INVION LIMITED — Capital/Financing Update 2009

Nov 26, 2009

PROSPECTUS

An initial public offering of up to 30,000,000 Shares at an Offer Price of $1.00 each to raise up to $30 million (with Over Subscriptions of up to $5 million)

An investment in Shares in CBio Limited should be considered speculative. There is no guarantee of any dividends, capital returns or the market price for Shares of CBio. Potential investors should consult their professional adviser for assistance before deciding to invest.

==> picture [74 x 33] intentionally omitted <==

CBio Limited ACN 094 730 417

Financial Advisor and Sponsoring Broker to the Offer Novus Capital Limited ACN 006 711 995 AFSL 238168

Contents

Key Details of the Offer	1	5. Financial Information	44
The Story Behind this Offer to Invest	3	6. Independent Accountant’s Report	64
Investment Highlights	4	7. Risks	67
Chairman’s Letter	6	8. Material Agreements	72
1. Details of the Offer	8	9. Additional Information	84
2. Company and Market Information	15	Appendix	89
3. Board of Directors and Corporate Governance	20	Glossary	91
4. Patent Attorney’s Report	28	Corporate Directory	inside back cover

Important Information

Defined terms and abbreviations used in this Prospectus are explained in the Glossary.

This Prospectus is dated 10 November 2009. A copy of this Prospectus was lodged with ASIC on that date. ASIC does not take responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. No Shares will be allotted or transferred on the basis of this Prospectus after the expiry date. This Prospectus expires on 10 December 2010.

The Offer is available to Australian residents in each State and Territory of Australia. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who obtain this Prospectus should seek advice on and observe any restrictions. Failure to comply with restrictions may constitute a violation of applicable securities law. This Prospectus does not constitute an offer in any place where, or to any person to whom, it would not be lawful to make the Offer.

No person is authorised to provide any information or to make any representation in connection with the Offer described in this Prospectus which is not contained in this Prospectus. Any information or representations not contained in this Prospectus must not be relied on as authorised by the Company or any other person in connection with the Offer.

This Prospectus provides information for investors to decide if they wish to invest in CBio, and must be read in its entirety. The assumptions underlying the use of funds and the risk factors that could affect the financial performance of CBio should be examined. Consider these factors carefully in light of your personal circumstances (including financial and taxation issues) and seek professional advice from your accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest. The Offer does not take into account the particular investment objectives, financial situation or needs of investors.

This Prospectus is available in electronic form via www.cbio. com.au. Applicants using the Application Form attached to the electronic version of this Prospectus must be located within Australia. Persons who receive an electronic version of this Prospectus should ensure they download and read the entire Prospectus. Persons who received a copy of this Prospectus in its electronic form may, during the Offer period, obtain a paper copy of the Prospectus (free of charge) by telephoning CBio on (07) 3841 4844 or by email to investor@cbio.com.au. Applications for Shares may only be made on the Application Form attached to this Prospectus or in its paper copy form downloaded in its entirety from www.cbio.com.au.

The Corporations Act 2001 (Cth) prohibits CBio from processing Application Forms in the seven day period after the date of lodgement of this Prospectus with ASIC. This period may be extended by ASIC by up to a further seven days. This period is an exposure period to enable the Prospectus to be examined by market participants prior to the raising of funds. Application Forms received during the exposure period will not be processed until after the expiry of that period. No preference will be given to Application Forms received during the exposure period.

All financial amounts shown in this Prospectus are expressed in Australian dollars unless otherwise stated. Photographs used in this Prospectus which do not have descriptions are for illustration only. No person shown is endorsing this Prospectus or its contents. Diagrams used in this Prospectus are illustrative only and may not be drawn to scale.

This document is important and should be read in its entirety.

Note: The graphic element used on the cover and throughout this Prospectus is an X-ray crystallographic view of XToll[®] homolog.

Key Details of the Offer

CBio Limited (CBio or the Company) is seeking to raise up to $30 million (with Over Subscriptions of up to $5 million) through an Offer of up to 30,000,000 Shares at an Offer Price of $1.00 per Share. The minimum application must be $2,000 (or 2,000 Shares) and $100 (or 100 Shares) thereafter. An application will be made to ASX not later than 7 days after the date of this Prospectus for the Company to be admitted to ASX and for official quotation of the Shares. This Prospectus provides the opportunity to participate in the initial public offering (IPO) of Shares in CBio, subject to the Minimum Subscription being achieved.

Priority entitlement

A $3 million portion of the Offer has been reserved for Existing Shareholders under a Priority Offer.

Minimum Subscription

The Minimum Subscription is $13 million. This amount must be raised in order for the Offer to complete.

Sponsoring Broker

Novus Capital Limited is the Sponsoring Broker to the Offer on the terms set out in the Sponsoring Broker Mandate summarised in section 8.3. The Offer is not underwritten.

More information about the Offer

Investors should refer to section 1 for more detailed information about the Offer.

Prospectus 1

continued Key Details of the Offer

Capital structure

The following table shows the Shares and Options which may be on issue post-IPO. Additionally, the Company has convertible notes and other contracts which may give rise to the issue of further equity (up to 12,000,000 Shares and 8,000,000 Options). Further details are contained in this Prospectus, including section 9.

At the date of this Prospectus:	Minimum	Maximum	Over
	Subscription	Subscription	Subscriptions
	$13 million	$30 million	$35 million
Number of existingShares	66,476,844	66,476,844	66,476,844
Number of existingOptions	23,909,849	23,909,849	23,909,849
Number of new Shares offered	13,350,000	30,350,000	35,350,000
under this Prospectus
Number of Options issued	1,000,000	1,000,000	1,000,000
under this Prospectus
Number of Shares on issuepost IPO	79,826,844	96,826,844	101,826,844
Number of Options on issuepost IPO	24,909,849	24,909,849	24,909,849
Offer Priceper Share	$1.00	$1.00	$1.00
Market capitalisation at Offer Price	$79,826,844	$96,826,844	$101,826,844
post IPO (undiluted)

Important dates

Event	Date
Prospectus lodged with ASIC	10 November 2009
Offer opens	16 November 2009
ExistingShareholder PriorityOffer closes	5:00pm 30 November 2009
Offer closes	5:00pm 3 December 2009
Anticipated date of allotment	8 December 2009
Shareholdingstatements expected to be dispatched	10 December 2009
Anticipated commencement of ASX trading	14 December 2009

All dates and times are subject to change and are indicative only. All times are AEDT will apply. The Company, with the consent of the Sponsoring Broker, reserves the right to vary these dates and times without prior notice, including the right to close the Offer early, or to withdraw the Offer, or to accept late Applications. Applicants are encouraged to submit their Application Form as soon as possible.

2 CBio Limited

The Story Behind this Offer to Invest

• XToll® is a drug therapy discovered and developed in Australia for the treatment of human autoimmune diseases, including rheumatoid arthritis (RA). RA is a chronic, debilitating and progressive disease that leads to pain, suffering and disability. It affects up to 2% of the world’s population.[1]

• CBio will initially target its lead product, XToll®, for development as a potential RA therapy. The Directors believe XToll[®] may also be useful in multiple disease states. Existing RA therapies generate significant income for global pharmaceutical companies - the top three therapies alone generated sales of approximately US$10.9 billion in 2008.[2] Data supports the view however that up to 30-40% of patients do not respond satisfactorily to these leading treatments.[3] In addition, safety issues and side effect profiles present concern.

• The efficacy and safety profile of XToll®, demonstrated in clinical trials completed to date, shows potential to reach or exceed current therapies; and with data suggesting a different mechanism of action to existing drugs and drugs currently under development by other companies, XToll[®] will potentially target both responders and non-responders to current treatments.

• With multiple patents already granted or granted under licence to CBio, and with a Notice of Allowance for the composition of matter patent covering the key US market, XToll[®] will, once remaining patents are granted, have patent protection to at least 2023 with a potential extension to 2028 in most jurisdictions.

• Further, it is believed that the manufacturing cost of goods for XToll® will be comparatively low compared with leading treatments available today.

• These advantages combine to make XToll® a potentially attractive pharmaceutical asset. Successful completion of the current Phase II study and other prioritised activities in the clinical development program will maximise the prospect of the licensing or sale of XToll[®] to a major pharmaceutical company – providing potential upside and return to shareholders.

Prospectus 3

Investment Highlights

Prime stage of development for growth potential

CBio recently announced the successful completion of a capital raising round of $12.6 million and is currently at a crucial value-add stage of development. The lead clinical compound XToll[®] is in Phase II clinical trials and successful results could lead to a significant increase in the value of the Company’s primary asset and, in turn, Shareholder value. This investment opportunity is supported by a preliminary safety and efficacy record, a strong patent position (including patents granted and rights under licence to CBio), the commitment of globally recognised drug development interests, an historically strong and supportive shareholder base, and a track record of successful capital raising.

XToll[®] : current Phase II clinical trials

73 patients have been recruited into the current Phase II placebo controlled clinical trial of patients with rheumatoid arthritis (RA). Currently, 70 patients have reached the week 12 primary efficacy endpoint as determined by the protocol, with 62 of those patients having reached week 24 and completed the study. The trial has been conducted at 17 sites across Australia and New Zealand. Further domestic and international sites have been identified and will be initiated for the recruitment of the remaining patients into the study in the earliest possible timeframe. This is a double blind clinical trial, with results only available at the conclusion of the study.

XToll[®] completed clinical trials: 150 humans with no pattern of treatment emergent serious adverse events

CBio has developed and trialled a biologically active, modified variant of the naturally occurring protein, chaperonin 10, which is commercially known as XToll[®] . Phase I and early Phase II non-placebo controlled clinical trials have been completed in RA, psoriasis and multiple sclerosis (MS), with efficacy observed in the RA and psoriasis trials. The MS trial was a safety trial. A good safety profile has been demonstrated in all trials conducted to date, with no pattern of serious adverse events linked to treatment.

Quality R&D

CBio’s science has been recognised and supported through its participation in a number of grants including $6 million under the Federal Government Pharmaceutical Partnerships Program (P3), and the Australian Research Council’s Linkage Project scheme which supports collaborative Research and Development projects between universities and industry. Partners have included the University of Queensland, the University of New South Wales, and the Australian Institute of Biotechnology & Nanotechnology.

Comprehensive intellectual property portfolio

CBio’s technologies are protected by a geographically diverse patent portfolio consisting of 42 patents granted in four families, and a further 86 patents across six families pending in key international markets. CBio is either the registered patentee of these intellectual property rights (including XToll’s[®] key Composition of Matter patent), or has the right to use these patent rights pursuant to licences granted by third parties.

Recognition of therapeutic benefit through peer review in respected medical journals

Results from various clinical trials and findings through peer-review have been published in medical journals. Notably:

• Data generated from the 2006 intravenous dosing Phase IIa RA clinical trial of XToll[®] were accepted for publication in the international medical journal, The Lancet (Vanags et al, Lancet 2006; 368: 855-63).

• These peer-review findings indicated XToll® was well tolerated and showed evidence of clinical effect in RA patients with well-established disease.

• The therapeutic benefits of XToll® in psoriasis were published in May 2008 by the Archives of Dermatology (Williams et al, Arch Dermatol, 2008; 144: 683-685).

4 CBio Limited

• Results from the multiple sclerosis clinical trial published in the Multiple Sclerosis journal, observed a trend towards the development of fewer new lesions in the brain, however statistical significance was not achieved (Broadley et al. Multiple Sclerosis 2009, 15: 329-336).

Experienced Board and advisors to the Board

CBio’s Board consists of internationally experienced drug developers who are supported by scientific advisors with international reputations in the autoimmune field.

Option agreement with global pharmaceutical company, Novo Nordisk A/S

Novo Nordisk has entered into an exclusive option agreement with CBio relating to the future development of XToll[®] intellectual property. The agreement provides Novo Nordisk with an exclusive option to negotiate and be granted an exclusive licence of CBio’s intellectual property portfolio. This strategic relationship offers validation of CBio’s science and clinical development program and, subject to successful milestone achievements and exercise of the option, a path for commercialisation. This exclusive option agreement is summarised in section 8.

Strategy

CBio’s strategy is to complete the development projects that will add the greatest value to its primary asset, XToll[®] . Funds raised under the Minimum Subscription scenario will be applied to the completion of the current Phase II study, which is due for completion in Q2 2011. Subject to successful results from this study, the Board believes CBio will own a potentially attractive pharmaceutical asset and could therefore be in a strong position to conclude a commercial transaction with a major pharmaceutical company. Funds raised in excess of the Minimum Subscription amount will be applied to a prioritised series of development projects with the view to adding the greatest value to the asset in a parallel timeframe to the completion of the trial. The Board

believes a commercial agreement, which could take the form of out-licensing the intellectual property (IP), a sale of the IP, or a sale of the Company, could potentially be concluded within two years from this Offer. The successful conclusion of a commercial agreement is the point at which optimum value inflection to shareholders is realised.

Investment risks

The investment highlights identified above are only a summary of some of the key investment features of investing in CBio Shares. Investment in CBio is subject to risks and investors should read the Risk Factors outlined in section 7 before making an investment decision regarding the Offer. Some of the key risks include:

• General risks associated with share market investments and economic conditions;

• Specific investment risks relating to the development and commercialisation of XToll[®] including:

• Risks associated with the Phase II trial, including the ability to successfully complete the trial and adverse events which may give rise to cessation of the trial or potential liability;

• The ability to successfully negotiate and conclude a commercialisation deal within the anticipated timeframes using funds raised from this Offer, which may necessitate raising further capital;

• Development risks, for example lack of demonstrable safety and/or efficacy and/or the incidence of drug-related serious adverse events;

• Commercial risks including product acceptance, manufacturing and distribution capability, increased or new competition;

• Risks associated with intellectual property ownership or infringement.

This summary is not intended to provide full details of the investment opportunity. Investors must read this Prospectus in full to make an informed investment decision.

Prospectus 5

Chairman’s Letter

Dear Investor

I am pleased to invite you to become a shareholder in an Australian company developing a potential new-generation drug therapy initially targeted for the treatment of rheumatoid arthritis. The name of this drug is XToll[®] .

We believe XToll[®] may hold several key advantages over existing therapeutic drugs for RA and other indications, and I believe the investment proposition can be summarised as follows:

1. The completion of Phase II studies will be the primary determinant of the success or failure of this investment.

2. If the current Phase II study is successfully completed, this may lead to significant growth in the value of CBio’s lead product, XToll[®] , and enhance the Company’s ability to realise that value through a commercial transaction with, for example, a major pharmaceutical company.

XToll[®] is currently in Phase II clinical development. Due to the immense resources required, we believe the Phase III development of this drug cannot be carried out by this small Australian company – the onward stages will need to be carried out by an offshore pharmaceutical company. This Offer to invest is therefore intended to be the final significant capitalraising for the Company prior to the future conclusion of a commercial agreement and realisation of value for Shareholders.

About XToll[®]

Early XToll[®] clinical data have been peer-reviewed and published in journals including the esteemed medical journal, The Lancet. Subsequent clinical research is now leading toward the close of this stage in the development program. Based upon discussions with pharmaceutical companies, CBio has targeted and achieved several significant milestones to bring XToll[®] to this point, driven to realise value for Shareholders. With a strong scientific foundation and strong leadership through the internationally credentialed Board of Directors, CBio has evolved from a research based company to a development focussed company.

CBio has systematically identified and endeavoured to address a prioritised series of early development risks relating to XToll[®] including preclinical toxicology, preclinical pharmacology, human safety studies and regulatory requirements.

We continue to work towards adding the greatest value to our primary asset, by following a clearly defined path of development activities, and we are now reaching the point of being able to address what we believe is the last major risk to a pharmaceutical company for a drug at this stage of development: proving it works and is safe as defined by the clinical trial protocol.

We have also worked to address financial risk and have recently announced the successful conclusion of a $12.6 million capital raising. In the prevailing economic climate, this raising exceeded expectations and has put CBio squarely on the front foot as we head into this Offer.

6 CBio Limited

Drug development is an arduous task, and there are indeed important risks to be considered before making an investment in CBio.

However, the Directors believe the Company has an opportunity to succeed – and to realise the value of this extraordinary product, XToll[®] . Global pharmaceutical company, Novo Nordisk A/S, currently holds an exclusive option agreement over the technology. This agreement not only offers validation to CBio’s science and clinical development program, but also presents an opportunity for a path to commercialisation.

Rheumatoid arthritis is a cruel disease. The destruction of joints and pain inflicted can be so overwhelming as to severely affect quality of life. I believe XToll[®] has the potential to make a real and positive difference to the lives of many millions of people.

This Prospectus contains detailed information in relation to the Company’s operations, financial performance, key personnel and future plans. It also outlines the potential risks associated with this development. I encourage you to read this Prospectus carefully before making your investment decision.

On behalf of the Board of Directors, I commend this Offer to you.

Realising value

To realise the value of this asset, the Company must complete the current Phase II study in rheumatoid arthritis, finalise the clinical trial report, and conclude a commercial transaction. This is the priority in the application of funds if only the Minimum Subscription amount under this Offer is raised. However in parallel, the Company is seeking to complete other prioritised development activities that will have added the greatest value to the asset at the time of a transaction occurring. This Offer therefore is seeking to raise a maximum of $30 million, with Over Subscriptions of up to $5 million. These funds will be applied to the completion of the clinical study, the further strengthening of the patent portfolio, the commencement of regulatory filing in the US for the product development program, clinical scale-up activities to address future manufacturing requirements, the commencement of long-term toxicology studies, pipeline asset development, and detailed studies into the mechanism of action of this unique technology.

Yours sincerely

==> picture [99 x 78] intentionally omitted <==

Stephen Jones Executive Chairman

Prospectus 7

1. Details of the Offer

1.1 Description of the Offer

This Prospectus offers a total of 30 million Shares at an Offer Price of $1.00 per Share. The Offer seeks to raise a minimum of $13 million and a maximum of $30 million (with Over Subscriptions of up to $5 million). A portion of the Offer, being $3 million (or 3 million Shares), has been reserved for Existing Shareholders. Details of Applications for Shares under the Existing Shareholder Priority Offer are set out in section 1.7.

Novus Capital is the Sponsoring Broker to the Offer. The Offer is not underwritten.

• complete other prioritised development activities including:

  • the further strengthening of the patent portfolio;

• commencement of regulatory filing in the US for the product development program;

  • detailed studies into the mechanism of action;

• preclinical studies on drug development platform pipeline assets;

• scoping studies into other indications;

Pursuant to section 723(2) of the Corporations Act, the Minimum Subscription for the Offer is $13 million.

• progression of manufacturing scale-up activities to address long-term manufacturing requirements; and

1.2 Key dates for the Offer

==> picture [213 x 192] intentionally omitted <==

----- Start of picture text -----

Event Date
Prospectus lodged with ASIC 10 November 2009
Offer opens 16 November 2009
Existing Shareholder 30 November 2009
Priority Offer closes 5.00pm
Offer closes 3 December 2009
5.00pm
Anticipated date of allotment 8 December 2009
Shareholding statements 10 December 2009
expected to be dispatched
Anticipated commencement 14 December 2009
of ASX trading
----- End of picture text -----

All dates and times are subject to change and are indicative only. All times are AEDT. The Company, with the consent of the Sponsoring Broker, reserves the right to vary these dates and times without prior notice, including the right to close the Offer early, or to withdraw the Offer, or to accept late Applications. Applicants are encouraged to submit their Application Form as soon as possible.

1.3 Purpose of the Offer and utilisation of funds

The purpose of the Offer is to raise up to $30 million, with Over Subscriptions of up to $5 million, to:

• complete the current Phase II clinical trial in rheumatoid arthritis patients; and

• commencement of long-term toxicology studies.

In the event that only the Minimum Subscription is raised, the completion of the current trial and receipt of the draft report will be the Company’s priority.

It is anticipated that funds raised under the Minimum Subscription scenario will also enable:

• full provision of supply of drug for the current Phase II RA clinical trial;

• completion of the clinical trial;

• further strengthening the patent portfolio;

• commencement of regulatory filing in the US for the product development program;

• detailed studies into the mechanism of action; and

• preclinical studies on drug development platform pipeline assets.

The Directors believe that the utilisation of funds in this manner will strengthen CBio’s position to conclude a commercialisation transaction for XToll[®] with a pharmaceutical company.

1.4 Anticipated use of funds

The following table details CBio’s development program and anticipated utilisation of funds raised under this Prospectus, including the cash balance as

8 CBio Limited

at 31 October 2009 which reflects the proceeds raised under the Information Memorandum less expenses and costs of running the business in the intervening period from year end to 31 October 2009, under the following scenarios, being raised:

• Minimum Subscription ($13 million);

• Maximum Subscription ($30 million); and

• Over Subscriptions up to a further $5 million (total $35 million).

==> picture [442 x 420] intentionally omitted <==

----- Start of picture text -----

Minimum Maximum Over
Subscription Subscription Subscriptions
($13 million) ($30 million) ($35 million)
Current anticipated use of funds $ $ $
Completion of the Phase II clinical trials in rheumatoid 7,763,540 7,763,540 7,763,540
arthritis and time to receipt of draft report
Product costs 1,903,276 1,903,276 2,388,144
Intellectual property patent costs and research costs 3,023,725 3,023,725 4,315,282
Long-term toxicology studies, including genotox - 2,832,865 2,832,865
and reprotox studies
Scale-up of drug manufacture and production - 12,300,000 12,300,000
Regulatory and pre-IND with FDA 150,000 150,000 150,000
Scoping studies and other clinical costs - 800,000 1,937,570
Overhead costs 3,290,271 3,290,271 5,071,493
- personnel
- office, administration, travel
- compliance and other corporate costs
Capital expenditure 50,000 50,000 50,000
Offer costs 1,344,926 2,412,061 2,712,061
Closing cash (4,783) (4,783) -
Total use of funds 17,520,955 34,520,955 39,520,955
Funding breakdown
Funds raised 13,000,000 30,000,000 35,000,000
Opening cash as at 31 October 2009 2,903,222 2,903,222 2,903,222
Income including milestone payments 1,325,000 1,325,000 1,325,000
Net movement in working capital 292,733 292,733 292,733
Total funding 17,520,955 34,520,955 39,520,955
----- End of picture text -----*

• The cash balance as at 31 October 2009 reflects the proceeds raised under the Information Memorandum less expenses and costs of running the business in the intervening period from year end to 31 October 2009.

Upon successful completion of the Offer, CBio will have sufficient working capital to carry out its objectives as stated in this Prospectus.

Prospectus 9

1. Details of the Offer continued

1.4 Anticipated use of funds continued

Minimum Subscription

In the event that only minimum funds are raised, the completion of the current trial and receipt of the draft report will be the Company’s priority.

It is anticipated that funds raised under the Minimum Subscription scenario will enable:

• full provision of supply of drug for the current Phase II RA clinical trial;

• completion of the clinical trial;

Funds in excess of the Minimum Subscription

Funds raised in excess of the Minimum Subscription are intended to be applied in prioritised order to projects that can be completed in parallel to the current trial to maximise the greatest potential value to the asset by the time of commercial discussions, including:

• activities to address future manufacturing requirements;

• commencement of long-term toxicology studies; and

• commencement and completion of smaller clinical scoping studies in other indications.

• further strengthening the patent portfolio;

• commencement of regulatory filing in the US for the product development program;

• detailed studies into the mechanism of action; and

The Company’s anticipated application of funds noted above is illustrated below. This is the Company’s view of anticipated timeline and, as it is subject to third party input, is subject to change. Potential risks associated with the Company’s operations and growth are highlighted in section 7.

• preclinical studies on drug development platform pipeline assets.

==> picture [441 x 255] intentionally omitted <==

----- Start of picture text -----

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010 2010 2010 2010 2011 2011 2011 2011
Clinical development
Phase IIa RA clinical trial
Last patient, last dose
Draft data tables become available
Intellectual Property development
Prosecution and new filings
Research and development
Clinical scoping studies
Regulatory
Pre-IND application to FDA
Chemistry manufacturing and controls (CMC)
Drug scale-up
Regulatory
Long-term toxicology studies
----- End of picture text -----

Minimum Subscription Maximum Subscription Over Subscriptions of up to $5m

10 CBio Limited

1.5 How to apply for Shares

This section 1.5 applies to the Offer other than broker firm Applicants and Applicants under the Existing Shareholder Priority Offer. Broker firm Applicants should refer to the details in section 1.6. Details about how Existing Shareholders can apply for Shares under the Priority Offer are set out in section 1.7.

1.6 Broker firm Applicants

If you have received a ‘firm’ allocation of Shares from your broker, your Application and payment procedures will differ in two important respects from those described above:

• your application cheque must be made payable to your broker (not to ‘CBio Limited – Share Offer’); and

Application Form

Applications may only be made on the Application Form attached to or accompanying this Prospectus or in its paper copy form as downloaded in its entirety from www.cbio.com.au. Detailed instructions on how to complete the Application Form are set out on the reverse of the Application Form.

Offer Price and minimum application

The Offer Price is $1.00 per Share. Applications must be for a minimum of $2,000 (or 2,000 Shares) and then in multiples of $100 (or 100 Shares).

An Application must be made by completing a paper copy of the Application Form (the Company will not accept Application Forms electronically) and sending it, with payment in Australian currency, by the Closing Date to:

Share Registry: Post CBio Limited Share Offer c/- Link Market Services Limited Locked Bag A14, Sydney South NSW 1235 Delivery CBio Limited Share Offer c/- Link Market Services Limited Level 12, 680 George Street, Sydney NSW 2000

• your completed Application Form and cheque must be delivered to your broker directly (not to the Share Registry).

Applicants who receive a firm allocation of Shares must lodge their Application Form and Application Monies with the relevant broker in accordance with the relevant broker’s directions in order to receive their firm allocation.

Your broker will act as your agent in submitting your Application.

Neither the Company, the Share Registry or the Sponsoring Broker take any responsibility for any acts or omissions by your broker in connection with your Application, Application Form or Application Monies.

The procedure should be explained to you in further detail by your broker. If you have a firm allocation of Shares and are in any doubt about what action to take, you should immediately contact the broker who has made you the firm offer.

Cheques or bank drafts must be made payable to ‘CBio Limited – Share Offer’ and should be crossed and marked ‘Not Negotiable’. Applicants who require additional copies of the Prospectus may visit the Company’s website www.cbio.com.au to download a copy of the Prospectus or request a copy from the Share Registry by contacting them on 1800 134 068 during business hours.

Prospectus 11

1. Details of the Offer continued

1.7 Existing Shareholder Priority Offer

A total of 3,000,000 Shares (or $3 million) have been reserved as a Priority Offer for Existing Shareholders. The allocation of Shares under the Existing Shareholder Priority Offer will be at the discretion of the Company, in consultation with the Sponsoring Broker.

Any Shares not taken up under the Existing Shareholder Priority Offer by the Priority Offer Closing Date will be available for allocation under the general Offer, described in section 1.5.

The Existing Shareholder Priority Offer is only open to persons who are resident in Australia and are Existing Shareholders, recorded on the share register, at the date of this Prospectus. This Offer is personal to each Existing Shareholder and may not be transferred.

The Offer Price for Applicants under the Existing Shareholder Priority Offer is $1.00 per Share, which is the same Offer Price to investors under the Offer. Applications under the Existing Shareholder Priority Offer must be for a minimum $2,000 (or 2,000 Shares) and thereafter in multiples of $100 (or 100 Shares).

Existing Shareholders should complete and lodge the specially marked Priority Offer Form with the Prospectus in accordance with the instructions on the guide to the Priority Offer Form. A Priority Offer Form must be accompanied by a cheque(s) or bank draft in Australian dollars and drawn on an Australian branch of an Australian bank. Cheque(s) must be made payable to ‘CBio Limited – Share Offer’ and crossed ‘Not Negotiable’.

