Black Point Capital Announces Proposed Qualifying Transaction with Mistral Pharma.

MONTREAL -- Black Point Capital Inc. ("Black Point") (TSX Venture: BPL.P) announces today that it has signed as of October 4, 2004 an arm's length letter of intent (the "Agreement") with Mistral Pharma Inc. ("Mistral") for the amalgamation of their respective company (the "Amalgamation"). It is anticipated that the company resulting from the Amalgamation will be known as Mistral Pharma Inc.

Highlights

- Mistral is a drug delivery company specializing in the development of oral controlled-release products both generic and branded. Mistral has a partnership with a pharmaceutical development company.

- The proposed Amalgamation will be completed concurrently with a financing for a minimum of $2.5 M. Canaccord Capital Corporation has agreed to act as agent for this proposed financing.

About Mistral Pharma Inc.

Mistral is a pharmaceutical company specialising in the development of controlled-delivery generic and branded drug products.

Over the last few years, PROCISE(TM) has been used to develop different drug products which were subject to clinical trials, both at GlaxoSmithKline and Mistral. SAVIT(TM) and CHRONOP(TM) are technologies currently under development. Mistral expects that its first generic CD product will enter pilot clinical testing in Q4 2004 or Q1 2005. A second generic CD product should enter pilot clinical testing in Q2 2005. From its inception up to March 31 st , 2004, Mistral invested more than $ 1.8 M in research and development.

Mistral holds the sole license for the world-wide rights to PROCISE(TM), an oral, controlled-release, drug delivery technology developed and patented by GlaxoSmithKline, based on a constant surface area concept. In addition, Mistral licensed from Savit Consulting Inc. the exclusive world-wide rights to SAVIT(TM) and CHRONOP(TM), two next-generation, surface area controlling oral drug delivery technologies.

Mistral's business is focused on pharmaceutical development of existing generic and branded drugs. Mistral intends to formulate, develop and commercialise controlled-release, oral pharmaceuticals utilising PROCISE(TM), SAVIT(TM) and CHRONOP(TM), with selected drugs or drug combinations. Mistral intends to develop two types of controlled-delivery ("CD") products.

The first type of CD products that Mistral intends to develop shall be targeted CD generic versions of pharmaceuticals. Mistral intends to co-develop and market these products through alliances with generic distributors. Two generic candidates have been identified and are presently in development. Development is rapid and relatively inexpensive. Mistral's management expects that approval by the United States Food & Drug Administration with regards to CD generics can be obtained within 2 to 3 years for an investment of Cdn.$2 M per product.

Mistral intends to develop branded oral drug delivery products offering added clinical value through improved pharmacokinetic profile or chronotherapy concept. Companies with New Chemical Entities ("NCEs") in phase II or III may also be approached to develop extended-release versions of their products. For a limited investment, Mistral could select and develop one or two projects and bring them to the clinical evaluation stage. Partnerships could then be sought to co-develop these products while retaining Canadian marketing rights. Development timelines can be as short as three years for this type of project. This approach would allow Mistral to benefit from the high revenue potential of these new drugs while limiting its risk and investment costs which are expected to be in the range of Cdn.$3 to $7 M per branded product.

Mistral has already signed a corporate alliance to develop controlled-delivery generics. In March 2004, Mistral signed a development agreement with the ratiopharm Group to develop an undisclosed generic pharmaceutical product. Following successful achievement of development milestones, Mistral is entitled to milestone payments and, in the event of marketing approval of the product, to royalties on net sales.

Mistral continues to explore business development opportunities in the generic and branded pharmaceutical sectors.

Mistral was incorporated under the Ontario Business Corporations Act on February 1 st , 1999 under the name "Althotech Pharma Inc." On March 15, 2004, it was continued under the Canada Business Corporations Act and changed its name to "Mistral Pharma Inc." Mistral's registered office is located at 2101 Halpern, St-Laurent (Quebec) H4S 1S3. The corporation's Web site address is www.mistralpharma.com.

