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Dear Pharmos Shareholder:
This past year is best characterized as a period of significanttransformation for Pharmos. In October 2006, we completed the acquisition ofVela Pharmaceuticals, Inc., thereby enhancing our product portfolio with anumber of potential medications that strategically align with our existingtherapeutic focus on nervous system and autoimmune disorders. More recently,we implemented a restructuring and cost reduction initiative designed toenable continued progress in our highly innovative cannabinoid 2 (CB2)receptor discovery program while better managing cash resources. Our board andmanagement team has also been transformed in the past year: a new ChiefExecutive Officer and new Chief Financial Officer are in place, and severalwell-known, experienced and successful biotech investors have joined our boardof directors. As a result of these changes, today Pharmos is a fundamentallystronger company with the framework to build shareholder value.
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Through the Vela acquisition, we obtained several pipeline assets thatwere either in, or ready to start, clinical trials. The lead drug,dextofisopam, is being developed as a treatment for irritable bowel syndrome(IBS), which remains a dramatically underserved treatment market in the U.S.and abroad. In June 2007, we commenced a Phase 2b study of dextofisopam, whichis expected to enroll approximately 480 female patients with diarrhea-predominant or alternating IBS. The new study follows a successful Phase 2astudy in 141 IBS patients in which dextofisopam demonstrated a statisticallysignificant improvement over placebo on the primary endpoint of adequateoverall relief. Affecting 10-15% of US adults, IBS is a large market withsignificant direct and indirect costs, and limited treatment options. We areenthusiastic about the opportunity dextofisopam presents to deliver a newmedication to the IBS patient segment, since it involves a totally newmechanism of action in this space and appears to offer a safer and morebalanced treatment than is currently available.
The Phase 2 study of our proprietary NanoEmulsion (NE) drug deliverytechnology formulated with 3% diclofenac in patients with osteoarthritic kneepain continues to recruit patients at the anticipated pace. We plan to enroll126 patients in the study with data expected by the middle of 2008.Strategically, the NE program broadens our development pipeline and carrieswith it a reduced technical risk for products having significant marketpotential. Osteoarthritis affects roughly 12% of U.S. adults, many of whom donot receive pharmacological treatment due to side effects associated with thecommonly used oral medicines. Diclofenac is an approved and widely usedgeneric non-steroidal anti-inflammatory drug (NSAID). However, oraladministration of NSAIDs results in higher systemic drug exposure, which maylead to serious adverse effects as compared to topical application.
Our expertise continues to grow in our core proprietary technologyplatform, the discovery and development of synthetic cannabinoid compounds astreatments for pain, inflammation and autoimmune disorders. Of particularpride is our proficiency with CB2 receptor-selective agonists, an exciting andgrowing area of
