AVANT has developed a novel two-dose, oral vaccine against rotavirus in collaboration with GlaxoSmithKline (Glaxo). Glaxo completed global Phase 3 clinical trials of the vaccine, called Rotarix®, in the fourth quarter of 2004. Rotarix® gained its first marketing approval in Mexico in July 2004 and has since been approved in over 90 countries worldwide, including the European Union. In May 2005, AVANT entered into an agreement whereby an affiliate of Paul Royalty Fund II, L.P. (“PRF”) purchased an interest in the net royalties AVANT will receive on worldwide sales of Rotarix®. AVANT received $50 million in 2005-2006 through this agreement and remaining milestone payments from PRF to AVANT include between $10 and $9 million upon product launch in the United States, depending on date of launch. AVANT also retains upside in future Rotarix® royalty revenues depending on its commercial success. Rotarix® is licensed by AVANT to Glaxo.

AVANT conducted a Phase 2 human clinical study in 215 infants at four U.S. medical centers, demonstrating the ability to protect approximately 90% of vaccinated infants from rotavirus disease. Moreover, the vaccine was shown to be helpful in preventing rotavirus disease in young children for at least two years following administration. Examination of the safety data revealed only mild transient symptoms of rotavirus disease in a small number of infants. The results of this study were published in Lancet in July 1999. In 1999, Glaxo assumed clinical and process development of the rotavirus vaccine. Glaxo has since completed clinical studies in over 85,000 subjects in Europe, Latin America and Southeast Asia.

Rotavirus is the most common cause of severe diarrhea and dehydration in infants and young children, especially in developing countries. More than 125 million cases of diarrhea each year are attributed to rotavirus, which causes an estimated 25% of all deaths due to diarrheal disease and 6% of all deaths in children under the age of five. The World Health Organization has given the development of a safe and effective vaccine against rotavirus infection a high priority for improving global health.

In the United States, rotavirus affects approximately 80% of the approximately 4 million infants born each year. On an annual basis, about 500,000 infants require medical attention and 50,000 are hospitalized. The economic burden from rotavirus disease in the United States is estimated at over $1 billion in direct medical and indirect societal costs.