Document:

EXHIBIT 4.11

                                                     Project No. BIF02806

                                             [LOGO] AusIndustry(TM)
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   Industry
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   Research and
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   Development
--------------------                    Biotechnology Innovation Fund

--------------------                    Grant Deed
   Board
--------------------                    Dated: 25 August 2003
                                        ========================================

BETWEEN

The Industry Research and
Development Board on behalf of
the Commonwealth of Australia

     - ABN 51 835 430 479 001

     - postal address                   Manager
                                        Biotechnology Innovation Fund Program
                                        AusIndustry
                                        GPO BOX 9839
                                        CANBERRA CITY ACT 2601

AND

The Grantee

                                        Prana Biotechnology Limited
     - ABN                              37080699065
     - ACN                              080 699 065
     - postal address                   P.O. Box 46
                                        ARMADALE VIC 3143
                                        Level 1
     - business address                 100 Dorcas Street
                                        South Melbourne VIC 3205

Biotechnology Innovation Fund Grant Deed                                  Page 1
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section

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                               Table of contents

Clause                                                                      Page

1      Interpretation                                                         3

2      Warranties                                                             5

3      Payment of Grant                                                       7

4      Conduct of Project                                                     8

5      Evaluation                                                            11

6      Commercialisation                                                     11

7      Other Financial Assistance                                            11

8      Acquittal of Grant                                                    12

9      Termination                                                           12

10     No Dealing With Grantee's rights                                      13

11     Acknowledgment and Public Statements                                  13

12     Regulatory and ethical approvals                                      13

13     Changes to the law or government policy                               14

14     Goods and Services tax                                                15

15     Notices                                                               16

16     General                                                               16

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The Schedule

Biotechnology Innovation Fund Grant Deed                                  Page 2
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section

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Operative provisions

1     Interpretation
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      1.1   Unless the contrary intention appears:

            Application means the application submitted by the Grantee in
            relation to the Project referred to in item 2 of the schedule;

            Biotechnology means biotechnology of a kind set out in a Guideline
            or Determination;

            Biotechnology Innovation Fund means the merit-based program designed
            to encourage Australian industry to commercialise promising
            biotechnology developed in Australia and to assist in attracting
            private sector investments in biotechnology;

            Board means the Industry, Research and Development Board established
            by section 6 of the Industry Research and Development Act 1986;

            Business Day means a day other than a Saturday, Sunday or Public
            Holiday in the Australian Capital Territory;

            Budget has the meaning given in clause 4.12, and Budgeted has a
            corresponding meaning;

            Commencement Date means the commencement date for the Project set
            out in item 3(a) of the schedule;

            Completion Date means the completion date for the Project set out in
            item 3(b) of the schedule;

            Control has the meaning given by section 50AA of the Corporations
            Act 2001;

            Deal With means:

            (a)   sell, transfer, novate, declare a trust over, grant or create
                  an Encumbrance or otherwise dispose of or procure or effect
                  the disposal of, any interest or right; or

            (b)   effect a change in the beneficial interest in or beneficial
                  unit holding under a trust which has an interest or right;

            Department means the Department of Industry Tourism and Resources or
            any successor;

            Determination means a determination of the Board under the
            Directions;

            Directions means the Biotechnology Innovation Fund Directions No. 1
            of 2002,

            Eligible Expenditure means expenditure determined by the
            Commonwealth to be expenditure on the Project that is:

Biotechnology Innovation Fund Grant Deed                                  Page 3
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Author: Biotechnology Innovation Fund Program Section

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            (a)   eligible expenditure under the Directions;

            (b)   incurred in the Project Period, and

            (c)   paid for by the Grantee no later than three months after the
                  Completion Date;

            Encumbrance means a security interest or any other legal or
            equitable interest or right which is either imposed by law or which
            is given to any person, over property or rights under a contract;

            Floating Charge has the meaning given by section 9 of the
            Corporations Act 2001;

            Financial Year means the 12 month period beginning 1 July of one
            year and ending 30 June of the following year.

            Gene Technology Regulator means the Gene Technology Regulator
            established by section 26 of the Gene Technology Act 2000;

            Grant means the amount set out in item 4 of the schedule;

            Grant Percentage means the percentage of Eligible Expenditure to be
            paid to the Grantee as the Grant, as set out in item 5 of the
            schedule;

            GST has the same meaning as in the A New Tax System (Goods and
            Services Tax) Act 1999;

            Guideline means a Guideline under the Directions;

            Input tax credit has the same meaning as in the A New Tax System
            (Goods and Services Tax) Act 1999;

            Insolvent means being an insolvent under administration or insolvent
            (each as defined in the Corporations Act 2001), or having a
            controller (as defined in the Corporations Act) appointed, or being
            in receivership, in receivership and management, in liquidation, in
            provisional liquidation, under administration, wound up, subject to
            any arrangement, assignment or composition, protected from creditors
            under any statute, dissolved (other than to carry out a
            reconstruction while solvent) or being otherwise unable to pay debts
            when they fall due or having something with the same or a similar
            effect happen under the laws of any jurisdiction.

            Intellectual Property means all statutory and other proprietary
            rights in respect of trade marks, patents, circuit layouts,
            copyrights, designs, moral rights, confidential information,
            expertise, knowledge, skills, techniques, methods, procedures, ideas
            and concepts, plant varieties and all other rights with respect to
            intellectual property as defined in Article 2 of the July 1967
            Convention Establishing the World Intellectual Property
            Organisation;

            National Health and Medical Research Council means the National
            Health and Medical Research Council established by section 6 of the
            National Health and Medical Research Council Act 1992;

Biotechnology Innovation Fund Grant Deed                                  Page 4
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
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            Performance Milestone means a performance milestone sat out in item
            8 of the schedule;

            Planned Outcomes means the planned outcomes set out in item 7 of the
            schedule;

            Program Funding means the funding made available by the Parliament
            of the Commonwealth of Australia for the Biotechnology Innovation
            Fund in any given Financial Year, being the funding specified in the
            Portfolio Budget Statement (as varied by any Portfolio Additional
            Estimates Statement) for that year.

            Project means the project described in items 1, 7 and 8 of the
            schedule;

            Project Intellectual Property means Intellectual Property created in
            the course of the Project including improvements, inventions and
            discoveries arising out of the conduct of the Project;

            Project Period, means the period beginning on the Commencement Date
            and ending on the Completion Date;

            Proof of Concept means work or activities, necessary to establish
            the commercial and technical viability of a process or product, of a
            kind set out in a Guideline or Determination;

            Quarter means the period 1 July to 30 September, 1 October to 31
            December, 1 January to 31 March or 1 April to 30 June in a
            Financial Year; and

            Retention Amount means the retention amount set out in item 6 of the
            schedule.

