TIDMOXB
RNS Number : 2112O
Oxford Biomedica PLC
17 August 2017
OXFORD BIOMEDICA PLC
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2017
Oxford, UK - 17 August 2017: Oxford BioMedica plc ("OXB" or "the
Group"; LSE: OXB), a leading gene and cell therapy group, today
announces interim results for the six months ended 30 June
2017.
OPERATIONAL HIGHLIGHTS (including post period-end events)
- Novartis partnership progressed well with the BLA for
Novartis' potential blockbuster product CTL019 granted priority
review in paediatric and young adult patients with relapsed and
refractory (r/r) B-cell acute lymphoblastic leukaemia; approval
anticipated following unanimous vote at FDA advisory committee
- Novartis received encouraging CTL019 Phase II results in r/r
diffuse large B-cell lymphoma adding further major potential
indication with breakthrough designation; filing anticipated in Q4
2017
- Major new lentiviral vector supply agreement signed with
Novartis for CTL019 and other undisclosed CART products; over $100
million revenue potential over three years including $10 million
upfront payment
- MHRA licence granted to the Group for commercial manufacture and supply of lentiviral vector
- The Group's priority in-house product development programmes
continue to be prepared for clinical studies whilst discussions
continue with potential partners
- GBP2 million Innovate UK collaboration to further enhance
LentiVector(R) platform suspension technology
- Proprietary TRiP yield enhancement technology published in
prestigious journal Nature Communications
FINANCIAL HIGHLIGHTS
- Revenue increased by 26% to GBP15.7 million (H1 2016: GBP12.5 million)
- Operating loss reduced to GBP2.2 million (H1 2016: GBP6.9 million)
- Cash outflow before financing activities reduced to GBP2.2 million (H1 2016: GBP3.2 million)
- Debt refinancing completed with significantly improved terms
from $55 million Oaktree Capital Management facility
- Cash at 30 June 2017 GBP10.2 million (31 December 2016: GBP15.3 million)
- At 31 July 2017 the cash balance was GBP22.1 million following
the receipt of $10 million upfront payment from Novartis and 2016
R&D tax credit
Commenting on the Group's interim results, John Dawson, Oxford
BioMedica's Chief Executive Officer, said: "Oxford BioMedica has
made significant progress in the past six months, highlighted by
the ongoing success of our collaboration with Novartis and their
CTL019 product. The anticipated approval of the first lentiviral
vector-based product, and imminent filing in a second major
indication, validates our position as a world leader in the gene
and cell therapy field. Our strengthened position has not only
boosted our partnering discussions but also provides the Group with
the financial flexibility to progress our key in-house programmes
whilst continuing discussions with suitable collaborators. We are
now ideally positioned and intend to build on our technological
leadership that makes Oxford BioMedica a world leading gene and
cell therapy business."
Conference call for analysts:
A briefing for analysts will be held at 9:30am BST on 17 August
2017 at 1 Cornhill, London EC3V 3ND. There will be a simultaneous
live conference call with Q&A and the presentation will be
available on the Group's website at www.oxfordbiomedica.co.uk.
Please visit the website approximately 10 minutes before the
conference call to download the presentation slides. Conference
call details:
Participant dial-in: 08006940257
International dial-in: +44 (0) 1452 555566
Participant code: 59069153
An audio replay file will be made available shortly afterwards
via the Group's website: www.oxfordbiomedica.co.uk
For further information, please contact:
Oxford BioMedica plc: Tel: +44 (0)1865 783 000
John Dawson, Chief Executive Officer
Tim Watts, Chief Financial Officer
Financial PR Enquiries: Tel: +44 (0)20 3709 5700
Mary-Jane Elliott/Matthew Neal/Philippa Gardner/Laura
Thornton
Consilium Strategic Communications
Jefferies (Corporate Broker): Tel: +44 (0)20 7029 8000
Gil Bar-Nahum
Simon Hardy
Lee Morton
Max Jones
Nicholas Moore
OVERVIEW
Oxford BioMedica has made significant progress during 2017. In
particular, the Group's flagship collaboration with Novartis has
performed strongly with preparations now well underway for the
approval and launch of CTL019 (tisagenlecleucel) following the
recent positive vote by the FDA Oncologic Drugs Advisory Committee.
The collaboration's recently established commercial supply
agreement provides Oxford BioMedica with a key foundation for
future growth. It validates the Group's LentiVector(R) technology
and boosts its partnering credentials, whilst the ongoing
production revenues and future sales-based royalties underpin the
Group's strategy. As a result, Oxford BioMedica is well positioned
to deliver against its strategic objectives as outlined in the 2016
Annual Report.
OPERATIONAL REVIEW
Novartis partnership progress
During 2017, Oxford BioMedica's collaboration with Novartis has
progressed well through the stages required for approval and launch
of the chimeric antigen receptor T cell therapy CTL019
(tisagenlecleucel).
BLA progress
At the end of 2016, Novartis presented CTL019 results from the
ELIANA study in paediatric and young adult patients with relapsed
and refractory (r/r) B-cell acute lymphoblastic leukaemia (ALL). In
early 2017, Novartis submitted a biologics license application
(BLA) for CTL019 to the US Food and Drug Administration (FDA). As
the sole manufacturer of the lentiviral vector that encodes CTL019,
Oxford BioMedica played a significant role in the filing,
contributing to the BLA's Chemistry, Manufacturing and Controls
(CMC) sections related to the vector.
In March 2017, the FDA confirmed its acceptance of the filing
and granted CTL019 priority review designation. In July 2017, the
investigational therapy was reviewed by the FDA Oncologic Drugs
Advisory Committee, which voted unanimously in favour of approval
in paediatric and young adult patients with r/r ALL. The vote from
this committee provides crucial support for CTL019 and potential
approval is anticipated by early October 2017.
