R&D
Vernalis plc Annual report and accounts 2004
Vernalis plc Annual report and accounts 2004 R&D
2 Highlights
3 Chairman’s review
4 Chief Executive Officer’s review 
of operations
16 Financial review
18 Board of Directors 
20 Report of the Directors
23 Corporate governance
29 Remuneration report
37 Statement of Directors’ 
responsibilities
38 Independent auditors’ report
to the members of Vernalis plc
39 Consolidated profit and 
loss account
40 Balance sheets
41 Consolidated cash flow statement
42 Notes to the financial statements
58 Five-year summary
59 Shareholder information
60 Addresses and advisers
Contents
      Rebuilt
&
Delivering
01
Vernalis plc Annual report and accounts 2004
Vernalis has been rebuilt, establishing a strong foundation for the
future. The initial consolidation resulted in a substantial reduction
to the cost base and the Company subsequently delivered on its
goal to re-license frovatriptan as well as achieving two further
R&D collaborations and advancing its internal pipeline.
Vernalis is recognised as one of Europe’s leading biotechnology
companies, with a marketed product and a healthy pipeline of
viable product candidates. In 2005 the Company plans to progress
towards its goal of becoming a sustainable, self-funding, R&D-
driven biotechnology company. R&D
Highlights
02
Vernalis plc Annual report and accounts 2004
Frovatriptan
• North American rights to frovatriptan re-acquired from
Elan and re-licensed to Endo Pharmaceuticals. 
• Re-launch of frovatriptan in the United States by Endo
with an increased sales force and revised marketing 
focus on the benefits of a long duration of action. 
• Additional approval of frovatriptan for the treatment 
of acute migraine in Canada and launches in countries
including Spain, Greece and Italy.
• Completion of recruitment of Phase III safety study of
frovatriptan for the short-term prophylaxis of menstrually-
related migraine. 
• Start of Phase III efficacy study of frovatriptan to support
a label extension for prophylaxis of menstrually-related
migraine. 
• Exercise of option to co-promote frovatriptan in the 
United States.
Product portfolio
• Positive results from an initial Phase II proof-of-concept
study of V10153 in acute myocardial infarction patients.
Its further development will continue with a Phase II study
in stroke expected to begin in H1 2005. 
• Positive data from initial Phase I studies of V2006, a novel
treatment for Parkinson’s disease; Phase II study expected
to start H2 2005. 
• Phase I study with V140 completed. 
• Start of a Phase I study of the first compound to enter the
clinic resulting from the MMPI collaboration with Serono. 
R&D collaborations
• Biogen Idec: collaboration to advance V2006 and
supporting A
2A
receptor antagonist programme which
targets Parkinson’s disease and other central nervous
system disorders. 
• Novartis: extension of cancer research collaboration 
on Hsp90.
Cash and short-term investments – increased 
to £33.3 million at 31 December 2004, bolstered
in 2004 by payments from Biogen Idec, Novartis
and Endo. 
Fully underwritten Placing and Open Offer 
raising £30.3 million.
£33.3m + £30.3m
Financial
Strengthened cash position Chairman’s review
03
Vernalis plc Annual report and accounts 2004
We have a high level of confidence in
the therapeutic and market opportunity
for frovatriptan, which is clearly
differentiated from other triptans by 
its much extended half-life in patients. 
With our major agreement with Endo
Pharmaceuticals Inc. we believe we now
have the right partner to significantly
enhance the value of this product. Endo
has an excellent reputation as one of
the leading North American speciality
pharmaceutical companies in the area
of pain management, with a substantial
sales force targeting neurologists and
primary care physicians. We believe 
that they will address the potential for
frovatriptan in the treatment of acute
migraine, as well as pave the way for 
its use in the prophylaxis of menstrually-
related migraine. Importantly for Vernalis,
our agreement with Endo provides us
with the opportunity to co-promote
frovatriptan in the US and we recently
announced that we intend to establish
our own US-based sales force, initially
substantially funded by Endo.
Two other important partnerships were
successfully established during 2004,
both of which will significantly advance
key R&D programmes. In June we
entered into a collaboration with Biogen
Idec Inc. to develop V2006, a novel
treatment for Parkinson’s disease. 
In August we started a major research
collaboration with Novartis to develop
new treatments for cancer, focused
upon an innovative, validated target,
Hsp90. Biogen Idec and Novartis 
are leaders in the fields of neurology
and oncology respectively, and these
partnerships further endorse Vernalis’
outstanding R&D capabilities.
Vernalis in its new integrated form was
built through the combination of three
companies during 2003. Last year 
we promised to realise extensive cost
synergies by refocusing and prioritising
R&D programmes, and by substantially
scaling back infrastructure and non-R&D
expenditure. We have delivered on 
all fronts which resulted in the post-
merger cost savings being achieved.
In order to build upon the robust
progress achieved during 2004, Vernalis
recently announced a very successful
secondary financing, which raised 
over £30 million. These funds will be
used to establish the US commercial
infrastructure, to progress the Company’s
clinical development programmes, 
and also to expand the pipeline with
additional product candidates. 
Following the successful integration 
of the Group, there have been a number
of planned Board changes. Ian Kent 
and Eugene Williams retired as Non-
Executive Directors from the Board
during the year, and Peter Worrall
retired as an Executive Director. 
We thank all of them for their valuable
contributions, particularly during the
integration process.
Allan Baxter, Senior Vice President 
of Drug Discovery at GlaxoSmithKline, 
who oversees their global discovery
efforts, joined as a Non-Executive
Director in May, and brings great
experience of modern pharmaceutical
R&D. In November, John Slater was
appointed as General Counsel, an
Executive Director position, with
responsibility both for legal matters 
and business development. He was
previously in a similar role at Celltech,
and has exceptional experience both 
in establishing corporate partnerships
and in mergers and acquisitions.
In summary, 2004 has been a year 
of great change at Vernalis, which has
emerged as one of the most dynamic
European biotechnology companies. 
We look forward to further strong
progress with our clinical pipeline 
during the coming year, including 
the completion of the Phase III
programme with frovatriptan in
menstrually-related migraine patients. 
On behalf of the Board, I would like 
to thank our shareholders for their
continued support during the past year,
and to thank all of our employees for
their efforts and contributions during 
a period of extensive change.
Peter Fellner
Chairman
I am very pleased to report that 2004 was a transforming year for Vernalis.
Important advances were achieved with all our key products and programmes
across the R&D portfolio, including a landmark licensing agreement for
frovatriptan, our marketed product for migraine. In addition, other major licensing
agreements concluded during 2004 substantially exceeded expectations, and
served to illustrate our commitment to adding value in each transaction. Chief Executive Officer’s review of operations
04
Vernalis plc Annual report and accounts 2004
Vernalis is recognised as one of Europe’s leading biotechnology companies, 
with a robust financial position, a marketed migraine treatment and a healthy
pipeline of viable product candidates. The management team is dedicated 
to achieving the goal of becoming a sustainable, self-funding, R&D-driven
biotechnology company. 05
Vernalis plc Annual report and accounts 2004
Objective
Secure the financial position of the Company. 
Achievement
Three licensing transactions resulted in the receipt of
significant funds during 2004. Financial position further
strengthened by the Placing and Open Offer which raised
£30.3 million early in 2005. Chief Executive Officer’s review of operations continued
06
Vernalis plc Annual report and accounts 2004
Overview
Frovatriptan
Our most important asset is our 
product for the treatment of migraine,
frovatriptan. The licensing agreement
with Endo Pharmaceuticals, one of 
the leading speciality pharmaceutical
companies in the US in the area of 
pain management, was recognised
within the industry as being truly
innovative, evidenced by winning 
the BioBusiness Network Innovative
Partnership 2004 from Worldwide
Business Research and Pharmalicensing.
Under the terms of the agreement,
Vernalis could receive more than 
$400 million in upfront and milestone
payments, of which $60 million is
unconditional. Vernalis also received 
a $50 million, five-year loan facility,
which allowed us to pay our outstanding
obligations to Elan Corporation plc
related to the re-acquisition of
frovatriptan earlier in the year. While 
the financial aspects of the collaboration
are very important, the major benefit 
is having a strong partner who is as
committed as we are to the product.
Endo has expanded its sales force and
has recently re-launched frovatriptan as
an acute treatment for migraine with a
revised marketing focus on the benefits
of the product’s long duration of action.
We believe frovatriptan’s long half-life 
of 26 hours, over four times longer 
than any other triptan, results in the
lowest headache recurrence rate in the
triptan class and also makes it an ideal
candidate for prophylactic use, an area
where there are currently no approved
treatments. Frovatriptan is currently in
development for this distinct use in the
menstrually-related migraine indication
and is expected to complete Phase III
trials later this year. 
In last year’s report we highlighted how Vernalis had embarked on a new
strategy to assemble the assets in order to become one of Europe’s leading
biotechnology companies.
We are pleased to report that 2004 was a year when we concluded the initial
consolidation of the Company that was started in 2003 and, through this
restructuring, we have seen our cost base reduced substantially. We have 
also strengthened the financial position of the organisation by securing three
substantial commercial collaborations, and, in early 2005, by successfully
completing a secondary financing raising over £30 million. Over the year we 
have seen our share price strengthen significantly, which is an outstanding
achievement, especially given the tough investment climate experienced by 
the entire industry last year. We believe we now have the strong foundation 
on which to build towards our goal of becoming a sustainable, self-funding, 
R&D-driven biotechnology company. 07
Vernalis plc Annual report and accounts 2004
Building towards a fully integrated
biopharmaceutical company
From its strengthened position, in 2005
Vernalis plans to progress towards its
ambition of building a fully-integrated
biopharmaceutical company and will
continue to drive the Company’s
existing product portfolio. A very
exciting part of the agreement with
Endo is the option for Vernalis to
establish its own speciality neurology
sales force to co-promote frovatriptan 
in the US alongside Endo. In February
2005, Vernalis exercised this option,
and Endo will provide funding for a
Vernalis sales team of up to 25
speciality neurology sales representatives
for up to five years, beginning 1 January
2006. This sales team has the
opportunity to market other prospective 
central nervous system products, 
in addition to frovatriptan, and will
establish Vernalis’ commercial
operations in North America for the
future sale of pharmaceuticals.
We see the establishment of a US 
sales and marketing infrastructure as
an important step forward in Vernalis’
growth. Not only does the US market
contribute more than 50 per cent of all
world pharmaceutical sales in a single
market, but it also provides opportunities
to strengthen our clinical pipeline in 
the areas of central nervous system
disorders and oncology and grow
through further merger and acquisition
activity. A US commercial presence will
also increase our visibility with the
North American investment community. 
Summary
Vernalis is recognised as one of
Europe’s leading biotechnology
companies, with a marketed product, 
a healthy pipeline of viable product
candidate assets, and a management
team dedicated to achieving our stated
goals, including strategic deal making
with experienced and credible partners. 
Frovatriptan
Frovatriptan
V10153
V2006
V140
MEI
5-HT 2C agonists
A 2A antagonists
Hsp90 inhibitors
CB 1
Acute treatment of migraine
Menstrual migraine
Thrombotic disorders
Parkinson’s disease
Cancer pain
Inflammation
Obesity 
Depression
Cancer
Obesity
Endo (US)
Menarini (Europe)
–
Biogen Idec
Serono
–
Late
research
Pre-
clinical
Phase I Phase II Phase III Market Partner Product Indication
Portfolio review:
Key products and programmes:
Roche
–
Novartis
–
Endo (US)
Menarini (Europe) Chief Executive Officer’s review of operations 
08
Vernalis plc
Following the re-licensing of frovatriptan to Endo Pharmaceuticals, the 
migraine drug has been re-launched with a new marketing focus on its long
duration of action resulting from its distinctive long half-life. Frovatriptan is
clearly differentiated from other triptans by this extended half-life which makes 
it an ideal candidate for prophylactic use in menstrually-related migraine.
Relaunched
&
Distinctive
   Objective

Achievement



09
Vernalis plc Chief Executive Officer’s review of operations continued
10
Vernalis plc Annual report and accounts 2004
Marketed product 
Frovatriptan is a selective 5-HT
1B/1D
receptor agonist approved as an acute
oral treatment for migraine headache
and its associated symptoms. It is one
of a class of prescription drugs called
triptans, a number of which are already
approved for this indication. 
Frovatriptan was launched in the United
States in June 2002 and, until May
2004 was marketed as Frova™ by a
combined sales force from Elan and its
co-promotion partner UCB. In May 2004,
Vernalis re-acquired the North American
rights to frovatriptan from Elan for a total
of $50 million payable in instalments
over the period to 31 December 2005
(subsequently renegotiated to $44 million
which was settled during the year). 
In August 2004, Vernalis re-licensed
frovatriptan to Endo Pharmaceuticals.
Under the terms of the licence
agreement, Endo will make unconditional
payments totalling $60 million to
Vernalis, including $30 million which
was paid at closing and two further
payments of $15 million on the first
and second anniversary of closing.
Endo will also make various milestone
payments to Vernalis upon the
achievement of certain sales thresholds
starting with a milestone of $10 million
upon reaching $200 million net annual
sales. Starting on 1 January 2007 , Endo
will make royalty payments to Vernalis
which will be tiered from 20 per cent or
higher if FDA approval of the menstrually-
related migraine indication is obtained.
In 2004, net sales of frovatriptan in the
US amounted to $33.3 million and in
February 2005 Endo re-launched the
product with an expanded sales force
and a revised marketing focus on the
benefits of a long duration of action. 
Also in February 2005, Vernalis
exercised its option to co-promote
frovatriptan alongside Endo, and 
Endo will substantially fund the Vernalis
sales team of up to 25 speciality
neurology sales representatives for 
up to five years, beginning 1 January
2006. This sales team has the
opportunity to market other prospective
central nervous system products 
in addition to frovatriptan, and will
establish Vernalis’ commercial
operations in North America for 
the future sale of pharmaceuticals.
In Europe, frovatriptan is marketed 
by Menarini in Italy, Germany, Austria,
Ireland, Spain, Greece, Holland, and 
the UK. In Germany where frovatriptan
is marketed as Allegro®, the drug’s
share of the overall triptan market is
approximately 10 per cent. Frovatriptan
is approved in an additional 18
European territories, as well as five 
Key point of differentiation Long half-life – Low recurrence
Plasma half-life (h)
Frovatriptan 2.5mg
Sumatriptan 6mg (sc)
Rizatriptan 10mg
Sumatriptan 100mg
Zolmitriptan 2.5mg
Eletriptan 80mg
Almotriptan 12.5mg
Naratriptan 2.5mg
Recurrence (%)
0
5 10 15 20 25
10
20
30
40
50
0 30 11
Vernalis plc Annual report and accounts 2004
Central American countries and is
expected to be launched in a number 
of these in 2005. 
In September 2004, frovatriptan was
granted approval in Canada for the
treatment of acute migraine. The
approval follows a successful dialogue
with the Canadian Health Authorities
regarding the product label, a necessary
step prior to initiation of the national
pricing approval. In the same month,
Vernalis signed an agreement with SK
Chemicals Co. granting them exclusive
distribution rights to frovatriptan in the
Korean market. Vernalis received an
upfront payment and is due a further
payment if Korean marketing authorisation
is obtained, in addition to revenues
from future product supply.
R&D operations
development pipeline
Frovatriptan – clinical development in
menstrually-related migraine. Vernalis
is currently conducting further studies
to develop frovatriptan as a prophylactic
oral treatment for menstrually-related
migraine, a form of migraine suffered by
over 50 per cent of female migraineurs.
In the United States this represents
approximately 13 million women. None
of the triptan class of drugs is currently
approved for prophylactic use in
migraine. Frovatriptan’s long half-life
(approximately 26 hours) makes it
ideally suited to this novel application.
In October 2002, Vernalis reported
positive preliminary results from a study
conducted at 36 clinics in the US and
involving more than 500 menstrual
migraine sufferers. Patients were
evaluated over three menstrual cycles
over the course of which each patient
received all three dose regimens –
placebo, 2.5mg frovatriptan once daily
and 2.5mg frovatriptan twice daily.
During each cycle they took the
treatment for a total of six days
commencing two days before the
expected onset of their headache. 
The results showed that both once- and
twice-daily dose regimens of frovatriptan
were highly effective in reducing the
incidence, severity and duration of
menstrually-related migraines compared
with placebo. By the intention-to-treat
analysis, 51 per cent of patients were
completely headache-free during the 
six-day period when they took 2.5mg
frovatriptan twice daily and 40 per cent
were headache-free at a once-daily dose
of 2.5mg, compared with only 26 per
cent on placebo. The results of the
study were presented to the American
Academy of Neurology in the US in April
2003, and have been published in key
scientific journals, including the July
2004 edition of Neurology.
Two further trials are required to
complete the data package for a
supplemental New Drug Approval
application in the US to permit
frovatriptan to be marketed as a short-
term prophylaxis for menstrually-related
migraine. The first, a long-term safety
study in 550 patients, is fully recruited
and is expected to complete in H2
2005. An interim analysis of the six-
month data from this study will be
published in Q2 2005. The second, 
a 600 patient study to confirm the
efficacy observed in the initial study,
commenced in Q4 2004, with
recruitment ongoing and is expected to
complete H2 2005. If the positive initial
results are confirmed, these studies
should lead to regulatory submissions
in the US and Europe in 2006. On FDA
approval of the menstrually-related
migraine indication, Endo will make 
an additional payment of $40 million 
to Vernalis.
V10153 is a recombinant protein
designed to dissolve blood clots and
therefore to improve the treatment 
of diseases such as stroke, acute
myocardial infarction (AMI) and deep
vein thrombosis (DVT). The drug has 
been designed in such a way that it 
only becomes active in the presence 
of newly-formed or forming bloodclots. 
This may be important in helping 
to overcome the major drawback 
of existing thrombolytic agents, that 
of internal bleeding. Conditions such 
as stroke may be under-treated 
because of this risk, particularly
intracranial haemorrhage. 
V10153 was initially evaluated by a
consortium of cardiologists in the US
and Europe (the TIMI Study Group) in 
a Phase IIa ascending dose study to
establish proof-of-concept (i.e. that it
can dissolve clots and restore coronary
bloodflow) in patients who have
suffered AMI. The study also evaluated
the safety of treatment with V10153,
especially with respect to bleeding.
This study has now successfully
completed. V10153 was well 
tolerated throughout the dose range 
of 1-10mg/kg by patients with AMI. 
Full restoration of blood flow was
observed in blocked coronary arteries 
in around 40 per cent of patients after
60 minutes following doses of 5mg/kg
and greater. This is comparable to the
efficacy reported for other marketed
thrombolytic therapies using a similar
experimental protocol. 
The next stage in the development of
V10153 is to conduct a Phase II clinical
trial in approximately 150 patients 
with acute ischaemic stroke, which is
expected to start in H1 2005. Vernalis
wishes to retain the full value of this
product and plans to undertake these
trials alone. In parallel, work is being
undertaken to improve the production
process prior to manufacturing material
for Phase III studies.
