05.03.2007

PharmaGap Announces $550,000 Investment by Dundee Securities Corporation; Additional Amounts to be offered for Public Purchase

Ottawa, Ontario/ May 3, 2007 – PharmaGap Inc. (TSX-V: GAP) (“PharmaGap” or “the Company”), a Canadian biotechnology company developing novel compounds to treat cancer, today announced the purchase by Dundee Securities Corporation (“Dundee”) of 2,000,000 common equity units (“Units”) and 2,400,000 Series I Preferred Shares (“Series I Shares”), for a total investment by Dundee of $550,000. 

Robert McInnis, President of PharmaGap said, “This issue provides the basis to complete the testing program underway at Queen’s University, Ontario and at Memorial Sloan-Kettering Cancer Center in New York, as well as to undertake specific additional testing of our lead cancer drug requested by potential licensing and development partners. Additional funding from the public offering will provide the financial strength required to move our lead drug - PhGalpha1 - toward clinical trials and to finalize design, synthesize, and initiate testing of the Company’s next pipeline compound. Funds will also be applied to continue discussions and expand our efforts in achieving value for shareholders through completion of a licensing or equivalent transaction for PhGalpha1 with potential development partners.”

The Company is also offering up to 15,600,000 additional Units to accredited investors, in the amount of up to $1,950,000, with an anticipated closing date or dates to be announced.  The Units are anticipated to be offered to accredited investors at the same price per Unit and on the same terms as today’s issue.  The sale to Dundee and the concurrent offering to accredited investors are collectively referred to as the “Private Placement”, the terms of which remain subject to final acceptance by the TSX Venture Exchange (“TSX-V”).

The Units consist of one common share and one warrant to purchase one common share. The price per Unit is $0.125. The warrants have a two year term and an exercise price of $0.165 per common share.

The Series I Shares are priced at $0.125 per Series I Share and are convertible at the request of the holder into Units on a one for one basis at no further cost.  The Series I Shares carry no fixed dividend and have no priority on liquidation. Series I Shares are eligible to vote in all votes of common shareholders to the extent of one vote for every one hundred Series I Shares held, and are subject to a voting agreement that directs Series I Share votes to be cast in favour of the majority of the common shares voted.  The Company has filed articles of amendment defining the rights of the Series I Shares.  The articles of amendment have been conditionally approved by the TSX-V.

The common shares so issued to accredited investors will be an eligible investment for RRSPs, RIFs, DPSPs and RESPs. Pursuant to applicable securities regulations, the Units and Series I Shares will be subject to a four month hold period from the date of closing.

Pursuant to an agency agreement between the Company and Dundee, Dundee will be paid a commission of 10% of the aggregate gross proceeds of the Private Placement and will also receive broker’s warrants in an amount equal to 10% of the number of Units issued in the Private Placement.  The broker’s warrants have an exercise price of $0.165 per common share and a two year term from date of issue of the Units placed.  In connection with today’s announcement, Dundee received payment of $55,000 and 200,000 broker’s warrants, respectively.

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

For information relating to this Release, please contact:
Robert McInnis, President & CEO
(613) 990-9551 bmcinnis@pharmagap.com

Note: The TSX Venture Exchange does not accept 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