Napo Files Brief on Appeal In Dispute With Salix

SAN FRANCISCO, Feb. 3, 2015 /PRNewswire/ -- Napo Pharmaceuticals, Inc. ("Napo") announced that it has filed its opening brief in the Appellate Division of the Supreme Court of the State of New York seeking to reverse the December 2013 Order of the Supreme Court of the State of New York that prevented important claims from being tried to verdict by a jury in the Napo vs. Salix Pharmaceuticals, Inc. ("Salix") litigation.  

Napo filed a lawsuit against Salix in New York on May, 2011 seeking to terminate its December 9, 2008 Collaboration Agreement with Salix for the Development, Manufacture and Commercialization of Napo's first-in-class anti-diarrheal drug, crofelemer (trade name FULYZAQ^™). Napo's original complaint alleged that Salix had materially breached its contract with Napo by its failure to use commercially reasonable efforts to develop crofelemer. Napo's appeal includes a challenge to the lower court decision that Salix's decision to withhold investment in commercial manufacturing capacity sufficient to launch crofelemer upon FDA approval was reasonable.

The issues on appeal include the lower court's ruling that Salix was entitled to ignore its obligations to commercialize and develop other indications for crofelemer as required by the Collaboration Agreement, including specifically diarrhea predominant irritable bowel syndrome, an indication for which Salix has licensed worldwide rights. Other licensed indications include pediatric, acute infectious (including cholera), and chemotherapy-related diarrheas.

In December, 2012, the US Food and Drug Administration approved crofelemer for the symptomatic relief of noninfectious diarrhea in adult patients with HIV/AIDS on antiretroviral therapy. The Appeal also cites Salix's delay in obtaining FDA approval of FULYZAQ™, especially in light of the announcement of positive Phase 3 trial results in November, 2010. Crofelemer had previously received Fast Track designation from the FDA for this indication. "Salix's failure to use commercially reasonable efforts to develop and commercialize a drug that it knows has the potential to treat important and unmet medical needs is a clear breach of its contractual obligations," said Napo counsel, William S. Ohlemeyer, a partner at Boies, Schiller & Flexner.  Salix has not responsibly pursued crofelemer for indications that may relieve suffering worldwide," said Ohlemeyer.

It should be noted, Salix has recently been involved in a review of its financial statements and executive performance. On January 28, 2015 Salix announced that it would restate financial statements for FY 2013 and for the first three quarters of 2014.  Also in the last three months, both Salix's CEO, Carolyn Logan, and its CFO, Adam Derbyshire, have resigned.

About Crofelemer
Napo's proprietary patented gastrointestinal compound, crofelemer, is a first-in-class antisecretory agent extracted from Croton lechleri, a medicinal plant sustainably harvested under fair-trade working conditions in several South American countries.

Crofelemer (trade name Fulyzaq) was approved on Dec. 31, 2012 indicated for the symptomatic relief of noninfectious diarrhea in adult patients with HIV/AIDS on antiretroviral therapy.  Crofelemer is in various stages of clinical development for the following indications:

- Crofelemer for diarrhea irritable bowel syndrome (CRO-IBS), Phase 2
- Crofelemer for acute infectious diarrhea, including cholera (CRO-ID), Phase 2
- Crofelemer for pediatric diarrhea (CRO-PED), Phase 1

The FDA has granted fast track status to crofelemer development for the IBS indication. 

About Napo Pharmaceuticals, Inc.
Napo Pharmaceuticals, Inc. focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners.  The company seeks partners in both traditional high-value markets and in the higher volume business models of emerging and developing economies. Napo was founded in November 2001 and is based in San Francisco, California. 

Please note: The materials provided herein contain projections and other forward-looking statements regarding future events. Such statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include, among others: the cost and unpredictability of the duration and results of clinical trials and FDA approval; the possible impairment of, or inability to obtain, intellectual property rights, and the costs of obtaining such rights from third parties; market acceptance for approved products; ability to secure the product; and generic and other competition, and the need to acquire new products.

SOURCE Napo Pharmaceuticals, Inc.

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