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Xenova Group PLC (XEN)

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Thursday 04 November, 2004

Xenova Group PLC

3rd Quarter Results

Xenova Group PLC
04 November 2004

                                Xenova Group plc

                          Third Quarter Results, 2004

Slough, UK, 4 November 2004 - Xenova Group plc (NASDAQ: XNVA; London Stock
Exchange: XEN) today announced its results for the quarter ended 30 September

Quarterly Highlights

•    TransMID TM - pivotal Phase III study in glioblastoma multiforme commenced 
     and patient recruitment progressing

•    TA-NIC - successful results from a second Phase I clinical trial of the 
     anti-smoking therapy provided anecdotal indications of efficacy

•    Canadian manufacturing facility sold to QSV Biologics for C$7.0m (£3.1m,
     $5.5m) completing the planned disposal programme

•    Cash, short term deposits and investments £15.6m ($28.0m) (31 December 
     2003: £27.5m ($49.5m))

Commenting, Chief Executive Officer, David Oxlade said: 'This quarter has seen
steady progress across the portfolio with the highlight being the commencement
of the Phase III trial of TransMID TM.  Patient recruitment is advancing with
most clinical centres now up and running.  The positive initial results of
TA-NIC's second Phase I study have provided further anecdotal evidence of
efficacy in the treatment of nicotine addiction.'


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

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

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

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

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

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

Quarterly Review

Development has continued throughout the quarter on the Group's prioritised
programmes and corporate objectives, with the current status being:

TransMID TM is Xenova's most advanced clinical product, for the treatment of
progressive and/or recurrent non-resectable glioblastoma multiforme (the most
common form of high-grade glioma or brain cancer).  Patient dosing for the Phase
III clinical study began in July 2004 and recruitment is progressing.

The Phase III trial will enrol up to 323 patients with non-resectable,
progressive and/or recurrent glioblastoma multiforme who have failed
conventional therapy.  The study is a randomised, open-labelled, multi-centre
trial designed to compare TransMID TM against a number of presently used
chemotherapeutic agents regarded as 'best standard of care' (BSC).  The 323
patients will be randomised in a 2:1 ratio of TransMID TM to BSC across 50
centres - 25 in the EU, 21 in the US and 4 in Israel.

TransMID TM is pumped directly into the brain tumour using Convection Enhanced
Delivery (CED) - licensed from the National Institutes of Health in the US.  CED
enhances the distribution of TransMID TM through the tumour mass, producing high
local concentrations of the drug and reducing systemic side effects.  This also
has the benefit of circumventing the usual obstacles present in drug delivery to
the brain caused by the blood brain barrier.

In an earlier Phase II study involving 44 patients, a 50% or greater reduction
in tumour volume was noted in 35% of evaluable patients.  In this study, median
survival for patients receiving TransMID TM on an intent to treat (ITT) basis 
was approximately 37 weeks.  This compares to a historical average life 
expectancy of approximately 26 weeks for patients being treated with BSC, as 
determined from the literature.

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

Novel DNA Targeting Agents
This programme consists of three compounds being developed for the treatment of
solid tumours, two of which are in Phase I, XR5944 and XR11576.

In late September a paper was published in the British Journal of Cancer
relating to the first Phase I study of XR11576, an oral DNA targeting agent.
The objectives of this Phase I study were to:

•         Assess the dose-limiting toxicities (DLT)
•         Determine the maximum tolerated dose (MTD)
•         Describe the pharmacokinetics of XR11576

The trial was conducted in patients with advanced solid tumours with the drug
administered orally on days 1-5 every three weeks.  In all, 21 patients received
a total of 47 courses of treatment.  The MTD was reached at 180mg/day, with
diarrhoea and fatigue identified as the DLT.  Four patients experienced stable
disease for periods of 12-30 weeks.  Alternative regimens are currently being
explored in a second Phase I setting.

During the period, drug candidate XR5944 has continued in Phase I studies.

Millennium Pharmaceuticals Inc has commercial rights to this programme in North
America in return for funding the clinical development programme and Xenova
retains commercial rights to the rest of the world.

