UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

o		REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		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                     

Novogen Limited

ACN 063 259 754

(Exact name of Registrant as specified in its charter)

(Translation of Registrant’s name into English)

(Jurisdiction of incorporation or organization)

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

*

Not for trading, but only in connection with the registration of American Depositary Shares.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

The number of outstanding Ordinary Shares of the issuer as at June 30, 2006 was 97,294,054.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  o       No  þ

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes  o       No  þ

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 reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  þ       No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o       Accelerated filer þ       Non-accelerated filer o

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

Item 17 o       Item 18 þ

If this is an annual report, indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o       No  þ

 

 

TABLE OF CONTENTS

Forward Looking Statements			1
PART I
ITEM 1. Identity of Directors, Senior Management and Advisors			2
ITEM 2. Offer Statistics and Expected Timetable			2
ITEM 3. Key Information			2
ITEM 4. Information on the Company			18
ITEM 4A Unresolved Staff Comments			36
ITEM 5. Operating and Financial Review and Prospects			36
ITEM 6. Directors, Senior Management and Employees			44
ITEM 7. Major Shareholders and Related Party Transactions			61
ITEM 8. Financial Information			62
ITEM 9. Offer and Listing Details			63
ITEM 10. Additional Information			65
ITEM 11. Quantitative and Qualitative Disclosures about Market Risk			70
ITEM 12. Description of Securities other than Equity Securities			70
PART II
ITEM 13. Defaults, Dividend Arrearages and Delinquencies			71
ITEM 14. Material Modifications to the Rights of Security Holders and the Use of Proceeds			71
ITEM 15. Controls and Procedures			71
ITEM 16. Reserved			73
ITEM 16A. Audit Committee Financial Expert			73
ITEM 16B Code of Ethics			73
ITEM 16C Principal Accountant Fees and Services			73
ITEM 16D Exemptions from the Listing Standards for Audit Committees			75
ITEM 16E Purchases of Equity Securities by the Issuer and Affiliated Purchases			75

PART III
ITEM 17. Financial Statements – Not Applicable			76
ITEM 18. Financial Statements			76
ITEM 19. Exhibits			76

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Security Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this Annual Report, including statements regarding the future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe”, “may”, “will”, “estimate”, “continue”, “anticipate”, “intend”, “should”, “plan”, “expect”, and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. The Company has based these forward-looking statements largely on current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, without limitation, those described in “Risk Factors” and elsewhere in this Form 20-F, including, among other things:

	•		our inability to obtain any additional required financing or financing available to us on acceptable terms;
	•		the failure to locate, hire, assimilate and retain qualified personnel;
	•		our failure to successfully commercialize our products;
	•		costs and delays in the development and/or receipt of U.S. Food and Drug Administration (“FDA”) or other required governmental approvals, or the failure to obtain such approvals, for our products;
	•		uncertainties in clinical trial results;
	•		our inability to maintain or enter into, and the risks resulting from our dependence upon, collaboration or contractual arrangements necessary for the development, manufacture, commercialization, marketing, sales and distribution of any products;
	•		competition and competitive factors;
	•		our inability to enforce our patents or proprietary rights and obtain necessary rights to third party patents and intellectual property to operate our business;
	•		our inability to operate our business without infringing the patents and proprietary rights of others;
	•		the failure of any product candidate to gain market acceptance;
	•		general economic conditions;
	•		government regulation generally and the receipt of regulatory approvals;
	•		changes in industry practice; and
	•		one-time events.

These risks are not exhaustive. Other sections of the Annual Report on Form 20-F may include additional factors which could adversely impact the Company’s business and financial performance. Moreover, the Company operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all risk factors, nor can the Company assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward looking statements as predictions of future events. The

Company cannot assure you that the events and circumstances reflected in the forward looking statements will be achieved or occur. Although the Company believes that the expectations reflected in the forward looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements.

PART I

Item 1. Identity of Directors, Senior Management and Advisors

Item 1 details are not required to be disclosed as part of the Annual Report.

Item 2. Offer Statistics and Expected Timetable

Item 2 details are not required to be disclosed as part of the Annual Report.

Item 3. Key Information

Selected Financial Data

The selected financial data at June 2006 and 2005 and for the years ended June 30, 2006 and 2005 have been derived from the Consolidated Financial Statements of Novogen Limited ( the “Company” or the “Group”) included in this Annual Report and should be read in conjunction with, and are qualified in their entirety by, reference to those statements and the notes thereto. The Consolidated Financial Statements in this annual report comply with Australian Accounting Standards, being Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (“IFRS”).

The Company qualifies for First-Time “Application of International Financial Reporting Standards” relief and therefore has presented only two years of financial information. Comparatives for the year ended June 30, 2005 have been restated to be consistent with AIFRS.

AIFRS varies in certain respects from accounting principles generally accepted in the United States (“U.S. GAAP”). A reconciliation of the major differences between AIFRS and U.S. GAAP is included in Note 24 to the Consolidated Financial Statements. The Consolidated Financial Statements have been audited in accordance with generally accepted auditing standards in the United States by the Company’s independent registered public accountants.

The Company’s fiscal year ends on June 30. As used throughout this Annual Report, the word “fiscal” followed by a year refers to the 12 month period ending on June 30 of that year. For example, the term “fiscal 2006” refers to the 12 months ended June 30, 2006. Except as otherwise indicated, all dollar amounts referred to in this Annual Report are at the consolidated level and exclude inter-company amounts.

Summary of Consolidated Income Statements
(AIFRS)

		2005				2006				2006
		(A$’000)				(A$’000)				(US$’000)
Continuing operations
Revenue			13,404				13,500				10,021
Other income			4,274				4,738				3,517
Total revenue			17,678				18,238				13,538
Net loss			(12,682	)			(17,912	)			(13,296	)
Net loss attributable to members of Novogen			(11,532	)			(16,220	)			(12,040	)
Basic and diluted earnings/(loss) per share (cents per share)			(11.9	)			(16.7	)			(12.4	)
Weighted average number of ordinary shares used to calculate earnings per share			96,839,570				97,207,053
Number of outstanding ordinary shares at year end			97,045,662				97,294,054

Adjusted to accord with		2002				2003				2004				2005				2006				2006
US GAAP		(A$’000)				(A$’000)				(A$’000)				(A$’000)				(A$’000)				(US$’000)
Sales revenue			17,644				18,977				11,774				12,928				12,654				9,393
Other operating revenue			3,463				3,325				2,414				2,955				3,278				2,433
Total revenue			21,107				22,302				14,188				15,883				15,932				11,826
Net loss			(15,420	)			(10,670	)			(11,760	)			(11,640	)			(16,228	)			(12,046	)
Net (loss) from operations per share (cents per share)			(16.2	)			(11.2	)			(12.2	)			(12.0	)			(16.7	)			(12.4	)

Note: Sales revenue reported under U.S. GAAP has been adjusted to reflect the impact of certain promotional expenditures in accordance with EITF Issue 01-9 Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products). Prior year’s financial statements have been reclassified where appropriate. Certain trade promotion expenditures are charged to marketing and selling expenses under AIFRS. These expenses are for co-operative advertising whereby the Company pays for the retailers’ promotion of the Company’s products. This would typically take the form of payments for advertisments in retailers cataloges, magazines, and instore product promotions. The payment of co-operative advertising is usually made in the form of an agreed amount taken off invoice or by direct payment. Under U.S. GAAP these amounts are treated as a discount to sales hence reducing the reported sales figures. See Note 24 to the Consolidated Financial Statements for the reconciliation to U.S. GAAP. Under AIFRS interest income is included in other income and is a component of total revenue. Under U.S. GAAP interest income is excluded from other operating revenue and total revenue.

Summary of Consolidated Balance Sheets
(AIFRS)

		2005				2006				2006
		(A$’000)				(A$’000)				(US$’000)
Cash and Cash Equivalents			47,260				33,513				24,877
Total Assets			67,485				51,098				37,930
Net Assets			60,492				44,578				33,090
Capital Stock			176,235				176,989				131,379

Adjusted to accord with		2002				2003				2004				2005				2006				2006
US GAAP		(A$’000)				(A$’000)				(A$’000)				(A$’000)				(A$’000)				(US$’000)
Total Assets			61,676				50,812				77,413				67,485				51,098				37,930
Shareholders Equity			51,852				41,069				65,759				57,725				43,415				32,227

No dividends have been declared by the Company in the fiscal years included in this Annual Report.

The Company publishes its Consolidated Financial Statements expressed in Australian dollars. In this Annual Report, references to “US dollars” or “US$” are to the currency of the United States of America (“U.S.”) and references to “Australian dollars” or “A$” are to the currency of Australia. For the convenience of the reader, this Annual Report contains translations of certain Australian dollar amounts into U.S. dollars at specified rates. These translations should not be construed as representations that the Australian dollar amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise stated, the translations of Australian dollars into U.S. dollars have been made at the rate of US$0.7423 = A$1.00, the noon market buying rate in New York City for cable transfers in Australian Dollars as certified for customs purposes by the Federal Reserve Bank of New York (the noon buying rate) on June 30, 2006.

The noon buying rate on October 31, 2006 was US$0.7743 = A$1.00

Exchange Rates for the six months to October 2006
A$ versus US$

Month		High				Low
May		$	0.7781			$	0.7509
June		$	0.7527			$	0.7284
July		$	0.7664			$	0.7407
August		$	0.7699			$	0.7568
September		$	0.7704			$	0.7461
October		$	0.7743			$	0.7434

Exchange Rates for the Last Five Years A$ versus US$

Fiscal Year		Average
Ended June 30		Rate
2002		$	0.5236
2003		$	0.5836
2004		$	0.7109
2005		$	0.7529
2006		$	0.7472

Risk Factors

The following risk factors, in addition to the other information and financial data contained in this Annual Report, should be considered carefully in evaluating the Company and its business. The risks described below and elsewhere in this Annual Report are not intended to be an exhaustive list of the general or specific risks involved, but merely identify certain risks that are now foreseen by the Company. It must be recognized that other risks, not now foreseen, might become significant in the future and that the risks which are now foreseen might affect the Company to a greater extent than is now foreseen or in a manner not now contemplated.

The Company has incurred operating losses since its inception, and is likely to incur operating losses for the foreseeable future.

The Company has incurred net losses of $131,700,000 since its inception, including net losses of $17,913,000, and $12,684,000 for the years ended June 30, 2006, and 2005, respectively. The Company anticipates that it will incur operating losses and negative cash flow for the foreseeable future.

The Company’s isoflavonoid technology is relatively new and unproven. If the Company is unable to develop its product candidates or successfully achieve market acceptance of its technology, the Company’s financial position could be seriously impaired.

The Company’s isoflavonoid technology is relatively new and evolving. The successful development and market acceptance of the Company’s proposed products are subject to inherent developmental risks. These include ineffectiveness or lack of safety, manufacturing difficulties, unreliability, failure to receive necessary regulatory clearances or approvals, high commercial cost and preclusion or obsolescence resulting from third parties’ proprietary rights or superior or equivalent products, as well as general economic conditions affecting purchasing patterns.

There can be no assurance that the Company and its marketing partners will be able to commercialize successfully or achieve market acceptance of any of the Company’s technologies or products, or that the Company’s competitors will not develop competing technologies that are less expensive or otherwise superior to those of the Company. The failure to develop and market successfully new products would have a material adverse effect on the Company’s business, financial condition and results of operations.

If the data from the Company’s clinical trial program do not demonstrate the safety and efficacy of the phenolic drug candidates to the FDA’s and other regulatory authorities’ satisfaction, the Company will not receive approval to market its drug candidates in the U.S. or other jurisdictions.

Phenolic drug development is an entirely novel and unproven field of pharmaceutical drug development and there is limited scientific understanding of phenolic technology on which the Company’s drug program is based. There can be no assurance that any of the compounds under development by the Company will prove to be sufficiently efficacious, or sufficiently safe, or sufficiently cost-effective to be commercially viable. The commercialization process of the products currently undergoing clinical trials includes the anti-cancer drug candidates phenoxodiol and NV-196 being developed by Marshall Edwards, Inc., a subsidiary of Novogen, TransNV-04, the Company’s cardiovascular drug candidate and NV-52 the Company’s anti-inflammatory drug candidate, may be delayed if the FDA or another regulatory authority requires the expansion in the size and scope of any clinical trial. It may take many years to complete the testing and failure can occur at any stage in the process. Negative or inconclusive results or adverse medical events during a clinical trial could cause Novogen to delay or terminate development efforts.

In 2004, the FDA granted phenoxodiol Fast Track status for patients with recurrent late stage ovarian cancer that is resistant or refractory to platins and taxanes. In 2005, the FDA granted phenoxodiol Fast Track status for its intended use in patients with hormone-refractory prostate cancer (prostate cancer that grows and is no longer inhibited by hormone therapy). More recently we completed a Special Protocol Assessment (“SPA”) and reached agreement with the FDA on a pivotal Phase III study of phenoxodiol in combination with carboplatin in women with platinum-resistant ovarian cancer (ovarian cancer that does not respond to platinum based anti-cancer agents such as cisplatin). The SPA process allows for FDA evaluation of a clinical trial protocol that will form the basis of an efficacy claim for a marketing application. As a Fast Track product, phenoxodiol will be eligible for accelerated approval and priority review by the FDA of the marketing application for this indication. If the FDA concludes that the data from our pivotal clinical trial have failed to demonstrate the safety and effectiveness of phenoxodiol, we will not receive FDA approval to market phenoxodiol for those indications in the United States. We cannot assure you that the results of our Phase III pivotal trial will be successful.

Any failure in the clinical trial program could impair the commercial prospects of the Company’s phenolic drug program.

Clinical trials have a high risk of failure. A number of companies have suffered significant setbacks in advanced clinical trials even after achieving promising results in earlier trials. If the Company experiences delays in the testing or approval process or if further clinical trials or clinical trials involving a larger number of patients are required the commercial prospects of the drugs under development could be impaired.

If the Company does not receive marketing approval for its phenolic drug candidates, or regulatory approval is withdrawn for the Company’s dietary supplements, the Company will not be able to commercialize its products and product candidates.

Marketing approval is needed in order to commercialize the Company’s phenolic drug candidates. The Company may never receive marketing approval for any of its phenolic drug candidates or if the Company does it will be limited to those disease states and conditions for which they have been proven to be safe and effective.