      1.2   Unless the contrary intention appears:

            (a)   a person includes a firm, a body corporate, an unincorporated
                  association or an authority;

            (b)   the singular includes the plural and vice versa; and

            (c)   a reference to a statute, ordinance, code or other law
                  includes regulations and other instruments made under it and
                  consolidations, amendments, re-enactments or replacements of
                  any of them.

      1.3   Headings are inserted for convenience of reference only and are not
            to be used in the interpretation of this deed.

2     Warranties
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      2.1   The Grantee warrants that as at the date of this deed and on each
            day during the term of this deed:

            (a)   all information that the Grantee provides to the Commonwealth,
                  including the Application, from time to time is true and
                  correct;

Biotechnology Innovation Fund Grant Deed                                  Page 5
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Author: Biotechnology Innovation Fund Program Section
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            (b)   the Grantee is registered for GST purposes pursuant to the A
                  New Tax System (Goods and Services Tax) Act 1999 with the
                  Australian Business Number set out in the front page of this
                  deed;

            (c)   the Project is for:

                  (i)   the commercialisation of Biotechnology; and

                  (ii)  the Proof of Concept stage of development;

            (d)   the Grantee does not have any interests or obligations that
                  conflict with its interests or obligations under this deed;

            (e)   the Grantee has and will have, at all times, the Intellectual
                  Property rights and technical information, including designs,
                  specifications, data, drawings, plans, reports, models,
                  prototypes and other things, necessary to carry out the
                  Project and to commercialise the Project's outcome;

            (f)   the Grantee is not aware of any circumstances which adversely
                  affect or might adversely affect the Grantee's ability to
                  fulfil its obligations under this deed; and

            (g)   when conducting research using genetic material from humans
                  (including human embryos, stem cells and all other human
                  organs, tissues and cells), animals or plants, and/or
                  undertaking projects involving experimentation in humans
                  (including human embryos, stem cells and all other human
                  organs, tissues and cells) or animals, the Grantee will ensure
                  that those activities:

                  (i)   will have received formal prior approval by a qualified
                        regulatory body(s) or committee(s) as complying with all
                        relevant ethics codes and guidelines adopted by the
                        National Health and Medical Research Council, the office
                        of the Gene Technology Regulator and all other relevant
                        regulatory agencies operating in Australia and any other
                        place in which the research will be conducted, that are
                        applicable during the Project Period; and,

                  (ii)  will comply with all relevant legal requirements of the
                        Commonwealth and any State or Territory of Australia,
                        and of any other place in which the research will be
                        conducted, that are applicable during the Project
                        Period.

      2.2   If the Grantee becomes aware of a breach of warranty, the Grantee
            must immediately notify the Commonwealth of that breach.

      2.3   The Commonwealth warrants that as at the date of this deed, and on
            each day during the term of this deed, the Department is registered
            for GST purposes pursuant to the A New Tax System (Goods and
            Services Tax) Act 1999 with the Australian Business Number set out
            in the front page of this deed.

Biotechnology Innovation Fund Grant Deed                                  Page 6
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Author: Biotechnology Innovation Fund Program Section
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3     Payment of Grant
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      3.1   The Commonwealth must make payments of the Grant to the Grantee in
            accordance with item 10 of the schedule subject to the Commonwealth
            having sufficient Program Funding available at the time a payment is
            due to be made to the Grantee, and the other terms of this deed.

      3.2   The Grantee must submit a payment request for each payment. The
            payment request must be in the form of the Report 1 - Payment
            Request Report, a subsequent payment request report or a progress
            report in accordance with item 10 of the schedule.

      3.3   A payment will be made by electronic transfer to the bank account
            nominated by the Grantee, within 30 days of receipt of the relevant
            report.

Amount of payments

      3.4   Subject to clause 3.7, each payment (except the second-last payment)
            will be for an amount determined by the Commonwealth using the
            formula:

                    Payment = Grant Percentage x (A + E) - P

            Where:

            A =  actual Eligible Expenditure incurred before the Quarter in
                 which the payment request is made

            E =  estimated Eligible Expenditure for the Quarter in which the
                 payment request is made

            P =  payments already made by the Commonwealth under this deed.

Second-last payment and Retention Amount

      3.5   Subject to clause 3.7, the second-last payment will be for an amount
            calculated in accordance with clause 3.4 less the Retention Amount.

      3.6   The Commonwealth will pay the Retention Amount within 30 days of the
            Commonwealth being satisfied that the Grantee has completed the
            Project, provided all reports and otherwise complied with this deed.

Application of payment formula

      3.7   The Commonwealth may in its absolute discretion determine the amount
            of a payment other than by applying the formula set out in clause
            3.4, if the amount so calculated would result in the Grantee
            receiving in total during a Financial Year more than the amount
            specified in item 4A of the schedule for that year.

Maximum Commonwealth liability

      3.8   The maximum amount the Commonwealth liable to pay to the Grantee
            under this deed:

Biotechnology Innovation Fund Grant Deed                                  Page 7
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      (a)   in any given Financial Year - is the amount specified in item 4A of
            the schedule for that year; and

      (b)   in respect of the Project - is the lesser of:

                  (i)   the Grant; or

                  (ii)  the Grant Percentage of total Eligible Expenditure
                        incurred by the Grantee on the Project.

Commonwealth rights

      3.9   Notwithstanding any other clause in this deed, the Commonwealth is
            not obliged to make a payment under clause 3.1:

            (a)   if, in the reasonable opinion of the Commonwealth:

                  (i)   the Grantee has not demonstrated satisfactory progress
                        and expenditure on the Project in accordance with the
                        deed; or

                  (ii)  the Grantee has not complied with all its obligations
                        under this deed; or

            (b)   if the Grantee becomes Insolvent; or

            (c)   after the Commonwealth has become entitled to terminate the
                  deed.

      3.10  In the last quarter of a Financial Year, the Commonwealth may defer
            a payment otherwise due in that quarter to the next Financial Year
            if, in the Commonwealth's opinion, insufficient Program Funding may
            be available to meet that commitment in the first mentioned
            Financial Year.

      3.11  The Commonwealth's determination as to whether expenditure on the
            Project is Eligible Expenditure is final and binding on the Grantee.

