Information  X 
Enter a valid email address

Xenova Group PLC (XEN)

  Print      Mail a friend

Wednesday 11 August, 2004

Xenova Group PLC

Interim Results

Xenova Group PLC
11 August 2004

                                Xenova Group plc

                   Interim Results for the First Half of 2004

Slough, UK, 11 August 2004 - Xenova Group plc (London Stock Exchange: XEN;
NASDAQ: XNVA) announced today its results for the six months ended 30 June 2004.

Year to Date Highlights


     •  TransMID(TM): agreement with the FDA under the Special Protocol 
        Assessment procedure for the revised Phase III clinical trial programme

     •  TransMID(TM): first patient treated in pivotal Phase III trial

     •  TA-CD: positive results of two dose escalation Phase II studies
        presented at College on Problems of Drug Dependence (CPDD) 66th Annual 

     •  TA-NIC: successful results from a second clinical trial

     •  Tariquidar: Phase I paediatric study data presented at American
        Society of Clinical Oncology (ASCO)

     •  XR5944: Abstract relating to the on-going Phase I trial published at


     •  Sale of Farnham facility to Bioventix raising £0.8m ($1.4m) completed

     •  Extension of manufacturing contract with Pharmexa

     •  10 year lease agreement signed with Genzyme for Cambridge Science Park


     •  Revenue recognised in half year £3.2m ($5.8m); (2003: £4.2m ($7.5m))

     •  Cash and short-term deposits and investments at the half year £19.5m
        ($35.3m); (2003: £10.1m ($18.3m))

David Oxlade, Chief Executive Officer said: 'We are pleased with the progress
made and the entry into Phase III trials of TransMID(TM) for the treatment of
brain cancer.  Positive results of trials with both addiction vaccines (cocaine
and nicotine) have also been encouraging.'


Xenova Group plc                                             +44 (0)1753 706600
David A. Oxlade, Chief Executive Officer
Daniel Abrams, Finance Director
Veronica Cefis Sellar, Head of Corporate Communications

UK - Financial Dynamics                                      +44 (0)20 7831 3113
David Yates
Ben Atwell

US - Trout Group/BMC Communications                          +1 212 477 9007
Media:               Brad Miles
Investors:           Lee Stern

Xenova Group plc is a UK-based biopharmaceutical company focused on the
development of novel drugs to treat cancer and addiction with a secondary focus
in immunotherapy.  The Company has a broad pipeline of products in clinical
development, including three cancer programmes:  its lead product TransMID(TM),
for the treatment of high-grade glioma, is in Phase III trials, and its novel
DNA targeting agents and XR303 are both in Phase I for cancer indications.
Xenova is also developing two therapeutic vaccines for cocaine and nicotine
addiction, which are in Phase II and Phase I trials respectively.  Quoted on the
London Stock Exchange (XEN) and on NASDAQ (XNVA), Xenova employs approximately
105 people throughout its sites in the UK and North America. (Reuters XEN.L;
Bloomberg XEN LN)
For further information about Xenova and its products please visit the Xenova
website at

A conference call for UK and Europe will take place today at 09:30 am UK time
(10:30 European time), please contact Mo Noonan at Financial Dynamics on +44 (0)
20 7269 7116 for details.

A conference call for the US will take place today at 14.00 UK time (09:00 EST),
please contact Mo Noonan at Financial Dynamics on +44 20 7269 7116 for details.

A recording of the UK conference call will be available following the US
conference call, please visit our website on for details on the
day.  Slides for the conference calls will also be made available through our
website prior to the UK conference call.

