Ixico Regulatory News (IXI)

23 September 2013

Proposed acquisition of IXICO Limited

Proposed Issue of up to 8,479,753 New Ordinary Shares in the Company

Proposed change of name to IXICO plc

Admission of the Enlarged Issued Share Capital to trading on AIM

Renewal of Shareholder Authorities

and

Notice of General Meeting

Phytopharm plc (PYM: London Stock Exchange) ("Phytopharm", or the "Company") today announces that terms have been agreed for the conditional acquisition (the "Acquisition") of IXICO Limited ("IXICO"), a medical technology and diagnostics company. The aggregate consideration for the Acquisition is to be satisfied by the initial issue of 8,014,403 New Ordinary Shares on Admission and the proposed issue of 465,350 New Ordinary Shares as a result of the outstanding share options under the IXICO unapproved share option share scheme. Based on the Phytopharm closing share price of 20 May 2013 immediately prior to its suspension, the aggregate consideration is valued at approximately £5.6 million.

Following completion, it is expected that Phytopharm shareholders will own approximately 45 per cent and that IXICO shareholders will own approximately 55 per cent of the Fully Diluted Enlarged Issued Share Capital. In view of the size of IXICO in relation to the Company, the Acquisition is classified as a reverse takeover under the AIM Rules and is therefore conditional, inter alia, on the approval of Shareholders in a general meeting. A copy of the admission document along with the notice of General Meeting is being sent out to shareholders shortly and will be available on the Company's website www.phytopharm.com.

The Directors of Phytopharm consider that IXICO will provide a platform from which to create value for Shareholders and will provide a different risk profile to the Company's business model. Upon completion of the Acquisition, Phytopharm plc will change its name to IXICO plc with the new ticker "IXI".

· IXICO was founded in 2004 with a mission to translate image acquisition, management and analysis technology and know-how, which the founders had developed together, into commercially successful products targeting the expanding area of imaging to inform decision-making during drug development.

· IXICO has established itself as a leading provider of medical imaging analysis services in the clinical trials market. Its revenue has come largely from contracts with seven of the top 15 pharmaceutical companies, with good growth over the last three years and has what the Board believes to be increasing recognition as a centre of excellence and specialised know-how in brain health and specifically dementia.

· IXICO's products to support dementia diagnosis use digital data and electronic reports and, as such, the Board believe such products can constitute a valuable component within the emerging and increasingly important field of 'digital healthcare'. IXICO now has the opportunity to launch its current and future products, proven in the clinical trials market, into the expanding market for dementia diagnosis.

· The Directors' and IXICO management's vision for IXICO is to build on its credibility internationally to position itself as a 'Brain Health Company' with the ambition to bring innovative technologies to those involved in researching and treating serious brain diseases enabling them to help patients quicker. IXICO will continue to explore opportunities to widen its product and service offerings through product licensing, collaborations and corporate activity, potentially including mergers and acquisitions.

· Following Completion, Dr. Andy Richards and Professor Derek Hill, currently non-executive Chairman and CEO of IXICO respectively, will assume the same roles in the enlarged group, while Tim Sharpington, current CEO of Phytopharm, will remain on the board as a non-executive director. John Bradshaw and Maina Bhaman will join as non-executive directors while Charles Spicer will join as an executive director.

It is expected that the suspension of the Company's existing ordinary shares on AIM will be lifted at 7.30. a.m. on 24 September 2013.

A General Meeting of the Company will be held to approve the acquisition and change of the Company's name, amongst other proposed resolutions. This will be held at the offices of FTI Consulting LLP, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB on the 14th October 2013 at 11.00 a.m.

Tim Sharpington, CEO of Phytopharm, commented, "Following the completion of the strategic review process, the Directors consider the IXICO opportunity to be in the best interests of the Company and Shareholders. Since its foundation in 2004, IXICO has established itself as a leading provider of medical imaging analysis services with a focus in dementia. It has developed and successfully launched innovative technologies in the clinical trials and experimental medicines markets, with an impressive record of increasing revenue generation in these areas. It now has the potential to translate these technologies, validated in clinical trials, into medical device products in the wider healthcare diagnostic market with the potential to enable rapid, accurate and cost-effective dementia diagnosis."

