Final Results

    RNS Number : 7939K
  Phynova Group PLC
  29 December 2008
   

    29 December 2008

    Phynova Group plc
    ("Phynova" or the "Company")

    PHYNOVA ANNOUNCES FINAL RESULTS FOR YEAR ENDED 30 SEPTEMBER 2008

    Phynova (AIM: PYN), the developer of prescription pharmaceuticals derived from plants used in Chinese medicines, today announces its
results for the year ended 30 September 2008.

    These results are prepared in accordance with International Reporting Standards ("IFRS") and key highlights are as follows:

    Financial highlights
    *     Operating loss in line with expectations at £2.4 million (2007: £3.0 million).
    *     Cash as of 31 March 2008 was £0.4 million (2007: £1.4 million).
    *     Research and operational costs remain low for a drug development company, demonstrating prudent financial management.
    *     As previously announced, Company will require additional funding from February 2009 and has commenced discussions with key
shareholders and potential investors.

    Research / pipeline highlights
    *     PYN17 - Financial constraints have prevented us from commencing the Phase IIb study planned to begin in 2008. However we are in
talks with two potential licensees for the product.

    *     PYN 6 - Phynova's anti-MRSA drug candidate has continued to show excellent efficacy in further pre-clinical studies carried out in
the past year and is expected to become Phynova's next clinical candidate. PYN6 is an excellent candidate for rapid development and because
of this, commercial discussions with interested parties are well underway.

    *     PYN22 - for the treatment of non-alcoholic fatty liver disease (NAFLD). With the recent withdrawal of the marketing authorisation
for one of the leading obesity drugs that was being trialled for use in NAFLD, there is renewed interest from pharmaceutical companies to
find novel treatments for this potential block-buster market. We are in commercial discussions with various specialty pharmaceutical
companies about co-developing and/or out-licensing PYN22. 

    *     PYN9 - Our JV partner, Botanic Century hopes it will be able to begin the registration trial for PYN9 in the second quarter of
2009 and to have Phase II data by the end of 2009. If this timeline is achieved, Phynova will be in a strong position to license out PYN9 in
2010.

    John Pool, Executive Chairman of Phynova said:

    "I believe that the Group is at an exciting stage in its development, with the potential for generating revenues in the coming year,
with discussions on some new out-licensing and collaboration deals well underway. Botanically derived drugs are now recognised by the FDA as
having significant therapeutic value. China continues to expand, albeit more slowly in the current economic climate, and is becoming of
greater significance in our field as a major global player and market. We are now well placed to take advantage of these opportunities."
    - ENDS-


    For further information, please contact: 

 Phynova Group plc
 John Pool (Executive Chairman)
 Tony Mills (CEO Phynova Limited)
 Robert Miller (CEO Phynova China Limited)

                                                             Tel: [phone]
 John East & Partners Limited
 John East/Bidhi Bhoma                                      Tel: [phone]

 Capital MS&L
 Mary Clark/Anna Mitchell                                  Tel: [phone]


    Notes to editors:

    About Phynova

    Phynova (AIM: PYN) is a UK company developing new prescription pharmaceuticals derived from plants used in Chinese medicines. The
Company is focused on viral and bacterial diseases, metabolic diseases and cancer. Phynova's lead product for hepatitis C has now completed
a Phase I/II trial in the US. Two further products, for fatty liver disease and post-operative ileus, are targeted for entry to the clinic
and there are a further four products in preclinical development.
    For further information please visit www.phynova.com.

    CHAIRMAN'S STATEMENT

    Despite the challenging environment, Phynova has made real progress in the development of its business in the past year. We have grown
the Groups' presence in China with important new commercial collaborations, made significant strides in the advancement of our pipeline of
drug candidates through the development process, and are now generating strong commercial interest in our pipeline.

    As previously reported, we have re-organised our Board and appointed two non-executive directors with strong pharmaceuticals
backgrounds. We have also taken the opportunity to streamline our management and focus on the two core elements of our business: the
development of our interests in China to generate a pipeline of novel new therapeutic candidates and the development and commercialisation
of the pipeline in the West. 

