PRESS RELEASE: Cangene Corporation Consolidating R&D Operations; Staff Reduction

Cangene Corporation Consolidating R&D Operations; Staff Reduction

TORONTO and WINNIPEG, Oct. 2 - Cangene Corporation today reports that it is consolidating all research and development activities within the Winnipeg head office location. The Company has instituted a number of strategic changes in its R&D processes over the past several months to formalize and enhance new product development; having a consolidated group will help to strengthen the links between research, product development and manufacturing activities, and increase operational effectiveness.

In addition, a significant portion of the activities in Cangene's Mississauga R&D operation were related to a contract research project with the Apotex Group that is now concluded and to two products (Accretropin(TM) and Leucotropin(R)) that have been submitted for licensure. On-going responsibility for any additional development of these two products will be transferred to the Winnipeg group. The Apotex project that has been concluded contributed a gross profit of $3.2 million to Cangene in fiscal 2006 and the Company expects a similar amount will be recorded for fiscal 2007.

The re-organization results in a reduction in staff of approximately 4% and an expected net operating savings of approximately $1.5 million annually. Non-R&D functions in Mississauga are unaffected by the consolidation.

About Cangene Corporation

Cangene is one of Canada's largest and earliest biopharmaceutical companies. It was founded in 1984 and is headquartered in Winnipeg, Manitoba. It uses patented manufacturing processes to produce plasma-derived and recombinant therapeutic proteins. Cangene has three FDA and Health Canada-approved products and a fourth that has been approved in Canada only. One of its recombinant protein products has received an approvable letter from the FDA and another has been submitted for regulatory review in Canada. In addition, the Company has several more products in development at various stages. Three of Cangene's products have been accepted into the U.S. Strategic National Stockpile - botulism antitoxin, anthrax immune globulin and vaccinia immune globulin, a product used to counteract certain complications arising from smallpox vaccination.

Capitalizing on its drug manufacturing expertise, Cangene also operates a significant contract research and manufacturing business using its Winnipeg facilities and the resources of Baltimore, Maryland-based Chesapeake Biological Laboratories, Inc. (a wholly owned subsidiary). An expansion in 2006 at the Winnipeg location increased the Company's capacity to fractionate plasma to accommodate the growing manufacturing requirements. Cangene's website, www.cangene.com, includes product and investor information, including past news releases. Chesapeake's website is www.cblinc.com.

Forward-looking information

The reader should be aware that Cangene's businesses are subject to risks and uncertainties that cannot be predicted or quantified; consequently, actual results may differ materially from past results and those expressed or implied by any forward-looking statements. Factors that could cause or contribute to such risks or uncertainties include, but are not limited to: the regulatory environment including the difficulty of predicting regulatory outcomes; changes in the value of the Canadian dollar; the Company's reliance on a small number of customers including government organizations; the demand for new products and the impact of competitive products, service and pricing; availability and cost of raw materials, especially the cost, availability and antibody concentration in plasma; fluctuations in operating results; government policies or actions; progress and cost of clinical trials; reliance on key strategic relationships; costs and possible development delays resulting from use of legal, regulatory or legislative strategies by the Company's competitors; uncertainty related to intellectual property protection and potential cost associated with its defence; the Company's exposure to lawsuits, and other matters beyond control of management.

Risks and uncertainties are discussed more extensively in the MD&A section of the Company's most recent annual report and annual information form, which are available on the Company's website or on SEDAR at www.sedar.com. Scientific information that relates to unapproved products or unapproved uses of products is preliminary and investigative. No conclusions can or should be drawn regarding the safety or efficacy of such products. Only regulatory authorities can determine whether products are safe and effective for the uses being investigated. Healthcare professionals are directed to refer to approved labelling for products and not rely on information presented in news releases.

The cautionary statements referred to above should be considered in connection with all written or oral statements, especially forward-looking statements, that are made by the Company or by persons acting on its behalf and in conjunction with its periodic filings with Securities Commissions, including those contained in the Company's news releases and most recently filed annual information form. Forward-looking statements can be identified by the use of words such as "expects", "plans", "will", "believes", "estimates", "intends", "may", "bodes" and other words of similar meaning (including negative and grammatical variations). Should known or unknown risks or uncertainties materialize, or should management's assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly make or update any forward-looking statements, except as required by applicable law.

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