ChemGenex's metabolic disease assets currently reside within the company's wholly-owned subsidiary Autogen Research, which is to be renamed Verva Pharmaceuticals. Pending shareholder approval at the Annual General Meeting, scheduled to take place in Melbourne on November 28, Verva Pharmaceuticals will be demerged from ChemGenex. Verva Pharmaceuticals then intends to merge with Adipogen Pharmaceuticals, pursuant to a merger implementation agreement signed today.

Upon shareholder approval, ChemGenex shareholders will receive one share in Verva Pharmaceuticals for every five ChemGenex Pharmaceuticals shares held at the record date. In accordance with ASX listing rules and the option agreements, existing ChemGenex option holders will not be allocated shares in Verva Pharmaceuticals unless options are exercised prior to the record date. After the record date the exercise price for each remaining ChemGenex option will be reduced by approximately 7 cents.

Current investors in Adipogen Pharmaceuticals, including the Queensland BioCapital Fund, GBS Venture Partners and UniSeed have agreed to participate as cornerstone investors in the newly merged entity subject to the finalization of documentation and the formal completion of the proposed merger. Following a capital raising, Verva Pharmaceuticals will seek to list on the ASX in early 2008.

The ChemGenex Board unanimously recommends this strategic transaction as it believes the separation of the two distinct businesses will enhance shareholder value.

ChemGenex Announces Strategic Restructuring of Company to Focus on Late-Stage Cancer Portfolio Page 2 of 4

Greg Collier, Ph.D., chief executive officer and managing director of ChemGenex, stated, "Through this restructuring, ChemGenex is now well-positioned to devote its resources to the development and commercialization of the anti-cancer assets in late stage clinical development, while enabling Verva Pharmaceuticals to focus on the development of novel therapeutics in the field of type 2 diabetes and obesity." Dr. Collier continued, "With Verva Pharmaceuticals focusing fully on metabolic disease, we believe that there is greater potential to realize the significant value of the metabolic disease platform, which could enter clinical trials within 12 months."

"By demerging Verva Pharmaceuticals from ChemGenex, we will create two distinct companies, each with a clear focus, dedicated management and clear strategic vision which in turn, will increase business efficiency. We believe that a dedicated diabetes and obesity company will be better positioned to engage in value-generating corporate transactions such as the proposed merger with Adipogen Pharmaceuticals that would not be possible within the current corporate structure," Dr. Collier added.

Following the merger, Vince Wacher, Ph.D., chief executive officer of Adipogen Pharmaceuticals, will become the chief executive officer of Verva Pharmaceuticals. Several of ChemGenex's most experienced metabolic disease scientists will join the new company and Dr. Collier has indicated that he will accept a Board position with Verva Pharmaceuticals.

Dr. Collier will host an investor audio and webconference to discuss the demerger on Thursday, November 1 Australian Eastern Daylight Time (Wednesday, October 31 in the USA and Europe).

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