Orbus Pharma Inc. Announces Progress on its Private Placement with Nanjing Sanhome Pharmaceutical Co., Ltd.

Orbus Pharma Inc. (ORB.H - TSX Venture), ("Orbus") announced today, that further to its December 23, 2009 press release that Nanjing Sanhome Pharmaceutical Co., Ltd. ("Sanhome"), a Chinese based health care company, entered into a definitive agreement for the subscription for 308,286,127 common shares at a subscription price of $0.015 per share for aggregate proceeds of $4,624,292 as well Orbus may accept subscriptions from the private placement for up to an aggregate of 533,333,333 common shares at the same price which, if completed, will increase aggregate proceeds to $8,000,000 (collectively the "Private Placement"). The net proceeds of the Private Placement will be used to fund development plans, pay liabilities and cover general working capital requirements.

Upon completion of the Private Placement, Sanhome will hold at least 51% of all of the issued and outstanding common shares of Orbus.  The Private Placement contemplates that a special meeting of Orbus will be held on or before March 2, 2010 (the "Meeting") and shareholders will be asked to approve the consolidation of the common shares of Orbus on a one for four basis, the Private Placement and certain transactions related to the Private Placement.

If the Private Placement is fully subscribed and the consolidation is approved, investors under the Private Placement will hold approximately 133,333,334 Common Shares (approximately 90% of the then issued Common Shares) and existing holders of Common Shares will hold approximately  15,235,718 Common Shares (approximately 10% of the then issued Common Shares).

The closing of the Private Placement is subject to the following principal conditions: (1) Sanhome completing its due diligence of Orbus; (2) Orbus being listed on the TSX Venture Exchange; (3) Orbus' senior lender, who is owed $3.1 million, agreeing to certain amendments to the senior lending facility; (4) the holders (the "Debentureholders") of convertible debentures (the "Debentures") under which debentureholders are owed $8.2 million, agreeing to certain amendments; (5) the working capital deficiency of Orbus not exceeding $1.1 million; (6) the lender of the subordinated credit facility (the "Trimac Facility"), who is owed $252,814, agreeing to certain amendments; (7) the holders of existing warrants, options and other rights to acquire an aggregate of 14,619,000 common shares agreeing to cancel such warrants, options and other rights for nominal consideration (the "Third Party Amendments"); and (8) the receipt of certain regulatory and shareholder approvals.  Additional information regarding these conditions to the Private Placement may be found below.

       Due Diligence

Under the terms of the Private Placement, Sanhome is entitled to conduct due diligence on Orbus, its assets, liabilities, business and capitalization, provided that such due diligence is completed by a date which is not later than three calendar days prior to the date of the Meeting.

       TSX Venture Exchange

Under the terms of the Private Placement, it is required that Orbus be listed on the TSX Venture Exchange.   Since January 4, 2010 the common shares of Orbus have traded on NEX.  Prior to January 4, 2010 the common shares of Orbus traded on the Toronto Stock Exchange, however, at the close of business on December 31, 2009, the common shares of Orbus no longer traded on the Toronto Stock Exchange due to Orbus' inability to meet the ongoing listing requirements of the Toronto Stock Exchange.  On January 15, 2010, Orbus made application to the TSX Venture Exchange.  Orbus has not received conditional approval for listing on the TSX Venture Exchange.

       Amendments to the Senior Lending Facility

Orbus has a lending agreement with the Business Development Bank of Canada ("BDB").  It is a condition of the Private Placement that BDB provide such waivers, consents or amendments to the loan documents with BDB as required to provide the consent of BDB for all of the transactions contemplated by the Private Placement, including the conditions precedent to the release of the funds of the subscribers of the Private Placement and to reaffirm the provisions of the BDB loan documents as to repayment terms, all in form and substance satisfactory to Sanhome, acting reasonably.

       Amendments to the Debentures

The Orbus Debentureholders have been asked to consider several amendments to the terms of the Debentures (the "Debenture Amendments"), if accepted by the Debentureholders and approved by the shareholders of Orbus, such amendments would be effective upon the closing of the Private Placement.

If completed, under the terms of the Debenture Amendments, the Debentureholders will agree to write-off a material amount of the outstanding liability under the Debentures.  In particular, the Debentureholders will write-off interest accrued on the Debentures from October 31, 2009 through to and including the final payment dates.  The Debentureholders will also be required to immediately write-off $2.5 million of the outstanding Debentures thus reducing the amount owing by Orbus to the Debentureholders to $5.7 million, from $8.2 million outstanding as at October 31, 2009 plus accrued interest to the closing date.  The outstanding balance of the Debentures will be reduced by an additional $2.7 million in exchange for payment of or an assignment of the proceeds for the sale of the land at Nisku, Alberta and the sale of the Metropolol Succinate product (notwithstanding that actual net proceeds from these two sales may not total $2.7 million); and then receive final payments of $3 million (less certain costs and adjustments equal to an amount of 50% of the working capital deficiency difference of the Corporation as at the closing date versus December 31, 2009 and an additional $67,500) over the six month period following closing.   In addition, the Debentureholders will relinquish their conversion rights entitling such holders to acquire 18,250,000 Common Shares.