Additional indication
In June 2017, Novartis presented CTL019 clinical data from the
Phase II JULIET study in r/r diffuse large B-cell lymphoma (DLBCL).
The study met its primary objective at the interim analysis, with a
three-month overall response rate of 45%.
The r/r DLBCL target patient population is considerably larger
than CTL019's initial indication in r/r ALL. The full dataset from
the JULIET study is anticipated later in 2017 and will provide the
basis for US and EU regulatory submissions. Based on the positive
clinical results to date, the life-threatening nature of the target
disease and potential significant improvement over existing
therapies, CTL019 has been granted Breakthrough Therapy Designation
for this indication, expediting the FDA's review.
Commercial supply agreement
Based on the success of the initial Novartis partnership, the
two companies have now entered a major supply agreement in
anticipation of the commercialisation of CTL019, and to support the
development of additional products. The new three year agreement,
with an option to extend a further two years, covers commercial and
clinical supply of the lentiviral vectors used to generate CTL019
as well as vector for other undisclosed chimeric antigen receptor T
cell (CAR-T) products. Under the agreement, Oxford BioMedica has
the potential to receive over $100 million, including an upfront
payment of $10 million and ongoing bioprocessing and development
revenues. In addition, under the licence agreement announced in
October 2014, Oxford BioMedica will receive royalty payments on
Novartis' sales of CAR-T products covered by the agreement.
Developing the LentiVector(R) platform
The Group's lentiviral vector delivery system, the
LentiVector(R) platform, is a pioneer and world leader in the field
of gene and cell therapy. The technology is established at
commercial scale with three state-of-the-art, custom-built GMP
clean rooms and laboratory facilities offering current and next
generation LentiVector(R) platform bioprocessing capabilities, with
capacity for in-house platform development work, current partners'
requirements and future collaborations.
Regulatory approvals
In the first half of the year, the FDA conducted a pre-license
inspection of Oxford BioMedica's facilities, processes and systems
as part of the BLA review process for Novartis' cell therapy
CTL019. This was followed by the UK's Medicines and Healthcare
products Regulatory Agency (MHRA), which recently granted approval
for bulk lentiviral vector manufacture and commercial supply. These
pave the way for the commercial supply of CTL019 and meet the
requirements of the Group's other partnered and proprietary
products as they move through the development process towards the
market.
Next generation bioprocessing
The Group has recently developed a step-change in lentiviral
vector production technology, moving from the use of labour
intensive, manual, open processing in cell factories to next
generation processing in single-use bioreactors. This new 200 litre
process allows for larger scale production in closed single use
systems, and has the potential to significantly increase capacity
and efficiency. This increased efficiency will result in delivery
of vector at lower cost of goods, which is important to support
product commercialisation. The greater vector volumes that this
process is capable of making also has the effect of unlocking
indications that require large doses, such as muscle, liver and
lung diseases. The Group has already successfully run the process
at commercial scale.
Innovate UK collaboration
In August 2017, Oxford BioMedica established a collaboration
with a consortium of partners, including the Cell and Gene Therapy
Catapult and technology companies Stratophase and Synthace, to
further develop Oxford BioMedica's next generation suspension
bioprocessing system. The two-year GBP2 million collaboration is
partially funded by a grant from the UK's innovation agency,
Innovate UK. During the collaboration, the partners will apply
novel technologies to dynamically control bioreactors in real time
and execute workflows to optimise operations and increase
productivity.
TRiP yield enhancement technology
In March 2017, the Group further demonstrated its lead in vector
production technology with the publication of a peer-reviewed study
of its Transgene Repression in vector Production (TRiP) system.
This approach suppresses undesirable over-expression of therapeutic
genes in production cells during vector manufacture. The
publication details significant yield improvements during the
production of a range of vectors, including those based on
lentiviruses, adenoviruses and adeno-associated viruses.
Consequently, the TRiP system offers significant licensing
opportunities for the Group as demand for vectors increases with
the introduction of gene and cell therapy products.
Product development
The LentiVector(R) gene delivery platform underpins the Group's
partnering business and is the starting point for its proprietary
products. In the second half of 2016, the Group refined its product
development strategy and stated that it would potentially
out-license or spin-out its priority programmes into special
purpose vehicles, thereby reducing financial risk of clinical
development whilst retaining a significant financial interest in
the products' future success. This approach was put in place to
allow the Group to reduce its R&D expenditure at the time,
whilst also capturing economic value from its proprietary
programmes through a combination of potential upfront fees /
equity, bioprocessing revenues, development milestones and
royalties on future product sales.
Since the progress report in the 2016 Annual Report, the Group
has continued to prepare the priority programmes for clinical
studies, and to pursue potential financial partnership
arrangements. OXB-102 (for Parkinson's disease), OXB-202 (for
corneal graft rejection) and OXB-302 (for cancer) have achieved
initial preclinical proof-of-concept, completed pre-clinical
efficacy studies and are being positioned to move into the clinic.
In particular, preparations to initiate a clinical study with
OXB-102 have made good progress including identification of an
improved administration system required to deliver the vector into
the brain and preparing a dossier to be submitted to the regulators
for approval of the system. During the second half of 2017 the
Group intends to complete the regulatory filings for the planned
Phase I/II study, manufacture a second batch of the vector to
ensure sufficient supplies for the entire study and to prepare the
clinical study centres in Cambridge, London and Paris for
initiation of the study. As a result, treatment of patients could
begin early in 2018. In parallel a variety of potential financial
partnership arrangements are being explored for each of the
priority programmes. The Board is determined to ensure that the
Group, and therefore shareholders, retains an appropriate share in
the upside potential of these programmes. As such, the Group will
continue to invest modestly in the programmes to maintain their
momentum and to continue to enhance their value.