In order for the Company to market its products in the U.S., Europe, Australia, Canada, Japan and certain other foreign jurisdictions, the Company must obtain required marketing approvals or clearances and otherwise comply with extensive regulations regarding safety, manufacturing processes and quality. There can be no assurance that the Company will be able to obtain or maintain regulatory approvals or clearances in such jurisdictions or that it will not be required to incur significant costs in obtaining or maintaining its foreign regulatory approvals or clearances.

The FDA and other governmental approvals that may be granted to the Company will be subject to continual review, and later discovery of previously unknown problems may result in withdrawal of products from the market. For example, in 2004 the Company was notified by the Therapeutic Goods Administration (“TGA”) that the TGA is reviewing the current listing status of the Company’s dietary supplements products in Australia. These products are currently listed as “AUSTL” listed complementary medicine, under regulations of the TGA. Following the completion of this review, these products may retain this status or may be de-listed in Australia. The Company believes that its products qualify for their current listing status as “AUSTL” listed complementary medicine. However, no assurance can be given that the TGA will ultimately reach this conclusion. In the event of an adverse determination by the TGA, the Company will consider what further options are available to it.

Moreover, if and when any FDA or other governmental approval is obtained, the marketing and manufacture of the Company’s products will remain subject to extensive regulatory requirements administered by the FDA and other regulatory bodies. Failure to comply with these regulatory requirements may, among other things, result in fines, suspensions or withdrawal of marketing approvals, operating restrictions and criminal prosecution.

The Company will need to raise additional funds in order to finance its future operations and the clinical development program. The actual amount of funds that we will need will be determined by a number of factors, some of which are beyond our control.

The Company’s funding requirements have been, and will continue to be, significant. The Company anticipates that its existing cash resources will be adequate to fund the Company’s operating requirements through at least the next 12 months based upon the Company’s current business plan.

The Company’s operating requirements may vary materially from those now planned due to a number of factors. These factors include the success of the Company’s research and development efforts, the ability of the Company to satisfy applicable

regulatory requirements, the extent of the Company’s ability to produce its products in a cost-effective manner, the rate at which the Company can introduce its products into new markets, the market acceptance and competitive position of the Company’s products, and the level of expenditure required to expand the Company’s production facilities should it need to do so. The Company may need to raise additional capital to fund its future operations. There can be no assurance that additional financing will be available when needed on terms acceptable to the Company, or at all. If additional funds are raised by issuing equity securities, further dilution to existing shareholders will result and future investors may be granted rights superior to those of existing shareholders. Insufficient funds may prevent the Company from implementing its business strategy or may require the Company to limit its operations significantly.

The supply of the raw material for the Company’s dietary supplement products is subject to a number of environmental factors beyond the Company’s control. If the Company cannot maintain a reliable supply of red clover, it may not be able to continue to sell its dietary supplement products and sales volumes could be significantly reduced.

An important risk concerns the supply of raw material (red clover) used to produce the Company’s consumer products. Numerous environmental factors (drought, disease, storms) can affect crop quality and quantity of clover. Although the Company has attempted to address this risk by sourcing clover from regions of geographic diversity within Australia, and from areas of historically reliable water supply, there can be no assurance of a continual supply of sufficient quantity and quality of red clover. Interruptions in supply or material increases in the cost of supply could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company currently depends upon a number of sources within Australia to grow and to harvest the raw materials required for the clover-based isoflavone products it produces. While the Company has entered into supply contracts with many of these sources and maintains a close supervision of the clover growing, there can be no assurance that the Company will be able to obtain increased quantities of this material, if and when the Company requires. There can also be no assurance that the crops of clover required by the Company will grow at all and not be subject to certain acts of nature or other problems associated with farming a naturally produced plant. Such events would have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company has identified a third party supplier of isoflavones to augment its supply of quality isoflavones for use in the consumer products.

The current stocks of clover, however, are adequate to cover the requirements of the Company for at least the next 12 months.

The Company has no direct control over the cost of formulation and packaging of its dietary supplement products and will be relying on third parties to manufacture commercial quantities of pharmaceutical drug candidates.

The Company relies on third parties to manufacture and package its dietary supplement products to satisfy performance and quality standards and dedicate sufficient production capacity to meet demand and delivery times. The Company will also rely on third parties to manufacture commercial quantities of its pharmaceutical drug candidates. There can be no assurance that third party manufacturers will devote the resources necessary to meet demand for the Company’s products. Failure or delay in supplying isoflavones would adversely affect the Company’s ability to deliver products on a timely and competitive basis.

In addition, the manufacturing facilities of the Company’s products are subject to periodic inspection by regulatory authorities for compliance with Current Good Manufacturing Practice (cGMP). There can be no assurance that these authorities will not, during the course of an inspection of existing or future facilities, identify what they consider to be deficiencies in cGMP or other requirements and request, or seek, remedial action. Failure to comply with such regulations or delay in attaining compliance may adversely affect the Company’s manufacturing activities and could result in, among other actions, warning letters, injunctions, civil penalties, refusal to grant approvals or clearances of future or pending product submissions, fines, recalls or seizure of products, total or partial suspensions of production and criminal prosecution which may result in the Company’s products not being available to supply the market demand which will adversely affect the Company’s sales revenues.

The Company’s success is largely dependent on its ability to obtain patent protection and preserve trade secrets, which cannot be guaranteed.

The Company’s success is dependent to a significant degree on whether it can obtain patents, maintain trade secret protection and operate without infringing on the proprietary rights of third parties. If the Company was determined to be infringing any third party patent, the Company could be required to pay damages, alter its products or processes, obtain licenses or to cease certain operations. If the Company is required to obtain any licenses, there can be no assurance that the Company will be able to do so on commercially favorable terms, if at all. The Company’s failure to obtain a license for any technology that it may require to commercialize its products could have a material adverse effect on the Company’s business, financial condition and results of operations.

Litigation relating to patent infringement could result in substantial costs to, and diversion of effort by, the Company, and may also be necessary to enforce any patents issued or licensed to the Company or to determine the scope and validity of third party proprietary rights. The Company is currently involved in a number of litigation proceedings against companies which were infringing certain Company patents related to dietary supplements.

If competitors of the Company that claim technology also claimed by the Company prepare and file patent applications in the U.S., the Company may have to participate in interference proceedings in the U.S. Patent and Trademark office to determine priority of invention, which could result in substantial cost to, and diversion of effort by, the Company, even if the eventual outcome is favorable to the Company.

Any such litigation or interference proceedings, regardless of outcome, could be expensive and time consuming. Litigation could subject the Company to significant liabilities to third parties, requiring disputed rights to be licensed from third parties to the Company or requiring the Company to cease using certain technologies and, consequently, could have a material adverse effect on the Company’s business, financial condition and results of operations.

In addition to patent protection, the Company relies on trade secrets and proprietary technological expertise. There can be no assurance that others will not independently develop or otherwise acquire substantially equivalent technologies, or otherwise gain access to the Company’s trade secrets or technological expertise or disclose such trade secrets. There can be no assurance that the Company can ultimately protect its right to such un-patented trade secrets and technological expertise. The Company relies, in part, on confidentiality agreements with its marketing partners, employees, advisors, vendors and consultants to protect its trade secrets and proprietary technological expertise. There can be no assurance that these agreements will not be breached, that the Company will have adequate remedies for any breach or that the Company’s un-patented trade secrets and proprietary technological expertise will not otherwise become known or independently discovered by competitors.

The Company’s commercial opportunity will be reduced or eliminated if competitors develop and market products that are more effective or less expensive than the Company’s products.

In developing its technology and products, the Company competes with many domestic and foreign competitors in various rapidly evolving and technologically advanced fields, including pharmaceutical, biotechnology and biopharmaceutical companies.

Many of the Company’s competitors and potential competitors have substantially greater financial, technological, research and Development (“R&D”), marketing and personnel resources than the Company. There can be no assurance that the Company’s competitors will not succeed in developing alternate technologies and products that are more effective, easier to use or more economical than those which have been developed by the Company or that would render the Company’s technologies and products obsolete and non-competitive in these fields. These competitors may also have greater experience in developing products, conducting clinical trials, obtaining regulatory approvals or clearances, and manufacturing and marketing such products or technologies. Certain of these competitors may obtain patent protection, approval or clearance earlier than the Company, which could adversely affect the Company’s business, financial condition and results of operations. Furthermore, the Company will

also be competing with respect to manufacturing efficiency and marketing capabilities, areas in which it currently has limited experience.

The Company’s commercial opportunities will be reduced or eliminated if competitors develop and market products that are more effective, have fewer side effects or are less expensive.

Revenue is affected by fluctuations in currency exchange rates.

Fluctuations in currency exchange rates may adversely affect the demand for the Company’s products by increasing the price of the Company’s products in the currency of the countries in which the products are sold.

The Company’s consolidated financial statements are presented in Australian dollars. In fiscal 2006, the Company’s revenue generated was approximately 31% in U.S. dollars and approximately 47% in Australian dollars with the balance of revenue in Pounds Sterling, Euros and Canadian dollars. Fluctuations in the rates of exchange between U.S. dollar and other foreign currencies may negatively impact the Company’s financial condition and results of operations. As the Company expands its presence into the U.S. and other international markets, the Company expects the percentage of both its revenues and expenditures denominated in non-Australian dollars to increase, with particular emphasis on U.S. dollars.

The Company depends on a number of key personnel to provide the strategic direction of its research and development programs and other corporate activities. If the Company is unable to procure the services of key personnel in the future, the Company’s research and development programs could be delayed.

The Company is highly dependent upon the principal members of its management and scientific staff. In addition, the Company believes that its future success in developing marketable products and achieving a competitive position will depend to a significant extent on whether it can attract and retain additional qualified management and scientific personnel. Competition for such personnel is intense, and there can be no assurance that the Company will be able to continue to attract and retain such personnel. The loss of the services of one or more of the management or scientific staff, or the inability to attract and retain additional personnel and develop expertise as needed, could have a material adverse effect on the Company’s results of operations and financial condition. As of October 30, 2006, Professor Kelly’s employment with the Company ceased and as a result, he is no longer acting as Phenoxodiol Program Director. The Company is currently negotiating a consulting agreement with Professor Kelly to provide strategic consulting advice. If Professor Kelly does not enter into a consulting agreement, the clinical program for phenoxodiol may be disrupted which may cause delays in obtaining marketing approval. The Company maintains key person life insurance for Mr. Naughton and Professor Husband, currently set at A$2,226,000 each. In addition the Company also maintains key person life insurance for all members of the executive team and other

key staff. The policies for these personnel range between A$800,000 and A$1,600,000. The proceeds of such policies are payable to the Company.

The ongoing criminal investigations involving Professor Kelly, a Director of Marshall Edwards, Inc., could have a material adverse effect on the Company’s business or cause the stock price to decline.

Professor Kelly is one of a number of individuals who, and whose associated entities and advisors have been, the subject of investigations by certain Australian authorities relative to their alleged involvement in the evasion of Australian tax, fraud and money laundering. Professor Kelly has informed the Company that he does not believe that he has committed any wrongdoing and denies that he has been involved in any wrongdoing. Nevertheless, Professor Kelly may need to allocate time and resources to deal with the investigation. Additionally, if the Australian authorities were to decide to prosecute Professor Kelly upon concluding their investigation and if such prosecution were to result in a conviction, Professor Kelly may be barred from acting as an officer or director and may become unavailable to the Company. Any publicity related to this investigation or potential prosecution or conviction of Professor Kelly could have a material adverse effect on the business or cause the stock price to decline.

The Company may not be able to establish or maintain the strategic partnerships necessary to market and distribute its dietary supplement products.

The Company relies on its own marketing staff for the marketing and sale of its current and proposed dietary supplement products in Australia, Canada, the U.K. and the Netherlands. The Company presently has limited marketing and sales staff. Achieving market acceptance for the Company’s products will require extensive and substantial efforts by experienced personnel as well as expenditure of significant funds. There can be no assurance that the Company will be able to establish sufficient marketing, distribution and sales capabilities necessary to achieve market penetration in these geographical areas. The Company recently announced in October 2006 that it had licensed the U.S. rights to market Promensil and Trinovin brands to Natrol, Inc.

In other markets, the Company intends to appoint licensees and/or marketing partners who will be responsible in large part for sales, marketing and distribution. While the Company will endeavor to appoint licensees and/or marketing partners with proven abilities in these areas, the amount and timing of resources, which may be devoted to the performance of their contractual responsibilities by these partners, are not within the control of the Company. There can be no assurance that such marketing partners will perform their obligations as expected, pay any additional option or license fees to the Company or market any products under any agreement. There can be no assurance that the Company will derive any revenue from such arrangements. Moreover, the other contracting parties may have rights of termination under certain of the agreements. Exercise of such termination rights by such other parties may have an adverse effect on the Company’s business, financial condition and results of operations. There can be no assurance that the interests of the Company will continue to coincide with those of its

partners or that such partners will not develop independently, or with third parties, products or technologies which could compete with the Company’s products, or that disagreements over rights or technologies or other proprietary interests will not occur. To the extent that the Company chooses not to, or is unable to, enter into future agreements, the Company would experience increased capital requirements to undertake the marketing or sale of its current or future products. There can be no assurance that the Company will be able to market or sell its technology or its current or future products independently in the absence of such agreements.

If the data from the Company’s clinical trial program does not demonstrate the safety and effectiveness of its pharmaceutical product candidates, the Company will not receive FDA approval to market those product candidates in the United States.

Pharmaceutical products, including the Company’s pharmaceutical drug candidates, are subject to significant regulation by a number of governmental entities, including the FDA in the U.S. and by comparable authorities in other countries, including Australia. These agencies regulate, among other things, research and development activities and the testing, manufacture, safety, effectiveness, labeling, storage, record keeping, approval, advertising, promotion, distribution and sale of such products. Product development and approval within this regulatory framework takes a number of years and involves the expenditure of substantial resources. Many products, which initially appear promising, ultimately do not reach the market because they are found to be unsafe or do not demonstrate efficacy during the testing required by the regulatory process.

