Panacea Pharmaceuticals, Inc. Raises $7 Million in Series C Round of Financing

July 8, 2005– Gaithersburg, Maryland – PR Newswire – Panacea Pharmaceuticals, Inc., a company focused on developing therapeutic and diagnostic products for cancer, announced today that it has closed its Series C Private Placement raising approximately $7 million. Participants in the round included Mitsubishi Corporation Life Sciences Venture, Olympus, JSR, Shin-Etsu Chemical, Fuji Photo Film, Dai Nippon Printing, and Tokio Marine & Nichido Fire Insurance, among others. The investments were secured through the assistance of the Cosmos Alliance [http://www.CosmosAlliance.com].

Proceeds from the offering will be used to move potential products within the Company’s HAAH Oncology Program towards clinical-stage development.

“We’re excited by the continued strength of our findings in the HAAH cancer program. These include the recent milestone we achieved under our antibody development collaboration with MIT, as well as positive efficacy studies in animal models of human primary liver cancer and metastatic human colon cancer,” stated Hossein A. Ghanbari, PhD, CEO and Chief Scientific Officer of the Company. “Securing these funds through the participation of excellent investors, as well as diversifying our investor base, allows us to aggressively pursue our product development activities and positions us for subsequent raising of capital upon the achievement of further milestones.”

Panacea recently announced the development of an engineered, all-human, single-chain antibody fragment against HAAH via a proprietary yeast display technology at the Massachusetts Institute of Technology. These molecules have already demonstrated outstanding characteristics and are being further explored as anti-cancer candidates subsequent to their back engineering to full antibodies.

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.