Final Results

Phytopharm PLC
29 November 2000

                                                              29 November 2000

            Preliminary Results for the Year Ended 31 August 2000



Phytopharm plc ('Phytopharm') today announces its preliminary results for the
year ended 31 August 2000.

Highlights

  * Completion of first Phase I study on Alzheimer's disease (P58) (see
    separate press release issued today)
  * Extension of collaboration agreement with Pfizer Inc on obesity (P57)
  * Results of evaluation of appetite suppressant in model of obese
    diabetics (P57)
  * Successful completion of Phase II study on canine eczema product P7v
  * Commencement of Phase II trial in alopecia areata and totalis (P45)
  * Investment in GMP manufacturing plant in India (P54)
  * In-licence of three new products for autoimmune diseases (P62)
  * £10.8m placing with institutional investors announced today to further
    develop the P58 platform and raise further working capital for the group

Dr Richard Dixey, Chief Executive of Phytopharm, said:

'Phytopharm has ended a very successful year, with strong developments
reported across its broad portfolio of products. The Company now has four drug
discovery platforms in full development and two further platforms moving into
the clinic. Phytopharm's innovative approach to drug discovery from natural
sources continues to make good progress.'

Enquiries:
Phytopharm plc                              Today:          0207 638 4010

Dr Richard Dixey, Chief Executive           Thereafter:     01480 437697
                                            Mobile          [phone]
Financial Dynamics                          Tel:            0207 831 3113

David Yates / Sophie Pender-Cudlip

       Phytopharm has a new update on its website from 29 November 2000
                             www.phytopharm.co.uk

Chief Executive's Review

Phytopharm is now building on strong foundations, and has made sustained
progress during the course of 2000. Indeed the development of our product
portfolio over the past year demonstrates that research based on extracts of
medicinal plants allows the creation of full drug discovery platforms for
major disease categories. Platforms form the basis for new drug classes, and
they can be built on clinical data generated by the evaluation of plant
extracts manufactured in a controlled manner. These extracts are called '
Botanicals' by the United States Food and Drug Administration (FDA), whose
draft guidelines concerning them have recently been published. Once clinical
data based on Botanical extracts has been gathered, it can be used to create
strong intellectual property relating the use of medicinal plants, and to
screens based on their mode of action. Such screens also allow the isolation
of patented chemical entities of clinical importance. These multiple products
can then be targeted at the human prescription, OTC and companion animal
markets. Phytopharm is widely recognised as the world leader in this new
development arena having achieved the world's first regulatory approvals for
Botanical products.

Biodiversity and sustainable development underwrite this whole process, and
the Company now operates at nine plantations world wide, with two
manufacturing sites in development. These operations are run under the
international standards for Good Agricultural Practice (GAP) and Good
Manufacturing Practice (GMP), and meet environmental and social concerns that
are of increasing importance to shareholders.

Despite the extent of our activities, Phytopharm operates on a core staff
count of only 31 and a low fixed overhead. By operating a large portfolio that
contains drug discovery platforms that themselves create multiple
opportunities for drug development, the Company has worked effectively to
mitigate the risks inherent in primary drug development. With considerable
upside inherent in the four major drug platforms now in development, and with
two more drug platforms moving into the clinic, the Company is looking forward
to its second decade of operation with confidence.

Review of the portfolio

Metabolic diseases

Development of our appetite suppressant platform, P57, continues to progress
well and in August this year we announced the extension of our Collaborative
Research Agreement with Pfizer Inc for the development and commercialisation
of P57. Under the Collaborative Research Agreement, Pfizer has already
contributed over $7 million in a two year early development programme which
has been carried out by Phytopharm. The extension announced continues the
funding of this development programme for another year.

Work to broaden the understanding of this novel anorectic agent has progressed
well. Additional pharmacological properties of the material are the subject of
new patent applications as P57 has been shown to restore glycaemic control in
a model of obese type II diabetes. This opens the possibility of a second
major application for this drug as 80% of type II diabetics could be rendered
non-diabetic by an effective agent of this sort. Phase I clinical development
of P57 continues alongside an extensive pre-clinical programme and a programme
of reformulation is now complete. This provides material for a Phase IIa study
which will commence in Q1 2001.

