Final Results

Intl. Biotechnology Trust PLC 30 September 2005 For immediate release 30 September 2005 International Biotechnology Trust plc The Board of International Biotechnology Trust Plc ('IBT') today announces its unaudited Annual Results for the twelve months ended 31 August 2005. Summary • Net asset value per share rose by 4.2% to 120.16p • NASDAQ Biotech Index rose 12.1% and the Merrill Lynch Small Cap Biotech Index rose by 13.6% (both sterling adjusted). • Return on IBT's quoted portfolio of 5.4%. • Unquoted revaluations increased net assets by £0.7m, however since the year-end the revaluation of Sunesis at its IPO reduced the Net Assets by £0.6m or1.3p per share • Ten new investments in quoted companies; sales of two quoted companies, Eyetech and Xoma • One new unquoted investment during the period (Oxagen) and one committed after the year end; follow-on investments in Trine, KuDOS Genosis, Archemix, PowderMed, and Micromet. • Total net assets at 31 August 2005: £57.5m (31 August 2004: £55.2m) Andrew Barker, Chairman, commented: 'Investment in International Biotechnology Trust's shares provides shareholders with exposure to biotechnology companies - both public and private. While the volatility of the share price of single stocks in the sector is high, the combination of a portfolio of investments, including unquoted holdings, should reduce the volatility of the Company's net assets while the investment trust structure allows investors reasonable liquidity for a specialist vehicle. Many of the companies in the portfolio have products that are in mid-stage clinical trials and as such can take a number of years to reach registration and the market. We remain optimistic about the prospects for the portfolio but must point out that it can take time to reap the rewards.' For further information, please contact: International Biotechnology Trust plc Andrew Barker, Chairman 020 7658 3206 SV Life Sciences Managers LLP Kate Bingham / Andy Smith 020 7421 7070 Lansons Communications Amy Fisher / Charlotte Edgar 020 7490 8828 Website: www.internationalbiotrust.com CHAIRMAN'S STATEMENT Performance and review I am pleased to report that for the third successive year there has been an increase in net asset value (NAV) of International Biotechnology Trust. However, in this year we did not have the benefit of the uplift in assets from initial public offerings (IPOs), such as Eyetech in the previous year. Over the year to 31st August 2005 the NAV per share increased by 4.2% from 115.35p to 120.16p per share. Over the same period the Merrill Lynch Small-Cap Biotech Index (MLSCI), which we consider the most relevant index given our weighting in private equity and smaller quoted companies, rose by 13.6% and the NASDAQ Biotech Index (NBI) 12.1%, in Sterling terms. Over the three years the NAV rose by 22.0% while the MLSCI and NBI rose by 15.4% and 36.2% respectively. In the last year, importantly for shareholders, the share price rose by 9.7% (up 36.3% over the three years) reflecting the rise in assets and the narrowing of the discount from 17.6% to 13.2%. This year currency changes had no material effect on net assets on a year to year basis, unlike the previous year when the US dollar weakened considerably against sterling. Whilst the situation is kept under regular review, it remains our current policy not to hedge the currency exposure of the portfolio. The performance of IBTs quoted portfolio showed an increase of 5.4%. During the reporting period, the net effect of the Directors valuation changes of unquoted portfolio investments totaled a net increase of £0.7 million and principally comprised a discount to the expected proceeds of the acquisition of most of the assets of Aderis, small write ups in the value of our holdings in KuDOS and Micromet, and a 50% write-down to the valuation of Affibody to reflect the poor European private funding climate. Subsequent to the year end there has been a write-down of £0.6m (or 1.3p per share) of our investment in Sunesis, following its IPO on 27 September 2005. There have been no IPOs from the portfolio this last year, which has mirrored the situation in the wider global biotechnology market which has had an intermittent IPO window in the U.S. and Europe. The IPOs that have occurred have frequently been priced below the indicative range and often below the last round private valuation. There have, however, been sales from the portfolio with the complete divestment of the holding in Eyetech Pharmaceuticals after its successful IPO in early 2004 which was priced at $21 per share. IBT invested $5.0 million in Eyetech and realised $32 million in total, including $11 million in the previous year, with an average exit price of just over $39 per share. The other exit from the unquoted portfolio was the acquisition of most of the assets of Aderis, which has been announced, but has not yet completed. In addition, there have been acquisitions of quoted portfolio companies; Warner Chilcott and Atrix Laboratories, while portfolio company Epimmune, in the U.S. merged with IDM in France. It has been both interesting and