Fundraising

Evolutec Group PLC
14 October 2005


For immediate release                                           14 October 2005



                               EVOLUTEC GROUP PLC

                         ('Evolutec' or the 'Company')

                           FUNDRAISING OF £10 MILLION



Evolutec Group plc (AIM: EVC), a biopharmaceutical company developing small
protein therapeutics for allergy, inflammation and auto-immune diseases, is
pleased to announce a fundraising, subject to certain conditions, of £10 million
at 160p per share, to be fully underwritten by Robert W. Baird.

Highlights

  • The fundraising follows the positive Phase II result, announced on 20
    September 2005, of Evolutec's lead molecule, rEV131, in allergic rhinitis
    (hay fever).

  • The majority of the funds from the placing will be used to further develop
    rEV131, the Company's primary asset. In particular, the funds raised will
    cover the cost of an extensive follow-up Phase II rhinitis trial using a
    multi-dose device.

  • A smaller portion of the funds raised will be invested in rEV576, the
    Company's second molecule. The Directors believe that rEV576 has significant
    potential in a number of acute and chronic conditions ranging from the
    orphan indication myasthenia gravis, to acute myocardial infarction (heart
    attack), and rheumatoid arthritis.

  • The placing is expected to complete on 11 November 2005, subject to
    approval at Extraordinary General Meeting convened for 11.00 a.m. on 9
    November 2005.



Mark Carnegie Brown, Evolutec's Chief Executive, said: 'We are extremely pleased
with existing and new institutional support on this placing. This support
underlines the compelling results with our lead molecule rEV131 in rhinitis and
the progress made with the development of our portfolio.'



For further information:


Evolutec                                                 + 44 (0) 118 922 4480

Mark Carnegie Brown, Chief Executive Officer
Nicholas Badman, Chief Financial Officer
www.evolutec.co.uk

Robert W. Baird                                           [phone]
Shaun Dobson/Xavier de Mol

Buchanan Communications                                   [phone]
Mark Court/Tim Anderson/Mary-Jane Johnson




Notes for Editors:



About Evolutec

Evolutec, which is based in Reading, UK, is a clinical stage biopharmaceutical
company with a focus on allergy, inflammation and auto-immune diseases.



The Company has just completed a positive 112 patient proof of concept Phase II
clinical trial with rEV131, its lead molecule, in allergic rhinitis.  The
Company had previously demonstrated clinical activity against the symptoms of
rhinitis when rEV131 was delivered as an eye drop. Evolutec intends to carry out
additional proof of concept Phase II trials with rEV131 in post-cataract surgery
and dry eye.  Positive preclinical data has also been generated in asthma.
rEV131 is a histamine binding protein and is understood to be the only molecule
currently in clinical trials that impacts the recently discovered H4 receptor, a
receptor implicated in many forms of inflammatory disease.



The Company has a further two molecules in preclinical development. rEV576, a
complement inhibitor that was very effective in a preclinical model of
myasthenia gravis, and rEV598, which is being evaluated in carcinoid syndrome
and CINV (chemotherapy-induced nausea and vomiting). Evolutec is working with
Merial to develop anti-tick and anti-tick borne disease vaccines.



Evolutec was founded in 1998 to exploit research carried out by the Natural
Environment Research Council.  Evolutec's drugs were first isolated from the
saliva of ticks but are now manufactured by bacterial fermentation procedures.
The tick remains undetected by its hosts, including humans, by injecting an
array of molecules that suppress normal defence mechanisms.  These stealth
molecules have evolved over millions of years to enable the tick to take a blood
meal from its host. Evolutec employs the tick's evolutionary stealth technology
to offer the potential of treating human diseases.





Safe Harbour statement: this news release may contain forward-looking statements
that reflect the current expectations of the Company regarding future events.
Forward-looking statements involve risks and uncertainties. Actual events could
differ materially from those projected herein and depend on a number of factors
including the success of the Company's research strategies, the applicability of
the discoveries made therein, the successful and timely completion of clinical
studies, the uncertainties related to the regulatory process, the successful
integration of completed mergers and acquisitions and achievement of expected
synergies from such transactions, and the ability of the Company to identify and
consummate suitable strategic and business combination transactions.




                               Evolutec Group plc

                           Fundraising of £10 million



                      Placing of 1,575,625 VCT Shares and

               4,674,375 Ordinary Placing Shares at 160p per share



1.              Introduction

The Board announced today that Evolutec has agreed, subject to certain
conditions, to raise approximately £9.2 million, net of expenses, by way of a
placing of the VCT Shares and a placing of the Ordinary Placing Shares. Further
details of the Placings, which have been fully underwritten by Robert W. Baird,
are set out below.

