UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
____________

FORM 10-Q

(Mark One)

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2009

£     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________ to ____________________

Commission File Number 1-8366

POLYDEX PHARMACEUTICALS LIMITED(Exact Name of Registrant as Specified in Its Charter)

|Commonwealth of the Bahamas                                    | None               
|-------------------------------------------------------------- | -------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer   
|                                                               | Identification No.)

|421 Comstock Road, Toronto, Ontario, Canada | M1L 2H5   
|------------------------------------------- | ----------
|(Address of Principal Executive Offices)    | (Zip Code)

Registrants Telephone Number, Including Area Code (416) 755-2231

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.     Yes x            
No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    
Yes £            
No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer and
smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer £ | Accelerated filer £        
|------------------------- | ---------------------------
|Non-accelerated filer £   | Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
£Nox

Indicate the number of shares outstanding of the issuers common shares, as of the latest practicable date.

|Common Shares, $.0167 Par Value | 3,072,846                    
|------------------------------- | -----------------------------
|(Title of Class)                | (Outstanding at May 31, 2009)

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|POLYDEX
      PHARMACEUTICALS LIMITED
|-------------------------------------
|TABLE OF
      CONTENTS              
|                                     
|PART I FINANCIAL
      INFORMATION   
|                                     
|Item 1                               
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|Item 2                               
|Item 3                               
|Item 4                               
|                                     
|PART II OTHER
      INFORMATION      
|Item 1                               
|Item 2                               
|Item 3                               
|Item 4                               
|Item 5                               
|Item 6                               
|                                     

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains various forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Companys expectations or beliefs concerning
future events, including, but not limited to, statements regarding the Companys future growth, results of operations, liquidity and capital resources, expectations of regulatory approvals and the commencement of sales of products. The Company
has tried to identify such forward-looking statements by use of words such as believes, anticipates, intends, plans, will, should, expects and similar expressions,
but these words are not the exclusive means of identifying such statements.  The Company cautions that these and similar statements in this Quarterly Report on Form 10-Q and in previously filed periodic reports including reports filed on Forms 10-K
and 10-Q are further qualified by various risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements. These factors include, without limitation,
changing market conditions, the progress of clinical trials and the results obtained, the establishment of new corporate alliances, the impact of competitive products and pricing, and the timely development, regulatory approval and market acceptance
of the Companys products, as well as the other risks discussed herein, none of which can be assured. The forward-looking statements contained herein speak only as to the date of this report. Except as otherwise required by federal securities
laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Quarterly Report on Form 10-Q, whether as a result of new information, future events, changed circumstances
or any other reason after the date of this report.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normally
recurring accruals) considered necessary for a fair presentation have been included.

---

PART IFINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited).

Consolidated Balance Sheets(Expressed in United States
dollars)

|                                                |   |             |  |   |            | 
|----------------------------------------------- | - | ----------- |  | - | ---------- | 
|                                                |   | April 30    |  |   | January 31 | 
|                                                |   | 2009        |  |   | 2009       | 
|                                                |   | (Unaudited) |  |   | (Audited)  | 
|                                                |   |             |  |   |            | 
|                                                |   |             |  |   |            | 
|Assets                                          |   |             |  |   |            | 
|                                                |   |             |  |   |            | 
|Current assets:                                 |   |             |  |   |            | 
|Cash and cash equivalents (note 3)              | $ | 27,038      |  | $ | 327,857    | 
|Investments available for sale (note 4)         |   | 396,473     |  |   | 381,457    | 
|Trade accounts receivable                       |   | 674,668     |  |   | 161,858    | 
|Inventories                                     |   |             |  |   |            | 
|Finished goods                                  |   | 702,426     |  |   | 626,058    | 
|Work in progress                                |   | 274,859     |  |   | 135,966    | 
|Raw materials                                   |   | 204,550     |  |   | 241,599    | 
|                                                |   | 1,181,835   |  |   | 1,003,623  | 
|Prepaid expenses
      and other current assets |   | 47,971      |  |   | 106,221    | 
|                                                |   |             |  |   |            | 
|Total current assets                            |   | 2,327,985   |  |   | 1,981,016  | 
|                                                |   |             |  |   |            | 
|Property, plant and equipment, net              |   | 4,088,658   |  |   | 4,057,959  | 
|Patents and intangible assets, net              |   | 35,461      |  |   | 37,471     | 
|Due from estate of
      former shareholder     |   | 257,470     |  |   | 257,470    | 
|                                                |   |             |  |   |            | 
|                                                | $ | 6,709,574   |  | $ | 6,333,916  | 
|                                                |   |             |  |   |            | 
|See accompanying notes.                         |   |             |  |   |            | 
|                                                |  

P a g e |F-1

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|                                                              |   |             |   |   |             |  
|------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|POLYDEX PHARMACEUTICALS LIMITED                               |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|Consolidated Balance Sheets                                   |   |             |   |   |             |  
|(Expressed in United States dollars)                          |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|                                                              |   | April 30    |   |   | January 31  |  
|                                                              |   | 2009        |   |   | 2009        |  
|                                                              |   | (Unaudited) |   |   | (Audited)   |  
|                                                              |   |             |   |   |             |  
|Liabilities and Shareholders' Equity                          |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|Current liabilities:                                          |   |             |   |   |             |  
|Accounts payable                                              | $ | 386,646     |   | $ | 150,965     |  
|Accrued liabilities                                           |   | 358,043     |   |   | 296,538     |  
|Customer deposits                                             |   | 92,932      |   |   | 92,932      |  
|Current portion of long-term debt                             |   | 37,175      |   |   | 35,336      |  
|Current portion of
      capital lease obligations            |   | 10,840      |   |   | 15,299      |  
|Current portion
      of due to shareholder                   |   | 30,000      |   |   | 30,000      |  
|                                                              |   |             |   |   |             |  
|Total current liabilities                                     |   | 915,636     |   |   | 621,070     |  
|                                                              |   |             |   |   |             |  
|Long-term debt                                                |   | 289,705     |   |   | 291,305     |  
|Capital lease obligations                                     |   | 20,394      |   |   | 20,902      |  
|Due to shareholder                                            |   | 570,300     |   |   | 578,316     |  
|                                                              |   |             |   |   |             |  
|                                                              |   | 880,399     |   |   | 890,523     |  
|                                                              |   |             |   |   |             |  
|Total liabilities                                             |   | 1,796,035   |   |   | 1,511,593   |  
|                                                              |   |             |   |   |             |  
|Going concern (note 1)                                        |   |             |   |   |             |  
|                                                              |   |             |   |   |             |  
|Shareholders' equity:                                         |   |             |   |   |             |  
|Capital stock                                                 |   |             |   |   |             |  
|Authorized:                                                   |   |             |   |   |             |  
|100,000 Class A preferred shares of $0.10 each                |   |             |   |   |             |  
|899,400 Class B preferred shares of $0.0167 each              |   |             |   |   |             |  
|10,000,000 common shares of $0.0167 each                      |   |             |   |   |             |  
|Issued and outstanding:                                       |   |             |   |   |             |  
|899,400 Class B preferred shares (January 31, 2009 - 899,400) |   | 15,010      |   |   | 15,010      |  
|3,072,846 common shares (January 31, 2009 - 3,072,846)        |   | 51,185      |   |   | 51,185      |  
|Contributed
      surplus                                     |   | 23,527,576  |   |   | 23,527,576  |  
|Deficit                                                       |   | (19,424,441 | ) |   | (19,370,714 | )
|Accumulated other comprehensive income                        |   | 744,209     |   |   | 599,266     |  
|                                                              |   |             |   |   |             |  
|                                                              |   | 4,913,539   |   |   | 4,822,323   |  
|                                                              |   |             |   |   |             |  
|                                                              | $ | 6,709,574   |   | $ | 6,333,916   |  
|                                                              |   |             |   |   |             |  
|See accompanying notes.                                       |   |             |   |   |             |  