welcome to see a resurgence in the acquisition of biotechnology companies by larger pharmaceutical companies. This activity will hopefully continue and has recently been illustrated by GlaxoSmithKline's proposed acquisition of ID Biomedical in Canada. For part of the year, the success of Genentech's drug Avastin propelled the share price of Genentech to the position of the world's largest biotechnology company by stock market capitalisation. With this advance came the focus on the larger quoted capitalisation biotechnology companies to the detriment of those with smaller capitalisations, where this Company has historically concentrated. Within the last year the Company has begun to diversify into some larger capitalisation companies, however it should be remembered that investment in even the larger biotechnology companies also carries significant risk. There have been some concerns since the election of the Republican Administration for a second term, that the absence of a permanent Commissioner at the Food and Drug Administration (FDA) would prompt a more cautious approach to U.S. drug and biologic approvals. However, while the appointment of Dr Crawford to that post in the second half of the year initially allayed those concerns, his retirement after two months, in late September 2005 has lead to those concerns re-surfacing. Dr Crawford's replacement has already been proposed and is an oncology specialist. This should bode well for those oncology companies in the portfolio and prior to these personnel changes at the FDA, three oncology portfolio companies received approval, approvable letters, or a positive recommendation by a FDA panel, subsequent to our year end. 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 2005, and at two year intervals thereafter. In considering whether to recommend to Shareholders that the Company continue in business as an investment trust, the Board of Directors has reviewed five particular aspects of its business: The prospects for the biotechnology sector The prospects for the portfolio The strength and depth of our management The appropriateness of the investment trust structure The number of investment vehicles offering investors liquid biotechnology exposure We consider the fundamentals of the biotechnology sector to be compelling and these are highlighted in the Investment Managers' Review. Our Investment Manager continues to manage a portfolio of public and private biotechnology investments which we believe are best positioned to benefit from an increase in interest in the sector. We believe that your Company has as its Investment Manager, a leading team in the biotechnology sector with considerable skill, diligence and resources to apply to the management of the portfolio. Investment trusts are one of the few investment vehicles that can provide investors a liquid investment in a portfolio of private and illiquid quoted investments in a specialist sector; furthermore their management is overseen by an active, but non-executive independent board of directors. Finally, in the last year we have witnessed a contraction in the number and scope of investment trusts offering investors global private and public biotechnology exposure. For these reasons, your Board of Directors remain excited about the prospects for the sector and for the Company. They intend to vote their 181,183 shares in favour of the ordinary resolution to continue in business as an investment trust and commend this resolution to shareholders. Share buy-backs During the year ended 31 August 2005, no shares were purchased by the Company for cancellation under the authority granted to it at the Annual General Meeting (AGM) held on 19 November 2004. The Board pays close attention to the discount to net assets at which the Company's shares trade and when shares are available in reasonable volumes and at a high discount to net assets, purchases will be made. To retain this flexibility to act, a resolution to authorise the Directors to purchase up to 14.99% of the issued share capital will be proposed to shareholders at the forthcoming AGM. Valuations In valuing unquoted securities, securities with restricted trading and holdings that are regarded as illiquid, the Board continues to use the policy outlined in past annual reports which is based upon the Association of Investment Trust Companies' Statement of Recommended Practice (SORP) and the International Private Equity and Venture Capital Valuation Guidelines (which were developed and adopted by the British Venture Capital Association (BVCA) on which the weekly NAV calculations are based. Valuation discounts applied to quoted investments range from 10% to 25% and the effect of these on 31 August 2005 was to reduce the NAV by a little under £0.6 million. International Financial Reporting Standards (IFRS) From 1 September 2005 IBT is required to prepare its financial statements in accordance with IFRS, as adopted for use in the European Union. The Company's Interim results for the six months ended 28 February 2006 will be the first set of results prepared exclusively on this basis. Adoption of