SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 20-F

(Mark One)
[]         REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                                       OR


[X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED JUNE 30, 2005
                         COMMISSION FILE NUMBER: 0-51373

                                       OR

                  [ ] TRANSITION REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to
                       Commission file number: 0-________
                                       OR
                [ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
         Date of event requiring this shell company report..............
                     For the transition period from      to


                        CHEMGENEX PHARMACEUTICALS LIMITED

             (Exact name of Registrant as specified in its charter)
                                    AUSTRALIA
                 (Jurisdiction of incorporation or organization)

                                  PIGDONS ROAD
                                   WAURN PONDS
                            P.O. BOX 1069, GROVEDALE
                             VICTORIA 3216 AUSTRALIA
                       TELEPHONE NUMBER: 011-613-5227-2752
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
                                      NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act:
              ORDINARY SHARES WITHOUT PAR VALUE ("ORDINARY SHARES")

             AMERICAN DEPOSITARY SHARES EACH REPRESENTING THE RIGHT
                         TO RECEIVE 15 ORDINARY SHARES

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:
                                      NONE

Indicate the number of outstanding shares of each of the issuer's class of
capital or common stock as of June 30, 2005:
                 114,797,616 ORDINARY SHARES WITHOUT PAR VALUE

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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report(s)) and (2) has been subject to such filing
requirement for the past 90 days.
                                   Yes/No       YES

                      Indicate by check mark which financial statement item the
registrant has elected to follow.

                              Item 17 X        Item 18 __



(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
                                                                  | | Yes | | No


            Please send copies of notice and communications from the
                     Securities and Exchange Commission to:

                                  Ross Kaufman
                             Greenberg Traurig, LLP
                                 200 Park Avenue
                            New York, New York 10166

                                       2
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<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

                                                                                                               PAGE

<S>                                                                                                              <C>
GLOSSARY..........................................................................................................5

PART I............................................................................................................7

   ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS..............................................7

   ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE............................................................7

   ITEM 3.     KEY INFORMATION....................................................................................7
     A.      Selected consolidated financial data.................................................................7
     B.      Capitalization and indebtedness.....................................................................10
     C.      Reasons for the offer and use of proceeds...........................................................10
     D.      Risk factors........................................................................................10

   ITEM 4.     INFORMATION ON THE COMPANY........................................................................18
     A.      History and development of the Company..............................................................18
     B.      Business overview...................................................................................19
     C.      Organizational structure............................................................................40
     D.      Property, plant and equipment.......................................................................40

   ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS......................................................41
     A.      Operating results...................................................................................45
     B.      Liquidity and capital resources.....................................................................49
     C.      Research and product development programs...........................................................50
     D.      Trend information...................................................................................56
     E.      Off-balance Sheet Arrangements......................................................................56
     F.      Tabular Disclosure of Contractual Obligations.......................................................56
     G.      Assets Acquired in a Business Combination to be used in Research & Development Activities...........56

   ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES........................................................58
     A.      Directors and senior management.....................................................................58
     B.      Compensation........................................................................................59
     C.      Board practices.....................................................................................60
     D.      Employees...........................................................................................65
     E.      Share ownership and options.........................................................................66

   ITEM 7.     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.................................................67
     A.      Major shareholders..................................................................................67
     B.      Related party transactions..........................................................................68
     C.      Interests of experts and counsel....................................................................69

   ITEM 8.     FINANCIAL INFORMATION.............................................................................69
     A.      Consolidated statements and other financial information.............................................69
     B.      Significant changes.................................................................................69

   ITEM 9.     THE OFFER AND LISTING.............................................................................70
     A.      Offer and listing details...........................................................................70
     B.      Plan of distribution................................................................................71
     C.      Markets.............................................................................................71
     D.      Selling shareholders................................................................................71
     E.      Dilution............................................................................................72
     F.      Expenses of the issue...............................................................................72

   ITEM 10.    ADDITIONAL INFORMATION............................................................................72
     A.      Share capital.......................................................................................72
     B.      Constitution........................................................................................72
     C.      Material contracts..................................................................................72
     D.      Exchange controls and other limitations affecting security holders..................................72
     E.      Taxation............................................................................................73
     F.      Dividends and paying agents.........................................................................79

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     G.      Statement by experts................................................................................79
     H.      Documents on display................................................................................79
     I.      Subsidiary information..............................................................................80

   ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................................80

   ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES............................................80
     A       Debt Securities.....................................................................................80
     B       Warrants and Rights.................................................................................80
     C       Other Securities....................................................................................81
     D       American Depositary Shares..........................................................................91

PART II..........................................................................................................82

   ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES...................................................82

   ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHT OF SECURITY HOLDERS AND USE OF PROCEEDS.......................82

   ITEM 15.    CONTROLS AND PROCEDURES...........................................................................82

   ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT..................................................................83

   ITEM 16B    CODE OF ETHICS....................................................................................83

   ITEM 16C    PRINCIPAL ACCOUNTANT FEES AND SERVICES............................................................83

   ITEM 16D.   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES........................................84

   ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS............................84

PART III.........................................................................................................85

   ITEM 17.    FINANCIAL STATEMENTS..............................................................................85

   ITEM 18.    FINANCIAL STATEMENTS..............................................................................85

   ITEM 19.    EXHIBITS..........................................................................................85
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                                    GLOSSARY



CML                        Chronic Myelogenous Leukemia is a malignant cancer of
                           the bone marrow that causes rapid growth of the
                           blood-forming cells (known as myeloid precursors) in
                           the bone marrow, peripheral blood, and body tissues.
                           CML can occur in adults (usually middle-aged) and
                           children. CML affects 1 to 2 people per 100,000 and
                           accounts for 7-20% cases of leukemia.

DACH-AC-PT                 (1R,2R-diaminocyclohexane) - (trans-diacetato) -
                           (dichloro) - platinum(IV) is a novel platinum
                           analogue that has potential to treat several cancer
                           types. The molecule has been licensed by the M. D.
                           Anderson Cancer Center in Houston, Texas to ChemGenex
                           Pharmaceuticals (CXS299). DACH-Ac-Pt was developed
                           with the goal of overcoming the limitations of
                           existing platinum-based anti-cancer therapeutics
                           currently on the market.

GAD                        Glutamic Acid Decarboxylase is an enzyme found on the
                           surface of beta cells in the pancreas. Levels of GAD
                           in the blood are associated with an autoimmune
                           process that leads to inflammation and destruction of
                           beta cells, usually resulting in the development of
                           type 1 diabetes. Diagnostic tests for GAD can be used
                           to indicate an increased risk of type 1 diabetes.

HHT                        Homoharringtonine is a natural compound isolated from
                           the Chinese evergreen tree Cephalotaxus harringtonia.
                           HHT has a broad antitumor activity in rodents and
                           antileukemic effects in humans. HHT is used in China
                           for the treatment of leukemia.

MDS                        Myelodysplastic Syndrome is a group of conditions
                           caused by abnormal blood-forming cells of the bone
                           marrow. In MDS, the bone marrow cannot produce blood
                           cells effectively, and many abnormal cells are
                           destroyed before they leave the bone marrow or
                           shortly after entering the bloodstream. This results
                           in low blood counts causing anemia and other
                           complications. It is estimated that there are between
                           10,000 and 15,000 new cases of MDS in the USA each
                           year.

NAT-2                      N-Acetyltransferase 2 is an enzyme that metabolizes
                           aromatic amines and hydrazines in the body.
                           Variations in the NAT-2 genes of humans (the NAT-2
                           genotype) are associated with NAT-2 activity, and
                           individuals can be classified as being fast or slow
                           acetylators. Variation in NAT-2 activity causes
                           different rates of metabolic conversion of molecules
                           ranging from caffeine to various therapeutics.

PSAMMOMYS OBESUS           A species of gerbil also known as the sand rat or the
                           Israeli sand rat. The animal is a  well-defined model
                           for dietary induced type 2 diabetes.

PSARL                      Presenilin-Associated Rhomboid-like protein is a
                           protein located within the mitochondria that appears
                           to be involved in the regulation of mitochondrial
                           function and energy balance. The mitochondria are
                           sub-cellular organelles that covert energy stored in
                           molecules such as glucose to forms that can be
                           directly used by the cell.

RATTUS NORVEGICUS          A common species of laboratory rat also known as the
                           brown rat or the Norway rat.

SGIP1                      SH3-Domain GRB2-Like Interacting Protein 1 is a
                           protein that appears to be involved in the regulation
                           of the internalization of neurotransmitter receptors
                           in the brain. Specifically, it appears that SGIP1 is
                           a novel brain-specific component of the neuronal
                           molecular machinery that regulates energy balance in
                           mammals.

                                       5
<PAGE>

                          USE OF CERTAIN DEFINED TERMS

As used herein the terms "ChemGenex" and the "Company" refer to ChemGenex
Pharmaceuticals Limited and its consolidated subsidiaries as at the date of
filing.

          PRESENTATION OF FINANCIAL INFORMATION; AVAILABLE INFORMATION

The Company's fiscal year ends on June 30 of each year. References in this
document to a particular year are to the fiscal year unless otherwise indicated.
The Company prepares annual reports containing consolidated financial statements
and an opinion thereon by an independent registered public accounting firm. Such
financial statements are prepared on the basis of accounting principles
generally accepted in Australia ("A GAAP"). This Annual Report on Form 20-F
contains a reconciliation to accounting principles generally accepted in the
United States of America ("U.S. GAAP") of net loss and shareholders' equity. The
Company also prepares half-yearly reports prepared in conformity with A GAAP,
which contain interim condensed consolidated financial information that are
subjected to a review by an independent registered public accounting firm.

The Company's consolidated financial statements are reported in Australian
dollars. In this Annual Report on Form 20-F, references to "U.S. dollars", US$
or "$" are to U.S. currency and references to "Australian dollars" or "A$" are
to Australian currency.


                ENFORCEMENT OF LIABILITIES AND SERVICE OF PROCESS

The Company is incorporated under the laws of New South Wales, Commonwealth of
Australia. The majority of its directors and executive officers, and the experts
named in this Annual Report, reside outside the U.S. A substantial part of the
Company's assets, its directors' and officers' assets and such experts' assets
are located outside the U.S. As a result, it may not be possible for investors
to effect service of process within the U.S. upon the Company or its directors,
executive officers or such experts, or to enforce against them or the Company,
judgments obtained in U.S. courts based upon the civil liability provisions of
the federal securities laws of the U.S. In addition, the Company has been
advised by its Australian lawyers, McCullough Robertson, that there is doubt
that the courts of Australia will enforce against the Company, its officers,
directors and experts named herein, judgments obtained in the U.S. based upon
the civil liability provisions of the federal securities laws of the U.S. or
will enter judgments in original actions brought in Australian courts based upon
the federal securities laws of the U.S.



                           FORWARD-LOOKING STATEMENTS

Except for historical information contained herein, the matters discussed in
this Annual Report are "forward-looking statements." These forward-looking
statements include, but are not limited to, statements about the Company's and
its strategic partners' respective plans, objectives, expectations, estimates,
strategies, product approvals and development plans, and anticipated financial
results. These statements are typically identified by the use of terms such as
"anticipates," "believes," "estimates," "expects," "intends," "may," "plans,"
"could," "should," "seeks," "will," "would" and similar words. These statements
are based on the Company's current expectations and beliefs concerning future
events but are subject to risks and uncertainties, including but not limited to
economic, competitive, governmental and technological factors affecting the
Company's operations, results of operations, markets, products, prices and
prospects, and other factors discussed below and elsewhere in this Annual
Report. These factors may cause the Company's results to differ materially from
the statements made in this Annual Report or otherwise made by or on behalf of
the Company. Item 3.D. "Risk Factors" is a summary (not listed in order of
priority) of some of the risk factors that could adversely affect the Company's
results. The risks and uncertainties described are not the only ones the Company
faces. Additional risks not presently known to the Company or other factors not
perceived by the Company to present significant risks to its business at this
time also may impair its business operation. The Company does not undertake to
update any of these forward-looking statements or to announce the results of any
revisions to these forward-looking statements except as required by law.

                                       6
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                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.


ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.



ITEM 3.  KEY INFORMATION

A.       SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected financial data of the Company as of the
dates and for each of the periods indicated. You should read the selected
financial data set forth below together with Item 5. "Operating and Financial
Review and Prospects" as well as the Company's audited consolidated financial
statements and notes thereto appearing elsewhere in this Annual Report.

The selected consolidated financial data as of June 30, 2005 and 2004 and for
each of the three years in the period ended June 30, 2005 have been derived
from, and are qualified in its entirety by reference to, the Company's audited
consolidated financial statements and notes thereto included elsewhere in this
Annual Report. The selected financial data as of June 30, 2003, 2002 and 2001
and for each of the two years in the period ended June 30, 2002 have been
derived from, and are qualified in its entirety by reference to the Company's
audited consolidated financial statements and notes thereto which are not
included in this Annual Report.


The Company prepares its consolidated financial statements in accordance with A
GAAP, which differ in certain significant respects from U.S. GAAP. A description
of the significant differences and reconciliations of net loss and shareholders'
equity for the periods and as of the dates therein indicated are set forth in
Note 25 to the Company's consolidated financial statements included elsewhere
herein.

Selected consolidated financial data as of and for the years ended June 30,
2005, 2004, 2003, 2002 and 2001 is set out below.

                                       7
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<TABLE>
<CAPTION>
                                            --------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL                 2005           2004           2003           2002           2001
PERFORMANCE DATA IN ACCORDANCE WITH A         AS RESTATED
GAAP:                                                  a)
                                            --------------------------------------------------------------------------

                                                                  A$'000, EXCEPT PER SHARE DATA
<S>                                                 <C>            <C>            <C>            <C>            <C>
Revenues from ordinary activities                   4,095          3,595          5,205          4,688          4,683

Research and development expenditure              (4,621)        (4,387)        (4,651)        (4,853)        (6,153)
Employee costs(b)                                 (2,226)          (828)          (818)          (664)              -
Patent costs                                        (447)          (473)          (145)          (244)           (66)
Legal costs                                         (106)            (3)           (82)        (1,167)              -
Depreciation                                        (270)          (258)          (256)          (111)          (184)
Amortization                                        (848)           (31)              -              -              -
Non-current asset write-down(c)                         -              -          (294)              -        (2,139)
Borrowing costs expense                                 -              -              -            (6)           (25)
Other expenses from ordinary activities(d)        (2,238)          (786)          (846)        (5,109)        (2,659)
                                            --------------------------------------------------------------------------
Operating loss                                    (6,661)        (3,171)        (1,887)        (7,466)        (6,543)
Profit on sale of subsidiary                            -              -              -              -          3,125
                                            --------------------------------------------------------------------------
Net loss                                          (6,661)        (3,171)        (1,887)        (7,466)        (3,418)
                                            ==========================================================================

Basic and diluted loss per share (A$)(e)           (0.06)         (0.05)         (0.04)         (0.20)         (0.09)
Basic and diluted weighted average number
of shares(e)                                 105,707,630    57,678,611     47,598,708     37,904,261     37,816,968


                                            --------------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL                  2005          2004           2003
PERFORMANCE DATA IN ACCORDANCE WITH U.S.
GAAP
                                            --------------------------------------------
                                              A$'000, EXCEPT PER SHARE DATA
Revenues from ordinary activities                    3,828         3,490          4,997
Net loss                                           (6,187)      (20,060)        (1,943)
Basic and diluted loss per share (A$)               (0.06)        (0.35)         (0.04)


                                              --------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL                   2005           2004           2003           2002           2001
POSITION DATA IN ACCORDANCE WITH A GAAP:
                                              --------------------------------------------------------------------------
                                                                               A$'000
Cash assets                                           8,512            942          3,059          2,383          7,095
Plant and equipment, net                                587            842          1,067          1,303            345
Total assets                                         25,727         18,834          4,310          4,339          8,304
Long-term debt                                            -              -              -              -             16
Total liabilities                                     1,340          2,121            447          4,728          1,379
Net assets                                           24,387         16,713          3,863          (389)          6,925
Accumulated deficit                                (71,073)       (64,411)       (61,240)       (59,353)       (51,887)
Contributed equity                                   84,593         70,257         54,236         48,097         47,945
Reserves                                             10,867         10,867         10,867         10,867         10,867



                                              ---------------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL                   2005           2004            2003
POSITION DATA IN ACCORDANCE WITH U.S. GAAP
                                              ---------------------------------------------
                                                                  A$'000
Total assets                                          9,718          2,252           4,495
Net assets                                            8,378            131           4,048
Contributed equity                                   84,201         69,865          54,236
</TABLE>

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  (a) The A GAAP consolidated financial statements for the year ended June 30,
      2005 have been restated. Refer to Note 24 to the Company's audited
      consolidated financial statements included elsewhere in this Annual Report
      for a description and summary of the significant effects of the
      restatement.

  (b) In fiscal 2001 the Company was party to an agreement that outsourced all
      employee costs. As such these costs, which cannot be broken out, form part
      of "Other expenses from ordinary activities."

  (c) Non-current asset write-down comprises the carrying amount of investments
      sold and diminution of investments.

  (d) Other expenses from ordinary activities comprise consulting and advisory
      costs (including management fees for fiscal 2002 and 2001), scientific
      advisory board costs, accounting and auditing costs, costs associated with
      original registration and NASDAQ listing, travel expenses and outsourced
      employee costs for fiscal 2001.

  (e) There was a 5:1 share split in fiscal 2001. Per share amounts and weighted
      average of number of shares outstanding for fiscal 2001 has been adjusted
      retroactively.

DIVIDENDS

No dividend has been paid by the Company in the five fiscal years up to and
including fiscal 2005.



EXCHANGE RATES

The consolidated financial statements of the Company which form part of this
Annual Report are presented in Australian dollars (A$).

The following table sets forth, for the periods and dates indicated, certain
information concerning the noon buying rate in New York City for Australian
dollars expressed in U.S. dollars per A$1.00 as certified for customs purposes
by the Federal Reserve Bank of New York.



MONTH             MONTH'S HIGHEST EXCHANGE RATE  MONTH'S LOWEST EXCHANGE RATE
November 2005                            0.7451                        0.7267
October 2005                             0.7644                        0.7436
September 2005                           0.7767                        0.7453
August 2005                              0.7754                        0.7461
July 2005                                0.7686                        0.7364
June 2005                                0.7810                        0.7472


                                                 AVERAGE
YEARS ENDED JUNE 30,
2005                                              0.7535
2004                                              0.7134
2003                                              0.5847
2002                                              0.5237
2001                                              0.5372

                                       9
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As at December 8, 2005 the Australian dollar closed at US$0.7507

B.       CAPITALIZATION AND INDEBTEDNESS

Not applicable.



C.       REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.



D.       RISK FACTORS

Prospective investors and shareholders should be aware that any investment in
the Company involves a degree of risk and should be made only by those with the
necessary expertise to appraise the investment. In addition to the other
information in this document, the following risk factors should be considered in
evaluating whether to make or hold an investment in the Company. Any or all of
these factors could have a material and adverse effect on the Company's
operational results, financial condition and prospects. Furthermore, the trading
price of ChemGenex shares could decline resulting in the loss of all or part of
any investment therein.


THE COMPANY HAS A HISTORY OF OPERATING LOSSES AND NEGATIVE CASH FLOW AND MAY
NEVER BECOME PROFITABLE

ChemGenex is a development stage company that has a history of operating losses.
These losses have arisen mainly from the costs incurred in research and
development of its products and general administrative costs. For the year ended
June 30, 2005, the Company's net loss was A$6,661,206 and its accumulated
deficit as of June 30, 2005 was A$71,072,449. The Company expects to continue to
incur operating losses over the next three years and may never be profitable. To
date, the Company has generated revenues through research and development
funding from its partners, milestone payments and contract research. In order to
support the research and development of the Company's business, the Company
plans to incur expenses in excess of revenue. The Company's strategy is to
utilize its understanding of the genetics of complex diseases and its expertise
in medicinal chemistry to identify novel targets for therapeutic intervention
and to develop personalized medicines particularly in the field of cancer. The
discovery of novel gene and protein targets and the subsequent development of
therapeutic products based on these targets is an expensive process and the
Company has historically partnered its discovery programs in diabetes and
obesity and in depression with international pharmaceutical companies (Merck
Sante and Vernalis, respectively). The Company's cancer program has led to the
development of two therapeutic agents that are currently in clinical trial in
the U.S. The Company may not develop any products and any other products it may
develop may not generate revenues.


ADDITIONAL FUNDING IS LIKELY TO BE REQUIRED TO GIVE THE COMPANY TIME TO REACH
PROFITABILITY. RAISING SUCH ADDITIONAL FUNDING COULD ENTAIL RESTRICTIONS ON THE
RIGHTS OF HOLDERS OF ORDINARY SHARES. IF THE COMPANY IS UNABLE TO RAISE
ADDITIONAL FUNDS IT MAY HAVE TO CURTAIL ITS OPERATIONS.

The Company's need for capital at any given time depends on a number of factors,
including:

          o    the ability to enter collaborations to support its research and
               development programs;

          o    the amount, and timing, of milestone payments the Company
               receives from its collaborators;

          o    the rate of progress and cost of the Company's research
               activities;

          o    the costs of preparing, filing, prosecuting, maintaining and
               enforcing patent claims and other intellectual property rights;

          o    the costs and timing of obtaining regulatory approvals for the
               Company's products;

                                       10
<PAGE>

          o    the emergence of competing products and other adverse market
               development; and

          o    changes in, or termination of, the Company's existing
               collaboration and licensing arrangements.

The Company may not receive further revenues from collaboration and licensing
agreements or changes in the development of the Company's drug candidates may
cause available capital resources to be used more quickly than expected.

The Company is likely in the future to require additional funds, in addition to
funds received from licensing and collaboration agreements, to continue research
and development. It is likely that the Company will seek funds through further
licensing and collaboration agreements and through additional sale of the
Company's securities. The Company may not be able to secure licensing and
collaboration agreements on satisfactory terms, if at all. Also, the public
markets for issues of biotechnology company securities are volatile and
competitive. The Company may not be able to attract additional funds on
acceptable terms, if at all. The Company also may decide to access the public
equity markets whenever conditions are favorable, even if the Company does not
have an immediate need for additional capital at that time. If the Company
raises additional funds by issuing equity securities, dilution to shareholders
may result. This might be the case, for example, because U.S. investors may not
be able to participate in certain fund raising, such as rights offerings, under
applicable securities laws and may therefore be diluted. Other shareholders may
not have the means to exercise their rights in such an offering, and will see
their interests diluted, and the price at which any further capital raising is
made also may be below the price at which other investors acquired their shares.

If adequate funds are not available, the Company may have to significantly
reduce its research and development programs or obtain funds through licensing
and collaboration agreements at an earlier stage in the drugs' development than
the Company envisaged. If adequate funds are not available on acceptable terms,
its ability to invest in the progress of its development programs and product
portfolio will be materially and adversely affected, with the result that its
prospects are less favorable. Following the issue of 14,900,000 shares at A$0.55
cents each on January 24, 2005 ChemGenex had working capital of approximately
A$10.5 million. Based on the anticipated cash flow requirements of the Company's
existing research and development activities, the Board has concluded that these
funds should be sufficient to support operations into the second half of
calendar 2006. The Board remains confident that adequate funds to continue the
Company's operations will be raised from partnership agreements and/or equity
placements as required in the future.


The Company anticipates a net loss in fiscal 2006.


IF THE COMPANY IS UNABLE TO RETAIN AND ATTRACT KEY EMPLOYEES, ITS SCIENTIFIC AND
MANAGEMENT CAPABILITIES COULD BE REDUCED.

The loss of key employees could weaken the Company's scientific and management
capabilities, resulting in delays in the development of its cancer clinical
trials and broader research programs thus impacting negatively on the Company's
business. ChemGenex is significantly dependent on certain scientific and
management personnel, including Dr. Gregory R. Collier, Dr. Dennis M. Brown, Dr.
James A. Campbell, Harry D. Pedersen, Eric P. Merrigan, Tina Herbert, Dr.
Kenneth R. Walder, and Dr. John Blangero. Although the Company has entered into
employment or consultancy arrangements with each of the Company's key personnel
with the aim of securing their services, the retention of such services cannot
be guaranteed. Companies such as ChemGenex are highly dependent on employees who
have an in-depth and long-term understanding of their companies' technologies,
products, programs, collaborative relationships and strategic goals. The loss of
these key employees and the Company's inability to recruit new employees to
replace them could have a negative impact on the business and prospects of the
Company because the Company's scientific and management capabilities would be
reduced.


THE COMPANY IS DEPENDENT ON ITS ACADEMIC COLLABORATORS, CONSULTANTS AND
SCIENTIFIC ADVISORS AND THEIR CONFIDENTIALITY.

The Company has relationships with collaborators and consultants at academic and
other scientific institutions who conduct research under contractually defined
terms at the Company's request. It is the Company's policy that all of

                                       11
<PAGE>

its employees, academic collaborators, consultants and scientific advisors enter
into confidentiality agreements that control the dissemination of all
intellectual property produced that results from their work for the Company. It
is possible; however, that unauthorized dissemination of such confidential
information could materially adversely affect the Company's business, financial
condition and results of operations. Such collaborators also could enter into
employment agreements or consulting arrangements with competitors.


THE COMPANY MAY NOT BE SUCCESSFUL IN ITS CLINICAL TRIALS PROGRAMS. THESE
PROGRAMS ARE COSTLY, TIME CONSUMING AND OF UNCERTAIN OUTCOME. IF SUCH PROGRAMS
ARE NOT SUCCESSFUL, THE COMPANY MAY INVEST SUBSTANTIAL AMOUNTS OF TIME AND MONEY
WITHOUT DEVELOPING REVENUE-PRODUCING PRODUCTS.

Clinical trials of promising products can take years, the duration depending
among other factors on type, complexity, novelty and intended use of the product
candidate. The Company may fail to successfully complete clinical trials and
bring products to market for a number of reasons, including:

          o    as the Company enters a more extensive clinical program in
               several different diseases, the data generated in these studies
               may not be as compelling as the earlier results;

          o    unforeseen safety issues or side effects;

          o    variability in the number and types of patients available for
               each study, and difficulty in maintaining contact with patients
               after treatment, resulting in incomplete data;

          o    delays resulting from review board action at institutions
               assisting the Company with its clinical trials; and

          o    the failure to obtain required regulatory approvals.


IF THE PRODUCTS THAT THE COMPANY BRINGS TO MARKET ARE NOT COMMERCIALLY
SUCCESSFUL, THE COMPANY'S LIQUIDITY MAY BE ADVERSELY AFFECTED.

The Company's success depends on acceptance of the Company's products by the
market, including physicians and third-party payers, and consequently the
Company's liquidity and viability as a going concern may be adversely affected
if it is unable to achieve market acceptance of its products. Factors that may
affect the rate and level of market acceptance of any of the Company's products
include:

          o    the existence or entry onto the market of superior competing
               products or therapies;

          o    the price of the Company's products compared to competing
               products;

          o    public perception regarding the safety, efficacy and benefits of
               the Company's products compared to competing products or
               therapies;

          o    the effectiveness of the Company's sales and marketing efforts
               and those of the Company's marketing partners;

          o    regulatory developments related to manufacturing or use of the
               Company's products;

          o    the willingness of physicians to adopt a new treatment regimen;
               and

          o    publicity concerning the product type in general.


EVEN IF THE COMPANY'S PRODUCTS ARE APPROVED, THEY MAY STILL FACE LATER
REGULATORY DIFFICULTIES, WHICH COULD IMPAIR ITS ABILITY TO MARKET ITS PRODUCTS
OR FORCE IT TO INCUR SUBSTANTIAL ADDITIONAL EXPENSES.

Even if the Company receives regulatory approval to sell any of its products,
the U.S. Food and Drug Administration ("FDA"), the Australian Therapeutics Goods
Administration or comparable foreign regulatory agencies could require the
Company to conduct post-marketing trials to further evaluate safety and efficacy
or could prevent the Company from using the labeling claims which the Company
would like to use to promote its products. Regulators will undertake periodic
reviews and inspections. If they discover previously unknown problems with a

                                       12
<PAGE>

product or its manufacturing facility or if the Company fails to comply with
regulatory requirements, regulators could:

          o    impose fines against the Company;

          o    impose restrictions on the product, its manufacturer, or the
               Company;

          o    require the Company to recall or remove a product from the
               market;

          o    suspend or withdraw its regulatory approvals;

          o    require the Company to conduct additional clinical trials;

          o    require the Company to change its product labeling; or

          o    require the Company to submit additional marketing applications.

If any of these events occur, the Company's ability to sell its products will be
impaired and the Company may incur substantial additional expense to comply with
the regulatory requirements. In addition, in certain countries, even after
regulatory approval, the Company is still required to obtain price reimbursement
approval. This may delay the marketing of the Company's products or, when
approval cannot be obtained, mean that the product cannot be sold at all.


IF THE COMPANY IS UNABLE TO KEEP PACE WITH TECHNOLOGICAL CHANGE OR WITH THE
ADVANCES OF ITS COMPETITORS, ITS TECHNOLOGY AND PRODUCTS MAY BECOME OBSOLETE OR
NON-COMPETITIVE.

The biotechnology and pharmaceutical industries are subject to rapid
technological change which could affect the success of the Company's drugs or
make them obsolete. The field of biotechnology is characterized by significant
and rapid technological change. Research and discoveries by others may result in
medical insights or breakthroughs which render the Company's drug candidates
less competitive or even obsolete before they generate revenue.


THE COMPANY'S BUSINESS FACES INTENSE COMPETITION FROM MAJOR PHARMACEUTICAL
COMPANIES AND SPECIALIZED BIOTECHNOLOGY COMPANIES ENGAGED IN THE DEVELOPMENT OF
DRUGS DIRECTED AT THE CONDITIONS AND DISORDERS THAT ARE THE FOCUS OF THE
COMPANY'S THERAPEUTICS PROGRAMS. AS A RESULT ITS COMPETITORS MAY BE ABLE TO
ESTABLISH SUPERIOR PROPRIETARY POSITIONS.

The Company's competitors in the biotechnology and pharmaceutical industries may
have superior research and development capabilities, drugs, manufacturing
capability or marketing expertise. Many of the Company's competitors have
significantly greater financial and human resources and may have more experience
in research and development. As a result, the Company's competitors may develop
safer or more effective drugs, or implement more effective sales and marketing
programs or be able to establish superior proprietary positions. In addition,
the Company anticipates that it will face increased competition in the future as
new companies enter the Company's markets and alternative drugs become
available.

The Company's products under development are expected to address a broad range
of markets including, but not limited to anti-cancer drugs for the treatment of
chronic myelogenous leukemia ("CML") and other forms of leukemia, prostate
cancer and other solid tumors, Type 2 diabetes, obesity and depression. The
Company's competitive position will be determined in part by the potential
indications for which the Company's products are developed and ultimately
approved by regulatory authorities. The relative speed with which the Company or
its collaborative partners can develop products, complete the clinical trials
and approval processes and supply commercial quantities of the products to the
market, are expected to be important competitive factors.

The Company's competitors may be developing products that could compete with the
products the Company is developing. The Company and its collaborators will need
to persuade patients and physicians to adopt its products over its competitors'
products.

In the field of cancer therapeutics the Company faces intense competition from
major pharmaceutical companies and specialized biotechnology companies engaged
in the development of product candidates and other therapeutic products. Several
of these companies have products in the same indications or utilize similar
technologies and/or

                                       13
<PAGE>

personalized medicine techniques, such as Antigenics' HSPPC-70 personalized
cancer vaccine, currently in a Phase 2 trial in CML. Bristol-Myers Squibbs'
Dasatinib BMS-354825 and Novartis' AMN-107 are currently in Phase 2 clinical
trials for CML patients who have developed resistance to Gleevec(R). Supergen
has three Phase 2 studies ongoing with decitabine in CML. Xanthus Life Sciences
is currently conducting a Phase 1/2 study with amonafide malate (listed as an
example product candidate - Refer Item 4B. Business Overview - ChemGenex's
development pipeline) in acute myeloid leukemia. The previous list is indicative
only, and there may be other competitive trials or technologies elsewhere in the
world. Additionally, many of the Company's competitors, including large
pharmaceutical companies, have greater financial and human resources and more
experience than the Company does.

In the fields of "Diabetes and Obesity" and Depression therapeutics the Company
faces competition from several internationally-regarded genomics and target
discovery companies that are active in the search for new potent therapeutics
against these diseases. Companies such as DeCode Genetics, Curagen Corporation
and Exelixis are applying different proprietary technologies to the search for
novel targets.


IF THE HEALTHCARE INDUSTRY LIMITS COVERAGE OR REIMBURSEMENT LEVELS, THE
ACCEPTANCE OF THE COMPANY'S PRODUCTS COULD SUFFER. IT MAY NOT BE ABLE TO SELL
ITS DRUG PROFITABLY.

The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and operations
of healthcare facilities. During the past several years, the healthcare industry
has been subject to increased government regulation of reimbursement rates and
capital expenditures. Among other things, third party payers are increasingly
attempting to contain or reduce healthcare costs by limiting both coverage and
levels of reimbursement for healthcare products and procedures. Cost control
policies of third party payers, including government agencies, may adversely
affect acceptance and use of the Company's product line.


IF THE COMPANY IS UNABLE TO SUCCESSFULLY ESTABLISH AND PROTECT ITS INTELLECTUAL
PROPERTY, WHICH IS SIGNIFICANT TO THE COMPANY'S COMPETITIVE POSITION, ITS
COMPETITORS MAY BE ABLE TO TAKE ADVANTAGE OF ITS RESEARCH AND DEVELOPMENT
EFFORTS.

The Company's success depends in part on its ability to obtain and maintain
protection for its inventions and proprietary information, so that it can stop
others from making, using or selling its inventions or proprietary rights. The
Company owns a portfolio of patents and patent applications. There is a
significant delay between the time of filing of a patent application and the
time its contents are made public, and others may have filed patent applications
for subject matter covered by the Company's pending patent applications without
the Company being aware of those applications. The Company's patent applications
may not have priority over patent applications of others and its pending patent
applications may not result in issued patents. Even if the Company obtains
patents, they may not be valid or enforceable against others. Moreover, even if
the Company receives patent protection for some or all of its products, those
patents may not give the Company an advantage over competitors with similar
products.

To develop and maintain its competitive position, the Company also relies on
unpatented trade secrets and improvements, unpatented know-how and continuing
technological innovation, which it protects with security measures it considers
to be reasonable, including confidentiality agreements with its collaborators,
consultants and employees. The Company may not have adequate remedies if these
agreements are breached and the Company's competitors may independently develop
any of this proprietary information.

If the Company fails to obtain adequate protection for its intellectual
property, the Company's competitors may be able to take advantage of the
Company's research and development efforts. The Company's success will depend,
in large part, on its ability to obtain and maintain patent or other proprietary
protection for its technologies in general and, in particular, drugs and
processes. The Company may not be able to obtain patent protection for the use
of certain drug compounds, processes developed by its employees or medical uses
of compounds discovered through its technology. Legal standards relating to
patents covering pharmaceutical or biotechnological inventions and the scope of
claims made under these patents are still developing. There is no consistent
policy regarding the breadth of claims allowed in biotechnology patents. The
Company's patent position is therefore uncertain and involves complex legal and
factual issues. This risk factor is one that faces many companies in the
biotechnology industry and the Company is not aware of any Company-specific
risks.

                                       14
<PAGE>


THE COMPANY MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF DISPUTES RELATING TO
INTELLECTUAL PROPERTY.

The Company may have to initiate litigation to enforce its patent and license
rights. If the Company's competitors file patent applications that claim
technology also claimed by the Company, the Company may have to participate in
interference or opposition proceedings to determine the priority of invention.
An adverse outcome could subject the Company to significant liabilities and
require the Company either to cease using a technology or to pay license fees.

The Company could incur substantial costs in any litigation or other proceeding
relating to patent rights, even if it is resolved in the Company's favor. Some
of the Company's competitors may be able to sustain the costs of complex
litigation more effectively or for a longer time than the Company can because of
their substantially greater resources. In addition, uncertainties relating to
any patent, pending patent or intellectual property litigation could have a
material adverse effect on the Company's ability to bring a technology to
market, enter into collaborations in respect of the disputed or other
technologies, or raise additional funds.


THE COMPANY CANNOT GUARANTEE THAT ITS COLLABORATORS WILL DEVOTE SUFFICIENT
RESOURCES TO COLLABORATIONS WITH THE COMPANY OR THAT THE COMPANY'S TECHNOLOGIES
CAN BE DEVELOPED AND COMMERCIALIZED WITHOUT THESE COLLABORATORS.

The Company's success is dependent on its collaborators and contractors. The
Company's collaborators have substantial responsibility for some of the
development and commercialization of the Company's products. Certain of the
Company's collaborators also have significant discretion over the resources they
devote to these efforts. The Company's success, therefore, will depend on the
ability and efforts of these outside parties in performing their
responsibilities. Currently, ChemGenex's most important collaborators are Merck
Sante (a subsidiary of the German company Merck KGaA) and Vernalis (R&D) Limited
(a subsidiary of the U.K. based listed company Vernalis plc); under the terms of
the contracts establishing the strategic alliances with Merck Sante and Vernalis
either party can terminate the agreement at any time the alliance permits them
to or if either party materially breaches the contract. For additional
information see Item 4B, "Business overview -- Commercial and research and
development collaborations."

The Company's business will rely on these strategic partners. If the
relationship with any one of these partners is adversely affected, the Company's
preclinical or clinical development of product candidates and results of
operations may be slowed or terminated. In addition, the Company will be unable
to provide all of its research, development, manufacturing, marketing or sales
needs and so the Company will depend on contractors providing such services and
upon the effort and skill of the companies providing those services.

The Company cannot guarantee that:

          o    existing collaborative arrangements or license agreements will be
               able to be maintained;

          o    any new collaborative arrangements or license agreements will be
               on favorable terms; or

          o    any collaborative arrangements or license agreements will prove
               successful.

If the Company is unable to continue with any of the existing collaborations
and, following negotiations with the relevant partners, terminates a
collaboration, this may have a negative impact on the reputation of the Company
or its ability to secure additional collaborations in the future.


THE COMPANY MAY NOT BE ABLE TO BRING ANY OF THE DRUG CANDIDATES IT IS DEVELOPING
TO MARKET.

Development of drug candidates involves a lengthy and complex process. Any drug
candidate that the Company seeks to offer commercially to the public must be put
through extensive research, development and pre-clinical and clinical testing
which will be costly to the Company. This development process takes several
years. In addition, the Company or its partners will need to obtain regulatory
approvals to conduct clinical trials and manufacture drugs before they can be
marketed. Results of pre-clinical studies are not necessarily indicative of
results that may be obtained in clinical trials and results in early clinical
trials may be different from those obtained in long-term testing or in general
use. Adverse or inconclusive results from pre-clinical testing or clinical
trials may substantially delay, or halt entirely, the development of products.

The Company may fail to successfully develop a drug candidate for many reasons,
including:

                                       15
<PAGE>

          o    the failure to establish any collaborative third party agreements
               to support drug development;

          o    the failure to produce a promising compound in sufficient
               quantities to conduct clinical trials or to manufacture the
               compound at commercially acceptable quantities and prices;

          o    the failure of the drug in pre-clinical studies;

          o    the inability of clinical trials to demonstrate that the drug is
               safe and effective in humans; or

          o    the failure to obtain required regulatory approvals.



CHEMGENEX PHARMACEUTICALS LIMITED SHARES MAY FLUCTUATE IN VALUE.

The market price for ChemGenex Pharmaceuticals Limited shares and the securities
of other similar companies have been volatile Factors that could significantly
impact the market price of ChemGenex Pharmaceuticals Limited shares in the
future other than those described elsewhere in this Annual Report include:

          o    announcements concerning research activities, technological
               innovations, clinical trials or financial results by the Company
               or its competitors;

          o    termination of collaborations by the Company or its partners;

          o    governmental regulatory initiatives;

          o    the FDA, the Australian Therapeutic Goods Administration or
               European Medicines Evaluation Agency approving or denying new
               applications;

          o    patent or proprietary rights developments;

          o    public concern as to the safety or ethical implications of
               biotechnology products;

          o    sales of substantial amounts of the Company's shares by existing
               shareholders;

          o    price and volume fluctuations in the stock market at large that
               do not relate to the Company's operating performance;

          o    changes in financial estimates by securities analysts, comments
               by securities analysts, or the Company's failure to meet
               analysts' expectation;

          o    actual or anticipated variations in periodic operating results;

          o    new products or services introduced or announced by the Company
               or its competitors;

          o    changes in the market valuations of other similar companies;

          o    announcements by the Company of significant acquisitions,
               strategic partnerships, joint ventures or capital commitments;
               and

          o    additions or departures of key personnel.


THE COMPANY'S PRODUCTS MAY NOT RECEIVE AND MAINTAIN REGULATORY APPROVAL. THE
COMPLEXITY AND MULTI-JURISDICTIONAL NATURE OF THE APPLICABLE REGULATORY
PROCESSES COULD RESULT IN DELAYS IN ACHIEVING SUCH REGULATORY APPROVAL, WHICH
WOULD HAVE AN ADVERSE EFFECT ON THE COMPANY'S FINANCIAL CONDITIONS, ITS PROGRAMS
AND PROJECTED REVENUES.

The international pharmaceutical industry is highly regulated by numerous
governmental authorities in the U.S., Australia and Europe and by regulatory
agencies in other countries where the Company intends to market products it may
develop. National regulatory authorities administer a wide range of laws and
regulations governing the testing, approval, manufacturing, labeling and
marketing of drugs and also review the quality, safety and effectiveness of such
products. These regulatory requirements are a major factor in determining
whether a technology can be developed into a marketable clinical application or
a specific product and the amount of time and expense associated with such
development.

                                       16
<PAGE>

Government regulation imposes significant costs and restrictions on the
development of pharmaceutical products for human use, including those the
Company is developing. The development, clinical evaluation, manufacture and
marketing of the Company's products and ongoing research and development
activities are subject to regulation by governments and regulatory agencies in
all territories within which the Company intends to manufacture and market its
products (whether themselves or through a partner). The Company's products may
not successfully complete the clinical trial process. Similarly, regulatory
approvals to manufacture and market the Company's products may not ultimately be
obtained.

The time taken to obtain regulatory approval varies between countries. The
Company's products may not be approved in any country within the timescale
envisaged, or at all. This may result in a delay, or make impossible, the
commercialization of its products. Furthermore, each regulatory authority may
impose its own requirements (for instance, by restricting the product's
indicated uses) and may refuse to grant, or may require additional data before
granting, an approval, even though the relevant product candidate may have been
approved by another country's authority.

If regulatory approval is obtained, the product and its manufacture will be
subject to continual review and this approval may be withdrawn or restricted.
Changes in applicable legislation or regulatory policies, or discovery of
problems with the product, or its production process, site or manufacturer, may
result in the imposition of restrictions on the product, its sale, manufacture
or use, including withdrawal of the product from the market, or may otherwise
have an adverse effect on the Company's liquidity and financial condition.