P a g e |F-2

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POLYDEX PHARMACEUTICALS LIMITED

Consolidated Statements of Operations and Comprehensive Income
(Loss)(Expressed in United States dollars)

|                                                   |  | Three Months |   |  | Three Months |  
|-------------------------------------------------- |  | ------------ | - |  | ------------ | -
|                                                   |  | Ended        |   |  | Ended        |  
|                                                   |  | April 30     |   |  | April 30     |  
|                                                   |  | 2009         |   |  | 2008         |  
|                                                   |  | (Unaudited)  |   |  | (Unaudited)  |  
|                                                   |  |              |   |  |              |  
|Sales                                              |  | 1,030,161    |   |  | 1,219,785    |  
|Cost of goods sold                                 |  | 822,431      |   |  | 955,789      |  
|                                                   |  |              |   |  |              |  
|Gross profit                                       |  | 207,730      |   |  | 263,996      |  
|                                                   |  |              |   |  |              |  
|Expenses                                           |  |              |   |  |              |  
|General and administrative                         |  | 212,980      |   |  | 257,475      |  
|Interest expense,net                               |  | 13,142       |   |  | 19,222       |  
|Selling and promotion                              |  | 14,942       |   |  | 13,979       |  
|Research and development                           |  | 1,107        |   |  | 4,784        |  
|Depreciation                                       |  | 4,877        |   |  | 9,161        |  
|Foreign exchange loss (gain)                       |  | 16,120       |   |  | (631         | )
|Interest and other income                          |  | (1,711       | ) |  | (14,372      | )
|Total expenses                                     |  | 261,457      |   |  | 289,618      |  
|                                                   |  |              |   |  |              |  
|Loss before income taxes                           |  | (53,727      | ) |  | (25,622      | )
|                                                   |  |              |   |  |              |  
|Recovery of income
      taxes                     |  | -            |   |  | -            |  
|                                                   |  |              |   |  |              |  
|Loss for the year                                  |  | (53,727      | ) |  | (25,622      | )
|                                                   |  |              |   |  |              |  
|Unrealized gain on investments available for sale  |  | 2,437        |   |  | 104          |  
|                                                   |  |              |   |  |              |  
|Currency
      translation adjustment              |  | 142,506      |   |  | (15,969      | )
|                                                   |  |              |   |  |              |  
|Comprehensive
      income (loss) for the period   |  | 91,216       |   |  | (41,487      | )
|                                                   |  |              |   |  |              |  
|Per share information:                             |  |              |   |  |              |  
|Loss per common
      share:                       |  |              |   |  |              |  
|Basic                                              |  | (0.02        | ) |  | (0.01        | )
|Diluted                                            |  | (0.02        | ) |  | (0.01        | )
|                                                   |  |              |   |  |              |  
|                                                   |  |              |   |  |              |  
|Weighted average number of common shares used in   |  |              |   |  |              |  
|computing net loss
      per share for the period: |  |              |   |  |              |  
|Basic                                              |  | 3,072,846    |   |  | 3,072,846    |  
|Diluted                                            |  | 3,072,846    |   |  | 3,072,846    |  
|                                                   |  |              |   |  |              |  
|See accompanying notes.                            |  |              |   |  |              |  

P a g e |F-3

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|POLYDEX PHARMACEUTICALS LIMITED                   |   |              |   |   |              |  
|------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                  |   |              |   |   |              |  
|Consolidated Statements of Shareholders' Equity   |   |              |   |   |              |  
|(Expressed in United States dollars)              |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  
|                                                  |   | Three Months |   |   | Three Months |  
|                                                  |   | Ended        |   |   | Ended        |  
|                                                  |   | April 30     |   |   | April 30     |  
|                                                  |   | 2009         |   |   | 2008         |  
|                                                  |   | (Unaudited)  |   |   | (Unaudited)  |  
|                                                  |   |              |   |   |              |  
|Preferred Shares:                                 |   |              |   |   |              |  
|Balance, beginning and end of
      period        | $ | 15,010       |   | $ | 15,010       |  
|                                                  |   |              |   |   |              |  
|Common Shares:                                    |   |              |   |   |              |  
|Balance, beginning and end of period              | $ | 51,185       |   | $ | 51,185       |  
|                                                  |   |              |   |   |              |  
|Contributed Surplus:                              |   |              |   |   |              |  
|Balance, beginning and end of
      period        | $ | 23,527,576   |   | $ | 23,499,154   |  
|                                                  |   |              |   |   |              |  
|Deficit:                                          |   |              |   |   |              |  
|Balance, beginning of period                      | $ | (19,370,714  | ) | $ | (17,779,244  | )
|Net loss for the period                           |   | (53,727      | ) |   | (25,622      | )
|                                                  |   |              |   |   |              |  
|Balance, end of period                            | $ | (19,424,441  | ) | $ | (17,804,866  | )
|                                                  |   |              |   |   |              |  
|Accumulated Other Comprehensive Income:           |   |              |   |   |              |  
|Balance, beginning of period                      | $ | 599,266      |   | $ | 1,898,161    |  
|Unrealized gain on investments available for sale |   | 2,437        |   |   | 104          |  
|Currency translation adjustment for the period    |   | 142,506      |   |   | (15,969      | )
|                                                  |   |              |   |   |              |  
|Balance, end of period                            | $ | 744,209      |   | $ | 1,882,296    |  
|                                                  |   |              |   |   |              |  
|See accompanying notes.                           |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  

