Acquisition and placing

15 April 2014

Acquisition of Silhouette

and

Proposed Placing of 62,500,000 new ordinary shares

Acquisition Highlights

· Global rights to fast growing, unique, patented collagen stimulation technology

· Acquisition radically differentiates Sinclair's aesthetics portfolio

· Silhouette® last in a series of transactions to maximise opportunity in aesthetics

· Slightly earnings accretive in FY 2015 and strongly accretive thereafter

· Net Debt / EBITDA is expected to be under 3x by September 2014

London, 15 April 2014 - Sinclair IS Pharma plc (AIM:SPH.L) ("Sinclair" or "the Group"), the international specialty pharmaceutical company, announces that it has entered into an acquisition agreement to purchase the entire issued share capital of Silhouette for a total cash consideration of around US$117million (£70.1 million) plus royalties (the "Acquisition"). An upfront payment of US$24 million (£14.4 million) is payable on completion, and the balance of the consideration of US$93 million (£55.7 million) relates to milestones and royalty buy back. The Acquisition is highly structured to manage risk and is largely contingent on Silhouette® performing against expectations.

The Company also announces that it has agreed to raise £19.5 million, net of expenses, by the issue and allotment by the Company of 62,500,000 Ordinary Shares at the Placing Price of 32p being a 5.3 per cent. premium to the closing share price on 14 April 2014. The Placing is being effected by Peel Hunt, acting as the Company's Nominated Adviser and Broker, on, and subject to, the terms of the Placing Agreement. The Company has also entered into an Amended Facility Agreement with Hayfin who will provide a facility of US$16.5 million (£9.9 million) gross in relation to the Acquisition.

Silhouette is a highly innovative, fast growing, private aesthetics company based in Barcelona, Spain and Irvine, California. Its unique patented products (Silhouette Lift® and Silhouette Soft®) are resorbable collagen-stimulating cones on sutures ('threads') and are complementary to Sinclair's existing aesthetics portfolio.

Chris Spooner, Sinclair CEO, commented: "Silhouette® will complete the recent build-out of our aesthetics business and significantly enhances Sinclair's technological position and growth prospects in collagen stimulation. Our enlarged aesthetics portfolio provides us with the platform to outperform this fast growth market. Further, the Group expects to increase significantly its exposure to key aesthetics markets, including the US, Korea, Russia, Brazil and Japan in addition to leveraging the existing aesthetics sales and marketing infrastructure in Europe."

Patrick Schupak, Silhouette Lift® CEO & co-founder, commented: "The Silhouette® adventure started in 2006 with an innovation that had a major impact in the world of cosmetic surgery. Eight years later, thanks to Silhouette Soft®, the company was able to establish itself as the market leader in suture suspension. Silhouette's new treatment using reabsorbing sutures with bi-directional cones is unique in the cosmetic surgery market. The USA-manufactured product generated such interest that Silhouette® is present today in more than fifty countries around the world and is enjoying strong growth. We are delighted to put our signature today to an agreement with Sinclair which will provide the financial and logistic support necessary to take Silhouette's highly innovative products to the next stage of their development."

Sinclair IS Pharma plc Tel: +44 (0) 20 7467 6920

Chris Spooner 

Alan Olby

Robert Taylor

Peel Hunt LLP Tel: +44 (0) 20 7418 8900

James Steel

Clare Terlouw

Jock Maxwell Macdonald

Notes to Editors:

About Sinclair IS Pharma plc - see www.sinclairispharma.com

Sinclair IS Pharma is an international specialty pharmaceutical company centred on dermatology, in particular - aesthetics, wound care, and skin care. The Group has a direct sales and marketing presence in the top five European markets and a rapidly growing International division concentrated on the emerging markets through long term multi-product, multi-country, sales, marketing and distribution deals with key strategic partners.

"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: Some or all of the statements in this document that relate to future plans, expectations, events, performances and the like are forward‐looking statements, as defined in the US Private Securities Litigation Reform Act of 1995. Actual results of events could differ materially from those described in the forward‐looking statements due to a variety of factors.

1. Introduction

The upfront cash consideration for the Acquisition of US$24 million (£14.4 million), payable at completion, will be funded by the US$16.5 million (£9.9 million) Amended Facility Agreement and the balance of £4.5 million from the net proceeds of the Placing. The Company intends to use the remaining proceeds of the Placing to fund future milestones relating to regulatory approvals and sales targets.

The Acquisition is conditional upon both the Company completing the Placing and the Amended Facility Agreement on or prior to 5 May 2014. The Transaction is conditional upon shareholder approval and Admission. The Placing is conditional, inter alia, upon Shareholders approving the Resolutions at the General Meeting that will grant the Directors the authority to allot the Placing Shares and the power to disapply statutory pre-emption rights in respect of the Placing Shares. In addition, the Resolutions, if passed, will grant the Directors certain authorities in respect of the Enlarged Share Capital, which the Company routinely seeks at its annual general meeting each year.