4     Conduct of Project
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The Grant to be applied only to Eligible Expenditure

      4.1   The Grantee must only use the Grant to pay for Eligible Expenditure.

Matching Funding

      4.2   The Grantee must contribute matching funding which, together with
            payments made by the Commonwealth under this deed, is sufficient to
            pay for all Eligible Expenditure. Matching funding must not include:

            (a)   funding obtained by the Grantee under a program administered
                  by the Board or the Department, except under:

                  (i)   the Innovation Investment Fund program administered by
                        the Board under directions given under sections 19 and
                        20 of the Industry Research and Development Act 1986;
                        or

Biotechnology Innovation Fund Grant Deed                                  Page 8
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                  (ii)  the Pooled Development Funds scheme established under
                        the Pooled Development Funds Act 1992;

            (b)   funding of a kind that a Guideline or a Determination states
                  is not to be regarded as matching funding; or

            (c)   non-financial (in-kind) assistance.

      4.3   If the Grantee is or may be unable to comply with clause 4.2 it must
            immediately notify the Commonwealth.

      4.4   If the Commonwealth considers in its absolute discretion that the
            Grantee is or may be unable to comply with clause 4.2, the
            Commonwealth may terminate this deed under clause 9.1.

Project performance

      4.5   The Grantee must conduct the Project in accordance with the schedule
            and otherwise in accordance with this deed and any applicable law of
            the Commonwealth or any State or Territory of Australia.

      4.6   If the Grantee does not or is unlikely to achieve a Performance
            Milestone by the due date set out in item 8 of the schedule the
            Grantee must immediately notify the Commonwealth.

      4.7   When notifying the Commonwealth under clause 4.6, the Grantee must
            specify:

            (a)   why the Performance Milestone was not or is unlikely to be
                  achieved by the due date;

            (b)   a proposal demonstrating how the Planned Outcomes of the
                  Project will be achieved;

            (c)   the planned date for achievement of the Performance Milestone;

            (d)   the expected effect the delay will have on Project; and

            (e)   changes to Grantee personnel, if any, having an impact on the
                  matters reported under paragraphs (a) to (d).

      4.8   If the Commonwealth considers in its absolute discretion that the
            failure by the Grantee to achieve a Performance Milestone may
            compromise the capacity of the Grantee to achieve the Planned
            Outcomes for the Project the Commonwealth may terminate this deed in
            accordance with clause 9.1.

Reporting

      4.9   The Grantee must give the Commonwealth reports, in form and content
            satisfactory to the Commonwealth, as set out in item 10 of the
            schedule.

      4.10  The Commonwealth may require the Grantee to have a report audited by
            a member of the Institute of Chartered Accountants, a member of CPA
            Australia or a Public Practice Certified Member of the National
            Institute of

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            Accountants, not being an employee, shareholder, director or other
            officeholder of the Grantee.

      4.11  If the form or content of a report is not satisfactory to the
            Commonwealth, the Commonwealth may by notice to the Grantee require
            the Grantee to submit a revised report satisfactory to the
            Commonwealth within 30 days of receipt of the notice.

Budget

      4.12  The parties acknowledge and agree that the budget of total planned
            Eligible Expenditure for the Project (by Financial Year) ("Budget")
            is set out in item 9 of the schedule. The Commonwealth will use this
            Budget for planning and administration purposes related to the
            Biotechnology Innovation Fund.

Variations

      4.13  The Grantee may change its work methods and incur Eligible
            Expenditure as it considers reasonably necesssary to undertake and
            complete the Project provided it does not materially change the
            Project.

      4.14  If the Grantee wishes to alter a Performance Milestone or the
            Budget, otherwise materially change the Project, or there is any
            breach or likely breach of this deed, the Grantee must immediately
            request the Commonwealth's consent to a variation of this deed.

      4.15  A request under clause 4.14 must include a proposal demonstrating
            how the Planned Outcomes of the Project will be achieved.

Records to be kept

      4.16  The Grantee must keep to the Commonwealth's satisfaction all records
            (including original receipts and invoices) relating to the conduct
            and management of the Project and commercialisation of its outcomes,
            necessary to provide a complete, detailed record and explanation of:

            (a)   expenditure by the Grantee on the Project;

            (b)   the conduct of the Project and its commercialisation;

            (c)   any amounts of GST paid by the Grantee in respect of any
                  supply made to the Commonwealth under this deed; and

            (d)   any other records relating to the Project which are required
                  by the Commonwealth such as the regulatory and ethical
                  approvals addressed in clause 12.

      4.17  Those records must be retained by the Grantee during the Project and
            for 5 years after the Completion Date.

Inspection and audit

      4.18  The Commonwealth or its auditor may at reasonable times and on
            reasonable notice enter the Grantee's premises and inspect the
            records kept by the

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            Grantee, and the progress of the Project, to review the Grantee's
            compliance with this deed.

      4.19  The Grantee must give the Commonwealth and its auditor all necessary
            facilities and assistance to enable them to conduct a review under
            clause 4.18.

      4.20  The Commonwealth or its auditor may take copies of any records
            (books, documents, invoices, receipts and any other papers) that the
            Commonwealth or the auditor considers relevant to the Project.

Affirmative Action

      4.21  The Grantee must comply with its obligations, if any, under the
            Equal Opportunity for Women in the Workplace Act 1999.

5     Evaluation
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      5.1   The Grantee must cooperate in any evaluation of the Biotechnology
            Innovation Fund by the Commonwealth.

      5.2   The Grantee must, if requested by the Commonwealth, provide
            information and completed survey forms relating to the Project and
            the Biotechnology Innovation Fund during the Project and for 5 years
            after the Completion Date.

      5.3   The Grantee must comply with a request under clause 5.2 within 28
            days of receiving the request.

6     Commercialisation
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      6.1   The Grantee must use its best endeavours to exploit the results of
            the Project on normal commercial terms and otherwise in a manner
            that will be for the benefit of the Australian economy within a
            reasonable time of completion of the Project.

      6.2   If, at any time, the Commonwealth is of the opinion that the results
            of the Project are not being exploited on normal commercial terms or
            otherwise in a manner that will be for the benefit of the Australian
            economy, the Commonwealth may by notice to the Grantee require the
            Grantee to repay some or all of the Grant within 28 days of receipt
            of the notice.

      6.3   For the purposes of this clause 6, result means a result that is
            capable of being exploited.

7     Other Financial Assistance
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      7.1   The Grantee must immediately give the Commonwealth details of any
            financial assistance the Project receives from another Commonwealth,
            State or Territory government source (other than matching funding
            described in the Application).

