TIDMOXB
RNS Number : 0454N
Oxford Biomedica PLC
20 September 2023
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 (as it forms part of
domestic law by virtue of the European Union (Withdrawal) Act
2018). Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to
be in the public domain.
OXFORD BIOMEDICA PLC
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
- Newly appointed Chief Executive Officer, Dr. Frank Mathias, is
leading a transformation to position Oxford Biomedica as a
pure-play CDMO; strategic and operational streamlining ongoing
- Transformation into a pure-play CDMO by 1 January 2024, with
GBP30 million of annualised costs savings
- Strong execution and delivery of commercial strategy evidenced
by client base expanding by 50% since the end of 2022, with a
robust growing business pipeline across all key vector types and
clinical stages
- On track for revenue growth in 2024 from existing and new
client programmes, targeting broadly breakeven Operating EBITDA by
year-end 2024
- Medium term guidance provided; 3-year revenue CAGR in excess
of 30% and Operating EBITDA margins in excess of 20% by the end of
2026
- Entered into exclusive negotiations with respect to a proposed
acquisition of ABL Europe from Institut Mérieux, as part of
pure-play CDMO transformation. The proposed transaction would
include:
o Addition of ABL Europe's facilities in Lyon and Strasbourg
allowing Oxford Biomedica to gain a footprint in the EU and expand
Oxford Biomedica's capacity to address increased client demand
o Consideration of GBP12.9 million (EUR15 million), including
the value of GBP8.6 million (EUR10million) of pre-completion cash
funding in ABL Europe from Institut Mérieux
o Institut Mérieux providing an additional GBP17.2 million
(EUR20 million) of committed future funding in exchange for Oxford
Biomedica shares, with timing at Oxford Biomedica's discretion
o Institut Mérieux to become a major shareholder in Oxford
Biomedica by building its ownership of Oxford Biomedica shares
through purchases in the open market with the intention of
reaching, in aggregate, approximately 10 per cent of the Company's
enlarged issued share capital
Oxford, UK - 20 September 2023: Oxford Biomedica plc ("Oxford
Biomedica" or "the Group") (LSE: OXB), a quality and innovation-led
cell and gene therapy CDMO today announces interim results for the
six months ended 30 June 2023.
Dr. Frank Mathias, Oxford Biomedica's Chief Executive Officer,
said:
"Oxford Biomedica is a market leader in the fast-growing gene
and cell therapy market. Our expertise and unmatched track record
sets us apart, and our focus on being a pure-play cell and gene
therapy CDMO gives us a unique position in the market. Six months
into the role, I am fully focused on sustainable growth and our
path to profitability - accelerating us to being a pure-play CDMO.
With the cell and gene therapy industry at an inflection point, I
believe that we are in the right market at the right time, and
well-equipped to succeed with our highly skilled workforce and
leading-edge technology.
"This has required a transformation and a change of mindset. We
are adapting our structure and processes to better serve our
clients and work more efficiently. We will now work together as one
company with aligned operations from our headquarters here in
Oxford, UK, a footprint in the US, and will offer multiple vector
types from our multiple sites. I value our staff tremendously and
thank everyone for their hard work and contribution to Oxford
Biomedica both now and into the future.
"'I'm especially excited to announce the potential acquisition
of ABL Europe today, from Institut Mérieux, as part of our
transformation strategy. This would bring us the opportunity to
gain a footprint in the EU and greatly enhance our capacity to
address the increase in client demand we are seeing. It would also
enable us to become an end-to-end CDMO capable of serving customers
across both sides of the Atlantic and across vector modalities,
leveraging cutting edge science and innovation.
"We are already seeing the success of our new commercial
strategy and increased market recognition. Not only did we grow our
client base by 50% since the start of the year, but at the end of
July we had signed more client orders than we had in the whole of
2022 (excluding COVID-19 vaccine manufacturing). We aim to be the
partner of choice for pharma and biotech companies developing life
changing cell and gene therapies, enabling them to get their
products to market faster and reach more patients. Having already
made significant progress, the Board and I are extremely excited
about the future of Oxford Biomedica."
FINANCIAL HIGHLIGHTS (including post-period events)
- Total revenue decreased by 33% to GBP43.1 million (H1 2022:
GBP64.0 million) and bioprocessing and commercial development
revenues decreased by 29% to GBP40.6 million (H1 2022: GBP57.3
million), with the non-recurrence of COVID-19 vaccine revenue
partly offset by double-digit growth in lentiviral vector revenues
and a full six months of revenues from Oxford Biomedica
Solutions.
- License, milestones & royalties were GBP2.5 million (H1
2022: GBP6.7 million), a decrease of 63% due to a generally lower
level of milestone payments from existing clients and relatively
lower license fees from new clients in the period.
- Operating EBITDA(1) loss and operating loss of GBP33.7 million
and GBP50.7 million respectively (H1 2022: Operating EBITDA loss
and operating loss of GBP5.8 million and GBP19.2 million
respectively), the higher losses compared to prior year driven by
the non-recurrence of COVID-19 vaccine revenue as well the full
six-monthly impact of operating expenditure from the acquisition of
Oxford Biomedica Solutions in March 2022.
- Cash at 30 June 2023 was 9% higher at GBP129.4 million
compared to GBP118.5 million at 30 June 2022. The net cash position
was 16% higher at GBP90.1 million as of 30 June 2023 (30 June 2022:
GBP78.7 million).
- Cash and net cash at 31 August 2023 were GBP121.4 million and GBP83.0 million respectively.
1 Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 14.
OUTLOOK AND FINANCIAL GUIDANCE:
Significant revenue growth anticipated in 2024 vs. 2023 as
existing client programmes progress through development,
supplemented by new client wins reflecting a significant step up in
business development activities.
- Accelerating towards broadly breakeven Operating EBITDA (1) by
the end of 2024; the Group's revenue backlog (1) at 30 June 2023
stood at GBP95 million; this is the amount of future revenue
available to earn from current orders. The Group expects to grow
this backlog significantly going forward based on high levels of
business development activity driving new client acquisition as
well as orders from existing clients.
- Aiming to achieve three-year revenue CAGR in excess of 30%
resulting in at least a doubling of revenues by the end of 2026
compared to c.GBP90 million in 2023. With increased operational
efficiencies, targeted cost management and targeted investment, the
Group aims to achieve Operating EBITDA (1) margins in excess of 20%
by the end of 2026.
- As a result of the business transformation towards a quality
and innovation-led pure-play CDMO, cost reductions will be
completed by the end of December 2023. The ongoing cost base from 1
January 2024 is anticipated to be reduced by c.GBP30 million on an
annualised basis compared to 2023. A one-off restructuring cost of
c.GBP10 million is expected to be incurred in the current financial
year.
- Group revenues for 2023 are expected to be approximately GBP90
million; below current market expectations due to lower milestone
and license payments than previously expected and reduced or
delayed bioprocessing orders from clients. More than 90% of
forecasted revenues for the second half of the year are covered by
existing binding purchase orders and rolling client forecasts.
- Financial impact from the proposed transaction to acquire ABL
Europe announced today is excluded from mid-term guidance pending
completion of the transaction.
1 Revenue backlog represents ordered CDMO revenues available to
earn. The value of customer orders included in revenue backlog only
includes the value of work for which the customer has signed a
financial commitment for OXB to undertake, whereby any changes to
agreed values will be subject to either change orders or
cancellation fees.
ANALYST BRIEFING
Oxford Biomedica's management team, led by new CEO, Dr. Frank
Mathias, Stuart Paynter, CFO, and Dr. Sebastien Ribault, CCO, will
be hosting a briefing and Q&A session for analysts at 13:00 BST
/ 8:00 EST today, 20 September, at One Moorgate Place Chartered
Accountants Hall, 1 Moorgate Pl, London EC2R 6EA, United
Kingdom.
A live webcast of the presentation will be available via this
link . The presentation will be available on Oxford Biomedica's
website at www.oxb.com
If you would like to dial in to the call and ask a question
during the live Q&A, please email
Oxfordbiomedica@consilium-comms.com
Notes
Unless otherwise defined, terms used in this announcement shall
have the same meaning as those used in the 2022 Annual report and
accounts.
Enquiries:
Oxford Biomedica plc:
Sophia Bolhassan, VP, Corporate T: +44 (0)1865 783 000 / E:
Affairs and IR ir@oxb.com
ICR Consilium: T: +44 (0)20 3709 5700
Mary-Jane Elliott
Matthew Neal
Davide Salvi
Peel Hunt (Joint Corporate T: +44 (0)20 7418 8900
Brokers):
James Steel
Dr. Christopher Golden
JP Morgan (Joint Corporate T: +44 (0)20 7134 7329
Brokers):
James Mitford
Manita Shinh
ABOUT OXFORD BIOMEDICA
Oxford Biomedica (LSE: OXB) is a quality and innovation-led cell
and gene therapy CDMO with a mission to enable its clients to
deliver life changing therapies to patients around the world.
One of the original pioneers in cell and gene therapy, the
Company has more than 25 years of experience in viral vectors; the
driving force behind the majority of gene therapies. The Company
collaborates with some of the world's most innovative
pharmaceutical and biotechnology companies, providing viral vector
development and manufacturing expertise in lentivirus,
adeno-associated virus (AAV) and adenoviral vectors. Oxford
Biomedica's world-class capabilities span from early-stage
development to commercialisation. These capabilities are supported
by robust quality-assurance systems, analytical methods and depth
of regulatory expertise.
Oxford Biomedica, a FTSE4Good constituent, is headquartered in
Oxford, UK. It has locations across Oxfordshire, UK and near
Boston, MA, US. Learn more at www.oxb.com , www.oxbsolutions.com ,
and follow us on LinkedIn and YouTube .
OVERVIEW
The Group is completing its strategy to transform into a quality
and innovation-led pure-play CDMO, and further establishing its
global leadership in developing and manufacturing high-quality
viral vectors for cell and gene therapy. These efforts have been
led by Dr. Frank Mathias, the Group's newly appointed CEO, who
joined in March this year. During this period, Dr. Mathias has
reviewed the Group's operations and is now executing his plan to
finalise the transformation of the Group into a pure-play CDMO,
dedicated to serving pharmaceutical and biotech clients across the
cell and gene therapy space.
As part of this transformation, the Group is streamlining
operations for enhanced efficiency and client-centricity. The Group
now operates as a unified global company, headquartered in Oxford,
UK, with operations in Oxford, UK, and Bedford, MA, US. This global
alignment ensures that Oxford Biomedica is able to service its
growing pipeline of potential new business opportunities and win
more clients and programmes at different stages and across
different vector types.
To accelerate the Group's transformation into a pure-play CDMO,
the Group is taking necessary steps to reorganise the business and
its workforce. As a result, Oxford Biomedica has decided to
discontinue the development of its therapeutic products and focus
on building a high-quality, high-service, innovation-led CDMO.
Ultimately the Group expects to accelerate towards broadly
Operating EBITDA breakeven by the end of 2024, and deliver strong
shareholder returns. The reorganisation of the business completes
the Group's evolution into a commercially high-performing entity,
primed for sustained growth, and providing the highest levels of
service and technical capabilities to its target client base.
OPERATIONAL REVIEW
CDMO Services
The Group, with its global leadership position in developing and
manufacturing high-quality viral vectors for cell and gene
therapies, continues to see momentum in the number of client
programmes across all key viral vector types. Currently, its CDMO
portfolio comprises 41 client programmes at various stages of
clinical development, spanning preclinical studies through to
commercial stage. This diversified client portfolio is a testament
to Oxford Biomedica's capabilities across all key viral vectors and
the breadth of its service offerings.
During the first half of 2023, the Group grew its portfolio of
clients and programmes, with multiple expanded and new agreements
signed for the development and manufacture of lentivirus, AAV and
adenoviral vectors. The Group's client portfolio includes 24
clients, with over a third of these clients working with the Group
on more than one programme. This successful growth demonstrates
Oxford Biomedica's success in executing its new commercial
strategy, including lead generation and qualification, and ability
to convert pipeline to client onboarding.
H1 2022* H1 2023*
14 clients 24 clients
------------- -------------
28 client 41 client
programmes programmes
------------- -------------
Cell line, process development &
pilot scale production**
(Preclinical) 15 25
------------- -------------
Early-stage clinical supply
(Phase I / 2) 10 14
------------- -------------
Late-stage, process characterization
& validation
(Phase 3) 1 1
------------- -------------
Commercial product supply
(Commercial) 2*** 1
------------- -------------
* H1 2022 as per the H1 2022 results release, including
post-period events. H1 2023 as of this results release.
** Includes undisclosed stage programmes ***Includes the
manufacture of the Oxford AstraZeneca COVID-19 vaccine.
