MEMPHASYS LIMITED. — Interim / Quarterly Report 2008

Apr 14, 2008

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FOR IMMEDIATE RELEASE

NuSep’s Quarterly Newsletter

SYDNEY, AUSTRALIA – 15 April, 2008 – NuSep Ltd (ASX: NSP). Attached is NuSep’s April 2008 quarterly newsletter.

About NuSep

NuSep (ASX: NSP) is a publicly listed life sciences company that sells products into the global bioseparations market. 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 offers two precast gel ranges: iGels, innovative gels including long life gels with a 2 year shelf life: and NuBlu, high quality gels at an everyday price.

• Separation Instruments – NuSep has developed two unique biological separation instruments. The first instrument released in February 2008 can separate biological samples into 8 fractions for use in the proteomic market. The second instrument separates sperm for fertility treatments such as IVF and is presently undergoing clinical trials.

• 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

Contact: Prakash Patel Chief Financial Officer & Company Secretary +61 2 8977 9000 prakash.patel@nusep.com

NuSep Ltd

Postal Address P.O. Box 6126 Frenchs Forest NSW 2086

Contact Details Telephone +61 2 8977 9000 Facsimile +61 2 8977 9099

Email info@nusep.com Web www.nusep.com ABN 33 120 047 556

22 Rodborough Rd Frenchs Forest NSW 2086

NuSep News April 2008 CS10 SpermSep Success

Successful Clinical Trial of SpermSep Produces Higher Pregnancy Rate

Westmead Fertility Centre in Sydney has now successfully completed the fi rst IVF SpermSep clinical trial. This trial was designed to show that NuSep’s CS10 SpermSep is both a safe and effective method of sperm preparation for IVF treatment. The trial resulted in 3 SpermSep pregnancies and 2 live births with the fi nal delivery expected later this year out of a total trial size of 18 patients. By comparison, there were no pregnancies and consequently no live births among trial participants treated using the conventional process.

The fi rst IVF birth occurred in November 2007 when Kim gave birth to her son Dylan. Kim is thrilled that her son has the distinction of being the very fi rst recorded IVF[1 ] pregnancy and birth using NuSep’s SpermSep device. Kim says “To fi nd out I was pregnant after 6 years of trying naturally was the best news we have ever received! We are so very grateful to both Westmead Fertility Centre and NuSep for allowing us to participate in the 800 500 108 | sales@NuSep.comtrial of the SpermSep. Dylan is a very healthy (and noisy!) 3 month old who is above average for his height and weight. We are so proud of him

and will be forever indebted to both Westmead and NuSep”.

The SpermSep instrument is supported by a $2.2m AusIndustry Commercial Ready grant. NuSep is proud to be associated with this project which has already brought so much joy to these couples who previously could not have children. This fi rst clinical trial conducted by Westmead Fertility Centre used our prototype SpermSep device and directly compared it to Density Gradient Centrifugation (DGC), the most common method of sperm separation used by fertility clinics. In the trial, the patient’s eggs (oocytes) were retrieved and split into two groups. One of the groups were fertilised with sperm prepared by the SpermSep and the second was fertilised with sperm prepared by DGC.

The trial compared 18 couples with an average of 7 eggs per couple in each arm of the study. In total over 200 eggs were compared. All oocytes were simultaneously monitored for fertilisation and cell cleavage (embryo fertilised egg formation). The best embryos were chosen by the embryologist and then transferred to the mother while any remaining embryos were frozen.

PG 01

1Asheligh, the fi rst SpermSep baby introduced to shareholders in July was conceived using ICSI.

Redefi ning BioSeparations through Innovation and Simplifi cation

NuSep SpermSep

Trials Achieve Pleasing Results

Clinical Trial Results

The trial demonstrated that:

• Sperm recovery and motility using SpermSep is comparable with DGC;

• Rates of fertilisation, cleavage, and embryo usage (transferred and frozen) using SpermSep is comparable with DGC;

• SpermSep achieved signifi cantly reduced processing times (5 mins compared to 30 mins); and

• SpermSep signifi cantly reduces risk management (i.e. consecutive processing with the SpermSep poses less risk of sample mix up than batch processing procedures associated with DGC).

