Final Results

Intl. Biotechnology Trust PLC
22 September 2003



Strictly embargoed for publication until 7.30 a.m. on 22 September 2003



International biotechnology trust plc



The Board of International Biotechnology Trust Plc today announces its unaudited
Preliminary Results for the year ended 31 August 2003.



Summary



  • Strong recovery in the biotech market since the lows of July 2002
  • Three unquoted IBT portfolio companies, together representing 16% of net
    assets (at 31 August 2003), have filed to go public on the NASDAQ, market
    conditions permitting
  • Net asset value per share rose by 14.5% to 112.8p
  • NASDAQ Biotech Index rose 48.1% (sterling adjusted), Merrill Lynch Small
    Cap Biotech Index rose by 26.5% (sterling adjusted) and the Bloomberg UK
    Biotech Index fell by 5.0%
  • The return on IBT's quoted portfolio was 46.4% calculated on a monthly
    time-weighted return basis assuming mid-month cash flows, and 29.9% on an
    unweighted basis (ignoring the timing of transactions)
  • Write-downs of two unquoted companies resulted in a fall in net assets for
    the year of £1.4 million or 2.9% of net assets at 31 August 2002
  • New investments in seven quoted companies; sales of five quoted companies
  • No new unquoted investments; follow-on investments in CancerVax and
    Affibody
  • Total net assets at 31 August 2003: £53.9million (31 August 2002: £47.9
    million)



Andrew Barker, Chairman, commented:



'After three years of falling stock markets I am pleased to be able to report
better results following the recovery in markets generally and specifically the
biotech sector. The valuations of the unquoted companies are based on tangible
third party priced events, which include trade sales, initial public offerings
(IPOs) and third party financings. We are encouraged that three of our unquoted
companies, Aderis Pharmaceuticals, CancerVax and Eyetech Pharmaceuticals,
(together representing 16% of net assets at 31 August 2003) have recently filed
to go public on NASDAQ, market conditions permitting.



Investor sentiment towards the biotech sector is currently very positive. At the
time of writing, although the biotech IPO window has yet to open in the US,
twelve biotech companies have filed to go public, and IBT has investments in
three of these.  We believe that most of our portfolio companies, both quoted
and unquoted, continue to make good progress and are generally well financed.



The fundamentals for the biotech industry remain intact with favourable
demographics and high barriers to entry once products are approved. More and
more biotech companies are turning profitable, product pipelines continue to
widen and mature and there are more late stage compounds in development than
ever before. The biggest issue facing the drug industry is a lack of new product
opportunities and biotech companies are well placed to take advantage of this,
as pharmaceutical companies are willing to enter rich strategic partnerships
even at early development stages. The prospects for smaller biotech companies
are consequently stronger than for some time.



The volatility of the biotech market does mean that IBT remains better suited to
the longer-term investor as the short to medium term direction of the market
remains difficult to predict.  IBT offers investors exposure to an exciting
industry with strong prospects through a portfolio of companies with strong
upside potential, diversified across the private and public markets and by
clinical area and geography.'




For further information, please contact:

International Biotechnology Trust plc, Andrew Barker, Chairman     020 7658 3206

Schroder Ventures Life Sciences, Kate Bingham/ Jodie Van Elst      020 7421 7070

Lansons Communications, Henrietta Guthrie/ Amy Fisher              020 7490 8828

Website: www.internationalbiotrust.com



CHAIRMAN'S STATEMENT



PERFORMANCE AND REVIEW



After three years of falling stock markets I am pleased to be able to report
better results following the recovery in the markets generally and specifically
the biotech sector. During the year to 31 August 2003, the net asset value (NAV)
per share of International Biotechnology Trust (IBT) rose by 14.5% from 98.5p to
112.8p with the share price rising by 11.1% from 76.5p to 85.0p. During the
period under review the NASDAQ Biotechnology Index (NBI) rebounded strongly and
rose 48.1%, the Merrill Lynch Small Cap Biotech Index (MLSCI) rose by 26.5% and
the Bloomberg UK Biotechnology Index fell by 5.0%, all in sterling terms.



We measure the performance of the Company in a number of different ways. The
portfolio is predominantly composed of smaller biotech companies, which makes it
difficult to compare the performance of IBT directly with the NBI, which is
heavily weighted towards larger companies. We believe that an index which is
more small cap focused is more useful, especially when looking at the
performance of the quoted portfolio. The Merrill Lynch Small Cap Biotech Index
currently consists of 117 biotech companies with market caps of less than
US$1bn. As mentioned previously, this index rose by 26.5% in sterling terms
during the period under review.



IBT's smaller quoted holdings were hit badly during the correction in the market
following the boom of 1999 and 2000, as investor focus moved towards the larger,
profitable companies or those with projected near term earnings. The recent
rally is the first post-bubble rally in which all the tiers of the market have
benefited, although smaller biotech companies have still lagged their larger
peers during the year under review.  The performance of IBT's quoted portfolio
has been calculated on a monthly time-weighted return basis (assuming mid-month
cash flows) and showed a rise of 46.4%. The return on an unweighted basis
(ignoring the timing of transactions) was 29.9%.