The Board unanimously considers the Acquisition to be in the best interests of Sinclair and its Shareholders as a whole.

2. Introduction to Sinclair IS Pharma plc

Sinclair is an international speciality pharmaceutical company centred on medicinal and aesthetic dermatology. Its three divisions focus on aesthetics, wound care, and skin care, with corporate headquarters in London, UK and operations headquarters in Paris, France. As a leading dermatology specialist the Company strives to improve the health, appearance and confidence of patients, creating value for healthcare providers and shareholders. The Group has a direct sales and marketing presence in the top five European markets and a rapidly growing international division concentrated on key emerging markets through long-term multi-product, multi-country, sales, marketing and distribution deals with key strategic partners. Creating global dermatology brands, organically and by acquisition from a strong base in Europe is key to the Company's growth strategy.

The Company has undertaken a number of transactions since the date of the last annual report and accounts:

· In November 2013, the Company disposed of a number of non-core products to Laboratoires Bailleul SA and Hexim Pharmaceuticals Inc. The disposals continued the Board's strategy of focussing on a smaller number of key dermatology brands in the Company's main spheres of aesthetics, wound care, and skin care.

· In January 2014, the Company acquired the global rights to Perfectha®, a complete range of hyaluronic acid fillers, through the acquisition of Obvieline and also acquired distribution rights from Pharma Vital. The acquisition of the global rights to Perfectha® was of strategic importance to the Company broadening its aesthetic dermatology portfolio.

· In January 2014, the Company acquired Atlean® from Stiefel, the dermatology business of GSK. Atlean® combines a collagen stimulator and hyaluronic acid filler which complement the Company's existing facial aesthetic brands, Sculptra® and Perfectha®. Atlean® had not been actively marketed in Europe since 2012 and requires the European CE Mark registration to be regained which was expected to take around 9-12 months.

· As announced on 25 March 2014, the Company has recently acquired AQTIS Medical B.V. Its fast acting, long lasting, collagen stimulator Ellansé™ 2 will be highly complementary to Perfectha®, acquired in January 2014, and further consolidates the Company's growing presence in the global aesthetics market.

Sinclair's key brands are set out in the table below. Its aesthetics franchise includes scar reduction gel Kelocote®, the Group's leading product by sales, and its facial rejuvenation brands which are described in more detail below. Wound Care focuses primarily on burns treatments where Flammacerium® provides the Group with a major growth opportunity through the recent grant by the US FDA of Orphan Drug designation for the treatment of patients with severe dermal burns. Skin Care is targeted at fast growth emerging markets and includes the Group's medicinal dermatology treatments.

In the six months to 31 December 2013 Sinclair's revenue was derived mainly from France (24 per cent.) and the UK (18 per cent.), as well as Germany (10 per cent.), Spain (6 per cent.), Italy (10 per cent.), and International sales (32 per cent.).

The Group's clearly defined growth strategy focussed on dermatology stems from the acquisition of Flammazine® in 2010 which expanded Sinclair's wound care franchise. Flammazine® was in decline prior to acquisition and has subsequently become a reliable cash cow for the Group whilst throwing off a number of opportunities through line extensions and product derivatives. Flammasun®, specifically for sunburn was launched in 2011 whilst Flammacerium®, indicated for severe burns, has been registered in a number of European countries with more targeted, including the US. Kelocote® was the Group's first aesthetic brand and sales have grown 41 per cent. since full worldwide (excluding US) rights were acquired in December 2011. More recently the 100 year rights in Western Europe to Sculptra®, the collagen stimulator were acquired in 2012. Sculptra® had not been actively promoted prior to acquisition and sales were reducing rapidly. Strong marketing and sales promotion together with a substantial physician training programme has resulted in 10 per cent. sales growth in the first 12 months as part of Sinclair.

3. Strategy of Sinclair and Rationale for the Acquisition

Sinclair is focused on creating patented global brands in medicinal and aesthetic dermatology. In Europe, it uses its own sales and marketing teams in the five largest EU economies to drive operational leverage, and is intent on growing the proportion of revenues from private pay products. Sales from emerging markets have grown rapidly through exporting Sinclair products and corporate brand image with the help of a number of established distribution partners. Sinclair's strategy is to create global dermatology brands, organically and by acquisition from a strong base in Europe.

