British Biotech Interim Results for the Six Months Ended October 31, 2002.

Business Editors

OXFORD, U.K.--(BUSINESS WIRE)--Dec. 4, 2002

British Biotech plc (LSE: BBG, Nasdaq: BBIOY) today announced its interim results for the six months ended October 31, 2002.

Operational highlights:

- Progress with clinical studies

- Phase II study started with the novel thrombolytic BB-10153

- Phase I weekly-dosing study successfully completed with the anti-cancer agent BB-10901

- Start of Phase II weekly-dosing study with BB-10901 announced today

- Second Phase I study started with more frequent dosing of BB-10901

- Phase I started with the novel antibiotic BB-83698

- Progress in research

- R&D collaboration formed with antibiotic specialist GeneSoft Pharmaceuticals, Inc.

- Anti-inflammatory collaboration with Serono extended

- The Company continues to evaluate M&A opportunities that will create value for shareholders

- Dr Peter Fellner appointed Chairman from January 1, 2003 (see separate statement)

Financial highlights:

- Loss for the period reduced to(pound)8.1 million (US$12.6

million) (2001:(pound)8.4 million)

- Net cash outflow for the period of(pound)7.6 million (US$11.8

million) (2001:(pound)2.8 million)

- Cash and short-term investments of(pound)42.8 million (US$66.8

million) at October 31, 2002 (April 30, 2002: (pound)50.4

million)

Tim Edwards, acting Chief Executive Officer of British Biotech, said:

"Our strategy is to create value for shareholders through focusing first, on managing the portfolio of products and research opportunities; and second, on completing a corporate transaction. We have progressed the product portfolio and continue to evaluate a number of M&A opportunities."

Safe harbor statement: this news release contains forward-looking statements that reflect the Company's current expectation regarding future events. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of the Company's research strategy, the applicability of the discoveries made therein, the successful and timely completion of clinical studies and the uncertainties related to the regulatory process.

Business Review

Product Portfolio

In the half-year to October 31, 2002 British Biotech, in collaboration with its partners, has continued to develop its product portfolio. Currently, four products are active in clinical development.

- BB-10153, which prevents and dissolves blood clots, was

discovered in-house at British Biotech. This product has the

potential to overcome the major risk of existing thrombolytic

drugs, that of internal bleeding. Following FDA approval in

March 2002, British Biotech started a Phase II trial of

BB-10153 in heart attack patients under the direction of the

US-based Thrombolysis in Myocardial Infarction Group. Data

from this study are expected to be available in the second

half of 2003.

- BB-10901 is a monoclonal antibody-based treatment for small

cell lung cancer (SCLC) and other CD-56 positive tumors

discovered by ImmunoGen of Cambridge, Massachusetts. British

Biotech has development and commercialization rights for

Europe and Japan. During the period, a Phase I weekly-dosing

study of BB-10901 was completed at two centers in the USA,

which established a maximum tolerated dose (MTD) of 60mg/m2

for the drug at this dosing schedule. In November 2002, data

from this study were presented at a cancer symposium by the

principal investigator at one of the centers, Dr Anthony

Tolcher (`Molecular Targets and Cancer Therapeutics';

Frankfurt, Nov. 19-22, 2002. Organized by the European

Organization for Research and Treatment of Cancer (EORTC), the

US-based National Cancer Institute (NCI) and the American

Association for Cancer Research (AACR)). These showed that

BB-10901 can be safely and feasibly administered for

repetitive courses at doses comparable to those that produced

anti-tumor activity in pre-clinical models. Dr Tolcher noted

that, at the MTD and below, toxicities were modest (in

particular, no hematological toxicity was observed) and

preliminary evidence of anti-tumor activity was seen. A Phase

II weekly-dosing study at this MTD in relapsed SCLC patients

is ready to start.

BB-10901 is also the subject of a second Phase I clinical

study, started in August 2002 and conducted in the United

Kingdom, to evaluate the safety, tolerability and

pharmacokinetics of more frequent dosing.

Data from these ongoing studies are expected to be available

in the second half of 2003.

- MG-98 is an innovative product targeted at the reversal of

methylation of tumor suppression genes in solid and liquid

tumors. British Biotech acquired European development and

commercialization rights from MethylGene Inc of Montreal,

Canada in February 2002. Phase I and Phase II studies with

intermittent dosing of MG-98 have been completed by

MethylGene. MG-98 is currently in Phase I trials in North

America to explore the safety, pharmacokinetics and

pharmacodynamics of a continuous infusion of the product in

AML and MDS. British Biotech will start a further Phase I

study with a continuous infusion of MG-98 in patients with

solid tumors later this month.

