Final Results - Year Ended 31 December 1999

Proteome Sciences PLC
28 March 2000

Proteome Sciences plc

Preliminary Announcement of Financial Results for the year ended
31 December 1999

Chairman's Report
Proteome  Sciences  continues  to  pursue  a  focused  proteomics
research  programme to identify changes in protein expression  in
specific disease states and the usage of such protein markers for
diagnostic  purposes  and  as novel molecular  targets  for  drug
discovery,  principally  in the areas of neurological  disorders,
cancer,  chronic  heart  disease,  rejection  after  solid  organ
transplantation, diabetes and obesity.

In the US, Intronn LLC, the 50 per cent. owned US subsidiary, has
developed  a proprietary method of gene based therapy.  The  lead
technology, spliceosome mediated RNA trans-splicing (SMaRTT), has
a  broad  spectrum  of potential applications ranging  from  gene
therapy  for inherited genetic disorders, cancer, and  repair  of
genetic  mutations  (such as those causing cystic  fibrosis),  to
address  the  modification of gene expression in plants.  At  the
same time, Intronn has developed some 'tool box' technologies  as
spin offs from the main SMaRTT programme, including exon tagging,
quality  control  and standardisation markers and oligonucleotide
purification.

Proteome  Sciences proposes to commercialise the results  of  the
research  through  sub-licensing  their  use  to  pharmaceutical,
diagnostics,  genomics  and  gene  therapy  companies.   Proteome
Sciences expects to generate substantially all its future revenue
in this way.

Review of Activities

Over  the  last year, I am very pleased to report that proteomics
appears  to  have arrived on centre stage in the  field  of  drug
discovery and development, as one of the key techniques necessary
to  unlock functional genomics. This is particularly significant,
given  the  impending completion of the sequencing of  the  human
genome,  and  the emphasis now being placed on bridging  the  gap
between  an  identified gene mutation and a disease condition  by
looking  at  subtle  qualitative and or quantitative  changes  in
protein  expression. By identifying changes in protein expression
in   disease,  proteomics  can  be  utilised  to  assist  in  the
identification of the same disease association with the gene.

By  comparing  control and disease samples,  it  is  possible  to
identify  over  and under expression of proteins in  disease  and
their  post-translational modification.  These  proteins  may  be
targets  for  drug  development or molecular markers  of  disease
playing a role in diagnostic and prognostic monitoring of disease
progression.

In  parallel,  gene  therapy, the second platform  technology  in
which  Proteome  Sciences  is involved  through  Intronn  LLC  is
attracting considerable interest and corporate activity  both  in
the US and Europe.

The  US  Patent  Office has recently allowed a patent  to  Oxford
Biomedica  plc,  covering  broad  aspects  of  the  delivery  for
retroviral  and lentiviral vector systems, which can be  used  in
gene  therapy products for a wide range of diseases.  In  October
1999  Intronn entered into a Material Transfer Agreement  ('MTA')
with Oxford Biomedica plc in respect of PTMs. This should provide
Intronn   with   an   opportunity  to  exploit   the   commercial
opportunities  for its pre-therapeutic RNA molecules  (PTMs),  by
using  a wide range of vector delivery systems developed by third
parties.

PTMs  function by base-pairing with a unique (disease associated)
pre-mRNA,  blocking  cis-splicing  of  the  target  pre-mRNA  and
promoting a spliceosome mediated trans-splicing reaction (SMaRTT)
to  occur between an exon in the PTM and the target pre-mRNA.  At
the  same  time, considerable international media  attention  and
debate  has  centred around genetic modification of  plants/crops
and developments within agricultural biotechnology.

Proteomic Research programme

The   projects   undertaken  through  the  primary  collaborative
agreements  are  concentrated in diabetes  and  obesity,  cancer,
neurological disease, rejection after solid organ transplantation
and chronic heart disease.

Diabetes and Obesity

At  the  time of the interim results, Proteome Sciences  reported
that a group of three patent applications had been filed from the
research  being  undertaken at the University of Geneva  and  the
University of Buckingham. This research related to the  proteomic
approach  being  used  to  identify  new  molecular  targets  for
pancreatic  islet cell function, insulin resistance and  obesity.
The  identification of these proteins has now been completed  and
further progress with this approach has led to the filing of  two
more   patent   applications.  The  company  has   entered   into
Confidential  Disclosure Agreements with  ten  different  parties
with  the  intention of establishing a funded research  programme
for  the  continuation of this research. This  process  is  being
actively pursued and further developments are anticipated  during
the year.