Although not part of the formal trial, the embryos, once selected by the clinician, were then transferred to the mothers. There were 9 embryo transfers in the SpermSep arm of the trial and 6 embryo transfers on the DGC side. Of the 9 SpermSep embryos transferred, 3 resulted in pregnancies and of the 6 DGC embryos transferred, none resulted in a pregnancy. To date 2 of the 3 SpermSep pregnancies have resulted in healthy babies, one boy (baby Dylan) and one girl. These are very pleasing results and augur well for the introduction of this new and exciting technology in IVF medicine”, said Professor Howard Smith, Director of the Westmead Fertility Centre.

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IVF ICSI IVF ICSI IVF ICSI
100%
DGC
80% CS10
60%
40%
20%
0%
Fertilisation Cleavage Pregnancy
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In addition to the IVF trial, Westmead Fertility Centre has also been assessing SpermSep’s performance with patients using ICSI. With ICSI, a single processed sperm cell is injected into the egg outside the prospective mother’s body. So far, Westmead has treated 35 ICSI patients. 12 of these patients have been included in the above trial results.“

Time to Market

NuSep has now validated that SpermSep is at least as safe and effi cacious as the existing sperm preparation process. The Company must now test the fi nal production version of the device and in doing so intends to:

• Verify that the SpermSep produces lower DNA damaged sperm in clinical samples; and

At present NuSep has designed the trial protocol and is fi nalising the clinical study trial sites. The fi nal clinical trials will be multi-centre trials in order to maximise the throughput of patients and contain recruitment times. A multicentre trial also allows the company to gauge the use of the SpermSep technique in various clinical settings. The next phase of trials is expected to commence in the next month and will fi nish in early 2009. The results of the current and the proposed study will be used to support an application with the TGA, FDA and European regulatory authorities. It is envisaged that fi rst sales of the SpermSep will occur in the second quarter of 2009. There is signifi cant demand for the SpermSep unit and this has been demonstrated by the number of enquiries generated by the presentation given by Dr Steven Fleming, Scientifi c Director of Westmead Fertility Centre, at an international fertility conference in Barcelona late last year.

SpermSep Media Coverage

Professor Howard Smith of Westmead Fertility Centre together with Kim and her son Dylan appeared on Channel 7’s Sunrise show with Mel and Kochie on Thursday 13 March. If you missed the interview you can see it by going onto our website at www.nusep.com. The Shipp family & the SpermSep device also received full page coverage in the Daily Telegraph. This article is also available on our website.

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ART Market

Sperm separation is a fundamental requirement for all Assisted Reproductive Technology (ART) treatments and the use of ART is growing rapidly as couples plan to have babies into their 30s and 40s when natural fertility begins to decline. ART is a big business, in Australia the IVF market is worth around $170m and in the US it is a $3 billion market. The SpermSep instrument addresses approximately 1-2% of these markets.

In the 2006 report by the International Committee for Monitoring the Assisted Reproductive Technologies (ICMART) the total number of ART cycles undertaken in the world was estimated at 1 million a year. Based on this, NuSep estimates the total current SpermSep consumables market at $A45m per annum.

• Validate the disposable cartridge in multiple formats.

NuSep Ltd | www.NuSep.com | 22 Rodborough Rd Frenchs Forest NSW 2086 | Ph: 02 8977 9000

NuSep Product Launch

NuSep Launches the MF10: On Time and Under Budget

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MF10 - A New Way of Separating Proteins in Proteomic Applications

In February 2008, NuSep offi cially launched the MF10 instrument at two prestigious proteomics conferences, the fi rst in Australia and th e second in the US. The MF10 can very quickly process small sample s of protein for analysis by mass spectrometry an important applicatio n in proteomic studies. The 13th Annual Proteomics Symposium in Lorne, Australia was attended by 250 national and international scientists with specialist interest in proteomics and protein structure. NuSep Senior Scientist Dr Steven Botto together with Dr Valarie Wasinger of the Bioanalytical Mass Spectrometry Facility at the University of NSW jointly conducted a workshop to showcase the MF10 capabilities.

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The MF10 has been well received with the Lorne conference generatin g over 30 sales leads and a number of potential applications identifi ed.

Our US launch occurred at the Association of Biomolecular Resource Facilities Conference in Salt Lake City on 10th February. This conference was attended by around 600 participants. This was the second trade show NuSep has attended in the US and was as much about creating awareness of the NuSep name as it was about launching the MF10. This was a very successful conference and generated over 60 sales leads for both the MF10 and Gel products.

