Placing and Notice of General Meeting

Oxford Pharmascience Group plc

("Oxford Pharmascience" or the "Company")

Placing and Notice of General Meeting

Oxford Pharmascience, the specialty pharmaceutical company that uses advanced pharmaceutic technologies to reposition medicines, announces that it has conditionally raised £2 million (before expenses) through the placing of 153,846,154 New Ordinary Shares at a placing price of 1.3p per Ordinary Share with certain new and existing institutional and other investors. N+1 Singer acted as broker to the Placing.

The placing of these 153,846,154 New Ordinary Shares (the "Placing") is conditional on the Company obtaining approval from Shareholders to their allotment at the General Meeting. The net proceeds of the Placing will be used by the Group to accelerate the development of the Group's business as described in more detail below and for general working capital/ corporate purposes.

The circular relating to the Placing (the "Circular") will be posted to shareholders shortly. The Circular contains a notice of general meeting to approve, inter alia, the Placing which will be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London W1S 1HU at 10:00 am on 12 December 2012.

The Circular will soon be available to view on the Company's website (www.oxfordpharmascience.com). Copies of the Circular will also be available from the registered offices of Oxford Pharmascience at Third Floor, 17 Hanover Square, London, W1S 1HU.

Nigel Theobald, CEO, commented:

"The Company has made strong progress over the past eighteen months in developing and commercialising its innovative technology platforms. The Placing will put Oxford Pharmascience in a stronger position for continuing this effort, both in relation to its existing soft chew and taste-masking platforms and with new applications such as its colonic delivery statin products, which the Directors believe will build material shareholder value by developing sustainable income streams over the longer term."

Defined terms are appended to this announcement and have the same meaning as the Circular. The letter from the Chairman to be contained in the Circular is repeated below without material adjustment.

For further information please contact:

Oxford Pharmascience Group plc

Nigel Theobald, Chief Executive +44 1865 854 874

N+1 Singer +44 20 7496 3000

Shaun Dobson / Aubrey Powell

About Oxford Pharmascience Group Plc

Oxford Pharmascience Group Plc develops advanced yet practical pharmaceutical technologies to enable reformulation that adds value to off patent and soon to be off patent drugs. The Company does not manufacture or sell its own pharmaceutical products but instead seeks to license its technologies to a network of partners, mainly leading pharmaceutical companies with Rx (prescription) and OTC (Over the Counter) branded portfolios. These partners use our technologies to reposition their products helping them sustain market share and profitability by delivering improved health outcomes and/or clinical profiles via reformulated versions of the same API (active pharmaceutical ingredient).

Oxford Pharmascience Group Plc develops platform technologies that have application across multiple drug categories and can be leveraged across a broad range of reformulation problems. This business model allows us to provide solutions across the industry and fund the ongoing development of cutting edge technologies to better serve the needs of our partners. The partner companies who adopt our technology pay an up-front license fee followed by development milestone payments and then royalties on finished products sold using the technology. OXP invests the upfront licence fee to optimise product development and to ensure seamless technology transfer to the pharmaceutical partner.

EXTRACTED LETTER FROM THE CHAIRMAN OF OXFORD PHARMASCIENCE GROUP PLC

1. Introduction

Your Board announced today that it has conditionally raised £2m (before expenses) through the placing of 153,846,154 New Ordinary Shares at a placing price of 1.3p per Ordinary Share with certain new and existing institutional and other investors. The placing of these 153,846,154 New Ordinary Shares (the "Placing") is conditional on the Company obtaining approval from Shareholders to their allotment at the General Meeting. The net proceeds of the Placing will be used by the Group to accelerate the development of the Group's business as described in more detail below and for general working capital/ corporate purposes.

