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K.S. Biomedix Hldgs (FOGC)


Friday 22 February, 2002

K.S. Biomedix Hldgs

Interim Results

K.S. Biomedix Holdings PLC
22 February 2002

Embargoed until 0700                                            22 February 2002

                            KS Biomedix Holdings plc
                             ('KSB' or 'the Group')

             Interim Results For The Six Months To 30 November 2001

KS Biomedix Holdings plc, the biopharmaceutical business focused on the
development of therapeutic products for the treatment of cancer and inflammatory
disease, announces its interim results for the six months to 30 November 2001.


  • Business now re-focused as a broadly based biopharmaceutical group in line
    with strategic review announced in February 2001
  • Development pipeline and technology base expanded significantly via the
    acquisition of Avicenna Medica Inc. and in-licensing of human antibody
    products from Intracel
  • TransMID programme proceeding to schedule
    -    US Fast Track and Orphan Drug Status granted in period
    -    European Orphan Drug application pending
    -    Phase III trials for TransMID107R, the lead product targeting recurrent
         inoperable brain tumours, due to commence in the second half of 
         calendar  2002
    -    Phase I trials in other indications under development

  • Positive Phase I imaging data for KSB303, our first super high affinity
    antibody, announced today - further clinical trials to commence before end
  • Phase IIb trial for KSB302 in Rheumatoid Arthritis running to schedule
    with data expected in Q2 2002
  • Discerna joint venture established in period provides access to novel
    ribosome display and protein array technologies - to drive early stage
    pipeline and accelerate development timelines
  • Board and operational management teams strengthened further
  • Cash balances of £23.5m at 30 November 2001
  • Underlying burn increased to £6.2m in line with expectations

Dr Steven Powell, Chief Executive, commented: 'The initial imaging data reported
today for KSB303, our first in-house developed antibody, support our plans to
continue its development as a therapeutic oncology product.  TransMID107R is
proceeding to schedule, with the pivotal Phase III study expected to commence in
the second half of calendar 2002.  The progress made during the first half of
2001/02 leaves us well placed to drive further value from our product pipeline
during the second half of the financial year.'


KS Biomedix Holdings plc                                (22/02/02) 020 7950 2800
Dr Steven Powell, Chief Executive Officer              (Thereafter) 01483 307500
Ian Miscampbell, Chief Operating Officer

Weber Shandwick Square Mile                                        020 7950 2800
Kevin Smith/Graham Herring

                            KS Biomedix Holdings plc
                             ('KSB' or 'the Group')

             Interim Results For The Six Months To 30 November 2001

                              Chairman's Statement


The six months to 30 November 2001 was a period of further significant activity
in the transformation of the Group from a discovery driven operation to a
broadly based biopharmaceutical business.

KSB is now focused on the development of therapeutic products for the treatment
and diagnosis of cancer and inflammatory disease.  The Group's clinical product
portfolio has been enlarged significantly to reduce product risk and the balance
between late stage projects and innovative early stage development has been
improved dramatically in line with our objective of achieving profitability and
sustainability for the business.

In July, the acquisition of the Avicenna Medica business ('KSA'), in Canada for
£32m brought the TransMID programme, a late stage oncology product pipeline,
into the KSB portfolio, expanded the Group's technology base significantly and
added a manufacturing capability.  Since acquiring KSA, regulatory progress has
been encouraging.  TransMID107R, our lead oncology product for refractory brain
cancer, gained Fast Track status from the Food & Drug Administration ('FDA') in
August and in the last three months has been granted Orphan Drug status in the
United States.  A similar application is pending in Europe.

Partnerships and Collaborations

In July, the Group licensed the HumaRAD family of human antibodies from Intracel
Corporation giving KSB access to a proprietary oncology target with potential
uses in a number of cancer indications together with a proprietary technology
for attaching radiolabel-warheads to antibodies.  Activity in the first half has
been concentrated on transferring the licensed technology in-house.  This
process is complete and we are on track to commence the next phase of
manufacturing and development of the two therapeutic products for ovarian and
head and neck cancer in the latter half of 2002.