P a g e |F-4



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POLYDEX PHARMACEUTICALS LIMITED

Consolidated Statements of Cash Flows(Expressed in
United States dollars)

|                                                         |  | Three Months |   |  | Three Months |  
|-------------------------------------------------------- |  | ------------ | - |  | ------------ | -
|                                                         |  | Ended        |   |  | Ended        |  
|                                                         |  | April 30     |   |  | April 30     |  
|                                                         |  | 2009         |   |  | 2008         |  
|                                                         |  | (Unaudited)  |   |  | (Unaudited)  |  
|                                                         |  |              |   |  |              |  
|Cash provided by (used in):                              |  |              |   |  |              |  
|                                                         |  |              |   |  |              |  
|Operating activities:                                    |  |              |   |  |              |  
|Net loss for the period                                  |  | (53,727      | ) |  | (25,622      | )
|Add (deduct) items not
      affecting cash:             |  |              |   |  |              |  
|Depreciation and amortization                            |  | 128,248      |   |  | 152,470      |  
|Interest on shareholder loan                             |  | -            |   |  | (5,257       | )
|Net change in non-cash working capital
      balances    |  |              |   |  |              |  
|related to operations                                    |  | (300,317     | ) |  | (601,746     | )
|                                                         |  |              |   |  |              |  
|Cash used in operating activities                        |  | (225,796     | ) |  | (480,155     | )
|                                                         |  |              |   |  |              |  
|Investing activities:                                    |  |              |   |  |              |  
|Additions to property, plant and equipment               |  | (20,936      | ) |  | (5,032       | )
|Proceeds (acquisition) of investments available for sale |  | (2,108       | ) |  | 103,422      |  
|                                                         |  |              |   |  |              |  
|Cash provided by (used in) investing activities          |  | (23,044      | ) |  | 98,390       |  
|                                                         |  |              |   |  |              |  
|Financing activities:                                    |  |              |   |  |              |  
|Repayment of long-term debt                              |  | (8,579       | ) |  | (10,167      | )
|Repayment of capital lease obligations                   |  | (5,747       | ) |  | (1,456       | )
|Decrease in due to shareholder                           |  | (8,016       | ) |  | (12,563      | )
|Increase in bank indebtedness                            |  | -            |   |  | 129,071      |  
|                                                         |  |              |   |  |              |  
|Cash provided by (used in) financing activities          |  | (22,342      | ) |  | 104,885      |  
|                                                         |  |              |   |  |              |  
|Effect of exchange rate changes                          |  | (29,637      | ) |  | (2,765       | )
|                                                         |  |              |   |  |              |  
|Net decrease in cash and cash
      equivalents          |  | (300,819     | ) |  | (279,645     | )
|                                                         |  |              |   |  |              |  
|Cash and cash equivalents, beginning of year             |  | 327,857      |   |  | 468,570      |  
|                                                         |  |              |   |  |              |  
|Cash and cash equivalents, end of year                   |  | 27,038       |   |  | 188,925      |  
|                                                         |  |              |   |  |              |  
|                                                         |  |              |   |  |              |  
|Cash and cash equivalents is comprised of the following: |  |              |   |  |              |  
|Cash                                                     |  | 27,038       |   |  | 188,925      |  
|Short-term deposits                                      |  | -            |   |  | -            |  
|                                                         |  |              |   |  |              |  
|                                                         |  | 27,038       |   |  | 188,925      |  
|                                                         |  |              |   |  |              |  
|See accompanying notes.                                  |  |              |   |  |              |  

P a g e |F-5

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.         Basis of Presentation:

The information contained in the interim consolidated financial statements is condensed from that which would appear in annual consolidated financial statements. The interim consolidated financial statements included herein should be read in
conjunction with the audited financial statements, and notes thereto, and other financial information contained in the 2009 Annual Report on Form 10-K for the fiscal year ended January 31, 2009 as filed by Polydex Pharmaceuticals Limited (the
Company) with the Securities and Exchange Commission. The unaudited interim consolidated financial statements as of April 30, 2009 and 2008 include all normal recurring adjustments which management considers necessary for a fair
presentation. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the entire fiscal year.  The interim consolidated financial statements include the accounts and
transactions of the Company and its majority owned subsidiaries in which the Company has equal to or more than a 50% ownership interest and exercises control.

Going Concern

These consolidated financial statements have been prepared on going concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future, For the fiscal
year ended January 31, 2009, the Company generated a consolidated net loss of $1,591,470 (2008-$885,211) and realized a negative cash flow from operating activities of $251,128 (2008-$297,899). There was an accumulated deficit of
$19,370,714 (2008 - $17,779,244) The Company, through its wholly owned subsidiary Dextran Products Limited, was also in violation of its debt service loan covenant related to the bank term loan of $324,893 (Cdn$398,481), on which the
Company subsequently received a waiver from its bank. The Company had positive working capital of $1,359,946 as at January 31, 2009 (2008 - $2,403,042).

Management has undertaken the following initiatives that it believes will be instrumental in leading to more profitable operations:

- Cost reductions relating to direct cost areas, including raw material pricing, and tighter control of plant hours of work (including the plant shutdown in the fourth quarter).
- Restructuring of the supervisory hierarchy over production personnel, to ensure more efficient communication especially as related to problem identification and scheduling.
- Improved control of operational processes, including increased frequency of production and quality control meetings to address production issues on a more timely basis.
- Cost reductions relating to administrative and overhead expenses, including administrative wages, insurance, and reporting costs.
- Increased interaction with larger new and potential customers, including site visits, in order to address their opportunities and concerns, and strengthen our relationship with them.

The Companys ability to continue as a going concern is in doubt as it is dependent on the ability of the Company to attain profitable operations, enabling it to meet the Companys liabilities as
they become due and the realization of its business plans. The outcome of these matters is dependent on factors outside the Companys control and cannot be predicted at this time. Should the above expectations fail to occur or not achieve the
levels required to meet the Companys profitability and liquidity requirements, management will seek other sources of investment from new or existing investors, creditors and customers.

P a g e |F-6

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.         Basis of Presentation
(Continued):

The accompanying consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. These
financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts or classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.Significant Accounting Policies:

Basis of consolidation

The interim consolidated financial statements include the accounts of the Company and its subsidiaries.  All inter-company accounts and transactions have been eliminated on consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from these estimates.

Cash and cash equivalents

Cash and cash equivalents include cash and short-term deposits with maturities of less than three months at the date of purchase.

Inventories

Inventories of raw materials are stated at the lower of cost and net realizable value, cost being determined on a first-in, first-out basis. Work-in-process and finished goods are valued at the lower of cost and net realizable value, and include the
cost of raw materials, direct labor and fixed and variable overhead expenses.