The Company has not had any of its product candidates receive approval for
commercialization in Australia, the U.S. or elsewhere.


THE COMPANY MAY BE UNABLE TO SECURE ADEQUATE INSURANCE AT AN ACCEPTABLE COST.
FAILURE TO SECURE SUCH INSURANCE MAY EXPOSE THE COMPANY TO LIABILITY IN THE
EVENT OF A CLAIM.

The Company's business exposes it to potential product liability, professional
indemnity and other risks which are inherent in the research and development,
pre-clinical studies, clinical trials, manufacturing, marketing and use of
pharmaceutical products. The Company in carrying out its activities will
potentially face contractual and statutory claims, or other types of claims.
Consumers, healthcare producers or persons selling products based on the
Company's technology may be able to bring claims against the Company based on
the use of such products in clinical trials and the sale of products based on
the Company's technology. The Company is insured for product liability with a
policy covering US$2,000,000 that covers bodily injury or property damage
arising out of the Company's products used in the regular course of the clinical
trials. The policy was recently renewed for the period from October 1, 2005 to
October 1, 2006. The Company also carries directors' and officers' liability
policies in the U.S. and Australia, with coverage of US$5,000,000 and
A$3,000,000, respectively, and customary employer's liability, fiduciary
liability and property insurance coverages in amounts that are considered usual
for similarly situated companies. Product liability or any future necessary
insurance cover may not be available to the Company at an acceptable cost, if at
all, and if there is any claim, the level of the insurance the Company carries
now or in the future may not be adequate. Similarly, a product liability,
professional indemnity or other claim may materially and adversely affect the
Company's liquidity or its ability to continue to progress its product
development. In addition, it may be necessary for the Company to secure certain
levels of insurance as a condition to the conduct of clinical trials. In the
event of any claim, the Company's insurance coverage may not be adequate.



THE COMPANY MAY FACE PRODUCT LIABILITY CLAIMS.

The testing, marketing and sale of human health care products entails an
inherent risk of product liability. The Company in carrying out its activities
will potentially face contractual and statutory claims, or other types of claim.
In addition, the Company is exposed to potential product liability risks that
are inherent in the research and development, pre-clinical study, clinical
trials, manufacturing, marketing and use of medical devices and drug products.
Consumers, healthcare producers or persons selling products based on the
Company's technology may be able to bring claims against the Company based on
the use of such products in clinical trials and the sale of products based on
the Company's technology.

                                       17
<PAGE>


THE COMPANY MAY BE SUBJECT TO SPECIAL INTEREST GROUPS AND ADVERSE PUBLIC
OPINION.

Government bodies and regulatory agencies require that potential pharmaceutical
products are subject to pre-clinical studies, including animal testing, prior to
conducting human trials. ChemGenex arranges for such work either directly or
through its collaborators. While the Company has not been subject to the
attention of special interest groups, or any adverse public opinion of which it
is aware, such work entails the risk of adverse public opinion and the attention
of special interest groups, including those of animal rights activists. These
groups may in the future focus on the Company's activities or those of its
licensees or collaborators, and this might adversely affect the Company's
operations, by requiring it to curtail its activities or to change its testing
procedures.

The pharmaceutical and biotechnology industries are frequently subject to
adverse publicity on many topics, including corporate governance or accounting
issues, product recalls and research and discovery methods, as well as political
controversy over the impact of novel techniques and therapies on humans, animals
and the environment. While there has to date been no adverse publicity about the
Company, its collaborators, or its products, such adverse publicity in the
future, should it arise, may hurt the Company's public image, which could harm
its operations, cause its share price to decrease or impair its ability to gain
market acceptance for its products. The Company has adopted an ethics policy for
genetic research.


ITEM 4.  INFORMATION ON THE COMPANY

A.       HISTORY AND DEVELOPMENT OF THE COMPANY

The Company was founded in September 1958 as N & B Finance and Development
Corporation. It was renamed the Kingsway Finance Group in August 1964 and then
became Australia Wide Industries Limited in May 1986. Australia Wide Industries
Limited listed on the Australian Stock Exchange ("ASX") in July 1986 and
operated for ten years as a listed mining and exploration company (ASX: AWI).
The Company commenced biotechnology activities in July 1996 and changed its name
to Autogen Limited (ASX: AGT) in May 1999. Autogen Limited, in turn, changed its
name to AGT Biosciences Limited in March 2003 and then to ChemGenex
Pharmaceuticals Limited (ASX: CXS) in June 2004. Biotechnology remains the focus
of the Company's activities. The Company's Australian Business Number (ABN) is
79 000 248 304. It operates pursuant to its constitution, the Australian
Corporations Act 2001, other legislation in Australia and the U.S., and the
rules of the ASX. The Company's representative in the U.S. is Dr. Dennis M
Brown, President - U.S. Operations, 3475 Edison Way, Suite M, Menlo Park, CA
94025 U.S.A. The Company's registered office is Edmondson Turner & Co., 439 Bay
Street, Brighton, Melbourne, Victoria 3186 Australia. Its principal
administration office is Pigdons Road, Waurn Ponds, Victoria 3217 Australia. Its
telephone number is +613-5227-2752. The Company's website address is
www.chemgenex.com. Information on the Company's website and websites linked to
it does not constitute part of this Annual Report.

The Company in its present form is the result of the merger of AGT Biosciences
Limited and ChemGenex Therapeutics, Inc. which was approved by shareholders in
the General Meeting on June 21, 2004 and concluded on the same date. ChemGenex
is a genomics-driven pharmaceutical development company dedicated to improving
the lives of patients by developing novel personalized therapeutics in the areas
of cancer, obesity, diabetes and depression. The Company has two molecules in
Phase 2 clinical trials in the U.S. and has a pipeline of pre-clinical
anti-cancer compounds in development The Company has assembled a comprehensive
technology platform that enables the identification of novel targets for complex
diseases.. These discoveries are then validated with a range of systems biology
approaches and evaluated in terms of "drugability". The target discovery and
validation approach is based on:

          o    A collection of tissue and DNA samples from worldwide population
               groups (>44,000 samples);

          o    Validated animal model systems for diabetes/obesity and
               depression/anxiety;

          o    A 1400 Central Processing Unit parallel Linux cluster
               supercomputer for statistical analysis of genetic data;

          o    The eXpress Technology Platform, a proprietary research engine
               for rapid target discovery and validation for any disease.

                                       18
<PAGE>

The Company's development platform is more fully discussed at Items 4B.
"Business Overview" and 4C "Research and Product Development Programs."



The Company's research commitments (not including fees payable to scientific
consultants and advisors to the Company) as of June 30, 2005 are as follows:

The Company has signed a one year agreement dated April 21, 2005 with Deakin
University to consolidate three previous research agreements. This consolidation
provides for total scheduled expenditures $2,420,000 for the year to December
31, 2005. As at June 30. 2005 a commitment of $1,210,000 remained under this
agreement.

A six month, A$369,856 extension to a research agreement first signed on January
14, 1998 with the International Diabetes Institute (Melbourne, Australia) to
conduct gene discovery and validation research according to instruction from the
Company in the fields of obesity and diabetes. This agreement is called
"Research Agreement for Human Diabetes / Obesity Discovery". The extension
covers the period from July 1, 2005 to December 31, 2005.

A six month, US$348,586 (A$457,582) extension to a research agreement first
signed on December 31, 2002 with the Southwest Foundation for Biomedical
Research (San Antonio, Texas, U.S.) to conduct human genomics research according
to instruction from the Company. This agreement is called "the Research
Agreement". The extension covers the period from July 1, 2005 to December 31,
2005.

Approved cancer research and clinical trials expenditure through Inveresk
Research Ltd of Euro 450,000 (A$709,660). This will fund ongoing clinical
programs with Inveresk in Europe for Ceflatonin(R) in accordance with supply and
development agreements entered into with Stragen Pharma S.A. on June 28, 2005

The Company has no fixed asset commitments as at June 30, 2005, and has incurred
no significant fixed asset expenditure since that date. Expenditure on plant and
equipment is usually minimal due to the Company's outsourcing arrangements.
Recent capital expenditure on plant and equipment is as follows:



                                    Plant and equipment expenditure (A$000)
Year ended June 30, 2005                                                 15
Year ended June 30, 2004                                                  8
Year ended June 30, 2003                                                 21




IMPORTANT EVENTS SINCE JUNE 30, 2005

Key events since June 30, 2005 include:

          o    On July 28, 2005 Peter Bradfield and Patrick Owen Burns were
               appointed directors of the Company and became members of the
               Board's Audit Committee.

B.       BUSINESS OVERVIEW

The Company focuses on the development of novel therapeutic agents in three
diseases: cancer, metabolic syndrome (which includes diabetes and obesity) and
depression (which includes anxiety). Product development in the three disease
areas is supported by four product development platforms: Gene-Based Target
Discovery, Target Validation, Drug Discovery and Drug Development. The
combination of these platforms is collectively known as the eXpress Technology
Platform. In the field of cancer, ChemGenex currently has two small molecule
drug candidates in Phase 2 human trials (Ceflatonin(R) and Quinamed(R)) and a
broad pipeline of compounds and validated targets, including four pre-clinical
cancer compounds (CXS299, CXS2101, CXS6001 and CXS273) and two early-stage
discoveries identified in the Target Discovery program. In the field of
metabolic syndrome, the Company has partnered its Target Discovery and Target
Validation capabilities with Merck Sante, has signed research and
commercialization agreements for four validated gene targets, and has discovered
and protected by patent more than 50 other gene and

                                       19
<PAGE>

protein targets. In the field of depression the Company has partnered its Target
Discovery and Target Validation capabilities with Vernalis (R&D) Limited, and
has discovered ten early stage targets.


CHEMGENEX'S COMPETITIVE ADVANTAGE

The Company's competitive advantage can be considered in terms of protected
intellectual property (IP), the research and development platforms that support
the development of existing IP and the creation of new IP and the organizational
ability to realize the commercial value of the Company's IP and other assets.

The Company has approximately 50 patent families in various states of protection
ranging from provisional applications through to granted patents in a number of
jurisdictions. In addition to IP that is protected by patents there is
significant know how and expertise within the senior research staff of the
Company.

The research and development infrastructure of the Company is described below
and consists of skills in medicinal chemistry and product development for cancer
therapeutics, gene discovery using animal models and human samples from known
populations, high-powered statistical analysis capabilities to determine
linkages between gene variations and disease states and a suite of validation
technologies to characterize the biological roles of given genes (and their
protein products) by altering their expression levels in cell culture and in
animals. Specific competitive advantage is realized through (a) ChemGenex's
product development pipeline (b) exclusive commercial access to Deakin
University's out-bred colony of Psammomys obesus, a species of gerbil also known
as the sand rat, a well-defined model for dietary induced Type 2 diabetes, (c)
exclusive access to the International Diabetes Institute's substantial
collection of phenotyped human tissue and DNA samples for the purpose of
discovery of novel metabolic syndrome targets and (d) access to the experience
of Dr. J. Blangero and supercomputing infrastructure at the Southwest Foundation
for Biomedical Research.


BUSINESS STRATEGY

The Company's business strategy for growth and profitability is to discover,
develop and commercialize novel therapeutics that address significant unmet
needs in the pharmaceutical industry, based on the Company's understanding of
the genetic basis of disease. The Company keeps its core competencies in-house
(such as laboratory research management, pre-clinical work, clinical strategy
and management), outsourcing the majority of laboratory research and all
clinical testing to specialists, to minimize its infrastructure and fixed
overhead costs. In the area of gene-based discoveries, the Company seeks early
partnering of discovery programs in order to share development costs and risks
with partners and to ensure that programs are commercially and scientifically
focused. In the case of therapeutics, the Company intends to seek out joint
venture or licensing partners for further development and commercialization of
its products following Phase 2 clinical evaluation. This will allow ChemGenex to
license its products before full regulatory approval is required to place the
product in the market. The goal in each case is to seek multinational partners
with drug development milestones payable to the Company on completion of agreed
targets and submission of regulatory documents and, eventually, payment or
royalties on sales of commercialized products. The expectation is that the size
of the payments to the Company will vary depending on the size of the eventual
market, the stage of development of the product concerned and the strength of
the data that is generated prior to partnering.


COMPONENTS OF CHEMGENEX'S DISCOVERY, VALIDATION AND DRUG DEVELOPMENT PLATFORMS

Target discovery

The target discovery, validation and drug development platforms utilize
infrastructure located at Deakin University (Geelong, Australia), the
International Diabetes Institute (Melbourne, Australia) and the Southwest
Foundation for Biomedical Research (San Antonio, Texas). Key features of the
Target Discovery platform include:

          o    Deakin University's out-bred colony of Psammomys obesus, a
               well-characterized animal model of diabetes, obesity and
               depression. The Company has exclusive access to this colony for
               both discovery and validation activities;

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<PAGE>

          o    a library of extensive family pedigrees of more than 44,000 human
               tissue and DNA samples and a dedicated human genotyping facility
               that is used for sequencing target genes to identify variations
               associated with disease states; and

          o    access to the computing facilities at the Southwest Foundation
               for Biomedical Research for statistical analysis of gene
               variations as relating to disease state.

The Company's research scientists have found the animal model to be useful in
studying metabolic disorders, such as diabetes and obesity, as well as Central
Nervous System disorders such as depression and anxiety. Psammomys obesus
populations develop a range of body weight, blood glucose, and insulin levels
with distributions similar to those found in human populations. This animal
model is used to discover candidate genes (and the proteins they encode) with
altered levels of expression that are associated with each disease. For example,
specific genes are up- or down-regulated in diabetic animals compared to normal
healthy animals. The candidate genes identified in this way are then analyzed
and compared with human population data using the Company's Human Gene Discovery
facility at the International Diabetes Institute (Melbourne) and in the U.S., at
the Center for Human Statistical Genetics at the Southwest Foundation for
Biomedical Research. The Company has contractual agreements with both
institutions. Candidate genes that are found to exist in the human genome and be
associated with the diseases in question are then subject to further rigorous
analysis. As an example the PSARL (Presenilin-Associated Rhomboid-like protein)
gene was discovered by the Company in Psammomys obesus and subsequently
identified in humans. This gene identified originally in the animal model was
found to have a human analogue and detailed genetic analysis of samples from
more than 1,000 humans confirmed that variation in the gene in humans was
significantly associated with increased risk of diabetes.



Target validation

The Target validation platform utilizes infrastructure located at Deakin
University in Geelong, Australia. It encompasses a comprehensive set of
proprietary and non-proprietary technologies from gene discovery, gene structure
and function analysis to the validation of gene and protein products that may be
potential therapeutic or diagnostic targets. The validation platform is used to
characterize the biological role of targets that have been discovered and found
to be related to disease state using the combined resources of the discovery
platform.

Examples of the technologies employed in Target Validation include in vitro
(cell culture) experiments to determine the effect of up- or down-regulation of
genes on quantifiable end-points, in vivo experiments to manipulate the levels
of target genes or expressed proteins in animals and tracking of physiological
and behavioral responses, and clarification of the nature of any protein-protein
interactions, which can reveal potential drug targets.

An example of the role of validation is the blocking of expression of the gene
target SGIP1 (SH3-Domain GRB2-Like Interacting Protein 1) in Psammomys obesus
and Rattus norvegicus. In the Company's laboratory experiments SGIP1 was
identified as having increased expression in the hypothalamus of obese compared
to lean Psammomys obesus. The candidate gene was confirmed as being associated
with disease using the Company's human genetics group in the Southwest
Foundation for Biomedical Research. To examine the role of SGIP1 in the
development of obesity, antisense oligonucleotides of the genes were infused
into a specific region of the brain (the lateral cerebral ventricle) in both
Psammomys obesus and Rattus norvegicus. The procedure has the effect of blocking
the expression of the SGIP1 genes in the brain and the Company believes this is
a proxy of what could occur if therapeutic agents could be used to affect the
level of the protein. When treated with antisense SGIP1, both species showed
approximately 40% reduction in food intake and 5-8% loss of body weight compared
with control animals.


Drug discovery

Drug discovery at ChemGenex is managed at the Company's facility in Menlo Park,
California. The therapeutic development platform currently focuses on developing
novel small molecule therapeutics for the treatment of cancer and related
conditions. The major strategy has been to screen agents studied by the U.S.
National Cancer Institute that have confirmed human clinical activity but were
not fully developed. Among these agents the Company identifies compounds
suitable for development based on its assessment of mechanism of action,
molecular targets affected, potential formulation improvements and genetic
differences between patients that can be exploited in clinical development. It
utilizes chemical genomics and drug screening systems to identify agents
affecting novel targets and evaluates a compound's suitability as a drug and
formulation technology to maximize delivery and

                                       21
<PAGE>

bioavailability, meaning the extent to which a chemical is absorbed and
distributed in the blood in an unchanged form following administration to a
living organism.


Drug development

The Company's pre-clinical and clinical development efforts are also based in
Menlo Park, California. In vitro and in vivo screening models are used to
evaluate lead compounds. Data from these models is fed back into extensive
in-house databases for iterative analysis. A parallel series of profiling assays
is performed to determine the potential pharmaceutical attributes and
vulnerabilities of a compound.

Compounds that merit further development proceed through pre-formulation and
advanced pre-clinical in support of regulatory filings for human clinical
evaluation. These include non- Good Laboratory Practice (GLP) and GLP
pharmacology, efficacy and toxicology studies in laboratory animal models.
Additionally, compound manufacturing, scale-up considerations and dosage form
stability studies are also performed.

Those agents with acceptable pharmacological and toxicological profiles may
become the subject of evaluation in humans. This requires submission to the U.S.
FDA of an Investigational New Drug (IND) application for permission to begin
Phase I dose escalation studies. After the Maximum Tolerated Dose is identified
at the schedule contemplated for therapeutic use, Phase 2 studies evaluating
potential disease indications are performed. If significant activity is
identified, then larger Phase 3 studies are conducted in support of a New Drug
Application (NDA). If approved the product can then be commercialized.


CHEMGENEX'S DEVELOPMENT PIPELINE

In the field of cancer the Company has two clinical stage product candidates,
four pre-clinical stage product candidates and two discovery stage targets that
have recently been identified.



Clinical stage product candidates

The Company has applied its genomic and clinical development expertise with its
knowledge of cancer to identify small molecule therapeutic targets in oncology.
By focusing on compounds with confirmed clinical activity and using genomic
tools to optimize their development, the Company has been able to create a
pipeline of product candidates described below:

Ceflatonin(R) (homoharringtonine)

Homoharringtonine ("HHT)" is a small molecule with established clinical activity
as a single agent in hematological malignancies. The Company's scientists have
discovered that it affects a number of critical cellular pathways, including the
regulation of genes associated with programmed cell death (apoptosis) and the
inhibition of formation of new blood vessels in solid tumors (angiogenesis). In
previous published Phase 2 clinical trials, 70% of patients showed complete
hematological remission (CHR) in chronic myeloid leukemia ("CML") after
interferon-a failure. In more recent pilot studies in CML patients who had
failed Gleevec(R), 100% of chronic-phase patients and 70% of accelerated-phase
patients achieved a CHR. The Company is currently conducting Phase 2 trials in
the U.S.A. and Europe for CML patients who have failed Gleevec(R),. The Company
is also conducting Phase 2 trials in patients with the bone marrow disease
called myelodysplastic syndrome ("MDS") in collaboration at the M.D. Anderson
Cancer Center. The Company has one issued patent and has four active patent
applications covering Ceflatonin(R) formulations, purification, synthesis and
uses. The Company has licensed from Stragen Pharma S.A. three issued patents and
has four active patent applications covering the preparation of
homoharringtonine derivates, purification, and the use of homoharringtonine
resistant to Gleevec(R).

Quinamed(R) (amonafide dihydrochloride)

Amonafide dihydrochloride (amonafide) is a synthetic organic compound with
established anti-cancer clinical activity. The Company has recently discovered
that amonafide affects a number of targets in the epidermal growth factor
receptor pathway, which controls the growth of a number of tumor types, in
addition to affects on an enzyme that is critical for normal cell replication,
topoisomerase II. In National Cancer Institute ("NCI")-sponsored clinical

                                       22
<PAGE>

studies with amonafide monohydrochloride, 25% of breast cancer patients and 15%
of prostate cancer patients showed either partial (>50% reduction in tumor
volume) or complete (no measurable disease) responses. However, researchers also
noted some unpredictable side effects. It was later discovered that differences
in how patients metabolize the drug has a significant impact on toxicities.
These metabolic differences can now be determined by testing a patient's NAT-2
genotype. The Company's development strategy is to determine a patient's NAT-2
genotype and then treat them with a more precise and personal dose needed to
produce the optimal result. In the Company's Phase I clinical trial,
investigators were able to achieve a higher overall dose intensity based on
NAT-2 genotype status and using a weekly schedule without observing unexpected
side effects. The Phase I trial enrolled a total of 32 patients and evaluable
responses were observed in patients suffering from three different types of
solid tumors. The Phase 2 study is now enrolling prostate, ovarian and breast
cancer patients who are not responding to hormone therapy (i.e. hormone
refractory patients) at the Sarah Cannon Cancer Center in Nashville, Tennessee.
The Company has two issued patents and has three active patent applications
covering amonafide salts, formulations, synthesis and uses.

Pre-clinical stage product candidates

In addition to Ceflatonin(R) and Quinamed(R) the Company is developing several
other pre-clinical oncology compounds, including the following:

CXS299: This is a new platinum (IV) compound recently licensed from the M.D.
Anderson Cancer Center in Houston, Texas. CXS299 is a first in class platinum IV
agent that is active against cancer cells resistant to the effects of
commercially available platinum-based therapies. Currently approved platinum II
agents have generated sales of greater than US$1 billion. However, some patients
develop resistance to platinum II therapy resulting in a need for additional
therapies. CXS299 is currently in pre-clinical development and could enter Phase
I in 2007.

CXS2101: This compound inhibits NF-Kappa B and has been shown to increase the
anti-cancer activity of other agents in animal models.

CXS6001: This compound affects levels of the structural protein tubulin in
cancer cells and has shown anti-tumor efficacy in mouse models.

CXS273: This compound affects the integrity of DNA and has been shown to
increase the anti-cancer activity of cisplatin in a mouse model.


Validated targets
The SEPS 1 gene (formerly called Tanis) was identified by the Company following
the observation of increased hepatic gene expression in diabetes in Psammomys
obesus. The Company has since determined the gene's sequence and location on the
human chromosome and the characteristics of the gene's protein product. Evidence
indicates that the SEPS 1 gene represents an important target not only in
diabetes but potentially in other diseases, such as cancer and inflammatory
diseases and the Company's patent protection has been broadened accordingly.
This discovery has been licensed to Merck Sante for pre-clinical development in
diabetes.

It has been determined that the PSARL gene is linked to signaling pathways
within a cell that are thought to be associated with insulin resistance, which
is the cause of Type 2 diabetes. Evidence indicates that the PSARL gene
represents an important target not only in diabetes but potentially in other
diseases, such as cancer and age-related degenerative diseases and the Company's
patent protection has been broadened accordingly. This discovery has been
licensed to Merck Sante for pre-clinical development in diabetes.

Beacon was isolated in Psammomys obesus as a gene expressed in direct proportion
to body fat content. The protein product of the Beacon gene is expressed as a
small peptide in the hypothalamus, a part of the brain that regulates energy
intake and expenditure, and is understood to play a role in energy balance. The
Company's research has demonstrated that the expression of the Beacon gene is
proportional to the amount of body fat, and that giving the Beacon peptide to
lean animals significantly increased their feeding rate and body weight in
direct proportion to the quantity of Beacon peptide. This suggests that blocking
the action of the Beacon peptide by biological or chemical means could provide a
means of treating obesity. This discovery has been licensed to Merck Sante for
pre-clinical development in obesity.

                                       23
<PAGE>

SGIP1 is a protein involved in the regulation of satiation at the neurological
level. The Company has determined that suppression of SGIP1 expression reduced
the feeding rate of Psammomys obesus significantly over a period of four days.
While the SGIP1 gene has been identified in humans, additional work on the
expression and function of the gene in humans is still needed. This discovery
has been licensed to Merck Sante for pre-clinical development in obesity.


Discovery stage targets
The Company has more than 50 discovery stage candidates, in different stages of
patent protection.



ADDITIONAL OPPORTUNITIES

The Company has identified over 50 target genes involved in diabetes, obesity
and depression. Out of this group, the Company has licensed to its alliance
partner Merck Sante four validated gene targets for continuing pre-clinical
development of these discoveries. The purpose of such research is to develop
lead compounds based on the validated targets that will result in commercialized
human therapeutics. The Company has the potential to use its novel gene
discoveries for licensing and commercialization in the areas of diagnostics,
over-the-counter products, animal health and applications of these gene
discoveries. These applications are not covered by the contractual arrangements
with Merck Sante.

In order to take full advantage of the Company's expertise and validated gene
targets for diabetes/obesity, the Company is pursuing partners for the
co-development of over-the-counter products for obesity. The Company has
discovered several obesity targets that are proteins found in the wall of the
gut and are involved in sending signals to the brain indicating fullness. The
Company has filed patent applications for these proteins that may be suitable
targets for developing over the counter products. The goal of a potential
commercial partnership would be to obtain a partner that would fund
high-throughput screening of natural product libraries in order to identify
compounds with the potential to act on the target proteins. The Company's most
advanced target in this research program is a gene called CXS829 that is
involved in the transmission to the brain from the stomach of the sensation of
satiation ("fullness"). ChemGenex has filed patent applications on this
discovery, as well as two chemical entities that are antagonistic to the target
and work to regulate the protein's activity.

While the Company has yet to commercialize any of its proprietary targets for
diagnostic use it has established a commercial collaboration with Kyokuto
Pharmaceutical Corporation, a Japanese pharmaceutical company, for the
development of a diagnostic kit for Type 1 diabetes based on glutamic acid
decarboxylase ("GAD") technology. The presence of antibodies to GAD in the blood
provides early evidence of diabetes and can be used for the prediction,
diagnosis, and management of the disease. This diagnostic is currently in
development (see details in Research and development programs below).

The Company has generated revenue through the use of the capacity in its
technology platform for fee-for-service contract research. Many drug development
companies do not have proprietary technology to validate genetic targets with
demonstrable links to a disease state. These companies are the prospective
clients for use of the Company's technology. In 2002 the Company had a
significant contract with Sequenom for this purpose and in 2003 the service was
utilized by two Australian biotechnology companies. While the Company continues
to seek fee-for-service revenue no further contracts have yet been arranged.

RESEARCH AND PRODUCT DEVELOPMENT PROGRAMS

The Company currently contracts its target discovery research programs to three
organizations; Deakin University in Geelong, Victoria, Australia, the
International Diabetes Institute in Melbourne, Victoria, Australia and the
Southwest Foundation for Biomedical Research in San Antonio, Texas. The
discovery and validation programs are involved in the previously described
collaborative programs with Merck Sante (diabetes and obesity targets) and
Vernalis (depression targets). Cancer research is carried out at the Company's
laboratory in Menlo Park, California, and clinical trials conducted at the M.D.
Anderson Cancer Center ,the Sarah Cannon Center in Nashville, Tennessee, and
leading European hospitals.

The Company has been accepted into the inaugural Pharmaceutical Partnership
Program (P3) of the Australian Federal government, through which the Company has
the ability to earn grant revenue based on the growth of the Company's research
in Australia over the next five years. Admission into the Australian
government's P3 scheme

                                       24
<PAGE>

involved a peer review process and the Company was one of only seven
Australian-owned biotechnology companies admitted into the scheme. The scheme
will subsidize incremental increases in research and development activities by
means of a 30% cash grant for every dollar spent on eligible research by the
Company at the end of each fiscal year. The Company's maximum entitlement under
this scheme is capped at A$4.8 million over five years.

Two further awards were received in 2004 for ChemGenex funded scientists: an
A$4.4 million research grant from the U.S. National Institutes of Health and an
A$127,000 grant from the Australian National Health and Medical Research Council
to further research into the genetic basis of Type 2 diabetes.


COMMERCIAL AND RESEARCH AND DEVELOPMENT COLLABORATIONS

The following section describes the Company's existing commercial collaborators
and the commercial agreements with respect to the Company's principal research
and development programs and commercialization agreement:

Vernalis Research and Development Option Agreement: Autogen Research Pty Ltd. (a
wholly owned subsidiary of the Company) entered into a Research and Development
Option Agreement dated August 31, 2004 with British biotechnology company
Vernalis (R&D) Limited (a wholly owned subsidiary of Vernalis plc). Pursuant to
this agreement Vernalis (R&D) Limited agreed to partner with the Company's
research program for the discovery and validation of novel genes and proteins
involved in depression and anxiety, with the goal of using the product of these
genes as therapeutic agents or as a target for drug discovery. The initial term
of the Agreement was for six months, and was extended by Vernalis (R&D) Limited
for an additional six months. Under the agreement Vernalis (R&D) Limited paid an
initial fee and a subsequent fee to ChemGenex. If Vernalis (R&D) Limited
exercised its option to negotiate in good faith a license and collaboration
agreement to govern the future terms of the parties' relationship, including a
grant to Vernalis of an exclusive world-wide license under the Company's
interest in the program's intellectual property, additional fees will become
payable in consideration of the option grant. The agreement can be terminated by
one party if the other is in material breach not timely remedied, if there is a
risk of insolvency administration of the other party or if there is a risk of
dissolution of the other party. In the event of these terminations the
non-defaulting party is granted the right to continue the research program and a
world-wide license to use and exploit the defaulting party's relevant
intellectual property. Vernalis (R&D) Limited paid 200,000 pounds sterling
(A$506,291) for the initial term in September 2004, and paid a further 300,000
pounds sterling ( A$720,738) for the additional six month term in May 2005. The
payments from Vernalis (R&D) Limited were made in consideration of the Company
performing a mutually agreed research program and granting to Vernalis (R&D)
Limited 50% of the IP rights and know-how produced under the terms of the
partnership. Any subsequent payments will be contingent upon the results of the
work undertaken and negotiations between the parties. The agreement will
terminate if the parties have not executed a Licence and Collaboration Agreement
by March 1, 2007.



Research and License Agreement (Field of Diabetes): Autogen Research Pty Ltd.
entered into a Research and License Agreement (Field of Diabetes) on April 28,
1999 with Merck Sante. (formerly Lipha S.A. a subsidiary of Merck KGaA) pursuant
to which Merck Sante is obligated to provide research support to the Company's
program for the discovery of novel genes involved in diabetes, with the goal
being using the product of these genes as therapeutic agents or as a target for
drug discovery. In addition, Merck Sante is obligated to provide in house
facilities to advance subsequent drug development in the field of diabetes.
Under the agreement Merck Sante made an upfront payment in consideration of the
Company entering into the agreement and granting to Merck Sante license of the
relevant patents and know-how. In addition, Merck Sante contributes to the costs
of research at Deakin University; agrees to perform biotechnological studies and
limited animal pharmacological studies. The term of the agreement is extendable
at Merck Sante's option, against payment of a renewal fee that constitutes part
contribution to the research the Company has committed to fund under its
research agreement for diabetes with Deakin University. Additional fees are
payable as milestones are met, and the parties at that time must enter into a
commercialization license in respect of the designated novel gene product.
Additional fees are payable after commencement of Phase 3 clinical trials in
respect of a product that resulted from research under the agreement. The
agreement may be terminated by one party in the event of breach by the other
that is not timely remedied; in the event of payment default by the other party;
upon an insolvency event affecting the other party. In addition, the Company may
terminate the agreement upon certain change of control events affecting Merck
Sante, and Merck Sante may terminate the agreement upon a change of control
event affecting the Company. The agreement was extended to December 31, 2005 by
a Deed dated March 16, 2001. Autogen Research Pty Ltd received payments of

                                       25
<PAGE>

A$1,180,892 in fiscal 2003, A$1,231,775 in fiscal 2004 and A$1,090,180 in fiscal
2005 under this agreement. Further payments of approximately A$470,000 will
become due before this contract expires. By that time total payments of
approximately A$7,200,000 will have been received under this contract.



Research and License Agreement (Field of Obesity): Autogen Research Pty Ltd
entered into a Research and License Agreement (Field of Obesity) with Merck
Sante on April 28, 1999 pursuant to which Merck Sante. is obligated to provide
research support to the Company's program for the discovery of novel genes
involved in obesity, with the goal being using the product of these genes as
therapeutic agents or as a target for drug discovery. In addition, Merck Sante
is obligated to provide in house facilities to advance subsequent drug
development in the field of obesity. Under the agreement Merck Sante made an
upfront payment in consideration of the Company entering into the agreement and
granting to Merck Sante license of the relevant patents and know-how. In
addition, Merck Sante contributes to the costs of research at Deakin University;
agrees to perform biotechnological studies and limited animal pharmacological
studies. The term of the agreement is extendable at Merck Sante's option,
against payment of a renewal fee that constitutes part contribution to the
research the Company has committed to fund under its research agreement for
obesity with Deakin University. Additional fees are payable as milestones are
met, and the parties at that time must enter into commercialization license in
respect of the designated novel gene product. Additional fees are payable after
commencement of Phase 3 clinical trials in respect of a product that resulted
from research under the agreement. The agreement may be terminated by one party
in the event of breach by the other that is not timely remedied; in the event of
payment default by the other party; upon an insolvency event affecting the other
party. In addition, the Company may terminate the agreement upon certain change
of control events affecting Merck Sante, and Merck Sante may terminate the
agreement upon a change of control event affecting the Company. The agreement
was extended to December 31, 2005 by a Deed dated March 16, 2001. Autogen
Research Pty Ltd received payments of A$273,291 in fiscal 2003, A$253,911in
fiscal 2004 and A$121,917 in fiscal 2005 under this agreement. Total payments of
A$4,213,251 have been received under this contract.





Research and License Agreement (Strategic Alliance in Human Gene): Autogen
Research Pty Ltd. entered into a research and License Agreement (Strategic
Alliance in Human Gene) on February 11, 2002 with Merck Sante related to the
human genome project. The scope of the agreement covers collaboration in human
therapeutic applications for the treatment or prevention of obesity, diabetes
and its complications and insulin resistance syndrome (excluding hypertension).
Additional fees are payable as milestones are met, and the parties at that time
must enter into commercialization license in respect of the designated novel
gene product. The agreement may be terminated by one party in the event of
breach by the other that is not timely remedied; in the event of payment default
by the other party; upon an insolvency event affecting the other party. In
addition, the Company may terminate the agreement upon certain change of control
events affecting Merck Sante, and Merck Sante may terminate the agreement upon a
change of control event affecting the Company. The agreement expires December
31, 2005. Autogen Research Pty Ltd received payments of, A$3,047,100 including a
milestone payment of A$1,330,484 in fiscal 2003 , A$1,389,715 in fiscal 2004 and
A$1,321,016 in fiscal 2005 under this agreement. Further payments of
approximately A$650,000 will become due before this contract expires. By that
time total payments of approximately A$11,100,000 will have been received under
this contract.





Commercialization License (Field of Diabetes and Obesity) "BEACON" - Under the
agreement dated April 28, 1999 Autogen Research Pty Ltd entered into a
commercialization license with Merck Sante in respect of the novel gene "Beacon"
and products arising from such gene in exchange for certain payments and
royalties. The license covers only human therapeutic applications for the
treatment of diabetes and its complications and as a secondary field, human
therapeutic applications for the treatment or prevention of obesity and does not
include diagnostics or veterinary applications. Royalties are payable under the
license on a sliding scale, based on net sales of products sold. The agreement
may be terminated by one party if the other breaches a provision of the contract
and does not timely remedy it, for a payment default not timely remedied, upon
an insolvency event and in the event of certain change of control events in
respect of the other party. Upon termination the license ends and all amounts

                                       26
<PAGE>

theretofore accrued become due and payable. Unless terminated by either party
the agreement remains in effect for so long as any product, subject to the
agreement, is still covered by a project patent. As yet Autogen Research Pty Ltd
has not received any payments under this agreement, any future payments will be
dependent upon the results of the work undertaken and negotiations between the
parties.





Commercialization License (Field of Diabetes and Obesity) "TANIS" (now known as
"SelS"). Under the commercialization license dated August 26, 2002 between the
Company and Merck Sante, Merck Sante having exercised its option to take a
license in respect of certain intellectual property under the Research and
License Agreements with Autogen Research Pty. Ltd. is granted an exclusive
license in exchange for certain payments and royalties. The commercialization
license relates specifically to the novel gene "SelS" and products arising from
such gene. The license covers only human therapeutic applications for the
treatment of diabetes and its complications and does not include diagnostics or
veterinary applications. Royalties are payable under the license on a sliding
scale, based on net sales of products sold. The agreement may be terminated by
one party if the other breaches a provision of the contract and does not timely
remedy it, for a payment default not timely remedied, upon an insolvency event
and in the event of certain change of control events in respect of the other
party. Upon termination the license ends and all amounts theretofore accrued
become due and payable. Unless terminated by either party the agreement remains
in effect for so long as any product, subject to the agreement, is still covered
by a project patent. As yet Autogen Research Pty Ltd has not received any
payments under this agreement, any future payments will be dependent upon the
results of the work undertaken and negotiations between the parties.





Commercialization License (Field of Diabetes and Obesity) "AGT 203": Under the
commercialization license dated March 14, 2003 between the Company and Merck
Sante, Merck Sante having exercised its option to take a license in respect of
certain intellectual property under the Research and License Agreements with
Autogen Research Pty Ltd., is granted an exclusive license in exchange for
certain payments and royalties. The commercialization license relates
specifically to the novel gene AGT 203 and products arising from such gene. The
license covers only human therapeutic applications for the treatment of diabetes
and its complications and does not include diagnostics or veterinary
applications. Royalties are payable under the license on a sliding scale, based
on net sales of products sold. The agreement may be terminated by one party if
the other breaches a provision of the contract and does not timely remedy it,
for a payment default not timely remedied, upon an insolvency event and in the
event of certain change of control events in respect of the other party. Upon
termination the license ends and all amounts theretofore accrued become due and
payable. Unless terminated by either party the agreement remains in effect for
so long as any product, subject to the agreement, is still covered by a project
patent As yet Autogen Research Pty Ltd has not received any payments under this
agreement, any future payments will be dependent upon the results of the work
undertaken and negotiations between the parties.





Commercialization License (Field of Diabetes and Obesity) "AGT 121": Under the
commercialization license dated March 14, 2003 between the Company and Merck
Sante. Merck Sante having exercised its option to take a license in respect of
certain intellectual property under the Research and License Agreements with
Autogen Research Pty. Ltd. is granted an exclusive license in exchange for
certain payments and royalties. The commercialization license relates
specifically to the novel gene AGT 121 and products arising from such gene. The
license covers only human therapeutic applications for the treatment of diabetes
and its complications and does not include diagnostics or veterinary
applications. Royalties are payable under the license on a sliding scale, based
on net sales of products sold. The agreement may be terminated by one party if
the other breaches a provision of the contract and does not timely remedy it,
for a payment default not timely remedied, upon an insolvency event and in the
event of certain change of control events in respect of the other party. Upon
termination the license ends and all amounts theretofore accrued become due and
payable. Unless terminated by either party the agreement remains in effect for
so long as any product, subject to the agreement, is still covered by a project
patent. As yet Autogen

                                       27
<PAGE>

Research Pty Ltd has not received any payments under this agreement, any future
payments will be dependent upon the results of the work undertaken and
negotiations between the parties.





Patent and Technology License Agreement: On February 7, 2005 ChemGenex
Pharmaceuticals Limited entered into a technology licensing agreement with The
University of Texas M. D. Anderson Cancer Center to develop information or
discoveries relating to the anti-cancer activities of DACH-Ac-Pt
[(1R,2R-diaminocyclohexane)-(trans-diacetato)-(dichloro)-platinum(IV)] a novel
cisplatin analog now referred to by the Company as CXS299. The royalty-bearing,
exclusive license is for certain IP rights defined in United States Patent No.
5,434,256, and foresees the pre-clinical and clinical development of CXS299.
ChemGenex Pharmaceuticals Limited has incurred expenses of US$50,000 (paid by
cash and issue of shares) in March 2005. Further fees payable under this
agreement will be dependent upon the commencement of various stages of clinical
trials required, the results of those trials and the licensing of product
associated with the trials. Unless terminated by either party the agreement will
remain in effect until patent rights or technology rights associated with the
agreement expire.





Research Services (Subcontracting) Agreement: On June 26, 2000 Autogen Research
Pty Ltd entered into a research services agreement with Deakin University.
Pursuant to this agreement Autogen Research Pty Ltd subcontracts Deakin
University to conduct certain of the studies required to be performed pursuant
to the agreements with Merck Sante (described above) in respect of identified
novel gene products (Beacon, field of obesity). One of the parties may terminate
the agreement following the failure by the other party to make a payment that is
not remedied, other failure to perform obligations, in the event of insolvency
of the other party This agreement had been extended annually by deed and was
recently incorporated in a consolidated agreement dated April 21, 2005
(Research, Licence and Commercialisation Agreement) between ChemGenex
Pharmaceuticals Limited and Deakin University. Autogen Research Pty Ltd had
incurred expenses of A$1,040,000 in each of fiscal 2003 and 2004 and A$520,000
in fiscal 2005 for services provided under the original agreement.





Research, License and Commercialization Agreement (Gene Discovery in
Depression): Autogen Research Pty Ltd. is party to a research, license and
commercialization agreement dated August 16, 2000 with Deakin University
pursuant to which Autogen Research Pty Ltd. undertakes to fund a research and
development program with Deakin University in the field of depression. All
intellectual property developed under the terms of the agreement belongs to the
Company. If Autogen Research Pty Ltd. commercializes or licenses products
resulting from the research program conducted under the contract, it is
obligated to pay Deakin University a royalty on net sales. The contract may be
terminated if the University does not timely commence its work, if it fails to
achieve milestones or use appropriate professional standards or if the program
is not producing results in the opinion of Autogen Research Pty Ltd., among
other conditions. It may also be terminated by Deakin University if Autogen
Research Pty Ltd. fails to provide the agreed funding. Under certain
circumstances Autogen Research Pty Ltd. is obligated to pay the royalties to
Deakin University even in the event of early termination. This agreement had
been extended annually by deed and was recently incorporated in a consolidated
agreement dated April 21, 2005 (Research, Licence and Commercialisation
Agreement) between ChemGenex Pharmaceuticals Limited and Deakin University.
Autogen Research Pty Ltd had incurred expenses of A$380,000 in each of fiscal
2003 and 2004 and $190,000 in fiscal 2005 for services provided under the
original agreement.





