Preliminary Results

Sareum Holdings PLC
02 October 2007


For Immediate Release                                             2 October 2007

                                        
                              SAREUM HOLDINGS PLC

                          ("Sareum" or the "Company")


          PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2007


Sareum Holdings plc (AIM: SAR), the specialist structure-based drug discovery
business, is pleased to announce its results for the twelve month period ended
30 June 2007.


• Financial highlights:

-        Revenues increased 67% to £2.5M (2006: £1.5M) plus an increase of
         £0.31M in deferred revenue (pre-payments to be recognised in current 
         financial year)

-        Gross profit increased 56% to £0.62M (2006: 0.40M)

-        Loss on ordinary activities for period (after taxation) reduced 16% to
         £0.53M (2006: £0.62M)

-        New equity investments in the Company of £0.70M

-        Cash in bank increased 25% to £0.66M (2006: £0.53M)


• Business highlights:

-        Patent filings submitted from two in-house drug discovery programmes

-        Revenue generating collaborations signed with major pharmaceutical
         companies Johnson & Johnson, Genentech and Roche

-        Repeat business with Almirall and Lundbeck


• Post year end highlights:

-        Substantial progress with two further in-house drug discovery
         programmes

-        Additional repeat business with Lundbeck



Dr Paul Harper, Chairman of Sareum Holdings plc, said: "Sareum has produced
another good set of results which further demonstrate the Company's ability to
consistently grow its business. We have increased spending on our internal
programmes where we are seeing considerable success and feel strongly that it is
this investment that will generate greatest future shareholder value."



For further information please contact:

Sareum Holdings plc                                                01223 497700
Tim Mitchell, Chief Executive Officer

Buchanan Communications                                            020 7466 5000
Tim Anderson, Mary-Jane Johnson

Grant Thornton Corporate Finance                                   0207 383 5100
Colin Aaronson, Philip Secrett




                Results for the twelve months ended 30 June 2007



Chairman's Statement


Background


The key value creator for Sareum's shareholders is in the development and
licencing of drugs from the Company's in-house drug development pipeline. Recent
successes in Sareum's programmes, which focus on novel treatments for cancer,
have led to a decision to increase investment in the drug discovery activity,
adding new programmes and increasing the resource applied to existing
programmes. This in turn has led directly to the filing of several patent
applications to protect families of promising compounds developed in two of
Sareum's research programmes, including its collaboration with the Institute of
Cancer Research and Cancer Research Technology Ltd. Sareum is now engaged in a
total of five in-house cancer drug discovery programmes.



Research


Since the Company's formation in 2003, Sareum's business is based on its
expertise in structure-based drug discovery, which is capable of rapidly
producing novel candidate drug compounds The platform enables a profitable
fee-for-service business where collaborations with major pharmaceutical and
biotechnology companies from around the world generate revenues to support our
in-house research and help to build relationships with potential future
licensees of this research. This is all combined with Sareum's management
know-how - a team with more than 90 years of pharmaceutical drug development
experience.



Development


Throughout the period Sareum has been pleased to announce advances in its
in-house drug discovery programmes. In August 2006 the Company reported that it
had achieved substantial progress in its joint research programme with Cancer
Research Technology Ltd and the Cancer Research UK Centre for Cancer
Therapeutics at the Institute of Cancer Research with the development of novel
compound series that showed efficacy in cancer cell models. Subsequently, in
February 2007, it was announced that patent applications had been filed on novel
small molecules effective against Checkpoint Kinase 1, a key component of a
biochemical pathway responsible for preventing the effectiveness of traditional
cancer therapeutics such as chemotherapy. Drugs that attack this target reduce a
cell's ability to repair the damage caused by current chemotherapy agents that
are used to treat many forms of cancer. Thus by combining drugs that attack
Checkpoint Kinase 1 with other anti-cancer drugs there is the opportunity to
potentiate the activity of the chemotherapy and possibly to reduce the dose and
therefore the side effects of the treatment. We are expecting to be able to
nominate a compound to enter pre-clinical development in latter half of the
current financial year. The Institute of Cancer Research is one of the world's
leading cancer research organisations and thus a prestigious partner for
Sareum's in-house research.


We continue to work on a number of other quality cancer targets in our in-house
programmes in addition to the joint venture activities. In April 2007, the
Company announced that it had filed patent applications on further small
molecule compounds effective in its programme focused on two significant cancer
drug discovery target types, the Aurora and FLT kinases. It is believed that a
drug simultaneously able to inhibit the function of both targets will be more
effective against cancer than one which acts solely on a single target.
Additionally, on 2 October 2007, the Company was pleased to announce initial
results from two further cancer drug discovery programmes, targeting PLK1 and
B-raf kinases.



