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Xenova Group plc (XEN)

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Thursday 03 March, 2005

Xenova Group plc

Xenova Group plc - 2004 Preliminary Results




Slough, UK, 3 March 2005 - Xenova Group plc (NASDAQ: XNVA; London
Stock Exchange: XEN) today announced its results for the year ended
31 December 2004.

Announced Today

*          TA-NIC preliminary 12 month clinical study results - see
  separate announcement

2004 Clinical & Manufacturing Highlights

*          TransMIDTM: agreement with the FDA under the Special
  Protocol Assessment procedure for the revised Phase III clinical
  trial programme
*          TransMIDTM: Phase III patient recruitment commenced
*          TA-CD: positive results for two dose escalation Phase IIa
  studies
*          TA-NIC: successful results from a second Phase I clinical
  trial provided anecdotal indication of efficacy
*          Tariquidar: Phase I paediatric study data presented at the
  American Society of Clinical Oncology (ASCO) conference
*          Novel DNA Targeting Agents: Millennium to cease funding
  after completion of Phase I trials
o        Phase I results for XR11576; initial Phase I results for
XR5944
*          Clinical Trials Manufacturing Facility in Cambridge, UK,
  received a Manufacturer's Authorisation - Investigational Medicinal
  Products from the MHRA
Financial Highlights (unaudited)

*          Cash, short-term deposits and investments £13.0m ($24.9m)
  at 31 December 2004 (31 December 2003: £27.5m ($52.8m))
*          Revenue recognised of £4.6m ($8.8m) (2003: £7.7m ($14.8m))
*          Loss on ordinary activities after taxation £12.5m ($24.0m)
  (2003: £15.0m ($28.8m))
*          Loss per share 2.9p (5.6c) (2003: 7.1p (13.6c))
*          Completed a cost saving reorganisation following the
  acquisition of KS Biomedix which included:
o        Prioritisation of R&D pipeline
o        Sale of Farnham Research Facility to Bioventix raising £0.8m
($1.5m)
o        Lease agreement signed with Genzyme for vacant space at
Cambridge Science Park site
o        Canadian manufacturing site sold to QSV Biologics for up to
C$7.0m (£3.1m, $5.8m)
Subsequent Events
*          Licensing of TA-CIN to Cancer Research Technology
*          Licensing of DISC-HSV and DISC-GM-CSF Vector to Oxxon
  Therapeutics for up to £44m ($83m)
*          TransMIDTM obtained orphan drug designation in Japan
David Oxlade, Chief Executive Officer of Xenova said: "In 2004 we
made good progress particularly with respect to TransMIDTM and the
addiction therapies.  We were pleased to have obtained agreement with
the FDA for the revised SPA for TransMIDTM, and the Phase III trial
is now actively recruiting in Europe, the US and other countries.
Encouraging anecdotal indications of efficacy have been seen with the
novel addiction therapies, TA-NIC for nicotine and TA-CD for cocaine.

Operationally we completed the planned disposals and achieved the
targeted cost reductions following the merger with KS Biomedix, which
has allowed us to focus on progressing our key programmes through
clinical trials.  In addition, we have continued to extract value
from the de-prioritised part of the portfolio as evidenced through
the two licensing agreements announced recently."

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 product candidates in clinical development, including three cancer
programmes:  its lead product candidate TransMIDTM, 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 has approximately 75 full time employees 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 www.xenova.com and www.gbmtrial.com

A meeting will take place on Thursday 3 March at 10:45 GMT at the
offices of Financial Dynamics, Holborn Gate, 26 Southampton
Buildings, London, WC2A 1PB.  In addition, Xenova will host a
conference call at 14:30 GMT (09:30 EST) to discuss the preliminary
results.  For further information on this and the meeting, please
call Mo Noonan at Financial Dynamics on +44 (0)20 7269 7116.  Details
of the replay will be available through the Xenova website under
Investor Information following the 14:30 conference call.

This press release contains "forward-looking statements," including
statements about our ability to integrate acquired businesses and
realize cost savings from integration, the revenues which we could
earn from milestone payments for product candidates under development
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 and delays in our drug
discovery and clinical development programs; failure to obtain
effective patent protection for our discoveries; commercial
limitations imposed by patents owned or controlled by third parties;
failure to achieve product development or commercialization
milestones on a timely basis or at all;  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 on-going 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 our reports
on file 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.

US dollar amounts provided in the text have been translated at the
closing rate on December 31, 2004 (£1.00:$1.92) solely for
information.


Chairman's Statement and Chief Executive's Review

Over the last financial year, Xenova has continued to progress its
products through the clinic.

TransMIDTM
Following discussions with the Food and Drug Administration (FDA) in
the US, the revised protocol for the TransMIDTM Phase III clinical
trials was agreed under a Special Protocol Assessment (SPA)
procedure.  The original strategy at KS Biomedix Holdings plc (KS
Biomedix) had been to file with one large Phase III study powered to
show a p<=0.01 value of statistical significance.  The revised
protocol submitted by Xenova was changed to perform two Phase III
trials where the required level of statistical significance is
lower.  This reduces the number of patients required in the first
study and hence the level of financial risk involved.

Immediately following the SPA agreement, the Company began the
initiation procedure for the clinical centres involved across North
America, Europe and Israel.  The first patient was dosed in July and
recruitment is on-going. The number of participating centres is now
expected to increase from the original 50 to 65 and the process of
identifying and initiating these centres is underway.

The Company has been supporting recruitment into the TransMIDTM Phase
III trial through a number of routes.  Articles have appeared in a
number of physician and oncology publications describing the study
and its objectives.  In the autumn, Xenova launched the website
www.gbmtrial.com dedicated to providing information on the TransMIDTM
clinical trial to potential patients, their families and doctors.

Addiction Therapy
The novel addiction therapies TA-NIC for nicotine addiction and TA-CD
for cocaine addiction have both reported positive data from their
Phase I and Phase II clinical trials respectively, in 2004.  There is
a clear medical and social need for improved treatments to help those
addicted. In the US, the National Institute on Drug Abuse (NIDA) is
supporting the Phase II clinical trials of TA-CD being carried out at
Yale School of Medicine in Boston.

Novel DNA Targeting Agents
In the autumn, Millennium Pharmaceuticals Inc (Millennium) undertook
an internal review of its pipeline and re-aligned it to revised
targets.  At this review, Millennium decided to cease funding trials
of the Novel DNA Targeting Agents following the end of the Phase I
programme.  Xenova and Millennium are now in discussions for the
return of the North American commercial rights which were the subject
of a licensing agreement entered into between the two companies in
December 2001.  Xenova also reported today further results of the
Phase I trial of XR11576 and initial results of the Phase I trial of
XR5944.

