Forbes Medi-Tech announces Financial Results for the Year ended December 31, 2005

Vancouver, Canada -- Forbes Medi-Tech Inc. (TSX:FMI; NASDAQ:FMTI) today announced its financial results for the year ended December 31, 2005 versus the year ended December 31, 2004. All amounts are in Canadian dollars unless otherwise noted.

Fiscal Year 2005 Highlights
. Reported total revenue of $21 million for year ended December 31,
2005 versus $17.6 million for year ended December 31, 2004, a 19% increase
. Reported net loss of $0.38 per share for the year ended December
31, 2005 compared to a net loss of $0.25 per share for the year ended December 31, 2004
. Contributing to the net loss is a significant increase in R&D
activity reflecting the continued development of the Company's lead drug candidate, FM-VP4, and the initiation of the US Phase II trial
. Initiated dosing phase in clinical trial for cholesterol-lowering
drug, FM-VP4
. Completed US$6 million private placement allowing the Company to
focus its pharmaceutical development efforts on our cholesterol-lowering compound, FM-VP4, and the FM-VPx Library of Compounds
. Launched cholesterol-lowering ingredient, Reducol(tm), in the UK
through Tesco Foods Ltd.
. Announced product launch with Kesko of Finland
. Received European approval for Reducol(tm) in seven major food

"Our commitment to strengthening the Company's fundamentals in 2005 was ultimately successful in reaching two important milestones: initiating a US Phase II clinical trial for FM-VP4, our leading drug candidate, and launching our branded cholesterol-lowering ingredient Reducol(tm) with the UK's largest retailer. These two developments position the company for future growth and success," says Charles Butt, President and CEO of Forbes Medi-Tech Inc.

Revenue Outlook
Following the sale of its interest in Phyto-Source, LP and discontinuance of non-branded sterol sales, Forbes' total revenue outlook for 2006 including sales from Reducol(tm) and other cholesterol-lowering ingredients is $7 - 7.5 million. Of the total revenue, $6.0 -- 6.5 million is based on Reducol(tm) sales and other value added products. The $6.0 -- 6.5 million is compared to the approximate $3.9 million of Reducol(tm) and other value added products revenue in 2005, an increase of up to 67%. The expected growth is primarily based on contracted and forecasted amounts for Reducol(tm) for sale into the functional food and dietary supplement markets.

Pharmaceutical Research
Forbes remains committed to the further clinical development of its lead cholesterol-lowering compound, FM-VP4. Taking into account the results of the European trial, a US Phase II clinical study of FM-VP4 involving an expanded number of participants, a longer trial duration and a narrower dosage range is underway. The primary efficacy objective of this trial is to investigate the effect on LDL-cholesterol of two doses of FM-VP4, 450mg and 900mg, given daily for 12 weeks, compared to placebo in subjects with mild to moderate primary hypercholesterolemia.
The clinical trial will focus on identifying the reduction in low density lipoprotein (LDL or bad)-cholesterol produced by FM-VP4 with a target reduction of 15% of LDL in comparison to baseline at week 12.
The trial is expected to be completed by the end of the third quarter of 2006 with topline results anticipated to be released by year-end.

Nutraceutical Business
We are continuing to gain market share for Reducol(tm). In December 2005, Forbes announced that its cholesterol-lowering ingredient, Reducol(tm), had been launched in the UK. The initial products carrying
Reducol(tm) are being sold through the UK's largest retailer, Tesco Stores Ltd. (Tesco), under their own private label. Since the initial launch, Tesco has started selling a range of products incorporating Reducol(tm), including a margarine spread, yogurt, yogurt drink and milk drink. According to industry reports, retail sales of phytosterol-based spreads, yogurts and yogurt drinks are expected to show double digit annual growth rates in the UK. Looking ahead, 2006 holds a great deal of opportunity with additional product launches in Europe anticipated.

Financial Results

Net loss - Contributing to the net loss for the year ended December 31,
2005 of $12.8 million is a significant increase in R&D activity reflecting the continued development of the Company's lead drug candidate, FM-VP4, and the initiation of the US Phase II trial. To date, Forbes has focused on the research, development and commercialization of our phytosterol-based businesses and has incurred annual operating losses since our inception. We expect to continue incurring operational losses until the earnings from commercialization of one or more of our products exceed the costs of research and development, administration and other expenses.

Revenues - Total revenues, including interest income, for the fiscal year ended December 31, 2005 were $21.0 million compared with $17.6 million for the fiscal year ended December 31, 2004, an increase of 19%. This increase was due to increases in both sales of Reducol(tm) and Phyto-S-Sterols (non-branded). With the recent sale of its interest in Phyto-Source, LP, Forbes future revenue would reflect this change in ownership and the discontinuance of non-branded sterol sales.

Cost of sales, marketing and product development ("Cost of Sales") - For the year ended December 31, 2005, Cost of Sales totaled $11.8 million on phytosterol revenues of $20.5 million, or 57% of phytosterol revenues. For the year ended December 31, 2004, Cost of Sales totaled $9.4 million on phytosterol revenues of $17.2 million or 55% of phytosterol revenues. The increase from fiscal 2004 to fiscal 2005 in the Cost of Sales as a percentage of revenue is primarily attributable to increases in product development expenses.

