Cyprotex PLC Investor Conference Call & CEO Review

Cyprotex Confidential

Cyprotex PLCInvestor Conference Call

& CEO Review

11th November 2008


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Cyprotex PLCLatest News – Increased Confidence!

Cyprotex PLC’s most recent RNS was released on 6th November 2008, as follows:

Cyprotex PLC(“Cyprotex“ or “the Company“)

Cyprotex PLC (LSE: CRX), the drug discovery services and information group, announces a trading update on its performance-to-date in calendar year to 2008.

Progress for the ten months to the end of October has been encouraging. The group produced a net profit in both the second and third quarters of 2008, and the Directors expect the same positive trend to continue into the fourth quarter. As a result the Directors expect 2008 full year net profits (including significant adjustments for non-recurring costs associated with the recent board restructuring) to be in excess of the current market expectations.

The Company announces that it will hold an investor call on 11th November 2008 at 16.30 (GMT). The call can be accessed by dialing into conference call telephone number: 0800-358-8171 and following the instructions to input pass code number: 329475 followed by #.

A presentation to accompany and support the call has been updated and will be available on the Company's website: www.cyprotex.com on the morning of the conference call.

For further information:


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Cyprotex PLCIdeally Positioned for Growth

• High-tech, high margin services for the pharmaceutical industry

• Over 200 international customers incl. half the top ten global giants

• Key beneficiary of industry-wide slowdown/trend toward outsourcing

• Profitable, strong balance sheet and cash generative for past two quarters

• Enjoying strong organic growth and high operational gearing

• Strengthened Management and Board


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Cyprotex PLCSpecialist Outsourcing for the Pharmaceutical Industry

• Unique industrial-scale laboratory facility - offering “virtual human” screening in a test tube

• Our customers can select drug candidates with better safety and efficacy profiles, with less likelihood of clinical failure

• Pharmaceutical sector to increase outsourcing and expand available market by 20% pa going forward

• Now targeting complementary/high potential acquisitions• An Ethical investment


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Management ChangesStrengthening the Board

• New Chief Executive Officer – Dr Anthony Baxter appointed June 2008

• New Non-Executive Chairman – Mr Steve Harris appointed Sept. 2008

• Chief Financial Officer – Russell Gibbs

• Nikolas Sofronis – Non-Executive Director

• David Evans – Non-Executive Director

• New Non-Executive Directors with sector experience being identified


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Steve Harris – Non-Executive Chairman Background

An experienced Non-Executive director with a range of

private and public companies in the life science sector

Current Positions :• Non-Executive Chairman of AIM-listed Proteome Sciences PLC• Non-Executive Chairman of LSE-listed Sinclair Pharma PLC• Non-Executive Chairman of Myotec Therapeutics Limited • Advanced Medical Solutions PLC – Non-Executive Director• Phynova plc – Non-Executive Director


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Dr Anthony Baxter – Chief Executive OfficerBackground

Over 25 years experience at Board level, in management and

research within the pharmaceutical, biotech, chemistry service and

instrumentation industries, principally in the areas of drug discovery,

medicinal chemistry, combinatorial chemistry and genomics positions :

Past Executive and Academic Positions:

• CEO deltaDOT Ltd 2005-2008• Founder and CEO Argenta Discovery Ltd 2000 -2005• CSO Oxford Asymmetry Intl. PLC 1995 -2000• Research Manager Ciba Central Research 1990 -1995• Team Leader Glaxo Group Research 1983 -1990• PhD Synthetic Chemistry Univ. Salford


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Service OfferingCEO Review as of June 2008

Positives Issues• Diverse range of services• Good customer retention• Excellent customer

satisfaction for services offered

• Focus on delivery of high quality services

• Excellent gross margins (~80%)… incremental sales quickly convert to cash

• Offering is a little ‘tired’• Lack of resources has

prevented the launch of new products & services

Action Points• Introduce new offerings

(e.g. new transporters, better Metabolite ID); after consultation with clients


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Service OfferingCEO Review

• New QTRAP 5500 Mass Spec. (£250K) ordered and will be operational in Jan 2009 – this will enable much more sensitive analyses to be performed

• New CYP2C8 assay developed and marketed• New metabolite ID / synthesis offering developed with

Onyx Scientific• New Mass Spec about to be ordered which will improve

throughput 2x on the lab triple quads

Results after 4 months


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Customers & SalesCEO Review

Positives Issues• Large customer base

(184 MSA’s) provides ‘core’ revenue of c.£3.3m per year and growing

• Recent signing of large strategic deal with mid sized European pharma(started May 2008) proceeding well –expected revenue >£1.5m per year

• New client is now a material % of revenues

• Lack of revenue visibility month to month

• About 35% of business is ‘overflow’ work from ‘big’pharma / biotech

• Low penetration of European market

but also…


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Customers & Sales (continued)CEO Review

