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

I'm going back in to cryofreeze! wake me up when logic returns. :0)

How was it higher in 2004 than it is now??????? patience eh!! This was going to be THE year, still might be but time is running out.

Just a small snippet from the FT.

Alizyme lost 3.5 per cent to 75p in spite of a licensing deal with Prometheus Laboratories of the US for the biopharmaceutical groups treatment for gastrointestinal diseases. Dealers said a deal covering Japan could follow next week.

Thanks Neil. I hung on to a small number of AZM but have down-sized somewhat. The sp just seems rather reluctant to acknowledge any deals, doesn't it?

It does seem that way Toya, but i just think that at some stage the penny will drop if and when more deals are done.

It will, eventually - and I'll top up again when it starts to move in the right direction.

RNS today: follow-on deal from last week's announcement, this time in Japan:
Alizyme PLC

ALIZYME ENTERS STRATEGIC PARTNERSHIP WITH TSD JAPAN INCLUDING A CO-DEVELOPMENTAGREEMENT FOR COLAL-PRED(R) IN JAPAN

Cambridge UK, 03 December 2007: Alizyme plc (LSE: AZM) ('Alizyme') announces
that its wholly owned subsidiary, Alizyme Therapeutics Limited, has entered into
a strategic partnership and co-development agreement with TSD Japan Inc.
('TSD'), a bio-venture company, including the exclusive rights to co-develop
COLAL-PRED(R) for ulcerative colitis in Japan.

TSD is a business focused on strategic partnering activities that
involve in-licensing pharmaceutical drug candidates for development and
commercialisation in Japan
TSD to identify new drug candidates in Japan for in-licensing/
acquisition by Alizyme for development ex-Japan
Exclusive licence agreement with TSD for co-development of COLAL-PRED(R)
in Japan
TSD will be predominantly responsible for Phase I and Phase II clinical
development costs
All future milestones and royalties in Japan shared equally
TSD to actively seek partner for late stage development and
commercialisation of COLAL-PRED(R) in Japan

Alizyme has formed a strategic partnership with TSD that offers the opportunity
to access one of the world's major pharmaceuticals markets via a Japan based
organisation. The corporate strategy to develop and commercialize Alizyme's
products in this important major territory is exemplified by this agreement for
COLAL-PRED(R). In addition, the relationship with TSD provides opportunity to
introduce further products from our portfolio into the Japanese market, and
provides the opportunity to access additional products via TSD for development
by Alizyme in the West.

Commenting on today's announcement, Tim McCarthy, Alizyme's Chief Executive
Officer said:
'We are delighted to enter into this strategic partnership with TSD in Japan,
which is exemplified by our co-development agreement for COLAL-PRED(R) as the
first step in our partnership. We have maintained a strong relationship with Dr
Shiho, the CEO and founder of TSD, following his time with Takeda Pharmaceutical
Company Limited and are excited by the many new opportunities that this
partnership will offer in the overall corporate development of Alizyme. We
believe Dr Shiho and his experienced team at TSD are uniquely positioned to
optimise the development and commercialisation of COLAL-PRED(R) for Japan, and
offer Alizyme further access to the Japanese market.'

Today's announcement follows last week's announced partnership with Prometheus
for North American rights for COLAL-PRED(R) and marks another important step in
our commercialisation activities.'

Commenting on today's announcement, Dr. Osamu Shiho, Chief Executive Officer TSD Japan commented:
'COLAL-PRED(R), developed by Alizyme, is a unique compound to be co-developed by
TSD Japan's pharmaceutical partnering business and I believe that its
significant potential as a pharmaceutical agent will greatly assist us in
realising our corporate objective of developing and commercializing innovative
products for the Japanese market. I would like to see our collaborative
relationship broaden in the future, both in providing Alizyme access to new
products for their portfolio and providing TSD access to other promising
compounds from the Alizyme portfolio.'

As usual though - no effect on the sp other than negative!

Hi folk

Sorry to have been AWOL. Been somewhat passive with spare cash largely soaked up with cost of living. So selling up and moving to a lovely cottage down in Dorset: get back into investment mode. Still have a few AZM. Not surprised that the market is a bit disappointed with the COLAL-PRED announcement: not that its not OK in itself but because its not very big. The potentially big boys are Renzapride and Cetilistat. My take is that these are bigger deals and therefore taking longer, probably because they have broader interest. They will be able to say that they have done one deal in 2007 which is a bit of a face saver. I don't think they have lost credibility with their major institutional supporters, otherwise they would have dropped below the 70p support price. One of these days, the big news will come through and its best to be on board.

Eric

Hi Eric - good luck with your move to Dorset, sounds idyllic.

