MEMPHASYS LIMITED. - Capital/Financing Update 2009

==> picture [174 x 311] intentionally omitted <==

N Gen

==> picture [245 x 70] intentionally omitted <==

PROSPECTUS NuSep Ltd

ABN 33 120 047 556

Prospectus to raise up to $5.075 million by:

the issue of up to 5.075 million Shares at $1.00 per Share; and
the distribution by NuSep of up to 1.7 million Prime BioSeparations Shares by way of transfer to Eligible Prime BioSeparations Shareholders.

Successful Applicants will also receive:

one Option for every four Shares issued under the Offer; and
a pro rata entitlement with existing Shareholders to 1.325 million Bonus Shares.

Preference will be given to Existing Shareholders

THE SECURITIES OFFERED BY THIS PROSPECTUS SHOULD BE CONSIDERED SPECULATIVE THIS PROSPECTUS REPLACES THE PROSPECTUS LODGED BY THE COMPANY WITH ASIC ON 11 MARCH 2009

Important Information

This Prospectus is dated 7 May 2009 and was lodged with ASIC on that date. It replaces the Prospectus lodged by the Company with ASIC on 11 March 2009. Neither ASIC nor ASX take responsibility for the contents of this Prospectus. No Shares will be issued on the basis of this Prospectus later than 13 months after 7 May 2009.

This document is important and should be read in its entirety. Your investment decision in relation to the Offer should be based on the information contained in this Prospectus and disclosures made to the market by the Company. If in doubt, you should consult your stockbroker, solicitor, accountant or other professional adviser without delay. Neither the Company, the Directors, the NxGen Nominee Directors nor any other party associated with the preparation of this Prospectus guarantee that any specifi c objective of the Company will be achieved or that any particular performance of the Company, Prime BioSeparations or NxGen or of the Shares will be achieved after the NxGen Acquisition.

Some words in this Prospectus have defi ned meanings. The glossary in section 13 of this Prospectus contains these meanings.

Offer

The Company specifi cally notes that the Offer does not take into account your specifi c investment needs or objectives. The Company urges you to read this Prospectus in its entirety before making an application for Shares and Prime BioSeparations Shares. In particular, the Company draws your attention to those matters identifi ed by the Company as representing risks to the Company, Prime BioSeparations, NxGen and the NxGen Acquisition in section 11 of this Prospectus. In the context of your personal requirements and the risk factors, the Company recommends that you seek professional guidance from your stockbroker, solicitor, accountant or other professional adviser prior to making the decision to apply for Shares (which will include the receipt of Prime BioSeparations Shares).

While the Directors recommend this Offer, investment in the securities offered under this Prospectus should be considered speculative.

For persons accessing the on-line version of the Prospectus, the Offer is only available to such persons accessing the Prospectus from within Australia only. The Prospectus may be accessed on the internet at www.nusep.com. A person who gives another person access to the Application Form must at the same time and by the same means give that other person access to the Prospectus (and any supplementary prospectus). The Company will make available a paper copy of the electronic Prospectus and Application Form if requested at no charge.

This Prospectus also sets out information relating to Prime BioSeparations as under the Offer successful Applicants will receive Prime BioSeparations Shares.

Purpose of this document

In addition to providing information in relation to the Offer, one of the main purposes of this Prospectus is to explain how the Spin Out and the NxGen Acquisition will result in a signifi cant change to the nature and scale of the Company’s activities. Under the ASX Listing Rules, the magnitude of the proposed change in the nature and scale of NuSep places a requirement on the Company to satisfy the requirements in Chapters 1 and 2 of the ASX Listing Rules which includes the requirement to issue a prospectus.

Privacy

If you apply for Shares and Prime BioSeparations Shares, you will provide personal information to the Company, Prime BioSeparations and the Share Registry. The Company, Prime BioSeparations and the Share Registry collect, hold and use your personal information in order to assess your Application, service your needs as an investor, provide facilities and services that you request and carry out appropriate administrative functions.

All personal information will be collected in accordance with the National Privacy Principles as set out in the Privacy Act 1988. The law requires that some of the information is required to be collected. If you do not provide the information requested, your Application may not be able to be processed.

The Company, Prime BioSeparations and the Share Registry may disclose your personal information for purposes related to your investment to their agents and service providers (including the ASX for the purpose of confi rming compliance with the ASX Listing Rules) or as otherwise required under the Privacy Act 1988.

Offer Highlights

The Offer under this Prospectus is for the issue of up to 5.075 million Shares in NuSep at $1.00 per Share and for the distribution by NuSep of 1.7 million Prime BioSeparations Shares in Prime BioSeparations by way of transfer to Eligible Prime BioSeparations Shareholders to raise up to $5.075 million.

Under this Offer successful Applicants will also receive:

one Option for every four Shares issued under the Offer; and
a pro rata entitlement with Eligible Bonus Shareholders to 1.325 million Bonus Shares.
NuSep intends to acquire all of the shares in NxGen (i.e. the NxGen Acquisition) so that NxGen will become a wholly-owned subsidiary of NuSep. Part of the proceeds raised under the Offer will be used to pay for the NxGen Acquisition and the future development of NxGen’s products. See sections 1 and 2 of this Prospectus for further details.
The Board of NuSep believes the NxGen Acquisition is in the best interests of NuSep and its Shareholders.
The Board has engaged an Independent Expert which has concluded that the NxGen Acquisition is fair and reasonable to existing NuSep Shareholders.
NuSep intends to conduct a Spin Out of all of its assets and liabilities into a separate entity, Prime BioSeparations, shortly after the close of the Offer. In consideration for the Spin Out NuSep will receive 1.7 million Prime BioSeparations Shares that will be distributed on a pro rata basis to Eligible Prime BioSeparations Shareholders (including successful Applicants under the Offer) shortly after the close of the Offer.
The securities offered under this Offer should be considered speculative. Full details of the possible risks associated with an investment in NuSep, Prime BioSeparations and the NxGen Acquisition are set out in section 11 of this Prospectus. A summary of key risks is set out in section 1.7 of this Prospectus. These risks should be considered carefully before an application is made under the Offer.
By applying for shares under this Offer, Shareholders and investors will be acquiring shares in two separate biotechnology organisations – NuSep and Prime BioSeparations. They will acquire:
Shares in NuSep which will own and operate the NxGen business. See section 3 for more details on the NxGen business; and
shares in Prime BioSeparations which will own and operate the current business of NuSep after the Spin Out.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

About NxGen

NxGen is a dominant player in the Australian custom pharmaceutical market. NxGen develops and manufactures innovative products to meet the increasing demand in the sexual health and anti-addiction markets.

In the Australian market the products developed by NxGen compete directly with Pfi zer’s Viagra, Eli Lilly’s Cialis and Bayer’s Levitra.
The premature ejaculation product developed by NxGen is the only known medical product to currently address this medical need. According to a global study, approximately 14% of the male population over 40 years old suffer from this disorder, relative to 10% of the male population who have erectile dysfunction.

NxGen has plans to enter the US$1 billion American erectile dysfunction market.

NxGen has developed an anti-addiction product to address alcoholism and opiate addiction. Clinical testing of this product is due to commence shortly. NxGen is also aiming to address addiction to ICE (methamphetamine) with the development of a new product.*

*No assurances can be given that NxGen’s research and development will give rise to the development of a commercially successful product.

NxGen made a pre-tax profi t of $1 million for the year ended 30 June 2008 and is on target to make a pre-tax profi t of $2 million in the year ending 30 June 2009. Please note that the NxGen accounts for the historical period ended 30 June 2008 have not been audited. Results may vary following preparation of audited accounts for that period. The estimated pre-tax profi t for the period ending on 30 June 2009 is a forward looking statement and no assurances can be given that such profi t will be reached.

NxGen 2008 Financials & 2009 Forecasts

==> picture [369 x 214] intentionally omitted <==

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

6
5
4
3
5.2
2 4.2
3.5
2.8
1 2.0
1.0
0
Sales Gross Margin Profit
07/08 $M 08/09 $M
----- End of picture text -----

2 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

NxGen 2009 Sales by Quarter – Unaudited Actuals to 1 March 2009

==> picture [391 x 271] intentionally omitted <==

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

Millions
$2.50
$2.02M
$2.00
$1.39M
$1.50
$0.93M
$0.86M
$1.00
$0.50
$0.00
Q1 2009 Q2 2009 Q3 Actuals to Q4 2009
Unaudited Unaudited 1 March 2009 Forecast
Actuals Actuals
Future Expected Business Existing Business
----- End of picture text -----

Please note the fi gures provided above for the fi rst three quarters of 2009 have been extracted from unaudited accounts of NxGen for that period. Results may vary once audited accounts for the period ending 30 June 2009 have been prepared. The forecast for the fourth quarter of 2009 is a forward looking statement and no assurances are given that such sales will be reached.

The above graphs were prepared using numbers from the independent Investigating Accountant’s Report in Section 10. This report includes a number of NxGen Director assumptions including:

Actual numbers have been used in the forecast for the 8 month period 1 July 2008 to 28 February 2009;
Actual unaudited revenue fi gures have been used in the forecast for the eight month period 1 July 2008 to 28 February 2009;
The revenue forecast for the four month period between 1 March 2009 and 30 June 2009 is split between existing business clients and forecast future clients;
The assumptions underlying the forecast for the year ended 30 June 2009 sales inputs are for the existing NxGen business to achieve a 44.5% increase on the fi nancial year end 30 June 2008 sales inputs, based on forecast continued high demand;
The pricing structure of goods is assumed to be in line with current pricing structures;

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Gross margins on new products are assumed to be in line with gross margins achieved on equivalent products currently sold by NxGen for the year ended 30 June 2009;
In the 30 June 2009 year end forecast, the NxGen Groups’ revenue has been forecast as if the NxGen Acquisition completes during April 2009;
The 30 June 2009 year end pro forma forecast includes anticipated additional costs associated with the completion of the NxGen Acquisition and the operation of the business going forward;
There is no material adverse change in economic conditions prevailing in the jurisdictions in which NxGen operates;
There is no change to key senior management, directors or other personnel;
There is no material amendment or termination to any material agreement relating to NxGens’ business;
There is no material litigation that will arise or can be realised to the detriment of NxGen;
There are no material business acquisitions or mergers; and
There are no contingent liabilities that will arise or be realised to the detriment of NxGen.

The full list of Director assumptions underlining these two graphs can be found on pages 71 to 73 of this Prospectus.

4 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

==> picture [142 x 103] intentionally omitted <==

==> picture [142 x 69] intentionally omitted <==

==> picture [142 x 171] intentionally omitted <==

==> picture [142 x 103] intentionally omitted <==

==> picture [142 x 69] intentionally omitted <==

==> picture [142 x 171] intentionally omitted <==

NxGen’s Main Products

Sexual Health Products

NxGen has developed a range of products that address erectile dysfunction, premature ejaculation and female sexual dysfunction.

Erectile Dysfunction (ED)

NxGen’s ED nasal spray is one of the market leaders in the Australian US$50 million market. This product is supplied by Australian Custom Pharmaceuticals Pty Ltd (ACP), NxGen’s strategic pharmacy partner, directly to the patient and competes directly with Pfi zer’s Viagra, Eli Lilly’s Cialis and Bayer’s Levitra. NxGen receives a product licensing fee on these sales from ACP. The Australian ED market is approximately 1/20th of the US market in terms of market size.

Premature Ejaculation (PE)

According to a global study of sexual attitudes and behaviours[1] , 14% of the male population over 40 years old suffers from PE compared with 10% who suffer from ED. This suggests that the market for PE treatment may be signifi cantly larger than the US$3.8 billion ED market. PE treatment options are limited and there is no licensed competitive product that addresses this market need.

Female Sexual Dysfunction (FSD)

Female sexual dysfunction affects as many as 4 in every 10 women at some point in their lives. NxGen has developed a gel formulation to address FSD in the Australian market.

Compound Pharmacy Products

ACP, NxGen’s strategic pharmacy partner, fi lls scripts and ships on average over 1,400 NxGen products a day across Australia. Each of these is an individual prescription issued by an Australian based doctor. Based on this system, NxGen has developed a unique ability to license and develop new pharmaceutical products.

Naltrexone – Addiction Implants

NxGen has developed a time release naltrexone implant that it believes is effective against alcohol abuse, nicotine, gambling and opiate addictions. Clinical trials will shortly commence for NxGen’s alcohol, nicotine and opiate substance abuse products. It is proposed that NxGen’s future projects will include implants for methamphetamine (ice) and cocaine addiction*.

No assurances can be given that NxGen’s research and development will give rise to the development of a commercially successful product

1Sexual behaviour and sexual dysfunctions after age 40: the global study of sexual attitudes and behaviours. Urology 2004 64: 991-997.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

About Prime BioSeparations

Prime BioSeparations is a life sciences company that will sell products into the global bioseparations market. As part of the Spin Out Prime BioSeparations will acquire all of the assets and liabilities of NuSep and conduct the business currently conducted by NuSep.

The business to be transferred to Prime BioSeparations under the Spin Out (i.e. the current NuSep business) made a loss of $1,951,873 for the half year ended 31 December 2008. The accounts for the NuSep business are set out in section 8.2 of this Prospectus.

A proforma balance sheet for Prime BioSeparations as at 30 April 2009 which sets out the company’s balance sheet pre and post the Spin Out is set out in section 8.3 of this Prospectus. Please note the fi nancial statements at section 8.3 have not been audited and amounts may vary depending on the proceeds raised by the Offer.

Prime BioSeparations’ Main Products

Following the Spin Out, Prime BioSeparations will manufacture and distribute the products currently offered by NuSep including:

Gels

Prime BioSeparations will manufacture and sell precast gels including the innovative iGels, with a two year shelf life.

Separation Instruments

Prime BioSeparations will offer two unique biological separation instruments which includes the MF10 which can separate biological samples for use in the proteomic market, and the SpermSep CS10 which separates sperm for fertility treatments such as IVF.

Biological Products

Prime BioSeparations will supply research grade biological products using its unique separations technologies. These products include human immunoglobulin and albumin.

==> picture [186 x 165] intentionally omitted <==

==> picture [70 x 35] intentionally omitted <==

==> picture [69 x 35] intentionally omitted <==

==> picture [70 x 35] intentionally omitted <==

==> picture [69 x 35] intentionally omitted <==

==> picture [70 x 35] intentionally omitted <==

==> picture [69 x 35] intentionally omitted <==

==> picture [70 x 35] intentionally omitted <==

==> picture [69 x 35] intentionally omitted <==

==> picture [70 x 35] intentionally omitted <==

==> picture [69 x 35] intentionally omitted <==

==> picture [207 x 171] intentionally omitted <==

==> picture [104 x 35] intentionally omitted <==

6 ~~N~~ uSep Ltd Prospectus 2009

Important Information ..................................................................................................................................................IFC Offer Highlights ............................................................................................................................................................... 1 Corporate Directory .........................................................................................................................................................7 Chairman’s Letter .............................................................................................................................................................8 1. Overview of the Offer ....................................................................................................................................................9 2. Details of the Offer ..................................................................................................................................................... 15 3. NxGen Overview ......................................................................................................................................................... 21 4. Independent Expert’s Report .....................................................................................................................................28 5. Prime BioSeparations Overview .................................................................................................................................46 6. Spin Out .....................................................................................................................................................................48 7. Existing and Proposed Directors ................................................................................................................................50 8. Pro Forma Financial Statements ................................................................................................................................. 51 9. Material Contracts .....................................................................................................................................................57 10. Investigating Accountant’s Report ............................................................................................................................ 61 11. Risk Factors ...............................................................................................................................................................74 12. Additional Information .............................................................................................................................................78 13. Glossary ...................................................................................................................................................................81 14. Directors’ Authorisation and Statement ...................................................................................................................84 Application Form ............................................................................................................................................................85

Corporate Directory

Directors

Mr J Manusu

(Executive Chairman)

Dr C. H. Nair (Managing Director and CEO) Mr I. Howard-Sorrell (Non executive Director)

Secretary and CFO Mr P. Patel

Registered Offi ce

22 Rodborough Road Frenchs Forest NSW 2086 Australia Tel: +61 2 8977 9000 Fax: +61 2 8977 9099 Web page: www.NuSep.com

Investigating Accountant

Pinn Deavin & Associates

Anchor Point Business Centre Level 2, 2-4 Northumberland Road Taren Point, NSW 2229 Phone: +61 2 8525 3700 Fax: +61 2 9525 3534

Independent Expert

Innovations Dynamics Pty Ltd

Australian Technology Park Biomedical Building Suite 1 1 Central Avenue Eveleigh, NSW 2015 Phone: +61 2 9209 4231 Fax: + 61 2 9209 4242

Share Registry Registries Limited

Level 7, 207 Kent Street Sydney, NSW 2000 Phone: +61 2 9290 9600 Fax: +61 2 9279 0664

NuSep Ltd Prospectus 2009

Chairman’s Letter

7 May 2009

Dear Shareholders and Potential Investors,

It gives me great pleasure to offer our Shareholders and other potential Investors the opportunity to subscribe for Shares in the Company and to receive Prime BioSeparations Shares. By participating in the Offer under this Prospectus you will, in addition to acquiring NuSep Shares and Prime BioSeparations Shares, be increasing your exposure to NxGen which NuSep is proposing to acquire. As a Board, we see the NxGen Acquisition offering signifi cant value to our existing Shareholders.

Full details of the NxGen Acquisition and the associated Spin Out of the existing NuSep business into Prime BioSeparations are outlined in sections 2, 3 & 6 of this Prospectus and I encourage all Shareholders and potential Investors to read these sections in full.

The Offer and the acquisition of NxGen will give our Shareholders and potential Investors an investment in two biotechnology organisations – NuSep and Prime BioSeparations. They will retain their ownership of NuSep’s current business, which will be spun out into Prime BioSeparations and at the same time they will also own a shareholding in the new NxGen business which is being acquired by the Company. The proposed transactions offer our Shareholders and Investors:

A minimum 12.5% interest in the NxGen business;
The ability to increase their shareholding in the Company and therefore their exposure to the NxGen business by subscribing for Shares under this Prospectus;
A pro rata shareholding in the existing NuSep business, which will be spun out into Prime BioSeparations, a separate unlisted public company; and
A pro rata entitlement to the bonus share issue of 1.325 million Shares.

The 1.325 million Bonus Shares will be distributed pro rata to existing Shareholders and successful Applicants under the Offer.

As part of the due diligence of the NxGen Acquisition the NuSep Board appointed an independent expert, Innovation Dynamics, to assess if this acquisition was fair and reasonable for the non associated shareholders of NuSep. This report is set out in full in section 4 of this Prospectus and I encourage you to read this carefully. In summary, Innovation Dynamics found the NxGen Acquisition to be both fair and reasonable to NuSep’s Shareholders.

While NxGen’s current profi tability (which was determined on the basis of unaudited accounts) was a signifi cant factor in our decision to acquire the company, the NuSep Board was also impressed by the substantial growth of the two entities that are now wholly-owned subsidiaries of NxGen. As a Board we believe NxGen’s products are socially and ethically responsible as they meet unmet medical needs. These products also create signifi cant commercial opportunities for NuSep and its Shareholders.

I urge you to read all the material in this Prospectus carefully including the risks section before deciding whether to participate in the Offer set out in this Prospectus. If you have any questions, you should consult your stockbroker, accountant, lawyer or other professional adviser.

In conclusion, the Directors strongly believe that this transaction will bring the greatest immediate and long term value to the Shareholders of NuSep and we strongly encourage you to participate in this Offer.

Yours sincerely,

Mr John Manusu Executive Chairman

8 ~~N~~ uSep Ltd Prospectus 2009

1. Overview of the Offer

1.1 Important notice

This section is not intended to provide a complete overview of the Offer made under this Prospectus. Accordingly, this Prospectus should be read and considered in its entirety.

1.2 Background

On 1 October 2008, the Directors announced that the Company had entered into a Heads of Agreement relating to the acquisition of the entire issued share capital of NxGen. The Company and NxGen then entered into an Implementation Deed in relation to the NxGen Acquisition and announced it to the market on 1 December 2008. A summary of the Implementation Deed is set out in section 9 of this Prospectus.

Prior to the NxGen Acquisition, the Company proposes to spin out all of its assets and liabilities into a new unlisted entity, Prime BioSeparations (i.e. the Spin Out). In consideration for the Spin Out, NuSep will be issued with approximately 1.7 million Prime BioSeparations Shares and will conduct a pro rata distribution of 100% of these shares to Eligible Prime BioSeparations Shareholders which include successful Applicants of the Offer.

The Spin Out and the NxGen Acquisition will result in a signifi cant change to the nature and scale of the Company’s activities. In this regard it received the approval of the Company’s Shareholders at a Shareholders’ Meeting which was held on Friday 13 March 2009.

Under the ASX Listing Rules, the magnitude of the change that will result in the nature and scale of the Company’s activities due to the Spin Out and the NxGen Acquisition requires NuSep to comply with the provisions of Chapters 1 and 2 of the ASX Listing Rules as if it was re-applying for admission to the Offi cial List. One of these requirements is that NuSep issues this Prospectus.

1.3 Consideration for the NxGen Acquisition

The consideration for the NxGen Acquisition will be paid to the NxGen Shareholder in the following three instalments:

by the issue of 15.95 million Consideration Shares or such number of Consideration Shares that equal 55% of the total Expanded Share Capital of NuSep on Completion (i.e. the First Instalment);
by the payment of cash and/or the issue of up to a maximum of 5.075 million Consideration Shares that equal a maximum of 17.5% of the Expanded Share Capital of NuSep within 15 business days of the close of the Offer (i.e. the Second Instalment). The proportion of cash and Consideration Shares in the Second Instalment shall be determined by the Board immediately prior to Completion (i.e. the proportion of cash and Consideration Shares in the Second Instalment will depend on the amount of proceeds raised by the Offer); and
by the issue of 4.35 million Consideration Shares or such number of Consideration Shares that equal 15% of the Expanded Share Capital of NuSep when NxGen reaches a pre-tax profi t of $2.1 million (i.e. the Third Instalment). Such pre-tax profi t must be reached prior to or on 30 June 2010.

Acquisition of the NxGen Group

==> picture [357 x 123] intentionally omitted <==

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

55% First Instalment
NuSep
17.5% Second Instalment
in cash and Consideration
Shares depending on
the proceeds raised NxGen
100% by the Offer Shareholder
Ownership
15% Third Instalment on
achievement of a $2.1m Profit
----- End of picture text -----

NxGen

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

If the Consideration Shares in the Third Instalment are not issued by 30 September 2010, the Third Instalment will lapse. The issue of the Consideration Shares to the NxGen Shareholder will result in the NxGen Shareholder holding up to a maximum of 87.5% of the Expanded Share Capital. As noted above, the number of Consideration Shares issued will depend on the level of proceeds raised under the Offer and whether NxGen reaches a pre-tax profi t of $2.1 million by 30 June 2010.

1.4 Offer under this Prospectus

In addition to providing information about the proposed change to the nature and scale of NuSep’s activities, this Prospectus also contains an Offer to potential Investors of up to 5.075 million Shares at $1.00 per Share and for the distribution by NuSep of 1.7 million Prime BioSeparations Shares in Prime BioSeparations to Eligible Prime BioSeparations Shareholders to raise up to $5.075 million with preference being given to Existing Shareholders on a fi rst come fi rst served basis.

As part of the Offer, successful Applicants will also receive:

one Option for every four Shares issued under the Offer; and
a pro rata entitlement with other Eligible Bonus Shareholders to a total of 1.325 million Bonus Shares.

Note that a successful Applicant’s entitlement to Prime BioSeparations Shares and Bonus Shares will be rounded down to the nearest share.

The Company is seeking to raise up to $5.075 million under the Offer to fund:

the expenses of the Offer;
the cash component of the consideration for the NxGen Acquisition;
the repayment of liabilities that are to be transferred to Prime BioSeparations under the Spin Out including $900,000 in loans from directors and former directors of NuSep and for working capital for Prime BioSeparations (please see section 6.2 of this Prospectus for a summary of the key terms and conditions of the directors’ loans); and
the provision of working capital for NxGen and the costs of NxGen’s expansion of its products into the US market which is expected to occur in the next 12 months.

The Offer will not be underwritten. However, brokers that refer successful Applicants to the Offer will receive a fee of 6% of the relevant Applicant’s application money. The fee will be paid on Applications which include a broker’s stamp.

The Offer is subject to a number of conditions which are set out below.

If the NxGen Acquisition is completed, NxGen will become a wholly-owned subsidiary of the Company. Accordingly, this Prospectus contains statements in relation to the Company which presume that NuSep will become the parent company of NxGen.

Spin Out, Capital Raising and Bonus Issue

Bonus issue of 1.325 million Shares to all Eligible Bonus Shareholders including successful Applicants of the Offer

NuSep

Offer to pay part of the Second Instalment in cash rather than Consideration Shares depending on the proceeds raised by the Offer

Pro rata share issue to all Eligible Prime BioSeparation Shareholders before the NxGen Acquisition

Prime BioSeparations Ltd (Existing NuSep business)

1.5 Conditions

The Offer is conditional on Shareholder approval of the Options that are to be issued under this Prospectus and Shareholder approval of the:

record date for the entitlement to the distribution of the Prime BioSeparations Shares; and
date that the distribution of Prime BioSeparations Shares will occur.

These approvals will be sought at a NuSep Shareholders meeting that will be held within the next two months.

10 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

The Company’s Share capital was consolidated on 27 March 2009 on a one for twenty basis so that NuSep will comply with the requirements in Chapters 1 and 2 of the ASX Listing Rules on Completion.

Further, the NxGen Acquisition is conditional on the satisfaction of the conditions set out in the Implementation Deed. These conditions are summarised in section 9 of this Prospectus.

In the event that the conditions in the Implementation Deed are not satisfi ed or waived the Offer will lapse and all Applications for the Offer will be dealt with in accordance with the Corporations Act.

1.6 Objectives and advantages

The key objective of the Offer is to raise up to $5.075 million to fund the cash component of the consideration for the NxGen Acquisition, the provision of working capital to NxGen and the expansion of its products into the US market and to provide $1.2 million to Prime BioSeparations for working capital purposes and the repayment of debt including $900,000 in loans from directors and former directors of NuSep.