Completed Priority Offer Forms and Application Monies for Shares under the Existing Shareholder Priority Offer must be returned by the Priority Closing Date of 5:00pm AEDT 30 November 2009 to:

Share Registry: Post Link Market Services Limited Locked Bag 3415, Brisbane QLD 4001 Delivery Link Market Services Limited Level 19, 324 Queen Street, Brisbane QLD 4000

Existing Shareholder Applicants with questions on how to complete the Priority Offer Form should contact the Share Registry on 1800 134 068.

Broker handling fees will be payable in the manner set out in section 1.10.

1.8 Allocation of Shares

Other than the Existing Shareholder Priority Offer, the Sponsoring Broker, after consultation with the Company will allocate Shares to Applicants under the Offer at its discretion. The Company reserves the right to allocate Shares to Applicants under the Existing Shareholder Priority Offer as described in section 1.7.

The Company may allocate Shares in full, allocate a lesser number of Shares than those for which an Application has been made, accept a late Application or decline an Application. Where Applications have been subjected to scale-back, there may be a different application of the scale-back policy to each of these Applicants.

Where no allocation is made to a particular Applicant or the number of Shares allocated is less than the number applied for by an Applicant, surplus Application Monies will be returned to that Applicant. No interest will be paid on refunded Application Monies. Any interest earned on Application Monies will be, and remains, the property of the Company.

Successful Applicants will be notified in writing of the number of Shares allocated to them as soon as possible after the Closing Date. It is the responsibility of Applicants to confirm the number of Shares allocated to them prior to trading in Shares. Applicants who sell Shares before they receive notice of the Shares allocated to them do so at their own risk.

If the Company’s application for admission to ASX is denied or for any reason this Offer does not proceed, all Application Monies will be refunded in full without interest.

12 CBio Limited

1.9 Validity of Application Forms

An Application Form or Priority Application Form may only be distributed with, attached to or accompany a complete and unaltered copy of this Prospectus.

By completing and lodging an Application Form or Priority Application Form received with this Prospectus, the Applicant represents and warrants that the Applicant has personally received a complete and unaltered copy of this Prospectus prior to completing the Application Form or Priority Application Form (as appropriate).

The Company will not accept a completed Application Form or Priority Application Form if it has reason to believe the Applicant has not received a complete copy of the Prospectus or it has reason to believe that the Application Form or Priority Application Form has been altered or tampered with in any way. A completed Application Form or Priority Application Form is an irrevocable acceptance of the Offer.

1.10 Handling fee

Brokerage and/or handling fees on Application for Shares will be payable to member firms of ASX or licensed investment advisers on such Application Forms bearing their stamp and being accepted by the Company. Any such brokerage or handling fees will be paid by Novus Capital out of its brokerage.

1.11 ASX listing

An application will be made to ASX not later than 7 days after the date of this Prospectus for the Company to be admitted to ASX and for official quotation of the Shares. CBio has reserved the ASX code CBZ in respect of its Shares.

Similarly, an application will be made to ASX not later than 7 days after the date of this Prospectus for the Company to be admitted to ASX and for official quotation of the Options as described in section 9.4.

Acceptance of the application by ASX is not a representation by ASX about the merits of the Company or the Shares. Official quotation of Shares, if granted, will commence as soon as practicable after the issue of initial shareholding statements to successful Applicants.

It is expected that trading of the Shares and Options on ASX will commence in accordance with the timetable set out in section 1.2. If permission is not granted for official quotation of the Shares on ASX within three months of the date of this Prospectus, all Application Monies received will be refunded without interest as soon as practicable in accordance with the requirements of the Corporations Act.

==> picture [193 x 197] intentionally omitted <==

“ There is a very significant need for new and better medicines. XToll[®] , to me, is exciting because it offers potentially a new mechanism of action. If XToll[®] makes it to market, and continues to show the excellent safety we have seen so far, I think we have good hopes for commercial success.”

Dr Göran Ando

Vice-Chairman Novo Nordisk, CBio Board of Directors

Prospectus 13

1. Details of the Offer continued

1.12 CHESS

The Company will apply for the Shares to participate in CHESS. Applicants who are issued Shares under this Offer will receive shareholding statements in lieu of share certificates, which will set out the number of Shares issued to each successful Applicant.

The shareholding statement will also provide details of the Shareholder’s HIN (in the case of a holding on the CHESS sub-register) or SRN (in the case of a holding on the issuer sponsored sub-register).

Shareholders need to quote their HIN or SRN, as applicable, in all dealings with a stockbroker or the Share Registry. Further statements will be provided to Shareholders showing changes in their shareholding during a particular month. Additional statements may be requested at any time, although the Company reserves the right to charge a fee.

1.13 Withdrawal

The Company reserves the right to withdraw the Offer, at any time before the allotment of Shares. If the Offer does not proceed, Application Monies will be refunded. No interest will be paid on any Application Monies refunded as a result of the withdrawal of the Offer.

1.14 Taxation considerations

The taxation consequences of an investment in CBio will depend upon the investor’s particular circumstances. Investors should make their own enquiries about the taxation consequences of an investment in the Company for their particular circumstances. If you are in doubt as to the course you should follow, you should consult your accountant, stockbroker, lawyer or other professional adviser.

1.15 Foreign selling restrictions

No action has been taken to register or qualify the Shares or the Offer in any jurisdiction outside Australia, or otherwise to permit a public offering of the Shares outside Australia.

The Prospectus does not constitute an offer or invitation in any jurisdiction where, or to any person to whom, such an offer or invitation would be unlawful. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Each Applicant will be taken to have represented, warranted and agreed that such person:

• is an Australian citizen, is located in Australia at the time of such application and is not acting for the account or benefit of any person in the United States or any other foreign person; and

• will not offer or sell the Shares in the United States or in any other jurisdiction outside Australia or to a United States person, except in transactions exempt from registration under the United States Securities Act of 1933 as amended, and in compliance with all applicable laws in the jurisdiction in which such Shares are offered and sold.

==> picture [57 x 6] intentionally omitted <==

----- Start of picture text -----

14 CBio Limited
----- End of picture text -----

2. Company and Market Information

2.1 Corporate history

CBio Limited is an Australian public company with headquarters in Brisbane. CBio was established in 2000 to develop and commercialise treatments for autoimmune diseases.

In 2001, extended preclinical studies at the University of Queensland concluded that a heat shock protein identified as chaperonin 10 played a key role in downregulating the innate immune response in patients during pregnancy. Further research suggested that chaperonin 10 appeared to intercede at a very early stage of the inflammatory process to prevent the over-expression of pro-inflammatory cytokines. Based on this research, CBio acquired a worldwide exclusive licence for the chaperonin 10 intellectual property, and now has an extensive IP portfolio surrounding the technology.

CBio’s patented lead molecule is an altered form of the natural chaperonin 10. Its registered name is XToll[®] .

As at the date of this Prospectus, the Company employs 25 staff. As is usual for companies of CBio’s size, CBio contracts its preclinical toxicology studies, drug substance production and manufacture, some preclinical research and some clinical trial operations to third parties qualified for these purposes.

2.2 Rheumatoid Arthritis – an autoimmune disease

The immune system is the body’s means of protection against “foreign” substances such as bacteria and viruses. It has the ability to recognise cells and tissues that are its own (self) as distinct from those that are not (non-self). The immune system generally protects rather than attacks its own body tissues. In autoimmune diseases, the immune system is no longer able to distinguish self from non-self - attacking some of its own tissues as a result. The reason for this attack is not well understood, although the risk of onset of autoimmune disease has been linked to genetic predisposition in some cases.[4]

CBio has evolved from a research-based operation into an early-stage drug development organisation. This strategic transformation is the result of the recruitment and appointment of Board members, management and staff with drug development expertise and capabilities.

The strategy of the Company is to complete the development projects that will add the greatest value to its primary asset, XToll[®] . Successful results from the current clinical trial should enable CBio to out-license its Cpn10/XToll[®] technology to Novo Nordisk A/S, with whom the Company already has a commercial agreement; or conclude a licensing or sale transaction with another major pharmaceutical company. This is CBio’s primary focus. Funds allowing, and as detailed in the Anticipated Use of Funds in section 1.4, further prioritised development projects will be completed in parallel with the current clinical trial, with the aim of realising the greatest possible value for this asset at the time of a commercial transaction.

Rheumatoid Arthritis (RA) is a chronic autoimmune disease, mainly characterised by inflammation of the lining, or synovium, of the joints. It can lead to long-term joint damage, resulting in chronic pain, loss of function and disability. The effects of RA are systemic, which means it can affect other organs in the body, and cardiovascular dysfunction in addition to RA is common.[5]

RA symptoms can make even the simplest activities – such as opening a jar or taking a walk – difficult to manage. RA has a worldwide distribution with an prevalence of 1 to 2%[6] – which currently equates to approximately 100 million people.[7] Prevalence increases with age, approaching 5% in women over age 55[8] . RA is two to three times more common in women than in men and generally occurs between the ages of 40 and 60, but it can also affect young children and older adults.

Currently, there is no cure.[9]

Prospectus 15

continued 2. Company and Market Information

2.2 Rheumatoid Arthritis – an autoimmune disease continued

Up to 30-40% of patients with established RA do not respond clinically to current leading biological therapies[11] and that there remains a significant unmet need for new, clinically efficacious therapies in RA.[12] Further, in June 2008, the US Food & Drug Administration (FDA) communicated that there are safety concerns with the antiTNF therapies, and that it was investigating the possible association between the use of TNF-blockers and the development of lymphoma and other cancers in children and young adults.[13] The FDA review is complete and three global leading therapies for the treatment of RA are now required to carry “Black Box” warnings, following reports of severe side effects.[14]

Treatment options

Treatment options

THE PAIN CONTROLLERS

THE DISEASE MODIFIERS

• Non-steroidal anti-inflammatory drugs (NSAIDs) reduce pain and inflammation.

• Examples include ibuprofen and naproxen.

• Possible side-effects include stomach upset, ulcers and bleeding.

• Some drugs in this class have been shown to increase the risk of cardiovascular events such as heart attack and stroke.

• Corticosteroids or glucocorticoids (steroids) alleviate joint pain, swelling and other symptoms of rheumatoid arthritis.

• Examples include prednisolone.

• Side-effects include weight gain, brittle bones, glaucoma, cataract, reduced immunity, high blood pressure, fragile skin and onset or worsening of diabetes.[10]

• Disease-modifying anti-rheumatic drugs (DMARDs) help prevent joint and cartilage damage.

• Examples include methotrexate.

• Side effects may include skin rashes, mouth sores, upset stomach, liver and kidney problems and severe anaemia.[10]

• Biologic DMARDs (bDMARDS) help to treat pain and reduce the symptoms of the disease. They also slow the progression of joint damage.

• Examples include Enbrel, Remicade and Humira. These “anti-TNF” drugs are now the leading global therapies in the treatment of RA.

• Current bDMARDS act as ‘blocking agents’ or ‘antibodies’ to inflammatory pathways.

• This ‘blocking’ affects the immune system and can leave the body open to infection.

16 CBio Limited

2.3 XToll[®] – targeted to address the needs of RA patients

Chaperonin 10 is a naturally occurring protein present in all cells that, in conjunction with chaperonin 60, performs the essential housekeeping role of protein folding, i.e. it helps proteins develop into exactly the right shape required for them to work effectively. CBio has demonstrated that recombinant chaperonin 10 (Cpn10, or XToll[®] ) has an immunomodulatory function in addition to this well-established protein folding activity.[15]

XToll[®] is a variant of human chaperonin 10 that has been optimised for commercial development. XToll[®] appears to work in a way which distinguishes it from current registered therapies for the treatment of RA.

Chaperonin 10 is thought to function as a natural regulator of the innate immune system: it is released locally by activated or damaged cells in response to “danger” signals, and down-regulates inflammatory immune responses. In disease states, levels of chaperonin 10 may not be high enough to control inflammation; however, administration of pharmacological levels of chaperonin 10 (provided as XToll[®] ) may overcome ongoing inflammatory signals and result in therapeutic benefit.

Unlike the current registered anti-inflammatory drugs which “block” immune responses, and as a consequence can increase the risk of infection and the development of cancers, XToll[®] appears to dampen excessive inflammatory responses and thereby works to restore a balanced immune system capable of surveillance for infections, viruses and cancer. It is this ability of XToll[®] to work with the body’s immune system, rather than against it, that offers the potential for real therapeutic benefit with a strong safety profile.

CBio has developed and implemented IP protection associated with other variants of native chaperonin 10, and is pursuing research on a number of these pipeline assets. Pre-clinical studies have shown that these molecules may have different immunomodulatory characteristics from XToll[®] , thereby showing potential as therapeutic drug candidates and a potential drug development platform.

Unmet needs of RA patients: safety, efficacy, price

XToll[®] appears to work as an endogenous regulator of the immune system – this means it works with the body’s own processes - and is therefore predicted to work more safely than other available drugs currently on the market.

With a different mechanism of action to current therapies, XToll[®] has the potential to show efficacy in patients who do not respond to current treatments.

XToll[®] is believed to be cost effective to manufacture compared with leading treatments available today.

Prospectus 17

continued 2. Company and Market Information

2.4 Global market and competitor information

Global sales for biological therapies for RA were US$8.6 billion in 2005,[16] anticipated to be over US$12 billion in 2009, and forecast to reach over US$18.5 billion by 2013.[17]

This RA market is currently dominated by three drugs, the “blockbuster” anti-TNF therapies Remicade, Enbrel and Humira. Whilst the primary market for these drugs is in the treatment of RA, they are used as therapies for other autoimmune diseases including Crohn’s disease, ulcerative colitis, psoriatic arthritis and ankylosing spondylitis. It is estimated that one-quarter of Remicade revenues come from indications other than RA; roughly one-sixth of Enbrel revenues come from indications other than RA; and one-eighth of Humira revenues come from indications other than RA.[18]

In 2008, sales from RA in these top 3 drugs were US$10.9 billion.[19] However, the total global sales of these 3 drugs in all disease states were in excess of US$17 billion.[20]

Biological DMARDs have essentially revolutionised the treatment of RA throughout the world, although they are also the most expensive of all available RA treatments. Between 2009 and 2013, the value of the biologic market for the treatment of RA is estimated to grow by a compound annual growth rate of around 11%.[21] Fuelling growth in this market will be a general increase in the uptake of biologics for the treatment of RA as they gain greater acceptance from physicians, the higher levels of patient disease education, and the ageing American and European populations. Apart from patent expirations facing current bDMARD leaders (two leading RA therapies have patent expiry dates in the coming seven years: Enbrel - 2012; Humira – 2016[22] ) and new product launches, it is expected that few other factors will slow down the growth in this market for the foreseeable future.[23]

Yet there remains a significant unmet need for new, clinically efficacious therapies for RA.[24] The pipeline for rheumatoid arthritis therapies therefore remains strong.

==> picture [193 x 197] intentionally omitted <==

“ Rheumatoid Arthritis is the most common form of chronic inflammatory arthritis affecting Australians. It is a chronic and disabling condition. The pain and discomfort associated with RA can significantly affect a person’s quality of life – it reduces longevity and a significant number of patients become severely disabled and unable to work after 5 years. Up to 4 out of 10 patients do not respond effectively to existing treatments for RA. This new therapy has the potential to be a very important breakthrough for RA sufferers. ”

Associate Professor Peter Nash, University of Queensland Principal Investigator for the Phase II RA clinical trial

18 CBio Limited

In addition to a number of “follow on” or “me too” therapies under development that are focussed on a TNF-a blockade, pharmaceutical companies are investing in candidates which target other cytokines implicated in disease development, including those that have an effect on the earlier stages of the RA disease process.

The majority of existing biological disease modifying treatments for rheumatoid arthritis act as ‘blocking agents’ or ‘antibodies’ to specific targets in the inflammatory pathway, and this mechanism of action has serious implications for a patient’s susceptibility to opportunistic infection and certain cancers. In addition, while other modulators of the immune system are certainly in development, a significant proportion of products in the global R&D pipeline continue to focus on antibody-mediated blockade of known pathways.[25]

However, in terms of mechanism of action, and as a potential endogenous regulator of the innate immune system, CBio’s XToll[®] remains novel, unique – and scientifically without global pipeline competition.

2.5 Novo Nordisk A/S exclusive option agreement

In May 2008, CBio concluded a commercial agreement with Novo Nordisk A/S relating to the future development of its Cpn10 intellectual property. This strategic relationship provides a development pathway for all Cpn10 drug variants, and is commercial validation of CBio’s research and development. The agreement provides Novo Nordisk an exclusive option to enter into negotiations for a License Agreement for the intellectual property rights relating to CBio’s XToll[®] (Cpn10) technology. Some of the financial terms relating to a potential license have been pre-agreed including an upfront payment, milestones payments and royalties. The milestone payments pre-agreed for up to four clinical indications total US$111 million plus up to double-digit royalties on commercial sales of the therapeutic.

Under the terms of the Option Agreement, Novo Nordisk must pay CBio an option fee of US$3 million under two payments: an upfront payment of US$2 million, which has been received by CBio, plus a further US$1 million on recruitment of the 75th patient into the current Phase IIa trial.

The Option Agreement and framework for the Licence Agreement are discussed in more detail at section 8.4.

About Novo Nordisk

Novo Nordisk is a healthcare company and a world leader in diabetes care. In addition, Novo Nordisk has a leading position within areas such as haemostasis management, growth hormone therapy and hormone replacement therapy. Novo Nordisk manufactures and markets pharmaceutical products and services that make a significant difference to patients, the medical profession and society. With headquarters in Denmark, Novo Nordisk employs more than 29,000 employees in 81 countries, and markets its products in 179 countries.

Prospectus 19

3. Board of Directors and Corporate Governance

3.1 Board of Directors

==> picture [137 x 208] intentionally omitted <==

MR STEPHEN JONES Executive Chairman

Stephen Jones is a founding director of CBio and was appointed its chairman in 2000. Mr Jones has extensive hands-on management experience in corporate recovery and reconstruction – including for International Card Systems Australia Limited (a credit card provider); Greyhound Pioneer Australia Limited (transport and tourism); and Bresagen Limited (biotechnology). He has been involved with several public capital raisings totalling in excess of $100 million and was a director of Fortune Advanced Technologies Pty Ltd, Retirewise Capital Australia Ltd, Ingot Capital Management Pty Ltd, and other funds management and venture capital companies. He has served on the Boards of several listed public companies including Greyhound Pioneer Australia Limited Analytica Limited, Psiron Limited and Bresagen Limited; is a non-executive director of Injet Digital Aerosols Ltd and Australia Biofund Investment Limited (Hong Kong); and is chairman of Australian Technology Innovation Fund Limited, one of CBio’s single largest shareholders.

MR JASON YEATES Managing Director and Chief Executive Officer

Jason Yeates has direct responsibility for the continued transition of CBio from a medical research company to a listed early-stage drug development company. In particular, Jason oversees the strategic planning involved in the commercial and clinical development of CBio’s key product XToll[®] and its targeted use as a treatment for chronic autoimmune diseases such as rheumatoid arthritis. Jason joined CBio in 2004 and soon after was named Chief Operating Officer before being appointed CEO in 2006. A year later he was named Managing Director. Jason has held senior financial and commercial positions in Australia, Europe, and Asia with significant experience gained in mergers and acquisitions, fundraising, commercialisation, sales & marketing and business management. Before joining CBio, he was Asia-Pacific Finance Director with MCI Limited during the company’s successful expansion into Asia and held the same position at Asia Global Crossing Limited. Earlier commercial management and accounting expertise was gained in the United Kingdom in roles at Harrods, Paramount/Universal and Rutland Trust. Jason holds a Bachelor of Business from Queensland University of Technology.

==> picture [137 x 208] intentionally omitted <==

20 CBio Limited

==> picture [136 x 208] intentionally omitted <==

DR GöRAN ANDO

Non-Executive Director

Dr Göran Ando qualified as a medical doctor and a specialist in general medicine from Linköping Medical University in Sweden. He is a founding fellow of the American College of Rheumatology in the United States. From 1989 until 1995, Dr Ando was medical director and later R&D director of Glaxo Group in the United Kingdom. From 1995 until 2003 he was executive vice-president and then president of R&D with Pharmacia (Pfizer) and from 2003 until 2004, CEO of Celltech Group plc in the United Kingdom. Dr Ando serves as Chairman of the Board of Novexel S.A.; is Vice-Chairman of the Boards of Novo Nordisk and S*Bio Pty; and is a member of the Boards of Novo A/S and NicOx S.A. Dr Ando also serves as a senior advisor to Essex Woodlands Health Ventures UK Ltd. Dr Ando was appointed to the Board of CBio in 2007.

DR PETER B. CORR Non-Executive Director

Dr Peter B. Corr is Founder and Co-General Partner, Celtic Therapeutics Management Company LLP, a private equity firm focused on the development of innovative therapeutics. Prior to that appointment Dr Corr served as Senior Vice-President for Science and Technology at Pfizer Inc from 2002 to 2007. Before assuming that role, Dr Corr served as Executive Vice-President, Pfizer Global Research & Development; and President, Worldwide Development. Prior to joining Pfizer in 2000, he was President of Pharmaceutical Research and Development at Warner Lambert/Parke Davis until the merger with Pfizer. Earlier, he served as Senior Vice-President, Discovery Research, at Monsanto/Searle. Dr Corr, who received his doctorate from Georgetown University School of Medicine, spent 18 years as a researcher in molecular biology and pharmacology at Washington University in St Louis. When he left the university, Dr Corr was Professor, Department of Medicine (Cardiology) and Professor, Department of Pharmacology and Molecular Biology. His research has been published in more than 160 scientific manuscripts. Dr Corr is the recipient of numerous awards, including membership in the Alpha Omega Alpha National Medical Honorary Society, an Established Investigator Award from the American Heart Association and a Research Career Development Award from the National Institutes of Health. He received the Washington University School of Medicine Teacher of the Year Award and, in 1990, the Washington University Distinguished Faculty Award. In 2004, Dr Corr was named a William Pitt Fellow at Pembroke College, Cambridge. Dr Corr served on the Board of Governors and was Chairman of the Board of the New York Academy of Sciences, the Board of Regents of Georgetown University and several other non-profit and for-profit boards. Dr Corr was appointed to the Board of CBio in 2007.

==> picture [137 x 208] intentionally omitted <==

Prospectus 21

continued 3. Board of Directors and Corporate Governance

3.1 Board of Directors continued

==> picture [137 x 208] intentionally omitted <==

PROFESSOR JOHN FUNDER

Non-Executive Director

Professor John Funder, AO, is currently Professor of Medicine at Monash University, Senior Fellow at Prince Henry’s Institute of Medical Research, a Professorial Associate at the Centre for Neuroscience at the University of Melbourne. He holds an Honorary Appointment at the Institute for Molecular Biosciences, University of Queensland. Professor Funder has worked for over 40 years in endocrinology with particular interests in steroid hormones and receptors, and hormonal mechanisms in hypertension and heart failure. He has been a member of advisory panels, including PIIP and P3 for the Commonwealth Government, and has a number of roles in Victoria, including chairing the Victorian Health Promotion Foundation and the Hospitals Admission Risk Program (HARP). He has published over 500 scientific papers, maintains an active research program with collaborations in Melbourne, Sydney, San Francisco, St. Louis and Toronto, and acts as a consultant for a number of international pharmaceutical firms in Australia, Europe, Japan and the United States. Professor Funder was appointed to the Board of CBio in 2007.

MR STEPHEN STREETER

Non-Executive Director

Stephen Streeter is an institutional stockbroker with seventeen years experience. He has been Director and Head of Sales for a number of broking firms including James Capel Australia, E L & C Baillieu, CIBC Wold Markets and ABN Amro Australia. Mr Streeter holds the position of Executive Director Equities, Novus Capital Limited, and is nonexecutive director of Australia Biofund Investment Limited (Hong Kong) and Australian Technology Innovation Fund Limited. Mr Streeter has had extensive exposure to equity capital markets and has built a very strong client base in this area. Mr Streeter was appointed to the Board of CBio in 2005.

==> picture [137 x 208] intentionally omitted <==

22 CBio Limited

==> picture [136 x 208] intentionally omitted <==

DR MICHAEL MONSOUR Non-Executive Director

Dr Michael Monsour is a medical practitioner with business interests in Queensland-based medical centres. He operates a medical management company that provides management support to medical practitioners, and is also one of Australia’s leading providers of software systems for occupational health and safety and medical accounting. Dr Monsour is the chairman of Analytica Limited and InJet Digital Aerosols Limited. Dr Monsour is also a director of Australian Technology Innovation Fund Limited and the Australia Biofund Investment Limited (Hong Kong). Dr Monsour was appointed to the Board of CBio in 2007.

DR DENNIS FEENEY

Executive Director and President Global Development and Licensing

Dr Dennis Feeney joined CBio as Chief Scientific Officer in 2003, was appointed President of Global Development and Licensing in 2006, and was appointed a member of the Board in 2007. Dr Feeney has worked for over 15 years in the senior management roles of international pharmaceutical industry companies including Sandoz, Marion Merrell Dow and Pharmacia. During this period, Dr Feeney held key corporate functional responsibilities for all Phases of clinical research (Phase I to Phase IV), regulatory affairs, health economics and medical services at domestic, regional and international levels. He has served as a member of the Executive Board of Management and corporate officer at Pharmacia. Dr Feeney has held responsibilities for strategic marketing and sales; human resource management; financial planning and accountability; and legal and corporate affairs.

==> picture [137 x 208] intentionally omitted <==

Prospectus 23

continued 3. Board of Directors and Corporate Governance

3.2 Corporate governance

CBio has implemented a corporate governance framework consistent with the 2nd edition of the ASX Corporate Governance Principles and Recommendations for listed companies, to better protect the interests of shareholders.

3.2.1 Role of the Board

The Board is responsible for the corporate governance of the business and has adopted as a guiding principle that it act honestly, conscientiously and fairly, in accordance with the law and in the interests of CBio’s Shareholders (with a view to building sustainable value for them), employees and other stakeholders. Responsibility for the operational conduct of the Company’s business has been delegated to the Chief Executive Officer who reports to the Board.

The Board’s broad function is to:

• a. chart strategy and set financial targets for the Company;

• b. monitor the implementation and execution of strategy;

• c. monitor performance against financial targets;

• d. appoint and oversee the performance of executive management; and

• e. generally take and fulfill an effective leadership role in relation to the Company.

Power and authority in certain areas is specifically reserved to the Board – consistent with its function as outlined above. These areas include:

• a. composition of the Board itself including appointment and removal of Directors;

• b. oversight of the Company including its control and accountability systems;

• c. appointing and removing the CEO;

• d. appointing the Company Secretary and ratifying changes to senior management;

• e. reviewing and overseeing systems of risk management and internal compliance and control, codes conduct, and legal and regulatory compliance;

• f. monitoring senior management’s performance and implementation of strategy;

• g. approving and monitoring financial and other reporting;

• h. overall corporate governance of CBio including the strategic direction, establishing goals for management and monitoring the achievement of these goals; and

• oversight of Committees.

• i.

3.2.2 Composition of the Board

The composition of the Board is subject to the following principles:

• a. The Chairman is responsible for leadership of the Board and for the efficient organisation and conduct of the Board.

• b. The Chairman will facilitate the effective contribution by all Directors and promote constructive and respectful relations between Directors, and between the Board and the Senior Executives.

• c. Due to the early stage of development of CBio, the Group does not believe it appropriate to maintain a structure where there is a majority of independent directors. The Company’s directors include some of the founders of the Company and significant shareholders. As the Company grows and the valuation of the Company’s intellectual property increases, it is anticipated the structure of the Board will change and greater levels of independence will be achieved.

The Board currently comprises an Executive Chairman, five Non-Executive Directors, the Managing Director and Chief Executive Officer, and an Executive Director and President Global Development and Licensing.

24 CBio Limited

3.2.3 Board Committees

The Board may establish Committees to assist the Board to carry out its functions effectively and efficiently. The Board will adopt a charter for each Committee setting the scope of its responsibility and relevant administrative and procedural arrangements.

The only Committee established at the date of this Prospectus is the Audit and Risk Committee.

