Jaguar Animal Health and Napo Pharmaceuticals Announce Details for Proposed Merger

Merger Would Allow Jaguar to Recognize an Important Revenue Stream
from First-in-Class, Novel Mechanism of Action of the Anti-diarrheal

SAN FRANCISCO–(BUSINESS WIRE)–Jaguar Animal Health, Inc. (NASDAQ:JAGX) (“Jaguar”), an animal health
company focused on developing and commercializing first-in-class
gastrointestinal products for companion and production animals, foals,
and high value horses, announced today that it has signed a non-binding
letter of intent (“LOI”) with Napo Pharmaceuticals, Inc. (“Napo”)
potentially to merge the two companies. Napo focuses on human product
development and commercialization from plants used traditionally in
rainforest areas, and has provided Jaguar with exclusive worldwide
rights for veterinary applications to crofelemer and corresponding
rights to all related Napo technology.

The LOI contemplates a 3-to-1 Napo-to-Jaguar value ratio (inclusive only
of in-the-money convertible securities of Jaguar at the time a
definitive agreement is entered into) to calculate the relative
ownership of the merged entity. As of October 1, 2016, Napo owned 22.6%
of Jaguar’s outstanding shares of common stock. The LOI also outlines
capitalization requirements that Napo would be required to satisfy to
proceed with a potential merger.

A merger of the two companies, should it occur, would allow Jaguar to
recognize revenue from sales of crofelemer, under the brand name Mytesi
(formerly known as Fulyzaq®), an important Napo revenue
stream. Crofelemer was approved by the Food and Drug Administration
(“FDA”) in 2012 for the symptomatic relief of noninfectious diarrhea in
adults with HIV/AIDS on antiretroviral therapy. In May 2016, Napo
regained ownership of the New Drug Application (NDA) and commercial
rights for human applications of crofelemer (Mytesi) from
Valeant Pharmaceuticals International, which acquired those rights from
Salix Pharmaceuticals in April 2015. Napo is now recognizing the sales
of Mytesi, and will begin promotion of Mytesi to
HIV prescribers in October 2016.

Napo is continuing development of Mytesi for other
antidiarrheal indications, with investigational studies completed in
irritable bowel syndrome, cholera, traveler’s diarrhea, and in pediatric
patients, and two planned investigator-initiated trials of the product
in breast cancer patients suffering from chemotherapy-induced diarrhea.
Diarrhea is a common adverse event seen with chemotherapy agents in the
therapeutic classes of epidermal growth factor receptor (EGFR)
monoclonal antibodies and tyrosine kinase inhibitors (TKI). The
increased need for and use of these agents has made diarrhea one of the
most disabling issues for cancer patients. Crofelemer offers the
potential for an appropriate mechanism of action against this likely
secretory diarrhea and has prompted interest among physicians concerned
about this diarrheal symptom, stimulating the aforementioned
investigator-initiated trials.

Crofelemer is also the active pharmaceutical ingredient (API) in
Canalevia, Jaguar’s lead prescription drug product
candidate, intended for the treatment of various forms of diarrhea in
dogs. Jaguar is planning a multi-site pilot study of Canalevia
in dogs with malignancies treated with toceranib phosphate, another TKI,
with diarrhea as a frequent adverse effect. Dr. Roger Waltzman, a
human medical oncologist and experienced drug-development executive who
serves as Jaguar’s Chief Scientific Officer and a medical consultant to
Napo, added, “I expect that a merger of Napo and Jaguar would play a
significant and positive role in supporting the development of
crofelemer to address the problem of chemotherapy-induced diarrhea in
both humans and companion animals.”

Canalevia is under license for exclusive global veterinary
rights to Jaguar from Napo. Twelve members of Jaguar’s team contributed
to the successful development of crofelemer for human indication while
at Napo.

As previously announced, Napo and Jaguar have been engaged in
exploratory discussions since February 2016 regarding a potential merger
and/or other ways to cooperate with their respective business endeavors.

