Company Presentation

1

• Company Presentation
• John Dawson Maddy Scott
• July 2004

2
Contents

• Introduction
• Recent Financial Performance
• Growth Strategy
• Marketing Investments
• Development Investments
• Summary

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Alliance Management
John Dawson, Managing Director Pharmacist, MSc
Finance 33yrs sector experience, board member,
controlling shareholder, 7 yrs with Alliance
Maddy Scott, Finance Director ACCA 16 yrs
experience across manufacturing and service
industries, board member, company secretary, 5
yrs with Alliance
Tony Booley, Sales Marketing Director BSc
Physiology, MBA, Chartered Marketer 23yrs
sector experience, board member, shareholder, 5
yrs with Alliance
4
Alliance Management
Sam Madden, Technical Regulatory Director BSc
Biochem/Toxicol, MSc Biopharmacy, 24yrs sector
experience across wide base board member,
shareholder, 7 yrs with Alliance
John Barber, Director of Scientific Affairs BSc
Pharmacology, MSc Information Science 18yrs
sector experience, 4 yrs with Alliance
Andrew Dean, Business Development Director BSc
Chemistry and Business 10yrs sector experience,
marketing sales management, 1 yr with Alliance
5
Alliance Non Executive Directors

Michael Gatenby, Non Executive Chairman MA. FCA
ex-director of Hill Samuel and Co, ex-vice
Chairman of Charterhouse Bank. Holds a number of
non executive directorships
Paul Ranson, Non Executive Director LL.B
Barrister Solicitor. 20 years sector experience,
board member
6
Alliance History
7
Alliance Acquisitions
Pentrax
Meted
Potassiumdeficiencies
Rheumatoidarthritis
Parkinsons disease
Creams for dry skin and eczema
Enteric coated aspirin
4 Derma Brands
Apr 1998 Jan 1999 Aug 2001 Oct 2001 Apr 2002 Sep 2002 Feb 2004
Fostering arrangement
9 M
2.1 M
0.9 M
2.1 M
0.5 M
4 M
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Organisational Development
1. Big pharma experience with small company speed
and flexibility
10m sales, 27 brands and 2 development projects
run by 13 people
Outsourced Operations
2. Progressive, stepwise development of resources
and range of operations
Manufacturing
Strategic HQ
Field Force
14 employees
3. Advantageous use of outsourcing
Clinical Trials
Distribution
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Recent Financial Performance
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Sales - Growth to date
11
03/04 Cash Sales by Brand
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3. Growth to-date - gross margins

• From the first fostering deal to date gross
  margins have more than doubled as fully acquired
  products deliver substantially higher margins
  than fostered ones
• Now, over 85 of gross margin comes from
  acquired products

13
Operational Performance
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Operational Financial Performance
Yr end Feb 02 000 Yr end Feb 03 000 Yr end Feb 04 000
Turnover 6,342 8,327 10,416
Direct costs (4,800) (4,687) (5,377)
Gross margin 1,542 3,640 5,039
Gross margin 24.3 43.7 48.4
Operating expenses (1,181) (1,553) (2,327)
Interest (excluding issue costs) (187) (1,079) (1,502)
Profit pre tax, exceptional items, issue costs amortisation 174 1,008 1,210
Source Annual Report and Accounts 2004 and 2003 Source Annual Report and Accounts 2004 and 2003 Source Annual Report and Accounts 2004 and 2003 Source Annual Report and Accounts 2004 and 2003
25 growth 8 like for like 17 impact of full
year on 2002 acquisitions
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Amortisation, issue costs exceptional items
Yr end Feb 04 000
Profit pre tax, pre exceptional items, Issue costs amortisation 1,210
Amortisation of intangible assets (907)
Costs associated with reverse into Peerless Technology Group (258)
Amortisation of reverse takeover goodwill (843)
Debt redemption premia (1,185)
Finance issue costs (169)
Profit pre tax (2,152)
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Balance Sheet
Feb 04 000
Fixed Assets 18,135
Intangible Assets 16,376
Development Costs 487
Goodwill on Acquisition 1,124
Tangible Assets 148
Net Current Assets 2,820
Long Term Liabilities 18,731
Total Net Assets 2,224

Share Capital / Share Premium 5,993
B/F Profit (Losses) (3,769)
2,224
Alliances acquired brands
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Debt structure (gross)
Cash generative brands facilitate leverage Cash generative brands facilitate leverage Cash generative brands facilitate leverage
Senior Term Loans to 2009 (base 2.5) 10.9m
Mezzanine Loan, payable 2009/10 (base 5) 2.5m
Current Funding 13.5m