Investments available for sale

Investments available for sale consist of medium-term fixed income instruments, trust income funds, and mutual funds, and are stated at fair market value based on quoted market prices. Interest income is included in other income in the consolidated
statement of operations as it is earned.  Changes in market values during the holding period are reported as unrealized gain (loss) on investments available for sale and are included in other comprehensive income (loss). Realized gains (losses) are
reclassified from accumulated other comprehensive income (loss) on a specific item basis when the security is sold or matured.

P a g e |F-7

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

2.         Significant Accounting
Policies (Continued):

Property, plant and equipment and patents and intangible assets

Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets as follows:

Buildings 15 years 
Machinery and equipment 3 to 10 years

Patents and intangible assets are recorded at cost and are amortized on a straight-line basis over their estimated useful lives of ten years.  Intangible assets consist of intellectual property, government licenses and government license
applications.

Useful life is the period over which the asset is expected to contribute to the Companys future cash flows.  The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the
carrying value of the asset may not be recoverable.  The assessment of possible impairment is based on the Companys ability to recover the carrying value of the asset from the expected future pre-tax cash flows of the related operations. If
these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value.

Costs related to plant refurbishments and equipment upgrades that represent improvements to existing facilities are capitalized.  Costs related to repair and maintenance of buildings and equipment are expensed. The Company has no major planned
maintenance activity.

Revenue recognition

Revenue results from sales of bulk manufactured products. Revenue is recognized when title and risk of ownership of products pass to the customer.  Title and risk of ownership pass to the customer pursuant to the applicable sales contract, either
upon shipment of product or upon receipt by the customer.

Product sold in bulk quantities is tested, prior to release for shipment, to ensure that it meets customer specifications, and in many cases, customers receive samples for their own testing. Approval is obtained from the customer prior to shipping.
Further purchases by a customer of a bulk product with the same specifications do not require approvals. Returns of bulk product are rare and generally are not accepted.

Shipping and handling costs

Shipping and handling costs incurred by the Company for shipment of products to customers are included in cost of goods sold.

Research and development

Research and development costs are expensed as incurred and are stated net of investment tax credits earned.

Foreign currency translation

The functional currency of the Companys Canadian operations has been determined to be the Canadian dollar. All asset and liability accounts of the Company except capital stock have been translated into United States dollars using the current
exchange rates at the interim consolidated balance sheet dates. Capital stock is recorded at historical rates. Revenue and expense items are translated using the average exchange rates for the year. The resulting gains and losses have been reported separately as accumulated other comprehensive
income within shareholders equity.

P a g e |F-8

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

2.         Significant Accounting
Policies (Continued):

Stock options

The Company has elected to follow Statement of Financial
Accounting Standards No. 123(R), Accounting for Stock-Based Compensation
(SFAS 123(R)). Under SFAS 123(R), compensation expense is recognized on the
date of grant, based on the fair value of the options granted.

Earnings (loss) per common share

Basic earnings (loss) per common share is computed using the
weighted average number of common shares outstanding of 3,072,846 for the three
months ended April 30, 2009 (2008 - 3,072,846). Diluted earnings (loss) per
common share is computed using the weighted average number of common shares
outstanding adjusted for the incremental shares, using the treasury stock
method, attributed to outstanding options to purchase common stock. Incremental
shares of nil at April 30, 2009 and nil at April 30, 2008 were used in the
calculation of diluted earnings (loss) per common share. Options to purchase
common shares of nil were included in the computation of diluted earnings per
share as at April 30, 2009. Options to purchase common shares of nil at April
30, 2008 were included in the computation of diluted earnings (loss) per common
share.

3.Cash and Cash Equivalents:

Cash and cash equivalents consist of the following:

|     |   | April 30 |  |   | January 31 | 
|---- | - | -------- |  | - | ---------- | 
|     |   | 2009     |  |   | 2009       | 
|     |   |          |  |   |            | 
|Cash | $ | 27,038   |  | $ | 327,857    | 

4. Investments Available For Sale:

Investments available for sale consist of the following:

|                               |   | April 30 |  |   | January 31 | 
|------------------------------ | - | -------- |  | - | ---------- | 
|                               |   | 2009     |  |   | 2009       | 
|                               |   |          |  |   |            | 
|Canadian short-term bond fund  | $ | 214,744  |  | $ | 205,934    | 
|Global fixed
      income fund | $ | 181,729  |  | $ | 175,523    | 
|                               | $ | 396,473  |  | $ | 381,457    | 

Canadian short-term bond fund has maturity dates extending from
one to five years and a yield rate of 3.46% . The Global fixed income fund has a
yield rate of 2.83% . Investments available for sale are stated at fair market
value, based on quoted market prices. An unrealized gain of $2,437 has been
included in accumulated other comprehensive income.

P a g e |F-9

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

5. Commitments and Contingencies:

There are no material commitments or contingencies outstanding
as at April 30, 2009 or April 30, 2008.

6.Stock-based Employee Compensation:

The Company maintains an incentive share option plan for
management personnel for options to purchase up to 954,950 common shares. The
Company also issues options to certain consultants for services provided to the
Company.

All options granted have terms of five years and vest
immediately. At April 30, 2009, the Company had 138,761 options outstanding at
exercise prices ranging from $0.38 to $10.01 and a weighted average exercise
price of $1.53. The options, which are immediately exercisable and expire on
dates between January 31, 2010 and January 31, 2014, entitle the holder of an
option to acquire one common share of the Company.

The Company uses the fair value method in accordance with SFAS
123 to account for awards of stock-based employee compensation. No stock-based
employee compensation expense was recorded during the period from February 1,
2009 to April 30, 2009, because there were no options granted during this
period. Similarly, no stock-based employee compensation expense was recorded
during the period from February 1, 2008 to April 30, 2008, because there were no
options granted during that period.

