Cytopia seeks representation on Progen Pharmaceuticals board, encourages share buyback

By Lisa Kerner

Charlotte, N.C., Feb. 19 - Progen Pharmaceuticals Ltd. shareholder Cytopia Ltd., along with 14 other shareholders, requisitioned a general meeting that will be held on March 27, according to a Cytopia news release.

Cytopia wants shareholders to vote on two proposals:

• A full share buyback accessible to all Progen shareholders; and

• Removal of the current board and appointment of three new independent directors.

The independent director candidates may explore a merger with Cytopia, a Melbourne, Australia-based biotechnology company, the release said.

Progen's board of directors said shareholders will have the opportunity to elect a new board. However, Cytopia said Progen will not put forward the resolution proposing the full share buyback.

According to Cytopia, a large number of shareholders would choose a full share buyback over Progen's proposed merger with Avexa Ltd.

Progen directors unanimously recommended the merger with Avexa, saying that it has the potential to deliver value in excess of A$1.35 per share and is in the best interests of the company's shareholders.

It was previously reported that Progen shareholders may:

• Maintain their shareholding in the merged company to be called Avexa Pharmaceuticals Ltd. with an implied per-share value of the merged group to Progen shareholders of A$1.35;

• Sell their shares into a proposed buyback at a price of A$1.10 per share; or

• Sell part of their shares into the buyback and maintain part of their shareholding in the merged company.

Progen's annual meeting is set for March 11.

"Although it clearly would be in the best interests of shareholders to delay by two weeks the meeting scheduled for March 11, 2009, shareholders will now have to endure the avoidable inconvenience and cost of two shareholder meetings," Cytopia said.

If the Avexa merger does not proceed for any reason, the Progen board said that it will be obliged to again consider all available options, including a transaction with another biotechnology company.

Progen said it has been assessing many different opportunities for the company to expand its portfolio to once again include later-stage, closer-to-market drug candidates since July 2008.

Brisbane, Australia-based Progen is a biotechnology company committed to the discovery, development and commercialization of small-molecule pharmaceuticals primarily for the treatment of cancer.

Avexa is a Melbourne-based biotechnology company with a focus on discovery, development and commercialization of small molecules for the treatment of infectious diseases.

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