So far 2003 has been a much better year for the biotech market than 2002. The
recovery in the value of biotech stocks has been driven by better general stock
market conditions and an improvement in newsflow from the sector. There have
been a run of regulatory approvals, strong clinical data (especially in the area
of cancer) and better than anticipated earnings from a number of large,
profitable companies.



At 31 August 2003, IBT's unquoted portfolio represented 42% of net assets (value
£22.7m) against 43% (value £20.8m) at the previous financial year end. The
valuations of the unquoted companies are based on tangible third party priced
events, which include trade sales, initial public offerings (IPOs) and third
party financings. We are encouraged that three of our unquoted companies, Aderis
Pharmaceuticals, CancerVax and Eyetech Pharmaceuticals, (together representing
16% of net assets at 31 August 2003) have recently filed to go public on NASDAQ,
market conditions permitting.



BASIS OF VALUATION



As is practice in the venture capital industry, the IBT portfolio is valued in
accordance with the British Venture Capital Association guidelines. The carrying
valuations of unquoted companies are reviewed weekly and incorporate
consideration of the progress of the underlying company against milestones made
at the time of investment and any upcoming need to raise capital. In certain
circumstances quoted holdings are valued at discounts to their mid market
prices.



Ahead of each investment considerable due diligence is undertaken, making use of
a comprehensive network of scientific and clinical advisers, with particular
focus on management, science and valuation.  Members of Schroder Ventures Life
Sciences (SVLS), the investment adviser to IBT, have board seats on eight of the
portfolio companies, at the time of writing.  This allows the performance of
these companies to be closely monitored and the input of strategic and financial
advice drawing on the experience of the SVLS team and their network of advisers,
which include the IBT Scientific Advisory Board.



Continuation Vote



The Articles of Association of the Company contain provisions requiring the
Directors to put a proposal for the continuation of the Company to shareholders
at the Annual General Meeting in 2003 and thereafter at two yearly intervals.



In considering whether to recommend to Shareholders that the Company continue in
business as an investment trust, the Board of Directors has reviewed four
particular aspects of its business:



The prospects for the biotech sector

The prospects for the portfolio

The strength and depth of our management

The appropriateness of the investment trust structure



We consider the fundamentals of the biotech sector to be compelling and these
are outlined below and in the 'Investment Advisers' Review'. Our adviser, SVLS,
has assembled a portfolio of quoted and unquoted, generally smaller, emerging
biotech companies, which we believe to be well positioned to benefit from the
increase in interest in the sector, especially the three unquoted companies that
are potential IPO candidates. As I have said in previous statements, I believe
that we have a leading team of advisers in SVLS, with considerable depth of
skill, experience and resources. Finally, investment trusts, with their
closed-end structures and boards of independent directors, have proved to be an
effective vehicle for making long-term investments and we believe that this will
continue to be the case.



For these reasons the Board of Directors is particularly excited about the
prospects for your Company. Recent soundings with major shareholders indicate
strong support for the Company to continue and the Directors intend to vote
their 146,183 shares in favour of the ordinary resolution to continue in
business as an investment trust.



SHARE BUY-BACKS



At the Annual General Meeting held on 19 December 2002, the Directors were
authorised to purchase for cancellation up to 14.99% of the shares in issue.
Since that time, the Directors have utilised this authority to purchase a total
of 800,000 shares for cancellation. We intend to continue to consider
opportunities to purchase shares for cancellation in appropriate market
conditions, at prices that would usefully enhance the net asset value for
remaining shareholders and with the intention of reducing discount volatility. A
resolution to renew the share buy-back authority is included in the notice of
the Annual General Meeting.



ANNUAL GENERAL MEETING



The Annual General Meeting will be held at 31 Gresham Street, London EC2V 7QA on
14 November 2003 at 3.00 p.m. A presentation will be made by Kate Bingham and
other members of the SVLS team.



OUTLOOK



Investor sentiment towards the biotech sector is currently very positive. At the
time of writing, although the biotech IPO window has yet to open, twelve biotech
companies have filed to go public in the US, and IBT has investments in three of
these.  We believe that our portfolio companies, both quoted and unquoted,
continue to make good overall progress and are generally well financed.



The fundamentals of the biotech industry remain intact with favourable
demographics and high barriers to entry once products are approved. More and
more biotech companies are turning profitable, product pipelines continue to
widen and mature and there are more late stage compounds in development than
ever before. The biggest issue facing the drug industry is a lack of new product
opportunities and biotech companies are well placed to take advantage of this,
as pharmaceutical companies are willing to enter rich strategic partnerships
even at early development stages. The prospects for smaller biotech companies
are consequently stronger than for some time.



The volatility of the biotech market does mean that both IBT and the sector
remain better suited to the longer-term investor, as the short to medium term
direction of the market remains difficult to predict. IBT offers investors
exposure to an exciting industry with strong prospects through a portfolio of
companies with strong upside potential, diversified across the private and
public markets and by clinical area and geography.