3.2.5 Other committees

The Audit and Risk Committee is currently the only committee established by the Board. The Board has, having regard to the size of the Company to date, determined it is not necessary to form a specific Nomination and Remuneration Committee, with these matters being dealt with by the full Board instead. The need for additional committees will be reconsidered following listing on ASX and will be kept continually under review.

3.2.4 Audit and Risk Committee

The Audit and Risk Committee operates to an approved Audit Charter, which governs the tasks, attendees, sources of professional information and responsibilities of the Committee and provides a forum for the effective communication between the Board and the external and internal auditors. The Audit and Risk Committee reviews the annual, quarterly and half-yearly financial statements prior to their approval by the Board and release to the ASX or ASIC whether appropriate, the effectiveness of management information systems and systems of internal control, and the efficiency and effectiveness of the external and internal audit functions. Membership of the committee currently comprises:

• a. Stephen Jones (Executive Chairman); and

• b. Michael Monsour (Non-Executive Director),

with both the Auditor and/or the CEO invited from time to time.

The membership composition will be reconsidered following listing on ASX.

3.2.6 Best practice commitment

The Company is committed to achieving and maintaining the highest standards of conduct and has undertaken various initiatives that are designed to achieve this objective. CBio’s corporate governance charter is intended to institutionalise good corporate governance and, generally, to build a culture of best practice both in the Company’s own internal practices and in its dealings with others. The following are a tangible demonstration of the Company’s corporate governance commitment.

Independent professional advice

With the prior approval of the Chairman, which may not be unreasonably withheld or delayed, each Director has the right to seek independent legal and other professional advice concerning any aspect of the Company’s operations or undertakings in order to fulfil their duties and responsibilities as directors. For the Chairman seeking independent advice, he should discuss with the Chairman of the Audit Committee or one of the other non-executive directors. Any costs incurred are borne by the Company.

CBio has used the Principles as a reference point for its corporate governance structure and practices and has customised them to suit CBio’s individual needs and situation. Further the Board has assessed the Company’s current practices against the Principles.

Prospectus 25

continued 3. Board of Directors and Corporate Governance

3.2 Corporate governance continued

Code of conduct

The Board has adopted a code of conduct to guide Directors in the performance of their duties.

Share trading policy

The Board has adopted a code of conduct for transactions in securities which is designed to ensure fair and transparent trading in accordance with both the law and best practice.

Compliance with ASX corporate governance principles and best practice recommendations

The ASX document, ‘Corporate Governance Principles and Recommendations 2nd Edition’ (Principles) was published in August 2007 by the ASX Corporate Governance Council with the aim of enhancing the credibility and transparency of Australia’s capital markets.

The Board has assessed the Company’s current practice against the Principles and outlines its assessment below:

Principle 1 - Lay solid foundations for management and oversight

The role of the Board and delegation to management have been formalised in CBio’s Board Charter. The Charter will be kept under review and amended from time to time as appropriate taking into consideration practical experience gained in operating as a listed Company. CBio complies with the Principles in this area.

Principle 2 - Structure the Board to add value

CBio has an eight member Board comprising an Executive Chairman, five Non-Executive Directors and two Executive Directors. Due to the roles of the directors, and the contractual and other relationships described in this Prospectus, the Company does not comply with the principles, to the extent that:

• a. at least half of the Board should be nonexecutive directors independent from management; and

• b. the chairman of the Board should be one of the independent non-executive directors.

CBio believes its current structure is appropriate for the size and nature of the Company. Together, the Directors have a broad range of experience, expertise, skills, qualifications and contacts relevant to the business of the Company.

“ Current treatments for rheumatoid arthritis are all associated with significant toxicity. While some of these treatments are quite effective, they do have a significant increase in risk of infection and concerns about long-term risk of malignancy. There is great demand in both the medical community and the community of those who suffer from arthritis for treatments which are highly effective and also at the same time safe. Many of our current treatments work by entirely blocking the effect of chemicals which are fundamentally important in the body’s immune system or blocking the effect of cells which are equally important. Treatment which can modify without totally abrogating the effect of these chemicals themselves would potentially be much safer and therefore highly desirable.”

==> picture [193 x 197] intentionally omitted <==

Dr Stephen Hall

Associate Professor of Medicine, Melbourne Rheumatology Group; co-Principal Investigator in CBio’s 2006 rheumatoid arthritis clinical trial; Investigator in CBio’s current rheumatoid arthritis clinical trial.

26 CBio Limited

Principle 3 - Promote ethical and responsible decision making

The Board has adopted in furtherance of the corporate governance charter and adopted a detailed Code of Conduct and a Code of Conduct for transactions in securities.

Principle 4 - Safeguard integrity in financial reporting

The Audit and Risk Committee has been established with its own charter. All members of the committee are financially literate.

Principle 5 - Make timely and balanced disclosure

CBio’s current practice on disclosure is consistent with the Principles.

Principle 6 - Respect the rights of shareholders

The Board will communicate with Shareholders regularly and clearly by electronic means as well as by more traditional methods. Shareholders are encouraged to attend and participate at CBio meetings. The Company’s auditors are invited to attend the annual general meeting in order to answer shareholder questions. The Company’s policies comply with the Principles in relation to the rights of Shareholders.

Principle 7 - Recognise and manage risks

The Board, together with management, has established processes to identify, monitor and mitigate risk. Internal controls are monitored on a continuous basis and, wherever possible, improved. The issue of risk management is formalised in the Company’s corporate governance Charter and the Audit Charter (which complies with the Principles in relation to risk management) and will be kept under regular review.

Principle 8 - Remunerate fairly and responsibly

The corporate governance Charter adopted by the Board requires individual performance review and evaluation to be conducted formally on an annual basis. The Board acknowledges that performance can always be enhanced and will continue to seek and consider ways of further improving the performance of Directors both individually and collectively. CBio’s remuneration practices are reviewed regularly and comply with the Principles. Remuneration of Directors and executives will be fully disclosed in the annual report.

Prospectus 27

4. Patent Attorney’s Report

==> picture [454 x 598] intentionally omitted <==

----- Start of picture text -----

30 October, 2009
CBio Limited
PO Box 8104
Sunnybank Plaza
Sunnybank QLD 4109
Attention: Mr James Greig; Mr Jason Yeates; Walter van Heumen, PhD
Dear Jason, James and Walter
Re: Patent Attorney’s Report
Our Ref: 920060M:ANB:SXP
1. BACKGROUND AND SCOPE
This report has been prepared by Spruson&Ferguson for inclusion in a prospectus to
be issued by CBio Limited.
This report is current as at 30 October 2009, and we are not aware of any changes to
the status of material discussed below since that date. The information provided
below is subject to the matters set out in Section 4 of this report.
This report is directed to the patent applications and patents identified in the attached
Patent Schedule, which identifies relevant patents and patent applications.
Spruson&Ferguson have not reviewed and do not comment on other forms of
intellectual property (IP) assets of CBio Limited.
2. OVERVIEW OF IP PROTECTION
IP includes patents, registered designs, trade marks, copyright, plant breeders’ rights
and rights to require that information be confidential (commonly referred to as ‘know
how’ or ‘trade secrets’).
Patents, registered designs, trade marks and copyright are the most common forms
of IP which can be enforced by an owner to prevent others from using or otherwise
exploiting the IP without the owner’s permission. This report deals only with IP in the
form of patents and applications for patents.
2.1 Monopoly provided by a patent
A patent is a right granted by a government to the inventor of an article, device,
substance, process, or method, which is new, inventive and useful, in return for its
disclosure to the public at large. The inventor can assign or license this right.
AH01(2366860_1)
----- End of picture text -----

28 CBio Limited

==> picture [455 x 598] intentionally omitted <==

----- Start of picture text -----

CBio Limited Our Ref: 920060M
Patents provide the inventor, or the inventor’s assignee, with the exclusive right to
exploit the invention for the life of the patent, which is generally 20 years. This
exclusive right allows the patentee to prevent others from exploiting the invention
covered by the patent in the country of grant by instituting an infringement action
against the infringing party.
Under Australian law, “exploitation” includes:
(a) where the invention is a product – to make, hire, sell or otherwise dispose of
the product, to offer to make, sell, hire or otherwise dispose of it, to use or
import it, or to keep it for the purpose of doing any of those things; or
(b) where the invention is a method or process - to use the method or process or
do any act mentioned in paragraph (a) in respect of a product resulting from
such use.
Broadly, in order to be the subject of a patent, the invention must, inter alia , be new
and not be obvious at the time of lodging the patent application. Subject to limited
exceptions, demonstrating, selling, publishing, or discussing the invention in public is
likely to preclude the inventor's or its assignee's ability to obtain a valid patent.
Eighteen months after lodgement of an initial patent application, the detailed
description of the invention (contained in the complete patent specification) becomes
available for public inspection.
2.2 Patent validity
Grant of a patent does not guarantee validity, and an invalid patent is unenforceable.
Further, the grant of a patent does not guarantee that all claims of that patent are
valid.
The grant of a patent also does not guarantee that the invention defined therein can
be exploited without infringing the rights of others.
2.3 Payment of annual fees for patents
Patent applications and patents are subject to the payment of annual fees (annuities
or taxes) throughout the life of the application and the granted patent. If annuities are
not paid, the patent (or patent application) may lapse.
CBio Limited instructs Spruson&Ferguson in respect of the payment of annual fees of
its patents and patent applications. For this purpose Spruson&Ferguson generally
engages Computer Patents Annuities Limited (CPA), an organization specializing in
this service. However, annual fees for CBio Limited’s Australian, New Zealand and
Singaporean patents/patent applications are paid directly by Spruson&Ferguson.
Spruson&Ferguson have determined from their own records and those of CPA that at
the time of this report there are no overdue fees (i.e. annuities) in respect of the
patents and patent applications set out in the attached Patent Schedule.
2.5 International conventions
Australia is a signatory to a number of international conventions that relate to
intellectual property. Many of these are administered by the World Intellectual
AH01(2366860_1) Page 2 SPRUSON & FERGUSON
----- End of picture text -----

Prospectus 29

4. Patent Attorney’s Report continued

CBio Limited Our Ref: 920060M Property Organisation (WIPO), which is an agency of the United Nations. Some features of the most important conventions are discussed below. 2.5.1 Paris Convention The ‘Paris Convention for the Protection of Industrial Property’ is signed by approximately 170 member states, including Australia. When seeking patent protection in foreign countries, it is necessary to lodge a separate application in each country or region where protection is desired and this may be done under the provisions of the Paris Convention within 12 months of the date of lodging a corresponding patent application in Australia. 2.5.2 Patent Cooperation Treaty (PCT) Australia is also a signatory to the PCT. The PCT allows for the lodgement of an ‘international patent application’. This provides for a single application to designate any number of member states in which the patent is to be pursued, and provides priority in those states. The PCT is signed by 142 member states (as at 1 October 2009), including most industrialised countries. It is also possible to designate the European Patent Convention (see below) via the PCT. The effect of filing an international application is to place an application on foot in each of the designated countries. Usually, the international application is filed within 12 months of lodging a provisional application and claims priority from that provisional application. The use of the PCT permits the effective lodgment and associated fees for each of the designated countries to be delayed by up to a further 18 or 19 months from the 12 month deadline under the Paris Convention. An application is said to be in the "international phase" from after filing the PCT application and until the filing of national applications, the latter being known as entering the "national phase". 2.5.3 International Search Report (ISR) Use of the PCT procedure also means that the results of an early prior art search (the ISR), indicating the searcher's opinion on the novelty and inventiveness of the invention, are available before the deadline for paying the national phase fees in the designated countries. 2.5.4 Written Opinion(s)/International Preliminary Report on Patentability (IPRP) Use of the PCT procedure can also involve certain recognised national patent offices (including the Australian Patent Office) providing comments on the relevance of the material listed in the ISR, in what is known as a Written Opinion. Although it is not compulsory, the PCT applicant can reply to the Written Opinion(s) with rebutting arguments and/or amendments. At the end of this process an IPRP issues. If all claims are said to meet the three examined patentability requirements (novelty, inventive step, industrial applicability), then the IPRP is said to be "clear". Although not binding, a clear IPRP can be helpful in obtaining national patent protection in many jurisdictions. It is also important to note that a non-clear IPRP is not prejudicial or limiting to any corresponding subsequent national patent application/s filed. 2.5.5 European Patent Convention Under the ‘European Patent Convention’, it is possible to lodge a single patent application to seek protection in any, or all, of the following European countries (as at 1 July 2009): Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,

Our Ref: 920060M

==> picture [327 x 8] intentionally omitted <==

----- Start of picture text -----

AH01(2366860_1) Page 3 SPRUSON & FERGUSON
----- End of picture text -----

30 CBio Limited

CBio Limited

Our Ref: 920060M

Estonia, Finland, Former Yugoslav Republic of Macedonia, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Liechtenstein, Lithuania, Luxembourg, Latvia, Monaco, Malta, The Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom. Several ‘extension states’ exist (Albania, Bosnia and Herzegovina, and Serbia) which also recognize European patents upon request. 2.5.6 National patents There is no such thing as a ‘world patent’. In order to obtain protection overseas, a national patent application must be lodged in each relevant jurisdiction. The result of examination in one country is not binding on any other country. Similarly, the grant of a patent in one country does not guarantee grant in others. Similarly, challenges to patent validity must be made in each country of interest. 2.6 Overview of the Patenting Process

==> picture [328 x 374] intentionally omitted <==

----- Start of picture text -----

The patenting process typically involves three steps, being: (1) filing of a provisional
application; (2) filing of a complete application (which in the case of a PCT
application is divided into: (a) international phase; and (b) national phase during
which the application is subject to examination before the relevant patent office); and
(3) grant of a patent.
The usual first step in obtaining patent protection for an invention typically involves
filing a “provisional” patent application. The purpose of the provisional application is
to describe the invention and to provide 12 months within which to carry out further
experiments/trials to further characterize the invention. The date of lodging the
provisional application establishes a “priority date”.
At the end of the 12 month period, the provisional application lapses and a
“complete” patent application must be filed, representing the second step in obtaining
patent protection.
If patent protection is sought in multiple countries, the complete application may be
filed as a single “international” application pursuant to the Patent Cooperation Treaty
(PCT) described above. This application represents a bundle of applications allowing
patent protection to be pursued in countries that are signatories to the PCT.
After the “international phase” of this application, the “national” or “regional” phase is
entered in individual signatory countries or regions as desired. Once the
international (PCT) application enters the national phase it undergoes examination
before the relevant national patent office to determine whether the application
proceeds to grant or is refused.
In some circumstances, instead of filing a single complete PCT application, it may be
preferable to file multiple complete applications in individual countries under the Paris
Convention described above.
Set out below is a schematic diagram of the process generally involved in obtaining
patent protection in the context of the three steps referred to above, being: (1) filing
of a provisional application; (2) filing of: (a) a complete “international” application
resulting in entry into international phase; and (b) national or regional phase
application/s, involving prosecution of patent application/s in individual signatory
countries or regions; and (3) grant and term of the resulting patent.
AH01(2366860_1) Page 4 SPRUSON & FERGUSON
----- End of picture text -----

Prospectus 31

4. Patent Attorney’s Report continued

==> picture [318 x 91] intentionally omitted <==

----- Start of picture text -----

CBio Limited Our Ref: 920060M
Overview of a typical patenting process
----- End of picture text -----

==> picture [58 x 6] intentionally omitted <==

----- Start of picture text -----

Our Ref: 920060M
----- End of picture text -----

==> picture [239 x 157] intentionally omitted <==

----- Start of picture text -----

Pending Granted
Application Patent
(1) (2a) (2b) (3)
Provisional International National Grant
Application Phase Phase and
Examination
12 18-19 2-5 To term
months months years
0 20
years
----- End of picture text -----*

• subject to payment of renewal fees and potential extension of term in limited circumstances

3. PATENT FAMILIES A list of the active patent families within the CBio Limited Patent Portfolio is contained in Table 1 of the accompanying Patent Schedule. CBio Limited is recorded as the applicant for patent families 4 to 11 listed in Table 1. CBio Limited has instructed Spruson&Ferguson that an appropriate chain of title exists between the inventor(s) of patent families listed in Table 1 and CBio Limited. CBio Limited has also instructed Spruson&Ferguson that CBio Limited is the exclusive licensee of the patents listed in patent families 1 to 3. Spruson&Ferguson have not independently reviewed or confirmed those matters.

The ‘Expiry Date’ given for the standard patents in the Patent Schedule is the approximate expiry date assuming all renewal fees are timely paid. Under certain circumstances it may be possible to extend the patent term in some jurisdictions (e.g. for a further 3-5 years) if the patent contains claims to pharmaceutical compositions. A brief description of the invention disclosed in each of the patent families set out in the Patent Schedule is provided below.

==> picture [327 x 8] intentionally omitted <==

----- Start of picture text -----

AH01(2366860_1) Page 5 SPRUSON & FERGUSON
----- End of picture text -----

32 CBio Limited

==> picture [455 x 598] intentionally omitted <==

----- Start of picture text -----

CBio Limited Our Ref: 920060M
3.1 Patent Family 1: Chaperonin 10
The invention disclosed in this family of patents relates to a process for the detection
of Chaperonin 10 (Cpn10) in serum or other biological fluids using a Cpn10-specific
antibody. The invention also provides a method for promoting cell growth or
immunosuppression by administering Cpn10. Patents in this family have been
granted in the United States, Europe, Japan, Canada, Australia and New Zealand.
3.2 Patent Family 2: Antagonists to Chaperonin 10
The invention disclosed in this family of patents relates to antagonists to Cpn10 such
as anti-Cpn10 antibodies. The invention provides methods for the suppression of
cellular growth or enhancing immunological activity by administration of Cpn10
antagonists/anti-Cpn10 antibodies. In particular, Cpn10 antagonists/anti-Cpn10
antibodies are provided as a means of suppressing the growth of cancer cells. An
assay for measuring the amount of anti-Cpn10 antibody in a given sample is also
disclosed. Patents in this family have been granted in the United States, Japan,
Canada, Australia and New Zealand.
3.3 Patent Family 3: Chaperonin 10 and beta-interferon therapy of multiple
sclerosis
The invention disclosed in this family of patents/patent applications provides a
method for treating multiple sclerosis (MS) by administration of Cpn10 in combination
with the cytokine interferon beta (IFN-ß). Cpn10 and IFN-ß are proposed to act co-
operatively to provide an improved treatment of MS in humans. The invention also
provides pharmaceutical compositions and kits for treating MS comprising Cpn10
and IFN-ß. Patents in this family have been granted in Europe, South Korea and
Australia.
3.4 Patent Family 4: Chaperonin 10 immunosuppression
The invention disclosed in this family of patents/patent applications relates to
methods of using Chaperonin 10 (Cpn10) in transplantation and in particular its use
for the treatment/prevention of graft versus host disease. Also disclosed is a modified
form of Cpn10 (known as Alanine-Cpn10). Patents in this family have been granted
in Australia, New Zealand, India, China and Singapore.
The United States Patent and Trade Marks Office (USPTO) has allowed the US
application and published an Issue Notification providing a projected patent number
(US Patent No. 7,618,935) and a projected issue date (17 November 2009).
3.5 Patent Family 5: Chaperonin 10 modulation of toll-like receptor-inducible
cytokine and chemokine secretion
The invention disclosed in this family of patent applications relates to methods of
using Cpn10 for regulating Toll-like receptor (TLR) signaling and TLR-induced
immunomodulator secretion. Cpn10 is identified to suppress the release of pro-
inflammatory cytokines and chemokines induced by TLR signaling and is also
proposed to positively regulate TLR-induced anti-inflammatory cytokine and
chemokine secretion. These immunoregulatory activities of Cpn10 are useful in the
treatment of diseases, disorders and conditions resulting from excessive pro-
inflammatory cytokine and chemokine secretion. This invention also provides
methods of screening candidate compounds for Cpn10 agonists and antagonists
AH01(2366860_1) Page 6 SPRUSON & FERGUSON
----- End of picture text -----

Prospectus 33

4. Patent Attorney’s Report continued

==> picture [454 x 598] intentionally omitted <==

----- Start of picture text -----

CBio Limited Our Ref: 920060M
according to their ability to regulate TLR signaling and/or TLR-induced
immunomodulator secretion.
3.6 Patent Family 6: Chaperonin 10-induced immunomodulation
The invention disclosed in this family of patent applications relates to the use of
Cpn10 in the modulation of Toll-like receptor (TLR) signaling, and in particular TLR2,
TLR3, TLR4, TLR7 and TLR9 signaling. Cpn10 is identified to associate with TLRs in
an activation cluster on the outer membrane of various immune cells and/or on the
surface of intracellular vesicles. The invention provides methods for the treatment of
diseases (e.g. viral and bacterial infections, inflammatory diseases and autoimmune
diseases) by administering Cpn10 (or Cpn10 agonists/antagonists) to modulate TLR
signaling.
3.7 Patent Family 7: Modified Chaperonin 10
The invention disclosed in this family of patent applications relates to modified forms
of Cpn10 with mutation/s in various region/s of the protein (e.g. the N-terminus, C-
terminus, mobile loop and/or -hairpin region) affecting immunomodulatory capacity.
The invention provides compositions comprising modified forms of Cpn10. Methods
for treating various diseases (e.g. acute or chronic inflammatory diseases) by
administering modified forms of Cpn10 are also disclosed. Also provided are
methods of screening for immunomodulatory compounds that interact with the
modified forms of Cpn10.
3.8 Patent Family 8: Treatment of Hypersensitivity
The invention disclosed in this family of patent applications relates to methods for
inhibiting diseases and conditions associated with hypersensitivity reactions (e.g.
asthma, dermatitis, eczema, ARDS (acute respiratory distress syndrome) and COPD
(chronic obstructive pulmonary disease) by administering Cpn10 or modified forms of
Cpn10. Cpn10/modified forms of Cpn10 are proposed to suppress hypersensitivity
through modulation of immune pathways such as those induced by Toll-like receptor
(TLR) signaling.
3.9 Patent Family 9: Regulation of immune responses by modulation of the
function of antigen presenting cells
The invention disclosed in this family of patent applications relates to the regulation
of immune responses by administering Cpn10 to modulate the function of antigen-
presenting cells (APCs). Cpn10 is shown to modulate APC function by regulating the
expression of major histocompatibility complex (MHC) proteins and associated cell
surface molecules (e.g. costimulatory molecules). This in turn is proposed to affect
various APC functions including proliferation, activation, and migration to lymphoid
tissues. The invention provides methods and compositions for the treatment of
diseases responsive to the modulation of APC function. Also disclosed are methods
of screening for agents that modulate APC function by interacting with Cpn10.
3.10 Patent Family 10: Modified Chaperonin 10 and PRR signalling
The invention disclosed in this family of patent applications relates to modified forms
of Cpn10 with mutation/s in various region/s of the protein (e.g. the mobile loop
and/or the roof loop). The modified forms of Cpn10 possess a greater net positive
charge compared to naturally occurring forms of Cpn10. This increased positive
charge is proposed to enhance the binding affinity between Cpn10 and ligands
AH01(2366860_1) Page 7 SPRUSON & FERGUSON
----- End of picture text -----

34 CBio Limited

==> picture [455 x 598] intentionally omitted <==

----- Start of picture text -----

CBio Limited Our Ref: 920060M
responsible for triggering pattern recognition receptor (PRR) signaling. Binding of
modified forms of Cpn10 to these ligands affects interactions between the ligands
and PRRs. This serves to alter PRR signaling and modulate the immune response.
The invention provides methods and compositions for the treatment of inflammatory
diseases responsive to the modulation of PRR signaling. Also disclosed are methods
of screening for immunomodulatory agents capable of interacting with the modified
forms of Cpn10.
3.11 Patent Family 11: Chaperonin 10 variants
This family currently consists of a single Australian provisional patent application and
the specification has not been published.
4. LIMITATIONS AND DISCLAIMERS
4.1 Search limitations
4.1.1 General
The prior art (or “novelty”) searches conducted by the various patent offices to
determine whether a patent should be granted are limited in terms of the time periods
and the geographical areas covered. Thus, the databases used in searching may
not include older published documents and may not cover certain jurisdictions.
Further, all searches are subject to the accuracy and scope of the material searched
as well as the classification criteria adopted. Accordingly, whilst the searches
conducted by various patent offices provide a reasonable indication of patentability,
these and other factors make it impossible to guarantee that every relevant prior art
record has been identified and considered. Hence, any conclusions regarding the
validity of claims in a patent based on patent office searches should be regarded as
indicative rather than conclusive. It should also be noted that Spruson&Ferguson
has not conducted any searches of the prior art for the purposes of this report.
4.1.2 Unpublished Documents
Searches cannot locate documents which have not been published at the time of
conducting the search. In most countries, publication of a patent application does not
occur until 18 months from the earliest priority date. Delays between official
publication and the implementation of information onto the relevant databases can
also occur.
4.1.3 Non-patent prior art documents and disclosure
No search can ever be considered entirely conclusive or exhaustive because some
forms of prior art such as prior public use, oral disclosures, prior commercial
exploitation and prior publication in non-patent literature, cannot be searched
systematically.
4.1.4 Commercialisation/Secret Use
The commercialization or secret use of an invention that is the subject of a patent
application can affect the patentability of the invention and the validity of any patent
granted on the invention. Such commercialization or secret use is unlikely to be
identified by documentary searches of publicly accessible databases.
AH01(2366860_1) Page 8 SPRUSON & FERGUSON
----- End of picture text -----

Prospectus 35

4. Patent Attorney’s Report continued

==> picture [454 x 598] intentionally omitted <==

----- Start of picture text -----

CBio Limited Our Ref: 920060M
4.1.5 Reliance on cited prior art classification
The views expressed in relation to relevance of the prior art cited in various
searching and examination reports are based on the relevant classification attributed
in such reports.
4.1.6 Searching and other matters relevant to validity
Searching may not disclose other matters relevant to validity including, for example,
matters relevant to obviousness (i.e. inventive step).
4.2 Examination Reports in one Country Not Binding in Other Countries
Patent applications lodged in each county are generally subject to an independent
search and examination by the local patent office, the results of which are not binding
in other jurisdictions. Equally, international PCT search and examination reports are
not binding on national patent applications during examination in the national phase.
Such search and/or examination reports should therefore be regarded as relevant to
patentability in the particular jurisdiction and not determinative of patentability
elsewhere. Furthermore, grant of a patent in one country does not guarantee that
patent/s for the same or related inventions will be granted in other countries.
4.3 Grant of Patent Provides no Guarantee of Validity
Grant of a patent by a national patent office provides an indication rather than a
guarantee of its validity.In most jurisdictions, a patent application is subject to
substantive examination prior to grant. Although this process confers an initial
presumption of validity, a patent may be challenged at any time after grant by way of
revocation proceedings undertaken in a court of competent jurisdiction. In certain
countries a granted patent may be subjected to re-examination by the patent office,
particularly if relevant prior art is identified that was not considered during initial
examination of the application.
Spruson&Ferguson has not been notified of any revocation action in respect of any of
the patents in the attached Patent Schedule, nor is it aware of any re-examination
procedure initiated in respect of any of the patents or patent applications in the
Schedule at the time of this report.
4.4 Grant of Patent Provides no Guarantee of Non-infringement
Grant of a patent provides no guarantee that the patentee is entitled to commercially
exploit the patented invention. For example, the working of an invention, even if
validly patented, may nevertheless infringe an earlier patent or other intellectual
property rights.
4.5 Scope of Claims May Vary During Examination
It may be possible, and often necessary, during the examination of a patent
application to define the invention more specifically by amendment of the claims to
distinguish the invention over relevant prior art. Accordingly, there may be variations
in the claims between countries, reflecting in part the different national examination
procedures and threshold patentability requirements. Such amendments may affect
the scope and hence the commercial significance of the resultant patent protection.
4.6 Opposition Proceedings
Some jurisdictions allow for accepted patent applications to be opposed by any third
party. For example, Australia provides for pre-grant opposition whereas Europe
AH01(2366860_1) Page 9 SPRUSON & FERGUSON
----- End of picture text -----

36 CBio Limited

CBio Limited Our Ref: 920060M provides for post-grant opposition. Successful opposition proceedings may result in some or all of the claims of a patent application or patent being held invalid or restricted in breadth. Spruson&Ferguson has not been notified of any oppositions in respect of any of the patents or patent applications of the attached Patent Schedule. 4.7 Enforcement of Patent Rights Upon grant of a patent, a patentee may initiate proceedings against an alleged infringer of the patent. In many jurisdictions, damages for infringement may be awarded for infringements occurring from the date of publication of the patent specification, provided certain criteria are met. We have not checked whether any patent family members in the attached Schedule are the subject of litigation. 4.8 Infringement of the rights of others As noted above, searches conducted during patent prosecution do not provide any guarantee that the subject inventions may be commercially exploited without risk of infringement of third parties. More particularly, searches focused on novelty and inventive step have different strategies from infringement searches (which seek to establish whether a specific activity is likely to infringe other parties’ patent rights). Spruson&Ferguson has not conducted any infringement searches for the purposes of this report. 4.9 Entitlement to Priority In order for material disclosed in a patent application to be entitled to the priority date of a corresponding provisional application, there must have been (in Australia) a “real and reasonably clear disclosure” of such material in the provisional application. Similar provisions apply in other jurisdictions. Subject matter not so disclosed is not entitled to the claim to priority, which may affect patentability of the subject invention or the validity of any patent that may be granted. 4.10 Duty of disclosure In some jurisdictions there is a duty to disclose certain information to the relevant Patent Office. This information can include search results issued in respect of corresponding foreign applications, and/or any prior art information known to the applicant or its agents, which can be considered material to the patentability of the relevant invention. Failure to disclose such information in accordance with jurisdictional requirements can adversely affect the validity and/or enforceability of the relevant patent. 4.11 Reliance on information provided This report has been prepared from information contained in the files relevant to CBio Limited’s patent portfolio in which Spruson&Ferguson have been instructed to act. No independent searches or enquiries have been carried out by Spruson&Ferguson in preparing this report.

