<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F

[ ]  Registration Statement Pursuant To Section 12(B) Or 12(G) Of The Securities
     Exchange Act Of 1934
                                       OR
[X]  Annual Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange
     Act of 1934
                                       OR
[ ]  Transition Report Pursuant To Section 13 Or 15(D) Of The Securities
     Exchange Act Of 1934


               COMMISSION FILE NUMBER INTELLIGENT POLYMERS LIMITED

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                 NOT APPLICABLE
                 (TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)

                                     BERMUDA
                 (JURISDICTION OF INCORPORATION OR ORGANIZATION)

            Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda
                           C/O CONYERS DILL & PEARMAN.
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
UNITS, EACH UNIT CONSISTING OF:

(I)  ONE COMMON SHARE, PAR VALUE $0.01 PER SHARE, OF INTELLIGENT POLYMERS
     LIMITED AND

(II) ONE WARRANT TO PURCHASE ONE COMMON SHARE, NO PAR VALUE, OF BIOVAIL
     CORPORATION INTERNATIONAL

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                                      None

NAME OF EACH EXCHANGE ON WHICH REGISTERED:

                            AMERICAN STOCK EXCHANGE.

     Securities for which there is a reporting obligation pursuant to Section
     15(d) of the Act:

     None


INDICATE THE NUMBER OF OUTSTANDING SHARES OF EACH OF THE ISSUER'S CLASSES OF
CAPITAL OR COMMON STOCK AS OF THE CLOSE OF THE PERIOD COVERED BY THE ANNUAL
REPORT:

          12,000 SPECIAL SHARES
          3,737,500 COMMON SHARES

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              Yes  X     No
                                  ---       ---

Indicate by check mark which financial statement item the registrant has elected
to follow.

                              Item 17     Item 18 X
                                      --          --


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<PAGE>   2



                                Table of Contents

                               General Information
<TABLE>
<CAPTION>
                                     PART I                                           Page
                                                                                      ----
<S>         <C>                                                                       <C>
Item 1.      Description Of Business....................................................4

Item 2.      Description of  Property..................................................19

Item 3.      Legal Proceedings.........................................................19

Item 4.      Control of Company........................................................20

Item 5.      Nature of Trading Market..................................................20

Item 6.      Exchange Control and Other Limitations Affecting Security Holders.........21

Item 7.      Taxation..................................................................21
 .
Item 8.      Selected Financial Data...................................................24

Item 9.      Management's Discussion and Analysis
             of Financial Condition and Results of Operations..........................25

Item 10.     Directors and Officers of Registrant......................................26

Item 11.     Compensation of Directors and Officers....................................27

Item 12.     Options to Purchase Securities from Registrant or Subsidiaries............27

Item 13.     Interest of  Management in Certain Transactions ..........................27

                                     PART II

Item 14.     Description of Securities to be Registered................................28

                                     PART III

Item 15.     Defaults Upon Senior Securities...........................................28

Item 16.     Changes in Securities, Changes in Security for Registered Securities......28

Item 17.     Financial Statements and Exhibits.........................................28

Item 18.     Financial Statements......................................................28

Item 19.     Financial Statements and Exhibits.........................................28
</TABLE>


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<PAGE>   3



In this Annual Report, unless otherwise specified, all amounts are expressed in
United States dollars ($)

                                     PART 1.

All financial information contained in this document is expressed in United
States dollars, unless otherwise stated.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:

TO THE EXTENT THAT ANY STATEMENTS MADE IN THIS DOCUMENT CONTAIN INFORMATION THAT
ARE NOT HISTORICAL, THESE STATEMENTS ARE ESSENTIALLY FORWARD LOOKING AND ARE
SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING THE DIFFICULTY OF PREDICTING FOOD
AND DRUG ACT AND THERAPEUTIC PRODUCT DIRECTORATE APPROVALS, ACCEPTANCE AND
DEMAND FOR NEW PHARMACEUTICAL PRODUCTS, THE IMPACT OF COMPETITIVE PRODUCTS AND
PRICING, NEW PRODUCT DEVELOPMENT AND LAUNCH, RELIANCE ON KEY STRATEGIC
ALLIANCES, AVAILABILITY OF RAW MATERIALS, THE REGULATORY ENVIRONMENT,
FLUCTUATIONS IN OPERATING RESULTS AND OTHER RISKS DETAILED FROM TIME TO TIME IN
THE COMPANY'S VARIOUS FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.


ITEM 1. DESCRIPTION OF BUSINESS

Introduction

Intelligent Polymers Limited ("IPL" or the "Company") was incorporated in
Bermuda on July 30, 1997 primarily to develop once-daily controlled release
versions of selected drugs, which are currently marketed only in immediate
release form or in controlled release form requiring multiple daily dosing, and
whose patents have or will have expired upon the anticipated receipt of FDA
marketing approval. We commenced operations on October 10, 1997. We intend to
commercialise our products through manufacturing, third party marketing partners
and other means.

On July 30, 1997, we issued 12,000 Special Shares of US$1.00 each to Biovail
Corporation International ("Biovail"), an Ontario corporation. In October 1997,
IPL and Biovail completed the sale to the public of 3,375,000 Units, each Unit
consisting of one Common Share of the Company and one Warrant (the "Warrant") to
purchase one Common Share of Biovail. The offering raised approximately
$67,700,000 in net proceeds to the Company. On September 30, 1999 the Units
separated into two underlying securities. Our Common Shares are traded on the
American Stock Exchange under the symbol "IXP". Our Warrants, which are
exercisable at US$40.00 per share from October 1, 1999 through September 30,
2002, are traded on the New York Stock Exchange under the symbol "BVFw".

We have not yet completed product development, obtained regulatory approvals or
verified the market acceptance and demand for our products. Revenues for the
period July 30, 1997 to June 30, 1999 relate entirely to investment activities.

Our registered office and principal executive office is located at Clarendon
House, 2 Church Street, Hamilton ,Bermuda.

Relationship with Biovail Corporation International

Biovail currently owns all of our issued and outstanding Special Shares, par
value $1.00 per share (the "Special Shares"). The Special Shares confer on
Biovail certain limited rights, including the right to appoint one director to
our Board of Directors and the right to purchase all, but not less than all, of
our outstanding Common Shares (See "Purchase Option"). Although the Special
Shares do not entitle Biovail to vote at any meeting of our shareholders and do
not entitle Biovail to receive any dividend or any other distribution, or any
right or interest in the profits or assets of IPL, any resolution to wind up the
affairs of or liquidate I.P.L. will confer upon Biovail a right to vote and the
Special Shares will carry the number of votes equal to the total number of votes
carried by the Common Shares outstanding at the time.


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<PAGE>   4



Purchase Option

Biovail, as holder of all of our issued and outstanding Special Shares, has the
right to purchase all, but not less than all, of our issued and outstanding
Common Shares at the time such right is exercised (the "Purchase Option").
Biovail may exercise the Purchase Option at any time up to the earlier of (i)
September 30, 2002 and (ii) the 90th day after the date that we provide Biovail
with our quarterly financial statements showing cash or cash equivalents of less
than $3 million. Biovail may, at its election, extend the period under (ii)
above by providing additional funding for the continued development of any or
all of the our Products, but in no event beyond September 30, 2002.

If the Purchase Option is exercised, the purchase price, calculated on a per
share basis, will be as follows:

<TABLE>
<CAPTION>
                                                                    Purchase Option Exercise Price
                                                                    ------------------------------
<S>                                                                           <C>
Before October 1, 2000                                                         US$39.06
On or after October 1, 2000 and on or before September 30, 2001                US$48.83
On or after October 1, 2001 and on or before September 30, 2002                US$61.04
</TABLE>

The Purchase Option exercise price may be paid in cash, or Biovail Common
Shares, or any combination at Biovail's sole discretion.

Until the expiration of the Purchase Option, no resolution or act of I.P.L. to
authorize or permit any of the following will be effective without the prior
written approval of Biovail, or any subsequent holder or holders of a majority
of the Special Shares: (i) the allotment or issue of our shares or other
securities or the creation of any right to such allotment or issue; (ii) the
reduction of our authorized share capital; (iii) borrowings by us over an
aggregate of $1 million outstanding at any one time; (iv) the sale or other
disposition of, or the creation of any lien or liens on, the whole or a material
part of our undertaking or assets; (v) the declaration or payment of dividends
or the making of any other distribution to our shareholders; (vi) the
amalgamation of I.P.L; and (vii) any alteration of the Purchase Option.
Accordingly, Biovail, as the holder of the majority of the outstanding Special
Shares, could preclude the holders of a majority of the outstanding Common
Shares and our Board of Directors from taking any of the foregoing actions
during such period.


Development Contract

We have entered into a Development and License Agreement with Biovail (the
"Development Contract") under which Biovail has agreed to use diligent best
efforts to conduct toxicity studies, formulation development, clinical studies
and final development including U.S. regulatory approval of our products, as
defined and as added to and modified by mutual agreement (the "Products"). Since
the majority of our activities are conducted under contract by Biovail, we do
not maintain any research staff nor occupy any research facilities. All
intellectual property developed pursuant to the Development Contract remains the
property of Biovail. Although Biovail and I.P.L. believe that, in general, the
terms of the

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Development Contract are consistent with customary practices in the
pharmaceutical industry, the Development Contract was not negotiated on an
arm's-length basis.

Since we commenced operations in October 1997, Biovail has performed research
and development work for us under the Development Contract. Payments to Biovail
under the Development Contract for clinical development of the Products are the
full amount of all development costs incurred by Biovail in performing these
activities, up to the maximum amount of funds available to us (which includes
any licensing or marketing income earned by us and any cash received upon
exercise of the Biovail Option, as described below), less working capital to be
retained by us of $1.0 million and a reserve of $1.5 million for possible
litigation relating to the Additional Product (the "Available Funds", which term
shall include any portion of the litigation reserve remaining after FDA approval
of the Additional Product). Biovail provides, subject to customary business
constraints and limitations, appropriate scientific and technical personnel,
necessary laboratories and equipment and administration of research and
development operations. Under the Development Contract, Biovail is not required
to allocate any specified amount of time or resources to perform its obligations
thereunder. The development obligations of Biovail and IPL under the Development
Contract will terminate upon the expenditure of all Available Funds or at such
other time as we and Biovail may mutually determine. In a press release dated
December 1, 1999, Biovail announced that it had exercised its option to purchase
an exclusive license for the Additional Product for a purchase price of $25
million. Accordingly, we estimate that the Available Funds will be expended on
or about March 31, 2001.

If at any time the amount of the Available Funds falls below $3.0 million, we
will deliver a Financial Notice to Biovail certifying the amount. On the 90th
day after the Financial Notice, to the extent Biovail has not either exercised
the Purchase Option or extended the termination date of the Purchase Option as
discussed above under "Purchase Option", we and Biovail will commence
negotiations as to the terms on which Biovail might provide additional funding
for any or all of the Products. Such negotiations will extend for a maximum of
60 days and will take into account relevant issues, including, but not limited
to, the amount and timing of such funding, possible alterations in the terms of
the Biovail Option if the Biovail Option has not yet been exercised, or the
possibility of granting Biovail a renewed Biovail Option with respect to a
different product if the Biovail Option has been exercised, and the terms of the
Development Contract. If the parties successfully negotiate new funding terms,
the Purchase Option can be extended, but not beyond September 30, 2002. During
such period of negotiation, we will have the right, but will not be required, to
expend any Available Funds under the Development Contract. As to any product for
which we and Biovail fail to reach agreement as to any additional funding by
Biovail, Biovail will grant to us a worldwide license for all of its patent
rights and other intellectual property (as reasonably agreed to by Biovail and
us as being necessary to develop further any such Product). The License to us
shall be non-royalty bearing and exclusive for the License Period and
non-exclusive thereafter.


