Dear shareholder,

The Phase IIa trial Cortendo completed involved 72 patients, all seriously ill with metabolic syndrome. All patients were on medication against the diseases that form part of metabolic syndrome. On average the patients were treated with 4.2 medicines per person prior to the trial, and this continued throughout the study. Despite this, the patients experienced significant decreases in blood lipids, blood pressure, blood-sugar content etc. following treatment with CORT001. The trial has been reported to the FDA, without comment.

Cortendo has decided, together with Covance, to prepare an application to the FDA to perform a six month Phase IIb CORT001 trial on approx. 400 patients. This trial will be based on the data created by the earlier Phase IIa trial. It is estimated that a Phase IIb trial will cost approx. MSEK 50 before completion, which it is estimated will be within 18-24 months after new financing.
The final decision to perform a Phase IIb trial will be made in consultation with partners and/or financiers.

Following preparation of the IIa trial and submission of a report to the FDA, the board has focused on fund raising and finding collaborating partners, preferably major pharmaceutical companies. Fund raising without agreement with a pharmaceutical company will dilute the existing shareholders significantly. The board's strategy is to first acquire a partner and then seek new financing. Cortendo has discussions with major pharmaceutical companies, but at the present stage it is difficult to have any idea of when and how these discussions will end.

Operation costs have been dramatically minimised by making big cuts in salaries and other payments, renegotiating leasing contracts and paring away non-essential activities. Funds suffice up to and including Quarter 3. A new share issue without first having signed an agreement with a pharmaceutical company might be necessary.

The board is considering two options: a new share issue targeting existing shareholders, or new capital from venture capital (VC) companies.

The VC companies with whom Cortendo has contacted have made it clear that the company's shareholder structure with 250-300 shareholders and unofficial listing make a capital infusion impossible.

To make Cortendo attractive to VC companies, a new company structure is needed whereby the business as a whole is transferred to a new company, allowing Cortendo AB to become a holding company.
After a change such as this, Cortendo Holding AB will become the sole owner of a subsidiary in which business is run. The new company can then go out onto the finance market and seek new financing without being burdened by listing or the large number of shareholders. This change is a prerequisite for financing from institutional investors.

Within the next six months the board will convene an extra-ordinary general meeting.

Cortendo convened an AGM on 8 May 2003, at which the aim was to submit the above description and give the shareholders the opportunity to ask questions. Unfortunately the notice to attend was not responded to, thus it was decided that the meeting should be adjourned until 4 June at 12pm, and to send out this brief report in advance.

Invitation

All shareholders, even those who did not previously state that they intend to attend, are welcome to personally participate in the continued general meeting on 4 June 2003 at 12pm, at the address Gruvgatan 6, Västra Frölunda, Sweden.

On behalf of the Board of Directors in Cortendo AB (publ)

With best wishes

Jan Ahlström
Managing director