British Biotech Makes Announcement.

OXFORD, England--(BUSINESS WIRE)--March 25, 1999--

Key points

Strategic and operational review of business completed.

Strategy is to:

- focus discovery research on metalloenzyme inhibition programs;

- take one research compound into development annually;

- focus the development capability to establish clinical 'proof

of priniciple' data; and

- create appropriate partnerships both to support the development

and marketing of compounds worldwide.

- Headcount to reduce from 350 to 290 by mid-2000, with 36

redundancies effective today.

- Program will generate annualized cost savings of 10 million

million by mid-2000.

- Dr Giles Campion, who is currently Vice-President and Director,

Cardiopulmonary Therapeutic Area, SmithKline Beecham, will be

appointed Development Director and Chief Medical Officer on

April 12, 1999, to succeed Dr Peder Jensen. Dr Jensen will

remain on the Board as a non-executive director.

- Mr Tim Edwards to join the Board on April 1, 1999, as Business

Development Director with responsibility for the identification

and execution of partnerships worldwide.

- Development of Zacutex to be discontinued following the results

of Study 215, which did not meet its primary end point.

- BB-3644 will be developed as an anti-cancer agent.

Commenting on today's announcement, Dr Elliot Goldstein, Chief Executive, British Biotech plc, said, "Our strategy is to create long-term value for shareholders from the products currently in clinical development -marimastat, BB-3644 and BB-10153 - and from the Company's discovery research capability, delivering one new drug development candidate each year. We have a clear direction and the policy and operating structure to optimize our strengths and experience."

Mr Chris Hampson, Chairman, British Biotech plc, added, "The Board would like to thank Peder Jensen for his important contribution to the Company and is delighted that he will remain on the Board, extending the pharmaceutical experience of our non-executive team.

"We are also pleased to welcome two new executive directors. Dr Giles Campion has a strong track record of international drug development in the pharmaceutical sector together with direct experience of the biotechnology industry. Tim Edwards' promotion to the Board reflects his contribution to the Company's partnering process and the importance of business development to its strategy."

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British Biotech plc today announces the completion of its strategic and operational review, resultant Board changes, the results of Zacutex Study 215 in acute pancreatitis and development plans for BB-3644.

Business objectives

The Company's strategy is to build a sustainable business and long-term shareholder value by producing innovative compounds from its focus on discovery research and by creating partnerships with pharmaceutical companies, to complete the development and marketing of these compounds.

The focus on metalloenzyme inhibitor research stems from an analysis both of the opportunities provided by these molecular targets and of British Biotech's particular strengths in discovery research. At least 200 metalloenzymes can be identified on current human genomic databases and a further significant number are also found in pathogenic bacteria and fungi. These control a broad range of biological processes and, as a consequence, metalloenzyme inhibitors promise to be of potential benefit in many clinical conditions including cancer and inflammatory and infectious diseases.

The Company's interest in metalloenzymes has developed from its experience of metalloproteinases. This has allowed it to build a large library of metalloenzyme inhibitors (derived both from conventional and combinatorial chemistry), a strong patent position and considerable experience in the toxicological and pharmacokinetic profile of these compounds. In addition, it has broad expertise in the biology and molecular genetics of metalloenzymes. The Company believes that its focus on a range of metalloenzyme inhibitor projects will deliver significant inter-project synergy and maximize productivity within discovery research.

Currently, the Company's most advanced metalloenzyme inhibitor research projects are in the anti-cancer, anti-inflammatory and anti-bacterial areas. The objective of this research effort is to take one research compound into development annually.

The development function at British Biotech will now focus on the completion of the marimastat clinical trial program and, for other compounds, the management of efficient preclinical development programs and the design and management of clinical 'proof of principle' studies.

Business development plays a central role in achieving the Company's strategy of obtaining commercially attractive pharmaceutical company partners for all its compounds, throughout the world. This includes advising on the selection of appropriate clinical indications, partnership strategy and negotiating licensing agreements. Partnership discussions are under way for marimastat and BB-10153, and a licensing strategy for BB-3644 is being developed.

Strategic and operational review

The Company's strategy is to:

- focus discovery research on metalloenzyme inhibition programs;

- take one research compound into development annually;

- focus the development capability to establish clinical 'proof of

principle' data; and

- create appropriate partnerships both to support the development and

marketing of compounds worldwide.

A detailed operational review has now been undertaken to ensure that the Company has the resources, financial capabilities and organizational structure necessary to implement its strategy.

As a result of the review, the Company today initiated a restructuring program which will generate annualized cost savings of 10 million and will result in headcount reducing by 60 from 350 to 290 by mid-2000. The reduction in employment levels and related overheads will have an immediate impact on expenditure. In addition, expenditure on clinical research will be reduced as marimastat trials complete. These savings will build on those already reported to shareholders in the third quarter's results announced in February 1999. The full annualized effect of these changes is expected to be realized in approximately 18 months.

The program has resulted in 36 redundancies effective from today of which 19 are based in the Company's United States' clinical and regulatory subsidiary, British Biotech Inc., Annapolis, Maryland. The 17 staff redundancies in Oxford are within the Development and Corporate functions. The remaining reduction of 24 staff will occur over the next 18 months as the marimastat Phase III program reduces in scale as trials complete.