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<PAGE>   6


License Option

Pursuant to the Development Contract and subject to the Biovail Option, Biovail
has granted us a License (the "License") to manufacture or obtain manufacturing
for (subject to Biovail's exclusive manufacturing period, right of first refusal
and right of approval described below), sell and otherwise market and sublicense
others to market, throughout the world (other than in Canada), Products
developed by us under the Development Contract or, as to Products for which we
and Biovail fail to reach agreement as to necessary additional funding, under
other arrangements. We will have a non-royalty bearing license with respect to
the rights described above which is exclusive for the License Period and is
non-exclusive thereafter. Pursuant to the terms of the Development Contract,
Biovail will have the exclusive right to manufacture any Product manufactured
through the fifth anniversary of FDA approval of each such Product and will be
obligated during such period, at our request, to manufacture any Product
approved by the FDA at Biovail's standard cost of manufacture plus 25 % of such
cost. Thereafter, our right to obtain manufacturing will be subject to a right
of first refusal on the part of Biovail to match any manufacturing arrangement
offered by third-party manufacturers and, in the event Biovail does not exercise
such right of first refusal, to Biovail's right to approve any proposed
manufacturer or sub-licensee, which approval may be withheld only if any such
manufacturer has insufficient or inadequate manufacturing capability (including
lack of compliance with GMP regulations) or if any such sub-licensee's
activities will have a material adverse effect on Biovail's overall competitive
position in the pharmaceutical industry. In the event that Biovail exercises its
right to reject a manufacturer proposed by us, and we and Biovail cannot agree
on an alternative manufacturer, Biovail will be obliged to manufacture any such
product for us at prevailing market rates but not less than Biovail's standard
cost of manufacturing plus 15% of such cost. Biovail will have the right to
terminate the License as to any product in the event that we do not market such
Product within nine months from the date of marketing approval by the FDA.

The License as to any particular Product will be exclusive until the expiration
of any patents covering the Licensed Product or, if there are no such patents,
for a period of 10 years from the date of the first commercial sale of the
Product (such longer period being the "License Period"). Any such License shall
be royalty-free and, after the License period, non-exclusive.

Crystaal Corporation, a wholly owned subsidiary of Biovail Corporation
International, will pay us royalties equal to 3% of net sales of any Product
(other than the Additional Product, if Biovail has exercised the Biovail Option)
sold in Canada during the License Period by Biovail or its sublicensees.

Biovail had the right to exercise an option to acquire an exclusive license for
the Additional Product from us by paying, at Biovail's option, either (1) base
royalties of 10% of net sales from this product during a specified period or (2)
within 30 days of the exercise of the option, a lump sum of $25.0 million. In a
press release dated December 1, 1999, Biovail announced that it had exercised
its option to purchase the exclusive license for a purchase price of $25
million. In this event, Biovail will possess all rights with respect to the
Additional Product, including, without limitation, the right to manufacture or
obtain manufacturing for, license and market the Additional Product.


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Services Agreement.

We have entered into a services agreement with Biovail (the "Services
Agreement") pursuant to which Biovail has agreed to provide management and
administrative services to us for a quarterly fee of $100,000. The Services
Agreement terminates one year after termination of the Purchase Option. In
addition, we or Biovail may terminate the Services Agreement at any time upon 90
days' notice. Either IPL or Biovail may terminate the Services Agreement in the
event that the other party (i) breaches any material obligation thereunder or
under the Development Contract, which breach continues for 60 days after notice
thereof, or (ii) enters into any liquidation or bankruptcy proceedings.

Status of Product Development.

Biovail has completed the development of a generic version of Procardia XL on
our behalf and filed an ANDA in the first quarter of 1998. We have received
tentative approval for this product from the FDA, however, we are subject to the
30 month provision under the Waxman-Hatch regulations. The 30 month provision
expires in August 2000.

Preclinical toxicology studies have been initiated by Biovail, on our behalf,
for the five branded products under development. Genetic toxicology studies for
all of the products have been completed and final results similar to those from
the innovator compounds were obtained. Chronic toxicity studies have been
completed for three of the five products and reproductive toxicity studies have
been completed on four of the five products. Final formulations for two products
have been developed and are planned to be scaled up by the first quarter of
fiscal 2000. Formulation development and optimization is in process for the
other products.

At the time of the Company's launch in October 1997, the indicated U.S. market
size for the molecules represented in the Company's branded product portfolio
was $1,905 million. For the twelve months ended June 30, 1999, the indicated
U.S. market size for the five branded products in the portfolio was $3,074
million.

Research and Development.

During the year ended June 30, 1999, we incurred research and development costs
of US$32,393,534 compared with $14,565,954 in the fiscal period ended June 30,
1998. The increase is attributable to the fact that Biovail and others were
developing products on our behalf in 1999 and these products were at a more
costly stage of development than the projects conducted in 1998.




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<PAGE>   8


Government Regulation

The research and development, manufacture and marketing of controlled-release
pharmaceuticals are subject to regulation by U.S., Canadian and foreign
governmental authorities and agencies. Such national agencies and other federal,
state, provincial and local entities regulate the testing, manufacturing, safety
and promotion of our products. The regulations applicable to our products may
change as the currently limited number of approved controlled-release products
increases and regulators acquire additional expertise in this area.

UNITED STATES REGULATION

NEW DRUG APPLICATION

We will be required by the FDA to comply with NDA procedures for our branded
products prior to commencement of marketing by us or our licensees. New drug
compounds and new formulations for existing drug compounds which cannot be filed
as ANDAs are subject to NDA procedures. These procedures include (1) preclinical
laboratory and animal toxicology tests; (2) scaling and testing of production
batches; (3) submission of an Investigational New Drug Application ("IND"),
which must become effective before human clinical trials commence; (4) adequate
and well controlled human clinical trials to establish the safety and efficacy
of the drug for its intended indication; (5) the submission of an NDA to the
FDA; and (6) FDA approval of an NDA prior to any commercial sale or shipment of
the product, including pre-approval and post-approval inspections of its
manufacturing and testing facilities. If all of this data in the product
application is owned by the applicant, the FDA will issue its approval without
regard to patent rights that might be infringed or exclusivity periods that
would affect the FDA's ability to grant an approval if the application relied
upon data which the applicant did not own. We do not intend to file applications
where we do not own all the data either submitted with or included in our
applications.

Preclinical laboratory and animal toxicology tests must be performed to assess
the safety and potential efficacy of the product. The results of these
preclinical tests, together with information regarding the methods of
manufacture of the products and quality control testing, are then submitted to
the FDA as part of an IND requesting authorization to initiate human clinical
trials. Once the IND notice period has expired, clinical trials may be
initiated, unless a hold on clinical trials has been issued by the FDA.

Clinical trials involve the administration of a pharmaceutical product to
individuals under the supervision of qualified medical investigators. Clinical
studies are conducted in accordance with protocols that detail the objectives of
a study, the parameters to be used to monitor safety and the efficacy criteria
to be evaluated. Each protocol is submitted to the FDA and to an Institutional
Review Board prior to the commencement of each clinical trial. Clinical studies
are typically conducted in three sequential phases, which may overlap. In Phase
I, the initial introduction of the product into human subjects, the compound is
tested for safety, dosage, tolerance, metabolic interaction, distribution,
excretion and pharmacodynamics. Phase II involves studies in a limited patient
population to (1) determine the efficacy of the product for specific targeted
indications; (2) determine optimal dosage and (3) identify possible adverse
effects and safety risks. In the


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event Phase II evaluations demonstrate that a pharmaceutical product is
effective and has an acceptable safety profile, Phase III clinical trials are
undertaken to further evaluate clinical efficacy of the product and to further
test its safety within an expanded patient population at geographically
dispersed clinical study sites. Periodic reports on the clinical investigations
are required. We or the FDA may suspend clinical trials at any time if either
party believes the clinical subjects are being exposed to unacceptable health
risks. The results of the product development, analytical laboratory studies and
clinical studies are submitted to the FDA as part of an NDA for approval of the
marketing and commercialization of a pharmaceutical product.

The above-described NDA procedures are premised on the applicant being the owner
of, or having obtained a right of reference to, all of the data required to
prove safety and efficacy. These NDAs are governed by 21 U.S.C. ss. 355(b)(1),
also known as Section 505(b)(1) of the FDC Act.

ABBREVIATED NEW DRUG APPLICATION

In certain cases, where the objective is to develop a generic version of an
approved product already on the market in controlled-release dosages, an ANDA
may be filed in lieu of filing an NDA. Under the ANDA procedure, the FDA waives
the requirement to submit complete reports of preclinical and clinical studies
of safety and efficacy and instead requires the submission of bioequivalency
data, that is, demonstration that the generic drug produces the same effect in
the body as its brand-name counterpart and has the same pharmacokinetic profile,
or change in blood concentration over time. The ANDA procedure would be
available to us for a generic version of a drug product approved by the FDA. In
certain cases, an ANDA applicant may submit a suitability petition to the FDA
requesting permission to submit an ANDA for a drug product that differs from a
previously approved reference drug product (the "LISTED DRUG") when the change
is one authorized by statute. Permitted variations from the listed drug include
changes in (1) route of administration; (2) dosage form; (3) strength and (4)
one of the active ingredients of the Listed Drug when the Listed Drug is a
combination product. The FDA must approve the petition before the ANDA may be
submitted. An applicant is not permitted to petition for any other kinds of
changes from listed drugs. The information in a suitability petition must
demonstrate that the change from the Listed Drug requested for the proposed drug
product may be adequately evaluated for approval without data from
investigations to show the proposed drug product's safety or effectiveness. The
advantages of an ANDA over an NDA include reduced research and development costs
associated with bringing a product to market, and generally a shorter review and
approval time at the FDA.

PATENT CERTIFICATION AND EXCLUSIVITY ISSUES

ANDAs are required to include certifications with respect to any patents which
claim the Listed Drug or which claim a use for the Listed Drug for which the
applicant is seeking approval. If applicable patents are in effect and this
information has been submitted to the FDA, the FDA must delay approval of the
ANDA until the patents expire. If the applicant believes it will not infringe
the patents, it can make a patent certification to the holder of patents on the
drug for which a generic drug approval is being sought, which may result in
patent infringement litigation which could delay the FDA approval of the ANDA
for up to 30 months. If the drug product covered by an ANDA were to be found by
a court to infringe another company's patents, approval of the ANDA could be
delayed until the patents expire.

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Under the FDC Act, the first filer of a generic product is entitled to receive
180 days of market exclusivity. Subsequent filers of generic products would be
entitled to market their approved product six months after the earlier of the
first commercial marketing of the first filer's generic product or a successful
defense of a patent infringement suit.

Patent expiration refers to expiry of U.S. patents (inclusive of any extensions)
on drug compounds, formulations and uses. Patents outside the United States may
differ from those in the United States. Under U.S. law, the expiration of a
patent on a drug compound does not create a right to make, use or sell that
compound. There may be additional patents relating to a person's proposed
manufacture, use or sale of a product that could potentially prohibit such
person's proposed commercialization of a drug compound.

The FDC Act contains non-patent market exclusivity provisions which offer
additional protection to pioneer drug products and are independent of any patent
coverage that might also apply. Exclusivity refers to the fact that the
effective date of approval of a potential competitor's ANDA to copy the pioneer
drug may be delayed or, in certain cases, an ANDA may not be submitted until the
exclusivity period expires. Five years of exclusivity are granted to the first
approval of a "new chemical entity." Three years of exclusivity may apply to
products which are not new chemical entities, but for which new clinical
investigations are essential to the approval. For example, a new indication for
use or a new dosage strength of a previously-approved product may be entitled to
exclusivity, but only with respect to that indication or dosage strength.
Exclusivity only offers protection against a competitor entering the market via
the ANDA route, and does not operate against a competitor that generates all of
its own data and submits a full NDA under Section 505(b)(1) of the FDC Act.