XR303 is a radioimmunotherapy product targeted at late stage pancreatic cancer.
Following encouraging results from a Phase I imaging study in colorectal cancer
patients, XR303 is now undergoing a Phase I/II clinical trial in patients with
pancreatic cancer which is expected to complete in 2005.

On 22 October 2004, XR303 was the subject of a presentation by The Royal
Liverpool and Broadgreen University Hospitals at the 10th Conference on Cancer
Therapy with Antibodies and Immunoconjugates in Princeton, US.  The presentation
provided an update on the on-going clinical trial in pancreatic cancer with
seven patients recruited in total.

Xenova retains all rights to XR303.

Tariquidar, discovered by Xenova, is a potent small-molecule inhibitor of the
P-glycoprotein pump, designed to treat multi-drug resistance (MDR) in cancer.
Following the cessation of the Phase III clinical trial in early 2003, the
National Cancer Institute (NCI) in the US has continued to undertake exploratory
clinical trials using tariquidar in combination with different cytotoxic drugs,
including a Phase II study in patients with recurrent, metastatic, or primary
unresectable adrenocortical cancer.

Xenova will review the future development prospects of tariquidar once the NCI
reports on the results of the above three trials.  Xenova is not providing
funding for any of the NCI trials.  An existing development and North American
marketing agreement exists between Xenova and QLT Inc for the tariquidar

TA-CD, Xenova's treatment for cocaine addiction, is undergoing a Phase IIa
administration study designed to evaluate the effect of TA-CD on behavioural
changes associated with cocaine administration under laboratory conditions.
Results of this trial are expected in 2005.  Results of two dose escalation
Phase II studies (relapse prevention study and abstinence initiation study) of
TA-CD were reported in June showing 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 group maintained abstinence from
cocaine use during the 12 week study duration with 100% relapsing after 12
months when antibody levels had dropped.  In the abstinence initiation group,
58% achieved and maintained abstinence during the 12-week study period 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
were observed to produce higher levels of anti-cocaine antibodies.  88% of
subjects from one study and 63% from the other, who relapsed within six months,
reported a reduction in the euphoric effects of cocaine.

A randomised, placebo-controlled Phase IIb study of TA-CD in up to 132 patients
is underway with recruitment in progress.  The primary objective of this study
is to determine the efficacy of TA-CD in methadone-dependent cocaine addicts
seeking treatment for cocaine abuse, and to determine the appropriate end points
for a Phase III trial.

The National Institute on Drug Abuse is supporting these studies but Xenova
retains all commercial rights to TA-CD.

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

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

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

Final results of this study are expected by the end of 2004 and commencement of
a rolling Phase II/III study is expected in 2005.  Xenova retains all commercial
rights to TA-NIC.

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

Xenova retains all rights for the use of OX40 in up-regulation whilst Genentech
Inc and UCB Pharma (previously Celltech Group plc and part of UCB Group SA) have
rights for down-regulation of the immune system.

Corporate Events
During the quarter, Xenova announced the disposal of its manufacturing facility
in Edmonton, Canada, to QSV Biologics Ltd (QSV) for C$7.0 million (£3.1 million,
$5.5 million).  The sale concluded the planned disposals and cost reduction
programme announced at the time of the acquisition of KS Biomedix Holdings plc.

The proceeds of the Edmonton facility, together with the disposal announced in
January 2004 of surplus facilities in Farnham, UK, amount to a total of £3.9
million ($7.0 million).  In addition, in April 2004, a 10 year lease agreement
was signed with Genzyme Limited for vacant space in Xenova's facilities on the
Cambridge Science Park, UK.

Financial Summary

Operating Performance
In the nine months to 30 September 2004, the Group's revenues recognised from
licensing agreements, strategic partnerships and manufacturing outsourcing were
£3.8m ($6.9m) (2003: £6.9m ($12.4m)).

Revenue included £2.1m ($3.7m) recognised under the revenue recognition policy
in respect of the tariquidar licensing agreement with QLT and the OX40 licensing
agreement with Genentech Inc.  £0.5m ($1.0m) was also recognised in respect of
the milestone due from Nycomed Danmark ApS for the first patient treated in the
TransMID TM trial.  Contract development revenue of £0.5m ($0.9m) arose in
respect of the Millennium Pharmaceuticals Inc collaboration on the DNA targeting
agents and manufacturing revenue was £0.7m ($1.3m).

