Interim Results: PAION AG reports half-year results 2008 and provides strategy update

    Interim Results: PAION AG reports half-year results 2008 and provides
strategy update
             



Aachen (Germany), 11 August 2008 - The biopharmaceutical company
PAION AG (ISIN DE000A0B65S3; Frankfurt Stock Exchange, Prime
Standard: PA8; London AIM: PAI) today announced its financial results
according to International Financial Reporting Standards (IFRS) for
the first six months ended 30 June 2008 and provides the results of
the pipeline review that was conducted following the acquisition of
UK-based CeNeS Pharmaceuticals. PAION will focus on selective
development activities in order to maximize value creation with a
balanced risk-reward profile. Based on its excellent partnering
expertise and the extended pipeline with now six compounds in the
clinical development stage PAION aims to build critical mass while
preserving cash.

Highlights of the first half-year 2008:

Partnering:
* The expanded licencing agreement with H. Lundbeck A/S regarding
  Desmoteplase came in force end of January. PAION received
  EUR 8 million non-refundable upfront payment.

Acquisitions:
* Acquisition of CeNeS Pharmaceuticals (UK) completed in June 2008.
* Purchase of the worldwide rights to Flovagatran, an anticoagulant,
  from Trigen Limited (UK) for EUR 0.3 million, completed in April
  2008.

Clinical milestones:
* CNS 7056, a new short-acting sedative/anesthetic entered clinical
  Phase I study.
* Solulin, an anticoagulant, achieved proof of concept for mode of
  action in Phase I clinical study.

Dr Wolfgang Söhngen, PAION's CEO added: "Following the successful
acquisition of CeNeS and based on our proven expertise in drug
development and partnering, we are committed to moving PAION forward
in order to maximize the value of our strengthened and risk-balanced
portfolio. In particular, we consider CNS 7056 as an important
near-term value driver. Our strong cash position provides us with the
operational flexibility to achieve significant milestones and is
sufficient to finance the current program until the end of 2010
without additional income from partnering ."

Consolidated financial results for the first half-year 2008:

Revenues in the first half-year 2008 amounted to EUR 2,214k (first
half-year 2007: EUR 2,285k). They primarily include the refund of
development expenses by Lundbeck (EUR 1,476k) and the systematic
release of deferred income in connection with the out-licensing
agreement concluded with Lundbeck (EUR 727k). As part of the
agreement, Lundbeck reimbursed substantial previously incurred
production development costs and made a non-refundable upfront
payment of EUR 8,000k, which is recognised as a deferred income item
and is being released over the anticipated development period for
Desmoteplase.

According to the new license agreement, Lundbeck will bear all
development expenses for Desmoteplase. As a result, PAION's research
and development expenses in the first half-year 2008 dropped
substantially to EUR 4,394k (first half-year 2007: EUR 9,632k).
Additionally, in the first half-year 2008 significantly lower
expenses were incurred for the development of Enecadin, the
development of which was terminated in April 2008 for strategic
reasons.

General and administrative expenses increased significantly in the
first half-year and amounted to EUR 4,754k (first half-year 2007: EUR
2,452k). This includes EUR 1,628k relating to the CeNeS group and the
business combination. In addition, the general and administrative
expenses contain one-off expenses of EUR 800k related to the
technical settlement of the exchange of the shares and the admission
of all PAION shares on AIM.

Compared to the same period in 2007, the net loss for the first
half-year 2008 decreased by EUR 3,896k to EUR 7,036k, mainly due to
significantly lower research and development expenses in the
reporting period (EUR 4,394k; first half-year 2007: EUR 9,632k).The
net result for the period includes the loss of the CeNeS group of EUR
2,533k since the acquisition date 20 June 2008, mainly resulting from
expenses in connection with the acquisition, severance payments and
advisers' fees.