Professor Derek Hill, CEO of IXICO Limited, commented, "We believe IXICO can continue to build on its significant successes to date to create shareholder value growth in the medium and longer term. We will continue to generate revenues in the clinical trials market while playing a leading role internationally in the implementation of IXICO's products and expertise in the emerging dementia diagnostics market. This will be supported by the enlarged group's strengthened balance sheet and additional grant finance, where available. We will continue to explore opportunities to widen our product and service offerings through product licensing, collaborations and corporate activity, potentially including mergers and acquisitions."

Notes to Editors

Shareholders and investors should be aware that if the Resolutions to be proposed at the General Meeting to be held on 14 October 2013 are not passed, the Acquisition will not proceed and Phytopharm will then be required to pursue other corporate acquisitions in line with its investing policy.

1. INTRODUCTION

Phytopharm is pleased to announce that terms have been agreed for the conditional acquisition of IXICO, a medical technology and diagnostics company. The aggregate consideration for the Acquisition is some £5.6 million to be satisfied by the initial issue of 8,014,403 New Ordinary Shares on Admission and the proposed issue of 465,350 New Ordinary Shares as a result of the outstanding share options under the IXICO unapproved share option share scheme.

IXICO was founded in 2004 with a mission to translate image acquisition, management and analysis technology and know-how, which the founders had developed together, into commercial products targeting the expanding area of imaging to inform decision-making during drug development. This has resulted in commercially successful products being launched in the clinical trials and experimental medicine markets and being readied for launch into the wider clinical diagnostic market.

As previously announced, for the purposes of the AIM Rules for Companies, the Company is currently deemed to be an investment company and its investment policy is to pursue suitable corporate acquisitions offering the potential to deliver a favourable return to Shareholders over the medium term, primarily in the form of capital gain.

The Company's investing policy is to invest in businesses that typically have attributed to them some or all of the following criteria and characteristics:

· Healthcare sector;

· Revenue generating or near revenue generation;

· Embedded or protected IP;

· UK based;

· Capable of significant growth potential; and

· A credible management team.

The Directors consider that IXICO will provide a platform from which to create value for Shareholders and will provide a different risk profile to Phytopharm's previous business model.

In view of the size of IXICO in relation to Phytopharm, the Acquisition is classified as a reverse takeover under the AIM Rules for Companies and is therefore conditional, inter alia, on the approval of Shareholders at a general meeting. Such approval is being sought at a general meeting on 14th October 2013. The Acquisition will also constitute a related party transaction under the AIM Rules for Companies by reason of IAML holding 56.4 per cent. of the issued share capital of Phytopharm and 45.6 per cent. of Imperial Innovations Group plc, which itself holds 18.0 per cent. of IXICO. The Directors consider, having consulted with Peel Hunt, Nominated Adviser to the Company, that the terms of the transaction are fair and reasonable insofar as its Shareholders are concerned. Upon completion of the Acquisition, Phytopharm plc will change its name to IXICO plc.

The Acquisition is conditional upon, inter alia, the passing of the relevant resolutions at the general meeting. It is expected that Admission will become effective and dealings in the Enlarged Issued Share Capital will commence on AIM on 15 October 2013. It is expected that the suspension of the Company's Existing Ordinary Shares on AIM will be lifted at 7.30 a.m. on 24 September 2013 following publication of this document.

The Company has today published an Admission Document in connection with the proposed acquisition of IXICO and share issue, which will be available on the Company's website www.phytopharm.com. Copies of the Admission Document will be available for inspection during usual business hours on any day (Saturdays, Sundays and public holidays excepted) at the offices of Peel Hunt LLP, Moor House, 120 London Wall, London, EC2Y 5ET.

