Ceragenix Reports 2005 Year-End Financial Results and Business Progress.

DENVER -- Ceragenix Pharmaceuticals, Inc., (OTCBB: CGXP), a biopharmaceutical company focused on infectious disease and dermatology, today announced financial results for the full-year ended December 31, 2005.

"2005 was a year in which we strengthened our corporate structure, improved our balance sheet, demonstrated potent in vitro activity of various product candidates derived from our Ceragenin(TM) technology and submitted a 510K application to the FDA for the potential clearance of the first product from our Barrier Repair Technology," stated Steven Porter, CEO of Ceragenix. "We are very proud of our achievements during 2005 and look forward to continuing to advance our product pipeline during 2006."

OPERATING RESULTS

For the year ended December 31, 2005, the Company reported a loss to common shareholders of $(12,800,304) or $(1.06) per share compared with a loss of $(825,711) or $(.07) per share for the same period of the prior year. Included in the annual results for 2005 is a loss from discontinued operations of $(7,697,089) or $(.64) per share primarily resulting from the impairment of goodwill of the Company's bingo supply reporting unit. For the year ended December 31, 2005, $1,430,481 of cash was used in operating activities of continuing operations compared to $711,102 used in the prior year. Please refer to the Company's "Management's Discussion and Analysis" section of the Form 10-KSB for a complete discussion of items affecting comparability to prior periods.

BUSINESS PROGRESS

A summary of certain significant events during 2005 are as follows:

--Completed a merger between Osmotics Pharma and OnSource Corporation to create a biopharmaceutical company focused on infectious disease and dermatology;

--Submitted a revised 510(k) application with the FDA seeking marketing clearance for EpiCeram(R), the Company's first planned commercial product, for the treatment of Eczema and other skin disorders;

--Presented five posters at the 45th Annual Interscience Conference of Antimicrobial Agents and Chemotherapy (ICAAC(TM)) demonstrating the efficacy of CSA-13, in vitro, against VRSA, VRE, MRSA, pseudomonas augeroginosa, E. Coli and surrogate strains of anthrax, listeria and plague;

--Demonstrated that a Ceragenin-based coating called Ceracide(TM) prevented bacterial colonization on titanium surfaces and eradicated staphylococcus aureus and E. Coli bacteria in the fluid surrounding the coated plate in an in vitro medical device coating model;

--Entered into a Cooperative Research and Development Agreement with the Centers for Disease Control to evaluate Ceracide as an antimicrobial coating in the prevention of bacterial biofilms on medical devices;

--Presented in vitro data at a meeting of the American Academy of Dermatology showing that Ceragenin compound CSA-8, when used in combination with mupirocin, was able to expand mupirocin's spectrum of activity to include gram-negative bacteria such as E. Coli, Salmonella and Kleibsiella;

--Presented in vitro data at the National Foundation for Infectious Disease's annual meeting on Antimicrobial Resistance demonstrating efficacy of Ceragenin compound CSA-13 against Vancomycin resistant infections such as VRSA, VRE and VISA as well as CSA-13's efficacy against strains of pseudomonas infections from cystic fibrosis patients resistant to Tobramycin; and

--Completed the sale of $3.2 million in convertible notes to four accredited investors.

ABOUT CERAGENIX

Ceragenix Pharmaceuticals, Inc. (OTCBB: CGXP) is a biopharmaceutical company that discovers, develops and commercializes novel anti-infective drugs based on its proprietary class of compounds, Ceragenins(TM) (or CSAs). Active against a broad range of gram positive and negative bacteria, these agents are being developed as anti-infective medical device coatings and as therapeutics for antibiotic-resistant organisms.

Ceragenix further owns exclusive rights to Barrier Repair Technology for the treatment of dermatological disorders including atopic dermatitis, neonatal skin disorders and others. Ceragenix's patented Barrier Repair Technology, invented by Dr. Peter Elias and licensed from the University of California, is the platform for the development of two prescription topical creams--EpiCeram(R) and NeoCeram(R)--that form human-like skin barriers. Defects in the skin's barrier function play critical roles in the pathogenesis of skin diseases such as eczema, irritant contact dermatitis and other common skin disorders and may also be of importance in HIV related skin dermatoses. Ceragenix has submitted a 510(k) to the FDA seeking marketing clearance to commercialize this technology in 2006. For additional information on Ceragenix, please visit www.ceragenix.com.

