CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 
2006
CENES PHARMACEUTICALS PLC  
Compass House  
Vision Park  
Chivers Way  
Histon, Cambridge CB24 9ZR  
Tel: 01223 266466  
Fax: 01223 266467  
Website: www.cenes.com  
CENES PHARMACEUTICALS PLC ANNUAL REPORT AND ACCOUNTS 
_cover.indd   1 29/06/2007   10:16:36 CeNeS Pharmaceuticals plc (LSE: CEN) identiﬁes and 
develops novel drugs that are designed to improve patient 
outcomes in the therapeutic areas of pain, anaesthesia and 
neurology. Each CeNeS programme addresses a clinically 
validated target, has a well understood clinical development 
pathway and offers an attractive market opportunity.
CeNeS aims to build a profitable, European, specialty 
pharmaceutical company by developing, partnering and 
marketing a portfolio of new pharmaceutical products 
which offer significant improvements over the existing 
‘gold standard’ treatments.
CeNeS has considerable experience in developing 
Central Nervous System (“CNS”) and pain products 
up to clinical proof of concept and beyond.
CORPORATE STATEMENT
 01 HIGHLIGHTS
 02 AT A GLANCE
 04 CHAIRMAN’S STATEMENT 
 08 CHIEF EXECUTIVE’S REVIEW 
 19 FINANCIAL REVIEW  
 21 BOARD OF DIRECTORS 
 22 SENIOR MANAGEMENT
 23 SCIENTIFIC ADVISORY BOARD
 24 DIRECTORS’ REPORT 
 27 CORPORATE GOVERNANCE 
 30 REMUNERATION REPORT 
 33 INDEPENDENT AUDITORS’ REPORT 
 34 CONSOLIDATED PROFIT AND LOSS ACCOUNT
 34 CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
 35 CONSOLIDATED AND COMPANY BALANCE SHEETS 
 36 CONSOLIDATED CASH FLOW STATEMENT
 36 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
 37 NOTES TO THE FINANCIAL STATEMENTS
 IBC DIRECTORS, ADVISORS AND CONTACTS
ALAN GOODMAN
CHAIRMAN
NEIL CLARK
CHIEF EXECUTIVE
RONALD IRWIN
NON-EXECUTIVE DIRECTOR
DR PETER JOHNSON
NON-EXECUTIVE DIRECTOR
ALAN SMITH
NON-EXECUTIVE DIRECTOR
COMPANY SECRETARY
TONY OSBORNE
REGISTERED OFFICE 
Riverside Way  
Riverside Business Park  
Irvine  
KA11 5DJ  
Scotland
REGISTERED NUMBER
SC 166791
WEBSITE
WWW.CENES.COM 
STOCK EXCHANGE CODE
CEN.L
REGISTRARS
LLOYDS TSB 
The Causeway 
Worthing 
West Sussex 
BN99 6DA 
England
SHAREHOLDER HELPLINE: 
Tel: +44 (0) 870 601 5366
BROKER HELPLINE: 
Tel: +44 (0) 891 105 366
NOMINATED ADVISOR (NOMAD)  
AND FINANCIAL ADVISOR 
J.M. FINN & CO.
4 Coleman Street 
London  
EC2R 5TA 
England 
Tel: +44(0) 207 600 1660 
AUDITORS
PRICEWATERHOUSECOOPERS LLP
Abacus House 
Castle Park 
Cambridge 
CB3 0AN 
England
LAWYERS
MORRISON & FOERSTER
One Ropemaker Street 
London  
EC2Y 9AW  
England
PUBLIC RELATIONS
FINANCIAL DYNAMICS LTD
Holborn Gate 
26 Southampton Buildings 
London 
WC2A 1PB 
England
Tel: +44 (0) 20 7831 3113 
DIRECTORS, ADVISERS AND CONTACTS
_cover.indd   2 29/06/2007   10:16:36 01
HIGHLIGHTS
CLINICAL PIPELINE
M6G – post-operative pain
  Successful major Phase III study 
results announced showing clear 
beneﬁts over morphine.
  Investigational New Drug Application 
(“IND”) approved by the Food and 
Drug Administration (“FDA”) in April 2007.
  Strengthened M6G intellectual property 
(“IP”) position. 
  Actively pursuing M6G partnering deals. 
CNS 5161 – cancer pain and neuropathic pain
  Signed revenue sharing and  
co-development agreement with ERGOMED. 
  Acquisition of transdermal patch formulation IP .
PRE-CLINICAL/DISCOVERY PIPELINE
CNS 7056 – short acting sedation/anaesthesia
  Japanese, Hong Kong and European patents 
granted for short acting sedative. 
 Encouraging pre-clinical studies. 
  Further studies in anaesthesia initiated with 
an international pharmaceutical company. 
COMT inhibitors – Parkinson’s disease
  Pre-clinical development candidate for 
Parkinson’s disease progressing well.
  Several potential lead candidates have 
already been identiﬁed.
BUSINESS DEVELOPMENT
  M6G partnering process has commenced. 
Phase III clinical data clarifies the value of 
the opportunity.
  Licensing discussions ongoing in relation 
to earlier portfolio programmes.
  Rodman & Renshaw appointed to assist 
in the partnering of M6G.
FINANCIAL 
  Fund raising of £4.5 million, net of expenses, 
through placing new shares. 
  Increased net loss after tax of £9.7 million 
(2005: £6.7 million restated) due to planned 
increase in clinical development activities 
on M6G Phase III trial.
  Cash at year end of £6.3 million 
(2005: £8.5 million).
KEY EVENTS SINCE 1 JANUARY 2006
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
_02_CEN_ar06_front.indd   1 29/06/2007   10:17:11 CeNeS has a balanced portfolio of late 
stage compounds and pre-clinical projects 
comprising morphine-6-glucuronide 
(“M6G”) in Phase III clinical trials for 
the treatment of post-operative pain; 
CNS 5161 in Phase II clinical trials for 
the treatment of neuropathic pain; and 
CNS 7056 in pre-clinical development 
as a short acting sedative for day case 
procedures. CeNeS also has a 
discovery programme to identify novel 
COMT inhibitors for the treatment of 
Parkinson’s disease and schizophrenia 
(see ﬁgure 1).
CeNeS is based in Cambridge, 
UK from where we direct our 
discovery and development 
activities utilising an outsourcing 
business model. By minimising 
central overheads and utilising 
specialist contract suppliers, we can 
manage our cash resources prudently 
and focus expenditure upon our key 
programmes that are planned to 
generate valuable collaborations 
and partnerships.
CeNeS strategy is to build a proﬁtable, 
European specialty pharmaceutical 
company by developing, partnering and 
marketing its portfolio of products, which 
offer signiﬁcant improvements over the 
existing ‘gold standard’ treatments.
CeNeS commenced operations in 
1997 and is listed on the Alternative 
Investment Market (“AIM”) of the London 
Stock Exchange. 
02
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
ABOUT CENES
AT A GLANCE
CeNeS Pharmaceuticals plc is developing a range of novel drugs that 
are designed to improve patient outcomes in the therapeutic areas of 
pain, anaesthesia and neurology. Each CeNeS programme addresses 
a clinically validated target, has a well understood clinical development 
pathway (reducing clinical risk) and offers a commercially attractive 
market opportunity. 
_02_CEN_ar06_front.indd   2 29/06/2007   10:17:11 03
PORTFOLIO REVIEW PROCESS
CeNeS conducts a comprehensive and rigorous portfolio 
review process each year, led by the Chair of the Scientiﬁc 
Advisory Board (“SAB”), Ann Hayes PhD. Each programme 
is reviewed in detail and the following data are input into the 
CeNeS model:
 phase/timelines of programme;
 costs;
  peak sales, net present value and risk adjusted 
net present value; and
 probability of success and detailed risk scoring.
Detailed risk scoring takes account of the following factors:
 phase of development;
 strength of scientiﬁc rationale;
 tractability of chemistry;
 ease of pre-clinical development;
 ease of clinical development;
 competition; and
 IP position.
The resulting data enables CeNeS to assess the rationale, 
both scientiﬁc and commercial, for the continued development 
of each programme, identiﬁes the key risks and also provides 
an overview of the product portfolio (see ﬁgure 2).
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
TARGET
ASSESSMENT
LEAD
IDENTIFICATION
LEAD
OPTIMISATION
PRE-CLINICAL
DEVELOPMENT
PHASE I PHASE II  PHASE III
CNS 7056 Short acting sedative/anaesthesia
COMT Inhibitor Parkinson’s disease
CNS 5161 Neuropathic pain
CNS 5161 Cancer pain
M6G (US) Post-operative pain
M6G (EU) Post-operative pain 
Figure 1
Figure 2
_02_CEN_ar06_front.indd   3 29/06/2007   10:17:27  
STRATEGY
After a year of signiﬁcant progress, CeNeS has 
a strong development pipeline with the capacity 
to deliver signiﬁcant shareholder value. 
The Central Nervous System (“CNS”) market 
is one of the largest and fastest growing 
segments of the pharmaceutical market. 
By focusing on CNS opportunities with well 
understood mechanisms of action, CeNeS 
is well positioned to deliver new products to 
neurologists, anaesthetists and pain specialists 
in order to improve the treatment of patients 
and to deliver signiﬁcant returns to its investors.
In the short term, the successful development 
of our lead programme M6G will drive the growth 
of the Company towards the goal of becoming 
a focused specialty pharmaceutical business.
The Board and management of CeNeS 
are committed to the development of the 
Company and are excited about the prospects 
for further signiﬁcant success. CeNeS ﬂexible 
business model means it is well placed to take 
advantage of opportunities that will enhance 
shareholder value.
M6G – LEAD CANDIDATE FOR 
POST-OPERATIVE PAIN
The M6G clinical development programme 
has been signiﬁcantly strengthened by recent 
Phase III clinical trial data which was a major 
step forward and supported the suggested 
product proﬁle. 
The completion of the M6G Phase III study 
with over 500 patients from 24 centres in six 
countries represents a major achievement for 
CeNeS and proves the ability of our clinical 
development and pharmaceutical teams to 
deliver to the exacting standards required 
under the EU Clinical Trials Directive. Their 
expertise means we are well placed to add 
further value by the continued development 
of our earlier stage programmes.
Although the recent Phase III trial just missed 
its second primary endpoint (p=0.052 versus 
the target of p<0.05), the overall reduction in 
PONV (post-operative nausea and vomiting) 
by over 25% gives clear, clinically relevant 
support for the product proﬁle of equal analgesia 
to morphine but with a signiﬁcant reduction in 
side effects. Further still, secondary data shows 
that M6G has other possible beneﬁts including 
reduced sedation, less use of anti-emetic drugs 
and a long duration of action (see ﬁgure 3). 
Independent marketing studies have conﬁrmed 
the potential peak market sales for M6G in 
post-operative pain of up to £200 million in the 
main European territories and the US. If M6G 
is successful in treating post-operative pain 
using the current intravenous (IV) formulation, 
there is potential for further use in other pain 
indications such as chronic pain and in the 
epidural delivery of M6G for analgesia during 
surgery. Such expansion would signiﬁcantly 
increase the potential peak market sales 
of M6G.
Multi-kilogram batches of M6G have been 
manufactured and the process is now validated. 
There are two years’ stability data on these 
batches to support drug registration. In addition, 
a US Drug Master File was opened in 2007. 
CeNeS has undertaken a successful scale-up 
of sterile product manufacture into a commercial 
plant. 15 batches of five different M6G IV 
products have now been manufactured 
at commercial scale.
04
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
CHAIRMAN’S STATEMENT
SUMMARY OF CHAIRMAN’S STATEMENT 
 Strong and well balanced development pipeline.
 M6G product proﬁle validated in Phase III studies.
 Co-development partnership with ERGOMED to progress CNS 5161.
 Flexible business model.
_02_CEN_ar06_front.indd   4 29/06/2007   10:17:27 05
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
 
The IP position has been strengthened 
by the acquisition of certain patent rights 
covering a proprietary synthetic method for 
the manufacture of M6G and also by the 
grant of a new composition of matter patent 
on a novel salt form of M6G by the European 
Patent Ofﬁce.
The preparation and filing of the IND adds 
to the package of data available for potential 
US partners to review and is a major event 
for CeNeS and the M6G clinical programme.
CeNeS is now actively pursuing its stated 
strategy of securing partners for M6G in the 
major territories. The quality and robustness 
of the clinical data produced by the current 
study signiﬁcantly reduces the risk for the 
development of M6G by enabling optimal trial 
design and the selection of endpoints in the 
remaining Phase III studies. The partner(s) 
will be expected to ﬁnalise the data package 
required for regulatory ﬁlings. It is still possible 
that the current package could be filed in 
Europe although CeNeS expects that a partner 
will look to further increase the data package 
by referring to the planned US Phase III studies. 
We remain conﬁdent that M6G is very well 
positioned to compete with standard 
morphine and morphine-like products in 
the post-operative setting.
CNS 5161
CeNeS second clinical candidate is CNS 5161. 
This compound has demonstrated efﬁcacy 
and an acceptable side effect proﬁle in two 
Phase IIa proof of concept studies in neuropathic 
pain patients. This encouraging clinical data 
was presented in September 2006 at the 
European Association for the Study of 
Diabetes (“EASD”) conference. 
In July 2006 CeNeS entered into a 
co-development partnership with ERGOMED, 
an experienced clinical development company 
specialising in neurology and oncology clinical 
trial design and management. Phase II studies 
are planned for 2007 and Phase II clinical supply 
manufacturing was completed in early 2007.
Initially, CeNeS plans to complete a trial in 
opioid refractory cancer pain. The study will 
be a Phase I/II dose-escalation study in up to 
36 patients to establish the optimal schedule 
for infusion of CNS 5161 in the management 
of cancer pain. 
Following this, CeNeS and ERGOMED plan 
to conduct Phase II studies in neuropathic 
pain. The respective teams are working with 
specialists in neuropathic pain to design the 
most effective Phase II study and to select 
the appropriate patient population to ensure 
efﬁcient completion of this study. In addition 
to diabetic neuropathic pain patients the 
collaboration is looking at the treatment of 
post-traumatic neuropathic pain patients as a 
possible alternative target population. Phase II 
trials in neuropathic pain will commence later 
in 2007 once the study design is ﬁnalised. 
Drug treatments for neuropathic pain represent 
a signiﬁcant area of unmet medical need and 
a growing market opportunity that is currently 
valued at over $2 billion globally and is forecast 
to reach $5 billion by 2010.
ADVANTAGES OF M6G COMPARED TO MORPHINE
   MORPHINE M6G SOURCE
 Efﬁcacy   
 Post-operative analgesia (IV+ PCA)   Phase III data
 Longer duration of action/cleaner metabolism —  Phase III/I data
 Side effects   
 Less nausea —  Phase III data
 Less vomiting —  Phase III data
 Less need for anti-emetic drugs —  Phase III data
 Less severe sedation —  Phase III data
 Less respiratory depression —  Phase I data
Figure 3
_02_CEN_ar06_front.indd   5 29/06/2007   10:17:27 CNS 5161 CONTINUED
During 2006, CeNeS also completed the 
assignment of transdermal patch technology 
from Alza Corporation, enabling the development 
of a high value transdermal formulation for 
neuropathic pain. CeNeS has already produced 
preliminary data demonstrating feasibility for 
a transdermal patch and the assignment will 
enable formulation development to be carried 
out in parallel to the Phase II studies. CeNeS 
already possesses composition of matter per se 
patents on CNS 5161 and patent protection 
may be extended to 2020 through the 
acquisition of this IP .
CNS 7056 – SHORT ACTING SEDATIVE
CNS 7056 is the lead compound of a series that 
was assigned to CeNeS from GlaxoSmithKline 
in November 2003. Pre-clinical development 
work is ongoing with the intention of ﬁling an 
IND in the US and then conducting a ﬁrst proof 
of concept Phase I study. The US is a major 
potential market for short acting sedatives. 
Recent data highlighted the encouraging 
pre-clinical proﬁle of CNS 7056, 
including a rapid onset and offset of sedative 
action and rapid metabolism by human liver 
samples. The compound is being developed 
primarily as a sedative for short non-surgical 
and surgical procedures. In addition, on the 
basis of these new data, CeNeS is now 
evaluating the potential of CNS 7056 for use in 
the induction and maintenance of anaesthesia. 
Pre-clinical studies to evaluate the potential of 
CNS 7056 in these additional indications are 
being undertaken at the University of Adelaide 
and under a Material Transfer Agreement at an 
international pharmaceutical company. 
Extending the development of CNS 7056 to 
include the induction and maintenance of 
anaesthesia could double the estimated 
potential market opportunity to over £400 
million. The ﬁrst detailed academic paper on 
the sedative, entitled “CNS 7056: A Novel 
ultra-Short Acting Benzodiazepine”, has 
been accepted for publication in the leading 
journal, “Anesthesiology”.
COMT INHIBITOR – PARKINSON’S DISEASE
CeNeS COMT inhibitor discovery programme 
has succeeded in identifying several series of 
novel active compounds, achieving a chemical 
breakaway from currently marketed COMT 
inhibitors. CeNeS is developing these lead 
series with a view to further optimising in vitro 
and in vivo activity as well as their ADMET 
(Absorption, Distribution, Metabolism, Excretion 
and Toxicity) proﬁle, thus addressing the 
known limitations associated with existing 
marketed therapies. The programme has 
continued to progress well and several lead 
candidates are currently being optimised.
CORPORATE
The Company is pleased to have appointed 
Professor Robert Sneyd (Associate Dean and 
Professor of Anaesthesia, Peninsula Medical 
School, University of Plymouth, UK) and 
Professor Peter Glass (Professor and Chairman, 
Department of Anesthesiology, Stony Brook 
University Hospital, US) to the SAB. With their 
recognised expertise in anaesthesia and pain, 
they will aid the existing SAB members 
in providing excellent support to our drug 
development programmes.
CHAIRMAN’S STATEMENT
“ CENES IS NOW WELL PLACED TO DELIVER FURTHER VALUE 
TO SHAREHOLDERS BY THE COMMERCIALISATION OF 
ITS LEAD ASSET (M6G).”
06
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
_02_CEN_ar06_front.indd   6 29/06/2007   10:17:27 07
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
UPDATE ON PORTFOLIO OF 
CARRIED INTERESTS
CeNeS has a portfolio of carried interests 
arising from non-core assets which were 
disposed of during the 2001 restructuring 
programme. In 2006, Addex Pharmaceuticals 
Limited (“Addex”) completed a venture capital 
funding, raising €25 million and also announced 
that its programme ADX10061, a dopamine 
D1-selective antagonist, is expected to commence 
a Phase II smoking cessation study in the US. 
CeNeS licensed out this dopamine D1-selective 
antagonist to Addex in 2002 and CeNeS 
could potentially receive up to $4.5 million 
in milestones and royalties in stages over the 
next few years if the programme progresses 
successfully through clinical development.
In the longer term, the Board believes this 
portfolio could generate up to $20 million plus 
royalty streams if various milestones and targets 
are achieved under the agreed contracts.
