AN2690 is our product candidate for the topical treatment of onychomycosis, a fungal infection of the nail and nail bed. AN2690 is a potent antifungal that, according to our preclinical studies, penetrates the human nail plate 250 times more effectively than Penlac, the only currently approved topical therapy. We believe this enhanced penetration will allow AN2690 to more effectively treat onychomycosis.

Dermatophytes, fungi that infect the skin, hair or nails, are the primary cause of onychomycosis. The infection involves the nail plate, the nail bed and, in some cases, the skin surrounding the nail plate. Infection causes nails to deform, discolor, become brittle and split and the nail bed and nail plate to thicken and separate. Toenails affected by onychomycosis can become so thick that routine trimming of the nails becomes difficult and can cause pain while wearing shoes, making it difficult to walk, work or do other activities. Onychomychosis can also lead to social embarrassment, since it may be perceived to be an active infection and contagious.

We utilized our expertise in medicinal chemistry to engineer AN2690 with enhanced nail permeation properties, allowing for improved delivery of the compound through the nail plate to the nail bed, the site of onychomycosis infection.

AN2690 has a novel mechanism of action that targets an essential protein synthesis enzyme, leucyl-transfer RNA synthetase, or LeuRS. This enzyme plays a pivotal role in fungal protein synthesis by attaching the leucine amino acid to transfer RNA, or tRNA. In addition, LeuRS also plays a key role in ensuring the correct synthesis of leucyl-transfer RNA. Our research has demonstrated that compounds that bind to the specific site on LeuRS involved in the synthesis of leucyl-transfer RNA also inhibit the attachment of leucine to tRNA, resulting in the inactivation of LeuRS and inhibiting protein synthesis within the fungal cell. The inhibition of protein synthesis leads to termination of cell growth or cell death, eliminating the fungal infection. We have shown that this inhibitory activity requires the presence of boron within the compound, as the replacement of the boron atom in AN2690 with a carbon atom inactivated the molecule. The unique boron-based mechanism of action underlying AN2690 was detailed in the June 22, 2007 issue of the journal Science.

AN2690 Phase 3 Clinical Development Program
We are preparing to conduct the Phase 3 trials ourselves, while simultaneously evaluting our partnership options. Phase 3 preparatory activities such as stability testing and packaging design have been completed. The company has also assembled a clinical toxicology package that includes data from local tolerance tests, genotoxicity studies, short term and chronic toxicity studies and reproductive toxicology studies. We expect that the Phase 3 AN2690 clinical trials will be consistent in length of trial and endpoint with Phase 3 clinical trials of other approved drugs to treat onychomycosis. Trial size will be set by the need to meet the regulatory requirement for the total number of patients treated prior to approval.

Our Phase 2 clinical trials have enabled us to define multiple well-tolerated, efficacious doses and a dose-response relationship. Initial studies have also demonstrated that topical application to the toenails with AN2690 led to little or no detectable systemic drug exposure in blood or urine. However, a small number of our patients who received AN2690 treatment experienced reversible skin irritation. Our Phase 2 clinical trials enabled the selection of a single concentration, or dose, of AN2690 for Phase 3 clinical trials and provided an understanding of the treatment effect associated with AN2690 that will allow the appropriate statistical calculations in the design of Phase 3 clinical trials.

According to Podiatry Today, 35 to 36 million people in the United States have onychomycosis. According to the manufacturer of Lamisil, 47% of those affected are not receiving treatment. For those who do seek treatment, options include debridement, oral or topical drugs or a combination of debridement and drug therapies. Debridement consists of scraping, cutting away, or removal of the affected nail. If not treated, onychomycosis may persist or worsen.

Because the fungi that cause onychomycosis are present in many common locations such as floors, the soil, socks and shoes, onychomycosis often re-occurs in susceptible individuals. Consequently, the nail can be reinfected and additional courses of treatment are frequently required even after successful treatment.

While Lamisil, a systemic antifungal, is effective for many patients, it carries the risk of liver failure. Despite this potential toxicity, worldwide sales of Lamisil peaked at $1.2 billion in 2004 and were $978 million in 2006 and $595 million in 2007. A generic version of Lamisil, terbinafine, became available in 2007, which we believe contributed to the decline in branded Lamisil sales. Phase 2 clinical trials suggest that AN2690 is effective in the treatment of onychomycosis, but with lower risks of systemic side effects than currently available oral therapies due to its topical administration.