GAP Pharmagap Inc.

PharmaGap Inc. (TSX VENTURE: GAP)(OTCBB: PHRGF)("PharmaGap" or "the Company") today announced that it has completed contractual arrangements and program design for model development and testing of its lead cancer drug GAP-107B8 using human bladder cancer in rats with ITR Laboratories Canada Inc. (ITR) of Baie d'Urfe Quebec.

The test program will be in three phases: first the development and validation of an intravesical bladder cancer model in rats, followed by an MTD (Maximum Tolerated Dose) study required to determine dose ranges for the third phase, which will be an assessment of efficacy of the Company's cancer drug GAP-107B8 in rats, using intravesical administration. Intravesical administration - direct injection of the drug into the bladder - is a clinically recognized route of administration for treatment of bladder cancer in humans.

Phase I

The objective of the first phase, anticipated to be completed by the end of September, is to develop an in vivo orthotopic model for human urinary bladder epithelial carcinomas. Three human bladder cancer cell lines representative of varying degrees of malignancy, all of which have been shown to be significantly inhibited by treatment with GAP-107B8 liposomal peptide formulations in vitro, will be screened in this model. Orthotopic refers to the establishment of the bladder cancer in the bladder itself, mimicking directly the in-life experience, which is a key factor in assessment of a drug's effectiveness. Epithelial carcinoma of the bladder represents over 75% of all the types of bladder carcinomas described in humans. The presence and number of solid tumors (single or multiple sites) within the urinary bladder and tumor size evaluation will be assessed using a high resolution in vivo micro-imaging ultrasound system.

Phase II

Upon completion of the Phase I study, the second phase of studies to be carried out at ITR will be an MTD (Maximum Tolerated Dose) study to determine the dose ranges to be used in the Phase III Efficacy study. This second phase will start following completion of the Phase I study, and will lead directly into the Phase III study.

Phase III

The third phase of the ITR studies will be an efficacy study to demonstrate GAP-107B8's effect in slowing the rate of progression of human bladder cancers implanted in the rat bladder using the methodology developed in Phase I and the dose range established in Phase II. This study is projected to be completed in Q4 of this year. PharmaGap will use the results from these studies to guide the Company's determination of the final drug formulation and target for initial clinical trial application.

Dr. Ken Sokoll, Vice President Clinical Development and Chief Operating Officer of PharmaGap, commented "PharmaGap is pleased to be entering into a critical assessment phase with ITR, a fully GLP capable contract research organization which has a wealth of experience in designing and executing preclinical efficacy studies and general toxicology protocols in support of clinical trial applications. The team at ITR, with its pool of collaborators and consultants, have direct experience in the development of animal models for instilling drugs to the bladder and PharmaGap has drawn upon this experience to assist in the design of the current bladder cancer model study and for our ongoing pharmacokinetics and toxicokinetics testing program."

About ITR Laboratories Canada Inc. (ITR)

ITR Laboratories Canada Inc. is an international Contract Research Organization that provides clinical toxicology services for the biotechnology and pharmaceutical industry in North America and Europe. ITR offers services from planning and study program design to study implementation and reporting for regulatory drug filing. ITR Canada studies conducted are fully compliant with GLP.

About PharmaGap Inc.

PharmaGap Inc. (TSX VENTURE: GAP), based in Ottawa, ON, is a biotechnology company with a core focus on developing novel peptide therapeutics for the treatment of cancer. PharmaGap's GAP-107B8 is a novel peptide drug that has been shown to be highly cytotoxic to numerous cancer types, including chemo-resistant cancers, in vitro. For more information on PharmaGap please visit the Company's website at www.pharmagap.com.

Forward Looking Statements

This news release contains certain statements that constitute forward-looking statements as they relate to the Company and its management. Forward-looking statements are not historical facts but represent management's current expectations of future events, and can be identified by words such as "believe", "expects", "will", "intends", "plans", "projects", "anticipates", "estimates", "continues", and similar expressions. Although management believes that expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.

By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this news release, PharmaGap will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities laws, the Company assumes no obligation to update or revise any forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: results of ongoing product testing and development; regulatory approvals required to complete development of products; ability to manufacture product at quality and scale for human use on an economically sound basis; patient reimbursement by private and public health insurance programs; unintended side effects of products; competitive products; product liability; intellectual property; reliance on key personnel; risks of future legal proceedings; income tax matters; availability and terms of financing; distribution of securities; effect of market interest rates on price of securities, and potential dilution.

Note: Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. No Securities Commission or other regulatory authority having jurisdiction over PharmaGap has approved or disapproved of the information contained herein. This release contains forward looking statements that may not occur or may change materially.

Contacts: Robert McInnis President & CEO (613) 990-9551 bmcinnis@pharmagap.com