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Xenova Group PLC (XEN)

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Friday 24 June, 2005

Xenova Group PLC

Offer by Celtic Part I

Xenova Group PLC
24 June 2005

  THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
                           CANADA, AUSTRALIA OR JAPAN



FOR IMMEDIATE RELEASE



24 June 2005



                       OFFER FOR XENOVA GROUP PLC



                    Celtic Pharma Development UK Plc



             Recommended Proposal to acquire Xenova Group Plc

Summary



The Directors of Xenova and the Board of Celtic Pharma announce that they have
reached agreement on the terms of a recommended offer, to be implemented by way
of a scheme of arrangement under Section 425 of the Act, under which Celtic
Pharma will acquire the entire issued and to be issued share capital of Xenova.
The Scheme is expected to become effective in August 2005.  Xenova
Securityholders (other than certain Restricted Overseas Persons) will be able to
elect from one of three choices:


Recommended Proposal                                       Offer Per 10 Xenova Shares or 1 Xenova ADS
Secured Loan Note Offer                                      US$1.10 nominal of Secured Loan Notes
Cash and Secured Loan Note Alternative                       US$0.50 nominal of Secured Loan Notes
                                                                      and 30 pence in cash
Cash Alternative                                                        45 pence in cash



The table below sets out the value of the recommended Proposal per 10 Xenova
Shares or 1 Xenova ADS:


Recommended Proposal                         Equivalent value in pence(1)         Total current value
                                                                                       in pence
Secured Loan Note Offer                                  60.44                     47.14 to 53.19(2)
Cash and Secured Loan Note Alternative                   57.47                     51.43 to 54.18(2)
Cash Alternative                                         45.00                           45.00



(1)             Equivalent value is based on the nominal value of the Secured
Loan Notes and an exchange rate of £1/US$1.82.

(2)             Based on Broadview's valuation of the Secured Loan Notes of
between 78 per cent. and 88 per cent. of nominal value.



Based on the nominal value of the Secured Loan Notes and assuming an exchange
rate of £1/US$1.82:



•                    The Secured Loan Note Offer values the existing issued
share capital of Xenova at approximately £26.1 million (US$47.5 million) and
each Xenova Share at approximately 6.044 pence (US11 cents, equivalent to US110
cents per ADS) and represents a premium of 56 per cent. to the Closing Price of
3.875 pence per Xenova Share on 23 June 2005, the last trading day immediately
prior to this announcement.



•                    The Cash and Secured Loan Note Alternative values the
existing issued share capital of Xenova at approximately £24.8 million (US$45.1
million) and each Xenova Share at approximately 5.75 pence (US 10.5 cents,
equivalent to US 105 cents per ADS) and represents a premium of 48 per cent. to
the Closing Price of 3.875 pence per Xenova Share on 23 June 2005, the last
trading day immediately prior to this announcement.



•                    The Cash Alternative values the existing issued share
capital of Xenova at approximately £19.4 million (US$35.3 million) and each
Xenova Share at 4.5 pence (US 8.2 cents, equivalent to US 82 cents per ADS) and
represents a premium of 16 per cent. to the Closing Price of 3.875 pence per
Xenova Share on 23 June 2005, the last trading day immediately prior to this
announcement.



Xenova and Celtic X Licensee (a member of the Celtic Pharma Group) have also
concluded an exclusive worldwide licence agreement in respect of Xenova's
nicotine and cocaine vaccines for the treatment of drug addiction, TA-NIC and
TA-CD.  Separately, Celtic X Licensee has agreed to make available to Xenova a
secured loan facility of up to $20 million to provide working capital for
Xenova.  Neither the Licence Agreement nor the facility is conditional upon the
Scheme becoming effective.  The Secured Loan Notes will be secured on the
Licence Agreement and the rights of Celtic X Licensee under the Licence
Agreement.



The Directors, who have been so advised by Lazard, have not taken a position as
to the relative merits of the Secured Loan Note Offer, the Cash and Secured Loan
Alternative and the Cash Alternative.  However, the Directors, who have been so
advised by Lazard, do believe the terms of the Cash Alternative to be fair and
reasonable.  In providing advice to the Directors, Lazard has taken into account
the Directors' commercial assessments.  Accordingly, the Directors unanimously
recommend that Xenova Shareholders vote in favour of the Resolutions as they
have irrevocably undertaken to do in respect of their own holdings of Scheme
Shares.



The Directors of Xenova who hold Xenova Scheme Shares (being all of the Xenova
Directors save for Dr Michael Young) have irrevocably undertaken to vote in
favour of the Proposals in respect of their aggregate beneficial holdings of
1,204,230 Scheme Shares, representing approximately 0.279 per cent. of the
issued share capital of Xenova.  John Jackson, David Oxlade, Daniel Abrams and
John Waterfall have informed Celtic Pharma that they will elect to receive
either the Secured Loan Note Offer or the Cash and Secured Loan Note
Alternative.



The Scheme will require approval of holders of Xenova Shareholders at a Court
Meeting and at an Extraordinary General Meeting.  The resolution to be proposed
at the Extraordinary General Meeting will be to approve the Scheme and other
related matters, including, inter alia, the reduction of Xenova's share capital
and amendments to the Xenova Articles required to implement the Scheme. If the
Scheme becomes effective it will be binding on all holders of Scheme Shares,
including any holders who did not vote to approve the Scheme.



Commenting on the Proposal on behalf of the Directors of Xenova, David Oxlade,
Chief Executive Officer, said:



'We believe that this offer is in the best interests of our shareholders.  It is
structured to provide shareholders with a choice between cash or securities with
a continued participation in the future commercialisation of Xenova products.
Xenova's maturing portfolio of attractive clinical programmes will require
significant funding to bring them to commercialisation, which Celtic Pharma is
in a position to provide.  In the context of the current financing environment
for biotechnology companies, this is the right solution for all Xenova
stakeholders, including the patients who stand to benefit in the future from our
products.'



Enquiries


Celtic Pharma                                          Xenova
John Mayo, Director                                    David Oxlade, Chief Executive Officer
Tel - today: +44 (0)20 7831 3113                       Daniel Abrams, Finance Director
Thereafter: +44 (0)20 7786 5555                        Tel: +44 (0)1753 706600
Stephen Evans-Freke, Director
Tel - until 24 June:  +44 (0)20 7831 3113
Tel - after 24 June:  +1 212 755 3411



Broadview (Adviser to Celtic Pharma)                   Lazard (Adviser to Xenova)
Bruce Huber                                            David Gluckman
Julie Langley                                          Nicholas Hill
Tel: +44 (0)20 7968 8000                               Tel: +44 (0)20 7187 2000



Financial Dynamics
David Yates
Ben Atwell
Tel:  +44 (0)20 7831 3113



Broadview, a division of Jefferies International Limited, which is authorised
and regulated in the United Kingdom by the Financial Services Authority, is
acting exclusively for Celtic Pharma and no one else in connection with the
Proposal and will not be responsible to anyone other than Celtic Pharma for
providing the protections afforded to customers of Broadview or for providing
advice in relation to the Proposal, the contents of this announcement or any
transaction or arrangement referred to herein.



Lazard, which is authorised and regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for Xenova and no on else in
connection with the Proposal and will not be responsible to anyone other than
Xenova for providing the protections afforded to customers of Lazard or for
providing advice in relation to the Proposal, the contents of this announcement
or any transaction or arrangement referred to herein.



As part of the Proposal, Xenova Securityholders who are eligible to do so may
choose to receive the Secured Loan Notes offer. The Secured Loan Notes to be
issued pursuant to the Scheme have not been, and will not be, listed on any
stock exchange and have not been, and will not be, registered under the US
Securities Act or under any relevant laws of any state or other jurisdiction of
the United States, nor have clearances been, nor will they be, obtained from the
securities commission or similar authority of any province or territory of
Canada and no prospectus has been, or will be, filled, or registration made,
under any securities law of any province or territory of Canada, nor has a
prospectus in relation to the Secured Loan Notes been, nor will one be, lodged
with, or registered by, the Australian Securities and Investments Commission,
nor have any steps been taken, nor will any steps be taken, to enable the
Secured Loan Notes to be offered in compliance with applicable securities laws
of Japan.  Accordingly, unless an exemption under relevant securities laws is
available, the Secured Loan Notes may not be offered, sold, re-sold or
delivered, directly or indirectly, in, into or from a Restricted Jurisdiction in
which an offer of Secured Loan Notes would constitute a violation of relevant
laws or require registration of the Secured Loan Notes, or to or for the account
or benefit of any resident of a Restricted Jurisdiction.