The other key objectives associated with the NxGen Acquisition are:

(access to the sexual dysfunction, anti-aging medicine and addiction markets) the NxGen Acquisition will allow the Company to access the sexual dysfunction, anti-aging medicine and addiction markets and offer the products currently being offered by NxGen to these markets;
(consideration for the NxGen Acquisition) the acquisition of NxGen will largely be paid for by the issue of Shares, thereby reducing the cash cost of this acquisition. This is an important factor in the current fi nancial climate. It also means that NuSep is able to acquire a signifi cantly larger company than it would have been able to if the consideration had to be paid only in cash;
(15% of the consideration is subject to achievement of $2.1 million profi t) 15% of the acquisition price for the NxGen Acquisition will only be paid if NxGen achieves a profi t of $2.1 million on or before 30 June 2010. This provides both an incentive to the NxGen Shareholder and also reduces the price that NuSep has to pay should this target not be achieved;
(NxGen makes ethically and socially responsible products) NxGen develops and markets products which are socially and ethically responsible. Both the sexual dysfunction and the implants to overcome addiction meet this criteria; and
(NxGen is a profi table Company based on NxGen’s unaudited accounts) in the current fi nancial climate only profi table companies are being positively rated on the worlds stock markets. NxGen is a profi table company (note that the determination that NxGen is a profi table Company is based on unaudited accounts) and has signifi cant growth potential offering NuSep Shareholders the potential of positive returns on their investment.

Key objectives associated with the Spin Out and the pro rata distribution of Prime BioSeparations Shares are:

(varied investment) the Spin Out will allow Eligible Prime BioSeparations Shareholders (which include successful Applicants under the Offer) to acquire shares in a separate biotechnology organisation, Prime BioSeparations which will own and operate the current business of NuSep; and
(working capital) Prime BioSeparations will receive up to $1.2 million of the proceeds of the Offer which will be used for working capital purposes and the repayment of liabilities that will be transferred to Prime BioSeparations under the Spin Out including $900,000 in loans from directors and former directors of NuSep.

The Directors consider that on Completion of the Offer the Company will have suffi cient working capital to carry out its stated objectives.

1.7 Summary of Key Risk Factors

NuSep and NxGen

The securities offered under this Prospectus should be considered speculative because of the nature of the Company’s business. The operation of the Company’s business and the acquisition of NxGen are subject to a range of business risks, both of a general and specifi c nature. Full details of the possible risks associated with an investment in the Company are set out at section 11 of this Prospectus. These risks should be considered carefully before an application for Shares is made to the Company.

The positions of the Company and NxGen may change following the NxGen Acquisition as a result of a change in economic conditions, the impact of geo-political factors on the Australian and world economies and changing market conditions on the ASX. Investors should also be aware that if they do invest in the Company there is no guarantee of future earnings, dividends, return of capital or the price at which the Shares will trade on the ASX after quotation.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

There is also the risk that the Company and NxGen may be affected by shifts in product markets or new products which replace existing product markets.

There are a number of specifi c risks in respect of the Company, NxGen and the NxGen Acquisition. The liquidity of the shares in the Company may also be affected. The NxGen Shareholder may be issued with up to 25.38 million Consideration Shares as consideration for the NxGen Acquisition. If the NxGen Shareholder is issued with all 25.38 million Consideration Shares, it will hold approximately 87.5% of the Company’s Expanded Share Capital. Under the Corporations Act, if the NxGen Shareholder increases its stake in the Company to 90% it may compulsorily acquire the remaining Shares in NuSep. There is also the risk that the liquidity of Shares may be affected if the NxGen Shareholder holds a signifi cant stake in the Company and/or the Consideration Shares are subject to escrow restrictions. Under the NxGen Acquisition, the NxGen Shareholder will hold up to 87.5% of the Company’s Shares and ASX has advised that the Consideration Shares will be subject to escrow restrictions for 24 months from the date that the Company has complied with Chapters 1 and 2 of the ASX Listing Rules and been re-admitted to the Offi cial List. Future investors may be reluctant to acquire Shares in these circumstances.

NxGen is also considered to be economically dependent on ACP which is owned by the CEO of NxGen Daryll Knowles. NxGen derived $1,439,414 in revenue in the year ended 30 June 2008 from ACP. Further, NxGen derived $220,000 from licensing fees during this same period, which included licensing fees paid in relation to AMI. Should AMI stop licensing these products these licensing fees would decrease by approximately 75%.

Prime BioSeparations

This Offer also includes an offer for shares in Prime BioSeparations. Prime BioSeparations is also subject to a range of business risks which are detailed in Section 11.4 of this Prospectus.

Under the Spin Out, Eligible Prime BioSeparations Shareholders will receive shares in an unlisted entity and will no longer have a ready market for their full investment if they do wish to dispose of their shares in Prime BioSeparations.

The risks set out in this section 1.7 are not all the risks an investor may be subject to. Shareholders and Investors are directed to read section 11 of this Prospectus in its entirety.

1.8 Indicative timetable

The following sets out an indicative timetable for the issue of the Shares, Options, Bonus Shares and transfer of the Prime BioSeparations Shares. It also sets out when the Consideration Shares in the First, Second and Third Instalments of the consideration payable for the NxGen Acquisition will be issued to the NxGen Shareholder.

Record Date to determine entitlements to the preference given to Existing Shareholders under the Offer	5.00pm Sydney time on 11 March 2009
Meeting to approve the change to the nature and scale of NuSep’s activities and other matters	13 March 2009
Consolidation of NuSep’s Share capital on a one for twentybasis	27March 2009
Despatch date of holdingstatements	27March 2009
Tradingin Shares on a normal settlement basis should commence by	27March 2009
ClosingDate for Applications for the Offer	22 May2009
Allotment and issue of Shares and Options under the Offer to successful Applicants	2June 2009
Transfer of Prime BioSeparations Shares to Eligible Prime BioSeparations Shareholders	11June 2009
Completion of the NxGen Acquisition	11June 2009
Issue of the Consideration Shares in the First Instalment to the NxGen Shareholder	11June 2009
Issue of Consideration Shares in the Second Instalment to the NxGen Shareholder (contingent on theproceeds raised bythe Offer)	12 June 2009
Allotment and issue of Bonus Shares to Eligible Bonus Shareholders	23 June 2009
Issue of Consideration Shares in the Third Instalment to the NxGen Shareholder (contingent on NxGen making a pre-tax prof t of $2.1 million prior to or on 30 June 2010. If the Consideration Shares in the Third Instalment are not issued by 30 September 2010, the Third Instalment will lapse.)	By 30 September 2010

The timetable is indicative only. NuSep reserves the right to amend the timetable without prior notice, subject to the requirements of the Corporations Act and the ASX Listing Rules.

12 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

1.9 Costs of the Offer and use of proceeds

The costs of the Offer are expected to be approximately $800,000. On the assumption that the Offer is fully subscribed, it is expected to raise $5.075 million.

The Directors intend to apply the proceeds raised by the Offer:

towards the expenses of the Offer (e.g. the preparation of this Prospectus, including the costs of engaging the Investigating Accountant and the Independent Expert);
to fund the cash component of the consideration for the NxGen Acquisition;
to fund the repayment of debt and the provision of working capital to Prime BioSeparations (for further details please see section 6 of this Prospectus); and
to fund the provision of working capital to NxGen and the costs of NxGen’s expansion into the US market which is expected to occur over the next 12 months.

A breakdown of the use of the proceeds raised under the Offer is set out in section 2 of this Prospectus.

1.10 Capital structure (Post Consolidation)

On 27 March 2009 the share capital of the Company was consolidated on a 1 for 20 basis so that NuSep will comply with the requirements in Chapters 1 and 2 of the ASX Listing Rules on Completion.

As at the date of this Prospectus, NuSep has 2,292,864 Shares on issue.

On the assumption that the Offer is fully subscribed, 5.075 million Shares will be issued and 1.268 million Options will be granted to successful Applicants. In addition, 1.325 million Bonus Shares will be issued to Eligible Bonus Shareholders.

NuSep currently has no Options on issue. However, at the Meeting Shareholder approval was obtained to issue 230,000 unlisted Options to the NxGen Nominee Directors under the terms of the Company’s Directors, Employees and Consultants Option Plan. The grant of these Options is contingent on Completion of the NxGen Acquisition. The Options will be issued within twelve months of the date of the Meeting.

Shareholders will be asked to approve a further 45,000 Share Options for the newly appointed director of NxGen Wilson Wong at the upcoming extraordinary general meeting of NuSep. Note that the table below does not include the Options that may be issued to Mr Wong.

The following sets out the capital structure of the Company before and after the Offer. Note that the following does not take into account the issue of Consideration Shares to the NxGen Shareholder as consideration for the NxGen Acquisition. It does take into account the 230,000 Options to be issued to the NxGen Nominee Directors and is based on the assumption that the Offer is fully subscribed.

Shares(Post Consolidation)	Shares(Post Consolidation)
Shares on issue at the date of this Prospectus	2,292,864
Shares to be issued under this Prospectuspursuant to the Offer	5,075,000
Bonus Shares to be issued	1,325,000
Total Shares on issue at the Close of the Offer	8,698,223
Options (Post Consolidation)
Total Options on issue at the date of this Prospectus	nil
Options to be issued under this Prospectus pursuant to the Offer	1,268,750
Options to be issued to the NxGen Nominee Directors	230,000
Total Options on issue at the Close of the Offer	1,498,750

In consideration for the NxGen Acquisition, the NxGen Shareholder will be issued with up to a maximum of 25.38 million Shares which will result in the NxGen Shareholder holding up to a maximum of 87.5% of the Expanded Share Capital of NuSep. The number of Shares issued to the NxGen Shareholder will depend on the level of proceeds raised under the Offer and whether NxGen reaches a pre-tax profi t of $2.1 million by 30 June 2010. For example, after the issue of the Consideration Shares in the First Instalment, the NxGen Shareholder will hold 55% of the Company’s Expanded Share Capital. The Second Instalment will be paid in cash and by the issue of Consideration Shares to the NxGen Shareholder so that the NxGen Shareholder may hold less than the anticipated 72.5% of NuSep’s Expanded Share Capital. The payment of the Third Instalment is contingent on NxGen reaching a pre-tax profi t of $2.1 million by 30 June 2010. If NxGen does not meet this condition, the Consideration Shares in the Third Instalment will not be issued.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

1.11 Capital structure – Prime BioSeparations

Prime BioSeparations was incorporated on 21 November 2008 as a wholly owned subsidiary of NuSep. It is expected that Prime BioSeparations will commence trading in May 2009 once the Spin Out has occurred. Under the Spin Out NuSep will transfer all of the assets and liabilities associated with the current business to Prime BioSeparations. In return Prime BioSeparations will issue NuSep with 1,699,998 Prime BioSeparations Shares. Once the Spin Out has occurred NuSep will have 1.7 million shares to return on a pro rata basis to all Existing Shareholders and investors who participate in the Offer. NuSep will return 100% of the Prime BioSeparations Shares under a pro rata return of capital.

At the date of this Prospectus, Prime BioSeparations has an issued share capital of 2 ordinary shares. These shares are legally and benefi cially held by NuSep.

1.12 Restricted Securities

Shares issued to the NxGen Shareholder as consideration for the NxGen Acquisition will be subject to escrow restrictions for 24 months from the date that the Company recomplies with Chapters 1 and 2 of the ASX Listing Rules.

~~N~~ uSep Ltd Prospectus 2009

2. Details of the Offer

2.1 Offer

This Prospectus is for an offer of up to 5.075 million Shares to Investors at an issue price of $1.00 per Share and for the distribution by NuSep of 1.7 million Prime BioSeparations Shares in Prime BioSeparations to Eligible Prime BioSeparations Shareholders to raise up to $5.075 million with preference being given to Existing Shareholders on a fi rst come fi rst served basis.

Successful Applicants will also receive:

one Option for every four Shares issued under the Offer; and
a pro rata entitlement with all other Eligible Bonus Shareholders to a total of 1.325 million Bonus Shares.

The options will be exercisable for $1.40 per Option and have an expiry date of 31 March 2011.

Applications for the Offer must be for a minimum of 500 Shares (i.e. $500). Over-subscriptions may be accepted at the discretion of the Directors.

Accompanying this Prospectus is an Application Form. Investors can only apply for the Offer on the accompanying Application Form which must be received by the Company with the appropriate payment by 5.00pm AEST on Friday 22 May 2009.

Note that:

an Eligible Prime BioSeparations Shareholder’s entitlement to the Prime BioSeparations Shares will be rounded down to the nearest Prime BioSeparations Share; and
an Eligible Bonus Shareholder’s entitlement to the Bonus Shares will be rounded down to the nearest Bonus Share.

2.2 Conditions of the Offer

The Offer is conditional on Shareholder approval of the Options that are to be issued under this Prospectus and Shareholder ratifi cation of the:

record date for the entitlement to the distribution of the Prime BioSeparations Shares; and
date that the distribution of Prime BioSeparations Shares will occur.

These approvals will be sought at a NuSep Shareholders meeting that will be held within the next two months.

The Company’s Share Capital was consolidated on 27 March 2009.

The NxGen Acquisition is conditional on the satisfaction of the conditions set out in the Implementation Deed. These conditions are summarised in section 9 of this Prospectus.

2.3 Consequences if conditions of Offer not satisfi ed

In the event that the conditions in the Implementation Deed are not satisfi ed or waived, none of the Shares offered under this Prospectus will be allotted or issued and the Spin Out will not occur. In these circumstances, all Applications will be dealt with in accordance with the Corporations Act.

2.4 Preference to Existing Shareholders

Shares issued under the Offer will be offered in priority to Existing Shareholders on a fi rst come fi rst served basis.

2.5 Purpose of the Offer and use of proceeds

If the Offer is fully subscribed, a total of 5.075 million Shares will be issued and the Company will raise $5.075 million (before costs).

The proceeds of the Offer will be used to:

pay for the costs associated with the Offer (e.g. the preparation of this Prospectus and the costs of engaging the Investigating Accountant and the Independent Expert);
to fund the cash component of the consideration for the NxGen Acquisition;
to fund the repayment of debt and the provision of working capital to Prime BioSeparations (please see section 6 for further details); and
to provide working capital to NxGen and fund the expansion of NxGen’s products into the US market which is expected to occur in the next 12 months.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

The funds raised under the Offer will fi rst be used to pay the expenses of the Offer. These costs are expected to be approximately $800,000.

On the assumption that the Offer is fully subscribed:

$3.1 million of the proceeds raised will be used to fund the cash component of the consideration payable to the NxGen Shareholder for the NxGen Acquisition and NxGen’s working capital and expansion into the US; and
$1.2 million will be transferred to Prime BioSeparations under the Spin Out to be used by Prime BioSeparations for working capital purposes and the repayment of debt including loans of $900,000 to directors and former directors of NuSep.

If the Offer is not fully subscribed, after the expenses of the Offer are paid, any remaining proceeds will be split evenly between:

the payment of the cash consideration to the NxGen Shareholder and NxGen’s working capital and US expansion; and
the transfer of up to $1.2 million to Prime BioSeparations for working capital purposes.

For example:

if no proceeds are raised under the Offer, no funds will be transferred to Prime BioSeparations and Prime BioSeparations will have a negative equity position of $859,728;
if $1 million is raised under the Offer, $100,000 will be transferred to Prime BioSeparations;
if $2 million is raised under the Offer, $600,000 will be transferred to Prime BioSeparations; and
if $3.2 million is raised under the Offer, the full $1.2 million will be transferred to Prime BioSeparations.

Prime BioSeparations will receive a maximum of $1.2 million of the proceeds of the Offer. As part of the Spin Out, Prime BioSeparations will acquire the $900,000 of director loans. The directors will not call on these loans until Prime BioSeparations is able to pay these loans as part of its normal trading business. See section 6.2 for more details on these loans.

Note that if none of the $1.2 million of the proceeds of the Offer is transferred to Prime BioSeparations, Prime BioSeparations will have a negative equity position of $859,728.

2.6 No overseas offer

This document does not constitute an offer in any place, or to any person to whom, it would not be lawful to make such an offer.

The Offer is only being made to Investors resident in Australia.

The Directors and the directors of Prime BioSeparations have formed a view that it is unreasonable to make the Offer to persons with a registered address outside Australia after having regard to the cost of complying with the legal and regulatory requirements in foreign jurisdictions.

2.7 Minimum Application

The minimum Application is for 500 Shares (i.e. $500).

2.8 Oversubscriptions

Over-subscriptions will be accepted at the discretion of the Directors.

2.9 Closing Dates

Acceptances must be received by the Company before the close of the Offer at 5.00pm AEST on 22 May 2009.

2.10 Date of issue of Shares, Options and Bonus Shares and Prime BioSeparations Shares

The Shares (including the Bonus Shares) and the Options will not be issued until the ASX has granted permission for the Shares and Options to be quoted (unless ASIC has granted an exemption permitting the issue/grant) and the proceeds of the Offer have been received by the Company.

The Shares and Options are expected to be issued on 2 June 2009 with holding statements to be issued thereafter. All Application money will be held in trust until the Shares are issued to Applicants or, if there is no issue, until the money is returned to Applicants.

The transfer of the Prime BioSeparations Shares by NuSep to Eligible Prime BioSeparations Shareholders is expected to occur on 11 June 2009. The Bonus Shares are expected to be issued to Eligible Bonus Shareholders on 23 June 2009.

16 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Interest earned on the Application money will be for the benefi t of NuSep and will be retained by NuSep even if the Offer does not go ahead.

2.11 Application monies held in trust

Until the Shares (including the Bonus Shares) and Options under the Offer are issued, all Application money will be held on trust in a separate bank account, which has been opened only for this purpose.

2.12 Payment

The completed Application Form must be accompanied by payment in full at the rate of $1.00 per Share. The minimum Application is for $500 (500 Shares). Payments will only be accepted in Australian currency. Refer to the Application Form for further details on payment requirements.

By submitting an Application Form you will also be applying for shares in Prime BioSeparations.

2.13 No Underwriting

The Offer is not underwritten. However, brokers that refer successful Applicants to the Offer will receive a fee of 6% of the relevant Applicant’s application money. The fee will be paid on Applications which include a broker’s stamp.

2.14 Taxation

The tax treatment and consequences of the Offer will vary depending on the particular circumstances of each investor. The Company accepts no liability or responsibility in relation to any taxation consequences connected to the issue of Shares (including the Bonus Shares) and Options and the transfer of the Prime BioSeparations Shares under the Offer. Therefore, it is the responsibility of any Investor who makes an Application for the Offer to satisfy themself of the appropriate tax treatment that applies to their participation in the Offer by consulting their own professional tax advisor prior to investing in the Offer.

2.15 Action by Investors

If you are in any doubt as to what you should do in relation to the Offer, you should contact you accountant, stockbroker, solicitor or other professional adviser.

2.16 Rights and liabilities attaching to Shares and Options

NuSep Shares

A summary of the more signifi cant rights and liabilities attaching to NuSep’s Shares (including the Bonus Shares) is set out below.

The NuSep Shares and Bonus Shares that are to be issued pursuant to this Prospectus are ordinary shares, the capital on which is fully paid.

(a) Voting – At a general meeting of NuSep, every shareholder present in person or by proxy, attorney or representative has one vote on a show of hands and, on a poll, one vote for each fully paid Share held. On a poll, partly paid Shares confer a fraction of a vote in proportion to the amount paid up on the Share.
(b) Dividends – Dividends are determined by the Directors at their discretion. Any dividend relating to Shares is divisible amongst the Shareholders in proportion to the amount paid up on the Shares held by them.
It is not currently intended that NuSep pay a dividend on Shares or that one be paid in the near future.
(c) Rights on winding up – Subject to the rights or restrictions attaching to any share or class of shares, if NuSep is wound up, the property of the Company available for distribution shall be divided among the members in proportion to the shares held by them, irrespective of the amounts paid up or credited as paid up on the shares. If the Company is wound up the liquidator may, with the sanction of a special resolution, divide the assets of the Company amongst the members and may determine how the division shall be carried out as between the members or different classes of members.
(d) Transfer of Shares – Except where required by law or the constitution of NuSep there are no restrictions on the transfer of Shares.
(e) Issue of further Shares – subject to the provisions of NuSep’s constitution and the Corporations Act, the Directors may issue further Shares on such terms and conditions as they may decide.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

(f) Variation of class rights – the rights attaching to each class of Shares may only be varied:
(i) with the consent in writing of the holders of three-quarters of the class of issued Shares concerned; or
(ii) with the sanction of a special resolution of Shareholders, a special resolution being a resolution passed by a majority of not less than 75 per cent of Shareholders present and voting.

NuSep Options

The rights and liabilities attaching to the Options that will be issued under the Offer are as follows:

(a) Each Option entitles the holder to subscribe for one (1) Share upon exercise of the Option and payment of the exercise price.
(b) The exercise price of each Option is $1.40.
(c) The exercise period of the Options will commence on the day the Company issues the Options and will expire at 5.00 pm (Sydney time) on 31 March 2011.
(d) An Option will be exercisable by giving a notice of exercise to the Company and paying the exercise price for the Option.
(e) Subject to the Company’s constitution, each Share issued pursuant to the exercise of an Option will rank equally in all respects with other issued Shares.
(f) An Option will not confer an entitlement to participate in any new issue of securities to shareholders without exercising the Option.
(g) The Company will apply to ASX for offi cial quotation of the Options.
(h) The Options will be freely transferable.
(i) The Company will apply to the ASX for offi cial quotation of Shares issued upon exercise of Options within the time period required by the ASX Listing Rules.
(j) Any Option not exercised before the end of the exercise period will lapse at the end of the exercise period.
(k) In the event of a reorganisation of the capital of the Company, the rights of the option holder will be changed to the extent necessary to comply with the ASX Listing Rules applying to a reorganisation of capital at the time of the reorganisation.
(l) If the Company offers Shares by way of a pro-rata issue (except a bonus issue) to shareholders, the exercise price of an Option will be reduced in accordance with the formula set out in the ASX Listing Rule 6.22.2.
(m) If there is a bonus issue to the shareholders, the number of Shares over which each Option is exercisable will be increased by the number of Shares which the holder of the Option would have received under the bonus issue if the Option had been exercised before the record date for the bonus issue.

2.17 The Prime BioSeparations Shares

A summary of the more signifi cant rights and liabilities attaching to the Prime BioSeparations Shares is set out below. A copy of Prime BioSeparations’ constitution can be downloaded from NuSep’s website at www.nusep.com

The Prime BioSeparations Shares that are to be issued pursuant to the Spin Out are ordinary shares, the capital on which is fully paid.

(a) Voting – At a general meeting of Prime BioSeparations, every shareholder present in person or by proxy, attorney or representative has one vote on a show of hands and, on a poll, one vote for each fully paid Prime BioSeparations Share held. On a poll, partly paid Prime BioSeparations Shares confer a fraction of a vote in proportion to the amount paid up on the Prime BioSeparations Share.
(b) Dividends – Dividends are determined by the directors at their discretion. Any dividend relating to Prime BioSeparations Shares is divisible amongst the Prime BioSeparations Shareholders in proportion to the amount paid up on the Prime BioSeparations Shares held by them.

It is not currently intended that Prime BioSeparations pay a dividend on Prime BioSeparations Shares or that one be paid in the near future.

(c) Rights on winding up – Subject to the rights or restrictions attaching to any share or class of shares, if Prime BioSeparations is wound up, the property of the company available for distribution shall be divided among the

18 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

members in proportion to the shares held by them, irrespective of the amounts paid up or credited as paid up on the shares. If the company is wound up the liquidator may, with the sanction of a special resolution, divide the assets of the company amongst the members and may determine how the division shall be carried out as between the members or different classes of members.

(d) Transfer of Shares – Except where required by law or the constitution of Prime BioSeparations there are no restrictions on the transfer of Prime BioSeparations Shares.
(e) Issue of further Shares – subject to the provisions of Prime BioSeparations’ constitution and the Corporations Act, the directors of the company may issue further Prime BioSeparations Shares on such terms and conditions as they may decide.
(f) Variation of class rights – the rights attaching to each class of Prime BioSeparations Shares may only be varied: (i) with the consent in writing of the holders of three-quarters of the class of issued Prime BioSeparations Shares concerned; or
(ii) with the sanction of a special resolution of shareholders, a special resolution being a resolution passed by a majority of not less than 75 per cent of shareholders present and voting.

2.18 ASX Listing

The Company will apply to ASX within seven (7) days of the date of this Prospectus for re-admission to the Offi cial List and for offi cial quotation of the Shares (including the Bonus Shares) and Options offered under this Prospectus.

If the Shares (including the Bonus Shares) and Options are not admitted to quotation within three (3) months after the date of this Prospectus, or such longer period as is permitted by the Corporations Act, none of the Shares or Options offered by this Prospectus will be issued. In that circumstance, all Applications will be dealt with in accordance with the Corporations Act.

As Prime BioSeparations is an unlisted public company the Prime BioSeparations Shares will not be listed on the ASX.

2.19 Market prices of Shares

Please note that on 27 March 2009 the Share Capital of the Company was consolidated on a one for twenty basis (i.e. twenty shares at 5.0 cents each based on the share price immediately prior to Consolidation were consolidated into one share of $1.00 each).

As set out in the table below, the lowest and highest closing market sale price of Shares on the ASX during the 3 months immediately preceding 13 March 2009 were AUS3.6 cents and AUS6.3 cents. The table also sets out the last sale price for Shares on the ASX prior to the date of this Prospectus.

==> picture [342 x 16] intentionally omitted <==

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

Share Price Date
----- End of picture text -----

	Share Price	Date

Highest	6.3cents	2January2009
Lowest	3.6 cents	17February2009
Last Price	5.0 cents	10 March 2009

Note that Prime BioSeparations is not listed on the ASX. Prime BioSeparations was incorporated on 21 November 2008 and no Prime BioSeparations Shares have been sold since incorporation. Accordingly, Prime BioSeparations has no history of the sale prices of its shares.

2.20 CHESS

NuSep already participates in the Clearing House Electronic Subregister System, known as CHESS. ASX Settlement and Transfer Corporation Pty Ltd (ASTC), a wholly owned subsidiary of ASX, operates CHESS in accordance with the ASX Listing Rules and Securities Clearing House Business Rules. The Shares and Options will be CHESS approved securities.

Under CHESS, Shareholders will not receive a certifi cate but will receive a holding statement for their Shares and Options. A statement will be sent routinely to shareholders at the end of any calendar month during which the holder’s shareholding changes. A shareholder will be supplied with a statement at any other time on request, subject to payment of a charge for the additional statement.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

2.21 Risk Factors

Investors should be aware that participating in the Offer under this Prospectus involves a number of risks. Key risks are summarised at section 1.7 of this Prospectus. Full details of possible risks are set out in section 11 of this Prospectus and all Investors are urged to consider these risks carefully (and if necessary, consult their professional advisor) before deciding whether to invest in the Shares and Prime BioSeparations Shares offered under this Prospectus. The securities offered under this Prospectus should be considered speculative.

2.22 Costs of the Offer

The costs of the Offer are estimated at approximately $800,000.

