Header updated on 24th April 2008

Market has been looking for an announcement re a licensing deal for Cetilistat, the obesity drug; instead it has been hit with the withdrawal of Renzapride, colonitis drug, following an unauspicious performance at Phase III. Folloiwng has been edited to reflect the situation

Alizyme is a speciality biopharmaceutical company that has been developing product categories for inflammatory gastrointestinal disorders, obesity and supportive cancer care . It is currently trading at a five year low of around 27p with a market cap. of around 60m. Prudential owned a near 20% stake (reduced in sale today?) There was good institutional taku-up of a placing in March rasing 10m at 50p; no wonder there has been "angry" selling. The directors hold 3.34million shares or about 1.7% of the equity (of which Tim McCarthy, CEO has 1.1million); thus, after some 10 years of development effort, they must be comletely focused on the success of the company and multiplying the value of their holdings (but with real doubts about their marketing competence). Alizyme had previously raised capital sums in the past three years at around 70p and 100p so it was somewhat surprising to see the share fall through its 70p support level. Clearly one reason is the current disaffection with the biopharm. market. Another has to be disappointment for the failure of the CEO, Tim McCarthy, to deliver on his expectation that 2007 would be a transformative year. The key question is whether 2008 will be that year and when is it likely to happen? The following points are relevant:

1. Alizyme did sign one deal in late-2007: with Prometheus Labs (U.S.) for the Colal-Pred, at a potential market of $250m, the smallest potential of their four products. Prometheus pay $2.5m up-front with a total of $15m payable upon future development milestones. They are responsible for all US development costs and will pay Alizyme undisclosed royalty rates which will increase with net sales. The deal was followed by a Japanese licensing agreement (which also gave Alizymen access to additional potential drug candidates).

2. This perhaps sets a precedent for subsequent deals for their other products. Cetistat (obesity) has an estimated potential of $1 billion p.a. sales and ATL-104 (mucositis) has a potential of $500m sales. The U.S. FDA has encouraged AZM to also launch a Phase III exercise for Cetistat for all diabetes sufferer because of positive II results for diabetes sufferers who also suffer from obesity.

3. Whilst the development programmes for the other drugs are on-going and appear to be satisfactorily funded from present resources, this is not the case for Cetilistat. The "Product and Company Update statement" (7th Jan 2008) says that 'the Phase III development programme is now ready to commence following the conclusion of a commercial deal'. So, perhaps for the first time, the development programme would be delayed if there was not a funding deal in either the U.S. or Europe. The reason for the sp shooting to nearly 200p in 2004 was the signing of a deal with Takada of Japan for some $50M development funding.

In response to a question at the Conference to report the Renzapride fiasco, McCarthy seemed pleased that there were six potential bidders for Cetilistat; however, that implies any announcement is some time away. When it comes, however, taking a line from the Takada and Prometheus deals it would seem likely that there would be of the order of $100m funding to support development. Of course, the major cash flow will be from licensing of actual sales. The analysts do their own discounted cash flow exercises; those seen tend to dwarf current valuations of the company.

There is not a strong argument for jumping in unless and until the sp establishes a baseline. Given the peaks in the sp, the time will probably come when there will be a very significant jump. An alternative scenario, is that management continue to rpove their level of incompetence and a buy-our results. Clearly the strength of the company is in their biochemists.

Eric

got interested in this one recently and it seems to be doing okay. what are future prospects?

Harry: this is quite a short thread and it might be worth having a trawl through. I short, AZM rose to a level of 180p in late 2002 and early 2003 on the back of positive progress reports on 4 drugs and, in particular, their obesity drug now called Cetilistat and the agreement with the Japanese company Takada which gave them good funding in return for development rights in Japan. It was thought that this would be followed up with a licencing agreement in other territories. However, the management used the higher SP to borrow money to fund the development through to the current stage. Now that this, and two other drugs, are moving in Phase 3 (the commercial stage of development) they have said that they are looking for partners and any announcement could dwarf that for Japan. Phase 3 is expensive so that it is unlikely that they will go it alone with Cetilistat though they may with their other two drugs.

What sp are we talking about. Well, there is a resistance level around 180p and the sp might pause there awaiting news. However, we are talking about a potential blockbuster that could lead to a cap. more like 500K and an sp approaching 3. AZM would make a good acquisition though that would need to carry the directors: it depends what they want and they may want to see their babies to market. I look upon them, compared with my other holdings, as long-term, i.e. 2 to 3 years, far too long for most in the market!

Happy to respond to any thoughts/queries.

