Hemosol Inc has entered into a memorandum of understanding with Dompe Farmaceutici S.p.A. to form a strategic marketing alliance for Hemolink for Southern and Eastern Europe.

Under the terms of the memorandum of understanding and subject to obtaining all necessary security regulatory approvals, Dompe will make an investment of CDN$5 million in Hemosol common shares at a price of $15.00 per share. Dompe has a 16 month option to make a further equity investment of CDN$5 million at $22.50 per share. The formation of this marketing alliance between Hemosol and Dompe is subject to negotiation and execution of definitive agreements. Upon completion of the final agreements Dompe will have exclusive marketing rights to Hemolink in Italy, Spain, Portugal, Greece, Turkey, Poland, Hungary, Russia, Austria and Switzerland.

The European pharmaceuticals company Dompe currently partners with global biotech companies such as Amgen, Biogen and Genzyme. Hemosol will supply initial demand for Hemolink from Hemosol's Toronto area manufacturing facility, which is currently under construction, until capacity is available in Europe. The two companies will work together to develop additional manufacturing capacity for the European market. Meanwhile, Dompe has begun to assist Hemosol with the European registration for Hemolink. Regulatory submissions are expected by the end of this year, with initial approvals to follow a year later.

"This announcement is part of our broader strategy in Europe which is to partner with strong companies who share our vision for the potential in the hemoglobin replacement therapy market. We are very pleased to have taken these first steps with Dompe and look forward to concluding the definitive agreements," said John W. Kennedy, president and CEO of Hemosol.