The Company currently has no products approved by the FDA. No assurance can be made that the Company will be able to file any New Drug Application (NDA) or that any such filings will result in FDA approval. Furthermore, the Company cannot predict with any degree of certainty when it might be in a position to file any NDA or the length of time involved between the filing of an NDA and obtaining FDA approval, if at all. The cost to the Company of conducting human clinical trials for any potential product can vary dramatically based on a number of factors, including the order and timing of clinical indications pursued and the extent of development and financial support, if any, from corporate partners. The Company may have difficulty obtaining sufficient patient populations, clinicians or support to conduct its clinical trials as planned and may have to expend substantial additional funds to obtain access to such resources, or delay or modify its plans significantly.

There can be no assurance that FDA or other regulatory authority approval for any product developed by the Company will be granted on a timely basis or at all. Any delay in obtaining or any failure to obtain such approvals would materially and adversely affect the marketing of the Company’s products and the Company’s business, financial condition and results of operations. In addition, legislation may be enacted in the future, which might adversely affect the Company’s ability to develop, manufacture or market its products.

The Company faces the risk of product liability claims and may not be able to obtain adequate insurance.

The Company’s business exposes it to the risk of product liability claims. This risk is inherent in the manufacturing, testing and marketing of human therapeutic products. The Company has product liability insurance coverage of up to approximately $A20 million. Although the Company believes that this amount of insurance coverage is appropriate for its business at this time, the insurance coverage is subject to deductibles and coverage limitations, and the market for such insurance is becoming more restrictive. The Company may not be able to obtain or maintain adequate protection against potential liabilities. If the Company is unable to sufficiently insure against potential product liability claims, it will be exposed to significant liabilities, which may materially and adversely affect the business development and commercialization efforts.

Enforceability of civil liabilities under the federal securities laws against the Company’s officers and directors may be difficult.

The Company is a public company limited by shares and is registered and operates under the Australian Corporations Act 2001. All of the Company’s directors and officers named in this Annual Report reside outside the U.S. Substantially all or a substantial portion of the assets of those persons are located outside the U.S. As a result, it may not be possible to affect service on such persons in the U.S. or to enforce, in foreign courts, judgments against such persons obtained in U.S. courts and predicated on the civil liability provisions of the federal securities laws of the U.S. Furthermore, substantially all of the directly owned assets of the Company are outside the U.S., and, as such, any judgment obtained in the U.S. against the Company may not be collectible within the U.S. There is doubt as to the enforceability in the Commonwealth of Australia, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon federal or state securities laws of the U.S., especially in the case of enforcement of judgments of U.S. courts where the defendant has not been properly served in Australia.

The trading price of the shares of the Company’s common stock and Alternative Depository Receipts (“ADRs”) could decline in value if the trading price of the shares of common stock of its listed subsidiary company, Marshall Edwards, Inc., declines.

Novogen currently owns 78.1% of its subsidiary Marshall Edwards, Inc. (“MEI”), whose shares are traded on the Nasdaq Global Market. If the trading price of Marshall Edwards’ shares declines or its business does not achieve its objectives or its product development program is delayed, it could have an adverse affect on Novogen’s share price.

The trading price of the shares of the Company’s common stock and ADRs is highly volatile. Your investment could decline in value and the Company may incur significant costs from class action litigation.

The trading price of the Company’s common stock and ADRs is highly volatile in response to various factors, many of which are beyond the Company’s control, including:

	•		Announcements of technological innovations by the Company and its competitors;
	•		New products introduced or announced by the Company or its competitors;
	•		Changes in financial estimates by securities analysts;
	•		Actual or anticipated variations in operating results;
	•		Expiration or termination of licenses, research contracts or other collaboration agreements;
	•		Conditions or trends in the regulatory climate in the biotechnology, pharmaceutical and genomics industries;
	•		Changes in the market values of similar companies;
	•		The liquidity of any market for the Company’s securities;
	•		Additional sales by the Company of its shares.

In addition, equity markets in general and the market for biotechnology and life sciences companies in particular, have experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the companies traded in those markets. In addition, changes in economic conditions in Australia, the United States, Europe, or globally, could impact on the Company’s ability to grow profitably. Adverse economic changes are outside the Company’s control and may result in material adverse impacts on the Company’s its business or its results of operations. These broad market and industry factors may materially affect the market price of the Company’s shares and ADRs regardless of its development and operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company. Such litigation, if instituted against the Company could cause it to incur substantial costs and divert management’s attention and resources.

Item 4. Information on the Company

History and development of the Company

Novogen Limited, a company limited by shares, was incorporated in March 1994 under the jurisdiction of the laws of New South Wales, Australia. Novogen has its registered office at 140 Wicks Rd, North Ryde, New South Wales 2113. Its telephone number and other contact details are: Phone 61-2-9878-0088; Fax 61-2-9878-0055; and website, www.novogen.com (the information contained in the website does not form part of the Annual Report). The Company’s Ordinary Shares are listed on the Australian Stock Exchange (“ASX”) under the symbol “NRT” and its American Depositary Receipts (ADRs), each representing five ordinary shares, trade on the Nasdaq Global Market under the symbol “NVGN”.

Capital expenditures

The Company made no major investments of a capital nature during fiscal 2006. Future facilities will be developed where appropriate, however, current plant capacity both at the isoflavones extraction plant at Wyong NSW and at the pilot plant at North Ryde NSW are sufficient to meet demand for the short to medium term.

Business overview

Nature of the Business

The Company is a pharmaceutical company involved in the discovery, development, manufacture and marketing of products based on the emerging field of isoflavoniod technology. The Company’s product development program embraces both a novel range of pharmaceuticals based on a range of phenolic compounds in humans and dietary supplements based on plant compounds known as isoflavones. A key element of the Company’s strategy is to leverage revenue generated from sales of the Company’s dietary supplements in an effort to develop novel proprietary pharmaceuticals based on phenolic compounds.

Dietary supplements

The Company launched its first dietary supplement product, Promensil™ (“Promensil”), in September 1997 in Australia. Subsequently, the Company has established 100% owned subsidiary companies in the U.S., Canada, the U.K. and The Netherlands to market and distribute its range of dietary supplements. The Company also entered into agency agreements to distribute its dietary supplements in Singapore and South Africa, Indonesia, Austria and Italy. In October 2006 the Company announced that it had licensed the U.S. rights to market Promensil and Trinovin brands to Natrol, Inc.

Promensil, Trinovin and Rimostil are “dietary supplements” that deliver standardized levels of all four isoflavones — daidzein, genistein, formononetin and biochanin. Promensil, Trinovin and Rimostil are listed with the appropriate regulatory bodies in the countries in which they are sold.

During the financial year, the consumer business (dietary supplement products) launched three new product introductions into selected markets including the dietry supplement Promensil Post Menopause into the U.S. market in September 2005, Promensil After Menopause in Canada in January 2006, and a diagnostic Promensil menopause test in Australia in March 2006. These products will be launched progressively into other markets and are targeted to augment the Promensil brand by extending the market to include an after menopause dietary supplement product and menopause test to help women diagnose the symptoms of menopause. Different regulatory requirements will apply for diagnostic tests intended for market in the U.S.

The following table is an analysis of revenue from sales and other sources during the past three fiscal years by categories of activity and by geographical market. Other revenue consists principally of interest income, grants received and royalty receipts. See Note 2 to the Consolidated Financial Statements.

Category of Activity

		2005				2006
		(A$’000)				(A$’000)
Dietary Supplements
Revenue			13,404				13,500
Other income			1,299				873
Pharmaceutical research and development
Other income			2,975				3,865
Total Revenue			17,678				18,238

Geographical Markets

		2005				2006
		(A$’000)				(A$’000)
Revenue
Australasia			4,646				5,166
UK & Europe			2,518				2,614
US & Canada			6,240				5,720
			13,404				13,500
Other income
Australasia			3,877				4,159
UK & Europe			80				4
US & Canada			317				575
			4,274				4,738
Total Revenue			17,678				18,238

Revenue

The Group earned gross revenues for the year ended June 30, 2006 of A$18.2 million versus A$17.7 million in the previous corresponding period, an increase of A$0.5 million. The increase in revenue was due to increased sales of the Company’s consumer products which were A$13.5 million for the year ended June 30, 2006 compared with A$13.4 million for the previous year, an increase of A$0.1 million or 1%. Other income increased by A$0.4 million to A$4.7 million verses A$4.3 million for the previous corresponding period. The increase in other income was mainly due to increased government grant income through the Pharmaceutical Partnership Program and an increase in revenue received from litigation settlements from our consumer products patent defence activities.

Consumer product sales

Sales in Australasia for the year ended June 30, 2006 were A$5.2 million, an increase of A$0.6 million or 13% from A$4.6 million for the previous year. Sales in North America were, A$5.7 million, a reduction of A$0.5 million or 8% from A$6.2 million for the previous year. Sales in Europe of A$2.6 million for the year were up slightly by A$0.1 million from A$2.5 million for the previous corresponding period.

During the financial year, the consumer business launched three new product introductions into selected markets including Promensil Post Menopause into the U.S. market in September 2005, Promensil After Menopause in Canada in January 2006 and a Promensil menopause test in Australia in March 2006. These products will be launched progressively into other markets and are targeted to augment the Promensil brand by extending the market to include an after menopause product and menopause test to help women diagnose the symptoms of menopause.

Sales levels of our consumer products in Australia, Canada and to a lesser extent in Europe, have continued to benefit from our targeted promotional programs. Sales in the U.S. market were affected by the market decline in the natural menopause product market of 18%. This decline was due to reduced advertising and sales and marketing effort across the sector and increased competition from hormone replacement therapy (“HRT”) products which appear to be regaining some of the markets which were impacted by the recent controversies surrounding safety issues. In October 2006, the Company licensed the U.S. rights to market Promensil and Trinovin brands to Natrol, Inc. The Company will continue to position its products as the most clinically trialled natural alternatives in the menopause market.

Product Research and Development.

Cardiovascular drug development

In September 2005, the Company announced that its cardiovascular drug transNV-04 had demonstrated significant reduction in blood pressure and reduced arterial stiffness in a Phase Ib human clinical trial in Australia. TransNV-04 was administered to 25 middle aged men and women who were overweight and had suffered from at least two complications of fatness (overweight), abnormal blood fats, high blood glucose or raised blood pressure. The trial results showed that arterial stiffness was reduced and that blood pressures, both systolic and diastolic, were lowered significantly.

Anti-inflammatory drug development

In March 2006, the Company announced that the anti-inflammatory drug NV-52 which is being developed for inflammatory bowel disease had completed a Phase I human clinical trial in Australia. Six patients were given a single oral dose. The study was designed to demonstrate safety and the mechanics of the drugs accumulation and elimination in human subjects. The rapid absorption indicates a potential as an oral therapy.

Cancer drug development

The Company has established a subsidiary company, Marshall Edwards, Inc. (“MEI”) to develop and commercialize its anti-cancer drug candidates. MEI was listed on the Alternative Investment Market of the London Stock Exchange in May 2002 and on the Nasdaq Global Market in December 2003. In January, 2006, MEI voluntarily cancelled the trading of its common stock on the Alternative Investment Market of the London Stock Exchange.

Phenoxodiol

The Group’s lead anti-cancer drug, phenoxodiol, continued its clinical development program through MEI. Phenoxodiol is currently being evaluated for the treatment of prostate cancer, ovarian cancer and squamous cell carcinomas (SCC) of the cervix, vagina and vulva.

In May 2006, MEI completed a SPA and agreement with the FDA on a pivotal Phase III study of phenoxodiol as a chemo-sensitizing agent in combination with carboplatin in women with platinum-resistant ovarian cancer. The SPA process allows for FDA evaluation of a clinical trial protocol that will form the basis of an efficacy claim for a marketing application, and provides an agreement that the study design, including patient numbers, clinical endpoints and analyses are acceptable to the FDA. As a Fast Track product, phenoxodiol will be eligible for accelerated approval and priority review by the FDA of the future marketing application for this indication.

During fiscal year 2006, MEI also made significant progress in the clinical development of phenoxodiol including:

•		In March 2006, MEI announced that Yale researchers presented data at the Annual Meeting on Women’s Cancer. The data was from the study conducted at Yale – New Haven Hospital, Connecticut, U.S. as well as the Royal Women’s Hospital, Melbourne, Australia, The Yale researchers reported that 74 percent of patients with late-stage, platinum-resistant tumors who received the phenoxodiol and cisplatin combination showed evidence of a change in tumor growth by way of either tumor shrinkage or no increase in tumor size.
•		In November 2005, MEI announced plans for a Phase Ib/IIa clinical study of the investigational anti-cancer drug, phenoxodiol in combination with docetaxel for women with recurrent ovarian cancer. The investigator-initiated clinical study is taking place at the Yale University School of Medicine and is supported jointly by Sanofi-Aventis and MEI.
•		In November 2005, MEI announced that phenoxodiol delays tumor progression in men suffering from late-stage hormone refractory prostate cancer. This study is being conducted at the Sir Charles Gairdner Hospital in Perth, Australia and was presented at the International Conference on Molecular Targets and Cancer Therapeutics in Philadelphia.
•		Also in November 2005, MEI announced at the International Conference on Molecular Targets and Cancer Therapeutics in Philadelphia, that Yale University’s School of Medicine reported a further update on results from a clinical study conducted with women with early-stage cancer of the cervix and vagina. The data presented by Yale researchers indicates continuing confidence that the

		investigational drug phenoxodiol produces anti-cancer responses in women with cervical cancer.
•		In October 2005, MEI announced updated results from two clinical studies, conducted at Yale University’s School of Medicine, involving women with late-stage ovarian cancer and women with early-stage cancer of the cervix and vagina. Interim data, for women with late stage ovarian cancer, presented by Dr Gil Mor at the 11th World Congress of the International Menopause Society, meeting in Buenos Aires, Argentina, indicated that after combining phenoxodiol with either paclitaxel or cisplatin, overall survival had been substantially extended.

In May 2006 the Company concluded with MEI’s wholly owned subsidiary, Marshall Edwards Pty Limited (“MEPL”), an exclusive, worldwide non-transferable licence under its patent and patent applications and in its know how for MEPL to conduct clinical trials, commercialize and distribute the anti-cancer drug candidates, NV-196 and NV-143.

NV-196, is a synthetic anti-cancer compound developed by Novogen, based on an isoflavan ring structure and like phenoxodiol, is a signal transduction inhibitor. Preliminary screening studies conducted by Novogen have identified NV-196 as a candidate for product development showing a favorable in vitro toxicity profile against normal cells and broad activity against cancer cells. NV-196 is currently in Phase I human testing in Australia and is being developed initially in oral form for the treatment of pancreatic and bile duct cancers.

