BPH Exciting Investments 2009

CHAIRMAN’S LETTER
Dear Shareholder and potential new investor

On 12 August 2009 and 21 September 2009, the Company issued announcements in relation to its intention, subject to the receipt of all necessary Shareholder, regulatory and ASX approvals, to (among other things):

•   restructure its assets by ultimately splitting the separate business activities and assets of the Company into 2 ASX listed entities. To give effect to this, the Company intends to spin-off its wholly owned subsidiary, Molecular Discovery Systems Limited (MDSystems), by way of an in specie distribution of 1 MDSystems share for every 1 BioPharmica share held at 6 January 2010;
•   exercise an exclusive option to acquire between 9.7% and 19.4% of Advent Energy (Advent Interest), an unlisted oil and gas exploration company based in Perth, Western Australia, with a portfolio of petroleum assets throughout Australia, including the cornerstone project situated in the offshore Sydney sedimentary Basin within Petroleum Exploration Permit 11; and
•   raise sufficient capital through the issue of up to 95,982,330 Shares under the First Offer to fund the acquisition of the Advent Interest and additional working capital.

The Company has convened a General Meeting to be held on 24 December 2009 to seek the Shareholder approvals necessary to proceed with the above transactions. In addition to the capital raising contemplated under the First Offer, the Company proposes to conduct a further placement of Shares and free attaching Options up to its annual 15% placement capacity (Second Offer). The Second Offer is not subject to Shareholder approval, however the total number of Shares which may be issued under the Second Offer will depend on whether Shareholders approve the First Offer. The Company‟s major Shareholders have indicated they will vote in favour of the relevant resolutions. The Company has already received commitments from investors for the full subscription under the First Offer.
The Offers are partially underwritten by Grandbridge Securities and any Securities not taken up pursuant to the Offers will be allocated to Grandbridge Securities (or nominated sub-underwriter(s)). A summary of the material terms of the Underwriting Agreement is contained in Section 8.2.2 of this Prospectus.

Based on information provided to the ASX by the Company, and, in summary, on the basis that the Company continues its activities as a biotechnology company as compared to any further expenditure on oil and gas assets, the ASX has determined that the Company may proceed with the acquisition of the Advent Interest (subject to the receipt of Shareholder approval at the General Meeting) without having to meet the requirements in Chapters 1 and 2 of the ASX Listing Rules.

The Board considers the acquisition of the Advent Interest will provide Shareholders with exposure to a resources project and provide Shareholders with the potential to diversify their investment risk whilst retaining their interest in the Company‟s core activities and investments. The Company will continue to maintain its existing interests in Cortical Dynamics Ltd (3.89%), Diagnostic Array Systems Pty Ltd (51.82%), and in the Synthetic Enhanced Raman Spectroscopy (SERS) project.

Details about the risks of an investment in the Company are contained in Section 7 of this Prospectus. Investors should obtain professional investment advice before deciding to invest. Please read this document carefully before making your investment decision.
If you are already a Shareholder, I invite you show your support for the Company by increasing your shareholding and, if you are not already a Shareholder, I invite you to become one and be part of what will be an exciting development.
Yours faithfully
David Breeze
Managing Director/Executive Chairman BIOPHARMICA LIMITED