ANACOR RELEASES DATA SHOWING CLINICAL SAFETY OF TOPICAL ANTIFUNGAL TREATMENT

-- Enrollment Completed in Two Phase 2 Studies --

-- Discovery of AN2690 Published in Journal of Medicinal Chemistry --

Palo Alto, Calif. — Aug. 9, 2006 - Anacor Pharmaceuticals, a privately held company, today said that a 15-patient, Phase 1 trial of its lead compound, AN2690, showed that patients receiving the topical treatment had no measurable level of the drug in their bloodstream. AN2690 is the first in a new class of antifungal agents that is being developed for onychomycosis, a fungal infection of the nail and nail bed.

A separate presentation at the meeting will detail a second study of 15 patients receiving AN2690 that shows levels of the drug in the bloodstream are below the level of quantification and that no patients in that trial had a positive fungal culture after four weeks.

The 15 patients in the absorption study, who were required to have at least eight infected nails, received daily treatments for 28 days with a 7.5 percent solution of AN2690. The drug could not be found at quantifiable levels (lower limit of quantification of 25 nanograms/ml) in the blood at any time point on days 1, 14 and 28, when blood samples were taken. Levels of AN2690 in the nail plate remained at therapeutic levels 14 days after the end of treatment. Samples will continue to be collected to evaluate the drug concentrations in the nail at longer durations post-dosing.

"These new findings confirm preclinical toxicology work and showed that while the drug will concentrate at its target, the nail bed, it is not present at quantifiable levels in the bloodstream," said Dr. Karl Beutner, Anacor's chief medical officer. "The level of drug found in the nail plate during AN2690 treatment was substantially higher than those found with currently available topical and oral agents."

In addition, cultures of all nails were taken at the end of the 28 days of treatment, and all cultures were negative for the fungus, an early indication of potential clinical efficacy.

Anacor also has completed enrollment in its 180-patient, double-blind, placebo-controlled study. This study is being conducted by investigators in both the United States and Mexico. An additional open-label study evaluating drug concentrations as low as 1 percent also has been fully enrolled. This trial consists of 60 patients and is being conducted in the U.S. Three-month results for both of these studies will be available in the fourth quarter of this year.

Anacor also announced the recent publication of the initial discovery and characterization work of AN2690 in the Journal of Medicinal Chemistry (volume 49, number 15). The article details the structure-activity relationship investigation to find a more efficacious treatment of onychomycosis that led to the boron-containing small molecule AN2690.

AN2690 Phase 2 Program
Anacor is evaluating AN2690 in three Phase 2 studies. Primary endpoints for all studies are greater than 5 mm clear nail growth at six months, or nails judged by investigators to be "clear" or "almost clear", and a negative culture for infection at the end of the trial period. The first is an open-label study of 60 patients with onychomycosis who are receiving either a 5 percent or 7.5 percent solution of AN2690 applied once a day for six months. Recently reported preliminary interim results from the first 90 days of this study in 24 patients receiving the 5 percent solution showed 2.6 mm average "clear" nail growth, and that 100 percent of fungal cultures were negative for infection after 30 days. The second study is a double-blind, placebo-controlled, six-month trial of 180 patients who are receiving 2.5 percent, 5 percent or 7.5 percent solutions of AN2690 or a placebo. The third trial is an open label study of 60 patients with onychomycosis who are receiving either 1 percent of AN2690 daily for six months or 5 percent AN2690 daily for one month followed by three times weekly treatment for an additional five months.

About Onychomycosis
Onychomycosis affects seven to ten percent of the U.S. population, including 48 percent of those over age 70. Without treatment, the nails thicken and cause localized pressure-related pain. Dermatophytes are the primary fungi that cause onychomycosis with two strains, Trichophyton rubrum and Trichophyton mentagrophytes, accounting for more than 90 percent of cases. Yeast-based infections are the second most common cause. Topical treatments succeed in fewer than 12 percent of patients, yet achieve sales of approximately $300 million a year worldwide. Systemic treatments are effective in approximately half of all cases, but have known toxicity. Sales of the largest selling systemic drugs for onychomycosis each exceed $1 billion annually worldwide.

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 AN2690 in Phase 2 trials for onychomycosis, a fungal infection of nails and nail beds. A second product candidate, AN0128, is in Phase 2 clinical trials for atopic dermatitis.