Alliance Pharma plc Project Byron

1. Alliance Pharma plcProject Byron John Dawson Maddy Scott October 2004

2. Contents • Brief Alliance Update • Alliance Interims (Aug 2004) • Project Byron (2 brand acquisition projects) • Appendix on Alliance • Management • Sources of growth • Growth product – Nu-Seals • Growth product – Symmetrel • Growth project – APL 202 • Growth project APL 510 • Flotation Dec 2003 • Current capital structure

3. Speciality pharma co exploiting niche prescription opportunities in UK and Ireland Grown to £11m+ sales via six brand acquisition deals since 1998 Ongoing profitability with growth opportunities from current portfolio future brand acquisitions in-house developments for launch In-house: transformational project (APL 510 for sleep disorders) £500m EU prescription market Two brand acquisition projects which transform Alliance Immediate and significant boost to P&L (£3.1m sales at 70+% gross margin) High long-term growth potential Greatly develops Alliance’s international reach Alliance has agreed contracts on each Total consideration £8.8m Bank debt secured £5.2m Alliance Project Byron

4. Occlusal Naseptin Pragmatar Slow-K Biorphen 16 brands Distamine Aquadrate Nu-Seals Periostat Forceval Symmetrel Alphaderm Acnisal Broflex Alliance Acquisitions Pentrax Project Byron Meted Potassiumdeficiencies Periodontitis Rx Multi-Vitamin Rheumatoidarthritis Enteric coated aspirin 4 Derma Brands Parkinson’s disease Creams for dry skin and eczema Fostering arrangement £2.1 M £9 M £0.9 M £1.8 M £7.0 M £2.1 M £0.5 M £4 M

5. Alliance Brands – Sales Progression PROMOTED BRANDS GROWING Nu-Seals (Ireland) Symmetrel Dermatology (8 brands) Euros ‘000s £ ‘000s NON PROMOTED BRANDS (17) STABLE £ ‘000s

6. Alliance - performance 49.6% 48.4% 43.7% 52.3% 30.9% 27.7% 25.9% 21.5%

7. Alliance interims (August 2004) Project Harrier costs

8. Forceval Specialist multivitamin and mineral product used for AIDS, cancer patients etc Brand has remained solid despite historical sub-optimal management Sales stable at £2.8m Gross margin 70% Upside potential through revival of brand and overseas distributors Alliance has agreed contract for worldwide rights, excluding China (1st option for later acquisition) Consideration £7m Periostat Enzyme suppressor as a novel adjunctive therapy for serious gum disease (periodontitis) Developed by CollaGenex (US) Sales currently £347k (£281k UK) High growth potential – UK sales currently based on 6,000 patients from pool of 3.2m US sales $45m after 5 yrs Alliance has agreed contract for EU, Switzerland, Israel, Australia, NZ and S. Africa Consideration £1.85m Project Byron - Two separate brand acquisitionsOne provides instant boost to P&L; the other long term growth

9. Forceval – resilient cash-generative brand • Forceval • 24 vitamins and minerals in one capsule • The professional and only prescribable brand (not OTC “feel good” market) • Used by dieticians for AIDS, cancer and convalescence • Brand has been very resilient despite sub-optimal management • Recent history of Unigreg Ltd • Cash extracted by owners • Suppliers unpaid and uncooperative • Into Administration June 2002 • Regained confidence of suppliers and distributors • Offered assets for sale May 2004 • Market research reveals deep prescriber support, but • Brand needs major makeover and coherent marketing strategy • Overseas distributor network need strengthening and expanding

10. Alliance acquisition of Forceval • Organisational • Likely termination for current 8 employees (Administrator to cover costs) • Recruit Business Unit Head, Export Manager & Supply Chain Manager • UK Marketing • Brand makeover • Coherent marketing strategy • Renew communications with dietetics specialists • Exports • Re-energise current distributors with new promotional materials • Seek new territories • Prepare for China opportunity • Big market in China for a sister product for pregnancy (10m births pa) • Current business exists following approach by Chinese government • Administrator stabilising situation prior to sale • Alliance to have first option

11. Periodontitis • Periodontitis is a severe form of gingivitis in which the inflammation of the gums extends to the supporting structures of the tooth. • Periodontitis results from a long-term accumulation of plaque and tartar between the teeth and the gums. • Pockets form between the teeth and gums and extend downward between the root of the tooth and the underlying bone. • These pockets collect plaque in an oxygen-free environment, which promotes the growth of aggressive forms of bacteria. • The body reacts to the aggressive bacteria with enzymes (collagenases). These enzymes also attack the supportive ligaments and gum tissue holding the tooth in place. The result is loosening and eventually loss of the tooth. Source: Adapted from the Merck Manual of Medical Information

12. Role of Periostat • Periostat suppresses the body's own enzymes released as part of the disease process. • Conventionally periodontitis is controlled by: • Removal of plaque and tartar (scaling and root planing) • Reducing infection (antibiotics) • Periostat offers a new third arm in addition to conventional treatments. Academic Backing • Adjunctive sub antimicrobial dose of doxycycline enhances scaling and root planing. It results in statistically significant attachment gains and probing depth reductions over those achieved by scaling and root planing with placebo. Philip M. Preshaw Newcastle University School of Dental Sciences. Journal of Periodontology 2004; 75 1068-1076 • American Academy of Periodontology (AAP) 2003 Workshop on contemporary sciences in clinical periodontics concluded the level of evidence rating for Periostat was “Strong”, the highest rating possible. • Periostat is listed on the Dental Practitioners Formulary and is prescribed and reimbursed by the NHS.