The admission document contains detailed information about IXICO and the Proposals and explains why the Board considers that the Proposals are in the best interests of the Company and recommends that Shareholders vote in favour of the resolutions.

2. BACKGROUND TO PROPOSALS AND REASONS FOR THE ACQUISITION

On 18 February 2013, the Board announced that analysis of the headline results from its Phase II clinical trial of Cogane™ in Parkinson's disease indicated that the drug had not demonstrated clinically meaningful efficacy. Analysis of the complete dataset was performed which confirmed that Cogane™ had no beneficial effects on patients' symptoms measured by the primary or secondary endpoints in the study, although the plasma levels of Cogane™ in Cogane™ dosed patients were in line with expectations, indicating that the drug had been well absorbed. The Board initiated a review of the strategic options available to the Company, including a review of a number of merger and acquisition opportunities.

Following the completion of the strategic review process, on 21 May 2013 the Company announced it had signed heads of terms in connection with a possible acquisition. As part of progressing the acquisition the Company received Shareholder approval on 5 August 2013 to delist from the Main Market, seek admission to trading on AIM and to effect a share capital consolidation.

As at 31 July 2013 Phytopharm had unaudited money market investments and cash and cash equivalents of £5.15 million.

The Directors consider the IXICO opportunity to be in the best interests of the Company and Shareholders for a number of reasons. Since its foundation in 2004, IXICO has established itself as a leading provider of medical imaging analysis services in the clinical trials market and has what the Board believes to be the following key strengths:

· increasing recognition as a centre of excellence and specialised know-how in brain health and specifically dementia;

· valuable, innovative and commercialised technologies addressing the clinical trials and experimental medicines markets;

· relationships with pharmaceutical customers and key opinion leaders in the dementia market;

· proven growth in revenue over the last three years; and

· diagnostic products under development with the potential to offer material health economic benefits in primary healthcare markets internationally.

IXICO now has the opportunity to launch its current and future products, proven in the clinical trials market, into the diagnostic market.

3. PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION

Phytopharm today announced the acquisition of IXICO, the purchase price to be satisfied by the proposed issue of 8,479,753 New Ordinary Shares. It is proposed that IXICO shareholders receive 15.67 New Ordinary Shares for each IXICO Ordinary Share held immediately prior to Completion.

Following Completion it is expected that Phytopharm shareholders will own approximately 45 per cent. and that IXICO shareholders will own approximately 55 per cent. of the Fully Diluted Enlarged Issued Share Capital.

The Acquisition is conditional, inter alia, upon:

(i) The passing of the Resolutions; and

(ii) Admission becoming effective by not later than 8.00 a.m. on 15 October 2013 (or such later time and/or date as Peel Hunt and the Company may agree, not being later than 8.00 a.m. on 31 October 2013).

4. EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Note:

Each of the times and dates in the above timetable is subject to change, in which event details of the new times and/or dates will be notified to the Financial Conduct Authority and the London Stock Exchange and, where appropriate, Shareholders.

5. BACKGROUND INFORMATION ON IXICO

IXICO brings innovative technologies to those researching, diagnosing and treating serious diseases, especially dementia. Its technologies enable timely decision-making aimed at improving patient outcomes. IXICO was founded with a mission to translate image acquisition, management and analysis technology and know-how, which the founders had developed together, into commercial products. These target the expanding area of imaging to inform decision-making during drug development. This has resulted in commercially successful products being launched in the clinical trials and experimental medicine markets and such products are now being readied for launch into the wider clinical diagnostic market.

IXICO's proprietary technology and know-how are used both to select patients for clinical trials and to assess the safety and efficacy of pharmaceuticals under development. These have been applied to patient data collected from more than 400 hospital sites globally in several of the largest clinical trials of AD treatments. While IXICO's clinical focus is predominantly dementia (especially AD and Huntington's disease), it also supports clinical studies for other CNS conditions (such as cerebral amyloid angiopathy), psychiatric conditions (such as schizophrenia), oncology and other diseases. IXICO's revenue has come largely from contracts with seven of the top 15 pharmaceutical companies.