NV-143 is currently in pre-clinical testing and preliminary screening studies have identified broad anti-cancer activity, against cancer cells representative of melanoma, glioma, prostate, ovarian, breast and lung cancer. NV-143 also exhibits broadly acting chemosensitizing activity. The mechanisms by which NV-143 elicits its anti-cancer/chemosensitizing effect are being researched. NV-143 is being initially developed to target the treatment of melanoma.

Novogen currently owns 78.1% of Marshall Edwards, Inc.

Wound healing

In May 1999 the Company established Glycotex, Inc., a U.S. subsidiary of Novogen Inc., to provide a commercial vehicle for Novogen’s glucan technology.

Novogen currently owns 84.3% of Glycotex Inc.

Source and Availability of Raw Materials

Isoflavones

Two major manufacturing considerations are supply of raw materials (red clover) and isoflavone extraction capacity.

Red clover is grown under contract by farmers experienced in red clover growing. As part of a risk reduction strategy, red clover is grown in a number of areas of geographical and climatic diversity in three Australian states (New South Wales, Victoria and South Australia). For cost reasons, red clover is no longer grown in the South Island of New Zealand. The current growing capacity is judged to exceed projected demand for the foreseeable future.

The existing isoflavone extraction facility at Wyong NSW is currently meeting existing demand for product. More recently, the Company has entered into a contract with a third party supplier of isoflavones to augment its supply of quality isoflavones for use in the consumer products. The Company currently uses contract formulators and packers in Australia to tablet and to pack the final product.

Phenolic Compounds

The synthetic phenolic compounds used in the Company’s pre-clinical and clinical trials are currently being manufactured at the pilot facility located at North Ryde. The facility manufactures phenoxodiol, cardiovascular program compounds and anti-inflammatory compounds and will provide sufficient product for pre-clinical and initial clinical trial purposes. The Company has taken the strategic decision not to manufacture commercial scale Active Pharmaceutical Ingredients (API) for cancer drugs, including phenoxodiol, as these can be more economically supplied by third parties with particular expertise in this area. The contract facilities that have been identified are registered with the FDA as drug manufacturing establishments, have a track record of large scale API manufacture and have already invested in capital and equipment.

MEPL has entered into contracts with third parties to develop a scalable manufacturing method to ensure that sufficient quantities of phenoxodiol can be manufactured in compliance with cGMP (Current Good Manufacturing Practices) and to complete the analytical and stability work necessary for an NDA submission. An NDA will be submitted if the Phase III study is successful, and approval of the NDA is required to market phenoxodiol. The Company will need to arrange similar contracts in the future to secure the supply of NV-196 and NV-143.

Marketing Channels

The Company is currently marketing dietary supplement products for people whose intake of isoflavones is inadequate.

The marketing strategy is for the Company to continue to be responsible for the direct marketing of its current and proposed dietary supplement products in Australia, New Zealand, Canada and selected European countries. The Company will rely on distributors and other third parties for the sale of the Company’s dietary supplements in other countries and regions. The Company has entered into agency distribution agreements in Singapore, South Africa, Austria, Ireland and Italy and licensed the U.S. rights to Promensil and Trinovin.

Patent Protection

The first and most important area of the intellectual property (“IP”) of the Company is based upon the understanding that an important function of isoflavones in the diet is to act as “pro-hormones”, leading to the formation of a previously undiscovered class of hormones known as “phenolic hormones”. The Company’s discovery that these isoflavonoid-derived phenolic compounds have biological activity is the basis of the Company’s drug discovery and development program. A number of these phenolic compounds have been identified by the Company as offering significant commercial potential as new pharmaceuticals and these are currently under development. The Company has PCT (Patent Cooperation Treaty) patent applications pending relating to these compounds and a wide range of therapeutic applications.

The second area of IP is the proprietary technology that allows the method of extraction of all four principal estrogenic isoflavones found in the human diet. This technology has allowed the development of Promensil and Trinovin, which are supplement products that deliver standardized levels of all four isoflavones — daidzein, genistein, formononetin and biochanin.

The third important area of IP is an understanding of the distinctive biological functions of each of the four estrogenic isoflavones. The Company has found that while the four estrogenic isoflavones share functions in common, each has a distinctive biological profile with some even having unique functions. This is the basis of development of dietary supplements with “customized” isoflavone ratios in order to meet specific health needs.

The Company pursues an aggressive patent application filing strategy, filing PCT patent applications which can be used to pursue patent protection in countries with significant markets for our products. All current patent applications are filed in the name of or assigned to either Novogen Inc., Novogen’s wholly-owned U.S. subsidiary, or Novogen Research Pty Ltd, one of Novogen’s wholly-owned Australian subsidiaries.

The Company believes that the protection of its intellectual property is fundamental to the success of its businesses. During the year the Company commenced a number of patent infringement litigation proceedings against companies which were in breach of certain patents. The Company has received A$613,000 in settlement fees resulting from actions resolved in Canada and the U.S. The Company is continuing to prosecute its IP rights and in June announced that the Vienna Commercial Court had upheld a provisional injunction against an Austrian company, APOtrend. The Company has provided a guarantee to the value of 250,000 Euros with the court to confirm its commitment to the ongoing enforcement process.

Intellectual property development

During the past fiscal year 16 patents were granted to the Company which relate to the Company’s technology and products. The areas with expanding patent cover include

isoflavone formulation and uses, synthetic drug compounds and their use, and a novel food product.

Europe
Patent # 1049451		Compositions and methods for protecting skin from UV induced immunosuppresion and skin damage
Australia
Patent # 2002238278		Dimeric Isoflavones
USA
Patent # 7033621		Preparation of isoflavones from legumes
Patent # 6987098		Health supplements containing phyto-oestrogen, analogues or metabolites thereof
Czech
Patent # 295625		Therapeutic methods and compositions involving isoflavones
Singapore
Patent # 86589		Compositions and therapeutic methods involving isoflavones and methods thereof
Patent # 97715		Regulation of lipids and/or bone density and compositions thereof
Sweden
Patent # 526737		Compositions and methods for protecting skin from UV induced immunosuppresion and skin damage
South Africa
Patent # 2001/6502		Production of isoflavone derivatives
Patent # 2003/5091		Regulation of lipids and/or bone density and compositions thereof
China
Patent # 222038		Preparation of isoflavones from legumes
Patent # ZL01804008.X		Food product and process
Israel
Patent # 138129		Therapy of estrogen-associated disorders
Patent # 136784		Compositions and methods for protecting skin from UV induced immunosuppresion and skin damage
New Zealand
Patent # 528067		Dimeric Isoflavones
Patent # 538323		Production of isoflavone derivatives

These grants bring the number of Company patents granted in the U.S. and abroad to 61 as compared to 45 patents granted at the end of fiscal year 2005.

Trademark Protection

The Company also seeks IP protection through trademark registration of product names and corporate logos. The Company has an active program of registering all product trademarks in significant markets.

Licensing Arrangements

In 1997, the Company granted an exclusive license for the use of soy under three Novogen patent applications to Dupont Protein Technologies, Inc. (“PTI”) and PTI’s subsequent joint venture with Bunge now called Solae LLC. During fiscal 2005, this licence was transferred to Archer Daniels Midland Company (ADM). Under the terms of the transfer, ADM assumes the rights and obligations formally held by Solae, including the obligation for royalty and milestone payments under the terms of the licence. In fiscal 2005, the Company received A$1.7 million royalty in line with the Company’s licence agreement with “The Solae Company” (licence transferred to ADM) and A$0.2 million Licence fees received from Melbrosin International GmbH & Co under the terms of a licence agreement resulting from the granting to Novogen of certain patents relating to our consumer business. In fiscal 2006, the Company received $A1.2 million from ADM and $A0.5 million from Melbrosin International GmbH & Co. See “Item 5. Operating and Financial Review and Prospects – Operating Results – Fiscal 2006 v. Fiscal 2005.”

Australian Government

The activities of the Company are subject to numerous Australian laws and regulations, including those described below.

The Australian Corporations Law is the main body of law governing companies incorporated in Australia, such as Novogen and its Australian subsidiaries. The Australian Securities and Investments Commission (“ASIC”) is an Australian Government organization that administratively enforces legislation covering matters such as directors’ duties and responsibilities, preparation of accounts, auditor control, issue and transfer of shares, control of shareholders’ meetings, rights of minority interests, amendments to capital structure, preparation and filing of public documents such as annual reports, changes in directors and changes to capital.

The Australian Stock Exchange (“ASX”) imposes listing rules on all listed companies, such as Novogen. The rules cover issues such as continuous and immediate disclosure to the market of relevant information, periodic financial reporting and the prior approval of reports to shareholders.

The Company believes that it materially complies with the foregoing Australian laws and regulations pertaining to public and private companies.

The Company’s products and manufacturing facilities also are regulated by various Australian federal and state instrumentalities. The Company’s manufacturing facilities hold the appropriate licenses concerning hazardous chemical use and the manufacture of health products.

Australian Regulatory Requirements

The Therapeutic Goods Act 1989, or 1989 Act, sets out the legal requirements for the import, export, manufacture and supply of pharmaceutical products in Australia. The 1989 Act requires that all pharmaceutical products to be imported into, supplied in, manufactured in or exported from Australia be included in the Australian Register of Therapeutic Goods, or ARTG, unless specifically exempted under the Act.

In order to ensure that a product can be included in the ARTG, a sponsoring company must make an application to the Therapeutic Goods Administration, or TGA. The application usually consists of a form accompanied by data (based on the European Union requirements) to support the quality, safety and efficacy of the drug and payment of a fee. Application details are available on the TGA website http://www.tga.gov.au.

The first phase of evaluation, known as the Application Entry Process, is usually a short period during which an application is assessed on an administrative level to ensure that it complies with the basic guidelines. The TGA must decide within at least 40 working days whether it will accept the application for evaluation.

Once an application is accepted for evaluation, aspects of the data provided are allocated to evaluators within the different relevant sections, who prepare evaluation reports. Following evaluation, the chemistry and quality control aspects of a product may be referred to a sub-committee of the Australian Drug and Evaluation Committee, or ADEC, to review the relevant evaluation reports. The evaluation reports (along with any resolutions of the ADEC sub-committee) are then sent to the sponsoring company who then has the opportunity to comment on the views expressed within the evaluation report, provide corrections and to submit supplementary data to address any issues raised in the evaluation reports.

Once the evaluations are complete, the TGA prepares a summary document on the key issues on which advice will be sought from the ADEC. This summary is sent to the sponsoring company which is able to submit a response to the ADEC dealing with issues raised in the summary and those not previously addressed in the evaluation report. The ADEC provides independent advice on the quality, risk-benefit, effectiveness and access of the drug and conduct medical and scientific evaluations of the application. The ADEC’s resolutions are provided to the sponsoring company 5 working days after the ADEC meeting.

The TGA takes into account the advice of the ADEC in reaching a decision to approve or reject a product. Any approval for registration on the ARTG may have conditions associated with it.

From the time that the TGA accepts the initial application for evaluation, the TGA must complete the evaluation and make a decision on the registration of the product within at least 255 working days. The TGA also has a system of priority evaluation for products that meet certain criteria, including where the product is a new chemical entity that it is not otherwise available on the market as an approved product, and is for the treatment of a serious, life-threatening illness for which other therapies are either ineffective or not available.

Promensil and Trinovin’s regulatory status is currently under review by the TGA in Australia. In 2004, the Company was notified by the TGA that it was reviewing the listing status of its dietary supplements products in Australia. These products are currently listed as “AUSTL” listed complementary medicine under regulations of the TGA. Following the completion of this review, these products could retain this status or be de-listed in Australia. The Company believes that its products qualify for their current listing status as “AUSTL” listed complementary medicine. However, no assurance can be given that the TGA will ultimately reach this conclusion. In the event of an adverse determination by the TGA, the Company will consider what further options are available to it. Refer to “Risk Factors” for further details.

U.S. Regulatory Requirements

The FDA, and comparable regulatory agencies in other countries, regulate and impose substantial requirements upon the research, development, pre-clinical and clinical testing, labeling, manufacture, quality control, storage, approval, advertising, promotion, marketing, distribution and export of pharmaceutical products including biologics, as well as significant reporting and record-keeping obligations. State governments may also impose obligations in these areas.

In the United States, pharmaceutical products are regulated by the FDA under the Federal Food Drug and Cosmetic Act or FDCA and other laws including in the case of biologics, the Public Health Service Act. We believe, but cannot be certain, that our products will be regulated as drugs by the FDA. The process required by the FDA before drugs may be marketed in the United States generally involves the following:

	•		pre-clinical laboratory evaluations, including formulation and stability testing, and animal tests performed under the FDA’s Good Laboratory Practices regulations to assess potential safety and effectiveness;
	•		submission and approval of an Initial New Drug Application (“IND”), including results of pre-clinical tests, manufacturing information and protocols for clinical tests, which must become effective before clinical trials may begin in the United States;

	•		obtaining approval of Institutional Review Boards to administer the products to human subjects in clinical trials;
	•		adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for the product’s intended use;
	•		development of manufacturing processes which conform to FDA current Good Manufacturing Practices, or cGMPs, as confirmed by FDA inspection;
	•		submission of pre-clinical and clinical test results, and chemistry, manufacturing and controls information on the product to the FDA in a NDA; and
	•		FDA review and approval of an NDA, prior to any commercial sale or shipment of a product.

The testing and approval process requires substantial time, effort, and financial resources, and we cannot be certain that any approval will be granted on a timely basis, if at all.

The results of the pre-clinical tests, together with initial specified manufacturing information, the proposed clinical trial protocol, and information about the participating investigators are submitted to the FDA as part of an IND, which must become effective before we may begin human clinical trials in the U.S. Additionally, an independent Institutional Review Board must review and approve each study protocol and oversee conduct of the trial. An IND becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises concerns or questions about the conduct of the trials or information in the IND and imposes a clinical hold. If the FDA imposes a clinical hold, the IND sponsor must resolve the FDA’s concerns before clinical trials can begin. Pre-clinical tests and studies can take several years to complete, and there is no guarantee that an IND we submit based on such tests and studies will become effective within any specific time period, if at all.

Human clinical trials are typically conducted in three sequential phases that may overlap.