Studies suggest menstruation acts as a trigger 
for more than half of women who suffer from
migraine attacks. Chief Executive Officer’s review of operations 
12
Vernalis plc
Objective


Achievement



Vernalis has a marketed product and five competitive products in clinical
development. The two significant deals with Novartis and Biogen Idec served 
to endorse Vernalis’ scientific expertise and the Company continues to drive its
internal programmes as well as progress the establishment of a United States
sales and marketing infrastructure.
Resolute
&
Driven 13
Vernalis plc Chief Executive Officer’s review of operations continued
14
Vernalis plc Annual report and accounts 2004
V2006 is an adenosine A
2A 
receptor
antagonist. Vernalis initiated research 
in 1998 to assess the potential of
selective adenosine A
2A
receptor
antagonists in the chronic treatment 
of Parkinson’s disease, a debilitating
and progressive movement disorder 
that affects approximately one per cent
of the population over 65 or about 
1.5 million people in the United States. 
Adenosine is a brain chemical that plays
an important role in motor co-ordination
and movement control. Vernalis believes
that by using selective adenosine A
2A
receptor antagonists to restore the
imbalance of neurotransmitters caused
by the loss of dopamine, it may provide
a novel approach to treat the symptoms
of Parkinson’s disease and to slow or
stop the progression of the disease. 
In particular, A
2A
receptor antagonists
may be able to restore function in
Parkinson’s disease patients without
inducing unwanted side effects such 
as nausea and dyskinesia (uncontrolled
movements). 
V2006 is the first development
compound from this research
programme. An initial Phase I study of
V2006, a single ascending dose study
in healthy male volunteers designed 
to investigate the drug’s safety and
pharmacokinetics, has been successfully
completed. The drug was shown to be
safe and well tolerated in this study,
achieving potentially therapeutic
concentrations at the lowest dose
tested. The long plasma half-life 
(18 hours) of V2006 in normal 
subjects would be consistent with 
a simple, once-daily dosing regimen.
The Phase I programme for V2006
continues, with the goal to begin 
a Phase II proof-of-concept study 
in H2 2005.
In June 2004 Vernalis entered into an
agreement with Biogen Idec, giving them
exclusive worldwide rights to develop
and commercialise Vernalis’ lead
compound, V2006. At the time of
signing, Vernalis received a $10 million
licence fee, with Biogen Idec also
making a $6 million investment in new
Vernalis shares. Biogen Idec are funding
all the clinical development with Vernalis
receiving a series of further payments
of up to $100 million if programme
milestones are met, and double-digit
royalties on commercial sales of
collaboration products. Vernalis retains
the right to co-promote the product 
in the United States.
V140 is a GABA
A
agonist targeted 
at the treatment of pain in cancer
patients. It was in-licensed from
Monash University, Melbourne,
Australia, and was previously tested 
in patients in an open-label pilot study
conducted in Australia under the Clinical
Trial Notification (CTN) Scheme. In this
study, indications of analgesic efficacy
were seen in patients who received a
single dose of V140 after orthopaedic
knee surgery with no sedative side
effects. V140 presents an opportunity
to be used alongside, or as a
replacement for, current opiate-based
pain therapies. Preliminary pre-clinical
studies indicate that V140 is capable 
of providing an improved profile over
current therapies since it is expected 
to produce non-sedating analgesia. 
An initial Phase I clinical programme 
to evaluate V140’s safety and
pharmacokinetic properties in single
and multiple dose studies found the
compound to be safe and well tolerated
in single and multiple doses. Subject 
to the satisfactory completion of further
pre-clinical studies it is intended to
evaluate V140 in a Phase II proof-of-
concept trial, which is expected to start
in H1 2005. This will investigate the
opiate-sparing and analgesic efficacy
and safety in patients undergoing
elective total knee replacement surgery.
MMPI In October 2000, Vernalis
entered into a research collaboration
with Serono to identify new compounds
for clinical development for the
treatment of inflammatory diseases.
Following successful completion of 
the research collaboration, all further
activities will be conducted by Serono.
In January 2005 Serono started a
Phase I clinical trial of a selective
inhibitor of MMP-12 (matrix
metalloprotease inhibitor 12). This 
is the first compound to enter the 
clinic resulting from the research
collaboration, entitling Vernalis, 
under the terms of the agreement, 
to a milestone payment. The Phase I 
trial is being performed in healthy
volunteers, with a primary objective 
of elucidating the safety, tolerability 
and pharmacokinetic properties of 
the compound. Serono will conduct 
and fund all development activities
associated with any programme that
enters the clinic, with Vernalis receiving
milestone payments and royalties 
upon successful commercialisation 
of any product. 
Vernalis is working towards making a difference
in patients’ lives. 15
Vernalis plc Annual report and accounts 2004
Research programmes
Oncology Our principal research
programme in oncology is aimed at
developing a synthetic small-molecule
inhibitor of Hsp90, a drug target
predicted to have relevance to 
a broad range of cancer types. 
The scientific rationale for Hsp90 as 
a therapeutic cancer target is based 
on the hypothesis that many of the
signalling proteins that behave aberrantly
in cancer cells require Hsp90 as a
chaperone molecule to ensure that 
they are maintained in an active form.
Inhibition of Hsp90 results in interference
in multiple signalling pathways that
mediate cancer growth and cell survival. 
Vernalis has been optimising small
molecule compounds which inhibit the
ATPase function of Hsp90 and has filed
patent applications in this area. The
project is in the lead optimisation phase
and is scheduled to identify a pre-clinical
development candidate in H2 2005. 
In December 2003, Vernalis formed 
a new research collaboration with the
Novartis Institutes for BioMedical
Research, Inc. (Novartis) in Cambridge,
Massachusetts to investigate inhibitors
of Hsp90. Under the terms of the
agreement Vernalis provided elements
of its ongoing oncology research 
to Novartis for an initial six-month
evaluation period. In August 2004,
Novartis chose to exercise its option 
to license exclusive worldwide rights to
Hsp90, with the companies conducting
a joint research programme under which
Novartis will provide research funding to
Vernalis over an initial three-year period.
Novartis is responsible for funding and
conducting the pre-clinical and clinical
development of product candidates, and
for commercialisation. Novartis paid
Vernalis an initial fee under the licence
agreement of $1.5 million and made 
an equity investment of $9 million.
Obesity Vernalis’ research into
treatments for obesity and related
disorders is in two fields: the potential
use of selective 5-HT
2C
receptor
agonists; and the potential of CB
1
receptor antagonists. The World Health
Organisation (WHO) has declared
obesity as the largest global chronic
health problem in adults. Indeed, 
by 2025, WHO estimates that obesity 
will emerge as a more serious world
problem than malnutrition. 
Vernalis scientists discovered that 
5-HT
2C
is a key receptor for controlling
satiety. This was a significant finding
since it is known that 5-HT
2C
receptors
are present in high density in the brain
(in particular in areas that control
eating) but not in the cardiovascular
system. Hence, adverse effects seen
with older obesity drugs (due to their
non-selective activity across a variety 
of 5-HT receptors) may be avoided with
a selective 5-HT
2C
receptor agonist. 
In 1999, Vernalis partnered its 5-HT
2C
programme with Roche, the world’s
leading pharmaceutical company in
sales of prescription treatments for
obesity. A development candidate 
has been selected by Roche which 
is currently undergoing pre-clinical
studies. If pre-clinical testing 
is successful, further development
would be undertaken by Roche.
In our other obesity research
programme, we are aiming to develop
potent and selective cannabinoid CB
1
receptor antagonists. Currently, two
cannabinoid receptors have been
described: the CB
1
receptor, which is
distributed widely in the central nervous
system; and the CB
2
receptor which 
is generally localised in the periphery
(e.g. immune cells). Clinical studies with
Sanofi’s compound rimonabant, support
the hypothesis that CB
1
receptor
antagonists have potential utility for 
the treatment of obesity. A focused
medicinal chemistry programme has
rapidly identified novel, selective CB
1
receptor antagonists with oral efficacy
in pre-clinical feeding models. 
Infection In August 2002, Vernalis
entered into a collaboration with
GeneSoft Pharmaceuticals Inc 
(now part of Oscient Pharmaceuticals
Corp.) to discover and develop novel 
anti-infectives based on Vernalis’
proprietary anti-bacterial PDF and other
metalloenzyme inhibitors. In October
2003 Vernalis’ peptide deformylase
inhibitor research programme in the
antibiotic field was out-licensed to
Oscient in its entirety. Under this 
out-licensing agreement, Oscient 
has assumed responsibility for all
further research and development, 
with Vernalis receiving milestone and
royalty payments if products progress
through development and to market.
Simon Sturge
Chief Executive Officer
Vernalis supports open and interactive exchanges
with both its employees and its partners.
Much of the science supporting the Company’s
research activities is performed at Vernalis’
modern laboratories in Winnersh and Cambridge. Financial review
16
Vernalis plc Annual report and accounts 2004
Profit and loss account
The loss for the year ended 31
December 2004 was £29.2 million
(eight months ended 31 December
2003: £34.2 million). This is mainly due
to the impact of increased revenues and
a reduced cost base, offset by one-off
costs associated with collaborations
concluded and an increase in long-term
provisions in the year. 
Turnover was £15.2 million (eight
months ended 31 December 2003:
£8.6 million) and comprised £10.0
million in respect of frovatriptan product
sales and royalties (2003: £2.4 million)
and £5.2 million in respect of revenue
recognised under collaboration and
similar agreements (2003: £6.0
million). In 2004, the frovatriptan
income of £10.0 million comprised
European-generated revenues of £2.0
million and North American revenues of
£8.0 million. North American revenues
consisted of royalties of £0.6 million for
the period to 18 May 2004 and product
sales of £7.4 million for the period 
from 19 May 2004 to 17 August 2004.
Cost of sales amounted to £2.9 million
(2003: £0.2 million) and comprised
£0.9 million on European sales and
£2.0 million on North American sales
(including £1.7 million of stock sold
directly to Endo at nil margin).
Research and development expenditure
decreased to £24.4 million (eight
months ended 31 December 2003:
£26.9 million). In 2004, expenditure 
of £17.2 million (2003: £18.1 million)
was incurred on internally funded R&D
and £7.2 million (2003: £7.0 million) 
on external costs associated with
development of the product portfolio. 
In addition in 2003, there was a loss 
on disposal of intangible assets of 
£1.8 million following the portfolio
review. The significant reduction on
internal expenditure results from the
cost-saving initiatives implemented
following the business combinations 
in 2003. 
Selling, general and administrative
expenses increased to £18.6 million
(eight months ended 31 December
2003: £10.9 million) and comprised
goodwill amortisation of £4.4 million
(2003: £3.0 million), restructuring costs
of £1.5 million (2003: £2.3 million),
sales and marketing costs associated
with frovatriptan of £1.3 million (2003:
£nil), professional fees associated with
collaborations of £1.1 million (2003:
£0.1 million), an increase in the provision
for vacant leases of £4.4 million 
(2003: £1.6 million) and other costs 
of £5.9 million (2003: £4.0 million). 
As a result, the operating loss was
increased to £30.7 million (eight
months ended 31 December 2003:
£29.4 million). 
The loss on disposal of fixed assets of
£0.8 million (2003: £3.0 million) related
to the Oxford facility which was sold for
£3.3 million, in October 2004. 
In the eight months ended 31 December
2003, merger transaction expenses of
£5.4 million were charged to the profit
and loss account in relation to the
combination of British Biotech and
Vernalis Group for which there are no
comparable amounts in the current year.
The benefits of earlier restructuring have been realised with a significant
reduction to operating costs. Cash and short-term investments increased 
during the year to £33.3 million, due to receipts from collaborative partners. 
In March 2005 £30.3 million was raised, further strengthening the cash 
position of the Company.
As a result of the change in accounting
reference date implemented last year,
comparisons are made between the
results for the 12 months ended 
31 December 2004 and eight months
ended 31 December 2003. Balance
sheet amounts at 31 December 2004
are compared with the amounts at 
31 December 2003. 17
Vernalis plc Annual report and accounts 2004
Interest receivable and similar income
increased to £2.9 million (eight months
ended December 2003: £2.3 million)
and comprised bank interest of 
£0.7 million (2003: £1.1 million),
exchange gains on loans and other
creditors of £1.7 million (2003: £1.2
million), and an implicit interest receipt
of £0.5 million (2003: £nil) relating 
to the fair value accounting for the
accrued income of $30 million due 
from Endo. Interest payable increased
to £2.2 million (eight months ended 
31 December 2003: £0.5 million) and
comprised loan interest of £0.9 million
(2003: £0.4 million), finance lease
charges of £0.1 million (2003: 
£0.1 million), an exchange loss on the
accrued income of $30 million due from
Endo of £0.7 million (2003: £nil) and
an implicit finance charge of £0.5
million (2003: £nil) in respect of the
deferred consideration that was payable
to Elan. The increase in loan interest
principally arises due to the draw-down
of the $50 million loan from Endo in
August 2004 and the final settlement
payment for the mortgage on the Oxford
facility in October 2004. Amounts
written off investments in collaborators
reduced to £0.1 million (December
2003: £0.9 million).
The tax credit of £1.8 million (eight
months ended 31 December 2003:
£2.6 million) represents amounts that
are expected to be received under
current legislation on research and
development tax credits for small- 
and medium-sized companies. 
Balance sheet 
Intangible assets increased to £37.0
million (2003: £22.9 million) and
comprised goodwill of £3.6 million and
other intangibles of £33.4 million. The
increase is due to the re-acquisition of
the North American rights to frovatriptan
from Elan. Tangible assets decreased to
£1.6 million (2003: £7.5 million) following
the disposal of the Oxford facility.
Debtors increased to £27.8 million
(December 2003: £11.0 million) with the
principal amounts being £15.2 million
(2003: £nil) of other debtors due from
Endo and £6.4 million (2003: £5.8 million)
in respect of research and development
tax credits. The amount due from 
Endo arises from the re-licensing of 
the North American rights to frovatriptan
in August 2004 and relates to the two
unconditional payments of $15 million
due in August 2005 and August 2006
respectively.
Cash and short-term investments were
£33.3 million (2003: £24.2 million), 
an increase of £9.1 million. The cash
movement for the year was significantly
impacted by the transactions with Elan,
Endo, Biogen Idec and Novartis.
Significant receipts during the year
included: the $30 million signature fee
from Endo in respect of the re-licensing
of frovatriptan; the draw-down of the
$50 million loan from Endo; the $10
million signature fee and $6 million
equity investment from Biogen Idec; 
and the $9 million equity investment
and $1.5 million signature fee from
Novartis. Significant payments during
the year included $48.5 million paid to
Elan to re-acquire the North American
rights to frovatriptan. This comprised
$44 million for the re-acquisition of the
rights ($50 million less $6 million following
renegotiation of the consideration in
August 2004) and $4.5 million for
inventory. In addition, payments of 
£5.5 million ($10 million) were made 
to GSK in respect of the deferred
consideration under the agreement to
buy out royalties due to GSK on sales
of frovatriptan. Further payments
relating to restructuring costs, one-off
professional fees associated with the
above transactions and sales and
marketing support for frovatriptan 
in the period May to August 2004
amounted to £4.5 million.
Creditors falling due within one year
decreased to £16.1 million (December
2003: £19.8 million) of which £4.8
million related to deferred revenue and
therefore has no future cash impact.
The balance at 31 December 2004
included £2.6 million (December 2003:
£5.8 million) due to GSK, and trade
creditors and accruals. 
Creditors falling due after more than
one year increased to £60.3 million
(2003: £8.1 million) due principally 
to the $50 million (£26.4 million) 
long-term loan received from Endo 
in the year (repayable in August 2009)
and £31.3 million (December 2003: 
£1.3 million) of deferred income
resulting from the licensing deals with
Endo, Biogen Idec and Novartis, where
the revenue is being recognised over
the expected life of the contracts. 
A payment of £1.6 million was made 
to redeem the mortgage on the Oxford
facility when it was sold for £3.3 million
in October 2004.
Provisions for liabilities and charges
increased to £10.5 million (2003: 
£4.1 million) of which £7.4 million
(2003: £3.4 million) relates to onerous
commitments on leased properties 
and £3.0 million (2003: £nil) relates 
to expected returns and rebates in
relation to frovatriptan sales in the 
US prior to August 2004.
Cash flow
Net cash inflow from operations was
£2.1 million (eight months ended 
31 December 2003: outflow of 
£34.1 million). This was principally due
to an operating loss of £30.7 million
and an increase in debtors of 
£16.2 million offset by amortisation 
of £7.1 million, an increase in deferred
income of £35.3 million, depreciation
and tangible fixed asset write-offs 
of £2.3 million and other movements 
of £4.3 million.
Capital expenditure for the year 
was £27.4 million (2003: £nil) due
principally to payments of £5.4 million
to GSK and £25.1 million to re-acquire
the North American rights to frovatriptan
from Elan and offset by the sale of the
Oxford facility for £3.3 million. There
was an inflow of financing in the year 
of £33.6 million, (eight months ended
31 December 2003: £6.5 million), due
principally to the receipt of the loan
from Endo of £27.5 million, and equity
issues of £8.3 million, offset by the
repayment of the mortgage on the
Oxford property of £1.4 million. 
Tony Weir
Chief Financial Officer Board of Directors
18
Vernalis plc Annual report and accounts 2004
is a Fellow of the Royal College of
Physicians and a Fellow of the Faculty 
of Pharmaceutical Medicine in London. 
John Slater (52)
Mr Slater was appointed to the Board 
in November 2004 as General Counsel
and Company Secretary and has
responsibility for all legal and business
development activities. A solicitor, 
Mr Slater joined the Company from
Celltech Group plc where he was
Director of Legal Services and Company
Secretary for the previous 15 years.
Prior to that he held legal and
commercial roles in a number of high-
technology multinational companies.
George Kennedy (64) * † ‡
Mr Kennedy was appointed as Deputy
Chairman and Senior Independent
Director on 1 September 2003. He 
was Non-Executive Chairman of Vernalis
Group plc from May 2000. He was
previously with Smiths Industries PLC
from 1973 to 2000, where he was
appointed to the Board in 1983,
becoming Executive Director and
Chairman of the Medical Division. 
His other current appointments include
Non-Executive Chairman of Carclo plc
and E2V plc; Chairman of the Inprint
Group, a privately held specialist printing
company; Chairman of Eschmann
Holdings Limited, a manufacturer of
medical equipment; and Non-Executive
Director of Isotron plc. From August
2000 to December 2003 he was
Chairman of the Trade Advisory Group
for Africa and the Middle East. He was
awarded a CBE in 1997 for services 
to the healthcare industry and exports. 
Peter Fellner (61) ‡
Dr Fellner was appointed as Chairman 
in January 2003, and as Executive
Chairman in April 2003. He was
Chairman of Celltech Group plc from
2003 until its acquisition in 2004,
having previously been Chief Executive
Officer since 1990. Before joining
Celltech he was Chief Executive Officer
of Roche UK from 1986 to 1990. Prior
to this he was Director of the Roche 
UK Research Centre. Dr Fellner is also
Chairman of two private biotechnology
companies, Astex Technology Ltd and
Ionix Pharmaceuticals Ltd. In addition he
serves as a Director of QinetiQ Group plc
and Isis Innovation Ltd, and is a Director-
designate of UCB SA. He is a member 
of the Medical Research Council. 
