Phosphagenics receives ethics approval for Phase I clinical trials of its transdermal insulin delivery product

Melbourne, Australia, 3 July 2006
Phosphagenics Limited (ASX: POH) (AIM: PSG) today announced that it received
Ethics Committee approval for a Phase I clinical trial of its transdermal insulin
delivery product, TPM-02/Insulin. TPM-02/Insulin is being developed as a novel way
of administering insulin to diabetics, and this trial - which is planned to commence
this July - follows on from the successful preclinical trials that were reported on 25
May 2006 to the market.

In the proposed study, 20 healthy male volunteers will be randomly assigned to
receive either TPM-02/Insulin or a placebo, applied in a single dose directly to the
skin. The primary objective of this study is to assess the safety and tolerability of this unique delivery platform. Blood glucose and insulin levels will also be measured.

Dr Esra Ogru, Executive Director of Research and Development at Phosphagenics,
said: "Ethics Committee approval of a Phase I clinical trial of insulin formulated with
our proprietary transdermal carrier is an important milestone in the development of
our topical insulin product. The Phase I trial will also provide clinical evidence of the
effectiveness of Phosphagenics’ technology in delivering larger peptide or protein
drugs through the skin."

The principal investigator to the clinical trial will be Professor Leon Bach, senior
endocrinologist at Alfred Hospital, and the co-investigator will be William Hsu MD,
clinical investigator at the Joslin Diabetes Center of Harvard Medical School.

ENDS….

For further information please contact:

Phosphagenics Limited
Dr Esra Ogru, Executive Director Research & Development
Telephone: +61 3 9605 5900 or 0402 080 846

About Phosphagenics’ Transdermal Carrier
Phosphagenics’ patented transdermal technology utilises existing dermal transport
mechanisms to transport drugs across the skin without disrupting its surface. The
company believes that they key advantages of the TPM delivery system include that
it possess anti-inflammatory and anti-erythema properties, thus minimising skin
irritation, and it has the ability to provide a sustained systemic delivery of a wide
range of drugs, ranging from relatively small molecules (e.g. morphine, fentanyl,
oxycodone, atropine, estradiol, testosterone) to large molecules (e.g. insulin and
PTH).

About Diabetes
Diabetes is an illness that occurs as a result of problems with the supply and
effectiveness of the hormone insulin.

Digested food is turned into glucose, a form of sugar, which is used as the body’s
energy source. Insulin, which is produced in the pancreas, enables muscles and
other tissues to absorb glucose from the bloodstream.

When an individual has diabetes, either their pancreas does not produce the insulin
they need or their body cannot use its own insulin effectively. As a result, people with
diabetes do not use enough of the glucose in the food they eat. This leads to the
amount of glucose in the blood increasing, a condition referred to as "high blood
sugar" or "hyperglycaemia". High levels of glucose in the blood can lead to medical
complications.

The International Diabetes Foundation (IDF) estimates that direct and indirect
healthcare costs associated with diabetes exceed US$153 billion globally. IDF
believes that some costs are preventable through disease control and management
that decreases the longer term costs of complications, such as blindness and vision
impairment, cardiovascular disease and kidney failure. At present there is no cure for
diabetes.

The world market for insulin is estimated to be worth more than US$5.5 billion per
annum and growing.

About Phosphagenics Limited (“Phosphagenics”)
Phosphagenics is a Melbourne-based biotechnology company focused on discovering new and cost effective ways to enhance the bioavailability, activity and delivery of proven pharmaceutical and nutraceutical products.

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.