Prior to entering into the subscription agreement with Sanhome, Orbus had begun to explore alternative financing measures which would allow Orbus to meet its ongoing operating expenses.  As previously announced, Orbus determined that is was in the best interests of the Orbus to sell certain lands it held in Nisku, Alberta (the "Nisku Land").  On January 7, 2010, for aggregate proceeds of $1,350,000, Orbus sold the Nisku Land to Trimac Investment Limited Partnership.  The sale of the Nisku Land was conditional upon the receipt of the approval of the Debentureholders, who held security over the Nisku Land.  The Debentureholders granted their consent and the Debentureholders and Orbus agreed that the proceeds from the Nisku Land would be allocated in the following manner: Orbus would be advanced $250,000 in order to augment Orbus' working capital, if additional working capital was required by Orbus, prior to the completion of the Private Placement, the Debentureholders agreed that up to an additional  $325,000 would be advanced to Orbus, Orbus agreed to pay $600,000 into a trust account to be held on behalf of the holders of Debentures and Orbus agreed to an assignment of the net proceeds of the holdback amount of $350,000 to the holders of Debentures.

       Amendments to the Trimac Facility

The lender of the Trimac Facility has been asked to consider amendments to the terms of the Trimac Facility (the " Trimac Facility Amendments"), if accepted by the lender of the Trimac Facility and approved by the shareholders of Orbus, such amendments would be effective upon the closing of the Private Placement.  As of  October 31, 2009 $252,814 was owed in principal under the Trimac Facility.  If the Trimac Facility Amendments are implemented, such amendments will provide for cancellation of interest for the period from October 31, 2009 to the closing date of the Private Placement and payments on interest accruing after such closing date will be suspended until December 15, 2012 when all such interest shall be payable along with the principal amount of the credit facility.  

       Cancellation of Convertible Securities

In addition to the Debenture Amendments and the Trimac Facility Amendments, the Debentureholders and the holder of the Trimac Facility will be required to surrender and cancel all of the warrants to purchase Common Shares held by them for nominal consideration prior to the completion of the Private Placement.  Similarly the holders of all outstanding options of Orbus, which entitle the holder to acquire Common Shares of Orbus, will be required to surrender and cancel all of the outstanding options for nominal consideration.

       Approvals

The resolutions proposed for the shareholders meeting will include the Private Placement of Common Shares to Sanhome, the amendments to the Debentures and the Trimac Facility and other transactions which are conditions precedent to the closing of the Private Placement as an ordinary resolution.  This resolution must be approved by a simple majority of the votes cast by the Shareholders who voted in respect of that resolution, excluding the votes attached to Common Shares, that to the knowledge of Orbus, or any interested party or their respective directors or senior officers, after reasonable inquiry, are beneficially owned or over which control or direction is exercised by Orbus, an interested party, a related party of an interested party, or joint actors (persons acting jointly or in concert) with an interested party or a related party of an interested party (the "Disinterested Vote").  As a result, the votes attached to those Common Shares held or controlled by the following shall be excluded from the calculation of the approval requirements for the Disinterested Vote: (1) Franklin T. Bailey, who is a director of Orbus and also a holder of Debentures; (2) Trimac Holdings Ltd., which is a principal shareholder; and (3) Jeffrey McCaig, who is chairman of the board of directors of Orbus and also a director of Trimac Holdings Ltd.  Orbus is not subject to the valuation requirements applicable to related party transactions as it is not listed on a specified stock exchange.

The Board of Directors of Orbus recommends that shareholders vote in favour of the Private Placement, the consolidation and the related party transactions which are conditions precedent to the Private Placement being completed.

At this time, there can be no certainty of completion of the transaction as it remains subject to the completion of addition subscriptions and finalization of negotiations and agreements, including in particular those relating to the Third Party Amendments, and to the receipt of all regulatory and shareholder approvals.  A copy of the subscription agreement with Sanhome will be filed on SEDAR.

       Sanhome

Sanhome is a growing health care company founded in 1996 and is headquartered in Nanjing, China.  Its website is www.sanhome.com.  As a comprehensive pharmaceutical enterprise it has an extensive new drug research and development centre, state of the art manufacturing facilities and a broad portfolio of prescription pharmaceuticals along with traditional Chinese medicine that are marketed throughout China.  Sanhome received the national GMP certification for its Niushou manufacturing facility in April 1999 and for its Nanjing manufacturing facility in January 2002.  The two plants cover an area of 80,000 square meters and have the capacity to produce multiple dosage forms.  The company and its management have been endowed with many enterprise honours.

Orbus Pharma Inc., headquartered in Markham, Ontario, is pursuing an integrated global strategy of: (1) generic drug development, using proprietary delivery systems for certain products; (2) product out-licensing; and (3) pharmaceutical manufacturing. For more information, please visit www.orbus.ca.

Forward-looking statements

Completion of the Private Placement is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and, if applicable, pursuant to TSX Venture Exchange requirements, majority of the minority shareholder approval. Where applicable, the Private Placement cannot close until the required shareholder approval is 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 information circular for the Meeting, to be prepared in connection with the Private Placement, any information released or received with respect to the Private Placement may not be accurate or complete and should not be relied upon

Please contact the following Orbus officers for further information:

Mr. Greg W. Muir            

Interim President and Chief Executive Officer        

(905) 943 9444 ext. 222

gmuir@orbus.ca

Source:  Orbus Pharma Inc. (TSX: ORB) http://www.orbus.ca

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