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ZARS Initiates Phase 3 Clinical Trial Of ThermoProfen For Osteoarthritis Treatment

July 30, 2007

ZARS commenced the first of two Phase 3 clinical trials of ThermoProfen in patients with mild to moderate osteoarthritis (OA) of the knee.

The Company plans to conduct two, 12-week, three arm, double blind Phase 3 efficacy trials within the United States in patients with mild to moderate OA of the knee. These trials will be conducted with ThermoProfen, a matrix transdermal ketoprofen patch with an integrated CHADD (Controlled Heat-Assisted Drug Delivery) unit. In each of the two Phase 3 trials, 1500 patients will be randomized to one of three treatment groups to receive: ThermoProfen, a ketoprofen control (a patch with drug but no heat), or a heat control (a patch with heat but no drug).

The primary measure of efficacy will be the patient's report of average pain intensity over the last 24 hours at Week 12. A predefined interim analysis will be conducted after approximately 100 patients in each group have completed the first study to determine if the projected number of 500 patients in each of the three groups will be sufficient to demonstrate a statistically significant difference in the primary efficacy endpoint. ThermoProfen is expected to provide localized pain relief with lower systemic levels than oral administration of ketoprofen, and is expected to reduce the frequency of adverse effects of oral ketoprofen and other oral NSAIDs.

"We believe that ThermoProfen could address the significant medical need of patients suffering from OA while at the same time lowering the risk of the negative side effects associated with chronic NSAID use," said Robert Lippert, President and Chief Executive Officer, ZARS. "These trials, assuming that they are successful, are intended to provide the pivotal data to support global marketing applications for ThermoProfen."

In addition to the two efficacy trials, an open-label safety trial will be conducted. In the safety trial, patients who complete either of the two efficacy trials will be able to use one or two ThermoProfen patches daily for up to one year. The Company also plans to initiate a two-year preclinical dermal carcinogenicity study.

OA is a disease of the joints that causes erosion of cartilage and leads to friction between bones. Based on data from IMS Health, we estimate that 6.5 million people in the United States have mild to moderate pain associated with OA of the knee. We believe that the number of individuals with OA of the knee will increase due to the growing U.S. population, shifting age demographics and additional factors including obesity that can increase the prevalence of OA. The two most common treatments for the pain associated with OA of the knee are non-selective and COX-2 selective NSAIDs.

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