Final Results

Oxford Pharmascience Group Plc

("Oxford Pharmascience", the "Company" or the "Group")

Final Results for the Year Ended 31 December 2015

& Notice of AGM

Oxford Pharmascience (AIM: OXP), the specialty pharmaceutical company that redevelops medicines to make them better, safer and easier to take, today announces its results for the year ended 31 December 2015.

The Company also gives notice of its Annual General Meeting ("AGM") to be held on 22 June 2016 at 3.00 p.m. at the offices of Fladgate LLP, Ninth Floor, 16 Great Queen Street, London, WC2B 5DG. The Report and Accounts and Notice of AGM will be posted to shareholders today, and both items are available on the Company's website at www.oxfordpharmascience.com.

OPERATIONAL HIGHLIGHTS

- Successful completion of proof-of-concept (POC) studies for OXPzero™ Ibuprofen and OXPzero™ Naproxen

- Data established from these studies confirm OXPzero™ products are differentiated and deliver benefits over the standard drug

- Commercialisation process for the OXPzero™ assets underway

- Additional focus on the application of the OXPzero™ technology to aspirin

- £20m gross funds raised in June 2015 for further development of portfolio and provide financial flexibility

- Anand Sharma appointed to the Board in February 2016 to assist commercialisation efforts

FINANCIAL HIGHLIGHTS

- Cash and short-term investments of £23.1m as at 31 December 2015 (2014: £6.7m), providing sufficient working capital to take products through to registration if required

- Operating loss of £3.97m (2014: £3.50m) reflecting a planned increase in R&D spend, and increased number of POC trials run compared to the previous year

Marcelo Bravo, Chief Executive Officer of Oxford Pharmascience Group Plc, commented:

"2015 was a busy and successful year for the Company. We established the proof-of-concept for OXPzero™ Ibuprofen and OXPzero™ Naproxen whilst continuing work with other pipeline programs. We have recently entered early stage partnering discussions for the OXPzero™ Ibuprofen and OXPzero™ Naproxen assets. We are encouraged by the strong level of interest from major global players in this space, and remain well funded and continue to operate in a prudent manner with cost control central to our operating model. We will continue to update shareholders of progress as appropriate and we look forward to the remainder of 2016 with confidence.

Finally, I would like to take this opportunity to thank all of our staff and service providers for their hard work throughout the year."

Contacts:

Oxford Pharmascience +44 20 7554 5875

Marcelo Bravo, Chief Executive

N+1 Singer +44 20 7496 3000

Aubrey Powell / Jen Boorer

About Oxford Pharmascience Group Plc

Oxford Pharmascience Group Plc uses a range of proprietary technology platforms to re-develop existing medicines to make them better, safer or easier to take. The Company does not manufacture or sell its own pharmaceutical products direct to consumers, but instead seeks to license its technologies and dossiers to a network of partners, mainly leading pharmaceutical companies with Rx (prescription) and OTC (over the counter) branded portfolios. 

Oxford Pharmascience Group Plc focuses on existing medicines that are proven to be safe and effective but nevertheless still have associated issues and side effects often affecting compliance. By working with such medicines, the Company is able to develop new innovative products for a fraction of the cost, in much quicker timescales and without the high risk of failure associated with developing new drugs.

Chairman and Chief Executive Officer's Joint Review

We begin 2016 ready to proceed to the commercial partnering stage with the two lead assets in our pipeline, OXPzero™ Ibuprofen and OXPzero™ Naproxen. Ibuprofen and naproxen are two of the dominant non-steroidal anti-inflammatory drug (NSAID) molecules in the pain relief and anti-inflammatory sector, with combined worldwide sales in excess of $5bn per annum (Source: Evaluate Pharma). In the last 18 months the company has accumulated a body of clinical data indicating a range of key benefits for OXPzero™ Ibuprofen and OXPzero™ Naproxen offering meaningful differentiation, competitive advantage and multiple growth opportunities to potential commercial partners.

The global analgesics market presents a challenging environment for brands looking to discover growth opportunities in a difficult and competitive market. A recessive economic environment, strong generic competition and safety concerns over key ingredients all form barriers to growth. Increasingly, own label and generics competition has led to market share erosion and severe pricing and margin pressure. Importantly NSAIDs such as ibuprofen and naproxen have well documented gastro-intestinal (GI) safety issues and the key competitive molecule, paracetamol, is perceived as safer in this regard. To overcome this challenging environment, global NSAID brands need relevant product differentiation driven by new product development, line extensions and strong, differentiated product claims.