Simon Sturge (46) ‡
Mr Sturge was appointed to the Board
as Chief Executive Officer in April 2003.
He has more than 20 years’ experience
in the pharmaceutical industry. After
graduating in biology from Sussex
University in 1980 Mr Sturge became
Product Manager of Napp Laboratories,
Head of Sales and Marketing at Portex,
and Business Development Manager 
at Astra Pharmaceuticals. He joined
Celltech in 1988 and was appointed
Chief Executive of Celltech Biologics plc
(now Lonza Biologics plc) in 1995 before
joining RiboTargets Holdings plc as 
Chief Executive Officer. He founded
RiboTargets in July 1997 when it was
spun out from the Medical Research
Council’s Laboratory of Molecular
Biology with a £7 million venture
capital investment. 
Tony Weir (44)
Mr Weir has a degree in mathematics
from Oxford University and is a Fellow 
of the Institute of Chartered Accountants.
Following qualification he advised a
variety of businesses as a financial
consultant, joining British Biotech in
1990 as Chief Accountant and Company
Secretary. In April 1999 he was
promoted to the Board as Finance
Director with responsibility for Finance,
Corporate Communications, Facilities
and IT. Following the combinations with
RiboTargets and Vernalis Group plc he
continues as Chief Financial Officer. 
John Hutchison (49)
Dr Hutchison was appointed as
Development Director on 1 September
2003 following the merger with Vernalis
Group plc. Prior to that he was Senior
Vice President Development and Chief
Medical Officer of Vernalis Group plc. 
In February 2000 he was appointed a
Director of Vernalis Group plc, where he
was responsible for drug development,
taking potential new therapies from early
pre-clinical testing through to registration
and commercialisation. He was
previously a main Board Director of
Cerebrus where he was also responsible
for drug development since joining the
company in 1997. Dr Hutchison began 
his industrial career 15 years ago as 
a clinical pharmacologist with Fisons,
before moving to Experimental Medicine
with Astra Pharmaceuticals Ltd. In
addition to being a UK registered
physician, Dr Hutchison has a first class
Honours degree in human physiology
and a PhD in neuroscience from the
University of Liverpool. Dr Hutchison  19
Vernalis plc Annual report and accounts 2004
Facing page from left: 
Peter Fellner
Simon Sturge
Tony Weir
John Hutchison
John Slater
This page from left:
George Kennedy
Carol Ferguson
Keith Merrifield
Peter Read
Allan Baxter
Carol Ferguson (58) * 
Carol Ferguson was appointed as a 
Non-Executive Director on 1 September
2003. She joined the Board of Vernalis
Group plc as a Non-Executive Director in
May 2002. She began her investment
career with Ivory and Sime, an
Edinburgh fund management group.
Thereafter she moved to Wood
Mackenzie, then a stock broking
company, becoming a partner in 1984.
Her most recent position was as
Finance Director for Timney Fowler, 
a textiles company. Her current
appointments include the Dental
Practice Board, where she is a 
Non-Executive Director and chairs the
Audit Committee, and the Chartered
Accountants Compensation Scheme
where she is a Non-Executive Director.
She is also a Non-Executive Director 
of Gartmore Smaller Companies
Investment Trust plc, Monks Investment
Trust plc, Merrill Lynch Greater Europe
Investment Trust plc and the
Association of Investment Trusts
Companies. Ms Ferguson has a Masters
degree in philosophy and economics
from St Andrews University and was
admitted as a member of the Institute
of Chartered Accountants of Scotland 
in 1973. 
Keith Merrifield (62) † ‡
Mr Merrifield was appointed to the
Board in 1995. He was formerly a 
main Board Director of Wellcome plc
from 1990 until its acquisition in 
1995 by Glaxo Holdings plc, with
responsibility for marketing and
international operations. Until May
2003, Mr Merrifield was also a 
Non-Executive Director of Coats plc. 
Peter Read (66) * † ‡
Dr Read was appointed as a Non-
Executive Director on 1 September
2003. He joined the Board of Vernalis
Group plc as a Non-Executive Director 
in March 1998. He is a former Chairman
of the Hoechst Group of Companies 
in the UK and a past President of the
Association of the British Pharmaceutical
Industry. Current appointments include
Non-Executive directorships of each of
SSL International plc and Innogenetics
Group. He is a Board member of the
South East England Development 
Agency and is a Fellow of the Royal
College of Physicians and of the Faculty
of Pharmaceutical Medicine. In January
2000 he was awarded a CBE for
services to the pharmaceutical industry. 
Allan Baxter (55) * 
Dr Baxter was appointed as a Non-
Executive Director on 19 May 2004. 
He is also Senior Vice President, Drug
Discovery at GlaxoSmithKline with
responsibility for GlaxoSmithKline’s
world-wide drug discovery effort,
including the clinical development 
of new product candidates through 
to proof-of-concept studies.
Board changes 
During the year Ian Kent, Eugene Williams 
and Peter Worrall retired from the Board and
John Slater and Allan Baxter were appointed.
* Audit Committee
† Remuneration Committee
‡ Nominations and Corporate Governance
Committee Report of the Directors
20
Vernalis plc Annual report and accounts 2004
The Directors are pleased to present their annual report on the affairs of the Group, together with the financial statements 
and auditors’ report, for the year ended 31 December 2004. The remuneration report can be found on pages 29 to 36 and 
the corporate governance report, including the corporate social responsibility statement, can be found on pages 23 to 28.
Principal activities
The principal activities of the Group during the year were pharmaceutical research and development focussed on Central
Nervous System (CNS) disorders and oncology, and the exploitation of its one marketed product, frovatriptan. For further details
regarding the Group’s activities, please refer to the Chairman’s review and Chief Executive Officer’s review of operations.
Key events
Key events during the past year are referred to in the Chairman’s review and the Chief Executive Officer’s review of operations.
These events include the following:
In March 2004 Vernalis announced positive results from an initial Phase II proof-of-concept study of its novel recombinant
thrombolytic protein V10153 in acute myocardial infarction patients.
In March 2004 Vernalis announced positive data from an initial Phase I study of V2006, a novel treatment for Parkinson’s disease.
On 19 May 2004 Vernalis completed the re-acquisition of the North American rights to its marketed product, frovatriptan, 
from Elan Corporation.
On 23 June 2004 Vernalis entered into an agreement with Biogen Idec to advance Vernalis’ adenosine A
2A
receptor 
antagonist programme.
On 9 August 2004 Novartis exercised its option under an agreement executed on 18 December 2003 to license exclusive
worldwide rights to Hsp90 (therapeutic cancer target).
On 17 August 2004 Vernalis completed an agreement to license the North American rights for frovatriptan to Endo Pharmaceuticals Inc.
On 3 September 2004 frovatriptan was granted approval in Canada for the treatment of acute migraine.
On 16 September 2004 Vernalis signed an agreement with SK Chemicals Co granting them exclusive distribution rights 
to frovatriptan in the Korean market.
On 27 September 2004 frovatriptan was launched in Italy.
On 18 October 2004 frovatriptan was launched in Spain.
On 6 December 2004 frovatriptan was launched in Greece.
In October 2004 recruitment started in a confirmatory Phase III frovatriptan efficacy study for the short-term prophylaxis 
of menstrually-related migraine.
Results and dividends
The turnover of the Group during the year ended 31 December 2004 was £15,195,000 (eight months ended 31 December
2003: £8,631,000). The loss after taxation during the year ended 31 December 2004 amounted to £29,209,000 (eight
months ended 31 December 2003: £34,219,000). The Directors do not recommend the payment of a dividend (2003: nil).
Important events since the year end 
On 19 January 2005 Vernalis’ collaborator Serono started a Phase I clinical study of a selective inhibitor of matrix metalloprotease
inhibitor 12.
On 24 February 2005 Vernalis exercised its option under its agreement with Endo Pharmaceuticals Inc. to co-promote
frovatriptan in the US.
On 21 March 2005 shareholders approved the Placing and Open Offer announced on 24 February 2005. This raised £30.3 million
(before expenses) by way of a fully underwritten Placing and Open Offer of 43,250,107 new ordinary shares representing
approximately 27.8 per cent of Vernalis’ existing issued ordinary share capital, full details of which were contained in a circular
(with notice of EGM) sent out to shareholders on 24 February 2005. Trading in the new shares commenced on 22 March 2005,
bringing the total number of shares in issue to 198,950,492.
  21
Vernalis plc Annual report and accounts 2004
On 30 March 2005 Vernalis acquired the intellectual property rights, know-how and associated assets related to an emerging
oncology target, Pin1, from Pintex Pharmaceuticals Inc. Pintex received initial cash payments on signature and transfer of know-
how and, should a drug candidate reach the market, the total cash liability to Pintex would be $6.5 million.
Substantial shareholdings
At 6 April 2005, the Directors had been notified of the following disclosable holdings representing three per cent, or more, 
of the issued share capital of the Company.
Shareholder having a major interest Number of shares held % of issued shares
Invesco Perpetual 55,663,903 27.98
Apax Partners & Co Limited 12,143,679 6.10
Jupiter Asset Management Limited 11,523,912 5.79
Biogen Idec Inc 7,581,673 3.81
Legal & General Investment Management Limited 7,313,720 3.68
Fidelity Investment Services Limited 7,257,496 3.65
Novartis Pharma AG 7,106,344 3.57
Morely Fund Management Limited 6,470,854 3.25
Directors
The Directors of the Company who served during the year were:
Executive
Dr P J Fellner (Executive Chairman) 
Mr S J Sturge (Chief Executive Officer)
Dr J B Hutchison 
Mr J A D Slater (appointed 18 November 2004)
Mr A J Weir
Mr P B Worrall (resigned 29 October 2004) 
Non-Executive
Dr A Baxter (appointed 19 May 2004)
Ms C C Ferguson 
Mr G M Kennedy 
Mr I F Kent (resigned 24 June 2004)
Mr K J Merrifield
Dr P R Read 
Mr E W Williams (resigned 24 June 2004)
Biographical details of the Directors, including those seeking re-election at the forthcoming Annual General Meeting, are set out
on pages 18 and 19. 
Re-election At the forthcoming Annual General Meeting, in accordance with the Company's Articles of Association, Ms Ferguson,
Dr Hutchison, Dr Read and Mr Merrifield will retire. Being eligible, and with the Board’s recommendation, they offer themselves
for re-election. Mr Slater, who has been appointed to the Board since the last Annual General Meeting, will retire. Being eligible,
and with the Board’s recommendation, he offers himself for election. With the exception of Dr Hutchison and Mr Slater, none 
of the Directors retiring have a service contract with the Company.
The Board considers that in evaluating their performance to date, the Non-Executive Directors offering themselves for re-election
continue to make valuable contributions to the Company’s performance and that they carry out their duties in an effective,
independent and constructive manner including commitment of the necessary time for Board and committee meetings and
other duties. In particular, the Board is pleased that Mr Merrifield, who had announced his intention to retire at the end of
2004, has agreed at the Board’s request to continue as a Director for one further year. In recommending Mr Merrifield for 
a further one-year term as a Director, the Board considers that he will provide valuable continuity for the Board during this
period of development and change for the Company and that he will continue to be independent. He meets all the criteria for
independence specified by the Combined Code other than he has now completed nine years’ service as a Non-Executive Director.
Directors’ interests Details of the interests of the Directors and their families in the ordinary shares of the Company, 
as disclosed in the register of Directors’ interests, are given in the remuneration report. 
Charitable and political donations
The Group made no charitable or political donations during the year (2003: nil).  Report of the Directors continued
22
Vernalis plc Annual report and accounts 2004
Employees
Equal opportunities The Group operates an equal opportunities policy. Full consideration is given to all job applicants,
irrespective of gender, age, marital status, disability, sexuality, race, colour, religion, political belief, ethnic or national origin 
or any other conditions not relevant to the performance of the job, who can demonstrate that they have the necessary skills
and abilities. 
Disabled employees With regard to existing employees and those who may become disabled, the Group’s policy is to examine
ways and means to provide continuing employment under its existing terms and conditions and to provide training, and career
development, including promotion, wherever appropriate. All employees accept the commitment within this policy that the Group
will not allow pressure to discriminate or harassment by employees or others acting on the Group’s behalf, in respect of
gender, age, marital status, disability, sexuality, race, colour, religion, political belief, ethnic or national origin or any other
conditions not relevant to the performance of the job, who can demonstrate that they have the necessary skills and abilities. 
Employee involvement The Group believes it is important that employees are aware of the Group’s business strategy and
objectives, to assist them to focus on working towards these goals. Communications at the time of key announcements,
including presentations by Directors to all employees, together with briefings throughout the year, are part of the communication
and consultation programme. In addition, regular meetings are held with staff and managers, both to raise issues and to assist
with the two-way flow of information. The Company has an elected staff consultative group which meets on a regular basis, and
Email and the Company’s intranet site are used to update employees. The Company also actively encourages and financially
supports a wide range of sports and social functions, many of which are organised by the Sports and Social Club. 
Further education, training and development Continuing education, training and development are important to ensure the
future success of the Group. The Group supports individuals who wish to obtain appropriate further education qualifications.
Share option schemes The Directors remain committed to the principle that all employees should be able to participate 
in the Group’s progress through share ownership schemes. Details of the Company’s share option schemes are given on
pages 34 to 36. 
Payment of creditors
The Group does not follow a specific payment code but has a policy to pay its suppliers in accordance with the specific terms
agreed with each supplier. The number of days’ purchases outstanding at 31 December 2004 for the Group was 33 days 
(31 December 2003: 32 days). The Company has negligible trade creditors. 
Auditor
PricewaterhouseCoopers LLP has expressed its willingness to continue in office as auditor and a resolution proposing its 
re-appointment and authorising the Directors to determine its remuneration will be proposed at the Annual General Meeting.
Annual General Meeting
The Notice convening the Annual General Meeting of the Company together with explanatory notes on the proposed resolutions
accompanies this report. The meeting will be held at 11am on Wednesday 25 May 2005 at Barber-Surgeons’ Hall, Monkwell
Square, London EC2Y 5BL. 
International Financial Reporting Standards
In June 2002, the Council of the European Union adopted a regulation requiring listed companies in its member states to
prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Under
this regulation the Group will prepare its first financial statements under IFRS during the year ending 31 December 2005. 
A project to implement the conversion from UK GAAP to IFRS is under way and the Company will report comparative data 
in the interim statement for the six-month period to 30 June 2005.
By order of the Board
JAD Slater 
Company Secretary
12 April 2005 Corporate governance
23
Vernalis plc Annual report and accounts 2004
The Combined Code
The Company is committed to practising good corporate governance of its affairs as part of its management of relationships
with its shareholders and other stakeholders. The Company seeks to uphold and to report on compliance with best practice 
in corporate governance.
Compliance statement
The Directors are satisfied that, other than as disclosed within this report, the Company has complied with the provisions 
set out in Section 1 of the Combined Code on Corporate Governance published in July 2003. During the current financial year
the Board will continue to assess its practices to ensure compliance with the Combined Code on an ongoing basis and will
continue to monitor any changes required to be made to further develop and enhance its governance policies. 
The principles set out in the Combined Code cover four areas: the Board, Directors’ remuneration, accountability and audit and
relations with shareholders. With the exception of Directors’ remuneration (which is dealt with separately in the remuneration
report) the following section sets out how the Board has applied such principles.
The Board 
The Board of the Company is responsible for the Group’s system of corporate governance. As at 31 December 2004, the
Board comprised ten Directors: an Executive Chairman, Dr P J Fellner; a Chief Executive Officer, Mr S J Sturge; three other
Executive Directors and five Non-Executive Directors. The role of Non-Executive Directors is to ensure that independent
judgement is brought to Board deliberations and decisions. The Non-Executive Directors possess a wide range of skills and
experience, relevant to the development of the Company, which complement those of the Executive Directors. 
The Chairman operates in an executive capacity and is not therefore considered to be independent. All Non-Executive Directors
are considered by the Board to be independent. Mr G M Kennedy, the Deputy Chairman, is currently the Company’s Senior
Independent Director. In recommending Mr Merrifield for a further one-year term as a Director, the Board considers that he 
will provide valuable continuity for the Board during this period of development and change for the Company and that he will
continue to be independent. He meets all the criteria for independence specified by the Combined Code other than he has 
now completed nine years’ service as a Non-Executive Director.
All Directors are required to retire and submit themselves for re-election at the first Annual General Meeting after appointment
and, thereafter, at least every three years. Subject to their re-election and Companies Act provisions, the Non-Executive
Directors are appointed for specified terms. 
The Board has agreed procedures for Directors to follow if they believe they require independent professional advice in 
the furtherance of their duties and these procedures allow the Directors to take such advice at the Company’s expense. 
In addition, all the Directors have direct access to the advice and services of the Company Secretary. The Company Secretary,
who is also one of the Executive Directors, is accountable to the Board through the Chairman on governance matters. It is 
the responsibility of the Company Secretary to ensure that Board procedures are followed and all rules and regulations are
complied with. Under the direction of the Chairman, the Company Secretary’s responsibilities include facilitating induction and
professional development and ensuring the smooth flow of information within the Board and its committees, and between Non-
Executive Directors and senior management. Any new Director receives a comprehensive, formal and tailored induction into the
Company’s operations. Appropriate training is provided to new Directors and is also available to other Directors as required.
The Company has arranged Directors’ and Officers’ insurance on behalf of all the Directors.
The terms of reference of the Chairman and Chief Executive Officer have been agreed with the Board and, in accordance with
best practice, their roles remain separate. These terms of reference were reviewed in light of the Chairman assuming executive
responsibilities on 23 April 2003, and were revised further in January 2004. 
As part of its leadership and control of the Company, the Board has agreed a list of items that are specifically reserved for 
its consideration. This list was revised in January 2004. These include business strategy, financing arrangements, material
acquisitions and divestments, approval of the annual budget, major capital expenditure projects, risk management, treasury
policies and establishing and monitoring internal controls. At each meeting, the Board reviews strategy and progress of the
Group towards its objectives, particularly in respect of research and development projects, and monitors financial progress
against budget.
The Board meets on a regular basis approximately every two months, with additional meetings when circumstances and urgent
business dictate. In the financial period under review, nine meetings of the full Board were held. Of these, apologies were
received from: Mr Williams for 15 March meeting; Messrs Williams, Worrall and Dr Baxter for 24 June meeting; Dr Hutchison
for 12 July meeting; and Ms Ferguson for 3 August meeting. Otherwise, meetings were attended by all members. All Directors
receive an agenda and Board papers in advance of meetings to help them make an effective contribution at the meetings.  Corporate governance continued
24
Vernalis plc Annual report and accounts 2004
In addition, the Executive Directors ensure regular informal contact is maintained with Non-Executive Directors. The Board
makes full use of appropriate technology as a means of updating and informing all its members. 
