Company Report for the Year Ended 31st December 2007

Company Report for the Year Ended 31st December 2007 Service Driven. Quality Focused. Global Perspective.

Company Report 2007 01 Leading the Way We have cemented our place as the nation s leading early phase clinical trials facility. Service Driven Each Sponsor is assigned an experienced project manager and a dedicated, study-specific research co-ordinator. Working closely with major hospital-based principal investigators, Nucleus Network s service and commitment is unparalleled. Chairman s Report With the addition of our new facility at Austin Health, Nucleus Network has delivered on its promise of being an industry leader in Australia in the area of early phase clinical trials. Early phase clinical trials are a vital step in the process of bringing new and safe medicines to the community. Every medicine that is sold over the counter or by prescription has undergone stringent clinical testing to ensure it is safe and effective, and it is this process that is undertaken at Nucleus Network. The clinical trials performed at Nucleus Network involve either healthy volunteers or patients with specific medical conditions. We rely heavily on community involvement in this process, and are grateful for the time and effort offered by our participants, without whom new medicines would not reach the people who need them most. ceo s report Clinical trials such as those conducted by Nucleus Network require an extraordinary degree of skill, expertise, care and diligence. As an industry leader, Nucleus follows strict adherence to the highest standards of clinical research, conducted in accordance with international regulatory requirements and expectations. The company is committed to best practice industry-wide and as such regularly provides training for researchers and medical staff involved in clinical trials in Australia and overseas. Chief executive officer Andrew Giddy has continued to attract the best staff to his organisation with a wide range of skills, able to assist biotechnology companies in the development of new therapies and in first-in-man studies. The education and consulting arms of Nucleus Network, in addition to its clinical trials activities, mean the company and its staff are at the top of their game at all times. We are grateful for the assistance and input of our industry partners, without whom our work could not continue especially The Alfred Hospital, Austin Health and our partners on the AMREP campus. Most importantly we are grateful for the tremendous support we receive from small and large pharmaceutical and biotechnology companies, here and overseas. It is their confidence and repeat business that has enabled us to grow into the world-class organisation we are today and one of which we can all feel proud. Professor Garry Jennings AM

02 Company Report 2007 03 Community Benefits Australia has the opportunity to continue to make great advances in the vital area of clinical trials. First-in-man testing of new medications is crucial to our ability to keep pace with medical discovery, our population and their medical needs, in times of both health and disease. Quality Focused As an industry leader, Nucleus Network follows strict adherence to the highest standards of clinical research, conducted in accordance with international regulatory requirements and expectations. The company is committed to best practice industry-wide and as such, regularly provides training for researchers and medical staff involved in clinical trials in Australia and overseas. CEO s Report From little things big things grow since our last company report Nucleus Network has continued to strive for excellence in clinical research services and we have cemented our place as the nation s leading early phase clinical trials facility. As a sign of our growth and continued return business, in February 2008 we opened a new $2.5 million purpose built 16-bed clinical research centre located at the Austin Hospital in Heidelberg, Melbourne. This new facility increases our capacity for clinical trials, with 46 beds now available between the Austin centre and our 30-bed centre in Prahran, Melbourne. The new partnership with the Austin brings together a formidable group of clinical researchers, medical professionals and key opinion leaders; industry relationships and new research alliances, all of which, working together, will further develop Victoria and Australia s capabilities in clinical research. ceo s report Australia has the opportunity to continue to make great advances in the vital area of clinical trials. First-in-man testing of new medications is crucial to our ability to keep pace with medical discovery, our population and their medical needs, in times of both health and disease. Nucleus Network, a subsidiary of the Baker Heart Research Institute (merging with the International Diabetes Institute in 2008 and to be know as Baker IDI Heart and Diabetes Institute), comprises the Centre for Clinical Studies; Clinical Trials Consulting and Nucleus Network Education. Our comprehensive service offers everything from recruiting volunteers for clinical trials and conducting the trial itself through to expert assistance to biotechnology companies and even educating the industry in best practice (Good Clinical Practice). This three-pronged approach to business ensures that Nucleus Network and its staff are leaders in their field and have a depth of knowledge and understanding of every aspect of the clinical trials and research business, with an expertise and capabilities unparalleled in Australia. We have continued our strong growth in commercial operations and our repeat work from top global pharmaceutical and biotechnology companies is testimony to our expertise and growing critical mass. We see it as a great opportunity to use our infrastructure and our experience to develop the local biotechnology sector in Australia, which is an industry that continues to grow. This company report will provide some of the latest information on our work and success in our field, as well as some of our plans for continuing to improve on Australia s emergent reputation as a leader in early phase clinical research. Dr. Andrew Giddy

