York Pharma (AIM:YRK) Preliminary Results for the Year Ended 30 September 2006

Hitchin, UK, 24 November 2006 - York Pharma plc, the AIM-listed (AIM:YRK) strategic acquirer, developer and marketer of pharmaceutical products in the field of dermatology, is pleased to announce its preliminary results for the year ended 30 September 2006.

Over the period, York has made significant progress towards its aim of becoming a leading international company focusing on the development and commercialisation of novel prescription products for dermatological use. This strategy remains firmly on track and the Company is now poised to achieve major scientific and commercial milestones.

Financial Highlights

• Pre and post tax loss of £5,884,490 in-line with management expectations

• Cash of £2,939,056 at the end of the period

• A further £3,000,000 of new equity was raised shortly after the period end via an institutional placing

Product Highlights

• Response received from the UK regulator (MHRA) for a Marketing Authorisation for its lead product Abasol™

• In the light of the MHRA response, the Company is preparing for the commercialisation of Abasol™ in the UK in H1 2007

• Sabarep™ (YP001) entered controlled trials in human subjects in a model of eczema

• Vampex™ (YP003) completed successfully a Phase IIa clinical trial in psoriasis

• Clinical development programmes for Vampex™ & Sabarep™ discussed with the regulator

• €1,000,000 competitive research grant awarded to support the development of S1P (YP005)

• Confirmed malignant melanoma as the disease target for YP004, York Pharma’s skin cancer programme

• Other product programmes remain ‘on-track’

Operating Highlights

• Portfolio now covers over 75% of the target dermatology market by value

• Intellectual property portfolio strengthened and extended

• Board strengthened with additional non-executive director

• Company poised to achieve major scientific and commercial milestones

Terry Sadler, York Pharma’s CEO said: ‘This has been a year in which York has made major advances in all areas of our business; scientifically, commercially and structurally. The response from the UK regulator to our application for a Marketing Authorisation for our lead product was a major milestone and has given us the confidence to begin planning for the first international launch of Abasol™ in the first half of 2007. Two other products, Sabarep™ and Vampex™, have successfully entered clinical development and show great promise as new and novel treatments for eczema and psoriasis respectively, whilst our pre-clinical programme is also advancing strongly.

Our prospects for the coming months look extremely strong, with the aforementioned launch of Abasol™ and with other programmes moving through clinical development. We believe our pipeline is among the strongest and most attractive in our sector. This together with our sound financial position enables us to take a considered approach to selecting our first international partner for products within our portfolio; an event which, when concluded, will significantly strengthen our finances and give further impetus to our development programme.

We look forward to 2007 as a year in which our shareholders should begin to reap the rewards of their confidence in our business as we generate revenues from both product sales and partnerships and create substantial added value for them’.

Chairman's statement

York Pharma is a pharmaceutical company specialising in the acquisition, development and commercialisation of new prescription dermatological products. Our goal is to provide patients and their carers with top quality, cost-effective and safe medicines for the best possible treatment of skin disease.

In 2006 we made further steady progress towards achieving our key objectives. Our lead product, Abasol™, has advanced through several stages of its regulatory approval and is now on course to be commercialised in the UK in the first half of next year. Two of our other products have advanced into Phase II clinical development. Progress with the rest of our portfolio remains both firmly within budget and in line with our original timescale.

Terry Sadler, our Chief Executive, has once again prepared a very detailed product and market report that accompanies this statement.

For the year ended 30 September 2006, York Pharma reported a loss of £5,884,490 and will not be paying a dividend. This result is broadly in line with expectations and reflects our ongoing investment in the creation of a product portfolio that will allow us to achieve our key strategic corporate objectives.

Insofar as the loss is actually less than we projected at the commencement of the financial year, it is the result of the Board’s careful management of the Group’s expenditure and cash resources. Throughout the year York Pharma has been in a cash positive position. Our ability to complete the first phase of our product commercialisation has now been strengthened further by a recent placing of new shares to raise £3 million, before expenses. Since this took place after our year-end, these new funds are not reflected in the September 2006 balance sheet.

