Melbourne, Australia and Vevey, Switzerland, 28 April 2006 Phosphagenics Limited (“Phosphagenics”), the Australian Stock Exchange (ASX:POH) and the London Stock Exchange’s Alternative Investment Market (AIM:PSG) listed pharmaceutical and nutraceutical company, and Nestlé Nutrition, a unit of Nestlé S.A. the world's biggest food and beverage company, today announce that they have entered into a research agreement to develop Phosphagenics’ Phospha E^® for use in Nestlé Nutrition's products. Products containing this superior form of vitamin E have the potential to play a role in the prevention and treatment of metabolic syndrome.

Under the terms of the agreement, Nestlé Nutrition will contribute some of the funding towards a full dose-response preclinical study of Phospha E^®, before full scale evaluation of the product in humans.  Phospha E^® has been shown in animal trials to lower blood cholesterol and triglyceride levels and to prevent or reduce arterial plaque formation, as well as inhibiting the main inflammatory pathways involved in metabolic syndrome.

In return, Nestlé Nutrition has obtained an option to license Phospha E^® for its use in nutritional products that target the prevention and treatment of metabolic syndrome. Upon completion of the preclinical trials, Nestlé Nutrition may exercise its option, upon payment of an option fee. The agreement requires that Nestlé Nutrition launch a product within 12 months of regulatory approval of the product and claims, and that Phosphagenics will be responsible for the manufacture of and sale to Nestle Nutrition of Phospha E^®.

Harry Rosen, Managing Director of Phosphagenics, said “Phosphagenics is delighted to have signed this agreement with Nestlé Nutrition, which builds on our collaborative work so far. As one of the world’s largest nutrition companies, Nestlé Nutrition is the ideal partner to exploit the potential of Phospha E^® in nutritional products”.

About metabolic syndrome
Metabolic syndrome is a multifactorial risk factor for cardiovascular disease and diabetes. The root causes of metabolic syndrome are overweight/obesity, physical inactivity, and genetic factors.  It is estimated that about 27% of adults in the US have metabolic syndrome and that one in three overweight or obese people in the US have this condition.  The condition is being diagnosed with increasing frequency.

About Phosphagenics  
Phosphagenics is a pharmaceutical and nutraceutical company with a diversified portfolio of technologies encompassing drug delivery, drug enhancement, and active ingredients for dietary supplements, functional foods and personal care products. It is based in Melbourne, Australia. Its shares are listed on the Australian Stock Exchange (POH) and the London Stock Exchange's Alternative Investment Market (PSG). Further information regarding Phosphagenics can be found at www.phosphagenics.com.

About Nestlé Nutrition
Nestlé Nutrition is an autonomous business operation within the Nestlé group that manages and develops the group's core nutrition business.  Through science-based nutrition products and services, Nestlé Nutrition will help enhance the quality of people's lives by supporting health and providing care for specific consumer groups with special nutrition needs at every stage of life.  Its product portfolio – covering infant nutrition, healthcare nutrition, and performance nutrition – includes such trusted and well-recognised brands as: NAN, LACTOGEN, NESLAC, NUTREN, PEPTAMEN and POWERBAR.

For further information please contact:

Australia:

Phosphagenics Limited : Harry Rosen, Managing Director

Telephone: +61 3 9605 5900

United Kingdom:

Northbank Communications : Rowan Minnon

Telephone : Direct line: 44 (0) 20 1886 8154

r.minnion@northbankcommunications.com