Interest rate hedging base rate fixed at 5.0 on 10.6m to Nov 2008 Currency hedging 4.1m denominated in Interest rate hedging base rate fixed at 5.0 on 10.6m to Nov 2008 Currency hedging 4.1m denominated in Interest rate hedging base rate fixed at 5.0 on 10.6m to Nov 2008 Currency hedging 4.1m denominated in
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Cashflow 1
2004 000 2003 000
EBIT 704 687
Depreciation 83 67
Amortisation 1,750 1,400
Change in Working Capital (425) (65)
Net cashflow from operating activities 2,112 2,089
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Cashflow 2
2004 000 2003 000
Net cashflow from operating activities 2,112 2,089
Interest paid and similar charges (1,537) (1,079)
Taxation (33)
Redemption premia and issue costs (1,764)
Development expenditure (487)
Net cash from acquisitions and capital expenditure 522 (12,229)
Net cash from financing 5,517 11,818
Increase in cash in year 4,373 566
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EPS
2004 2003
Basis of Calculation
Weighted average number of shares in year (assumed) 79,973k 72,917k
Loss transferred to reserves (1,955k) (732k)

Unadjusted earnings per share (2.44p) (1.00p)
Eliminating amortisation, one off charges and deferred tax 3.62p 1.92p
Adjusted earnings per share - based on year-end capital 1.18p 0.85p 0.92p
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Alliance Strategy

• Selective acquisition of cash-generative brands
• In-licensing of launch opportunities from
  overseas RD companies
• Creation of launch opportunities by limited
  end-stage development projects

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Strategy 1 Brand Acquisitions

• Niche pharma Rx brands have a long life
• Target profile
• Stable historic sales pattern
• Low promotional investment
• Ungenericised
• Big impact on PL

Sales Margin Price? EBITA Debt EBAT
2m 70 6.3m 1.3m 4.2m 1.0m
5m 60 13.5m 2.8m 9.0m 2.1m
10m 50 22.5m 4.6m 15.1m 3.5m
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Current Growth Projects Marketing Investment

• Nu-Seals 75 Ireland / Cardiovascular
• 0.3m
• Symmetrel UK / Parkinsons Disease
• 0.7m
• Dermatology
• 0.2m

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Nu-Seals Opportunity

• Rapidly growing market (28 CAGR)
• Heart disease
• No. 1 killer in Ireland
• Government initiatives
• Ageing population

2020 1m people over 55
2010 833k people over 55
2002 782k people over 55

• Nu-Seals 75
• 2.3m sales in Ireland
• 15 increase year 02/04
• 70 of antiplatelet market
• 84 of low dose aspirin market
• Ireland highly branded market

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Nu-Seals 75 Sales Ex Irish Warehouse
Monthly sales
MAT Sales
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Symmetrel UK Opportunity

• Acquired from Novartis in Oct 2001
• Current sales 1.2m
• Parkinsons disease market
• 80m
• 120,000 patients
• Symmetrel renaissance in PD
• 50 papers specifically on amantadine in PD in the
  last 5 years
• The only nmda antagonist for PD
• Dyskinesias
• Niche segment 15,000 potential patients
• Unmet needs

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SymmetrelImplementation

• Founded new business unit in Dec 2003
• Highly targeted campaign

• Key opinion leader endorsement
• Neurologist reaction positive
• Roll out message to less specialised physicians

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Dermatology

• Acquisition of Dermapharm Ltd
• 8 derm brands sales 1.7m
• Currently promoting brands ex Dermapharm
• Planning additional growth utilising existing
  infrastructure alliances

Alphaderm
Aquadrate
Meted
Acnisal
Pragmatar
Pentrax
Occlusal
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Strategy 2 In-licensing
Adds to current portfolio - Alphaderm,
Aquadrate, Pragmatar - Occlusal, Acnisal, Meted,
Pentrax ex Dermapharm
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Strategy 3 Product Developments

• Two low risk developments
• APL 202 (intra-vaginal misoprostol for induction
  of labour)
• APL 510 (1.5mg SR melatonin for sleep disorders)
• Smaller investment reaches market first
• Proof of principle well known on each
• Both already used off licence
• Developments funded and underway
• EU registration strategy
• Possible introductions in H2 2005 and H2 2006
• 10 yr data protection for larger opportunity (APL
  510)
• Commercialisation strategy in place

