Rights Issue

RNS Number:7143U
M.L. Laboratories PLC
28 January 2004


Not for release, publication or distribution in or into the United States of
America, Canada, the Republic of Ireland, the Republic of South Africa,
Australia, or Japan or their respective territories.


28 January 2004                                          For Immediate Release

                               ML LABORATORIES PLC

PROPOSED 1 FOR 4 RIGHTS ISSUE OF 39,542,140 NEW ORDINARY SHARES AT 22 PENCE PER
SHARE AND ISSUE FOR CASH OF 31,000,000 NEW ORDINARY SHARES AT 22 PENCE PER SHARE
                             TO RAISE #14.3 MILLION

Highlights

   *Proposed 1 for 4 Rights Issue of 39,542,140 New Ordinary Shares and
    Issue for Cash of 31,000,000 New Ordinary Shares, both at 22 pence per share
    to raise approximately #14.3 million (net of expenses)


   *The net proceeds to be used to provide additional working capital in
    order to assure the continuance of the Group's plans for the development and
    commercialisation of its portfolio


   *Rights Issue underwritten by Panmure Gordon and certain institutions
    have irrevocably committed to subscribe for the Issue for Cash shares


   *Preliminary results for the year ended 30 September 2003 announced
    separately today

A prospectus published by the Company and containing details of the Rights Issue
and the Issue for Cash (the 'Prospectus') is expected to be posted to
Shareholders today and Provisional Allotment Letters are expected to be sent to
Qualifying non-Crest Shareholders following the Extraordinary General Meeting to
be held on 20 February 2004.

For further information contact:

ML Laboratories PLC                                   (28/01/04) 020 7067 0700
Stuart Sim, Executive Chairman                      (Thereafter) 01925 844 700
Peter Shennan, Chief Operating Officer

Panmure Gordon, a division of Lazard & Co., Limited              020 7187 2000
Hugh Morgan
Mark Lander

Weber Shandwick Square Mile                                      020 7067 0700
Kevin Smith
Cass Helstrip

This summary should be read in conjunction with the full text of the attached
press release.

Not for release, publication or distribution in or into the United States of
America, Canada, the Republic of Ireland, the Republic of South Africa,
Australia, or Japan or their respective territories.


                                                                28 January 2004

                              ML LABORATORIES PLC

PROPOSED 1 FOR 4 RIGHTS ISSUE OF 39,542,140 NEW ORDINARY SHARES AT 22 PENCE PER
SHARE AND ISSUE FOR CASH OF 31,000,000 NEW ORDINARY SHARES AT 22 PENCE PER SHARE

Introduction

ML Laboratories plc ("ML" or the "Company") has today announced that it proposes
to raise approximately #14.3 million, net of expenses, by way of a rights issue
to Qualifying Shareholders of up to 39,542,140 new Ordinary Shares, on the basis
of 1 new Ordinary Share for every 4 Ordinary Shares held at the Record Date, at
a price of 22 pence per share, and an Issue for Cash of 31,000,000 new Ordinary
Shares, at a price of 22 pence per Share. The Rights Issue has been fully
underwritten by Panmure Gordon. Panmure Gordon has also procured subscribers for
all of the new Ordinary Shares to be issued pursuant to the Issue for Cash. The
Issue for Cash is not underwritten. The New Issue Shares to be issued under the
Issues, when fully paid, will rank pari passu with the Existing Ordinary Shares.

In view of the requirement to seek authority from shareholders, inter alia, to
allot the New Issue Shares, there will be an Extraordinary General Meeting on 20
February 2004.

In addition, ML Laboratories today announced its preliminary audited results,
which include within note 1 to the accounts an explanation of the uncertainty
regarding the going concern position of the Company.

Background

ML Laboratories was floated as a public company in 1987 and joined the Official
List in 1996. ML's first product, a patented renal dialysis solution based on
the active ingredient Icodextrin, was successfully developed through to European
regulatory approval in 1994 and licensed to Baxter Healthcare Limited ("Baxter")
in 1996. That first product is now commercially available under Baxter's trade
name, Extraneal, in the major pharmaceutical markets of Europe, North America,
and Japan, and in certain other countries. During the 1990's, ML expanded its
portfolio of products under development through a combination of progressing
further applications of its Icodextrin technology (including the Adept product,
which is being sold in Europe by its licensee, Shire Pharmaceuticals PLC),
in-licensing product candidates from third parties and funding external research
initiatives.