IFRS would have the key impacts on previously published financial statements and portfolio valuations of requiring the application of bid prices to, and more importantly, the removal of discounts on quoted investments. At 31 August 2005 this would have increased net assets by £547,000 (1.14p per share) Annual General Meeting The Annual General Meeting will be held at 12:00 noon on Friday 11 November 2005 at 31 Gresham Street, London EC2V 7QA. As in previous years, the meeting will include a presentation by SV Life Sciences. Prospects Investment in IBT's shares provides shareholders with exposure to biotechnology companies - both public and private. While the volatility of the share price of single stocks in the sector is high, the combination of a portfolio of investments, including unquoted holdings, should reduce the volatility of the Company's net assets while the investment trust structure allows investors reasonable liquidity for a specialist vehicle. Many of the companies in the portfolio have products that are in mid-stage clinical trials and as such can take a number of years to reach registration and the market. We remain optimistic about the prospects for the portfolio but must point out that it can take time to reap the rewards. Andrew Barker Chairman 30 September 2005 Investment Managers Review MARKET REVIEW It has been a very volatile year for biotechnology and one where the divergence between the U.S. and European biotechnology indices has continued. In the U.S., the NBI visited low points in late October 2004 and early April 2005 and in the case of the latter, remained depressed for a period of about three months. During the period from early April to mid-June, the smaller capitalisation US biotechnology companies were hit the hardest as investors rotated towards lower risk equity exposure. Between January and May 2005 there appeared to be a de-coupling of the perceived prospects for the largest profitable biotechnology companies, from the rest of the U.S. biotechnology stock universe as a stream of positive clinical trials emanated from Genentech. The periods of recovery in the U.S. biotech indices; in the last two months of 2004, and from early June to August 2005, were marked by two very different drivers. At the end of September 2004, Merck announced the withdrawal of its blockbuster analgesic Vioxx due to the risk of cardiovascular side effects. This event cast a shadow over the whole therapeutic (non-device) healthcare sector (pharmaceutical and biotechnology) and was compounded in early October when Chiron admitted to problems in the manufacturing of influenza virus vaccine destined for the U.S. market which subsequently resulted in the suspension of their manufacturing license and their inability to supply the U.S. market in 2004/5 and Europe in 2005/6. While the impact of these events is still being felt in the pharmaceutical industry with the success of the Vioxx first Class-action law suit, this shadow had started to lift from the biotechnology sector at the end of 2004 when it was realised that the likelihood of product withdrawals should be lower in the biotechnology sector than in the pharmaceutical sector and the manufacturing problems with influenza virus vaccines should be confined to Chiron. However, at the end of February, Elan Corp. and partner Biogen IDEC announced the withdrawal of their expected blockbuster drug for multiple sclerosis, Tysabri due to the death of two patients. Sentiment was again hit across the therapeutic healthcare sector although this later recovered as the negative impact was limited mostly to Elan Corp. and Biogen. The accelerated approval process at the FDA, which allowed Tysabri to be approved subject to the completion of the clinical programme has however, rightly been the subject of some further debate. From the low point of the NBI at the end of April, the appointment of a permanent FDA Commissioner in late July, a stream of positive clinical results from Genentech on their oncology product, Avastin, and particularly good earnings for the first half of 2005, reported in July and August, have all bolstered the sector. A further milestone in the evolution of the biotechnology sector occurred in the summer of 2005 when the market capitalisations of Amgen and Genentech exceeded $100 billion making them bigger than many pharmaceutical companies including Merck and AstraZeneca. In Europe, companies and management appear to be at a much earlier stage than in the U.S. and the European market shares those structural characteristics of other less developed biotechnology markets (such as Canada and Australia), which may always relegate them to being junior or feeder markets for the U.S.. These structural issues include a smaller number of investors, inexperienced management and currently too many companies with too few viable products. Outside of the U.S., there are still opportunities to make money from biotechnology and while there have been a limited number of IPOs, there continues to be a high level of M&A activity leading to consolidation of this fragmented European sector. There are