The question was not whether but when Panacos (NASDAQ:PANC) would announce additional data from its ongoing phase 2 study. Thankfully, last week Panacos answered those questions when it presented its third-quarter financial results.

Results from another group of Panacos' phase 2b clinical trial testing, evaluating lead drug bevirimat as a treatment for HIV, weren't spectacular, but they did confirm again that the drug works.

In the small 15-day, 10-person arm of the trial, eight HIV-infected patients taking a 300-mg liquid dose of bevirimat (in addition to whatever background therapy they were failing on) experienced an average 1.02 log reduction of the virus in their blood.

As Panacos has stated in the past, results showing greater than a mean 1 log viral load reduction, with more than half the patients treated achieving at least a 0.5 log reduction, are high enough to bring a drug into phase 3 testing. (A commercially viable efficacy profile would be a mean 1 and at least median 0.5 log reduction in viral loads.) The results announced today mean bevirimat has met these endpoints, although as a liquid rather than an optimal pill form.

Panacos presented a slide that showed the bevirimat results to be comparable or better than several other marketed HIV compounds, including Trimeris' (NASDAQ:TRMS) Fuzeon or Gilead Sciences' (NASDAQ:GILD) Viread, when they were tested in a similar monotherapy setting.   

As no show-stopping adverse events were encountered in the study, Panacos plans to continually raise the dose of bevirimat in successive 10-person cohorts until the benefits seen in patients decline or safety concerns arise.

During the conference call, Panacos said the next arms of the study would take three months, rather than the four months that this cohort took, with results likely coming in late January. Plans are to start dosing some patients longer than 15 days next year and for phase 3 studies to begin in 2008 as well.

If the next successive 15-day cohort is successful, and another arm is included in the ongoing trial, the timeline for the start of phase 3 testing sounds tight. I wouldn't be surprised to see phase 3 trials pushed back until 2009.

Nonetheless, the bevirimat efficacy results look good. If they continue to improve at the higher doses, and if the safety results hold up in longer-term testing, Panacos will have a viable drug on its hands.

Even with the 33% run-up in shares on Friday, Panacos is still in the red on the Rule Breakers scorecard. Thankfully other biopharmas on our scorecard, like Vertex Pharmaceuticals and Myriad Genetics, are doing much better. You can see all the Rule Breakers recommendations with a 30-day free trial.

Fool contributor Brian Lawler owns shares of Panacos but in no other company mentioned in this article. The Fool's disclosure policy showed good efficacy in phase 2 testing.