Midatech will host a conference call and live Q&A session today (Monday 23 April 2018) at 1400 BST / 0900 EDT for analysts and investors to discuss the Full Year 2017 Results. Dr Craig Cook, Chief Executive Officer-desig

Midatech will host a conference call and live Q&A session today (Monday 23 April 2018) at 1400 BST / 0900 EDT for analysts and investors to discuss the Full Year 2017 Results. Dr Craig Cook, Chief Executive Officer-designate, and Nick Robbins-Cherry, Chief Financial Officer, will lead the presentation.

The conference call dial-in details are: UK: +44 (0) 1452 580570 US: +1 866-223-0481 ID: 8963358

The presentation will be available on Midatech's website shortly before the call, and a recording will be available shortly afterwards.

("Midatech", "Company" or "Group")

Audited financial results for the year ended 31 December 2017

Midatech Pharma (AIM: MTPH; NASDAQ: MTP), the international specialty pharmaceutical company focused on commercialising and developing products in oncology, immunology and other therapeutic areas, today announces its audited financial results for the twelve-month period ended 31 December 2017.

Financial highlights

Operational highlights including post period end highlights

Commenting on the Full Year 2017 Results, Midatech's Chief Executive Officer-designate, Dr Craig Cook, said: "2017 was a year of significant change and progress for Midatech. We have continued the development of our three lead oncology drug candidates and we now have exciting value inflection points coming up in 2018. Additionally we made good progress with our immunotherapy assets, which are now advancing toward potential clinical development. Our US commercial business recorded solid growth, achieving a breakeven EBITDA in the second half of the year.

"As we announced earlier in the year, Midatech has an updated leadership team and we are fully focused on advancing our R&D pipeline into clinical development and beyond. With additional funding secured, we are well-resourced to drive towards our clinical objectives. We are enthused by the prospect of delivering transformative therapies to improve patients' lives and progressing our R&D pipeline forward to address unmet needs in significant markets, driving future profitability and creating value for stakeholders."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014 (MAR).

For more information, please contact:

Dr Craig Cook, CEO-designate

Tel: +44 (0)1235 841575

Panmure Gordon (UK) Limited (Nominated Adviser and Broker)

Freddy Crossley / Ryan McCarthy

Tel: +44 (0)20 7886 2500

Consilium Strategic Communications (Financial PR)

Mary Jane Elliott / Ivar Milligan / Nicholas Brown

Tel: +44 (0)20 3709 5700

Email: midatech@consilium-comms.com

Westwicke Partners (US Investor Relations)

Tel: +1 339 970 2843

Email: chris.brinzey@westwicke.com

About Midatech Pharma PLC

Midatech is an international specialty pharmaceutical company focused on the research and development of a pipeline of medicines for oncology and immunotherapy, and marketing these through its established US commercial operation which includes four cancer care supportive products and two further co-promoted products. Midatech's strategy is to internally develop oncology products, and to drive growth both organically and through strategic acquisitions. The Company's R&D activities are focused on three innovative platform technologies to deliver drugs at the "right time, right place": gold nanoparticles ("GNPs") to enable targeted delivery; Q-Sphera polymer microspheres to enable sustained release ("SR") delivery; and Nano Inclusion ("NI") to provide local delivery of therapeutics, initially to the brain. The Group, listed on AIM: MTPH and Nasdaq: MTP, employs c.100 staff in four countries. For further company information see: www.midatechpharma.com

Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking statements" within the meaning of legislation in the United Kingdom and/or United States. Such forward-looking statements include, but are not limited to, statements regarding the ability of Midatech to successfully test, manufacture, produce or commercialize products for conditions using the nanoparticle and sustained release drug delivery platforms, and the ability for products in development to achieve positive clinical results, and the ability to meet or achieve timelines associated with pre-clinical studies, clinical trials or regulatory submissions. Any forward-looking statements are based on currently available competitive, financial and economic data together with management's views and assumptions regarding future events and business performance as of the time the statements are made and are subject to risks and uncertainties. We wish to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

Reference should be made to those documents that Midatech shall file from time to time or announcements that may be made by Midatech in accordance with the London Stock Exchange AIM Rules for Companies ("AIM Rules"), the Disclosure and Transparency Rules ("DTRs") and the rules and regulations promulgated by the US Securities and Exchange Commission, which contains and identifies other important factors that could cause actual results to differ materially from those contained in any projections or forward-looking statements. These forward-looking statements speak only as of the date of this announcement. All subsequent written and oral forward-looking statements by or concerning Midatech are expressly qualified in their entirety by the cautionary statements above. Except as may be required under the AIM Rules or the DTRs or by relevant law in the United Kingdom or the United States, Midatech does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise arising.

CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT

The Group's hard work in 2017, dealing successfully with some significant challenges, means Midatech is well-positioned to reach key value inflection points in our lead development projects during 2018 and beyond, and for the first time, we forecast that our US marketing operation will be profitable on an EBITDA basis for a full year in 2018.

2017 saw Midatech make important progress towards achieving our objective of creating significant shareholder value through advancing our three key R&D projects for rare cancers and by profitably commercialising our cancer supportive care products.

As a fully integrated business, we have made great strides with our development programmes, scale-up of our manufacturing capabilities, and also with our commercial organisation as we start to prepare our in-house products for launch.

Progress against strategy

In-house oncology products

During the past year, Midatech has completed the formulation of Q-Octreotide, its pre-clinical testing phase as well as manufacture for the forthcoming clinical trial. This followed a lengthy but valuable and comprehensive liaison with the US Food and Drug Administration ("FDA") regarding the clinical trial design, in order to optimise the conduct of the clinical trial. We also satisfactorily addressed manufacturing challenges which was necessary prior to commencement of the study. The initial clinical trial application was submitted in October 2017. The study received Polish regulatory approval in January 2018, and is expected to commence in April 2018. The trial programme has two components, an initial exploratory phase, which should complete during the first half of the year, and a second confirmatory phase expected to be completed by the end of 2018.

Whilst our existing manufacturing capability is sufficient to meet anticipated early demand, the next stage of development would require further investment in full commercial scale manufacturing capacity ahead of filing for marketing authorisation. If the product shows interchangeability with Sandostatin LAR, the Company expects to file for marketing authorisation with the FDA in 2020.

Our licence deal with Novartis, signed in 2017, gave us access to a highly potent drug, panobinostat, to use in our children's brain tumour product, MTX110. Midatech's nano-inclusion technology platform enables local delivery of panobinostat directly to the tumour via a catheter system called Convection Enhanced Delivery, diffusing the drug into and around the tumour. This technique allows for elevated drug concentrations to be delivered to the tumour, while at the same time minimizing systemic toxicity and peripheral side effects.

Following comprehensive and constructive discussion with the FDA regarding the clinical trial design, the Investigative New Drug ("IND") application was submitted to the FDA in Q4 2017 and approval was granted in January 2018. We were then required to obtain ethics approval for the trial, which is expected to be granted in April 2018. The study is expected to formally commence Q2 2018.

The study, a combined Phase I/II in up to 43 patients, will be conducted at the University of California San Francisco and at Memorial Sloan Kettering Cancer Centre in New York. It is expected to take up to two years to complete but, as it is open label, if encouraging results are seen as the study progresses, then discussions with the FDA can be accelerated to enable greater patient access through compassionate use and/or accelerated approval.

The pre-clinical programme for MTD119, comprising the anti-cancer compound maytansine bound to GNP, was completed in July 2017, with studies demonstrating potent anti-tumour activity. Peak reduction in tumour growth due to MTD119 suggests that it has the potential to be more effective than the standard of care, Sorafenib. Improved tolerability may reflect specific targeting of maytansine to tumour cells by MTD119.

Midatech has now entered formal IND enabling studies, with completion of the first pilot animal studies in the first half of 2018, and completion of the remainder of the studies expected in the fourth quarter of 2018 or early 2019. These studies will allow Midatech to review the data for efficacious dose levels versus toxic dose levels and optimise the dosing regime for a potential future first in-human study. Assuming favourable data, Midatech hopes to complete an IND submission to the FDA H1 2019, for first-in-human studies in H2 2019. On February 22, 2018, Midatech announced that the European Medicines Agency granted orphan drug designation for MTD119.

Manufacturing Operations

A highlight of 2017 was the upscaling of our manufacturing capability in Bilbao, Spain, enabling us to produce our sustained release microcapsule formulations for clinical and commercial use. This includes the required clinical grade batches of Q-Octreotide (MTD201) allowing that key programme to commence. The upgrade involved a 1.6 million investment during 2016 and 2017, and considerable effort in process development from our teams in Bilbao and Cardiff. Some significant upscaling challenges were overcome and the upgraded facility was signed off by the Spanish Medicines Agency to GMP (Good Manufacturing Practice) standard in the second half of the year.

