OXFORD BIOMEDICA PLCINTERIM RESULTS FOR
THE SIX MONTHS ENDED 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
- £2 million Innovate UK collaboration to further enhance
LentiVector® platform suspension technology
- Proprietary TRiP yield enhancement technology published in
prestigious journal Nature Communications
FINANCIAL HIGHLIGHTS
- Revenue increased by 26% to £15.7 million (H1 2016: £12.5
million)
- Operating loss reduced to £2.2 million (H1 2016: £6.9
million)
- Cash outflow before financing activities reduced to £2.2
million (H1 2016: £3.2 million)
- Debt refinancing completed with significantly improved terms
from $55 million Oaktree Capital Management facility
- Cash at 30 June 2017 £10.2 million (31 December 2016: £15.3
million)
- At 31 July 2017 the cash balance was £22.1 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
5700Mary-Jane Elliott/Matthew Neal/Philippa Gardner/Laura
ThorntonConsilium Strategic Communications
Jefferies (Corporate Broker):
Tel: +44 (0)20 7029
8000Gil Bar-NahumSimon HardyLee MortonMax JonesNicholas 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®
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 progressDuring 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 progressAt 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 indicationIn 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 agreementBased 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® platformThe
Group's lentiviral vector delivery system, the LentiVector®
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® platform bioprocessing capabilities, with capacity for
in-house platform development work, current partners' requirements
and future collaborations.
Regulatory approvalsIn 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 bioprocessingThe 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 collaborationIn 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 £2 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 technologyIn 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 developmentThe LentiVector® 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 progressDuring 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
developmentDuring 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® 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® 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 (£16.5 million) increased by 18% over H1 2016
(£14.0 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 £1.3 million was greater than the
£0.7 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 £6.0 million in 2016 to £1.0
million in 2017
- Cash outflow before interest and R&D tax credit reduced
from £6.7 million to £2.2 million
- Cash at 30 June 2017 was £10.2 million compared to £11.9
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
£22.1 million.
KEY FINANCIAL INDICATORS (£ m) |
H1 2017 |
H1 2016 |
|
|
|
|
Gross income |
Bioprocessing/commercial 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 £16.5 million in H1 2017, 18% above
the £14.0 million in H1 2016.
£m |
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
£m |
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 £18.6 million,
compared with £19.2 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 £8.1 million was 19% higher
than the £6.8 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 £2.1 million was £3.1 million better
than the £5.2 million loss in 2016.
The table below shows the costs by type of
expenditure (excluding depreciation, amortisation and share option
charges):
£m |
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
£m |
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 £2.2
million in H1 2017 compared with £6.9 million in 2016.
The interest charge of £3.6 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 £3.3 million, £6.1 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
£m |
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
£m |
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
£m |
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 £2.1 million, reduced from £5.2
million in the same period of 2016. Working capital inflow of £0.8
million was lower than in H1 2016 when there had been significant
inflows due to a reduction in receivables. Capital
expenditure was £1.0 million in the first six months of 2017,
compared with £6.0 million in the first six months of 2016 when the
Group was completing its capacity expansion programme.
Interest paid, £7.5 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 £27.5 million to £26.5 million in the
first six months of 2017 as the additions of £1.0 million were more
than offset by the depreciation charge. Investments increased from
£0.7 million to £3.0 million due to the revaluation of the equity
investment in Orchard Therapeutics.
Current assets - Trade and other receivables
increased from £6.9 million to £8.5 million due to increased
revenues, whilst inventory rose to £3.9 million from £2.2 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 £6.0 million at the start of the year to £8.0
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 £15.3 million. Cash outflow from operations, interest payments
and capital expenditure amounted to £9.8 million and there was an
inflow of £4.6 million from the loan refinancing, resulting in a
cash balance at 30 June 2017 of £10.2 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
£22.1 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 (£38.5
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 £33.9 million balance within
loans, and the fair value of the warrants of £1.2 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 £22.1 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 Incomefor the
six months ended 30 June 2017
|
|
Six
months ended 30 June 2017 |
Six
months ended 30 June 2016 |
|
Notes |
£'000 |
£'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
|
Notes |
30 June2017£'000 |
31 December2016£'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 Flowsfor the six months
ended 30 June 2017
|
Notes |
Six months ended30 June 2017£'000 |
Six months ended30 June 2016£'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 capital£'000 |
Share premium£'000 |
Merger reserve£'000 |
Treasury reserve £'000 |
Warrant reserve1 £'000 |
Accumulated Losses£'000 |
Total£'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 |
1Refer note 17 for further information
The notes on pages 15 to 21 form part of this
financial information.
