Warnex Inc.

Warnex Inc.

August 31, 2006 16:50 ET

Warnex concludes acquisition of MDS Pharma Services' Blainville - Pharmaceutics business

LAVAL, QC, Aug. 31 - Warnex Inc. (TSX:WNX) today announced that
its wholly-owned subsidiary Warnex Analytical Services Inc. has concluded the
acquisition of the MDS Pharma Services pharmaceutics business located in
Blainville, Quebec, following an agreement in principle announced on July 18,
2006.

The purchase price of $1,950,112.23 was paid in cash. Concurrent to the
acquisition, Warnex signed a 12-month lease for the Blainville facilities,
with an option to renew for 6 months. The acquisition will operate as Neopharm
Laboratories, a division of Warnex Analytical Services.

Warnex expects to bring the Blainville pharmaceutics operations, which
reported $6.7 million in annual revenue and incurred a loss in its last fiscal
year, in line with the historically profitable performance of its existing
analytical business unit. The acquisition, which effectively doubles the
Company's analytical revenue, is expected to be EBITDA positive within
12 months.

"This acquisition, for a number of reasons, made sound, strategic
rationale. First, we are already well established in this business segment and
this acquisition gave us a one time opportunity to leverage our success into a
dominant market position in our regional market of Quebec," said Mark Busgang,
President and CEO of Warnex. "As well, this acquisition gives us the scale to
reach beyond our regional market and we will now focus on more aggressive
international growth."

MDS Pharma Services' analytical laboratories offer pharmaceutical
analysis, traditional chemistry, microbiology, method development and
validation, technology transfer, and stability studies. The Blainville
operations occupy 28,000 square feet and are fully cGMP compliant.

The MDS Pharma Services Bioanalytical Services unit continues its
operations at the Blainville site.

About Warnex

Warnex (www.warnex.ca) is a biotechnology company devoted to protecting
public health by providing advanced diagnostic products and science-based
services to the agri-food, pharmaceutical and healthcare sectors. Warnex's
DNA-based technology offers a versatile detection platform that produces
accurate results rapidly, using Real-Time PCR technology combined with unique
genetic markers and software. With a focus on pathogen detection in food, our
development pipeline also includes applications in GMO testing and meat
speciation, as well as in the detection of viruses, yeasts and moulds.
Warnex's analytical, bioanalytical, and medical laboratory service groups
offer a variety of quality control services, method development and
validation, contract R&D, bioavailability and bioequivalence studies for
clinical trials, and medical laboratory testing.

Warnex is a trademark of Warnex Inc., Laval, Quebec.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this news release are forward-looking and
are subject to numerous risks and uncertainties, known and unknown. For
information identifying known risks and uncertainties, relating to the early
commercialization of Warnex products, intellectual property and licensing, R&D
of new Warnex products, integration of acquisitions, manufacturing and
laboratory facilities, suppliers, key employees, key customers and business
partners, financial resources and credit risk, government regulations, foreign
currency risk and volatility of share price, and other important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the heading Risks and
Uncertainties in the Management's Discussion and Analysis for the second
quarter ended June 30, 2006, which can be found at www.sedar.com.
Consequently, actual results may differ materially from the anticipated
results expressed in these forward-looking statements.

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