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Xenova Group PLC (XEN)

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Monday 14 August, 2000

Xenova Group PLC

Interim Results

Xenova Group PLC
14 August 2000

                                                         
                                       
                                       
                   Xenova: Interim Results Announcement 2000
                                       

Highlights:


     Encouraging Phase IIa Clinical Trial results announced for multi-drug
     resistance modulator XR9576
     
     Operating loss for 6 months to 30 June 2000 reduced by 37%
     
     Net cash outflow (before financing) reduced by 45%
     
     XR5000 Phase II ovarian, non-small cell lung and glioma trials continuing
          - colorectal trial completed, no further recruitment planned
     
     Telomerase research agreement signed with Brunel University, UK

     July 2000 Placing and Open Offer raises an initial £9.8m, before expenses
          - attached warrants may raise a further £9.8m, before expenses

     Potential realisation of Xenova's £3m investment through agreed
     acquisition of TerraGen by Cubist Pharmaceuticals Inc.

Commenting, Chief Executive Officer David Oxlade said:

 'Xenova has made good progress so far this year with, in particular, the
encouraging clinical trials results which are beginning to emerge for our
cancer drug resistance modulator, XR9576. The funds raised last month should
enable us to complete our ongoing Phase II trials and to advance our
preclinical research programmes.  The acquisition of TerraGen by Cubist
Pharmaceuticals should allow us to realise our £3m investment in TerraGen.'
                                      
                                                                              
Contacts

UK                                           US
Xenova Group plc                             Noonan/Russo Communications Inc
Tel: +44 (0) 1753 706600                     Tel: 001 212 696 4455
David Oxlade: Chief Executive Officer        Joy E Bessenger (Investors)
Daniel Abrams: Finance Director              Tony Ho Loke (Media)
Hilary Reid Evans: Corporate Communications

Financial Dynamics
Tel: +44(0)207 831 3113
David Yates/Sophie Pender-Cudlip
  

Notes to Editors

Xenova Group plc is an emerging bio-pharmaceutical company specialising in the
development of new small molecule drugs.  The company's strategy is to develop
commercially attractive new drugs, primarily in the area of cancer
therapeutics.

Xenova currently has two drug candidates, XR9576 and XR5000, undergoing Phase
II clinical trials, and a number of drug leads undergoing optimisation or
evaluation.

XR9576 is a P-glycoprotein pump (P-gp) inhibitor, which is being developed to
restore the sensitivity of multi-drug resistant cancer cells to specific
cytotoxic drugs.  Preliminary Phase II pharmacokinetic (PK) data, showing that
XR9576 was well tolerated and without PK interaction, was announced in
November 1999. IND approval was also received in late November 1999.  The
successful completion of the XR9576 paclitaxel study and positive interim data
from the doxorubicin study were announced in March and May 2000 respectively.

XR5000 acts as an inhibitor of both topoisomerases I and II, enzymes which are
critically involved in the replication of DNA during the process of cell
division and which therefore play a key role in the proliferation of cancer
cells.  It has demonstrated significant activity in preclinical animal models
against several types of solid tumours, including multi-drug resistant
cancers.  XR5000 completed Phase I studies in late 1998.

 In addition to XR9576 and XR5000, Xenova is also currently undertaking cancer
research projects targeting MRP-related multi-drug resistance, next generation
topoisomerase inhibitors, telomerase (with Brunel University) and plasminogen
activator inhibitor-1 (PAI-1).  Xenova has a drug development agreement with
Eli Lilly, based on small molecule inhibitors of PAI-1, to develop novel
antithrombotic drugs for chronic use.

Safe Harbor Statement under the US Private Securities Litigation Reform Act of
1995: Some or all of the statements in this document that relate to future
plans, expectations, events, performances and the like are forward-looking
statements, as defined in the US Private Securities Litigation Reform Act of
1995.  Actual results of events could differ materially from those described
in the forward-looking statements due to a variety of factors, including those
set forth in the Company's filings with the US Securities and Exchange
Commission.

Chairman's Statement

Xenova made considerable progress in the first six months of 2000 in
development of its product pipeline.  The company continues to be clearly
focused on the discovery and development of valuable new drugs and has two
oncology-related products, the  P-glycoprotein modulator XR9576 and the
cytotoxic agent XR5000, nearing the end of Phase II clinical trials.  Interim
results from the trials for XR9576 are particularly encouraging and, although
the results of the colorectal trial for XR5000 proved disappointing, results
from the three further XR5000 trials (for ovarian and non-small cell lung
cancers and glioblastoma), which are expected during the fourth quarter 2000,
will help determine the future development strategy for this compound.  It is
the Group's intention to seek commercial partners for its products, generally
no later than the start of Phase III clinical trials.