    Development Programme 

    The further development and commercialisation of Phynova's pipeline of drug candidates is key to the success of the Group. During the
last several months Phynova has been in discussions with a number of potential licensing and development partners. In November the Company
announced a commercial agreement with Norgine, a leading specialty pharmaceutical company. Under the terms of the collaboration, Norgine
will assess certain of Phynova's drug candidates in proprietary assays in order to measure their effectiveness in the treatment of liver
disease. We are very pleased to be working with Norgine and we believe that this collaboration is the first of several we anticipate
announcing in the near future.

    Regarding the pipeline, I can report the following: 

    PYN17 - Financial constraints have prevented us from commencing the Phase IIb study planned to begin in 2008. The IND granted for the
trial is still open and if sufficient funding becomes available or a partner is found for PYN17 we would carry on with the trial. We are
also in talks with a regional pharmaceutical company to license PYN17 in an area of the world that has a very high rate of hepatitis C
infections. 

    PYN 6 - Phynova's anti-MRSA drug candidate has continued to show excellent efficacy in further pre-clinical studies carried out in the
past year. Working with collaborators at Queen Mary, University of London, Phynova demonstrated that MRSA cultured in the presence of PYN6
does not become resistant to PYN6. These studies have also demonstrated that PYN6 appears to have a dual action on MRSA, inhibiting the
growth of the bacterium, as well as a strong bactericidal action. As a consequence of these results, PYN6 will become Phynova's next
clinical candidate and first human studies are targeted to start within 12-15 months. In June 2007, a presentation on PYN6 was given at the
American Society of Microbiology's Annual General Meeting. PYN6 is an excellent candidate for rapid development and because of this,
commercial discussions with interested parties are well underway.

    PYN22 - is a candidate for the treatment of non-alcoholic fatty liver disease (NAFLD), considered to be the most common liver disorder
in the Western world. NAFLD is closely associated with the metabolic syndrome and obesity. There is no evidenced-based treatment for NAFLD,
and most pharmacological agents are primarily approved for other aspects of the metabolic syndrome, i.e. anti-obesity drugs and diabetic
drugs. With the recent withdrawal of the marketing authorisation for one of the leading obesity drugs (rimonabant) that was being trialled
for use in NAFLD, there is renewed interest from pharmaceutical companies to find novel treatments for this potential block-buster market.
We are in commercial discussions with various specialty pharmaceutical companies about co-developing and/or out-licensing PYN22. Again,
financial constraints have delayed the clinical development of PYN22. However, further funding or co-development/out-licensing deals could
see PYN22 in the clinic within 12 months of financing.

    PYN9 - as has been well documented in the press over the last year, China's drug regulatory agency, the SFDA, is going through a major
re-structuring that has caused extensive delays in the normal course of its business. Unfortunately our JV partner, Botanic Century has been
one of many Chinese drug development companies who have suffered as a result. Very recently there have been signs that the SFDA is beginning
to function again and Botanic Century have had communication with the agency that suggests they will be able to begin the registration trial
for PYN9 in the second quarter of 2009 and hopefully have Phase II data by the end of 2009. If this timeline is achieved, Phynova will be in
a strong position to license out PYN9 in 2010.

    PYN18 - is an antiviral candidate that has shown good activity against two flaviviruses; hepatitis C virus (HCV) and dengue virus.
During the past year, the preclinical in vitro screening was furthered with confirmatory studies being carried out at the world-renowned
virology labs of Prof Eric de Clercq at the Katholieke Universiteit Leuven in Belgium. Laboratory studies have confirmed that PYN18 has a
potentially wide therapeutic index with very low toxicity in cell culture.  Studies investigating the activity of PYN18 against dengue
confirmed the data from initial screenings in Thailand and showed that it had significant antiviral activity against the dengue virus (MIC