7. Segmented Information:

|                                       |   | Three Months |  |   | Three Months | 
|-------------------------------------- | - | ------------ |  | - | ------------ | 
|                                       |   | Ended        |  |   | Ended        | 
|                                       |   | April 30,    |  |   | April 30,    | 
|                                       |   | 2009         |  |   | 2008         | 
|                                       |   |              |  |   |              | 
|Total revenue by significant customer: |   |              |  |   |              | 
|Customer
      A                       | $ | 258,259      |  | $ | 124,550      | 
|Customer B                             | $ | 220,160      |  | $ | --           | 
|Customer
      C                       | $ | 131,551      |  | $ | 252,523      | 
|Customer D                             | $ | 102,400      |  | $ | --           | 
|Customer
      E                       | $ | 575          |  | $ | 339,570      | 
|Customer F                             | $ | --           |  | $ | 154,693      | 
|                                       | $ | 712,945      |  | $ | 871,336      | 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

7. Segmented Information (Continued):

Sales by geographic destination:

| |  | Three Months |  |  | Three Months | 
| |  | ------------ |  |  | ------------ | 
| |  | Ended        |  |  | Ended        | 
| |  | April 30,    |  |  | April 30,    | 
| |  | 2009         |  |  | 2008         | 
| |  |              |  |  |              | 

|Europe        | $ | 340,954   |  | $ | 186,910   | 
|------------- | - | --------- |  | - | --------- | 
|Pacific Rim   | $ | 233,710   |  | $ | 33,200    | 
|Other         | $ | 202,150   |  | $ | 89,442    | 
|Canada        | $ | 137,552   |  | $ | 255,045   | 
|United States | $ | 115,795   |  | $ | 655,188   | 
|              | $ | 1,030,161 |  | $ | 1,219,785 | 

P a g e |F-11

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Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations

The Companys fiscal year ends on January 31stof each year. In this report, fiscal year 2010 refers to the Companys fiscal year ended January 31, 2010. The following discussion
should be read in conjunction with the April 30, 2009 interim consolidated financial statements and notes thereto included elsewhere in this report.  Operating results for the three months ended April 30, 2009 are not necessarily indicative of the
results that may be expected for the fiscal year ending January 31, 2010. For further information, refer to the consolidated financial statements and footnotes thereto included in the Companys annual report on Form 10-K for the fiscal year
ended January 31, 2009.  The Companys financial statements are prepared in accordance with United States generally accepted accounting principles. All amounts are in United States dollars, unless otherwise denoted.

Overview

The Company is engaged in the manufacture of bulk pharmaceutical intermediates for the worldwide veterinary pharmaceutical industry and also the manufacture and marketing of biotechnology-based products for the human
pharmaceutical market. The Company conducts its business operations through its wholly-owned subsidiaries, Dextran Products and Chemdex.

The manufacture and sale of bulk quantities of dextran and derivative products for sale to large pharmaceutical companies throughout the world is conducted through Dextran Products in Canada. Chemdex in the United
States provides ferric hydroxide and hydrogenated dextran to Sparhawk pursuant to a definitive supply agreement.

Management Objectives for Fiscal 2010. In fiscal year 2010, management intends to continue to focus on the core products of Dextran Products that have historically been the backbone of the Company.  Opportunities
to increase distribution chains for existing Dextran products in overseas markets continue to be explored by management. New customers have also been identified in Europe. Expanding current market opportunities and the potential for new market
penetration led management to make plant refurbishments and the expansion of production capacity a priority with respect to the Companys manufacturing operations located in Toronto.The first step has been construction of new drying
facilities to produce increased quantities of higher quality product. These products have traditionally generated higher margins. Production of product utilizing this new equipment is planned for the third quarter of fiscal year 2010.

Research and development of the Companys human pharmaceutical products is coordinated at Dextran Products. Ushercell is a high molecular weight Cellulose Sulphate that was envisioned for topical vaginal use
primarily in the prevention of unplanned pregnancies, as well as the transmission of AIDS and other sexually transmitted diseases. Further work in this area has been suspended pending a final investigative report which is expected during fiscal year
2010. The Company never received any financial gain from this project, and as a result, there is no immediate or direct effect on sales or revenues.

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Results of Operations

Three months ended April 30, 2009 compared to three
months ended April 30, 2008

|               |   | Three Months |   |   | Three Months |   |  |          |   
|-------------- | - | ------------ | - | - | ------------ | - |  | -------- | --
|               |   | Ended        |   |   | Ended        |   |  |          |   
|               |   | April 30,    |   |   | April 30,    |   |  |          |   
|               |   | 2009         |   |   | 2008         |   |  | Variance |   
|               |   |              |   |   |              |   |  |          |   
|Net Loss       | $ | (53,727      | ) | $ | (25,622      | ) |  | (110     | )%
|               |   |              |   |   |              |   |  |          |   
|Loss per Share | $ | (0.02        | ) | $ | (0.01        | ) |  |          |   

The increase in net loss for the
first quarter of fiscal year 2010 is a result of decreased sales compared to the
first quarter of fiscal year 2009, partially offset by decreased expenses and
the increase in value of the United States dollar as compared to the Canadian
dollar.

|      |   | Three Months |  |   | Three Months |  |  |          |   
|----- | - | ------------ |  | - | ------------ |  |  | -------- | --
|      |   | Ended        |  |   | Ended        |  |  |          |   
|      |   | April 30     |  |   | April 30,    |  |  |          |   
|      |   | 2009         |  |   | 2008         |  |  | Variance |   
|      |   |              |  |   |              |  |  |          |   
|Sales | $ | 1,030,161    |  | $ | 1,219,785    |  |  | (16      | )%

Sales for the first quarter of
fiscal year 2010 decreased from the comparable period for the first quarter of
fiscal year 2009 is primarily due to a substantial order that was shipped in the
first quarter of fiscal year 2009, and is expected to be repeated in the third
quarter of fiscal year 2010.

|                    |   | Three Months |  |   | Three Months |  |  |          |   
|------------------- | - | ------------ |  | - | ------------ |  |  | -------- | --
|                    |   | Ended        |  |   | Ended        |  |  |          |   
|                    |   | April 30,    |  |   | April 30,    |  |  |          |   
|                    |   | 2009         |  |   | 2008         |  |  | Variance |   
|                    |   |              |  |   |              |  |  |          |   
|Gross profit        | $ | 207,730      |  | $ | 263,996      |  |  | (21      | )%
|Percentage of sales |   | 21%          |  |   | 21%          |  |  |          |   

The decrease in gross margin in
the first quarter of fiscal year 2010 is due primarily to the decrease in sales
compared to the first quarter of fiscal year 2009, partially offset by managements
commitment to stringent control of direct costs. As a percentage of sales,
margins remained consistent aided in part by the decreased value of the Canadian
dollar during the period.