Corporate
Following the acquisition of KS Biomedix, Xenova implemented a cost
saving reorganisation that included the release of excess facilities
in the UK and North America and the prioritisation of the R&D
portfolio.  These disposals: the sale of the Farnham research
facility to Bioventix Limited, the leasing of vacant space at the
Cambridge Science Park site to Genzyme and the sale of the Canadian
manufacturing facility to QSV Biologics Ltd, will substantially
reduce the Company's facilities overheads.  In addition, through the
sale of the Canadian manufacturing facility, the Company's headcount
was reduced by 30.  Xenova had 75 full time employees as at 31
December 2004.

In December 2004, Xenova received notification that judgment was
issued in Xenova's favour by the US Patent and Trademark Office
(USPTO) Board of Patent Appeals and Interferences, in a patent
interference case in which Baxter AG, a subsidiary of Baxter
Healthcare Corporation, of Deerfield, Illinois, USA, was the other
party involved.  The subject of the proceedings was vaccines using
genetically-disabled poxvirus such as vaccinia virus, relating to
Xenova's DISC (Disabled Infectious Single Cycle) technology.  As a
result of the interference decision Xenova can expect to receive
grant of a US patent on its pending US patent application.

During 2004, the Company also had a successful outcome of a Medicines
and Healthcare products Regulatory Agency (MHRA) Good Clinical
Practice (GCP) inspection.


Programme Overview

TransMIDTM - Phase III
TransMIDTM is the most advanced product candidate in Xenova's
pipeline, currently in Phase III clinical trials.  TransMIDTM is a
potential treatment for glioblastoma multiforme (GBM) the most common
form of high grade glioma (brain cancer).  The prognosis for patients
is poor and it is a condition for which there has been little
improvement in treatment for the last two decades.

TransMIDTM is a modified diphtheria toxin conjugated to transferrin.
Transferrin receptors are particularly prevalent on rapidly dividing
cells, and the high level of transferrin receptor expression on
glioma cells makes it an ideal target for brain cancer treatment.
The diphtheria toxin gains entry to the tumour cell when the
transferrin to which it is attached binds to transferrin receptors on
the surface of the tumour cell.  Once inside a cell the diphtheria
toxin interferes with protein synthesis which ultimately kills the
cancer cell.

TransMIDTM is pumped directly into the brain tumour via two catheters
using CED (Convection Enhanced Delivery - licensed from the National
Institute of Health (NIH), US).  CED enhances the distribution of
TransMIDTM through the tumour mass, producing high local
concentrations of drug.  This also has the benefit of circumventing
the usual obstacles present in drug delivery to the brain caused by
the blood-brain barrier.

Prior to its acquisition, KS Biomedix had obtained FDA agreement for
a single Phase III clinical trial for TransMIDTM under the SPA
process.  Following the acquisition of KS Biomedix, Xenova submitted
a revised programme involving two Phase III clinical trials rather
than one, which was agreed with the FDA in May 2004.  The adoption of
a two study approach reduces the level of financial risk associated
with a large single study.

The initial Phase III clinical trial will enrol up to 323 patients
with non-resectable, progressive or recurrent GBM who have failed
conventional therapy.  The study is a randomised, open-labelled,
multi-centre trial comparing TransMIDTM against a number of presently
used chemotherapeutic agents regarded as Best Standard of Care.  The
323 patients will be randomised in a 2:1 ratio of TransMIDTM to Best
Standard of Care across approximately 65 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.   The first patient was dosed in July 2004
and recruitment is on-going.

TransMIDTM received fast track status from the FDA in August 2001 and
orphan drug status in December 2001. In addition, the European
Commission granted TransMIDTM orphan designation in March 2002.  In
February 2005 TransMIDTM obtained orphan drug designation in Japan.

TransMIDTM is currently licensed to Sosei in Japan, Nycomed in
Europe, Medison in Israel and Ranbaxy in India.  The rights to
TransMIDTM in North America have been retained.

TA-CD - Phase II
The Company is developing a therapeutic vaccine, TA-CD, for the
treatment of cocaine dependence, for which there is no currently
available effective treatment.  TA-CD is designed to induce
cocaine-specific antibodies which bind to cocaine in the blood,
blocking its uptake into the brain.  Therefore, the human
physiological response to cocaine is altered and the reinforcing
properties of cocaine are reduced which may assist patients in
breaking the cycle of addiction and abuse.

A Phase IIa clinical trial was completed and the results were
announced in July 2001.  Attenuation of the usual euphoric effects of
cocaine was reported amongst patients who relapsed during the study,
providing anecdotal evidence of the benefit TA-CD may provide.

The results of a second Phase IIa dose escalation trial were reported
in June 2003.  This study was designed to evaluate the safety and
immunogenicity of TA-CD using four or five dose vaccination
schedules.  As for the previous study, the results showed the vaccine
to be safe and well tolerated with a dose-related immune response.
Of the 16 patients in the two Phase IIa studies who used cocaine at
any time following vaccination, 13 (81%) reported a reduction of the
usual euphoric effect normally associated with cocaine use, providing
further anecdotal evidence of the vaccine's proposed mode of action.

The start of a Phase IIa cocaine administration trial was announced
in April 2003.  The 10 patient open label trial is being conducted in
the US and is designed to evaluate the effect of TA-CD on behavioural
changes associated with cocaine administration.  This trial is
expected to report during the first half of 2005.

In June 2004 data was presented at the College of Problems of Drug
Dependence 66th Annual Scientific Meeting in Puerto Rico, of two dose
escalation Phase II studies of TA-CD (a relapse prevention study and
an abstinence initiation study).  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.

Three quarters (75%) of the relapse prevention study group (9
subjects) maintained abstinence from cocaine use during the 12-week
study duration with 100% relapsing after nine months when antibody
levels had dropped.  In the abstinence initiation study group (13
subjects), 58% achieved and maintained abstinence during the 12-week
study and 42% continued to be cocaine free after 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 produced higher levels of anti-cocaine
antibodies.  88% of subjects from one study and 63% in the other, who
did relapse within six months, reported a reduction in the euphoric
effects of cocaine.

