Vernalis PLC Regulatory News (VER)

19 May 2010

LSE: VER

Vernalis plc: Interim Management Statement

For the period to 19 May 2010

Vernalis plc today publishes its interim management statement for the period 1 January 2010 to 19 May 2010.

Key Events

·; On 11 February 2010, Vernalis announced an agreement to regain all royalties rights from Menarini's sales of frovatriptan by terminating agreements entered into with Paul Capital Healthcare in 2008 ("Paul Capital Healthcare Agreements") and to be funded by a fully underwritten Placing and Open Offer.

Approximately £30 million (approximately £28.5 million net of expenses) was raised through the fully underwritten Placing and Open Offer of 39,413,722 New Ordinary Shares at a price of 76 pence per New Ordinary Share, of which $32.57 million (approximately £21 million) was used to terminate the Paul Capital Healthcare Agreements. In addition, Paul Capital Healthcare agreed to subscribe for 2.1 million warrants over Vernalis ordinary shares.

All required resolutions were passed at a General Meeting held on 1 March 2010 and 39,413,722 New Ordinary Shares were issued on 2 March 2010 after which the Company's share capital consisted of 99,571,509 Ordinary Shares of 1 pence each. The Paul Capital Healthcare Agreements were terminated on 8 March 2010.

·; On 15 March 2010, Vernalis announced that it had earned a $3 million milestone under its Hsp90 oncology collaboration with Novartis triggered by the first dosing in a Phase II proof of concept clinical trial of AUY-922 in a range of solid tumours.

·; On 24 March 2010, Vernalis announced top-line results from the V3381 (indantadol) IN-STEP Phase IIb study, evaluating further the safety and efficacy of indantadol in patients with neuropathic pain due to diabetes. The study showed a 25% reduction compared to baseline in pain scores in patients who received indantadol but there was also a marked reduction in the placebo-treated subjects. Consequently there was no significant difference between the two treatment groups. Indantadol was generally well tolerated at all doses in this study. As expected, the most common adverse event was dizziness (placebo 4%, indantadol 26%).

·; On 12 April 2010, Vernalis announced its financial results for the year end 31 December 2009. Key highlights were strong revenue growth of 27%, a 47% reduction in the loss from continuing operations (both on a pre-exceptional basis), pro-forma year end cash of £37.5 million and that it was debt free following termination of the Paul Capital Healthcare Agreements.

·; Underlying Menarini sales of frovatriptan grew by 11% in the first quarter of 2010 compared to the same period in 2009.

·; On 4 May 2010, Vernalis announced that its ongoing oncology collaboration with Servier over two undisclosed oncology targets would be extended following success during its initial three-year term.

Outlook

The substantial achievements during the period to 19 May 2010 provide the Group with a robust platform for growth. Over the remainder of 2010 we expect significant newsflow:

·; We aim to progress our in-house programmes V158411 and V158866 through pre-clinical studies and if successful then initiate phase I studies.

·; Novartis continues to progress our two Hsp90 oncology programmes and has indicated that it aims to achieve proof of concept for AUY-922 by the end of the year.

·; Biogen continues to build the vipadenant (V2006) data package required to commence registrational studies. It has not announced the expected timing of concluding its current work.

·; Our out-licensing activities remain focused on V85546 for inflammatory disease.

·; Our current cash resources take the company into 2013 and we aim to expand our already broad development pipeline during 2010 through in-licensing and acquisitions.

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Notes to Editors

About Vernalis

Vernalis is a development stage pharmaceutical company with significant expertise in taking promising product candidates along a commercially-focused path to market. The Group has one marketed product, frovatriptan for the acute treatment of migraine, and eleven candidates in development, eight of which are designated priority programmes. Five of these priority programmes are currently unpartnered and three are partnered. Pipeline programmes are derived from both our own research activities where we have significant expertise in fragment and structure based drug discovery, as well as from collaborations. Our technologies, capabilities and products are endorsed by collaborations with Biogen Idec, Chiesi, Endo, GSK, Menarini, Novartis and Servier.

For further information about Vernalis, please visit www.vernalis.com

Vernalis Forward-Looking Statement

This news release may contain forward-looking statements that reflect the Company's current expectations regarding future events including the clinical development and regulatory clearance of the Company's products, the Company's ability to find partners for the development and commercialisation of its products, as well as the Company's future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of the Company's research strategies, the applicability of the discoveries made therein, the successful and timely completion of clinical studies, the uncertainties related to the regulatory process, the ability of the Company to identify and agree beneficial terms with suitable partners for the commercialisation and/or development of its products, as well as the achievement of expected synergies from such transactions, the acceptance of Frova® and other products by consumers and medical professionals, the successful integration of completed mergers and acquisitions and achievement of expected synergies from such transactions, and the ability of the Company to identify and consummate suitable strategic and business combination transactions.