Final Results

23 March 2011

Cyprotex PLC

("Cyprotex" or the "Company" or the "Group")

Final results for the year ended 31 December 2010

Entrance to the In Vitro Toxicology Market

Cyprotex PLC (AIM:CRX), the preclinical ADME-Tox services company, today reports its final results for the year ended 31 December 2010.

Financial Highlights

·; Revenues up 18.4% to £5.92 million (2009: £5.00 million)

·; Revenues from UK operations up 7.5% to £5.38 million (2009: £5.00 million)

·; Third year of profitability with operating profits at £0.22 million (2009: £0.46 million)

·; Underlying EBITDA^, an indicator of cash generation, remains consistently strong up 1.3% to £0.77 million (2009: £0.76 million)

·; Profit after taxation at £0.62 million (2009: £0.46 million)

·; Earnings per share at 0.31 pence (2009: 0.26 pence)

^ excluding share-based payment charge and expensed acquisition costs

Operational Highlights

·; Successful acquisition of US-based competitor Apredica, LLC, ('Apredica') on 6 August 2010

·; Re-validation and re-launch of the CellCiphr™, High Content Toxicology technology following Apredica's acquisition of certain assets and intellectual property of Cellumen, Inc. on 4 August 2010

·; Acquisition enabled entry into the growing in vitro toxicology market, supported by a new toxicology laboratory in the UK

·; Expansion and replication of service offerings in both US and UK giving enhanced service standards to our customers

- Product portfolio of 56 core products (2009: 29 core products)

·; Reduced reliance on top five customers with 46 new customers, plus 67 new Apredica customers

Steve Harris, Chairman of Cyprotex PLC, said:

'2010 was a transformational year for Cyprotex. The acquisition of Apredica helped to reposition the Company adding toxicology to our product offerings and securing an operational base in the important US market. With the opening of our new UK toxicology laboratory, we can now offer these services, alongside our established ADME offerings, in the UK and the US. We believe that Cyprotex is well positioned for growth as the industry emerges from recession and the new in vitro toxicology market grows.'

For further information:

Notes to Editors:

Cyprotex PLC

Cyprotex is the world's largest contract research organisation (CRO) specialising in ADME Tox, which is the analysis of the Absorption, Distribution, Metabolism, Excretion, and Toxicity properties of potential drugs, cosmetics, and agrochemicals. It is the only company in the world with in-house capabilities for both in vitro (test tube) and in silico (computer modelling) ADME Tox. Cyprotex was founded in 1999 and listed on the AIM in 2002. It has laboratories in Macclesfield, Cheshire, UK (near Manchester), and Watertown, Massachusetts, USA (near Boston), making it one of only three ADME Tox CROs with international operations.

Chairman and Chief Executive Officer's Report

2010 was a transformational year for Cyprotex, during which we achieved three major strategic objectives:

1. Entry into the in vitro toxicology market

2. Acquisition of a US base of operations

3. Launch of a proprietary toxicology offering

Last year we outlined our plans to enter the in vitro toxicology market through the expansion of our laboratory facilities in Macclesfield. This facility is now fully operational. The acquisition of Apredica gave us additional opportunities to accelerate our entry into this young, growing market. Apredica had a three-year head start on the in vitro toxicology market, including acquiring the rights to CellCiphr™, a cutting-edge, proprietary High Content Toxicology product. The acquisition also gave Cyprotex a much-needed US base.

Financial Performance

Market conditions in 2010 were as challenging as those in 2009. The larger pharmaceutical companies have been reducing their in-house drug-discovery efforts and relying increasingly on in-licensing and acquisitions to fill their pipelines. Furthermore, new drug-discovery companies continue to have difficulty in securing funding.

In the first quarter of 2010, the Company experienced major business disruptions associated with severe winter weather in the UK, and travel and shipping disruption associated with the volcano eruption in Iceland. Despite this, revenues grew 18.4% to £5.92 million with underlying revenues of the UK business growing by some 7.5% to £5.38 million. The Company recorded a third year of profitability and positive cash flows from operations, with operating profits of £0.22 million (2009: £0.46 million). When non-cash items, (share-based payment) and acquisition costs are deducted, then underlying EBITDA recorded for the year was £0.77 million, up from £0.76 million in the previous year. This is a key indicator of the group's ability to generate cash from operations. The Company further significantly reduced its exposure to revenues from any single customer with the largest customer contributing 16% of revenues, down from 22% in the previous year and 34% two years ago.

