ANACOR ANNOUNCES POSITIVE RESULTS FROM PHASE 2 TRIAL OF NOVEL ANTI-INFLAMMATORY AGENT FOR THE TREATMENT OF ATOPIC DERMATITIS

-- Results show promise for efficacy and lead to further studies --

-- Phase 2b trial expected to begin later this year --

Palo Alto, Calif. — June 15, 2006 - Anacor Pharmaceuticals, a privately-held pharmaceutical company developing novel agents for inflammatory and infectious diseases, today announced promising data from a Phase 2a study of AN0128, a novel topical anti-inflammatory drug candidate for atopic dermatitis (AD), a disease affecting approximately 15 million Americans.

"In addition to the attractive safety profile seen in this clinical trial, the results demonstrated clinically meaningful efficacy trends for AN0128 and warrant additional studies," said Dr. Karl Beutner, chief medical officer at Anacor. "We plan to begin a Phase 2b trial of AN0128 in children later this year."

The multi-center, randomized, placebo-controlled study of AN0128, a novel topical anti-inflammatory drug candidate, enrolled 103 subjects with mild to moderate AD at eight centers. Study participants received twice daily treatment for four weeks with either AN0128 Cream 1 percent or vehicle cream. Efficacy was measured by a 6 point (clear, almost clear, mild, moderate, severe, very severe) investigator static global assessment (ISGA) scale. At the end of the four-week treatment period, the study demonstrated that 47 percent of the patients enrolled with moderate AD and treated with AN0128 exhibited at least a two grade improvement on the ISGA scale and were judged by investigators to be "Clear" or "Almost Clear" of disease. 29 percent of those treated with the vehicle cream reached the same endpoint. AN0128 was well tolerated at the site of application.

The trial was considered exploratory in nature and thus there were no formal power calculations. Treatments were well tolerated with only rare application site reactions and no serious adverse events were reported. The results of this study would indicate that AN0128 represents a potential new therapy for AD and this study provides the necessary data to power future trials.

About AN0128
AN0128 inhibits the release of pro-inflammatory cytokines, including TNFα, without affecting the normal immune response. It has demonstrated potent anti-inflammatory activity in pre-clinical models of inflammation. This activity gives the compound the potential to treat a number of diseases. Anacor also has conducted Phase 1/2 trials of AN0128 in acne and psoriasis, and will evaluate further studies in these indications.

About Atopic Dermatitis
Atopic Dermatitis (AD) is a chronic rash characterized by inflammation and itchiness. The disease, which affects approximately 15 million patients in the U.S., most commonly appears in children (20% of U.S. children are affected) and can persist into adulthood. Current AD treatments attempt to reduce inflammation and itchiness to maintain the protective integrity of the skin. Combinations of antibiotics, antihistamines, topical corticosteroids and topical immunomodulators (TIMs) such as picrolimus and tacrolimus are the current standard of care.

About Anacor Pharmaceuticals
Anacor, a privately held, clinical-stage pharmaceutical company, is developing novel product candidates for inflammatory and infectious diseases based on its proprietary, small-molecule, boron-based chemistry. Initially, Anacor is focusing development efforts on dermatological disorders with AN0128 in Phase 2 clinical trials for atopic dermatitis and AN2690 in Phase 2 trials for onychomycosis, a fungal infection of fingernails and toenails that affects as much as 14 percent of the general U.S. population.