Phosphagenics announces plans to expand its manufacturing capabilities  

Melbourne, Australia, 23 May 2006
Phosphagenics Limited ("Phosphagenics") (ASX: POH) (AIM: PSG), today announced that it has commenced the building of a production plant in Melbourne. The new facility will permit a substantial increase in the Company’s ability to manufacture tocopheryl phosphates, the base component of many of its pharmaceutical and nutraceutical products. It will also provide the Company with manufacturing capabilities to meet anticipated future supply requirements.

The new facility, expected to be commercially ready by the end of 2006, will be a scaled-up version of the pilot plant used successfully in the initial development of Phosphagenics' proprietary phosphorylation process. On completion the facility will have an annual capacity of 100 tonnes of high purity tocopheryl phosphates with an estimated wholesale value of $A25 million, although the Company does not expect to utilize all of this capacity in the immediate future. The budgeted cost for the upscale including all ancillary equipment is $A500,000, with all manufacturing equipment complying with Food Standards Australia New Zealand criteria.

Ian Pattison, Chief Operating Officer of Phosphagenics, said: "The new plant demonstrates our capability to manufacture on a commercial scale for current and future licensing partners. On completion it will also allow us to step up manufacturing output as the markets for Phosphagenics' products develop."

About Phosphagenics Limited
Phosphagenics is a pharmaceutical and nutraceutical company with a diversified portfolio of technologies encompassing drug delivery, drug enhancement, and active ingredients for the nutraceutical industry (dietary supplements, functional foods and personal care products).

Phosphagenics is based in Melbourne, Australia. Its shares are listed on the Australian Stock Exchange (POH) and the London Stock Exchange's Alternative Investment Market (PSG). An American Depository Receipts-Level 1 facility has been established in the US with the Bank of New York (PPGNY) for the trading of the Company’s shares in the US ‘Over the Counter’ market. Further information regarding Phosphagenics can be found at www.phosphagenics.com

Phosphagenics has existing commercial agreements with Zila and ISP for thedietary supplement and personal care markets, and has announced joint development programmes with Alza Corporation and Nestlé Nutrition.

For further information please contact:

Phosphagenics Limited:
Australia:
Mr Harry Rosen, Managing Director
Telephone: +61 3 9605 5900