Admission to AIM

RNS Number:8325H
RII PLC
27 January 2005


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR IN TO
THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA

27 January 2005


                        RII Plc ("RII" or "the Company")

                  Proposed Acquisition of BioPartners Limited
           Placing of 400,000,000 Ordinary Shares at 0.75p per share
                           Approval of Rule 9 Waiver
           Admission of the enlarged Share Capital to trading on AIM
                 Change of name to Minster Pharmaceuticals plc
                                      and
                    Notice of Extraordinary General Meeting
     
1.   Introduction
     
     The Board of RII ("the Board" or "the Directors") announced today that the
     Company has entered into a conditional agreement to acquire the entire      
     issued share capital of BioPartners and to change its name to Minster 
     Pharmaceuticals plc ("the Proposals"). In addition, it has, subject to 
     approval at EGM, effected the Placing of 400,000,000 Ordinary Shares of 
     0.1p each in the capital of the Company at a price of 0.75p per share 
     (the "Placing") and is applying for the entire issued share capital of the 
     Company to be admitted to trading on AIM.

2.   Background to RII

     The Company was listed on AIM in September 1995 as Riceman Insurance 
     Investments plc. The principal activity was to be the establishment and 
     management of insurance companies in the Commonwealth of Independent 
     States. Associated offices were set up in Moscow, Tashkent, Baku, and 
     Tiblisi. The business developed until the Russian economic crisis in 1998, 
     after which it went into decline. On 13 March 2001 the Company sold its 
     entire operating business for a total consideration of US$300,000.

     Robert Stubbs was appointed Chairman and Chief Executive on 17 October 2003 
     with a view to seeking an acquisition of a suitable business which would 
     provide a basis to build shareholder value. The Company changed its name to 
     RII plc on 21 October 2003. In order to make the Company a more attractive 
     proposition to an incoming business, the Company raised #450,000 before 
     expenses on 6 April 2004. This was achieved by way of a placing of 
     27,536,231 Ordinary Shares at 0.345p per share and the issue of convertible 
     loan notes.

     The Company now has no business or employees.

     In late 2004 the Board identified BioPartners as a potential acquisition 
     for the Company. Negotiations were commenced and terms were agreed in 
     principle leading to this announcement.

     On 17 January 2005, the Company announced that it was in discussions 
     regarding a transaction that would constitute a reverse takeover, pursuant 
     to the AIM Rules, if concluded. Trading in the Ordinary Shares was then 
     suspended.
     
3.   BioPartners Limited ("Biopartners")

     History and background to BioPartners

     BioPartners was established in January 2001 as a drug development company. 
     Its aim was to acquire potentially valuable compounds from major 
     pharmaceutical companies, academia and the biotech industry and progress 
     them to proof of concept stage, with a view to then seek partnering for 
     further development or selling the rights to exploit the compounds. 
     BioPartners outsources development work, including clinical trials, and 
     exploits the development and project management skills of the founder and 
     CEO, Dr Paul Sharpe, and other specialist contributors. It operates from 
     leased premises near Saffron Walden, south of Cambridge.

     Its first assets were two licences granted by SmithKline Beecham plc ("SB") 
     (a member of the GlaxoSmithKline group ("GSK")) in 2001. These licences 
     gave BioPartners exclusive rights to develop and exploit the compounds 
     Sabcomeline and Tonabersat ("the Compounds") on a worldwide basis. 
     Sabcomeline is targeted primarily at schizophrenia. The rights granted to 
     BioPartners in relation to tonabersat are being addressed to pre-emptive or 
     prophylactic treatment of migraine. In the last few months a possible 
     additional use for sabcomeline in the treatment of insulin resistant 
     diabetes has been identified. Dr Sharpe had managed the development work on 
     the Compounds during his time at SB up to the end of 1998. The patents of 
     the Compounds are currently held by SB subject to the licences to 
     BioPartners.

     Since it was established in 2001, BioPartners has raised approximately 
     #600,000 to progress its business. The majority of its funds have been 
     directed to the further development of the Compounds. BioPartners has had 
     no revenues as yet from the exploitation of products derived from the 
     Compounds. It is anticipated that, at the appropriate time, it will 
     negotiate development and marketing agreements with partners in respect of 
     products derived from the Compounds.

     The directors of BioPartners and the Board now consider it appropriate that
     BioPartners attains a public quotation on a market for smaller growth      
     companies, such as AIM. Such a quotation is expected to raise the profile 
     and standing of BioPartners with potential licence partners and other 
     business groups and suppliers and to provide access to institutional and 
     other potential investors.