OUTLOOK
Following the successful completion of 
the recent M6G Phase III study CeNeS is 
actively pursuing partnering discussions 
with interested parties. The upfront milestones 
generated from a partnering deal are expected 
to be sufﬁcient to fund operations through 
2008 and beyond. CeNeS is conﬁdent 
that the positive clinical data will enable a 
partnering deal and/or ﬁnancing to be secured 
in the second half of 2007 to enable the 
Company to remain as a going concern.
CeNeS prospects are greatly enhanced by the 
validation of the M6G product proﬁle. CeNeS 
is now well placed to deliver further value to 
shareholders by the commercialisation of its 
lead asset. The strength of the clinical data 
package and the quality of CeNeS earlier 
stage pipeline also means that CeNeS is well 
placed to consider other strategic opportunities 
if and when they arise.
ALAN GOODMAN
CHAIRMAN
27 JUNE 2007
“ M6G IS ONE OF THE MOST COMPELLING LICENSING 
OPPORTUNITIES TARGETING THE TREATMENT OF 
POST-OPERATIVE PAIN THAT WE HAVE SEEN IN A 
WHILE. WHAT MAKES M6G STAND OUT CLINICALLY 
IS THAT IT DELIVERS THE PAIN RELIEF OF MORPHINE 
WHILE REDUCING THE LIMITATIONS OF NAUSEA 
AND RESPIRATORY PROBLEMS – REDUCING THESE 
PROBLEMS WILL BE BENEFICIAL TO PATIENTS, CARE 
PROVIDERS AND REDUCE THE COST OF RELATED 
CARE. ALL OF THIS SHOULD TRANSLATE INTO A 
COMMERCIALLY VALUABLE DRUG.” 
RODMAN & RENSHAW
_02_CEN_ar06_front.indd   7 29/06/2007   10:17:28 08
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
POST-OPERATIVE PAIN
Post-operative pain is an acute condition 
directly caused by a surgical procedure. 
The pain typically lasts for a few days and 
can range in intensity from mild to severe 
depending on the type and duration of the 
operation. There are over 90 million operations 
in the US and Europe each year and patients 
are treated with a variety of drugs to manage 
post-operative pain. 
Morphine remains the ‘gold standard’ for the 
management of severe pain despite well known 
undesirable side effects.
The most potent class of known analgesic 
(pain-relieving) drugs are the opiates, 
derived from the opium poppy. Opiates act 
in the brain where they ‘switch off’ the sensation 
of pain. Morphine is an opiate and is one 
of the most effective analgesics known, 
remaining the standard treatment used for 
the management of moderate to severe pain. 
However, like many drugs it can be associated 
with undesirable side effects. These side effects 
can be distressing for patients, may lead to 
medical complications and can impose an 
economic burden on healthcare providers. 
Nausea and vomiting are amongst the 
most common side effects of morphine 
and up to 50% of patients receiving morphine 
experience these distressing side effects. 
Patients have been reported to be willing to 
suffer a degree of pain rather than experience 
post-operative nausea and vomiting. 
“ Acute post-operative pain and PONV are 
the negative outcomes commonly associated 
with surgery that patients are most anxious 
to avoid” (Macario, A and Pergolizzi, J Pain 
and Nausea Management after Surgery, 
The International Journal of Pain Medicine 
and Palliative Care vol3 no3 2004).
Sedation is another common side effect of 
morphine treatment and in the post-operative 
period it is complicated by the sleepiness 
caused by the anaesthetic. If patients are 
excessively sedated, it may be difﬁcult for 
doctors to accurately assess their well-being. 
Respiratory depression (a reduction in breathing 
rate) is a rarer, but potentially dangerous side 
effect, of morphine treatment. The body’s 
normal response to lack of oxygen or the build 
up of excessive carbon dioxide is to increase 
the breathing rate to compensate. This response 
is inhibited by morphine. This can be particularly 
dangerous in the post-operative period since 
anaesthetic drugs often reduce the patient’s 
breathing rate.
MORPHINE METABOLISM 
When morphine is taken into the body 
it is broken down in the liver to two main 
metabolites, M6G and morphine-3-glucuronide 
(“M3G”). M6G is a potent active metabolite 
of morphine and is an effective analgesic, 
whereas M3G is ineffective.
M6G CLINICAL DEVELOPMENT 
CeNeS is developing M6G for the 
management of moderate to severe 
post-operative pain and has reached the 
advanced stages of clinical development 
(Phase III). 
SUMMARY OF M6G FOR POST-OPERATIVE PAIN
 M6G is CeNeS lead clinical candidate.
 Phase III studies conﬁrm superior side effect proﬁle to morphine and equivalent analgesia.
 CeNeS seeks partner(s) for M6G to ﬁnalise date packages.
 M6G programme risk signiﬁcantly reduced with Phase III data.
 Peak sales potential of £200m.
M6G FOR THE TREATMENT 
OF POST-OPERATIVE PAIN
CHIEF EXECUTIVE’S REVIEW
_02_CEN_ar06_front.indd   8 29/06/2007   10:17:28 09
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
PHASE III STUDIES 
COMPLETED PHASE III STUDY (M6G015)
The ﬁrst Phase III trial of M6G was completed 
in 2005. This initial Phase III trial (designated 
M6G Study M6G015) was carried out in three 
European countries, recruiting 168 hospitalised 
patients suffering from post-operative pain 
following knee replacement surgery carried 
out under spinal anaesthesia. The prime 
objective of the study was to compare the 
analgesic efﬁcacy and duration of action of 
a range of doses of M6G compared with 
placebo. M6G015 conﬁrmed that a single 
dose of M6G administered intravenously 
at 30mg/70kg body weight is an effective 
analgesic agent for the treatment of post-operative 
pain. The study also showed a clear dose 
response relationship with a decrease in the 
amount of morphine consumed as the dose of 
M6G increased. The study results also showed 
that M6G is safe and well tolerated.
M6G015 was not designed to produce 
deﬁnitive evidence on the side effect proﬁle 
of M6G. However, the incidence of nausea 
and vomiting over early time periods after 
M6G was low and similar to placebo, 
indicating that a single dose of M6G that 
can provide pain relief does not appear 
to induce nausea or vomiting. 
COMPLETED PHASE III STUDY (M6G022) 
The study involved 24 centres in six 
European countries and recruited 517 
patients. The study was designed primarily 
to provide key information on a comparison 
of effective IV pain management regimens of 
M6G or morphine treatment for a minimum of 
24 hours (and up to 48 hours) following major 
abdominal surgery. Morphine is generally 
accepted as the ‘gold standard’ drug for use 
in these circumstances. Initial pain management 
was achieved by administration of a loading 
dose and titration of either M6G or morphine 
to achieve acceptably low levels of pain for the 
patient to go onto the ward. In the ward, pain 
management treatment was achieved by 
patient controlled analgesia (“PCA”), whereby 
the patient was allowed to self administer 
a dose of M6G or morphine as required to 
control their pain. The study was randomised 
and double blind so that neither patient nor 
carer was aware of which treatment was being 
administered. The main purpose of the study 
was to demonstrate statistically that:
  treatment with either M6G or morphine, 
particularly during PCA, results in similar 
levels of pain management; and
  effective analgesic treatment during 
PCA results in lower levels of nausea 
and vomiting in patients receiving M6G 
compared to those receiving morphine. 
In addition, other important side effects, 
efﬁcacy and safety features were determined 
throughout the study. 
1. M6G matches morphine for analgesic effect
Importantly for a novel pain product, the trial 
results unequivocally show that M6G is as good 
as morphine in terms of analgesia achieved 
in patients up to 48 hours post-operatively 
(ﬁgure 4). Successful achievement of this ﬁrst 
primary endpoint supports data from previous 
clinical trials of M6G and is an essential 
component in the product proﬁle of M6G. 
2. M6G shows signiﬁcant reduction in 
post-operative nausea and vomiting 
compared to morphine
The trial results conﬁrm the excellent potential 
of M6G as an analgesic with a clinically 
signiﬁcant improved side effect proﬁle compared 
to morphine. The study results show that 
patients receiving M6G experienced a 28% 
reduction in the severity of PONV in the key  
6 – 24 hours after treatment (statistically 
signiﬁcant, p=0.018) (ﬁgure 6). 
_02_CEN_ar06_front.indd   9 29/06/2007   10:17:28 10
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
PHASE III STUDIES CONTINUED
COMPLETED PHASE III STUDY (M6G022) 
CONTINUED
2. M6G shows signiﬁcant reduction in 
post-operative nausea and vomiting 
compared to morphine continued
In addition, the incidence of dry retching/
vomiting in the M6G arm compared to the 
morphine arm in the 24 hour period after 
treatment was reduced by 32% (statistically 
signiﬁcant, p=0.044) (ﬁgure 7). The incidence 
and severity of post-operative nausea in the 
M6G arm was 27% less than that observed 
in the morphine arm in the period 6–24 hours 
after treatment. This was the second primary 
endpoint and approached statistical 
signiﬁcance (p=0.052) (ﬁgure 5).
3. Patients receiving M6G used 
less anti-emetic drugs
In addition to the clear nausea and vomiting 
reductions of over 25%, secondary data 
revealed that patients receiving M6G required 
over 20% less anti-emetic medication over the 
0–24 hour period than those in the morphine 
group (ﬁgure 9). This shows that not only 
does M6G induce signiﬁcantly less nausea 
and vomiting than morphine, but also that the 
post-operative anti-emetic treatment required 
is considerably reduced. 
The potential for reduced anti-emetic drug 
costs combined with the reduction in medical 
assistance and the improved patient comfort 
due to lower PONV supports CeNeS justiﬁcation 
of a substantial price premium for M6G 
compared to morphine.
4. The Drug consumption proﬁle of M6G 
indicates a long duration of action
It has been shown in previous studies that 
the dose of M6G required to provide analgesia 
immediately after surgery is three times that of 
morphine. In accordance with this, the M6G022 
trial was designed such that M6G was available 
in a 3:1 ratio to morphine during the titration 
to comfort phase. Thereafter pain relief was 
provided using patient controlled analgesia 
(PCA) in a dose ratio of 2:1 (M6G: morphine). 
In the initial phase after surgery the dose 
of M6G required to titrate patients to comfort 
was three times that required for morphine on 
a weight basis. However, during the prolonged 
PCA phase, the ratio was lower (0–24 hours 
1.7:1; 24–48 hours 1.3:1). This shows that 
patients in the M6G group made less 
demands for pain relief after titration to 
comfort, as assessed by presses on the 
PCA button. This data supports the hypothesis 
that M6G has a longer duration of analgesic 
action than morphine. 
5. Patients receiving M6G were less sedated
The M6G022 data show that M6G patients 
experience lower levels of sedation compared 
to those on morphine for up to 48 hours 
(see ﬁgure 8). This reduction is particularly 
noticeable in the severe sedation scores of 
M6G patients in the clinically relevant ﬁrst 
twelve hours after surgery.
6. Safety proﬁle/adverse events
The trial conﬁrmed that M6G’s safety proﬁle 
is similar to morphine. Aside from reduced 
nausea and vomiting, the adverse events 
reported were at levels similar to those 
experienced by patients receiving morphine 
in a post-operative setting.
ADDITIONAL PHASE I STUDIES (M6G023, 
M6G024 AND M6G029)
To provide the relevant Regulatory Authorities 
with additional clinical safety information for 
a Marketing Authorisation Application, three 
further small studies are being carried out:
M6G FOR THE TREATMENT 
OF POST-OPERATIVE PAIN
CHIEF EXECUTIVE’S REVIEW
COMPLETED PHASE III STUDY M6G022
POST-OP (IV BOLUS)
10MG MORPHINE/70KG + 
TITRATION (5MG/70G + 5MG/70KG)
30MG M6G/70KG + 
M6G TITRATION (15MG/70KG  
+ 15MG/70G)
MORPHINE SULPHATE 1mg/ml
MG6 2mg/ml
RESCUE MEDICATION/PCA 24 (48) HOURS
n=268
n=249
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EQUIVALENT ANALGESIA TO MORPHINE
Figure 4
_02_CEN_ar06_front.indd   10 29/06/2007   10:17:39 11
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
  M6G023 is a mass balance study and is 
designed to show the metabolic rate of an 
IV injection of M6G. To carry out this study, 
low doses of radio-labelled (14c) M6G will 
be administered to six healthy volunteers. 
The disappearance of radio-labelled 
material from the blood and its 
appearance in urine and faeces 
will be determined; 
  M6G024 is a pharmacokinetic study 
in mild and moderate renally impaired 
patients. M6G is excreted from the body 
by the kidney. Deterioration of kidney 
function, therefore, may cause accumulation 
of M6G in that organ. Volunteers with 
normal, mild or moderate renal impairment 
will receive an IV injection of M6G and the 
relative plasma and urine levels of M6G 
will be determined and compared between 
these groups; and 
  M6G029 is the US IND-opening study. 
It is a pharmacokinetic study examining 
dose proportionally and accumulation 
of M6G in volunteers.
THE MARKETS FOR M6G
The global market for opiate use in managing 
post-operative pain was estimated at $1 billion 
in 2000 and growing at a rate of 6–7%. M6G 
represents an attractive alternative for patients 
and healthcare providers with potentially 
signiﬁcant pharmaco-economic beneﬁts 
including a reduction in the use of anti-emetics, 
nursing time and length of hospital stay. 
CeNeS has commissioned two independent 
studies researching the market for M6G in Europe 
and the US. These studies have conﬁrmed 
CeNeS understanding that there is a signiﬁcant 
global market for M6G of around £200 million 
and that the planned price premium is likely to 
be acceptable to physicians and pharmacists 
in hospitals and also the various Government 
reimbursement authorities. These assumptions 
are based on the successful delivery of M6G’s 
potential clinical and health economic beneﬁts. 
PARTNERING STRATEGY
CeNeS has appointed Rodman & Renshaw, 
the US based healthcare specialist investment 
bank, to assist in the partnering of M6G. 
The appointment of Rodman & Renshaw 
strengthens CeNeS ability to manage the 
international partnering process and is in 
keeping with the outsourcing business 
model. The quality of the recently announced 
Phase III data on M6G means that there is a 
comprehensive data package for potential 
partners to review. 
There is a clear need for new drugs that 
can improve the quality of pain management 
currently given to patients by standard morphine 
regimens across the world and M6G is well 
positioned to address that market. CeNeS is 
conﬁdent that agreements can be ﬁnalised 
with partner(s) based on the existing set of 
clinical trial data. Concluding these deals 
will generate short term income and recurring 
revenue streams from a successful product 
launch in the future.
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INCIDENCE AND SEVERITY OF 
POST-OPERATIVE NAUSEA
SEVERITY OF PONV INCIDENCE OF DRY RETCHING/VOMITING
Figure 5 Figure 6 Figure 7
_02_CEN_ar06_front.indd   11 29/06/2007   10:17:40 REGULATORY STRATEGY
The considerable total numbers of studies 
that have been carried out with M6G have 
also produced an extensive safety database 
for the compound.
Patients who have been administered morphine 
will have been exposed normally to M6G as a 
result of the metabolic processes; approximately 
10% of morphine is converted to M6G in the 
human. This is particularly relevant when there 
has been prolonged treatment with high doses 
of morphine, e.g. to manage cancer related 
pain. When morphine is given over a short 
period of time (e.g. 24 hours) to control 
post-operative pain, M6G is not believed to 
contribute to the analgesia obtained with 
morphine treatment.
CeNeS, therefore, is working towards 
compiling the efﬁcacy and safety data that 
are required by the Regulatory Authorities for 
Market Authorisation Application in Europe. 
CeNeS has also successfully completed the 
additional pre-clinical work that was required 
by the FDA for the US market and had an IND 
application accepted by the FDA in April 2007.
CeNeS preferred strategy is for a partner 
to be involved in the key decisions regarding 
regulatory ﬁling strategies both in Europe 
and in the US. The strong data obtained 
from the most recent Phase III study validates 
the proposed product profile of M6G and 
strengthens CeNeS position with potential 
North American partners. Registration 
could be achieved in the US in 2010 
after conducting two Phase III studies to 
the requirements of the FDA. It is important 
to note that the quality and robustness of 
the clinical data produced by the M6G022 
study signiﬁcantly reduces the risk for the 
development of M6G by enabling optimal 
trial design and the selection of endpoints 
in the remaining Phase III studies. 
In Europe the narrow failure to achieve statistical 
signiﬁcance with the second chosen primary 
endpoint of incidence and severity of nausea 
(p=0.052 not p<0.050) offers three options:
  pursue a filing application in certain 
European countries with the comprehensive 
clinical data package that CeNeS 
has assembled; 
  further strengthen the European package 
by conducting an additional European 
Phase III study which would complete 
in 2008 with product ﬁling in 2009; and
  use the US Phase III trials to support 
the European application, potentially with 
a global partner. 
In March, CeNeS announced the ﬁling of 
its ﬁrst IND application with the US FDA to 
commence clinical studies in the US with 
M6G.  This ﬁling is a key milestone in CeNeS 
history and represents a major step forward 
in the clinical development of M6G. 
The opening trial under this IND will be a 
Phase I pharmacokinetic study in volunteers 
(M6G029). This study was required by the 
FDA as was an additional pre-clinical 
toxicology study. In parallel to conducting 
these two small studies, CeNeS will complete 
the protocol design of the ﬁrst US Phase III 
trial. CeNeS is actively seeking a partner to 
collaborate and fund the Phase III US trials. 
The ﬁling of the IND enhances the package 
of data already available to potential US 
partners for review. 
M6G FOR THE TREATMENT 
OF POST-OPERATIVE PAIN
CHIEF EXECUTIVE’S REVIEW
“ THERE IS A CLEAR NEED FOR NEW DRUGS THAT 
CAN IMPROVE THE QUALITY OF PAIN MANAGEMENT 
CURRENTLY GIVEN TO PATIENTS BY STANDARD MORPHINE 
REGIMENS ACROSS THE WORLD AND M6G IS WELL 
POSITIONED TO ADDRESS THAT MARKET.”
12
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
_02_CEN_ar06_front.indd   12 29/06/2007   10:17:40 13
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
INTELLECTUAL PROPERTY (“IP”)
CeNeS has established a signiﬁcant IP portfolio 
comprising patents covering novel synthetic 
routes for the manufacture of M6G, as well as 
key intermediates, novel salts and know-how. 
The Company has two cGMP compliant 
manufacturing contractors in place and the 
primary manufacturer has produced validation 
batches of M6G at the multi-kilogram scale. 
The synthetic process currently used 
by CeNeS is expected to be the least-cost 
manufacturing route for M6G. In addition, 
CeNeS acquired rights to another proprietary 
synthetic method for the manufacture of M6G 
from Innovata plc in March 2006. 
This agreement further strengthened 
CeNeS IP position around M6G. CeNeS also 
expects to beneﬁt from data and marketing 
exclusivity provisions accorded to companies 
that undertake clinical trials, representing a 
period of ten years following ﬁrst approval in 
Europe, and at least ﬁve years following 
approval in the US. In 2006, CeNeS was 
granted a new composition of matter patent 
on a novel salt form of M6G by the European 
Patent Ofﬁce. 
The invention relates to a salt of M6G with 
improved stability and to the therapeutic use 
of the salt. The granted patent is registered 
in 21 European countries. The new patent 
expires in 2022 and has the potential to extend 
and strengthen the protection provided by the 
existing process patents. 