Novartis
Oxford Biomedica continues its strong and long-term relationship
with Novartis and is currently working with Novartis on multiple
client programmes. These include vector supply for Novartis' new
T-Charge(TM) platform, a next-generation platform that aims to
revolutionise CAR-T cell therapy, which is being studied in a Phase
II trial to assess YTB323 treatment in participants with severe
refractory systemic lupus erythematosus.
The Group remains the sole global supplier of lentiviral vectors
for Kymriah(R) (tisagenlecleucel, formerly CTL019), the first ever
FDA-approved CAR-T cell therapy which is available for the
treatment of three different indications. Kymriah (R) is available
in more than 400 qualified treatment centres in 30 countries having
coverage for at least one indication.
Arcellx
During the period, Oxford Biomedica continued to progress its
relationship with Arcellx around their lead programme, CART-ddBCMA,
which is currently being investigated in a pivotal Phase 2 study
and has been granted Fast Track, Orphan Drug, and Regenerative
Medicine Advanced Therapy Designations by the FDA, for the
treatment of relapsed or refractory multiple myeloma.
Juno Therapeutics, Inc. (a wholly owned subsidiary of Bristol
Myers Squibb Company)
The Group maintains its collaboration with Juno Therapeutics
(Juno), focusing on multiple distinct CAR-T/TCR-T programmes.
Juno has adopted Process C, the Group's best-in-class perfusion
bioreactor process for one Phase I and one preclinical programme .
This cutting-edge technology offers the potential to deliver
superior yield and quality, whilst reducing the costs of goods for
manufacturing.
Cabaletta
In August 2023, Oxford Biomedica announced its expanded
relationship with Cabaletta Bio, Inc., adding CD19 as a new target,
following the License and Supply Agreement announced in January
2022. Oxford Biomedica initially licensed its LentiVector(R)
platform to Cabaletta Bio for their DSG3-CAART product candidate,
and the agreement has now been extended to grant a non-exclusive
license to Cabaletta under Oxford Biomedica's LentiVector(R)
platform IP for Cabaletta's CD19-CAR T programme, CABA-201, a
4-1BB-containing fully human CD19-CAR T cell investigational
therapy. Cabaletta Bio has received two IND clearances to date for
CABA-201 and plans to initiate a Phase 1/2 clinical trial for
patients with systemic lupus erythematosus and lupus nephritis and
a separate Phase 1/2 clinical trial for patients with myositis
.
Further client updates
Among the new lentiviral vector programmes initiated during the
period, one stands out as the Group's inaugural 'transferred-in'
lentiviral vector technology project. In this arrangement, the new
client has predefined the methods and processes, with the Group
undertaking the development work. This collaboration is with an
undisclosed US-based biotech firm dedicated to engineering cells as
medicines. The Group is responsible for manufacturing and supplying
viral vectors for the company's primary oncology programme.
Post-period end, Oxford Biomedica signed an agreement with
Kyverna Therapeutics ("Kyverna"), a clinical-stage cell therapy
company with the mission of engineering a new class of therapies
for serious autoimmune diseases. Kyverna's anti-CD19 chimeric
antigen receptor (CAR) T-cell therapies, KYV-101 and KYV-201, have
the potential to offer new hope to patients who have exhausted
current treatment options. Kyverna's KYV-101 CAR T-cell product is
currently being tested in a Phase 1 clinical trial in lupus
nephritis in the U.S. and a Phase 1/2 trial in Germany.
The Group's AAV business also continued to mature, with
agreements signed with three new AAV clients for process
development work for programmes in indications including cystic
fibrosis, and gene therapies targeting rare diseases and auditory
indications.
Following the success of the adenoviral vector work with
AstraZeneca to manufacture the Oxford AstraZeneca COVID-19 vaccine,
the Group has continued to grow its portfolio of adenoviral vector
programmes. Two new adenoviral vector agreements with Oxford
University have been signed, including a Clinical Supply Agreement
for the manufacture and supply of adenoviral vectors for a vaccine
against the Lassa virus, and a second agreement for the supply of
adenoviral vector for their programme in Middle East Respiratory
Syndrome (MERS) signed post-period. The Lassa virus and MERS have
both been identified by the World Health Organisation as priority
disease areas for research and development in emergency
contexts.
Client programmes using the Group's platform technologies
continue to advance, including next-generation CAR-T developer,
Beam Therapeutics Inc., announcing post-period end, the dosing of
the first patient into their Phase 1/2 trial of BEAM-201 in
relapsed/refractory T-cell acute lymphoblastic leukaemia/T-cell
lymphoblastic lymphoma (T-ALL/ T-LL). BEAM-201 is a CD7-targeting
allogeneic CAR-T therapy that incorporates four edits to increase
the potency and persistence of cells and Phase 1/2 trials are
expected to start in Q3 2023.
Business development
Work has progressed to ensure that the commercial team is
sufficiently resourced and optimally positioned to leverage the
expected increase in cell and gene therapy opportunities under the
leadership of the Group's newly appointed Chief Commercial Officer,
Dr. Sebastien Ribault, who joined the Group from Merck KGaA in
November 2022. To support this growth, the commercial team has
doubled in size over the last year, and now has a vector-agnostic
approach covering lentivirus, AAV, and other vectors including
adenoviral vectors. The team operates in three different areas;
Commercial Operations, Sales, and Strategy, Marketing and Corporate
Development and are located across the East and West Coast of the
US as well as Europe, within close proximity to potential and
existing clients.
As part of this commercial strategy, the Group is planning the
introduction of manufacturing of lentiviral vectors at our Bedford,
MA site and AAV to our Oxford site, opening up new potential
revenue opportunities. It is expected that by adding lentiviral
vector and AAV capabilities to both sites, investing in our
platform and innovating in a client-focussed way, we will work with
a broader range of companies and support them as they grow and
progress through clinical trials, further expanding our reach into
the cell and gene therapy sector. This global-focused strategy not
only aims to drive sustainable and predictable revenue growth but
also ensures the Group is strategically positioned to cater to the
anticipated surge in demand from the rapidly maturing gene and cell
therapy sector - marked by more approvals, more late-stage trials,
and an increasing number of therapies in development.
The Group's new commercial strategy has already started to show
success and momentum as demonstrated by a growth in both orders and
pipeline. The orders signed at the end of July 2023 were materially
in excess of the number of orders signed for the financial year
ended 2022 (excluding COVID-19 vaccine orders). There has also been
consistent growth in the business development pipeline, which grew
by over 40% from January to July 2023, and includes all segments
from early phase clinical programmes through to late-stage
programmes close to commercialisation.
Innovation
The Group takes a client-centric approach to innovation,
developing solutions in response to challenges experienced in the
cell and gene therapy field that deliver value to our clients. The
TetraVecta(TM) system, the Group's latest innovation, launched in
May 2023. This 4th generation lentiviral vector delivery system
allows for higher quality, potency, safety and packaging capacity
of lentiviral vectors, and enables cell and gene therapy companies
to overcome previous barriers in therapeutic development, due to
the size, complexity, or interference of the payload to be
delivered. The TetraVecta(TM) system is the result of years of
development and understanding of industry challenges and can be
used to accelerate the adoption of in vivo gene therapies, as well
as support the creation of high-titre stable producer cell lines
for previously unachievable payloads. The new technology is
currently being investigated by a number of existing clients and
several CDMOs.
Work continues on the project which Oxford Biomedica initiated
last year with Orchard Therapeutics utilising the Group's
proprietary LentiStable(TM) technology. As part of the project,
Oxford Biomedica's LentiStable(TM) technology platform is being
used to develop a producer cell line capable of producing high
titre lentiviral vectors. The project is focusing on developing
high-performing candidate clones for Orchard Therapeutics' OTL-203,
an investigational hemopoietic stem cell (HSC) gene therapy in
development for the potential treatment of mucopolysaccharidosis
type I Hurler's syndrome (MPS-IH).
Gene therapeutics pipeline
The Group has concluded the review of strategic options for its
therapeutics portfolio and, in line with its strategy to become a
pure play CDMO, has decided to discontinue work on internal product
development from the second half of 2023.
No material costs associated with the therapeutics portfolio are
expected to be carried by the Group post 2023.
Corporate and organisational development
The Group's Bedford, MA site is based near Boston, US and is led
by Mark Caswell who joined the Group in July 2023 and has succeeded
Tim Kelly who has stepped down from the business. Mark Caswell
joined the Group as Site Head of US Operations and has more than 25
years' experience in the biopharmaceutical industry, including as
Head of Operations at the Portsmouth, New Hampshire site of Lonza
Biologicals. Before Lonza, Mr. Caswell worked for over 18 years at
Sanofi Genzyme (previously Genzyme) in positions of increasing
responsibility, most recently as Director, Global Engineering and
Technology.
In January, Dr. Sam Rasty announced his intention not to stand
for re-election at the Group's AGM and stepped down from the Board
in June. Sam joined the Board in December 2020 and was a member of
the Scientific and Technology Advisory Committee, and also a member
of the Audit Committee until December 2021.
In April, Leone Patterson was appointed to the Board as an
Independent Non-Executive Director. Ms. Patterson has extensive
public company biotech experience, including in the cell and gene
therapy industry, and has managed significant growth within
international commercial companies working across areas including
strategy, finance, operations, and governance.
Potential transaction to acquire ABL Europe
Oxford Biomedica has entered into exclusive negotiations with
respect to the proposed acquisition by Oxford Biomedica of ABL
Europe SAS ("ABL Europe") from Institut Mérieux SA ("Institut
Mérieux"). ABL Europe is a pure play European CDMO with specialised
expertise in the development and manufacturing of solutions for
biotechs and biopharma including viruses for gene therapy,
oncolytic viruses and vaccine candidates. This proposed transaction
would form part of Oxford Biomedica's transformation to be a
world-leading quality-focused and innovation-led CDMO in the cell
and gene therapy field.
Under the proposed transaction, Oxford Biomedica would acquire
ABL Europe for a consideration of GBP12.9 million (EUR15 million),
including the value of GBP8.6 million (EUR10 million) of
pre-completion cash funding from Institut Mérieux in ABL Europe, in
exchange for new Oxford Biomedica shares. In addition, as part of
the proposed transaction, Institut Mérieux would also commit to
provide Oxford Biomedica with GBP17.2 million (EUR20 million) of
additional funding, to cover capex and potential future operating
losses, in exchange for new Oxford Biomedica shares.
Under the proposed transaction, Institut Mérieux would further
build its ownership of Oxford Biomedica by acquiring up to GBP8.6
million (EUR10 million) of additional Oxford Biomedica existing
ordinary shares in the market from the date of this announcement to
31 March 2024. Institut Mérieux intends to build its ownership of
Oxford Biomedica shares through purchases in the open market so as
to reach, in aggregate, approximately 10 per cent of the Company's
enlarged issued share capital.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
The Group remains committed to its role as a responsible
business and implementing its Environmental, Social and Governance
(ESG) strategy, which is focused on five pillars: People;
Community; Environment; Innovation and Supply Chain.
The Group has continued its commitment to review OXB policies to
ensure they are inclusive, progressive and offer equal
opportunities to all our employees.
On the environmental pillar, the Group has undertaken
climate-based risk modelling, with an expert advisor, to assess
resilience against physical and transitional risks posed by climate
change.
The Group is fully committed to responsible supply chain
management and the Group's supplier code of conduct has been
distributed to its top 250 suppliers for their acceptance or
submission of their own equivalent code of conduct.
On the community pillar, the Group donated GBP50,000 to the
Disasters and Emergencies Committee for the Turkey and Syria
earthquake appeal and further donations of GBP3,000 have been made
to the Group's nominated charities, Oxfordshire Mind (Registered
Charity No. 261476) and Homeless Oxfordshire (Registered Charity
No. 297806).
Full details on our ESG pillars, including the supplier code of
conduct, can be found on our ESG webpage at www.oxb.com
Financial Review
The first half of 2023 has been a period of transition with the
Group executing on its strategy of transforming into a quality and
innovation-led pure-play cell and gene therapy CDMO. Lentiviral
vector manufacturing volumes have continued their post pandemic
upward trajectory, with revenues from the core business achieving
double digit revenue growth compared to the first half of 2022.
COVID-19 vaccine bioprocessing volumes reduced to zero, which is
reflected in the overall variance from the prior year.
As part of its evolution into a quality and innovation-led
pure-play viral vector CDMO, the Group has made the difficult
decision to streamline roles, affecting approximately 200 positions
in both the UK and the US. This move will ensure strategic
alignment of resources while optimising cost efficiency.
