E&Y - Cyprotex

E&Y - Cyprotex

Cyprotex PLC 2007 Results April 2008 Cyprotex Confidential Business Overview A unique packaged solution A specialist provider of technology and information to evaluate and optimise ADME, toxicity and pharmacokinetic properties of potential drug candidates A portfolio of technologies to identify potential problems at the drug discovery stage and help determine likely outcome of administering compounds Highly automated in-vitro and in-silico screening, designed to significantly accelerate and simplify the process from hit-to-lead in drug discovery Helps eliminate the potential of costly late-stage development failure or product withdrawal due to unexpected pharmacokinetics and safety problems Success of Cloe Integrated Product Offering Cyprotex is an Ethical investment Cyprotex Confidential Business Overview Challenge The industrys main problem is a lack of

significantly advanced pipeline products. Most companies have a number of early stage molecules; the hopes for these products are high, but only a very small number progress through all stages of required regulatory approval testing. Most drug compounds fail to reach the market Poor ADME/Tox Poor ADME and toxicity properties account for over 50% of drug development failures (Pharma IQ Website) 1/5000 compounds make it to clinic (Tufts Center for Drug Developments) 1/5 clinical compounds make it to market (Tufts Center for Drug Developments) Adverse Clinical Effects 12% Lack of Efficacy 30% Properties 50% Commercial Reasons 8% Cyprotex Confidential

Business Overview Validated Technology now well over 100 customers worldwide, including half the top ten pharmaceutical giants Highly automated environment supported by proprietary technologies Unrivalled scale, reproducibility, turnaround and pricing make Cyprotex the standard-setter for this industry Collaborative agreements provide forward visibility Exceptional operational gearing An Ethical investment Cyprotex Confidential Highlights Year ended 31st December 2007 Revenues for the year ended 31 December 2007 increased by 3.7% to 3.63 million against 3.50 million for the comparable period. Gross profits for the year rose marginally to 3.00 million from 2.97 million. Operating losses for the year were cut by 33% to 496,000 from 741,000 in 2006. Non-recurring costs of around 80,000, used in defending the group from the attempted requisition, sapped the groups cash resources during the first half-year. Despite continued investment, cash-in-hand improved slightly from the

low point recorded at the half year to 30 June 2007 of 267,000, to just over 300,000 at the year end. Cyprotex Confidential Summary Profit and Loss Year ended 31 December 2007 (000) 2007 2006* 2005* Revenue 3,626 3,505 2,701 Gross profit 3,004 2,972 2,295 (2,191) (2,073) (1,967) (63) (137) (108) Depreciation

(264) (352) (346) Other (982) (1,150) (1,042) Operating loss (496) (740) (1,168) (47) (20) (543) (760) (1,155) 64 100 148 (479)

(660) (1,007) (1,354) (0.35)p (0.48)p (0.78)p (1.08)p EBITDA (232) (388) (822) (1,352) EBDASBP (152) (171) (553) (1,026) Staff costs Share based payment charge Net interest (payable)/ receivable Loss before taxation Taxation Loss for the year

Loss per ordinary share *restated on the adoption of IFRS 13 2004* 2,117 1,685 (1,906)(55) (273) (1,076) (1,625) 106 (1,519) 165 Cyprotex Confidential Financial Progress 4000 3000 2000 1000 Revenue k Loss for the year 0 -1000 -2000 -3000 -4000 2002 2003 2004 2005 2006 2007 Targeted Deal Size k 50 100-200 100-400 100-1,000 100-1,000

Cyprotex Confidential Summary Balance Sheet As at 31 December 2007 (000) 2006 2005 1,366 1,422 1,696 Current assets excluding cash 842 944 949 Current liabilities excluding debt (442) (387) (303) Net assets before net (debt)/cash 1,766 1,979 2,342 Debt

(799) (751) (829) Cash 301 455 690 1,268 1,683 2007 Fixed assets Net assets 2,203 2004 915 857 (563) 1,209 (0) 1,840 3,049 Cyprotex Confidential Summary Cash Flow Year ended 31 December 2007(000) Outflow from operations

Interest (paid)/received 2007 2006 2005 2004 (43) (192) (1,093) (1,488) (47) (20) 12 95 146 166 Capital expenditure (net) (33) (78) (966) Net cash flow before financing (28)

(144) (1,881) Taxation received 106 163 (529) (1,748) 3,097 Financing (net) (126) (91) 731 Net cash flow (154) (235) (1,150) Opening cash 455 690 1,840 491 690

1,840 Closing cash 301 455 1,349 Cyprotex Confidential Customers Cyprotex Confidential Market Global Market Opportunities Pharma Majors Biotech/CROs Looking to replace integrated services with trusted external development collaborations Presently account for over 70% of global drug development spending Pressure to outsource comes from Weak pipelines Slow development processes Cost cutting drives Failure/litigation