• Phase I: The drug is initially introduced into healthy human subjects or patients and tested for safety and dosage tolerance. Absorption, metabolism, distribution, and excretion testing is generally performed at this stage.

• Phase II: The drug is studied in controlled, exploratory therapeutic trials in a limited number of subjects with the disease or medical condition for which the new drug is intended to be used in order to identify possible adverse effects and safety risks, to determine the preliminary or potential efficacy of the product for specific targeted diseases or medical conditions, and to determine dosage tolerance and the optimal effective dose.

• Phase III: When Phase II studies demonstrate that a specific dosage range of the drug is likely to be effective and the drug has an acceptable safety profile, controlled, large-scale therapeutic Phase III trials are undertaken at multiple study sites to demonstrate clinical efficacy and to further test for safety in an expanded patient population.

We cannot be certain that we will successfully complete Phase I, Phase II, or Phase III testing of our products within any specific time period, if at all. Furthermore the FDA, the Institutional Review Board or we may suspend or terminate clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

Results of pre-clinical studies and clinical trials, as well as detailed information about the manufacturing process, quality control methods, and product composition, among other things, are submitted to the FDA as part of an NDA seeking approval to market and commercially distribute the product on the basis of a determination that the product is safe and effective for its intended use. Before approving an NDA, the FDA will inspect the facilities at which the product is manufactured and will not approve the product unless cGMP compliance is satisfactory. If applicable regulatory criteria are not satisfied, the FDA may deny the NDA or require additional testing or information. As a condition of approval, the FDA also may require post-marketing testing or surveillance to monitor the product’s safety or efficacy. Even after an NDA is approved, the FDA may impose additional obligations or restrictions (such as labeling changes), or even suspend or withdraw a product approval on the basis of data that arise after the product reaches the market, or if compliance with regulatory standards is not maintained. We cannot be certain that any NDA we submit will be approved by the FDA on a timely basis, if at all. Also, any such approval may limit the indicated uses for which the product may be marketed. Any refusal to approve, delay in approval, suspension or withdrawal of approval, or restrictions on indicated uses could have a material adverse impact on our business prospects.

Each NDA must be accompanied by a user fee, pursuant to the requirements of the Prescription Drug User Fee Act, or PDUFA, and its amendments. According to the FDA’s fee schedule, effective on October 1, 2006 for the fiscal year 2007, the user fee for an application requiring clinical data, such as an NDA, is $896,200. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual product fee for prescription drugs and biologics ($49,750), and an annual establishment fee ($313,100) on facilities used to manufacture prescription drugs and biologics. A written request can be submitted for a waiver for the application fee for the first human drug application that is filed by a small business, but there are no small business waivers for product or establishment fees. We are not at the stage of development with our products where we are subject to these fees, but they are significant expenditures that will be incurred in the future and must be paid at the time of application submissions to FDA.

Satisfaction of FDA requirements typically takes several years. The actual time required varies substantially, based upon the type, complexity, and novelty of the pharmaceutical product, among other things. Government regulation imposes costly and time-

consuming requirements and restrictions throughout the product life cycle and may delay product marketing for a considerable period of time, limit product marketing, or prevent marketing altogether. Success in pre-clinical or early stage clinical trials does not ensure success in later stage clinical trials. Data obtained from pre-clinical and clinical activities are not always conclusive and may be susceptible to varying interpretations that could delay, limit, or prevent marketing approval. Even if a product receives marketing approval, the approval is limited to specific clinical indications. Further, even after marketing approval is obtained, the discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market.

After product approval, there are continuing significant regulatory requirements imposed by the FDA, including record-keeping requirements, obligations to report adverse side effects in patients using the products, and restrictions on advertising and promotional activities. Quality control and manufacturing procedures must continue to conform to cGMPs, and the FDA periodically inspects facilities to assess cGMP compliance. Additionally, post-approval changes in ingredient composition, manufacturing processes or facilities, product labeling, or other areas may require submission of an NDA Supplement to the FDA for review and approval. New indications will require additional clinical tests and submission of an NDA Supplement. Failure to comply with FDA regulatory requirements may result in an enforcement action by the FDA, including Warning Letters, product recalls, suspension or revocation of product approval, seizure of product to prevent distribution, impositions of injunctions prohibiting product manufacture or distribution, and civil and criminal penalties. Maintaining compliance is costly and time-consuming. We cannot be certain that we, or our present or future suppliers or third-party manufacturers, will be able to comply with all FDA regulatory requirements, and potential consequences of noncompliance could have a material adverse impact on our business prospects.

The FDA’s policies may change, and additional governmental regulations may be enacted that could delay, limit, or prevent regulatory approval of our products or affect our ability to manufacture, market, or distribute our products after approval. Moreover, increased attention to the containment of healthcare costs in the United States and in foreign markets could result in new government regulations that could have a material adverse effect on our business. Our failure to obtain coverage, an adequate level of reimbursement, or acceptable prices for our future products could diminish any revenues we may be able to generate. Our ability to commercialize future products will depend in part on the extent to which coverage and reimbursement for the products will be available from government and health administration authorities, private health insurers, and other third-party payers. European Union and U.S. government and other third-party payers increasingly are attempting to contain healthcare costs by consideration of new laws and regulations limiting both coverage and the level of reimbursement for new drugs. We cannot predict the likelihood, nature or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.

Our activities also may be subject to state laws and regulations that affect our ability to develop and sell our products. We are also subject to numerous federal, state, and local laws relating to such matters as safe working conditions, clinical, laboratory, and manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with such laws and regulations now or in the future, and the failure to comply may have a material adverse impact on our business prospects.

The FDCA includes provisions designed to facilitate and expedite the development and review of drugs and biological products intended for treatment of serious or life-threatening conditions that demonstrate the potential to address unmet medical needs for such conditions. These provisions set forth a procedure for designation of a drug as a “Fast Track product.” The Fast Track designation applies to the combination of the product and specific indication for which it is being studied. A product designated as Fast Track is ordinarily eligible for additional programs for expediting development and review, but products that are not in Fast Track drug development programs may also be able to take advantage of these programs. These programs include priority review of NDAs and accelerated approval. Drug approval under the accelerated approval regulations may be based on evidence of clinical effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. A postmarketing clinical study will be required to verify clinical benefit, and other restrictions to assure safe use may be imposed.

Under the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Patent Act”), a sponsor may obtain marketing exclusivity for a period of time following FDA approval of certain drug applications, regardless of patent status, if the drug is a new chemical entity or if new clinical studies were required to support the marketing application for the drug. This marketing exclusivity prevents a third party from obtaining FDA approval for an identical or nearly identical drug under an Abbreviated New Drug Application (“ANDA”) or a “505(b)(2) New Drug Application.” The statute also allows a patent owner to obtain an extension of applicable patent terms for a period equal to one-half the period of time elapsed between the filing of an IND and the filing of the corresponding NDA plus the period of time between the filing of the NDA and FDA approval, with a five year maximum patent extension. We cannot be certain that Novogen will be able to take advantage of either the patent term extension or marketing exclusivity provisions of these laws.

The Best Pharmaceuticals for Children Act, signed into law on January 4, 2002, provides an additional six months of marketing exclusivity for new or marketed drugs, for which specific pediatric studies were conducted at the written request of the FDA. On December 3, 2003, the Pediatric Research Equity Act was signed into law, authorizing the FDA to require pediatric studies for drugs and biological products to ensure the drugs’ or products’ safety and effectiveness in children. This Act required that NDAs or supplements to NDAs contain data assessing the safety and effectiveness for the claimed indication in all relevant pediatric subpopulations. Dosing and administration must be supported for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant deferrals for submission of data, or full or partial waivers.

European Union Regulatory Requirements

Outside the United States, our ability to market our products will also be contingent upon receiving marketing authorizations from the appropriate regulatory authorities and compliance with applicable post-approval regulatory requirements. Although the specific requirements and restrictions vary from country to country, as a general matter, foreign regulatory systems include risks similar to those associated with FDA regulation, described above. Under EU regulatory systems, marketing authorizations may be submitted either under a centralized or a national procedure. Under the centralized procedure, a single application to the European Medicines Agency (EMEA) leads to an approval granted by the European Commission which permits the marketing of the product throughout the EU. The centralized procedure is mandatory for certain classes of medicinal products, but optional for others. For example, all medicinal products developed by certain biotechnological means, and those developed for cancer and other specified diseases and disorders, must be authorized via the centralized procedure. We assume that the centralized procedure will apply to our products that are developed by means of a biotechnology process. The national procedure is used for products that are not required to be authorized by the centralized procedure. Under the national procedure, an application for a marketing authorization is submitted to the competent authority of one member state of the EU. The holders of a national marketing authorization may submit further applications to the competent authorities of the remaining member states via either the decentralized or mutual recognition procedure. The decentralized procedure enables applicants to submit an identical application to the competent authorities of all member states where approval is sought at the same time as the first application, while under the mutual recognition procedure, products are authorized initially in one member state, and other member states where approval is sought are then requested to recognize the original authorization based upon an assessment report prepared by the original authorizing competent authority. Both the decentralized and mutual recognition procedures should take no longer than 90 days, but if one member state makes an objection, which under the legislation can only be based on a possible risk to human health, the application will be automatically referred to the Committee for Medicinal Products for Human Use (CHMP) of the EMEA. If a referral for arbitration is made, the procedure is suspended. However, member states that have already approved the application may, at the request of the applicant, authorize the product in question without waiting for the result of the arbitration. Such authorizations will be without prejudice to the outcome of the arbitration. For all other concerned member states, the opinion of the CHMP, which is binding, could support or reject the objection or alternatively could reach a compromise position acceptable to all EU countries concerned. The arbitration procedure may take an additional year before a final decision is reached and may require the delivery of additional data.

As with FDA approval we may not be able to secure regulatory approvals in Europe in a timely manner, if at all. Additionally, as in the United States, post-approval regulatory requirements, such as those regarding product manufacture, marketing, or distribution, would apply to any product that is approved in Europe, and failure to comply with such

obligations could have a material adverse effect on our ability to successfully commercialize any product.

The conduct of clinical trials in the European Union is governed by the European Clinical Trials Directive (2001/20/EC), which was implemented in May 2004. This Directive governs how regulatory bodies in member states control clinical trials. No clinical trial may be started without a clinical trial authorization granted by the national competent authority and favorable ethics approval.

Dietary Supplements

The Company’s products, Promensil, Trinovin and Rimostil are classified as “dietary supplements”. “Dietary supplements”, although subject to the FDCA, are treated differently than pharmaceuticals and are the subject of recent legislation known as the Dietary Supplement Health and Education Act of 1994 (the “Dietary Supplement Act”). The Dietary Supplement Act defines dietary supplements, and regulates claims and labeling of dietary supplements. Under the Dietary Supplement Act, a company is responsible for determining that the dietary supplements it manufactures or distributes are safe, and that any representations or claims made about them are substantiated by adequate evidence to show that they are not false or misleading. The FDA has published a proposed rule for cGMP regulations for dietary supplements. The Company believes that Promensil, Trinovin and Rimostil, the products of the Company currently sold in the U.S., comply with the claims, labeling and other rules relating to dietary supplements. The products are formulated and packaged by a contract manufacturer in the U.S. which informed the Company that it is compliant with the FDA’s proposed cGMP requirements. The active bulk ingredients for Promensil, Trinovin and Rimostil are produced by the Company at its production facility which is certified by the TGA as adhering to cGMP for Australia.

Organizational Structure

Corporate Structure

Novogen Limited is a company limited by shares and is incorporated and domiciled in Australia. Novogen Limited and its controlled entities “Novogen” or “Group” have prepared a consolidated financial report incorporating the entities that it controlled during the financial year, which included the following controlled entities:

Name of Entity		Country of Incorporation		Ownership %
Novogen Laboratories Pty Ltd		Australia			100
Novogen Research Pty Ltd		Australia			100
Central Coast Properties Pty Ltd		Australia			100
Phytosearch Pty Ltd		Australia			100
Phytogen Pty Ltd		Australia			100
Glycotex Pty Ltd		Australia			100
Norvogen Pty Ltd		Australia			100

Name of Entity		Country of Incorporation		Ownership %
Novogen Inc		USA			100
Glycotex Inc		USA			84.3
Novogen Limited (U.K.)		U.K.			100
Promensil Limited		U.K.			100
Novogen BV		Netherlands			100
Novogen Canada Limited		Canada			100
Marshall Edwards Inc		USA			86.9
Marshall Edwards Pty Limited*		Australia			86.9

Property, Plants and Equipment

The Company’s major isoflavone extraction manufacturing plant is located in Wyong in New South Wales. This plant is used to manufacture the active raw material used in the Company’s dietary supplement products. The Company owns the land and buildings at Wyong site which covers an area of approximately 3.37 hectares. The Company also owns the equipment used in the extraction process and laboratories. The manufacturing capacity of the Wyong extraction and manufacturing facility is adequate to produce the forecasted isoflavone extract requirements for at least the next two years.

The pilot plant used for the manufacture of the phenoxodiol clinical trial material and other pharmaceutical product candidates is located in the Company’s leased premises in North Ryde, Sydney. The North Ryde premises occupies 1,088 square meters. These premises are also used as Novogen’s corporate headquarters. The Company owns the equipment used in the pilot plant. The plant has enough capacity to produce clinical trial quantities up to Phase II of the Company’s product candidates.

Item 4A. Unresolved Staff Comments

None

Item 5. Operating and Financial Review and Prospects

The following discussion and analysis should be read in conjunction with “Item 18. Financial Statements” included below. Operating results are not necessarily indicative of results that may occur in future periods. This discussion and analysis contains forward-looking statements that involve risks uncertainties and assumptions. The actual results may differ materially from those anticipated in the forward-looking statements as a result of many factors including, but not limited to, those set forth under “Forward-Looking Statements” and “Risk Factors” in Item 3. “Key Information” included above in this Annual Report. All forward-looking statements included in this document are based on the information available to us on the date of this document and we assume no obligation to update any forward-looking statements contained in this Annual Report.

Application of Critical Accounting Policies

The summary of significant accounting policies are described in Note 1 to the Consolidated Financial Statements under Item 18 of this Annual Report. A reconciliation of operating results to U.S. generally accepted accounting principles (“US GAAP”) is included in Note 24 to the Consolidated Financial Statements under Item 18 of this Annual Report.