ADDITIONAL FORMULATIONS 
AND MARKETS
If M6G is successful in treating post-operative 
pain using the current IV formulation there 
will be potential for use in other pain indications 
such as chronic pain and also by other routes 
of administration such as epidural and oral 
delivery. Such expansion would signiﬁcantly 
increase the potential peak market sales 
of M6G. An oral formulation could potentially 
be used to treat many of the 2.7 million 
patients who develop cancer each year in 
the US and Europe. The market for oral 
morphine formulations is currently estimated 
at £600 million annually.
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Figure 8 Figure 9
_02_CEN_ar06_front.indd   13 29/06/2007   10:17:40 14
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
Neuropathic pain represents a signiﬁcant unmet 
medical need and a large, growing market 
opportunity currently worth over $2 billion 
globally. It arises from a range of primary 
diseases or conditions (including cancer, 
diabetes, shingles and HIV/AIDS) that can result 
in nerve damage and subsequently chronic pain. 
Neuropathic pain is difﬁcult to treat and current 
analgesics do not provide adequate relief for 
many patients. This neuropathic pain can be 
described by patients as burning, stinging, 
shooting, aching or electric-shock-like sensations, 
and it can last for many months or years. 
Common features of these abnormal conditions 
include increased temporal summation of pain 
in response to repeated stimulation (“wind-up” 
pain), hyperalgesia (reduced pain threshold and 
exaggerated response to mild noxious stimuli), 
and allodynia (painful response to non-noxious 
stimuli). Drug treatments for neuropathic pain 
represent a signiﬁcant area of unmet medical 
need and a growing market opportunity.
One of the most common forms of neuropathic 
pain is associated with diabetes. It is estimated 
that there are over 13 million patients in the US 
and Europe with diabetes and that over 30% of 
these experience neuropathic pain, which can 
last for many years. In addition, herpes zoster 
infections can lead to shingles and up to 20% 
of the 1.5 to 2.0 million patients in the US and 
Europe with shingles experience neuropathic 
pain, which is often resistant to current 
treatments and can last for many months. 
CURRENT DRUG TREATMENT 
OF NEUROPATHIC PAIN
Some patients with mild to moderate 
neuropathic pain may respond to simple 
analgesics or non-steroidal anti-inﬂammatory 
drugs (“NSAIDs”) but most patients will require 
more specialist drug therapy. Due to the 
difﬁculty in treating neuropathic pain, it can 
account for up to 40% of patients referred to 
specialist pain clinics. The more common 
treatments include tricyclic anti-depressant 
drugs and anti-convulsant drugs, though their 
side effects can be problematic. Additionally, 
many of these drugs are not licensed for the 
treatment of neuropathic pain.
The anti-convulsant gabapentin is currently 
the only oral drug licensed for the treatment 
of neuropathic pain in the UK and had worldwide 
sales of $2.7 billion in 2003, of which a signiﬁcant 
proportion is believed to be for neuropathic 
pain. Gabapentin has a more favourable side 
effect proﬁle than some other anti-convulsants 
but does not work in the majority of neuropathic 
pain patients. Capsaicin cream, commercially 
prepared from dried chilli peppers, is also 
licensed for some types of neuropathic pain 
and may be applied topically. However, it can 
cause initial stinging and this deters some 
patients. Local anaesthetic drugs can also be 
used to provide short term soothing relief from 
neuropathic pain. Opioid analgesics are 
effective for some patients, especially when 
combined with other drugs. 
In extreme cases nerve blocks, nerve 
ablation and spinal analgesia may be 
required to ease this distressing condition. 
There remains a clear need for an effective 
agent with a favourable side effect proﬁle for 
the treatment of neuropathic pain.
GLUTAMATE AND NEUROPATHIC PAIN
Glutamate is a major excitatory transmitter in 
the brain and binds to N-methyl-D-aspartate 
(“NMDA”) receptors on nerves in the spinal 
cord. This mechanism has been implicated in 
the sensitisation of long term pain responses.
Drugs that block the NMDA receptor have 
been shown to be effective in models 
of persistent pain and some of the older 
non-speciﬁc NMDA antagonists have shown 
promise in the treatment of neuropathic pain. 
However, they are often associated with 
unacceptable side effects.
CNS 5161 
CNS 5161 is a novel and selective non-competitive 
NMDA receptor antagonist. It acts by binding 
to a site within the ion-channel associated 
with the NMDA receptor, rather than competing 
with glutamate at the agonist recognition site.
CNS 5161 FOR THE TREATMENT 
OF NEUROPATHIC PAIN
CHIEF EXECUTIVE’S REVIEW
SUMMARY OF CNS 5161 FOR NEUROPATHIC PAIN
 Neuropathic pain represents a signiﬁcant unmet medical need.
  Revenue sharing and co-development agreement with ERGOMED to assemble comprehensive  
Phase II data package.
 Two Phase II studies in cancer pain and neuropathic pain planned to start in 2007.
 Transdermal patch development is planned.
 Market size for neuropathic pain drugs is more than $2 billion.
_02_CEN_ar06_front.indd   14 29/06/2007   10:17:40 15
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
ERGOMED AGREEMENT
In July 2006, CeNeS and ERGOMED entered 
into a revenue sharing and co-development 
agreement whereby the parties intend to 
collaborate on a comprehensive development 
programme for CNS 5161. A detailed product 
plan has been prepared by CeNeS and 
ERGOMED which sets out how the parties will 
collaborate to assemble Phase II data packages.
Under the agreement, CeNeS and ERGOMED 
will work together to assemble a comprehensive 
Phase II data package with the goal of 
demonstrating that CNS 5161 can provide 
sustained pain relief to improve treatment in 
certain pain conditions. Both parties will invest 
their respective expert internal resources and 
contribute funding into the programme to 
cover the external clinical trial costs. Under the 
terms of the agreement, ERGOMED is entitled 
to a share of commercial revenues generated 
from CNS 5161 in a ratio of ERGOMED’s 
investment compared to the total development 
costs. Their share of any revenues generated 
can be increased in the future if ERGOMED, 
in agreement with CeNeS, takes responsibility 
for a further percentage of the investment 
required in the planned Phase II programme.
CNS 5161 CLINICAL DEVELOPMENT 
Following a successful small initial study in 
patients with neuropathic pain (CNS 5161 003), 
CeNeS carried out a further similar proof of 
concept study (CNS 5161 003A) which reported 
positive results in June 2005. In the study, which 
was designed to establish the therapeutic window 
of CNS 5161, the product was associated with 
a clear trend to improvement in pain levels and 
was well tolerated with no instances of the 
psychotomimetic side effects associated with 
some NMDA antagonists. This latter ﬁnding 
conﬁrms CeNeS understanding that CNS 5161 
occupies a unique position in its class.
In partnership with ERGOMED CeNeS plans to 
pursue two development routes for CNS 5161 
in parallel; an IV/subcutaneous infusion 
presentation for the treatment of refractory pain 
in patients with cancer and an adhesive patch 
presentation that can be applied to the skin and 
so provide pain relief over a number of days. 
Initial studies have conﬁrmed the feasibility of 
administering CNS 5161 by the patch route. 
The Company has also completed the 
manufacture of supplies of CNS 5161 material 
sufﬁcient for the next set of clinical trials.
THE MARKETS FOR CNS 5161
CNS 5161 is being developed for a poorly 
treated population of around eight million 
patients suffering from neuropathic pain in the 
major pharmaceutical markets. The neuropathic 
pain market is currently estimated to exceed 
$2 billion worldwide but existing drugs are 
believed to work in only about 30% of patients 
with neuropathic pain. The total available 
market should therefore be signiﬁcantly larger. 
If CeNeS is able to conﬁrm the efﬁcacy of 
CNS 5161 in the treatment of neuropathic pain 
and is able to establish that it is well tolerated 
by patients this could prove to be a valuable 
commercial opportunity. 
Although neuropathic pain is the lead 
therapeutic indication for CNS 5161, clinical 
observations and pre-clinical ﬁndings with 
NMDA antagonists suggest that this drug 
candidate has the potential to prevent or treat 
a wide range of neurological disorders that 
involve neuronal degeneration, altered 
neuronal activity or neuro-inflammation. 
These diseases include Parkinson’s disease, 
Huntington’s disease, epilepsy, addiction, 
multiple sclerosis, AIDS, dementia and the 
neurological complications of certain central 
nervous system injuries and infections.
_02_CEN_ar06_front.indd   15 29/06/2007   10:17:41 16
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
SEDATION AND ANAESTHESIA
Sedation is required for a wide range of surgical 
and non-surgical procedures. The high cost of 
overnight hospital stays means that there is a 
trend towards day-case procedures. This creates 
a requirement for IV sedative agents that permit 
a rapid and predictable recovery. CNS 7056 has 
the potential to ﬁt this proﬁle. 
CNS 7056 works via a clinically validated 
mechanism as an agonist at the benzodiazepine 
site of the GABA A receptor. Agents with a 
similar mechanism of action have been used 
for many years as sedatives (e.g. midazolam) 
but suffer from relatively long and variable 
durations of action, primarily due to active 
metabolites. CNS 7056 was developed by 
GlaxoSmithKline (“GSK”) to have equivalent 
sedative effects to agents such as midazolam 
but, uniquely, the compound is designed to be 
rapidly broken down in the body to an inactive 
metabolite and consequently to have a very 
short duration of action. 
CNS 7056 is the lead compound of a series 
that was assigned to CeNeS from GSK in 
November 2003. The compound ﬁts very 
well with the CeNeS focus on precedented 
mechanisms and builds on the expertise 
established in the peri-operative area with 
the development of M6G. The design of CNS 
7056 was based on the experience gained at 
GSK with the short acting opiate, remifentanil. 
CNS 7056 is an ester-based drug that is rapidly 
hydrolysed in the body by esterases to an 
inactive metabolite. An attractive potential 
advantage offered by this mechanism of 
deactivation is a predictable onset and offset 
proﬁle, in contrast to midazolam. Pre-clinical 
studies reveal that this compound has a 
signiﬁcantly shorter duration of action than 
midazolam. The lack of reliance on a cytochrome 
P450 for metabolism means less scope for 
drug-drug interactions compared to midazolam 
and should permit its use in patients with 
reduced liver function. This is frequently 
important in the intensive care setting.
SEDATION FOR NON-SURGICAL 
AND SURGICAL PROCEDURES
Sedation is important in a number of settings, 
both non-surgical and surgical. Non-surgical 
procedures where sedation is required include 
endoscopies, bronchoscopies, manipulations 
(such as the re-setting of dislocated limbs) and 
wound dressing. Surgical procedures include 
those performed under local and general 
anaesthesia. Long term treatment with 
sedatives is also employed in the intensive 
care unit. Agents acting as agonists at the 
benzodiazepine site of the GABA A receptor 
such as lorazepam, diazepam and especially 
midazolam are the most commonly used 
sedative agents.
CURRENT SHORT ACTING 
SEDATIVE AGENTS
As the ﬁrst water-soluble benzodiazepine, 
midazolam was seen as a major breakthrough 
when introduced to the market in the early 
1980s. As with other benzodiazepines and 
unlike anaesthetics such as propofol, midazolam 
induces a controlled sedation and has amnesic 
properties. However, midazolam has a number 
of notable drawbacks. These include respiratory 
depression and a prolonged and variable 
duration of action. The latter is due to the 
existence of an active metabolite. Prolonged 
sedation can result in extended hospital 
conﬁnement with resultant increases in costs. 
Another drawback of midazolam is that it is 
mainly metabolised in the liver by a major 
drug-metabolising enzyme (cytochrome 
P450 3A4). This means that drug-drug 
interactions can be problematic as is its 
administration to patients with compromised 
liver function. 
ANAESTHESIA AS AN ADDITIONAL 
INDICATION
On the basis of new and very encouraging 
pre-clinical data, revealing a rapid onset and 
offset of sedative action and rapid metabolism 
by human liver samples, CeNeS is now 
evaluating the potential of CNS 7056 for the 
additional indications of the induction and 
maintenance of anaesthesia. Pre-clinical 
studies to evaluate the potential of CNS 7056 
in these additional indications are being 
CNS 7056 A SHORT  
ACTING SEDATIVE
CHIEF EXECUTIVE’S REVIEW
SUMMARY OF 7056 FOR SEDATION
 Pre-clinical studies reveal shorter duration of action than midazolam.
 Trend is towards day case procedures.
 7056 has a predictable onset and offset proﬁle.
  7056 is also being evaluated for the additional indications of the induction  
and maintenance of anaesthesia.
_02_CEN_ar06_front.indd   16 29/06/2007   10:17:41 17
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
undertaken at the University of Strasbourg, 
the University of Adelaide and at an international 
pharmaceutical company. Propofol is used 
widely for the induction and maintenance of 
anaesthesia. Whilst propofol is an extremely 
successful IV anaesthetic, its limitations include 
pain on injection and cardiovascular depression 
(lowering of heart rate and blood pressure). 
The pre-clinical proﬁle of CNS 7056 suggests that 
it may overcome some of these limitations and 
could offer a new paradigm for IV anaesthesia.
THE MARKETS FOR CNS 7056
A large and growing number of surgical 
and non-surgical procedures are conducted 
in hospitals and surgeries worldwide. Many of 
these procedures are conducted under sedation 
rather than general anaesthesia. The worldwide 
sedative/hypnotic market for anaesthesia is 
greater than $1 billion and the US holds a 60% 
share of the value. Midazolam sales reveal that 
this agent is used in a large proportion of 
procedures. Midazolam became generic in 
mid-2000 (US). Prior to becoming generic, sales 
in 1999 were US$450 million. The additional use 
of CNS 7056 as an agent for the induction and 
maintenance of anaesthesia could double the 
potential market opportunity. Propofol is used 
widely for the induction and maintenance of 
anaesthesia in the US, Europe and Japan, 
and its sales during 2002 were approximately 
$500 million. 
CNS 7056 DEVELOPMENT STATUS
The IP position around CNS 7056 was recently 
strengthened when the European, Hong Kong 
and Japanese Patent Ofﬁces granted the 
patent for a series of sedative compounds, 
including CNS 7056. CNS 7056 is progressing 
through pre-clinical development. CeNeS is 
undertaking the pre-clinical development work 
with the intention of ﬁling an IND in the US 
in 2007. CeNeS is planning to conduct the 
ﬁrst proof of concept Phase I in the US study 
because the Company has identiﬁed the US 
as a major potential market for short acting 
sedatives. Unlike many CNS indications, 
it is planned that the clinical proof of concept 
for this compound will be evaluated in the 
Phase I trials, where the onset and offset of 
sedation for CNS 7056 will be examined and 
compared with that of midazolam. Sedative 
effects can readily be monitored in volunteers 
by measuring parameters such as reduction 
of awareness and movement or changes in 
the electrical activity of the brain. 
_02_CEN_ar06_front.indd   17 29/06/2007   10:17:41 18
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
PARKINSON’S DISEASE
Parkinson’s disease is a neurodegenerative 
disease affecting approximately 2% of the 
population over the age of 65. The symptoms 
of Parkinson’s disease such as tremor, rigidity 
and slowness of movement result from the 
loss of neurones containing the neurotransmitter 
dopamine in parts of the brain responsible for 
controlling movement. 
In line with our stated lower risk approach, 
CeNeS has examined the continuing use of 
L-DOPA as the main treatment of Parkinson’s 
disease and selected a discovery opportunity 
that could signiﬁcantly enhance its effectiveness.
COMT inhibitors are used to ‘smooth’ the 
pharmacokinetics of L-DOPA, the ‘gold 
standard’ therapy for Parkinson’s disease.
Replacement therapy using the precursor 
of dopamine, L-DOPA combined with a 
Dopa-decarboxylase (“DDC”) inhibitor (carbidopa 
or benserazide) is the mainstay of therapy in 
Parkinson’s disease. Catechol-O-methyltransferase 
(“COMT”) is an enzyme that metabolises 
catecholamines such as L-DOPA and 
dopamine and causes a signiﬁcant depletion 
of L-DOPA in the brain and periphery, limiting 
its efficacy. COMT inhibitors essentially 
smooth out the pharmacokinetics of L-DOPA, 
giving patients a longer ‘on’ or functional time 
each day. They also have a sparing effect on 
the dose of L-DOPA required and thus may 
delay the development of motor ﬂuctuations 
and dyskinesias.
CURRENT COMT INHIBITORS
In the mid-to-late 1990s two COMT inhibitors 
were introduced to the market: tolcapone and 
entacapone. However, tolcapone was withdrawn 
from the EU market in late 1998 due to liver 
toxicity, which is unrelated to COMT inhibition. 
Tolcapone has recently been re-introduced to 
the market in Europe but, as in the US, its use 
is severely restricted. As such, entacapone 
(co-marketed by Orion and Novartis) is the 
only unrestricted COMT inhibitor available 
in the major markets. However, entacapone 
has a number of drawbacks, namely a short 
half-life, low oral bioavailability and minimal 
brain penetration. 
COMT INHIBITOR DISCOVERY 
PROGRAMME
Tolcapone and entacapone, in common with 
the majority of known potent COMT inhibitors, 
contain the undesirable 3-nitrocatechol unit 
that is associated with poor oral absorption, 
short plasma half-life and extensive metabolism 
issues. The goal of breaking away from this 
nitrocatechol series has been achieved by 
CeNeS scientists and a number of discrete 
chemical series without the nitrocatechol 
group have been identiﬁed. The COMT 
inhibitor programme was carefully chosen 
by CeNeS in line with our strategy to have 
a low-risk proﬁle and to address a clear 
commercial opportunity. A number of potent 
compounds are now being evaluated in the 
lead optimisation process, prior to selection 
of a development candidate. 
THE POTENTIAL USE OF COMT 
INHIBITORS IN SCHIZOPHRENIA
In addition to Parkinson’s disease, a number 
of recent academic publications point to the 
potential use of a COMT inhibitor that acts in 
the brain to improve the profound cognitive 
deﬁcits of schizophrenia. Cognitive disturbances 
often prevent schizophrenics from readjusting 
to society and require patients to be under 
medical care for their entire lives. Despite the 
availability of a variety of current anti-psychotic 
drugs, cognitive disturbances are poorly 
addressed by existing therapies. CeNeS novel 
COMT inhibitors have the potential to address 
this signiﬁcant unmet need. The worldwide 
sales of drugs used to treat schizophrenia 
are US$12 billion. 
THE MARKET FOR COMT INHIBITORS
The global market of drugs for Parkinson’s 
disease was US$1.7 billion in 2003 and is 
predicted to grow to US$3 billion by 2012. 
The growth will arise largely due to the 
increased prevalence of the disease, as a 
result of the ageing population. The use of 
COMT inhibitors is currently growing rapidly. 
COMT inhibitors currently have more than a 
10% share of the Parkinson’s disease market.
NEIL CLARK
CHIEF EXECUTIVE
27 JUNE 2007
COMT INHIBITORS FOR 
PARKINSON’S DISEASE
CHIEF EXECUTIVE’S REVIEW
SUMMARY OF COMT INHIBITORS FOR PARKINSON’S DISEASE
 The use of COMT inhibitors is growing rapidly.