Two new second-generation cytotoxics, both discovered through Xenova's in-
house research and development capability, are nearing the end of preclinical
development.  The first of these, XR11576, is expected to enter clinical
studies in 2001.

Xenova's collaborative research agreement for the discovery and development of
apoptosis inducing telomerase inhibitors, with Brunel University (one of the
UK's leading universities in this field) has further strengthened the Group's
preclinical pipeline.

Peter Gillett, an audit partner with professional services firm Ernst & Young
for some 25 years, was appointed to the Board as a non-executive Director in
February 2000.  Peter Gillett was most recently a senior partner in Ernst &
Young's Entrepreneurial Services office, meeting the needs of emerging growth
companies.

Stephen Howell, Professor of Medicine at the University of California, San
Diego, was appointed to Xenova's Scientific Advisory Board in January 2000.
Professor Howell is acknowledged as a leading world expert in the field of
cancer therapeutics and is a recipient of the Milken Family Medical Foundation
Award for Outstanding Work in the Field of Cancer Research.

In July, the Group's financial position was strengthened through a successful
Placing and Open Offer which raised an initial £9.8m, before expenses. In
addition, the Group will raise a further approximately £9.8m, before expenses,
assuming full exercise of the warrants.  The warrants are exercisable between
1 January 2001 and 31 October 2001 at 85p per warrant.

Product Pipeline Update - Clinical Trials

The Group is currently undertaking Phase II clinical trials for its two most
advanced drugs, XR9576 and XR5000.

XR9576 (P-glycoprotein modulator) - The successful conclusion of a Phase IIa
pharmacokinetic study in relapsed ovarian patients was announced in March
2000. This study was carried out in patients with ovarian cancer recurring
more than 6 months after previous treatment, with a variety of cytotoxic
drugs.  Patients received a single intravenous dose of 150 mg of XR9576 two
hours prior to administration of paclitaxel.  Paclitaxel was administered as a
3-hour infusion at the full clinical dose of 175 mg/m2.

In this trial, no clinically significant drug interaction between XR9576 and
paclitaxel in plasma was observed.  By contrast with the performance of some
other compounds in development by competitors, this allows paclitaxel to be
administered at its full normal dose when used with XR9576.

Although not designed as an efficacy study, complete or partial responses were
observed in 6 of the 12 patients.  Two patients showed complete response (no
detectable tumour), 4 a partial response (that is, a more than 50% reduction
in tumour size as measured by CT scans), 2 stable disease and 4, progressive
disease.

It is expected that XR9576 will be ready to enter pivotal Phase III clinical
trials in late 2000.  The company does not, however, intend to progress XR9576
into Phase III trials until a licensing partner has been secured to provide
financial support for the conduct of these trials.

A further two Phase IIa clinical trials, in which XR9576 is being studied in
combination therapy with doxorubicin and vinorelbine, are underway at a number
of centres. Paclitaxel, vinorelbine and doxorubicin are three of the world's
best-selling cytotoxic drugs.   Interim trial results from the doxorubicin
study were announced in May 2000 and final PK data from these trials is
anticipated for both studies before the end of the current year.  The Phase
IIa clinical trials programme is being carried out in both the US and UK.

XR5000 - Three Phase II clinical trials are also underway at a number of
European centres for novel cytotoxic XR5000, a topoisomerase I and II
inhibitor for the treatment of common solid tumours.  The Phase II trials are
being conducted on an 'open label' basis and target three cancer types -
ovarian, non small cell lung and glioblastoma.  In preclinical studies, XR5000
has been shown to be effective in cases where a tumour has already shown
resistance to treatment with existing cytotoxic drugs.

The results of a fourth Phase II trial, in which the efficacy of XR5000 was
investigated in patients with colorectal cancer, were announced in June 2000.
At a dose level of 3010 mg/m2, no complete or partial responses to treatment
were observed after two courses of treatment with XR5000.  Two patients showed
stable disease and 13 patients disease progression.  XR5000 was shown to have
a good safety profile.  This study is complete and no further recruitment is
therefore planned for this indication.

Final data from all three remaining studies are expected to be available
during the course of the fourth quarter of 2000.  Results from these trials
will help determine the future development strategy for this compound.