04 Company Report 2007 05 The Centre for Clinical Studies and the Austin Centre for Clinical Studies The Centre for Clinical Studies at the Alfred Medical Research and Education Precinct (AMREP) in Prahran, Melbourne, is an unrivalled site for the conduct of clinical trials and is core to the business of Nucleus Network. This 30-bed facility, co-located with The Alfred Hospital, was custom-designed to comfortably conduct early phase clinical trials and is staffed by leading professionals in the clinical trials field. With the expertise of Nucleus Network behind it, it is the nation s premier clinical research facility, as witnessed by our steady growth and strong repeat business from local and international sponsors. Highlights for 2007 include: Over 30 phase I clinical trials conducted Staff growth to over 70 full and part-time staff Two Japanese Caucasian metabolism studies completed Collaboration with specialist Principal Investigators in Dermatology, Oncology, Rheumatology, Gastroenterology, Endocrinology and Respiratory In February 2008 a new 16-bed facility, the Austin Centre for Clinical Studies, was officially launched. This new centre, based at the Austin Hospital in Heidelberg, Melbourne, increases our capacity to conduct trials and also increases our strong suite of industry professionals to undertake the trials, oversee them and provide the best advice for the development of new therapies post-trial. Like the Centre for Clinical Studies AMREP, the Austin Centre has: Direct access to essential services and leading specialists Co-location with a world-class teaching hospital and associated research groups across all three Austin Health campuses Cardiac telemetry to all beds Dedicated processing laboratories and State-of-the-art recreational facilities for in-patients By working hand-in hand, Nucleus Network and Austin Health can draw on the specialised expertise of our group of competent, peer-reviewed clinicians and management staff to undertake world-class clinical research at the highest level of international regulatory expectation. Prof. Albert Frauman, a renowned clinical pharmacologist and director of the drug evaluation unit and Victorian toxicology service has joined as our Austin Centre for Clinical Studies site Medical Director and Principal Investigator for healthy volunteer studies. Collaboration with leading specialist investigators in Alzheimer s Disease, Rheumatology and Oncology are already underway. Clockwise from top left Centre for Clinical Studies, AMREP Laboratory at the Austin Centre for Clinical Studies Patient dining room at Austin Centre for Clinical Studies Purpose-built room at Austin Centre for Clinical Studies Austin Hospital, Heidelberg Burnet Tower at AMREP