      7.2   After taking into account that other financial assistance, the
            Commonwealth may reduce the Grant by an amount if the Commonwealth
            considers that the

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            Project can proceed (or could have proceeded) satisfactorily without
            that amount.

8     Acquittal of Grant
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      8.1   If at any time the total amount paid to the Grantee under this deed
            exceeds:

            (a)   the Grant; or

            (b)   the Grant Percentage of total Eligible Expenditure incurred to
                  date and proposed to be incurred by the Grantee by the end of
                  the current Quarter,

            the Grantee must immediately notify the Commonwealth and repay the
            amount of the excess to the Commonwealth.

      8.2   If the Grantee expends any amount of the Grant other than in
            accordance with this deed:

            (a)   the Grantee must immediately notify the Commonwealth and repay
                  that amount to the Commonwealth; and

            (b)   the Commonwealth may by notice require the Grantee to repay
                  all or some of the Grant within 28 days of the notice.

9     Termination
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      9.1   The Commonwealth may terminate this deed by notice to the Grantee
            if:

            (a)   the Grantee is in breach of this deed, that breach is capable
                  of being remedied and the Grantee fails to remedy that breach
                  within 21 days of receipt of a notice from the Commonwealth
                  requiring it to do so (or within any longer period specified
                  in the notice);

            (b)   the Grantee is in breach of a warranty set out in this deed;

            (c)   the Grantee is otherwise in breach of this deed; or

            (d)   the Grantee is unable, or is about to become unable, to pay
                  all of its debts as and when they become due, or goes, or is
                  about to go, into administration or receivership.

      9.2   On termination of this deed under clause 9.1

            (a)   the Commonwealth's obligation to pay any amount of the Grant
                  that is unpaid as at the date of termination ceases;

            (b)   the Grantee must give the Commonwealth reports as required by
                  the Commonwealth as at the date of termination; and

            (c)   the Commonwealth may by notice to the Grantee require the
                  Grantee to repay some or all of the Grant within 28 days of
                  receipt by the Grantee of the notice.

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      9.3   The Commonwealth may not take action under clause 9.1 for a breach
            of this deed due to a cause or causes beyond the Grantee's
            reasonable control which does not continue for more than 6 weeks in
            the aggregate.

      9.4   This deed may be terminated at any time by the written agreement of
            the parties.

10    No Dealing With Grantee's rights
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      10.1  Unless expressly authorised to do so under this deed, the Grantee
            must not Deal With its rights under this deed or its interest in the
            Project Intellectual Property during the course of the Project
            without the prior written consent of the Commonwealth.

      10.2  A change in Control of the Grantee is taken to be Dealing With the
            Grantee's rights under this deed.

      10.3  If the Grantee Deals With its rights under this deed or its interest
            in the Project Intellectual Property during the course of the
            Project without the prior written consent of the Commonwealth and
            the Commonwealth reasonably considers that this event adversely
            affects or may adversely affect the objectives from time to time of
            the Biotechnology Innovation Fund, the Commonwealth may terminate
            this deed under clause 9.1.

      10.4  The Commonwealth may impose conditions (a breach of which is a
            breach of this deed) in giving its consent under clause 10.1,
            including requiring the Grantee and any other person concerned in a
            transaction referred to in clause 10.1 to execute all documentation
            as required by the Commonwealth.

      10.5  The giving of a Floating Charge over the assets and undertaking of
            the Grantee is not to be taken to be a breach of clause 10.1.

11    Acknowledgment and Public Statements
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      11.1  The Grantee must acknowledge the Grant and the Biotechnology
            Innovation Fund in any public statements about the Project until the
            Completion Date.

      11.2  The Commonwealth may publicise the awarding of the Grant at any time
            after it is awarded.

      11.3  The Commonwealth may include in media releases and general
            announcements about the Grant and in the Board's annual report:

            (a)   the name of the Grantee;

            (b)   the amount of the Grant; and

            (c)   the title and a brief description of the Project.

12    Regulation and ethical approvals
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      12.1  The Grantee must obtain and maintain any necessary legal or ethical
            approvals in relation to the conduct of the Project.

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      12.2  The Commonwealth may give a notice to the Grantee to obtain or
            restore an approval referred to in clause 12.1 within 28 days, or a
            further period allowed by the Commonwealth, of receipt of the
            notice. If the Grantee does not comply with the notice, the
            Commonwealth may terminate this deed under clause 9.1(c).

      12.3  The Grantee expressly acknowledges that the Commonwealth, its
            employees and agents may make inquiries of the National Health and
            Medical Research Council, the Gene Technology Regulator or any other
            relevant regulatory agency within the scope of the warranties in
            paragraph 2.l(g) of this deed in connection with whether or not the
            Grantee is complying with those warranties or in connection with any
            other matter. The Grantee acknowledges that the Commonwealth may act
            in reliance on any documents or information obtained as a result of
            those inquiries. The Grantee expressly consents to the Commonwealth,
            its employees and agents making those inquiries and acting in
            reliance on any information resulting from those inquiries.

      12.4  The Grantee must assist with any inquiry referred to in clause 12.3,
            including by executing any authority or other document, as
            reasonably required by the Commonwealth.

13    Changes to the law or government policy
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      13.1  The Grantee acknowledges that either or both of relevant laws and
            government policies can be amended or changed and that law and/or
            government policy may change during the life of this deed in a way
            that is inconsistent with the Commonwealth continuing support for
            the Project.

      13.2  If law and/or government policy changes during the life of this deed
            in a way that is inconsistent with the Commonwealth continuing
            support for the Project the Commonwealth may suspend further
            payments by notice to the Grantee.

      13.3  If the Commonwealth gives the Grantee a notice under clause
            13.2, the Grantee may propose a variation to the Project that is
            consistent with law and government policy for the Commonwealth's
            consideration.

      13.4  If the Grantee does not propose a variation to the Project, or the
            Commonwealth and the Grantee are not able to agree on a variation,
            within 28 days of receipt of the notice under clause 13.2, or any
            further period allowed by the Commonwealth, the Commonwealth may
            terminate this deed by notice to the Grantee.

      13.5  Upon receipt of a notice of termination under clause 13.4, the
            Grantee must take all available steps to minimise loss resulting
            from the termination.