- BB-83698 is the first clinical development candidate to emerge

from British Biotech's antibiotic research program and is

targeted at community-acquired pneumonia in hospitalized

patients. In pre-clinical studies the compound has shown high

potency against a range of gram-positive bacteria, including

several drug-resistant strains. BB-83698 is an inhibitor of

the bacterial metalloenzyme peptide deformylase (PDF) and

became the first of this potential new class of anti-infective

drugs to enter clinical trials when a Phase I study in healthy

volunteers was started in October 2002. BB-83698 and other PDF

inhibitors are being co-developed with the US specialist

anti-infectives company, GeneSoft Pharmaceuticals, Inc.

Clinical development of E21R was discontinued during the half-year, and the collaboration with BresaGen terminated, after British Biotech sponsored new pre-clinical studies which failed to support the rationale for developing the product.

Research

British Biotech's principal research activities are based on the proprietary position it has established in the discovery of inhibitors of human and bacterial metalloenzymes. Its two main research programs are conducted under collaboration in the field of inflammation and bacterial infection.

- Inflammation. Formed in October 2000, British Biotech's

research collaboration with Serono was extended for a further

year in October 2002. The collaboration has identified

selective inhibitors that show activity against three enzyme

targets involved in inflammation. The aim in the third year of

the collaboration will be to optimize the pharmacokinetic

profile of these inhibitors that may produce orally

bioavailable compounds for clinical development.

- Bacterial infection. In August 2002, British Biotech formed a

collaboration with GeneSoft to discover and develop novel

anti-infectives based on British Biotech's proprietary

bacterial metalloenzyme inhibitors. In addition to clinical

development of BB-83698, the collaboration will focus on lead

optimization and development of oral PDF inhibitors and

discovery research on other microbial metalloenzyme targets.

Board composition

Dr Peter Fellner has today been appointed as a non-executive director and will become non-executive Chairman on January 1, 2003. Dr Fellner (58) has been Chief Executive Officer of Celltech Group plc since 1990, and is Chairman-designate. He will become Chairman of Celltech when his successor as Chief Executive Officer takes up his appointment, which is expected in early 2003. Mr Christopher Hampson will retire as Chairman and from the Board on December 31, 2002. Dr Paul Nicholson will also step down as a non-executive Director on December 31, 2002 after completing nearly three years service.

On November 4, 2002, the Company announced that Dr Elliot Goldstein had agreed to step down from his position as Chief Executive Officer and from the Board of the Company. Mr Tim Edwards, then Chief Operating Officer, was appointed acting Chief Executive with effect from that date.

Financial Review

Profit and loss account

The loss for the six months ended October 31, 2002 decreased to (pound)8.1 million (US$12.6 million) (2001: (pound)8.4 million). In 2002, revenue was derived from the research and development collaborations with Serono and GeneSoft. Income of (pound)0.6 million (US$0.9 million) was recognized from the collaboration with Serono thus completing recognition of the US$5 million received from Serono in November 2000. In the six months ended October 31, 2002 a total of US$5 million ((pound)3.2 million) was received from GeneSoft; (pound)0.1 million (US$0.16 million) has been recognized as income in the period with (pound)3.1 million (US$4.8 million) deferred until future periods. In 2001 revenue was derived solely from the Serono collaboration.

Research and development expenditure decreased by (pound)4.1 million (US$6.4 million) in the half year to (pound)6.7 million (US$10.5 million) (2001: (pound)10.8 million). Cost reduction initiatives, principally arising from the transfer of certain pre-clinical facilities to OSI Pharmaceuticals Inc in September 2001, account for savings of (pound)3.7 million (US$5.8 million) with expenditure on the product portfolio reduced by (pound)0.4 million (US$0.6 million). Administrative expenses were (pound)2.9 million (US$4.5 million) (2001: (pound)2.3 million) including costs of (pound)1.3 million (US$2.0 million) relating to the aborted merger discussions with MorphoSys A.G. Excluding these costs, administrative expenses were reduced by (pound)0.7 million (US$1.1 million) due to the cost reduction initiatives.