 CeNeS has achieved a chemical breakthrough with its novel chemical series.
 Potential for use to treat cognitive impairment in schizophrenia.
_02_CEN_ar06_front.indd   18 29/06/2007   10:17:41 19
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
RESULTS OF OPERATIONS
The loss for the year ended 31 December 2006 
was £9.7 million (2005: £6.7 million as restated). 
The increased loss is due to planned expenditure 
associated with the increased investment 
in clinical development, in particular for the 
M6G022 Phase III clinical trial. Net cash as 
at 31 December 2006 was £6.3 million (2005: 
£8.5 million). Turnover from out-licensing activities 
was less than £0.1 million in the year ended 
31 December 2006 (2005: less than £0.1 million).
As planned, research and development costs 
rose to £7.3 million (2005: £4.9 million) as a result 
of the clinical trial costs associated with the M6G 
Phase III study which completed recruitment of 
over 500 patients in November 2006. 
Administrative expenses for the year to 
31 December 2006 increased to £3.6 million 
(2005: £3.2 million as restated) including 
amortisation of goodwill of £1.0 million in the 
year to 31 December 2006 (2005: £1.0 million).
Other operating income for the year ended 
31 December 2006 was less than £0.1 million 
(2005: £0.2 million) and includes rents receivable 
on property sublet in Irvine, Scotland. 
The Company has adopted FRS 20 
“Share-based payments” in these results. 
The adoption of this accounting standard 
represents a change in accounting policy 
and the comparative ﬁgures have been 
restated accordingly. The impact in 2006 
is a charge to the proﬁt and loss account of 
£0.2 million (2005: £0.1 million as restated). 
Net interest receivable for the year ended 
31 December 2006 was £0.3 million 
(2005: £0.5 million).
TAXATION
The Group submits a claim each year for 
Research and Development T ax Credits. The tax 
credit of £0.8 million (2005: £0.6 million) relates 
to a claim for the year ended 31 December 2006 
of £0.6 million and £0.2 million relating to an 
under provision in prior years. The amount for 
the year ended 31 December 2006 has yet to 
be agreed with the HMRC. The claim submitted 
for 2005 of £0.6 million was agreed by the HMRC 
and payment was received in August 2006.
FIXED ASSETS
The decrease in intangible assets to £5.3 million 
(2005: £6.5 million) is a result of goodwill 
amortisation of £1.0 million and a reduction in 
the original assessment of the fair value of the 
contingent consideration payable arising on a 
historical acquisition of £0.2 million. Tangible 
ﬁxed assets have decreased to £26,000 
(2005: £36,000).
 
FINANCIAL REVIEW
_02_CEN_ar06_front.indd   19 29/06/2007   10:17:41 20
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
FINANCIAL REVIEW
DEBTORS AND CREDITORS
Total debtors as at 31 December 2006 are 
lower at £1.2 million (2005: £1.5 million), 
including amounts due from the HMRC in 
respect of Research and Development Tax 
Credits at 31 December 2006 of £0.6 million 
(2005: £0.9 million). 
Creditors due within one year were higher at 
£3.0 million (2005: £1.5 million) as a result of 
invoiced costs and accruals in respect of the 
M6G 022 Phase III clinical trial. 
The Company has reviewed and recalculated 
the onerous lease provision of £1.0 million 
(2005: £1.0 million) which reﬂects the expected 
liability relating to the leases of premises 
in Scotland that are no longer required 
by the Group.
CASH RESOURCES
Cash at bank and in hand as at 31 December 2006 
was £6.3 million (2005: £8.5 million). Net funds 
decreased by £2.2 million in 2006, after raising 
£4.5 million net of expenses through a placing 
of new shares in December 2006 (2005: increase 
of £4.1 million restated).
Following the successful completion of 
the recent M6G Phase III study CeNeS is 
actively pursuing partnering discussions with 
interested parties. The upfront milestones 
generated from a partnering deal are expected 
to be sufﬁcient to fund operations through 
2008 and beyond. CeNeS is conﬁdent that the 
positive clinical data will enable a partnering 
deal and/or ﬁnancing to be secured in the 
second half of 2007 to enable the Company 
to remain as a going concern.
NEIL CLARK
CHIEF EXECUTIVE
27 JUNE 2007
_02_CEN_ar06_front.indd   20 29/06/2007   10:17:41 21
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
ALAN GOODMAN 
CHAIRMAN (56) 
Alan Goodman, a leading biotech 
entrepreneur, has founded or co-founded 
many biotechnology and healthcare 
companies, including Agricultural Genetics 
Company, Medeva plc, Chiroscience Group plc, 
Acambis plc, Oxford BioMedica plc, CeNeS 
Pharmaceuticals plc and Core Group plc. He was 
non-executive Chairman of Oxford BioMedica 
plc, Chief Executive of Acambis and a Director 
of Alizyme plc. Alan is also currently Chief 
Executive of Avlar Bioventures Ltd.
NEIL CLARK 
CHIEF EXECUTIVE (44) 
Neil has a life sciences degree and is a 
Chartered Accountant with over ten years’ 
international professional experience working 
for Coopers & Lybrand. Neil joined CeNeS 
in 1997 and was made Finance Director in 
July 2000. Neil became Chief Operating Ofﬁcer 
in October 2001 and led the restructuring of 
CeNeS. Neil was promoted to Chief Executive 
in January 2005.
DR PETER JOHNSON 
NON-EXECUTIVE DIRECTOR (71) 
Peter has extensive research and development 
and management experience with ﬁve major 
international pharmaceutical companies: 
Wellcome, Hoechst, SmithKline, Fisons and 
Astra. He is currently Chairman of Oxford 
BioMedica plc. In the last ﬁve years he has 
also been Non-executive Director of Quadrant 
Healthcare plc, Chairman of CBAMS Limited 
and Executive Chairman of Sterix Limited.
BOARD OF DIRECTORS
RONALD IRWIN 
NON-EXECUTIVE DIRECTOR (71) 
Ronald has had a number of executive 
appointments with ICI, Wellcome Foundation, 
Sterling Winthrop, Marion Merrell Dow 
(Chairman and Managing Director) and British 
Biotechnology. He is currently a Non-executive 
Director of Echo International Health Services Ltd 
(Chairman) and previously Xenova Group plc, 
Pharmovations Ltd and Tanvec Group Plc 
(Chairman).
ALAN SMITH 
NON-EXECUTIVE DIRECTOR (62) 
Alan is a member of the Chartered Institute 
of Public Finance and Accountancy. He was 
Chairman of Acambis plc from 1999 until 2006 
and prior to this a Non-executive Director 
since 1995. He was Group Managing Director 
of Anglian Water plc until December 1997 
and is currently Chairman of Avlar BioVentures 
Limited and Chairman of Medical Device 
Innovations Limited. 
_02_CEN_ar06_front.indd   21 29/06/2007   10:17:41 22
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
DR GAVIN KILPATRICK 
CHIEF SCIENTIFIC OFFICER
After completing his PhD in pharmacology 
at the Institute of Psychiatry, University of 
London, in 1985, Gavin joined Glaxo, UK, 
and worked on the development of novel 
drugs for CNS and gastrointestinal disorders. 
In 1995, he moved to Roche, Basel, Switzerland 
as Head of Psychiatry Research. In 1999 Gavin 
joined CeNeS as Research Director. In 2002 
Gavin co-founded the drug discovery company, 
TheraSci. TheraSci was acquired by CeNeS in 
2003. He is an author/co-author of more than 
80 academic publications, an editor of the 
journals ‘Neuropharmacology’ and ‘Current 
Opinion in Investigational Drugs’ and a 
member of the Scientiﬁc Advisory Board 
for the charity ‘Ataxia UK’.
SIMON KERR 
COMMERCIAL DIRECTOR 
Simon has worked in the pharmaceutical 
and biotechnology sectors for over 20 years 
in business development, marketing and sales 
roles. He initially held a number of commercial 
roles with Beecham Pharmaceuticals, 
Wellcome plc and Scotia Pharmaceuticals, 
prior to moving into the biotechnology sector 
in 1996. He has subsequently held Board-level 
positions in four biotechnology companies: 
Gemini Genomics (1996), Cambridge 
Genetics (1998), Circassia Limited (2001) 
and TheraSci Limited (2002). He joined CeNeS 
in November 2003 upon completion of the 
acquisition of TheraSci Limited by CeNeS.
KEITH BORKETT BSC (HONS)
DEVELOPMENT DIRECTOR
Keith has worked in the pharmaceutical 
industry for over 20 years. After starting his 
clinical research career working in the Clinical 
Pharmacology Unit of G D Searle in High 
Wycombe, UK, he moved on to managing 
European Phase II and III studies as a Clinical 
Research Associate. After seven years with 
Searle, he moved to Schering Plough working 
in oncology and respiratory diseases. Keith 
then spent twelve years at Amgen as a Clinical 
Project Manager responsible for the European 
Clinical Development of compounds in 
haematology/oncology from Phase I through 
to licensing, before he joined Roche as 
Operations Project Leader responsible for 
the global clinical operations of products 
in the ﬁelds of haematology/oncology 
and rheumatoid arthritis. Keith joined 
CeNeS in August 2005.
SENIOR MANAGEMENT
TONY OSBORNE 
GROUP FINANCIAL CONTROLLER 
AND COMPANY SECRETARY 
Tony has over ten years’ experience working 
for biotechnology companies, both private and 
public. After qualifying as a Chartered Accountant 
in 1993 Tony joined Cobra Therapeutics 
(formerly Therexsys) in 1994 as Financial 
Controller. Tony joined CeNeS as Group 
Financial Controller in July 2000 and was 
appointed Company Secretary in January 2004.
_02_CEN_ar06_front.indd   22 29/06/2007   10:17:41 23
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
ANN HAYES PhD 
For 22 years Ann Hayes worked for GlaxoWellcome 
specialising in the areas of CNS and pain. She 
was a Director in Drug Discovery, with particular 
expertise in determining long term discovery 
strategy, in portfolio management and in 
discovery project management. After leaving 
GSK in 2001, Ann set up a business as an 
independent pharmaceutical consultant. In this 
capacity she has co-founded two companies, 
Ionix Pharmaceuticals and TheraSci, which 
has since been bought by CeNeS. Ann is 
a Non-executive Director of Plethora and 
Curidium, a director of Theradeas, a member 
of the Scientiﬁc Advisory Boards for Ingenium 
and Paradigm and has also been Non-executive 
Director at TheraSci, Ionix and Sirus.
DAVID BROOKS MD DSC FRCP FMED SCI 
David Brooks is Hartnett Professor of Neurology 
and Deputy Head of the Department of Clinical 
Neurosciences in the division of Neuroscience, 
Faculty of Medicine, Imperial College, London. 
He is also Head of the Neurology Group at the 
Medical Research Council Clinical Sciences 
Centre, Hammersmith Hospital, London. 
Additionally, he is Head of Neurology, Medical 
Diagnostics, GE Healthcare PLC. David is 
a member of the Medical Research Council 
Neuroscience and Mental Health Board, 
UK Parkinson’s Disease Society Research 
Advisory Panel and German BMBF Dementia 
Network Advisory Panel. He was a member of 
the Research Advisory Board of the Michael J Fox 
Foundation 2002–2006. David is on the editorial 
boards of several journals. In 2001, he was 
elected a Fellow of the Academy of Medical 
Science, UK. His research involves the use of 
positron emission tomography and magnetic 
resonance imaging to study cerebral control 
of movement and performance of therapeutic 
trials in Parkinson’s, Huntington’s, and Alzheimer’s 
disease. To date, he has published over 
250 reports in peer reviewed journals, 
including Nature.
MICK SERPELL, MB CHB, FSCHP ,  
ECFMG, FRCA 
Mick Serpell graduated from medical 
school at the University of Dundee in 1983. 
He completed his training in anaesthesia 
and pain management in Dundee, Orebro 
in Sweden and Dartmouth Hitchcock Medical 
Centre in New Hampshire, US. He took up 
his consultant post in Glasgow in 1993 and 
became Senior Lecturer at the University 
Department of Anaesthesia, Glasgow in 1999. 
His research interests include pharmacological 
and regional analgesia management of acute 
and chronic pain. He is particularly interested 
in the diagnosis and early treatment of 
neuropathic pain. He leads the Clinical Trials 
Unit at the Pain Clinic in Gartnavel. He has 
undertaken 24 commercial studies over the 
past six years, and is on the Advisory Board 
of four commercial companies. He is chairman 
of the Research and Priority Programme for 
Pain & Acute Medicine for the Glasgow Acute 
Hospital Trusts. Mick is Lead Clinician in 
Chronic Pain for North Glasgow and chairs the 
Neuropathic Pain SIG (British Pain Society).
DAVID BROWN PhD, FRSC 
David Brown has over 30 years’ experience 
in the pharmaceutical/biotechnology industry 
both in research and in senior executive roles. 
From 1974 to 2002 he served with Zeneca, 
Pﬁzer, Glaxo, and most recently with F Hoffman 
La-Roche as Global Head of Drug Discovery. 
In this role he had responsibility for the output 
of clinical candidate drugs from approximately 
2,000 scientists across Roche’s ﬁve research 
sites. From 2002 to 2004, David was President 
and Chief Executive Ofﬁcer of Cellzome AG, 
a biotechnology company headquartered 
in Heidelberg Germany. David has extensive 
experience of pharmaceutical research and 
development. Whilst at Pﬁzer he was named 
co-inventor on the patent for Viagra, 
a treatment for male impotence, and led the 
team that developed Viagra through to proof 
of clinical efﬁcacy in man. He also played a 
key role in the discovery of Relpax, a treatment 
for migraine. 
PROFESSOR J ROBERT SNEYD  
MA MB MD FRCA
Robert Sneyd is Professor of Anaesthesia 
and Associate Dean of the Peninsula Medical 
School, Plymouth. His research interests 
include drug development and clinical 
investigations especially in IV anaesthesia 
and analgesia. Professor Sneyd has previously 
worked in the Pharmaceutical industry and 
has signiﬁcant experience in working with 
industry to ensure that clinical development 
programmes are optimally aligned with clinical 
priorities and unmet patient needs.
DR PETER S A GLASS, MB, CHB
Peter Glass is Professor and Chairman of 
Anaesthesiology at the State University of 
New York at Stony Brook, where he also is 
Chief of Anaesthesia at the University Hospital. 
After receiving a medical degree from the 
University of Witwatersrand in Johannesburg, 
Dr Glass trained at the Johannesburg Hospital 
and spent 15 years on the faculty at Duke 
University before joining the faculty at 
Stony Brook. His research interests are the 
pharmacology of analgesics, anaesthetics 
and muscle relaxants, ambulatory anaesthesia, 
drug delivery systems and post-operative 
analgesia. This research has been funded by 
grants from private funding agencies and the 
pharmaceutical industry and Dr Glass has 
served as a consultant for NIH funded grants. 
Dr Glass has published over 125 peer-reviewed 
manuscripts, 39 book chapters, numerous 
editorials and invited monographs. He is 
Section Editor, Ambulatory Anaesthesia for 
Anaesthesia & Analgesia and is a reviewer for 
several pharmacology and anaesthesiology 
journals. He has been Chairman of the 
VA Merit Review Sub-committee for Alcoholism, 
Drug Dependence, Anaesthesia, and Clinical 
Pharmacology. Dr Glass has served as the 
president of the International Society of 
Anaesthetic Pharmacology (formally SIVA), 
serves on the Board of Directors of the Society 
of Ambulatory Anaesthesia, lists membership 
in several professional organisations, and 
has served on several committees of the 
American Society of Anaesthesiology and 
Association of University Anaesthesiologists. 
He is also a frequently invited national and 
international lecturer. 
SCIENTIFIC ADVISORY BOARD
THE ROLE OF THE SAB IS TO REVIEW AND PROVIDE ADVICE ON THE SCIENTIFIC WORK CONDUCTED IN CENES. THE SAB PROVIDES 
GUIDANCE TO INDIVIDUAL PROJECTS AND ALSO AT A STRATEGIC (PORTFOLIO) LEVEL. THE SAB MEETS ANNUALLY AND ITS MEMBERS 
ARE DETAILED BELOW. THEY HAVE BEEN SELECTED ON THE BASIS OF RECOGNISED EXPERTISE IN CNS DRUG DISCOVERY AND 
DEVELOPMENT AND/OR EXPERTISE IN PAIN, ANAESTHESIA AND PARKINSON’S DISEASE. THE SAB IS CHAIRED BY DR ANN HAYES. 
IN 2006, THE COMPANY FURTHER STRENGTHENED THE SAB BY APPOINTING PROFESSOR ROBERT SNEYD (ASSOCIATE DEAN AND 
PROFESSOR OF ANAESTHESIA, PENINSULA MEDICAL SCHOOL, UNIVERSITY OF PLYMOUTH, UK) AND PROFESSOR PETER GLASS 
(PROFESSOR AND CHAIRMAN, DEPARTMENT OF ANESTHESIOLOGY , STONY BROOK UNIVERSITY HOSPITAL, US).
_02_CEN_ar06_front.indd   23 29/06/2007   10:17:42 24
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
The Directors present their Annual Report on the affairs of CeNeS Pharmaceuticals plc (the “Company”) together with the Consolidated Financial 
Statements of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2006.
PRINCIPAL ACTIVITY 
The principal activity of the Group is the discovery and development of drug products for the treatment of disorders of the central nervous system 
(“CNS”) including the treatment of pain and sedation.
BUSINESS REVIEW
REVIEW AND FUTURE DEVELOPMENTS
The Group has continued to follow its strategy of progressing its pipeline of pharmaceutical products towards commercialisation with the aim of 
building a proﬁtable, European, specialty pharmaceutical Company. A full review of the business and future prospects is given in the Chief Executive’s 
Review on pages 8 to 18 and the Financial Review on pages 19 and 20.
RESULTS
Turnover for the year was less than £0.1 million (2005: less than £0.1 million) and comprises revenues from licence fees. The loss of the Group 
for the year after taxation was £9.7 million (2005: £6.7 million restated).
PRINCIPAL RISKS AND UNCERTAINTIES
CeNeS faces risks and uncertainties that are common to other companies developing novel pharmaceutical products. 
Clinical
A drug may fail at any stage of its clinical development as a result of insufﬁcient efﬁcacy or safety issues. Clinical programmes may also encounter 
delays as a result of the performance of clinical research organisations and other third parties, failure to obtain the necessary regulatory and ethical 
approvals or an inability to recruit patients.
Regulatory
The regulatory environment differs around the world and is subject to change. Changes to the regulatory environment may result in delays 
and additional costs. Ethical, regulatory or marketing approvals may be delayed or withheld or may carry unacceptable conditions.
Safety or efﬁcacy issues may come to light once a product has been approved which may result in the withdrawal or a restriction of use of 
the product.
Manufacturing
CeNeS uses contract manufacturers who could cease supply at short notice. This may result in delays to clinical programmes and increased costs.
The development of a manufacturing process may also encounter delays and additional costs due to technical problems, for example in the 
scale-up of a process so that larger quantities of the product can be produced.
Intellectual property (“IP”) and competition
The Group may not be able to secure and maintain IP for its products. There is no guarantee that the Group’s current or future patent applications 
will be successful or that challenges will not be made against them. The Group’s IP may become invalid or expire before its products are 
successfully launched.
