GSK EXERCISES OPTION ON ANACOR'S NOVEL ANTIBIOTIC FOR THE TREATMENT OF GRAM-NEGATIVE INFECTIONS

GSK EXERCISES OPTION ON ANACOR'S NOVEL ANTIBIOTIC FOR THE TREATMENT OF GRAM-NEGATIVE INFECTIONS


Palo Alto, Calif. and London, UK-July 29, 2010-Anacor Pharmaceuticals and GlaxoSmithKline PLC (GSK) today announced that GSK has exercised its option to obtain an exclusive licence to develop and commercialise GSK2251052 (GSK '052), formerly known as AN3365. GSK '052 is a novel, systemic antibiotic derived from Anacor's boron chemistry platform.

In early stage studies, GSK '052 has shown robust activity against multi-resistant gram-negative bacteria with no cross resistance to existing classes of antibiotics. GSK '052 will be developed as a potential treatment for complicated urinary tract infection (cUTI), complicated intra-abdominal infections (cIAIs), and hospital/ventilator-associated pneumonia (HAP/VAP).

Under the terms of the agreement, Anacor will receive an option exercise fee of $15 million and is eligible for further development and commercialisation milestone payments and royalties on any future product sales. GSK will now assume responsibility for further development of the compound and any resulting commercialisation.

"GSK '052 has an entirely novel mechanism of action with the potential to be the first new class antibacterial to treat serious hospital gram-negative infections in 30 years," said David Payne, Vice President of GSK's, Anti-bacterial Drug Discovery Unit. "Our collaboration with Anacor has enabled the rapid progression of GSK '052, and we are excited about the opportunity to address the growing need for new treatments for serious hospital acquired infections."

"The increasing prevalence of gram-negative strains of bacteria that are resistant to current antibiotics has created a significant unmet medical need that GSK '052 appears well positioned to address," said David Perry, Chief Executive Officer of Anacor. "GSK has been an excellent development partner and we are confident that their continued commitment will help ensure that this important compound can reach its fullest potential."

About GSK '052
GSK '052 is a novel boron-based, small-molecule candidate that targets the bacterial enzyme leucyl tRNA synthetase. Preclinical studies suggest that GSK '052 is a promising compound for the treatment of infections caused by a broad range of gram-negative bacteria, including E. coli, K. pneumoniae, Citrobacter spp, S.marcescens, P.vulgaris, Providentia spp, Pseudomonas aeruginosa and Enterobacter spp. GSK '052 has demonstrated a potent effect on strains harboring known resistance to widely-used antibiotics.

About the GSK and Anacor Alliance
In October 2007, GSK and Anacor entered into a worldwide strategic alliance for the discovery, development and commercialization of novel medicines for viral and bacterial diseases. The collaboration provides GSK access to Anacor's proprietary boron-based chemistry for use in four target-based project areas. Under the terms of the agreement with GSK, Anacor retains responsibility for the development of compounds through to clinical proof of concept, at which point GSK has an exclusive option to license each compound for further development and commercialization on a worldwide basis. Contingent on achieving certain milestones, Anacor is eligible to receive development and regulatory milestone payments up to $84 million as well as commercial milestones and tiered double-digit royalties up to the mid-teens, which are dependent on sales achieved.

Anacor Pharmaceuticals
Anacor is a biopharmaceutical company focused on discovering, developing and commercializing novel small molecule therapeutics derived from its boron chemistry platform. Anacor has discovered and is developing four additional clinical compounds, including its other two lead programs: AN2690, a topical antifungal for the treatment of onychomycosis and AN2728, a topical anti-inflammatory PDE-4 inhibitor for the treatment of psoriasis. The Company is developing other systemic antibacterial therapeutics under a research and development agreement with GlaxoSmithKline. For more information visit www.anacor.com.

GlaxoSmithKline - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer. For further information please visit www.gsk.com

Forward-Looking Statements
This press release may contain forward-looking statements that relate to future events and involve known and unknown risks, uncertainties and other factors that could cause actual levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. These statements reflect the views of Anacor as of the date of this press release with respect to future events and, except as required by law, it undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release.

Contact:
Anne Bowdidge
Investor Relations
650-543-7575

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Cautionary statement regarding forward-looking statements
Under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, GSK cautions investors that any forward-looking statements or projections made by GSK, including those made in this announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect GSK' s operations are described under 'Risk Factors' in the 'Business Review' in the company' s Annual Report on Form 20-F for 2009.

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