Osteoporosis

Zelos Therapeutics’ lead product candidate for osteoporosis is ZT-031 [Ostabolin-C™, cyclic PTH-(1-31)], a 31-amino acid peptide analog of parathyroid hormone, or PTH. Zelos plans to initiate a Phase 3 trial of ZT-031 for the prevention of vertebral fractures in postmenopausal women with severe osteoporosis in mid-2008. In 2007, we completed a twelve month Phase 2 study for ZT-031 in postmenopausal women with low bone mass. Based on the study results, we believe that ZT-031 has the following clinically relevant advantages:

Rapid onset of clinically meaningful bone formation activity
Increased bone mineral density (BMD) which can potentially reduce fracture rates, including a significant increase in hip BMD at all time points with the highest dose tested
Broad responder rate in patients achieving at least a 5% increase in BMD
Low potential for calcium-related toxicity

In addition, multiple prospectively defined analyses of the Phase 2 database indicated that bodyweight has a highly significant and additive effect to that of dose on efficacy and safety parameters, leading to the development of an innovative dosing regimen which may potentially provide consistent and superior clinical effect in all patients. Following an in-depth technical assessment, Zelos has licensed a proprietary technology that will allow for intranasal administration of ZT-031, creating a convenient and well accepted alternative to daily subcutaneous injection. An injection-free delivery system could substantially improve patient adherence to therapy, expand the addressable market for ZT-031 and extend the product life cycle.

Osteoporosis Overview
Osteoporosis is defined as a loss of bone density and changes to bone architecture resulting from age-related hormone deficiency. During adulthood bone is continually remodeled through the resorption of old bone by osteoclasts and the subsequent formation of new bone by osteoblasts. Osteoporosis results from an imbalance between bone resorption and bone formation, leading to bone loss, which, over the years, leads to a loss of the structural integrity of bone and an increased risk of fracture.

According to the National Osteoporosis Foundation (NOF):

55% of people 50 years and older are at risk of developing osteoporosis, with post-menopausal women at the greatest risk
10 million Americans (8 million women and 2 million men) are already diagnosed with the disease
Osteoporosis leads to more than 1.5 million fractures annually
One in two women and one in four men over age 50 will have an osteoporosis-related fracture in their remaining lifetime
Any bone can be affected, but more severe fractures (hip and spine) can have devastating effects on both overall health and quality of life (physical impairment, chronic pain and loss of independence)
Severe fractures can lead to death, with 20% of all individuals who suffer a hip fracture dying within a year of their injury (CDC)
Estimated health care costs (including hospitals, nursing homes and outpatient services) for osteoporotic fractures were reported to be $18 billion in 2002 in the US and costs continue to rise as the baby-boomer population ages

PTH analogs can restore a positive balance between bone formation and resorption, thereby creating an anabolic window when bone mineral density is increased. PTH analogs also activate previously quiescent, or inactive, bone surfaces to further increase bone mass and bone strength by restoring bone micro-architecture.

The use of PTH fragments is now a well-established approach to the treatment of osteoporosis in both the United States and the European Union (EU) and the use of full length PTH hormone is also gaining acceptance in the EU. Large-scale, fracture-outcome studies of other PTH analogs, including PTH(1-34), marketed as Forteo® / Forsteo®, (teriparatide), have validated earlier findings by demonstrating the largest reduction in the incidence of vertebral and non-vertebral fractures yet reported. Forteo has already created a strong market for PTH-based therapeutics, with worldwide sales of over $700 million in 2007—a 19% increase over 2006 sales.

Clinical Development of ZT-031
Zelos Therapeutics will initiate a Phase 3 trial of ZT-031 for the prevention of vertebral fractures in women with osteoporosis in mid-2008. A Phase 2 trial of ZT-031 in post-menopausal women with low bone mineral density was successfully completed in 2007, the results of which were also reported at the annual meeting of the American Society of Bone and Mineral Research in 2007.

Phase 2 Trial Results:

Achieved primary endpoint of significant increase in lumbar spine bone mineral density at one year; dose-related increases in lumbar spine-BMD observed in all treatment groups at one year with a maximum mean increase of 11%
Markers of bone formation increased significantly as early as one-month following the initiation of treatment, peaking at nearly a 200% increase from baseline with highest dose studied
Markers of bone resorption increased in a dose-dependent manner, but were delayed and of a lower magnitude, resulting in a wide “anabolic window,” which indicates a strong bone-building effect
Proportion of patients who developed a clinically relevant lumbar spine BMD increase of 3% or more was 79% after four months and 97% after 12 months (45 µg dose group)
Significant increases in BMD of the hip were also observed in the high dose group at all timepoints
Adverse events were consistent with those observed with other PTH analogs
No statistically significant increase in urinary calcium excretion; increases in serum calcium were observed predominantly in the 45 µg dose group with the highest incidence occurring at 4 months - most episodes were isolated and mild in nature; symptomatic hypercalcemia was not reported

Phase 2 Trial Design:

Double blind, placebo controlled, dose ranging study
Enrolled 261 postmenopausal women with moderate osteoporosis into five dosage groups (placebo, 7.5, 15, 30 or 45 µg daily by subcutaneous injection)
Treatment was continued for four months with all study subjects offered the opportunity to continue treatment in an eight month blinded extension to allow the evaluation of 12 months of continuous treatment with ZT-031
198 study subjects continued in the extension study under the same blinded treatment assignment assigned in the four month study

Forteo^® is a registered trademark of Eli Lilly and Company.

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