Melbourne, Australia, 03 May 2007: The Industry Minister, Hon Ian Macfarlane, announced today that Vital Health Sciences Pty Ltd, a wholly-owned subsidiary of Phosphagenics Limited (ASX: POH) (AIM: PSG) (ADR/OTC: PPGNY), has been offered a research grant under the AusIndustry Pharmaceuticals Partnerships Program (P3) of up to $3.2 million.

P3 is a competitive government grant program aimed at increasing the amount of high quality pharmaceutical R&D activity in Australia. The P3 grant entitles Phosphagenics to funding of up to $3.2 million over two years starting from 01 July 2007 to support a number of its drug-development projects, dependent on the company meeting forecast R&D expenditure for the period.

The funding will be used to further develop Phosphagenics’ R&D portfolio, including the following:

• pre-clinical and clinical development of its TPM transdermal delivery technology and oral drug delivery technology for the treatment of diabetes, chronic pain management and other markets; and

• pre-clinical and clinical development of its lead compounds for the treatment of atherosclerosis/metabolic syndrome (APA-01) and the treatment of cancer (GTP-0805).  

Mr Harry Rosen, President and CEO of Phosphagenics, said “Phosphagenics patented technologies are world class and address areas of medical need such as diabetes, metabolic syndrome and chronic pain. The support of the government and this grant will not only help Phosphagenics meet its key milestones, but also provides support for our local scientists, researchers and developers.”

ENDS...

APPENDIX AND NOTES TO EDITORS

About Phosphagenics Limited

Phosphagenics is a Melbourne-based, globally driven biotechnology company focused on the discovery of new and cost effective ways to enhance the bioavailability, activity, safety and delivery of proven pharmaceutical and nutraceutical products.

Phosphagenics’ core technology is built around the science and application of phosphorylation, a process where the addition of a phosphate group has been found to enhance the bioavailability, activity and safety of existing pharmaceuticals and nutraceuticals, as well as to assist in the production of drug delivery platforms.

Phosphagenics’ shares are listed on the Australian Stock Exchange (POH) and the London Stock Exchange's Alternative Investment Market (PSG). An ADR – Level 1 program has been established in the US with the Bank of New York (PPGNY) for US investors to trade in Phosphagenics’ stock on the ‘over-the-counter’ market.