Our Ref: 920060M

==> picture [326 x 8] intentionally omitted <==

----- Start of picture text -----

AH01(2366860_1) Page 10 SPRUSON & FERGUSON
----- End of picture text -----

Prospectus 37

4. Patent Attorney’s Report continued

==> picture [328 x 170] intentionally omitted <==

----- Start of picture text -----

CBio Limited Our Ref: 920060M
5. Spruson&Ferguson’s interest
Spruson&Ferguson, particularly Dr Andrew Blattman (author of this report), have
been involved, inter alia , in the preparation, filing and prosecution of certain
patents/patent applications set out in the Patent Schedule and discussed herein.
Subject to the following paragraph neither Dr Andrew Blattman nor any other
Principal of Spruson&Ferguson has any financial interest in CBio Limited over and
above the fees charged for the professional work done. The fees charged for
preparation of this report are based upon Spruson&Ferguson’s standard rates of
charging.
A Principal of Spruson&Ferguson has a financial interest in CBio Limited in the form
of a minority shareholding. The Principal holding that interest has had no
involvement in the preparation of this report, nor in the preparation, filing and/or
prosecution of any of the patents/patent applications discussed herein.
----- End of picture text -----

6. Spruson&Ferguson’s expertise Spruson&Ferguson is one of Australia’s leading patent and trade mark attorney firms, providing a comprehensive range of expertise to our clients in the field of Intellectual Property (IP).

7. Consent Consent for the inclusion of this report in CBio Limited’s Prospectus, in the form in which it now appears, has been granted by Spruson&Ferguson and has not been revoked, as at the date of this report.

Yours sincerely SPRUSON & FERGUSON Andrew Blattman BScAgr(Hons) PhD GradDipIP FIPTA Principal andrew.blattman@sprusons.com.au

==> picture [327 x 8] intentionally omitted <==

----- Start of picture text -----

AH01(2366860_1) Page 11 SPRUSON & FERGUSON
----- End of picture text -----

38 CBio Limited

CBio Limited Table 1: CBio Patent Portfolio as at 30 October 2009

Our Ref: 920060M

Country	Official No.	Case Status	Filing Date	Expiration Date
1. Chaperonin 10†
Australia	684577	Registered	30 November 1994	30 November 2014
Canada	2176948	Registered	30 November 1994	30 November 2014
Japan	3545408	Registered	30 November 1994	30 November 2014
Japan	3986481	Registered	30 November 1994	30 November 2014
New Zealand	276670	Registered	30 November 1994	30 November 2014
United States of America	6117421	Registered	30 November 1994	30 November 2014
Belgium	0731811	Registered	30 November 1994	30 November 2014
Germany	69434137.1	Registered	30 November 1994	30 November 2014
Denmark	0731811	Registered	30 November 1994	30 November 2014
Spain	0731811	Registered	30 November 1994	30 November 2014
France	0731811	Registered	30 November 1994	30 November 2014
United Kingdom	0731811	Registered	30 November 1994	30 November 2014
Greece	0731811	Registered	30 November 1994	30 November 2014
Italy	0731811	Registered	30 November 1994	30 November 2014
Portugal	0731811	Registered	30 November 1994	30 November2014
Sweden	0731811	Registered	30 November 1994	30 November 2014
2. Antagonists to Chaperonin 10†
Australia	684578	Registered	30 November 1994	30 November 2014
Canada	2177179	Registered	30 November 1994	30 November 2014
Japan	3987104	Registered	30November 1994	30 November 2014
New Zealand	276672	Registered	30 November 1994	30 November 2014
United States of America	6113899	Registered	30 November 1994	30 November 2014
United States of America	6417334	Registered	30 November 1994	30 November 2014
United States of America	7358329	Registered	30 November 1994	19 January 2017
3. Chaperonin 10 and beta-interferon therapy of multiple sclerosis†
Australia	771867	Registered	20 January 2000	20 January 2020
Canada	2361081	Application pending	20 January 2000	-
Japan	2000-594486	Application pending	20 January 2000	-
Republic of Korea (South)	0694011	Registered	20 January 2000	20 January 2020
United States of America	12/362,456	Application pending	20January 2000	-
Belgium	1150703	Registered	20 January 2000	20 January 2020
Switzerland	1150703	Registered	20 January 2000	20 January 2020
Germany	1150703	Registered	20 January 2000	20 January 2020
Denmark	1150703	Registered	20 January2000	20 January2020

Prospectus 39

4. Patent Attorney’s Report continued

CBio Limited Our Ref: 920060M AH01(2366860_1) Page13 SPRUSON & FERGUSON Country Official No. Case Status Filing Date Expiration Date Spain 1150703 Registered 20 January 2000 20 January2020 France 1150703 Registered 20 January 2000 20 January 2020 United Kingdom 1150703 Registered 20 January 2000 20 January 2020 Greece 1150703 Registered 20 January 2000 20 January 2020 Republic of Ireland 1150703 Registered 20 January 2000 20 January2020 Italy 1150703 Registered 20 January 2000 20 January 2020 Portugal 1150703 Registered 20 January 2000 20 January 2020 Sweden 1150703 Registered 20 January 2000 20 January 2020 4. Chaperonin 10 immunosuppression Australia 2003277992 Registered 6 November 2003 6 November 2023 Canada 2505141 Application pending 6 November 2003 - China ZL200380108296.9 Registered 6 November 2003 6 November 2023 Europe 03769073.2 Application pending 6 November 2003 - India 230239 Registered 6 November 2003 6 November 2023 Japan 2004-548934 Application pending 6 November 2003 - Republic of Korea (South) 2005-7008096 Application pending 6 November 2003 - New Zealand 540433 Registered 6 November 2003 6 November 2023 Singapore 111796 Registered 6 November 2003 6 November 2023 United States of America 7618935 (projected patent number) Allowed-Issue Notification received†† 6 November 2003 22 October 2024 (projected patent term) United States of America to be issued by USPTO Application pending 6 November 2003 - 5. Chaperonin 10 modulation of toll-like receptor-inducible cytokine and chemokine secretion Australia 2005204979 Application pending 14 January 2005 - Brazil P10506916.5 Application pending 14 January 2005 - Canada 2553325 Application pending 14 January2005 - China 200580005917.X Application pending 14 January 2005 - Europe 05700073.9 Application pending 14 January 2005 - Hong Kong 07100822.7 Application Pending 14 January 2005 - Indonesia W00200602284 Application pending 14 January 2005 - India 04500/DELNP/06 Application pending 14 January 2005 - Japan 2006-548041 Application pending 14 January 2005 - Republic of Korea (South) 10-2006-7016409 Application pending 14 January 2005 -

40 CBio Limited

CBio Limited Our Ref: 920060M Country Official No. Case Status Filing Date Expiration Date Mexico PA/a/06/008082 Application pending 14 January 2005 - New Zealand 548985 Application pending 14 January 2005 - The Philippines 1-2006-501365 Application pending 14 January 2005 - Russian Federation 2006129629 Application pending 14 January 2005 - Singapore 200604789-8 Application pending 14 January 2005 - United States of America 12/553765 Application pending 14 January 2005 - 6. Chaperonin 10-induced immunomodulation Australia 2006269824 Application pending 11 July 2006 - Brazil P10613515.3 Application pending 11 July 2006 - Canada 2614480 Application pending 11 July 2006 - China 200680031144.7 Application pending 11 July 2006 - Europe 06752688.9 Application pending 11 July 2006 - Hong Kong 08105709.3 Application pending 11 July 2006 - Indonesia W-00200800493 Application pending 11 July 2006 - Japan 2008-520676 Application pending 11 July 2006 - Republic of Korea (South) 10-2008-7003288 Application pending 11 July 2006 - Mexico MX/a/08/000596 Application pending 11 July 2006 - New Zealand 565731 Application pending 11 July 2006 - The Philippines 1-2008-500318 Application pending 11 July 2006 - Singapore 200800214.9 Application pending 11 July 2006 - United States of America 11/995,524 Application pending 11 July 2006 - 7. Modified Chaperonin 10 Australia 2006287120 Application pending 31 August2006 - Brazil P10615284.8 Application pending 31 August 2006 - Canada 2620729 Application pending 31 August 2006 - China 200680040617.X Application pending 31 August 2006 - Europe 06774907.7 Application pending 31 August 2006 -	CBio Limited Our Ref: 920060M Country Official No. Case Status Filing Date Expiration Date Mexico PA/a/06/008082 Application pending 14 January 2005 - New Zealand 548985 Application pending 14 January 2005 - The Philippines 1-2006-501365 Application pending 14 January 2005 - Russian Federation 2006129629 Application pending 14 January 2005 - Singapore 200604789-8 Application pending 14 January 2005 - United States of America 12/553765 Application pending 14 January 2005 - 6. Chaperonin 10-induced immunomodulation Australia 2006269824 Application pending 11 July 2006 - Brazil P10613515.3 Application pending 11 July 2006 - Canada 2614480 Application pending 11 July 2006 - China 200680031144.7 Application pending 11 July 2006 - Europe 06752688.9 Application pending 11 July 2006 - Hong Kong 08105709.3 Application pending 11 July 2006 - Indonesia W-00200800493 Application pending 11 July 2006 - Japan 2008-520676 Application pending 11 July 2006 - Republic of Korea (South) 10-2008-7003288 Application pending 11 July 2006 - Mexico MX/a/08/000596 Application pending 11 July 2006 - New Zealand 565731 Application pending 11 July 2006 - The Philippines 1-2008-500318 Application pending 11 July 2006 - Singapore 200800214.9 Application pending 11 July 2006 - United States of America 11/995,524 Application pending 11 July 2006 - 7. Modified Chaperonin 10 Australia 2006287120 Application pending 31 August2006 - Brazil P10615284.8 Application pending 31 August 2006 - Canada 2620729 Application pending 31 August 2006 - China 200680040617.X Application pending 31 August 2006 - Europe 06774907.7 Application pending 31 August 2006 -	CBio Limited Our Ref: 920060M Country Official No. Case Status Filing Date Expiration Date Mexico PA/a/06/008082 Application pending 14 January 2005 - New Zealand 548985 Application pending 14 January 2005 - The Philippines 1-2006-501365 Application pending 14 January 2005 - Russian Federation 2006129629 Application pending 14 January 2005 - Singapore 200604789-8 Application pending 14 January 2005 - United States of America 12/553765 Application pending 14 January 2005 - 6. Chaperonin 10-induced immunomodulation Australia 2006269824 Application pending 11 July 2006 - Brazil P10613515.3 Application pending 11 July 2006 - Canada 2614480 Application pending 11 July 2006 - China 200680031144.7 Application pending 11 July 2006 - Europe 06752688.9 Application pending 11 July 2006 - Hong Kong 08105709.3 Application pending 11 July 2006 - Indonesia W-00200800493 Application pending 11 July 2006 - Japan 2008-520676 Application pending 11 July 2006 - Republic of Korea (South) 10-2008-7003288 Application pending 11 July 2006 - Mexico MX/a/08/000596 Application pending 11 July 2006 - New Zealand 565731 Application pending 11 July 2006 - The Philippines 1-2008-500318 Application pending 11 July 2006 - Singapore 200800214.9 Application pending 11 July 2006 - United States of America 11/995,524 Application pending 11 July 2006 - 7. Modified Chaperonin 10 Australia 2006287120 Application pending 31 August2006 - Brazil P10615284.8 Application pending 31 August 2006 - Canada 2620729 Application pending 31 August 2006 - China 200680040617.X Application pending 31 August 2006 - Europe 06774907.7 Application pending 31 August 2006 -	CBio Limited Our Ref: 920060M Country Official No. Case Status Filing Date Expiration Date Mexico PA/a/06/008082 Application pending 14 January 2005 - New Zealand 548985 Application pending 14 January 2005 - The Philippines 1-2006-501365 Application pending 14 January 2005 - Russian Federation 2006129629 Application pending 14 January 2005 - Singapore 200604789-8 Application pending 14 January 2005 - United States of America 12/553765 Application pending 14 January 2005 - 6. Chaperonin 10-induced immunomodulation Australia 2006269824 Application pending 11 July 2006 - Brazil P10613515.3 Application pending 11 July 2006 - Canada 2614480 Application pending 11 July 2006 - China 200680031144.7 Application pending 11 July 2006 - Europe 06752688.9 Application pending 11 July 2006 - Hong Kong 08105709.3 Application pending 11 July 2006 - Indonesia W-00200800493 Application pending 11 July 2006 - Japan 2008-520676 Application pending 11 July 2006 - Republic of Korea (South) 10-2008-7003288 Application pending 11 July 2006 - Mexico MX/a/08/000596 Application pending 11 July 2006 - New Zealand 565731 Application pending 11 July 2006 - The Philippines 1-2008-500318 Application pending 11 July 2006 - Singapore 200800214.9 Application pending 11 July 2006 - United States of America 11/995,524 Application pending 11 July 2006 - 7. Modified Chaperonin 10 Australia 2006287120 Application pending 31 August2006 - Brazil P10615284.8 Application pending 31 August 2006 - Canada 2620729 Application pending 31 August 2006 - China 200680040617.X Application pending 31 August 2006 - Europe 06774907.7 Application pending 31 August 2006 -	CBio Limited Our Ref: 920060M Country Official No. Case Status Filing Date Expiration Date Mexico PA/a/06/008082 Application pending 14 January 2005 - New Zealand 548985 Application pending 14 January 2005 - The Philippines 1-2006-501365 Application pending 14 January 2005 - Russian Federation 2006129629 Application pending 14 January 2005 - Singapore 200604789-8 Application pending 14 January 2005 - United States of America 12/553765 Application pending 14 January 2005 - 6. Chaperonin 10-induced immunomodulation Australia 2006269824 Application pending 11 July 2006 - Brazil P10613515.3 Application pending 11 July 2006 - Canada 2614480 Application pending 11 July 2006 - China 200680031144.7 Application pending 11 July 2006 - Europe 06752688.9 Application pending 11 July 2006 - Hong Kong 08105709.3 Application pending 11 July 2006 - Indonesia W-00200800493 Application pending 11 July 2006 - Japan 2008-520676 Application pending 11 July 2006 - Republic of Korea (South) 10-2008-7003288 Application pending 11 July 2006 - Mexico MX/a/08/000596 Application pending 11 July 2006 - New Zealand 565731 Application pending 11 July 2006 - The Philippines 1-2008-500318 Application pending 11 July 2006 - Singapore 200800214.9 Application pending 11 July 2006 - United States of America 11/995,524 Application pending 11 July 2006 - 7. Modified Chaperonin 10 Australia 2006287120 Application pending 31 August2006 - Brazil P10615284.8 Application pending 31 August 2006 - Canada 2620729 Application pending 31 August 2006 - China 200680040617.X Application pending 31 August 2006 - Europe 06774907.7 Application pending 31 August 2006 -
Country	Official No.	Case Status	Filing Date	Expiration Date
Mexico	PA/a/06/008082	Application pending	14 January 2005	-
New Zealand	548985	Application pending	14 January 2005	-
The Philippines	1-2006-501365	Application pending	14 January 2005	-
Russian Federation	2006129629	Application pending	14 January 2005	-
Singapore	200604789-8	Application pending	14 January 2005	-
United States of America	12/553765	Application pending	14 January 2005	-
6. Chaperonin 10-induced immunomodulation
Australia	2006269824	Application pending	11 July 2006	-
Brazil	P10613515.3	Application pending	11 July 2006	-
Canada	2614480	Application pending	11 July 2006	-
China	200680031144.7	Application pending	11 July 2006	-
Europe	06752688.9	Application pending	11 July 2006	-
Hong Kong	08105709.3	Application pending	11 July 2006	-
Indonesia	W-00200800493	Application pending	11 July 2006	-
Japan	2008-520676	Application pending	11 July 2006	-
Republic of Korea (South)	10-2008-7003288	Application pending	11 July 2006	-
Mexico	MX/a/08/000596	Application pending	11 July 2006	-
New Zealand	565731	Application pending	11 July 2006	-
The Philippines	1-2008-500318	Application pending	11 July 2006	-
Singapore	200800214.9	Application pending	11 July 2006	-
United States of America	11/995,524	Application pending	11 July 2006	-
7. Modified Chaperonin 10
Australia	2006287120	Application pending	31 August2006	-
Brazil	P10615284.8	Application pending	31 August 2006	-
Canada	2620729	Application pending	31 August 2006	-
China	200680040617.X	Application pending	31 August 2006	-
Europe	06774907.7	Application pending	31 August 2006	-

AH01(2366860_1) Page 14 SPRUSON & FERGUSON

Prospectus 41

4. Patent Attorney’s Report continued

CBio Limited Our Ref: 920060M AH01(2366860_1) Page15 SPRUSON & FERGUSON Country Official No. Case Status Filing Date Expiration Date Hong Kong 08107344.0 Application pending 31 August 2006 - Indonesia W00200800914 Application pending 31 August 2006 - India 02435/DELNP/08 Application pending 31 August 2006 - Japan 2008-528295 Application pending 31 August 2006 - Republic of Korea (South) 10-2008-7007836 Application pending 31 August 2006 - Mexico MX/a/08/002775 Application pending 31 August 2006 - New Zealand 566817 Application pending 31 August 2006 - The Philippines 1-2008-500503 Application pending 31 August 2006 - Singapore 200801663-6 Application pending 31 August 2006 - United States of America 11/991,279 Application pending 31 August 2006 - 8. Treatment of hypersensitivity Australia 2006303826 Application pending 20 October 2006 - Brazil PI0617681.0 Application pending 20 October 2006 - Canada 2626692 Application pending 20 October 2006 - China 200680047437.4 Application pending 20 October 2006 - Europe 06804426.2 Application pending 20 October 2006 - Hong Kong 08108688.2 Application pending 20 October 2006 - Indonesia W00200801586 Application pending 20 October 2006 - Japan 2008-535851 Application pending 20 October 2006 - Republic of Korea (South) 10-2008-7012006 Application pending 20 October 2006 - Mexico MX/a/08/005174 Application pending 20 October 2006 - New Zealand 568217 Application pending - The Philippines 1-2008-500946 Application pending 20 October 2006 - Singapore 200803043-9 Application pending 20 October 2006 - United States of America 12/090821 Application pending 20 October 2006 -

42 CBio Limited

CBio Limited Our Ref: 920060M AH01(2366860_1) Page16 SPRUSON & FERGUSON Country Official No. Case Status Filing Date Expiration Date 9. Regulation of immune responses by modulation of the function of antigen presenting cells Australia 2007219733 Application pending 1 March 2007 - Brazil PI0708503.6 Application pending 1 March 2007 - Canada 2644058 Application pending 1 March 2007 - China 200780013496.4 Application pending 1 March 2007 - Europe 07701573.3 Application pending 1 March 2007 - Hong Kong 09100248.1 Application pending 1 March 2007 - Indonesia W00200802844 Application pending 1 March 2007 - Japan 2008-556616 Application pending 1 March 2007 - Republic of Korea (South) 10-2008-7024284 Application pending 1 March 2007 - Mexico MX/a/08/011167 Application pending 1 March 2007 - New Zealand 571696 Application pending 1 March 2007 - The Philippines 1-2008-501970 Application pending 1 March 2007 - Russia 2008139299 Application pending 1 March 2007 - Singapore 200806723-3 Application pending 1 March 2007 - United States of America 12/281291 Application abandoned (Petition for revival) 1 March 2007 - 10. Modified Chaperonin 10 and PRR signalling Patent Co-operation Treaty application PCT/AU2008/00520 Application pending 11 April 2008 - Provisional patent application 2009900613 Application pending 13 February 2009 - Patent Co-operation Treaty application PCT/AU2009/000444 Application pending 9 April 2009 - 11. Chaperonin 10 variants Provisional patent application Not available Application pending 9 October 2009 - † University of Queensland is the recorded patentee of patents in the family. CBio Limited has informed Spruson&Ferguson that CBio Limited is the exclusive licensee of the patentee ††Issue Notification published on 28 October 2009-projected patent number 7,618,935/projected issue date 17 November 2009/patent term adjustment 351 days -patent application only, no expiration date applies until after patent is granted

Prospectus 43

5. Financial Information

5.1 Overview

This section contains a summary of the Financial Information for CBio Limited. All Financial Information set out in this section should be read in conjunction with the other information contained in this section, the Independent Accountant’s Report included in section 6, the Risk Factors included in section 7 and other information contained in this Prospectus.

The Financial Information comprises:

• a. The Historical Income Statements for the financial years ended 30 June 2007, 2008 and 2009, extracted from the audited financial statements;

• b. The Historical Balance Sheets as at 30 June 2007, 2008 and 2009, extracted from the audited financial statements;

• c. The Historical Cash Flow Statements for the financial years ended 30 June 2007, 2008 and 2009, extracted from the audited financial statements;

• d. The Pre-IPO Pro-forma Balance Sheet as at 30 June 2009 which assumes completion of the pre-IPO transactions disclosed in section 5.5 of the Prospectus (“the Pre-IPO Pro-forma Transactions”) as at 30 June 2009;

• e. The Post-IPO Pro-forma Balance Sheet as at 30 June 2009 which assumes completion of the contemplated IPO transactions disclosed in section 5.5 of the Prospectus (“the IPO Proforma Transactions”) as at 30 June 2009; and

The Financial Information in a) to c) is referred to as “Historical Financial Information”. The Financial Information in d) to e) is referred to as “Pro-forma Financial Information”.

The Financial Information in this section should be read in conjunction with the Summary of Significant Accounting Policies as set out in this section. The significant accounting policies have been included to assist in a general understanding of the Historical Financial Information and the Pro-forma Financial Information presented in this section. In addition, applicable notes to the Financial Information have been included to assist the reader to better understand a number of areas of interest from a financial perspective.

The Annual Report of the Company for the year ending 30 June 2009 has previously been made available to existing Shareholders. Pursuant to section 712 of the Corporations Act, the Company incorporates the 2009 Annual Report which was lodged with ASIC on 2 November 2009 into this Prospectus. This report contains certain information about the financial position of the Company and other information required by law, and may be of interest to professional analysts or advisers, as well as other prospective investors. This report and previous years’ reports and financial information are available on the Company’s website www.cbio.com.au. If you require a paper copy, please telephone the Company on (07) 3841 4844.

• f. Applicable notes to the Financial Information.

44 CBio Limited

5.2 Historical Income Statements

==> picture [442 x 439] intentionally omitted <==

----- Start of picture text -----

Actual Actual Actual
year ended year ended year ended
30 June 2007 30 June 2008 30 June 2009
$ $ $
Fair value movement of derivative - - 144,331
Interest received 209,367 12,833 20,712
Other income 1,608,209 1,200,017 1,177,169
Borrowing costs expense (109) (135,709) (395,467)
Administration expenses (6,141,385) (10,466,335) (5,088,395)
Research and development (10,706,179) (9,574,774) (7,353,717)
Patent costs (529,502) (744,972) (702,084)
Loss on disposal of available for sale assets - (532,143) -
Marketing expenses (471,040) (774,154) (550,307)
Loss before income tax (16,030,639) (21,015,237) (12,747,758)
- - -
Income tax expense
Loss from continuing operations after income tax [1] (16,030,639) (21,015,237) (12,747,758)
Discontinued operations
Profit from discontinued operations after income tax 6,444,497 - -
Loss for the period (9,586,142) (21,015,237) (12,747,758)
Loss attributable to minority equity interest 160,306 - -
Loss attributable to members of the parent entity (9,425,836) (21,015,237) (12,747,758)
(Loss)/gain per share (cents per share)
Basic/Diluted – Continuing operations (61.74) (73.44) (32.06)
Basic/Diluted – attributable to members (36.30) (73.44) (32.06)
of the Company
----- End of picture text -----

==> picture [46 x 156] intentionally omitted <==

1. The 2007 results represent the consolidated performance of CBio Limited including the discontinued operations of BresaGen Limited. On 11 August 2006, CBio Limited sold a 19.95% stake in BresaGen Limited to Hospira Holdings (S.A.) Pty Ltd at 14 cents per share. Effective from this date, CBio Limited no longer held a controlling interest in BresaGen Limited. CBio Limited subsequently accepted an offer from Hospira Holdings (S.A.) Pty Ltd in October 2006 to purchase its remaining 17.1% stake in BresaGen Limited at 14 cents per share. The 2007 consolidated results include results for the discontinued operations of revenue of $67,711 and net profit after income tax of $6,444,497.

Prospectus 45

5. Financial Information continued

5.3 Historical and Pro-forma Balance Sheets

==> picture [443 x 531] intentionally omitted <==

----- Start of picture text -----

Pre-IPO Post-IPO
Actual Actual Actual pro-forma as pro-forma as
30 June 30 June 30 June at 30 June at 30 June
2007 2008 2009 2009 2009
$ $ $ $ $
CURRENT ASSETS
Cash and cash equivalents 155,708 36,367 40,335 12,033,500 23,646,574
Trade and other receivables 851,846 2,301,490 14,765 14,765 14,765
Financial assets 1,585,129 - - - -
Other current assets 56,346 55,970 51,024 51,024 51,024
Total current assets 2,649,029 2,393,827 106,124 12,099,289 23,712,363
NON-CURRENT ASSETS
Property, plant and equipment 911,239 662,691 454,826 454,826 454,826
Trade and other receivables 175,462 181,597 150,000 150,000 150,000
- - - - -
Intangible assets
Total non-current assets 1,086,701 844,288 604,826 604,826 604,826
Total assets 3,735,730 3,238,115 710,950 12,704,115 24,317,189
CURRENT LIABILITIES
Trade and other payables 2,651,814 3,946,121 5,977,398 5,977,398 5,977,398
Short-term provisions 148,828 119,209 151,982 151,982 151,982
Unearned income - - 2,086,158 2,086,158 2,086,158
Financial liabilities 200,000 272,887 820,441 2,353,151 2,353,151
Total current liabilities 3,000,642 4,338,217 9,035,979 10,568,689 10,568,689
NON-CURRENT LIABILITIES
Long-term provisions 19,809 39,079 74,646 74,646 74,646
Financial liabilities - - 2,405,136 1,535,434 1,535,434
Unearned Income - 2,086,158 - - -
Total non-current liabilities 19,809 2,125,237 2,479,782 1,610,080 1,610,080
Total liabilities 3,020,451 6,463,454 11,515,761 12,178,769 12,178,769
Net assets/(deficiency) 715,279 (3,225,339) (10,804,811) 525,346 12,138,420
----- End of picture text -----

46 CBio Limited

==> picture [443 x 167] intentionally omitted <==

----- Start of picture text -----

Pre-IPO Post-IPO
Actual Actual Actual pro-forma as pro-forma as
30 June 30 June 30 June at 30 June at 30 June
2007 2008 2009 2009 2009
$ $ $ $ $
EQUITY
Issued capital 36,838,670 45,306,148 47,947,588 58,021,450 70,468,685
Reserves 5,494,253 14,101,394 16,628,240 18,263,857 18,585,005
Accumulated losses (41,617,644) (62,632,881) (75,380,639) (75,759,961) (76,915,270)
Total equity/(deficiency) 715,279 (3,225,339) (10,804,811) 525,346 12,138,420
----- End of picture text -----

The Post-IPO Pro-forma Balance Sheet incorporates the Minimum Subscription proceeds from the Offer, net of Offer Costs incurred, as contemplated by this Prospectus.