If applicable regulatory criteria are not satisfied, the FDA may deny approval
of an NDA or an ANDA or may require additional testing. Product approvals may be
withdrawn if compliance with regulatory standards is not maintained or if
problems occur after the product reaches the market. The FDA may require further
testing and surveillance programs to monitor the pharmaceutical product that has
been commercialized. Noncompliance with applicable requirements can result in
additional penalties, including product seizures, injunction actions and
criminal prosecutions.

CANADIAN REGULATION

The requirements for selling pharmaceutical drugs in Canada are substantially
similar to those of the United States described above.

INVESTIGATIONAL NEW DRUG APPLICATION

Before conducting clinical trials of a new drug in Canada, we must submit an IND
to the Canadian Therapeutics Products Directorate (the "TPD"). This application
includes information about the methods of manufacture of the drug and controls,
and preclinical laboratory and animal toxicology tests on the safety and
potential efficacy of the drug. If,


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within 60 days of receiving the application, the TPD does not notify us that our
application is unsatisfactory, we may proceed with clinical trials of the drug.
The phases of clinical trials are the same as those described above under
"--United States Regulation--New Drug Application."

NEW DRUG SUBMISSION

Before selling a new drug in Canada, we must submit a New Drug Submission
("NDS") to the TPD and receive a notice of compliance from the TPD to sell the
drug. The NDS includes information describing the new drug, including its proper
name, the proposed name under which the new drug will be sold, a quantitative
list of ingredients in the new drug, the methods of manufacturing, processing,
and packaging the new drug, the controls applicable to these operations, the
tests conducted to establish the safety of the new drug, the tests to be applied
to control the potency, purity, stability and safety of the new drug, the
results of clinical trials, the intended indications for which the new drug may
be prescribed and the effectiveness of the new drug when used as intended. The
TPD reviews the NDS. If the NDS meets the requirements of Canada's Food and
Drugs Act and Regulations, the TPD will issue a notice of compliance for the new
drug.

Where the TPD has already approved a drug for sale in controlled-release
dosages, we may seek approval from the TPD to sell an equivalent generic drug.
In certain cases, the TPD does not require the manufacturer of a drug that is
equivalent to a drug that has already been approved for sale by the TPD to
conduct preclinical tests and clinical trials; instead, the manufacturer must
satisfy the TPD that the drug is bioequivalent to the drug that has already been
approved.

The TPD may deny approval or may require additional testing of an NDS if
applicable regulatory criteria are not met. Product approvals may be withdrawn
if compliance with regulatory standards is not maintained or if problems occur
after the product reaches the market. Non-compliance with applicable
requirements can result in fines and other sanctions, including product seizures
and criminal prosecutions. Proposals have recently been made that, if
implemented, would significantly change Canada's drug approval system. In
general, the recommendations emphasize the need for efficiency in Canadian drug
review. Proposals include establishment of a separate agency for drug regulation
and modeling the approval system on those found in European Union countries.
There is no assurance, however, that such changes will be implemented or, if
implemented, will expedite the approval of controlled-release products.

The Canadian government has regulations which prohibit the issuance of a notice
of compliance ("NOC") for a patented medicine to a generic competitor, provided
that the patentee or an exclusive licensee has filed a list of its Canadian
patents covering that medicine with the TPD. After receiving the list, the TPD
may be prohibited from issuing an NOC permitting the importation or sale of a
patented medicine to a generic competitor until patents on the medicine expire
or the wave of infringement and/or validity of the patent(s) in question is
resolved by litigation in the manner set out in such regulations. There may be
additional patents of a drug compound.


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<PAGE>   12


Certain provincial regulatory authorities in Canada have the ability to
determine whether the consumers of a drug sold within such province will be
reimbursed by a provincial government health plan for that drug by listing drugs
on formularies. The listing or non-listing of a drug on provincial formularies
may affect the prices of drugs sold within provinces and the volume of drugs
sold within provinces.

ADDITIONAL REGULATORY CONSIDERATIONS

Sales of our products by our licensees outside the United States and Canada are
subject to regulatory requirements governing the testing, registration and
marketing of pharmaceuticals, which vary widely from country to country.

Our manufacturing facilities located at Steinbach, Manitoba and Carolina, Puerto
Rico operate according to FDA mandated Good Manufacturing Practices. The
manufacturing facilities are inspected on a regular basis by the FDA, the TPD
and other regulatory authorities. Our self-auditing team seeks to ensure
compliance on an ongoing basis with FDA mandated Good Manufacturing Practices.
From time to time, the FDA, the TPD or other regulatory agencies may adopt
regulations that may significantly affect the manufacture and marketing of our
products.

In addition to the regulatory approval process, pharmaceutical companies are
subject to regulations under provincial, state and federal law, including
requirements regarding occupational safety, laboratory practices, environmental
protection and hazardous substance control, and may be subject to other present
and future local, provincial, state, federal and foreign regulations, including
possible future regulations of the pharmaceutical industry. We believe that we
are in compliance in all material respects with such regulations as are
currently in effect.

Development Facilities

A substantial amount of the work under the Development Contract is being
conducted at Biovail's facilities. We believe that these facilities are
sufficient to satisfy our obligations for performance under the Development
Contract. Biovail's staff of scientists has expertise in all aspects of research
and development, from pre-formulation studies and formulation development to
pharmacokinetics and technology applications.

Biovail has successfully developed appropriate delivery systems for
pharmaceutical compounds exhibiting a wide range of solubility and
hydrophobicity characteristics. However, the same facilities are used by Biovail
for work performed for its own account and in the performance of third party
contracts.

In 1996, Biovail further enhanced its research capabilities when it opened its
new primary Canadian research and development facilities. This 24,000 square
foot facility in Toronto is equipped with state-of-the-art technology and
equipment. Complementing the technology is the group's optimized computer
modeling and simulation expertise. We believe that this combination of highly
specialized equipment, scientific expertise and proprietary internal technology
platforms enable Biovail to effectively pursue its controlled release drug
delivery research and development programs.


                                       13

<PAGE>   13


Competition and Markets

The pharmaceutical industry is highly competitive and subject to rapid and
significant technological change. Our products face intense competition from
both conventional forms of drug delivery and controlled release drug delivery
systems developed, or under development, by other pharmaceutical concerns. Many
of these competitors have greater financial resources and marketing capabilities
than those of I.P.L. Our competitors in the U.S. and abroad are numerous and
include, among others, major pharmaceutical and chemical companies, including
without limitation some of the licensees (or potential licensees) of our
products, specialized contract research and research and development firms,
universities and other research institutions. We believe that Biovail's
controlled release technology combined with its strategy of funding and
controlling all or most aspects of its controlled release pharmaceutical
business will provide the cost savings, efficiencies in product development and
acceleration of regulatory filings necessary for it to compete effectively with
such firms and institutions. There can be no assurance, however, that
competitors will not succeed in developing technologies and products that are
as, or more, clinically or cost-effective than any that are being developed or
licensed by us or Biovail or that would render our or Biovail's technologies and
products obsolete or uncompetitive. In addition, certain competitors have
greater experience than Biovail in clinical testing and human clinical trials of
pharmaceutical products and in obtaining FDA and other regulatory approvals.

IPL was formed to- develop once-daily controlled-release branded versions of
selected drugs, whose patents have expired and which are currently marketed (1)
only in immediate release form or (2) in controlled-release form requiring
multiple daily dosage. It is expected that such products will be marketed under
distinct brand names.

The markets and clinical indications of the Company's products are set out
below. Data as to market size has been obtained from IMS Health (America).

GENERIC VERSION OF PROCARDIA XL

A three to four times daily immediate-release formulation of nifedipine,
introduced in January 1982 by Pfizer, is marketed in the United States under the
brand name Procardia. Pfizer introduced a controlled-release version in
September 1989 under the brand name Procardia XL. U.S. sales of Procardia XL
were approximately $569 million for the twelve months ended June 30, 1999.

Biovail has developed a generic version of Procardia XL on behalf of Intelligent
Polymers that includes multiple strengths and filed an ANDA in the first quarter
of 1998. Prior to such filing, Mylan filed an ANDA for one strength only.
Biovail has the right to exercise an option to acquire this product from us by
paying, at Biovail's option, either (1) base royalties of 10% of net sales from
this product during a specified period or (2) within 30 days of the exercise of
the option, a lump sum of $25.0 million. Biovail has indicated that it intends
to exercise this option and pay us $25 million for Procardia XL. In this event,
Biovail will possess all rights with respect to this product, including, without
limitation, the right to manufacture or obtain manufacturing for, license and
market this product.


                                       14

<PAGE>   14


BRANDED PRODUCTS

In addition to a generic version of Procardia XL, under the Development Contract
Biovail is developing, on our behalf, once-daily controlled-release branded
versions of the following compounds, whose patents have expired:

<TABLE>
<CAPTION>
                                                                                        U.S. PRODUCT
                                                                                          SALES (1)
                    CURRENTLY
                  MARKETED BRAND                                                       (IN MILLIONS OF
COMPOUND              NAME              U.S. MARKETER             INDICATION             U.S. DOLLARS)
--------              ----              -------------             ----------             -------------
<S>               <C>                   <C>                    <C>                          <C>
Bupropion         Wellbutrin/Zyban      Glaxo Wellcome         Depression/smoking            $689
                                                               cessation

Buspirone         Buspar                Bristol-Myers          Anxiety, depression           $501
                                        Squibb

Metformin         Glucophage            Bristol-Myers          Diabetes                      $892
                                        Squibb

Tramadol          Ultram                Johnson &              Chronic Pain                  $421
                                        Johnson

Gabapentin        Neurontin             Parke-Davis            Epilepsy                      $571
</TABLE>

[FN]
(1)  U.S. product sales are for the twelve months ended June 30, 1999
</FN>

BUPROPION

A four times daily immediate-release formulation of Bupropion, introduced in
July 1989 by Glaxo is marketed in the United States under the brand name
Wellbutrin. In addition, a twice-daily controlled-release formulation of
Bupropion, introduced in November 1996 by Glaxo, is marketed in the U.S. under
the brand name Zyban for use as an aid in smoking cessation. U.S. sales of
Wellbutrin/Zyban were approximately $689 million for the twelve months ended
June 30, 1999.

Indication: Bupropion is indicated for the symptomatic relief of depressive
illness. Major depression is frequently encountered by patients of primary care
physicians. Depression may occur in neurosis as well as in mood disorders and is
a manifestation of major psychiatric illness. Bupropion is also indicated in the
United States for use as an aid in smoking cessation.

Clinical Efficacy: Bupropion has been proved to be effective in the treatment of
depression. An open, uncontrolled study of 3,167 patients at 105 sites showed
that functional status improved in patients treated with Wellbutrin SR for up to
56 days. This improvement was highly correlated with improvement in clinical
symptoms.


                                       15

<PAGE>   15


Bupropion can also be used in conjunction with other anti-depressant drugs. When
combined with another class of anti-depressants, specified neurotransmitter
modulators ("SNMS"), in 27 patients, greater symptomatic improvement was found
in 19 (70%) of those 27 subjects during a combined daily use of Bupropion with
an SNM (Prozac-equivalent) than with either drug alone.

Our once-daily controlled-release formulation of Bupropion will seek to
significantly improve upon the existing sustained release formulation by
providing sustained plasma levels with better control of symptoms and improved
compliance with convenient once-a-day dosing. Clinically, it is important that
symptoms in the depressed patient be adequately controlled as compliance is a
major concern in these patients.

In a study with children with attention deficit disorder with hyperactivity
("ADDH"), the results indicated that Bupropion may also be a useful addition to
available treatments for ADDH.