The Directors' and IXICO management's vision for IXICO is to build on its credibility internationally to position itself as a 'Brain Health Company' with the ambition to bring innovative technologies to those involved in researching and treating serious brain diseases enabling them to help patients quicker. The Directors believe IXICO's products and technology can support early, high-quality, diagnosis enabling better-targeted treatment and care plans for patients with diseases that cause dementia using both currently available and emerging drug and non-drug technologies. IXICO's products to support dementia diagnosis use digital data and electronic reports and, as such, the Directors believe such products can constitute a valuable component within the emerging and increasingly important field of 'digital healthcare'.

IXICO's current products and those under development provide pharmaceutical customers with the ability to use specific quantified image characteristics to identify patient subpopulations (e.g. those with a higher rate of predicted cognitive decline). IXICO collaborates with pharmaceutical companies on such a basis. These products are also being designed to assist healthcare practitioners in diagnosis and aid matching patients to the most appropriate treatment; therefore they are intended to support an increasingly 'personalised' approach to medicine and treatment. The Directors believe there is the potential for these products to be widely adopted internationally by primary care physicians (including GPs) and other primary and secondary healthcare practitioners, thus opening up potentially significant new markets internationally for the enlarged group.

The Directors believe that the enlarged group can build on IXICO's significant successes to date to grow shareholder value in the medium and longer term. This will be achieved by continuing to generate revenues in the clinical trials market while playing a leading role internationally in the implementation of IXICO's products and expertise in the emerging dementia diagnostics market. The Directors and IXICO's management intend to fund this implementation through the use of the enlarged group's cash resources, additional grant finance (where available) and any cash generated from the provision of services to pharmaceutical customers. In addition to the core technologies, the Company will continue to explore opportunities to widen its product and service offerings in all of its markets through product licensing, collaborations and corporate activity, potentially including mergers and acquisitions.

6. CURRENT TRADING AND PROSPECTS FOR THE ENLARGED GROUP

IXICO continues to generate revenues from the clinical trials market with its core customers. The Directors are encouraged by the enlarged group's current order book but recognise that the revenue performance achieved in the 12 months ended 31 May 2013, which included accelerated completion of a contract, may not be achieved in the near term. The enlarged group's current intention is to launch its diagnostics product in late 2013 to key opinion leaders in the EU with the goal of securing early clinical adopters that could be referenceable to the wider EU market. The Directors expect modest revenues from diagnostic products in the first 12 months following such launch with clinical adoption as a strategic priority. The Directors intend to invest in this implementation through the use of the enlarged group's cash resources, additional grant finance (where available) and any surplus cash generated from the provision of services to pharmaceutical customers.

Summary financial data of IXICO

IXICO has more than trebled its revenue over the three year period; from £1.0 million in the year ended 31 May 2011 to £3.6 million in the year ended 31 May 2013, as it has established itself in the clinical trials market. As outlined above, in 2013, revenues were inflated because of the accelerated completion of one contract following a trial termination, therefore the Directors and IXICO's management believe that this level of revenue may not be repeated in the near term. In 2011, IXICO generated significant losses as it invested significantly in research and development for its technologies. It achieved close to breakeven profitability in 2012 following significant revenue growth and generated a profit in 2013. IXICO's cash and cash equivalents and equity balances have improved due to the generation of profits in 2013 and the raising of investment capital.

The above financial information has been extracted, without material adjustment from the financial information on IXICO for the financial years ended 31 May 2011, 2012 and 2013 as set out in the Admission Document.

7. BOARD CHANGES

The Board will comprise the following directors:

Directors

(1) Member of the Audit Committee

(2) Member of the Remuneration Committee

At Completion therefore Alistair Taylor, Roger Hickling, Dr. Peter Blower and Dr. Ian Tulloch will be resigning from the Board.