Sinclair applies medicinal dermatology quality and regulatory standards to its broad aesthetic dermatology portfolio which ranges from topical scar reduction to deep tissue regeneration. The aesthetics market is growing rapidly in Sinclair's key territories and is expected to be over 50 per cent. of Sinclair's revenues in the year to 30 June 2015 as a result of its global presence. The Kelo® franchise, which includes Kelocote®, the Group's largest brand by sales, is expected to grow globally by around 20 per cent. in the year to 30 June 2014.

Facial rejuvenation is at the heart of Sinclair's aesthetic strategy through the use of the Group's fast acting, long lasting, subtle, collagen stimulation treatments Ellansé™ and Sculptra®. Europe and Asia are the largest contributors to aesthetic sales and the markets in which Sinclair competes are currently dominated by sales of HA fillers. Sinclair's HA brand Perfectha® together with Ellansé is growing fast in Asia and will be launched in Europe. There are opportunities for further growth in Asia, Japan, the Middle East, Russia, Latin America, and the US.

As a mid-sized dermatology player, Sinclair is well placed to execute a targeted land-grab for innovative aesthetics products that are too small to interest the major dermatology companies.

The European Dermal Filler Market was estimated to be worth US$155.6 million in 2011 split between HA (US$139 million) and others (US$16.6 million). By 2017 this market is forecast to be worth US$234 million split between HA (US$211.3 million) and others (US$22.7 million). The AsiPac Dermal Filler Market was estimated to be worth US$114 million in 2011 split between HA (US$108.9 million) and others (US$5.1 million). By 2017 this market is forecast to be worth US$199.8 million split between HA (US$193.1 million) and others (US$6.7 million).

4. Silhouette

Silhouette is a private aesthetics company based in Barcelona, Spain and Irvine, California and has the global rights to the facial aesthetics products Silhouette Lift® and Silhouette Soft®. These highly innovative, unique, patented, and fast growing products are resorbable collagen stimulating cones on sutures ("threads") which give a minimally invasive facelift and provide multiple opportunities for line extensions in non-facial use. The products are CE marked Class III medical devices and are manufactured through an exclusive third party manufacturing agreement in the US. Silhouette® is complementary to Sinclair's existing portfolio of collagen stimulating brands Sculptra® and Ellansé™ and its overall aesthetic strategy centred on facial rejuvenation as patients using threads are also likely to use dermal fillers such as Perfectha®. The Directors consider Silhouette to be the best thread product and technology available on the market.

Silhouette Soft®

Silhouette Soft® is a unique fully resorbable collagen-stimulating bi-directional cone product. It is inserted as a minimally invasive procedure under local anaesthetic in a procedure which takes approximately 30-60 minutes to perform, and produces a natural lift effect that lasts about 18 months. The patient is awake during the procedure and may be able to participate in thread placing decisions, whereas most other thread procedures are done under general anaesthetic. Clinicians can charge higher prices in relation to products such as dermal fillers or collagen stimulation which incentivises them to offer the procedure. Silhouette Soft® grew 308 per cent. to US$6.2 million in 2013. There has been rapid uptake in European and Asian markets, with considerable interest in the product at medical congresses, and a US launch is intended in 2015 assuming FDA approval in early 2015. Silhouette Soft® is CE marked.

Silhouette Lift®

Silhouette Lift® is a non-resorbable suture with unidirectional absorbable cones which is used to lift the mid and lower face and is anchored in the deep tissue above the hairline. It offers a minimally invasive cosmetic surgery procedure that offers a subtle and natural facelift. The procedure takes about an hour to complete compared to two to six hours for a conventional facelift. It is performed under local anaesthetic and lasts up to four years. Between two and a half to three years the sutures may be re-tightened if necessary. Silhouette Lift® is CE marked and FDA approved.

Silhouette Soft® and Silhouette Lift® are sold in over fifty countries through distributors. In addition, Silhouette® has been very successful in marketing products in trade conferences, attracting attention at major aesthetics conferences worldwide.

Silhouette historical financial information

Silhouette did not consolidate the financial results of Silhouette Lift S.L. and Silhouette Lift Inc., therefore, Sinclair, together with its accountants, re-constructed, consolidated pro forma financial results for the Silhouette group based on unaudited aggregation of Silhouette Lift S.L. and its 100 per cent. subsidiary, Silhouette Lift Inc.

Silhouette's sales increased 123 per cent. to US$8.3 million in 2013 (inclusive of US$2.9 million revenue from the Carved-Out Territories) despite limited promotional spend in 2014 of US$1.4 million. EBITDA margins rose from 5 per cent. in 2012 to 21 per cent. in 2013. Silhouette Soft® sales grew by 320 per cent. in 2013 to account for US$6.2 million of sales with Silhouette Lift® accounting for the remaining sales of US$2.1 million.