The necessary authorities required for the allotment of Placing Shares pursuant
to the Placings will be sought at an Extraordinary General Meeting convened for
11.00 a.m. on 9 November 2005. The purpose of this document is to provide you
with information on the Placings and to convene the EGM at which your approval
will be sought for the Resolutions, as set out in the notice of EGM.

Definitions used in the circular to shareholders in connection with the Placings
apply herein unless otherwise stated or inconsistent herewith.



2.              Background to and reasons for the Placings

The Group intends to raise £10 million from placings of the VCT Shares and of
the Ordinary Placing Shares.

Evolutec is a research and development based biopharmaceutical business with a
focus on allergy, inflammation and auto-immune diseases. Evolutec expects to
incur further losses until revenues from royalty income, milestone receipts and
product sales exceed expenditure on the research and development portfolio (as
well as overheads and administrative costs).

Evolutec has three molecule candidates, one in clinical development and two at
the preclinical stage as well as a vaccine technology. The animal uses of the
vaccine technology have been partnered with Merial Inc. ('Merial').

Evolutec's lead molecule, rEV131, has recently achieved a positive result in a
Phase II clinical trial in allergic rhinitis (hay fever). This result is
compelling because, in addition to delivering the primary endpoint of the trial,
rEV131 showed a rapid onset of action as well as efficacy against congestion and
mucus production, the most difficult to treat symptoms of rhinitis. Evolutec's
second molecule, rEV576, recently showed a high degree of efficacy in a
preclinical trial of the autoimmune disease myasthenia gravis. On the basis of
the data generated, Evolutec believes that rEV576 may have potential in both
acute and chronic inflammatory conditions that are mediated by complement.
Evolutec's third molecule, rEV598, is being evaluated in carcinoid syndrome and
chemotherapy induced nausea and vomiting. Based on a positive outcome from an
initial trial in cattle, Merial has decided to continue its evaluation of
Evolutec's vaccine technology against tick-borne diseases.

The Board believes that, following the Placing, the Company will be in a
stronger position to capitalise on the development of its molecules, and in
particular rEV131. It is intended that the majority of the funds from the
Placing will be used to further develop rEV131, the Company's primary asset. The
rest of the proceeds from the Placing will be used to develop the Company's
pipeline of products.

In particular, Evolutec is seeking the additional funds in order to:

O    Compile a comprehensive Phase II data package for rEV131 in rhinitis -
Evolutec's strategy is to find a partner to undertake the final stages of
clinical development and marketing of rEV131 in the respiratory area. Rhinitis,
which represents a US$6 billion market, is the lead indication. In addition, the
Company intends to leverage the preclinical data for rEV131 in asthma, which
represents an US$11 billion market, and acute respiratory distress syndrome.

The funds will cover the cost of further extensive Phase II studies in rhinitis,
as well as concurrent safety and metabolism studies. This second Phase II
rhinitis trial will use a multi-dose device and will also examine the duration
of action and the onset of action of rEV131. On the manufacturing side, the
funds will pay for multiple batches of drug substance to be produced according
to current good manufacturing practice ('cGMP'). This will also provide material
for subsequent Phase III studies.

The Directors believe that the follow-up Phase II rhinitis result, together with
the metabolism and safety data will represent a comprehensive Phase II data
package upon which to base subsequent partnering negotiations.

O    Progress rEV131 in the ophthalmic area - Evolutec is looking to retain the
marketing rights to rEV131 in specialist markets such as ophthalmology. The
additional funds sought will cover the investment required for more extensive
Phase II trials in dry eye and post-cataract surgery.

O      Accelerate the preclinical development of rEV576 - The Directors believe
that rEV576 has significant potential in a number of acute and chronic areas
ranging from the orphan indication myasthenia gravis, which there are some
36,000 cases in the US, to acute myocardial infarction (heart attack), of which
there are 1 million cases in the US each year, and rheumatoid arthritis, a
US$13.5 billion market. Evolutec intends to invest in the outsourced development
of a cGMP manufacturing process for rEV576 to provide material for preclinical
and clinical trials. The Company will carry out an extensive preclinical
programme in 2006 to evaluate fully the potential of rEV576 and select
appropriate indications for the clinic.