     Licences

     In addition to royalties on sales of products derived from either of the
     Compounds, the Company is obliged under the two licences to make 
     non-refundable and non-recoverable milestone payments to GSK as set out 
     below:

     For tonabersat:

     #5 million on the initiation of the first Phase III Clinical Trial; and

     #10 million on the first commercial sale of a product containing tonabersat 
     in a major market.

     For sabcomeline:

     #3 million on the initiation of the first Phase III Clinical Trial; and

     #10 million on the first major market filing for a product containing
     sabcomeline.

     These milestone payments are not expected to become due in the 12 months
     following Admission.

     The Compounds
     
(1)  Tonabersat
          
     *    Tonabersat is aimed at the prevention and treatment of migraine. In a
          Phase II program conducted by SB in the late 1990s in over 800 
          patients with established migraine headache, tonabersat showed, in the 
          opinion of Dr Sharpe and others, clear evidence of activity and was 
          well tolerated, with few side effects and no apparent significant 
          cardiovascular liability. Development work on the Compound was 
          discontinued at about the time of the merger of SB with Glaxo Wellcome 
          in 2001.
          
     *    GSK has continued to develop compounds of the same class for 
          indications including migraine.
          
     *    BioPartners believes that there is a potential role for tonabersat in
          the management of migraine. When BioPartners acquired the licence the 
          mode of action of tonabersat was not well established and indeed, it 
          is only relatively recently that the basic mechanism of action of this 
          class of benzopyran compounds has been discovered. Studies at GSK have 
          led to a clearer understanding of the precise mode of action of these 
          compounds, which are now described by GSK as 'gap junction blockers'. 
          The effects demonstrated for these benzopyrans on brain function, 
          including inhibition of cortical spreading depression, indicate 
          potential for the prevention of migraine as well as the treatment of 
          established headache.
          
     *    Currently, clinical trials of tonabersat in migraine have involved
          single dose acute treatment only. Establishment of tonabersat in 
          prophylactic therapy will involve chronic administration to patients 
          over a period of months.
     
(2)  Sabcomeline
                    
     *    Sabcomeline is a direct muscarinic cholinergic agonist with functional
          selectivity for M1 and M4 receptors. It had been progressed by SB 
          through development for Alzheimer's Disease, including clinical trials 
          in over 2,500 patients. As a result, there is a substantial dossier 
          showing the compound to be well tolerated with few significant side 
          effects when taken for up to a year. Although the compound was not 
          taken forward by SB for Alzheimer's Disease because it failed its 
          primary endpoints, an improvement in secondary behavioural endpoints           
          was observed in some of those receiving sabcomeline. Clinicians
          supported the view that this was indicative of a potential role for 
          sabcomeline in management of schizophrenic patients. Dr Sharpe 
          believes that the safety and tolerability profile of sabcomeline would 
          potentially be attractive for schizophrenic patients where long term 
          continuous therapy is often indicated, but is frequently not achieved 
          as a result of patient non-compliance, reflecting in part the side 
          effects of existing drugs.
           
     *    Since the grant of the licence in respect of sabcomeline, BioPartners
          has conducted an exploratory Phase II clinical trial which has shown 
          some evidence of activity, predominately against negative symptoms of 
          schizophrenia and associated cognitive decline. GSK conducted studies 
          in parallel with those carried out by BioPartners. Having reviewed the 
          data from studies, GSK concluded that it did not wish to elect to take 
          back the development and marketing as permitted under the terms of the 
          licence.

Current activities of BioPartners

BioPartners has undertaken limited studies on tonabersat. These have included a
study to evaluate the extent of binding of the compound to the HERG potassium
channel. This study was undertaken as a prelude to further clinical development.

The Directors of BioPartners are in discussions to formulate plans for
mechanistic studies with key opinion leaders and are also developing plans for
proof of concept studies with contract research organisations.

BioPartners is at present exploring options with other parties for the further
development of sabcomeline in the indications of schizophrenia and type 2
diabetes.

Future Business Strategy

BioPartners aims during 2005 to initiate a clinical programme to progress
tonabersat to the stage of proof of concept. At the same time, BioPartners may
initiate a preliminary programme on the possibility of using sabcomeline for
diabetes, probably through a development partner. BioPartners will also seek a
development partner for sabcomeline in the schizophrenia indication. Depending
on the availability of future funds, the Company may seek further assets to
which it can apply its development expertise, primarily but not exclusively, in
the field of CNS compounds.