The Company's researchers presented new data to 600 delegates  at
the Keystone Symposium on Diabetes Mellitus: Molecular Mutations,
Genetics and Prospect for New Therapy held on 16-22 February 2000
in  Taos,  New Mexico, USA, which attracted considerable interest
with  an  experimental  paradigm for  identifying  new  molecular
targets  associated with insulin resistance. By  treating  normal
and  insulin  resistant  mice with the  insulin  sensitiser  drug
rosiglitazone, it was possible to identify over 48 proteins  that
were   differentially  expressed  between  normal   and   insulin
resistant mice and which were also modulated by rosiglitazone  in
the  course  of  inducing  insulin  sensitivity  in  the  insulin
resistant  mice.  These proteins are potential molecular  targets
for the treatment of non-insulin dependent diabetes.

Cancer

The current phase of the research programme at the University  of
Michigan was concluded at the end of November. The programme  has
proved highly successful, resulting in patent applications  being
filed for protein markers for lung, oesophageal, colon and breast
cancer,   in   addition  to  patent  applications   relating   to
proprietary  methodologies  and  techniques.  A  further   patent
application was filed in August 1999 for the usage of proteins in
the identification and treatment of lung cancer.

The University of Michigan was awarded a $10m grant in October by
the NIH for proteomic research in oncology to use these proteomic
techniques in an integrated genomic approach for DNA and  protein
analysis  and  for the molecular analysis of tumours.  A  special
feature  of  the  programme  will  be  the  integration  of  gene
expression analysis at both the RNA and protein levels.  Proteome
Sciences  has  exercised an option for an  exclusive  licence  to
commercialise the results and continues to seek partners to  take
the programme on to the next stage.

Neurological

The main emphasis of this research, principally undertaken at the
University  Cantonal  Hospital  Geneva,  is  to  identify   novel
diagnostic  and  therapeutic targets for a range of  neurological
disorders  including  brain damage, stroke, Parkinson's  disease,
pain and transmissible spongiform encephalopathies (BSE, scrapie,
CJD, nvCJD).

A proprietary human astrocyte cell line 2D PAGE reference map was
established in 1995 for comparison with numerous tissue biopsies,
cells  and  body fluids. A substantial collection  of  sequential
samples  from  acute  stroke  patients  was  collected  and   the
potential marker candidates identified have resulted in a  patent
application  being filed in December 1999 for a diagnostic  assay
for  stroke  from a blood sample. The ongoing work programme  has
provided rapid progress with very interesting results.

There  continues  to be considerable media attention  as  to  the
potential  risk  of  substantial numbers  of  possible  CJD/nvCJD
victims  emerging in the future. Proteome Sciences has maintained
its  involvement  in the area and has focused  its  attention  on
using highly sensitive techniques for the early identification of
the  abnormal forms of the mutated prion protein PrP and  to  try
and  identify  such  changes, preferably in  an  accessible  body
fluid.  Considerable progress has been made and a further  patent
application has been filed for a new method of detection  of  CJD
and other forms of TSE. The present invention is for an assay  of
high  sensitivity, specificity and predictive  accuracy  for  CJD
taken from a blood sample.

The  research  programme  in  Parkinson's,  to  establish  a  CSF
reference  map and then to look at different protein  expression,
has  generated data on 34 protein changes of significance between
control  and disease. These results are in the process  of  being
further analysed with a view to assessing their applicability for
patent protection.

Rejection after Solid Organ Transplantation/Chronic Heart Disease

The  aim  of  the REMAP project is to identify diagnostic  and/or
prognostic  markers of acute organ rejection  and  to  develop  a
reliable, non-invasive way of detecting acute rejection following
solid  organ transplantation. The proteomic approach adopted  was
to identify, by 2DE analysis of sequential tissue biopsy samples,
changes  in  protein  expression which either  precede  or  occur
during periods of acute rejection.

Significant  progress  is  being  made  with  20  protein   spots
submitted  for  protein characterisation. ELISA  assays  can  now
start  to  be  developed to test their potential as  non-invasive
markers of acute rejection using the serum samples collected from
the REMAP study patients.

The  EUREKA  grant,  provided  by the  Department  of  Trade  and
Industry, has not been fully drawn down and Proteome Sciences has
applied for an extension to the grant period.