The Group achieved total revenues of GBP43.1 million and
incurred an Operating EBITDA loss of GBP33.7 million in the first
half of 2023 compared to revenues of GBP64.0 million and an
Operating EBITDA loss of GBP5.8 million in the prior year. The
variance in revenues from the prior year reflects the
non-recurrence of any COVID-19 vaccine bioprocessing volumes in H1
2023, partly offset by double-digit growth in lentiviral vector
revenues and a full six months of revenues from Oxford Biomedica
Solutions. At a cost level, there was an increase in operating
expenditure in the first half of 2023 due to the impact of the full
six months of operational expenditure of Oxford Biomedica Solutions
which was acquired during March 2022, and inflationary cost
increases.
In September, post-period end, Oxford Biomedica announced that
it had entered into exclusive negotiations with Institut Mérieux
for the proposed acquisition of ABL Europe. This potential
transaction would broaden the Company's customer base in Europe and
the cell and gene therapy space and offer cross-selling
opportunities with ABL Europe's existing customer base. ABL Europe
had forecasted revenues of c.EUR15million for the year ended 31
December 2023 and EBITDA of c.EUR (1.7)m at 31 December 2022
In July, post-period end, Homology Medicines Inc. ("Homology"),
a genetic medicines company and client of Oxford Biomedica's US
business announced an update on their business, including a review
of strategic alternatives. Any amounts outstanding at period end
and expected to be billed during H2 2023 for bioprocessing and
commercial development work are expected to be received in the
normal course of business, however the Group is assuming that no
further revenues will be received from Homology beyond the current
financial year.
At the end of June, the Group completed a sale and leaseback of
its Harrow House facility for GBP4.5 million to Kadans Science
Partner. Under the agreement, Kadans have granted the Group an
occupational lease of the property for approximately 15 years at a
rent of GBP0.5 million per annum rising to GBP0.6 million after 5
years, with a further market rent review after 10 years. In the
year the Group has recognised a profit on the sale of GBP0.5
million, a right of use asset of GBP2.2 million and a lease
liability of GBP3.1 million.
The key financial indicators used by the Board are set out in
the table below and the highlights are:
- Total revenue (GBP43.1 million) decreased by 33% over H1 2022
(GBP64.0 million) with the non-recurrence of COVID-19 vaccine
revenues partly offset by double-digit growth in lentiviral vector
revenues and a full six months of revenues from Oxford Biomedica
Solutions .
- Operational losses (Operating EBITDA (1) loss and Operating
loss) of GBP33.7 million and GBP50.7 million respectively, were
higher than the prior year due to the full six-monthly impact of
operating expenditure from the acquisition of Oxford Biomedica
Solutions in March 2022, inflationary cost increases and then also
the non-recurrence of vaccine bioprocessing revenues.
- Operational activities consumed cash of GBP5.4 million
compared to GBP24.5 million in H1 2022. The lower level of cash
consumed was due to the larger operational loss in H1 2023 being
offset by a large working capital inflow, as opposed to a working
capital outflow in H1 2022.
- Capital expenditure decreased from GBP6.0 million in H1 2022
to GBP4.9 million due mainly to lower levels of purchasing of
bioprocessing and laboratory equipment.
- Cash burn (2) was GBP10.2 million in H1 2023 (H1 2022: GBP32.2
million) mainly due to increased Operating EBITDA losses offset by
positive working capital movements driven by a decrease in trade
receivables and other debtors.
- Cash at 30 June 2023 was GBP129.4 million compared to GBP118.5
million at 30 June 2022. The net cash position was GBP90.1 million
as at 30 June 2023 (30 June 2022: GBP78.7 million).
1 Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 14.
2 Cash (burn)/inflow is net cash generated from operating
activities less net finance costs paid and capital expenditure. A
reconciliation to GAAP measures is provided on page 14.
KEY FINANCIAL INDICATORS (GBPm) H1 2023 H1 2022
Revenues
------------ ------------
Bioprocessing/commercial development 40.6 57.3
------------ ------------
Licence fees, milestones & royalties 2.5 6.7
------------ ------------
Total 43.1 64.0
------------ ------------
Operating loss (50.7) (19.2)
------------ ------------
Operating EBITDA(1) (33.7) (5.8)
------------ ------------
Cash consumed by operating activities (5.4) (24.5)
------------ ------------
Capital expenditure (4.9) (6.0)
------------ ------------
Cash burn(2) (10.2) (32.2)
------------ ------------
Period end cash 129.4 118.5
------------ ------------
Net cash(3) 90.1 78.7
------------ ------------
Headcount
------------ ------------
Period end 891 959
------------ ------------
Average 891 920
------------ ------------
1. Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 14.
2. Cash (burn)/inflow is net cash generated from operating
activities less net finance costs paid and capital expenditure. A
reconciliation to GAAP measures is provided on page 14.
3. Net cash is cash less external loans.
The Group evaluates its performance inter alia by making use of
three alternative performance measures as part of its Key Financial
Indicators (see table above). The Group believes that these
Non-GAAP measures, together with the relevant GAAP measures,
provide an accurate reflection of the Group's performance over
time. The Board has taken the decision that the Key Financial
Performance Indicators against which the business will be assessed,
are Revenue, Operating EBITDA and Operating profit/(loss).
Revenue
Revenues were GBP43.1 million in H1 2023, 33% below the GBP64.0
million achieved in H1 2022.
GBPm H1 2023 H1 2022
--------------------------------------- --------- ---------
Bioprocessing/commercial development 40.6 57.3
Licence fees, milestones & royalties 2.5 6.7
Revenue 43.1 64.0
Revenues from bioprocessing/commercial development were 29%
lower in H1 2023 as compared to H1 2022, largely due to the
non-recurrence of revenues from the manufacturing of vaccine
batches for AstraZeneca. This was partly offset by a double digit
increase in revenues from lentiviral vector as well as AAV
commercial development and manufacturing activities performed on
behalf of the Group's existing clients .
Revenues from licence fees, milestones and royalties have
decreased compared to the prior year due to a generally lower level
of milestones achieved from existing clients and license fees from
new clients, as compared to H1 2022.
Operating EBITDA
GBPm H1 2023 H1 2022
------------------------------------------- --------- ---------
Revenue 43.1 64.0
Other operating income 1.4 0.9
Gain on sale of property 0.5 -
Total expenses (1) (78.7) (70.7)
Operating EBITDA (33.7) (5.8)
Depreciation, amortisation, share option
charge and fair value adjustments of
available-for-sale assets (17.0) (13.4)
--------- ---------
Operating loss (50.7) (19.2)
(1) Cost of goods plus research, development, bioprocessing and
administrative expenses excluding depreciation, amortisation and
share option charge. A reconciliation to GAAP measures is provided
on page 12.
Total expenses in H1 2023 were GBP78.7 million, compared with
GBP70.7 million in H1 2022, a 11% increase over H1 2022. The
increase was driven by the full six month impact in H1 2023 of the
consolidation of the results of Oxford Biomedica Solutions,
acquired during March 2022, as well as inflationary increases.
As a result of the lower revenues and increased operational
spend, the Operating EBITDA loss in H1 2023 was GBP33.7 million,
GBP27.9 million higher than the prior period (H1 2022 Operating
EBITDA loss of GBP5.8 million).
Total expenses
In order to provide the users of the accounts with a more
detailed explanation of the reasons for the period-on-period
movements of the Group's operational expenses included within
Operating EBITDA, the Group has added together cost of goods,
research and development, bioprocessing and administrative costs
and has removed depreciation, amortisation and the share option
charge as these are non-cash items which do not form part of the
Operating EBITDA alternative performance measure. As Operating
profit/(loss) is assessed separately as a key financial performance
measure, the year-on-year movement in these non-cash items is then
individually analysed and explained specifically in the Operating
and Net profit/(loss) section. Expense items included within Total
Expenses are then categorised according to their relevant nature
with the year-on-year movement explained in the second table
below:
GBPm H1 2023 H1 2022
------------------------------------- --------- ---------
Research and development costs (1) 31.4 27.3
Bioprocessing costs (1) (2) 30.3 12.4
Administrative expenses (1) 12.9 16.5
Operating expenses 74.6 56.2
Depreciation, amortisation & share
option charge (17.0) (13.4)
--------- ---------
Adjusted operating expenses 57.6 42.8
Cost of Sales 21.1 27.9
--------- ---------
Total expenses (1) 78.7 70.7
(1) Includes operational expenditure for Oxford Biomedica
Solutions for the full six months as opposed to from March onwards
during 2022.
(2) Bioprocessing costs have increased from the prior period due
to the lower recovery of batch manufacturing costs which is also
reflected in decreased cost of goods in H1 2023.
The table below shows total expenses by nature (excluding
depreciation, amortisation and other non-cash items):
GBPm H1 2023 H1 2022
--------------------------------------- --------- ---------
Raw materials, consumables and other
external bioprocessing costs 15.9 15.8
Personnel-related 47.1 40.4
External R&D expenditure 1.5 1.9
Due diligence costs - 5.1
Other costs 14.2 7.5
--------- ---------
Total expenses 78.7 70.7
--------------------------------------- --------- ---------
Raw materials, consumables and other external bioprocessing
costs have increased slightly as a result of a higher number of
lentiviral vector batches manufactured in H1 2023 as compared to H1
2022. Personnel related costs are higher due to the full six month
impact of payroll costs of employees acquired as part of the
acquisition of Oxford Biomedica Solutions in March 2022. External
R&D expenditure was lower as a result of a lower level of
research and development project spend incurred in the platform
division. Due diligence costs relate to the establishment of Oxford
Biomedica Solutions during 2022. Other costs have increased
compared to H1 2022 due to the full six month impact of the
expenditure of Oxford Biomedica Solutions, foreign exchange losses
of GBP0.5 million (H1 2022: GBP2.4 million gain), and inflationary
increases in the administrative and facility expenditure.
Operating profit/(loss) and net profit/(loss)
GBPm H1 2023 H1 2022
--------------------------------------- --------- ---------
Operating EBITDA (1) (33.7) (5.8)
Depreciation, amortisation and share
option charge (17.0) (13.4)
Operating loss (50.7) (19.2)
Financing (1.7) (8.2)
Taxation (0.3) (0.2)
--------- ---------
Net loss (52.7) (27.6)
--------------------------------------- --------- ---------
(1) Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided above.
In arriving at the Operating loss, the Operating EBITDA loss of
GBP33.7 million was further impacted by depreciation, amortisation
and the share option charge.
Depreciation and amortisation increased by GBP3.6 million mainly
due to Oxford Biomedica Solutions' fixed assets and intangible
asset depreciation and amortisation for the full six month period
as opposed to the period from when they were acquired. The share
option charge remained relatively stable compared to the prior
period.
The impact of these charges resulted in an operating loss of
GBP50.7 million in the first half of 2023 compared to a loss of
GBP19.2 million in the prior year's corresponding period.
The finance charge decreased by GBP6.6 million mainly due to
foreign exchange gains of GBP1.7 million as opposed to foreign
exchange losses of GBP4.9 million on the Oaktree loan in H1 2022,
an increase in interest received of GBP2.2 million due to improved
interest rates on cash balances held by the Group but offset by a
GBP2.1 million increase in IFRS 16 interest on the lease
liabilities related to the Group's Boston and Windrush Court
facilities.
The corporation tax expense which is based on the notional tax
charge on the RDEC tax credit, included within research and
development costs, has increased due to the increase in corporation
tax rates, as well as an increase in the expected RDEC tax
credit.
Other Comprehensive Income
The Group recognised a loss on other comprehensive income in H1
2023 of GBP4.6 million (2022: GBP10.8 million gain) in relation to
movements on the foreign currency translation reserve.
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations, including gains arising from
monetary items that in substance form part of the net investment in
foreign operations.
Segmental analysis
The Group reports its results within two segments, namely the
"Platform" segment which includes the revenue generating
bioprocessing and process development activities for third parties,
and internal technology projects to develop new potentially
saleable technology, improve the Group's current processes and
bring development and manufacturing costs down. The other segment,
"Product", includes the costs of researching and developing new
product candidates.
H1 2023
GBPm Platform Product Total
Revenues 43.0 0.1 43.1
---------- --------- --------
Operating EBITDA(1) (28.7) (5.0) (33.7)
---------- --------- --------
Operating loss (44.6) (6.1) (50.7)
---------- --------- --------
H1 2022
GBPm Platform Product Total
Revenues 64.0 0.0 64.0
---------- --------- --------
Operating EBITDA(1) (0.8) (5.0) (5.8)
---------- --------- --------
Operating loss (13.2) (6.0) (19.2)
---------- --------- --------
1 Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 14.