Since May 2001, the Group has established two new research and development ('R&D
') collaborations with Schering AG and MedPharm.  This is in line with its
strategy of identifying R&D partners to drive development of its early stage
product pipeline.  These latest agreements bring the total number of external 
R&D collaborations to eight, up from five a year ago.  The Group's patent estate
now includes 41 key product patents (Feb 2001: 11), underlining the progress
made in establishing a portfolio of proprietary intellectual property assets.

Earlier, in June, the Group formed a joint venture, Discerna Limited, with
Babraham Bioscience Technologies ('Babraham') in Cambridge, UK to access
Babraham's novel ribosome display and protein array technologies and accelerate
development of the Group's therapeutic products.   Since its establishment
Discerna has made excellent progress in validating and exemplifying its
technology and the first fruits of this venture should be available to KSB by
the third quarter of calendar 2002.

Clinical Progress

The Group's clinical trials programme continued to make good progress, with a
Phase I trial for KSB303, the Group's first in-house antibody programme
targeting colorectal cancer, now nearing completion.  Initial indications are
that the data from the trial support the findings from earlier pre-clinical

In December, management announced the decision not to progress to Phase III
trials on KSB301, a treatment for osteoarthritis, following Phase IIb results
that, although showing a positive effect, were not sufficient to support KSB's
commercial criteria for continued development.

A Phase IIb trial for KSB302, a product unrelated to KSB301, for rheumatoid
arthritis, is due to report in the first half of calendar 2002.  A decision on
the next steps towards commercialisation of this product will be taken in the
light of the Phase IIb results.

Significant progress has also been made in preparing the TransMID and HumaRAD
products for the next phase of their development.

Oncology Portfolio

KSA, the Canadian manufacturing and oncology business acquired in July 2001, has
now been fully integrated into the Group.

The development of TransMID for the targeted delivery of therapeutic agents
direct to tumour cells has continued on schedule.  The lead product,
TransMID107R, for the treatment of adult recurrent inoperable high grade glioma
(brain tumours) has shown encouraging results in Phase II clinical trials, with
significant reductions in tumour size being coupled with improvements in
survival times.  During the first half the clinical team has been preparing for
a significant expansion of activity, including the move into Phase III trials,
which will commence in both North America and Europe in the second half of
calendar 2002.  In-house manufacturing of the materials required is underway at
KSA's production facility.  Two further programmes targeting newly diagnosed and
paediatric brain tumour indications will commence Phase I trials during 2002.

TransMID107R also made significant regulatory progress in the first half,
receiving Fast Track status from the FDA in August 2001.  Grant of Fast Track
status will accelerate the US approval process significantly and help ensure an
early market launch of this product.  In December, TransMID107R secured US
Orphan Drug status, bringing a range of benefits, including marketing
exclusivity, tax incentives and clinical development assistance from the FDA.
We have also applied for Orphan Drug status for the product in Europe, which
would secure a similar package of benefits for the European territory and we
expect a decision from European regulatory authorities early in calendar 2002.

The acquisition of KSA also brought into the Group a biologicals manufacturing
facility, situated in Edmonton, Canada.  This Good Manufacturing Practice
designated ('GMP') facility has the capability to produce a range of high value
bio-therapeutic products and gives KSB considerable manufacturing flexibility in
an industry which is currently capacity constrained.  Manufacture of products
for third parties will produce a complementary revenue stream after completion
of the expansion programme announced at the time of the acquisition, which will
add GMP antibody manufacturing to the facility's existing biologics fermentation

Elsewhere in North America, KSB has established an office in Philadelphia as a
base for a local team to progress the clinical development of TransMID and
subsequent products in the US market.

In June the Group also announced that it had acquired an exclusive licence to
three fully human monoclonal antibody products from a subsidiary of Intracel
Corporation.  Two of these products, known as the HumaRAD family, are being
developed for radioimmunotherapy of defined cancer indications.  The other,
HumaSPECT, is already approved in Europe for monitoring the recurrence of
colorectal cancer.  The therapeutic products use a proprietary antibody and
conjugating agent to deliver the therapeutic warhead directly into the tumour
targeting a proprietary antigen.  The transfer of technology and supporting
documentation has been completed and the development plan for the next phase of
product development established.