The Board

Dr. Andy Richards - Chairman (aged 53)

Andy has been chairman of IXICO since 2009. He is an established life science entrepreneur with experience in growing businesses, corporate transactions and exits. He is currently chairman of Altacor Ltd, Novacta Biosystems Ltd, and Abcodia Ltd and is a director of Arecor Ltd, Psychologyonline.co.uk Ltd, Cambridge Temperature Concepts Limited, Congenica Limited, Cancer Research Technology Ltd (commercial arm of CR-UK) and Babraham Bioscience Technologies Ltd. He is a council member of the Biotechnology and Biological Sciences Research Council (BBSRC) and an adviser to Vectura Group plc. Andy's early career was with ICI (now AstraZeneca) and with PA Technology. He was a founder of Chiroscience Group PLC and an executive director through to the sale to Celltech Group PLC in 1999. Since that time he has been founding and investing in new Cambridge-based biotechnology companies including several of those listed above as well as Arakis Ltd, Geneservice Ltd, Cambridge Biotechnology Ltd, Amedis Pharmaceuticals Ltd, Sirus Pharmaceuticals Ltd, Daniolabs Ltd and Pharmakodex Ltd, each of which was recently sold. He is a graduate of Cambridge University with a PhD in Chemistry.

Professor Derek Hill - Chief Executive Officer (aged 47)

Derek is a founder and has been chief executive officer of IXICO since its incorporation in 2004. As such, he has built IXICO into a profitable international business including taking the entrepreneurial leadership role in raising both equity and grant finance as well as in customer-facing activities. He also holds an academic appointment as full professor at University College London to which he was appointed shortly before co-founding IXICO having previously been a professor at King's College London. He has been working on medical imaging science for over 25 years and has authored more than 80 journal papers in this field. He is a member of the MRI Core of the Alzheimer's Disease Neuroimaging Initiative (ADNI) in the US, has served on the scientific advisory board for several pharmaceutical companies and is involved in the US FDA Critical Path Institute's Coalition Against Major Diseases (CAMD) biomarker qualification initiatives. Derek has a PhD in medical image analysis at the Medical School of Guy's & St Thomas' Hospitals, University of London, an MSc in Medical Physics at the University of Surrey and a BSc degree in Physics from Imperial College. He undertook business training at London Business School as part of the CSEL programme.

Charles Spicer - Vice President of Corporate Development (aged 48)

Charles joined IXICO in July 2013 having previously been an adviser on corporate strategy to the board since 2011. He is an experienced director of, and adviser to, public and private companies primarily in the medtech and life science sectors. He is currently a non-executive director of PuriCore plc, SIW Holdings Limited (Stanmore Implants), Aircraft Medical Limited, XCounter AB, Gresham's Schools and Ark Therapeutics Group Plc. He is chair of the UK Department of Health's Invention for Innovation Funding Panel, a panel member on the UK Health Innovation Challenge Fund and a member of the techMARK Advisory Group at the London Stock Exchange. He was previously Chief Executive of MDY Healthcare plc, a strategic healthcare investor and prior to that, Head of Healthcare Corporate Finance at both Numis Securities and Nomura International. He has an MA in History from Cambridge University.

Tim Sharpington - Non-Executive Director and Senior Independent Director (aged 47)

Tim has been asked to remain on the board of the Enlarged Group on Admission as a non-executive director having previously served as chief executive officer of Phytopharm since 2010. He has more than 20 years' experience in the life sciences sector with various pharmaceutical, biotechnology and pharmaceutical service companies in Europe and the US. He has broad experience across drug development, in-licensing, mergers and acquisitions as well as fundraisings. Tim founded and was Chief Executive Officer of Serentis Limited. Previously he was Development Director at Arakis Limited, a UK-based VC-backed biotechnology company which was sold to Sosei of Japan in 2005 for £107 million. Prior to that, Tim led product development at US-based Sequus Inc. following a period of time at Pfizer. His CRO experience was gained at ICON, one the world's largest CROs, where he led European operations. Tim was also a non-executive director at Clinical Force Limited, a clinical trial software company, until its successful trade sale in 2011.