Revenue Recognition

Revenues from product sales and manufacturing revenue are recognized at the time of shipment and a provision is made at that time for estimated future credits, chargebacks, sales discounts, and returns. These sales provision accruals are presented as an increase in accounts payable balances. The Company continually monitors the adequacy of the accruals by comparing the actual payments to the estimates used in establishing the accruals. The Company ships product to customers primarily FOB and utilizes the following criteria to determine appropriate revenue recognition: pervasive evidence of an arrangement exists, delivery has occurred, selling price is fixed and determinable and collection is reasonably assured. Sales terms are generally 30 days.

Royalties under license agreements with third parties are recognized when earned through the sale of the product by the licensor net of any estimated future credits, charge-backs, sales discounts and refunds.

Inventory Adjustments

Inventories are measured at the lower of cost or net realizable value. The Company reviews the components of inventory on a regular basis for excess, obsolete and impaired inventory based on estimated future usage and sales. The likelihood of any material inventory write-downs is dependent on rapid changes in customer demand or new product introductions by competitors.

Research and development expenses

The directors do not consider the development programs to be sufficiently advanced to reliably determine the economic benefits and technical feasibility to justify capitalisation of development costs. These costs have been recognised as an expense when incurred.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of equity instruments at the date at which they are granted. The fair value is determined using a binomial model, using the assumptions detailed in Note 10.

Impairments

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

Results of Operations

The following table provides a summary of revenues and expenses to supplement the more detailed discussions below:

INCOME STATEMENTS
for the year ended June 30, 2006

		Notes				2006				2005				2006
						A$’000				A$’000				US$’000
Continuing Operations
Revenue			2				13,500				13,404				10,021
Cost of sales							(5,445	)			(4,666	)			(4,042	)
Gross profit							8,055				8,738				5,979
Other income			2				4,738				4,274				3,517
Research & development expenses							(12,014	)			(10,217	)			(8,918	)
Selling & promotional expenses							(9,013	)			(8,411	)			(6,690	)
Shipping and handling expenses							(556	)			(444	)			(413	)
General and administrative expenses							(8,769	)			(6,566	)			(6,509	)
Other Expenses							(301	)			—				(223	)
Finance costs							(52	)			(56	)			(39	)
Loss before income tax			2				(17,912	)			(12,682	)			(13,296	)
Income tax expense			3				(1	)			(2	)			(1	)
Loss for the period							(17,913	)			(12,684	)			(13,297	)
Loss attributable to minority interest							1,693				1,152				1,257
Loss attributable to members of Novogen Limited							(16,220	)			(11,532	)			(12,040	)

Operating Results – Fiscal 2006 v Fiscal 2005

Revenue

The Group earned gross revenues for the year ended June 30, 2006 of $18.2 million versus $17.7 million in the previous corresponding period, an increase of $0.5 million. The increase in revenue was due to increased sales of the Company’s consumer products which were $13.5 million for the year ended June 30, 2006 compared with $13.4 million for the previous year, an increase of $0.1 million or 1%. Other income increased by $0.4 million to $4.7 million verses $4.3 million for the previous corresponding period. The increase in Other income was mainly due to increased government grant income through the Pharmaceutical Partnership Program and an increase of A$0.5 million in revenue received from litigation settlements from our consumer products patent defence activities.

Total revenue, adjusted for U.S. GAAP, remained constant at A$15.9 million in fiscal 2006 and 2005. Revenue under U.S. GAAP is reduced by certain trade promotions which are treated as discounts to Sales Revenue. These trade promotion expenditures are treated as a marketing expense under AIFRS. Other Revenue under U.S. GAAP is also reduced by interest revenue being recognized in Other Income whereas under AIFRS interest income is recognized in Other Operating Revenue. See Note 24 “Differences between AIFRS and U.S. GAAP” for detailed U.S. GAAP formatted Statement of Financial Performance.

Consumer product sales

Sales in Australasia for the year ended June 30, 2006 were $5.2 million, an increase of $0.6 million or 13% from $4.6 million for the previous year. Sales in North America were, $5.7 million, a reduction of $0.5 million or 8% from $6.2 million for the previous year. Sales in Europe of $2.6 million for the year were up slightly by $0.1 million from $2.5 million for the previous corresponding period.

During the financial year, the consumer business launched three new product introductions into selected markets including Promensil Post Menopause into the U.S. market in September 2005, Promensil After Menopause in Canada in January 2006 and a Promensil menopause test in Australia in March 2006. These products will be launched progressively into other markets and are targeted to augment the Promensil brand by extending the market to include an after menopause product and menopause test to help women diagnose the symptoms of menopause.

Sales levels of our consumer products in Australia, Canada and to a lesser extent in Europe, have continued to benefit from our targeted promotional programs. Sales in the U.S. market were affected by the market decline in the natural menopause product market of 18%. This decline was due to reduced advertising and sales and marketing effort across the sector and increased competition from hormone replacement therapy (“HRT”) products which appear to be regaining some of the markets which were

impacted by the recent controversies surrounding safety issues. In October 2006, the Company licensed the U.S. rights to Promensil and Trinovin brands to Natrol, Inc. The Company will continue to position its products as the most clinically trialled natural alternatives in the menopause market.

Costs and Expenses

Total expenses before interest and tax increased by $5.8 million to $36.1 million for the year ended June 30, 2006 from $30.3 million for the previous year. Cost of sales increased by $0.8 million, reflecting lower production volumes. Selling and promotional expenses increased by $0.6 million to $9.0 million. The increase was associated with the expenses incurred to fund new product launches and to continue our targeted promotional program. Research and development expenses were $12.0 million, an increase of $1.8 million from $10.2 million for the same period last year, reflecting the costs associated with progressing the pre-clinical and clinical development program including the anti-cancer program being conducted by MEI and manufacturing scale-up costs associated with phenoxodiol. General and administrative expenses were $8.8 million an increase of $2.2 million from $6.6 million for the same period last year. The increased costs included the costs associated with the withdrawn registration statement for Glycotex, Inc. of $1.0 million, $0.2 million increase in share based payments to employees and consultants and increases in other corporate costs.

Net loss

The operating loss attributable to Novogen shareholders for the fiscal year, after allowing for losses attributable to minority interests of $1.7 million, increased by $4.7 million to $16.2 million from a loss of $11.5 million for the previous year.

The net loss from ordinary activities after income tax for the consolidated group for the year ended June 30, 2006 increased by $5.2 million to $17.9 million from $12.7 million for the previous year. The increase in the Company’s net loss for the year ended June 30, 2006 was due to higher cost of goods due to reduced production volumes, higher sales and marketing expenditure, increased research and development costs and additional administration and general expenses. The increased loss was partly offset by an increase in sales and other revenues.

Liquidity and capital resources

The Company has continued to finance its operations from equity capital.

At June 30, 2006, the Company had cash balances of A$33.5 million, a decrease of A$13.8 million from the previous year’s balance of A$47.3 million. Cash was used to fund the Company’s operations including the clinical trial program for the anti-cancer drug phenoxodiol, being undertaken by MEI. Cash resources were also used to fund the ongoing efforts in the areas of cardiovascular and anti-inflammatory research and development. Cash was also used to supplement the cash flows from the consumer

products business and general corporate purposes. At June 30, 2006 the Company held cash balances in U.S. dollars of US$13.2 million.

Marshall Edwards, Inc. post balance date capital raising

On July 11, 2006, MEI entered into a securities purchase agreement with certain accredited investors providing for the placement of 6,329,311 shares of its common stock and warrants exercisable for 2,215,258 shares of its common stock at a purchase price of US$2.90 per unit (PIPE). The warrants have an exercise price of US$4.35 per share, subject to certain adjustments. The warrants may be exercised no less than six months from the closing date and will expire four years from the date of issuance, or July 11, 2010. MEI closed the private placement on July 11, 2006. In conection with the PIPE the Company received proceeds of US$16.9 million net of US$1.5 million commissions and other costs.

On July 11, 2006, MEI entered into a standby equity distribution agreement (SEDA), with Cornell Capital Partners, LP. Under the SEDA, MEI may issue and sell to Cornell shares of its common stock for a total purchase price of up to US$15 million, once a resale registration statement is in effect. MEI has sole discretion whether and when to sell shares of its common stock to Cornell. Cornell will be irrevocably bound to purchase shares of common stock from MEI after MEI sends a notice that it intends to sell shares of common stock to Cornell. Each advance under the SEDA is limited to a maximum of US$1.5 million. Management does not believe that it will access the SEDA until 2007.

The Company invests its cash and cash equivalents in interest bearing facilities with various maturity dates. At the end of fiscal 2006, deposits amounting to A$12.1 million had a weighted average interest rate of 5.78% and cash deposits of A$21.4 million had a weighted average interest rate of 3.65%.

At the end of fiscal 2006, the Company had outstanding interest bearing liabilities in the form of lease liabilities of A$0.1 million. These leases have an average lease term of 4 years. The average interest rate implicit in the leases is 7.75% as compared to 8.33% in fiscal 2005.

The Company has arranged finance lease facilities with St George Bank Limited, an Australian commercial bank, of A$4.0 million, of which A$3.4 million was unused at the end of fiscal 2006.

The Company does not hedge its foreign exchange exposures. The Company, however, continues to minimise foreign exchange risk by having international sales and marketing expenses being denominated in local currencies. See “Item 11 Quantitative and Qualitative Disclosures About Market Risk – Foreign Currency Risk”.

During fiscal 2006, the Company had net cash outflows from operating activities of A$14.4 million. Included in this amount are cash receipts of A$1.5 million of interest received from invested cash balances, A$1.3 million from the proceeds of government

grants being primarily the Pharmaceutical Partnerships Program grants for research and development and A$1.2 million royalty received from ADM pursuant to a license agreement between the Company and PTI. See “Item 4. Information on the Company- Business Overview – Clinical Developments — License Agreements”.

It is the opinion of the Company that the current level of working capital is sufficient to meet present requirements. There are no commitments for capital expenditure outstanding at the end of the financial year.

Research and Development

Research and development policy

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

The Company spent A$12.0 million on gross R&D expenditure during fiscal 2006. The Company spent A$10.2 million on gross R&D expenditure in fiscal 2005.

Due to the nature and uncertainty of the R&D projects being undertaken by the Company, it is not possible to reasonably estimate the cost and timing of project completion. The costs of R&D projects are not estimated on a project by project basis and to analyse costs between projects could only be performed on an arbitrary and subjective basis.

The progress on research and development projects and expenses is monitored and controlled in a number of ways:

•		All third party research and development including the conduct of clinical trials are carried out under contract. The contract details include project milestones and expenditure budgets. Senior Novogen research and development staff monitor the projects to ensure that milestones are achieved in a timely manner.
•		In-house research and development is managed by the Research and Development Director and senior research and development staff. Budgets are prepared annually and agreed by the Novogen Board. Expenses are monitored monthly, actual versus budget by expense line and in total.

Trend Information

Sales of the Company’s dietary supplements increased slightly in fiscal 2006 compared to fiscal 2005. Sales levels of our consumer products in Australia, Canada and to a lesser extent in Europe, have continued to benefit from our targeted promotional programs. Sales in the U.S. market were affected by the market decline in the natural menopause product market of 18%. This decline was due to reduced advertising and sales and marketing effort across the sector and increased competition from HRT products which appear to be regaining some of the markets which were impacted by the recent controversies surrounding safety issues. The Company will continue to position its products as the most clinically trialled natural alternatives in the menopause market.

The Company expects to continue its significant expenditure on research and development and the impact on cash resources and results from operations of this expenditure will vary with the extent and timing of the future clinical trial program. It is not possible to make accurate predictions of future operating results.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Table of Contractual Obligations

The following table summarizes our future payment obligation and commitments as at June 30, 2006.

		Payments due by period
In $000’s		Total				Less than 1 year				1-3 years				4-5 years				After 5 years
Operating Leases			1,858				427				1,367				64				—
Finance Leases			15				15				—				—				—
Other Expenditure Commitments *			3,575				3,506				69				—				—
Total Contractual Cash Obligations			5,448				3,948				1,436				64				—

Item 6. Directors, Senior Management and Employees.

DIRECTORS

The names and details of the Company’s Directors during the financial year and up to the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

Mr P A Johnston (Chairman)
Mr C Naughton (Managing Director)
Professor G E Kelly (Executive Director) resigned from the Board on September 2, 2005, employment with the Company ceased
    on October 30, 2006.
Professor P J Nestel
Mr P B Simpson
Dr L C Read
Mr G M Leppinus
Professor AJ Husband (Executive Director) Appointed May 23, 2006

Names, qualifications, experience and special responsibilities

Philip A Johnston Non-Executive Chairman
Dip Eng (Production)

Non-Executive Director since 1997, Mr Johnston was elected chairman of Novogen Limited with effect from January 1, 2001. Mr Johnston has extensive experience in the pharmaceutical industry including 9 years as an Executive Director of Wellcome Australia Limited. He was previously a Director of two subsidiary Companies of GlaxoWellcome. He has had responsibility for production, distribution, quality assurance and consumer product development and has been directly involved in the establishment of strategic alliances and joint ventures. He has completed a number of executive development programs including the University of NSW and the London Business School.

During the last three years Mr Johnston has served as a director and is currently a director of the ASX listed company, Lipa Pharmaceuticals Limited and NASDAQ listed, Novogen subsidiary, Marshall Edwards, Inc. (MEI or Marshall Edwards)

Christopher Naughton Managing Director
BEc, LLB

Managing Director since March 1997, Mr Naughton joined Novogen in 1996 as Commercial Director. Mr Naughton has degrees in Economics from the ANU and in Law from the UNSW. He has completed the Program for Management Development at the Harvard Business School, and is an Attorney in New South Wales. After working in merchant banking, he has spent the last 21 years in the pharmaceutical industry, including appointments as a Director of Wellcome Australia Limited and in worldwide business development with The Wellcome Foundation Limited in the U.K.

During the last three years Mr Naughton has served as Chief Executive Officer (“CEO”) and director and is currently CEO and director for the NASDAQ listed, Novogen subsidiary, Marshall Edwards, Inc.