The Group's own monoclonal antibody development programme is focused on the
development of super high affinity antibodies, which offer a number of
significant potential benefits over conventional antibody technologies,
particularly in the field of cancer treatment.  Super high affinity antibodies
have the ability to bind to their target for prolonged periods, which should
allow regional delivery of the drug to the tumour, less frequent and lower
dosing, which should reduce side effects and extend the therapeutic window.

Although patient recruitment for Phase I trials of KSB303, the Group's own
monoclonal antibody targeted at late stage colon cancer, was slower than
originally anticipated, preliminary results from trial centres in Belgium and
Malaysia have been received.  The Phase I data show encouraging results, with
prolonged retention of the product on the tumour accompanied by rapid clearance
from healthy tissues, supporting the utility of the antibody.  A Phase I/II
oncology study is scheduled to start in the last quarter of calendar 2002.  This
therapeutic study will be designed to define the maximum tolerated dose of the
radiolabelled antibody.  We are also considering the merits of developing the
therapeutic antibody for a range of oncology indications.

Having assembled an extensive base of complementary technologies in the last
eighteen months, the Group is now focusing its research effort on the
development of concepts for combining these technologies to make new
bio-targeted therapeutic products.  These projects will combine the Group's in
house biologics engineering expertise with other technologies accessed through
existing R&D collaborations.

In June 2001 the Group entered into a research collaboration with Schering AG
which will utilise KSB's super high affinity antibody technology to create
antibodies directed at one of Schering's angiogenesis oncology targets.  This
collaboration is progressing well and was recently extended for a further 12

Inflammatory Diseases

In December the Group reported that it was discontinuing development of KSB301,
its candidate for treatment of osteoarthritis.  Although Phase IIb clinical
trial results did show a positive effect of KSB301, the Board, in line with its
strategy of concentrating KSB's resources only on those products with
significant market potential, did not consider this sufficiently superior over
the comparative NSAID treatment to warrant further development and

While the Phase IIb trial results were disappointing, KSB301 is distinct from
other products in clinical development.

The Phase IIb clinical trial for KSB302, targeting rheumatoid arthritis, is
running to schedule and the results are expected in the second calendar quarter
of 2002.  Provided that the results show sufficient clinical benefit to support
a good commercial potential for the product, an intensive campaign to partner
the product will be undertaken prior to commencement of Phase III trials.

Our collaboration with Arakis Limited to evaluate KSB307 for the treatment of
rheumatoid arthritis is continuing.  Arakis has taken up its option to pursue
development of KSB306 for osteoarthritis following the Group's decision to
terminate its interest in this indication in the light of the KSB301 trial

Technology Platforms

The Discerna Joint Venture founded with Babraham in June 2001 gives the Group
access to leading-edge ribosome display technology which should accelerate KSB's
early stage development programmes by reducing the time taken to identify and
engineer lead candidates.  Since June Discerna has established laboratories on
the Babraham campus and recruited a scientific team.   Excellent progress has
been made in establishing the first library and a panel of potential lead
candidates against a target introduced by KSB is expected in the second quarter
of this year.   Following the establishment of Discerna, a number of
opportunities have arisen to commercialise the technology with other
biotechnology and pharmaceutical companies through collaborative agreements and
these are being pursued.

As part of its oncology development programme KSB has been examining the
potential of bispecific antibodies, which would allow the pre-targeting of
tumours in the treatment of cancer.  In a bispecific application the antibody to
target the tumour is administered separately from the radiolabelled warhead
which then binds to the antibody rather than the tumour directly.  Improving
targeting in this way is expected to produce fewer side effects than
conventional radioimmunotherapy.  The Group's in-house research teams are
currently active in developing novel bispecific constructs, that will clear from
the blood without use of a clearing agent and are planning to move these into
the pre-clinical phase within the next twelve months.

The KSA acquisition also added the AviMab technology, which combines a receptor
binding complex with a cytotoxic therapeutic molecule, to the Group's technology
portfolio.  Following further post acquisition evaluation, AviMab has now been
incorporated into our R&D pipeline.  KSB will shortly be initiating a programme,
in conjunction with academic collaborators, to investigate AviMab's potential to
enhance the therapeutic utility of antibodies for the treatment of cancer.