Competitor companies may develop equivalent or better technologies or products which may limit the potential commercial success of the 
Group’s products.
Financial
In the longer term the Group plans to generate cash ﬂows from the successful development and commercialisation of its products. Until then the 
Group will be dependent upon funding through the completion of licensing deals or through the injection of capital. Failure to generate additional 
funding may lead to the postponement or cessation of clinical programmes or going concern.
RESEARCH AND DEVELOPMENT
The Group is involved with an active programme of research and development of CNS and pain products. The costs of research and development 
are expensed to the proﬁt and loss account as incurred.
Research and development costs have increased to £7.3 million (2005: £4.9 million). The majority of this spend relates to the clinical development 
of M6G which completed a European Phase III trial in over 500 patients at the end of 2006.
DIVIDENDS
The Directors do not recommend the payment of a dividend (2005: £nil). 
DIRECTORS
The present membership of the Board is set out on page 21 together with brief biographies.
The Directors who served during the year were:
Mr Alan G Goodman – Chairman
Mr Neil R Clark – Chief Executive
Mr Ronald Irwin  – Non-executive Director
Dr Peter Johnson  – Non-executive Director
Mr Alan Smith – Non-executive Director
Mr Alan Goodman, Mr Ronald Irwin and Dr Peter Johnson will retire at the next Annual General Meeting and offer themselves for re-election.
DIRECTORS’ REPORT
THIS SHOULD ONLY BE 
BLACK PLUS 3005C
_1_CEN_ar06_back.indd   1 29/06/2007   10:16:53 25
CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
DIRECTORS’ SHAREHOLDINGS AND SERVICE CONTRACTS
Details of the Directors’ contracts and their beneﬁcial interests in the shares of the Company are shown in the Remuneration Report on 
pages 30 to 32. 
POLICY ON PAYMENT OF CREDITORS
The Group seeks the best possible terms from suppliers consistent with consideration of quality, delivery price and discounts. In many cases 
these are agreed with the supplier as part of the process of placing an order. Provided that the supplier has met its contractual obligations, 
then the Group endeavours to ensure that payment is made on these terms. This policy is known to all staff who handle payments to suppliers.
The average number of creditor days of the Company at 31 December 2006 was 35 days (2005: 33 days).
KEY PERFORMANCE INDICATORS (“KPIs”)
The Directors consider that cash and spending on research and development to be the Group’s KPIs. These factors are detailed in the Financial 
Review on pages 19 and 20.
EMPLOYMENT POLICY
The Group is aware of its obligations to disabled persons and makes every effort to ensure they receive equal opportunities and are not 
discriminated against on the grounds of their disability.
The Group will make every effort to assist any individual who becomes disabled during the course of their employment.
All employees are kept informed about the Group’s progress and objectives through regular meetings. The Directors believe that it is important 
that the employees’ interests are closely aligned with the Group.
To this end all employees either already hold, or are eligible to receive, options under the current and/or any new share option schemes.
GOING CONCERN 
The Group is engaged in the development of biopharmaceutical products and expects those activities to absorb liquid resources until such 
products begin to be commercialised. Following the successful completion of the recent M6G Phase III study, CeNeS is actively pursuing 
partnering discussions with interested parties. CeNeS is conﬁdent that the positive clinical data will enable a partnering deal to be secured 
with upfront milestones generated sufﬁcient to fund operations through 2008 and beyond. The Directors therefore have a reasonable expectation 
that the Group will have adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to 
adopt the going concern basis in the ﬁnancial statements. 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual 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 
ﬁnancial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and 
applicable law). The ﬁnancial statements are required by law to give a true and fair view of the state of affairs of the Company and of the proﬁt 
or loss of the Company and Group for that period.
In preparing those ﬁnancial statements, the Directors are required to:
 select suitable accounting policies and then apply them consistently;
 make judgments and estimates that are reasonable and prudent;
  state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the 
ﬁnancial statements; and
  prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business 
in which case there should be supporting assumptions or qualiﬁcations as necessary.
The Directors conﬁrm that they have complied with the above requirements in preparing the ﬁnancial statements.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the ﬁnancial position 
of the Company and enable them to ensure that the ﬁnancial statements comply with the Companies Act 1985. They are also responsible for 
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible to the maintenance and integrity of the Company’s website, www.cenes.com.
Legislation in the United Kingdom governing the preparation and dissemination of ﬁnancial statements may differ from legislation 
in other jurisdictions.
DISCLOSURE OF INFORMATION TO AUDITORS
In accordance with Section 234ZA of the Companies Act 1985, in the case of each of the persons who are Directors at the time when the report 
is approved, the following applies:
 so far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and
  they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any audit information 
and to establish that the Company’s auditors are aware of that information.
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
FINANCIAL RISK MANAGEMENT
The Group’s operations expose it to a variety of ﬁnancial risks that include price risk, credit risk, liquidity risk and interest rate risk. The Group does 
not use derivative ﬁnancial instruments to manage ﬁnancial risks and as such, no hedge accounting is applied.
Given the size of the Group, the Directors have not delegated the responsibility of monitoring ﬁnancial risk management to a sub-committee of the 
Board, although risk management is reviewed by the Audit Committee. The policies set by the Board of Directors are implemented by the Group’s 
ﬁnance department. The department has policies and procedures in place that set out guidelines to manage interest rate risk, credit risk, and the 
circumstances where it would be appropriate to use ﬁnancial instruments to manage these.
PRICE RISK
The Group is exposed to commodity price risk as a result of its operations. However, given the size of the Group’s operations, the costs of managing 
exposure to the commodity price risk exceed any potential beneﬁts. The Directors will revisit the appropriateness of this policy should the Group’s 
operations change in size or nature. The Group has no material exposure to equity securities price risk. The Group has one equity investment in 
an unlisted Company, Xention Limited, which has been written down to £1 in the ﬁnancial statements.
CREDIT RISK
Where debt ﬁnance is utilised, this is subject to pre-approval by the Board of Directors. The amount of exposure to any individual counterparty is 
subject to a limit, which is reassessed annually by the Board. The Group has no exposure to credit concentration risk as it has no third party sales. 
Currently the Group has no material debt ﬁnance.
LIQUIDITY RISK
The Group does not currently have any material short or long term debt ﬁnance other than trade creditors which arise under the normal course 
of business.
INTEREST RATE CASH FLOW RISK
The Group has interest bearing assets. Interest bearing assets include only cash balances, which earn interest at ﬂoating rates. The Directors 
will revisit the appropriateness of this policy (of maintaining only cash balances) should the operations of the Group change in size or nature.
SUBSTANTIAL SHAREHOLDINGS
As at 27 June 2007, under Section 198 of the Companies Act 1985, the Company had been notiﬁed of the following interests amounting to 3% 
or more of the ordinary share capital of the Company:
Name      Number % holding
Gartmore      51,477,758 10.6
Barclays Stockbrokers Limited      30,437,864 6.3
Goldman Sachs Group, Inc.      29,486,760 6.1
Avlar Bioventures Fund II      26,807,760 5.5
USS      21,278,462 4.4
R G Robb      17,000,000 3.5
Alan Goodman      15,985,276 3.3
INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)
CeNeS intends to present its 2007 interim results in accordance with IFRS. The Group is currently conducting an analysis of the effects of IFRS 
on presentation of its results. The principal issues arising on the transition from UK GAAP to IFRS which could have an impact on the presentation 
of CeNeS ﬁnancial information are:
 research and development expenditure; and
 intangibles.
CeNeS will be positioned to ensure compliance in the required timescale.
AUDITORS
In accordance with Section 384 of the Companies Act 1985, a resolution for the re-appointment of PricewaterhouseCoopers LLP as auditors 
of the Company is to be proposed at the forthcoming Annual General Meeting.
ANNUAL GENERAL MEETING
The 2007 Annual General Meeting is planned to take place at 10.00am on 13 August 2007 at the ofﬁces of J.M. Finn & Co., 4 Coleman Street, 
London EC2R 5TA.
The notice of the Annual General Meeting, together with explanatory information concerning the resolutions to be proposed at the Annual General 
Meeting will be sent to shareholders in due course.
By order of the Board
TONY OSBORNE
COMPANY SECRETARY
27 JUNE 2007 
DIRECTORS’ REPORT
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
The Board is committed to maintaining the highest standards of Corporate Governance by complying with the code of corporate governance 
(known as the 2003 “Combined Code”) and is accountable to shareholders for the good governance of the affairs of the Group.
The Company’s shares are traded on the Alternative Investment Market (“AIM”) of the London Stock Exchange. The Group is therefore subject to 
the AIM Admission Rules of the London Stock Exchange and is consequently not required to comply with the best practice corporate governance 
provisions contained within the Combined Code. However, because the Board is committed to the highest standards of corporate governance it 
has conducted a review of the Combined Code on corporate governance. The Company has implemented procedures to ensure that it complies 
with the rules where practical for a small sized, AIM listed Company.
Set out below is how the principles of the Combined Code have been applied and the extent of the Group’s current compliance.
STATEMENT OF COMPLIANCE WITH THE CODE OF BEST PRACTICE
The Company has complied throughout the year with the provisions of the Code of Best Practice as they relate to small companies, set out in 
Section 1 of the Combined Code except as follows:
  Provision C.3.1 requires that one member of the Audit Committee should have recent and relevant ﬁnancial experience. The Board has 
determined that the combined qualiﬁcations and experience of the Committee members, when taken together with its modus operandi, 
gives the Committee collectively the ﬁnancial expertise necessary to discharge its responsibilities.
BOARD OF DIRECTORS
The Board of Directors currently consists of two Executive Directors and three Non-executive Directors. The biographies of the Directors are set out 
on page 21. The Board is responsible for providing leadership within a framework of controls for managing risk and also the following main areas:
 approving the Company’s scientiﬁc and commercial strategy;
 approving budgets and funding plans;
 approving treasury policies;
 overseeing membership of Board Committees and their terms of reference;
 monitoring performance against key ﬁnancial and non-ﬁnancial indicators;
 overseeing the system of risk management;
 setting corporate governance policies;
 setting health, safety and environmental policies;
 approving annual and interim ﬁnancial statements;
 approving shareholder communications; and
 reviewing and approving major ﬁnancial commitments and substantial transactions.
In line with best practice, the Board has also discussed and approved a detailed list of Matters for the Attention of the Board which is 
reviewed annually.
The Board plans to meet formally at least six times a year and there is also frequent contact between meetings as required to discuss ongoing 
issues and to maintain a dialogue between Board members. During the year all the Directors were present in person or by telephone for all of 
the meetings of the Board with the exception of Dr Peter Johnson, who was absent for two meetings, and Mr Neil Clark who was absent for one 
meeting. These absences arose due to unavoidable short notice for the timings of the meetings. Board meetings are held at the Cambridge 
ofﬁces of the Company or at a suitable London venue. During the year there were 13 meetings.
The Board has shown its commitment to dividing responsibilities for running the Board and running the Company’s business by appointing 
Mr Neil Clark and Mr Alan Goodman as the Chief Executive and Executive Chairman respectively. Mr Neil Clark has overall responsibility for 
the running of the Company and ﬁnancial matters. The Company Secretary and Group Financial Controller, Mr Antony Osborne, is also closely 
involved in the management of ﬁnancial matters.
The roles of the Chairman and the Chief Executive, which have been deﬁned by the Board, are respectively to run the Board and to take 
responsibility for the running of the business. Both the Chairman and the Chief Executive are fully involved in developing the longer term 
strategy of the Company. Other senior executives are invited to Board meetings to present on speciﬁc issues relevant to their departments 
as required. The whole Board and senior management team plan to meet annually to carry out a broad review of the Company’s operations 
and possible strategic opportunities. The Executive Directors of the Company are fully involved with the management of the Group at all levels 
and the direction and control of the Company. 
The Non-executive Directors and the Chairman also meet annually in the absence of the other Executive Director, to assess Board and 
individual performance and other matters considered relevant to the successful running of the Board and the Group. This includes an 
annual review of the effectiveness of the composition and operation of the Board and the Remuneration, Nomination and Audit Committees. 
The Non-executive Directors also meet without the Chairman being present, at least annually, to appraise the Chairman’s performance.
All Directors bring individual judgment to bear on matters of strategy, resources, performance and standards of conduct. Appropriate training 
is made available to Directors to assist them in the discharge of their duties as required. The Directors receive reports on the current and 
prospective activities of the Group and have full and timely access to any other relevant information they may require.
All Directors have direct access to the services and advice of the Company Secretary who is responsible for ensuring those relevant procedures, 
rules and regulations are complied with. The Board as a whole determines the appointment and removal of the Company Secretary. Directors may, 
at the Company’s expense, seek independent legal advice on any matter relating to the discharge of their duties.
CORPORATE GOVERNANCE
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
BOARD OF DIRECTORS CONTINUED
The Board has two independent Non-executive Directors, Mr Ronald Irwin, who is the Senior Independent Non-executive Director, and 
Dr Peter Johnson who are free from any business or relationship that could jeopardise the exercise of independent judgment. Mr Alan Smith 
is not considered to be independent because he is also Chairman of Avlar Bioventures Limited – Avlar Bioventures Limited manages 
Avlar Bioventures Fund II Limited Partnership which is a shareholder in the Company. Mr Goodman is also Chief Executive of Avlar Bioventures Limited. 
Mr Ronald Irwin is the Non-executive Director to whom any relevant concerns should be addressed. 
The Company has arranged appropriate insurance cover in respect of legal action against its Directors.
All Directors are subject to election by shareholders at the ﬁrst Annual General Meeting after their appointment and are required to submit 
themselves for re-election at least every three years thereafter. The Executive Directors have contracts of service that can be terminated by either 
party, with a notice period of twelve months. The Non-executive Directors have contracts of service that can be terminated by either party on three 
months’ notice. Further details of the contracts of service are given in the Remuneration Report.
AUDIT COMMITTEE
The Audit Committee is comprised of two independent Non-executive Directors, Mr Ronald Irwin (the Committee Chairman) and Dr Peter Johnson. 
The Audit Committee examines and reviews, on behalf of the Board, internal controls, ﬁnancial and accounting policies and practices, the form 
and content of ﬁnancial reports and statements, the requirement for an internal audit function and the scope of work, appointment, re-appointment 
and removal of external auditors. The Committee is also responsible for establishing a ‘whistle blowing’ policy designed to enable the anonymous 
reporting by staff of any suspected ﬁnancial impropriety, fraud or wrong doing. It meets at least once a year with representatives of the Company’s 
auditors without any Executive Directors being present. The Committee has the power to call for information from management and to consult 
directly with the external auditors. The detailed terms of reference of the Audit Committee have been established in a document which has been 
approved by the Board. The terms of reference are available on request from the Company Secretary.
The Committee has reviewed the requirement for an internal audit function and has decided that after careful consideration it is not appropriate 
for the Company due to the small size of the Group’s operations. The Audit Committee undertakes an ongoing risk appraisal which includes a 
review of the internal ﬁnancial controls of the Company.
The Committee also reviews the levels of audit and non-audit services that are provided by the external auditors and reviews the type of work 
to ensure that auditor independence and objectivity are maintained. The Committee has also discussed their independence with the external 
auditors, and has received and reviewed written disclosures from the external auditors as required by the Auditing Practice Board’s International 
Standard on Auditing (“ISA”) (UK and Ireland) 260 “Communication of audit matters with those charged with governance”.
The Audit Committee met three times in 2006 and all members were present.
INTERNAL CONTROL
The Group fully complies with the Combined Code’s provisions on internal control, having established procedures to implement the guidance 
issued in the 2005 Turnbull Report, and by reporting in accordance with that guidance. These procedures have been in place throughout the year 
under review and up to the date of approval of these ﬁnancial statements.
The Board has established a continuous process for identifying, evaluating and managing the signiﬁcant risks faced by the Group. Identiﬁcation 
and evaluation of risks is an integral part of the Board’s business planning process.
The Board is also responsible for ensuring that the Group maintains a sound system of internal control to address those risks to safeguard 
shareholders’ investments and the Group’s assets. In compliance with the Combined Code, the Board undertakes a speciﬁc review, at least 
annually, to evaluate the effectiveness of the process of identifying, evaluating and managing risks. The reviews covered all controls, including 
ﬁnancial, operational and risk management controls. The Board also reviewed the effectiveness of the Group’s system of internal control.
The monitoring of internal controls includes the scrutiny and in depth review of reports prepared by management. These include detailed annual 
budgets and monthly analyses of variance to budget. The composition of the Board and of senior management is aimed at providing an appropriate 
range of knowledge, skill and experience in scientiﬁc, clinical and commercial matters. The management of the Company actively promotes the 
values of integrity and professionalism and the maintenance of high ethical standards. Any weaknesses identiﬁed will be reviewed. As part of this 
process the Audit Committee will consider and report to the Board on any matters arising from the work undertaken by the external auditors and 
will undertake a periodic review to consider the need to establish an internal audit function.
There are inherent limitations in any system of internal control. Internal controls can only manage and not eliminate the risk of a failure to achieve 
business objectives or of other losses. Internal controls can therefore provide only reasonable, and not absolute, assurance against material 
misstatement or loss.
CORPORATE GOVERNANCE
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
REMUNERATION COMMITTEE
The Remuneration Committee is comprised of two independent Non-executive Directors, Dr Peter Johnson (the Committee Chairman) and 
Mr Ronald Irwin. The Company Chairman, Mr Alan Goodman, is an ex ofﬁcio member and exempts himself when his remuneration is being 
discussed. It makes recommendations to the Board on the Group’s policy for Executive Directors and senior management remuneration and 
determines their individual remuneration packages on behalf of the Board. The remuneration of Non-executive Directors is made by the Board 
as a whole. The detailed terms of reference of the Remuneration Committee have been established in a document which has been approved by the 
Board and are available on request from the Company Secretary. Further matters are covered in the Remuneration Report. Meetings are held as and 
when necessary although there will be at least one meeting a year. There were two meetings in 2006 and all members were present.
NOMINATIONS COMMITTEE
The Nominations Committee, which is chaired by Mr Ronald Irwin, makes recommendations to the Board regarding all new Board appointments. 
The Nominations Committee members are Mr Alan Goodman, Mr Ronald Irwin and Dr Peter Johnson. The Committee assesses candidates of 
suitable knowledge and quality for consideration by the Board as potential Directors of the Company. The Committee also considers succession 
planning at Board level. In addition, the Committee makes recommendations to the Board relating to the membership of the Audit and Remuneration 
Committees. The detailed terms of reference of the Nominations Committee have been established in a document which has been approved by 
the Board. The terms of reference are available on request from the Company Secretary. There were no meetings in 2006.
RELATIONS WITH SHAREHOLDERS
The Board attaches a high priority to effective communications with all shareholders. The announcement of interim and full year results is used as 
an opportunity for shareholders to enter into a dialogue with the Company. Major shareholders are encouraged to meet and talk to the Chairman 
and the Non-executive Directors at any time. The Chairman had regular dialogue with major shareholders during the year. 
In addition the Company has established a web site (www.cenes.com) to further aid communications. All of the Company’s press releases, as well as 
other information on the Company, including the current share price, can be accessed through the web site.