exceptions to this landscape and during the year include portfolio company Cambridge Antibody Technology emerged from their successful legal dispute with partner Abbott Laboratories (which is still under appeal) to sign a landmark research and clinical development deal with AstraZeneca. In continental Europe, the reputation of biotechnology companies has not however been enhanced in the last year with a number including Evotech OAI, Bavarian Nordic and Innogenetics raising money from secondary offerings and announcing profit warnings within a matter of months. We remain cautious on the prospects for many European biotechnology companies and 2005/6 may be a year where investor expectations of clinical success at companies such as Ark Therapeutics, Antisoma, Oxford bioMedica and the many recently AIM-listed companies may be tested. Paradoxically, this less developed European market has resulted in the out performance of the predominantly U.K. biotechnology indices compared to their U.S. counterparts, partly due to the limited availability of capital. The Bloomberg UK biotechnology index and the FTSE techmark Mediscience index both increased over 20% in the year under review but both indices are skewed by the performance of single large components (Shire Pharmaceuticals and Elan Corp., respectively), which in the case of Elan Corp. has been removed and added back to the composite index within the same year. An increasingly important dynamic in this sector has been the re-emergence of acquisition activity by large pharmaceutical companies. Over the last year GlaxoSmithKline has acquired Corixa and announced the intended acquisition of ID Biomedical, Pfizer announced the acquisition of Vicuron, which still has to complete, and Shire has acquired Transkaryotic Therapies, Inc.. In addition, pharmaceutical companies have been active in acquiring private biotechnology companies such as Angiosyn (Pfizer) and Peninsula Pharmaceuticals (J&J) in a growing trend where so-called 'IPO ready' companies opt to be acquired rather than become public. The year prior to the summer of 2005 saw 8 U.S. biotechnology IPOs raising $509 million compared to 22 IPOs raising $1.3 billion over the same period in 2004. While calendar 2004 was the best biotechnology financing period since 2000, the lower number of companies and pre-money valuations, as well as the lower absolute level of money raised, suggests that investors have become more selective. Part of this pause in the fundraising window has been due to the oversupply of new primary and secondary biotechnology shares. This cautious environment can bring with it opportunities for an investment trust company such as IBT which can invest across the spectrum of public and private biotechnology. OUTLOOK The fundamentals of the biotechnology sector remain strong and the most recent earnings season has emphasised the maturity of this sector where, in those biotechnology companies that have them, profits growth is being achieved both by growing sales and reducing costs. This is something that is much more difficult to effect in more mature businesses in the broad healthcare sector. In times during the past year, the biotechnology sector has outperformed the broader markets and there may now be the gradual acceptance that the sector offers high beta exposure combined with the defensiveness that has previously been reserved for the pharmaceutical industry. At the time of writing, the sector may be pausing its recent advance in order to digest the plethora of IPOs and secondary fundraising that have occurred in the last year. Future advancement of the sector is partly dependent on the generalist investors' attitude to risk and in recent months, this has been affected by terrorist attacks and oil prices. A number of IBT portfolio companies are approaching important milestones before the end of this calendar year. The first inhaled insulin product to be submitted for US approval (from Nektar Therapeutics and Partners Pfizer and Sanofi-Aventis) was recommended for approval by a FDA panel in early September. Just after our year end, MGI Pharma received an approvable letter from the FDA on Dacogen for a type of leukaemia which bodes well for an approval before the end of our interim period. An FDA oncology review panel is also scheduled for the drug Relvimid from Celgene for multiple myeloma in mid-September. Towards the end of 2005, it is expected that the appeal of Abbott Laboratories against the level of royalties to Cambridge Antibody Technology will be concluded. PORTFOLIO HIGHLIGHTS In mid-November 2004, OSI Pharmaceuticals and partner Genentech announced the approval of OSIs lead drug Tarceva to treat non-small cell carcinoma (NSCLC). As is often the case, the share price of OSI fell on the announcement as investors expected a similar drug to Tarceva (Iressa from AstraZeneca) to show a significant survival benefit as Tarceva had done earlier in the year. About a month later, AstraZeneca reported the results of a clinical trial which was designed (but failed) to show a survival benefit in NSCLC patients and the share price of