Maximum Subscription

In the event that the Maximum Subscription from the Offer is received (17,000,000 additional Shares at $1.00 per Share), the Post-IPO Pro-forma Balance Sheet would reflect an increase in Cash and Issued Capital of $17,000,000 (net of Offer Costs incurred).

Over Subscriptions raised

In the event that the Over Subscriptions are received to a maximum of 5,000,000 additional Shares at $1.00 per Share, the Post-IPO Pro-forma Balance Sheet would reflect an increase in Cash and Issued Capital of $5,000,000 (net of Offer Costs incurred).

==> picture [193 x 197] intentionally omitted <==

“ I have been involved in drug discovery and development for many years, and this is an example of a drug that I think has huge potential. If all goes well we should, in a very few number of years, have a drug to market that will change the lives of RA patients around the world.”

Dr Peter B. Corr

Founder and General Partner, Celtic Therapeutics, formerly Corporate Senior Vice-President Pfizer, CBio Board of Directors

Prospectus 47

5. Financial Information continued

5.4 Historical Cash Flow Statements

==> picture [442 x 589] intentionally omitted <==

----- Start of picture text -----

Actual Actual Actual
Year Ended Year Ended Year Ended
30 June 2007 30 June 2008 30 June 2009
$ $ $
CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES
Payments to suppliers and employees (14,028,621) (11,423,335) (9,809,722)
Grant income received 1,422,392 1,378,632 1,245,880
Cash receipts in the course of operations 265,076 135,421 2,160,688
Interest received 145,309 79,744 20,712
Interest paid (59,806) (30,333) (124,836)
Net cash used in operating activities (12,255,650) (9,859,871) (6,507,278)
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Bank guarantee deposit (5,929) (11,136) 31,597
Purchase of property, plant and equipment (302,707) (25,187) (60,476)
Proceeds from disposal of subsidiary 7,766,219 1,406,097 -
Loan to related entity (1,684,000) - -
Proceeds from receipt of financial asset 1,600,000 94,000 -
Cash received on disposal of controlled entity (284,027) - -
Net cash (used in)/provided by investing activities 7,089,556 1,463,774 (28,879)
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
Proceeds from issue of shares 3,999,001 4,660,215 2,693,735
- - -
Proceeds from issue of Shares under this Prospectus
Proceeds from the issue of convertible notes 600,000 3,580,000 3,210,000
Repayment of borrowings (65,534) - (24,000)
Share issue costs (108,000) (53,000) (141,610)
- - -
Share issue costs for this Prospectus
Proceeds from shares not yet issued - 10,000 -
Proceeds from borrowings 200,000 79,541 802,000
Proceeds from conversion of options 276,533 - -
Net cash provided by financing activities 4,902,000 8,276,756 6,540,125
Net increase/(decrease) in cash held (264,094) (119,341) 3,968
Cash at beginning of the financial period 419,802 155,708 36,367
Cash at the end of the financial period 155,708 36,367 40,335
----- End of picture text -----

48 CBio Limited

5.5 Pro-forma transactions

The Pro-forma Balance Sheets disclosed in section 5.3 assume none of the Options which are currently on issue are exercised prior to the Offer Close Date and that no terms of Options currently on issue are modified.

Set out below are the Pro-forma Transactions incorporated into the Pro-forma Balance Sheets disclosed in section 5.3.

5.5.1 Shares issued for cash

In August 2009, CBio issued an Information Memorandum to raise a maximum of $25 million through the issue of both convertible notes and Shares. The offer was underwritten to $6 million by Novus Capital Limited. CBio has received subscriptions for 15,126,000 shares, raising $7,563,000 as part of the Information Memorandum subsequent to 30 June 2009. Subscription monies of $50,000 are yet to be allocated to an individual shareholder.

As part of the capital raising process, the following Shares and Options were issued as consideration for capital raising services:

==> picture [442 x 77] intentionally omitted <==

----- Start of picture text -----

Value
Instrument issued Number $
Ordinary share capital 350,250 175,125
Share options 2,797,152 205,946
----- End of picture text -----

Ordinary share capital was issued at a fair value of $0.50 a Share. Options vested on issue and were issued with an exercise price of $1.00 per Option. The Options expire 31 December 2012. The Options were valued at an average of 7.36 cents each using a Black-Scholes (Hull) option valuation model.

Additional costs associated with the raising of $999,950 have been charged against share capital.

5.5.2 Issue of convertible notes

Subsequent to 30 June 2009, 6 convertible notes were issued under a Convertible Note Deed dated 30 August 2007 totalling $5 million which remain currently on issue. The notes have face values of between $240,000 and $2,000,000 and interest of 10% per annum is payable monthly.

The notes issued may be grouped into three tranches based on their exercise and conversion features as follows:

==> picture [442 x 137] intentionally omitted <==

----- Start of picture text -----

Options
Conversion Shares issued issued if Option
Value rate on conversion converted exercise price Note
$ $ # # $ expiry
1 1,000,000 0.50 2,000,000 1,000,000 1.00 31 Dec 2009
2 2,000,000 0.50 4,000,000 2,500,000 1.00 31 Dec 2010
3 2,000,000 0.50 4,000,000 2,500,000 1.00 31 Mar 2010
Total 5,000,000 10,000,000 6,000,000
----- End of picture text -----

Prospectus 49

5. Financial Information continued

5.5 Pro-forma transactions continued

The following features are specific to the individual notes, by reference to their tranche as numbered above. Options are only issued upon conversion of notes to ordinary shares. Each Option vests on issuance with an exercise price of $1.00 per Option and has a life to 31 December 2012:

1. Notes may be converted to ordinary shares at any time at the discretion of the note holder and in the event of a stock exchange listing of CBio proceeding during the life of the convertible note. This discretion is permissible up to 31 December 2009. Any notes not converted by 31 December 2009 will be repaid in full to the note holder, unless extended by mutual agreement.

2. The term of the notes will be 31 December 2010, unless extended by mutual agreement. Notes may be converted to ordinary shares at any time at the discretion of the note holder and in the event of a stock exchange listing of CBio proceeding during the life of the convertible note. This discretion will be permissible up to 31 December 2010. Any notes not converted by 31 December 2010 will be repaid in full to the note holder.

3. The term of the notes will be 31 December 2010, unless extended by mutual agreement. Notes may be converted to ordinary shares at any time at the discretion of the note holder and in the event of a stock exchange listing of CBio proceeding during the life of the convertible note. This discretion will be permissible up to 90 days after the listing date. Any notes not converted by the 90th day after listing date will be repaid in full to the note holder. 31 March 2010 is the estimated date 90 days post listing.

The Australian Auditing Standards (“AAS”) requires that the convertible notes be accounted for in their three components of debt, an embedded derivative (the options attaching) and equity (the conversion feature). The estimated components of the notes have been formulated using a Black-Scholes (Hull) model.

Subsequent to 30 June 2009, the Company also received subscriptions for $200,000 in convertible notes which converted at 50 cents and had a life to 31 December 2010. No options were attached. These notes were issued and converted as disclosed in 5.5.4.

The notes on issuance were allocated to the balance sheet as follows ($):

==> picture [442 x 77] intentionally omitted <==

----- Start of picture text -----

Note Embedded Equity
Issuance Cash liability derivative reserve
5 million 5,000,000 3,184,395 654,190 1,161,415
0.2 million 200,000 139,996 - 60,004
----- End of picture text -----

5.5.3 Director loan conversion

Subsequent to 30 June 2009, entities related to a Director, Dr Michael Monsour, advanced a loan to the Company in the amount of $260,295 (including interest of $4,180). This loan was subsequently converted to Shares at $0.50 per Share. 520,590 new Shares have been issued to those entities.

50 CBio Limited

5.5.4 Conversion of convertible notes

At 30 June 2009 the following convertible notes were on issue as disclosed in the 30 June 2009 annual report:

==> picture [442 x 161] intentionally omitted <==

----- Start of picture text -----

Conversion Shares to Options to Option
Notes value rate issue Issue ex price Expiry date on
$ $ No. No. $ original issue
100,000 2.50 40,000 - NA July 2008
610,000 0.85 717,647 - NA May 2009
1,785,000 0.50 3,570,000 3,570,000 1.00 December 2010
815,000 0.85 958,824 479,412 1.00 December 2010
802,000 0.50 1,604,000 1,604,000 1.00 December 2010
4,112,000 6,890,471 5,653,412
----- End of picture text -----

Subsequent to 30 June 2009, due to the capital raising of new shares at $0.50, the conversion rate of all notes was reset to $0.50, including notes on issue with a conversion price above $0.50. Any notes with options attaching with a conversion price above $0.50 forfeited their entitlement to Options. Also, an additional 300,000 Options were issued. As result of this, the profile for notes on conversion is amended as follows:

==> picture [442 x 162] intentionally omitted <==

----- Start of picture text -----

Conversion Shares to Options to Option
Notes value rate issue Issue ex price Expiry date on
$ $ No. No. $ original issue
100,000 0.50 200,000 - NA July 2008
610,000 0.50 1,220,000 300,000 1.00 May 2009
1,785,000 0.50 3,570,000 3,570,000 1.00 December 2010
815,000 0.50 1,630,000 - NA December 2010
802,000 0.50 1,604,000 1,604,000 1.00 December 2010
4,112,000 8,224,000 5,474,000
----- End of picture text -----

These Options were (post 30 June 2009) marked to fair value to reflect the amendment of terms and subsequently converted to equity and options issued as in the above table. The net mark to market and removal of options resulted in a profit and loss charge of $131,606, a decrease in the note liability of $47,460 and an increase in equity reserves of $179,066.

$200,000 in convertible notes issued in section 5.5.2 was also converted to 400,000 shares.

Associated with these notes was interest accrued to 30 June 2009 of $84,441 to which additional interest of $114,349 accrued and the total of $198,790 was subsequently converted to 397,580 ordinary shares.

Prospectus 51

5. Financial Information continued

5.5 Pro-forma transactions continued

On conversion to equity the convertible note and embedded derivative associated with the notes was reduced by $3,207,675, which is reconciled as:

==> picture [442 x 101] intentionally omitted <==

----- Start of picture text -----

Component $
Total liability at 30 June 2009 3,115,139
Removal of 479,412 option liability (47,460)
New notes issued 139,996
Total 3,207,675
----- End of picture text -----

5.5.5 Repayment of loan

Subsequent to 30 June 2009, the Company repaid a loan with Australian Technology Innovation Fund Limited of $26,000 in full.

5.5.6 Director loan and repayment

Subsequent to 30 June 2009, entities related to a Director, Mr. Stephen Jones, advanced a loan to the Company in the amount of $100,000. This loan was subsequently repaid in full.

5.5.7 Sundry expenditure involving Shares and Options

Post 30 June 2009 consulting costs of $100,000 were settled by payment of 200,000 ordinary shares and 60,000 options were issued to an employee for services rendered which were valued at $4,180. The $1.00 options vested on issue and expire on 31 December 2012 in accordance with the CBio option plan.

5.5.8 IPO funds raised

This adjustment reflects the amount that the Company would raise from the Minimum Subscription under the IPO and the estimated expenses relating to the IPO.

As part of the capital raising process, the following Shares and Options will be issued as consideration for capital raising services upon completion of the Offer:

==> picture [442 x 77] intentionally omitted <==

----- Start of picture text -----

Value
Instrument issued No. $
Ordinary share capital 350,000 350,000
Options 1,000,000 321,148
----- End of picture text -----

52 CBio Limited

Ordinary share capital will be issued at a fair value of $1.00 per Share. Options will immediately vest on issue and will be issued with an exercise price of $1.00. The Options expire 31 December 2012. The Options were valued at an average of 32.11 cents each using a Black-Scholes (Hull) option valuation model.

Additional costs associated with the raising of $1,386,926 have been incurred. $1,155,309 costs relate to the listing of historical capital and are considered a period cost. The balance of $231,617 relates to the raising of new capital and is recorded against equity.

5.6 Notes to the financial information

5.6.1 Dividend policy and forecast distribution

The Company is not yet profitable and therefore there can be no assurance that CBio will become profitable or will pay dividends in the near future. Should any dividends be paid in the future, no assurances can be given as to the level of franking credits attaching to such dividends.

5.6.2 Impact on capital structure

The number of Shares issued under this Prospectus will depend on the final funds raised. The capital structure of the Company on completion of the IPO will be as follows under the minimum scenario:

==> picture [442 x 168] intentionally omitted <==

----- Start of picture text -----

Convertible Convertible
notes notes
Shares Options (potential (potential
(number) Shares ($) (number) shares) options)
Capital on issue at 30 June 2009 41,258,424 47,947,588 15,578,697 8,224,000 5,653,412
Add: Net pre-IPO transactions 25,218,420 10,073,862 8,331,152 1,776,000 346,588
Total pre-IPO 66,476,844 58,021,450 23,909,849 10,000,000 6,000,000
Add: Net IPO Pro-forma 13,350,000 12,447,235 1,000,000
transactions
Total post-IPO 79,826,844 70,468,685 24,909,849 10,000,000 6,000,000
----- End of picture text -----

The above assumes none of the Options which are currently on issue are exercised prior to the Offer Close Date.

Prospectus 53

5. Financial Information continued

5.6 Notes to the financial information continued

5.6.3 Options currently on issue

As at the date of this Prospectus, there are 23,909,849 Options on issue. Options have exercise prices ranging from $1.00 to $3.00 per Option, and all expire on 31 December 2012. Details of Options currently on issue are:

==> picture [442 x 344] intentionally omitted <==

----- Start of picture text -----

Exercise Total amount if all Total amount if all
Number of Options price outstanding Options Number of vested Options
outstanding $ exercised Options vested exercised
DIRECTORS
11,504,000 $1.00 $11,504,000 10,504,000 $10,504,000
EXECUTIVES
1,000,000 $1.00 $1,000,000 800,000 $800,000
EMPLOYEES
1,483,697 $1.00 1,483,697 1,483,697 $1,483,697
OTHERS
8,592,152 $1.00 $8,592,152 8,592,152 $8,592,152
730,000 $2.00 $1,460,000 720,000 $1,440,000
600,000 $3.00 $1,800,000 600,000 $1,800,000
9,922,152 $11,852,152 9,912,152 $11,832,152
TOTAL
22,579,849 $1.00 $22,589,849 21,379,849 $21,379,849
730,000 $2.00 $1,460,000 720,000 $1,440,000
600,000 $3.00 $1,800,000 600,000 $1,800,000
23,909,849 $25,839,849 22,699,849 $24,619,849
----- End of picture text -----

5.6.4 Commitments

As at the date of this Prospectus, the Company had unfinalised contracts involving clinical studies and the production and supply of Cpn10 for use in research and development and clinical studies. The estimated remaining contracted costs to finalise these contracts amount to approximately $1.8 million. It is expected that these contracts will be finalised by 30 June 2010.

In 2005, the Company entered into a long-term property lease for purpose built facilities which will expire in March 2012. Current lease payments are approximately $499,000 per annum. A portion of these facilities has been sub-leased until March 2010 with current lease payments of approximately $131,000 per annum. The net cash flows in 2010 are expected to be $401,000 and $874,000 between 30 June 2010 and 31 March 2012, with associated overheads.

54 CBio Limited

5.7 Summary of significant accounting policies

The principal accounting policies have been included to assist readers and to provide a general understanding of the Financial Information presented in this section. The accounting policies set out below have been consistently applied for each of the financial years presented unless otherwise stated.

5.7.1 General

(i) Statement of compliance

The financial report complies with the measurement and recognition requirements (but not all of the presentation and disclosure requirements) of applicable Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (“AIFRS”).

As at 30 June 2009 there were no Australian equivalents to International Accounting Standards or applicable pronouncements issued and not yet effective that are expected to have a material impact on the financial results or position of the Company.

(ii) Corporate information

CBio is a public company limited by shares incorporated in Australia. The shares of CBio are not traded on a recognised public stock exchange. The nature of the operations and principal activities of the Company are described in this Prospectus.

5.7.3 Going concern

The Financial Information has been prepared on a going concern basis. The Company incurred an operating loss after income tax of $12,747,758 (2008: $21,015,237) for the year ended 30 June 2009. At 30 June 2009 the Company had net current liabilities of $8,929,855 and an excess of liabilities over total assets of $10,804,811. These conditions give rise to significant uncertainty as to whether the Company will be able to continue as a going concern and be able to pay its debts as and when they fall due.

The Directors believe that the going concern basis is appropriate due to a strong history of capital raising, current capital raising initiatives underway and the positive clinical results to date. The success of future capital raising for CBio will depend on the Company achieving positive results in the future clinical trials.

As a consequence of the IPO and subsequent listing, it is expected that this will allow CBio in future to raise funds in a more timely manner from a wider pool of potential retail and institutional investors.

Additionally CBio has an agreement with Novo Nordisk A/S in connection with its Cpn10 asset. US$2 million was received by the Company in relation to this agreement during the year and a further US$1 million is expected to be received upon the recruitment of the 75th patient into the current clinical trial. There are currently 73 patients enrolled.

5.7.2 Basis of accounting

The Financial Information has been prepared in accordance with the historical cost convention. Cost in relation to assets represents the cash amount paid or the fair value of the assets given in exchange.

Prospectus 55

5. Financial Information continued

5.7 Summary of significant accounting policies continued

Should CBio not receive future funds, it may not be able to continue as a going concern and pay its debts, including convertible notes should they not be converted to ordinary shares prior to expiry and mutual agreement is not reached with regard to the extension of the convertible notes, as and when they fall due. Accordingly, the Company may be required to realise assets and extinguish liabilities other than in the ordinary course of business and at amounts different from those stated in the Financial Information. The Financial Information does not include any adjustments relating to the recoverability or classification of recorded asset amounts or to the amounts or classification of liabilities that might be necessary should CBio not be able to continue as a going concern.

5.7.4 Property, plant and equipment

Plant and equipment is stated at cost less depreciation and impairment in value. Depreciation is calculated on a straight line basis over the estimated useful life of the asset as follows:

==> picture [213 x 138] intentionally omitted <==

----- Start of picture text -----

2009 2008 2007
Buildings 4% 4% 4%
Plant and 10%-50% 10%-50% 10%-50%
equipment
Computer 20%-50% 20%-50% 20%-50%
equipment
Furniture and 10%-20% 10%-20% 10%-20%
fittings
----- End of picture text -----

Impairment

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset.

Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amounts of the item) is included in the income statement in the period the item is derecognised.

5.7.5 Acquisition of assets

All assets acquired including property, plant and equipment and intangibles other than goodwill, are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. When equity instruments are issued as consideration, their market prices at the date of acquisition are used as fair value, except where the notional price at which they could be placed in the market is a better indication of fair value.

56 CBio Limited

5.7.6 Recoverable amount of assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

5.7.7 Trade and other receivables

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Terms of receivables are between 30 and 45 days.

Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accrual basis.

5.7.8 Intangible assets - Intellectual Property

Amounts incurred in acquiring and extending patents are expensed as incurred, except to the extent that such costs are expected beyond any reasonable doubt to be recoverable.

5.7.9 Research and development expenditure

Amounts incurred on research and development activities are expensed as incurred, except to the extent that such development costs are expected beyond any reasonable doubt to be recoverable.

5.7.10 Income taxes

Deferred income tax liabilities are recognised for all taxable temporary differences:

• Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit and loss.

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward or unused tax assets an unused tax losses can be utilised:

• Except where the deferred income tax asset relating to the deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor the taxable profit or loss.

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Prospectus 57

5. Financial Information continued

5.7 Summary of significant accounting policies continued

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax asset and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settles, based on tax rates (and tax laws) that have been enacted or substantially enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.

5.7.11 Other taxes

Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”) except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of an asset or as part of an item of expense as applicable; or

• receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Cash Flow Statements on a gross basis and the GST component of cash arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

5.7.12 Cash and cash equivalents

Cash on hand and in banks and short term deposits are stated at its fair value.

For the purpose of the Cash Flow Statements, cash includes cash on hand and in banks, and money market investments readily convertible to cash within two working days, net of outstanding bank overdrafts. Bank overdrafts are carried at the principal amount. Interest is charged as an expense on an accrual basis.

5.7.13 Investments

All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment.

After initial recognition, investments which are classified as held for trading and available-for-sale, are measured at fair value. Gains or losses on investments held for trading are recognised in the income statement.

Gains or losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement.

For investments that are actively traded in organized financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date.

For investments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment.

Purchases and sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place are recognised on the trade date i.e. the date that the Company commits to purchase the asset.

58 CBio Limited

5.7.14 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific criteria must also be met before revenue is recognised:

• Revenues are recognised at fair value of the consideration received net of the amount of GST payable to the taxation authority.

• Fee income derived from research and development contracts is recognised when specific milestones are achieved and the consolidated entity becomes entitled to the income under the terms of the relevant contract.

• Contract research income is recognised as and when the relevant research expenditure is incurred. When the consolidated entity received income in advance of incurring the relevant expenditure, it is treated as deferred income as the consolidated entity does not control the income until the relevant expenditure has been incurred.

• License fees are recognised evenly over the life of the license.

5.7.16 Trade and other payables

Liabilities for trade creditors and other amounts are carried at amortised cost which is the fair value of the consideration to be paid in the future for goods and services, whether or not billed to the consolidated entity.

Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis.

5.7.17 Issued capital

Ordinary share capital is recognised at the fair value of the consideration received by the Company.

Transaction costs related to the listing of new shares and the simultaneous listing of existing shares are allocated to those transactions on a proportional basis. Transaction costs relating to the listing of existing shares are not considered costs of an equity instrument as no equity instrument is issued, and consequently costs are recognised as an expense in the Income Statement when incurred. Transaction costs related to the issue of new share capital are recognised directly in equity as a reduction of the share proceeds received.

5.7.18 Leased assets

5.7.15 Foreign currency

The functional and presentation currency of CBio is Australian Dollars.

Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at reporting date are translated at the rate of exchange ruling on that date.

Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account in the statement of financial performance as exchange gains or losses, in the financial year in which the exchange rates change.

Leases under which the Company assumes substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

Payments made under operating leases are expensed on a straight line basis over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.

5.7.19 Superannuation

Contributions are made to approved employee superannuation funds at the rate of 9% of employees’ gross salaries as directed by the Superannuation Guarantee Legislation. Contributions are recognised as an expense against income as they are made.

Prospectus 59

5. Financial Information continued

5.7 Summary of significant accounting policies continued

5.7.20 Employee benefits

Provisions are recognised when CBio has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When CBio expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the balance sheet date using a discounted cash flow methodology. The risks specific to the provision are factored into the cash flows and as such a risk-free government bond rate relative to the expected life of the provision is used as a discount rate. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

Long service leave

The amount provided for employee benefits to long service leave represents the present value of the estimated future cash outflows to be made in connection with employees’ services provided up to reporting date.

The provision is calculated using expected wage and salary rates, including related on-costs and expected settlement dates are based on turnover history and is discounted using the rates attaching to national government bonds at reporting date which most closely match the terms of maturity of the related liabilities. The unwinding of the discount is treated as long service leave expense.

5.7.21 Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments.

Wages, salaries and annual leave

Liabilities for employee benefits for wages, salaries and annual leave represent present obligations resulting from employees’ services provided to reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the consolidated entity expects to pay as at reporting date, including related on-costs, such as workers’ compensation insurance and payroll tax.

5.7.22 Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

Gains and losses are recognised in the income statement when the liabilities are de-recognised and as well as through the amortisation process.

60 CBio Limited

Convertible notes

The component of the convertible note that exhibits characteristics of a liability is recognised as a liability in the balance sheet, net of transaction costs.

On issuance of the convertible notes, the fair value of the conversion option is determined and recorded as a separate component of equity. The net balance of the convertible note is recorded as an interest bearing liability. The liability is increased over the term of the liability using the effective interest rate implicit in the note. Any increase recorded is recognised as interest expense.

Certain convertible notes contain a feature which allows options over ordinary shares to be issued. This option feature is recorded as an embedded derivative liability on issuance of the convertible note at the fair value of the embedded derivative. At each balance date while the convertible note is outstanding the embedded derivative liability is re-measured to fair value through the profit and loss.

Costs of convertible note issues are offset against the liability and match the term of the note.

5.7.23 Use and revision of accounting estimates

The preparation of the financial report requires the making of estimations and assumptions that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

5.7.24 Borrowing costs

Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement for borrowings, finance charges in respect of finance leases and foreign exchange differences.

Interest payments in respect of financial instruments classified as liabilities are included in borrowing costs.

Ancillary costs incurred in connection with the arrangement of borrowings are netted against the relevant borrowings and amortised over their life.

Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which necessarily take a substantial period of time to get ready for their intended use or sale. In these circumstances, borrowing costs are capitalised to the cost of the assets. Where funds are borrowed specifically for acquisition, construction or production of a qualifying asset, the capitalised amount of the borrowing costs include costs incurred in relation to that borrowing net of any interest earned on those borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.

5.7.25 Earnings per Share

Basic earnings per share (“EPS”) is calculated by dividing the net profit attributable to members of the parent entity for the reporting period, after excluding any costs of servicing equity (other than ordinary shares and converting preference shares classified as ordinary shares for EPS calculation purposes), by the weighted average number of ordinary shares of the Company outstanding during the year.

Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive potential ordinary shares and the effect on revenues and expenses of conversion to ordinary shares associated with dilutive potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the year.

Prospectus 61

5. Financial Information continued

5.7 Summary of significant accounting policies continued

As the Company and consolidated entity incurred a loss for the current and previous year, potential ordinary shares, being options to acquire ordinary shares, are considered non-dilutive and therefore not included in the diluted earnings per share calculation.

5.7.26 Share-based payment transactions

The Company provides benefits to employees (including Directors) of the Company and to selected contractors in the form of share based payment transactions, whereby participants render services in exchange for shares or rights over shares (“equitysettled transactions”).

There is currently a plan in place to provide these benefits to Directors, Executives, Employees and others. The costs of the equity settled transactions with participants are measured by reference to the fair value at the date at which they are granted. The fair value is determined by using the Black-Scholes (Hull) option-pricing model.

In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of CBio (“market conditions”).

The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date.

No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest.

Where the terms of an equity settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity settled award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“vesting date”).

62 CBio Limited

5.7.27 Significant accounting judgements, estimates and assumptions

The preparation of the Financial Information requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

Share-based payment transactions

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined with using a Black-Scholes (Hull) model. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

Convertible notes

The fair value of equity components contained in convertible notes is determined with using a BlackScholes (Hull) model. The accounting estimates and assumptions relating to these equity components would have an impact on the carrying amounts of liabilities within the next annual reporting period, expenses and equity.

As the Company is not a listed entity a proxy of other listed companies is used to determine the volatility assumption used in valuation models for share-based payments, other equity instruments and embedded derivatives.