Andrew Barker

Chairman


INVESTMENT ADVISERS REVIEW



SUMMARY



Investor sentiment regarding the biotech sector is much improved since the last
Annual Report.  The biotech market has rallied significantly and the recent
approvals and strong clinical data underscore the progress that the industry is
making in bringing new drugs to market.  A reflection of this positive sentiment
is the recent improvement in the share price and NAV of IBT and the filing of
three unquoted portfolio companies to try and go public if the initial public
offering (IPO) window opens.



REVIEW



2002 was a difficult year for the biotech sector. Share prices were driven lower
by the overall bear market, impending war in Iraq and a lack of appetite for
risk. This led to a flight to quality and a lack of interest in the more
volatile sectors including biotech. Newsflow from biotech companies was poor
with corporate scandals and a number of drug candidate failures, which resulted
in a heightened sensitivity of investors to the risks of clinical development.



Smaller companies were hit the hardest in the sell off, which impacted the
performance of IBT given its investment focus in this area. Many smaller
companies were left trading below cash and some were delisted from the NASDAQ
market, including one of IBT's portfolio investments, Essential Therapeutics.



The NASDAQ Biotech Index (NBI) bottomed at just over 400 in July 2002.  At the
time of writing the index had reached 798, a near doubling in dollar terms since
the lows of 2002. This compares with the peak in the market in March 2000 when
the index reached over 1600.



There have been a number of drivers of the recovery in the sector. Removal of
the uncertainty around the conflict in Iraq, an increased appetite for risk and
a broad bullish market direction have rewarded higher beta groups such as
biotech and technology. However, the rally has not only been driven by improving
general sentiment, but also by strengthening industry fundamentals. The NBI has
significantly outperformed both the general market, rising by 48.1% in sterling
terms, in comparison with rises of 8.1% in the S&P500 Index and 35.2% in NASDAQ
Composite Index (which gives a reflection of the performance of technology
stocks) during the year under review.



The initial rebound in biotech share prices was led by the large cap, profitable
companies.  However investor interest has extended beyond these limited names
and into the smaller and earlier stage companies, which had suffered the most in
the flight to liquidity of the previous years. The breadth of the recent rally
has been notable as previous post-bubble rallies have been limited to the top
tier of stocks. This has benefited the performance of IBT with some of the
smaller cap holdings rising sharply in the year under review, for example
Targeted Genetics which almost tripled in price. However, as noted in the
Chairman's statement, the small caps still underperformed their larger peers in
the year under review with the Merrill Lynch Small Cap Biotech Index (MLSCI)
rising 26.5% in sterling terms in comparison with a 48.1% rise in the NBI.



The rally has been underpinned by the release of better than anticipated
earnings by a number of large, profitable biotech companies, with sales of
approved products going strongly. While earnings growth may be an issue in the
pharmaceutical sector, biotech companies continue to post strong results with a
number of companies recently moving into profitability.



Positive sentiment around the regulatory environment has also drawn interest to
the sector. In contrast to the relatively low expectations following the
disappointments of 2002, there have been a string of timely drug approvals this
year. New leadership at the Food and Drug Administration (FDA) already seems to
be having an impact with eleven new biotech drug approvals in 2003, at the time
of writing. The FDA appears to be committed to shortening the time it takes to
review new drug applications and improving the predictability of the review
process.



Recent approvals include two exciting first-in-class drugs in the cancer field.
AstraZeneca's Iressa was approved for the treatment of advanced non-small cell
lung cancer and Millennium Pharmaceutical's Velcade was approved for the
treatment of relapsed and refractory multiple myeloma less than four months
after the application was made. Both drugs were approved on the basis of Phase
II trials rather than more typical larger controlled Phase III trials.
First-in-class drugs typically attract additional scrutiny from the regulatory
authority and these approvals illustrate the efforts of the FDA to be flexible
about its approach to the evaluation of drug candidates that address life
threatening diseases where little or no therapy is currently available.



A spate of positive recent clinical trial data has helped spur share prices. In
May 2003, Genentech presented results from a Phase III trial of Avastin, which
showed an improvement in the overall survival of colorectal cancer patients.
Many investors were not expecting a positive outcome following poor data in
breast cancer in 2002 and the results played a major role in rekindling interest
in the sector. Avastin could be the first to market of a new class of drugs
called angiogenesis inhibitors, which choke off the supply of blood to tumours.



Further encouraging clinical data was released by one of IBT's investments,
Esperion Therapeutics. Esperion has a promising pipeline for the treatment of
cardiovascular disease. These drug candidates are designed to increase levels of
HDL (the so-called good cholesterol), and to reduce the build up of
cholesterol-laden plaques in the arteries of patients. In June 2003, initial
Phase II results were released showing a reduction in plaque volume in the
arteries of patients with acute coronary syndromes. This is an exciting finding
and we await the full details of the trial, which will be reported in the coming
months.



Company pipelines continue to broaden and mature and many of the announcements
made by later-stage portfolio companies are described later in the report. The
pipelines of IBT's earlier stage investments have also made progress. KuDOS
Pharmaceuticals started Phase II trials of its drug candidate, PaTrin, in
metastatic melanoma and colorectal cancer patients. AnorMED started Phase II
trials with AMD 3100 for stem cell transplant in cancer patients. Inflazyme's
lead compound started a Phase IIa asthma study with partner Aventis, and
Targeted Genetics and the Cystic Fibrosis Foundation initiated a Phase IIb trial
in cystic fibrosis. Finally, Epimmune's HIV vaccine candidate entered Phase I/II
trials and a second vaccine entered Phase I/II trials in lung cancer and
colorectal cancer patients.



