21 May 2001

CAMBRIDGE ANTIBODY TECHNOLOGY

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2001

Highlights

· Major profit-sharing strategic alliances with Elan and Immunex.

· European Orphan Drug status awarded to Trabio™, the human monoclonal antibody against TGF_₂, as a potential treatment to prevent scarring after glaucoma surgical procedures.

· Encouraging two-year follow-up results for Phase I/IIa trial of Trabio™ announced.

· First phase of relocation to new facilities at Granta Park underway.

· Loss for the six months ended 31 March 2001 of £0.9 million.

· Cash and liquid resources at 31 March 2001: £168.0 million.

Professor Peter Garland, CAT's Chairman, said "During the six months to the end of March 2001 there has been progress in CAT's partnered and in-house clinical development programmes. CAT signed six new alliances, with Elan, Immunex (two), Weston Medical, Zyomyx and Randox. The collaboration with Elan, and the second collaboration with Immunex, are both cost and profit sharing, and reflect CAT's objective to invest in building its antibody-based therapeutic pipeline."

CAMBRIDGE ANTIBODY TECHNOLOGY

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2001

Strategic alliances

In January 2001, CAT announced a four-year strategic partnership with Elan for the discovery and development of novel antibody-based therapeutics targeting human neurological diseases. CAT shares research and development costs with Elan, as well as commercialisation profits.

Today, CAT announced a new broad product development collaboration with Immunex, committed to the joint discovery, development, marketing and sale of human antibody-based therapeutics for certain autoimmune and inflammatory disorders. The two companies will share costs and any profits equally. Prior to this, in December 2000, CAT signed an agreement with Immunex to licence CAT's antibody libraries for the discovery, development and potential commercialisation of human monoclonal antibodies. The Company received a licence fee from Immunex that allows Immunex the use of CAT's libraries and provides Immunex with eight exclusive therapeutic antibody product options from which CAT could potentially receive clinical milestone and royalty payments on subsequent product sales.

Also in December 2000, CAT signed an agreement with Zyomyx to jointly develop high-density protein biochips based on parallel antibody arrays and in April 2001 CAT signed an agreement with Randox to evaluate the use of CAT antibodies in developing diagnostic biochip products.

In March 2001, an agreement was signed with Weston Medical that will allow CAT to assess its in-house and partnered antibodies for drug delivery through Weston Medical's Intraject^® needle-free injection system.

CAT's collaboration with Genzyme progressed, with CTX approval for phase I/II clinical trials of CAT-192, as a possible therapy for diffuse scleroderma, being received. CAT's antibody research and development programme with Wyeth-Ayerst continues. Activity in the strategic alliance with Pharmacia has continued to build, but at a lower rate than originally envisaged. In our collaboration with Human Genome Sciences (HGS), a number of antibody leads are under development.

Product pipeline

D2E7, the human monoclonal antibody that neutralises TNF_, continues in phase III trials as a potential treatment for rheumatoid arthritis. CAT's partner, Abbott (formerly BASF Pharma), is responsible for these trials and is working towards a launch of the product in 2003. Data from phase II trials is due to be announced at the June 2001 meeting of the European League Against Rheumatism (EULAR).

Trabio™ is CAT's human monoclonal antibody that neutralises TGF_₂. Recruitment of patients to a Phase II study to test Trabio™ as a treatment to prevent post-operative scarring after glaucoma surgery was completed in February. It is expected that the three month results of this trial will be announced at a major international conference of ophthalmology in November 2001 and a preliminary communication of these results should be available in late summer.

In April 2001, Trabio™ was recommended for Orphan Drug status (a drug that treats a condition that affects not more than 5 in 10,000 people) in Europe as a treatment to prevent post-operative scarring in patients undergoing surgery for glaucoma, providing benefits which include grants, market exclusivity and protocol assistance.

In May 2001 two-year follow-up results of the ongoing Phase I/IIa clinical trial were presented at the annual meeting of the Association for Research in Vision and Ophthalmology (ARVO). These suggested that patients treated with Trabio™ after surgery for glaucoma continued to experience lower intraocular pressure, with less use of post-operative injections and topical medication. Using Trabio™ at the time of surgery appears to lead to a more successful outcome of the operation, albeit based on low patient numbers. CAT is planning to confirm these encouraging findings in further Phase II/III trials of Trabio™ to be initiated later this year.

