Interim Results

Phytopharm PLC 11 May 2005 Phytopharm plc Interim results for the period to 28 February 2005 Phytopharm plc today announces interim results for the six-month period ended 28 February 2005. Key Points - Operational â€¢ Completion of a Licence and Joint Development Agreement with Unilever for Hoodia gordonii extract â€¢ Successful interim data review for Phase II proof of principle study in Alzheimer's disease (Cogane(TM)) â€¢ Receipt of Â£4 million milestone confirmed in February 2005 (Â£3.6 million net received in March 2005) from Yamanouchi Pharmaceutical Co., Ltd following evaluation of interim Phase II Alzheimer's disease data (Cogane(TM)), confirming that the data had met the criteria in the licensing agreement â€¢ Termination of licensing agreement with Yamanouchi Pharmaceutical Co., Ltd (Cogane(TM)) in March 2005, following Yamanouchi's post-merger portfolio review Key Points - Financial â€¢ Revenues of Â£6.3 million (H1 2004: Â£1.1 million) and milestone receipts enable Phytopharm to record a profit for the period of Â£734,999 (H1 2004: loss of Â£1.9 million) â€¢ Placing of new shares announced in April raised Â£9.0 million after expenses Dr Richard Dixey, Chief Executive of Phytopharm, said: 'The highlight of the first half was the signing of a worldwide licence agreement with Unilever, the global leader in weight management products, for our Hoodia gordonii extract. We will be seeking further licensing deals over the next year, starting with our veterinary portfolio and then with our Alzheimer's product Cogane(TM), following completion of phase II trials at the end of this year.' Enquiries: Phytopharm plc Today: 07867 782000 Dr Richard Dixey, Chief Executive Thereafter: 01480 437697 Mobile: 07867 782000 Dr Wang Chong, Chief Financial Officer Tel: 01480 437697 Mobile: 07876 684223 Financial Dynamics Tel: 0207 831 3113 David Yates / Ben Atwell A presentation for analysts will be held at Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB at 9:30am today. www.phytopharm.co.uk Operational Review Phytopharm is a small pharmaceutical company specialising in the discovery and development of novel pharmaceutical and functional food products for neurodegeneration, obesity and metabolic disease, dermatology and inflammation. The Company's strategy is to develop first-in-class products through Phase II clinical testing, and then secure pharmaceutical partners for late stage development, sales and marketing. The progress of our products over the first half of the year, each at different stages of development, is described on the following pages. Neurodegeneration The neurodegeneration programmes include Alzheimer's disease, Parkinson's disease and amyotrophic lateral sclerosis, a motor neurone disease. Our lead product, Cogane(TM) (coded PYM50028) is being developed for Alzheimer's and Parkinson's disease. In pre-clinical studies, PYM50028 is neuroprotective and reverses both the decrease of neuronal growth factors and the neuronal degeneration observed in the ageing brain. Importantly, this product has also been shown to restore levels of proteins that are altered in the ageing brain, returning them to levels observed in the young, causing beneficial outgrowth and branching of neurites. In January 2005, we announced the successful outcome of a scheduled interim data review for the ongoing Phase II 'proof of principle' clinical study in Alzheimer's disease of PYM50028. This study is being conducted under a clinical trial authorisation (CTA) from the UK Medicines and Healthcare Products Regulatory Agency (MHRA). The Phase II study utilises a randomised, double-blind, placebo-controlled design to evaluate the safety, efficacy and pharmacokinetic profile of PYM50028 after once daily oral administration over three months. The effects of PYM50028 on memory, concentration and executive function will be evaluated during the study. In accordance with the protocol, an interim review was conducted after the first 60 subjects completed the study. The objectives of this review were to evaluate the emergent safety profile of the study and to re-estimate the total number of subjects required to measure the efficacy of PYM50028 on cognitive performance. The safety review was conducted by an independent consultant physician, who was provided with blinded data for each of the two treatment groups. He concluded that 'the data obtained to date indicate that the study medication is not associated with any safety concerns.' Therefore, the study will continue with no changes to the safety monitoring. The sample size re-assessment was conducted by an independent statistician, who reported