Revenues from the platform segment decreased when compared to H1
2022 due to the non-recurrence of vaccine batches manufactured for
AstraZeneca, partly offset by higher lentiviral and AAV
manufacturing volumes. Operating results were negatively impacted
by the lower revenues as well as Oxford Biomedica Solutions'
operational expenditure for the full six months as opposed to, in
2022, the period since they were acquired.
Revenues from the product segment were higher due to an
increased level of clinical development activities for clients.
Product operating expenses were higher due to increased research,
development and preclinical product expenditure, but also increased
manpower costs. The Group has concluded the review of strategic
options for its product portfolio and, in line with its strategy to
become a pure-play CDMO, has decided to discontinue work on
internal product development from the second half of 2023. No
material costs associated with the Product segment are expected to
be carried by the Group post 2023.
In 2023 the Senior Executive Team re-assessed the reporting
segments to reflect the way the business will be managed in future.
Management reporting is currently being reworked to align with
these new segments and the Group expects to be able to report on
these new segments during H2 2023 and thereafter. No changes from
the current basis have been reflected in these Interim financial
statements.
Cash flow
GBPm H1 2023 H1 2022
----------------------------------------- --------- ---------
Operating loss (50.7) (19.2)
Depreciation, amortisation and share
option charge 17.0 13.4
Operating EBITDA(1) (33.7) (5.8)
Working capital 24.8 (19.3)
R&D tax credit received 3.5 0.6
--------- ---------
Cash consumed in operations (5.4) (24.5)
Interest received less paid/(paid less
received) 0.1 (1.7)
Capital expenditure (4.9) (6.0)
Cash burn (10.2) (32.2)
--------- ---------
1 Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 14.
Operating losses for the first six months of 2023 were GBP31.5
million higher than the GBP19.2 million loss incurred in H1 2022.
The positive inflow from working capital was mainly as a result of
the decrease in trade and other receivables due to amounts received
from clients outstanding as at December 2022. The 2021 RDEC tax
credit was received in January 2023. Interest was received as
opposed to paid (H1 2022) due to improved interest rates on cash
balances held by the Group offset by increased IFRS 16 interest due
on the lease liability related to the Group's Boston and Windrush
Court facilities. Capital expenditure decreased by GBP1.1 million
compared to H1 2022 due mainly to lower levels of purchasing of
bioprocessing and laboratory equipment.
Statement of financial position
The most notable items on the Statement of financial position,
including changes from 31 December 2022, are as follows:
Non-current assets - Intangible assets and goodwill decreased
from GBP105.9 million to GBP97.9 million due to amortisation of
GBP3.6 million and foreign exchange movements of GBP4.4 million.
Property, plant and equipment decreased from GBP133.8 million to
GBP120.6 million due to disposals of property of GBP7.1 million,
depreciation of GBP11.2 million, foreign exchange movements of
GBP2.6 million, offset by capital expenditure of GBP8.2 million on
mainly plant and equipment.
Current assets - Inventories increased slightly to GBP13.5
million from GBP12.6 million at 31 December 2022, mainly as a
result of inventory purchased in preparation of the expected
increased bioprocessing activities in the second half of 2023.
Trade and other receivables have decreased by GBP26.9 million
mainly as a result of the receipt of amounts outstanding from
clients as at December 2022, but also lower levels of un-invoiced
client work as compared to year end.
Current liabilities - Trade and other payables have decreased
from GBP36.6 million at the start of the year to GBP26.2 million
due to lower levels of client and other operational activities
leading to lower levels of accruals and trade creditors
outstanding. Contract liabilities have increased by GBP4.1 million
due to the invoicing of orders received in advance for the goods
and services being provided by the Group. Lease liabilities
increased by GBP0.4 million as the recognition of the lease
liability on our Harrow House facility more than offset lease
payments during the period. Deferred income decreased due to the
recognition of grant income related to production capacity
expansion.
Non-current liabilities - Provisions increased by GBP0.5 million
as a result of the recognition of a liability for the costs of
restoring the newly leased Harrow House manufacturing facility to
its original state at the end of the lease term. Contract
liabilities have increased by GBP4.5 million due to the invoicing
of orders received in advance for the goods and services being
provided by the Group. The put option liability to acquire the
remaining 20% of Oxford Biomedica Solutions that the Group doesn't
already own has decreased from GBP38.2 million at 31 December 2022
to GBP20.3 million at the end of June 2023 due to a decrease in the
value at which the option is expected to be exercised.
The Group's cash resources at 1 January 2023 were GBP141.3
million. Cash used in operations was GBP5.4 million. which includes
GBP3.5 million RDEC tax credit received. Other significant cash
flows were GBP4.4 million received from the sale of Harrow House
facility, GBP4.9 million of capex expenditure, GBP5.3 million of
lease liability payments and a negative impact from exchange rates
on cash balances held of GBP1.3 million. The cash balance at 30
June 2023 was GBP129.4 million with a net cash position of GBP90.1
million.
Post balance sheet event
Homology Medicines Inc. strategic update
As a result of Homology Medicines Inc. announcing an update on
their business, including strategic alternatives in July 2023, the
Group will perform an impairment review for the Oxford Biomedica
Solutions' CGU as at 31 December 2023 to assess any potential
impairment of the intangible assets and fixed assets of the CGU
during H2 2023. Any resultant impairment charge will be booked in
the December 2023 year-end financial statements.
Potential transaction to acquire ABL Europe
Oxford Biomedica has entered into exclusive negotiations for the
proposed acquisition of ABL Europe SAS. Terms of the proposed
transaction would include a consideration of EUR15million,
(including the value of GBP8.6 million (EUR10 million) of
pre-completion cash funding in ABL Europe from Institut Mérieux),
in exchange for Oxford Biomedica shares. In addition, Institut
Mérieux would also commit to provide Oxford Biomedica with GBP17.2
million (EUR20 million) of additional funding, to cover capex and
potential future operating losses, in exchange for new Oxford
Biomedica shares.
In addition, under the proposed transaction, Institut Mérieux
would further build its ownership of Oxford Biomedica by acquiring
up to GBP8.6 million (EUR10 million) of additional Oxford Biomedica
existing ordinary shares in the market from the date of this
announcement to 31 March 2024. Institut Mérieux intends to build
its ownership of Oxford Biomedica shares through purchases in the
open market so as to reach, in aggregate, approximately 10 per cent
of the Company's enlarged issued share capital.
Financial outlook
Oxford Biomedica is reorganising its business as it finalises
its transformation towards a pure-play cell and gene therapy CDMO.
As part of this transformation the Group is expected to incur a
one-off restructuring cost of c.GBP10 million in the second half of
2023. The Group has concluded the review of strategic options for
its therapeutics products portfolio and spend on therapeutic
products will be ceased during H2 2023. In addition, there will be
a streamlining of the organisational structure and adopting of a
more client-focused R&D strategy.
Group revenues for 2023 are expected to be approximately GBP90
million, below current market expectations due to lower milestone
and license payments than previously expected, and reduced or
delayed bioprocessing orders from clients. Significant revenue
growth is expected in 2024 vs. 2023, driven by high levels of
business development activity. This includes existing client
programmes progressing through development and the acquisition of
new clients , notwithstanding a slowdown in the biotech funding
environment .
The Group has a high level of visibility over revenues for the
remainder of 2023 with more than 90% of forecasted revenues for the
second half of the year covered by existing binding purchase orders
and rolling client forecasts. The Group's revenue backlog at 30
June 2023 stood at GBP95 million; this is the amount of future
revenue available to earn from current orders. The Group expects to
grow this backlog significantly going forward based on high levels
of business development activity driving new client acquisition, as
well as orders from existing clients. The strong execution and
delivery of commercial strategy gives strong visibility in and
confidence in 2024 revenue growth.
Whilst the outcome of Homology's strategic review is not yet
known, the Group expects Homology to remain a client of the Group
with contracted revenues for the remainder of 2023; and is
prudently assuming that no further revenues are expected from 2024
onwards. Homology remains well capitalised with cash and short term
investments of GBP100.8 million ($127.1 million) as of 30 June
2023. In addition, they recently reported encouraging data from
their Phase I trial evaluating gene editing candidate HMI-103 in
adults with PKU.
The Operating EBITDA loss (after restructuring costs) for the
second half of 2023 is expected to be approximately GBP10 million
better than the first half. As a result of business transformation
and cost reductions completed in 2023, the ongoing cost base from
2024 is anticipated to be reduced by c.GBP30m on an annualised
basis compared to 2023.
Capex levels are expected to be similar in the second half of
2023 to the first half of 2023 with the Group taking a cautious
approach to planning significant new projects.
With a strong cash position of GBP121.4 million and a net cash
position of GBP83.0 million as at 31 August 2023, the Group is well
financed.
Medium term guidance
In 2024 and beyond, the Group expects to continue to grow
lentiviral vector and AAV manufacturing and development revenues
through the successful development of existing client relationships
and the continued targeting of new client relationships. Further,
the group is already accelerating towards broadly breakeven
Operating EBITDA by the end of 2024 with a leaner cost base and
positive momentum in business development activities, including
growth in both orders and pipeline.
Building on its leading position in lentiviral vectors, the
Group aims to ultimately have a market leading position in the
viral vector outsourced supply market across all key vector types.
The Group aims to achieve three-year revenue CAGR in excess of 30%,
and at least a doubling of revenues by the end of 2026 from the
approximately GBP90 million being indicated for 2023, with this
growth being maintainable into the longer term. This will be
supported by the strength of the Group's revenue backlog, growing
pipeline of potential new business opportunities, and the progress
being made by the newly expanded business development team and the
new commercial strategy.
With increased operational efficiencies, targeted cost
management, and targeted investment the Group aims to achieve
Operating EBITDA margins in excess of 20% by the end of 2026.
Financial impact from the potential transaction to acquire ABL
Europe announced today is excluded from mid-term guidance pending
completion of the transaction.
Finally, management reporting for the financial year 2023 will
reflect the Group's new structure as a pure-play CDMO. Future
guidance is anticipated to be split by the new reporting
segments.
Principal risks and uncertainties
Risk assessment and evaluation is an integral and
well-established part of the Group's management processes. The
Group's management framework incorporates the implementation of a
mitigation strategy, each tailored to the specific risk in
question. Details of our principal risks and uncertainties can be
found on pages 64 to 68 of the 2022 Annual report & accounts
which is available on the Group's website at www.oxb.com . A
summary of these risks is provided below. We have seen increased
risk with regards to the execution of the business plan for Oxford
Biomedica Solutions, and the risks associated with moving into the
AAV sector, and a decrease in product liability risk as a result of
the Group discontinuing product development. The remaining risks
have been assessed not to have changed materially.
Commercialisation risks
-- Failure or delays in the execution of the business plan for Oxford Biomedica Solutions
-- Risks associated with the move into the AAV sector
-- Discontinuation of product development by collaborators and partners
-- Unable to keep up with rapid technological changes
Supply chain and business execution risks
-- Failure of key third party suppliers
-- Bioprocessing failures
-- Cyber attacks
-- Failure to attract, develop and retain talented and capable workforce
Legal, regulatory and compliance risks
-- Adverse outcomes of litigation; governmental; or regulatory inspections
-- Infringement of IP and patents
Economic and financial risks
-- Impacts of climate change
-- Exposure to foreign currency fluctuations
-- Claims from product liability
-- Impacts from the war in Ukraine and COVID-19
Going concern
The financial position of the Group, its cash flows and
liquidity position are described in the primary statements and
notes to these interim financial statements.
The Group made a loss for the period ended 30 June 2023 of
GBP52.7 million, consumed net cash flows from operating activities
of GBP5.4 million, and ended the period with cash and cash
equivalents of GBP129.4 million. The Group sold its Harrow House
facility in a sale and leaseback transaction for GBP4.5 million to
Kadans, whilst also agreeing an occupational lease of the property
for 15 years. In considering the basis of preparation of the
Interim financial statements, the Directors have prepared cash flow
forecasts for a period of at least 12 months from the date of
approval of these financial statements, based in the first instance
on the Group's 2023 latest view,, and forecasts for 2023 and 2024.
The Directors have undertaken a rigorous assessment of the
forecasts in a base case scenario and assessed identified downside
risks and mitigating actions.
These cash flow forecasts also take into consideration severe
but plausible downside scenarios including:
-- Commercial challenges leading to a substantial manufacturing
and development revenue downside affecting both the LentiVector(R)
platform and AAV businesses;
-- No revenues from new customers;
-- Decreases in forecasted existing customer milestones and
removal of any future license revenues, and
-- The potential impacts of a recession on the Group and its
customers including expected revenues from existing customers under
long term contracts.
Under both the base case and mitigated downside scenario, the
Group and parent company has sufficient cash resources to continue
in operation for a period of at least 12 months from the date of
approval of these financial statements.