The Directors seek to build on a mutual understanding of objectives between the Company and its institutional shareholders by making regular 
presentations, obtaining feedback and providing training to those involved in investor relations. The relationship with, and views of, the Company’s 
shareholders are discussed at all Board meetings.
The Board actively encourages participation at the Annual General Meeting which is the principal forum for dialogue with private shareholders. 
The Board is available at the Annual General Meeting to present and comment on recent developments in the business and the implementation 
of the business strategy.
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
The principal function of the Remuneration Committee is to determine, on behalf of the Board, the remuneration and other beneﬁts of the 
Executive Directors and Senior Management, including pension contributions, share options, bonus payments and service contracts. The fees 
paid to Non-executive Directors are determined by the Board as a whole. Non-executive Directors do not receive bonuses or pension contributions.
The Committee gives full consideration to the provisions set out in Schedule B of the Combined Code in determining appropriate remuneration packages.
THE REMUNERATION PACKAGE (UNAUDITED)
The Remuneration Committee is aware that it must attract and retain individuals of the highest calibre by continuing to offer packages that are fair 
and reasonable for the responsibilities involved. The Committee endeavours to ensure that such packages are sufﬁciently dependent on achievement 
to motivate individuals to continue to contribute to the success of the Company. The Chairman of the Remuneration Committee is Dr Peter Johnson.
BASIC SALARY 
The basic salary of each executive Director is determined by the Remuneration Committee, taking into account the individual’s performance, the achievement 
of personal objectives and basic salaries in companies whose activities and size are comparable to those of CeNeS Pharmaceuticals plc.
BONUS ARRANGEMENTS 
Directors’ bonuses are discretionary and are approved by the Remuneration Committee. The bonuses are linked to performance against speciﬁc targets 
for the Group. The maximum achievable bonus is not normally to be above 50% of basic salary. Details of bonuses awarded for 2006 are shown in 
the table on page 31.
PENSION CONTRIBUTIONS 
The Group makes deﬁned contributions to personal pension arrangements on behalf of the Executive Directors at a deﬁned percentage of 10% 
of salary, excluding bonus, car allowance or other forms of remuneration.
SHARE OPTIONS 
All Executive Directors are entitled to participate in the Company’s share option schemes. The performance criteria for the share option schemes 
are disclosed on page 32. Any options granted thereunder are approved by the Remuneration Committee.
SERVICE CONTRACTS (UNAUDITED)
Each of the Directors has a service agreement or letter of appointment with the Company. Details of the terms of employment (including salary) 
are set out below:
ALAN GILBERT GOODMAN
Mr Alan Gilbert Goodman has a service contract with the Company dated 17 November 1999. Mr Goodman is currently Executive Chairman 
of the Company and his salary in 2006 was £113,308. The agreement provides that Mr Goodman spends two days per week working on the 
Group’s business. The agreement is for an initial term of twelve months and thereafter may be terminated by either party on twelve months’ 
notice. Mr Goodman is also entitled to a pension contribution equal to 10% of his salary, permanent health insurance, life insurance cover, 
private medical insurance and a Company car. There are no provisions in the service agreement for compensation upon early termination 
of Mr Goodman’s contract. 
NEIL ROBERT CLARK
Mr Neil Robert Clark has a service contract with the Company dated 14 August 2000. Mr Clark is currently Chief Executive of the Company and his 
salary in 2006 was £181,483. The agreement is for an initial term of twelve months and thereafter may be terminated by either party on twelve 
months’ notice. Mr Clark is also entitled to a pension contribution equal to 10% of his salary, permanent health insurance, life insurance cover, 
private medical insurance and a car allowance of £5,000. There are no provisions in the service agreement for compensation upon early 
termination of Mr Clark’s contract. 
RONALD IRWIN
Mr Ronald Irwin was appointed a Non-executive Director of the Company by a letter of appointment with effect from 13 December 1999. Mr Irwin’s 
total fees in 2006 were £30,975, including fees for his roles as Chairman of the Audit Committee, and as a member of the Remuneration 
Committee. The appointment as a Non-executive Director may be terminated by either party on three months’ notice.
DR PETER JOHNSON
Dr Peter Johnson was appointed a Non-executive Director of the Company by a letter of appointment with effect from 16 October 2003. Dr Johnson’s 
total fees in 2006 were £30,975, including fees for his roles as Chairman of the Remuneration Committee and as a member of the Audit Committee. 
The appointment as a Non-executive Director may be terminated by either party on three months’ notice.
ALAN SMITH
Alan Smith was appointed a Non-executive Director of the Company by a letter of appointment with effect from 8 January 2004. Mr Smith’s total fees 
in 2006 were £23,100. The appointment may be terminated by either party on three months’ notice.
Each Non-executive Director is also entitled to reimbursement of out of pocket expenses.
REMUNERATION REPORT
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
TOTAL SHAREHOLDER RETURN (“TSR”) (UNAUDITED)
The graph below shows the TSR performance of the Company in comparison to the FTSE A All Share and the FTSE AIM indices over the past 
ﬁve years.
The FTSE A All Share index is chosen an appropriate index because it is used to measure the Company’s performance in assessing the exercising 
of share options under the Company schemes. CeNeS is listed on AIM.
DIRECTORS’ SHAREHOLDINGS (UNAUDITED)
The Directors’ beneﬁcial interests in the shares (unaudited) of the Company are shown below. None of the Directors has any other beneﬁcial 
interest in the shares of any other Group companies.
      Interest in Interest in 
       ordinary shares ordinary shares 
       of 1p each  of 1p each 
      31 December  31 December  
      2006 2005 
     Note Number Number
Mr T R Irwin      476,593 404,333
Mr N R Clark      574,522 434,968
Mr A G Goodman     1,2 15,985,276 15,843,866
Dr P Johnson      133,333 133,333
NOTES
(1)  4,638,176 (2005: 4,638,176) of these ordinary shares are held by ATM Investments Limited, a Company limited by shares with Mr Goodman 
as a Director. 1,600,000 of these ordinary shares are held by Avlar Bioventures Limited, a company controlled by Mr Goodman.
(2)  Mr Goodman, the Chairman of CeNeS, is also a Director of Avlar Bioventures Limited and a limited partner in the funds it manages. One of the 
funds managed by Avlar Bioventures Limited has an interest in 26,807,760 ordinary shares in CeNeS as a result of the acquisition of TheraSci Ltd 
by CeNeS in November 2003.
AUDITABLE INFORMATION
The following information has been audited by the Company’s auditors, PricewaterhouseCoopers LLP , as required by Schedule 7A to the 
Companies Act 1985.
DIRECTORS’ REMUNERATION
The remuneration paid in respect of Directors who served during the year was as follows:
        Pension  
  Basic   T axable  Pension  Total Subtotal contributions  Total 
 Fees salary Bonus  benefits
(3)
 contributions 2006 2005 2005  2005 
Director £ £ £ £  £ £ £ £ £
Executive         
Mr N R Clark
(3)
 — 181,483 59,150 7,059 18,194 265,886 209,134 17,194 226,328
Mr A G Goodman — 113,308 36,825 — 11,331 161,464 128,016 10,895 138,911
Non-executive         
Mr T R Irwin
(1)
 30,975 — — — — 30,975 29,500 — 29,500
Dr P Johnson
(2)
 30,975 — — — — 30,975 29,500 — 29,500
Mr A Smith 23,100 — — — — 23,100 22,000 — 22,000
Total 85,050 294,791 95,975 7,059 29,525 512,400 418,150 28,089 446,239
NOTES
(1) These amounts represent fees payable to Irwin Associates International on behalf of Mr Ronald Irwin’s services.
(2) These amounts represent fees payable to Johnson Partners on behalf of Dr Peter Johnson’s services.
(3) Non-pensionable taxable beneﬁts include medical insurance and car allowance.
CeNeS Pharmaceuticals plc
FTSE A All Share
FTSE AIM
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
AUDITABLE INFORMATION CONTINUED
INTEREST IN SHARE OPTIONS
  As at  Granted  Exercised Lapsed  As at     
  1 January  during during  during  31 December  Earliest   
  2006 the year the year the year  2006  exercise  Expiry 
Directors’ options Note Number Number Number Number Number Exercise price date  date
Mr N R Clark 2,5 100,961 — — — 100,961 £1 in aggregate 30.06.03 03.07.10
 2,5 1,176,563 — — — 1,176,563 £1 in aggregate 31.12.04 31.12.11
 2,5 1,647,500 — — — 1,647,500 £1 in aggregate 01.08.06 01.08.13
 2,5 1,500,000 — — — 1,500,000 £1 in aggregate 20.04.07 20.04.14
 3,6 73,170 — — — 73,170 82p 11.05.03 11.05.07
 1 15,230 — — — 15,230 4.9p note 1 02.03.11
 1 101,538 — — (101,538) — — — —
 3,6 1,172,000 — — — 1,172,000 7.8p 22.12.07 22.12.11
 3,6 — 2,000,000 — — 2,000,000 7p 02.02.09 02.02.13
  5,786,962 2,000,000 — (101,538) 7,685,424   
Mr A G Goodman 1 2,023,864 — — — 2,023,864 4.9p note 1 14.01.09
 2,5 126,923 — — — 126,923 £1 in aggregate 19.06.03 30.06.10
 2,5 928,125 — — — 928,125 £1 in aggregate 31.12.04 31.12.11
 2,5 1,299,375 — — — 1,299,375 £1 in aggregate 01.08.06 01.08.13
 2,5 800,000 — — — 800,000 £1 in aggregate 20.04.07 20.04.14
 3,6 476,334 — — — 476,334 7.8p 22.12.07 22.12.11
  — 1,000,000 — — 1,000,000 7p 02.02.09 02.02.13
  5,654,621 1,000,000 — — 6,654,621 
NOTES
(1)  Each of Mr Alan Goodman, Mr Goodman’s spouse, Mrs E Goodman and Mr Neil Clark have entered into option agreements with 
CeNeS Limited pursuant to which they have a right to subscribe at par for a number of shares in CeNeS Limited. In the event that the option 
is exercised (the end date for exercising being seven years from the date of grant of the option) the optionholder will be under an obligation 
to transfer his ordinary shares in CeNeS Limited to CeNeS Pharmaceuticals plc in return for approximately 20.31 1p ordinary shares for each 
CeNeS Limited ordinary share.
(2)  These options have been granted under the CeNeS Pharmaceuticals plc Executive Share Option Plan and have a performance target linked 
to the FTSE A All Share 900 companies’ performance over a period of three years (see note 5).
(3) Options granted under the CeNeS Pharmaceuticals plc Unapproved Share Option Scheme (see note 6).
(4)  Subject to the rules of the relevant option scheme and the agreement of the Remuneration Committee, Directors and employees may have the right 
to exercise their options awarded under the relevant schemes within a six month period following the termination of their employment contracts.
(5)  Performance condition schedule for the CeNeS Pharmaceuticals plc Executive Share Option Plan – The performance target is that the 
growth in the Company’s share price over a three year period (starting with the date of grant of the Option) must exceed the growth in TSR 
for the FTSE A All Share 900 companies (excluding investment companies) over that period. Options may be exercised in full only if the growth 
of the Company’s share price over a three year period commencing on the date of grant would put the Company at the same level or above 
the Company which is ranked 225th (with the Company being granted ﬁrst) of the FTSE A All Share 900 companies (excluding investment 
companies) ranked according to the growth in TSR over that period. Options may be exercised over half the number of shares in the Company 
to which they relate if the growth in the Company’s share price over a ﬁxed three year period commencing on the date of grant would put the 
Company at the same level or above the median Company of the FTSE A All Share 900 companies (excluding investment companies) ranked 
according to growth in TSR over that period. If the performance target is not met over the ﬁxed three year period, it shall be re-tested over a four year 
period or a ﬁve year period (each period having the same start date). If the performance target is not met, the Option will lapse.
(6)  Performance condition schedule for the CeNeS Pharmaceuticals plc Approved and Unapproved Share Option Schemes – The exercise 
of the option will be subject to the satisfaction of a performance target. The performance target is that the growth in the Company’s share 
price over a three year period (starting with the date of the grant of the option) must exceed the growth in TSR for the FTSE A All Share 900 
(excluding investment companies) over that period. Options may be exercisable in full only if the growth in the Company’s share price over 
a ﬁxed three year period commencing on the date of grant would put the Company at the same level or above the median Company of the 
FTSE A All Share 900 Companies (excluding investment companies) ranked according to the growth in TSR over that period. If the performance 
target is not met over the ﬁxed three year period, it may be re-tested over a four year period or a ﬁve year period (each period having the 
same start date).
(7) The performance conditions were selected to align the interests of the employees with those of the Group and its shareholders.
The market price of the Company’s shares at 31 December 2006 was 7.75p.
The highest and lowest prices during the year were 8.25p and 4.5p respectively.
DR PETER JOHNSON
CHAIRMAN OF THE REMUNERATION COMMITTEE
27 JUNE 2007
REMUNERATION REPORT
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
We have audited the Group and parent company ﬁnancial statements (the ‘‘ﬁnancial statements’’) of CeNeS Pharmaceuticals plc for the year 
ended 31 December 2006 which comprise the Consolidated Proﬁt and Loss Account, the Consolidated Statement of Total Recognised Gains 
and Losses, the Consolidated and Company Balance Sheets, the Consolidated Cash Flow Statement, the Reconciliation of Net Cash Flow to 
Movements in Net Funds and the related notes. These ﬁnancial statements have been prepared under the accounting policies set out therein. 
We have also audited the information in the Remuneration Report that is described as having been audited.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Directors’ responsibilities for preparing the Annual Report, the Remuneration Report and the ﬁnancial statements in accordance with 
applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the 
Statement of Directors’ Responsibilities.
Our responsibility is to audit the ﬁnancial statements and the part of the Remuneration Report to be audited in accordance with relevant legal 
and regulatory requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for 
and only for the Company’s members as a body in accordance with Section 235 of the Companies Act 1985 and for no other purpose. We do not, 
in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose 
hands it may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the ﬁnancial statements give a true and fair view and whether the ﬁnancial statements and the 
part of the Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to 
you whether in our opinion the information given in the Directors’ Report is consistent with the ﬁnancial statements. The information given in the 
Directors’ Report includes that speciﬁc information presented in the Chief Executive’s Review and the Financial Review that is cross referred from 
the Business Review section of the Directors’ Report. 
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and 
explanations we require for our audit, or if information speciﬁed by law regarding Directors’ remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited ﬁnancial statements. This other 
information comprises only the Highlights, the At a Glance, the Chairman’s Statement, the Chief Executive’s Review, the Financial Review, the Board 
of Directors, the Senior Management, the Scientiﬁc Advisory Board, the Directors’ Report, the unaudited part of the Remuneration Report, the Corporate 
Governance Statement and the Directors, Advisers and Contacts. We consider the implications for our report if we become aware of any apparent 
misstatements or material inconsistencies with the ﬁnancial statements. Our responsibilities do not extend to any other information.
We also, at the request of the Directors (because the Company applies the Listing Rules of the Financial Services Authority as if it were a listed 
company), review whether the Corporate Governance Statement reﬂects the Company’s compliance with the nine provisions of the Combined 
Code (2003) speciﬁed for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to 
consider whether the Board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Group’s 
corporate governance procedures or its risk and control procedures.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit 
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the ﬁnancial statements and the part of the Remuneration 
Report to be audited. It also includes an assessment of the signiﬁcant estimates and judgments made by the Directors in the preparation of the 
ﬁnancial statements, and of whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently applied 
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us 
with sufﬁcient evidence to give reasonable assurance that the ﬁnancial statements and the part of the Directors’ Remuneration Report to be audited 
are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall 
adequacy of the presentation of information in the ﬁnancial statements and the part of the Remuneration Report to be audited.
OPINION
In our opinion:
  the ﬁnancial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state 
of the Group’s and the parent company’s affairs as at 31 December 2006 and of the Group’s loss and cash ﬂows for the year then ended;
  the ﬁnancial statements and the part of the Directors’ Remuneration Report to be audited have been properly prepared in accordance with 
the Companies Act 1985; and
 the information given in the Directors’ Report is consistent with the ﬁnancial statements.
EMPHASIS OF MATTER – GOING CONCERN
In forming our opinion on the ﬁnancial statements, which is not qualiﬁed, we have considered the adequacy of the disclosures made in the ﬁnancial 
statements concerning the basis of preparation described in note 1. The ﬁnancial statements have been prepared on a going concern basis and the 
validity of this depends on the Group’s parent company successfully obtaining future funding. This indicates the existence of a material uncertainty 
that may cast doubt on the Company’s ability to continue as a going concern. The ﬁnancial statements do not include any adjustments that would 
result in a failure to obtain such funds. 
PRICEWATERHOUSECOOPERS LLP
CHARTERED ACCOUNTANTS AND REGISTERED AUDITORS
CAMBRIDGE
27 JUNE 2007 
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF CENES PHARMACEUTICALS PLC
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
       2005 
      2006 (Restated) 
     Notes £’000 £’000
Turnover     2 53 55
Gross profit      53 55
Research and development costs      (7,277) (4,893)
Administrative expenses      (3,552) (3,235)
Other operating income     3 26 174
Operating loss      (10,750) (7,899)
Net interest receivable     4 267 535
Loss on ordinary activities before taxation     5 (10,483) (7,364)
Tax credit on ordinary activities     9 815 625
Loss for the year     19 (9,668) (6,739)
Loss per ordinary share – basic and diluted     10 (2.3p) (1.6p)
All of the above results relate to continuing activities.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED 
GAINS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2006
       2005 
      2006 (Restated) 
      £’000 £’000
Loss for the year      (9,668) (6,739)
Total recognised gains and losses for the year      (9,668) (6,739)
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2006
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
 Group  Company
    2006 2005 2006 2005 
   Notes £’000 £’000 £’000 £’000 
Fixed assets     
Intangible assets   11 5,348 6,513  —  —
Tangible assets   12 26 36  —   — 
Investments   13 — — 11,085 11,297
    5,374 6,549 11,085 11,297
Current assets     
Debtors   14 1,164 1,535 51 11
Cash at bank and in hand    6,296 8,464 17 14
      7,460 9,999 68 25
Creditors: amounts falling due within one year   15 (2,993) (1,471) (356) (178)
Net current assets/(liabilities)     4,467 8,528 (288) (153)
Total assets less current liabilities    9,841 15,077 10,797 11,144
Provisions for liabilities and charges   16 (959) (1,009) —  — 
Net assets     8,882 14,068 10,797 11,144
Capital and reserves     
Called up share capital   17 4,839 4,098 4,839 4,098
Share capital to be issued   17 3,687 3,899 3,687 3,899
Share premium account   19 116,866 113,080 116,866 113,080
Capital redemption reserve   19 15,697 15,697 15,697 15,697
Other reserves   19 10,396 10,396 26 26
Profit and loss account   19 (142,603) (133,102) (130,318) (125,656)
Total shareholders’ funds   20 8,882 14,068 10,797 11,144
These ﬁnancial statements were approved by the Board of Directors on 27 June 2007 and were signed on its behalf by:
NEIL CLARK ALAN GOODMAN
CHIEF EXECUTIVE CHAIRMAN 
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 31 DECEMBER 2006
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
      2006 2005 
     Notes £’000 £’000
Net cash outflow from operating activities     21 (8,019) (6,855)
Returns on investments and servicing of finance   
Interest received      267 563
Interest paid       — (5)
Net cash inflow from returns on investment and servicing of finance     267 558
Taxation   
Research and Development Tax Credit       1,065 516
Capital expenditure   
Payment to acquire tangible fixed assets      (1) (28)
Net cash outflow from capital expenditure      (1) (28)
Cash outflow before use of liquid resources and financing      (6,688) (5,809)
Decrease in short term deposits with banks      — 10,000
Net cash (outflow)/inflow before financing       (6,688) 4,191
Financing   
Issue of ordinary share capital      4,821  — 
Issue expenses      (294) —
Repayment of loans      (7) (47)
Net cash inflow/(outflow) from financing       4,520 (47)
(Decrease)/increase in cash     22 (2,168) 4,144
      2006 2005 
     Notes £’000 £’000
(Decrease)/increase in cash in the period     22 (2,168) 4,144
Cash outflow due to changes in debt      7 47
Movements in deposits       — (10,000)
Movement in net funds       (2,161) (5,809)
Net funds brought forward       8,457 14,266
Net funds carried forward     22 6,296 8,457
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
RECONCILIATION OF NET CASH FLOW TO MOVEMENTS 
IN NET FUNDS
FOR THE YEAR ENDED 31 DECEMBER 2006
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
1. ACCOUNTING POLICIES
The ﬁnancial statements have been prepared in accordance with the Companies Act 1985 and applicable accounting standards in the 
United Kingdom. A summary of the more important accounting policies, which have been reviewed by the Board of Directors in accordance 
with FRS 18 “Accounting policies”, is set out below, together with an explanation of where changes have been made to previous policies on 
the adoption of new accounting standards in the year.