Currently, the Directors do not have sufficient authority to disapply pre-emption rights in relation to the allotment of the Placing Shares. Accordingly, the Placing is conditional upon the Company obtaining approval from Shareholders to empower the Directors to disapply statutory pre-emption rights which would otherwise apply to the allotment of such new Ordinary Shares. The Placing, which has been arranged by the Company's broker, N+1 Singer, is subject to the terms of the Placing Agreement, and is also conditional inter alia upon Admission.

The Circular is therefore being provided to: (i) explain the background to and the reasons for the Placing, (ii) give notice of the General Meeting to approve the Placing to be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London W1S 1HU at 10:00 am on 12 December 2012, (iii) explain why the Directors recommend that Shareholders vote in favour of the Resolution to approve the Placing, and (iv) explain the actions you should now take in respect of the General Meeting.

2. Background to and reasons for Placing

2011 was an important year for the Group having changed its focus to the higher value pharmaceutical market. As stated in the Company's unaudited interim results for the six months to 30 June 2012, the challenge for the Group going forward was twofold: first, to continue to develop science into innovative products that industry wants and requires and second, to continue to commercialise these products with major pharma companies to secure a profitable route to market.

The Group has continued to evolve its science and has established three solid technology platforms: the soft chew technology OXPchew™, the taste-masking platform OXPzero™ and OXPtarget™, controlled-release technology.

In the first half of 2012 the Group made significant progress with revenues from the OXPchew™ technology continuing to grow with strong sales in Brazil from Aché Laboratorios. Importantly the Group signed its first licensing deal with a major global pharmaceutical company, Bayer. Co-development work has also begun with Hermes Pharma for a range of ibuprofen direct to mouth granules using the OXPzero™ technology. This will lead to clinical studies in early 2013 to demonstrate the bio equivalence of our OXPzero™ ibuprofen salt, a major step towards securing the first licensed medicine using the technology.

Repeating the success of the OXPchew™ business with OXPzero™ by first commercialising a product and then extending this to deals with other highly reputable pharmaceutical companies in ibuprofen remains a short-term goal of the Group.

In addition, the recent announcement that the Company has now executed its option to an exclusive global licence from The School of Pharmacy, University College London, with the intention to develop and commercialise a range of formulations of Simvastatin and Atorvastatin with reduced side effects, moves the Company into an area which the Board believes has the potential for significant growth. Cardiovascular disease is the number one cause of deaths worldwide and Statins are the leading drugs used to combat this. Continued concerns remain though about potential side effects of using statins, particularly at higher doses and this is a major issue for this sector. The OXPtarget™ technology licensed from UCL will potentially allow the formulation of lower dose statins, with the equivalent lipid reduction effect of the current higher dose statin.

The Group's challenge is now to convert the OXPzero™ and OXPtarget™ technologies into real, exciting products that industry wants and to repeat the commercial success of OXPchew™ in the more attractive and higher value areas of NSAIDs (Non Steroidal Anti-Inflammatory Drugs) and Statins.

While the Group has sufficient cash resources for its near term needs, and retains discretion over a substantial part of its development and other expenditure, the Board believes that the Group requires and would benefit from additional finance to enable it to implement its short-term growth strategy.

If the Resolution is not passed by Shareholders at the General Meeting, the Placing would be unable to proceed. In this situation, the Company may not be able to access sufficient cash resources to maintain current operations beyond the near term and would need to consider alternative strategic options that the Directors believe would not be in the best interests of stakeholders, potentially leading to the loss of shareholder value.

3. Current Trading

As announced in the first half results for 2012, the Company has made good progress in building commercial opportunities for its OXPchew™ technology and co-developing a novel ibuprofen product with Hermes Pharma. It expects to continue to derive a mixture of sales and royalties in connection with these products. 

Commercial discussions are ongoing in relation to additional OXPchew™ and OXPzero™ based products. Although neither the timing nor the scale of any commercial developments can be certain, the Board reasonably expects near term progress to be made. Further announcements are likely to be made before the year end and one or more contracts possibly could materialise before completion of the Placing; further announcements will be made as appropriate.