Management & Board

The process of strengthening the operational management team has continued.  In
January 2002, Dr Simon Long joined the Group as Director of Clinical
Development.  Simon joined the Group from Chugai Pharma Europe Ltd where he led
a team responsible for its monoclonal antibody development programme.  Further
new appointments to strengthen the team, both in the UK and Canada, are expected
in the coming months.

Ian McManus has joined the Board as a non-executive director with effect from 21
February 2002.  Ian has 30 years of international management and production
experience generated during his time in the agrochemical and pharmaceutical
industries, most recently as Chairman of Aventis CropScience UK and previously
with Agrevo and Schering AG.  It is the Group's intention to appoint additional
non-executive directors to the Board in the coming months.

Financial Review

As expected the financial shape of the business has changed significantly during
the period following the acquisition of KSA, establishment of Discerna and
acquisition of the HumaRAD products.  As indicated in the 2001 Annual Report,
the cost base of the Group has increased significantly as a result of these
transactions, which were undertaken primarily to broaden and accelerate KSB's
development pipeline.

Turnover rose again to £192,000 from £177,000 in the prior period and comprised
service revenue generated by KSA and revenue from the sale of antibodies
manufactured by the Group for diagnostic purposes.

Operating expenses showed a significant increase, as predicted in the last
Annual Report, to £9.3 million (2000: £1.8 million).  Operating expenses in the
first half include £1.2 million of goodwill arising on the acquisition of KSA.
In addition, one-off costs of £1.6 million relating to the acquisition of the
HumaRAD products and the establishment of Discerna Limited and £0.1 million
relating to the change of control of KSA as a result of the acquisition are also
reflected in the period.

Total expenditure on R&D activities in the period, including the one-off costs
noted above, totalled £6.9 million (2000: £0.9 million).  This comprises the
one-off HumaRAD costs noted above together with recurring R&D expenditure for
the period.  Of this, 51% was incurred on the oncology pipeline and 43% in
inflammatory disease, with the remainder being incurred to fund early stage
research projects.  The balance of expenditure in oncology will continue to
increase following the completion of the Phase IIb trials in inflammatory
disease undertaken by the Group this year.

The profit and loss account for the period reflects the company's 50% share of
the results of Discerna for the period, together with the amortisation of
goodwill relating thereto.

Investment income has increased from £0.5 million to £0.9 million in the period,
reflecting the additional funds on hand throughout the period.  As at 30
November 2001 the Group had total cash reserves of £23.5 million (2000: £19.3
million) after accounting for the transactions completed in July 2001 and the
fund raising completed at that time, as discussed further in Note 2 to the
interim results.

Goodwill of £32.7 million arose on the acquisition of KSA.  This is being
amortised over a period of 10 years. The net cash out flow from operating
activities (the Group's underlying cash burn for the period) was £7.1 million.
The underlying, recurring burn for the same period, excluding one off costs was
£6.2 million and expenditure is expected to continue at this rate for the
remainder of the year.

Reserves include £23.6 million of shares to be issued.  These relate to the
ordinary shares to be issued on exchange of the remaining outstanding
exchangeable shares of KS Canada Inc., an indirectly owned subsidiary
undertaking, which were issued as consideration for the KSA acquisition.


The re-focusing of the business undertaken during the last twelve months has
expanded KSB's core capabilities significantly, broadened the Group's
development pipeline and accelerated its commercial development.  KSB now has a
diversified product pipeline with a primary focus on cancer therapy.

Cash burn has increased in line with expectations and as highlighted in the 2001
Annual Report.  This increase is the result of driving an expanded, later stage
product development pipeline, which is accelerating the Group towards

We anticipate delivering strong news flow during calendar 2002 from all areas of
the business.  The next phase of development of both the TransMID and HumaRAD
programmes should be accompanied by results from the ongoing trials involving
KSB302 and KSB303.  We will also be pursuing commercial opportunities around our
later stage programmes and continuing to progress the less mature products
through the pre-clinical phase.