Disclaimer to take advantage of the 'Safe Harbor' provisions of the US Private
Securities Litigation Reform Act of 1995. This press release contains '
forward-looking statements,' including statements about our ability to integrate
acquired businesses and realize cost savings from integration, and the
discovery, development and commercialization of products. Various risks may
cause Xenova's actual results to differ materially from those expressed or
implied by the forward looking statements, including: unexpected costs and
delays in integrating acquired businesses into our group, adverse results in our
drug discovery and clinical development programs; failure to obtain patent
protection for our discoveries; commercial limitations imposed by patents owned
or controlled by third parties; our dependence upon strategic alliance partners
to develop and commercialize products and services; difficulties or delays in
obtaining regulatory approvals to market products and services resulting from
our development efforts; the requirement for substantial funding to conduct
research and development and to expand commercialization activities; and product
initiatives by competitors.  For a further list and description of the risks and
uncertainties we face, see the reports we have filed with the Securities and
Exchange Commission.  We disclaim any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.

Chairman's Statement

The decision last year to concentrate on key prioritised programmes has been
successful.  Our lead programme, TransMID(TM), received Special Protocol
Assessment (SPA) approval from the US Food and Drug Administration (FDA) and the
first patient was dosed shortly afterwards.  The addiction vaccines have also
been progressing well, with positive initial results for both TA-CD and TA-NIC
announced in the first half of the year generating interest with investors and
media across both sides of the Atlantic.  Our other programmes, including the
Novel DNA Targeting Agents and XR303 are advancing steadily.

We have achieved our objectives with the on-going disposal of surplus facilities
in the UK.  In January we announced the sale of part of the Farnham facility to
Bioventix Limited for £0.8m ($1.4m) in cash, which was recognised in our 2003
accounts.  In April we signed a 10 year agreement with Genzyme Limited for
vacant space in the 310 Cambridge Science Park site.  We continue to occupy part
of the site together with the adjacent Clinical Trials Manufacturing Facility.

This year we also held the first trans-Atlantic R&D event for Xenova to provide
investors and interested parties with an in-depth review of our prioritised
development programmes.  In late June we hosted an R&D meeting for US analysts
and investors in New York shortly followed by an R&D meeting in London for UK
analysts and investors with both meetings being well received.

As at 30 June 2004 we employed 105 people across our sites in the UK and North

Programme Update

On 11 May 2004 we reached an agreement with the FDA under the SPA procedure for
the revised Phase III clinical trial programme proposed for TransMID(TM).

Prior to its acquisition by Xenova, KS Biomedix Holdings plc (KS Biomedix) had
obtained FDA agreement for a single Phase III clinical trial for TransMID(TM)
under the SPA process.  Following the acquisition of KS Biomedix, Xenova
submitted a revised programme involving two smaller sequential Phase III
clinical trials rather than one larger study, which has now been agreed with the
FDA.  The adoption of a two study approach reduces the level of risk associated
with a large single study.

The initial Phase III clinical trial is designed to enrol 323 patients with
non-resectable, progressive or recurrent Glioblastoma Multiforme (GBM) who have
failed conventional therapy.  The study is a randomised, open-labelled,
multi-centre trial and will compare TransMID(TM) against a number of presently
used chemotherapeutic agents regarded as 'best standard of care' (BSC).  The 323
patients will be randomised in a 2:1 ratio of TransMID(TM):BSC across
approximately 50 sites in the EU, Israel and North America.  The primary
end-point is overall survival time with a planned interim analysis to be
conducted after 50% of the required events have been observed.

In an earlier, open label, Phase II study, patients receiving TransMID(TM)
achieved a significant increase in overall survival compared with historical
survival figures.  In this study, median survival for patients receiving
TransMID(TM) was approximately 37 weeks.  This compares to the historical 
average life expectancy for these patients which is approximately 26 weeks.

Subsequent to the SPA approval, on 7 June 2004 we announced that the dosing of
the first patient in the TransMID(TM) trial had taken place at the University of
Utah, Huntsman Cancer Institute.

TransMIDTM is currently licensed to Nycomed Danmark ApS in Europe, Sosei Co Ltd
in Japan, Medison Pharma Ltd in Israel and Ranbaxy Laboratories Limited in
India.  Xenova retains all rights to countries outside these territories
including North America.