      13.6  Where there has been a termination under clause 13.4, the
            Commonwealth will be liable only for payment of:

            (a)   an amount which, in addition to any amounts already paid to
                  the Grantee under this deed, is equal to the Grant Percentage
                  of Eligible Expenditure incurred by the Grantee before
                  termination; and

            (b)   reasonable costs incurred by the Grantee directly attributable
                  to the termination.

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      13.7  The Grantee is not entitled to payment under clause 13.6 for:

            (a)   compensation for loss of prospective profits, loss of
                  opportunity or any other indirect or consequential loss; or

            (b)   an amount which would, in addition to any amounts already paid
                  to the Grantee under this deed, together exceed the Grant.

      13.8  On termination under clause 13.4:

            (a)   the Commonwealth's obligation to pay any amount of the Grant
                  that is unpaid as at the date of termination ceases; and

            (b)   the Grantee must give the Commonwealth reports as required by
                  the Commonwealth as at the date of termination.

      13.9  If as a result of the termination under clause 13.4 the Grantee is
            wound up, the Commonwealth may, in its absolute discretion, pay the
            Grantee's reasonable costs of winding up.

14    Goods and Services Tax
--------------------------------------------------------------------------------

      14.1  Unless otherwise indicated, all consideration for any supply under
            this deed is exclusive of any GST imposed in relation to the supply.

      14.2  If GST is imposed on any supply made by the Grantee to the
            Commonwealth under this deed, the Commonwealth must pay the amount
            imposed to the Grantee in addition to the consideration required
            under this deed.

      14.3  If for any reason the Commonwealth pays to the Grantee an amount
            under clause 14.2 which is more that the GST imposed on the
            supply, the Grantee must repay the excess to the Commonwealth on
            demand, or the Commonwealth may set-off the excess against any other
            amounts due to the Grantee.

      14.4  The Grantee must comply with Part VB of the Trade Practices Act 1974
            in relation to any supply made to the Commonwealth under this deed.

      14.5  The Commonwealth is not liable to reimburse the Grantee for any
            amount in relation to which the Grantee can claim an input tax
            credit.

      14.6  If GST is imposed on any supply made by the Grantee to the
            Commonwealth under this deed in return for all or any part of the
            Grant, the Department may issue a 'recipient created tax invoice' to
            the Grantee for the supply in question and the Grantee must not
            issue a tax invoice for that supply.

      14.7  If for any reason the Grantee or the Department ceases to be
            registered for GST purposes, becomes aware of any reason why its
            registration may be cancelled, or ceases to satisfy any of the
            requirements of public ruling GSTR 2000/10, it must immediately
            notify the other party.

      14.8  If the Grantee is of the opinion that it is a 'government related
            entity' and that the Grant is 'specifically covered by an
            appropriation under an Australian law' for the purposes of section
            9-15(3)(c) of the A New Tax System (Goods

Biotechnology Innovation Fund Grant Deed                                 Page 15
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
<PAGE>

            and Services Tax) Act 1999, the Grantee must immediately notify the
            Department and provide materials supporting that opinion.

15    Notices
--------------------------------------------------------------------------------

      15.1  Any notice, request, approval, consent or other communication to be
            given under this deed must be in writing and addressed and signed as
            the case may be, as specified in item 11 of the schedule.

      15.2  A notice, request, approval, consent or other communication must be
            delivered by hand, sent by prepaid post, transmitted electronically
            or transmitted by facsimile.

      15.3  A notice, request approval, consent or other communication will be
            taken to be received:

            (a)   if delivered by hand, upon delivery;

            (b)   if sent by pre-paid ordinary post within Australia, upon the
                  expiration of 2 Business Days after the date on which it was
                  sent; and

            (c)   if transmitted electronically or by facsimile, upon receipt by
                  the sender of an electronic or facsimile acknowledgment that
                  the communication has been properly transmitted to the
                  recipient.

16    General
--------------------------------------------------------------------------------

      16.1  A provision of, or a right created under, this deed may not be:

            (a)   waived except in writing signed by the party granting the
                  waiver; or

            (b)   varied except in writing signed by the parties.

      16.2  This deed and the transactions contemplated by this deed are
            governed by the laws in force the Australian Capital Territory.

      16.3  Each party irrevocably and unconditionally submits to the
            non-exclusive jurisdiction of the courts of the Australian Capital
            Territory and courts of appeal from them for determining any dispute
            concerning this deed or the transactions contemplated by this deed.

      16.4  Each party waives any right it has to object to an action being
            brought in those courts, including claiming that the action has
            been brought in an in inconvenient forum or that those courts do not
            have jurisdiction.

      16.5  Obligations under this deed, unless otherwise stated, terminate 5
            years after the Completion Date.

      16.6  The Grantee must comply with any Special Conditions set out in item
            12 of the schedule. If the Special Conditions are inconsistent with
            the rest of this deed, the Special Conditions will prevail to the
            extent of the inconsistency.

Biotechnology Innovation Fund Grant Deed                                 Page 16
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
<PAGE>

EXECUTED as a deed

Date of deed: 25 August 2003
                                           )
Commonwealth of Australia                  )
                                           )
SIGNED for and on behalf of the            )
COMMONWEALTH OF AUSTRALIA by               )
                                           )
                                           )
         PAM O'BRIEN                       )           /s/  Pam O'Brien
-----------------------------------        )    --------------------------------
a delegate of the INDUSTRY RESEARCH        )
AND DEVELOPMENT BOARD in the               )
presence of:                               )
                                           )
                                           )
   /s/ Craig Hildebrand                    )
-----------------------------------        )
Signature of witness                       )

       CRAIG HILDEBRAND
-----------------------------------
Name of witness (block letters)

Biotechnology Innovation Fund Grant Deed                                 Page 17
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
<PAGE>

Grantee
The Grantee accepts the terms and
conditions of this deed.                                  [THE COMMON
                                                         SEAL OF PRANA
THE COMMON SEAL of                                 )     BIOTECHNOLOGY
                                                   )        LTD ACN
Prana Biotechnology Limited                        )      080 699 065]
                                                   )
is duly affixed by the authority of its directors  )
in the presence of                                 )     /s/ Richard Revelins
                                                   ) ---------------------------
                                                   ) Signature of Director/
/s/ Geoffrey Kempler                               ) Secretary
---------------------------------                  )
Signature of Director                              )
                                                   )     RICHARD REVELINS
                                                   ) ---------------------------
GEOFFREY KEMPLER                                   ) Name of Director/Secretary
---------------------------------                  ) (block letters)
Name of Director (block letters)                   )

Biotechnology Innovation Fund Grant Deed                                 Page 18
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
<PAGE>

The Schedule
--------------------------------------------------------------------------------

1   Project Title (and reference number)  BIF02806

                                          Immunotherapy for Alzheimer's disease.