Product Pipeline Update - Pre-Clinical

Development of Xenova's pipeline of preclinical compounds continued
satisfactorily throughout the first half of 2000.  All preclinical compounds
currently in development have been derived from Xenova's own R&D capability.

XR11576 - XR11576 is undergoing final pharmacological and toxicity testing,
prior to its planned entry into clinical development.  The adoption of this
novel, orally active, next generation cytotoxic topoisomerase I and II
inhibitor as a preclinical development candidate was announced in November
1999.  XR11576 is structurally dissimilar to XR5000, with a significant
improvement in its profile including oral bioavailability and a marked
enhancement of potency, while retaining certain advantageous characteristics
of XR5000.

In preclinical studies, XR11576 has been shown to be highly potent as a
cytotoxic agent against both parental and MDR cell lines.  In vivo it has been
shown to inhibit the growth of human and murine tumours after iv and oral
administration and to display good potency when compared with competitors'
development candidates in the same broad class. The XR11576 series of
compounds is protected by a priority patent application in the UK.

XR5944 - Xenova has discovered a further novel inhibitor of topoisomerase I
and II that has shown exceptionally high potency as a cytotoxic agent in
preclinical studies with a number of tumour cell lines.  XR5944 is
structurally distinct from both XR5000 and XR11576 and has been shown to be
unaffected by atypical MDR.

A UK priority patent application  relating to the XR5942 second generation of
drug leads has been filed by Xenova.  XR5944 forms part of this family of drug
leads.  Patents granted pursuant to these applications, if any, would expire
in 2017.

PAI-1 Inhibitors (Anti-Thrombotic) - Research is continuing in the drug
development programme, in which Xenova established a partnership with Lilly in
February 1998.  The partnership is based on compounds from Xenova's XR334
series which are capable of oral absorption and are active in both venous and
arterial models of thrombosis.  Under the partnership Xenova will receive up
to $35 million over five years in licence fees, research funding and milestone
payments over the drug development cycle, subject to the achievement of
certain objectives. Approximately $10 million in total was received from Lilly
in the period from February 1998 to 31 December 1999.

PAI-1 Inhibitors (Anti-Cancer) - Research continued throughout the first half
of 2000 in this programme, in which Xenova is collaborating with the Institute
for Cancer Research.  PAI-1 is believed to play a role in the spread of cancer
(metastasis).  In a number of types of tumours susceptible to metastasis, a
strong correlation has been observed between elevated PAI-1 levels, disease
progression and reduced patient survival time. Xenova presented 'proof of
concept' studies in this area in 1999.  Lilly has been granted an option to
acquire exclusive rights to develop and commercialise PAI-1 inhibitors in this
field. If exercised, Xenova could receive up to $16.5 million in aggregate
together with additional royalties on commercialised products.

Product Pipeline Update - Research

Multi-Drug Resistant Protein (MRP) - Xenova is conducting a research programme
for MRP during 2000.  Should this be successful, it is expected that the
project will enter preclinical development during 2001.  MRP acts as a pump,
which, like P-gp, expels small molecules (such as cytotoxins) out of cells and
thus can help protect tumour cells from certain chemotherapeutic agents.

Xenova is also exploring the potential application of MRP inhibitors in the
prevention of lung inflammation in asthma patients.  Xenova is currently
evaluating drug leads from its MRP cancer programme in the search for new
classes of anti-asthmatic drug candidates.

Telomerase - Telomerase is an enzyme known to play a role in cancer
progression.  On 7 February 2000 Xenova signed an exclusive collaborative
research agreement, lasting at least two years, for the discovery and
development of novel classes of apoptosis inducing telomerase inhibitors with
Brunel University (one of the United Kingdom's leading universities in this
field).

Management

Stephen B. Howell, Professor of Medicine at the University of California, San
Diego, joined Xenova's Scientific Advisory Board (SAB) in January 2000.
Chaired by Professor Stan Kaye, the SAB was substantially restructured in May
1999 to reflect Xenova's strategic focus on oncology-related drug discovery
and development.

Peter Gillett, an audit partner with Ernst & Young, the leading professional
services firm, for some 25 years, joined Xenova as a non-executive Director of
Xenova in February 2000.  His experience has encompassed multinational listed
plc's and small and medium-sized enterprises.  In recent years, Peter Gillett
was a senior partner in Ernst & Young's Entrepreneurial Services office,
meeting the needs of emerging growth companies, and was also the partner in
charge of Ernst & Young's services to Japanese business.  Peter Gillett chairs
Xenova's Audit Committee.