The Directors believe that the Placing allows the Group to continue to fund trading losses whilst building material shareholder value by developing sustainable income streams over the longer term from existing and new applications of its technology.

4. Use of proceeds

The total funds raised from the Placing (net of expenses) of approximately £1.92m will be used by the Company to continue to develop its current business and to co-develop two statin products from its recently announced statin program to clinical trials, with the intention of bringing these to market in 2015.

5. Details of the Placing

The Placing will raise £2.0 million before expenses through the issue of 153,846,154 New Ordinary Shares at a Placing Price of 1.3p per share. Net proceeds of the Placing are expected to be approximately £1.92m. Completion of the Placing and the issue of the Placing Shares are subject to the passing of the Resolution at the General Meeting.

The Placing is being conducted by way of a non pre-emptive share issue. The Directors believe that this is the most cost effective method to raise funds, avoiding the significant costs of a full public offer. The Placing Shares represent approximately 21.05% of the Enlarged Share Capital.

The Placing Shares will, on Admission, be credited as fully paid and will have the same rights in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared. The Placing is conditional, inter alia, upon:

(i) the approval of the Resolution at the General Meeting;

(ii) the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

(iii) Admission.

The Placing is to be effected on behalf of the Company by N+1 Singer, under the terms of the Placing Agreement. Completion of the Placing is subject to certain conditions including those listed above. Under the terms of the Placing Agreement, the Company has agreed to pay N+1 Singer a fixed fee in consideration for its corporate finance and broking services in respect of the Placing. The Placing Agreement contains certain warranties given by the Company with respect to its business and the Group and certain matters connected with the Placing. In addition, the Company has given indemnities to N+1 Singer in connection with the Placing and their performance of services in relation to the Placing. The Placing Agreement may be terminated by N+1 Singer for, inter alia, a material breach by the Company of the terms of the Placing Agreement or the warranties contained in it or on the occurrence of certain specified events or of certain force majeure events.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM and it is expected that Admission will be effective and trading will commence at 8:00 am on 13 December 2012. 

Following Admission, the Company will have 730,869,952 Ordinary Shares in issue. Since the Company currently holds no shares in treasury, the total number of voting rights in the Company is therefore 730,869,952 and this figure may therefore be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FSA's Disclosure and Transparency Rules.

6. Related Party Transaction

As part of the Placing, ORA Capital Partners is subscribing for 14,538,462 New Ordinary Shares at the Placing Price.

Under the AIM Rules, ORA Capital Partners is deemed to be a related party due to its substantial shareholding in the Company and, as such, its participation in the Placing is deemed to be a related party transaction. Accordingly, Mike Bretherton, as a director of ORA Capital Partners, has not participated in the Board's consideration of the Placing nor in the Directors' recommendation. 

The Independent Directors consider, having consulted with N+1 Singer, that the terms of the Placing are fair and reasonable insofar as shareholders of the Company are concerned. In providing advice to the Independent Directors, N+1 Singer has taken into account the commercial assessments of the Independent Directors.

7. Concert Party

The shareholdings of the Concert Party, including ORA Capital Partners, before and after the Placing are set out below:

Following completion of the Placing, the Concert Party will have interests in shares carrying approximately 33.97 per cent. of the voting rights of the Company.

No individual member of the Concert Party is increasing its resulting percentage holding as a result of its participation in the Placing.

Shareholders should note that, following the Placing, if the Concert Party or any of its members (individually or collectively) acquires an interest in additional Ordinary Shares which increases the Concert Party's percentage of shares carrying voting rights, the Concert Party would normally be required by the Panel to make a general offer to the shareholders of the Company, pursuant to Rule 9 of the Code, to acquire the balance of the equity share capital in the Company at the highest price paid by any member of the Concert Party in the previous 12 months (unless a dispensation from this requirement has been obtained from the Panel in advance).