This announcement does not constitute an offer to sell or the solicitation of an
offer to subscribe for or buy any securities, nor the solicitation of any vote
or approval in any jurisdiction, nor shall there be any sale, issue or transfer
of the securities referred to in this announcement in any jurisdiction in
contravention of applicable law or regulation.



This summary should be read in conjunction with the full text of the following
announcement.  Appendix I to the following announcement contains certain
conditions to the implementation and operation of the Scheme.  Appendix II
contains definitions of certain expressions used in this summary and in the
following announcement.



Under the provisions of Rule 8.3 of the City Code, any person who, alone or
acting together with any other person(s) pursuant to an agreement or
understanding (whether formal or informal) to acquire or control relevant
securities of Xenova, owns or controls, or becomes the owner or controller,
directly or indirectly, of one per cent. or more of any class of securities of
Xenova is required to disclose, by not later than 12.00 noon (London time) on
the London business day following the date of the relevant transaction, dealings
in such securities (or in any option in respect of, or derivative referenced to,
any such securities) during the offer period.



Under the provisions of Rule 8.1 of the City Code, all dealings in relevant
securities of Xenova by Xenova or Celtic Pharma, or by any of their respective
'associates' (within the meaning of the City Code) must also be disclosed.



If you are in any doubt as to the application of Rule 8 to you, please contact
an independent financial adviser authorised under FSMA 2000, consult the Panel's
website at www.thetakeoverpanel.org.uk or contact the Panel on telephone +44 20
7638 0129 or by fax on +44 20 7236 7013.



This announcement includes 'forward-looking statements' relating to the
Proposal, the Celtic Pharma Group and Xenova that are subject to known and
unknown risks and uncertainties, many of which are outside of the Celtic Pharma
Group's and Xenova's control and are difficult to predict and that may cause
actual results to differ materially from any future results expressed or implied
by such forward-looking statements.  All statements other than statements of
historical fact included in this announcement regarding the business, financial
condition, results of operations of Xenova, the Xenova Group, Celtic Pharma, the
Celtic Pharma Group, Celtic Pharma Holdings, Celtic X Licensee, or Celtic Pharma
Capital and certain plans, objectives, assumptions, expectations or beliefs with
respect to these items and statements regarding other future events or
prospects, are forward-looking statements. Should one or more of the risks or
uncertainties associated with such forward-looking statements materialise, or
should assumptions underlying such forward-looking statements prove incorrect,
actual results may vary materially from those described herein.



These statements include, without limitation, those concerning: strategy and the
ability to achieve it; expectations regarding sales, expenses, profitability and
growth; possible or assumed future results of operations; capital expenditure
and investment plans; adequacy of capital; and financing plans. The words
'seek', 'aim', 'may', 'expect', 'anticipate', 'believe', 'future', 'continue',
'help', 'estimate', 'plan', 'intend', 'should', 'could', 'would', 'shall' and
similar terms or the negative or other variations thereof, as well as other
statements regarding matters that are not historical fact, are intended to
identify or may constitute forward-looking statements. In addition, this
announcement includes forward-looking statements relating to potential exposure
to various types of market risks, such as foreign exchange rate risks, interest
rate risks and other risks related to financial assets and liabilities. These
forward-looking statements have been based on the current view of Xenova or
Celtic Pharma management, as applicable, with respect to future events and
financial performance. These views reflect the best judgement of the management
of Xenova or Celtic Pharma, as applicable, but involve a number of risks and
uncertainties which could cause actual results to differ materially from those
predicted in forward-looking statements and from past results, performance or
achievements. Although it is the belief of Xenova and Celtic Pharma, as the case
may be, that the estimates reflected in the forward-looking statements are
reasonable, such estimates may prove to be incorrect. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that may occur in the future. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking statements,
including, without limitation, the following: the inability to obtain any
necessary regulatory approvals in the context of the Proposal or to obtain them
on acceptable terms, the inability to integrate successfully Xenova within the
Celtic Pharma Group; costs related to the Acquisition; the economic environment
of the industries in which the Celtic Pharma Group and Xenova operate; costs
associated with research and development; changes in the prospects for products
in the pipeline or under development by Xenova; dependence on the existing
management of Celtic Pharma and Xenova; changes or uncertainties in UK or US
federal or state tax laws or the administration of such laws; changes or
uncertainties in the laws or regulations applicable to the markets in which
Celtic Pharma and Xenova operate, including those of the Federal Drug
Administration in the United States, and other factors detailed in Xenova's
fillings with the SEC; failure to protect intellectual property rights or any
infringement claims; litigation; future exchange and interest rates; economic
downturn; acts or threats of terrorism; acts or the threat of war or other
adverse political developments.



All subsequent written and oral forward-looking statements attributable to
Celtic Pharma or Xenova or persons acting on behalf of either of them are
expressly qualified in their entirety by the cautionary statements above.  The
forward-looking statements included herein are made only as of the date of this
announcement.



  THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
                           CANADA, AUSTRALIA OR JAPAN



FOR IMMEDIATE RELEASE



24 June 2005



                       OFFER FOR XENOVA GROUP PLC



           Recommended Proposal by Celtic Pharma for Xenova



1.                  Introduction



The Directors and the Board of Celtic Pharma announce that they have reached
agreement on the terms of a recommended offer to be made by Celtic Pharma for
the entire issued and to be issued share capital of Xenova. It is proposed that
such offer be implemented by means of a scheme of arrangement between Xenova and
Xenova Securityholders under section 425 of the Act.



Xenova and Celtic Pharma have also concluded an exclusive worldwide licence
agreement in respect of Xenova's nicotine and cocaine vaccines for addiction,
TA-NIC and TA-CD. This Licence Agreement is not conditional upon the Scheme
becoming effective.  Separately, Celtic Pharma has agreed to make available to
Xenova a secured loan facility of up to $20 million to provide working capital
for Xenova.  This facility is also not conditional upon the Scheme becoming
effective.



2.                  Summary terms of the recommended Scheme



Holders of Scheme Shares (other than Restricted Overseas Persons who will
receive the Cash Alternative) on the register of members as at the Scheme Record
Time will receive (subject to their elections in respect of either the Cash and
Secured Loan Note Alternative or the Cash Alternative):



The Secured Loan Note Offer


For every 10  Scheme Shares                                 US$1.10 nominal value of Secured Loan Notes
or for every 1 Xenova ADS                                   Equivalent to 60.44 pence
                                                            assuming £1 = $1.82



and so in proportion for any other number of Scheme Shares or Xenova ADSs held.



The Cash and Secured Loan Note Alternative:


For every 10 Scheme Shares                                  30 pence in cash
or for every 1 Xenova ADS                                   and
                                                            US$0.50 nominal value of Secured Loan Notes
                                                            In aggregate, equivalent to 57.47 pence assuming
                                                            £1 = $1.82



and so in proportion for any other number of Scheme Shares or Xenova ADSs held.



The Cash Alternative:


For every 10 Scheme Shares                                  45 pence in cash
or for every 1 Xenova ADS



In all circumstances, fractional entitlements to Secured Loan Notes will be
remitted in cash and any cash payment will be rounded down to the nearest whole
penny.



The Secured Loan Notes will be denominated and issued in US Dollars.  The
Secured Loan Notes will be issued, credited as fully paid, in multiples of US$1
nominal amount.  The Secured Loan Notes will accrue compound interest at a rate
of 15 per cent. per annum.



The equivalent values shown in pence throughout this announcement are calculated
on an exchange rate of £1=US$1.82 and are provided for illustrative purposes.



Except for certain Restricted Overseas Persons those Xenova Shareholders who
have either: (a) not accepted the Proposal; or (b) accepted the Proposal, but
failed to submit a valid Form of Election,  will be deemed to have accepted the
Secured Loan Note Offer in the event that the Scheme becomes effective.



3.                  Valuation of the Scheme



Broadview, which is acting as financial adviser to Celtic, has advised that, in
its opinion, a reasonable estimate of the current value of the Secured Loan
Notes, if they had been in existence at this time, is in the range of between
approximately 78 per cent. and 88 per cent. of their nominal value.



None of the Xenova Directors or Lazard is expressing an opinion as to the
estimated value of the Secured Loan Notes.  A letter from Broadview setting out
the basis for its estimate of the value of the Secured Loan Notes will be
contained in the Scheme Document. Before deciding which form of consideration to
receive under the Scheme, Xenova Securityholders should consider the factors set
out in paragraph 4(c) of this announcement and are strongly advised to take
their own independent professional advice.