A  further  patent  application was filed  in  November  1999  in
relation to the work undertaken on the vimentin chronic rejection
marker.  Considerable additional data has  resulted  from  a  109
patient study, conducted over a five year period. This shows that
on  at  least one occasion 107 out of the 109 patients  increased
their anti-vimentin antibody titres after transplantation.

Research  into  chronic heart disease under the two  year  funded
agreement  with Rhone-Poulenc Rorer has made good  progress,  but
detailed  results from the programme are not expected  to  emerge
until the end of 2000.

The   Protein  Separation  and  Analysis  Service  at   Harefield
continues to carry out limited third party contracts.

Intronn

The last year has proved most successful for Intronn. In January,
results  with  SMaRTT technology were presented at  the  Keystone
Symposium,  Salt Lake City which demonstrated for the first  time
the  repair  of  the  genetic mutations  in  the  mRNA  which  is
defective  in  cystic fibrosis, SMaRTT offers a  major  advantage
using vector systems by specifically restricting treatment to the
faulty  fibrosis  cells, thereby preventing other  healthy  cells
from being damaged.

In  March,  SMaRTT  featured  in  the  March  edition  of  Nature
Biotechnology. The magazine press release reported a  novel  gene
therapy  approach  that  exploited  the  cellular  machinery  for
editing  RNA to correct faulty genes, a human protein  engineered
to  sabotage cancer cells, and a plant genetically engineered for
improved  nutritive value. In a review of the  article  Professor
Ryszard  Kole  of  the  University of  North  Carolina  said,  in
principle,  that the trans-splicing approach should  be  able  to
modify any gene in any cell type.

Intronn  was  awarded  a  Phase 1 SBIR grant  from  the  National
Institute  of  Health  (NIH) in the USA for $235,000,  more  than
twice  the  level  that  had  been  requested.  In  August  1999,
notification was received of the issuance of Intronn's first main
US   patent  which  covers  the  SMaRTT  gene  therapy  platform.
Notification  was received by Intronn in February 2000  from  the
Cystic Fibrosis Foundation in the USA that it has been awarded  a
grant for part of the cystic fibrosis programme.

At  the  time  of the interim results in October, the  Board  was
evaluating  the  options  available  to  maximise  the  value  of
Proteome  Sciences' interest in Intronn. The options contemplated
included  a  separate structure for the company with  independent
funding and a possible future listing. Agreement has been reached
with  Intronn  Holdings LLC, the owners of the remaining  50  per
cent.  of  Intronn  LLC,  to  simplify the  ownership  structure,
whereby Intronn LLC will be incorporated and the differing profit
participations will be exchanged for equity in the  new  company.
Under  these arrangements, Proteome Sciences will be allotted  60
per  cent.  of the equity and Intronn Holdings 40 per  cent.  The
process  to  raise the appropriate funding for  Intronn  and  the
search  for  a CEO with profile and expertise in gene therapy  is
underway and further developments are expected in the first  half
of  the  year. The main alternative technologies to SMaRTT centre
on ribozymes and antisense.

In  November, Intronn entered into MTAs in respect of  PTMs  with
King's  College,  London  and  The  General  Hospital,  Salzburg,
Austria,  where Intronn's constructs will be tested for  specific
neurological and dermatological applications.

On the basis of current interest, Intronn anticipates that it may
soon enter into a funded programme to determine the efficiency of
SMARTT  technology to address the modification of gene expression
in  plants with a major company. Such a project is expected to be
completed  within  twelve  months. If  satisfactory  results  are
achieved,  the  company will negotiate a collaborative  licensing
and  Research and Development agreement with Intronn with related
milestone and royalty payments.

Results

In  the  twelve  month  period ended 31 December  1999,  Proteome
Sciences   incurred   a   pre-tax  loss  of   £1,229,758   (1998:
£1,850,527). A reversal of the realised foreign exchange loss  of
the  previous  year and a reduction in the level of research  and
development costs have been the main factors contributing to  the
lower level of losses.

At the year end, cash balances stood at £446,818. As disclosed at
the  time  of  the Interim Results in the second  half  of  1999,
Proteome  Sciences implemented the contingency plan, referred  to
in  the 1998 Annual Report and Accounts which involved reductions
in overhead costs and the level of research expenditure.