FORWARD LOOKING STATEMENTS

This press release may contain forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, the following: the ability of the Company to raise sufficient capital to finance its planned activities, receiving the necessary marketing clearance approvals from the United States Food and Drug Administration (the "FDA"), successful clinical trials of the Company's planned products, the ability of the Company to commercialize its planned products, market acceptance of the Company's planned products, the Company's ability to successfully develop its licensed compounds, alone or in cooperation with others, into commercial products, the ability of the Company to successfully prosecute and protect its intellectual property, and the Company's ability to hire, manage and retain qualified personnel. The aforementioned factors do not represent an all inclusive list. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this press release. In particular, important factors that could cause actual results to differ materially from our forward-looking statements include general economic factors, business strategies, the state of capital markets, regulatory conditions, and other factors not currently known to us, may be significant, now or in the future, and these factors may affect us to a greater extent than indicated. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this press release and in other documents that we file from time to time with the Securities and Exchange Commission including our Annual Report on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-KSB to be filed in 2006. Except as required by law, we do not undertake any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

CERAGENIX PHARMACEUTICALS, INC.

           SUMMARIZED CONSOLIDATED STATEMENTS OF OPERATIONS

  FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIOD FROM
        FEBRUARY 20, 2002 (INCEPTION) THROUGH DECEMBER 31, 2005

                                                           Cumulative
                                                              From
                                                           Inception
                                                           (February
                                      2005        2004     20, 2002)
                                --------------------------------------

Revenue                         $        --    $      --          $--
Operating Expenses                2,434,707      807,489    3,611,810
Other Expense, net                2,443,347       18,222    2,461,569
Loss Before Discontinued
 Operations                      (4,878,054)    (825,711)  (6,073,379)
Discontinued Operations          (7,697,089)          --   (7,697,089)
Net Loss                        (12,575,143)    (825,711) (13,770,468)
Preferred Stock Dividends           225,161           --     (225,161)
Loss to Common Shareholders     (12,800,304)    (825,711) (13,995,629)
Weighted Average Shares
 Outstanding (Basic and Diluted) 12,060,591   11,427,961          N/A
Loss Per Share
 (Basic and Diluted)            $     (1.06)  $    (0.07)         N/A



                    CERAGENIX PHARMACEUTICALS, INC.
                 SUMMARIZED CONSOLIDATED BALANCE SHEET
                        AS OF DECEMBER 31, 2005

Cash and cash equivalents       $ 2,459,341
Total current assets              2,634,021
Total assets                      3,220,609
Total current liabilities         1,112,789
Total liabilities                 4,455,687
Total stockholders' deficit      (1,235,078)



                    CERAGENIX PHARMACEUTICALS, INC.
           SUMMARIZED CONSOLIDATED STATEMENTS OF CASH FLOWS

  FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004 AND THE PERIOD FROM
        FEBRUARY 20, 2002 (INCEPTION) THROUGH DECEMBER 31, 2005

                                                            Cumulative
                                                              From
                                                            Inception
                                                            (February
                                          2005      2004    20, 2002)
                                       -------------------------------

Net cash used in operating activities
 of continuing operations            (1,430,481) (711,102) (2,511,197)
                                     ---------------------------------

Net cash provided by investing
 activities of continuing operations  1,070,842        --   1,070,842
                                     ---------------------------------

Net cash provided by financing
 activities of continuing operations  2,971,611   709,298   4,052,527
                                     ---------------------------------

Cash flows from discontinued operations
  Operating cash flows                  (97,735)       --     (97,735)
  Investing cash flows                   (2,001)       --      (2,001)
  Financing cash flows                  (53,095)       --     (53,095)
                                     ---------------------------------
                                       (152,831)       --    (152,831)
                                     ---------------------------------
Net increase (decrease) in cash       2,459,141    (1,804)  2,459,341
                                     ---------------------------------
  Cash and cash equivalents at the
   beginning of year                        200     2,004          --
                                     ---------------------------------

  Cash and cash equivalents at the
   end of year                       $2,459,341  $    200  $2,459,341
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