Pre-clinical evaluation has also continued on our diabetes platform, P30.
Recently we have demonstrated that it is a potent inhibitor of
gluconeogenesis. In this regard, the P30 extract is approximately ten fold
more active per gram than metformin, which is the mainstay of current
anti-diabetic treatment. A series of simple experiments has now been initiated
to further delineate the mode of action and optimal extraction methodology
before proceeding into clinical evaluation.

Neurological disorders

During the past twelve months, we have made considerable progress in our
development of the P58 platform for the treatment of age related dementias and
Alzheimer's disease. This novel drug family works by reversing the age related
decline in nerve receptor number that is a central feature of all age related
dementias. In September 2000 we announced the commencement of a Phase I, open
label, single ascending dose study to investigate the safety, tolerability and
pharmacokinetics of P58 in healthy volunteers. The results of the study are
reported alongside these results, and indicate that the drug is well
tolerated, displays dose dependent absorption and a half life in man that is
suitable for once daily dosing. This is a very positive start to the clinical
programme for this drug family, and will be followed by a Phase IIa trial with
repeat dosing in the elderly which is scheduled to commence in Q2 2001 and
with a full Phase IIb study towards the end of the year.

Alongside this clinical development, nine patent families concerning the P58
drug discovery platform have now been submitted. These patents provide cover
for the use of the plants, the drug discovery screens that have been developed
by Phytopharm based on their mode of action and 37 active molecules isolated
using those screens. Data showing the effects of P58 in raising the number of
receptors in different regions of the brain has been gathered, and work on the
mode of action has moved to the molecular level. Toxicology to support the
Phase I programme has been completed and a programme of manufacture to produce
a semi-synthetic analogue of the active molecule has now moved to the kilogram
scale. This material will be used to support further clinical development
during 2001. Not only does this project exemplify all the stages of the
Botanical drug development programme in action, but it also offers the
potential of a major breakthrough in the treatment of age related dementias,
including Alzheimer's disease and Parkinson's disease.

Anti-inflammatory treatments

The P54 platform concerns plant extracts that are naturally occurring
anti-inflammatory agents reducing the over production of the inflammatory
cyclo-oxygenase enzyme, COX II. This makes P54 attractive for use in patients
wishing to avoid the side effects of existing therapies (both Non Steroidal
Anti-Inflammatory Drugs (NSAID'S) and steroids) for conditions such as
inflammatory bowel disease (IBD), including Crohn's, and as a cancer
chemo-preventive agent for bowel cancer.

A Phase IIa study on the use of this material in patients with tertiary
adenoma of the colon at the Leicester Royal Infirmary is nearing completion
and will report in Q4 of this year. Furthermore, planning is in a late stage
to commence a double blind, placebo controlled parallel group pilot study to
evaluate the safety and efficacy of P54 for the treatment of steroid dependent
IBD at Addenbrooke's Hospital, Cambridge.

Naturally occurring anti-inflammatories have substantial attractions in the
companion animal market where early product launches are possible. In this
regard we have initiated a study in canine arthritis designated as P54v to
confirm the evidence of efficacy of the material in this important indication.

This year has also seen investment in a manufacturing facility in India which
gives Phytopharm a second GMP compliant manufacturing site in addition to the
GMP facility in South Africa. The new site will provide us with an
infrastructure from which to manufacture a number of products in our
portfolio, including P54. This will be particularly useful for the veterinary
products which are closer to launch.

