Interim Results

Proteome Sciences PLC
31 October 2000

                            Proteome Sciences plc

                                Coveham House,

                            Downside Bridge Road,

                           Cobham, Surrey KT11 3EP.


                              Tel: [phone]

                              Fax: [phone]

                             [e-mail]


                              INTERIM STATEMENT


                     FOR THE SIX MONTHS TO 30TH JUNE 2000


                                  HIGHLIGHTS

      + Proteomics

      + Proteomics now recognised as a key scientific route to understanding
        and diagnosing disease.
      + Two tests now ready for commercialisation; one for the diagnosis of
        CJD and the other for the diagnosis of stroke.
      + Patents now granted or filed for disease diagnosis, prognosis and
        therapy in the following areas; neurodegenerative diseases, chronic
        heart disease, rejection after solid organ transplantation, cancer and
        diabetes/obesity.
      + Three patents filed relating to diabetes and obesity in the first
        half of the year.
      + Proteome Sciences is a founder shareholder in GeneProtTM, a company
        formed in March this year to sequence the human proteome. Second round
        funding has put a value on this Company close to $200 million.
      + Agreement reached to assign interest in certain colorectal patents
        to Europroteome SA in exchange for equity. Europroteome is expected to
        effect an IPO during 2001.

      + Gene expression

      + Intronn LLC, the US based subsidiary of Proteome Sciences,
        positioned for IPO in 2001.
      + CEO appointed in September of this year.
      + Two key patents granted and a further patent application filed
        during the period
      + Major grant application submitted and expected to receive
        considerable proportion of $3.2 million requested.
      + A number of collaborative research and partnering opportunities are
        being actively pursued for Intronn's SMaRT TM technology in addition
        to those already signed up which are addressing key disease states.
      + Intronn set to become a market leader in the analysis and purity of
        synthetic oligonucleotides, a market which is experiencing rapid
        growth.

      + Financial performance

      + Loss before tax of £606,799 (loss £502,560), in line with budget.
      + Cash at 30 June 2000 amounted to £4.3m.
      + Current cash resource should provide adequate funding through to
        2003 at current levels of cash burn.

Commenting on the results for the period, Christopher Pearce, Chief Executive,
said:


        'Proteome Sciences has had a very active six months during which
        substantial developments across both the proteomics and gene
        expression divisions of the Company have been made.

        'In particular, having two diagnostic tests, for CJD and stroke, ready
        for immediate commercialisation and with Intronn making outstanding
        advances with its SMaRTTM technology I am confident of further strong
        progress during the rest of the year.'





Set out below is the full text of the Interim Statement.



Introduction

The Company announces its interim financial results for the six months ended
30th June 2000, together with an update on its research programmes.

Intellectual Property

Over the period two key patents have been granted in the USA. At the same time
the discoveries made across the scientific projects have resulted in four
additional patent filings:-

  * two key patents relating to Intronn LLC's research in spliceosome
    mediated targeted


        transplicing (SMaRT TM) have been granted in the U.S.

      - the first of these relates to the SMaRT TM technology platform


    - the second includes the use of SMaRT TM in genomics as a means

    of exon tagging

  * a further three patent applications have been filed relating to the
    diabetes and obesity


        research undertaken at the Universities of Buckingham and Geneva.

  * a patent application has been filed as a method to detect the purity and
    length of synthetic oligonucleotides

Intronn

Considerable advances both in science and in corporate development have been
made at Intronn LLC, Proteome Sciences' US subsidiary. Dr Gerard McGarrity was
appointed as CEO in September 2000. Since then he has undertaken a major
scientific review of Intronn to finalise the business plan and corporate
strategy to complete the funding for Intronn ahead of preparing the business
for IPO in 2001. An interim funding was completed in July which raised
$500,000, the initial part of the $5m to $6m mezzanine total anticipated for
the company.

In the latest Annual Report and Accounts, mention was made that Intronn was in
the process of submitting a major Phase 2 SBIR grant application to the NIH in
the USA following its successful Phase 1 SBIR grant. The reviewers praised the
Phase 2 SBIR grant application as one of the most innovative, thoughtful and
exciting ones they had ever read. The application received a particularly high
score at 119 (100 being perfection) and Intronn understands that it will
receive a considerable proportion of the $3.2m grant for which it applied.
This is a clear endorsement of the outstanding and innovative scientific
approach established by SMaRT TM and the wide range of applications that it
can address.