Research Agreement: On February 28, 1997 Autogen Research Pty Ltd. entered into
a research agreement concerning novel therapies for treatment of obesity with
Deakin University and the International Diabetes Institute (IDI), pursuant to
which Autogen Research Pty Ltd undertakes to collaborate with Deakin and the IDI
and to provide the funding for a project in return for joint ownership and a
license to the intellectual property resulting

                                       28
<PAGE>

from the project. The IDI is the owner of the Psammomys obesus colony which it
agreed to make available to Deakin University for the purposes of the project.
If Autogen Research Pty Ltd commercializes or licenses products resulting from
the research program conducted under the contract, it is obligated to pay Deakin
University a royalty on net sales. The contract may be terminated if the
University does not timely commence its work, if it fails to achieve milestones
or use appropriate professional standards or if the program is not producing
results in the opinion of Autogen Research Pty Ltd, among other conditions. It
may also be terminated by Deakin University if Autogen Research Pty Ltd fails to
provide the agreed funding. Under certain circumstances Autogen Research Pty Ltd
is obligated to pay the royalties to Deakin University even in the event of
early termination. This agreement had been extended annually by deed and was
recently incorporated in a consolidated agreement dated April 21, 2005
(Research, Licence and Commercialisation Agreement) between ChemGenex
Pharmaceuticals Limited and Deakin University. Autogen Research Pty Ltd incurred
expenses of A$1,100,000 in each of fiscal 2003 and 2004 and A$550,000 in fiscal
2005 for services provided under the original agreement. The IDI retains ongoing
intellectual property rights based on the original agreement.





Research, License and Commercialization Agreement (Research Services Provision):
A recently executed contract dated April 21, 2005 between ChemGenex
Pharmaceuticals Limited and Deakin University consolidates the provision of
research services by Deakin University previously defined in the agreements of
June 26, 2000 (Research Services (Subcontracting)), August 16, 2000 (Research,
License and Commercialization Agreement (Gene Discovery in Depression)) and
February 28, 1997 (Research Agreement). Under the consolidated agreement
ChemGenex undertakes to fund research and development programs with Deakin
University in the fields of diabetes, obesity, cancer, respiratory diseases,
inflammatory diseases, osteoporosis, allergy, asthma, depression and
autoimmunity. All intellectual property developed under the terms of the
agreement belongs to the Company. If ChemGenex commercializes or licenses
products resulting from the research program conducted under the contract, it is
obligated to pay Deakin University a royalty on net sales. The contract may be
terminated if the University does not timely commence its work, if it fails to
achieve milestones or use appropriate professional standards or if the program
is not producing results in the opinion of the Company, among other conditions.
It may also be terminated by Deakin University if ChemGenex fails to provide the
agreed funding. Under certain circumstances the Company is obligated to pay the
royalties to Deakin University even in the event of early termination. The term
of this agreement is from January 1, 2005 to December 31, 2005. ChemGenex
incurred expenses of A$1,210,000 in fiscal 2005 for services provided under the
original agreement. Further expenses of $1,210,000 will be incurred until expiry
date.





Research, License and Commercialization Agreement: Autogen Research Pty Ltd.
entered into this agreement with the SFBR, based in San Antonio, Texas, on
December 31, 2002. Under the terms of this agreement Autogen Research Pty Ltd
undertakes to collaborate with SFBR and to provide funding for a project in
return for the joint ownership and an exclusive license to use and commercialize
the intellectual property resulting from the funded project on the terms set
forth in the agreement. Among the conditions for termination are failure to
timely commence and progress the agreed work plan, insolvency, change in control
and other similar conditions. The agreement also is terminable if Autogen
Research Pty Ltd does not provide the agreed funding. The term of this agreement
has been extended to June 30, 2005. Autogen Research Pty Ltd incurred expenses
of A$456,760 in fiscal 2003, A$555,304 in fiscal 2004 and A$490,929 in fiscal
2005 under this agreement.





Research Agreement: On January 14, 1998 Autogen Pty Ltd. entered into a research
agreement with the International Diabetes Institute (IDI) to conduct gene
discovery and validation research according to instruction from the Company in
the fields of obesity and diabetes pursuant to which Autogen Research Pty Ltd
undertakes to collaborate with the IDI and to provide the funding for a project
in return for joint ownership and a license to the intellectual property
resulting from the project. If Autogen Research Pty Ltd commercializes or
licenses products resulting from the research program conducted under the
contract, it is obligated to pay the IDI a royalty on net

                                       29
<PAGE>

sales. The contract may be terminated if the IDI does not timely commence its
work, if it fails to achieve milestones or use appropriate professional
standards or if the program is not producing results in the opinion of Autogen
Research Pty Ltd, among other conditions. It may also be terminated by the IDI
if Autogen Research Pty Ltd fails to provide the agreed funding. Under certain
circumstances Autogen Research Pty Ltd is obligated to pay the royalties to the
IDI even in the event of early termination. The term of this agreement has been
extended to June 30, 2005. Autogen Research Pty Ltd incurred expenses of
A$1,600,000 in fiscal 2002, A$1,499,545 in fiscal 2003 and A$1,233,323 in fiscal
2004 and A$1,104,190 in fiscal 2005 under this agreement.





Sponsored Clinical Study Agreement: ChemGenex Pharmaceuticals, Inc. is party to
a sponsored clinical study agreement with the M.D. Anderson Cancer Center of The
University of Texas, dated April 14, 2003, as amended, pursuant to which
ChemGenex as sponsor has agreed to fund a Phase 2 open-label study of
homoharringtonine. ChemGenex can terminate the agreement at will upon 30 days
prior notice and the research institution can terminate the agreement for
material breach by ChemGenex that is not timely remedied. In the event of
termination costs incurred up to the date of termination are payable. This
agreement will expire on April 21, 2005. Prior to June 21, 2004 ChemGenex
Pharmaceuticals, Inc. had incurred expenses of approximately US$2,561,000
(A$3,880,00) in relation to homoharringtonine trials. It is expected a further
US$1,688,000 (A$2,250,000) will be expended prior to the end of Phase 2 trials
in this compound.





Sole License Agreement: On March 1, 1999: Autogen Pty Ltd and Kyokuto
Pharmaceutical Industrial Co. Ltd., licensed certain intellectual property for
use in Kyokuto's diagnostic products in Japan. The contract relates to the use
of an engineered hybrid of certain forms of glutamic acid decarboxylase in the
diagnostic and presymptomatic detection of insulin dependent (type 1) diabetes.
Under the agreement Kyokuto is obligated to pay a net royalty on sales, at
certain minimum levels. If less than the minimum net royalty is paid, the
Company can terminate the license on three months' notice or convert it to a
non-exclusive license. The license agreement, which is for a term of 15 years or
so long as there is patent coverage over the licensed property, whichever is
long, can be terminated by either party for an uncured breach upon 60 days'
notice; for a payment default; upon certain insolvency events and in the event
of a change of control of either party, by the non-defaulting party.





PATENTS, LICENSES AND PROPRIETARY RIGHTS

The Company pursues a policy of seeking to obtain patent protection for its
inventions in Australia, the U.S., Europe, Japan and in selected other
countries. The Company also relies upon trade secrets, know-how, continuing
technological innovations and licensing opportunities to develop and maintain
its competitive position. To date, the Company has not threatened or instituted
proceedings against any third party on patent or other proprietary rights nor
has any third party threatened or instituted proceedings against the Company.

Certain products and processes currently being developed or considered for
development by the Company are in the area of biotechnology. The number of
patent filings by biotechnology firms in major jurisdictions is particularly
high and the outcome of such applications is generally uncertain and involves
complex legal and factual questions. To date, no consistent international policy
has emerged regarding the breadth of claims allowed in biotechnology patents.
Accordingly, there can be no assurance that the Company will develop products or
processes that are patentable, that patent applications made by the Company, or
made by parties who have agreed to license their inventions to the Company, will
result in patents being issued or that, if issued, the claims allowed will be
sufficiently broad to protect what the Company believes to be its proprietary
rights or that such patents will prevent others from developing similar or
functionally equivalent products or processes. In addition, products or
processes covered by such patents, or any other products or processes developed
by the Company or licensed to the Company, may infringe patents owned by third
parties or be subject to claims of patent infringement by these parties. In such
a situation, the Company may have to obtain a license, defend an infringement
action in court or challenge the scope

                                       30
<PAGE>

or validity of any infringed or allegedly infringed patents. Such required
licenses may not be available to the Company at all, or if available, such
licenses may not be on terms acceptable to the Company or that the Company will
prevail in any patent litigation. Failure to obtain a license or prevail in any
patent litigation relating to any technology that the Company may require to
commercialize its products or processes may have a material adverse impact on
the Company.

Litigation may also be necessary to enforce any patents granted to the Company
or to determine the scope and validity of third party patents. Patent litigation
is time consuming and expensive. The Company may not have, or be able to devote
the necessary resources to conduct patent litigation. Patent applications made
by or licensed to the Company may not result in patents being issued or, if
issued, the patents may not provide the right to exclude competitors with
similar technology.

The Company maintains an active policy of filing patent applications. It is
possible that patents may not be granted on pending applications made by the
Company or parties that have licensed their inventions to the Company.
Similarly, issued patents may not provide significant proprietary protection or
commercial advantage or may be infringed or designed around by others. Since
publication of inventions or discoveries in scientific or patent literature
often lags behind actual invention or discovery, it is possible that the
inventions covered by each of the Company's pending patent applications may not
have dominant status in terms of date of invention. The Company's patents or
patent applications may become involved in opposition proceedings instituted by
third parties. If such proceedings were initiated against the Company's rights,
the defense of such rights could involve substantial costs and the outcome
cannot be anticipated. If patents are issued to other parties that contain valid
claims that are interpreted to cover any of the Company's products, it is
possible that the Company may not be able to obtain licenses to such patents at
a reasonable cost, if at all, or may not be able to develop or obtain
alternative technology. Competitors or potential competitors may have filed
applications for, may have received patents covering, or may obtain additional
patents and proprietary rights that may relate to, compounds or processes
competitive with those of the Company.

The Company also relies upon unpatented proprietary technology, and no assurance
can be given that others will not independently develop substantially equivalent
proprietary technology and techniques, or otherwise gain access to the Company's
proprietary technology or disclose such technology, or that the Company can
meaningfully protect its rights to its unpatented proprietary technology,
secrets and know-how.

It is the Company's policy generally to require its consultants, outside
scientific collaborators, sponsored researchers and other advisors to execute
confidentiality agreements prior to the commencement of consulting or other
relationships with the Company. Employees have a similar confidentiality
provision in their employment contracts. These agreements provide that all
confidential information developed or made known to the individual during the
course of the individual's relationship with the Company is to be kept
confidential and not disclosed to third parties except in specific, limited
circumstances. The Company also requires signed confidentiality or material
transfer agreements from any person who is to receive confidential data or
proprietary material from the Company. In the case of consultants, the
agreements generally provide that all inventions conceived by the individual
while rendering services to the Company shall be assigned to the Company as the
exclusive property of the Company. Similar provisions are contained in the
Company's employment contracts, and provisions of many national laws, including
Australia, provide that intellectual property rights created during the course
of employment belong to the employer. There can be no assurance, however, that
these agreements and provisions will provide meaningful protection or adequate
remedies for the Company's intellectual property rights, trade secrets or other
confidential information in the event of unauthorized use or disclosure.

The Company's current patent portfolio is described below. It should be noted
that gene and molecule names, whilst updated in the above descriptions still
retain their previous identifiers in the IP table as these are the names used in
the USPTO applications.

                                       31
<PAGE>

<TABLE>
<CAPTION>
                          EARLIEST
TITLE                     PRIORITY         COUNTRIES ENTERED  PCT APPLICATION NUMBER    STATUS
-----                     --------         -----------------  ----------------------    ------

<S>                       <C>              <C>                <C>                       <C>
A novel gene and uses     October 30,      Australia          10112/99                  Granted
therefor (Beacon)         1998                                (742651)
                          October 30,      Canada             2,307,839                 Pending
                          1998
                          October 30,      Europe             98952412.9                Pending
                          1998
                          October 30,      Hong Kong          00107656.0                Pending
                          1998
                          October 30,      Israel             135822                    Pending
                          1998
                          October 30,      Japan              2000-519076               Pending
                          1998
                          October 30,      Mexico             0004223                   Granted
                          1998
                          October 30,      New Zealand        504327                    Granted
                          1998
                          October 30,      New Zealand        520101                    Granted
                          1998                                (Div of 504327)
                          October 30,      Singapore          200002303.6               Granted
                          1998
                          October 30,      U.S.A.             09/331,930                Granted
                          1998                                (6436670)
                          October 30,      U.S.A.             10/067,832                Pending
                          1998                                (Div of USSN 09/331,930)
---------------------------------------------------------------------------------------------------------
A ligand of the protein   April 19, 2000   Australia          39469/00                  Granted
`beacon'
                          April 19, 2000   Canada             2,370,286                 Pending
                          April 19, 2000   Europe             00918579.4                Pending
                          April 19, 2000   Hong Kong          02106821.0                Pending
                          April 19, 2000   Israel             146035                    Pending
                          April 19, 2000   Japan              2000-614280               Pending
                          April 19, 2000   Mexico             PA/2001/010743            Pending
                          April 19, 2000   New Zealand        530543                    Granted
                          April 19, 2000   Singapore          200106345-2               Granted
                          April 19, 2000   U.S.A.             09/959,164                Pending
----------------------------------------------------------------------------------------------------------
Therapeutic molecules     February 10,     U.S.A.             60/446,191                Pending
(Beacon ligand 2)         2003

                                       32
<PAGE>

                          February 10,     International      PCT/AU2004/000147         Pending
                          2003
--------------------------------------------------------------------------------------- -----------------
Novel genes and their
use in the modulation
of obesity, diabetes
and energy imbalance"     June 29, 2000    Australia          55129/00                  Granted
(B38, B55 (SEPS1), B60)
                          June 29, 2000    Canada             2,377,784                 Pending
                          June 29, 2000    Europe             00940047.4                Pending
                          June 29, 2000    Hong Kong          02107381.0                Pending
                          June 29, 2000    Israel             147183                    Pending
                          June 29, 2000    Japan              2001-508333               Pending
                          June 29, 2000    Mexico             PA/2001/013425            Pending
                          June 29, 2000    New Zealand        531749                    Granted
                                                              (Divisional of 516211)
                          June 29, 2000    Singapore          200108084.5               Granted
                          June 29, 2000    U.S.A.             10/039,050                Pending
----------------------------------------------------------------------------------------------------------
Nucleic acid expressed    February 5,      PCT                PCT/AU02/00109            Pending
in the hypothalamus or
muscle tissue in obese
animals"

(AGT-106, AGT-113,
AGT-201, AGT-202 and      2002
AGT-203 (PSARL))
                          February 5,      Australia          2002227795                Pending
                          2002
                          February 5,      Canada             2,437,423                 Pending
                          2002
                          February 5,      Europe             020709910.0               Pending
                          2002
                          February 5,      Hong Kong          04103638.8                Pending
                          2002
                          February 5,      Israel             157166                    Pending
                          2002
                          February 5,      Japan              2002-563330               Pending
                          2002
                          February 5,      Mexico             PA/a/2003/007067          Pending
                          2002
                          February 5,      New Zealand        527260                    Pending
                          2002

                                       33
<PAGE>

                          February 5,      Republic of        10-2003-701389            Pending
                          2002             Korea (South)
                          February 5,      Republic of        2003/5965                 Granted
                          2002             South Africa
                          February 5,      Singapore          200304476-5               Pending
                          2002
                          February 5,      U.S.A.             10/467,606                Pending
                          2002
---------------------------------------------------------------------------------------------------------
A gene and uses           May 21, 2002     PCT                PCT/AU02/00628            Pending
~therefore (L25, L27,
L28, S6, S9, S10, S15
and S31)
                          May 21, 2002     Australia          2002308412                Pending
                          May 21, 2002     Canada             2,447,942                 Pending
                          May 21, 2002     Europe             02771600.0                Pending
                          May 21, 2002     Hong Kong          04106894.0                Pending
                          May 21, 2002     Japan              2002-592483               Pending
                          May 21, 2002     New Zealand        529735                    Pending
                          May 21, 2002     U.S.A.             10/478,443                Pending
                          May 21, 2002     U.S.A.             Provisional               Pending
                                   60/494,428
---------------------------------------------------------------------------------------------------------
Modulating serum          June 21, 2002    PCT                PCT/AU02/00815            Pending
amyloid and interaction
with tanis and agents
useful for same"
(apolipoprotein
{modulator of Tanis}
                          June 21, 2002    Australia          2002344670                Granted
                          June 21, 2002    Canada             2,451,250                 Pending
                          June 21, 2002    Europe             02742500.8                Pending
                          June 21, 2002    Hong Kong          04106897.7                Pending
                          June 21, 2002    Japan              2003-506918               Pending
                          June 21, 2002    New Zealand        530499                    Pending
                          June 21, 2002    U.S.A.             10/481,652                Pending
---------------------------------------------------------------------------------------------------------
Obesity related genes     August 28, 2002  PCT                PCT/AU02/01173            Pending
expressed at least in
the hypothalamus, liver
or pancreas
(AGT-109, AGT-407,
AGT-408, AGT-409,
AGT-601, AGT-204)

                                       34
<PAGE>

                          August 28, 2002  Australia          2002325644                Pending
                          August 28, 2002  Canada             2,458,849                 Pending
                          August 28, 2002  Europe             02759897.8                Pending
                          August 28, 2002  Japan              2003-523670               Pending
                          August 28, 2002  New Zealand        531456                    Pending
                          August 28, 2002  Singapore          200401127-6               Pending
                          August 28, 2002  U.S.A.             10/488,350                Pending
---------------------------------------------------------------------------------------------------------
Differentially            October 16,      PCT                PCT/AU02/01405            Pending
expressed genes
associated with obesity
or Type 2 diabetes
(AGT-119, AGT-120,
AGT-121, AGT-122,
AGT-422, AGT-123 and      2002
AGT-504)
                          October 16,      Australia          2002332956                Pending
                          2002
                          October 16,      Canada             N/A                       Pending
                          2002
                          October 16,      Europe             02801234.2                Pending
                          2002
                          October 16,      Israel             161294                    Pending
                          2002
                          October 16,      Japan              2003-536252               Pending
                          2002
                          October 16,      Mexico             PA/a/2004/003635          Pending
                          2002
                          October 16,      New Zealand        532078                    Pending
                          2002
                          October 16,      Peoples Republic   02823611.4                Pending
                          2002             of China
                          October 16,      Republic of        10-2004-7005672           Pending
                          2002             Korea (South)
                          October 16,      Republic of        2004/2859                 Granted
                          2002             South Africa

                                       35
<PAGE>

                    October 16, Singapore 200401778-6 Pending
                          2002
                          October 16,      U.S.A.             10/826,448                Pending
                          2002
---------------------------------------------------------------------------------------------------------
Methods of treatment      March 16, 2004   U.S.A.             60/553,823                Pending
and prophylaxis (SGIP1
stand-alone)
                          March 16, 2004   International      PCT/AU2005/000372         Pending
---------------------------------------------------------------------------------------------------------
A gene and uses           January 13,      U.S.A.             60/439,767                Pending
therefor (AGT-701,
AGT-702, AGT-704,
AGT-705, AGT-706,
AGT-707, AGT-708,         2003
AGT-709 and AGT-710)
                          January 13,      International      PCT/AU2004/000043         Pending
                          2003
---------------------------------------------------------------------------------------------------------
Differential expression   July 8, 2003     U.S.A.             60/485,790                Pending
of nucleic acid (AGT
711 - AGT 726)
                          July 8, 2003     International      PCT/AU2004/000919         Pending
---------------------------------------------------------------------------------------------------------
A nucleic acid molecule   September 14,    U.S.A.             60/609,962                Pending
(AGT 307, AGT308,         2004
AGT309, AGT310 & AGT311)
                          September 14,    International      PCT/AU2005/001402         Pending
                          2004
---------------------------------------------------------------------------------------------------------
Therapeutic,              September 18,    U.S.A.             60/504,186                Pending
prophylactic and
diagnostic markers
(SelS and inflammation)   2003
                          September 18,    International      PCT/AU2004/001260         Pending
                          2003
---------------------------------------------------------------------------------------------------------
Methods and               February 3,      U.S.A.             60/541,862                Pending
compositions for
modulating satiety
(CXS829 and others)       2004
                          February 3,      International      PCT/AU2005/000120         Pending
                          2004
---------------------------------------------------------------------------------------------------------
A gene and uses           March 31, 2004   U.S.A.             60/558,261                Pending
therefore II (PSARL P
beta)
                          March 31, 2004   International      PCT/AU2005/000468         Pending
---------------------------------------------------------------------------------------------------------


                                       36
<PAGE>

Chemopotentiation by      March 15, 2000   U.S.A.             09/810527                 Granted
Cephalotaxine
alkaloids, derivatives,
compositions and uses
thereof
                          March 15, 2000   U.S.A.             10/769638                 Pending
                                                              Divisional of above
---------------------------------------------------------------------------------------------------------
Cephalotaxine alkaloid    March 15, 2000   U.S.A.             10/769638
                                                              Divisional of above to
compositions &                                                claim HHT and
uses thereof                                                  Camptothecin              Pending
                          March 15, 2000   Europe             01908763.2                Pending
                          March 15, 2000   Australia          2001245803
                                                                                        Pending
                          March 15, 2000   Canada             2402710                   Pending
                          March 15, 2000   Japan              2001-566662               Pending
                          March 15, 2000   Hong Kong          03104183.6                Pending
---------------------------------------------------------------------------------------------------------
Formulations and          July 17, 2002    International      PCT/US03/21639            Pending
methods of
administration of
Cephalotaxines,
including
homoharringtonine
---------------------------------------------------------------------------------------------------------
Angiogenesis inhibition   July 22, 2002    U.S.A.             10/625866
by Cephalotaxine
alkaloids, derivatives,
compositions and uses
thereof                                                                                 Pending
                          July 22, 2002    International      US03/22926                Pending
---------------------------------------------------------------------------------------------------------
Chemopotentiation by      April 12, 2000   U.S.A.             09/834177                 Granted
napthalimides,
derivatives,
compositions and uses
thereof                                                                                 (US6,630,173)
                          April 12, 2000   Europe             EP 1,274,458 B1           Granted
---------------------------------------------------------------------------------------------------------
Naphthalimide             July 8, 2002     U.S.A.             10/616178
synthesis  including
amonafide synthesis and
pharmaceutical
preparations thereof                                                                    Pending
                          July 8, 2002     International      PCT/US03/21503            Pending
------------------------- ---------------- ------------------ ------------------------- -----------------
</TABLE>

                                       37
<PAGE>

Patent protection is being sought in major markets through the filing of U.S.
and International Patent Cooperation Treaty ("PCT") applications. The portfolio
includes 22 PCT applications and currently derived from these applications are
over 96 national and regional patent applications in 12 different jurisdictions,
including the U.S., Europe and Japan. The portfolio also includes 5 provisional
patent applications not listed above that have been submitted in the past year.



Under the PCT, a single patent application is filed which designates various
countries or regions. The application is referred to as an International
application. All major countries and regions (e.g. Europe) can be designated and
this effectively reserves the right to lodge patent applications in those
countries and regions up to 18 months following the filing of the PCT
application. During that period, an International Search Report and an
International Preliminary Examination Report are issued by the relevant national
patent office (eg. the United States Patent and Trademark Office ("USPTO"), or
Australian Patent Office) and there are opportunities to amend the claims and
specification although new matters cannot be added. At the end of the 18 month
period (i.e. generally 30 months after filing of the initial provisional
application), the applicant decides in which countries to pursue national or
regional applications.



COMPETITION

The Company faces, and will continue to face, intense competition from one or
more of the following entities:

          o    biotechnology companies;

          o    pharmaceutical companies;

          o    academic and research institutions; and

          o    government agencies.

The Company is also subject to significant competition from organizations that
are pursuing approaches, technologies and products that are the same as, or
similar to, its technology and products. Any products that are developed through
the Company's technologies will compete in highly competitive markets. Further,
the Company's competitors may be more effective at using their technologies to
develop commercial products. Many of the organizations competing with the
Company have greater capital resources, larger research and development staffs
and facilities, more experience in obtaining regulatory approvals and more
extensive product manufacturing and marketing capabilities. As a result, the
Company's competitors may be able to more easily develop technologies and
products that would render the Company's technologies and products, and those of
its collaborators, obsolete and noncompetitive. In addition, there may be
product candidates of which the Company is not aware at an earlier stage of
development that may compete with the Company's product candidates.

Specific competition risk according to disease class is summarized below.

Cancer
The Company faces intense competition from major pharmaceutical companies and
specialized biotechnology companies engaged in the development of product
candidates and other therapeutic products. Several of these companies have
products in the same indications or utilize similar technologies and/or
personalized medicine techniques, such as Antigenics' HSPPC-70 personalized
cancer vaccine, currently in a Phase 2 trial in CML. Bristol-Myers Squibbs'
Dasatinib (BMS-354825) and Novartis's AMN-107 are currently in Phase 2 clinical
trials for CML patients who have developed resistance to Gleevec(R). Supergen
has three Phase 2 studies ongoing with decitabine in CML. Xanthus Life Sciences
is currently conducting a Phase I/2 study with amonafide malate in acute myeloid
leukemia. There are also a number of other competitive trials or technologies
elsewhere in the world.

Metabolic Syndrome and Depression
There are numerous internationally-regarded genomics and target discovery
companies that are active in the search for new potent therapeutics against
these diseases. Some of the Company's competitors have entered into
collaborations with leading companies within the Company's target markets.
Companies that are applying different proprietary technologies to the search for
novel targets include:

                                       38
<PAGE>





          o    Amgen, Inc.

          o    Curagen Corporation, Inc.

          o    DeCode Genetics.

          o    Excelixis, Inc.

          o    Genentech, Inc.

          o    Human Genome Sciences, Inc.

          o    Incyte Pharmaceuticals, Inc.

          o    ZymoGenetics, Inc.

A number of organizations are attempting to rapidly identify and patent genes
and gene fragments sequenced at random, typically without specific knowledge of
the function of such genes or gene fragments. If the Company's competitors
discover or characterize important genes or gene fragments before it does, it
could adversely affect the Company's ability to commercialize its products. The
Company expects that competition in genomics research will intensify as
technical advances are made and become more widely known. In addition, a number
of competitors are claiming patent protection without having cellular, animal,
or human data to support their claims. In many cases generic claims are being
issued by the USPTO, and these claims may make it difficult to commercialize
products, or, if licenses are made available, may make the royalty burden on
these products so high as to prevent commercial success.


Material effects of government regulation
The international pharmaceutical industry is highly regulated by numerous
governmental authorities in Australia, the U.S., the U.K., Europe and by
regulatory agencies in other countries where the Company intends to test or
market products it may develop. National regulatory authorities administer a
wide range of laws and regulations governing the testing, approval,
manufacturing, labeling and marketing of drugs and devices and also review the
quality, safety and effectiveness of pharmaceutical products and devices. These
regulatory requirements are a major factor in determining whether a substance
can be developed into a marketable product and the amount of time and expense
associated with such development.

The national regulatory authorities have high standards of technical appraisal.
Consequently, the introduction of new pharmaceutical products generally entails
a lengthy development and approval process. Of particular importance is the
requirement that products be authorized or registered prior to marketing and
such authorization or registration be maintained. Of particular significance in
the U.S. are the U.S. FDA requirements covering research and development,
testing, manufacturing, quality control, labeling and marketing of drugs for
human use. A pharmaceutical product cannot be marketed in the U.S. until it has
been approved by the FDA, and then can only be marketed for the indications and
claims approved by the FDA. As a result of these requirements, the length of
time, the level of expenditure and the laboratory and clinical information
required for approval of a New Drug Application ("NDA") or a product license
application are substantial and can require a number of years, although recently
revised regulations are designed to reduce the time for approval of new
products. In Europe, two systems for the registration of pharmaceutical products
are in operation, the centralized procedure and the mutual recognition
procedure. In the centralized system, review of the proposed new product is
co-coordinated by the European Medicines Evaluation Agency ("EMEA") located in
London and, if the product is found to meet the criteria for marketing
authorization, a European Marketing Authorization is granted which is valid
throughout the EU. In the mutual recognition procedure, the initial review is
undertaken by the national health authority of one of the EU member states and,
if this country considers the product acceptable for marketing authorization,
the other EU member states are asked to recognize this approval and issue their
own authorization. The mutual recognition procedure thus results in a national
authorization in each member state. However, irrespective of the procedure
followed, the technical requirements for marketing authorization are the same.
For European countries that are outside the EU, national marketing authorization
procedures with similar technical standards exist. The Company anticipates that
the introduction of new products will continue to require substantial effort,
time and expense in order to comply with regulatory requirements.

No new drug is permitted to be sold in developed countries without extensive
data on its quality, safety and efficacy first being obtained, organized and
submitted to governmental regulatory authorities. The development stage of this
process may be divided into two parts: (i) pre-clinical; and (ii) clinical
development. Included in pre-clinical development are the development of
processes for manufacturing the product candidate, toxicology studies and

                                       39
<PAGE>

other activities such as pharmacology and drug metabolism studies. Clinical
trials run until, and in some cases after, the product is marketed and cover
several, sometimes overlapping, phases.

In Phase I trials, a small number of healthy human volunteers are exposed to a
product candidate. Typically, the volunteers are administered single or multiple
doses, following which the effects of the candidate drug are closely monitored.
The way the body deals with the product candidate from administration to
elimination (pharmacokinetics) is also studied. Phase 2 trials involve the first
studies on patients and explore the doses required to produce the desired
benefits. Safety and pharmacokinetic information is also collected. Phase 3
trials typically involve larger numbers of patients and geographically dispersed
test sites. The trials in this Phase may compare the new agent with other
available treatments. In Phase 3 trials, costs are significantly higher than in
earlier Phases due to the larger number of patients and longer duration of
trial.

In addition to the forms of regulation referred to above, the prices of
pharmaceutical products in many countries are controlled by law. In some
countries, such as France and Japan, the prices of individual products are
regulated. By contrast, in the U.K., prices are controlled by reference to
limits upon the overall profitability, measured by the rate of return on capital
employed, of sales of products supplied under the U.K. National Health Service.
The permitted rate of return on capital employed for each pharmaceutical company
is determined through negotiations with the U.K. Department of Health under the
1999 Pharmaceutical Price Regulation Scheme. If a company's actual rate of
return exceeds the agreed rate, it is required to negotiate either a repayment
of past profits which the Department of Health considers to be excessive or
future price reductions. There is no assurance that the current arrangements
will continue in the future.

Governments may also influence the price of pharmaceutical products through
their control of national healthcare organizations which may bear a large part
of the cost of supply of such products to consumers. In the U.S. and Germany,
indirect pressure can be exerted on prices by government funded or private
medical care plans. The Company is unable to predict whether, or to what extent,
its business may be affected by legislative and regulatory developments relating
to specific pharmaceutical products or the pricing of such products, or to its
overall business. The uncertainties involved, or any adverse regulatory
developments, could significantly affect the Company's operational results and
its ability to achieve profitability.

C.       ORGANIZATIONAL STRUCTURE

ChemGenex Pharmaceuticals Limited is a limited liability corporation listed on
the ASX. Its subsidiaries are set forth below:

<TABLE>
<CAPTION>
Name of entity                                  Country of incorporation    Ownership interest (%)     Business
--------------                                  ------------------------    ----------------------     --------
<S>                                             <C>                         <C>                        <C>
Autogen Research Pty Ltd                        Australia                   100                        Research and
                                                                                                       development
ChemGenex Pharmaceuticals, Inc. (formerly       U.S. (Delaware)             100                        Research and
ChemGenex Therapeutics, Inc.)                                                                          development
</TABLE>


D.       PROPERTY, PLANT AND EQUIPMENT

The Company's headquarters are in Geelong, Victoria, Australia. Its
headquarters, comprising leased premises of approximately 80 square meters,
contains office space and storage space. The property plant and equipment
recorded includes leasehold improvements, furniture and fittings, computer
equipment, and equipment used in research and development by external providers.

These properties are in good condition.

The lease for the headquarters premises is continuing. Designated research
projects are subcontracted to third party laboratories.

ChemGenex Pharmaceuticals, Inc. leases approximately 2,400 square feet of
corporate office space in Menlo Park, California, under a lease agreement that
terminates on December 31, 2005. The U.S. subsidiary also subleases

                                       40
<PAGE>

approximately 500 square feet of laboratory space to conduct in vitro
experiments to support oncology discovery and development programs in Menlo
Park, California under a sublease that terminates on December 31, 2005.

Environmental

The Company's operations are not subject to any significant environmental
regulations under either Australian Commonwealth or State legislation. The
Company uses hazardous materials that could be dangerous to human health, safety
or the environment. As appropriate, the Company stores these materials and
various wastes resulting from their use at its facilities pending ultimate use
and disposal. The Company is subject to a variety of federal, state and local
laws in both Australia and the U.S. and regulations governing the use,
generation, manufacture, storage, handling and disposal of these materials and
wastes resulting from the use of such materials. While the costs for compliance,
including costs related to the disposal of hazardous materials, to date have
been nominal, the Company may incur significant costs complying with both
existing and future environmental laws and regulations. ChemGenex
Pharmaceuticals, Inc. is subject to regulation by the Occupational Safety and
Health Administration, or OSHA, the California and federal environmental
protection agencies and to regulation under the Toxic Substances Control Act.
OSHA or the California or federal EPA may adopt regulations that may affect the
U.S. subsidiary's research and development programs. The Company is unable to
predict whether any agency will adopt any regulations that could have a material
adverse effect on its operations.


ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis should be read in conjunction with Item
3A. "Selected consolidated financial data" and the Company's audited
consolidated financial statements, the notes thereto and other financial
information appearing elsewhere in this Annual Report. In addition to historical
information, the following discussion and other parts of this Annual Report
contain forward-looking statements that reflect the Company's plans, estimates,
intentions, expectations and beliefs. Actual results could differ materially
from those discussed in the forward-looking statements. See the "Risk Factors"
section of Item 3D and other forward-looking statements in this Annual Report
for a discussion of some, but not all factors that could cause or contribute to
such differences.

The following review is based on the Company's audited consolidated financial
statements which are prepared under A GAAP. A summary of the significant
differences between A GAAP and U.S. GAAP is given below and more detailed
information is provided in the Company's audited consolidated financial
statements included elsewhere in this Annual Report.

RECENTLY ISSUED BUT NOT YET ADOPTED ACCOUNTING PRONOUNCEMENTS APPLICABLE TO
CHEMGENEX

AUSTRALIAN PRONOUNCEMENTS
In accordance with the Financial Reporting Council's strategic directive, the
Company will be required to prepare financial statements that comply with
Australian equivalents to International Financial Reporting Standards ("A
IFRS"), for annual reporting periods beginning on or after January 1, 2005.
Accordingly, the Company's first half-year report prepared under A IFRS will be
for the half-year reporting period ending December 31, 2005, and the first
annual financial report prepared under A IFRS will be for the year ending June
30, 2006.

The Company has commenced transitioning its accounting policies and financial
reporting from A GAAP to A IFRS. The Company has allocated internal resources
and engaged external consultants to perform diagnostics and conduct impact
assessments to isolate key areas that will be impacted by the transition to A
IFRS. As the Company has a June 30 year end, priority has been given to
considering the preparation of an opening balance sheet in accordance with A
IFRS as at July 1, 2004. This will form the basis of accounting for Australian
equivalents of IFRS in the future, and is required when the Company prepares its
first fully A IFRS compliant financial report for the year ending June 30, 2006.
Set out below are the key areas where accounting policies will change-

Goodwill
Under AASB 3 Business Combinations goodwill would not be permitted to be
amortised but instead is subject to impairment testing on an annual basis or
upon the occurrence of triggers which may indicate a potential impairment.
Currently, the group amortises goodwill over its useful life but not exceeding
20 years.

                                       41
<PAGE>

The Company has not elected to apply AASB 3 retrospectively and hence, prior
year amortisation would not be written-back as at the date of transition.

Impairment of assets
Under AASB 136 Impairment of Assets, the recoverable amount of an asset is
determined as the higher of net selling price and value in use. Estimated "whole
of life" depreciation rates will no longer be used as companies are review
assets for "impairment' at the end of each reporting period.

Share-based payment
Under AASB 2 Share based Payments, the Company would recognise the fair value of
options granted to employees and non-employees as remuneration as an expense on
a pro-rata basis over the vesting period in the statement of financial
performance with a corresponding adjustment to equity. Share-based payment costs
are not recognised under A-GAAP.

Income taxes
The Company has carried forward tax losses which have not been recognized as
deferred tax assets as they do not satisfy the `virtually certain' criteria
under A GAAP. Under A IFRS, it may be easier to recognize these tax losses as
deferred tax assets as they are recognized based on a `probable' recognition
criteria. The impact of this difference may be to increase deferred tax assets
and opening retained earnings, and result in a higher level of recognized
deferred tax assets on a go-forward basis.

The Company's estimates of the effect of the implementation of A IFRS are
detailed in note 1(s) of the consolidated financial statements.

U.S. PRONOUNCEMENTS
In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004),
Share-Based Payments ("SFAS 123R"). This statement eliminates the option to
apply the intrinsic value measurement provisions of Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25")
to stock compensation awards issued to employees. Rather, SFAS No. 123R requires
companies to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award.
That cost will be recognized over the period during which an employee is
required to provide services in exchange for the award - the requisite service
period (usually the vesting period). SFAS No. 123R applies to all awards granted
after the required effective date and to awards modified, repurchased, or
cancelled after that date. SFAS No. 123R will be effective for the Company's
fiscal year ending June 30, 2006. The Company has not yet quantified the effect
of the future adoption of SFAS No. 123R on a go forward basis.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets
- an amendment of APB Opinion No. 29 ("SFAS No. 153"), which amends APB Opinion
No. 29, Accounting for Nonmonetary Transactions to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. The Company does not
anticipate that the adoption of this statement will have a material effect on
its financial position or results of operations.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3
("SFAS 154"). The Statement applies to all voluntary changes in accounting
principle, and changes the requirements for accounting for and reporting of a
change in accounting principle. SFAS 154 requires retrospective application to
prior periods' financial statements of a voluntary change in accounting
principle unless it is impracticable. APB Opinion No. 20, Accounting Changes
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of the change the cumulative
effect of changing to the new accounting principle. SFAS 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005 (fiscal 2007 for the Company). The Company has not yet
assessed the impact of the adoption of SFAS 154.

                                       42
<PAGE>

DIFFERENCES BETWEEN AUSTRALIAN ACCOUNTING STANDARDS AND U.S. ACCOUNTING
STANDARDS
The Company prepares its audited consolidated financial statements in accordance
with A GAAP, which differ in certain significant respects from U.S. GAAP. The
following table sets forth a comparison of the Company's net loss and total
equity in accordance with A GAAP and U.S. GAAP as of the dates and for the
periods indicated:

<TABLE>
<CAPTION>
                                               -----------------------------------------------------
PERIOD                                             YEAR TO JUNE      YEAR TO JUNE      YEAR TO JUNE
                                                       30, 2005          30, 2004          30, 2003
                                               -----------------------------------------------------

                                               -----------------------------------------------------
<S>                                                     <C>               <C>               <C>
Net  loss  in  accordance  with  A  GAAP  (as           (6,661)           (3,171)           (1,887)
restated)
                                               -----------------------------------------------------
Net loss in accordance with U.S. GAAP                   (6,187)          (20,060)           (1,943)
                                               -----------------------------------------------------

                                               -----------------------------------
AS AT                                             JUNE 30, 2005     JUNE 30, 2004

                                               -----------------------------------

                                               -----------------------------------
Total equity in accordance with A GAAP                   24,387            16,713
                                               -----------------------------------
Total equity in accordance with U.S. GAAP                 8,378               131
                                               -----------------------------------
</TABLE>


See Note 25 to the audited consolidated financial statements included elsewhere
herein for a description of the differences between A GAAP and U. S. GAAP as
they relate to the Company, and a reconciliation to U.S. GAAP of net loss and
total equity for the dates and periods indicated therein. Differences between A
GAAP and U.S. GAAP that have a material effect on net loss and total equity
relate to share-based compensation, purchase accounting and marketable
securities.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The Company prepares its financial statements in accordance with generally
accepted accounting principles. As such, it is required to make estimates,
judgments, and assumptions that management believes are reasonable based upon
the information available. The estimates, judgments and assumptions affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the periods
presented. The significant accounting policies listed in Note 1 of the Company's
audited consolidated financial statements that management believes are the most
critical to aid in fully understanding and evaluating its financial condition
and results of operations are discussed below.


A GAAP AND U.S. GAAP

Revenue Recognition

Research revenue comprises amounts received for certain research and development
activities under the Company's collaborations with Merck Sante and Vernalis
(R&D) Limited.

For contracts without specifically defined milestones, revenues are recognized
as earned on a straight line basis over the lives of the respective agreements
as this reflects the level of effort required over the performance period. Such
agreements are performed on a "best efforts" basis with no guarantee of either
technological or commercial success Project funding received in advance of the
period in which the associated research efforts are performed is included in
deferred revenue.

For contracts with specifically defined milestones, revenues from milestone
payments related to agreements under which the Company has no continuing
performance obligations are recognized upon achievement of the related milestone
which represents the culmination of the earnings process. Revenues from
milestone payments related to research collaboration agreements under which the
Company has continuing performance obligations are recognized as revenue upon
achievement of the milestone only if all of the following conditions are met:
the milestone payments are non-refundable; substantive effort is involved in
achieving the milestone; and the amount of the

                                       43
<PAGE>

milestone is reasonable in relation to the effort expended or the risk
associated with achievement of the milestone. If any of these conditions are not
met, the milestone payments are deferred and recognized as revenue when the
collaborating party confirms that the performance obligations have been met.


U.S. GAAP

In-Process Research and Development

In connection with the June 21, 2004 merger with ChemGenex Therapeutics, Inc.
(accounted for under the purchase method of accounting), for U.S. GAAP purposes
the Company allocated A$16.6 million of the purchase price to in-process
research and development projects that had not yet reached technological
feasibility and are reasonably believed to have no alternative future use. The
value assigned to in-process research and development was determined by
estimating the cost to develop the purchased in-process research and development
into commercially feasible products, the percentage of completion at the
acquisition date and the resulting net risk-adjusted cash flows from the
projects, and discounting the net cash flows to their present value. The
discount rate of 43.5% used in determining the in-process research and
development expenditures reflects a higher risk of investment because of the
higher level of uncertainty due in part to the nature of the Company and the
industry to constantly develop new technology for future product releases. The
forecasts used by the Company in valuing in-process research and development
were based on assumptions the Company believed at the time to be reasonable, but
which are inherently uncertain and unpredictable. Given the uncertainties of the
development process, no assurance can be given that deviations from the
Company's estimates will occur and no assurance can be given that the in-process
research and development projects identified will ever reach either
technological or commercial success.

Share-based Compensation
Under U.S. GAAP, the Company has elected to account for share-based compensation
attributable to the issuance of share options to directors and employees using
the intrinsic value method as prescribed by APB No. 25. Accordingly, share-based
compensation expense is only recorded if the quoted market price of the
Company's stock, as at the measurement date, exceeds the amount that the
director or employee must pay. The intrinsic value attributable to unvested
options is amortized over the remaining vesting period of the options. For
options that vest upon the achievement of a target stock price, compensation
expense is recognized when the target is achieved.

