International Biotechnology Trust (IBT) 31 Aug 2002 Page 3
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, currently have board seats on ten of the portfolio companies. 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.
Scientific Advisory Board ("SAB")
The SAB has been expanded during the reporting period and now numbers four, providing IBT
with a very valuable resource upon which to draw both scientific and clinical expertise. This
advice is used to help identify new investment opportunities and in the management of portfolio
companies. I would like to extend my congratulations to the Chairman of the SAB, Dr. Sydney
Brenner, on sharing this year's Nobel Prize in Physiology and Medicine.
Share Buy-Back Facility
To date, the Directors have not utilised the authority given to them at the 2001 Annual General
Meeting to purchase shares for cancellation. Your Board will, however, 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. A resolution to renew
the share buyback 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
December 2002 at 12 noon. A presentation will be made by SVLS.
Continuing market declines have resulted in attractive valuations for many good quality biotech
companies. IBT has taken advantage of this value and made a number of new investments.
This has further strengthened the portfolio, which provides investors with an exposure to a
dynamic industry through an exciting set of companies with strong upside potential, spread
across the private and public markets, different clinical areas and varying stages of clinical
The fundamentals of the biotech sector remain compelling and while other sectors suffer
declining earnings, more and more biotech companies are turning profitable and product
pipelines continue to both widen and mature. Biotech companies have generated nearly a
quarter of the drug candidates currently in development and are set to become the research
and development engine of the drug industry.
We have experienced an extreme downturn in the biotech market and the timing of an upturn is
difficult to predict. Investment in the both the biotech sector and IBT remain more suited to the
longer-term investor who is willing to weather the volatility, which looks set to continue, at least
in the short-term. That said, I continue to believe that we have a leading team of advisers in
SVLS, with considerable depth of skill, experience and resources, which should be reflected in
our results in due course.