Zila Receives Special Protocol Assessment from FDA for its Oral Cancer Detection Drug

Phoenix, AZ - Zila, Inc., announced recently that it has reached agreement with the United States Food and Drug Administration (FDA) on the design and size of its new Phase III clinical trial for OraTest, an oral cancer detection drug. The agreement, reached under FDA's Special Protocol Assessment (SPA) process, will permit Zila to begin its new Phase III clinical trial. The SPA process allows for official FDA evaluation of a Phase III clinical trial protocol and provides trial sponsors, such as Zila, with a binding written agreement that the study design, including size, is acceptable to the FDA.

The SPA process is intended to finalize the design and size of a clinical trial with respect to a drug's primary efficacy endpoint. A significant component of the new OraTest Phase III clinical trial is the classification of severe dysplasia (pre-cancer) as a "true positive" finding in the study (in addition to carcinoma in situ and cancer). This and certain other elements of the new clinical trial protocol will permit enrollment of fewer patients and fewer visits than originally anticipated. This will dramatically reduce the cost and duration of the trial while at the same time expanding the potential post approval marketing claims and the potential market size for OraTest.

"The SPA is consistent with our expectations for our new Phase III program. The SPA provides Zila with a clear and certain pathway for our OraTest New Drug Application (NDA) submission. We are very pleased to have achieved this highly desired, binding agreement with FDA," said Douglas D. Burkett, Ph.D., chairman, chief executive officer and president of Zila, Inc. "This new trial design reduces our expected cost by tens of millions of dollars, reduces the trial time by many years and expands our market potential by more than one-hundred times. It is our intent to complete the trial's pre-enrollment activities in order to begin enrolling patients within the next month."

The OraTest clinical trial includes severe dysplasia as a true positive finding (as opposed to a false positive). Severe dysplasia is recognized as a precursor to cancer and Zila Tolonium Chloride (ZTC(TM)), the patented active pharmaceutical ingredient in OraTest, has been demonstrated to be very sensitive to severe dysplasia, carcinoma in situ and cancer in previous studies. The incidence of severe dysplasia in high risk populations is expected to be higher than the incidence of cancer. When severe dysplasia is included as a true positive finding in the OraTest clinical trial, the number of patients required to demonstrate the efficacy of OraTest is significantly reduced. Additionally, the inclusion of severe dysplasia and certain other key protocol modifications enable the assessment of the efficacy of OraTest in a wide population of tobacco users and/or alcohol consumers. This potentially broadens the post-approval marketing claims and market for the product to more than 25 million Americans within this population that visit the dentist at least once annually.

The trial is expected to require fewer than 4,000 high-risk, readily available patients, generally requiring a single visit. The trial is expected to require approximately a year for completion, once all investigator sites are active, but will include an interim analysis to determine the total number of patients required. Whether an NDA is approved by the FDA depends on a variety of factors including whether the data from the study achieve the predetermined protocol requirements for safety and efficacy for its intended use or uses.

Zila will discuss the SPA and its implications in more detail at its quarterly conference call to be held after the filing of the Report on Form 10-Q for the quarter-ended October 31, 2005.

SOURCE: Zila