Under U.S. GAAP, the Company accounts for share-based compensation attributable
to share options granted to non-employees in accordance with SFAS No. 123,
Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting
for Stock-Based Compensation-Transition and Disclosure (collectively, "SFAS No.
123"), and Emerging Issues Task Force Issue No. 96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services ("EITF No. 96-18"). Under SFAS No.
123 and EITF No. 96-18, share-based compensation for stock options granted to
non-employees is equal to the fair value of the share options as of the
measurement date. The Company determines the fair value of options granted to
non-employees using the Black-Scholes option valuation model, which requires the
input of highly subjective assumptions, including the estimated fair value of
the Company's common stock and expected stock price volatility. Share-based
compensation related to unvested options granted to non-employees is remeasured
periodically as the underlying options vest.

RESTATEMENT
As a public company in Australia, the Company is required to file consolidated
financial statements with the ASX and the Australian Securities and Investment
Commission ("ASIC") that comply with A-GAAP. In these statutory A-GAAP
consolidated financial statements for the year ended June 30, 2004, direct
acquisition costs associated with the Company's June 2004 acquisition of
ChemGenex Therapeutics, Inc. were expensed as incurred.

For the purpose of the Company's Registration Statement on Form 20-F filed with
the Securities and Exchange Commission in June 2005, the Company completed a
detailed assessment of the in-process research and development and potential
cash flows of ChemGenex Therapeutics, Inc. and further considered the applicable
guidance in AASB 1013, Accounting for Goodwill, which led the Company to
conclude that it should have capitalized the direct acquisition costs as part of
the cost of acquisition, thereby increasing the goodwill on acquisition. This
change in accounting treatment was reflected in the Company's statutory A-GAAP
interim consolidated financial statements for the half year ended December 31,
2004 and consolidated financial statements for the year ended June 30, 2005
lodged with the ASX and the ASIC during 2005.

                                       44
<PAGE>

For the purpose of this Form 20-F Annual Report, the Company has restated its
Consolidated Statement of Financial Performance for the year ended June 30, 2005
to reverse the change in accounting treatment of the direct acquisition costs
made in the statutory filings lodged with the ASX and the ASIC referred to
above. This reversal is necessary as the direct acquisition costs were already
capitalized in the consolidated financial statements as of and for the year
ended June 30, 2004 included in the Company's June 2005 Registration Statement
on Form 20-F. As at June 30, 2005, the Consolidated Statement of Financial
Position included in this Form 20-F Annual Report and as well as the statutory
A-GAAP consolidated financial statements filed with the ASX and ASIC reflect the
same values for goodwill ($16,083,622) and for net assets ($24,387,320).

A summary of the significant effects of the restatement for the year ended June
30, 2005 is included as note 24 to the consolidated financial statements.


A.       OPERATING RESULTS

The Company's principal activity since July 1996 has been research and
development of novel targets and therapeutics for human diseases including
obesity, diabetes, depression and cancer. The Company has made losses since
commencing its current principal activities. As at June 30, 2005,, the Company's
accumulated deficit was A$ 71,072,449 compared to A$64,411,243, as at June 30,
2004, and A$61,240,103 at June 30, 2003.

The Company's losses fluctuate from year to year principally due to the
commencement or termination of collaborative research and development
agreements, the timing of milestone payments, government grants, the level of
interest income and variations in the level of expenditures relating to research
and clinical development programs. The Company expects to incur continued losses
in coming years. The Company continues to incur the greater part of its costs on
personnel and external contract costs needed to support the research and
development of its platforms, including expenses related to the protection of
patent and other intellectual property rights.


OVERVIEW

The Company is a development stage biopharmaceutical company committed to
advancing patient care by discovering, developing and commercializing novel
medicines for cancer, diabetes, obesity, depression and anxiety. ChemGenex
Pharmaceuticals Limited was formed through the merger of AGT Biosciences Limited
and ChemGenex Therapeutics, Inc. on June 21, 2004. AGT Biosciences Limited was a
publicly-listed company that specialized in the use of genomics tools to
identify and validate novel targets for therapeutic intervention in diabetes,
obesity, depression and anxiety. AGT Biosciences Limited, which had previously
been called Autogen Limited (from May 1999 to March 2003) and Australia Wide
Industries Limited (from July 1986 to May 1999), commenced biotechnology
activities on July 10, 1996. On June 28, 2002, a 20% shareholding in Autogen
Limited held by the then Executive Chairman was sold to the publicly-listed
Australian investment company, Charter Pacific Corporation Limited. This led to
a significant restructure of the management team and significantly improved
financial performance of the Company. ChemGenex Therapeutics, Inc. was a private
company incorporated in the state of Delaware on September 14, 1999 to use
genomic tools and medicinal chemistry to accelerate the development of
anti-cancer therapeutics. The merged entity commenced trading on the ASX as
ChemGenex Pharmaceuticals Limited on June 29, 2004. The merged entity has an
aggregate of 114,797,616 shares of ordinary stock outstanding.

To date, the Company has devoted substantially all of its resources to the
development of its target discovery and validation technologies, research and
development and preclinical and early stage clinical testing of Ceflatonin(R)
(homoharringtonine) and Quinamed(R) (amonafide dichloride) and other product
candidates. It has incurred net losses since the commencement of biotechnology
operations and expects to incur substantial and increasing losses for the next
several years as it expands its research and development activities and moves
its product candidates into later stages of development. To date, the Company
has no product revenue and has funded its operations primarily through the
payments from pharmaceutical industry partners (direct revenues and milestone
payments), issue of equity securities and interest income. It has established
ongoing partnership agreements in its two main discovery programs; diabetes and
obesity (with Merck Sante) and depression and anxiety (with Vernalis (R&D)
Limited). Planned core activities over the next several years are to:

                                       45
<PAGE>

          o    continue the development of Ceflatonin(R), currently in Phase 2
               clinical trial for the treatment of CML;

          o    continue the development of Quinamed(R), currently in Phase 2
               clinical trial for the treatment of solid tumors including
               prostate, breast and ovarian cancer;

          o    continue the development of its other cancer-treating product
               candidates;

          o    expand the Company's research, discovery and development programs
               in the fields of diabetes and obesity;

          o    expand the Company's research, discovery and development programs
               in the fields of depression and anxiety;

          o    advance the Company's preclinical cancer-treating candidates into
               clinical development;

          o    establish and maintain sales and marketing operations;

          o    commercialize any product candidates that receive regulatory
               approval; and

          o    in-license technology and acquire or invest in businesses,
               products or technologies that are synergistic with the Company's
               own.


ChemGenex has a limited history of operations with its current management team
and business focus.

The Company's business is subject to significant risks, including but not
limited to the risks inherent in its ongoing clinical trials and the regulatory
approval process, the results of its research and development efforts,
competition from other products and technologies and uncertainties associated
with obtaining and enforcing patent rights.

RESULTS OF OPERATIONS - FISCAL YEARS

The following tables are intended to illustrate a tabular analysis of the
consolidated statements of financial performance for the 2005, 2004 and 2003
fiscal years.

The table below shows contribution of different revenue types to total revenue
for fiscal 2005, 2004 and 2003. All revenue was earned in Australia and is
expressed in A$.

<TABLE>
<CAPTION>
                                                                         2005                 2004                2003
                                                                                                A$
<S>                                                                 <C>                  <C>                 <C>
Research revenue                                                    3,527,312            2,885,349           4,997,247
Interest revenue                                                      266,987               80,828              57,947
Patent reimbursement                                                  104,085              605,110                   -
Exchange rate benefit                                                       -               24,153                   -
Other revenue                                                         196,902                    -             149,404
                                                           ------------------------------------------------------------
Total revenue                                                       4,095,286            3,595,440           5,204,598
                                                           ------------------------------------------------------------


The table below shows revenue changes for fiscal 2005, 2004 and 2003:

                                                                      PERCENTAGE CHANGE OVER PREVIOUS YEAR
                                                                         2005                 2004                2003
                                                           ------------------------------------------------------------
Revenues from ordinary activities                                       13.9%               -30.9%               11.0%


The table below shows the proportion of individual expenses items to total operating costs for fiscal 2005, 2004 and 2003.
                                                                         2005                 2004                2003
                                                                (AS RESTATED)
                                                           ------------------------------------------------------------
Research and development expenditure                                    43.0%                64.8%               65.6%
Employee costs                                                          20.7%                12.2%               11.5%
Patent costs                                                             4.1%                 7.0%                2.0%
Legal costs                                                              1.0%                 0.0%                1.2%
Depreciation                                                             2.5%                 3.8%                3.6%
Amortization                                                             7.9%                 0.5%                0.0%
Non-current asset write-down                                             0.0%                 0.0%                4.1%
Other expenses from ordinary activities                                 20.8%                11.7%               12.0%

TOTAL EXPENSES                                                         100.0%               100.0%              100.0%
</TABLE>

                                       46
<PAGE>


While the level of research and development expenditure has remained relatively
constant for the past three fiscal years, the relativity to other expenses
altered significantly in 2005 reflecting the increase in the Company's operating
base following the merger with ChemGenex Therapeutics Inc. in June 2004.



COMPARISON OF FISCAL YEAR 2005 WITH FISCAL YEAR 2004


Revenue
The Company's total revenue increased by A$0.5 million or 14% from A$3.6 million
in fiscal 2004 to A$4.1 million in fiscal 2005. The increase primarily reflects
the introduction of the depression gene discovery and validation agreement with
Vernalis (R&D) Limited which provided revenue of A$1.0 million in fiscal 2005.
Interest revenue increased by A$0.2 million due to higher cash balances while
patent reimbursements reduced by A$0.5 million.

Costs and expenses

The Company's costs and expenses are detailed in the consolidated statements of
financial performance.


Research and development expenditure


Research and development expenditure increased by 5% from A$4.4 million in
fiscal 2004 to A$4.6 million in fiscal 2005. This increase reflects preliminary
expenses incurred on the cancer trials and a rearrangement of expenses
associated with the depression and metabolic syndrome projects.

Employee costs


Employee expenses increased by A$1.4 million or 169% from A$0.8 million in
fiscal 2004 to A$2.2 million in fiscal 2005, reflecting the inclusion of the
Menlo Park operations for a full year.


Patent costs

Patent costs include regulatory charges involved in applying for, and
maintaining, patent protection together with charges from patent attorneys for
specialist advice on these matters. Patent costs are expensed as incurred.
Patent costs decreased by 6% in fiscal 2005 due to different timing of various
patent activities.


Legal costs


Legal costs increased by 3,110% from almost nil in fiscal 2004 to A$0.1 million
in fiscal 2005, reflecting the requirement for legal services in the development
of new contracts.


Depreciation


No substantive change from previous year.


Amortization


Amortization in fiscal 2005 reflects the full year charge for amortization of
goodwill associated with the acquisition of ChemGenex Therapeutics, Inc. in June
2004.

                                       47
<PAGE>

Other expenses from ordinary activities


Other expenses from ordinary activities increased by 185% from A$0.8 million in
fiscal 2004 to A$2.2 million in fiscal 2005. This increase reflects the costs
associated with the initial SEC registration and NASDAQ listing in June 2005 and
increased operating costs associated with maintaining offices in Australia and
the USA for a full year.


Net loss

The Company's net loss increased by A$3.4 million or 68% from A$3.2 million in
fiscal 2004 to A$6.6 million in fiscal 2005 for the reasons described above.



COMPARISON OF FISCAL YEAR 2004 WITH FISCAL YEAR 2003


Revenue
The Company's total revenue decreased by A$1.6 million or 31% from A$5.2 million
in fiscal 2003 to A$3.6 million in fiscal 2004. The decrease primarily reflects
the lack of milestone payment from Merck Sante (A$1.3 million in fiscal 2003
whereas no payment was due or anticipated in fiscal 2004) and foreign currency
fluctuations. The foreign currency fluctuations meant that for the same
contracts the Company received A$0.4 million less in fiscal 2004 than in fiscal
2003. Patent reimbursements of A$0.6 million were received from Merck Sante in
fiscal 2004 whereas no reimbursements were due in fiscal 2003.

Costs and expenses

The Company's costs and expenses are detailed in the consolidated statements of
financial performance.


Research and development expenditure


Research and development expenditure decreased by 6% from A$4.7 million in
fiscal 2003 to A$4.4 million in fiscal 2004. This decrease occurred without any
commensurate reduction in research capacity due to increased operational
efficiency of the Company's research service providers.

Employee costs


No substantive change from previous year.


Patent costs

Patent costs include regulatory charges involved in applying for, and
maintaining, patent protection together with charges from patent attorneys for
specialist advice on these matters. Patent costs are expensed as incurred.
Patent costs increased by 226% from A$0.1 million incurred in fiscal 2003 to
A$0.5 million in fiscal 2004. This reflects different timing of patent
activities, and the progression of several applications to the examination
phase.


Legal costs

Legal costs decreased by 96% from A$0.1 million incurred in fiscal 2003 to A$0.0
million in fiscal 2004. This reflects reduced requirement for legal services in
the development of new contracts.

                                       48
<PAGE>

Depreciation


No substantive change from previous year.


Amortization


Amortization in fiscal 2004 reflects the amortization of goodwill associated
with the acquisition of ChemGenex Therapeutics, Inc. in June 2004.


Non-current asset write down


Non-current asset write down decreased from A$0.3 million in fiscal 2003 to
A$0.0 in fiscal 2004. In fiscal 2003, the charge reflects the final diminution
in value of share investments not related to biotechnology activities made by
the previous management as well as the carrying amount of investments sold
during the year.


Other expenses from ordinary activities


Other expenses from ordinary activities decreased by 7% due primarily to a
reduction in payments to members of the Scientific Advisory Board.


Net loss

The Company's net loss increased by A$1.3 million or 68% from A$1.9 million in
fiscal 2003 to A$3.2 million in fiscal 2004 for the reasons described above.



B.       LIQUIDITY AND CAPITAL RESOURCES

The Company's future revenues, liquidity and capital requirements are dependent
upon several factors, including, but not limited to, its success in generating
significant revenues from partnerships and/or sales; the time and cost required
to manufacture and find partners for its products; the time and cost required
for clinically developed products to obtain regulatory approvals; competitive
technological developments; additional government-imposed regulation and
control; and changes in healthcare systems which affect reimbursement, pricing
or availability of drugs and market acceptance of drugs and drug technologies.

To date, the Company has funded its operations primarily through the payments
from pharmaceutical industry partners and the issue of equity securities. From
July 1, 1996, when the Company's biotechnology activities commenced, it has
received approximately A$45.1 million (including A$14.4 million since July 1,
2004) from the issue of equity securities. In addition, during this period, the
Company has received A$24.2 million from its pharmaceutical partners for
depression, diabetes and obesity research.

Over the past four years the Company has been able to obtain approximately 85%
of the funding required for the combined diabetes, obesity, depression and
anxiety contracts research spending via collaborative research agreements -

                                       49
<PAGE>

PERIOD                    CONTRACT RESEARCH SPENDING     COLLABORATIVE FUNDING
                                                    A$
Fiscal year 2005                           4,065,119                 3,760,142
Fiscal year 2004                           4,308,627                 2,875,401
Fiscal year 2003                           4,476,305                 4,501,101
Fiscal year 2002                           4,100,780                 3,362,728
Total since July 1, 2001                  16,950,831                14,499,372

Net cash used in operating activities of A$6,677,199 in fiscal 2005, A$2,057,757
in fiscal 2004 and A$5,511,131in fiscal 2003 was primarily a result of a cash
shortfall associated with our research and development activities (detailed in
Item 4B - Business Overview - commercial and research and development
collaborations) and expenses incurred for administration infrastructure.

From July 1, 2001 the Company has received approximately A$1.3 million from
fee-for-service research activities. The Company is actively engaged in efforts
to find pharmaceutical partners for its anti-cancer development therapeutics and
fee-for-service customers.

As of June 30, 2005, the Company had A$8.5 million in available cash and cash
equivalents. The Company's existing cash reserves and revenues received from
existing pharmaceutical partners will be utilized to support company
administration costs, research and developments costs and the ongoing cancer
development and clinical trial programs. Based on existing cash and cash
equivalents, the Company anticipates that it has adequate funds to operate at
current levels and meet its contractual obligations, described further in Item
5F. "Tabular Disclosure of Contractual Obligations," until the second half of
calendar 2006 without obtaining further partnership agreements for the cancer
clinical trial programs. The Company continues to monitor this situation and is
constantly reviewing it relationships to ensure adequate funding will be
available to support current projects.

Minimal cash has been provided by, or used for, investing activities during each
of the three years in the period ended June 30, 2005.

While the Company's cash resources are currently held in Australian dollars
(A$), a significant part of its cash flow burden over the next year is committed
to funding clinical trial programs in the U.S. The Company's potential foreign
currency exposure from this situation is partially ameliorated by US$ revenues
that the Company receives from Merck Sante for its diabetes and obesity research
conducted in Australia.

C.       RESEARCH AND PRODUCT DEVELOPMENT PROGRAMS

Included within research and development expenditure is the following external
expenditure on research and development projects.

Over the last three and a half years total investment in research and
development has resulted in the consumption of significant cash resources,
totaling A$16,150,931. The principal investments have been as follows:



PROGRAM                          INVESTMENT JULY 2001
                                            -JUNE 2005
Diabetes and obesity                      A$15,450,051
Depression                                 A$1,500,780
Cancer                                      A$556,287-

                                       50
<PAGE>

Whilst the Company made no investment in cancer research in fiscal 2002 through
2004, ChemGenex Therapeutics, Inc. had invested US$5,955,000 (A$9,353,000) in
cancer related research. This investment is reflected in the purchase price paid
by the Company for ChemGenex Therapeutics, Inc.


The major expenditure during the last three and a half years by specific
research undertaking is as follows:

<TABLE>
<CAPTION>
COLLABORATOR                AGREEMENT AND COMMENCEMENT DATE          COMMITMENT AT     EXPIRY DATE   INVESTMENT JULY
                                                                     JUNE 30, 2005                   2001-JUNE 2005

<S>                         <C>                                      <C>               <C>          <C>
Deakin University and the   "Research Agreement - Psammomys obesus   A$Nil             December      A$3,850,000
International Diabetes      Diabetes / Obesity Discovery"                              31, 2004
Institute
                            Gene discovery research according to instruction
                            from the Company in the fields of obesity and
                            diabetes.

                            (February 28, 1997)
Deakin University           "Research Agreement - Functional         A$Nil             December      A$3,640,000
                            Studies"                                                   31, 2004

                            Gene and protein validation research according to
                            instruction from the Company in the fields of
                            obesity and diabetes.

                            (June 26, 2000)
Deakin University           "the Research Agreement for Depression   A$Nil             December      A$1,310,780
                            and Anxiety"                                               31, 2004

                            Gene discovery and validation research according to
                            instruction from the Company in the fields of
                            depression and anxiety.

                            (August16, 2000)
Deakin University           "Research, License and                   A$1,210,000       December      A$1,210,000
                            Commercialization Agreement"                               31, 2005

                            (April 21, 2005)
International Diabetes      "Research Agreement for Human Diabetes   A$369,856         December      A$5,437,058
Institute                   / Obesity Discovery"                                       31,, 2005

                            Gene discovery and validation research according to
                            instruction from the Company in the fields of
                            obesity and diabetes.

                            (January 14, 1998)
Southwest Foundation for    "the Research Agreement"                 US$348,586        June 30,      A$1,502,993
Biomedical Research                                                                    2005
                            Human genomics research according to
                            instruction from the Company.
                                                                     (A$457,582)
                            (December 31, 2002)

                                       51
<PAGE>

ChemGenex                   Ongoing preclinical and clinical         Euro 450,000      Trial         A$556,287
Pharmaceuticals, Inc.       development of cancer therapeutics                         dependent

                            (June 30, 2005 commitments based
                            Stragen Agreement)                       (A$709,660)
</TABLE>

These research and development expenses have been financed principally through
working capital raised by equity placements, through ongoing funding from
commercial collaborators and through milestone payments from commercial
collaborators. Since its commencement of biotechnology activities in 1996 the
Company has raised A$45.1 million, of which a net total of A$36.3 million has
been invested in direct research expenditure by the Company through June 30,
2005.

See Item 4B. "Business overview - Components of the ChemGenex Discovery,
Development and Validation Platforms" for further information on the current
status of the development programs.

See Item 4B. "Business overview - Commercial Collaborations" for further
information on the status of research and development and commercial
collaborations.

See Item 3D. "Risk Factors" for the risks associated with developing and
bringing drug candidates to market.


RESEARCH AND DEVELOPMENT

The Company has three programs; (i) cancer; (ii) diabetes and obesity; and (iii)
depression and anxiety. The cancer program has two molecules in clinical trials
and a suite of earlier-stage molecules in pre-clinical development. The latter
two programs are purely preclinical, focusing on the discovery and validation of
novel gene and protein targets that may lead to the development of new drugs to
treat these diseases. The status of these three programs is discussed below.

Cancer

The cancer program has two therapeutic agents in Phase 2 clinical trial for
three indications in the USA and several molecules in pre-clinical development.

Ceflatonin is currently in a Phase 2 clinical trial in combination with Gleevec.
Ceflatonin is also in a Phase 2 clinical trial to treat MDS patients. In the
coming year two additional single agent Phase 2 clinical trials are planned
treating CML patients who are Gleevec non responders.

A Phase I clinical trial of Quinamed was completed successfully in early 2004,
and the Company initiated a Phase 2 trial in prostate cancer patients in late
2004. The trial is being performed at the Sarah Cannon Cancer Center in
Nashville, Tennessee. The most advanced pre-clinical therapeutic is CXS299,
which was recently licensed from the MD Anderson Cancer Center.

Expenditures associated with the cancer programs were cumulative costs incurred
by ChemGenex Therapeutics, Inc. up to June 21, 2004, the merger date. The
following is the breakdown of the programs costs converted to A$:

<TABLE>
<CAPTION>
                                      Fiscal 2004           Fiscal 2003         Fiscal 2002                 Total
                                                                    A$000'S
<S>                                           <C>                 <C>                 <C>                   <C>
Ceflatonin                                    581                 1,149               2,215                 3,945
Quinamed                                    1,282                 2,168               1,913                 5,363
Other pre-clinical projects                    15                    15                  15                    45
Total                                       1,878                 3,332               4,143                 9,353
</TABLE>

Completion of the project as pertaining to the three clinical trials for the two
therapeutic agents is defined as the completion of the Phase 2 studies. Phase 2
trials are clinical trials conducted on a limited number of patients to, (i)
determine the efficacy of the compound for specific indications, (ii) determine
dosage tolerance and optimal dosage and (iii) identify possible adverse effects
and safety risks. The trials also seek to establish the most effective

                                       52
<PAGE>

route of administration. Trials are conducted on a larger, but still limited
number of carefully monitored patients. Phase 2 trials may last up to two and
one-half years.

The regulatory authorities in each country may impose their own requirements and
may refuse to grant, or may require additional data before granting approval
even though the relevant product has been approved by another authority. The US,
Australia and European Union countries have very high standards of technical
appraisal and, consequently, in most cases, a lengthy approval process for
pharmaceutical products. The time required to obtain such approval in particular
countries varies, but if obtained generally takes from six months to several
years, if approval is received at all, from the date of application, depending
upon the degree of control exercised by the regulatory authority, the duration
of its review procedures, and the nature of the product. The trend in recent
years has been towards stricter regulation and higher standards.

In the US, the primary regulatory authority is the FDA. In addition to
regulating clinical procedures and processes, the FDA investigates and approves
market applications for new pharmaceutical products and is responsible for
regulating the labeling, marketing and monitoring of all pharmaceutical
products, whether currently marketed or under investigation. Upon approval in
the US, a drug may be marketed only for the approved indications in the approved
dosage forms and dosages. In addition to obtaining FDA approval for each
indication to be treated with each product, each domestic drug manufacturing
firm must register with the FDA, list its drug products with the FDA, comply
with current Good Manufacturing Practice (cGMP) requirements and be subject to
inspection by the FDA. In Australia, a similar role is played by the Therapeutic
Goods Administration, and in Europe, the European Committee for Proprietary
Medicinal Products provides a mechanism for European Union-member states to
exchange information on all aspects of product licensing and assesses license
applications submitted under two different procedures (the multistate and the
high-tech concentration procedures).


Ceflatonin is currently in a Phase 2 clinical trial to treat MDS patients at the
MD Anderson Cancer Center in Houston Texas. To date the study has completed
treatments on nine patients, and approximately twenty-one more patients will be
treated to complete the Phase 2 trial. Expected completion of this trial is
during the first half of 2006.

Ceflatonin commenced in mid 2005 a Phase 2 clinical trial in combination with
Gleevec to treat CML patients who are Gleevec non responders. The study will
recruit up to seventy seven patients and will be performed at the MD Anderson
Cancer Center in Houston Texas. This trial is expected to be completed by the
end of 2006.

ChemGenex recently launched a Phase 2 study in accelerated-phase CML patients
who have failed Gleevec at six centers in Europe and plans to initiate a Phase
2/3 study in CML patients with the T3151 BCR-ABL point mutation, which confers
resistance to tyrosine kinase inhibitor therapy, in early 2006.

A Phase 2 clinical trial of Quinamed in prostate cancer patients commenced in
2004. This trial was expanded to include ovarian and breast cancer patients in
September 2005. The trial is being performed at the Sarah Cannon Cancer Center
in Nashville, Tennessee. Expected completion of this trial is mid 2006.

After completion of the Phase 2 studies, the Company may seek to license the
compounds to a pharmaceutical industry partner who would support appropriate
registration-directed trials.

Completion for the most advanced pre-clinical lead, CXS299 is defined as the
submission to the U.S. FDA of an investigational new drug (IND) application. The
granting of an IND provides permission to administer the compound to humans in
clinical trials. Several years of research and testing generally are necessary
before an IND may be obtained and clinical development may commence. In some
instances, the IND application process can result in substantial delay and
expense. The IND must contain information, such as the results of pre-clinical
laboratory and animal experiments; information about the proposed clinical
investigations; the chemical structure of the compound, or the sequence of a
protein or antibody therapeutic; the mechanism by which it is believed to work
in the human body; any toxic effects of the compound found in the animal
studies; and how the proposed therapeutic agent is manufactured. There can be no
certainty that submission of an IND will result in FDA authorization to commence
clinical trials or that authorization of a particular phase of a human clinical
trial program will result in authorization of other phases or that the
completion of any clinical trials will result in FDA approval.

                                       53
<PAGE>

The Company is initiating toxicology studies in animals and is seeking to file
an IND by the end of 2006.

Actual and estimated expenditures associated with the progression of the cancer
programs since June 21, 2004 (the merger with ChemGenex Therapeutics, Inc) to
the end of Phase 2 are shown below.


<TABLE>
<CAPTION>
                                      Fiscal 2007           Fiscal 2006         Fiscal 2005                 Total
                                                                                   (Actual)
                                                                    A$000'S
<S>                                           <C>                 <C>                 <C>                   <C>
Ceflatonin                                    579                 2,361               1,323                 4,263
Quinamed                                      380                   280                 459                 1,119
Other pre-clinical projects                   200                    47                   7                   253
Total                                       1,159                 2,688               1,788                 5,635
</TABLE>


None of our product candidates have been approved for commercialization in the
U.S. or elsewhere. We, or any of our collaborators, may not be able to conduct
clinical testing or obtain the necessary approvals from the FDA or other
regulatory authorities for some products. Failure by us, or our collaborators,
to obtain required governmental approvals will delay or preclude our
collaborators or us from marketing therapeutics or diagnostic products developed
with us or limit the commercial use of such products and could have a material
adverse effect on our business, financial condition and results of operations.

Diabetes and Obesity

The currents status of the diabetes and obesity program is that it is an ongoing
discovery and validation program. That is, proprietary and non-proprietary
technologies are employed to discover novel genes and proteins associated with
the diseases, and a suite of biological validation technologies are used to
confirm the potential of the discoveries as targets whose activities might
usefully be modified by therapeutic agents. The Company has discovered and
protected by patent application more than 50 novel targets in these diseases,
and has signed license and commercialization agreements with its partner Merck
Sante for four of these targets.

Summary table of costs incurred during each period presented and to date on the
diabetes and obesity project. All costs in A$000's.

<TABLE>
<CAPTION>
          Fiscal 2005          Fiscal 2004          Fiscal 2003          Fiscal 2002               Total
<S>             <C>                  <C>                  <C>                  <C>                <C>
                3,685                3,929                4,096                3,740              15,450
</TABLE>

As this project is partnered with a pharmaceutical industry partner the concept
of `completion date' is complicated by the fact that the clinical development of
any ChemGenex-discovery is controlled by a different entity. As such
`completion' can be considered either from the perspective of the Company or
from the perspective of any therapeutic agent that is eventually approved and
released. Completion from the perspective of the Company can be defined as the
licensing to a pharmaceutical industry partner of novel ChemGenex-discovered
technologies.

Whilst the nuances of discovery research make accurate predictions difficult
there are several discoveries that are at a stage that, based on the Company's
prior experience, would be ready to license to a partner to fund further
research by mid 2006. The Company's current research agreements with Merck Sante
run until December 31, 2005 and Jun 30, 2006 respectively, and these dates could
also be considered as logical completion dates for this project as the Company
will have no ongoing obligation to pursue this program after the termination of
these agreements. It should be noted however that the Company is currently in
discussion with its partner to renegotiate and extend this alliance, and other
companies have expressed an interest in accessing ChemGenex's expertise in the
field of diabetes and obesity so it is unlikely that this project will be
stopped.

The risks and uncertainties associated with the diabetes and obesity project are
minimal as the research activities and expenditures are currently tied to a
corresponding revenue stream from the Company's partner Merck Sante. If there is
no matching revenue for the project the Company is under no obligation to
continue with diabetes and obesity research, although it might choose to fund
such activities from contributed equity.

                                       54
<PAGE>

In the longer term it is obviously the desire of the Company that its
discoveries lead to the development of new therapeutics as this will generate
material net cash inflows for the Company as royalty revenue. There are many
risks involved in the progression of `validated targets' to commercially
released therapeutics; risks include the inability to effectively drug the
target, undesirable complications, clinical trial results and competitive
position of the market at the proposed time of release. Industry averages
suggest that the probability of a validated target reaching the market are less
than two percent, and the time taken for this progression varies from seven to
12 years. As the development of new therapeutics would be controlled by
ChemGenex's pharmaceutical industry partner, the Company will have no ongoing
funding obligations for therapeutic development.

Depression and Anxiety

The currents status of the depression and anxiety program is that it is an
ongoing discovery and validation program. That is, proprietary and
non-proprietary technologies are employed to discover novel genes and proteins
associated with the diseases, and a suite of biological validation technologies
are used to confirm the potential of the discoveries as targets whose activities
might usefully be modified by therapeutic agents. The Company has discovered and
protected by patent application ten novel targets in these diseases.

Summary table of costs incurred during each period presented and to date on the
depression and anxiety project. All costs in A$000's.

<TABLE>
<CAPTION>
          Fiscal 2005          Fiscal 2004          Fiscal 2003          Fiscal 2002               Total
<S>               <C>                  <C>                  <C>                  <C>               <C>
                  380                  380                  380                  361               1,501
</TABLE>

As with the above-described diabetes and obesity project, the depression and
anxiety project is partnered with a pharmaceutical industry partner and the
concept of `completion date' is complicated by the fact that the clinical
development of any ChemGenex-discovery is controlled by a different entity. As
such `completion' can be considered either from the perspective of the Company
or from the perspective of any therapeutic agent that is eventually approved and
released. Completion from the perspective of the Company can be defined as the
licensing to a pharmaceutical industry partner for further research and
development of novel ChemGenex-discovered technologies.

The Company's current research agreement with Vernalis has been extended to
December 31, 2005 and this date could be considered as the logical completion
date for this project as the Company will have no ongoing obligation to pursue
this program after the termination of these agreements. It should be noted
however that the Company is currently in discussion with its partner to
renegotiate and further extend this alliance.

The risks and uncertainties associated with the depression and anxiety project
are minimal as the research activities and expenditures are currently tied to a
corresponding revenue stream from the Company's partner Vernalis. If there was
no matching revenue for the project the Company is under no obligation to
continue with depression and anxiety research, although it might choose to fund
such activities from contributed equity.

In the longer term it is obviously the desire of the Company that its
discoveries lead to the development of new therapeutics as this will generate
material net cash inflows for the Company as royalty revenue. There are many
risks involved in the progression of `validated targets' to commercially
released therapeutics; risks include the inability to effectively drug the
target, undesirable complications, clinical trial results and competitive
position of the market at the proposed time of release. Industry averages
suggest that the probability of a validated target reaching the market are less
than two percent, and the time taken for this progression varies from seven to
12 years. As the development of new therapeutics would be controlled by
ChemGenex's pharmaceutical industry partner, the Company will have no ongoing
funding obligations for therapeutic development.

                                       55
<PAGE>


D.       TREND INFORMATION

The Company is a development stage company and it is difficult to predict with
any degree of accuracy the outcome of the Company's research and development
efforts. The following are developments that the Company considers a possible
progression in the near term in its business:

     o    Phase 2 clinical trials for Quinamed(R) and Ceflatonin(R), Phase 2/3
          clinical trials for Ceflatonin(R) and possible partnering of these
          lead therapeutics with a pharmaceutical or biotechnology partner;

     o    Progression of targets from the diabetes and obesity target discovery
          program to preclinical development;

     o    Ongoing development of the depression and anxiety target discovery
          program; and

     o    Partnering of the novel satiation target for either therapeutic or
          over the counter development and ongoing development of that program.


For additional information on the current status of the Company's product
development and research programs, see above Item 4B, "Business overview -
Commercial and Research and Development Collaborations" and Item 5C, "Research
and Product Development Programs." The Company is not aware of any changes
bearing upon its financial condition since the date of the financial statements
included in this Annual Report.

E.       OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements that have or are reasonably
likely to have current or future effect on the Company's financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.

F.       TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The table below shows the contractual obligations and commercial commitments as
at June 30, 2005:

<TABLE>
<CAPTION>
                                                                        Payments due by period
                 In A$'s                  Total        Less than 1 year              1-3 years          After 3 years
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                     <C>                    <C>                       <C>
        Operating leases                 27,566                  27,566                      -                      -
    Research expenditure                                                                                            -
          commitments(a)              2,747,098               2,747,098                      -
  Total contractual cash                                                                                            -
             obligations              2,774,664               2,774,664                      -
----------------------------------------------------------------------------------------------------------------------
</TABLE>
  (a) Research expenditure commitments include fees payable under the major
      research and development programs discussed in Item 5C. "Research and
      Product Development Programs" as well as fees payable to scientific
      consultants and advisors to the Company.

G. ASSETS ACQUIRED IN A BUSINESS COMBINATION TO BE USED IN RESEARCH &
DEVELOPMENT ACTIVITIES

In June 2004 ChemGenex Pharmaceuticals Limited (then AGT Biosciences Limited)
acquired all of the shares in ChemGenex Therapeutics Inc. for a total purchase
price, including direct acquisition costs, of approximately A$17.1 million under
A GAAP. The fair value of net tangible assets amounted to approximately A$0.1
million.

                                       56
<PAGE>

The remaining value received from the acquisition relates primarily to the
relevant patents for the anti-cancer compounds Ceflatonin and Quinamed held by
ChemGenex Therapeutics Inc. at the time of the acquisition, and the in process
research and development already undertaken on these compounds.

Ceflatonin is a small molecule with established clinical activity as a single
agent in blood cell cancers. Phase 2 trials of Ceflatonin will commence in
patients with CML in European hospitals and the M.D. Anderson Cancer Center in
Houston in 2005.

Quinamed is a synthetic small molecule with established anti-cancer activity in
humans. Quinamed affects the growth of a number of tumor types; however,
researchers have also noted some unpredictable side effects. Researchers have
been working on treating patients with a precise and personal dose that
maximizes Quinamed's clinical effect while minimizing its side effects.

The development history of these compounds prior to the acquisition is as
follows-

(a)           NCI in the USA began funding early research relating to the two
              projects in the early 1980's.

(b)           In early 1999 management of ChemGenex Therapeutics Inc. began work
              on both research and development projects, continuing the drug
              development phase from the initial NCI development work.

(c)           From 2000 ChemGenex Therapeutics Inc. continued chemical
              development, and by the business combination date of June 30, 2004
              approximately A$3.9 million (or 20%) of the total expected
              research and development program costs of A$19.7 million had been
              spent on the Ceflatonin project and approximately A$5.3 million
              (or 28%) of the total program costs of A$19.1 million had been
              spent on the Quinamed project.

The Company has developed discounted cash flow models for the compounds based on
the following assumptions-

     o    Projected market share for the compounds based on the forecast market
          share for each type of cancer

     o    Projected cash flows based on patent expiry dates of 2022 for
          Ceflatonin and 2024 for Quinamed and allowed for eroded cash flows to
          2026 for Ceflatonin and 2028 for Quinamed as generic drug providers
          take advantage of the patents expiries

     o    Research and development expenses projected over the forecast period
          by project, including an analysis of expenses incurred to June 2005
          and remaining expenses expected until proposed approval dates

     o    Projected capital expenditure, depreciation, tax and working capital,
          and

     o    A risk-adjusted discount rate which the Company believes is toward the
          middle of the range adopted by "second stage" or "expansion" companies
          and slightly above the top end of the range of discount rates for
          Bridge/Initial Public Offering assessments usually undertaken by
          venture capital investors.

The model projected that the Ceflatonin compound would commence producing net
positive annual cash flows in 2008 and would continue to generate net positive
annual cash flows for the Company to 2026. The model projected that the Quinamed
compound would commence producing net positive annual cash flows in 2009 and
would continue to generate net positive annual cash flows until 2028. Naturally
any delays in taking these compounds to the market would delay the achievement
of positive cash flows; however, given the overall uncertainty involved with
getting such products to the market, it is impossible to accurately predict the
consequences of any unknown delays.

From these models the Company estimated the value of Ceflatonin at A$14.8
million and Quinamed at A$13.0 million. Based on these valuations, the Company
has concluded that the entire A GAAP excess purchase price of A$17.0 million can
be considered as in-process research and development, which is classified as
goodwill under A GAAP.

Subsequent to the acquisition, there have been no significant developments
related to the current status of the acquired in-process research and
development that would result in material changes to the assumptions.

Failure to achieve the expected levels of revenue and net income from a product
or products based on this acquired research and development will negatively
impact the return on investment expected at the time that the purchase was
completed and may result in impairment charges to the goodwill of A$17.0 million
under A GAAP.

                                       57
<PAGE>


ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.       DIRECTORS AND SENIOR MANAGEMENT.

Certain information concerning the current directors of the Company is set forth
below. Non-executive directors are not full-time employees of the Company. There
exists no arrangement or understanding with major shareholders, customers,
suppliers or others pursuant to which any person referred to below was selected
as a director or member of senior management.

No director is related to any other. Biographical information with respect to
the directors is as follows:



MR. J. BRETT HEADING B.COM LLB(HONS) ASIA (NON-EXECUTIVE CHAIRMAN)

Mr. Heading is an experienced corporate lawyer, a partner of McCullough
Robertson for 19 years. He specializes in capital raisings, mergers and
acquisitions and board advice. He has a wide-ranging client base in emerging
companies in the biotechnology and agribusiness sectors. Mr. Heading is Chairman
of Clovely Estate Limited. His government appointments include membership of the
Takeovers Panel, the Legal Committee of the Corporations and Markets Advisory
Committee and the Board of Taxation. Age 49.



DR. GREGORY R. COLLIER B.SC(HONS) PHD (CHIEF EXECUTIVE OFFICER AND MANAGING
DIRECTOR)

Dr. Collier is one of Australia's leading biotechnology executives, and is
credited with leading the transformation of the former Australian genomics
company Autogen Limited into the integrated international biopharmaceutical
company ChemGenex Pharmaceuticals Limited. As CEO Dr. Collier has overseen the
partnering of major research programs, the $14 million acquisition of a private
US biotechnology company and the listing of the company's securities on the
NASDAQ exchange. . Age 48.



MR. ELMAR J. SCHNEE B.COM M.MKTG (NON-EXECUTIVE DIRECTOR)

Mr. Schnee is a Member of the Executive Board of Merck KGaA, President of Merck
Sante S.A.S. and a director of a number of other Merck KGaA subsidiaries. Mr.
Schnee has more than 20 years experience in the international pharmaceutical
industry, with specific expertise in business development and marketing. Mr.
Schnee has a depth of understanding in product development and launch that is
expected to enhance the Company's position as it progresses with the
commercialization of its core technologies through alliances and in-house
development. Age 46.



MR. KEVIN J. DART (NON-EXECUTIVE DIRECTOR)

Mr. Dart has extensive experience in bringing new technologies to the market
over the last ten years. He has over 23 years experience in all aspects of the
property industry as well as general investment and has been involved in listed
and unlisted public companies over the last 16 years. Mr. Dart has extensive
experience in mergers and acquisitions, takeovers, capital raisings and
cross-border transactions in the USA, Hong Kong, United Kingdom and Japan. He is
a founding director of the ASX listed company Charter Pacific Corporation
Limited. Age 54.



MR. ROGER V. BYRNE LLB (NON-EXECUTIVE DIRECTOR)

Mr. Byrne is a former partner of Clayton Utz, with extensive experience as a
corporate lawyer. Mr. Byrne engaged in mergers and acquisitions, public capital
raisings, private equity raisings and corporate structuring. He consults to
several clients on technology commercialization and corporate legal issues. He
is a member of the Company's Audit Committee. Age 43.

                                       58
<PAGE>

DR. DENNIS M. BROWN B.A M.S PHD (PRESIDENT AND EXECUTIVE DIRECTOR, APPOINTED
SEPTEMBER 29, 2004)
Dr. Brown has 25 years of experience in the biotechnology and the
biopharmaceutical industries with specific experience in cancer research and
product development. Dr. Brown received his PhD. Degree from New York
University, and held academic positions at Stanford University and Harvard
University Medical School prior to beginning his industry career. Dr. Brown was
a co-founder of Matrix Pharmaceutical, Inc. and was the scientific founder of
ChemGenex Therapeutics, Inc. in 1999, shaping and leading the company's clinical
and early stage research programs. Age 56.


On July 28,, 2005 Patrick Owen Burns and Peter Bradfield were appointed to the
Board of the Company. As they were not directors during fiscal 2005, they are
not mentioned in text pertaining to the Board as at June 30, 2005.


MR PATRICK OWEN BURNS BA LLB (HONS) (NON-EXECUTIVE DIRECTOR, APPOINTED JULY 28,
2005)
Mr Burns has extensive experience as an executive and director in technology and
venture capital organisations. He is a director of firmView Inc.(from December
2003), Euclid Systems Corporation (from March 1998) and the ASX listed Progen
Industries Limited (from March 1999). Prior to this Mr Burns had over 25 years
experience as a senior executive in the venture capital industry after
practicing law in New York with Milbank, Tweed, Hadley & McCloy. Mr Burns is a
member of the Company's Audit Committee. Age 68.