Board changes

Following the completion of the strategic and operational review, which resulted in the decision to direct all drug development from Oxford and concentrate future development of new compounds on establishing clinical 'proof of principle' data, Dr Peder Jensen has indicated his wish to step down as Development Director and Chief Medical Officer. Dr Jensen will remain on the Board as an executive director until July 31, 1999, during which time he will undertake a transfer of responsibility to his successor and oversee the implementation of the operational changes in the USA. Dr Jensen will become a non-executive director from August 1, 1999.

Dr Giles Campion MD, MRCP will succeed Dr Jensen as Development Director and Chief Medical Officer with effect from April 12, 1999. Dr Campion, aged 44, joins British Biotech from SmithKline Beecham (SB) where he was Vice-President and Director, Cardiopulmonary Therapeutic Area. For the last 10 years, Dr Campion has worked in the pharmaceutical and biotechnology industries and prior to joining SB, in 1995, held clinical development appointments with Synergen and Hoechst.

Reflecting the importance of business development within the Company's strategy, Mr Tim Edwards will join the Board on April 1, 1999, as Business Development Director with responsibility for the identification and execution of partnerships worldwide. Mr Edwards, aged 42, joined British Biotech in March 1997 as Director of Business Development from NatWest Markets where he was a Director of Corporate Finance, a member of its Global Industries team and co-head of the PharmaGroup.

Zacutex

British Biotech has now completed and analyzed its international double-blind, placebo-controlled, 1,500 patient trial of Zacutex, known as Study 215, in acute pancreatitis. The study was designed to detect whether Zacutex, an investigational new drug, reduced the mortality of patients with acute pancreatitis, when administered by intravenous infusion for up to seven days. Recruitment into this study commenced in January 1996 and all patients were entered within 48 hours of the onset of pain. Patients were randomly allocated to one of three groups to receive either 10mg or 100mg of Zacutex per 24 hours or placebo. Recruitment was completed in the second quarter of 1998/99.

Study 215 did not meet its primary end point in that there was no significant difference between the number of deaths observed within 28 days of treatment in each of the three groups. The drug was well tolerated; a similar pattern of adverse events was reported in all three groups.

On the basis of these results, the Board has decided to discontinue the development of Zacutex. The ongoing 1,800 patient trial of Zacutex, as a potential prophylactic treatment for pancreatitis induced by a diagnostic procedure known as ERCP (endoscopic retrograde cholangio-pancreatography), will be stopped with immediate effect.

BB-3644

BB-3644 is an oral compound which, due to its ability to block matrix metalloproteinases (MMPs) and tumor necrosis factor, has potential use in cancer and inflammatory diseases. BB-3644 has undergone Phase I clinical testing in healthy volunteers which demonstrated that the compound is well tolerated and orally absorbed. Additionally, long-term toxicology studies have now been completed.

BB-3644 will be developed as an anti-cancer agent. This decision was taken following a review of the results of the preclinical studies which showed that BB-3644 has an anti-cancer effect in a range of models. Furthermore, when compared to other broad spectrum MMP inhibitors such as marimastat, BB-3644 has a lower propensity to induce musculo-skeletal side-effects.

This news release contains forward-looking statements which 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.

Notes to editors

Dr Campion qualified in 1980 as a doctor at the University of Bristol and between 1980 and 1989 undertook various appointments in clinical and academic medicine in the UK and USA. In 1989, he moved into the pharmaceutical industry joining Hoechst in Germany to direct its rheumatology program. In 1992, he moved to the Netherlands to join Synergen, a US biotechnology company, to establish their European clinical research operation and subsequently, in 1994, was promoted to Vice-President Clinical Research based at Synergen's US headquarters.

In 1995, Dr Campion joined SmithKline Beecham (SB) as Vice-President and Director, Inflammation and Tissue Repair based in the USA. In this role, he was responsible for the worldwide development of SB's portfolio of oncology, urology, bone disease and dermatology compounds, including a novel topoisomerase inhibitor for ovarian cancer, which was approved in the USA in 1996. In 1997, Dr Campion became Vice-President and Director of SB's largest therapeutic area, Cardiopulmonary, where he oversaw the development of SB's cardiopulmonary and diabetes portfolio.

Dr Campion holds an honorary lectureship in Rheumatology at the University of Bristol and is Chairman of the Rheumatology, Immunology and Inflammation Section of the American Society of Clinical Pharmacology and Therapeutics.

Mr Tim Edwards, aged 42, joined British Biotech in March 1997 as Director of Business Development from NatWest Markets where he was a Director of Corporate Finance, a member of its Global Industries team and co-head of the PharmaGroup. In this role, his responsibilities included providing strategic and mergers and acquisitions advice to several major pharmaceutical and healthcare companies, and structuring and evaluating licensing and royalty agreements. A chartered accountant, Mr Edwards spent 10 years managing the development of two separate companies in which he was a major shareholder. In 1990, he founded Carter Edwards + Partners Ltd., a corporate finance boutique, which advised the pharmaceutical and healthcare sectors before being absorbed into NatWest Markets in early 1995.