Need to accelerate throughput Need to change business model Safeguarding IP Focus on core skills Purchasing new early stage development Generics Global distribution Rely on key R&D outsourcing relationships Presently account for around 30% of global drug development spending Hold over half of development molecules Growth powered by corporate structure Cash rich Limited exposure to generics Self-funding R&D Partnerships arrangement in later stages Successful R&D achievements Highly efficient pricing Rapid turnaround Independent scrutiny Access to external database/PBPK analysis Cyprotex Confidential Market Industry R&D Spending Patterns 15% Annualised % R&D Growth by CROs

13% 11% 9% Annualised % R&D Growth by Big Pharma 7% 5% Q2 Q3 2003 Q4 Q1 Q2 Q3 2004 Q4 Q1 Q2 Q3 2005 CRO and Biotech companies choose to outsource much early stage R&D, particularly

where independent assessment maximises integrity of early development, pace of turnaround and efficiency Pharmaceutical majors will lower dependence on in-house operations, in order to cut costs and focus on key expertise Cyprotex Confidential Market International Investment in Drug Development Forecast at 10% CAGR Forecast at 10% CAGR $80 $73.9 $50.5 $55.6 $14 Billions $50 $16.1 $16 $61.1 $60 $17.7 $18 $67.2

$70 Billions $20 $40 $30 $12 $12.1 $13.3 $14.6 $10 $8 $6 $20 $4 $10 $2 $0 $0 2004 2005 2006 2007 2008

2004 2005 2006 2007 2008 Outsourced drug development presently amounts to about one quarter of total international investment Of this, approximately 10% - 12% is directly in ADME/Tox markets, the area that Cyprotex addresses Cyprotex anticipates an accelerating willingness by Big Pharma to reduce reliance on in-house spending and move toward trusted outsourcing partners *base estimate Sources: PhRMA, Reuters, Dow Jones, Industry Sources, broker estimates Cyprotex Confidential Strategy Strategic Development Services & Software Model fast track profitability Drive sales of existing services Enormous scope to build turnover of business over next 3 years The worldwide ADME/Tox/screening market in 2005 was worth in excess of $1bn. This is expected to grow to beyond $2bn by end-2008. As the

industry standard-setter, in terms of service, product, turnaround, reproducibility etc, Cyprotex expects to benefit from a general move toward outsourcing such services by big pharma and the increasing proliferation of biotech development companies Continued revenue growth driven by Cloe services Pathway to revenue generating business with growing portfolio of clients Valuation uplift from first commercial demonstration Multiple exit / out licensing routes Cyprotex Confidential High Operational Gearing Major investment phase now complete Significant cash balance remains Very low cost of consumables Break-even at just over 40% of present operational capacity and existing site capable of further significant expansion Significant carried forward tax losses Enlargement of sales force Increased activity will now drop largely to the bottom line Cyprotex Confidential Outlook Key Objectives 2008

Target a positive outcome for 2008 Significantly outpace sector growth as recognised standard-setter industry-wide Broaden Cyprotexs range of products, services and technologies, both organically and through acquisition Add further downstream value and visibility through integrated drug discovery collaborations Build rapidly upon contribution from the US Expand foothold in Japanese market Cyprotex Confidential Summary Unique, validated and standard-setting industrial-scale laboratory testing (Cloe Screen) supported and integrated predictive software to offer virtual human screening Enormous global market opportunity Major investment phase now complete. Strict management has ensured the Group remains cash rich Very highly operationally geared An Ethical investment Cyprotex Confidential Appendices Cyprotex Confidential Cloe Integrated Product Offering

Industrial Scale testing A predictive software product now bundled with Cloe Screen, to offer virtual human synthesis Annual subscriptions 100,000 to 500,000 p.a. Software that predicts pharmacokinetics from chemical structure Complementary to other Cloe technologies Unit cost 1/10th of competition Complete outsourcing solution, new applications Target market all drug discovery scientists Enables pre-screening of compounds that do not yet exist, so only the most promising proceed to development Cyprotex Confidential An Ethical Investment

Cyprotexs in-silico technology is designed to create a virtual human. Drugs can be screened within this virtual human to test for pharmacokinetics. The evolution of this process will allow drug development to bypass in vivo testing Part of ECVAM (the European Consortium for Validation of Alternative Methods) designed to demonstrate that in vivo toxicity can be predicted using a combination of in vitro ADME data and cytotoxicity Declared policy on corporate governance and stakeholder management Strict environmental and pollution controls. Cyprotex engages with its environment Cyprotex is an Equal Opportunities Employer Cyprotex Confidential Board of Directors Executive Directors and Senior Management Mr Robert Morrisson Atwater - Chief Executive Officer previously Biochem Pharma / Shire Mr Russell Gibbs - Group Chief Financial Officer, previously UBS Mr Nikolas Sofronis - Chairman Banque Edmund de Rothchild Mr Minhaz H Manji - Director advisory board of InterContinental Dr Martial Lacroix

- Director - co-founder of Biochem Pharma / Shire, currently VC for Genechem Montreal (Canadas largest biotech VC) Mr David Evans - Director senior director of IP Genentech Non-Executive Directors Cyprotex Confidential Cyprotex 15 Beech Lane Macclesfield Cheshire SK10 2DR UK [email protected] www.cyprotex.com Cyprotex Confidential

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