06 Company Report 2007 07 Efficient, Effective and Quality Driven Australia s competitive advantage in early phase clinical trials lies in the openness, transparency and timeliness of the current regulatory system. Why Australia? Australia is an excellent location for conducting early phase clinical trials. Australia was one of the first countries in the Asia Pacific region to perform clinical research and has earned a solid reputation for quality and integrity in all aspects of the sector. The number of clinical trials carried out in Australian is increasing around 15 percent per annum. (2006 Frost & Sullivan) demonstrating a vibrant and growing sector. Australia provides trained personnel, adherence to time schedules and quality data for the conduct of clinical trials, and together with Australia s quality health care system, Sponsors are able to access healthy volunteer and patient volunteer pools for specialised therapeutic areas. why Australia? The majority of clinical trials are conducted via the Clinical Trial Notification (CTN) Scheme. The CTN system only requires an institutional ethics committee (IEC) approval, following review by the IEC scientific committee of the investigator s brochure and the study protocol. It is, therefore, possible to obtain Ethics Review Committee approval within 30 days and then lodge a notification (CTN ) to the Therapeutics Good Administration, the Australian pharmaceutical regulator, with acknowledgement received within 7-10 days. Australia provides an efficient regulatory system for first-into-man clinical trials. All clinical trial data generated in Australia are acceptable to the FDA and EMEA All clinical operations are conducted in a robust ethical, legal and regulatory, first world environment which includes a fast tracked regulatory system that does not require IND filings for Phase I studies to commence Global Perspective We are experienced in the conduct of ethnopharmacological studies and work with an extensive database of healthy and patient volunteer groups suitable to meet the needs of the global market place.

08 Company Report 2007 09 Nucleus Network Education Good Clinical Practice Clinical Trials play a pivotal role in bringing new medication to appropriate patient groups. Training in how to conduct clinical trials to the highest ethical standards is the focus of Good Clinical Practice (GCP). GCP guidelines are based on the Declaration of Helsinki and they underpin all clinical trials from concept to long after medication is marketed. In this dynamic medical environment where regulations and methods evolve and change, regular training is essential in order that we work to the highest standard. The education arm of the Nucleus Network business (NNE) is committed to training the clinical trials industry in GCP and offers certificates on completion of study. Courses are offered face-to-face or on-line and are designed around the schedule of the participant. For those who want to build a career in clinical research, NNE offers an internationally recognized certification programme. There are several benefits to obtaining and maintaining certification. Certification assists the public, healthcare professionals and the industry itself by identifying standards for professional practice and provides confidence that those testing our future medicines do so as trained and competent professionals. Between 2003 and mid-2008, Nucleus Network Education trained over 700 industry professionals across Australia and in New Zealand, with a 97 per cent pass rate on certification examination completion. These numbers have grown exponentially in the last two years (refer to graphs), with a significant expansion of the number of external clients trained. NNE also provides a number of scholarships in GCP training to its research partners. In an expansion of its education resources, Nucleus Network Education, partnered in 2007 with global online training company ClinfoSource, based in Danville, California. This partnership is offering online training for clinical trials professionals in the Australia-New Zealand region. The program provides clinical trial investigators, coordinators, research associates and others a solid and practical understanding of clinical trials conduct and management, and of the regulations and ethics central to the drug development process. Nucleus Network has been providing in-class clinical research training to those involved in trials in Australia and New Zealand since 2005. The new collaboration offers courses customised for the Australia-New Zealand region in the web-based format allowing convenient access to GCP training. These online also courses represent a greater depth and breadth to the current in-class GCP course. This high standard, accessible, affordable and flexible clinical research training format is designed to suit the pressures of busy dedicated personnel working in the clinical research area. Number of Registrants 400 350 300 250 200 150 100 50 0 GCP Course Participation 2004 2005 2006 2007 QLD Joint (NSW, SA & WA) NZ VIC Online Courses