The ﬁnancial statements are prepared in accordance with the historical cost convention.
CHANGES IN ACCOUNTING STANDARDS
The 2006 ﬁnancial year is the ﬁrst year in which the Company has adopted FRS 20 “Share-based payment”. In accordance with this standard, 
the cost of share options awarded to employees under the Group’s share option schemes is measured by reference to their fair value at the date 
of grant. This cost is recognised over the vesting period of the options based on the number of options, which in the opinion of the Directors will 
ultimately vest. The impact in 2006 is a charge to the proﬁt and loss account of £0.2 million (2005: £0.1 million as restated). There is no impact 
on the net assets of the Group. 
GOING CONCERN
CeNeS Pharmaceuticals plc does not have sufﬁcient cash resources to fund its current level of activities for the next twelve months. This represents 
a material uncertainty that may cast doubt on the Company’s ability to continue as a going concern. The Directors have a reasonable expectation 
that CeNeS Pharmaceuticals plc can raise additional cash resources for this purpose through fundraising and partnering opportunities. Therefore, 
the Directors consider that it is appropriate to prepare the ﬁnancial statements on a going concern basis. If the Company was unable to continue in 
operational existence for the foreseeable future, adjustments would have to be made to revise the balance sheet values of assets to their recoverable 
amounts, to provide for further liabilities that might arise and to reclassify ﬁxed assets as current assets.
BASIS OF CONSOLIDATION
The Group ﬁnancial statements consolidate the ﬁnancial statements of CeNeS Pharmaceuticals plc and its wholly owned subsidiary undertaking, 
CeNeS Drug Delivery Limited, under merger accounting principles and its subsidiary undertakings, which are also wholly owned, CeNeS Limited, 
CeNeS Pharmaceuticals Inc., Cambridge Cognition Guarantee Limited, CeNeS (Bermuda) Limited and TheraSci Limited under acquisition 
accounting principles.
INTANGIBLE FIXED ASSETS
Goodwill, arising on the acquisition of subsidiary undertakings and businesses, representing the excess of the fair value of the consideration given 
over the fair value of the identiﬁable assets and liabilities acquired, is capitalised as an asset on the balance sheet and amortised over its useful 
economic life which the Directors estimate to be as follows:
CeNeS Limited 15 years
TheraSci Limited 5 years
Provision is made for any impairment.
INTANGIBLE ASSETS – LICENCES
Licences with an immediate deﬁned revenue stream are included at cost and depreciated in equal instalments over a period of ﬁve years which 
is their estimated useful economic life. Provision is made for any impairment.
Other licences acquired are expensed immediately as part of research and development costs.
TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible ﬁxed assets are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is provided on tangible 
ﬁxed assets at rates calculated to write off the cost, less estimated residual value, of each asset on a straight-line basis over its expected useful 
life as follows: 
Leasehold improvements over the shorter of the lease term or 10 years
Fixtures, ﬁttings and computers over 2 – 7 years
Plant and machinery over 5 – 10 years
Laboratory equipment over 3 – 5 years
INVESTMENTS
Investments in subsidiary companies which are accounted for under merger accounting principles are shown at the nominal value of shares issued 
in accordance with the provisions of the Companies Act 1985.
Investments in subsidiary companies which are accounted for under acquisition accounting principles are shown at cost less any provision 
for impairment.
Short term investments comprise bank deposits which are not repayable on demand. Movements in such investments are included under 
“use of liquid resources” in the Group’s Cash Flow Statement.
FOREIGN CURRENCY
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated 
in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at this date.
The Company enters into forward purchase contracts for foreign currencies in order to meet a known ﬁnancial liability in that currency. A deposit 
of 5% of the value of the contract is payable on order and is included within other debtors until completion of the transaction. Upon completion 
of the forward contract the currencies purchased are used to settle the outstanding liability.
NOTES TO THE FINANCIAL STATEMENTS
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
1. ACCOUNTING POLICIES CONTINUED
LEASING AND HIRE PURCHASE COMMITMENTS
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. 
Beneﬁts received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term, except 
where the period to the review date on which the rent is ﬁrst expected to be adjusted to the prevailing market rate is shorter than the full lease term, 
in which case the shorter period is used.
Provisions are made in respect of onerous leases to the extent that the Directors believe that costs will be incurred under the terms of the lease 
with no beneﬁt to the Group.
TAXATION
Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantially enacted 
by the balance sheet date.
Provision is made for deferred taxation, in accordance with FRS 19 “Deferred tax” on all material timing differences. Deferred tax assets are 
recognised to the extent that they are regarded as recoverable. Deferred tax assets and liabilities are not discounted.
TURNOVER
Turnover represents amounts receivable from licence fees net of VAT and other sales related taxes.
RESEARCH AND DEVELOPMENT
Fixed assets used for research and development are included as tangible ﬁxed assets and written off in accordance with the depreciation policy 
above. Other research and development expenditure is charged to the proﬁt and loss account as incurred and includes relevant staff costs as well 
as an apportionment of occupancy costs, general overheads and depreciation.
PENSIONS
The Company operates deﬁned contribution schemes for its employees. The amount charged to the proﬁt and loss account in respect of pension 
costs is the contributions payable during the year. Differences between contributions payable in the year and contributions actually paid are shown 
either as accruals or prepayments in the balance sheet.
SHARE OPTIONS
During the year the Group adopted FRS 20 “Share-based payments”. In accordance with this standard, the cost of share options awarded to 
employees under the Group’s share option schemes is measured by reference to their fair value at the date of grant. This cost is recognised 
over the vesting period of the options based on the number of options which, in the opinion of the Directors, will ultimately vest. The impact 
in 2006 is a charge to the proﬁt and loss account of £0.17 million (31 December 2005: £0.13 million). There is no impact on the net assets 
of the Group.
FINANCIAL INSTRUMENTS
The Group’s ﬁnancial instruments comprise cash, liquid resources, trade debtors and trade creditors, which arise directly from its operations. 
The main purpose of these ﬁnancial instruments is to raise ﬁnance for the Group’s operations. The Group does not enter into derivative transactions 
for speculative purposes. It has been, throughout the year under review, the Group’s policy that no trading in ﬁnancial instruments shall be undertaken. 
The main risks arising from the Group’s ﬁnancial instruments are interest rate risk, liquidity risk and foreign currency risk. The Board reviews and 
agrees policies for managing each of these risks and they are summarised in note 27. These policies have remained unchanged during the year.
2. TURNOVER AND SEGMENTAL INFORMATION
Turnover comprises licence fees. All turnover is derived from the principal activities of the Group, originates in the UK and arises in North America.
3. OTHER OPERATING INCOME
      2006 2005 
      £’000 £’000
Rental income      26 137
Other income      —  37
      26 174
4. NET INTEREST RECEIVABLE
      2006 2005 
      £’000 £’000
Interest receivable on cash balances      267 540
Interest on loans      — (5)
      267 535
NOTES TO THE FINANCIAL STATEMENTS
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
5. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
The loss on ordinary activities before taxation is stated after charging:
      2006 2005 
      £’000 £’000
Depreciation of owned assets      11 9
Amortisation of intangible fixed assets      953 953
Operating lease rentals:
– land and buildings      447 447
Operating lease rentals:
– other      25 18
SERVICES PROVIDED BY THE GROUP’S AUDITOR
During the year the Group obtained the following services from the Group’s auditors at costs detailed below:
      2006 2005 
      £’000 £’000
Audit services:    
Fees payable to Company auditors for the audit of parent company and consolidated accounts    23 23
Non-audit services:    
Fees payable to the Company’s auditors and its associates for other services:  
– auditing of accounts of subsidiaries of the Company pursuant to legislation     10 10
– other services relating to taxation      7 19
      40 52
6. STAFF COSTS
The number of employees (including Executive Directors) at 31 December 2006 was 17 (2005: 17). The average monthly number of employees 
during the year (including Executive Directors) was: 
      2006 2005 
      Number Number
Administration      9 8
Research and development      8 8
      17 16
Their aggregate remuneration comprised:
      2006 2005 
      £’000 £’000
Wages and salaries      1,551 1,359
Social security costs      177 150
Other pension costs (see note 24)      100 95
      1,828 1,604
The Company had no employees in 2006 or 2005 and no staff costs were incurred by the Company during the year ended 31 December 2006 
(2005: £nil).
7. DIRECTORS’ REMUNERATION
      2006 2005 
      £’000 £’000
Aggregate emoluments      482 418
Pension costs      30 28
      512 446
Highest paid Director  
Aggregate emoluments      248 209
Pension costs      18 17
      266 226
The disclosure of individual Directors’ remuneration, share options, pension contributions and pension entitlements are shown in the Remuneration 
Report on pages 30 to 32.
Retirement beneﬁts are accruing to two Directors (2005: two) under deﬁned contribution pension schemes.
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
8. LOSS FOR THE FINANCIAL YEAR
As permitted by Section 230 of the Companies Act 1985, the parent company’s proﬁt and loss account has not been included in these ﬁnancial 
statements. The parent company’s loss for the ﬁnancial year was £4,829,000 (2005: £5,450,000).
9. TAX CREDIT ON LOSS ON ORDINARY ACTIVITIES
      2006 2005 
      £’000 £’000
UK corporation tax – Research and Development Tax Credits      (650) (625)
Adjustment in respect of prior periods      (165)  —
      (815) (625)
CURRENT TAXATION
The tax result for the period is different from the standard rate of corporation tax in the UK (16%) (2005: 16%).
The differences are explained below:
       2005 
      2006 (Restated) 
      £’000 £’000
Loss on ordinary activities before tax      (10,483) (7,364)
Loss on ordinary activities multiplied by the rate at which UK Research and Development Tax Credits  
may be claimed of 16% (2005: 16%)      (1,677) (1,178)
Effects of:  
Expenses not deductible for tax purposes:      63 (26)
– accelerated capital allowances and other timing differences      1 3
– tax losses unutilised in the year      963 576
– adjustment in respect of prior periods      (165) —
Current tax credit for the period      (815) (625)
10. LOSS PER ORDINARY SHARE
The basic and diluted loss per ordinary share is based on a Group loss for the ﬁnancial year of £9.7 million (2005: £6.7 million restated) 
on 414,639,353 (2005: 409,762,474) ordinary shares, the weighted average number of shares in issue during the year. 
11. INTANGIBLE FIXED ASSETS
     Licences  Goodwill  Total 
Group     £’000 £’000 £’000
Cost   
As at 1 January 2006     1,939 50,746 52,685
Adjustment     — (212) (212)
As at 31 December 2006      1,939 50,534 52,473
Amortisation   
As at 1 January 2006     1,939 44,233 46,172
Charge for the year     — 953 953
As at 31 December 2006     1,939 45,186 47,125
Net book value as at 31 December 2006     —  5,348 5,348
Net book value as at 31 December 2005      — 6,513 6,513
The adjustment to goodwill arises as a result of a reduction in the original assessment of the fair value of the contingent consideration payable 
(note 17). 
The Company has no intangible ﬁxed assets (2005: £nil).
NOTES TO THE FINANCIAL STATEMENTS
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
12. TANGIBLE FIXED ASSETS
     Computers,   
    Plant, office    
    machinery equipment and   
    and leasehold laboratory Furniture  
    improvements equipment and fittings Total 
Group    £’000 £’000 £’000 £’000
Cost    
As at 1 January 2006    1,908 56 332 2,296
Additions    — — 1 1
As at 31 December 2006    1,908 56 333 2,297
Depreciation    
As at 1 January 2006    1,908 56 296 2,260
Charge for the year    — — 11 11
As at 31 December 2006    1,908 56 307 2,271
Net book value as at 31 December 2006    — — 26 26
Net book value as at 31 December 2005    — —  36 36
There are no items held under existing ﬁnance lease or hire purchase agreements included within ﬁxed assets.
The Company has no tangible ﬁxed assets (2005: £nil). 
13. INVESTMENTS
In subsidiary companies:
       Company  
Cost       £’000
As at 1 January 2006       22,339
Adjustment       (212)
As at 31 December 2006       22,127
Amounts written off 
As at 1 January 2006 and 31 December 2006       (11,042)
Net book value as at 31 December 2006       11,085
Net book value as at 31 December 2005       11,297
The adjustment to costs of investments arises as a result of a reduction in the original assessment of the fair value of the contingent consideration 
payable (note 17).
     % holding 
  Number, class and  Country of (all classes 
Summary of subsidiary undertaking  nominal value of shares held incorporation of shares)
Subsidiary undertakings held directly:  
CeNeS Drug Delivery Limited   3,666,018 ordinary shares of £0.10 each  Scotland 100%
CeNeS Limited  2,220,301 ordinary shares of £1.00 each England 100%
CeNeS Pharmaceuticals Inc.   18,149,889 common stock of $0.001 each USA 100%
CeNeS (Bermuda) Limited  6,000,000 common stock of $1.00 each Bermuda 100% 
  6,000,000 preference stock of $1.00 each  
Cambridge Cognition Guarantee Limited  CeNeS is the sole member England 100%
TheraSci Limited  300 ordinary shares of £1.00 each England 100% 
  3,110 ordinary A shares of £1.00 each  
The principal activity of CeNeS Limited is the development of pharmaceutical products for the treatment of pain and disorders of the central nervous 
system. The activities of CeNeS Drug Delivery Limited and TheraSci Limited have been discontinued. Cambridge Cognition Guarantee Limited, 
CeNeS Pharmaceuticals Inc. and CeNeS (Bermuda) Limited are dormant companies.
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
14. DEBTORS
 Group  Company
    2006 2005 2006 2005 
Debtors: amounts falling due within one year    £’000 £’000 £’000 £’000 
Trade debtors    — 6 —  —
Other debtors    246 267 35  8 
Corporation tax recoverable    650 900 —  — 
Prepayments and accrued income    120 214 16  3 
    1,016 1,387 51  11 
Debtors: amounts falling due after more than one year
Loan note – Xention Limited    148 148 —  — 
    1,164 1,535 51 11
The loan note was issued by Xention Limited to CeNeS Limited in 2002 as part of its consideration for the acquisition of the Channelwork division 
from CeNeS Limited. The loan note was valued at £375,000 and is receivable on 31 December 2009.
The fair value assigned to the loan notes is £148,000 to reﬂect the risk that the full value of the loan note may not be recoverable.
15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
 Group  Company
    2006 2005 2006 2005 
    £’000 £’000 £’000 £’000 
Trade creditors    1,541 859 70 43
Other taxation and social security    45 45  —  —
Other loans    — 7  —   — 
Other creditors    3 18  —   — 
Accruals    1,404 542 286 135
    2,993 1,471 356 178
16. PROVISIONS FOR LIABILITIES AND DEFERRED TAX
Deferred tax assets have not been recognised as the Directors consider that this would be inappropriate as the Group is not expected to realise 
sufﬁcient proﬁts in the foreseeable future. This will be reassessed at such time as the Group makes a proﬁt. The amount unrecognised of the total 
potential asset is as follows:
 2006  2005
    Amount  Amount  Amount  Amount  
    recognised  unrecognised  recognised unrecognised  
Group    £’000 £’000  £’000 £’000
Tax effect of timing differences:    
– excess of capital allowances over depreciation    — (134)  — (130)
– short term timing differences    — (90)  —  (2)
– tax effect of losses carried forward    — (16,045)  —  (14,216)
– other provisions    — (13)  —  (14)
    — (16,282)  —  (14,362)
 2006  2005
    Amount  Amount  Amount  Amount  
    recognised  unrecognised  recognised unrecognised  
Company    £’000 £’000  £’000 £’000
Tax effect of timing differences:    
– short term timing differences    — (90)  — (2)
– tax effect of losses carried forward    — (1,983)  —  (1,924)
    — (2,073)  —  (1,926)
NOTES TO THE FINANCIAL STATEMENTS
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
16. PROVISIONS FOR LIABILITIES AND CHARGES CONTINUED
       Lease 
       provision  
       £’000 
At 1 January 2006 as previously reported       1,009
Utilised in year       (354)
Amortisation of discount       32
Additions to provision       272
At 31 December 2006       959
The Group has reviewed and recalculated the onerous lease provision of £1.0 million (31 December 2005: £1.0 million) which reﬂects the expected 
liability relating to the leases of premises in Scotland that are no longer required by the Group. A discount rate of 10% (pre tax) has been used. 
The provision has increased based on the Directors’ current prudent expectations for the time it will take to sublet the properties.
The maturity of the provision at the year end was as follows:
      Group
      2006 2005 
      £’000 £’000
Amounts falling due:       
– within one year      321 525
– after more than one year      638 484
      959 1,009
The Company has no provision for liabilities and charges (2005: £nil).
17. CALLED UP SHARE CAPITAL
The share capital of the Company is shown below:
 2006 2006 2005 2005 
 Number £’000 Number £’000
Authorised 
Ordinary shares of 1p each 1,013,289,538 10,133 1,013,289,538 10,133
     Number Issued Share capital 
     of ordinary share capital  to be issued  
     1p shares £’000 £’000
Allotted, issued and fully paid   
At 1 January 2006     409,762,474 4,098 3,899
Issues of new shares – placing (net of issue expenses of £294,000)     74,169,194 741 —
Lapse of share options     — — (212)
At 31 December 2006     483,931,668 4,839 3,687
CeNeS placed an aggregate of 74,169,194 new ordinary shares at 6.5 pence each, to raise £4.8 million (before expenses) on 4 December 2006.
