Hollis-Eden Pharmaceuticals Announces Filing of IND for Phase I Clinical Trial with Next-Generation Drug Candidate HE3286 in Metabolic Disorders.

-- Successful Safety Study Would Also Support Potential Phase II Study with HE3286 in Autoimmune Disorders under Separate IND Filing --

SAN DIEGO -- Hollis-Eden Pharmaceuticals, Inc. (NASDAQ:HEPH) announced that it is filing today an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) to begin a Phase I clinical trial with its next-generation drug candidate HE3286 for the treatment of metabolic disorders, which include diabetes, obesity and dyslipidemia. The Phase I trial program, designed to assess the safety of HE3286 in healthy volunteers, could support both a Phase II study in type 2 diabetes patients, as well as a Phase II study in rheumatoid arthritis patients under a separate IND the Company plans to file for autoimmune disorders later this year. In preclinical studies, HE3286 has been shown to regulate signaling pathways of inflammation common to both metabolic and autoimmune disorders.

As previously reported at a scientific conference on diabetes, HE3286 produced glucose lowering activity and increased insulin sensitivity when administered orally in preclinical models of type 2 diabetes. The Company's findings suggest that HE3286 may be the first in a new class of insulin sensitizers with a novel mechanism of action, since it appears to regulate the pro-inflammatory NF-kappa B pathway without acting on the PPARgamma receptor, which is the target of insulin sensitizing drugs currently prescribed today. By working through this new pathway, HE3286 appears in preclinical studies to avoid the undesirable side effect of weight gain commonly seen with these existing therapies.

HE3286 is a derivative of an endogenous hormone the Company believes is central to regulating glucose metabolism. Studies in rats fed with a diet containing the parent hormone of HE3286 showed a reduction in the expression levels of certain genes encoding key enzymes involved in glucose and cortisol metabolism (e.g., PEPCK or 11beta-HSD1), an effect which should lessen the severity or impact of type 2 diabetes on insulin resistance. Through the application of medicinal chemistry, Hollis-Eden has developed a chemical analog of that hormone, HE3286, a compound with a more pharmaceutically suitable profile.

In preclinical studies conducted to date, HE3286 administered orally to genetically obese mice prone to diabetes (db/db model), significantly (p<0.02) suppressed after 10 days the progression of hyperglycemia typically observed in these animals. In an animal model of diet-induced insulin resistance, HE3286 significantly (p<0.01) improved glucose handling in an oral glucose tolerance test (OGTT) when compared to the control group, and at the end of the study was superior (p<0.003) to the active control (rosiglitazone). In addition, HE3286 demonstrated a statistically significant (p<0.006) reduction in fasting glucose values when compared to controls at days 14 and 29 of the study, and the activity was similar to the active control (rosiglitazone) (p<0.05).

Additional evidence of improvement in glucose disposal by HE3286 comes from a hyperinsulinemic/euglycemic clamp study, widely acknowledged as the "gold standard" model to measure insulin sensitivity in vivo. In this study, administration of HE3286 to diabetic db/db mice markedly increased the glucose infusion rate (GIR) required to maintain normal levels of blood glucose following an intravenous infusion of a high dose of insulin. The GIR is a key parameter used to determine the degree of insulin sensitivity in vivo, and its increase following treatment with HE3286 indicates that this compound acts physiologically as an insulin sensitizer in the diabetic state.

In parallel experiments designed to elucidate the possible mechanism of action of HE3286 to produce these metabolic effects, it was found that HE3286 regulates the pro-inflammatory NF-kappa B pathway in cultured mouse macrophages or human monocytes. This may be an important finding because over the last several years reports in the scientific literature suggest that chronic activation of inflammatory pathways such as NF-kappa B can also lead to insulin resistance and may play a role in the progression towards type 2 diabetes.

HE3286 has also demonstrated a dramatic benefit in rodent models of both initial-onset and established rheumatoid arthritis. Potential mechanisms of action for HE3286 in this indication include regulation of NF-kappa B and increasing the production of regulatory T cells, or Treg cells. Treg cells play a key role in keeping the immune system from attacking the body itself, and are being cited increasingly in the medical literature as therapeutic targets in a range of diseases and disorders including autoimmune conditions.