Also at ARVO encouraging results from laboratory studies were presented that showed a possible role for Trabio™ in suppressing secondary cataract - a `clouding' of the posterior capsule of the lens that occurs in up to 40 per cent of patients following cataract surgery. CAT is evaluating whether to initiate clinical trials with Trabio™ for this indication.

J695, the human monoclonal antibody that neutralises Interleukin 12, a pro-inflammatory molecule associated with a range of autoimmune diseases including rheumatoid arthritis, is in two Phase II clinical trials, conducted by Abbott and Genetics Institute.

CAT-192 is a human anti-TGF_₁ monoclonal antibody developed as a potential treatment for a variety of scarring and fibrotic conditions. CAT-192 has completed Phase I clinical trials and results presented at the British Pharmacological Society in December 2000 showed that CAT-192 was well tolerated, with a prolonged half-life of around 40 days in healthy volunteers. Following recent regulatory approval it is anticipated that patient enrolment for UK Phase I/II multi-centre clinical trials, managed by Genzyme, CAT's partner, to evaluate CAT-192 as a potential treatment for diffuse scleroderma will begin shortly.

During the period, CAT-213, a human anti-eotaxin₁ monoclonal antibody with the potential to treat severe allergic disorders, progressed satisfactorily through toxicology and pre-clinical testing. CAT intends to progress CAT-213 to Phase I clinical trials shortly.

CAT completed its discovery programme with Human Genome Sciences to develop anti-BLyS antibodies raised against B-Lymphocyte Stimulator, a protein implicated in several autoimmune and neoplastic disorders. HGS has now completed pre-clinical studies on a selected clinical candidate monoclonal antibody and is working towards Phase I clinical trials later this year.

It is unlikely that there will be any further candidates moving into clinical trials in this calendar year. There are currently 10 active antibody discovery programmes underway.

Intellectual property

In April 1999, MorphoSys commenced an action against CAT in the US District Court of Washington DC concerning CAT's US `Griffiths' patent, which covers the isolation of antibodies from phage display libraries which specifically recognise human `self' antigens. MorphoSys asked the court to revoke CAT''s patent and/or declare that MorphoSys does not infringe the patent; CAT filed a counter patent infringement action against MorphoSys. Following a hearing in March 2001, the US District Court of Washington was unable to reach a decision on all but one issue. The jury agreed on this one issue in favour of CAT, that the Company was entitled to the priority dates of its British patent applications. Several post trial motions have been filed with the court and the parties are awaiting the court's decision. If the court does not issue a dispositive ruling on the question of validity then the case will be retried at a later date to be arranged.

There has been no change in the status of the legal action brought by MorphoSys in respect of CAT's US McCafferty patent since the 2000 Annual Report. With regard to the McCafferty patent litigation with MorphoSys in Europe, CAT is awaiting the written decision from the Opposition Division following the hearing last July. Receipt of the written decision triggers the four-month deadline for filing of any appeal.

In respect of the litigation with Crucell, in response to motions filed by CAT's lawyers, the court declined jurisdiction for Crucell's non-infringement claim on Winter II and will assume jurisdiction only on the invalidity claim and limited to the Netherlands only. A similar ruling on jurisdiction is expected in the McCafferty case. CAT intends to defend both of these proceedings vigorously and does not believe that there is merit in these claims.

Whatever the outcome of current litigation, CAT believes that its ability to operate its own technology will not be materially and adversely affected.

In the six months CAT has increased its patent estate in the US with the granting of a new patent in the McCafferty family which provides protection for libraries of phage displaying functional protein binding domains derived from natural repertoires of nucleic acids, wherein each phage particle contains a phagemid genome.

CAT still expects the first US patent from the Winter/Huse/Lerner family (part of the settlement with Scripps) covering antibody gene libraries to be granted in 2001.

Operations

CAT has made further progress towards its proposed listing of ADRs on the NASDAQ market. CAT made a public filing of its registration statement with the SEC in April 2001 and is currently in discussion with the SEC on the remaining issues that must be addressed before effectiveness can be granted and the listing take place.

In May 2001 the first phase of CAT's relocation plan was completed when CAT commenced occupation of the Franklin Building, comprising 20,500 sq.ft. of new laboratories and offices, at Granta Park, ten miles from the Company's main location. This will be occupied by the Company's Pre-Clinical and Medical departments. Work is progressing on the next stage of the development, with occupation of a new 66,000 sq. ft. building, also on Granta Park, scheduled for late 2002.