20 ~~N~~ uSep Ltd Prospectus 2009

3. NxGen Overview

3.1 NxGen’s Business

NxGen is a fully diversifi ed pharmaceutical business and the largest developer and licensor of custom pharmaceuticals in Australia. The company has two wholly-owned subsidiaries – ASA and NxGen Australia. A structure diagram of the NxGen Group is set out below:

==> picture [303 x 139] intentionally omitted <==

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

NxGen
NxGen
ASA
Australia
----- End of picture text -----

ASA is a wholesale distributor of chemicals and other compounding supplies and is operating through a licence from the NSW Department of Health. ASA is the exclusive Australian and New Zealand distributor for Medisca Inc’s fi ne chemicals and active pharmaceutical ingredients and has over 200 customers in Australia.

NxGen Australia conducts market research, training and educational services for NxGen.

NxGen has experienced solid growth over the past couple of years, partly as a result of the expansion of its scientifi c formulation and analytical capabilities which have resulted in the commercialisation of a number of new products. In addition, NxGen has a solid pipeline of new products which it will bring to the market over the next few years[2] . The company’s development pipeline includes a number of novel products such as a slow release implant designed to overcome substance abuse including opiate, amphetamine and alcohol addiction.

NxGen is the dominant market player in the Australian custom pharmaceuticals development market. NxGen has focused its expertise on several niche markets including:

(a) pharmaceutical;
(b) sexual dysfunction;
(c) veterinary pharmaceuticals;
(d) innovative cosmetics and peptide therapies; and
(e) drug development formulation.

Sources of 30 June 2008 Revenue*

==> picture [378 x 127] intentionally omitted <==

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

10% Pharmaceutical
20% 10%
Cosmetics
10% Sexual Dysfunction
50%
Veterinary Pharmaceutical
Drug Development and Formulation
----- End of picture text -----

*This diagram shows the sources of NxGen’s revenue as at 30 June 2008. Please note these details have been extracted from NxGen’s unaudited accounts to 30 June 2008. Results may vary once accounts for the period ending on 30 June 2008 have been audited.

To date, sales of NxGen’s developed products have been limited to the Australian market. NxGen will use some of the funds raised under the Offer to open the US market for its nasal spray products. The US market is approximately 20 times the size of the Australian market. In addition, NxGen’s major Australian client is currently expanding into the UK market, which is approximately 3 times the size of the Australian market. NxGen is also considering distributing its products into other parts of the world.

2No assurances can be given that NxGen’s research and development will give rise to the development of a commercially successful product.

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

NxGen recently developed and licensed a prostate herbal mixture which is sold exclusively in Australia. As part of the development process NxGen assisted its client to obtain a TGA listing to market it worldwide. Furthermore, NxGen has recently begun to develop a local anaesthetic gel for minor surgical procedures and injections for children. Phase 1 of the clinical trials is scheduled to start shortly in a major Australian teaching hospital and initial results of these trials should be available in approximately 12 months time.

NxGen’s potential future pipeline of products comes from several growth areas including substance abuse medications. One of these potential products is a slow release product to overcome addiction to “ICE” (i.e. methamphetamine) and cocaine.

Off Label Regulatory Provisions

NxGen develops products that range from nutritional supplements through to prescription pharmaceuticals that need to be prescribed by doctors. The pharmaceutical products developed by NxGen for the custom pharmaceutical market are exempt from the Therapeutic Goods Act 1989 under section 5, item 6 of the Therapeutic Goods Regulations 1990 and Schedule 8(2) of the Therapeutics Goods Regulations 1990. This exemption allows doctors to prescribe NxGen’s custom pharmaceuticals. This is often called ‘Off Label’ use.

NxGen develops products that are prescribed by doctors. The doctor specifi es the active constituents required for a specifi c patient on the prescription and NxGen then develops a product incorporating these active constituents. This approach allows the doctor to prescribe an individual medication specifi c to the patient’s needs rather than trying to make a patient fi t a predefi ned therapeutic regimen. Also, this approach allows doctors to prescribe medications where there is no commercial product available.

NxGen and its founders have been creating and developing products for doctor prescriptions both in Australia and overseas for over 15 years. Pharmacy compounding is a well established business worldwide. One of NxGen’s core competencies is its ability to quickly develop stable and effective products to meet the exact demands of individually tailored prescriptions.

Each of the active constituents in NxGen’s products have previously been used to treat ailments for many years. Most of these active constituents have been the subject of extensive clinical trials over the years, albeit using different dose formulations. These clinical trials have confi rmed that the medications are clinically effective and have provided detailed data on safety and effi cacy.

NxGen’s custom pharmaceutical products have not been approved for over the counter sales. This means that its products cannot be sold under a brand name nor can they be sold through a retail pharmacy.

The provision of NxGen’s developed medications through pharmacies on an individual prescription basis is lawful in Australia, the United Kingdom, the United States and most other countries around the world.

The use of custom pharmaceuticals is a common practice and allows doctors to individualise the medication to the patient’s requirements and to prescribe drugs to address aliments not otherwise covered by mainstream medications. NxGen’s founders have successfully operated a number of compounding organisations within the Australian regulatory environment for over 25 years.

The US custom pharmaceutical market works along the same principles as the Australian compounding market. There are numerous compounding pharmacies in the US and the US compounded or “Off Label” regulations are similar to the Australian regulations.

Individual Tailored Medications – The NxGen Advantage

One of NxGen’s core competencies is its ability to develop and formulate ‘one off’ medications for patients. This is a skill that the founders of NxGen have developed over a 25 year period, both in the Australian and overseas markets.

Individual medication offers many advantages to a patient, not least of which is the speed and effi cacy of the treatment. Proteomics is opening up the individual medication area by offering individual health profi ling. This will enable people to know if they are predisposed to certain diseases, particularly hereditary diseases. NxGen is a leader in the preparation of medications for this individual medicine future.

It is NxGen’s business model to develop individually tailored medication for its clients thus offering a long-term individual therapeutic regimen which the patient can safely utilise for many years. NxGen will advertise its services to the general public and use different media to send out different product offerings thereby breaking the market into a number of niches.

22 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

NxGen has developed more than 20 proprietary compound formulations using previously approved ingredients. These products are provided in a number of delivery formats including nasal spray, lozenges and gel formulation. NxGen has developed a number of different products and delivery mechanisms which allow doctors to prescribe and pharmacies to dispense a tailored individual product for each patient. This approach fundamentally differentiates NxGen’s business model and sets it apart from other pharmaceutical organisations.

Finally, the range of treatment options open to NxGen allows the company to tailor treatment to a patient’s particular needs. This is particularly important for a number of patient groups who can’t use existing products or require different treatment regimes.

Market for NxGen’s Products

This section sets out the markets for NxGen’s main products in more detail.

(a) Drug Development and Formulation

Drug development, formulation and stability are critical in the development of a new pharmaceutical product. Less than 1 in every 3 drugs fi nally reaches the market and even those that do often require reformulation and stability testing to overcome short comings such as shelf life. NxGen, through its many years of product development and the formulation experience of its expert team has built up a signifi cant skill base in developing stable and effective pharmaceutical formulations.

Drug development as discussed here relates to the development, formulation, small scale manufacture (non-TGA) and regulatory processing of new products for the pharmaceutical market. NxGen undertakes drug development and formulation for many of Australia’s top niche market and contract pharmaceutical companies. In addition NxGen has also developed high tech skin treatments and transdermal topical creams.

(b) Sexual Dysfunction Markets

The sexual dysfunction market covers erectile dysfunction, premature ejaculation and female sexual dysfunction. In these markets NxGen only has direct competition in the erectile dysfunction market. In the 12 months ended 30 June 2008, NxGen received $220,000 in licensing fees from the sales of all prescriptions fi lled by ACP based on NxGen developed products.

Erectile Dysfunction Market

Erectile dysfunction (ED) affects the lives of many middle-aged men.

There have been a number of studies on the prevalence of ED. As an example, in the Massachusetts Male Aging Study (MMAS) it was revealed that 52% of men aged 40-70 years report some degree of erectile dysfunction.[3] It is estimated that about 150 million men worldwide suffer from erectile dysfunction. According to the MMAS study, age is a signifi cant factor in the rate of ED. Between the ages of 40 to 70 years, the incidence of moderate ED doubles from 17% to 34%, whereas that of severe ED triples from 5% to 15%.

Previously, doctors thought ED was primarily caused by psychological factors. While thoughts and emotions always play a role in getting an erection, ED is usually caused by a physical cause, such as a chronic health problem or the side effects of medication.

Common causes of erectile dysfunction include:

(a) heart disease;
(b) clogged blood vessels (atherosclerosis);
(c) high blood pressure;
(d) diabetes;
(e) obesity; and
(f) metabolic syndrome.

In some cases ED is one of the fi rst signs of an underlying medical problem.

3E Medicine Erectile Dysfunction. www.emedicine.com/MED/topic3023.htm

NuSep Ltd Prospectus 2009 [ 2][3]

==> picture [595 x 63] intentionally omitted <==

Despite this signifi cant growth, it is estimated that 85-90% of men with ED remain untreated[4] . In 2005, the ED market was estimated to be US$1.95 billion[5] and by 2006, the market had grown to US$3.8 billion. It is forecast to increase by 74% to US$6.6 billion by 2012.[6] This report also notes that growth could be greater if a drug could address the 30% of people for whom the current treatments available fail. The NxGen product addresses this unmet need.

NxGen’s commercial relationship with ACP is particularly important. A pharmaceutical licence is required to compound NxGen developed products. As NxGen does not hold a pharmaceutical licence it relies on ACP which holds a pharmaceutical licence to compound its products.

AMI Australia is a subsidiary of AMI Inc which is a US over the counter company with the code AVMD. NxGen does not currently have a formal contractual agreement with AMI Australia.

If NxGen’s relationship with either AMI Australia or ACP were to break down NxGen would be unable to sell its sexual dysfunction products to the market until other suitable arrangements were established. In particular, if NxGen’s relationship was to break down with ACP, NxGen would be required to fi nd another pharmaceutical licensee to compound its products. Without the services of a pharmaceutical licensee, NxGen could not sell its sexual dysfunction products to the market. It should be noted that ACP is a wholly-owned company of Mr Daryll Knowles who is the CEO of NxGen and a NxGen Nominee Director.

NxGen developed products compete directly with products such as Viagra, Cialis and Levitra.

In the 12 months ended 30 June 2008, NxGen received $220,000 in licensing fees from the sales of all prescriptions fi lled by ACP based on NxGen developed products.

Premature ejaculation (PE) is one of the most common of all male sexual dysfunctions. This is a more common problem in younger men but older men can also suffer from it.

Contrary to the perceptions given by the increased awareness of erectile dysfunction, premature ejaculation is the most common form of male sexual dysfunction. Even though it is a common problem that can be treated, many men feel embarrassed to talk to their doctors about it or seek treatment. Once thought to be purely psychological, experts now know that biological factors also play an important role in PE. In some men, PE is related to erectile dysfunction.

Experts believe a number of biological factors may contribute to PE, including:

(a) abnormal hormone levels;
(b) abnormal levels of brain chemicals called neurotransmitters;
(c) certain thyroid problems;
(d) infl ammation and infection of the prostate or urethra; and
(e) inherited traits.

According to “Sexual behaviour and sexual dysfunctions after age 40: The global study of sexual attitudes and behaviours”[7] , 14% of the male population over 40 years old suffers from premature ejaculation compared with 10% of the male population who suffer from erectile dysfunction. This suggests that the market for PE treatment is larger than the US$3.8 billion ED market. PE treatment options are limited and there are no labelled treatments available.

Female Sexual Dysfunction Market

Female sexual dysfunction affects as many as 4 in every 10 women at some point in their lives.

Female sexual dysfunction has many possible symptoms and causes most of which are treatable. Women can suffer female sexual dysfunction at any age, but sexual problems are most common when hormones are in fl ux for example, when having a baby or during the menopause transition.

4Jan 2008 Erectile Dysfunction Market Assessment and Analysis 2007 to 2022 , BioPortfolio Limited

5April 2007 Commercial opportunity awaits in erectile dysfunction market www.pharmaceutical-business-review.com/article_feature. asp?guid=92C3C6D3-3E02-4783-9A68-7DA3FE5982B9

6April 2006 Erectile Dysfunction Market Shows Flaccid Growth, but VIVUS may rise high (PFE, LLY, GSK, VVUS, NEXM) http://seekingalpha.com/ article/9731-erectile-dysfunction-market-shows-fl accid-growth-but-vivus-may-rise-high-pfe-lly-gsk-vvus-nexm

7Sexual behaviour and sexual dysfunctions after age 40: the global study of sexual attitudes and behaviours. Urology 2004 64: 991-997.

24 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

(d) Pharmaceutical, Veterinary and Cosmetic Markets

These markets account for 30% of NxGen’s sales. They cover a number of different products including animal hormone preparations for the equine and canine market, anti-parasitic preparations for poultry and antibiotics and gastric products for horses.

NxGen’s Proposed US Market Entry Strategy

NxGen’s proposed US market entry strategy is based on its successful Australian business model. NxGen proposes to establish a US based compounding organisation to formulate products for use in their core product markets from ingredients already approved by the Food and Drug Administration (FDA) under the ‘Off Label’ provisions. It is proposed that a US call centre be established to direct potential customers to a doctor’s clinic for a consultation. The doctors will prescribe the appropriate individual medication which will be fi lled by the US based compounding organisation.

NxGen is currently in negotiations with a potential US partner and believes that it will enter the US market later this year. However, there is no guarantee that this will occur and if it does it may be some time before any US based operations are profi table.

For the initial push into the US market NxGen will concentrate on the sexual dysfunction market and in particular, NxGen will offer treatments for:

(a) erectile dysfunction; and

(b) premature ejaculation.

As set out above, NxGen believes that its extensive product offering provides it with advantages over licensed competing products. NxGen will focus on those people for whom the existing products have failed to work. This latter group represents approximately 30% of all men who have tried the existing products[8] .

Once NxGen has established its US compounding facility it will start advertising in selected geographic markets. The potential customers phone a call centre and a consultation with a doctor will be organised. If the NxGen products are appropriate, the doctor will write a prescription for the patient that will be fi lled by the NxGen US compounding organisation. Once the prescription has been manufactured it will be couriered directly to the patient.

NxGen intends to establish operations in several core states and to then expand into additional markets. Its initial target markets are New York, New Jersey, Connecticut, California and Florida. These markets have been selected for a number of reasons. The New York Tri State area and California were chosen as these states have large populations and high per capita incomes. Further, NxGen intends to establish its US compounding facilities in the New York and Arizona areas. Florida was chosen as this state has an older population which should offer a higher rate of people with a need for the NxGen product offering.

Material Contracts and Arrangements

A summary of the material contracts and arrangements that NxGen is a party to are set out section 9 of this Prospectus.

3.2 The NxGen Nominee Directors

It is proposed that the NxGen Nominee Directors will be appointed to the Board on Completion of the NxGen Acquisition.

Details of each of the NxGen Nominee Directors are set out below.

(a) Mr Daryll Knowles

Mr Knowles is currently the Managing Director and Chief Executive Offi cer of NxGen.

Mr Knowles graduated from Sydney University with a Bachelor of Pharmacy and has over 20 years experience in compounding and pharmaceutical formulation. He has owned or been in partnership in 7 retail pharmacies and was awarded the Australian Institute of Pharmacy Management Pharmacist Manager of the year in 1995.

Mr Knowles is currently a candidate to become a Fellow of the Australasian Association of Anti Aging Medicine in Integrative and Functional Medicine. He is a board member of the Australasian Association of Anti Aging Medicine (A5M) and a Consultant Pharmacist to Advanced Implant Technologies. Mr Knowles is also a Life Fellow of the Sydney

8April 2007 Commercial opportunity awaits in erectile dysfunction market www.pharmaceutical-business-review.com/article_feature. asp?guid=92C3C6D3-3E02-4783-9A68-7DA3FE5982B9

NuSep Ltd Prospectus 2009 [ 2][5]

==> picture [595 x 63] intentionally omitted <==

University Pharmacy Practice Foundation, Associate Fellow of Australian Institute of Pharmacy Management, Member of the Pharmaceutical Society of Australia and a Member of the Australian Society of Cosmetic Chemists.

(b) Mr Michael Tattersall

Mr Tattersall is currently the Chief Operations Offi cer of NxGen.

Mr Tattersall graduated form the University of Western Sydney with a Diploma of Business in 2000 and is a licensed real estate agent with an extensive history of management and training. He was a Specialist Civilian Contractor with the Royal Australian Navy specialising in mechanical engineering and during this period was part of a team that provided a turnkey installation for the IMASAT satellite communications system.

Mr Tattersall has had extensive management experience ranging from being a foreman in an engineering company to a Sales and Rentals Manager for one of the world’s largest providers of satellite communication systems. He also acquired a long haul transport company in 1994.

Mr Tattersall holds directorships in the following businesses: NxGen, NxGen Australia Pty Ltd, NxGen Properties Pty Ltd, TAT Consulting Services Pty Ltd, Rejuvaderm Pty Ltd, Jehega Pty Ltd (i.e. the NxGen Shareholder) and Jehegajuni Pty Ltd.

(c) Dr Alan Amodeo

Dr Amodeo is currently the Chairman of NxGen.

Dr Amodeo has 25 years experience in the health care industry, both in the private and public sectors. He has experience in sales, marketing and business development at senior levels in domestic and international markets and is experienced in liaising with Government Health Departments.

Dr Amodeo has a Doctorate in Medicine with a Bachelor of Science in Biology, Chemistry and Physics. He has studied at St John’s University (New York), the University of Perugia (Italy) and Sydney University.

Dr Amodeo has a strong commitment to the community including many years in various positions on the Board of Telstra Child Flight. He was Chairman of the Child Flight Board of Management and Chief Executive Offi cer. He has also held the positions of CEO of Tuta Healthcare P/L, Australian Medical Imaging P/L and Hydebrae Private Hospital. Dr Amodeo is also on the Clinical Excellency Commission.

(d) Mr John Patrick Boyd

Mr Boyd is currently the Chief Financial Offi cer of NxGen.

Mr Boyd has extensive knowledge of business and management. Throughout his career Mr Boyd has held positions within middle and senior management as well as board positions, providing specialist knowledge in fi nance, operations, logistics and manufacturing. He is currently a member of AIMM.

Mr Boyd has travelled extensively throughout his career both nationally and internationally supporting strategic alliances within the defence, biotechnology and pharmaceutical industries.

Mr Boyd currently holds directorships in the following businesses: NxGen, Locfi nn Pty Ltd, NxGen Australia, ASA, Jehega Pty Ltd (i.e. the NxGen Shareholder), Jehegajuni Pty Ltd, Rejuvaderm Pty Ltd, International Custom Pharmaceuticals Pty Ltd, Advanced Implant Technology Pty Ltd and Pharmaceutical Registrations Australia Pty Ltd.

(e) Dr James Stevens Rowe

Dr Rowe is currently a Scientifi c Director of NxGen.

Dr Rowe graduated with a Bachelor of Pharmacy from the University of Sydney in 1966. He then went on to complete a Masters in Science in 1976 and a Doctorate of Philosophy in 1980 from the University of London. Both of these degrees were in the fi elds of pharmaceutical formulation and the development of novel drug delivery systems. He also completed a Pharmaceutical Compounding Course at the University of Florida in 2004.

Dr Rowe has 35 years experience in both the multi-national pharmaceutical industry and academia in the development, testing, manufacturing and marketing of both novel and existing drug dosage forms for the pharmaceutical and veterinary markets worldwide. This includes 15 years experience in the United Kingdom. Dr Rowe’s industrial experience includes senior positions at Abbott Laboratories, Eli Lilly and Riker Laboratories in Australia as well as ER Squibb & Sons Ltd in the United Kingdom. He has also held academic positions at the University of Sydney and the University of London. Dr Rowe has been credited with a number of publications in peer reviewed journals as well as being the author or co-author of a range of patents relating to drug delivery and

26 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

pharmaceutical formulation. Dr Rowe also has had signifi cant experience in the commercialisation of pharmaceutical products in his previous role as Marketing Planning Manager for ER Squibb & Sons Ltd in the United Kingdom.

Dr Rowe is a member of various societies including the Pharmaceutical Society of Australia, The Royal Pharmaceutical Society of Great Britain, The Royal Australian Chemical Institute, Sydney University Chemical Society and the Australian Academy of Forensic Scientists. Dr Rowe is a registered pharmacist and Chartered Chemist.

(f) Mr Wilson Kim Ling Wong

Mr Wong is a non executive Director of NxGen.

Mr Wong graduated with a Bachelor of Commerce from the University of New South Wales in 1980, becoming a Chartered Accountant in 1983 whilst working for Deloitte.

Mr Wong is a Fellow of the Institute of Chartered Accountants in Australia, a Fellow of the Taxation Institute of Australia and a member of the Australian Institute of Company Directors.

Mr Wong has 29 years experience in Accounting & Finance including 19 years as the principal of a highly successful Accountancy & Management Consultancy fi rm based in Sydney and Hong Kong.

Mr Wong has been involved in a wide spectrum of industries including property, banking and fi nance, health, hospitality and investment companies. Mr Wong also has considerable local and international business experience advising on and consummating a number of cross border transactions.

Mr Wong has broad commercial experience and has built an extensive network in the Asia Pacifi c region, including China. Currently, Mr Wong holds directorships in the following companies: Bennelong Partners Pty Limited, Bennelong BPO Group Pty Limited and Bennelong Wealth Management Pty Limited.

NuSep Ltd Prospectus 2009 [ 27]

4. Independent Expert’s Report

2nd April 2009 Mr John Manusu Executive Chairman NuSep Limited 22 Rodborough Road Frenchs Forest, NSW 2086

Dear Mr Manusu,

As requested by the Directors of NuSep Limited (“NuSep”), we have prepared this independent Expert’s Report. This report is to be included in a Prospectus to be provided to NuSep’s shareholders.

NuSep announced on 1 October 2008 that it had entered into a binding Heads of Agreement to acquire 100% of the shares in NxGen Pharmaceuticals Pty Ltd (“NxGen” or the “Company”) in return for shares and cash and subject to approval by NuSep shareholders. NxGen is a private Australian company that is wholly owned by Jehega Pty Ltd and has diverse activities in pharmaceutical product development and formulation, contract research, and specialty chemical wholesaling and manufacturing.

This report provides our opinion on the transaction and whether it is fair and reasonable in all the circumstances to the non-associated shareholders of NuSep. At the conclusion of this transaction NxGen Shareholders will hold the majority of the shares in NuSep and this is therefore a reverse takeover of NuSep by NxGen. According to Section 611 (Item 7) of the Corporations Act 2001 and Regulatory Guide 74 (“Acquisitions agreed to by shareholders”) of the Australian Securities and Investments Commission, an analysis of whether the proposal is fair and reasonable to non-associated shareholders must be provided to shareholders as part of proper and full disclosure where control of the company may change. In addition, Regulatory Guide 111 describes the accepted meaning of “fair” and “reasonable” in Australian mergers and acquisitions practice. [1]

A transaction is regarded as “fair” if the assessed value of the shares acquired is greater or equal to the consideration given. The transaction is considered “reasonable” if the offer is “fair” and the potential advantages of entering the agreement outweigh the disadvantages to NuSep shareholders, or, in the absence of the transaction being “fair”, that the offer should be accepted if there is no higher offer. We understand from NuSep management that there has been no higher offer to date.

In arriving at our fair and reasonable opinion we have determined a value range of NxGen based on its assets and projected discounted cash flow (DCF) analysis and examined the likely advantages and disadvantages of the transaction to NuSep shareholders. We have also considered this valuation against the ASX industry price earnings (PE) multiple to triangulate this valuation. The sole purpose of this report is to provide this independent opinion to the NuSep shareholders and it should not be used in any other context.

1 ASIC Regulatory Guide 111, Content of Expert Report, Page 7 Section RG 111.9 – RG 111.11

Page 1 of 18

==> picture [35 x 714] intentionally omitted <==

==> picture [87 x 625] intentionally omitted <==

28 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

In conclusion, having regard to the offer of AU$21.25 million plus a performance payment of $3.75 million falling within our estimate of the fair value of NxGen being AU18.3 million to AU30.8 million with a mid point of 24.5 million, and considering the advantages and disadvantages, in our opinion the takeover is fair and reasonable to the non-associated NuSep shareholders.

The Proposed Transaction

NuSep is an Australian-based life science company listed on the Australian Stock Exchange Limited (ASX:NSP) and focussing on the development and sales of biological separations technology. NuSep was founded on 1[st] December 2006 from the divesture of certain Australian assets of Life Therapeutics Ltd (ASX:LFE). NuSep’s core competency is in precast gels and laboratory separation processes, namely the iGels the MF10 Separator instrument and biological products such as human immunoglobulin (IgG) and albumin.

NxGen has two subsidiary companies: ASA Pharmaceuticals Pty Ltd, which is a pharmaceutical wholesaling company and the exclusive Australian distributor of Medisca, Inc.’s fine chemicals and active pharmaceutical ingredients (APIs); and NxGen Australia Pty Ltd, which is responsible for the research and development as well as analytical, product development, training and marketing services in NxGen. The consolidation of these companies into NxGen occurred in January 2008. The company is also closely associated with Australian Custom Pharmaceuticals Pty Ltd (ACP), which is owned by NxGen CEO and shareholder, Daryll Knowles, and provides pharmaceutical compounding services. The group of companies is headquartered in rented facilities at Taren Point, New South Wales.

Prior to completion of the NxGen acquisition, the Board of NuSep is proposing to spin out the existing separations business of the Company into a new public, unlisted entity, “Prime BioSeparations Pty Ltd”, in which existing NuSep Shareholders will receive a pro rata shareholding. The Board of NuSep also proposes to raise up to $5,075,000 under a general share offer (the Offer) pursuant to a prospectus to be issued by NuSep.

The consideration for the NxGen Acquisition will be paid to the NxGen Shareholder in the following three instalments:

by the issue of 15.95 million Shares which equals 55% of the total Expanded Share Capital of NuSep post the acquisition, ie including the shares issued in the first instalment, second instalment and third instalment and the issue of the bonus shares (the First Instalment);
by the payment of cash and/or the issue of up to a maximum of 5.075 million Shares that equals a maximum of 17.5% of the Expanded Share Capital of NuSep within 15 business days of the Close of the Offer (the Second Instalment).� In the event that the Offer is fully subscribed the Second Instalment shall be paid in cash.� In the event that the Offer is not subscribed or partly subscribed, the proportion of cash and Shares in the Second Instalment shall be determined by the Board immediately prior to completion of the acquisition; and
by the issue of 4.35 million Shares which is to equal 15% of the Expanded Share Capital of NuSep when and if NxGen reaches a pre-tax profit of $2.1 million (the Third Instalment).� Such pre-tax profit must be reached prior to or on 30 June 2010.

