Procyon and Cellpep to Merge Via Acquisition Creating a New Global Biopharmaceutical Company: Ambrilia Biopharma Inc.

MONTREAL -- Procyon Biopharma Inc. (TSX:PBP)

ATTENTION BUSINESS/FINANCIAL/HEALTH EDITORS

- Concurrent $18.1 million financing

          - Combination of early and late-stage products aimed at
            achieving positive cash flow and profitability within two
            years

          - Head office, R&D and manufacturing to be located in
            Montreal with a regional office in France

Procyon Biopharma Inc., a biotechnology company developing innovative therapeutics in the fields of cancer and HIV/AIDS, and Cellpep S.A., a French private biotechnology company developing therapeutics in oncology and infectious diseases, announced today that they have entered into a definitive acquisition agreement under which Procyon has offered to acquire all of the outstanding securities of Cellpep in exchange for a number of common shares equal to $39.1 million in value to be issued to the Cellpep shareholders. A $18.1 million concurrent private placement of special warrants and units has also been completed today. As of the date of this announcement, more than 95% of all Cellpep shareholders have accepted Procyon's offer. The acquisition and concurrent private placement have been approved by the Board of directors of both companies and remain subject to the approval of Procyon shareholders. The special warrants will entitle holders to receive common shares and warrants to purchase common shares of Procyon upon completion of the Cellpep acquisition. Procyon also announced that it has made a secured loan of $1.9 million to fund the operations of Opep Pharma Inc., the Canadian manufacturing subsidiary of Cellpep S.A. This will allow the newly formed entity to substantially increase its future gross margin in the manufacturing area. Following the completion of the transaction, Procyon intends to change its name to Ambrilia Biopharma Inc.

The strategic combination of both companies will form a new entity: Ambrilia Biopharma Inc., a global, publicly-listed biopharmaceutical company specialized in the development of innovative therapeutics in the fields of oncology and infectious diseases. Following completion of the transaction, Ambrilia Biopharma's common shares will continue to be traded on the Toronto Stock Exchange, under a new ticker symbol: AMB

Cellpep brings to Procyon a complementary oncology and infectious diseases product portfolio that includes two late-stage high-value generics. The first of these products, octreotide, for which distribution agreements with major pharmaceutical companies have been already concluded, is expected to be launched in Europe in 2007 and in the U.S. in 2008. The second product, goserelin, is expected to be launched in Europe in 2008. With this combined portfolio comprised of high-value late-stage products, Ambrilia Biopharma expects to accelerate its path to profitability and enhance its global position by generating potential revenues through U.S. and European sales of octreotide and goserelin.

Dr. Max Link will remain chairman of the board, Hans J. Mader will remain president and chief executive officer and Dr. Bonabes de Rouge, Cellpep's co-founder and its present president and chief executive officer, will become chief scientific officer of Ambrilia Biopharma. Procyon's co-founder, Dr. Chandra Panchal, will assume the responsibilities of business development, licensing and intellectual property.

"We are very excited about this major strategic move to bring both companies together," said Hans J. Mader, president and chief executive officer of Procyon Biopharma. "Combining an early-stage with a late-stage oncology and infectious diseases products company will, we believe, create value for all of our stakeholders. The expected revenues from Cellpep's high-value generics should enable Ambrilia to reach profitability within the next 24 months," he continued. "Furthermore, we are delighted by the successful financing we were able to achieve from both North American and European investors," he concluded.

"Our values, expertise, therapeutic focus and our respective pipelines, are a definitive fit," said Dr. Bonabes de Rouge, co-founder, president and chief executive officer of Cellpep. "We believe this merger will leverage the strengths of both of our companies and I'm looking forward to joining forces with Procyon," he concluded.

TERMS OF THE TRANSACTION

The transaction is an all-equity acquisition agreement under which Procyon will issue 119,885,894 common shares to Cellpep shareholders in exchange for their shares and other securities, assuming 100% of Cellpep shareholders accept the offer, representing a total value of $39.1 million at the volume weighted average price of the last 20 days. The concurrent financing of $18.1 million consists in part of the issuance of 61,690,785 special warrants of Procyon priced at $0.23 per special warrant for a total consideration of $14.2 million. Upon closing of the Cellpep acquisition, each special warrant will entitle the holder to receive for no further consideration a unit made of one common share and one warrant to subscribe for one common share at a price of $0.35 at any time within five years from its issue date. The remaining $3.9 million of the financing consists of 16,987,056 similar units to be issued to European investors as part of the Cellpep transaction.