The following table sets out, for illustrative purposes only and on the bases
and assumptions set out in the notes below, the financial effects on capital
value for a holder of 10 Xenova Shares assuming the Scheme becomes effective. It
compares the value of the Secured Loan Notes issued and the amount of cash due
under the Cash and Secured Loan Note Alternative and the Cash Alternative in
respect of 10 Xenova Shares with the value of 10 Xenova Shares on 23 June 2005
(the last trading day immediately prior to the Announcement Date). In assessing
the financial effects of the Scheme, no account has been taken of any potential
liability to taxation of a Xenova Securityholder or ability to defer taxation.


                                                     Secured Loan       Cash and Secured              Cash
                                                       Note Offer              Loan Note       Alternative
                                                                             Alternative

MARKET VALUE OF 10 XENOVA SHARES ON 23 JUNE                 38.75                  38.75             38.75
£/p
Value as at 23 June
Nominal value of Secured Loan Notes (p)                     60.44                  27.47                 -
Current value of Secured Loan Notes(1) (p)         47.14 to 53.19         21.43 to 24.18                 -
Cash consideration (p)                                          -                  30.00             45.00

                                                             ____                   ____              ____
Total current value (inc. cash where               47.14 to 53.19         51.43 to 54.18             45.00
relevant) (p)
                                                             ____                   ____              ____
Increase in capital value                          21.7% to 37.3%         32.7% to 39.8%             16.1%
Total current value (inc. cash where             £20.3m to £23.0m       £22.2m to £23.4m            £19.4m
relevant) (£m)
Value of the entire issued share capital of                £26.1m                 £24.8m            £19.4m
Xenova(2)
Value at time of redemption of Secured Loan
Notes
Value assuming redemption at par of Secured                 60.44                  57.47             45.00
Loan Notes after 24 months(3)(p)
Value assuming redemption or conversion of                  79.93                  66.33             45.00
Secured Loan Notes at par plus compound
interest after 24 months(4) (p)
Value of Secured Loan Notes after 72 months                139.80                  93.54             45.00
(5)(p)

Notes

(1) Based on the Broadview valuation of the Secured Loan Notes in the range of 78% to 88% of their nominal
value.

(2) Based on the nominal value of the Secured Loan Notes and an exchange rate of £1/US$1.82.

(3) Assuming that Celtic Pharma does not exercise its call option to purchase all of the outstanding
Secured Loan Notes before being able to make Pharmaceutical Investment Notes available to Noteholders (in
which event, Noteholders would be entitled to have their Secured Loan Notes redeemed for nominal value
plus Compound Interest) and assuming that, at the time of purchase, Noteholders do not instead choose to
exchange their Secured Loan Notes for Pharmaceutical Investment Notes if and when they are made available.

(4) Assuming either that Celtic Pharma redeems all of the outstanding Secured Loan Notes without making
available Pharmaceutical Investment Notes (in which event, Noteholders would be entitled to have their
Secured Loan Notes redeemed for nominal value plus Compound Interest) or that a Noteholder elects to
receive Pharmaceutical Investment Notes in the event that Pharmaceutical Investments Notes are made
available by Celtic Pharma (in which case, Noteholders would receive Pharmaceutical Investment Notes with
a nominal value equal to the nominal value of the Secured Loan Notes plus Compound Interest).  Celtic
Pharma has confirmed that it intends to structure the offering of Pharmaceutical Investment Notes such
that they trade initially at or around par at the time of listing.

(5) Assuming Secured Loan Noteholders choose to receive Pharmaceutical Investment Notes at redemption and
receive Compound Interest for a further four years until redemption of the Pharmaceutical Investment
Notes.



4.                  The Secured Loan Notes



The Secured Loan Notes will be denominated and issued in US Dollars.  The
Secured Loan Notes will be issued, credited as fully paid, in multiples of US$1
nominal amount.  The Secured Loan Notes will accrue compound interest at a rate
of 15 per cent. per annum.



(a)                Security arrangements and ring-fencing



Celtic Pharma is a public limited liability company incorporated under the laws
of England and Wales for the purposes of making the Proposal.  Celtic Pharma is
a subsidiary of Celtic X, a limited liability company incorporated under the
laws of Malta. Celtic X is a subsidiary of Celtic Pharma Capital, also a limited
liability company incorporated under the laws of Malta, which is a subsidiary of
Celtic Pharma Holdings, a Bermuda-based limited partnership established by John
Mayo and Stephen Evans-Freke in October 2004. Celtic Pharma Holdings' general
partner is Celtic Pharma General L.P., which is itself a limited partnership
which is managed by its general partner, Celtic Pharma GP Ltd, a limited
liability company incorporated under the laws of Bermuda.  Celtic X Licensee is
a subsidiary of Celtic Pharma Capital.



The Secured Loan Notes will be secured against the rights of Celtic X Licensee
under the Licence Agreement, which are in respect of TA-CD and TA-NIC.
Additionally, Celtic Pharma intends to put in place certain other arrangements
for the benefit of Noteholders as follows:-



•        Neither Celtic Pharma Holdings nor any other members of the Celtic
Pharma Group with respect to which Celtic Pharma Capital is a subsidiary shall
receive payments of principal in relation to the Facility Agreement until the
earlier of the Exchange Date and the Long Stop Date save that this shall be
without prejudice to the set-off provisions contained in the Facility Agreement.



•        Neither Celtic Pharma Holdings nor any other members of the Celtic
Pharma Group with respect to which Celtic Pharma is a subsidiary will be
entitled to receive any dividends or distributions of capital from any of Celtic
Pharma or Xenova until the earlier of the Exchange Date and 40 days from and
including the Long Stop Date.  Any amounts realised in relation to the assets of
either Xenova or its subsidiaries prior to that time will be retained or
reinvested in the development of the assets of Xenova or its subsidiaries until
the earlier of the Exchange Date and 40 days from and including the Long Stop
Date.



•        Celtic Pharma will, under the terms of the Secured Loan Note
Instrument, be precluded from incurring any indebtedness or any security
interest relating to such indebtedness which would rank in seniority to the
Secured Loan Note.



•        Celtic Pharma shall on or before the issuance of the Secured Loan Notes
procure a guarantor which shall irrevocably and unconditionally undertake with
Celtic Pharma and the Noteholders from time to time on the terms of the
guarantee annexed to the Secured Loan Instrument to guarantee payments in
respect of the principal amount of the Secured Loan Notes and interest (if any)
payable in cash under the Secured Loan Note Instrument.  This guarantee will
cease on the earlier of (i) the Exchange Date; and (ii) 40 days from and
including the Long Stop Date.



•        As part of this transaction, Celtic Pharma agrees that it will not
grant security in respect of the assets of the Xenova Group save for the Licence
Agreement, save for the ability to grant security in respect of such assets for
the Pharmaceutical Investment Notes (if issued) into which the Secured Loan
Notes will be exchangeable.



(b)               Exchange rights into Pharmaceutical Investment Notes and
options to redeem Secured Loan Notes



The Secured Loan Notes will be issued in certificated form and will not be
transferable except to any member of the Celtic Pharma Group or, at the time of
issue, by the ADS Depositary to the registered holders of Xenova ADSs.  Celtic
Pharma may transfer its obligations under the Secured Loan Notes to any other
member of the Celtic Pharma Group.



Celtic Pharma has agreed to use all reasonable endeavours to procure that, on or
prior to the Long Stop Date (expected to be in August 2007), Pharmaceutical
Investment Notes will be made available to Noteholders in exchange for the
Secured Loan Notes then held by them and that these Pharmaceutical Investment
Notes will, when issued, be listed and admitted to trading on a Regulated Market
or such other major stock exchange as Celtic Pharma Capital shall reasonably
determine.  When such Pharmaceutical Investment Notes are made available, each
Noteholder will be entitled to elect to either:



(i)         receive cash in an amount equal to the nominal US Dollar value of
the Secured Loan Notes (but not including any Compound Interest which shall not
be payable) then held by him, and payable in US Dollars; or



(ii)        receive Pharmaceutical Investment Notes with a nominal value equal
to the aggregate of: (a) the nominal amount of the Secured Loan Notes then held
by him; and (b) Compound Interest accrued up to (but not including) the date of
issue of the Pharmaceutical Investment Notes.  Celtic Pharma has confirmed that
it intends to structure the offering of Pharmaceutical Investment Notes such
that they trade initially at or around par at the time of listing.