In addition, Bupropion has been demonstrated to be an effective aid in smoking
cessation. In a placebo-controlled trial comparing transdermal nicotine, and
sustained-release Bupropion, and a combination of both transdermal nicotine and
sustained-release Bupropion in 893 patients for nine weeks, smoking cessation
rates were 20% with placebo, 32% with nicotine alone, 46% with Bupropion alone
and 51% with both transdermal nicotine and Bupropion.

Market Size: The largest segment in the anti-depressant market is represented by
SNMs (with which Bupropion is used in combination or with which it competes)
which had U.S. sales of approximately $5.7 billion for the twelve months ended
June 30, 1999. The anti-depressant market consists of four major drug
categories: tricyclic anti-depressants, monoamine oxidase inhibitors, anti-mania
drugs and SNMs. Major marketed brands include Tofranil (imipramine), Prozac
(fluoxetine), Paxil (paroxetine), Luvox (fluoxamine) and Zoloft (sertaline). The
smoking cessation market reached $347 million for the twelve months ended June
30, 1999. Major marketed brands of smoking cessation products include nicotine
products such as Nicoderm, Habitrol, Nicorette, Nicotrol and Prostep.

BUSPIRONE

A three times daily immediate-release formulation of Buspirone, introduced in
October 1986 by Bristol-Myers Squibb Company, is marketed in the United States
under the brand name Buspar. U.S. sales of Buspar were approximately $501
million for the twelve months ended June 30, 1999.

Indication: Buspirone is indicated for the short-term symptomatic relief of
excessive anxiety in patients with generalized anxiety disorder ("GAD"), which
is also known as anxiety neurosis. GAD is a neurotic disorder characterized by
chronic unrealistic anxiety often punctuated by acute attacks of anxiety or
panic. Anxiety is a symptom of almost all psychiatric disorders and is
encountered in day-to-day practice by both the general practitioner and the
psychiatrist.

Clinical Efficacy: Controlled studies suggest that Buspirone is effective in
treating GAD and that, unlike other anti-anxiety drugs, tolerance to the
therapeutic effect of Buspirone does not develop. In one study involving 121
patients, Buspirone was found to be effective in improving both anxiety and
depressive symptoms in GAD patients. Another study showed that Buspirone was
more effective and had fewer side effects than lorazepam, a competing drug, and
that, unlike patients treated with Lorazepam, those treated with Buspirone did
not


                                       16
<PAGE>   16


exhibit rebound anxiety. Given its effectiveness in treating symptoms of
depression associated with GAD, Buspirone is also an effective and well
tolerated drug for the treatment of depressive disorders.

Market Size: The anti-anxiety market had approximately $1.2 billion in U.S.
sales for the twelve months ended June 30, 1999, of which Buspirone was the
market leader. Due to its efficacy in treating depressive symptoms in GAD
patients, Buspirone also indirectly competes in the market for antidepressant
drugs, including the market for SNMs, which represented U.S. sales of
approximately $5.7 billion for the twelve months ended June 30, 1999. Major
anti-anxiety brands other than Buspirone include Xanax (alprazolam), Librium
(chlordiazepoxide), Valium (diazepam), Ativan (lorazepam), Serax (oxazepam) and
Atarax (hydroxyzine).

METFORMIN

A two to three times daily immediate-release formulation of Metformin,
introduced in April 1995 by Bristol-Myers Squibb Company, is marketed in the
United States under the brand name Glucophage. U.S. sales of Glucophage were
approximately $892 million for the twelve months ended June 30, 1999.

Indication: Metformin is indicated for the treatment of diabetes mellitus which
cannot be controlled by proper dietary management, exercise and weight reduction
or when insulin therapy is not appropriate. Diabetes is a common disorder in
which there are inappropriately elevated blood glucose levels and a variety of
end organ complications leading to impaired kidney function and accelerated
atherosclerosis.

Clinical Efficacy: Clinical advantages of Metformin include achieving control of
elevated blood sugar levels without exacerbating weight gain, which is a common
side effect of other anti-diabetic treatments. Metformin differs from the
sulfonylureas in that it does not elevate insulin secretion and does not produce
abnormally low blood sugar levels.

In controlled trials, Metformin has shown efficacy in lowering elevated blood
sugar levels in the treatment of diabetes mellitus. In one such study of 289
obese patients with non-insulin dependent diabetes, poorly controlled with diet,
the patients were given Metformin or a placebo. Blood sugar levels were on
average 29% lower in patients receiving Metformin than in patients receiving a
placebo. Furthermore, total cholesterol, LDL, and triglyceride concentrations
decreased in patients receiving Metformin, but did not change in patients
receiving a placebo.

Market Size: The oral anti-diabetic market represented approximately $2.3
billion in U.S. sales for the twelve months ended June 30, 1999. Major
anti-diabetic products other than Glucophage include Glucotrol XL (glipizide)
and Glynase (glyburide).


                                       17

<PAGE>   17


TRAMADOL

A three to four times daily immediate-release formulation of Tramadol,
introduced in March 1995 by Johnson and Johnson, is marketed in the United
States under the brand name Ultram. U.S. sales of Ultram were approximately $421
million for the twelve months ended June 30, 1999.

Indication: Tramadol is indicated for the treatment of a variety of pain
syndromes, including management of moderate to moderately severe chronic pain
associated with cancer and other terminal illnesses. Pain is a common symptom of
many diseases and is generally seen in everyday clinical practice.

Clinical Efficacy: Tramadol is one of a number of narcotic (opioid) analgesics,
which are among the most effective and valuable medications for the treatment of
chronic pain. Tramadol's minimal propensity to induce typical opioid adverse
effects is an advantage over other morphine-like agents. For example, relative
to morphine, Tramadol causes less dependence and less respiratory depression.
Tramadol also appears to be a promising drug for post-operative pain relief.

In an article published in the American Journal of Medicine, the author
concluded that, based on clinical experience, Tramadol appears to have a low
potential for abuse or addiction. Results from U.S. and European studies
indicated that Tramadol is an effective analgesic that may have a particularly
important role in the management of chronic pain. Tramadol has been prescribed
for almost two decades in Europe.

Two long-term safety studies conducted on patients with chronic, nonmalignant
pain demonstrated the efficacy of Tramadol in a variety of pain conditions.

Our once-daily controlled-release formulation of Tramadol will seek to provide
sustained pain control, as compared to the immediate-release form. This would be
especially useful to cancer or terminally ill patients who need analgesics as a
24-hour treatment.

Market Size: The combined market for narcotic and non-narcotic analgesics had
U.S. sales of $2.2 billion for the twelve months ended June 30, 1999. The market
for drugs for the relief of chronic pain consists of two major categories,
narcotic and non-narcotic drugs. Narcotic analgesics include morphine
(ketorolac) and Cataflam (diclofenac).

GABAPENTIN

A three times a day, immediate-release formulation of Gabapentin, introduced in
February 1994 by Parke-Davis, is marketed in the United States under the brand
name Neurontin. U.S. sales of Neurontin were approximately $571 million for the
twelve months ended June 30, 1999.

Indication: Gabapentin is indicated as adjunctive therapy for the treatment of
seizure disorders. It is used to minimize "break-through" seizures in patients
that are being treated for epilepsy using other anti-convulsant therapies.


                                       18
<PAGE>   18


Clinical Efficacy: Gabapentin is an anti-convulsant drug whose mechanism of
action is unknown. Clinical studies have shown that the use of Gabapentin as an
add-on therapy reduces the incidence of refractory partial seizures as well as
secondarily generalized tonic-clonic seizures in epileptic patients.

Central nervous system side effects can occur in patients treated with
Gabapentin. A sustained release formulation will minimize these side effects by
providing steady state therapeutic plasma levels without the peaks and troughs
normally associated with immediate-release dosing. A once a day dosing regimen
should improve patient compliance.

Market Size: Sales for the drug treatment of seizure disorders in the United
States were $2.2 billion for the twelve months ended June 30, 1999. Gabapentin
sales accounted for 26.4% of this market . Other anticonvulsant drugs include
Dilantin (phenytoin), Depakene (Valproic acid), and Tegopen (carbamazapine).

Research Personnel and Facilities

A substantial amount of the work under the Development Contract is currently
being conducted at Biovail's facilities. Although we believe that Biovail's
research personnel and facilities are adequate for the performance of Biovail's
services under the Development Contract, Biovail's research personnel also
perform services in the same facilities for Biovail and other third party
clients. Biovail is not required to allocate any specified amount of time or
resources to its duties under the Development Contract. Biovail's obligations to
other present and future clients may restrict the amount of resources that
otherwise could be devoted to its duties under the Development Contract. Subject
to its duties to use diligent efforts under the Development Contract, consistent
with commercially reasonable practices, Biovail may allocate both its research
and development personnel and its facilities as it deems appropriate under the
circumstances.


Employees

Since our operations are conducted pursuant to the Development Contract and the
Services Agreement, we have no employees other than the Chief Executive Officer,
who is not a full-time employee.

ITEM 2. DESCRIPTION OF PROPERTY

Our principal executive office is located at Clarendon House, 2 Church Street,
Hamilton, Bermuda. We do not own any facilities.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which we are a party or to
which any of our property is subject.


                                       19
<PAGE>   19


ITEM 4. CONTROL OF COMPANY

(a)  To our knowledge, we are neither directly nor indirectly owned or
     controlled by another corporation or any foreign government.

(b)  The following table states the identity of any individual, known to us, who
     owns more than 10% of our voting securities and the amount owned by our
     directors and officers, as of November 30, 1999.

(c)  There are presently issued and outstanding 12,000 Special Shares all of
     which are owned by Biovail. Biovail as holder of the Special Shares, has an
     exclusive, irrevocable option to purchase all, but not less than all, of
     our issued and outstanding Common Shares. The Special Shares confer limited
     voting and other rights on Biovail (as the holder thereof). See
     "Description of Business - Relationship with Biovail."

<TABLE>
<CAPTION>
          (1)                         (2)                         (3)                    (4)
     Title of  Class       Identity of person or Group        Amount Owned        Percentage of Class
     ---------------       ---------------------------        ------------        -------------------
<S>                        <C>                                 <C>                      <C>
     Common Shares         Farallon Partners L.L.C.             538,000                  14.3
     Common Shares         Directors and Officers                37,500                   1.0
</TABLE>

ITEM 5. NATURE OF TRADING MARKET

Until September 30, 1999 the Units were traded on the American Stock Exchange
(the "ASE") under the symbol IXP.u. The Units then separated into the two
underlying securities. The IPL Common Shares now trade on the ASE under the
symbol IXP, and the Biovail Warrants now trade on the New York Stock Exchange
under the symbol BVFw. The following table sets forth the high and low prices on
the ASE for the Units for the periods indicated, as reported by the ASE.

On September 30, 1999 the closing price of the Units was $46.50

<TABLE>
<CAPTION>
                                              High                      Low
                                              ----                      ---
<S>           <C>                            <C>                      <C>
Fiscal 2000
               1st quarter                   $53.13                   $42.25

Fiscal 1999
               4th quarter                    41.88                    28.00
               3rd quarter                    30.88                    25.63
               2nd quarter                    28.00                    16.50
               1st quarter                    23.13                    16.63

Fiscal 1998
               4th quarter                    30.38                    19.75
               3rd quarter                    31.38                    20.75
               2nd quarter                    22.18                    17.75
</TABLE>

                                       20

<PAGE>   20


There was one holder of record of the Units on September 30, 1999. This does not
reflect beneficial ownership of shares held in street or nominee name. Based
upon the number of annual reports and proxy statements requested by shareholder
nominees, we estimate that the total number of beneficial holders of Units (now
Common Shares) exceeds 700 holders.