Financial Review

Half Year Performance

Turnover of £0.1m ($0.1m) (1999: £1.8m, $2.7m) for the six months to 30 June
2000 was primarily derived from the sale of a software licence, following the
1999 sale of the majority of the assets and the transfer of the employees of
MetaXen, Xenova's San Francisco-based subsidiary, to Exelixis. The decrease in
turnover is primarily attributable to the transfer to Lilly of work in
connection with the ongoing Lilly cardiovascular research and development
programme.

Operating expenses declined 50% to £4.0m ($6.0m) (1999: £8.0m, $12.1m) and
included £3.2m ($4.8m) (1999: £7.0m, $10.6m) of research and development costs
and £0.8m ($1.2m) (1999: £1.1m, $1.7m) of administrative expenses. The
reduction in operating costs reflects the cost benefits of the disposal of the
non-core businesses of Xenova Discovery and MetaXen in March and July 1999
respectively.  Research and development costs for continuing operations
declined 16% to £3.2m ($4.8m) (1999: £3.8m, $5.7m) reflecting the phasing of
costs for the Phase II clinical trials of XR9576 and XR5000.  Phase II trials
for both compounds are expected to be completed by the end of 2000.

The total operating loss for the six-month period was £3.9m ($5.9m) (1999:
£6.2m, $9.4m).  The net decrease in cash during the period was £3.3m ($5.0m)
(1999: £6.4m, $9.7m, representing a decline of 45% in net cash outflow before
financing of £3.6m ($5.4m) (1999: £6.5m, $9.8m).

The directors do not intend to propose an interim dividend for 2000 (1999:
Nil).

Treasury

Cash and investments at 30 June 2000 totalled £6.2m ($9.5m) (1999: £5.0m,
$7.6m). Net interest in the six months to 30 June 2000 was £290,000 ($439,000)
(1999: £271,000, $410,000).

The number of shares in issue rose to 54,817,037 as at 30 June 2000 from
54,627,506 at 31 December 1999. This increase was largely attributable to the
exercise of outstanding warrants issued as part of the October 1998 Placing
and Open Offer.

A further Placing and Open Offer was announced on 13 July 2000, raising an
initial £9.8 million before expenses, by way of an issue of 2,885,108 units,
each unit comprising 5 new ordinary shares and 4 warrants, at 345p per unit.
Dealings in the new shares and warrants began on 9 August 2000.  The issue of
the units was underwritten in full by Nomura International plc.  In addition,
Xenova will raise a further approximately £9.8 million before expenses
assuming full exercise of the warrants at 85p per warrant, the warrants being
exercisable between 1 January 2001 and 31 October 2001.   As a result of the
Placing and Open Offer, the issued ordinary share capital has increased from
54,817,037 ordinary 10p shares to 69,242,577 as at 9 August 2000.

On August 5 TerraGen Discovery Inc. ('TerraGen') entered into an acquisition
agreement with, among others, Cubist Pharmaceuticals ('Cubist').  This
agreement is subject to various closing conditions under which Cubist will
indirectly acquire the outstanding shares of TerraGen in exchange for shares
of Cubist common stock. It is anticipated that Xenova will receive 91,048
shares of Cubist common stock in exchange for its holding of 1m Class B
preferred shares and following conversion of the £1.5m convertible note in
TerraGen which can occur in April 2001 (assuming a £/CAN$ exchange rate of
2.3).  These investments were together valued in Xenova's balance sheet at 30
June 1999 at £3m.  The number of shares of Cubist common stock which may be
received by Xenova may change, depending upon potential changes in the
conversion rate at which TerraGen preferred shares are convertible into
TerraGen common shares and the number of fully diluted TerraGen common shares.
The shares of Cubist common stock to be issued under the acquisition
transaction are being issued at a value of US$47.66 per share, representing
the 10 day average trading price of Cubist's common stock on the Nasdaq Stock
Market.  Based on the anticipated 91,048 shares of Cubist common stock, this
suggests a value of Xenova's holding in Cubist of approximately US$4.3m
(£2.9m).

Xenova's investment in TerraGen was acquired in April 1999 as a result of the
sale of the majority of the assets of Xenova Discovery Limited to TerraGen.
The sale resulted in a total realised and unrealised gain on disposal of £3.0m
(US$4.8m).  It is anticipated that these provisions will result in Xenova
being entitled to receive approximately 15% of the shares of Cubist common
stock issuable under the transaction.
     