While the Board retains overall responsibility for, and control of, the Company, day-to-day management of the business is
conducted by the Executive Directors. Review of the Group’s principal business activities is the responsibility of the Senior
Executives (comprising the Executive Directors, the Director of Human Resources and the Research Director) who meet weekly.
The Board has agreed a process of establishing a formal and rigorous process for the annual evaluation of its own performance
and that of its committees and individual Directors including the Chairman. The first such evaluation will be completed in 2005.
The Chairman holds meetings with Non-Executive Directors without the presence of Executive Directors as appropriate.
Board committees
In accordance with best practice, the Company has established Audit, Nominations and Corporate Governance, and
Remuneration Committees with written terms of reference for each that deal with their authorities and duties. The full 
terms of reference of all the Committees have been published on the Company’s website.
Audit Committee The Audit Committee is comprised entirely of independent Non-Executive Directors. During the financial period
it was chaired by Mr Kent (until 21 January 2004) and thereafter by Ms Ferguson, who the Board considers has recent and
relevant financial experience. The other current members are Mr Kennedy, Dr Read and Dr Baxter (appointed from 13 September
2004). Mr Williams and Mr Kent resigned on 24 June 2004. The Audit Committee is responsible for reviewing the Group’s
annual accounts and interim reports prior to their submission for approval to the full Board. This Committee also monitors 
the Group’s accounting policies, internal financial control systems and financial reporting procedures. The Audit Committee
provides a forum through which the Group’s external auditor reports to the Board. The auditor attends its meetings and has
the opportunity to meet privately with Committee members in the absence of executive management. In addition, the Audit
Committee monitors the scope and results of the audit, the independence and objectivity of the auditor and its performance,
confirms its re-appointment and agrees the level of audit fees. In order to safeguard auditor objectivity and independence, the
Audit Committee pre-approves any non-audit services to be performed by the auditor. The Audit Committee held eight meetings
during the period under review. Apologies were received from: Messrs Kent and Williams for 15 March meeting; Messrs Kennedy,
Williams and Dr Read for 26 March meeting; Dr Read for 4 May meeting; Mr Williams for 19 May meeting and Dr Baxter for 
18 November meeting. Otherwise, meetings were attended by all members.
The Audit Committee’s terms of reference have recently been amended to provide a process for employees of the Company 
to raise in confidence concerns about possible impropriety in matters of financial reporting or other matters.
The terms of reference of the Audit Committee include the following responsibilities:
• To review the effectiveness of the Company's financial reporting and internal control policies and procedures.
• To review the internal management of financial matters.
• To review annually the need for an internal audit function.
• To consider and make recommendations regarding the appointment of the Company's external auditor including the 
pre-approval of non-audit services.
• To establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting
controls and auditing matters.
• To review the consistency and application of accounting policies.
• To review annual financial statements and interim and preliminary announcements before submission for Board approval.
Nominations and Corporate Governance Committee The Nominations and Corporate Governance Committee is chaired by 
Mr Kennedy. The other current members are Dr Fellner, Mr Sturge, Mr Merrifield and Dr Read. The Committee is responsible 
to the full Board for determining the qualities and experience required of the Company’s Executive and Non-Executive Directors
and for identifying suitable candidates. Both Dr Baxter and Mr Slater, who were appointed to the Board during the year, were
identified and interviewed by Committee members prior to their appointment. In appropriate cases, recruitment consultants
assist in the process. The Committee is also responsible for succession planning and for reviewing, and making recommendations
in relation to, the Company’s corporate governance procedures. The Nominations and Corporate Governance Committee met
four times during the period under review. Apologies were received from Mr Merrifield and Dr Read for 9 and 13 September
meetings. Otherwise, meetings were attended by all members. 25
Vernalis plc Annual report and accounts 2004
The terms of reference of the Nominations and Corporate Governance Committee include the following responsibilities:
• To review the structure, size and composition of the Board.
• To prepare a description of the role and capabilities required for a particular appointment.
• To identify and nominate candidates to fill Board vacancies as and when they arise.
• To satisfy itself with regard to succession planning.
• To keep the effectiveness of the corporate governance and system of internal non-financial controls under regular review.
Remuneration Committee The Remuneration Committee is made up entirely of independent Non-Executive Directors and is
chaired by Mr Merrifield. The other current members are Mr Kennedy and Dr Read, both of whom replaced Mr Williams and 
Mr Kent who resigned on 24 June 2004. The Remuneration Committee determines the terms of service and remuneration 
of the Executive Directors and senior employees. It also determines overall remuneration policy for all other employees and
targets for performance-related pay schemes operated by the Company. The Remuneration Committee held five meetings
during the period under review. Apologies were received from: Messrs Williams and Kent for 15 March meeting; and Dr Read
for 9 September meeting. Otherwise, meetings were attended by all members.
The terms of reference of the Remuneration Committee include the following responsibilities:
• To determine the framework and policy and the individual packages for the remuneration of the Executive Directors, 
Chairman and members of the executive management. 
• To determine targets for any performance-related pay schemes.
• To approve overall remuneration policy.
• To review employee benefit structures.
• To produce an annual report of the Committee's remuneration policy.
Accountability and audit
The Board is responsible for the preparation of financial statements that present a balanced assessment of the Group’s
financial position and prospects. This responsibility is administered primarily by the Audit Committee, the terms of reference 
for which are referred to above. 
Internal controls
The Board is ultimately responsible for establishing and monitoring internal control systems throughout the Group and
reviewing their effectiveness. It recognises that rigorous systems of internal control are critical to the Group’s achievement 
of its business objectives, that those systems are designed to manage rather than eliminate risk and that they can only provide
reasonable and not absolute assurance against material misstatement or loss. 
An ongoing process for identifying, evaluating and managing the significant risks faced by the Group has been in place for 
the financial period under review and up to the date of approval of the annual report and accounts. The effectiveness of the
Group’s internal control systems has been reviewed by the Board during the year. The Audit Committee’s terms of reference
include the review of the Group’s internal financial control systems and the Nominations and Corporate Governance Committee
carries out reviews of the non-financial control systems. Both of these committees are required to report and make
recommendations to the Board on their respective areas. 
Communication and reporting The Group’s strategy and business objectives are communicated to all levels of the
organisation. The Executive Directors hold regular all-employee meetings to exchange information with staff. 
Review of internal controls The Group’s internal controls are regularly reviewed as part of the risk management process. 
The Directors consider that in view of the control procedures in place in the Company, and given the size of the Group’s
operations at this time, it is inappropriate to appoint an internal audit function.
Information Board members and members of the other committees and groups which discuss risk issues are provided with
timely and detailed briefings on relevant matters. 
Human resources The Group endeavours to appoint employees with appropriate skills, knowledge and experience for the 
roles they undertake. The Group has a range of policies which are aimed at retaining and incentivising key staff. Objectives 
are set for departments and employees that are derived from the Group’s business objectives. The Group has a clear and 
well-understood organisational structure and each employee knows his or her line of accountability.  Corporate governance continued
26
Vernalis plc Annual report and accounts 2004
Regulatory framework Documented quality procedures are in place to ensure the maintenance of regulatory compliance. 
These are subject to periodic review to ensure current standards of quality compliance are maintained. A quality group
monitors compliance of contractors to Good Laboratory Practice (GLP), Good Clinical Practice (GCP) and Good Manufacturing
Practice (GMP) through the implementation of a compliance programme for relevant in-house and contracted-out activities. 
A pharmacovigilance contractor is responsible for monitoring and reporting adverse events in support of the Group’s marketed
product and development programmes. These are managed in accordance with formally documented procedures which comply
with current regulatory requirements. 
Announcements All major announcements are approved by the Chairman, the Executive Directors and a panel of senior
executive management and then circulated to the Board prior to issue. The Group also has internal and external checks 
to guard against unauthorised release of information.
Operational reviews The Group has procedures that are designed to ensure that key documents, decision points and
investment decisions are reviewed by the right people. Decision points include each significant clinical development decision.
Financial A comprehensive budgeting system allows managers to submit detailed budgets, which are reviewed and amended 
by Executive Directors prior to submission to the Board for approval. At the mid-year, a forecast is prepared in the same level
of detail as the budget. Actual results against budget and forecast, highlighting variances, are prepared for managers and 
the Board. 
Insurance The Group has reviewed its portfolio of insurance policies with its insurance broker to ensure that the policies are
appropriate to the Group’s activities and exposures. 
Shareholder relations 
The Company reports formally to shareholders twice a year, around February (preliminary announcement of annual results) 
and September (interim statement). The annual report is usually mailed to shareholders in April. Separate announcements 
of all material events are made as necessary.
Regular communications are maintained with institutional shareholders and, in particular, presentations are given to shareholders
when the half-year and full-year financial results are announced. In addition to the Chairman, Chief Executive Officer and Chief
Financial Officer who have regular contact with investors, Mr Kennedy, as Senior Independent Director, is available to meet 
with shareholders if and when required. The whole Board is kept up to date at its regular meetings with the views 
of shareholders and analysts.
The Company’s website (www.vernalis.com) provides an overview of the business including its strategy, products and
objectives. All Group announcements are available on the website and new announcements are published without delay. 
The terms of reference of each of the Board’s three committees and other important corporate governance documents are
displayed on the Company’s website. Additionally, the Group’s corporate communications department and Chief Financial
Officer provide a focal point for shareholders’ enquiries and dialogue throughout the year. 
Annual General Meeting The Annual General Meeting (AGM) provides the opportunity for the Board to meet with all
shareholders and their participation is encouraged. At the meeting, in addition to the statutory business, the Board has 
a policy of holding business presentations to ensure that an up-to-date picture of the Group’s activities is given, following 
which the Board is available for questions from shareholders.
In accordance with the Combined Code recommendations, the Company counts all proxy votes. On each resolution which 
is voted on a show of hands, the Company indicates the level of proxies lodged, the number of proxy votes for and against
such resolution and the number of abstentions. A separate resolution is proposed for each substantive issue and the Chairs 
of the Audit, Remuneration, and Nominations and Corporate Governance Committees attend to answer questions. 
Corporate social responsibility 
The Board is committed to running the Company in accordance with best practice in corporate governance. This commitment
includes recognition by the Company of the importance of taking into account its corporate social responsibilities (CSR) in
operating the business. In this context, Vernalis seeks to integrate CSR considerations relating particularly to social, ethical
and health, safety and environment (HS&E) issues in its day to day operations. The Board acknowledges its duty to ensure 
the Group conducts its activities responsibly and with proper regard for all its stakeholders including employees, shareholders,
business partners, suppliers and the local and scientific communities. 27
Vernalis plc Annual report and accounts 2004
In exercising its corporate social responsibility, Vernalis seeks to ensure that:
• The Board takes account of the significance of social, ethical and HS&E issues.
• Business practices are managed ethically.
• Positive contributions are made to the scientific and medical communities.
• The business is focused on delivering value to stakeholders.
• Existing legislation, regulations and guidelines are adhered to as a minimum.
• Employees are recognised as key to the business with individual skills and experience being valued and developed.
• All employees are educated as to the significance of CSR risks and opportunities.
• HS&E issues are treated as critical areas of concern for the business.
Vernalis addresses CSR issues in three key areas that have potential for significant effect on the Company’s short- and 
long-term value. These areas are as follows:
Social – Recognising the importance of the Company’s employees and of managing external relations ethically.
Ethical – Investing in pharmaceutical research and development with the aim of establishing and sustaining 
a business model designed to secure a fair return for shareholders.
Health, safety – Ensuring employee health and safety risk prevention and limiting the environmental impact of the 
and environment Company’s activities by managing its utility usage and waste production.
Social The health, welfare and development of the Company’s employees remain a priority. With the intent of attracting,
recruiting, developing and retaining key employees, Vernalis maintains a number of policies and procedures for the benefit 
of its employees. These include a code of business conduct and ethics; a whistle-blowing policy and procedure; an equal
opportunities policy; a dignity at work policy and a stress policy. An employee handbook including these policies is made
available to all employees on the Company’s intranet. Employee development is encouraged through appropriate training.
Scientists are encouraged to attend external conferences relevant to their disciplines.
Regular and open communication between management and employees is viewed as essential for motivating a highly 
educated workforce. Briefings at the two Company sites at Winnersh and Cambridge are held regularly to provide updates 
on Company business and to provide opportunity for questions and feedback. Review meetings are also held regularly within
each department and amongst those involved on each of the Company’s R&D programmes. An elected staff consultancy group
comprising employee representations from across the Company meets at least quarterly to discuss and review issues and
concerns raised by employees. The Company maintains both an internet website which is freely accessible and an intranet 
site accessible to all employees.
Ethical In conducting its business, Vernalis has an extensive range of established procedures that enable it formally to 
manage the risks associated with the discovery and development of drugs for the therapeutic treatment of serious diseases. 
The Company operates within a strict regulatory environment in the pharmaceutical industry and conducts its laboratory
research and clinical development activities in accordance with internationally recognised regulatory standards. The Company
manages its resources prudently to ensure appropriate investment is made in its R&D programmes and its commercialisation
activities. Up-to-date security systems are utilised to protect the Company’s IT systems. The Company’s intellectual property 
is protected through a robust patenting programme. Close attention is paid to maintaining relationships with key stakeholders
including business collaborators, suppliers and shareholders. A code of business conduct and ethics has been developed 
to promote fair, honest and ethical conduct by all employees in their relationships with other Company stakeholders.
Health safety and environment The Company has well-developed health and safety policies and procedures, safeguarding staff,
contractors and visitors, and it complies with current legislation and best practice. Mr Weir is the Executive Director responsible
for HS&E.
Health and safety is managed on each site through committees with competent persons representing all disciplines and with
external expert support. The Company’s health and safety policies and procedures are published on the Company’s intranet
and are readily available in hard copy; they form a key component in the staff induction programme. Appropriate health and
safety training is provided (for example manual handling, fire safety, cylinder gas safety) with quarterly internal safety audits,
and annual audits by specialists and governmental agencies (for example the Environment Agency). No significant issues 
have been identified by these audits. Risk and COSHH assessments are regularly reviewed and updated as necessary. Corporate governance continued
28
Vernalis plc Annual report and accounts 2004
During the year the Company has employed a consultant to advise on how best the Company can manage its activities so 
as to minimise their environmental impact. As a result, the Company has introduced a number of new practices particularly
relating to waste management and utility consumption. The Company’s environmental policy will be included on the internet 
as part of the redesign of the Company’s website which is currently in progress. Waste is minimised with packaging and
containers returned to suppliers where possible. Paper waste is recycled and confidential paper waste is shredded and
recycled. The Company does not knowingly discharge toxic materials into the environment other than very small amounts 
via fume cupboard extraction systems, arising from small-scale synthetic chemistry, and low-level radioactive waste which 
is discharged into public drainage, as permitted under Vernalis’ Certificate of Authorisation from the Environment Agency.
Going concern
Vernalis is a research and development based pharmaceutical business which expects to incur further losses until revenues
from royalty income and milestone receipts exceed expenditure on the product portfolio. The Directors have prepared
projections which, by their nature, are inherently subject to some uncertainty, particularly in respect of revenues, but have
reasonable expectations that the Group anticipates to have sufficient cash resources to continue in operation for the
foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.  Remuneration report
29
Vernalis plc Annual report and accounts 2004
This report covers the year ended 31 December 2004 with comparative figures provided for the eight months ended 31 December
2003. It has been prepared in compliance with the UKLA Listing Rules, the Combined Code (as it applied to the Company for
the year ended 31 December 2004), and the Companies Act 1985 as amended. In accordance with the Companies Act 1985, 
a resolution to approve the remuneration report will be proposed at the Company’s Annual General Meeting on 25 May 2005.
Details of the resolution may be found in the notice of the meeting accompanying this annual report. The vote will be advisory
and will be considered carefully by the members of the Remuneration Committee in the formulation and approval of the
Company’s future remuneration policies.
The Remuneration Committee
The Remuneration Committee (“the Committee”) is made up entirely of independent Non-Executive Directors of the Company
and met five times during the financial year. Mr K J Merrifield is the Chairman of the Committee with Mr G M Kennedy and 
Dr P R Read as its other members. Where appropriate the Committee invited the views of the Executive Chairman, Chief
Executive Officer and Director of Human Resources, and from external remuneration consultants Deloitte & Touche LLP.
Deloitte & Touche LLP was re-appointed at the behest of the Committee and has not provided any other services to the
Company during the financial year.
Policy on employee remuneration
The Company’s policy on the remuneration of employees, including Executive Directors, is established by the Committee and
approved by the Board. The overall budget for remuneration of employees and the individual remuneration packages of each
Executive Director and senior employee is determined by the Committee. No Executive Director or employee participates in
discussions relating to the setting of their own remuneration.
The objective of the Company’s remuneration policies is that all employees, including Executive Directors, should receive
appropriate remuneration given their performance, scale of responsibility, skills and experience. Remuneration packages
enable the Company to attract and retain key employees by ensuring they are remunerated appropriately and competitively 
and that they are motivated to achieve the highest level of Company performance in line with the best interests of shareholders. 
A proportion of remuneration is performance-related. Performance conditions for performance-related bonuses and long-term
incentives are designed with a view to alignment of executive and shareholder interests. The Committee believes that the
performance conditions are demanding and appropriate, in that they measure value for shareholders when compared with
comparable companies. Share options under the current Share Option Plan will only become exercisable in full if the Company’s
share price growth equals or exceeds that of the upper quartile company in the FTSE Small Cap Index and no option will be
exercisable if share price growth is below that of the median company. Options currently held by Executive Directors are subject
to various performance conditions which are set out on page 34.
Policies on remuneration take account of the pay structure and employment conditions within the Group and also the 
industry sector. To determine the elements and level of remuneration appropriate to each employee and Executive Director, 
the Committee considers remuneration levels in comparable biotechnology and pharmaceuticals companies, reviews pay 
and benefits surveys relating to industry sector or professional specialism and considers individual skills, experience 
and performance.
Components of remuneration
Employees’ remuneration currently comprises annual salary, a performance-related bonus, a long-term incentive in the form 
of share options, pension contributions and other benefits.
Annual salary The Committee approves the overall budget for employee salary increases and specific increases for Executive
Directors and other members of the Management Team. In determining appropriate salary levels for each Executive Director
and senior employee, the Committee considers both the nature and the status of the Company’s operations and the
responsibilities, skills, experience and performance of each Executive Director and other members of the Management Team.
The Committee compares the Company’s remuneration packages for its employees with those for employees of similar
seniority in companies whose activities are comparable with the Group and with which it competes for staff.
Performance-related bonus All employees participate in a performance-related bonus scheme. The level of bonus, if any, 
is based on overall Group performance and, in the case of Executive Directors and senior employees, is additionally linked 
to individual performance measures against criteria established at the beginning of the financial year.