The acquisition of KSA has highlighted the benefits of strategic acquisition
opportunities available to the Group in the world healthcare market.  Other
potential opportunities to expand the Group's product portfolio and technology
platforms by acquisition or by licensing will be considered.

John Rennocks
Chairman                                                        21 February 2002



We have been instructed by the company to review the financial information for
the six months to 30 November 2001, which comprises the profit and loss account,
balance sheet, cash flow and associated 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

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 group 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.

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 to
30 November 2001.

Arthur Andersen
Chartered Accountants

Abbots House
Abbey Street

  21 February 2002

                            KS Biomedix Holdings plc

                Interim Results For The Six Months To 30 November 2001

                       Consolidated Profit & Loss Account

                                                                 6 Months to        6 Months to     12 Months to
                                                                 30 November        30 November           31 May
                                                                        2001               2000             2001
                                                                           £                  £                £
Continuing operations                                                 86,375             80,488          224,113
Acquired operations                                                  105,676                  -                -
Discontinued operations                                                    -             96,778           96,778
                                                                  __________         __________       __________
                                                                     192,051            177,266          320,891

Cost of sales                                                       (70,366)           (67,879)         (50,762)
                                                                  __________         __________       __________
Gross Profit                                                         121,685            109,387          270,129

Other operating expenses                                         (9,265,149)        (1,774,967)      (4,463,079)
                                                                  __________         __________       __________
Operating Loss
Continuing operations                                            (8,402,999)        (1,341,704)      (3,869,074)
Acquired operations                                                (740,465)                  -                -
Discontinued operations                                                    -          (323,876)        (323,876)
                                                                  __________         __________       __________
                                                                 (9,143,464)        (1,665,580)      (4,192,950)

Share of loss of joint venture                                      (66,809)                  -                -

Profit on sale of discontinued operation                                   -                  -          791,783

Investment income                                                    914,221            543,589        1,085,677

Interest payable                                                           -            (9,446)               -
                                                                  __________         __________       __________
Loss on Ordinary Activities Before Taxation                      (8,296,052)        (1,131,437)      (2,315,490)

Tax on loss on ordinary activities                                         -                  -                -
                                                                  __________         __________       __________
Loss on Ordinary Activities After Taxation                       (8,296,052)        (1,131,437)      (2,315,490)

Minority interests                                                         -            126,601          126,601
                                                                  __________         __________       __________
Retained Loss for the Period                                     (8,296,052)        (1,004,836)      (2,188,889)
                                                                  __________         __________       __________
Loss per Share - Basic                                               (13.6p)             (2.1p)           (4.5p)

Loss per Share - Diluted                                             (13.6p)             (2.1p)           (4.5p)

                            KS Biomedix Holdings plc

             Interim Results For The Six Months To 30 November 2001

           Consolidated Statement of Total Recognised Gains and Losses

                                                                 6 Months to       6 Months to     12 Months to
                                                                 30 November        30 November           31 May
                                                                        2001              2000             2001
                                                                           £                 £                £

Retained loss for period                                         (8,296,052)       (1,004,836)      (2,188,889)

(Loss) / gain on foreign currency translation                        (4,437)            10,658           10,656
                                                                  __________        __________       __________
                                                                 (8,300,489)         (994,178)      (2,178,233)
                                                                  __________        __________       __________

                            KS Biomedix Holdings plc

             Interim Results For The Six Months To 30 November 2001

                           Consolidated Balance Sheet

                                                      Note      30 November        30 November           31 May
                                                                       2001              2000             2001
                                                                          £                 £                £

Fixed Assets
Tangible fixed assets                                             1,710,626         1,360,770          846,652

Goodwill                                                         31,552,768                 -                -
Other investments                                                    28,324                 -                -

Current Assets
Stock                                                                 4,030            58,518            4,030
Debtors                                                           1,327,983           201,825        1,409,446
Cash at bank and in hand                                         23,512,053        19,364,640       17,060,044
                                                                 __________        __________       __________
                                                                 24,844,066        19,624,983       18,473,520