MR PETER BRADFIELD LLB (NON-EXECUTIVE DIRECTOR, APPOINTED JULY 28, 2005)
Mr Bradfield is an experienced executive and director of Australian and
international companies. He is a former CEO of Energy Resources of Australia
Limited and former Managing Director of the Elders Mining Group of companies. Mr
Bradfield also has substantial experience in the management of high technology
platforms as a former director of the CSIRO and Cooperative Research Centres. Mr
Bradfield currently provides strategic marketing and development advice to a
range of Australian and international clients and served as a director for the
ASX listed Ticor Limited (from June 1998 to May 2004). Mr Bradfield is a member
of the Company's Audit Committee. Age 63.




B.       COMPENSATION

The aggregate amount of compensation paid to all directors of the Company as a
group by the Company and its subsidiaries for services in all capacities during
fiscal 2005 was A$1,243,704 including A$278,104 of options. This amount includes
directors' fees, salaries and bonus payments, but excludes amounts set aside or
accrued to provide pension, retirement or similar benefits. The aggregate amount
set aside or accrued to provide pension, retirement or similar benefits for
directors of the Company by the Company and its subsidiaries during fiscal 2005
was A$47,702. The Company's remuneration policy for directors and executives is
to:

     o    have regard to the directors' experience and the nature and complexity
          of their work and due regard to directors' remuneration in comparable
          companies in order to pay a competitive salary that attracts and
          retains management of the highest quality;

     o    link individual remuneration packages to the Company's long-term
          performance through the award of share options and incentive schemes;
          and

     o    provide post-retirement benefits through the Company's pension
          schemes.


     There are four main elements of the remuneration package to executive
directors:

     o    basic salary;

     o    benefits in kind;

     o    share options and incentives; and

     o    pension arrangements.

                                       59
<PAGE>

The remuneration of each of the directors and senior management who served
during fiscal 2004 is set out below. For details regarding share options held by
directors and senior management, see Item 6E. Share Ownership and Options.

Remuneration packages, which consist of base salary, fringe benefits, incentive
schemes (including performance-related bonuses), superannuation, and
entitlements upon retirement or termination, are reviewed with due regard to
performance and other relevant factors. The following table discloses the
remuneration of the directors and senior management of the Company:

<TABLE>
<CAPTION>
                                                      POST EMPLOYMENT     EQUITY      OTHER
           NAME              SALARY/FEES    BONUS     SUPERANNUATION      OPTIONS    BENEFITS           TOTAL
           ----              -----------    -----     --------------      -------    --------           -----
SPECIFIED DIRECTORS                    A$       A$                   A$         A$          A$                     A$
<S>                                <C>          <C>               <C>       <C>          <C>                   <C>
J. Brett Heading                   65,000        -                    -          -           -                 65,000
Dr. Gregory R. Collier            414,882        -               38,702    278,104       3,834                735,522
Kevin J. Dart                      50,000        -                4,500          -           -                 54,500
Roger V. Byrne                     50,000        -                4,500          -           -                 54,500
Elmar J. Schnee                    50,000        -                    -          -           -                 50,000
Dr. Dennis Brown                  265,516        -                    -          -      18,666                284,182
TOTAL REMUNERATION:
                             -----------------------------------------------------------------------------------------
SPECIFIED DIRECTORS               895,398        -               47,702   278,104       22,500              1,243,704

SPECIFIED EXECUTIVES(A)
Dr. James A. Campbell             159,223        -               14,330     40,000           -                213,553
Harry D. Pedersen                 255,985        -                    -          -      11,120                267,105
Tina Herbert                      199,137        -                    -          -      10,295                209,432
Shawnya Michaels                  119,482        -                    -          -       9,140                128,622
Eric Merrigan                      94,154        -                8,425     10,000           -                112,579
TOTAL REMUNERATION:
                             -----------------------------------------------------------------------------------------
SPECIFIED EXECUTIVES              827,981        -               22,755     50,000      30,555                931,291
</TABLE>

(a) Specified executives are the five highest paid non-consultant executives of
the Company other than the Board of Directors.

C.       BOARD PRACTICES

All executives hold service contracts with the Company or one of its
subsidiaries. Service contracts for Australian-based executives are for fixed
terms, while those of U.S.-based staff are for an indefinite term. All service
contracts are approved by the Board of Directors. The Company's purpose in
entering into service contracts with executives is to enable the recruitment of
high quality executives and to obtain protection from their sudden departure to
competitor companies. Additionally, service contracts optimize protection for
the Company's intellectual property rights and other commercially sensitive
information.

The details of the senior management executives' contracts are summarized below:

<TABLE>
<CAPTION>
Executive                             Date of Contract                    Notice period for termination
---------                             ----------------                    -----------------------------
<S>                                   <C>            <C>                  <C>
Dr. Gregory R. Collier                July 1, 2003 - June 30, 2008        Six months
Dr. Dennis M. Brown                   September 14, 1999 - ongoing        At-will
Dr. James A. Campbell                 September 1, 2002 -August 31,       Three months
                                      2005 (renewed twice to date)
Harry D. Pedersen                     May 6, 2001 - ongoing               At-will
Eric P. Merrigan                      September 20, 2004 - September      Three months
                                      19, 2005
Dr. Kenneth R. Walder                 December 20, 2002 - ongoing         Thirty days
Dr. John Blangero                     September 4, 2001 - ongoing         Thirty days
Tina Herbert                          June 4, 2001 - ongoing              At-will
</TABLE>

                                       60
<PAGE>

The terms and conditions of the appointment of non-executive directors are set
out in a formal letter of appointment which deals with the following matters:
duration of appointment (subject to approval of shareholders), remuneration,
expectations concerning preparation and attendance at Board meetings, conflict
resolution and the right to seek independent legal and professional advice
(subject to the prior approval of the Chairman). The Company is committed to
practicing good corporate governance of its affairs as part of its management of
relationships with its shareholders and other stakeholders. The Company seeks to
uphold, and to report on compliance with, best practice in corporate governance.
During the fiscal year ended June 30, 2005, and at present, the Company paid a
premium in respect of a contract insuring the directors of the Company, the
Company Secretary, and all executive officers of the Company and of any
affiliate against a liability incurred as such by a director, Secretary or
executive officer to the extent permitted by the Australian Corporations Act
2001, including

(a) a willful breach of duty; or

(b) a contravention of sections 182 or 183 of the Corporations Act 2001,

as permitted by section 199B of the Corporations Act 2001.

The contract of insurance prohibits disclosure of the nature of the liability
and the amount of the premium.



THE BOARD

The Board of the Company is responsible for the Company's system of corporate
governance. This includes responsibility for the approval of the annual and
half-year financial report, the establishment of the long-term goals of the
Company and strategic plans to achieve those goals, the review and adoption of
annual budgets for the financial performance of the Company and monitoring the
results on a quarterly basis, and ensuring that the Company has implemented
adequate systems of internal controls together with appropriate monitoring of
compliance activities. The Board currently comprises five directors: a Chairman
with non-executive responsibilities, an executive director, and three
non-executive directors. The role of non-executive directors is to ensure that
independent judgment is brought to Board deliberations and decisions. The
non-executive directors possess a wide range of skills and experience, relevant
to the development of the Company, which complement those of the Chairman. It is
the Company's policy that the Board should comprise a majority of non-executive
directors.



The number of meetings of directors (including meetings of committees of
directors) held during the year and the number of meetings attended by each
director were as follows:

                                 DIRECTORS' MEETINGS   AUDIT COMMITTEE MEETINGS
NUMBER OF MEETINGS HELD:                  6                       2
NUMBER OF MEETINGS ATTENDED:
J. Brett Heading                          5                       2
Dr. Gregory R. Collier                    6                       -
Kevin J. Dart                             6                       2
Roger V. Byrne                            6                       2
Elmar J. Schnee *                         3                       -
Dr. Dennis Brown (appointed               5                       -
29/09/04)#

During the year ended June 30, 2005 a total of 13 Circular Resolutions of
Directors were also passed, pursuant to S248A of the Corporations Act 2001

* Because Mr. Schnee resides in France it is difficult for him to attend Board
meetings in person. Mr. Schnee has participated in three meetings electronically
and in 13 circulating resolutions.

                                       61
<PAGE>

# Because Dr. Brown resides in the United States of America it was difficult for
him to attend Board meetings in person. Since his appointment Dr. Brown has
participated in five meetings electronically and in 13 circulating resolutions.


The Board of Directors of the Company is responsible for the corporate
governance of the Company. The Board guides and monitors the business and
affairs of the Company on behalf of the shareholders by whom they are elected
and to whom they are accountable. In 2004 the Australian Stock Exchange
Corporate Governance Council's (the Council's) "Principles of Good Corporate
Governance and Best Practice Recommendations" (the Recommendations) were
introduced. ChemGenex Pharmaceuticals Limited's Corporate Governance Statement
is now structured with reference to the Council's principles and
recommendations, which are as follows:

Principle 1.      Lay solid foundations for management and oversight

Principle 2.      Structure the board to add value

Principle 3.      Promote ethical and responsible decision making

Principle 4.      Safeguard integrity in financial reporting

Principle 5.      Make timely and balanced disclosure

Principle 6.      Respect the rights of shareholders

Principle 7.      Recognize and manage risk

Principle 8.      Encourage enhanced performance

Principle 9.      Remunerate fairly and responsibly

Principle 10.     Recognize the legitimate interests of stakeholders

The Company's corporate governance practices were in place throughout the year
ended June 30, 2005 and were fully compliant with the Council's best practice
recommendations. For further information on corporate governance policies
adopted by ChemGenex Pharmaceuticals Limited, refer to the Company's website:
www.chemgenex.com.

BOARD COMMITTEES

In accordance with best practice, the Company has established an Audit Committee
with written terms of reference that deal with its authorities and duties. The
terms of reference of the Audit Committee have been reviewed during the year and
updated to ensure compliance with current best practice.

AUDIT COMMITTEE

The Board has established an audit committee, which operates under a charter
approved by the Board. It is the Board's responsibility to ensure that an
effective internal control framework exists within the entity. This includes
internal controls to deal with both the effectiveness and efficiency of
significant business processes, the safeguarding of assets, the maintenance of
proper accounting records, and the reliability of financial information as well
as non-financial considerations such as the benchmarking of operational key
performance indicators. The Board has delegated the responsibility for the
establishment and maintenance of a framework of internal control and ethical
standards for the management of the Company to the audit committee.

The committee also provides the Board with additional assurance regarding the
reliability of financial information for inclusion in the financial reports. All
members of the audit committee are non-executive directors.

The members of the audit committee during the year were: J. Brett L. Heading
(retired 28/07/05), Kevin J. Dart (retired 28/07/05) and Roger V. Byrne. Patrick
O Burns and Peter J. Bradfield were appointed to the Audit committee on July 28,
2005.

                                       62
<PAGE>

Qualifications of audit committee members

Roger V. Byrne has over 20 years experience as a corporate lawyer who retired as
a partner from Clayton Utz in 2002. Mr. Byrne engaged in mergers and
acquisitions, public capital raisings, private equity raisings and corporate
structuring.

Patrick O. Burns has over 40 years experience as a corporate lawyer, senior
executive and director of public and private companies.

Peter J. Bradfield has over 30 years experience as a senior executive and
director of public and private companies.



The Audit Committee held two meetings during fiscal year 2005.

The Sarbanes-Oxley Act of 2002 was enacted on July 30, 2002 and contains
significant new rules on corporate governance for U.S. and foreign companies
reporting in the U.S., especially in the area of audit committee composition and
authority. The Company is closely monitoring SEC rulemaking pursuant to the
Sarbanes-Oxley Act to ensure its compliance with any rules as they become
applicable to the Company as a foreign private issuer.



REMUNERATION COMMITTEE

The Company does not currently have a remuneration committee. The Board is
responsible for determining and reviewing compensation arrangements for the
directors themselves and the Chief Executive Officer and the executive team. It
is the Company's objective to provide maximum stakeholder benefit from the
retention of a high quality board and executive team by remunerating directors
and key executives fairly and appropriately with reference to relevant
employment market conditions. To assist in achieving this objective, the Board
links the nature and amount of executive directors' and officers' emoluments to
the Company's financial and operational performance. The expected outcomes of
the remuneration structure are:

     o    retention and motivation of key executives;

     o    attraction of quality management to the company; and

     o    performance incentives that allow executives to share the rewards of
          the success of the Company.

The Board assesses the appropriateness of the nature and amount of emoluments of
such officers on a periodic basis by reference to relevant employment market
conditions with the overall objective of ensuring maximum stakeholder benefit
from the retention of a high quality board and executive team. Such officers are
given the opportunity to receive their base emolument in a variety of forms
including cash and fringe benefits such as motor vehicles and expense payment
plans. It is intended that the manner of payment chosen will be optimal for the
recipient without creating undue cost for the Company. Further details on the
remuneration of directors and executives are also provided in Note 20 to the
Company's audited consolidated financial statements included elsewhere in this
Annual Report.

All senior executives have the opportunity to qualify for participation in the
Senior Executive Share Option Plan which currently provides incentives where
specified criteria are met including criteria relating to profitability, cash
flow, share price growth and environmental performance. Details regarding the
issue of share options under this plan are provided in Note 15 to the Company's
audited consolidated financial statements included elsewhere in this Annual
Report.

In relation to the payment of bonuses, options and other incentive payments,
discretion is exercised by the Board, having regard to the overall performance
of the Company and the performance of the individual during the period. There is
no scheme to provide retirement benefits, other than statutory superannuation,
to non-executive directors.



SCIENTIFIC ADVISORY BOARD

The Company's Scientific Advisory Board identifies new research opportunities
and monitors existing programs. Its members are as follows:

                                       63
<PAGE>

Professor Paul Zimmet, AO, MD, FRACP, FACE, is the Chairman of the Company's
Scientific Advisory Board. Professor Zimmet is a leading scientist in the fields
of diabetes and obesity. He is Professor/Director of the International Diabetes
Institute, Professor of Diabetes at the Monash University, Honorary Professor at
Deakin University and Professor in the Graduate School of Public Health at the
University of Pittsburgh in the U.S. He is actively involved with the World
Health Organization's diabetes and obesity study groups and is a member of the
Australian Federal Government National Advisory Group on Diabetes and the
Victorian Government Advisory Committee for Diabetes. In 2004, Professor Zimmet
was awarded the Hellmut Mehnert Award at the 40th annual meeting of the European
Association for the Study of Diabetes.

Dr. John Blangero, PhD, is a scientist at the Department of Genetics at the
Southwest Foundation for Biochemical Research in San Antonio, U.S. He is the
first researcher from the Southwest Foundation to be selected for a "Method to
Extend Research in Time" (MERIT) award from the U.S. National Institutes of
Health. He is a leading international statistical geneticist. Dr. Blangero is
also on the management team of the Company where he serves as the Chief
Scientific Director of Human Genomics. He was responsible for developing new
statistical software to increase greatly the amount of data that could be
handled in genetic studies of families. Dr. Blangero leads a number of
government-funded research projects in the U.S. related to the genetics of
common complex diseases.

Professor Ian Gust, AO, MD, FRCPA, FRACP, FTS, was the founding Director of the
MacFarlane Burnet Centre for Medical Research and subsequently was Research and
Development Director for CSL Limited ("CSL"). During the ensuing decade, he was
responsible for managing a research and development budget of more than A$20
million per annum. Recently retired from CSL, Professor Gust serves as a
scientific adviser to Bill and Melinda Gates Children's Vaccine Program, the
International AIDS Vaccine Initiative and the World Health Organization. He is a
non-executive director of Promics Pty Ltd, Biota Holdings Limited and Biota,
Inc..

Professor David James B.Sc (Hons) PhD is the Director of the Diabetes and
Obesity Research Program, Garvan Institute of Medical Research in Sydney.
Professor James was the discoverer of the GLUT4 glucose transporter molecule and
is recognized as an international leader in the field of diabetes molecular cell
biology. Professor James has a distinguished academic research career, was the
recipient of a Wellcome Trust Senior Research Fellowship, and was the recipient
in 1999 of the Glaxo Wellcome Australia Medal.

Professor Hagop Kantarjian MD is Professor of Medicine and Chairman of the
Department of Leukemia at M.D. Anderson Cancer Center in Houston, Texas.
Professor Kantarjian specializes in leukemia and holds an interest in creating
new treatment approaches for these diseases. Professor Kantarjian has authored
and contributed to over 560 medical publications, articles and abstracts and,
for his accomplishments, has received awards, including a Leukemia Society of
America Scholarship from 1989-1994 and a Leukemia Society of America Special
Fellow Scholarship from 1982-1983.

Dr. John Hughes B.Sc (Hons) PhD FIPAA is a leading Australian biotechnology
patent attorney and a partner with Davies Collison Cave with more than 13 years
experience in patent law. Dr. Hughes is involved in the drafting and prosecution
of patent applications directed to all facets of biotechnology, including
inventions relating to molecular biotechnology, pharmacology, transgenic plants
and animals as well as general chemistry and microbiology. Dr. Hughes has a
substantial U.S. practice at the drafting and prosecution levels of patent
filing. Dr. Hughes has post-doctoral experience at Yale University and
Genentech, Inc., mainly in microbial genetics and molecular biology and trained
as a patent attorney in New York before returning to Australia.

COMPLIANCE WITH NASDAQ RULES

NASDAQ listing rules require that the Company disclose the home country
practices that it follows in lieu of compliance with NASDAQ corporate governance
rules. The following describes the home country practices and the related NASDAQ
rule:

Majority of Independent Directors: The Company follows home country practice
rather than NASDAQ's requirement in Marketplace Rule 4350(c)(1) that the
majority of the Board of each issuer be comprised of independent directors as
defined in Marketplace Rule 4200. The Company's Board of Directors is not
comprised of a majority of independent directors, a practice which is not
prohibited by the laws of Australia. The ASX does not have a requirement that
each issuer's Board be comprised of a majority of independent directors.
Furthermore, no law, rule or regulation of the Australian Securities and
Investments Commission ("ASIC"), the public authority which exercises securities
law jurisdiction over the Company, has such a requirement nor does the
Corporations Act (the "Act"), which is the applicable corporate law legislation.

                                       64
<PAGE>

Compensation of Officers: The Company follows home country practice rather than
NASDAQ's requirement in Marketplace Rule 4350(c)(3) that chief executive
compensation be determined or recommended to the Board by the majority of
independent directors of a compensation committee of independent directors.
Similarly, compensation of other officers is not determined or recommended to
the Board by a majority of the independent directors or a compensation committee
comprised solely of independent directors. These decisions are made by the
Company's Board as a whole, and it is not comprised of a majority of independent
directors; the Company has no remuneration committee. The ASX does not have a
requirement that each listed issuer have a remuneration committee or otherwise
follow the procedures embodied in NASDAQ's Marketplace Rule. Furthermore, no
law, rule or regulation of the ASIC has such a requirement nor does the
applicable corporate law legislation. Such home country practices are not
prohibited by the laws of Australia.

Nomination: The Company follows home country practice rather than NASDAQ's
requirement in Marketplace Rule 4350(c)(4) that director nominees be selected or
recommended by a majority of the independent directors or by a nominations
committee comprised of independent directors. These decisions are made by the
Company's Board as a whole, and it is not comprised of a majority of independent
directors; the Company has no nominations committee. The ASX does not have a
requirement that each listed issuer have a nominations committee or otherwise
follow the procedures embodied in NASDAQ's Marketplace Rule. Furthermore, no
law, rule or regulation of the ASIC has such a requirement nor does the
applicable corporate law legislation. Accordingly, selections or recommendations
of director nominees by a board of directors that is not comprised of a majority
of directors that are not independent is not prohibited by the laws of
Australia.

Quorum: The Company follows home country practice rather than NASDAQ's
requirement in Marketplace Rule 4350(f) that each issuer provide for a quorum of
at least 331/3 percent of the outstanding shares of the issuer's common stock
(voting stock). Pursuant to its Constitution the Company is currently required
to have a quorum for a general meeting of two persons holding ordinary shares.
The practice followed by the Company is not prohibited by Australian law.

Pursuant to the Sarbanes-Oxley Act of 2002, the Securities and Exchange
Commission issued new rules that, among other things, require NASDAQ to impose
independence requirements on each member of the audit committee of a listed
company and the NASDAQ also reformulated its corporate governance requirements.
The recently-adopted SEC and NASDAQ rules apply to the Company as of July 31,
2005. The Company has taken the appropriate steps with respect to its corporate
governance system, including the addition of independent directors to its audit
committee, to assure timely compliance with the SEC rules and the amended
corporate governance standards of NASDAQ





D.       EMPLOYEES

As at June 30, 2005, the Company employed eight individuals on a full-time
basis.

The Company employs a number of contract employees in research and development.
During the last fiscal year, the average number of contract employees was 50.

The following table summarizes the number of full-time employees employed by the
Company, including executive directors, as at the year end of the last three
fiscal years:

                                 June 30,
         2005                     2004                       2003
          8                         8                         4

                                       65
<PAGE>

E.       SHARE OWNERSHIP AND OPTIONS

The relevant interest of each director in the share capital of the Company as
notified by the directors to the ASX in accordance with S205G(1) of the
Corporations Act 2001 at June 30, 2005 is as follows:

<TABLE>
<CAPTION>
                                                     ORDINARY SHARES                                  OPTIONS OVER
                                                                                                   ORDINARY SHARES
-------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>
J. Brett Heading                                              100,000                                         -
Dr. Gregory R. Collier                                              -                                 3,800,000
Kevin J. Dart                                              23,159,247                                 7,399,324
Roger V. Byrne                                                      -                                         -
Elmar J. Schnee                                             9,833,750                                 4,439,308
Dr. Dennis M. Brown                                        14,398,297                                         -
</TABLE>

Employee share option plan

An employee share option plan (ESOP) has been established where the Company may,
at the discretion of the Board, grant options over the ordinary shares of the
Company to directors, executives, advisors and support staff of the Company.
These options, issued for nil consideration, are granted in accordance with
performance guidelines established by the directors of the Company. The options
cannot be transferred and will not be quoted on the ASX. There are currently one
director, one executive and 18 scientific advisors and support staff who hold
options issued under the ESOP.

Information with respect to the number of options granted under the ESOP is as
follows:

<TABLE>
<CAPTION>
                                     YEAR TO JUNE 30, 2005      YEAR TO JUNE 30, 2004       YEAR TO JUNE 30, 2003
                                   ----------------------------------------------------------------------------------
                                     NUMBER OF      WEIGHTED     NUMBER OF      WEIGHTED     NUMBER OF      WEIGHTED
                                       OPTIONS       AVERAGE       OPTIONS       AVERAGE       OPTIONS       AVERAGE
                                                    EXERCISE                    EXERCISE                    EXERCISE
                                                  PRICE (A$)                  PRICE (A$)                  PRICE (A$)
                                   ----------------------------------------------------------------------------------
<S>                                <C>                <C>      <C>               <C>         <C>             <C>
Balance at beginning of period     1,440,000          0.74     1,165,000         0.81        855,000         1.05
-   granted                          360,000          0.56       325,000         0.50        500,000         0.50
-   forfeited                              -             -      (50,000)         0.90      (190,000)         1.06
-   exercised                       (25,000)          0.50             -            -              -            -
                                   ----------------------------------------------------------------------------------
Balance at end of period           1,775,000          0.71     1,440,000         0.74      1,165,000         0.81
                                   ==================================================================================
Exercisable at end of period       1,160,000          0.52       825,000         0.50        500,000         0.50
                                   ==================================================================================
</TABLE>

         In the addition to options granted under the ESOP, 3,300,000 options
have been granted to Dr. Gregory R. Collier after approval by shareholders at
General Meetings. Details of theses options and ESOP options granted to Dr.
Gregory R. Collier are included in Notes 15 and 20 to the Company's audited
consolidated financial statements.

For disclosure purposes, the Company uses the fair value measurement provisions
of AASB No. 1046, Director and Executive Disclosures for Disclosing Entities,
and the pending AASB 2 for all options granted to directors and relevant
executives, which have not vested as at July 1, 2003. The straight-line
amortization of the fair value of such grants over the vesting period is
disclosed as part of director and executive emoluments. No adjustments have been
or will be made to reverse amounts previously disclosed in relation to options
that never vest (i.e., forfeitures). From July 1, 2003, options granted as part
of director and executive emoluments have been valued using the Black-Scholes
option pricing model, which takes account of factors including the option
exercise price, the current level and volatility of the underlying share price,
the risk-free interest rate, expected dividends on the underlying share, current
market price of the underlying share and the expected life of the option. See
below for further details.

Fair values of options: The fair value of each option is estimated on the date
of grant using Black-Scholes option pricing model with the following weighted
average assumptions used for grants made during the 2005 financial year:

                                       66
<PAGE>

                                                             2005
                                                             ----
Dividend yield                                               0%
Expected volatility                                          65%
Risk-free interest rate at issue date                        5.17%
Life of option                                               5 years

The dividend yield reflects the assumption that the current dividend payout will
continue with no anticipated increases. The expected life of the options is
based on historical data and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that the
historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome. The resulting weighted average fair values
per option for those options vesting after July 1, 2003 are:

<TABLE>
<CAPTION>
Number of options               Grant date                   Vesting date                 Weighted average fair
                                                                                          value (A$)
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                             <C>                          <C>                          <C>
300,000                         November 21, 2003            November 21, 2003            0.34
310,000                         November 21, 2003            November 21, 2003            0.36
1,000,000                       June 21, 2004                June 21, 2004                0.35
1,000,000                       June 21, 2004                June 21, 2006                0.35
500,000                         June 21, 2004                June 21, 2007                0.35
500,000                         June 21, 2004                June 21, 2008                0.35
360,000                         December 21, 2004            December 21, 2004            0.40
</TABLE>

Currently, these fair values are not recognized as expenses in the financial
statements. However, should these grants be expensed, this would result in an
increase in employee benefits expense of A$422,104 for the 2005 financial year.
Note that no adjustments to these amounts have been made to reflect estimated or
actual forfeitures (i.e., options that do not vest).



ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.       MAJOR SHAREHOLDERS

As at November 30, 2005 the Company had knowledge of the following ownership
interest (direct and beneficial) of 5% or greater in its ordinary shares:

<TABLE>
<CAPTION>
   SHAREHOLDER                                      NUMBER OF SHARES HELD          % OF ISSUED SHARES

<S>                                                            <C>                              <C>
   Charter Pacific Corporation Limited                         23,510,087                       20.5%
   Dr. Dennis M. Brown                                         14,398,297                       12.5%
   Queensland Investment Corporation                           10,574,416                        9.2%
   Merck Sante                                                  9,793,750                        8.5%
   Elan International Services Ltd                              7,000,000                        6.1%
   Toibb Investments LLC                                        6,454,962                        5.6%
</TABLE>

                                       67
<PAGE>


Charter Pacific Corporation Limited is a publicly listed company with
approximately 3,300 shareholders as at November 30, 2005. Charter Pacific
Corporation Limited is noted as a related party as it is a major shareholder and
as Mr. Kevin J. Dart is a director of ChemGenex Pharmaceuticals Limited and a
director, and Chief Executive Officer, of Charter Pacific Corporation Limited.

Queensland Investment Corporation is wholly owned by the Government of the State
of Queensland in the Commonwealth of Australia.

Elan International Services Ltd, a Bermuda exempted limited liability company,
is a wholly-owned subsidiary of Elan Corporation plc an Irish public limited
liability company.

Toibb Investment LLC is a privately-owned US-based investment company which has
notified the ASX and the Company that it and its related entities have increased
their combined shareholding to greater than 5%.

At November 30, 2005 calculation of major shareholders, the issued share capital
of the Company was 114,797,616 ordinary shares. The major shareholders do not
have different voting rights. Under the terms of a Voting Rights Deed dated as
of June 21, 2004 between Dr. Dennis M. Brown and Charter Pacific Corporation
Limited, until the earlier to occur of June 21, 2006 and the date on which
Charter Pacific Corporation Limited beneficially owns less than 10% of the
Company's outstanding ordinary shares, Charter Pacific Corporation Limited is
entitled to vote that number of shares beneficially owned by Dr. Dennis M. Brown
in the Company that will take Charter Pacific Corporation Limited's vote to 25%
plus one vote of the outstanding stock.

At November 30, 2005, the directors of the Company controlled ordinary shares
representing approximately 41.8% of the Company's outstanding share capital, as
follows:



   DIRECTOR                                         NUMBER OF SHARES HELD

   J. Brett Heading                                               100,000
   Kevin J. Dart                                               23,659,247
   Elmar J. Schnee                                              9,833,750
   Dr. Dennis M. Brown                                         14,398,297
   TOTAL                                                       47,951,294


As far as is known to the Company and subject to the disclosure provided under
Item 8B. "Financial information -- Significant Changes" the Company is not
directly or indirectly owned or controlled by another corporation or by any
government, and there are no arrangements the operation of which may result in a
change of its control.



B.       RELATED PARTY TRANSACTIONS

In June 2004 Charter Pacific Corporation Limited agreed to provide unsecured
funding to the Company to the extent of A$5 million for working capital to
further develop the Company's two anti-cancer compounds in Phase 2 clinical
trials in the U.S. Following the capital raising of July 14, 2004 this unsecured
funding facility lapsed. No funds were drawn down under this facility.

Legal services were provided by McCullough Robertson lawyers, a legal firm of
which Mr. J. Brett L. Heading is a partner. The value of legal services provided
by McCullough Robertson lawyers was A$52,934, A$116,754 and A$88,798 and during
the years ended June 30, 2005, 2004 and 2003, respectively. During the four
months from July to October 2005 the value of legal services provided by
McCullough Robertson was $15,419.

Mr. J. Brett Heading is a director of two companies that are the joint holders
of 5% of the shares of Global Markets Capital Group LLC ("GMCG") which has
provided advisory and consulting services to the Company. The value of

                                       68
<PAGE>

advisory and consulting services provided by GMCG was A$65,214, A$1,882,294 and
A$260,631 during the years ended June 30, 2005, 2004 and 2003, respectively.
During the four months from July to October 2005 the value of services provided
by GMCG was $24,657. The Company issued 300,000 options to GMCG on November 21,
2003 at an exercise price of A$0.50. The options vested immediately with an
expiry date of November 21, 2008. Mr. J.B.L. Heading has no beneficial interest
in the two companies that are 5% shareholders in GMCG.

As an individual investor, Mr. J. Brett Heading holds 100,000 shares in the
Company.

Mr. Kevin J. Dart is a director and shareholder of Charter Pacific Corporation
Limited, which holds 23,510,087 shares and 7,399,324 options exercisable at
A$1.25 expiring March 12, 2010 in the Company. Charter Pacific Corporation
Limited is a 38.5% shareholder of GMCG that has provided advisory and consulting
services to the Company as indicated above.

Mr. Elmar J. Schnee is a director of Merck Sante which holds 9,793,750 shares
and 4,439,308 options exercisable at A$1.25 expiring March 12, 2010 in the
Company. As an individual investor Mr. Schnee holds 40,000 shares in the
Company. Merck Sante is party to research and development and commercialization
agreements with the Company's 100% owned subsidiary Autogen Research Pty Ltd.
Under these ongoing agreements Merck Sante provided research and development
funding and milestone payments to Autogen Research Pty Ltd totaling A$2,637,198,
A$3,482,511and A$4,297,176 for the years ended June 30, 2005, 2004 and 2003,
respectively. During the four months from July to October 2005 Merck Sante
provided research and development funding of $1,228,141.

Dr. Dennis M. Brown is an executive director of the Company. As an individual
investor Dr. Dennis M. Brown holds 14,398,297 shares.


C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.



ITEM 8.  FINANCIAL INFORMATION

A.       CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Reference is made to page F-1. Financial Statements for a list of all financial
statements, including the notes thereto, and exhibits.

Dividends

The Company does not currently pay dividends. The payment of future dividends
will be dependent upon future earnings, the financial condition of the Company
and other factors. In addition, the Company expects to retain a substantial
portion of future earnings, if only to finance the growth and development of the
business. Accordingly, the Company does not expect to pay dividends in the near
future.

Legal matters

The Company is not engaged in any legal or arbitration proceedings.

B.       SIGNIFICANT CHANGES

The Company is not aware of any matter or circumstance that has arisen since
June 30. 2005 that has significantly affected, or may significantly affect the
operations of the Company, the results of those operations or the state of
affairs of the consolidated Company in future fiscal years.

                                       69
<PAGE>

ITEM 9.  THE OFFER AND LISTING

A.       OFFER AND LISTING DETAILS

TRADING MARKET FOR ORDINARY SHARES AND ADSS

The Company's ordinary shares were listed on the ASX on July 10, 1986. The ASX
is the principal trading market for the ordinary shares. The following table
sets forth, for the periods indicated, the highest and lowest market quotations
for the ordinary shares reported on the Daily Official List of the ASX.

ANNUAL HIGH AND LOW MARKET PRICE OF ORDINARY SHARES AND AVERAGE DAILY TRADING
VOLUME ON ASX FOR LAST FIVE FULL FISCAL YEARS

<TABLE>
<CAPTION>
                                                    High (A$)       Low (A$)        Ave. daily trading volume
<S>              <C>             <C>                 <C>            <C>                                   <C>
2005             July 1, 2004 to June 30, 2005      0.73            0.43                                   84,716
2004             July 1, 2003 to June 30, 2004      0.84            0.25                                  247,578
2003             July 1, 2002 to June 30, 2003      0.65            0.17                                   84,713
2002             July 1, 2001 to June 30, 2002      1.15            0.47                                   27,027
2001             July 1, 2000 to June 30, 2001      1.48            0.24                                   82,117


QUARTERLY HIGH AND LOW MARKET PRICE OF ORDINARY SHARES AND AVERAGE DAILY TRADING
VOLUME FOR LAST TWO FULL FISCAL YEARS AND BEYOND
                                                           High (A$)    Low (A$)   Ave. daily trading volume
Fiscal 2006          September quarter                     0.72         0.50                              48,083
Fiscal 2005          June quarter                          0.80         0.43                             114,678
                     March quarter                         0.69         0.48                              45,166
                     December quarter                      0.73         0.47                             143,504
                     September quarter                     0.58         0.43                              76,843
Fiscal 2004          June quarter                          0.62         0.44                             131,195
                     March quarter                         0.59         0.42                              62,174
                     December quarter                      0.63         0.45                              83,549
                     September quarter                     0.84         0.25                             692,940


MONTHLY HIGH AND LOW MARKET PRICE OF ORDINARY SHARES AND AVERAGE DAILY TRADING
VOLUME FOR LAST SIX MONTHS

                                                           High (A$) Low (A$)
                                                           Ave. daily trading
                                                           volume
November 2005                                              0.68         0.56                              54,367
October 2005                                               0.63         0.47                             106,440
September 2005                                             0.60         0.50                              35,603
August 2005                                                0.63         0.52                              43,268
July 2005                                                  0.72         0.56                              65,377
June 2005                                                  0.80         0.55                             179,180
</TABLE>

As at December 8, 2005 the ordinary shares closed at AUD 63.5 cents.

At December 8, 2005 the Company had 114,797,616 ordinary shares issued and
outstanding. The shares are without par value. See Item 10B Memorandum and
articles of incorporation for a detailed description of the rights attaching to
the shares. Also see Item 12A. "American Depositary Shares" for a description of
the rights attaching to the ADR.

                                       70
<PAGE>

On December 10, 2002 the Company established a Level I ADR program, in which the
ordinary shares trade in the form of ADSs, which are evidenced by American
Depositary Receipts or ADRs, issued by The Bank of New York, as Depositary, and
registered on Form F-6 pursuant to the U.S. Securities Act of 1933, as amended.

The Company's Level I ADR program was upgraded to a Level II program on June 28,
2005, in connection with the Company's listing on the NASDAQ SmallCap Market.
One American Depositary Share ("ADS") represents fifteen ordinary shares.

As of November 30, 2005 there were approximately 3,900 record holders of the
Company's ordinary shares, of which 28.1% of the total ordinary shares issued
and outstanding were held of record by 93 U.S. residents (based solely on their
addresses).

As of December 8, 2005, there were 35,439 ADRs outstanding.

QUARTERLY HIGH AND LOW MARKET PRICE OF ADRS AND AVERAGE DAILY TRADING VOLUME
SINCE NASDAQ LISTING

<TABLE>
<CAPTION>
                                         High (US$) Low (US$)       Ave. daily trading volume
<S>                                      <C>         <C>                                  <C>
September quarter                        8.55        6.00                                 863

MONTHLY HIGH AND LOW MARKET PRICE ADRS AND AVERAGE DAILY TRADING VOLUME SINCE
NASDAQ LISTING

                                         High (US$) Low (US$)       Ave. daily trading volume
November 2005                            8.48        7.04                                 666
October 2005                             8.25        5.02                               1,571
September 2005                           6.39        6.00                                  19
August 2005                              7.35        6.05                                  39
July 2005                                8.55        6.18                               2,530
June 2005                                10.95       6.00                               3,166
</TABLE>


As at December 8, 2005 ADRs on the NASDAQ SmallCaps market closed at US$6.85



B.       PLAN OF DISTRIBUTION


Not applicable.

C.       MARKETS


The Company's ordinary shares were listed on the ASX on July 10, 1986. The ASX
is the principal trading market for the ordinary shares.

The Company's ADRs were listed on the NASDAQ SmallCap market on June 28, 2005.
Each ADR evidences 15 ordinary shares.

D.       SELLING SHAREHOLDERS


Not applicable.

                                       71
<PAGE>


E.       DILUTION


Not applicable.

F.       EXPENSES OF THE ISSUE


Not applicable.


ITEM 10. ADDITIONAL INFORMATION

A.       SHARE CAPITAL

Not applicable

B.       MEMORANDUM AND ARTICLES OF INCORPORATION

Incorporated by reference to the Company's Registration Statement on Form 20-F
(file no. 0-51373) filed with the Commission on June 23, 2005.

C.       MATERIAL CONTRACTS

The following contracts are the only contracts not entered into in the ordinary
course of business which have been entered into by the Company within two years
immediately preceding the date of this document and are or may be material to
the Company:

The Company's principal commercial collaborations are described under Item 4.B.
"Business overview - commercial and research and development collaborations."

Under the Agreement and Plan of Merger dated as of April 27, 2004 among AGT
Biosciences Limited (the Company), AGT Biosciences, Inc., ChemGenex
Therapeutics, Inc. (now ChemGenex Pharmaceuticals, Inc.) and Dr. Dennis M.
Brown, the Company acquired 100% of ChemGenex Therapeutics, Inc. through a
merger, using ordinary shares. Pursuant to the terms of the agreement, the
Company has continuing indemnity obligations in favor of the selling
shareholders, represented by Dr. Dennis M. Brown, and Dr. Dennis M. Brown has
certain continuing indemnity obligations in favor of the Company. Each of the
selling shareholders, who are now shareholders of the Company, entered into a
non-sale undertaking restricting their ability to trade the ordinary shares
received in the merger for a period ending on June 21, 2005.



D.       EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

Exchange controls

Under existing Australian legislation, the Reserve Bank of Australia does not
inhibit the import and export of funds, and, generally, no permission is
required to be given to the Company for the movement of funds in and out of
Australia. However, from time to time, Australian foreign exchange controls are
implemented against prescribed countries, entities and persons. Certain
transactions relating to Iraq, the National Union for the Total Independence of
Angola (UNITA), certain persons associated with the former government of the
Federal Republic of Yugoslavia, and ministers and senior officials of the
Government of Zimbabwe are currently prohibited, without the specific prior
approval, of the Reserve Bank of Australia. Restrictions also apply to
transactions, accounts and assets relating to the Taliban, Usama bin Laden, the
Al-Qaida organization and other persons and entities identified as terrorists or
sponsors of terrorism.

                                       72
<PAGE>

Accordingly, at the present time, remittances of any dividends, interest or
other payment by the Company to non-resident holders of the Company's securities
in the U.S. are not, subject to the above, restricted by exchange controls or
other limitations.

Takeovers Act

There are no limitations, either under the laws of Australia or under the
Constitution of ChemGenex Pharmaceuticals Limited, to the right of non-residents
to hold or vote the Company's ordinary shares other than the Commonwealth
Foreign Acquisitions and Takeovers Act 1975 (the "Takeovers Act"). The Takeovers
Act may affect the right of non-Australian residents, including U.S. residents,
to hold ordinary shares but does not affect the right to vote, or any other
rights associated with any ordinary shares held in compliance with its
provisions. Acquisitions of shares in Australian companies by foreign interests
are subject to review and approval by the Treasurer of the Commonwealth of
Australia under the Takeovers Act. The Takeovers Act applies to any acquisition
of outstanding shares of an Australian company that exceeds, or results in a
foreign person or persons controlling the voting power of more than a certain
percentage of those shares. The thresholds are 15% where the shares are acquired
by a foreign person, or group of associated foreign persons, or 40% in aggregate
in the case of foreign persons who are not associated. Any proposed acquisition
that would result in an individual foreign person (with associates) holding more
than 15% must be notified to the Treasurer in advance of the acquisition. At
January 31, 2005, approximately 39.6% of the Company's fully paid outstanding
ordinary shares were held by shareholders outside Australia. In addition to the
Takeovers Act, there are statutory limitations in Australia on foreign ownership
of certain businesses, such as banks and airlines, not relevant to the Company.
However, there are no other statutory or regulatory provisions of Australian law
or ASX requirements that restrict foreign ownership or control of the Company.

Corporations Act 2001

As applied to the Company, the Corporations Act 2001 (the "Corporations Act
2001") prohibits any legal person (including a corporation) from acquiring a
relevant interest in ordinary shares if after the acquisition that person or any
other person's voting power in the Company increases from 20% or below to more
than 20%, or from a starting point that is above 20% and below 90%.

This prohibition is subject to a number of specific exceptions set out in
section 611 of the Corporations Act 2001 which must be strictly complied with to
be applicable.

In general terms, a person is considered to have a "relevant interest" in a
share in the Company if that person is the holder of that share, has the power
to exercise, or control the exercise of, a right to vote attached to that share,
or has the power to dispose of, or to control the exercise of a power to dispose
of that share.

It does not matter how remote the relevant interest is or how it arises. The
concepts of "power" and "control" are given wide and extended meanings in this
context in order to deem certain persons to hold a relevant interest. For
example each person who has voting power above 20% in a company which in turn
holds shares in the Company is deemed to have a relevant interest in those
shares. Certain situations (set out in section 609 of the Corporations Act 2001)
which would otherwise constitute the holding of a relevant interest are excluded
from the definition.

A person's voting power in the Company is that percentage of the total votes
attached to ordinary shares in which that person and its associates (as defined
in the Corporations Act 2001) holds a relevant interest.



E.       TAXATION

This summary is based on the tax laws of the U.S.(including the Internal Revenue
Code of 1986, as amended, its legislative history, existing and proposed
regulations thereunder, published rulings and court decisions) and on the
Australian tax law and practice as in effect on the date hereof. In addition,
this summary is based on the income tax convention between the U.S. and
Australia (the "Treaty"). The foregoing laws and legal authorities as well as
the Treaty are subject to change (or changes in interpretation), possibly with
retroactive effect. Finally, this summary is

                                       73
<PAGE>

based in part upon the representations of the Company's ADR Depositary and the
assumption that each obligation in the Deposit Agreement and any related
agreement will be performed in accordance with its terms.