Partnerships


We have continued to make good progress in securing profitable service
collaborations that generate revenues to support our in-house research. During
the year under review, an agreement was reached with Roche, a one-year
multi-target collaboration was entered into with Genentech and an 18-month
multidisciplinary drug discovery collaboration started with PIramed. In
addition, following the successful completion of initial programmes, repeat
business was secured with Almirall and Lundbeck. Our existing collaborations
continue to progress well, and success milestone payments have been received
from our multi-disciplinary drug discovery collaborations with Organon and
Idenix. The announcement in January of a research collaboration with Johnson and
Johnson Pharmaceutical R&D added a further major global pharmaceutical company
to Sareum's growing list of blue chip collaborators.



Operations


The overall increase in activity on both our in-house programmes and fee for
service activities has resulted in the need for Sareum to create additional
capacity and resource. We are currently upgrading our operations in Cambridge to
accommodate additional equipment, create new facilities and make space for
additional staff.



Fundraisings and Investment


The placing of £312,000 in October 2006 was made to augment the cash available
from our own activities, to fund investment in the business. The cash position
was further underpinned by an investment of £400,000 by Mr and Mrs Leonard
Licht, announced in January 2007 Sareum's Board was delighted to receive the
investment and endorsement from such an experienced investor.





Financial Review


During the period, revenues amounted to almost £2.5 million which is a 67%
increase on the previous year, plus a £307,000 increase in deferred income that
will be recognised during the current financial year. Gross profit increased 56%
to £618,000, reflecting the increased investment on in-house development. The
resultant loss after taxes of £527,000 is a 16% improvement on the previous year
and represents a loss per share of 0.12p. The cash position increased 25% to
£660,000 following new investment of £698,000 net.



Summary


Sareum's business model is maturing and the Company has now demonstrated that it
is able to progress its in-house research by advancing programmes according to
plan and invest in strategic alliances to develop candidate drug molecules. In
addition the Company has generated a significant increase in revenues from
fee-for-service activity and, together with new investment, is now able to
substantially increase its spending on in-house programmes.


This is a creditable performance and one that reflects the professionalism and
commitment of the entire team to excellence and to generating shareholder value.
Sareum will continue to build on this position via expansion of its facilities
and advancement of its exciting in-house anti-cancer drug pipeline.



Outlook


The combination of a world-class technology platform and a skilled and committed
research team has resulted in a number of patent filings during the period under
review. We expect to be able to nominate a pre-clinical candidate in the current
financial year. In parallel, we are actively seeking licencing partners for at
least one of our in-house programmes during the current financial year.


Fee for service activities remain a vital part of our business model providing
valuable relationships, new learning and substantial revenues for investment in
our own programmes.


Dr Paul Harper
Chairman Sareum Holdings plc



Chief Executive's Review

Strategy and Business Model


Sareum's strategy continues to be focused on advancing its own in-house research
programmes into novel cancer therapies whilst generating revenues through the
provision of specialist drug discovery services to the pharmaceutical industry.


Our business model comprises two main components:


1)     Investment in proprietary research into novel cancer therapeutics to
generate drug candidates for partnering with pharmaceutical companies at the
early clinical or pre-clinical trials stage


2)     Generation of revenues through the provision of specialist drug discovery
services to pharmaceutical company customers.


Our collaboration with the Cancer Research UK Centre for Cancer Therapeutics at
the Institute of Cancer Research enables us to share the risks involved in drug
discovery and to access specialist biology capabilities from one of the world's
leading cancer research organisations. This collaboration has led to the
discovery of, and filing of patent applications on, a number of novel compound
series that are effective in cancer cell models. These compounds target
Checkpoint Kinase 1, a key component of a biochemical pathway responsible for
preventing the effectiveness of traditional cancer therapeutics such as
chemotherapy.


We have also filed patent applications on novel small molecule compounds which
show promising activity against the Aurora and FLT kinases, two significant
cancer drug discovery target types which are believed to be key to the
regulation of cell division and proliferation, and control different stages in
the development of a tumour. Additionally, we have initiated two further
research programmes which target the cancer drug targets Polo-like kinase and
B-raf kinase. Reducing the levels of Polo-like kinase activity has been shown to
induce cell death of many types of tumour cell and over-activity of B-raf kinase
is observed in many cancers, particularly skin cancer.


We continue to apply our unique and innovative structure-based approaches in
these programmes to rapidly optimise the selected lead compounds with the aim of
selecting a candidate for pre-clinical scale-up and toxicology studies in the
current financial year.


During this period we continued or expanded our existing collaborations in
Europe with Organon, Lundbeck, UCB, Almirall and Idenix and received success
milestone payments in all cases. In addition we have signed new collaborations
with PIramed, a UK biotechnology company, and three major international
pharmaceutical companies, namely Roche, Genentech and Johnson & Johnson. 50% of
our income during the period originated from top-50 ranked pharmaceutical
companies and approximately 90% of income was received from longer-term
collaborations of 12 months plus duration, evidence that we continue to attract
longer-term partnerships with larger pharmaceutical customers.