The biotech sector has benefited from corporate activity as product acquisitions
are used to diversify pipelines and revenue streams. There were a number of
mergers and acquisitions (M&A) announcements from within IBT's investment
portfolio. Novuspharma agreed to merge with Cell Therapeutics (CTIC) adding a
late stage drug candidate, pixantrone, to CTIC's pipeline. OSI Pharmaceuticals
acquired Cell Pathways, adding a marketed oncology product and expanding its
pipeline through an earlier stage therapeutic platform. Inflazyme bought
GlycoDesign to expand further in the area of inflammation and to boost cash
reserves. CancerVax brought in an early stage pipeline of angiogenesis
inhibitors through the acquisition of Cell-Matrix, and Corvas merged with
Dendreon Corporation. Finally, Galen announced in July 2003 that it was in
preliminary discussions with a potential acquiror, although these talks were
terminated without the emergence of a bid for the company.



There have been some acquisitions of biotech companies by pharmaceutical
companies, for example Johnson & Johnson's acquisition of one of IBT's
investments, 3-Dimensional Pharmaceuticals. However, these acquisitions have
been limited in number as pharmaceutical companies have tended to avoid
depressing earnings by buying unprofitable biotech companies.



As patent expiries loom, the reliance of pharmaceutical companies on biotech to
replenish dwindling pipelines has increased the price that these companies are
willing to pay for synergistic assets. This has continued to be demonstrated
through a variety of deals, although the number of collaborations has not
increased noticeably. Within the portfolio, in December 2002, EyeTech announced
a major deal with Pfizer for Macugen, which is in Phase II/III trials for
age-related macular degeneration (AMD), and Phase II trials for diabetic macular
edema. EyeTech received a $100m upfront payment and could receive a further
$645m in milestones, contingent on regulatory approvals and successful
commercialisation.



An unquoted IBT portfolio company, Sunesis, announced deals with both Merck &
Co. and Biogen during the year under review.  With Merck, Sunesis entered a
research collaboration to discover oral therapeutics for Alzheimer's disease and
with Biogen, a collaboration was initiated to discover therapeutics for
inflammatory and auto-immune diseases.



Another example of a licensing deal by an IBT portfolio company, although with a
larger biotech rather than a pharmaceutical company, was the co-development
agreement between Micromet and Medimmune for the Phase I stage anti-cancer agent
MT103. MT103 is the most advanced of Micromet's novel class of antibody
derivatives, Bi-Specific T Cell Engagers (BiTEs).  Micromet will receive
milestone payments based on successful development and commercialisation, as
well as royalties on North American sales. In addition, the parties will
collaborate to develop up to six new BiTE drug candidates.



The combination of solid earnings, product approvals, strong clinical data and
partnering has meant that momentum has continued to build in the biotech market.
This has allowed issuers to aggressively tap both the secondary and convertible
markets in order to bolster cash reserves. Many of the convertible debt
financings have incorporated attractive terms for issuers due to the low
interest rate environment and volatility of the sector.



The surge in financing activity has allowed many of IBT's portfolio companies to
extend their cash runways including Alexion Pharmaceuticals, Aradigm, Esperion
Therapeutics, Indevus Pharmaceuticals, Inspire Pharmaceuticals, Nektar
Therapeutics, OSI Pharmaceuticals, Sirna Therapeutics (formerly Ribozyme
Therapeutics) and Targeted Genetics.



Despite the flurry of secondary financings there have not been any biotech IPOs
since April 2002. Only one healthcare company has gone public this year, a
profitable managed care company called Molina Healthcare.  It is possible that
an IPO window for biotech companies may open in the USA later this year, market
conditions permitting. The later stage, higher quality private companies with
nearer term revenue/profit opportunities are best positioned to be able to take
advantage of any such opening. At the time of writing a number of biotech
companies have filed to try and go public on the NASDAQ market. Examples from
IBT's portfolio include Aderis Pharmaceuticals, CancerVax and Eyetech
Pharmaceuticals.



Aderis has four product candidates in development for six indications. The most
advanced of these is a transdermal patch partnered with Schwarz Pharma, in Phase
III trials for Parkinson's disease and in Phase IIb for the treatment of
Restless Legs syndrome. CancerVax has a therapeutic cancer vaccine, in Phase III
trials for the treatment of advanced stage melanoma and EyeTech has been
described previously.



Financing of unquoted biotech companies has held up relatively well, despite the
correction in the market since 2000. With the biotech IPO window being closed
for the last year, private equity funds have had to fund existing portfolio
companies for longer and new investments have tended to be made in later stage
companies closer to a potential revenue stream. Financing rounds have generally
been larger in size in order to fund companies for longer and deals are taking
longer to complete as investors have become more valuation sensitive.



