MEMPHASYS LIMITED. — Capital/Financing Update 2011

Aug 1, 2011

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Tuesday, 2[nd] August 2011

Letter from the Chairman

Dear Shareholder,

It is with great pleasure that I write to update you on the significant steps we have taken to unlock the true value of the PrIME technology. In the December 2010 Shareholder Newsletter I used the phrase “Carpe Diem” to describe our approach. I can now report that we have truly Seized the Day! This is a special time in the company’s evolution where a dream has finally materialised into a commercial reality!

The PrIME[1] Technology

It is clear that our PrIME process is a disruptive technology and until recently only NuSep and our supportive shareholders could see the potential. I can now report that interest in the PrIME process has moved beyond just that of a single Singapore plant to an Asia wide phenomenon.

What has led to this dramatic change?

We have identified a way of saving countries at least $15m on every 50,000L of plasma that they currently throw away. This wasted or ‘ Currently Unprocessable Plasma’ accounts for approximately 50% of all the plasma collected in most Asian countries.

Adopting the PrIME process becomes a compelling case as it helps these countries significantly increase their supply of Therapeutic Plasma products. As a result the PrIME process enables these countries to be more self-sufficient and contributes significantly towards reducing their public health budgets and increases the availability of potentially life saving products.

Undoubtedly, the ability to fractionate Currently Unprocessable Plasma is the reason why both the Government and industry support our Singapore project. I believe the Currently Unprocessable Plasma application provides the market entre’ for this disruptive technology, similar to the small volume, low cost & local supply that enabled the Mini Mills to enter the US steel market. In my mind the PrIME Mini Mill has now reached its ‘Tipping Point’.

The PrIME Facility in Singapore: A Reality!

Since the December 2010 Shareholder Newsletter the Singapore plasma project has achieved some critical milestones:

• Selected a new larger location in TechView located in Kaki Bukit in Singapore. This is a 1500m[2] facility enabling the establishment of the Asian Headquarters of NuSep.; Appointed both the Directors of GMP Operations and Regulatory Affairs;

• Received funding and economic support from the Singapore Economic Development Board ( EDB ): and

1 PrIME stands for Pr eparative I solation by M embrane E lectrophoresis and is the technology used by NuSep to fractionate human plasma. NuSep Holdings Ltd Postal Address Contact Details E info@nusep.com 324 Burns Bay Road P.O. Box 823 P +612 8415 7300 W nusep.com Lane Cove NSW 2066 Lane Cove NSW 1595 F +612 8415 7399 ABN 33 120 047 556

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Signed a LOI with United Laboratories ( Unilab ) for an investment into the Singapore facility and the concurrent right to build a PrIME fractionation facility in the Philippines.

The Singapore plant will house 5 PrIME units capable of processing up to 150,000L pa. By 2017 we will be processing 80,000L pa, allowing significant room for additional sales growth. The Singapore facility will process 4 products: IVIG, Albumin, Factor VIII and Factor IX. Factor VIII and Factor IX are both high value clotting factors associated with haemophilia. The Net Present Value (NPV) of this project is $17m using a 15% discount rate. The Internal Rate of Return (IRR) on this project is 33%. This NPV and IRR have been calculated on profits up to 2017 only.

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The Singapore PrIME facility showing the flow of products through the facility

The Worldwide Therapeutic Plasma Market

Blood plasma products represent a US$9.7B global market with a compound growth rate of 13% of which the Market Research Bureau[2] ( MRB ) estimated US$1B is sold in Asia. This market is dominated by 5 major manufacturers who have undergone considerable consolidation in the recent past. Existing plasma fractionation methodologies are capital intensive, high cost production process similar to the old steel mills.

The Asian Therapeutic Plasma Market

The fractionators are focused on the European and US markets and only supply Asia with excess product. Further, the regulators will not allow the fractionators to process plasma from countries who don’t collect plasma at the international standards.. It is this plasma that we refer to as Currently Unprocessable Plasma . Consequently, most Asian countries are forced to buy from the fractionators and discard the plasma they collect providing a unique niche that the PrIME process addresses. Specifically the PrIME mini mill:

2 The Market Research Bureau Inc. Worldwide Plasma Fractions Market Report - 2008, published in April 2010.

NuSep Holdings Ltd 324 Burns Bay Road Lane Cove NSW 2066	Postal Address P.O. Box 823 Lane Cove NSW 1595	Contact Details P+612 8415 7300 F+612 8415 7399	Einfo@nusep.com Wnusep.com ABN 33 120 047 556

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Can process small volumes (less than 10,000L batches); and

Is based on a disposable manufacturing system so that it can fractionate Unprocessable Plasma .

Make countries in Asia self-sufficient in their plasma product requirements in line with 2010 WHO mandate[3] .

The existing fractionators cannot address the Currently Unprocessable Plasma market as their manufacturing processes are continuous leaving them open to batch to batch contamination. Ultimately, the regulators, such as FDA, will not allow fractionators in their countries to import Currently Unprocessable Plasma .

In addition, the PrIME process doubles the yield of Therapeutic Product relative to the existing processes while increasing product safety. Further, NuSep’s process can produce multiple plasma products in hours compared to days required by the current manufacturers.

The Philippine Opportunity and others

On 27[th] July 2011 NuSep announced it had signed a Letter of Intent with Philippine pharmaceutical company United Laboratories ( Unilab ) for an investment in the Singapore project and concurrent investment in a Philippines PrIME facility. Unilab is particularly interested in setting up a PrIME facility in the Philippines to fractionate Currently Unprocessable Plasma . Today the Philippines market is a fraction of the A$400m Australian market[4] although on a population basis it should be 4 times its size. At present there is a major shortage of albumin & IVIG in the Philippines and access available only to those who can afford to import these products. This is just one, (but very important), example of the many reasons why the PrIME process is so attractive to these countries.

This project and others being currently negotiated signal that a ‘tipping point’ has been reached with the PrIME technology. These countries realise that the PrIME technology can help them to significantly increase the supply of Therapeutic Plasma products, save thousands of lives and millions in public health expenditure from plasma that they were otherwise throwing away. I think that this is a Carpe Diem moment by any measure!

Extension of Share Purchase Offer: an unique opportunity

A number of shareholders have asked us to extend the Share Purchase Offer ( SPO ) following the EDB and Unilab announcements.. The Board of NuSep has, therefore, agreed to extend the SPO until Monday 15[th] August 2011 in order to give shareholders additional time to analyse and digest recent announcements and participate in this unique opportunity to top up their shareholding. I would personally like to invite you to talk to us and then consider participating in the SPO. This is the moment in time when all the promise of NuSep finally converts into commercial reality.

3 World Health Organisation - 63 World Health Assembly 10-12 May 2010, Resolution 63.12 - Availability, Safety & Quality of Blood Products

4 The National Blood Authority of Australia 2009-2010 Annual Report page 34. NuSep Holdings Ltd Postal Address Contact Details E info@nusep.com 324 Burns Bay Road P.O. Box 823 P +612 8415 7300 W nusep.com Lane Cove NSW 2066 Lane Cove NSW 1595 F +612 8415 7399 ABN 33 120 047 556