Eric

Just see this as natural correction caused by profit-taking. Fidelity keep adding to their holding, including those on behalf of clients. They will know the company and management intimately; you could say they are in bed with them. The trend-line has not been broken and I think there will be continued upward pressure pending an announcement on licensing deal(s).

Eric

Should help the price a little, but there has been a lot of Institutional buying of recent. What do they know.

Alizyme PLC
22 February 2006

SCHEDULE 10



NOTIFICATION OF MAJOR INTERESTS IN SHARES



1. Name of listed company


Alizyme plc



2. Name of shareholder with a major interest




(A) FMR Corp.

82 Devonshire Street

Boston, MA 02109



Parent holding company of Fidelity Management & Research Company (FMRCO),
investment manager for US mutual funds, and Fidelity Management Trust Company
(FMTC), a US state chartered bank which acts as a trustee or investment manager
of various pension and trust accounts.



(B) Fidelity International Limited (FIL)

P.O. Box HM 670

Hamilton HMCX, Bermuda



Parent holding company for various direct and indirect subsidiaries, including
Fidelity Investment Services Ltd. (FISL), Fidelity Gestion (FIGEST), Fidelity
Investments Advisory (Korea) Limited (FIA(K)L), Fidelity Investments Management
(Hong Kong) Limited (FIMHK), Fidelity Pension Management (FPM), Fidelity
Investments Japan (FIJ) and Fidelity Investments International (FII), investment
managers for various non-US investment companies and institutional clients.



(C) The notifiable interests also comprise the notifiable interest of:



Mr Edward C. Johnson 3d

82 Devonshire Street

Boston, MA 02109



A principal shareholder of FMR Corp. and Fidelity International Limited.






3. Please state whether notification indicates that it is regarding the holding
of the shareholder named in 2 above; in respect of a non-beneficial interest; or
in the case of an individual holder if it is a holding of that person's spouse
or children under the age of 18


Shareholders named in 2 above




4. Name of the registered holder(s) and, if more than one holder, the number of
shares held by each of them


Shares Held Management Company Nominee/Registered Name
1,551,800 FPM JP Morgan, Bournemouth
432,300 FPM Northern Trust London
280,500 FPM Bank of New York Brussels
269,800 FPM Citibank London
200,100 FPM Mellon Bank
83,800 FPM State Street Bank &

Trust Co London
63,300 FPM Bankers Trust London
34,000 FPM Midland Securities Services
3,400 FPM Clydesdale Bank PLC
99,100 FMTC Brown Brothers Harriman and Co
80,700 FMTC JP Morgan Chase Bank
59,800 FMTC State Street Bank & Trust Co
87,700 FMRCO Brown Brothers Harriman and Co
28,400 FMRCO JP Morgan Chase Bank
200 FMRCO State Street Bank & Trust Co
1,839,910 FISL JP Morgan, Bournemouth
16,406,423 FIL Brown Brothers Harriman Ltd Lux
895,100 FIL JP Morgan, Bournemouth
152,272 FIL Morgan Stanley London
132,500 FIL State Street Bank & Trust Co London
98,000 FIL National ASTL Bank Melbourne
26,000 FIL Bank of New York Brussels
17,500 FIL Northern Trust London
113,820 FIJ Brown Brothers Harriman and Co



5. Number of shares / amount of stock acquired


3,259,916 ordinary shares



6. Percentage of issued class


1.82%



7. Number of shares / amount of stock disposed


Not applicable



8. Percentage of issued class


Not applicable




9. Class of security


Ordinary shares of 2p each



10. Date of transaction


Not disclosed



11. Date listed company informed


21 February 2006



12. Total holding following this notification


22,956,425





13. Total percentage holding of issued class following this notification


12.83%



14. Any additional information


These notifications of disclosable interests constitute separate notifications
of interest in the shares and are combined solely for the purposes of clarity
and efficiency. Nothing herein should be taken to indicate that FMR Corp. and
its direct and indirect subsidiaries, Fidelity International Limited and its
direct and indirect subsidiaries or Mr Edward C. Johnson 3d act as a group or in
concert in respect of the disclosed interests, or that they are required to
submit these notifications on a joint basis.



15. Name of contact and telephone number for queries


David Campbell



Tel. No. +44 (0)1223 896000



16. Name and signature of duly authorised officer of the listed company
responsible for making this notification


David Campbell, Company Secretary



Date of notification


22 February 2006



The FSA does not give any express or implied warranty as to the accuracy of this
document or material and does not accept any liability for error or omission.
The FSA is not liable for any damages (including, without limitation, damages
for loss of business or loss of profits) arising in contract, tort or otherwise
from the use of or inability to use this document, or any material contained in
it, or from any action or decision taken as a result of using this document or
any such material.