In the event of the downside scenarios crystallising, the Group
would continue to meet its existing loan covenants until December
2024 without taking any mitigating actions, but the Board has
mitigating actions in place that are entirely within its control
that would enable the Group to reduce its spend within a reasonably
short time-frame to increase its cash covenant headroom as required
by the loan facility with Oaktree Capital Management.
The Board has confidence in the Group's ability to continue as a
going concern for the following reasons:
-- As noted above, the Group has cash balances of GBP129.4
million at the end of June 2023, and GBP121.4 million at the end of
August 2023;
-- More than 90% of 2023 forecasted revenues are covered by
binding purchase orders and rolling customer forecasts which give
confidence in the level of revenues forecast over the next 12
months; and
-- The Group's history of being able to access capital markets
including raising GBP77.0 million of equity during 2022;
-- The Group's history of being able to obtain loan financing
when required for purposes of both capital expenditure and
operational purposes, as recently evidenced by the US$85 million
one-year facility and US$50 million replacement four-year facility
obtained with Oaktree;
-- The Group intends to delay the construction element of its
OXBOX manufacturing facility expansion to now take place during
2028 and 2029;
-- The completion of the potential transaction to acquire ABL
Europe is subject to successful completion of due diligence,
regulatory approvals and final Board approval. The Board of Oxford
Biomedica do not intend to approve the transaction if it is
expected to materially impact our ability to continue as a going
concern;
-- The Group's ability to continue to be successful in winning
new customers and building its brand as demonstrated by
successfully entering into new customer agreements including with
Arcellx, Cargo Therapeutics and Oxford University over the last 6
months;
-- The Group has the ability to control capital expenditure
costs and lower other operational spend, as necessary.
Taking account of the matters described above, the Directors
remain confident that the Group will have sufficient funds to
continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern
basis.
Consolidated Statement of Comprehensive Expense
for the six months ended 30 June 2023
Six months ended Six months
30 June 2023 ended
Unaudited 30 June 2022
Unaudited
Notes GBP'000 GBP'000
--------------------------------------------- ------- ----------------- --------------
Revenue 43,061 64,027
Cost of sales (21,122) (27,899)
--------------------------------------------- ------- ----------------- --------------
Gross profit 21,939 36,128
Bioprocessing costs (30,314) (12,383)
Research and development costs (31,417) (27,310)
Administrative expenses (12,838) (16,479)
Other operating income 1,402 925
Gain on sale and leaseback 472 -
Change in fair value of available-for-sale
asset 8 (38)
--------------------------------------------- ------- ----------------- --------------
Operating loss (50,748) (19,157)
Finance income 2,217 50
Finance costs 6 (3,813) (8,277)
--------------------------------------------- ------- ----------------- --------------
Loss before tax (52,344) (27,384)
Taxation (317) (250)
Loss for the period (52,661) (27,634)
--------------------------------------------- ------- ----------------- --------------
Other comprehensive (expense)/
income
Foreign currency translation
differences (4,640) 10,825
Other comprehensive (expense)/
income for the period (4,640) 10,825
--------------------------------------------- ------- ----------------- --------------
Total comprehensive expense (57,301) (16,809)
Loss attributable to:
Owners of the Company (47,956) (25,483)
Non-controlling interests (4,705) (2,151)
(52,661) (27,634)
Total comprehensive (expense)/income
attributable to:
Owners of the Company (51,349) (17,419)
Non-controlling interests (5,952) 610
--------------------------------------------- ------- ----------------- --------------
(57,301) (16,809)
--------------------------------------------- ------- ----------------- --------------
Basic and diluted loss per
share 5 (49.74p) (27.29p)
--------------------------------------------- ------- ----------------- --------------
The notes on pages 20 to 41 form part of this financial
information.
Consolidated Statement of Financial Position
as at 30 June 2023
30 June 31 December
2023 2022
Unaudited Audited
Notes GBP'000 GBP'000
---------------------------------- ------- ---------------------- ---------------------------
Assets
Non-current assets
Intangible assets & Goodwill 7 97,884 105,886
Property, plant and equipment 8 120,554 133,780
Trade and other receivables 10 4,931 5,010
223,369 244,676
---------------------------------- ------- ---------------------- ---------------------------
Current assets
Inventory 9 13,542 12,625
Assets held for sale 31 23
Trade and other receivables 10 34,693 61,571
Cash and cash equivalents 11 129,430 141,285
---------------------------------- ------- ---------------------- ---------------------------
177,696 215,504
---------------------------------- ------- ---------------------- ---------------------------
Current liabilities
Trade and other payables 12 26,208 36,579
Contract liabilities 22,469 18,370
Deferred income 681 894
Lease liabilities 13 3,666 3,295
Deferred tax liabilities 506 525
53,530 59,663
---------------------------------- ------- ---------------------- ---------------------------
Net current assets 124,166 155,841
---------------------------------- ------- ---------------------- ---------------------------
Non-current liabilities
Lease liabilities 13 71,047 71,206
Loans 14 38,436 39,780
Provisions 15 8,954 8,424
Contract liabilities 4,600 76
Deferred income 1,032 1,069
Put option liability 16 20,270 38,182
Deferred tax liabilities 5,040 5,588
---------------------------------- ------- ---------------------- ---------------------------
149,379 164,325
---------------------------------- ------- ---------------------- ---------------------------
Net assets 198,156 236,192
---------------------------------- ------- ---------------------- ---------------------------
Shareholders' equity
Share capital 17 48,260 48,132
Share premium 17 380,247 379,953
Other reserves (11,970) (24,887)
Accumulated losses (244,428) (198,545)
---------------------------------- ------- ---------------------- ---------------------------
Equity attributable to owner of
the Company 172,109 204,653
---------------------------------- ------- ---------------------- ---------------------------
Non-controlling interests 19 26,047 31,539
---------------------------------- ------- ---------------------- ---------------------------
Total equity 198,156 236,192
---------------------------------- ------- ---------------------- ---------------------------
The notes on pages 20 to 41 form part of this financial
information.
Consolidated Statement of Cash Flows
for the six months ended 30 June 2023
Six months
ended Six months ended
30 June 2023 30 June 2022
Unaudited Unaudited
Notes GBP'000 GBP'000
---------------------------------------- ------- --------------- ------------------
Cash flows from operating activities
Cash consumed in operations 18 (8,916) (25,069)
Tax credit received 3,502 558
---------------------------------------- ------- --------------- ------------------
Net cash used in operating activities (5,414) (24,511)
---------------------------------------- ------- --------------- ------------------
Cash flows from investing activities
Acquisition of subsidiary, net
of cash acquired - (99,206)
Purchases of property, plant and
equipment 8 (4,854) (6,009)
Proceeds on disposal of property,
plant and equipment 4,420 35
Interest received 2,217 50
---------------------------------------- ------- --------------- ------------------
Net cash generated from/ (used
in) investing activities 1,783 (105,130)
---------------------------------------- ------- --------------- ------------------
Cash flows from financing activities
Proceeds from issue of ordinary
share capital 422 80,082
Costs of share issues - (2,952)
Interest paid (2,094) (1,732)
Loan arrangement fees - (2,205)
Payment of lease liabilities (2,222) (1,484)
Payment of lease liabilities interest (2,999) -
Loans received - 64,866
Net cash (used in)/generated from
financing activities (6,893) 136,575
---------------------------------------- ------- --------------- ------------------
Net (decrease)/ increase in cash
and cash equivalents (10,524) 6,934
Cash and cash equivalents at 1
January 2023 141,285 108,944
Movement in foreign currency balances (1,331) 2,632
---------------------------------------- ------- --------------- ------------------
Cash and cash equivalents at
30 June 2023 11 129,430 118,510
---------------------------------------- ------- --------------- ------------------
The notes on pages 20 to 41 form part of this financial
information.
Statement of Changes in Equity Attributable to Owners of the
Parent
for the six months ended 30 June 2023 (Unaudited)
Share Share Merger Other Translation Accumulated Total Non- Total NCI
capital premium reserve Equity reserve Losses GBP'000 Controlling Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Interest GBP'000
GBP'000
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- ----------- -----
At 1 January
2022 43,088 307,765 2,291 - - (165,806) 187,338 - 187,338
Six months
ended 30 June
2022:
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Loss for the
period - - - - - (25,483) (25,483) (2,151) (27,634)
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Other
comprehensive
income - - - - 8,064 - 8,064 2,761 10,825
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Total
comprehensive
expense
for the
period - - - - 8,064 (25,483) (17,419) 610 (16,809)
Transactions
with owners:
Share options
Proceeds
from shares
issued 12 75 - - - (4) 83 - 83
Value of
employee
services - - - - - 1,959 1,959 233 2,192
Issue of
shares
excluding
options 4,938 75,062 - - - - 80,000 - 80,000
Costs of share
issues - (2,952) - - - - (2,952) - (2,952)
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Total
contributions 4,950 72,185 - - - 1,955 79,090 233 79,323
Changes in
ownership
interests:
Acquisition of
subsidiary
with NCI
(Note 19) - - - - - - - 48,418 48,418
Acquisition of
NCI without
change in
control - - - - - 11,279 11,279 (11,279) - -
Recognition of
put option - - - (38,996) - - (38,996) - (38,996)
Revaluation of
put option - - - 740 - - 740 - 7 740
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
At 30 June
2022 48,038 379,950 2,291 (38,256) 8,064 (178,055) 222,032 37,982 260,014
Six months
ended 31
December
2022:
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Loss for the
period - - - - - (13,674) (13,674) (3,851) (17,525)
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Other
comprehensive
expense - - - - (239) - (239) (11) (250)
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Total
comprehensive
expense
for the
period - - - - (239) (13,674) (13,913) (3,862) (17,775)
Transactions
with owners:
Share options
Proceeds
from shares
issued 94 3 - - - (25) 72 - 72
Value of
employee
services - - - - - 3,963 3,963 316 4,279
Deferred tax
on share
options - - - - - 125 125 - 125
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Total
contributions 94 3 - - - 4,063 4,160 316 4,476
Changes in
ownership
interests:
Acquisition of
subsidiary
with NCI
(Note 19) - - - - - - - (13,776) (13,776)
Acquisition of
NCI without
change in
control - - - - - (10,879) (10,879) 10,879 - -
Put Option
recognition - - - (740) - - (740) - 7 (740)
Revaluation of
put option - - - 3,993 - - 3,993 - 7 3,993
At 31 December
2022 48,132 379,953 2,291 (35,003) 7,825 (198,545) 204,653 31,539 236192 236,192
At 1 January
2023
Six months
ended 30 June
2023:
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Loss for the
period - - - - - (47,956) (47,956) (4,705) (52,661)
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Other
comprehensive
expense - - - - (3,393) - (3,393) (1,247) (4,640)
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
Total
comprehensive
expense
for the
period - - - - (3,393) (47,956) (51,349) (5,952) (57,301)
Transactions
with owners:
Share options
Proceeds
from shares
issued 128 294 - - - - 422 - 422
Value of
employee
services - - - - - 2,073 2,073 460 2,533
Total
contributions 128 294 - - - 2,073 2,495 460 2,955
Changes in
ownership
interests:
Revaluation of
put option - - - 16,310 - - 16,310 - 16,310
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
At 30 June
2023 48,260 380,247 2,291 (18,693) 4,432 (244,428) 172,109 26,047 198,156
---------------- --------- --------- --------- ----------- ------------- ------------- ----------- ------------- -------- -----------
The notes on pages 20 to 41 form part of this financial
information.
Notes to the Financial Information
1. General information and basis of preparation
This condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK, as well as the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority.
The annual financial statements of the Group are prepared in
accordance with UK-adopted international accounting standards. As
required by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 31
December 2022. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
The financial information set out above does not constitute the
Company's Statutory Accounts. Statutory accounts for the year ended
31 December 2022 were approved by the Board of Directors and have
been delivered to the Registrar of Companies. The report of the
auditor (i) was unqualified, (ii) included no references to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006
These interim financial statements have been prepared applying
consistent accounting policies to those applied by the Group in the
2022 Annual Report.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 20 September 2023. They have
not been audited.
Oxford Biomedica plc, the parent company in the Group, is a
public limited company incorporated and domiciled in the UK and is
listed on the London Stock Exchange.
All material related party transactions in the first six months
of 2023 are described in note 21 of these interim financial
statements. There was no material change in related parties from
those described in the last annual report.
2. Going concern
Going concern
The financial position of the Group, its cash flows and
liquidity position are described in the primary statements and
notes to these interim financial statements.