2003 has been characterised by a much better mix of news from the sector.
However, as should be expected, given the risks of drug development, there have
been some disappointments and setbacks. Examples from within the portfolio
include Essential Therapeutics. Essential failed to achieve common shareholder
consent to the conversion of $60m convertible preferred stock into common and
the company was delisted from NASDAQ in May 2003. The company filed for Chapter
11 and the final initial hearing on its plan of reorganisation is planned for
October 2003. If this plan is approved, it is likely that the company will be
relaunched as a private company using the remaining cash left from the $60m
preferred investment. If the plan is not approved, then it is likely that the
company will be wound up with cash distributed back to its preferred
shareholders, which include IBT.



Weston Medical announced manufacturing problems with its needle-free drug
delivery device and the assets of the company were sold to Aradigm for
approximately $2m. Crucell had a difficult year and refocused on vaccine
development and although Aradigm announced the start of its first inhaled
insulin Phase III trial with Novo Nordisk, it subsequently announced a one-year
delay to the program due to manufacturing issues. Epimmune cancelled a merger
agreement with Anosys and announced cost cutting measures and is considering
alternative strategies going forward.



It is difficult to predict the direction the market will take from here, in the
short term at least. There remain a number of potential FDA approvals on the
horizon, including compounds from three of IBT's portfolio companies - Inspire's
diquafasol for dry eye; XOMA's Raptiva for psoriasis; and Indevus' Trospium for
overactive bladder.



More late-stage clinical trial data is expected to be released over the next
year. Examples from the IBT portfolio include data from OSI Pharmaceuticals,
which has an EGFR inhibitor in Phase III trials for lung cancer and Adolor which
will report the results of two further Phase III trials of its potential
treatment for post-surgical constipation resulting from the use of opioids for
pain relief.



The fundamentals of the industry remain strong and IBT's portfolio companies
continue to make good overall progress and are generally well funded. The broad
rally across all tiers means that stock picking will be key and deep due
diligence will continue to be fundamental in the selection of new investments.



The next year will be an exciting time for IBT, although there are likely be
some delays and surprises at portfolio companies, as should be expected from the
nature of the industry. An opening of the IPO window could allow some of the
unquoted portfolio companies to gain a listing and Aderis, CancerVax and EyeTech
are well positioned to try and take advantage of such an opportunity.  However
an IPO window requires the backdrop of a good overall market environment, which
in turn relies on positive economic and political conditions.



PORTFOLIO SUMMARY AT 31 AUGUST 2003



IBT has investments in 36 companies - 25 quoted companies (representing 51% of
NAV) and 11 unquoted companies (comprising 42% of NAV). The remaining 7% is made
up of cash, money market instruments and other net current assets. Given the
level of unquoted investments, no new unquoted investments are planned in the
short term.



Members of SVLS sat on the Board of 9 of the 36 portfolio companies at the end
of the year under review - Aderis Pharmaceuticals, Affibody, CancerVax,
Epimmune, Eyetech Pharmaceuticals, Galen Group, Genosis, KuDOS Pharmaceuticals
and Micromet.

Since 31 August 2003, the SVLS representative on the board of Epimmune has
resigned.



In terms of the geographical split of the portfolio, 63% of NAV is invested in
the US, 4% in Canada, 8% in the UK/Ireland and 18% in Continental Europe. By
sub-sector, 80% of NAV is invested in biopharmaceuticals, 5% in drug delivery,
1% in medical devices and 7% in other areas. The remaining 7% is made up of
cash, money market instruments and other net current assets.



Analysing the investments by the stage of their most advanced product in drug
development; eight companies have products on the market, three have filed for
approval, ten are in Phase III trials, eight are in Phase II or Phase I/II, and
three are in preclinical development. Of the remaining four, one is in late
stage testing for a diagnostic device and the other three are platform
technology companies.



In terms of the cash positions of the portfolio companies, it is estimated that
at 31 August 2003, seventeen have two or more years of cash (41% of NAV),
fifteen have between one and two years of cash (47% of NAV) and four have less
than a year of cash (5% of NAV). The companies with less than a year of cash are
Auxilium, Axxima, Genosis and publicly quoted Epimmune. Genosis has raised money
since 31 August 2003, Auxilium has fundraising plans, Axxima is exploring M&A
opportunities and Epimmune is considering alternative strategies.



The portfolio gives investors a broad spread of exposure to different stages of
clinical development across a variety of different clinical areas - cancer,
infectious disease, diabetes, central nervous system disorders, women's health,
urology, cardiovascular complications, rheumatoid arthritis, asthma, psoriasis,
opthalmology and management of the side effects of opioids for pain relief.