In 2004 the Remuneration Committee placed a greater proportion of executive pay “at risk”, so that it is closely linked to 
the interests of shareholders. Senior directors received pay rises equivalent to retail price index inflation and increases to the
potential bonus level that they could achieve. The Committee has ensured that challenging and clearly assessable objectives
are set for the Chief Executive Officer linked to a 100% bonus maximum (as a percentage of salary), with similarly demanding
objectives for the other Executive Directors, linked to a 60% maximum bonus. The objectives are directly linked to shareholder
value, the growth of the portfolio and operational effectiveness as follows: Remuneration report continued
30
Vernalis plc Annual report and accounts 2004
• Shareholder value: the improvement in shareholder value over the period, taking account of the following measures over
the bonus year: market capitalisation, share price performance (both absolute and relative to the Pharmaceutical and
Small Cap Indices, Bloomberg and NASDAQ), investor feedback and analysts’ ratings.
• Growth of the portfolio: the progress of key strategic products, the licensing in or out of compounds, the development 
of new technologies or the acquisition of new products through M&A. 
• Operational effectiveness: related to the performance of the business, ensuring appropriate financial controls, managing
staffing levels, whilst ensuring good corporate governance.
As a further direct link between Executive remuneration and the interests of shareholders, the Committee has asked that 
a proportion of any future bonus paid be used to purchase shares in the Company, with the aim of building and maintaining 
an eventual personal shareholding of at least one times annual salary. Details of bonuses paid to Executives in 2004 are
detailed in the remuneration tables below.
Maximum bonus levels range between 10 and 40 per cent for all other employees based on their role and market need.
Bonuses are awarded wholly in cash. 
Long-term incentives The Board believes that long-term incentive schemes are important in retaining and recruiting high-calibre
individuals and ensuring that the performance of Executives is focused on creating long-term shareholder value whilst allowing
the Company’s cash reserves to be conserved. Details of the Share Option Plan are given below. One set of option awards in
the Company, equivalent to twice base salary, have been made to members of the executive team. For all other employees the
level is role related and below one times base salary. Further awards of options will be considered by the Remuneration
Committee periodically. 
Pensions benefits All employees are invited to participate in either a Group Personal Pension Plan or an Occupational Pension
Scheme. The only pensionable element of remuneration is annual salary. All schemes are money purchase in nature and have
no defined benefits. During the period, the Group contributed a maximum of 10 per cent of base salary in relation to employees,
a maximum of 15 per cent in relation to senior employees and 19 per cent in relation to Executive Directors to the schemes.
The Group has no obligation to the pension scheme beyond the payment of contributions.
Other benefits All employees are entitled to private health insurance, the cover being extended to spouse and family for
Executive Directors and some senior employees. Terms and conditions of service for employees from the merged Group
companies were harmonised in 2004.
Chairman’s remuneration
The remuneration of the Company’s Chairman is determined by the Committee, led by the Deputy Chairman and Senior 
Non-Executive Director, in the absence of the Chairman, after taking into account appropriate professional advice.
The Chairman receives an annual salary, but does not participate in the performance-related bonus scheme or pension scheme,
nor does he receive any other benefits. In addition to his salary, under the terms of his contract he is entitled to receive certain
fixed bonus payments once the Company’s share price has reached pre-determined levels, payment being conditional on exercise
of a corresponding part of the options granted to him on 25 April 2003 and such payment being equal to approximately half 
of the option price payable by Dr Fellner in respect of such options. Accordingly, Dr Fellner is entitled to receive, in each case
after the deduction of income tax and employee’s National Insurance contributions (for which reason the figures given are
approximate), £350,000 once the Vernalis share price has reached £1.00, £100,000 when the Vernalis share price has
reached each of £1.20, £1.40 and £1.60, £350,000 when the Vernalis share price has reached £2.00 and a final £350,000
when the Vernalis share price has reached £3.00. In each case, the share price will only have reached the requisite value 
if the market value of an Ordinary Share has been at or above the required value over 30 consecutive dealing days.
Appointment of Directors and service contracts
The Company’s policy in entering into service contracts with Executive Directors, including the Chairman, is to enable the
recruitment of high-quality Executives and to obtain protection from their sudden departure to competitor companies. In
addition, service contracts are an important element in maintaining maximum protection for the Group’s intellectual property
rights and other commercially sensitive information. All service contracts are approved by the Committee and are one-year
rolling contracts. Each service contract may be terminated by mutual agreement or by either party giving 12 months’ notice 
to the other. If an Executive Director is guilty of serious misconduct, serious breach (after due warning) or persistent breach 
of failure to carry out his duties then the Company is entitled summarily to terminate his service contract without notice and
without paying compensation in respect of that termination. Should an Executive Director be dismissed he would receive a sum
equal to 12 months’ pay and benefits (unless for gross misconduct, or a similar event, where no payments would be made).  31
Vernalis plc Annual report and accounts 2004
The service agreements of Dr Fellner and Mr Sturge were made on 21 March 2003 and came into effect on 23 April 2003. 
The service agreement of Mr Weir was made on 24 June 1999 and came into effect on that date. The service agreement of 
Dr Hutchison was made on 2 July 2003 and came into effect on 1 September 2003. The service agreement of Mr Slater was
made on 29 October 2004.
Mr Worrall’s service agreement was made on 2 July 2003. Mr Worrall resigned from the Board on 29 October 2004 and
ceased employment on 31 October 2004. Mr Worrall received a compensation payment for loss of office. Full details of his
compensation for loss of office are given in the Directors’ remuneration section on page 32.
Non-Executive Directors’ appointments and remuneration
Non-Executive Directors are appointed by letter of engagement for periods not exceeding three years. They receive fees for
services as members of the Board and its committees and the Chair of each Board committee is paid an additional fee for
performing that role. Mr Kennedy is also paid additional remuneration to reflect his additional responsibilities as Deputy
Chairman and Senior Independent Director. The level of fees is determined by the Chairman after taking into account
appropriate advice.
Mr Merrifield signed a new appointment letter dated 21 March 2003, which became effective on 23 April 2003. Mr Merrifield,
who was appointed in December 1995, also has a current fixed term to 22 April 2006. Ms Ferguson, Mr Kennedy and 
Dr Read signed new appointment letters dated 17 July 2003, each of which became effective on 1 September 2003. 
Each of Ms Ferguson, Mr Kennedy and Dr Read has an appointment for a fixed term of three years to 30 August 2006. 
Dr Baxter signed a new appointment letter effective 19 May 2004 for a fixed term of three years to 18 May 2007. Mr Kent 
and Mr Williams resigned on 24 June 2004 following the successful merger of Vernalis and British Biotech.
All of these appointments are subject to the Non-Executive Directors being re-elected under the rotation provisions in the
Company’s Articles of Association, and subject to Companies Act provisions. Each Non-Executive Director still serving at 
the end of his/her term will have his/her appointment reviewed by the Board and a further term of office may be agreed.
Where a Non-Executive Director does not serve until the end of his/her term, the policy is to pay the fees due pro rata to 
the date of cessation.
TSR performance 
The chart below shows the Company’s total shareholder return (TSR) performance over the period 1 May 2000 to 31
December 2004 alongside the performance of the FTSE Small Cap Index and meets the requirements of Schedule 7A 
to the Companies Act 1985. This index is considered suitable as the Company was a constituent member during the period.
Total shareholder return for five financial periods to 31 December 2004
0
20
40
60
80
100
120
140
160
180
April 2000 April 2001 April 2002 April 2003 Dec 2003 Dec 2004
TSR (rebased to 100 at 1 May 2000)
Financial year end
Vernalis FTSE Small Cap (excluding investment trusts) Source: Datastream Remuneration report continued
32
Vernalis plc Annual report and accounts 2004
Directors’ remuneration (audited)
Performance- Compensation December December December December
related for loss 2004 2003 2004 2003
Salary/fees Benefits bonus of office Total Total Pension Pension
£000 £000 £000 £000 £000 £000 £000 £000
Executive
Dr P J Fellner (Chairman) 200 – – – 200 136 – –
S J Sturge (CEO) (i) 325 (vii) 1 165 – 491 209 58 (ix) 38
Dr J B Hutchison (iv) 196 (vii) 1 57 – 254 63 (iii) 35 11
A J Weir 195 (vii) 1 90 – 286 129 35 23
P B Worrall (ii), (iv) 203 (vii) 1 54 452 710 79 (iii) 42 14
J A D Slater (vi) 40 (vii) – – – 40 – 7 –
1,159 4 366 452 1,981 616 177 86
Non-Executive
G M Kennedy (iv) 60 – – – 60 20 (iii) – –
Dr P R Read (iv) 33 – – – 33 11 (iii) – –
C C Ferguson (iv) 40 – – – 40 11 (iii) – –
I F Kent 17 – – – 17 27 – –
Dr A Baxter (x) – – – – – – – –
K J Merrifield 38 – – – 38 23 – –
E W Williams 17 – – – 17 23 – –
205––– 205 115 – –
Total 1,364 4 366 452 2,186 731 177 86
Retirement benefits are accruing to five (2003: four) Directors under a money purchase scheme.
i) Benefits for Simon Sturge include an annual relocation allowance of £24,000 that started in October 2004.
ii) Compensation for loss of office includes a payment of £331,000 in respect of his notice period and accrued holiday pay 
and £121,000 compensation for loss of office.
iii) Remuneration from date of appointment, 1 September 2003 until 31 December 2003.
iv) During the eight-month period ended 31 December 2003, the remuneration paid by Vernalis Group plc to the Directors 
of Vernalis plc is set out below.
Performance- Compensation December December December December
related for loss 2004 2003 2004 2003
Salary/fees Benefits bonus of office Total Total Pension Pension
£000 £000 £000 £000 £000 £000 £000 £000
P B Worrall (v) – – – – – 99 – –
Dr J B Hutchison –––– – 80 – 8
G M Kennedy –––– – 68 – –
Dr P R Read – – – – – 11 – –
C C Ferguson – – – – – 11 – –
–––– – 269 – 8
v) On 1 September 2003, 16,137 ordinary shares of 10 pence each in Vernalis Group plc awarded to Mr Worrall under that
company’s Restricted Share Scheme vested and were transferred to him.
vi) Remuneration from date of employment, 29 October 2004, until 31 December 2004.
vii) Includes benefits received through payroll.
ix) Includes £27,000 received through payroll.
x) Dr A Baxter has waived his rights to receive remuneration from the Group. 33
Vernalis plc Annual report and accounts 2004
Directors’ options (audited)
At 1 January Granted Lapsed At 31 December Exercise Date from 
2004 in the year in the year 2004 price which Performance 
Number Number Number Number £ exercisable Expiry date conditions
Dr P J Fellner
Option Deed 2,670,071 – – 2,670,071 1.00 Apr 2003 Apr 2013 (viii)
2,670,071 – – 2,670,071
Dr J B Hutchison
Share Option Plan 431,138 – – 431,138 0.835 Oct 2006 Oct 2013 (vii)
SAYE Plan – 13,345 – 13,345 0.71 Dec 2007 June 2008
431,138 13,345 – 444,483
J A D Slater
Share Option Plan – 538,922 – 538,922 0.835 Oct 2007 Oct 2014 (vii)
– 538,922 – 538,922
S J Sturge
Share Option Plan 1,367,520 – – 1,367,520 0.59 Apr 2006 Apr 2013 (vii)
1,367,520 – – 1,367,520
A J Weir
1992 Scheme 5,077 – (5,077) – 7.19 Jul 1997 Jul 2004 (i)
7,615 – (7,615) – 7.19 Jul 1999 Jul 2004 (ii)
Executive Scheme 1,202 – – 1,202 42.00 Dec 2000 Dec 2006 (iii)
1,202 – – 1,202 42.00 Dec 2001 Dec 2006 (iv)
3,078 – – 3,078 20.30 Dec 2000 Dec 2007 (iii)
3,078 – – 3,078 20.30 Dec 2002 Dec 2007 (iv)
6,250 – – 6,250 8.00 Sep 2001 Sep 2008 (iii)
6,250 – – 6,250 8.00 Sep 2003 Sep 2008 (iv)
12,500 – – 12,500 4.40 Jul 2002 Jul 2009 (iii)
12,500 – – 12,500 4.40 Jul 2004 Jul 2009 (iv)
Share Option Plan 615,380 – – 615,380 0.59 Apr 2006 Apr 2013 (vii)
SAYE Scheme 370 – (370) – 5.60 Oct 2003 Mar 2004 (v)
Bonus Scheme 98 – (98) – 1.00 Jul 1997 Jul 2004 (v)
196 – (196) – 1.00 Jul 1999 Jul 2004 (v)
1,608 – – 1,608 1.00 Jul 1998 Jul 2005 (v)
3,217 – – 3,217 1.00 Jul 2000 Jul 2005 (v)
62,500 – (62,500) – 1.00 Aug 2003 Aug 2008 (vi)
742,121 – (75,856) 666,265
P B Worrall –
Share Option Plan 550,898 – (117,548) 433,350 0.835 Oct 2004 Oct 2005 (vii)
550,898 – (117,548) 433,350
Total 5,761,748 552,267 (193,404) 6,120,611
None of the Non-Executive Directors who served during the financial period (Ms Ferguson, Mr Kent, Mr Kennedy, Mr Merrifield,
Dr Read, Mr Williams or Dr Baxter) held share options at any time during the period. Remuneration report continued
34
Vernalis plc Annual report and accounts 2004
Performance conditions Option awards are subject to share price growth performance as compared with the following various
comparators:
i) RPI.
ii) Pharmaceuticals Index.
iii) Median FTSE 100.
iv) Upper-quartile FTSE 100.
v) No performance conditions.
vi) Progressively as share price increases from £5.00 to £8.00 by July 2004.
vii) See Share Option Plan description below.
viii) See Option Deed in respect of the Chairman below.
No price was paid for the grant of options, nor were any options exercised by Directors during the year.
The market price of the Company’s shares at 31 December 2004, the last working day of the financial year, was 87.46 pence.
During the year, the market price of the Company’s shares ranged from 47.5 pence to 97 pence (eight months to 31 December
2003: 57 pence to 84 pence).
Directors’ interests in shares
The table below sets out the interests of the Directors in the Company’s shares. With the exception of shares issued to
Directors following the Placing and Open Offer announced in February 2005, there have been no changes in Directors’
interests in shares since 31 December 2004.
Ordinary shares held
Ordinary shares held Ordinary shares held at 31 December 2003
following Placing and Open Offer at 31 December 2004 or at date of appointment
Number Number Number
Dr A Baxter 1,828 – –
Dr P J Fellner 63,888 50,000 50,000
Ms C C Ferguson 35,535 27,810 27,810
Dr J B Hutchison 45,757 35,811 35,811
Mr G M Kennedy 37,405 29,274 29,274
Mr K J Merrifield 1,500 1,500 1,500
Dr P R Read 3,300 2,583 2,583
Mr J A D Slater 21,965 17,191 17,191
Mr S J Sturge 56,435 56,435 56,435
Mr A J Weir* 62,300 51,728 51,728
*In addition, Mr A J Weir has a non-beneficial interest in 33,375,891 deferred shares of 95 pence each which he holds on behalf of the Company following the capital reorganisation
in April 2003 (see note 17 to the financial statements).
Share option schemes
The Company currently operates two share option schemes, the Share Option Plan (which comprises an Inland Revenue-
approved Company share option plan and an option plan that has not been approved by the Inland Revenue) and the SAYE
Plan, under which grants of options may be made. Option incentive arrangements under the British Biotech Group 1992 Share
Option Scheme (the “1992 Scheme”), the British Biotech Executive Share Option Scheme (the “Executive Scheme”); the British
Biotech SAYE Share Option Scheme (the “SAYE Scheme”) and the British Biotech Deferred Share Bonus Scheme (the “Bonus
Scheme”) remain in place but will not be operated again. 
The total number of shares that have been, or may be issued in pursuance of rights granted after 18 September 1996, under
the Share Option Plan, SAYE Plan, Executive Scheme, the SAYE Scheme and the Bonus Scheme may not exceed 10 per cent 
of the issued share capital of the Company at any time. The performance criteria are stated in the tables above and relate
directly to share price performance. These criteria were chosen as being in the best interests of shareholders after
consideration of the particular circumstances of the Company. 35
Vernalis plc Annual report and accounts 2004
In addition, the Company has provided options by deed for the Chairman (see below).
Share Option Plan 
Eligibility Employees and Executive Directors of the Company, other than those within two years of their normal retirement
date, will be able to participate in the Share Option Plan at the discretion of the Committee.
Exercise of options Options will normally be exercisable between three and ten years following grant provided that any
performance target set by the Committee has been satisfied. The performance condition for options granted under the Plan to
date is share price growth against the FTSE Small Cap Index. No options will vest if performance is below median; 50 per cent
of the shares under option will vest at median and there will only be full vesting if the Company’s share price performance is 
in the upper quartile (with options vesting pro rata between median and upper quartile). These conditions are considered
appropriate in that the focus on delivering shareholder value is retained whilst being simple to measure and communicate.
SAYE Plan
The SAYE Plan is a save-as-you-earn share option scheme approved by the Inland Revenue. A Plan offer was made to all
employees and Executive Directors in October 2004.
Option deed in respect of the Chairman (audited)
A share option over 2,670,071 shares was granted to the Chairman in April 2003. The grant was made under an option deed
made by British Biotech plc with the Chairman. The exercise price is 100 pence per share. The option will vest and become
exercisable as follows:
Shares subject to the option vesting % Vernalis share price equal to or greater than
50 100p
25 200p
25 300p
For the option to vest in respect of any of the percentages of shares, the Vernalis target share price must be met (using the
mid-market closing price as quoted in the daily official list of the London Stock Exchange) over 30 consecutive trading days.
The option will vest on a change of control of Vernalis to the extent that the Vernalis share price has reached the target set 
out above.
Outstanding options (audited)
At 31 December 2004 the following options over shares had been granted to employees and Directors and remained
outstanding.
1992 Scheme
Date of grant Exercise period Number of shares Exercise price £ 
20 October 1995 October 1998 – October 2005 152 16.39
Executive Scheme
Date of grant Exercise period Number of shares Exercise price £ 
16 December 1996 December 2000 – December 2006 2,460 42.00
16 December 1996 December 2001 – December 2006 1,579 42.00
15 December 1997 December 2000 – December 2007 4,647 20.30
15 December 1997 December 2002 – December 2007 4,001 20.30
30 September 1998 September 2001 – September 2008 8,750 8.00
30 September 1998 September 2003 – September 2008 8,750 8.00
01 July 1999 July 2002 – July 2009 15,000 4.40
01 July 1999 July 2004 – July 2009 15,000 4.40
26 January 2000 January 2003 – January 2010 7,500 6.00
26 January 2000 January 2005 – January 2010 5,000 6.00
72,687  Remuneration report continued
36
Vernalis plc Annual report and accounts 2004
Bonus Scheme
Date of grant Exercise period Number of shares Exercise price £ 
31 July 1998 July 1998 – July 2005 1,608 1.00
31 July 1998 July 2000 – July 2005 3,537 1.00
1 July 1999 July 2001 – July 2006 719 1.00
26 January 2000 January 2002 – January 2007 10,000 1.00
17 July 2000 July 2002 – July 2007 11,000 1.00
13 December 2000 December 2002 – December 2007 2,500 1.00
13 February 2001 February 2003 – February 2008 2,500 1.00
06 January 2003 January 2005 – January 2010 12,500 1.00
44,364
Share Option Plan
Date of grant Exercise period Number of shares Exercise price £ 
23 April 2003 April 2006 – April 2013 1,982,900 0.59
03 October 2003 October 2006 – October 2013 2,799,488 0.84
30 September 2004 September 2007 – September 2014 378,000 0.88
29 October 2004 October 2007 – October 2014 618,922 0.84
5,779,310
Option Deed
Date of grant Exercise period Number of shares Exercise price £ 
23 April 2003 April 2003 – April 2013 2,670,071 1.00
2,670,071
SAYE Plan
Date of grant Exercise period Number of shares Exercise price £ 
29 October 2004 December 2007 – June 2008 482,543 0.71
482,543
Approved by the Board of Directors
Keith Merrifield
Chairman, Remuneration Committee
12 April 2005 Statement of Directors’ responsibilities
37
Vernalis plc Annual report and accounts 2004
The Directors are required by the Companies Act 1985 to prepare financial statements for each financial year which give 
a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit 
or loss of the Group for the financial period.
