May 1, 2006

POLYDEX PHARMACEUTICALS LIMITED - 2006 FISCAL YEAR END RESULTS

Toronto, Ontario, May 1, 2006 -- Polydex Pharmaceuticals Limited (NASDAQ:POLXF) has announced the results for its fiscal year ending January 31, 2006. All figures are reported in US dollars.

Sales of the Company for the year ending January 31, 2006 amounted to $5,265,209 and the Company incurred a net loss of $1,489,053 for the year. This net loss is a result of the decrease in sales and gross margin at Dextran, and can be primarily attributed to the continued increase in value of the Canadian dollar relative to the U.S. dollar. Dextran Products’ sales decreased by 4% during fiscal year ended January 31, 2006, but since most of the Company’s sales are denominated in U.S. dollars, while its costs are primarily denominated in Canadian dollars, the rise in value of the Canadian dollar also resulted in increased cost of sales. In addition, the gross margins were affected by other factors, including supplier price increases, increased equipment repairs and building supply costs, and increased depreciation charged to cost of sales due to equipment acquisitions during the year.

Looking ahead, the Company has recently experienced an increase in demand for dextran based products from European customers. Consideration of these and other current market opportunities has led Management to make plant refurbishments and the expansion of production capacity a priority for fiscal year 2007. Management also continues to explore opportunities to increase distribution chains for existing Dextran products in certain overseas markets, such as India, China and Russia.

Sales from continuing operations in the 4th quarter of fiscal 2006 amounted to $1,606,980, the highest sales in any other quarter during fiscal 2006, and an increase of $300,683 over 4th quarter in the previous year of $1,306,297. Management continues to focus on improving market penetration of its core product base, increased productivity and cost control measures over materials.

In the first quarter of fiscal 2006, the staff and Management of Polydex marked the passing of Company Director, VP Research and Development, and Founder, Thomas C. Usher at the age of 90. A Memorial publication of the Company Annual Report was produced to honour his contributions to the Company during his 39-year tenure. The Company’s leading human pharmaceutical compound, Ushercell, is a cellulose sulphate gel envisioned as a method of contraception and prevention in the spread of the AIDS causing virus HIV, and other sexually transmitted diseases, and bears his name in celebration of his ingenuity.

In the second quarter of fiscal 2006, we reported the award of $24 million in grant funding to CONRAD by USAID and the Bill and Melinda Gates Foundation for the commencement of a second Phase III human clinical trial to determine Ushercell’s effectiveness at prevention of the spread of HIV and other sexually transmitted diseases. (see news release May 3, 2005)
The Company announced the formation of a Strategic and Scientific Advisory Board to provide Management and the Polydex Board of Directors with expert advice, counsel and direction to optimize and capture the commercial value of Ushercell for Polydex. The SSAB is addressing critical issues and define appropriate action from technical, business, legal, clinical and regulatory perspectives as Ushercell moves toward completion of Phase III clinical studies and in preparation for commercialization. (see news release December 15, 2005)

In the fourth quarter, the Company was very pleased to announce several key advances in the development of Ushercell, one being the commencement of a Phase II human clinical trial in Brazil, to determine Ushercell’s effectiveness at prevention and treatment of bacterial Vaginosis, a common disorder among reproductive age women (see news release January 23, 2006), another being the confirmation of Ushercell as a highly effective contraceptive when used as directed (see news release January 26, 2006), and finally, the issuance of a European Patent covering the use of Ushercell in the prevention and treatment of papilloma virus infections (see news release January 30, 2006). 

Ushercell has been developed with collaborative support from CONRAD, a cooperating agency of USAID committed to improving reproductive health by expanding the contraceptive choices of women and men and by helping to prevent the transmission of HIV/AIDS and other sexually transmitted diseases. CONRAD is administered through the Department of Obstetrics and Gynecology at Eastern Virginia Medical School (EVMS) in Norfolk, VA, with the main office located in Arlington, VA. Polydex has entered into agreements with CONRAD for the provision of Ushercell product at a fair price for the public sector and retains exclusive worldwide commercial rights for sales in the private sector. Together, CONRAD and Polydex are working to identify third parties interested in entering into licensing agreements with Polydex.

A copy of the Company’s Annual Report on Form 10-K, including its complete fiscal year end financial statements, is available at the company website at www.Polydex.com.
Polydex Pharmaceuticals Limited, based in Toronto, Ontario, Canada, is engaged in the research, development, manufacture and marketing of biotechnology-based products for the human pharmaceutical market, and also manufactures bulk pharmaceutical intermediates for the worldwide veterinary pharmaceutical industry.

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:

Investor Relations
Contact for CONRAD: Annette Larkin, 202-429-4929, AnnetteLarkin@rationalpr.com

Investor Relations for Polydex Pharmaceuticals Limited:  North Arm Capital Services, Linda Hughes, 1-877-945-1621, (Linda@northarm.com)