Novel DNA Targeting Agents
This programme involves three compounds being developed for the treatment of
solid tumours.  XR11576 and XR5944 have been shown to be highly potent as
cytotoxic agents in both tumour cell lines and human xenograft models and are
currently in Phase I clinical trials for the treatment of a range of solid
tumours.  The results of these two Phase I clinical trials are expected before
the end of 2004.  The third compound, XR11612, is in pre-clinical development.

Millennium Pharmaceuticals Inc (Millennium) and Xenova had an abstract published
at ASCO in June 2004 on the on-going Phase I study of XR5944.

Millennium holds the rights to these compounds in North America and Xenova
retains the rights to the rest of the world.

XR303 is a radioimmunotherapy product targeted at late stage pancreatic cancer.
XR303 has completed a Phase I imaging study in patients with metastatic
colorectal cancer, the results of which showed the tumours still clearly visible
at eight days as a result of the radiolabelled antibody remaining bound to the
tumour surface.

A Phase I/II dose escalation study is now underway in patients with
non-resectable pancreatic cancer.  This study is expected to complete in 2005.
Xenova retains all rights to XR303.

In June 2004 the National Cancer Institute (NCI) in the US presented a poster at
the ASCO conference in New Orleans on a Phase I clinical trial of tariquidar in
children with solid tumours.

The results of this study showed that tariquidar was well tolerated in children.
Of the 18 subjects enrolled, one had a complete response, one had a partial
response and five had stable disease for one to eight cycles of therapy.

In early 2004 it was also announced that the NCI had commenced exploratory Phase
I/II studies with tariquidar in combination with various cytotoxic drugs.

On 14 June 2004 we announced results of two dose escalation Phase II studies of
TA-CD, our therapeutic vaccine being developed for the treatment of cocaine
addiction, at the CPDD 66th Annual Scientific Meeting in Puerto Rico between
12-17 June.

Results from both studies showed that the maximum mean antibody response
occurred between 70 and 90 days post vaccination, with cocaine-specific
antibodies persisting for at least six months.  The authors also reported that
the likelihood of using cocaine decreased in those subjects who received a more
intense vaccination schedule and as a result were observed to produce higher
levels of anti-cocaine antibodies.  88% of subjects from one study and 63% from
the other, who did relapse within six months, reported a reduction in the
euphoric effects of cocaine.

A randomised, placebo-controlled Phase IIb study of TA-CD in 132 patients is
underway with recruitment in progress.  The primary objective of this study is
to determine the efficacy of TA-CD in methadone-dependent cocaine addicts
seeking treatment for cocaine abuse, and to determine the appropriate end points
for a Phase III trial.  The National Institute on Drug Abuse (NIDA) is
supporting these studies but Xenova retains all commercial rights to TA-CD.

Initial results of the second clinical trial of TA-NIC, our therapeutic vaccine
being developed for the treatment of nicotine addiction, were announced on 14
July 2004.  These results showed that there were no drug-related serious adverse
events in any of the three cohorts with minimal injection-site effects seen at
the dose selected for Phase II/III studies.

The anti-nicotine antibody responses were dose dependent and at the selected
dose, an improved anti-nicotine antibody response profile was observed compared
to the lowest dose tested.  The data showed that the level of anti-nicotine
antibodies obtained with the chosen dose was approximately double that seen at
the low dose.  There was also a faster rise and more rapid onset of
anti-nicotine antibody response.

Although not designed to test the effect of TA-NIC on smokers' quit rates, there
was a clear reduction across all groups receiving the vaccine in terms of those
smokers who voluntarily quit during the 12-week period or self-reported a
reduction in smoking pleasure compared to those receiving the placebo.

Final results of this study are expected by the end of 2004.  Xenova retains all
commercial rights to TA-NIC.

