PharmaGap Reaches Agreement with Debenture Holder to extend Maturity Date



    OTTAWA, Oct. 15 /CNW Telbec/ - PharmaGap Inc. (TSX-V: GAP) ("PharmaGap"
or "the Company"), a Canadian biotechnology company developing novel compounds
to treat cancer, today announced that it has reached agreement with SC
Stormont Holdings Inc. ("Stormont", a company controlled by Roderick M.
Bryden, Chairman of PharmaGap), holder of $2,470,000 principal amount of its
Series 2 and 3 Convertible Secured Debentures ("Debentures"), which matured on
August 26, 2007, to extend the maturity date of the debentures by 18 months to
February 26, 2009.
    In return for the granting of the extension of the maturity date, the
terms of conversion have been changed, reducing the conversion price to
thirteen cents ($0.13) and eliminating the common share purchase warrant
previously provided on conversion. Original terms provided for conversion into
equity units consisting of one common share and one warrant, with conversion
price of thirty and thirty-two and one-half cents ($0.30 or $0.325) and
warrant exercise price of forty-five and forty-eight and three quarters cents
($0.45 or $0.4875) to twenty-six and one quarter cents ($0.2625).
    At the revised conversion price, the Debentures (excluding interest
accruing in the future at 10% per annum) are convertible into
22,793,761 common shares. Following conversion of all debentures, including
debentures held by third parties, and conversion of $261,726 Series 1
Convertible Secured Promissory Notes held by Stormont at the current market
price of thirteen cents ($0.13) total shares outstanding would be 51,980,555
(56,189,131 following full warrant exercise). The Stormont ownership interest
following conversion of all debentures would be 50.6% (50.5% assuming full
warrant exercise).
    PharmaGap's Board of directors (the "Board") has considered the related
transaction between PharmaGap and Stormont and the Board (and separately, the
independent members of the Board comprising an Independent Committee to review
and provide guidance to the Board) and determined that the related transaction
is exempt from the valuation and minority voting requirements of Ontario
Securities Commission Rule 61-501 pursuant to section 5.5 paragraph 8 and
section 5.7 paragraph 6 of Rule 61-501.
    The agreement is subject to final approval by the TSX Venture Exchange.

    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.

    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.




For further information:

For further information: Robert McInnis, President & CEO, (613)
990-9551, bmcinnis@pharmagap.com

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PharmaGap Inc.

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