The Directors confirm that in preparing the financial statements the Company and the Group have used appropriate accounting
policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all accounting
standards which they consider to be applicable have been followed subject to any explanations and material departures
disclosed in the notes to the financial statements.
The Directors have responsibility for ensuring that the Company and the Group keep proper accounting records which disclose,
with reasonable accuracy at any time, the financial position of the Company and Group, and which enable them to ensure that
the financial statements comply with the Companies Act 1985. The Directors have responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and the Group and to prevent and detect fraud and other
irregularities. 
The Directors are responsible for the maintenance and integrity of the Group’s website, and acknowledge that information
published on the internet is accessible in countries with different legal requirements relating to the preparation and
dissemination of financial statements. Independent auditors’ report to the members of Vernalis plc
38
Vernalis plc Annual report and accounts 2004
We have audited the financial statements which comprise the consolidated profit and loss account, the balance sheets, the
cash flow statement and the related notes which have been prepared under the historical cost convention and the accounting
policies set out in the statement of accounting policies. We have also audited the disclosures required by Part 3 of Schedule
7A to the Companies Act 1985 contained in the Directors’ remuneration report (“the auditable part”).
Respective responsibilities of Directors and auditors
The Directors’ responsibilities for preparing the annual report and the financial statements in accordance with applicable
United Kingdom law and accounting standards are set out in the statement of Directors' responsibilities. The Directors are 
also responsible for preparing the Directors’ remuneration report.
Our responsibility is to audit the financial statements and the auditable part of the Directors’ remuneration report in
accordance with relevant legal and regulatory requirements and United Kingdom Auditing Standards issued by the Auditing
Practices Board. This report, including the opinion, has been prepared for and only for the Company’s members as a body in
accordance with Section 235 of the Companies Act 1985 and for no other purpose. We do not, in giving this opinion, accept 
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it 
may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial
statements and the auditable part of the Directors’ remuneration report have been properly prepared in accordance with 
the Companies Act 1985. We also report to you if, in our opinion, the Directors' report is not consistent with the financial
statements, if the Company has not kept proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law regarding Directors' remuneration and transactions 
is not disclosed.
We read the other information contained in the annual report and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises only
the Chairman’s review, Chief Executive Officer’s review of operations, financial review, report of the Directors and unaudited
parts of the Directors’ remuneration report.
We review whether the corporate governance statement reflects the Company’s compliance with the nine provisions of the
2003 FRC Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if 
it does not. We are not required to consider whether the Board’s statements on internal control cover all risks and controls, 
or form an opinion on the effectiveness of the Company’s or Group’s corporate governance procedures or its risk and 
control procedures.
Basis of audit opinion
We conducted our audit in accordance with auditing standards issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the
auditable part of the Directors’ remuneration report. It also includes an assessment of the significant estimates and
judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies 
are appropriate to the Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary 
in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the auditable
part of the Directors’ remuneration report are free from material misstatement, whether caused by fraud or other irregularity 
or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial
statements.
Opinion
In our opinion:
• the financial statements give a true and fair view of the state of affairs of the Company and the Group at 31 December
2004 and of the loss and cash flows of the Group for the year then ended;
• the financial statements have been properly prepared in accordance with the Companies Act 1985; and
• those parts of the Directors’ remuneration report required by Part 3 of Schedule 7A to the Companies Act 1985 have
been properly prepared in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London
12 April 2005 Consolidated profit and loss account
For the year ended 31 December 2004
39
Vernalis plc Annual report and accounts 2004
Year Eight months
ended ended 
31 December 31 December 
2004 2003
Note £000 £000
Turnover 2 15,195 8,631
Cost of sales (2,909) (228)
Gross profit 12,286 8,403
Research and development expenditure (24,387) (26,890)
Selling, general and administrative expenses 4 (18,642) (10,901)
Operating loss 4 (30,743) (29,388)
Loss on disposal of fixed assets 10 (836) (2,988)
Merger transaction expenses – (5,396)
Loss on ordinary activities before interest and taxation (31,579) (37,772)
Interest receivable and similar income 5 2,933 2,314
Amounts written off investments 11 (71) (862)
Interest payable and similar charges 6 (2,250) (544)
Loss on ordinary activities before taxation (30,967) (36,864)
Tax credit on loss on ordinary activities 7 1,758 2,645
Loss for the period (29,209) (34,219)
Loss per share (basic and diluted) 8 (19.8)p (24.9)p
The results for the period shown above are derived entirely from continuing activities.
There is no difference between the loss on ordinary activities before taxation and the loss for the financial periods stated
above, and their historical cost equivalents.
There are no recognised gains and losses other than the losses above, and therefore no separate statement of total
recognised gains and losses has been presented.
The notes on pages 42 to 57 form part of these financial statements.
  Balance sheets
As at 31 December 2004
40
Vernalis plc Annual report and accounts 2004
Group Company
31 December 31 December 31 December 31 December 
2004 2003 2004 2003
Notes £000 £000 £000 £000
Fixed assets
Intangible assets 9 36,999 22,925 – –
Tangible assets 10 1,596 7,508 – –
Investments 11 – 83 116,184 20,427
38,595 30,516 116,184 20,427
Current assets
Stock – finished goods 49 49 – –
Debtors (Group: includes £7.4 million due in more than one year 
(2003: £nil)) 12 27,773 10,991 128 541
Other investments 22 32,014 22,329 32,014 11,338
Cash 1,309 1,885 244 1
61,145 35,254 32,386 11,880
Current liabilities
Creditors: amounts falling due within one year 13 (16,050) (19,773) (453) (447)
Net current assets 45,095 15,481 31,933 11,433
Total assets less current liabilities 83,690 45,997 148,117 31,860
Creditors: amounts falling due after more than one year 14 (60,285) (8,119) (112,416) –
Provisions for liabilities and charges 15 (10,530) (4,089) – –
Net assets 12,875 33,789 35,701 31,860
Capital and reserves
Share capital 17 39,492 38,813 39,492 38,813
Share premium account 18 305,842 298,226 305,842 298,226
Merger reserve 18 101,985 101,985 – –
Other reserves 18 50,776 50,776 20,026 20,026
Profit and loss account 18 (485,220) (456,011) (329,659) (325,205)
Total shareholders’ funds 18 12,875 33,789 35,701 31,860
Analysis of shareholders’ funds
Equity 18 (18,832) 2,082 3,994 153
Non-equity 18 31,707 31,707 31,707 31,707
12,875 33,789 35,701 31,860
Approved by the Board of Directors
Tony Weir
Chief Financial Officer
12 April 2005
The notes on pages 42 to 57 form part of these financial statements. Consolidated cash flow statement
Year ended 31 December 2004
41
Vernalis plc Annual report and accounts 2004
Year Eight months 
ended ended 
31 December 31 December 
2004 2003
Notes £000 £000
Reconciliation of operating loss to operating cash flows
Operating loss (30,743) (29,388)
Depreciation 2,327 1,575
Amortisation of intangible fixed assets 7,146 3,985
Loss on disposal of tangible fixed assets 4 – 171
Loss on disposal of intangible fixed assets – 1,777
(Increase)/decrease in debtors (16,178) 578
Increase/(decrease) in creditors 370 (4,133)
Increase in provisions 4,260 1,572
Increase/(decrease) in deferred income 35,299 (4,838)
Decrease in stock – 8
Merger transaction expenses paid – (5,396)
Adjustment for exchange gain (391) –
Net cash inflow/(outflow) from operating activities 2,090 (34,089)
Cash flow statement
Net cash inflow/(outflow) from operating activities 2,090 (34,089)
Returns on investments and servicing of finance 19 (293) 659
Taxation 1,129 2,783
Capital expenditure 20 (27,380) (16)
Cash utilised by operations (24,454) (30,663)
Management of liquid resources 22 (9,685) 25,786
Financing 21 33,611 6,478
(Decrease)/increase in cash in the period (528) 1,601
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash in the period (528) 1,601
Cash (inflow from increase)/outflow from decrease in debt and lease financing (24,944) 7,955
Cash outflow/(inflow) from movement in liquid resources 9,685 (25,786)
Other non-cash movements (463) –
Exchange adjustment 1,218 (55)
Movement in net funds in the period (15,032) (16,285)
Net funds at start of the period 21,973 38,258
Net funds at end of the period 22 6,941 21,973
The notes on pages 42 to 57 form part of these financial statements Notes to the financial statements 
Year ended ended 31 December 2004
42
Vernalis plc Annual report and accounts 2004
1 Principal accounting policies
The financial statements have been prepared under the historical cost convention, and in accordance with applicable
accounting standards in the United Kingdom. A summary of the principal Group accounting policies, which have been applied
consistently, is set out below.
Vernalis is a research and development based pharmaceutical business which expects to incur further losses until revenues
from royalty income and milestone receipts exceed expenditure on the product portfolio. The directors believe that the Group
has sufficient funds available to continue for the foreseeable future, therefore the financial statements have been prepared 
on the going concern basis.
Basis of consolidation The consolidated financial statements of the Group include the accounts of Vernalis plc (the “Company”)
and all its subsidiary undertakings (together, the “Group”), made up to 31 December 2004. Inter-company transactions are
eliminated on consolidation.
The identifiable assets and liabilities of subsidiary undertakings accounted for under acquisition accounting principles are
included in the consolidated balance sheet at their fair values at the date of acquisition. The results and cash flows of such
subsidiaries are brought into the Group accounts only from the date of acquisition. 
The merger basis of accounting, as set out in FRS 6 (Acquisitions and Mergers), has been adopted by the Group in respect of
the merger of Vernalis Group plc and the Company. Under merger accounting principles, the results, assets and liabilities and
cash flows of Vernalis Group plc and the Company have been combined from the beginning of the period in which the merger
took place.
Company profit and loss account In accordance with the provisions of section 230 of the Companies Act 1985, no separate
profit and loss account has been presented for the Company. 
Turnover Turnover, which excludes value added tax, represents the value of goods and services supplied. Product sales 
are recognised on despatch to the customer, net of a provision for expected sales returns and rebates to be paid in future 
years. Non-refundable access fees, options fees and milestone payments receivable for participation by a third party in
commercialisation of a compound are recognised when they become contractually binding provided there are no related
commitments of the Group. Where these receipts are inducements to enter into contracts, they are recognised over the
expected life of the contract. Where there are related commitments, revenue is recognised on a percentage of completion
basis in line with the actual levels of expenditure incurred in fulfilling these commitments. All other licence income and contract
research fees are recognised over the accounting period to which the relevant services relate. Revenues derived from grants
received are recognised in line with the related expenditure. Royalty income is recognised in relation to sales to which the
royalty relates.
Research and development Research and development expenditure is written off as incurred, except where assets are
acquired or constructed in order to provide facilities for research and development over a number of years. These assets 
are capitalised and depreciated over their useful lives. Expenditure relating to clinical trials is accrued on a percentage of
completion basis with reference to fee estimates with third parties.
Joint arrangements The Group has certain contractual research agreements with other participants. These joint activities 
do not create an entity carrying on a trade or business of its own and, as such, each is accounted for as a joint arrangement
that is not an entity. That is, the Group accounts for its own assets, liabilities and cash flows measured in accordance with 
the terms of the agreement governing the arrangement. 
Goodwill Goodwill arising from the purchase of subsidiary undertakings represents the excess of the value of the purchase
consideration over the fair value of the underlying net assets acquired. The goodwill arising is capitalised and amortised in
equal instalments over its estimated useful economic life. Provision is made for any impairment in value if events or changes
in circumstances indicate that the carrying value may not be recoverable in full. 
Goodwill in respect of the acquisition of RiboTargets Holdings plc in 2003 and Cerebrus Pharmaceuticals Limited in 1999 is
being amortised over three years and five years respectively.
Goodwill previously written off to reserves has not been reinstated on the balance sheet as permitted by FRS 10.
  43
Vernalis plc Annual report and accounts 2004
1 Principal accounting policies continued
Other intangible assets Other intangible assets, which principally comprise payments made to third parties to acquire royalty
streams and product rights, are amortised on a straight line basis over their estimated useful economic life. Provision is made
for any impairment in value if events or changes in circumstances indicate that the carrying value may not be recoverable 
in full.
Tangible fixed assets Tangible fixed assets are stated at historic cost less depreciation, with the exception of freehold land 
and assets in the course of construction that are not depreciated. Historic cost comprises the purchase price together with 
any incidental costs of acquisition. Depreciation is calculated to write off the cost, less residual value, of tangible fixed assets
in equal annual instalments over their estimated useful lives as follows:
Freehold buildings 50 years
Buildings – internal works 5 to 50 years
Leasehold buildings Period of lease
Plant and machinery 2 to 5 years
Fixtures and fittings 3 to 10 years
Finance and operating leases Costs in respect of operating leases are charged to the profit and loss account on a straight line
basis over the terms of the leases. Leasing agreements which transfer to the Company substantially all of the benefits and
risks of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in fixed assets
and the capital element of the leasing commitments is shown as obligations under finance leases. The lease rentals are
treated as consisting of both a capital and an interest element. The capital element is applied to reduce the outstanding
obligations under the leasing commitments and the interest element is charged against profit in proportion to the reducing
capital element outstanding. Assets held under finance leases are depreciated over the shorter of the relevant lease term 
and the useful economic life of the equivalent owned assets.
Fixed asset investments Investments in subsidiary and other undertakings are carried at cost less any impairment provision.
Such investments are subject to review, and any impairment is charged to the profit and loss account. Impairments in listed
undertakings are determined having regard to the evolution of the market price of shares. Impairment in unlisted investments
are determined using Directors’ estimates of changes in the underlying investment and market movements. 
Current asset investments Current asset investments are stated at the lower of cost and net realisable value at the balance
sheet date.
Stock Stocks are carried at the lower of cost and net realisable value.
Deferred taxation Provision is made for deferred tax liabilities and assets, using full provision accounting, otherwise known 
as the incremental liability method, when an event has taken place by the balance sheet date which gives rise to an increased
or reduced tax liability in the future in accordance with FRS 19. Deferred tax is measured at the average tax rates that are
expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have
been enacted or substantially enacted by the balance sheet date. Deferred tax assets are only recognised to the extent that 
it is considered probable that they will be recoverable. Deferred tax is measured on a non-discounted basis.
Pension costs The Group operates several defined contribution pension schemes. The assets of the schemes are held
separately from those of the Group in independently administered funds. In addition, the Group makes defined contributions 
to employees’ approved personal pension plans. Pension contributions are charged to the profit and loss account in the period
in which the costs are incurred. The Group does not offer any other post-retirement benefits. 
Foreign currencies Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the transaction
date. Assets and liabilities in foreign currencies are retranslated into sterling at the rate of exchange ruling at the balance
sheet date. Differences arising due to exchange rate fluctuations are taken to the profit and loss account in the period in 
which they arise. Notes to the financial statements continued
Year ended ended 31 December 2004
44
Vernalis plc Annual report and accounts 2004
1 Principal accounting policies continued
Employee benefits 
Shares that were held for the continuing benefit of the Group’s business under employee share ownership plan (ESOP)
arrangements were included in the financial statements of the Group, in accordance with generally accepted accounting
practices, and are classified as fixed assets and carried at cost less provision for impairment in value. Following the closure 
of the plan, the remaining shares were sold and the gain on sale over the book value was recognised in the profit and loss
account.
The Company takes advantage of the exemption under UITF 17 in respect of SAYE schemes.
Financial instruments
The Group enters into derivative financial instruments where necessary, to hedge against future material foreign currency
exposures. As at 31 December 2004, there were no derivative contracts outstanding and the Group has no financial liabilities
other than finance leases, loans and trade-related creditors. Financial assets and liabilities are recognised and cease to be
recognised on the basis of when the related legal title or obligations pass to or from the Group. Financial assets and liabilities
are shown at the lower of cost to the Group and fair value, as determined by reference to the market value of the asset 
or liability.
Related party transactions
In accordance with FRS 8 (Related Party Disclosures), the Company discloses details of material transactions between the
reporting entity and related parties. However, transactions between the Company and other Group companies have not been
disclosed, in accordance with the exemption in FRS 8 paragraph 3(a).
2 Segmental and geographical analyses
The Group operates one primary business, being the research, development and commercialisation of pharmaceutical products
for a range of medical disorders. Turnover, loss on ordinary activities before taxation and net assets are wholly attributable to
this activity and originate exclusively in the United Kingdom. 
a) A geographical analysis of turnover by destination according to the country of registration of the fee-paying parties 
is as follows:
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
United Kingdom 161 49
Rest of Europe 3,822 5,645
North America 11,207 2,937
Rest of the world 5 –
15,195 8,631
b) The Group derives turnover from a variety of revenue streams including out-licensing agreements, collaboration agreements
and sales of product. A split of turnover by type is as follows:
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Pharmaceutical research, development and commercialisation
Product sales 9,330 487
Royalties 688 2,105
Collaborative agreements 5,177 6,039
15,195 8,631 45
Vernalis plc Annual report and accounts 2004
3 Employees and Directors
The average number of persons, including Executive Directors, employed by the Group during the period was as follows:
Eight months
Year ended ended 
31 December 31 December 
2004 2003
Research, development and operations 105 163
Administration 26 48
131 211
At 31 December 2004, the Group employed a total of 131 permanent staff (31 December 2003: 156).
Staff costs in respect of these employees were:
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Wages and salaries 7,845 8,299
Social security costs 1,062 846
Pension costs 621 716
9,528 9,861
In respect of Directors’ remuneration, the Company has taken advantage of the permission in paragraph 1(6) of Schedule 6 
to the Companies Act 1985 to omit aggregate information that is capable of being ascertained from the detailed disclosures 
in the report of the remuneration committee on pages 29 to 36 which form part of these financial statements.
