ANACOR PHASE 2 STUDY OF NOVEL TOPICAL ANTIFUNGAL FOR ONYCHOMYCOSIS DEMONSTRATES EFFICACY

Palo Alto, Calif. - Sept. 26, 2006 - Anacor Pharmaceuticals, a privately held pharmaceutical company, today announced the end-of-treatment results from a 60-patient, Phase 2, open-label study of 5 percent and 7.5 percent solutions AN2690 in onychomycosis, a fungal infection of the nail and nail bed. At 6 months, halfway through the study, 50 percent of patients in the 7.5 percent group and 45 percent of patients in the 5 percent dose group met the primary endpoint of the study, which was more than 2 mm of clear nail growth and a negative fungal culture.

Subjects were treated once daily with AN2690, a topical antifungal drug, and evaluated for both a clinical response by measuring the length of new clear nail growth as well as for the presence of fungi by culture and direct microscopic evaluation.

"These results suggest that the AN2690 is substantially more effective that other topical treatments and could rival results seen with the currently available oral treatments," said Raza Aly, Ph.D., adjunct professor in the departments of dermatology and microbiology immunology at the University of California at San Francisco. "The mycological findings clearly show that the drug kills fungus, and the consistent clear nail growth provides evidence of a real clinical benefit from the treatment."

Eight patients in the 7.5 percent group and seven patients in the 5 percent group had greater than 5 mm clear nail growth and negative fungal cultures. As is the practice in onychomycosis trials these subjects will be followed for an additional 6 months. This type of follow-up is required to allow the nail time to regrow after the fungus has been eliminated.

"Given the positive results from our first open-label trial, we eagerly anticipate the results from the rest of our Phase 2 program," said Dr. Karl Beutner, Anacor's chief medical officer. "This study demonstrates that AN2690 is an active compound with potent antifungal activity."

AN2690 Phase 2 Program
The open-label study of AN2690 is one of three fully enrolled phase 2 studies being conducted by Anacor. The second study is a double-blind, placebo-controlled, six-month trial of 180 patients who will receive 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 will receive either a 1 percent dose of AN2690 daily for six months or a 5 percent dose AN2690 daily for one month followed by thrice-weekly treatment for an additional five months.

About Onychomycosis
Onychomycosis affects 7 to 10 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.

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 nailbeds. A second product candidate, AN0128, is in Phase 2 clinical trials for atopic dermatitis.