Forbes Medi-Tech Announces Second Quarter Results

Vancouver, Canada - Forbes Medi-Tech Inc. (TSX:FMI; NASDAQ:FMTI) today announced its financial results for the three and six-month periods ended June 30, 2005. Comparative periods for these statements are the three months and six months ended June 30, 2004, respectively. All amounts are in Canadian Dollars unless otherwise noted.

Second Quarter 2005 Highlights

. Reported revenues of $6.73 million for the three months ended June 30, 2005 compared to $3.18 million for the three months ended June 30, 2004
. Reported revenues of $11.45 million for the six months ended June 30, 2005 compared to $6.44 million for the six months ended June 30, 2004
. Reported net loss of $0.09 per share for the three months ended June 30, 2005 compared to $0.08 per share loss for the three months ended June 30, 2004.
. Announced the launch of a cholesterol-lowering yogurt by Kesko of Finland incorporating Forbes' Reducol(tm) . Completed the FM-VP4 toxicity study as a precursor to the planned US Phase II trial . Announced FM-VP4/Zocor* pre-clinical study results will be presented at the AAPS Conference in November (*Zocor is a registered trademark of Merck & Co. Inc.)

"In the second quarter, we demonstrated record growth in our ingredient business and increased activity in our core research and development programs", said Charles Butt, President and CEO of Forbes Medi-Tech Inc. "The granting of the European patent for FM-VP4 is a significant milestone in the drug's development path. The successful grant of the patent parallels the Company's progress in its efforts to complete its
IND application for FM-VP4's planned US Phase II trial", said Butt.

Drug Development
Building a successful pharmaceutical development program includes key milestones in both science and intellectual property (IP) protection.
Strengthening the Company's IP, Forbes has received notice from the European Patent Office that the patent for FM-VP4 has been granted. On the development front, the Company is currently compiling information received from the toxicity study to complete its investigational new drug (IND) application to the FDA. The Company plans to initiate a US Phase II clinical trial pending the outcome of the FDA review of the IND.

Marketing & Sales Outlook
Building Reducol(tm)'s awareness and stature in the European market has become a focal point for Forbes' ingredient business as it continues to develop additional opportunities with potential customers. Kesko of Finland was the first to capitalize on Reducol(tm)'s regulatory approvals in launching a yogurt incorporating the cholesterol-lowering ingredient in May 2005. With its non-genetically modified (non-GMO), wood-based sterols, Forbes has garnered interest in its products for the European market, where there is a preference for non-GMO ingredients, and a limited supply. Based on existing sales contracts, and assuming that forecasted supply requirements will be ordered and shipped, the Company maintains its revenue guidance for 2005 of $21-22 million. This figure represents Forbes' actual year-to-date revenue and the projected revenue for the balance of the year from the Company's sales and from its proportionate share of the Phyto-Source joint venture revenue.

Revenues - Phytosterol revenues, including direct sales of phytosterol products and the amortization of license fees, made up the majority of the Company's total revenue of $6.6 million for the three months ended June 30, 2005 ($3.1 million - three months June 30, 2004) and $11.2 million for the six months ended June 30, 2005 ($6.3 million - six months ended June 30, 2004). The increase in revenue is primarily due to the strong demand for the Company's cholesterol-lowering ingredients combined with the increase in capacity from the completed plant expansion.

Net loss - For the three months ended June 30, 2005, the Company recorded a net loss of $3.2 million ($0.09 per common share) compared to a net loss of $2.4 million ($0.08 per common share) for the three months ended June 30, 2004. Net loss for the six-month period ended June 30, 2005 totaled $5.6 million ($0.17 per common share) compared to a net loss of $4.2 million ($0.14 per common share) for the six months ended June 30, 2004.

