Ann: Notice of Meeting and Proxy Form , page-3

This should give you an outline of their motivations. This is an extract from the Retirewell e-newsletter sent to clients about the restructure.

Restructure of CBio Board to Put Company Back on Track

A shareholder action group led by Retirewell principals Alan Baker and Tony Gillett served notice on CBio Ltd on Monday, 5 September requiring the company to call a general meeting within two months to consider resolutions to restructure the Board.

Click here for a report by The Courier-Mail on this development.

CBio now has until 26 September to send out notices of this meeting and proxy voting forms for the resolutions to all shareholders.

We are seeking to provide shareholders with an opportunity to rejuvenate the Board with a view to improving CBio?s communication with shareholders and the market, capital management and corporate governance. We consider the Company?s record in all three areas to be poor.

We still believe CBio will prove to be a Queensland success story and a triumph of Australian science.

We expect CBio will enter into a licensing and royalty deal with a global pharmaceutical company next year to bring its drug XToll? to market.

We are taking this definitive action to protect your interests, because we believe a renewed Board and management will greatly enhance CBio?s prospects for a successful negotiation of this deal on the best possible terms.

Because of its strong safety profile and efficacy at the right dose, we believe XToll? will benefit millions of people throughout the world who suffer from rheumatoid arthritis and other auto-immune diseases such as MS, lupus and psoriasis.

The presence on the CBio Board of distinguished and eminent directors such as Novo-Nordisk?s vice-chairman Dr Goran Ando, retired Pfizer senior vice-president of science and technology Dr Peter Corr and retired European Medicines Agency executive director Dr Thomas Lonngren attests to the predicted success of this small Brisbane-based Company.

We consider that the market is significantly undervaluing CBio at present because of an inadequate announcement on 31 July 2011 by CBio regarding the interim results of the recently completed Phase IIa trial.

In our view, the announcement did not provide investors with full and complete information regarding the trial and led to the misconception that the trial was not a success, which consequently drove down the share price by around 60%. While the announcement noted that the trial did not meet its primary endpoint at the 12 week mark, we believe this was simply the result of underdosing and does not mean that the trial or the drug will be unsuccessful.

We believe the trial demonstrates that the drug works and is safe and that it is now a question of determining the optimum dose for the subcutaneous method of delivery, which the next rheumatoid arthritis trial is designed to establish.

We question whether the Company has fulfilled its continuous disclosure obligations by neglecting to clarify the meaning of the 31 July announcement before this week (and then only partly) and failing to specifically inform the market of recent presentations the Company has made to several major European pharmaceutical companies.

The shareholder action group, whose nine members own more than 5% of the Company?s issued capital in their various entities, have requisitioned CBio to call a general meeting to consider the removal of three directors from the Board (the Executive Chairman Mr Stephen Jones, Mr James Greig and Professor John Funder) and the appointment of three new directors (Helen Cameron, Dr Ralph Craven and Warren Brown).

Best practice in corporate governance, according to the ASX, is having an independent Chairman and separating the roles of Chief Executive and Chairman. The removal of Mr Jones, who has chaired the Company since its inception more than 10 years ago, will achieve this.

We believe that the appointment to the CBio Board of experienced, highly capable and well-credentialed company directors Helen Cameron BSc MBA MAICD, Ralph Craven BE PhD FAICD and Warren Brown MBA MIEA (who have been long-standing shareholders) will assist in restoring the confidence of the market in and assure the future success of our Company.
Ms Cameron is a former Chairman and/or Director of several ASX-listed companies, including two in the biotech sector. She is a former head of research in the health sector for Citigroup and wrote the independent research report on CBio in November 2009 at the time of the Company?s float. Dr Ralph Craven was one of the 20 angel investors in CBio who contributed the first $500,000 in the seed capital round to start the Company in early 2001. He is the current Chairman of Ergon Energy and was the Deputy Chairman of ASX-listed Arrow Energy until its takeover by Shell and PetroChina last year. Mr Brown, a professional investor since he sold his civil engineering business some years ago, also has been a Director of an ASX-listed company and has been a substantial shareholder in CBio since its first prospectus in late 2001.
We are dismayed at the Board?s actions in diluting shareholders unnecessarily by raising more capital than is essential at such a low price in the rights issue announced this week, documentation for which you will receive from the Company the week after next. We will advise you in respect to this in a separate communication.