Killick Capital

Ottawa, Ontario/January 25, 2006 – PharmaGap Inc. (TSX-V: GAP) ("PharmaGap" or "the Company"), today released the first animal efficacy data for its novel lead drug compound, PhGalpha1, a selective inhibitor of Protein Kinase C-alpha (PKC-alpha).

● Time to establish and grow drug resistant (MDR) colon cancer more than doubled

Colon cancer tumour establishment and growth (measured in days) was delayed by an average of 100% in mice receiving PhGalpha1 in combination with a widely used chemotherapeutic agent versus mice in a non-treated control group.

● Delay in establishment of metastatic breast cancer

Breast cancer tumour establishment was delayed by an average of 60% in mice receiving PhGalpha1 versus mice in a non-treated control group.

● Breast cancer tumours rendered benign

Tumour analysis revealed that untreated tumour cancer cells exhibited aggressive re-growth, whereas treated tumour cancer cells were fully differentiated (ie. mature) and essentially benign.

● No Toxicity

PhGalpha1 was administered to fifty mice in 72 hour cycles over periods of up to 75 days. No evidence of toxicity was observed or evident in pathology analysis.

The effect of PhGalpha1, administered singly or in combination, was observed and subsequently analyzed using xenografts – human cancer cells grown on host mice bred without an immune system - using CD1 outbred "nude" mice. The study was carried out over a period of 75 days, during which time the rate of establishment and subsequent growth of solid tumours were observed in each test group and compared to a control group which received no treatment. Testing was carried out by PharmaGap researchers at the National Research Council’s (NRC) Animal Care Facility in Ottawa.

• Human (LS180) colon cancer cells were injected into test mice in order to induce colon cancer tumours.

• Tumour establishment (a pre-defined "M1" stage - see details provided below) in mice receiving PhGalpha1 and a pre-treatment with doxorubicin (chemotherapeutic drug used to trigger drug resistance) was delayed an average of 14 days compared to a control group receiving saline (28 days for the treated group compared with 14 days to reach tumour establishment for saline group).

• Tumour growth following establishment (a pre-defined "M2" stage - see details provided below) in the cohort receiving PhGalpha1 and a pre-treatment with doxorubicin occurred after 31 days compared with 13 days for the control group. Overall, from initial injection to the M2 stage took 58 days for the doxorubicin/PhGalpha1 treated group compared to 26 days for the control group

● The results of this test are consistent with earlier in vitro tests showing that PhGalpha1 has a significant impact in reducing the degree to which Multi-Drug Resistance ("MDR") arises in chemotherapy treatment. MDR is the cellular detoxifying process which acts to expel toxic chemotherapeutic agents when administered to cancer patients. The effect of MDR is to require ever-increasing doses of chemotherapeutic agents, with a corresponding increase in the severity of side effects caused by these toxic agents.

• Human (MDA-MB231) metastatic breast cancer cells were injected into test mice in order to induce breast cancer tumours.

• Tumour establishment (M1) was delayed an average of approximately 9 days in mice treated with PhGalpha1 versus control mice receiving saline (25 days for the treated group compared with 16 days to reach tumour establishment for saline group).

● Ex vivo analysis of cancer cells derived from treated and untreated tumours revealed that the untreated tumour cancer cells exhibited aggressive re-growth, whereas treated tumour cancer cells were fully differentiated (ie. mature) and essentially benign. Further, adipose tissue surrounding the small solid body tumour from the treated group was also essentially benign in nature.

• There was no evidence of toxicity in mice given a regular 72 hour dosing schedule of PhGalpha1 over a 75 day test period (repeat-dose toxicity study). A dosage of 25 micrograms per mouse was provided to a cohort of mice by subcutaneous injection. No physiological, behavioral or external signs of toxicity were observed. Follow-up pathological and histological organ studies also showed no signs of toxicity.

• In previous acute toxicity studies in mice, PhGalpha1 demonstrated very low toxicity within the effective dose range.

• This excellent result indicates that a wide dose range is available for animal and human clinical studies and is an important milestone for pre-clinical development of PharmaGap’s lead drug compound.

PharmaGap’s Chief Scientific Officer, Dr. Jenny Phipps, commented, "These tests with PhGalpha1 in nude mice are the first in a series of animal studies, which will continue in 2006. We are delighted with the results of this first study that confirm the efficacy and low toxicity of this compound."

Investigators studied nude mice hosting LS180 colon cancer, a well established testing model for MDR (see below for discussion of MDR). Treatment cohorts were assessed over a 75 day period. PhGalpha1 was administered intra-tumourally by fine needle injection every 72 hours (dose = 25 micrograms) within the treated groups.