Partnering progress
During 2016, the Group expanded its strategic partnerships with
the addition of Orchard Therapeutics and Immune Design. These are
making good progress, and during the first half of 2017 the Group
continued its activities to further grow its portfolio of strategic
collaborations. These activities are benefiting from the success of
the Group's involvement with Novartis' CTL019. The filing of
CTL019, followed by the positive advisory committee vote and
anticipated approval, have validated the Group's position as a
world leader in lentiviral vector design, development and
production. This has attracted additional interest from a range of
potential partners and, as a result, the Group is conducting
feasibility studies and discussions with a number of companies. The
Group anticipates establishing further relationships over the next
twelve months.
Corporate and organisational development
During the first half of 2017, Oxford BioMedica continued to
develop its organisation to meet the requirements of the growing
activities under its collaborations with third parties and in-house
LentiVector(R) platform development activities. Particular
attention has been given to the need to operate the robust quality
processes required for commercial supply of lentiviral vectors. The
Group is also in the process of initiating a formal apprenticeship
scheme, working with the Government and other organisations in the
sector, to contribute to the training and development of the next
generation of people working in the life science industry. The
scheme will launch later in the year, with two apprentices joining
the Group initially.
OUTLOOK
Oxford BioMedica has made considerable progress during the first
half of 2017 and the Group intends to capitalise on this positive
momentum in the coming months. With the anticipated approval and
launch of CTL019, and recent MHRA approval of its state-of-the-art
facilities, the Group is making good progress preparing for
commercial supply of its lentiviral vectors under the new
three-year agreement with Novartis. The Group also anticipates
supporting a further CTL019 filing during 2017, in DLBCL, a major
indication targeting a significantly larger patient population than
the initial paediatric ALL indication.
With the ongoing success of its Novartis collaboration
validating its LentiVector(R) platform and partnering credentials,
the Group expects its technology leadership to boost its business
development activities. The Group intends to expand its portfolio
of collaborations, and to attract third-party investment to
accelerate the clinical development of its wholly-owned proprietary
products.
Oxford BioMedica's progress during 2017 demonstrates its leading
industry position. With the Group's collaborations supporting its
continued growth, Oxford BioMedica is ideally positioned to deliver
value to shareholders as a world-leading gene and cell therapy
business.
Financial Review
The first six months of 2017 have seen further significant
development in the business culminating in the new supply agreement
with Novartis, announced in July 2017, and the re-financing of the
loan facility. The key financial indicators used by the Board are
set out in the table below and the highlights are:
-- Gross income (GBP16.5 million) increased by 18% over H1 2016
(GBP14.0 million) driven by bioprocessing and commercial
development income which was up by almost 27%, whilst the less
predictable revenue from licence upfronts, incentives and grants
was 13% lower
-- The operational losses (EBITDA, EBIDA and the operating loss)
in H1 2017 were all significantly reduced compared with H1 2016
-- Cash used in operations of GBP1.3 million was greater than
the GBP0.7 million in H1 2016 because 2017 includes more non-cash
income, whilst 2016 also benefited from more favourable working
capital movements
-- Capital expenditure reduced from GBP6.0 million in 2016 to GBP1.0 million in 2017
-- Cash outflow before interest and R&D tax credit reduced
from GBP6.7 million to GBP2.2 million
-- Cash at 30 June 2017 was GBP10.2 million compared to GBP11.9 million at 30 June 2016
Following the receipts in July 2017 of the $10 million upfront
from the new Novartis agreement and the R&D tax credit in
respect of 2016, the cash balance at 31 July 2017 was GBP22.1
million.
KEY FINANCIAL INDICATORS (GBP m) H1 2017 H1 2016
-------------------------------------------- -------- --------
Bioprocessing/commercial
Gross income development 13.7 10.8
---------------- -------------------------- -------- --------
License upfronts,
incentives, grants 2.8 3.2
------------------------------------------- -------- --------
Total 16.5 14.0
------------------------------------------- -------- --------
EBITDA (2.1) (5.2)
-------------------------------------------- -------- --------
EBIDA 0.4 (2.6)
-------------------------------------------- -------- --------
Operating loss (2.2) (6.9)
-------------------------------------------- -------- --------
Cash used in operations (1.3) (0.7)
-------------------------------------------- -------- --------
Capital expenditure (1.0) (6.0)
-------------------------------------------- -------- --------
Cash outflow before interest and
R&D tax credit (2.2) (6.7)
-------------------------------------------- -------- --------
Period end
cash Cash 10.2 11.9
---------------- -------------------------- -------- --------
Loan (33.6) (31.3)
------------------------------------------- -------- --------
Net debt (23.4) (19.4)
------------------------------------------- -------- --------
Headcount Period end 288 252
---------------- -------------------------- -------- --------
Average 280 240
------------------------------------------- -------- --------
Gross income
Gross income - the aggregate of Revenue and Other Operating
Income - was GBP16.5 million in H1 2017, 18% above the GBP14.0
million in H1 2016.
GBPm H1 2017 H1 2016
------------------------ -------- --------
Revenue 15.7 12.5
Other Operating Income 0.8 1.5
-------- --------
Gross income 16.5 14.0
------------------------ -------- --------
Note - Other Operating Income includes process development
income arising from the October 2014 Novartis collaboration as well
as grant income. This is because process development income under
the 2014 contract is essentially the reimbursement by Novartis of
R&D costs incurred in developing IP which Oxford BioMedica will
own.
The main contributor to growth has been the revenues generated
from bioprocessing clinical batches of CTL019 for Novartis and
Orchard Therapeutics. Commercial development revenues were slightly
lower in 2017 than 2016 with the decline in development activity
for Novartis and Sanofi largely offset by the increase in work for
Orchard Therapeutics and other customers.
