Letter to Shareholders

Dear Shareholder

This letter is to bring to your attention a recent development within Novogen Limited that the directors believe represents a major step forward for the company.

It may have come to your notice that an announcement was made to the ASX on April 29th that Marshall Edwards, Inc. ("MEI"), a newly formed and currently wholly owned subsidiary of Novogen Limited, has lodged a prospectus with ASIC.

The creation of this new company is a direct result of the fast pace of development within Novogen’s drug discovery program, a program that has led to the discovery of a considerable number of new drug entities with substantial clinical potential.

These new drugs embrace the therapeutic areas of cancer, cardiovascular disease, inflammatory diseases and osteoporosis. Within the cancer field alone, Novogen scientists have created three drugs – phenoxodiol (previously known as NV06) which is being developed to treat a range of solid cancers and prostatic carcinoma in particular; NV47 for the treatment of lung cancer; and NV50 for the treatment of breast cancer.

The Novogen directors believe that this family of drug candidates represents a unique and very substantial commercial opportunity. It would indeed be highly prized for a pharmaceutical company of any size to have so many product opportunities which cover such large therapeutic areas as cancer and cardiovascular disease.

The cost of drug development is substantial and often proves to be formidable for smaller companies. In light of this, your directors have considered how best to realise the value of this intellectual property in the best interest of shareholders. Your directors believe that the value to shareholders can be increased by developing the property in a company which is separately listed (but in which Novogen retains a majority interest) to the point where the drugs are clinically proven.

The decision was taken to focus attention initially on the opportunities in the cancer area and the phenoxodiol drug in particular.

By placing the cancer opportunities in a subsidiary company of Novogen and taking that company public, the objective is for that subsidiary to raise funds to enable it to continue the human clinical trials now underway and pursue broader human testing in Australia and in the USA.

This structure expedites the commercialisation path for the cancer drugs, preserves Novogen's significant ownership of the cancer drug program, and keeps intact the Novogen ownership and future benefits to be derived from planned human trials in the other therapeutic areas.

Under the terms of the MEI offer, shareholders with registered addresses in Australia will have a priority entitlement to invest directly in MEI. Accordingly, those shareholders can expect to receive soon a copy of the prospectus which includes the details of the phenoxodiol cancer patient clinical trial program, and an expert’s valuation of the drug. MEI intends to raise $55 million through the public offer (with an option to raise a further $15 million). The offer of shares in MEI will be made in the prospectus and any person wishing to acquire shares will need to complete the relevant application form that will be in or accompany the prospectus. We encourage your consideration of the detailed information in the prospectus.

Your directors are very keen to expedite the anti-cancer trials with phenoxodiol and to bring the benefits of a successful outcome of the trials to shareholders (whether as owners of Novogen or as direct owners of MEI), and to make the drug available to cancer patients throughout the world as soon as possible.

Yours sincerely

Christopher Naughton Managing Director

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