John Bradshaw ACA - Non-Executive Director (aged 49)

John is a chartered accountant with more than 15 years' experience as a CFO with venture capital backed and listed companies. He is a partner in Bradshaw Daniel, which provides CFO services to small and medium sized companies throughout the UK and Europe. He is the Chief Financial Officer of Syncona Partners LLP, an independent subsidiary of the Wellcome Trust founded in 2012 to invest in healthcare. He was previously CFO of Gyrus Group PLC, which he joined prior to listing it on the London Stock Exchange, following 11 years at Arthur Andersen in Cambridge and Turin where he qualified as a chartered accountant. John has a law degree from the University of Liverpool.

Maina Bhaman - Non-independent non-Executive Director (aged 41)

Maina joined the board of IXICO in 2010. She is director of Healthcare Ventures at Imperial Innovations, a founding shareholder of IXICO, which she joined in 2006. She has led a number of healthcare investments at Imperial Innovations and is currently a non-executive director of Autifony Therapeutics Limited, Cell Medica Limited, Psioxus Therapeutics Limited and Topivert Pharma Limited. She has previously served as a non-executive director of Acrobot Limited and Molecular Vision Limited. She previously worked in the research and development team at Celltech Group plc and at Oxford Glycosciences Plc. Maina has a BSc from the University of Texas and an MBA from the Imperial College Business School.

Service Contracts for the Proposed Directors

Professor Derek Hill entered into a service agreement with Phytopharm on 20 September 2013 which takes effect on Admission. Professor Hill will receive a salary of £160,000 per annum. His salary is exclusive of any bonus award, pension contribution or share option grant which may be made by the Board from time to time and inclusive of any fees payable to him as a director or other officer of Phytopharm or the Group. The service agreement provides that Professor Hill is entitled to receive a total contribution by Phytopharm into appropriate pension schemes at a rate of 8 per cent. of basic salary, variable upwards upon a decision of the Board, based on the recommendation of the Remuneration Committee.

Charles Spicer will be Vice President of Corporate Development of Phytopharm and entered into a service agreement with Phytopharm on 20 September 2013 which takes effect on Admission. His service agreement is identical in all material respects to that of Professor Derek Hill with the exception that he will receive a salary of £75,000 (for working two and a half out of five business days per week under normal circumstances). Phytopharm may in its absolute discretion award to Mr. Spicer a non-pensionable cash bonus or bonus awarded in shares dependent upon the overall satisfactory performance of the Group and the achievement of personal targets, as determined by the Remuneration Committee and approved by the Board.

The Proposed Non-Executive Directors are appointed under the terms in their letters of appointment dated 20 September 2013 which take effect on Admission with a provision for termination subject to three months' notice. In addition, the agreements provide for termination if the relevant Non-Executive Director is removed from office as a director by resolution of Shareholders or if, having retired from office as a Director of the Company at any annual general meeting, he is not re-elected to such office at that meeting. Dr. Andy Richards is entitled to a fee at the rate of £42,500 (exclusive of VAT) per annum and Tim Sharpington and John Bradshaw are each entitled to a fee at the rate of £22,500 (exclusive of VAT) per annum. Each letter of appointment contains confidentiality provisions.

Company Secretary

Zoe McGowan

Zoe will remain as Company Secretary for an interim period following completion of its acquisition by Phytopharm after which a successor will be appointed. Zoe previously served as Head of Finance and Company Secretary at Phytopharm which she joined in 2001 and worked on the re-focussing of the Group on pharmaceutical development following the successful £25 million fundraising in 2009. She has over 25 years' financial and commercial experience including within the pharmaceutical, healthcare and technology sectors. Her previous roles also include Chief Accountant at CCG Limited and Finance Manager at Addenbrooke's NHS Trust as well as roles in a number of private companies and in the public sector. Zoe is a Fellow of the Association of Accounting Technicians and a Fellow of the Chartered Management Institute.

Senior management on Admission

The following persons are considered by the Board to be members of the Enlarged Group's senior management team:

Employees

The enlarged group will on Admission have 39 employees (including Executive Directors but excluding Non-Executive Directors).