Creditors: amounts falling due within one year           3      (2,566,770)       (1,232,892)      (1,250,969)
                                                                 __________        __________       __________
Net Current Assets                                               22,277,296        18,392,091       17,222,551

Total Assets Less Current Liabilities                            55,569,014        19,752,861       18,069,203

Creditors: amounts falling due after more than one                (421,416)          (97,097)                -

Provisions for Liabilities and Charges                                    -           (8,361)                -
                                                                 __________        __________       __________
Net Assets                                                       55,147,598        19,647,403       18,069,203
                                                                 __________        __________       __________

Share Capital and Reserves
Called-up share capital                                           1,136,298           969,420          978,781
Share premium account                                            46,949,027        25,302,475       25,399,113
Shares to be issued                                              23,671,453                 -                -
Other reserves                                                      419,287           916,254          419,287
Profit and loss account                                        (17,028,467)       (7,543,923)      (8,727,978)
                                                                 __________        __________       __________
Equity shareholders' funds                                       55,147,598        19,644,226       18,069,203

Minority equity interests                                                 -             3,177                -
                                                                 __________        __________       __________
Total Capital Employed                                           55,147,598        19,647,403       18,069,203
                                                                 __________        __________       __________

                            KS Biomedix Holdings plc

             Interim Results For The Six Months To 30 November 2001

                        Consolidated Cash Flow Statement

                                                      Note      6 Months to       6 Months to     12 Months to
                                                                30 November       30 November           31 May
                                                                       2001              2000             2001
                                                                          £                 £                £

Net Cash Out Flow from Operating Activities              4      (7,115,950)       (1,063,393)      (4,010,358)

Returns on investments and servicing of finance                     914,221           680,262        1,085,677

Capital expenditure and financial investment                       (81,263)         (173,095)        (251,005)

Acquisitions and disposals                                                -                 -          200,538
                                                                 __________        __________       __________
Cash Out Flow Before Management of Liquid Resources             
and Financing                                                   (6,282,992)         (556,226)      (2,975,148)

Management of Liquid Resources                                  (5,419,956)           690,628        3,344,721

Financing                                                        12,735,000          (45,601)           67,011
                                                                 __________        __________       __________
Increase in Cash in the Period                                    1,032,052            88,801          436,584
                                                                 __________        __________       __________

Notes to the Interim Accounts
For the 6 months to 30 November 2001

1. Basis of Preparation

The unaudited interim financial information, which has been approved by the
Board of Directors, has been prepared on the basis of accounting policies set
out in the Group's accounts for the year ended 31 May 2001, with the exception
that FRS19 Deferred Tax has been adopted from the beginning of the period.  The
effect of adopting FRS19 is not material to the Group.  These accounts do not
constitute the Group's statutory accounts.  The Group's statutory accounts for
the year ended 31 May 2001 have been reported on by the auditors and delivered
to the Registrar of Companies.  The report of the auditors was unqualified and
did not contain a statement under section 237(2) or (3) of the Companies Act

2. Acquisition

On 19 June 2001, the Company announced its intention to acquire the operations
of Avicenna Medica Inc. ('KSA'), a biopharmaceutical company incorporated under
the laws of Alberta, Canada.  The operations of KSA comprised proprietary
technology platforms, a pipeline of products and a biologics manufacturing
capability.  At the same time the Company announced the acquisition of oncology
projects from Human Antibody Sciences Inc ('HASI'), a wholly owned subsidiary of
Intracel Corporation, a private biopharmaceutical company incorporated in the
United States.  In order to fund these transactions, the Company announced a
Placing and Open Offer which raised £16.3 million for the Company net of

On 13 July 2001 these transactions and the fund raising were completed by the

In order to effect the KSA acquisition, the Company established wholly owned
direct and indirect subsidiary undertakings incorporated under the laws of New
Brunswick, Canada.  Consideration paid to complete the KSA and HASI project
acquisitions were:

                                               Cash   KS Biomedix Holdings plc            KS Canada Inc.
                                                               Ordinary Shares       Exchangeable Shares
KSA                                    C$10,000,000                          -                 8,658,000
HASI Projects                          US$1,000,000                    199,886                         -

The exchangeable shares issued by the Company's indirectly owned subsidiary
undertaking, KS Canada Inc., are exchangeable for an equivalent number of KS
Biomedix Holdings plc ordinary shares on terms as set out in the voting exchange
and support agreement entered into between the Company and the vendors of KSA.

