September 14, 2006

Polydex Pharmaceuticals Provides Second Quarter Report With Improved Sales and Bolstered Management

Toronto, Ontario, September 14, 2006 - Polydex Pharmaceuticals Limited (NASDAQ:POLXF) reports financial results for its second fiscal quarter, the three-month period ending July 31, 2006.

POLYDEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
SECOND QUARTER RESULTS, FISCAL 2007
QUARTER ENDED: July 31, 2006
(Unaudited figures, stated in U.S. dollars)

Second quarter sales have increased over the same period last year primarily due to pricing increases and customer demand.  Gross profit was up 84% over the same period last year due to these factors and to the ongoing control of direct costs by Management.

During this quarter, the Company appointed Mr. John Luce to the position of Chief Financial Officer, and also appointed Ms. Sharon Wardlaw, who has served as Chief Financial and Accounting Officer for the past thirteen years, to the position of Chief Operating Officer for the Company. Mrs. Wardlaw currently also serves as President of Dextran Products Limited.  Mr. Luce brings to his role a broad background in the financial services, audit and general management sectors. Most recently he has directed his own public accounting and consulting practice. Prior to that, he was a vice-president at the Canadian Imperial Bank of Commerce, where he was responsible for audit and credit inspection activities for the Head Office and foreign operations of the bank.

George Usher, President and Chief Executive Officer at Polydex, welcomed Mr. Luce to the Company adding, “John has been working with Polydex on an interim basis for several months and has become an integral part of our team. The Board of Directors is pleased to welcome John to the Company's management team. In his role, John will provide financial leadership and play a key role in the Company's future plans.”

The Company’s lead human pharmaceutical compound is a cellulose sulphate gel being investigated as a microbicide for potential uses in prevention of HIV and other sexually transmitted infections. Ushercell blocks infection by creating a barrier between the pathogen and the cells of the vagina, preventing viruses and bacteria from taking hold after entering the body.  It is also highly effective at preventing pregnancies, and has shown to be effective in preventing Human Papilloma Virus (HPV), the most prevalent sexually transmitted infection in the world, and linked to the onset of cervical cancer. Ushercell has demonstrated an excellent safety profile in numerous clinical trials in over a decade of research and development.

At the recent XVI International AIDS Conference held in Toronto Canada, talk of microbicides was the pulse of the conference.  Microbicides moved from the sidelines to center stage at several plenaries, starting at the opening ceremonies where Melinda Gates stated, "We believe the most promising breakthrough that could be available soon is an effective microbicide or oral prevention drug”.  Keynote speakers former United States President William J. Clinton and Microsoft co-founder Bill Gates also emphasized the need for female-controlled methods such as microbicides to halt the spread of the virus – particularly among young women and girls who now make up the fastest growing proportion of new HIV infections.  During the Company’s second quarter, former President Clinton and Mr. and Mrs. Gates visited a clinic in Durban South Africa where Ushercell is being investigated in an HIV prevention trial.

Polydex and Ushercell were mentioned in various articles published in concert with the AIDS conference including:  Bloomberg (August 11, 2006 - Africa's Condom-Wary Women, Hit by HIV, Await Protective Gels), CBC online (August 10, 2006 - In Depth: Reality Check, Women and HIV: The promise of microbicides), and featured in a story by CTV, a national Canadian television network (August 15, 2006 - Microbicide gels touted as preventative AIDS tool) and as part of their television coverage of the conference, a video of which can be viewed online at the following URL:  http://tinyurl.com/pgl85.

To further facilitate the rising awareness of microbicide development Polydex participated in this AIDS Conference and sponsored the New Prevention Technologies Zone in the Global Village; and a Microbicide Networking Reception - an event that brought microbicide developers, advocates, government representatives, activists, funders and guests together to network and shares ideas on moving forward with microbicide development.

Large-scale Phase III clinical trials to determine Ushercell’s effectiveness in prevention of HIV and other sexually transmitted diseases are ongoing at six sites in five countries.  At the recent International AIDS Conference, Dr. Gita Ramjee reported that these trials have now enrolled 2354 participants.  This research is being carried out in collaboration with 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. These trials also receive significant support from Family Health International and the Bill and Melinda Gates Foundation.

The Company’s research and development expenditures increased in the second quarter of this year, from $26,574 in the second quarter of last year to $72,484 in this second quarter, to establish extended patent protection of the processes and uses of cellulose sulphate in various countries, and toward the continued costs of a pilot clinical study on the use of cellulose sulphate for the treatment of bacterial vaginosis (BV) currently underway in Brazil.   BV is the most common bacterial disorder among reproductive age women and is a known HIV risk enhancer.  A treatment and potential prevention of BV presents an opportunity for commercial viability of Ushercell in advance of the completion of ongoing testing for use as an antiviral or contraceptive gel.

As a result of promising results from a contraceptive efficacy trial announced earlier this year, Management is looking into methods of advancing Ushercell toward commercial viability as a contraceptive product.

Plant refurbishment remains a management objective and with the application for a building permit in the last quarter, construction of new drying facilities is expected to begin in the third quarter continuing through the fourth quarter and into the next fiscal year with the unit being operational in fiscal 2008. George Usher suggests “These refurbishments, together with bringing some of our newer equipment online, will help meet the growing demands of our current customer base and allow us to engage in procuring new customer orders."

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

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