that the sample size for the study should be increased from 200 to 238 subjects. Phytopharm subsequently received regulatory and ethics approval for this amendment. A total of 237 subjects have now been recruited into this study, and subject recruitment is expected to be completed within two weeks. We therefore anticipate the completion of the phase II trial for Cogane(TM) at the end of 2005 and, following analysis of the results, will be seeking further licensing partners for this product. In February 2005, we received confirmation of a milestone payment of Â£4 million (Â£3.6 million net received in March 2005) from Yamanouchi Pharmaceutical Co. Ltd ('Yamanouchi') following receipt by Yamanouchi of the safety data in relation to the first 60 patients treated with PYM50028 in the ongoing phase II proof of principle study in patients with Alzheimer's disease. The study confirmed that the data met the criteria set out in the licensing agreement. In March 2005, Phytopharm also received confirmation from Yamanouchi that as a result of a portfolio review arising out of the merger of Yamanouchi with Fujisawa Pharmaceutical Co, Yamanouchi was terminating the licensing agreement, covering Japan and some other Asian countries, in connection with PYM50028. Phytopharm had previously announced in February 2005 that it had been informed by Yamanouchi that it was likely to terminate this agreement. Our second lead product Myogane(TM) (coded PYM50018) is being developed for amyotrophic lateral sclerosis (ALS; also known as Lou Gehrig's disease). ALS is the most common motor neurone disease and results from progressive degeneration of both upper and lower motor neurones. In pre-clinical models, PYM50018 protects against neuronal damage, increases neurite outgrowth, reverses oxidative damage and reverses neuronal apoptosis in vitro. When administered orally to a transgenic pre-clinical model of ALS, PYM50018 delays the loss of muscle strength and extends survival time. Last year, we successfully completed a Phase Ia clinical study to evaluate the safety, tolerability and pharmacokinetic profile of PYM50018. This residential clinical study was conducted under an investigational new drug (IND) application filed with the United States Food and Drug Administration (FDA) and confirmed that the product was well absorbed with a good safety profile. We also announced last year that the FDA had granted Orphan Drug and Fast Track designation to PYM50018 for the treatment of ALS. Building on this success we are now progressing the development package to support further clinical studies with PYM50018 for ALS. Obesity and metabolic disease Our obesity programme includes an extract of Hoodia gordonii for the dietary control of obesity, which contains a novel appetite suppressant that reduces caloric intake in overweight subjects, as demonstrated in our double-blind, placebo-controlled clinical study announced in December 2001. In December 2004, we announced that we had granted an exclusive global licence for our Hoodia gordonii extract to Unilever plc. As part of the agreement, Unilever committed to initial payments totalling approximately Â£6.5 million ($12.5 million) out of a potential total of Â£21 million ($40 million) in payments to us. In addition, we will receive a royalty on sales of all products, including globally recognised brands, containing the extract. We are collaborating with Unilever on a five stage research and development programme of safety and efficacy studies with a view to bringing new products to market. Unilever will manage the agronomy programme and will support the international patent programme for the products. Phytopharm has also developed screens that are predictive of appetite suppressant activity to evaluate pharmaceutical development candidates in our obesity and metabolic disease programme. Dermatology The dermatology programmes include products for canine skin disorders and human eczema. These products have a dual mode of action that targets both the allergic and inflammatory components of skin disorders. Following the success last year of the three-plant product, coded PYM00217 in our European multi-centre study in canine atopic dermatitis, we launched PYM00217 with the brand name Phytopica(TM). Following the successful UK launch to registered veterinary practitioners, Phytopharm is now seeking global partners to market Phytopica(TM) in other territories. Inflammation Finally, the inflammation programmes include products for canine joint disorders and human inflammatory disorders, including asthma. These products are characterised by their inhibition of a wide range of