27/01/2012 Shareholder Update Q2 2012

27 January 2012

Second Quarter 2012 shareholder update

Dear Shareholder,
With 2011 behind us, we thought it would be appropriate to send a brief note to recount what has been a pivotal year for Agenix and provide some insights into what we are looking forward to in 2012.
As a result of your support and the efforts of our team in China and Australia, Agenix made a number of significant achievements on several fronts in 2011. As we look forward to 2012,
we anticipate another year of progress towards building long-term shareholder value through the delivery of key milestones.
While we have set ourselves a range of major objectives for 2012, our key priorities are:
1. The sale or licensing of our ThromboView® diagnostic for blood clots
2. Completion of pre-clinical studies for our hepatitis B drug AGX-1009 focused on
China's rapidly growing hepatitis B market
3. Filing of our application for approval to begin human trials of AGX-1009 in China
4. Expansion of our current product pipeline.
We are on the verge of hitting a number of key development milestones and are focused on doing everything we can to take advantage of the significant opportunities in front of us.
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Quarterly financial position and cash flow

Agenix today released its cash flow statement for the quarter ended 31 December 2011. As you will notice from our cash flow statements, our spending in the fourth quarter was steady compared to prior quarters but will reduce significantly from January 2012. This is largely
due to our focus on cost controls, winding back on surplus personnel and the wash-through of historical legacy liabilities in December 2011. Options and shares have become a large part of remuneration in a demonstration of confidence by key-people including the Chief of our Scientific Advisory Board Professor Timothy Morris and our Chief Scientific Officer - ThromboView®, Dr Mike Gerometta and also by me as Chairman & CEO.
Cash at the end of the quarter was $670,000. This is less than we had planned for after a funding opportunity expected last year did not eventually materialise. As we head into 2012, we are focused on ensuring Agenix has sufficient capital to meet its development
milestones. The Board has a number of strategies and initiatives in place to address our capital needs in a timely manner which will be detailed at the appropriate juncture.

Hepatitis B drug development in China on track

In China, we remain on track to meet our pre-clinical development milestones for our new hepatitis B drug and to file our formal clinical trial approval application in the middle of 2012 with China's State Food and Drug Administration (SFDA). Our goal is to begin Phase I trials in China in late 2012 or early 2013.
It is worth remembering that AGX-1009 is based on an active and approved compound currently marketed and used extensively in the US and Europe and that our patented compound is undergoing pre-clinical testing conducted by very experienced hands at the Institute of Pharmacology and Toxicology of the Academy of Military Medical Sciences in Beijing, China.
Our strategic partner from whom we purchased this patented technology, the internationally renowned Institute of Medicinal Biotechnology (IMB) of the Chinese Academy of Medical Sciences in Beijing, is also very experienced at navigating the State Food and Drug Administration (SFDA) regulatory processes in China. It is also worth remembering that Agenix already has a track record for successfully obtaining SFDA clearance for a Hepatitis B small molecule therapeutic with the YouHeDing project, which the company subsequently
divested.
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Over time, there will be multiple market opportunities for AGX-1009 - it has potential to be used in combination with Interferon therapies or in combination with other small molecule drugs and in other markets such as HIV. These facts significantly reduce our risks and provide a solid foundation.
Our good relationship with IMB, cemented in a co-operation agreement signed in October
2011, also provides Agenix with potential access to a large pipeline of new medical therapies and the opportunity to expand our product pipeline in 2012 and beyond.

ThromboView® commercialisation progress

The other valuable world class asset we are actively seeking to exploit is a patented monoclonal antibody diagnostic, ThromboView®.
We are in active discussions with a number of international businesses that have expressed an interest in buying or licensing this promising technology. These discussions are progressing in a positive and timely manner and we look forward to providing you with a detailed update in the coming months.
ThromboView® promises to give medical professionals an accurate method of detecting deadly live blood clots and pulmonary embolisms without exposing patients to the high radiation and toxic chemicals used in current technologies.
We are encouraged by the growing body of independent clinical evidence that shows ThromboView® is safe and effective. A recent report in the highly influential American Journal of Respiratory and Critical Care described ThromboView® as 'not just a new diagnostic method; it is a new imaging concept.'
The ability of ThromboView® to stratify and manage anti-coagulation patients fulfils a significant unmet medical need.

Closing comments

We believe Agenix is ideally positioned to partner ThromboView® for global commercialisation as a patient management tool and also to take advantage of current and future opportunities in the rapidly evolving Chinese healthcare market together with our partner, the Institute of Medicinal Biotechnology (IMB) of the Chinese Academy of Medical
Sciences.
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Our focus on China will help us create significant value over the long term.
In 2011 the Chinese government unveiled a number of incentives to nurture its domestic pharmaceutical and biotechnology industries and there are significant new opportunities unfolding for the development of drugs relevant for the Chinese market like our hepatitis B compound AGX-1009.
China's biotechnology industry is one of seven strategic sectors the government committed to support in its Five-Year Plan for 2011 to 2015. China's goal is to become a global drug development hub and there is strong support for the rapid development of new cost-effective treatments for disease like hepatitis B which are a major health issue.
Agenix's hepatitis B drug AGX-1009 is one of the drug candidates supported by the Chinese
Government's State Special Funds for Important Newly-Developed Drugs.
China is considered to be the most important future market in terms of sales, clinical trial opportunities, and potential investment for many global biotechnology and life science firms.
International healthcare market researcher IMS Health Inc has said China is now the world's third-largest pharmaceutical market and has been estimated that China's domestic drug market be the world's largest drug market by 2020, overtaking Japan, Europe and the US.
This growth is fueled by growing wealth, urbanization and the ageing of China's population combined with a global demand for cheap, effective medicines.
We firmly believe Agenix's experience and established presence in China gives us a leading edge and ensures our long-term growth potential for 2012 and beyond.
All of us at Agenix appreciate your ongoing support and look forward to providing you with updates over the coming months as we work to build shareholder wealth.
Yours sincerely,
Nicholas Weston
Chairman & Chief Executive Officer www.agenix.com
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