8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 28, 2007

Panacos Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-24241	11-3238476
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

134 Coolidge Avenue

Watertown, Massachusetts 02472

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (617) 926-1551

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On June 28, 2007, Panacos Pharmaceuticals, Inc. (“Panacos” or the “Company”) issued a press release announcing the closing of a $20 million senior secured term loan (the “Loan”) with Hercules Technology Growth Capital, Inc., a Maryland corporation (“Hercules”). In connection with the Loan, Panacos entered into a Loan and Security Agreement, dated as of June 28, 2007, by and between Hercules as Lender and Panacos as the Borrower.

Pursuant to the Loan and Security Agreement, the Loan has a maturity date of January 3, 2011. Panacos is eligible to receive a 6-month extension of the final maturity date of the Loan if it achieves certain milestones. The first tranche of the Loan will bear interest at a rate of 11.20% and Panacos will have a 12 month interest-only period for payments under the Loan, which shall be extendable to 15 months if certain milestones are achieved. $10,000,000 of the principal amount of the Loan has been funded by the Lender at the closing, and the remaining $10,000,000 in principal amount must be drawn in full by September 30, 2007. Panacos has granted the Lender a first priority security interest in all of its assets with the exception of its intellectual property, specific lien financing up to $2,000,000 and standard permitted liens, provided that the Lender will receive a security interest in the proceeds from the sale of any intellectual property and Panacos may not pledge its intellectual property to another lender. Hercules also has the right to invest up to $2,000,000 in the Company’s next round of equity financing at the same terms and conditions presented to potential investors, subject to the terms and conditions set forth in the Equity Rights Letter.

In connection with the Loan and Security Agreement, Panacos has also issued to Hercules warrants to purchase 646,900 shares of the Company’s common stock, $0.01 par value per share, at an exercise price of $3.71 per share, equal to the volume-weighted average of the closing prices for the Company’s common stock for the three trading days preceding the closing of the Loan. Panacos will issue both the warrants and the shares of common stock underlying the warrants in registered form using its existing shelf registration statement on Form S-3.

A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference in this Item 1.01.

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION

(a) The information set forth above under Item 1.01 is incorporated herein by reference.

(b) Not applicable.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

Exhibit No.	Exhibit
99.1	Press release dated June 28, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PANACOS PHARMACEUTICALS, INC.
Dated: June 28, 2007	By:	/s/ Peyton J. Marshall
		Peyton J. Marshall, Ph.D. Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Exhibit
99.1	Press release dated June 28, 2007

EX-99.1

Exhibit 99.1

CONTACT:
Jill Smith Director, Corporate Communications 240.449.1250 jsmith@panacos.com	Peyton Marshall EVP and Chief Financial Officer 617.926.1551 pmarshall@panacos.com

Panacos Secures $20 Million Debt Financing

Watertown, MA (June 28, 2007) – Panacos Pharmaceuticals, Inc. (NASDAQ: PANC), a biotechnology company dedicated to developing the next generation of antiviral therapeutic products, announced that it has closed a $20 million term loan agreement today with Hercules Technology Growth Capital, Inc. (NASDAQ: HTGC). Under the terms of the loan agreement, Hercules has advanced $10 million to the Company immediately upon closing. The Company plans to draw the remaining $10 million prior to September 30, 2007.

“This financing extends Panacos’ cash runway in a relatively non-dilutive form, and provides us with additional strategic flexibility as we continue to advance our pipeline of antiviral programs,” said Alan W. Dunton, M.D., Panacos’ Chief Executive Officer. “We are pleased to enter this relationship with Hercules, and will benefit from their experience and expertise in the biopharmaceutical industry.”

Under the agreement, only interest payments will be required for the first 12 months. Thereafter, the balance will be payable in equal monthly installments of principal and interest for 30 months.

As part of the transaction, the Company issued to Hercules a five-year warrant to purchase 646,900 shares of the Company’s common stock at an exercise price per share of $3.71.

About Panacos

Panacos is developing the next generation of anti-infective products through discovery and development of small molecule oral drugs for the treatment of HIV and other major human viral diseases. HIV infects approximately 1.7 million people in North America and Western Europe and approximately 40 million people worldwide.

Approximately 650,000 patients are treated annually for HIV in the United States and Western Europe. Resistance to currently available drugs is one of the most pressing problems in HIV therapy and the leading cause of treatment failure. Panacos’ proprietary discovery technologies are designed to combat resistance by focusing on novel targets in the virus life cycle, including virus maturation and virus fusion.

Panacos’ lead candidate, bevirimat (PA-457), is the first in a new class of oral HIV therapeutics under development called maturation inhibitors, discovered by Panacos scientists and their academic collaborators. Based on its novel mechanism of action, bevirimat is designed to have potent activity against a broad range of HIV strains, including those that are resistant to existing classes of drugs. The Company has completed seven clinical studies of bevirimat in over 300 subjects, showing significant reductions in viral load in HIV-infected subjects and a promising safety profile, and is currently in Phase 2b clinical trials. The Company also has a second-generation program in HIV maturation inhibition in clinical testing and a research program to develop oral HIV fusion inhibitors.

Except for the historical information contained herein, statements made herein, including those relating to the benefits of Panacos’ relationship with Hercules, bevirimat’s clinical development, the potential results of treatment with bevirimat and future clinical trials and clinical practice are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks as set forth in the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. These risks and uncertainties could cause actual results to differ materially from any forward-looking statements made herein. The Company undertakes no obligation to publicly update forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable law.

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