Ten largest quoted investments


 Investment                                                      Value     % of NAV                    Country
                                                                 £'000

OSI Pharmaceuticals                                              2,703         5.01                        USA
Atrix Laboratories                                               2,273         4.22                        USA
XOMA                                                             2,073         3.84                        USA
Encysive Pharmaceuticals                                         1,803         3.34                        USA
Esperion Therapeutics                                            1,750         3.24                        USA
Novuspharma                                                      1,734         3.22                      Italy
Nektar Therapeutics                                              1,450         2.69                        USA
Inflazyme                                                        1,232         2.28                     Canada
Aradigm                                                          1,099         2.04                        USA
AnorMED                                                          1,040         1.93                     Canada
Total                                                           17,157        31.81



Unquoted investments
                                                                      Value
 Investment                                                           £'000      % of NAV              Country

Micromet                                                              3,658          6.78              Germany
Aderis Pharmaceuticals                                                3,161          5.86                  USA
EyeTech Pharmaceuticals                                               3,161          5.86                  USA
Sunesis Pharmaceuticals                                               3,161          5.86                  USA
Affibody                                                              3,025          5.61               Sweden
CancerVax                                                             2,161          4.01                  USA
KuDOS Pharmaceuticals                                                 1,400          2.60                   UK
Essential Therapeutics                                                  948          1.76                  USA
Axxima Pharmaceuticals                                                  864          1.60              Germany
Auxilium Pharmaceuticals                                                632          1.17                  USA
Genosis                                                                 518          0.96                  USA
Total                                                                22,689         42.07



VALUATION



During the year under review the net effect of the change in the Directors
valuations of unquoted companies was a net reduction in NAV for the year of
£1.4m. This represents a decrease of 6.7% on the valuation of the unquoted
portfolio at 31 August 2002.  The value of unquoted investments at 31 August
2003 was £22.7m (£20.8m at 31 August 2002). The holdings in CancerVax and Axxima
were written down by £0.2m (total cost £2.5m) and £1.2m (cost £1.4m)
respectively during the period under review. CancerVax was written down to the
price of the August 2003 financing round in which IBT invested £0.4m. The
valuation of Axxima was written down to a best estimate of a fair market value.
Currency gains increased the valuation of the unquoted portfolio by £0.6m during
the period under review.



The valuation of Essential Therapeutics was changed during the year under review
to an unquoted basis and is included as an unquoted holding. This change in
valuation basis was because the company was delisted from NASDAQ. While the
common shares of Essential are still thinly traded, IBT holds a preferred
redeemable instrument that is not quoted. The preferred shareholders have issued
redemption notices and the SVLS representative on the board of the company has
resigned. Since Essential could not repay the $60m originally invested by the
preferred shareholders, the Chapter 11 process was initiated to enable the
company to reorganise. The holding is valued at £0.9m (cost £5.3m) taking into
account the stage the company has reached in Chapter 11 proceedings. The
valuation is believed to be a conservative estimate of IBT's interest in
Essential following the resolution of the court process after which it is
expected that the preferred shareholders will own 100% of the company. The
company reported $16m of cash and marketable securities at end June 2003.



At 31 August 2003 the holdings in Aderis, Affibody, Auxilium, EyeTech, Genosis,
KuDOS and Sunesis are held at cost (total value £15.0m), Axxima, CancerVax and
Essential Therapeutics have been written down from their original cost (total
value £4.0m), and Micromet has been written up (value £3.7m). This equates to
66% of the unquoted portfolio held at cost, 18% written down and 16% written up
by value. The unquoted portfolio, excluding ValiGen and Entigen, is now valued
at 81% of original cost (including the initial cost of Essential).



To recap, the carrying valuations of each of the unquoted companies are reviewed
weekly and incorporate consideration of the progress of the underlying company
against milestones made at the time of investment and any upcoming need to raise
capital.  Strategic equity investments, such as Pfizer's equity investment in
EyeTech are not used as a basis for valuing unquoted companies.



Of the 25 quoted investments, five are held at a discount to their mid market
prices at 31 August 2003, due to disposal restrictions, including limited
liquidity - AnorMED, Epimmune, Galen, Inflazyme, and LION. The effect of these
discounts was to reduce the NAV by £0.9m at 31 August 2003.



INVESTMENT ACTIVITY



Unquoted Companies



As the percentage of NAV invested in unquoted investments remains high, no new
investments have been made in the unquoted portfolio during the year under
review. An investment of £0.4m was made in August 2003 in existing portfolio
company, CancerVax (total investment £2.1m). CancerVax raised $41m in the
financing and has subsequently filed to go public on NASDAQ, market conditions
permitting.



Following a commitment made in August 2001, the second tranche of an investment
(£1.4m) was made in Affibody (total investment £2.7m). Affibody continues to
make good progress developing antibodies (small peptide binders similar to
antibodies) in the areas of protein separation, affinity ligands for drug
discovery, diagnostics and biotherapeutics. The company's collaboration with
Amersham in the area of bioseparations is progressing well and the company has
met its milestones. Affibody is well financed with cash estimated to last until
the end of 2005.



In May 2003, Auxilium's investors agreed to guarantee a revolving line of credit
of $10m to the company in proportion to their investments and in return for
warrants. IBT's share of the guarantee is £0.1m and is shown as a contingent
liability in the accounts. Auxilium's testosterone gel, Testim has been approved
for sale in the US and the UK for use in treating men with low testosterone
levels, and was launched in the USA in February 2003. The sales ramp has been
disappointing due to difficulties with pre-marketing and a stronger than
expected competitor response. However, it appears that Testim is now making up
an increasing share of new testosterone prescriptions as physicians recognise
the benefit of the product over alternative gels.  Auxilium is likely to need to
raise another round of private finance in which IBT is likely to participate (up
to £0.5m).