The amount received for licence upfronts, process development
incentives and grants, which are less predictable in timing and
amount, were slightly lower in H1 2017 than in H1 2016 due to lower
process development incentive receivables from Novartis being
earned in H1 2017. The incentive receivables in H1 2017 include
items recognised on a probability adjusted basis for which most of
the deliverables were achieved prior to 30 June 2017 and the
Directors have a high degree of confidence in the eventual receipt
of the incentive payment.
EBITDA/EBIDA
GBPm H1 2017 H1 2016
--------------------------- -------- --------
Gross income 16.5 14.0
Cost of sales and related
production costs(1) (8.1) (6.8)
R&D and other costs(1) (10.5) (12.4)
EBITDA(2) (2.1) (5.2)
R&D tax credit 2.5 2.6
-------- --------
EBIDA(3) 0.4 (2.6)
--------------------------- -------- --------
(1) excluding depreciation, amortisation and share option
charge
(2) EBITDA is defined as Earnings Before Interest, Tax and
Depreciation and share option charge
(3) EBITDA plus R&D tax credit
The aggregate of costs excluding depreciation, amortisation and
share option charges in H1 2017 was GBP18.6 million, compared with
GBP19.2 million in H1 2016. The growth in bioprocessing gross
income drove the growth in cost of sales and related production
costs in H1 2017 which at GBP8.1 million was 19% higher than the
GBP6.8 million in H1 2016. R&D and other costs were lower with
both product-related R&D costs and administrative costs
reduced, whilst process development expenditure remained roughly in
line with last year.
As a result of the higher gross income and lower costs excluding
depreciation, amortisation and share option charge, the EBITDA loss
in H1 2017 of GBP2.1 million was GBP3.1 million better than the
GBP5.2 million loss in 2016.
The table below shows the costs by type of expenditure
(excluding depreciation, amortisation and share option
charges):
GBPm H1 2017 H1 2016
----------------------------------- -------- --------
Raw materials, consumables
and other external bioprocessing
costs 3.7 3.5
Manpower-related 8.4 8.6
External R&D expenditure 2.0 2.7
Other costs 4.5 4.4
-------- --------
18.6 19.2
----------------------------------- -------- --------
Raw materials, consumables and other external bioprocessing
costs were slightly higher due to an increase in the number of
batches manufactured offset by lower material costs used in process
development activities. Manpower related costs are slightly lower
due to lower spend on recruitment and travel partly offset by
increased employee numbers. External R&D expenditure was lower
due to lower product related spend compared to 2016. Other costs
are slightly higher mainly due to foreign exchange losses on dollar
denominated receivables and cash (due to the strengthening of
sterling versus the dollar) offset by lower facility costs.
Operating loss and net loss
GBPm H1 2017 H1 2016
----------------------------------- -------- --------
EBITDA (2.1) (5.2)
Depreciation, amortisation
and share option charge (2.4) (1.7)
Revaluation of equity investments 2.3 -
-------- --------
Operating loss (2.2) (6.9)
Interest and currency revaluation
of loan (3.6) (5.1)
R&D tax credit 2.5 2.6
-------- --------
Net loss (3.3) (9.4)
----------------------------------- -------- --------
The lower EBITDA loss in H1 2017 compared with H1 2016 was
slightly offset by the higher depreciation, amortisation and share
option charge arising mainly from the depreciation charge on the
third clean room facility and the new laboratory complex which were
brought into operation in mid-2016. However, there was a gain
arising from the revaluation of the equity investment in Orchard
Therapeutics which was acquired as an upfront receipt at the time
the licence agreement was signed in 2016. This led to an operating
loss of GBP2.2 million in H1 2017 compared with GBP6.9 million in
2016.
The interest charge of GBP3.6 million in H1 2017 was lower than
that in H1 2016 due to a beneficial currency revaluation impact in
2017 as sterling strengthened against the US dollar, whereas in
June 2016 sterling weakened significantly after the Brexit vote,
offset by a higher interest charge caused by the requirement to
provide Oberland with a 15% per annum return on termination of that
loan facility.
The R&D tax credit in H1 2017 is broadly comparable with
that in H1 2016.
As a consequence of the above, the net loss for H1 2017 was
GBP3.3 million, GBP6.1 million better than in H1 2016.
Segmental analysis
The Partnering segment includes the revenue-generating
bioprocessing and commercial process development activities for
third parties, whilst the R&D segment includes the costs of our
proprietary R&D activities in product and technology
development as well as income arising from out-licensing
intellectual property to third parties. The results for the first
half of 2017, shown below, continue the trend towards establishing
a cash-generative and profitable Partnering business segment as
bioprocessing volumes increase.
H1 2017
GBPm Partnering R&D Total
------------------------- ----------- ------ ------
Gross income 16.0 0.5 16.5
------------------------- ----------- ------ ------
EBITDA 3.0 (5.1) (2.1)
------------------------- ----------- ------ ------
Operating profit/(loss) 1.4 (3.6) (2.2)
------------------------- ----------- ------ ------
H1 2016
GBPm Partnering R&D Total
---------------- ----------- ------ ------
Gross income 12.7 1.3 14.0
---------------- ----------- ------ ------
EBITDA 0.2 (5.4) (5.2)
---------------- ----------- ------ ------
Operating loss (0.9) (6.0) (6.9)
---------------- ----------- ------ ------
Cash flow
GBPm H1 2017 H1 2016
----------------------------------- -------- --------
Operating loss (2.2) (6.9)
Depreciation, amortisation
and share option charge 2.4 1.7
Revaluation of equity investments (2.3) -
-------- --------
EBITDA (2.1) (5.2)
Working capital 0.8 4.5
-------- --------
Cash used in operations (1.3) (0.7)
R&D tax credit received - 3.5
-------- --------
Net cash (used in)/ generated
from operating activities (1.3) 2.8
Capital expenditure (1.0) (6.0)
Interest paid, less received (7.5) (1.7)
-------- --------
Cash outflow (9.8) (4.9)
----------------------------------- -------- --------
As discussed above, the EBITDA loss for the first six months of
2017 was GBP2.1 million, reduced from GBP5.2 million in the same
period of 2016. Working capital inflow of GBP0.8 million was lower
than in H1 2016 when there had been significant inflows due to a
reduction in receivables. Capital expenditure was GBP1.0 million in
the first six months of 2017, compared with GBP6.0 million in the
first six months of 2016 when the Group was completing its capacity
expansion programme. Interest paid, GBP7.5 million in H1 2017, was
significantly higher than in H1 2016 partly due to sterling being
weaker in 2017 but also due to the termination of the Oberland loan
facility which crystallised the 15% internal rate of return
obligation under that agreement.