The final value of the transaction will total $29 million, which will result in the NxGen Shareholder holding between 70% and 87.5% of the total shares in NuSep depending on the take up of the Offer. The NuSep shareholders will retain 12.5% of the issued capital of the company and so the cost to them of the NxGen acquisition is $25.3 million. If NxGen do not

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 2 of 18

NuSep Ltd Prospectus 2009 [ 2][9]

==> picture [595 x 63] intentionally omitted <==

achieve the $2.1 million profit forecast the additional 15% shares will lapse and the value of the company to NuSep shareholders will be $21 million. The majority ownership of NuSep will then pass to NxGen Shareholder.

Table 1: Structure and effects of takeover

	Percent of total shares	Number of shares
Current NuSepIssued Capital	8.60%	2,300,000
NuSepBonus Shares	3.9%	1,325,000
NxGengeneral share offer	17.50%	5,075,000
NxGen first installment Shares	55%	15,950,000
Total Issued Capital after acquisition		24,650,000
NxGen third installment Shares based on achieving $2.1m profit	15%	4,350,000
Total Issued Capital after issue of Performance Shares	100.00%	29,000,000

The takeover will be funded by cash raised by the Offer which aims to raise $5.075 million to cover costs of the capital raising activity, support the cash component of the acquisition, expand the NxGen business into the US market, working capital needs of NxGen and Prime BioSeparations Pty Limited, and fund the spin out of the existing NuSep business. The NxGen acquisition is contingent on first gaining approval by NuSep shareholders for the spin out of NuSep’s current business into Prime BioSeparations. NuSep shareholders then need to approve the issue of NuSep shares to acquire the NxGen business. This report deals with the second of these steps, namely the purchase by NuSep of NxGen and whether this is fair and reasonable to the NuSep shareholders.

The NuSep share price has fallen progressively since listing on the ASX approximately eighteen months ago, from a high of $0.52 in June 2007 to a low of $0.04 in September 2008. The Company’s current share price is $1 ($0.05 pre-consolidation) and its market capitalisation is $2 million. We have not investigated the reasons for the change in the price of NuSep shares and this may have been influenced, among other things, by the effects of the recent deteriorating global economic conditions.

The Board of Directors of NuSep views the proposed takeover as the best current option for preserving and increasing the value of NuSep shareholders’ investment. The NuSep Board believes this proposal offers the best opportunity to raise the necessary funds to complete the development of the SpermSep instrument while offering shareholders an investment in a complementary profitable business. In particular this allows NuSep to become a pharmaceutical development and supplier company with positive cash flow and profit and provides a separate vehicle for further development of the separations business as a private entity. The NuSep management has stated that a major part of the business of NxGen is in sexual dysfunction and therefore related to the current business of NuSep.

Overview of NxGen

NxGen is a diversified pharmaceutical development and manufacturing business with a focus on the design of formulations that will be manufactured as “compounded” or “off label” pharmaceuticals. NxGen specialises in formulating products that treat sexual

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 3 of 18

30 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

dysfunction and has products in development for drugs of addiction. NxGen also manufactures cosmetics and over-the-counter pharmaceuticals and sells wholesale ingredients through the NxGen subsidiary ASA Pharmaceuticals Pty Ltd. Most of the current business is generated in Australia and manufacturing is carried out through Australian Custom Pharmaceuticals Pty Ltd (ACP) which holds a pharmacy licence in accordance with Australian regulations. NxGen is entering agreements with pharmacy groups overseas to significantly expand their operation.

NxGen’s staff have expertise in formulation chemistry, drug delivery mechanisms and the behaviour and action of pharmaceutical drugs. To support this development, the company has testing facilities to determine the composition and stability of the product and conducts clinical trials on new formulations. Once developed, they either license the appropriate formulations to contract manufacturers and compounding pharmacies to prepare the products and receive royalties in return or receive a pre agreed fee for formula development and testing. It is important to note that ACP is a separate legal entity to NxGen and the transaction with NuSep does not include any transfer of ownership of ACP, which acts solely as the strategic partner to NxGen. Because the company’s pharmaceuticals are individually compounded from previously approved drugs, and their safety and efficacy is not independently proven through specific clinical trials for that particular use, they are prescribed “off-label”. ACP claims to have a dominant share of the Australian market for compounded pharmaceuticals with the remainder mostly carried out by individual pharmacists.

The NxGen intellectual property is embodied mostly in formulations (or recipes) and in the use of particular excipients to meet the requirements of the physician. NxGen claims to have over 1,500 different proprietary formulations, including various delivery formats that have been devised by the company pharmacists based on their specialist compounding knowledge. These formulations are significant assets and are held as trade secrets rather than as patents. All NxGen’s pharmacist staff are responsible for developing these proprietary formulations, but most are attributed to Drs James Rowe and Daryll Knowles and held in secure databases. NxGen also has considerable knowledge of the sourcing of raw ingredients and the testing of them and of manufactured products.

Pharmaceutical Compounding

Off-label products are special formulations of known active compounds that have been prepared to meet individual patients’ needs and prescribed by a licensed physician. Offlabel prescriptions may be prepared from a registered medicine for a disease, indication, age, dosage or route of administration that is not included in its approved product information or registration.[2] They may be prescribed to treat conditions other than those approved by regulators. Doctors may choose to prescribe a medication off-label because their patient has exhausted all other available treatments, is intolerant of the required medication in its normal format, requires a different dosage to benefit from the effects of the drug, or many other reasons. The doctor writes the prescription based on their assessment of the needs of that particular patient and must accept responsibility for prescribing the medication and monitoring the patient. They must also be convinced that the off-label product better suits their patient’s needs and that there is good clinical evidence or experience that indicates the medication is safe and efficacious.[3] Pharmaceutical

2 Kron J (2005). Label Conscious: Are there legal risks for doctors when they prescribe drugs offlabel? Australian Doctor, 13 January 2005

3 Gaxarian M et al (2006). Off-label use of medicines: consensus recommendations for evaluating appropriateness. MJA, 185;10 pp544-548

Page 4 of 18

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

compounding of custom drugs has a long history but this activity decreased as mass manufactured dosage forms became available and pharmacists dispensed pre-packaged medicines. It is a common legal practice undertaken by 95% of surveyed Australian GPs.[4]

Regulatory Environment

Under the regulations of the Australian Therapeutic Goods Act, the pharmaceuticals developed by NxGen must be produced or “compounded” by a pharmacist and cannot be sold off-the-shelf or over-the-counter in retail pharmacies or elsewhere. Companies that manufacture compounded pharmaceuticals must be owned by a pharmacist and NxGen have a close relationship with ACP which is owned by Dr Daryll Knowles who is a pharmacist, the CEO of NxGen and a shareholder.

ACP is a custom compounding pharmacy providing a range of formulations for dental, dermatological, geriatric, nausea, paediatric, podiatric and pain indications. Individual doses, flavour specification and veterinary products are available in a range of delivery and packaging formats. All products are manufactured at the Taren Point facility, with 48 hour script turnaround. At the patient’s request ACP retains repeats, and the majority of business comes from personal, repeat prescriptions. ACP also publishes, through NxGen Australia’s marketing arm, information guides about compounding for doctors and physicians, in an effort to educate their target market as to the uses and benefits of prescribing custom compounded products.

NxGen currently provides advice and formulations to ACP for compounding. All pharmaceutical products are tightly regulated and the processes, equipment and facilities used by ACP are regularly inspected to meet the standards of the State Pharmacy Board and also come under the jurisdiction of a number of other State regulations and boards. The Therapeutic Goods Act[5] provides exemption for extemporaneous dispensing (pharmaceutical compounding) and ACP is not required to be licensed by the Australian Therapeutic Goods Administration (TGA) to manufacture and market its pharmaceuticals. This allows the company’s pharmacists to prepare pharmaceutical formulations for individual patient prescriptions, without requiring the company to meet the compliance obligations of TGA certification. The testing facility is registered by the National Association of Testing Authorities (NATA).

Although pharmaceutical compounding is well established there has been discussion by the Australian Government to change the regulatory environment under which this operates. A Discussion Paper was released in 2008 on the regulation of prescription compounded Medicines in Non-Hospital Pharmacies,[6] recommending that a tiered structure of approval be set up depending on the complexity of the products and size of the operation. NxGen and ACP management believe such a structure would be of competitive benefit to them since they are already preparing to operate to TGA requirements. We agree that this could benefit NxGen but the regulations have yet to be determined.

The UK and USA have analogous laws to those in Australia relating to access to off-label pharmaceuticals. The Food and Drug Administration (FDA) has clearly indicated that offlabel prescribing is considered legal in the US, and provides guidelines for doctors to make decisions about off-label prescribing. Analyses of prescribing patterns in the US have

4 Kron J (2005). op cit

5 Under Section 5 of the Therapeutic Goods Act 1989 and Item 6 and Schedule 8(2) of the Therapeutic Goods Regulations 1990

6 A Discussion Paper on Regulation of Extemporaneously Prepared Medicines in Non-Hospital Pharmacies, National Coordinating Committee on Therapeutic Goods 10 April 2008

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 5 of 18

32 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

indicated that 25-75% of prescriptions for some of the top selling drugs are prescribed for off-label uses.[7]

Several countries have different regulations to those in Australia in terms of who can manufacture bespoke formulations and in the way drugs are marketed. Most notable is the US where a compounding pharmacy does not have to be owned by a registered pharmacist and a number of compounding companies exist and operate. NxGen sees this as a market opportunity for certain of its product formulations and we understand that it is their intention in time to acquire such compounding business overseas enabling it to own this part of the value chain.

Contributions to value

NxGen has signed contracts and are in negotiation with a number of other companies in Australia and overseas. According to the Company business model, all products developed and offered by NxGen are individually prepared (or compounded only) by pharmacists for specific patients. Several initiatives are intended to allow NxGen to manufacture and market products in the US, Asia and Europe. Many of these arrangements are projected to be operating in 2009 and it is our understanding that they will contribute significantly to the cash flow of NxGen. Although we cannot guarantee that these events will occur as planned and in the time proposed, we believe the company has the capability and, with the new listed entity, the resources to bring them about.

Australian market

In Australia, prescriptions for compounded products come directly from Australian doctors to ACP who then contracts NxGen to develop appropriate formulations and delivery systems. NxGen and ACP have been successfully carrying out this work and have an effective monopoly position in the Australia market. We assume that this will continue. NxGen also have developed specialist formulated products for treatment of sexual dysfunction, drugs of abuse and several other areas and intends to expand this work through license arrangements with companies in larger overseas markets.

AMI Australia Pty Ltd

NxGen has a marketing and distribution relationship with AMI for all the products related to sexual dysfunction in the Australian and UK markets. AMI is a 100% subsidiary of Advanced Medical Industries Inc. which is incorporated in Nevada, USA, and whose shares are offered on an Over-The-Counter Bulletin Board through NASDAQ.[8] In this arrangement, AMI markets the NxGen products to fill prescriptions for products prescribed by AMI doctors through their clinics and call centres specialising in sexual dysfunction. AMI has operated since 1993 in Australasia and now has more than 30 treatment clinics.[9] The arrangement with AMI is important for NxGen but the agreement is verbal. To address this issue NxGen is currently negotiating a world wide supply agreement with AMI. In the absence of this arrangement NxGen would have to build this service themselves.

NxGen intend to enter several overseas markets with business structures and facilities that will enable it to sell directly to patients and to manufacture off-label products. Negotiations with several companies in the US, UK, Malaysia and other Asian countries are advanced and NxGen expects these to generate cash flow in 2009. In several cases NxGen is seeking to

7 Moskowitz D (2007). Off-label Prescribing: Strategies, Risks and Market Challenges. Informa UK Ltd, Reference No. BS1346

8 Advanced Medical Institute, Inc. (2008) Website http://www.avmd.com.au 9 US SEC Filings

Page 6 of 18

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

[33] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

acquire companies in these countries which will be paid through shares or cash raised from the market. We have reviewed these opportunities and negotiations and where we have considered it appropriate, have included these in our valuation sensitivity analysis of cash flows. The operation of NxGen and its future expansion depends on successfully concluding a number of agreements and acquisitions but there is no guarantee that these will be completed in the timeframe proposed.

NxGen business growth areas

NxGen is focusing on treatments for sexual dysfunction, drugs of dependence and skin treatments, which fit its business strategy and marketing through clinics and specialists requiring close and confidential consultation between the prescribing physician and the patient. Whilst there are competing products in each of the areas targeted, the approach to these niche markets is a familiar and profitable business area for NxGen. NxGen also provides contract research to develop new formulations in other areas and they also conduct a wholesaling business of imported cosmetics and other products.

1. Sexual dysfunction treatments

NxGen has developed treatments for premature ejaculation (PE) and erectile dysfunction (ED) in men, and sexual dysfunction in women (female sexual dysfunction or FSD). The active ingredients are currently available and may use a range of application systems including a nasal spray, gel, lozenges and injectable formulation. The benefit of these delivery mechanisms is that they each bypass the gastrointestinal tract and kidneys, allowing faster action, elimination of gastric and hepatic drug degradation. Lower doses can therefore be administered with fewer side effects.

The products are currently sold through Advanced Medical Institute (AMI) in Australia, New Zealand, China, Japan, Indonesia and Europe. In other markets, such as Indonesia, the base material is shipped and the API is added to the mixture and distributed in-country.

Funds from the NuSep capital raising and NxGen acquisition will be used to enter the US market with these products.

Market size and approach

Over 150 million men worldwide reportedly suffer from erectile dysfunction and this is expected to double by 2020. Around 85% of cases remain undiagnosed and incidence is related to age, systemic disease, neurogenic or vascular factors, drug inducement and psychology.[ 10] Few men seek treatment and the overall market could expand with better education and less confronting consultations. Within the erectile dysfunction area there are niche markets with a high prevalence, such as diabetics.[11]

Currently three phosphodiesterase V inhibitor products dominate the erectile dysfunction market: Viagra (Pfizer), Cialis (Eli Lilly/ICOS) and Levitra (GSK/Bayer), which together generate revenues of over US$3 billion annually growing at 4.9% p.a. Sales in Australia, were $63 million in 2006.[12] The US remains the largest single market and new erectile dysfunction products are being developed by a number of companies, including Abbott, Pfizer, Inotek, Schering-Plough, Vivus and EK Chemicals.

10 Visiongain (2007). The ED Market Report: Erectile Dysfunction Market Assessment and Analysis 2007 to 2022.

11 Pharmaceutical Business Review (2007). Commercial Opportunity Awaits in Erectile Dysfunction Market. Progressive Media Group, 25 April 2007 12 Visiongain (2007). op cit

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 7 of 18

~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

The market for pharmacological treatments for premature ejaculation is relatively underdeveloped, with little statistical reporting and few effective products on the market. Premature ejaculation can affect men from a much younger age than erectile dysfunction, and the market is estimated to be at least as large (about 30% of all men reportedly suffer from premature ejaculation on a consistent basis).[13] Currently there are no competing drugs to NxGen’s premature ejaculation treatment, with only off-label anti-depressants, home remedies and internet-marketed solutions on offer. The UK company, Plethora Solutions, is developing a spray-on treatment (PSD502) which is expected to reach the market in late 2009.[14]

Female sexual dysfunction (FSD) is another poorly recognised condition, believed to affect up to 45% of all women. FSD encompasses symptoms such as problems with desire, arousal, achieving orgasm and pain during intercourse. With an estimated 84 million women in the seven major markets suffering some form of FSD, and only a few approved treatments available, there is significant unmet need in this market.[15]

Procter & Gamble markets Intrinsa, a testosterone patch which is approved in parts of Europe but not Australia or the USA. Organon testosterone implants are available in Australia, and many other testosterone formulations are available off-label. The FDA cited the potential for off-label use as one of the reasons for rejecting the drug, Intrinsa, in the US, and is indicated for use only by surgically menopausal women (hysterectomy patients). PBN Pharma LLC has launched ApoGyn onto the market as a prescription medication to cause sexual arousal in women, without side effects. Other companies with products in development and clinical trials include Antares/BioSante (LibiGel), Boehringer Ingelheim (Flibanserin), Novavax (Androsorb), Pharmos (VPI013) and Recordati (REC 2615).

Risk Assessment

Major competitors dominate the global erectile dysfunction market and many new products are in development. Whilst AMI has a significant market share in Australia, there is no guarantee that the company will be able to establish such effective distribution arrangements in other markets such as the US or maintain its share in Australia. The AMI offer is not competitive on price, but the marketing approach and relative anonymity of the prescribing and drug delivery methods are key advantages.

NxGen does not currently have a formal contractual agreement with AMI. Whilst the two companies are understood to have a close relationship and NxGen shares all IP relating to the sexual dysfunction products prescribed by AMI doctors, if this relationship were to break down the company would be at least temporarily unable to receive license fees for these products. Without the assistance of a distributor such as AMI other approaches to the market would have to be implemented and this represents an increased risk to the timing and success of the expansion.

Value comparables

We note the following transactions which may offer some insight into current comparable valuations for NxGen in these markets:

GlaxoSmithKline (NYSE:GSK) licensed co-development rights in 2006 from Futura Medical plc (AIM:FUM) for a gel and spray topical formulation based on their DermaSys®�delivery system�as treatment for erectile dysfunction. GSK also licensed

13 Lewcock A (2007). Premature ejaculation spray coming to clinical climax. Decision News Media SAS, 31 October 2007

14 Lewcock A (2007). op cit

15 Datamonitor (2007). Female Sexual Dysfunction: Prescription Drug Pipeline Overview 2007.

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 8 of 18

[35] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

from Futura the rights to two other early-stage products for female sexual dysfunction and premature ejaculation. GSK agreed to pay 65% of the development costs (approximately _2.4 million), plus royalties. In 2007 GSK cancelled the deal unexpectedly, and Futura signed a similar agreement with SSL International plc. under similar terms (SSL pays 65% of the approximate _3.8 million development costs, plus royalties and up to _18 million in regulatory and sales milestone payments).[16] Futura develops novel products for sexual health and pain relief using existing chemical entities only; none of their products are compounded. Futura has a market capitalisation of _14.6 million (or AU$32 million at 14 December 2008).[17]

Acrux Ltd (ASX:ACR) is an Australian company developing pharmaceutical products for global markets. The company’s pipeline of non-occlusive topical sprays and liquids includes treatments for decreased libido in women, menopause, hypogonadism, contraception, pain and nicotine addiction. In 2004 Acrux signed an exclusive licensing agreement with VIVUS, Inc. (NASDAQ:VVUS) for the development and commercialisation of topical testosterone spray, Testosterone MDTS, for decreased libido in women and Estradiol MDTS, for menopausal symptoms. Vivus agreed to pay Acrux combined licensing fees of US$3 million, clinical development milestone payments of US$4.3 million, product approval milestone payments of US$6 million, plus undisclosed royalties.[18] Acrux’s current market capitalisation is AU$76 million.[19]
In 2002, Nastech Pharmaceutical Company Inc. (NASDAQ:NSTK)[20] signed a development and marketing agreement with Pharmacia Corporation (NYSE: PHA) for their proprietary erectile dysfunction and female sexual dysfunction treatments. The nasally delivered apomorphine product had completed Phase II trials in men with erectile dysfunction and was being tested in Phase II studies in women with FSD. Pharmacia paid Nastech US$3 million upfront, plus future development costs up to US$45 million and sales milestones and escalating royalties. Costs of US$3.4 million were reimbursed to Nastech, and Pharmacia also purchased US$5 million of common stock in Nastech.[21]

2. Anti-addiction treatment

NxGen is in the final stages of developing an implantable, slow-release pellet formulation of the generic, non-addictive, medication naltrexone. Naltrexone is an opiate antagonist commonly used to treat addicts. NxGen will be manufacturing naltrexone initially for alcohol addiction, and will then target opiate and amphetamine dependence. The implant is inserted under the skin of the patient’s abdomen, and slowly releases the medication for up to six months.

Market size and approach

The global market for all anti-addiction pharmaceuticals is currently valued at approximately US$1 billion per annum and expected to increase as a wider range of

16 NATAP (National AIDS Treatment Advocacy Project) (2006). GSK licenses OTC erectile dysfunction product, 5 July 2006

17 www.futuramedical.co.uk/ Quoted on the AIM market of the London Stock Exchange

18 Vivus, Inc. (2004). Press Release: VIVUS Expands Sexual Health Product Pipeline Through Deal With Acrux, 12 February 2004

19 Commsec (2008). ASX:ACR Last updated 19 December 2008

20 In 2008 Nastech was renamed MDRNA, Inc.

21 MDRNA, Inc. (2002). Press Release: Nastech And Pharmacia Reach Worldwide Agreement To Develop And Market Nasally Administered Apomorphine, 4 February 2002

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 9 of 18

~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

treatments become available and addiction continues to be a major societal issue. Nicotine addiction and obesity are projected to be the biggest markets, based on the increasing incidence of obesity globally and community pressure to quit smoking.[22] The global market for alcohol dependence drugs is about US$100 million and expected to reach US$300 million by 2016.[ 23]

The anti-addiction treatment market is relatively untapped but highly competitive, with a range of generic medications already available. A number of targeted therapies are in preclinical or clinical development and expected to reach the market over the next few years. Several major pharma companies are increasingly active.[24] Although Naltrexone has been used for many years in a range of formulations as a generic anti-addiction drug, this increasingly competitive anti-addiction market will require a new approach to capture share. Patients differ in their requirements and individual formulation, directed by the physician in consultation with the patient, in a dedicated clinic is seen as a distinct advantage.

Value comparable

Alkermes (NASDAQ:ALKS) markets Vivitrol, an extended release injectable formulation of naltrexone for alcohol dependence and now in clinical trials for opioid dependence. In 2005 Alkermes, Inc. entered into an agreement with Caphalon, Inc. (NASDAQ:CEPH) to develop and commercialise a long lasting naltrexone injection, Vivitrex, for the treatment of alcohol and opioid dependence. Cephalon agreed to pay US$160 million upfront, plus US$110 million on FDA approval and up to an additional US$220 million in milestone payments based on sales.[25] In January 2008 Alkermes licensed the rights to the product, Vivtrol, outside the US, to Johnson and Johnson subsidiary Cilag GmbH International. Cilag will pay up to US$39 million in milestone payments plus royalties for rights in the Russian and Commonwealth of Independent States (CIS) region.[26] Alkermes is a much larger well established USbased company, with multiple products in the market and is further advanced than NxGen with a correspondingly high valuation.

3. Contract services

NxGen provides contract drug development and formulation services to the pharmaceutical and consumer products sectors. They assist drug developers and manufacturers (in both human and veterinary markets) to produce novel products and reformulate old products, with a range of delivery formats available including tablets and capsules, lozenges, injectables, nasal sprays, suppositories and gel formulations. Examples of the company’s work in consumer products include soap, skin cream and other cosmetic formulations.

NxGen does not retain the formulation developed through its contract research work but it does increase the technology base and diversification within NxGen and positions NxGen as a major source of knowledge in formulation. Following formulation, NxGen may retain the contract to manufacture the product and in other cases the clients may pass the formulation

22 Visiongain (2006). Anti-addiction Therapies, 2006-2011 – The Pharmaceutical Industry’s Next Viagra?

23 McBride R (2008). Big pharmas target addiction as depression drugs come off patent. Mass High Tech: The Journal of New England Technology, 11 July 2008

24 Datamonitor (2008). MedTRACK Database, viewed 5 November 2008

25 Alkermes, Inc. (2005). Press Release: Cephalon and Alkermes Announce Agreement for the Commercialization of Vivitrex for the Treatment of Alcohol Dependence; Companies to Share Profits from Future Sales of Vivitrex Equally, 24 June 2005

26 Alkermes, Inc. (2008). Press Release: Alkermes Announces Agreement for the Commercialization of VIVITROL in Russia/CIS, 7 January 2008

Innovation Dynamics Pty Ltd Page 10 of 18

==> picture [35 x 714] intentionally omitted <==

[3][7] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

on to a separate contract manufacturing organisation (CMO). Reflecting their strong position in the industry, ASA will also run educational courses covering the theoretical and practical aspects of extemporaneous compounding.

Formulation is a critical but under-serviced niche area of pharmaceutical contracting where NxGen has specific expertise. In general this contract and educational work helps to maintain the strength of the company and competitiveness in formulation know-how, and reflects market leadership. There is a risk in loss of key staff with formulation knowledge and critical company know-how may be disseminated to other companies through this work. It is also a low revenue area relative to the other key business lines.

Value Comparable

No comparable companies were identified for contracted formulation services

4. Specialty Pharmaceutical Wholesaling

ASA Pharmaceuticals Pty Ltd (ASA) is wholly owned by NxGen and is a wholesale distributor of chemicals and other compounding supplies operating through a licence from the NSW Department of Health. ASA is the exclusive Australian distributor for Medisca Inc., a North American supplier of bases, fine chemicals, active pharmaceutical ingredients (APIs), controlled substances, natural flavours and oils, and equipment and devices sourced from US FDA-inspected[27] manufacturers worldwide. ASA also sources goods from alternative suppliers, including empty capsules, nutraceuticals and other fine chemicals. ASA already has a number of significant Australian compounding pharmacies as customers. This is a relatively simple business for NxGen to operate, with low overheads and expenses.

Value comparable

A major player in the pharmaceutical wholesaling market in Australia is Australian Pharmaceutical Industries Ltd (API). API is considerably larger than NxGen and, whilst not a direct comparable, API is worth noting because it currently holds about 90% of the market and has a number of corporate pharmacy licences. API is listed on the ASX with a market capitalisation of $102 million (27 December 2007).[28] The company is not only a pharmaceutical wholesaler (over the counter[29] and PBS[30] medicines), but also owns the Priceline, Soul Pattinson and Pharmacist Advice pharmacy brands, and provides services to the retail health and beauty markets. Additionally, API has a partnership with the generic medicines distributor Alphapharm Pty Ltd.[31]

6. Corporate pharmacy licence in Australia

The New South Wales Government provides an exemption to the regulation in the Pharmacy Act to allow wholesale manufacturing companies to hold “corporate” pharmacy licences and own a pharmacy provided it is operated by a qualified pharmacist. Around half of the current 30 licenses are owned by pharmaceutical wholesaler Australian Pharmaceutical Industries Limited. NxGen is seeking to purchase a corporate pharmacy licence which would allow the ACP business to be combined with the NxGen group. However there is no guarantee that this will take place or under what terms.

27 FDA = Food and Drug Administration of America

28 Commsec (2008). ASX:API, Last Updated 22 December 2008

29 OTC = over-the-counter medications that can be purchased without a prescription, such as headache and common cold medications.