Profit on disposal of fixed assets was (pound)nil (2001: (pound)1.9 million) with the profit in 2001 resulting from the transfer of pre-clinical operations to OSI. Interest receivable was lower at (pound)0.9 million (US$1.4 million) (2001: (pound)1.6 million) due to lower cash balances and rates of interest. Provision has been made against the value of investments in collaborators of (pound)0.8 million (US$1.2 million) (2001: (pound)nil), which reflects the fall in value of biotechnology stocks. Research and development tax credits of (pound)0.7 million (US$1.1 million) (2001: (pound)0.7 million) were recognized as the Company believes it will satisfy the requirements of the Finance Act 2000 in the year ending April 30, 2003.

Cash flow

Cash and short-term deposits at October 31, 2002 were (pound)42.8 million (US$66.8 million), compared with (pound)50.4 million at April 30, 2002 and (pound)62.2 million at October 31, 2001. The net cash outflow in the half-year of (pound)7.6 million (US$11.9 million) (2001: (pound)2.8 million) benefited from the receipt of US$5 million ((pound)3.2 million) from GeneSoft Inc. while last year's outflow benefited from the receipt of (pound)8.2 million (US$12.8 million) from OSI. Excluding these items, the cash outflow in the half-year was (pound)10.8 million (US$16.8 million) (2001: (pound)11.0 million). The lower levels of operating expenditure referred to above were largely offset by higher payments to creditors.

            Unaudited consolidated profit and loss account
               for the half year ended October 31, 2002

                                  Half year     Half year    Full year
                                    ended         ended       ended
                                  October 31,   October 31,  April 30,
                                    2002          2001         2002
                                 (pound)000    (pound)000   (pound)000

Turnover                             725           722         1,450

Research and development
 expenditure                      (6,718)      (10,810)      (21,256)

Administrative expenses (note 2)  (2,889)       (2,307)       (3,759)

Operating loss                    (8,882)      (12,395)      (23,565)
Profit on disposal of
 fixed assets (note 3)                 -         1,945         2,505

Loss on ordinary activities
 before interest                  (8,882)      (10,450)      (21,060)
Interest receivable                  939         1,589         2,820
Interest payable                    (121)         (147)         (278)
Amounts written off
 investments (note 4)               (799)            -          (324)

Loss on ordinary activities
 before taxation                  (8,863)       (9,008)      (18,842)

Taxation                             720           653         1,608

Loss for the period               (8,143)       (8,355)      (17,234)

Loss per share
 (basic and diluted) (note 5)       (1.2)p        (1.3)p        (2.6)p


       Unaudited statement of total recognized gains and losses
               for the half year ended October 31, 2002

                                  Half year    Half year    Full year
                                    ended        ended        ended
                                  October 31,  October 31,  April 30,
                                     2002         2001         2002
                                 (pound)000    (pound)000   (pound)000

Consolidated loss for the period    (8,143)      (8,355)     (17,234)
Translation of overseas
 subsidiary financial statements         -            -            3

Total losses recognized
 for the period                     (8,143)      (8,355)     (17,231)



                 Unaudited consolidated balance sheet

                                      At            At          At
                                  October 31,   October 31,  April 30,
                                     2002          2001        2002
                                  (pound)000    (pound)000  (pound)000
Fixed assets
Intangible assets                    1,876         1,186      1,987
Tangible assets                      8,016         7,301      7,996
Investments                          1,107           824      1,906
                                    10,999         9,311     11,889
Current assets
Debtors                              3,638         2,493      3,119
Short-term deposits and
 investments                        42,279        61,811     50,106
Cash                                   528           394        308
                                    46,445        64,698     53,533
Current liabilities
Creditors: amounts falling due
 within one year                    (6,869)       (8,284)    (8,607)

Net current assets                  39,576        56,414     44,926

Total assets less
 current liabilities                50,575        65,725     56,815

Creditors: amounts falling due
 after more than one year           (3,993)       (1,913)    (1,683)

Provision for liabilities and
 charges                              (250)         (200)      (250)

Net assets                          46,332        63,612     54,882

Capital and reserves
Share capital                       33,376        33,353     33,375
Share premium account              298,615       298,615    298,615
Other reserve                       10,008        10,008     10,008
Profit and loss account           (295,667)     (278,364)  (287,116)

Total equity shareholders' funds    46,332        63,612     54,882


         Approved by the Board of Directors, December 4, 2002


              Unaudited consolidated cash flow statement
               for the half year ended October 31, 2002