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|                                                              |   | Three Months |  |   | Three Months |  |  |          |   
|------------------------------------------------------------- | - | ------------ |  | - | ------------ |  |  | -------- | --
|                                                              |   | Ended        |  |   | Ended        |  |  |          |   
|                                                              |   | April 30,    |  |   | April 30,    |  |  |          |   
|                                                              |   | 2009         |  |   | 2008         |  |  | Variance |   
|                                                              |   |              |  |   |              |  |  |          |   
|Selling,
      promotion, general and administrative expenses | $ | 227,922      |  | $ | 271,454      |  |  | (16      | )%

The decrease during the first
quarter of fiscal year 2010 in selling, promotion, general and administrative
expenses is primarily due to a general decrease in the expenses of the Company,
aided by the decreased value of the Canadian dollar. These reductions included
legal, insurance, consulting and reporting costs, and are a result of the
continued focus by management to minimize these costs.

|                                            |   | Three Months |  |   | Three Months |  |  |          |   
|------------------------------------------- | - | ------------ |  | - | ------------ |  |  | -------- | --
|                                            |   | Ended        |  |   | Ended        |  |  |          |   
|                                            |   | April 30,    |  |   | April 30,    |  |  |          |   
|                                            |   | 2009         |  |   | 2008         |  |  | Variance |   
|                                            |   |              |  |   |              |  |  |          |   
|Research and development
      expenditures | $ | 1,107        |  | $ | 4,784        |  |  | (77      | )%

The decrease in research and
development expenses during the first quarter of fiscal year 2010 is a result of
the continued reduction in patent issuance fees and consulting fees which had
been substantially related to the Ushercell project. An independent review board
is examining all of the data associated with the Ushercell Phase III clinical
trials and its report is expected later this fiscal year.

Further funding from research and
development partners for these projects has been put on hold, pending receipt of
the independent review board report mentioned above. The Company has no
commitments to repay this funding or to purchase the results of such research.

|                                      |   | Three Months |  |   | Three Months |  |  |          |   
|------------------------------------- | - | ------------ |  | - | ------------ |  |  | -------- | --
|                                      |   | Ended        |  |   | Ended        |  |  |          |   
|                                      |   | April 30,    |  |   | April 30,    |  |  |          |   
|                                      |   | 2009         |  |   | 2008         |  |  | Variance |   
|                                      |   |              |  |   |              |  |  |          |   
|Depreciation and amortization expense | $ | 128,248      |  | $ | 152,470      |  |  | (16      | )%

The decrease in depreciation and
amortization expense for the first quarter of fiscal year 2010 compared to the
first quarter of fiscal year 2009 is due to the decrease in the value of the
Canadian dollar and the reduced fixed asset balances resulting from the
impairment write down that occurred at January 31, 2009, and described in the
Companys 2009 Annual Report on Form 10K for the fiscal year ended January 31,
2009.

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|                 |   | Three Months |  |   | Three Months |  |  |          |   
|---------------- | - | ------------ |  | - | ------------ |  |  | -------- | --
|                 |   | Ended        |  |   | Ended        |  |  |          |   
|                 |   | April 30,    |  |   | April 30,    |  |  |          |   
|                 |   | 2009         |  |   | 2008         |  |  | Variance |   
|                 |   |              |  |   |              |  |  |          |   
|Interest expense | $ | 13,142       |  | $ | 19,222       |  |  | (32      | )%

Interest expense decreased for
the first quarter of fiscal year 2010 compared to the first quarter of fiscal
year 2009 due primarily to the decrease in interest rates applicable to the due
to shareholder amount, as well as the reductions in long-term debt balances due
to continued repayments by the Company.

|                             |   | Three Months |  |   | Three Months |   |  |          |   
|---------------------------- | - | ------------ |  | - | ------------ | - |  | -------- | --
|                             |   | Ended        |  |   | Ended        |   |  |          |   
|                             |   | April 30,    |  |   | April 30,    |   |  |          |   
|                             |   | 2009         |  |   | 2008         |   |  | Variance |   
|                             |   |              |  |   |              |   |  |          |   
|Foreign exchange (gain) loss | $ | 16,120       |  | $ | (631         | ) |  | (2,655   | )%

The foreign exchange loss for the
first quarter of fiscal year 2010 compared to the gain for the first quarter of
fiscal year 2009 was due to the increase in value of the United States dollar
compared to the Canadian dollar during the period.

|                          |   | Three Months |  |   | Three Months |  |  |          |   
|------------------------- | - | ------------ |  | - | ------------ |  |  | -------- | --
|                          |   | Ended        |  |   | Ended        |  |  |          |   
|                          |   | April 30,    |  |   | April 30,    |  |  |          |   
|                          |   | 2009         |  |   | 2008         |  |  | Variance |   
|                          |   |              |  |   |              |  |  |          |   
|Interest and other income | $ | 1,711        |  | $ | 14,372       |  |  | (88      | )%

The decrease in interest and
other income in the first quarter of fiscal year 2010 compared to the first
quarter of fiscal year 2009 is primarily related to the decrease in investments
available for sale and the reserve provided against the accrued interest on the
shareholder loan balance.

Liquidity and Capital Resources

As of April 30, 2009, the Company
had cash of $27,038, compared to cash of $327,857 at January 31, 2009. In the
first quarter of fiscal year 2010, the Company expended cash of $255,796 in its
operating activities, compared to expending cash of $480,155 for the first
quarter of fiscal year 2009. The use of cash for operations during the first
quarter of fiscal year 2010 is primarily due to the increase in receivables and
inventory, partially offset by the increase in accounts payable. Depreciation
continues to be a large non-cash expense of the Company.

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The Companys working capital increased to $1,412,349 and a working capital ratio of 2.54 to 1 as of April 30, 2009, compared to $1,359,946 and 3.19 to 1 as of January 31, 2009.

As of April 30, 2009, the Company had accounts receivable of $674,668 and inventory of $1,181,835, compared to $161,858 and $1,003,623 respectively at January 31, 2009 and $936,231 and $1,750,390
respectively at April 30, 2008. The increase in accounts receivable during the first quarter ended April 30, 2009 is primarily due to the low volume of sales during the latter part of the fourth quarter of fiscal year 2009, which led to the plant
shutdown during that period.

At April 30, 2009, the Company had accounts payable of $386,646 compared to $150,965 at January 31, 2009 and $535,456 at April 30, 2008. The increase in accounts payable from January 31, 2009 was due to the
increase in inventory, and the timing of supplier payments.

During the first quarter of fiscal year 2010, capital expenditures totaled $20,936, as compared to $5,032 in the first quarter of fiscal year 2009. Expenditures related to Phase I of the plant refurbishment and
expansion plan at Dextran Products in Toronto have been completed and management expects it to be available for production during the third quarter of fiscal year 2010. Capital expenditures are expected to be minimal during the remainder of fiscal
year 2010.

The change in accumulated other comprehensive income of the Company is primarily attributable to the currency translation adjustment of Dextran Products. Dextran Products functional currency is the Canadian
dollar. This currency translation adjustment arises from the translation of Dextran Products financial statements to U.S. dollars.

