PharmaGap Announces Offering of Equity Units of up to $3 million

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PharmaGap Announces Offering of Equity Units of up to $3 million
Marketwire.com - Aug 11, 2010

OTTAWA, ONTARIO--(Marketwire - Aug. 11, 2010) - PharmaGap Inc. (TSX VENTURE:GAP)(OTCBB:PHRGF) ("PharmaGap" or "the Company") today announced its intention to issue up to 16,666,667 equity units (the "Units"), at a price per Unit of eighteen cents ($0.18) (the "Offering") for total proceeds of up to three million dollars ($3,000,000). Each Unit consists of one (1) common share and one (1) warrant to purchase a common share at an exercise price of twenty-five cents ($0.25) for the initial two (2) years and thirty-five cents ($0.35) for the third year of a three (3) year warrant term.

Robert McInnis, President and Chief Executive Officer of PharmaGap, stated "The funds raised from this Offering, assuming full subscription, are expected to fund the Company to completion of the requirements to file an application to commence Clinical Trials in early 2012. In the event that warrants currently outstanding, which expire between June 2011 and February 2012 with a twenty cent exercise price, are fully exercised, a further three million dollars will be available to the Company to take us well into Phase II Trials. With a clinical development program now under the management and direction of Dr. Ken Sokoll, who has recently been appointed Vice President Clinical Development and Chief Operating Officer, and with the required funding in place, it is my view that the risk to shareholders will have declined materially. We will be providing updates of our progress as significant elements of the program are completed so that shareholders can assess our progress and evaluate on an ongoing basis the remaining risk of our achieving commercial success, which for us is the completion of a licensing transaction for GAP-107B8 sometime after commencing Clinical Trials and prior to completion of Phase II Clinical Trials. We are intent on structuring and managing the development program so that we maintain the ability to complete Phase II Clinical trials on our own in order that we maximize the value in our lead drug program for shareholders before entering into a licensing transaction for GAP-107B8."

Capital Street Group of Vancouver, an Exempt Market Dealer, will act as Selling Agent for the Offering. The Company has agreed to pay the Agent a selling concession of 10% of proceeds raised, along with broker warrants equal to 10% of the Units issued, which includes placement fees for individual brokers.

The Company anticipates closing of the Offering on or about August 23, 2010 subject to receipt of all necessary regulatory and TSX-Venture Exchange ("TSX-V") approvals.

PharmaGap will apply the proceeds to pursue its program to take its lead cancer drug GAP-107B8 into clinical trials in humans, which it anticipates will occur in 2012. The Company will also apply up to $1,000,000 of proceeds to meet working capital requirements including reduction in outstanding amounts owed to SC Stormont Holdings Inc. ("Stormont"), a company owned by Roderick M. Bryden, Chairman of PharmaGap, which currently owns 20,849,314 common shares and 323,359 warrants with a $0.2033 exercise price expiring in February 2011. This represents a percentage ownership position of 20.1% (16.7% fully diluted) prior to the Offering and 17.3% (13.2% fully diluted) if the full Offering is completed. In the past three months Stormont has exercised 1,942,000 warrants at an exercise price of $0.2033 providing gross proceeds to the Company of $394,809.

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.

To subscribe or enquire about the Offering

For information about the Offering and to obtain subscription forms, please contact Capital Street Group (attention Mr. David Taylor (david@capitalstreetgroup.com, (604) 988-8186) or Mr. Kalen Stewart (kalen@capitalstreetgroup.com, (778) 991-8223) or the Company directly (attention Robert McInnis (bmcinnis@pharmagap.com, (613) 990-9551)

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.

For more information, please contact
PharmaGap Inc.
Robert McInnis
President & CEO
613-990-9551
bmcinnis@pharmagap.com
or
PharmaGap Inc.
Martin Tremblay
IR Consultant
514-351-3736
IR@pharmagap.com