The Group made a loss for the period ended 30 June 2023 of
GBP52.7 million, consumed net cash flows from operating activities
of GBP5.4 million, and ended the period with cash and cash
equivalents of GBP129.4 million. The Group sold its Harrow House
facility in a sale and leaseback transaction for GBP4.5 million to
Kadans, whilst also agreeing an occupational lease of the property
for 15 years. In considering the basis of preparation of the
Interim financial statements, the Directors have prepared cash flow
forecasts for a period of at least 12 months from the date of
approval of these financial statements, based in the first instance
on the Group's 2023 latest view, and forecasts for 2023 and 2024.
The Directors have undertaken a rigorous assessment of the
forecasts in a base case scenario and assessed identified downside
risks and mitigating actions.
These cash flow forecasts also take into consideration severe
but plausible downside scenarios including:
-- Commercial challenges leading to a substantial manufacturing
and development revenue downside affecting both the LentiVector(R)
platform and AAV businesses;
-- No revenues from new customers;
-- Decreases in forecasted existing customer milestones and
removal of any future license revenues, and
-- The potential impacts of a recession on the Group and its
customers including expected revenues from existing customers under
long term contracts.
Under both the base case and mitigated downside scenario, the
Group and parent company has sufficient cash resources to continue
in operation for a period of at least 12 months from the date of
approval of these financial statements.
In the event of the downside scenarios crystallising, the Group
would continue to meet its existing loan covenants until December
2024 without taking any mitigating actions, but the Board has
mitigating actions in place that are entirely within its control
that would enable the Group to reduce its spend within a reasonably
short time-frame to increase its cash covenant headroom as required
by the loan facility with Oaktree Capital Management.
The Board has confidence in the Group's ability to continue as a
going concern for the following reasons:
-- As noted above, the Group has cash balances of GBP129.4
million at the end of June 2023, and GBP121.4 million at the end of
August 2023;
-- More than 90% of 2023 forecasted revenues are covered by
binding purchase orders and rolling customer forecasts which give
confidence in the level of revenues forecast over the next 12
months; and
-- The Group's history of being able to access capital markets
including raising GBP77.0 million of equity during 2022;
-- The Group's history of being able to obtain loan financing
when required for purposes of both capital expenditure and
operational purposes, as recently evidenced by the US$85 million
one-year facility and US$50 million replacement four-year facility
obtained with Oaktree;
-- The Group intends to delay the construction element of its
OXBOX manufacturing facility expansion to now take place during
2028 and 2029;
-- The completion of the potential transaction to acquire ABL
Europe is subject to successful completion of due diligence,
regulatory approvals and final Board approval. The Board of Oxford
Biomedica do not intend to approve the transaction if it is
expected to materially impact our ability to continue as a going
concern;
-- The Group's ability to continue to be successful in winning
new customers and building its brand as demonstrated by
successfully entering into new customer agreements including with
Arcellx, Cargo Therapeutics and Oxford University over the last 6
months;
-- The Group has the ability to control capital expenditure
costs and lower other operational spend, as necessary.
Taking account of the matters described above, the Directors
remain confident that the Group will have sufficient funds to
continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern
basis.
3. Accounting policies
The accounting policies, including the classification of
financial instruments, applied in these interim financial
statements are consistent with those of the annual financial
statements for the year ended 31 December 2022, as described in
those financial statements.
Judgements
Contract revenues: Identification of performance obligations,
allocation of revenue and timing of revenue recognition
The Group has identified three key areas of judgement within the
collaboration agreements entered into during the period. Firstly,
in relation to the number of distinct performance obligations
contained within each collaboration agreement; secondly the fair
value allocation of revenue to each performance obligation; and
thirdly the timing of revenue recognition based on the achievement
of the relevant performance obligation. The sales royalties
contained within the collaboration agreements qualify for the
royalty exemption available under IFRS 15 and will only be
recognised as the underlying sales are made even though the
performance obligation, in terms of the technology license, has
already been met.
The judgements with regards to the number of distinct
performance obligations and the fair value allocation of revenue to
each performance obligation takes place on a contract-by-contract
basis across numerous contracts entered into by the Group. As these
judgements take place across numerous contracts, each with
different characteristics, it is not practical to provide a
quantitative analysis of the impact of applying different
judgements, and the Directors do not believe that disclosing a
range of outcomes resulting from applying different judgements
provides meaningful information to the reader of the financial
statements. Consequently, no quantitative analysis has been
provided for these judgements.
Number of distinct performance obligations
Upon review of certain client contracts and preparation of
accounting papers setting out the accounting treatment as per IFRS
15, the Group is required to exercise judgement in identifying the
distinct performance obligations contained within the contract.
These have been identified as being:
-- The granting of technology licences
-- Milestones relating to bioprocessing or process development activities
The fair value allocation of revenue to each performance
obligation
Because there is no readily available market price for many of
the performance obligations contained in the client contracts, the
Group exercises judgment in estimating the stand alone selling
price of each of these performance obligations. Key areas of
judgement are assessed to be:
-- The stand alone selling price of technology licences. The
Group assesses the stand alone selling price of licences
by reference to the stand alone selling price of previously
recognised client technology licences, and the size of the
market of the target indication and other market related
observable inputs
-- The stand alone selling price of bioprocessing batches. The
Group assesses the stand alone selling price of the batches
in terms the stand alone selling price of its other client
contract batch selling prices
-- The stand alone selling price in terms of the annual full
time equivalent rate to charge for process development activities.
The Group assesses the full time equivalent rate in terms
the stand alone equivalent rate of its other client contract
equivalent rates
Timing of revenue recognition: technology licence revenues
One of the key judgemental areas identified within the
collaboration agreements is the timing of recognition of licence
revenue based on the achievement of the relevant performance
obligation. The individual factors and aspects relating to licence
revenue are assessed as part of the IFRS 15 accounting paper
prepared for each agreement and a judgement is made as to whether
the licence fee performance obligation related to the granting of
the licence to the client has been achieved. If it was judged that
the performance obligations on licences granted in 2023 had not
been met, revenues would have been GBP413,000 lower with the
revenue expected to be recognised in future when the performance
obligations were deemed to have been met.
Estimations
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below. The nature of estimation means that actual
outcomes could differ from those estimates.
Impairment assessment of Oxford Biomedica Solutions Cash
Generating Unit (CGU)
Oxford Biomedica Solutions has been identified as a CGU (cash
generating unit) of the business. During H1 2023 an impairment
trigger was identified in that it was assessed that the CGU did not
meet the original revenues forecasted as part of the acquisition of
Oxford Biomedica Solutions. Therefore, an impairment assessment has
been performed as at 30 June 2023. The recoverable amount of the
CGU is deemed to be the higher of its fair value in use less cost
of disposal, or value in use. The Group has determined that the
recoverable amount of the CGU is the value in use of the Oxford
Biomedica Solutions CGU as it expects this value to be higher than
the fair value in use less costs of disposal
The Group estimated the value in use of the Oxford Biomedica
Solutions CGU through a discounted cash flow calculation which
calculates the present value of the CGU taking into consideration
the forecasted cash flows over the estimated useful life of the
acquired intangible assets, as well as the calculation of the
terminal value at the end of the cash flow period.
Management have prepared the value in use calculation based on
an approved forecast of 15 years because the estimated useful life
of the acquired intangibles is expected to be greater than 5 years
and the CGU is still expected to be in its initial growth phase at
the end of 5 years.
Sensitivity Calculation:
Key estimation uncertainty inputs which directly impact the
valuation of the CGU are assessed to be:
-- Revenue growth rates - these are the expected growth rates
for a start-up CDMO entity over the initial growth period after
which growth rates are brought down to more inflationary levels
-- Discount rate - the discount rate may be impacted by economic
and market factors, as well as changes to the risk free rate of
return which impacts debt borrowing rates. Should the discount rate
calculated by management be adjusted, this may impact the value of
the CGU. The discount rate has been calculated based on the current
risk free rate, the NASDAQ biotechnology Index's expected rate of
return, and the Group's cost of debt,
-- Useful life of intangible asset - management have assessed this to be 15 years.
Sensitivities
30 June 2023 Higher/Longer Lower/Shorter
---------------------------------------------- -------------------------- ----------------------
Effect in millions of pounds:
Forecast Revenues 10% higher or lower 56 (57) (1)
Term of forecast 1 year longer or short (1) (1) (4) (1)
Discount rate 1% lower or higher (28) (1) 36
---------------------------------------------- -------------------------- ----------------------
1 Would result in an impairment charge to intangibles as of 30 June 2023.
Other judgemental inputs are:
-- Operational expenditure and capital expenditure - the cash
flows of Oxford Biomedica Solutions are based on the management
approved forecasts. These forecast may change in future or the
actual results vary,
-- Long term inflation rates in the United States,
-- Ability of the CGU to acquire new clients and increase revenues from existing clients,
-- Expected volatility of cash flows - should the expected
volatility of Oxford Biomedica Solutions cash flows vary, this may
impact the value of the CGU.
Based on the valuation of the CGU through a discounted cash flow
calculation, the Group has assessed that an impairment of Oxford
Biomedica Solutions was not required at 30 June 2023.
Percentage of completion of bioprocessing batch revenues
Bioprocessing of clinical/commercial product for partners is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the bioprocessing process.
Revenues are recognised on a percentage of completion basis and as
such require judgement in terms of the assessment of the correct
stage of completion including the expected costs of completion for
that specific bioprocessing batch. The value of the revenue
recognised with regards to the bioprocessing batches which remain
in progress at period end is GBP25,385,000. If the assessed
percentage of completion was 10 percentage points higher or lower,
revenue recognised in the period would have been GBP3,285,000
higher or GBP3,578,000 lower.
Percentage of completion of fixed price process development
revenues
As it satisfies its performance obligations the Group recognises
revenue and the related contract asset with regards to fixed price
process development work packages. Revenues are recognised on a
percentage of completion basis and as such require judgement in
terms of the assessment of the correct percentage of completion for
that specific process development work package. The value of the
revenue recognised with regards to the work packages which remain
in progress at period end is GBP24,244,000. If the assessed
percentage of completion was 10 percentage points higher or lower,
revenue recognised in the period would have been GBP2,424,000
higher or lower.
Provision for out of specification bioprocessing batches
Bioprocessing of clinical/commercial product for partners is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the process.
As the Group has now been bioprocessing product across a number
of years, and also in a commercial capacity, the Group has assessed
the need to include an estimate of bioprocessed product for which
revenue has previously been recognised and which may be reversed
should the product go out of specification during the remaining
period over which the product is bioprocessed. In calculating this
estimate the Group has looked at historical rates of out of
specification batches across the last five years and has applied
the percentage of out of specification batches to total batches
produced across the assessed period to the revenue recognised on
batches which have not yet completed the bioprocessing process at
period end. The Group makes specific provisions for product batches
where it is considered that the average overall historical failure
rate does not adequately cover the perceived risk of revenue
recognised on those specific batches having to be subsequently
reversed.
This estimate, based on the historical average percentage as
well as certain specific provisions, may be significantly higher or
lower depending on the number of bioprocessing batches actually
going out of specification in future. The estimate will increase or
decrease based on the number of bioprocessing batches undertaken,
the percentage of completion of those bioprocessing batches, and
the number of batches which go out of specification over the
assessment period.
Consequently, bioprocessing revenue of GBP1.3 million (31
December 2022: GBP2.6 million) has not been recognised during the
six months ended 30 June 2023 with the corresponding credit to
contract liabilities. This revenue will be recognised as the
batches complete bioprocessing.
Amortisation of intangibles assets (developed technology)
The estimated useful life of developed technology acquired by
the Group is 15 years as the Group expects the technology to
generate cash flows for a total of 15 years. The estimate of 15
years is based on management's experience of the time period over
which the technology acquired as part of the acquisition of Oxford
Biomedica Solutions will become fully obsolete. Over time as the
platform technology is improved, parts of the technology become
obsolete as they are superseded by new technology until after 15
years the original technology is expected to have been fully
replaced by newer/improved technology.
If the estimated useful life of the assets had been 10 years,
the estimated amortisation for the six months ended 30 June 2023
would be GBP1.8 million higher (2022: GBP1.2m); whilst, if the
estimated useful life of the assets had been 20 years, the
estimated amortisation for the six months ended 30 June 2023 would
be GBP0.9 million lower (2022: GBP0.6m).
Valuation of put option liability
Where a put option with non-controlling shareholders exists on
their equity interests, a liability for the fair value of the
exercise price of the option is recognised. On 10 March 2022, the
Group recognised a put option liability to acquire the remaining
20% of Oxford Biomedica Solutions that it doesn't already own, from
Homology Medicines. The option is subsequently recognised at
amortised cost taking account of adjustments to the present value
of the estimated future contractual cash flows. At 30 June 2023 the
put option liability was adjusted to GBP20.3 million (Dec 2022:
GBP38.2m).