3.              rEV131 development

The Board announced on 20 September 2005, ahead of schedule, a positive clinical
trial result for its lead molecule, rEV131, in a 112 patient Phase II study in
allergic rhinitis (hay fever). The Company had previously demonstrated clinical
activity against the symptoms of rhinitis when rEV131 was delivered as an eye
drop.

rEV131 is a recombinant version of a naturally occurring molecule identified in
ticks; parasites whose saliva contains immuno-suppressive and immuno-modulatory
molecules. This Phase II dose ranging study of rEV131, which involved rEV131
administered as a nasal spray, was undertaken at two clinical centres in San
Antonio, Texas. The trial was conducted in accordance with the FDA's guidance
for industry recommendations.

The trial comprised four groups of 20 patients (16 active, 4 placebo), with the
active patients on ascending single doses of rEV131, followed by a fifth group
of 32 patients (16 active, 16 placebo) at the optimum dose. A ragweed pollen
extract was administered 30 minutes following the dosing of rEV131. The trial
met its primary endpoint, a statistically significant difference in the mean sum
of symptom scores at 15 minutes post allergen challenge versus placebo in
patients who completed the trial according to the protocol. This result shows
that rEV131 has an onset of action of 45 minutes or less, which is quicker than
steroid nasal sprays which have an onset of action of approximately 8 hours.

The main effects of rEV131 were against congestion and mucus production,
symptoms that patients find the most problematic and which are not well
addressed by oral antihistamines. There were no significant adverse effects and
rEV131 was comfortable and well tolerated.

rEV131 has therefore shown a dose related drug effect, which has enabled
Evolutec to select the optimum dose for further work to determine the onset of
action and the duration of effect.

Evolutec intends to carry out additional proof of concept Phase II trials with
rEV131 in post-cataract surgery and dry-eye.



4.              The Placings

The Company announced today that it was raising approximately £9.2 million, net
of expenses, through the placing of 1,575,625 VCT Shares and 4,674,375 Ordinary
Placing Shares. The Placing Shares will rank in full for all dividends and
otherwise pari passu with the existing Ordinary Shares.

It is expected that the VCT Shares will be admitted to trading on AIM on 10
November 2005 and that the Ordinary Placing Shares will be admitted to trading
on AIM on 11 November 2005. The Placings, which have been fully underwritten by
Robert W. Baird, are conditional, inter alia, upon:

O    the approval of the Resolutions at the EGM;

O    the Placing Agreement becoming unconditional in all respects and not having
been terminated in accordance with its terms;

O    Admission of the Placing Shares.

In order to ensure certainty, to broaden the institutional shareholder base and
to minimise transactional costs, the Placing Shares are being offered to a
number of existing and new institutional shareholders.

The Placings are to be effected on behalf of the Company by Robert W. Baird on
the terms of the Placing Agreement. The Placing Agreement provides for Robert W.
Baird to use its reasonable endeavours to procure subscribers for the Placing
Shares, or failing which, to subscribe for such Placing Shares itself. These
obligations are subject to certain conditions including those listed above.

The Placing Shares represent approximately 26.5 per cent. of the enlarged issued
ordinary share capital of the Company following the Placings.



5.              Directors' Shareholdings
                                          Current Interests             Interests after Placing
Director                              Number of      Percentage       Number of       Percentage of
                                      Ordinary        of Issued        Ordinary          Issued
                                       Shares         Ordinary          Shares          Ordinary
                                                        Share                         Share Capital
                                                       Capital


David Bloxham                            117,858            0.68          126,608             0.54%
Mark Carnegie Brown                       50,714            0.29           63,214             0.27%
Nicholas Badman                           56,429            0.33           68,929             0.29%
John Burke                               129,914            0.75          192,414             0.82%
Graeme Hart                              138,739            0.80          208,739             0.88%

The Directors have agreed to subscribe for an aggregate of £0.27 million for
166,250 Ordinary Placing Shares at the Placing Price. The beneficial and
non-beneficial interests of the Directors (not including unexercised options
over the Ordinary Shares) on the date of this document and following the Placing
are set out below:



6.              Extraordinary General Meeting and action to be taken

A notice convening the EGM to be held at 100 Longwater Avenue, Green Park,
Reading, Berkshire RG2 6GP at 11.00 a.m. on 9 November 2005 has been sent to
shareholders. The Resolutions to be proposed at the EGM are to empower the
Directors to allot equity securities for cash and to do so otherwise than in
accordance with the Shareholders' statutory pre-emptory provisions, as set out
in the Act, in connection with - inter alia - the Placings.