In addition, under the terms of the Secured Loan Notes, Celtic Pharma will, at
any time after the Scheme Effective Date and prior to the issue of the
Pharmaceutical Investment Notes, be entitled to exercise the Loan Note Call
Option to require the Noteholders to transfer to it or another member of the
Celtic Pharma Group all of the Secured Loan Notes then held by them for a cash
amount equal to the aggregate of: (a) their nominal value; and (b) Compound
Interest accrued up to but not including the date of transfer.



If Celtic Pharma does not exercise this Loan Note Call Option, Celtic Pharma
will, under the terms of the Secured Loan Note Instrument, be obliged to use all
reasonable endeavours to procure that Pharmaceutical Investment Notes are made
available to Noteholders on or prior to the Long Stop Date and that they are
listed as aforesaid.  If Celtic Pharma is unable to make Pharmaceutical
Investment Notes available to Noteholders on this basis, it shall have no
liability to Noteholders for not making them available but will be required to
inform the Noteholders of this on or prior to the Long Stop Date, as a result of
which Noteholders will then be entitled to require Celtic Pharma to purchase
their Secured Loan Notes for a cash amount equal to the aggregate of: (a) their
nominal value as at the date of such notice; and (b) Compound Interest accrued
up to but not including the date of such purchase.



Xenova Securityholders should consider the factors set out in paragraph 4(c)
below of this announcement and are strongly advised to take their own
independent professional advice before deciding whether to accept Secured Loan
Notes under the Scheme.



(c)                Factors to consider in relation to the Secured Loan Notes



When considering whether or not to receive Secured Loan Notes pursuant to the
Scheme, the attention of Xenova Securityholders is drawn to the matters set out
below. In addition, Xenova Securityholders are strongly advised to take their
own independent professional advice before deciding to receive Secured Loan
Notes under the Scheme. Xenova Securityholders are recommended carefully to
consider, in the light of their own investment objectives and having taken
advice appropriate to their own financial circumstances, whether or not they
wish to receive the Secured Loan Notes.



The main quantitative factor a Xenova Securityholder should consider in favour
of receiving Secured Loan Notes is the high rate of return that the Secured Loan
Notes will offer in the event that they are redeemed (including Compound
Interest accrued) or converted into Pharmaceutical Investment Notes with a
nominal value equal to the aggregate of:  (a) the nominal amount of the Secured
Loan Notes then held by him; and (b) Compound Interest accrued up to (but
excluding) the date of the issue of the Pharmaceutical Investment Notes.  Celtic
Pharma has confirmed that it intends to structure the offering of Pharmaceutical
Investment Notes such that they trade initially at or around par at the time of
listing.  Potential returns on Secured Loan Notes are set out below.


                                                                Percentage uplift       Percentage uplift

                                                                     after 1 year           after 2 years
Secured Loan Note Offer                                                     79.4%                  106.3%

Cash and Secured Loan Note Alternative                                      58.9%                   71.2%
                                                                         IRR over                IRR over
Secured Loan Note Offer                                                    1 year                 2 years

Cash and Secured Loan Note Alternative                                      79.4%                   43.6%

                                                                            58.9%                   30.8%
Implied IRRs in relation to acquiring US$0.50 cents of                     110.6%                   55.6%
Secured Loan Notes and giving up 15 pence of cash by
accepting the Cash and Secured Loan Note Alternative rather
than accepting the Cash Alternative

Note:  Calculations assume an exchange rate of £1/US$1.82 and compare to Xenova's Closing Price of 3.875
pence per Xenova Share on 23 June 2005, the last trading day immediately prior to this announcement.



The qualitative factors to consider in favour of receiving Secured Loan Notes
are the structural issues set out in paragraph 4(a) that are designed to provide
protections to Secured Loan Noteholders.



Factors to consider in favour of not receiving Secured Loan Notes



•                      This is Celtic Pharma's first acquisition.



•                      The Secured Loan Notes will not be listed on any stock
exchange and are not transferable (other than to members of the Celtic Pharma
Group or, at the time of issue by the ADS Depositary to the registered holders
of Xenova ADSs).  Therefore Xenova Securityholders who receive Secured Loan
Notes will be unable to sell them prior to their being either redeemed or
converted into listed Pharmaceutical Investment Notes.



•                      The security arrangements in relation to the Secured Loan
Notes remain to be finalised with the Security Trustee.  There can be no
certainty that the Security Trustee will not require amendments to such
arrangements.



•                      There is no certainty that at the time Celtic Pharma
seeks to or is required at the Long Stop Date to redeem the Secured Loan Notes,
it will have sufficient of its own resources so to do or the ability to draw
down from its investors sufficient funds to meet any shortfall.



•                      There is no certainty that if the security arrangement in
relation to the Secured Loan Notes is required to be enforced, there will be
assets subject to the security arrangement with realisable value at that time
that is sufficient to meet in full Celtic Pharma's obligations to holders of
Secured Loan Notes.



•                      The Secured Loan Notes will be denominated in US Dollars
the value of which may be affected by currency fluctuations.



The above does not necessarily represent all of the factors that should be
considered in connection with the Secured Loan Notes.  Other factors that should
be considered in relation to deciding whether to receive the Secured Loan Notes
include, but are not limited to the tax implications that relate to Xenova
Securityholders personally in respect of the Secured Loan Notes including any
withholding tax which may be payable in respect of any interest payments made in
relation to the Secured Loan Notes.



The Directors of Xenova, who have been so advised by Lazard, believe that all of
these are factors to which consideration should be given by Xenova
Securityholders in determining their own intentions in respect of the Secured
Loan Notes.  However, there may be other factors not included here which an
individual Xenova Securityholder should consider when determining whether or not
to make an election for Secured Loan Notes.  Having taken advice appropriate to
their own financial circumstances, Xenova Securityholders should form their own
view as to whether or not the Secured Loan Notes represent a suitable investment
opportunity in the light of their own investment objectives.



5.                  Factors Relating To The Pharmaceutical Investment Notes



Celtic Pharma Capital, of which Celtic Pharma is a subsidiary, intends to
establish, by no later than the Long Stop Date, a note programme (the 'Note
Programme') pursuant to which Celtic Pharma Capital may issue, from time to
time, different series of limited recourse Pharmaceutical Investment Notes or
other limited recourse debt obligations which will be secured by a floating
charge over the intellectual property assets of Celtic Pharma Capital as
acquired from time to time, including, patent licences, sub-licences or other
similar contractual intellectual property rights in respect of pharmaceutical
intellectual property held by Celtic Pharma Capital or affiliates of Celtic
Pharma Capital and all or a portion of the proceeds of the foregoing.  Any such
assets will be assigned to a security trustee and held in a collateral trust for
the benefit of the holders of the Pharmaceutical Investment Notes issued
pursuant to the Note Programme.  Additionally, Celtic Pharma Capital intends to
retain discretion to transfer or sell any of the assets set out above, from time
to time, provided that certain proceeds thereof are retained by the security
trustee in cash or other highly liquid investments to be used to repay the
relevant Pharmaceutical Investment Noteholder.



In the event that Celtic Pharma Capital establishes the Note Programme, Celtic
Pharma Capital intends initially to issue an aggregate principal amount of
Pharmaceutical Investment Notes equal to the then outstanding principal amount
of the Secured Loan Notes and effect an exchange therefor. If issued, the
Pharmaceutical Investment Notes should enable Xenova Shareholders who receive
Secured Loan Notes and who then elect to receive Pharmaceutical Investment
Notes, to realise returns with a preferred position in relation to equity
investors in Celtic Pharma Holdings. As stated, it is intended that the security
pool upon which the Pharmaceutical Investment Notes will be secured will include
other pharmaceutical products and programmes acquired by Celtic Pharma Capital.
This means that, if this is achieved, the holders of Secured Loan Notes who
elect to exchange their Secured Loan Notes for Pharmaceutical Investment Notes
should benefit from a more diversified security pool of assets with a
commensurate increase in credit quality. Celtic Pharma Group has stated that it
is its intention to continue to add to the security pool with more acquired
assets, involving equity funding by Celtic Pharma Group of at least 40 per cent
of their purchase and development cost. Therefore the security pool and the size
of the Celtic Pharma Group equity contribution is expected to grow to the
benefit of Pharmaceutical Investment Noteholders. The Pharmaceutical Investment
Notes will rank ahead of the rights of equity investors in Celtic Pharma Capital
with respect to distributions or sale proceeds from any of the Xenova
programmes.