30 PBS = Pharmaceutical Benefits Scheme,

31 Alphapharm Ltd (2008). Website http://www.alphapharm.com.au

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 11 of 18

~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Value comparable

In March 2006 Coles Myer (now the Coles Group, owned by Wesfarmers) acquired Sydney retail pharmacy business Sydney Drug Stores Pty Ltd (trading as Pharmacy Direct). The acquisition included a retail store in Western Sydney and an online, mail, fax and phone order pharmacy business with a 430,000 customer base, 100 employees and $44 million in annual sales. The purchase of Pharmacy Direct also included the corporate pharmacy licence under which the company operated. The total value of the acquisition was $48 million (excluding merchandise), and was paid in full in Coles Myer shares.[32,33]

Assessment of fairness

In our assessment of the proposed transaction being fair we have considered whether our independently assessed value of the technology, IP and other assets held by NxGen exceeds the consideration in the proposal to acquire these assets.

Several methods may be used to estimate the current value of NxGen, and their suitability depends on the circumstances of the company, the transaction and the available data in the particular industry sector. These are outlined in ASIC Practice Note 43, 111 & 112 and information on them is available widely. These methods include multiples of earnings, market based comparisons with recent transactions of similar companies (or recent quoted price of listed securities) or calculation of Net Present Value (NPV) from an analysis of Discounted Cash Flow (DCF) projections.

We have used a DCF analysis of after tax cash flows as our primary valuation methodology and have compared this with the values of companies developing or selling similar products together with multiples of their earnings.

Discounted cash flow valuation

A DCF analysis is used to determine the Net Present Value of the business as a going concern. We regard the DCF methodology to be most appropriate because it captures many variables in the operating business and is based on future projected earnings. The disadvantage of DCF is the inherent uncertainty of the future projected cash flow, including future revenues and the level of discounting applied.

We have considered each of the main product and technology areas in NxGen to form an aggregate valuation (Base Case) and have applied sensitivity analyses aimed to account for variation in discount rates, variation of performance to milestones and possible changes in market conditions. These are: Sensitivity 2: Income from account sales is reduced by 21% in year 1 (FY2008-2009) to 43% in years 3-5. Sensitivity 3: Entry into the US market is delayed by one year to Q4 FY2009-2010 with no income prior to this date. Expenses associated with this market are maintained. Discount rates used are described later under assumptions. We have also considered the values of recent transactions announced by several companies with products in sexual dysfunction and addiction therapy markets.

Table 2: Sensitivity analysis

32 Coles Myer Ltd (2006). Press Release: Coles Myer Acquires Pharmacy Direct, 31 March 2006 33 Subsequent to the Coles takeover the Pharmacy Guild commenced proceedings against Coles because the licence was held by Coles but the pharmacy was operated by a subsidiary. The NSW Supreme Court found against Coles in April 2008.

Innovation Dynamics Pty Ltd Page 12 of 18

==> picture [35 x 714] intentionally omitted <==

[39] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Discount rate	High	Medium	Low
Base Case	��	��	��
Sensitivity2: Low account sales	��	��	��
Sensitivity3: Delayed US entry	��	��	��
Range	18.3 million to 30.8 million
Midpoint	24.5 million

Assumptions

NxGen is composed of several companies that have been operating semi-independently up to 2008 when they were merged into NxGen Pharmaceuticals. Historical financial statements are available for the individual companies but the combined statements for NxGen only cover the Q1, Q2 and Q3 of FY2008-2009. NxGen Directors have also provided Pro Forma Financial Statements including projections for the full financial year to end June 2009.
The NxGen financial statements and projections for FY2007-2008 and FY2008-2009 are the subject of an Investigative Accountants report to be found elsewhere in this Prospectus and which we have relied upon in preparing our report.[34] We have not audited any accounts or carried out detailed due diligence. The projections used on our analysis included cash flows from overseas operations which were not included in the Investigative Accountant’s report.
NxGen management have also provided their projections for cash flows for the operation of domestic and overseas activities up to December 2010 and we have used these projections and the historical financial statements in our base case analysis. The cash flow budget includes income derived from domestic (Australian) sales and license fees from overseas sales of product through contracting companies and NxGen expects continued growth in all of these markets. The NxGen Director’s monthly and quarterly projections for FY2008-2009 include increased domestic sales, which continue the growth seen in the previous three months, and one quarter (April – June 2009) of new overseas sales. The NxGen management’s revenue projections to December 2010 continue at a similar growth rate.
In our DCF analysis we have extrapolated these after tax cash flow projections from FY2010-2011 to FY2012-2013. (See Table 3) In doing so we have increased the company income and variable expenditure for domestic sales by 10% per annum and international license income by 20% per annum based on our understanding of the present business and the market potential for the NxGen products. These projected increases are expected to come largely from expansion of existing client business and are less per annum than those budgeted up to December 2009.
Entry into the North American market through licensees or distributors will be a new venture for NxGen and the company is in advanced negotiations or has signed agreements with compounding pharmaceutical companies in the USA and elsewhere. In several of these agreements NxGen will take over existing businesses with ongoing cash flows and NxGen revenues from these are expected to start in Q4 of FY2008-2009. Accordingly, the NxGen budget includes a three fold increase in revenue from FY20082009 to FY2009-2010 due largely to the increase in sales from overseas markets over the full year (in FY2008-2009 overseas sales occurred in one quarter only). Overseas rollout

34 See the Investigative Accountants report dated 30th March 2009 by Pinn Deavin and Associates

==> picture [35 x 714] intentionally omitted <==

Page 13 of 18

Innovation Dynamics Pty Ltd

40 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

is funded over 3 years from the NuSep capital raising and $500,000 pa is included as expenses in subsequent years.

Table 3: Summary Base Case revenue projections and profit before tax

	FY08 (historic unaudiTed)	FY09 (forecast)	FY09 (forecast)	FY10 (forecast)	FY10 (forecast)	FY11 (forecast)	FY11 (forecast)	FY12 (forecast)	FY12 (forecast)	FY13 (forecast)	FY13 (forecast)
	$ M	$ M	% inc.	$ M	% inc.	$ M	% inc.	$ M	% inc.	$ M	% inc.
Revenue: Domestic	3.2	5.2	61	11.9	129	15.9	33	16.7	5	17.5	5
Revenue:Overseas	0	0.7	NA	6.5	875	7.5	16	9.0	20	10.8	20
Total Revenue	3.2	5.9	82	18.4	214	23.4	27	25.7	10	28.3	10
Profit BeforeTax: Domestic	1.0	2.0	98	8.6	321	12.1	40	12.7	5	13.3	5
Profit Before Tax: Overseas	0	0.1	NA	4.5	6713	7.0	56	8.5	21	10.3	21
Total Profit Before Tax	1.0	2.1	104	13.1	520	19.1	46	21.2	11	23.6	11

Future cash flow forecasts are subjective, especially where they involve entry of the company into new territories. We have considered the main transactions that NxGen intends to enter into and reviewed the assumptions the Directors used in their forecasts and we regard these as reasonable within their ability to predict these events. However, there is no guarantee that they will take place or achieve market share and meet regulatory and market requirements in the time frame indicated by NxGen or within this budget. We have tried to account for this in our extrapolations and scenario analyses where we have applied variations to the cash flows and discount rates to reflect three possible alternative scenarios related to timelines of market entry and penetration. The first model or Base Case uses extrapolated cash flow data provided by NxGen management. In the second model we have discounted the income from the Australian market, while allowing for the projected overseas sales. In the third model we have discounted the overseas sales by delaying entry into the US market by one year while maintaining the projected Australian sales. No terminal value is included in any model.
In our base model the contribution of the US market to total income is budgeted to increase from 4% in FY2008-09 to 19% of income in FY2009-2010 and the contribution of all overseas market to the NPV is approximately 33% in the base case and ranged from 22% to 49% in the sensitivity analyses.
We have applied ranges of discount rates between 24% and 40% uniformly to different cash flows. These values were selected according to the Weighted Average Cost of Capital (WACC) using a risk free rate of return as the current 10 year bond rate of 4.0% and a risk premium of 16%-30%. Handley[35] has calculated the Equity Risk Premium from historical data to be around 6.2% and, given the uncertainty of the market entry for several of NxGen ventures and achieving milestones, we have used a higher range. NxGen has a number of separate revenue streams and the Company has increasing profit from products that are in increasing demand. The risk is therefore less than if the Company relied on one or two sources of revenue.
According to the NxGen unaudited balance sheet of 30 September 2008 the current assets comprising cash plus trade receivables and inventory minus current liabilities will be used up early in the ongoing business and these have not been taken into account in the valuation of the company. The book value of plant and equipment is $337,629 and NxGen currently rents space and will continue to do so for the foreseeable future. The

35 John C. Handley, A Note on the Historical Equity Risk Premium , Report prepared for the Australian Energy Regulator, 17 October 2008

Innovation Dynamics Pty Ltd Page 14 of 18

==> picture [35 x 714] intentionally omitted <==

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

NxGen balance sheet also includes intangible assets of $1,781,758 as intellectual property valued by directors. We have not included this in our own analysis of the value of NxGen. NuSep has over $10m of carried forward tax losses and we have incorporated these carried forward tax losses in our calculations.

We assume that the regulatory and business environment that NxGen operates in remains generally constant over the period of the analysis and that there will not be any change in the economic conditions that would adversely impact a business of this type.

Comparable valuations

NxGen products and formulas hold a dominant percentage share of the Australian pharmaceutical compounding market and, in our view there are no companies that are directly comparable to NxGen and no sales of companies that could be used as exact comparables. There are also no directly similar listed securities and we have also not found any international companies or sales with publicly available financial data on which to base a comparable valuation.

We have noted above several transactions involving pharmaceutical companies that may assist us in providing a general industry benchmark indication for the valuation of NxGen. Three of these companies are developing products that will be used as over-the-counter products or ethical pharmaceuticals in the same medical areas as NxGen. These products are not compounded pharmaceuticals which would be analogous to NxGen and their manufacture and marketing will therefore follow more traditional routes for pharmaceuticals. Typically the value of such companies is closely associated with the intellectual property held in patents and their value relies on successful clinical trials and licensing to gain future earnings. In addition, several of these companies are currently not making profit and data is unavailable to calculate their EBIT and PE multiples. API is a major pharmaceutical wholesaler in Australia and may represent the type of organisation that NxGen could grow into.

Table 4: Summary of comparable valuations

Company	Value	Value(AU$)	PE Ratio	EBIT Multiple
Futura Medical	£14.6 m	$32 m	NA	NA
Acrux Ltd	AU$67 m	$67 m	NA	NA
API Ltd	AU$126 m	$126 m	8.4	5.9

Multiples of earnings

Methodologies involving multiples of earnings (these are mostly quoted as EBIT or earnings before interest and tax) or cash flows are used where these are known historically to be stable and the Company will continue to operate profitably and with predictable growth. Several of the NxGen precursor companies have operated for several years and the owners have considerable experience in this market.

We have considered the multiple of EBIT that NxGen would need to have for it to be valued at the acquisition price of $25 million. Company EBIT for the full FY2008-2009 year is projected to be $2.1m and therefore a multiple of 12 would value the Company at $25 million. We have also considered the future growth through new activities, such as the launch of products into US and UK. If the EBIT of $13.2 million projected by management after one year (in FY2009-2010) is realised this gives a multiple of 1.9 for a valuation of $25 million.

==> picture [35 x 714] intentionally omitted <==

Page 15 of 18

Innovation Dynamics Pty Ltd

~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

As a further indication of value, the average PE ratio for all companies listed on the ASX health, pharmaceutical and biotech index is 12.74[36] . On this basis and using the $2.1 million profit hurdle required for the NxGen Shareholders to earn their 15% performance bonus the value of NxGen is $27 million.

Taking these valuation estimates together, we believe that the offer price of AU$25 million is fair. However the value depends critically on achieving significant future growth in income from successful overseas operations.

Overall Valuation of the NxGen Technologies

We estimate that the offer price for NxGen of AU$25 million is within the range of our DCF valuation analysis between AU$18.3 million to AU$30.8 million with a mid point of $24.5 million. This value is also supported by our arguments based on comparables and multiples of earnings. We also note that the initial payment for NxGen is $21 million, which is less than our mid point DCF valuation analysis of NxGen. We consider the proposal to acquire these assets is fair to NuSep shareholders.

Assessment of Reasonableness

The NuSep share price has fallen progressively since listing on the ASX approximately eighteen months ago, from a high of $0.52 in June 2007 to a low of $0.04 in September 2008. The Company’s current share price is $0.05 and its market capitalisation is $2 million. The Board of Directors of NuSep views the proposed takeover as the best current option for preserving and increasing the value of the shareholders’ investment. In particular this would allow NuSep to become a pharmace ~~uti~~ cal development and supplier company with positive cash flow and profit and provides a separate vehicle for further development of the separations business as a private entity. Likely advantages to NuSep shareholders if the takeover is approved:

NuSep has seen its share price deteriorate to a small fraction of its listing price in 2007 and its operating profit decrease. The potential upside in value that could be achieved in the acquisition of NxGen considerably out-weighs the costs of continuing the NuSep operation.
NuSep Directors have investigated a number of alternative opportunities and have selected this course of action as the most beneficial to its shareholders.
NxGen is already a profitable business with good management and there are opportunities to increase income and value. This represents more certainty to the NuSep shareholders.
NxGen has multiple businesses that are consolidated under the new structure. NuSep shareholders will also retain share in the existing NuSep business lines through spinout pro rata allotment of shares in Prime BioSeparations.
NxGen forecasts strong growth (and hence investor returns) through expansion of the business to the US. The new product lines in sexual dysfunction and addiction are rapidly growing and suit a compounding business structure as operated by NxGen.
Likely disadvantages to NuSep shareholders if the takeover is approved:
The percentage share held by NuSep shareholders in the new company will decrease as a result of the takeover.

36 Comsec 16th January 2009

Innovation Dynamics Pty Ltd Page 16 of 18

==> picture [35 x 714] intentionally omitted <==

NuSep Ltd Prospectus 2009 [ 4][3]

==> picture [595 x 63] intentionally omitted <==

There will be less liquidity of shares held by current NuSep shareholders in the new spin-out business containing the separation assets. (However the shareholders can participate in a listed business, NxGen, that is already in profit and is expanding into markets that have strong demand for their products.)

Likely advantages to NuSep shareholders if the takeover is not approved:

The existing shareholders will retain a higher percentage of the NuSep business and possibly have greater influence on decision making.
If the NuSep business is separated from the listed company into an unlisted entity as proposed, the listed company is still available for a merger or takeover, possibly under more favourable terms. There is therefore still potential for NuSep Directors to identify a better deal or opportunity for the company. However this has not occurred so far and appears less likely, especially if the company has no management and assets and would be of low value to shareholders.

Likely disadvantages to NuSep shareholders if the takeover is not approved:

The present NuSep cash burn will significantly curb operations without injection of capital and will limit expansion and this may decrease the value further. The current international financial crisis will make further capital raising uncertain and shareholders may be expected to inject cash to keep the business afloat.
It is unlikely that NuSep would make the bonus share distribution if this takeover was not approved by shareholders.
Liquidity of funds in NuSep as a cash-box company will be limited.

Based on our assessment of the potential advantages and disadvantages, we consider that the proposed acquisition is reasonable to the non-associated shareholders of NuSep.

Conclusions

The NxGen Pharmaceuticals group of companies has evolved over several years and the revenue streams come from several niche areas that involve complex marketing and regulations. It is well placed in the specialist market of pharmaceutical compounding which addresses patient specific medicines or personalised medicine under current regulations. The consolidation of these companies into NxGen and the subsequent takeover by NuSep provides the opportunity to streamline the operation considerably to focus on major global revenue areas and to benefit from additional management and direction. Further, the spun out Prime BioSeparations business will have a reduced cost base enhancing its ability to achieve profitability.

In our opinion, the proposed takeover of NxGen by NuSep as presented is fair and reasonable to the non-associated NuSep shareholders.

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

Page 17 of 18

~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Disclaimer

This report is provided solely for inclusion in the Prospectus and the Notice of Meeting issued by NuSep on or about 13 February 2009. All comments, forecasts and recommendations made in this report are made in good faith on the basis of information available to Innovation Dynamics at the time including information from NuSep and NxGen. NuSep has given permission to include the information as presented. Innovation Dynamics has prepared this independent report according to the Regulatory Guides from the Australian Securities and Investments Commission (ASIC), including RG56, RG75, RG111 and RG112, and the ASX Listing Rules. Innovation Dynamics holds an Australian Financial Services Investment Advisors Licence (No. 295107).

There are risks in bringing NxGen’s technologies to market and Innovation Dynamics does not guarantee that the actions noted in this report will actually come to pass because of possible changes in the markets and general business environment, and actions by NxGen, which occur over time subsequent to this report and are outside our control to know. Innovation Dynamics has not audited any financial forecasts of NxGen and has not analysed the legal status of agreements NxGen has entered into or patent applications filed or granted. However, in our independent assessment we have not identified anything that would indicate that this is materially misstated. A draft report was issued to the due diligence committee of NuSep to confirm factual accuracy and changes were made in the final report to reflect these.

We have given our written consent to the issue of this report as appearing in the Prospectus in the form and context in which it appears. We have been involved only in the preparation of this Report and not in any other part of this Prospectus, and specifically disclaim liability to any person in respect of any statements included elsewhere in this Prospectus. We have not, other than as set out above, been involved in the preparation, nor authorised or caused the issue of, this Prospectus. This report does not make any recommendations regarding purchase of shares in NuSep or NxGen.

Innovation Dynamics has acted independently in preparing this report and neither its directors nor staff has any pecuniary or other interest in NuSep or NxGen, or their associates that could reasonably be regarded as affecting its ability to give an unbiased opinion. Innovation Dynamics will receive a fixed professional fee for the preparation of this report, irrespective of whether or not the proposed takeover is successful. With the exception of this fee, it will not receive any other benefits, either directly or indirectly, from the preparation of this report.

Yours Faithfully,

INNOVATION DYNAMICS PTY LTD

Kelvin Hopper PhD Executive Chairman

Page 18 of 18

Innovation Dynamics Pty Ltd

==> picture [35 x 714] intentionally omitted <==

NuSep Ltd Prospectus 2009 [ 4][5]

5. Prime BioSeparations Overview

5.1 Prime BioSeparations Business

Prime BioSeparations is a life sciences company that will sell products into the global bioseparations market. It is intended that NuSep will conduct the Spin Out of all of its assets and liabilities into a separate unlisted public company, Prime BioSeparations. As a result of the Spin Out, Prime BioSeparations will conduct the business currently being conducted by NuSep. The company will have offi ces in both Sydney, Australia and Atlanta, USA.

Following the Spin Out, Prime BioSeparations aims to inherit NuSep’s world class reputation for its innovative yet simple biological separation techniques including the world’s fi rst IVF sperm separation device.

After the Spin Out, Prime BioSeparations will manufacture, distribute and sell 55 products to customers in the USA, Europe, Asia and Australia.

Prime BioSeparations Products will include:

Gels – Prime BioSeparations will manufacture and sell precast gels including the innovative iGels, with a 2 year shelf life. These gels will be manufactured using a patented technique which allows plastic cassettes to be used. Gels will be sold directly or via OEM partners around the world
Separation Instruments – Prime BioSeparations will offer two unique biological separation instruments. The fi rst instrument released in February 2008 by NuSep can separate biological samples into 8 fractions for use in the proteomic market. The instrument is called the MF10 and can rapidly fractionate proteins using an electrical environment. Currently, the instrument has been sold to strategic sites with the view that protocols developed at these sites will result in not only publications in peer reviewed scientifi c journals but drive sales for Prime BioSeparations.
The second instrument, the SpermSep CS10, separates sperm for fertility treatments such as IVF. This product when completely developed will introduce one of the fi rst real changes in the way sperm is prepared in in vitro fertilization procedures.
Biological Products – Prime BioSeparations will supply research grade biological products manufactured using its unique separation technologies. These products will include human immunoglobulin and albumin. Using the latest separation technologies Prime BioSeparations will be capable of rapidly purifying high grade pure protein samples which can be used in research and development.

5.2 Prime BioSeparations Directors

The Directors of Prime BioSeparations as at the date of this Prospectus are:

John Manusu B.Com, F.Fin.

Executive Chairman

Member of Audit Committee, Member of Remuneration Committee

Managing Director between September 2006 and September 2008, since then Executive Chairman. Age 49.

Mr Manusu has over 20 years experience running biotechnology companies. He has been involved with startups, turnarounds and mature organisations in the biotechnology space. Mr Manusu has undertaken a number of signifi cant acquisitions and divestures, as well as raising over $100 million in public funding and $10 million of peer reviewed government R&D grants. Mr Manusu was a Director of Life Therapeutics Ltd (October 2003 to June 2007). Mr Manusu has a degree in Commerce and is a Fellow of the Financial Services Institute of Australasia. Mr Manusu has worked in the biotechnology industry in Australia and the U.S. and is best described as a biotechnology entrepreneur.

Dr Hari Nair BSc (Hons), PhD (Med & Clin Sci), MAIBiol, MOIF (Cambridge)

Managing Director, Chief Executive Offi cer

Non executive Director between September 2006 and September 2008, since then Managing Director and Chief Executive Offi cer. Age 51.

Dr Nair has a PhD in Medicine and Clinical Science from the Australian National University with his specialty in cardiovascular medicine and haematology. Dr Nair has received a number of awards from international organisations including being specially recognised for his role in coagulation research by the ACT government. He has run biotechnology companies in Australia and the US and was the CEO and Managing Director of Life Therapeutics Ltd (October 2003 to December 2007) where he transformed Life Therapeutics Ltd into the world leader in the collection of hyperimmune plasmas. Dr Nair has been heavily involved in mergers and acquisitions especially in the US and Europe and has US fi nancial experience.

46 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Iain Howard-Sorrell HND, LiBiol

Non executive Director

Chairman of Audit Committee, Chairman of Remuneration Committee

Non executive Director since September 2006. Age 51.

Mr Howard-Sorrell is based in the USA and has over 20 years experience in the Life Sciences arena. He has held senior sales and marketing positions in both corporate and startup businesses both in Europe and the USA. In addition to his extensive knowledge of the separations industry he has also set up and operated a successful import and distribution organisation in the USA. He is a graduate of the University of Plymouth in Applied Biology. In addition to on-going consultative roles he is also actively involved on the board of trustees for non-profi t organisations. Mr Howard-Sorrell has not held any directorships in listed entities in the last three years. He is best recognised for his ability to develop new markets and co-ordinate international distribution.

NuSep Ltd Prospectus 2009 [ 47]

6. Spin Out

6.1 General

Prior to the close of the Offer, NuSep proposes to spin out all of its assets and liabilities into a new unlisted entity, Prime BioSeparations. A return of capital to Eligible Prime BioSeparations Shareholders under the Spin Out (which includes successful Applicants of the Offer) was approved by Shareholders at the Meeting on 13 March 2009. Under the Offer, Eligible Prime BioSeparations Shareholders will receive a pro rata entitlement to 1.7 million Prime BioSeparations Shares. Please refer to section 2.17 of this Prospectus which sets out the rights and liabilities attaching to the Prime BioSeparations Shares.

On completion of the Spin Out, Prime BioSeparations will conduct the business and offer the products currently being offered by NuSep.

Once the Offer has closed and Completion of the NxGen Acquisition has occurred, NuSep will pursue a new direction and offer the pharmaceutical products currently being offered by NxGen to the Australian sexual dysfunction, antiaging medicine and addiction markets. In particular, the Company will offer hormone replacement therapies and erectile dysfunction products and some of the proceeds raised by the Offer under this Prospectus will be used to fund the expansion of these products into the US market.

As part of the Spin Out, up to $1.2 million of the proceeds raised by the Offer will be transferred to Prime BioSeparations to be used for working capital purposes and the repayment of debt including loans of up to $900,000 to directors and former directors of NuSep. However, if none of the $1.2 million of the proceeds of the Offer is transferred to Prime BioSeparations, Prime BioSeparations will have a negative equity position of $859,728.

6.2 Directors’ Loans

As part of the Spin Out, $900,000 in loans to NuSep from directors and former directors of NuSep will be transferred to Prime BioSeparations. It is proposed that up to $900,000 of the $1.2 million of proceeds raised by the Offer to be transferred to Prime BioSeparations under the Spin Out will be used to repay these directors’ loans.

The loans were provided to NuSep by the existing and former directors of NuSep in the following proportions:

(a) John Manusu (existing director) – $310,000;
(b) Hari Nair (existing director) – $176,042;
(c) Iain Howard-Sorrell (existing director) – $108,555;
(d) Choon Lee (former director) – $175,000; and
(e) Nicolas Care (former director) – $110,000.

On 29 September 2008, the existing directors of NuSep (i.e. John Manusu, Hari Nair and Iain Howard-Sorrell) entered into an agreement with NuSep under which the existing directors received a fi xed and fl oating charge over all of NuSep’s assets in consideration for the loans that they provided to NuSep. The existing directors provided $594,597 of the $900,000 of directors’ loans to NuSep. Under the agreement, the charge crystallises if the existing directors’ loans are not repaid or an event of default occurs. The agreement contains the types of provisions usually found in agreements relating to fi xed and fl oating charges.

