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Anadys Pharmaceuticals Resumes Clinical Investigation of TLR7 Mechanism in HCV

Expanded HCV Development Presence Includes ANA598 and ANA773 Acting via

Independent but Potentially Complementary Mechanisms

Conference Call Today at 2:00 PM PDT

SAN DIEGO, July 7 /PRNewswire-FirstCall/ -- Anadys Pharmaceuticals, Inc. (Nasdaq: ANDS) announced today that it is resuming clinical investigation of the Toll-Like Receptor-7 (TLR7) mechanism for the treatment of chronic hepatitis C. Based on preclinical pharmacology testing and the results of completed 13-week GLP animal toxicology studies, Anadys has received clearance to initiate a clinical trial of ANA773, the Company's oral TLR7 agonist prodrug, under a clinical trial application (CTA) in the Netherlands. Following initial dosing in healthy volunteers, this trial will explore every-other-day dosing over 28 days in HCV patients. Anadys also continues to enroll patients in a separate Phase I clinical trial of ANA773 in oncology that is ongoing under an IND in the United States.

"In an extensive preclinical program conducted with ANA773, we have previously shown that the profile of immune stimulation resulting from TLR7 activation can be dramatically modulated by altering the schedule of administration," said James Freddo, M.D., Anadys' Chief Medical Officer. "Now, results of toxicology studies employing every-other-day dosing of ANA773 have shown that we can achieve desired levels of immune stimulation sustained over 13 weeks without adverse toxicology findings. The favorable toxicology profile seen to date, coupled with the stable induction of interferon-alpha dependent responses when ANA773 is dosed every other day over 13 weeks, have convinced us that ANA773 has the potential to demonstrate benefit in patients infected with HCV."

Steve Worland, Ph.D., Anadys' President and CEO, commented, "The decision to take ANA773 into HCV, which will be our third clinical development program to commence dosing this year, reflects an expansion of Anadys' development efforts in HCV. As an approach to treat hepatitis C, the TLR7 mechanism is independent from, and potentially complementary to, ANA598, Anadys' non-nucleoside HCV polymerase inhibitor currently in Phase I clinical development." Commenting on the expected impact this expansion will have on the Company's cash outlook for 2008, Dr. Worland added, "Because the ANA773 hepatitis C program is highly leveraged off our oncology program, we expect to carry forward all three clinical development programs this year within our previous 2008 cash utilization projection of $29 to $31 million."

ANA773 Phase I Clinical Trial in HCV

The Phase I clinical trial of ANA773 in HCV will be conducted under a two-part protocol. Part A of the study will include both single and multiple doses of ANA773 in healthy volunteers. Successive cohorts of volunteers will receive ascending dose levels of ANA773. The primary objectives of Part A of the study are to assess safety and tolerability. In Part B of the study, HCV patients will receive ANA773 every other day for 28 days. The primary objectives of Part B are to assess safety, tolerability and viral load decline. The starting dose level in HCV patients will be selected based on safety, tolerability and immune responses seen in healthy volunteers in Part A. It is expected that this study design will allow initial dosing in HCV patients at a dose that will have demonstrated a desired magnitude of immune stimulation in the healthy subjects, and that dosing in patients will initiate prior to completion of dose escalation in Part A of the study. Approximately 40 healthy volunteers and 24 patients are anticipated to be enrolled in this study. Dosing is expected to begin in healthy volunteers within the next few weeks and in HCV patients early in the fourth quarter of 2008.

About ANA773 and TLR Pharmacology

ANA773 is an orally administered prodrug of a novel TLR7-specific agonist. Results from pre-clinical pharmacology studies have shown that ANA773 can elicit desired immune responses and that the profile of response can be modulated by both dose and schedule of administration. Results of recently completed 13-week GLP toxicology studies have shown that with every-other-day dosing of ANA773, immune stimulation of a magnitude believed to confer therapeutic potential can be achieved without adverse toxicology findings. The immune stimulation observed with every-other-day dosing of ANA773 in monkeys included induction of interferon-alpha and interferon dependent responses at levels that are sustained over 13 weeks of dosing.

The recently obtained results with every-other-day dosing of ANA773 over 13 weeks contrast with results from prior 13-week animal toxicology studies that utilized daily dosing of ANA975, a TLR7 agonist prodrug previously in development by the Company for the treatment of chronic hepatitis C. In initial 13-week animal toxicology studies of ANA975 dosed daily, unexpected findings associated with intense immune stimulation were observed. When lower daily doses of ANA975 were then explored in a subsequent 13-week animal toxicology study, it was determined that adverse findings were present even at dose levels where desired immunostimulatory effects were not measurable, following which the decision was made in 2007 to discontinue development of ANA975.

Webcast of Conference Call

Anadys will host a conference call today, July 7, 2008 at 2:00 p.m. Pacific Daylight Time to discuss Anadys' plans to resume clinical investigation of the TLR7 mechanism in HCV. A live webcast of the call will be available online at A telephone replay will also be available approximately one hour after completion of the call. To access the telephone replay, dial 888-286-8010 (domestic) or 617-801-6888 (international), passcode 84526379. The webcast and telephone replay will be available through July 21, 2008.

About Anadys

Anadys Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company dedicated to improving patient care by developing novel medicines in the areas of hepatitis C and oncology. For the treatment of chronic hepatitis C, the Company is developing ANA598, a non-nucleoside polymerase inhibitor, and ANA773, an oral TLR7 agonist prodrug. The Company is also developing ANA773 for the treatment of cancer.

Safe Harbor Statement

Statements in this press release that are not strictly historical in nature constitute "forward-looking statements". Such statements include, but are not limited to, references to (i) the expected timing and planned development activities for ANA773, including the timing for commencing dosing in the planned ANA773 HCV clinical trial; (ii) the belief that ANA773 has the potential to demonstrate benefit in patients infected with HCV; (iii) the belief that the TLR7 mechanism will potentially be complementary to ANA598; (iv) expectations regarding Anadys' cash utilization for 2008; (v) the planned study design of the two-part protocol of the ANA773 clinical trial in HCV; (vi) Anadys' expectation to begin dosing HCV-infected patients with ANA773 prior to the completion of the healthy volunteer portion of the study at a dose that will have demonstrated a desired magnitude of immune stimulation in the healthy subjects; and (vii) the belief that ANA773 can elicit immune stimulation of a magnitude sufficient to confer therapeutic potential without adverse safety issues. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Anadys' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. For example, the results of preclinical studies, including the toxicology studies described in this press release, may not be predictive of future results, and Anadys cannot provide any assurances that ANA773 or ANA598 will not have unforeseen safety issues in future toxicology studies, will have favorable results in future clinical trials or will receive regulatory approval. In addition, Anadys' results may be affected by risks related to competition from other biotechnology and pharmaceutical companies, its effectiveness at managing its financial resources, its ability to successfully develop and market products, difficulties or delays in its preclinical studies or clinical trials, difficulties or delays in manufacturing its clinical trials materials, the scope and validity of patent protection for its products, regulatory developments involving future products and its ability to obtain additional funding to support its operations. Risk factors that may cause actual results to differ are more fully discussed in Anadys' SEC filings, including Anadys' Form 10-K for the year ended December 31, 2007 and Anadys' Form 10-Q for the quarter ended March 31, 2008. All forward-looking statements are qualified in their entirety by this cautionary statement. Anadys is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

SOURCE Anadys Pharmaceuticals, Inc.
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