If a notice certifying that the completion of all matters required for the closing of the acquisition and the private placement and that Procyon has obtained a receipt for a final prospectus  qualifying the distribution of the common shares and share purchase warrants to be issued upon conversion of the special warrants in each of the jurisdictions where the private placement is to be made, has not been provided to special warrants holders on or before March 22, 2006, Procyon will repurchase the special warrants held by such holder at a price equal to $0.23 per special warrant, plus applicable interest.

Proceeds of the private placement have been placed in escrow pending completion of all conditions precedent to the acquisition, including approval by Procyon shareholders and securing a final receipt for the prospectus. In the event the Cellpep acquisition is not completed, the escrowed funds will be returned to the subscribers.

A consolidation (reverse split) of shares is also planned at a later date during the year, following the transaction.

The acquisition, the private placement and the name change are subject to Procyon's shareholders approval at a Special Meeting of Shareholders to be held on Friday, February 24, 2006 at 10:00 A.M. E.T. The event will take place at the Centre Mont-Royal, 2200 Mansfield Street, Montreal (Quebec) H3A 3R8. An information circular  and proxy card will be mailed to all shareholders at least 21 days prior to the date of the meeting.

The private placement was completed through a syndicate of agents, lead by Dundee Securities Corporation and including Loewen, Ondaatje, McCutcheon Limited and Desjardins Securities Inc. Dundee Securities Corporation acted as advisor to Procyon for the acquisition.

CONFERENCE CALL INFORMATION

Procyon will host a conference call and live webcast on Thursday, January 19, 2006 at 11:00 A.M. E.T. to discuss the transaction, followed by a question and answer session. Interested parties may access the conference call by way of telephone or webcast. The live webcast will be available at www.procyonbiopharma.com and archived for 90 days for replay purposes.

The numbers to access the conference call are 1-800-814-4890 (North America) and [phone] (international). A replay of the call will be available from January 19 to April 19 and the numbers to access the replay are [phone] and 1-877-289-8525 with access code 21173098.

ABOUT CELLPEP S.A.

Cellpep is a French, private biotechnology company with headquarters in Paris and a subsidiary in Montreal. The Company identifies and develops leading edge technologies in the fields of oncology and infectious diseases. Cellpep's business model focuses on the pursuit of two generic products nearing commercialization and the development of proprietary peptide drug candidates. The lead product is an improved version of octreotide, a significant source of revenue for a major pharmaceutical company. Distribution agreements with major pharmaceutical companies have been already concluded for this product and it is expected to be launched in Europe in 2007 and in the U.S. in 2008. In addition, Cellpep is developing goserelin, an improved version of a prostate cancer drug as well as a fusion inhibitor for HIV and several other peptides.

ABOUT PROCYON BIOPHARMA INC.

Procyon Biopharma Inc. is a biotechnology company actively engaged in the discovery and development of innovative therapeutics in the fields of cancer and HIV/AIDS.The Company leverages its strengths in research and clinical development, bringing products through late-stage clinical trials and then evaluating the best options for further development, such as co-development and licensing.Procyon's pipeline includes: PCK3145, a non-toxic peptide soon to enter a Phase II North American trial for the treatment of advanced prostate cancer; TVT-Dox, a tumor vasculature targeting technology for the treatment of solid tumors for which an IND filing is expected within 12 months; and, PPL-100, a protease inhibitor for the treatment of drug-resistant HIV/AIDS currently in clinical development. Headquartered in Montreal, Procyon shares are listed on the Toronto Stock Exchange (TSX) under the ticker symbol PBP. For more information, visit www.procyonbiopharma.com.

This release contains forward-looking statements that reflect the company's current expectation regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors as well as risks and uncertainties that are generally experienced by the biotechnology industry, including, but not limited to, changing market conditions, successful and timely completion of clinical studies, uncertainties related to the regulatory approval process, establishment of corporate alliances and other risks detailed from time to time in the company's filings. These statements are also based on various assumptions, including the successful and timely completion of clinical studies on Cellpep's products demonstrating efficacy and safety for human use, their successful commercialization within the forecasted timelines and the attainment of the forecasted milestone payments and other revenues.

www.procyonbiopharma.com

Procyon BioPharma Inc. (TSX:PBP)