Phytopharm
for a healthier future
Phytopharm plc
Annual Report and Accounts 201 1 Our objective
Our objective is to develop products aimed 
at major markets with high unmet clinical need 
to key value inflection points before seeking 
late‑stage development and commercial partners.
Who we are
Developing novel treatments targeting diseases 
with high unmet need
Phytopharm (LSE:PYM) is a development stage 
pharmaceutical company. Our lead series of 
compounds has the potential to be a new class 
of therapy for neurodegenerative diseases.
Our lead programmes target neurodegenerative diseases, including Parkinson’s disease, 
amyotrophic lateral sclerosis and glaucoma.
Our products
Our products are single chemical entities with 
novel mechanisms of action protected by strong 
patent families.
visit us online at 
www.phytopharm.com
Business Overview
IFC Who we are
01 Business highlights
02 Strategy and portfolio
Business Review
04 Chairman’s review
06 Chief Executive’s review
08 Business review
13 Financial review
Corporate Governance
1 6  Principal risk s 
and uncertainties
17 Board of Directors
18 Directors’ report
22 Remuneration report
27 Corporate governance
33  S tat ement of 
Directors’ responsibilities
Financial Statements
34 Independent auditors’ report
36  Consolidat ed stat ement 
of comprehensive income
37  Consolidated and Company 
balance sheets
38  Consolidat ed stat ement 
of changes in equity
39  Com pan y stat ement  
of changes in equity
40  Consolidated and Company 
cash flow statements
41 Notes to the financial statements
Shareholder information can be found 
on page 60.
read more about our strategy 
on page 8
read more about our product 
development on pages 8 to 12
Contents Business highlights
Business Overview Annual Report and Accounts 201 1 Phytopharm plc
Operational
•	 Cogane™	Phase	II	Parkinson’s	disease	trial	(CONFIDENT‑PD)	on	track	to	
complete	recruitment	in	spring	2012	with	results	around	the	end	of	2012
•	 Positive	preclinical	results	on	Cogane™	in	Parkinson’s	disease	presented	
at the	Movement	Disorders	Conference	in	June	2011
•	 Cogane	secures	Orphan	Drug	status	from	US	Food	and	Drug	Administration	
and	the	European	Commission	for	the	treatment	of	amyotrophic	
lateral sclerosis	(“ALS”)
•	 Positive	data	achieved	in	preclinical	model	of	ALS	with	Cogane™.	Initiated	
“gold	standard”	genetic	in	vivo	model	with	the	financial	support	of	the	UK	
Motor	Neurone	Disease	Association;	results	anticipated	in	Q1	2012
•	 Encouraging	early	data	reported	from	the	recently	initiated	programme	
investigating	the	effect	of	Myogane™	in	glaucoma.	Further	results	due	
in Q1	2012
•	 Technology	Strategy	Board	agreed	to	provide	grant	funding	to	support	
the	development	of	Myogane™	in	glaucoma
•	 P61	anti‑inflammatory	project	re‑activated,	lead	compound	selected	for	
further	development
Financial
•	 Loss	after	tax	increased	to	£7.66	million	in	line	with	expectations	reflecting	
increased	focus	on	the	development	of	our	pharmaceutical	programmes	
(2010:	£3.80	million)
•	 Cash	and	money	market	investments	of	£17.57	million	(2010:	£23.61	million)
read more about our operational highlights 
in the Business Review on pages 8 to 12
01 Business Overview Phytopharm plc Annual Report and Accounts 201 1
02
Strategy and portfolio
Targeting diseases with high levels 
of unmet need
Phytopharm is a development stage pharmaceutical company 
developing novel treatments targeting diseases with high levels 
of unmet need.
Our	commercially	focused	development	projects	have	the	potential	to	produce	significant	
treatment	advances	in	our	target	areas	of	neurodegeneration	and	inflammatory	disease.	
Our products	are	single	chemical	entities	with	novel	mechanisms	of	action	protected	by	
strong	patent families.	Our	pipeline	has	been	sourced	from	our	own	research	activities	and	
from	licensing	activities,	particularly	from	leading	research	institutions	in	China	with	whom	
the	Company	has	long‑standing	relationships.
The potential to be a new class 
of therapy
Our lead series of compounds, the Sapogenins (including Cogane
TM
 
and Myogane
TM
), has the potential to be a new class of therapy 
for neurodegenerative diseases including Parkinson’s disease, 
ALS and glaucoma.
Clinical development
Cogane
TM	
is	currently	being	evaluated	in a 400	patient	multi‑national	Phase	II,	randomised,	
double	blind,	placebo	controlled,	dose	ranging	study	(CONFIDENT‑PD).	The	study	is	comparing	
the	safety,	tolerability	and	efficacy	of	three	doses	of	Cogane
TM
	and	placebo	when	administered	
for	28	weeks	to	untreated	patients	with	early	stage	Parkinson’s	disease.
read more about the Sapogenin 
programmes on pages 8 to 11
Myogane
™
Cogane
™ Business Overview Phytopharm plc Annual Report and Accounts 201 1
03
Management
Laboratory work
Manufacturing
Company strategy
Clinical work
Medical leaders
Clinicians
Charitable organisations
Our business model
Phytopharm	operates	as	a	virtual	
company	ensuring	the	majority	of	
our financial	resources	are	focused	
on our	pharmaceutical	pipeline.	
We utilise	a	network	of	scientific	
and clinical	experts	to	help	guide	
our development	projects	with	
our experienced	pharmaceutical	
managers	overseeing	operations.
read more about our business in  
the Chief Executive’s Review on page 6
In‑house
Out‑sourced
Collaborations
Drug candidate
Parkinson’s disease
Parkinson’s	disease	is	a	movement	disorder	
characterised	by	muscle	rigidity,	tremor	and	
a slowing	of	physical	movement	(bradykinesia)	
and,	in	extreme	cases,	a	loss	of	physical	movement	
(akinesia).	The	primary	symptoms	are	the	result	
of altered	signalling	of	an	area	of	the	brain,	the	
striatum,	responsible	for	the	control	of	movement.
ALS
ALS,	also	known	as	Lou	Gehrig’s	disease,	is	the	
most	prevalent	form	of	motor	neurone	disease	
which	generally	strikes	people	between	40	and	
60	years	of	age.	It	is	characterised	by	progressive	
loss	of	both	lower	(spinal	cord	and	brain	stem)	
and	upper	(cerebral	cortex)	motor	neurones,	
which	leads	to	severe	muscle	weakness	and	
wasting,	followed	by paralysis	and	death,	
generally	caused	by	respiratory	failure.
Glaucoma
Current	pharmacological	treatments	for	glaucoma	
are	predominantly	focused	on	reducing	the	elevated	
intraocular	pressure	(“IOP”)	in	the	eye,which	is	often	
associated	with	glaucoma.	However,	a	significant	
number	of	patients	with	glaucoma	do	not	exhibit	
raised	IOP	and,	in	addition,	a	significant	number	
of	patients	whose	IOP	is	successfully	reduced	still	
experience	ongoing	neurodegeneration	resulting	
in	deterioration	of	sight.
P61
P61	is	a	series	of	novel	new	chemical	entities	
(“NCEs”)	which	exhibit	anti‑inflammatory,	
anti‑remodelling,	anti‑spasmodic	and	TRPV1	
modulating	activities.	This	range	of	activity	
within	single	molecules	could	provide	
attractive	therapeutic	options	for	a	number	
of inflammatory	diseases	including	chronic	
obstructive	pulmonary	disease,	asthma,	
atopic dermatitis,	psoriasis,	gastrointestinal	
inflammatory	conditions	and pain.
Other Development Areas Key Development Areas Business Review Phytopharm plc Annual Report and Accounts 201 1
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Chairman’s review
“ The coming year is going to be a critical 
one for the Company. Success in our 
ongoing studies is likely to bring good 
returns to Phytopharm.”
Mr	Alistair	Taylor	Non‑Executive	Chairman
Following	a	year	of	re‑organisation	and	
consolidation	in	2010,	Phytopharm	has	been	
delivering	on	its	objectives	in	2011.	The	Company,	
much	leaner	and	more	focused	than	in	previous	
years,	is	on	plan	and	budget	to	deliver	significant	
results	from	its	pharmaceutical	development	
projects	in	2012.	
Over	the	past	year	the	Company	has	produced	
new	supportive	data	in	Parkinson’s	disease,	ALS	
and	glaucoma;	has	been	granted	Orphan	Drug	
status	for	Cogane™	in	ALS	in	both	the	US	and	
Europe;	has	been	successful	in	attracting	grant	
funding	for	its	ALS	and	glaucoma	projects;	and	
has	initiated	a	large,	multinational	Phase	II	study	
in	Parkinson’s	disease	which	is	on	target	to	report	
around	the	end	of	2012.	Importantly	the	Company	
has	been	very	efficient	in	its	cost	control.	In	the	
current	economic	climate	it	is	heartening	that	
Phytopharm	retains	a	cash	runway	until	the	
end	of	2013,	sufficient	to	complete	its	current	
studies	and	allow	time	to	negotiate	whatever	
deals	may	follow.
The	coming	year	is	going	to	be	a	critical	one	
for	the	Company.	Results	from	ongoing	projects,	
particularly	the	clinical	trial	in	Parkinson’s	disease,	
have	the	potential	to	be	major	value	drivers	
and	the	management	team	are	working	hard	
in	order	to	deliver	high‑quality	studies.
Success	in	our	ongoing	studies	is	likely	to	bring	
good	returns	to	Phytopharm.	Whilst	it	is	true	that	
we	are	operating	in	a	difficult	environment	at	
the	current	time,	it	is	also	true	that	the	majority	
of	large	pharmaceutical	companies	are	looking	
to	external	sources	in	order	to	replenish	their	
product	pipelines	and	that	high	value	deals	are	
being	concluded	for	attractive	new	products.	
We	believe	that	Cogane™	and	Myogane™	
fall into	this	category,	with	the	potential	to	
provide	important	advances	in	the	treatment	
of	neurodegenerative	diseases	and,	ultimately,	
provide	the	basis	of	good	returns	for	shareholders.
We	thank	you	for	your	ongoing	support	and	
look	forward	to	delivering	exciting	new	data	
in 2012.
Mr A H Taylor
Non‑Executive	Chairman Business Review Phytopharm plc Annual Report and Accounts 201 1
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Cogane
TM 
and Myogane
TM
 are orally bioavailable 
neurotrophic factor modulators that readily cross the 
blood-brain barrier. They have been shown to induce 
and modulate the production of neurotrophic factors.
Many neurodegenerative diseases, including Parkinson’s disease, ALS, glaucoma 
and Alzheimer’s disease, occur as a result of neurodegenerative processes that 
exhibit many similarities suggesting that these diseases are related on a sub-cellular 
level. Because of the similarities in neurodegeneration across this range of diseases, 
there is hope that therapeutic advances, such as Phytopharm’s lead pharmaceutical 
programmes Cogane™ and Myogane™, could be beneficial in more than one of 
these diseases.
Dopaminergic neurones Retinal ganglion cells Spinal motor neurones Business Review Phytopharm plc Annual Report and Accounts 201 1
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Chief Executive’s review
Mr	Tim	Sharpington	Chief	Executive	Officer
Phytopharm	has	made	good	progress	in	2011.	
We	have	focused	our	efforts	and	resources	
on advancing	the	projects	in	our	pharmaceutical	
pipeline	and	these	programmes	remain	on	
track	to	reach	significant	milestones	in	the	
coming	year.	Our	lead	programmes	target	
neurodegenerative	diseases,	including	
Parkinson’s	disease,	Amyotrophic	Lateral	Sclerosis	
(ALS,	the	common	form	of	motor	neurone	
disease)	and	glaucoma.	These	diseases	share	a	
common	feature,	the	degeneration	of	neurones.	
There	is	a	significant	unmet	medical	need	for	
new	treatments	which	can	slow	or	halt	the	
progression	of	these	diseases	–	disease	modifying	
therapies	–	as	currently	available	medicines	
focus	largely	on	reducing	the	symptoms	of	
disease	rather	than	tackling	their	underlying	
cause.	Phytopharm’s	lead	development	
compounds,	Cogane™	and	Myogane™,	have	
demonstrated	disease	modifying	potential	
in a broad	range	of	experimental	models.	
If this	potential	translates	into	clinical	efficacy	
then Cogane™	and	Myogane™	will	provide	
significant	breakthroughs	in	the	treatment	
of neurodegenerative	diseases.
During	the	past	year	the	Company	has	presented	
new	data	which	supports	the	potential	use	
of Cogane™	and	Myogane™	as	new	treatments	
of	neurodegenerative	diseases.	We	have	also	
In Summary
•	 	 We	have	focused	our	efforts	and	resources	
on advancing	the	projects	in	our	pharmaceutical	
pipeline	and	these	programmes	remain	on	track	
to	reach	significant	milestones	in	the	coming	year.
•	 	 Around	the	end	of	2012	we	will	receive	the	
results	from	our	400	patient,	Phase	II	study	
of Cogane™	in	Parkinson’s	disease.
•	 	 We	have	also	worked	on	the	development	of	our	
novel	anti‑inflammatory	project,	P61.	Though	this	
project	is	at	an	early	stage	of	development	it	has	
made	good	progress	this	year.
•	 	 The	Company	has	been	successful	in	securing	
grant	funding	to	support	some	of	its	activities.
initiated	long‑term	studies	which	will	read	
out in	2012.	In	the	early	part	of	2012	we	
are expecting	results	from	new	preclinical	
studies in	ALS	and	glaucoma.	Around	the	
end of	2012	we	will	receive	the	results	
from our	400	patient,	Phase	II	study	of	
Cogane™	in	Parkinson’s	disease.	The	study	
of neurodegenerative	diseases	does,	by	
its nature,	take	some	time	and	everyone	
in the Company	is	focused	on	delivering	a	
high‑quality	study	as	efficiently	as	possible.	
The	Company	has	been	successful	in	securing	
grant	funding	to	support	some	of	its	activities.	
We	were	grateful	to	receive	financial	support	
for	our	ongoing	ALS	study	from	the	Motor	
Neurone	Disease	Association	whilst	the	
Technology	Strategy	Board	agreed	to	provide	
a grant	to	help	support	a	study	of	Myogane™	
in	glaucoma.	These	grants,	together	with	our	
virtual	staffing	model,	have	helped	us	to	move	
our	programmes	forward	whist	maintaining	
tight	cost	control.	Our	spending	has	been	in	
line	with	expectations	and	is	focused	on	our	
research	and	development	activities.
As	we	move	closer	to	obtaining	the	results	
from	our	clinical	study	in	Parkinson’s	disease,	
we	have	started	the	planning	process	for	our	
next	steps.	We	have	initiated	discussions	with	 Business Review Phytopharm plc Annual Report and Accounts 201 1
07
a number	of	pharmaceutical	companies	who	
are	interested	in	our	products	and,	while	we	
do	not	anticipate	concluding	significant	deals	
until	after	the	completion	of	our	ongoing	studies,	
we	have	been	pleased	with	the	initial	level	
of interest	expressed.	
In	addition	to	Cogane™	and	Myogane™	we	
have	also	worked	on	the	development	of	our	
novel	anti‑inflammatory	project,	P61.	Though	
this	project	is	at	an	early	stage	of	development	
it	has	made	good	progress	this	year.	A	lead	
compound	has	been	identified	and	a	number	
of	early	development	checkpoints	have	been	
successfully	passed.	We	are	looking	forward	
to testing	this	compound	in	a	number	of	disease	
models	next	year.
We	are	very	grateful	for	the	ongoing	support	
of	our	staff	and	shareholders.	Developing	new	
treatments	for	neurodegenerative	diseases	
is time	consuming,	expensive	and	not	without	
risk.	However,	there	are	significant	rewards	for	
developing	successful	new	treatments,	both	
in terms	of	benefits	to	those	affected	by	these	
diseases	and	in	terms	of	commercial	returns	
for	companies	and	their	shareholders.	We	are	
making	good	progress	with	our	developments	
and	are	confident	of	delivering	good	value	for	
shareholders	if	our	ongoing	studies	show	the	
same	level	of	benefit	as	those	performed	to	date.
Mr T Sharpington
Chief	Executive	Officer
Neurodegenerative diseases
Cogane™ and Myogane™ have demonstrated disease modifying 
potential in a broad range of experimental models. If this potential 
translates into clinical efficacy then Cogane™ and Myogane™ 
will provide significant breakthroughs in the treatment 
of neurodegenerative diseases.
Unmet need Dosage CONFIDENT-PD Market
There is a significant unmet medial need 
for new treatments which can slow or 
halt the progression of these diseases.
Both compounds have been formulated 
as once daily, orally administered therapies.
Cogane
TM
 is being studied in a Phase II 
trial of early stage Parkinson’s disease 
(CONFIDENT-PD) in movement disorder 
centres in North America and Europe.
The prevalence of Parkinson’s disease 
is estimated at being 0.3% of the whole 
population in industrialised countries. Business Review Phytopharm plc Annual Report and Accounts 201 1
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Business review
Strategy
Phytopharm	plc	(“Phytopharm”)	is	a	development	
stage	pharmaceutical	company	developing	novel	
treatments	targeting	diseases	with	high	levels	of	
unmet	need.	Our	lead	series	of compounds,	the	
Sapogenins	(including	Cogane™	and	Myogane™),	
has	the	potential	to	be	a	new	class	of	therapy	for	
neurodegenerative	diseases	including	Parkinson’s	
disease,	amyotrophic	lateral	sclerosis	(“ALS”)	
and glaucoma.
Phytopharm	operates	as	a	virtual	company	
ensuring	the	majority	of	our	financial	resources	
are	focused	on	our	pharmaceutical	pipeline.	
We	utilise	a	network	of	scientific	and	clinical	
experts	to	help	guide	our	development	projects	
with	our	experienced	pharmaceutical	managers	
overseeing	operations.
Our	commercially	focused	development	
projects	have	the	potential	to	produce	
significant	treatment	advances	in	our	target	
areas	of	neurodegeneration	and	inflammatory	
disease.	Our	products	are	single	chemical	entities	
with	novel	mechanisms	of	action	protected	
by strong	patent	families.	Our	pipeline	has	
been	sourced	from	our	own	research	activities	
and	from	licensing	activities,	particularly	from	
leading	research	institutions	in	China	with	whom	
the	Company	has	long‑standing	relationships.	
We	will	consider	adding	additional	products	
to our	pharmaceutical	pipeline	if	suitable	
candidates	are	identified.
Our	objective	is	to	develop	products	aimed	at	
major	markets	with	high	unmet	medical	need	
to	key	value	inflection	points	before	seeking	
late‑stage	development	and	commercial	partners	
as	appropriate.	We	will	consider	retaining	certain	
rights	to	products	targeting	orphan	indications.
Overview
We	continue	to	progress	our	strategy	
of focusing	on	our	pharmaceutical	programmes,	
specifically	on	the	development	of	Cogane™	
for	Parkinson’s	disease.	During	the	period,	
we reported	recruitment	of	patients	with	
Parkinson’s	disease	into	the	multi‑national	
Cogane™	Phase	II	dose	ranging	study	
(CONFIDENT‑PD)	which	commenced	
in November	2010.	The	study	is	being	
conducted	in	leading	movement	disorder	
centres	in	North	America	and	Europe.
