24 August 1998

Phytopharm plc Collaboration with Pfizer
to Develop and Commercialise Obesity Drug (P57)

Phytopharm plc (PYM: London Stock Exchange) announces today that it has signed a licensing agreement with Pfizer Inc. for the development and commercialisation of P57, an appetite suppressant derived from an extract of a South African plant. Phytopharm announced it had licensed this opportunity from the CSIR (Council for Scientific and Industrial Research) in South Africa last year.

Under the agreement, Pfizer has acquired an exclusive worldwide licence to develop and market P57. Phytopharm will receive up to $32 million in licence fees and milestone payments based upon the achievement of specific objectives. In addition, Pfizer will contribute at least $7 million in an early development programme to be carried out by Phytopharm. Phytopharm will also receive royalties on sales of P57 by Pfizer.

P57 will be developed globally as a prescription drug for obesity, a rapidly growing health problem. The US, which represents the largest opportunity for obesity drugs, has according to some estimates between 35 and 65 million obese individuals. The potential US market for prescription pharmaceuticals to treat obesity is estimated to be worth in excess of $3 billion. It is also estimated that direct health care costs for obesity related disorders exceed $75 billion, including costs for cardiovascular disease, diabetes and osteoarthritis (Source: IMS).

Commenting on today’s announcement, Richard Dixey, Chief Executive of Phytopharm, said:

“Today’s announcement is a landmark in the development of Phytopharm and is an endorsement of our efforts in the botanical pharmaceutical field where the Company is a worldwide leader. We are delighted to be working with Pfizer who we believe will be an ideal partner for this product. This is the first of a number of agreements we are currently negotiating as our drugs progress into and through the clinic.”

- ENDS -

Enquiries:

Gavin Anderson & Company
Tel: 0171 457 2345
David Yates / Nicola Matthews

A presentation for analysts will be held at Gavin Anderson & Company, 15 Eldon Street, London EC2M 7LA (Tel: 0171 457 2345) at 10.00am today. Coffee will be available from 9.45am.

NOTES TO EDITORS

Phytopharm plc
Phytopharm’s business is to take both simple and complex mixtures derived from plant sources into full pharmaceutical development. The US Food and Drug Administration call such medicinal products ‘Botanicals’. Botanical products are whole or partially purified extracts of medicinal plants in which the chemical composition is not fully characterised. These products represent a new sector in the pharmaceutical market.

Phytopharm is the leading company in the development of botanical pharmaceuticals. It has developed a portfolio of products that have been targeted in a limited number of therapeutic areas to maximise synergy in their development effort. These areas include anti-inflammatory treatments, neurological disorders, dermatology and metabolic diseases. In 1997, Phytopharm was granted an Investigational New Drug (IND) approval in the US, the first time an IND has been granted for a complex Botanical product, indicating that such products may be registered as prescription medicines.

More information concerning Phytopharm’s activities can be found on its Web site at http://www.phytopharm.co.uk from 1 September 1998.

CSIR
The CSIR is the largest community and industry-directed scientific and technological research, development and implementation organisation in Africa, currently undertaking approximately 12 per cent of all research and development work on the Continent. It has a turnover of US$150 million and a staff complement of approximately 3,300 specialist scientists, engineers, technologists and support staff who undertake broadly-based, market-driven research and development for the benefit of the commercial market place, as well as urban and rural communities in South Africa and the region.