OX40 is a platform technology capable of producing multiple drug candidates
targeting cancer, autoimmune and other diseases where the immune system is
involved.  In 2003 Imperial College demonstrated that by blocking the OX40-OX40
ligand (OX40L) interaction (down-regulation), symptoms of influenza could be
alleviated without affecting the ability to clear the virus.  In contrast, the
use of agents such as OX40L-IgG that bind to OX40 and up-regulate the immune
response, has been shown to be effective at promoting anti-tumour responses in a
number of cancer models.  Xenova retains all rights for the use of OX40 in
up-regulation whilst Genentech Inc and Celltech Group plc have the rights for

Corporate Events

In June 2004, our Clinical Trials Manufacturing Facility in Cambridge, UK,
(CTMF), received a Manufacturer's Authorisation - Investigational Medicinal
Products from the Medicines and Healthcare products Regulatory Agency (MHRA).
This authorisation allows Xenova to manufacture and release investigational
products in compliance with the new Clinical Trials Directive that came into
force in May of this year.

In July 2004 we signed an agreement with Pharmexa A/S (Pharmexa) to continue the
current manufacturing campaign of their AutoVac HER-2 vaccine.  Manufacture will
take place at our CTMF.  This extension enables us to manufacture additional
batches of the vaccine for Pharmexa's Phase II trials in breast cancer.

Financial Summary

Operating Performance
In the six months to 30 June 2004, Xenova's revenues recognised from licensing
agreements, strategic partnerships and manufacturing outsourcing were £3.2m
($5.8m) (2003: £4.2m ($7.5m)).

Revenues included £1.9m ($3.4m) recognised under the revenue recognition policy
in respect of the tariquidar licensing agreement with QLT and the OX40 licensing
agreement with Genentech.  As at 30 June there is no deferred revenue from QLT
for the tariquidar license. £0.3m ($0.5m) was also recognised in respect of the
milestone due from Nycomed for the first patient treated in the TransMID(TM)
trial.  Contract development revenue of £0.4m ($0.7m) arose in respect of the
Millennium collaboration on the DNA Targeting Agents and manufacturing revenue
was £0.6m ($1.1m).

Net operating expenses in the period to 30 June 2004 were £11.3m ($20.5m) (2003:
£12.6m ($22.7m)).  Excluding the exceptional reorganisation costs to 30 June
2003 of £2.0m ($3.6m) and the impact of increased goodwill amortisation charges
in 2004, net operating expenses in the period to 30 June 2004 increased 4%
compared to the prior year.

Total research and development expenditure for the six months to 30 June 2004
was £7.7m ($14.0m), 5% less than the prior year (£8.1m ($14.7m)).  Expenditure
was incurred primarily in respect of the TransMID(TM) programme, the Phase I/II
dose escalation trial of XR303, and the Vaccines of Addiction programmes
including the second Phase I study in TA-NIC.  The development costs under the
Millennium license agreement of £0.4m ($0.7m) have been recovered as in previous

Total administrative expenditure for the six months to 30 June 2004 of £3.9m
($7.1m) (2003: £4.7m ($8.5m)) included £1.1m ($2.1m) in respect of goodwill
amortisation related to the acquisitions of Cantab and KS Biomedix.
Administrative expenses, excluding the amortisation of goodwill, were £2.8m
($5.1m) (2003: £2.0m ($3.6m)).  The subletting of vacant space in Slough and
Cambridge reduced net expenses in the period by £0.3m ($0.6m) (2003: £0.2m

The increase in investment income recorded for the six months compared with the
prior year reflects the higher average cash and liquid resources balances held
following the fundraising in December 2003.  The R&D tax credits recoverable for
the six months have increased to reflect the impact of the KS Biomedix
acquisition and the revised impact of the reorganisation announced in June 2003.

Cash outflow before financing and movements in liquid resources in the six
months to 30 June 2004 of £7.3m ($13.2m) has decreased 26% from the prior year
(£9.9m ($18.0m)) partly as a result of the cost savings made during 2003 both
before and after the KS Biomedix acquisition and partly because the
reorganisation costs of £1.0m ($1.8m) were incurred in 2003.  Cash outflow also
includes significant expenditure on the commencement of Phase III clinical
trials of TransMID(TM).

The net loss per share in the six months to 30 June 2004 was 1.6p (2003: 4.5p).