Pharmaceutical programmes
Neurodegeneration
Neurodegeneration	is	the	umbrella	term	for	
the	progressive	loss	of	structure,	function	or	
death	of	neurones.	Many	neurodegenerative	
diseases,	including	Parkinson’s	disease,	ALS,	
glaucoma	and	Alzheimer’s	disease,	occur	as	
a result	of	neurodegenerative	processes	that	
exhibit	many	similarities	suggesting	that	these	
diseases	are	related	on	a	sub‑cellular	level.	
Because	of	the	similarities	in	neurodegeneration	
across	this	range	of	diseases,	there	is	hope	that	
therapeutic	advances,	such	as	Phytopharm’s	
lead	pharmaceutical	programmes	Cogane™	
and	Myogane™,	could	be	beneficial	in	more	
than	one	of	these	diseases.
The	Sapogenins
Cogane™	and	Myogane™	are	structurally	
related,	small	molecule,	chemical	entities	
and members	of	the	Sapogenin	class	of	
compounds.	They	are	orally	bioavailable	
neurotrophic	factor	modulators	that	readily	
cross	the	blood‑brain	barrier.	Both	compounds	
have	demonstrated	neuroprotective	effects	
in a	range	of	preclinical	models.	Specifically,	
Cogane™	and	Myogane™	have	been	shown	
to induce	and	modulate	the	production	of	
neurotrophic	factors.
Both	compounds	have	completed	long‑term	
toxicology	studies,	have	been	formulated	as	
once	daily,	orally	administered	therapies	and	
have	completed	Phase	I	studies	demonstrating	
good	bioavailability	and	safety	profiles.
“ Our commercially focused development 
projects have the potential to produce 
significant treatment advances in our 
target areas of neurodegeneration 
and inflammatory disease.” Business Review Phytopharm plc Annual Report and Accounts 201 1
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Cogane™ and Myogane™, our lead 
neurodegenerative products
Structurally related, small molecule, chemical entities and members 
of the Sapogenin class of compounds. Both compounds have 
demonstrated neuroprotective effects in a range of preclinical models.
•		 Induce	and	modulate	the	production	
of neutrophic	factors
•	Completed	long‑term	toxicology	studies
•		 Been	formulated	as	once‑daily,	orally	
administered	therapies
•	Completed	Phase	1	studies
•		 Demonstrated	good	bioavailability	
and safety	profile
Cogane™ is being studied in a Phase II 
trial of early stage Parkinson’s disease 
and in preclinical models of ALS. 
It has also been evaluated for safety 
andtolerability in patients 
with Alzheimer’s disease.
Myogane
TM
 is currently being evaluated in 
an in vivo model of glaucoma. Myogane™ 
has already been tested in standard 
preclinical safety studies that we believe, 
subject to funding, will be able to progress 
the project rapidly into Phase II studies if 
the in vivo models provide positive data.
Cogane™	is	being	studied	in	a	Phase II	trial	
of early	stage	Parkinson’s	disease.	It	has	also	
been	evaluated	for	safety	and	tolerability	
in patients	with	Alzheimer’s	disease.
Additionally,	Cogane™	is	being	assessed	
in preclinical	models	of	ALS	and	Myogane™	
in preclinical	models	of	glaucoma,	
a neurodegenerative	disease	of	the	eye.	
If results	are	encouraging,	they	have	the	potential	
to	be	progressed	rapidly	into	clinical	proof	
of concept	studies.
The	neuroprotective	and	neurotrophic	
actions of	Cogane™	and	Myogane™	suggest	
potential	beneficial	effects	in	other	orphan	
neurodegenerative	diseases.
Cogane™ in Parkinson’s disease
Parkinson’s	disease	is	a	movement	disorder	
characterised	by	muscle	rigidity,	tremor	and	
a slowing	of	physical	movement	(bradykinesia)	
and,	in	extreme	cases,	a	loss	of	physical	
movement	(akinesia).	The	primary	symptoms	
are	the	result	of	altered	signalling	in	an	area	
of the	brain,	the	striatum,	responsible	for	
the control	of	movement.	This	is	caused	
by degeneration	of	dopaminergic	neurones	
between	the	substantia	nigra	and	the	 Business Review Phytopharm plc Annual Report and Accounts 201 1
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Business review (continued)
Pharmaceutical programmes 
(continued)
The	Sapogenins	(continued)
Cogane™ in Parkinson’s disease (continued)
striatum	parts	of	the	brain,	leading	to	insufficient	
formation	and	action	of	dopamine.	Parkinson’s	
disease	is	therefore	termed	a	neurodegenerative	
disease.	The	disease	is	slow	in	onset	and	the	
appearance	of	symptoms	reflects	the	gradual	
loss	of	dopaminergic	neurones.
The	prevalence	of	Parkinson’s	disease	
is estimated	at	being	0.3%	of	the	whole	
population	in	industrialised	countries,	rising	
to 1%	in	those	over	60	years	of	age	and	to	4%	
of the	population	over	80.	The	market	size	
for Parkinson’s	disease	was	$3.2	billion	in	2009	
and is	forecast	to	grow	to	$4.6	billion	by	2012.
Mode of action
Glial	cell‑derived	neurotrophic	factor	(“GDNF”)	
and	brain	derived	neurotrophic	factor	(“BDNF”)	
are	naturally	occurring	proteins	in	the	brain	
that	have	been	shown	to	be	effective	in	
re‑growing	damaged	nerves.	As	they	are	
proteins,	they	cannot	be	given	orally	(in	tablet	
or	liquid	form)	because	they	are	degraded	
in the	stomach	and	intestine	and	also	do	not	
readily	cross	the	blood‑brain	barrier.	GDNF	
and BDNF	can	work	only	when	injected	into,	
or when	produced	by,	the	brain.	Direct	injection	
of	GDNF	into	the	area	of	the	brain	involved	
in Parkinson’s	disease	has	shown	evidence	
of being	clinically	effective	in	restoring	the	
control	of	movement	but	requires	highly	
complex	and	difficult	surgical	procedures.
Cogane™	has	the	potential	to	overcome	
many of	the	difficulties	associated	with	GDNF	
administration.	In	preclinical	models,	Cogane™	
stimulated	the	release	of	GDNF	and	BDNF	
in the	brain	and	increased	neurite	outgrowth.	
When	administered	orally	in	several	different	
preclinical	models	of	Parkinson’s	disease,	
Cogane™	reversed	the	decrease	of	neurotrophic	
factors	and	reversed	the	loss	of	dopaminergic	
neurones	in	the	striatum,	the	area	of	the	brain	
most	affected	in	Parkinson’s	disease.
Progress to date
The	profile	of	Cogane™	suggests	that	it	will	
have benefit	in	both	the	motor	and	non‑motor	
symptoms	of	Parkinson’s	disease.	In	addition	
its effect	on	restoring	damaged	neurones	to	
a functioning	state	implies	that	it	might	result	
in	a	delay	in	the	progression	of	disease	in	recently	
diagnosed	patients.
Data	from	preclinical	models	also	indicates	that	
Cogane™	when	administered	in	conjunction	with	
L‑DOPA	showed	additional	benefit	over	L‑DOPA	
alone.	Other	data	suggests	that	Cogane™	reduces	
the	side	effects	associated	with	L‑DOPA.	If	these	
effects	of	improved	efficacy	and	reduced	side	
effects	of L‑DOPA	by co‑administration	of	
Cogane™	are	also	observed	in	patients,	this	
will have	significant	benefit	in	the	management	
of	patients	with	more	severe	disease.
Cogane™	is	currently	being	evaluated	
in a 400 patient	multi‑national	Phase	II,	
randomised,	double	blind,	placebo	controlled,	
dose	ranging	study	(CONFIDENT‑PD).	The	study	
is	comparing	the	safety,	tolerability	and	efficacy	
of	three	doses	of	Cogane™	and	placebo	when	
administered	for	28	weeks	to	untreated	patients	
with	early	stage	Parkinson’s	disease.	The	study	
will	assess	the	efficacy	of	Cogane™	in	the	
treatment	of	both	motor	and	non‑motor	
symptoms	of	Parkinson’s	disease.	Recruitment	
into	the	study	is	ongoing	and	expected	to	be	
completed	in	spring	2012.	Our	target	remains	
to have	results	from	the	study	available	
around the	end	of	2012.
Cogane™ in motor neurone disease/ALS
ALS,	also	known	as	Lou	Gehrig’s	disease,	
is the most	prevalent	form	of	motor	neurone	
disease	which	generally	strikes	people	between	
40	and 60	years	of	age.	It	is	characterised	
by progressive	loss	of	both	lower	(spinal	cord	
and brain	stem)	and	upper	(cerebral	cortex)	
motor	neurones,	which	leads	to	severe	muscle	
weakness	and	wasting,	followed	by	paralysis	and	
death,	generally	caused	by	respiratory	failure.	 Business Review Phytopharm plc Annual Report and Accounts 201 1
11
There	is	an	urgent	need	for	the	
development of	new	approaches	
to treat this devastating	condition.
It	is	estimated	that	there	are	over	30,000	
patients	living	with	ALS	in	the	seven	major	
markets.	ALS	is	classified	as	an	orphan	
disease and,	as	such,	offers	the	potential	
for expedited development.
Progress to date
ALS	is	the	most	common	form	of	motor	neurone	
disease,	a	neurodegenerative	disease	with	
limited	treatment	options	and	poor	prognosis.	
Cogane™	has	previously	shown	promising	
activity	in	preliminary	in	vitro	and	in	vivo	
models	of	ALS.	In	a	preclinical	study	using	
a toxin‑induced	model	of	ALS,	Cogane™	
protected	motor	neurones	and	demonstrated	
anti‑inflammatory	effects	compared	to	the	
control	animals.	A	study	of	Cogane™	in	the	
genetic	“gold	standard”	in	vivo	model	of	ALS	
is ongoing.	This	study	is	being	performed	
with the	support	of	the	Motor	Neurone	
Disease	Association,	a	UK‑based	charitable	
organisation	which	has	provided	a	grant	to	
cover	the	costs	of	the	study.	Results	from	
the study	are	expected	in	Q1	2012.
As	Cogane™	is	already	in	clinical	trials	for	
Parkinson’s	disease,	rapid	progression	into	
efficacy	indicating	trials	will	be	possible,	subject	
to	funding,	if	results	from	this	preclinical	
study are	positive.	Furthermore,	ALS	is	an	
orphan	indication,	a	classification	which	
supports	expedited	clinical	development.	
Cogane™	has recently	been	granted	Orphan	
Drug	status by	both	the	European	Commission	
and by	the US	Food	and	Drug	Administration	
for	development	in	ALS.	Orphan	Drug	status	
allows	significant	access	to	the	regulatory	
authorities	for	advice	and	expedited	clinical	
progression	as well	as	financial	advantages.
Glaucoma
A	programme	investigating	the	effect	
of Myogane™	in	glaucoma,	a	neurodegenerative	
condition	of	the	eye,	has	recently	been	initiated.	
Current	pharmacological	treatments	for	
glaucoma	are	predominantly	focused	on	
reducing	the	elevated	intraocular	pressure	
(“IOP”)	in	the	eye,	which	is	often	associated	
with	glaucoma.	However,	a	significant	number	
of	patients	with glaucoma	do	not	exhibit	raised	
IOP	and,	in	addition,	a	significant	number	
of patients	whose	IOP	is	successfully	reduced	
still experience	ongoing	neurodegeneration	
resulting	in	deterioration	of	sight.	We	therefore	
believe	that	there	is	a	major	unmet	need	
and a commercial	opportunity	for	products	
which could	successfully	treat	the	underlying	
neurodegenerative	process	in	glaucoma.
“ The market size for 
Parkinson’s disease 
was $3.2 billion  
in 2009 and is 
forecast to grow 
to $4.6 billion 
by 2012.” Business Review Phytopharm plc Annual Report and Accounts 201 1
12
Business review (continued)
Pharmaceutical programmes 
(continued)
Glaucoma	(continued)
There	is	a	growing	body	of	scientific	literature	
describing	the	neuroprotective	effects	of	
neurotrophic	factors,	specifically	brain	derived	
neurotrophic	factors	(“BDNF”)	and	glial‑cell	
derived	neurotrophic	factors	(“GDNF”)	in	models	
of	glaucoma.	Myogane™	has	been	shown	
to modulate	the	production	of	neurotrophic	
factors	in	a	number	of	cell	types	and	to	have	
beneficial	neuroprotective	and	neurorestorative	
effects	on	retinal	ganglion	cells,	the	cells	which	
degenerate	in	glaucoma.	Myogane™	is	currently	
being	evaluated	in	an	in	vivo	model	of	glaucoma;	
it	is	expected	that	results	from	these	studies	
will	be	available	in	Q1	2012.	As	Myogane™	has	
already	been	tested	in	standard	preclinical	safety	
studies	we	believe	that,	subject	to	funding,	we	
will	be	able	to	progress	the	project	rapidly	into	
Phase	II	studies	if	the	in vivo	models	provide	
positive	data.
Alzheimer’s	disease
Cogane™	and	Myogane™	protect	cortical	
neurones	from	glutamate	and	 ‑amyloid	induced	
neuronal	damage	and	increase	neurite	outgrowth	
in	vitro.	Cogane™	and	Myogane™	also	increase	
the density	of	muscarinic	receptors	both	in	vitro	
and in	vivo.	In	vivo,	Cogane™	and	Myogane™	
improve	cognition	in the	aged	rat	and		
‑amyloid/ibotenic	acid	rat model	of	
Alzheimer’s	disease.
The	safety,	tolerability	and	pharmacokinetics	
of orally	administered	Cogane™	in	patients	
with	Alzheimer’s	disease	have	previously	been	
assessed	in	a	twelve	week	study.	Cogane™	was	
generally	well	tolerated	in	this	patient	group.	
Further	work	may	be	undertaken	in	this	area	
if additional	resources	become	available.
P61	programme
During	the	period	we	re‑activated	the	
P61 programme,	which	was	established	
to investigate	the	known	pharmacological	
properties	of	curcumin	and	gingerol.	P61	is	
a series	of	novel	new	chemical	entities	(“NCEs”)	
which	exhibit	anti‑inflammatory,	anti‑remodelling,	
anti‑spasmodic	and	TRPV1	modulating	activities.	
This	range	of	activity	within	single	molecules	
could	provide	attractive	therapeutic	options	
for	a	number	of	inflammatory	diseases	including	
chronic	obstructive	pulmonary	disease,	asthma,	
atopic	dermatitis,	psoriasis,	gastrointestinal	
inflammatory	conditions	and	pain.	A	lead	
compound	has	been	identified	and	is	being	
characterised	to	better	understand	its	
pharmaceutical	potential.
Legacy products
A	co‑operation	agreement	was	signed	
with the Council	for	Scientific	and	Industrial	
Research,	South	Africa,	who	will	fund	the	
future	development	and	commercialisation	
of Hoodia	gordonii	as	an	appetite	suppressant.	
Phytopharm	retains	a	commercial	interest	
in the	project	and	will	receive	a	proportion	
of any future	commercial	milestones	and	
royalties	from	the	project.
The	sales	and	distribution	agreement	with	
Intervet/Schering	Plough	Animal	Health	for	
Phytopica®,	our	canine	animal	health	product,	
came	to	an	end	in	December	2010.	 Business Review Phytopharm plc Annual Report and Accounts 201 1
13
Financial review
Ongoing pharmaceutical development
We have continued to implement a strategy focused on the progression 
of our pharmaceutical development programmes. 
Financial review
The	financial	performance	for	the	year	
ended 30	September	2011	reflects	the	
Group’s ongoing	pharmaceutical	development	
activities,	particularly	the	progress	of	our	
pharmaceutical	development	programmes	
in neurodegenerative	diseases.
Following	our	successful	fundraising	activities	
in the	previous	financial	year,	we	have	
continued	to	implement	a	strategy	focused	
on the	progression	of	our	pharmaceutical	
development	programmes.	We	continue	
to operate	with	a	lean	operational	structure	
whilst	also	diversifying	our	development	
pipeline	in	a	cost	efficient	manner,	with	the	
potential	for	further	programmes	to	enter	the	
clinic	or	become	licensed	in	the	medium	term.	
Based	on	our	current	expectations	Phytopharm	
is	financed	through	to	the	end	of	2013.
Revenue
Following	the	conclusion	of	activities	on	our	
legacy	programmes	revenue	from	continuing	
operations	amounted	to	£0.07	million	
(2010: £0.70	million).
Research and development expenses
Research	and	development	expenses	for	the	
year	increased	from	£4.01	million	for	the	year	
ended	30	September	2010	to	£7.46	million	in	
the	current	year.	This	increase	in	expenditure	
on	research	and	development	activities	
reflects	the	progression	of	Cogane™	into	
the CONFIDENT‑PD	clinical	study.
Administrative expenses
Our	administrative	expenses	remained	
fairly constant	at	£1.15	million	compared	
to £1.12 million	in	the	previous	year,	in	line	
with our	virtual	business	model.
Finance income
Finance	income	represents	interest	received	
and	receivable	from	our	cash	balances	which	
amounted	to	£0.38	million	during	the	year	
compared	to	£0.29	million	for	the	year	ended	
30	September	2010	due	to	higher	average	
cash	balances	during	the	financial	year	
following	the	fundraising	completed	during	
the previous	year.
Taxation
The	tax	credit	of	£0.51	million	for	the	year	
represents	amounts	that	are	expected	to	be	
received	under	current	legislation	on	research	
and	development	tax	credits.	The	increase	
in the	year	is	due	to	increased	expenditure	
on our research	and	development	activities	
primarily	in	relation	to	the	Cogane™	development	
programme	which	is	also	reflected	in	the	increase	
in	our	total	loss	for	the	year	of £7.66 million	
(2010:	£3.80 million).
Administrative expenses
£1.15m
2010: £1.12m
Research and development expenses 
£7.46m	
2010: £4.01m  Business Review Phytopharm plc Annual Report and Accounts 201 1
14
Financial review (continued)
Balance sheet
Non‑current	assets
Non‑current	assets	representing	property,	plant	
and	equipment	amounted	to	£0.08 million	at	
30	September	2011	compared to	£0.11 million	
in	the	previous	year.
Current	assets
Current	assets	comprise	trade	and	other	
receivables,	tax	receivable,	money	market	
investments	and	cash	and	cash	equivalents	
which	decreased	to	£18.51	million	at	
30 September	2011	(2010:	£24.50	million).
Money	market	investments	and	cash	and	cash	
equivalents	at	30	September	2011	amounted	
to	£17.57	million	reflecting	net	cash	outflows	
from	research	and	development	activities.	
Money	market	investments	represent	fixed‑rate,	
short‑term	deposits	placed	with	a	range	of	
banks	at	fixed	terms	with	a	maturity	date	
of more	than	three	months.	Cash	and	cash	
equivalents	are	invested	for	a	period	of	90	
days	or	less	with	a	similar	range	of	banks.
