HMPL-004

Treatment for auto-immune disorders
HMPL-004 is a botanical product extracted from a herb that occurs naturally in China. The herb has an extensive history of use in TCM for the treatment of upper respiratory tract infections and other inflammatory and infectious diseases. HMPL-004 was developed in-house for the completely new indication of Inflammatory Bowel Disease ("IBD"), as a result of screening known TCM anti-inflammatory medicines.

The following chart outlines the current projected discovery and development pipeline and targets.

Mechanism of Action
IBD is considered an auto-immune disease, as are rheumatoid arthritis, psoriasis, multiple sclerosis, and systemic lupus erythematosis. A deregulated immune response plays a major role in the pathogenesis of the disease. Pro-inflammatory cytokines, such as tumour necrosis factor alpha (TNF-α), IL-1β , IL-6, IL-12, IL-15, and IL-18 are the key mediators of inflammatory reactions. Conventional therapeutics for IBD include steroids, anti-inflammatory drugs, antibiotics, immunosuppressive reagents, and cytokine inhibitors.

HMPL-004 acts on multiple cellular targets in the inflammatory signal transduction pathways resulting in suppressed inflammation cytokine expression including TNF-α, IL-1β and IL-6. HMPL-004 was demonstrated to inhibit TNF-α and IL-1β production in cell-based assays. HMPL-004 is also able to inhibit NF-kB activation. NF-kB is a family of transcriptional factors that regulate a wide spectrum of genes critically involved in host defence and inflammation. The mechanism of action of HMPL-004 was further supported in laboratory IBD animal models. Treatment of IBD rats with HMPL-004 caused a significant drop in plasma cytokine concentrations, including TNF-α and IL-1β.

Safety
Products extracted from the same herb as HMPL-004 have been widely used as traditional remedies in China and South East Asia to treat upper respiratory tract infections and other inflammatory and infectious diseases. Extracts of the same herb have also been used as dietary supplements in the US for many years. In over sixteen years, among an estimated 129 million users, a total of only fifteen cases of adverse events are documented in China. There have been no reports of adverse events associated with the dietary supplement use of extracts from the same herb source as HMPL-004 in searches of US FDA databases conducted by Mediwatch Ltd. in 2005.

Clinical and Regulatory Status and Plan
US FDA IND clearance was received in 2005 for a Phase II study on HMPL-004 for the treatment of patients with Crohn's Disease ("CD"). The trial has been designed by Hutchison MediPharma and its CD expert advisers in collaboration with Omnicare, Inc., which is currently enrolling patients for the Phase II trial.

The US Phase II study is a double blind, randomised, multi-centre, placebo-controlled study to determine HMPL-004's efficacy and safety in both male and female subjects with active moderate CD.

HMPL-004 has currently completed a multi-center, randomized, double-blind, and comparator Phase II proof-of-concept study of 120 patients with mild-to-moderate Ulcerative Colitis. The study evaluated HMPL-004 at 400mg taken three times a day, orally, compared to Mesalazine, the current first-line standard of care. The four trial endpoints were patients: clinical symptom score; overall clinical evaluation; colonoscopic score; and safety evaluation. After treatment for eight weeks, the percentage of patient’s clinical symptom score reduction for HMPL-004 was 56% versus 59% for Mesalazine in the Intent-To-Treat population. The overall remission rate (combination of complete and partial remissions) for HMPL-004 was 57% by clinical score compared to 53% for Mesalazine in the Intent-To-Treat population and 47% for HMPL-004 versus 42% for Mesalazine by colonoscopy in the Intent-To-Treat population. HMPL-004 was well tolerated in the study and the adverse event rate was half that of the Mesalazine group.

Manufacture
HMPL-004 is extracted from a herb. The active ingredient used in the clinical trials was manufactured in a GMP facility in China. The drug is encased in a hard gelatine capsule, produced under GMP in the US.

Sufficient quantities of the clinical supplies have been manufactured with acceptable batch-to-batch reproducibility for use in the Phase II clinical trials.

Competitive Advantages

Market Potential of HMPL-004
The following information relating to the market potential of HMPL-004 and the market size for inflammatory disease treatments have been extracted or derived from statistical data and information published by various sources including a report commissioned and paid for by Chi-Med and produced by Cambridge Consultants Limited, an independent research organization, dated 24 February 2006. In collating that information, certain assumptions and qualifications have been made which may affect the interpretation of the information contained herein.

Inflammatory Disease Market
UC and CD are the two most common forms of IBD. The patient population with UC and CD in the US is estimated to be between 250,000-500,000 and 400,000-600,000 respectively. The annual incidences of UC and CD in the US are 2-7 cases per 100,000 population per year and 5-7 cases per 100,000 population per year, respectively. Between 2001 and 2005 it is estimated that the number of patients with UC in the US increased by approximately 47,000, representing a CAGR of 4 per cent and the number of patients with CD increased by approximately 58,000, a CAGR of 3 per cent.

Inflammatory Disease Market Size
The products used for the treatment of UC and CD are prescribed according to severity and anatomical location of the disease. The main types of drugs recommended for treatment of the two conditions include 5-aminosalicylates, corticosteroids and antibiotics to control inflammation and immuno-modulators.

The estimated costs per recommended course of treatment per patient of the drugs used for CD are US$663 for the oral 5-ASA drug Pentasa (mild-moderate disease), US$534 for the oral corticosteroid Entocort EC (mild-moderate disease), and US$7,573 for the intravenous immuno-modulator Remicade (moderate to severe disease).

The estimated costs per recommended course of treatment per patient of the drugs used for UC are US$739 for the oral 5-ASA drug Asacol (mild-moderate disease), US$9 for the oral corticosteroid, Deltasone (mild-moderate disease), US$31 for the intravenous corticosteroid Solu-Medrol (moderate-severe disease) and US$7,573 for the intravenous immuno-modulator Remicade (moderate-severe disease).

In 2002, the US market size for CD was estimated to be US$590 million. This is expected to reach US$980 million by 2012, a CAGR of 5 per cent. In 2002, the US market size for UC was estimated to be US$420 million. This is expected to reach US$500 million by 2012, a CAGR of 2 per cent. However, the FDA approval of Remicade for UC in 2005 came after this market analysis was undertaken, and sales of this drug for UC are likely to have increased the overall value of the UC market further.