Cash, short-term deposits and investments at 30 June 2004 totalled £19.5m
($35.3m) (2003: £10.1m ($18.3m)).  Of this balance, cash was £3.1m ($5.6m) and
short-term deposits and investments were £16.4m ($29.7m) at 30 June 2004 (2003:
cash £0.4m ($0.7m), short-term deposits and investments £9.7m ($17.6m)).

Included in short-term deposits and investments is an investment in Cubist
Pharmaceuticals Inc, which at 30 June 2004 was valued at £0.4m ($0.7m) (2003:
£0.6m ($1.1m)).

Share capital
The number of shares in issue stood at 431.5 million as at 30 June 2004 (2003:
174.5 million).

During the half year 2,195 million deferred shares were cancelled and their
value of £21.9m ($39.7m) credited to a special reserve.

The Directors do not propose an interim dividend for 2004 (2003: nil).

Consolidated Profit and Loss Account (unaudited)
for the six months ended 30 June 2004
                                                            Unaudited    Unaudited     Unaudited       Audited
                                                           Six months   Six months    Six months          Year
                                                                ended        ended         ended         ended
                                                              30 June      30 June       30 June   31 December
                                                                 2004         2004          2003          2003
                                                  Notes          $000         £000          £000          £000

Turnover (including share of joint ventures)                    5,890        3,254         4,158         7,710
    Less: share of joint ventures revenue                       (103)         (57)           (5)          (11)
                                                                _____        _____         _____         _____
Turnover                                                        5,787        3,197         4,153         7,699

Operating expenses
Research and development costs                               (13,989)      (7,729)       (8,104)      (15,072)

    Administrative expenses                                   (5,097)      (2,816)       (2,034)       (4,748)
    Administrative expenses: exceptional           2                -            -       (2,036)       (3,161)
reorganisation costs
    Administrative expenses: amortisation of                  (2,035)      (1,124)         (584)       (1,486)
                                                                _____        _____         _____         _____
Total administrative expenses                                 (7,132)      (3,940)       (4,654)       (9,395)

Other operating income                                            586          324           198           449

Total net operating expenses                                 (20,535)     (11,345)      (12,560)      (24,018)

                                                                _____        _____         _____         _____

Group operating loss                                         (14,748)      (8,148)       (8,407)      (16,319)

Share of operating (loss) of joint ventures                      (47)         (26)         (114)         (213)
                                                                _____        _____         _____         _____

Total operating loss: Group and share of joint               (14,795)      (8,174)       (8,521)      (16,532)

Investment income                                                 776          429           265           385
Amounts written (off)/back on investments          3             (99)         (55)           126           189
                                                                _____        _____         _____         _____

Loss on ordinary activities before taxation                  (14,118)      (7,800)       (8,130)      (15,958)

Tax on loss on ordinary activities                 4            1,328          734           307           954

                                                                _____        _____         _____         _____

Loss on ordinary activities after taxation         5         (12,790)      (7,066)       (7,823)      (15,004)
                                                                _____        _____         _____         _____

Loss per share (basic and diluted)                             (3.0c)       (1.6p)        (4.5p)        (7.1p)
                                                                _____        _____         _____         _____

Shares used in computing net loss per share                   431,522      431,522       174,534       212,437
(thousands)                                                     _____        _____         _____         _____

US Dollar amounts have been translated at the closing rate on 30 June 2004
(£1.00: $1.81) solely for information.

Statement of Total Recognised Gains and Losses (unaudited)
for the six months ended 30 June 2004

                                                             Unaudited     Unaudited    Unaudited       Audited
                                                            Six months    Six months   Six months         Year
                                                                 ended         ended        ended         ended
                                                               30 June       30 June      30 June   31 December
                                                                  2004          2004         2003          2003
                                                                  $000          £000         £000          £000

Loss attributable to Xenova Group plc                         (12,743)       (7,040)      (7,719)      (14,818)
Loss attributable to joint ventures                               (47)          (26)        (104)         (186)
                                                                 _____         _____        _____         _____
                                                              (12,790)       (7,066)      (7,823)      (15,004)

Translation difference                                           (311)         (172)          (2)           228
                                                                 _____         _____        _____         _____
Total recognised gains and losses in the period               (13,101)       (7,238)      (7,825)      (14,776)
                                                                 _____         _____        _____         _____

US Dollar amounts have been translated at the closing rate on 30 June 2004
(£1.00: $1.81) solely for information.