BioPartners expects to remain for the foreseeable future a development company,
reliant on outsourcing its clinical trials and contracting for the services and
facilities needed to progress the development of its compounds. It will recruit
further senior management as required and retain the services of its present
scientific advisors, who include internationally acknowledged experts in the
field of migraine. BioPartners may recruit further advisors in the CNS and
diabetes fields if needed for its development programme.

Potential market
     
(1)  Tonabersat
          
     *    According to a report from pharmaceutical and health-care researchers
          Decision Resources Inc., the migraine drug market will double from 
          US$2.86 billion in 2002 to about US$5.6 billion in 2012 in the United 
          States, France, Germany, Italy, Spain, the United Kingdom and Japan. 
          The report also predicts that the triptan drug class will hold 75 per 
          cent. market share through 2012.
           
     *    In these seven markets, more than 74 million people suffered from
          migraine in 2002, according to this report, but up to 65 per cent. of 
          those afflicted in these markets remain undiagnosed. Diagnosis rates 
          are on the rise, however, due to advertising campaigns from the drug 
          makers and other awareness campaigns.
          
     *    In a trial conducted jointly by key international opinion leaders and
          GSK a majority of migraineurs were able to predict the onset of an 
          attack up to 48 hours or even earlier before the onset of the 
          headache. BioPartners is therefore considering positioning the 
          Compound for the prophylactic or pre-emptive treatment of migraine.           
          Recently, topiramate (sold as Topamax by Johnson & Johnson) has shown 
          a significant reduction in frequency of migraine, which could expand 
          the prophylactic market.
     
(2)  Sabcomeline
          
     *    Schizophrenia is a chronic condition. Age of onset is typically late
          teens or early 20s and, while some recover, in many it is a 
          progressive condition. The National Institute of Mental Health has 
          estimated that schizophrenia affects 1.5 million people in the U.S. 
          This remains a very difficult condition to treat and the older drugs 
          have significant side effect issues and, whilst the newer drugs are 
          better, there is still room for improvement. However, even with 
          sub-optimal treatment, the markets' drug spend continues to grow at 
          over 15 per cent. per annum.
     
4.   Patents

     The patents and other intellectual property to the Compounds are owned and
     currently maintained by GSK. Tonabersat is covered by three worldwide 
     patent filings, one provides generic protection for the Compound and its 
     use in treating migraine, the second covers a process of production and the 
     third provides specific protection for the current form of the Compound. 
     The patents of the third case expire in the US in 2015 but may be extended 
     for up to 5 years. No third party issues have been identified which would 
     inhibit commercialisation of the Compound.

     The original patents to sabcomeline owned by GSK expire in April 2010 in 
     Europe and October 2011 in the USA, but Biopartners has been advised that 
     it should be possible to extend the patent life for five years. Eli Lilly 
     has obtained grant of claims to the use of xanomeline and sabcomeline for 
     the treatment of schizophrenia and other psychotic conditions in the USA, 
     but could not commercialise sabcomeline without infringing the rights of 
     GSK/BioPartners.
     
5.   The Acquisition and the Placing

     Acquisition Agreement

     The consideration for the Acquisition is a maximum of 1,613 million new 
     Ordinary Shares.

     Financing the new business

     The Company has raised from investors #2,695,000 (net of the cash expenses 
     of these Proposals) via the Placing, which is conditional upon, inter alia, 
     RII shareholder approval. The Placing will provide additional working 
     capital for the Company for the next 12 months.

     With the funds available to the Company, it is proposed to commence a Phase 
     II clinical trial with tonabersat. This will be outsourced and project 
     managed by the Company. At the same time, the Company proposes to seek a 
     development partner in order to set up some initial studies on the possible 
     use of sabcomeline in diabetes. The balance of the funding will be used to 
     repay a bank overdraft of #260,000 and other creditors amounting in total 
     to about #391,000 and for additional working capital.

     Although the Directors are of the opinion that the Company, following the
     completion of the Placing, will have sufficient working capital at 
     Admission for its present requirements, that is for at least the 12 months 
     following Admission, the Company may need to raise further funds after this 
     period in order to implement fully its business plan and, in due course, to 
     satisfy the milestone payments under the licences. Milestone payments may 
     be funded wholly or in part by partnering arrangements or by other external 
     funding methods including the issue of  further Ordinary Shares.

     Change of name

     To reflect the new direction of the Company, it is proposed, subject to RII
     shareholder approval, that the Company changes its name to Minster
     Pharmaceuticals plc.
     
