This study is being conducted to evaluate the safety and efficacy of treatment with CTP-499 for 24 weeks in patients with chronic kidney disease, Type 2 diabetic nephropathy and who are currently receiving treatment with an angiotensin converting enzyme inhibitor (ACEI) and/or angiotensin II receptor blocker (ARB).

There are two parts to this study, each part includes double-blind treatment with either CTP-499 or placebo. Part 1 will evaluate the safety and efficacy of treatment with CTP-499 twice daily for 24 weeks. Part 2 will evaluate the effects of longer term dosing for an additional 24 weeks. Following Part 2, patients will be allowed to participate in an Open Label extension with CTP-499 for a period of an additional 48 weeks.

Inclusion Criteria:

• Male or female 18 years or older
• Patient diagnosed with Type 2 diabetes mellitus and chronic kidney disease
• On a stable regimen of ACE inhibitors and/or ARB drugs for a minimum of 4 weeks
• Not expected to start dialysis for one year
• Patient has blood pressure less than or equal to 145/90 mm Hg
• Patient has UACR greater than or equal to 200 mg/g if male and 300 mg/g if female but not more than 5000 mg/g
• Patient has glycosylated hemoglobin A1c less than or equal to 10.5%

Exclusion Criteria:

• Patient has concurrent condition such as uncontrolled inflammatory disease, acute infection or other unstable illnesses
• Patient has a history of allergy or sensitivity to pentoxifylline or methylxanthines
• Patient has acute, active and/or unstable renal impairment or has been hospitalized for acute renal failure within the previous year
• Patient has active malignancy or history of neoplastic disease
• Patient has a QTc interval greater than 450 milliseconds
• Patient has ALT or AST greater than 3 times the upper limit of normal or a potassium greater than or equal to 5.5mEq/L at screening
• Patient is breast feeding or pregnant