Balance sheet
Non-current assets - Property, plant and equipment decreased
from GBP27.5 million to GBP26.5 million in the first six months of
2017 as the additions of GBP1.0 million were more than offset by
the depreciation charge. Investments increased from GBP0.7 million
to GBP3.0 million due to the revaluation of the equity investment
in Orchard Therapeutics.
Current assets - Trade and other receivables increased from
GBP6.9 million to GBP8.5 million due to increased revenues, whilst
inventory rose to GBP3.9 million from GBP2.2 million at 31 December
2016 as bioprocessing activity increased. Current tax assets have
increased as the 2016 R&D tax credit had not been received by
30 June 2017, although it was subsequently received in July.
Current liabilities - Trade and other payables have increased
from GBP6.0 million at the start of the year to GBP8.0 million due
mainly to the timing of payments around the respective period ends.
Deferred income has increased due to higher levels of bioprocessing
activity.
The Group's cash resources at 1 January 2017 were GBP15.3
million. Cash outflow from operations, interest payments and
capital expenditure amounted to GBP9.8 million and there was an
inflow of GBP4.6 million from the loan refinancing, resulting in a
cash balance at 30 June 2017 of GBP10.2 million.
In July 2017 the $10 million upfront payment under the new
Novartis contract was received, as was the 2016 R&D tax credit.
The cash balance at 31 July 2017 was GBP22.1 million.
Loans
On 1 May 2015 the Group established a $50 million loan facility
with Oberland Capital Healthcare which was used to finance the
capacity expansion programme between late 2014 and mid-2016.
On 29 June 2017 the Group was able to re-finance this loan
facility at a lower cash cost with a new $55 million facility with
Oaktree Capital Management. $50 million (GBP38.5 million) of the
facility was drawn down as at 30 June 2017 with the fair value of
the loan net of capitalised legal and associated finance costs
accounted for as a GBP33.9 million balance within loans, and the
fair value of the warrants of GBP1.2 million is accounted for as
equity. The remaining $5 million of the loan facility was drawn
down in July 2017.
Financial outlook
The new vector supply agreement with Novartis and the
encouraging progress that CTL019 is making towards marketing
approval in the USA gives the Board confidence that revenues will
continue to grow, in particular through bioprocessing and future
royalties. The Board also remains confident that demand for process
development and manufacture of lentiviral vectors is growing and
that further contracts with new partner companies will be concluded
over the next twelve months. These will help the Group move towards
sustainable cash generation.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group are those
set out in the 2016 Annual Report & Accounts which is available
on the Group's website at www.oxfordbiomedica.co.uk. The principal
risks and uncertainties remain the same for the second six months
of the year.
Going concern
At 31 July 2017, the Group held cash amounting to GBP22.1
million. The Directors are of the opinion that the Group has
sufficient working capital for its present requirements, that is
for at least 12 months from the date of this announcement. The
Directors therefore consider it appropriate to adopt the going
concern basis of accounting in preparing the interim financial
information.
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2017
Six months Six months
ended ended
30 June 2017 30 June 2016
Notes GBP'000 GBP'000
----------------------------- ----- -------------- --------------
Revenue 15,694 12,485
Cost of sales (7,997) (4,851)
----------------------------- ----- -------------- --------------
Gross profit 7,697 7,634
Research, development
and bioprocessing costs (10,489) (12,740)
Administrative expenses (2,567) (3,372)
Other operating income 842 1,536
Other gains 8 2,297 -
----------------------------- ----- -------------- --------------
Operating loss (2,220) (6,942)
Finance income 27 4
Finance costs 6 (3,651) (5,017)
----------------------------- ----- -------------- --------------
Loss before tax (5,844) (11,955)
Taxation 2,500 2,566
----------------------------- ----- -------------- --------------
Loss and total comprehensive
expense for the period (3,344) (9,389)
Basic loss and diluted
loss per ordinary share 5 (0.11p) (0.35p)
----------------------------- ----- -------------- --------------
The notes on pages 15 to 21 form part of this financial
information.
Consolidated Balance Sheet
as at 30 June 2017
30 June 31 December
2017 2016
Notes GBP'000 GBP'000
------------------------------ ----- --------- -----------
Assets
Non-current assets
Intangible assets 1,175 1,330
Property, plant and equipment 7 26,484 27,514
Investments 8 2,954 657
------------------------------ ----- --------- -----------
30,613 29,501
------------------------------ ----- --------- -----------
Current assets
Inventory 9 3,896 2,202
Trade and other receivables 10 8,532 6,904
Current tax assets 5,500 3,000
Cash and cash equivalents 11 10,182 15,335
------------------------------ ----- --------- -----------
28,110 27,441
------------------------------ ----- --------- -----------
Current liabilities
Trade and other payables 12 8,021 6,003
Deferred income 13 5,407 3,313
13,428 9,316
------------------------------ ----- --------- -----------
Net current assets 14,682 18,125
------------------------------ ----- --------- -----------
Non-current liabilities
Loans 14 33,872 34,389
Provisions 15 626 622
------------------------------ ----- --------- -----------
34,498 35,011
------------------------------ ----- --------- -----------
Net assets 10,797 12,615
------------------------------ ----- --------- -----------
Shareholders' equity
Share capital 16 30,886 30,879
Share premium 16 154,045 154,036
Reserves 3,407 2,189
Accumulated losses (177,541) (174,489)
------------------------------ ----- --------- -----------
Total equity 10,797 12,615
------------------------------ ----- --------- -----------
The notes on pages 15 to 21 form part of this financial
information.
