LONDON _ The net asset value of International BiotechnologyTrust plc, of London, fell by 10.6 percent in the year to the end ofAugust 1996, despite the strong performance of the biotechnologysector. This amounted to a net loss per share of 1.57 pence, comparedto revenue of 0.87 pence per share the previous year.

IBT which has core investments in 12 U.S. companies blamed twofactors for this decline when it released its annual results on Monday.The first was the downturn in June and July, due to profit taking. Thesecond was a 6 million fall in the value of IBT's holding in CytelCorp. after it terminated Phase II trials of the cell adhesion blockerCylexin, in June.

Jeremy Curnock Cook, director of IBT, said these events should beconsidered in the context of the biotechnology sector as a whole."From mid August the market started to pick up again. In the U.S. inthe past two to three weeks issues are again oversubscribed asinvestors come back in."

Despite the fall in net asset value, IBT's share price rose from 96pence at August 1995 to 1.175 on Aug. 31, 1996. The rise of 22.4percent compares to rises in the Amex Biotech Index of 16.3 percent,and of the Chicago Biotech Index of 10.2 percent over the year.Curnock Cook said the annual rate of return since the fund wasestablished in May 1994, has been 32.8 percent. The Amex andChicago indices have risen by 14.4 percent and 22.8 percent per year,respectively.

On the setback at San Diego-based Cytel, Curnock Cook pointed outthat it was, "but one project among several."

"From our perspective it was useful in helping Cytel's managementto focus, rather than spreading themselves too thinly," he said.

During the year IBT made total investments of 23.6 million, inseven new core companies, bringing the overall number ofinvestments to 12. A further 2.2 million was invested in companiesalready in the portfolio. The 12 currently have a combined marketcapitalization of US$1.5 billion, spend US$150 million per year onresearch and development, and have 90 products in preclinical andclinical trials.

Since IBT was set up it has reviewed 140 proposals. Five currentlyare being assessed, and the trust expects its funds to be fullycommitted over the next six months, Curnock Cook said.

IBT expects the current recovery in biotechnology stocks to continuefor the next few months, fueled by a stream of news during themedical conference season, and by more FDA approvals for biotechdrugs.

Since it was established in May 1994 with 37.7 million, largely fromU.K. institutions, IBT has invested in 12 U.S. companies. In February1996 it raised a further 27.4 million. In September the trust, which islisted on the London Stock Exchange, made its first investmentoutside the U.S., in Core Technologies Ltd., of Kilmarnock,Scotland, a drug delivery specialist.

Curnock Cook said that although the U.S. continues to lead thebiotechnology sector, there is a degree of catch up in Canada, Europeand Australia. "In all these areas the technology base on which tofound companies is very strong." IBT currently is reviewing fiveinvestment opportunities and expects to make two more investmentsbefore the end of the first quarter of 1997.

But Curnock Cook said, "It will be difficult to recreate the success ofAmgen or Genentech." Instead IBT is shaping the companies inwhich it invests to enable them to make the most of relationships withthe pharmaceutical industry. "We see that as the role for IBT."

In the past year the trust has concentrated on improving itsrelationships with pharmaceutical companies. "We are building ourunderstanding of how the technology base fits into their shoppinglists," Curnock Cook said. n

-- Nuala Moran Special To BioWorld Today

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