Panacea Pharmaceuticals, Inc. Announces Formation of Proteus Diagnostics, Inc. to Develop and Commercialize Cancer Diagnostic Products

Proteus will focus on developing in vitro diagnostics including pharmacogenomic and pharmacoproteomic tools for cancer patient management

Gaithersburg, MD May 13, 2003 -- Panacea Pharmaceuticals, Inc. announced today the formation of a wholly-owned subsidiary, Proteus Diagnostics, Inc., which will focus on developing and commercializing proprietary in vitro diagnostics including pharmacogenomic and pharmacoproteomic tools for cancer detection, diagnosis, prognosis, treatment selection, and follow-up.

Products developed by Proteus will be based on the enzyme human aspartyl (asparaginyl) beta-hydroxylase or HAAH. Panacea obtained exclusive, worldwide rights to all therapeutic and diagnostic uses of HAAH through License and Collaborative Research Agreements with Rhode Island Hospital/Brown University in September 1999.

Background on HAAH Oncology Program

HAAH over-expression has been detected in more than 99% of nearly 1000 human tumor specimens from all 18 of the cancers tested to date and has not been detected in normal or unaffected, adjacent tissue. Among the cancers tested are lung, liver, colon and rectum, pancreas, prostate, ovary, bile duct, brain, and breast, which collectively account for more than 75% of cancer deaths worldwide. For most of these malignancies, accurate and early diagnosis followed by therapy offer the only chance for effective treatment.

Recent studies have indicated that over-expression of HAAH induces cellular transformation, increases cell motility and invasiveness, and causes tumor formation in experimental animals.  Even partial inhibition of HAAH expression by antisense or antibodies appears to have a beneficial effect on tumor cells both in vitro and in vivo, causing them to revert to a more normal phenotype as measured by the inhibition of growth, motility, and invasiveness. HAAH is over-expressed on the surface of cancer cells, potentially facilitating detection, drug delivery, and enzyme inhibition.

In a survey of gene expression in more than 4000 human tissues, ASPH (the gene that codes for HAAH) was found to be significantly up-regulated in 29 different types of cancer from 11 organs and tissues. Among non-cancer pathologic conditions, only one exhibited up-regulation.

Panacea signed a Collaboration and License Agreement with MedImmune, Inc. in early 2002 to discover, develop, and commercialize therapeutic agents for the prevention or treatment of human disease based on Panaceas HAAH technology or its pathways. Panacea has retained all rights to the development of diagnostic products based on HAAH.

Panacea has already developed several in vitro methods for detection and quantitation of HAAH in tissues and bodily fluids. The diagnostic methods that have been developed include primary tests such as immunohistochemistry, immunocytochemistry and enzyme linked immunosorbent assay (ELISA); secondary or confirmatory tests including Western blot and sandwich ELISA; and quantitative gene expression analysis to measure up-regulation of the HAAH gene. Panacea has also initiated efforts to develop its antibodies against HAAH as imaging agents for use in nuclear medicine.

Diagnostic products and services are playing an increasingly critical and prominent role in oncology from primary screening to long-term follow-up after treatment, stated Kasra Ghanbari, President of Panacea. The large number of cancers that over-express HAAH, the large proportion of cancer cases in which HAAH is detected, and the robustness of the diagnostic methods we are developing create a virtually unique opportunity to build an integrated cancer diagnostic platform that addresses many components of the life-cycle of disease management in oncology. Proteus intends to maintain a tight focus on taking a single family of products based on a common underlying technology from proof of principal through regulatory approval and commercialization.

Cancer Diagnostic Market

The cancer diagnostic market includes both services and products. The market for cancer diagnostic services comprises tests performed on patient specimens (in vitro tests) including pathologic examinations, clinical diagnostics conducted in independent or hospital laboratories, and high complexity tests performed in reference laboratories as well as radiology (or in vivo) examinations. The global market for in vitro cancer diagnostic services in 2000 was estimated to be in excess of $1 billion. The product component of the cancer diagnostics market, such as reagents and test kits sold to laboratories and physicians, represents a market approaching $500 million in the U.S. alone. The market in 2000 for in vivo cancer imaging agents used in radiology and nuclear medicine was estimated at greater than $250 million. Both the in vitro and in vivo cancer diagnostic markets are growing at approximately 25% per year.

About Proteus Diagnostics, Inc.

Proteus Diagnostics, Inc. will be developing proprietary in vitro diagnostics including pharmacogenomic and pharmacoproteomic tools for cancer detection, diagnosis, prognosis, treatment selection, and follow-up. The Company will target the enzyme human aspartyl (asparaginyl) beta-hydroxylase or HAAH, which has been detected in 18 cancers tested to date including lung, liver, colon and rectum, pancreas, prostate, ovary, bile duct, brain, and breast, which collectively account for more than 75% of cancer deaths worldwide. For most of these malignancies, accurate and early diagnosis followed by therapy offer the only chance for effective treatment. Proteus Diagnostics, Inc. is a wholly-owned subsidiary of Panacea Pharmaceuticals, Inc.

More information will soon be available at http://www.ProteusDx.com.

About Panacea Pharmaceuticals, Inc.

Panacea Pharmaceuticals, Inc. is an emerging biopharmaceutical company focused on utilizing functional genomics and proteomics to develop therapeutics and diagnostics for diseases with substantial unmet clinical need. The Companys product development focus is on novel proteins and biochemical pathways related to cellular regulation and cell cycle abnormalities in oncology as well as neurodegenerative diseases, particularly Alzheimers disease and Parkinsons disease.

More information 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.

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