Cost of sales, marketing and development for the three months ended
June 30, 2005 totaled $3.6 million on phytosterol revenues of $6.6
million, or 55% of phytosterol revenues, versus $1.6 million on
phytosterol revenues of $3.1 million for the three months ended June
30, 2004, or 52% of phytosterol revenues. Cost of Sales for the six
months ended June 30, 2005 totaled $6.2 million on $11.2 million of
phytosterol revenues, or 55% of phytosterol revenues, versus $3.6
million on $6.3 million of phytosterol revenues, or 57% of phytosterol
revenues, for the six months ended June 30, 2004. Cost of Sales as a
percentage of phytosterol revenue varies due to a number of factors,
including changes in production efficiencies, phytosterol product mix
and marketing efforts.

Research and development expenses ("R&D") for the three months ended
June 30, 2005 totaled $3.3 million compared with $0.8 million for the
same period in 2004. R&D expenses for the six months ended June 30,
2005 totaled $5.3 million compared with $1.7 million for the same
period in 2004. R&D expenditures increased significantly in the second
quarter of 2005 primarily due to work on the 90 day toxicity study,
Phase II clinical work on FM-VP4, and continuing work on our Library of
Compounds. Increases in R&D expenditures are expected to continue
through 2005. Patent application, filing and defence costs are expensed
as incurred and included in R&D costs.

General and administrative expenditures ("G&A") totaled $1.2 million
for the three months ended June 30, 2005 compared with $1.6 million for
the three months ended June 30, 2004. The primary reason for the
decrease was that included in G&A in the three and six months ended
June 30, 2004 was a payment of $0.6 million resulting from the
termination of a consulting contract. Other fluctuations in G&A for the
three months period are due to increased staffing levels and increased
expenditures in legal and professional fees. G&A for the six-months
ended June 30, 2005 was $2.4 million compared to $2.3 million for the
same period ended June 30, 2004.

Depreciation and Amortization for the three months ended June 30, 2005
totaled $0.4 million compared with $0.4 million for the three months
ended June 30, 2004. For the six months ended June 30, 2005, of the
total $0.9 million in depreciation and amortization, $0.5 million
pertains to depreciation of assets and $0.4 million to amortization of
the Company's technology licenses compared with the six months ended
June 30, 2004, where, of the total of $0.7 million in depreciation and
amortization expenses, $0.4 million pertains to depreciation of assets
and $0.3 million to amortization of the Company's technology licenses.

Stock Based Compensation Expense totaled $0.7 million for the three
months ended June 30, 2005 compared with $1.2 million in the same
period last year. For the six-month period ended June 30, 2005
stock-based compensation expense totaled $1.1 million compared with
$2.3 million for the six months ended June 30, 2004. The change is due
primarily to a decrease in non-employee stock-based compensation for
the three and six month periods ending June 30, 2005.

Liquidity & Capital Resources

Cash, cash equivalents and Working Capital
As at June 30, 2005, Forbes' net cash and cash equivalents were $12.0
million compared with $9.2 million as at December 31, 2004. The
Company's working capital at June 30, 2005 was $11.4 million compared
with $15.1 million at December 31, 2004.

Operations
During the three months ended June 30, 2005, the Company used $2.1
million of cash in operations compared with $1.5 million of cash used
in the three months ended June 30, 2004. During the six months ended
June 30, 2005, Forbes used $2.2 million of cash in operations compared
with $2.6 million used in operations during the six months ended June
30, 2004.

Investing Activities
Cash used in investing activities in the three months ended June 30,
2005 and 2004 were insignificant and resulted from capital asset
additions and movements in short-term investments. During the six
months ended June 30, 2005, $5.8 million of cash was provided by
investing activities compared with $10.4 million of cash used in the
six-month-period ended June 30, 2004. In 2005, $6.0 million was
transferred from short-term investments and $0.2 million of cash was
used in the acquisition of capital assets, compared with $1.0 million
of cash used for capital asset acquisitions in 2004 and $10.7 million
was transferred into short-term investments. In addition, in the
six-month period ended June 30, 2004, Forbes received the final payment
on the disposal of the AD/ADD technology.