Research and development ("R&D") - For the year ended December 31, 2005, the Company's net R&D expenses totaled $10.3 million compared with $4.7 million for the year ended December 31, 2004. The increase in R&D expenditures in fiscal 2005 over 2004 is mainly due to the Phase II clinical work on FM-VP4, including the 90 day toxicity study as well as the commencement of our U.S. Phase II clinical trial.

General and administrative expenditures ("G&A") - For the year ended December 31, 2005 G&A totaled $5.7 million, compared with $6.2 million in fiscal year 2004.

Stock based compensation - For the year ended December 31, 2005, stock based compensation expense totaled $1.8 million compared with $2.8 million for 2004. Of the $1.8 million of stock-based compensation expense, $1.8 million (2004 - $1.9 million) relates to employee option grants, with the balance attributable to non-employee options.

Depreciation and amortization - Amortization expense relates primarily to the amortization of equipment and intangible assets acquired upon the formation of the Phyto-Source joint venture. Amortization for the year ended December 31, 2005 totaled $1.8 million compared with $1.6 million for 2004. The increase in amortization relates mainly to the full year of Amortization on the Phyto-Source assets acquired in 2004 for the plant expansion. For the year ended December 31, 2005, of the total $1.8 million (2004 - $1.6 million) of Amortization, $1.1million
(2004 - $1.0 million) pertains to depreciation of assets and $0.7 million (2004 - $0.6 million,) pertains to amortization of our technology licenses. Our technology is being amortized over ten years.

Liquidity & Capital Resources

Cash, cash equivalents and working capital - As at December 31, 2005, net cash and short-term investments totaled $10.5 million, compared with $15.2 million as at December 31, 2004. We had working capital of
$12.8 million at December 31, 2005 (2004 -- working capital $15.1 million). The decrease in cash and working capital in 2005 was mainly due to increased R&D expenditures offset by the proceeds of a US$6.0 million (Cdn $ 7.0) million financing.

Operations - In the fiscal year 2005, cash used in operating activities was $9.4 million in fiscal 2005, compared to $4.5 million in fiscal 2004. Net changes in non-cash operating items used cash of $0.9 million in 2005 compared with $0.8 million of cash used in the year 2004. Net cash used in operations for 2005 was primarily a result of the net loss adjusted for non-cash expenses and increases in non-cash operating assets and decreases in non-cash liabilities.

Investing Activities - In the fiscal year 2005, investing activities generated net cash of $5.6 million and used net cash of $4.9 million in 2004. Cash provided in 2005, resulted primarily from $6.0 million transferred from short-term investments offset by expenditures of $0.6 million, which was used in the acquisition of capital assets, primarily at the Phyto-Source manufacturing facility.

Financing Activities - In the year ended December 31, 2005, financing activities provided $5.1 million of cash compared with $14.1 million in 2004. In November 2005, we completed a private placement, which contributed US$6.0 million (Cdn$7.0 million, before $0.8 million of share issue costs). Funds used in financing activities were primarily used for repayment of loans and capital leases by Phyto-Source.

Fiscal Year Ended December 31, 2005 Report This news release includes by reference the Company's audited financial statements for the fiscal year ended December 31, 2005, and 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. Forecasted amounts for Reducol(tm) comprise forecasts made by some of the Company's customers and forecasts made by Company management based on discussions with certain customers. This News Release contains forward-looking statements concerning anticipated developments in the Company's business and projected sales volumes, revenues, research and development, and other information in future periods. Forward-looking statements can be identified by words such as, "anticipated," "future", "outlook", "forecasted", "objective, "expected", "projected", "further", "vision", "strategy" and similar expressions or variations thereon, or statements that events, conditions or results "will," or "may," 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, uncertainty as to whether forecasts will be met and the Company will achieve its anticipated 2006 revenue; uncertainty as to whether products will be launched as anticipated; the need for performance by buyers of products; the Company's reliance on a few customers, the loss of any of which could materially adversely affect the Company's revenue; the need for performance by Phyto-Source LP for supplies of Reducol(tm) and other products and the lack of alternative suppliers; uncertainty of the size and existence of a market opportunity for, and uncertainty as to market acceptance of, the Company's and its customers' products; uncertainty as to whether the U.S. Phase II clinical trial, or any 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; the need for further clinical trials; the need for regulatory approvals, which may not be obtained or may be withdrawn; intellectual property risks; product liability and insurance risks; the effect of competition; upscaling and manufacturing risks; and the Company's need for future funding; any of which could cause actual results to vary materially from current results or the Company's anticipated future results. See the Company's reports filed with the Canadian and U.S. securities regulatory authorities from time to time for cautionary statements identifying important factors with respect to the Company's forward-looking statements, including certain risks and uncertainties that could cause actual results to differ materially from results referred to in forward-looking statements. The Company assumes no obligation to update the information contained in this News Release.

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