In October 2003, Xenova announced the start of the first randomised,
placebo controlled Phase IIb clinical trial for TA-CD.  The primary
objective of this study is to determine the efficacy of TA-CD in
addicts seeking treatment for cocaine abuse, and to determine
appropriate end-points for a Phase III study.  Up to 132 subjects,
all of whom are methadone-dependent cocaine addicts being treated for
drug dependency, are being recruited into this clinical study.  Half
the subjects will be treated with active TA-CD and half will be given
a placebo.  Subjects will be monitored three times a week to assess
cocaine usage, including testing for cocaine metabolites in urine,
for a period of 20 weeks.  Patients will also undergo medical
examinations and blood tests for anti-cocaine antibodies to assess
the immunogenicity of the dosing schedule.  The trial is expected to
report in H1 2006 and will allow an objective assessment of the
efficacy of the TA-CD vaccine against placebo.

The TA-CD investigations are being funded in part by the National
Institute on Drug Abuse (NIDA) which recognises cocaine abuse to be a
major problem in the US.  NIDA has also supported earlier clinical
work as part of this programme.


Tariquidar - Phase II
Discovered by Xenova, tariquidar is a potent small-molecule inhibitor
of the P-glycoprotein pump, which is being developed for the
treatment of multi-drug resistance (MDR) in cancer.

The National Cancer Institute in the US (NCI) commenced further
exploratory Phase I/II and Phase II studies with tariquidar in
combination with various cytotoxic drugs in 2003.  The studies
include one in adrenocortical cancer, one in lung, ovarian or
cervical cancer and a paediatric study in solid tumours.  These
studies are currently on-going and information can be viewed through
the NCI website.

Xenova is in discussions with QLT regarding the return of their
rights, arising from the license agreement entered into between QLT
and Xenova in August 2001.

TA-NIC - Phase I
Xenova is developing a therapeutic vaccine, TA-NIC, for the treatment
of nicotine addiction which is designed to induce nicotine-specific
antibodies.  On smoking, nicotine enters the bloodstream where it is
expected that it will encounter and bind to these antibodies.  This
antibody-nicotine complex is too large to cross the blood-brain
barrier, so the pleasurable stimulus which usually accompanies
smoking should be absent or reduced.

The start of a second Phase I clinical trial for TA-NIC was announced
in October 2003.  This second Phase I study builds upon the findings
of a previous Phase I trial which were announced in June 2002.  60
smokers, divided into three cohorts of 20 subjects, have been
recruited into this double-blind, randomised, placebo-controlled
study.  The objectives of this second Phase I clinical study were to
explore the safety, tolerability and level of anti-nicotine antibody
response to increasing doses of the vaccine TA-NIC, and to select a
dose for Phase II and Phase III evaluation.

Key findings from the initial data announced on 14 July were:

*          No drug-related serious adverse events were seen in any
  cohort
*          Minimal injection-site effects were seen at the dose
  selected for Phase II and Phase III studies
*          Anti-nicotine antibody responses were dose dependent
*          The selected dose showed an improved anti-nicotine
  antibody response profile compared to the lowest dose tested:
o        Almost twice the level of anti-nicotine antibodies were
observed
o        Earlier and more rapid onset of anti-nicotine antibody
response was achieved
*          Although not designed to test the effect of the TA-NIC
  vaccine on smoker's quit rates, there was a clear reduction across
  all groups receiving TA-NIC compared to those with the placebo
  group, in terms of those smokers who voluntarily quit during the
  12-week period or self-reported a reduction in smoking pleasure
o        At week six, 19 out of the 44 (43%) subjects receiving
TA-NIC voluntarily gave up smoking or reported reduced pleasure when
smoking compared to only 1 out of 11 (9%) receiving the placebo

On the basis of these results, a Phase II/III dose has been selected
for further clinical evaluation.  The final data from this Phase I
study is expected early this year with Phase II trials commencing
during H1 2005.

Xenova retains all rights to the TA-NIC vaccine.

XR303 - Phase I/II
XR303 is a radioimunotherapy product targeted at late-stage
pancreatic cancer.  The product comprises a super high affinity
antibody, labelled with a radionuclide, 131Iodine.  The antibody
binds to carcino-embryonic antigen (CEA), a marker which is widely
expressed on solid tumours.  The antibody can thus deliver a dose of
radiation to the tumour that is sufficient to kill tumour cells
whilst limiting damage to normal tissues.

This antibody has been shown to bind to its target for extended
periods.  The radioactive isotope has therefore been selected to
reflect this extended binding.  131Iodine has a half life of eight
days which matches the estimated half time of binding of the antibody
at the tumour site, thus maximising its killing potential.

XR303 has completed a Phase I imaging study in patients with
metastatic colorectal cancer.  This study conducted in 10 patients
showed the tumours still clearly visible at eight days as a result of
the radiolabelled antibody remaining bound to the tumour surface.
There were no drug related severe adverse events.

In view of these results a Phase I/II dose escalation study for
patients with non-resectable pancreatic cancer was initiated and is
anticipated to complete in 2005.  More than 80% of tumours in this
indication are estimated to express CEA.  In addition, the study has
been designed to assess whether locoregional administration of the
antibody results in improved efficacy and reduced systemic effects.

In May 2003 both the European Commission and FDA granted orphan drug
designation to XR303 for pancreatic cancer.  Xenova retains all
rights to XR303.

Novel DNA Targeting Agents - XR11576/XR5944/XR11612 - Phase I
This programme is being developed for the treatment of solid
tumours.  The compounds were originally believed to affect the DNA
replication process through a mechanism of action that involved the
dual inhibition of topoisomerases I and II.  Recent work however
indicates that XR5944 binds tightly to DNA and inhibits RNA synthesis
by an effect on RNA polymerases.

The Phase I clinical trial of XR11576 in solid tumours has been
completed with the recruitment of 38 patients divided between two
oral dosing schedules.  The objective of the study was to evaluate
the pharmacokinetic profile, safety and efficacy of XR11576.  21
patients received 48 courses (dosing days 1-5 on a three week cycle
over a dose range of 30-180 mg/day) and 17 patients received 53
courses (dosing days 1 and 8 of a three week cycle over a dose range
of 120-840 mg/day).  On the five day schedule, the maximum tolerated
dose was 120 mg/day but on the two day schedule adverse events were
reported across all seven dosage groups.  Dose limiting toxicities
included diarrhoea, vomiting, nausea and fatigue with no objective
responses reported.  However, stable disease was reported in four out
of the 21 patients on the five day schedule and five out of the 17
patients on the two day schedule.  No Phase II dose was established.

The Phase I trial of XR5944 in solid tumours using a single iv dosing
schedule of a 30 minute infusion once every three weeks is being
finalised.  Initial data from the 27 patients recruited shows a
maximum tolerated dose of 24 mg/m2 with dose limiting toxicities of
mucositis (ulceration of the mouth) and neutropaenia (reduction in
white blood cells).  No objective responses were reported however
four out of the 27 patients had stable disease.  When final data is
available later this year Xenova will review the future development
plans for this compound.

