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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): February 23, 2009

PANACOS PHARMACEUTICALS, INC.

(Exact n am e of re gistran t as spe cifie d in its ch arte r)

Delaware 0-24241 11-3238476

(State or oth e r jurisdiction (C om m ission File Nu m be r) (IRS Em ploye r
of in corporation ) Ide n tification No.)

134 Coolidge Avenue

Watertown, Massachusetts 02472
(Addre ss of prin cipal e xe cu tive office s an d z ip 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))
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ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN
OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
(a) Not applicable.

(b) On February 23, 2009, Panacos Pharmaceuticals, Inc. (“Panacos” or the “Company”) announced that it will close its Gaithersburg facility
and reduce its workforce from 11 to 4 employees, effective February 27, 2009. Among the departing employees are Chief Financial and
Business Officer, Jane Pritchett Henderson, who joined the Company in January 2008, and Graham P. Allaway, Ph.D., Chief Operating Officer,
who has served in this capacity since 2005 but was also a founder of the Company in 1999 and has been the lead scientist for Panacos’
development programs. A press release announcing the departures of Ms. Henderson and Dr. Allaway is attached hereto as Exhibit 99.1 and
incorporated herein by reference.

In accordance with the terms of Ms. Henderson’s offer letter, upon leaving the Company, Ms. Henderson will receive severance payments in
the aggregate amount of $225,000, or nine months of her current salary, paid over time, and a payment for accrued vacation time. In addition,
Ms. Henderson will be eligible to participate in the Company’s health and dental insurance plans for nine months following her separation
from the Company, with the Company paying 90% of her insurance premiums. Ms. Henderson will also have twelve months to exercise any of
her stock options to purchase the Company’s common stock that are vested as of February 27, 2009.

In accordance with the terms of Dr. Allaway’s severance letter and employment letter agreement, upon leaving the Company, Dr. Allaway will
receive severance payments in the aggregate amount of $297,413, or twelve months of his current salary, paid over time, and a payment for
accrued vacation time. In addition, Dr. Allaway will be eligible to participate in the Company’s health and dental insurance plans for twelve
months following his separation from the Company, with the Company paying 90% of his insurance premiums. The vesting of Dr. Allaway’s
stock options to purchase the Company’s common stock that would have vested during the twelve month period following February 27, 2009
will also be accelerated to February 27, 2009. Dr. Allaway will have twelve months to exercise any of his stock options to purchase the
Company’s common stock that are vested as of February 27, 2009.

(c) Not applicable.

(d) Not applicable.

(e) Not applicable.

(f) Not applicable.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits:
99.1 Press release of the Company, dated as of February 23, 2009.
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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: February 24, 2009 By: /S/ Alan W. Dunton

Alan W. Dunton, M.D.
President and Chief Executive Officer
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EXHIBIT INDEX

Exh ibit No. De scription

99.1 Press release of the Company, dated as of February 23, 2009.
Exhibit 99.1

LOGO

CONTACT:
Edith Hurley
617 926 1551

Panacos Provides Corporate and Strategic Update

Watertown, MA (February 23, 2009) – Panacos Pharmaceuticals, Inc. (NASDAQ: PANC), today announced it has engaged Oppenheimer &
Co. Inc. to advise the Company on strategic alternatives, which may include the sale of Panacos or its HIV development programs. In addition,
the Company will close its Gaithersburg facility and reduce its workforce from 11 to four employees, effective February 27, 2009.

Among the departing employees are Chief Financial and Business Officer, Jane Pritchett Henderson, who joined the Company in January 2008,
and Graham P. Allaway, PhD, Chief Operating Officer, who has served in this capacity since 2005 but was also a founder of the Company in
1999 and has been the lead scientist for Panacos’ development programs.

“The Company is taking these actions to help conserve capital as we continue to investigate potential financing and partnering options,”
commented Alan W. Dunton, MD, President and Chief Executive Officer of Panacos. “The goal is to maximize the likelihood that Panacos’
proprietary antiviral programs, technology, and intellectual property will continue to be developed and commercialized, ultimately providing
new treatment options for HIV patients. Jane and Graham have been critically important members of the executive team. I want to thank them
and all of our employees for their contributions and loyalty to the Company, particularly in the face of such tough economic times. I wish them
all the best in their future endeavors.”

The Company is continuing to explore strategic alternatives in order to monetize its technology assets, which may take the form of sales or
licensing transactions with
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respect to some or all of those assets. In light of the Company’s cash position and current negative economic and capital markets conditions,
if the Company is unable to enter into such transactions in a timely manner, the Company’s ability to continue operations beyond the second
quarter of 2009 is in doubt.

Panacos has an intellectual property estate of 10 U.S. issued patents (and its foreign counterparts) and 12 U.S. patent applications pending
(and its foreign counterparts). The Company’s second-generation program in HIV maturation inhibition has the potential to bring a compound
into Phase 1 clinical testing within 12 months. The second-generation maturation inhibitors, while structurally related to bevirimat, have the
ability to overcome the amino acid polymorphisms found in some strains of HIV, which reduce the sensitivity of those viruses to bevirimat.
The second-generation compounds also have reduced serum protein binding compared to bevirimat and thus have the potential for a lower
daily dose. The third-generation maturation inhibitor program has compounds that are chemically distinct from bevirimat and have activity
against polymorphic HIV. These compounds are in the lead optimization stage of development.

Panacos has identified several compounds in its oral fusion inhibitor program that demonstrate potent in vitro activity against diverse HIV
strains. A lead compound, PA-161, has been selected from these compounds and is poised to enter IND-enabling studies. PA-161 has good
oral bioavailability in a rodent model and has shown potent in vitro activity against diverse HIV-1 strains, including enfuvirtide-resistant viral
clones.

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. 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. Approximately one million people in the United
States and approximately 33 million people worldwide are living with HIV. Approximately 475,000 patients are treated annually for HIV in the
United States. Resistance to currently available drugs is one of the most pressing problems in HIV therapy and the leading cause of treatment
failure.
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Except for the historical information contained herein, statements made herein, including those relating to the Company’s ability to
complete the sale of its pipeline products or complete a strategic transaction of the Company in its entirety on favorable terms, the
potential results of treatment with its pipeline products 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, 2007. 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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