Phynova Group plc (AIM: PYN), the developer of prescription pharmaceuticals derived from Chinese botanical medicines, announces significant progress with its portfolio of products in development.

Pipeline highlights:

PYN17 for treating the symptoms of chronic hepatitis C on track for start of Phase II clinical trial in April 2007

PYN18, an antiviral for treating hepatitis C, shows activity against dengue virus, a new indication

PYN22, a candidate treatment for obesity and fatty liver, successfully reduces body fat in preclinical studies

Phynova will present further supplementary data at the "BioTrinity" company showcase and partnering conference in Oxford on 28 March 2007.

Robert Miller, Chief Executive of Phynova, commented: "Traditional Chinese medicine contains a wealth of candidate compounds with demonstrated efficacy and safety. We select specific plant-derived drug candidates in China and prove their value in rigorous Western preclinical and clinical models. I am delighted that our lead product, PYN17 for chronic hepatitis C, is progressing on schedule for a Phase II trial to start next month. Encouraging progress elsewhere in Phynova??s pipeline validates our business strategy and makes us confident that our approach will generate a strong product portfolio.

"We are also encouraged by the fact that Phynova??s growing market presence, including the relationship with Botanic Century in Beijing, is resulting in an increased inflow of commercially attractive new drug development opportunities."

Chronic Hepatitis C treatment on track to start Phase II clinical trial in April 2007
Phynova??s PYN17 is a treatment for the symptoms of chronic Hepatitis C, a viral liver disease. Hepatitis C is endemic in many parts of Asia and is now becoming a serious threat in the Western word, with over 4 million cases in the USA. In January 2007, the FDA approved Phynova??s PYN17 Investigational New Drug (IND) application and Phynova has recently held a successful Investigator Meeting in the US with participating physicians, heralding the start of the Phase II clinical trial. This trial will begin in April 2007 in five centres in the US. An interim analysis is expected around the end of the year.

Hepatitis C antiviral also active against dengue virus
Phynova??s PYN18 is an antiviral in development for the treatment of Hepatitis C virus (HCV). Current treatments for HCV are only partially effective and have significant associated toxicity. PYN18 is a novel antiviral medicine that Phynova expects to have a better benefit to risk ratio than existing treatments. In addition, as strategies for treating HCV treatments increasingly involve combinations of drugs, Phynova believes that PYN18 will be used alongside existing treatments to enhance their effectiveness.

Phynova has recently demonstrated that PYN18 is also active against dengue virus, the causative agent of Dengue Haemorrhagic Fever ("DHF"), a common and serious tropical disease that is endemic in much of Asia. Preclinical studies were carried out with Phynova??s collaborators at the Sirriraj Hospital in Bangkok, Thailand. The results indicate that PYN18 has a broader spectrum of antiviral activity than previously believed. This provides a clear commercial opportunity for PYN18 in the potential treatment of DHF. Phynova will pursue the DHF indication along with its work on HCV and other potential RNA virus targets.

Lipid lowering compound successfully reduces body fat in preclinical models
Phynova??s PYN22 is a lipid lowering compound in-licensed from China. Preliminary in vitro and in vivo experiments indicate that PYN22 reduces both blood lipids and percentage body fat. Data generated by Phynova??s Chinese collaborators have been confirmed and extended by a group in the UK. They have shown that PYN22 reduces both insulin resistance and blood glucose levels in a similar manner to that seen with the oral antidiabetic rosiglitazone (GlaxoSmithKline??s Avandia), one of the current standard treatments for Type II diabetes, often associated with fatty liver disease. Data on blood lipids and liver fat in a specific in vivo model are pending. Phynova expects to commence clinical testing of PYN22 during 2007.

Obesity is associated with a number of metabolic disorders, including type II diabetes and fatty liver disease. Obesity is a huge and rapidly growing problem worldwide, with the fastest increase in Asia as populations already predisposed to Type II diabetes adopt a Western diet and life style. There are few effective treatments for obesity or for fatty liver disease.

For further information, please contact:
Phynova Group PLC 07775 920 963
Robert Miller, Chief Executive Officer

Abchurch Communications 020 7398 7700
Peter Laing/Martin Sutton/Stephanie Cuthbert

Nominated Adviser:
Nabarro Wells & Co. Limited 020 7710 7400
Marc Cramsie/John Wilkes

Broker:
J M Finn & Co. Limited
Sam Smith 020 7628 9688