In the event that the Pharmaceutical Investment Notes are redeemed as intended,
they would realise an uplift in value as compared to Xenova's Closing Price of
3.875 pence per Xenova Share on 23 June 2005, the last trading day immediately
prior to this announcement, of at least 261 per cent (reflecting the minimum 15
per cent compound return on the original face value and the premium of the
original face value to the share price on 23 June 2005) on the sixth anniversary
of issuance of the Secured Loan Notes.  This equates to approximately 14.0 pence
per Xenova Share at that time.



In addition to the potential return in relation to the Pharmaceutical Investment
Notes, Xenova Securityholders' attention is drawn to the fact that the right to
receive listed Pharmaceutical Investment Notes before or at the Long Stop Date
is subject to the creation of such notes, however:



•                 Celtic Pharma Capital may be unable to procure the listing of
the Pharmaceutical Investment Notes prior to the Long Stop Date.



•                 As a result of too few Pharmaceutical Investment Notes being
issued as consideration for acquisitions or directly to investors for cash, it
may be that once listed there are insufficient Pharmaceutical Investment Notes
in issue for there to be liquid trading in Pharmaceutical Investment Notes.



•                 The eventual ability of Celtic Pharma Capital to redeem the
Pharmaceutical Investment Notes will depend on Celtic Pharma Group's ability
successfully to develop the products it acquires into the pool of security
intended to be created by Celtic Pharma Capital and to realise value from these
products. Beyond the products to be acquired through the acquisition of Xenova,
the identity and nature of the products that Celtic Pharma Group will eventually
acquire is unknown as is the amount of Pharmaceutical Investment Notes that may
be issued or other liabilities that may be incurred in relation to such
acquisitions.



Celtic Pharma Group have confirmed that the terms of the Pharmaceutical
Investment Notes will be no less favourable to the holders of the Pharmaceutical
Investment Notes than those of the Secured Loan Notes and will otherwise be made
available on such other terms as Celtic Pharma Capital shall reasonably
determine.  The detailed terms of the Pharmaceutical Investment Notes are
unknown, however Celtic Pharma has confirmed that it intends to structure the
offering of Pharmaceutical Investment Notes such that they trade initially at or
around par at the time of listing.  Nevertheless, whilst the Pharmaceutical
Investment Notes are intended to be listed and therefore freely tradable, it is
unlikely that the Pharmaceutical Investment Notes will be guaranteed or contain
provisions expressly allowing for the Pharmaceutical Investment Notes to be
exchanged for other securities or for cash other than upon a redemption in the
ordinary course or pursuant to the compulsory acquisition procedures relating to
the Investment Company Act described in paragraph 24 below.  The eventual
economic characteristics that will underlie the Pharmaceutical Investment Notes
cannot be known at the current time. Therefore none of the Directors or Lazard
is expressing an opinion as to whether or not the Pharmaceutical Investment
Notes will be issued or, in the event that they are, as to their estimated value
at that time.  Further details of the Pharmaceutical Investment Notes and the
Pharmaceutical Investment Note Programme will be set out in the Scheme Document.



6.                  Background to and reasons for the recommendation



The Xenova Group has focused over the last few years on the development of novel
drugs to treat cancer and addiction with a secondary focus in immunotherapy.
The Xenova Group currently has a number of products in various stages of
development. However these products require substantial further investment in
order to complete the clinical trials and other activities needed before
marketing authorisation can be sought.



Xenova stated in its preliminary results for the year ended 31 December 2004,
which were announced on 3 March 2005, that it would have insufficient funds for
the subsequent twelve months.  As a result, the Board of Xenova has vigorously
explored options for raising further cash, including a fundraising or a sale of
the Company.  Discussions with  existing  and  potential  investors  took  place
in the first quarter  of 2005 with a view to providing the Xenova Group with the
necessary working capital to advance  its  core  programmes. Discussions have
also been held with a number of alternative potential licensees for the Xenova
Group's products and potential merger partners and acquirers, including Celtic
Pharma.



Xenova has today entered into the Licence Agreement with Celtic X Licensee for
the world-wide development and marketing of Xenova's conjugated therapeutic
vaccines, TA-CD and TA-NIC. The Directors of Xenova believe that the terms of
the Licence Agreement are fair and reasonable.  However the immediate payments
due under the Licence will not fundamentally alter Xenova's medium term
financial position.



Celtic Pharma's offer structure enables Xenova Securityholders to choose between
the certainty of cash at a premium to the current Xenova Share price or possibly
higher returns in the form of Secured Loan Notes.



7.                  Information on Xenova



Xenova is a bio-pharmaceutical company which was incorporated and registered in
England on 19 March 1992 under the Act.  The Company, which acquired Cantab
Pharmaceuticals Plc in April 2001 and acquired KS Biomedix Holdings plc in
September 2003, is focused on the development of novel commercially attractive
drugs, primarily for the treatment of cancer and addiction with a secondary
focus on immunotherapy.  The Xenova Group currently has six programmes in
clinical development, including new chemical entities for the treatment of
addiction.  The Xenova Group has in its ownership, or licensed to it, a total of
approximately 43 families of patent application and/or has granted patents.



Based in Slough and Cambridge in the UK and Philadelphia in the United States,
the Xenova Group currently employs approximately 72 full-time employees at its
three locations of whom approximately 49 are directly involved in drug
development or manufacturing.  The Xenova Group's head office is located in
Slough while the Xenova Group's addiction vaccine activities are carried out at
its Cambridge site.  The US office, located in Philadelphia, runs the US side of
the TransMID Phase III clinical trial.  The Xenova Group also has a biological
manufacturing plant located at the Cambridge site, which is used for the
production of clinical grade materials for its own clinical trials and for
contract manufacturing on behalf of third party clients.



The Xenova Group seeks to commercialise its development products through
partnering with major biopharmaceutical companies.  It considers the optimal
timing for partnering on a project by project basis following an assessment of
the scientific and commercial risks and returns for each individual project.
However, in general, a licensing partner will be sought to assist with Phase III
trials and to take on the marketing and distribution of the product.



For the year ended 31st December 2004, in accordance with generally accepted
accounting principles in the United Kingdom, Xenova reported turnover of £4.6
million (2003: £7.7 million) with a loss on ordinary activities before taxation
of £14.1 million (2003: £16.0 million), net assets of £35.9 million (2003: £48.3
 million) and cash, short term deposits and investments of £12.9 million (2003:
£27.5 million).



8.                  Information on Celtic Pharma Holdings and the Celtic Pharma
Group and Celtic Pharma's intentions regarding The Xenova Group



Celtic Pharma is a subsidiary of Celtic Pharma Holdings.  Celtic Pharma Holdings
is a $300m (first round) private equity fund, to which over $125 million has
been committed and closed in to date, that is pursuing strategic investment
opportunities in the pharmaceutical and biotechnology sectors of North America
and Europe.  It is anticipated that, the balance of the $300 million will be
closed in by the end of 2005 and that during 2006, this will be invested or
committed to future development costs of acquired projects.



Celtic Pharma Holdings intends to build a diversified portfolio of novel,
innovative and potentially valuable products that are in the late stages of
clinical development, in order to drive them forward through the final value
building stages of clinical development to market launch.



It is Celtic Pharma's intention that Xenova will continue to be focused on the
development of pharmaceuticals and it is intended that it will become Celtic
Pharma's drug development vehicle in the UK, managing projects and outsourced
service contracts as it does presently.



Celtic Pharma intends to invest in Xenova so that it can improve its core drug
development capability. However, Celtic Pharma's ability to source new drug
candidates and the fact that Xenova will become a private company will mean that
some administrative and support functions will cease to exist.



Further financial information in relation to Celtic Pharma Holdings and the
Celtic Pharma Group will be set out in the Scheme Document.



9.                  Structure of the Scheme



The Acquisition is being implemented by way of the Scheme.  The Scheme involves
an application by Xenova to the Court to sanction the Scheme and to confirm the
cancellation of the Scheme Shares, in consideration for which Scheme
Shareholders on the register of members at the Scheme Record Time will be
entitled to receive the consideration described.  The cancellation and the
subsequent issue of new Xenova Shares to Celtic Pharma provided for in the
Scheme will result in Xenova becoming a wholly-owned subsidiary of Celtic
Pharma.



Before the Court's sanction of the Scheme can be sought, the Scheme will require
the approval of Xenova Shareholders at the Court Meeting. The implementation of
the Scheme will also require the passing by Xenova Shareholders of the special
resolution to be proposed at the Extraordinary General Meeting.  Further details
of the structure of the Scheme will be included in the Scheme Document which
will be posted in due course.