10 Company Report 2007 11 Our Senior Clinical Research Team Andrew Giddy CEO, Nucleus Network Andy joined Nucleus Network in 2005 from The Boston Consulting Group (BCG) where he spent five years as a strategy consultant to top Australian companies. Prior to joining BCG, Andy spent nine years in the pharmaceutical industry and was Head of Clinical Development Operations at F. Hoffman-LaRoche AG (Roche) in Switzerland. Andy is a registered Veterinary Physician and Surgeon and has a postgraduate diploma in Bioethics. He has attended executive programmes at both Columbia and London Business Schools. Lisa Nelson General Manager, Nucleus Network Lisa joined the company as one of the founding management executives. In this role, Lisa provides strategic and financial oversight of Nucleus Network s clinical development services and works closely with all our Sponsors. She is also key in developing collaborations and business partnerships nationally and internationally with not-for-profit and independently owned clinical research organisations, academia, research institutes and health-care research organisations, a key strategy for success from Nucleus Network s inception. Craig Rogers Chief Commercial Officer The development and implementation of commercial opportunities for NN Ltd is Craig s responsibility. His role includes negotiation and contracting of new studies, establishment and maintenance of master service agreements with existing clients and participation in the identification and development of vertical and horizontal growth opportunities. He also reviews legal agreements for clinical trials and participation in external industry development groups. Peter Hodsman Medical Director for Nucleus Network As medical director for Nucleus Network, Associate Professor Peter Hodsman holds legal and ethical responsibility for all first-in-man drug trials conducted by the company. He also holds dual specialist recognition in medicine and clinical pharmacology. Kazuko Masuo Deputy Medical Director Dr. Masuo is an experienced medical doctor with 29 years experience in clinical medicine and medical research. She is a certificated cardiologist, nephrologist and endocrinologist, and a fellow and a mentor of the American Heart Association. She graduated from Osaka University Medical School, and completed her PhD in Japan. She has been an Associate Professor of Medicine at Osaka University Graduate School of Medicine, Japan from 1998. Andrew Humberstone Director of Operations Centre for Clinical Studies, AMREP site Andrew is responsible for Operations at the CCS AMREP Site and has overall responsibility at Nucleus Network for project management. Originally from the UK, Andrew is a pharmacist with PhD in drug absorption and pharmacokinetics. He has 10 years experience working in drug development in the pharmaceutical industry in Australia and Europe. Albert Frauman Medical Director Austin Centre for Clinical Studies Professor Albert Frauman holds the Chair in Clinical Pharmacology and Therapeutics at the University of Melbourne, is Director of Clinical Pharmacology and Therapeutics/ Hypertension Services at Austin Health and Co-Director of the Victorian Toxicology Service. He has joined as our Austin Centre for Clinical Studies site Medical Director. Jacqui Waterkeyn Director of Operations Austin Centre for Clinical Studies Jacqui is Involved in the day-to-day management of all aspects of the Austin CCS Clinical Trial Unit. Her role involves an intimate knowledge of all clinical studies conducted at CCS Austin and managing the staff at all levels. Jacqui has a Bachelor of Science degree with honours (UNSW, Sydney) and a PhD in infectious diseases from the University of Melbourne School of Veterinary Science. Robin Luber Nucleus Network Quality Manager Robin Luber is a quality systems professional with 17 years experience in various quality related roles within the pharmaceutical / life science industry. He has been the Quality Manager at Nucleus Network since April 2006. Robin heads up the Quality Assurance department that provides QA services to the organisation with the primary responsibility of managing the company quality system for the benefit of both internal and external customers. Robyn Lichter Director of Education and Training Nucleus Network Education Robyn is also Head of the Association for Clinical Research Professionals (ACRP) Australian/New Zealand Chapter and is the key liaison for Nucleus Networks exclusive, enduring national franchise with ACRP. Together with partners in Education and Training, Robyn co-ordinates the delivery of in-class and on-line modules for Good Clinical Practice training and certifications. Her role is to co-ordinate skills and knowledge programs for clinicians and researchers which enhance the performance of researchers in clinical trials.