8. Notice of General Meeting

A notice convening the General Meeting to be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London W1S 1HU at 10.00 am on 12 December 2012 is set out at the end of the Circular.

The only resolution to be proposed at the General Meeting is a special resolution to disapply pre-emption rights in relation to the issue of the New Ordinary Shares.

9. Action to be taken

Shareholders will find enclosed with the Circular a Form of Proxy for use at the General Meeting. Whether or not a Shareholder intends to attend the General Meeting they are requested to complete the Form of Proxy in accordance with the instructions printed on it and to return it to the Company's registrars, Capita Registrars, PXS, Beckenham, BR3 4TU, as soon as possible, and in any event so as to arrive no later than 10.00 am on 10 December 2012. If Shareholders hold Ordinary Shares in CREST they may appoint a proxy using the CREST proxy appointment service by following the instructions in note (8) to the Notice of General Meeting. The completion and return of a Form of Proxy, or the electronic appointment of a proxy will not preclude Shareholders from attending the General Meeting and voting in person should they so wish.

10. Recommendation

The Independent Directors believe that the Proposals and therefore the Resolution is in the best interests of the Company and Shareholders taken as a whole. The Independent Directors therefore unanimously recommend that you vote in favour of the Resolution, as they intend to do in respect of their own shareholdings. 

Yours faithfully

David Norwood

Non-Executive Chairman

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

DEFINITIONS

The following definitions apply throughout the Circular, unless the context otherwise requires:

"Act" the Companies Act 2006

"Admission" the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules

"AIM" a market operated by the London Stock Exchange

"AIM Rules" the AIM Rules for Companies and/or the AIM Rules for Nominated Advisers as applicable

"Code" the City Code on Takeovers and Mergers

"Company" Oxford Pharmascience Group Plc

"Concert Party" those persons whose details are set out in paragraph 7 of the Circular

"Crest" the computerised settlement system to facilitate transfer of the title to an interest in securities in uncertified form operated by Euroclear UK and Ireland Limited

"Directors" or "the Board" the directors of the Company whose names are set out on page 5 of the Circular

"Enlarged Share Capital" the 730,869,952 Ordinary Shares in issue on Admission, comprising the Existing Ordinary Shares and the New Ordinary Shares

"Existing Ordinary Shares" the 577,023,798 Ordinary Shares in issue as at the date of the Circular

"Form of Proxy" the form of proxy for use in relation to the General Meeting which accompanies the Circular

"General Meeting" the general meeting of the Company, the details of which are set out in the Notice of General Meeting, to be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London W1S 1HU at 10:00 am on 12 December 2012 (or at any adjournment thereof) to consider the Resolution

"Group" the Company and its subsidiary undertakings

"Independent Directors" the Directors of the Group with the exception of Mike Bretherton

"London Stock Exchange" London Stock Exchange plc

"New Ordinary Shares" the Placing Shares

"Notice of General Meeting" the notice convening the General Meeting which is set out at the end of the Circular

"Ordinary Shares" the ordinary shares of 0.1p each in the capital of the Company

"Panel" the Panel on Takeovers and Mergers

"Placing" the conditional placing by N+1 Singer on behalf of the Company of the Placing Shares at the Placing Price, in accordance with the Placing Agreement

"Placing Agreement" the conditional agreement dated 23 November 2012 made between the Company, the Directors and N+1 Singer, further details of which are set out in this Circular

"Placing Price" 1.3 pence per New Ordinary Share

"Placing Shares" the 153,846,154 new Ordinary Shares to be issued to placees pursuant to the Placing Agreement

"Posting" the posting of the Circular and form of proxy

"Proposals" the Placing

"Resolution" the resolution to be proposed at the General Meeting as set out in the Notice of General Meeting

"Shareholder" a holder of Ordinary Shares

"uncertificated" a share or security recorded in the Company's register of members as being held in uncertificated form, title to which may be transferred by means of Crest