As the Group moves towards commercialisation we have taken appropriate steps to strengthen the management team. I am delighted that Ian Harvey has become our full time Finance Director. Ian has been with us on a part time basis since the flotation in April 2004, and his full time commitment to our business is a major vote of confidence in our future. I am also pleased to welcome Dr Allan Salem to the Board as a non-executive Director. Allan has a long and distinguished career in microbiology and in the pharmaceutical industry and his contribution is already greatly valued.

The team have worked exceptionally hard in the last year and I am sure shareholders will once again join me in expressing our gratitude for their efforts. It is thanks to them that the business is now well placed to move to its next phase of development that should, over time, yield real financial returns for all its stakeholders. I am confident that 2007 will be a year of significant progress for all involved in the Company.

Max Dyer Bartlett

Chairman

Chief Executive's review

Summary

Sustained progress has been made in all areas of the business in the current financial year.

The eagerly awaited response to our first regulatory application for a marketing authorisation for our lead product Abasol™ was received and we are now preparing our response to the regulator whilst actively working towards its commercialisation in H1 2007.

Two of our products continue their path through Phase II clinical development and have given rise to a strengthening of our intellectual property portfolio. All other programmes are ‘on-track’ and in line with budgets.

Research funding of €1,000,000 for the pre-clinical phase of development of YP005 was awarded to York Pharma GmbH by the Federal Ministry for Education and Research in Germany under its Nanotechnologies for Life Science and Health programme.

During the period, the business has continued to deliver on its targets, has maintained a positive cash position and major value creating milestones have continued to be generated.

Corporate Objectives

York Pharma is a speciality pharmaceutical company. Our stated objective is the acquisition, development and commercialisation of novel prescription dermatological products.

We are committed to bringing to both patients and healthcare professionals, effective and safe medicines of the highest quality for the superior treatment of diseases of the skin.

Financial Information

The results for the twelve months ended 30 September 2006 are in line with management expectations and show a pre-tax loss of £5,884,490 (2005 – loss of £2,690,011). This reflects the Company’s investment in the development of our portfolio of products, in implementing our regulatory strategy and in planning for the first commercialisation of Abasol™ in the United Kingdom, other key markets in the European Union, the USA and Japan.

Business Review

Our pipeline currently comprises seven products/projects. Products span pre-clinical to pre-registration status, and cover many of the key therapeutic areas within prescription dermatology.

• Abasol™(dermatomycoses) In first registration in the UK

• Sabarep™ (YP001) (anti-eczema) In controlled human studies

• YP002 (skin diagnostic) In laboratory development

• Vampex™ (YP003) (antipsoriatic) Completed Phase IIa clinical study

• YP004 (skin cancer) Pre-clinical

• YP005 (anti-acne) Pre-clinical

• YP006 (onychomycoses) New development

In addition to the antifungal market in which our lead product Abasol™ will operate, the company has innovative dermatology products in development for the treatment of atopic eczema/irritant dermatitis, psoriasis and acne.

Combined, these four therapeutic markets make up over 75% of the total prescription dermatology market, valued at over US$10 billion. We have a robust and strategically focused dermatology product portfolio consisting of innovative products, that are well advanced, are relatively low-risk and that address significant unmet market needs.

The conduct of clinical trials and the risk factors associated with developing medicines applied to the skin, whilst still facing rigorous development hurdles, pose generally fewer risks than the development of systemic medicines which pass through most of the body’s major organs in significant quantities via the circulatory system.

Intellectual Property

The 13 patent families which protect York Pharma’s current R&D projects are owned and controlled wholly by the Company. Additional IP has been generated in the period to extend further York Pharma’s leadership position in the field of skin protease inhibition for treating eczema/dermatitis and VAMP Inhibition for managing a wide range of skin diseases.

Trademarks are also under our own ownership; in particular the Abasol™ mark is being registered in all territories where commercialisation is anticipated; the Sabarep™ mark has been applied for internationally as the product is now progressing through studies of phase II design en-route to commercialisation. Similarly, the Vampex™ mark will be used, now that YP003 has successfully completed its initial Phase IIa clinical study and is progressing towards the market.