Professor Paul J Nestel Non-Executive Director
AO MD, FTSE, FRACP, FAHA, FCSANZ

Professor Nestel is currently a Senior Principal Research Fellow and Head of the Cardiovascular Nutrition Laboratory at the Baker Medical Research Institute, Victoria. Professor Nestel is also a Consultant Physician at the Alfred Hospital, Melbourne. He is president of the International Life Sciences Institute (Australasia) and is a member of the board of directors of ILSI South East Asia. He was formally Clinical Professor in Medicine, The Flinders University of South Australia. Professor Nestel has been and remains a member of many national and international committees for research and policy on cardiovascular disease. He has published over 400 scientific and medical papers and is a Fellow of the Australian Academy of Technological Sciences and Engineering, a Fellow of the American Heart Association and a Fellow of the Cardiac Society of Australia and New Zealand. Professor Nestel is an Officer of the Order of Australia.

During the last three years Professor Nestel has served as a director and is currently a director for the NASDAQ listed, Novogen subsidiary, Marshall Edwards, Inc.

Peter B Simpson Non-Executive Director
MPharm, PhC

Non-Executive Director since 1994, Mr Simpson has extensive experience in the development of pharmaceutical products for international markets. He was Research and Development Manager with David Bull Laboratories for 8 years prior to being appointed Chief Executive Officer of Biota Holdings Limited in 1987. At Biota he oversaw the research and development of an effective cure for influenza and the licensing of that discovery to Glaxo Limited. Mr Simpson is currently associated with a wide range of biotechnology and pharmaceutical interests, predominately associated with the conduct of late stage clinical studies and the commercialisation of Australian biomedical discoveries.

Dr Leanna C Read Non-Executive Director
BAgSc (Hons), PhD, FTSE, FAICD

Dr Read was appointed Non-Executive Director in September 2003. Dr Read is founder and Managing Director of TGR BioSciences Pty Ltd, an early-stage biotech company that discovers novel therapeutics by high-throughput screening. She has 15 years of experience in leading and managing commercially-related research organisations, including the CRC for Tissue Growth and Repair, and the Child Health Research Institute. Dr Read holds a professorial appointment at Flinders University and the

University of South Australia and has published over 90 scientific papers. Board appointments currently include the Prime Minister’s Science, Engineering and Innovation Council and the Australian Proteome Analysis Facility Inc. Dr Read was a member of the Industry Research and Development Board for six years until 2002 and chaired its Biological Committee. She is a Fellow of the Australian Academy of Technological Sciences and Engineering and has been awarded the inaugural Biotechnology Industry Service Award.

Mr Geoffrey M Leppinus Non-Executive Director
BEc FCA

Non-Executive Director since February 2005, Mr Leppinus was, until July 2002, a Senior Audit and Advisory partner of KPMG with over 30 years experience in professional accounting and auditing. At KPMG he was responsible for the audit of a number of large public companies and the Australian subsidiaries of U.S. listed public corporations. Mr Leppinus has experience in the assessment of systems of internal control over financial reporting and the financial reporting requirements applicable to listed public companies. He has also had a wide range of experience in conducting due diligence for business acquisitions. Mr Leppinus has served as a member of the Australian Auditing Standards Board and member of the State Council of the Institute of Chartered Accountants in Australia.

Professor Alan Husband Executive Director
PhD, DSc, FASM

Professor Husband was appointed as a Director of Novogen Limited on the May 23, 2006. Professor Husband has over 30 years experience in basic and applied scientific research and research management. His academic research interests in immunology and pathology have been reflected in the publication of several books and over 200 scientific papers and he currently holds a professorial appointment at the University of Sydney. These activities in basic and applied research, coupled with experience in the biotechnology industry, provided the foundations for his current appointment as Group Director of Research for the Novogen group of companies, which he has held since 1996. In this position Professor Husband is responsible for the development and commercialisation of the Company’s flavonoid drug technology platform. During this time he has managed the scientific discovery and clinical trial programs, including development of novel oncology, cardiovascular and anti-inflammatory therapeutics as well as wound healing technologies.

Executive Officers’ profiles

David R. Seaton – Chief Financial Officer
B Bus KCAE, M Com UNSW, CPA

Mr. Seaton is a graduate in Business Studies as well as holding a Master of Commerce degree from the University of NSW. He has completed Management Development programs at Northwestern University in Chicago as well as at Duke University and the London Business School. He has had 20 years experience in the pharmaceutical industry and prior to joining Novogen in 1999 was the Finance Director of GlaxoWellcome Australia Ltd. Mr. Seaton was also Finance Director of Wellcome Australia Limited prior to its merger with Glaxo in 1995.

In September 2005, Mr. Seaton was appointed a director and secretary of Glycotex, Inc. Mr Seaton was appointed Chief Financial Officer (“CFO”) of Glycotex, Inc. in November 2006.

Warren Lancaster – Vice President Commercial and Corporate Development
BSc, MBA

A graduate in physics as well as holding an MBA from the Australian Graduate School of Management (Sydney), Mr. Lancaster worked as a business strategy and management consultant with an Australian consulting firm before joining the Company in March 1997, specifically to assume the role of Vice President- North America.

Bryan Palmer – Operations General Manager

Mr. Palmer joined Novogen in 1993. Since that time he has held a number of senior management positions within the Company. He completed the Program for Management Development at the Harvard Business School in 2001.

Craig Kearney – General Manager Consumer Business
BMS Waikato.

Craig Kearney joined Novogen in December 2001 as the General Manager of the Consumer Business. He has a Bachelor of Management Studies from Waikato University in New Zealand and has subsequently completed managerial development programmes at London School of Business and Duke University in the U.S. He has worked 18 years in the Over The Counter (OTC) consumer pharmaceutical category including 10 years for Wellcome New Zealand and Wellcome Australia, 6 years for Parke Davis/Warner Lambert Australia and prior to Novogen he worked for Pfizer Australia. He held senior sales, marketing and business management roles for all three companies.

Ronald L Erratt
FINA

Mr Erratt has been the Company Secretary of Novogen Limited since it floated on the Australian Stock Exchange in 1994. He is also the Company Secretary for all the wholly owned subsidiaries of Novogen. Mr Erratt has over 30 years experience in accounting and commercial roles. Prior to joining Novogen he was the Director of Superannuation

Fund Administration at Towers Perrin, an international firm of Actuaries and Management Consultants.

Compensation

Remuneration Philosophy

Remuneration is assessed for Directors and senior Executives with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality executive team. The appropriateness and nature of emoluments is assessed by reference to employment market conditions. The performance criteria against which Directors and Executives are assessed have regard to the financial and non-financial objectives of Novogen Limited, however, Directors and senior Executive annual remuneration have no variable performance elements that are directly linked to company performance.

Employee share option plan.

The employee share option plan provides for the issue of options to eligible employees being an employee or Director of the Company or related company. Each option entitles its holder to acquire one fully paid ordinary share and is exercisable at a price equal to the weighted average price of such shares at the close of trading on the Australian Stock Exchange Limited for the five days prior to the date of issue. Options are not transferable. The option lapses if the employee ceases to be an employee during the vesting period. Options vest equally over a four year period from date of grant and expire five years after grant date. There are currently 51 employees eligible for this scheme (2005: 47)

The philosophy behind the employee share option plan is to encourage a level of ownership in the Company by employees and align their interests with those of shareholders. The employee share option plan is modest in scale and is principally designed to foster teamwork and the benefits of pursuing shared goals.

The Company is a small to medium sized research organisation pursuing a significant number of different projects where it relies on its staff being flexible in the way in which they work with their own colleagues together with outside collaborators. The Company’s desire to capitalise on its ability to be flexible and adapt as new information is discovered and new opportunities arise underpins the Company’s business strategies. In this context the Company believes it is inappropriate to have individual performance hurdles tied to share options or other variable remuneration.

The Company believes it has a highly motivated workforce which responds better to the existing remuneration arrangements than the more complex variable systems popular with companies trying to engender individual competition amongst their fellow staff.

All Executive Directors and Executives have the opportunity to qualify for participation in the Employee Share Option Plan after achieving a qualifying service period.

Remuneration committee

The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors, the Managing Director, Executive Director and senior Executives.

The Remuneration Committee 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 executive team.

Remuneration structure

In accordance with best practice corporate governance, the remuneration structure of Non-Executive Directors and Executive Director and senior management are separate and distinct.

Non-Executive director remuneration

The Constitution of the Company and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The latest determination for Novogen Limited was at the Annual General Meeting held on the October 28, 2005 when the shareholders approved an aggregate remuneration of $560,000. The total Non-Executive Director remuneration of Novogen Limited for the year ended June 30, 2006 utilised $280,000 of this authorised amount.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed periodically.

Each Non-Executive Director receives a fee for being a Director of the Company. An additional fee is also paid for each board committee on which a Director sits. The payment of additional fees for serving on a committee recognises the additional time commitment required by Non-Executive Directors who serve on one or more sub committees.

The remuneration of Non-Executive Directors for the period ending June 30, 2006 is detailed in the table below.

Executive and senior manager remuneration

The Remuneration Committee of the Board of Directors is responsible for determining

and reviewing compensation arrangements for the Managing Director, Executive Director and senior Executives. The Remuneration Committee 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 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 the use of motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group.

All Executive Directors and Executives have the opportunity to qualify for participation in the Employee Share Option Plan after achieving a qualifying service period.

The performance criteria against which Directors and Executives are assessed have regard to the financial and non-financial objectives of Novogen Limited.

Employment contracts

It is the Remuneration Committee policy that employment agreements are entered into with the Chief Executive Officer, the Executive Director, and each of the Executives except for the VP Commercial and Corporate Development. The contracts for service between the Company and the CEO, Executive Director and the Executives are for terms of three years with a notice period of six months. In the event of the Company terminating the employment under the terms of the contract the Company shall pay the pro-rata balance of the unexpired contract term plus an additional amount of one and one half times the then current annual remuneration of the employee. However, the maximum payable on termination by the Company will be three years’ remuneration. The minimum payable on termination by the Company will be eighteen months’ remuneration. The Company may terminate the contracts at anytime without notice if serious misconduct has occurred. Where termination with cause occurs, there is no entitlement to termination payments under the term of the contract. On termination, any unvested options issued under the employee share option plan are immediately forfeited.

Details of the nature and amount of each element of the emolument of each Director of Novogen Limited and the five Executive Officers included in the Company’s senior management are as follows:

Director remuneration from Novogen Limited for the year ended June 30, 2006

																														Post
		Short term emoluments												Termination				Share based payments												Employment
		Salary				Committee								& similar				Options granted												Super-
		and Fees				fee				Other				payments								Amortised cost				Remuneration				annuation				Total
		A$				A$				A$				A$				Number ***				A$				%				A$				A$
PA Johnston			63,064				14,000				—				—				—				—				—				6,936				84,000
C Naughton			518,835				—				46,827				—				—				—				—				100,587				666,249
AJ Husband *			290,766				—				41,785				—				30,436				51,281				11.9	%			47,618				431,450
GE Kelly **			362,388				—				—				—				31,792				7,145				1.8	%			32,615				402,148
PJ Nestel AO			40,000				12,000				—				—				—				—				—				—				52,000
PB Simpson			35,540				14,000				—				—				—				—				—				4,460				54,000
LC Read			36,368				4,000				—				—				—				—				—				3,632				44,000
GM Leppinus			25,650				6,000				—				—				—				—				—				14,350				46,000
			1,372,611				50,000				88,612				—				62,228				58,426				3.3	%			210,198				1,779,847

Director remuneration from Marshall Edwards for the year ended June 30, 2006

																														Post
		Short term emoluments												Termination				Share based payments												Employment
						Committee								& similar				Options granted												Super-
		Base fee				fee				Other				payments								Amortised cost				Remuneration				annuation				Total
		A$				A$				A$				A$				Number				A$				%				A$				A$
PA Johnston			27,524				—				—				—				—				—				—				2,476				30,000
PJ Nestel AO			30,000				—				—				—				—				—				—				—				30,000
			57,524				—				—				—				—				—				—				2,476				60,000

Director remuneration from Glycotex for the year ended June 30, 2006

																														Post
		Short term emoluments												Termination				Share based payments												Employment
						Committee								& similar				Options granted												Super-
		Base fee				fee				Other				payments								Amortised cost				Remuneration				annuation				Total
		A$				A$				A$				A$				Number				A$				%				A$				A$
PA Johnston			39,024				—				—				—				—				—				—				—				39,024
			39,024				—				—				—				—				—				—				—				39,024

Total Directors’ remuneration for the year ended June 30, 2006

																														Post
		Short term emoluments												Termination				Share based payments												Employment
		Salary and				Committee								& similar				Options granted												Super-
		Fees				fee				Other				payments								Amortised cost				Remuneration				annuation				Total
		A$				A$				A$				A$				Number ***				A$				%				A$				A$
PA Johnston			129,612				14,000				—				—				—				—				—				9,412				153,024
C Naughton			518,835				—				46,827				—				—				—				—				100,587				666,249
AJ Husband *			290,766				—				41,785				—				30,436				51,281				11.9	%			47,618				431,450
GE Kelly **			362,388				—				—				—				31,792				7,145				1.8	%			32,615				402,148
PJ Nestel AO			70,000				12,000				—				—				—				—				—				—				82,000
PB Simpson			35,540				14,000				—				—				—				—				—				4,460				54,000
LC Read			36,368				4,000				—				—				—				—				—				3,632				44,000
GM Leppinus			25,650				6,000				—				—				—				—				—				14,350				46,000
			1,469,159				50,000				88,612				—				62,228				58,426				3.1	%			212,674				1,878,871

Compensation of the Executive Officers of the Company and the consolidated entity for the year ended June 30, 2006

																										Post
										Termination				Share based payments												Employment
		Short term emoluments								& similar				Options granted												Super-
		Salary				Other				payments								Amortised cost				Remuneration				annuation				Total
		A$				A$				A$				Number				A$				%				A$				A$
DR Seaton			284,916				28,976				—				30,436				51,310				12.18	%			56,162				421,364
WJ Lancaster (USA)			195,843				6,243				—				12,232				24,137				9.73	%			21,956				248,179
BM Palmer			153,085				33,239				—				16,692				28,562				12.49	%			13,778				228,664
CD Kearney			181,405				22,952				—				17,752				28,209				11.33	%			16,326				248,892
RL Erratt			149,939				26,203				—				16,520				28,381				12.11	%			29,845				234,368
			965,188				117,613				—				93,632				160,599				11.6	%			138,067				1,381,467

Executive Directors have been disclosed under Directors’ remuneration only and have been excluded from the Executive remuneration.

