ALGORAE PHARMACEUTICALS LIMITED — Capital/Financing Update 2011

Oct 18, 2011

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Living Cell Technologies Limited Company Announcement

Otsuka commits $A25 million to JV with LCT

19 October 2011: Sydney, Australia & Auckland, New Zealand .

Living Cell Technologies Limited (ASX: LCT; OTCQX: LVCLY) has agreed to establish a 50/50 joint venture company DIATRANZ OTSUKA LIMITED with Otsuka Pharmaceutical Factory, Inc. (“Otsuka”) to accelerate the commercialisation of LCT’s DIABECELL[®] , a ground breaking new cell implant therapy to treat diabetes.

The joint venture will contract with LCT to further refine the product, complete the clinical trials in New Zealand, Russia and Argentina, obtain product registration and bring DIABECELL to market. It will also build further pig and manufacturing facilities to ensure supply.

LCT founder and Medical Director, Professor Bob Elliott, said, “DIABECELL is a ground breaking treatment for Type 1 diabetes that we hope will change the paradigm of how we treat this terrible disease. DIABECELL offers the prospect of helping restore insulin regulation to near-normal levels, reducing the need for frequent injections and constant monitoring of blood glucose levels. With Otsuka’s investment and support together we will be able to refine the product and accelerate its registration. Otsuka will also bring invaluable experience and innovative ideas to market DIABECELL worldwide to bring relief to the millions of sufferers.”

Hiromi Yoshikawa, Executive Senior Managing Director - Otsuka Pharmaceutical Factory, said, “We have been following the development of DIABECELL closely. LCT is a pioneer in xenotransplantation. We are excited at the prospect of improving the treatment options for diabetes sufferers all over the world and we are delighted to be joining with LCT to bring this product to market.”

LCT Chairman Mr Roy Austin added, “It is most gratifying to see all the work which LCT has done over many years culminating in this breakthrough agreement. It provides us with a solid funding base to further develop DIABECELL towards commercialisation, while enabling LCT to continue developing its pipeline of products and technology platforms.”

On 12 April 2011 Otsuka invested A$3m in LCT subscribing for 25m shares at A$0.12 per share. Today Otsuka has agreed to invest A$25m cash into the joint venture company subject to completion of conditions precedent, providing a secure funding base to bring DIABECELL to market over the next three years. In return LCT will transfer DIABECELL–related assets valued at the equivalent amount. These include clinical trial contracts, knowhow, patents and trademarks, manufacturing and R&D facilities plus its special herd of biocertified designated pathogen-free pigs.

LCT will own a 50 per cent shareholding in the Joint Venture Company. LCT will supply testing, R&D, management and administrative services to the joint venture at market rates. The joint venture will grant LCT an exclusive royalty free licence to relevant patents and knowhow and supply pig cells to progress its other products.

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Diabetes is the world’s fastest growing chronic disease affecting 220 million people worldwide. The World Health Organisation predicts diabetes deaths will likely increase by more than 50 per cent in the next 10 years. In Australia, diabetes is the sixth leading cause of death with the total number of sufferers (diagnosed and undiagnosed) estimated to be 1.7 million people. The cost of treating Type 1 diabetes, which affects an estimated 10 per cent of all sufferers, is estimated at approximately A$1 million per person over a lifetime.

DIABECELL involves implanting pancreatic islet cells through a simple keyhole procedure to produce a self-regulating source of insulin in the patient’s body. This is done without the use of immuno-suppressive drugs - a world first – which is a significant benefit as these drugs are usually required long-term and often have undesirable toxic side effects. The indications from clinical trials are that DIABECELL can make a significant difference particularly for the 20 per cent of Type 1 sufferers who have no awareness of when their blood glucose drops dangerously low. Unaware hypoglycemia is responsible for up to 8 per cent of deaths and many disease related complications.

Professor Elliott concluded, “The commitment from Otsuka demonstrates their confidence in DIABECELL and its prospects for commercial success on a global scale. While the joint venture will focus exclusively on DIABECELL, LCT will continue to advance our other initiatives which include our encapsulation technology IMMUPEL™, which eliminates the requirement for immuno-suppressive drugs, and NTCELL, the cell therapy for Parkinson’s and Huntington’s disease, stroke and hearing loss.”

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For further information: www.lctglobal.com

At the company:Living Cell Technologies LimitedRoy Austin, ChairmanTel:+64 9 9134605Mobile: +64 21 656400raustin@lctglobal.com Bob Elliott, Medical DirectorTel: +64 9 2762690Mobile: +64 272924177belliott@lctglobal.com	Media and analyst enquiries:Symbol Strategic CommunicationsPatrick Sinclair/Robert LuttrellTel: +61 2 8079 2969Mobile: +61 403 708 431psinclair@symbolstrategic.com.auRobert Luttrell +61 419 185 652rluttrell@symbolstrategic.com.au

About Living Cell Technologies - www.lctglobal.com

Living Cell Technologies (LCT) is developing cell-based products to treat life threatening human diseases. The Company owns a biocertified pig herd that it uses as a source of cells for treating diabetes and neurological disorders. For patients with Type 1 diabetes, the Company transplants microencapsulated islet cells so that near-normal blood glucose levels may be achieved without the need for administration of insulin or at significantly reduced levels. The Company entered clinical trials for its diabetes product in 2007. For the treatment of Parkinson’s disease and other neurological disorders, the company transplants microencapsulated choroid plexus cells that deliver beneficial proteins and neurotrophic factors to the brain. LCT’s technology enables healthy living cells to be injected into patients to replace or repair damaged tissue without requiring the use of immunosuppressive drugs to prevent rejection. LCT also offers medical-grade porcine-derived products for the repair and replacement of damaged tissues, as well as for research and other purposes.

About Otsuka Pharmaceutical Factory - www.otsukakj.jp/en/

OtsukaPharmaceutical Factory, Inc., the first company in the Otsuka Group (TYO: 4768), was established by Busaburo Otsuka in 1921. Originally, the company manufactured and distributed industrial and pharmaceutical chemicals. It began manufacturing intravenous solutions such as large volume parenterals

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in 1946. Since that time, Otsuka Pharmaceutical Factory has extended its operations into a wide variety of areas such as the development of new drugs, innovative packaging, and intravenous delivery systems. It has over 2000 employees and is headquartered in Naruto City, Tokushima, Japan.

LCT Disclaimer

This document contains certain forward-looking statements, relating to LCT’s business, which can be identified by the use of forward-looking terminology such as “promising,” “plans,” “anticipated,” “will”, “project”, “believe”, “forecast”, “expected”, “estimated”, “targeting”, “aiming”, “set to,” “potential,” “seeking to,” “goal,” “could provide,” “intends,” “is being developed,” “could be,” “on track,” or similar expressions, or by express or implied discussions regarding potential filings or marketing approvals, or potential future sales of product candidates. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no assurance that any existing or future regulatory filings will satisfy the FDA’s and other health authorities’ requirements regarding any one or more product candidates nor can there be any assurance that such product candidates will be approved by any health authorities for sale in any market or that they will reach any particular level of sales. In particular, management’s expectations regarding the approval and commercialization of the product candidates could be affected by, among other things, unexpected clinical trial results, including additional analysis of existing clinical data, and new clinical data; unexpected regulatory actions or delays, or government regulation generally; our ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry, and general public pricing pressures; and additional factors that involve significant risks and uncertainties about our products, product candidates, financial results and business prospects. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. LCT is providing this information and does not assume any obligation to update any forward-looking statements contained in this document as a result of new information, future events or developments or otherwise.

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