Current Operations

York Pharma plc, currently has four operational subsidiaries, York Pharma (R&D) Limited, York Pharma (UK) Limited, York Pharma GmbH and York Pharma KK.

Products/Projects

Abasol™

Our lead product, Abasol™ (abafungin), as an arylguanidine, is the first in a new class of antifungal agents. It is also a totally new therapeutic molecule having a novel mode of action that offers features and benefits which will give it a meaningful competitive advantage in the important topical antifungal market.

The antifungal market in which Abasol™ will compete is valued at approximately $2.65 billion or approximately 25% of the overall dermatology market therefore illustrating the strategic importance of the product to the company.

The initial indication for Abasol™ is for the treatment of dermatomycoses (fungal infections of the skin) and, subsequently, we hope to expand the indications to include fungal infections of the nails. The potential for further indications is being evaluated and may include seborrhoeic dermatitis, tinea capitis, vaginal candidiasis, vulvovaginitis (especially where bacteria are also implicated), dermatitis associated with various skin bacteria and possibly some forms of acne.

During the period the Company received its first response from the UK regulator (MHRA) to its application for a marketing authorisation for Abasol™. The response was in the form of a request for further information, to which the Company is in a position to respond, using either data already in its possession or which will be available shortly.

Our first regulatory approval is now within our sights and the first commercialisation in Europe is now planned for H1 2007. Manufacturing scale up for commercialisation of the product has been completed and York Pharma is now planning for and proceeding toward securing marketing authorisations in other key European markets, the USA and Japan.

Sabarep™ (YP001)

The first therapeutic product to emerge from York Pharma’s Skin Barrier Repair Technology platform is Sabarep™ (YP001), a product for the treatment of atopic eczema (synonym dermatitis), a disease characterised by intense itching, scratching, redness and dryness of the skin. Atopic eczema affects 15 to 25% of children and 2% of adults and causes an enormous amount of suffering at a crucial time in a child’s development.

A published medical review has revealed that approximately 66% of children with clinically defined atopic dermatitis and who consult their primary care physician are not immunologically atopic. This strongly supports York Pharma’s earlier discoveries surrounding skin barrier dysfunction and its role in the development of atopic eczema. Changes in genes that regulate the thickness and function of the skin barrier have been identified. The physical sites predisposed to atopic eczema are also those that have a relatively thin skin barrier such as the face, inside flexor of the arm, behind the knees and the eyelids thereby supporting further the relevance of the skin barrier function in the disease.

To date, in vitro and in vivo data has confirmed Sabarep™ has substantial anti-protease activity and exerts a significant beneficial effect on minimising water loss from the skin.

Sabarep™ will be marketed as a topical cream and entered controlled human studies in December 2005. In July 2006, the Company announced that, during the course of its clinical development programme for Sabarep™, it had created the opportunity to extend further its intellectual property position in the field of skin protease inhibition. The Company also confirmed that details of clinical progress achieved to date and the proposed route to commercialisation of Sabarep™ would be disclosed following the filing of a new patent and after a meeting with the UK regulator (MHRA), to clarify and agree the requirements for the remainder of its development programme prior to regulatory submission.

YP002

YP002, will be marketed as a point of care (POC) diagnostic test for identifying individuals having a dysfunctional skin barrier that would benefit from using Sabarep™. The product arises from important discoveries made by York Pharma scientists into the genetics of eczema and the resulting abnormal composition of proteins that are associated with the impaired skin barrier. The test will enable those having an impaired skin barrier to take positive therapeutic steps prior to the cascade of events which can result in overt clinical skin disease. Importantly, it will also provide a valuable tool for clinicians and patients to monitor the response to skin barrier therapy such as Sabarep™.

Vampex™ (YP003)

Psoriasis affects approximately 2% of the world’s population and the market for therapeutic products is valued at approximately $630 million; independent analysts have projected it to grow to $2.0 billion by 2008. Approximately 85% of patients have mild to moderate disease that is not appropriate for treatment with the newer biologics due to their profile, associated high cost and administration by injection. York Pharma’s anti-psoriatic product, Vampex™ (YP003), is a small molecule that will be presented in a cosmetically acceptable formulation for the topical management of psoriasis.

