Coley Pharmaceutical Group Initiates Phase II Clinical Study of Actilonâ„¢ for H

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Coley Pharmaceutical Group Initiates Phase II Clinical Study of

Actilonâ„¢ for Hepatitis C

Wellesley, MA - February 23, 2006

Coley Pharmaceutical Group, Inc. (Nasdaq: COLY) today announced the

initiation of a randomized Phase II clinical study of Actilonâ„¢ (CPG

10101) for the treatment of patients with chronic Hepatitis C

infection.

The Phase II clinical trial is expected to enroll ninety adults with

genotype 1 Hepatitis C virus (HCV) who have failed previous therapy

with the current standard of care. Subjects will be randomly assigned

to one of three parallel treatment arms, which will evaluate two dose

levels of Actilon (0.2 mg/kg once weekly or 0.5 mg/kg once weekly) in

combination with pegylated interferon alpha and ribavirin or

pegylated interferon alpha plus ribavirin alone (the current standard

of care). The Phase II clinical trial is designed to compare the

safety and tolerability of the different drug combinations, as well

as the efficacy of the regimens in reducing viral load over 12 weeks

and achieving a sustained virologic response for 24 weeks following

48 weeks of treatment. Coley expects preliminary data from this Phase

II study to be available in the second half of 2006.

" This study is designed to determine how frequently the combination

of Actilon plus standard of care induces early and sustained

virologic responses in this population of chronic Hepatitis C

patients with a very high unmet medical need, " said L.

Bratzler, Ph.D., President and Chief Executive Officer of Coley

Pharmaceutical Group. " Based on its promising safety profile, novel

dual mechanism of action, which stimulates both the innate and

adaptive arms of the immune system, and preclinical and Phase I

clinical studies data, we believe Actilon may prove to be an

important component of both current and future therapeutic regimens

in the treatment of chronic HCV. "

Subjects in each of the three arms will be treated for 12 weeks, at

which time an early virologic response analysis will be conducted to

assess reductions in serum HCV RNA concentrations. Those patients who

achieve a greater than 1.5 log reduction in serum HCV RNA levels

compared to baseline will continue treatment in their assigned

regimen for an additional 36 weeks. Patients in the standard of care

arm who fail to achieve a response may be offered the option of

switching to one of the combination therapy arms. Subjects whose HCV

RNA levels are undetectable at the end of 48 weeks will be monitored

for an additional 24 weeks to determine if they have achieved a

sustained virologic response.

Actilon is currently undergoing clinical evaluation both as a

monotherapy and as part of combination regimens in an ongoing Phase

Ib clinical study among chronic HCV patients who have previously

responded to standard treatment but have since relapsed. Preliminary

results from a dose-escalation trial which evaluated Actilon's safety

when administered as a monotherapy to HCV patients demonstrated that

Actilon is generally well tolerated over a wide dose range, and

induces dose-dependent antiviral and immune responses consistent with

the known pharmacologic mechanisms of this new class of

immunomodulatory antiviral drug candidates.

About Actilon and TLR Therapeuticsâ„¢

Coley's proprietary TLR Therapeuticsâ„¢ act through a specific class

of targets, called Toll-like receptors, or TLRs, found in and on

immune system cells which, in turn, direct the immune system to fight

disease. Actilon, an investigational therapeutic, acts through the

Toll-like receptor 9 (TLR9) found in dendritic cells and B cells and

is designed to induce a durable and natural immune response to treat

viral infections such as Hepatitis C. The compound stimulates the

body's own production of antiviral cytokines and chemokines, such as

interferons, and is designed to drive both early and sustained virus-

specific memory immune responses to help clear infection.

Actilon, (CPG 10101), Coley's proprietary product candidate for the

treatment of viral infectious disease, is being developed for the

treatment of patients chronically infected with Hepatitis C virus

(HCV) to address many of the shortcomings of current therapies.

Actilon is a synthetic oligonucleotide and selective TLR9 agonist

which enhances the ability of dendritic cells to activate killer T

cells against invaders. Actilon appears to stimulate TLR9 in a

different way from CPG 7909 resulting in significantly stronger

activation of interferon-α production by the plasmacytoid dendritic

cells.

Actilon operates through a dual method of action consisting of both

innate and adaptive immunity antiviral mechanisms. Actilon was

designed to induce not only the early short-term innate immune

effects that temporarily control the virus, but also to trigger

adaptive immunity, with a strong killer T cell response, that we

believe may provide sustained anti-infective effects. We believe

Actilon therapy may allow the duration of HCV therapy to be reduced

significantly, thereby resulting in reduced toxicity and improved

patient compliance.

Based on results observed in our early clinical trials, we believe

that Actilon - like interferon α and ribavirin treatment -- will

trigger an innate immune response to HCV resulting in an early

virologic response in many people. In contrast to conventional

interferon-α therapy, we believe that Actilon may cause faster and

more effective dendritic cell maturation in the patients, followed by

more rapid enhancement of the adaptive immune response that is

thought to be required for controlling difficult-to-treat chronic

viral diseases, such as HCV and HIV. Thus, in HCV, we expect that

Actilon therapy may lead to more rapid and more frequent development

of a sustained viral response, even in the difficult to treat and

most common genotype 1 patients. We believe that Actilon will be

capable of inducing and amplifying potent and natural antiviral

mechanisms at relatively well-tolerated doses.

In addition, based on the preclinical tests we have conducted in

infection models, we believe that synthetic TLR9 agonists such as

Actilon may have broad utility in the treatment and prevention of

many types of infections because of their ability to activate both

the short-term innate and sustained adaptive responses of the immune

system. Coley believes that the ability of Actilon to at least

partially reverse dendritic cell dysfunction and enhance the Th1

response could lead to improved clinical outcomes not only in chronic

HCV, but also other chronic infections such as Human Immunodeficiency

Virus (HIV), Hepatitis B and herpes.