CAT employed 221 staff at 31 March 2001 (189 at 30 September 2000). Further recruitment is underway, with staff numbers expected to increase to approximately 250 by the end of the financial year.

Financial results

CAT made a loss for the six months ended 31 March 2001 of £0.9 million (six months ended 31 March 2000 (H1) £2.1 million; six months ended 30 September 2000 (H2) £3.1 million.) Net cash outflow before financing for the period was £3.3 million (H1 - £4.9 million inflow; H2 - £4.6 million outflow). Cash and liquid resources at 31 March 2001 amounted to £168.0 million (31 March 2000 £36.5 million; 30 September 2000 £156.5 million).

Revenues in the period were £6.6 million (H1- £6.4 million; H2 - £3.7 million). The profile of revenues over time continues to be irregular due to the nature of CAT's business although some collaborations are continuing to provide a more regular source of income. During the period a library license fee was received from Immunex and income was also generated from fees receivable under ongoing collaborations with HGS, Wyeth-Ayerst and Pharmacia.

The Group will be reviewing its accounting policy for revenue recognition in the next six months. Part of this review will be giving consideration to the adoption of a revenue recognition policy which is more consistent with US GAAP (particularly SAB101) and thus ensure its results are more readily comparable with those of US Biotech companies. Before any final decision is reached the Group will await the publication of the Accounting Standards Board discussion paper on Revenue Recognition, which is anticipated to be released in the near future. Due consideration will be given to proposals contained within that paper.

Operating costs for the period amounted to £12.3 million (H1 - £9.0 million; H2 - £11.6 million). External development costs have increased in line with increased activity on the Group's own and partnered programs. Staff costs have increased as staff numbers have built. Spend in the period on patent-related matters, including patent filings, oppositions and litigations was £1.2 million compared to £1.7 million for the whole of the 2000 financial year.

During the period the Group earned interest on its cash deposits of £4.9 million ( H1 - £0.7 million; H2 - £4.9 million) reflecting the level of cash and liquid resources held in interest bearing securities.

Capital expenditure for the period was £1.6 million (H1 - £0.3 million; H2 - £0.7 million). Of this, approximately half was on the fitting out of the Franklin Building and preparations for further premises at Granta Park and the remainder was largely laboratory equipment.

Funds raised from the issue of equity during the period included £13.5 million (net of expenses) from Genzyme in October 2000 in connection with a collaboration agreement, the remainder being raised from the exercise of share options.

Recurring contract reseach revenues in the second half of the year will arise from Pharmacia, Wyeth-Ayerst and HGS and are expected to be of the order of £2 million. Additional revenues may arise from technical and clinical milestone payments.

Operating costs are expected to increase significantly in the second half. Particular areas of anticipated increase are external product development costs, staff costs and premises costs, reflecting increased scale of activity; in addition there are certain costs which fall only in the second half of the year such as performance related remuneration and staff share scheme allocation.

Capital expenditure in the second half is expected to approach £4 million.

Whilst the average monthly cash burn for the first half of the financial year has been significantly less than the £1.8 million predicted in the 2000 Annual Report, the average monthly cash burn is expected to be around the predicted rate for the remainder of the year.

CONSOLIDATED PROFIT AND LOSS
(Unaudited)
	Six months ended 31 March 2001	Six months ended 31 March 2000	Year ended 30 September 2000
	£'000	£'000	£'000
Turnover	6,628	6,388	10,146
Direct costs	(233)	(249)	(381)
Gross profit	6,395	6,139	9,765
Research and development expenses	(9,216)	(7,151)	(15,728)
General and administration expenses	(3,034)	(1,838)	(4,842)
Operating loss	(5,855)	(2,850)	(10,805)
Interest receivable (net)	4,931	749	5,644
Loss on ordinary activities before taxation	(924)	(2,101)	(5,161)
Taxation on loss on ordinary activities	-	-	-
Loss for the financial period	(924)	(2,101)	(5,161)
Loss per share - basic and fully diluted (pence)	2.6p	8.0p	17.1p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
	Six months ended 31 March 2001	Six months ended 31 March 2000	Year ended 30 September 2000
	£'000	£'000	£'000
Loss for the financial period	(924)	(2,101)	(5,161)
Loss on foreign exchange translation	(3)	-	(7)
Total recognised loss	(927)	(2,101)	(5,168)

