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Xenova Group PLC (XEN)

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Thursday 09 November, 2000

Xenova Group PLC

3rd Quarter & 9 Mths Results

Xenova Group PLC
9 November 2000

                               Xenova Group plc

                      Third Quarter Results Announcement

Slough, UK, 9th November 2000 - Xenova Group plc (Nasdaq: XNVA; London Stock
Exchange: XEN) today announced its results for the nine-month period to 30
September 2000.

Commenting on the results, Chief Executive Officer David Oxlade said:
'Xenova's product pipeline has generally made good progress in the first nine
months of this year. Following positive clinical trial results from the Phase
IIa trials, in which XR9576 was administered in combination with paclitaxel
and doxorubicin respectively, we anticipate that XR9576 will be ready to enter
Phase III around the end of this year. XR11576, our next generation cytotoxic
drug candidate, has entered preclinical development and we have identified a
further novel topoisomerase I and II cytotoxic drug candidate, known as

Operational Highlights

Product Development

Both of Xenova's lead drug candidates, XR9576 (which targets the reversal of
multi-drug resistance in cancer) and XR5000 (a novel cytotoxic designed to
kill cancer cells), have continued to progress through Phase II clinical
trials. These Phase II studies are expected to complete by the end of calendar
year 2000.

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.

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 clinical dose when used with XR9576.

Further positive data was announced in October for a second Phase IIa trial,
in which XR9576 was administered in combination therapy with doxorubicin. The
trial showed that limited and predictable interaction occurred, allowing
doxorubicin to be administered at or close to the normal clinical dose,
potentially providing an advantage in clinical practice.

A further Phase IIa clinical trial, in which XR9576 is being studied in
combination therapy with vinorelbine, is currently underway in the US and is
being carried out in conjunction with the National Cancer Institute. It is
anticipated that results from this trial will be announced before the end of
2000. Paclitaxel, vinorelbine and doxorubicin are three of the world's
highest-selling cytotoxic drugs.

It is expected that XR9576 will be ready to enter pivotal Phase III clinical
trials around the end of this year. The company anticipates that expenses for
Phase III pivotal registration studies will be assumed by a partner.

XR5000 - (Topoisomerase I and II inhibitor) Three Phase II clinical trials are
also underway at a number of European centres for the 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 was shown to be effective in cases where a tumour
had 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 the study dose level of 3010mg/m(2) no complete or partial responses to
treatment were observed. 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 by
the end of this year. Results from these trials will help determine the future
development strategy for this compound.

Development of Xenova's pipeline of preclinical compounds continued
satisfactorily in the nine months to 30 September 2000. All preclinical
compounds currently in development have been derived from Xenova's own R&D

XR11576 - A novel, orally active next generation topoisomerase I and II
inhibitor, XR11576 is undergoing final pharmacological and toxicity testing,
prior to its planned entry into clinical development. 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.

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 multi-drug resistance.

A UK priority patent application relating to the XR5942 second generation 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

PAI-1 Inhibitors (Anti-Thrombotic) - Research continues in this 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 that are capable of oral absorption and are active in both venous and
arterial models of thrombosis.

PAI-1 Inhibitors (Anti-Cancer) - Research has continued 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) and it has been
demonstrated that monoclonal antibodies to PAI-1 inhibit tumour cell migration
and invasion in vitro. A poster was presented at the VIII Congress of
Metastasis Society, in London in September 2000, demonstrating that antibodies
to PAI-1 suppress angiogenesis in vitro.

Multi-Drug Resistant Protein (MRP) - Xenova is conducting a research programme
for MRP during 2000. Should this be successful, it is expected that compounds
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, to last for a minimum of two years, for the discovery and
development of novel classes of apoptosis inducing telomerase inhibitors with
Professor Rob Newbold and his team at Brunel University. Professor Newbold and
his team are acknowledged as being amongst the world's leading experts in this


Stephen B. Howell, Professor of Medicine at the University of California, San
Diego, joined Xenova's Scientific Advisory Board (SAB) in January 2000.

Peter Gillett joined Xenova as a non-executive Director in February 2000.
Peter Gillett chairs Xenova's Audit Committee. Until June 2000 he was a
partner in Ernst & Young, the audit and professional services firm.

Financial Review

The Group's financial position has been strengthened by a successful August
placing and open offer, which raised £10m before expenses. A further £9.8m
before expenses will be raised, assuming full exercise of associated warrants,
between 1 January and 31 October 2001.

Nil revenues (1999: £0.8m, $1.1m) occurred for the quarter to 30 September
2000. Total revenue for the nine months to 30 September 2000 of £0.1m ($0.1m)
(1999: £2.6m, $3.8m) 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 PAI-1 cardio-vascular
research and development programme.

Operating expenses for the quarter to 30 September 2000 totalled £2.5m ($3.7m)
(1999: £2.8m, $4.2m) and included research and development costs of £2.1m
($3.1m) (1999: £2.2m, $3.3m). Research and development costs for continuing
operations were £2.1m ($3.1m) (1999: £1.9m, $2.8m), reflecting the increased
costs of Phase II clinical trials for XR5000 and XR9576. These trials are
expected to complete by the end of 2000.