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
17. CALLED UP SHARE CAPITAL CONTINUED
SHARES TO BE ISSUED
Following the reverse takeover of Core Group plc by CeNeS Limited in December 1999 there are 7,506,558 ordinary 1p shares to be issued as 
deferred consideration to holders of options over ordinary shares in CeNeS Limited. These were valued at 45p per share at the date of the reverse 
takeover of Core Group plc by CeNeS Limited giving a value of £3,003,000 after deducting £369,000 receivable by CeNeS on exercise of the 
options. During the year options over 527,228 ordinary 1p shares with a value of £212,000 lapsed.
There are also 868,463 (2005: 868,463) ordinary 1p shares to be issued as deferred consideration to holders of options over shares  
in Cambridge NeuroScience Inc. These were valued at approximately 66p per share at the date of the takeover of Cambridge NeuroScience Inc.  
in December 2000 giving them a value of £390,000 after deducting £185,000 receivable by CeNeS on exercise of the options.
On 21 November 2003, the Company acquired the entire share capital of TheraSci Limited (“TheraSci”). A further allotment of 3,622,558 ordinary 
1p shares, valued at £294,000, is due to GlaxoSmithKline plc subject to the achievement of a project milestone.
SHARE OPTIONS
  As at    
Schedule of options outstanding as at 31 December 2006 Note 31 December 2006 Exercise price Date of grant
Approved share option scheme 1 400 £0.52 09.11.1998
Unapproved share option scheme 1 103,658 £0.82 11.05.2000
Approved share option scheme 1 15,243 £0.82 11.05.2000
Approved share option scheme 1 9,422 £0.82 26.09.2000
Unapproved share option scheme 1 24,540 £0.82 03.10.2000
Unapproved share option scheme 1 375,000 £0.54 18.12.2000
Unapproved share option scheme 1 2,198,125 £0.08 01.01.2002
Approved share option scheme 1 569,750 £0.08 01.01.2002
Unapproved share option scheme 1 3,360,000 £0.04 01.08.2003
Unapproved share option scheme 1 1,000,000 £0.07 21.11.2003
Unapproved share option scheme 1 5,870,000 £0.10 20.04.2004
Unapproved share option scheme 1 5,840,470 £0.08 22.12.2004
Unapproved share option scheme 1 300,000 £0.09 05.05.2005
Unapproved share option scheme 1 750,000 £0.08 01.11.2005
Unapproved share option scheme 1 100,000 £0.07 30.11.2005
Unapproved share option scheme 1 10,090,000 £0.07 02.02.2006
Executive Share Option Plan 2 126,923 £1 in aggregate 30.06.2000
Executive Share Option Plan 2 100,961 £1 in aggregate 03.07.2000
Executive Share Option Plan 2 2,104,688 £1 in aggregate 31.12.2001
Executive Share Option Plan 2 2,946,875 £1 in aggregate 01.08.2003
Executive Share Option Plan 2 2,300,000 £1 in aggregate 20.04.2004
Notes
(1)  Subject to the satisfaction of any applicable condition of exercise, options may be exercised in whole or in part at any time and from time to 
time after the earliest of the third anniversary of grant, the death of the option holder, or the option holder ceasing to be a Director or employee 
of the Company by reason of injury, disability or redundancy, or retirement, or at the discretion of the Remuneration Committee, for any reason. 
No options were exercised (2005: nil) and 727,490 (2005: 120,951) options lapsed during the year.
(2)  The CeNeS Incentive Plan (the “Plan”) provides for the grant of rights to acquire shares by way of purchase to eligible employees of CeNeS. 
Under the Plan options are granted at an aggregate exercise price of £1 and will normally only vest after the third anniversary of the date of 
grant and if the Company’s share price has exceeded the growth in TSR for the FTSE A All Share 900 Companies over that period. Further 
information about the performance targets is shown in the Remuneration Report on page 32.
NOTES TO THE FINANCIAL STATEMENTS
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
18. SHARE-BASED PAYMENTS
All employees of the Group are awarded share options. Recently option grants to UK employees have been made under the CeNeS Unapproved 
Share Option Scheme share option scheme (“Unapproved”). Previously, options have also been granted under the CeNeS Approved Share Option 
Scheme and the Executive Share Option Plan (“ESOP”). Options granted under the Unapproved scheme have a ﬁxed exercise price based on the 
market price at the date of grant. The contractual life of the options is seven years. Options cannot normally be exercised before the third anniversary 
of the date of grant. For options granted to all Directors and employees, the options are exercisable only if at the time of exercise, a performance 
condition has been met. The performance conditions for each scheme are set out in the Remuneration Report on page 32. 
Options were valued using the Black-Scholes option pricing model. The Group has taken the exemption provided in FRS 20 which allows the 
charge for share-based payment to be calculated only in respect of options granted to employees after 7 November 2002 which had not vested 
by 1 January 2006. 
The fair value per award granted and the assumptions used in the calculations are as follows:
       Discount   
    Exercise Share price at factor for   
   Number of price grant date  performance Fair value 
Date of grant  Option scheme awards (p) (p) conditions per option
01.08.03  Unapproved 3,840,000 4.0 4.0 30% £0.009
21.11.03  Unapproved 1,000,000 7.12 7.12 30% £0.016
20.04.04  Unapproved 6,000,000 10.38 10.38 30% £0.023
22.12.04  Unapproved 6,067,250 7.75 7.75 30% £0.017
05.05.05  Unapproved 300,000 9.0 9.0 30% £0.020
01.11.05  Unapproved 750,000 7.75 7.75 30% £0.017
30.11.05  Unapproved 100,000 6.88 6.88 30% £0.015
02.02.06  Unapproved 3,000,000 7.0 7.0 30% £0.015
02.02.06  Unapproved 7,090,000 6.88 7.0 30% £0.015
01.08.03  ESOP 2,946,875 £1 in aggregate 4.0 50% £0.013
20.04.04  ESOP 2,300,000 £1 in aggregate 10.38 50% £0.035
The key assumptions used are as follows:
(1) The expected future volatility is calculated at 60%. This is based on historical volatility for the period since January 2000.
(2)  The risk-free rate of return of 4.83% is the yield on zero-coupon UK government bonds of a term consistent with the expected option life.
The expected dividend yield is nil.
(3) The charge is spread over the expected vesting period.
(4)  Discount factors of 30% for the Unapproved scheme and 50% for the ESOP have been applied to take account of the performance conditions 
which must be met before the options can be exercised. 
(5) The expected life of options has been estimated at ﬁve years after the grant date. 
A reconciliation of movements in all options over the year to 31 December 2006 is shown below:
 2006  2005
     Weighted   Weighted  
    Number average  Number average  
    ‘000 exercise price ‘000 exercise price
Outstanding at 1 January    28,860 6.9p 28,043 7.0p
Granted    10,090 6.9p 1,150 8.0p
Forfeited    (764) 8.0p (333) 24.3p
Exercised    — — — —
Outstanding at 31 December    38,186 6.8p 28,860 6.9p
Exercisable at 31 December    6,307 4.0p — —
The total charge for the year relating to employee share-based payment plans was £167,000 (2005: £132,000) all of which related to equity-settled 
share-based payment transactions. The fair value of options granted during the year was £138,000 (2005: £20,000).
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
19. RESERVES
     Capital   Profit 
    Other  redemption  Share  and loss  
    reserves reserve  premium  account  
The Group    £’000 £’000 £’000 £’000
As at 1 January 2006    10,396 15,697 113,080 (133,102)
Issue of new shares:
– placing (net of issue expenses of £294,000)    — — 3,786 —
FRS 20 share option charge    — — — 167
Loss for the year to 31 December 2006    — — — (9,668)
As at 31 December 2006    10,396 15,697 116,866 (142,603)
Included in other reserves as at 31 December 2005 is a merger reserve of £10,370,000 and a share option reserve of £26,000.
     Capital   Profit 
    Other  redemption  Share  and loss  
    reserves reserve  premium  account  
The Company    £’000 £’000 £’000 £’000
As at 1 January 2006    26 15,697 113,080 (125,656)
Issue of new shares:
– placing (net of issue expenses of £294,000)    — — 3,786 —
FRS 20 share option charge    — — — 167
Loss for the year to 31 December 2006    — — — (4,829)
As at 31 December 2006    26 15,697 116,866 (130,318)
Other reserves comprise a share option reserve.
20. RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS’ FUNDS
 Group
       2005 
      2006 (Restated) 
      £’000 £’000
Loss for the financial year      (9,668) (6,739)
Movement in share capital to be issued      (212)  (36)
Issue of shares (net of issue expenses of £294,000)      4,527 — 
FRS 20 share option charge      167  132 
Net decrease in shareholders’ funds for the year      (5,186) (6,643)
Opening shareholders’ funds      14,068 20,711
Closing shareholders’ funds      8,882 14,068
21. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
       2005 
      2006 (Restated) 
      £’000 £’000
Operating loss      (10,750) (7,899)
Depreciation      11 9
FRS 20 share option charge      167 132
Amortisation of intangible fixed assets      953 953
Decrease/(increase) in debtors      121 (11)
Increase/(decrease) in creditors and provisions      1,479 (39)
Net cash outflow from operating activities       (8,019) (6,855)
22. ANALYSIS AND RECONCILIATION OF NET FUNDS
     1 January Cash 31 December  
     2006  flow 2006 
     £’000 £’000 £’000
Cash in hand and at bank     8,464 (2,168) 6,296
Debt due within one year     (7) 7 —
     8,457 (2,161) 6,296
NOTES TO THE FINANCIAL STATEMENTS
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
23. CONTINGENT LIABILITIES AND GUARANTEES
The Company has a guarantee in relation to the lease arrangements for 3 Riverside Way, Irvine, entered into by CeNeS Drug Delivery Limited. 
The lease has a 25 year term, commencing 12 February 1998, with a break point at year 20. The annual amount payable is £168,000. As a result 
of the restructuring, this property is no longer required and the Company is actively seeking to sublet the property.
In September 1999, Core Technologies Limited concluded an agreement to take a lease of new, additional premises adjacent to the main site 
at Riverside Way, Irvine. The lease term is for ten years and the annual rental is £186,500. The Company sublet the building until March 2006 
and is currently seeking new tenants.
The Company has reviewed and recalculated the onerous lease provision of £1.0 million (31 December 2005: £1.0 million) which reﬂects 
the expected liability relating to the leases of premises in Scotland that are no longer required by the Group. Of this provision, £0.7 million 
(2005: £0.5 million) is due after more than one year and £0.3 million (2005: £0.5 million) is due within one year. 
The Company has entered into cross guarantees within the Group as part of its banking arrangements. 
24. PENSION COMMITMENTS
CeNeS has a stakeholder pension scheme which is available to all UK based employees. The pension charge for the year was £100,000 
(2005: £95,000). At 31 December 2006, contributions totalling £45,000 (2005: £46,000) were payable to these pension arrangements.
25. OPERATING LEASE COMMITMENTS
Annual obligations under non-cancellable operating leases are as follows:
    Land and  Land and  
    buildings Other  buildings  Other  
     2006 2006 2005 2005 
Expiry date    £’000 £’000 £’000 £’000
Within one year    — — 96 1
Within two to five years    274 17 — 17
After five years    168 — 354 —
    442 17 450 18
26. RELATED PARTY TRANSACTIONS
The following fees and expenses were incurred during the period from the associated companies of the Non-executive Directors of the Group 
(see Remuneration Report) as follows:
      Group  Group 
      2006 2005 
      £’000 £’000
Irwin Associates International (Mr T R Irwin)      31 29
Johnson Partners (Dr P Johnson)      31 29
The balances due at the year end and included in creditors and accruals were as follows:
      Group  Group 
      2006 2005 
      £’000 £’000
Irwin Associates International (Mr T R Irwin)      8  16
Mr Alan Goodman, the Chairman of CeNeS, and Mr Alan Smith, a Non-executive Director of CeNeS are also Directors of Avlar Bioventures Limited. 
One of the funds managed by Avlar Bioventures Limited holds 26,807,760 CeNeS ordinary shares after the acquisition of TheraSci Limited in 
November 2003. The acquisition was treated as a related party transaction (as deﬁned in the AIM rules). 
The Company has taken advantage of the exemption available to parent companies under FRS 8 “Related party disclosures” not to disclose 
transactions and balances with Group entities which have been eliminated on consolidation.
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CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 2006
27. FINANCIAL INSTRUMENTS
The Group’s ﬁnancial instruments comprise cash and liquid resources and various items arising directly from its operations such as trade debtors 
and trade creditors. The Group undertakes certain foreign currency transactions in the course of its operations, predominantly in euros and 
US dollars. The Group seeks to use forward exchange contracts to minimise the currency risk on foreign currency translations.
It is, and has been throughout the year, the Group’s policy that no trading in ﬁnancial instruments shall be undertaken, other than placing funds 
on treasury deposit.
The main risks arising from the Group’s ﬁnancial instruments are interest rate risk, foreign currency risk and liquidity risk. The Board and the 
Audit Committee review and agree policies for managing each of these risks and they are summarised below.
Short term debtors and creditors have been excluded from all the following disclosures, other than currency risk disclosures.
INTEREST RATE PROFILE
The Group has no short term deposits at the year end (2005: £nil). 
Interest rate proﬁle of the Group’s ﬁnancial liabilities, which all have ﬁxed interest rates, was as follows:
      31 December  31 December  
      2006 2005 
      £’000 £’000
Sterling:       
– borrowings      — 7
The weighted average interest rate is nil% (2005: 5.0%).
INTEREST RATE PROFILE OF THE GROUP’S FINANCIAL ASSETS
During the year cash and short term treasury deposits were the only ﬁnancial asset within the Group. Cash was subject to ﬂoating rates of interest 
equal to 1% below base rate and the short term deposits were placed for periods of less than three months at ﬁxed rates of interest between 5.0% 
and 5.2% (2005: between 4.6% and 4.84%). 
CURRENCY RISK
At the end of the year the Group’s individual operations had no (2005: £nil) net monetary assets, but monetary liabilities in currencies other than 
their functional currency.
LIQUIDITY RISK
The Board closely monitors the liquidity of the Group through regular review of ﬁnancial information and takes appropriate action to reduce liquidity 
risk in terms of meeting working capital requirements.
FAIR VALUES
There is no difference between the fair value and the carrying value of bank and cash balances (2005: £nil). Carrying values approximate to fair 
values because of the short maturity periods of these ﬁnancial instruments.
During the year the Group entered into forward exchange contracts for foreign currencies. The fair value of the forward exchange contracts is not 
material and therefore has not been recorded in the ﬁnancial year.
The carrying value of the Xention Limited loan note of £148,000 is considered to approximate fair value. The carrying value of this asset has 
previously been written down to reﬂect the risk that the full face value of the loan note may not be recovered.
28. CAPITAL COMMITMENTS
As at 31 December 2006 capital amounts contracted for, but not provided in the ﬁnancial statements, amounted to £nil (2005: £nil). 
29. POST BALANCE SHEET EVENTS
Following the year end, the UK Government announced a phased increase in small companies’ Corporation Tax rate from 19% to 22% with effect 
from 1 April 2009. This is not material to the ﬁnancial statements as deferred tax assets are not recognised.
NOTES TO THE FINANCIAL STATEMENTS
_1_CEN_ar06_back.indd   25 29/06/2007   10:16:57 CeNeS Pharmaceuticals plc (LSE: CEN) identiﬁes and 
develops novel drugs that are designed to improve patient 
outcomes in the therapeutic areas of pain, anaesthesia and 
neurology. Each CeNeS programme addresses a clinically 
validated target, has a well understood clinical development 
pathway and offers an attractive market opportunity.
CeNeS aims to build a profitable, European, specialty 
pharmaceutical company by developing, partnering and 
marketing a portfolio of new pharmaceutical products 
which offer significant improvements over the existing 
‘gold standard’ treatments.
CeNeS has considerable experience in developing 
Central Nervous System (“CNS”) and pain products 
up to clinical proof of concept and beyond.
CORPORATE STATEMENT
 01 HIGHLIGHTS
 02 AT A GLANCE
 04 CHAIRMAN’S STATEMENT 
 08 CHIEF EXECUTIVE’S REVIEW 
 19 FINANCIAL REVIEW  
 21 BOARD OF DIRECTORS 
 22 SENIOR MANAGEMENT
 23 SCIENTIFIC ADVISORY BOARD
 24 DIRECTORS’ REPORT 
 27 CORPORATE GOVERNANCE 
 30 REMUNERATION REPORT 
 33 INDEPENDENT AUDITORS’ REPORT 
 34 CONSOLIDATED PROFIT AND LOSS ACCOUNT
 34 CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
 35 CONSOLIDATED AND COMPANY BALANCE SHEETS 
 36 CONSOLIDATED CASH FLOW STATEMENT
 36 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
 37 NOTES TO THE FINANCIAL STATEMENTS
 IBC DIRECTORS, ADVISORS AND CONTACTS
ALAN GOODMAN
CHAIRMAN
NEIL CLARK
CHIEF EXECUTIVE
RONALD IRWIN
NON-EXECUTIVE DIRECTOR
DR PETER JOHNSON
NON-EXECUTIVE DIRECTOR
ALAN SMITH
NON-EXECUTIVE DIRECTOR
COMPANY SECRETARY
TONY OSBORNE
REGISTERED OFFICE 
Riverside Way  
Riverside Business Park  
Irvine  
KA11 5DJ  
Scotland
REGISTERED NUMBER
SC 166791
WEBSITE
WWW.CENES.COM 
STOCK EXCHANGE CODE
CEN.L
REGISTRARS
LLOYDS TSB 
The Causeway 
Worthing 
West Sussex 
BN99 6DA 
England
SHAREHOLDER HELPLINE: 
Tel: +44 (0) 870 601 5366
BROKER HELPLINE: 
Tel: +44 (0) 891 105 366
NOMINATED ADVISOR (NOMAD)  
AND FINANCIAL ADVISOR 
J.M. FINN & CO.
4 Coleman Street 
London  
EC2R 5TA 
England 
Tel: +44(0) 207 600 1660 
AUDITORS
PRICEWATERHOUSECOOPERS LLP
Abacus House 
Castle Park 
Cambridge 
CB3 0AN 
England
LAWYERS
MORRISON & FOERSTER
One Ropemaker Street 
London  
EC2Y 9AW  
England
PUBLIC RELATIONS
FINANCIAL DYNAMICS LTD
Holborn Gate 
26 Southampton Buildings 
London 
WC2A 1PB 
England
Tel: +44 (0) 20 7831 3113 
DIRECTORS, ADVISERS AND CONTACTS
_cover.indd   2 29/06/2007   10:16:36 CENES PHARMACEUTICALS PLC 
ANNUAL REPORT AND ACCOUNTS 
2006
CENES PHARMACEUTICALS PLC  
Compass House  
Vision Park  
Chivers Way  
Histon, Cambridge CB24 9ZR  
Tel: 01223 266466  
Fax: 01223 266467  
Website: www.cenes.com  
CENES PHARMACEUTICALS PLC ANNUAL REPORT AND ACCOUNTS 
_cover.indd   1 29/06/2007   10:16:36