OXFORD BIOMEDICA

PLC INTERIM STATEMENT FOR THE PERIOD ENDED 30 JUNE 1997

Chairman's Statement
I am delighted to be making my first statement to you following the successful admission of the Company to the Alternative Investment Market (AIM), London, in December 1996. During this period the Company has made substantial progress in establishing its operations in new custom built laboratories and offices on the Oxford Science Park. In addition, we have recruited a full complement of staff to pursue the Company's innovative research and development programmes. Most significantly, I am pleased to announce that we now anticipate starting clinical trials by the end of 1998, over a year earlier than originally planned. We have achieved this by enhancing our existing oncology programme with new complementary technology.

Highlights

The acceleration in the clinical programme has been in part due to the acquisition in February 1997 of exclusive rights to a significant novel technology known as the Hypoxia Response Element, which exploits the hypoxia (lack of oxygen) sensitive control of gene expression and which is likely to be applicable to a wide range of solid tumours. The first clinical trial planned to start in 1998 will be in breast cancer.

In April 1997 the Company acquired intellectual property from Sheffield University covering the use of macrophages to target solid tumours, including the use of engineered macrophages to deliver gene-based therapeutics. This creates a potentially powerful new clinical approach to the treatment of cancers. The Biotechnology and Biological Sciences Research Council (BBSRC) has awarded to the Company a Teaching Company Scheme grant of £140,020 to support two postdoctoral staff who will work on research and development of this novel technology.

As a result of filing new patent applications and in-licensing, the Company's patent portfolio at 30 June 1997 included 20 patent applications covering all aspects of gene based therapeutics, from vector production, through targeting and control of gene expression to design of therapeutic genes.

During the period, a major collaborative research programme with Viromedica Pacific Limited of Seoul, Korea, to assemble and test Immstat, Oxford BioMedica's novel anti-HIV product was completed. This is one of 20 contracts completed since flotation which cover research collaborations and consultancies and for the establishment of the Scientific Advisory Board.

Recruitment of staff has progressed to plan. The Company has appointed 32 employees and we now have a talented and highly motivated workforce to take the research and development programmes forward. Significant senior appointments include Peter Nolan, formerly deputy head of the Biotechnology Directorate at the UK Department of Trade and Industry, as Director of Operations and Dr Chris Bebbington, formerly Team Leader in gene therapy at Celltech Therapeutics plc, as Head of Research.

In March 1997 the Company moved into its new, purpose-built laboratories and offices at the Medawar Centre on the Oxford Science Park. These facilities comprise 5,000 sq. ft. of first class laboratory space and 3,000 sq. ft. of office accommodation.

Financial results
The net loss for the 9 months ended 30 June 1997 was £1.3 million, which was within our budget and the illustrative projections in the offer prospectus. In order to maintain the momentum in research and development and in line with the illustrative projections, costs for the second half of 1997 will be higher than in the first half.

The placing and offer for subscription in December 1996 raised £4.4 million net of expenses. The issue had been underwritten to a total of £6.15 million. However, two underwriters failed to meet their obligations under the underwriting agreements. As a result, the Company issued proceedings against the defaulting underwriters in February 1997. In May 1997 the Company ceased its action against Stockton Trading Limited on reaching an agreement whereby Stockton Trading Limited subscribed for 125,000 ordinary shares at the placing price of 88p, raising proceeds of £110,000. The other defendant, Kaj Kjellquist is now the subject of a bankruptcy order, and the Company's claim has been filed with his trustee in bankruptcy.

Outlook

• We are undertaking a number of strategic meetings with pharmaceutical companies with the prospect of identifying future potential partners.
• The advances made in the clinical programme have led us to seek to appoint a clinical management team ahead of our original plans.
• Receiving research awards and grants are key financial milestones that highlight thequality of research carried out by our scientists. In addition, they act as independent third party endorsement of our technology and scientific approach. We expect to announce the news of further grants throughout the year.
• In line with our policy we continue to vigorously protect the Company's intellectual property by the filing of patent applications. We will also continue to acquireinnovative technologies that are synergistic with our research and development.

Directors

On 1 December 1996 Andrew Wood was appointed as Finance Director. June Clark resigned as a Non-Executive director on 8 May 1997. The directors intend to make an appointment of a Non-Executive director to replace Ms Clark in the near future.

The post flotation period has been one of momentous and continuous achievement for the Company, the highlight of which is the prospect of Oxford BioMedica entering its first clinical trial in 1998, significantly ahead of previous expectations. These achievements are a testament to the quality and hard work of the board of directors and the newly assembled management team. I remain extremely confident that the Company will continue its rapid progress in the year ahead.

Sir Brian Richards CBE
Chairman
August 1997 Notes to Editors

1. Copies of this statement are being sent to all shareholders. Copies are also available at the registered office of the Company, Medawar Centre, Oxford Science Park, Oxford OX4 4GA.

2. The Company was incorporated and registered in England and Wales on 20 September 1996 as a private limited company with the name "Pinco 838 Limited" and was re-registered as a public limited company under the name "Oxford BioMedica plc" on 30 October 1996. On 29 October 1996 the Company acquired the entire issued share capital of Oxford BioMedica (UK) Limited. On 13 December 1996 the Company floated on the Alternative Investment Market of the London Stock Exchange and at the same time 5,709,723 new shares were sold to new investors as part of the Placing and Offer for Subscription. On 8 May 1997 a further 125,000 new ordinary shares were issued for cash.

3. The interim results are unaudited and do not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The Company has adopted the merger method of accounting for the acquisition of Oxford BioMedica (UK) Limited. The profit and loss account includes the results of Oxford BioMedica (UK) Limited for the whole of the nine month period ended 30 June 1997 and the comparative figures reflect the position that would have arisen if the Company and Oxford BioMedica (UK) Limited had been combined throughout the previous period. The figures in the balance sheet as at 30 September 1996 are based on the audited balance sheet of Oxford BioMedica (UK) Limited at that date. The financial statements of Oxford BioMedica (UK) Limited for the five months ended 30 September 1996 have been reported on by the company's auditors and delivered to the Registrar of Companies. The audit report was not qualified. The figures for the period ended 30 September 1996 were included in the AIM prospectus dated 15 November 1996. The interim results have been prepared on a consistent basis to the September 1996 statutory accounts, but have not been reviewed by the auditors.

4. The basic loss per ordinary share has been calculated on a weighted average number of 55,281,807 shares in issue during the period (period ended 30 September 1996 - weighted average of 21,024,179). The weighted average number of shares which would have been in issue in the period if all share options granted under the Company's share option schemes had been exercised on the first day of the period, or the date granted if later is 56,792,989 (period ended 30 September 1996 - 22,664,516).