Consolidated Balance Sheet (unaudited)
     as at 30 June 2004
                                                               Unaudited     Unaudited     Unaudited     Audited
                                                                   As at         As at         As at       As at
                                                                 30 June       30 June       30 June 31 December
                                                                    2004          2004          2003        2003
                                                   Notes            $000          £000          £000        £000
Fixed assets
   Intangible assets                                              32,752        18,095         9,642      19,272
   Tangible assets                                                13,399         7,403         5,131       7,858

   Investment in joint ventures:
     Share of gross assets                                           143            79           138         137
     Share of gross liabilities                                    (119)          (66)         (116)        (98)
                                                                   _____         _____         _____       _____
                                                                      24            13            22          39
                                                                   _____         _____         _____       _____

                                                                  46,175        25,511        14,795      27,169
Current assets
   Work in progress                                                1,461           807             -         662
   Debtors                                                         7,734         4,273         3,620       3,669
   Short-term deposits and investments                            29,662        16,388         9,650      15,437
   Cash at bank and in hand                                        5,662         3,128           429      12,070
                                                                   _____         _____         _____       _____
                                                                  44,519        24,596        13,699      31,838

Creditors: amounts falling due within one year       7          (12,163)       (6,720)       (8,170)     (7,143)
                                                                   _____         _____         _____       _____

Net current assets                                                32,356        17,876         5,529      24,695

Total assets less current liabilities                             78,531        43,387        20,324      51,864

Creditors: amounts falling due after more than                   (1,475)         (815)             -     (1,766)
one year

Provisions for liabilities and charges                           (2,554)       (1,411)         (918)     (1,764)
                                                                   _____         _____         _____       _____

Total net assets                                                  74,502        41,161        19,406      48,334
                                                                   _____         _____         _____       _____

Capital and reserves

Called up share capital                              8             7,812         4,316        17,454      26,264
Shares to be issued                                               11,723         6,477             -       6,483
Share premium account                                            176,909        97,740        80,831      97,827
Merger reserve                                                    55,859        30,861        27,218      30,859
Special reserve                                      8            39,728        21,949             -           -
Other reserves                                                    31,364        17,328        17,902      17,328
Profit and loss account                                        (248,893)     (137,510)     (123,999)   (130,427)
                                                                   _____         _____         _____       _____

Shareholders' funds                                  5            74,502        41,161        19,406      48,334
                                                                   _____         _____         _____       _____

US Dollar amounts have been translated at the closing rate on 30 June 2004
(£1.00: $1.81) solely for information.

Consolidated Cash Flow Statement (unaudited)
for the six months ended 30 June 2004
                                                             Unaudited     Unaudited     Unaudited       Audited
                                                            Six months    Six months    Six months          Year
                                                                 ended         ended         ended         ended
                                                               30 June       30 June       30 June   31 December
                                                                  2004          2004          2003          2003
                                                 Notes            $000          £000          £000          £000

Net cash outflow from operating activities         6          (15,286)       (8,445)       (9,294)      (17,837)

Returns on investments and servicing of finance
Interest received                                                  594           328           263           346
Interest element of finance lease rental                             -             -           (2)           (4)
                                                                 _____         _____         _____         _____
Net cash inflow from returns on investments and                    594           328           261           342
servicing of finance

Taxation                                                         1,910         1,055             -         2,608

Capital expenditure and financial investment
Purchase of tangible fixed assets                                (478)         (264)         (276)         (700)
Purchase of intangible fixed assets                                  -             -         (622)         (622)
Sale of Farnham site tangible and intangible                         -             -             -         (800)
Sale of other tangible fixed assets                                 34            19             -           265
                                                                 _____         _____         _____         _____
Net cash outflow from capital expenditure and                    (444)         (245)         (898)         (257)
financial investment