Driven by the advances in genetics, in particular the mapping of the human
genome, the US market for synthetic oligonucleotides, which is likely to
exceed $200m in 2000, is thereafter expected to escalate at a very rapid rate.
Nucleic acid-based therapeutics - there are 15 antisense products from 9 US
companies in clinical trials - and diagnostic (DNA chip) products are
projected to reach $11bn in 2005.

Today purification and analysis of purity of these synthetic oligonucleotides
requires expensive methods and technologies. Intronn, through its research
programme and the patent applications relating thereto is poised to become a
market leader with its proprietary methods for simple, reproducible and
sensitive front end analysis and purification of synthetic oligonucleotides.
The prospects for these activities look outstanding and it is proposed that
the oligonucleotides programme will be spun out separately from SMaRT TM for
commercialisation early in 2001.

Heads of Agreement have been signed up in July for a collaborative programme
in agbio using SMaRT TM and other collaborative research and partnering
opportunities are being actively addressed. SMaRT TM is now being used across
a broad range of applications in collaborations to address cystic fibrosis
(the University of Iowa and Duke University), factor VIII (University of North
Carolina), HPV and cervical cancer (National Cancer Institute, USA),
Alzheimer's (Kings College, London) and collagen disease (General Hospital,
Salzburg).

Proteomics

The announcement of the completion of the first draft sequencing of the human
genome at the end of June was a major scientific landmark which engendered
considerable media attention. This has stimulated significant activity in the
pharmaceutical and biotechnology industry and for investors on both sides of
the Atlantic. Whilst the first draft of the human genome was an enormous
achievement, the vast amount of sequence data needs to be made intelligible
and maximum value will be added to this process through function and the
ability to patent utility of function.

Genes (which are simple functional units of sequence data) control the body
through the proteins they produce. By identifying the proteins that are
implicated in a particular disorder (through proteomics and functional
genomes) it is possible to see what is actually happening and has happened in
a disease. Identification of disease related genes (genomics) only tells us
what could happen.

Consequently, the information generated by proteins is most valuable data as
it not only allows accurate identification of the mechanism and markers of
disease (diagnostics) but also provides real targets for drug discovery.
Proteome Sciences shares the view that it is considerably easier and faster to
go from disease-associated protein to drug, than it is to go from basic
genomic sequence data to drug.

Proteome Sciences is particularly well placed through its established
proteomics research programmes in neurogenerative disease, chronic heart
disease, rejection after solid organ transplantation, cancer and diabetes/
obesity to capitalise from the substantial proprietary libraries and data it
has built up on differential protein expression in disease pathways. Not only
is proteomics a key tool to unlock functional genomics, but Proteome Sciences
has now developed early products from proteomics which address significant
areas of unmet need.

There has been considerable media focus on the implications of human
consumption of BSE infected meat and the identification and consequent
increases in the numbers of deaths from CJD/ nv CJD (new variant CJD) from the
Phillips Report and the pressing requirement for a blood test to diagnose
these conditions. Proteome Sciences has developed a blood test with high
sensitivity for CJD and is actively involved in out licensing it to commercial
partners. Details of this have been disclosed under a confidential disclosure
agreement to the CJD Surveillance Unit where the assay is under evaluation. At
the same time, it has developed a blood test for stroke with high sensitivity,
specificity and predictive accuracy and this, combined with the markers from
the other research programmes is being aggressively marketed through our
business development team.

The Fourth Siena Conference 'from Genome to Proteome' created and sponsored by
Proteome Sciences attended by 450 people provided further reflection of the
interest focused on proteomics, with over 500 prospective delegates unable to
obtain places. There was substantial representation from the core and
strategic research areas of major pharmaceutical, diagnostic and genomics
companies. This provided an ideal platform for Proteome Sciences to present
some of its latest results including stroke, CJD, diabetes, obesity, chronic
heart disease and rejection after solid organ transplantation. This, and the
major Bio Partnering meeting in London in October, have combined to generate
considerable activity in commercialisation of the proteomics programme. Strong
scientific progress has continued across the research, with a further three
patents applications filed in diabetes and obesity. Proteome Sciences is close
to concluding its exclusive licensing option with the University of Michigan
in respect of the oncology programme in the USA.

Agreement has been reached with Europroteome SA for the assignment of the
group's interest in certain of its colorectal patents, in exchange for equity.
Europroteome has recently received an injection of funds from BioMerieux,
valuing the company at approximately Dm25m. It is anticipated that
Europroteome will effect an IPO sometime in 2001.