Total net operating expenses for the nine months ended 30 September 2004 were
£17.1m ($30.8m) (2003: £18.8m ($33.8m)). Excluding the exceptional
reorganisation costs to 30 September 2003 of £3.4m ($6.0m), the impact of
increased goodwill amortisation charges in 2004 and the costs of discontinued
operations, net operating expenses in the period to 30 September 2004 were 3%
lower than the prior year.

Research and development expenditure for the nine months ended 30 September 2004
were £11.9m ($21.4m) (2003: £11.7m ($21.1m)).  R&D expenditure, excluding the
costs of discontinued operations, was £10.7m ($19.3m) which is 9% lower than the
prior year.  This reduction is mainly due to a fall in the costs of the DNA
targeting agents programme in the period.  Expenditure was incurred primarily in
respect of the TransMID TM programme, the Phase I/II dose escalation trial of
XR303, and the vaccines of addiction programmes including the second Phase I
study in TA-NIC.  The development costs under the Millennium license agreement
of £0.5m ($0.9m) have been recovered as in previous periods.

Total administrative expenditure for the nine months to 30 September 2004 of
£5.8m ($10.4m) (2003: £7.4m ($13.3m)) included £1.6m ($2.9m) in respect of
goodwill amortisation related to the acquisitions of Cantab Pharmaceuticals plc
(Cantab) and KS Biomedix Holdings plc (KS Biomedix).  Administrative expenses,
excluding the costs of discontinued operations, amortisation of goodwill and
exceptional reorganisation costs were £3.8m ($6.9m) (2003: £3.1m ($5.6m)).  The
subletting of vacant space in Slough and Cambridge reduced net expenses in the
period by £0.5m ($1.0m) (2003: £0.3m ($0.6m)).

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

The net loss per share for the nine months to 30 September 2004 was 2.7p (2003:

Cash, Short-Term Deposits and Investments
Cash, short-term deposits and investments at 30 September 2004 totalled £15.6m
($28.0m) (31 December 2003: £27.5m ($49.5m)).  The Group held cash of £2.2m
($4.0m) and short-term deposits and investments of £13.4m ($24.0m) at 30
September 2004 (31 December 2003: cash £12.1m ($21.7m), short-term deposits and
investments £15.4m ($27.8m)).

Included in short-term deposits and investments is an investment in Cubist
Pharmaceuticals Inc. As at 30 September 2004 the share price was $9.88 valuing
the investment at £0.4m ($0.6m).

Share Capital
The number of shares in issue stood at 431.5 million as at 30 September 2004.

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

Sale of Edmonton Facility
On 3 September 2004, Xenova announced the completion of the sale of its
manufacturing facility based in Edmonton, Canada, to QSV Biologics Limited for
C$7.0m (£3.1m, $5.5m).  The consideration comprises C$5.0m payable in cash on
completion and C$2.0m deferred in two equal secured promissory notes maturing 12
and 18 months following completion.  Xenova has also agreed terms for a
manufacturing and supply contract for TransMID TM 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 ($3.2m).  Net assets disposed as part of the
transaction amounted to C$6.7m (£2.9m, $5.3m).

Consolidated Profit and Loss Account (unaudited)
for the periods ended 30 September 2004
                                                         Three months ended               Nine months ended
                                                   30 Sept   30 Sept    30 Sept     30 Sept   30 Sept   30 Sept
                                                      2004      2004       2003        2004      2004      2003
                                                      $000      £000       £000        $000      £000      £000
Turnover (including share of joint
    Continuing operations                            1,132       629      2,735       6,989     3,883     6,893
    Discontinued operations                              -         -          -           -         -         -
     Less: share of joint ventures                     (3)       (2)        (3)       (106)      (59)       (8)
                                                     _____     _____      _____       _____     _____     _____
Turnover                                             1,129       627      2,732       6,883     3,824     6,885

Operating expenses
Research and development costs
    Continuing operations                          (6,754)   (3,752)    (3,625)    (19,280)  (10,711)  (11,729)
    Discontinued operations                          (725)     (403)          -     (2,111)   (1,173)         -