Dermatological portfolio

Mode of action work is highly advanced in our dermatology portfolio and we
have a further patent family in preparation supporting our eczema product
platforms, P7v and P55. Positive results of the Phase II trial with P7v in
canine atopic dermatitis were announced in October. The owners reported that
38% of the dogs were improved or markedly improved after being treated with
P7v compared to only 13% of those treated with the placebo (p=0.09). There was
also a notable reduction in the extent of erythema (p=0.075) and scratching (p
=0.15) in the dogs that received P7v. Furthermore, 57% of the dogs in the
placebo group were withdrawn from treatment due to worsening of their
condition compared with only 25% of the dogs in the P7v group, which is a
highly significant result (p=0.039). The treatment was generally well
tolerated with no serious adverse events recorded. As a plant based powder
that can be added to the animals' food, P7v has the potential for greater
efficacy than the topical products that are currently used for canine atopic
dermatitis.

The P55 development work represents the progression of a Botanical product
from a complete extract of ten plants through to the isolation and
identification of a single chemical based on an understanding of its mode of
action. This work is now nearing completion. The isolation of the single
active chemical entity, together with the synthesis of a series of chemically
related analogues will form the basis for a topical product for the human
pharmaceutical market.

An interim review of the Phase II double blind placebo controlled evaluation
of the P45 platform for alopecia was reported in January of this year, and
revealed no treatment related serious adverse events. Final efficacy and
safety results are expected shortly.

Based on this safety profile, we have recently announced the start of a Phase
II study of P45 cream for the treatment of severe alopecia areata and totalis,
which are the autoimmune forms of the disease. This study will recruit up to
30 subjects who will be treated with the cream for 26 weeks. Clinical data
will be recorded including patient and clinician assessments and serial
photographs taken at regular intervals during the treatment period.

Cancer and infectious disease

Alongside the work on P54 in cancer chemo-prevention mentioned above,
Phytopharm has also continued to develop its work in liver disease. Patients
with Hepatitis B and C have a greatly increased risk of developing liver
cancer, and the plant that forms the basis of the P56 platform has been
demonstrated to have anti-viral and immuno-stimulatory properties. Three
plantations of a high yielding strain are now in development in Southern India
to support formal evaluation of the product.

New Products
A final development of note is the announcement of an option agreement to
in-license three new products, for chronic idiopathic thrombocytopenic purpura
(ITP), chronic glomerulonephritis (CG) and asthma. All three products are
based on the Vietnamese traditional medical system. Of the three, the clinical
data generated from individual patients taking the treatment for ITP is the
most extensive and impressive, and this will be the first of these products
that will be taken into an early evaluation programme.

Financial Review

Results of operations

Turnover of £2.08m (1999: £2.45m) comprises development and milestone income
and includes the group's first milestone of £0.63m under its licence and
development agreement with Pfizer Inc for P57, its appetite suppressant. This
was earned in the first half of the year. Turnover has reduced by 15% when
compared with last year and this arises due to a combination of phasing in the
development programme for P57 and Pfizer undertaking some of the P57
development costs. This was anticipated under the terms of the licence and
development agreement and the project has now moved back to Phytopharm for the
Phase IIa programme referred to above. Pfizer has now extended this agreement
for a further year to cover this clinical programme. The cost of sales of £
0.31m (1999: nil) was incurred in the first half of the year and represents
the proportion of the milestone income from Pfizer due to the CSIR from whom
the group originally licensed the product P57.

Overall overheads for the year at £4.21m are 28% lower than the previous year
(1999: £5.81m). Within overheads the expenditure on research and development
of £3.39m shows a reduction of 30% on the previous year while expenditure on
administrative costs of £0.82m shows a small increase of 6% over that incurred
in the previous year. The expenditure on research and development has
decreased during the period primarily as a result of lower expenditure on P57
as noted above offset by increased expenditure across the rest of the
portfolio but principally on P58, the group's treatment for age related
dementias and on P7v for canine atopic dermatitis. Administrative costs have
increased principally as the group has strengthened its business development
activities during the year, but the small increase continues to demonstrate
the group's close control over expenditure, particularly administrative
expenditure.

The reduction in turnover for the year has been more than offset by the
reduction in overheads with the result that the operating loss reported for
the year of £2.45m was 27% lower than the previous year at £3.38m. Interest
income of £0.28m (1999: £0.16m) represents deposit interest on the group's
cash reserves. The overall loss for the year was £2.18m which is 32% less than
the previous year.