In December 2001, Xenova entered into an agreement with Millennium
for the development and North American marketing of XR11576 (MLN576),
XR5944 (MLN944) and XR11612 (MLN612).  In November 2004, Xenova
announced that Millennium had informed the Company that following an
internal portfolio prioritisation review it had decided to cease
funding the XR5944/XR11576/XR11612 programme after completion of the
on-going Phase I studies.  Xenova and Millennium are in discussions
regarding the return of the North America rights to the programme.

OX40
OX40/OX40L is a platform for the creation of multiple product
candidates targeting cancer and autoimmune disease.  Xenova has
produced by recombinant DNA technology a modified form of the OX40
molecule which can be used to block the interaction between the OX40
receptor and its ligand (OX40L) and hence inhibit T-cell activation.
This product candidate has been shown to be effective in a
pre-clinical model of autoimmune disease, and has moved into
pre-clinical development.

Development of a monoclonal antibody against OX40 presents an
alternative approach to target and destroy OX40-bearing activated T
cells and hence treat autoimmune disease.  This strategy is being
pursued by UCB under a license agreement with Xenova, which began in
September 1999.

A development and license agreement potentially worth up to $63m was
signed in April 2002 with Genentech for the worldwide rights to
develop and market products, primarily targeting disorders of the
immune system, based on Xenova's OX40 receptor protein and anti-OX40L
antibody programmes.  Under this agreement, Genentech paid a license
fee of $5 million over the first year of the collaboration and could
pay up to $58 million in milestones in the event of the successful
development and commercialisation of the product.  Xenova retains all
rights to the up-regulation of the immune system using the OX40/OX40L
interaction, including use in oncology and infectious disease
therapy.

In October 2003, findings relating to a research collaboration
involving Xenova's OX40 technology and its potential for the
treatment of influenza were published by Imperial College of Science
Technology and Medicine, London.  These results demonstrated that in
a pre-clinical model, down-regulation of the immune response, through
blocking the OX40-OX40L interaction, could alleviate the symptoms of
influenza, without affecting the ability to clear the virus.  This
new research suggests that the down-regulation of OX40 signalling may
play an important role in the fight against the symptoms of influenza
and perhaps other diseases similarly characterised by an excessive
immune response.

Clinical Trials Manufacturing Facility

Xenova's Clinical Trials Manufacturing Facility (CTMF) based in the
Cambridge Science Park has been manufacturing the Group's own
internal clinical trials supplies since 1995 and this remains the
primary purpose of the facility.  Surplus capacity in the facility is
being offered along with its supporting development organisation for
contract manufacturing.

In June 2003, Xenova announced the signing of a two-year
manufacturing, development and clinical supply agreement with
Pharmexa A/S (CSE: PHARMX) for the contract manufacture of clinical
supplies of a vaccine targeting the human HER-2 protein.  This
contract was extended in July 2004, enabling Xenova to manufacture
additional batches of the vaccine for Pharmexa's Phase II trials in
breast cancer.

In June 2004, Xenova received a Manufacturer's Authorisation -
Investigational Medicinal Products from the MHRA that allows the
Company to manufacture and release investigational medicinal products
and to do so in compliance with the new Clinical Trials Directive.
This license applies to Xenova's own products and those manufactured
at Xenova under contract for clients.  This follows the receipt of a
letter from the MHRA confirming that the Company's operations are in
compliance with the European Clinical trials Directive of May 2004.

Subsequent Events

On 10 January 2005, Xenova announced that it had entered into a
licensing agreement with Cancer Research Technology Limited (CRT) in
respect of Xenova's intellectual property relating to TA-CIN.  TA-CIN
is a vaccine developed by Xenova as a treatment for women with
cervical dysplasia, and has proved safe and immunogenic in Phase I
and Phase II clinical trials.

CRT will facilitate a further Phase II clinical trial to be
undertaken at St. Mary's Hospital Manchester and associated
laboratory studies at the Paterson Institute for Cancer Research in
Manchester to evaluate TA-CIN in combination with an immune modulator
in subjects with vulval intra-epithelial neoplasia (VIN).  This
trial, expected to start shortly, will recruit between 20 and 30
women with known, pre-treated, or newly diagnosed VIN3.  The primary
end point is objective response of vulval intraepithelial lesions to
treatment as well as evaluating safety, toxicity and tolerability of
the combination treatment.

CRT has licensed TA-CIN patents, know-how and materials from Xenova
and will undertake marketing of TA-CIN to potential commercial
partners with a view to sub-licensing the development and
commercialisation of the product.  Net receipts from the
sub-licensing of TA-CIN will be shared between Xenova and CRT after
certain direct costs have been recouped.

Cervical dysplasia (also known as cervical intra-epithelial
neoplasia, CIN) is one of a group of conditions, including VIN, known
collectively as ano-genital intraepithelial neoplasia (AGIN), which
are precursors to invasive cancers such as cervical cancer. Infection
with certain high risk types of Human Papillomavirus such as HPV16,
is closely associated with these dysplasias and cancers, which are
difficult to treat and have a high recurrence rate.

On 13 January 2005 Xenova announced it had signed an exclusive
licensing agreement with Oxxon Therapeutics Ltd (Oxxon) potentially
worth up to £44 million ($84 million) in up-front and milestone
payments, in the event four products complete commercialisation.
Royalties will be paid on future sales of any products derived from
the DISC-HSV Vector platform.

The agreement provides Oxxon with the right to use the DISC-HSV
Vector (Disabled Infectious Single Cycle - Herpes Simplex Virus) in a
number of specified indications in the areas of oncology and
infectious diseases.  Oxxon also has the option to further, as yet
unspecified, indications subject to payment of additional fees.  The
agreement includes global development, manufacturing and marketing
rights to DISC-GM-CSF, an oncology product developed using the
DISC-HSV Vector platform which has successfully completed a Phase I
dose-escalating safety study. Xenova retains the rights to the
DISC-PRO vaccine programme for the prophylaxis of herpes virus
diseases.

On 14 February 2005, Xenova announced the granting of orphan drug
designation to TransMIDTM (through Sosei Co Ltd, its licensee for the
Japanese market) by the Ministry of Health, Labour and Welfare (MHLW)
in Japan.  Orphan drug designation will facilitate the initiation of
clinical trials by Sosei and provide fast track approval process by
the MHLW once trials have been completed and a dossier seeking
marketing approval has been filed.  The achievement of orphan drug
designation triggers a milestone payment from Sosei to Xenova.