Our	current	tax	receivable	at	
30 September 2011	increased	to	
£0.48 million compared	to £0.41	million	
at 30 September	2010.	This increase	in	the	
current	tax	receivable	reflects	an	increase	
in expenditure	on	our	pharmaceutical	
programmes;	however,	the current	amount	
reclaimable	is	capped	at	the	level	of	PAYE	
and NIC	paid	by	the	Group.
Current	liabilities
Current	liabilities	representing	trade	and	
other payables,	other	taxation	and	social	
security,	accruals	and	deferred	income	and	
other	payables	increased	from	£1.13	million	
at 30 September	2010	to	£2.63	million	at	
the current	year	end	primarily	due	to	the	
recognition	of	unbilled	costs	of	research	
and development	activities.
Equity
Share	capital	and	share	premium	at	
30 September	2011	have	broadly	remained	
unchanged	at	£3.47	million	and	£77.28	million	
respectively.	During	the	year	the	Group	issued	
124,539	new	ordinary	shares	for	cash	
consideration	of	£0.01	million	following	
the exercise	of	share	options.
Cash flow
Net	cash	used	in	operating	activities	for	
the year	was	£6.42	million,	an	increase	from	
£4.44 million	in	the	previous	year,	reflecting	
our	continued	focus	on	the	development	
of our	pharmaceutical	programmes.
“ Diversifying our development pipeline 
in a cost efficient manner.”
Cash and money market investments 
£17.57m
2010: £23.61m Business Review Phytopharm plc Annual Report and Accounts 201 1
15
We	expect	net	cash	outflow	to	continue	as	we	
progress	the	development	of	our	pharmaceutical	
programmes,	primarily	Cogane™	in	the	Phase	II	
proof	of	concept	and	dose	range	finding	study	
(CONFIDENT‑PD)	which	commenced	recruitment	
in	November	2010.	We	also	continue	to	maintain	
our	strong	relationships	with	disease	specific	
charities	which	may	result	in	additional	funding	
being	available.
Outlook
Following	the	start	of	recruitment	onto	
the CONFIDENT‑PD	clinical	study,	we	look	
forward	to	continuing	the	development	of	our	
pharmaceutical	pipeline	during	the	remainder	
of	2011	and	into	2012.	This	development	
work will	also	include	the	completion	of	the	
investigations	into	the	effects	of	Cogane™	
in ALS	and	Myogane™	in	glaucoma	which	may,	
funding	dependent,	allow	us	to	initiate	further	
efficacy	indicating	trials	in	additional	indications.	
We	also	expect	to	complete	the	current	phase	
of	the	P61	programmes.
In	line	with	our	virtual	operational	structure,	
we will	continue	to	outsource	the	majority	
of our	operations	to	specialist	external	
organisations	enabling	us	to	operate	with	
a low headcount	and	minimal	infrastructure.	
This lean	operational	structure	confers	substantial	
cost	and	technical	benefits	as	the nature	
and range	of	our	activities	change	as	our	
programmes	progress	through	the	various	
stages	of	development.	Efficiency	and cost	
control	continue	to	be	a	key	focus.
Forward looking statements
Certain	information	included	in	these	
statements	is	forward	looking	and	involves	
risk and	uncertainties	that	could	cause	results	
to differ	materially	from	those	expressed	or	
implied	by	the	forward	looking	statements.
Forward	looking	statements	include,	without	
limitation,	projections	relating	to	results	of	
operations	and	financial	conditions,	market	
estimates,	the	Group’s	plans	and	objectives	
for future	operations,	including	future	revenues,	
financial	plans	and	expected	expenditures	and	
divestments.	All	forward‑looking	statements	
in this	report	are	based	on	information	known	
to the	Group	on	the	date	of	this	release.	
The Group	undertakes	no	obligation	to	publicly	
update	or	revise	any	forward	looking	statement,	
whether	as	a	result	of	new	information,	future	
events	or	otherwise.
It	is	not	reasonably	possible	to	itemise	all	
of the many	factors	and	specific	events	that	
could	cause	the	Group’s	forward	looking	
statements	to	be	incorrect	or	that	could	
otherwise	have	a	material	adverse	effect	
on the	future	operations	or	results	of	
the Group. 16
Principal risks and uncertainties
Phytopharm plc Annual Report and Accounts 201 1 Corporate Governance
The nature of pharmaceutical development is such that there 
are significant inherent risks due to the long and complex 
development process.
Below are those principal risks and uncertainties that the Board considers could have a material impact 
on the Group’s operational results, financial condition and prospects. These risks are not in any particular 
order of priority and there may be other risks that are either currently unknown or not considered material 
which could have a similar impact on the Group’s business in the future.
The Board reviews each area of the business at least annually to identify material risks and the controls in place 
to manage these risks. This comprehensive review is undertaken as part of the review of internal controls as set 
out on pages 30 and 31.
Risk Description and mitigating activities
Industry  
risk
In	common	with	other	research	and	development	stage	businesses,	Phytopharm’s	business	risks	relate	principally	to	the	success	of	its	
development	programmes	and	to	the	need	to	fund	its	operations	through	these.	The	success	of	the	Group’s	programmes	depends	upon	
the	quality	of	the	design	and	the	implementation	of	each	programme.	The	progress	of	the	development	programmes	therefore	represents	
the	best	indicator	of	the	Group’s	performance.	A	full	review	of	the	programmes	is	given	in	the	Business	Review	on	pages	8	to	12.	
Financial  
risk
The	Group	expects	to	continue	to	make	losses	until	it	is	able	to	increase	its	revenues	sufficiently.	Additional	funds	such	as	charitable	
income,	collaboration	deals	and/or	further	financing	may	be	required	to	allow	further	scope	for	product	development.	The	availability	
and	timing	of	such	additional	external	funds	represent	a	material	uncertainty,	although	the	Group	currently	has	sufficient	funds	to	
finance	its	operational	activities	for	at	least	the	next	twelve	months.
Clinical and 
regulatory risk
Successful	commercialisation	of	the	Group’s	products	is	likely	to	depend	on	successful	progress	through	clinical	studies	and	registration.	
Development	of	product	candidates	involves	a	lengthy	and	complex	process	and	products	may	not	meet	the	necessary	requirements	
in terms	of	toxicity,	efficacy	or	safety,	or	the	relevant	regulators	may	not	agree	with	the	conclusions	of	the	Group’s	research	and	may	
require	further	testing	or	withhold	approval	altogether.
Competition  
risk
The	Group’s	success	depends	on	acceptance	of	the	Group’s	products	by	the	markets,	including	physicians	and	third	party	payers,	
and consequently	the	Group’s	progress	may	be	adversely	affected	if	it	is	unable	to	achieve	market	acceptance	of	its	products.	Factors	
which	may	affect	the	rate	and	level	of	market	acceptance	of	any	of	the	Group’s	products	include	the	existence	or	entry	on	to	the	market	
of	superior	competing	products	or	therapies	and	the	price	of	the	Group’s	products	compared	to	competing	products	and	overall	cost	
effectiveness	of	the	product.
Intellectual 
property risk
The	Group’s	success	depends	in	part	on	its	ability	to	obtain	and	maintain	protection	for	its	intellectual	and	proprietary	information,	
so that	it	can	stop	others	from	making,	using	or	selling	its	inventions	or	proprietary	rights.	The	Group’s	patent	applications	may	not	
be granted	and	its	existing	patent	rights	may	be	successfully	challenged	and	revoked.
Counterparty  
risk
The	Group	relies	on	third	party	organisations	to	conduct	its	clinical	trials	and	to	manufacture	its	products.	If	the	relationship	with,	
or performance	of,	any	of	these	partners	is	adversely	affected,	the	Group’s	results	or	operations	may	be	adversely	impacted.	The	Group	
also	derives	revenue	or	financial	support	from	its	collaborators	and	expects	to	derive	additional	support	from	partnering	with certain	
charitable	organisations.	If	these	relationships	are	adversely	affected,	or	if	the	products	involved	fail	to	continue	to	make	satisfactory	
progress,	the	Group’s	results	or	operations	may	be	adversely	impacted.
Foreign 
exchange risk
The	Group	records	its	transactions	and	prepares	its	financial	statements	in	sterling.	Where	possible	the	Group	maintains	natural	hedges	
by	matching	foreign	currency	income	with	foreign	currency	expenditure.	The	Group	incurs	expenditure	in	foreign	currency	relating	
principally	to	clinical	trials	which	may	exceed	any	revenues	in	foreign	currencies.	To	the	extent	that	income	and	expenditure	in	foreign	
currencies	are	not	matched,	fluctuations	in	exchange	rates	between	sterling	and	foreign	currencies,	principally	US	dollar	and	Euro,	may	
result	in	realised	or	unrealised	foreign	exchange	gains	and	losses.	Where	there	is	certainty	of	the	amount	and	timing	of	expenditure	of	
foreign	currencies,	the	Group	may	purchase	financial	instruments	to	minimise	any	foreign	exchange	gains	or	losses.	Where	the	timing	
and/or	the amount	to	be	received	is	uncertain,	risk	management	is	more	difficult	and	the	Group	will	use	financial	instruments	wherever	
possible.	To	the	extent	that	financial	instruments	are	not	utilised,	any	fluctuations	in	foreign	exchange	movements	may	have	a	material	
adverse	impact	on	the	results	from	operating	activities. Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
17
Board of Directors
Mr Alistair Taylor
Non-Executive Chairman
Mr	Taylor	is	formerly	Executive	Chairman	of	UK	listed	Lombard	Medical	
Technologies	plc	and	has	over	47	years’	experience	in	the	healthcare	
industry;	12	years	in	pharmaceuticals	and	over	37	years	in	medical	
devices.	He	was	Chief	Executive	Officer	of	Biocompatibles	International	
plc	from	1994	to	1998	and	during	this	period	the	company	progressed	
from	a technology‑based	start	up	company,	through	flotation	to	a	
FTSE 250	company.	Prior	to	this,	Mr	Taylor	was	Chief	Executive	Officer	
of	Schneider	Inc,	a	Swiss	interventional	cardiology/radiology	device	
company	and	during	this	time	the	company’s	turnover	grew	to	
$100 million.	Schneider	was	subsequently	sold	by	Pfizer	Inc.,	its	parent,	
for	over	$2 billion.	Mr	Taylor’s	early	career	included	the	Chief	
Accountant	role	at Beecham	Pharmaceuticals.	He	is	also	Chairman	
of Starbridge	Systems	Limited	and	Nightingale‑EOS	Limited.
Mr Tim Sharpington
Chief Executive
Mr	Sharpington	has	nearly	20	years’	experience	in	the	life	sciences	sector	
with	various	biotechnology	and	pharmaceutical	service	companies	in	
Europe	and	the	USA.	He	has	broad	experience	across	drug	development,	
in‑licensing,	mergers	and	acquisitions	as	well	as	fundraisings.	In 2002,	
Mr Sharpington	was	appointed	as	Development	Director	at	Arakis	Ltd,	
a UK‑based	inflammatory	and	CNS	focused	company	where	he	led	the	
development	of	four	projects	from	concept	to	Phase	II,	participated	in	
the	licensing	of	its	lead	product	to	Novartis	and	also	had	a	pivotal	role	
in the	successful	sale	of	Arakis	to	Sosei	in	2005	for	£107	million.	After	
leaving	Arakis	Mr	Sharpington	founded	and	became	Chief	Executive	
Officer	of	Serentis	Limited	in	2006	where	he	led	a	£15	million	venture	
capital	fundraising	and	the	development	of	two	dermatology	products	
to	Phase	II.
Mr Roger Hickling
Research and Development Director
Mr	Hickling	has	a	BSc	in	chemistry	from	Kings	College,	University	of	
London	and	over	30	years’	experience	in	pharmaceutical	research	
and development.	This	includes	management	of	development	portfolios	
and	projects	from	preclinical	through	to	Phase	IV	covering	a range	
of disease	areas.	In	addition,	Mr	Hickling	has	extensive	experience	in	
international	regulatory	affairs,	including	clinical	trials	and	marketing	
applications.	Between	1976	and	1998	Mr	Hickling	worked	at	SmithKline	
Beecham	where	he	oversaw	both	in‑house	and	partnered	early	stage	
neuroscience	development	projects.	Mr	Hickling	held	a	variety	of	positions	
at	several	pharmaceutical	companies	between	1998	and	2009	including	
Alizyme	Therapeutics	plc.	He	was	appointed	to	the	Board	of	Alizyme	
Therapeutics	as	Research	and	Development	Director	in	2006	with	
responsibility	for	research	and	development	strategy	development,	
all research	and	development	operations	and	staff.
Mr Alexander (Sandy) Morrison
Non-Executive Director
Mr	Morrison	has	a	BSc	(Hons)	in	applied	chemistry	(Strathclyde)	and	
has over	20	years’	experience	in	general	and	international	management,	
global	supply	chain	management	and	research	and	development.	
He was	Chief	Executive	Officer	of	Lipton	Ltd,	the	global	tea	sourcing	
organisation	for	Unilever	with	operations	in	six	countries	from	2000	
to 2006.	During	Mr	Morrison’s	period	as	CEO,	substantial	operational	
and	financial	improvements	were	made	to	the	Unilever	global	tea	
supply	chain	and	he	also	played	a	significant	part	in	addressing	issues	
in the	international	tea	trade.	In	the	immediate	years	prior	to	2000,	
Mr Morrison	had	senior	international	food	and	beverage	roles	for	
Unilever	outside	the	UK,	in	the	supply	chain	and	in	research	and	
development,	both	at	the	Rotterdam	head	office	and	in	the	
Unilever food	and	beverage	subsidiary	in	Australia.
Dr Peter Blower
Non-Executive Director
Dr	Blower	has	over	40	years’	experience	in	medicinal	research	and	
development	with	a	strong	background	in	the	field	of	neuroscience.	
He joined	Beecham	Research	Laboratories	in	1969	and	rose	to	the	
position	of	Director	of	New	Neuroscience	products	at	SmithKline	
Beecham	in	1996	before	leaving	in	2000	to	form	his	own	consultancy	
company.	He	has	been	elected	to	Fellowship	of	the	Royal	Society	of	
Medicine	and	the	Institute	of	Biology	and	has	authored	over	seventy	
scientific	publications.	He	has	a	M.I.Biol	from	the	Institute	of	Biology	
(1972),	a	PhD	in	pharmacology	from	the	University	of	Aston	(1977)	
and a	DSc	from	the	University	of	East	London	(1997). Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
18
The Directors of Phytopharm (registered in England and Wales: 03131723) present their report together with the audited consolidated 
and Company financial statements for the year ended 30 September 2011.
The Remuneration Report can be found on pages 22 to 26 and the Corporate Governance Report, including the corporate social responsibility statement, 
can be found on pages 27 to 32.
Principal activities
Phytopharm is a development stage pharmaceutical company developing novel treatments targeting diseases with high levels of unmet need. 
For further details regarding the Group’s activities, please refer to the Chairman and Chief Executive Officer’s Review and the Business Review.
Review of the business and future developments
A review of the development and performance of the Group including important events, progress during the year, the financial performance 
during the year and likely future developments, can be found in the Chairman and Chief Executive Officer’s Review, the Business Review 
and the Financial Review on pages 4 to 15. The principal risks and uncertainties facing the Group can be found on page 16.
The Directors are satisfied with the progress made across the product portfolio and with the year end position.
Key performance indicators
The principal Key Performance Indicators (“KPIs”) of the Group are the progress of the Group’s development programmes through preclinical and 
clinical development, in particular its lead programme Cogane™ in Parkinson’s disease, whilst tightly controlling its cost base. The Group focuses its 
financial resources on its research and development activities whilst operating as a virtual company keeping administrative costs to a minimum and 
ensuring cash resources are sufficient to fulfil its current strategy. While these KPIs demonstrate relevant factors by reference to which the development, 
performance and position of the Group can be measured effectively, it is the nature of Phytopharm’s business and the biopharmaceutical industry 
in general, that these KPIs are not readily or meaningfully comparable on a year-on-year basis. Details of financial performance are given in the 
Financial Review on pages 13 to 15.
Key events 
Key events during the past year are referred to in the Chairman and Chief Executive Officer’s Statement, the Business Review and the Financial Review. 
They include the following:
•	Cogane™ Phase II Parkinson’s disease trial (CONFIDENT-PD) on track to complete recruitment in spring 2012 with results around the end of 2012;
•	positive preclinical results on Cogane™ in Parkinson’s disease presented at the Movement Disorders Conference in June 2011;
•	 Cogane™ secures Orphan Drug status from US Food and Drug Administration and the European Commission for the treatment of amyotrophic 
lateral sclerosis;
•	 positive data achieved in preclinical model of ALS with Cogane™. Initiated “gold standard” genetic in vivo model with the financial support 
of the UK Motor Neurone Disease Association; results anticipated in Q1 2012;
•	 encouraging early data reported from the recently initiated programme investigating the effect of Myogane™ in glaucoma. Further results 
due in Q1 2012;
•	Technology Strategy Board agreed to provide grant funding to support the development of Myogane™ in glaucoma; and
•	P61 anti-inflammatory project re-activated, lead compound selected for further development.
Post balance sheet events
See note 24.
Results and dividends
The Group’s results for the year ended 30 September 2011 are presented on page 36. The Group’s net loss after taxation was £7,658,330 
(2010: £3,801,514). The Group is not yet in a position to pay a dividend and the loss for the year has been added to the accumulated losses 
in equity.
Research and development activities
The Group continues to develop pharmaceutical products, as described in the Business Review.
Directors’ report
for the year ended 30 September 201 1 Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
19
Directors
The Directors of the Company, all of whom have been Directors for the whole of the year and up to the date of signing the financial statements, 
are as follows:
Executive Directors
Mr T Sharpington  Chief Executive Officer 
Mr R I Hickling  Research and Development Director
Non-Executive Directors
Mr A H Taylor  Non-Executive Chairman 
Mr A D Morrison 
Dr P R Blower  Senior Independent Director
Biographical details of the Directors are shown on page 17.
There were no contracts of significance with the Company or any of its subsidiaries existing during or at the end of the financial year in which 
a Director of the Company was materially interested.
The interests of Directors in the shares and share options of the Company at 30 September 2011 are disclosed in the Remuneration Report 
of the Board of Directors on pages 22 to 26.
Re‑election
At the 2012 Annual General Meeting (“AGM”), in accordance with the Company’s Articles of Association and the provisions of the UK Corporate 
Governance Code, Mr R I Hickling and Dr P R Blower will retire. Being eligible, and with the Board’s recommendation, they will offer themselves 
for re-election.
Mr A H Taylor, Dr P R Blower and Mr A D Morrison, as Non-Executive Directors, have letters of appointment which provide for three months’ notice 
from either party.
The service contracts of the Executive Directors and the letters of appointment for the Non-Executive Directors are available for inspection 
at the registered office of the Company and will be available at the 2012 AGM as specified in the notice of meeting.
In accordance with Section 992 of the Companies Act 2006, the Directors disclose that the rules regarding the appointment and replacement of Directors 
are contained in the Company’s Articles of Association, which may be amended with shareholder approval in accordance with relevant legislation. 