Cash and cash equivalents at the end of the first half-year 2008
amounted to EUR 45,732k (first half-year 2007: EUR 42,901k). PAION`s
cash position was significantly strengthened by the non-refundable
upfront payment of EUR 8,000k paid by Lundbeck at the beginning of
2008 under the new license agreement for Desmoteplase.

The balance sheet as at 30 June 2008 contains for the first time the
assets and liabilities acquired as a results of the business
combination of the CeNeS group. Compared to 31 December 2007, the
balance sheet total increased by EUR 22,471k to EUR 68,013k which was
primarily due to the capitalisation of the development projects
(EUR 18,664k) within the first-time consolidation of the CeNeS group
and to the payment of EUR 8,000k by Lundbeck.

Since the beginning of fiscal year 2008, the equity rose from EUR
35,664k to EUR 39,145k. Due to the increased balance sheet total, the
equity ratio decreased to 57.6% as of 30 June 2008 (31 December 2007:
78.3%).

In addition to the primary listing on the Frankfurt Stock Exchange,
PAION shares represented by depositary interests have been traded on
the Alternative Investment Market (AIM) of the London Stock Exchange
since 25 June 2008.

As of 30 June 2008, PAION employed 39 employees in total, of which 10
employees are from the CeNeS group.

Strategy update:

At the end of June 2008, PAION successfully completed the acquisition
of UK-based CeNeS Pharmaceuticals, a group focusing on the
development of drugs for the treatment of selected central nervous
system disorders. The acquisition of CeNeS was achieved by an
exchange of shares. For this purpose, PAION has issued 7.8 million
new shares in total and thus increased the number of shares in issue
to 24.6 million. The transaction has broadened and strengthened
PAION's development pipeline by addition of three clinical compounds
plus an early-stage development program and enables PAION to expand
its development activities beyond stroke.

In April 2008, PAION further expanded its pipeline in the field of
thrombotic diseases by purchasing the rights to the substance
Flovagatran. At the same time, PAION decided to terminate the
development of the drug candidate Enecadin due to the high failure
rate seen with similar compounds.

As part of the integration process, PAION's management has conducted
a comprehensive review of the combined portfolio. PAION's development
strategy is to initiate selective development activities in order to
maximise value creation while preserving cash.

* CNS 7056: A first Phase I study for this short-acting
  sedative/anesthetic was started in July 2008. In this double-blind,
  placebo- and comparator-controlled dose-escalating study, up to 91
  healthy volunteers will be recruited. In addition to safety and
  pharmacokinetic evaluation, the sedative effects of CNS 7056 will
  be measured. As such, the study is anticipated to provide proof of
  concept. Data from the study will be available in H1/2009. In
  parallel, preparations for a Phase II study in patients undergoing
  endoscopy will be initiated in order to continue the developmental
  momentum.

* Solulin: Solulin is an anticoagulant with commercial potential in
  several cardiovascular indications as well as other fields such as
  inflammation and radiation injury (a potential side effect of
  radiotherapy in oncology patients). PAION started partnering
  activities based on the successful proof of concept data achieved
  in the recently completed single- and multiple-dose Phase I study.

* M6G: PAION has started a more in-depth analysis of all available
  clinical data under the assumption that the positioning and
  partnering potential of M6G for postoperative pain treatment can be
  optimised.. In addition, the available pharmacokinetic data will be
  used to model alternative dosing regimens. The results of these
  analyses are expected to be available in Q4/2008 and will form the
  basis for the next steps of the clinical development. The
  partnering efforts, which were started by CeNeS, will be continued
  after review of the data.

* CNS 5161: PAION will await the results of the ongoing open-label
  Phase IIa study for cancer pain before deciding on the next
  development steps. PAION expects these results to be available in
  Q4/2008.

* Flovagatran: Following a review of the available data, PAION's
  management believes that the previous positioning in hemodialysis
  is suboptimal. Therefore, further preclinical studies will be
  conducted in order to target the commercially most attractive
  market segments in the acute cardiovascular area such as coronary
  artery bypass graft (CABG) operations. The next steps regarding the
  future development of the acute on/off anticoagulation therapy will
  be decided when data are available in H1/2009.