enzymes central to chronic inflammation. Last year, we announced the launch of Zanthofen(TM) (coded PYM50014) for the maintenance of canine joint mobility. Pre-clinical studies have demonstrated that the components of Zanthofen(TM) maintain normal white cell function and have anti-oxidant properties that help maintain joint mobility. Zanthofen(TM) is available to veterinary practitioners across the UK and is marketed by Phytopharm's marketing partner, Genitrix Ltd, a UK based veterinary product company. Steady progress has been made in developing novel synthetic molecules intended to result in a pharmaceutical prescription medicine for the treatment of asthma and other inflammatory disorders. Pre-clinical studies have demonstrated anti-inflammatory and anti-spasmodic activity in several models of asthma and inflammation. We anticipate that further proof of concept studies will be investigated during the year using these compounds in pre-clinical models of asthma. Financial Review Summary The financial performance for the first six months to 28 February 2005 has been influenced by two main events: the income from Unilever for Hoodia gordonii extract after the agreement was signed in December 2004 and the third milestone payment due from Yamanouchi for PYM50028 in February 2005. The Company's investment in research and development continues to grow in line principally with the continuing progress of our programmes for Alzheimer's disease, amyotrophic lateral sclerosis and the dietary control of obesity. Turnover Revenues of Â£6.34 million for the first six months (H1 2004: Â£1.05 million, H2 2004: Â£0.02 million) comprised principally Â£2.27 million in payments received from Unilever, for the exclusive licence to develop, manufacture and market Hoodia gordonii extract for the dietary control of obesity on a global basis, and a Â£4 million (Â£3.6 million net of Japanese withholding tax) milestone payment from Yamanouchi, following acknowledgement by Yamanouchi that the safety data in relation to 60 patients treated with PYM50028 had fulfilled the criteria in the licensing agreement. The significant increase in revenues for the period reflects the intermittent timing of milestone payments. Expenses Research and development remained our most significant investment, totalling Â£4.11 million or 78% of total operating costs, an increase of 58% (H1 2004: Â£2.60 million, H2 2004: Â£3.75 million). This is largely due to the successful progress of the Alzheimer's disease and amyotrophic lateral sclerosis programmes, which are in clinical trials, and also the dietary control of obesity programme, which is now fully funded by Unilever. The research and development activity required administrative support of Â£1.15 million (H1 2004: Â£0.59 million, H2 2004: Â£1.12 million), due to the additional one-off costs of an aborted Â£23.9 million fund raising, US financial compliance costs and the share option compensation charge. This period's total operating expenses were Â£5.26 million, an increase of 65% (H1 2004: Â£3.18 million, H2 2004: Â£4.87 million). Interest and Tax Interest income of Â£0.09 million was higher this period (H1 2004: Â£0.07 million, H2 2004: Â£0.17 million), due to a combination of changing cash balances and higher interest rates, and represents an average return of 2.04% on the cash balances throughout the period. There was a net tax charge of Â£0.07 million instead of net tax recoverable in previous periods (H1 2004: Â£0.21 million, H2 2004: Â£0.33 million), despite a similar research and development corporation tax credit to the previous period, due to the payment of a 10% Japanese withholding tax deducted from the Yamanouchi income. Liquidity and Capital Resources At 28 February 2005 the Group had cash and liquid resources of Â£3.67 million, Â£1.76 million lower than at the start of the financial year. Cash and liquid resources were strengthened by a placing and open offer of Â£9.0 million net, post the period end. The fixed asset base remained low at Â£0.16 million since the start of the six month period as research and development activities are contracted out so that the Group does not need to finance its own laboratory facilities. Debtors of Â£6.33 million are 297% higher than at the start of the period, comprising principally the Yamanouchi milestone payment and to a lesser extent, research and development tax credits. Creditors of Â£4.27 million are 89% higher than at the start of the period, comprising mainly trade creditors and accruals. Working capital at 28 February 2005 was Â£6.07 million, an increase of Â£0.96 million during the period and is a manifestation of