Dextran Products has a Cdn. $250,000 (U.S. $209,500) operating line of credit, of which none was utilized at April 30, 2009 and January 31, 2009. This line of credit bears interest at the Canadian banks
prime lending rate plus 1.0% (April 30, 2009  3.25%; January 31, 2009 4.00%) . In May 2006, a fixed term rate loan of Cdn. $500,000 (U.S. $419,111) was obtained to fund capital purchases. The interest rate is 0.75% over Canadian
bank prime lending rate (6.95%) . Bank indebtedness is collateralized by a general security agreement over the Companys assets and a collateral mortgage of Cdn. $500,000 on the Dextran Products building in Toronto. The line of credit is
used periodically by the Company to cover temporary short-term Canadian dollar cash needs. For these short-term cash needs, the interest expense on the credit line is typically less than the transaction costs incurred in selling short-term
investments.

The decrease in long-term debt and capital lease obligations from January 31, 2009 is due to repayments during the period, as well as the decrease in value of the Canadian dollar during the period.

Changes in the relative values of the Canadian dollar and the United States dollar occur from time to time and may, in certain instances, materially affect the Companys results of operations.

The Company does not believe that the impact of inflation and changing prices has had a material effect on its operations or financial results at any time in the last three years.

P a g e | 5

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Related Party Transactions

In August 1997, the Company loaned the late Thomas C. Usher, its Vice-Chairman, Director of Research and Development, a member of its Board of Directors and the beneficial owner of greater than 5% of the outstanding
common shares of the Company, $691,500 at an interest rate equal to the prime rate of Toronto Dominion Bank plus 1.50% (the Loan). The Loan was used to partially fund a $1,000,000 payment to the State of Florida in order to allow
Thomas C. Usher to regain possession of 430,000 Common Shares of the Company then held by the State as collateral security relating to the liquidation of insurance companies formerly owned by Thomas C. Usher. Repayment of the Loan is accomplished by
periodic payments and through offsets by the Company against royalty payments due Thomas C. Usher pursuant to intellectual property license agreements and, in the past, bonus payments, if any, granted to Thomas C. Usher as an employee of the
Company. The amount outstanding under the Loan as of April 30, 2009 was $303,201, as compared to $299,716 at January 31, 2009, including accrued interest. The Company has taken a cumulative provision of $326,975 at April 30, 2009
(January 31, 2009 - $323,490) against accrued interest on the Loan and the other amounts receivable from the estate as noted below. Obligations with respect to the Loan transferred to the estate of Thomas C. Usher upon his death in February
2005.

In August 1999, Thomas C. Usher personally assumed all of the assets and liabilities of Novadex Corp., including the balance of receivables (the Receivables) due to the Company from Novadex Corp. The
Receivables have no specific repayment terms. The total outstanding amount of the Receivables as of April 30, 2009 and at January 31, 2009 was $31,244. The Company continues to be obligated to make royalty payments to Mr. Ushers estate
pursuant to intellectual property license agreements, and intends to continue to offset such payments against the Receivables. Thomas C. Usher also owed $250,000 to a subsidiary of the Company, Novadex International Limited, as of April 30,
2009, pursuant to a non-interest bearing loan with no specific repayment terms. The outstanding amount of this loan has not changed from January 31, 2009. The amounts continue to remain owing from the estate of Thomas C. Usher.

As of April 30, 2009, Thomas C. Usher, now through his estate, had pledged 243,263 common shares of the Company as security for these amounts owing to the Company. These common shares had a market value of $41,355
at April 30, 2009, based on the closing price of the Companys common shares on the OTC Bulletin Board on April 30, 2009. The Company intends to continue to hold the pledged assets as collateral until the amounts owing discussed above are
repaid.

The Company had a commitment to pay an amount equal to one years salary, $110,000, to Thomas C. Ushers estate. The amount owing on this commitment as at April 30, 2009 is $36,050.

The Company also has an outstanding loan payable to Ruth Usher, a former director and the widow of Thomas C. Usher.  The amount due from the Company pursuant to this loan decreased to $600,277 at April 30, 2009 from
$608,293 at January 31, 2009 due to monthly payments by the Company, less interest charges.

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Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Critical Accounting Policies

The Companys interim consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, applied on a consistent basis. The critical accounting policies
include the use of estimates of allowance for doubtful accounts, the useful lives of assets and the realizability of deferred tax assets. The Companys accounting policies with respect to the Sparhawk Joint Venture and its disposition are also
discussed below.

Management is required to make estimates and assumptions, in preparing the consolidated financial statements, that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the periods. The actual results could differ from these estimates. Significant estimates made by management include the
calculation of reserves for uncollectible accounts, inventory allowances, useful lives of long-lived assets and the realizability of deferred tax assets.

Revenue Recognition

Revenue results from sales of bulk manufactured products and is recognized when title and risk of ownership of products pass to the customer. Title and risk of ownership pass to the customer pursuant to the applicable sales contract, either upon
shipment of product or upon receipt by the customer. Since returns are rare and generally not accepted, management has not made provision for returns. In addition, product sold in bulk quantities is tested, prior to release for shipment, to ensure
that it meets customer specifications, and in many cases, customers receive samples for their own testing. Approval is obtained from the customer prior to shipping.

Allowance for Doubtful Accounts

Accounts receivable is stated net of allowances for doubtful accounts. Allowances for doubtful accounts are determined by each reporting unit on a specific item basis. Management reviews the credit worthiness of
individual customers and past payment history to determine the allowance for doubtful accounts. Since the majority of sales at Dextran Products are export, Dextran Products maintains credit insurance through a crown corporation which is supported by
the Canadian government, for the majority of its customers receivables.  There has been no allowance for doubtful accounts during the past two fiscal years.

Long-Lived Assets

Long-lived assets are stated at cost, less accumulated depreciation or amortization computed using the straight-line method based on their estimated useful lives ranging from three to fifteen years. Useful life is the
period over which the asset is expected to contribute to the Companys future cash flows. A significant change in estimated useful lives could have a material impact on the results of operations. The Company reviews the recoverability of
its
long-lived assets, including buildings, equipment and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on
the Companys ability to recoverthe carrying value of the asset from the expected future pre-tax cash flows of the related operations. If these cash flows are less than thecarrying value of such asset, an impairment loss is
recognized for the difference betweenestimated fair value and carrying value. The measurement of impairment requires management tomake estimates of these cash flows related to long-lived assets as well as other fair valuedeterminations.

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Deferred Tax Assets

The Company has recorded a valuation allowance on deferred tax assets where there is uncertainty as to the ultimate realization of the future tax deduction. Dextran Products has incurred capital losses, which are only
deductible against capital gains. It is not certain that Dextran Products will realize capital gains in the future to use these Canadian capital loss deductions.

Changes in Accounting Policies

No changes in accounting principles or their application have been implemented in the reporting period that would have a material effect on reported income.