The powers of the Directors are contained in the Company’s Articles of Association or in accordance with the provisions of the Companies Act 2006. 
The Companies Act 2006 provides that Directors may issue and buy back the Company’s shares on behalf of the Company, subject to authority 
being given to the Directors by shareholders in general meeting. No authority to buy back the Company’s ordinary shares has been sought.
Directors’ interests
Details of the Directors’ interests in the ordinary share capital of the Company, as required to be disclosed in accordance with the Disclosure 
and Transparency Rules, are given in the Remuneration Report. During the financial year under review, the Directors purchased the following 
ordinary shares:
Mr T Sharpington 120,000 ordinary shares 
Mr R I Hickling 120,000 ordinary shares
There were no other changes in the Directors’ shareholdings between 30 September 2011 and the date of this report.
Directors’ and officers’ liability insurance
The Group has in place for the whole of the year, and at the date of signing the financial statements, qualifying third party indemnity insurance 
for all Directors and officers.
Structure of the Company’s capital
The Company’s share capital traded on the London Stock Exchange comprises a single class of ordinary shares of one pence each, each carrying 
one voting right and all ranking equally with each other. At 30 September 2011, 346,801,972 shares were allotted and fully paid. See note 22 
to the financial statements for details of movements in the Company’s share capital during the year. Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
20
Structure of the Company’s capital (continued)
Holders of ordinary shares are entitled to receive all shareholder documents, to attend, speak and exercise voting rights, either in person or by proxy, 
on resolutions proposed at General Meetings and participate in any distribution of income or capital. There are no restrictions on the transfer of 
shares in the Company or in respect of voting rights attached to the shares. None of the shares carry any special rights with regard to the control 
of the Company.
Details of employee share option schemes are set out in note 23 to the financial statements. Participants in employee share option schemes have 
no voting or other rights in respect of the shares subject to their awards until the options are exercised, at which time the shares rank pari passu 
in all respects with shares already in issue.
There are no restrictions on the transfer of securities in the Group.
Authority to issue shares
Each year at the AGM, the Directors seek authority to allot shares. The authority, when granted, lasts until 30 March 2012 or until the conclusion 
of the next AGM if sooner. At the last AGM held on 30 March 2011, shareholders authorised the Directors to allot relevant securities up to an 
aggregate nominal value of £1,155,779 representing one-third of the issued share capital and to further allot equity securities up to a nominal 
value of £346,734 (being 10% of the issued share capital). At the 2012 AGM similar authorities will be sought from shareholders.
Substantial shareholdings
At 9 December 2011 the Directors are aware of the following holdings representing 3% or more of the voting rights of the issued share capital 
of the Company in accordance with the Disclosure and Transparency Rules of the Financial Services Authority (“FSA”):
Name of shareholder having a material interest % holding
Invesco Perpetual 56.38
Henderson Global Investors 10.23
Mr Klaus Hebben 4.28
The shares held by Invesco Asset Management Limited (“Invesco”) are held in Invesco’s capacity as an institutional investor and an investment channel 
for others and not on its own behalf. A significant number of the shares are held by open ended investment companies together with other shares 
held in investment portfolios managed by Invesco as nominee/bare Trustee. 
On 3 December 2009, Invesco and the Company entered into a relationship agreement under which Invesco has undertaken to ensure that whilst 
it holds an interest in the shares of the Company in excess of 30%. it will exercise its voting rights insofar as it is able to do so that:
(a) the Company is capable of carrying on its business independently of Invesco;
(b) all transactions, agreements and arrangements with any member of the Group and Invesco are conducted on an arm’s length basis; and
(c) any dealing or dispute between Invesco and any member of the Group is dealt with by a committee comprising only of independent Directors.
Purchase of own shares
Purchases in shares of Phytopharm relate to the Phytopharm Share Incentive Plan whereby the Company issued one “Matching Share” for every one 
“Partnership Share” purchased by the employee. All shares are held by the scheme Trustees until the shares vest unconditionally with the employee.
During the year ended 30 September 201 1, the Group purchased 5,171 ordinary shares of one pence (2010: 39,296) at a total cost of £373 (2010: £3,885).
Significant agreements
The Group is not party to any significant agreement which would take effect, alter or terminate upon a change of control of the Company. 
The Group has licences granted to it from Shanghai Jiao Tong University (formerly Shanghai Second Medical University) and the Beijing Institute 
of Radiation Medicine. In addition, the Group has entered into a co-operation agreement with the Council for Scientific and Industrial Research 
in South Africa.
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, 
sexual orientation, race, colour, religion, political belief, ethnic or national origin or any other conditions not relevant to the performance of the role, 
who can demonstrate that they have the necessary skills and abilities.
Directors’ report (continued)
for the year ended 30 September 2011 Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
21
Employees (continued)
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 possible.
Employee involvement
The Group believes that it is important that employees are aware of the Group’s business strategy and objectives and to assist them to work 
towards these goals. Regular meetings are held with all employees and managers, both to raise issues and provide a flow of information.
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 Group’s share option schemes are given on pages 25 and 26.
Payment of creditors
The Company 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 30 September 2011 for the Company was 47 days (2010: 44 days).
Financial risk management
The financial risk management and objectives of the Group and the exposure of the Group to capital, liquidity, credit and interest rate risks are set 
out in note 20.
Annual General Meeting
The notice convening and giving details of the 2012 AGM of the Company will be mailed to shareholders.
Corporate governance
The Company’s statement on corporate governance can be found in the Corporate Governance Report on pages 27 to 32 of these financial statements. 
The Corporate Governance Report forms part of this Directors’ Report and is incorporated into it by cross-reference.
Audit information
In the case of each of the persons who are Directors of the Company at the date when this report is approved:
•	 so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the Company’s 
auditors are unaware; and
•	 each of the Directors has taken all steps that he ought to have taken as a Director to make himself aware of any relevant audit information 
and to establish that the Company’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Going concern
As at 30 September 2011, the Group had cash resources (being cash and cash equivalents and money market investments) of £17,574,476. 
(2010: £23,608,171).
After making enquiries and taking into account of management’s estimate of future expenditure the Directors have a reasonable expectation 
that the Group will have adequate financial resources to continue in operation for the foreseeable future.
Independent auditors
A resolution to re-appoint PricewaterhouseCoopers LLP as auditors to the Company will be proposed at the next AGM.
Mr T Sharpington
Chief Executive Officer
9 December 2011 Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
22
This report complies with the UK Corporate Governance Code 2010, the Listing Rules of the FSA and the Companies Act 2006. It sets out the 
Group’s remuneration policy and details of Directors’ remuneration. In accordance with the Companies Act 2006, a resolution to approve this 
report will be proposed to shareholders at the AGM in 2012.
The regulations require the auditors to report to the Company’s members on certain parts of the Directors’ Remuneration Report and to 
state whether in their opinion those parts of the report have been properly prepared in accordance with the Companies Act (as amended 
by the Regulations). The report has therefore been divided into separate sections for audited and unaudited information.
Unaudited information
Remuneration Committee
The Remuneration Committee (“the Committee”) is comprised exclusively of independent Non-Executive Directors. The Directors who have 
served on the Remuneration Committee during the year are as follows:
Mr A D Morrison (Chairman from 26 January 2011) 
Dr P R Blower (Chairman to 26 January 2011) 
Mr A H Taylor
The Remuneration Committee decides the remuneration policy that applies to Executive Directors and all of the Group’s employees including 
other senior management. This comprises the setting of salaries for the Executive Directors, the setting of salary scales for other employees, 
approving the format and range of all performance related arrangements (both annual and long-term equity incentive arrangements) and 
determining the extent to which the elements of variable pay vest. In determining remuneration, consideration will be given to reward levels 
throughout the organisation as well as in the external employment market. The Remuneration Committee aims to reward all employees fairly 
based on their role, their performance and salary levels in the wider market.
The Executive Directors are invited to attend the Remuneration Committee meetings to make recommendations on compensation levels 
for employees.
During the year ended 30 September 2011, the Remuneration Committee met five times and there was full attendance at each meeting.
Remuneration of Non-Executive Directors
The Non-Executive Directors each receive a fee for their services, which is agreed by the Board following recommendation by the Committee 
in respect of the Chairman and by the Chairman in respect of the other Non-Executive Directors with the assistance of independent information 
regarding the level of fees within the sector, where necessary, concerning comparable organisations and appointments.
Neither the Chairman nor the other Non-Executive Directors receive any pension or other benefits from the Group.
Remuneration policy for Executive Directors
The Group’s remuneration policy for Executive Directors is to:
•	 have regard to the Directors’ experience and the nature and complexity of their work, and regard to Directors’ remuneration in comparable 
companies, in order to pay a competitive salary, including a performance related cash bonus that attracts and retains management of the 
highest quality;
•	 link individual remuneration packages to the Group’s long-term performance through the award of share options via the Phytopharm Share 
Option Plan 2007 and the Phytopharm Long Term Incentive Plan 2007; and
•	 provide post retirement benefits through the Group’s pension schemes.
Consistent with the above policy, compensation awarded to Executive Directors comprises four main performance and non-performance 
related elements:
•	basic salary and bonuses;
•	benefits;
•	share options and performance share awards (awarded by reference to annual performance); and
•	pension arrangements.
Basic salary
The Committee sets the annual salaries for Executive Directors, having regard to personal performance and responsibilities of each Director 
and their expected future contribution.
Remuneration report Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
23
Unaudited information (continued)
Performance related bonuses
The Group may make bonus payments depending on the overall performance of the Group against objectives agreed with the Remuneration 
Committee at the beginning of each year. These objectives relate to the development and progression of the Group’s product portfolio together 
with operational and corporate effectiveness. The level of any bonus payments is based on the Group’s overall performance against these objectives 
together with individual’s performance and contribution towards achieving overall objectives.
Incentive schemes
The Group operates incentive schemes to assist in attracting and retaining high calibre employees and to focus the performance of key management 
on creating long-term shareholder value. The awards to individuals are linked to the performance targets of the Group and the individual. The Group’s 
targets and those for Executive Directors are approved by the Board.
Share option schemes
The total number of unissued ordinary shares in the capital of the Company which may be placed under option on any day under the Phytopharm 
share option schemes may not exceed, when added to the aggregate number of shares that have been or may be issued pursuant to rights granted 
for the past ten years, 10% of the issued ordinary share capital of the Company immediately prior to that day.
Share options are granted under the Phytopharm Share Option Plan 2007 which is open to all employees. The Phytopharm Share Option Plan 2007 
complies with the tax favoured Enterprise Management Incentive Legislation. Where possible the Company will grant tax advantaged options. 
The Remuneration Committee determines the level of awards. To provide maximum flexibility, the Committee has discretion to make awards up 
to an annual 400% of salary individual limit although the Committee would only envisage making an award at such a level in very exceptional 
circumstances. Performance share awards will normally vest three years after the date of grant subject to continued employment and the extent 
to which a performance target has been satisfied. 
The vesting of a share option under the above scheme will depend on total shareholder return (“TSR”) performance conditions being met. 
The Company’s TSR will be compared to that of the companies making up the FTSE Small Cap Index at or within three months of the vesting 
date. No option or award can be exercised for below median performance.
The Committee considers TSR to be the most appropriate method of measuring performance at this stage of the Group’s development where 
income streams have not stabilised and the Group has not yet made a profit. The Committee seeks independent verification of the TSR conditions 
before confirming that a share option has vested.
The 2010 Directors’ Reward Plan enabled the Group to recognise the input of the Non-Executive Directors to the success of the Group in 2009. 
The one-off grant of options in 2010 under the plan will vest at the end of three years and no performance conditions will apply. As a condition 
of exercise, the Non-Executive Directors will be required to enter into an agreement under which they agree not to dispose of any shares acquired 
on exercise for a period of at least one year from the date of exercise. No further options have been granted under this scheme.
Long-term incentives
The Group operates the Phytopharm Long Term Incentive Plan 2007 under which performance share awards can be made to selected senior 
managers of the Group and its subsidiaries. The Committee determines the level of awards to provide maximum flexibility. The Committee has 
discretion to make awards up to an annual 400% of salary individual limit although the Committee would only envisage making an award at such 
a level in very exceptional circumstances. Performance share awards will normally vest three years after the date of grant subject to continued 
employment and the extent to which a performance target has been satisfied.
The Committee’s policy is that the same TSR performance condition as described above for share options will apply to the vesting of performance 
share awards. This is for the same reasons as given above. The vesting of a share award under the above scheme will depend on TSR performance 
conditions being met. The Company’s TSR will be compared to that of the companies making up the FTSE Small Cap Index at or within three months 
of the vesting date. The distinction is that no option or award can be exercised for below median performance and the maximum level of the 
award vesting for performance in the upper quartile.
Share purchase scheme
The Group also operates an HMRC approved Share Incentive Plan which is open to all employees who may purchase Partnership shares up to the value 
of £125 each month and are awarded one Matching Share for each Partnership Share purchased. The shares are held in trust for a minimum of three 
years and are not subject to performance criteria. Details of the Executive Directors’ interests in this plan are specified in the table on page 26.
Pensions
The Executive Directors have money purchase pension schemes to which the Group contributed 12.5% of basic salary during the year. Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
24
Unaudited information (continued)
Fees retained for non-executive directorships in other companies
The Committee recognises that Executive Directors may be invited to take up non-executive directorships and that these can broaden the experience 
and knowledge of the Director, from which the Group would benefit. Accordingly, subject to Board approval, they may accept non-executive appointments, 
as long as they are not likely to lead to a conflict of interest. They are also allowed to retain any fees paid under such appointments. Mr T Sharpington 
served as a Non-Executive Director of Clinical Force Limited until July 2011 for which he did not receive a fee.
Performance graph
The following shows the Company’s performance, measured by TSR compared with the performance of the FTSE Small Cap Index also measured 
by TSR. TSR looks at the value at 30 September 2011 of £100 invested in the Company on 1 September 2006 compared with the value of £100 
invested in the FTSE Small Cap Index over the same period. This index has been selected for this comparison because, in the opinion of the Directors, 
it is the most appropriate index against which the total shareholder return of the Company should be measured.
FTSE Small Cap – TSR
Phytopharm plc  – TSR 
01 Sept 06 01 Sept 07 01 Sept 08 01 Sept 09 01 Sept 10 01 Sept 11
140
120
100
80
60
40
20
0
Executive Directors’ contracts
It is the Group’s policy that Executive Directors have contracts with an indefinite term but which provide for a maximum period of six months 
notice to be served by the Company or by the Director.
Non-Executive Directors’ letters of appointment
The terms of service for Non-Executive Directors are specified in letters of appointment. Currently appointments are for a period of twelve months, 
which may be renewed, and are summarised in the table below:
Date of
appointment
Notice
period
Mr A H Taylor 1 July 2011 3 months
Mr A D Morrison 1 June 2011 3 months
Dr P R Blower 31 July 2011 3 months
In addition, one-third of all Directors are required under the Articles of Association to resign and offer themselves for re-election at each 
Annual General Meeting.
Directors’ interests in shares
The interests of the Directors in the shares of the Company at 30 September 2011 and 30 September 2010 were:
Ordinary shares of 1 pence
2011 2010
Mr T Sharpington 120,000 —
Mr R I Hickling 120,000 —
Mr A H Taylor 330,043 330,043
Mr A D Morrison 246,544 246,544
Dr P R Blower 193,682 193,682
All Directors’ interests are beneficially held.
Remuneration report (continued) Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
25
Unaudited information (continued)
Directors’ interests in shares (continued)
Apart from the interests disclosed on the previous page, and those set out in the share option table on page 26, no Directors had any interest 
in the year in the share capital of the Company or other Group companies. There have been no changes in the Directors’ interests in the share 
capital of the Group since the year end.
Audited information
Directors’ detailed emoluments and compensation
Details of individual Directors’ emoluments for the year are as follows:
2011 2010
Salary
and fees
£
Performance
related
bonus
£
Total
excluding
pensions
£
Pension
contributions
£
Total
excluding
pensions
£
Pension
contributions
£
Executive
Mr T Sharpington
(i)
 190,687  15,000  205,687  22,469  43,266  5,089 
Mr R I Hickling
(ii)
 130,341  20,000  150,341  15,327  81,846  7,408 
Mr A D Morrison
(iii)
 —  —  —  —  128,031  — 
 321,028  35,000  356,028  37,796  253,143  12,497 
Non‑Executive
Mr A H Taylor 41,344  —  41,344  —  38,906  — 
Mr A D Morrison 30,793  —  30,793  —  28,531  — 
Dr P R Blower 30,758  —  30,758  —  29,025  — 
 102,895  —  102,895  —  96,462  — 
Total 423,923  35,000  458,923  37,796  349,605  12,497 
(i)
 From 6 July 2010.
(ii)
 From 15 January 2010.
(iii)
 To 6 July 2010.
No Directors waived emoluments in the financial year ended 30 September 2011 (2010: £nil).
There were no gains made by individual Directors from the exercise of share options for the year ended 30 September 2011 (2010: none). Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
26
Audited information (continued)
Directors’ interest in share options
Details of options over shares of the Company held by Directors, all of which have been granted at no cost to the Directors, are set out below:
Number of options
At 
1 October
2010
Granted 
during
the year
At 
30 September
2011 Note*
Exercise
price
Date from which
exercisable
Expiry
date
Mr T Sharpington 1,566,186 —  1,566,186 1 £0.0763 20 July 2013 20 July 2020
 1,900,558 —  1,900,558 2 £0.0763 20 July 2013 20 July 2020
 —  750,791  750,791 1 £0.0735 16 December 2013 16 December 2020
 3,466,744  750,791  4,217,535  
Mr R I Hickling 1,566,186  —  1,566,186 1 £0.0763 20 July 2013 20 July 2020
 167,201  —  167,201 2 £0.0763 20 July 2013 20 July 2020
 —  512,305  512,305 1 £0.0735 16 December 2013 16 December 2020
 1,733,387  512,305  2,245,692  
Mr A H Taylor 350,000  —  350,000 3 £0.1125 30 March 2013 30 March 2018
Mr A D Morrison 256,667  —  256,667 3 £0.1125 30 March 2013 30 March 2018
Dr P R Blower 256,667  —  256,667 3 £0.1125 30 March 2013 30 March 2018
Total 6,063,465  1,263,096  7,326,561 
* Further details of the terms of the share option schemes are contained in note 23 to the financial statements under the note reference in the above table.
Directors’ interests in long-term incentive plans
There are no awards in issue under the Long Term Incentive Plan.
Share Price
The market price of the Company’s shares at the end of the financial year was 7.5 pence (30 September 2010: 8.43 pence) and the range 
of market prices during the year was between 6.88 pence and 9.75 pence.
Approval
This report was approved by the Board of Directors and signed on its behalf by:
Mr A D Morrison
Chairman of the Remuneration Committee
9 December 2011
Remuneration report (continued) Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
27
The UK Corporate Governance Code
The Directors are accountable to shareholders for the good corporate governance of the Group and seek to uphold and report on compliance 
with current best practice in corporate governance.
See page 33 for the Statement of Directors’ Responsibilities in respect of the Annual Report, the Directors’ Remuneration Report and the 
Financial Statements.