Liquidity and capital resources

The increase in net assets during the year from £2.06m at 1 September 1999 to
£4.76m at the end of August 2000 comprises the loss for the year of £2.18m
offset by the share placing in November 1999, which raised £4.27m net of
expenses, and a further £0.61m net raised during the year as a result of the
exercise of share options.

Fixed assets increased by £0.08m over the year and includes a £0.03m
investment representing a 10% equity stake in an Indian pharmaceutical
processing facility adjacent to areas of cultivation for certain of the
group's products.

Short term creditors at the year end were £0.88m and are 18% less than the
previous year. This is as expected and is primarily due to the lower levels of
expenditure in the year ended 31 August 2000 as noted above.

Overall, after allowing for the share issue in November 1999 and the exercise
of options during the year the group utilised £2.25m of working capital (1999:
£2.97m). This is equivalent to an average of £188,000 per month (1999: £
248,000) during the year. The working capital consumption during the second
half of the year was £231,000 compared with £144,000 reported for the first
half with the increase during the year due to the lower level of expenditure
within the group on P57 noted above while expenditure on the group's other
projects increased.

The Placing

Today, the group has raised £10.8m, net of expenses, through the placing of
1,764,819 Ordinary Shares for cash with institutional investors at a price of
625p per share, being a nominal premium to the closing middle market quotation
on 28 November 2000 of 624p. The placing was arranged and fully underwritten
by the company's broker, WestLB Panmure Limited. Application will be made for
the new shares, which represent 4.9% of the current issued share capital of
the Company and which will rank pari passu in all respects with the existing
issued Ordinary Shares of 1p each, to be admitted to the Official List of the
London Stock Exchange. Dealings in the new shares are expected to begin on 4
December 2000.

This additional working capital has strengthened the group's balance sheet
significantly and this, with the anticipation of further licence and
development income generation arising from the rest of the group's portfolio,
will allow the group to fully develop the P58 platform to maximise its
licensing potential while continuing development within the rest of the
portfolio.

                                PHYTOPHARM PLC

    Consolidated Profit and Loss Account for the year ended 31 August 2000
                                 (unaudited)
                                                    Notes       2000       1999

                                                               £'000      £'000

Turnover                                              2        2,078      2,447

Cost of sales                                                  (314)        (8)

                                                          __________ __________

Gross profit                                                   1,764      2,439

Other operating expenses                              3      (4,213)    (5,814)

                                                          __________ __________

Operating loss                                               (2,449)    (3,375)

Interest receivable and similar income                           275        163
Interest payable and similar charges                             (9)        (9)

                                                          __________ __________

Loss on ordinary activities before and after                 (2,183)    (3,221)
taxation
                                                          __________ __________

Loss for the year                                            (2,183)    (3,221)

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

Basic fully diluted loss per ordinary share (pence)   4        (6.3)      (9.9)
IIMR loss per share (pence)                           4        (6.3)      (9.5)

All revenue and expenses shown above were generated from continuing
operations.

The group has no recognised gains or losses for the financial year other than
those disclosed above.

           Consolidated Balance Sheet at 31 August 2000 (unaudited)
                                                     Notes      2000      1999

                                                               £'000     £'000
Fixed assets
Tangible assets                                                  255       210
Investments                                                       30         -

                                                           _________ __________

                                                                 285       210

Current assets
Debtors                                                          103       163
Cash held on deposit as short term investments                 4,528     2,009
Cash at bank and in hand                                         792       818

                                                           _________ __________

                                                               5,423     2,990

Creditors: amounts falling due within one year                 (884)   (1,084)

                                                           _________ __________

Net current assets                                             4,539     1,906

                                                           _________ __________

Total assets less current liabilities                          4,824     2,116

                                                           _________ __________

Creditors: amounts falling due after more than one              (64)      (55)
year
                                                           _________ __________

Net assets                                                     4,760     2,061

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

Capital and reserves
Called up share capital                                          362       332
Share premium account                                  5      20,287    15,435
Merger reserve                                         5       (204)     (204)
Profit and loss account                                5    (15,685)  (13,502)

