GENEMEDIX PLC

Interim Results for the six months to 31^st May 2002

GeneMedix plc (“GeneMedix” or “the Company”), the UK generic biopharmaceutical company with operations in Europe and Asia and with joint London and Singapore Stock Exchange listings, announces its results for the 6 months to 31 May 2002. GeneMedix is involved in the development and manufacture of therapeutic proteins using recombinant DNA technology and novel cell culture.

Key highlights for the period include:

Ø First product sales made

Ø Sales and distribution agreements signed for India with Gland Pharmaceuticals

Ø Manufacturing agreement signed with Gland, providing access to specialised capabilities

Ø New business unit reviewing technology developed by Shanghai Institute of Biochemistry and Cell Biology

Ø Costs remain in line with expectations – operating loss for the period £1.3 million

Ø Cash balances at period end – £9.4 million

Post Period Events

Ø Irish manufacturing facility formally opened – commissioning and validation under way

Ø SkyePharma joint collaboration agreement signed

Paul Edwards, Chief Executive Officer, commented:

“In the first half of the year, we have made further significant progress in developing our global manufacturing and distribution infrastructure. The process development of EPO, our first mammalian cell derived product, is nearing completion, ready for transfer into our new Irish manufacturing facility over the coming months. We have also continued to make important advances in the development of our other generic biopharmaceuticals, with process development of generic Interferon-alpha-2b largely complete and the insulin programme also progressing well.

“Overall we have continued to develop our outlined business strategy and the Board is pleased with the progress.”

28 August 2002

ENQUIRIES:

GeneMedix plc	Tel: 01638 663 320
Paul Edwards, Chief Executive

College Hill	Tel: 020 7457 2020
Michael Padley
Clare Warren

Chairman’s statement

In the first six months of the financial year, GeneMedix has made further significant progress in developing its global manufacturing and distribution infrastructure.

In the period, we launched the 150mg presentation of our first product, GM-CSF (Granulocyte Macrophage-Colony Stimulating Factor), under the trademark NeustimÔ, into the Chinese market. The latter half of the year will see the Company expanding the number of regions in China where the product is available to patients. GM-CSF stimulates the production of white blood cells and is used in the treatment of cancer patients.

The Company concluded the building of its state-of-the-art mammalian fermentation facility in Ireland, which it formally opened in June 2002. Commissioning and validation procedures are well underway and the process development of its first mammalian cell derived product, Erythropoietin (EPO), is nearing completion, ready for transfer into this facility over the coming months. Toxicology studies using this EPO are scheduled to commence later this year.

We have also entered into important Sales and Distribution and Manufacturing Agreements with Gland Pharmaceuticals (Gland), one of India’s leading suppliers of speciality pharmaceutical products. The Sales and Distribution Agreement adds India to the Company’s commercial network, which already covered China and the ASEAN territories. Under the Manufacturing Agreement, Gland will use its specialised manufacturing operations to provide product in presentations such as pre-filled syringes, initially for the Asian market but then for the global market, as product approvals are granted. Current customers of Gland include Schering Plough (India), Aventis (India) and several large Indian Pharma companies. Preparations for Gland to manufacture the Company’s products are well underway.

Product development on the Company’s other generic biopharmaceuticals has continued rapidly. The process development of generic Interferon-alpha-2b is largely complete and product will be available to commence clinical trials in the next financial year. The Insulin programme is also progressing well.

The business strategy is based upon the setting up of cost-efficient manufacturing plants using the Company’s proprietary high-yielding cell lines in fiscally attractive territories, such as Ireland, Malaysia, China and India. We are currently working proactively with various regulatory authorities and through the European Generics Association (EGA) regarding the regulatory approval process for our products and to promote the acceptance of biogenerics on a world-wide basis.

Concurrently, we are also setting up a global partner network to launch and market our products and, as mentioned above, we have launched our first product in China and signed agreements that will allow us to roll out our products into the ASEAN territories and India. This is preparing the way to penetrate the larger and more lucrative European market as and when it opens up to generic biopharmaceuticals. To this end, the process is well underway to find a major distribution partner for Europe and other potential territories, such as Canada and South America.