==> picture [193 x 197] intentionally omitted <==

“ This is a big space, rheumatoid arthritis, that needs new, different, effective and safe agents, and I think that CBio is really onto something. The CBio scientists are absolutely staggering, extraordinary people. Support is needed now so that the proper clinical trials can be done, but potentially we have a real go-er in XToll. It really is very exciting.”

Professor John Funder

Professor of Medicine Monash University, CBio Board of Directors

Prospectus 63

6. Independent Accountant’s Report

10 November 2009 The Directors CBio Limited 85 Brandl Street EIGHT MILE PLAINS QLD 4113

Dear Sirs

Independent Accountant's Report – Historical and Pro-forma Financial Information

1. Introduction

We have prepared this Independent Accountant’s Report (the “Report”) on the Historical and Pro-forma Financial Information of CBio Limited (“CBio” or the “Company”), for inclusion in a Prospectus to be dated on or about 10 November 2009 (the “Prospectus”) relating to the Offer of Shares in the Company (the “Offer”).

Expressions defined in the Prospectus have the same meaning in this Report.

2. Scope

We have been requested to prepare an Independent Accountant’s Report covering the following Financial Information:

• Historical Financial Information comprising the Historical Balance Sheets as at 30 June 2007, 2008 and 2009 and the Historical Income Statements, Cash Flow Statements and applicable notes to these statements for the years ended 30 June 2007, 2008 and 2009 as set out in sections 5.2, 5.3 and 5.4 of the Prospectus; and

 Pro-forma Financial Information comprising the Pre-IPO Pro-forma Balance Sheet and the PostIPO Pro-forma Balance Sheet as at 30 June 2009 and applicable notes to these statements for the year ended 30 June 2009 which assumes completion of the contemplated transactions as at that date as set out in section 5.5 of the Prospectus.

The Historical Financial Information comprising the Historical Balance Sheets at 30 June 2007, 2008 and 2009 and the Historical Income Statements, Cash Flow Statements and applicable notes to these statements for the years ended 30 June 2007, 2008 and 2009 have been extracted from the audited statutory financial statements of the Company, which were audited by Ernst & Young and on which an unqualified audit opinion was issued. The independent audit reports included emphasis of matter paragraphs on the material uncertainty regarding the Company’s continuation as a going concern. No adjustments have been made to the audited statutory financial statements.

Liability limited by a scheme approved under Professional Standards Legislation

64 CBio Limited

2

The Directors have prepared and are responsible for the preparation and presentation of the Historical and Pro-forma Financial Information. We disclaim any assumption of responsibility for any reliance on this Report or on the Historical Financial Information and Pro-forma Financial Information to which it relates for any purposes other than that for which it was prepared. This Report should be read in conjunction with the full Prospectus.

Review of Historical Financial Information

Our responsibility is to express a conclusion on the Historical Financial Information based on our review. We have conducted our review in accordance with Standard on Review Engagements ASRE 2405 Review of Historical Financial Information Other than a Financial Report in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that the Historical Financial Information is not prepared, in all material respects, in accordance with the measurement and recognition requirements (but not all of the presentation and disclosure requirements) of Australian Accounting Standards and other mandatory professional reporting requirements in Australia.

ASRE 2405 requires us to comply with the requirements of the applicable code of professional conduct of a professional accounting body.

A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the Historical Financial Information.

Review of Pro-forma Financial Information

We have conducted an independent review of the Pro-forma Financial Information in order to state whether on the basis of the procedures described, anything has come to our attention that would cause us to believe that the Pro-forma Financial Information as set out in section 5.3 of the Prospectus:

• a) has not been prepared on the basis of the assumptions set out in section 5.5 of the Prospectus; and

• b) is not applying the measurement and recognition requirements (but not all of the presentation and disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia as if the Pro-forma Transactions set out in section 5.5 of the Prospectus had occurred at 30 June 2009.

Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements and has been limited to reading of relevant Board minutes, reading of contracts and other legal documents, inquiries of management personnel and analytical procedures applied to the financial data. We have also determined whether the Pro-forma Transactions form a reasonable basis for the preparation of the Pro-forma Financial Information. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion on the Pro-forma Financial Information.

Prospectus 65

6. Independent Accountant’s Report continued

3 3. Conclusion Historical Financial Information

Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe that the Historical Financial Information of CBio has not been prepared in accordance with the measurement and recognition requirements (but not all the presentation and disclosure requirements) of Australian Accounting Standards and other mandatory professional reporting requirements in Australia. Pro-forma Financial Information Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe that the Pro-forma Financial Information as set out in section 5.3 of the Prospectus: a) has not been prepared on the basis of the assumptions as set out in section 5.5 of the Prospectus; and b) is not applying the measurement and recognition requirements (but not all of the presentation and disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia as if the Pro-forma Transactions set out in section 5.5 of the Prospectus had occurred at 30 June 2009.

4. Subsequent Events

Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and belief no material transactions or events outside the ordinary business of CBio subsequent to 30 June 2009 have come to our attention which require comment on, or adjustment to, the information referred to in our Report or that would cause such information to be misleading or deceptive.

5. Independence and Disclosure

Ernst & Young does not have any interest in the outcome of the equity raising other than in connection with the preparation of this Report and participation in due diligence procedures. Ernst & Young will receive a professional fee for the preparation of this Report. Ernst & Young has provided audit, tax, and other advisory services to the Company, for which it received a market based fee.

The Directors of CBio have agreed to indemnify and hold harmless Ernst & Young and its employees from claims arising out of misstatement or omissions in any material or information supplied by the Directors for the purpose of this Report.

Consent to the inclusion of this Independent Accountant’s Report in the Prospectus in the form and context in which it appears, has been given. At the date of this Report, this consent has not been withdrawn.

Yours faithfully Ernst & Young

66 CBio Limited

7. Risks

7.1 Factors influencing success and risk

7.2 General investment risks

7.2.1 Share market investments

Introduction

This section identifies the areas believed by the Board to be the major risks associated with an investment in CBio. The CBio business is subject to risk factors, both specific to its business activities, and risks of a general nature. Individually, or in combination, these might affect the future operating performance of CBio and the value of an investment in the Company. There can be no guarantee that CBio will achieve its stated objectives or that any forward-looking statements or forecasts will eventuate. An investment in the Company should be considered in light of relevant risks, both general and specific. Each of the risks set out below could, if they eventuate, have a material adverse impact on CBio’s operating performance and profits, and the market price of the Shares.

Before deciding to invest in the Company, potential investors should:

• a. read the entire Prospectus;

• b. consider the risk factors that could affect the financial performance of CBio;

• c. review these factors in light of their personal circumstances; and

• d. seek professional advice from their accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest.

Prior to the Offer there has been no material public market for the Shares. It is important to recognise that, once the Shares are quoted on ASX, their price might rise or fall and they might trade at prices below or above the Offer Price. There can also be no assurance that an active trading market will develop for the Shares. Factors affecting the price at which the Shares are traded on ASX could include domestic and international economic conditions.

In addition, the prices of many listed entities’ securities are affected by factors that might be unrelated to the operating performance of the relevant company. Such fluctuations might adversely affect the price of the Shares.

7.2.2 General economic conditions

CBio’s operating and financial performance is influenced by a variety of general economic and business conditions including the level of inflation, interest rates and government fiscal, monetary and regulatory policies. Prolonged deterioration in general economic conditions, including an increase in interest rates, could be expected to have a corresponding adverse impact on the Company’s operating and financial performance.

7.2.3 Accounting standards

Australian accounting standards are set by the Australian Accounting Standards Board (AASB) and are outside the Directors’ and CBio’s control. Changes to accounting standards issued by AASB could materially adversely affect the financial performance and position reported in CBio’s financial statements.

Prospectus 67

7. Risks continued

7.2 General investment risks continued

7.2.4 Taxation risks

A change to the current taxation regime in Australia or overseas may affect CBio and its Shareholders. Personal tax liabilities are the responsibility of each individual investor. CBio is not responsible either for taxation or penalties incurred by investors.

7.3.3 Product acceptance

The Company’s product is new and currently unregistered for commercial use. Once registered for commercial use, in order to be successful, XToll[®] must meet the requirements of the markets for which they are intended, and potential customers must be convinced to use XToll[®] instead of competing technologies.

7.3.4 Development risk

7.3 Specific investment risks

The details contained in this Prospectus concerning the application of funds are based on estimates and assumptions about certain events and circumstances which have not yet taken place, and are subject to variation and possible non-fulfilment. The Company is involved in technology development. There can be no assurances as to the accuracy of estimated expenditure under the table for the application of funds under this Prospectus.

7.3.1 XToll[®] risk

The drug, XToll[®] and its success in testing is important to the prospects of the Company. If data from the current clinical trial do not indicate efficacy according to the clinical trial protocol, it is unlikely that CBio will ever become profitable. Specifically, investors must be aware that, despite the promising results of research and development to date, it is distinctly possible that the XToll[®] drug may ultimately not be capable of application. In parallel with the risk of showing little or no efficacy, there is also exists the risk of the occurrence of Serious Adverse Events (SAE) which can, in the worst case, halt further development or severely limit commercial opportunity.

7.3.2 Commercialisation deal

The Company may not be able to successfully negotiate and conclude a suitable commercialisation deal within the anticipated timeframes using funds raised from this Offer, which may necessitate raising further capital. Additionally, the commercialisation deal may not realise value in the manner and timeframe expected.

Pharmaceutical products have lengthy development cycles, which could cause the Company’s operating results to fluctuate significantly. Sales of the Company’s products may typically involve significant evaluation and development. Accordingly, the development cycles associated with the products and their optimisation to achieve market penetration are expected to be lengthy and subject to a number of significant risks, including approval by regulatory authorities such as the Australian Therapeutic Goods Administration (TGA) and the United States Food and Drug Administration (FDA), customers’ preferences, the Company’s potential strategic research partners’ choices as to which types of projects to fund, the Company’s competitors’ developments and significant regulatory approvals, each of which is beyond the Company’s control. The Company expects to continue to experience significant fluctuations as a result of a variety of factors, many of which are outside of the Company’s control.

The Company will depend in part on third-party products and services and sole or limited sources of supply to manufacture some components of its products. The Company will rely on outside vendors to manufacture many of the components used in the products. Some of these components will be obtained from a single supplier or a limited group of suppliers. Reliance on outside vendors generally, and a sole or a limited group of suppliers in particular, involves several risks, including:

• the inability to obtain an adequate supply of required components due to manufacturing capacity constraints, a discontinuance of a product by a third-party manufacturer or other supply constraints;

68 CBio Limited

• reduced control over quality and pricing of components;

• delays and long lead times in receiving materials from vendors; and

• the cost of supply.

The Company may not be successful in developing new products and services. For example, the Company’s customers or strategic partners may choose to expend their resources on competing products to such a degree that it does not make economic sense for it to continue its research and development of certain products. If this happens, the Company may not be able to take advantage of opportunities identified in this Prospectus.

7.3.5 Commercial, manufacturing and distribution capability

CBio’s ultimate success is dependent upon its ability and/or that of its commercial partners to manufacture its products on a commercial scale, with continuity of supply and in accordance with current Good Manufacturing Practices, prescribed by regulatory authorities. In the event that the Company or any one or more of its commercial partners discontinue operations for any reason, this may result in substantial cost and delay.

Delays and difficulties in the manufacture of products could delay trials and subsequently market introduction and sales of CBio’s products. More particularly, any contamination in the manufacture of the compounds that are supplied or subsequently manufactured could result in delay, increased costs, exposure to liability for breach of obligations as well as regulatory and statutory standards, loss of funding and/or regulatory approval.

The inability of CBio to scale up and maintain production within estimated timeframes may potentially result in an adverse financial impact for the Company both in the short and medium term. Any one of these potential risks could have a material adverse impact on CBio.

7.3.6 Increased or new competition

Competition may arise from a number of sources and may include companies with greater capital resources and expertise. While CBio’s Directors believe that the Company’s stage of development, intellectual property position, depth of services and industry knowledge effectively reduce the impact of future competition, no assurances can be given that such competition will not adversely affect the performance of the Company. The Company remains engaged in maintaining an awareness and understanding of competitive developments.

7.3.7 Dependence on key personnel

The success of the Company will depend on the continuing commitment of its key employees. The Company has in place employment contracts with key employees. The Company has an objective of providing equity incentives and attractive employment conditions to assist in retaining key employees.

7.4 Risks related to operating in this industry

7.4.1 Markets

The Company competes with companies in the US and abroad that are engaged in the development and production of drug products and services including pharmaceutical companies, contract research companies and academic institutions. Many of the Company’s competitors have access to greater financial, technical, research, marketing, sales, distribution, service and other resources than CBio. Academic institutions, governmental agencies and other research organisations also are conducting research in areas in which the Company proposes to provide services, either on their own or through collaborative efforts.

Prospectus 69

7. Risks continued

7.4 Risks related to operating in this industry continued

7.4.2 Technology

The pharmaceutical and biotechnology industries are characterised by rapid and continuous technological innovation. The Company’s technology, services and expertise may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by the Company or one or more of its competitors. The existing approaches of the Company’s competitors or new approaches or technologies developed by its competitors may be more effective than those the Company develop. The Company may not be able to compete successfully with existing or potential competitors and competitive factors may prevent it from becoming successful.

7.4.3 Strategic partners

The Company’s success will depend on its strategic development partners and the extent to which these partners are interested in pursuing development and marketing of products. The Company’s revenues will be highly dependent on the research and development decisions of the current and potential strategic partners.

Their expenditures are based on a wide variety of factors, including the resources available, the spending priorities among various types of research and policies regarding expenditures during recessionary periods. General economic downturns in our partners’ industries or any decrease in research and development expenditures could materially and adversely affect the Company’s operations.

7.4.4 Consolidation

The concentration of the pharmaceutical industry and the current trend towards increasing consolidation could adversely affect the Company’s business prospects. The number of potential strategic partners could be reduced if the current trend towards consolidation of the pharmaceutical industry continues. Accordingly, the Company expects that a relatively small number of partners will account for a substantial portion of its research, development and marketing activities with third parties.

Additional risks associated with such a highly concentrated industry include:

• larger companies may develop in-house technology and expertise rather than using or helping develop products; and

• larger customers may negotiate price discounts or other terms for their products that are unfavourable to CBio.

7.4.5 Intellectual property

The Company’s ability to leverage its innovation and expertise depends upon its ability to protect its intellectual property and any improvements to it. Such intellectual property may not be capable of being legally protected, it may be the subject of unauthorised disclosure or unlawful infringement, or the Company may incur substantial costs in asserting or defending its intellectual property rights. The intellectual property rights on which the Company relies to protect the technology underlying the products and techniques may not be adequate, which could enable third parties to use the Company’s technology or very similar technology and thereby reduce its ability to compete in the market.

Competitors may develop products similar to ours, which are not covered by our patents. Further, examination of patent applications at any Patent and Trademark Office may take several years more than anticipated.

In addition to patent protection, the Company also relies on copyright protection, trade secrets, know-how, continuing technological innovation and licensing opportunities. In an effort to maintain the confidentiality and ownership of our trade secrets and proprietary information, the Company requires employees, consultants and advisors to execute confidentiality and proprietary information agreements. However, these agreements may not provide adequate protection against improper use or disclosure of confidential information and there may not be adequate remedies in the event of unauthorised use or disclosure.

70 CBio Limited

The Directors believe that whilst the Company’s intellectual property position is robust, it is possible that various licensing deals may be required in respect of some products to have full freedom to operate in the market place.

In relation to ownership of the various intellectual property rights relating to the technology, while measures have been put in place to ensure that a chain of title exists from the inventor to CBio, there is no guarantee that each of these measures are sufficient or that CBio’s rights to the intellectual property are complete or cannot be challenged.

The recent Full Federal Court decision of University of Western Australia v Gray has created uncertainty in respect of the intellectual property rights created by the researchers of Australian universities. This decision may be relevant to the intellectual property of CBio’s business as some of that intellectual property was developed by university researchers. CBio has used reasonable endeavours to secure deeds of assignment from relevant university researchers as well as its own employees however this does not guarantee that these measures are sufficient or that CBio’s rights to that intellectual property are complete or cannot be challenged.

The Company may be involved in intellectual property lawsuits, which may be expensive. High technology companies have a history of patent litigation. It is possible that competitor(s) attempt to revoke already granted patents. In order to protect or enforce the Company’s patent rights, the Company may have to initiate legal proceedings against third parties. In addition, others may sue the Company for infringing their intellectual property rights or the Company may find it necessary to initiate a lawsuit seeking a declaration from a court that the Company does not infringe the proprietary rights of others.

7.4.6 Material contracts and Cpn10 intellectual property

In addition to the general intellectual property risks described above, the intellectual property rights of CBio’s business is influenced by various contractual arrangements that affect how CBio can use those intellectual property rights. Some of those arrangements may mean that the way in which CBio is able to use those intellectual property rights is limited to use within a particular field of use.

In some instances, if CBio breaches its contractual obligations, abandons exploitation of intellectual property in a particular territory or a contract to which it is a party is terminated, CBio may lose its right to deal with those intellectual property rights.

A summary of the key contracts that relate to CBio’s intellectual property are set out in section 8 below.

7.4.7 Liability regarding hazardous materials

Our research and development processes involve the controlled use of hazardous materials. CBio is subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products. The risk of accidental contamination or injury from these materials cannot be completely eliminated.

In the event of such an accident, the Company could be held liable for any damages that result, and any such liability could exceed its resources and disrupt the business. In addition, the Company may have to incur significant costs to comply with environmental laws and regulations related to the handling or disposal of such materials or waste products in the future.

The Directors of the Company are not presently aware of any fact, matter or circumstance by which any party may claim or be entitled to object to or challenge any of the Company’s patents, trade marks or intellectual property. These circumstances, however, do not reduce the importance of the foregoing considerations for investors.

Prospectus 71

8. Material Agreements

8.1 Key documents

The Board considers that certain agreements relating to the Company are significant to the Offer, the operations of the Company, or may be relevant to investors. A description of material agreements or arrangements, together with a summary of the more important details of each of these agreements is set out below.

8.2 Constitution

The following is a summary of the major provisions of the Company’s constitution:

Shares

Subject to the Listing Rules, the Shares in the capital of the Company can be issued with preferred, deferred or other special rights, obligations or restrictions in relation to dividends, voting, return of share capital, payment of calls or other matters, as determined by the Board from time to time. All unissued Shares are under the control of the Board, which may grant options on the Shares, issue option certificates, allot or dispose of the Shares on the terms and conditions and for consideration it thinks fit. This power is subject to contract or any contrary rules in the constitution.

The constitution permits the issue of preference shares on terms determined by the Board.

Alteration of rights

The rights and restrictions attaching to any class of shares (unless provided by the terms of issue of the shares of that class), can only be varied with the consent in writing of members with at least three-quarters of the votes in that class, or with the sanction of a special resolution passed at a separate meeting of the holders of shares of that class.

Calls

The Board may from time to time call upon Shareholders for unpaid monies on their shares. If such a call is made, shareholders are liable to pay the amount of each call in the manner and at the time and place specified by the Board. Such calls may be payable by instalments. When a resolution of the Board authorising the call is passed, the call will be deemed to have been made. It may be revoked or postponed at the discretion of the Board.

Forfeiture and lien

The Company is empowered to forfeit shares in relation to any part of allotment monies, calls, instalments, interest and expenses which remains unpaid following any notice sent to a shareholder. Such forfeiture must occur in accordance with the constitution, the Corporations Act, the ASX Listing Rules and the ASTC Settlement Rules.

The Company has a first lien or charge for unpaid calls, instalments and related interest and any amount it is legally required to pay in relation to a shareholder’s shares. The lien or charge extends to all dividends declared in respect of the shares provided that, if the Company registers a transfer of any shares subject to this lien or charge without giving the transferee notice of the claim it may have at that time, the shares are freed and discharged from the Company’s lien or charge in respect to that claim.

Share transfers

Shares may be transferred in any manner required or permitted by the ASX Listing Rules or the ASTC Settlement Rules and by any instrument in writing in any usual or common form or in any other form that the Board approves. The Board may only refuse to register a transfer of securities of the Company as permitted by the ASX Listing Rules or the ASTC Settlement Rules.

72 CBio Limited

Directors need not issue share certificates

Subject to the requirements of the ASX Listing Rules and the Corporations Act, the Company need not issue share certificates.

Meeting procedure

ASX and each shareholder and director of the Company is entitled to receive notice of and attend any general meeting of the Company. Two shareholders must be present to constitute a quorum for a general meeting and no business may be transacted at any meeting except the election of a Chairman and an adjournment, unless the quorum required is present at the start of the business. The Company is obliged to convene and hold an annual general meeting.

Voting rights

Each shareholder has the right to receive notices of, and to attend, general meetings of the Company.

Subject to restrictions on voting from time to time affecting any class of shares in the Company, and any restrictions imposed by the Corporations Act, the shares in the Company carry the right to cast one vote on a show of hands and, on a poll, one vote for each fully paid share held, and for each partly paid share held, a vote having the same proportionate value as the proportion to which the shares have been paid up. Voting may be in person or by proxy, attorney or representative.

Remuneration of Directors

Directors are to be paid out of Company funds as remuneration for their services up to such sum as accrues on a daily basis as the Company in general meeting determines to be divided among them as agreed, or failing agreement, equally.

Directors’ remuneration for their services as Directors is by a fixed sum and not a commission or a percentage of profits or operating revenue. The aggregate amount available for payment of Director’s remuneration may not be increased except at a general meeting in which particulars of the proposed increase have been provided in the notice convening the meeting to shareholders. There is provision for Directors who devote special attention to the business of the Company or who perform services which are regarded as being outside the scope of their ordinary duties as directors, or who at the request of the Board engage in any journey on Company business, to be paid additional remuneration as determined by the Board. Directors are also entitled to their reasonable travel, accommodation and other expenses incurred in attending Company or Board meetings, or meetings of any committee engaged in the Company’s business.

Any director may be paid a retirement benefit as determined by the Board, consistent with the Corporations Act and the Listing Rules.

A director is disallowed from voting on any contract or arrangement in which he or she has directly or indirectly any material interest, if it will be contrary to the Corporations Act. If such a director does vote, his or her vote will not be counted, nor will his or her attendance be counted in the quorum present at the meeting. Either or both of these prohibitions may be relaxed or suspended to any extent by ordinary resolution passed at a general meeting if permitted by the Corporations Act.

Election of Directors

There must be a minimum of three Directors and a maximum number of ten Directors (not including alternate Directors), which the Board may from time to time determine provided it may not reduce the number below the number of Directors in office at the time of the reduction.

Prospectus 73

8. Material Agreements continued

8.2 Constitution continued

At every annual general meeting, one third of the Directors (other than the Managing Director as may be appointed by the Board from time to time) must retire from office, and may offer themselves for reelection. If their number is not a multiple of three, then the number nearest to, but not less than one third will retire. A Director, other than the Managing Director, must retire from office at the conclusion of the third annual general meeting after which he or she was elected or re-elected.

With respect to the retirement of Directors, the Director or Directors longest in office since last being elected must retire. If a number of Directors were elected on the same day, the Directors to retire shall, in default of agreement between them, be determined by ballot.

Dividend

If the Board determines that a dividend is payable, it will be paid on all shares proportionate to the total amount for the time being paid on each share. Such dividend payment is subject to the rights and restrictions on the holders of shares created or raised under any special dividend arrangements.

The Board may establish and maintain one or more dividend reinvestment plans, under which shareholders may elect to take up with some or all their entitlement to shares subject to the rules of the plan.

Subject to the Listing Rules, the Board has the power to capitalise and distribute the whole or part of the undivided profits of the Company or standing to the credit of any reserve or other account and which is available for distribution. Such capitalisation and distribution must be in the same proportions which the shareholders would be entitled to receive if distributed by way of dividend or in accordance with the terms of issue of any shares or terms of any plan for the issue of securities for the benefit of officers or employees.

The Board has the power to decide whether to pay shareholders an interim dividend on account of the next forthcoming dividend. Any distribution may be paid otherwise than in cash as specified in the constitution.

No dividend is payable except out of Company profits and no dividend or other monies paid in relation to a share will carry interest as against the Company.

Partial takeover bids

The Company may prohibit registration of transfers purporting to accept partial takeover bids unless and until a resolution of the Company has been passed approving the offers in accordance with the provisions of the constitution.

Indemnities and insurance

The Company must indemnify current and past Directors, secretaries and executive officers of the Company against any liability incurred by them by virtue of their holding office as, and acting in the capacity of, director, secretary or executive officer, other than a liability owed to the Company or a related body corporate of the Company or a pecuniary penalty order or compensation order or where the liability does not arise out of conduct in good faith. Indemnities also apply to employees in circumstances designated under the constitution.

Insurance

The Company may also pay insurance premiums for officers and employees in certain designated circumstances but not where the liability arises out of wilful breach of duty to the Company or an improper use of position or inside information, as prohibited by the Corporations Act.

74 CBio Limited

8.3 Sponsoring Broker mandate

Under mandate dated 4 September 2009 (Mandate), CBio has appointed Novus Capital Limited as financial advisor and Sponsoring Broker to the Offer. CBio is required to pay Novus Capital:

• a. a financial advisory fee of $225,000 (excluding GST) for strategic advice and assistance in preparing for the IPO, including due diligence, payable upon completion of the capital raising;

• b. a monthly retainer of $15,000 (excluding GST), which is rebated against the fee in (a) above;

• c. brokerage fee of 5% of amounts raised excluding GST, payable upon settlement of funds raised;

• d. a management fee of 1% of the total funds raised, excluding GST.

In addition, Novus Capital (or nominees) will be issued 350,000 Shares and 1,000,000 Options upon successful completion of the Offer.

CBio will reimburse Novus Capital for all out-ofpocket expenses incurred by Novus Capital, in the course of or in connection with the Offer and provision of its services.

Under the Mandate, Novus has a first right of refusal to any capital raising and any corporate activity, including a joint venture, merger or acquisition activity, for a minimum period of 24 months after the successful listing of CBio on ASX.

Novus Capital will be retained as part of an ongoing role as exclusive investor relations advisor to the Company for a minimum period of 12 months from successful listing of CBio on ASX at $5,000 (excluding GST) per month (Ongoing Role).

A break fee of $75,000 is payable in the event that CBio terminates any of the arrangements, other than the Ongoing Role. Brokerage and/or handling fees on Applications for Shares will be payable to member firms of ASX or licensed investment advisers on such Application Forms bearing their stamp and being accepted by the Company. Any such brokerage or handling fees will be paid by Novus Capital out of its brokerage fees.

8.4 Novo Nordisk A/S exclusive option agreement

Novo Nordisk A/S (Novo), a Danish pharmaceutical company, entered into an exclusive option agreement with CBio on 21 May 2008. Under the agreement, CBio:

• a. must undertake a Work Plan that includes preclinical research, assay development, Phase IIa human clinical trials, process development and reproduction, quality assurance and quality control, generation and maintenance of data and intellectual property and production of publications; and

• b. grants an exclusive option for Novo to negotiate an exclusive licence to CBio’s intellectual property (including all patents controlled by CBio and all know how related to the Cpn10 Protein) that is to include the terms set out in the Term Sheet attached to the agreement.

CBio must complete quarterly reports in respect of the work it performs pursuant to the Work Plan and must immediately notify Novo of any new intellectual property arising from the performance of that work.

The option may only be exercised by Novo and can be exercised at any time during the Option Period, being the period from on or around 21 May 2008 until CBio has completed the activities referred to at paragraph 8.4(a) above and prepared a final report that contains, in Novo’s sole discretion, the information required by the Work Plan plus an additional 60 days after the date that Novo receives such a final report.

The term of the option agreement is from 21 May 2008 until either:

• a. Novo does not exercise the option within the option period;

• b. Novo notifies CBio of its decision not to exercise the option at an earlier time;

• c. the parties fail to execute the Licence Agreement within the Negotiation Period or any agreed extension thereof; or

• d. the parties execute the Licence Agreement.