The discussion does not address any aspects of U.S. taxation other than federal
income taxation or any aspects of Australian taxation other than federal income
taxation, inheritance taxation, stamp duty and goods and services tax. This
discussion does not address all aspects of U.S. or Australian federal tax
considerations that may be important to particular investors in light of their
individual investment circumstances or investors subject to special tax regimes,
like broker-dealers, insurance companies or financial institutions, tax-exempt
organizations, regulated investment companies, real estate investment trusts or
real estate mortgage investment conduits, persons who actually or constructively
own ten percent or more of the Company's ADRs or ordinary shares, persons who
hold ADRs or ordinary shares as part of a straddle, "hedge" or "conversion
transaction" with other investments, persons who have elected mark-to-market
accounting, or persons who acquired their ADRs or ordinary shares through the
exercise of options or similar derivative securities or otherwise as
compensation. This discussion applies only to shares held as capital assets.
Prospective investors are urged to consult their tax advisers regarding the U.S.
and Australian federal, state and local tax consequences and any other tax
consequences of owning and disposing of ADRs and ordinary shares.

AUSTRALIAN TAX CONSEQUENCES

In this section the Company's discuss Australian tax considerations that apply
to non-Australian tax residents who are residents of the U.S. with respect to
the ownership and disposal by the absolute beneficial owners of ADRs. This
summary does not discuss any foreign or state tax considerations, other than
stamp duty.

NATURE OF ADRS FOR AUSTRALIAN TAXATION PURPOSES

ADRs held by a U.S. Holder will be treated for Australian taxation purposes as
held under a "bare trust" for that holder. Consequently, the underlying ordinary
shares will be regarded as owned by the ADR holder for Australian income tax and
capital gains tax purposes. Dividends paid on the underlying ordinary shares
will also be treated as dividends paid to the ADR holder, as the person
beneficially entitled to those dividends. Therefore, in the following analysis
the Company discusses the tax consequences to non-Australian resident holders of
ordinary shares which, for Australian taxation purposes, will be the same as to
U.S. Holders of ADRs.

TAXATION OF DIVIDENDS

Australia operates a dividend imputation system under which dividends may be
declared to be "franked" to the extent of tax paid on company profits. Fully
franked dividends are not subject to dividend withholding tax. Dividends payable
by the Company to non-Australian resident stockholders will be subject to
dividend withholding tax, to the extent the dividends are unfranked. Dividend
withholding tax will be imposed at 30%, unless a stockholder is a resident of a
country with which Australia has a double taxation agreement. Under the
provisions of the Treaty, the Australian tax withheld on unfranked dividends
paid by the Company to which a resident of the U.S. is beneficially entitled is
generally limited to 15% if the U.S. resident holds less than 10% of the voting
rights of the Company, unless the shares are effectively connected to a
permanent establishment or fixed base in Australia through which the stockholder
carries on business or provides independent personal services, respectively.
Where the U.S. resident holds 10% or more of the voting rights of the Company,
the withholding tax rate is reduced to 5%.

TAX ON SALES OR OTHER DISPOSITIONS OF SHARES - CAPITAL GAINS TAX

Non-Australian resident stockholders will not be subject to Australian capital
gains tax on the gain made on a sale or other disposal of our shares, unless
they, together with associates, hold 10% or more of our issued capital at any
time during the five years before the disposal of the shares. If a
non-Australian resident stockholder did own a 10% or more interest, that
stockholder would be subject to Australian capital gains tax to the same extent
as Australian resident stockholders. The Australian Taxation Office maintains
the view that the Double Taxation Convention between the U.S. and Australia does
not limit Australian capital gains tax. Australian capital gains tax applies to
net capital gains at a taxpayer's marginal tax rate but for certain stockholders
a discount of the capital gain may apply if the shares have been held for 12
months or more. For individuals, this discount is 50%. Net capital gains are
calculated after reduction for capital losses, which may only be offset against
capital gains.

                                       74
<PAGE>

TAX ON SALES OR OTHER DISPOSITIONS OF SHARES - STOCKHOLDERS HOLDING SHARES ON
REVENUE ACCOUNT

Some non-Australian resident stockholders may hold shares on revenue rather than
on capital account, for example, share traders. These stockholders may have the
gains made on the sale or other disposal of the shares included in their
assessable income under the ordinary income provisions of the income tax law, if
the gains are sourced in Australia. Non-Australian resident stockholders
assessable under these ordinary income provisions in respect of gains made on
shares held on revenue account would be assessed for those gains at the
Australian tax rates for non-Australian residents, which start at a marginal
rate of 29%. Some relief from the Australian income tax may be available to
non-Australian resident stockholders under the Double Taxation Convention
between the U.S. and Australia, for example, because the stockholder does not
have a permanent establishment in Australia.

To the extent an amount would be included in a non-Australian resident
stockholder's assessable income under both the capital gains tax provisions and
the ordinary income provisions, the capital gain amount would generally be
reduced, so that the stockholder would not be subject to double tax on any part
of the income gain or capital gain.
DUAL RESIDENCY

If a stockholder were a resident of both Australia and the U.S. under those
countries' domestic taxation laws, that stockholder may be subject to tax as an
Australian resident. If, however, the stockholder is determined to be a U.S.
resident for the purposes of the Double Taxation Convention between the U.S. and
Australia, the Australian tax would be subject to limitation by the Double
Taxation Convention. Stockholders should obtain specialist taxation advice in
these circumstances.

STAMP DUTY

Any transfer of shares through trading on the ASX, whether by Australian
residents or foreign residents, are not subject to stamp duty within Australia.

AUSTRALIAN DEATH DUTY

Australia does not have estate or death duties. No capital gains tax liability
is realized upon the inheritance of a deceased person's shares. The disposal of
inherited shares by beneficiaries, may, however, give rise to a capital gains
tax liability.

GOODS AND SERVICES TAX

The issue or transfer of shares will not incur Australian goods and services tax
and does not require a stockholder to register for Australian goods and services
tax purposes.

U.S. FEDERAL INCOME TAXATION

As used below, a "U.S. Holder" is a beneficial owner of an ADR or ordinary share
that is, for U.S. federal income tax purposes, (i) a citizen or resident alien
individual of the United States, (ii) a corporation (or an entity treated as a
corporation) organized under the law of the United States, any State thereof or
the District of Columbia, (iii) an estate the income of which is subject to U.S.
federal income tax without regard to its source or (iv) a trust if (1) a court
within the United States is able to exercise primary supervision over the
administration of the trust, and one or more United States persons have the
authority to control all substantial decisions of the trust, or (2) the trust
was in existence on August 20, 1996 and properly elected to continue to be
treated as a United States person. For purposes of this discussion, a "non-U.S.
Holder" is a beneficial owner of an ADR or ordinary share that is (i) a
nonresident alien individual, (ii) a corporation (or an entity treated as a
corporation) created or organized in or under the law of a country other than
the United States or a political subdivision thereof or (iii) an estate or trust
that is not a U.S. Holder.

NATURE OF ADRS FOR U.S. FEDERAL INCOME TAX PURPOSES

In general, for U.S. federal income tax purposes, a holder of an ADR will be
treated as the owner of the underlying ordinary shares. Accordingly, except as
specifically noted below, the tax consequences discussed below with respect to
ADRs will be the same for ordinary shares in the Company, and exchanges of
ordinary shares for ADRs,

                                       75
<PAGE>

and ADRs for ordinary shares, generally will not be subject to U.S. federal
income tax.

TAXATION OF DIVIDENDS

U.S. Holders. In general, subject to the passive foreign investment company
rules discussed below, a distribution on an ADR will constitute a dividend for
U.S. federal income tax purposes to the extent made from the Company's current
or accumulated earnings and profits as determined under U.S. federal income tax
principles. If a distribution exceeds the Company's current and accumulated
earnings and profits, it will be treated as a non-taxable reduction of basis to
the extent of the U.S. Holder's tax basis in the ADR on which it is paid, and to
the extent it exceeds that basis it will be treated as capital gain. For
purposes of this discussion, the term "dividend" means a distribution that
constitutes a dividend for U.S. federal income tax purposes.

The gross amount of any dividend on an ADR (which will include the amount of any
Australian taxes withheld) will be subject to U.S. federal income tax as foreign
source dividend income. The amount of a dividend paid in Australian dollars will
be its value in U.S. dollars based on the prevailing spot market exchange rate
in effect on the day that the U.S. Holder receives the dividend or, in the case
of a dividend received in respect of an ADR, on the date the Depositary receives
it, whether or not the dividend is converted into U.S. dollars. Any gain or loss
realized on a conversion or other disposition of the Australian dollars
generally will be treated as U.S. source ordinary income or loss. Any Australian
withholding tax will be treated as a foreign income tax eligible for credit
against a U.S. Holder's U.S. federal income tax liability, subject to generally
applicable limitations under U.S. federal income tax law. For purposes of
computing those limitations separately under current law for specific categories
of income, a dividend generally will constitute foreign source "passive income"
or, in the case of certain holders, "financial services income" for purposes of
the current foreign tax credit limitation rules. For taxable years beginning
after December 31, 2006, "financial services income" generally will be treated
as "general category income," and "passive income" generally will be treated as
"passive category income." A U.S. Holder will be denied a foreign tax credit
with respect to Australian income tax withheld from dividends received on an ADR
to the extent the U.S. Holder has not held the ADR for at least 16 days of the
30-day period beginning on the date which is 15 days before the ex-dividend date
or to the extent the U.S. Holder is under an obligation to make related payments
with respect to substantially similar or related property. Any days during which
a U.S. Holder has substantially diminished its risk of loss on the ADR are not
counted toward meeting the 16-day holding period required by the statute. The
rules relating to the determination of the foreign tax credit are complex, and
you should consult your own tax adviser to determine whether and to what extent
you would be entitled to this credit. You should consult your tax adviser with
respect to the determination of the foreign tax credit limitation, as the
relevant rules are complex and are scheduled to change in future years.
Alternatively, any Australian withholding tax may be taken as a deduction
against taxable income if the U.S. Holder elects to deduct rather than credit
all of his foreign income taxes. A dividend will not be eligible for the
corporate dividends received deduction.



Subject to certain exceptions for short-term and hedged positions, a dividend an
individual receives on an ADR before January 1, 2009 will be subject to a
maximum tax rate of 15% if the dividend is a "qualified dividend." A dividend
will be a qualified dividend if (a) the dividend is paid on an ordinary share
and the ordinary shares are readily tradable on an established securities market
in the United States or (b) the dividend is paid on an ADR or an ordinary share
and the Company is eligible for benefits of a comprehensive income tax treaty
with the United States that the Secretary of the Treasury determines is
satisfactory for purposes of these rules and that includes an exchange of
information program, and (ii) the Company was not, in the year prior to the year
the dividend was paid, and is not, in the year the dividend is paid, (A) in the
case of taxable years of the Company beginning before January 1, 2005, a passive
foreign investment company ("PFIC"), foreign personal holding company ("FPHC")
or foreign investment company ("FIC"), or (B), in the case of taxable years
beginning after December 31, 2004, a PFIC. Effective for taxable years of
foreign corporations beginning after December 31, 2004, the rules relating to
FPHCs and FICs are repealed. The ADRs will be listed on the NASDAQ SmallCap
Market. It is not clear whether that listing will qualify them as readily
tradable on an established securities market in the United States. Moreover,
because only the ADRs and not the shares themselves are listed on a U.S.
exchange, based on existing guidance it is not clear whether dividends paid by
the Company will be treated as paid on shares that are readily tradable on an
established securities market in the United States. However, the Treaty
satisfies the requirements of clause (i)(b), and, although the matter is not
free from doubt, the Company should be a resident of Australia entitled to the
benefits of the Treaty. Based on the Company's audited financial statements and
relevant market and shareholder data, the Company believes it was not a PFIC,
FPHC or FIC for U.S. federal income tax purposes for its 2004

                                       76
<PAGE>

taxable year. In addition, based on the Company's audited financial statements
and its current expectations regarding the value and nature of its assets, the
sources and nature of its income, and relevant market and shareholder data, the
Company does not anticipate becoming a PFIC for its 2005 taxable year. However,
because the determination of whether the Company is a PFIC is based upon the
composition of the income and assets from time to time, there can be no
assurances that the Company will not become a PFIC for any future taxable year.
However, as described in the section below entitled "Passive Foreign Investment
Company Rules," if the Company were a PFIC in a year while a U.S. Holder held an
ADR or ordinary share, and if the U.S. Holder has not made a qualified electing
fund election effective for the first year the U.S. Holder held the ADR or
ordinary share, the ADR or ordinary share remains an interest in a PFIC for all
future years or until such an election is made. The Internal Revenue Service
takes the position that that rule will apply for purposes of determining whether
an ADR is an interest in a PFIC in the year a dividend is paid or in the prior
year, even if the Company does not satisfy the tests to be a PFIC in either of
those years. Even if the Company has not been a PFIC in any prior year and is
not currently a PFIC, because the composition of the Company's income and assets
will vary over time, there can be no assurance that the Company will not be
considered a PFIC for any taxable year. The U.S. Treasury has announced its
intention to promulgate rules pursuant to which holders of stock of non-U.S.
corporations, and intermediaries though whom the stock is held, will be
permitted to rely on certifications from issuers to establish that dividends are
treated as qualified dividends. Because those procedures have not yet been
issued, it is not clear whether the Company will be able to comply with them.
Special limitations on foreign tax credits apply to dividends subject to the
reduced rate of tax. Holders of ADRs and ordinary shares should consult their
own tax advisers regarding the availability of the reduced dividend tax rate in
the light of their own particular circumstances.

Non-U.S. Holders. A dividend paid to a non-U.S. Holder of an ADR will not be
subject to U.S. federal income tax unless the dividend is effectively connected
with the conduct of trade or business by the non-U.S. Holder within the United
States (and is attributable to a permanent establishment or fixed base the
non-U.S. Holder maintains in the United States if an applicable income tax
treaty so requires as a condition for the non-U.S. Holder to be subject to U.S.
taxation on a net income basis on income from the ADR). A non-U.S. Holder
generally will be subject to tax on an effectively connected dividend in the
same manner as a U.S. Holder. A corporate non-U.S. Holder may also be subject
under certain circumstances to an additional "branch profits tax," the rate of
which may be reduced pursuant to an applicable income tax treaty.


TAXATION OF CAPITAL GAINS

U.S. Holders. Subject to the passive foreign investment company rules discussed
below, on a sale or other taxable disposition of an ADR, a U.S. Holder will
recognize capital gain or loss in an amount equal to the difference between the
U.S. Holder's adjusted basis in the ADR and the amount realized on the sale or
other disposition, each determined in U.S. dollars. Any gain a U.S. Holder
recognizes generally will be U.S. source income for U.S. foreign tax credit
purposes, and, subject to certain exceptions, any loss generally will be a U.S.
source loss. If an Australian tax is paid on a sale or other disposition of an
ADR, the generally applicable limitations under U.S. federal income tax law on
crediting foreign income taxes may preclude a U.S. Holder from obtaining a
foreign tax credit for the Australian tax.

In general, any adjusted net capital gain of an individual in a taxable year
ending before January 1, 2009 is subject to a maximum tax rate of 15%. In later
years, the maximum tax rate on the net capital gain of an individual will be
20%. The deductibility of capital losses is subject to limitations.

Non-U.S. Holders. A non-U.S. Holder will not be subject to U.S. federal income
tax on gain recognized on a sale or other disposition of an ADR unless (i) the
gain is effectively connected with the conduct of trade or business by the
non-U.S. Holder within the United States (and is attributable to a permanent
establishment or fixed base the non-U.S. Holder maintains in the United States
if an applicable income tax treaty so requires as a condition for the non-U.S.
Holder to be subject to U.S. taxation on a net income basis on income from the
ADR), or (ii) in the case of a non-U.S. Holder who is an individual, the holder
is present in the United States for 183 or more days in the taxable year of the
sale or other disposition and certain other conditions apply. Any effectively
connected gain of a corporate non-U.S. Holder may also be subject under certain
circumstances to an additional "branch profits tax," the rate of which may be
reduced pursuant to an applicable income tax treaty.

                                       77
<PAGE>

PASSIVE FOREIGN INVESTMENT COMPANY RULES

A special set of U.S. federal income tax rules applies to a foreign corporation
that is a PFIC for U.S. federal income tax purposes. As noted above, based on
the Company's audited financial statements and relevant market and shareholder
data, the Company believes it was not a PFIC for U.S. federal income tax
purposes for its 2004 taxable year. In addition, based on the Company's audited
financial statements and current expectations regarding the value and nature of
its assets, the sources and nature of its income, and relevant market and
shareholder data, the Company does not anticipate becoming a PFIC for its 2005
taxable year.

In general, a foreign corporation is a PFIC if at least 75% of its gross income
for the taxable year is passive income or if at least 50% of its assets for the
taxable year produce passive income or are held for the production of passive
income. In general, passive income for this purpose means, with certain
designated exceptions, dividends, interest, rents, royalties (other than certain
rents and royalties derived in the active conduct of trade or business),
annuities, net gains from dispositions of certain assets, net foreign currency
gains, income equivalent to interest, income from notional principal contracts
and payments in lieu of dividends. The determination of whether a foreign
corporation is a PFIC is a factual determination made annually and is therefore
subject to change. Subject to exceptions pursuant to certain elections that
generally require the payment of tax, once stock in a foreign corporation is
stock in a PFIC in the hands of a particular shareholder that is a United States
person, it remains stock in a PFIC in the hands of that shareholder.

If the Company is treated as a PFIC, contrary to the tax consequences described
in "U.S. federal Income Tax Considerations--Taxation of Dividends" and "--U.S.
federal Income Tax Considerations--Taxation of Capital Gains" above, a U.S.
Holder that does not make an election described in the succeeding two paragraphs
would be subject to special rules with respect to (i) any gain realized on a
sale or other disposition of an ADR and (ii) any "excess distribution" by the
Company to the U.S. Holder (generally, any distribution during a taxable year in
which distributions to the U.S. Holder on the ADR exceed 125% of the average
annual taxable distributions the U.S. Holder received on the ADR during the
preceding three taxable years or, if shorter, the U.S. Holder's holding period
for the ADR). Under those rules, (i) the gain or excess distribution would be
allocated ratably over the U.S. Holder's holding period for the ADR, (ii) the
amount allocated to the taxable year in which the gain or excess distribution is
realized would be taxable as ordinary income and (iii) the amount allocated to
each prior year, with certain exceptions, would be subject to tax at the highest
tax rate in effect for that year, and the interest charge generally applicable
to underpayments of tax would be imposed in respect of the tax attributable to
each of those years. A U.S. Holder who owns an ADR during any year the Company
is a PFIC must file Internal Revenue Service Form 8621.

The special PFIC rules described above will not apply to a U.S. Holder if the
U.S. Holder makes a timely election to treat the Company as a "qualified
electing fund" ("QEF") in the first taxable year in which the U.S. Holder owns
an ADR and the Company is a PFIC and if the Company complies with certain
reporting requirements. Instead, a shareholder of a QEF generally is currently
taxable on a pro rata share of the Company's ordinary earnings and net capital
gain as ordinary income and long-term capital gain, respectively. Neither that
ordinary income nor any actual dividend from the Company would qualify for the
15% maximum tax rate on dividends described above if the Company is a PFIC in
the taxable year the ordinary income is realized or the dividend is paid or in
the preceding taxable year. The Company has not yet determined whether, if it is
a PFIC, it would make the computations necessary to supply U.S. Holders with the
information needed to report income and gain pursuant to a QEF election. It is,
therefore, possible that U.S. Holders would not be able to make or retain that
election in any year the Company is a PFIC. Although a QEF election generally
cannot be revoked, if a U.S. Holder made a timely QEF election for the first
taxable year it owned an ADR and the Company is a PFIC (or is treated as having
done so pursuant to any of certain elections), the QEF election will not apply
during any later taxable year in which the Company does not satisfy the tests to
be a PFIC. If a QEF election is not made in that first taxable year, an election
in a later year generally will require the payment of tax and interest, and in
certain circumstances the election may cease to be available at a later date.

In lieu of a QEF election, a U.S. Holder of stock in a PFIC that is considered
marketable stock could elect to mark the stock to market annually, recognizing
as ordinary income or loss each year an amount equal to the difference as of the
close of the taxable year between the fair market value of the stock and the
U.S. Holder's adjusted basis in the

                                       78
<PAGE>

stock. Losses would be allowed only to the extent of net mark-to-market gain
previously included in income by the U.S. Holder under the election for prior
taxable years. A U.S. Holder's adjusted basis in the ADRs will be adjusted to
reflect the amounts included or deducted with respect to the mark-to-market
election. If the mark-to-market election were made, the rules set forth in the
second preceding paragraph would not apply for periods covered by the election.
A mark-to-market election will not apply during any later taxable year in which
the Company does not satisfy the tests to be a PFIC. In general, the ADRs will
be marketable stock if the ADRs are traded, other than in de minimis quantities,
on at least 15 days during each calendar quarter. However, there is no certainty
that the shares will be considered "marketable stock" for these purposes unless
and until the Internal Revenue Service designates the ASX as having rules
adequate to carry out the purposes of the PFIC rules. There can be no assurance
that the Internal Revenue Service will make that designation.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Dividends paid on, and proceeds from the sale or other disposition of, an ADR to
a U.S. Holder generally may be subject to information reporting requirements and
may be subject to backup withholding at the rate of 28% unless the U.S. Holder
provides an accurate taxpayer identification number or otherwise establishes an
exemption. The amount of any backup withholding collected from a payment to a
U.S. Holder will be allowed as a credit against the U.S. Holder's U.S. federal
income tax liability and may entitle the U.S. Holder to a refund, provided
certain required information is furnished to the Internal Revenue Service. A
non-U.S. Holder generally will be exempt from these information reporting
requirements and backup withholding tax but may be required to comply with
certain certification and identification procedures in order to establish its
eligibility for exemption.

The discussion above is not intended to constitute a complete analysis of all
tax considerations applicable to an investment in ADRs. A holder should consult
his tax adviser concerning the tax consequences to him in his particular
situation.


THE DISCUSSION ABOVE IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL
TAX CONSIDERATIONS APPLICABLE TO AN INVESTMENT IN ADRS OR ORDINARY SHARES.
HOLDERS AND POTENTIAL HOLDERS SHOULD CONSULT THEIR TAX ADVISER(S) CONCERNING THE
TAX CONSEQUENCES RELEVANT TO THEM IN THEIR PARTICULAR SITUATION.


F.       DIVIDENDS AND PAYING AGENTS

Not applicable

G.       STATEMENT BY EXPERTS

Not applicable

H.       DOCUMENTS ON DISPLAY

This Annual Report on Form 20-F and any related documents may be inspected by
investors at the Company's registered office at Edmondson Turner & Co., 439 Bay
Street, Brighton, Victoria, Australia, or at the Company's headquarters at
Pigdons Road, Waurn Ponds, Victoria, Australia or at the public reference room
of the SEC located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington DC 20549, at prescribed rates. The Company is subject to the
information requirements of the U.S. Securities Exchange Act of 1934, as
amended, and, in accordance therewith, is required to file reports, including
annual reports on Form 20-F, and other information with the U.S. Securities and
Exchange Commission in electronic form. More information concerning the public
reference room of the SEC can be obtained by calling the SEC at 1-800-SEC-0330.
The SEC filings of the Company are available to the public from commercial
document retrieval services and at the website maintained by the SEC at
www.sec.gov. The Company also maintains a website at www.chemgenex.com.
Information on the Company's website and websites linked to it do not constitute
part of this Annual Report.

                                       79
<PAGE>

I.       SUBSIDIARY INFORMATION

Not applicable



ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has exposure to changes in foreign currency exchange rates and
interest rates. The Company does not utilize derivative financial instruments or
other financial instruments subject to market risk.

FOREIGN CURRENCY EXCHANGE RATES
The principal currency of the Company is the Australian dollar. Under existing
partnership agreements the Company receives funds in U.S. dollars, Euros and
Pounds Sterling. Cash to fund working capital requirements is managed centrally
in Australia and held in Australian dollars.

The following table shows the sensitivity of the Company's future earnings as a
result of an appreciation or depreciation in the value of the June 30, 2005
exchange rate of the Australian dollar against the U.S. dollar, the Euro and
Pounds Sterling based on foreign currency receipts from partnership agreements
in 2004/2005. As the Company receives revenue and pays some expenses in U.S.
dollars its operations provide a natural hedge against fluctuations in the
Australian dollar: U.S. dollar exchange rate.

<TABLE>
<CAPTION>
                             A$ DEPRECIATION                                          A$ APPRECIATION
                        -15%         -10%               -5%           0%             5%          10%            15%
              ------------------------------------------------------------------------------------------------------

<S>                  <C>           <C>                <C>       <C>            <C>         <C>            <C>
US$                  196,902      131,268            65,634      -             (65,634)    (131,268)      (196,902)
(euro)               177,123      118,082            59,041      -             (59,041)    (118,082)      (177,123)
(pound)              176,523      117,682            58,841      -             (58,841)    (117,682)      (176,523)
              ------------------------------------------------------------------------------------------------------
Total                550,548      367,032           183,516      -            (183,516)    (367,032)      (550,548)
              ======================================================================================================
</TABLE>






INTEREST RATES

Cash deposits are held in call and deposit accounts at the National Australian
Bank and are subject to variable interest rates. The Company does not consider
its exposure to interest rates to be significant.


ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A        DEBT SECURITIES

Not applicable.

                                       80
<PAGE>



B        WARRANTS AND RIGHTS

Not applicable.



C        OTHER SECURITIES

Not applicable.



D        AMERICAN DEPOSITARY SHARES

Not applicable.
                                       81
<PAGE>



                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.



ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHT OF SECURITY HOLDERS AND USE OF
PROCEEDS

None.



ITEM 15. CONTROLS AND PROCEDURES

         A.  CONTROLS AND PROCEDURES

As of June 30, 2005 the Company's management, including its Chief Executive
Officer and its Chief Financial Officer, reviewed the effectiveness of the
design and operation of the Company's disclosure controls and procedures, as
defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934.
Based on that review, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the design and operation of the Company's existing
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports that the Company files and submits under
the Exchange Act is (i) recorded, processed, summarized and reported as and when
required and (ii) accumulated and communicated to management, including the
Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure as of the end of the Company's most recent fiscal
year.

In preparation for the adoption of Section 404 of the Sarbanes-Oxley Act of 2002
by all Foreign Private Issuers by June 30, 2007 management has initiated a
detailed evaluation of existing internal controls against Section 404
requirements. Management will allocate the necessary resources and initiate
required actions to redress any possible Section 404 weaknesses prior to that
date

 No changes in the Company's internal controls over financial reporting occurred
during the period covered by this report that materially affected, or are
reasonably likely to materially affect, the Company's internal controls over
financial reporting.



B. MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Not applicable.

C. ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

Not applicable.

D. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no significant changes in our internal controls or in other factors
that could significantly affect these controls and procedures subsequent to the
date our chief executive officer and our chief financial officer completed their
evaluation, nor were there any significant deficiencies or material weaknesses
in our internal controls and procedures requiring corrective actions.

                                       82
<PAGE>




ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Directors of the Company has determined that Patrick Owen Burns, an
independent member of its Board of Directors and a member of its Audit
Committee, is an audit committee financial expert within the meaning of the
Sarbanes-Oxley and related regulations.



ITEM 16B.  CODE OF ETHICS

We have adopted a Code of Ethics that applies to all of the Company's employees,
including our principal executive officer, principal financial officer,
principal accounting officer or controller. The Code can be downloaded at our
website (www.chemgenex.com). Additionally, any person, upon request, can ask for
a hard copy or electronic file of such Code. If we make any substantive
amendment to the Code of Ethics or grant any waivers, including any implicit
waiver, from a provision of the Code of Ethics, we will disclose the nature of
such amendment or waiver on our website. During the year ended June 30, 2005, no
such amendment was made or waiver granted



ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

For purposes of this Form 20-F Annual Report and other SEC filings, the
Company's independent registered public accounting firm is Deloitte Touche
Tohmatsu. For statutory reporting purposes and filings with the ASX and ASIC in
Australia, the Company's auditor is Ernst & Young.



The following table sets forth the fees billed to us by our independent
registered public accounting firm, Deloitte Touche Tohmatsu, for the years ended
June 30, 2005 and 2004, respectively:



Deloitte Touche Tohmatsu           2005                        2004
Audit fees (a)                     497,804                     -
Audit-related fees                 -                           -
Tax fees                           -                           -
All other fees                     -                           -
Total                              497,804                     -

(a) Audit fees billed by Deloitte Touche Tohmatsu relate to the audit of
financial statements and review of SEC filings for purposes of the Company's
Registration Statement on Form 20-F lodged in June 2005 as well as this Annual
Report on Form 20-F for the year ended June 30, 2005.

                                       83
<PAGE>

The following table sets forth the fees billed to us by our statutory auditor,
Ernst & Young, for the years ended June 30, 2005 and 2004, respectively:

Ernst & Young                             2005                          2004
Audit fees (b)                           93,250                        41,000
Audit-related fees                          -                            -
Tax fees                                 12,000                          -
All other fees (c)                       17,709                        47,537
Total                                    122,959                       89,537

(b) Audit fees billed by Ernst & Young relate to the statutory audit of our
annual financial statements for ASX and ASIC in Australia.

(c) Other fees billed by Ernst & Young in 2005 comprised of costs associated
with handover of previous audit files, and related to an expert opinion prepared
in 2004.





AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

The Company's Board of Directors has established pre-approval and procedures for
the engagement of its independent registered public accounting firms for all
audit and non-audit services.

The Audit Committee reviews the scope of all the services to be provided, before
their commencement, in order to ensure that there are no independence issues and
the services are not prohibited services as defined by Sarbanes-Oxley Act of
2002.



ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.



ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

                                       84
<PAGE>

                                    PART III

ITEM 17. FINANCIAL STATEMENTS

Refer to page F-1 for an index of all Financial Statements.

ITEM 18. FINANCIAL STATEMENTS

The Company has chosen to respond to Item 17 in lieu of responding to this Item.

ITEM 19. EXHIBITS

The following documents are filed as exhibits to this Annual Report on Form
20-F:

     1.       Constitution of the Registrant #.

     2.       Deposit Agreement, dated as of December 6, 2002, by and among
              Autogen Limited, The Bank of New York, as Depositary, and the
              Owners and Holders of American Depositary Receipts (such agreement
              is incorporated herein by reference to the Registration Statement
              on Form F-6 relating to the ADSs (File No. 333-101016) filed with
              the Commission on November 1, 2002)

     3.       Material Contracts:


     3.1 Service Contracts of Directors and Consultants


          (a)  Consulting Agreement between Autogen Research Pty Ltd and Dr.
               Kenneth Walder dated December 20, 2002 #.

          (b)  Secondment Agreement between Deakin University and the Autogen
               Limited dated March 19, 2002 in respect of the secondment to the
               Company of Dr. Gregory R. Collier #.

          (c)  Supplementary Secondment Deed among the Company, Autogen Research
               Pty Ltd and Dr. Gregory R. Collier dated March 26, 2002 #.

          (d)  Offer of Employment dated July 1, 2003 for Dr. Gregory R. Collier
               #.

          (e)  Offer of Employment dated August 10, 2004 for Dr. James A.
               Campbell #.

          (f)  Offer of Employment dated September 20, 2004 for Eric P. Merrigan
               #.

          (g)  Employment letter agreement dated September 14, 1999 between
               ChemGenex Therapeutics, Inc. and Dr. Dennis M. Brown as amended
               #.

          (h)  Employment letter agreement dated May 6, 2001 between ChemGenex
               Therapeutics, Inc. and Harry Pedersen as amended #.

          (i)  Employment letter agreement dated June 20, 2000 between ChemGenex
               Therapeutics, Inc. and Shawnya Michaels as amended #.

          (j)  Employment letter agreement dated May 6, 2001 between ChemGenex
               Therapeutics, Inc. and Tina Herbert as amended #.

                                       85
<PAGE>

3.2      Other Contracts

          (a)  Autogen Limited Senior Executive Share Option Plan #.

          (b)  Research and License Agreement dated April 28, 1999 between
               Autogen Pty Ltd. and Lipha S.A.* #

          (c)  Deed dated March 16, 2001 between Autogen Research Pty Limited
               and Lipha S.A.* #

          (d)  Research and License Agreement dated April 28, 1999 between
               Autogen Pty Ltd. and Lipha S.A.* #

          (e)  Research and License Agreement dated February 11, 2002 between
               Autogen Research Pty Ltd. and Lipha S.A.* #

          (f)  Research Services (Subcontracting) Agreement dated June 26, 2000
               between Autogen Research Pty Limited and Deakin University.* #

          (g)  Research and Development Option Agreement dated August 30, 2004
               between Autogen Research Pty Ltd and Vernalis (R&D) Limited.* #

          (h)  Research, License and Commercialisation Agreement (Gene Discovery
               in Depression), dated August 16, 2000 between Autogen Research
               Pty Ltd. and Deakin University.* #

          (i)  Commercialisation License (Field of Diabetes and Obesity) "AGT
               203" dated March 14, 2003 between Autogen Limited (now ChemGenex
               Pharmaceuticals Limited) and Merck Sante s.a.s.* #

          (j)  Commercialisation License (Field of Diabetes and Obesity) "AGT
               121" dated March 14, 2003 between the Autogen Limited (now
               ChemGenex Pharmaceuticals Limited) and Merck Sante s.a.s.* #

          (k)  Commercialisation License (Field of Diabetes and Obesity) "TANIS"
               dated August 26, 2002 between the Autogen Pty Ltd and Merck Sante
               s.a.s.* #

          (l)  Commercialisation License (Field of Obesity) "BEACON" dated April
               28, 1999 between Autogen Pty Ltd and Lipha S.A.* #

          (m)  Research, License and Commercialization Agreement dated December
               31, 2002 between Autogen Research Pty Ltd. and the Southwest
               Foundation for Biomedical Research.* #

          (n)  Variation Agreement dated June 24, 2003 between Autogen Research
               Pty Limited and Southwest Foundation for Biomedical Research.* #

          (o)  Extension Agreement dated July 1, 2004 between Autogen Research
               Pty Limited and Southwest Foundation for Biomedical Research.* #

          (p)  Research Agreement dated February 28, 1997 among Autogen Pty
               Ltd., Deakin University and International Diabetes Institute.* #

          (q)  Research, License and Commercialisation Agreement dated January
               14, 1998 between Autogen Pty Ltd and International Diabetes
               Institute.* #

          (r)  Agreement dated August 18, 2004 between Autogen Pty Ltd and
               International Diabetes Institute.* #

          (s)  Sponsored Clinical Study Agreement dated April 14, 2003 between
               The University of Texas M.D. Anderson Cancer Center and ChemGenex
               Therapeutics, Inc., as amended by Amendment No. 1 dated November
               18, 2004.* #

                                       86
<PAGE>

          (t)  Patent and Technology License Agreement dated February 7, 2005
               between ChemGenex Pharmaceuticals Limited and The University of
               Texas M. D. Anderson Cancer Center.* #

          (u)  Voting Rights deed dated June 21, 2004 between Dr. Dennis M.
               Brown and Charter Pacific Corporation Ltd. #

          (v)  Sole Licence Agreement dated March 1, 1999 between Autogen Pty
               Ltd and Kyokuto Pharmaceutical Industrial Co. Ltd. #

          (w)  Agreement and Plan of Merger dated April 27, 2004 between AGT
               Biosciences Limited, AGT Biosciences Inc., ChemGenex Therapeutics
               Inc. and Dr. Dennis M. Brown. #

          (x)  Research, Licence and Commercialisation Agreement dated April 21,
               2005 between ChemGenex Pharmaceuticals Limited and Deakin
               University. #

          (y)  HHT Development and Commercialisation Agreement dated June 27,
               2005between ChemGenex Pharmaceuticals Limited, Stragen Investment
               B.V. and Stragen Pharma S.A.*

          (z)  HHT Supply and Distribution Agreement dated June 27, 2005 between
               ChemGenex Pharmaceuticals Limited and Stragen Investment B.V.*

          (aa) Extension Agreement dated July 27, 2005 between Autogen Research
               Pty Limited and Southwest Foundation for Biomedical Research. *

          (bb) Extension Agreement dated September 20, 2005 between Autogen Pty
               Ltd and International Diabetes Institute.*

          (cc) Clinical Master Service Agreement dated September 28, 2005
               between ChemGenex Pharmaceuticals Limited and Inveresk Research
               Limited.

       12.01 Certification by the Company's Chief Executive Officer required
             by Item 15.

       12.02 Certification by the Company's Chief Financial Officer required
             by Item 15.

       13.01 Certification pursuant to 18 U.S.C. Section 1350.

       13.02 Certification pursuant to 18 U.S.C. Section 1350.





     # Incorporated by reference to the Company's Registration Statement on Form
     20-F (file no. 0-51373) filed with the Commission on June 23, 2005

     * Certain provisions of this exhibit have been omitted and filed separately
     with the Commission pursuant to an application for confidential treatment
     under Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as
     amended.

                                       87
<PAGE>

                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the undersigned to sign
this Annual Report on its behalf.



CHEMGENEX PHARMACEUTICALS LIMITED

By:      /s/Greg Collier
Name:  Greg Collier
Title: Chief Executive Officer and Managing Director
Date: December 19, 2005

                                       88
<PAGE>
               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES


CHEMGENEX PHARMACEUTICALS LIMITED:......................................PAGE NO.

    Report of Independent Registered Public Accounting Firm..................F-2

    Consolidated Statements of Financial Performance For the Years
    Ended June 30, 2005 (As Restated), 2004 and 2003.........................F-3

    Consolidated Statements of Financial Position As of June 30,
    2005 and 2004  ..........................................................F-4

    Consolidated Statements of Cash Flows For the Years Ended
    June 30, 2005, 2004 and 2003 ............................................F-5

    Consolidated Statements of Changes in Stockholders' Equity
    For the Period From July 1, 2002 to June 30, 2005 (As Restated)..........F-6

    Notes to the Consolidated Financial Statements...........................F-7



                                      F-1
<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CHEMGENEX PHARMACEUTICALS LIMITED

We have audited the accompanying consolidated statements of financial position
of ChemGenex Pharmaceuticals Limited and subsidiaries (the "Company") as of June
30, 2005 and 2004 and the related consolidated statements of financial
performance, cash flows and changes in stockholders' equity for each of the
three years in the period ended June 30, 2005. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of ChemGenex Pharmaceuticals Limited
and subsidiaries as of June 30, 2005 and 2004, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2005, in conformity with accounting principles generally accepted in
Australia.

As discussed in Note 24, the accompanying consolidated financial statements for
the year ended June 30, 2005 have been restated.

Accounting principles generally accepted in Australia vary in certain
significant respects from accounting principles generally accepted in the United
States of America. Information relating to the nature and effect of such
differences is presented in Note 25 to the consolidated financial statements.



/s/Deloitte Touche Tohmatsu
DELOITTE TOUCHE TOHMATSU
Chartered Accountants

Melbourne, Australia
December 16, 2005



                                      F-2
<PAGE>


                CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE

                             (IN AUSTRALIAN DOLLARS)

<TABLE>
<CAPTION>

YEAR ENDED JUNE 30                                NOTES                  2005                  2004                  2003
                                                                  As Restated
                                                                  See Note 24
                                                                            $                     $                     $
-------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>         <C>                    <C>                   <C>
REVENUES FROM ORDINARY ACTIVITIES
Research revenue                                      2             3,527,312             2,885,349             4,997,247
Interest revenue                                      2               266,987                80,828                57,947
Exchange rate benefit                                 2                    --                24,153                    --
Other revenue                                         2               300,987               605,110               149,404
                                                           --------------------------------------------------------------
TOTAL REVENUE                                                       4,095,286             3,595,440             5,204,598
                                                           --------------------------------------------------------------
EXPENSES
Research and development expenditure                  3            (4,621,406)           (4,387,410)           (4,651,495)
Administration costs                                               (1,027,871)             (506,266)             (480,664)
Employee costs                                                     (2,226,417)             (828,443)             (818,447)
Scientific advisory board costs                                      (125,763)             (143,817)             (208,074)
Patent costs                                                         (446,527)             (472,684)             (144,630)
Legal costs                                                          (105,945)               (3,300)              (82,429)
Depreciation                                          3              (269,937)             (257,596)             (256,167)
Amortisation                                          3              (848,128)              (30,811)                   --
Accounting and audit costs                                           (129,208)             (136,253)             (156,146)
NASDAQ listing expenses                                              (911,578)                   --                    --
Exchange rate loss                                    3               (43,712)                   --                    --
Carrying amount of investments sold                   2                    --                    --               (88,742)
Non current asset write down                                               --                    --              (204,958)
                                                           --------------------------------------------------------------
TOTAL EXPENSES                                                    (10,756,492)           (6,766,580)           (7,091,752)
                                                           --------------------------------------------------------------
LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME                        (6,661,206)           (3,171,140)           (1,887,154)
TAX EXPENSE
                                                           --------------------------------------------------------------

INCOME TAX EXPENSE RELATING TO ORDINARY               4                    --                    --                    --
ACTIVITIES

                                                           --------------------------------------------------------------
NET LOSS                                                           (6,661,206)           (3,171,140)           (1,887,154)

                                                           --------------------------------------------------------------
NET LOSS ATTRIBUTABLE TO MEMBERS OF PARENT                         (6,661,206)           (3,171,140)           (1,887,154)
ENTITY

                                                           --------------------------------------------------------------
TOTAL CHANGES IN EQUITY OTHER THAN THOSE                           (6,661,206)           (3,171,140)           (1,887,154)
RESULTING FROM TRANSACTIONS WITH OWNERS AS
OWNERS
                                                           ==============================================================

Basic loss per share                            1(r),18                ($0.06)               ($0.05)               ($0.04)
Diluted loss per share                          1(r),18                ($0.06)               ($0.05)               ($0.04)

</TABLE>

PLEASE REFER TO THE ACCOMPANYING NOTES WHEN CONSIDERING THE CONSOLIDATED
STATEMENTS OF FINANCIAL PERFORMANCE.