Although the loans were due for repayment on 1 July 2008, in accordance with the terms of the loans, the directors have agreed that the loans will not be repaid until the Company has suffi cient funds to repay them in the normal course of its business. Under the Spin Out, the obligation to repay the Directors’ loans will be assumed by Prime BioSeparations on the same terms as the current loans including that the loans will not need to be repaid by Prime BioSeparations until Prime BioSeparations has suffi cient funds to repay them in the normal course of its business. The key terms of the directors’ loans are:

(a) (Repayment date) – As noted above, the directors have agreed that the loans will not be repaid until the Company has suffi cient funds to repay them in the normal course of its business. The lender (i.e. each director) may elect to offset all or any part of such amount against an equivalent amount of money due to the lender in NuSep Shares or converting notes (i.e. securities which convert into NuSep Shares);
(b) (Purpose of Loan) – The loan funds may be used by the Company for working capital purposes;

48 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

(c) (Interest) – The interest rate of the loans is 14% per annum (calculated daily from the date of the relevant agreement until the date of repayment) by way of one lump sum payment on the repayment date. Under each loan agreement, the interest rate may be increased to 16% per annum on all amounts outstanding if NuSep fails to pay the interest on the relevant repayment date;
(d) (Expenses) – Under each loan agreement, NuSep agrees to pay all legal expenses (including preparing any relevant agreements), any possible stamp duty, the costs of enforcement, incidental expenses and expenses to enforce repayment on a default;
(e) (Events of Default) – The following are considered events of default under each of the loan agreements:
(i) if NuSep fails to pay any principal, interest or relevant fee under the relevant loan agreement;
(ii) if NuSep commits any breach of or omits to observe or perform any of its covenants under the relevant agreement which remains unremedied for 14 days after being notifi ed under the relevant loan agreement;
(iii) if any representation made by NuSep pursuant to the loan agreement is incorrect or misleading in any material respect;
(iv) if any present or future indebtedness of NuSep is not paid when due;
(v) if NuSep is or becomes insolvent or steps are taken to make NuSep insolvent;
(vi) if NuSep is deregistered or steps are taken to deregister NuSep;
(vii) if any consent of any governmental or other authority is not given or is withdrawn or terminated with respect to a loan agreement or any security;
(viii) if any of the assets of NuSep necessary for the normal carrying on of its business is lost or materially damaged and not replaced or repaired within 60 days of the loss or damage;
(ix) if any judgement or order is entered against NuSep which the lender determines would have a material adverse effect on the operations of NuSep;
(x) if the relevant loan agreement, at any time for any reason ceases to be in full force and effect or is declared to be void;
(xi) if without the prior written consent of the lender, NuSep creates any encumbrance on any portion of its property;
(xii) if without the prior written consent of the lender, NuSep, transfers or leases the whole or a substantial portion of its property; or
(xiii) if the lender believes some act occurs to NuSep that materially and/or adversely affects the capacity of NuSep to perform any of its obligations under the relevant loan agreement.
Upon default, the lender (i.e. the director) may demand immediate repayment of the loan; and
(f) (Confi dentiality) – The terms of the loan agreements are confi dential and must not be disclosed to third parties without written consent (except for disclosure to professional advisers).

NuSep Ltd Prospectus 2009 [ 4][9]

7. Existing and Proposed Directors

7.1 Existing Directors

The Directors of NuSep are:

Mr John Manusu;
Dr Hari Nair; and
Mr Iain Howard-Sorrell

John Manusu B.Com, F.Fin.

Executive Chairman

Member of Audit Committee, Member of Remuneration Committee

Managing Director between September 2006 and September 2008, since then Executive Chairman. Age 49. Mr Manusu has over 20 years experience running biotechnology companies. He has been involved with startups, turnarounds and mature organisations in the biotechnology space. Mr Manusu has undertaken a number of signifi cant acquisitions and divestures, as well as raising over $100 million in public funding and $10 million of peer reviewed government R&D grants. Mr Manusu was a Director of Life Therapeutics Ltd (October 2003 to June 2007). Mr Manusu has a degree in Commerce and is a Fellow of the Financial Services Institute of Australasia. Mr Manusu has worked in the biotechnology industry in Australia and the U.S. and is best described as a biotechnology entrepreneur.

Dr Hari Nair BSc (Hons), PhD (Med & Clin Sci), MAIBiol, MOIF (Cambridge)

Managing Director, Chief Executive Offi cer

Non executive Director between September 2006 and September 2008, since then Managing Director and Chief Executive Offi cer. Age 51.

Dr Nair has a PhD in Medicine and Clinical Science from the Australian National University with his specialty in cardiovascular medicine and haematology. Dr Nair has received a number of awards from international organisations including being specially recognised for his role in coagulation research by the ACT government. He has run biotechnology companies in Australia and the US and was the CEO and Managing Director of Life Therapeutics Ltd (October 2003 to December 2007) where he transformed Life Therapeutics into the world leader in the collection of hyperimmune plasmas. Dr Nair has been heavily involved in mergers and acquisitions especially in the US and Europe and has US fi nancial experience.

Iain Howard-Sorrell HND, LiBiol

Non executive Director

Chairman of Audit Committee, Chairman of Remuneration Committee Non executive Director since September 2006. Age 51.

Mr Howard-Sorrell is based in the USA and has over 20 years experience in the Life Sciences arena. He has held senior sales and marketing positions in both corporate and start-up businesses both in Europe and the USA. In addition to his extensive knowledge of the separations industry he has also set up and operated a successful import and distribution organisation in the USA. He is a graduate of the University of Plymouth in Applied Biology. In addition to on-going consultative roles he is also actively involved on the board of trustees for non-profi t organisations. Mr Howard-Sorrell has not held any Directorships in listed entities in the last three years. He is best recognised for his ability to develop new markets and co-ordinate international distribution.

The existing directors (Mr John Manusu, Dr Hari Nair & Mr Iain Howard-Sorrell) will step down as directors of NuSep shortly after the acquisition of NxGen is completed.

7.2 Proposed NxGen Nominee Directors

In the event that the NxGen Acquisition is successful, the existing Directors of NuSep will be replaced by the NxGen Nominee Directors.

The NxGen Nominee Directors are:

Mr Daryll Knowles;
Mr Michael John Tattersall;
Dr Alan Henry Amodeo;
Mr John Patrick Boyd;
Dr James Stevens Rowe; and
Mr Wilson Kim Ling Wong.

A brief profi le of each of the NxGen Nominee Directors is set out in section 3 of this Prospectus.

The NxGen Nominee Directors have a sound spread of corporate and fi nancial skills as well as experience in the pharmaceutical market.

50 ~~N~~ uSep Ltd Prospectus 2009

8. Pro Forma Financial Statements

8.1 NxGen

Set out below are the consolidated fi nancial statements for the NxGen Group for the year ended 30 June 2008. The notes to the consolidated fi nancial statements are set out in the Investigating Accountant’s Report in section 10 of this Prospectus.

Please note that the NxGen accounts for the period ended 30 June 2008 have not been audited. Results may vary following preparation of audited accounts for that period. The pro forma forecast results for the year ending 30 June 2009 are forward looking statements and no assurance can be given that such results will be achieved.

NXGEN PHARMACEUTICALS PTY LTD and Controlled Entities CONSOLIDATED UNAUDITED ACTUAL AND PRO FORMA FORECAST INCOME STATEMENT

	Unaudited actual results	Pro Forma forecast results
	for the year ended:	for the year ended:
	30 June 2008	30 June 2009
	$	$
Revenue	3,233,330	5,205,820
Cost of Sales	(863,962)	(1,001,281)
Gross prof t	2,369,368	4,204,539
Other revenues	234,759	5,495
Finance costs	(11,754)	0
Occupancy expenses	(93,477)	(137,244)
Other expenses	(1,462,262)	(2,072,215)
Prof t before income tax	1,036,634	2,000,575
Income tax expense (See note below)	(291,176)	(600,173)
Prof t after income tax	745,458	1,400,402

Note: NuSep has $10 million worth of carried forward tax losses which should be available to NxGen going forward.

NXGEN PHARMACEUTICALS PTY LTD and Controlled Entities CONSOLIDATED UNAUDITED ACTUAL STATEMENT OF CHANGES IN EQUITY

Actual balance at 30 June 2007 Revaluation increment: 2008 Prof t attributable to entity Dividends paid or provided for Actual balance at 30 June 2008	Share Capital $ 110 110	Asset Revaluation $ 1,492,500 1,492,500	Retained Earnings $ 522,570 745,458 (200,000) 1,068,028	TOTAL $ 522,680 1,492,500 745,458 (200,000)
				2,560,638

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

NXGEN PHARMACEUTICALS PTY LTD and Controlled Entities CONSOLIDATED UNAUDITED BALANCE SHEET

NXGEN PHARMACEUTICALS PTY LTD and Controlled Entities CONSOLIDATED UNAUDITED BALANCE SHEET	NXGEN PHARMACEUTICALS PTY LTD and Controlled Entities CONSOLIDATED UNAUDITED BALANCE SHEET
Unaudited actual results for the year ended:
	30 June 2008
	$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	4,202,855
Cash from capital raised	–
Trade and other receivables	848,042
Inventories	458,391
TOTAL CURRENT ASSETS	5,509,288
NON-CURRENT ASSETS
Financial Assets	253,286
Property, plant and equipment	339,597
Intangible assets – Technology, product formulations, rights and licences	1,769,592
(at directors valuations) – (see notes)
TOTAL NON-CURRENT ASSETS	2,362,475
TOTAL ASSETS	7,871,763
LIABILITIES
CURRENT LIABILITIES
Trade an other payables	4,426,891
Financial Liabilities – Income in advance (see notes)	474,325
Provisions	80,000
Tax liabilities	186,807
TOTAL CURRENT LIABILITIES	5,168,023
NON-CURRENT LIABILITIES
Trade and Other payables	143,102
Financial Liabilities	–
TOTAL NON-CURRENT LIABILITIES	143,102
TOTAL LIABILITIES	5,311,125

NET ASSETS	2,560,638
EQUITY
Issued Capital	110
Reserves	1,492,500
Retained Earnings	1,068,028
TOTAL EQUITY	2,560,638

52 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Impairment Contingencies

Please note that NxGen’s fi nancial reports are subject to an impairment contingency which is described in detail in the Investigating Accountant’s Report in section 10 of this Prospectus. In summary, the Investigating Accountant has expressed some doubt as to NxGen’s ability to continue to carry the following items in its balance sheet at their current carrying value given that on Completion of the NxGen Acquisition, NxGen will have to prepare general purpose fi nancial reports and adopt a more restrictive and prescriptive accounting and reporting policy framework:

(a) a fi nancial investment in Redwood Anti-Aging Pty Limited currently valued at $224,000;
(b) intangible assets including technology, product formulations, rights and licences currently valued at $1,769,592; and
(c) a fi nancial liability for income received as a result of a joint venture arrangement that NxGen entered into in January 2008 which was subsequently rescinded valued at $474,325. The Investigating Accountant’s Report provides that it is proposed that NxGen, through an associated entity, will provide in the future research and development, analytical and testing services to its former joint venture partner in lieu of repayment of these funds.

See the Investigating Accountant’s Report in section 10 for further details.

8.2 NuSep 31 December Accounts

Set out below are the audited consolidated fi nancial statements for the NuSep group (i.e. NuSep and Prime BioSeparations) for the half year ended 31 December 2008. These results were released to the market on 27 February 2009. A full copy of these accounts can be found on ASX or NuSep’s web site at www.nusep.com.

Consolidated Income Statement	Consolidated Income Statement
For the half-year	ended 31 December 2008
	CONSOLIDATED	CONSOLIDATED
	Half-year	Half-year
	December 2008	December 2007
	$	$
Continuing operations
Revenue	1,105,016	652,684
Cost of sales	(599,717)	(961,309)
Gross Prof t	505,299	(308,625)
Other income	35,580	59,766
Marketing expenses	(383,474)	(419,861)
General and administration expenses	(966,667)	(1,368,401)
Research and development expenses	(1,068,213)	(494,248)
Finance cost expenses	(74,398)	(18,650)
Loss before income tax	(1,951,873)	(2,550,019)
Income tax expense	–	–
Loss after tax from continuing operations	(1,951,873)	(2,550,019)
Net loss for the period	(1,951,873)	(2,550,019)
Net loss attributable to members of parent	(1,951,873)	(2,550,019)

[53] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Consolidated Balance Sheet As at 31 December 2008

	CONSOLIDATED	CONSOLIDATED
	As at 31 December 2008	As at 30 June 2008
	$	$
CURRENT ASSETS
Cash and cash equivalents	213,733	695,560
Trade and other receivables	183,874	444,971
Inventories	399,363	374,491
Other assets	13,251	32,886
TOTAL CURRENT ASSETS	810,221	1,547,908
NON-CURRENT ASSETS
Cash and cash equivalents	734,572	867,286
Financial assets	855,000	855,000
Property, plant and equipment	1,584,495	1,785,590
TOTAL NON-CURRENT ASSETS	3,174,067	3,507,876
TOTAL ASSETS	3,984,288	5,055,784
CURRENT LIABILITIES
Trade and other payables	2,873,122	2,091,674
Other current liabilities	164,383	164,383
Short-term f nancial liabilities	–	305,000
Short-term provisions	155,240	154,265
TOTAL CURRENT LIABILITIES	3,192,745	2,715,322
NON-CURRENT LIABILITIES
Other non-current liabilities	589,042	671,233
Long-term f nancial liabilities	995,221	521,554
Long-term provisions	67,008	46,318
TOTAL NON-CURRENT LIABILITIES	1,651,271	1,239,105
TOTAL LIABILITIES	4,844,016	3,954,427
NET ASSETS	(859,728)	1,101,357
EQUITY
Issued capital	10,587,798	10,602,240
Reserves	732,237	727,007
Retained losses	(12,179,763)	(10,227,890)
TOTAL EQUITY	(859,728)	1,101,357

54 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

8.3 Prime BioSeparations

Set out below is a pro forma balance sheet for Prime BioSeparations as at 30 April 2009 which sets out the company’s balance sheet pre and post the Spin Out. Under the Spin Out, it is proposed that up to $1.2 million of the funds raised under the Offer will be transferred to Prime BioSeparations. The amount to be transferred to Prime BioSeparations will depend on the proceeds received under the Offer. Note that if none of the $1.2 million of the proceeds of the Offer is transferred to Prime BioSeparations, the company will have a negative equity position of $859,728. The directors of Prime BioSeparations (i.e. the current Directors of NuSep) propose to provide a $1 million debt facility to Prime BioSeparations if and when required after the close of the Offer.

The following are all of the material underlying assumptions that have been considered in compiling the pro-forma balance sheet for Prime BioSeparations:

(a) by relocating from its current facility to a smaller business location, Prime BioSeparations will save up to $700,000 per annum on rent, excluding outgoings;
(b) the Directors of Prime BioSeparations have taken a conservative approach to the valuation of assets by not valuing the company’s intangible assets which are recorded at a nil value;
(c) that the Spin Out will occur;
(d) after the Spin Out to Prime BioSeparations NuSep’s current business will continue to operate as it did pre and post the Spin Out; and
(e) in the event that the full $1.2 million is not transferred to Prime BioSeparations under the Offer the directors’ loans (valued at $900,000) will not be repaid until Prime BioSeparations has suffi cient funds to repay them in the normal course of its business.

Accordingly, set out below is a pro-forma balance sheet for Prime BioSeparations with:

(a) the fi rst column setting out the actual fi nancial position of NuSep as at 31 December 2008;
(b) the second column setting out the fi nancial position of Prime BioSeparations on a pro-forma basis post the Spin Out assuming no Shares are subscribed for under the Offer and none of the $1.2 million is transferred to Prime BioSeparations under the Spin Out; and
(c) the third column setting out the fi nancial position of Prime BioSeparations on a pro-forma basis post the Spin Out assuming the Offer is fully subscribed.

[55] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

			Consolidated unaudited
		Consolidated unaudited	Pro Forma (Assuming
		Pro Forma	General Share Offer
		(Assuming no cash	is fully subscribed
		raised under the	and $5.075 million
	Actual	General Share Offer)	is raised)
	31 December 2008	30 April 2009	30 April 2009
	$	$	$
Current Assets
Cash and cash equivalents	213,733	213,733	213,733
Cash from capital raised	–	–	1,200,000
Trade and other receivables	183,874	183,874	183,874
Inventories	399,363	399,363	399,363
Other Assets	13,251	13,251	13,251
Total Current Assets	810,221	810,221	2,010,221
Non-Current Assets
Cash and cash equivalents	734,572	734,572	734,572
Financial assets	855,000	855,000	855,000
Property, plant and equipment	1,584,495	1,584,495	1,584,495
Intangible Assets	–	–	–
Total Non-Current Assets	3,174,067	3,174,067	3,174,067
TOTAL ASSETS	3,984,288	3,984,288	5,184,288
Current Liabilities
Trade and other payables	2,873,122	2,873,122	2,873,122
Other current liabilities	164,383	164,383	164,383
Provisions	155,240	155,240	155,240
Tax Liabilities	–	–	–
Total Current Liabilities	3,192,745	3,192,745	3,192,745
Non-Current Liabilities
Trade and other payables	589,042	589,042	589,042
Financial liabilities	995,221	995,221	995,221
Provisions	67,008	67,008	67,008
Total Non-Current Liabilities	1,651,271	1,651,271	1,651,271
TOTAL LIABILITIES	4,844,016	4,844,016	4,844,016
NET ASSETS	(859,728)	(859,728)	340,272
NET EQUITY	(859,728)	(859,728)	340,272

Note that if none of the $1.2 million of the proceeds of the Offer is transferred to Prime BioSeparations, the company will have a negative net equity position of $859,728.

The directors of Prime BioSeparations (i.e. the current Directors of NuSep) propose to provide a $1 million debt facility to Prime BioSeparations if and when required after the close of the Offer.

56 ~~N~~ uSep Ltd Prospectus 2009

9. Material Contracts

Material Contracts of NxGen

A summary of the material contracts that NxGen is a party to are set out below.

9.1 Implementation Deed

The Company entered into an Implementation Deed with the NxGen Shareholder, NxGen, Michael John Tattersall, Alan Henry Amodeo, John Patrick Boyd and James Stevens Rowe and announced it to the ASX on 1 December 2008. The Implementation Deed was then amended on 27 February 2009, 5 March 2009 and 6 May 2009. Under the Implementation Deed, the Company agreed to acquire the entire issued share capital of NxGen in consideration for cash and the issue of a number of ordinary shares in the capital of the Company (i.e. the Consideration Shares), equal to a maximum of 87.5% of the Expanded Share Capital.

The Implementation Deed contains the following material terms and conditions:

(Conditions) – the completion of the transaction contemplated under the Implementation Deed is subject to a number of conditions including completion of due diligence by the Company to the Board’s satisfaction, the receipt of an independent expert’s report by the Board, the holding of the Meeting and the passing of the resolutions necessary to complete the proposed transaction, receipt by the Company of all necessary ASX, ASIC and regulatory approvals, lodgement of the Prospectus and the completion of the Spin Out;
(Consideration) the consideration under the Implementation Deed shall be payable to the NxGen shareholder in three instalments. The fi rst instalment shall be paid on Completion by the issue of such number of shares that equals 55% of the Expanded Share Capital. The second instalment shall be paid within 15 Business Days of the close of the Offer by the payment of cash (the amount determined by the total amount raised under the Offer) and/or the issue of such number of Consideration Shares that equals a maximum of 17.5% of the Expanded Share Capital. The third instalment shall be paid by the issue of such number of shares that equals 15% of the Expanded Share Capital when NxGen reaches a pre-tax profi t of $2.1 million. Such pre-tax profi t must be reached prior to or on 30 June 2010 or the NxGen Shareholder’s entitlement to the third instalment will lapse;
(Completion) – Completion will occur on the later of 2 Business Days after the conditions set out in the paragraph above titled “Conditions” have been completed or 27 February 2009. Under clause 8 of the Implementation Deed, the Company and the NxGen Shareholder may agree in writing to any other time for Completion. On 6 May 2009, the Company and the NxGen Shareholder agreed that Completion will occur by 12 June 2009;
(Warranties) – both the Company and the NxGen Shareholder have given the other party warranties in respect of its authority and capacity to enter into the Implementation Deed and in respect of requisite actions to implement the proposed transaction. In addition the NxGen Shareholder has provided standard warranties in respect of the shares of NxGen and the NxGen business. If applicable, each party has three years to notify the other party of a claim under the warranties and up to 5 years in relation to a claim regarding taxation;
(NxGen Shareholder indemnity) – save for items expressly excluded under the Implementation Deed the NxGen Shareholder indemnifi es the Company and NxGen against any claim or liability which it may incur as a result of any matter or thing in respect of NxGen being other than as represented in the Implementation Deed; where there is a breach of warranty, a share being worth less had there been no such breach; any liability of NxGen in respect of the period, or relating to or arising from events or circumstances that occurred prior to Completion; and any breach of the Implementation Deed by the NxGen Shareholder;
(Company indemnity) – save for items expressly excluded under the Implementation Deed the Company indemnifi es the NxGen Shareholder against any breach of the Implementation Deed by the Company;
(Termination) – either party will have a right to delay Completion or terminate the Implementation Deed if a Termination Event occurs and the party in default is notifi ed and unable to rectify the situation within 10 Business Days of such notifi cation; and
(Restrictive covenant) – the NxGen Shareholder, each of the Jehega Directors and their affi liates is restricted from directly or indirectly competing with and soliciting staff, suppliers and customers from NxGen for a period of up to 2 years in New South Wales or Australia. Under the restrictive covenant they may not divulge any information to a third party relating to NxGen.

[5][7] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

9.2 Wholesale Supply Agreement

ASA entered into the Wholesale Supply Agreement on 1 July 2007. Under the Wholesale Supply Agreement, ASA has been engaged to provide by wholesale, the raw ingredients used by ACP in its day-to-day compounding activities. The term of the Wholesale Supply Agreement is 5 years, plus an option to extend for a further period of 5 years, unless terminated in accordance with the terms of the agreement (summarised below).

ASA generated $1,439,414 in revenue for the fi nancial year ended 30 June 2008 from ACP under the agreement. The Wholesale Supply Agreement contains the following material terms and conditions:

(Termination for breach) – either party may terminate the Wholesale Supply Agreement if the other party breaches, or fails to comply with, any provision of the agreement and fails to remedy the breach or noncompliance within 14 days of receiving written notice specifying the breach or non-compliance;
(Termination for insolvency event) – either party may terminate the Wholesale Supply Agreement if the other party makes a general assignment for the benefi t of creditors, has a receiver or trustee appointed, applies for relief under any insolvency law, enters into liquidation in respect of the whole or part of its business or assets or a mortgagee takes possession of the whole or part of its business or assets;
(Termination by ASA) – ASA may terminate the Wholesale Supply Agreement if ACP fails to provide guidance on future product introduction to the reasonable satisfaction of ASA and fails to remedy such failure within 14 days of receiving written notice from ASA;
(Termination by ACP) – ACP may terminate the Wholesale Supply Agreement if ASA fails to perform the services to the reasonable satisfaction of ACP and fails to remedy such failure within 14 days of receiving written notice from ACP;
(Intellectual property) – ASA owns all intellectual property rights in all information relating to raw ingredients supplied by ASA. ASA indemnifi es ACP against any action, claim, suit or demand in respect of any breach of a third party’s intellectual property rights relating to the provision of goods or services under the Wholesale Supply Agreement;
(Guidance on advertising) – ASA will be responsible to ACP for providing guidance on advertising and professional standards in advertising so as to comply with the ACCC code of conduct for advertising;
(Indemnity and damages) – ASA releases and indemnifi es ACP and its employees and agents from any damages, costs, expenses, loss or damage which they may incur and all actions, proceedings, claims and demands which may be brought against them, arising out of:
the provision of the services by ACP under the Wholesale Supply Agreement;
any negligence or other wrongful act or omission of ACP;
death, injury, loss or damage to ACP; or
any breach of the Wholesale Supply Agreement by ACP.
ASA’s liability is reduced to the extent that any action, proceeding, claim or demand arises out of any negligence or other wrongful act or omission of ACP; and
(Obligation to pay staff) – ASA indemnifi es ACP against:
any obligation to make any payment to ASA staff and other personnel engaged in the provision of the Wholesale Supply Agreement; and
any obligation to pay any related statutory taxes, fees, levies or charges.

ASX is of the view that Listing Rule 10.1 applies to the Wholesale Supply Agreement and the ACP Service Agreement (see section 9.3 below). The Company is applying to ASX for a waiver from Listing Rule 10.1. However, if the waiver is not granted, Shareholder approval of the agreements will be required.

9.3 ACP Service Agreement

NxGen Australia entered into the ACP Service Agreement on 1 July 2007. Under the agreement, NxGen Australia has been engaged to provide marketing services to ACP. The term of the ACP Service Agreement is 5 years, plus an option to extend for a further period of 5 years, unless terminated in accordance with the terms of the agreement (summarised below). During the remainder of the term of the ACP Service Agreement, NxGen Australia expects to receive $300,000 per annum in revenue from the agreement.

The ACP Service Agreement contains the following material terms and conditions:

(Termination for breach) – either party may terminate the ACP Service Agreement if the other party breaches, or fails to comply with, any provision of the agreement and fails to remedy the breach or non-compliance within

58 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

14 days of receiving written notice specifying the breach or non-compliance;

(Termination for insolvency event) – either party may terminate the ACP Service Agreement if the other party makes a general assignment for the benefi t of creditors, has a receiver or trustee appointed, applies for relief under any insolvency law, enters into liquidation in respect of the whole or part of its business or assets or a mortgagee takes possession of the whole or a substantial part of its business or assets;
(Termination by NxGen Australia) – NxGen Australia may terminate the ACP Service Agreement if ACP fails to provide guidance on future products to the reasonable satisfaction of NxGen Australia and fails to remedy such failure within 14 days of receiving written notice from NxGen Australia;
(Termination by ACP) – ACP may terminate the ACP Service Agreement if NxGen Australia fails to perform the services to the reasonable satisfaction of ACP and fails to remedy such failure within 14 days of receiving written notice from ACP;
(Intellectual property) – ACP owns all intellectual property rights in all information relating to products compounded by ACP. ACP indemnifi es NxGen Australia against any action, claim, suit or demand in respect of any breach of a third party’s intellectual property rights relating to the provision of goods or services under the ACP Service Agreement;
(Indemnity and damages) – NxGen Australia releases and indemnifi es ACP and its employees and agents from all damages, costs, expenses, loss or damage which they may incur and all actions, proceedings, claims and demands which may be brought against them, arising out of:
the provision of the services by ACP under the ACP Service Agreement;
any negligence or other wrongful act or omission of ACP;
death, injury, loss or damage to ACP; and
any breach of the ACP Service Agreement by ACP.

NxGen Australia’s liability is reduced to the extent that any action, proceeding, claim or demand arises out of any negligence or other wrongful act or omission of ACP; and

(Obligation to pay staff) – NxGen Australia indemnifi es ACP against:
any obligation to make any payment to NxGen Australia staff and other personnel engaged in the provision of the ACP Service Agreement; and
any obligation to pay any related statutory taxes, fees, levies or charges.

9.4 ASA Service Agreement

NxGen Australia entered into the ASA Service Agreement on 1 July 2007. Under the agreement, NxGen Australia has been engaged to provide marketing services to ASA. The term of the ASA Service Agreement is 5 years, plus an option to extend for a further period of 5 years, unless terminated in accordance with the terms of the agreement (summarised below). During the remainder of the term of the ASA Service Agreement, NxGen Australia expects to receive $180,000 in revenue from the agreement.