OSI Pharmaceuticals gained as much as 45%. In late September 2004, when its shares were trading below £6.50 per share, Warner Chilcott, formally Galen Holdings, announced that it had received an approach from a potential acquirer. After a number of other approaches, the company was acquired in early January 2005 for £8.62 per share. Similarly the previously announced acquisition of Atrix Laboratories by QLT was completed in November 2004. In late September 2004, Aradigm and affiliate Novo announced that their agreement on the AERx inhaled insulin platform was to be restructured so that Novo could take the programme, equipment and personnel in-house resulting in a cash payment to Aradigm of $55 million. Aradigm continues to develop non-insulin applications of AERx and has recently reported successful clinical trial results on its second device platform, Intraject. In July the majority of the assets of unquoted portfolio company Aderis were acquired by their partner Schwartz Pharma in a transaction worth €58 million which will result in a realisation slightly above carrying value but slightly below cost due to currency movements. In late January 2005 Progenics Pharmaceuticals reported positive Phase II results for its lead drug methylnaltrexone for the management of post-operative bowel dysfunction. Subsequently in March, Progenics announced highly statistically significant results for all of the primary and secondary endpoints for the Phase III clinical trial of methylnaltrexone in patients with advanced medical illness. At the end of the period under review, Progenics was the Company's largest quoted holding. PORTFOLIO SUMMARY AT 31 AUGUST 2005 At our year end, IBT held 44 companies - 33 quoted companies (representing 56.1% of NAV) and 11 unquoted companies (comprising 28.6% of NAV). The remaining 15.3% was made up of cash and money market instruments (£8.8 million), a significant proportion of which is committed to new or further unquoted investments. Members of SV Life Sciences sat on the Boards of ten portfolio companies at the end of the year under review - Affibody, Auxilium, Archemix, CancerVax, Dynogen, KuDOS, Micromet, Oxagen, PowderMed, and Trine. The geographical split of the portfolio at 31 August 2005 was 65.9% in North America, 10.6% in the U.K. and 6.2% in Continental Europe and 2.0% in Australia. By sub-sector, 66.4% of NAV was invested in biopharmaceuticals, 5.4% in drug delivery, 5.9% in medical devices and 7.0% in other areas. The remaining 15.3% is made up of cash, money market instruments and other net current assets. The companies which SV Life Sciences estimate as having less than one year of cash at 31 August 2005 were Affibody, Anormed, Aradigm, Archemix, Atherogenics, CancerVax, Genosis, Indevus, Kosan, KuDOS, Micromet, Powdermed, Pozen and Trine. Within this group, Archemix, Genosis, Micromet and, Trine are unquoted companies with milestone-linked committed funding tranches due within the next year. As reported at the end of the interim period, the cash balances (including money market instruments and other net current assets) totalled 30% of NAV - mostly as a result of the divestment of the company's holding in Eyetech. By our year end at 31 August, this had been reduced to below 16% due to new and further quoted investments. Furthermore, a total of £4.2 million (or 7.3% of NAV at 31 August 2005) had been committed for first or further investment in unquoted companies. The portfolio as always offered investors a broad exposure to biotechnology at different stages of clinical development and across a diversified range of therapeutic area including oncology, drug delivery, cardiovascular, specialty pharmaceutical, anti-infective and vaccines. With the contraction in the number of Investment Trusts offering investors global biotechnology exposure, IBT now stands alone in offering investors this exposure to public and private biotechnology investments. INVESTMENT MANAGEMENT PERSONNEL In May of the year under review, one of IBTs competitors, the Bioscience Investment Trust (BIT), formally 3i Bioscience Investment Trust, elected to be managed in members' voluntary liquidation. In June it was announced that Dr Andy Smith, the lead manager of BIT had been recruited by SV Life Sciences to join the team that manages IBT and is headed by Kate Bingham. VALUATION At 31 August 2005, IBTs unquoted portfolio (value £16.4 million) represented 28.6% of net assets, up from 22% the previous year due to further investments in portfolio companies. These follow-on investments in Genosis, KuDOS, Trine, Archemix and Powdermed, and Micromet totalled £2.8 million. During the year under review, the net change in the Directors' valuations of the unquoted investments was £0.7 million, representing 1.4% of NAV at the start of the reporting year. Currency movements increased the valuation of the unquoted portfolio by £0.02 million during the year under review. INVESTMENT ACTIVITY Unquoted Companies A number of previously committed investments in portfolio companies from earlier reporting periods were made during the year under review. As reported