PharmaGap Reports Significant Improvement in Efficacy of Enhanced GAP-107B8; Early Results of Testing in Bladder Cancer

   PharmaGap Inc. (TSX VENTURE: GAP)(OTCBB: PHRGF) ("PharmaGap" or "the Company") today reports significant improvement in efficacy using an enhanced version of its lead cancer drug GAP-107B8, along with a further update on progress toward clinical trials.

The Company has tested an enhanced version of GAP-107B8 and is seeing significantly increased efficacy for this unformulated peptide at lower doses from in-vitro and early in vivo results.

The Company has previously reported that using a liposomal formulation will permit it to achieve improved efficacy and widen the safety window for its lead drug GAP-107B8 in its original form. A liposomal formulation of the enhanced peptide is currently being produced, with testing to follow in Q3. The combination of these two initiatives is expected to significantly broaden the Therapeutic Index for GAP-107B8 - the separation of effective dose from the higher doses at which toxicity appears - a key consideration for a successful clinical trial design. Selection of the final peptide form and liposomal formulation to advance into efficacy studies is expected to be made in Q3 2011.

Robert McInnis, President and C.E.O. of the Company, commented that "The program that we have undertaken over the course of the past 9 months and which will continue to completion this year to enhance efficacy and safety of our lead drug compound will provide us with a significantly higher probability of approval of the clinical trial application and success in clinical trials. The short delay in the anticipated filing for clinical trial approval from Q3 2012 to Q4 2012, necessitated by this drug enhancement and formulation effort, will be more than offset by a much higher probability of success. Under the leadership and direction of our clinical development program by Dr. Ken Sokoll, and the work completed since his appointment as Vice President Clinical Development and Chief Operating Officer in September 2010, we are now provided with a much enhanced capability to meet the requirements to achieve clinical trial success, and accordingly a much higher degree of confidence in our ability to submit the clinical trial application by Q4 of 2012."

Other program elements

Work is underway at the Company's current manufacturer of peptide in order to optimize and scale-up the production of peptide that will proceed to cGMP ("current Good Manufacturing Practice") production of the peptide.

The Company has also received first results of testing in bladder cancer cell lines at a collaborator site. The early findings from in-vitro Colony Forming Assays ("CFA") in tumour cells has demonstrated that unformulated peptides can significantly reduce the survival of colonies in the two murine bladder cancer cell lines studied. The early results from this study have also demonstrated that the enhanced GAP-107B8 peptide is more potent at lower concentrations. CFA assays provide useful information relevant to clinical development including the efficacy of the drug compound against cancer cells that metastasize and therapy-resistant cells that have the ability to re-populate tumours. Full details of these results will be announced when complete results are received and analyzed by the Company.

The Company is currently in contract discussions with an independent Contract Research Organization to expand and accelerate the investigation of liposomal formulations and unformulated versions of GAP-107B8 in in vivo models of bladder cancer, and expects to be able to start this program in early Q3 2011. Additional in vivo studies in ovarian cancer models will take place in Q3/Q4 using liposomal formulations of GAP-107B8 peptides. Results of this testing will be critical to the choice of final formulation of GAP-107B8 and the cancer target to proceed to clinical trials.

With the significance and extent of new data generated, specifically with respect to peptides and liposomal formulations, the Company is developing and filing additional patents in order to generate new and valuable Intellectual Property Rights for its lead cancer drug program.

Discussions have commenced and will continue through 2011 with Clinical Trial Contract Research Organizations. Past performance in accruing patients for bladder and ovarian cancer trials and access to key oncology leaders in these cancers will be a key determining factor in this selection, to be made in early 2012.

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 [phone] [e-mail]