PharmaGap Inc. Announces Closing of First Tranche of Private Placement

OTTAWA, ONTARIO--(Marketwire - August 30, 2010) - PharmaGap Inc. (TSX VENTURE: GAP)(OTCBB: PHRGF) (“PharmaGap” or “the Company”) announced today that it has completed the initial tranche of an offering of equity units (the “Units”) previously announced on August 11 of up to $3 million. A total of up to 16,666,667 units are being made available to subscribers at the offering price of $0.18. Each Unit consists of one common share and one warrant to purchase a common share at an exercise price of $0.25 for the first two years and $0.35 for the third year of the three year warrant term.

The initial closing is in the amount of $493,077 being 2,739,317 Units, to accredited investors.

In connection with this private placement, cash finder’s fees and broker warrants will be paid to Capital Street Group ($21,484 cash fees and 119,356 broker warrants), to Northern Securities ($9,828 cash fees and 54,600 broker warrants) and to Canaccord Genuity Corp. ($7,285 cash fees and 40,474 broker warrants). Broker warrants are issued on the same terms and conditions as the warrants included in the Units.

At the request of the Lead Agent and brokers, the Company has agreed to keep the Offering open until September 11, 2010 in order to provide additional time to reach prospective buyers, and looks to close a second tranche of the Offering on or before that date. The Company has been advised that additional subscription documents have been executed by subscribers, and that others are expected to be executed, however these orders have not been received by the Company’s legal counsel in time or form to permit inclusion in this initial closing, but are expected to be included in the second closing.

Robert McInnis, President and CEO commented “The closing just completed and indications for the second close on or about September 11th are expected to fund the company’s program through the end of 2010. Significant results from this program will be announced as available. Additional equity will be raised this year or early in 2011 in the context of these announcements.”

About PharmaGap Inc.

PharmaGap Inc. (TSX VENTURE: GAP), based in Ottawa, ON, is a biotechnology company with a core focus on developing novel peptide therapeutics for the treatment of cancer. PharmaGap’s GAP-107B8 is a novel peptide drug that has been shown to be highly cytotoxic to numerous cancer types, including chemo-resistant cancers, in vitro. For more information on PharmaGap please visit the Company’s website at www.pharmagap.com.

Forward Looking Statements

This news release contains certain statements that constitute forward-looking statements as they relate to the Company and its management. Forward-looking statements are not historical facts but represent managements current expectation of future events, and can be identified by words such as “believe”, “expects”, “will”, “intends”, “plans”, “projects”, “anticipates”, “estimates”, “continues” and similar expressions. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.

By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this news release, PharmaGap will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities law, the Company assumes no obligation to update or revise any forward looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: the ability to secure licensing arrangements; successful development of PharmaGap’s drug products for human use; competition from alternate therapies; product liability; intellectual property; reliance on key personnel; interest rates; uninsured and underinsured losses; operating hazards; risks of future legal proceedings; availability and terms of financing; distribution of securities; effect of market interest rates on price of securities; and potential dilution.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts 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.