Anadys Pharmaceuticals Initiates Phase I Clinical Trial of ANA598

Tuesday, June 3, 2008 General News
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SAN DIEGO, June 2 Anadys Pharmaceuticals, Inc.(Nasdaq: ANDS) announced today the initiation of dosing in a Phase I clinicaltrial of ANA598, an investigational oral non-nucleoside polymerase inhibitorfor the treatment of chronic hepatitis C virus (HCV) infection. Theobjectives of this trial are to assess safety, tolerability, andpharmacokinetics following ascending single oral doses of ANA598 in healthyvolunteers. Approximately 40 healthy subjects will participate in the study,which is being conducted in the United States. Following successfulcompletion of the healthy volunteer study, Anadys plans to begin a Phase Ibstudy of ANA598 in HCV-infected patients in the third quarter of 2008.

"Based on its very favorable preclinical profile, including potency,pharmacokinetics, and tolerability, we believe ANA598 has the potential tobecome an important component of future combination therapy for patients withHCV infection," said James Freddo, M.D., Anadys' Chief Medical Officer. "Weare excited about initiating this clinical program and look forward to futuretrials of ANA598 in HCV patients, first as a single agent and then insubsequent combination studies. We expect the full benefit of directantivirals to be demonstrated when studied as components of novel combinationregimens incorporating multiple anti-HCV agents."

Steve Worland, Ph.D., Anadys' President and CEO commented, "This is asignificant milestone for Anadys. ANA598 is the second internally discoveredcompound that we've moved into clinical studies this year. With thecommencement of dosing in a Phase I clinical trial for ANA773 in cancerpatients in February and this study of ANA598 underway, Anadys is now focusedon achieving important clinical milestones in both programs."

About ANA598

ANA598 is a highly potent and selective inhibitor of HCV genotypes 1a and1b NS5b RNA polymerases (IC50 < 1 nM) and of HCV replication in cell culture(EC50 values for genotypes 1b and 1a replicons are 3 and 50 nM, respectively).ANA598 has been well-tolerated in all preclinical studies, including 28-dayGLP toxicology studies, and was selected as a development candidate in June2007.

Clinical Need and Market Opportunity in HCV Infection

Chronic hepatitis C virus (HCV) infection is a serious public healthconcern affecting approximately 2.7 million people in the United States andapproximately 170 million people worldwide. HCV causes inflammation of theliver, which may lead to fibrosis and cirrhosis, liver cancer, and ultimately,liver failure. Cirrhosis of the liver resulting from chronic HCV infection isthe leading indication for liver transplantation in the U.S. Due to theasymptomatic nature of HCV infection, it often goes undetected for up to 20years following initial infection. Each year, 8,000 to 10,000 people in theU.S. die from complications of HCV.

The current standard of care is a combination of pegylated interferon andribavirin. Inadequate response rates, in particular for patients infectedwith genotype 1 HCV, along with significant side effects of approved therapy,support the medical need for improved treatment options. It is estimated thatfewer than 5% of people with chronic HCV infection living in the U.S. areunder treatment today. The majority of infected individuals are unaware oftheir infection status and the large majority of individuals who know theirstatus do not currently receive drug therapy. There is also a growing numberof individuals who have failed interferon-based regimens who may besuccessfully treated with combinations of two or more direct antivirals. Itis expected that the next generation of therapies for treatment of HCV willinclude small molecules, such as ANA598, that act directly upon specific viralenzymes to inhibit viral replication. These direct antivirals are expected toimprove overall therapy by increasing cure rates and improving to

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