at the interim stage, a new investment was made in Oxagen in the second half of our year. While an investment in a U.S. unquoted anti-infective company was approved and reported at the interim stage, delays and changes to the clinical programme during the second half of our year allowed further review and the determination that this particular investment was at an earlier stage than when the investment was first reviewed, and consequently not yet suitable for IBT. However, very close to our year end, an exciting North American SV Life Sciences unquoted investment, which had not previously been an IBT investment was reviewed and judged to be at a late enough stage to be very appropriate to IBT. $2 million has been committed to this investment. QUOTED COMPANIES During the period under review the Company's holding in Encysive Pharmaceuticals was partially divested after a positive Phase III clinical trial result and NDA filing for its lead molecule Thelin, an endothelin antagonist for the treatment of pulmonary hypertension. One of the Company's smaller investments, Xoma was divested and the proceeds re-invested in new quoted investments that are expected to have positive clinical or regulatory events in the next year. These new quoted holdings include MGI Pharma, Celgene Corp., and Pozen Inc.. SV Life Sciences Managers LLP 30 September 2005 Ten Largest Quoted Investments at 31 August 2005 --------------- ------ -------- ------- -------------------- Investment Carrying % of Country Business activity value Shareholders' £'000 Funds --------------- ------ -------- ------- -------------------- 1 Progenics 2,575 4.48 USA Progenics is a ---- Pharmaceuticals ------ -------- ------- biopharmaceutical ------------- company focusing products for the treatment and prevention of cancer and viral diseases. The company's lead drug, methylnaltrexone is in phase III studies for patients with advanced cancer. -------------------- 2 Alexion 2,277 3.96 USA Alexion discovers and ---- Pharmaceuticals ------ -------- ------- develops compounds for ------------- the treatment of autoimmune and cardiovascular diseases. The company develops C5 complement inhibitors and Apogens, two classes of potential therapeutics designed to target disease-causing segments of the immune system. -------------------- 3 OSI 2,048 3.56 USA OSI is a research and ---- Pharmaceuticals ------ -------- ------- development company ------------- focused in the areas of oncology and diabetes. OSI has one approved drug Tarceva, developed and commercialised in collaboration with Genentech. -------------------- 4 Nektar 1,899 3.31 USA Nektar is a drug ---- Therapeutics ------ -------- ------- delivery company with ------------- technologies that encompass inhaled delivery and PEGylation of macromolecules, peptides and aptamers. -------------------- 5 Encysive 1,897 3.30 USA Encysive discovers and ---- Pharmaceuticals ------ -------- ------- develops small molecule ------------- therapeutics in vascular biology. The company's first product, Argatroban is approved and licensed to GSK for heparin-induced thombocytopenia and its second is an endothelin antagonist under review by the FDA and EMEA. -------------------- 6 Phase Forward 1,838 3.20 USA Phase Forward provides ---- ------------- ------ -------- ------- data management solutions for clinical trials and drug safety, offering solutions in electronic data capture, clinical data management and adverse event reporting. -------------------- 7 Cambridge 1,796 3.13 UK CAT discovers and ---- Antibody ------ -------- ------- develops monoclonal Technology antibodies (MAbs). The ------------- companies MAbs are used in human therapeutics and the drug discovery process. CAT's development partners and licensees include Abbott Laboratories, AstraZeneca and Human Genome Sciences. -------------------- 8 Anormed 1,683 2.93 Canada AnorMED discovers and ---- ------------- ------ -------- ------- develops small molecule therapeutics for the treatment of HIV infection and cancer -------------------- 9 Shire 1,317 2.29 UK Shire is a global ---- Pharmaceuticals ------ -------- ------- specialty pharmaceutical ------------- company with a focus on four therapeutic areas: central nervous system disorders, oncology/ hematology, anti-virals and biologics. -------------------- 10 Solexa 1,287 2.24 USA Solexa is developing a ---- (including ------ -------- ------- method of genetic warrants) analysis based on ------------- sequencing-by-synthesis and molecular arrays. The company intends to offer different types of genetic analyses including DNA sequencing, gene expression, genotyping and micro-RNA analysis. -------------------- Total 18,617 32.40 --------------- ------ -------- ------- -------------------- Unquoted Investments at 31 August 2005 ------------- ----- ------ -------- ---------------------- Investment Cost Carrying % of Business activity and £'000 value Shareholders' valuation basis £'000 Funds 1 Sunesis 3,312 2,780 4.84 Sunesis is a Pharmaceuticals clinical-stage biopharmaceutical company focused on the discovery, development and commercialisation of novel