The Group estimates the value of the put liability using a Monte
Carlo simulation which calculates the expected future exercise
value of the put option, taking into consideration Oxford Biomedica
Solutions' forecasted revenues over the period up until the
expected exercise date along with the expected volatility of those
revenues over that same period. The expected future exercise value
is then discounted to the present using a discount rate in order to
capture the counter party risk of the expected payment.
Key estimation uncertainty inputs which directly impact the
valuation of the put option liability are assessed to be:
-- Revenues of Oxford Biomedica Solutions -the revenues of
Oxford Biomedica Solutions are based on the management approved
forecast up until the end of the option period. Should the forecast
change or the actual results vary this may impact the value of the
put option liability. (1)
-- Expected volatility of revenues - should the expected
volatility of Oxford Biomedica Solutions' revenues vary, this may
impact the value of the put option liability,
-- Discount rate - the discount rate may be impacted by economic
and market factors, as well as changes to the risk free rate of
return which impacts debt borrowing rates. Should the discount rate
calculated by management be adjusted, this may impact the value of
the put option. Management has calculated the discount rate based
on the risk free rate, the expected return from similar companies
and the Group's cost of debt.
Fair value
---------------------------- --------------
Put option liability
30 June 2023 Increase Decrease
-------------------------------------------------- ---------------------------- --------------
Effect in millions of pounds:
Revenues of Oxford Biomedica Solutions: 10%
higher or lower 2.1 (2.2)
Discount rate 1% lower or higher 0.3 (0.4)
-------------------------------------------------- ---------------------------- --------------
(1) The forecasted revenues of Oxford Biomedica Solutions over
the option period are expected to be negatively impacted by the
announcement of Homology Medicines to look at strategic
alternatives to their business. This is expected to lead to a
decrease in the fair value of the put option liability as at 31
December 2023.
4. Segmental analysis
The chief operating decision-makers have been identified as the
Senior Executive Team (SET), comprising the Executive Directors,
Chief Technical Officer, Chief Medical Officer, Chief Scientific
Officer, Chief Business and Corporate Development Officer, Chief
Operations Officer, General Counsel, Chief People Officer and Chief
Information Officer. The SET monitors the performance of the Group
in two business segments:
(i) Platform - this segment consists of the revenue generating
bioprocessing and process development activities undertaken for
third parties. It also includes internal technology developments
and the costs involved in developing platform related intellectual
property;
(ii) Product - this segment consists of the clinical and
preclinical development of in vivo and ex-vivo gene and cell
therapy products which are owned by the Group.
Revenues, other operating income and operating loss by
segment
Operating EBITDA and Operating profit/(loss) represent the
Group's measures of segment profit & loss as they are a primary
measure used for the purpose of making decisions about allocating
resources and assessing performance of segments.
Platform Product Total
H1 2023 GBP'000 GBP'000 GBP'000
============================================= =========== ========== ===========
Revenue 42,975 86 43,061
Other operating income 1,402 - 1,402
Operating EBITDA(1) (28,705) (5,021) (33,726)
Depreciation, amortisation and share based
payment (15,948) (1,082) (17,030)
Change in fair value of available-for-sale
asset 8 - 8
Operating loss (44,645) (6,103) (50,748)
Net finance cost (1,596)
Loss before tax (52,344)
============================================= =========== ========== ===========
Platform Product Total
H1 2022 GBP'000 GBP'000 GBP'000
============================================= =========== ========== ===========
Revenue 64,024 3 64,027
Other operating income 925 - 925
Operating EBITDA(1) (780) (5,005) (5,785)
Depreciation, amortisation and share based
payment (12,350) (984) (13,334)
Change in fair value of available-for-sale
asset (38) - (38)
Operating loss (13,168) (5,989) (19,157)
Net finance cost (8,227)
Loss before tax (27,384)
============================================= =========== ========== ===========
(1) Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 14.
Other operating income of GBP1.4 million (2022: GBP0.9 million)
includes grant income of GBP0.3 million (2022: GBP0.4 million) and
GBP1.1m (2022: GBP0.5m) of income for the provision of support
services to Homology Medicines and is included within the Platform
segment. No grant income to fund clinical and preclinical
development is included within the Product segment.
Costs are allocated to the segments on a specific basis as far
as is possible. Costs which cannot readily be allocated
specifically are apportioned between the segments using relevant
metrics such as headcount or direct costs. Finance costs are not
allocated to segments as they have been assessed to be group costs
rather than relating to a specific segment.
No intangible assets or fixed assets of any significant value
have been assessed to be assigned specifically to the Product
division and therefore no impairment has been required as a result
of the decision by the Group to discontinue work on product
development from the second half of 2023.
The acquired business of Oxford Biomedica Solutions has been
included in the Platform Segment.
The Group has concluded the review of strategic options for its
product portfolio and, in line with its strategy to become a
pure-play CDMO, has decided to discontinue work on internal product
development from the second half of 2023. No material costs
associated with the Product segment are expected to be carried by
the Group post 2023.
Disaggregation of revenue
Revenue is disaggregated by the type of revenue which is
generated by the commercial arrangement. Revenue shown in the table
below is denominated in sterling and is primarily generated in the
UK and US.
For the six months ended 30 June
Platform Product Total
2023 GBP'000 GBP'000 GBP'000
======================================= ========== ========= =========
Bioprocessing/Commercial development 40,446 86 40,532
Licence fees, Milestones & Royalties 2,529 - 2,529
--------------------------------------- ---------- --------- ---------
Total 42,975 86 43,061
--------------------------------------- ---------- --------- ---------
Platform Product Total
2022 GBP'000 GBP'000 GBP'000
======================================= ========== ========= =========
Bioprocessing/Commercial development 57,301 3 57,304
Licence fees, Milestones & Royalties 6,723 - 6,723
--------------------------------------- ---------- --------- ---------
Total 64,024 3 64,027
--------------------------------------- ---------- --------- ---------
Revenue by geographical location
30 June 30 June
2023 2022
Revenue by client location GBP'000 GBP'000
----------------------------- ---------- ----------
UK 1,292 35,305
Europe 12,309 8,150
US 29,460 20,176
Rest of world - 396
----------------------------- ---------- ----------
Total 43,061 64,027
----------------------------- ---------- ----------
In the first half of 2023 5 clients (2022: 1) each generated
more than 10% of the Group's revenue.
5. Basic earnings and diluted earnings per ordinary share
The basic loss per share of 49.74p (2022: 27.29p loss) has been
calculated by dividing the loss for the period attributable to the
owners of the company by the weighted average number of shares in
issue during the six months ended 30 June 2023, being 96,521,209
(2022: 93,371,295).
As the Group made a loss in the period and prior period, there
were no potentially dilutive options therefore there is no
difference between the basic loss per ordinary share and the
diluted loss per ordinary share.
6. Finance Costs
Finance costs of GBP3.8 million (2022: GBP8.3 million) consists
of loan interest GBP2.3 million (2022: GBP2.3 million), foreign
exchange gains relating to loans GBP1.7 million (2022: GBP4.9
million loss) and lease liability interest recognised in accordance
with IFRS 16 (Leases) of GBP3.2 million (2022: GBP1.1 million).
.
Developed
Goodwill technology Patents Total
Note GBP'000 GBP'000 GBP'000s GBP'000
---------------------------------- ----- ------- ---------- ------------- ---------- ---------
Cost
At 1 January 2023 661 111,405 1,811 113,877
Effects of movements in
exchange rates (28) (4,675) - (4,703)
At 30 June 2023 633 106,730 1,811 109,174
----------------------------------- ------------ ---------- ------------- ---------- ---------
Amortisation and impairment
At 1 January 2023 - 6,188 1,803 7,991
Charge for the period - 3,626 1 3,627
Effects of movements in
exchange rates - (328) - (328)
At 30 June 2023 - 9,486 1,804 11,290
----------------------------------- ------------ ---------- ------------- ---------- ---------
Net book amount at 30 June 2023 633 97,244 7 97,884
----------------------------------------- ------- ---------- ------------- ---------- ---------
Net book amount at 31 December
2022 661 105,217 8 105,886
----------------------------------- ------------ ---------- ------------- ---------- ---------
7. Intangible assets & goodwill
The Cash-generating unit (CGU) identified is the manufacturing
and process development operations of Oxford Biomedica Solutions
located at the Bedford, Massachusetts site in the United States.
The CGU was tested for impairment at 30 June 2023 as a result of a
trigger being identified, with no impairment being identified.
Due to a tax deduction not being available on a portion of the
developed technology intangible asset, a deferred tax liability of
GBP7.3 million was recognised at the acquisition date, with the
liability expected to unwind in line with the 15 year useful life
of the developed technology intangible asset.
8. Property, plant & equipment
Bio-processing
Office and
Freehold Leasehold equipment Laboratory Right-of-use
property Improve-ments and computers equipment assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000s GBP'000
-------------------- ------------ ---------------- ---------------- ---------------- -------------- ----------
Cost
At 1 January 2023 9,848 60,228 12,420 48,596 57,146 188,238
Additions at cost - 1,583 414 2,858 3,359 8,214
Disposals (9,848) - (60) (139) (4,089) (14,136)
Change of Estimate - - - - (470) (470)
Effects of
movements in
exchange rates - (1,276) (41) (614) (1,110) (3,041)
At 30 June 2023 - 60,535 12,733 50,701 54,836 178,805
--------------------- ----------- ---------------- ---------------- ---------------- -------------- ----------
Depreciation
At 1 January 2023 6,494 11,440 9,042 18,386 9,096 54,458
Charge for the
period 336 3,081 1,153 3,958 2,680 11,208
Effects of
movements in
exchange rates - (138) (5) (91) (171) (405)
Disposals (6,830) - (58) (122) - (7,010)
At 30 June 2023 - 14,383 10,132 22,131 11,605 58,251
--------------------- ----------- ---------------- ---------------- ---------------- -------------- ----------
Net book amount at
30 June 2023 - 46,152 2,601 28,570 43,231 120,554
--------------------- ----------- ---------------- ---------------- ---------------- -------------- ----------
Net book amount at
31 December
2022 3,354 48,788 3,378 30,210 48,050 133,780
--------------------- ----------- ---------------- ---------------- ---------------- -------------- ----------
9. Inventory
30 June 31 December
2023 2022
GBP'000 GBP'000
---------------- ---------- -------------
Raw materials 13,542 12,625
Inventory 13,542 12,625
---------------- ---------- -------------
Inventories constitute raw materials held for bioprocessing,
research and development purposes.
During 2023, the Group wrote off GBP781,000 (2022: GBP304,000)
of inventory which is not expected to be used in production or sold
onwards.
10. Trade and other receivables
30 June 31 December
2023 2022
Current GBP'000 GBP'000
------------------------------------ ----------- -------------
Trade receivables 14,351 34,109
Contract assets 6,171 10,897
Other receivables 2,837 4,832
Other tax receivable 6,174 7,757
Prepayments 5,160 3,976
------------------------------------- ---------- -------------
Total trade and other receivables 34,693 61,571
------------------------------------- ---------- -------------
30 June 31 December
2023 2022
Non-current GBP'000 GBP'000
-------------------- ----------- -------------
Other receivables 4,931 5,010
--------------------- ---------- -------------
Non - current trade and other receivables constitute other
receivables of GBP4,931,000 (Dec 22: GBP5,010,000) which are
deposits held in escrow as part of the Windrush Innovation Centre,
Oxbox and Patriot's Park lease arrangements.
11. Cash and cash equivalents
30 June 31 December
2023 2022
GBP'000 GBP'000
--------------------------- --------- -------------
Cash at bank and in hand 129,430 141,285
--------------------------- --------- -------------
Cash and cash equivalents includes GBP1.5 million in relation to
improvement works at Harrow House agreed under the sale and
leaseback arrangement.
12. Trade and other payables
30 June 31 December
2023 2022
GBP'000 GBP'000
------------------------------------- ---------- -------------
Trade payables 9,234 13,604
Other taxation and social security 773 2,347
Accruals 16,201 20,628
------------------------------------- ---------- -------------
Total trade and other payables 26,208 36,579
------------------------------------- ---------- -------------
13. Leases
The Group leases many assets including land and buildings,
equipment and IT equipment. Information about leases for which the
Group is a lessee is presented below:
Right-of-use assets
Bioprocessing
and
Laboratory
Property equipment Total
GBP'000 GBP'000 GBP'000
----------------------------------- ------------ ----------------- -----------
Balance at 1 January 2023 46,000 2,050 48,050
Additions 3,359 - 3,359
Disposals (4,089) - (4,089)
Depreciation charge for the
period (2,307) (373) (2,680)
Change in Estimate (470) - (470)
Effects of movements in exchange
rates (939) - (939)
----------------------------------- ------------ ----------------- -----------
Balance at 30 June 2023 41,554 1,677 43,231
----------------------------------- ------------ ----------------- -----------
The additions in the period related to the Harrow House sale and
lease back entered into in the first half of 2023, whilst disposals
in the period related to the US business' Patriot's Park
facility.