Silhouette's strong growth has continued into 2014. The majority of the sales growth in 2013 came from Europe and Russia. Revenue by geography was broken down as follows: Russia (21 per cent.), Italy (11 per cent.), Japan (8 per cent.), France (7 per cent.), Thailand (6 per cent.), US (6 per cent.) and other (41 per cent.). The Carved-Out Territories accounted for US$2.9 million in sales in 2013, but Sinclair believes that the rights in the majority of these territories will be acquired over the next 6-24 months.

5. Principle Terms of the Acquisition Agreement

The Silhouette shareholders, Sinclair Holdings Iberia S.L. and the Company have entered into the Acquisition Agreement, which sets out the framework for the Company, through Sinclair Holdings Iberia S.L., to acquire 100 per cent. of the issued share capital of Silhouette Lift S.L. for a total of around US$117 million (£70.1 million) in cash. The Company has guaranteed the obligations of Sinclair Holdings Iberia S.L. under the Acquisition Agreement.

The total consideration payable under the Acquisition Agreement is structured into a number of payments. These include an upfront payment of US$24 million (£14.4 million) followed by a number of milestone and royalty payments, including a payment of US$15 million (£9.0 million) on obtaining FDA approval in the US; payments of up to a total of US$8 million (£4.8 million) on obtaining the necessary product approvals; revenue milestone payments for sales both within and outside the US and 15 per cent. royalty payments on net sales. US$40 million (£24.0 million) of the total transaction value (around 34 per cent.) is payable only after June 2017.

At completion, the Company, through Sinclair Holdings Iberia S.L., will acquire 65 per cent. of the issued share capital of Silhouette Lift S.L. The Acquisition Agreement sets out a mechanism by which the Company will acquire the Retained Shares as it provides that between 1 January 2015 and 31 January 2015, the current owner of the Retained Shares will have the option to sell and require the Company to buy the Retained Shares. If this option is not exercised, the Company will then have the option, between 1 February 2015 and 30 June 2015, to buy and require the current owner of the Retained Shares to sell the Retained Shares. These options ensure that by 30 June 2015 the Company will own 100 per cent. of the issued share capital of Silhouette Lift S.L. as the Option Agreements oblige the current owner of the Retained Shares to transfer the Retained Shares under one of the two options prior to this date. The Directors expect the option to be exercised in early 2015.

As the Company will only be acquiring around 65 per cent. of the issued share capital of Silhouette Lift S.L. at completion, only the consideration amount for those shares will be paid over to the Silhouette Lift S.L. shareholders at that time (US$15.6 million (£9.3 million)). In addition, US$4.5 million (£2.7 million) will be paid to Silhouette creditors to satisfy existing debt obligations of Silhouette, which the Company is acquiring and which are being repaid at completion. The remaining US$2.9 million (£1.7 million) of the agreed consideration amount will be paid into an escrow account pending the transfer of the Retained Shares to the Company. Only upon the transfer of the Retained Shares to the Company will the amount retained in escrow be released to the current owner of the Retained Shares.

As part of the total consideration, the Company will pay double digit royalties on sales. When aggregate royalties hit pre-determined levels by territory (either in the US or in the rest of world territories), this will trigger an option for the Company to buy back the royalty stream. The Company will be able to elect to buy back the royalties and the Silhouette shareholders will also have the right to elect to oblige the Company to exercise the buy back option.

As part of the transaction, the Company has agreed: (i) that immediately prior to completion Swissco will be assigned the distribution of rights for several Silhouette® products until certain conditions are met for distribution to be operated by the Company, at which time the distribution agreements would be assigned to an affiliate of the Company; and (ii) that Swissco will exclusively acquire Silhouette® products from Silhouette Lift Inc. for the period until completion of the assignment of the distribution agreements to the affiliate of the Company.

The Acquisition Agreement is subject to and conditional upon the completing the Placing, which includes obtaining shareholder approval to allot and issue additional shares and admission of the issued shares to trading on AIM, and securing the Amended Facility Agreement on or prior to 5 May 2014. The Acquisition Agreement will terminate automatically if this condition is not achieved.

6. Amended Facility Agreement

The Amended Facility Agreement is a formal amendment and re-statement of the SFA, which was previously amended and restated on 24 March 2014 in order to fund the acquisition of AQTIS Holding BV. A further US$16.5 million (gross) will be drawn by the Company to fund the acquisition of Silhouette.