US Commercial Organisation

The US commercial arm of the organisation has reached a significant point in its development. During the first half of 2017, increased discounting pressure in the market had some impact on margins. However, we had a strong second half of the year, and for H2 2017, despite the above challenges, the US commercial business on a standalone basis has broken even, on an EBITDA basis, for the first time.

We recently initiated a market expansion study - a Phase 4 clinical trial - for one of our marketed products in the US, Gelclair. This study received approval in December, and we will be testing the product for use in patients undergoing bone marrow transplants over the next 12 months. If that study shows the product to be as effective for treating oral mucositis as it is in current users undergoing chemo- or radiotherapy, we would expect to see a significant expansion of use.

The Emergex collaboration, signed during 2016, had a positive first year with the successful application of Midatech know-how to rapidly deliver multiple, novel, peptide-bearing gold nanoparticles for application as vaccines against a variety of infectious diseases. As communicated previously, our collaboration with Ophthotech in the US came to an end during the year due to Ophthotech's internal issues.

In October, we undertook a 6 million fund raise and placing of shares to existing and new investors, the proceeds of which are being used to drive forward the clinical development programmes. In conjunction with the fund raise, the Group went through a cost reduction exercise, including decreasing the costs of the Board and senior management team.

This equity fundraise was followed, in December, by the Company entering into a four-year senior secured loan agreement with MidCap Financial of up to $15 million. $7 million was drawn on closing and provides the necessary working capital to reach the value-driving inflection points in our product development programmes in 2018. Drawdown of the remaining $8 million is dependent on clinical development milestones. This agreement was also a strong, independent validation of the progress the business has made.

Our development programmes, targeted at new delivery mechanisms for approved therapies, are complemented by our balanced portfolio of commercialised products which serves to mitigate risk. The Board monitors risks on an ongoing basis, and during 2017 put in place a formal Compliance Committee, which reports to the Board.

Across the business, the entire Midatech team has worked continuously to meet difficult deadlines and challenging targets. On behalf of ourselves and the rest of the Board, we would like to thank colleagues for their dedication and contributions during 2017 that has enabled the Group to achieve a strong platform on which to build for the future.

In recognition of our employees' commitment to the business, the Board introduced a share save scheme, the Midatech Pharma Share Incentive Plan, allowing employees to invest in Midatech through the acquisition of shares and to participate in the future success of the Group.

Looking forward, we expect important advances in all areas of the business during 2018. Positive clinical trial readouts for Q-Octreotide would accelerate the path to product registration. Early data from the MTX110 children's brain tumour study will be an important indicator of the product's efficacy and may also lead to early registration for this ultra-rare indication in children. The Gelclair study readouts later in the year could widen the product's application and as a result have a significant impact on sales and growth potential. Beyond our internal priorities, we continue to look for prospective partnerships to take on commercial rights for our own development projects. We will be pursuing multiple opportunities in the coming months, and look forward with cautious optimism to a pivotal year ahead.

On 15 March 2018, the Company announced that Dr Jim Phillips would step down as CEO at the end of May 2018 after having served the Company for five years. On behalf of the Board, we thank Jim for his contribution to the Group since IPO. The Board has appointed Dr Craig Cook (currently Chief Operating Officer and Head of Research & Development) to succeed Dr Phillips as CEO and proposed Board member from 1 June 2018, following a transition period of approximately three months in order to ensure a smooth handover.

Dr Cook, who joined Midatech in April 2014, has more than 20 years of international experience in the pharmaceutical, biomedical and high technology sectors including roles across a range of therapeutic areas covering both drug development and medical affairs. The Company is fortunate that, in Dr Cook we have an internal candidate who can take over responsibility as CEO, ensuring continuity and a controlled handover. He will provide strong leadership, demonstrated expertise, a deep understanding of the business, and a relentless focus on delivery of key value-driving programmes to take Midatech into its next phase of value creation. The Board is also evaluating options for obtaining non-dilutive funding, that would enable the Group to deliver on its key value-driving programmes and to take Midatech into its next phase of value creation without a reliance in the short-term on equity finance. We have every confidence that Dr Cook, together with his senior management team, will drive Midatech to a successful future.

On behalf of the Board, we would like to thank all of Midatech staff, investors, clinicians and patients for their continued support during 2017.