ITEM 6. EXCHANGE CONTROL AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

We have been designated as a non-resident for exchange control purposes by the
Bermuda Monetary Authority. The transfer of our Common Shares between persons
regarded as resident outside Bermuda for exchange control purposes may be
effected without specific consent under The Bermuda Exchange Control Act 1972
(the "Bermuda Act") and its regulations. Issues and transfers of our Common
Shares involving any person regarded as resident in Bermuda for Exchange Control
purposes require specific prior authorization under the Bermuda Act. Pursuant to
our non-resident status, we may hold any non-Bermudian currency and convert that
currency into any other currency (other than Bermuda dollars) without
restriction.

Non-Bermuda owners of our Common Shares are not restricted in the exercise of
the rights to hold or vote such shares. Because we have been designated as a
non-resident for Bermuda exchange control purposes, there are no restrictions on
our ability to transfer funds in and out of Bermuda or to pay dividends to
United States residents who are holders of our Common Shares, other than in
respect of local Bermuda currency.

As an "exempted company," we are exempt from Bermuda laws which restrict the
percentage of share capital that may be held by non-Bermudians, but as an
exempted company we may not participate in certain business transactions
including: (1) the acquisition or holding of land in Bermuda (except that
required for its business and held by way of lease or tenancy for terms of not
more than 21 years); (2) the taking of mortgages on land in Bermuda to secure an
amount in excess of $50,000 without the consent of the Minister of Finance of
Bermuda; (3) the acquisition of securities created or issued by, or any interest
in, any local company or business, other than certain types of Bermuda
government securities or securities of another "exempted" company, partnership
or other corporation resident in Bermuda but incorporated abroad; or (4) the
carrying on of business of any kind in Bermuda, except in furtherance of our
business carried on outside Bermuda or under a license granted by the Minister
of Finance of Bermuda.

ITEM 7. TAXATION

We are incorporated in Bermuda. Under current Bermuda law, we are not subject to
tax on income or capital gains, and no Bermuda withholding tax will be imposed
upon payments of dividends by us to our shareholders. Furthermore, we have
received from the Minister of Finance of Bermuda under the Exempted Undertakings
Tax Protection Act of 1966, as amended, an undertaking that, in the event that
Bermuda enacts any legislation imposing any tax computed on profits or income,
including any dividend or capital gains withholding tax,


                                       21
<PAGE>   21


or computed on any capital assets, appreciation, or any tax in the nature of an
estate, duty or inheritance tax, the imposition of such tax shall not be
applicable to us or any of our operations, nor to our shares, debentures or
other obligations, until March 28, 2016. This undertaking does not, however,
prevent the imposition of property taxes on Intelligent Polymers-owned real
property or leasehold interests in Bermuda. We do not expect to own or lease
property in Bermuda. As an exempted company, we are liable to pay to the Bermuda
government an annual registration fee calculated on a sliding-scale basis by
reference to our assessable capital, that is, our authorized capital plus any
share premium.

PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS

A "passive foreign investment company" ("PFIC") is any foreign corporation if,
after the application of certain "look-through" rules, (i) at least 75% of its
gross income is "passive income" or (ii) at least 50% of the average value of
its assets is attributable to assets that produce "passive income" or that are
held for the production of "passive income." The determination as to PFIC status
is made annually. Whether IPL or Biovail is a PFIC in any year and the tax
consequences relating to PFIC status will depend on the composition of the
income of IPL and Biovail. Because IPL will receive interest income and may
receive royalties, it is expected that Intelligent Polymers will initially be a
PFIC and a U.S. Holder would be subject to the PFIC taxation rules regardless of
whether IPL continues to be a PFIC in any subsequent year. Under the PFIC
taxation rules, U.S. holders owning shares of a PFIC are subject to a special
U.S. federal income tax regime with respect to certain distributions received
from the PFIC and with respect to gain from the sale or disposition of PFIC
stock.

If IPL is a PFIC for any taxable year during which a U.S. Holder holds IPL
Common Shares, unless such U.S. Holder makes the qualified election described
below, such U.S. Holder would generally be subject to various adverse U.S. tax
consequences. Generally, the direct and indirect U.S. shareholders of a PFIC
must either (i) elect to have IPL treated, with respect to the holder's
shareholding, as a "Qualified Electing Fund" and to report currently their pro
rata share of the PFIC's ordinary earnings and net capital gain even if they do
not receive distributions (the "qualified election"), or (ii) upon disposition
of the shares of the PFIC, including a disposition pursuant to an otherwise
tax-free reorganization, or receipt of an "excess distribution" (generally the
U.S. Holder's ratable share of distributions in any year that are greater than
125% of the average annual distributions received by such U.S. Holder in the
three preceding years or its holding period, if shorter), be subject generally
to tax at the highest applicable rate of tax imposed on ordinary income in
effect for that year as if the gain or distribution were earned ratably over the
period in which the IPL Common Shares were held (including payment of an
interest charge at the rate equal to the charge generally applicable to
underpayments of tax, on the deferred tax). A shareholder that makes a qualified
election may recognize ordinary income or loss as a result of currency
fluctuations between the dates of deemed and actual distributions from the PFIC.


                                       22

<PAGE>   22


The qualified election is made on a shareholder-by-shareholder basis and can be
revoked only with the consent of the IRS. Each shareholder should consult with
his own tax advisor to decide whether to make the "qualified election." This
election is made by attaching the shareholder election statement, the PFIC
annual information statement and Form 8621 to such shareholder's timely filed
income tax return with a copy of the shareholder election statement and Form
8621 being sent to the Internal Revenue Service Center, P.O. Box 21086,
Philadelphia, Pennsylvania 19114. We will supply the PFIC annual information
statement to all shareholders of record for each year. Copies of the Form 8621
must also be filed every year during which the "qualified election" is
outstanding, both with such shareholder's tax return and with the IRS Service
Center in Philadelphia.

The foregoing discussion of Bermuda taxation and of PFIC considerations is of a
general and summary nature only and is not intended to be, nor should it be
considered to be, legal or tax advice to any particular share unit, share or
warrant holder. Accordingly, investors should consult their own tax advisors as
to the tax consequences of disposing of their holdings.



                                       23
<PAGE>   23



ITEM 8. SELECTED FINANCIAL DATA

The following selected financial data of the Company for the year ended June 30,
1999, the period ended June 30, 1998 and as at June 30, 1999 and 1998
respectively have been derived from, and should be read in conjunction with, the
audited financial statements of the Company for such periods and at such dates,
included elsewhere in this Annual Report.

INCOME STATEMENT DATA

<TABLE>
<CAPTION>
                                                        Year Ended           Period ended
                                                       June 30, 1999         June 30, 1998
                                                       -------------         -------------
                                                       (in $000's, except per share data)

<S>                                                     <C>                  <C>
Income:
     Net Investment Income                              $    2,384           $    2,360

Costs and expenses:
     Research and development                              (32,393)             (14,566)
     General administrative                                 (1,150)                (594)
                                                        ----------           ----------
     Total operating expenses                              (33,543)             (15,160)
                                                        ----------           ----------

Net loss                                                   (31,159)             (12,800)

Loss per common share                                        (8.34)               (3.42)

Weighted average number of Common Shares                 3,737,500            3,737,500
     Outstanding
</TABLE>

BALANCE SHEET DATA

<TABLE>
<CAPTION>
                                                                   As at June 30,
                                                             1999                 1998
                                                             ----                 ----
<S>                                                         <C>                  <C>
Working capital                                             21,524               50,568
Total assets                                                31,850               55,821
Total liabilities                                            2,054                1,084
Total shareholders' equity                                  23,579               54,737
</TABLE>

The Company has not paid dividends on its Common Shares and does not anticipate
that it will pay any cash dividends for the foreseeable future. Until the
expiration of the Purchase Option, the Company may not pay any dividends without
the prior written approval of the holders of a majority of the outstanding
Special Shares. Biovail currently owns all of the outstanding Special Shares.
See "Description of Business - Relationship with Biovail - Purchase Option."


                                       24


<PAGE>   24


ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

We commenced operations in October 1997 and since then we have been engaged in
the development of once-daily controlled release versions of selected drugs
whose patents have expired. Development is carried out on our behalf by Biovail
Corporation International.

Results of Operations
Research and development costs for the year ended June 30, 1999 ("fiscal 1999")
were $32,394,000 compared with $14,566,000 in the eleven month period ended June
30, 1998 ("fiscal 1998"). The increase relates to the fact that a number of
projects progressed into more costly clinical stages of development.

General and administrative expenses were $1,150,000 in fiscal 1999 compared with
$594,000 in fiscal 1998. The increase relates primarily to the fact that legal
fees increased to $534,000 in fiscal 1999 from $152,000 in fiscal 1998. We have
been actively contesting litigation brought against us in connection with
certain of our products. In addition, administration fees increased to $400,000
for the full fiscal period in 1999 from $300,000 for the partial year in fiscal
1998.

Income from investments in fiscal 1999 was $2,384,000 compared with $2,360,000
in fiscal 1998. The increase stems from the fact that surplus funds were
available for investment for the full year in fiscal 1999 and at marginally
higher rates of interest than in fiscal 1998, although cash available for
investment was lower in 1999.

As a result of the foregoing, the loss for fiscal 1999 was $31,159,000 in fiscal
1999 compared with $ 12,800,000 in fiscal 1998.

Liquidity and Capital Resources

At June 30, 1999 we had current assets of $29,875,000 of which $26,133,000 was
represented by cash and available for sale securities, as compared to
$51,652,000 and $51,121,00 at June 30, 1998. Additional available for sale
securities with maturities greater than one year totalling $2,054,000 were held
at June 30, 1999 compared to $4,169,000 at the previous year-end.

Current liabilities at June 30, 1999 were $8,272,000 compared to $1,084,000 the
previous year.

Working capital at June 30, 1999 was $21,524,000 compared to $50,568,000 the
previous year.

In a press release dated December 1, 1999, Biovail announced that it had
exercised its option to purchase an exclusive license for the Additional Product
for a purchase price of $25 million. Accordingly, we believe that our current
working capital, in conjunction with investment income and revenues anticipated
from possible out-licensing and co-development alliances, will be sufficient to
meet cash requirements for the fiscal year to June 30, 2000.


                                       25
<PAGE>   25


Inflation

Inflation has not had a material effect of IPL's operations.

YEAR 2000 COMPLIANCE

The year 2000 issue arises because many computer hardware and software systems
use only two digits to represent the year. As a result, these systems and
programs may not process dates beyond 1999. We are directly reliant upon
information technology only in the area of accounting and administration where
we use widely available accounting and word-processing application software. We
have been assured by the suppliers of these applications that they will be year
2000 compliant.

Since Biovail carries out all development for us under the Development Contract,
we are indirectly reliant on Biovail's state of preparation in the fields of
financial management and manufacturing. Biovail has assured us that they have
completed their review of all applications and that they are now year 2000
compliant.

As part of its year 2000 preparedness program, Biovail purchased and has now
installed an enterprise wide business system to handle financial and
manufacturing applications at all its locations. The system was represented by
the supplier to be year 2000 compliant and Biovail is performing detained
analysis to ensure compliance.

ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT

The following table provides information concerning the current directors and
officers of the Company:

<TABLE>
<CAPTION>
Name                      Position with the Company                   Age
----                      -------------------------                   ---
<S>                       <C>                                        <C>
Eugene N. Melnyk          Chairman of the Board of Directors          40
                          Chief Executive Officer

David J. Doyle            Director and Secretary                      44

Paul W. Haddy             Director                                    46
</TABLE>


Mr. Melnyk has been the Chairman of the Board and a Director of Biovail since
Trimel was merged into Biovail on March 29, 1994 (the "Amalgamation"). From
October 1991 to March 1994, he was the Chairman of the Board of Directors of
Biovail Corporation International ("BCI"), a predecessor of Biovail which was
then a subsidiary of Trimel. Mr. Melnyk was instrumental in acquiring, financing
and organizing the companies or businesses that comprised BCI. Mr. Melnyk also
founded Trimel and served as its President and Chief Executive Officer from 1983
through July 1991.