“We are confident that a merger will enable both companies, through a
joint management team, to maximize the potential value creation for
stockholders,” stated Lisa Conte, Jaguar’s president and CEO, as well as
the CEO and founder of Napo. “We believe both Jaguar and Napo will
benefit from the synergies and economies of scale that a merger should
create in manufacturing and commercialization of crofelemer for various
human and animal indications. In addition, we are confident that the
commercial readiness that Napo’s team would bring to a combined entity
would prove beneficial for Jaguar as it prepares for the launch of its
first prescription products—Canaleviafor canine diarrhea,
and Equileviafor equine gastric ulcers—if approved.”

The final pivotal field trial for Canalevia is ongoing for
acute diarrhea in dogs, the first planned indication for this Jaguar
drug product candidate. Jaguar expects to enroll approximately 200 dogs
in the study. Jaguar has completed enrollment for the dose determination
study for Equileviaand expects top line results to be
available next month. More than 100 horses have been enrolled in the

Karen Wright, Jaguar’s CFO and Treasurer, commented, “A merger will
allow Jaguar to benefit from Napo’s existing Mytesi revenue
stream and we believe aligns with Jaguar’s strategic plans, including
planning for the anticipated launch of our prescription product
candidates currently in clinical development.”

Jaguar is also announcing that Aspire Capital Fund, LLC (“Aspire”)
purchased 348,601 shares of Jaguar common stock, at a price per share of
$2.28, under the existing $15 million Common Stock Purchase Agreement
between Aspire and Jaguar.

The LOI is non-binding and any agreement is subject to the negotiation
and execution of a definitive transaction agreement, which may vary from
the terms set forth in the LOI. A final transaction also is anticipated
to be subject to material conditions, including, but not limited to, the
approval of: (i) the respective boards of directors of Jaguar and Napo,
(ii) the shareholders of each company, (iii) the Nasdaq Stock Market,
and (iv) other customary conditions for a transaction of this nature.
Accordingly, there can be no assurance that a definitive agreement will
be reached by the companies, or that any agreement will result in the
completion of a merger transaction.

About Crofelemer

Napo’s proprietary, patented gastrointestinal compound, crofelemer, is a
first-in-class anti-secretory agent isolated and purified from Croton
, a medicinal plant sustainably harvested under fair-trade
working conditions in several South American countries. Crofelemer
(trade name Mytesi) was approved in 2012 and is indicated
for the symptomatic relief of noninfectious diarrhea in adult patients
with HIV/AIDS on antiretroviral therapy. Crofelemer is in various stages
of clinical development by Napo for the following indications:

  • Crofelemer for diarrhea predominant irritable bowel syndrome (IBS-D),
    Phase 2,
  • Crofelemer for acute infectious diarrhea, including cholera, Phase 2,
  • Crofelemer for pediatric diarrhea, Phase 1, and
  • Crofelemer for chemotherapy-induced diarrhea, Phase 2.

About Mytesi

Mytesi (crofelemer 125mg delayed-release tablets) is an
antidiarrheal indicated for the symptomatic relief of noninfectious
diarrhea in adult patients with HIV/AIDS on antiretroviral therapy
(ART). Mytesi is not indicated for the treatment of
infectious diarrhea. Rule out infectious etiologies of diarrhea before
starting Mytesi. If infectious etiologies are not
considered, there is a risk that patients with infectious etiologies
will not receive the appropriate therapy and their disease may worsen.
In clinical studies, the most common adverse reactions occurring at a
rate greater than placebo were upper respiratory tract infection (5.7%),
bronchitis (3.9%), cough (3.5%), flatulence (3.1%), and increased
bilirubin (3.1%). Please see complete Prescribing Information
available at

About Napo Pharmaceuticals, Inc.

San Francisco-based Napo Pharmaceuticals, Inc. focuses on the
development and commercialization of proprietary pharmaceuticals for the
global marketplace in collaboration with local partners.

For more information, please visit

About Jaguar Animal Health, Inc.