12 Balance Sheet as at 31 December 2007 Income Statement for the Year Ended 31 December 2007 Independent Auditor s Report 2007 2006 ASSETS Current assets Cash & cash equivalents 371,524 1,140,625 Trade & other receivables 3,396,215 1,532,326 Prepayments 27,630 21,931 Total current assets 3,795,369 2,694,882 Non-current assets Property, plant & equipment 2,258,287 335,693 Total non-current assets 2,258,287 335,693 TOTAL ASSETS 6,053,656 3,030,575 LIABILITIES Current liabilities Trade and other payables 2,079,351 1,477,990 Interest-bearing loans & borrowings 360,000 - Non-interest-bearing loans & borrowings 287,978 287,978 Provisions 408,475 238,551 Unearned revenue 766,223 292,634 Total current liabilities 3,902,027 2,297,153 Non-current liabilities Interest-bearing loans & borrowings 440,000 - Non-interest-bearing loans & borrowings - - Lease liability 13,285 - Provisions 64,287 26,987 Total non-current liabilities 517,572 26,987 TOTAL LIABILITIES 4,419,599 2,324,140 NET ASSETS 1,634,057 706,435 EQUITY Equity attributable to equity holders - - Retained surplus 1,634,057 706,435 TOTAL EQUITY 1,634,057 706,435 1 Jan 2007 1 Jan 2006 31 Dec 2007 31 Dec 2006 Revenue Rendering of services 12,645,662 8,709,786 Rental income 500 23,000 Finance income 32,471 15,896 12,678,633 8,748,682 Cost of services (8,095,471) (5,617,496) Gross profit 4,583,162 3,131,186 Other income 104,433 147,071 Marketing expenses (53,415) (56,218) Occupancy expenses (384,434) (340,120) Administrative expenses (3,090,030) (1,955,655) Depreciation expense (216,349) (81,800) Loss on disposal of property, plant & equipment (4,440) - Surplus before tax & finance costs 938,927 844,464 Finance costs (11,305) (985) Surplus before income tax 927,622 843,479 Income tax expense - - Surplus after tax 927,622 843,479 Cash Flow Statement as at 31 December 2007 Cash flows from operating activities Receipts from customers (incl of GST) 12,459,585 9,239,976 Payments to suppliers and employees (incl of GST) (11,976,469) (8,220,108) Interest received 32,471 15,896 Borrowing costs (11,305) (985) Receipt of government grants 70,000 75,046 Net cash flows from (used in) operating activities 574,282 1,109,825 Cash flows from investing activities Proceeds on sale of property, plant & equipment 928 - Purchase of property, plant & equipment (2,144,311) (141,755) Net cash flows from (used in) investing activities (2,143,383) (141,755) Cash flows from financing activities Proceeds from borrowings 800,000 - Proceeds from borrowings from parent entity - 61,515 Net cash flows from financing activities 800,000 61,515 Net increase (decrease) in cash and cash equivalents (769,101) 1,029,585 Cash and cash equivalents at beginning of period 1,140,625 111,040 Cash and cash equivalents at end of period 371,524 1,140,625 The summary financial information provided above has been extracted from the audited general purpose financial statements of Nucleus Network Limited. The summary financial information does not include all the information and notes normally included in a statutory set of financial statements. A full set of audited general purpose financial statements can be obtained by contacting the Company directly on +61 (3) 9076 8900. The statutory financial statements (from which the summary financial information has been extracted) have been prepared in accordance with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standard ( AIFRS ). The statutory financial statements were audited by Ernst & Young Australia and their unqualified audit opinion is shown above and is contained in the statutory financial statements.

Nucleus Network, Burnet Tower, AMREP Precinct Business Address 5th Floor, Burnet Tower, AMREP Precinct 89 Commercial Road Melbourne, Victoria, Australia 3004 Tel +613 9076 8892 Fax +613 9076 8911 Fax +613 9076 8940 Mailing Address PO Box 6083 St Kilda Road Central Melbourne, Victoria, Australia 8008 Nucleus Network, Harold Stokes Building, Austin Site Business Address C/O Austin Centre for Clinical Studies Levels 8 and 9, Harold Stokes Building 145 Studley Road Heidelberg, Victoria, Australia 3004 Tel +613 9496 6700 Fax +613 9496 6724 Mailing Address PO Box 5555 Heidelberg, Victoria, Australia 3084 Email contactus@nucleusnetwork.com.au Email www.nucleusnetwork.com.au Nucleus Network Ltd ABN 39 102 450 706 trading as Centre for Clinical Studies, Clinical Trials Consulting, Nucleus Network Education and in association with its network partners.