MEMPHASYS LIMITED. — Capital/Financing Update 2012

Oct 14, 2012

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FOR IMMEDIATE RELEASE

Spin Out of PrIME Biologics

Sydney, Australia 15[th] October 2012 – The Board of NuSep (ASX:NSP) wishes to advise the market that it has resolved, subject to shareholder approval, to spin out its therapeutic plasma fractionation business, called PrIME Biologics.

PrIME Biologics is using NuSep’s PrIME Technology in its therapeutic plasma manufacturing process. NuSep, by comparison, is the developer of the PrIME Technology. NuSep’s strategy is to develop applications of the PrIME Technology which will generate sales of both equipment and long term supply contracts of the consumables. It is PrIME Biologics’s goal to open up the Asian therapeutic plasma market and particularly the untapped Currently Unprocessable Plasma ( CUP ) market. The goals and business plans for both companies are significantly different and require significantly different operational focus.

For this reason the Board believes that NuSep’s overall goal of ‘Becoming the leading supplier in the BioSeparations market’ is best served by having successful applications of its PrIME Technology operating as separate independent companies. NuSep is then able to concentrate on commercialising other applications of the PrIME Technology including IVF sperm separation, recombinant proteins and renal dialysis to name a few.

Further, it has been difficult to finalise the external funding for PrIME Biologics while it formed part of the NuSep group as NuSep has a market capitalisation of less than A$10m relative to the S$60m (A$46m) valuation of PrIME Biologics. By spinning out PrIME Biologics the issue of PrIME funding will be addressed.

Recent PrIME Developments

Over the last six months PrIME has achieved a number of critical milestones. Specifically PrIME has:

• Signed a HOA to supply CUP products to India;

• Completed the purchase of a cGMP[1] facility in Singapore valuing PrIME at S$60m (A$46m);

• Is drawing down its first Singapore Government loan instalment; and

• Installing the pilot scale PrIME production unit into PrIME’s Singapore cGMP facility.

Terms of the Proposed Spin Out

The current share capital of PrIME Biologics is held 90% by NuSep and 10% by Luye Pharma Group. At the time of the IPO the capital structure of PrIME is expected to look like:

1 cGMP is current Good Manufacturing Practise

Contact Details Email info@nusep.com Telephone +61 2 8415 7300 Web www.nusep.com Facsimile +61 2 8415 7399 ABN 33 120 047 556

NuSep Holdings Ltd 324 Burns Bay Rd Lane Cove NSW 2066

Postal Address P.O. Box 823 Lane Cove NSW 1595

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Luye Pharma Group Investor Group Escrow NuSep Shareholders NuSep IPO Total	20% 10% 50% 10% 10% 100%

All of the funds raised from the sale of the PrIME Biologics shares will be retained in PrIME Biologics and will be used to produce the first registered therapeutic product using the PrIME Technology. NuSep will retain 10% of the shares in PrIME Biologics as a long term investment.

As part of the spin off of PrIME Biologics it is proposed that all of the ordinary fully paid escrow shares be distributed pro rata to NuSep Shareholders on a 1 for 5 basis. The result of the pro rata distribution would be that after the distribution, every Shareholder will also hold 1 PrIME Biologics Share for every 5 Shares held in the capital of NuSep Holdings Ltd. No payment is required from Shareholders for this distribution as the spin out is defined to be a return of capital.

The escrow shares that are to be distributed to shareholders will represent 50% of PrIME Biologics at the time of the spin out. NuSep will sell 10% of PrIME Biologics shares in March/April 2013 under an IPO prospectus. All of the funds raised, excluding costs, in the IPO will be retained by PrIME Biologics. Post this IPO NuSep will still hold 10% of PrIME Biologics.

The proposed spin out will be achieved by way of an ordinary shareholder resolution approving an equal reduction of capital under Section 265C of the Corporations Act. NuSep will put this resolution to the 2012 Annual General Meeting to be held on 30 November 2012.

Indicative Timetable for the Spin Out

While a final timetable has not been finalised, below is an indicative timetable:

Date	Event
15 October 2012	Announcement of PrIME Biologics Spin Out.
30 October 2012	Notice of Meeting sent to shareholders incorporating the Spin Out resolution.
30 November 2012	AGM to approve the PrIME Spin Out.
31 January 2013	NuSep Shareholders entitlement date to the PrIME Biologics shares.
6 February 2013	PrIME Biologics posts shareholder statements to all shareholders.
7 February 2013	PrIME Biologics posts prospectus to all PrIME Biologics shareholders and other investors.
Early April 2013	PrIME Biologics capital raising closes.
Early May 2013	PrIME Biologics lists on the ASX.
30 November 2013	All the escrow shares become fully tradable.