P a g e | 8

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Item 3. Quantitative and Qualitative Disclosures About
Market Risk

Exchange Rate Sensitivity

The Companys operations consist of manufacturing activities in
the United States and Canada. The Companys products are sold in North America,
Europe and the Pacific Rim.

While the majority of the sales of Dextran Products, the
Companys Canadian operation, are denominated in United States dollars, the
majority of its expenses are incurred in Canadian dollars. The majority of the
assets and liabilities of Dextran Products are denominated in Canadian dollars
prior to the currency translation adjustment necessary for preparation of the
consolidated financial statements of the Company contained in this report. When
the Canadian dollar rises in value relative to the United States dollar, the
carrying value of the assets and liabilities of Dextran Products as stated in
United States dollars increases. A rise in the Canadian dollar relative to the
United States dollar also results in a decrease in gross margins and net income
of Dextran Products. Dextran Products also experiences a foreign exchange gain
when the Canadian dollar rises in relation to the United States dollar because
it has a net asset exposure to the United States dollar resulting from United
States dollar denominated accounts receivable and an intercompany loan.

Management monitors currency fluctuations to ensure that an
acceptable margin level at Dextran Products is maintained. Management has the
ability, to some extent, to adjust sales prices to maintain an acceptable margin
level.

The following table presents information about the Companys
financial instruments other than accounts receivable that are sensitive to
changes in foreign currency exchange rates. All financial instruments are held
for other than trading purposes. The table presents principal cash flows and
related weighted average interest rates by expected maturity dates.

|                          |  | Expected Maturity
      Date |  |  |         |  |  |         | 
|------------------------- |  | ---------------------------- |  |  | ------- |  |  | ------- | 
|                          |  |                              |  |  |         |  |  |         | 
|                          |  | 4/30/09                      |  |  | 4/30/10 |  |  | 4/30/11 | 
|                          |  | (US$
      Equivalent)       | 
|Assets:                   |  |                              |  |  |         |  |  |         | 
|Short-term investments:   |  |                              |  |  |         |  |  |         | 
|Fixed rate ($Cdn)         |  | 396,488                      |  |  |        |  |  |        | 
|Average
    interest rate |  | 3.16%                        |  |  |        |  |  |        | 
|Liabilities:              |  |                              |  |  |         |  |  |         | 
|Long-term debt:           |  |                              |  |  |         |  |  |         | 
|Fixed rate ($Cdn)         |  | 47,954                       |  |  | 44,428  |  |  | 47,843  | 
|Average
    interest rate |  | 8.94%                        |  |  | 9.16%   |  |  | 9.17%   | 

P a g e | 9

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Interest Rate Sensitivity

The Company has interest earning assets consisting of
investment grade short-term commercial paper and medium-term fixed income
instruments. A significant portion of the Companys debt is at fixed rates. The
variable rate debt represents the shareholder loan payable, which is partially
offset by the shareholder loan receivable. Both of these financial instruments
carry the same interest rate. As such, the Company has no significant risk
exposure to changes in interest rates.

The following table presents information about the Companys
financial instruments that are sensitive to changes in interest rates. All
financial instruments are held for other than trading purposes. The table
presents principal cash flows and related weighted average interest rates by
expected maturity dates.

|                            |  | Expected Maturity
      Date |  |  |         |  |  |         | 
|--------------------------- |  | ---------------------------- |  |  | ------- |  |  | ------- | 
|                            |  |                              |  |  |         |  |  |         | 
|                            |  | 4/30/09                      |  |  | 4/30/10 |  |  | 4/30/11 | 
|                            |  | (US$
      Equivalent)       | 
|Assets:                     |  |                              |  |  |         |  |  |         | 
|Short-term investments:     |  |                              |  |  |         |  |  |         | 
|Fixed rate ($Cdn)           |  | 396,488                      |  |  |        |  |  |        | 
|Average interest rate       |  | 3.16%                        |  |  |        |  |  |        | 
|Notes receivable:           |  |                              |  |  |         |  |  |         | 
|Variable rate ($US)         |  | 21,598                       |  |  | 22,624  |  |  | 23,698  | 
|Average interest
      rate |  | 4.75%                        |  |  | 4.75 %  |  |  | 4.75%   | 
|Liabilities:                |  |                              |  |  |         |  |  |         | 
|Long-term debt:             |  |                              |  |  |         |  |  |         | 
|Fixed rate ($Cdn)           |  | 47,954                       |  |  | 44,428  |  |  | 47,843  | 
|Average interest
      rate |  | 8.94%                        |  |  | 9.16%   |  |  | 9.17%   | 
|Variable rate ($US)         |  | 31,487                       |  |  | 32,982  |  |  | 34,549  | 
|Average interest
      rate |  | 4.75%                        |  |  | 4.75%   |  |  | 4.75%   | 

P a g e | 10

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Item 4. Controls and Procedures.

The Company completed an evaluation as of the end of the period covered by this report under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of its disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures cannot be relied upon to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and
when required or to ensure that information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Therefore disclosure controls and procedures were not effective for the 3 months ended April 30,
2009.

There have been no changes in the Companys internal control over financial reporting that occurred in the Companys fiscal quarter ending April 30, 2009, that has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.

P a g e | 11

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PART II 
OTHER INFORMATION

Item 1.         Legal Proceedings

The Company is not a party to any pending legal proceedings.

Item 2.         Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3.         Defaults Upon Senior Securities

Not applicable.

Item 4.         Submission of Matters to a Vote of Security Holders.

No items were submitted to a vote of the Companys shareholders during the quarter ended April 30, 2009.

Item 5.         Other Information

Not applicable.

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Item 6.         Exhibits and Reports on Form 8-K.

(a)         Exhibits

3.1
	Memorandum of Association of Polydex Pharmaceuticals Limited, as amended to date (filed as Exhibit 3.1 to the Annual Report on Form 10-K filed April 30, 1997, and incorporated herein by reference)3.2
	Articles of Association of Polydex Pharmaceuticals Limited, as amended to date (filed as Exhibit 3.2 to the Quarterly Report on Form 10-Q filed September 13, 1999, and incorporated herein by reference)31.1
	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193431.2
	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193432.1
	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


(b)         Reports on Form 8-K

Not applicable.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: June 15, 2009

POLYDEX PHARMACEUTICALS LIMITED(Registrant)By /s/ George G. UsherGeorge G. Usher, Chairman, President andChief Executive Officer(Principal Executive Officer)By /s/ John A. LuceJohn A. Luce, Chief Financial Officer(Principal Financial Officer)


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Exhibit Index

31.1
	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193431.2
	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193432.1
	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




P a g e | 15

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