2   Application made 12 February 2003

3   Project Period

    (a) Commencement Date:                1 August 2003

    (b) Completion Date:                  31 January 2005

4   Grant                                 A maximum amount of $227,252

4A  Maximum annual payments of Grant

                -------------------------------------
                Financial Year             Amount ($)

                -------------------------------------
                2003/04                    136,316

                -------------------------------------
                2004/05                     90,936

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

5   Grant Percentage                                 50%

6   Retention Amount (clause 3.5)                    $11,363

7   Project Description and Planned Outcomes (clause 4)

    The aim of the project is to establish that the dityrosine cross-link in
Abeta can be used as a specific target for immunotherapy in Alzheimer's
Disease. The project's activities involve:

1.  The development of methods for identification and preparation of specific
    antigens suitable for eliciting an immune response specific for oxidatively
    modified toxic species of Abeta.

2.  Demonstration that 'active' immunisation with a dityrosine containing
    fragment of Abeta in an Alzheimer's Disease animal model can reduce plaque
    burden and Abeta accumulation.

3.  Demonstration that monoclonal antibodies against the 'specific antigen' have
    passive immunity in mice and may be used as diagnostic reagents.

Biotechnology Innovation Fund Grant Deed                                 Page 19
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
<PAGE>

8   Performancc Milestones and Planned Achievement Dates (clause 4)

    ----------------------------------------------------------------------------
       Major Milestone                                      Expected Achievement
                                                            Date
    ----------------------------------------------------------------------------
    1  Six suitable Abeta fragments identified.             29 February 2004
    ----------------------------------------------------------------------------
    2  Candidate Abeta fragments ligated with the           31 July 2004
       T-cell epitope and adjuvant.
    ----------------------------------------------------------------------------
    3  Antibodies generated recognising DT-Abeta in         30 November 2004
       vitro and in PM tissue.
    ----------------------------------------------------------------------------
    4  Immune response generated in transgenic              30 November 2004
       mice.
    ----------------------------------------------------------------------------
    5  Abeta deposition prevented or reduced in             31 December 2004
       transgenic mice.
    ----------------------------------------------------------------------------
    6  Generation of monoclonal antibodies which            31 January 2005
       recognise the specific antigen.
    ----------------------------------------------------------------------------
    7  Attenuation of amyloid pathalogy in                  31 January 2005
       immunised transgenic mice.
    ----------------------------------------------------------------------------

9   Budget of Eligible Expenditure by Financial Year

                      -------------------------------------------------
                      Financial Year             Eligible Expenditure $

                      -------------------------------------------------
                      2003/04                    271,632

                      -------------------------------------------------
                      2004/05                    181,872

                      -------------------------------------------------
                      TOTAL                      454,504

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

10  Payments and Reports

--------------------------------------------------------------------------------
Report or Payment          Due                Reporting Period
--------------------------------------------------------------------------------
Progress Report            28 October 2003    1 August 2003 to 30 September 2003
--------------------------------------------------------------------------------
Payment request            28 January 2004    1 October 2003 to 31 December 2003
--------------------------------------------------------------------------------
Progress report            28 April 2004      1 October 2003 to 31 March 2004
--------------------------------------------------------------------------------
Payment Request            28 July 2004       1 April 2004 to 30 June 2004
--------------------------------------------------------------------------------
Progress Report            28 October 2004    1 April 2004 to 30 September 2004
--------------------------------------------------------------------------------
Payment Request            28 January 2005    1 October 2004 to 31 December 2004
--------------------------------------------------------------------------------
Find Report and Audited    1 April 2005       1 August 2003 to 31 January 2005
Financial Report
--------------------------------------------------------------------------------

*     in form and content satisfactory to the Commonwealth

Biotechnology Innovation Fund Grant Deed                                 Page 20
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
<PAGE>

What payment requests and reports must contain

1.    Report 1 - Payment Request Report must include:

      (a)   the total of actual Eligible Expenditure incurred before the Quarter
            in which the initial payment request is made;

      (b)   an estimate of Eligible Expenditure expected to be incurred in the
            Quarter in which the initial payment request is made;

      (c)   a declaration by the Grantee that it is not aware of any reason the
            Commonwealth would be entitled not to make the next payment; and

      (d)   a declaration whether or not the Grantee has incurred, or is likely
            to incur, a total amount of Eligible Expenditure during the current
            financia1 year that is less than 90% or more than 110% of the amount
            in the Budget for that financial year.

2.    Subsequent Payment request reports must include:

      (a)   the total of actual Eligible Expenditure incurred from the
            Commencement Date until the end of the last completed Quarter;

      (b)   the total actual Eligible Expenditure incurred during the last
            completed Quarter;

      (c)   an estimate of Eligible Expenditure expected to be incurred in the
            Quarter in which the payment request report is submitted;

      (d)   a declaration by the Grantee that it is not aware of any reason the
            Commonwealth would be entitled not to make the next payment; and

      (e)   a declaration whether or not the Grantee has incurred, or is likely
            to incur, a total amount of Eligible Expenditure during the current
            financial year that is less than 90% or more than 110% of the amount
            in the Budget for that financial year.

3.    Project Progress Reports must include:

      (a)   textual commentary on progress to date, and progress against
            Performance Milestones;

      (b)   a financial acquittal of expenditure of Grant payments for the last
            two completed Quarters; and

      (c)   an estimate of Eligible Expenditure expected to be incurred in the
            Quarter in which the project progress request report is submitted;

      (d)   a declaration by the Grantee that it is not aware of any reason the
            Commonwealth would be entitled not to make the next payment; and

      (e)   a declaration whether or not the Grantee has incurred, or is likely
            to incur, a total amount of Eligible Expenditure during the current
            financial year that is less than 90% or more than 110% of the amount
            in the Budget for that financial year.

Biotechnology Innovation Fund Grant Deed                                 Page 21
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program Section
<PAGE>

4.    The Final and Audited Financial Report must include:

      (a)   a brief report on the project as a whole and progress made towards
            the Planned Outcomes (eg, milestones achieved, what progress was
            made towards Proof of Concept and what commercialisation avenues
            seem to exist at the end of the project);

      (b)   an audited financial statement that acquits all expenditure of Grant
            payments.