In 1990 ML acquired a controlling interest in Innovata Biomed Limited, which it
increased to an 81 per cent. interest in 1997. Innovata Biomed is a dedicated
respiratory company, developing technology for delivering compounds to the lung.
Its patented Clickhaler inhaler achieved European regulatory approval for the
delivery of two asthma compounds in the 1990's, which are currently being sold
by Celltech plc ("Celltech"). Innovata Biomed also commenced the development of
further asthma compounds for use in the Clickhaler.

In 2000 ML acquired Cobra whose activities included gene therapy based research
and development (including a clinical programme for cancer treatment and
patented enabling technologies derived from its research) and DNA contract
manufacturing.

Following a strategic review of the Group's business during 2001, the Board
concluded it should focus the Group's activities on the development and
commercialisation of its portfolio of pharmaceutical products utilising its core
skills of product selection, the design and project management of clinical
development programmes, regulatory affairs and product commercialisation. The
Group has successfully demonstrated these core skills by establishing a track
record of taking products through the development and regulatory approval
processes and into the market.

Recent Developments

Following the strategic review, during the past two years ML has substantially
restructured and refocused its business.

The principal elements in this restructuring of the business are as follows:

   *the divestment in June 2002 of Cobra's DNA contract manufacturing
    business through the flotation on AIM of Cobra Bio-Manufacturing and the
    integration within ML Pharmaceuticals of the research and development
    activities of Cobra, including its clinical programme and enabling
    technologies;


   *the downsizing in February 2003 of ML's early stage research capability
    and the focusing of its research activities on products and technologies
    with the potential to produce income in the relatively near term;


   *the disposal of ML's Icodextrin manufacturing business to Baxter in
    April 2003; and


   *the implementation over that period of a programme of withdrawal from
    the Company's non-pharmaceutical activities.

As a consequence, there has been a substantial reduction in the Group's cost
base, with the number of employees within the Group reducing from 248 as at 30
September 2001 to 126 currently.

During 2002, in addition to the operational changes, the Board was restructured.
In October 2002, Kevin Leech resigned as Executive Chairman and left the
Company, with the role of Executive Chairman being filled by Stuart Sim, who was
previously the Company's Chief Executive. Peter Shennan, the Company's Finance
Director, also took on the role of Chief Operating Officer. Professor Donald
Davies, previously a non-executive director of the Company, replaced Dr. Nick
Boyes as Group Director of Research and Development and became an Executive
Director of ML Laboratories. Dr. Boyes was appointed Director, North America.
Dr. Colin Brown, although continuing to fulfill his role as Medical Director,
stepped down from the Board. In June 2002, Peter Fothergill had stepped down
from the Board to enable him to take up the position of Executive Chairman of
Cobra Bio-Manufacturing, while continuing to be employed by ML Laboratories on a
part-time basis in an advisory capacity. It remains the Company's intention to
appoint a Chief Executive Officer when appropriate.

In May 2003, the Company sold 5 million out of the holding of 6 million CBM
shares retained at the time of the Cobra Bio-Manufacturing flotation and, in
December 2003, sold the remaining 1 million CBM shares. The flotation of CBM
realised a total of #8.25 million of cash for the Group before expenses,
including the repayment of inter-company balances and the proceeds of sales of
shares.

The shareholder base has also changed following the placing with institutional
investors by Panmure Gordon, ML's brokers, in October 2003 of a holding of 54.4
million Ordinary Shares, being approximately 34.4 per cent. of the issued
ordinary share capital, formerly controlled by Kevin Leech.