"Filing an IND for HE3286 is a significant milestone for Hollis-Eden and for our development program targeting metabolism," stated Richard B. Hollis, Chairman and Chief Executive Officer of Hollis-Eden. "HE3286 represents a potential first-in-class treatment with a new class of hormones to control glucose metabolism in type 2 diabetes. The role that hormones play in metabolism is well documented in the scientific literature, and HE3286 is an analog of a naturally occurring parent hormone believed to play a fundamental role in regulating glucose metabolism. Given this biological lineage, along with the preclinical data we have generated to date with HE3286, we are optimistic about the compound's potential as a novel therapy for the treatment of type 2 diabetes and possibly other metabolic disorders. In addition, based on the role of inflammation common to both metabolic and autoimmune disorders, we believe that HE3286 offers potential therapeutic benefit in autoimmune conditions such as rheumatoid arthritis given its demonstrated ability to simultaneously regulate signaling pathways central to inflammation and immune function.

"Advancing HE3286 to this stage of development further demonstrates the progress we are making with our next-generation drug development program," added Hollis. "In addition to our expectation of initiating clinical development of HE3286 in metabolic disorders, we plan to file an IND for HE3286 for autoimmune disorders later this year, as well as an IND for our cancer drug candidate HE3235 in late 2007 or early 2008. At the same time, we are profiling additional follow-on oral next-generation compounds for a variety of diseases and disorders. Through these efforts, we are translating our proprietary class of adrenal steroid hormones into potential pharmaceutical products with competitive advantages in indications that have well-defined clinical paths and large, well-established markets."

About Diabetes

Diabetes, a disease characterized by high levels of glucose in the blood, is reaching epidemic proportions in the U.S. and other developed countries. Approximately 20 million Americans and over 160 million people worldwide have type 2 diabetes. As a result of an aging population and a rise in obesity rates, a common risk factor in this disease, the prevalence of type 2 diabetes is increasing rapidly.

In diabetes, the body does not produce sufficient quantities of, or properly use, insulin. Insulin is a hormone needed to carry glucose from the blood into cells, where it is converted to energy necessary for proper cellular function. When insulin is not available in sufficient quantities or does not function properly, glucose levels in the blood become elevated, leading to a variety of severe medical conditions.

Included among the therapeutic approaches to type 2 diabetes are drugs designed to increase insulin production by the pancreas, drugs to reduce glucose production by the liver, and drugs to increase the body's sensitivity to insulin, thereby improving glucose disposal by the bloodstream. Of these, insulin sensitizers represent the largest class of oral anti-diabetic agents, representing 48% of the annual sales in the $12 billion per year global oral anti-diabetic market. Currently approved insulin sensitizers, known as glitazones, appear to act primarily through the activation of the nuclear hormone receptor known as PPARgamma. While these agents can lower blood glucose, they have been associated with undesirable side effects such as weight gain and edema.

Hollis-Eden Pharmaceuticals

Hollis-Eden Pharmaceuticals, Inc. is a world leader in the development of a proprietary class of adrenal steroid hormones as novel pharmaceuticals for human health. Through its Hormonal Signaling Technology Platform, Hollis-Eden is developing a new series of small molecule compounds that are metabolites or synthetic analogs of endogenous hormones derived by the adrenal glands from the body's most abundant circulating steroid. These steroid hormones, designed to restore the biological activity of cellular signaling pathways disrupted by disease and aging, have been demonstrated in humans to possess several properties with potential therapeutic benefit -- they regulate innate and adaptive immunity, reduce nonproductive inflammation and stimulate cell proliferation. The Company's clinical drug development candidates include HE3286, a next-generation compound being prepared for clinical trials in treating type 2 diabetes and potentially rheumatoid arthritis. A second next-generation candidate, HE3235, has been selected for clinical development in cancer. In addition to these clinical development candidates, Hollis-Eden has an active research program that is generating additional new clinical leads that are being further evaluated in preclinical models of a number of different diseases. For more information on Hollis-Eden, visit the Company's website at www.holliseden.com.

This press release contains forward-looking statements within the meaning of the federal securities laws concerning, among other things, the potential and prospects of the Company's drug discovery program and its drug candidates. Any statement included in this press release that are not a description of historical facts are forward-looking statements that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause the Company's actual results to differ materially from historical results or those expressed or implied by such forward-looking statements. Such statements are subject to certain risks and uncertainties inherent in the Company's business, including, but not limited to: the ability to complete preclinical and clinical trials successfully and within specified timelines, if at all; the ability to obtain regulatory approval for HE3286, HE3235 or any other investigational drug candidate; the Company's future capital needs; the Company's ability to obtain additional funding; the ability of the Company to protect its intellectual property rights and to not infringe the intellectual property rights of others; the development of competitive products by other companies; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company undertakes no obligation to update or revise the information contained in this press release as a result of new information, future events or circumstances arising after the date of this press release.