Hemosol to Receive $20 Million In Additional Funding
Proceeds to be used to advance clinical trials and to commission new HEMOLINKTM manufacturing facility

TORONTO, ON, October 28, 2002 - Hemosol Inc. (NASDAQ: HMSL, TSX: HML, HML.WT) today announced it will be obtaining additional funding through a CDN $20 million loan from the Bank of Nova Scotia. This loan will provide sufficient cash resources to support all ongoing clinical studies into the latter half of calendar 2003 and to commission the Company's Meadowpine manufacturing facility. "With this new infusion of capital our Company will be in a strong position to significantly advance our clinical and product development programs for HEMOLINK," said John Kennedy, President and CEO. "We believe the Company now possesses the necessary funds to complete the ongoing phase II program and to initiate the pivotal study necessary for registration in the U.S."

The loan will replace Hemosol's undrawn senior credit facility. The loan will have substantially more favourable terms for Hemosol than its existing senior credit facility, including a lower interest rate and less restrictive covenants.

"This capital will see Hemosol achieve significant clinical milestones while management continues to explore additional financing and strategic options," added Lee Hartwell, Chief Financial Officer of Hemosol.

This loan will be guaranteed by Hemosol's largest shareholder, MDS Inc. ("MDS") and will be secured by a fixed and floating charge over all the assets of Hemosol. Under the guarantee, MDS will be subrogated to and take an assignment of the rights and remedies of the Bank of Nova Scotia under the loan.

In consideration for providing the guarantee, MDS will receive 5.0 million warrants to purchase common shares of Hemosol which are immediately exercisable at a price of CDN $1.00 per share. It is Hemosol's present intention to repay the loan within 15 months, however, the Company may extend the term of the loan to a maximum of 30 months. For each month beyond the initial 15-month term of the loan, MDS may exercise warrants entitling it to purchase an additional 333,333 common shares at $1.00 per share to a maximum of an additional 5.0 million shares. If Hemosol wishes to extend the loan beyond 18 months, regulatory approval will be required for the additional warrants to be issued to MDS.

The transaction was reviewed by an independent committee of the Board of Directors of Hemosol. The independent committee retained the services of an investment bank to provide a fairness opinion of the transaction from a financial point of view to the common shareholders other than MDS, its associates, affiliates and managed entities. Based on this opinion and its own deliberations the independent committee decided that the transaction will significantly improve the financial position of Hemosol and is reasonable in the circumstances.

The transaction is subject to regulatory approval and is expected to close on or before November 25, 2002.

To obtain a copy of the related material change report, which contains additional information on this transaction please visit Hemosol's website at www.hemosol.com or contact the investor relations department at ir@hemosol.com.

About Hemosol Inc.
Hemosol is a near-term, commercial-stage biopharmaceutical company focused initially on developing life-sustaining therapies for the treatment of acute anemia. Hemosol has a broad range of products in development, including its flagship product HEMOLINKTM [hemoglobin raffimer], an oxygen therapeutic, that is designed to rapidly and safely improve oxygen delivery via the circulatory system. HEMOLINK is currently being evaluated in late-stage clinical trials. The Company also is developing additional oxygen therapeutics and a hemoglobin-based drug delivery platform to treat diseases such as hepatitis C and cancers of the liver, as well as a cell therapy initially directed to the treatment of cancer through its cell expansion and stem cell research activities.

About MDS Inc.
MDS Inc. (TSX: MDS; NYSE: MDZ) is an international health and life sciences company. In many of its products and services, it is among the largest and most respected companies in the world. MDS's focus is on advancing health through science. Detailed information about the company is available at the MDS Web site at www.mdsintl.com or by calling 1-888-MDS-7222, 24 hours a day.

Hemosol Inc.'s common shares are listed on The NASDAQ Stock Market under the trading symbol "HMSL" and on the Toronto Stock Exchange under the trading symbol "HML".

HEMOLINK is a registered trademark of Hemosol Inc.

Certain statements concerning Hemosol's future prospects are "forward-looking statements" under the United States Private Securities Litigation Reform Act of 1995. There can be no assurances that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially from forecasts and estimates include, but are not limited to: Hemosol's ability to obtain regulatory approvals for its products; Hemosol's ability to successfully complete clinical trials for its products; technical or manufacturing or distribution issues; the competitive environment for Hemosol's products; the degree of market penetration of Hemosol's products; and other factors set forth in filings with Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. These risks and uncertainties, as well as others, are discussed in greater detail in the filings of Hemosol with Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission. Hemosol makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.

Contact: 
Jason Hogan
Investor & Media Relations
416 361 1331
800 789 3419
416 815 0080 fax
ir@hemosol.com 

www.hemosol.com