As a result of the restructuring, the Group now focuses on the development and
commercialisation of its portfolio of pharmaceutical products, which it conducts
through two distinct operating divisions, ML Pharmaceuticals and Innovata
Biomed. Both divisions have made significant progress through the period of the
restructuring as set out below:

ML Pharmaceuticals

Baxter, the worldwide licensee of ML's peritoneal dialysis solution, which
Baxter sells under the trade mark Extraneal, obtained marketing approval for,
and subsequently launched, the product in both the USA and Japan during 2003.
The Directors believe that sales of Extraneal in the major US and Japanese
markets could generate significant royalty income. The interim data from the US
pivotal Phase III clinical trial of Adept, ML's adhesion reduction therapy, was
reviewed by an independent data monitoring committee which found that there were
no concerns relating to the safety of the product and recommended that the study
be continued through to completion. A product development agreement was entered
into with Ineos Silicas Limited for a phosphate binding product for the
treatment of kidney failure patients, which subsequently successfully completed
a Phase I trial and is currently entering Phase II. The treatment stage of the
Phase II trial of ML's novel treatment of prostate cancer using gene therapy
technology was commenced and further research licences of one of ML's enabling
technologies were granted to third parties.

Innovata Biomed

In July 2002, Innovata Biomed agreed to terminate the licensing arrangements it
had entered into with Celltech in 1996 and 1999. As a result of this, Celltech
agreed to continue to distribute two Clickhaler products, whilst Innovata Biomed
received substantial undisclosed payments and regained the European rights to
the use of the Clickhaler for the delivery of the asthma compounds budesonide
and formoterol. These rights were re-licensed in September 2002 to a major
global pharmaceutical group under an agreement which provided for the payment to
Innovata Biomed of up to #10 million in access fees and milestone receipts and
with double-digit royalties on ensuing sales. Milestone receipts under this
agreement have already been triggered by the subsequent regulatory filings of
the formoterol and budesonide Clickhalers. In March 2003 Innovata Biomed granted
a licence to Otsuka Pharmaceutical Co. Ltd ("Otsuka") of Japan for the delivery
of Otsuka's asthma treatment, Meptin, in the Clickhaler, under which Innovata
Biomed will receive milestone payments and supply Clickhaler devices to Otsuka.

In December 2003 Innovata Biomed entered into an agreement with Pliva dd
("Pliva") to develop a novel asthma medication based on Pliva's New Chemical
Entity ("NCE") steroid in Clickhaler. This is the first agreement to deliver an
NCE in Clickhaler and is significant in that it sets Innovata Biomed on its way
to achieve its principal objective of becoming a leading independent provider of
dry powder inhalation technologies for the delivery of NCE respiratory
compounds.

Further details of the status and progress of all of the Company's products are
set out in the Chairman's Statement and in the Operational Review which form
part of today's Preliminary Announcement of the Group's audited results for the
year ended 30 September 2003.

Background to and reasons for the Rights Issue and the Issue for Cash

In addition to its ongoing trading income, including substantial milestone
receipts, the Group has, over the past two years, generated significant cash
receipts from the proceeds of divestment of non-core assets. The royalty and
revenue sharing transactions entered into with Paul Capital Royalty Acquisition
Fund in July 2001 and February 2002 also contributed substantially to the
Group's cash resources. However, throughout that two year period the Board
consistently drew to the attention of Shareholders the fact that the adequacy of
the Company's working capital remained dependent on both future milestone
receipts and disposal proceeds and would remain under review. The acknowledged
inherent difficulty in predicting accurately the timing and amount of such
receipts has led to continuing uncertainty as to the adequacy of the Group's
working capital position.

The Board anticipate the receipt of substantial milestones during 2004 and the
first half of 2005. These include receipts from the further commercialisation of
Adept where the Company anticipates appointing licensees for the US and Japanese
markets in the event of a successful outcome to the US pivotal trial. In
addition, the Board anticipates further substantial milestone receipts from both
existing and anticipated Innovata Biomed licence agreements. These include the
existing licence agreement for budesonide and formoterol in Clickhaler in Europe
and those with Otsuka and Pliva, as well as an anticipated licence agreement for
the combination of two drugs in the C200 device.

However, based on the Board's current projections, anticipated milestone
receipts will not provide sufficient cash resources to progress the Board's
planned programmes for the development and commercialisation of the Company's
product portfolio and the timing and amount of such anticipated milestone
receipts remains uncertain. Therefore, in the absence of the Issues, the
Directors believe that ML will need to curtail its development plans, sell
assets and seek alternative funding arrangements.

The Directors consider that it is in the interests of ML Laboratories and its
Shareholders to execute the development plan as currently envisaged and that ML
Laboratories should therefore raise additional working capital by way of the
Issues. Furthermore, the Directors consider that a strengthened financial
position will assist in negotiations with potential partners for both the
out-licensing of the Group's existing products and the in-licensing of
additional products.

