FDA comments on Zila's OraTest

March 11, 2005
Zila's OraTest advancing through regulatory process; FDA provides preliminary comments on clinical program amendments

Zila, Inc. announced Wednesday that it has received preliminary comments from the Food and Drug Administration (FDA) on proposed amendments to the clinical program for its OraTest product. The comments that were received were technical in nature and centered on the need to provide clarifications to previously submitted materials, particularly within the statistical metrics that would be used to evaluate the data gathered during the clinical trial.

A significant component of the proposed clinical program is the
identification of severe dysplasia as a primary endpoint. This and
certain other elements of the proposed program would permit a
reduction in the total number of patients and the number of visits per patient, which would reduce the cost and duration of the program.

Douglas D. Burkett, PhD, chairman, chief executive officer and
president of Zila, Inc. stated, "Although the FDA's comments are
preliminary, we are encouraged by their initial response to our
clinical program amendments. Zila will continue to communicate with the FDA, focusing on addressing their technical comments.

"Although the FDA may have additional comments, we have concluded, in consultation with our regulatory, clinical and medical advisors, that we now have adequate information to enable us to proceed with certain of the preliminary processes necessary to conduct the amended Phase III clinical program. These tasks will include the submission of our clinical protocols to the independent review boards (IRBs) at our investigative sites in the U.S., Europe and Asia, and the completion of required contractual agreements.

"It is our intent to complete these pre-enrollment activities while we respond to the FDA's comments."

The core objective of Zila's amendment to the OraTest clinical
program is the inclusion of 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), the patented active pharmaceutical ingredient in OraTest,
has proven to be very sensitive to severe dysplasia in previous

The incidence of severe dysplasia in high risk populations is higher than the incidence of cancer; therefore, when severe dysplasia is included as a true positive finding in the OraTest clinical trials, the number of patients required to demonstrate the efficacy of OraTest is significantly reduced. Additionally, the inclusion of severe dysplasia enables the assessment of the efficacy of OraTest in a wide population of tobacco users and alcohol drinkers, thereby potentially broadening the post-approval market and marketing claims for the product.

While there can be no assurances that the clinical program will be
executed as proposed, Zila's proposal includes an amendment to the current phase III study and an additional study. The amendment to the current study reduces the additional patients from over 3,000 individuals requiring over 30,000 total visits to fewer than 1,000 additional patients requiring fewer than 3,000 visits. The study is targeted at screening previous oral cancer patients; a group that has a high incidence of new or recurrent oral cancer.

The additional study also includes severe dysplasia as a primary
endpoint, making it possible for the proposed program to assess the efficacy of OraTest in a much broader patient population of tobacco users and alcohol drinkers. The trial is targeted at the screening of such high-risk patients by dentists for referral to oral cancer experts. The trial is expected to require fewer than 4,000 of these readily available patients, generally requiring a single visit. The study is expected to require approximately a year for completion, once all investigator sites are active, but will include an interim analysis for the evaluation of the incidence of cancer and pre-cancer in order to determine the total number of patients required.

All clinical sites for both studies have been screened, selected
and are ready to receive the clinical protocols for IRB approval and
execute contracts so they can begin patient enrollment under the new program. Zila anticipates that the cost of the new program is well within its current cash and cash availability, even though the
remaining expense will be incurred primarily in late fiscal 2005 and
fiscal 2006.

"Much hard work remains to be done, but the Zila team is
passionately dedicated to the task of gaining regulatory approval and then delivering this oral cancer detection product. It is our goal to improve the survivability of oral cancer, first domestically and then worldwide," concluded Dr. Burkett.

Meanwhile, with the recent 510(k) clearance of Zila's ZTC swab
product, Zila is now able to explore new regulatory paths that could result in the possible clearance by the FDA of products containing ZTC. Zila is continuing to evaluate its options in this regard.