Reports must conform with the requirements in the Project Reporting Guide
supplied to the Grantee by the Commonwealth, as varied from time to time by the
Commonwealth and notified to the Grantee.

Unless the Grantee is otherwise notified by the Commonwealth, the Grantee must
give the Commonwealth post-project reports 1, 3 and 5 years after the Completion
Date, in the format supplied by the Commonwealth at those times.

11    Notices (clause 15)

Notices must be addressed as follows:

11.1  if given to the Commonwealth, addressed and forwarded to the State
Manager, AusIndustry Victoria, Department of Industry, Tourism and Resources for
the attention of an AusIndustry Customer Service Manager at the following
address:

Address: Level 9, 161 Collins Street, Melbourne 3000
Facsimile No: 03 9268 7599
Email address: aivic@industry.gov.au
or as otherwise notified in writing by an AusIndustry Customer Service Manager;
and

11.2  if given by the Commonwealth, signed by a member of staff assisting the
Industry Research and Development Board and forwarded to the Grantee at the
following address:

Mr P Hains
Financial Controlled/Accountant
Prana Biotechnology Limited
PO Box 46
Armadale VIC 3135

or as otherwise notified in writing by the Grantee.

12    Special Conditions

Nil.

Biotechnology Innovation Fund Grant Deed                                 Page 22
Version Number 3: Release Date 25 October 2002
Author: Biotechnology Innovation Fund Program SectionExhibit 4.12

                             [LOGO] AusIndustry(TM)

                               R&D Start Program
                                 Grant Agreement

                              Particular Conditions
--------------------------------------------------------------------------------
Parties
--------------------------------------------------------------------------------

Commonwealth of Australia acting
through the Industry Research and
Development Board

ABN 51 835 430 479 001
(Department of Industry, Tourism and
Resources)

Postal address                     Department of Industry, Tourism and Resources
                                   GPO Box 85A
                                   MELBOURNE VIC 3001

--------------------------------------------------------------------------------
The Grantee

                                   Prana Biotechnology Limited
       - ABN                       37080699065
       - ACN                       080 699 065
       - postal address            Suite 2
                                   1233 High street
                                   ARMADALE VIC 3143
       - business address          Level 1
                                   100 Dorcas Street
                                   South Melbourne VIC 3205

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

R&D Start Grant Agreement
Particular Conditions                   1                SME Agreement Version 7
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management

<PAGE>

Operative provisions

1.    This Grant is made to the Grantee in respect of the Project by the
      Industry Research and Development Board on behalf of the Commonwealth to
      the Grantee under the R&D Start Program.

2.    The Grant is made pursuant to the Industry Research and Development Act
      1986 and the relevant Ministerial Directions issued under sections 19 and
      20 of that Act.

3.    The Grant is made on the terms and conditions of the Grant Agreement,
      which comprises the General Conditions (version 7.2) and the Particular
      Conditions (including the schedule).

4.    The Grantee acknowledges that it has received and read a copy of the
      General Conditions (version 7-2), and agrees that the terms and conditions
      of the General Conditions form part of the Grant Agreement.

5.    Terms defined in the General Conditions (version 7.2) have the same
      meaning in the Particular Conditions.

6.    If there is an inconsistency between the Particular Conditions and the
      General Conditions (version 7.2), the Particular Conditions prevail to the
      extent of the inconsistency.

R&D Start Grant Agreement
Particular Conditions                   2                SME Agreement Version 7
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management
<PAGE>

--------------------------------------------------------------------------------
Acceptance of terms
--------------------------------------------------------------------------------

EXECUTED as a deed                       )
                                         )
Date of deed:                            )
                                         )
Ensure the applicant does not date the   )
Deed, this is done by the                )
Commonwealth                             )
Commonwealth of Australia                )
                                         )
SIGNED for and on behalf of the          )
COMMONWEALTH OF AUSTRALIA by             )
                                         )
a delegate of the INDUSTRY RESEARCH      )
AND DEVELOPMENT BOARD in the             )
presence of:                             )
                                         )
-------------------------------------    )
Signature of witness                     )
                                         )                   [SEAL]
-------------------------------------    )
Name of witness (block letters)          )    ----------------------------------

This signature block is for customers that have a Common Seal. Please delete if
not necessary

Grantee

The terms and conditions pursuant to which the Grant is made are hereby accepted
by the Grantee.

                                         )
THE COMMON SEAL of                       )
Prana Biotechnology Limited              )
is affixed in the presence of:           )
                                         )
                                         )
/s/ Geoffrey Kempler                     )     /s/ George Mihaly
-------------------------------------    )     ---------------------------------
Signature of director                    )     Signature of director/secretary
                                         )
                                         )
GEOFFREY KEMPLER                         )     GEORGE MIHALY
-------------------------------------    )     ---------------------------------
Name of director (block letters)         )     Name of director/secretary (block
                                         )     letters)
                                         )
                                         )

R&D Start Grant Agreement
Particular Conditions                   3                SME Agreement Version 7
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management
<PAGE>

The Schedule
--------------------------------------------------------------------------------

1     Project Title                      MPAC therapies for Alzheimer's disease.

2     Project Reference                  Number GRA02960

3     Project Duration

      (a)   Commencement Date:           1 September 2003

      (b)   Completion Date:             31 August 2005

4     Grant                              A maximum amount of $1,359,810

5     Grant Percentage of Eligible
      Expenditure                        50%

6     Interest Rates 5.65% per annum

7     Project Planned Eligible Expenditure by Financial Year

      --------------------------------------------------------------------------
      Head of            Estimated Expenditure $                   Total $
      Expenditure

      --------------------------------------------------------------------------
                         2002/03   2003/04   2004/05     2005/06

      --------------------------------------------------------------------------
      R&D Salary         NIL       32,000    39,936      6,912     78,848
      Expenditure

      --------------------------------------------------------------------------
      Contract           NIL       813,605   1,401,760   289,256   2,504,621
      Expenditure

      --------------------------------------------------------------------------
      Plant              NIL       NIL       NIL         NIL       NIL
      Expenditure

      --------------------------------------------------------------------------
      Prototype          NIL       NIL       NIL         NLL       NIL
      Expenditure

      --------------------------------------------------------------------------
      Other              NIL       51,625    76,943      7,578     136,151
      Expenditure

      --------------------------------------------------------------------------
      Project Eligible   NIL       897,230   1,518,644   303,746   2,719,620
      Expenditure

      --------------------------------------------------------------------------
      Annual Cap         NIL       448,615   759,322     151,873   1,359,810
      Amount

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

8     Initial Payment                   $177,939

R&D Start Grant Agreement
Particular Conditions                   4
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management

<PAGE>

9     Project Description and Planned Outcomes

To progress the lead MPAC compound PBT-2, developed in R&D Start Project
GRA01809, through pre clinical and clinical phase 1 trials for the Alzheimer's
Disease.