Consolidated Statement of Cash Flows
for the six months ended 30 June 2017
Six months Six months
ended ended
30 June 2017 30 June 2016
Notes GBP'000 GBP'000
------------------------------- ----- ------------- -------------
Cash flows from operating
activities
Cash used in operations 18 (1,268) (698)
Tax credit received - 3,437
------------------------------- ----- ------------- -------------
Net cash (used in)/generated
from operating activities (1,268) 2,739
------------------------------- ----- ------------- -------------
Cash flows from investing
activities
Purchases of property,
plant and equipment 7 (978) (5,983)
Interest received 17 5
------------------------------- ----- ------------- -------------
Net cash used in investing
activities (961) (5,978)
------------------------------- ----- ------------- -------------
Cash flows from financing
activities
Interest paid (7,494) (1,718)
Proceeds from issue of
ordinary share capital 16 8,101
Costs of share issues - (589)
Loans received 14 35,090 -
Loans repaid 14 (30,536) -
Net cash (used in)/generated
from financing activities (2,924) 5,794
------------------------------- ----- ------------- -------------
Net (decrease) / increase
in cash and cash equivalents (5,153) 2,555
Cash and cash equivalents
at 1 January 15,335 9,355
Cash and cash equivalents
at 30 June 11 10,182 11,910
------------------------------- ----- ------------- -------------
The notes on pages 15 to 21 form part of this financial
information.
Statement of Changes in Equity Attributable to Owners of the
Parent
for the six months ended 30 June 2017
Reserves
-------------------------------
Share Share Merger Treasury Warrant Accumulated
capital premium reserve reserve reserve(1) Losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
At 1 January 2016 25,741 141,677 2,291 (102) - (158,713) 10,894
Six months ended
30 June 2016:
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
Loss for the period - - - - - (9,389) (9,389)
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
Total comprehensive
expense for the period - - - - - (9,389) (9,389)
Transactions with
owners:
Share options
Proceeds from shares
issued 7 12 - - - - 19
Value of employee
services - - - - - 263 263
Issue of shares excluding
options 1,284 6,798 - - - - 8,082
Cost of share issues - (589) - - - - (589)
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
At 30 June 2016 27,032 147,898 2,291 (102) - (167,839) 9,280
Six months ended
31 December 2016:
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
Loss for the period - - - - - (7,252) (7,252)
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
Total comprehensive
expense for the period - - - - - (7,252) (7,252)
Transactions with
owners:
Share options
Proceeds from shares
issued 13 27 - - - - 40
Value of employee
services - - - - - 602 602
Issue of shares excluding
options 3,834 7,647 - - - - 11,481
Cost of share issues - (1,536) - - - - (1,536)
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
At 31 December 2016 30,879 154,036 2,291 (102) - (174,489) 12,615
Six months ended
30 June 2017:
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
Loss for the period - - - - - (3,344) (3,344)
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
Total comprehensive
expense for the period - - - - - (3,344) (3,344)
Transactions with
owners:
Share options
Proceeds from shares
issued 7 9 - - - - 16
Value of employee
services - - - - - 292 292
Issue of warrants - - - - 1,295 - 1,295
Costs related to
issue of warrants - - - - (77) - (77)
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
At 30 June 2017 30,886 154,045 2,291 (102) 1,218 (177,541) 10,797
-------------------------- -------- -------- -------- -------- ----------- ----------- --------
(1) Refer note 17 for further information
The notes on pages 15 to 21 form part of this financial
information.
Notes to the Financial Information
1. General information and basis of preparation
These condensed consolidated interim financial statements for
the six months ended 30 June 2017 have been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34 Interim Financial Reporting as adopted by
the European Union. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group
for the year ended 31 December 2016.
These condensed consolidated interim financial statements do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
December 2016 were approved by the Board of Directors on 15 March
2017 and have been delivered to the Registrar of Companies. The
report of the Auditors on the 2016 accounts was unqualified.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 16 August 2017. They have not
been audited.
The Company is a public limited company incorporated and
domiciled in the UK. The Company is listed on the London Stock
Exchange.
2. Going concern
At 31 July 2017 the Group held cash amounting to GBP22.1
million. The Directors are of the opinion that the Group has
sufficient working capital for its present requirements, that is,
for at least 12 months from the date of this announcement. The
Directors therefore consider it appropriate to adopt the going
concern basis of accounting in preparing the interim financial
information.
3. Accounting policies
The accounting policies applied in these interim financial
statements are consistent with those of the annual financial
statements for the year ended 31 December 2016, as described in
those annual financial statements.
Accounting developments
The Directors have considered all new standards, amendments to
standards and interpretations which are mandatory for the first
time for the financial year beginning 1 January 2017 and there are
none which impact the group in the period.
Use of estimates and assumptions
In applying the Group's accounting policies, management is
required to make judgements and assumptions concerning the future
in a number of areas. Actual results may be different from those
estimated using these judgements and assumptions.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were in the
same areas as those that applied to the consolidated financial
statements for the year ended 31 December 2016. Specifically these
are revenue recognition, intangible asset impairment, and going
concern.