The Amended Facility Agreement is a 5 year term loan facility and a revolving credit facility. The term loan is repayable in full on 3 January 2019 and the revolving credit facility is repayable at the end of the relevant interest period. The effective interest rate for the facility equates to 9.2 per cent. which includes a margin over LIBOR, upfront arrangement fees and direct costs of entering into the facility agreement. Borrowings under the facility are secured by, inter alia, a debenture over all the Group's assets, French, Dutch and US law share pledges, pledges over Dutch receivables, and charges over French and US bank accounts

Drawdown of the US$16.5 million facility pursuant to the Amended Facility Agreement for the purposes of the Acquisition will be subject to the Company satisfying certain conditions precedent, including the agreement of the terms of the necessary security documents. The Directors believe that all such conditions precedent are capable of satisfaction by the Company in accordance with the terms of the Amended Facility Agreement but a failure to do so will mean that the Company is not able to proceed with the Acquisition and the Placing.

The Amended Facility Agreement contains certain conditions subsequent requiring that security is provided to Hayfin, including inter alia a share pledge over the Silhouette shares, a pledge over the bank accounts of Silhouette and a pledge over the rights of Sinclair Holdings Iberia S.L. under the Acquisition Agreement.

The Amended Facility Agreement is conditional upon the Company executing the Acquisition Agreement and completing the Placing on or prior to 5 May 2014. The Amended Facility Agreement will terminate automatically if this condition is not satisfied.

7. Financial Effects of the Acquisition, Placing and Amended Facility Agreement

Silhouette® represents the last in a series of transactions which allows Sinclair to establish a broad, innovative and fast growing aesthetics business uniquely positioned around collagen stimulation. In the financial year ending 30 June 2015, Silhouette® is expected to add around £6.2 million to sales and around £2.8 million to EBITDA with a potential increase in this if certain Carved-Out Territories and/or US approvals are transferred and/or granted earlier than anticipated. Silhouette® is also expected to be slightly earnings accretive by that time and strongly accretive thereafter.

Debt will peak at £60 million (at completion) under the Amended Facility Agreement, which includes £60 million term loans with 5 year term through to January 2019. The effective interest rate for the enlarged facility will be maintained at 9.2 per cent. The key financial covenants which are tested quarterly are:

· operating cash flows to exceed debt service costs;

· leverage not to exceed 4.9 times and falling; and

· interest cover to exceed 2.8 times and rising.

The Directors anticipate a sharp decline in gearing. Pro forma net debt/EBITDA is expected to be 3.1 times at June 2014 (previously 3.5 times) and is expected to continue to fall to less than 3 times by September 2014. Peak gearing is anticipated to be 3.7 times at completion (4.4 times at April 2014).

8. Background to and Reasons for the Placing

Sinclair's aesthetic strategy takes a patient life-cycle approach to facial and body rejuvenation. The acquisition of Silhouette® is a significant step forward in Sinclair's aesthetic strategy complementing Sculptra®, Ellansé™ and Perfectha®, leveraging the benefits from a 70 strong sales and marketing team, and enabling Sinclair to continue to build a leading aesthetics business with fast growing patented products. Silhouette® represents the last in a series of transactions which allows Sinclair to establish a broad, innovative and fast growing aesthetics business uniquely positioned around collagen stimulation.

The Company intends to fund the Acquisition through a combination of equity and debt. The US$16.5 million debt facility will be drawn down in full, together with £4.5 million of the net proceeds of the Placing to fund the up front consideration of US$24 million (£14.4 million) payable at completion. The balance of the net proceeds of the Placing will be used to fund the following:

· acquisition of Silhouette rights in certain Carved-Out territories (around £2.4 million) (expected quarter 4 of 2014);

· the Silhouette® FDA milestone payment (around £8.9 million) (expected in the first quarter of 2015); and

· part payment of Obvieline Lidocaine milestone (around £3.6 million) (expected in the first quarter of 2015). The balance of £1.8 million of this milestone payment is to be paid out of internally generated cash flows.

9. Current Trading and Outlook

On 25 March 2014, the Company announced its interim results to 31 December 2013.

Sinclair has now created a portfolio of innovative, high quality and fast growing aesthetic brands. The addition of Silhouette®, the only fully resorbable cones-on-suture dermal product, radically differentiates the portfolio and enhances its leading technology position in collagen stimulation. Silhouette also offers the opportunity to line extend to several new body indications unserved by injected fillers. Significant aesthetics markets, particularly in the US and South Korea, offer great potential for the Company and its products. As a result, the Directors expect strong growth to continue.

Expected news flow over the next 12 months:

· Q3 2014 Submission of Silhouette Soft® for US FDA approval;

· Q4 2014 Acquisition of rights for certain Carved-Out Territories;

· Q1 2015 FDA approval for Silhouette Soft®; and

· Q1 2015 Perfectha Lidocaine range CE Mark approval.

The Directors, have no reason to believe that its working capital, assuming completion of the Placing and the Amended Facility Agreement, will be insufficient for at least 12 months from the date of Admission.

