chairmans address

PROPOSED MERGER WITH EVOGENIX TO FORM ANTIBODY POWERHOUSE
I am writing to provide you with more information on the proposed merger of Peptech Limited (“Peptech”) with EvoGenix Limited (“EvoGenix”) to become one of Australia’s largest biotechnology companies, which was announced to the Australian Securities Exchange on 7 May 2007.
The merger represents a major milestone for both companies and a key landmark for the Australian biotechnology industry in developing a world class company of scale and will be a major step in our move to cement our place as an active international player in the antibody space.
What are the advantages for Peptech shareholders?
The Board believes this merger is a unique opportunity to obtain the following advantages for our shareholders:
��
Strategic fit of technology and focus – the combined entity will focus on developing significant antibody/protein therapeutic products for the treatment of inflammatory diseases, bone disease and cancer. Each of these therapeutic areas represent substantial opportunities, with successful antibody-based products achieving record sales growth in recent years to levels in excess of a billion dollars annually.
��
Expanded talent base - we will have the combined experience and knowledge of members of the Peptech and EvoGenix teams, as well as attracting new talent to increase our presence on a worldwide scale.
��
Increased revenue – EvoGenix’s platform technology is already generating revenue from collaborative deals with GlaxoSmithKline, CSL and Vegenics. This will supplement Peptech’s on-going revenue streams from Abbott and Johnson & Johnson in relation to blockbuster antibody, anti-TNF drugs Humira® and Remicade®.
��
Increased pipeline of products – the combined pipeline of high potential antibody products will position the company for accelerating value in the high growth antibody sector. In two years time the combined entity expects to have one Phase I trial, two Phase II trials and one Phase III trial underway.
��
Maintaining our cash position – we have purposely structured the transaction to include more scrip than cash in order to maintain our solid cash position. Having such a strong cash position will enable us to fast track our drugs through development, avoiding the need to raise capital on the primary market. It also enables the merged company to choose the optimal strategy to partner its products.
��
Increased institutional shareholding – the merged company will have a larger share register with a greater following from industry analysts and commentators.
Antibody therapeutics is a major global opportunity, with high demand for technology and antibody products. We will be in a stronger position to compete on a global scale for commercialisation opportunities and immediate international recognition. We would not have been able to realise such a strong position by ourselves.
The Board and management of Peptech view this merger as a transaction which positions Peptech well, for creating shareholder value with the merged company being in a position to become a sizeable global player in the field of antibody therapeutics.
Next Steps to Implementing the Merger
The proposed merger is to be implemented by way of a Scheme of Arrangement, in which Peptech will acquire 100% of EvoGenix Ordinary shares. EvoGenix shareholders are entitled to receive for each share held, $0.15 in cash and 0.5055 in Peptech shares.
EvoGenix shareholders will be asked to vote on the proposed merger at meetings that will be convened in August.
We shall endeavour to keep you fully informed and will provide you with further information in due course.
This is an exciting time for Peptech, and your directors are committed to achieving the best outcomes for our shareholders and staff.