The Board has concluded that the best means to address the funding requirements
arising from the opportunities open to the Group, the obligations it must meet
and the need to strengthen its balance sheet is by way of a Rights Issue and an
Issue for Cash.

Structuring the fundraising by way of a Rights Issue and Issue for Cash is
intended to strengthen the Company's shareholder base by allowing, subject to
Shareholder approval, a limited number of institutional investors to subscribe
for new Ordinary Shares on a conditional firm basis through the Issue for Cash,
whilst at the same time providing existing Shareholders with the opportunity to
participate in the fundraising through the Rights Issue pro rata to their
existing shareholdings, at the same discount to the current share price.
Accordingly, the Board has, subject to Shareholder approval, agreed with six
institutional investors to issue 31,000,000 new Ordinary Shares for cash, in
conjunction with the Rights Issue.

The Board does not believe that the Company could obtain a sufficient level of
irrevocable undertakings from existing Shareholders not to take up their
entitlements under the Rights Issue, such that those institutional investors
wishing to make a firm investment in the Company could be assured of the
opportunity to subscribe. The Directors have taken the above factors into
account and believe that the Rights Issue and the Issue for Cash constitute the
most suitable structure to enable the fundraising to occur.

Use of Proceeds

The net proceeds of the Issues will be used to provide additional working
capital for the Group in order to assure the continuance of ML's plans for the
development and commercialisation of its portfolio.

Specifically, the funds will be applied to take forward both ML Pharmaceuticals'
planned clinical development programmes, including Adept, the treatment of
hyperphosphataemia and CTL 102, and Innovata Biomed's product programmes,
including the development of the C200 device and the pharmaceutical development
of compounds for its devices. Further details of these programmes are set out in
the Operational Review forming part of the Preliminary Results announcement for
the year ended 30 September 2003, the full text of which was announced today, 28
January 2004.

In the event that milestones are received in line with current projections, the
working capital generated therefrom, in addition to the proceeds of the Issues,
will put the Group in a position to consider further developing certain products
through Phase III, adopting alternative commercialisation strategies and/or
seeking to expand the pharmaceutical portfolio by in-licensing additional
appropriate products.

Current trading and prospects

ML today announced its preliminary audited results for the year ended 30
September 2003.
The key highlights of the results are as follows: since the year end, the Group
is now benefitting from a much simplified group structure and the resulting
significantly reduced cost base. With the downsizing of ML's early stage
research activities, the Group's research is focused on the development of
products and technologies with the potential to produce income in the relatively
near term.

On 21 January 2004, the Company announced that it had reviewed its current
working capital requirements and, as a result of the delays in receipt of
milestone income, had concluded that it could no longer have a reasonable
expectation that anticipated milestone income in the short term would be
sufficient to fund its existing development plans and that it had therefore
concluded that it should explore ways of raising additional funds.

ML is a business already generating income from products it has successfully
developed and licensed to other pharmaceutical companies. Following the
restructuring of the Group, ML has focused its core skills in clinical
development, regulatory affairs and product commercialisation on the development
of its portfolio of pharmaceutical products in both early and late stages of
development.

ML's potential for growth is supported by its established track record of
sourcing a development pipeline through in-house initiatives, in-licensing and
joint development agreements, all of which it will continue actively to pursue.
In view of the above the Company believes that the business is capable of
achieving profitability in the near term and delivering value to shareholders
over the long term.

The Directors continue to believe that the Group's products and technologies
have an acceptable risk profile and accordingly have a reasonable probability of
being successful in the clinic and with regulators and licensees in generating
income for the Group. Therefore, the Directors view the future prospects of the
Group with confidence.