With Vampex™, York Pharma scientists have discovered a new therapeutic target and mechanism of action for the treatment of psoriasis. Correspondingly, the company has also discovered a potent inhibitor of the therapeutic target that is an existing medicinal product on which the company has generated new patents covering its use in dermatology which provide the necessary freedom to commercialise exclusively.

Data generated by the company through in vitro and in vivo tests has confirmed the ability of Vampex™ to significantly alter the abnormal hyperproliferation of epidermal cells, characteristic of the disease. By inhibiting a particular biochemical pathway that is over-active in psoriasis, Vampex™ triggers cells that are abnormally proliferating to stop dividing and undergo final differentiation, a principal therapeutic objective in psoriasis.

The present gold standard therapy for mild to moderate psoriasis consists of the vitamin D analogues, such as calcipotriol. Vampex™ has recently completed a Phase lla “proof of concept” clinical trial in psoriatic patients. A comparison was made against placebo and also against calcipotriol, as a positive control.

The study was double-blind and randomised within patients. For each patient, three medications: the test medication, Vampex™ (2% carbenoxolone gel), placebo and 0.05% calcipotriol cream (reference product) were applied to selected psoriasis plaques daily for four weeks. Whilst the carbenoxolone formulation was not optimised, in terms either of dosage form or concentration, this product showed favourable signs of clinical effect. Its activity profile demonstrated clinical activity according to the guideline set by the European Medicines Agency (EMEA), showing an improvement of at least a 50% reduction in redness, scaling and thickness of plaques. Histological examination further supported these positive results. There were no adverse reactions to carbenoxolone.

The profile of Vampex™ and the results from this study give a provisional indication that Vampex™ will be an effective anti-psoriatic agent which is well differentiated versus its competitors by having a lower risk of skin irritancy, a more favourable safety profile and, potentially, efficacy that is not diminished with ongoing administration. During the period, the Company met with the UK Medicines Regulator (MHRA) to confirm its development plans for Vampex™.

YP004

Although YP004 is at a pre-clinical programme stage, it has a major potential in the treatment of melanoma. York Pharma scientists have identified that the relevant drug target is expressed preferentially in melanoma skin cancer cells – thus making it of particular interest for evaluating that condition.

YP004 is aimed at the therapeutic inhibition of a novel receptor characterised by York Pharma that is expressed on the surface of the cell and believed to be over-expressed in a variety of cancers. Inhibition of the receptor has been associated with an important and marked shift from a state of ongoing proliferation to a state of terminal differentiation in the cells targeted by the therapy.

Recent reports predicting a trebling in skin cancer over the next 30 years illustrates the growing problem which YP004 may address. Malignant melanoma is associated with 77% of the mortalities caused by skin cancers and kills 1,700 people annually in the UK; 7,300 new cases are also diagnosed each year for which new therapeutic treatments are needed urgently.

In February 2006, York Pharma reported new data which confirmed malignant melanoma as a target malignancy for York Pharma’s YP004 skin cancer programme. Discovery of a receptor involved in the cellular uptake of retinol (vitamin A) on the surface of cells that provides a novel means of treating cancer has now been validated in two skin malignancies; malignant melanoma and basal cell carcinoma.

The same cell-surface receptor has also been identified in renal cell carcinoma. In view of this observation, York Pharma’s scientific team believes that the eventual novel anti-proliferative agent may have a wider role in the treatment of cancers extending beyond those involving the skin.

The findings present an exciting opportunity for the development of a novel therapeutic treatment of malignant melanoma and potentially other cancers. York Pharma has filed for patent protection internationally in relation to these scientific findings.

This discovery marks an important step along the road to producing a therapeutic agent against a devastating cancer that regrettably is increasing in incidence. York Pharma has developed a unique understanding and patent exclusivity over the novel use of a receptor involved in cellular transport of vitamin A as a treatment for malignant melanoma. Our achievements make the Company ideally placed both to develop and partner our scientific and intellectual property in the field of skin and potentially other cancers.