Xenova announced today preliminary 12 month study findings of the
second Phase I clinical trial of TA-NIC.  These results, reported in
a separate press release issued today, support the initial findings
announced in July 2004, confirming the selected dose and showing
anecdotal evidence of efficacy.

Board Changes

There were no changes to the Board of Directors during 2004.

Prof Michael Moore was appointed to the Scientific Advisory Board
(SAB).

Financial Summary

Operating Performance

In the year ended 31 December 2004, the Group's revenues from
licensing agreements, strategic partnerships and manufacturing
outsourcing were £4.6m ($8.8m) (2003: £7.7m ($14.8m)).

Revenues included £2.1m ($4.0m) in respect of the tariquidar
licensing agreement with QLT and the OX40 licensing agreement with
Genentech.  There is no further deferred revenue from QLT for the
tariquidar license.  £0.6m ($1.1m) was also recognised in respect of
the milestone due from Nycomed for the first patient treated in the
TransMIDTM trial.  Contract development revenue of £0.6m ($1.2m)
(2003: £3.2m ($6.1m)) was recognised in the year in respect of the
Millennium collaboration on the Novel DNA Targeting Agents.

The CTMF, based in the Cambridge Science Park, extended a contract
with Pharmexa in July 2004.  Manufacturing revenue for the year 2004
was £1.3m ($2.5m) (2003: £0.8m ($1.5m)). Contract manufacturing
provides a contribution to the costs of running the CTMF which is
primarily used for manufacture of clinical trials material for the
Group's own programmes. Cost of sales, which reflects a full
allocation of the fixed and variable costs relating to contract
manufacturing activities, increased to £2.2m ($4.3m) from £0.6m
($1.2m) in 2003, reflecting an increased time spent on external
contracts compared to the prior year where the majority of
manufacturing activity related to internal programmes.

Total net operating expenses of £17.1m ($32.8m) were reduced from
£23.4m ($44.9m) in 2003.

Research and development (R&D) expenditure of £14.3m ($27.4m) fell by
1% from £14.4m ($27.7m) in 2003.  R&D expenditure, excluding the
costs of discontinued operations, was £13.1m ($25.2m) which is 9%
lower than the prior year. Expenditure was incurred primarily in
respect of the TransMIDTM programme which commenced recruitment in
July, the vaccines of addiction programmes including the second Phase
I trial in TA-NIC, the recruitment of the Phase IIb TA-CD clinical
trial, and the Phase I/II dose escalation trial of XR303.
Development costs under the Millennium license agreement of £0.6m
($1.2m) have been recovered as in previous years.

Administrative expenses fell 62% to £3.6m ($6.8m) (2003: £9.4m
($18.0m)) primarily due to the release of vacant leasehold and
impairment provisions totalling £3.6m ($7.0m).  Administrative
expenses for continuing operations excluding exceptional
reorganisation costs and goodwill amortisation were £4.7m ($9.0m),
flat as compared to £4.7m ($9.1m) for 2003.  Goodwill amortisation of
£2.2m ($4.3m) increased from £1.5m ($2.9m) in 2003 as a result of a
full year impact from the KS Biomedix acquisition in September 2003.
The subletting of vacant space in Slough and Cambridge reduced net
expenses in the year by £0.7m ($1.4m) (2003: £0.4m ($0.9m)).

Exceptional reorganisation costs of £3.6m ($7.0m) credited to
administrative expenses include the release of impairment provisions
of £2.7m ($5.3m) and vacant leasehold provision of £0.9m ($1.7m) both
arising from the sub-leasing of vacant space in the Cambridge Science
park site.

The increase in investment income for the year reflects the higher
average cash and liquid resources balance held following the
fundraising in December 2003 and the impact of higher interest
rates.  R&D tax credits recoverable for the year have been increased
as a result of the KS Biomedix acquisition.

Cost Saving Programme

Following the acquisition of KS Biomedix, Xenova implemented a cost
saving reorganisation in 2003 which was completed by the release of
excess facilities in the UK and North America over the year.  Certain
premises at the Farnham research facility along with related assets
were sold to Bioventix Limited (Bioventix) at the end of 2003 for a
cash consideration of £0.8m ($1.5m).  In April 2004 Xenova signed a
10 year lease agreement with Genzyme Limited (Genzyme) for vacant
space in the Cambridge Science Park site.  Following the sub-letting
of facilities to Genzyme it was possible to release vacant leasehold
and impairment provisions of £3.6m ($7.0m) as detailed above.

On 3 September 2004, Xenova announced the completion of the sale of
its manufacturing facility based in Edmonton, Canada, to QSV
Biologics Limited for up to C$7.0m.  The consideration comprised
C$5.0m payable in cash on completion and C$2.0m deferred in two equal
secured promissory notes.  Xenova has also agreed terms for a
manufacturing and supply contract for TransMIDTM with the purchaser.
The disposal resulted in 30 employees transferring from Xenova to the
purchaser.  The Directors estimate that the annualised reduction in
net operating expenses as a result of the disposal, ignoring the
impact of the manufacturing contract, will be approximately £1.8m
($3.4m).  Net assets disposed as part of the transaction amounted to
C$6.7m (£2.9m, $5.6m). The overall loss on disposal including sale
expenses amounted to £62k ($119k)

Cash, short-term deposits and investments

Cash, short-term deposits and investments at 31 December 2004
totalled £13.0m ($24.9m) (2003: £27.5m ($52.8m)).  The Group had cash
of £1.6m ($3.0m) and liquid resources of £11.4m ($21.9m) at 31
December 2004 (2003: cash £12.1m ($23.2m), liquid resources £15.4m
($29.6m)).

Included in liquid resources is an investment in Cubist
Pharmaceuticals Inc of £0.4m ($0.8m), (2003: £0.4m ($0.8m)).




Share capital

The number of shares in issue stood at 431.5 million as at 31
December 2004 (2003: 431.5 million). During the year, 2,195 million
deferred shares were cancelled and their value of £21.9m ($42.1m)
credited to a special reserve.  The number of warrants in issue as at
31 December 2004 was 56,263,317 entitling their holders to subscribe
for one ordinary share in the Group at a price of 12.5 pence during
the period from 1 July 2004 to 31 December 2008.

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

Going concern
Xenova does not have sufficient cash resources to fund its current
level of activities for at least the next 12 months, but the
Directors have a reasonable expectation that it can raise additional
cash resources during 2005 for this purpose, and have therefore
prepared the financial statements on a going concern basis.
Attention is drawn to Note 1 to the financial statements which sets
out the consequences that might follow if Xenova is not able to
secure additional funds in 2005.