Market and Strategic Development 

The ADME market emerged about 15 years ago. Customers are now increasingly demanding more than just screening for the most common assays. This is rapidly raising the bar, with smaller ADME-Tox contract research organisations struggling to provide all of the services customers are coming to expect, resulting in consolidation in the industry. While we expect our automated ADME screening platform to continue to produce the majority of our revenues and profits for the next few years, we believe that it will be Cyprotex's ability to address customised ADME and in vitro toxicology needs that will be the driver of future growth. To address this, Cyprotex nearly doubled its service offerings in 2010. We expect to see substantial growth in demand for these new services, especially in toxicology.

The current weakness in demand for outsourced preclinical services is being caused by more than just the recession. It is also being caused by changes in the fundamental problems associated with drug discovery. The golden age of small-molecule drug discovery (aka 'traditional' drug discovery, as opposed to new technologies aimed at larger molecule sizes) has now arguably ended. FDA approvals of new small-molecule drugs have been steadily falling since 1996 despite increasing R&D spending. This does not mean that small-molecule drug discovery is going to disappear, but it does reflect an ever-steepening level of difficulty in identifying new clinical candidates, and corresponding changes in investment patterns within the business.

These ever-steepening levels of difficulty are not necessarily a bad thing for companies serving the earliest stages of discovery and development, as Cyprotex does. The most costly stages of drug development are the later, clinical stages. The purpose of the ADME-Tox stage is to reduce the chances of failure at later stages. As drug discovery becomes increasingly difficult, interest in technologies that reduce the chances of failure also increases.

We believe that in time the portion of preclinical studies that are outsourced will continue to grow, as pharmaceutical companies better understand the cost efficiencies that can accrue from outsourcing; and as an increasing portion of drug discovery moves away from large pharmaceutical companies and towards smaller, younger organisations without in-house ADME and toxicology capabilities.

Because of shifts in the drug discovery and development market, we have repositioned Cyprotex to encompass in vitro toxicology. This is a young and growing market, much like in vitro ADME was a decade ago. The basic technologies are mostly similar to the technologies used for ADME, and in which Cyprotex excels; although high content imaging is a new and notable technology being employed. Both our UK and US laboratories are now equipped with Thermo Cellomics high content imagers, giving the Company five such instruments.

One reason for the emergence of the in vitro toxicology market is the success of in vitro ADME. In 1995 40% of Phase I clinical trial failures were due to ADME reasons. Now that figure is under 10% and falling. With ADME no longer a major contributor for failure, other issues, such as toxicity, have grown. By its nature, toxicity is a far worse problem in drug discovery than ADME is. Most ADME problems result in a drug being prevented from having a therapeutic effect and failing in clinical trials. Toxicity problems can emerge after clinical trials, resulting in litigation and commercialisation losses.

We have moved quickly and decisively. In January 2010 we began construction on our new toxicology laboratory in Macclesfield. In August we not only opened that laboratory, we acquired Apredica, a Boston-based ADME-Tox contract research organisation that was an early entrant to the in vitro toxicology market, and which owned the rights to the CellCiphr™ High Content Toxicology platform. The acquisition allowed Cyprotex to double the size of its product portfolio and have instant credibility in the in vitro toxicology market.

Outlook and Summary

In light of the continued challenging business conditions experienced in 2010, Cyprotex's ability to grow revenues, remain profitable, and invest strategically for the next stage of growth represents a creditable performance. Cyprotex is well positioned to benefit from improving market conditions when they emerge.

We believe market conditions for 2011 will be more favourable than those of 2010. Although Cyprotex remains somewhat reliant on a small number of large customers, each year we decrease this reliance as we add more customers and diversify the product offerings.

In 2008 the Company achieved its first profitable year. In 2009 we entered the bespoke ADME market. In 2010 we entered the in vitro toxicology market, successfully executed a major acquisition, and increased sales on continuing operations.

Cyprotex is now focused on growth. We are working on organic growth through building upon our leading position in the new in vitro toxicology market while also growing our existing ADME business. We also now have the significant benefit of established US operations, where we expect most organic growth in 2011-2013 to come from. The Board is also looking to continue to play a proactive role in the ongoing consolidation of the industry.

23 March 2011

Consolidated income statement

year to 31 December 2010

Consolidated statement of comprehensive income

year to 31 December 2010

Consolidated statement of financial position

at 31 December 2010

Consolidated statement of changes in equity

year to 31 December 2010

Consolidated statement of cash flows

Year to 31 December 2010

Notes to the final results

year to 31 December 2010

1. Nature of operations and general information

Cyprotex PLC ('Cyprotex') and subsidiaries' (together 'the Group') principal activity is the provision of in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity/Pharmacokinetic) information to the pharmaceutical industry.

Cyprotex's vision is to provide, in partnership with our customers in drug discovery and development, the highest quality, fastest turnaround and most cost effective ADME and pharmacokinetic data to those customers.

