RNS Number:0863J
M.L. Laboratories PLC
24 March 2003

Embargoed until 0700

24 March 2003

                          ML Laboratories plc

PROPOSED DISPOSAL OF THE ICODEXTRIN MANUFACTURING BUSINESS OF ML LABORATORIES
                                PLC

The Board of ML Laboratories plc ("ML") is pleased to announce that it has
entered into a conditional agreement with Baxter Healthcare Limited ("Baxter")
to dispose of its Icodextrin manufacturing business located in Liverpool (the 
"Disposal").

The Disposal follows the Board's recent strategic review, which concluded that
ML's manufacturing businesses are non-core, and which resulted in the subsequent
divestment of its DNA manufacturing business that was completed in June 2002.

The total cash consideration for the Disposal is #6.5 million plus the valuation
of stock to be determined at completion of the Disposal ("Completion").

The proceeds of the Disposal, after settlement of finance leases and other
obligations, including the repurchase of the Paul Capital Royalty Acquisition
Fund, L.P. ("PCRAF") entitlements to participate in the net contribution
generated by sales of Icodextrin to Baxter, but before expenses, are expected to
amount to approximately #5.5 million. The net proceeds will be applied towards
satisfying the working capital requirements of ML and its subsidiary
undertakings following Completion (the "Continuing Group").

Icodextrin is a glucose polymer developed by ML and over which it holds
extensive international patents for its use in a number of therapeutic fields.
It is the active ingredient in a number of ML's products, including Adept,
Dexemel and Emmelle.

In 1996 ML and Baxter entered into an agreement whereby Baxter licensed the
exclusive worldwide rights to the use of a solution of Icodextrin in the
treatment of renal disease by peritoneal dialysis. Baxter markets the solution
under the trademark Extraneal which is currently approved for marketing in 34
countries and is used by more than 9,000 patients on a daily basis.

ML has supplied Icodextrin to Baxter from its manufacturing plant since 1996.
In June 1998, ML and Baxter entered into a long-term supply agreement under
which 95% of the production capacity of the plant at the time was contracted to
be sold to Baxter until 2007.  The current capacity of ML's plant is not
sufficient to meet the current total requirement, for Icodextrin and Baxter
sources alternative supply from a contract manufacturer.

Baxter received marketing approval for Extraneal in the USA in December 2002 and
approval in Japan is anticipated by the Board in 2003; consequently Baxter's
requirement for Icodextrin will increase as the product is launched in these
countries. ML does not wish to increase its investment in a non-core
manufacturing asset, which has no alternative use.

Following the Disposal, ML will continue to earn royalty income on sales of
Extraneal under the terms of the existing licence agreement with Baxter.

The turnover and profit before tax attributable to the Icodextrin Manufacturing
Business for the audited financial period ended 30 September 2002 were #2,866k
and #330k respectively and its net assets at that date were #1,561k

In addition to the Disposal, ML will enter into an agreement with Baxter for it
to supply ML, on commercial terms, with Icodextrin for use in non-renal dialysis
applications including those for its Adept, Dexemel and Emmelle products.

The Directors are unable to confirm that the Continuing Group will have
sufficient working capital for its present requirements.

As disclosed in the Chairman's Statement contained in the Preliminary
Announcement on 28 January 2003, the Continuing Group's working capital adequacy
is dependent on the receipt of significant milestone income and the proceeds of
disposal of non-core assets, the timing and amount of which are difficult to
predict. The proceeds of the Disposal represent an important element of the
Continuing Group's projected cash flow and will constitute a significant
contribution to the working capital requirements of the Continuing Group.

The Directors continue to have a reasonable expectation that the Continuing
Group will have sufficient working capital. However, significant milestone
income forecast to arise on the commercialisation of the Continuing Group's
products and, in particular the timing and amount of these milestone receipts,
cannot be guaranteed. This is because the timing of signing of agreements with
third parties, and the obtaining of regulatory approval for products, makes it
difficult to predict, with certainty, whether or not milestones will be achieved
on schedule and, therefore, the actual timing and amount of payments received.
ML does not have any significant borrowings and does not have sufficient
tangible assets on which to secure any material borrowing facilities.

On the basis that the Disposal is completed, that net proceeds of #5,050,000 are
realised, and that the Continuing Group is able to generate funds from milestone
receipts on a timely basis, the Directors are of the opinion that the Continuing
Group has sufficient working capital for its present requirements.

Stuart Sim, Chairman of ML, commented:

"This disposal is a further significant step in the repositioning of ML as a
focused biopharmaceutical product development company, with the object of
achieving cash self-sufficiency and profitability in the near term."

The Disposal is conditional upon the approval of ML's shareholders in General
Meeting.

A circular giving further details of the Disposal will be despatched to
shareholders as soon as is practicable. The circular will contain a notice of an
extraordinary general meeting at which meeting shareholders' consent for the
Disposal will be sought.

Contacts:

Stuart Sim                                                         01925 844 700
ML Laboratories plc

Tim Mickley/Richard Potts                                          0207 020 4000
WestLB Panmure Limited

Ben Padovan/Graham Herring                                         020 7067 0700
Weber Shandwick Square Mile

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