As a consequence of the above transactions, the Company obtained shareholder
approval at an Extraordinary General Meeting on 12 July 2001 to amend its
articles and to make the following amendments to its authorised and issued share

-          To redesignate one ordinary share in the authorised but unissued
           capital of the Company to be a Special Voting Share
-          To allot ordinary shares in the Company, in accordance with the
           circular dated 19 June 2001, in order to complete the transactions
-          To appoint Dr Fahar Merchant, the Chief Executive Officer of KSA to
           the post of Chief Technology Officer of the Company
-          To allot 6,022,840 ordinary shares in the Company in accordance with
           the terms of the Placing and Open Offer.

Immediately on completion, notice was received from the holders of 1,153,131
exchangeable shares to exchange those for ordinary shares in the Company.  The
Company's directly owned subsidiary acquired the exchangeable shares in its
subsidiary undertaking, KS Canada Inc., in return for procuring the issue of
1,153,131 ordinary shares by the Company.

The terms of the KSA acquisition allowed for an adjustment to the acquisition
price to reflect the actual value of KSA's net working capital, as defined in
the sale and purchase agreement.  A price adjustment of C$250,000 has been
agreed in this regard, which is being satisfied by the issue of a further 27,057
exchangeable shares by KS Canada Inc. to the vendors of KSA.

As a consequence of the completion of the KSA acquisition, the research
agreement between Intelligene Expressions Inc. (a subsidiary undertaking of KSA)
('Intelligene') entered into on 10 May 2001 for the development of novel
expression systems relating to the conjugation of novel cytotoxic agents lapsed
and amounts advanced to Intelligene totalling C$980,000 included within other
debtors at 31 May 2001 have been redesignated as an inter company debtor.

On 11 June 2001, the Company entered into a joint venture agreement with
Babraham Bioscience Technologies Limited ('BBT') to establish the company
Discerna Limited.  Discerna's principal activity is the exploitation of certain
intellectual property acquired from the Babraham Institute, the owner of BBT, in
the field of ribosome display and protein/protein interaction.  Pursuant to the
joint venture agreement, the Company has agreed to subscribe for a maximum of
45,000 shares in Discerna at a total cost of £780,000.  The initial subscription
was for 22,500 shares at a cost of £380,000 payable in four quarterly
installments in advance.  The remaining 22,500 shares will be subscribed for on
delivery of certain agreed milestones by Discerna.

3. Directors' Loan

During the 6 months ended 30 November 2000 Dr KS Tan, a director of the Company
loaned an amount equivalent to £348,000 to Asiaprise Sdn Bhd, a subsidiary
undertaking at that time.  This amount was included in creditors at 30 November
2000.  It was unsecured and bore interest paid monthly in arrears.  The
Company's interest in Asiaprise Sdn Bhd was disposed of in January 2001.

4. Reconciliation of Operating Loss to Net Cash Out Flow from Operating

                                                        6 Months to       6 Months to     12 Months to
                                                        30 November        30 November           31 May
                                                               2001              2000             2001
                                                                  £                 £                £

Operating loss                                          (9,143,464)       (1,665,580)      (4,192,950)
Amortisation and depreciation charge                      1,322,978           230,688          292,134
(Increase) in stock                                               -           (9,131)          (9,129)
Decrease / (increase) in debtors                            327,644            41,293      (1,044,453)
Increase in creditors                                       376,892           339,337          944,040
                                                         __________        __________       __________
Net Cash Out Flow from Operating Activities             (7,115,950)       (1,063,393)      (4,010,358)
                                                         __________        __________       __________

5. Interim Report

The interim report will be sent to registered shareholders.  Further copies will
be available to the public from the Company's registered office, 42-46 High
Street, Esher, Surrey, KT10 9QY.

                      This information is provided by RNS
            The company news service from the London Stock Exchange

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