4. Segmental analysis
The chief operating decision-maker has been identified as the
Senior Executive Team (SET), comprising the executive directors,
Chief Scientific Officer and Chief Technical Officer. The SET
monitors the performance of the Group in two business segments:
(i) Partnering - providing lentiviral vector bioprocessing and
process development services to partners;
(ii) R&D - the development of in-vivo and ex-vivo gene and
cell therapy products which are owned by the Group, and the
development of lentivirus-related platform technology which can
improve the efficacy of therapeutic products or the vector
manufacturing processes. Included within this category is clinical
and pre-clinical product development and also the development of
technical intellectual property.
Revenues, other operating income and operating loss by
segment
EBITDA and Operating loss represent our 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.
Partnering R&D Total
H1 2017 GBP'000 GBP'000 GBP'000
=============================== ========== ============ =============
Revenue 15,453 241 15,694
Other operating income 602 240 842
Operating EBITDA 3,007 (5,069) (2,062)
Depreciation, amortisation and
share based payment (1,586) (869) (2,455)
Other gains - 2,297 2,297
Operating profit/(loss) 1,421 (3,641) (2,220)
=============================== ========== ============ =============
Partnering R&D Total
H1 2016 GBP'000 GBP'000 GBP'000
=============================== ========== ============ =============
Revenue 11,556 929 12,485
Other operating income 1,104 432 1,536
Operating EBITDA 219 (5,431) (5,212)
Depreciation, amortisation and
share based payment (1,166) (564) (1,730)
Operating loss (947) (5,995) (6,942)
=============================== ========== ============ =============
Other operating income includes process development income of
GBP0.5 million (2016: GBP0.8 million) and grant income of GBP0.3
million (2016: GBP0.7 million). Grant income of GBP0.2 million
(2016: GBP0.4 million) from Innovate UK to fund clinical and
pre-clinical development is included within the R&D segment
whilst grant income of GBP0.1 million (2016: GBP0.3 million) from
AMSCI (UK Government's Advanced Manufacturing Supply Chain
Initiative) to develop our supply chain capabilities is included
within Partnering. Process development income is included within
the Partnering 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.
5. Basic loss and diluted loss per ordinary share
The basic loss per share of 0.11p (2016: 0.35p) has been
calculated by dividing the loss for the period by the weighted
average number of shares of 3,088,264,844 in issue during the six
months ended 30 June 2017 (six months ended 30 June 2016:
2,664,846,105).
As the Group is loss-making, there were no potentially-dilutive
ordinary shares in either period which would serve to increase the
loss per ordinary share. There is therefore no difference between
the loss per ordinary share and the diluted loss per ordinary
share.
6. Finance income and costs
Finance costs of GBP3.6 million (2016: GBP5.0 million) consists
of interest payable of GBP5.3 million (2016: GBP2.4 million) on
repayment the Oberland loan facility, which was repaid on 29 June
2017, and foreign exchange gains on the loan of GBP1.7 million
(2016: GBP2.6 million loss).
7. Property, plant & equipment
Bioprocessing
Office and
Freehold Leasehold equipment Laboratory
property improvements and computers equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- ------------- -------------- ------------- -------
Cost
At 1 January
2017 20,902 6,970 1,651 6,488 36,011
Additions at
cost 168 11 318 481 978
At 30 June 2017 21,070 6,981 1,969 6,969 36,989
---------------- --------- ------------- -------------- ------------- -------
Depreciation
At 1 January
2017 2,306 2,798 877 2,516 8,497
Charge for the
period 993 234 454 327 2,008
---------------- --------- ------------- -------------- ------------- -------
At 30 June 2017 3,299 3,032 1,331 2,843 10,505
---------------- --------- ------------- -------------- ------------- -------
Net book amount
at
30 June 2017 17,771 3,949 638 4,126 26,484
---------------- --------- ------------- -------------- ------------- -------
8. Investments
In November 2016 the Group received a 1.95% equity stake in
Orchard Therapeutics under the terms of the collaboration and
licence agreement. A revaluation of this investment has been
carried out and a gain of GBP2.3 million recognised during the
first six months of 2017. As Orchard Therapeutics is a private
company the investment has not been valued based on observable
market data.
The aggregate fair value of the equity investment in Orchard
Therapeutics is GBP3.0 million (31 December 2016: GBP0.7
million).
30 June 31 December
2017 2016
GBP'000 GBP'000
----------------------------------- -------- -----------
At 1 January 2017 657 -
Recognition of milestones/upfronts - 657
Revaluation of investments 2,297 -
----------------------------------- -------- -----------
At 30 June 2017 2,954 657
----------------------------------- -------- -----------
9. Inventory
30 June 31 December
2017 2016
GBP'000 GBP'000
----------------- -------- -----------
Raw materials 3,062 2,120
Work-in-progress 834 82
----------------- -------- -----------
Inventory 3,896 2,202
----------------- -------- -----------
Inventories constitute raw materials held for commercial
bioprocessing purposes, and work-in-progress inventory related to
contractual bioprocessing obligations.
10. Trade and other receivables
30 June 31 December
2017 2016
GBP'000 GBP'000
---------------------------------- -------- -----------
Trade receivables 1,851 1,969
Accrued income 3,958 2,919
Other receivables 174 238
Other tax receivable 1,393 1,330
Prepayments 1,156 448
---------------------------------- -------- -----------
Total trade and other receivables 8,532 6,904
---------------------------------- -------- -----------
11. Cash and cash equivalents
30 June 31 December
2017 2016
GBP'000 GBP'000
------------------------- -------- -----------
Cash at bank and in hand 10,182 15,335
------------------------- -------- -----------
12. Trade and other payables
30 June 31 December
2017 2016
GBP'000 GBP'000
------------------------------- -------- -----------
Trade payables 4,080 1,576
Other taxation and social
security 523 442
Accruals 3,418 3,985
------------------------------- -------- -----------
Total trade and other payables 8,021 6,003
------------------------------- -------- -----------
13. Deferred income
Deferred income arises when the Group has received payment for
services in excess of the stage of completion of the services being
provided.
