Inflazyme Pharmaceuticals Ltd.
TSX : IZP

Inflazyme Pharmaceuticals Ltd.

September 20, 2005 23:32 ET

Inflazyme Raises Additional Cash Through a Corporate Reorganization

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Sept. 20, 2005) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Inflazyme Pharmaceuticals Ltd. (TSX:IZP) today announced an increase in its cash from the restructuring of one of its wholly-owned subsidiaries. The restructuring initially provides $3,430,000 of proceeds to be used to fund Inflazyme's operations. Inflazyme has also entered into a put agreement that assures Inflazyme of the ability to sell its holdings in the subsidiary for an additional $2,500,000 increasing the total aggregate proceeds from the restructuring to $5,930,000. The put option is exercisable upon the satisfaction of certain conditions or in any event on March 15, 2006. Inflazyme expects to realize the additional $2,500,000 before March 15, 2006.

The restructuring includes the issuance of $7,430,000 principal amount of convertible secured debentures by the subsidiary company. Proceeds of $4,000,000 will be escrowed and act as security for the convertible debenture. The balance will be available to fund Inflazyme's current operations. The convertible debentures mature on September 20, 2007 and bear interest at 2% per annum with interest payments due semi-annually beginning July 1, 2006. The debentures are convertible at the option of the holders into unlisted, non-voting common shares of the subsidiary.

Dr. Kevin Mullane, President and Chief Executive Officer of Inflazyme, commented that "This reorganization brings into the Company an additional $5.9 million, once the put option is exercised. This increase in our cash resources is being completed without any dilution to our shareholders. The additional funding allows us to continue to advance our business plan for a longer period. At our current burn rate, it will provide sufficient cash until the end of calendar 2007."

The securities referenced in this transaction have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, absent U.S. registration, or an applicable exemption from U.S. registration requirements.

Inflazyme Pharmaceuticals is a biopharmaceutical company pioneering medical breakthroughs that will transform the lives of patients with respiratory and inflammatory diseases worldwide. Further information on the Company may be obtained from its website at www.inflazyme.com.

Statements in this news release other than historical information are forward-looking statements subject to risks and uncertainties. Actual results could differ materially depending on factors such as the availability of resources, the timing and effects of regulatory actions, the strength of competition, the outcome of litigation and the effectiveness of patent protection. Additional information regarding risks and uncertainties is set forth in the current Annual Information Form for Inflazyme on file with the Canadian Securities Commissions.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this information.

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