the sporadic nature of milestone payments. The underlying utilisation of working capital in FY2005 is anticipated to be similar to previous periods. During the period, Phytopharm reported an operating profit of Â£0.71 million, compared with a loss of Â£2.1 million in H1 2004. At a pre-tax level, profits were Â£0.81 million, compared with a loss of Â£2.1m in H1 2004. Phytopharm has raised a net total of Â£43 million since the IPO in 1996 (including the Â£9.0 million fund raising in April 2005). As at 28 February 2005, a net total of Â£29 million has been invested by shareholders in developing Phytopharm and its product opportunities. Independent review report to Phytopharm plc Introduction We have been instructed by the company to review the financial information which comprises the consolidated profit and loss account, the reconciliation of movements in Group shareholders' funds, the consolidated balance sheet and the consolidated cash flow statement and the related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of company management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 28 February 2005. PricewaterhouseCoopers LLP Chartered Accountants Cambridge 10 May 2005 (a) The maintenance and integrity of the Phytopharm plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the website. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. Unaudited consolidated profit and loss account for six months ended 28 February 2005 Notes Unaudited Unaudited Audited Six months Six months Year Ended Ended Ended 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ Turnover 2 6,340,644 1,052,360 1,072,082 Cost of sales (371,054) - (10,136) __________ __________ __________ Gross profit 5,969,590 1,052,360 1,061,946 __________ __________ __________ Net operating expenses 3 (5,255,859) (3,184,923) (8,057,945) __________ __________ __________ Operating profit/(loss) 713,731 (2,132,563) (6,995,999) Interest receivable and similar income 93,356 69,693 239,235 Interest payable and similar charges (296) - (312) __________ __________ __________ Profit/(loss) on ordinary activities 806,791 (2,062,870) (6,757,076) before taxation Tax on profit/(loss) on ordinary 4 (71,792) 205,434 530,946 activities __________ __________ __________ Profit/(loss) for the period 7 734,999 (1,857,436) (6,226,130) __________ __________ __________ Basic earnings/(loss) per share (pence) 5 1.7 (4.8) (15.3) Diluted earnings per share 5 1.7 - - Unaudited reconciliation of movements in Group shareholders' funds for the six months ended 28 February 2005 Unaudited Unaudited Audited Six months Six months Year Ended Ended Ended 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ Profit/(loss) for the period 734,999 (1,857,436) (6,226,130) New share capital issued 157,893 6,517,429 6,519,929 Expenses of share capital issued - (163,721) (154,035) Share option compensation charge 44,250 27,340 55,400 __________ __________ __________ Net increase in shareholders' funds 937,142 4,523,612 195,164 Opening shareholders' funds 5,292,048 5,096,884 5,096,884 __________ __________ __________ Closing shareholders' funds 6,229,190 9,620,496 5,292,048 __________ __________ __________ Unaudited consolidated balance sheet at 28 February 2005 Notes Unaudited Unaudited Audited At At At 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ Fixed assets Tangible assets 154,628 171,675 177,817 __________ __________ __________ 154,628 171,675 177,817 Current assets Stocks 347,574 195,820 350,534 Debtors amounts falling due after one year 6 - - 613,929 Debtors amounts falling due within one 6,325,063 1,122,908 977,837 year Cash held on deposit as short term 3,524,233 2,541,243 5,237,452 investments Cash at bank and in hand 147,269 6,526,875 193,708 __________ __________ __________ 10,344,139 10,386,846 7,373,460 Creditors: amounts falling due within one (4,269,577) (938,025) (2,259,229) year __________ __________ __________ Net current assets 6,074,562 9,448,821 5,114,231 __________ __________ __________ Total assets less current liabilities 6,229,190 9,620,496 5,292,048 __________ __________ __________ Net assets 6,229,190 9,620,496 5,292,048 __________ __________ __________ Capital and reserves Called up share capital 430,997 427,433 427,488 Share premium account 7 38,289,041 38,122,526 38,134,657 Merger reserve 7 (204,211) (204,211) (204,211) Profit and loss account 7 (32,286,637) (28,725,252) (33,065,886) __________ __________ __________ Equity shareholders' funds 6,229,190 9,620,496 5,292,048 __________ __________ __________ Unaudited consolidated cash flow statement for the six months ended 28 February 2005 Notes Unaudited Unaudited Audited