6.   Admission and Dealings

     Application has been made to the London Stock Exchange for all the Ordinary
     Shares in issue following approval of the Proposals by the RII Shareholders 
     and the waiver by the Panel on Takeovers and Mergers of any requirement for 
     a general offer to be made under Rule 9 of the City Code on Takeover and 
     Mergers to be admitted to trading on AIM. It is expected that Admission of 
     the Ordinary Shares will become effective and dealings will commence in 
     such shares on 25 February 2005. CREST accounts of placees, whose shares 
     are held via that system, will be credited on Admission and certificates 
     in respect of other placees will be sent to them within 21 days thereof.
     
7.   Directors, Proposed Directors and Scientific Advisers

     The Board of Directors of the Company is currently Robert Stubbs and Clive
     McGuire.

     At Admission Robert Stubbs will step down as Chairman of the Company, but 
     will remain as a Non-Executive Director. Dr Paul Sharpe will become the 
     Chairman and Chief Executive Officer of the Company, Robert Aubrey the 
     Chief Operating Officer and Peter Blower an Executive Director. Clive 
     McGuire will resign from the board.

     The biographies of the Proposed Directors are set out below:

     Dr Paul Sharpe, Chairman and Chief Executive Officer

     Dr Sharpe MD(Lond) FFPM (UK) (aged 57 years) has over 30 years' experience 
     in pharma organisations and the Medicines Control Agency, now known as the
     Medicines and Healthcare Products Regulatory Agency. From 1991 to 1998 he 
     was with SmithKline Beecham plc as Vice President, Neuroscience Project 
     Management. In this capacity he had major roles in the development of 
     Requip and Paxil/ Seroxat. He developed an R&D portfolio management process 
     at SB, which was featured in the Harvard Business Review, March-April 1998. 
     After leaving SB in 1998 he joined Oxis International Inc, a NASDAQ quoted 
     company, as CEO, leaving in 2001, before establishing BioPartners in 2001. 
     He is also Visiting Professor in Pharmaceutical Medicine at Imperial 
     College, London.

     Robert Aubrey, Chief Operating Officer

     Mr Aubrey MBA BSc (Eng) (aged 66 years) is a graduate of the NY Stern 
     Business School with extensive senior management experience in 
     international businesses, including Staveley Industries plc and 
     Westinghouse Electric Corp Inc. He has also taken general management roles 
     in venture capital start ups and is experienced in the commercialisation of 
     university technology spin outs.

     Peter Blower, Executive Director

     Dr Blower PhD DSc CBiol FIBiol (aged 56 years) has been involved in medical
     research and development for over 30 years, his career having begun in 1969 
     when he joined Beecham plc's Research Division as a research biologist. 
     Subsequently Dr Blower moved through various roles within Beecham plc and 
     post-merger with SmithKline Beecham plc where in 1991 he was appointed as 
     Director, Gastrointestinal Product Support. This was followed by promotions 
     to Director, Product Support Programmes and then to Director, New 
     Neuroscience Products. In March 2000, Dr Blower left SmithKline Beecham and 
     has since then been providing independent advice on technical development, 
     market analysis and strategic marketing of therapeutic agents and      
     biotechnology devices to multinational companies, smaller start-up 
     companies and Governmental organisations such as the US Defense Advanced 
     Research Projects Agency.

     It is intended that as soon as practical Dr Paul Sharpe will step down as
     Chairman and an independent non executive chairman will be appointed in his
     place. Following Admission it is also intended to appoint a finance 
     director to the board.

     Scientific Advisers

     BioPartners has a number of scientific advisers including those mentioned 
     below. The scientific advisers provide expert advice regarding developments 
     in understanding of migraine and similar phenomena or conditions of 
     interest. They also advise BioPartners on the design and implementation of 
     development programmes for BioPartners' assets.

     Professor Stephen Silberstein

     Prof Silberstein is Director of the Headache Centre at Thomas Jefferson
     University Medical Centre, Philadelphia. He is a past President of the 
     American Academy of Neurology and President elect of the American Headache 
     Society.

     Professor Richard Lipton

     Prof Lipton is a consultant neurologist at the Albert Einstein College of
     Medicine, New York and a past President of the American Headache Society.
     
8.   Extraordinary General Meeting and Document Availability

     A circular to shareholders, which comprises the Admission Document and 
     notice to RII Shareholders convening an Extraordinary General meeting to be 
     held at the offices of Beachcroft Wansbroughs, 100 Fetter Lane, London EC4A 
     1BN on 21 February 2005, is being posted today.

     Copies of the Admission Document are available from the offices of the 
     Company at 56 Queen Anne Street, London  W1G 8LA.


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