Dear Fellow Shareholder,

I am pleased to invite you to participate in either a pro rata non-renounceable entitlements offer on the basis of 1 New Share for every 5 Existing Shares that you hold, at an issue price of 5 cents per New Share, and/or the Placement (via a prospectus) being made to Narhex Life Sciences’ shareholders and other selected investors, to raise total proceeds of up to $2.8M.

In the past year, 2006, Narhex Life Sciences has made significant progress towards its ultimate goal of building a company based on the clinical and commercial success of therapeutic and diagnostic products which are used to manage patients with HIV infection. Our initial goal of developing an anti HIV protease inhibitor (DG17) and bringing it to market is very much on track. In the past year, Narhex Life Sciences has successfully completed two key clinical trials that extended our previous clinical studies and confirmed that, with proper formulation, we can obtain both predictable and therapeutic drug levels which require only low doses of DG17 to be taken by patients. Work on large-scale synthesis has also been successfully completed and we are now in the process of making our first commercial-sized batch of drug.

In addition, we have acquired an HIV diagnostic company, Cavidi AB, which has developed and sells innovative low cost and easy to use tests for monitoring HIV treatment where laboratory resources are limited. Revenues from international sales of these HIV monitoring diagnostics are tracking nicely (showing strong year on year growth) and ensure that Narhex Life Sciences has a developing commercial presence in the HIV scene.

Narhex Life Sciences expects to achieve a number of key objectives in 2007. These include:

• The first commercial production of 20 kilos of DG17 of cGMP quality, which is required for the conduct of further large-scale Phase II and III Clinical Trials.
• The commercial formulation of DG17 for use in our planned Phase II Clinical Trials.
• Completion of a small Phase IIA Clinical Trial to determine an appropriate dosing protocol for this newly formulated DG17.
• Submission of complete and acceptable documentation to the China State Food and Drug Administration (SFDA) to allow our joint venture Xi’an-Hex Life Sciences Co. Ltd. to undertake Phase IIB Clinical Trials of DG17 in China.
• SFDA approval for this Phase IIB Clinical Trial to be undertaken in China.
• Commencement of Chinese Phase IIB Clinical Trials with patient recruitment in appropriate Chinese HIV treatment centres in the second half of 2007.
• Growing sales of Cavidi products in Africa with registration and sales of Cavidi diagnostic kits in Asia, including China, as a result of our sales and marketing efforts in these countries.

Your Board is conscious that the Company must continue to maintain and, if possible, increase its rate of progress, since it is only by the successful clinical testing and registration of Narhex DG17 and sale of Narhex DG17 to patients with HIV infection, complemented by profitable sales of Cavidi diagnostics, that your Company will be successful.

Your Directors urge you to carefully read the relevant Prospectus and the accompanying Entitlement and Acceptance Form together with all publicly available information relating to Narhex Life Sciences before deciding whether to participate in the Offer.

The Closing Date for the Offer is 5.00 pm on 18 May 2007.

I will certainly be taking up my full entitlement under this Offer and I urge you to do likewise.

Yours sincerely

Dr Michael Cohen
CHAIRMAN