                                       
Group Balance Sheet                                                  
(unaudited)
(in thousands)                  Unaudited   Unaudited   Unaudited      Audited
                                    As at       As at       As at        As at
                                  30 June     30 June     30 June  31 December
                                     2000        2000        1999         1999
                                    $'000       £'000       £'000        £'000
Fixed assets                                                        
Tangible fixed assets                 507         335       1,586          328
Investments                         2,271       1,500       1,500        1,500
                                    _____       _____       _____        _____
                                    2,778       1,835       3,086        1,828
Current assets                                                                

                                                                              

Debtors                                                                       
  due within one year                 852         563       1,730          462
  due after more than                                                         
  one year                          2,271       1,500       1,500        1,500
                                    _____       _____       _____        _____
                                    3,123       2,063       3,230        1,962
                                                                              

Investments                             -           -         516          514
Cash at bank and in hand            9,456       6,246       4,494        9,567
                                   12,579       8,309       8,240       12,043
                                                                              

Creditors:                                                                    

amounts falling due                                                           
within one year                   (2,813)     (1,858)     (3,217)      (2,251)
                                    _____       _____       _____        _____
Net current assets                  9,766       6,451       5,023        9,792
                                    _____       _____       _____        _____
                                                                              

Total assets less                                                             
current liabilities                12,544       8,286       8,109       11,620
                                                                              
  
Creditors:                                                                    
  
amounts falling due                                                           
after more than one year                -           -       (347)            -
                                    _____       _____       _____        _____
Total net assets                   12,544       8,286       7,762       11,620
                                    _____       _____       _____        _____
                                                                              
  
Capital and reserves                                                          
  
Called up share capital             8,300       5,482       4,339        5,463
Share premium account             101,401      66,980      59,783       66,762
Other reserves                     27,101      17,902      17,902       17,902
Profit and loss account         (124,258)    (82,078)    (74,262)     (78,507)
Shareholders' funds                                                           
- equity interests                                                
(note 3)                           12,544       8,286       7,762       11,620
                                    _____       _____       _____        _____
                                                                    
 
US dollar amounts have been translated at the closing rate on the 30th June
2000 (£1.00:$1.5139), solely for informational purposes                       
              
                                       
                                       
Consolidated Cashflow                                                
(unaudited)
(in thousands)                  Unaudited   Unaudited   Unaudited      Audited
                               Six months  Six months  Six months         Year
                                    Ended       Ended       Ended        ended
                                  30 June     30 June     30 June  31 December
                                     2000        2000        1999         1999
                                    $'000       £'000       £'000        £'000
                                                                     
Net cash outflow from                                                         
operating activities                                                          
(note 4)                          (6,472)     (4,275)     (7,092)     (11,101)
                                                                     
Returns on investments                                               
and servicing of finance
Interest received                     439         290         279          552
Interest element of                                                           
finance lease rental                                                          
payments                                -           -        (31)         (35)
                                    _____       _____       _____        _____
Net cash inflow from                                                          
returns on investments                                                        
and servicing of finance              439         290         248          517
Capital expenditure and                                              
financial investment
Purchase of tangible                                                          
fixed assets                        (145)        (96)        (63)        (102)
Proceeds from disposal                                                        
of tangible fixed assets                -           -         220          220
                                    _____       _____       _____        _____
Net cash (outflow)/                                                           
inflow from capital                                                           
expenditure and                                                               
financial investment                (145)        (96)         157          118
                                    _____       _____       _____        _____
                                                                     
Acquisitions and disposals                                           
Net cash received from                                                        
businesses sold                         -           -         167          937
                                                                     
Management of liquid                                                 
resources
Purchase of investments                 -           -       (519)      (1,035)
Sale of investments                   786         519         510        1,029
                                    _____       _____        ____        _____
Net cash inflow/(outflow)                                                     
from management of liquid                                                     
resources                             786         519         (9)          (6)
                                     ____        ____       _____        _____
                                                                     
Net cash outflow before                                                       
financing                         (5,392)     (3,562)     (6,529)      (9,535)
                                                                     
Financing                                                                     
  
Issue of ordinary share                               
capital net of expenses               359         237         272        8,375
Repurchase of shares by                              
subsidiary undertaking                  -           -           -          (2)
Capital element of finance                                                    
lease rental payments                   -           -       (138)        (159)
                                    _____       _____       _____        _____
Net cash inflow from                                                          
financing                             359         237         134        8,214
                                                                     