10    Performance Milestones and Planned Achievement Dates

      --------------------------------------------------------------------------
        Major Milestone                                     Expected Achievement
                                                            Date
      --------------------------------------------------------------------------
      1 Completion of preclinical studies of lead MPAC for  30 September 2004
        Alzheimer's Disease.
      --------------------------------------------------------------------------
      2 Completion of Phase 1 clinical studies of MPAC's    31 August 2005
        for Alzheimer's Disease.
      --------------------------------------------------------------------------

11   Retention Amount                                       $67,991

12    Reports

<TABLE>
<CAPTION>
      -------------------------------------------------------------------------------------
      Review Type   Due Date              Report Period                             Audit
                                                                                    Report
                                                                                    Y/N
      -------------------------------------------------------------------------------------
<S>                 <C>                   <C>                                       <C>
      Progress      28 January 2004       28 November 2003 to 31 December 2003
      -------------------------------------------------------------------------------------
      Progress      28 April 2004         1 January 2004 to 31 March 2004
      -------------------------------------------------------------------------------------
      Progress      28 July 2004          1 April 2004 to 30 June 2004
      -------------------------------------------------------------------------------------
      Progress      28 October 2004       1 July 2004 to 30 September 2004           Y
      -------------------------------------------------------------------------------------
      Progress      28 January 2005       1 October 2004 to 31 December 2004
      -------------------------------------------------------------------------------------
      Progress      28 April 2005         1 January 2005 to 31 March 2005
      -------------------------------------------------------------------------------------
      Progress      28 July 2005          1 April 2005 to 30 June 2005
      -------------------------------------------------------------------------------------
      Final         28 September 2005     1 July 2005 to 31 August 2005              Y
      -------------------------------------------------------------------------------------
</TABLE>

Reports must conform with the requirements in the Project Reporting Guide
supplied to the Grantee by the Commonwealth, as varied from time to time by the
Commonwealth and notified to the Grantee.

Unless the. Grantee is otherwise notified by the Commonwealth, commercialisation
reports will be required 1, 3 and 5 years after completion of the Project, in
the format supplied by the Commonwealth at those times.

13    Notices

Notices must be addressed as follows:

   a) if given to the Commonwealth, addressed and forwarded to the Director,
      AusIndustry State Office, Department of Industry, Tourism and Resources
      for the attention of an AusIndustry Customer Service Manager at the
      following address:

R&D Start Grant Agreement
Particular Conditions                   5                SME Agreement Version 7
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management
<PAGE>

               Address:      GPO Box 85A
                             Melbourne 3001 VICTORIA
                             Facsimile No: 03 9268 7599

or as otherwise notified in writing by an AusIndustry Customer Service Manager;
and

   b) if given by the Commonwealth, signed by an authorised delegate of the
      Industry Research and Development Board and forwarded to the Grantee at
      the following address:

      Prana Biotechnology Limited
      Mr R Murdoch
      Chief Operating Officer
      Level 1, 100 Dorcas Street
      South Melbourne VIC 3205

or as otherwise notified in writing by the Grantee.

14    Special Conditions

1. Prana Biotechnology providing satisfactory documentary evidence of its
ability to meet its share of project costs beyond June 2004

2. Prana Biotechnology Limited demonstrating the successful completion of
preclinical evaluation studies in Alzheimer's Disease as noted in major
activities 1 and 2.

R&D Start Grant Agreement
Particular Conditions                   6                SME Agreement Version 7
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management

<PAGE>

                 NATIONAL BENEFIT INDICATORS - COMMERCIALISATION

The Industry Research and Development (IR&D) Board understands the increasing
global nature of business and the need for innovative companies to respond
flexibly to market needs. For example, while the IR&D Board is keen to support
projects which involve manufacturing or production in Australia, it accepts that
there will be instances where Australian manufacture could limit the
commercialisation prospects of intellectual property developed with its grant
funding. This does dot remove the necessity for the commercialisation of project
outcomes to provide national benefits,

Set out below are the indicators by which the IR&D Board will assess the level
of national benefit contribution to Australia and the Australian economy from
the commercialisation of R&D Start projects where commercialisation will not
take place in Australia:

o     the commercialisation plan includes Australia being maintained as the home
      base far future R&D, manufacture or product development;

o     the ongoing development of the commercial outcomes, (product, process or
      service), arising from R&D activities involves interactions with other
      firms and research institutions (both domestic and international);

o     the commercialisation of the products, processes or services arising from
      R&D activities result in an increase in the number of employees in the
      company's operations based in Austrilia;

o     as a result of the commercialisation, Australian residents receive
      commercial compensation through royalties, licence fees, equity, dividends
      or outright sale; and

o     production overseas could be considered reasonable as:

      >     local production is demonstrated to be uneconomic in terms of cost
            structure; and/or

      >     the production or commercialisation requires close physical
            interaction with overseas companies, customers, suppliers and
            competitors.

Where a company is proposing to conduct exploitation overseas due to economic
viability in terms of cost structure, the Board will consider:

o     the level of commitment to retaining or enhancing the companies R&D
      facilities in Australia;

o     the degree of globalisation of the relevant industry sector;

o     the relative input costs to production as identified by the company;

o     the relative transport costs as identified by the company;

o     the relative costs of skilled labour as identified by the company; and

o     legal barriers to entry; or

o     any other factors the Board considers relevant,

Where the company is proposing to conduct exploitation overseas due to close
proximity to customers, suppliers and competitors, the Board will consider:

R&D Start Grant Agreement
Particular Conditions                   7                SME Agreement Version 7
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management

<PAGE>

o     the level of commitment to retaining or enhancing the companies R&D
      facilities in Australia;

o     the mechanisms established to disseminate knowledge and market
      intelligence from overseas to the companies operations based in Australia;

o     the industry norms in terms of proximity;

o     the level of competition in the industry sector and the need to innovate
      quickly;

o     the nature of the products' inputs which require close contact eg
      perishables, knowledge, etc; and

o     any other factors the Board considers relevant.

R&D Start Grant Agreement
Particular Conditions                   8                SME Agreement Version 7
                    Version 7.2 - Release Date December 2002
                      Author: R&D Start Program Management

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