AN2718 is our second topical antifungal in clinical development for skin and nail fungal infections. AN2718 utilizes the same mechanism as AN2690, and appears to be well suited to target organisms that cause common skin and topical fungal infections, including Trichophyton and Candida fungi. Based on preclinical studies and in comparison to AN2690, we believe that AN2718 has greater potency against the dermatophytes T. mentagrophytes and T. rubrum, and results in similar nail penetration. These studies suggest that, like AN2690, AN2718 also has significantly greater nail penetration than Penlac.

Our Phase 1 data for AN2718 has also indicated that AN2718 has a low skin irritation profile across multiple doses and that it would thus be suitable for the treatment of skin fungal infection. This Phase I data, which we announced in March 2009, was from a 21-day skin irritation trial. In the trial, we compared AN2718 gel at 1.5%, 2.5%, 5.0% and 7.5%, and AN2718 cream at 0.3% and 1.0%, to their respective vehicles. All doses of AN2718 gel, cream and vehicle were applied to the skin of normal volunteers for 21 days using semi-occlusive, or semi air- and water tight, adhesive patches. Application sites were then evaluated daily for signs of irritation. The irritation indices for all AN2718 doses were very low and comparable to vehicle. We believe that these Phase 1 data, coupled with the preclinical findings, support the initiation of a Phase 2 trial of AN2718 in onychomycosis, which we expect to initiate in the first half of 2011.