Decrease in cash during                                                       
the period                        (5,033)     (3,325)     (6,395)      (1,321)
                                    _____       _____       _____        _____
                                                                     
 US dollar amounts have been translated at the closing rate on the 30th June
2000 (£1.00:$1.5139), solely for informational purposes
          
                                                                              
Reconciliation of Net           Unaudited   Unaudited   Unaudited      Audited
Cash Flow to Movement          Six months  Six months  Six months         Year
in Net Funds                        Ended       Ended       Ended        Ended
(unaudited)                       30 June     30 June     30 June  31 December
                                     2000        2000        1999         1999
                                    $'000       £'000       £'000        £'000
                                                                     
Decrease in cash                                                              
during the period                 (5,033)     (3,325)     (6,395)      (1,321)
Capital element of                                                            
finance leases                          -           -         138          159
Change in liquid                                                              
resources                           (786)       (519)           9            6
                                    _____       _____       _____         ____
Changes in net funds                                                          
resulting from cash                                                           
flows                             (5,819)     (3,844)     (6,248)      (1,156)
                                                                     
Disposal of finance                                                           
leases in respect of                                                          
discontinued                                                                  
operations                              -           -          97          675
Translation                                                                   
difference                             14           9        (32)         (19)
                                    _____       _____       _____        _____
Change in net funds               (5,805)     (3,835)     (6,183)        (500)
                                                                     
Net funds at 1 January             15,261      10,081      10,581       10,581
                                    _____       _____       _____        _____
Net funds at 30 June/                                                         
31 December                         9,456       6,246       4,398       10,081
                                    _____       _____       _____        _____

US dollar amounts have been translated at the closing rate on the 30th June
2000 (£1.00:$1.5139), solely for informational purposes


Statement of Total Recognised Gains and Losses
For the six months ended 30 June 2000

                                Unaudited   Unaudited   Unaudited      Audited
                               Six months  Six months  Six months         Year
                                    Ended       ended       ended        ended
                                  30 June     30 June     30 June  31 December
                                                       (restated)
                                     2000        2000        1999         1999
                                    $'000       £'000       £'000        £'000
                                                                      
Loss attributable                                                             
to members of Xenova                                                          
Group plc                         (5,435)     (3,590)     (5,722)     (10,114)
Unrealised profit on                                                          
sale of business                        -           -       2,167        2,167
                                                                              
Translation                                                                   
difference                                                                    
in respect of                                                                 
Overseas subsidiary                                                           
undertaking                            15          10           1            7
                                                                              
Total recognised                                                              
gains and losses in                                                           
the period                                                                    
attributable to                                                               
members of Xenova                                                             
Group plc                         (5,420)     (3,580)     (3,554)      (7,940)
                                    _____       _____       _____        _____


Consolidated Statements         Unaudited   Unaudited   Unaudited      Audited
of Operations (unaudited)      Six months  Six months  Six months         Year
(in thousands, except per           ended       Ended       Ended        Ended
share amounts)                    30 June     30 June     30 June  31 December
                                                       (restated)
                                     2000        2000        1999         1999
                                                                     
                                    $'000       £'000       £'000        £'000
Turnover (note 2)                                                    
 Continuing operations                118          78         176          383
 Discontinued operations                -           -       1,648        2,310
                                    _____       _____       _____        _____
                                      118          78       1,824        2,693
                                                                    
Operating expenses                                                   
Research and development                                             
 Continuing operations              4,787       3,162       3,824        7,793
 Discontinued operations                -           -       3,128        3,501
                                    _____       _____       _____        _____
                                    4,787       3,162       6,952       11,294
                                                                    
Administrative expenses                                              
 Continuing operations              1,205         796         788        2,002
 Discontinued operations                -           -         297          323
                                    _____       _____       _____        _____
                                    1,205         796       1,085        2,325
                                    _____       _____       _____        _____
Total operating expenses            5,992       3,958       8,037       13,619
                                                                     
Operating loss                                                       
 Continuing operations            (5,874)     (3,880)     (4,436)      (9,412)
 Discontinued operations                -           -     (1,777)      (1,514)
                                    _____       _____       _____       ______
                                  (5,874)     (3,880)     (6,213)     (10,926)
Discontinued operations                                              
- exceptional items
Profit on sale of                                                             
business                                -           -         800          271
Permanent diminution                                                          
of fixed assets                         -           -       (580)            -
                                    _____       _____       _____        _____
                                                                     