                                 Half year    Half year    Full year
                                   ended        ended        ended
                                 October 31,  October 31,   April 30,
                                    2002         2001         2002
                                (pound)000    (pound)000   (pound)000

Net cash outflow from
 operating activities             (7,969)      (10,141)     (19,309)
Return on investments and
 servicing of finance              1,057         1,279        2,351
Taxation - overseas                    -             -            4
Capital expenditure (note 7)        (529)        6,270        2,686

Cash utilized by operations       (7,441)       (2,592)     (14,268)
Management of liquid resources     7,827         2,473       14,249
Financing                           (174)         (173)        (342)

(Decrease)/increase in cash
 in the period                       212          (292)        (361)

Reconciliation of net cash flow
 to movement in net funds
 (Decrease)/increase in cash
  in the period                      212          (292)        (361)
 Cash used to decrease debt and
  lease financing                    175           201          462
 Net movement in liquid resources (7,827)       (2,473)     (14,249)
 Exchange adjustment                  24           (20)          18

Movement in net funds
 in the period                    (7,416)       (2,584)     (14,130)
Net funds at start of the period  48,328        62,458       62,458

Net funds at end
 of the period (note 8)           40,912        59,874       48,328


Notes

1.  The interim financial information on the Group set out above has
    been prepared on the basis of the accounting policies set out in
    the Group's statutory accounts for the year ended April 30, 2002.
    This interim financial information does not constitute statutory
    accounts within the meaning of Section 240 of the Companies Act
    1985 but has been reviewed by the auditors in accordance with
    bulletin 1999/4 issued by the Auditing Practices Board; their
    report to the Company is set out on page 10. The Group's statutory
    accounts for the year ended April 30, 2002 have been delivered to
    the Registrar of Companies; the report of the auditors on these
    accounts was unqualified and did not contain a statement under
    Section 237 (2) or (3) of the Act.

2.  Administrative expenses of(pound)2.9 million (US$4.5 million)
    (2001:(pound)2.3 million) include(pound)1.3 million (US$2.0
    million) (2001:(pound)nil) of costs related to the aborted merger
    discussions with MorphoSys AG.

3.  The profit on disposal of fixed assets in 2001 arises from the
    agreement signed with OSI whereby 59 British Biotech employees
    transferred to OSI along with the leases on two properties and
    certain fixed assets.

4.  Amounts written off investments of (pound)0.8 million (US$1.3
    million) (2001: (pound)nil) consist of a permanent diminution in
    value of listed investments of (pound)0.3 million (US$0.5
    million), and a permanent diminution in value of unlisted
    investments of (pound)0.5 million (US$0.8 million).

5.  Loss per share is based on the loss attributable to shareholders
    of(pound)8.1 million (US$12.6 million) (2001: (pound)8.4 million)
    and on 668 million shares (2001: 667 million), being the weighted
    average number of shares in issue for the half year.

6.  The directors do not propose a dividend for the period.

7.  Capital expenditure consists of purchase of fixed assets
    of(pound)0.5 million (US$0.8 million) (2001:(pound)0.6 million)
    less proceeds on the sale of fixed assets of(pound)nil
    (2001:(pound)6.8 million).

8.  Net funds consist of cash at bank and short-term deposits and
    investments of(pound)42.8 million (US$66.8 million)
    (2001:(pound)62.2 million) less(pound)1.9 million (US$3.0 million)
    of secured loans (2001:(pound)2.3 million).

9.  A copy of the interim results for the six months ended October 31,
    2002 will be sent to shareholders before the end of December 2002.
    Further copies of the interim results are available from the
    Company's registered office at: British Biotech plc, Watlington
    Road, Oxford OX4 6LY.

10. Where they appear, US Dollar figures have been translated at the
    rate GB(pound)1 = US$1.56

Independent Review Report to British Biotech plc

Introduction

We have been instructed by the company to review the financial information which comprises the consolidated profit and loss account, consolidated statement of total recognized gains and losses, consolidated balance sheet, consolidated cash flow statement, and the related notes 1 to 9. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.

This report has been prepared for and only for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or in to whose hands it may come save where expressly agreed by our prior written consent.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended October 31, 2002.

PricewaterhouseCoopers
Chartered Accountants
London
December 4, 2002


Notes:

(a)    The maintenance and integrity of the British Biotech website is
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(b)    Legislation in the United Kingdom governing the preparation and
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