I'm sure you're right in what you say. They'll get the big deals eventually, but even these smaller deals have taken nearly a year to conclude - according to the recent webcast, they began talks with Prometheus in the US back in January.

i see the excitment at the beginning of the year has changed. We were quite convinced this was going to be THE year. I have followed a few shares like this and they have done nothing but disappoint (ie, bioprogress, cenes, skypharma, etc). I think they will probably come good one day but it could 3, 5 or even 10 years away. I am going to tuck mine away as an all or nothing share. I''l either make a packet or lose a mint. Just hope im still around to find out, lol.

BTW Hasn't Dorset (esp around poole) got some of most expensive properties in the country?????

I still think the potential rewards out way the risk, albeit that the former is deferred longer than we had hoped. I do not hold many smaller company specalations but, I believe this one will prove worthwhile, it is a question of when.
Hope the move to Dorset is lucky for you Eric.

Good to see you back Eric.

Is it?

Not that it makes any difference.

Alizyme PLC
17 December 2007


For Immediate Release 17 December 2007



ALIZYME PLC



TR - 1: NOTIFICATION OF MAJOR INTERESTS IN SHARES



1. dentity of the issuer or the underlying issuer of existing
shares to which voting rights are attached:


Alizyme plc


2. Reason for the notification (please tick the appropriate box or boxes):

A acquisition or disposal of voting rights

3. Full name of person(s) subject to the notification obligation:


Prudential plc group of companies


4. Full name of shareholder(s) (if different from 3.)


See attached schedule


5. Date of the transaction and date on which the threshold is crossed or
reached:


12 December 2007


6. Date on which issuer notified:


14 December 2007


7. Threshold(s) that is/are crossed or reached:


See item 13

8. Notified details:

A: Voting rights attached to shares

Class/type Situation previous to the Resulting situation after the triggering transaction
of shares Triggering transaction
if possible
using the Number of Number of Number of Number of voting % of voting
ISIN CODE Shares Voting Rights shares rights rights
Direct Direct Indirect Direct Indirect
Ordinary 29,750,419 29,750,419 29,850,419 29,850,419 14.8%
Shares
GB 2p
GB0000374289

B: Financial Instruments

Resulting situation after the triggering transaction
Type of Expiration Exercise/ Number of voting rights that may be % of
financial date Conversion acquired if the instrument is voting
instrument exercised/ converted. rights
Period/
Date
n/a n/a n/a n/a n/a

Total (A+B)

Number of voting rights % of voting rights
29,850,419 14.8%


9. Chain of controlled undertakings through which the voting rights and/or the
financial instruments are effectively held, if applicable


Prudential plc (parent Company)

M&G Group Limited (wholly owned subsidiary of Prudential plc)

M&G Limited (wholly owned subsidiary of M&G Group Limited)

M&G Investment Management Limited (wholly owned subsidiary of M&G Limited)

M&G Securities Limited (wholly owned subsidiary of M&G Limited)

The Prudential Assurance Company Limited (wholly owned subsidiary of Prudential
plc)


Proxy Voting:


10. Name of the proxy holder:


n/a


11. Number of voting rights proxy holder will cease to hold:


n/a


12. Date on which proxy holder will cease to hold voting rights:


n/a


13. Additional information


As per 5.1.2, the non-exempt holdings for Prudential plc have crossed 3%
triggering this notification.


14. Contact name:


David Campbell, Finance Director


15. Contact telephone number:


+ 44 (0) 1223 896000


For further information, please contact:

David Campbell, Finance Director
ALIZYME plc Tel No: + 44 (0) 1223 896000


Further information on Alizyme can be found on the Company's website:


www.alizyme.com

I spoke to Alizymes David Cambell last week and he referred to further deals waiting to be signed.

They are also about to finish recruitment into Phase 3 ColalPred.

Welcome back Ludlow, the next few months should see a good bit of news flow.
But whats with the SP........

Good to hear from Ludlow Castle - has his ear in the right places (figuratively as well as physically I'm sure). It appears that one or more long-term investors have lost patience given that this was to be the year of transformation. They realised after six months that they were not negotiating at the right level in potential partner organisations and brought in additional advisors. One reeading, hopefully not overly optimistic, is that, with the loss of six months, they are only six months into the negotiating year. Cetilistat and Renzapride are the big 2 not COLAL-PRED; therefore deals could well take longer. An earlier note makes a good point: deals on either are likely to lead to a spike but the real progression in the share price will depend on the terms of the deal. The length of the process really doesn't indicate the answer to that question. What's in a few months when they have taken 12 years to get that far and some of us have been in for four.

Hopefully, a happy New Year to all holders!

Eric

Another point about the SP is that there still appears to be a lot of bear manipulation of the price. It seems that if one trader makes a lot of small AT sells it far more than offsets a small number of larger buys. He eventually buys back and starts the process again. The institutional holders have enough shares on their books whilst the smaller investor has become somewhat nervous. Thus he has the field to himself. Could add up to a buying opportunity.

Eric