Altachem Pharma Ltd. announces closure of Private Placement and provides corporate update

Trading Symbol: AAF:TSX Venture Exchange

EDMONTON, May 10 /CNW/ - Altachem Pharma Ltd (TSXV:AAF; "Altachem" or the
"Company") announces that it has closed the second and last tranche of the  
non-brokered private placement financing announced December 10, 2004 with the
sale of an additional 4,200,000 units (the "Units") for gross proceeds of
$1,050,000. Closing of the second tranche is subject to regulatory approval.
The proceeds will be used to further operations and fund core programs. Total
gross proceeds from both tranches are $1,493,000.
The Company also wishes to update shareholders on progress in
implementing the strategic re-positioning, announced February 23rd, 2005. The
Company intends to concentrate resources on the development of its unique
'Sonolight' photodynamic therapy (PDT) based on the Hypocrellin-derivatives
platform and on the CDK inhibitor program, presently in the discovery stage.
The lead compound from the PDT platform, SL-017, is expected to enter a
phase I trial for Actinic Keratoses in Q3. A second phase I trial for prostate
cancer is anticipated for early 2006. To support this focus on the PDT (and
related sonodynamic therapy) the Company has decided to suspend the current
phase I clinical trials for ACP-HIP (Kaposi's Sarcoma indication) and to
secure a 3rd party to continue development of the product. The Company's other
AIDS project ("AntiCort") for which it has the Canadian rights (and an option
for Commonwealth rights) is under development by the US-based licensor and the
Company intends to work with the licensor to finalize a strategy for the next
stages of development for AntiCort in Altachem's territories of use.
Altachem's strategy of discontinuing operations in China is well under
way. The Company has retained several agents on a non-exclusive basis to
represent the sale of its Shanghai-based operating company ("SHGP") and
several parties have received the information memorandum, toured the facility
and begun their due diligence. The Company has also received initial approval
from the Chinese Authorities to collapse Altachem's other Chinese subsidiary
("SACP") and return its cash and technology assets to Canada. This process is
expected to be completed during the Fall. Altachem also intends to divest its
Bionex disinfectant business, but has not yet determined the most effective
way to accomplish this.
"We are confident that we can extract substantial value from the Bionex
family of products for our shareholders" commented Dr. David Cox, President &
CEO "Whether this is by outright sale, licensing or some other transaction
will depend to a significant degree on whether it will be 'bundled' with the
sale of our Chinese assets, where the technology is currently held.
With the closing of the private placement announced today", continued Dr.
Cox, "the Company is now able to retire the bulk of its debt and, assuming
reasonable proceeds from the sale of non-core assets, should be able to
resource its core programs through 2005, at least. We are delighted that we
have raised over $2.5 million for the company in the last 3 months, but we are
of course continuing to evaluate all options for further capitalization. These
could include brokered financings (public or private), merger/acquisition
and/or corporate partnerships. Our goal is to extend our financial runway into
2007 or beyond".
Altachem also announces that its 2005 Annual General Meeting will be held
at 3.00pm, Thursday, September 15th at the Greenwood Inn in Edmonton. As
previously announced, the company is also hosting an informal 'meet the new
executive team' evening at 5.30pm, Wednesday, May 11th at the Coast Terrace
Inn (Gateway Boulevard, Edmonton). Dr. Cox will make a presentation
summarizing the developments outlined in this release and answer questions
from the floor. Refreshments will be provided. All shareholders and other
interested parties are welcome.
Finally, the Company wishes to announce that it has granted a total of
500,000 stock options to 3 Officers and 2 non-management Directors. The
exercise price of the options is $0.25. All allocations will be subject to
approval by the TSXV and the allocations to the Officers will also be subject
to shareholder approval.

Altachem Pharma is a publicly traded (TSX Venture Exchange: AAF),  
Alberta-based pharmaceutical company committed to the development and
commercialization of new pharmaceutical products. It is developing a series of
products for the treatment of cancer and other proliferative diseases based on
its Sonolight and CDK platforms. It also has a profitable product in       
Accu-MAb(TM), a monoclonal-based diagnostic kit for whooping cough.

Certain information contained in this press release may be forward-
looking and is subject to unknown risks and uncertainties. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove correct. This is neither an offer to buy or sell a security. For
informational purposes only, from sources deemed to be reliable.

"TSX Venture Exchange has neither approved nor disapproved of the
information contained herein."

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