8. CORPORATE GOVERNANCE

The Directors and proposed directors are committed to practising good corporate governance and recognise that they are accountable to Shareholders for the Group's standard of governance. The Directors and Proposed Directors recognise the value of the principles of good corporate governance and the principles embodied in the UK Corporate Governance Code and intend, following Admission, to take into account the Corporate Governance Guidelines of the Quoted Companies Alliance so far as is practicable and appropriate in the Board's determination for a public company of the Company's size, board structure, stage of development and resources.

9. RELATED PARTY TRANSACTION

The Acquisition will constitute a related party transaction under the AIM Rules for Companies by reason of IAML holding 56.4 per cent. of the issued share capital of Phytopharm and 45.6 per cent. of Imperial Innovations Group plc, which itself holds 18.0 per cent. of IXICO. The Directors consider, having consulted with the Company's nominated adviser, Peel Hunt, that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

10. EFFECT OF THE ACQUISITION

Upon Admission and assuming no further exercises of share options under the Share Schemes, the Enlarged Issued Share Capital is expected to be 14,952,437 Ordinary Shares. On this basis, the New Ordinary Shares will represent approximately 53.6 per cent. of the Enlarged Issued Share Capital on Admission.

Following the proposed issue of up to 8,479,753 New Ordinary Shares to be allotted pursuant to the Acquisition, an Existing Shareholder will suffer dilution of 55 per cent. to his interests in the Company.

11. TAKEOVER CODE

The Company will be subject to the City Code. The City Code governs, inter alia, transactions which may result in a change of control of a public company to which the City Code applies.

Relationship between IAML and Imperial

Under the City Code a company and its associated companies are presumed to be acting in concert. For this purpose ownership or control of 20 per cent. or more of the equity share capital of a company is regarded as the test of associated company status. Since funds managed by IAML on a discretionary basis own 45.6 per cent. of Imperial Innovations' equity share capital, IAML and Imperial Innovations are, by operation of the presumption contained in the City Code, presumed to be acting in concert.

Neither IAML nor Imperial Innovations have, at this stage, sought to rebut the presumption of concertedness. However, each of them pursues its own independent investment objectives in a manner which it considers best suits its own, or, in the case of IAML, its managed clients', interests and objectives. Consequently, each of IAML and Imperial Innovations reserve the right to seek to rebut the presumption if it deems it appropriate to do so.

Until the presumption is rebutted however, since the Invesco Funds and Imperial Innovations will, following Completion, together own 37.1 per cent. of the Enlarged Issued Share Capital (including the New Ordinary Shares purchased by Imperial Innovations prior to Admission) purchases by them of Ordinary Shares which increase their aggregate percentage holding of Ordinary Shares would, subject to the provisions of, and dispensations available under, the City Code, normally trigger a mandatory offer under Rule 9.1(b) of the City Code.

Relationship between the Founders

Under the City Code, the Founders are presumed to be acting in concert. The Founders comprises Derek Hill and Associates, Joseph Hajnal and Associates, Professor David Hawkes, Professor Daniel Rueckert and Thomas Hartkens.

None of the Founders, at this stage, sought to rebut the presumption of concertedness. However, each of them pursues its own independent investment objectives in a manner which it considers best suits its own interests and objectives. Consequently, each of the Founders reserve the right to seek to rebut the presumption if it deems it appropriate to do so.

Until the presumption is rebutted however, the Founders will, following Completion, together own 14.8 per cent. of the Enlarged Issued Share Capital.

12. CHANGE OF NAME

It is proposed that the name of the Company be changed to IXICO plc. A special resolution will be proposed at the General Meeting to this effect.

Share certificates with a nominal value of 50 pence issued in respect of the recent Share Capital consolidation in the name of Phytopharm will remain valid.

13. DIVIDEND POLICY

The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions (if any) declared, paid or made by the Company after Admission.