                                                     _____     _____      _____       _____     _____     _____
                                                   (7,479)   (4,155)    (3,625)    (21,391)  (11,884)  (11,729)

Administrative expenses
    Continuing operations                          (2,253)   (1,252)    (1,068)     (6,888)   (3,827)   (3,102)
    Continuing operations: exceptional                   -         -    (1,319)           -         -   (3,355)
reorganisation costs
    Continuing operations: amortisation              (850)     (472)      (335)     (2,873)   (1,596)     (919)
of goodwill
                                                     _____     _____      _____       _____     _____     _____
                                                   (3,103)   (1,724)    (2,722)     (9,761)   (5,423)   (7,376)
                                                     _____     _____      _____       _____     _____     _____

    Discontinued operations                          (108)      (60)          -       (542)     (301)         -

                                                     _____     _____      _____       _____     _____    ______
Total administrative expenses                      (3,211)   (1,784)    (2,722)    (10,303)   (5,724)   (7,376)

                                                     _____     _____      _____       _____     _____     _____

Other operating income                                 378       210        132         961       534       330

Total net operating expenses                      (10,312)   (5,729)    (6,215)    (30,733)  (17,074)  (18,775)

Group operating loss
    Continuing operations                          (8,350)   (4,639)    (3,483)    (21,197)  (11,776)  (11,890)
    Discontinued operations                          (833)     (463)          -     (2,653)   (1,474)         -

                                                     _____     _____      _____       _____     _____     _____
                                                   (9,183)   (5,102)    (3,483)    (23,850)  (13,250)  (11,890)

Share of operating (loss) of joint                    (50)      (28)       (77)        (97)      (54)     (191)
                                                     _____     _____      _____       _____     _____     _____

Total operating loss: Group and share of           (9,233)   (5,130)    (3,560)    (23,947)  (13,304)  (12,081)
joint ventures

Loss on disposal of discontinued                      (96)      (53)          -        (96)      (53)         -
                                                     _____     _____      _____       _____     _____     _____

Loss on ordinary activities before                 (9,329)   (5,183)    (3,560)    (24,043)  (13,357)  (12,081)

Interest (net)                                         364       202         66       1,136       631       331
Amounts written (off)/back on                         (58)      (32)         36       (157)      (87)       162
                                                     _____     _____      _____       _____     _____     _____

Loss on ordinary activities before                 (9,023)   (5,013)    (3,458)    (23,064)  (12,813)  (11,588)

Tax on loss on ordinary activities                     642       357        242       1,964     1,091       549

                                                     _____     _____      _____       _____     _____     _____

Loss on ordinary activities after                  (8,381)   (4,656)    (3,216)    (21,100)  (11,722)  (11,039)
                                                     _____     _____      _____       _____     _____     _____

Loss per share (basic and diluted)                  (1.9c)    (1.1p)     (1.6p)      (4.9c)    (2.7p)    (6.1p)

                                                     _____     _____      _____       _____     _____     _____

Shares used in computing net loss per              431,524   431,524    197,596     431,524   431,524   182,221
share (thousands)
                                                     _____     _____      _____       _____     _____     _____

US Dollar amounts have been translated at the closing rate on 30 September 2004
(£1.00: $1.80) solely for information.

Condensed Consolidated Balance Sheet (unaudited)
                                                                 Unaudited         Unaudited         Unaudited
                                                                     As at             As at             As at
                                                              30 September      30 September       31 December
                                                                      2004              2004              2003
                                                                      $000              £000              £000

Cash, short-term deposits and investments                           28,002            15,557            27,507

Other current assets                                                12,593             6,996             4,331

Fixed assets (including goodwill)                                   39,825            22,125            27,169
                                                                     _____             _____             _____

Total assets                                                        80,420            44,678            59,007
                                                                     _____             _____             _____

Current liabilities (including provisions &                         13,775             7,653            10,673
deferred income)

Shareholders' equity                                                66,645            37,025            48,334
                                                                     _____             _____             _____

Total liabilities and shareholders' equity                          80,420            44,678            59,007
                                                                     _____             _____             _____

US Dollar amounts have been translated at the closing rate on 30 September 2004
(£1.00: $1.80) solely for information.

Notes to the Statement

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.

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

Going Concern

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

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

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