Company Presentation

John Dawson Maddy Scott

July 2004

Contents

Introduction

Recent Financial Performance

Growth Strategy

Marketing Investments

Development Investments

Summary

Alliance Management

John Dawson, Managing DirectorPharmacist, MSc Finance; 33yrs sector experience, board member, controlling shareholder, 7 yrs with Alliance

Tony Booley, Sales & Marketing DirectorBSc Physiology, MBA, Chartered Marketer; 23yrs sectorexperience, board member, shareholder, 5 yrs with Alliance

Maddy Scott, Finance Director ACCA; 16 yrs experience across manufacturing and service industries, board member, company secretary, 5 yrs with Alliance

Alliance ManagementSam Madden, Technical & Regulatory DirectorBSc Biochem/Toxicol, MSc Biopharmacy, 24yrs sector experience across wide base; board member, shareholder, 7 yrs with Alliance

John Barber, Director of Scientific AffairsBSc Pharmacology, MSc Information Science; 18yrs sector experience, 4 yrs with Alliance

Andrew Dean, Business Development DirectorBSc Chemistry and Business; 10yrs sector experience, marketing & sales management, 1 yr with Alliance

Alliance Non Executive Directors

Paul Ranson, Non Executive Director LL.B Barrister Solicitor. 20 years sector experience, board member

Michael Gatenby, Non Executive ChairmanMA. FCA ex-director of Hill Samuel and Co, ex-vice Chairman of Charterhouse Bank. Holds a number of non executive directorships

Alliance History

Trading started

June 1998

Growth via 6 acquisition

deals between Jan ‘99 &Feb ‘04

Listed onAIM

Dec 2003

Apr

1998

Jan

1999

Aug

2001

Oct

2001

Apr

2002

Sep

2002

Feb

2004

Fostering arrangement

£2.1 M £0.5 M £9 M£4 M £2.1 M £0.9 M

16 brands

Rheumatoidarthritis

Parkinson’s

disease

Potassiumdeficiencies

Creams for dry skin and

eczema

Enteric coated aspirin

Alphaderm

Slow-K

SymmetrelDistamineBroflex

Biorphen

Pragmatar

Naseptin

Aquadrate

Nu-Seals Acnisal

Meted

Pentrax

Occlusal

Alliance Acquisitions

4 Derma Brands

Organisational Development

1. Big pharma experience with small company speed and flexibility

2. Progressive, stepwise development of resources and range of operations

3. Advantageous use of outsourcing

£10m sales, 27 brands and 2 development projects

run by 13 people

14 employees

Manufacturing

Field Force

Distribution

Clinical Trials

Strategic HQ

OutsourcedOperations

Recent Financial Performance

Sales - Growth to date

£0

£2,000

£4,000

£6,000

£8,000

£10,000

£12,000

£000

s

1999 2000 2001 2002 2003 2004

Year ending February

03/04 Cash Sales by Brand

Others 11%

Cafergot 3%

Synacthen 3%

Alphaderm 4%

Distamine 4%

Slow-K tabs 6%

Naseptin 7%

Syntometrine 7%

Symmetrel 11%

Syntocinon 15%

Nu-seals 29%

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

0%

10%

20%

30%

40%

50%

60%

70%

Bioglan Acquisition

Distamine Acquisition

Symmetrel/Slow-k Acquisition

Nu-seals Acquisition

Nu-seals switches manufacturing to

Alliance

Operational Performance

0

2000

4000

6000

8000

10000

12000

Turnover Direct Costs GrossMargin

OperatingExpenses

Interest AdjustedEBAT

2002 2003 2004

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

25% growth

8% like for like17% impact of

full year on 2002 acquisitions

Amortisation, issue costs & exceptional items Yr end

Feb ’04

£000

Profit pre tax, pre exceptional items,

Issue costs & amortisation1,210

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)

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

* Alliance’s acquired brands

Debt structure (gross)

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 €

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

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

EPS2004 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

Alliance Strategy

1. Selective acquisition of cash-generative brands

2. In-licensing of launch opportunities from overseas R&D companies

3. Creation of launch opportunities by limited end-stage development projects

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 P&L

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

Current Growth Projects Marketing Investment Nu-Seals 75 – Ireland / Cardiovascular

£0.3m

Symmetrel – UK / Parkinson’s Disease

£0.7m

Dermatology

£0.2m

Nu-Seals Opportunity

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

Ageing population

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

marketIreland highly branded market

2002: 782k people over 55

2010: 833k people over 55

2020: 1m people over 55

Nu-Seals 75 Sales Ex Irish Warehouse

Mon

thly

sal

es

MA

T S

ales

0

20000

40000

60000

80000

100000

120000

Jan-

02

Feb-0

2

Mar

-02

Apr-0

2

May

-02

Jun-

02

Jul-0

2

Aug-0

2

Sep-0

2

Oct-02

Nov-02

Dec-02

Jan-

03

Feb-0

3

Mar

-03

Apr-0

3

May

-03

Jun-

03

Jul-0

3

Aug-0

3

Sep-0

3

Oct-03

Nov-03

Dec-03

Jan-

04

Feb-0

4

Mar

-04

Apr-0

4

May

-04

0

200000

400000

600000

800000

1000000

1200000

Paris Actual units MAT Paris Actual units

Acquisition from

Symmetrel UK Opportunity

Acquired from Novartis in Oct 2001 Current sales £1.2m

Parkinson’s 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

SymmetrelImplementation

Founded new business unit in Dec 2003

Highly targeted campaignKey opinion leader endorsement

Neurologist reaction positive

Roll out message to less specialised physicians

Acquisition of Dermapharm Ltd

8 derm brands sales £1.7m

Currently promoting brands ex Dermapharm

Planning additional growth utilising existing infrastructure & alliances

Dermatology

Naseptin

Acnisal

Occlusal

Alphaderm

Pragmatar

Aquadrate

Pentrax

Meted

Building Dermatology Portfolio*

Leverage on hospital tendering

Strategy

£110mDermatology Pipeline

UK, RoI, Scandinavia

Nov 2003

£35mNiche Hospital Generics

UK & RoIApr 2003

Market Size

ProductsTerritoryPartner

Strategy 2: In-licensing

*Adds to current portfolio:- Alphaderm, Aquadrate, Pragmatar- Occlusal, Acnisal, Meted, Pentrax – ex

Dermapharm

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

APL 202 – Market BackgroundAround 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

APL 202 – Current Knowledge on Misoprostol

Originally introduced to reduce gastric acid secretionsLarge 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

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 (<£1m)

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

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

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 annumCurrently melatonin used mainly for sleep disorders in• Children with Special Needs ( a wide variety of conditions)• Blind patients

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” productCurrent 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• >50% had been involved in its usage via specialists

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)

Pharmacokinetics studyPerformance of surge-sustained formulation

Mean APL 510 Plasma Levels

0

500

1000

1500

2000

2500

Time - Hours

Mea

n M

elat

onin

Con

c. (

pg/m

L)

1.5mg Surge-sustained 1.0mg Sustained 3.0mg Surge-sustained

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

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