Panacos Pharmaceuticals, Inc. (Nasdaq:PANC), a biotechnology company dedicated to developing the next generation of antiviral therapeutic products, today announced that it has initiated a Phase 1 clinical trial of PA-1050040 (also referred to as "PA-040"), an investigational maturation inhibitor for the treatment of HIV.

This Phase 1 study is designed to evaluate the safety and pharmacokinetic properties of PA-040 in humans after a single dose. Maturation inhibition is a new target discovered by Panacos scientists and their academic collaborators. The first-in-class HIV maturation inhibitor, bevirimat (PA-457), has shown significant anti-HIV activity in HIV patients and is in Phase 2b clinical testing. The Company's second-generation maturation inhibitor program is designed to develop chemical analogs of bevirimat with distinct pharmacological properties including the potential to have activity against HIV strains resistant to bevirimat, should these resistant strains appear in the clinic in the future.

In vitro studies with PA-040 have shown that the compound has a lower level of binding to human serum proteins than bevirimat, which may result in greater levels of free drug in patients dosed with the compound, and thus the potential ability to have activity against HIV strains that exhibit partial bevirimat resistance. Furthermore, PA-040 retains wild-type activity against one of two bevirimat-resistant HIV isolates that represent the most-frequently mutated amino acids found by in vitro resistance-selection experiments performed to date.

"The initiation of clinical testing with our second maturation inhibitor is a major milestone for Panacos as we build our maturation inhibitor franchise," said Graham Allaway, Ph.D., Panacos' President and Chief Operating Officer. "Having already demonstrated proof of concept of maturation inhibition with bevirimat, we plan to test several second generation compounds, including PA-040, in single dose testing and then select the optimum compound to take into multiple dose human studies."

About Panacos

Panacos is developing the next generation of anti-infective products through discovery and development of small molecule oral drugs for the treatment of HIV and other major human viral diseases. HIV infects approximately 1.7 million people in North America and Western Europe and approximately 40 million people worldwide. Approximately 650,000 patients are treated annually for HIV in the United States and Western Europe. Resistance to currently available drugs is one of the most pressing problems in HIV therapy and the leading cause of treatment failure. Panacos' proprietary discovery technologies are designed to combat resistance by focusing on novel targets in the virus life cycle, including virus maturation and virus fusion.

Panacos' lead candidate, bevirimat (PA-457), is the first in a new class of oral HIV therapeutics under development called maturation inhibitors, discovered by Panacos scientists and their academic collaborators. Based on its novel mechanism of action, bevirimat is designed to have potent activity against a broad range of HIV strains, including those that are resistant to existing classes of drugs. The Company has completed seven clinical studies of bevirimat in over 300 subjects, showing significant reductions in viral load in HIV-infected subjects and a promising safety profile, and is currently in Phase 2b clinical trials. The Company also has a second-generation program in maturation inhibition in clinical testing and a research program to develop oral fusion inhibitors.

Except for the historical information contained herein, statements made herein, including those relating to the clinical development of bevirimat and PA-040, or the development of other maturation inhibitors or oral fusion inhibitors, the potential results of treatment with bevirimat or other maturation inhibitors, future clinical trials and clinical practice are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks as set forth in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and subsequent reports on Form 10-Q. These risks and uncertainties could cause actual results to differ materially from any forward-looking statements made herein. The Company undertakes no obligation to publicly update forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable law.