Expected Timetable

                                                                          2004
Record Date for the Rights Issue              Close of business on 17 February

Extraordinary General Meeting                        10.00 a.m. on 20 February
Provisional Allotment Letters despatched 
(to Qualifying non-CREST shareholders only)                        20 February

Admission and dealings in Rights Issue Shares, 
nil paid, and Issue for Cash Shares commence on the London 
Stock Exchange                                                     23 February

Latest time and date for splitting Provisional 
Allotment Letters, fully paid or nil paid                3.00 p.m. on 10 March

Latest time and date for acceptance and 
payment in full                                          9.30 a.m. on 12 March

Dealings in Rights Issue Shares, fully paid, commence on the          
London Stock Exchange                                                 15 March

Principal terms and conditions of the Rights Issue

The Company proposes, by way of the Rights Issue, to raise approximately #8.7
million before expenses by offering up to 39,542,140 new Ordinary Shares
(representing 25 per cent. of the existing issued share capital of the Company)
at 22 pence per share, payable in full on acceptance. The latest time for
acceptance and payment in full for the Rights Issue is expected to be no later
than 9.30 a.m. on 12 March 2004. The Rights Issue will be on the basis of:

                1 new Ordinary Share for every 4 Ordinary Shares

held by Qualifying Shareholders on the Record Date, and so in proportion to any
other number of Ordinary Shares then held and otherwise on the terms and
conditions set out in this document and, in the case of Qualifying non-CREST
Shareholders only, the Provisional Allotment Letter. The Rights Issue has,
subject as set out below, been fully underwritten by Panmure Gordon.

The Issue Price of 22 pence per new Ordinary Share represents a 13.7 per cent.
discount to the closing middle market price of 25.5 pence per Ordinary Share on
27 January 2004, the last business day before the announcement of the Rights
Issue.

The Rights Issue Shares will, when issued and fully paid, rank pari passu in all
respects with the existing issued Ordinary Shares including the right to all
future dividends and other distributions declared, made or paid.

The Rights Issue is conditional upon:

(i) the passing of the Resolutions at the Extraordinary General Meeting without
amendment (or such amendments as Panmure Gordon may agree, such agreement not to
be unreasonably withheld or delayed);

(ii) the Underwriting Agreement having become unconditional in all respects
(save for the condition relating to Admission) and not having been terminated in
accordance with its terms; and

(iii) Admission becoming effective not later than 8.00 a.m. on 23 February 2004
(or such later time and date, no later than 3.00 p.m. on 31 March 2004, as the
Company and Panmure Gordon may agree).

The Rights Issue is conditional upon the Issue for Cash proceeding. If the
conditions in the Underwriting Agreement are not fulfilled, the Rights Issue
will not proceed.

Application has been made to the UK Listing Authority for the Rights Issue
Shares to be admitted to the Official List and to the London Stock Exchange for
the Rights Issue Shares, nil paid, to be admitted to trading on its market for
listed securities. It is expected that Admission will become effective and
dealings in the Nil Paid Rights will commence, nil paid, on 23 February 2004.



Principal terms and conditions of the Issue for Cash

In addition, the Directors will allot 31,000,000 Issue for Cash Shares at 22
pence per share to the institutions named below who have irrevocably committed
to subscribe for Issue for Cash Shares in the amounts set out below, subject to
the Underwriting Agreement becoming unconditional in all respects and not having
been terminated in accordance with its terms before 23 February 2004 (or such
later date as Panmure Gordon and the Company may agree but in any event being no
later than 31 March 2004). The Issue for Cash is conditional upon the Rights
Issue proceeding.

On the basis of the above, the following institutional investors will be
allotted the following Issue for Cash Shares:

Name of institutional investors              Number of Issue      Gross proceeds
                                             for Cash Shares                 #
                                             to be allotted

Hermes
Investment
Management                                       3,400,000             748,000
BP Investment
Management                                       5,700,000           1,254,000
Savoy Asset
Management                                       2,700,000             594,000
Morley Fund
Management                                       6,100,000           1,342,000
Deutsche Asset
Management                                       6,100,000           1,342,000
Framlington
Investment
Management                                       7,000,000           1,540,000

Panmure Gordon has procured the institutions listed above to subscribe for the
Issue for Cash Shares.

The Issue for Cash Shares will, when fully paid, rank pari passu in all respects
with all other Ordinary Shares in issue, including the right to receive all
dividends and other distributions declared, made or paid on or after or by
reference to a record date on or after the date of their issue and will be
issued free of all liens, charges and encumbrances. It is expected that
Admission will become effective and dealings in the Issue for Cash Shares will
commence on 23 February 2004. Application has been made for the Issue for Cash
Shares to be admitted to CREST and it is expected that the Issue for Cash Shares
will be enabled for settlement in, and admitted to, CREST on 23 February 2004 or
as soon as is practicable after Admission.