Mistral currently has 4,241,154 common shares issued and outstanding and approximately 30 shareholders. The principal shareholders of Mistral, and the only ones holding more than 10% of the outstanding shares, are Dynex Capital Limited Partneship (36.04%) a private limited partnership created under the laws of Ontario and having its registered office in Kingston, Ontario and Peter Tomlinson, a resident of Toronto, Ontario, (30.65%). Dynex Capital Limited Partnership has approximately 20 limited partners, none of which has an indirect interest in the shares of Mistral that exceeds 10% of the outstanding shares of Mistral. and its general partner is Dynex Capital Corporation which is owned by Dynex Advanced Technology Investment Co (40%) and Altacap II Inc. (60%). All these corporations have their registered office in Kingston, Ontario. The directors of Dynex Capital Corporation are: Eric Baker, Chris Winn, Tom Kaneb, Peter Blaney, Tom Racey, Geoff Hyland, Barry Marchowski and Duncan Sinclair.

There are options outstanding allowing the holders thereof to purchase collectively 570,000 common shares. 540,000 of these options, having a term of 10 years and an exercise price of $0.001 per share, were issued to employees and consultants of Mistral between December 2003 and May 2004. The remaining 30,000 options, having a term of 10 years and an exercise price of $1.50 per share, were issued to two directors of Mistral in June 2004. It is contemplated that the 540,000 options having an exercise price of $0.001 per share be exercised prior to the closing of the proposed transaction and that they be subject to a contractual escrow in favour of Mistral. There is a $500,000 interest-bearing secured convertible debenture issued to GlaxoSmithKline.

On the basis of audited financial statements for the year ended March 31, 2004, Mistral had total assets of $1,791,989 liabilities of $1,497,377 including a $554,372 secured debenture, shareholders' equity of $294,612, available working capital of $35,702, accumulated net losses of $4,067,809. Mistral recorded $200,000 in revenues and a loss of $505,069 for the six month period ending March 31, 2004. During this period, Mistral changed its financial year end from September 30 to March 31.

The current officers of Mistral are:

Mr. Bertrand F. Bolduc, B.Pharm., MBA. President & CEO and director of Mistral Pharma since September 2003, Mr. Bolduc brings more than 14 years of experience gained at Servier, Biovail, Axcan, Procrea Biosciences and TGN Biotech where he has been involved in numerous product and company acquisitions. Mr. Bolduc has been involved or led financing rounds, both private and public, for a cumulative amount in excess of $75 M. He is a former president of the Pharmaceutical Marketing Club of Quebec and of BioQuebec.

Mr. Alain Provencher, CA, Vice-President, Finance & CFO since March 31, 2004. In a career spanning 19 years, Mr. Provencher has acquired operational management capabilities and valuable experience in securing financing from institutional and venture capital investors. Prior to joining Mistral Pharma, Mr. Provencher was President of Finstratege Inc. a consulting firm specializing in corporate financing. Mr. Provencher has held the position of Vice-President Finance for Procrea Biosciences and Uforce inc. (subsequently acquired by 8X8 inc. of California).

Dr. Sham Chopra, Ph.D., Chief Scientific Officer since December 2000. Dr. Chopra is the inventor of PROCISE(TM), SAVIT(TM) and CHRONOP(TM) technologies. He has over 30 years of experience in the pharmaceutical industry, with 25 years in R&D with Merck Frosst and GlaxoSmithKline.

Dr. Alain Desjardins, Ph.D., Director R&D since May 2004. Alain Desjardins, B.Sc., Ph.D., brings 12 years of product development gained at Johnson & Johnson, Labopharm, and Carter-Horner (now Church & Dwight). Mr. Desjardins has lead groups that developed several pharmaceutical products in various dosage forms, including several years at developing control-delivery solid dosage products. He has been instrumental in bringing forward several products from laboratory prototypes to scaling-up and transfer to manufacturing.

These persons will continue to hold their office following the closing of the proposed transaction.

About the Proposed Transaction

On October 4, 2004, Black Point and Mistral signed the Agreement pursuant to which they agreed to amalgamate their respective company. The Amalgamation is expected to constitute a "Qualifying Transaction" for Black Point as defined in Policy 2.4 of the TSX Venture Exchange (the "Exchange") Corporate Finance Manual. The transaction is subject to (i) satisfactory reciprocal due diligence, (ii) shareholder approval from both corporations, (iii) the completion of the public financing described below and (iv) all required regulatory approval pursuant to laws, regulations and applicable policies.

