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 £5 million (before expenses) through the placing of 166,666,667 New Ordinary Shares at a placing price of 3p per Ordinary Share with discretionary funds managed by Invesco Asset Management Limited. N+1 Singer acted as broker to the Placing.

The placing of these 166,666,667 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 further accelerate the development of the Group's business as described in more detail below.

The circular relating to the Placing (the "Circular") will be posted to shareholders shortly. The Circular contains a notice convening a general meeting of the Company to approve certain matters relating to the Placing. The general meeting of the Company will be held at the offices of Fasken Martineau LLP, Third Floor, 17 Hanover Square, London W1S 1HU at 10.00 am on 19 March 2013.

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 two years in developing and commercialising its innovative technology platforms and recently raised £2 million to strengthen its position for continuing this effort.

We are delighted to have Invesco on board as a major shareholder. This new placement will raise additional funds to allow us to accelerate our work on commercialising our technology platforms and to strengthen our IP position by developing our own dossiers for a range of NSAIDs which we will seek to license to major pharmaceutical companies"

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 / Jenny Wyllie

About Oxford Pharmascience

Oxford Pharmascience 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 the Company's 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 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 announces today that it has conditionally raised £5m (before expenses) through the placing of 166,666,667 New Ordinary Shares at a placing price of 3p per Ordinary Share with discretionary funds managed by Invesco Asset Management Limited (the "Placee"). The placing of these 166,666,667 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.

Currently the Directors have insufficient authorities in place to allot the Placing Shares to the Placee without the need first to offer the Placing Shares to existing Shareholders. Accordingly, the Placing is conditional upon the Company, among other things, obtaining approval from Shareholders to empower the Directors to allot the Placing Shares pursuant to the Placing and to disapply statutory pre-emption rights in respect of such allotment.

The Placing, which has been arranged on behalf of the Company by N+1 Singer subject to the terms of the Engagement Letter, is therefore conditional, inter alia, on the passing of the Resolutions at a general meeting of Shareholders to be held at 10.00 a.m. on 19 March 2013. The Circular is therefore being provided to Shareholders 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 19 March 2013, (iii) explain why the Directors recommend that Shareholders vote in favour of the Resolutions to approve the Placing, and (iv) explain the actions Shareholders should take in respect of the General Meeting.

2. Background to and reasons for Placing

As was previously reported to you in the Company's circular dated 26 November 2012, 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 of 13 September 2012 that the Company 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 accelerate its growth strategy.

If the Resolutions are not passed by Shareholders at the General Meeting, the Placing would be unable to proceed. In this situation, the Company would continue to invest its cash resources in line with its current plan to commercialise its technology platforms however the Directors believe that the acceleration of these programs has the potential to deliver significantly higher and quicker shareholder value.

3. Current Trading

The Company continues to make 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. 

The Company's announcements of 27 November 2012 and 3 December 2012 respectively in relation to additional OXPchew™ and OXPzero™ based products reported that the Company had entered into feasibility and option agreements with third party healthcare companies. Commercial discussions between the Group and third parties continue to progress. 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 accelerating 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 £4.97m will be used by the Company to continue to develop its current business by developing its own dossiers for taste masked NSAIDS and to fund the clinical work required to enable a dossier submission for improved statin products, with the intention of licensing this to partners in 2015.

5. Details of the Placing

The Placing will raise £5.0 million before expenses through the issue of 166,666,667 New Ordinary Shares at a Placing Price of 3p per share. Net proceeds of the Placing are expected to be approximately £4.97m. Completion of the Placing and the issue of the Placing Shares are subject to the passing of the Resolutions 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 18.6 per cent. 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 Resolutions at the General Meeting;

(ii) the Engagement Letter 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 Engagement Letter. Completion of the Placing is subject to certain conditions including the passing of the Resolutions. Under the terms of the Engagement Letter, the Company has agreed to pay N+1 Singer a fixed corporate finance fee in consideration for its corporate finance and broking services in respect of the Placing.

The Engagement Letter contains certain warranties given by the Company with respect to its business and the Group and certain matters connected with the Placing. The Placing may be terminated by N+1 Singer for, inter alia, a material breach by the Company of the terms of the Engagement Letter or the warranties contained in it or their being a material adverse change in the condition of the Group.

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 20 March 2013. 

Immediately following Admission, the Company will have 897,536,619 Ordinary Shares in issue. Since the Company currently holds no shares in treasury, the total number of voting rights in the Company is therefore 897,536,619 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. Concert Party

The shareholdings of the Concert Party before and after the Placing are set out below:

Following completion of the Placing, the Concert Party will have interests in shares carrying approximately 27.66 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.

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 Ordinary Shares carrying voting rights to 30 percent. or more of the voting rights of the Company, the Concert Party would normally be required by the Panel to make a general offer to the Shareholders, 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).

7. 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 19 March 2013 is set out at the end of the Circular.

The resolutions to be proposed at the General Meeting are as follows:

1. an ordinary resolution to provide the Directors with an authority under section 551 of the Act to allot Ordinary Shares up to a maximum nominal amount of £166,666.67 (being the maximum required for the purposes of issuing the Placing Shares pursuant to the Placing); and

2. subject to the passing of the above Resolution, a special resolution granting the Directors with an authority pursuant to sections 570 to 573 of the Act to allot Ordinary Shares up to a maximum nominal amount of £166,666.67 for cash on a non-pre-emptive basis such that they can allot the Placing Shares pursuant to the Placing, without the need first to offer such shares to the existing Shareholders.

8. 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 you 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, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, B63 3DA as soon as possible, and in any event so as to arrive no later than 10.00 am on 15 March 2013. 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 Directors believe that the Placing and therefore the Resolutions are in the best interests of the Company and Shareholders taken as a whole. The Directors therefore unanimously recommend that you vote in favour of the Resolutions, as they intend to do in respect of their own shareholdings. 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Announcement of the Placing and Posting of Circular to Shareholders 27 February 2013

Latest time and date for receipt of Forms of Proxy 10.00 am on 15 March 2013

Latest time and date for receipt of Crest Proxy Instructions 10:00 am on 15 March 2013

General Meeting 10.00 am on 19 March 2013

Admission of Placing Shares to trading on AIM 8.00 am on 20 March 2013

DEFINITIONS

"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 6 of this announcement

"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 4 of this document

"Engagement Letter" the letter dated 25 February 2013 from N+1 Singer to the Company setting out the terms and conditions upon which N+1 Singer is engaged by the Company for the purpose of the Placing

"Enlarged Share Capital" the 897,536,619 Ordinary Shares in issue on Admission, comprising the Existing Ordinary Shares and the New Ordinary Shares

"Existing Ordinary Shares" the 730,869,952 Ordinary Shares in issue as at the date of this announcement

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

"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, 17 Hanover Square, London W1S 1HU at 10:00 am on 19 March 2013 (or at any adjournment thereof) to consider the Resolutions

"Group" the Company and its subsidiary undertakings

 "London Stock Exchange" London Stock Exchange plc

"New Ordinary Shares" each of the new Ordinary Shares comprising the Placing Shares

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

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

"Panel" the Panel on Takeovers and Mergers

"Placee" Invesco Asset Management Limited acting as agent for and on behalf of its discretionary managed funds

"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 Engagement Letter

 "Placing Price" 3 pence per New Ordinary Share

"Placing Shares" the 166,666,667 new Ordinary Shares to be issued to the Placee pursuant to the Placing

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

 "Resolutions" the ordinary and special resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting and "Resolution" shall mean any one of them

"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