* Desmoteplase: PAION continues to support Lundbeck in its
  preparation of the next Phase III study in acute ischemic stroke
  which is expected to start in H2/2008. According to the revised
  agreement which came into effect earlier in 2008, Lundbeck will pay
  all costs of this program. PAION expects to receive up to EUR 63
  million milestone payments and double-digit royalties on sales from
  Lundbeck.

In partnering negotiations PAION aims to provide additional funding
in order to accelerate the development of its assets. Where
appropriate, PAION will seek to retain co-development rights.
Furthermore PAION will remain open for additional opportunities to
broaden its pipeline given the relatively low valuations in the
sector and the current emphasis on sector consolidation.

Outlook:

The acquisition of CeNeS Pharmaceuticals plc (now PAION Holdings UK
Limited) marks the expansion of PAION's pipeline beyond its former
focus on thrombotic diseases towards drugs for the treatment of
selected central nervous system (CNS) disorders in the hospital
setting. In Lundbeck, PAION has a financially strong and committed
partner for the future development and marketing of Desmoteplase
which continues to be an important economic asset for PAION.

At the end of the first half-year 2008 PAION had EUR 46 million in
cash and cash equivalents which provides PAION with the necessary
flexibility to achieve value-generating steps for its extended
pipeline while securing a sufficient cash-reach until the end of
2010. This does not account for future upfront and milestone
payments, which would expand the cash reach but may also be used for
financing additional development activities.


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About PAION
PAION is a biopharmaceutical company headquartered in Aachen,
Germany. Since the acquisition of CeNeS Pharmaceuticals, which was
completed in June 2008, the company has a second site in Cambridge,
UK. The company is specializing in developing and commercializing
innovative drugs for the hospital-based treatment of central nervous
system (CNS) disorders and thrombotic/cardiovascular diseases,
indications for which there is a substantial unmet medical need.
PAION intends to further expand its portfolio of drugs by exploiting
its core expertise in identifying high-potential compounds, licensing
or otherwise acquiring them and advancing them through the clinical
development and regulatory approval process. Where appropriate,
particularly during the late stages of the clinical development and
approval process and the commercialization phase, PAION seeks to
collaborate with experienced partners.

The complete report for the  second quarter and first half-year  2008
will be available on 11 August 2008 at www.paion.de/reports.

Conference Call and Webcast
On Monday 11 August 2008 at 2 p.m. CEST (1 p.m. BST, 8 a.m. EDT), the
Management Board of PAION AG will host a public conference call (in
English) to present the financial results of the first half-year 2008
and provide further details on the company's latest developments as
well as a strategy update following the successful acquisition and
integration of CeNeS Pharmaceuticals. Participants may dial +49 69
2222 2220 (from Germany), [phone] (from UK) or +1 718 354
1362 (from the US); other countries please choose from German/UK/US
numbers. The participant passcode is 7945994. To allow for smooth
processing we suggest that you dial in 10 minutes before the
beginning of the call. The conference call will be recorded. A replay
will be available starting approx. 2 hours after the call until end
of day 15 August 2008. The conference call will be supplemented by a
webcast presentation which can be accessed during the call under the
following link:
http://www.thomson-webcast.net/de/dispatching/?paion_080811misc
The dial-in details for the conference call and the replay as well as
the webcast link will also be published on our website
http://www.paion.de/investors

Contact
Dr. Peer Nils Schröder, Corporate Communications & Investor Relations
PAION AG
Martinstrasse 10-12,
52062 Aachen - Germany
Phone [phone]
E-mail [e-mail]
www.paion.de

Landsbanki Securities (UK) Limited
Nomad and broker
Shaun Dobson/Claes Spång
Phone [phone]

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