The Scheme will not become effective unless all the conditions to its
implementation (which are set out in Appendix I to this announcement), including
shareholder approvals and the sanction of the Court, have been satisfied (or, if
capable of waiver, waived) by not later than 20 September 2005, or such later
date as Celtic Pharma and Xenova shall agree and the Court may approve.



The implementation of the Scheme is conditional upon, inter alia:



(i)                  the Scheme becoming effective by no later than 20 September
2005, or such later date as Xenova and Celtic Pharma shall agree and the Court
may approve, failing which the Scheme will lapse;



(ii)                the approval by a majority in number of the Xenova
Shareholders who attend and vote, representing at least three-fourths in value
of the Xenova Shares voted, either in person or by proxy, at the Court Meeting;



(iii)               the passing of the special resolution required to approve
and implement the Scheme at the Extraordinary General Meeting;



(iv)              the Scheme being sanctioned by the Court with or without any
modification and confirmation of the reduction of capital involved therein by
the Court;



(v)                the delivery to the Registrar of Companies in England and
Wales for registration of an office copy of the Court Order sanctioning the
Scheme and confirming the reduction of capital and, in relation to the reduction
of capital, the registration of such Court Order by the Registrar of Companies;
and



(vi)              the other conditions which are not otherwise identified above
(set out in Appendix I of this announcement) being satisfied or, if capable of
waiver, waived.



Once effective, the Scheme will become binding on all Xenova Shareholders
including those who did not vote, or who voted against the Scheme, at the
Meetings.



The Scheme Document will include full details of the Scheme, together with
notices of the Court Meeting and the EGM and the expected timetable, and will
specify the necessary action to be taken by the Xenova Shareholders.



10.              Effect of the Proposal on the Xenova Share Option Schemes and
the Xenova Share Plan



Holders of awards granted pursuant to the Xenova Share Plan will be entitled to
receive a notice, as soon as possible following the Court sanctioning the
Scheme, and thereafter will be entitled to exercise their awards within a thirty
day period from the notice (to the extent not already exercisable).  Holders of
these awards will receive documentation in advance of their awards becoming
exercisable, in order to remind them of the awards becoming exercisable and to
enable them to consent to exercise prior to the awards becoming exercisable.



All subsisting options under the Xenova Share Option Schemes will become
exercisable on the Court sanctioning the Scheme, to the extent they are not
already exercisable.  All Xenova Shares issued on the exercise of such options
on or prior to the Hearing Record Date will be subject to the Scheme.



Holders of options of the Xenova Group 1992 Share Option Scheme will be entitled
to exercise their options (to the extent not already exercisable) in the 6 month
period immediately following the Court sanctioning the Scheme.  Xenova will
notify the option holders that these options will become exercisable, shortly
before the date on which they will become exercisable.



Holders of options under the Xenova Group 1996 Savings Related Share Option Plan
and the Xenova Group 1996 Share Option Scheme will be entitled to exercise their
option on the period between the Court sanctioning the Scheme and the Scheme
Effective Date.  It is intended that this period will be at least 24 hours in
order to enable exercise of the options.  Xenova will notify the option holders
that these options will become exercisable.  These schemes have been approved by
the HM Revenue & Customs and therefore are capable of, in some cases, gaining
favourable tax treatment on exercise.



It is intended that Xenova's Articles of Association will be amended to provide
for the acquisition by Celtic Pharma of any Xenova Shares issued pursuant to the
exercise of options in the period after the Scheme has become effective.



11.              The Xenova Warrants



Within 14 days of the Court sanctioning the Scheme, Xenova will give Xenova
Warrantholders notice that pursuant to the terms of the instrument constituting
the Warrants, the Warrants have become exercisable.  All Warrants will then have
to be exercised within 30 days of the notice after which they will cease to be
exercisable.  All Xenova Shares issued on the exercise of Warrants on or prior
to the Hearing Record will be subject to the Scheme.



Warrants may be exercised after the Hearing Record Date.  Xenova's Articles will
be amended pursuant to the resolution to be proposed at the Extraordinary
General Meeting to provide that following issue of the relevant Xenova Shares,
such shares will be transferred to Celtic Pharma automatically on payment by
Celtic Pharma of an amount per share equal to the cash payable under the Cash
Alternative.



12.              Management and employees



Subject to the Scheme becoming effective, Celtic Pharma has given assurances to
the Directors that the existing employment rights, including pension rights, of
the directors and employees of the Xenova Group will be fully safeguarded in the
event of the Scheme becoming effective.



13.              The Implementation Agreement



Xenova has today entered into an implementation agreement with Celtic Pharma
whereby the Company and Celtic Pharma have each undertaken to take certain steps
in order to implement the terms of the Scheme.  In particular, the Company has
undertaken to Celtic Pharma not to solicit an alternative offer, grant any new
share options, enter into or recommend any licence of its intellectual property
rights, sale of business or a material part of its assets, any merger (other
than by way of offer), or any transaction that would require shareholders'
consent.



Certain of the Company's obligations in the Implementation Agreement are made
subject to the fiduciary duties of its directors.



14.              The facility agreement



Xenova Limited today entered into a secured facility agreement (the 'Facility
Agreement') with Celtic X Licensee.  Pursuant to this agreement, loans in an
aggregate amount not exceeding US$20,000,000 are to be made available to Xenova
Limited by Celtic X Licensee subject to the satisfaction of certain conditions
precedent, and on the terms set out therein.  The loans are to be advanced in
two tranches, each in an amount of up to US$10,000,000.  The first tranche is to
be made available for drawdown on the date Xenova Limited is notified by Celtic
X Licensee of the satisfaction of certain conditions precedent (the 'Effective
Date'), with the second tranche to be made available 12 months thereafter.  The
loans are to bear interest at a rate of 2 per cent. per annum over LIBOR from
the date of drawdown, and will be repayable on the date falling 48 months after
the Scheme Effective Date, absent the exercise of any right under the Facility
Agreement for their prior repayment.  Xenova Limited is obliged to apply the
amounts borrowed under the Facility Agreement in or towards its general
corporate purposes, save in certain circumstances, where it will be required to
apply such amounts in satisfaction of certain items of ordinary business
expenditure approved in advance by Celtic X Licensee.  As security for the
obligations of Xenova Limited under the Facility Agreement, each of Xenova
Limited and its affiliate, Xenova Biomedix Limited, will upon drawdown execute a
charge granting security over certain intellectual property rights in favour of
Celtic X Licensee.



15.              The Licence Agreement



Xenova has today announced that it had entered into an agreement with Celtic X
Licensee for the world-wide development and marketing of Xenova's conjugated
therapeutic vaccines, TA-CD and TA-NIC.



Under the terms of this agreement, Xenova has granted to Celtic X Licensee
world-wide rights to develop and commercialise TA-CD and TA-NIC.  The licence is
exclusive for the fields of the treatment of cocaine and nicotine addiction
respectively.  Celtic X Licensee has the right to have further indications
included within the licence ahead of those rights to other indications being
licensed to other third parties.  Celtic X Licensee will be responsible for the
conduct of future clinical studies and commercialisation activities with TA-CD
and TA-NIC and will pay royalties on sales of these indications.  Celtic X
Licensee will also make milestone payments during the progress of the
development and commercialisation.



Lazard which has taken account of the Director's commercial assessments of the
Licence Agreement, considers the terms of the Licence Agreement to be fair and
reasonable.



16.              Delisting and re-registration



The London Stock Exchange and the UKLA will be requested respectively to cancel
trading in Xenova Shares on the London Stock Exchange's market for listed
securities with effect from the close of business on the Business Day
immediately prior to the Scheme Effective Date and the delisting of Xenova
Shares from the Official List with effect from 8.00 a.m. on the Scheme Effective
Date. Celtic Pharma also intends to procure that Xenova applies for the
delisting of the Xenova ADSs from NASDAQ.



It is also proposed that, following the Scheme Effective Date and after the
Xenova Shares and ADSs are delisted, Xenova will be re-registered as a private
company under the relevant provisions of the Act.



