CS-917 represents a new therapeutic approach for the treatment of type 2 diabetes. It is a first-in-class inhibitor of fructose-1,6-bisphosphatase (FBPase), a regulatory enzyme in the pathway responsible for the production of glucose in the liver, known as the gluconeogenesis pathway. Results from preclinical and clinical studies suggest that by specifically inhibiting this pathway, liver glucose production is reduced, resulting in a decrease in blood glucose levels. In February 2006, our partner on the development of CS-917, Daiichi Sankyo, initiated a Phase 2b clinical trial for CS-917, given orally as a single agent to patients with type 2 diabetes. The trial is designed to evaluate the safety and tolerability of CS-917 during three months of dosing, as well as its effect on blood levels of HbA1c, an important measure of long-term glucose control in patients with type 2 diabetes. In January 2007, Daiichi Sankyo informed us that enrollment in the clinical trial was complete with a total of 392 patients having been enrolled in the U.S. If successful, this clinical trial could support selection of a dose for Phase 3 clinical trials. We expect to report top-line results of this study around mid-year.

CS-917 is expected to be used alone or in combination with other diabetes therapies other than metformin. Daiichi Sankyo is funding the development of CS-917 and has worldwide rights to the product candidate, with Metabasis receiving payments upon achievement of certain milestones, royalties on net sales, as well as retaining an option to co-promote the product in North America.