The authority given to the Directors to allot further shares in the capital of
the Company requires the prior authorisation of the Shareholders at a general
meeting under section 80 of the Act. Upon the passing of Resolution 1 and
following completion of the Placings the Directors will have authority to allot
certain of the unissued ordinary share capital up to an aggregate nominal amount
of £778,500, representing approximately 33 per cent. of the issued ordinary
share capital of the Company as enlarged by the issue of the Placing Shares.
This authority will expire immediately following the annual general meeting of
the Company in 2006.

Upon the passing of Resolution 2 and following completion of the Placings, the
Directors will have the power under section 95 of the Act to allot, for cash,
Ordinary Shares up to a maximum aggregate nominal amount of £235,909.06,
representing approximately 10 per cent. of the issued ordinary share capital of
the Company as enlarged by the issue of the Placing Shares, without being
required first to offer such securities to Shareholders in accordance with the
statutory pre-emption rights. This authority will expire immediately following
the annual general meeting of the Company in 2006.

While the Directors have no present intention to allot any Ordinary Shares
pursuant to the authorities proposed to be granted to them at the EGM, save for
the allotment of the Placing Shares, the rights described above would provide
flexibility for raising additional funds or making acquisitions should suitable
opportunities arise.

A form of proxy for use by Shareholders in connection with the EGM is enclosed
with this document. Whether or not you propose to attend the EGM in person, you
are requested to complete the form of proxy in accordance with the instructions
printed on it and to return it to the Company's registrars, Capita Registrars,
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and
in any event so as to arrive no later than 11.00 a.m. on 7 November 2005.
Completion and return of the form of proxy will not preclude you from attending
the EGM and voting in person should you so wish.



1.              Recommendation

The Directors consider the terms of the Placing to be fair and reasonable
insofar as the Shareholders are concerned and in the best interests of the
Company; and accordingly recommend that you vote in favour of the Resolutions at
the EGM as they intend to do in respect of their own holding of Ordinary Shares,
representing 493,654 Ordinary Shares, being 2.8 per cent. of the current issued
ordinary share capital.



This announcement shall not constitute or form any part of any offer or
invitation to subscribe for, underwrite or otherwise acquire, or any
solicitation of any offer to purchase or subscribe for, securities including in
the United States.

This announcement does not constitute an offer of securities for sale in the
United States. Neither this announcement nor any copy of it may be taken or
distributed into the United States or distributed or published, directly or
indirectly, in the United States. Any failure to comply with this restriction
may constitute a violation of US securities laws. The securities referred to
herein have not been and will not be registered under the Securities Act, and
may not be offered or sold in the United States unless they are registered under
the Securities Act or pursuant to an available exemption therefrom. No public
offering of securities of the Company is being made in the United States.

This announcement does not constitute an offer to sell or the solicitation of an
offer to buy, subscribe or otherwise acquire Placing Shares or other shares in
the Company in Canada, Australia, Japan, the Republic of Ireland or in any
jurisdiction in which such offer or solicitation is unlawful and the information
contained herein is not for release, publication or distribution in whole or in
part in or into Canada, Australia, Japan or the Republic of Ireland or in any
jurisdiction in which such publication or distribution is unlawful.

The Placing Shares have not been recommended, approved or disapproved by any
United States federal or state securities commission or regulatory authority.
Furthermore, the foregoing authorities have not confirmed the accuracy or
determined the adequacy of this announcement. Any representation to the contrary
is a criminal offence in the United States.

The announcement contains a number of statements relating to the Company that
are considered 'forward looking statements' as defined in the Private Securities
Litigation Reform Act 1995 of the United States. Such statements are based on
current plans and, information and intentions and certain external factors which
may be beyond the control of the Company and, therefore, undue reliance should
not be placed on them. Forward looking statements speak only as of the date they
are made and the Company undertakes no obligation to update publicly any of them
in light of new information or future events. These statements are subject to
risks and uncertainties that could cause actual occurrences to differ materially
from the forward looking statements.

Robert W. Baird Limited, which is a member of the London Stock Exchange and is
authorised and regulated by the Financial Services Authority, is acting
exclusively for Evolutec and no-one else in relation to the Placing and will not
be responsible to anyone other than Evolutec for providing the protections
afforded to clients of Robert W. Baird Limited nor for providing advice in
relation to the Placing.  No representation or warranty, express or implied, is
made by Robert W. Baird Limited as to any of the contents of this announcement.

This announcement, which is the sole responsibility of Evolutec, has been
approved by Robert W. Baird Limited for the purposes of Section 21 of the
Financial Services and Markets Act 2000.  Robert W. Baird Limited, which is
authorised and regulated by the Financial Services Authority, is acting as the
Company's financial adviser in connection with the Placing.


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