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

See Shares this morning. AZM is Number 9 on list of 100 'Rockets': "While Alizyme's shares have soared over the apst yer, there is plenty on the horizon to suggest that the bull run has further to go." Goes on to comment on the three drugs entering Phase 3. "The most likely next step would be for AZM to find a licensing partner to help fund Phase III trials and this should be the next major catalyst for the share price." "...analysts believe peak sales of Cetlistat could top $1 billion a year, so the company should not be short of potential suitors."

I am accumulating an overweight position (may need to take the obesity drug!). Looking for 3 by June.

Eric

Eric you've convinced me! I have dipped a toe in today perhaps I'll be able to qualify for a free sample!!

Great, Moneyplus. You will already be in profit. My imagination tell me that you don't need the product, though!

Eric

moneyplus

OK I've looked at this too and put a foot in as well! No, Eric I don't need the product.
Good luck to all

Ruthie

Don't know about the stock, Eric - but I could definitely do with the product these days! :o(

ruthie and moneyplus on board! Success indeed. Two very sagacious ladies. Don't worry, marcus, the walrus wasn't impeded by weight and just think of the initial velocity of the golf ball. I would advise you not to invest in the shares: what would you do with the profits other than invest in another putter and driver?

Eric

The update required
UK smallcap opening - Alizyme better after successful trial results
AFX


LONDON (AFX) - Solid progress was logged in Alizyme, 13-1/4 pence better at 179-3/4, after the company said preliminary results of its Phase IIa clinical trial to evaluate ATL-104 for the treatment of mucositis -- which demonstrated positive responses in patients -- have been successful.

A statement from the company said ATL-104 'did not appreciably alter the adverse event profile attributed to the chemotherapy regimens'.

newsdesk@afxnews.com

fjb/vjt

thank you Eric-delighted so far!

Pleased to have a satisfied customer, moneyplus, and I'm sure Ruthie will also be a happy girl. What I really like about AZM is their professionalism: they have been going nearly 10 years now on the 4 potential drugs they acquired; every step is well planned and each delivery has been achieved. Thus confidence is high in success with all four. ATL-104 has a smaller market that cetilistat but still $500m;it is also behind the other 3; the next phase will be much larger and no doubt run into 2007. As I understand it, they will obtain a licensing partner befor long for Cetilistat but could well run with the other three off the back of that funding. The size of that deal could justify the sp on its own so that the share has a long way yet to run.

Eric

ive been in and out eric, back in at the mo. already made one very handsome profit, now looking to make another. good luck to all.

Still here holding AZM Eric, one of my long term buy and holds.

Enjoying the recent move North immensely.

all the best.

capa

Pleased to see you're still on board, Kivver and capa. I'm looking to Q2 for the big announcemnet re licensing with a run up to new ground. Possibly a resistance level around the current level but I think institutional investors will hold so new money could drive sp through the resistance.
Eric

Eric
Yes sir very happy. Managed to keep most of my profits from SEO, got into CHP at 6.9!! and my ISA fund has taken in AZM as a long term hold. So apart from an unlucky turn on ASC via a CFD the last year or so has been good to me...even my funds are up way more than deposit returns. I am still learning but must thank you and several other good posters for all the research that's done which I wouldn't have the time to do.
Regards Ruthie

Thanks, Ruthie. A really good thing about AZM is that the research facts are on the table due to the pharma. trials process. I'm fascinated by the extent of the positive market reaction to the mucositis drug; this compares with the muted reaction to last year's progress. OK, the drug must be worth 50M+ at this stage of development, which is some 30p on the sp. But it confirms that there is a pent-up demand, much presumably from institutions. There is a historical resistance level at around 190p, two years ago. But we are two years of on-schedule progress further forward and the momentum could take it through to new ground - there was a spike to about 220p but I think that was a defensive MM mark-up, sensing a cetilistat licensing deal, which didn't materialise.
Regards Eric

Think I should probably update the heading piece with an update on the products, wherre they are and what the perceived potential is. Will try to do it at the weekend. I see the aim is to help newcomers evaluating the stock. I think if one trawls through the records you can quantify the earnings potential three years down the line.
Eric

that would be great Eric, liking this one a lot. (but not falling in love, your not allowed to that!,lol) ps dont forget to have a look at corus, creeping up slowly but nicely. great for the long term.