June 21, 2006– Gaithersburg, Maryland – Panacea Pharmaceuticals, Inc., today announced the award of a Phase II Small Business Innovation Research (SBIR) grant of $880,000 from the National Heart, Lung and Blood Institute of the U.S. National Institutes of Health (NIH) to complete preclinical studies on a novel drug to treat ischemic stroke. Results from a Phase I study confirmed that a novel class of alpha (N) - heterocyclic carboxaldehyde thiosemicarbazones (HCTs), demonstrates a powerful neuroprotective effect in animal stroke models. Panacea has identified a lead compound, PAN-811, and anticipates initiation of clinical trials in late 2007.

“We are excited about the potential of PAN-811 as a neuroprotective agent,” commented Hossein Ghanbari, Ph.D., CEO and Chief Scientific Officer at Panacea Pharmaceuticals. “The safety of PAN-811 in humans has already been demonstrated, and we are optimistic about its potential to significantly improve neurologic function in individuals who have suffered a stroke. With no currently available neuroprotective treatment alternatives for these patients, PAN-811 could significantly improve outcomes and reduce the risk of paralysis, loss of speech, and other complications associated with stroke.”

About Stroke

A stroke occurs when the blood supply to part of the brain is suddenly interrupted or when a blood vessel in the brain bursts. Brain cells die when they no longer receive oxygen and nutrients from the blood or there is sudden bleeding into or around the brain. The symptoms of a stroke include sudden numbness or weakness, especially on one side of the body; sudden confusion or trouble speaking or understanding speech; sudden trouble seeing in one or both eyes; sudden trouble with walking, dizziness, or loss of balance or coordination; or sudden severe headache with no known cause. There are two forms of stroke: ischemic - blockage of a blood vessel supplying the brain, and hemorrhagic - bleeding into or around the brain; 80 percent of strokes are ischemic. Stroke is the third leading cause of death in the U.S., a major cause of long-term disability, and a significant burden on public health worldwide. Currently, more than 4 million people in the U.S are living with the consequences of stroke. Ischemia/hypoxia as a result of stroke is a significant contributor to neurodegeneration, manifest as paralysis, loss of speech, memory loss, and other neurologic symptoms.

About PAN-811

PAN-811 is a small-molecule that fully blocks hypoxic and ischemic neuronal cell death at a dose of 1 µM in vitro, and reduces infarct volume by up to 59% in the middle cerebral artery occlusion rat model of stroke. It manifests dual mechanistic functions including both Ca2+ -chelation and free radical-scavenging (Zhi-Gang Jian, X.C., et.al., A multifunctional cytoprotective agent that reduces neurodegeneration after ischemia, PNAS, vol. 103, No. 5, 1581-1586, 2006). The toxicology and pharmacokinetics of the drug candidate have been demonstrated and it is currently in Phase II clinical trials at NIH for a cancer indication. Thus, at the end of the Phase II SBIR study, Panacea expects to be in a position to begin a Phase Ib human clinical trial to assess PAN-811 as a the treatment of transient ischemic stroke.

About Panacea’s Oncology Platform

Panacea is also pursuing the development of antibodies directed against Human aspartyl (asparaginyl) ß-hydroxylase (HAAH) as novel agents for the treatment of cancer, with liver cancer as its first intended indication. The Company is exploring both naked anti-HAAH antibodies, as well as antibody conjugates with various chemotherapeutic agents as lead candidates. Panacea is also pursuing the development of diagnostic products based on anti-HAAH antibodies. A proprietary blood-based assay has shown high sensitivity and specificity in the detection of a range of cancers and responsiveness to chemotherapy, thus allowing utility in the diagnosis and therapeutic management of disease. Initial targets for the HAAH diagnostic products include prostate and liver cancers, along with tests to determine responsiveness to a current therapy of choice in patients with Chronic Myelogenous Leukemia. Panacea anticipates the initiation of its diagnostic testing services later in 2006.

About Panacea Pharmaceuticals, Inc.

Panacea Pharmaceuticals, Inc. is a privately-held biopharmaceutical company focused on the development and commercialization of therapeutics and diagnostics for diseases with substantial, unmet clinical needs. The Company’s product development strategy is based on novel therapeutic agents and approaches for cancer treatment, and acute and chronic neurodegenerative conditions, such as hypoxia-induced neurological insult, Parkinson’s disease, and Alzheimer’s disease. Panacea’s neurodegenerative and oncology technologies are each covered by one or more patents or patent applications.

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.