YP005

Sphingosine-1-phosphate (S1P) is a pre-clinical product which may have potential in hyperproliferative skin disorders such as acne.

S1P has a novel dual mechanism of action which is aimed at preventing the overproduction of corneocytes at the entrance of sebaceous follicle ducts believed to be a primary cause of acne, whilst also having complementary anti-inflammatory properties. The profile of S1P has the potential to become a breakthrough treatment for this commonly occurring skin condition.

On this programme, York Pharma is collaborating with the Freie Universität Berlin, one of the world’s leading teams in dermatological research. In June 2006, the Company announced research funding of €1,000,000 for the pre-clinical phase of development of YP005 had been awarded to York Pharma GmbH by the Federal Ministry for Education and Research in Germany under its Nanotechnologies for Life Science and Health programme.

YP006

YP006 is the development and use of Abasol™ in onychomycoses – fungal infections of the nails and nailbed – a common and chronic condition.

Current locally applied treatments offer only low cure rates and lengthy treatment regimens, whilst oral treatments which offer a higher degree of efficacy give some concerns over toxicity which limit their use in what is a non-life threatening condition.

Abasol™ has the potential to offer a treatment which is both safe and effective, with an important competitive advantage; Abasol™ not only kills fungus when it is in the actively growing phase, it also kills the resting spores, which may become active after an apparent cure has been achieved, once again starting the cycle of recurrent infection.

York is currently evaluating the most appropriate dosage form for delivering Abasol™ into and through the nail. Once the dosage form has been selected and validated, the product will proceed into Phase II human studies.

People

We announced in December 2005 the strengthening of the York Pharma Board with the appointment of an additional Non-Executive Director, Dr Allan Salem.

Dr Salem gained an MA, DPhil in Biochemistry and Microbiology at Wadham College, Oxford. Subsequently, he lectured in microbiology at the University of Sheffield, before embarking on a long and distinguished career in the pharmaceutical industry. Since 2002, Dr Salem has operated as a pharmaceutical industry consultant for a number of international companies.

Dr Salem’s R&D expertise coupled with his International business development skills is already impacting positively on the York Pharma Board’s planning and decision making processes.

The Future



Your Company has made substantial progress over the last twelve months, having advanced all products/projects along the development path and closer to commercialisation; most importantly we have gained clarity on the requirements and timeframe for the first regulatory approval for our lead product Abasol™.

Significant progress of a study programme on Sabarep™ in an eczema model in human subjects under a controlled Phase II study design has been achieved and awaits the filing of a new patent before release of the data. Vampex™ shows great promise as a novel treatment for psoriasis and YP004 could herald a major breakthrough in the treatment of one of the most aggressive skin cancers. YP005 has been the subject of a major grant award and YP006 progresses towards the selection of a final formulation to treat fungal infections of the nails, prior to entering clinical development.

It has taken great effort and dedication from the York Pharma team, our advisers and supporters to make such impressive progress during the past year; we thank them all for their efforts and look forward with great anticipation to the commercialisation of our first product – Abasol™ – in 2007.

Terry I Sadler

Chief Executive Officer

For further information:

York Pharma plc
Tel: +44 (0) 870 067 2563

Terry Sadler, Chief Executive Officer

J M Finn

Sam Smith
Tel: +44 (0) 020 7860 6470

Collins Stewart

Navid Malik
Tel: +44 (0) 020 7523 8000

Northbank Communications
Tel: +44 (0) 203 008 7550

Frances Bornstein (financial enquiries)

Annabel Entress (media enquiries)

Notes to editors:

About York Pharma plc

York Pharma is an AIM-listed strategic acquirer, developer and marketer of pharmaceutical products in the field of dermatology. Its portfolio now targets skin diseases that make up approximately 75% of the global $10.4bn dermatology market. The Company's lead product Abasol, an entirely new drug for the treatment of fungal infections of the skin, is anticipated to be commercialised from H1 07. For further information, please go to www.yorkpharma.com .