Compliance statement
The Directors are satisfied that, unless disclosed otherwise within this report, the Group has complied throughout the year with the best practice 
provisions set out in the UK Corporate Governance Code in effect for the financial year to 30 September 2011. This report, together with the 
Remuneration Report, sets out the manner in which the Group has applied the main principles contained in the UK Corporate Governance Code. 
A copy of the UK Corporate Governance Code is available at the FRC’s website: www.frc.org.
The principles set out in the UK Corporate Governance Code cover five main areas: leadership, effectiveness, accountability, remuneration 
and relations with shareholders. With the exception of remuneration (which is dealt with separately in the Remuneration Report) the following 
section sets out how the Board has applied such principles.
Board
The Board is chaired by Mr A H Taylor and met for regular business six times during the year under review. All meetings were attended by all the 
Directors appointed at the time of the meeting. In addition, further meetings were held when circumstances and urgent business dictated.
The Board has agreed a schedule of items that are specifically reserved for its consideration, which is reviewed on an annual basis. This schedule 
includes business strategy, financing arrangements, material acquisitions and divestments, approval of budgets, major capital expenditure projects, 
risk management, treasury policies, and establishing and monitoring internal controls. The Board is responsible for the overall direction and strategy 
of the Group and for securing the optimum performance from Group assets. 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 Group’s policy is that at least half of the Board of Directors consists of Non-Executive Directors. The role of Non-Executive Directors is to ensure 
that independent judgement is brought to Board deliberations and decisions. Dr P R Blower is the Senior Non-Executive Director. During 2010, 
shareholders approved the 2010 Directors’ Reward Plan to enable the Group to recognise the input of the Non-Executive Directors to the success 
of the Group in the previous twelve months and the Non-Executive Directors were awarded a one-off grant of share options. The Group does not 
intend to make any further grants of share options under this scheme. There are no performance conditions attached to the share options and given 
the level of the award, the Board considers the Non-Executive Directors to be independent. Mr A D Morrison filled the role of interim Chief Executive 
Officer from November 2009 to July 2010 and returned to his role as Non-Executive Director following the appointment of Mr T Sharpington as 
Chief Executive Officer in July 2010 and the publication of the 2010 Annual Report. The Board does not consider the role of Interim Chief Executive 
Officer has impacted the independence of Mr A D Morrison due to the temporary nature of the role.
Biographies of the Directors are set out on page 17. Details of the Directors’ shareholdings are shown on page 24.
All Directors are required to retire and submit themselves for re-election at the first AGM 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. See page 24.
There is clear separation of the roles of Chairman and Chief Executive Officer on terms which have been agreed and set out in writing by the Board and 
which are reviewed on an annual basis. The Chairman is responsible for overseeing the running of the Board, encouraging all Directors to participate fully 
in discussions with the aim of reaching a consensus and ensuring that the Non-Executive Directors are properly briefed on matters. The Chief Executive 
has responsibility for implementing the Board’s strategy and managing day-to-day business activities of the Group with the Executive Directors 
and senior managers. The Company Secretary, through the Chairman, is responsible for advising the Board on all governance matters.
The Board has agreed procedures to allow individual Directors to seek independent professional advice at the Company’s expense for the furtherance 
of their duties and all Directors have access to the services of the Company Secretary. The Company Secretary 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. Newly appointed Directors receive a comprehensive, formal and tailored introduction to the Group’s business 
as well as information on their responsibilities and roles as a Director of the Company.
Corporate governance Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
28
Board performance and appraisal
The Board is mindful of the requirement to undertake annual evaluation of its performance and that of its committees and individual Directors. 
All Directors have conducted a self assessment of the performance of the Board during the year by reference to an evaluation checklist provided 
by the Group’s external auditors. The results were compiled and analysed by the Company Secretary. Areas for improvement identified by the 
assessment will be addressed accordingly.
Board committees
In accordance with best practice, the Company has established Audit, Remuneration and Nominations 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 comprises the independent Non-Executive Directors, Mr A D Morrison, Dr P R Blower and Mr A H Taylor, who the Board considers 
has recent and relevant financial experience, and is chaired by Dr P R Blower. The Audit Committee met three times during the year under review, 
with the Group’s external auditors and Executive Directors attending where appropriate. All meetings were fully attended. Following the appointment 
of Mr T Sharpington in July 2010, Mr A D Morrison has now returned to his role as a Non-Executive Director and he reverted to a member of the 
Audit Committee following the publication of the 2010 Annual Report.
Between 1 October 2010 and the publication of the 2010 Annual Report the Audit Committee did not consist of at least two independent 
Non-Executive Directors other than the Non-Executive Chairman as required under Section C.3.1 of the UK Corporate Governance Code as 
Mr A D Morrison had stepped down as a Non-Executive Director whilst fulfilling the role of Interim Chief Executive Officer which in the view 
of the Board did not affect Mr A D Morrison’s independence.
The Audit Committee assists the Board in ensuring that the Group’s published financial statements give a true and fair view and in securing reliable 
internal financial information for decision making. The Audit Committee reviews the findings of the external auditors and reviews key accounting 
policies and judgements. The Audit Committee is also responsible for monitoring the effectiveness of the external audit process and the independence 
of the external auditors, recommending audit fee proposals to the Board and considering the scale and nature of non-audit work. Non-audit services 
provided by the external auditors are discussed to ensure the Audit Committee is satisfied regarding the objectivity and independence of the external 
audit, including any relevant safeguards. Any material non-audit fees are approved by the Audit Committee before being committed.
The Group’s tax compliance work is carried out by the auditors only in cases where they are best suited to perform the work in a cost efficient manner, 
given their familiarity with the Group’s business. A breakdown of fees paid to the auditors can be found in note 7 to the financial statements.
The Audit Committee assesses annually the qualification, expertise and resources, and independence of the external auditors and the effectiveness 
of the audit process. The assessment covers all aspects of the audit service provided by the audit firm.
The Audit Committee reviews the Group’s Protected Disclosure (“Whistleblowing”) policy and procedure on an annual basis to ensure that adequate 
arrangements are in place by which members of staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting 
or other areas. The Audit Committee considers that appropriate arrangements are in place for the proportionate and independent investigation 
of such matters and for appropriate follow up action.
The Audit Committee conducted a self-assessment of its performance during the year by reference to an evaluation checklist provided by the Group’s 
external auditors. The results were compiled and analysed by the Company Secretary. Areas for improvement identified by the assessment will be 
addressed accordingly.
The terms of reference of the Audit Committee include the following responsibilities:
•	to monitor the integrity of the Group’s financial statements;
•	to review annually the need for an internal audit function;
•	to review the effectiveness of the Group’s internal control and risk management systems; and
•	to consider and make recommendations to the Board regarding the appointment of the Group’s external auditors.
Remuneration Committee
The Remuneration Committee comprises the independent Non-Executive Directors Mr A D Morrison, Dr P R Blower and Mr A H Taylor and 
is chaired by Mr A D Morrison. The Remuneration Committee met five times during the year under review. All meetings were attended by 
all members. During the year Dr P R Blower stepped down as Chairman of the Committee.
Corporate governance (continued) Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
29
Board committees (continued)
Remuneration Committee (continued)
The Remuneration Committee is responsible for making recommendations to the Board on remuneration policy for all members of staff and 
Executive Directors. The policy recommendations include setting salary scales and approving the format and range of incentive payments 
and share option grants to all staff. Remuneration of Non-Executive Directors is under the control of the Chairman and the Executive members 
of the Board.
The Remuneration Committee conducted a self-assessment of its performance during the year by reference to an evaluation checklist provided 
by the Group’s external auditors. The results were compiled and analysed by the Company Secretary. Areas for improvement identified by the 
assessment will be addressed accordingly.
The terms of reference of the Remuneration Committee include the following responsibilities:
•	to determine and agree with the Board the framework and policy for the remuneration of the Executive Directors and other members 
of the Executive Team;
•	to determine targets for any performance related pay scheme;
•	to approve overall remuneration structure; and
•	to review employee benefit structures.
The Remuneration Report, which includes details of the Group’s remuneration policy, is set out on pages 22 to 26.
Nomination Committee
The Nomination Committee comprises Mr A D Morrison, Dr P R Blower and Mr A H Taylor and is chaired by Dr P R Blower. The Nomination Committee 
met once during the year under review and the meeting was attended by all members.
The Nomination Committee is responsible to the Board for determining the qualities and experience required of the Company’s Executive 
and Non-Executive Directors and for identifying suitable candidates. In appropriate cases, recruitment consultants assist in the process. 
The Nomination Committee is also responsible for succession planning.
The terms of reference of the Nomination Committee include the following responsibilities:
•	to identify and nominate candidates to fill Board positions as they arise;
•	to prepare a description of the role and capabilities required for a particular appointment; and
•	to give full consideration to succession planning.
Relations with shareholders
The Group is committed to maintaining good relations with its institutional and private shareholders and reports formally to shareholders four 
times a year through the provision of interim results (around April) and annual results (around November) and, as required under the Disclosure 
and Transparency Rules, releases interim management statements around February and August. In addition, the Group keeps shareholders 
informed of significant events for the Group during the year by issuing press releases which are immediately made available on the Group’s 
website (www.phytopharm.com). The Group’s website also provides an overview of the business, including its strategy, products and objectives.
The Group also maintains communication by making presentations during the year to institutional shareholders on request and to all shareholders 
through the Group’s website. This contains information on all of the Group’s products and all financial reports and regulatory announcements issued 
by the Group. Details of the current share price and historic share price performance are also included.
The Board is kept up to date at its regular meetings with the views of shareholders and analysts by the Chairman and Chief Executive.
Annual General Meeting
The principal forum for discussion with shareholders is the AGM and their participation is encouraged. The Group endeavours to provide formal 
notification together with an explanation of each proposed resolution and to send these to shareholders at least 20 working days in advance 
of the meeting.
At the AGM the Board provides a summary of the year’s events after which all the Directors are available to answer questions from shareholders.
In accordance with the UK Corporate Governance 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 each resolution and the number 
of abstentions. The Chairs of the Audit, Remuneration and Nomination Committees attend to answer questions. Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
30
Announcements
All major announcements are approved by the Board prior to issue. The Group also has internal procedures to guard against unauthorised release 
of information.
Corporate social responsibility
The Board recognises the importance of social, ethical and environmental matters and it endeavours to take into account the interests of the 
Group’s stakeholders, including its investors, employees and suppliers, when operating the business.
Social
The Group places considerable value on attracting and retaining its employees and seeks to keep them informed on the Group’s business strategy 
and objectives to assist them in working towards these goals. This is achieved through formal and informal meetings where employees have the 
opportunity to ask questions as well as receive information.
Employee training and development requirements are assessed as part of the performance appraisal process. Additional training is undertaken 
as required to provide staff with continual professional development.
The Group is committed to health and safety and has well-developed health and safety policies and procedures to safeguard all of its employees, 
partners, contractors and visitors. The Board is aware of its legal and moral obligations for health and safety at work and is committed to preventing 
accidents and minimising occupational ill health.
The Board of Directors is committed to continuing communication and involvement with all the Group’s employees.
Ethical
The Group operates within a strict regulatory environment in the pharmaceutical industry and conducts its clinical development activities 
in accordance with internationally recognised regulatory and quality standards. A code of business conduct and ethics is in place to promote fair, 
honest and ethical conduct by all employees in their relationships with stakeholders. The Group has also implemented an anti-bribery and 
corruption policy following the introduction of the Bribery Act 2010.
The Group endeavours to appoint employees with appropriate skills, experience and knowledge for the roles they undertake. The Group has a range 
of polices which are aimed at retaining and incentivising key staff. Employees have clear objectives based on the Group’s business objectives which 
have been set by the Remuneration Committee.
Environment
The Group recognises that protecting the environment is a primary corporate responsibility and that environmental matters are not just the 
responsibility of the Board of Directors, but also an area in which each employee, sub-contractor and supplier has a contribution to make.
The Group therefore encourages all employees, partners and contractors to operate in an environmentally responsible manner. Where appropriate 
these requirements have been incorporated into the Group’s standard operating procedures and the environmental performance of contractors 
is reviewed as part of the audit process. It is the Group’s policy to undertake reasonable measures to assess the environmental impact of its operations, 
processes and products. Waste is minimised with paper and packaging recycled and confidential waste is shredded and recycled. Where possible 
other materials, including glass and plastics, are recycled. The Group aims to continually improve environmental performance and compliance 
within these areas.
Internal control
The Board acknowledges that it is ultimately responsible for the Group’s system of internal control and reviews its effectiveness at least annually 
and the Board confirms that this process has been in place up to the date of the approval of the financial statements. However, the Board acknowledges 
that such a system can only provide reasonable and not absolute assurance against material misstatement or loss, as it is designed to manage rather 
than eliminate the risk of failure to achieve business objectives.
The key procedures that the Board has established are designed to provide effective internal controls within the Group and comply with the 
Internal Control Guidance for Directors on the UK Corporate Governance Code (Turnbull Guidance 2005) issued by the Financial Reporting Council. 
There is an ongoing process for identifying, evaluating and managing significant risks faced by the Group and the effectiveness of all the Group’s 
internal controls in effect during the year has been reviewed by the Board. This process has been in place throughout the year under review. 
The Board confirms that the necessary steps have been taken to rectify any significant failings or weaknesses identified through this process.
Corporate governance (continued) Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
31
Internal control (continued)
The Group has a quality assurance function but it does not have a formal internal audit function, which is considered appropriate by the Audit 
Committee given the size of the Group’s operations at this time. The Executive Directors’ active involvement in the activities of the Group allows 
the Board to continually monitor and assess significant business, operational, financial, compliance and other risks and to review the effectiveness 
of internal control. The Executive Directors provide regular management reports covering inter alia research and development activities, shareholder 
relations, financial management and commercial activities.
Following the implementation of the Bribery Act 2010, the Group has reviewed, and where appropriate updated, its existing policies and procedures 
in this area.
The Group’s key internal control procedures include the following:
Control environment
The Group’s control environment is the responsibility of the Group’s Directors and managers at all levels. The Group’s organisational structure has 
clear lines of reporting and responsibility. Regular research and development programme reviews are held to review progress against plans for each 
programme. The information from these meetings is reported on a regular basis to a management group comprising the Executive Directors and 
key senior managers to compare progress against plans for the business as a whole. Overall control of the business rests with the Board of Directors.
Risk identification and evaluation
Regular assessments of ongoing risks facing the business are undertaken as part of the operational reviews and regular management group 
meetings in the key areas such as management of working capital, compliance, legal and operational issues.
Operational controls
Quality
Investigational medicinal products are manufactured on behalf of Phytopharm and are produced in accordance with Good Manufacturing Practice (“GMP”) 
to ensure that the products are manufactured consistently to the appropriate quality standards.
Non-clinical studies
Key non-clinical studies to determine the safety and efficacy of new products are conducted in accordance with Good Laboratory Practice (“GLP”) 
at contractors who operate under those regulations. Each contractor is audited to assess compliance with GLP prior to initiation of studies.
Clinical studies
All clinical studies carried out by the Group are in accordance with Good Clinical Practice (“GCP”). This ensures that the health and well being of the 
subjects is carefully monitored during the study and that the data gathered are complete and reliable. All studies are audited for compliance under 
the management of Phytopharm’s quality assurance group.
Financial controls
Financial reporting and consolidation
Budgets and long-term forecasts are normally prepared twice a year to allow management to monitor the key business and financial risks. 
Further, more frequent, forecasts are prepared if circumstances require. The budgets are reviewed and approved by the Board prior to adoption 
by the Group. Consolidated management accounts are prepared on a monthly basis and performance against budget is analysed in detail 
and reported on monthly and reviewed regularly by the Board.
The integrity of the Group’s public financial reporting process is supported by a number of processes and steps to provide assurance over the 
completeness and accuracy of the content, including:
•	review by Executive Directors;
•	review and recommendation by the Audit Committee; and
•	review and approval by the Board.
Control procedures
The Group has established detailed policies and accounting and administrative procedures are in place covering all significant areas and key 
systems. These include formal authorisation procedures for the transfer of funds, capital expenditure and recruitment. Any commitment of 
expenditure requires documentary approval which is subject to prescribed limits of authority. Any major expenditure or commitment including 
the appointment of senior members of staff requires Board approval. Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
32
Compliance
The Group has established policies and standard operating procedures (“SOPs”) together with company handbooks that provide instruction 
on all aspects of the operation of the business. These SOPs and handbooks are designed to ensure compliance with the quality management 
requirements of the Group and external regulations where appropriate. All SOPs and company handbooks are reviewed on a regular basis 
and updated where necessary.
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.
Takeover directive
Disclosures relating to the Takeover Directive are included in the Directors’ Report on pages 18 to 21.
Announcements
All major announcements, including those relating to the Group’s research and development activities, are approved by the Board of Directors and, 
where appropriate, by senior management prior to issue. The Group also has internal and external checks to guard against unauthorised release 
of information.
On behalf of the Board
Mr A H Taylor
Non-Executive Chairman
9 December 2011
Corporate governance (continued) Corporate Governance Phytopharm plc Annual Report and Accounts 201 1
33
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance 
with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare 
the Group and parent company financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the 
European Union (“EU”). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true 
and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial 
statements, the Directors are required to:
•	select suitable accounting policies and then apply them consistently;
•	make judgements and accounting estimates that are reasonable and prudent; and
•	state whether applicable IFRS as adopted by the EU have been followed, subject to any material departures disclosed and explained 
in the financial statements.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions 
and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that 
the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial 
statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence 
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the 
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed in the Board of Directors on page 17, confirm that, to the best of their knowledge:
•	the Group financial statements, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, 
liabilities, financial position and loss of the Group; and
•	the information contained in the Directors’ Report and the Business Review includes a fair review of the development and performance 
of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
By order of the Board
Mrs Z McGowan
Company Secretary
9 December 2011
Statement of Directors’ responsibilities Financial Statements Phytopharm plc Annual Report and Accounts 201 1
34
Independent auditors’ report
to the members of Phytopharm plc
Independent auditors’ report to the members of Phytopharm plc
We have audited the financial statements of Phytopharm plc for the year ended 30 September 2011 which comprise the Consolidated Statement 
of Comprehensive Income, the Consolidated and Company Balance Sheets, the Consolidated and Company Statements of Changes in Equity, the 
Consolidated and Company Cash Flow Statements and the related notes. The financial reporting framework that has been applied in their preparation 
is applicable law and International Financial Reporting Standards (“IFRS”) as adopted by the European Union and, as regards the parent company 
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Respective responsibilities of Directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 33, the Directors are responsible for the preparation of the 
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial 
statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with 
the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the 
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting 
policies are appropriate to the Group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; 
the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, 
we read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited 
financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion: 
•	the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 30 September 2011, 
and of the Group’s loss and Group’s and parent company’s cash flows for the year then ended;
•	the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; 
•	the parent company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied 
in accordance with the provisions of the Companies Act 2006; and
•	the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group 
financial statements, Article 4 of the lAS Regulation. 