17.              Overseas shareholders



The implications of the Scheme for persons resident in, or citizens of,
jurisdictions outside the UK and the United States (including, without
limitation, any nominee, custodian or trustees who may have an obligation to
forward any document in connection with the Scheme outside the UK or the US)
('Overseas Shareholders') may be affected by the laws and regulations of the
relevant jurisdiction. Such Overseas Shareholders should inform themselves about
and observe any applicable legal requirements. It is the responsibility of each
Overseas Shareholder to satisfy himself as to the full observance of the laws
and regulations of the relevant jurisdiction in connection therewith, including
the obtaining of any governmental, exchange control or other consents which may
be required, or the compliance with other necessary formalities which are
required to be observed and the payment of any issue, transfer or other taxes
due in such jurisdiction.



Restricted Overseas Persons may not be entitled to receive Secured Loan Notes
(and or Pharmaceutical  Investment Notes if they are issued) and may be entitled
to receive only cash consideration as if they had elected for the Cash
Alternative in full.



The Secured Loan Notes to be issued in connection with the Scheme may not be
offered, sold or delivered, directly or indirectly, in or into Canada, Australia
or Japan, (except in transactions exempt from or not subject to the relevant
securities laws of those jurisdictions).



The Secured Loan Notes will not be transferable (except to any member of the
Celtic Pharma Group or, at the time of issue, by the ADS Depositary to the
registered holders of Xenova ADSs) and have not been, nor will they be, listed
on any stock exchange or registered under the US Securities Act or under any
relevant laws of any state or other jurisdiction of the United States, nor have
clearances been, nor will they be, obtained from the securities commission or
similar authority of any province or territory of Canada and no prospectus has
been or will be filed, or registration made, under any securities law of any
province or territory of Canada, nor has a prospectus in relation to the Secured
Loan Notes been, nor will one be, lodged with or registered by the Australian
Securities and Investments Commission nor have any steps been taken, nor will
any steps be taken, to enable the Secured Loan Notes to be offered in compliance
with applicable securities laws of Japan.  Accordingly, Secured Loan Notes may
not be transferred, offered, sold, re-sold or delivered, whether or not directly
or indirectly, in, into or from a Restricted Jurisdiction or any jurisdiction in
which an offer of Secured Loan Notes would constitute a violation of relevant
laws or require registration of the Secured Loan Notes, or to or for the account
or benefit of any resident of a Restricted Jurisdiction.



The availability of the Proposal to persons not resident in the UK may be
affected by the laws of the relevant jurisdiction in which they are located.
Such persons should inform themselves about and observe any available
requirements.  Further details in relation to Overseas
Shareholders will be contained in the Scheme Document.



Further information for Overseas Shareholders will be set out in the Scheme
Document.



18.              Certain Further Terms of the Secured Loan Notes and the
Pharmaceutical Investment Notes



The Secured Loan Notes and Pharmaceutical Investment Notes will be issued in
reliance upon the exemptions from the registration requirements of the US
Securities Act provided by Sections 3(a)(10) and 3(a)(9) respectively and, as a
consequence, will not be registered thereunder or under the securities laws of
any state or other jurisdiction of the United States.  For the purposes of
qualifying for the Section 3(a)(10) exemptions from the registration
requirements of the US Securities Act and the securities laws of certain states
(as described above) Celtic Pharma and Xenova will advise the Court that its
sanctioning of the Scheme will be relied upon by Xenova and Celtic Pharma as an
approval of the Scheme following a hearing on its fairness to Xenova
Securityholders at which hearing all such Xenova Shareholders are entitled to
attend in person or through counsel to support or oppose the sanctioning of the
Scheme and with respect to which notification has been given to all Xenova
Securityholders.  Upon completion of the Scheme, Celtic Pharma will cause Xenova
to  delist its ADSs from NASDAQ, terminate the Depository Agreement with Bank of
New York and to terminate its registration under Section 12 of the United States
Securities and Exchange Act of 1934. Thereafter Xenova will cease to file with
the US Securities and Exchange Commission the periodic reports (e.g., annual and
quarterly reports) that Xenova currently files.  Celtic Pharma will not register
the Secured Loan Notes or the Pharmaceutical  Investment Notes under the US
Securities and Exchange Act of 1934, and thus will not be required following the
completion of the Scheme to file any reports with the US Securities and Exchange
Commission.  Holders of Loan Notes and Pharmaceutical Investment Notes will be
entitled to receive a copy of the annual audited accounts of Celtic Pharma or
Celtic Pharma Capital, as the case may be.



Celtic Pharma shall on or before the issuance of the Secured Loan Notes procure
a Guarantor which shall irrevocably and unconditionally undertake with Celtic
Pharma and the Noteholders from time to time on the terms of the Guarantee to
guarantee payments in respect of the principal amount of the Secured Loan Notes
and interest (if any) payable in cash under the Secured Loan Note Instrument.
The Guarantee will cease on the earlier of (i) the date of the completion of the
transfer of Secured Loan Notes; or (ii) 40 days from and including the Long Stop
Date.



The Pharmaceutical Investment Notes (if issued) will be issued to US holders of
the Secured Loan Notes in reliance upon the exemption from the registration
requirement of the US Securities Act of 1933 provided by Section 3(a)(9) thereof
and, as a consequence, will not be registered thereunder or under the securities
laws of any state or other jurisdiction of the United States.



It is possible that Celtic Pharma Capital, as the issuer of the Pharmaceutical
Investment Notes, may in the future be required to register as an investment
company under Section 3(c)(7) of the Investment Company Act as a result of
Pharmaceutical Investment Notes, including the Pharmaceutical Investment Notes
of any future Series, being offered or sold in the United States or to US
Persons.



The additional and different obligations involved with registering as an
investment company under the Investment Company Act are costly in both financial
terms and management time, and confer no material benefit on Celtic Pharma
Capital.



Celtic Pharma Capital will be exempt from the obligation to register as an
investment company under the Investment Company Act to the extent that the only
US persons to whom the Pharmaceutical Investment Notes have been offered or sold
are 'Qualified Purchasers' within the meaning of the Investment Company Act.



Accordingly, it will be one of the Pharmaceutical Investment Note Terms that, if
Celtic Pharma Capital becomes, or the directors of Celtic Pharma Capital have
reasonable grounds to believe that Celtic Pharma Capital might become, an
investment company for the purposes of the Investment Company Act, Celtic Pharma
Capital will be entitled to serve a mandatory transfer notice on any
Pharmaceutical Investment Noteholder who is a US Person and who is not a
Qualified Purchaser (within the meaning of the Investment Company Act) requiring
such Pharmaceutical Investment Noteholder either to have his Pharmaceutical
Investment Notes redeemed by Celtic Pharma Capital or, at the option of Celtic
Pharma Capital, transfer his Pharmaceutical  Investment Notes to such other
person as Celtic Pharma Capital may specify in either case for a consideration
equal to the market value of the Pharmaceutical  Investment Notes held by such
Pharmaceutical  Investment Noteholder.  For these purposes, the market value of
the Pharmaceutical Investment Notes which are the subject of a mandatory
transfer notice will either be determined by reference to the average of the
aggregate closing middle market value of the Pharmaceutical Investment Notes
over the 5 Business Days immediately preceding the date of the mandatory
transfer notice as shown on the register maintained by the exchange on which the
Pharmaceutical Investment Notes are traded or such other equitable calculation
as shall be set out in the Pharmaceutical  Investment Terms.



19.              General



In accordance with Rule 2.10 of the City Code, Xenova confirms that it has the
following relevant securities in issue:


Xenova Shares                                                 431,547,821           (ISIN GB0009850008)
Xenova Warrants                                               56,259,429            (ISIN GB0033872499)
Options under the Xenova Share Option Schemes                 25,157,977



Save for the irrevocable undertakings described in this announcement, neither
Celtic Pharma nor, so far as Celtic Pharma is aware, any person acting in
concert with Celtic Pharma for the purposes of the Proposal owns or controls any
Xenova Shares or any securities convertible into Xenova Shares or any rights to
subscribe for, or options, including traded options, in respect of, or
derivatives referenced to, any such shares which remain outstanding on 23 June
2005, being the last trading day prior to the date of this announcement
('relevant Xenova securities') nor does any such person have any arrangement in
relation to relevant Xenova securities.  For these purposes, 'arrangement'
includes an indemnity or option arrangement, any agreement or understanding,
formal or informal of whatever nature relating to the Xenova Shares which may be
an inducement to deal or refrain from dealing in such shares.



20.              Recommendation



The Directors, who have been so advised by Lazard, have not taken a position as
to the relative merits of the Secured Loan Note Offer, the Cash and Secured Loan
Alternative and the Cash Alternative.  However, the Directors who have been so
advised by Lazard, do believe the terms of the Cash Alternative to be fair and
reasonable.  In providing advice to the Directors, Lazard has taken into account
the Directors' commercial assessments.  Accordingly, the Directors unanimously
recommend that Xenova Shareholders vote in favour of the Resolutions as they
have irrevocably undertaken to do in respect of their own holdings of Scheme
Shares.