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Impact on NuSep

The spin out of PrIME Biologics from NuSep is a significant event as it represents the first commercial application of the PrIME Technology. Post the spin out, the relationship with PrIME Biologics will be one of supplier/customer. As part of its decision to approve the spin out the Board of NuSep has considered a number of other factors including the financial impact on NuSep’s Balance Sheet/P&L and the future growth of NuSep. These items are addressed in more detail below.

Impact on the Balance Sheet and P&L

The spin out of PrIME Biologics from NuSep will not have any significant impact on NuSep’s 30 June 2012 Balance Sheet as NuSep did not at that time have any PrIME Biologics assets of material value on its Balance Sheet.

More importantly, post the spin out, NuSep will no longer incur any expenditure associated with PrIME Biologics. To put this expenditure into perspective, during the 2011-12 financial year NuSep incurred over $400,000 in PrIME Biologics expenditure. This expenditure was incorporated into the Company’s P&L and formed part of the $1,128,774 EBITDA loss. From the 2013-14 financial year onwards, NuSep will not incur any PrIME expenditure in its P&L.

Impact on NuSep’s Future Growth

While the expenditure side is important, the spin out will create two new revenue streams for NuSep. These are:

• PrIME Equipment sales

• PrIME Biologics will acquire all of its PrIME equipment from NuSep. The first purchase relating to the Singapore production unit will generate sales of approximately $850,000 to NuSep. NuSep will be PrIME Biologics sole supplier of PrIME Technology for these new facilities.

• PrIME Consumable sales

PrIME Biologics will purchase under a long term exclusive contract the PrIME consumables from NuSep. This will generate ~ $3-4m pa in sales to NuSep once the PrIME Biologics plant in Singapore is at full capacity. Each new plant that PrIME Biologics establishes thereafter will generate similar amounts of both equipment and consumables sales.

The net result of the spin out for NuSep is:

• Reduced expenditure; and

• Two new highly profitable revenue streams.

In summary, the spin out of PrIME Biologics enables NuSep to focus on development of new PrIME Technology applications (IVF, Recombinant and Dialysis) while generating the first of a series of unique high margin revenue streams.

*ENDS*

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For more information please contact:

Contact: Swapna Keskar Company Secretary +61 2 8415 7300 keskar@companymatters.com.au

About NuSep

NuSep (ASX: NSP) is a publicly listed life sciences company that sells products into the global BioSeparations market. NuSep recently acquired BioInquire which developed the ProteoIQ software enabling NuSep to offer a total Proteomics solution from Fraction to Function . The company has offices in both Sydney Australia and Atlanta, USA.

With a 30 year heritage in biological separations, NuSep has forged a world class reputation for its innovative yet simple biological separation techniques including the world’s first IVF sperm separation device. In short NuSep has redefined the BioSeparations market through innovation and simplification.

NuSep’s world renowned research team has developed an extensive portfolio of patented products. In all, NuSep currently manufactures, distributes and sells 55 products to customers in the USA, Europe, Asia and Australia.

NuSep Products:

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• Gels – NuSep manufactures and sells precast gels including the innovative nUView Gels, which can be visualised 2 minutes after use.

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• Separation Instruments – NuSep has developed two unique biological separation instruments. The ProteomeSep was released in 2009 and can separate biological samples into 8 fractions for use in the proteomic market. The SpermSep separates sperm for fertility treatments such as IVF.

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• Proteomics Software – NuSep offers the unique ProteoIQ software for the analysis of complex mass spec samples. This software is also designed to identify bio markers.

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• Biological Products – NuSep supplies research grade biological products manufactured using its unique separation technologies. These products include human IgG and Albumin .

For more information about NuSep please visit the company’s website www.NuSep.com

About PrIME Biologics Pte Ltd

PrIME Biologics is a Singapore based biotech company that has developed a disposable therapeutic plasma manufacturing process based on NuSep’s PrIME Technology. NuSep has a 90% shareholding in PrIME Biologics. PrIME Biologics process is based on the Pr eparative I solation by M embrane E lectrophoresis (PrIME) technology developed by NuSep. PrIME provides disposable modular processing that is ‘electronically’ driven membrane fractionation.

The PrIME process increases product yields to over 90% relative to the existing process 50% while increasing product safety. The PrIME has been shown to remove virus, bacteria, endotoxins and prions which cause ‘Mad Cow Disease’. Further, PrIME Biologics process can produce multiple plasma products in hours compared to days, which is required by the current manufacturers.

The initial application for the PrIME process will be the Currently Unprocessable Plasma which represents approximately 50% of all the plasma collected in many Asian countries.