OXPzero™ NSAIDs - a growth platform for the global NSAID brands

During 2015 the Company conducted two clinical studies assessing the pharmacokinetic (PK) profile as well as the GI irritation via endoscopy of oral dose formulations of both OXPzero™ Ibuprofen and OXPzero™ Naproxen, completing the work initiated in 2014. The body of data amassed by the Company during the year shows that the OXPzero™ compounds have been demonstrated to deliver a range of key benefits that can be leveraged across multiple, differentiated product applications.

Global brand owners are expected to be enabled to strengthen their core business and exploit growth opportunities, via top-line growth at premium pricing and increased gross margins. This is significant as it addresses the key needs of the major global brands currently unable to differentiate and under severe pricing and margin pressure.

Specifically, by comparison with existing NSAIDs, OXPzero™ Ibuprofen and OXPzero™ Naproxen:

• are milder in the GI tract, delivering major reduction in GI mucosal damage;

• significantly mask the bitter taste/burn associated with NSAIDs; and

• deliver an attractive PK profile with adaptable drug release properties.

These characteristics enable multiple advantaged product applications across over-the-counter (OTC), pharmacist-only sales and prescription (Rx) markets. Working with advisers formerly in senior roles in global OTC pharmaceutical companies, the Company has identified immediate, medium-term and long-term new products, line extensions and claims opportunities. Specifically, the Company believes there are major opportunities in key commercial categories including:

Pain - The Company believes that the GI mildness of the OXPzero™ products can be capitalised on in order to address the needs of patients exposed to higher risk of GI damage. For example, OXPzero™ Ibuprofen and OXPzero™ Naproxen can be widely used in pain management for the over-60s as well as for the treatment of chronic or severe pain in other age groups, with reduced GI risks. Importantly this offers the opportunity to remove the current disadvantage against paracetamol;

Cough and Cold - Ibuprofen has inherent advantages in efficacy and duration of effect versus paracetamol, however paracetamol dominates non-tablet forms of cough and cold remedies because of its GI mildness and taste advantages. OXPzero™ Ibuprofen products enable superior, longer lasting, non-tablet forms versus paracetamol without the inferior GI profile or taste issues associated with standard ibuprofen; and;

Easy-to-take, non-tablet products - Formulations of OXPzero™ products lend themselves to being taken 'on the move'. For example, the technology allows for high dose ibuprofen (200mg/5ml) suspension formulations which are not currently available due to the bitter taste/burn of Ibuprofen at that dose level or for great tasting NSAID-based hot drinks formulations.

To demonstrate these opportunities the Company has developed a number of novel ibuprofen products that bring to life the commercial potential of the technology. These include 200mg and 400mg chewable tablets and oral dispersible tablets that are far superior to any other similar non-tablet forms in the market; a 200mg/5ml suspension which is new to the market and a 400mg hot chocolate drink which is also completely novel. These products are a small sample of what the technology can do, but help illustrate what global brands could achieve in pain relief, children's pain and fever and cough and cold.

Continuing with efforts initiated last year, our focus in the coming months is to engage with leading global pharmaceutical and other companies in the NSAIDs market with strategic interest in introducing OXPzero™ NSAIDs as a disruptive platform for growth. To this effect, the Company has engaged consultants and advisers to support this important phase in its development. These include former senior management from major pharmaceutical companies which represent prospective strategic partners for licensing, high level regulatory support, as well as additional business development resource. We also recently welcomed Anand Sharma to the Board whose background and experience, most recently as Global Director for new business development at Reckitt Benckiser, will be invaluable to this process. As previously indicated, the Company has prepared due diligence information for prospective license partners and is in the process, through its advisers, of soliciting their interest.

PipelineThe Company is also continuing to advance the development of new programmes into its pipeline in accordance with the strategy outlined at the time of attracting further funding in June 2015. The Company successfully raised £20 million gross proceeds (approximately £19.4 million after expenses) at a price of 10 pence per placing share. The fundraising has enabled the Company to pursue a wider range of opportunities across its portfolio with initial focus on the application of the OXPzero™ technology to aspirin. The Company believes aspirin is favourably positioned in primary and secondary prevention of cardiovascular disease ("CVD"), but its use is limited because of the gastric side effects. The Directors believe there is a very substantial opportunity to replace current aspirin and significantly increase usage for CVD prevention if a GI-safe OXPzero™ Aspirin derivative can be developed. Importantly, the Company believes that its OXPzero™ Aspirin has potential to provide superior anti-platelet efficacy than that of enteric coated aspirin products that currently predominate in the market. In the past months the Company has made significant breakthroughs overcoming major technical obstacles in this programme and expects to be reporting progress in the coming months. Further updates on this and other programmes will be given throughout 2016. 