Jaguar Animal Health, Inc. is an animal health company focused on
developing and commercializing first-in-class gastrointestinal products
for companion and production animals, foals, and high value horses.
Canalevia is Jaguar’s lead prescription drug product
candidate, intended for the treatment of various forms of diarrhea in
dogs. Equilevia (formerly referred to as SB-300) is Jaguar’s
prescription drug product candidate for the treatment of
gastrointestinal ulcers in horses. Canalevia and Equilevia
contain ingredients isolated and purified from the Croton lechleri
tree, which is sustainably harvested. Neonorm Calf and
Neonorm Foal are the Company’s lead non-prescription
products. Neonorm is a standardized botanical extract
derived from the Croton lechleri tree. Canalevia and
Neonorm are distinct products that act at the same last step
in a physiological pathway generally present in mammals. Jaguar has nine
active investigational new animal drug applications, or INADs, filed
with the FDA and intends to develop species-specific formulations of
Neonorm in six additional target species, formulations of
Equilevia in horses, and Canalevia for cats and

For more information, please visit

Important Additional Information will be Filed with the SEC

This press release may be deemed solicitation material regarding the
potential merger contemplated by the LOI. In connection with a potential
merger with Napo, Jaguar currently intends to file with the Securities
and Exchange Commission (the “SEC”) a Registration Statement on Form S-4
that will include a proxy solicitation. Jaguar also plans to file other
relevant materials with the SEC. Stockholders of Jaguar and Napo are
urged to read the proxy solicitation/prospectus contained in the
Registration Statement when it becomes available and any other relevant
materials filed with the SEC because these materials will contain
important information about the potential merger.
Once available,
these materials will be made available to the stockholders of Jaguar and
Napo at no expense to them. The Registration Statement, proxy
statement/prospectus and other relevant materials, including any
documents incorporated by reference therein, once available, may be
obtained free of charge at the SEC’s website at
or from Jaguar at
or by emailing

Jaguar and certain of its directors and executive officers may be deemed
to be participants in the solicitation of proxies in connection with the
potential merger. Information about the executive officers and directors
of Jaguar is set forth in Jaguar’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2015 as filed with the SEC on March 29,
2016 and Definitive Proxy Statement for the 2016 Annual Meeting of
Stockholders of Jaguar filed with the SEC on April 29, 2016.

Forward-Looking Statements

Certain statements in this press release constitute “forward-looking
statements” within the meaning of section 27A of the Securities Act of
1933 and section 21E of the Securities Exchange Act of 1934. These
include statements regarding the proposed merger between Jaguar and
Napo, that a merger would allow Jaguar to recognize an important Napo
revenue stream, Napo’s ability to meet certain capitalization
requirements that would be required for a merger to occur, the belief
that a combination of the two companies would enable both companies to
maximize the potential value creation for stockholders, the belief that
both Jaguar and Napo would benefit from the synergies and economies of
scale that a merger should allow related to the manufacture and ongoing
commercialization of crofelemer for various human and animal
indications, the belief that the merged entity would be well positioned
to accelerate the development of crofelemer for both human and
veterinary applications, the belief that the commercial readiness that
Napo’s team would bring to a combined entity would prove beneficial for
Jaguar as Jaguar prepares for the launch of its first prescription
products, if approved, for canine diarrhea (Canalevia) and
equine gastric ulcers (Equilevia), Jaguar’s
expectation that top line results from its dose determination study for
Equileviawill be available next month, the belief that a
merger would align with Jaguar’s strategic plans, Jaguar’s plan to
develop formulations of Equilevia in horses and
species-specific formulations of Neonorm in additional
target species, and Jaguar’s plan to develop formulations of Canalevia
for cats and dogs. In some cases, you can identify forward-looking
statements by terms such as “may,” “will,” “should,” “expect,” “plan,”
“aim,” “anticipate,” “could,” “intend,” “target,” “project,”
“contemplate,” “believe,” “estimate,” “predict,” “potential” or
“continue” or the negative of these terms or other similar expressions.
The forward-looking statements in this release are only predictions.
Jaguar has based these forward-looking statements largely on its current
expectations and projections about future events. These forward-looking
statements speak only as of the date of this release and are subject to
a number of risks, uncertainties and assumptions, some of which cannot
be predicted or quantified and some of which are beyond Jaguar’s
control. Except as required by applicable law, Jaguar does not plan to
publicly update or revise any forward-looking statements contained
herein, whether as a result of any new information, future events,
changed circumstances or otherwise.



KCSA Strategic Communications
Garth Russell, 212-896-1250