Directors' intentions

The Directors currently beneficially own, in aggregate, 1,717,518 Ordinary
Shares representing approximately 1.1 per cent. of the issued ordinary share
capital of the Company and intend to take up (or procure the taking up of) their
entitlements to Rights Issue Shares in full.

Extraordinary General Meeting

The Company does not have sufficient authorised and unissued share capital in
order to implement the Issues. Accordingly, the Company has convened an
extraordinary general meeting of the Company to be held at 10.00 a.m. on 20
February 2004 at The Fairclough Suite, Crowne Plaza Midland Hotel, Peter Street,
Manchester M60 2DS. Resolutions will be proposed at the Extraordinary General
Meeting to give certain authorities to the Board in relation to the Company's
share capital.

Working Capital and the Importance of the Proposals

The Company is of the opinion that, taking into account the net proceeds of the
Issues, the working capital available to the Group is sufficient for its present
requirements, that is for at least the next 12 months from the date of this
document.

In the event the Issues do not proceed, the Group will have insufficient working
capital for the next 12 months and this insufficiency would arise at the end of
April 2004. However, the Directors would immediately implement a programme of
remedial measures which would reduce expenditure and generate working capital.
These would include discontinuation of certain clinical trials, cessation of
device development programmes, closure of research activities and the sale of
assets, including intellectual property rights in the Group's products and
further sales of income streams arising therefrom.

The Directors consider that all of these remedial measures are achievable. At
the same time, the Directors would explore the availability of alternative
sources of funding.

Recommendation

ML's Directors, who have received financial advice from Panmure Gordon in
relation to the Issues, consider that the Issues and the Resolutions are in the
best interests of the Company and its Shareholders as a whole. In providing
advice to the Directors, Panmure Gordon has relied on the Directors' commercial
assessment of the reasons for and the benefits of the Issues.

Accordingly, the Directors unanimously recommend that Shareholders vote in
favour of Resolutions to be proposed at the Extraordinary General Meeting as
they intend to do so in respect of their own beneficial holdings of 1,717,518
Ordinary Shares, representing approximately 1.1 per cent. of the current issued
ordinary share capital of the Company.

A Prospectus published by the Company containing details of the Rights Issue and
the Issue for Cash is expected to be posted to Shareholders today and
Provisional Allotment Letters are expected to be sent to Qualifying non-Crest
Shareholders following the EGM to be held on 20 February 2004.

                                    - Ends -

Panmure Gordon, a division of Lazard & Co., Limited ("Panmure Gordon"), which is
authorised in the United Kingdom to engage in investment activity by the
Financial Services Authority Limited, is acting exclusively for ML Laboratories
plc and no-one else in connection with the Rights Issue, the Issue for Cash and
the matters described in this announcement and will not be responsible to anyone
other than ML Laboratories plc for providing the protections afforded to
customers of Panmure Gordon, nor for providing advice in relation to the Rights
Issue, the Issue for Cash or any matters referred to in this announcement.

This announcement does not constitute, or form part of, an offer or any 
solicitation of an offer for securities, and any purchase of, or application 
for, shares in the Rights Issue or the Issue for Cash should only be made on 
the basis of the information contained in the Prospectus and any supplement 
thereto issued in connection with the Rights Issue or the Issue for Cash.

This announcement does not constitute an offer of securities for sale in the
United States of America, Canada, the Republic of Ireland, the Republic of South
Africa, Australia or Japan or their respective territories. The securities
referred to in this announcement may not be offered or sold in the United States
of America or to persons resident in the United States of America absent an
applicable exemption from registration under the US Securities Act of 1933, as
amended.

The securities referred to in this announcement have not been and will not be
registered under the United States Securities Act 1933, as amended, nor under
the applicable securities laws of any state of the United States of America, any
province or territory of Canada, the Republic of Ireland, the Republic of South
Africa, Australia or Japan or their respective territories. No prospectus has
been or will be lodged with, or registered by, the Australian Securities and
Investments Commission, and, subject to certain limited exceptions, the
securities may not be offered, sold, taken up, renounced or delivered, directly
or indirectly, in or into United States of America, Canada, the Republic of
Ireland, the Republic of South Africa, Australia, or Japan or any country,
territory or possession where to do so may contravene local securities laws or
regulations.