                                                           _________ __________
Equity shareholders' funds                                     4,760     2,061

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



Consolidated Cash Flow Statement for the year ended 31 August 2000 (unaudited)
                                                                 2000     1999

                                                                £'000    £'000
Net cash outflow from continuing operating activities         (2,458)  (1,979)

                                                             ________ _________
Returns on investment and servicing of finance
Interest received                                                 264      163
Interest paid on finance leases                                   (9)      (9)

                                                             ________ _________
                                                                  255      154

                                                             ________ _________
Taxation
UK corporation tax paid                                             -        -

                                                             ________ _________
Capital expenditure and financial investment
Purchase of fixed asset investments                              (30)        -
Purchase of tangible fixed assets                               (102)     (47)
Proceeds on sale of tangible fixed assets                          13       34

                                                             ________ _________
                                                                (119)     (13)

                                                             ________ _________
Cash outflow before management of liquid resources and        (2,322)  (1,838)
financing
                                                             ________ _________
Management of liquid resources
Net movement of cash held on deposit                          (2,519)    (495)

Financing
Proceeds from exercise of share options                           611      103
Proceeds from issue of share capital                            4,387    2,257
Expenses of issue of share capital                              (116)     (32)
Repayment of principal under finance leases                      (67)     (61)

                                                             ________ _________
Net cash inflow from financing                                  4,815    2,267

                                                             ________ _________
(Decrease) in cash in the year                                   (26)     (66)

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



Reconciliation of operating loss to net cash outflow from operating activities
                                                             2000          1999

                                                            £'000         £'000
Continuing activities
Operating loss                                            (2,449)       (3,375)
Depreciation on tangible fixed assets                         119           206
(Profit)/loss on disposal of fixed assets                     (9)           124
Decrease in stock                                               -             9
Decrease in debtors                                            70           643
(Decrease)/increase in creditors                            (189)           414

                                                       __________    __________
Net cash outflow from continuing ACTIVITIES               (2,458)       (1,979)

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



Notes to the Preliminary announcement

1.     Basis of Preparation

These financial statements have been prepared in accordance with the
accounting policies set out in the financial statements for the year ended 31
August 2000, together with the following:

Basis of extraction

The figures shown for the year to 31 August 2000 represent unaudited abridged
financial statements and have not as yet been delivered to the Registrar of
Companies. The comparative figures for the year to 31 August 1999 have been
taken from, but do not constitute, the group's financial statements for that
financial year. Those financial statements have been reported on by the
group's auditors and delivered to the Registrar of Companies. The report of
the auditors was unqualified and did not contain a statement under s237 (2) or
(3) of the Companies Act 1985.

2.     Turnover
                                                          2000             1999

                                                         £'000            £'000
By business activity
Licensing and development                                2,078            2,427
Product sales                                                -               20

                                                      ________         ________
                                                         2,078            2,447

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



All turnover arose in the United Kingdom.

3.     Other Operating Expenses

Other operating expenses comprise:
                                                        2000              1999

                                                       £'000             £'000
Continuing operations
Research and development                               3,394             4,871
Administrative expenses                                  819               772
Laboratory closure costs                                   -               171

                                                   _________         _________
                                                       4,213             5,814

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



4.     Loss Per Share

The basic undiluted loss per share is based on losses of £2,183,222 (1999:
loss of £3,221,178) and 34,923,482 ordinary shares (1999: 32,628,503), being
the weighted average number of shares in issue during the period. The IIMR
earnings per share figure excludes gains and losses on disposals of fixed
assets during the year.

5.     Share Premium Account and Reserves
                                         Share         Merger            Profit

                                       premium        Reserve          and loss

                                       account          £'000           account

                                         £'000                            £'000
At 1 September 1999                     15,435          (204)          (13,502)
Premium on issue of shares               4,968              -                 -
Expenses of share issue                  (116)              -                 -
Loss for the year                            -              -           (2,183)

                                    __________      _________       ___________
At 31 August 2000                       20,287          (204)          (15,685)

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