4 Group operating loss
Group operating loss is stated after charging/(crediting):
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Operating lease rentals:
– land and buildings 1,974 1,495
– plant, machinery and vehicles 99 48
Depreciation charge for the period:
– tangible owned fixed assets 2,207 1,183
– tangible fixed assets held under finance leases 120 392
Amortisation charge for the period:
– goodwill 4,398 3,031
– other intangible assets 2,748 954
Loss on disposal of intangible assets – 1,777
Restructuring costs (see below) 1,493 2,269
Loss on disposal of fixed assets (excluding exceptional profit) – 171
Auditors’ remuneration: 
– audit fees (Company: £25,000 (2003: £25,000)) 122 193
– other services (see below) 203 314 Notes to the financial statements continued
Year ended ended 31 December 2004
46
Vernalis plc Annual report and accounts 2004
4 Group operating loss continued
Restructuring costs: this represents restructuring costs incurred in relation to the acquisition of RiboTargets Holdings plc 
and merger with Vernalis Group plc, and relate principally to redundancy costs.
Auditors’ remuneration: “other services” relates to fees for a proposed fundraising £90,000; fees of £113,000 (December
2003: £149,000) that have been paid in relation to taxation advice, advice on collaborative agreements and services on
Securities and Exchange Commission filings and to other fees of £nil (December 2003: £165,000) for proposed and completed
acquisitions. In addition, fees of £70,000 (December 2003: £225,000) relate to professional services in relation to the 
re-acquisition of rights of frovatriptan from Elan in May 2004; and in respect of the fundraising by Vernalis Group plc in 
May 2003. There were no fees paid in respect of management consultancy services.
Selling, general and administrative expenses:
Eight months
Year ended ended
31 December 31 December
2004 2003
£000 £000
Restructuring costs 1,493 2,269
Amortisation of goodwill 4,398 3,031
Provision for vacant leases (see note 15) 4,401 1,642
Sales and marketing costs 1,333 –
Other 7,017 3,959
Total administrative expenses 18,642 10,901
5 Interest receivable and similar income
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Bank interest 664 1,136
Exchange gains on other creditors (see note 14) 468 1,178
Exchange gains on long-term loan 1,266 –
Unwinding of discount on other debtor (see note 12) 529 –
Other interest 6 –
2,933 2,314
6 Interest payable and similar charges
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Loans repayable wholly or partly after five years – 142
Loans repayable wholly or partly within five years 866 293
Finance leases 107 109
Exchange loss on other debtors (see note 12) 686 –
Unwinding of discount on deferred consideration on purchase 
of intangible asset (see note 9) 519 –
Other interest payable 72 –
2,250 544 47
Vernalis plc Annual report and accounts 2004
7 Tax credit on loss on ordinary activities
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Research and development tax credits 1,773 2,645
Withholding tax (15) –
1,758 2,645
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Factors affecting the tax charge for the period
Loss before tax at 30 per cent (9,291) (11,058)
Expenses not deductible for tax purposes 725 752
Goodwill on consolidation 1,320 909
Movement on deferred tax asset not recognised 5,976 6,120
Research and development tax credit received at 
24 per cent of losses compared with 30 per cent tax rate 488 632
150 per cent deduction for research and development expenditure not surrendered for cash (657) –
Under-provision in respect of prior-year tax credit (334) –
Withholding tax 15 –
(1,758) (2,645)
No liability to UK corporation tax arose during the year. The Group had losses, as computed for taxation purposes, of
approximately £415 million at 31 December 2004 (31 December 2003: £413 million) available to be carried forward to 
future periods. 
In accordance with the provisions of the Finance Act 2000 in respect of research and development allowances, the Group is
entitled to claim tax credits for certain research and development expenditure. The amount included in the financial statements
in respect of the year ended 31 December 2004 of £1,773,000 (eight months ended 31 December 2003: £2,645,000)
represents the tax credit receivable by the Group.
8 Loss per ordinary share
Eight months
Year ended ended 
31 December 31 December 
2004 2003
£000 £000
Attributable loss (£000) (29,209) (34,219)
Weighted average number of shares in issue (000) 147,388 137,219
Loss per share (basic and diluted) (19.8)p (24.9)p
All potential ordinary shares, including options and deferred shares, are anti-dilutive. Notes to the financial statements continued
Year ended ended 31 December 2004
48
Vernalis plc Annual report and accounts 2004
9 Intangible fixed assets
Other 
Goodwill intangibles Total 
Group £000 £000 £000
Cost
At 1 January 2004 17,223 17,177 34,400
Additions – 21,220 21,220
At 31 December 2004 17,223 38,397 55,620
Aggregate amortisation
At 1 January 2004 9,209 2,266 11,475
Charge for the year 4,398 2,748 7,146
At 31 December 2004 13,607 5,014 18,621
Net book value at 31 December 2004 3,616 33,383 36,999
Net book value at 31 December 2003 8,014 14,911 22,925
Goodwill arises on the acquisitions of RiboTargets Holdings plc in 2003 and Cerebrus Pharmaceuticals Limited in 1999 
and is being amortised over three years and five years respectively, which is based on the Directors’ estimate of its useful
economic life. 
Other intangibles represent the capitalisation of payments conditionally due to GlaxoSmithKline (GSK) agreed in December
2000 to buy out royalties due to GSK on sales of frovatriptan, and the consideration paid to Elan in respect of the re-acquisition
of the North American rights to frovatriptan in May 2004. The costs associated with re-acquisition of the North American rights
to frovatriptan comprise the fair value of the consideration of £26.5 million, less £5.3 million in relation to certain obligations
to Elan that were cancelled as part of the re-acquisition of the rights. Both assets are being amortised on a straight-line basis
to the end of the patent life of frovatriptan in 2014 which is considered by the Directors to be the useful life of the asset. 
Company The Company has no intangible fixed assets.
10  Tangible fixed assets
Short- 
leasehold Assets held Plant and Fixtures and
buildings for resale(i) machinery fittings Total
Group £000 £000 £000 £000 £000
Cost
At 1 January 2004 3,804 10,937 8,105 820 23,666
Additions 292 – 209 – 501
Disposals – (10,937) (1,310) (48) (12,295)
At 31 December 2004 4,096 – 7,004 772 11,872
Accumulated depreciation
At 1 January 2004 2,034 6,870 6,561 693 16,158
Charge for the year 1,308 – 939 80 2,327
Disposals – (6,870) (1,291) (48) (8,209)
At 31 December 2004 3,342 – 6,209 725 10,276
Net book value at 31 December 2004 754 – 795 47 1,596
Net book value at 31 December 2003 1,770 4,067 1,544 127 7,508
i) Relates to the sale of the Oxford site during the year.
The net book value of plant and machinery includes £13,000 (31 December 2003: £674,000) in respect of assets held under
finance leases. The depreciation charge for the year was £120,000 (31 December 2003: £392,000). 49
Vernalis plc Annual report and accounts 2004
10  Tangible fixed assets continued
Capital commitments at 31 December 2004 were as follows:
31 December 31 December
2004 2003
£000 £000
Group
Contracted for but not provided 15 –
Company The Company had no fixed assets or capital commitments. 
11  Investments
Group Company
Shares in Loans to
Quoted subsidiary subsidiary
companies Total undertakings undertakings Total 
£000 £000 £000 £000 £000
Cost
At 1 January 2004 649 649 29,164 308,112 337,276
Additions – – – 99,033 99,033
At 31 December 2004 649 649 29,164 407,145 436,309
Provision for impairment
At 1 January 2004 (566) (566) (12,661) (304,188) (316,849)
Charge for the year (83) (83) (691) (2,585) (3,276)
At 31 December 2004 (649) (649) (13,352) (306,773) (320,125)
Net book value at 31 December 2004 – – 15,812 100,372 116,184
Net book value at 31 December 2003 83 83 16,503 3,924 20,427
Group Investments in quoted companies at 31 December 2004 include Bresagen Ltd, a pharmaceutical company listed on the
Australian stock exchange. This investment has been fully provided against in the year.
On 2 February 2004 the shareholders of Genesoft Pharmaceuticals Inc. approved its merger with Oscient Pharmaceuticals
Corp. (formerly Genome Therapeutics Corp.), a Nasdaq quoted company. As a result of the merger, the Group’s holding in
Genesoft has been exchanged for 424,118 shares in Oscient. Of these, 93,141 shares will remain in Escrow and will not 
be made available to the Company for up to 18 months from February 2004. These shares are held at nil book value at 
31 December 2004.
Following the merger between Vernalis plc and Vernalis Group plc, the Group closed down the ESOP, and sold the remaining
16,346 shares at market price of 87 pence resulting in a profit on disposal of £12,000.
Company The Company has written down its investment in subsidiary undertakings to their net asset value. This has resulted
in the carrying value of the Company’s subsidiaries being reduced by £3,276,000.
During the year, the Company had the following wholly-owned principal operating subsidiary undertakings:
Country of incorporation 
Name of company Nature of business and operation
Vernalis (R&D) Limited Research and development England and Wales
Vernalis Development Limited* Research and development England and Wales
Vernalis Research Limited* Research and development England and Wales
*Held by a subsidiary undertaking. Notes to the financial statements continued
Year ended ended 31 December 2004
50
Vernalis plc Annual report and accounts 2004
12  Debtors
Group Company
31 December 31 December 31 December 31 December
2004 2003 2004 2003
£000 £000 £000 £000
Trade debtors 860 1,133 – –
Interest receivable 122 136 122 136
Amounts due from subsidiary undertakings – – – 382
Research and development tax credits 6,433 5,804 – –
Other debtors 15,681 2,079 – 23
Prepayments and accrued income 4,677 1,839 6 –
27,773 10,991 128 541
Included within other debtors is £15.2 million in relation to the fair value of the $30 million receivable from Endo, in equal
instalments in August 2005 and August 2006.
During the year an exchange loss of £0.7 million and an implicit interest receipt of £0.5 million linked to the unwinding of the
discount has been recognised in the profit and loss account in relation to this asset.
13  Creditors: amounts falling due within one year
Group Company
31 December 31 December 31 December 31 December
2004 2003 2004 2003
£000 £000 £000 £000
Secured loan – 270 – –
Trade creditors 3,134 2,538 51 114
Amounts due to subsidiary undertakings – – – 93
Obligations under finance leases 18 738 – –
Taxation and social security payable 226 458 – 58
Other creditors 2,699 5,774 – 28
Accruals 5,134 5,352 402 154
Deferred income 4,839 4,643 – –
16,050 19,773 453 447
At 31 December 2004 the Group had a total deferred income balance of £36.1 million of which £4.8 million was due within
one year and £31.3 million due in more than one year. Of this total balance £30.5 million relates to the initial $60 million
payable from Endo in relation to the outlicense of the North American rights to frovatriptan. This income is being recognised on
a straight line basis over the patent life of the product to 2014. The remaining balance of deferred income relates to the up-front
payments received from Biogen Idec of $10 million and Novartis of $1.5 million in connection with the collaboration agreements
entered into during the year. These are being recognised over the expected useful lives of the respective agreements.
Other creditors primarily relates to payments conditionally due to GlaxoSmithKline (GSK) under the agreement of December
2000 to buy out royalties due to GSK on sales of frovatriptan. The Group is committed to making one further annual payment
of $5 million, the first having been made in September 2002. A fifth payment of $5 million is due 90 days after cumulative
global sales exceed $300 million. As a result, other creditors includes $10 million in respect of GSK, as the Directors believe 
it is probable that cumulative global sales will exceed $300 million. During the period ended 31 December 2004 exchange
gains of £0.4 million (eight months ended 31 December 2003: gain of £1.2 million) were recognised in the profit and loss
account in relation to this liability.
Included within other creditors is £58,000 in relation to money purchase pension contributions payable. 51
Vernalis plc Annual report and accounts 2004
14  Creditors: amounts falling due after more than one year
Group Company
31 December 31 December 31 December 31 December
2004 2003 2004 2003
£000 £000 £000 £000
Group 
Loans and other borrowings
Secured loan (see note 23) 26,364 1,215 – –
Obligations under finance leases – 18 – –
26,364 1,233 – –
Deferred income (see note 13) 31,294 1,299 – –
Other creditors 2,627 5,587 – –
Amounts due to subsidiary undertakings – – 112,416 –
60,285 8,119 112,416 –
Loans and other borrowings included above are repayable as follows:
Over one and under two years – 288 – –
Over two and under five years 26,364 945 – –
Beyond five years, by instalments – – – –
26,364 1,233 – –
Group The secured loan at 31 December 2003 related to the mortgage on the Oxford site. Following the sale of this site during
the year this loan has been repaid in full. The secured loan at 31 December 2004 relates to $50 million borrowed from Endo,
net of the finance charges of £0.3 million, and interest payable which the Group has elected to roll up into the loan after the
year end (see note 23). During the year, exchange gains of £1.3 million have been recognised in the profit and loss account 
in relation to this liability.
Company Amounts due to subsidiary undertakings are unsecured, interest free and have no fixed date of repayment.
15  Provisions for liabilities and charges
Vacant Returns
Restructuring lease Dilapidation and
provision provision provision rebates Total
£000 £000 £000 £000 £000
Group
At 1 January 2004 717 1,932 1,440 – 4,089
Charge for the year 1,493 4,401 283 3,328 9,505
Utilised during the year (2,080) (618) – (192) (2,890)
Movements on exchange – – – (174) (174)
At 31 December 2004 130 5,715 1,723 2,962 10,530
The restructuring provision at 31 December 2003 and further charges incurred during the year related to redundancy costs
incurred as part of the Group’s ongoing restructuring following the acquisition of RiboTargets Holdings plc and the merger 
of the Company and Vernalis Group plc on 1 September 2003.
Where leasehold properties become vacant the Group provides for all costs, net of anticipated income, to the end of the lease
or the anticipated date of the disposal or sublease. During the year the Company received notice from a tenant in its property
in Oxfordshire and has significantly increased the provision as a result. In addition, based on professional advice, the Company
has increased its provision on a vacant property in Cambridge. This provision is expected to be utilised over the life of the
related leases to 2014 and 2020 respectively.
The dilapidation provision relates principally to costs associated with the Group’s obligation to reinstate leased buildings to
their original state. The provision is expected to be utilised on vacation of the properties by 2014. The charge in the year has
been capitalised to fixed assets and is being depreciated over the life of the lease. Notes to the financial statements continued
Year ended ended 31 December 2004
52
Vernalis plc Annual report and accounts 2004
15  Provisions for liabilities and charges continued
On acquiring the rights from Elan the Group took on an obligation for certain product returns, estimated at £1.9 million. In
addition the Company is responsible for product returns, rebates and chargebacks from the date it re-acquired the rights from
Elan through to the date of the outlicense to Endo. A further provision has been made in relation to sales made by the Group
totalling £1.4 million. There are no further obligations to the Company in respect of these for sales made after the Company
outlicensed the rights to frovatriptan to Endo. The provision is to be utilised within a four year period.
Company The Company has no provisions for liabilities and charges. 
16  Deferred taxation (unrecognised)
31 December 31 December
2004 2003
£000 £000
Group
Tax effect of timing differences
Losses (124,428) (123,773)
Excess of depreciation over tax allowances (5,115) (2,074)
Short-term timing differences (2,280) –
Potential deferred tax asset (131,823) (125,847)
There was no potential liability to deferred tax at 31 December 2004, nor at 31 December 2003.
Given the uncertainty of the recoverability of the Group’s tax losses carried forward, no deferred tax asset in respect of the
further available tax losses is recognised. Note 7 gives details of the tax losses available to be carried forward by the Group.
Company The Company has a potential (unrecognised) deferred taxation asset of £1,123,000 at 31 December 2004 (31 December
2003: £1,010,000). It is considered highly unlikely that this potential asset will be realised in the forseable future.
17  Share capital
Allotted, called
Authorised up and fully paid Allotted, called
Group and Group and Authorised up and fully paid
Company Company Group and Group and 
Number Number Company Company
of shares of shares £000 £000
At 1 January 2004
Equity capital:
Ordinary shares of 5 pence each 285,858,083 142,126,883 14,293 7,106
Non equity capital
Deferred shares of 95 pence each 33,375,891 33,375,891 31,707 31,707
Total share capital at 1 January 2004 319,233,974 175,502,774 46,000 38,813
Allotments – equity capital
Ordinary shares of 5 pence each – 13,573,502 – 679
Total allotments for the year ended 31 December 2004 – 13,573,502 – 679
At 31 December 2004
Equity capital:
Ordinary shares of 5 pence each 285,858,083 155,700,385 14,293 7,785
Non-equity capital
Deferred shares of 95 pence each 33,375,891 33,375,891 31,707 31,707
Total share capital at 31 December 2004 319,233,974 189,076,276 46,000 39,492
Allotments
On 24 June 2004 6,218,487 shares were issued to Biogen Idec at a price of 53 pence per share. The market price of the
shares on the date which the terms of issue were fixed was 47.44 pence. 53
Vernalis plc Annual report and accounts 2004
17  Share capital continued
In August 2004, the Novartis Institutes for BioMedical Research, Inc., (Novartis) exercised its option to subscribe for ordinary
shares under the terms of the research collaboration agreement formed in December 2003. Accordingly on 23 September
2004, 7,106,344 shares were issued at a price of 71 pence per share. The market price of the shares at the date on which
the terms of issue were fixed was 74.61 pence.
All other allotments relate to employee share options. Details of the Company’s options in issue are shown on pages 35 to 36.
Rights and restrictions attaching to the ordinary shares. 
The rights and restrictions attaching to the ordinary shares are set out in the Articles of Association. 
Rights and restrictions attaching to the deferred shares.
Income The deferred shares carry no rights to participate in the profits of the Company. 
Capital On a return of capital in a winding up or dissolution (but not otherwise) the holders of the deferred shares shall be
entitled to participate in the distribution of the assets of the Company pari passu with the holders of the ordinary shares but
only in respect of any excess of those assets above £1,000,000,000,000. The holders of the deferred shares shall not be
entitled to any further right of participation in the assets of the Company. 
Attendance and voting at general meetings The holders of the deferred shares are not entitled, in their capacity as holders 
of such shares, to receive notice of any general meeting of the Company or to attend, speak or vote at any such meeting. 
Form The deferred shares shall not be listed on any stock exchange nor shall any share certificates be issued in respect 
of such shares. The deferred shares shall not be transferable, save as referred to below or with the written consent of 
the Directors. 
Class rights The Company may from time to time create, allot and issue further shares, whether ranking pari passu with or 
in priority to the deferred shares, and on such creation, allotment or issue any such further shares (whether or not ranking in
any respect in priority to the deferred shares) shall be treated as being in accordance with the rights attaching to the deferred
shares and shall not involve a variation of such rights for any purpose. A reduction by the Company of the capital paid up on
the deferred shares shall be in accordance with the rights attaching to the deferred shares and shall not involve a variation 
of such rights for any purpose and the Company shall be authorised at any time to reduce its capital (subject to and in
accordance with the Companies Act) and without obtaining the consent of the holders of the deferred shares. 