Prospectus 75

8. Material Agreements continued

8.4 Novo Nordisk A/S exclusive option agreement continued

During the term of the exclusive option agreement, CBio must not grant any options or licences to its technology to any third parties nor enter into any arrangements, contracts or other arrangements that would adversely impact Novo’s rights under the option agreement. CBio has entered into certain agreements during the term of the exclusive option agreement however the Directors of CBio confirm that these arrangements are directly related to the Work Plan that CBio is obliged to undertake pursuant to the exclusive option agreement.

CBio has received US$2 million of the US$3 million option fee under the agreement, with the final US$1 million becoming payable 30 days after the 75th patient has been recruited to the clinical phase IIa trial. No fees are payable by Novo if CBio becomes insolvent, is dissolved or liquidated or similar.

Under the agreement, CBio continues to own or control the intellectual property rights relating to Cpn10 and has an ongoing obligation to maintain and protect the intellectual property, while Novo has a right to comment on the nature and text of all patent applications but all final decisions in respect of the following and prosecution of CBio’s patents shall be at CBio’s discretion.

In the event that Novo decides to exercise the option during the Option Period, then during the Negotiation Period, Novo and CBio must diligently and without undue delay negotiate in good faith and enter into the License Agreement. The License Agreement is defined to mean a definitive and complete exclusive (even as to CBio) development and licence agreement regarding Cpn10 protein that contains the pre-negotiated terms set out in the Term Sheet attached to the option agreement as well as terms that are customary in the pharmaceutical industry. The Negotiation Period is defined to mean the period from the date that Novo exercises its option until the parties either enter into the licence agreement or agree in writing that their negotiations regarding the licence agreement have terminated, in either event not to exceed 120 days from the date that Novo exercises its option.

The key pre-agreed terms included in the Term Sheet include:

• a. the grant to Novo and its affiliates of a worldwide, exclusive (even as to CBio) perpetual license with the right sublicense CBio’s patents and know how to research, develop, make, have made, use, sell, import, export, manufacture, distribute, offer for sale and otherwise transfer Licensed Product. Licensed Product is defined to mean a Cpn10 protein or fragment of derivatives thereof suitable as a human or animal therapeutic, the research, development, making, having made, use, importing, exporting, manufacture, distribution, sale, offering for sale, the transfer of which, but for the licence granted, would infringe an issued patent claim of a licensed patent or misappropriate a legally enforceable right in the know how of CBio;

• b. the payment of royalties to CBio in respect of both the first, second, third and fourth indication of a Licensed Product;

• c. the payment of a royalty to CBio on net sales of Licensed Product;

• d. a conditional obligation for Novo to execute an equity investment in CBio;

• e. an obligation for Novo to use commercially reasonable efforts to develop, seek marketing approval for and commercialise at least one Licensed Product in each of the US, the EU and Japan;

• f. a right for Novo to terminate the development or commercialisation of a Licensed Product with respect to any indication at any stage of development or commercialisation if:

• i. an event occurs in the regulatory process that, in Novo’s good faith judgement, materially affects its ability to progress the indication and cannot be overcome by commercially reasonable efforts; or

• ii. in Novo’s good faith judgement, the development or commercialisation of a Licensed Product is deemed not commercially attractive for Novo;

76 CBio Limited

• g. the preparation of a development plan that may involve performance of work by CBio and which will be administered by a steering committee;

• h. the term of the licence will be from the date of entry of the license agreement until no issued patent claim may be sustained in a licensed patent in any country or 10 years following the first commercial sale of a Licensed Product in any country, whichever is later to occur;

• i. termination for material breach, insolvency as well as a right for Novo to terminate the agreement without cause at any time by giving CBio 90 days written notice;

• j. Novo will be solely responsible for the maintenance, prosecution, enforcement and inventions and intellectual property rights discovered during the term of the License Agreement shall be exclusively owned by Novo; and

• k. the governing law of the agreement shall be the laws of Denmark with dispute resolution pursuant to ICC arbitration in Copenhagen, Denmark.

As Novo and CBio have pre-agreed key terms for the Licence Agreement, CBio may be immediately bound by those pre-agreed terms upon Novo exercising its option under the option agreement.

The option agreement is governed by and is subject to the laws of Denmark without regard to conflict of laws. The parties must use commercially reasonable efforts to settle disputes amicably however any dispute that cannot be resolved between the parties amicably shall be settled by the Rules of Arbitration of the International Chamber of Commerce. The arbitration must take place in Copenhagen, Denmark.

8.5 Compulsory restriction agreements

As at the date of this Prospectus, there are approximately 1,200 Existing Shareholders. CBio has applied to ASX for a determination (or waiver as necessary), in relation to the restriction requirements under the Listing Rules, which is pending.

It is currently anticipated that up to 239 existing Shareholders, holding a total of 34,829,330 Shares, may be required to enter into compulsory restriction agreements pursuant to which they will be restricted from dealing in Shares in CBio held by them at the date of this Prospectus (other than those included in the Offer and the Existing Shareholder Priority Offer).

Similarly, it is anticipated that up to 56 existing Option holders, holding a total of 20,121,152 Options, may be required to enter into compulsory restriction agreements pursuant to which they will be restricted from dealing in Options in CBio held by them at the date of this Prospectus. A determination (or waiver as necessary) from ASX is also pending.

It is also anticipated that up to 6 existing convertible note holders may be required to enter into compulsory restriction agreements pursuant to which they will be restricted from dealing with the convertible note instruments in respect of the Shares and Options for which the convertible notes may be converted. A determination (or waiver as necessary) from ASX is also pending.

Restriction agreements will be in a form consistent with the Listing Rules and restrict the ability of these Share and/or Option holders to dispose of, create any security interest in or transfer effective ownership or control of, the restricted Shares and/or Options.

Novo can terminate the agreement 30 days after an unremedied breach and is entitled to repayment of any option fee paid and to receive any data produced by CBio since the prior progress report. As at the date of the Prospectus, CBio is not aware of event of default, nor has it received any notice of an event of default.

Prospectus 77

8. Material Agreements continued

8.6 Executive service contracts

CBio has entered into executive service agreements with key executives, which contain standard terms and conditions for agreements of this nature, including confidentiality, restraint on competition and assignment of intellectual property provisions. The agreements are expressed to cover periods specific to individual appointments, but may generally be terminated by notice by either party, or earlier in the event of certain breaches of the terms and conditions.

8.7 Deeds of access, insurance and indemnity

The Company has entered into standard deeds of indemnity and access with the Directors. The Company has undertaken, consistent with the Corporations Act, to indemnify each Director in certain circumstances and to maintain Directors’ and Officers’ insurance cover in favour of each Director for seven years after the Directors have ceased to be a Director. The Company has further undertaken with each Director to maintain a complete set of the Company’s board papers and to make them available to the Director for seven years after the Director has ceased to be a Director.

8.8 Employee Share Option Plan (ESOP)

Eligibility criteria

The ESOP will be open to eligible participants, namely full and part time employees (including Directors) of the Company and any subsidiaries.

Grant of Options

Options may be offered to eligible participants for no consideration or an specified option fee as the Board may determine appropriate. The offer must be in writing and specify, amongst other things, the number of Options for which the eligible participant may apply; the period within which the Options may be exercised and any conditions to be satisfied before exercise, the option expiry date (as determined by the Board) and the exercise price of the Options.

Exercise

The Options may be exercised in multiples of 100 (unless less than 100 are held), subject to any exercise conditions nominated by the Board, by the participant giving a signed notice to the Company and paying the exercise price in full. The Company will apply for official quotation of any Shares issued on exercise of any Options.

Lapse

The Options shall lapse upon the earlier of the date specified by the Board or events contained in the ESOP rules, including within 30 days of ceasing employment, within 90 days of redundancy, death or disablement.

Rights of participants

Once Shares are allotted upon exercise of the Options, the participant will hold the Shares free of restrictions. The Shares will rank for dividends declared on or after the date of issue but will carry no right to receive any dividend before the date of issue.

Should the Company undergo a reorganisation or reconstruction of capital or any other such change, the terms of the Options will be correspondingly changed to the extent necessary to comply with the Listing Rules. In the event of a change of control, the Board shall have discretion to deal with the Options, including allowing accelerated vesting or the issue of options in the substituted corporation. A holder of options is not entitled to participate in a new issue of Shares or other securities made by the Company to Shareholders merely because he or she holds Options.

Assignment

The options are not transferable or assignable without the prior written approval of the Board.

78 CBio Limited

Administration

The ESOP will be administered by the Board which has an absolute discretion to determine appropriate procedures for its administration and resolve questions of fact or interpretation and formulate special terms and conditions (subject to the Listing Rules) in addition to those set out in the ESOP.

Termination and amendment

The ESOP may be terminated or suspended at any time by the Board. The ESOP may be amended at any time by the Board except where the amendment reduces the rights of the holders of Options.

Outstanding options

As at the date of this Prospectus the Company had a total of 13,987,697 Options for current Directors, Executives and Employees issued under the ESOP.

The lease is a standard form lease containing terms and conditions usual in leases of this nature and may be terminated earlier in the event of default by CBio, such as a failure to pay rent in accordance with the terms, certain insolvency events or if CBio fails to meet its obligations under the lease.

CBio is also liable for the obligations of the sub-tenant under the sub-lease and will be in default itself to the extent it does not remedy the breach of the subtenant. The Landlord may claim against the $150,000 bank guarantee supporting the lease without notice, in the event of default.

The rental fee is subject to review in accordance with Consumer Price Index formula in March 2010 and market review in March 2011.

CBio has sought and anticipates receiving the consent of the landlord to the deemed change in control as a consequence of issue of shares under the IPO.

8.9 Finance facility

CBio has no material bank finance facilities or other finance facilities other than noted in this Prospectus.

8.10 Lease

CBio currently leases its premises at ‘Brisbane Technology Park’ 85 Brandl Street, Eight Mile Plains in Queensland, a small portion of which is sub-leased to a third party, with the consent of the landlord.

The lease commenced on 23 September 2005. The initial term of the lease expires on 22 March 2012, with an option to extend the lease term for an additional 5 years, upon CBio giving notice of exercise of the option three months (minimum) and six months (maximum) before the expiry of the initial period.

Prospectus 79

8. Material Agreements continued

8.11 Intellectual Property

The details of Patents currently held by CBio are contained in the Patent Attorney’s Report in section 4 of this Prospectus. CBio is the applicant or patentee of patent families 4 to 11 described in that report. CBio is licensed patent rights the subject of patent families 1 to 3 under the Research Agreement discussed at section 8.11.1 below.

CBio is the registrant of the domain, www.cbio.com. au and has registered trade marks for ‘CBio LIMITED’ in class 5 for human and veterinary pharmaceuticals and ‘XTOLL’ in class 1 for the chemical compound, Chaperonin 10, and class 5 for medicated cosmetic preparations and therapeutic preparations.

8.11.1 Research Funding and Commercialisation Rights Agreement

UniQuest is the technology transfer and commercialisation company of the University of Queensland. It is primarily a vehicle for the university to licence intellectual property rights developed or owned by the University to third parties such as CBio.

On or around 27 March 1996, the University of Queensland exclusively licensed certain patent rights to UniQuest. The key patent rights in question were those the subject of applications PM2705 and PM8234 and all corresponding national and international applications now embodied within patent families 1, 2 and 3 summarised at section 4 of this Prospectus.

On or around the same time that the University of Queensland granted an exclusive licence to UniQuest, UniQuest entered into a Research Funding and Commercialisation Rights Agreement (Research Agreement) with CSL Limited (CSL), whereby:

• b. CSL was granted by UniQuest an exclusive worldwide licence and right to exploit the intellectual property (including, without limitation, the right to make, have made, use, market, sell and commercialise the products) with the right to grant sub-licences to licensees approved by UniQuest (such approval not to be unreasonably withheld).

Pursuant to a Deed of Assignment made in 2001 between CSL, CBio and UniQuest, the parties to that deed agreed to substitute CBio for CSL under the Research Agreement.

The Research Agreement was then varied by a Deed of Agreement and Variation so that CBio was relieved of its obligation to pay royalties to UniQuest in respect of its exploitation of the intellectual property licensed to CBio under the Research Agreement and CBio issued to UniQuest 3 million ordinary one dollar shares and granted a convertible note with a value of $1,125,000.

UniQuest also grants to CBio a non-exclusive licence to use such of all patents, provisional patent applications, all corresponding international applications, facts, data, opinions, secrets, ideas, processes, methodologies, know-how, models, reagents or formulae which:

• a. are developed by or under the guidance of either Dr Alice Cavanagh or Dr Halle Morton (the inventors of the provisional patents the subject of the Research Agreement);

• b. in the Field (the diagnostic, prophylactic and therapeutic uses of Chaperonin 10/EPF or its derivatives including agonists and antagonists); and

• c. that did not arise from the research program described in the Research Agreement.

• a. CSL agreed to fund a research program to be performed by UniQuest; and

80 CBio Limited

Under the Research Agreement, UniQuest is granted by CBio the exclusive right to exploit the intellectual property:

• a. in any country where CBio has declared in writing its intention to abandon exploitation; and

• b. anywhere in the world if the agreement is terminated by UniQuest for events such as administration, winding up and receivership or for unremedied default by CBio.

CBio has the right to grant sub-licences without the consent of UniQuest to licensees, subject to any rights granted by UniQuest to third parties prior to 1 January 1996 that were previously disclosed by UniQuest to CSL and any rights granted to third parties after 1 January 1996 under an agreement to which UniQuest is not a party (UniQuest is obligated to use its best endeavours to ensure that no such agreements are created without CSL’s prior written approval).

UniQuest granted CBio the sole, worldwide, exclusive, royalty-free right and licence (without the need for any further consent from CBio), to commercialise all aspects of the intellectual property in relation to all applications whatsoever outside the Field. The Field is defined in the agreement to mean the diagnostic, prophylactic and therapeutic uses of Chaperonin 10/EPF or its derivatives (including agonists and antagonists).

Where UniQuest lawfully terminates the Research Agreement or if CBio declares its intention to abandon exploitation of the intellectual property in any country, CBio must procure from applicable licensees all assistance to enable UniQuest or a person nominated by UniQuest to take the benefit of the registration of a product.

8.11.2 Royalty Agreement

An agreement made between CSL Limited and CBio in connection with the substitution of CSL with CBio under the Research Agreement, requires CBio to pay certain payments to CSL. Under the agreement CBio has two key payment obligations:

• a. the CBio Turnover Payment (being a sum of money equivalent to 5% of the gross revenue earned by CBio in respect of the products from all sources including sale of products, royalties and milestone payments paid by any distributor of or licensee or sub licensee to CBio less any royalty payments due and payable by CBio to UniQuest during the term); and

• b. the CSL Royalty (being the sum of money equivalent to 2% of the gross sale price received by CBio and any distributor from the sale of products during the term).

8.11.3 EPF Diagnostic Licence Agreement

Under this agreement, CBio grants an exclusive, worldwide licence to Psiron Limited ACN 010 657 351 to use, exploit and enjoy certain intellectual property (the intellectual property licensed to CBio by UniQuest under the research agreement discussed at section 8.11.1 above) involving the measurement of Early Pregnancy Factor (EPF) in humans and animals and limited to field of diagnostic applications. Psiron has no right to use the licensed intellectual property in respect of any therapeutic, curative or other like applications.

As a result of the grant of this exclusive licence to Psiron Limited, CBio is not permitted to use the licensed intellectual property itself or permit any thirdparty to use the intellectual property in the field of diagnostic applications.

Prospectus 81

8. Material Agreements continued

8.11 Intellectual Property continued

If Psiron develops and sells a diagnostic product relating to the intellectual property, it must pay a royalty to CBio of 5% of the net sales value received by Psiron from the sale of such products.

Psiron may assign its licence to the Australian Technology Innovation Fund Limited ACN 098 694 690 in the event that Psiron exercises no less than 100,000 put options in respect of the shares in CBio acquired by Psiron.

8.11.4 Manufacturing and process development

Development and Manufacture Agreement with Hospira Adelaide Pty Limited (formerly BresaGen Limited)

CBio has entered into an agreement with Hospira Adelaide Pty Limited (Hospira) (which has been varied on a number of occasions) for the manufacture of the active pharmaceutical ingredient Chaperonin 10 for use in toxicological studies, stability studies, human clinical trials and to support the transfer of process technology for third-party contract manufacturers and the generation of regulatory submissions.

A failure or delay by Hospira to produce any (or sufficient) quantities (all quality) of Chaperonin 10 may detrimentally affect CBio’s ability to successfully complete its clinical trials on schedule or at all.

All Intellectual Property rights that arise in the agreement directly relating to the product (recombinant human Chaperonin 10) will be owned by CBio. Generally speaking, other intellectual property created during the course of the agreement will be owned by Hospira, however Hospira does grant CBio a licence to use this intellectual property for the purpose of commercialising the product.

Either party may terminate the agreement if the other party commits a breach of a material term that is not capable of remedy, or is not remedied within 30 days of receiving notice to do so. The parties also have a right to terminate in the event of the other party’s failure to comply with a statutory demand, in the event of insolvency, appointing an administrator or in the event of steps being taken to wind up, de-register or dissolve the Company. The parties may also terminate the agreement for convenience by giving the other party 60 days written notice.

Hospira provides certain warranties under the agreement particularly in relation to the manufacture of the product under the agreement. CBio provides warranties in relation to intellectual property relating to the product.

Hospira has limited its liability under the agreement. CBio grants a broad ranging indemnity in favour of Hospira, and its liability under the indemnity is unlimited.

A further variation to the agreement has been executed by both Hospira and CBio. Pursuant to the variation Hospira disclaims all liabilities and provides no warranties in relation to the product meeting the specifications provided by CBio once it is filled. CBio accepts full responsibility and risk for the filling of the product.

The term of the head agreement expired on 7 September 2008 but has been continued and varied through subsequent agreement between the parties. In particular, CBio has agreed to pay at least 50% of the cost of future manufacturing services three months prior to commencement.

82 CBio Limited

Agreements between CBio and Formatech, Inc

Under the agreement Formatech is to manufacture the Drug Product (Chaperonin 10 or placebo) in accordance with then current European CGMP and/or US FDA CGMP regulations as they apply to aseptic manufacturing. CBio is responsible for all contact with the FDA and other regulatory authorities.

All intellectual property that is an improvement, or new use, of the Drug Product, or an invention that embodies or is developed using information furnished by CBio or a third party performing services for CBio will be owned by CBio. Any other intellectual property created will belong to Formatech.

Formatech limits its liability under the agreement and there is also a bar to any claims brought after one year of the event occurring which gave rise to the claim.

A broad ranging indemnity is also granted in favour of Formatech in relation to Drug Product manufactured by Formatech.

8.11.5 Funding and grant contracts

Pharmaceuticals Partnerships Program (P3) Funding Agreement

A funding agreement was made between the Commonwealth of Australia and CBio. The agreement commenced on 1 July 2005 and expired on 30 June 2009. Over the term of the agreement, the Commonwealth has granted approximately $5.6 million toward CBio’s research, development and clinical activates.

The Commonwealth does not assert ownership to any intellectual property created under the agreement, however, it does receive a licence to use, reproduce, publish, electronically transmit, electronically distribute, adapt and modify any material brought into existence by CBio for the purpose of the Commonwealth’s dissemination, reporting and accountability requirements but not to commercially exploit such material.

The agreement permits either party to terminate for convenience, as well as for a material breach that has not been remedied within 30 days of receiving notice to do so, or in the event of insolvency.

The agreement is governed by the law of the Commonwealth of Massachusetts.

Prospectus 83

9. Additional Information

9.1 Recent transactions

In August 2009 and subsequent to the financials to 30 June 2009, CBio undertook a pre-IPO capital raising under an Information Memorandum. A total of $12.6 million was raised, comprising $7,563,000 from the issue of 15,126,000 shares at $1.00 per Share; and $5 million in convertible notes which, if converted, would result in the issue of 10,000,000 Shares and 6,000,000 Options.

In addition, an existing Shareholder entered into a convertible note deed dated 13 August 2009 under the terms of which, the note holder agreed to use its best endeavours to acquire further convertible notes of up to $1 million in the period up until the listing of CBio with ASX.

If the note holder does not take up the option to apply for additional notes, the option will lapse on listing. Any convertible notes that are issued will attract an interest rate of 8% of the face value and expire on 31 December 2010 (unless extended by mutual agreement) and will automatically convert for Shares and Options upon CBio listing on ASX. If the convertible notes are acquired and converted (either at the note holder’s election or automatically upon listing), this would result in the issue of a maximum of 2,000,000 Shares and 2,000,000 Options exercisable at $1.00 each with an expiry of 31 December 2012.

Further details regarding these transactions and other recent transactions are set out in section 5.

9.2 Rights attaching to Shares

CBio has one class of shares, fully paid ordinary shares. The rights attaching to Shares in CBio are set out in the Constitution and summarised in section 8.2 of this Prospectus.

9.3 Shareholding qualifications

Directors are not required under the Constitution to hold any Shares.

9.4 Options

Current Options

There are 23,909,849 Options currently on issue. These Options have exercise prices ranging between $1.00 to $3.00 per Option, and all expire on 31 December 2012. These Options are predominantly held by Directors and Employees with a lesser number being held by third parties, including persons who may have performed services for CBio and received Options as part payment or received Options as part of the terms of convertible notes that were offered by CBio. Details regarding the number of Options on issue, the vesting dates of each tranche and the corresponding exercise price are set out in section 5.6.3.

Option terms

As set out in section 1.11, CBio intends to apply for quotation of 22,579,849 of $1.00 Options with ASX. In addition to the details contained in section 5.6.3, the terms on which the Options were issued include:

• The Options will expire at 5.00pm AEST on 31 December 2012 (Expiry Date). Options not exercised on that date shall lapse.

• There is no obligation to exercise the Options.

• The exercise price of $1.00 or number of Options issued may be changed in accordance with Listing Rule 6.22 or any amendment of that rule from time to time.

• In the event of any reconstruction (including a consolidation, sub-division, reduction or return) of the issued capital of the Company, the rights of the Option holder will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

• An Option has no right to participate in a new issue of Shares unless that Option has been exercised.

84 CBio Limited

• To exercise an Option, the holder must complete and execute a notice of exercise of Option in the form nominated by the Board, and must lodge the completed notice and payment of the exercise price at the Company’s registered office or otherwise directed at any time prior to the Expiry Date.

• Shares issued on exercise of the Option will rank equally in all respects with other Shares on issue. The rights and liabilities attaching to the Shares issued upon exercise of the Options are set out below.

• The Company will apply for official quotation by the ASX of the Shares issued upon exercise of the Options within 3 business days of allotment of the Shares.

Novus Capital Limited has given, and has not withdrawn, its written consent to be named as Financial Advisor and Sponsoring Broker to the Offer in the form and context in which it is named.

McCullough Robertson has given, and has not withdrawn, its written consent to be named as lawyers to the Company in the form and context in which it is named.

Ernst & Young has given, and has not withdrawn, its written consent to be named as Independent Accountant, in the form and context in which it is named and for the inclusion of its Independent Accountant’s Report in section 6 of this Prospectus in the form and context in which it is included.

Ernst & Young has given, and not withdrawn, its consent to be named as Auditor in the form and context in which it is named.

Future issues of Options

In addition to the existing Options, a further 1,000,000 Options will be issued to the Sponsoring Broker under the terms of the Mandate (summarised in section 8.3 upon successful completion of the Offer). CBio may also issue Options to employees under the Employee Share Option Plan, details of which are set out in section 8.8.

9.5 Litigation

As at the date of this Prospectus, there is no current litigation against the Company, nor are the Directors aware of any pending litigation against the Company.

Spruson & Ferguson has given, and has not withdrawn, its written consent to be named as Patent Attorney, in the form and context in which it is named and for the inclusion of its Report in section 4 of this Prospectus in the form and context in which it is included.

Link Market Services Limited has given, and not withdrawn, its written consent to be named as share registrar in the form and context in which it is named.

Each of Dr Peter Nash, Dr Stephen Hall, Dr Göran Ando, Dr Peter B. Corr and Professor John Funder have given, and not withdrawn, their individual written consent to be quoted and named in this Prospectus in the form and context in which they are quoted and named.

9.6 Consents and disclaimers

of responsibility

None of the parties referred to below has made any statement that is included in this Prospectus or any statement on which a statement made in this Prospectus is based, except as specified below. Each of the parties referred to below, to the maximum extent permitted by law, expressly disclaims, and takes no responsibility for, any part of this Prospectus, other than the reference to its name and a statement included in this Prospectus with the consent of that party, as specified below.

9.7 Interests of experts and advisors

Except as set out in this Prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus:

• has any interest or has had any interest during the last two years, in the formation or promotion of CBio, or in property acquired or proposed to be acquired by CBio in connection with its formation or promotion, or the Offer of the Shares; and

Prospectus 85

9. Additional Information continued

9.7 Interests of experts and advisors continued

• no amount has been paid or agreed to be paid, and no benefit has been given, or agreed to be given, to any such person in connection with the services provided by the person in connection with the formation or promotion of CBio, or the Offer of the Shares.

Novus Capital Limited has acted as Sponsoring Broker to the Offer. Novus Capital Limited will be paid a sponsoring broker fee, details of which are disclosed in section 8.3 of this Prospectus. In addition, Novus Capital Limited acted as underwriter on terms set out in an Underwriting Agreement dated 17 August 2009 for the offer made under Information Memorandum referred to in section 9.1. Novus Capital received $703,650 (excluding GST) and in addition, 350,000 Shares and 1,000,000 Options.

McCullough Robertson has acted as legal adviser to the Company in relation to the Offer and has been involved in undertaking due diligence enquiries and providing legal advice in relation to the Offer. McCullough Robertson will be paid an amount of up to $165,000 (excluding GST) in respect of these services.

Ernst & Young has acted as Independent Accountant to the Offer and has prepared the Independent Accountant’s Report in section 6 and performed work in relation to due diligence enquiries. Ernst & Young will be paid an estimated fee of $75,000 (excluding GST) in respect to these services. Further amounts may be paid to Ernst & Young in accordance with their normal time-based charges.

Spruson & Ferguson has acted as Patent Attorney to the Company and has prepared the Report in section 4 and performed work in relation to due diligence enquiries. Spruson & Ferguson will be paid an estimated amount $20,000 (excluding GST) of in respect of these services.

Link Market Services Limited has acted as Share Registry to the Company. Link Market Services Limited will be paid an estimated $5,500 (excluding GST) in respect of these services.

9.8 Interests of Directors

Other than set out below or elsewhere in this Prospectus:

• no Director or proposed Director of the Company has, or has had in the two years before lodgement of this Prospectus, any interest in the formation or promotion of the Company, or the Offer of Shares, or in any property proposed to be acquired by the Company in connection with information or promotion of the Offer of the Shares; and

• amounts have been paid or agreed to be paid and no benefit has been given or agreed to be given, to any Director or proposed Director of the Company either to induce him or her to become, or to qualify him or her as a Director, or otherwise for services rendered by him or her in connection with the promotion or formation of the Company or the Offer of Shares.

9.8.1. Shareholdings

The Directors of the Company or their associates have a beneficial interest in the following Shares and Options in the Company at the date of this Prospectus:

==> picture [213 x 184] intentionally omitted <==

----- Start of picture text -----

Director &
Associated Entities Shares Options
Stephen Jones 1,190,033 300,000
Michael Monsour 4,844,282 3,104,000
Stephen Streeter 18,182 1,300,000
Jason Yeates - 2,000,000
Dennis Feeney - 1,800,000
Göran Ando - 1,000,000
John Funder 100,000 1,000,000
Peter B. Corr - 1,000,000
TOTAL 6,192,497 11,504,000
----- End of picture text -----

The Directors reserve the right to apply for further Shares under the Offer.

In addition to the above Messrs Jones, Streeter and Monsour are directors of Australian Technology Innovation Fund Ltd which holds 3,373,598 Shares in CBio.

86 CBio Limited

9.8.2 Transactions with related parties

Other than as described elsewhere in this Prospectus, there are no arrangements or transactions between CBio and related parties.