Novogen’s Constitution provides that the directors who are not executive officers shall be paid an ordinary remuneration which may not exceed the maximum amount fixed by the shareholders of the Company in general meetings from time to time. Directors fees are higher for the role of Company Chairman.

No Director has received or become entitled to receive, during or since the end of the fiscal year, a benefit because of a contract made by Novogen Limited, a controlled entity, or a related body corporate with a Director, a firm of which a Director is a member or an entity in which a Director has a substantial financial interest.

Executives are those directly accountable and responsible for the operational management and strategic direction of the Company and its consolidated entities and include the Company Secretary.

PA Johnston and PJ Nestel are also directors of Marshall Edwards, Inc. and receive remuneration in the form of director’s fees of $30,000 per annum. PA Johnston is also a director of Glycotex, Inc. and receives directors fees of US$50,000 per annum. These amounts have been separately identified and included in the table above.

The elements of emoluments have been determined on the basis of the cost to the Company and the consolidated entity.

The Company has adopted the fair value measurement provisions of Australian Accounting Standard, AASB 1046 “Director and Executive Disclosures for Disclosing Entities” prospectively for all options granted to Directors and relevant Executives, which had not vested at July 1, 2003. The fair value of such grants being amortised are disclosed as part of Director and Executive emoluments on a straight-line basis over the vesting period. No adjustments have been made or will be made to reverse amounts in relation to options that never vest (i.e. forfeitures).

Options granted as part of Director and Executive emoluments have been valued using the binomial option pricing model, which takes account of factors including the option exercise price, the volatility of the underlying share price, the risk free interest rate, expected dividends, the current market price of the underlying share and the expected life of the option.

Fair values of options:

The fair value of each option is estimated on the date of grant using a binomial option-pricing model with the following assumptions used for grants made on:

		April 21,				March 16,				February 27,				November 29,
		2006				2005				2004				2002
Dividend yield			0	%			0	%			0	%			0	%
Expected volatility			66	%			69	%			69	%			68	%
Historical volatility			66	%			69	%			69	%			68	%
Risk-free interest rate			5.62	%			5.67	%			5.52	%			5.27	%
Expected life of option		5 years				5 years				5 years				5 years
Option fair value			2.10				2.96				2.82				1.26

The dividend yield reflects the assumption that the current dividend payout, which is zero, 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.

Further detail on the remuneration of Directors and Executives are also provided in Note 20.

Arrangements and Relationships

There are no arrangements (other than standard employment remuneration arrangements) by which any Director or Executive Officer was appointed to his position. There are no family relationships between any of the Directors or Executive Officers.

Pension Benefits

The Company has paid A$735,000 during fiscal 2006 for employee superannuation benefits and pension benefits.

Board Practices

Novogen Board of Directors

				Year First		Current Term
Name		Postion Held		Appointed		Expires
P A Johnston		Chairman		1997		October-2009
C Naughton		Managing Director		1997		—
*G E Kelly		Executive Director		1994		—
P B Simpson		Director		1994		October-2009
P J Nestel		Director		2001		October-2009
L C Read		Director		2003		October-2008
G M Leppinus		Director		2005		October-2008
**A J Husband		Executive Director		2006		October-2009

Term of Directors

The term for each director (excluding the Managing Director) is three years at which time that director retires from office and offers himself/herself for re-election at the next annual general meeting. For more information about the term and details of the Managing Director’s term refer to the Employment contract attached.

The Board has the power to appoint any person to be a director either to fill a casual vacancy or as an additional director (up to a maximum of 10). Any director so appointed may hold office only until the next annual general meeting when he or she shall be eligible for election.

Board of Directors

The Novogen Limited Board of Directors is elected by and accountable to shareholders.

It monitors and directs the business and is responsible for the corporate governance of the Company. Responsibility for managing the development of the Company consistent with the objective of enhancing long term shareholder value is with the Managing Director, who is accountable to the Board.

Since May 23, 2006, the Board has been comprised of seven Directors of whom five are non-executive Directors. In addition the Board has established the following Committees — Audit, Remuneration, and Capital Works Committees.

There are also Scientific Advisory Boards whose membership includes the Executive Director which advises on clinical and scientific strategy and direction.

Structure of the Board of Directors

The skills, expertise and experience relevant to the position of director held by each director in office at the date of this annual report is included in Item 6 beginning on page 44. Directors are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgement.

In the context of director independence, “materiality” is considered from both the Company and individual director perspective. In determining whether a non-executive director is independent, they must not hold more than 5% of the Company’s outstanding shares. Also, qualitative factors are considered, including not having been employed as an Executive within the last three years, not been a principal of a material professional advisor or consultant, not have a material contractual relationship with the Company, not served on the Board for a period which could be perceived to interfere with their ability to act in the best interests of the Company or engaged in any business interests which could be perceived to interfere with their ability to act in the best interests of the Company.

In accordance with the definition of independence above, and the materiality thresholds set, the following Directors of Novogen Limited are considered to be independent:

Name		Position
P A Johnston		Non-Executive Chairman
Professor P J Nestel AO		Non-Executive Director
P B Simpson		Non-Executive Director
Dr L C Read		Non-Executive Director
G M Leppinus		Non-Executive Director

There are procedures in place, agreed upon by the Board, to enable Directors in the furtherance of their duties, to seek independent professional advice at the Company’s expense.

For additional details regarding Board appointments please refer to the Company’s web site.

Audit Committee

The Board has 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 Group. 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 bench marking 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 consolidated entity 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 independent Non-executive Directors. The members of the Audit Committee during the year were Geoffrey Leppinus (Chairman), Paul Nestel, Philip Johnston, Leanna Read and Peter Simpson.

Performance

The performance of the Board and the key Executives is reviewed regularly against both measurable and qualitative indicators. During the reporting period the Board conducted a performance evaluation which involved the assessment of each Board member’s and key Executive’s performance. The performance criteria against which Directors and Executives are assessed have regard to the financial and non-financial objectives of Novogen Limited.

Remuneration Committee

The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors, the Managing Director, Executive Director and senior Executives.

The Remuneration Committee 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 executive team.

Capital Works Committee

The Capital Works Committee reviews capital investment proposals, assesses the project tenders and reviews progress against timetables and cost estimates. The Capital Works Committee comprises Philip Johnston (Chairman), Peter Simpson, Paul Nestel AO and Christopher Naughton.

There were no major capital works undertaken by the Company in the financial year.

Nomination Committee

The duties and responsibility typically delegated to such a committee are included in the responsibilities of the entire Board. Accordingly, during the year ended June 30, 2006, Novogen Limited did not have a separately established Nomination Committee. The Board does not believe that any marked efficiencies or enhancements would be achieved by the creation of a separate Nomination Committee.

Employees

The Company employed 67 people at June 30, 2006 as follows (June 30, 2005 : 74 people June 30, 2004 : 66).

Category of Activity		Number of People
		2006				2005				2004
Research and development			29				23				19
Production			13				21				21
Sales and marketing			13				18				12
Finance and administration			12				12				14
Total			67				74				66

Geographic Location		Number of People
		2006				2005				2004
Australasia			63				65				54
North America			3				8				11
Europe			1				1				1
Total			67				74				66

Share Ownership

Directors’ holdings of shares and options in the Company

The table below shows the number of ordinary shares and options to purchase ordinary shares held directly or indirectly by the Directors of the Company as of October 31, 2006.

		Ordinary				%								Options
		Shares Fully				Total Shares				Number				Exercise				Expiry
		Paid				on Issue				Outstanding				Price				Date
P A Johnston			48,594				—				—				—				—
C Naughton			633,511				0.6				—				—				—
A J Husband			102,920				0.1				38,256				2.10				30/11/2007
											14,892				6.76				27/02/2009
											22,592				4.90				16/03/2010
											30,436				3.64				21/04/2011
P J Nestel			32,000				—				—				—				—
P B Simpson			500				—				—				—				—
L C Read			2,000				—				—				—				—

The tables below shows the number of ordinary shares and options to purchase ordinary shares held directly or indirectly by the named Executives of the Company as of October 31, 2006.

Shares held

		Ordinary				%
		shares fully				Total shares
		paid				on issue
GE Kelly			7,810,152				8.0
DR Seaton			37,378				—
WJ Lancaster (USA)			—				—
BM Palmer			205,636				0.2
CD Kearney			8,850				—
RL Erratt			232,368				0.2

Options granted to and held by named Executives

				Eligible
Total				executives		Exercise
options				participating		price				Grant date				Expiry date
						(A$)
	116,286			5			2.10				30/11/2002				30/11/2007
	47,332			5			6.76				27/02/2004				27/02/2009
	69,560			5			4.90				16/03/2005				16/03/2010
	125,424			6			3.64				21/04/2006				21/04/2011

Each option represents the right to purchase one ordinary share.

Exemptions from Certain Nasdaq Corporate Governance Rules

Exemptions from the Nasdaq corporate governance standards are available to foreign private issuers such as Novogen when those standards are contrary to a law, rule or regulation of any public authority exercising jurisdiction over such issuer or contrary to generally accepted business practices in the issuer’s country of domicile. In connection with Novogen’s National Market Listing Application, Nasdaq granted Novogen exemptions from certain corporate governance standards that were contrary to the laws, rules, regulations or generally accepted business practices of Australia. These exemptions and the practices followed by Novogen are described below:

•		Novogen is exempt from Nasdaq’s quorum requirements applicable to meetings of ordinary shareholders. In keeping with the law of Australia and generally accepted business practices in Australia, Novogen’s Constitution (formerly known as the Memorandum of Association and Articles of Association) requires a quorum of three shareholders for a shareholders’ meeting.
•		Novogen is exempt from Nasdaq’s requirement that each Nasdaq issuer shall require shareholder approval of a plan or arrangement in connection with the acquisition of the stock or assets of another company if “any director, officer or substantial shareholder of the issuer has a 5 percent or greater interest (or such persons collectively have a 10 percent or greater interest), directly or indirectly, in the Company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common shares or voting power of 5 percent or more”.

Novogen is listed on the Australian Stock Exchange (ASX) and subject to chapter 10 of the ASX Listing rules which requires shareholder approval for an acquisition from or disposal to a “related party” (including a director) or “substantial shareholder” (who is entitled to at least 10% of the voting securities) of “substantial assets”. The Australian Corporations Act to which Novogen is also subject generally requires shareholder approval for a transaction with a director or director-controlled entity unless on arm’s length terms.

Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

The names of the major shareholders known to the Company are as follows at October 31, 2006

Bende Holdings Pty Ltd — holding 6,299,638 Ordinary Shares representing 6.5% of the outstanding Ordinary Shares. Bende Holdings Pty Ltd is a company controlled by Professor Graham E. Kelly.

Oppenheimer Funds Inc — holding 13,462,783 Ordinary Shares representing 13.8% of the outstanding Ordinary Shares.

Josiah T. Austin and El Coronado Holdings, LLC (beneficially owned by Mr Austin) — holding 8,719,100 Ordinary Shares representing 8.9% of the outstanding Ordinary Shares.

The major shareholders do not have any different voting rights than other shareholders of the Company. Josiah T. Austin and El Coronado Holdings have become a significant shareholder during the year. There have been no other significant changes to the shareholding of the known major shareholders over the last three years.

At October 31, 2006 there were 8,057,381 ADRs outstanding, representing 40,286,905 Ordinary Shares (or 41.3% of the then outstanding Ordinary Shares). At October 31, 2006 there were 37 registered holders of Novogen ADRs.

Item 8. Financial Information

Consolidated financial statements are included in “Item 18 — Financial Statements” on pages 80 through 138.

Export Sales

Export sales to third parties from Australia are not a significant portion of total sales. The details of sales by geographic region are contained in “Item 4 — “Information on the Company”.

Legal Proceedings

On August 11, 2006, Camellia Properties Pty Limited initiated proceedings against the Company, claiming damages of $5,161,487 in connection with terminated negotiations of a commercial property lease. The Directors are of the view that the basis of the claim is without foundation and the Directors are obtaining legal advice with the intention of vigorously defending the claim.

Dividends

The Company has incurred losses since its inception and as a result has not declared any dividends. Any dividends declared in the future will be paid in Australian dollars.

Significant Changes

Since the date of the consolidated financial statements, the Company has announced that it has licensed the U.S. rights to the Promensil and Trinovin brands to Natrol, Inc. No other significant change has occurred since the date of the consolidated financial statements included in this Annual Report.

Item 9. Offer and Listing Details

Trading Markets

The principal listing of Novogen and quotation of its Ordinary Shares and listed options to purchase Ordinary Shares is on the Australian Stock Exchange (“ASX”). The trading symbol on ASX is “NRT”.

American Depositary Receipts

Novogen’s Ordinary Shares trade in the U.S. in the form of ADRs on the Nasdaq Global Market. Each ADR represents five ordinary Novogen shares. The trading symbol on Nasdaq is “NVGN”. Novogen has entered into a Deposit Agreement with the Bank of New York under which the Bank of New York, acting as depositary, issues the ADRs.

The following table sets forth, for the calendar periods indicated, the high and low market quotations for Novogen’s Ordinary Shares, as quoted on the ASX, and Novogen’s ADRs, as quoted on the Nasdaq.

NOVOGEN LIMITED SHARE PRICE HISTORY

Period		Per Ordinary Share (A$)								Per ADR (US$)
		High				Low				High				Low
Year Ended
June 2002			3.34				0.83				10.50				1.98
June 2003			5.59				1.18				19.59				3.15
June 2004			8.80				4.00				31.90				12.30
June 2005			6.25				4.15				24.35				14.85
June 2006			6.00				2.14				22.08				8.03
Quarter Ended
December 2004			6.25				4.54				24.35				17.44
March 2005			5.76				4.65				22.94				18.15
June 2005			5.98				4.35				23.55				17.01
September 2005			5.22				4.46				20.18				17.68
December 2005			6.00				4.66				22.08				17.20
March 2006			5.05				3.30				18.41				11.62
June 2006			4.04				2.14				14.49				8.03
September 2006			3.80				2.40				13.25				9.10
Month Ended
May 2006			3.66				2.53				13.91				9.50
June 2006			2.90				2.14				11.08				8.03
July 2006			3.80				2.48				13.25				9.46
August 2006			3.03				2.44				11.60				9.51
September 2006			3.20				2.40				11.95				9.10
October 2006			3.01				2.61				11.58				9.92