Loss on ordinary                                                              
activities before                                                             
interest                          (5,874)     (3,880)     (5,993)     (10,655)
                                                                     
Interest (net)                        439         290         271          541
                                    _____        ____        ____        _____
Loss on ordinary                                                              
activities before and                                                         
after taxation,                                                               
retained and                                                                  
attributable to members                                                       
of Xenova Group plc               (5,435)     (3,590)     (5,722)     (10,114)
                                    _____        ____      ______        _____
                                                                     
Net loss per share                                                            
(basic and diluted)                 (10c)        (7p)       (13p)        (22p)
Shares used in computing                                                      
net loss per share                 54,772      54,772      43,032       46,870
                                    _____        ____        ____        _____


US dollar amounts have been translated at the closing rate on the 30th June
2000 (£1.00:$1.5139), solely for informational purposes

Notes to the interim accounts

1.   Basis of preparation

These unaudited interim accounts, which do not constitute statutory accounts,
within the meaning of Section 240 of the Companies Act 1985, have been
prepared using accounting policies set out in the Group's 1999 Statutory
Accounts. The 1999 accounts received an unqualified auditor's report and have
been delivered to the Registrar of Companies.  The prior period restatement
reflects the year end treatment of the unrealised proportion of the gain on
disposal of the Discovery business (Note 5).  The adoption of new accounting
standards in the period has had no impact on the current or prior period
results.


2.   Segmental Analysis


                                                                              
                                    Unaudited       Unaudited          Audited
                                     6 months        6 months          Year to
                                   to 30 June      to 30 June      31 December
                                         2000            1999             1999
                                        £'000           £'000            £'000
By geographical area                                                          
of destination
Continuing operations
  United Kingdom                           15               -               19
  North America                            63             176              364
                                        _____           _____            _____
                                           78             176              383
                                                                              
Discontinued operations                                                       
  North America                             -           1,509            2,136
  Rest of the world                         -             139              174
                                         ____           _____            _____
                                            -           1,648            2,310
                                         ____           _____            _____
                                                                              
Total                                      78           1,824            2,693
                                         ____           _____            _____

                                                Turnover
                                    Unaudited       Unaudited          Audited
                                     6 months         6 month          Year to
                                   to 30 June      to 30 June      31 December
                                         2000            1999             1999
                                        £'000           £'000            £'000
By business and                                                               

geographical area of origin
  Continuing operations
  Therapeutics (UK)                        78             176              383
                                                                              

  Discontinued                                                                

  operations 
  Discovery (UK)                            -             231              266
  Metaxen (US)                              -           1,417            2,044
                                        _____           _____            _____
                                            -           1,648            2,310
                                        _____           _____            _____
  Total                                    78           1,824            2,693
                                        _____            ____             ____


                                      Operating loss before exceptional items
                                    Unaudited       Unaudited          Audited
                                     6 months        6 months          Year to
                                   to 30 June      to 30 June      31 December
                                         2000            1999             1999
                                        £'000           £'000            £'000
                                        
By business and                                                               
geographical area
of origin
  Continuing operations
  Therapeutics (UK)                   (3,880)         (4,436)          (9,412)
                                                                              
  Discontinued                                                                
  operations
  Discovery (UK)                            -           (823)               16
  Metaxen (US)                              -           (954)          (1,530)
                                        _____           _____           ______
                                            -         (1,777)          (1,514)
                                        _____           _____           ______
  Total                               (3,880)         (6,213)         (10,926)
                                        _____           _____           ______


Notes to the interim accounts (cont'd)

3.   Reconciliation of movement on shareholders' funds
     
                                    Unaudited       Unaudited          Audited
                                  6 months to     6 months to          Year to
                                      30 June         30 June      31 December
                                         2000            1999             1999
                                                   (restated)
                                        £'000           £'000            £'000
At start of period                     11,620          11,181           11,181
Allotment of shares                       327             272            8,462
Expense on issue of                                                           
shares                                   (90)               -             (87)
Repurchase of shares                                                          
by subsidiary                               -               -              (2)
Shares to be issued                         9               -                6
Retained loss for                                                             
the period                            (3,590)         (5,722)         (10,114)
Unrealised profit on                                                          
sale of business                            -           2,167            2,167
Exchange movement                          10           (136)                7
                                        _____           _____            _____
At end of period                        8,286           7,762           11,620
                                        _____           _____            _____