Post period event – Joint collaboration with SkyePharma

It has always been the Company’s stated objective to develop innovative formulations of its recombinant proteins to allow it to compete more successfully against “second generation” therapeutic proteins, especially in Europe and the US. To this end, in July 2002 the Company announced a joint collaboration with SkyePharma (LSE: SKP; Nasdaq: SKYE) for the development of an extended release formulation of interferon alpha-2b using SkyePharma’s proven DepoFoamÔ injectable drug delivery technology. Therapeutic proteins are usually degraded rapidly inside the body. SkyePharma’s proven DepoFoamÔ extended release, injectable technology, combined with GeneMedix’ recombinant interferon alpha-2b, has the possibility to deliver therapeutic doses of the protein in a controlled manner for a period up to 28 days from a single injection. This would represent a considerable benefit to patients with Hepatitis C whose current treatment may require injection of interferon alpha-2b every few days. This collaboration is very exciting for GeneMedix, as the Company has gained access to a project that has already shown promising early results, and uses a combination of two proven technologies.

Financial Review

The Group’s operating loss for the 6 months ended 31^st May 2002 was £1,344,562, after taking into account a charge for the amortisation of goodwill of £158,191 (H1 2001: £1,134,477). Costs were in line with expectations, and we now have 13 employees in Ireland, to go with the 18 at Head Office and 34 in China. Turnover for the period, arising from initial sales of our first product, NeustimÔ, totalled £94,224 in the period.

In the 6 months to 31st May 2002, we incurred £1,177,389 (H1 2001: £416,061) of expenditure on our development and clinical programmes, which has been capitalised in accordance with our accounting policy. Included within this figure are up-front payments of £400,000 that were made to book future manufacturing capacity with our development collaborators. This expenditure was accelerated in the second quarter of 2002 to bring our principal EPO and Interferon-alpha programmes close to completion so as to ensure that material will be available for clinical trials early in the next financial year. As a result of these effects, we expect that levels of expenditure on all programmes will be significantly lower in the third quarter of the year than they were in the second quarter.

Group cash balances at the end of the period were £9,391,373. To the end of the period we had spent £3.3m on our EPO facility out of a total planned expenditure of £4.4m. We drew down £1.1m in the period under a sale and lease back arrangement with a major Irish bank, which will allow us to defer a total of £2m of funding over a 5 year period.

Summary

We have made consistent progress towards achieving our aims in the period and have continued to build upon this, especially following the SkyePharma agreement. We have also continued to look for additional recombinant proteins that would be complementary to our existing portfolio, and additional manufacturing facilities for our products.

In addition, we are having on-going discussions to establish marketing agreements in other key territories with significant pharmaceutical partners, which will help to establish a global network for the marketing and distribution of our products.

Finally, our newly established business unit is continuing to analyse the technology that is coming out of the Shanghai Institute of Biochemistry and Cell Biology, our research partners in China, with a view to filing international patents, identifying products which have the potential for us to develop with partners, or out-licensing the technology.

Overall we have continued to develop our outlined business strategy and the Board is pleased with the progress made towards our aim of becoming an international generic biopharmaceutical company.

CONSOLIDATED PROFIT & LOSS ACCOUNT

For the 6 months ended 31 May 2002

		6 months to		6 months to			12 months to
	31 May 2002		31 May 2001			30 November 2001
		£			£		£

Turnover		94,224			-		-
Cost of sales		(32,176)			-		-

Gross profit		62,048			-		-
Administrative expenses		(1,406,610)			(1,134,477)		(2,388,003)

Operating loss		(1,344,562)			(1,134,477)		(2,388,003)
Investment income		217,306			488,032		798,823
Interest payable		(13,824)			(33,361)		(15,432)

Loss on ordinary activities before taxation		(1,141,080)			(679,806)		(1,604,612)
Tax on loss on ordinary activities		-			-		-

Loss on ordinary activities after taxation		(1,141,080)			(679,806)		(1,604,612)
Minority interests		83,707			50,426		122,631

Retained loss for the period		(1,057,373)			(629,380)		(1,481,981)

Loss per share – basic and diluted		(0.4p)			(0.2p)		(0.5p)

All of the results relate to continuing operations.

CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

For the 6 months to 31 May 2002

		6 months to		6 months to		12 months to
	31 May 2002		31 May 2001		30 November 2001
		£		£		£

Retained loss for the period		(1,057,373)		(629,380)		(1,481,981)
Gain on foreign currency translation		(53,512)		128,669		117,063
Total gains and losses for the recognised period		(1,110,885)		(500,711)		(1,364,918)

CONSOLIDATED BALANCE SHEET

As at 31 May 2002

	31 May 2002		31 May 2001		30 November 2001
		£		£		£
Fixed assets
Intangible fixed assets		2,272,860		729,954		1,095,471
Goodwill		4,246,193		4,613,909		4,404,384
Tangible fixed assets		6,198,727		2,863,675		3,797,682
		12,717,780		8,207,538		9,297,537
Current assets
Stock		120,206		24,873		72,507
Debtors		604,973		498,812		398,875
Cash at bank and in hand		9,391,373		15,279,275		12,846,638
		10,116,552		15,802,960		13,318,020

Creditors: amounts falling due within one year		(1,504,476)		(1,111,909)		(872,253)
Net current assets		8,612,076		14,691,051		12,445,767

Total assets less current liabilities		21,329,856		22,898,589		21,743,304

Creditors: Amounts falling due after more than one year
Other creditors		(838,889)		-		-
Provisions for liabilities and charges		(99,280)		(371,076)		(156,074)
Net assets		20,391,687		22,527,513		21,587,230

Share capital and reserves
Called-up share capital		2,901,028		2,897,045		2,897,045
Share premium account		20,223,904		20,211,001		20,211,001
Profit and loss account		(3,334,849)		(1,359,756)		(2,223,964)

Shareholders’ funds		19,790,083		21,748,290		20,884,082
Minority interests		601,604		779,223		703,148

Total capital employed		20,391,687		22,527,513		21,587,230

CONSOLIDATED CASH FLOW STATEMENT

For the 6 months ended 31 May 2002

	31 May 2002	31 May 2001		30 November 2001
	£		£		£

Net cash outflow from operating activities (see note to cash flow)	(17,649)		(864,411)		(2,446,433)
Returns on investments and servicing of finance	287,347		148,691		774,331
Capital expenditure and financial investment	(3,682,469)		(488,858)		(1,597,029)
Acquisitions and disposals	-		(5,720,606)		(6,088,597)

Cash outflow before management of liquid resources and financing	(3,412,771)		(6,925,184)		(9,357,728)
Management of liquid resources	3,541,754		(11,035,315)		(9,276,997)
Financing	(39,040)		1,876		1,876

Increase / (Decrease) in cash in period	89,943		(17,958,623)		(18,632,849)

RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES

	31 May 2002		31 May 2001		30 November 2001
		£		£		£

Operating loss		(1,344,562)		(1,134,477)		(2,388,003)
Depreciation charge		180,822		52,620		201,346
Goodwill Amortisation		158,191		131,826		290,017
Decrease / (Increase) in stock		(47,699)		(18,994)		(66,656)
(Increase) / Decrease in debtors		(344,685)		505,681		(69,578)
(Decrease)/Increase in creditors		1,437,078		(426,909)		(224,399)
Increase / (Decrease) in provision (NIC payable on share options)		(56,794)		25,842		(189,160)
Net cash outflow from operating activities		(17,649)		(864,411)		(2,446,433)

NOTES

1. The 6-month figures to 31 May 2002 and 31 May 2001 are unaudited. The comparative figures for the year ended 30 November 2001 are not statutory accounts but are extracted from the audited statutory accounts. The statutory accounts for the year ended 30 November 2001 have been filed with the Registrar of Companies. They received an unqualified audit report which did not contain a statement under S237(2) or S237(5) of the Companies Act 1985. The quarterly report should be read in conjunction with the statutory accounts for the year ended 30 November 2001.

2. We were unable to pay a dividend in the period.