Issues Action Points• No formal account

management in place• Lack of commercial focus

to bring in new customers

• Too much reliance on existing customers

• New sales team and no Commercial head

• Lack of scientist input in sales process

• Exceed expectations for 2008 revenues (budget for 2008 is £4.7M)

• Hire a Chief Commercial Officer to lead sales team (already identified)

• Greater focus on business development of new customers

but also…


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Action Points Action Points• Improve account

management process• Reduce reliance on

‘overflow’ work• Secure 2 more large

‘strategic’ deals• Secure more

‘collaborative’ deals• Reduce reliance on

‘overflow’ work

• Significant investment / improvement in marketing (stands, literature, training)

• Target European pharma/ biotech / Agrichemmore actively

• Training of scientists to support business development activity


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Results after 4 months• RNS last week announced year end turnover and profits

to be increased over previous management expectations• Search for CCO ongoing (1 offered)• Improved activity of Bus Dev group has resulting in 10

new customers since July, 36 on going negotiations with potential new customers and existing customers placing larger orders

• Month by month revenue visibility improved to 45%• Marketing improved – new stands, brochures, e-mail

flyers. Website currently under review• Study Managers (5) now trained and encouraged to

support Bus Dev activities


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StaffCEO Review

Positives Issues• Highly committed and

talented workforce• Key staff have been with

CRX for over 6 years• Excellent retention rate• Relative ease of

recruitment of new staff• Macclesfield is in a

pharma (AZ) hub within the larger Manchester area

• Career development for exceptional staff

• Attracting specialist staff to Macclesfield

Action Points• Career development

plans will beimplemented for all staff


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StaffCEO Review


• Mentoring system for all new staff has commenced• Training manual for all staff involved in sales started• Company meetings for all staff held quarterly


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Investor CommunicationsCEO Review

Positives Issues• Large shareholders are close

to the company and supportive of new impetus

• Limited news flow to market

• Lack of broker research• Website gossip

Action Points• Quarterly update dial-in

calls for all investors• Increased institutional

visits to increase demand


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Investor CommunicationsCEO Review

• Quarterly meetings with shareholders organised• Research note written in July by our NOMAD• News flash from NOMAD published today• Personal visits to company by institutional and private

investors welcomed and updates given to all investors by Management team



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Cyprotex PLCCompany Overview

• Cyprotex provides outsourced ADMET (Absorption, Distribution, Metabolism, Excretion, & Toxicity) screening of drug candidates to the global pharmaceutical & biotech industry

• ADMET screening - in vitro tests used to predict how a drug will be behave in vivo (i.e. in living bodies) - All drug candidates are tested at some point in their development.

• Highly automated process driven by proprietary software and state-of-the-art laboratory facilities

• Cyprotex offers high-throughput (Cloe Screen), bespoke (Cloe Select) and predictive (Cloe Predict) services

• Business model provides very high operational gearing


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Cyprotex PLCMarket Review

• In excess of 85% of ADMET tests are still performed internally by pharmaceutical & biotech companies themselves – yet it is not a core competence

• But the external market for outsourced ADMET presently addressed by Cyprotex is estimated to be worth over $600M is now growing >20%p.a.

• Growth drivers include:• Pharmaceutical industry now embracing greater outsourcing in all areas • Industry moving to perform ADMET earlier in drug discovery to reduce attrition in later

clinical trials• First signs of mid-tier Pharma switching from overflow outsourcing of ADMET to strategic

partnerships to reduce internal overhead• Agrichem now screening chemicals to ensure they comply with regulatory body rules


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Cyprotex PLCProduct Offering

• ADMET has historically been performed manually, labour intensively, – this is expensive, time consuming & often low quality

• Cyprotex’s unique offering remains unchallenged on basis of:– Rapid turnaround– Exceptionally robust data– Highest industry capacity– Low cost without compromising quality

• This is achieved by high strategic investment in:– Custom built, proprietary automation and operating system– Significantly refined internal processes– State-of-the-art laboratory facilities– Unique data handling software


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Cyprotex PLCSample of Global Customers

http://www.solvay.com/

http://www.protez.com/index.php

http://www.schering.de/scripts/de/index.php

http://www.7tm.com/content.aspx

http://www.altanapharma.com/-snm-0006124996-1155155637-0000000039-0000008833-1156495940-enm-home.htm

http://www.ambitbio.com/

http://www.basilea.com/template_loader.php?tplpage_id=1

http://www.chromatherapeutics.com/index.htm

http://www.cyclacel.com/home.htm

http://www.envivopharma.com/

http://www.f2g.com/Default.htm

http://www.gilead.com/wt/home

http://www.ingenium-ag.com/index.html

http://www.sepracor.com/index.cfm

http://sirtrispharma.com/

http://www.manchester.ac.uk/

http://www.vastox.com/index.html

http://www.trimeris.com/default.aspx

http://www.gsk.com/index.htm

http://www.astrazeneca.com/ncm.aspx


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Cyprotex PLCRationale for Future Acquisition Strategy