9.8.3 Payments to Directors

The constitution of the Company provides that the Directors may be paid, as remuneration for their services, a sum determined from time to time by the Company’s shareholders in general meeting, with that sum to be divided amongst the Directors in such manner and proportion as they agree. The current directors’ fees are $75,000 (excluding GST as applicable) per annum plus statutory superannuation for the Chairman, and $50,000 per annum plus statutory superannuation for each of the non-executive directors. In addition, Stephen Jones is retained under contract to act as a consultant to the Company and is paid for these services on monthly retainer plus a per diem fee basis also paid monthly. The Contract provides that he will serve an Executive of the Company. Stephen Streeter provides capital raising services to the Company. Fees based on funds raised are paid to S & M Streeter Investments.

Fees amounting to $4,979 have been paid since 30 June 2009 to a company related to Stephen Streeter with respect to fund raising services for the Company. In addition, Stephen Streeter holds the position of Executive Director Equities, Novus Capital Limited, and may receive remuneration from Novus with respect to fund raising services provided to CBio.

Directors’ remuneration (1 July 2009 – 10 November 2009)

==> picture [441 x 264] intentionally omitted <==

----- Start of picture text -----

Share-
Post Termination based
Short-term employment benefit payment Total
Salary Superann- Value of
& fees Other uation Options
$ $ $ $ $ $
Stephen Jones 133,000 - 420 - - 133,420
Peter B. Corr 66,666 - - - - 66,666
Göran Ando 16,666 - - - - 16,666
John Funder 16,666 - - - - 16,666
Michael Monsour 16,666 - 1,500 - - 18,166
Stephen Streeter 16,666 - - - - 16,666
Jason Yeates 100,000 - 9,000 - - 109,000
Dennis Feeney 102,665 - - - - 102,665
468,995 - 10,920 - - 479,915
----- End of picture text -----

The above table includes payments made to Director related entities and is inclusive of consulting services provided by Stephen Jones. As noted in section 5.1 of this Prospectus, CBio also relies upon s712 of the Corporation Act to incorporate by reference the annual report for the financial year ended 30 June 2009. This report contains disclosure of the Company’s remuneration report, disclosure of directors’ fees and related party transactions.

Prospectus 87

9. Additional Information continued

9.9 Offer Costs

Should the Company raise the maximum funds under the Offer, the total estimated expenses payable by the Company (Offer Costs) including ASX and ASIC fees, sponsoring broker fees, accounting fees, legal fees, share registry fees, printing costs, public relations costs and other miscellaneous cash expenses are estimated to be approximately $2,412,061 (excluding GST).

9.10 Electronic Prospectus

This Prospectus is available in electronic form at www. cbio.com.au. Any person receiving this Prospectus electronically will on request be sent a paper copy of the Prospectus by the Company free of charge during the period of the Offer. Applications must be made by completing a paper copy of the Application Form. CBio will not accept Application Forms electronically. The Application Form may only be distributed attached to a complete and unaltered copy of the Prospectus. The Application Form included with this Prospectus contains a declaration that the investor had personally received the complete and unaltered Prospectus prior to completing the Application Form. The Company will not accept a completed Application Form if it has reason to believe that the Applicant has not received a complete paper copy or electronic copy of the Prospectus or if it has reason to believe that the Application Form or electronic copy of the Prospectus has been altered or tampered with in any way. While the Company believes that it is extremely unlikely that during the period of the Offer the electronic version of the Prospectus will be tampered with or altered in any way, the Company can not give an absolute assurance that this will not occur. Any investor in doubt concerning the validity or integrity of an electronic copy of the Prospectus should immediately request a paper copy of the Prospectus directly from the Company or a financial adviser.

9.11 Privacy

Upon applying for Shares in the Company, Applicants will be required to provide personal information to the Company directly and via the share registry, such as name, address, telephone and fax numbers, tax file number and account details. The Company and the share registry collect, hold and use that personal information to assess Applications, provide facilities and services to Applicants and undertake appropriate administration. Access to information may be disclosed by the Company to its agents and service providers on the basis that they deal with such information in accordance with the Privacy Act 1988 (Cth) as amended. Applications which do not provide the information requested may not be processed. Under the Privacy Act 1988 (Cth) as amended, Applicants may request access to their personal information held by or on behalf of the Company by contacting the share registry as set out in the Directory.

9.12 Authorisation

This Prospectus is issued by the Company. Each Director has consented to the lodgement of the Prospectus with ASIC.

==> picture [99 x 78] intentionally omitted <==

Stephen Jones Executive Chairman 10 November 2009

88 CBio Limited

Appendix

Completed and ongoing human clinical trials

==> picture [442 x 527] intentionally omitted <==

----- Start of picture text -----

Total XToll
Year/Status Phase Indication Route patients patients Doses Details
2003/complete 1a Healthy IV/SC 19 14 1, 2.5, 5, 1 placebo in each
volunteers 10mg IV cohort
5mg SC
2004/complete 1b Multiple IV 12 9 2.5 or 5mg x 5 1 placebo in each
Sclerosis cohort
2005/complete 2a Multiple IV 50 39 5mg 11 subjects received
Sclerosis placebo 2x weekly
1x - 2x/weekly
2005/complete 2 Ulcerative IV 8 8 5mg Terminated early
Colitis
2005/complete 2a Plaque IV 24 24 5, 7.5 or 10 mg No placebo
Psoriasis
2x/weekly
2005/complete 2a Rheumatoid IV 23 23 5, 7.,5 or 10 mg No placebo
Arthritis
2x/weekly
2006/complete 1a Healthy SC 24 16 10,30,60,100mg Single dose
volunteers
2 placebo in each
cohort
2006/complete 1b Healthy SC 22 17 30, 60, 60x2, Multiple dose
volunteers 80mg
1 placebo in each
cohort
2008/ongoing 2a Rheumatoid SC 150 100 25mg, 75mg First patient injected
Arthritis June 2008
Placebo controlled
73 of 150 patients
recruited
62 patients
completed
Total 332 250
----- End of picture text -----

Prospectus 89

Appendix continued

Publications referencing Cpn10/XToll[®]

Athanasas-Platsis S, Zhang B, Hillyard NC, Cavanagh AC, Csurhes PA, Morton H, and McCombe PA. 2003. Early pregnancy factor suppresses the infiltration of lymphocytes and macrophages in the spinal cord of rats during experimental autoimmune encephalomyelitis but has no effect on apoptosis. J Neurol Sci. 214:27-36.

Broadley SA, Vanags D, Williams B, Johnson B, Feeney D, Griffiths L, Shakib S, Brown G, Coultard A, Mullins P, Kneebone C 2009. Results of a Phase IIa clinical trial of an anti-inflammatory molecule, chaperonin 10, in multiple sclerosis. , Multiple Sclerosis. 15: 329-336.

Cavanagh AC and Morton H. The purification of early-pregnancy factor to homogeneity from human platelets and identification as chaperonin 10. Eur J Biochem 222, 551-660. 1994.

Harness J, Cavanagh A, Morton H, and McCombe P, 2003. A protective effect of early pregnancy factor on experimental autoimmune encephalomyelitis induced in Lewis rats by inoculation with myelin basic protein. J Neurol Sci 216:33-41.

Johnson BJ, Le TTT, Dobbin CA, Banovic T, Howard CB, Flores FML, Vanags D, Naylor DJ, Hill G, Suhrbier A 2005. Hsp10 Inhibits LPS-induced Inflammatory Mediator Production. J.Biol.Chem 280: 4037-4047.

Quinn KA, Athanasas-Platsis S, Wong T-Y, Rolfe BE, Cavanagh AC, and Morton H. Monoclonal antibodies to early pregnancy factor perturb tumour cell growth. Clin Exp Immunol 80, 100-108. 1990.

Quinn KA and Morton H. Effect of monoclonal antibodies to early pregnancy factor (EPF) on the in vivo growth of transplantable murine tumours. Cancer Immunol Immunother 34, 265-271. 1992.

Morton H, McKay DA, Murphy RM, Somodevilla-Torres MJ, Swanson CE, Cassady AI, Summers KM, and Cavanagh AC, 2000. Production of a recombinant form of early pregnancy factor that can prolong allogeneic skin graft survival time in rats. Immunol Cell Biol 78:603-607.

Somodevilla-Torres M.J., Morton H., Zhang B., Reid S. and Cavanagh A.C., 2003, Purification and characterisation of functional early pregnancy factor expressed in Sf9 insect cells and in Escherichia coli, Protein Expression and Purification, 32, 276-287.

Vanags D, Williams B, Johnson B, Hall S, Nash P, Taylor A, Weiss J, Feeney D 2006. Therapeutic Efficacy and Safety of Cpn10 in patients with rheumatoid arthritis. The Lancet. 368: 855-63.

Van Eden. 2008. Evaluation of XToll[®] . Current Opinion in Investigational Drugs. 9(5):523-533.

Footnotes

1. The John Hopkins Arthritis Centre www.hopkins-arthritis.org

2. Mehta Partners Morning Meeting, 24 April 2009. p4

3. Voll, RE and Kalden, JR. Autoimmune Diseases and Treatment: Organ-Specific and Systemic Disorders, Annals of New York Academy of Sciences. 1051:799–810, 2006, p800

4. National Centre for Monitoring Arthritis and Musculoskeletal Conditions, 2009. “A picture of rheumatoid arthritis in Australia”.

5. Arthritis Foundation www.arthritis.org

6. The John Hopkins Arthritis Centre www.hopkins-arthritis.org

7. In July 2008, The CIA World Factbook estimates the world population at 6,706,993,152 https://www.cia.gov/library/ publications/the-world-factbook/print/xx.html

8. The John Hopkins Arthritis Centre www.hopkins-arthritis.org

9. Mayo Clinic www.mayoclinic.com

10. National Centre for Monitoring Arthritis and Musculoskeletal Conditions, 2009. A Picture of Rheumatoid Arthritis in Australia.

11. Voll, RE and Kalden, JR. Autoimmune Diseases and Treatment: Organ-Specific and Systemic Disorders, Annals of New York Academy of Sciences. 1051:799–810, 2006, p800

12. Selective Costimulation Modulators: Addressing Unmet Needs in Rheumatoid Arthritis Management. Emery et al, Medscape General Medicine 2005; 6(4 Suppl):1

13. US Food & Drug Administration, last updated 28 May 2009 http://www.fda.gov/Drugs/DrugSafety/ PostmarketDrugSafetyInformationforPatientsandProviders/ DrugSafetyInformationforHeathcareProfessionals/UCM070725

14. Arrowhead Publishers, 2009. The Rheumatoid Arthritis Market Competitive Landscape and Clinical Stage Analysis. p 109-114

15. Johnson et al., 2005 J.Biol.Chem 280: 4037-4047

16. Arrowhead Publishers Rheumatoid Arthritis Therapeutics: Market Trends and R&D Insights 2006, p51

17. Arrowhead Publishers, 2009. The Rheumatoid Arthritis Market Competitive Landscape and Clinical Stage Analysis. p124

18. Arrowhead Publishers, 2009. The Rheumatoid Arthritis Market Competitive Landscape and Clinical Stage Analysis. p66

19. Mehta Partners Morning Meeting, 24 April 2009. p4

Williams B, Vanags D, Hall S, Mc Cormack C, Foley P, Weiss J, Johnson B, Latz E, Feeney D . 2008. Efficacy and Safety of Chaperonin 10 in Patients with Moderate to Severe Plaque Psoriasis: Evidence of Utility Beyond a Single Indication. Arch Dermatol. 144:683-685.

Zhang B, Harness J, Somodevilla-Torres MJ, Hillyard NC, Mould AW, Alewood D, Love SG, Alewood PF, Greer JM, Cavanagh AC, McCombe PA, and Morton H, 2000. Early pregnancy factor suppresses experimental autoimmune encephalomyelitis induced in Lewis rats with myelin basic protein and in SJL/J mice with myelin proteolipid protein peptide 139-151. J Neurol Sci 182:5-15.

Zhang B, Walsh MD, Nguyen KB, Hillyard NC, Cavanagh AC, McCombe PA, and Morton M, 2003. Early pregnancy factor treatment suppresses the inflammatory response and adhesion molecule expression in the spinal cord of SJL/J mice with experimental autoimmune encephalomyelitis and the delayed-type hypersensitivity reaction to trinitrochlorobenzene in normal BALB/c mice. J Neurol Sci 212:37-46.

1. Arrowhead Publishers, 2009. The Rheumatoid Arthritis Market Competitive Landscape and Clinical Stage Analysis. p67

2. Arrowhead Publishers, 2009. The Rheumatoid Arthritis Market Competitive Landscape and Clinical Stage Analysis. p15

3. United States Patent & Trademark Office http://www.uspto.gov/ web/offices/pac/dapp/opla/term/156.html

4. Arrowhead Publishers, 2009. The Rheumatoid Arthritis Market Competitive Landscape and Clinical Stage Analysis. p82-84

5. Selective Costimulation Modulators: Addressing Unmet Needs in Rheumatoid Arthritis Management. Emery et al, Medscape General Medicine 2005; 6(4 Suppl):1

6. Arrowhead Publishers, 2009. The Rheumatoid Arthritis Market Competitive Landscape and Clinical Stage Analysis. p122

90 CBio Limited

Glossary

==> picture [441 x 532] intentionally omitted <==

----- Start of picture text -----

Term Meaning
AEDT Australian Eastern Daylight Saving Time
Applicant A person or entity who submits an Application Form or Priority Offer Form
Application Form An application form attached to this Prospectus or the Prospectus
available electronically
Application Money The money received by the Company pursuant to the Offer, being the Offer
Price multiplied by the number of Shares applied for by an Applicant
ASIC Australian Securities and Investments Commission
ASX ASX Limited and the securities exchange operated by it
Board The board of directors of the Company
Closing Date The date on which the Offer closes, being 3 December 2009, or another date
nominated by the Company
Company or CBio CBio Limited ACN 094 730 417
Composition of Matter One of the four principal categories by which things may be patented
Corporations Act Corporations Act 2001 (Cth)
Cpn10 A modified version of the natural protein chaperonin 10
Director Shareholders The parties associated with each of the Directors
Directors The directors of the Company
Existing Shareholder A person who owns Shares as at the date of the Prospectus and is noted
as such on the shareholder register and, for the purposes of the Priority Offer,
is an eligible shareholder if they are registered, as at the record date specified
for the Priority Offer, with a registered address in Australia
Existing Shareholder Priority The offer described in section 1.7
Offer or Priority Offer
Information Memorandum Means the offer under information memorandum to raise pre-IPO capital
which is refered to in sections 5.5.1 and 9.1
Intravenous (IV) A method of drug delivery where an injection is made directly into the vein
Investigational New Drug An application to FDA to begin studies of a new drug or biologic on humans.
Application (IND) The IND gives the plan for the study and contains formulation, manufacturing
and animal test result information
IP Intellectual Property – including patents and trade marks
Listing Rules Means the rules applying to ASX
----- End of picture text -----

Prospectus 91

continued Glossary

==> picture [441 x 508] intentionally omitted <==

----- Start of picture text -----

Term Meaning
Minimum Subscription The Minimum Subscription, being the amount referred to in section 1.1
is $13 million
Maximum Subscription The Maximum Subscription under this Offer is $30 million
Offer The offer of new Shares under this Prospectus
Offer Costs means the amount referred in section 9.9
Offer Price $1.00 per Share
Option An option to acquire a fully paid ordinary share in CBio
Option Holder The holder of an Option
Over Subscriptions Over Subscriptions of up to $5 million will be accepted under this Offer
Personnel Employees and professional services contractors of CBio
Phase I Drug development stage aimed at establishing safety
Phase Il Drug development stage aimed at establishing efficacy and optimal
dosing regimen
Priority Offer Form An application form attached to this Prospectus that is sent to Existing
Shareholders who are eligible to participate in the Existing Shareholder
Priority Offer
Priority Closing Date 30 November 2009, being the date on which the Existing Shareholder
Priority Offer closes
Prospectus This document, dated 10 November 2009
R&D Research and Development
Shareholders Holders of shares in CBio
Shares Fully paid ordinary shares in CBio
Sponsoring Broker Novus Capital Limited ACN 006 711 995
or Novus Capital
Subcutaneous (SC) A method of drug delivery where an injection is made into the tissue just
below the skin
Toxicology Studies Studies in animals for safety purposes
XToll [®] XToll [®] is the registered trade mark of Cpn10 which CBio is developing
for ultimate commercialisation
----- End of picture text -----

92 CBio Limited

Broker Code

Adviser Code

ABN 76 094 730 417

==> picture [94 x 48] intentionally omitted <==

CBio Limited

Public Offer Application Form

This is an Application Form for Shares in CBio Limited under the Public Offer on the terms set out in the Prospectus dated 10 November 2009. You may apply for a minimum of 2,000 Shares and multiples of 100 Shares thereafter. This Application Form and your cheque or bank draft must be received by 5:00pm (AEDT) on 3 December 2009 . This Offer closes on 3 December 2009.

If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.

A

Shares applied for Price per Share Application Monies , , at A$1.00 B A$ , , . (minimum 2,000, thereafter in multiples of 100)

PLEASE COmPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) Applicant #1 Surname/Company Name

C

==> picture [509 x 526] intentionally omitted <==

----- Start of picture text -----

Title First Name Middle Name
Joint Applicant #2
Surname
Title First Name Middle Name
Designated account e.g. (or Joint Applicant #3)
TFN/ABN/Exemption Code
First Applicant Joint Applicant #2 Joint Applicant #3
TFN/ABN type – if NOT an individual, please mark the appropriate box Company Partnership Trust Super Fund
PLEASE COmPLETE ADDRESS DETAILS
PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)
Unit Number/Level Street Number Street Name
Suburb/City or Town State Postcode
Email address (only for purpose of electronic communication of shareholder information)
CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)
X
Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly
with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares
issued as a result of the Offer will be held on the issuer sponsored sub-register.
Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)
( )
Cheques or bank drafts should be made payable to “CBio Limited – Share Offer” in Australian currency and crossed “Not
Negotiable”.
Cheque or Bank Draft Number BSB Account Number
-
Total Amount A$ , , .
----- End of picture text -----

D

E

F X

G ( )

H

LODGEmENT INSTRUCTIONS You must return your application so it is received before 5:00pm (AEDT) on 3 December 2009 to: Link Market Services Limited, Locked Bag A14, Sydney South NSW 1235.

CBZ IPO001

Your Guide to the Application Form

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the form.

The shares to which this Application Form relates are CBio Limited shares. Further details about the shares are contained in the Prospectus dated 10 November 2009 issued by CBio Limited. The Prospectus will expire on 9 November 2010. While the Prospectus is current, CBio Limited will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request.

The Australian Securities and Investment Commission requires that a person who provides access to an electronic application form must provide access, by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.

The Prospectus contains important information about investing in the shares. You should read the Prospectus before applying for Shares.

• a Insert the number of Shares you wish to apply for. The Application must be for a minimum of 2,000 Shares and thereafter in multiples of 100. You may be issued all of the Shares applied for or a lesser number.

• e Please enter your postal address for all correspondence. All communications to you from CBio Limited and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

• b Insert the relevant amount of Application Monies. To calculate your only one address can be entered. Application Monies, multiply the number of Shares applied for by the F If you are already a CHESS participant or sponsored by a CHESS issue price. Amounts should be in Australian dollars. Please make sure participant, write your Holder Identification Number (HIN) here. If the the amount of your cheque or bank draft equals this amount. name or address recorded on CHESS for this HIN is different to the

• C Write the full name you wish to appear on the register of Shares. This details given on this form, your Shares will be issued to CBio Limited’s must be either your own name or the name of a company. Up to three issuer sponsored subregister.

• C Write the full name you wish to appear on the register of Shares. This must be either your own name or the name of a company. Up to three joint Applicants may register. You should refer to the table below for the correct registrable title.

• g Please enter your telephone number(s), area code and contact name in case we need to contact you in relation to your Application.

• D Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not affect your Application. However, if these are not provided, CBio Limited will be required to deduct tax at the highest marginal rate of tax (including the Medicare Levy) from payments.

• H Please complete the details of your cheque or bank draft in this section. The total amount of your cheque or bank draft should agree with the amount shown in section B.

• Make your cheque or bank draft payable to “Cbio limited – share offer” in Australian currency and cross it “Not Negotiable”. Your cheque or bank draft must be drawn on an Australian bank. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected.

loDgemeNt iNstrUCtioNs

This Application Form and your cheque or bank draft must be mailed or delivered so that it is received before 5:00pm (AEDT) on 3 December 2009 at:

Postal Delivery Hand Delivery CBio Limited Share Offer CBio Limited Share Offer C/- Link Market Services Limited C/- Link Market Services Limited Locked Bag A14 Level 12, 680 George Street SYDNEY SOUTH NSW 1235 SYDNEY NEW SOUTH WALES (do not use this address for mailing purposes)

if you require further information on how to complete this application Form, or would like to obtain a paper copy of the Prospectus, please contact the Cbio limited offer information line on 1800 134 068 (within australia) or +612 8280 7732 (from outside australia) between 8:30am and 5:30pm (aeDt) monday to Friday.

Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

CorreCt Forms oF registrable Names

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

type of investor	Correct Form of registration	incorrect Form of registration
individual Usegiven names in full, not initials	Mrs Katherine Clare Edwards	K C Edwards
Company Use Company’s full title, not abbreviations	Liz Biz PtyLtd	Liz Biz P/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms MaryOrlando Tranche	Peter Paul & MaryTranche
trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith FamilyTrust
Deceased estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post or Harold Post Deceased
minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton	Master Henry Hamilton
Partnerships Use the partners’ personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son
long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated bodies/business Names Use offce bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

Broker Code

Adviser Code

ABN 76 094 730 417

==> picture [94 x 48] intentionally omitted <==

CBio Limited

Broker Firm Application Form

This is an Application Form for Shares in CBio Limited under the Broker Firm Offer on the terms set out in the Prospectus dated 10 November 2009. Capitalised words and certain terms used in this Application Form have the meanings given to them in the Prospectus. You may apply for a minimum of 2,000 Shares and multiples of 100 Shares thereafter. This Application Form and your cheque or money order must be received by your Broker by the deadline set in their offer to you. The CBio Limited Initial Public Offer closes on 3 December 2009.

If you are in doubt as to how to deal with this Application Form, please contact your Broker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.

A

C

Number of Shares applied for Offer Price per Share Application Monies , , at A$1.00 B A$ , , . (minimum 2,000, thereafter in multiples of 100) PLEASE COmPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) Applicant #1 Surname/Company Name Title First Name Middle Name Joint Applicant #2 Surname Title First Name Middle Name

==> picture [33 x 49] intentionally omitted <==

Designated account e.g. (or Joint Applicant #3)

PLEASE COmPLETE ADDRESS DETAILS

PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

D

Unit Number/Level Street Number	Street Name
Suburb/City or Town		State	Postcode

Email address (only for purpose of electronic communication of shareholder information)

CHESS HIN (If you want to add this holding to a specific CHESS holder, please provide your CHESS HIN in the box below)

E X

Please note: if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored sub-register.

Telephone number where you can be contacted during business hours Contact name (PRINT)

F ( )

Cheques or money orders should be drawn up according to the instructions given by your Broker.

G

==> picture [444 x 50] intentionally omitted <==

----- Start of picture text -----

Cheque or money order number BSB Account number
-
Total Amount A$ , , .
----- End of picture text -----

==> picture [32 x 41] intentionally omitted <==

LODGEmENT INSTRUCTIONS

You must return your application so it is received by your Broker by the deadline set in their offer to you.

CBZ IPO002

Your Guide to the Application Form

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the form.

The Shares to which this Application Form relates are CBio Limited Shares. Further details about the Shares are contained in the Prospectus dated 10 November 2009 issued by CBio Limited. The Prospectus will expire on 9 November 2010. While the Prospectus is current, CBio Limited will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request.

The Australian Securities and Investment Commission requires that a person who provides access to an electronic application form must provide access, by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.

The Prospectus contains important information about investing in the Shares. You should read the Prospectus in its entirety before applying for Shares.

• A Insert the number of Shares you wish to apply for. The Application must E If you are already a CHESS participant or sponsored by a CHESS be for a minimum of 2,000 Shares and thereafter in multiples of 100. participant, write your Holder Identification Number (HIN) here. If the You may be issued all of the Shares applied for or a lesser number. name or address recorded on CHESS for this HIN is different to the details given on this form, your Shares will be issued to CBio Limited’s

• B Insert the relevant amount of Application Monies. To calculate your issuer sponsored subregister.

• B Insert the relevant amount of Application Monies. To calculate your Application Monies, multiply the number of Shares applied for by the Offer Price. Amounts should be in Australian dollars. Please make sure the amount of your cheque or money order equals this amount.

• F Please enter your telephone number(s), area code and contact name in case we need to contact you in relation to your Application.

• C Write the full name you wish to appear on the register of Shares. This must be either your own name or the name of a company. Up to three joint Applicants may register. You should refer to the table below for the correct registrable title.

• G Please complete the details of your cheque or money order in this section. The total amount of your cheque or money order should agree with the amount shown in section B.

  • If you receive a firm allocation of Shares from your Broker make your cheque payable to your Broker in accordance with their instructions.

• D Please enter your postal address for all correspondence. All communications to you from CBio Limited and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

LODGEMENT INSTRUCTIONS

This Application Form and your cheque or money order must be mailed or delivered so that it is received by your Broker by the deadline set out in their offer to you. The CBio Limited Initial Public Offer closes on 3 December 2009.

THIS FORM MUST NOT BE SENT TO LINK MARKET SERVICES LIMITED AS THEY WILL NOT BE PROCESSING YOUR APPLICATION.

Privacy Statement: Link Market Services Limited advises that Chapter 2C of the Corporations Act 2001 requires information about you as a shareholder (including your name, address and details of the Shares you hold) to be included in the public register of the entity in which you hold shares. Information is collected to administer your shareholding and if some or all of the information is not collected then it might not be possible to administer your shareholding. Your personal information may be disclosed to the entity in which you hold shares. You can obtain access to your personal information by contacting us at the address or telephone number shown on this form. Our privacy policy is available on our website (www.linkmarketservices.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

designation if completed exactly as described in the examples of correct	forms below.
Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual Usegiven names in full,not initials	Mrs Katherine Clare Edwards	K C Edwards
Company Use Company’s full title,not abbreviations	Liz Biz Pty Ltd	Liz Biz P/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post or Harold Post Deceased
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton	Master Henry Hamilton
Partnerships Use the partners’ personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated Bodies/Business Names Use offce bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

Corporate Directory

Company CBio Limited ACN 094 730 417

Registered Address 85 Brandl Street Eight Mile Plains QLD 4113 www.cbio.com.au

Directors

Mr Stephen Jones Executive Chairman

Mr Jason Yeates Managing Director and CEO

Dr Göran Ando Non-Executive Director

Professor John Funder Non-Executive Director

Dr Peter B. Corr Non-Executive Director

Dr Michael Monsour Non-Executive Director

Mr Stephen Streeter Non-Executive Director

Dr Dennis Feeney Executive Director and President Global Development and Licensing

Sponsoring Broker to the Offer Novus Capital Limited ACN 006 711 995 Level 24, Royal Exchange Building 56 Pitt Street Sydney NSW 2000 www.novuscapital.com.au

Auditor & Independent Accountant Ernst & Young 1 Eagle Street Brisbane QLD 4000 www.ey.com/au

Lawyers to the Offer McCullough Robertson Level 11, Central Plaza Two 66 Eagle Street Brisbane QLD 4000 www.mccullough.com.au

Patent Attorneys Spruson & Ferguson Patent and Trade Mark Attorneys Level 35, St Martins Tower 31 Market Street Sydney NSW 2000 www.sprusons.com.au

Share Registry Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 www.linkmarketservices.com.au

Company Secretary Mr Ben Graham

==> picture [595 x 703] intentionally omitted <==

CBio Limited ACN 094 730 417

85 Brandl Street, Eight Mile Plains QLD 4113 P +61 7 3841 4844 F +61 7 3341 4200 W www.cbio.com.au