OUR DEVELOPMENT PIPELINE

We are advancing the development of multiple, high value, therapies, and 2018 is expected to see the first in-human studies for two of our lead programmes: MTD201 for carcinoid cancer using our sustained release technology, and MTX110 for childhood brain cancer based on our nano-inclusion technology. We also expect to progress towards the clinic for our gold nanoparticle based programmes, MTD119 for liver cancer and our brain cancer immunotherapy programmes MTR111 and MTR116.

Focus Programme: Q Octreotide

Long-acting formulation of octreotide, using Midatech's sustained release Q-SpheraTM technology for the treatment of carcinoid cancer and acromegaly.

Focus Programme: MTX110 for DIPG

Treatment for ultra-rare childhood brain tumour (DIPG), with delivery of therapeutic constructs directly into tumour using Midatech's nano-inclusion technology.

Focus Programme: MTD119 for liver cancer

Targeted therapy treatment for liver cancer using Midatech's gold nanoparticle technology

"Combining Midatech's impressive Q-Sphera sustained release technology with the pharmacologically active agent octreotide promises a much-needed product for treating acromegaly and endocrine tumours. MTD201's interchangeability with Octreotide LAR, as well as the opportunity for simpler reconstitution, fewer errors and wastage, and improved patient experience, would be a welcome addition to the limited choice of therapies currently available. Achieving such a unique product equivalent to Octreotide LAR would be advantageous for patients, physicians, and payors."

Professor Shlomo Melmed, Dean of Medical Faculty, Cedars-Sinai Medical Centre, Los Angeles

"DIPG is a devastating childhood brain cancer with virtually no long-term survivors, and for which there are no current therapies other than palliative treatments. Midatech's MTX110 has shown promise as one of the most potent compound against DIPG brain tumour cells in laboratory experiments, and has also been well tolerated in compassionate use treatments to date. It is exciting to be working with the Midatech team on taking MTX110 into formal clinical trials in patients that are about to start, and developing a potentially breakthrough treatment for DIPG."

Professor Sabine Mueller, Paediatric Neuro-Oncologist, Benioff Children's Hospital, University of California San Francisco

Midatech Pharma plc (the "Company") was incorporated as a company on 12 September 2014 and is domiciled in England. The Midatech Group was formed on 31 October 2014 when Midatech Pharma plc acquired the entire issued share capital of Midatech Limited and its wholly owned subsidiaries. The Group was expanded when, on 8 December 2014, the Company acquired the entire issued share capital of UK based Q Chip Limited ("Q Chip"), a pharmaceutical development company. Q Chip was subsequently renamed Midatech Pharma (Wales) Limited ("MPW"). The Company was admitted to AIM on 8 December 2014, raising 32.0m before costs in new capital.

On 4 December 2015, the Company acquired the entire issued share capital of U.S. based, DARA BioSciences, Inc. ("DARA"), an oncology supportive care pharmaceutical company. DARA was subsequently renamed Midatech Pharma US, Inc. ("MPUS"). On 4 December 2015, following the DARA acquisition, American Depositary Receipts ("ADRs") with each ADR representing the right to receive two ordinary shares, were admitted to trading on the NASDAQ Stock Market LLC trading platform ("NASDAQ").

The MPUS business brought with it a portfolio of five cancer supportive care products and an established commercial platform in the U.S. market with a field sales organisation. To supplement this acquisition, on 24 December 2015, the Company acquired Zuplenz (ondansetron), a marketed anti-emetic oral soluble film from Galena Biopharma, Inc. (Nasdaq: GALE) for the prevention of chemotherapy-induced nausea and vomiting, radiotherapy-induced nausea and vomiting, and post-operative nausea and vomiting.

On 28 October 2016, the Company announced that at a General Meeting, shareholders had approved the issuance of 15,157,044 new ordinary shares following a Placing to new and existing institutional shareholders and additional Open Offer. This raised proceeds of 16.67m before expenses and the new shares were admitted to AIM on 31 October 2016. On 16 October 2017, the Company announced that at a General Meeting, shareholders had approved the issuance of a further 12,314,679 new ordinary shares following a Placing to new and existing institutional shareholders and additional Open Offer. This raised proceeds of 6.16m before expenses and the new shares were admitted to AIM on 17 October 2017.

On 2 January 2018, the Company announced that it had entered into a four-year senior secured loan agreement with MidCap Financial ("MidCap") of up to $15m. As at 31 December 2017, an initial tranche of $7m had been received. Drawdown of the remaining $8m is dependent on achieving certain clinical development milestones.

