Shares of Panacos gained more than 45 percent after the company reported that its Phase IIa trial of PA-457 met the primary endpoint of reducing viral load in HIV patients, compared to placebo.

The study randomized both treatment-na ve and treatment-experienced patients to receive the orally administered PA-457 in one of four dose levels - 25, 50, 100 or 200 mg - with six patients per group, compared to an eight-patient placebo group for a 10-day treatment period. Viral loads measured at Day 11 showed that the two highest doses of PA-457 demonstrated statistical significance vs. placebo, with individual decreases in HIV levels of up to 1.7 log10.

At the 200-mg level, the median viral reduction was greater than 1 log10, a 90 percent decrease.

"To us, that means that PA-457 has the potential to be a major new drug," said Skip Ackerman, chairman and CEO of Watertown, Mass.-based Panacos. "The mechanism of [the drug] shows a new point of vulnerability of the virus."

Wall Street agreed with that prognosis. The company's stock (NASDAQ:PANC) jumped $3.25, or 46.1 percent, Monday to close at $10.30.

PA-457 is the first in a class of drugs knows as maturation inhibitors designed to "combat the biggest problem in HIV today, which is resistance to existing therapies," Ackerman said.

The drug aims to prevent virus replication by blocking a late step in the processing of the HIV Gag protein. That interruption ensures that the virus protein released from a HIV-infected cell becomes non-infectious and unable to replicate.

Patients in the trial receiving the 200-mg dose of PA-457 showed a median viral load change at Day 11 of -1.03 log10. Values at the other dose levels were: -0.48 log10 for patients receiving the 100-mg dose, -0.17 log10 for the 50-mg dose and 0.05 log10 for the 25-mg dose. In subjects with baseline viral loads less than 100,000 copies/ml, the reduction was -1.52 log10 for 200 mg and -0.56 log10 for 100 mg.

Results of the Phase IIa study also affirmed earlier studies showing that subjects did not develop resistance to PA-457, according to a genetic analysis, available for 21 of 33 HIV patients before and after treatment. All doses were found to be safe and well tolerated, and results reported no instances of dose-limiting toxicity. One moderate adverse event was reported involving a patient with a five-year history of hypertension.

Patients involved in the study were not taking any other antiretroviral drugs.

In addition to its safety profile and its ability to combat resistance, PA-457 can be administered "once a day as an oral drug, which has become the gold standard now for HIV therapy," Ackerman told BioWorld Today.

"Preclinical studies also indicated its use in combination therapy with existing [drug] classes," he said, "which is important because most HIV therapies involve combination treatments."

Panacos' next step will be a Phase IIb study, set to begin during the first half of 2006, to evaluate PA-457 in combination with other HIV treatments. After that, the company plans to initiate a Phase III trial that will lead to the filing of a new drug application in the early part of 2008, Ackerman said.

"We have fast-track status so that will allow us to submit a rolling NDA," he added.

PA-457 is being investigated against all HIV patient populations. That broad applicability could net the drug a substantial market share, with estimates of drug sales potentially bringing in between $500 million to $1 billion per year, Ackerman said.

He said Panacos is "open to partnership opportunities," though the company has not made any decisions yet.

Overall, data from the Phase IIa trial "validate the approach Panacos has taken" in the discovery of maturation inhibitors, Ackerman said. The company has other early stage products based on the same mechanism of action, including a second-generation maturation inhibitor expected to enter clinical trials sometime next year.

Panacos went public in March, following its merger with V.I. Technologies (Vitex) Inc. The combined company initially traded under Vitex's name, but changed its corporate moniker to Panacos earlier this month to reflect its focus on developing antiviral products using Panacos' technology. (See BioWorld Today, March 11, 2005.)

Panacos reported a net loss of $8.25 million for the second quarter of 2005. As of June 30, the company had cash and cash equivalents totaling $15.6 million.