13. Market research • 2 studies commissioned, £25k • Findings • 7 severe periodontitis patients / wk / surgery (= pool of 3.2m prescribing opportunities pa) • 54% of Users likely to increase prescribing of Periostat • Non-Users did not know enough about the product to prescribe • 46% of non-user dentists would use as result of the market research • Conclusions • The potential market is large • Periostat is appreciated by the dentists who use it • Lack of knowledge is preventing the majority of dentists from using it • Periostat sales are likely to respond to promotion

14. Current UK sales represent 6000 patients (0.2% of “pool”) 5% of pool would give £6.9m sales CollaGenex promotion has only reached 6% of the 20,000 UK dentists. Periodontologists are a small influential customer group Dentists are readily accessible by representatives Unexploited European markets Periostat Sales Potential CollaGenex Annual Periostat Sales 99-03 2003 £334k Source: Hillier Hopkins LLP, Extracts from P&L’s 2002-Jul 2004

15. Appendix

16. Alliance - Management John Dawson, Managing Director Pharmacist, MSc Finance; 34yrs sector experience, board member, controlling shareholder, 7 yrs with Alliance Sam Madden, Technical & Regulatory Director BSc Biochem/Toxicol, MSc Biopharmacy, 25yrs sector experience across wide base; board member, shareholder, 7 yrs with Alliance • Maddy Scott, Finance Director • ACCA; 17 yrs experience across manufacturing and service industries, board member, company secretary, 5 yrs with Alliance John Barber, Director of Scientific Affairs BSc Pharmacology, MSc Information Science; 16yrs sector experience, 4 yrs with Alliance Tony Booley, Sales & Marketing Director BSc Physiology, MBA, Chartered Marketer; 24yrs sector experience, board member, shareholder, 5 yrs with Alliance Andrew Dean, Business Development Director BSc Chemistry and Business; 11yrs sector experience, marketing & sales management, 2 yrs with Alliance • 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

17. Alliance – Sources of growth • Promoted products • Nu-Seals in cardiovascular prevention • Symmetrel in Parkinson’s disease • Dermatology (portfolio of 8 brands) • Established Brand acquisitions • Immediate cashflow and profit • Launches from in-licensing • Dermatology products from Barrier Therapeutics Inc • Niche hospital antibiotics from GES • Launches from own developments • APL 202 (misoprostol) for induction of labour • APL 510 (melatonin) for sleep disorders

18. Growth product - Nu-Seals in Ireland • 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

19. Growth product - Symmetrel • Acquired from Novartis in Oct 2001 • Current sales £1.2m • Parkinson’s disease market • £80m • 120,000 patients • Dyskinesias (large involuntary movements) • Niche segment 15,000 potential patients • Unmet needs • Symmetrel renaissance in PD • 50 papers specifically on amantadine in PD in the last 5 years • The only nmda antagonist for PD • Promotion started Dec 2003 • Neurologists endorsing the concept • Rolling message out to less specialised physicians

20. Misoprostol originally introduced to reduce gastric acid secretions and prevent ulcers Extensive published research in obstetrics (cervical ripening and labour induction) Early usage was given orally Current preference is for vaginal administration Local action Reduced side-effects Some trials show greater efficacy than dinoprostone (market leader) Published trials unsuitable for registration High awareness amongst obstetricians Already used “off-licence” But requires 3 serial cuts to the oral tablet (200mcg to 25mcg) Unlike dinoprostone, does not require refrigeration Will compete against dinoprostone (ca £13m EU sales) Introduction is eagerly awaited In 2002 Royal College of Obstetricians & Gynaecologists called for the development Specialist marketing – low cost Alliance to market in UK & Ireland Existing Specialist Hospital sales force in UK Existing GP / Hospital sales force in Ireland Intend to license out in rest of EU Commencing clinical trials at end of 2004 Planned launch in H1 2006 NPV about £2m Growth project - APL 202 (misoprostol)

21. 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 High awareness in GPs(ex market research) 100% awareness >50% had been involved in its usage via specialists 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 GPs (and patients) are reluctant to use current “sleeping tablets” Benzodiazepines concerns over habituation and hangover effects seen as unsuitable for children 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 Growth project -APL 510 (melatonin)

22. 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 H2 2005 Possible introduction H2 2006 Will gain 10 yr data protection in EU regulatory system Moderate development costs (£4-5m) NPV about £18m - £30 m EU Sleep Disorders market estimated at £500m Melatonin will expand the market Alliance to market in UK & Ireland To Specialists initially to gain endorsement for GPs Will need UK GP sales force to accompany Hospital sales force Will use existing GP / Hospital sales force in Ireland GP marketing – significant investment License out in rest of EU Down payments plus royalty stream Growth project- APL 510 (melatonin)