                                      F-3
<PAGE>


                  CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                             (IN AUSTRALIAN DOLLARS)
<TABLE>
<CAPTION>

AT JUNE 30                                  NOTES                              2005                               2004
                                                                                  $                                  $
----------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
<S>                                          <C>                        <C>                                <C>
Cash assets                                  13(b)                        8,511,952                            941,785
Receivables                                   5                             381,527                             30,440
Prepayments                                                                 163,373                             88,622
                                                     -----------------------------------------------------------------
TOTAL CURRENT ASSETS                                                      9,056,852                          1,060,847
                                                     -----------------------------------------------------------------
NON-CURRENT ASSETS
Plant and equipment, net                      7                             587,022                            841,741
Goodwill, net                                 8                          16,083,622                         16,931,750

                                                     -----------------------------------------------------------------
TOTAL NON-CURRENT ASSETS                                                 16,670,644                         17,773,491
                                                     -----------------------------------------------------------------
TOTAL ASSETS                                                             25,727,496                         18,834,338
                                                     -----------------------------------------------------------------
CURRENT LIABILITIES
Trade creditors and accruals                 10                             754,992                          1,993,410
Provision for employee entitlements          15                             119,351                                 --
Deferred revenue                                                            465,833                            127,910
                                                     -----------------------------------------------------------------
TOTAL LIABILITIES                                                         1,340,176                          2,121,320
                                                     -----------------------------------------------------------------
NET ASSETS                                                               24,387,320                         16,713,018
                                                     =================================================================

</TABLE>

EQUITY
Parent entity interest
  Contributed equity            11           84,592,891         70,257,383
  Reserves                      12           10,866,878         10,866,878
  Accumulated deficit           12          (71,072,449)       (64,411,243)
                                        ----------------------------------
TOTAL EQUITY                                 24,387,320         16,713,018
                                        ==================================



PLEASE REFER TO THE ACCOMPANYING NOTES WHEN CONSIDERING THE CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION.


                                      F-4
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (IN AUSTRALIAN DOLLARS)

<TABLE>
<CAPTION>

YEAR ENDED JUNE 30                              NOTES                  2005                  2004                   2003
                                                                          $                     $                      $
------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>                   <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Proceeds from research revenue                                    3,514,148             2,952,376              5,172,415
Proceeds from patent reimbursement                                  104,085               605,110                     --
Payments to suppliers and employees                             (10,562,419)           (5,696,071)           (10,741,493)
Interest received                                                   266,987                80,828                 57,947
                                                        ----------------------------------------------------------------
NET CASH FLOWS USED IN OPERATING ACTIVITIES     13(a)            (6,677,199)           (2,057,757)            (5,511,131)
                                                        ----------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid on acquisition of controlled          13(d)                    --               (52,065)                    --
  entity, net of cash acquired
Proceeds from sale of investments                                        --                    --                149,404
Purchase of plant and equipment                   7                 (15,218)               (7,560)               (20,600)
                                                        ----------------------------------------------------------------
NET CASH FLOWS (USED IN)/FROM INVESTING                             (15,218)              (59,625)               128,804
ACTIVITIES
                                                        ----------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from placements of ordinary shares      11              14,439,437                    --              6,653,271
Proceeds from issue of ordinary shares on                            12,500                    --                     --
  exercise options
Payment of issue costs                           11                (189,353)                   --               (514,078)
Repayments of borrowings                                                 --                    --                (80,836)
                                                        ----------------------------------------------------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES                         14,262,584                    --              6,058,357
                                                        ----------------------------------------------------------------

NET INCREASE/(DECREASE) IN CASH HELD                              7,570,167            (2,117,382)               676,030
Add opening cash brought forward                                    941,785             3,059,167              2,383,137
                                                        ----------------------------------------------------------------
CLOSING CASH CARRIED FORWARD                    13(b)             8,511,952               941,785              3,059,167

                                                        ================================================================

</TABLE>

PLEASE REFER TO THE ACCOMPANYING NOTES WHEN CONSIDERING THE CONSOLIDATED
STATEMENTS OF CASH FLOWS.


                                      F-5
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


PERIOD FROM JULY 1, 2002 TO JUNE 30, 2005
(in Australian dollars)
<TABLE>
<CAPTION>

                                                                                                Option
                                                             Contributed equity                premium
                                                           Shares          Amount              reserve
                                                        -------------- ---------------      ---------------
                                                                             $                    $
                                                        -------------- ---------------      ---------------
<S>                                                       <C>              <C>                  <C>
BALANCE AT JUNE 30, 2002                                   38,018,394      48,096,896           10,866,878
Ordinary fully paid shares issued for
     35 cents per share on December 24, 2002                6,003,087       2,101,080
Ordinary fully paid shares issued for
     35 cents per share on December 31, 2002               13,006,259       4,552,191
Costs of December 2002 share issues                                         (514,078)
Net loss
                                                        -------------- ---------------      ---------------
BALANCE AT JUNE 30, 2003                                   57,027,740      54,236,089           10,866,878
Ordinary fully paid shares issued as
     consideration for acquisition on June 21, 2004        28,000,000      15,120,000
Ordinary fully paid shares issued in consideration
     for advisory services on June 21, 2004                 1,700,554         901,294
Net loss
                                                        -------------- ---------------      ---------------
BALANCE AT JUNE 30, 2004                                   86,728,294      70,257,383           10,866,878
Ordinary fully paid shares issued for
     48 cents per share on July 14, 2004                   13,009,244       6,244,437
     55 cents per share on January 24, 2005                14,900,000       8,195,000
Ordinary fully paid ordinary shares issued upon
     exercise of options                                       25,000          12,500
Costs of July 2004 share issues                                             (189,353)
Ordinary fully paid shares issued in consideration
     for advisory services on November 23, 2004                84,535          40,577
   for research services on June 21, 2005                      50,543          32,347
Net loss (as restated, see Note 24)
                                                        ============== ===============      ===============
BALANCE AT JUNE 30, 2005                                  114,797,616      84,592,891           10,866,878
                                                        ============== ===============      ===============


(TABLE CONTINUED)


PERIOD FROM JULY 1, 2002 TO JUNE 30, 2005
(in Australian dollars)

<CAPTION>

                                                                                Total
                                                          Accumulated       stockholders'
                                                           deficit             equity
                                                        ----------------- -------------------
                                                               $                  $
                                                        ----------------- -------------------
<S>                                                         <C>                   <C>
BALANCE AT JUNE 30, 2002                                    (59,352,949)           (389,175)
Ordinary fully paid shares issued for
     35 cents per share on December 24, 2002                                       2,101,080
Ordinary fully paid shares issued for
     35 cents per share on December 31, 2002                                       4,552,191
Costs of December 2002 share issues                                                (514,078)
Net loss                                                     (1,887,154)         (1,887,154)
                                                        ----------------- -------------------
BALANCE AT JUNE 30, 2003                                    (61,240,103)           3,862,864
Ordinary fully paid shares issued as
     consideration for acquisition on June 21, 2004                               15,120,000
Ordinary fully paid shares issued in consideration
     for advisory services on June 21, 2004                                          901,294
Net loss                                                     (3,171,140)         (3,171,140)
                                                        ----------------- -------------------
BALANCE AT JUNE 30, 2004                                    (64,411,243)          16,713,018
Ordinary fully paid shares issued for
     48 cents per share on July 14, 2004                                           6,244,437
     55 cents per share on January 24, 2005                                        8,195,000
Ordinary fully paid ordinary shares issued upon
     exercise of options                                                              12,500
Costs of July 2004 share issues                                                    (189,353)
Ordinary fully paid shares issued in consideration
     for advisory services on November 23, 2004                                       40,577
   for research services on June 21, 2005                                             32,347
Net loss (as restated, see Note 24)                          (6,661,206)         (6,661,206)
                                                        ================= ===================
BALANCE AT JUNE 30, 2005                                    (71,072,449)          24,387,320
                                                        ================= ===================

</TABLE>


           PLEASE REFER TO THE ACCOMPANYING NOTES WHEN CONSIDERING THE
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY.



                                      F-6
<PAGE>



               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A)      BACKGROUND
ChemGenex Pharmaceuticals Limited (the "Parent Entity"), is incorporated in New
South Wales, Australia. It is an integrated biopharmaceutical development
company with expertise in the discovery of new therapeutic targets and the
development of drugs in the fields of cancer, metabolic syndrome (obesity and
diabetes), and depression. The Company listed on the Australian Stock Exchange
("ASX") in July 1986 and, following registration with the Securities and
Exchange Commission commenced a Level II American Depository Receipts ("ADR")
program on the NASDAQ SmallCap Market in June 2005.

(B)      BASIS OF ACCOUNTING
The financial report is a general-purpose financial report, which has been
prepared in accordance with the requirements of applicable Australian Accounting
Standards ("A-GAAP"). Other mandatory professional reporting requirements
(Urgent Issues Group Consensus Views) have also been complied with. The
financial report has been prepared in accordance with the historical cost
convention.

Since commencing biotechnology activities in June 1996 the Company has
experienced recurring net losses and negative cash flows from operations. At
June 30, 2005, the Company had an accumulated deficit of $71,072,449 and
recorded a net loss of $6,661,206 and negative cash flows from operations of
$6,667,199 for the year ended June 30, 2005. These factors cast some uncertainty
on the Company's ability to continue as an ongoing enterprise for a reasonable
period of time. The Company's ability to continue as an ongoing enterprise in
its current configuration is dependent on it securing continued funding from
collaboration and licensing agreements and/or by raising additional equity
capital.

Based on anticipated cash flow requirements of the Company's existing research
and development activities, the directors consider that the Company will have
sufficient funds to support operations into the second half of calendar 2006.
The directors are confident that adequate funds to support the Company's
continued operations will be raised from collaboration and licensing agreements
and/or equity placements as required. From July 1, 1996 it has raised
approximately $45.1 million (including $14.4 million since July 1, 2004) from
the issue of equity securities. In addition, during this time, the Company has
received approximately $24.2 million from its pharmaceutical partners pursuant
to collaboration and licensing agreements.

In the event that additional funding is not obtained, the Company may have to
significantly reduce its expenditure on research and development programs and
other costs. The Company's research expenditure commitments for the following 12
month period were approximately $2.7 million (refer Note 14) and its employee
costs for the year ended June 30, 2005 were approximately $2.2 million (the
directors expect the Company's employee costs for fiscal 2005/06 to be of a
similar magnitude). The directors consider that the Company's remaining costs
are predominantly discretionary in nature and can be reduced if required.

Accordingly, having carefully assessed the uncertainties referred to above, the
likelihood of securing additional funding and the ability of the Company to
effectively manage its expenditures, the directors consider that the Company
will continue to operate as a going concern for the foreseeable future and
therefore that it is appropriate to prepare the financial statements on a going
concern basis. Accordingly, no adjustments have been made to the financial
report relating to the recoverability and classification of the asset carrying
amounts or the carrying amounts and classification of liabilities that might be
necessary should the Company not continue as a going concern.

(C)      CHANGES IN ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the previous year.

(D)      PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are those of the Company, comprising the
Parent Entity and all entities that the Parent Entity controlled from time to
time during the year and at reporting date.


                                      F-7
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)


Information from the financial statements of controlled entities is included
from the date the Parent Entity obtains control until such time as control
ceases. Where there is loss of control of a controlled entity, the consolidated
financial statements include the results for the part of the reporting period
during which the Parent Entity has control.

When controlled entities have adopted accounting policies or reporting periods
that differ to the Company, adjustments and or interim accounts are used to
bring those financial statements substantially into line with the Company.

All intercompany balances and transactions, including unrealized profits arising
from intra-group transactions, have been eliminated in full.

(E)      ACQUISITIONS
Controlled entity acquisitions are accounted for using the purchase method of
accounting. The cost of acquisition consists of the purchase consideration
determined as at the date of acquisition plus costs incidental to the
acquisition.

(F)      FOREIGN CURRENCIES
Translation of foreign currency transactions

Transactions in foreign currencies of entities within the Company are converted
to local currency at the rate of exchange ruling at the date of the transaction.

Foreign currency monetary items that are outstanding at the reporting date
(other than monetary items arising under foreign currency contracts where the
exchange rate for that monetary item is fixed in the contract) are translated
using the spot rate at the end of the financial year.

Financial statements of self-sustaining foreign controlled entities are
translated at reporting date using the current rate method and exchange rate
differences are taken directly to the foreign currency translation reserve.

Financial statements of integrated foreign operations are translated at
reporting date using the temporal method and exchange differences are taken to
net profit or loss for the period.

(G)      CASH AND CASH EQUIVALENTS
For the purposes of the Consolidated Statements of Cash Flows, cash includes
cash on hand and in banks.

(H)      RECEIVABLES
Receivables are recognised and carried at original invoice amount less a
provision for any uncollectible debts. An estimate for doubtful debts is made
when collection of the full amount is no longer probable. Bad debts are
written-off as incurred.

(I)      PLANT AND EQUIPMENT
Cost and valuation

Plant and equipment is carried at cost less accumulated depreciation.

Depreciation

Depreciation is provided on a straight-line basis on all plant and equipment
over the following estimated useful lives:

   - research equipment                   5-7 years
   - office equipment                     3-13 years



                                      F-8
<PAGE>



               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

(J)      GOODWILL
Goodwill represents the excess of the cost of acquisition over the fair value of
identifiable net assets acquired at the time of acquisition of a business or
shares in a controlled entity.

Goodwill is amortised on a straight-line basis over 20 years, such period not
exceeding the period during which benefits are expected to be received.

(K)      RECOVERABLE AMOUNT OF NON-CURRENT ASSETS
Non-current assets are written down to recoverable amount where the carrying
value of any non-current asset exceeds recoverable amount. In determining the
recoverable amount of non-current assets, the expected cash flows have been
discounted to their present value.

(L) RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed
as incurred.

(M)      PAYABLES
Liabilities for trade creditors and other amounts are carried at cost which is
the fair value of the consideration to be paid in the future for goods and
services received, whether or not billed to the Company.

(N)      CONTRIBUTED EQUITY
Issued and paid up capital is recognised at the fair value of the consideration
received by the Company.

Transaction costs arising on the issue of ordinary shares are recognised
directly in equity as a reduction of the share proceeds received.

(O)      REVENUE RECOGNITION
Research revenue

         i) Contracts which do not specify milestone payments-

Revenue under research collaboration agreements which do not specify milestone
payments are recognized as earned on a straight-line basis over the life of the
respective agreement as this reflects the level of effort required over the
performance period. These agreements are performed on a "best efforts" basis
with no guarantees of either technical or commercial success. Project funding
received in advance of the period in which the associated research efforts are
performed is included in deferred revenue.

         ii) Contracts which specify milestone payments

Revenues from milestone payments related to research collaboration agreements
under which the Company has no continuing performance obligations are recognized
upon achievement of the related milestone, which represents the culmination of
the earnings process. Revenues from milestone payments related to research
collaboration agreements under which the Company has continuing performance
obligations are recognized as revenue upon achievement of the milestone only if
all of the following conditions are met: the milestone payments are
non-refundable, substantive effort is involved in achieving the milestone, and
the amount of the milestone is reasonable in relation to the effort expended or
the risk involved with the achievement of the milestone. If any of these
conditions are not met, revenue from the milestone payment is deferred and
recognized only when the collaborating party confirms that the performance
obligations have been met.

Interest

Interest income is recognised as earned and collectibility is reasonably assured

Asset sales

The gross proceeds of asset sales are included as revenue. The profit or loss on
disposal of assets is brought to account at the date an unconditional contract
of sale is signed and control of the asset has passed to the buyer.



                                      F-9
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)


Patent reimbursement

Patent reimbursement comprises amounts received in accordance with partnership
agreements for patent costs incurred by the Company in conjunction with
specified research projects. The revenue is recognised when the reimbursable
expense is incurred and approved in accordance with the agreement.

(P)      TAXES
Income taxes

Tax-effect accounting is applied using the liability method whereby income tax
is regarded as an expense and is calculated on the accounting profit after
allowing for permanent differences. To the extent timing differences occur
between the time items are recognised in the financial statements and when items
are taken into account in determining taxable income, the net related taxation
benefit or liability, calculated at current rates, is disclosed as a future
income tax benefit or a provision for deferred income tax.

The net future income tax benefit relating to tax losses is not carried forward
as an asset unless the benefit is virtually certain of being realized. The
future income tax benefit relating to timing differences is not carried forward
as an asset unless its realization is assured beyond reasonable doubt or, in the
case where tax losses exist, realization is virtually certain.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST except:

     o    where the GST  incurred  on a purchase  of goods and  services  is not
          recoverable  from the  taxation  authority,  in which  case the GST is
          recognised as part of the cost of  acquisition of the asset or as part
          of the expense item as applicable; and

     o    receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the Consolidated Statements of
Financial Position.

Cash flows are included in the Consolidated Statements of Cash Flows on a gross
basis and the GST component of cash flows arising from investing and financing
activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows.

Commitments are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.

(Q)      EMPLOYEE BENEFITS
Provision is made for employee benefits accumulated as a result of employees
rendering services up to the reporting date. These benefits include wages and
salaries, annual leave and long service leave.

Liabilities arising in respect of wages and salaries, annual leave and other
employee entitlements expected to be settled within twelve months of the
reporting date are measured based on remuneration rates which are expected to be
paid when the liability is settled. All other employee entitlement liabilities
are measured at the present value of the estimated future cash outflow to be
made in respect of services provided by employees up to the reporting date. In
determining the present value of the future cash outflows, the interest rates
attaching to government guaranteed securities which have terms to maturity
approximating the terms of the related liability are used.


                                      F-10
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

Employee entitlement expenses arising in respect of the following:

     o    Wages and salaries,  non-monetary benefits, annual leave, long service
          leave and other entitlements; and

     o    Other types of employee entitlements

are charged against operating profits in their respective categories.

The value of the equity-based compensation scheme described in Note 15 is not
being recognised as an employee benefits expense.

The Company expenses all superannuation contributions as and when they fall due
and they are charged against profit and loss as employee costs.

(R) LOSS PER SHARE
Basic loss per share is determined by dividing the loss from ordinary activities
after income tax by the weighted average number of ordinary shares, outstanding
during the period.

The computation of diluted loss per share is similar to basic loss per share,
except that it assumes the potentially dilutive securities, such as share
options, were converted to shares as of the beginning of the period. For all
periods presented, diluted loss per share is equivalent to basic loss per share
as the potentially dilutive securities are excluded from the computation of
diluted loss per share because the effect is anti-dilutive.

(S)      ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS (UNAUDITED)
The Company is in the process of transitioning its accounting policies and
financial reporting from current Australian Accounting Standards, or A-GAAP, to
Australian equivalents of International Financial Reporting Standards, or A
IFRS, which will be applicable for the financial year ended June 30, 2006. In
2004, the Company allocated internal resources and engaged external consultants
to conduct impact assessments to identify key areas that would be impacted by
the transition to A IFRS. Priority has been given to the preparation of an
opening balance sheet in accordance with A IFRS as at July 1, 2004, the
transition date to A IFRS. This will form the basis of accounting for A IFRS in
the future, and is required when the first fully A IFRS compliant financial
report for the year ended June 30, 2006 are prepared.

Set out below are the key areas where accounting policies are expected to change
on adoption of A IFRS and our best estimate of the quantitative impact of the
changes on total equity as at the date of transition and June 30, 2005 and on
net profit for the year ended June 30, 2005, had the financial statements been
prepared using A IFRS, based on the directors' accounting policy decisions
current at the date of this financial report. The actual effects of transition
to A IFRS may differ from the estimates disclosed due to (a) ongoing work to be
undertaken by the Company; (b) potential amendments to A IFRSs and
Interpretations thereof being issued by the standard-setters and the
International Financial Reporting Interpretations Committee ("IFRIC"); and (c)
emerging accepted practice in the interpretation and application of A IFRS and
Interpretations of the Urgent Issues Group ("UIG") and IFRIC. Some
classification differences may be required in the consolidated statements of
financial position and financial performance following the implementation of A
IFRS. The A IFRS standards and interpretations that will apply to the Company
will be those effective as at December 31, 2005 being the date of the first half
year financial statements that the Company has to publish under A IFRS.

The directors may, at any time until the completion of the Company's first A
IFRS compliant financial report, elect to revisit and, where considered
necessary, revise the accounting policies applied in preparing the pro forma
financial statements.


                                      F-11
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

(S)      ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING
         (UNAUDITED) (CONT)

                 UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF
                              FINANCIAL PERFORMANCE
START HERE
<TABLE>
<CAPTION>

YEAR ENDED JUNE 30, 2005                                 HISTORICAL             AASB 2:          AASB 138:          PRO FORMA
                                                           A-GAAP            SHARE-BASED        INTANGIBLE            A IFRS
                                                        CONSOLIDATED           PAYMENTS           ASSETS           CONSOLIDATED
                                                                   $                   $                 $                  $
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                   <C>                 <C>             <C>
REVENUE                                                    4,095,286                  --                 --          4,095,286
Depreciation and amortization expense                     (1,118,065)                 --            848,128           (269,937)
Research and development expenditure                      (4,621,406)                 --                 --         (4,621,406)
Patent costs                                                (446,527)                 --                 --           (446,527)
Legal costs                                                 (105,945)                 --                 --           (105,945)
Employee costs                                            (2,226,417)           (422,104)                --         (2,648,521)
NASDAQ listing costs                                        (911,578)                 --                 --           (911,578)
Other expenses from ordinary activities                   (1,326,554)                 --                 --         (1,326,554)
                                                      ------------------ ----------------- ----------------- ------------------
LOSS FROM ORDINARY ACTIVITIES BEFORE                      (6,661,206)           (422,104)           848,128         (6,235,182)
INCOME TAX EXPENSE
                                                      ------------------ ----------------- ----------------- ------------------
INCOME TAX EXPENSE RELATING TO ORDINARY                           --                  --                 --
ACTIVITIES
                                                      ------------------ ----------------- ----------------- ------------------

NET LOSS                                                  (6,661,206)           (422,104)           848,128         (6,235,182)
                                                      ================== ================= ================= ==================

</TABLE>


                                      F-12
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

(S)  ADOPTION OF AUSTRALIAN  EQUIVALENTS TO  INTERNATIONAL  FINANCIAL  REPORTING
     STANDARDS (UNAUDITED) (CONT)

       UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>

JUNE 30, 2005                                             HISTORICAL          AASB 2:          AASB 138:          PRO FORMA
                                                            A-GAAP          SHARE-BASED        INTANGIBLE           A IFRS
                                                         CONSOLIDATED         PAYMENTS           ASSETS         CONSOLIDATED
                                                                    $                 $                 $                  $
-------------------------------------------           ------------------ ----------------- ----------------- ------------------
CURRENT ASSETS
<S>                                                         <C>              <C>                <C>               <C>
Cash assets                                                 8,511,952                 --                 --          8,511,952
Receivables                                                   381,527                 --                 --            381,527
Prepayments                                                   163,373                 --                 --            163,373
                                                       ------------------ ----------------- ----------------- ------------------
TOTAL CURRENT ASSETS                                        9,056,852                 --                 --          9,056,852
                                                      ------------------ ----------------- ----------------- ------------------
NON-CURRENT ASSETS                                                                    --                 --
Plant and equipment, net                                      587,022                 --                 --            587,022
Goodwill, net                                              16,083,622                 --            848,128         16,931,750

                                                      ------------------ ----------------- ----------------- ------------------
TOTAL NON-CURRENT ASSETS                                   16,670,644                 --                 --         17,518,722
                                                      ------------------ ----------------- ----------------- ------------------
TOTAL ASSETS                                               25,727,496                 --                 --         26,575,624
                                                      ------------------ ----------------- ----------------- ------------------
CURRENT LIABILITIES
Trade creditors and accruals                                  754,992                 --                 --            754,992
Provision for employee entitlements                           119,351                 --                 --            119,351
Deferred revenue                                              465,833                 --                 --            465,833
                                                      ------------------ ----------------- ----------------- ------------------
TOTAL LIABILITIES                                           1,340,176                 --                 --          1,340,176
                                                      ------------------ ----------------- ----------------- ------------------
NET ASSETS                                                 24,387,320                 --                 --         25,235,448
                                                      ================== ================= ================= ==================
EQUITY
Parent entity interest
  Contributed equity                                       84,592,891            428,962                 --         85,021,853
  Reserves                                                 10,866,878                 --                 --         10,866,878
  Accumulated deficit                                    (71,072,449)           (428,962)           848,128       (70,653,283)
                                                      ------------------ ----------------- ----------------- ------------------
TOTAL EQUITY                                               24,387,320                 --                 --         25,235,448
                                                      ================== ================= ================= ==================

</TABLE>

The following explanatory notes relate to the unaudited pro forma consolidated
financial statements above and describe the differences between the accounting
polices under A IFRS and the current treatment of those items under A-GAAP.


                                      F-13
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)

(S) ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING
STANDARDS (UNAUDITED) (CONT)

A. Share-based Payments

Under AASB 2 Share based Payments, the Company would recognise the fair value of
options granted to employees and non-employees as remuneration as an expense on
a pro-rata basis over the vesting period in the statement of financial
performance with a corresponding adjustment to equity. Share-based payment costs
are not recognised under A-GAAP. As permitted under A IFRS first time adoption,
the Company will not retrospectively recognize share-based payments that have
vested before July 1, 2004. As at July 1, 2004 (transition date) under A IFRS,
contributed equity would increase by $6,858 and an additional employee benefits
expense of the same amount will be recognized in accumulated deficit in relation
to the options issued on June 21, 2004.

For the year ended June 30, 2005, under A IFRS, contributed equity would
increase by a further $422,104 and an additional employee benefits expense of
the same amount will be recognized in profit and loss in relation to these
options and those issued during the year.

B. Intangible Assets

Under AASB 3 Business Combinations goodwill would not be permitted to be
amortised but instead is subject to impairment testing on an annual basis or
upon the occurrence of triggers which may indicate a potential impairment.
Currently, the group amortises goodwill over its useful life but not exceeding
20 years.
The Company has not elected to apply AASB 3 retrospectively and hence, prior
year amortisation would not be written-back as at the date of transition. The
Company has assessed impairment of goodwill in accordance with AASB 136
Impairment of Assets at July 1, 2004 (transition date) and June 30, 2005 and
notes no recognition of impairment losses are required.
The impact of the above transition adjustment to A IFRS for the year ended June
30, 2005 is that the amortization expense, and accumulated deficit, will
decrease by $848,128 and the value of intangible assets at June 30, 2005 will
increase by the same amount to $16,931,750.

C. Financial Instruments

The directors have elected to apply the first-time adoption exemption available
to ChemGenex to defer the date of transition of AASB 132: Financial Instruments:
Disclosure and Presentation and AASB 139: Financial Instruments: Recognition and
Measurement' to July 1, 2005. The company does not expect significant changes as
a result of the transition to these standards in future periods.

D. Reconciliation of Accumulated Deficit as at July 1, 2004
<TABLE>
<CAPTION>

                                                                                Consolidated
<S>                                                                             <C>
Accumulated deficit under A-GAAP                                                (64,411,243)
Share based payments- employee benefit expenses                                      (6,858)
Intangible assets - reversal of amortization of goodwill                                   --
                                                                       ----------------------
Accumulated deficit under A IFRS                                                (64,418,101)
                                                                       ======================


                                      F-14
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(S) ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING
STANDARDS (UNAUDITED) (CONT)


E. Reconciliation of Contributed Equity as at July 1, 2004
                                                                                Consolidated
Accumulated deficit under A-GAAP                                                  70,257,383
Share based payments- employee benefit expenses                                        6,858
Intangible assets - reversal of amortization of goodwill                                   --
                                                                       ----------------------
Accumulated deficit under A IFRS                                                  70,264,241
                                                                       ======================

</TABLE>


<TABLE>
<CAPTION>

                                                                    2005                   2004                    2003
                                                                       $                      $                       $
----------------------------------------------        ---------------------- ---------------------- -----------------------
2.  REVENUE FROM ORDINARY ACTIVITIES
REVENUES FROM OPERATING ACTIVITIES
<S>                                                             <C>                     <C>                     <C>
Research revenue                                                3,527,312               2,885,349               4,997,247
Interest income                                                   266,987                  80,828                  57,947
Exchange rate benefit                                                --                    24,153                    --
Patent reimbursement                                              104,085                 605,110                    --
                                                                ---------               ---------               ---------
Total revenues from operating activities                        3,898,384               3,595,440               5,055,194
                                                                ---------               ---------               ---------
REVENUES FROM NON-OPERATING ACTIVITIES
Proceeds from disposal of listed investments                         --                      --                   149,404
Reimbursement of NASDAQ expenses                                  196,902                    --                      --
                                                                ---------               ---------               ---------
Total revenues from non-operating activities                      196,902                    --                   149,404
                                                                ---------               ---------               ---------
TOTAL REVENUES FROM ORDINARY ACTIVITIES                         4,095,286               3,595,440               5,204,598
                                                                =========               =========               =========


(a) Under an agreement dated April 9, 2002 The Bank of New York agreed to
    reimburse the Company up to US$ 150,000 (A$ 196,902) for direct and indirect
    expenses related to the implementation of a Level II ADR program on the
    NASDAQ SmallCap Market. The Bank of New York will act as Depository for ADRs
    associated with this program which commenced in June 2005.



                                      F-15
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


3.  EXPENSES AND LOSSES/(GAINS)
(a) EXPENSES
Depreciation of non-current assets                                 269,937               257,596               256,167
                                                                ----------            ----------            ----------
Total depreciation of non-current assets                           269,937               257,596               256,167
                                                                ----------            ----------            ----------

Amortisation of goodwill                                           848,128                30,811                  --
                                                                ----------            ----------            ----------
Total amortisation of non-current assets                           848,128                30,811                  --
                                                                ----------            ----------            ----------
TOTAL DEPRECIATION AND AMORTISATION EXPENSES                     1,118,065               288,407               256,167
                                                                ==========            ==========            ==========

Borrowing costs/interest expense                                      --                      12                  --

Increase in provision for diminution in the                           --                    --                 204,958
value of investments

Research and development costs                                   4,621,406             4,387,410             4,651,495

Exchange rate losses                                                43,712                  --                    --

(b) (Gains)/lOSSES
Net gain on disposal of investments                                   --                    --                 (60,662)


                                      F-16
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


                                                                     2005                   2004                   2003
                                                                        $                      $                      $
----------------------------------------------        ---------------------- ---------------------- ----------------------
4.  INCOME TAX
The prima facie tax, using tax rates applicable in the country of operation, on
loss from ordinary activities differs from the income tax provided in the
financial statements as follows:
Prima facie tax on loss from ordinary activities                (1,998,362)              (951,342)             (566,146)
Tax effect of permanent differences
Research and development allowance                                (304,884)              (333,756)             (407,559)
Research and development allowance adjustment
for prior year                                                        --                     --                  43,564
Goodwill amortization                                              254,438                  9,243                  --
Under provision of tax in previous year                            (94,879)                  --                    --
Other items (net)                                                     --                      473                 1,840
                                                               -----------            -----------           -----------
                                                                (2,143,687)            (1,275,382)             (928,301)
Future income tax benefits not recognised                        2,143,687              1,275,382               928,301
                                                               -----------            -----------           -----------
Income tax expense attributable to ordinary
activities                                                            --                     --                    --
                                                               ===========            ===========           ===========

Income tax losses
Future income tax benefit arising from tax losses is not recognised at the reporting date as realization of the
benefit is not regarded as virtually certain.
Revenue losses                                                 14,928,141              12,820,259              9,528,077
Capital gains tax losses                                          436,439                 436,439                436,439
                                                              -----------             -----------            -----------
Total                                                          15,364,580              13,256,698              9,964,516
                                                              ===========             ===========            ===========
</TABLE>


This future income tax benefit will only be obtained if:

(a)  future assessable income is derived of a nature and of an amount sufficient
     to enable the benefit to be realized;

(b)  the conditions for deductibility imposed by tax legislation continue to be
     complied with; and

(c)  no changes in tax legislation adversely affect the Company in realizing the
     benefit.

TAX CONSOLIDATION
Effective July 1, 2003, for the purposes of income taxation, the
Parent Entity and its 100% owned Australian controlled entity formed a tax
consolidated group. Members of the group have entered into a tax sharing
arrangement in order to allocate income tax expense to the wholly-owned
controlled entity on a pro-rata basis. In addition, the agreement provides for
the allocation of income tax liabilities between the entities should the head
entity default on its tax payment obligations. At the balance date, the
possibility of default is remote. The head entity of the tax consolidated group
is the Parent Entity.

The Parent Entity will formally notify the Australian Tax Office of its adoption
of the tax consolidation regime when it lodges its June 30, 2004 consolidated
tax return.


                                      F-17
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)

                                             2005                 2004
                                                $                    $
-----------------------------       -----------------    -----------------
5.  RECEIVABLES (CURRENT)
Other debtors                             381,527               30,440

TERMS AND CONDITIONS
Other debtors are non-interest bearing and have repayment terms between 30 and
90 days.



6.  INTERESTS IN CONTROLLED ENTITIES

<TABLE>
<CAPTION>

NAME                                    COUNTRY OF          PERCENTAGE OF EQUITY INTEREST HELD BY THE PARENT ENTITY
                                       INCORPORATION
                                                              2005                  2004                   2003
                                                                %                      %                     %
<S>                                   <C>                     <C>                   <C>                    <C>
Autogen Research Pty Ltd                 Australia            100                   100                    100
ChemGenex Pharmaceuticals Inc.              USA               100                   100                     --

</TABLE>

7.  PLANT AND EQUIPMENT                    2005                    2004
Plant and equipment                           $                       $
Office equipment
At cost                                  78,337                  63,119
Accumulated depreciation                (36,171)                (18,258)
                                     ----------              ----------
                                         42,166                  44,861
                                     ----------              ----------
Research equipment
At cost                               1,604,036               1,604,036
Accumulated depreciation             (1,059,180)               (807,156)
                                     ----------              ----------
Total plant and equipment               587,022                 841,741
                                     ==========              ==========

Total plant and equipment
At cost                               1,682,373               1,667,155
Accumulated depreciation             (1,095,351)               (825,414)
                                     ----------              ----------
Total net book value                    587,022                 841,741
                                     ==========              ==========



                                      F-18
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)
<TABLE>
<CAPTION>


                                                                     2005                2004                  2003
                                                        --------------------- ------------------- ---------------------
                                                                        $                   $                     $
                                                        --------------------- ------------------- ---------------------
7.  PLANT AND EQUIPMENT (CONT'D)
RECONCILIATIONS
Reconciliations of the carrying amounts of plant and equipment at the beginning
and end of the current financial year.

Office equipment
<S>                                                                  <C>                  <C>                   <C>
Carrying amount at beginning                                         44,861               18,118                1,661
Additions at cost                                                    15,218                7,560               20,600
Additions through acquisition of                                       --                 24,755                 --
entities/operations
Depreciation expense                                                (17,913)              (5,572)              (4,143)
                                                                 ----------           ----------           ----------
Carrying amount at end of year                                       42,166               44,861               18,118
                                                                 ==========           ==========           ==========

Research equipment
Carrying amount at beginning                                        796,880            1,048,904            1,300,928
Additions                                                              --                   --                   --
Depreciation expense                                               (252,024)            (252,024)            (252,024)
                                                                 ----------           ----------           ----------
Carrying amount at end of year                                      544,856              796,880            1,048,904
                                                                 ==========           ==========           ==========


8.  GOODWILL
Goodwill on acquisition                                          16,962,561          16,962,561
Accumulated amortisation                                          (878,939)            (30,811)
                                                          ------------------     ------------------
                                                                 16,083,622          16,931,750
                                                          ==================     ==================


9.  FINANCIAL ASSETS
Shares in a listed company at cost                                1,367,310           1,367,310
Shares in an unlisted company at cost                             2,247,650           2,247,650
Less provision for diminution of value                          (3,614,960)         (3,614,960)
                                                          =================      ================
                                                                       --                   --
                                                          =================      ================

</TABLE>

10. TRADE CREDITORS

TERMS AND CONDITIONS
Trade creditors are non-interest bearing and are normally settled on 30 day
terms.



                                      F-19
<PAGE>



               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



<TABLE>
<CAPTION>


                                     NOTES          2005         2004          2003        2005           2004          2003
                                             ------------- -------------- ----------------------------------------- ----------------
                                                Number of    Number of      Number of       $              $             $
                                                 shares        shares        shares
                                             ------------- -------------- ----------------------------------------- ----------------
11.   CONTRIBUTED EQUITY
(A)   ISSUED AND PAID UP CAPITAL
<S>                                           <C>            <C>           <C>           <C>            <C>           <C>
Ordinary shares fully paid                    114,797,616    86,728,294    57,027,740    84.592,891     70,257,383    54,236,089
                                              ===========   ===========   ===========   ===========    ===========  =============

(B)    MOVEMENTS IN SHARES ON ISSUE
------------------------------------ -------  -----------  -----------   -----------    -----------    -----------   -----------
Beginning of the financial year               86,728,294     57,027,740    38,018,394     70,257,383    54,236,089    48,096,896
Issued during the year
share placements                     (i)      27,909,244           --      19,009,346     14,439,437          --       6,653,271
shares issued on exercise of options (ii)         25,000           --            --           12,500          --             --
less cost of shares issued                          --             --             --        (189,353)         --        (514,078)
purchase of ChemGenex Therapeutics, Inc.            --       28,000,000          --             --      15,120,000           --
fees paid in lieu of cash            (iii)       135,078      1,700,554          --           72,924       901,294           --
                                             -----------    -----------   -----------    -----------   -----------    -----------
End of the financial year                    114,797,616     86,728,294    57,027,740     84,592,891     70,257,383   54,236,089
                                             ===========    ===========   ===========    ===========   ===========    ===========
</TABLE>


(i) On July 14, 2004, 13,009,244 ordinary shares were issued at 48 cents each
raising $6,244,437 for working capital and further develop anti-cancer compounds
in clinical trials. This issue was ratified by the Annual General Meeting of
shareholders held on November 23, 2004.

On January 24, 2005, 14,900,000 ordinary shares were issued at 55 cents each
raising $8,195,000 to expedite the continued clinical trials. This issue was
ratified by the Annual General Meeting of shareholders held on November 16,
2005.



(ii) On February 14, 2005, 25,000 ordinary shares were issued at 50 cents
raising $12,500 upon the exercise of 25,000 options previously issued under the
Employee Share Option Plan (ESOP).



                                      F-20
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


11.   CONTRIBUTED EQUITY (CONT)

(iii) On November 23, 2004 , 84,535 ordinary shares were issued to Topete Pty.
Ltd. as consideration for services provided in regard to the capital raising on
July 14, 2005. The shares were issued to Topete Pty. Ltd. at 48 cents each, the
same price as the issue to which these expenses relate.

On February 21, 2005, 50,543 ordinary shares with a market value of $32,347 were
issued to the University of Texas MD Anderson Cancer Center in accordance with a
Patent and Technology License Agreement to support the clinical trials for
Ceflatonin.

(C)     SHARE OPTIONS
Listed options

At June 30, 2005 there were 22,158,526 (2004 and 2003: 22,158,526) unissued
ordinary shares for which options were outstanding exercisable at $1.25 per
share expiring March 12, 2010.

Non-listed options

(i) Employee Share Plan Options (ESOP)

All directors, employees and certain consultants are eligible to receive options
under the ESOP. Details of options issued over ordinary shares to employees are
set out in Note 15.

(ii) Options approved at General Meetings of Shareholders

Separate issues of other unlisted options have been approved by resolutions
passed by shareholders on November 21, 2003 (600,000 options) and June 21, 2004
(3,000,000 options).

At June 30, 2005 there were a total of 5,375,000 (2004: 5,040,000; 2003:
1,165,000) unissued ordinary shares in respect of which non-listed options were
outstanding.



(D) TERMS AND CONDITIONS OF CONTRIBUTED EQUITY


Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the
event of winding up the Company, to participate in the proceeds from the sale of
all surplus assets in proportion to the number of and amounts paid up on shares
held.

Ordinary shares entitle their holder to one vote per share, either in person or
by proxy, at a meeting of the Company.



                                      F-21
<PAGE>



               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)

<TABLE>
<CAPTION>


                                                         2005                  2004                    2003
                                                            $                     $                       $
--------------------------------------         ------------------    ------------------     ------------------
12. RESERVES AND ACCUMULATED DEFICIT

(a) OPTION PREMIUM RESERVE

(i) Nature and purpose of reserve Amounts contributed for the future right to
acquire shares at a pre-determined price.

(ii) Movements in reserve
<S>                                                  <C>                    <C>                    <C>
Balance at the beginning of year                     10,866,878             10,866,878             10,866,878
Listed options exercised                                   --                     --                     --
                                                    -----------            -----------            -----------
Balance at end of year                               10,866,878             10,866,878             10,866,878
                                                    ===========            ===========            ===========


(b) ACCUMULATED DEFICIT
Accumulated deficit at beginning of year            (64,411,243)           (61,240,103)           (59,352,949)
Net loss for the year                                (6,661,206)            (3,171,140)            (1,887,154)
                                                    -----------            -----------            -----------
Accumulated deficit at end of year                  (71,072,449)           (64,411,243)           (61,240,103)
                                                    ===========            ===========            ===========

</TABLE>

                                      F-22
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


<TABLE>
<CAPTION>

                                                          2005                  2004                    2003
                                                           $                     $                        $
--------------------------------------           ---------------      ----------------     -----------------
13. STATEMENT OF CASH FLOWS (A) RECONCILIATION OF THE NET LOSS TO THE NET
    CASH FLOWS FROM OPERATIONS
<S>                                                   <C>                  <C>                     <C>
Net loss                                              (6,661,206)          (3,171,140)             (1,887,154)

Non-Cash Items
Amortisation of goodwill                                 848,128               30,811                    --
Depreciation of non-current assets                       269,937              257,596                 256,167
Decrement in value of financial assets                      --                   --                   204,958
Share-based payments for services received
                                                          72,924                 --                      --
Net profit on disposal of financial assets                  --                   --                   (60,662)
CHANGES IN ASSETS AND LIABILITIES, NET OF
EFFECTS OF ACQUISITIONS OF BUSINESSES
(Increase)/decrease in receivables                      (351,087)             142,427                 210,437
(Decrease)/increase in payables                       (1,119,067)             648,845              (4,267,666)
Increase in deferred revenue                             337,923               59,852                  68,058
Increase in prepayments                                  (74,751)             (26,148)                (35,269)
                                                       ----------          -----------             -----------
Net cash used in operating activities                 (6,677,199)          (2,057,757)             (5,511,131)
                                                      ===========          ===========             ===========
(B) RECONCILIATION OF CASH Cash balance
comprises:
--         cash assets                                 8,511,952              941,785               3,059,167
                                                      ----------           ----------              ----------
Closing cash balance                                   8,511,952              941,785               3,059,167
                                                      ==========           ==========              ==========

(C) FINANCING FACILITIES AVAILABLE At reporting date, the following financing
facilities had been negotiated and were available:
Total facilities
-   unsecured funding facility                             --               5,000,000                     --
Facilities used at reporting date
-   unsecured funding facility                             --                      --                     --
Facilities unused at reporting date
-   unsecured funding facility                             --               5,000,000                     --

</TABLE>


Following the July 2004 capital raising the facility was not required. No funds
were drawn down under the facility. The facility is no longer available to the
Company.

