ANACOR PHARMACEUTIALCS RECEIVES $21.6 MILLION CONTRACT FROM DEPARTMENT OF DEFENSE

Funds will further discovery and development of biodefense agents

Palo Alto, Calif., October 29, 2002 - Anacor Pharmaceuticals today announced that it was awarded a $21.6 million joint contract from the Defense Advanced Research Projects Agency (DARPA) and the United States Army Medical Research and Materials Command (USAMRMC) to expedite the research and development of therapeutics for use against biowarfare agents such as anthrax.

Anacor was formed to develop technology that was initially created by co-founders Dr. Lucy Shapiro at Stanford University and Dr. Stephen Benkovic at Pennsylvania State University. The company's initial therapeutic targets are staphylococcus, streptococcus pneumoniae, anthrax, tularemia and other infectious diseases.

"An immediate DARPA goal is to speed the identification and development of drugs that will provide protection in the case of a biological attack. Anacor is on the forefront of research and development of biodefense agents and this contract will help expedite the company's efforts," stated Dr. John M. Carney, DARPA program manager. "We are impressed with the preliminary in vitro activity displayed by Anacor's compounds and look forward to a productive, collaborative relationship."

"The early technology development was funded by DARPA, and their continued commitment to our technology through this new contract will accelerate our progress in developing compounds as biodefense agents," said David Perry, chief executive officer of Anacor Pharmaceuticals. "We're pleased to earn this strong support from DARPA and the USAMRMC."

In separate press releases, Anacor also today announced the formation and financing of the company (see "Anacor Pharmaceuticals Raises $7 Million in Venture Financing" and "Anacor Pharmaceuticals Formed to Develop New Class of Therapeutics").

The Defense Advanced Research Projects Agency (DARPA) is the central research and development organization for the Department of Defense (DoD). The DARPA mission is to develop imaginative, innovative and often high-risk research ideas offering a significant technological impact that will go well beyond the normal evolutionary developmental approaches; and, to pursue these ideas from the demonstration of technical feasibility through the development of prototype systems.

The U.S. Army Medical Research and Materiel Command's (USAMRMC) mission is to provide solutions to medical problems of importance to U.S. military troops at home and abroad.

About Anacor
Anacor Pharmaceuticals is an early-stage pharmaceutical company engaged in the discovery and development of novel antimicrobials for the treatment of serious bacterial and fungal infections. The company's technology is based on work originally conducted by Dr. Lucy Shapiro at Stanford University and Dr. Stephen Benkovic at Pennsylvania State University. Its initial therapeutic targets are staphylococcus, streptococcus pneumoniae, anthrax, tularemia and other infectious diseases. Privately held and based in Palo Alto, Calif., Anacor is funded by Aberdare Ventures and Rho Ventures. For more information, visit www.anacor.com.