Mistral Pharma Inc announced that it has filed a proposal under the Bankruptcy and Insolvency Act (Canada) (the BIA). If ratified, the proposal shall effect a compromise of the Corporation's debts existing at June 13, 2008, and effect an arrangement under Section 191 of the Canada Business Corporation's Act. Demers Beaulne Inc has agreed to act as trustee to Mistral's proposal.

The proposal contemplates the investment of fresh funds by a third-party in the corporation in exchange for the cancellation of all of the corporation's issued and outstanding shares, options and warrants (the Existing Shares), and the issuance of new shares in favour of the investor. The sums to be received from the investor will serve to fund the payments provided for under the corporation's proposal, and provide the corporation with the working capital it needs to meet its current operating requirements. A meeting of the corporation's creditors will be held on September 4, 2008 to vote on the proposal. Should the creditors approve the proposal in the required percentages, a hearing will be held on September 15, 2008 and the Superior Court of Quebec will be asked to ratify the proposal and authorize the arrangement, which will cancel the Existing Shares.

In order to be accepted by its creditors, the corporation's proposal needs to be approved by a majority in number of the creditors voting on the proposal, representing 66.66 per cent in value of those creditors' claims.

Mistral Pharma Inc. is a pharmaceutical company specializing in the development of controlled-delivery branded products. Mistral Pharma can formulate, develop and commercialize controlled-release, oral pharmaceutical product.