The Manager

Company Announcements Office

The Australian Stock Exchange Limited

Dear Sir

Re: Phosphagenics Limited successfully delivers morphine through human skin in a phase I clinical study

The Board of Directors of Phosphagenics Limited ("Phosphagenics") (ASX Code: "POH"; AIM Code: "PSG") has pleasure in announcing that its patented drug delivery technology, TPM-01, successfully delivered sustained therapeutic levels morphine through human skin in a Phase I Proof of Concept study.

Based on these exceptionally promising results, the potential market size and advantages of the TPM-01/Morphine product, Phosphagenics considers that continued development of the product is warranted. The Company is now planning a Phase 2 efficacy study under the guidance of the US Food and Drug Administration (FDA).

Attached for release to the Market is a copy of a News Release that is to be made today.

For further information, contact Dr Esra Ogru, Vice President Research & Development on 61 3 9605 5900

Yours faithfully
Phosphagenics Limited



per Mourice Garbutt
Company Secretary

Phosphagenics Limited successfully delivers morphine through human skin in a phase I clinical study

In a world first, Phosphagenics Limited (Phosphagenics) (ASX Code: POH; AIM: PSG) today announced that its patented drug delivery technology, TPM-01, successfully delivered sustained therapeutic levels morphine through human skin in a Phase I Proof of Concept study.

Based on these exceptionally promising results, the potential market size and advantages of the TPM-01/Morphine product, Phosphagenics considers that continued development of the product is warranted. The Company is now planning a Phase 2 efficacy study under the guidance of the US Food and Drug Administration (FDA).

Summary of results

The study, conducted in healthy volunteers, demonstrated rapid transdermal delivery of morphine and sustained blood levels. Peak blood levels were achieved within 4 hours and the delivery system maintained therapeutic levels for up to 48 hours following a single administration (see graph of results). No serious adverse events were recorded, the formulation was well tolerated and there was no redness or irritation of the skin associated with the application.

"These results are a significant milestone for Phosphagenics as they clearly confirm TPM-01 as a novel platform technology capable of delivering morphine (a world first) and potentially a variety of other drugs through the skin" says Dr Esra Ogru (Vice President Research and Development).

Examples of other drugs that have been delivered successfully with TPM-01 in Phosphagenic’s earlier animal trials are atropine, estradiol and testosterone.

"Further more", added Dr Ogru, "the current positive results were achieved with an early formulation of the TPM-01/Morphine mixture, which we believe can be further improved upon as part of the progression to a Phase 2 study."

Advantages of delivery through the skin

Morphine is currently administered orally, intravenously or by intramuscular injection. It has not previously been delivered transdermally.

The advantages of transdermal delivery include a potential reduction in some of the side effects associated with the other methods of administration, and the delivery of a steady amount of morphine over an extended period of time in a safe and convenient manner.

All other commercially available extended release morphine preparations are oral products, and they are only effective for between 12 to 24 hours per dose.

We expect that a transdermal morphine product will be well accepted in the global $US6.0 billion market for pain management using narcotic medications.

Aims of the Study

This first-in-humans Phase I study was designed to obtain information on safety and to determine TPM-01/Morphine’s pharmacokinetic profile (how a drug is absorbed, distributed in the body, metabolised and excreted). The overall objectives were to confirm the promising results from previous animal experiments and to define the conditions for further product development. These objectives were fully achieved.

Outline of study

In a non-blinded study, 10 healthy male volunteers received a single application to their skin of a TPM-01/Morphine mixture, containing 100 mg of morphine, which was rubbed into the skin of the upper arm. The volunteers were then monitored and blood samples taken for analysis.

Funding

The TPM-01/Morphine research is half funded by an R&D START grant of $1.7 million from the Australian Government through AusIndustry, and half by Phosphagenics R&D funds.

For further information contact:

Dr Esra Ogru

Vice President

Research & Development

+61 3 9605 5900