Notes to the Financial Information
- 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.
- Going concern
At 31 July 2017 the Group held cash amounting to
£22.1 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.
- 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 developmentsThe 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 assumptionsIn 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.
- 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:
- Partnering - providing lentiviral vector bioprocessing and
process development services to partners;
- 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
segmentEBITDA 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.
H1
2017 |
Partnering£'000 |
R&D£'000 |
Total£'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) |
H1
2016 |
Partnering£'000 |
R&D£'000 |
Total£'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 £0.5 million (2016: £0.8 million) and grant
income of £0.3 million (2016: £0.7 million). Grant income of £0.2
million (2016: £0.4 million) from Innovate UK to fund clinical and
pre-clinical development is included within the R&D segment
whilst grant income of £0.1 million (2016: £0.3 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.
- 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.
- Finance income and costs
Finance costs of £3.6 million (2016: £5.0
million) consists of interest payable of £5.3 million (2016: £2.4
million) on repayment the Oberland loan facility, which was repaid
on 29 June 2017, and foreign exchange gains on the loan of £1.7
million (2016: £2.6 million loss).
- Property, plant & equipment
|
Freehold property |
Leaseholdimprovements |
Office equipment and computers |
Bioprocessing and Laboratory equipment |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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 |
- 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 £2.3 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 £3.0 million (31 December
2016: £0.7 million).
|
30 June2017£'000 |
31 December2016£'000 |
At 1 January 2017 |
657 |
- |
Recognition of
milestones/upfronts |
- |
657 |
Revaluation of investments |
2,297 |
- |
At 30
June 2017 |
2,954 |
657 |
- Inventory
|
30 June2017£'000 |
31 December2016£'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.
- Trade and other receivables
|
30 June2017£'000 |
31 December2016£'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 |
- Cash and cash equivalents
|
30 June2017£'000 |
31 December2016£'000 |
Cash
at bank and in hand |
10,182 |
15,335 |
- Trade and other payables
|
30 June2017£'000 |
31 December2016£'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 |
- 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.
- 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 £33.9 million.
In May 2015, the Group entered into a $50
million loan facility with Oberland. The Group drew down $40
million (£26.1million) 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 £36.3 million including the accrued interest
of £5.3 million.
- Provisions
The dilapidations provision of £0.6 million
(2016: £0.6 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.
- 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.
- 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 £1.2
million net of related expenses and this amount has been credited
to the warrant reserve.
- Cash flows from operating
activities
Reconciliation of operating loss to net cash used in
operations
|
Six months ended30 June 2017£'000 |
Six months ended30 June 2016£'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) |
- 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 DawsonChief Executive Officer16 August 2017
Shareholder Information
DirectorsLorenzo Tallarigo(Non-executive Chairman)
John Dawson(Chief Executive Officer) Tim Watts(Chief
Financial Officer and Company Secretary) Peter Nolan(Chief
Business Officer) Andrew Heath(Deputy Chairman and Senior
Independent Director) Martin Diggle(Non-executive Director)
Stuart Henderson(Independent Non-executive Director) |
Corporate BrokerJefferies International LimitedVintners
Place68 Upper Thames StreetLondon EC4V 3BJ
Financial Adviser WG Partners85 Gresham StreetLondon EC2V
7NQ Financial and Corporate CommunicationsConsilium
Strategic Communications41 LothburyLondon EC2R 7HG
Registered AuditorsPricewaterhouseCoopers LLP3 Forbury
Place23 Forbury RoadReadingRG1 3JH
SolicitorsCovington & Burling LLP265 StrandLondon WC2R
1BH RegistrarsCapita Asset ServicesThe
Registry34 Beckenham RoadBeckenhamKent BR3 4TU
Company Secretary and Registered OfficeTim WattsWindrush
CourtTransport WayOxford OX4 6LT Tel: +44 (0) 1865 783
000Fax:+44 (0) 1865 783 001
enquiries@oxfordbiomedica.co.ukwww.oxfordbiomedica.co.uk
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