Panacea Pharmaceuticals, Inc. and Massachusetts Institute of Technology Achieve Major Milestone in HAAH Oncology Therapeutic Collaboration

Company Exercises Worldwide, Exclusive License Option Covering Developments

March 7, 2005 - Gaithersburg, Maryland - Panacea Pharmaceuticals, Inc. (the Company) announced today the achievement of major developmental milestones in the production of engineered fully-human antibodies for its HAAH Oncology Program under a collaboration with the Massachusetts Institute of Technology (MIT), as well as the exercising of a license option with MIT that provides Panacea exclusive, worldwide commercialization rights covering these developments.

The milestones pertain to the development of an engineered, all-human, single-chain antibody fragment against HAAH via a proprietary yeast display technology. Identified fragments were then back-engineered into full-sized and fully human IgG antibodies that demonstrated affinities at least ten times higher than previously identified murine monoclonal antibodies. Testing of these new molecules revealed that they bind specifically to cancer cells as determined by FACS analysis and immunohistochemistry, as well as stain cancer tissue but not normal adjacent tissue. Significantly, strong evidence supports that these new molecules upon binding to HAAH on the cellular surface internalize into the cancer cell. Further functional and biochemical analyses are being performed by the Company.

"The newly delivered antibodies represent a novel breakthrough and a major developmental achievement against a compelling cancer target," stated K. Dane Wittrup, PhD, the Joseph R. Mares Professor of Chemical Engineering & Bioengineering at MIT and Principal Investigator under the collaboration. "We look forward to continuing our collaboration with Panacea in the exploration of these antibodies as potentially potent anticancer molecules."

"The availability of fully-human antibodies directed-against HAAH has propelled our therapeutic program forward toward clinical development," stated Hossein A. Ghanbari, PhD, CEO and Chief Scientific Officer of the Company. "We're further excited by the outstanding characteristics of these molecules, such as increased affinity, which has the potential to yield even stronger efficacies in vivo than we have seen with their murine counterparts."

The Company has funded research at MIT since February 2001. Under the agreement, Panacea retained an option for exclusive worldwide commercialization rights to antibodies resulting from the collaboration, which it has now exercised. The relevant intellectual property is fully protected under a clearly defined patent application.

Background on Yeast Display Technology

The technology uses a yeast surface display method for engineering antibody fragments of extremely high affinity. The technology was first described in the September 2000 issue of Proceedings of the National Academy of Sciences (vol. 97, no. 20, pp. 10701-10705) entitled, "Directed evolution of antibody fragments with monovalent femtomolar antigen-binding affinity." This paper reported the development of single-chain antibody mutants that possess the highest monovalent ligand-binding affinity yet reported for an engineered protein by over two orders of magnitude.

Background on HAAH Oncology Program

The Company's HAAH Oncology Program is based on the enzyme human aspartyl (asparaginyl) Beta-hydroxylase (HAAH). HAAH over-expression has been detected in primary tumor tissue of more than twenty tumor types tested to date, including cancers of the pancreas, breast, ovary, liver, colon, prostate, lung, brain, and bile duct. HAAH over-expression has been detected in 99% of tumor specimens (greater than 1000) tested to date and has not been detected in normal or adjacent non-affected tissue.

Preclinical studies have indicated that over-expression of HAAH is sufficient to induce cellular transformation, to increase cell motility and invasiveness, and to establish tumor formation in animals. HAAH is over-expressed on the surface of cancer cells facilitating an antibody-based treatment approach. In in vitro studies, anti-HAAH antibodies have been shown to have a beneficial effect on tumor cells, causing them to revert to a more normal phenotype as measured by the inhibition of growth, motility, and invasiveness. Recent studies have investigated the efficacy of anti-HAAH antibodies in vivo and have indicated that the murine forms of these antibodies are capable of inhibiting tumor formation and growth in a xenograft model of primary human liver cancer. Furthermore these antibodies significantly reduced the number and size of metastases in a model of human colon cancer metastasis to the liver.

The Company is actively pursuing the development of anti-HAAH antibodies as novel agents for the treatment of cancer, with liver cancer as its first intended indication. The Company is exploring the utility of naked anti-HAAH antibodies, as well as antibody conjugates with various chemotherapeutic agents as lead candidates in this regard. In addition, the Company maintains an active diagnostic development program also based on anti-HAAH antibodies. The confluence of these two programs presents a fully integrated approach to cancer treatment and management.

About Panacea Pharmaceuticals, Inc.

Panacea Pharmaceuticals, Inc. is an emerging biopharmaceutical company focused on using functional genomics and proteomics to develop therapeutics and diagnostics for diseases with substantial unmet clinical need. The Company's product development focus is on novel proteins and biochemical pathways related to cellular regulation and cell cycle abnormalities in oncology as well as both acute and chronic neurodegenerative conditions such as hypoxia-induced cognitive impairment, Parkinson's disease, and Alzheimer's disease.

More information about the Company is available at http://www.PanaceaPharma.com.

Except for historical information presented in this press release, matters discussed herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the opinions and estimates of management only as of the date of this release and are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance, or achievements expressed or implied by such statements. Factors that might cause such a difference include, but are not limited to, uncertainties related to our access to capital, the progress, costs, and results of any clinical trials undertaken by us, progress of our research and development projects, and uncertainties related to whether our product candidates would ultimately achieve commercial success. We do not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events, or otherwise unless required by law.