Genosis, the infertility diagnostics company, has completed its clinical trials
for the female fertility test and has filed for regulatory approval for the
female test. The final tooling and manufacturing of the male fertility test has
been somewhat delayed, although the male device appears to have the necessary
accuracy and sensitivity. This has delayed clinical testing. Since 31 August
2003 an investment of £0.2m has been made in Genosis in order to fund the
completion of the trials for the male test (total investment £0.7m).



There were no exits from unquoted investments during the period under review.



Quoted Companies



New investments were made in seven quoted companies - Cambridge Antibody
Technology Group (CAT), Encysive Pharmaceuticals, Galen Holdings, Indevus
Pharmaceuticals, Inspire Therapeutics, Progenics Pharmaceuticals and XOMA.



CAT (£0.5m investment)

CAT is a Cambridge, UK-based antibody platform and therapeutics company. The
company's primary areas of therapeutic focus are auto-immune disorders and
oncology. CAT's most advanced program is HUMIRA, an antibody which is partnered
with Abbott and has been launched in the US for rheumatoid arthritis and been
approved in Europe. CAT has seven other antibodies in clinical development, the
most advanced of which is Trabio in Phase III trials for the prevention of
post-operative scarring in patients with glaucoma.



Encysive Therapeutics (£1.1m investment)

Encysive is a US-based company developing therapeutics for cardiovascular and
inflammatory diseases, the most advanced of which is Sitaxsentan, which is in a
pivotal trial for Pulmonary Arterial Hypertension (PAH). The company expects to
report data from the trial towards the end of 2004 and to announce a marketing
partner thereafter. Sitaxsentan appears to offer a significant improvement in
treatment over the traditional practice of care, a continuous infusion by
implanted catheter. Currently there is only one oral drug available for PAH
patients, and data to date suggest that the clinical profile of Sitaxsentan may
be superior.



Indevus Pharmaceuticals (£0.4m investment)

Indevus is a US-based company with drug candidates in development for overactive
bladder, anxiety, stroke, HIV, pain and inflammation and serious fungal
infections. Indevus acquires the rights to developmental compounds and uses its
team to advance the clinical program, either independently or with a partner.
Indevus' lead compound, Trospium, is for the treatment of overactive bladder.
Currently marketed products can cause side effects including dry mouth and data
suggest that Trospium may have similar efficacy to marketed products but with a
more favourable side effect profile. Indevus licensed the US rights to Trospium
from Madaus who market the product in Europe. Trospium was filed for approval in
the US in April 2003 and the search for a marketing partner is underway.


Progenics Pharmaceuticals (£0.4m investment)

Progenics is a US-based company. Its most advanced product candidate is
methylnaltrexone, a compound in Phase III trials designed to reduce the side
effects of currently marketed opioids used for pain relief. Progenics is
developing the compound in three parallel clinical programs. A Phase III trial
is underway for opioid-induced bowel dysfunction in advanced medical illness, a
Phase II trial has started in post-surgical constipation and finally a Phase I
study in patients taking opioids chronically is planned for later this year. The
compound is currently unpartnered.



The final three new investments were discussed in detail in the 2003 Interim
Report.



Galen Holdings (£0.5m investment)

Galen is a speciality pharmaceutical company focused on women's health,
dermatology and urology. During the year under review, the company significantly
broadened its product portfolio. Galen strengthened its position in the
dermatology market through a co-promotion agreement with Bristol-Myers Squibb
and development agreement with Leo Pharma in the area of psoriasis. In June
2003, Galen's Femring was launched in the USA. Femring is the first vaginal
estrogen product indicated to treat both the hot flushes and vaginal symptoms
associated with menopause. Galen also bolstered its position in women's health
through the acquisition of the rights to three marketed products from Pfizer.



Inspire Therapeutics (£0.3m investment)

Inspire's lead drug candidate, diquafasol, is for the treatment of dry eye, and
was filed for approval in the USA in mid 2003. In May 2003, Inspire announced
data from a PIII trial for allergic rhinitis, which did not meet its primary
endpoint. Although this was a large potential market, the dry eye compound and
potential size of the dry eye market mean that this remains an interesting
investment.



XOMA (£1.0m investment)

XOMA's lead drug candidate is Raptiva, an antibody for moderate to severe
psoriasis partnered with Genentech in the US, and Serono in Europe. Raptiva has
been filed for approval in both areas and an FDA Advisory panel in September
2003 unanimously recommended its approval. Although the FDA is not bound by the
recommendation of its advisory committees it generally follows their advice.



A further £0.4m was invested in Adolor (total investment £0.8m) and a net
investment of £0.4m was made in Esperion Therapeutics (total investment £0.5m).



Adolor's lead compound, Alvimopan is in Phase III clinical trials for
post-surgical constipation resulting from the use of opioids for pain relief.
Data from the first of these three trials was reported in April 2003 and was
mixed - the primary endpoint of recovery of gastrointestinal function was met in
one of the dosage groups but the time to hospital discharge did not show as much
of a reduction as anticipated. Data from the other two trials is expected later
this year or early next and should allow a better evaluation of the clinical
profile of the compound.