The Qualifying Transaction will be realized by way of an amalgamation agreement to be entered between Black Point and Mistral on the basis that the holders of common shares of Mistral will receive 7.5 common shares of the merged company ("MergeCo") at a deemed price of $0.25 for every common share of Mistral owned, and the holders of common shares of Black Point will receive 1 common share of MergeCo for each common share owned. The 1,462,300 existing stock options of Black Point will be exchanged on a one for one basis for options of MergeCo but otherwise remain unchanged. Each of the remaining 30,000 stock options of Mistral at the time of the closing of the proposed transaction will be exchanged on a 7.5 to 1 basis for stock options of MergeCo (subject to regulatory approval) and the exercise price will be adjusted accordingly in accordance with the applicable regulatory requirements. All other terms will remain the same, subject to regulation approval. The convertible debenture will become an obligation of MergeCo. As at March 31, 2004, the debenture and the interest accumulated thereon (approximately $82,500), if converted in accordance with its terms and conditions, would have resulted in the issuance of approximately 317,388 common shares of Mistral (or 2,380,410 common shares of MergeCo at a deemed price of $0.245 per share).

In connection with the Amalgamation, it is anticipated that an aggregate of 35,858,655 common shares of MergeCo at a deemed price of $0.25 per share, and an aggregate consideration of $8,964,664, will be issued in favour of the holders of common shares of Mistral. After completion of the Amalgamation, but without giving effect to the public offering described below, an aggregate of 44,345,155 common shares of MergeCo will be issued and outstanding (or 48,412,865 common shares on a fully diluted basis, assuming the exercise of the 30,000 outstanding stock options outstanding at the time of the proposed transaction and the conversion of the debenture). The current shareholders of Black Point will own 8,486,500 common shares (19.14%) while the current shareholders of Mistral will own 35,858,655 common shares (80.86%).

The Amalgamation is subject to the completion of a public offering of units of Black Point of a minimum gross value of $2.5 million and a maximum of $5 million before January 31, 2005. The net proceeds arising from this offering will be used for the following purposes: (i) approximately $2,000,000 for research and development and (ii) the balance for working capital purposes. Accordingly, Mistral anticipates that it will have sufficient financial resources to carry on business for the next 24 months.

Pursuant to an engagement letter signed on October 4, 2004, Canaccord Capital Corporation has agreed to act as agent for a public financing by prospectus for a minimum amount of $2.5 million. This prospectus will qualify the issuance of units, each unit being comprised of one Black Point common share and one share purchase warrant. One full share purchase warrant will allow its holder to purchase one common share of Black Point for a period of 18 months from the issue date. It is contemplated that the price of units offered will be $0.25. The exercise price of the warrants will be superior to the unit price by 25% to 50%. Canaccord Capital Corporation will receive a cash remuneration equal to 8% of the gross proceeds of the issue, a two year option to purchase a number of common shares equal to 8% of the number of units issued pursuant to the prospectus, as well as 250,000 common shares.

Black Point has agreed to provide to Mistral a $125,000 secured loan to be used for working capital purposes. The loan is repayable at the latest twelve months after disbursement. In case of default, the loan will bear interest at the rate of 10% per year and becomes convertible in common shares of Mistral, at the option of Black Point.

After giving effect to the Amalgamation, the Board of Directors of MergeCo will be comprised of 7 directors, 5 of whom will be from the current directors of Mistral and 2 from the current directors of Black Point.

Mark J. Busgang, CA, Chairman of the Board, Mistral Pharma Inc. and President, Chief Executive Officer and Director, Warnex Pharma Inc. Mr. Busgang is President and Chief Executive Officer of Warnex Pharma (WNX - TSE) since February 1998. He is also President of Busgang Investments Inc., a private venture capital company, since 1996. From 1993 to 1996, he was President and Chief Executive Officer of Pharmetics Ltd. and Vice-President of Operations of Theratechnologies Inc. Mr. Busgang is a member of the Young Presidents' Organization and actively involved in many community and charitable organizations.