Consolidated Profit and Loss Account (unaudited)


+-------------------------------------------------------------------+
|                  |   |       |  Unaudited |  Unaudited |  Audited |
|------------------+---+-------+------------+------------+----------|
|                  |   |       | Year ended | Year ended |     Year |
|                  |   |       |            |            |    ended |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |         31 |         31 |       31 |
|                  |   |       |   December |   December | December |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |       2004 |       2004 |     2003 |
|------------------+---+-------+------------+------------+----------|
|                  |   | Notes |       $000 |       £000 |     £000 |
|------------------+---+-------+------------+------------+----------|
| Turnover         |   |       |            |            |          |
| (including share |   |       |            |            |          |
| of joint         |   |       |            |            |          |
| ventures)        |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|      Continuing  |   |       |      8,905 |      4,638 |    7,710 |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |          - |          - |        - |
| Discontinued     |   |       |            |            |          |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|      Less: share |   |       |      (140) |       (73) |     (11) |
| of joint         |   |       |            |            |          |
| ventures         |   |       |            |            |          |
| turnover         |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Group turnover   |   |       |      8,765 |      4,565 |    7,699 |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Cost of sales    |   |       |    (4,303) |    (2,241) |    (622) |
|------------------+---+-------+------------+------------+----------|
| Gross profit     |   |       |      4,462 |      2,324 |    7,077 |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Operating        |   |       |            |            |          |
| expenses         |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Research and     |   |       |            |            |          |
| development      |   |       |            |            |          |
| costs            |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|      Continuing  |   |       |   (25,177) |   (13,113) | (14,450) |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |    (2,240) |    (1,167) |        - |
| Discontinued     |   |       |            |            |          |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |   (27,417) |   (14,280) | (14,450) |
|------------------+---+-------+------------+------------+----------|
| Administrative   |   |       |            |            |          |
| expenses         |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|     Continuing   |   |       |    (8,964) |    (4,669) |  (4,748) |
| operations       |   |       |            |            |          |
|----------------------+-------+------------+------------+----------|
|     Continuing       |     2 |      6,960 |      3,625 |  (3,161) |
| operations:          |       |            |            |          |
| exceptional          |       |            |            |          |
| reorganisation costs |       |            |            |          |
|----------------------+-------+------------+------------+----------|
|     Continuing       |       |    (4,280) |    (2,229) |  (1,486) |
| operations:          |       |            |            |          |
| amortisation of      |       |            |            |          |
| goodwill             |       |            |            |          |
|----------------------+-------+------------+------------+----------|
|                  |   |       |    (6,284) |    (3,273) |  (9,395) |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|     Discontinued |   |       |      (563) |      (293) |        - |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Total            |   |       |    (6,847) |    (3,566) |  (9,395) |
| administrative   |   |       |            |            |          |
| expenses         |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Other operating  |   |       |            |            |          |
| income           |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|    Continuing    |   |       |      1,438 |        749 |      449 |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Total net        |   |       |   (32,826) |   (17,097) | (23,396) |
| operating        |   |       |            |            |          |
| expenses         |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Group operating  |   |       |            |            |          |
| loss             |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|      Continuing  |   |       |   (25,561) |   (13,313) | (16,319) |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |    (2,803) |    (1,460) |        - |
| Discontinued     |   |       |            |            |          |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |   (28,364) |   (14,773) | (16,319) |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Share of         |   |       |            |            |          |
| operating loss   |   |       |            |            |          |
| of joint         |   |       |            |            |          |
| ventures         |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|     Continuing   |   |       |       (44) |       (23) |    (213) |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|----------------------+-------+------------+------------+----------|
| Total operating      |       |   (28,408) |   (14,796) | (16,532) |
| loss: Group and      |       |            |            |          |
| share of joint       |       |            |            |          |
| ventures             |       |            |            |          |
|----------------------+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Loss on disposal |   |     4 |      (119) |       (62) |        - |
| of discontinued  |   |       |            |            |          |
| operations       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Loss on ordinary |   |       |   (28,527) |   (14,858) | (16,532) |
| activities       |   |       |            |            |          |
| before interest  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Investment       |   |       |      1,507 |        785 |      381 |
| income           |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Share of         |   |       |          - |          - |        4 |
| interest of      |   |       |            |            |          |
| joint ventures   |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Amounts written  |   |       |       (81) |       (42) |      189 |
| back to/(off)    |   |       |            |            |          |
| investments      |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Loss on ordinary |   |       |   (27,101) |   (14,115) | (15,958) |
| activities       |   |       |            |            |          |
| before taxation  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Tax on loss on   |   |     3 |      3,057 |      1,592 |      954 |
| ordinary         |   |       |            |            |          |
| activities       |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
| Loss on ordinary |   |       |   (24,044) |   (12,523) | (15,004) |
| activities after |   |       |            |            |          |
| taxation         |   |       |            |            |          |
|------------------+---+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|----------------------+-------+------------+------------+----------|
|                      |       |            |            |          |
|----------------------+-------+------------+------------+----------|
| Loss per share       |       |     (5.6c) |     (2.9p) |   (7.1p) |
| (basic and diluted)  |       |            |            |          |
|----------------------+-------+------------+------------+----------|
|                  |   |       |            |            |          |
|----------------------+-------+------------+------------+----------|
| Shares used in       |       |    431,529 |    431,529 |  212,437 |
| computing net loss   |       |            |            |          |
| per share            |       |            |            |          |
| (thousands)          |       |            |            |          |
|----------------------+-------+------------+------------+----------|
|                  |   |       |            |            |          |
+-------------------------------------------------------------------+


US Dollar amounts have been translated at the closing rate on 31
December 2004 (£1.00: $1.92) solely for information.

Statement of Total Recognised Gains and Losses (unaudited)


                                    Unaudited   Unaudited     Audited
                                   Year ended  Year ended  Year ended
                                  31 December 31 December 31 December
                                         2003        2003        2002
                                         $000        £000        £000

Loss attributable to Xenova          (24,000)    (12,500)    (14,818)
Group plc
Profit/(loss) attributable to            (44)        (23)       (186)
joint ventures

Total loss attributable to           (24,044)    (12,523)    (15,004)
members of Xenova Group plc

Translation difference                   (21)        (11)         228
Total recognised gains and
losses in the
year attributable to members of      (24,065)    (12,534)    (14,776)
Xenova Group plc


US Dollar amounts have been translated at the closing rate on 31
December 2004 (£1.00: $1.92) solely for information.