Sareum has demonstrated that through its unique technology platforms and
experienced scientific staff, it is able to considerably advance its in-house
research by developing programmes to plan whilst at the same time investing in
strategic alliances to develop candidate drug molecules.



Objectives for the coming year


We look forward to successfully progressing on the developments achieved in our
third trading year.


Our primary objective remains as the advancing of our in-house drug discovery
pipeline to deliver drug candidates positioned to attract lucrative partnering
deals with pharmaceutical companies. We will continue to advance these
programmes, and have filed further drug patent applications during the year to
protect our Intellectual Property portfolio. We expect to develop drug
candidates for pre-clinical studies during the current financial year and are
actively seeking licencing partners with the aim of achieving a high-value
licencing deal on at least one of our five current in-house programmes.


We also continue to advance our global research services business to generate
revenues and cash flow to support our drug discovery pipeline. In addition to
continuing to secure repeat business from our current customers, we will seek to
sign further longer-term collaborations, potentially including clinical
development milestones, with major international pharmaceutical companies. We
look forward to announcing successful results from these existing and developing
relationships.


Dr Tim Mitchell
CEO Sareum Holdings plc

CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 30 JUNE 2007

                                              2007                  2006
                                                 £                     £

Turnover                                 2,470,676             1,475,792
Cost of sales                            1,852,626             1,080,278
Gross profit/(loss)                        618,050               395,514
Administrative expenses                  1,352,636             1,145,792
Operating loss                            (734,586)             (750,278)
Interest receivable                         28,712                10,478
Interest payable                           (16,953)              (12,586)
                                            11,759               (2,108)
Loss on ordinary activities               (722,827)             (752,386)
before taxation
Tax on loss on ordinary activities        (195,441)             (128,040)
Loss on ordinary activities               (527,386)             (624,346)
after taxation
Basic and diluted earnings per share       (0.0012)              (0.0018)



The loss on ordinary activities before taxation arises from the Group's
operations all of which are continuing.

There are no recognised gains or losses other than as stated in the profit and
loss account.


CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2007

                                          2007                 2006
                                             £                    £
Fixed assets
Intangible assets                       30,681               17,499
Tangible fixed assets                1,014,835              792,072
                                     1,045,516              809,571
Current assets
Debtors                                837,179              436,982
Cash at bank                           660,326              528,476
                                     1,497,505              965,458
Creditors: amounts                   1,017,165              517,010
falling due within one year

Net current assets                     480,340              448,448
Total assets less current            1,525,856            1,258,019
liabilities
Creditors: amounts                     159,965               62,702
falling due after more
than one year
Net assets                           1,365,891            1,195,317

Capital and reserves
Called up share capital                114,952               93,187
Share premium account                3,764,303            3,088,108
Merger reserve                              27                   27
Profit and loss account            (2,513,391)          (1,986,005)
Equity shareholders'                 1,365,891            1,195,317
funds


Creditors: amount falling due within one year includes £389,000 of deferred
revenue, which will be recognised during the next period (2006: £82,000)


COMPANY BALANCE SHEET

AS AT 30 JUNE 2007

                                         2007                2006
                                            £                   £
Fixed assets
Investment in subsidiary               30,000              30,000
Debtors
Long term debt -                    3,539,458           2,958,387
subsidiary
Net current assets                  3,539,458           2,958,387
Net assets                          3,569,458           2,988,387

Capital and reserves
Called up share capital               114,952              93,187
Share premium account               3,764,303           3,088,108
Profit and loss account              (309,797)           (192,908)
Equity shareholders'                3,569,458           2,988,387
funds



CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2007

                                                2007       2006
                                                   £          £
Net cash outflow from operating             (370,084)  (362,664)
activities
Returns on investment and servicing of        11,759     (2,108)
finance
Taxation                                     128,040    119,796
Capital expenditure                         (518,199)   (66,145)
Cash flow before financing                  (748,484)  (311,121)
Financing                                    880,334    398,162
Increase in cash                             131,850     87,041


NOTES TO THE FINANCIAL STATEMENTS


1 General


The financial information set out above does not constitute the company's
statutory accounts within the meaning of section 240 of the Companies Act 1985.


The 2007 figures are based on unaudited accounts for the year ended 30 June
2007. The statutory accounts will be finalised on the basis of the financial
information presented by the directors in the preliminary announcement and which
will be delivered to the Registrar of Companies following the company's annual
general meeting.


The 2006 comparatives are derived from the statutory accounts for 2006 which
have been delivered to the Registrar of Companies and received an unqualified
audit report and did not contain a statement under the Companies Act 1985, s237
(2) or (3).


This statement will be made available online at www.sareum.co.uk


2 Basis of accounting


The financial statements have been prepared under the historical cost convention
and in accordance with applicable UK accounting standards.


3 Earnings per share


The basic and diluted earnings per share is calculated on the loss after tax of
£527,386 and a weighted average number of shares of 431,571,725 (2006:
359,403,542). The calculation of diluted earnings per share takes account of
share options that have vested.







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