The ASA Service Agreement contains the following material terms and conditions:

(Termination for breach) – either party may terminate the ASA Service Agreement if the other party breaches, or fails to comply with, any provision of the agreement and fails to remedy the breach or non-compliance within 14 days of receiving written notice specifying the breach or non-compliance;
(Termination for insolvency event) – either party may terminate the ASA Service Agreement if the other party makes a general assignment for the benefi t of creditors, has a receiver or trustee appointed, applies for relief under any insolvency law, enters into liquidation in respect of the whole or part of its business or assets or a mortgagee takes possession of the whole or a substantial part of its business or assets;
(Termination by NxGen Australia) – NxGen Australia may terminate the ASA Service Agreement if ASA fails to provide guidance on future product introduction to the reasonable satisfaction of NxGen Australia and fails to remedy such failure within 14 days of receiving written notice from NxGen Australia;
(Termination by ASA) – ASA may terminate the ASA Service Agreement if NxGen Australia fails to perform the services to the reasonable satisfaction of ASA and fails to remedy such failure within 14 days of receiving written notice from ASA;

[59] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

(Intellectual property) – ASA owns all intellectual property in all information relating to raw material ingredients supplied by ASA. ASA indemnifi es NxGen Australia against any action, claim, suit or demand in respect of any breach of a third party’s intellectual property rights relating to the provision of goods or services under the ASA Service Agreement;
(Indemnity and damages) – NxGen Australia releases and indemnifi es ASA and its employees and agents from all damages, costs, expenses, loss or damage which they may incur and all actions, proceedings, claims and demands which may be brought against them, arising out of:
the provision of the services by ASA under the ASA Service Agreement;
any negligence or other wrongful act or omission of ASA;
death, injury, loss or damage to ASA; and
any breach of the ASA Service Agreement by ASA.

NxGen Australia’s liability is reduced to the extent that any action, proceeding, claim or demand arises out of any negligence or other wrongful act or omission of ASA; and

(Obligation to pay staff) – NxGen Australia indemnifi es ASA against:
any obligation to make any payment to NxGen Australia staff and other personnel engaged in the provision of the ASA Service Agreement; and
any obligation to pay any related statutory taxes, fees, levies or charges.

9.5 AMI Australia

ACP dispenses the prescriptions written by AMI Australia doctors for NxGen developed products directly to the patients. NxGen currently does not have a formal contractual agreement with AMI Australia.

In the 12 months ended 30 June 2008, NxGen received $220,000 in licensing fees from the sales of all prescriptions fi lled by ACP based on NxGen developed products. This included the products developed for use by AMI doctors.

9.6 Medisca Inc

ASA, a member of the NxGen Group, entered into an agreement with Medisca Inc on 1 July 2005. Under the agreement, ASA has been appointed as the exclusive agent for the importation, distribution and sales of Medisca Inc’s chemicals, devices and equipment in Australia and New Zealand. The agreement is due to terminate on 30 June 2010.

The agreement does not contain the type of terms that are usually found in an agreement of its kind. For example, it does not include any warranties or indemnities, any provisions regarding the ownership of intellectual property used in respect of the agreement or the fees to be received by ASA for performing its obligations (if any) under the agreement.

Material Contracts of Prime BioSeparations

A summary of the material contracts that Prime BioSeparations is a party to (or will be a party to after the Spin Out) are set out below.

9.7 Director Loans

The Directors of NuSep have advanced loans of $900,000 to NuSep under a loan agreement. Loans from the current Directors are subject to a fi xed and fl oating charge. These loans will be transferred to Prime BioSeparations under the Spin Out. For more details on these loans see section 6.2 of this Prospectus.

9.8 Spin Out Agreement

Under the Spin Out Agreement between NuSep and Prime BioSeparations dated 5 May 2009, NuSep has agreed to transfer all of its assets and liabilities, excluding an amount of the proceeds under the Offer and accumulated tax losses, to Prime BioSeparations. In consideration for the Spin Out NuSep will be issued with 1.7 million Prime BioSeparations Shares. It is expected that the Spin Out will occur shortly after the close of the Offer.

9.9 Draft Lease Agreement

Prime BioSeparations is currently negotiating with Trust Company Limited a 5 year lease for a property at Lane Cove, Sydney which Prime BioSeparations intends to conduct its business from. It is proposed that the annual rent for the premises will be $146,000 excluding outgoings and that the lease will contain the standard types of provisions included in lease agreements.

60 ~~N~~ uSep Ltd Prospectus 2009

10. Investigating Accountant’s Report

==> picture [513 x 717] intentionally omitted <==

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

��
��
��
��
��
��
��
��
��
��
��
• ��
• ��
• ��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
----- End of picture text -----

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

==> picture [42 x 10] intentionally omitted <==

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

��
��
----- End of picture text -----

��
��

��

��

��

��
��
��
��
��

��

��

��

==> picture [35 x 714] intentionally omitted <==

62 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

==> picture [513 x 717] intentionally omitted <==

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

��
��
��
• ��
• ��
• ��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
----- End of picture text -----

[63] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

��

��

��

��

��

==> picture [35 x 714] intentionally omitted <==

64 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

==> picture [509 x 714] intentionally omitted <==

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

��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
• ��
• ��
��
��
• ��
��
��
��
��
��
��
----- End of picture text -----

[65] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

��

��

��

��

��

��
��
��
��
��
��
��

��

==> picture [166 x 71] intentionally omitted <==

��

==> picture [188 x 16] intentionally omitted <==

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

��
----- End of picture text -----

==> picture [35 x 714] intentionally omitted <==

66 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==



	��
	��
	��


			��
					��
			��				��
				��			��
							��

				�			�

	��			��			��
	��			��			��
	��			��			��
	��			��			��
	��			��			�
	��			��			��
	��			��			��
	��			��			��
	��			��			��
	��			��			��



	��
	��
	��


		�� ��		�� ��		�� ��			��

		�		�		�			�


	��	��				��			��
	��			��				��
	��					��		��
	��					��		��
	��	��		��		��		��

� ��

[6][7] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

�� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� ��	�� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� ��	�� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� ��		�

	��
	��
	��



			��
			��
			��
			�

	��
	��
	��		��
	��		�
	��		��
	��		��
	��		��

	��
	��		��
	��		��
	�� ��
			��
	��		��
	��		��

	��
	��
	��		��
	��		��
	��		��
	��		��
	��		��

	��
	��		��
	��		�

	��		��
	��		��

	��		��

	��
	��		��
	��		��
	��		��
	��		��


	��		��

68 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

==> picture [513 x 717] intentionally omitted <==

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

��
��
��
��
��
��
�� This fi nancial report is a special purpose report prepared for use by the directors and members of the company.
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
��
----- End of picture text -----

[69] NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

��

==> picture [42 x 10] intentionally omitted <==

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

��
��
----- End of picture text -----

��

==> picture [35 x 714] intentionally omitted <==

70 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

��

��
��
��
��
��
��
��
• ��
��
��

��

==> picture [35 x 714] intentionally omitted <==

NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

��

��
��
��
��
��
��

��

��

��

��

��

��

��

==> picture [35 x 714] intentionally omitted <==

72 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

��

��
��
��
��
��
��
��
��
��

��

==> picture [35 x 714] intentionally omitted <==

NuSep Ltd Prospectus 2009 [ 7][3]

11. Risk Factors

11.1 Introduction

An investment in the Company (which includes an investment in Prime BioSeparations, NxGen and the NxGen Acquisition) is not risk free and investors should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Shares.

The securities offered under this Prospectus should be considered speculative because of the nature of the Company’s business and Applicants should consult their professional advisers before deciding whether to apply for the Offer. The operations of the Company, Prime BioSeparations and NxGen are subject to a range of business risks, both of a general nature and of a specifi c nature in respect of the business activities conducted by those companies. There can be no guarantee that the companies will achieve their stated objectives.

11.2 General Risks

General risks associated with the Company, Prime BioSeparations, NxGen and the NxGen Acquisition are:

(economic conditions) the performance of NuSep, Prime BioSeparations and NxGen following the NxGen Acquisition may be signifi cantly affected by changes in economic conditions, particularly conditions which affect the pharmaceutical industry. The profi tability of the business may be affected by factors such as market conditions, interest rates, infl ation and consumer demand;
(geo-political factors) NuSep, Prime BioSeparations and NxGen may be affected by the impact that geo-political factors have on the various world economies or the Australian economy or on fi nancial markets and investments generally or specifi cally;
(share market conditions) NuSep, being a company listed on ASX, will continue to be subject to market forces that infl uence broad share market trends and the price of securities of individual companies. Accordingly, the price of the Shares when quoted on ASX will be subject to varied and often unpredictable infl uences on the market for equities in general;
(no guarantee of future earnings risk) there is no guarantee of profi tability, dividends, return of capital, or the price at which the Shares will trade on ASX after quotation;
(uncontrollable factors) NuSep, Prime BioSeparations and NxGen will be exposed to general risk factors that are associated with conducting a business including litigation resulting from the breach of agreements or in relation to employees (through personal injuries, industrial matters or otherwise), strikes, lockouts, loss of service of key management or operational personnel, non-insurable risks, delay in the resumption of activities after reinstatement following the occurrence of an insurable risk, acts of terrorism and acts of God and other matters or force majeure events that may interfere with the business or trade of the Company; and
(product market factors) NuSep, Prime BioSeparations and NxGen may be affected by shifts in product markets and/or new products which replace existing product markets. Such shifts may replace existing products in an extremely short period of time making it impossible for the Company to replace these sales.

11.3 Specifi c Risks – NxGen

Specifi c risks associated with the NxGen Acquisition and the issue of the Consideration Shares are:

(a) (technical risks) NxGen has a number of projects that could give rise to products. However, no assurances can be given that NxGen’s research and development will give rise to the development of a commercially successful product;
(b) (compulsory acquisition) the NxGen Shareholder may be issued with up to 25.375 million Consideration Shares as consideration for the NxGen Acquisition. If the NxGen Shareholder is issued with all 25.375 million Consideration Shares, it will hold approximately 87.5% of the Company’s Expanded Share Capital. Under the Corporations Act, if the NxGen Shareholder increases its stake in the Company to 90% it may compulsorily acquire the remaining Shares in NuSep;
(c) (Completion risk) the NxGen Acquisition is subject to the risk that it may not complete as Completion is subject to a number of conditions precedent, including satisfactory due diligence. Completion of the NxGen Acquisition will not go ahead if the Company is not satisfi ed with its due diligence investigations on NxGen;
(d) (liquidity) the liquidity of Shares may be affected if the NxGen Shareholder holds a signifi cant stake in the Company and/or the Consideration Shares are subject to escrow restrictions. Under the NxGen Acquisition, the

74 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

NxGen Shareholder will hold up to 87.5% of the Company’s Expanded Share Capital and ASX has advised that the Consideration Shares will be subject to escrow restrictions for 24 months from the date that the Company has complied with Chapters 1 and 2 of the ASX Listing Rules and been re-admitted to the Offi cial List. Future investors may be reluctant to acquire Shares in these circumstances;

(e) (intellectual property – GTN Erectile Dysfunction Gel) NxGen has been using intellectual property relating to the GTN Erectile Dysfunction Gel which was co-invented by Dr James Rowe, a NxGen Nominee Director. AMI Australia has made a patent application in relation to this intellectual property which if successful will mean AMI Australia is the sole owner of that intellectual property. Dr Rowe is currently in negotiations with AMI Australia to be included in the patent application. If Dr Rowe is successful he has agreed to assign his rights in relation to the intellectual property to NxGen. If this does not occur, it may have an impact on NxGen’s business;
(f) (joint venture arrangement) the NxGen Shareholder entered into a joint venture arrangement in January 2008 which was subsequently rescinded. Surplus funds received by NxGen under the arrangement were applied to ongoing liabilities as a result of the arrangement. NxGen’s directors are of the opinion that the NxGen Shareholder and NxGen have no liability to the other joint venture party. However, there could be a potential liability for NxGen arising from the original parties to the transaction having provided personal guarantees, which in turn could be counterclaimed against NxGen. If action was taken under these guarantees, NxGen’s estimated liability under these guarantees is not expected to exceed $500,000. These guarantees have an expected expiry date of September 2009;
(g) (ASX Approval) the Offer and the proposed transactions are conditional upon the Company satisfying ASX that it has complied with Chapters 1 and 2 of the ASX Listing Rules. This may not occur;
(h) (competitor risks) no assurances can be given that any products that NxGen will offer will successfully compete with other products either currently on the market or expected to enter the market in the future;
(i) (ACP) NxGen has a close relationship with ACP which has a pharmaceutical licence and provides pharmaceutical compounding services to NxGen for its products. As NxGen does not hold a pharmaceutical licence and cannot compound its products, it requires ACP to compound and distribute its products. Historically, based on the percentage of sales to ACP of the total sales of NxGen, NxGen is also considered to have been economically dependent on ACP.

If NxGen’s relationship with ACP breaks down, NxGen will be required to fi nd another pharmaceutical licensee to compound and distribute its products to the market and it is likely to have a negative impact on NxGen’s revenue. NxGen received $1,439,414 in revenue in the fi nancial year ended 30 June 2008 from ACP.

ACP is wholly-owned by Daryll Knowles who is the CEO of NxGen and a NxGen Nominee Director;
(j) (AMI Australia) NxGen currently develops formulas which are used by ACP to fi ll prescriptions from AMI doctors. NxGen does not have a formal contractual agreement with AMI Australia. If NxGen’s relationship were to break down with AMI Australia it would be unable to receive further licensing fees on the products developed for AMI doctors. NxGen received $22,000 in licensing fees during the fi nancial year ended 30 June 2008. Approximately 75% of this related to licensing fees associated to AMI;
(k) (material contracts) the following material contracts entered into by members of the NxGen Group contain provisions which may be considered to be one-sided in favour of the non NxGen Group party – the Wholesale Supply Agreement, ACP Services Agreement and the ASA Services Agreement. For example, under these agreements the relevant member of the NxGen Group releases and indemnifi es the other party from all damages, costs, expenses, loss or damage which that other party incurs as a result of the provision of services by the relevant NxGen Group member other than any action arising out of any negligence or wrongful act of the other party under the agreement. A reciprocal release and indemnity is not provided by the other party to the relevant NxGen Group member;
(l) (Medisca Inc) the agreement between ASA (a member of the NxGen Group) and Medisca Inc does not contain the type of terms that are usually found in an agreement of its kind. For example, it does not include any warranties or indemnities, any provisions regarding the ownership of intellectual property used in respect of the agreement or the fees to be received by ASA for performing its obligations (if any) under the agreement. Accordingly, if there was a dispute regarding this agreement it would be diffi cult to establish the key terms of the agreement between the parties;

NuSep Ltd Prospectus 2009 [ 7][5]

==> picture [595 x 63] intentionally omitted <==

(m) (fi nancial risks) the ability of NxGen to implement its business strategy may require it or the Company to raise additional funds. No assurances can be given that such funding will be available or that it will be available on terms attractive to NxGen or the Company;
(n) (impairment contingency) the Investigating Accountant has expressed some doubt as to NxGen’s ability to continue to carry the following items in its balance sheet at their current carrying values given that on Completion of the NxGen Acquisition, NxGen will have to prepare general purpose fi nancial reports and adopt a more restrictive and prescriptive accounting and reporting policy framework:
(i) a fi nancial investment in Redwood Anti-Aging Pty Limited currently valued at $224,000;
(ii) intangible assets including technology, product formulations, rights and licences currently valued at $1,769,592; and
(iii) a fi nancial liability for income received as a result of the joint venture arrangement that NxGen entered into in January 2008 which was subsequently rescinded valued at $474,325. The Investigating Accountant’s Report provides that it is proposed that NxGen, through an associated entity, will provide in the future research and development, analytical and testing services to its former joint venture partner in lieu of repayment of these funds.
See the Investigating Accountant’s Report in section 10 for further details;
(o) (lease) the lease for the premises that NxGen operates its business from is not registered. While the lease remains unregistered, a subsequent owner of the premises will not be subject to the lease. If NxGen is required to fi nd a new premises, the business will be disrupted until a new suitable premises is located. The permitted use of the lease also does not cover the manufacturing activities conducted by NxGen;
(p) (key employee risk) the future success of NxGen may depend in part on its continued access to highly qualifi ed scientifi c, technical and managerial personnel. The loss of key staff could have a material adverse effect on the company. While NxGen will seek to ensure that the services of key personnel are retained, no assurances can be given that NxGen will continue to retain and attract key staff as required by the business;
(q) (investigations) it has been reported in the press that the NSW Offi ce of Fair Trading and the Victorian Offi ce of Consumer Affairs are examining the operations of AMI Australia regarding complaints of alleged unconscionable contracts and undeliverable guarantees. NxGen develops products for use by ACP to fi ll prescriptions written by AMI doctors. It has also been reported in the press that AMI Australia has received attention from the Australian Competition and Consumer Commission over allegedly misleading claims relating to the sexual dysfunction products and AMI’s guarantees. If a regulator does pursue AMI Australia, it may have a negative impact on NxGen’s business;
(r) (clinical trials) NxGen’s sexual dysfunction products have not been subject to clinical trials;
(s) (litigation) NxGen’s subsidiary, ASA, is a defendant to litigation that is currently being conducted in the Supreme Court of NSW. The plaintiff is claiming $66,000 plus interest, damages and costs from ASA. If ASA is unsuccessful in defending this claim it will more than likely be required to pay an amount to the plaintiff that will be determined by the Court;
(t) (regulatory risks) major changes in regulatory legislation, particularly in relation to the pharmaceutical market may affect NxGen. No guarantee can be given that the regulatory environment will not change and that as a result, NxGen will be required to undertake costly new regulatory processes or clinical trials;
(u) (non-performance) non-performance of signifi cant contracts by other parties;
(v) (failure to achieve sales growth) failure to achieve sales growth from existing products;
(w) (diffi culties with product launches) diffi culties or delays in completing product developments or product launches;
(x) (diffi culties with regulatory approval) diffi culties or delays in receiving regulatory approval or certifi cation for products or processes;
(y) (competition) the existence of any competition for the products currently offered by NxGen or to be developed by the company after the NxGen Acquisition;
(z) (substitute products) the existence of substitute or improved products developed by competing companies;

76 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

(aa) (research and development programs) the success or failure of existing research and development programs of NxGen;
(bb) (market development) the pace of market development for NxGen products and the costs involved in achieving market penetration and brand awareness;
(cc) (change in markets) changes in the markets for the products sold by NxGen; and
(dd) (litigation) litigation arising from the business conducted by NxGen.

11.4 Specifi c Risks – Prime BioSeparations

Specifi c risks associated with Prime BioSeparations after the Spin Out include without limitation:

(unlisted public company) Prime BioSeparations is an unlisted public company. Eligible Prime BioSeparations Shareholders will receive shares in an unlisted entity and will no longer have a ready market for their full investment. If Prime BioSeparations Shareholders do wish to dispose of or buy more shares in Prime BioSeparations they will have to do so privately. There is no guarantee that Prime BioSeparations Shareholders will be able to fi nd a buyer or seller for their shares in Prime BioSeparations;
(fi nancial risks) the ability of Prime BioSeparations to implement its business strategy may require it to raise additional funds. No assurances can be given that such funding will be available or that it will be available on terms attractive to Prime BioSeparations;
(litigation) NuSep is a defendant to litigation that is currently being conducted in the Supreme Court of NSW. The plaintiff is claiming $62,000 plus interest, damages and costs from NuSep. If NuSep is unsuccessful in defending this claim it will more than likely be required to pay an amount to the plaintiff that will be determined by the Court. Prime BioSeparations will acquire this litigation as part of the liabilities being transferred to it;
(non-performance) non-performance of signifi cant contracts by other parties;
(failure to achieve sales growth) failure to achieve sales growth from existing NuSep products;
(diffi culties with product launches) diffi culties or delays in completing product developments or product launches;
(diffi culties with regulatory approval) diffi culties or delays in receiving regulatory approval or certifi cation for products or processes;
(competition) the existence and extent of any competition for the products or processes to be developed by Prime BioSeparations after the Spin Out – particularly from major international biotechnology companies;
(substitute products) the existence of substitute or improved products developed by competing companies;
(research and development programs) the success or failure of research and development programs of Prime BioSeparations;
(market development) the pace of market development for products and the costs involved in achieving market penetration and brand awareness;
(change in markets) change in the markets for the products and processes sold by Prime BioSeparations;
(patent litigation) patent litigation, including failure of existing patents or failure to gain patent licenses to yet unknown blocking patents; and
(clinical trial litigation) litigation arising from the clinical studies undertaken by Prime BioSeparations.

NuSep Ltd Prospectus 2009 [ 77]

12. Additional Information

12.1 Disclosing Entity

NuSep is a disclosing entity for the purposes of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. These obligations include compliance with the requirements of the ASX Listing Rules and the Corporations Act concerning notifi cation of information to ASIC and ASX. Copies of documents lodged at ASIC in relation to NuSep may be obtained from, or inspected at, an offi ce of ASIC.

12.2 Escrow Securities

NuSep was admitted to the Offi cial List on 10 May 2007 with offi cial quotation of its Shares commencing on 14 May 2007.

Pursuant to chapter 9 of the ASX Listing Rules, a number of the securities issued pursuant to the IPO Prospectus have been made subject to escrow requirements.

Details of these securities subject to escrow and the periods of escrow of those securities are as follows:

TYPE	NUMBER	DATE OF RELEASE FROM ESCROW
Shares	6,042	14 May 2009

The balance of the issued capital of NuSep, being approximately 2.3 million Shares, are quoted and freely tradeable on ASX.

ASX has also advised that the Consideration Shares will be subject to escrow restrictions for 24 months from the date that the Company re-complies with Chapters 1 and 2 of the ASX Listing Rules.

12.3 Taxation

The issue of Shares, Options and Bonus Shares and transfer of Prime BioSeparations Shares under the Offer may have taxation implications for their holders. If you have any doubts regarding possible taxation consequences, you should contact your professional tax adviser for advice. Neither NuSep, Prime BioSeparations nor any of their offi cers, employees, agents and advisers accepts any liability or responsibility in respect of the taxation consequences connected with an investment in the Offer.

12.4 Expenses

The expenses of the Offer payable by NuSep, including fees paid to legal fees, consultancy fees, registry costs, printing and mailing, are estimated to amount to approximately $800,000.

12.5 Interests of Directors, NxGen Nominee Directors, Prime BioSeparations directors and Experts

As at the date of this Prospectus, the Directors have relevant interests in securities in the Company as set out in the table below.

table below.
Director	Title	Shares	Options	Registered Holder
Mr J Manusu	Executive Chairman	72,831 direct	nil
		34,125 indirect		Mancu Pty Ltd
Dr C H Nair	Managing Director & CEO	4,281	nil
Mr I Howard-Sorrell	Director	6,231	nil
The NxGen Nominee Directors have the following interests in securities in			NuSep as at the date of this Prospectus.
Director	Title	Shares	Options	Registered Holder
Mr Daryll Ian Knowles	Managing Director & CEO	8,798	nil
Dr Alan Henry Amodeo	Chairman	395	nil
Dr James Stevens Rowe	CSO & Director	6,475	nil	J Rowe Investments P/L
Mr Michael John	COO	4,827	nil
Tattersall
Mr John Patrick Boyd	CFO	nil	nil
Mr Wilson Kim Ling Wong	Non executive Director	36,400	nil

78 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

At the Meeting Shareholders approved the issue of 230,000 Options to the NxGen Nominee Directors. These Options will be issued within twelve months of the date of the Meeting in the following amounts:

NxGen Nominee Director	Options
Mr Daryll Knowles	50,000
Mr Michael John Tattersall	45,000
Dr Alan Henry Amodeo	45,000
Mr John Patrick Boyd	45,000
Dr James Stevens Rowe	45,000

The issue of the Options is subject to Completion of the NxGen Acquisition. Shareholder approval will be sought to grant Mr Wilson Wong 45,000 Options at the upcoming extraordinary general meeting of the Company.

The Prime BioSeparations directors have the following interests in the securities of Prime BioSeparations as at the date of this Prospectus.

date of this Prospectus.
Director	Title	Shares	Options	Registered Holder
Mr J Manusu	Executive Chairman	nil	nil
Dr C H Nair	Managing Director & CEO	nil	nil
Mr I Howard-Sorrell	Non executive Director	nil	nil
The Prime BioSeparations directors will have the following interests in securities of Prime				BioSeparations post t
Spin Out as a result of the Shares they hold in NuSep.
Director	Title	Shares	Options	Registered Holder
Mr J Manusu	Executive Chairman	14,566 direct	nil
		6,825 indirect		Mancu Pty Ltd
Dr C H Nair	Managing Director & CEO	856	nil
Mr I Howard-Sorrell	Non executive Director	1,246	nil

The Prime BioSeparations directors will have the following interests in securities of Prime BioSeparations post the Spin Out as a result of the Shares they hold in NuSep.

The Directors have provided $594,597 in loans to NuSep. Please see section 6.2 of this Prospectus for a summary of the key terms and conditions of the Directors’ loans.

Each of the following NxGen Nominee Directors holds a 20% shareholding in the NxGen Shareholder, Jehega Pty Ltd, through an associated company:

Mr Michael John Tattersall;
Dr James Stevens Rowe;
Mr John Patrick Boyd;
Dr Alan Henry Amodeo; and
Mr Daryll Knowles.

Each of the following NxGen Nominee Directors are also directors of the NxGen Shareholder:

Mr Michael John Tattersall;
Dr James Stevens Rowe;
Dr Alan Henry Amodeo; and
Mr John Patrick Boyd.

Contractual relationships with NxGen

The NxGen Group is closely associated with ACP which is wholly-owned by Mr Daryll Knowles, a NxGen Nominee Director. ACP provides compounding services to the NxGen Group and ACP has engaged a member of the NxGen Group to provide marketing services to ACP.

Historically, based on the percentage of sales to ACP of the total sales of the NxGen Group, the NxGen Group is considered to have been economically dependent on ACP.

ACP is a party to two material contracts with members of the NxGen Group – the ACP Supply Agreement and the Wholesale Supply Agreement.

The NxGen Group expects to receive $300,000 per annum in revenue from the ACP Supply Agreement during the remainder of the term of the agreement.

The NxGen Group generated $1,439,414 in revenue for the fi nancial year ending 30 June 2008 from ACP under the Wholesale Supply Agreement.

NuSep Ltd Prospectus 2009 [ 7][9]

==> picture [595 x 63] intentionally omitted <==

The key terms of the ACP Service Agreement and the Wholesale Supply Agreement are set out in section 9 of this Prospectus.

ASX is of the view that Listing Rule 10.1 applies to the ACP Service Agreement and the Wholesale Supply Agreement. The Company is applying to ASX for a waiver from Listing Rule 10.1 in relation to the agreements. However, if the waiver is not granted, Shareholder approval of the agreements will be required.

Except as disclosed 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 issue of the Prospectus, has, or in the past two years has had, before the date of this Prospectus any interest in:

the formation or promotion of NuSep;
any property acquired or proposed to be acquired by NuSep in connection with the issue of Shares; or
the issue of Shares by NuSep.

No amounts have been paid or agreed to be paid and no benefi t has been given or agreed to be given to any adviser, for services rendered by the advisor in connection with the promotion or formation of NuSep or in connection with the Offer except as disclosed in this Prospectus.

