Pacgen Biopharmaceuticals Corporation Announces Private Placement Financing and Financial Restructuring

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 19, 2010) - Pacgen Biopharmaceuticals Corporation (the “Company” or “Pacgen”) (TSX VENTURE: PGA) announced today that it has arranged a non-brokered private placement (the “Financing”) of $600,000 of subscription receipts (“Subscription Receipts”) subject to satisfactory completion of certain conditions, including the approval of the TSX Venture Exchange. The Company also announced that it has initiated a financial restructuring (the “Financial Restructuring”).

In connection with the Financial Restructuring, the Company will arrange settlements to reduce its indebtedness by up to $1.3 million and will seek shareholder approval for a consolidation of its common shares (the “Common Shares”) on the basis of one post-consolidation Common Share for every two existing Common Shares (the “Consolidation”).

Under the Financing, the Company will issue an aggregate of 10,000,000 Subscription Receipts at a price of $0.06 per Subscription Receipt for gross proceeds of $600,000. If the Consolidation is approved, each Subscription Receipt will be automatically exercised, for no additional consideration, for one post-consolidation Common Share. If the shareholders of the Company do not approve the Consolidation, the subscription proceeds from the private placement will be returned to subscribers forthwith. Completion of the Financing is subject to approval of the TSX Venture Exchange.

The $1.3 million reduction of indebtedness under the Financial Restructuring will include converting approximately $658,000 of outstanding principal and interest under past due debentures into approximately 10,966,667 common shares. Although negotiations with creditors have not been finalized, the Company expects a portion of the balance of the restructured indebtedness to be converted into up to 2,000,000 additional Common Shares. The issuance of Common Shares in connection with the Financial Restructuring is subject to completion of the Consolidation.

If the Consolidation is approved by the Company’s shareholders, the 38,144,693 Common Shares currently issued and outstanding will be reduced to approximately 19,072,346 Common Shares. Following the completion of the Consolidation, the Financing and the Financial Restructuring, the Company expects to have approximately 42 million Common Shares issued and outstanding and will have secured a financing of $0.6 million and reduced its indebtedness by approximately $1.3 million. Completion of the Consolidation, the Financing and the debt-for-shares component of the Financial Restructuring are subject to the approval of the TSX Venture Exchange.

Directors and officers of the Company have subscribed for an aggregate of 1,416,667 Subscription Receipts and will convert an aggregate of approximately $415,000 of debentures into Common Shares in the Financial Restructuring. The independent directors of the Company have approved the participation of such directors and officers in the Financing and the Financial Restructuring. While participation in such transactions constitute “related party transactions” under Multilateral Instrument 61-101 (“MI 61-101"), the participation of such related parties in the Financing is exempt from minority approval requirements under MI 61-101 on the basis that neither the fair market value of the securities issued to nor the consideration paid by such persons will exceed 25% of the Company’s market capitalization. The participation of such related parties in the debt-for-shares conversion is exempt from the minority approval requirements under MI 61-101 because the board of directors, including the independent directors of the Company, has determined, in good faith that the Company is in serious financial difficulty, the transaction is designed to improve the financial position of the Company and the terms of the transaction are reasonable in the circumstances.

This press release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act of 1933 or any state securities laws and may not be offered or sold within the United States unless registered under the U.S. Securities Act of 1933 and applicable state securities laws or an exemption from such registration is available.

About Pacgen

Pacgen is a life science technology transfer company focused on the commercial development of novel therapeutic drug candidates up to Phase II, proof of concept efficacy in human. Pacgen sources innovative therapeutic drug candidates globally, and develops these drug candidates in accordance to the United States Food and Drug Administration regulatory standards to feed the product development pipelines of the pharmaceuticals industry. Pacgen’s technology portfolio is composed of PAC-113, an anti-fungal for the treatment of oral Candidiasis, and PAC-G31P, a novel peptide therapeutic designed to treat inflammatory diseases characterized by non-beneficial neutrophil.

PAC-113 is a 12 amino-acid antimicrobial peptide derived from a naturally occurring histatin protein found in human saliva. This peptide alters the permeability of fungal cell membranes causing cell death. In June 2008, Pacgen announced positive results from its Phase IIb clinical trial demonstrating that PAC-113 is effective in the treatment of oral Candidiasis and compares favourably to the efficacy demonstrated by Nystatin, a current standard of care. PAC-G31P is a small recombinant protein that is a synthetic analogue of the human cytokine called Interleukin-8 which is the key chemokine involved in neutrophil recruitment. PAC-G31P is currently being investigated in preclinical studies for its potential to treat inflammatory diseases characterized by non-beneficial neutrophil. For additional information, please visit www.pacgenbiopharm.com.

Forward looking Statements

Certain statements included in this press release may be considered forward-looking. Statements relating to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, market acceptance and future commitments constitute forward-looking statements. All forward-looking statements are based on Pacgen’s current beliefs and expectations as well as assumptions relating to the successful completion of its clinical trials and pre-clinical studies, the time and process required to obtain regulatory approval for commercialization of its product, the ability of Pacgen to raise additional capital in future on favourable terms, the impact of competitive products and pricing in the market, new product development, and the successful and timely completion of corporate collaborations or licensing arrangements for its research programs. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those implied by such statements, and therefore these statements should not be read as guarantees of future performance or results. Such factors include, among others, our stage of development, lack of product revenues, additional capital requirements, risk associated with completion of clinical trials and obtaining regulatory approval, dependence on collaborative partners, and our ability to protect our intellectual property.

Wherever possible, words such as “anticipate”, “believe”, “expect”, “may”, “could”, “will”, “potential”, “intend”, “estimate”, “should”, “plan”, “predict”, “project” or the negative or other variations of such expressions reflect Pacgen’s current beliefs and assumptions and are based on the information currently available to Pacgen. Certain risks and uncertainties, including those risk factors identified by Pacgen in its annual management’s discussion and analysis dated July 9, 2009 and annual information form dated July 31, 2008, may cause our actual results, level of activity, performance or achievements to differ materially from those implied by forward looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made only as of the date of this press release. Pacgen disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. For all forward-looking statements, Pacgen claims the safe harbour for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

No Regulatory Authority has approved or disapproved the content of this release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.