Lease liabilities
30 June 2023
GBP'000
---------------------------------------------------------- --------------
Maturity analysis - contractual undiscounted cash flows
Less than one year 8,951
One to five years 35,550
Six to ten years 40,228
More than ten years 22,616
---------------------------------------------------------- --------------
Total undiscounted cash flows at 30 June 2023 107,345
---------------------------------------------------------- --------------
30 June 2023
GBP'000
----------------------------------------------------------- ---------------
Lease liabilities included in the Statement of Financial
Position
Current 3,666
Non-current 71,047
------------------------------------------------------------
Total lease liabilities at 30 June 2023 74,713
------------------------------------------------------------ --------------
Amounts recognised in the statement of comprehensive income
30 June 2023
GBP'000
---------------------------------------- --------------
Interest on lease liabilities 2,999
Expense relating to short-term leases -
---------------------------------------- --------------
Amounts recognised in the statement of cash flows
30 June 2023
GBP'000
-------------------------------- --------------
Total cash outflow for leases 5,220
-------------------------------- --------------
14. Loans
On 10 March 2022, the Group drew down an US$85 million loan
facility with Oaktree to finance the acquisition of Oxford
Biomedica Solutions under a 1 year facility agreement maturing in
2023. Over the course of the term loan interest was payable
quarterly with a nominal interest rate on the loan of 8.5%.
On 7 October 2022, the loan facility was refinanced with
Oaktree. Under the terms of such refinancing, the Company has
partially repaid the outstanding amounts and amended the facility
into a new senior secured four year term loan facility provided by
Oaktree in a principal amount of US$50 million. The Term Loan
carries a variable interest rate, which is capped at 10.25% per
annum and payable quarterly in cash, with up to 50% of interest for
the first twelve months payable in kind as additional loan
principal, at the option of the Company. The interest rate is
subject to downward adjustment following the satisfaction of
certain commercial conditions.
The Company also has secured the option, subject to the same
commercial conditions as the amended facility and available for a
three- year period, to draw down a further US$25 million from
Oaktree to fund certain permitted acquisitions. If the option were
to be exercised, it would be assessed against meeting the
substantial modification requirements under IFRS 9.
The terms include financial covenants including holding a
minimum of US$20 million cash at all times, restrictions on the
level of indebtedness the Group may enter into or distributions
made by the Group. The Oaktree facility was secured by a pledge
over substantially all of the Group's assets.
30 June 31 December
2023 2022
GBP'000 GBP'000
--------------------------------------- -------------
Balance at 1 January 39,780 -
New loan - 64,866
Interest accrued 2,261 5,564
Interest paid (2,094) (4,554)
Foreign exchange movement (1,672) 7,964
Amortised fees 161 588
Loan repayment - (31,424)
Arrangement fees - (3,224)
----------------------------- --------- -------------
Closing balance 38,436 39,780
----------------------------- --------- -------------
15. Provisions
The dilapidations provisions relate to the anticipated costs of
restoring the leasehold Oxbox, Yarnton, Corporate office,
Wallingford Warehouse, Windrush Court, Windrush Innovation Centre
and Harrow House properties to their original condition at the end
of the lease terms ending between 2024 and 2037 respectively.
The future anticipated costs of restoring the properties are
calculated by inflating the current expected restoration costs
using the 3 year historic UK Consumer Price Inflation rate, up to
the end of the lease term.
The Group recognised a provision for restoration costs of the
Harrow House site following a sale and lease back transaction in H1
2023.
16. Put option liability
30 June 31 December
2023 2022
GBP'000 GBP'000
--------------------------- ---------- -------------
Balance at 1 January 38,182 -
Recognised at fair value - 38,996
Revaluation (17,912) (814)
--------------------------- ---------- -------------
Closing balance 20,270 38,182
--------------------------- ---------- -------------
On 10(th) March 2022, the Group recognised a put option
liability to acquire the remaining 20% of Oxford Biomedica
Solutions that it doesn't already own from Homology Medicines. The
fair value of the option at the date of acquisition was assessed to
be GBP39 million.
At 30(th) June 2023 the fair value of the Put option liability
was GBP20.3 million (Dec 2022: GBP38.2m). The forecasted revenues
of Oxford Biomedica Solutions over the option period are expected
to be negatively impacted by the announcement of Homology Medicines
to look at strategic alternatives to their business. This is
expected to lead to a decrease in the fair value of the put option
liability as at 31 December 2023.
17. Share capital and Share premium
At 31 December 2022 and 30 June 2023 Oxford Biomedica had an
issued share capital of 96,263,165 and 96,521,209 ordinary 50 pence
shares respectively.
317,474 shares were created as a result of the exercise of
options by employees during the period.
18. Cash flows from operating activities
Reconciliation of operating (loss)/profit to net cash (used
in)/generated from operations
Six months ended Six months ended
30 June 2023 30 June 2022
GBP'000 GBP'000
--------------------------------------------------- ------------------ ------------------
Continuing operations
Loss before tax (52,344) (27,384)
Adjustment for:
Depreciation 11,208 8,816
Amortisation of intangible assets 3,627 2,320
Loss on disposal of property, plant
and equipment 29 27
Gain on sale and leaseback (472) -
Loss on disposal of intangible assets - 23
Amortisation of loan fees - 283
Net finance costs 1,596 8,227
Charge in relation to employee share
scheme 2,532 2,202
Change in fair value of available-for-sale
asset (8) 38
Changes in working capital:
Decrease/(increase) in contract assets
and trade and other receivables 23,991 (26,365)
(Decrease)/increase in trade and other
payables (6,536) 7,282
Increase/(decrease) in contract liabilities
and deferred income 8,374 (6)
Decrease in inventories (917) (532)
Increase in provisions 4 -
--------------------------------------------------- ------------------ ------------------
Net cash used in operations (8,916) (25,069)
--------------------------------------------------- ------------------ ------------------
19. Non-controlling interest ("NCI")
The following table summarises the information relating to the
Group's subsidiary that has material NCI:
2023 2022
GBP'000 GBP'000
---------------------------------------- ----------- -----------
NCI percentage 20% 20%
Non-current assets 156,378 185,736
Current assets 14,933 44,040
Non-current liabilities (28,673) (525)
Current liabilities (12,405) (39,342)
----------- -----------
Net assets 130,233 189,909
Net assets attributable to NCI 26,047 37,982
Revenue 13,636 7,273
Loss (23,522) (10,753)
Other comprehensive (expense)/ income (6,237) 13,801
----------- -----------
Total comprehensive (expense)/income (29,759) 3,048
Loss allocated to NCI (4,705) (2,151)
Other comprehensive (expense)/ income
allocated to NCI (1,247) 2,761
Cash flows from operating activities (13,689) (3,308)
Cash flows from investment activities 2,874 37,672
Cash flow from financing activities
(dividends to NCI: nil) (6,644) 265
---------------------------------------- ----------- -----------
Net (decrease)/ increase in cash and
cash equivalents (17,459) 34,629
---------------------------------------- ----------- -----------
20. Capital commitments
At 30 June 2023, the Group had commitments of GBP2,811,547 for
capital expenditure for leasehold improvements, plant and equipment
not provided in the financial statements (June 2022 GBP4,752,000).
Additionally, the Group also had a Capital commitment of 48,935,000
for leasehold improvements in respect of the expansion of its OXBOX
manufacturing facility as a result of the GBP50 million equity
investment by Serum Life Sciences in September 2021.
21. Related party transactions
Transactions for Balance outstanding
the six months ended
30 June 30 June 30 June 30 June 2022
2023 2022 2023
GBP '000s GBP '000s GBP '000s GBP '000s
------------------------------------ ------------ ----------- ----------- --------------
Sales of goods and services
Homology Medicines, Inc. 12,872 7,273 7,777 7,273
Purchase of services
Homology Medicines, Inc. 384 1,661 22 1,661
Other
Homology Medicines, Inc. - rental
income 1,071 568 572 568
------------------------------------ ------------ ----------- ----------- --------------
All outstanding balances with related parties are to be settled
in cash within six months of the reporting date. None of the
balances is secured.
22. Post balance sheet event
Homology Medicines Inc. strategic update
In July, post-period end, Homology Medicines Inc. a genetic
medicines company and client of Oxford Biomedica's US business
announced an update on their business, including strategic
alternatives. Whilst future bioprocessing and commercial
development work has been impacted, the Group expects no other
business impact and any amounts outstanding at period end are
expected to be received in the normal course of business.
As a result of Homology Medicines Inc. announcing an update on
their business, including strategic alternatives in July 2023, the
Group will perform an impairment review for the Oxford Biomedica
Solutions' CGU as at 31 December 2023 to assess any potential
impairment of the intangible assets and fixed assets of the CGU
during H2 2023. Any resultant impairment charge will be booked in
the December 2023 year-end financial statements.
Potential transaction to acquire ABL Europe
Oxford Biomedica has entered into exclusive negotiations for the
proposed acquisition of ABL Europe. Terms of the proposed
transaction would include a consideration of EUR15million,
(including the value of GBP8.6 million (EUR10 million) of
pre-completion cash funding in ABL Europe from Institut Mérieux),
in exchange for Oxford Biomedica shares. In addition, Institut
Mérieux would also commit to provide Oxford Biomedica with GBP17.2
million (EUR20 million) of additional funding, to cover capex and
potential future operating losses, in exchange for new Oxford
Biomedica shares.
In addition, under the proposed transaction, Institut Mérieux
would further build its ownership of Oxford Biomedica by acquiring
up to GBP8.6 million (EUR10 million) of additional Oxford Biomedica
existing ordinary shares in the market from the date of this
announcement to 31 March 2024. Institut Mérieux intends to build
its ownership of Oxford Biomedica shares through purchases in the
open market so as to reach, in aggregate, approximately 10 per cent
of the Company's enlarged issued share capital.
23. Statement of Directors' responsibilities
The Directors of Oxford Biomedica plc are set out on page 43 of
this report. We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
for use in the UK.
-- the interim management report includes a fair review of the information required by:
o DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
o DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Frank Mathias
Chief Executive Officer
20 September 2023
Independent review report to Oxford Biomedica plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Oxford Biomedica plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the Press Release of Oxford Biomedica plc for the 6 month period
ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Consolidated statement of financial position as at 30 June 2023;
-- the Consolidated statement of comprehensive income for the period then ended;
-- the Consolidated statement of cash flows for the period then ended;
-- the Statement of changes in equity attributable to owners of
the parent for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Press Release
of Oxford Biomedica plc have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Press
Release and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Press Release, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the Press Release in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
preparing the Press Release, including the interim financial
statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Press Release based on our review. Our
conclusion, including our Conclusions relating to going concern, is
based on procedures that are less extensive than audit procedures,
as described in the Basis for conclusion paragraph of this report.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Reading
20 September 2023
Shareholder Information
Directors Financial adviser and joint
Roch Doliveux broker
(Chair) Peel Hunt
7(th) Floor
Frank Mathias 100 Liverpool Street
(Chief Executive Officer appointed London EC2M 2AT
27 March 2023)
Financial adviser and joint
Stuart Paynter broker
(Chief Financial Officer) J.P. Morgan Securities plc
25 Bank Street
Stuart Henderson Canary Wharf
(Deputy Chairman and Senior London
Independent Director) E14 5JP
Michael Hayden Financial and Corporate Communications
(Non-executive Director) ICR Consilium
85 Gresham St
Siyamak Rasty London EC2V 7NQ
(Independent Non-executive Director
resigned 23 June 2023) Registered Auditor
PricewaterhouseCoopers LLP
Heather Preston 3 Forbury place
(Independent Non-executive Director) 23 Forbury Road
Reading
Robert Ghenchev RG1 3JH
(Non-executive Director)
Solicitor
Kay Davies Covington & Burling LLP
(Independent Non-executive Director) 22 Bishopsgate
London EC2N 4BQ
Catherine Moukheibir
(Independent Non-executive Director) Registrars
Link Group
Namrata P. Patel 10th Floor
(Independent Non-executive Director) Central Square
29 Wellington Street
Leone Patterson Leeds LS1 4DL
(Independent Non-executive Director
appointed 1 May 2023) Company Secretary and Registered
Office
Natalie Walter
Windrush Court
Transport Way
Oxford OX4 6LT
Tel: +44 (0) 1865 783 000
Fax: +44 (0) 1865 783 001
enquiries@oxb.com
www.oxb.com
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