NuSep’s Tiffany Kanegawa NuSep’s Steven Botto, and Barry Holman at the David Hyatt and Barry PepTalk Conference in San Holman promote the MF10 Diego, January 2008. at Lorne

Our sales team has already begun the follow up process and a number of demonstrations have occurred. The Company has also provided a surprising number of quotes and initial sales are expected to occur in the next two months. Sales of the MF10 will generate income from both initial instrument sales and ongoing consumables sales. The MF10 compliments our current Gel products and, in fact, most of the sales leads from these conferences were for both the Gels and the MF10 unit.

Acquisition Update

As previously announced, NuSep has been scanning the market for suitable acquisition and licensing opportunities. The Company is actively pursuing a number of new product licenses. Separately, the Company has raised the internal rate of return (IRR) required in its acquisition search because of the higher rate of return generated by its own internal sales growth. The Company will continue to monitor this situation.

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The MF10 has been well received with the Lorne conference generating over 30 sales leads and a number of potential applications identifi ed.

800 500 108 | sales@NuSep.com PG 03 Ordering | www.NuSepStore.com | USA Ph: 1 877 592-1060 | Australia Ph:1 800 500 108 | sales@NuSep.com

NuSep Financial Update

On Track to Achieve Breakeven in June

On Track to Achieve Breakeven In June

NuSep’s half-year results to 31 December 2007 show a loss of $2.6m on revenues of $0.7m. This result is in line with expectations given the significant expenditure on the MF10 development and the SpermSep clinical trials. Further, the Company has made significant advances in ramping up gel production required to meet sales forecasts in the second half of the year.

The forecast for the second half of the 2007/08 year is a loss of $2m on sales of $1.5m, with the Company achieving a monthly breakeven in June 2008. NuSep has budgeted a full year profit in the 08/09 year.

Achievements to December ’07

• Expanded gel production capacity – NuSep has more than doubled its production capacity and is now capable of producing 35,000 gels per month. The gels pass rate has also improved to levels above 75%.

• Finalised the MF10 Proteomics Unit – The MF10 design was finalised allowing NuSep to order tooling and production parts as well as producing initial marketing material. The product was launched for sale in February 2008.

• SpermSep Clinical Trials – Patient recruitment and clinical assessment of NuSep’s sperm separation device has been completed with 18 patients undergoing IVF treatment at Westmead Fertility Centre. Official results of the trial were released in March 2008.

Second Half Sales Performance

Direct sales of the Gels in the US have started to grow following the appointment of Barry Holman as VP of Sales. Direct sales will be further boosted as NuSep’s Atlanta, USA facility came online at the end of March 2008, (see report below). Gel sales under the Pierce OEM name have more than trebled over the last 3 months and forward orders indicate that this level of sales will continue.

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NuSep Sales $ and Production Growth
500,000
Sales $
Production Units
400,000
300,000
200,000
100,000
0
1. Quarter 2. Quarter 3. Quarter
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The Company has resolved to setup a Customer Service function in both the US and Australia. Finally, NuSep is also planning to release new gel products during this period. These initiatives will not only boost revenues but support NuSep’s reputation as a market innovator in the field of BioSeparations.

Second Half Production Performance

Production has also seen significant improvements over the last 6 months. The Company achieved a monthly production rate of 35,000 Gels in December 2007. While this is an impressive increase, in February, the Company achieved a daily production rate of 4,000 gels in one production shift. This translates to a monthly production rate of 64,000 gels at an 80% pass rate. To further increase production the Company can run up to 3 production shifts per day. Well done to the production team lead by Dr Greg Rogers, NuSep’s Director of Operations.

Sales – Forecast

Sales revenue has doubled from the first quarter to the second quarter ending 31 December 2007. Looking forward, projections based on confirmed orders indicate that sales will reach double digit growth in the third quarter. This trajectory is expected to continue in the fourth quarter as sales momentum for the MF10 increases and a number of new gel products are launched.

NuSep Atlanta Facility

NuSep has signed a lease for a 2,500 square feet (270 square meters) facility in Atlanta, Georgia, USA. This facility will be the US headquarters for NuSep and the US distribution centre for the Gels and MF10. It will also house our US customer service function.

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The facility is now operational and replaces the fulfilment house we used in Atlanta. The cost of this outsourced distribution facility had reached the point where it was more economical for the Company to establish and run its own facility. In addition, by having our own people on the ground, our US customers will receive a better level of service, at both the technical level and in delivery of their orders. It is expected that this will further accelerate the US Gel and MF10 Sales.

Redefining BioSeparations through Innovation and Simplification