Phosphagenics and Nestle Nutrition Extend Option Agreement

- Phospha E(R) Clinical Program to Progress as Planned -

Jul 10, 2007, 01:00 ET from Phosphagenics Limited

    MELBOURNE, Australia, July 10 /PRNewswire-FirstCall/ -- Phosphagenics
 Limited ("Phosphagenics") (ASX: POH; AIM: PSG; OTCQX: PPGNY) today
 announced that it has, by mutual consent, extended the period in which a
 commercial agreement is to be concluded with Nestle Nutrition ("Nestle").
 In January 2007, Nestle exercised its option to negotiate, on an exclusive
 basis, a commercial agreement with Phosphagenics for the use of its Phospha
 E(R) to treat and prevent metabolic syndrome.
     Nestle has received regulatory approval of its acquisition of Novartis
 Medical Nutrition ("Novartis"), substantially improving Nestle's position
 in the fast-growing and profitable healthcare nutrition segment. Gradual
 integration of Novartis activities is planned during the next months. As
 Phospha E would be marketed by the extended Nestle enterprise; the
 acquisition of Novartis has the potential to increase the value of the
 arrangement between Nestle and Phosphagenics. In these circumstances, it
 was considered by both parties to be premature to conclude their commercial
 arrangements before consolidation of Novartis activities.
     To avoid any delays in the development of Phospha E, Nestle and
 Phosphagenics are continuing their planned clinical program, with the first
 human trial intended to commence this quarter. This clinical trial follows
 the successful completion of a series of full dose-response pre-clinical
 studies of Phospha E. Nestle and Phosphagenics are continuing to work
 together to develop Phospha E for use as a nutritional product, targeting
 the prevention and treatment of metabolic syndrome.
     "We are delighted to be working closely with Nestle, the world's
 largest food company, with the aim of bringing Phospha E to market as
 quickly as possible," said Harry Rosen, President and CEO of Phosphagenics.
     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. The Company's 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). In March 2006, an ADR - Level 1 program was established in
 the U.S. with The Bank of New York Mellon (PPGNY) for U.S. investors to
 trade in Phosphagenics' stock on the 'over-the-counter' market. This has
 now been upgraded to the International OTCQX, a new premium market tier in
 the US for international exchange-listed companies, operated by Pink
 Sheets, LLC.
     For more information, please visit Phosphagenics' web site at
     About Nestle Nutrition
     Nestle Nutrition is an autonomous business within the Nestle group
 managing and developing the group's speciality nutrition brands. Through
 science-based nutrition products and services, Nestle Nutrition helps
 enhance the quality of people's lives by supporting health and providing
 care for specific consumer groups with special nutrition needs at every
 stage of life.
     About 16,500 employees in more than 100 countries are part of Nestle
 Nutrition. Its product portfolio - covering infant nutrition, healthcare
 nutrition, performance nutrition and weight management - includes such
 trusted and well-recognised brands as: NAN, LACTOGEN, NESLAC, CERELAC,
     More information at:
     About Phospha E(R)
     Phospha E(R) is a patented derivative of vitamin E that has superior
 properties compared to its parent molecule. For example, Phospha E has been
 shown to be better absorbed than vitamin E, both orally and through the
 skin, to lower cholesterol and triglycerides, prevent the formation of
 plaque in heart arteries, as well as having unique anti-inflammatory
     Phospha E has applications across all three nutraceutical market
 segments, and is currently sold internationally as a dietary supplement by
 NBTY Inc (under the name of Ester-E(TM)) and is marketed worldwide in the
 personal care market as Vital ET(TM) by ISP Corporation.
     Safe Harbor Statement
     This press release contains forward-looking statements based on current
 expectations of future events. If underlying assumptions prove inaccurate
 or unknown risks or uncertainties materialise, actual results could vary
 materially from the Phosphagenics' expectations and projections. Risks and
 uncertainties include general industry conditions and competition; economic
 conditions, such as interest rate and currency exchange rate fluctuations;
 technological advances and patents attained by competitors; challenges
 inherent in new product development, including obtaining regulatory
 approvals; domestic and foreign health care reforms and governmental laws
 and regulations.

SOURCE Phosphagenics Limited