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Panacos says drug reduces HIV

Watertown firm's shares rise 46 on preliminary trial

Panacos Pharmaceuticals Inc. of Watertown said tests of a new type of oral medication reduced the virus that causes AIDS by 90 percent in a small study. The preliminary results, involving 33 patients, came in the second of three steps required for US approval of the drug PA-457, Panacos said in a statement.

Shares of Panacos rose $3.25, or 46 percent, to $10.30 yesterday on the Nasdaq Stock Market.

The company said PA-457 is the first in a class of drugs, known as maturation inhibitors, designed to treat the human immunodeficiency virus and combat resistance to therapy.

The Food and Drug Administration has granted PA-457 fast-track designation, a process designed to speed approval of new drugs that may improve treatment for life-threatening diseases.

''They pretty much control this class of drugs," said Clay Wilson, a securities analyst with Needham & Co. in New York, in a telephone interview. ''If it works for them, this is very lucrative," said Wilson, who doesn't rate or own the shares.

Patients received single doses of PA-457 or the placebo for 10 days.

Panacos said it will begin new tests, also part of the second round, in 2006.

Samuel Ackerman, chief executive of Panacos, said the company hopes to submit an application for approval of the experimental drug in early 2008.

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