Acquisitions and disposals
Purchase of subsidiary undertaking                                   -             -             -         (605)
Cash at bank and in hand acquired with                               -             -             -         1,444
                                                                 _____         _____         _____         _____
Net cash inflow from acquisitions                                    -             -             -           839

Management of liquid resources
(Increase)/decrease in short-term deposits                     (1,819)       (1,005)         7,061         3,696
Proceeds on sale of current asset investments                        -             -             -           189

                                                                 _____         _____         _____         _____
Net cash inflow from management of liquid                      (1,819)       (1,005)         7,061         3,885
                                                                 _____         _____         _____         _____

Net cash outflow before financing                             (15,045)       (8,312)       (2,870)      (10,420)

Issue of ordinary share capital                                      -             -           680        21,785
Expenses on issue of shares                                      (796)         (440)          (10)       (1,894)
Repayment of secured loans                                       (326)         (180)             -           (4)
Capital element of finance lease rental                           (18)          (10)           (3)          (29)
payments                                                         _____         _____         _____         _____
Net cash inflow from financing                                 (1,140)         (630)           667        19,858
                                                                 _____         _____         _____         _____

(Decrease)/increase in cash during the period                 (16,185)       (8,942)       (2,203)         9,438
                                                                 _____         _____         _____         _____

US Dollar amounts have been translated at the closing rate on 30 June 2004
(£1.00: $1.81) solely for information.

Reconciliation of Net Cash Flow to Movement in Net Funds (unaudited)
for the six months ended 30 June 2004
                                                             Unaudited     Unaudited     Unaudited       Audited
                                                            Six months    Six months    Six months          Year
                                                                 ended         ended         ended         ended
                                                               30 June       30 June       30 June   31 December
                                                                  2004          2004          2003          2003
                                                                  $000          £000          £000          £000

(Decrease)/increase in cash during the period                 (16,185)       (8,942)       (2,203)         9,438

Repayment of secured loans                                         326           180             -             4
Capital element of finance lease payments                           18            10             3            29
Change in liquid resources                                       1,819         1,005       (7,061)       (3,507)
                                                                 _____         _____         _____         _____
Change in net funds resulting from cash flows                 (14,022)       (7,747)       (9,261)         5,964

Liquid resources acquired with KS Biomedix Holdings plc              -             -             -         2,557
Secured loans acquired with KS Biomedix Holdings plc                 -             -             -         (196)
Finance leases acquired with KS Biomedix Holdings plc                -             -             -          (63)
Movement in value of current asset investments                    (99)          (55)           126         (189)
Translation difference                                               5             3             -             6
                                                                 _____         _____         _____         _____
Change in net funds                                           (14,116)       (7,799)       (9,135)         8,079

Net funds at 1 January                                          49,400        27,293        19,214        19,214

                                                                 _____         _____         _____         _____
Net funds at 30 June/31 December                                35,284        19,494        10,079        27,293
                                                                 _____         _____         _____         _____

US Dollar amounts have been translated at the closing rate on 30 June 2004
(£1.00: $1.81) solely for information.

Notes to the Interim Statement

1    Basis of preparation

These unaudited interim statements, which have been approved by the Board, do
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985, have been prepared using the accounting policies set out in
the Group's 2003 Annual Report and Accounts.  The 2003 Annual Report and
Accounts received an unqualified auditor's report, did not include a statement
under section 237(2) or (3) of the Companies Act 1985 and have been delivered to
the Registrar of Companies.

There have been no changes to the Group's accounting policies in 2004.

2    Exceptional reorganisation costs

Included in administrative expenses, within exceptional reorganisation costs, is
£nil (six months to 30 June 2003:  £2,036,000, year to 31 December 2003:
£2,033,000) in respect of severance payments and a vacant leasehold provision.

