Vancouver, CANADA, August 27, 1999 - Micrologix Biotech Inc. is pleased to announce that it has closed the $15 million "bought deal" financing announced on August 18, 1999. The net proceeds of the financing are being held in escrow until such time as the Company receives all necessary approvals, including shareholder approval, and obtains receipts for a final prospectus.

"Given current market conditions and the difficulties that small cap biotechnology companies face in raising capital, we are very pleased that existing shareholders, noteworthy new investors and our underwriters have given us this strong vote of confidence" said Dany Hadary, President and CEO. "These funds would allow Micrologix to commence this fall its planned Phase II clinical trial of MBI 226 for the prevention of central venous catheter-related bloodstream infections. As well, we have secured the necessary financial resources to advance two additional drug products into Phase I clinical trials in the first half of 2000. Finally, the enhanced cash position would provide us greater flexibility to advance Micrologix's clinical programs and secure strategic alliances with major pharmaceutical companies under conditions of maximum benefit to Micrologix and its shareholders."

The syndicate of underwriters led by Yorkton Securities Inc. included TD Securities Inc., RBC Dominion Securities Inc., CIBC World Markets Inc. and CT Securities Inc. A total of 7,692,500 special units were issued at a price of $1.95 per special unit. Each special unit entitles the holder to acquire, at no additional cost, one common share of Micrologix and a one-half common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase one common share of Micrologix at $2.35 for a period of 12 months from closing, or in certain circumstances, up to 24 months from closing.

"It was important to Micrologix not only to have a strong syndicate assemble the financing but also one that is aligned with, and supports the Company's long-term financial strategy" said Mr. Hadary. "To this end, we have granted three of the underwriters special After-Market Support Options. Holders of these options may purchase up to 769,250 common shares of Micrologix, in three equal six-month tranches, at exercise prices escalating from $3.25 per common share in the first six-month tranche, to $5.50 per common share in the third six-month tranche."

Micrologix Biotech Inc. is a biopharmaceutical company developing novel drugs to treat severe and life-threatening diseases-particularly those caused by antibiotic-resistant microorganisms. The Company has a broad portfolio of drug candidates based on improved analogs of the anti-infective peptide compounds found in the host-defense systems of most life forms. Micrologix has completed Phase I and plans to initiate a Phase II clinical trial later this year for the prevention of catheter-related bloodstream infections. In addition, the Company has preclinical development programs for severe inflammatory acne, eye infections and other serious diseases.