Consolidated Balance Sheet (unaudited)


+-------------------------------------------------------------------+
|                   |   |       | Unaudited | Unaudited |   Audited |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |     As at |     As at |     As at |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |        31 |        31 |        31 |
|                   |   |       |  December |  December |  December |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |      2004 |      2004 |      2003 |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   | Notes |      $000 |      £000 |      £000 |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Fixed Assets      |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|    Intangible     |   |       |    32,523 |    16,939 |    19,272 |
| assets            |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|    Tangible       |   |       |    13,814 |     7,195 |     7,858 |
| assets            |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|    Investment in  |   |       |           |           |           |
| joint ventures:   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|     Share of      |   |       |       115 |        60 |       137 |
| gross assets      |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|     Share of      |   |       |      (84) |      (44) |      (98) |
| gross liabilities |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |        31 |        16 |        39 |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |    46,368 |    24,150 |    27,169 |
|-------------------+---+-------+-----------+-----------+-----------|
| Current Assets    |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|    Work in        |   |       |     1,321 |       688 |       662 |
| progress          |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|    Debtors        |   |       |     8,519 |     4,437 |     3,669 |
|-------------------+---+-------+-----------+-----------+-----------|
|    Short-term     |   |       |    21,888 |    11,400 |    15,437 |
| deposits and      |   |       |           |           |           |
| investments       |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|    Cash at bank   |   |       |     3,014 |     1,570 |    12,070 |
| and in hand       |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |    34,742 |    18,095 |    31,838 |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Creditors:        |   |   7   |  (10,681) |   (5,563) |   (7,143) |
| amounts falling   |   |       |           |           |           |
| due within one    |   |       |           |           |           |
| year              |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Net current       |   |       |    24,061 |    12,532 |    24,695 |
| assets            |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Total assets less |   |       |    70,429 |    36,682 |    51,864 |
| current           |   |       |           |           |           |
| liabilities       |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-----------------------+-------+-----------+-----------+-----------|
| Creditors: amounts    |   7   |     (580) |     (302) |   (1,766) |
| falling due after     |       |           |           |           |
| more than one year    |       |           |           |           |
|-----------------------+-------+-----------+-----------+-----------|
| Provisions for    |   |       |     (827) |     (431) |   (1,764) |
| liabilities and   |   |       |           |           |           |
| charges           |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Total net assets  |   |       |    69,022 |    35,949 |    48,334 |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Capital and       |   |       |           |           |           |
| reserves          |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Called up share   |   |   8   |     8,287 |     4,316 |    26,264 |
| capital           |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Shares to be      |   |       |    12,436 |     6,477 |     6,483 |
| issued            |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Share premium     |   |       |   187,797 |    97,811 |    97,827 |
| account           |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Merger reserve    |   |       |    59,253 |    30,861 |    30,859 |
|-------------------+---+-------+-----------+-----------+-----------|
| Special reserve   |   |   8   |    42,142 |    21,949 |         - |
|-------------------+---+-------+-----------+-----------+-----------|
| Other reserves    |   |       |    33,270 |    17,328 |    17,328 |
|-------------------+---+-------+-----------+-----------+-----------|
| Profit and loss   |   |       | (274,163) | (142,793) | (130,427) |
| account           |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
|                   |   |       |           |           |           |
|-------------------+---+-------+-----------+-----------+-----------|
| Shareholders'     |   |   5   |    69,022 |    35,949 |    48,334 |
| funds             |   |       |           |           |           |
+-------------------------------------------------------------------+


US Dollar amounts have been translated at the closing rate on 31
December 2004 (£1.00: $1.92) solely for information.


Consolidated Cash Flow Statement (unaudited)


                                  Unaudited     Unaudited     Audited
                                  Year ended  Year ended  Year ended
                                  31 December 31 December 31 December
                                  2004               2004        2003
                            Notes        $000        £000        £000

Net cash outflow from         6      (34,295)    (17,862)    (17,837)
operating activities


Returns on investments and
servicing of finance
Interest received                       1,225         638         346
Interest element of finance               (4)         (2)         (4)
lease rental payments
Net cash inflow from
returns on
investments and servicing               1,221         636         342
of finance

Taxation                      3         3,362       1,751       2,608

Capital expenditure and
financial investment
Purchase of tangible                    (808)       (421)       (700)
fixed assets
Purchase of intangible                      -           -       (622)
fixed assets
Sale of Farnham site                        -           -         800
tangible and intangible
assets
Sale of other tangible                    104          54         265
fixed assets
Net cash outflow from
capital expenditure
and financial investment                (704)       (367)       (257)

Acquisitions and
disposals
Net cash received from sale   4         3,688       1,921           -
of manufacturing facility
Purchase of subsidiary                      -           -       (605)
undertakings
Cash at bank and in hand                    -           -       1,444
acquired with subsidiary
Net cash inflow from                    3,688       1,921         839
acquisitions

Management of Liquid
Resources
Decrease in short-term                  7,670       3,995       3,696
deposits
Proceeds on sale of                         -           -         189
current asset investments
Net cash inflow from
management of liquid                    7,670       3,995       3,885
resources

Net cash outflow before              (19,058)     (9,926)    (10,420)
financing

Financing
Issue of ordinary share                     4           2      21,785
capital
Expenses on issue of                    (713)       (371)     (1,894)
shares
Repayment of secured                    (345)       (180)         (4)
loans
Capital element of finance               (48)        (25)        (29)
lease rental payments
Net cash inflow from                  (1,102)       (574)      19,858
financing


(Decrease)/increase in               (20,160)    (10,500)       9,438
cash during the year


US Dollar amounts have been translated at the closing rate on 31
December 2004 (£1.00: $1.92) solely for information.