six months six months Year ended ended Ended 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ Net cash outflow from continuing operating (2,604,414) (3,095,843) (6,826,047) activities Returns on investment and servicing of finance Interest received 93,356 69,693 239,235 Other interest paid (296) - (312) __________ __________ __________ Net cash inflow from returns on investment 93,060 69,693 238,923 and servicing of finance Taxation UK corporation tax credit received - 277,600 855,699 Foreign taxation paid - (100,000) (100,000) __________ __________ __________ Net cash (outflow)/inflow from taxation - 177,600 755,699 Capital expenditure and financial investment Purchase of tangible fixed assets (29,126) (59,945) (117,110) Proceeds on sale of tangible fixed assets 9,000 9,750 14,575 Reimbursement of advances to/(advances to) 6 613,929 - (613,929) suppliers __________ __________ __________ Net cash inflow/(outflow) for capital 593,803 (50,195) (716,464) expenditure and financial investment __________ __________ __________ Cash outflow before use of liquid (1,917,551) (2,898,745) (6,547,889) resources Management of liquid resources Decrease/(increase) in cash held on short 1,713,219 2,590,309 (105,900) term deposit __________ __________ __________ Financing Proceeds from exercise of share options 157,893 33,367 36,625 Proceeds from issue of share capital - 6,484,062 6,483,304 Expenses of share capital issue - (163,721) (154,035) __________ __________ __________ Net cash inflow from financing 157,893 6,353,708 6,365,894 __________ __________ __________ (Decrease)/increase in cash (46,439) 6,045,272 (287,895) __________ __________ __________ Reconciliation of operating loss to net cash outflow from operating activities Unaudited Unaudited Audited six months Six months Year ended ended ended 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ Continuing activities Operating profit/(loss) 713,731 (2,132,563) (6,995,999) Depreciation on tangible fixed assets 44,752 45,168 93,114 Gain on disposal of fixed assets (1,437) (4,723) (6,471) Decrease/(increase) in stocks 2,960 (153,069) (307,783) (Increase)/decrease in debtors (5,019,018) (525) (108,041) Increase/(decrease) in creditors 1,610,348 (877,471) 443,733 Share option compensation charge 44,250 27,340 55,400 __________ __________ __________ Net cash outflow from continuing operating (2,604,414) (3,095,843) (6,826,047) activities __________ __________ __________ Notes to the interim report 1. Preparation of Interim Statements The interim results have been prepared in accordance with the accounting policies set out in the Group's 2004 annual report and are unaudited. The information set out in this interim report for the six months to 28 February 2005 does not comprise statutory accounts within the meaning of the Companies Act 1985. The figures for the year ended 31 August 2004 are abridged from the Group's statutory accounts for that year, which received an unqualified auditors' report and have been filed with the Registrar of Companies. 2. Turnover Six months Six months Year ended ended ended 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ By business activity Licensing and development 6,266,426 1,052,360 1,052,360 Product sales 74,218 - 19,722 __________ __________ __________ 6,340,644 1,052,360 1,072,082 __________ __________ __________ 3. Net Operating Expenses Net operating expenses comprise: Six months Six months Year ended ended ended 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ Research and development expenditure 4,109,707 2,597,986 6,347,431 Administrative expenditure 1,146,152 586,937 1,710,514 __________ __________ __________ 5,255,859 3,184,923 8,057,945 __________ __________ __________ 4. Tax on Loss on Ordinary Activities Six month Six months Year ended ended ended 28 Feb 2005 29 Feb 2004 31 Aug 2004 Â£ Â£ Â£ Current tax UK corporation tax credit on loss for period 328,208 305,434 630,946 Foreign tax (400,000) (100,000) (100,000) __________ __________ __________ Corporation tax (charge)/credit (71,792) 205,434 530,946 __________ __________ __________ Foreign tax related to 10% Japanese withholding tax. The Group is forecasting tax losses for the full year The Group has taken advantage of the Research and Development corporation tax credits introduced in the Finance Act 2000 whereby the Group may surrender corporation tax losses incurred on research and development expenditure for a corporation tax refund at the rate of 24 pence in the pound of actual spend. 