4.   Cash flow statement

Reconciliation of                   Unaudited       Unaudited          Audited
operating loss to net             6 months to     6 months to          Year to
cash outflow from                     30 June         30 June      31 December
operating activities                     2000            1999             1999
                                        £'000           £'000            £'000
                                                                              
Operating loss                        (3,880)         (6,213)         (10,926)
Depreciation                               89             439              580
Loss on disposal of                                                           
tangible fixed assets                       -              86               83
Provision for                               -                            (140)
liabilities and                                         (140)
charges
Decrease in debtors                     (101)              77              502
Decrease in creditors                   (392)         (1,341)          (1,206)
Charge for long term                                                          
incentive scheme                            9               -                6
                                       ______          ______           ______
Net cash outflow from                 (4,275)         (7,092)         (11,101)
operating activities                   ______          ______           ______


5.   TerraGen Investment

On August 5 TerraGen Discovery Inc. ('TerraGen') entered into an acquisition
agreement with, among others, Cubist Pharmaceuticals ('Cubist').  Pursuant to
this agreement, subject to satisfaction of a number of conditions, including
obtaining any required government or regulatory approvals, review under the
United States Hart-Scott-Rodino Antitrust Improvements Act, approval by the
shareholders of TerraGen and other closing conditions, Cubist will,
indirectly, acquire the outstanding shares of TerraGen in exchange for shares
of Cubist common stock, or shares of a subsidiary of Cubist which are
exchangeable for shares of Cubist common stock and will assume the convertible
note held by Xenova, which will be converted into a debenture convertible into
shares of Cubist common stock.  It is anticipated that under, or in connection
with, this transaction, Xenova will receive 91,048 shares of Cubist common
stock in exchange for its holding of 1m Class B preferred shares and following
conversion of the £1.5m convertible note in TerraGen which can occur in April
2001 (assuming a £/CAN$ exchange rate of 2.3).  These investments were each
carried in Xenova's balance sheet at 30 June 1999 at £1.5m.  The number of
shares of Cubist common stock which may be received by Xenova may change,
depending upon potential changes in the conversion rate at which TerraGen
preferred shares are convertible into TerraGen common shares and the number of
fully diluted TerraGen common shares.  The shares of Cubist common stock to be
issued under the acquisition transaction are being issued at a value of
US$47.66 per share, representing the 10 day average trading price of Cubist's
common stock on the Nasdaq Stock Market.  Based on the anticipated 91,048
shares of Cubist common stock, this suggests a value of Xenova's holding in
Cubist of approximately US$4.3m (£2.9m).

Xenova's investment in TerraGen was acquired in April 1999 as a result of the
sale of the majority of the assets of Xenova Discovery Limited to TerraGen.
The sale resulted in a total realised and unrealised gain on disposal of £3.0m
(US$4.8m).  Xenova received a total of £1.0m cash during 1999 plus 1 million B
class preferred voting shares in TerraGen carried at £1.5m, equivalent to 6%
of the then issued share capital.  An interest bearing loan note of £1.5m was
also issued to Xenova by TerraGen which is convertible into TerraGen preferred
shares from and after April 8 2001.  It is anticipated that these provisions
will result in Xenova being entitled to receive approximately 15% of the
shares of Cubist common stock issuable under the transaction.
     
     
6.   Going Concern

The Group is an emerging pharmaceutical business and as such expects to absorb
cash until products are commercialised.  The Directors therefore have a
reasonable expectation that the Group has adequate cash resources to enable it
to continue in operational existence for the foreseeable future, and have
therefore prepared the financial statements on the going concern basis.
     
     
7.   Subsequent Events
     
Placing and Open Offer
On 9 August 2000 Xenova issued 2,885,108 units, each unit comprising 5 new
ordinary shares and 4 warrants, at 345p per Unit, raising £9.8m before
expenses.  In addition, a further £9.8m may be raised, before expenses, on
exercise of the warrants at 85p per warrant, the warrants being exercisable
between 1 January 2001 and 31 October 2001.

     
Independent review report to Xenova Group Plc

Introduction
We have been instructed by the company to review the financial information set
out on pages x to y and we have read the other information contained in the
interim report for any apparent misstatements or material inconsistencies with
the financial information.

Directors responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.

Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. A review consists principally
of making enquiries of Xenova's management and applying analytical procedures
to the financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on the
financial information.

Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2000.


PricewaterhouseCoopers
Chartered Accountants
Uxbridge
10 August 2000