Panacos Pharmaceuticals, Inc. (PANC)

‘Panacos cooling off’ – Panacos Pharmaceuticals, Inc., a development stage biotechnology company, engages in the discovery and development of small molecule oral drugs to treat human immunodeficiency virus (HIV) and other major human viral diseases. Its principal product, Beviriment, under Phase II clinical trials, is a new class of oral HIV therapeutic called maturation inhibitor.

As the company has no drug in the market, its stock performance will be solely driven by the results of the clinical research studies conducted on its flagship investigational drug Bevirimat for the treatment of HIV. This drug is currently undergoing phase II b trial. The result of the first cohort of a Phase II b study on Beviriment that released on December 19, 2006 has been below expectation, negatively impacting the stock price of the company. All eyes would now be set on the second and third cohorts of the trial, which are expected in the first and second quarters of 2007, respectively. Following the successful completion Phase II b trial the company intends to submit NDA for initial approval for the commencement of the Phase III trial in 2007 and finally seek marketing approval in 2009. Moreover, compounds like HIV Fusion Inhibitor, which are currently in preclinical stage, are expected to move into human clinical testing in 2007.

The market opportunity for HIV treatments is immense as 38.6 million people worldwide were living with HIV at the end of 2005. Going forward Beviriment will face stiff competition for existing drugs like Bristol-Myers Squibb’s Reyataz for the treatment of HIV, a potential block buster. We believe we must exercise caution following the below expected result of the first cohort of Phase II b for drug Beviriment.