CONSOLIDATED BALANCE SHEET
(Unaudited)
	As at 31 March 2001	As at 31 March 2000	As at 30 September 2000
Fixed Assets
Intangible assets	4,261	4,635	4,448
Tangible fixed assets	5,651	5,194	5,008
	9,912	9,829	9,456
Current Assets
Debtors	4,128	1,555	3,452
Investment in liquid resources	167,246	36,286	156,502
Cash at bank and in hand	779	206	26
	172,153	38,047	159,980
Creditors
Amounts falling due within one year	(7,636)	(6,687)	(8,427)
Net current assets	164,517	31,360	151,553
Total assets less current liabilities	174,429	41,189	161,009
Creditors
Amounts falling due after more than one year	(1,278)	(3,441)	(1,975)
Net Assets	173,151	37,748	159,034
Capital and Reserves
Called-up share capital	3,538	2,759	3,477
Share premium account	194,689	56,071	179,706
Other reserve	13,451	13,451	13,451
Profit and loss account	(38,527)	(34,533)	(37,600)
Shareholders' funds - all equity	173,151	37,748	159,034

CONSOLIDATED CASH FLOW STATEMENT
(Unaudited)
	Six months ended 31 March 2001	Six months ended 31 March 2000	Year ended 30 September 2000
	£'000	£'000	£'000
Operating loss	(5,855)	(2,850)	(10,805)
Depreciation in the period	1,001	907	1,808
Amortisation of patents	187	187	374
Profit on disposal of fixed assets	1	(6)	(5)
(Increase) / decrease in debtors	(27)	(558)	(1,159)
(Decrease) / increase in creditors	(1,244)	6,858	6,178
Net cash (outflow) / inflow from operations	(5,937)	4,538	(3,609)
Returns on investments and servicing of finance
Interest received	4,282	646	4,245
Taxation	-	-	-
Capital expenditure and financial investment
Purchase of fixed assets	(1,647)	(289)	(1,018)
Sale of fixed assets	2	31	44
	(1,645)	(258)	(974)
Net cash (outflow) / inflow before management of liquid resources and financing	(3,300)	4,926	(338)
Management of liquid resources	(10,744)	(13,513)	(133,729)
Financing
Issue of ordinary shares	15,044	7,949	132,302
Capital element of finance lease payments	-	(9)	(9)
	15,044	7,940	132,293
Increase/ (decrease) in cash and cash equivalents	1,000	(647)	(1,774)

Basis of preparation

These interim financial statements have been prepared in accordance with the policies set out in statutory financial statements for the year ended 30 September 2000.

These interim financial statements do not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985. Results for the six-month periods ended 31 March 2001 and 31 March 2000 have not been audited. The results for the year ended 30 September 2000 have been extracted from the statutory financial statements, which have been filed with the Registrar of Companies and upon which the auditors reported without qualification.

National Insurance on share options

The Group is making a provision systematically over time for employer's National Insurance payable on certain share options granted to employees. There was a credit for the current period of £0.2 million principally resulting from the decline in share price between the beginning and end of the period. The charge for the whole of the year ended 30 September 2000 was £0.5 million. In the interim statement for the six months ended 31 March 2000 the provision was calculated in accordance with draft accounting guidance which indicated that a full provision for the total potential liability be made at each period end, resulting in a charge for that period of £0.9 million. At the time this was shown separately on the face of the profit and loss account but it has now been subsumed into the relevant expense headings. If that charge had been calculated in accordance with current guidance it would have been £0.1 million.

Loss per share

The loss per ordinary share and fully diluted loss per share are equal because the Group is sustaining losses. The calculation is based on the following, for the six months ended 31 March 2001, the six months ended 31 March 2000 and the year ended 30 September 2000 respectively. Losses of £924,000, £2,101,000, and £5,161,000. Weighted average number of shares in issue of 35,209,153, 26,285,300 and 30,179,818. The company currently has 35,380,856 ordinary shares in issue and a total of 1,588,478 ordinary shares under option.

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995: This press release contains statements about Cambridge Antibody Technology Group plc ("CAT") that are forward looking statements. All statements other than statements of historical facts included in this press release may be forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.

These forward looking statements are based on numerous assumptions regarding CAT's present and future business strategies and the environment in which CAT will operate in the future. Certain factors that could cause CAT's actual results, performance or achievements to differ materially from those in the forward looking statements include: market conditions, CAT's ability to enter into and maintain collaborative arrangements, success of product candidates in clinical trials, regulatory developments and competition.