Administrative expenses for the quarter were £0.4m ($0.6m) (1999: £0.6m,
$0.9m). The operating loss for the quarter to 30 September 2000 was £2.5m
($3.7m) (1999: £2.1m, $3m). The total operating loss before exceptional items
for the nine months to 30 September 2000 was £6.4m ($9.5m) (1999: £8.3m,
$12.2m), representing a 23% reduction against the same period in 1999.

In September 2000, the shareholders of TerraGen Discovery Inc ('TerraGen')
approved the sale of TerraGen to Cubist Pharmaceuticals ('Cubist'). The
allocation of Cubist shares to Xenova at completion was 88,668 in exchange for
its equity and convertible loan note. The immaterial difference from the
91,048 shares reported at the time of Xenova's interim statement results from
changes in the exchange rate between sterling and the Canadian dollar. Based
upon a Cubist share price of £34 (US$50) per share at the date of acquisition
the value of the investment held in Cubist is not materially different to the
net book value of the TerraGen investment.

Treasury - Cash and investments at 30 September 2000 totalled £13.3m ($19.7m)
(31 December 1999: £10.1m, $14.9m). In a placing and open offer Xenova issued
2,885,108 units on August 9, 2000, each unit comprising 5 new shares and 4
warrants, at 345p per unit. Assuming full exercise of the warrants at 85p per
warrant by the expiry date of 31 October 2001, the company will raise a
further £9.8m before expenses. Shares in issue at 30 September 2000 were

Net interest received in the nine months to 30 September 2000 was £0.5m
($0.7m) (1999: £0.4m, $0.6m).


                       (See attached Notes to Editors)

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

Financial Dynamics

Tel: +44 (0)207 831 3113

David Yates/Sophie Pender-Cudlip

Xenova Group plc is a London Stock Exchange techMARK listed company and has
been listed on the US Nasdaq exchange since 1994.

                               Notes to Editors

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

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

For further information about Xenova and its products please visit the Xenova
website at

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

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

                                    Three months ended  Nine months ended 30
                                       30 September           September
                                    2000*   2000   1999 2000*  2000      1999

Turnover                            $'000  £'000  £'000 $'000 £'000     £'000

Continuing operations                   -      -     98   115    78       274
Discontinued operations                 -      -    662     -     -     2,310
                                    _____  _____  _____ _____ _____     _____
Operating expenses                      -      -    760   115    78     2,584

Research and development

Continuing operations               3,135  2,121  1,888 7,811 5,283     5,712
Discontinued operations                 -      -    350     -     -     3,478
                                    _____  _____  _____ _____ _____     _____
Administrative expenses             3,135  2,121  2,238 7,811 5,283     9,190

Continuing operations                 609    412    548 1,786 1,208     1,337
Discontinued operations                 -      -     39     -     -       336
                                    _____  _____  _____ _____ _____     _____
                                      609    412    587 1,786 1,208     1,673

Total operating expenses            3,744  2,533  2,825 9,597 6,491    10,863
                                    _____  _____  _____ _____ _____     _____
Operating (Loss)/Profit

Continuing operations              (3,744) (2,533)(2,338)(9,482)(6,413) (6,775)
Discontinued operations                 -      -    273     -     -   (1,504)
                                    _____  _____  _____ _____ _____     _____
Discontinued operations -         (3,744) (2,533)(2,065)(9,482)(6,413)  (8,279)
exceptional items

Profit on sale of businesses            -      -     51     -     -       271

                                    _____  _____  _____ _____ _____     _____
Loss on ordinary activities before
interest                          (3,744)(2,533)(2,014)(9,482)(6,413)   (8,008)

Interest (net)                        278    188    128   707   478       400
                                    _____  _____  _____ _____ _____     _____
Loss on ordinary activities before
and after taxation

Retained and attributable to      (3,466)(2,345)(1,886)(8,775)(5,935)   (7,608)
members of Xenova Group plc
                                    _____  _____  _____ _____ _____     _____
Net loss per share (basic and
diluted)                             (6c)   (4p)   (4p) (15c) (10p)     (17p)
                                    _____  _____  _____ _____ _____     _____
Shares used in computing net loss
per share                          62,971 62,971 49,924 57,525 57,525    45,363
                                    _____  _____  _____ _____ _____     _____

Condensed Consolidated Balance Sheets (unaudited)

(in thousands)
                                       30 September 2000          30         31
                                                       *   September   December

                                                                2000       1999
                                                   _____       _____       ____
                                                   $'000       £'000      £'000

Cash and investments                              19,658      13,296     10,081
Other current assets                               1,343         909      1,962
Long term receivables                                  -           -      1,500
Fixed assets                                       4,933       3,336        328
                                                   _____       _____      _____

Total assets                                      25,934      17,541     13,871
                                                  ______       _____      _____

Current liabilities                                3,455       2,337      2,251
Shareholders' equity                              22,479      15,204     11,620
                                                   _____       _____      _____
Total liabilities and shareholders'
equity                                            25,934      17,541     13,871
                                                   _____       _____      _____

*US dollar amounts have been translated at the Noon Buying Rate on 30
September 2000 of £1.00 - $1.4785 solely for informational purposes.

Basis of Preparation

These unaudited quarterly statements, 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.