                                      F-23
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)

13. STATEMENT OF CASH FLOWS (CONT)

(D) ACQUISITION OF CONTROLLED ENTITY

On June 21, 2004, the Company acquired 100% of the issued and voting share
capital of ChemGenex Therapeutics, Inc., an unlisted US company specializing in
the development of anti-cancer compounds including Quinamed(R) and
Ceflatonin(R). The components of the acquisition cost were:

                                                                  $
-------------------------------------------------         ----------------
Consideration:
-   shares issued - vendor                                  15,120,000
-   shares issued - incidental costs                           901,294
-   cash - incidental costs                                  1,066,643
                                                          ----------------
                                                            17,087,937
                                                          ================
Net assets of ChemGenex Therapeutics, Inc.:
-   cash                                                       113,284
-   trade debtors                                               37,000
-   prepaid expenses and other current assets                   14,398
-   plant and equipment                                         24,755
                                                          ----------------
                                                               189,437
                                                          ----------------
-   accounts payable                                            35,490
-   accrued liabilities                                         28,571
                                                          ----------------
                                                                64,061
                                                          ----------------
-   fair value of net tangible assets                          125,376
-   goodwill arising on acquisition                         16,962,561
                                                          ----------------
                                                            17,087,937
                                                          ================
Net cash effect:
Cash consideration paid as at June 30, 2004                   (165,349)
Cash included in net assets acquired                           113,284
                                                          ----------------
Net cash outflow for purchase of controlled entity             (52,065)
as reflected in the Consolidated Statements               ================
of Cash Flows

There were no acquisitions or disposals of controlled entities or businesses in
the 2005 or 2003 financial years.

14.      EXPENDITURE COMMITMENTS


(A) RESEARCH EXPENDITURE COMMITMENTS
Estimated research expenditure contracted for at reporting date, but not
provided for, payable:

-  not later than one year- $2,747,098 (2004:$5,496,792)
-  later than one year and not later than five years- $Nil(2004:$44,571)

A controlled entity, Autogen Research Pty Ltd, has agreed to provide certain
monies for research and development projects covering areas of diabetes, obesity
autoimmune disorders and depression and anxiety


                                      F-24
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)

14.  EXPENDITURE COMMITMENTS (CONT)

with the object of long term commercialisation. Research agreements have been
undertaken with Deakin University, Southwest Foundation for Biomedical Research
and the International Diabetes Institute.

Autogen Research Pty Ltd has the option to continue funding these research
agreements subject to annual reviews which are dependent upon research
milestones being met. Autogen Research Pty Ltd has the right to benefit from the
commercialisation of any resulting products. Under alliance agreements with
Merck Sante, Merck Sante provides funding towards the commitments made by
Autogen Research Pty Ltd to the relevant research institutions. Under current
contracts Merck Sante will provide approximately $1.3 million during fiscal 2006
(Fiscal 2005: $2.5 million).



(B)  OPERATING LEASE COMMITMENTS
The Company has operating lease commitments relating to the premises used at
Menlo Park. These leases expire on December 31, 2005. Estimated operating lease
commitments as at June 30, 2005:

-   not later than one year- $27,566 (2004:$42,857)

-   later than one year and not later than five years- $Nil (2004:$Nil)



15.  EMPLOYEE BENEFITS


                                            2005        2004       2003
                                               $           $          $
EMPLOYEE ENTITLEMENTS
The aggregate employee benefit
liability is comprised of-
Accrued wages, salaries and on-costs          --          --         --
Provisions (current)                       119,351        --         --
Provisions (non-current)                      --          --         --
                                         ---------    --------    -------
                                           119,351        --         --
                                         =========    ========    =======

EMPLOYEE SHARE OPTION PLAN (ESOP)
An ESOP has been established where the Company may, at the discretion of the
Board, grant options over the ordinary shares of the Company to directors,
executives, advisors and support staff of the Company. The options, issued for
nil consideration, are granted in accordance with performance guidelines
established by the directors of the Company. The options cannot be transferred
and will not be quoted on the Australian Stock Exchange ("ASX"). There are
currently one director, one executive and 18 scientific advisors and support
staff who hold options issued under the ESOP.


                                      F-25
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)

15. EMPLOYEE BENEFITS (CONT)


Information with respect to the number of options granted under the ESOP is as
follows:

<TABLE>
<CAPTION>

                                               2005                             2004                            2003
                                  -------------------------------- ------------------------------- --------------------------------
                                                     Weighted                        Weighted                         Weighted
                                    Number of        average         Number of        average        Number of        average
                                     options      exercise price      options     exercise price      options      exercise price
                                                        $                                $                               $
                                   -------------- ----------------- -------------- ---------------- -------------- -----------------
<S>                                 <C>                   <C>        <C>                  <C>          <C>                 <C>
Balance at beginning of year        1,440,000             0.74       1,165,000            0.81         855,000             1.05
-   granted                           360,000             0.56         325,000            0.50         500,000             0.50
-   forfeited                              --               --         (50,000)           0.90        (190,000)            1.06
-   exercised                        (25,000)             0.50               --             --              --               --
                                  -------------- ----------------- -------------- ---------------- -------------- -----------------
Balance at end of year              1,775,000             0.71       1,440,000            0.74       1,165,000             0.81
                                  ============== ================= ============== ================ ============== =================
Exercisable at end of year          1,160,000             0.52         825,000            0.50         500,000             0.50
                                  ============== ================= ============== ================ ============== =================
</TABLE>

(A) OPTIONS HELD AT THE BEGINNING OF THE REPORTING PERIOD:
The following table summarizes information about options held by directors,
executives, advisors and support staff as at July 1, 2002:

<TABLE>
<CAPTION>

   NUMBER OF OPTIONS           GRANT DATE             VESTING DATE             EXPIRY DATE           WEIGHTED AVERAGE
                                                                                                      EXERCISE PRICE
       <S>                        <C>                   <C>                       <C>                     <C>
        520,000               March 24, 2000         March 25, 2003           March 24, 2010               1.16
        335,000               March 8, 2001           March 9, 2004           March 24, 2010               0.90

(B) OPTIONS GRANTED DURING THE PAST THREE FINANCIAL YEARS:
The following table summarizes information about options granted by the Company
(under the ESOP or at General Meetings of Shareholders) to directors,
executives, advisors and support staff since July 1, 2002:


   NUMBER OF OPTIONS           GRANT DATE             VESTING DATE             EXPIRY DATE           WEIGHTED AVERAGE
                                                                                                      EXERCISE PRICE
                                                                                                            $
        300,000             November 28, 2002       November 28, 2002         March 24, 2010               0.50
        200,000             December 5, 2002        December 5, 2002          March 24, 2010               0.50
        325,000             November 21, 2003       November 21, 2003         March 24, 2010               0.50
        300,000             November 21, 2003       November 21, 2003       December 31, 2006              0.30
       1,000,000              June 21, 2004           June 21, 2004           March 24, 2010               0.50
       1,000,000              June 21, 2004           June 21, 2006           March 24, 2010               0.50
        500,000               June 21, 2004           June 21, 2007           March 24, 2010               0.50
        500,000               June 21, 2004           June 21, 2008           March 24, 2010               0.50
        360,000             December 21, 2004       December 21, 2004         March 24, 2010               0.56


                                      F-26
<PAGE>
               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



15.      EMPLOYEE BENEFITS (CONT)

(C) OPTIONS EXERCISED
25,000 options granted to an advisor under ESOP were exercised in the year ended
June 30, 2005. No other options granted by the Company (under the ESOP or at
General Meetings of Shareholders) to directors, executives, advisors and support
staff, have been exercised during the years ended June 30, 2005, 2004, or 2003.

(D) OPTIONS HELD AS AT THE END OF THE REPORTING PERIOD:
The following table summarizes information about all options held by directors,
executives, advisors and support staff as at June 30, 2005:



                                                                                                WEIGHTED AVERAGE
   NUMBER OF OPTIONS          GRANT DATE            VESTING DATE             EXPIRY DATE        EXERCISE PRICE $

        400,000             March 24, 2000         March 25, 2003          March 24, 2010             1.16
        215,000             March 8, 2001           March 9, 2004          March 24, 2010             0.90
        300,000           November 28, 2002       November 28, 2002        March 24, 2010             0.50
        190,000            December 5, 2002       December 5, 2002         March 24, 2010             0.50
        310,000           November 21, 2003       November 21, 2003        March 24, 2010             0.50
        300,000           November 21, 2003       November 21, 2003       December 31, 2006           0.30
       1,000,000            June 21, 2004           June 21, 2004          March 24, 2010             0.50
       1,000,000            June 21, 2004           June 21, 2006          March 24, 2010             0.50
        500,000             June 21, 2004           June 21, 2007          March 24, 2010             0.50
        500,000             June 21, 2004           June 21, 2008          March 24, 2010             0.50
        360,000           December 21, 2004       December 21, 2004        March 24, 2010             0.56

</TABLE>

(E) SUPERANNUATION COMMITMENTS
The Company has nil superannuation commitments. All superannuation contributions
are paid and expensed by the Company as and when they fall due.



16.      SUBSEQUENT EVENTS


On July 28, 2005 P.J. Bradfield and P.O. Burns were appointed directors of the
Company and became members of the Board's Audit Committee. The appointments
ensure the Company complies with Section 10A of the Securities Exchange Act of
1934 requiring the Audit Committee to consist of three members who meet the
independence requirements of that section.

17.      ECONOMIC DEPENDENCY


As at June 30, 2004 Charter Pacific Corporation Limited has agreed to provide
unsecured funding to the Company to the extent of $5 million for working capital
and to further develop the Company's two anti-cancer compounds in Phase II
clinical trials in the United States pending successful future capital raisings
to extinguish the facility and provide working capital.

Following the July 2004 capital raising referred to in Note 11 (b), the facility
was not required. No funds were drawn down under the facility. The facility is
no longer available to the Company.

                                      F-27
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)

<TABLE>
<CAPTION>

  18.    LOSS PER SHARE
                                                                                    2005             2004               2003
                                                                                       $                $                  $
-----------------------------------------------------------------------       -----------    -------------     --------------

The following reflects the loss and share data used in the calculations of basic
and diluted loss per share:
<S>                                                                            <C>              <C>               <C>
Net loss                                                                       (6,661,206)      (3,171,140)       (1,887,154)
ADJUSTMENTS:                                                                           --               --                --
                                                                            ----------------- ---------------- -----------------
Loss used in calculating basic and diluted loss per share                      (6,661,206)      (3,171,140)       (1,887,154)
                                                                            ================= ================ =================

                                                                               NUMBER OF           NUMBER OF        NUMBER OF
                                                                              SHARES 2005         SHARES 2004      SHARES 2003
                                                                            ----------------- ---------------- -----------------
Weighted  average number of ordinary  shares used in calculating  basic         105,707,630       57,678,611        47,598,708
and diluted loss per share:
                                                                            ================= ================ =================

19.     AUDITORS' REMUNERATION

                                                                                        2005             2004             2003
Amounts  received or due and receivable by the auditors of the consolidated                $                $                $
group and Parent Entity



Young Australia for:
Amounts  received or due and receivable by Deloitte Touche Tohmatsu for SEC
filings
     Audit fees                                                                     497,804                --                --
     Tax fees                                                                            --                --                --
     All other fees                                                                      --                --                --
                                                                              ---------------     ------------    -------------
                                                                                    497,804                --                --

Amounts received or due and receivable by Ernst & Young as Statutory
Auditor in Australia
     Audit fees                                                                      93,250             41,000           35,000
     Tax fees                                                                        12,000                 --               --
     All other fees                                                                  17,709             48,537               --
                                                                              ----------------     ------------   ---------------
                                                                                    122,959             89,537           35,000

                                                                              ----------------     ------------   ---------------
Total amounts received or due and receivable                                        620,763             89,537           35,000
                                                                              ================     ============   ===============


</TABLE>


                                      F-28
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



20. RELATED PARTY DISCLOSURES

(A) DETAILS OF SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES
(i) Specified directors
J.B.L. Heading            Chairman (non-executive) appointed June 28, 2002
Dr. G.R. Collier          Managing Director and Chief Executive Officer
                            appointed June 28, 2002
K.J. Dart                 Director (non-executive) appointed June 28, 2002
R.V. Byrne                Director (non-executive) appointed March 28, 2003
E.J. Schnee               Director (non-executive) appointed January 27, 2004
J.-N. Treilles            Director (non-executive) resigned November 21, 2003
Dr. D. M. Brown           Director (executive) appointed September 29, 2004

(ii) Specified executives
Dr J. Campbell            Vice President of Operations
H. Pedersen               Vice President of Business Development
E. Merrigan               Chief Financial Officer
T. Herbert                Senior Director of Finance and Administration
S. Michaels               Director of Discovery Research


(B)      REMUNERATION OF SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES
Remuneration Policy

The Board of Directors of the Company is responsible for determining and
reviewing compensation arrangements for the directors, the Chief Executive
Officer and the executive team. The Board assesses the appropriateness of the
nature and amount of emoluments of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of
ensuring maximum stakeholder benefit from the retention of a high quality board
and executive team. Such officers are given the opportunity to receive their
base emolument in a variety of forms including cash and fringe benefits such as
motor vehicles and expense payment plans. It is intended that the manner of
payment chosen will be optimal for the recipient without creating undue cost for
the Company.

To assist in achieving these objectives, the Board links the nature and amount
of executive directors' and officers' emoluments to the Company's financial and
operational performance. All executive directors and executives have the
opportunity to qualify for participation in the ESOP which currently provides
incentives where specified criteria are met including criteria relating to
profitability, cash flow, share price growth and environmental performance.

It is the Board's policy that employment agreements shall be entered into with
the Chief Executive Officer and other specified executives.



                                      F-29
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)




20.      RELATED PARTY DISCLOSURES (CONT)


YEAR ENDED JUNE 30, 2005

<TABLE>
<CAPTION>

                                                                                        NON-
                                    PRIMARY          POST EMPLOYMENT       EQUITY     MONETARY
NAME                          SALARY/FEES BONUS       SUPERANNUATION      OPTIONS     BENEFITS           TOTAL
----                          ----------- -----       --------------      -------     --------           -----
<S>                            <C>         <C>               <C>          <C>          <C>              <C>
SPECIFIED DIRECTORS                   $      $                     $           $            $                 $
J.B.L. Heading                   65,000      -                     -           -            -            65,000
Dr. G. R. Collier               414,882      -                38,702     278,104        3,834           735,522
K.J. Dart                        50,000      -                 4,500           -            -            54,500
R.V. Byrne                       50,000      -                 4,500           -            -            54,500
E.J. Schnee                      50,000      -                     -           -            -            50,000
Dr. D.M. Brown                  265,516      -                     -           -       18,666           284,182

TOTAL REMUNERATION:             895,398      -                47,702     278,104       22,500         1,243,704

SPECIFIED EXECUTIVES
H. Pedersen                     255,985      -                     -           -       11,120           267,105
Dr J. Campbell                  159,223      -                14,330      40,000            -           213,553
T. Herbert                      199,137      -                     -           -       10,295           209,432
S. Michaels                     119,482      -                     -           -        9,140           128,622
E. Merrigan                      94,154      -                 8,425      10,000            -           112,579

TOTAL REMUNERATION:             827,981      -                22,755      50,000       30,555           931,291

</TABLE>

(C) REMUNERATION OPTIONS: GRANTED AND VESTED

Options were granted as equity compensation benefits to certain specified
directors and specified executives as disclosed below. Where a market "hurdle"
price was set for the exercise of the option this is noted in the table below.
Each option entitles the holder to subscribe for one fully paid ordinary share
in the entity at exercise prices set out in the table below. The options may
only be exercised after the vesting date and before the expiry date as set out
in the table below.

<TABLE>
<CAPTION>
                                                                              VALUE PER     EXERCISE      FIRST           LAST
                        VESTED      GRANTED      MARKET       GRANT DATE      OPTION AT       PRICE      EXERCISE       EXERCISE
                        NUMBER      NUMBER      "HURDLE"                      GRANT DATE    PER SHARE      DATE           DATE
                                                 PRICE
SPECIFIED DIRECTORS                               ($)                            ($)           ($)
<S>                       <C>         <C>         <C>               <C>          <C>          <C>           <C>             <C>
Dr. G.R. Collier          100,000     100,000     2.10          Mar 24, 2000     1.23         1.16      Mar 25, 2003    Mar 24, 2010
                          100,000     100,000     1.54           Mar 8, 2001     1.08         0.90       Mar 9, 2004    Mar 24, 2010
                          300,000     300,000     n/a           Nov 28, 2002     0.36         0.50      Nov 28, 2002    Mar 24, 2010
                          300,000     300,000     n/a           Nov 21, 2003     0.34         0.30      Nov 21, 2003    Dec 31, 2006
                        1,000,000   1,000,000     n/a           Jun 21, 2004     0.35         0.50      Jun 21, 2004    Mar 24, 2010
                                    1,000,000     0.70          Jun 21, 2004     0.35         0.50      Jun 21, 2006    Mar 24, 2010
                                      500,000     1.00          Jun 21, 2004     0.35         0.50      Jun 21, 2007    Mar 24, 2010
                                      500,000     1.25          Jun 21, 2004     0.35         0.50      Jun 21, 2008    Mar 24, 2010


                                      F-30
<PAGE>


               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)


20.      RELATED PARTY DISCLOSURES (CONT)

SPECIFIED EXECUTIVES
Dr. J.A. Campbell          50,000      50,000     n/a            Dec 5, 2002     0.37         0.50       Dec 5, 2002    Mar 24, 2010
                           35,000      35,000     n/a           Nov 21, 2003     0.35         0.50      Nov 21, 2003    Mar 24, 2010
                          100,000     100,000     n/a          Dec  21, 2004     0.40         0.56     Dec  21, 2004    Mar 24, 2010

E. Merrigan                25,000      25,000     n/a          Dec  21, 2004     0.40         0.56     Dec  21, 2004    Mar 24, 2010
                      ------------------------
TOTAL                   2,010,000   4,010,000
                      ========================
</TABLE>

(D) SHARES ISSUED ON EXERCISE OF REMUNERATION OPTIONS

<TABLE>
<CAPTION>

                                             SHARES ISSUED                       PAID                          UNPAID
                                                 NUMBER                      $ PER SHARE                    $ PER SHARE
SPECIFIED DIRECTORS
<S>                                                <C>                            <C>                              <C>
Nil shares were issued                             --                              --                              --

SPECIFIED EXECUTIVES
Nil shares were issued                             --                              --                              --

</TABLE>

(E) OPTION HOLDINGS OF SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES

<TABLE>
<CAPTION>
                                                                         BALANCE AT             VESTED AT JUNE 30, 2005
                     BALANCE AT                                            END OF
                      BEGINNING   GRANTED AS    OPTIONS    NET CHANGE      PERIOD
                      OF PERIOD   RENUMER-     EXERCISED    OTHER(1)      JUNE 30,                      NOT
                     JULY 1, 2002  ATION                                    2005          TOTAL      EXERCISABLE   EXERCISABLE
SPECIFIED DIRECTORS
<S>                     <C>         <C>          <C>          <C>            <C>          <C>            <C>            <C>
J.B.L. Heading           -             -           -            -            -               -             -             -
Dr. G.R. Collier        200,000     3,600,000      -            -         3,800,000         1,800,000      200,000      1,600,000
K.J. Dart                -             -           -        7,399,324     7,399,324         7,399,324      -            7,399,324
R.V. Byrne               -             -           -           -             -               -             -             -
E.J. Schnee              -             -           -        4,439,308     4,439,308         4,439,308      -            4,439,308
J.-N. Treilles  (2)   4,439,308        -           -       (4,439,308)       -               -             -             -
Dr. D.M. Brown           -             -           -           -             -               -             -             -


SPECIFIED
EXECUTIVES
H. Pedersen              -             -           -           -             -               -             -             -
Dr J. Campbell           -            185,000      -           -            185,000           185,000      -              185,000
T. Herbert               -             -           -           -             -               -             -             -
S. Michaels              -             -           -           -             -               -             -             -
E. Merrigan              -             25,000      -           -             25,000            25,000      -               25,000
                    --------------------------------------------------------------------------------------------------------------
TOTAL                 4,639,308     3,810,000      -        7,399,324    15,848,632        13,848,632      200,000     13,648,632
                    ==============================================================================================================
(i)  Includes forfeits and offers to employees under the ESOP to June 30, 2005.
(2) Resigned November 21, 2003

</TABLE>



                                      F-31


<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



20.      RELATED PARTY DISCLOSURES (CONT)



(F) SHAREHOLDINGS OF SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES

<TABLE>
<CAPTION>

SHARES HELD IN             BALANCE            GRANTED AS           ON EXERCISE              NET CHANGE               BALANCE
CHEMGENEX               JULY 1, 2002         REMUNERATION          OF OPTIONS                  OTHER              JUNE 30, 2005
PHARMACEUTICALS
LTD (NUMBER)
                         ORDINARY            ORDINARY             ORDINARY                 ORDINARY                ORDINARY
SPECIFIED DIRECTORS
<S>                       <C>                  <C>                  <C>                     <C>                      <C>
J.B.L. Heading                     -             -                   -                           100,000              100,000
Dr. G.R. Collier                   -             -                   -                                 -                    -
K.J. Dart                  7,603,677             -                   -                        15,555,570           23,159,247
R.V. Byrne                         -             -                   -                                 -                    -
E.J. Schnee                        -             -                   -                         9,833,750            9,833,750
J.-N. Treilles (i)         5,668,750             -                   -                       (5,668,750)                    -
Dr. D.M. Brown                     -             -                   -                        14,398,297           14,398,297

SPECIFIED
EXECUTIVES

H. Pedersen                        -             -                   -                         1,203,377            1,203,377
Dr J. Campbell                     -             -                   -                             5,000                5,000
T. Herbert                         -             -                   -                           760,027              760,027
S. Michaels                        -             -                   -                           760,027              760,027
E. Merrigan                        -             -                   -                            25,000               25,000
                    ------------------------------------------------------------------------------------------------------------
TOTAL                     13,272,427             -                   -                        36,972,298           50,244,725

                    ============================================================================================================

(i) Resigned November 21, 2003

</TABLE>

                                      F-32
<PAGE>



               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)

20.      RELATED PARTY DISCLOSURES (CONT)

(G) LOANS TO SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES
Options granted under the ESOP in 2001 and 2000 contained an issue price which
the Company, in accordance with the terms of the ESOP, funded via an interest
free "off balance sheet" loan to the option holder. The loan is repayable upon
either the sale of shares obtained through exercise of the options, or
termination of the option holder's relationship with the Company.

Dr Greg Collier (who was not a director at the time of the grants) received
100,000 options under the ESOP in FY 2001 and FY 2000 and, as a result, was
loaned $96,820 to fund the issue price of these options. Subsequent to the date
of these option grants the terms and conditions of the loans have not been
changed, no repayments have been made and the balance of $96,820 is outstanding
as at June 30, 2005. Interest not charged for fiscal 2005 of $3,834 has been
included in Note 20(b) as a non-monetary benefit.

Neither the loans or equity items relating to these options are included in the
Company's financial statements as share price hurdle rates associated with these
options have not been achieved.

There are no other loans to specified directors and specified executives and
there have been no loans made to or repaid by specified directors and specified
executives during the period of this report.


(H) OTHER TRANSACTIONS AND BALANCES WITH SPECIFIED DIRECTORS AND SPECIFIED
EXECUTIVES

PURCHASES
During the year, there have been no purchases by the Company from specified
directors and specified executives.

SALES
During the year, there have been no sales by the Company to specified directors
and specified executives.

INVESTMENTS
Subsequent to shareholder approval granted in general meeting on
June 21, 2004, the Company acquired all of the issued and voting capital in
ChemGenex Therapeutics, Inc. in the U.S. in consideration for the issue of
28,000,000 ordinary shares in the Parent Entity. As part of that transaction
executive director Dr. D.M. Brown, and specified executives Mr. H.D. Pedersen,
Ms T. Herbert and Ms S. Michaels received 14,398,297, 1,203,377, 760,027 and
760,027 ordinary shares, respectively, in the Company.

CONTRACTS
Mr. E. J. Schnee is a director of Merck Sante which holds 9,793,750 shares and
4,439,308 options in the Company. Merck Sante is party to research and
development and commercialisation agreements with the Parent Entity's 100% owned
controlled entity Autogen Research Pty Ltd. Under these agreements Merck Sante
provides research and development revenue and patent reimbursements to Autogen
Research Pty Ltd.

SERVICES
Legal services were provided by McCullough Robertson lawyers, a legal firm of
which Mr. J.B.L. Heading is a partner. Mr. J.B.L. Heading is a director of two
companies that are the joint holders of 5% of the shares of GMCG that has
provided advisory and consulting services to the Company during the years ended
June 30, 2005, 2004 and 2003. Mr. Heading has no beneficial interest in these
shareholders.

Mr. K.J. Dart is a director and shareholder of Charter Pacific Corporation
Limited, which holds 23,010,087 shares and 7,399,324 options expiring March 12,
2010 in the Company. Charter Pacific Corporation Limited is a 38.5% shareholder
of GMCG that has provided advisory and consulting services to the Company during
the years ended June 30, 2005, 2004 and 2003.



                                      F-33
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



20.      RELATED PARTY DISCLOSURES (CONT)

AMOUNTS RECOGNISED AT THE REPORTING DATE IN RELATION TO OTHER TRANSACTIONS
<TABLE>
<CAPTION>

                              2005         2004                                         2005           2004          2003
ASSETS                           $            $     REVENUE                                $              $             $
<S>                         <C>         <C>                                           <C>           <C>            <C>
Trade receivables           97,149            -     Research funding               2,533,113      2,877,401     4,297,176
                                                    Patent reimbursements            104,085        605,110             -
TOTAL ASSETS                97,149            -     TOTAL REVENUE                  2,637,198      3,482,511     4,297,176
LIABILITIES                                         EXPENSES
Trade creditors             29,531      908,638     Legal services provided           52,934        116,754        88,798
Deferred revenue           217,637      127,910     Advisory and consulting           65,214      1,882,294       260,631
                                                    services provided
TOTAL LIABILITIES          247,168    1,035,548     TOTAL EXPENSES                   118,148      1,999,048       349,429

</TABLE>

(i)OTHER RELATED PARTY TRANSACTIONS The Company issued 300,000 options to GMCG
on November 21, 2003 at an exercise price of 50 cents per option. The options
vested immediately with an expiry date of November 21, 2008.

21.      SEGMENT INFORMATION

Segment products and locations The Company performs biotechnology research.
Up to June 2004, the Company's operations were entirely in Australia. Following
the acquisition of ChemGenex Therapeutics Inc. in June 2004 the operations have
been conducted in Australia and the United States of America.

Based on operating losses for the year ended June 30, 2005, the United States of
America represented 30% of the consolidated operations for that period.

<TABLE>
<CAPTION>

                                     SEGMENT REVENUES                  SEGMENT LOSSES                  SEGMENT ASSETS
                                    YEAR ENDED JUNE 30,             YEAR ENDED JUNE 30,                   JUNE 30,
                                   2005            2004             2005            2004            2005             2004

                                    $                $               $               $                $               $
<S>                                <C>              <C>           <C>             <C>               <C>             <C>
Australia                          4,095,217        3,595,440     (4,767,722)     (3,071,168)       25,486,176      18,671,824
United States of America                  69                -     (1,893,484)        (99,972)          241,320         162,514

TOTAL                              4,095,286        3,595,440     (6,661,206)     (3,171,140)       25,727,496      18,834,338

</TABLE>

                                      F-34
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



21.      SEGMENT INFORMATION (CONT)
Segment accounting policies
Segment accounting policies are the same as the consolidated entity's policies
described in Note 1.
During the financial year, there were no changes in segment accounting policies
that had a material effect on the segment information.




22.      FINANCIAL INSTRUMENTS

(A)      INTEREST RATE RISK

The Company's exposure to interest rate risks and the effective interest rates
of financial assets and financial liabilities, both recognised and unrecognised
at the reporting date, are as follows:

<TABLE>
<CAPTION>

  FINANCIAL INSTRUMENTS       FLOATING INTEREST RATE     FIXED INTEREST RATE       NON-INTEREST BEARING


                              2005         2004           2005      2004           2005         2004
                                $            $              $        $              $             $
(i) FINANCIAL ASSETS
<S>                             <C>           <C>            <C>      <C>          <C>           <C>
Cash                         8,511,952      941,785            -         -                -            -
Receivables                          -            -            -         -          381,527       30,440
Prepayments                          -            -            -         -          163,373       88,622

Total financial assets       8,511,952      941,785            -         -          544,900      119,062

(II) FINANCIAL
LIABILITIES
Payables                             -            -            -         -        1,340,176    1,993,410

Total financial                      -            -            -         -        1,340,176    1,993,410
liabilities

<CAPTION>

  FINANCIAL INSTRUMENTS        TOTAL CARRYING AMOUNT AS       WEIGHTED AVERAGE
                                PER THE STATEMENTS OF          EFFECTIVE RATE
                                  FINANCIAL POSITION
                                2005          2004           2005      2004
                                  $            $              %         %
(i) FINANCIAL ASSETS
<S>                                 <C>          <C>           <C>        <C>
Cash                           8,511,952       941,785         4.00      4.00
Receivables                      381,527        30,440          N/A       N/A
Prepayments                      163,373        88,622          N/A       N/A

Total financial assets         9,056,852     1,060,847

(II) FINANCIAL
LIABILITIES
Payables                       1,340,176     1,993,410          N/A       N/A

Total financial                1,340,176     1,993,410
liabilities

</TABLE>






N/A not applicable for non-interest bearing financial instruments


                                      F-35
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)




22.      FINANCIAL INSTRUMENTS (CONT)

(B)      FAIR VALUES
The following methods and assumptions are used to determine the fair values of
financial assets and liabilities:


RECOGNISED FINANCIAL INSTRUMENTS

Cash and cash equivalents, current receivables, prepayments and current
payables: The carrying amount approximates fair value because of their
short-term to maturity.


(C)      CREDIT RISK EXPOSURES
The Company's maximum exposure to credit risk at reporting date in relation to
each class of recognised financial assets is the carrying amount of those assets
as indicated in the Statement of Financial Position.



23.      CONTINGENT LIABILITIES

No contingent liabilities have arisen during the period to the date of this
report. The Company is not involved in any legal or arbitration proceedings and
management is unaware of any pending or threatened proceedings against the
Company.

24.      RESTATEMENT

As a public company in Australia, the Company is required to file consolidated
financial statements with the ASX and the Australian Securities and Investment
Commission ("ASIC") that comply with A-GAAP. In these statutory A-GAAP
consolidated financial statements for the year ended June 30, 2004, direct
acquisition costs associated with the Company's June 2004 acquisition of
ChemGenex Therapeutics, Inc. were expensed as incurred.

For the purpose of the Company's Registration Statement on Form 20-F filed with
the Securities and Exchange Commission in June 2005, the Company completed a
detailed assessment of the in-process research and development and potential
cash flows of ChemGenex Therapeutics, Inc. and further considered the applicable
guidance in AASB 1013, Accounting for Goodwill, which led the Company to
conclude that it should have capitalized the direct acquisition costs as part of
the cost of acquisition, thereby increasing the goodwill on acquisition. This
change in accounting treatment was reflected in the Company's statutory A-GAAP
interim consolidated financial statements for the half year ended December 31,
2004 and consolidated financial statements for the year ended June 30, 2005
lodged with the ASX and the ASIC during 2005. Under A-GAAP corrections to errors
are made in the current year, rather than by adjusting the comparatives.

For the purpose of this Form 20-F Annual Report, the Company has restated its
Consolidated Statement of Financial Performance for the year ended June 30, 2005
to reverse the change in accounting treatment of the direct acquisition costs
made in the statutory filings lodged with the ASX and the ASIC referred to
above. This reversal is necessary as the direct acquisition costs were already
capitalized in the consolidated financial statements as of and for the year
ended June 30, 2004 included in the Company's June 2005 Registration Statement
on Form 20-F. As at June 30, 2005, the Consolidated Statement of Financial
Position included in this Form 20-F Annual Report and as well as the statutory
A-GAAP consolidated financial statements filed with the ASX and ASIC reflect the
same values for goodwill ($16,083,622) and for net assets ($24,387,320).

A summary of the significant effects of the restatement for the year ended June
30, 2005 is as follows:



                                      F-36
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



24.      RESTATEMENT (CONT)

<TABLE>
<CAPTION>

                                                                  Year Ended June 30, 2005
CONSOLIDATED STATEMENT OF
FINANCIAL PERFORMANCE (A-GAAP)
                                                    As previously reported         As restated
                                                                         $                   $
------------------------------------------------------------------------------ -----------------
<S>                                                            <C>                      <C>
Adjustment to carrying cost of goodwill                        (1,967,937)                   -
Total expenses                                                 (8,788,555)         (10,756492)
Loss from ordinary activities before income tax                (4,693,269)         (6,661,206)
Net loss                                                       (4,693,269)         (6,661,206)
Basic and diluted loss per share                                   ($0.04)             ($0.06)

</TABLE>

                                      F-37
<PAGE>

               CHEMGENEX PHARMACEUTICALS LIMITED AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN AUSTRALIAN DOLLARS
                          (EXCEPT AS OTHERWISE NOTED)



25.      RECONCILIATION TO US GAAP

The consolidated financial statements have been prepared in accordance with
A-GAAP, which differ in certain respects from accounting principles generally
accepted in the United States of America ("US GAAP"). The following is a summary
of the adjustments to net loss and total equity required when reconciling such
amounts recorded in the consolidated financial statements to the corresponding
amounts in accordance with US GAAP, considering the differences between A-GAAP
and US GAAP.

RECONCILIATION OF NET LOSS
The following is a reconciliation of net loss as reported in the Consolidated
Statements of Financial Performance under A-GAAP to the net loss as adjusted for
the effects of the application of US GAAP for the years ended June 30, 2005,
2004, and 2003.

<TABLE>
<CAPTION>

Years Ended June 30,                                                       2005                2004                2003
                                                                              $                   $                   $
-------------------------------------------------------- ------ ------------------- ------------------- -------------------
<S>                                                                 <C>                 <C>                  <C>
Net loss in accordance with A-GAAP                                  (6,661,206)         (3,171,140)          (1,887,154)
US GAAP adjustments
Share based compensation expense, net of forfeitures      (a)
  - Directors and employees                                             (9,100)           (110,050)                   -
  - Non-employees                                                      (92,000)           (239,402)             (55,598)
Purchase accounting
   In-process research and development                    (c)                 -        (16,570,561)                   -
   Reversal of amortisation of goodwill                   (c)           848,128              30,811                   -
Marketable securities                                     (d)         (272,715)                   -                   -
Deferred tax effect of US GAAP adjustments                (e)                 -                   -                   -
                                                                ------------------- ------------------- -------------------
Net loss in accordance with US GAAP                                 (6,186,893)        (20,060,342)          (1,942,752)
                                                                =================== =================== ===================
Loss per share in accordance with US GAAP:
Basic and diluted                                                       ($0.06)             ($0.35)               (0.04)
Weighted average shares - basic and diluted                        105,707,630          57,678,611           47,598,708

</TABLE>


                                      F-37
<PAGE>



25.      RECONCILIATION TO US GAAP (CONT)
RECONCILIATION OF TOTAL EQUITY
The following is a reconciliation of the total equity as reported in the
Consolidated Statements of Financial Position under A-GAAP to total equity as
adjusted for the effects of the application of US GAAP as of June 30, 2005 and
2004.

<TABLE>
<CAPTION>
June 30,                                                                               2005                          2004
                                                                                          $                             $
-------------------------------------------------------       ------------------------------ -----------------------------
<S>                                                                              <C>                           <C>
Total equity in accordance with A-GAAP                                           24,387,320                    16,713,018
US GAAP adjustments
 Purchase accounting
    Fair value of shares issued as consideration        (b)                       (392,000)                     (392,000)
    In-process research and development                 (c)                    (16,570,561)                  (16,570,561)
    Reversal of amortisation of goodwill                (c)                         878,939                        30,811
Marketable securities                                   (d)                          77,098                       349,813
Deferred tax effect of US GAAP adjustments              (e)                               -                             -
                                                              ------------------------------ -----------------------------
Total equity in accordance with US GAAP                                           8,378,329                       131,081
                                                              ============================== =============================
ROLLFORWARD ANALYSIS OF TOTAL EQUITY UNDER US GAAP

Years Ended June 30,                                                                   2005                          2004
                                                                                          $                             $
-------------------------------------------------------- ------ ---------------------------- -----------------------------
Balance in accordance with US GAAP, beginning of year                               131,081                     4,048,216
Issue of shares, net of issue costs                       (b)                    14,335,508                    15,629,294
Issue of options, net of  forfeitures                     (a)                       101,100                       349,452
Unrealised gain on securities, net of tax                 (d)                             -                       164,461
Net loss in accordance with US GAAP                                              (6,186,893)                  (20,060,342)
                                                                ---------------------------- -----------------------------
                                                                ---------------------------- -----------------------------
Balance  in accordance with US GAAP, end of year                                  8,378,329                       131,081
                                                                ============================ =============================
</TABLE>

CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS UNDER US GAAP

<TABLE>
<CAPTION>

Years Ended June 30,                                                       2005                   2004                    2003
                                                                              $                      $                       $
--------------------------------------------------------- ---------------------- ---------------------- -----------------------
<S>                                                                  <C>                   <C>                      <C>
Net loss in accordance with US GAAP                                  (6,186,893)           (20,060,342)             (1,942,752)
Other comprehensive income:
   Unrealised gain  on securities, net of tax                                 -                164,461                  18,245
                                                          ---------------------- ---------------------- -----------------------
Comprehensive loss in accordance with US GAAP                        (6,186,893)           (19,895,881)             (1,924,507)
                                                          ====================== ====================== =======================
</TABLE>

(A)      SHARE-BASED COMPENSATION
As disclosed in Notes 11(c) and 15 to the consolidated financial statements, the
Company issued share options to directors, employees and non-employees as an
incentive for future performance or in consideration for services rendered.
Under A-GAAP, the Company did not recognise any compensation expense in
connection with the issuance of the options.

Options issued to directors and employees
Under US GAAP, the Company has elected to account for the issuance of share
options to directors and employees in accordance with Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees and related
interpretations (collectively, "APB 25"). Under APB 25, compensation expense is
recognised to the extent that the quoted market price of the stock, as at the
measurement date, exceeds the amount that the director / employee must pay.


                                      F-38
<PAGE>


25.      RECONCILIATION TO US GAAP (CONT)

The resultant compensation cost, net of forfeitures, is charged to earnings
ratably over the vesting period. For options that vest upon the achievement of a
target stock price, compensation expense is recognised when the target is
achieved.

Options issued to non-employees
Under US GAAP, the Company accounts for share-based compensation to
non-employees in accordance with Statement of Financial Accounting Standards
("SFAS") No. 123, Accounting for Stock-Based Compensation, as amended by SFAS
No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, and
Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services. Accordingly, the Company has calculated compensation
cost based on the estimated fair value of the options as of the measurement
date, using the Black-Scholes model with the following weighted average
assumptions:


     o    Risk-free interest rate of 5.17% for 2005 and 5.77% for 2004 and 5.36%
          for 2003;

     o    No dividends;

     o    Expected volatility of 65% for 2005 and 2004 and 85% for 2003; and

     o    Expected life of 5 years for 2005, 6 years for 2004 and 7 years for
          2003.

The resultant compensation cost, net of forfeitures, is charged to earnings
ratably over the vesting period.


(B)      FAIR VALUE OF SHARES ISSUED AS CONSIDERATION
As disclosed in Note 11 to the consolidated financial statements, the Company
issued 28,000,000 ordinary shares as consideration for acquiring 100% of
ChemGenex Therapeutics, Inc. In accordance with the acquisition agreement the
value placed on the issue under A-GAAP was 54 cents per share, the closing
market price on June 21, 2004. Under US GAAP the fair value of the shares issued
to affect the acquisition is the average quoted market price for a period of two
days before and after the date the terms of the agreement are agreed and
announced (52.6 cents). Accordingly, for US GAAP purposes, the Company has
recorded an adjustment to the purchase price as well as the value of the shares
issued.



(C)      GOODWILL ON ACQUISITION
As disclosed in Notes 1(j) and 13(d) to the consolidated financial statements,
the Company has calculated goodwill relating to the acquisition of ChemGenex
Therapeutics, Inc. as the excess of the purchase price over the fair value of
identifiable net assets acquired. In accordance with A-GAAP, the resultant
goodwill is being amortised over 20 years. For US GAAP purposes, the Company
considered the guidance contained in the AICPA Practice Aid "Assets Acquired in
a Business Combination to be Used in Research and Development Activities: A
Focus on Software, Electronic Devices, and Pharmaceutical Industries" and
determined that the excess of the US GAAP purchase price over the fair value of
identifiable net assets acquired represents the estimated value of acquired
in-process research and development projects that had not yet reached
technological feasibility and had no alternative future use. Accordingly, this
amount was immediately expensed at the date of acquisition under US GAAP.
Additionally, the A-GAAP goodwill amortisation has been reversed for US GAAP
purposes.


(D)      MARKETABLE SECURITIES
The Company holds an investment in a marketable security that was fully provided
for under A-GAAP during the year ended June 30, 1999 because the security was
deemed worthless by management. Under US GAAP, the investment is classified as
available-for-sale and reported at fair value based on the average of the
closing bid and asked prices as reported by the OTC Bulletin Board. Unrealized
gains and losses are excluded from earnings, and reported, net of tax, in
accumulated other comprehensive income until realized.

During the year ended June 30, 2005, a decline in market value judged to be
other than temporary was recognised in earnings.



                                      F-39
<PAGE>



25.      RECONCILIATION TO US GAAP (CONT)


(E)      DEFERRED TAX EFFECT OF US GAAP ADJUSTMENTS
The deferred tax effect of US GAAP adjustments is nil because it is more likely
than not that the net deferred tax asset will not be realized and, accordingly,
the Company has recorded a 100% valuation allowance against the net deferred tax
assets.


(F) CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE CLASSIFICATION DIFFERENCES
Under A-GAAP, exchange rate gains are reported as a component of revenue from
ordinary activities. Under US GAAP, exchange rate gains relating to operating
activities are classified within operating income (loss) whereas exchange rate
gains related to non-operating activities are classified as a component of
non-operating income (loss).

Under A-GAAP, interest income is reported as a component of revenue from
ordinary activities. Under US GAAP, interest income is reported as a component
of non-operating income (loss).

Under A-GAAP, borrowing costs are classified in income (loss) from ordinary
activities. Under US GAAP, borrowing costs are classified in non-operating
income (loss).

Under A-GAAP, the proceeds on sale of investments are reported as other revenue
from ordinary activities and the book value of investments sold is reported as a
separate component of income (loss) from ordinary activities. Under US GAAP,
only the net gain/(loss) on sale of investments is reported in non-operating
income (loss).

Under A-GAAP, the Company classifies costs paid to third parties under research
and development contracts as research and development expenditure. Other costs
directly attributable to research and development activities, such as
depreciation of plant and equipment, patent costs, legal costs, personnel costs,
among others, are classified in separate line items in the Consolidated
Statements of Financial Performance. Under US GAAP, all costs of research and
development activities are classified as research and development in the
Consolidated Statements of Financial Performance.




                                      F-40