Placing

Subject to Admission, the Company will issue 62,500,000 new Ordinary Shares which will raise approximately £20.0 million, before expenses, and £19.5 million, after the expenses of the Placing (which are estimated to be £0.5 million (excluding VAT) in total). The Placing Shares have been conditionally placed by Peel Hunt, as agent for the Company, with institutional and other investors in accordance with the terms of the Placing Agreement. Application will be made for the Placing Shares to be admitted to trading on AIM and dealings are expected to commence on 2 May 2014.

The Placing Shares issued pursuant to the Placing will represent approximately 12.6 per cent. of the Enlarged Share Capital. The Placing Shares will, following Admission, rank in full for all dividends and distributions declared, made or paid in respect of the issued Ordinary Share capital of the Company and otherwise rank pari passu in all other respects with the Existing Ordinary Shares. The Placing Price represents a premium of 5.3 per cent. to the closing mid-market price of 30.375 pence per Ordinary Share as at 14 April 2014 (being the latest practicable date prior to the date of this announcement).

10. The Placing Agreement

Pursuant to the terms of the Placing Agreement, Peel Hunt, as agent for the Company, has agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing Agreement is conditional upon, inter alia:

· the Resolutions being duly passed at the General Meeting;

· the Acquisition Agreement and the Amended Facility Agreement becoming unconditional in all respects, other than in respect of Admission;

· none of the warranties or undertakings given to Peel Hunt prior to Admission being or becoming untrue, inaccurate or misleading in any material respect; and

· Admission becoming effective on or before 8.00 a.m. on 2 May 2014 (or such later time and/or date as the Company and Peel Hunt may agree, but in any event by no later than 8.00 a.m. on 9 May 2014).

The Placing Agreement contains customary warranties given by the Company in favour of Peel Hunt in relation to, inter alia, the accuracy of the information in the Circular and other matters relating to the Group and its business. In addition, the Company has agreed to indemnify Peel Hunt in relation to certain liabilities which it may incur in respect of the Placing.

Peel Hunt has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a breach of the warranties or a material adverse change.

11. Related Party

Toscafund Asset Management and Lansdowne Partners, as holders of more than 10 per cent. of the Existing Ordinary Shares, are substantial shareholders under the AIM Rules. As they are subscribing for 16,885,000 and 12,051,000 Placing Shares respectively, their participation constitutes a related party transaction under Rule 13 of the AIM Rules.

Jean-Charles Tschudin and Stuart Swanson, being directors of the Company, are participating in the Placing and are subscribing for 500,000 and 3,125,000 Placing Shares respectively. In accordance with the AIM Rules and market practice, the directors' respective participations in the Placing must be aggregated and they must also be aggregated with any similar transactions carried out by them in the previous 12 months. As a result of this aggregation, Jean-Charles Tschudin and Stuart Swanson are considered to be related parties under the AIM Rules for the purposes of the Placing. The Independent Director, Grahame Cook, considers, having consulted with Peel Hunt, that the terms of Jean-Charles Tschudin, Stuart Swanson, Toscafund Asset Management and Lansdowne Partners' respective participations in the Placing are fair and reasonable insofar as the Shareholders are concerned.

12. Risk Factors

In addition to all other information set out in this announcement, investors should carefully consider the risk factors described below before making a decision to invest in the Company. If any of the following risks actually occur, the Company's business, financial condition, results or future operations could be materially affected. In such circumstances, the price of the Company's shares could decline and investors could lose all or part of their investment. This document contains forward looking statements that involve risks and uncertainties. The Company's results could actually differ materially from those anticipated in the forward looking statements as a result of many factors, including, without limitation, the risks faced by the Company, which are described below and elsewhere in this announcement. Making an investment in the Company may not be suitable for all recipients of this announcement. An investment in the Company is only suitable for investors who are capable of evaluating the risks and merits of such investment and who have sufficient resources to bear any loss which might result from such investment. If you are in any doubt about the action you should take, you should consult a professional adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities. This summary of risk factors is not intended to be exhaustive.

Risk associated with commercialised success of products

The Company's revenues are, and will be, principally from sales of its products. There can be no assurance that current product revenues can be maintained or increased in the future. Product sales may be affected by adverse market conditions or other factors including: pricing pressures from governments or other authorities, competition from other products, the withdrawal of a product because of a regulatory or other reason, or the financial or commercial failure of a marketing partner. The Company also spreads risk by commercialising its products throughout the global markets. Manufacturing of all of the Company's products is outsourced and supply may be interrupted or products may be recalled should quality or other issues arise. The Company maintains adequate insurance to mitigate the risks associated with product recall.