However, it is, at present, intended that no dividends will be paid by the Enlarged Group for the foreseeable future. The Directors will review this dividend policy in view of the level of future distributable profit, if any, cash requirements, future prospects and financial conditions at the appropriate time.

14. RISK FACTORS

If the Resolutions to be proposed at the General Meeting to be held on 14 October 2013 are not passed, the Acquisition will not proceed. Phytopharm will then be required to pursue other corporate acquisitions in line with its investing policy. There can be no guarantee that the Directors will be able to identify such acquisitions and no assurance can be provided that the Directors will be able to conclude successfully agreements with any such business.

Within 12 months from the date of Admission to AIM, under the provisions of AIM Rule 9 the Company will be required to undertake one of the following, either:

(i) to complete an acquisition which constitutes a reverse takeover under AIM Rule 14; or (ii) to implement the Investing Policy to the satisfaction of the London Stock Exchange; or (iii) to complete an equity fundraise of no less than £3 million so as to fully satisfy the requirements of AIM Rule 8.

Should the Company not satisfy at least one of the required actions in (i), (ii) or (iii) above within 12 months of Admission, the Exchange may suspend trading in the Company's AIM securities pursuant to AIM Rule 40 for the Company's failure to comply with the special condition imposed by AIM Rule 9. Should the Company's AIM securities not be restored to trading within six months of such suspension, the Company's AIM securities will be cancelled from trading on AIM in the normal course pursuant to AIM Rule 41. In respect of such suspension, a restoration event will be the satisfaction of at least one of either (i), (ii) or (iii) above.

Shareholders and investors should consider fully the risk factors associated with the Acquisition and Admission, the business of the Enlarged Group, the stock market and share trading. Your attention is drawn to the section entitled "Risk Factors" set out in the Admission Document.

15. ADDITIONAL INFORMATION

You are recommended to read all the information contained in the Admission Document and not just rely on this announcement.

16. LIFTING OF SUSPENSION, ADMISSION AND CREST

It is expected that the suspension of the Company's Existing Ordinary Shares on AIM will be lifted at 7.30 a.m. on 24 September 2013 following publication of this document.

As the Acquisition constitutes a reverse takeover under the AIM Rules for Companies, Shareholder consent to the Acquisition is required at the General Meeting. If the relevant resolutions are duly passed at the General Meeting, the admission of the Company's Existing Ordinary Shares to trading on AIM will be cancelled (immediately prior to Admission) and application will be made to the London Stock Exchange for 14,952,37 Ordinary Shares to be admitted to trading on AIM. Admission is expected to take place at 8.00 a.m. on 15 October 2013. CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument in accordance with the requirements of CREST. The Articles permit the holding and transfer of Ordinary Shares to be evidenced in uncertificated form in accordance with the requirements of CREST. It is anticipated that the Enlarged Issued Share Capital will be eligible for CREST settlement and application has been made for the 14,952,437 Ordinary Shares to be eligible for admission to CREST with effect from Admission. Accordingly, following Admission, settlement of transactions in Ordinary Shares may take place within the CREST system if the relevant Shareholder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able to do so.

17. RECOMMENDATIONS

The Board, which has been so advised by Peel Hunt, believes that the Acquisition and the Resolutions are fair and reasonable as far as the Shareholders are concerned and are in the best interests of Phytopharm and the Shareholders as a whole. In providing such advice to the Directors, Peel Hunt has taken into account the Directors' commercial assessments.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they intend to do in respect of their own beneficial holdings amounting to (at 20 September 2013, being the latest practicable date prior to the publication of this document) an aggregate of 15,273 Existing Ordinary Shares representing approximately 0.22 per cent. of the current issued ordinary share capital of the Company.

In addition to the Directors, Invesco has irrevocably undertaken to vote in favour of the Resolutions in respect of the Ordinary Shares in which it is interested, amounting, in aggregate, to 3,910,452 Ordinary Shares, representing 56.4 per cent. of the current issued ordinary share capital of the Company.

Appendix

In this announcement, the following expressions have the following meanings unless the context requires otherwise: