The link between diet and aging in mammals was established nearly 70 years ago when researchers at Cornell University discovered that restricting calorie intake in rats could significantly extend lifespan. Since then, calorie restriction has been shown to extend lifespan in numerous species, including mammals such as mice and rats. A number of unpublished preliminary studies have produced similar results in primates. Generally, these studies have demonstrated that reduction in calories by approximately 40% can extend lifespan by up to 50% as compared with animals fed a standard diet. In addition, studies have shown that resveratrol mimics certain effects of calorie restriction in multiple species.

Until the past few years, findings on the beneficial effects of calorie restriction were of academic interest only. As a practical matter, very few people are willing to discipline themselves to reduce their calorie intake by a significant degree for any extended period of time. However, beginning in the late 1990s, scientists discovered a set of enzymes, sirtuins, that appear to regulate certain beneficial effects of calorie restriction. The first discovery was a gene in yeast that is the counterpart to the human gene SIRT1. Subsequently, scientists discovered that SIRT1 appears to affect the aging process in mammals.

In 2003, an article in Nature demonstrated that resveratrol could activate the SIRT1 counterpart in yeast and increase lifespan without requiring a reduction in caloric intake. In 2006, another study published in Nature extended this finding to mammals by showing that resveratrol extends the lifespan of mice which are placed on a high-fat diet, when compared with mice on a high-fat diet who were not given resveratrol.

The Company has also increased levels of resveratrol that reaches the blood by optimizing particle size. Using SRT501 in mice, the Company is able to achieve an average of almost four times higher levels of resveratrol in the blood compared with administration of unformulated resveratrol after adjusting for differences in dosage levels.

MELAS (Mitochondrial Encephalopathy, Lactic Acidosis, and Stroke-like episodes), an inherited disorder, is caused by a mutation in the DNA of mitochondria. The Company has filed an application with European regulatory authorities to commence a Phase 1b human clinical trial in MELAS using SRT501 and expect to initiate this trial by the end of 2007 in order to test the primary endpoints of safety and PK of SRT501 in this patient population. SRT501 will be administered to a group of 15 patients once daily for three months and an additional group of 15 patients will receive a placebo.

The Company is pursuing a program to discover and develop novel, orally available, small molecule NCEs that activate SIRT1 and have increased potency, specificity and bioavailability compared to SRT501. The Company has studied several of these next generation SIRT1 activators in a preclinical model of Type 2 Diabetes in mice.

The Company has successfully completed preclinical studies of these NCEs that measure solubility and PK. The Company has currently selected one of these NCEs as an early development candidate.

Sirtuins are a recently discovered family of enzymes consisting of seven members, SIRT1 through SIRT7. The Company has screened activators and inhibitors for sirtuins other than SIRT1.

Research and development expense for the year ended December 31, 2006 was $14.2 million compared to $7.1 million for the year ended December 31, 2005.

General and administrative expense for the year ended December 31, 2006 was $4.3 million compared to $3.9 million for the year ended December 31, 2005.

Interest income increased to $2.4 million for the year ended December 31, 2006 from $1.1 million for the year ended December 31, 2005.

Interest expense was $878,000 for the year ended December 31, 2006. The Company had no interest expense in the year ended December 31, 2005.