The appointment of an internal business development manager in the second
quarter of the year, complemented by specialist external consultants in
oncology and licensing, combined with the substantial increase in activity
after the draft sequence of the human genome, should lead to the conclusion of
collaborative research and license agreements with biotechnology and
pharmacos, moving into 2001.

Proteome Sciences was a founder shareholder in Geneva Proteomics TM (GeneProt
TM ), a company formed in March 2000, to sequence the human proteome with a
bank of 50 mass spectrometers. Since that time GeneProt TM has announced a
successful second round of funding, capitalising the corporation at close to
$200m. In October, GeneProt TM announced that it had entered into an agreement
with Novartis to sequence three disease proteomes for $43m with further
milestones which could trigger up to a further $41m of payments. This is the
first major transaction in proteomics since the announcement of the sequence
of the human genome and augers well for future transactions in disease related
proteomics.

Financial Update

The financial results for the six months to 30th June 2000, show a loss before
taxation of £606,799, compared with £502,560 in the corresponding period in
1999. This includes £219,000 for costs associated with the Placing and Open
Offer in March and also incorporates a favourable movement in realised
exchange gains of £238,044 (1999: £158,876). The results exclude any write
back of provisions made in earlier years, as included in the 1999 results.

Cash at 30th June 2000, totalled £4,268,823. This reflects the £4.4m received
by way of the Placing and Open Offer to shareholders completed in May 2000.
This should provide adequate funding to satisfy the existing level of cash
burn through to 2003.



Outlook

The prospects for Proteome Sciences look most encouraging. With its two
platform technologies in proteomics and modification of gene expression,
(SMaRT TM) the company is uniquely positioned to address functional genomics.
These offer vital tools to unlock the vast amount of data from the human
genome, to simplify its navigation and to accelerate disease discovery and
treatment. The Directors look forward to exploiting the considerable
commercial opportunities that these provide and thus to demonstrate clearly
the substantial value that has been established from the research programme.

                                                             31st October 2000

Enquiries:-
Proteome Sciences plc, UK                       Tel: [phone]
Christopher Pearce, Chief Executive Officer     e-mail: [e-mail]

Ikon Associates
Adrian Shaw                                     Tel: [phone]



Unaudited consolidated profit and loss account for the six months

ended 30th June 2000






                           Six months ended   Six months ended  Year ended 31st
                             30th June 2000     30th June 1999    December 1999
                                          £                  £                £

Administrative expenses           (652,392)          (426,206)        (761,396)
(Note 4)
Realised exchange gains             238,044            158,876           71,072
Research and development          (234,887)          (252,205)        (560,190)
expenses
Other operating expenses              (139)            (4,491)          (5,614)
                                     ______             ______         ________
Operating loss
                                  (649,374)          (524,026)      (1,256,128)
Interest receivable                  47,923             23,208           32,817
Interest payable and                (5,348)            (1,742)          (6,447)
similar charges
                                     ______             ______         ________

Loss on ordinary                  (606,799)          (502,560)      (1,229,758)
activities before
taxation
Tax on loss on ordinary                   -                  -                -
activities
                                     ______             ______         ________
Accumulated deficit for           (606,799)          (502,560)      (1,229,758)
the period

Loss per share / Basic                0.71p              0.64p            1.57p
and diluted



Notes to the Financial information


1.    There has been no change to any of the accounting policies set out in the
      1999 statutory accounts

2.    Following the loss of £606,799 incurred in the period, the Directors do
      not recommend the payment of a dividend

3.    a)  The calculation of the loss per share for the six months ended 30th
          June 2000 is based on the loss for the financial period of £606,799
          and on 85,533,704 Ordinary Shares, being the weighted average number
          of shares in issue and ranking for dividend during the period (six
          months ended 30th June 1999 - loss £502,560, number of Ordinary
          Shares in issue and ranking for dividend, 77,717,483).
      b)  The calculation of the loss per share for the year ended 31st
          December 1999 is based on the loss for the year of £1,229,758 and on
          78,505,304 Ordinary Shares, being the weighted average number of
          shares in issue and ranking for dividend during the year.

4.    Administrative expenses for the six months ended 30th June 2000, include
      £219,000 for costs associated with the Placing and Open Offer in March
      2000.

5.    The preceding financial information does not constitute statutory
      accounts as defined in Section 240 of the Companies Act 1985. The
      financial information for the year to 31st December 1999 is based on the
      statutory accounts for that year. These accounts, upon which the auditors
      issued an unqualified opinion, and which did not contain any statement
      under Section 237(2) or (3) of the Companies Act 1985, have been
      delivered to the Registrar of Companies.