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
•	the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
•	the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the 
financial statements. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
35
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•	adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from 
branches not visited by us; or 
•	the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the 
accounting records and returns; or
•	certain disclosures of Directors’ remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
•	the Directors’ statement, set out on page 21, in relation to going concern;
•	the parts of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate 
Governance Code specified for our review; and
•	certain elements of the report to shareholders by the Board on Directors’ remuneration.
Simon Ormiston (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cambridge
9 December 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
36
Note
2011
£
2010
(restated)
£
Revenue 2 66,659 696,854 
Cost of sales — (87,447)
Gross profit 66,659 609,407
Other income 2 — 17,120 
Operating expenses 3 (8,613,800) (5,129,037) 
Operating loss (8,547,141) (4,502,510)
Finance income 6 375,685 289,825
Loss before taxation 7 (8,171,456) (4,212,685)
Taxation 8 513,126 411,171
Loss and total comprehensive income for the year 9 (7,658,330) (3,801,514) 
Basic and diluted loss per ordinary share (pence) 10 (2.2) (1.3)
The notes on pages 41 to 59 form part of these financial statements.
All of the loss is attributable to the owners of the parent.
Consolidated statement of comprehensive income
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
37
Group Company
Note
2011
£
2010
£
2011
£
2010
£
Assets
Property, plant and equipment 12 83,646 112,904 — —
Investments 13 — — 1,639,136 1,501,603
Amounts due from subsidiary undertaking 14 — — 21,870,207 16,471,326
Non-current assets 83,646 112,904 23,509,343 17,972,929
Trade and other receivables 15 459,954 480,974 198,675 209,794
Current tax receivable 479,229 411,171 — —
Money market investments 16 14,500,000 22,500,000 14,500,000 22,500,000
Cash and cash equivalents 17 3,074,476 1,108,171 2,677,736 484,469
Current assets 18,513,659 24,500,316 17,376,411 23,194,263
Total assets 18,597,305 24,613,220 40,885,754 41,167,192
Liabilities and equity
Trade and other payables 18 2,633,307 1,134,915 87,034 76,961
Total current liabilities 2,633,307 1,134,915 87,034 76,961
Equity attributable to owners of the parent 
Ordinary shares 22 3,468,019 3,466,774 3,468,019 3,466,774
Share premium 77,283,731 77,278,113 76,788,324 76,782,706
Merger reserve (204,211) (204,211) — —
Accumulated loss (64,583,541) (57,062,371) (39,457,623) (39,159,249)
Total equity 15,963,998 23,478,305 40,798,720 41,090,231
Total liabilities and equity 18,597,305 24,613,220 40,885,754 41,167,192
The notes on pages 41 to 59 form part of these financial statements.
The financial statements, comprising the Consolidated Statement of Comprehensive Income, the Consolidated and Company Balance Sheets, 
the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Cash Flow Statements and the related notes, 
were approved by the Board of Directors and were signed on its behalf by:
Mr T Sharpington
Chief Executive Officer
9 December 2011
Phytopharm plc
Registered number: 3131723
Consolidated and Company balance sheets
at 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
38
Group Note
Ordinary
shares
£
Share
premium
£
Merger
reserve
£
Accumulated
losses
£
Total
£
Balance at 1 October 2009 945,484 55,709,052 (204,211) (53,312,914) 3,137,411
Comprehensive income
Loss attributable to owners of the parent — — — (3,801,514) (3,801,514)
— — — (3,801,514) (3,801,514)
Transactions with owners:
Issue of ordinary shares 22 2,521,290 21,569,061 — — 24,090,351
Purchase of shares in Phytopharm plc 22 — — — (3,885) (3,885) 
Credit in respect of share options — — — 55,942 55,942 
Transactions with owners 2,521,290 21,569,061 — 52,057 24,142,408
Balance at 30 September 2010 3,466,774 77,278,113 (204,211) (57,062,371) 23,478,305
Balance at 1 October 2010 3,466,774 77,278,113 (204,211) (57,062,371) 23,478,305
Comprehensive income
Loss attributable to owners of the parent — — — (7,658,330) (7,658,330)
— — — (7,658,330) (7,658,330)
Transactions with owners:
Issue of ordinary shares 22 1,245 5,618 — — 6,863
Purchase of shares in Phytopharm plc 22 — — — (373) (373)
Credit in respect of share options — — — 137,533 137,533
Transactions with owners 1,245 5,618 — 137,160 144,023
Balance at 30 September 201 1 3,468,019 77,283,731 (204,211) (64,583,541) 15,963,998
The notes on pages 41 to 59 form part of these financial statements.
Consolidated statement of changes in equity
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
39
Company statement of changes in equity
for the year ended 30 September 2011
Company Note
Ordinary
shares
£
Share
premium
£
Accumulated
losses
£
Total
£
Balance at 1 October 2009 945,484 55,213,645 (38,786,185) 17,372,944 
Comprehensive income
Loss attributable to owners of the parent — — (429,006) (429,006)
— — (429,006) (429,006) 
Transactions with owners:
Issue of ordinary shares 22 2,521,290 21,569,061 — 24,090,351 
Credit in respect of share options — — 55,942 55,942 
Transactions with owners 2,521,290 21,569,061 55,942 24,146,293 
Balance at 30 September 2010 3,466,774 76,782,706 (39,159,249) 41,090,231 
Balance at 1 October 2010 3,466,774 76,782,706 (39,159,249) 41,090,231 
Comprehensive income
Loss attributable to owners of the parent — — (435,907) (435,907)
— — (435,907) (435,907)
Transactions with owners:
Issue of ordinary shares 22 1,245 5,618 — 6,863 
Credit in respect of share options — — 137,533 137,533 
Transactions with owners 1,245 5,618 137,533 144,396 
Balance at 30 September 201 1 3,468,019 76,788,324 (39,457,623) 40,798,720
The notes on pages 41 to 59 form part of these financial statements. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
40
Consolidated and Company cash flow statements
for the year ended 30 September 2011
Group Company
Note
2011
£
2010
£
2011
£
2010
£
Cash flows from operating activities
Operating loss (8,547,141) (4,502,510) (809,798) (718,335)
Depreciation 12 49,804 67,198 — —
Impairment of intangible asset — 99,400 — —
Gain on disposal of property, plant and equipment (24,743) (4,108) — —
Share option charge 137,533 55,942 — —
 (8,384,547) (4,284,078) (809,798) (718,335)
Changes in working capital
Decrease/(increase) in trade and other receivables 17,052 (90,254) 6,632 (25,307)
Increase/(decrease) in trade and other payables 1,498,392 (611,905) 10,073 6,802
Decrease in inventories — 249,474 — —
Cash used in operations (6,869,103) (4,736,763) (793,093) (736,840)
Taxation received 445,068 294,855 — —
Net cash used in operating activities (6,424,035) (4,441,908) (793,093) (736,840)
Cash flows from investing activities
Purchase of property, plant and equipment 12 (20,800) (85,128) — —
Sale of property, plant and equipment 24,997 11,500 — —
Investment in shares of Phytopharm plc (373) (3,885) — —
Interest received 379,653 127,124 378,378 126,896
Loan to subsidiary undertaking 14 — — (5,398,881) (4,179,740)
Net cash generated from/(used in) investing activities 383,477 49,611 (5,020,503) (4,052,844)
Cash flows from financing activities
Issue of shares 22 6,863 25,212,904 6,863 25,212,904
Share issue costs 22 — (1,122,553) — (1,122,553)
Movement in money market investments 16 8,000,000 (22,500,000) 8,000,000 (22,500,000)
Net cash generated from financing activities 8,006,863 1,590,351 8,006,863 1,590,351
Movements in cash and cash equivalents in the year 1,966,305 (2,801,946) 2,193,267 (3,199,333)
Cash and cash equivalents at the beginning of the year 1,108,171 3,910,117 484,469 3,683,802
Cash and cash equivalents at the end of the year 3,074,476 1,108,171 2,677,736 484,469
Money market investments at the end of the year 14,500,000 22,500,000 14,500,000 22,500,000
Total cash, cash equivalents and money market investments 17,574,476 23,608,171 17,177,736 22,984,469
The notes on pages 41 to 59 form part of these financial statements. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
41
1. Accounting policies and basis of preparation
Phytopharm plc is a public limited company incorporated in England and Wales and domiciled in the UK with a listing on the London Stock Exchange 
under the symbol PYM. The address of its registered office is Lakeview House, 2 Lakeview Court, Ermine Business Park, Huntingdon, Cambridgeshire, 
England PE29 6UA.
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently 
applied to both years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU, 
IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements 
have been prepared on a historical cost basis.
Going concern
At 30 September 2011, the Group had cash resources (being cash and cash equivalents and money market investments) of £17,574,476 
(2010: £23,608,171).
After making enquiries and taking into account management’s estimate of future expenditure, the Directors have a reasonable expectation 
that the Group will have adequate financial resources to continue in operation for the foreseeable future.
Basis of consolidation
The consolidated financial statements include the financial statements of Phytopharm plc (the “Company”) and all its subsidiary undertakings 
(together the “Group”), made up to 30 September 2011.
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding 
of more than one-half of the voting rights. Subsidiaries are full consolidated from the date on which control is transferred to the Group. They are 
deconsolidated from the date that control ceases.
Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses resulting 
from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where 
necessary to ensure consistency with the policies adopted by the Group.
Accounting developments
Current financial year
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 
1 October 2010:
•	Annual improvements 2009 (those improvements effective 1 January 2010);
•	Annual improvements 2010 (those improvements effective 1 July 2010);
•	amendment to IFRS 1, ‘First time adoption on additional exemptions’ (effective 1 January 2010);
•	amendment to IFRS 1, ‘First time adoption on Financial instrument disclosures’ (effective 1 July 2010);
•	amendment to IFRS 2, ‘Share-based payments’ on group cash-settled share-based payment transactions (effective 1 January 2010);
•	amendment to IAS 32, ‘Financial instruments Presentation’ on classification of rights issues (effective 1 February 2010);
•	IFRIC 15, ‘Agreements for construction and real estates’ (effective 1 January 2009 but EU-endorsed from 1 January 2010); and
•	IFRIC 19, ‘Extinguishing financial liabilities with equity instruments’ (effective 1 July 2010).
None of the above new standards, amendments to standards or interpretations which were mandatory for the first time for the financial year 
beginning 1 October 2010 have had an impact on the financial statements of the Group.
Future financial years
The following standards and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods 
beginning on or after 1 October 2011:
•	Annual improvements 2010 (those improvements effective 1 January 2011);
•	amendment to IFRS 7, ‘Financial instrument disclosures’ enhancing disclosures about transfers of financial assets (effective 1 July 2011);
•	IFRS 9, ‘Financial instruments’ on ‘classification and measurement’ (effective 1 January 2013);
Notes to the financial statements
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
42
1. Accounting policies and basis of preparation (continued)
Accounting developments (continued)
Future financial years (continued)
•	IFRS 10, ‘Consolidated financial statements’ (effective 1 January 2013);
•	IFRS 11, ‘Joint arrangements’ (effective 1 January 2013);
•	IFRS 12, ‘Disclosure of interests in other entities’ (effective 1 January 2013);
•	IFRS 13, ‘Fair value measurement’ (effective 1 January 2013);
•	amendment to IAS 24, ‘Related party transactions (effective 1 January 2011);
•	amendment to IAS 19, ‘Employee benefits’ resulting from post employment benefits (effective 1 January 2013); and
•	amendment to IAS 27, ‘Consolidated and separate financial statements’ reissued as ‘separate financial statements’ (effective 1 January 2013).
The Directors do not anticipate that the adoption of these standards will have a significant impact on the financial statements of the Group when 
they come into effect for periods commencing on or after 1 October 2011.
The following standards and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods 
beginning on or after 1 October 2011 and are not expected to be relevant to the Group:
•	amendment to IFRS 1, ‘First time adoption’ on hyperinflation and fixed dates (effective 1 July 2011);
•	amendment to IAS 12, ‘Income taxes’ relating to recovery of underlying assets (effective 1 January 2012);
•	IAS 28, ‘Investments in associates’ reissued as ‘Investments in associates and joint ventures’ (effective 1 January 2013);
•	amendment to IAS 1, ‘Presentation of financial statements’ (effective 1 July 2012); and
•	amendment to IFRIC 14, ‘Prepayments of minimum funding requirement’ (effective 1 January 2011).
Critical accounting judgements
The preparation of the consolidated financial statements requires the Directors to make judgements, estimates and assumptions that affect 
the application of policies and reported amounts of assets and liabilities, income and expenses. The main accounting judgements relate to the 
determination of the carrying value of investments in and loans to subsidiaries, the period over which research and development costs are recognised 
and the share option charge and the underlying assumptions. The Directors have reviewed the period over which significant research and development 
costs relating to clinical trials are recognised based on information provided by clinical research organisations. The Directors have assessed the 
carrying value of the investments and loans and the inputs to the share option charge calculation and there is not considered to be a reasonable 
change to a metric that would result in a material adjustment to the carrying value of the investments or the share option charge.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under 
the circumstances, the results of which form the basis of making judgements about carrying value of assets and liabilities that are not readily apparent 
from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. 
Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the year 
of revision and future years if the revision affects both current and future years.
Revenue
Revenue, which excludes value added tax, represents the invoiced value of goods and services supplied, net of certain promotional activity. 
Revenue from sales of products is recognised when the risks and rewards of ownership pass to the customer and is stated net of value added tax.
Amounts received or receivable in respect of research and development contracts, collaborative research agreements, licence fees or milestone 
payments are recognised as revenue when the licence rights are granted or the specific conditions stipulated in the agreements have been satisfied 
and provided that there are no future obligations. These amounts are shown gross of any withholding tax.
Other income
Other income, which excludes value added tax, represents amounts received or receivable from charitable organisations.
Cost of sales and operating expenses
Cost of sales comprises the proportion of milestone and royalty income earned by the Group and due to third parties under licence agreements 
and the direct cost of goods sold, including distribution costs.
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
43
1. Accounting policies and basis of preparation (continued)
Research and development expenditure
All research and development costs, whether funded by third parties under licence and development agreements or not, are included within 
operating expenses and classified as research and development costs.
All ongoing development expenditure is currently expensed in the year in which it is incurred. Due to the regulatory and other uncertainties 
inherent in the development of the Group’s products, the criteria for development costs to be recognised as an asset, as prescribed by IAS 38, 
‘Intangible assets’, are not met until the product has been submitted for regulatory approval, such approval has been received, and it is probable 
that future economic benefits will flow to the Group. The Group does not currently have any such internal development costs that qualify for 
capitalisation as intangible assets.
Share-based payments
The Group makes equity-settled share-based payments to its employees and Directors. Equity-settled share-based payments are measured at fair 
value at the date of grant and are expensed on a straight line basis over the vesting period of the award. At each balance sheet date, the Group 
revises its estimate of the number of options that are expected to become exercisable. The share-based payment charge is allocated to research 
and development expenses and administrative expenses on the basis of staff numbers, with a corresponding adjustment to equity.
Employee benefits
All employee benefit costs, notably holiday pay and contributions to Group or personal defined contribution plans, are charged to the statement 
of comprehensive income on an accruals basis. The Group operates a defined contribution pension scheme. The assets of this scheme are held 
separately from those of the Group in independently administered funds. The Group does not offer any other post retirement benefits.
Operating leases
Costs in respect of operating leases are charged to the statement of comprehensive income on a straight line basis over the lease term.
Property, plant and equipment
Property, plant and equipment are stated at historic purchase cost less accumulated depreciation. The cost of property, plant and equipment 
is its purchase cost, together with any incidental expenses of acquisition. Depreciation is calculated so as to write off the cost of property, plant 
and equipment, less its estimated residual value, on a straight line basis over the expected useful economic lives of the assets concerned.
The principal rates used for this purpose are:
Plant and machinery 20% 
Computer equipment 33% 
Fixtures and fittings  20% 
Motor vehicles  25%
Leasehold improvements are depreciated over the shorter of the lease term and the asset’s useful economic life.
The assets’ residual values and useful lives are reviewed, and adjusted if necessary, at each balance sheet date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the operating loss.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost 
less any accumulated amortisation and any accumulated impairment losses. At each balance sheet date the Group reviews the carrying amount 
of its intangible assets to determine whether there is any indication that these assets have suffered an impairment loss.
Impairment of assets
Non-current assets are reviewed for impairment both annually and when there is an indication that an asset may be impaired (when events or changes 
in circumstances indicate that carrying value may not be recoverable). An impairment loss is recognised in the statement of comprehensive income 
for the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value 
less cost to sell and value in use.
Investments in subsidiary
Investments in subsidiary undertakings are carried at cost less any impairment provision. Such investments are subject to an annual review and any 
impairment is charged to the statement of comprehensive income. The fair value of the options granted after 7 November 2002 by Phytopharm plc 
to the employees of Phytotech Limited which had not vested by 1 September 2005 is also included in the value of the investment. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
44
1. Accounting policies and basis of preparation (continued)
Trade and other receivables
Trade receivables are non-interest bearing and are recognised initially at fair value and subsequently measured at amortised cost using the effective 
interest method, less provision for impairment.
Money market investments
Money market investments have fixed maturities that the Group’s management has the positive intention to hold to maturity. These investments 
include short-term investments with an original maturity date of more than three months.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank deposits repayable on demand and other short-term highly liquid investments with original 
maturities at inception of ninety days or less.
Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment 
in which the entity operates (the functional currency). The consolidated financial statements are presented in sterling (£), which is the Company’s 
functional and presentation currency.
Transactions denominated in foreign currencies are translated into sterling, being the functional currency of the Group, at actual rates of exchange 
ruling at the date of transaction. Monetary assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange ruling 
at the end of the financial year. All foreign currency exchange differences are taken to the statement of comprehensive income in the year in which 
they arise.
Current tax
Current tax represents UK tax recoverable and is provided at amounts expected to be recovered using the tax rates and laws that have been 
enacted at the balance sheet date.
Deferred taxation
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities 
and their carrying amounts in the consolidated financial statements in accordance with IAS 12, ‘Income taxes’. Deferred tax is not accounted for 
if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction 
affects neither the accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or 
substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred 
income tax liability is settled. A deferred tax asset is recognised only to the extent that it is probable that sufficient taxable profit will be available 
in future years to utilise the temporary difference.
Trade and other payables
Trade payables are non-interest bearing and are initially stated at their fair value and subsequently held at amortised cost.
Ordinary shares and share premium
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Employee share trust
The Company recognises the assets and liabilities of the trust in its own accounts and shares held by the trust are recorded at cost as a deduction 
at arriving at shareholders’ funds until such time as the shares vest unconditionally to employees. The trust is a separately administered trust, funded 
by contributions from employees and Phytotech Limited, whose assets comprise shares in the Company.
Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating 
decision maker has been identified as the Executive Directors.
2. Business and geographical segments
The Group’s development and other functions operating across all the Group’s research programmes are managed centrally and are reported 
internally as a single business. This also applies to the Group’s marketed products. The chief operating decision maker has been identified as the 
Executive Directors of Phytopharm plc. The Executive Directors review the Group’s internal reporting in order to assess performance and allocate 
resources. Management has determined the operating segment based on these reports. Accordingly, the Directors consider that there is only one 
reporting segment, being the research and development of pharmaceutical products.