14. Loans
On 29 June 2017 the Group completed a new $55 million debt
facility with Oaktree Capital Management ("Oaktree"). The facility
has been used to redeem the debt facility with Oberland Capital
Healthcare.
The Oaktree loan is repayable no later than 29 June 2020
although it may be repaid, at the Group's discretion, at any time
subject to early prepayment fees and an exit fee. The loan carries
an interest rate of 9.0% plus US$ LIBOR, subject to a minimum of
1%. Subject to achieving certain conditions, the interest rate
could reduce by 0.25% in the second year and a further 0.25% in the
third year. The loan was issued at an original discount of 2.5%,
and under the agreement the Company has issued 134,351,226 warrants
to Oaktree (note 17). The loan is secured over all assets of the
Group including intellectual property. The terms also include
financial covenants relating to the achievement of revenue targets
and a requirement to hold a minimum of $5 million cash at all
times.
On initial recognition, the Oaktree loan, net of the expenses
incurred in the refinancing which are treated as prepaid expenses,
was fair valued at GBP33.9 million.
In May 2015, the Group entered into a $50 million loan facility
with Oberland. The Group drew down $40 million (GBP26.1million) of
the facility to finance the Group's expansion of its bioprocessing
and laboratory capacity in order to enable it to deliver on
commitments under its bioprocessing agreement with Novartis. Over
the course of the loan term, cash interest was payable quarterly at
an annual interest rate of 9.5% plus the greater of 1% and three
month LIBOR. The loan was issued at an original discount of 2.5%,
and a repayment fee was also due on repayment. In addition to
interest, the Group would also have been required to pay an
additional amount of 0.35% of its annual worldwide net revenue from
1 April 2017 to 31 December 2025 for each $5 million of loan drawn
down over $30 million.
As the loan was repaid after the second anniversary, under the
terms of the agreement, there was a true-up payment payable to
ensure that Oberland received an aggregate return of 15% per annum
over the period of the loan. The Group was also required to
maintain a cash balance of not less than $10 million in a
ring-fenced account whilst the Oberland Facility was
outstanding.
The Oberland Facility was fully repaid on 29 June 2017 at a cost
of GBP36.3 million including the accrued interest of GBP5.3
million.
15. Provisions
The dilapidations provision of GBP0.6 million (2016: GBP0.6
million) relates to anticipated costs of restoring the leasehold
Yarnton property in Oxford, UK to its original condition at the end
of the present lease in 2024, discounted using the rate per the
Bank of England nominal yield curve. The equivalent rate was used
in 2016. The provision will be utilised at the end of the lease if
it is not renewed.
16. Share capital and Share premium
At 31 December 2016 and 30 June 2017 the Company had issued
share capital of 3,088,047,310 and 3,088,726,215 ordinary 1p shares
respectively.
17. Warrant reserve
Under the Oaktree loan agreement the Company has issued
134,351,226 warrants to Oaktree, equivalent to 4.4% of the enlarged
Group's share capital. The warrants are exercisable at the nominal
share price of 1p and may be exercised at any time over the next
ten years. The warrants have been fair valued at GBP1.2 million net
of related expenses and this amount has been credited to the
warrant reserve.
18. Cash flows from operating activities
Reconciliation of operating loss to net cash used in
operations
Six months
ended Six months ended
30 June 2017 30 June 2016
GBP'000 GBP'000
------------------------------- --------------- ------------------
Continuing operations
Operating loss (2,220) (6,942)
Adjustment for:
Depreciation 2,008 1,295
Amortisation of intangible
assets 155 172
Charge in relation to employee
share schemes 292 263
Revaluation of investments (2,297) -
Changes in working capital:
(Increase) / decrease in trade
and other receivables (1,628) 4,222
Increase / (decrease) in trade
and other payables 2,018 (928)
Increase in deferred income 2,094 1,348
Increase in provisions 4 7
Increase in inventories (1,694) (135)
------------------------------- --------------- ------------------
Net cash used in operations (1,268) (698)
------------------------------- --------------- ------------------
19. Statement of Directors' responsibilities
The Directors of Oxford BioMedica plc are set out on page 22 of
this report.
The condensed consolidated interim financial statements are the
responsibility of, and have been prepared by the Directors. The
Directors confirm that they have been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34 'Interim financial reporting' as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- An indication of important events that have occurred during
the first six months 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 financial year;
and
-- Material related party transactions in the first six months
and any material change in related-party transactions described in
the last annual report.
By order of the Board
John Dawson
Chief Executive Officer
16 August 2017
Shareholder Information
Directors Corporate Broker
Lorenzo Tallarigo Jefferies International
(Non-executive Chairman) Limited
John Dawson Vintners Place
(Chief Executive Officer) 68 Upper Thames Street
Tim Watts London EC4V 3BJ
(Chief Financial Officer Financial Adviser
and Company Secretary) WG Partners
Peter Nolan 85 Gresham Street
(Chief Business Officer) London EC2V 7NQ
Andrew Heath Financial and Corporate
(Deputy Chairman and Communications
Senior Independent Director) Consilium Strategic Communications
Martin Diggle 41 Lothbury
(Non-executive Director) London EC2R 7HG
Stuart Henderson Registered Auditors
(Independent Non-executive PricewaterhouseCoopers
Director) LLP
3 Forbury Place
23 Forbury Road
Reading
RG1 3JH
Solicitors
Covington & Burling LLP
265 Strand
London WC2R 1BH
Registrars
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Company Secretary and
Registered Office
Tim Watts
Windrush Court
Transport Way
Oxford OX4 6LT
Tel: +44 (0) 1865 783
000
Fax:+44 (0) 1865 783 001
enquiries@oxfordbiomedica.co.uk
www.oxfordbiomedica.co.uk
------------------------------ ------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
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