Cytopia Letter to Progen Shareholders(backing; The board recently commi...)

For over seven months, institutional and retail shareholders have been asking for choice in how their capital is dealt with. The current board's response has been to propose only a limited share buy-back and to commit the rest of your funds to a merger with an HIV company.

Cytopia and 14 other shareholders requisitioned the company on 28 January 2009 to call a meeting to give shareholders a better choice. We asked for one combined meeting so shareholders could vote on:

• Opportunity for a full cash back offer of $1.10 per share available to all shareholders (subject to maintaining sufficient net cash reserves);
• Replacement of the current board with three new directors.

The Progen board reluctantly responded and called a second meeting for 27 March 2009 where only the board replacement resolutions will be put to shareholders. The current board has advised that it will:

• Not support the wide share buy-back access being sought by shareholders;
• Not align meetings, meaning additional cost and inconvenience to shareholders.

General meeting on 11 March 2009

At this meeting the Progen board wants you to vote for a merger with Avexa. We oppose this because:

• The proposed share buy-back will be capped at $20 million, insufficient to meet likely take-up;
• The board proposes yet another long and costly Phase III program, this time in HIV;
• The Avexa HIV drug development costs are estimated at $155 million to complete the Phase III program, and the drug may take four years to reach registration;
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