                                       26


<PAGE>   26


Mr. Doyle has been a Common Director of Intelligent Polymers since its
organization. Mr. Doyle has been an associate in the law firm of Conyers Dill &
Pearman, Hamilton, Bermuda, since March 1, 1996, and specializes in
international corporate matters with particular emphasis on insurance and
reinsurance. Prior thereto, Mr. Doyle was a partner of the law firm of Appleby,
Spurling & Kempe, Hamilton, Bermuda. Mr. Doyle is a director and officer of
numerous Bermuda companies for which Conyers Dill & Pearman acts as legal
counsel and for which its associated company, Codan Services, Ltd., provides
corporate administrative services.

Mr. Haddy was appointed a Common Director of Intelligent Polymers in July 1998.
Mr. Haddy has been Chairman and Chief Executive Officer of London Life Bank &
Trust Corporation since January 1990. From 1989 to 1994, Mr. Haddy also served
as President of London Life & Casualty Reinsurance Corporation and from 1984 to
1989 he was Director of Public Bonds at London Life Canada.

Each director retires annually and serves until their respective successors have
been elected or qualified.

ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS

For the fiscal period ended June 30, 1999, all directors and directors of the
Company as a group received total compensation of $2,500 (1998 -- $nil). The
Company reimburses directors and officers for their actual business-related
expenses.

Messrs. Melnyk is an employee of Biovail and receives compensation from Biovail
for services performed for Biovail. IPL and Biovail have entered into a Services
Agreement, under which Biovail performs management and administrative services
for us. Charges under the Services Agreement for fiscal 1999 were $400,000 (1998
-- $300,000).

ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

There are no options outstanding to purchase securities of the Company.

ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Mr. Melnyk, Chairman of the Board and Chief Executive Officer of the Company, is
Chairman of the Board of Biovail Corporation International.

The Company is involved in certain transactions with Biovail including the
Development and License Agreement and the Services Agreement. See "Description
of Business - Relationship with Biovail - Purchase Option, Development Contract,
License Option and Services Agreement."


                                       27

<PAGE>   27


                                    PART II.

14.  DESCRIPTION OF SECURITIES TO BE REGISTERED

Not applicable.

                                    PART III.

15.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

16.  CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES

Not applicable.

17.  FINANCIAL STATEMENTS AND EXHIBITS

The financial statements filed as part of this Annual Report are listed in Item
19. Financial Statements and Exhibits.

All financial statements herein are stated in accordance with generally accepted
accounting principles in Canada and have been reconciled to United States GAAP.
The table of contents to the consolidated financial statements and accompanying
notes to the consolidated financial statements appear on F-1 of the Report on
Form 20-F.

18.  FINANCIAL STATEMENTS

The Company has elected to provide Financial Statements pursuant to Item 17.

19.  FINANCIAL STATEMENTS AND EXHIBITS

The following Financial Statements are filed as part of this Annual Report:

A.   FINANCIAL STATEMENTS

--   Independent Auditors' Report.

--   Balance Sheets of the Company as at June 30, 1999 and 1998

--   Statements of Operations for the year ended June 30, 1999 and the period
     July 30, 1997 to June 30, 1998

--   Statements of Cash Flows for the year ended June 30, 1999 and the period
     July 30, 1997 to June 30, 1998

--   Statements of Changes in Shareholders' Equity for the year ended June 30,
     1999 and the period July 30, 1997 to June 30, 1998

--   Notes to the Financial Statements



                                       28
<PAGE>   28



                           NTELLIGENT POLYMERS LIMITED

                          INDEX TO FINANCIAL STATEMENTS



<TABLE>
<S>                                                                                <C>
Independent Auditors' Report........................................................F-2

Balance Sheets of the Company as at June 30, 1999 and 1998..........................F-3

Statements of Operations for the year ended June 30, 1999 and the period July
30, 1997 to June 30, 1998...........................................................F-4

Statements of Cash Flows for the year ended June 30, 1999 and the period July
30, 1997 to June 30, 1998...........................................................F-5

Statements of Changes in Shareholders' Equity for the year ended June 30, 1999
and the period July 30, 1997 to June 30, 1998.......................................F-6

Notes to the Financial Statements...................................................F-7
</TABLE>






















                                       F-1

<PAGE>   29




                          INDEPENDENT AUDITORS' REPORT


To the Shareholders of
INTELLIGENT POLYMERS LIMITED
(A development stage Bermuda company )
Administrative Offices
Chelston Park
Collymore Rock
St. Michael, Barbados

We have audited the accompanying balance sheets of Intelligent Polymers Limited
(a development stage company domiciled in Bermuda) as of June 30, 1999 and 1998
and the related statements of operations, cash flows and shareholders' equity
for the year ended June 30, 1999, for the period from July 30, 1997 (inception)
to June 30, 1998, and for the period from July 30, 1997 (inception) to June 30,
1999 (all expressed in United States dollars). These financial statements are
the responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance that the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for our
opinion.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the company as of June 30, 1999 and 1998 and
the results of its operations and its cash flows for the year ended June 30,
1999, for the period from July 30, 1997 (inception) to June 30, 1998, and for
the period from July 30, 1997 (inception) to June 30, 1999 in accordance with
generally accepted accounting principles in the United States of America.




                                                        [Deloitte & Touche Logo]

                                                           CHARTERED ACCOUNTANTS

Bridgetown, Barbados
November 26, 1999


                                       F-2

<PAGE>   30


                          INTELLIGENT POLYMERS LIMITED
                      (A DEVELOPMENT STAGE BERMUDA COMPANY)

                                 BALANCE SHEETS

                          AS AT JUNE 30, 1999 AND 1998

                      (Expressed in United States Dollars)

<TABLE>
<CAPTION>


                                                                      JUNE 30,          JUNE 30,
  ASSETS                                            NOTES               1999              1998
  ------                                            -----               ----              ----
<S>                                                  <C>           <C>              <C>
CURRENT ASSETS
  Cash and cash equivalents                           7             $  8,397,244     $ 21,739,894
  Available for sale securities                       8               17,656,921       29,380,952
  Interest receivable                                                    192,336          530,926
  Contract advances                                   4                3,550,000               --
                                                                    ------------     ------------

  Total current assets                                                29,796,501       51,651,772

  Available For Sales Securities                      8                2,054,400        4,169,035
                                                                    ------------     ------------
                                                                    $ 31,850,901       55,820,807
                                                                    ============     ============

  LIABILITIES AND SHAREHOLDERS' EQUITY
  ------------------------------------

CURRENT LIABILITIES
  Accounts payable                                                  $    223,995     $    682,806
  Accrued liabilities                                 9                8,048,215          401,191
                                                                    ------------     ------------
                                                                       8,272,210        1,083,997
                                                                    ------------     ------------
SHAREHOLDERS' EQUITY
  Common shares, of par value US$0.01 per share
  4,000,000 shares authorised
  3,737,500 shares issued and outstanding            10                   37,375           37,375
Special shares, of par value US$1.00 per share
  12,000 shares authorised, issued and outstanding   10                   12,000           12,000
Additional paid-in share capital                     11               67,486,400       67,486,400
                                                                    ------------     ------------
Total paid in capital                                                 67,535,775       67,535,775

Accumulated other comprehensive income                                     2,422            1,287

Deficit accumulated during the development stage                     (43,959,506)     (12,800,252)
                                                                    ------------     ------------
                                                                      23,578,691       54,736,810
                                                                    ------------     ------------
                                                                    $ 31,850,901     $ 55,820,807
                                                                    ============     ============
</TABLE>

The attached notes form an integral part of these financial statements.



                            APPROVED ON BEHALF OF THE BOARD

                            ......................     .........................
                            Director                   Director


                                       F-3

<PAGE>   31


                          INTELLIGENT POLYMERS LIMITED

                      (A DEVELOPMENT STAGE BERMUDA COMPANY)

                            STATEMENTS OF OPERATIONS

                        FOR THE YEAR ENDED JUNE 30, 1999

                  AND THE PERIOD JULY 30, 1997 TO JUNE 30, 1998

                      (Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                                                               PERIOD FROM
                                                      FROM JULY 30,                           JULY 30,1997
                                                    1997 (INCEPTION)        YEAR ENDED         (INCEPTION)
                                                       TO JUNE 30,           JUNE 30,          TO JUNE 30,
                                     NOTES                1998                 1999                1999
                                     -----          ----------------     --------------      --------------
<S>                                  <C>            <C>                  <C>                 <C>
INCOME
Net investment income                                $   4,744,106        $   2,383,982       $   2,360,124
                                                     -------------        -------------       -------------
COSTS AND EXPENSES
Research and development               4                46,959,488           32,393,534          14,565,954
General and administrative                               1,744,124            1,149,702             594,422
                                                     -------------        -------------       -------------
Total operating expenses                                48,703,612           33,543,236          15,160,376
                                                     -------------        -------------       -------------
NET LOSS for the year/period                         $ (43,959,506)       $ (31,159,254)      $ (12,800,252)
                                                     =============        =============       =============

NET LOSS PER COMMON
 SHARE 12                                            $      (11.76)       $       (8.34)      $       (3.42)
                                                     -------------        -------------       -------------
WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                                      3,737,500            3,737,500           3,737,500
                                                     -------------        -------------       -------------
</TABLE>


The attached notes form an integral part of these financial statements.












                                       F-4


<PAGE>   32


                          INTELLIGENT POLYMERS LIMITED
                     (A DEVELOPMENT STAGE BERMUDA COMPANY )

                            STATEMENTS OF CASH FLOWS

                        FOR THE YEAR ENDED JUNE 30, 1999

                  AND THE PERIOD JULY 30, 1997 TO JUNE 30, 1998

                      (Expressed in United States Dollars)

<TABLE>
<CAPTION>
                                                                                               PERIOD FROM
                                                      FROM JULY 30,                            JULY 30,1997
                                                    1997 (INCEPTION)        YEAR ENDED          (INCEPTION)
                                                       TO JUNE 30,           JUNE 30,           TO JUNE 30,
                                                          1999                 1999                1998
                                                          ----                 ----                ----
<S>                                                   <C>                  <C>                 <C>
OPERATING ACTIVITIES
Net loss for the year/period                          $(43,959,506)        $(31,159,254)       $(12,800,252)
Adjustments to reconcile net loss to
cash provided by operating activities:
Amortization of investment premiums                        106,889              104,691               2,198
                                                      ------------         ------------        ------------
                                                       (43,852,617)         (31,054,563)        (12,798,054)

Changes in operating assets and liabilities
Decrease/(increase) in interest receivable                (192,336)             338,590            (530,926)
(Increase) in contract advances                         (3,550,000)          (3,550,000)                  -
(Decrease)/increase in accounts payable                    223,995             (458,811)            682,806
Increase in accrued liabilities                          8,048,215            7,647,024             401,191
                                                      ------------         ------------        ------------
Net cash used by operating activities                  (39,322,743)         (27,077,760)        (12,244,983)
                                                      ------------         ------------        ------------
INVESTING ACTIVITIES
Proceeds from sale of securities                       110,723,269           69,119,016          41,604,253
Purchases of securities                               (130,539,057)         (55,383,906)        (75,155,151)
                                                      ------------         ------------        ------------
Net cash provided by/(used in) investing
activities                                             (19,815,788)          13,735,110         (33,550,898)
                                                      ------------         ------------        ------------
FINANCING ACTIVITIES
Proceeds from issue of share capital and
warrants                                                67,535,775                    -          67,535,775
                                                      ------------         ------------        ------------
Net cash provided by financing activities               67,535,775                    -          67,535,775
                                                      ------------         ------------        ------------
(DECREASE)/INCREASE
IN CASH AND CASH EQUIVALENTS                             8,397,244          (13,342,650)         21,739,894

CASH AND CASH EQUIVALENTS,
beginning of year/period                                         -           21,739,894                   -
                                                      ------------         ------------        ------------
CASH AND CASH EQUIVALENTS,
end of year/period                                    $  8,397,244         $  8,397,244        $ 21,739,894
                                                      ============         ============        ============
</TABLE>


The attached notes form an integral part of these financial statements.