Current Outlook

Whilst the potential of proteomics has been widely recognised for
a  number of years, it was only in 1999 that it came of age, with
a  handful  of  international collaborative  research  agreements
established in proteomics in the second half and early 2000  with
major  pharmaceutical  companies.  Proteomics  is  not  only   an
important  tool  that  complements the  information  provided  by
genomics, potentially it also provides a more efficient method of
understanding disease mechanisms and a fast track  to  genes,  as
well as drug targets.

Proteome  Sciences  has  been  using proteomics  for  proprietary
discovery  since the early 1990s to identify protein  changes  in
disease.  The  company has concentrated on 'high  output'  rather
than 'high throughput', addressing quality of samples, separation
and sensitivity of detection, rather than volume and its focus on
direct discovery rather than third party contract research.  This
was  a  strategic  decision  by the Board  to  position  Proteome
Sciences  in  what  it considered to be the optimal  position  to
realise  long term shareholder value. A portfolio of over  twenty
patents  and  patent  applications has been established,  largely
concentrated on changes in protein expression across the range of
diseases covered by the research programme.

Over  the last two years, the Board has been frustrated with  the
time  required  to  commercialise the  results  of  the  research
programme with major pharmaceutical companies and to convert  the
protein  markers into licences and commercial revenue. As pointed
out  earlier in my statement, it is only as we are moving through
2000  that the tide appears to be changing and that now there  is
beginning  to be a wider appreciation of the potential  value  of
Proteome  Sciences'  intellectual property and  its  position  in
proteomics and gene therapy.

As  indicated above, in order to conserve its financial position,
Proteome  Sciences implemented reductions in overhead  costs  and
the  level  of  research expenditure at the time of  the  Interim
Results  in  October 1999. The programmes at  the  University  of
Michigan  and  the  University  Cantonal  Hospital  Geneva   were
deferred  at the end of November and December respectively,  with
the  diabetes/obesity programme at the University of  Geneva  and
the  University of Buckingham and the arrangements at  Harefield,
London  continuing into 2000. In the interim statement,  Proteome
Sciences  stated that it intended to resume part or  all  of  the
research  programmes in the light of the market  background,  the
status  of licensing arrangements, research partnerships and  the
level of funding available.

Subject to completion of the proposed Placing and the Open Offer,
I  am  pleased  to report that Proteome Sciences  will  have  the
necessary   funding   to  resume  the  full  proteomic   research
programmes with its main collaborative partners and to  take  the
research through to commercialisation.

With a new level of perception and acceptance of proteomics,  the
Board  feels  that  it is now appropriate to move  the  corporate
structure  at  Proteome  Sciences to a  less  virtual  basis  and
subject  to  raising sufficient funds under  the  Open  Offer  is
proposing  to  establish  its  own  small  specialist  proteomics
facility  in the UK. In addition to the protein facilities  based
at  Harefield,  this  will provide a core  research  facility  to
undertake  partnership  research programmes  with  pharmaceutical
companies  and  to accelerate the projects underway  through  the
collaborations  with the HCUG, Harefield, London, the  University
of Buckingham and the University of Geneva.

A  senior business development manager has been appointed, with a
strong  background in protein separation, mass  spectrometry  and
bioinformatics,  to interface between the scientific  researchers
and   the  corporate  customers/prospective  licensees   and   to
accelerate the commercialisation process.

The  research  projects in diabetes/obesity,  stroke,  TSE,  CJD,
nvCJD  and  chronic  heart disease/rejection,  have  all  reached
exciting  stages  in  their development and there  should  be  an
interesting news flow through 2000 and 2001. The Directors intend
to  pursue  an  active  licensing and  partnership  programme  to
exploit the Company's research.

The  Board is particularly encouraged by the development  of  the
assay  of  high sensitivity, specificity and predictive  accuracy
for  CJD  and  the diagnostic assay for stroke, both  taken  from
blood  samples. Everyone is at risk from stroke and there are  at
least 350,000 people disabled by it at any one time in the UK and
it  is  the UK's third highest killer disease (source: The Stroke
Association).

The company is looking at various grant schemes in the UK and the
EEC  to  supplement the portfolio of Proteome Sciences'  research
projects.

In the US, Intronn should benefit considerably from incorporation
and  is looking to appoint a high profile CEO with a gene therapy
background,  to take the company through its first major  funding
round, expected to close in July.

In  light of the buoyant activity in the biotechnology section in
2000,  the  Board will continue to evaluate the options available
to  maximise the value of its interest in Intronn, in  particular
in  respect of external funding and the possibility of a  listing
in the US.