The fundraising also provides the Company with greater flexibility in its commercial strategy with sufficient additional funds to take a selected NSAID molecule further through development, if the Directors consider it will enhance value compared to an earlier stage licensing deal.

Financial Results

Revenue from the calcium chew business grew slightly from the prior year to £749k (2014: £705k). The majority of these revenues are derived from our valued partner, Ache Laborotorios in Brazil who continue to grow their business despite the challenging economic climate in their domestic market. We look forward to continuing to work together with Ache and other partners going forward to expand this area of the business.

The Group continues to implement a lean and agile, low cost business model which allows the execution of its R&D plan in the most efficient manner. Administrative expenses, including R&D expenditure were £4.1m versus £3.7m in 2014, the increase mainly due to the number of clinical trials run in the year. The loss before tax was £3.9m versus a loss of £3.5m in the prior year. The Group claimed £0.60.m in Research and Development tax credits for the year ended 31 December 2014 which were received in 2015. The Group's claim for the year ended 31 December 2015 amounts to £0.76m.

The Group raised £20.0m from the issue of new shares in the year (£19.4m after costs of issue were deducted) which leaves the Group well-funded with cash and short-term investment balances at 31 December 2015 of £23.1m (2014: £6.7m). This allows the Group the flexibility it requires to deliver its R&D programme and to retain the ability to take a selected product through to registration if deemed more likely to create greater shareholder value.

OutlookThe Company will continue to work on the OXPzero™ Ibuprofen and OXPzero™ Naproxen programs as it enters commercial discussions focused on enabling registration and approval of selected lead applications. In parallel, the Company anticipates the scale up of efforts behind OXPzero™ Aspirin as well as the introduction of new programmes into its pipeline. Progress on these will be informed separately over the coming months.

We look forward to continuing progress and to successful partnering activities for our pipeline during 2016.

David Norwood Marcelo Bravo

Chairman Chief Executive Officer

3 March 2016

Strategic Report

Strategy and business objectives

2015 was a year of execution for OXP as the Company looked to implement the new strategy it had set out in the previous year. The Company conducted two proof-of-concept (POC) clinical trials, one with OXPzero™ Ibuprofen and one with OXPzero™ Naproxen, with the intention of gathering sufficient data to market a compelling and attractive asset (or assets) that would be of interest to large pharmaceutical companies with strategic interests in the NSAIDs market.

The results of the two POC trials have given the Company a body of data, confirming that the OXPzero™ products are differentiated, superior forms of Ibuprofen and Naproxen, which deliver a range of benefits over the standard drug across multiple parameters. In particular, the OXPzero™ products have been proven to deliver a major reduction in the incidence and severity of GI mucosal damage, completely taste mask the bitterness of the drug and deliver an attractive PK profile with immediate and complete drug release. These characteristics, along with the recent US grant of one of its key patents, put the Company in a strong position as it enters commercial discussions in an attempt to secure a commercial partner for these products.

Development and performance

2015 was an active year in which the Company conducted POC trials across two different drugs. The costs incurred in respect of these trials was lower than expected leading to Research and Development spend (included within operating expenses) in this area of £2.50m in 2015 (compared to £2.24m in 2014). We did not expand the team during the year and it is testament to the Research and Development team's hard work and dedication that these trials were conducted without the need for additional staff. The Company continues to operate a flexible, outsourced approach that can be expanded as required - this enables us to maintain our low cost operating base.

In June 2015, the Company raised £20.0m (£19.4m after expenses) through the placing of 200,000,000 new ordinary shares at a placing price of 10 pence per share. The placing proceeds will enable the Company to allocate greater resource to the Company's OXPzero™ Aspirin programme, thereby enabling the Company to address the significant opportunity it has identified in cardiovascular disease applications. The Company also intends to pursue a wider range of opportunities and add new programmes to its pipeline. The placing proceeds also provide the potential to advance development programmes further towards product registration before agreeing licensing deals, if the board determines at the appropriate time that such a move would be likely to deliver better value for shareholders.

Sales in the year to 31 December 2015 were £749k compared to £705k in the previous year. We continue to work with our main partner, Ache Laboratorios in Brazil and have engaged business development resource to try and grow product sales in other territories going forward. The loss for the year after tax of £3.11m (2014: £2.86m) is in line with expectation.

Position at year end

The Group finished the year with cash and short-term investment balances of £23.06 million (2014: £6.71 million). Net assets at 31 December 2015 were £23.79 million compared to £7.32 million at 31 December 2014.

Events since the end of the financial year

Anand Sharma joined the Board as a non-executive director on 25 February 2016, bringing significant experience from within an OTC consumer healthcare company to the Board with over 40 years' experience in the pharmaceutical and consumer healthcare industry. Mr Sharma has been advising the Company on its commercialisation efforts for the past six months. His appointment to the Board will enable him to continue to assist the Company in its commercialization strategy.

Key performance indicators

The key indicators of performance for the business in its current stage of development are the successful conclusion of clinical trials and the winning of commercial contracts and license agreements to commercialise the Group's products.

In addition, the control of capital allocated to the Group's development projects is a priority for management. Budgets are monitored closely to ensure adequate financial resources are available to meet financial commitments as they arise.

At this stage in its development, quantitative key performance indicators are not an effective way of measuring the Group's performance.

Principal risks and uncertainties

The Group considers that the principal risks to achieving its business objectives are as follows:

Clinical trial data

The Group is reliant on positive data arising from trials scheduled for 2016 and beyond. The Group cannot guarantee that results will match expectations but has tried to minimise this risk through non-clinical and pre-clinical work and detailed trial programme design and close consultation with Key Opinion Leaders (KOLs), scientific advisers and regulatory bodies.

Customers

The Group's success is dependent upon generating revenue from licensing its Intellectual Property to customers. As the Group's development programmes proceed, the Group will seek to form relationships and sign commercial contracts with large pharmaceutical companies at a price that generates an economic return.

Intellectual property

The success of the Group's strategy depends in part on the ability to protect and defend its rights over its Intellectual Property portfolio. The Group has procedures in place to monitor and guard its Intellectual Property and also has specialist IP lawyers to defend against potential breaches should they arise.

Attraction and retention of key employees

Attracting and retaining key personnel is critical to the long-term success of the business. The Group aims to provide remuneration and working conditions that will both attract and retain high calibre employees. The Group operates a share option scheme for certain senior staff which allows them to benefit from future improvements in the Group's share price.

Funding

The Group has £23.06 million of cash and short-term investments as at 31 December 2015. The Directors believe that this is sufficient to take key development programmes through to commercialisation. However, were the development programmes to be delayed or suffer cost over-runs, additional finance may be required. The Board tries to manage and mitigate this risk by regularly reviewing budgets and analysing future cash requirements.

Christopher Hill

Chief Financial Officer

3 March 2016

Consolidated Statement of Comprehensive Income

The loss for the year arises from the Group's continuing operations.

Consolidated Statement of Changes in Equity

Consolidated Statement of Financial Position

Approved by the Board of Directors and authorised for issue on 3 March 2016.

Marcelo Bravo Christopher Hill

Chief Executive Officer Chief Financial Officer

Company number: 07036758

Consolidated Statement of Cash Flows

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2015

The following notes have been extracted from the full notes to the audited report and accounts available on the Company's website www.oxfordpharmascience.com.

1) Segmental information

At 31 December 2015 the Group operated as one segment, being the development and commercialisation of drug products from proprietary technology platforms. This is the level at which operating results are reviewed by the chief operating decision maker (the CEO) to make decisions about resources, and for which financial information is available. All revenues have been generated from continuing operations and are from external customers.

The Group operates in three main geographic areas, although all are managed in the UK. The Group's revenue per geographical area is as follows:

* 2015: 100% (2014: 100%) of Brazil revenue is generated from one customer

All the Group's assets are held in the UK and all of its capital expenditure arises in the UK.

2) Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the period. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary shares.

The Company has issued employee options over 95,200,000 (2014: 79,000,000) ordinary shares which are potentially dilutive. There is, however, no dilutive effect of these issued options as there is a loss for each of the periods concerned.

3) Annual Report and Accounts 

A copy of the Annual Report and Notice of AGM is being posted to shareholders today and will be made available on the Company's website: www.oxfordpharmascience.com.