                                       F-5


<PAGE>   33


                          INTELLIGENT POLYMERS LIMITED

                      (A DEVELOPMENT STAGE BERMUDA COMPANY)

                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                        FOR THE YEAR ENDED JUNE 30, 1999
                  AND THE PERIOD JULY 30, 1997 TO JUNE 30, 1998
                      (Expressed in United States Dollars)

<TABLE>
<CAPTION>

                                                 1999                              1998
                                                 ----                              ----
<S>                                        <C>                <C>             <C>                 <C>
SHARES
Balance at July 30, 1997                                                      $          -
Balance at July 1, 1998                     $     37,375
Shares issued October 10, 1997                                                      37,375
                                            ------------                      ------------
Balance at June 30, 1999                          37,375                            37,375
                                            ------------                      ------------

SPECIAL SHARES
Balance at July 30, 1997                                                                 -
Balance at July 1, 1998                           12,000
Shares issued July 30, 1997                                                         12,000
                                            ------------                      ------------
Balance at June 30, 1999                          12,000                            12,000
                                            ------------                      ------------
ADDITIONAL PAID-IN CAPITAL
Balance at July 30, 1997                                                                 -
Balance at July 1, 1998                       67,486,400
Shares issued October 10, 1997                                                  74,712,625
Issue expenses                                                                  (7,226,225)
                                            ------------                      ------------
Balance at June 30, 1999                      67,486,400                        67,486,400
                                            ------------                      ------------
ACCUMULATED OTHER COMPREHENSIVE
  INCOME/(LOSS)
Balance at July 30, 1997                                                                 -
Balance at July 1, 1998                            1,287
Unrealised gain on available
  for sale securities                                         $      1,135                        $      1,287
                                                              ------------                        ------------
Other comprehensive income                         1,135             1,135           1,287               1,287
                                            ------------                      ------------
Balance at June 30, 1999                           2,422                             1,287
                                            ------------                      ------------
ACCUMULATED DEFICIT
Balance at July 30, 1997                                                                 -
Balance at July 1, 1998                      (12,800,252)
Net loss                                     (31,159,254)      (31,159,254)    (12,800,252)        (12,800,252)
                                            ------------      ------------    ------------        ------------
Balance at June 30, 1999                     (43,959,506)                      (12,800,252)
                                            ------------                      ------------
Comprehensive loss                                            $(31,158,119)                       $(12,798,965)
                                                              ============                        ============

TOTAL SHAREHOLDERS' EQUITY                  $ 23,578,691                      $ 54,736,810
                                            ============                      ============
</TABLE>

The attached notes form an integral part of these financial statements.

                                      F-6

<PAGE>   34


                          INTELLIGENT POLYMERS LIMITED
                      (A DEVELOPMENT STAGE BERMUDA COMPANY)


                        NOTES TO THE FINANCIAL STATEMENTS


                        FOR THE YEAR ENDED JUNE 30, 1999
                  AND THE PERIOD JULY 30, 1997 TO JUNE 30, 1998
                      (Expressed in United States Dollars)




Note 1. BACKGROUND

        Intelligent Polymers Limited (`IPL' or the `Company'), a development
        stage company domiciled in Bermuda, was formed on July 30, 1997
        primarily to develop once-daily controlled release versions of selected
        drugs, which are currently marketed only in immediate release form or in
        controlled release form requiring multiple daily dosing, and whose
        patents have or will have expired upon the anticipated receipt of FDA
        marketing approval. The Company commenced operations on October 10,
        1997.

        In October 1997 IPL and Biovail Corporation International completed a
        sale to the public of 3,737,500 units, each unit consisting of one
        Common Share (the `IPL Common Shares') and one Warrant (the `Warrants')
        to purchase one Common Share of Biovail Corporation International. The
        offering raised $67,523,775 in net proceeds for the Company.

Note 2. SIGNIFICANT ACCOUNTING POLICIES

        The accompanying financial statements have been prepared in accordance
        with generally accepted accounting principles in the United States of
        America. These require management to make estimates and assumptions that
        affect the reported amounts of assets and liabilities and the disclosure
        of contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenues and expenses during the
        reporting period. Actual results could differ from these estimates. The
        following are the significant accounting policies adopted by the
        Company:

        The Company is currently engaged in the development of certain
        therapeutic products; it has not yet completed product development,
        obtained required regulatory approvals or verified the market acceptance
        and demand for its products. Accordingly, its activities have been
        accounted for as those of a `development stage enterprise' as set forth
        in Financial Accounting Standards Board Statement No. 7, `Accounting and
        Reporting by Development Stage Enterprises'.

                                       F-7


<PAGE>   35


Note 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

        BASIS OF ACCOUNTING

        At the current rate of research and development expenditure the Company
        will exhaust its cash resources sometime during the fiscal year ended
        June 30, 2000, at which time its future activities will be dependent on
        additional funding. As further explained in Note 5, Biovail, has the
        right to acquire an exclusive license to one product [Nifedipine
        (Procardia) XL, the "Additional Product"] upon payment of either (a) a
        one time cash fee of US$25,000,000 or (b) base royalties of 10% of the
        net sales from the Additional Product. Biovail has represented that it
        plans to exercise this option by remitting the one-time fee of $25
        million. Consequently these financial statements have been prepared on a
        going concern basis.

        RESEARCH AND DEVELOPMENT

        Research and development costs are expensed as incurred. Amounts paid by
        the Company related to invoices received for work that has yet to be
        performed are treated as contract advances.

        TECHNOLOGY RIGHTS

        Payments for access to and use of proprietary technologies are expensed
        as incurred.

        CASH AND CASH EQUIVALENTS

        Cash and cash equivalents include cash and highly liquid investments
        with initial maturities of three months or less.

        INVESTMENTS

        The Company's investments are considered to be `available for sale' as
        set forth under the definition in the Financial Accounting Standards
        Board Statement No. 115 `Accounting for Certain Investments in Debt and
        Equity Securities'.

        Investments available for sale are carried at fair value, being the
        quoted market price of these securities. The net unrealized appreciation
        or depreciation on investments available for sale is included as a
        component of other comprehensive income. Realized gains and losses on
        sales of investments are determined on a first-in, first out basis.
        Investment income is recognized when earned and includes the
        amortization of premiums or discounts on investments.

        FAIR VALUE OF FINANCIAL INSTRUMENTS

        The carrying amount approximates fair value because of the short
        maturity of those instruments.

        The fair values of investments are estimated based on quoted market
        prices for those investments.

                                      F-8


<PAGE>   36




Note 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

        PRONOUNCEMENTS

        During the year ended June 30, 1999, the Company adopted Statement of
        Financial Accounting Standards (`SFAS') 130 `Reporting Comprehensive
        Income'. SFAS 130 establishes standards for reporting and displaying
        comprehensive income (loss) and its components in a full set of
        general-purpose financial statements. Comprehensive income (loss) is
        determined by adjusting net loss by other items not included as a
        component of net loss, such as gains or losses on available for sale
        investments. Total comprehensive income (loss) is shown in the statement
        of shareholders' equity.

        Also during the year ended June 30, 1999, the Company adopted SFAS 131
        `Disclosures about Segments of an Enterprise and Related Information'.
        SFAS 131 establishes standards for the manner in which public business
        enterprises report information about operating segments in annual and
        interim financial statements. It also establishes standards for related
        disclosures about products and services, geographic areas and major
        customers. Because the Company has focused its efforts on developing its
        business and conducting market research and product development, the
        Company has operated as a single segment.

        In June 1998, the Financial Accounting Standards Board issued SFAS 133
        `Accounting for Derivative Instruments and Hedging Activities'. SFAS 133
        establishes accounting and reporting standards for derivative financial
        instruments and hedging activities related to those instruments, as well
        as other hedging activities. Because the Company does not currently hold
        any derivative instruments and does not engage in hedging activities,
        the Company expects that the adoption of SFAS 133 will not have a
        material impact on its financial position, results of operations or cash
        flows. The Company will not be required to adopt SFAS 133 until fiscal
        2001.

Note 3. TRANSACTIONS WITH BIOVAIL

        The Company has entered into agreements with Biovail Laboratories
        Incorporation, a wholly owned subsidiary of Biovail Corporation
        International, (collectively `Biovail') which include a product
        development and licensing agreement (the `Development Contract', see
        notes 4 and 5) relating to the research, development and licensing of
        once-daily controlled release drug products and the `Services Agreement'
        (see note 6). Pursuant to the Development Contract, Biovail has agreed
        to use diligent efforts to conduct toxicity studies, formulation
        development and clinical studies for, and pursue U.S. regulatory
        approval of, certain agreed upon drug products. Payments to Biovail
        under the Development Contract will be in an amount equal to the full
        amount of all development costs incurred by Biovail at actual cost plus
        a 65% markup in 1999 (45% in 1998).




                                       F-9


<PAGE>   37



Note 3. TRANSACTIONS WITH BIOVAIL (CONTINUED)

        Substantially all the management and operating activities of the Company
        will be carried out by Biovail under the Services Agreement.

        Biovail owns all the issued and outstanding special shares of the
        Company, which grant the holder of the majority of such special shares
        the Purchase Option and confer limited voting and other rights on the
        holder (see note 10).

Note 4. PRODUCT DEVELOPMENT ARRANGEMENT

        In September 1997, the Company entered into the Development Contract
        with Biovail to conduct toxicity studies, formulation development,
        clinical studies and final development including U.S. regulatory
        approval of the Company's products as defined and as added to and
        modified by mutual agreement.

        The net proceeds of the unit offering in October 1997 were used
        primarily to make payments to Biovail pursuant to the agreement for the
        development of these products. In the year to June 30, 1999 an amount of
        $20,260,000 (1998 - $14,565,954) was invoiced by Biovail, of which
        $3,550,000 (1998 - $NIL) represented an advance against future costs. In
        the event of a contract termination, amounts representing advances
        against future costs would be fully refundable to the Company.

        All intellectual property developed pursuant to the Development Contract
        remains the property of Biovail.

Note 5. DEVELOPMENT CONTRACT

        Under the Development Contract and subject to the Biovail Option (see
        last paragraph of note 5), IPL has been granted a license (the
        `License') from Biovail to manufacture or obtain manufacturing for, sell
        and otherwise market throughout the world (other than in Canada),
        products developed for IPL under the Development and License Agreement.

        Notwithstanding any rights or license granted or acquired by IPL under
        this arrangement, Biovail has the exclusive right to manufacture any
        product through to the fifth anniversary of FDA approval of each such
        product and is obligated during such period, at the request of IPL, to
        manufacture any product at Biovail's standard cost of manufacture plus
        25% of such cost.

        The License as to any particular product is exclusive until the
        expiration of patents covering the licensed product or, if there are no
        such patents, for a period of 10 years from the date of the first
        commercial sale of the product. Any such license shall be royalty free.

        With respect to one product (Nifedipine XL, the `Additional Product'),
        Biovail has the right, exercisable within 60 days of US regulatory
        approval (the `Biovail Option'), to acquire an exclusive license to the
        Additional Product upon payment by Biovail, at Biovail's option, of
        either (a) a one-time cash fee of US$25,000,000 or (b) base royalties of
        10% of the net sales from the Additional Product.

                                      F-10



<PAGE>   38




Note 6. SERVICES AGREEMENT

        In September 1997, the Company entered into a Services Agreement with
        Biovail for the provision of administrative support. For the year ended
        June 30, 1999, general and administrative services in the statement of
        operations includes US$400,000 (1998 - US$300,000) charged by Biovail
        under the terms of this agreement.