Product liability risk

The Company's products may produce unanticipated adverse side effects that may hinder their marketability. The Company may be insufficiently covered for any potential litigation which in some cases can potentially be open-ended.

Interruption to product supply

The Company relies on third-party manufacturers for the supply of all products. Problems at manufacturers' facilities may lead to delays and disruptions in the supply chain which could have significant negative impact on the Company. The Company maintains a close dialogue with key suppliers and rigorously monitors inventory levels and customer demand to ensure that any interruption to product supply can be managed, and back up sources of supply are maintained where possible.

Competition and intellectual property risk

The position of the Company's products in the market is dependent on its ability to obtain and maintain patent and/or trademark protection for its products, preserve its trade secrets, defend and enforce its rights against infringement and operate without infringing the proprietary or intellectual property rights of third parties. The validity and enforceability of patents and/or trademarks may involve complex legal and factual issues resulting in uncertainty as to the extent of the protection provided. The Company's intellectual property may become invalid or expire before or during commercialisation of the product.

The Company continuously seeks to develop its products to ensure they are competitive and monitors its intellectual property rights to identify and protect against any infringements. However it may not always be possible for the Company to obtain protection which is sufficiently broad in its scope to protect the Company's intellectual property rights and exclude competitors from developing similar competing products or technologies. In addition, adverse judgments against the Company in intellectual property disputes may give rise to significant liability in monetary damages, legal fees and an inability to manufacture, market or sell products either at all or in particular territories using existing trademarks and/or particular technology.

Regulatory Approval

As part of the regulatory approval process the Company must conduct pre-clinical studies and clinical trials for each of its unapproved products to demonstrate safety and efficacy. The number of pre-clinical studies and clinical trials that will be required varies depending on the product, the indication being evaluated, the trial results and regulations applicable to the particular product. The results of pre-clinical studies and initial clinical trials of the Company's unapproved products do not necessarily predict the results of later-stage clinical trials. Unapproved products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through initial clinical trials. There can be no assurance that the data collected from the pre-clinical studies and clinical trials of the Company's unapproved products will be sufficient to support FDA, EMEA or other regulatory approvals, or approvals from local ethics committees. In addition, the continuation of a particular study after review by an independent data safety monitoring board or review body does not necessarily indicate that all clinical trials will ultimately be successfully completed.

The Directors cannot accurately predict when the planned clinical trials will be completed, if at all. Successful and timely completion of clinical trials will require the Company to recruit a sufficient amount of patient candidates and enter into agreements with clinical research organisations to perform the trials.

The Company's unapproved products may produce unexpected side effects or serious adverse events which could interrupt, delay or halt clinical trials of the products and could result in the FDA, EMEA or other regulatory authorities denying approval of its products for any or all targeted indications. An independent safety monitoring board, the FDA, EMEA, other regulatory authorities or the Company itself may suspend or terminate clinical trials at any time. There can be no assurances that any of the Company's unapproved product candidates will ultimately prove to be safe for human use. The Company's clinical trials could also be delayed or terminated in the event that the product being tested is in the same class of drug as a marketed product that is revealed to cause side effects.

Regulatory Compliance

The Company's manufacturing facilities and those of some of its suppliers are subject to regulatory requirements and there is a risk that such facilities may not comply with such requirements.

The Company may face competition from competitors with much greater capital

The Company may face significant competition, both actual and potential, including competition from competitors who have greater capital resources in the provision of products and services, who are able to provide products that are more effective, economically viable or advanced than those provided by the Company or who undertake an aggressive pricing policy. Despite its current contractual arrangements, there is no assurance that the Company will be able to compete successfully in such a market place.

Trading market for the Ordinary Shares

The market price of the Ordinary Shares may be subject to wide fluctuations in response to many factors, including variations in the operating results of the Company, divergence in financial results from analysts' expectations, changes in earnings estimates by stock market analysts, general economic conditions, legislative changes in the Company's sector and other events and factors outside of the Company's control. In addition, stock markets have from time to time experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could adversely affect the market price for the Ordinary Shares.

Dependence on key personnel

The Company's success depends to a significant extent upon a limited number of key employees. The loss of one or more key employees could have a material adverse effect on the Company. No assurances can be given, however, that the loss of any key employee of the Company would not have a material adverse effect on the business, financial condition or results of operations of the Company. The Company has endeavoured to ensure that the key employees are incentivised, but the retention of such staff cannot be guaranteed.

Foreign exchange risk

The Company has transactional currency exposures as the majority of the Company's revenues, and certain expenditures, are in currencies other than the functional currency of the Company, mainly Euros and US Dollars. Certain of the Company's bank borrowings are denominated in US Dollars. In addition, the Company finances the majority of its activities in Europe and the US in the local currency, out of revenue receipts, excess currency receipts are then translated into Sterling either at the spot rate or through forward contracts.