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APL 202 Market Background

• Around 20-25 of labours in UK (150,000 - 175,000
  pa) are induced (many more are augmented)
• Two drug interventions in assisted labour
• 1. Dinoprostone (a prostaglandin) for induction
• Ripens (softens) cervix
• Stimulates uterus to contract
• 2. (Syntocinon Alliance Pharma) for induction
  and augmentation
• Is used to stimulate uterus to contract (if
  cervix is ripe)
• Maintains contractions after labour has been
  started
• Improvements sought over dinoprostone (ex market
  research)
• Greater efficacy (more predictability, more
  deliveries achieved within 24hrs)
• Reduced need for Caesarean sections
• No need for refrigeration of the drug
• Suitable for home initiation

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APL 202 Current Knowledge on Misoprostol

• Originally introduced to reduce gastric acid
  secretions
• Large bibliography in obstetrics
• Early usage was given orally
• Current preference is for vaginal administration
• Local action
• Reduced side-effects
• Some trials show greater efficacy than
  dinoprostone
• Published trials unsuitable for registration
• High awareness
• Already used off-licence
• But requires 3 serial cuts to the oral tablet
  (200mcg to 25mcg)
• Does not require refrigeration

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APL 202 Status of Development

• Clinical Trial Application submitted
• Ethics Committee Application submitted
• Trialists currently being recruited
  (multi-centre)
• Trials expected to commence September 2004
• Marketing Authorisation Application H1 2005
• Possible introduction H2 2005
• Low development cost (lt1m)

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APL 202 - Commercialisation

• Alliance Pharma to market in UK Ireland
• Existing Specialist Hospital sales force in UK
• Existing GP / Hospital sales force in Ireland
• Introduction is eagerly awaited
• Specialist marketing low cost
• Will probably license out in rest of EU
• Current EU labour induction market estimated at
  32m

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APL 510 Market Background (Sleep Disorders)

• Sleep disorders are of many types
• Anti-histamines are available OTC
• GPs (and patients) are reluctant to use current
  therapies
• Benzodiazepines
• concerns over habituation and hangover effects
• seen as unsuitable for children
• Nevertheless UK prescription hypnotics market is
  46m
• Key product improvements desired (ex market
  research)
• Non-addictive, especially for long term usage
• No drowsiness or hangover the next day
• Particularly for school children, teenagers and
  working adults
• Product that will restore sleep to a normal
  pattern

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APL 510 Market Background (Melatonin)

• Melatonin freely available OTC in USA
• Classified by FDA as a nutritional supplement
• Melatonin sales banned in EU
• Needs to be registered as a medicine
• Melatonin used off licence in UK
• Initiated by NHS specialists
• Patient-specific usage continued by GPs
• Named patient supply regulated by Dept of
  Health
• manufactured under a Specials licence
• controlled importation
• Usage estimated at 3-4m per annum
• Currently melatonin used mainly for sleep
  disorders in
• Children with Special Needs ( a wide variety of
  conditions)
• Blind patients

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APL 510 Current Knowledge on Melatonin

• Melatonin hormone that regulates circadian
  rhythm (body clock)
• Therapeutic melatonin has been shown to promote
  sleep in many different sleep disorders
• large bibliography, but unsuitable for
  registration
• Seen as a natural product
• Current prescribers (ex market research)
• Are very enthusiastic about its results
• Biggest complaint is restrictions imposed by not
  having a marketing authorisation
• Seek a formulation that is quick acting but has a
  prolonged release
• High awareness in GPs (ex market research)
• 100 awareness
• gt50 had been involved in its usage via
  specialists

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APL 510 Status of Development

• Special release formulation has been developed
• Phase 1 trials in human volunteers completed
• Rapid production of therapeutic blood levels
• Blood levels then maintained for 5 hours
• Phase 3 clinical trials to commence H2 2004
• Regulatory submission planned for H1 2006
• Possible introduction H2 2006
• Will gain 10 yr data protection in EU regulatory
  system
• Moderate development costs (4-5m)

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Pharmacokinetics studyPerformance of
surge-sustained formulation
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APL 510 - Commercialisation

• Alliance Pharma to market in UK Ireland
• To Specialists initially to gain endorsement for
  GPs
• Will need GP sales force to accompany Hospital
  sales force
• Existing GP / Hospital sales force in Ireland
• GP marketing significant investment
• License out in rest of EU
• Down payments plus royalty stream
• EU sleep disorders market estimated at 500m

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Summary

• Capable experienced management
• Profitable growing base business
• Making good progress on a clear growth strategy
• Acquire cash-generative brands
• In-license launch opportunities
• Develop launch opportunities