PhGalpha1 was tested in combination with doxorubicin, a widely used anthracycline chemotherapeutic agent known to induce MDR in LS180 colon cancer. PhGalpha1 treatment in combination with doxorubicin in mice given LS180 cells pre-treated with doxorubicin to induce MDR provided the most efficacious results and is termed the doxorubicin +/PhGalpha1 cohort.

The doxorubicin +/PhGalpha1 cohort established LS180 solid tumours on average in 28 days versus approximately 14 days in the control groups receiving saline or doxorubicin treatment alone. The approximate 14 day difference seen with the treated cohort represents a 100% delay in tumour establishment versus the control group (p<0.03). Establishment of tumours was deemed to occur at a size of 1–2 mm x 2 mm (M1 stage).

Following establishment, LS180 tumour growth was monitored until it reached the size of approximately 4-5 mm x 7-8 mm (M2 stage). The total time from initial injection of LS180 human cancer cells to the M2 stage was an average of 58 days for the doxorubicin +/PhGalpha1 cohort compared to an average of just 26 days for the saline group.

In combination with previously released in vitro data, the animal study data supports PhGalpha1 having a potent effect ameliorating MDR and the utility of PhGalpha1 for increasing the efficacy of cytotoxic chemotherapy agents now in clinical use.

Investigators studied nude mice hosting MDA-MB231 human breast cancer (HER+ type), an aggressive and highly metastatic cancer that aberrantly expresses PKC-alpha and is representative of approximately one-third of breast cancers. Two cohorts were assessed over a 75 day period. PhGalpha1 was administered intra-tumourally every 72 hours (dose = 25 micrograms) with the treated group.

The cohort treated with PhGalpha1 established MDA-MB231 solid tumours on average in 25 days versus 16 days in the control group receiving saline. The approximately 9 day difference seen with the treated cohort represents an approximate 60% delay in tumour establishment versus the control group (p<0.001).

Pathology analysis of tumours revealed that, in 3 of 5 samples, tumours in the cohort treated with PhGalpha1 were composed of up to 90% fatty tissue and with as little as 10% solid tumour, whereas 4 out of 5 tumours from the control group were solid tumours with no fatty tissue. Tumourogenicity of tumour cells samples was assessed in a limited study. Tumour cells removed from the untreated group readily grew using a standard agar protocol, indicating continued proliferative characteristics. However, tumour cells taken from the treated group would not grow or proliferate. Fatty tissue cells surrounding the small solid tumour were found to be fully differentiated and essentially benign.

About PKC-alpha

Protein Kinase C-alpha (PKC-alpha) is associated with many key intracellular signaling processes, including cell growth, survival and apoptosis (normal programmed cell death). In certain cancers, PKC-alpha has been strongly linked to tumour formation and cancer’s ability to develop immunity to cytotoxic chemotherapy, or multi-drug resistance (MDR). PKC-alpha is one of eleven closely related family-members, or isoforms, in the PKC family, each of which performs essential roles at certain times within cells. To that end, in certain cancers and MDR selectively targeting the alpha isoform, and not the other PKC isoforms, is viewed as key to successful clinical development of an efficacious compound with a favourable safety profile.

Multi-drug resistance (MDR) is the principal mechanism whereby many cancers develop resistance to cytotoxic chemotherapy drugs. An estimated 500,000 new cancer patients in the U.S. every year will develop MDR and subsequently will not respond effectively to chemotherapy.

PharmaGap’s lead drug compound PhGalpha1 is a selective inhibitor of PKC-alpha. PhGalpha1 has been designed to selectively inhibit the alpha isoform of PKC and exhibits practically no association with other PKC isoforms. PharmaGap is developing a strong patent estate around PhGalpha1 and associated peptide inhibitors of other PKC isoforms for the Company’s drug development pipeline. Alterations in PKC isoform activity relate to many disorders, including cancer, such as diabetes, heart and blood circulation dysfunction, kidney and liver illnesses.

PharmaGap Inc. (TSX-V: GAP), based in Ottawa, ON, is a biotechnology company with a core focus developing novel therapeutic compounds for the treatment of cancer. PharmaGap's research platform targets cellular signalling pathways controlled by Protein Kinase C (PKC) isoforms. PharmaGap's lead drug compound, PhGalpha1, is in preclinical development and targets PKC-alpha. The Company's strategy is to out-license drug compounds to larger life sciences companies at the preclinical stage. For more information on PharmaGap please visit the Company's website at www.pharmagap.com.