3    Amounts written (off)/back on investments

The £55,000 written off on investments reflects the unrealised loss on the
Group's holding of 65,168 Cubist Pharmaceuticals Inc, shares following a
decrease in the listed market price since 31 December 2003.

4    Taxation

The Group has recognised the R&D tax credit in respect of the first half of the
year that will be received in 2005.  The Group has not recognised any deferred
tax assets or liabilities in the period.

5    Reserves and reconciliation of movements in shareholders' funds

                                                                  Unaudited        Unaudited           Audited
                                                                 Six months       Six months              Year
                                                                      ended            ended             ended
                                                                    30 June          30 June       31 December
                                                                       2004             2003              2003
                                                                       £000             £000              £000

At start of period                                                   48,334           26,510            26,510

Shares issued and to be issued in respect of                              -                -            16,518

Proceeds of share issues (net of issue costs)                             -              680            20,082

Expenses on issue of shares                                            (90)             (10)                 -

Credit for share options and deferred bonus share                       155               51                 -

Loss for the period                                                 (7,066)          (7,823)          (15,004)

Other recognised gains and losses                                     (172)              (2)               228
                                                                      _____            _____             _____

At end of period                                                     41,161           19,406            48,334
                                                                      _____            _____             _____

6    Reconciliation of operating loss to net cash outflow from operating
                                                                 Unaudited        Unaudited             Audited
                                                                Six months       Six months                Year
                                                                     ended            ended               ended
                                                              30 June 2004     30 June 2003    31 December 2003
                                                                      £000             £000                £000

Group operating loss                                               (8,148)          (8,407)            (16,319)

Depreciation                                                           491              638               1,211

Amortisation                                                         1,177              609               1,589

Profit on disposal of tangible fixed assets                           (19)                -               (638)

Increase in work in progress                                         (145)                -               (662)

Increase in debtors                                                  (824)            (156)               (143)

Increase/(Decrease) in creditors (excluding                            847          (2,122)             (1,541)
deferred license fees)

Decrease in deferred license fees                                  (1,626)            (804)             (3,086)

(Decrease)/Increase in provision for liabilities                     (367)              906               1,752
and charges

Charge for long term incentive scheme                                  169               42                   -

                                                                     _____            _____               _____

Net cash outflow from operating activities                         (8,445)          (9,294)            (17,837)
                                                                     _____            _____               _____

Cashflow in respect of exceptional reorganisation costs was £nil (2003:

7    Deferred license fees

Included in Creditors is £1,318,000 (30 June 2003: £4,923,000, 31 December 2003:
£2,944,000) in respect of deferred license fees.

8    Share capital

In March 2004, the High Court approved a capital reduction, resulting in the
cancellation of the 2,195 million deferred shares arising from the capital
reorganisation approved in December 2003.  On cancellation, the value of the
deferred shares, of £21.9 million, was credited to a special reserve as
instructed by the court.

9    Going concern

Xenova expects to absorb cash until products are commercialised.  The Directors
have a reasonable expectation that the Group has, or can reasonably expect to
obtain, adequate cash resources in order to enable it to continue operational
existence for the foreseeable future, and have therefore prepared the financial
statements on the going concern basis.

Independent review report to Xenova Group plc


We have been instructed by the company to review the financial information which
comprises the consolidated profit and loss account, the statement of total
recognised gains and losses, the consolidated balance sheet, the consolidated
cash flow statement and the related notes.  We have read the other information
contained in the interim report and considered whether it contains 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 directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which 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.

The maintenance and integrity of the Xenova Group plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the website.  Legislation in the United
Kingdom governing the preparation and dissemination of financial information may
differ from legislation in other jurisdictions.

Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom.  A review
consists principally of making enquiries of group 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 United Kingdom 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.  This report, including the
conclusion, has been prepared for and only for the company for the purpose of
the Listing Rules of the Financial Services Authority and for no other purpose.
We do not, in producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.

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 2004.

PricewaterhouseCoopers LLP
Chartered Accountants

11 August 2004

                      This information is provided by RNS
            The company news service from the London Stock Exchange