On the basis of current interest, Intronn anticipates that it may
soon enter into a funded programme to determine the efficiency of
SMaRTT  technology to address the modification of gene expression
in  plants with a major company. Such a project is expected to be
completed  within  twelve  months. If  satisfactory  results  are
achieved,  the  company will negotiate a collaborative  licensing
and  Research and Development agreement with Intronn with related
milestone  and royalty payments. Other opportunities for  similar
agreements for SMaRTT applications will be actively pursued.

Intronn  has  several manuscripts which have been  submitted  for
review  by  scientific journals which should further substantiate
and  extend  the  SMaRTT technology platform  and  its  potential
applications. Results should flow through from the MTA agreements
already in place and a number of other agreements are anticipated
before  the  end of the year. After its successful Phase  1  SBIR
grant,   Intronn  is  in  the  process  of  submitting  a   major
application for a Phase 2 SBIR grant. This should all combine  to
provide  an  exciting backcloth for Intronn in 2000 and  to  help
establish a strong basis of valuation for the refinanced  entity,
where Proteome Sciences will remain the principal shareholder.

In  the last six months of 1999, there were increasing levels  of
corporate  and  merger activity in the biotechnology  sectors  on
both  sides  of the Atlantic. At the time of publication  of  the
Interim  Results  in  October,  the  Directors  pointed  out  the
pressures  for consolidation in the industry and the creation  of
larger  units  of  specialist focus  and  'one  stop  solutions'.
Subject  to  completion of the Placing and the  Open  Offer,  the
Directors  consider  that the funding requirements  for  Proteome
Sciences will be addressed for the foreseeable future. The  Board
continues  to investigate a range of options, including  possible
merger,  strategic alliances and other opportunities which  could
enhance shareholder value.

Proteome Sciences has established a unique position in proteomics
and  in  gene  therapy through SMaRTT technology.  The  Directors
believe  that  the Company is strongly placed to capitalise  from
the  two technology platforms and the Board looks forward to  the
future    with   confidence   and   to   the   application    and
commercialisation of the two technology platforms  in  functional
genomics.

As  a  closing comment, I would like to take this opportunity  to
sincerely  thank  our  employees, scientists,  collaborators  and
consultants  for  their  hard  work  and  commitment  which  have
contributed  to  the  success  of  Proteome  Sciences'   research
programme.
R Stephen Harris
Chairman

Unaudited Consolidated profit and loss account

For the year ended 31st December 1999

                    Notes       1999       1998
                                   £          £
Administration             (761,396) (1,061,510)
expenses                                   
Realised exchange     4       71,072   (22,246)
gains/(losses)
Research and                (560,190)  (904,707)
development                        
expenses
Other operating              (5,614)   (13,528)
expenses
                            --------  ---------
                     
                                               
Operating loss           (1,256,128) (2,001,991)
                                             
Interest                      32,817    155,349
receivable
Interest payable      3      (6,447)    (3,885)
and similar
charges
                            --------  ---------
                          
Loss on ordinary      4  (1,229,758) (1,850,527)
activities before               
taxation
Tax on loss on        7            -          -
ordinary
activities
                            --------  ---------
                            
Loss for the          16 (1,229,758) (1,850,527)
financial year                   
                            ========  =========
                                 
Loss per share                                 
Basic and diluted     8        1.57p      2.38p
                            ========  =========
                                 
Notes to the Financial Information.

1.There has been no change to any of the accounting policies  set
out in the 1998 statutory accounts.

2.  Following the loss of £1,229,758 incurred in the period,  the
Directors do not recommend the payment of a dividend.

3.(a) The calculation of the loss per share for the year ended 31
December  1999  is based on the loss of the financial  period  of
£1,229,758 and on 78,505,304 Ordinary Shares, being the  weighted
average number of shares in issue and ranking for dividend during
the year.

    (b)  The calculation of the loss per share for the year ended
31  December 1998 is based on the loss for the year of £1,850,527
and on 77,717,483 Ordinary Shares, being the number of shares  in
issue and ranking for dividend during the year.

4.  The  preceding  financial  information  does  not  constitute
statutory accounts as defined in Section 240 of the Companies Act
1985.  The financial information for the year to 31 December 1998
is  based  on  the  statutory  accounts  for  that  year.   These
accounts,  upon which the auditors issued an unqualifed  opinion,
and  which did not contain any statement under Section 237(2)  or
(3)  of  the  Companies  Act 1985, have  been  delivered  to  the
Registrar of Companies.