None of the Xenova Directors or Lazard is expressing an opinion as to the
estimated value of the Secured Loan Notes. Xenova Securityholders should
consider carefully the factors set out in paragraph 4(c) of this announcement in
light of their own investment objectives, and are strongly advised to take their
own independent professional advice before deciding whether to accept Secured
Loan Notes, and/or whether to make an election for the Cash Alternative under
the Scheme.



In addition, the detailed terms of the Pharmaceutical  Investment Notes and of
the eventual economic characteristics that will underlie them cannot be known at
the current time. Therefore none of the Xenova Directors nor Lazard is
expressing an opinion as to whether or not the Pharmaceutical  Investment Notes
will be issued or, in the event that they are, as to their estimated value at
that time. Xenova securityholders should consider the factors set out in
paragraph 5 of this announcement in relation to the Pharmaceutical Investment
Notes and are strongly advised to take their own independent professional advise
in relation to them.



The Directors who hold Xenova Scheme Shares (being all of the Directors save for
Dr Michael Young) have irrevocably undertaken to vote in favour of the Proposals
in respect of their beneficial holdings of 1,204,230 Scheme Shares, representing
approximately 0.279 per cent. of the issued share capital of Xenova (being
431,547,821 shares) as set out below:


Name                                                                 Number of Scheme Shares
Daniel Abrams                                                                204,040
Peter Gillett                                                                 21,974
Adrian Harris                                                                 19,539
Thomas Irwin                                                                  44,140
John Jackson                                                                 286,726
David Oxlade                                                                 348,975
John Rennocks                                                                219,183
John Waterfall                                                                59,653



Enquiries:


Celtic Pharma                                      Xenova
John Mayo, Director                                David Oxlade, Chief Executive Officer
Tel - today: +44 (0)20 7831 3113                   Daniel Abrams, Finance Director
Thereafter: +44(0)20 7786 5555                     Tel: +44 (0)1753 706 600
Stephen Evans-Freke, Director
Tel - today:  +44 (0)20 7831 3113
Thereafter:  +1 212 755 3411



Broadview (Adviser to Celtic Pharma)               Lazard (Adviser to Xenova)
Bruce Huber                                        David Gluckman
Julie Langley                                      Nicholas Hill
Tel: +44 (0)20 7968 8000                           Tel: +44 (0)20 7187 2000



Financial Dynamics
David Yates
Ben Atwell
Tel:  +44 (0)20 7831 3113



The conditions and principal further terms of the Proposal are set out in
Appendix I to this announcement.  The further terms of the Proposal will be set
out in the formal Scheme Document and the Forms of Election.



Appendix II contains definitions of certain expressions used in this
announcement.



The Scheme Document and accompanying documentation will be despatched to Xenova
Shareholders  and, for information only, to Xenova Optionholders and Xenova
Warrantholders as soon as practicable (and, in any event, save with the consent
of the Panel, within 28 days of the Announcement Date).



The Proposal will be subject to the City Code. An offer period in relation to
Xenova is deemed to have commenced with immediate effect by virtue of this
announcement.



Under the provisions of Rule 8.3 of the City Code, any person who, alone or
acting together with any other person(s) pursuant to an agreement or
understanding (whether formal or informal) to acquire or control relevant
securities of Xenova, owns or controls, or becomes the owner or controller,
directly or indirectly, of one per cent. or more of any class of securities of
Xenova is required to disclose, by not later than 12.00 noon (London time) on
the London business day following the date of the relevant transaction, dealings
in such securities (or in any option in respect of, or derivative referenced to,
any such securities) during the Offer Period.  Under the provisions of Rule 8.1
of the City Code, all dealings in relevant securities of by Celtic Pharma, or by
any of the respective 'associates' of Celtic Pharma or Xenova (within the
meaning of the City Code) must also be disclosed.



If you are in any doubt as to the application of Rule 8 to you, please contact
an independent financial adviser authorised under the Financial Services and
Markets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk or
contact the Panel on telephone +44 20 7638 0129 or by fax on +44 20 7236 7013.



Broadview, a division of Jefferies International, which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is acting
exclusively for Celtic Pharma and no one else in connection with the Proposal
and will not be responsible to anyone other than Celtic Pharma for providing the
protections afforded to customers of Broadview or for providing advice in
relation to the Proposal, the contents of this announcement or any transaction
or arrangement referred to herein.



Lazard, which is authorised and regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for Xenova and no on else in
connection with the Proposal and will not be responsible to anyone other than
Xenova for providing the protections afforded to customers of Lazard or for
providing advice in relation to the Proposal, the contents of this announcement
or any transaction or arrangement referred to therein.



This announcement does not constitute an offer to sell or the solicitation of an
offer to subscribe for or buy any securities, nor the solicitation of any vote
or approval in any jurisdiction, nor shall there be any sale, issue or transfer
of the securities referred to in this announcement in any jurisdiction in
contravention of applicable law.



This announcement includes 'forward-looking statements' relating to the
Proposal, the Celtic Pharma Group and Xenova that are subject to known and
unknown risks and uncertainties, many of which are outside of the Celtic Pharma
Group's and Xenova's control and are difficult to predict and that may cause
actual results to differ materially from any future results expressed or implied
by such forward-looking statements.  All statements other than statements of
historical fact included in this announcement regarding the business, financial
condition, results of operations of Xenova, the Xenova Group, Celtic Pharma, the
Celtic Pharma Group, Celtic Pharma Holdings or Celtic Pharma Capital and certain
plans, objectives, assumptions, expectations or beliefs with respect to these
items and statements regarding other future events or prospects, are
forward-looking statements. Should one or more of the risks or uncertainties
associated with such forward-looking statements materialise, or should
assumptions underlying such forward-looking statements prove incorrect, actual
results may vary materially from those described herein.



These statements include, without limitation, those concerning: strategy and the
ability to achieve it; expectations regarding sales, expenses, profitability and
growth; possible or assumed future results of operations; capital expenditure
and investment plans; adequacy of capital; and financing plans. The words
'seek', 'aim', 'may', 'expect', 'anticipate', 'believe', 'future', 'continue',
'help', 'estimate', 'plan', 'intend', 'should', 'could', 'would', 'shall' and
similar terms or the negative or other variations thereof, as well as other
statements regarding matters that are not historical fact, are intended to
identify or may constitute forward-looking statements. In addition, this
announcement includes forward-looking statements relating to potential exposure
to various types of market risks, such as foreign exchange rate risks, interest
rate risks and other risks related to financial assets and liabilities. These
forward-looking statements have been based on the current view of Xenova or
Celtic Pharma management, as applicable, with respect to future events and
financial performance. These views reflect the best judgement of the management
of Xenova or Celtic Pharma, as applicable, but involve a number of risks and
uncertainties which could cause actual results to differ materially from those
predicted in forward-looking statements and from past results, performance or
achievements. Although it is the belief of Xenova and Celtic Pharma, as the case
may be, that the estimates reflected in the forward-looking statements are
reasonable, such estimates may prove to be incorrect. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that may occur in the future. There are a
number of factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking statements,
including, without limitation, the following: the inability to obtain any
necessary regulatory approvals in the context of the Proposal or to obtain them
on acceptable terms, the inability to integrate successfully Xenova within the
Celtic Pharma Group; costs related to the Acquisition; the economic environment
of the industries in which the Celtic Pharma Group and Xenova operate; costs
associated with research and development; changes in the prospects for products
in the pipeline or under development by Xenova; dependence on the existing
management of Celtic Pharma and Xenova; changes or uncertainties in UK or US
federal or state tax laws or the administration of such laws; changes or
uncertainties in the laws or regulations applicable to the markets in which
Celtic Pharma and Xenova operate, including those of the Federal Drug
Administration in the United States, and other factors detailed in Xenova's
fillings with the SEC; failure to protect intellectual property rights or any
infringement claims; litigation; future exchange and interest rates; economic
downturn; acts or threats of terrorism; acts or the threat of war or other
adverse political developments.



All subsequent written and oral forward-looking statements attributable to
Celtic Pharma or Xenova or persons acting on behalf of either of them are
expressly qualified in their entirety by the cautionary statements above.  The
forward-looking statements included herein are made only as of the date of this
announcement.




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