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
45
2. Business and geographical segments (continued)
The Group is domiciled in the UK. The result of its revenue and other income from external customers in the UK is £4,761 (2010: £566,717) and the 
total revenue and other income from external customers in other countries is £61,898 (2010: £147,257).
2011
£
2010
£
Revenue
South Africa 61,898 —
Europe 4,761 566,717 
Asia — 130,137
 66,659 696,854
Other income
USA
 (i)
— 17,120
 66,659 713,974
(i) Represents grant income recognised.
All non-current assets are located in the United Kingdom (2010: all).
The Group has revenue and other income exceeding 10% from more than one customer:
2011
£
2010
£
Customer A 61,898 —
Customer B 4,761 506,717 
Customer C — 116,611 
Customer D — 17,120 
Customer E — 60,000
3. Operating expenses
2011
£
2010
£
Research and development
7,461,246 4,013,486
Administrative expenses 1,152,554 1,115,551
8,613,800 5,129,037
4. Directors’ emoluments
2011
£
2010
£
Aggregate emoluments 458,923 349,605 
Contributions to money purchase pension schemes 37,796 12,497 
496,719 362,102
There were no gains made by individual Directors from the exercise of share options for the year ended 30 September 2011 (2010: none).
Detailed disclosures of Directors’ individual remuneration and share options are given in the Remuneration Report on pages 22 to 26.
Two of the Executive Directors (2010: two) had retirement benefits accruing to them from money purchase pension schemes in respect 
of qualifying services. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
46
5. Employee information
The average monthly number of persons (including Executive Directors) employed during the year was:
2011
Number
2010
Number
Administration 4 5 
Research and development 10 15 
14 20
2011
£
2010
£
Staff costs (for the above persons):
Wages and salaries 1,022,420 1,126,653 
Social security costs 117,542 100,810 
Other pension costs 81,096 54,973 
Share option charge 137,533 55,942 
1,358,591 1,338,378
Highest paid Director
2011
£
2010
£
Aggregate emoluments 205,687 128,031
Contributions to money defined benefit scheme 22,469 —
228,156 128,031
Key management compensation
2011
£
2010
£
Short-term employee benefits 769,840 689,968
Post employment benefits 51,483 25,173
Share-based payments 104,734 33,345
926,057 748,486 
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, 
directly or indirectly, including all Executive Directors and Non-Executive Directors. The number of management personnel in addition to the Directors 
whose remuneration is included above is 2 (2010: 2).
Included within wages and salaries is an amount of £71,840 for the year ended 30 September 2010 paid in consultancy costs for the services 
of the Interim Chief Operating Officer, Keith Thomson, paid to Thomson Business Consultancy Limited, of which Keith Thomson is a director.
6. Finance income
Interest receivable represents interest from cash and cash equivalents and money market deposits.
2011
£
2010
£
Cash and cash equivalents 59,262 93,678 
Money market investments 316,423 196,147 
375,685 289,825
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
47
7. Loss before taxation
2011
£
2010
£
Loss before taxation is stated after charging/(crediting):
Depreciation charge for the year:
       Owned property, plant and equipment 49,804 67,198 
Loss on disposal of property, plant and equipment (24,743) (4,108) 
Impairment charge for intangible asset —  99,400 
Fees payable to the Company’s auditors for the audit of the parent company
and consolidated financial statements 24,255 27,000 
Fees payable for other services supplied pursuant to legislation 13,840 10,000 
Fees payable for the audit of the Company’s subsidiaries pursuant to legislation 10,395 6,000 
Tax services 14,350 25,642 
Foreign exchange loss 19,186 36,299 
Operating lease charges:
       Other 83,318 104,127 
In addition to the fees payable to the Company’s auditor for the year ended 30 September 2010 disclosed above, £108,000 was paid to the Company’s 
auditor in respect of fees for other services supplied pursuant to legislation. These fees have been recorded against the share premium account.
8. Taxation
2011
£
2010
£
Current tax:
UK corporation tax
Current UK corporation tax credit on loss for the year 479,229 411,171
Adjustment in respect of prior year 33,897 —
Current UK corporation tax credit on loss for the year 513,126 411,171
No corporation tax liability arises on the results for the year due to the loss incurred (2010: £nil). The Group has taken advantage of the research 
and development corporation tax credits introduced in the Finance Act 2000 whereby a company may surrender corporation tax losses incurred 
on research and development expenditure for a corporation tax refund.
The tax on the Group’s loss before taxation differs from the theoretical amount that would arise using the weighted average tax rate applicable 
to losses of the Group as follows:
2011
£
2010
£
Loss before taxation (8,171,456) (4,212,685) 
Loss before taxation multiplied by the standard rate for research 
and development tax credits at 13.25% (2010: 14%) (1,082,718) (589,776)
Effect of:
Difference between depreciation and capital allowances (1,524) 4,690 
Expenses not deductible for tax purposes 407 92 
Effect of share option charge/(credit) 18,223 7,832 
Enhanced research and development expenditure (511,373) (176,216) 
Adjustment in respect of prior year (33,897) —
Carried forward losses 1,097,756 342,207
Tax credit for the year (513,126) (411,171)
See note 19 for details of the potential deferred tax assets that have not been recognised due to uncertainty as to the timing of their utilisation. 
See note 24 for details of the impact on the potential deferred tax assets of changes to the United Kingdom corporation tax system announced 
in the March 2011 Budget Statement. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
48
8. Taxation (continued)
The Company has taken advantage of the Research and Development corporation tax credits introduced in the Finance Act 2000 whereby 
a company may surrender corporation tax losses incurred on research and development expenditure for a corporation tax refund at the rate 
of 14% to 31 March 2011 and 12.5% from 1 April 2011.
9. Loss for the financial year
As permitted by Section 408 of the Companies Act 2006 the parent company’s statement of comprehensive income has not been included 
in these financial statements. The parent company’s loss for the year to 30 September 2011 was £435,907 (2010: £429,006).
10. Loss per ordinary share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding 
during the year after the deduction of the weighted average number of the ordinary shares held by the employee benefit trust during the year.
For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion for all dilutive potential 
ordinary shares. The Company has no dilutive potential ordinary shares in issue because it is loss making.
2011 2010
Attributable loss (£)
(7,658,330) (3,801,514) 
Weighted average number of shares in issue 346,619,213 284,234,443 
Basic and diluted loss per ordinary share (pence) (2.2) (1.3)
1 1. Intangible assets
2011
£
2010
£
Cost
At 1 October and 30 September — 99,400
Impairment at 1 October — (99,400)
Charge for the year — —
Impairment at 30 September — (99,400)
Net carrying value at 30 September — —
Intangible assets represent patent and know-how licences acquired externally that have been recognised as an asset at cost. At each balance sheet 
date the Group reviews the carrying amount of its intangible assets to determine whether there is any indication that these assets have suffered an 
impairment loss.
During the year ended 30 September 2010 an impairment charge of £99,400 was recorded to write down to £nil the carrying value of the intangible 
assets. The intangible assets were impaired as a result of the Group’s strategy of focusing in specific chemical entities as pharmaceutical products, 
which means that the intangible assets are no longer expected to be utilised.
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
49
12. Property, plant and equipment
Group 
Leasehold
improvements
£
Computer 
equipment
£
Motor
vehicles
£
Plant and
machinery
£
Fixtures
and fittings 
£
Total
£
Cost
At 1 October 2010 32,637 233,257 61,304 19,049 130,054 476,301 
Additions 4,435 11,309 — 4,443 613 20,800 
Disposals — (10,354) (61,304) (10,712) (46,001) (128,371) 
At 30 September 201 1 37,072 234,212 — 12,780 84,666 368,730 
Accumulated depreciation
At 1 October 2010 2,011 187,644 60,111 17,281 96,350 363,397 
Charge for year 7,118 30,465 1,193 1,086 9,942 49,804 
Disposals — (10,292) (61,304) (10,520) (46,001) (128,117) 
At 30 September 201 1 9,129 207,817 — 7,847 60,291 285,084 
Net book value
At 30 September 201 1 27,943 26,395 — 4,933 24,375 83,646 
At 30 September 2010 30,626 45,613 1,193 1,768 33,704 112,904
Group
Leasehold
improvements 
£
Computer
equipment
£
Motor
vehicles
£
Plant and
machinery
£
Fixtures
and fittings
£
Total
£
Cost
At 1 October 2009 9,184 251,355 95,000 28,838 189,687 574,064
Additions 32,637 22,562 — 1,277 28,652 85,128 
Disposals (9,184) (40,660) (33,696) (11,066) (88,285) (182,891)
At 30 September 2010 32,637 233,257 61,304 19,049 130,054 476,301
Accumulated depreciation
At 1 October 2009 5,142 188,090 82,866 25,314 170,286 471,698
Charge for year 3,789 39,441 10,941 1,262 11,765 67,198
Disposals (6,920) (39,887) (33,696) (9,295) (85,701) (175,499)
At 30 September 2010 2,011 187,644 60,111 17,281 96,350 363,397 
Net book value
At 30 September 2010 30,626 45,613 1,193 1,768 33,704 112,904 
At 30 September 2009 4,042 63,265 12,134 3,524 19,401 102,366 
Company
The Company has no property, plant and equipment (2010: none). Financial Statements Phytopharm plc Annual Report and Accounts 201 1
50
13. Investments
Group Company
Investment in Group undertakings
2011
£
2010
£
2011
£
2010
£
At 1 September — — 1,501,603 1,445,661
Increase in capital contribution relating to share-based payments — — 137,533 55,942 
At 30 September — — 1,639,136 1,501,603 
The capital contribution relating to share-based payments relates to share options granted by the Company to employees of subsidiary 
undertakings in the Group. Refer to note 23 for further details on the Group’s share option schemes.
Interests in Group undertakings
Proportion of voting rights and nominal 
value of issued shares held by
Name of undertaking Country of incorporation Description of shares held Group % Company %
Phytotech Limited England and Wales Ordinary 10 pence shares 100 100
Phytodevelopments Limited England and Wales Ordinary £1 shares 100 —
Both the above companies have been included in these financial statements and operated principally in their country of incorporation or registration.
The principal business activities of these subsidiary undertakings are:
•	Phytotech Limited – development of pharmaceutical products and functional foods; and
•	Phytodevelopments Limited – dormant.
14. Amounts due from subsidiary undertaking
Group Company
2011
£
2010
£
2011
£
2010
£
Amounts due from subsidiary undertaking — — 21,870,207 16,471,326
No provision was made against the amount due to the Company from its subsidiary undertaking during the year (2010: £nil).
There are no fixed terms in respect of amounts owed by subsidiary undertakings. These are non-interest bearing, unsecured and not payable on demand.
15. Trade and other receivables
The fair value of trade and other receivables are their current book values.
Group Company
2011
£
2010
£
2011
£
2010
£
Trade receivables 5,581 — — —
Other receivables 86,395 59,926 5,696 7,796 
Prepayments and accrued income 367,978 421,048 192,979 201,998 
459,954 480,974 198,675 209,794 
As of 30 September 2011, all trade receivables were fully performing and aged less than six months from their due date. These related to 
independent customers for whom there was not recent history of default. As of 30 September 2010, the Group had no trade receivables.
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
51
15. Trade and other receivables (continued)
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
Group Company
2011
£
2010
£
2011
£
2010
£
Sterling 5,581 — — —
16. Money market investments
Group Company
2011
£
2010
£
2011
£
2010
£
Held-to-maturity financial assets 14,500,000 22,500,000 14,500,000 22,500,000
These represent fixed-rate short-term deposits placed with a range of banks at fixed terms.
17. Cash and cash equivalents
Group Company
2011
£
2010
£
2011
£
2010
£
Cash and cash equivalents 3,074,476 1,108,171 2,677,736 484,469
The Company holds its excess cash and cash equivalents in a combination of fixed interest accounts and fixed-term money market deposits. 
At 30 September 2011 and 30 September 2010 these did not exceed three months in duration. The fair value of cash and cash equivalents 
approximates their carrying value.
18. Trade and other payables
The fair value of trade and other payables approximates their current book values.
 
Group Company
2011
£
2010
£
2011
£
2010
£
Trade payables 665,109 354,219 33,699 36,970 
Other taxation and social security 37,945 36,364 — —
Other payables 10,662 11,502 — —
Accruals and deferred income 1,919,591 732,830 53,335 39,991 
2,633,307 1,134,915 87,034 76,961
19. Deferred taxation
The Group and Company have the potential deferred tax assets shown below, which are not recognised due to uncertainty as to the timing 
of their utilisation.
Group Company
2011
£
2010
£
2011
£
2010
£
Tax effect of timing differences:
Depreciation in excess of tax allowances 302,472 329,776 7,317 7,902 
Accumulated losses 12,655,313 11,448,286 1,115,669 1,087,228 
 12,957,785 11,778,062 1,122,986 1,095,130 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
52
19. Deferred taxation (continued)
A number of changes to the UK corporation tax system were announced in the March 2011 Budget Statement. Certain of these tax changes 
were substantively enacted in the Finance Act 2011 in July 2011. The impact of this has been reflected in the unrecognised potential deferred 
tax asset.
Certain other changes are expected to be enacted in future Finance Acts, including further reductions in the main rate of corporation tax 
by 1% per annum to 23% by April 2014. As at 30 September 2011, there is an unrecognised deferred tax asset of £12,957,785. If these changes 
were applied to this the impact would be to reduce the potential deferred tax asset by £1,036,000 (being £518,000 recognised in the year 
ending 30 September 2012 and £518,000 recognised in the year ending 30 September 2013).
20. Financial instruments
The Group’s financial instruments comprise primarily cash and liquid resources and various items such as trade receivables and trade payables, 
which arise directly from its operations. The Group does not currently have any derivative transactions.
The Group’s ongoing objectives in using financial instruments are to maximise the returns on funds held on deposit, while investing only with 
institutions with high credit ratings, to minimise exchange rate risk where appropriate, and to generate additional cash resources through the 
issue of shares when market conditions are appropriate. In addition, the Group has from time to time conserved cash resources by entering into 
financing arrangements for the acquisition of major capital assets.
The balance sheet positions at 30 September 2011 and 30 September 2010 are not representative of the positions throughout the years as cash 
and short-term investments fluctuate considerably depending on when significant receipts have occurred and on the timing of share issues.
Risk in relation to the use of financial instruments
Capital risk
The capital structure of the Group consists of cash and cash equivalents, money market investments and equity attributable to owners of the parent, 
comprising issued capital, reserves and accumulated losses. The Group manages its capital to ensure that entities in the Group will be able to continue 
as a going concern and to ensure that the Group has sufficient capital available to meet future operational requirements. The Group does not typically 
utilise debt financing.
Liquidity risk
The Group’s policy throughout the year regarding liquidity has been to maximise the return on funds, but to minimise the associated credit and liquidity 
risk by placing funds in low-risk cash deposits and short-term cash deposits. The Board monitors the level of cash and money market investments on a regular 
basis and management monitors the level on a daily basis to ensure that the Group has sufficient liquid funds to meet its commitments as they fall due.
The Group and Company holds cash deposits at call or with a maturity of up to twelve months.
Trade and other payables are payable within the terms specified by the supplier.
Credit risk
Other than trade receivables, the financial instruments that subject the Group to a potential credit risk comprise principally cash and cash equivalents 
and money market investments. The Group’s policy is to minimise the risks associated with cash and money market investments by placing these deposits 
with institutions with a recognised high rating (typically A or above) or with one of the major clearing banks. Trade receivables are largely with highly 
reputable, creditworthy trading partners.
The table below shows the rating of the financial institutions that the Group’s cash and cash equivalents and money market deposits are held with:
Group Rating
2011
£
2010
£
Institution A AA 8,241,585 12,166,258 
Institution B A 9,323,881 11,432,498
Institution C A 8,410 8,787 
 17,573,876 23,607,543
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
53
20. Financial instruments (continued)
Risk in relation to the use of financial instruments (continued)
Credit risk (continued)
Company Rating
2011
£
2010
£
Institution A AA 8,083,089 11,958,260
Institution B A 9,090,442 11,021,816 
Institution C A 4,205 4,393
17,177,736 22,984,469
The Group disclosure above does not include cash in hand amounting to £600 (2010: £628).
Interest rate risk
The Group holds all cash, bank and held-to-maturity investments in sterling, US dollar, Euros, Canadian dollar, Hungarian forint and South African 
rand accounts. Interest rates on current accounts are floating and are based on London Interbank Bid Rate (“LIBID”), while interest rates on term 
deposits are fixed for the duration of deposit.
The Group monitors future potential cash outflows on a regular basis and where possible places cash resources in money market deposits with 
fixed interest rates for the term of the deposit. The remaining cash resources are held in accounts with floating interest rates based on relevant 
national LIBID equivalents. Changes in interest rates for fixed and floating deposits may increase or decrease the Group’s finance income. The Group 
does not have any committed borrowing facilities. Consequently, there is no material exposure to interest rate risk in respect of financial liabilities.
If interest rates had been 1% higher or lower in 2011 the increase/decrease in finance income arising from money market investments would have 
been £168,000 (2010: £150,000).
The interest rate profile of the Group’s financial assets is:
2011 2010
Group
Fixed
£
Floating
£
Fixed
£
Floating
£
Sterling cash and cash equivalents — 2,785,205 — 586,183
US dollar cash and cash equivalents — 271,811 — 496,932
Euro cash and cash equivalents — 17,416 — 24,309 
Canadian dollar cash and cash equivalents — 40 — —
Hungarian forint cash and cash equivalents — 4 — —
South African rand cash and cash equivalents — — — 747
Sterling money market deposits 14,500,000 — 22,500,000 —
 14,500,000 3,074,476 22,500,000 1,108,171
The weighted average interest rate of the Group’s cash and cash equivalents at 30 September 2011 was 1.09% (2010: 0.24%). 
The weighted average interest rate of the Group’s money market investments at 30 September 2011 was 2.06% (2010: 1.73%).
The interest rate of the Company’s financial assets is:
2011 2010
Company
Fixed
£
Floating
£
Fixed
£
Floating
£
Sterling cash and cash equivalents — 2,677,736 — 484,469 
Sterling money market deposits 14,500,000 — 22,500,000 —
 14,500,000 2,677,736 22,500,000 484,469
The weighted average interest rate of the Company’s cash and cash equivalents at 30 September 2011 was 1.27% (2010: 0.26%). 