Mr. Bertrand F. Bolduc, B.Pharm., MBA, President & CEO and director of Mistral Pharma since September 2003. Mr. Bolduc is a licensed pharmacist (U. of Montreal - 1990) and holds a MBA from HEC Montreal (2000). He has more than 14 years of experience in the biopharmaceutical field. Before taking over the position of President & CEO of Mistral, Mr. Bolduc has held different marketing and business development positions at Servier, Biovail, Axcan Pharma, Procrea Biosciences and TGN Biotech. He has launched two new drugs on the Canadian market and made several business and product acquisitions. He also participated or led financing deals, both private and public, for a cumulative amount in excess of $75M. In 2002, Mr. Bolduc has won the Next Generation Entrepreneurship Award from Reseau HEC and was awarded the "Heart & Action Pharmacist Award" in the industry category by "L'Actualite Pharmaceutique", a pharmacy monthly newspaper. In 2004, he was named "Pharmacist Emeritus" by Quebec Pharmacie, a continuing education magazine, for his innovative practice of pharmacy in the biopharmaceutical and business field. A former President of the Pharmaceutical Marketing Club of Quebec (1996-1997), Mr. Bolduc was also President of BioQuebec from 2001 to 2003.

Jacques Gagne, B.A., B.Sc.Pharm., Ph.D. Dr. Gagne completed his B.A., B.Sc.Pharm., M.Sc. and Ph.D. (Pharmacology) at the University of Montreal. He became Professor at the Faculty of Pharmacy in 1972 and was Dean from 1982 to 1990. He then founded the Pharmaceutical Research Institute (now Ethypharm Canada) and was its General Manager from 1991 to 1996. He was General Manager of the Frosst Foundation from 1999 to 2001. Dr. Gagne chaired the board of directors of LAB Gestion International inc., Pharmagene, URRMA Biopharma and Quantis Formulation. He is presently a director of Warnex Pharma Inc. (WNX-TSE) and Molichem Medicines Inc. and the chairman of the Galien Prize, the CQIB and Laval Technopole. Thomas Kaneb, Eng, MBA, Partner, Dynex Capital Corporation. Mr. Kaneb has been an entrepreneur, early stage investor, and company operator for over 27 years. He has been directly involved in the start up and operations of 10 companies and the leveraged buyout of three companies in addition to operating four businesses as CEO, and investing in four venture funds. Mr. Kaneb is presently Chairman of the Board of Mitec Telecom Inc. (MTM - TSE) and Chairman of the Board of Sigma Point Technologies Inc.

Peter Tomlinson, PhD, MBA, President & CEO, Althotech Consulting Inc. Dr. Tomlinson has 20 years of senior experience in the pharmaceutical sector, in Europe and North America. He is presently President & CEO of Althotech Consulting Inc., a consulting firm in the life sciences sector. From 2000 to 2003, Dr. Tomlinson was President & CEO of Althotech Pharma Inc., the company which became Mistral Pharma. Before founding Althotech Pharma, Dr. Tomlinson was President & CEO of Supratek Pharma, a biotechnology company, from 1997 to 1999. Before 1999, Dr. Tomlinson has occupied various senior positions in the pharmaceutical industry, notably at GSK and Taro Pharmaceuticals.

Robert Boisjoli, B. Com., DIA, CA, CBV, Pl. Fin., CFO, Xanthus Life Sciences Inc. Since 2001, Mr. Boisjoli is a co-founder and Chief Financial Officer of Xanthus Life Sciences, Inc. a Boston, MA based biotechnology firm where he led different financing rounds for proceeds in excess of US $50 MM of equity capital. Prior to Xanthus, he was involved in investment banking for leading securities firms. Mr. Boisjoli has extensive business valuation experience gained at his own firm, Robert Boisjoli & Associates, and Richard Wise & Partners. He has been involved directly as consultant in the acquisition of numerous business enterprises.

Marc Boisjoli, M.Sc., CFO, TSO3. Mr. Boisjoli is the Chief Financial Officer of TSO3 (TSO - TSX) since December 2000. He led the IPO transaction and different subsequent financings totaling more than $30 MM. Mr. Boisjoli was previously working at Innovatech Quebec where he invested and managed 33 Capital Investments, mainly in the biotech sector; He was a director for 13 high-tech companies. Mr. Boisjoli has an actuarial science degree along with a master's degree in finance; he is a CFA level II candidate.

The sole shareholders that will hold more than 10% of the resulting issuer following the completion of the proposed transaction: Dynex Capital Limited Partnership and Peter Tomlinson.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, satisfactory reciprocal due diligence reviews by Black Point and Mistral, regulatory and Exchange acceptance, Black Point shareholder approval, Mistral shareholder approval and completion of the proposed public offering before January 31, 2005. The transaction cannot close until the required regulatory approvals pursuant to laws, regulations and applicable policies are obtained. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Black Point Capital Inc. (TSX VENTURE:BPL.P)