Cyprotex PLC is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of Cyprotex PLC's registered office is 100 Barbirolli Square, Manchester M2 3AB. The address of its principal place of business is 15 Beech Lane, Macclesfield, Cheshire, United Kingdom, SK10 2DR. Cyprotex PLC's shares are listed on the Alternative Investment Market of the London Stock Exchange.

The consolidated financial information set out in this announcement are presented in Pounds Sterling (£), which is also the functional currency of the parent. The consolidated financial information has been approved for issue by the Board of Directors on 22 March 2011.

The information in this preliminary announcement does not constitute statutory accounts within the meaning of sections 434 to 436 of the Companies Act 2006 and no statutory accounts have yet been filed with the Registrar of Companies for the year ended 31 December 2010. Statutory accounts for the year ended 31 December 2009 have been filed with the Registrar of Companies. The auditors report on these accounts was unqualified and did not contain an emphasis of matter, nor did it contain a statement under section 498 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2010 will be delivered to the registrar of Companies following the Company's Annual General Meeting.

The Group's statutory financial statements for the year ended 31 December 2009 and 31 December 2008, prepared under International Financial Reporting Standards (IFRS) have been filed with the Registrar of Companies.

Whilst the financial information included in this final results announcement has been computed in accordance with IFRS, this announcement in itself does not contain sufficient information to comply with IFRS.

2. Basis of preparation

The consolidated final results are for the year ended 31 December 2010 They have been prepared in accordance with the requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), including international Accounting Standards (IAS) and interpretations issued by the international Financial Reporting Committee (IFRIC) and applied in Accordance with the Companies Act 2006.

The consolidated final results have been prepared in accordance with the accounting policies set out in the group's statutory financial statements for the year ended 31 December 2009.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this consolidated financial information.

3. Going concern

The group recorded a profit after taxation of £616,640 in the year ended 31 December 2010 and cash and deposits are £1,036,888. The Directors have reviewed the budget, financial forecasts including cash flow forecasts and other relevant information and believe that the Group has adequate resources to continue in operation for the foreseeable future

4. Segmental information

Revenue represents the amounts derived from the provision of goods and services which fall within the Group's ordinary activities and is stated net of value added tax and trade discounts.

The Group has a single operating and reportable segment, that of providing in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity/Pharmacokinetic) information to the pharmaceutical and biotechnology industries. The revenue and operating profit or loss for the year are derived from the Group's single operating and reportable segment. The Group has made an acquisition during the second half of the year ended 31 December 2010 which falls into this reporting segment.

The Group gives a geographic analysis of revenue by destination. Key markets for the Group are identified as North America, Mainland Europe and the United Kingdom.

5. Earnings per share

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

6. Taxation

At 31 December 2010, the group has tax losses of approximately £4.5 million that are available for offset against future profits arising from the same trade.

7. Share issues

The authorised share capital of the Company was increased by 100,000,000 ordinary shares of 0.1p each to 300,000,000 on 14 July 2009. The Company has only one class of shares. During the year to 31 December 2010, 44,730,297 ordinary shares were issued. Shares issued may be summarised as follows:

8. Acquisition

On 6 August 2010, the group acquired 100% of the voting shares of Apredica LLC, a privately owned ADMET business based in Watertown, Boston USA. Further details are provided in the Chairman's and Chief Executive Officer's report. The book and fair values of the net assets of Apredica LLC on that date are summarised in the table below:

On 4 August 2010, Apredica LLC had purchased all of the intellectual property and certain assets of Cellumen, Inc. adding an advanced, proprietary High Content Toxicology platform to its portfolio of in vitro toxicology services.

The purchase price for the acquisition of Apredica LLC and net cash paid at the date of acquisition was as follows:

Transaction costs of £86,024 have been expensed through the income statement.

In addition, costs attributable to the issue of equity instruments of £16,911 have been charged directly to equity.

Details of the performance of Apredica LLC, since acquisition by the Group on 6 August 2010 are set out below:

9. Additions and disposals of property, plant and equipment

The following tables show the significant additions and disposals of property, plant and equipment.

10. Intangible assets

The following tables show the significant additions to intangible fixed assets.

Goodwill and other intangible assets relate solely to the acquisition of Apredica LLC,

11. The Annual Report

The 2010 Annual Report & Accounts of the Group will be available to shareholders on the 1 June 2011. Copies will be available on request from the Company Secretary, Cyprotex PLC, 15 Beech Lane, Macclesfield, Cheshire, SK10 2DR.

12. Annual General Meeting

The Annual General meeting will be held at 10:00am on Thursday, 30 June 2011 at The Royal Society of Medicine, 1 Wimpole Street, London, W10 0AE.