DEFINITIONS

The following principal definitions apply throughout this press release, unless
the context requires otherwise:
"Admission"        admission of the Rights Issue Shares, nil paid, and of the
                   Issue for Cash Shares, fully paid, to the Official List of
                   the UK Listing Authority and to trading on London Stock
                   Exchange's market for listed securities becoming effective in
                   accordance with the Listing Rules and the London Stock
                   Exchange's Admission and Disclosure Standards.
"Board" or         the board of directors of the Company
"Directors"
"CREST"            the relevant system (as defined in the Regulations) in
                   respect of which CRESTCo is the Operator (as defined in the
                   Regulations) in accordance with which listed securities may
                   be held and transferred in uncertificated form
"Directors"        the current directors of ML Laboratories
"Extraordinary     the extraordinary general meeting of ML Laboratories convened
General Meeting    for 10.00 a.m. on 20 February 2004 (or any adjournment of it)

"Group"            ML Laboratories and its subsidiary undertakings
"Issues for        the proposed issue for cash of the Issue for Cash Shares
Cash"              described in this press release and in the Prospectus
"Issue for Cash    31,000,000 new 1p Ordinary Shares to be issued by the Company
Shares"            pursuant to the Issue for Cash
"Issue Price"      22 pence per New Issue Share
"Issues"           the Rights Issue and the Issue for Cash
"Lazard"           Lazard & Co., Limited
"Listing Rules"    the Listing Rules of the UK Listing Authority
"London Stock      London Stock Exchange
Exchange"
"ML" or "ML        ML Laboratories plc
Laboratories" or
"the Company"
"New Issue         the Rights Issue Shares and the Issue for Cash Shares
Shares"
"Nil Paid          Rights Issue Shares in nil paid form provisionally allotted
Rights"            to Qualifying Shareholders pursuant to the Rights Issue
"Official List"    the Official List of the UK Listing Authority
"Panmure Gordon"   Panmure Gordon, a division of Lazard & Co., Limited
"Prospectus"       the prospectus to be published by the Company containing
                   details regarding the Company, the Rights Issue, the Issue
                   for Cash and the Extraordinary General Meeting
"Provisional       the renounceable provisional allotment letter to be issued to
Allotment          Qualifying non-CREST Shareholders by the Company in respect
Letter"            of the Nil Paid Rights pursuant to the Rights Issue
"Qualifying        Shareholders (other than certain overseas Shareholders) on
Shareholders"      the register of members of the Company on the Record Date
"Qualifying CREST  Qualifying Shareholders who, in respect of Current Ordinary
Shareholders"      Shares in certificated form, are on the register of members
                   of the Company at the close of business on the Record Date
"Qualifying        Shareholders (other than certain overseas Shareholders) on
non-CREST          the register of members of the Company at the close of
Shareholders       business on the Record Date
"Record Date"      close of business on 17 February 2004
"Resolutions"      the resolutions set out in the notice of Extraordinary
                   General Meeting included in the Prospectus reference to a
                   numbered "Resolution" is to the resolution so numbered in
                   that notice
"Rights Issue"     the proposed offer by way of rights of the Rights Issue
                   Shares to Qualifying Shareholders at the Rights Issue Price
                   on the terms and subject to the conditions set out in the
                   Prospectus and, in the case of Qualifying non-CREST
                   Shareholders only, in the Provisional Allotment Letter
"Shareholders"     holders of Current Ordinary Shares
UK Listing         the Financial Services Authority acting in its capacity as
Authority          the competent authority under the Finance Services and
                   Markets Act 2000
"Underwriting      the conditional agreement dated 28 January 2004 entered into
Agreement"         by the Company and Panmure Gordon relating to the Rights
                   Issue under which, inter alia, Panmure Gordon agrees to use
                   its reasonable endeavours to procure subscribers, or failing
                   which itself to subscribe, for any Rights Issue Shares (other
                   than Committed Shares) not taken up by Qualifying
                   Shareholders under the Rights Issue.





                      This information is provided by RNS
            The company news service from the London Stock Exchange

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