The positive initial Phase II data announced by Esperion has been described and
more details are expected in the coming months.  The company's pipeline
continues to progress with two product candidates in Phase II, and another two
in Phase I. However, the inadvertent acquisition by a shareholder of a third of
the company has resulted in an overhang of stock in the market which will need
to be carefully managed.



The holdings in Arqule, Aspect Medical, Corvas International, 3 - Dimensional
Pharmaceuticals and Weston Medical were sold in their entirety.



The holdings in Alexion Pharmaceuticals, AnorMED, Crucell, Forest Labs, OSI
Pharmaceuticals, Sirna Therapeutics and Targeted Genetics were reduced in size.



International Biotechnology Trust plc



Unaudited Preliminary Results



Unaudited Statement of Total Return (incorporating the Revenue Account)




                                    For the year end 31 August 2003         For the year end 31 August 2002
                                 Revenue      Capital         Total      Revenue       Capital        Total
                                   £'000        £'000         £'000        £'000         £'000        £'000

Gains/(losses) on
investments                            -        7,613         7,613            -      (49,532)     (49,532)

Exchange gains/(losses) on
currency balances                      -           53            53            -          (28)         (28)

Income                               112            -           112          278             -          278

Management fees                    (638)                      (638)        (804)             -        (804)
                                                    -
Administrative
expenses                           (488)            -         (488)        (758)             -        (758)
                                                    
Net (deficit)/return on
ordinary activities before
taxation                         (1,014)        7,666         6,652      (1,284)      (49,560)     (50,844)

Tax on ordinary
activities                             -            -             -            -             -            -

Net (deficit)/return on
ordinary activities after
taxation                         (1,014)        7,666         6,652      (1,284)      (49,560)     (50,844)

Transfer (from)/to reserves      (1,014)        7,666         6,652      (1,284)      (49,560)     (50,844)

(Deficit)/surplus per share       (2.09)p       15.82p        13.73p      (2.64)p     (101.94)p    (104.58)p






The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.


International Biotechnology Trust plc

Unaudited Balance Sheet as at 31 August




                                                  2003              2003             2002              2002
                                                 £'000             £'000            £'000             £'000
Fixed assets
Investments                                                       49,911                             43,584

Current assets
Debtors                                             73                                153
Investments                                      2,742                              1,889
Cash at bank                                     1,615                              2,912
                                                 4,430                              4,954
Creditors: amounts falling due
within one year
                                                   410                                643
Net current assets                                                 4,020                              4,311
Net assets                                                        53,931                             47,895

Capital and reserves
Called up share capital                                           11,954                             12,154
Capital redemption reserve                                        11,043                             10,843
Share purchase reserve                                            66,467                             67,083
Capital reserve                                                 (26,512)                           (34,178)
Revenue reserve                                                  (9,021)                            (8,007)
Equity shareholders' funds                                        53,931                             47,895

Net asset value per share                                        112.79p                             98.52p





International Biotechnology Trust plc
Unaudited Cash Flow Statement


                                                           For the year ended           For the year ended
                                                               31 August 2003               31 August 2002
                                                                        £'000                        £'000
Operating activities
Income                                                                     56                          283
Management fees paid                                                    (617)                        (852)
Other cash payments                                                     (537)                        (729)
Net cash outflow from operating
activities                                                            (1,098)                      (1,298)
Servicing of finance
Interest paid                                                               _                            _
Cash outflow from servicing of finance                                      _                            _
Taxation
UK income tax recovered                                                     _                           67
Tax recovered                                                               _                           67
Capital expenditure and financial
Investment
Purchase of investments                                               (7,838)                     (25,579)
Disposal of investments                                                 8,994                       19,816
Net cash inflow/(outflow) from capital expenditure
and financial investment
                                                                        1,156                      (5,763)
Net cash inflow/(outflow) before management of
liquid resources and financing                                             58                      (6,994)

Management of liquid resources                                          (793)                        2,777

Financing
Repurchase of shares for cancellation                                   (615)                            _

Net cash outflow from financing                                         (615)                            _
Net cash outflow                                                      (1,350)                      (4,217)





Notes:



1.         Audit status



The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 31 August 2003 or 31 August
2002. The financial information for the year ended 31 August 2002 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on those accounts; their report
was unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985. The statutory accounts for the year ended 31 August 2003
will be finalised on the basis of the financial information presented by the
Directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.



This announcement is prepared on the basis of the accounting policies as set out
in the most recently published set of annual financial statements.



2.         Annual General Meeting



The Annual General Meeting of International Biotechnology Trust plc will be held
at 3pm on 14 November 2003 at 31 Gresham Street, London, EC2V 7QA.




3.         Annual Report and Accounts



The Annual Report and Accounts will be mailed to registered shareholders at
their registered addresses in October 2003 and from the date of release copies
of the Annual Report will be made available to the public at the Company's
registered office, 31 Gresham Street, London EC2V 7QA.








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