Fluctuations in exchange rates between currencies in which the Company operates, in particular the US Dollar, may cause fluctuations in its financial results. The Company cannot predict the effect of exchange rate fluctuations upon future operating results and there can be no assurance that exchange rate fluctuations will not have a material adverse effect on its business, operating results or financial condition.

Debt financing and breach of covenants

The Company has procured some of the funds it requires for the Acquisition, and for previous acquisitions, by borrowing from Hayfin. It is possible that the cost of the funds could increase because of rising interest rates or a decline in the Company's creditworthiness. Such an increase in fund procurement costs would be likely to impact the Company's operating results.

In addition, various covenants are attached to the Company's borrowings from Hayfin. If these covenants are breached, the Company could be required to repay its borrowings early. Furthermore, if in such a situation the Company is unable to generate alternative funds, it may need to sell some of its assets or take other measures to secure resources for repaying the funds. As a result, the Company's assets and financial position could be impacted. This would be likely to affect the Company's business development, operating results, and financial position.

Credit risk

Credit risk is managed on a Group basis. The Group is exposed to credit risk through pre-wholesalers and marketing partners, such that if one or more of them is affected by financial difficulty, it could materially and adversely affect the Group's, and therefore the Company's, financial results.

Price risk

Like any trading company, the Company is exposed to the risk of unforeseen increases in the cost of goods purchased from suppliers. There can be no assurance that unforeseen cost increases will not have a material adverse effect on the Company's business, operating results or financial condition.

Capital management and liquidity risk

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern; to provide an adequate return to investors based on the levels of risk undertaken; to have available the necessary financial resources to allow the Company to invest in areas that may deliver future benefits and returns to investors; and to maintain sufficient financial resources to mitigate against risks and unforeseen events together with ensuring compliance with the Company's existing banking covenants on borrowings. In addition, the Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities as they fall due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Whilst the Company intends to maintain its current approach to capital management and liquidity, there is no assurance that the Company will remain in such a position and if it does not, this may have an adverse effect on the Company's business and/or reputation.

Cash flow and interest rate risk

The Group does not have significant interest-bearing assets and therefore the Group's income and operating cash flows are substantially independent of changes in market interest rates. The Group's interest rate risk arises from short and long-term borrowings. Borrowings at variable rates expose the Group to cash flow interest rate risk. The Group manages interest rate risk through the purchase of interest caps covering a portion of its borrowings.

13. General Meeting

A General Meeting will be convened at the offices of Reed Smith LLP at the Broadgate Tower, 20 Primrose Street, London, EC2A 2RS on 1 May 2014 at 10 a.m. at which the following Resolutions will be proposed:

(A) Resolution 1, which will be proposed as an ordinary resolution, is to authorise the Directors to allot relevant securities up to an aggregate nominal value of: (i) £625,000.00 in connection with the Placing; and (ii) £1,658,049.24 otherwise than in connection with the Placing; and

(B) Resolution 2, which will be proposed as a special resolution and which is subject to the passing of Resolution 1, is to disapply statutory pre-emption rights, provided that such authority shall be limited to, inter alia, the allotment of equity securities in connection with the Placing, and otherwise the allotment of equity securities up to an aggregate nominal amount of £497,414.77.

Resolution 1 authorises the allotment of such number of new Ordinary Shares as are necessary for the Placing, as well as providing the Directors with a standing authority to allot equity securities up to an aggregate nominal value of £1,658,049.24 (representing one-third of the Enlarged Share Capital). Similarly, Resolution 2 authorises the disapplication of statutory pre-emption rights in respect of such number of new Ordinary Shares as are necessary for the Placing as well as providing the Directors with a standing authority to allot equity securities otherwise than in accordance with statutory pre-emption rights up to an aggregate nominal value of £497,414.77 (representing ten per cent. of the Enlarged Share Capital).

14. Recommendation

The Directors consider the Acquisition, Placing, and Amended Facility Agreement to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings amounting, in aggregate, to 14,961,434 Existing Ordinary Shares, representing approximately 3.44 per cent. of the Existing Ordinary Shares.

This announcement has been issued by, and is the sole responsibility of, Sinclair IS Pharma plc. Peel Hunt is authorised and regulated in the United Kingdom by the FCA. Peel Hunt is acting solely for the Company and no one else in connection with the arrangements described in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the arrangements described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the clients of Peel Hunt nor for providing advice in connection with the arrangements described in this announcement or any other matter referred to in this announcement.

Definitions

The following words and expressions shall have the following meanings in this announcement unless the context otherwise requires:

Ends