The weighted average interest rate of the Company’s money market investments at 30 September 2011 was 1.81% (2010: 1.73%). Financial Statements Phytopharm plc Annual Report and Accounts 201 1
54
20. Financial instruments (continued)
Foreign currency risk
The Company’s principal functional currency is sterling. Where possible the Group maintains natural hedges by matching foreign currency income 
with foreign currency expenditure. The Group incurs expenditure in foreign currency relating principally to clinical trials which may exceed any revenues 
in foreign currencies. To the extent that income and expenditure in foreign currencies are not matched, fluctuations in exchange rates between 
sterling and foreign currencies, principally Euro and US dollar, may result in realised or unrealised foreign exchange gains and losses. Where there 
is certainty of the amount and timing of expenditure of foreign currencies, the Group may purchase financial instruments to minimise any foreign 
exchange gains or losses. Where the timing and/or the amount to be received is uncertain, risk management is more difficult and the Group will 
use financial instruments wherever possible. To the extent that financial instruments are not utilised, any fluctuations in foreign exchange movements 
may have a material adverse impact on the results from operating activities. The Group had an exposure to the sterling/Euro and sterling/US dollar 
exchange rates due to the need to fund expenditure denominated in Euros and US dollars. Had sterling been 10%. weaker in relation to the Euro, 
the loss in 2011 would have been increased by £79,000 (2010: £24,000) and had sterling been 10% weaker in relation to the US dollar, the loss in 2011 
would have increased by been £48,000 (2010: £68,000).
Fair value of financial assets and liabilities
There is no material difference between the fair value and the carrying values of the financial instruments referred to above, because of the short 
maturity period of these financial instruments or their intrinsic size and risk.
Financial instruments by category
Group
2011
Loans and
receivables
£
2010
Loan and
receivables
£
Assets as per balance sheet
Trade and other receivables excluding prepayments 257,087 229,002
Money market investments 14,500,000 22,500,000
Cash and cash equivalents 3,074,476 1,108,171
17,831,563 23,837,173
Company
2011
Loans and
receivables
£
2010
Loan and
receivables
£
Assets as per balance sheet
Trade and other receivables excluding prepayments 169,976 176,564 
Money market investments 14,500,000 22,500,000 
Cash and cash equivalents 2,677,736 484,469 
 17,347,712 23,161,033
Group
2011 
Other financial
liabilities
£ 
2010 
Other financial 
liabilities
£ 
Liabilities as per balance sheet
Trade and other payables excluding statutory liabilities 2,595,362 1,098,551
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
55
20. Financial instruments (continued)
Financial instruments by category (continued)
Company
2011
Other financial
liabilities
£
2010
Other financial
liabilities
£
Liabilities as per balance sheet
Trade and other payables excluding statutory liabilities 87,034 76,961
21. Pensions
The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the Group 
in independently administered funds. The pension cost represents contributions paid and payable by the Group to the funds and amounted to £81,096 
(2010: £54,973). The amounts outstanding in respect of pensions are £10,662 (2010: £11,705).
22. Ordinary shares
Ordinary shares
Number
Ordinary shares
of 1 pence each
£
Share premium
£
At 1 October 2009 94,548,391 945,484 55,213,645
Issued under placing and open offer 252,129,042 2,521,290 21,569,061
At 30 September 2010 346,677,433 3,466,774 76,782,706
At 1 October 2010 346,677,433 3,466,774 76,782,706
Issued under share option scheme 124,539 1,245 5,618
At 30 September 201 1 346,801,972 3,468,019 76,788,324 
In the year ended 30 September 2011 the Company issued 124,539 new ordinary shares of one pence each for a total cash consideration of £6,863 
following the exercise of share options. The nominal value of these shares was £1,245.
In the year ended 30 September 2010 the Company issued 252,129,042 new ordinary shares of one pence each for a total cash consideration 
of £24,090,351 after the expenses of issue. The nominal value of these shares was £2,521,290.
Netted against the accumulated loss are purchases of shares in Phytopharm plc, which relate to the Phytopharm Share Incentive Plan 2007, 
under which the Company issued one “Matching Share” for every one “Partnership Share” purchased by the employee. All shares are held by 
the scheme Trustees until the shares vest unconditionally with the employee. During the year ended 30 September 2011 the Group purchased 
5,171 (2010: 39,296) ordinary shares of one pence at a total cost of £373 (2010: £3,885).
23. Options over shares of Phytopharm plc
Potential issues of ordinary shares
The Company may grant share options to selected employees on joining the Company and any such grants are made following the preliminary 
and interim announcements together with performance related grants to all employees. Performance criteria must be satisfied before share 
options can be exercised and these are detailed below. In addition, the Company has a long-term incentive scheme and a Directors’ Reward Plan 
under which long-term share incentives may be granted to selected senior executives. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
56
23. Options over shares of Phytopharm plc (continued)
Potential issues of ordinary shares (continued)
The outstanding share scheme options and long-term incentive awards at 30 September 201 1 are shown below analysed according to the exercise criteria:
 Number
outstanding
2011
Exercise
price Note
Date
granted
Exercisable
from
Exercisable
to
Currently
vested
2011
Currently
exercisable
2011
Phytopharm Share 
Option Plan 2007
235,189 £0.0413 1 11/03/2009 11/03/2012 10/03/2019 — —
980,562 £0.1100 1 20/01/2010 19/01/2013 19/01/2020 — —
3,132,372 £0.0763 1 21/07/2010 20/07/2013 20/07/2020 — —
2,067,789 £0.0763 2 21/07/2010 20/07/2013 20/07/2020 — —
1,868,030 £0.0735 1 17/12/2010 16/12/2013 16/12/2020 — —
1,355,841 £0.0735 2 17/12/2010 16/12/2013 16/12/2020 — —
9,639,783 — —
Phytopharm Directors’ 
Reward Plan 2010
863,334 £0.1125 3 31/03/2010 30/03/2013 30/03/2015 — —
863,334 — —
Number
outstanding
2010
Exercise
price Note
Date 
granted
Exercisable
from
Exercisable
to
Currently
vested
2010
Currently
exercisable
2010
Phytopharm Share 
Option Plan 2007
80,426 £0.3100 1 19/12/2007 19/12/2010 18/12/2017 — —
14,327 £0.2350 1 28/03/2008 28/03/2011 27/03/2018 — —
239,963 £0.2175 1 30/05/2008 30/05/2011 29/05/2018 — —
409,230 £0.0413 1 11/03/2009 11/03/2012 10/03/2019 — —
1,406,750 £0.1100 1 20/01/2010 19/01/2013 19/01/2020 — —
3,132,372 £0.0763 1 21/07/2010 20/07/2013 20/07/2020 — —
2,067,789 £0.0763 2 21/07/2010 20/07/2013 20/07/2020 — —
7,350,857 — —
Phytopharm Directors’ 
Reward Plan 2010
 863,334 £0.1125 3 31/03/2010 30/03/2013 30/03/2015 — —
863,334 — —
Phytopharm Save As 
You Earn Plan 2007
125,285 £0.0613 4 22/12/2008 22/12/2011 21/12/2012 — —
125,285 — —
Note
1  These options vest on the third anniversary of the date of grant and have been granted under the Phytopharm Share Option Plan 2007: Enterprise Management Incentive Scheme. The number 
of options exercisable will be determined by the Company’s TSR compared to the constituents of the FTSE Small Cap Index. The value of options (at date of grant) will be exercisable if the 
Company’s TSR in the relevant ranking group is above the median.
2  These options vest on the third anniversary of the date of grant and have been granted under the Phytopharm Share Option Plan 2007: Unapproved Scheme. The number of options 
exercisable will be determined by the Company’s TSR compared to the constituents of the FTSE Small Cap Index. The value of options (at date of grant) will be exercisable if the Company’s 
TSR in the relevant ranking group is above the median.
3  These options vest on the third anniversary of the grant date and have been granted under the Phytopharm Directors’ Reward Plan 2010. There are no performance conditions attached 
to the exercise of these options.
4  These options are granted under a Save As You Earn plan approved by HMRC. The last offer under the plan was made to all employees and Executive Directors on 13 August 2007. 
There are no performance conditions attached to the exercise of these options. This plan has been cancelled during 2011 and there are no options outstanding at 30 September 2011. 
All options outstanding at 1 October 2010 were exercised or lapsed during the year according to the scheme rules.
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
57
23. Options over shares of Phytopharm plc (continued)
Option valuations
Exercise of options is subject to continued employment or being a good leaver. Options were valued using a stochastic model (also known as a 
Monte Carlo model). The fair value per option granted and the assumptions used in the calculation for options granted since 19 December 2007 
are set out in the tables below.
Award Grant date Exercise price
Number of
shares
outstanding
2011
Number of
shares
outstanding
2010
Fair value per
option at
grant date
Share Option Plan 2007 19/12/2007 £0.3100 — 80,426 £0.1531
Share Option Plan 2007 23/08/2008 £0.2350 — 14,327 £0.1297
Share Option Plan 2007 30/05/2008 £0.2175 — 239,963 £0.1142
Share Option Plan 2007 11/03/2009 £0.0413 235,189 409,230 £0.0223
Share Option Plan 2007 20/01/2010 £0.1100 980,562 1,406,750 £0.0574
Share Option Plan 2007 21/07/2010 £0.0763 3,132,372 3,132,372 £0.0404
Share Option Plan 2007 21/07/2010 £0.0763 2,067,789 2,067,789 £0.0404
Share Option Plan 2007 17/12/2010 £0.0735 1,868,030 — £0.0402
Share Option Plan 2007 17/12/2010 £0.0735 1,355,841 — £0.0402
Directors’ Reward Plan 2010 31/03/2010 £0.1125 863,334 863,334 £0.0666
Save as You Earn Plan 2007 22/12/2008 £0.0613 — 125,285 £0.0308
 10,503,117 8,339,476 
The fair values of the original share options granted but not vested as at 30 September 2011 were calculated using the following assumptions:
Award Grant date
Expected term
(note(a))
Expected
dividend yield
(note(b))
%
Risk-free rate
(note (c))
%
Expected
volatility
(note (d))
%
Performance
condition
(note)
Share Option Plan 2007 11/03/2009 6.00 years — 2.3 72.4 1
Share Option Plan 2007 20/01/2010 5.90 years — 3.2 70.5 1
Share Option Plan 2007 21/07/2010 6.77 years — 2.3 70.4 1
Share Option Plan 2007 21/07/2010 6.77 years — 2.3 70.4 2
Share Option Plan 2007 17/12/2010 5.00 years — 2.5 74.7 1
Share Option Plan 2007 17/12/2010 5.00 years — 2.5 74.7 2
Directors’ Reward Plan 2010 31/03/2010 5.91 years — 2.7 73.7 3
Notes to assumptions
(a) Expected term
For options granted up to 21 July 2010
i)  40% of participants exercise after three years if a gain of 40% is available. If this gain is not available, these individuals hold on to their shares 
until such a gain can be made;
ii)  25% of the remainder exercise from the third anniversary onwards using a reducing balance methodology, providing that a gain of 20% 
is available. If this gain is not available, these individuals refrain from exercising until such a gain can be made;
iii)  15% of the total participants are “good leavers”. A good leaver is an employee who ceases to be an employee due to redundancy or other 
circumstances outside their control;
iv)  5% of the participants exercise per annum on a reducing balance methodology, providing that the options are “in the money” (irrespective of the 
level of gain) to allow for leavers in these years;
v)  any remaining options are exercised at maturity providing that they are “in the money” (i.e. the share option price is less than the market price). 
Any awards that are “underwater” (i.e. the share option price is greater than the market price) therefore lapse at maturity; and
vi) all exercises are dependent on the performance condition being met. Financial Statements Phytopharm plc Annual Report and Accounts 201 1
58
23. Options over shares of Phytopharm plc (continued)
Notes to assumptions (continued)
(a) Expected term (continued)
For options granted after 21 July 2010
A fixed term of 5 years (being almost halfway through the exercise window). The exercise profile has been simplified as calculations indicated that 
the difference in values is small and this alternative approach allows better modelling of the actual TSR performance condition and to use actual 
company data rather than assuming a hypothetical company performance.
(b) Expected dividend yield
The dividend yield of 0% reflects the absence of a history of paying dividends and a clear dividend policy statement at the relevant grant dates.
(c) Risk free interest rate
UK Gilt rates prevalent on the date of grant with a period commensurate with the term of the award.
(d) Expected volatility
Expected volatility is the measurement of the amount by which a share price is expected to fluctuate during a period. The expected volatility has 
been calculated using the standard approach of calculating the standard deviation of the natural logarithm of historical share price movements. 
Certain periods where there has been inactivity followed by substantial increases in price and volume have been excluded from this calculation 
due to specific events creating a volatility that would not be representative of the potential future volatility.
A reconciliation of share option scheme movements for the years ended 30 September 2011 and 30 September 2010 is set out below:
2011 2010
Number
Weighted
average
exercise
price Number
Weighted
average
exercise
price
At 1 October 8,339,476 £0.09 1,062,051 £0.15
Granted 3,466,774 £0.07 7,563,495 £0.09
Exercised (124,539) £0.06 — £0.00
Lapsed (1,178,594) £0.13 (286,070) £0.21
At 30 September 10,503,117 £0.06 8,339,476 £0.09
The weighted average mid-market share price at the time of exercise was £0.08 per share. No share options were exercised in the year ended 
30 September 2010.
The following tables summarise the information about the range of exercise prices for share options outstanding at 30 September 2011 
and 30 September 2010:
2011 2010
Range of exercise prices
Weighted
average
exercise
price
Number
of shares
Weighted
average
remaining life
contractual
years
Weighted
average
exercise
price
Number
of shares
Weighted
average
remaining life
contractual
years
£0.04 to £0.08 £0.07 8,659,221 8.97 £0.07 5,734,676 £9.73
£0.11 to £0.12 £0.11 1,843,896 6.66 £0.11 2,270,084 £8.10
£0.21 to £0.24 — — — £0.22 254,920 £8.00
£0.31 — — — £0.31 80,426 £7.00
The total charge for the year relating to employee share-based payment plans was £137,533 (2010: £55,942) all of which related to the above 
equity based transactions.
Notes to the financial statements (continued)
for the year ended 30 September 2011 Financial Statements Phytopharm plc Annual Report and Accounts 201 1
59
24. Post balance sheet events
A number of changes to the UK corporation tax system were announced in the March 2011 Budget Statement. Certain of these tax changes were 
substantively enacted in the Finance Act 2011 in July 2011. The impact of this has been reflected in the unrecognised potential deferred tax asset.
Certain other changes are expected to be enacted in future Finance Acts, including further reductions in the main rate of corporation tax by 1% 
per annum to 23% by April 2014. As at 30 September 2011, there is an unrecognised deferred tax asset of £12,957,785. If these changes were 
applied to this the impact would be to reduce the potential deferred tax asset by £1,036,000 (being £518,000 in the year ending 30 September 2012 
and £518,000 in the year ending 30 September 2013).
25. Financial commitments
At 30 September 2011 there were the following commitments under non-cancellable operating leases:
2011
Land and
buildings
£
2010
Land and
buildings
£
Within one year 81,224  81,224 
Between two and five years inclusive 233,961  315,185 
 315,185  396,409 
The Group has purchase obligations of £8,290,230 in respect of its sub-contracted research and development activities as at 30 September 2011 
(2010: £2,531,835). The Company had no such commitments (2010: £nil).
Company
The Company has no annual commitments under non-cancellable operating leases (2010: £nil).
26. Related party transactions
Group
Under IAS 24, ’Related Party Disclosures’ the Group is not required to disclose intra-group transactions which are eliminated on consolidation.
The Directors regard Phytopharm plc as the ultimate controlling party of the Group.
Company
The inter-company balances outstanding at 30 September 2011 and 30 September 2010 are shown on the Company balance sheet.
The Company has been charged £548,148 (2010: £412,694) for corporate services provided by subsidiary undertakings.
The remuneration received by key management personnel, including the Directors, is disclosed in note 5. Phytopharm plc
60
Annual Report and Accounts 201 1
Phytopharm is listed in the Official List of the Financial Services Authority and traded on the London Stock Exchange’s (“LSE”) main market for 
listed securities. The stock symbol for Phytopharm on the LSE is PYM.
Analysis of shareholdings at 30 September 201 1
Shareholding range
Number of
shareholders
Percentage
of total
shareholders
Number of
ordinary 
shares
Percentage 
of ordinary
issued share
capital
1–1,000 1,379 54.5275% 584,512 0.1685%
1,001–5,000 639 25.2669% 1,536,956 0.4432%
5,001–10,000 181 7.1570% 1,327,951 0.3829%
10,001–500,000 285 11.2693% 18,042,002 5.2024%
500,001–1,000,000 15 0.5931% 11,392,483 3.2850%
1,000,000 and over 30 1.1862% 313,918,068 90.5180%
2,529 346,801,972  
American Depositary Receipts
Phytopharm’s shares are represented in the US in the form of American Depositary Shares (“ADSs”) represented by American Depositary Receipts 
(“ADRs”). The ADR are issued by the Bank of New York Mellon. Each ADRs is equivalent to two ordinary shares and trades on the over-the-counter 
(“OTC”) market in the US under the symbol PHYOY, identified by the CUSIP number 41942W101.
Registrar
Administrative enquiries regarding shareholdings in Phytopharm on such matters as a lost share certificate should be made to Equiniti Registrars 
who can be contacted directly on 0871 384 2030* or you may wish to write to them at Equiniti, Aspect House, Spencer Road, Lancing, West Sussex 
BN99 6DA. For security reason, Equiniti cannot accept address changes over the telephone or by email.
* Calls to this number are charged at 8 pence per minute from a BT landline. Call charges may vary if using other telephone providers. Lines open 8.30am to 5.30pm, Monday to Friday.
Shareholders can also register a portfolio online at www.shareview.co.uk. This will provide options to register for electronic communications, 
view details of your shareholding and complete certain transactions online.
ADR holders should contact the Bank of New York Mellon, BNY Mellon Shareowner Services, PO Box 247416, Pittsburgh, PA 15252-8516, US.
Share dealing
If you wish to buy or sell shares in Phytopharm, this must be done through a stockbroker. The London Stock Exchange provides a “Guide to 
Investment Services” which gives a number of companies offering share dealing services.
Equiniti offers share dealing services by post, telephone and online. If you would like more details about the share dealing services available, 
please write to the address above, telephone 0871 384 2030 or visit Equiniti’s website, www.equiniti.com.
Shareholder information Phytopharm’s commitment to environmental issues is reflected in this 
Annual Report and Accounts which has been printed on Revive 100, 
a recycled paper stock containing 100% recovered waste.
Registered office
Lakeview House 
2 Lakeview Court 
Ermine Business Park 
Huntingdon 
Cambridgeshire 
PE29 6UA
Company Secretary
Mrs Zoe McGowan
Company number
03131723
Registrars
Equiniti Registrars Limited
Aspect House 
Spencer Road 
Lancing 
West Sussex 
BN99 6DA
Brokers
Peel Hunt LLP
111 Old Broad Street 
London 
EC2N 1PH
Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors 
Abacus House 
Castle Park 
Cambridge 
CB3 0AN
Solicitors
White & Case
5 Old Broad Street 
London 
EC2N 1DW
Financial public relations
FTI Consulting Limited
Holborn Gate 
26 Southampton Buildings 
London 
WC2A 1PB
Financial advisors
N M Rothschild & Sons Limited
New Court 
St Swithins Lane 
London 
EC4N 8AL
Phytopharm plc Annual Report and Accounts 201 1 Phytopharm plc
Lakeview House
2 Lakeview Court
Ermine Business Park
Huntingdon
Cambridgeshire
PE29 6UA
United Kingdom
Tel: +44 (0)1480 437697
Fax: +44 (0)1480 417090
Email: info@phytopharm.com