January 21, 2004

POLYDEX'S USHERCELL COMPLETES FURTHER PHASE I TRIALS PROCEEDS TO PHASE II CONTRACEPTIVE TRIALS

Toronto, Ontario, January 21, 2004 -- Polydex Pharmaceuticals Limited (NASDAQ:POLXF) (BSE:PXL) is pleased to provide this update on current research and development projects involving its Ushercell and Usherdex-4 products.

Ushercell, a cellulous sulfate gel formulation developed by Polydex, is envisioned for topical vaginal use primarily in the prevention of unplanned pregnancies as well as the transmission of AIDS and other sexually transmitted diseases.

With the assistance and financial support of its collaborative research partner CONRAD, several Phase I safety, tolerance and acceptability clinical trials were successfully completed in Cameroon, Uganda, Nigeria, India, Belgium, the United States and the Dominican Republic during 2003. The data from these trials has shown consistent safety and tolerance with respect to the product, and the reports include recommendations to proceed with Phase II and III efficacy trials.

A Phase II non-comparative contraceptive effectiveness trial for cellulose sulfate gel was initiated this month by CONRAD. Two hundred heterosexual couples who currently do not desire a pregnancy and who are at low risk for sexually transmitted infections have agreed to use Ushercell as their contraceptive product preceding each act of intercourse for six months. A study report is expected in mid-2006.

A Phase II comparative contraceptive efficacy study of cellulous sulfate gel is expected to begin in February, to be conducted by CONRAD, Family Health International, and the California Family Health Council in Los Angeles, CA, and their satellite clinical sites. One hundred fifty heterosexual couples desiring pregnancy but willing to postpone conception by one menstrual cycle will be randomized between the placebo gel and Ushercell groups. Couples will be instructed to use the products for every act of vaginal intercourse and to have at least two acts during days 10-15 of the female participant's menstrual cycle and at least one act during days 16-20 of her menstrual cycle. The study is expected to be completed by the end of this year, with a report issued in 2005.

Ushercell has enjoyed unwavering support and financial assistance from the prestigious research group CONRAD (www.conrad.org), which has been successful in obtaining funding from various private and public sector donors, as well as the collaborative efforts of Family Health International (FHI), World Health Organization (WHO) Centers for Disease Control (CDC) and HPTN (HIV Prevention Trials Network). Funds from the Bill & Melinda Gates Foundation are being provided to CONRAD for Ushercell's Phase II clinical studies and supplies.

George Usher, President and CEO of Polydex is pleased that Ushercell was accepted for this support by CONRAD and notes that "Ushercell would still be in our laboratories as a pipe dream if it were not for CONRAD, their highly skilled and motivated team of clinicians, research and development scientists, pre-clinical and product development abilities, and their ability to demonstrate continued development of successful compounds to their philanthropic supporters. A topical contraceptive method, with possible antimicrobial activity for the prevention of sexually transmitted diseases, has long been a goal for CONRAD and with their continued support may be an achievable reality within the next several years."

CONRAD's Development Plan for Ushercell calls for commencement of large-scale, efficacy trials of Ushercell for both contraceptive and HIV prevention indications in 2004. 100,000 individual-dose units of the product have already been manufactured to supply the contraceptive efficacy trials. Production of several million individual-dose units has started in preparation for phase III HIV prevention clinical studies. The scopes of the Phase II and III clinical programs currently planned by CONRAD are expected to take several years and will require additional funding to complete.

CONRAD has indicated that Ushercell remains one of the leading microbicides in development and maintains confidence that funding will become available to bring this product to market as more awareness and international concern over the HIV/AIDS pandemic is sourced. Dr. Gabelnick, Director of CONRAD, says that "funding remains a constant challenge but we are very dedicated to finding a method of preventing the millions of new HIV infections every year and Ushercell is furthest along in our pipeline to attain that goal."

Usherdex-4, now called DCF987, is a carbohydrate technology intended to alleviate breathing difficulties experienced by patients with such diseases as Cystic Fibrosis (CF), Chronic Obstructive Pulmonary Disease (COPD) and other lung disorders. DCF987 has been advanced through pre-clinical and human clinical trials by BCY LifeSciences Inc. (www.bcylifesciences.com) pursuant to a sub-licensing agreement.

2003 saw the completion of both Phase I and Phase II human clinical trials involving adult cystic fibrosis patients in several medical centers across Canada. Post clinical trial analysis indicated that DCF987 was well tolerated and showed a number of positive trends including improved FEV (1) (forced expiratory volume in one second), a measure of lung function, and the reduction of Pseudomonas aeruginosa bacterial load in patient sputum, which if proven in the next development stage, would be meaningful to a cystic fibrosis patient.

Polydex Pharmaceuticals Limited, based in Toronto, Ontario, Canada, is engaged in the research, manufacture and marketing of biotechnology-based products for the human pharmaceutical market, and also manufactures bulk pharmaceutical intermediates for the worldwide veterinary pharmaceutical industry. Please visit our updated website at www.Polydex.com

Note: This press release may contain forward-looking statements, within the meaning of the United States Securities Act of 1933, as amended, and the United States Securities Exchange Act of 1934, as amended, regarding Polydex Pharmaceuticals Limited. Actual events or results may differ materially from the Company's expectations, which are subject to a number of known and unknown risks and uncertainties including but not limited to changing market conditions, future actions by the United States Food and Drug Administration or equivalent foreign regulatory authorities as well as results of pending or future clinical trials. Other risk factors discussed in the Company's filings with the United States Securities and Exchange Commission may also affect the actual results achieved by the Company.

CONTACT:
Polydex Pharmaceuticals Limited
George G. Usher, President
(416) 755-2231
or e-mail: gu-dextran@rogers.com

Investor Relations
North Arm Capital Services
Linda Hughes, Toll-free 1-877-945-1621
or e-mail: Linda@northarm.com