small molecule therapeutics for oncology and other unmet medical needs. (USA) ---- ------------ ----- ------ -------- ---------------------- 2 Aderis 3,519 2,780 4.84 Aderis is a small Pharmaceuticals molecule discovery and development company with investigational compounds in CNS, cardiovascular and renal therapeutic areas. Aderis has partnerships with Schwarz Pharma AG and King Pharmaceuticals. (USA) ---- ------------ ----- ------ -------- ---------------------- 3 Micromet 4,121 2,091 3.64 Micromet designs and develops novel antibody derived therapies for the treatment of severe human diseases. Micromet has two clinical candidates and partnerships with Serono, Enzon and MedImmune (Germany) ---- ------------ ----- ------ -------- ---------------------- 4 KuDOS 1,585 1,585 2.76 KuDOS is developing Pharmaceuticals small molecule drugs based on DNA damage sensing, signalling and repair, initially focussed on oncology, has three products in clinical development and three preclinical candidates. (UK) ---- ------------ ----- ------ -------- ---------------------- 5 Genosis 1,640 1,533 2.66 Genosis is a medical device company with proprietary technology for the diagnosis of reproductive disorders. The company's first product offering is an over-the-counter in vitro diagnostic for screening male and female fertility which has already received regulatory approval. (USA) ---- ------------ ----- ------ -------- ---------------------- 6 Trine 5,741 1,494 2.60 Trine is a drug Pharmaceuticals development company with products to address the areas of renal, gastrointestinal and metabolic diseases. (USA) ---- ------------ ----- ------ -------- ---------------------- 7 Affibody 2,687 1,464 2.55 Affibody uses innovative protein engineering technologies for the development of products for biotherapeutics and biotechnology applications. Affibody molecules mimic monoclonal antibodies and are derived from an antibody-binding domain of Protein A. (Sweden) ---- ------------ ----- ------ -------- ---------------------- 8 Oxagen 930 930 1.62 Oxagen is developing a pipeline of novel drugs to treat inflammatory diseases. The company's portfolio includes a lead programme with the potential to treat asthma and other respiratory and inflammatory conditions. (UK) ---- ------------ ----- ------ -------- ---------------------- 9 Dynogen 639 650 1.13 Dynogen is a biopharmaceutical company developing drugs for genitourinary and gastrointestinal disorders including constipation, irritable bowel syndrome and overactive bladder. (USA) ---- ------------ ----- ------ -------- ---------------------- 10 Archemix 621 626 1.09 Archemix is a leading biopharmaceutical company in the development of aptamers as therapeutic agents. Aptamers are single-stranded nucleic acids that form well-defined 3-D shapes binding target molecules in a similar manner to antibodies. (USA) ---- ------------ ----- ------ -------- ---------------------- 11 PowderMed 480 480 0.84 PowderMed is an immunotherapeutic product company with six vaccine programmes targeting influenza, chronic vital diseases and cancer. PowderMed's products are based on their proprietary DNA particle mediated delivery technology. (UK) ---- ------------ ----- ------ -------- ---------------------- Total 25,275 16,413 28.57 ------------- ----- ------ -------- ---------------------- Note on Merrill Lynch Small Cap Biotech Index (MLSCI) The MLSCI represents stocks with market caps under US$1 billion. The movement in the MLSCI from 31 August 2004 to 31 August 2005 in $ terms, based on the data received from Merrill Lynch on 1 September 2005 is 14%.The movement in £ terms has been calculated using the prevailing exchange rates at the start and end of the reporting period, sourced from Factset and Bloomberg. The data underlying the MLSCI changes regularly in line with changes in the index constituents, price adjustments and corporate actions. The historic data is then retrospectively adjusted. As a result the performance for the reporting period, if calculated at a future date, is likely to be different from the previously published number. International Biotechnology Trust plc Unaudited Preliminary Results Unaudited Statement of Total Return (incorporating the Revenue Account) Group Group For the year For the year ended 31 August ended 31 August 2005 2004 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments - 3,258 3,258 - 2,641 2,641 Exchange (losses)/gains on currency balances - (224) (224) - (226) (226) Income 545 - 545 204 - 204 Management fees (781) - (781) (788) - (788) Administrative (496) - (496) (608) - (608) expenses -------------- -------- -------- -------- -------- -------- -------- Net(deficit)/ return on ordinary activities before taxation (732) 3,034 2,302 (1,192) 2,415 1,223 Tax on ordinary - - - - - - activities -------------- -------- -------- -------- -------- -------- -------- Net (deficit)/return on ordinary activities after taxation (732) 3,034 2,302 (1,192) 2,415 1,223 -------------- -------- -------- -------- -------- -------- -------- Transfer (from)/to reserves (732) 3,034 2,302 (1,192) 2,415 1,223 -------------- -------- -------- -------- -------- -------- -------- (Deficit)/surplus per share (1.54)p 6.35p 4.81p (2.49)p 5.05p 2.56p The revenue column of this statement is the profit and loss account of the Group. All revenue and capital items in the above statement derive from continuing operations. International Biotechnology Trust plc Unaudited Balance Sheets as at 31 August Group Company Group Company 2005 2005 2004 2004 £'000 £'000 £'000 £'000 Fixed assets Investments 48,680 48,680 43,242 42,211 Investment in _ _ subsidiary undertaking Current assets Debtors 61 61 1,935 3,035 Investments 7,110 7,110 6,018 6,018 Cash at bank 2,336 2,336 4,337 4,337 ----------------- --- ----------- ---------- --------- ------- 9,507 9,507 12,290 13,390 ----------------- --- ----------- ---------- --------- ------- Creditors: amounts falling due (731) (1,242) (378) (378) within one year --- ----------- ---------- --------- ------- ----------------- Net current assets 8,776 8,265 11,912 13,012 ----------------- --- ----------- ---------- --------- ------- Net assets 57,456 56,945 55,154 55,223 ----------------- --- ----------- ---------- --------- ------- Capital and reserves Called up share capital 11,954 11,954 11,954 11,954 Capital redemption 11,043 11,043 11,043 11,043 reserve Share purchase reserve 66,467 66,467 66,467 66,467 Capital reserve (21,063) (21,574) (24,097) (24,028) Revenue reserve (10,945) (10,945) (10,213) (10,213) ----------------- --- ----------- ---------- --------- ------- Equity shareholders'funds 57,456 56,945 55,154 55,223 --- ----------- ---------- --------- ------- ----------------- Net asset value per share 120.16p 119,.09p 115.35p 115.49p International Biotechnology Trust plc Unaudited Cash Flow Statement Group Group For the year For the year ended ended 31 August 2005 31 August 2004 £'000 £'000 Operating activities Income 683 25 Management fees paid (969) (785) Other cash payments (523) (657) ----------------------- ----------- ----------- Net cash outflow from operating (809) (1,417) activities ----------------------- ----------- ----------- Servicing of finance Interest paid _ _ ----------------------- ----------- ----------- Cash outflow from servicing of finance _ _ ----------------------- ----------- ----------- Taxation UK income tax recovered _ _ ----------------------- ----------- ----------- Tax recovered _ _ Capital expenditure and financial Investment Purchase of investments (17,740) (3,776) Disposal of investments 18,002 11,241 ----------------------- ----------- ----------- Net cash inflow from capital expenditure and financial investment 262 7,465 ----------------------- ----------- ----------- Net cash (outflow)/inflow before management of liquid resources and financing (547) 6,048 ----------------------- ----------- ----------- Management of liquid resources (1,230) (3,100) ----------------------- ----------- ----------- Financing Repurchase of shares for cancellation _ _ ----------------------- ----------- ----------- Net cash outflow from financing _ _ ----------------------- ----------- ----------- Net cash (outflow)/inflow (1,777) 2,948 ----------------------- ----------- ----------- Notes: 1. Audit status These accounts consolidate the accounts of the Company 'International Biotechnology Trust plc and its wholly-owned subsidiary, IBT 2004 Limited. The financial information set out in the announcement does not constitute the Company's statutory accounts for the year ended 31 August 2005 or 31 August 2004. The financial information for the year ended 31 August 2004 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 2005 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 set out in the annual financial statements. 2. As permitted by Section 230 (4) of the Companies Act 1985, the Company has not presented its own revenue account. The net revenue deficit after taxation for the year of the Company, dealt within the accounts of the Group was £732,000. 3. Transactions in foreign currency, whether of a revenue or capital nature, are translated into sterling at the rates of exchange ruling on the dates of such transactions. Foreign currency assets and liabilities at the balance sheet date are translated into sterling at the rates of exchange ruling on that date. Exchange gains or losses on fixed asset investments are included within realised or unrealised gains or losses on investments. Other exchange movements are shown separately in the Group Statement of Total Return. 4. The net asset value shown as at 31 August 2005 of 120.16p relates to group assets of £57,456,000 and on 47,815,467 shares in issue. 5. Annual General Meeting The Annual General Meeting of International Biotechnology Trust plc will be held at 12 noon on 11 November 2005 at 31 Gresham Street, London, EC2V 7QA. 6. Annual Report and Accounts The Annual Report and Accounts will be mailed to registered shareholders at their registered addresses in October 2005 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. This information is provided by RNS The company news service from the London Stock Exchange

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