Note 7. CASH AND CASH EQUIVALENTS

        At June 30, 1999 funds were held in short-term deposits with major
        financial institutions and in commercial paper with maturities of three
        months or less. Management is of the opinion that there is no
        significant concentration of credit risk.

Note 8. AVAILABLE FOR SALE SECURITIES

        The amortized cost, fair value and unrealized gains of available for
        sale securities by contractual maturity is shown below:

<TABLE>
<CAPTION>
                                                                June 30, 1999
                                              -------------------------------------------------
                                                 Gross
                                               Amortized              Fair
                                                  Cost               Value          Gain/(Loss)
                                                  ----               -----          -----------
                                                  US$                 US$               US$
<S>                                          <C>                 <C>                  <C>
Maturity less than one year but
greater than three months:
    Asset backed securities                  $ 17,639,329        $ 17,656,921         $ 17,592

Maturity one to two years:
    Corporate bonds                             2,069,570           2,054,400          (15,170)
                                             ------------        ------------         --------
                                             $ 19,708,899        $ 19,711,321         $  2,422
                                             ============        ============         ========
</TABLE>


<TABLE>
<CAPTION>
                                                                June 30, 1998
                                              -------------------------------------------------
                                                 Gross
                                               Amortized              Fair
                                                  Cost               Value          Gain/(Loss)
                                                  ----               -----          -----------
                                                  US$                 US$               US$
<S>                                          <C>                 <C>                  <C>
Maturity less than one year but
greater than three months:
    Commercial Paper                         $ 22,552,293        $ 22,552,293         $      -
    Certificates of Deposit                     6,827,432           6,828,659            1,227
                                             ------------        ------------         --------
                                               29,379,725          29,380,952            1,227
Maturity one to two years:
    Asset backed securities                     4,168,975           4,169,035               60
                                             ------------        ------------         --------
                                             $ 33,548,700        $ 33,549,987         $  1,287
                                             ============        ============         ========
</TABLE>

                                      F-11




<PAGE>   39


Note 9. ACCRUED LIABILITIES

<TABLE>
<CAPTION>
                                                      1999            1998
                                                      ----            ----
<S>                                                <C>             <C>
        Contract payment                           $8,000,000      $        -
        Other accrued liabilities                      48,215         401,191
                                                   ----------      ----------
                                                   $8,048,215      $  401,191
                                                   ==========      ==========
</TABLE>

        The Company entered into an agreement on June 30, 1999 for access to
        certain toxicology data and committed to a payment of $8,000,000 in line
        with that agreement. The Company has expensed this payment as a research
        and development expense as the future benefits to be derived from the
        access are uncertain. This amount was paid subsequent to the year end
        and is consequently provided for as an accrued liability.

Note 10. SHARE CAPITAL

        The Company's authorised capital stock consists of 4,000,000 Common
        Shares, par value $0.01 per share (the `IPL Common Shares'), of which
        3,737,500 are issued and outstanding, and 12,000 Special Shares, par
        value US$1.00 per share (the `Special Shares'), of which 12,000 are
        issued and outstanding.

        Biovail, as holder of the Special Shares has an exclusive, irrevocable
        option (the `Purchase Option') to purchase all, but not less than all,
        of the issued and outstanding IPL Common Shares. Biovail may exercise
        the Purchase Option at any time up to the earlier of (i) September 30,
        2002 and (ii) the 90th day after the date that IPL provides Biovail with
        quarterly financial statements of IPL showing cash or cash equivalents
        of less than $3 million, although Biovail may at its election extend
        such period by providing additional funding for the continued
        development of the Products or Additional products, but in no event
        beyond September 30, 2002. The Purchase Option exercise price may be
        paid in cash, or Biovail Common Shares, or any combination at Biovail's
        sole discretion, as follows:

<TABLE>
<CAPTION>
                                                                   Purchase Option
                                                                   Exercise Price
                                                                   --------------
<S>                                                                  <C>
        Before October 1, 2000                                        US$39.06
        On or after October 1, 2000 and on or before
           September 30, 2001                                         US$48.83
        On or after October 1, 2001 and on or before
           September 30, 2002                                         US$61.04
</TABLE>

        Biovail owns all of the issued and outstanding Special Shares which have
        limited voting rights and confer limited rights on Biovail in addition
        to the Purchase Option. The Company, under its bye-laws is prohibited,
        until the expiration of the Purchase Option, from taking or permitting
        certain actions inconsistent with Biovail's rights under the Purchase
        Option. The Special Shares do not confer any rights to receive any
        dividend or other distribution, nor any right or interest in the profits
        or assets of the Company.


                                       F-12


<PAGE>   40


Note 11. ADDITIONAL PAID IN SHARE CAPITAL

         In October, 1997, the Company completed a public offering of 3,737,500
         units. Each unit sold at a price of $20 comprised of one (1) common
         share of the Company, par value $0.01, and one warrant to purchase one
         (1) common share of Biovail. The portion of the proceeds attributable
         to the fair value of the Biovail Warrants was treated as a capital
         contribution by the Company.

         On September 30, 1999, the Warrants traded only with the Company's
         common shares as units. From and after such date, the Warrants
         separated from the Company's common shares and now trade independently.

         The Warrants will be exercisable at any time from October 1, 1999
         through September 30, 2002 (the `Warrant Expiration Date') at an
         exercise price per Biovail Common share of $40.00, subject to certain
         adjustments. Warrants not exercised on or prior to the Warrant
         Expiration Date, shall become void and all rights in respect thereof
         shall cease as of such time.

         The Warrants do not confer upon the holder thereof any voting,
         preemptive, or other rights as a stockholder of Biovail.

Note 12. LOSS PER COMMON SHARE

         Loss per Common Share is based upon the weighted average number of
         Common Shares outstanding during the year. There were no common share
         equivalents outstanding during the year.

Note 13. TAXATION

         The Company is incorporated under the laws of Bermuda and currently is
         not obligated to pay any taxes in Bermuda based upon income or capital
         gains. The Company has received an undertaking from the Minister of
         Finance in Bermuda pursuant to the provisions of the Exempted
         Undertakings Tax Protection Act, 1966, Amendment Act 1987, which
         exempts the Company and its shareholders, other than shareholders
         ordinarily resident in Bermuda, from any Bermuda taxes computed on
         profits, income or any capital asset, gain or appreciation, or any tax
         in the nature of estate duty or inheritance tax, at least until the
         year 2016.

Note 14. CONTINGENCIES

         The Company is involved in various routine legal proceedings incidental
         to the ordinary course of business. The Company believes the outcome of
         all pending legal proceedings in the aggregate will not have a material
         adverse effect on its financial condition, results of operations or
         cash flows.

                                      F-13

<PAGE>   41


     Registration Statements No. 333-35833 and No. 333-35839.



                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company certifies that it meets all of the requirements for filing on
Form 20-F and has duly caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.


INTELLIGENT POLYMERS LIMITED



                                                /s/     Eugene N. Melnyk
                                                ------------------------

                                                Eugene N. Melnyk
                                                Chief Executive Officer

Date: December 30, 1999.






<PAGE>   42



B.   EXHIBITS PREVIOUSLY FILED

Exhibit Number

1.1*    Form of Underwriting Agreement
3.1*    Memorandum of Association of Intelligent Polymers
3.2*    Bye-Laws of Intelligent Polymers
4.1*    Purchase Option (included in Exhibit 3.2)
4.2*    Form of Warrant Agreement
4.3*    Form of Warrant (included in Exhibit 4.2)
4.4*    Form of Unit Certificate
4.6*    Specimen Stock Certificate for Intelligent Polymers Common Shares
        (included in Exhibit 4.4)
4.7*    Specimen Stock Certificate for Intelligent Polymers Special Shares
5.1*    Opinion of Cassels Brock & Blackwell as to legality of underlying
        Biovail Common Shares, including consent.
5.2*    Opinion of Conyers Dill & Pearson as to legality of Intelligent Polymers
        Common Shares, including consent.
8.1*    Opinion of Cahill Gordon & Reindel as to U.S. tax matters, including
        consent.
8.2*    Opinion of Cassels Brock & Blackwell as to Canadian Tax matters ,
        including consent.
8.3*    Opinion of Conyers Dill & Pearson as to Bermuda tax matters, including
        consent.
10.1*   Form of Development and License Agreement
10.2*   From of Services Agreement
21.1*   List of Subsidiaries of Biovail.
23.1*   Consent of Cahill Gordon & Reindel (included in Exhibit 8.1).
23.2*   Consent of Cassels Brock & Blackwell (included in Exhibit 5.1 and
        Exhibit 8.2).
23.3*   Consent of Conyers Dill & Pearson (included in Exhibit 5.2 and Exhibit
        8.2).
23.4*   Consent of Kenneth C. Cancellara (included in Exhibit 5.1).
23.5*   Consent of Deloitte & Touche, independent Chartered Accountants,
        regarding Intelligent Polymers Balance Sheet and Biovail Consolidated
        Financial Statements.
24.1*   Powers of Attorney (included on signature pages).

C.   EXHIBITS FILED PREVIOUSLY THIS YEAR

No exhibits were filed other than as exhibits to Registration Statement and
Amendments thereto.

D.   EXHIBITS FILED WITH THIS SUBMISSION

99.1    Notice of Annual Meeting
99.2    Proxy

[FN]
     *    Filed by amendment to Registrant's Registration Statement Form F-1 on
          Form F - 1A,
</FN>


<PAGE>   43

                                 Exhibit Index


     EXHIBITS PREVIOUSLY FILED

Exhibit Number

1.1*    Form of Underwriting Agreement
3.1*    Memorandum of Association of Intelligent Polymers
3.2*    Bye-Laws of Intelligent Polymers
4.1*    Purchase Option (included in Exhibit 3.2)
4.2*    Form of Warrant Agreement
4.3*    Form of Warrant (included in Exhibit 4.2)
4.4*    Form of Unit Certificate
4.6*    Specimen Stock Certificate for Intelligent Polymers Common Shares
        (included in Exhibit 4.4)
4.7*    Specimen Stock Certificate for Intelligent Polymers Special Shares
5.1*    Opinion of Cassels Brock & Blackwell as to legality of underlying
        Biovail Common Shares, including consent.
5.2*    Opinion of Conyers Dill & Pearson as to legality of Intelligent Polymers
        Common Shares, including consent.
8.1*    Opinion of Cahill Gordon & Reindel as to U.S. tax matters, including
        consent.
8.2*    Opinion of Cassels Brock & Blackwell as to Canadian Tax matters ,
        including consent.
8.3*    Opinion of Conyers Dill & Pearson as to Bermuda tax matters, including
        consent.
10.1*   Form of Development and License Agreement
10.2*   From of Services Agreement
21.1*   List of Subsidiaries of Biovail.
23.1*   Consent of Cahill Gordon & Reindel (included in Exhibit 8.1).
23.2*   Consent of Cassels Brock & Blackwell (included in Exhibit 5.1 and
        Exhibit 8.2).
23.3*   Consent of Conyers Dill & Pearson (included in Exhibit 5.2 and Exhibit
        8.2).
23.4*   Consent of Kenneth C. Cancellara (included in Exhibit 5.1).
23.5*   Consent of Deloitte & Touche, independent Chartered Accountants,
        regarding Intelligent Polymers Balance Sheet and Biovail Consolidated
        Financial Statements.
24.1*   Powers of Attorney (included on signature pages).

     EXHIBITS FILED PREVIOUSLY THIS YEAR

No exhibits were filed other than as exhibits to Registration Statement and
Amendments thereto.

     EXHIBITS FILED WITH THIS SUBMISSION

99.1    Notice of Annual Meeting
99.2    Proxy

[FN]
     *    Filed by amendment to Registrant's Registration Statement Form F-1 on
          Form F - 1A,
</FN>