18  Reconciliation of movements in shareholders’ funds 
Year Eight months
ended ended
31 December 31 December
Share Share Merger Other Profit and 2004 2003
capital premium reserve reserves loss account Total Total
£000 £000 £000 £000 £000 £000 £000
Group
At 1 January 2004 38,813 298,226 101,985 50,776 (456,011) 33,789 53,576
Loss for the period – – – – (29,209) (29,209) (34,219)
Allotment of shares 679 7,616 – – – 8,295 1,918
Expense on issue of shares – – – – – – (26)
Adjustment to merger reserve – – – – – – 12,540
At 31 December 2004 39,492 305,842 101,985 50,776 (485,220) 12,875 33,789
Company
At 1 January 2004 38,813 298,226 – 20,026 (325,205) 31,860 59,002
Loss for the period – – – – (4,454) (4,454) (30,884)
Allotment of shares 679 7,616 – – – 8,295 3,768
Expense on issue of shares – – – – – – (26)
At 31 December 2004 39,492 305,842 – 20,026 (329,659) 35,701 31,860 Notes to the financial statements continued
Year ended ended 31 December 2004
54
Vernalis plc Annual report and accounts 2004
18  Reconciliation of movements in shareholders’ funds continued
The share premium account is a non-distributable reserve.
The other reserves arise as a result of the application of merger relief taken in respect of the issue of shares on the
acquisition of subsidiaries of the Group, including RiboTargets, Cerebrus Pharmaceuticals, Vanguard Medica and British 
Biotech Pharmaceuticals.
The merger reserve arises as a difference on consolidation under merger accounting principles and is solely in respect of the
merger of the Company and Vernalis Group plc in the prior period. The reserve represents the difference between the nominal
value of shares issued by the Company in consideration for Vernalis Group plc shares and the nominal value and share
premium of Vernalis Group plc shares at the date of the merger.
The loss attributable to shareholders which is dealt with in the accounts of the Company was £4,454,000 (eight months ended 
31 December 2003: loss of £30,884,000). In accordance with Section 230 (4) of the Companies Act 1985 there is no requirement
to publish a profit and loss account for the Company. In the Group, the cumulative amount of goodwill written off against reserves
at 31 December 2004 was £91,000 (31 December 2003: £91,000). This goodwill was eliminated in line with the Group’s
accounting policy and will be charged to the profit and loss account on subsequent disposal of the business to which it relates.
Total shareholders’ funds consist of negative equity interests of £18,832,000 and non-equity interests of £31,707,000. Non-
equity interests consist of 33,375,889 deferred shares of 95 pence. The deferred shares carry no voting rights and no rights
to participate in the profits of the Company. On a return of capital in a winding up or dissolution (but not otherwise) the holders
are entitled to a distribution in excess of assets distributed above £1,000,000,000,000. Further details of the rights of the
deferred shares are given in note 17.
19  Returns on investments and servicing of finance
Year Eight months
ended ended
31 December 31 December
2004 2003
£000 £000
Interest received 684 1,414
Interest paid, including interest element of finance lease payments (977) (755)
Net cash inflow from returns on investments and servicing of finance (293) 659
20  Capital expenditure
Year Eight months
ended ended
31 December 31 December
2004 2003
£000 £000
Purchase of tangible fixed assets (101) (180)
Sale of tangible fixed assets 3,250 2
Sale of investments 12 162
Purchase of intangible fixed assets (30,541) –
Net cash outflow from capital expenditure (27,380) (16)
Purchase of intangible fixed assets represents payments made to Elan of £25.1 million in relation to the re-acquisition of the
North American rights to frovatriptan (see note 9) and payments made to GSK of £5.5 million to buy out royalties due to GSK
on sales of frovatriptan (see note 13). 55
Vernalis plc Annual report and accounts 2004
21  Financing
Year Eight months
ended ended
31 December 31 December
2004 2003
£000 £000
Issue of shares (see note 17) 8,295 15,960
Share issue costs – (1,527)
Repayment of secured loan (see note 14) (1,485) (135)
Repayment of 6.5 per cent convertible loan – (7,000)
Receipt of US dollar secured loan (see note 14) 27,539 –
Capital element of finance lease payments (738) (820)
Net cash inflow from financing 33,611 6,478
22  Analysis of changes in net funds
At Other At
31 December Exchange non-cash 31 December 
2003 Cash flow movement movements 2004
£000 £000 £000 £000 £000
Cash 1,885 (528) (48) – 1,309
Short-term deposits and investments 22,329 9,685 – – 32,014
24,214 9,157 (48) – 33,323
Secured loan due within one year (270) 270 – – –
Secured loan due after one year (1,215) 1,215 – – –
US dollar secured loan (includes finance charges of £372,000) – (27,167) 1,266 (463) (26,364)
Finance leases (756) 738 – – (18)
21,973 (15,787) 1,218 (463) 6,941
Short-term deposits and short-term investments are aggregated on the balance sheet. Cash flows from short-term deposits
and short-term investments are reported in the cash flow statement under the heading “management of liquid resources”.
Short-term deposits have a maturity period of more than 24 hours but less than 12 months. They are repayable on demand
subject, in some instances, to the payment of certain expenses. Short-term investments are investments in a money market
managed fund that are repayable within 48 hours.
23  Financial instruments related disclosure
The Group’s financial instruments comprise cash, liquid resources, finance leases, loans and various debtors and creditors,
such as trade debtors and trade and other creditors, that arise directly from its operations. The Group does not enter into
derivative transactions. In addition, it is, and has been throughout the period under review, the Group’s policy that no trading 
in financial instruments shall be undertaken except in accordance with strict and prudent investment criteria, principally that
funds are actively managed by reputable independent fund managers and investments are only made in low-risk funds with
fixed rates of return.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign currency risk. 
The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies 
have remained unchanged throughout the period under review, and since the year end.
Interest rate risk The Group finances its operations through reserves of cash and liquid resources. The funds are held in
sterling, euro and US dollar managed funds and sterling treasury deposits. The funds are actively managed by reputable
independent fund managers to provide the highest rate of return with a neutral risk profile.
Liquidity risk The Board’s policy is to ensure that sufficient funds are held on a short-term basis in order to meet operational
needs without the use of an overdraft facility. Notes to the financial statements continued
Year ended ended 31 December 2004
56
Vernalis plc Annual report and accounts 2004
23  Financial instruments related disclosure continued
Foreign currency risk The Group’s functional currency is sterling. The Group has transactional currency exposures. Such
exposures arise from sales or purchases in currencies other than the Group’s functional currency, which include royalty and
milestone receipts in US dollars from Endo, the Group’s North American licensee for frovatriptan, royalty and product sale
receipts in euros from Menarini, the Group’s European licensee for frovatriptan and payments in US dollars to various clinical
research organisations in respect of ongoing trials. In addition, the Group has currency exposures to balances in currencies
other than the Group’s functional currency. In particular, the Group has a loan for $50 million, that is repayable in August 2009
and included within other creditors is $10 million due to GSK. The Group considers selectively hedging against specific
significant currency exposures where the dates of future payments or receipts in foreign currency are known. There were 
no hedging transactions in place at 31 December 2004 or 31 December 2003. 
All the Group’s debtors and creditors falling due within one year (other than the bank overdraft, other debtors in relation to
amounts receivable from Endo, secured loans and other creditors) have been excluded from the disclosures below either due 
to the exclusion of short-term items or because they do not meet the definition of a financial liability, or asset. The weighted
average period for GSK cannot be calculated due to the payments being conditional on future events. The Directors estimate
that this will not be before 2007 (see note 13). The weighted average period for the Endo receivable is 14 months.
Interest rate risk profile
The interest rate profile of the Group’s financial assets and liabilities are:
31 December 2004 31 December 2003
Floating Fixed Floating Fixed
rate rate Total rate rate Total
£000 £000 £000 £000 £000 £000
Financial liabilities
US dollar secured loan (vi) – 26,711 26,711 –––
Sterling secured loan (i) ––– – 1,485 1,485
Finance leases (ii) – 18 18 – 756 756
– 26,729 26,729 – 2,241 2,241
Financial assets
Sterling cash at bank and in hand (v) (83) – (83) (16) – (16)
Euro cash at bank and in hand 5 – 5 99 – 99
US dollar cash at bank and in hand 1,387 – 1,387 1,802 – 1,802
Sterling short-term investment (iii) (v) 13,295 – 13,295 10,360 – 10,360
Sterling short-term deposits (iv) – 15,000 15,000 – 11,969 11,969
US dollar investment (iii) (v) 2,455 – 2,455 – – –
Australian dollar investment ––– 83 – 83
Euro short-term investments (iii) (v) 1,264 – 1,264 – ––
18,323 15,000 33,323 12,328 11,969 24,297
The Group’s provisions other creditors and other debtors, are non-interest bearing.
i) The secured loan was for a term of 20 years from 14 April 1989, and was secured by a fixed charge over three of the
Group’s freehold properties. Interest was fixed at 12.13 per cent per annum throughout the term. Following the sale of the
Oxford site, the loan was repaid in full.
ii) The finance leases were all in sterling at fixed rates of interest. The weighted average interest rate and period remaining 
on liabilities at 31 December 2004, was 9.2 per cent and two months. 
iii) The floating rate short-term investments are invested in a money market managed fund with a weighted average maturity 
of less than 120 days by reference to seven-day LIBID and three-month LIBID days and repayable within 48 hours.
iv) The fixed-rate short-term deposits are placed with a range of banks and building societies at fixed terms with a weighted
average maturity of 129 days and a weighted average fixed rate of 4.816 per cent.
v) Short-term investments are used to maintain a positive bank balance in sterling, US dollar and euro.
vi) The US dollar secured loan was for a term of five years from 31 August 2004, and was secured against all royalty and
milestone income receivable by Vernalis in respect of the license deal with Endo. The weighted average interest rate 
is 5 per cent fixed for the term of the loan.
Borrowing facilities The Group has no significant undrawn committed borrowing facilities at 31 December, 2004.
Foreign currency exposure At 31 December 2004 the Group’s operating companies had net monetary liabilities of 
£22.9 million (31 December 2003, net monetary assets: £1.8 million) denominated in US dollars, £nil (31 December 2003:
£0.1 million) denominated in Australian dollars, £1.3 million (31 December 2003: £0.1 million) denominated in euros. 57
Vernalis plc Annual report and accounts 2004
23  Financial instruments related disclosure continued
Fair value of financial assets and liabilities There is no significant difference between the fair value and the carrying value 
of the Group’s financial assets and liabilities at 31 December 2004, and 31 December 2003, except for the sterling secured
loan, other creditors and fixed asset investments. The fair value of the loan at £nil (31 December 2003: £1.7 million) and other
creditors at £4.8 million (31 December 2003: £9.5 million) was calculated using a discounted cash flow method as market
values were unavailable. The book value of the loan at 31 December 2004, was £nil (31 December 2003: £1.5 million). 
The book value of the other creditors at 31 December 2004 was £5.2 million (31 December 2003: £11.4 million). 
The market value of the Group’s listed investments at 31 December 2004 was £0.6 million (31 December 2003: £0.1 million).
24  Operating lease commitments
Annual commitments for the Group under operating leases are as follows:
31 December 2004 31 December 2003
Plant, Plant,
Land and machinery Land and machinery
buildings and vehicles buildings and vehicles
£000 £000 £000 £000
Expiring within one year –1 –9
Expiring in the second to fifth years – 66 – 34
Expiring after five years 2,290 – 2,251 –
2,290 67 2,251 43
Company The Company had no operating lease commitments.
25  Financial commitments and contingencies
The Group has commitments of up to £6.1 million (31 December 2003: £12.45 million) which are contingent upon successful
product development, registration and approval.
Company The Company has no financial commitments (31 December 2003: nil).
The Company has provided Endo Pharmaceuticals Inc. with a parent company guarantee on the US$50 million loan to Vernalis
Development Limited (see note 14).
26  Post balance sheet events
On 19 January 2005 Vernalis’ collaborator Serono started a Phase I clinical study of a selective inhibitor of matrix metalloprotease
inhibitor 12.
On 24 February 2005 Vernalis exercised its option under its agreement with Endo Pharmaceuticals Inc. to co-promote frovatriptan
in the US.
On 21 March 2005 shareholders approved the Placing and Open Offer announced on 24 February 2005. This raised £30.3 million
(before expenses) by way of a fully underwritten Placing and Open Offer of 43,250,107 new ordinary shares representing
approximately 27.8 per cent of Vernalis’ existing issued ordinary share capital, full details of which were contained in a circular
(with notice of EGM) sent out to shareholders on 24 February 2005. Trading in the new shares commenced on 22 March 2005,
bringing the total number of shares in issue to 198,950,492.
On 30 March 2005 Vernalis acquired the intellectual property rights, know-how and associated assets related to an emerging
oncology target, Pin1, from Pintex Pharmaceuticals Inc. Pintex received initial cash payments on signature and transfer of know-
how and, should a drug candidate reach the market, the total cash liability to Pintex would be $6.5 million.
27  Related party transaction
There have been no related party transactions through the year. Five-year* summary
58
Vernalis plc Annual report and accounts 2004
Year to Year to Year to Eight months to Year to
30 April 30 April 30 April 31 December 31 December
2001 2002 2003 2003 2004
£000 £000 £000 £000 £000
Turnover
Continuing operations 4,616 14,766 9,140 8,514 15,195
Acquisitions – – 3 117 –
4,616 14,766 9,143 8,631 15,195
Operating loss
Continuing operations (57,292) (34,954) (35,590) (17,312) (30,743)
Acquisitions – – (659) (12,076) –
(57,292) (34,954) (36,249) (29,388) (30,743)
Profit/(loss) on disposal of fixed assets 557 2,505 – (2,988) (836)
Merger transaction expenses – – – (5,396) –
Amount written off investments (799) (324) (799) (862) (71)
Net interest 4,199 2,783 2,803 1,770 683
Loss before tax (53,335) (29,990) (34,245) (36,864) (30,967)
Research and development expenditure 50,408 38,152 30,512 26,890 24,387
Assets employed
Fixed assets 24,193 35,997 41,358 30,516 38,595
Cash and short-term deposits and investments 83,022 62,982 48,453 24,214 33,323
Other net current assets/(liabilities) (7,754) (34,131) (8,946) (8,733) 11,772
Creditors due after more than one year (9,559) (1,683) (24,773) (8,119) (60,285)
Provisions for liabilities and charges (350) (250) (2,517) (4,089) (10,530)
Net assets 89,552 62,915 53,575 33,789 12,875
Capital employed
Share capital 35,157 35,225 36,895 38,813 39,492
Share premium account 420 298,615 298,252 298,226 305,842
Other reserves 120,054 140,221 140,221 152,761 152,761
Profit and loss account (364,079) (390,979) (421,792) (456,011) (485,220)
Shareholders’ funds 93,808 62,915 53,576 33,789 12,875
*Represents three years to 30 April 2003, the eight-month period to 31 December 2003, and the year to 31 December 2004. Shareholder information
59
Vernalis plc Annual report and accounts 2004
Analysis of ordinary shareholdings at 31 December 2004
Number of shareholders: 22,842
Percentage
Percentage Number of of ordinary
Number of of total ordinary issued share
shareholders shareholders shares capital
Shareholding range
1 – 1,000 21,316 93.3193 3,415,545 2.1937
1,001 – 5,000 1,084 4.7456 2,353,515 1.5116
5,001 – 50,000 310 1.3571 4,809,102 3.0887
50,001 – 500,000 90 0.3940 17,502,717 11.2413
500,001 – 1,000,000 20 0.0876 14,097,394 9.0542
1,000,000 and over 22 0.0963 113,522,112 72.9106
Total 22,842 155,700,385
Registrar
Administrative enquiries regarding shareholdings in Vernalis on such matters as a change of address or lost share certificates
should be made to Capita IRG plc. American Depository Receipt (ADR) holders should contact The Bank of New York.
Correspondence should clearly state the name and address of the shareholder and refer to Vernalis.
Amalgamation of shareholdings
If a shareholder receives more than one copy of the report and accounts, it may indicate multiple accounts in the shareholder’s
name are appearing on the share register. Shareholders can write to Capita IRG plc, or ADR holders should contact The Bank
of New York, at the addresses on page 60 stating the accounts concerned and giving instructions on how they should be
amalgamated.
Financial calendar
Annual General Meeting: Wednesday 25 May 2005
Interim results 2005: September 2005
Preliminary results 2005: February 2006
Share price information
Vernalis shares are listed on the London Stock Exchange under the symbol VER. The latest share price information is available
on the Cityline Service operated by the Financial Times: tel +44 (0)906 8432619 (calls from within the UK are charged at 
60 pence per minute).
Annual General Meeting
The Company’s 2005 Annual General Meeting of shareholders will take place at 11am on Wednesday 25 May 2005 at 
Barber-Surgeons’ Hall, Monkwell Square, London EC2Y 5BL.
ADR holders may instruct The Bank of New York as to how the ordinary shares represented by their ADRs should be voted 
by completing and returning the voting card provided by The Bank of New York in accordance with the instructions given.
Information for US investors
The Company’s shares, in the form of American Depository Shares (ADRs) and as evidenced by ADRs, are listed in the USA 
on the Nasdaq National Market System. The ADRs are issued by The Bank of New York. Each ADR is equivalent to two ordinary
shares and trades under the symbol VNLS. The Company prepares an annual report on Form 20-F which is filed with the
Securities and Exchange Commission.
Vernalis prepares its UK financial statements in accordance with generally accepted accounting principles (GAAP) in the UK. 
UK GAAP differs in certain respects from US GAAP and a reconciliation between UK and US GAAP is included in the Form 20-F. Addresses and advisers
60
Vernalis plc Annual report and accounts 2004
Vernalis plc
Oakdene Court
613 Reading Road
Winnersh
Berkshire RG41 5UA
Tel +44 (0)118 977 3133
Fax +44 (0)118 989 9300
Registered number 2304992
Information about the Company may be found 
on the internet at www.vernalis.com
Registrar
Capita IRG plc
Bourne House
34 Beckenham Road
Beckenham BR3 4TU
Tel +44 (0)870 162 3100
Fax +44 (0)20 8639 2342
Email ssd@capita–irg.com
www.capita–irg.com
Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Tel +44 (0)20 7583 5000
Fax +44 (0)20 7822 4652
www.pwc.com
ADR depositary bank
The Bank of New York
Investor Relations
PO Box 11258
Church Street Station
New York, NY 10286–1258
Tel +1 610 312 5315
(or toll–free on 1 888 BNY ADRS for US callers)
Email shareownersvcs@bankofny.com
www.adrbny.com
www.stock.bankofny.com
Financial adviser and joint stockbroker
JP Morgan Cazenove Limited
20 Moorgate
London EC2R 6DA
Tel +44 (0)20 7588 2828
Fax +44 (0)20 7155 9000
Joint stockbroker
Nomura International Plc
Nomura House
1 St Martin’s-le-Grand
London EC1A 4NP
Tel +44(0)20 7521 2000
Fax +44(0) 7521 2121
Solicitors
Allen & Overy LLP
One New Change
London
EC4M 9QQ
Tel +44 (0)20 7330 3000
Public relations
Brunswick Group
16 Lincoln’s Inn Fields
London WC2A 3ED
Tel +44 (0)20 7404 5959 R&D
Designed and produced by 
85
four. Printed in England by Westerham Press ISO 14001. Vernalis plc Oakdene Court, 613 Reading Road, Winnersh, Berkshire RG41 5UA www.vernalis.com
Vernalis plc Annual report and accounts 2004