5. Earnings Per Share The basic earnings per share is based on profits of Â£734,999 and 42,919,416 ordinary shares, being the weighted average number of shares in issue during the period. For diluted earnings per share, the weighted average number of ordinary shares in issue is diluted to assume conversion of all dilutive potential ordinary shares. The Group has two classes of dilutive potential ordinary shares: these share options granted to employees where the exercise price is less than the average market price of the company's ordinary shares during the period and the contingently issuable shares under the group's long term incentive plan. At 28 February 2005, the performance criteria for the vesting of the awards under the incentive scheme had not been met and consequently the shares in question are excluded form the diluted EPS calculation. Reconciliations of the earnings and weighted average number of shares used in the calculations for the period to 28 February 2005 are set out below. There is no calculation for the comparative period as the group incurred a loss. Earnings Weighted Per-share Â£ Average Amount Number of (pence) shares Basic EPS Earnings attributable to ordinary shareholders 734,999 42,919,416 1.7 Effect of dilutive share options - 769,570 - Diluted EPS __________ __________ __________ Adjusted earnings 734,999 43,688,986 1.7 __________ __________ __________ 6. Debtors The Company was obliged to pay to the Inland Revenue Â£157,731.41 arising on the exercise by Dr Dixey of 288,889 share options on 3 December 2004, near the end of the exercise period. Dr Dixey is accordingly obliged to reimburse such amount to the Company including interest charges at a commercial rate. He intends to sell a sufficient number of his shares in the Company, as soon as he is reasonably and legally able, to raise sufficient funds net of tax and costs to enable him to reimburse the Company. This amount is included in debtors due within one year. The Company has been reimbursed by Unilever N.V. as part of the Joint Development Agreement, for the advances made to suppliers shown as debtors due after one year at 31 August 2004. 7. Share Premium Account and Reserves Share Merger Profit and Premium Reserve Loss Account Account Â£ Â£ Â£ At 1 September 2004 38,134,657 (204,211) (33,065,886) Premium on new share issue 154,384 - - Share option compensation charge - - 44,250 Loss for the period - - 734,999 __________ __________ __________ At 28 February 2005 38,289,041 (204,211) (32,286,637) __________ __________ __________ 8. Performance Share Award On 3 December 2004 the Remuneration Committee made a performance share award of 150,000 ordinary shares at par to Dr G W Chong. The Remuneration Committee considered that there was a considerable risk of Dr Chong leaving the Company as his existing share option awards were at option prices significantly in excess of the current share price and this performance share award was granted, as permitted by Chapter 13.13A of the Listing Rules to retain the services if Dr Chong. The award is subject to performance conditions and the benefits are not pensionable. The performance conditions are based on Total Shareholder Return (TSR) over a three year period (with no retesting opportunities) when compared to a peer group comprising 21 other listed UK biotech and pharmaceutical companies for 100,000 shares and compared to the FTSE SmallCap index for the remaining 50,000 shares. In each case 25% of the shares awarded will vest for median performance against the comparator group rising to 100% for upper decile and above performance. None of the shares awarded will vest for below median performance. TSR is considered by the Remuneration Committee to be the most robust method of measuring company performance over the period. The terms of the award will not be amended to the benefit of Dr Chong without seeking shareholder approval. 9. Post Balance Sheet Events Phytopharm announced on 29 March 2005 that it had received confirmation from Yamanouchi Pharmaceutical Co. Ltd ('Yamanouchi) that as a result of a portfolio review arising out of the merger of Yamanouchi with Fujisawa Pharmaceutical Co, Yamanouchi is to terminate the licensing agreement covering Japan and some other Asian countries in connection with Cogane(TM) (PYM50028), Phytopharm's candidate product for the treatment of Alzheimer's disease. Phytopharm announced on 4 May 2005 the completion of a Placing and Open Offer raising approximately Â£10.1 million (Â£9.0 million net of expenses) comprising an aggregate of 8,091,193 New Ordinary Shares at the Issue Price of 125 pence per New Ordinary Share. This information is provided by RNS The company news service from the London Stock Exchange

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