The Company has paid or agreed to pay $350,000 in legal costs (plus disbursements) (not including GST) for these services to the date of this Prospectus.

Innovation Dynamics Pty Limited has acted as Independent Expert to the Company in relation to the NxGen Acquisition. The Company has paid or agreed to pay $35,000 (plus disbursements) (not including GST) for these services to the date of this Prospectus.

Pinn Deavin & Associates has acted as Investigating Accountant to the Company. The Company has paid or agreed to pay $83,900 (plus disbursements) (not including GST) for these services to the date of this Prospectus.

12.6 Consents of named parties

Innovation Dynamics Pty Limited has given and has not before lodgement of this Prospectus withdrawn its written consent to being named in this Prospectus as the Independent Expert to the Company. Innovation Dynamics Pty Limited has not authorised or caused the issue of, and takes no responsibility for, any part of this Prospectus.

Pinn Deavin & Associates has given and has not before lodgement of this Prospectus withdrawn its written consent to being named in this Prospectus as the Investigating Accountant to the Company. Pinn Deavin & Associates has not authorised or caused the issue of, and takes no responsibility for, any part of this Prospectus.

Registries Limited has given and has not before lodgement of this Prospectus withdrawn its written consent to be named in this Prospectus as the Company’s share registry. Registries Limited has not authorised or caused the issue of, and takes no responsibility for, any part of this Prospectus.

12.7 Litigation

The Company is involved in a number of minor litigations. These matters relate to disputes with suppliers all of which have been fully provided in the Company’s accounts. None of these disputes are of a material nature, the largest being in the order of $70,000. NuSep is defending these matters and does not expect these matters to materially impact on the Company. The Company is not involved in any arbitration or alternative dispute resolution proceedings, nor, so far as the Directors are aware, are any such proceedings pending or threatened against the Company at the date of this Prospectus.

Prime BioSeparations is not involved in any litigation and the directors of Prime BioSeparations are not aware of any pending or threatened litigation against Prime BioSeparations as at the date of this Prospectus.

12.8 Secured Debt

The Company has $900,000 of secured debts. The Company has not given any additional charge or other security on any of its assets to secure payment of any debt or otherwise. This secured debt of $900,000 represents the Director loans. These Director loans (which total $900,000) will be transferred to Prime BioSeparations as part of the liabilities that Prime BioSeparations assumes under the Spin Out. Accordingly, after the Spin Out the repayment of the Directors’ loans will be a liability of Prime BioSeparations. More details on these loans is provided in section 6.2.

80 ~~N~~ uSep Ltd Prospectus 2009

13. Glossary

In this Prospectus the following expressions have the following meanings:

ACP	Australian Custom Pharmaceuticals Pty Ltd (ACN 132 862 992)
ACP Service Agreement	The service agreement between NxGen Australia and ACP dated 1 July 2007 relating to
	the provision of marketing services to ACP
AMI Australia	AMI Australia Holdings Pty Ltd (ACN 095 238 645), the Advanced Medical Institute
Application	A valid application made upon the conditions set out in this Prospectus by using the
	relevant Application Form for a specif ed number of Shares
Applicant	A person who makes an Application
Application Form	The application form for the Offer
ASA	ASA Pharmaceuticals Pty Limited (ACN 110 211 544)
ASA Service Agreement	The service agreement between NxGen Australia and ASA dated 1 July 2007 relating to
	the provision of marketing services to ASA
ASIC	Australian Securities and Investments Commission
ASX	ASX Limited (ACN 008 624 691)
ASX Listing Rules	The listing rules of ASX except to the extent of any waiver by ASX of their application
	to the Company
Board	The board of directors of the Company
Bonus Shares	The 1.325 million bonus Shares to be issued to Eligible Bonus Shareholders
Business Day	Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday,
	Christmas Day, Boxing Day, and any other day that ASX declares is not a business day
Closing Date	22 May 2009, the closing date of the Offer
Company or NuSep	NuSep Ltd (ACN 120 047 556)
Completion	On or around 11 June 2009, the date of completion of the NxGen Acquisition
Consideration Shares	A maximum of 25.375 million Shares or such number of Shares that equal a maximum
	of 87.5% of the Expanded Share Capital which are to be issued to the NxGen
	Shareholder as consideration for the NxGen Acquisition
Constitution	The constitution of the Company as amended from time to time
Corporations Act	Corporations Act 2001(Cth)
DCF	Discounted Cash Flow
Directors	The Board of Directors of the Company
ED	Erectile dysfunction
Eligible Bonus Shareholder	A Shareholder who is recorded in the Company’s Share register at 5.00pm Sydney
	time on 22 June 2009
Eligible Prime	A Shareholder who is recorded on the Company’s Share register at 5.00pm Sydney
BioSeparations	time on 10 June 2009
Shareholders
Existing Shareholder	A Shareholder who is recorded on the Company’s Share register at 5.00pm Sydney
	time on Wednesday 11 March 2009
Existing Shares	All of the 2.3 million Shares issued by the Company prior to the date of this
	Prospectus
Expanded Share Capital	The total issued share capital of the Company if the Consideration Shares in the First
	Instalment, Second Instalment and the Third Instalment are issued and the Bonus
	Share issue is completed
First Instalment	The f rst instalment of consideration for the NxGen Acquisition which is payable by
	the issue of approximately 15.95 million Consideration Shares or such number of
	Consideration Shares that equal 55% of the Expanded Share Capital
FSD	Female sexual dysfunction
Gels	The gels manufactured and sold by NuSep which are typically used to separate
	biological macromolecules for example protein and DNA
GST	Goods and Services or similar tax

81 NuSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Half Year Accounts	The f nancial report for NuSep and its controlled entities for the half year ended
	31 December 2008 and announced on the ASX on 27 February 2009
Implementation Deed	The agreement between the Company and the NxGen Shareholder in relation to the
	NxGen Acquisition
Investors	Eligible Shareholders, Shareholders and the general public
Independent Expert	Innovations Dynamics Pty Limited (ACN 109 316 949)
Independent Expert’s	The report prepared by the Independent Expert for inclusion in this Prospectus at
Report	section 4
Investigating Accountant	Pinn Deavin & Associates
Investigating Accountant’s	The report prepared by the Investigating Accountant for inclusion in this Prospectus at
Report	section 10
IPO Prospectus	The prospectus lodged by the Company with ASIC on 14 December 2006
Jehega Directors	Each of Mr Michael Tattersall, Dr Alan Amodeo, Mr John Boyd and Dr James Rowe
Life Therapeutics	Life Therapeutics Limited (ACN 001 001 145)
Meeting	The extraordinary general meeting of the Company held on 13 March 2009 to approve
	the return of capital to Shareholders pursuant to the Spin Out, the NxGen Acquisition,
	the change in the nature and scale of NuSep’s activities and other matters
MF10 Separation Instrument	A gradif ow based instrument used to separate proteins into multiple fractions which
	has been designed to meet the needs of the proteomic market
Notice of Meeting	The notice of the Meeting provided by the Company to Shareholders
NuSep Board	The board of directors of the Company
NuSep Shareholders	The holder of a share in the Company
NxGen	NxGen Pharmaceuticals Pty Ltd (ACN 127 297 143)
NxGen Acquisition	The acquisition by the Company of all the shares in NxGen
NxGen Australia	NxGen Australia Pty Limited (ACN 117 913 649)
NxGen Group	NxGen and its wholly-owned subsidiaries ASA and NxGen Australia
NxGen Nominee Directors	Each of Mr Daryll Knowles, Mr Michael John Tattersall, Dr Alan Henry Amodeo, Mr John
	Patrick Boyd, Dr James Stevens Rowe and Mr Wilson Kim Ling Wong
NxGen Shareholder	Jehega Pty Ltd (ACN 125 224 508)
Offer	The offer made under this Prospectus for the issue of up to 5.075 million Shares for
	$1.00 per Share and for the distribution of 1.7 million Prime BioSeparations Shares
	in Prime BioSeparations Ltd to raise up to $5.075 million with preference being
	given to Existing Shareholders on a f rst come f rst served basis. As part of the Offer,
	successful Applicants will receive one Option for every four Shares applied for and
	issued under the Offer. Successful Applicants will also receive a pro rata entitlement
	with all other Eligible Bonus Shareholders to 1.325 million Bonus Shares
Off cial List	The off cial list of entities that ASX has admitted to listing and not removed
Option	An option over a Share
PE	Premature ejaculation
Price Earnings Ratio	A measure of the price paid for a share in a company relative to the income earned by
	the company per share
Prime BioSeparations	Prime BioSeparations Ltd (ACN 134 281 977)
Prime BioSeparations Share	A fully paid ordinary share in the capital of Prime BioSeparations
Prospectus	This replacement prospectus dated 7 May 2009
Record Date	5.00pm (Sydney time) on 11 March 2009
SCH	Has the meaning ascribed to it in Chapter 19 of the ASX Listing Rules
SCH Business Rules	The business rules of SCH

82 ~~N~~ uSep Ltd Prospectus 2009

==> picture [595 x 63] intentionally omitted <==

Second Instalment

Second Instalment The second instalment of consideration for the NxGen Acquisition which is payable in cash and/or by the issue of up to 5.075 million Consideration Shares or such number of Consideration Shares that equal a maximum of 17.5% of the Expanded Share Capital within 15 Business Days of the close of the Offer. The proportion of cash and Consideration Shares in the second instalment will depend on the proceeds raised by the Offer and will be determined by the Board immediately before Completion Share A fully paid ordinary share in the capital of the Company Shareholder A holder of Shares in the capital of the Company Share Registry Registries Limited (ACN 003 209 836)

Shareholder Share Registry Spin Out

The spin out of all of NuSep’s assets and liabilities into a new unlisted entity, Prime BioSeparations on the terms of the Spin Out Agreement The agreement between the Company and Prime BioSeparations in relation to the Spin Out

Spin Out Agreement

Termination Event

Any of the following:

(a) if one party to the Implementation Deed breaches a term of the Implementation Deed;
(b) if a warranty of the other party to the Implementation Deed becomes false, misleading or incorrect when made under the Implementation Deed;

(c) if a material adverse change occurs in the business, assets, fi nancial or trading position of NxGen since 30 June 2008 that was not disclosed in the Disclosure Material (as defi ned in the Implementation Deed)

Third Instalment

Wholesale Supply Agreement

The third instalment of consideration for the NxGen Acquisition comprising up to 4.35 million Consideration Shares or such number of Consideration Shares that is equal to 15% of the Expanded Share Capital which will be issued to the NxGen Shareholder provided that NxGen reaches a pre-tax profi t prior to 30 June 2010. If the Consideration Shares in the third instalment are not issued by 30 September 2010, the third instalment will lapse

The supply agreement between ASA and ACP dated 1 July 2007 relating to the wholesale supply of compounding pharmaceutical raw ingredients to ACP

[83] NuSep Ltd Prospectus 2009

14. Directors’ Authorisation and Statement

This Prospectus is issued by the Company and Prime BioSeparations and its issue has been authorised by a resolution of the Directors and the Prime BioSeparations directors, with which the NxGen Nominee Directors have agreed in writing.

In accordance with sections 716 and 720 of the Corporations Act, each of the Directors, the Prime BioSeparations’ directors and the NxGen Nominee Directors have consented in writing to the lodgement of this Prospectus with ASIC and the inclusion of any statements in this Prospectus attributable to them.

J Manusu

Executive Chairman

on behalf of the Board of the Company

J Manusu

Executive Chairman

on behalf of the board of Prime BioSeparations

~~N~~ uSep Ltd Prospectus 2009

NuSep Ltd

Application Form

ABN 33 120 047 556

This is an Application Form for ordinary shares in NuSep Ltd (the Company) on the terms set out in This is an Application Form for ordinary shares in NuSep Ltd (the Company) on the terms set out in the Prospectus. You may apply for a minimum of 10,000 ordinary shares at 5 cents per share ($500) the Prospectus. You may apply for a minimum of 500 ordinary shares at $1.00 per share ($500). By Note that priority under the offer will be given to the Company's current shareholders. This submitting an Application Form you will also be applying for Shares in Prime BioSeparations. Note that Application Form and your cheque must be received by NuSep priority under the Offer will be given to the Company’s current shareholders. This Application Form and by 5.00pm (AEST) on 27 March 2009. your cheque must be received by NuSep If you are in doubt as to how to deal with this Application Form, please contact your accountant, by 5.00pm (AEST) on 22 May 2009. If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a professional adviser. The Prospectus contains information relevant to a decision to invest in the Offer decision to invest in the Offer and you should read the entire Prospectus carefully before applying for and you should read the entire Prospectus carefully before applying for shares. shares.

Broker Reference – Stamp Only Broker Code Advisor Code

A Offer Choice

Indicate your choice below by marking one box only. You may purchase a minimum of 10,000 shares for A$500Indicate your choice below by marking one box only. You may purchase a minimum of 500 shares for A$500 . Option 1 Option 2 Option 3 ……………………… [insert number of shares] at 100,000 shares 5,000 shares 10,000 shares200,000 shares $0.05 per share = $1.00 per share = � � � A$5,000.00 A$5,000.00 A$10,000.00A$10,000.00 A$......................................A$................................... [insert amount][insert amount]

B Write the name(s) you wish to register the shares Note in (see instructions page)

Applicant

Name of Applicant 2 or < Account Designation >

Name of Applicant 3 or < Account Designation >

C Write your postal address here

Number / Street

Suburb/Town State Postcode

D CHESS participant – Holder Identification Number (HIN) or NuSep SRN if a current NuSep shareholder

Important please note if the name & address details above in sections C & D do not match exactly with your registration details held at CHESS or NuSep’s share registry, any Securities issued as a result of your application will be held on the Issuer Sponsored subregister.

E Cheque payment details – � PIN CHEQUE(S) HERE

ECheque payment details –�PIN CHEQUE(S) HERE	ECheque payment details –�PIN CHEQUE(S) HERE	ECheque payment details –�PIN CHEQUE(S) HERE	ECheque payment details –�PIN CHEQUE(S) HERE	ECheque payment details –�PIN CHEQUE(S) HERE	ECheque payment details –�PIN CHEQUE(S) HERE	ECheque payment details –�PIN CHEQUE(S) HERE
Please enter details of the cheque(s) that accompany this application.
Name ofdrawerofcheque ChequeNo. BSB No. Account No. ChequeAmount A$

F Enter your Tax File Number(s), ABN, or exemption category

Applicant #1 Applicant #2

Applicant #3

H Contact telephone number (daytime/work/mobile)

I Email address

By submitting this Application Form, I/We declare that this Application is completed and lodged according to the Prospectus and the instructions on the reverse of the Application Form and declare that all details and statements made by me/us are compete and accurate. I/We agree to be bound by the constitution of NuSep Ltd. I/We was/were given access to the Prospectus together with the Application Form. I/We represent, warrant and undertake to the Company that our subscription for the above Offer will not cause the Company or me/us to violate the laws of Australia or any other jurisdiction which may be applicable to this subscription for shares in the Company. I/We acknowledge that I/we am/are residents of Australia.

Guide to the Application Form

YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS APPLICATION FORM.

Please complete all relevant sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the Application Form. The Corporations Act 2001 prohibits any person from passing onto another person the Application Form which is attached to the Prospectus for the issue of the shares, unless the Application Form is attached to or accompanying a complete and unaltered copy of the Prospectus. A person who gives another person access to the Application Form must at the same time and by the same means give the other person access to the Prospectus, and any supplementary prospectus. While the Prospectus is current, a paper copy of the Prospects, any supplementary prospectus and the Application Form will be provided to you, at no charge, upon request by telephoning the Company Secretary of NuSep on (02) 8977 9000.

Instructions

A. If applying for Shares insert the If applying for Shares insert the number number of Shares for which of Shares for which you wish to subscribe at Item you wish to subscribe at Item A (not less than 10,000 shares A (not less than 500 shares for $500). For option 3 multiply the number of Shares which for $500). For option 3 multiply the number of Shares which you wish to subscribe for by you wish to subscribe for by $0.05 $1.00 AUD to calculate the AUD to calculate the $amount $amount. .
B. Write your full name . Initials are not acceptable for first names.
C. Enter your postal address for all correspondence. All communications to you from the Company will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.
D. If you are sponsored in CHESS by a stockbroker or other CHESS participant, you may enter your CHESS HIN if you would like the allocation to be directed to your HIN. If you have a existing NuSep SRN you may enter your current SRN.
E. Complete cheque details as requested. Make your cheque payable to NuSep Ltd , cross it and mark it "Not negotiable" . Cheques must be made in Australian currency, and cheques must be drawn on an Australian Bank.
F. Enter your Australian tax file number ("TFN") or ABN or exemption category, if you are an Australian resident. Where applicable, please enter the TFN /ABN of each joint Applicant. Collection of TFN's is authorised by taxation laws. Quotation of your TFN is not compulsory and will not affect your Application Form.
H. Enter your contact details so we may contact you regarding your Application Form or Application Monies.
I. Enter your email address so we may contact you regarding your Application Form or Application Monies or other correspondence.
NB: your registration details provided must match your CHESS account or your current NuSep SRN exactly.

Lodgement

Completed Application Forms and cheque(s) must be received no later than Completed Application Forms and cheque(s) must be received no later than 5.00 pm5.00 pm (Sydney time) (Sydney time) on on 27 March 200922 May 2009 being the closing date at being the closing date at the following address: the following address: Mailing address : Deilvery address : NuSep Ltd NuSep Ltd PO Bo x6126 22 Rodborough Road Frenchs Forest, NSW 2086 Frenchs Forest, NSW 2086

It is not necessary to sign or otherwise execute the Application Form. If you have any questions as to how to complete the Application Form, please contact the Company Secretary at NuSep on telephone number (02) 8977 9000.

Correct Forms of Registrable Title

Note that ONLY legal entities can hold the shares. The Application must be in the name of a natural person(s), companies or other legal entities acceptable to the Company. At least one full given name and surname is required for each natural person.

Examples of the correct form of registrable title are set out below.

==> picture [523 x 22] intentionally omitted <==

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

Type of Investor Correct Form of Registrable Title Incorrect Form of Registrable Title
----- End of picture text -----

Type of Investor	Correct Form of Registrable Title	Incorrect Form of Registrable Title
la u divid n I	h ti m S div a D n h o J r M	h ti m S D J
y n a p m o C	d t L yt P C B A	o C C B A r o L / P C B A
s g nidlo H t nio J	& h ti m S div a D n h o J r M MrsMary Jane Smith	John David & Mary Jane Smith
sts u r T	h ti m S div a D n h o J r M	John Smith Family Trust
s e t a ts E d e s a e c e D	h ti m S r e t e P le a h ci M r M	John Smith (deceased)
s pih s r e n tr a P	& h ti m S div a D n h o J r M Mr Ian Lee Smith	John Smith & Son
Clubs/Unincorporated Bodies	Mr John David Smith	Smith Investment Club
s d n u F n oit a u n n a r e p u S	d e ti m iL yt P h ti m S n h o J	John Smith Superannuation Fund

Privacy Statement

Registries Limited advises that Chapter 2C of the Corporations Act 2001 (Cth) 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 share holding and if some or all of the information is not collected then it might not be possible to administer your share holding. 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 the Application Form. Our privacy policy is available on our website (http://www.registriesltd.com.au/help/share_privacy.html). For information, please contact Registries Ltd., Level 7, 207 Kent Street, Sydney NSW 2000, GPO Box 3993 Sydney NSW 2001, Phone: +61 2 9290 9600, Fax: +61 2 9279 0664.

NuSep Ltd

Application Form

ABN 33 120 047 556

This is an Application Form for ordinary shares in NuSep Ltd (the Company) on the terms set out in This is an Application Form for ordinary shares in NuSep Ltd (the Company) on the terms set out in the Prospectus. You may apply for a minimum of 10,000 ordinary shares at 5 cents per share ($500) the Prospectus. You may apply for a minimum of 500 ordinary shares at $1.00 per share ($500). By Note that priority under the offer will be given to the Company's current shareholders. This submitting an Application Form you will also be applying for Shares in Prime BioSeparations. Note that Application Form and your cheque must be received by NuSep priority under the Offer will be given to the Company’s current shareholders. This Application Form and by 5.00pm (AEST) on 27 March 2009. your cheque must be received by NuSep If you are in doubt as to how to deal with this Application Form, please contact your accountant, by 5.00pm (AEST) on 22 May 2009. If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a professional adviser. The Prospectus contains information relevant to a decision to invest in the Offer decision to invest in the Offer and you should read the entire Prospectus carefully before applying for and you should read the entire Prospectus carefully before applying for shares. shares.

Broker Reference – Stamp Only

Broker Code Advisor Code

A Offer Choice

B Write the name(s) you wish to register the shares Note in (see instructions page)

Applicant 1

Name of Applicant 2 or < Account Designation >

Name of Applicant 3 or < Account Designation >

C Write your postal address here

Number / Street

Suburb/Town State Postcode

D CHESS participant – Holder Identification Number (HIN) or NuSep SRN if a current NuSep shareholder

E Cheque payment details – � PIN CHEQUE(S) HERE

Please enter details of the cheque(s) that accompany this application.

Name of drawer of cheque Cheque No. BSB No. Account No. Cheque Amount A$

F Enter your Tax File Number(s), ABN, or exemption category

Applicant #1 Applicant #2

Applicant #3

H Contact telephone number (daytime/work/mobile) I Email address

Guide to the Application Form

YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS APPLICATION FORM.

Instructions

A. If applying for Shares insert the If applying for Shares insert the number number of Shares for which of Shares for which you wish to subscribe at Item you wish to subscribe at Item A (not less than 10,000 shares A (not less than 500 shares for $500). For option 3 multiply the number of Shares which for $500). For option 3 multiply the number of Shares which you wish to subscribe for by you wish to subscribe for by $0.05 $1.00 AUD to calculate the AUD to calculate the $amount $amount. .
B. Write your full name . Initials are not acceptable for first names.
C. Enter your postal address for all correspondence. All communications to you from the Company will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.
D. If you are sponsored in CHESS by a stockbroker or other CHESS participant, you may enter your CHESS HIN if you would like the allocation to be directed to your HIN. If you have a existing NuSep SRN you may enter your current SRN.
E. Complete cheque details as requested. Make your cheque payable to NuSep Ltd , cross it and mark it "Not negotiable" . Cheques must be made in Australian currency, and cheques must be drawn on an Australian Bank.
F. Enter your Australian tax file number ("TFN") or ABN or exemption category, if you are an Australian resident. Where applicable, please enter the TFN /ABN of each joint Applicant. Collection of TFN's is authorised by taxation laws. Quotation of your TFN is not compulsory and will not affect your Application Form.
H. Enter your contact details so we may contact you regarding your Application Form or Application Monies.
I. Enter your email address so we may contact you regarding your Application Form or Application Monies or other correspondence.
NB: your registration details provided must match your CHESS account or your current NuSep SRN exactly.

Lodgement

Correct Forms of Registrable Title

Examples of the correct form of registrable title are set out below.

==> picture [523 x 22] intentionally omitted <==

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

Type of Investor Correct Form of Registrable Title Incorrect Form of Registrable Title
----- End of picture text -----

Type of Investor	Correct Form of Registrable Title	Incorrect Form of Registrable Title
la u divid n I	h ti m S div a D n h o J r M	h ti m S D J
y n a p m o C	d t L yt P C B A	o C C B A r o L / P C B A
s g nidlo H t nio J	& h ti m S div a D n h o J r M MrsMary Jane Smith	John David & Mary Jane Smith
sts u r T	h ti m S div a D n h o J r M	John Smith Family Trust
s e t a ts E d e s a e c e D	h ti m S r e t e P le a h ci M r M	John Smith (deceased)
s pih s r e n tr a P	& h ti m S div a D n h o J r M Mr Ian Lee Smith	John Smith & Son
Clubs/Unincorporated Bodies	Mr John David Smith	Smith Investment Club
s d n u F n oit a u n n a r e p u S	d e ti m iL yt P h ti m S n h o J	John Smith Superannuation Fund

Privacy Statement

N Gen

==> picture [53 x 34] intentionally omitted <==

AI assistant

MEMPHASYS LIMITED. — Capital/Financing Update 2009

65314_rns_2009-05-06_02221e09-1fbb-4dfa-a24d-d21c4df79636.pdf

N Gen

PROSPECTUS NuSep Ltd

Important Information

Offer

Purpose of this document

Privacy

Offer Highlights

About NxGen

NxGen 2008 Financials & 2009 Forecasts

NxGen 2009 Sales by Quarter – Unaudited Actuals to 1 March 2009

NxGen’s Main Products

Sexual Health Products

Erectile Dysfunction (ED)

Premature Ejaculation (PE)

Female Sexual Dysfunction (FSD)

Compound Pharmacy Products

Naltrexone – Addiction Implants

About Prime BioSeparations

Prime BioSeparations’ Main Products

Gels

Separation Instruments

Biological Products

Contents

Corporate Directory

Directors

Mr J Manusu

Secretary and CFO Mr P. Patel

Registered Offi ce

Investigating Accountant

Pinn Deavin & Associates

Independent Expert

Innovations Dynamics Pty Ltd

Share Registry Registries Limited

1. Overview of the Offer

1.1 Important notice

1.2 Background

1.3 Consideration for the NxGen Acquisition

Acquisition of the NxGen Group

NxGen

1.4 Offer under this Prospectus

Spin Out, Capital Raising and Bonus Issue

NuSep

NuSep

1.5 Conditions

1.6 Objectives and advantages

1.7 Summary of Key Risk Factors

NuSep and NxGen

Prime BioSeparations

1.8 Indicative timetable

1.9 Costs of the Offer and use of proceeds

1.10 Capital structure (Post Consolidation)

1.11 Capital structure – Prime BioSeparations

1.12 Restricted Securities

2. Details of the Offer

2.1 Offer

2.2 Conditions of the Offer

2.3 Consequences if conditions of Offer not satisfi ed

2.4 Preference to Existing Shareholders

2.5 Purpose of the Offer and use of proceeds

2.6 No overseas offer

2.7 Minimum Application

2.8 Oversubscriptions

2.9 Closing Dates

2.10 Date of issue of Shares, Options and Bonus Shares and Prime BioSeparations Shares

2.11 Application monies held in trust

2.12 Payment

2.13 No Underwriting

2.14 Taxation

2.15 Action by Investors

2.16 Rights and liabilities attaching to Shares and Options

NuSep Shares

NuSep Options

2.17 The Prime BioSeparations Shares

2.18 ASX Listing

2.19 Market prices of Shares

2.20 CHESS

2.21 Risk Factors

MEMPHASYS LIMITED. Capital/Financing Update 2009