Reconciliation of Net Cash Flow to Movement in Net Funds (unaudited)


+-------------------------------------------------------------------+
|                         |   |   Unaudited |  Unaudited |  Audited |
|-------------------------+---+-------------+------------+----------|
|                         |   |  Year ended | Year ended |     Year |
|                         |   |             |            |    ended |
|-------------------------+---+-------------+------------+----------|
|                         |   | 31 December |         31 |       31 |
|                         |   |             |   December | December |
|-------------------------+---+-------------+------------+----------|
|                         |   |        2004 |       2004 |     2003 |
|-------------------------+---+-------------+------------+----------|
|                         |   |        $000 |       £000 |     £000 |
|-------------------------+---+-------------+------------+----------|
|                         |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| (Decrease)/increase in  |   |    (20,160) |   (10,500) |    9,438 |
| cash during the year    |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
|                         |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Repayment of secured    |   |         345 |        180 |        4 |
| loans                   |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Capital element of      |   |          48 |         25 |       29 |
| finance lease payments  |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Cash flow from movement |   |     (7,670) |    (3,995) |  (3,507) |
| in liquid resources     |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Change in net funds     |   |    (27,437) |   (14,290) |    5,964 |
| resulting from cash     |   |             |            |          |
| flows                   |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
|                         |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Liquid resources        |   |           - |          - |    2,557 |
| acquired with KS        |   |             |            |          |
| Biomedix Holdings plc   |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Secured loans acquired  |   |           - |          - |    (196) |
| with KS Biomedix        |   |             |            |          |
| Holdings plc            |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Finance leases acquired |   |           - |          - |     (63) |
| with KS Biomedix        |   |             |            |          |
| Holdings plc            |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Finance leases disposed |   |          17 |          9 |        - |
| with manufacturing      |   |             |            |          |
| facility                |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Movement in value of    |   |        (23) |       (12) |    (189) |
| liquid investments      |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Translation difference  |   |        (57) |       (30) |        6 |
|-------------------------+---+-------------+------------+----------|
| Change in net funds     |   |    (27,500) |   (14,323) |    8,079 |
|-------------------------+---+-------------+------------+----------|
|                         |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Net funds at 1 January  |   |      52,402 |     27,293 |   19,214 |
|-------------------------+---+-------------+------------+----------|
|                         |   |             |            |          |
|-------------------------+---+-------------+------------+----------|
| Net funds at 31         |   |      24,902 |     12,970 |   27,293 |
| December                |   |             |            |          |
+-------------------------------------------------------------------+


US Dollar amounts have been translated at the closing rate on 31
December 2004 (£1.00: $1.92) solely for information.

Notes to the Unaudited Preliminary Announcement

1.       Basis of preparation

These unaudited statements, which 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 and have been
delivered to the Registrar of Companies.

The financial information in this announcement has been prepared on a
going concern basis which assumes that the Company will continue in
operational existence for the foreseeable future.  The financial
information does not contain any adjustments that would arise if the
financial information was not drawn up on a going concern basis.

The Group is an emerging pharmaceutical business and as such expects
to absorb cash until products are commercialised.  The Group does not
have sufficient cash resources to fund its current level of
activities for at least the next 12 months, but the Directors have
reasonable expectation that the Group can raise additional cash
resources during 2005 for this purpose, and have therefore prepared
these financial statements on a going concern basis.  In the event
that additional funds are not secured, the Group would seek to reduce
its overheads and might delay, reduce or eliminate the development of
product candidates which are not externally funded by partners.  In
addition, the Group might also be forced to license the rights to
some of its drug candidates and technologies at an earlier stage than
would otherwise be intended, which would be likely to be on less
favourable terms.

If further sources of funding are not secured by the time the
statutory accounts are approved by the Board, the auditors have
indicated that their report will contain reference to fundamental
uncertainty relating to going concern.

2.       Exceptional reorganisation costs

Following the announcement in April 2004 that Genzyme had signed a
ten year sub-lease for the vacant space in the Group's Cambridge
facility, the vacant lease provision and asset impairment provision
following the previous reorganisations have been reduced to reflect
the impact of the sub-lease agreement. This has resulted in an
exceptional credit to the profit and loss account of £3.6m.

3.       Taxation

The Group is entitled to claim tax credits in the United Kingdom for
certain research and development expenditure. The amount included in
the financial statements for the year ended 31 December 2004 (£1.6m)
represents the credit receivable by the Group for the year (£1.3m)
and an adjustment in respect of prior years (£0.3m). These amounts
have not yet been agreed with the Inland Revenue.

Cash received for R&D tax credits in the year amounted to £1.8m.

4.       Disposal of manufacturing facility

On 1 September 2004, Xenova completed the sale of the business and
assets of KS Avicenna Inc, its manufacturing facility based in
Edmonton, Canada.  Under the terms of the agreement Xenova received
C$5.0m (£2.2m) at completion and will receive a further C$2.0m
(£0.9m) payable in two equal instalments.

Notes to the Unaudited Preliminary Announcement (continued)


                                   £000
Sale of business comprises:
Fixed assets                      2,862
Capital commitment                   52
Finance leases                      (9)
Loss on disposal                   (62)
                                  2,843

Satisfied by:
Cash                              2,174
Deferred consideration              870
Disposal expenses                 (201)
                                  2,843



5.       Reconciliation of movements in shareholders' funds


                                                Unaudited     Audited
                                               Year ended  Year ended
                                              31 December 31 December
                                                     2004        2003
                                                     £000        £000

At 1 January                                       48,334      26,510

Shares issued in the period                             2      22,326
Shares issued and to be issued in respect               1      16,518
of acquisition
Expenses on issue of shares                          (22)     (2,244)
Shares to be issued under long term                   168           -
incentive scheme
Retained loss for the period                     (12,523)    (15,004)
Exchange movement                                    (11)         228

At 31 December                                     35,949      48,334


6.       Reconciliation of operating loss to net cash outflow from
operating activities


                                                Unaudited     Audited
                                               Year ended  Year ended
                                              31 December 31 December
                                                     2004        2003
                                                     £000        £000

Group operating loss                             (14,773)    (16,319)

Depreciation                                          891       1,211
Amortisation                                        2,333       1,589
Exceptional impairment of tangible fixed          (2,745)           -
assets
Loss/(profit) on disposal of tangible                   9       (638)
fixed assets
Increase in work in progress                         (26)       (662)
Decrease/(increase) in debtors                         92       (143)
Decrease) in creditors (excluding deferred          (474)     (1,541)
license fees)
Decrease in deferred license fees                 (2,004)     (3,086)
(Decrease)/increase in provision for              (1,333)       1,752
liabilities and charges
Charge for long term incentive scheme                 168           -

Net cash outflow from operating                  (17,862)    (17,837)
activities



Cash outflow in respect of exceptional reorganisation costs was £nil
(2003: £2.4m).

Notes to the Unaudited Preliminary Announcement (continued)

7.       Deferred license fees

Included within creditors is £0.9m (2003: £3.0m) in respect of
deferred license fees of which £0.3m is included within creditors:
amounts falling due after more than one year.


8.       Share Capital

In March 2004, the High Court approved a capital reduction, resulting
in the cancellation of the 2,195,000,000 deferred shares arising from
the capital reorganisation 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.


Contacts:

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

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