Financing Activities
Cash used in financing activities in the three months ended June 30,
2005 and June 30, 2004 were insignificant and related primarily to the
receipt of cash from the exercise of stock options offset by repayment
of loans and leases. For the six-month period ended June 30, 2005, $0.8
million was used in financing activities, primarily for the repayment
by Phyto-Source of the US$1.0 million (Forbes' 50% joint venture
interest - US$0.5 million, Cdn$0.6 million) of funds previously drawn
under the revolving line of credit and the regular term-loan payments,
offset by cash received on the exercise of stock options compared with
$14.5 million of cash which was provided in the six-month period ended
June 30, 2004. In the six month period ending June 30, 2004, the
January 2004 equity financing provided a net amount of $12.9 million of
cash and stock option and warrant exercises provided an additional $1.2
million of cash.

Second Quarter 2005 Report
This news release includes by reference the Company's unaudited
financial statements for the second quarter ended June 30, 2005,
including the full Management Discussion & Analysis (MD&A). The MD&A
and financial statements are being filed with applicable Canadian and
U.S. regulatory authorities.

About Forbes Medi-Tech Inc.
Forbes Medi-Tech Inc. is a life sciences company dedicated to the
research, development and commercialization of innovative products for
the prevention and treatment of cardiovascular disease. Our vision is
to develop and market products along a treatment continuum that
cardiovascular disease consumers, healthcare professionals and
specialized cardiovascular disease research and healthcare institutions
will identify, recommend and seek. Our business strategy is to develop
and commercialize proprietary compounds to address the unmet needs of
patients within the cardiovascular disease market.

NASDAQ and the Toronto Stock Exchange have not reviewed and do not
accept responsibility for the adequacy or accuracy of the content of
this News Release. This News Release contains forward-looking
statements concerning anticipated developments in the Company's
business and projected sales volumes, revenues, capital, research and
development, products, and other information in future periods.
Forward-looking statements can be identified by forward-looking words
such as "plans," "to develop", "projected", "revenue guidance",
"expected", "future", "outlook", "forecasted", "continues", and
similar expressions or variations thereon, or statements that events,
conditions or results "will," "may," "could", "would" or "should" occur
or be achieved. Forward-looking statements are statements about the
future and are inherently uncertain, and actual achievements of the
Company and other results and occurrences may differ materially from
those reflected in the forward-looking statements due to a variety of
risks, uncertainties and other factors, including, without limitation,
the need for performance by buyers of products and by the Company's
strategic partners; uncertainty whether patents will be issued for
FM-VP4 in any jurisdictions other than Europe; the need to secure new
sales contracts; the need to secure raw materials at competitive
prices; uncertainty as to whether future clinical trials will be
undertaken or completed as planned, and if undertaken or completed, the
risk that such trials may not achieve expected results; uncertainty as
to whether the Company's anticipated sales volumes, revenues, and
expenditure levels will be achieved as currently anticipated or at all;
the risk of technical obsolescence; the need for regulatory approvals,
including the need for FDA review prior to commencing the planned US
Phase II clinical trial, which may be withdrawn or not be obtained in a
timely manner or at all; intellectual property risks;
marketing/manufacturing risks; partnership/strategic alliance risks and
in particular, the Company's dependency on its manufacturing joint
venture partner, Chusei (U.S.A.) Inc.; product liability risk; the
effect of competition; the uncertainty of the size and existence of a
market opportunity for, and of market acceptance of, the Company's and
its customers' products; the Company's need for additional future
capital, which may not be available in a timely manner or at all;
exchange rate fluctuations; the need to attract and retain key
personnel; risks inherent in research and development; changes in
business strategy or development plans; and other risks and
uncertainties affecting the Company and its business, as contained in
news releases and filings with the United States Securities and
Exchange Commission and Canadian Securities Regulatory Authorities, any
of which could cause actual results to vary materially from current
results or the Company's anticipated future results. Forward-looking
statements are based on the beliefs, opinions and expectation of the
Company's management at the time they are made, and the Company does
not assume any obligation to update its forward-looking statement if
those beliefs, opinions or expectations or other circumstances should
change.

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