Reclassification of 2015 and 2016 comparative operating costs

Management has reviewed how costs are presented on the income statement, allocated between:

In order to give a clearer and more meaningful picture of activity within the business, certain costs, previously shown within administrative costs have been reclassified to either research and development costs, or distribution costs, sales and marketing. Comparative figures for 2016 and 2015 have been reclassified using the same allocation basis as the 2017 results.

Key performance indicators

Midatech's KPIs focus on the key areas of sales revenue, R&D spend, operating results and cash management. These measures provide information on the both the commercial operation and also the key R&D development programmes. Additional financial and non-financial KPIs, including further KPIs in respect of the research and development programmes, are being considered and may be adopted in due course.

For the year ended 31 December 2017, Midatech generated consolidated total gross revenues(1) of 12.08m (2016: 9.21m), an increase of 31% on the prior year and in-line with market expectation. Included in this figure are gross product sales generated by the US commercial business of 11.13m (2016: 7.47), an increase of 49%. Statutory Revenue for the year also increased, by 6%, to 6.76m (2016: 6.38m).

As part of the MPW acquisition, Midatech acquired the in-process research and development relating to various product development programmes including Q Octreotide, one of Midatech's lead programmes, and Opsisporin. Opsisporin is a sustained release treatment for uveitis, an inflammatory condition of the eye. Whilst pre-clinical proof of concept studies have been completed for the product, Opsiporin is outside of Midatech's strategic focus and as a result the decision was made not to continue with the programme at this point. The product still has merit and when the Group has the available resources, development may be continued. The absence, however, of an immediate opportunity to commercialise the asset has lead management to conclude that it has become impaired, resulting in a charge to the Income Statement of 1.50m.

In 2016, management concluded that, whilst overall performance of the MPUS business had been good, sales of Oravig has been disappointing and, as a result, the value of this element of the intangible assets acquired with the DARA business has become impaired, resulting in a charge of 11.41m to the Income Statement. The performance of the other MPUS products, including Zuplenz , enabled us to support the carrying value of goodwill in the MPUS business.

Net cash outflows for the year were 4.15m (2016: inflow of 0.97m). This reflected the share issue in October 2017 where 5.73m was raised after costs and receipt of the first tranche of debt finance from MidCap of 5.24m. Stripping out the share issue and debt proceeds, the adjusted outflow of 15.11m (2016: 14.67m) was in line with the forecast for the year. Cash management continues to be a major focus for the Board and senior management.

Cost of sales has increased commensurately with product sales to 0.93m (2016: 0.67m), an increase of 39% and broadly in line with the increase in gross product sales.

Research and development expenditure

Research and development costs increased on the previous year to 10.19m (reclassified 2016: 7.80m) reflecting ongoing investment in Midatech's R&D programmes. Activities in the year included:

Distribution costs, sales and marketing

Distribution costs, sales and marketing decreased slightly to 9.42m (reclassified 2016: 12.51m). This includes amortisation of intangible assets acquired as part of the acquisition of DARA/MPUS resulting in a charge of 1.38m (2016: 3.39m). The reduction in amortisation arose as a result of the impairment of Oravig in 2016.

Administrative costs

Midatech's administrative costs decreased significantly on the prior year to 3.15m (reclassified 2016: 5.12m). The decrease is, in part, reflective of one-off costs incurred in 2016, including 1.10m associated with the departure of three former senior executives in the US, as well as reduced Directors' remuneration in 2017.

As noted above, this relates to the write down by 1.50m of the Opsisporin in-process research and development. In 2016, a charge of 11.41m resulted from the write down of the product sales and marketing rights of Oravig.

During the year, the average number of staff employed grew by 1% to 85 (2016: 84), however, the payroll cost fell by 12% to 6.60m (2016: 7.49m). Share based payment charges increased to 520k (2016: 203k) and included in the 2016 figures was 1.1m of settlement costs relating to former, senior DARA management who left during 2016.

During the year, cash expenditure on intangible fixed assets was 0.78m (2016: 0.02m).

The total cash expenditure on property plant and equipment in 2017 was 0.71m (2016: 1.35m), principally reflecting continued investment in Spain in the manufacturing capability of Midatech's sustained release ("SR") platform technology in advance of the Q-Octreotide first-in-human clinical trial programme.

Movement in total assets

Total assets saw a reduction to 49.22m at 31 December 2017 (2016: 56.69m). This reduction includes the 1.50m impairment of the Opsisporin IPRD discussed above. Amortisation of intangible assets ( 1.58m) was further increased by a foreign exchange loss in USD denominated assets ( 1.44m), as set out in note 10.