Defiant directors at troubled British Biotech say the company is in a stronger position than many of its competitors.

But they have confirmed that joining forces with a similar firm was a key priority along with managing its portfolio of products and research opportunities.

Acting chief executive Tim Edwards said: "The aim is to become a bigger biotech company with more capabilities.

"We want to merge and bring strengths together, forming bigger companies.

"We have progressed the product portfolio and continue to evaluate a number of merger and acquisition opportunities."

Mr Edwards refused to reveal who the company was in talks with but added the opportunities had increased since the annual general meeting on November 4.

Executives have admitted that although they have £42.8m in the bank, which will last three years, it is not enough to see its four main drugs, which are in early clinical trials, reach the marketplace.

But by that time, Mr Edwards said a merger or acquisition would definitely have taken place.

Figures for the six months to October 31 show British Biotech made a pre-tax loss of £8.9m compared to £9m for same period last year.

During the period, Dr Elliott Goldstein, appointed in 1998 to try and reverse the fortunes of the Cowley-based group following revelations about the effectiveness of some of its drugs, stepped down after failing to find a merger partner or boost a sliding share price.

Former chief operating officer Mr Edwards has stepped in as acting chief executive and the company has announced Dr Peter Fellner will be appointed non-executive chairman from January 1, succeeding Christopher Hampson who is retiring.

Dr Fellner, 58, has been chief executive of Slough-based biotech firm Celltech and will step aside to also become chairman of that company early in 2003.