• Cyprotex becomes preferred supplier for multiple services and ‘one-stop shopping’

• Diversification of services decreases risk and increases sales opportunities

• Major cross-selling opportunities through Cyprotex’s large installed customer base

• Rationalisation benefits to accrue through Group head-office, administrative function

• Management has core shareholder support to effect ambitious expansion plans


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Financial PerformanceSix Months to 30 June 2008

• Performance ahead of Management expectations• Revenues for the period rose by 33% to £2.25m (1H 2007: £1.69m)• Operating profit declared for the first time at £81k (1H: 2007 loss £428k)• Net Profit declared for first time at £56k (1H: 2007 loss £418k)• Fully diluted earnings per share at 0.04p (1H 2007: loss 0.31p)• Cash ‘in hand’ unchanged from comparable period at £276k (1H: 2007

£267k)


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Fund Raising Background and Reasons for the Placing

• Higher growth expectations• Improved shareholder confidence following appointment of Dr Anthony

Baxter• Build upon commercial sales infrastructure, laboratory efficiency and

capacity• Provide resources to respond to customer demands and opportunities• Provide confidence for customers to make longer-term outsourcing

commitments• Placing and Open Offer successfully completed on 26th August 2008,

raising £1m (gross). Cash-in-hand presently over £1.4m.


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Cyprotex PLCBusiness Evolution

• Increase market focus, appoint Chief Commercial Officer• Deepen relationships within global customer base• Focus on scientific input and value-added, while continuing to set

industry standards in high throughput ADMET screening• Broaden offering organically and through acquisition • Reduce historical dependence on ‘fee-for-service’ or ‘overflow’

activity• Heighten dependence on longer-term strategic and collaborative

agreements • Become an ‘integral part of the customers drug development

programme’


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Cyprotex15 Beech LaneMacclesfieldCheshireSK10 2DRUK

[email protected]

Appendices


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Summary Profit and Loss

Six months ended 30 June 2008 (£’000)

-

EBDASBP 190 (224) (152)EBITDA 202 (287) (232) (389)

(171)

Operating profit/(loss) 81 (428) (496)

Taxation credit - 34 64

Profit/(Loss) before taxation 56 (452) (543)

Turnover 2,246 1,685 3,626

2008 HY 2007 HY 2007 FY

Profit/(Loss) per ordinary share 0.04p (0.31)p (0.35)p

Loss for the year 56 (418) (479)

Net interest (payable)/ receivable (25) (24) (47)

2006 FY*

3,504

Staff costs (1,222) (1,149) (2,191) (2,072)

Gross profit 1,894 1,437 3,004 2971

Share based payment charge (13) (52) (64)

Depreciation (121) (141) (264) (352)

Other costs (457) (523) (981) (1,151)

(741)(20)

(761)101

(660)(0.48)p*

(137)

*restated on the adoption of IFRS from 1 January 2007


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Summary Cash Flow

Six months ended 30 June 2008 (£’000)

Net cash flow before financing 44 (130) (28)

Opening cash 301 455 455

Net cash flow (25) 188 (154)

2008 HY 2007 HY 2007 FY

Closing cash 276 267 301

Financing (net) (69) (58) (126)

2006 FY*

Interest (paid)/received (net) (25) (24) (47) (20)

Taxation received 0 0** 95

Capital expenditure (net) (6) (17) (33) (78)

(76)

690

455

(Outflow)/inflow from operations 75 (89) (43) (208)

147

(159)

(235)

*restated on the adoption of IFRS from 1 January 2007

**R&D tax credit of £95,000 received on 6 August 2007


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Summary Balance Sheet

As at 30 June 2008 (£’000)

Net assets

Cash

Debt

Net assets before net (debt)/cash

Current liabilities excluding debt

Current assets excluding cash

Fixed assets

2008 HY 2007 HY 2007 FY 2006 FY

1,250 1,472 1,365 1,422

1,018 844 843 944

(477) (398) (442) (387)

(730) (867) (799) (752)

276 267 301 455

1,791 1,918 1,766 1,979

1,337 1,318 1,268 1,682


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Fund Raising Details

• Placing and Open Offer successfully completed on 26th August 2008, raising £1m (gross).

• Subscribed by existing and new investors on a non-pre-emptive basis.• Placing of 40 million new ordinary shares of 0.1p each at 2.5p per

share• New Ordinary Shares comprise 22.39% of the enlarged entire issued

share capital• New Ordinary Shares admitted to trading on 1st September• Total cash-in hand at end August 2008 £1.2m

Cyprotex PLC Investor Conference Call & CEO Review

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