Oxford Biomedica plc Preliminary results for the year ended 31 December 2019
Oxford Biomedica plc
Preliminary results for the year ended 31 December 2019
Building the Group for future growth
Oxford, UK – 6 May 2020: Oxford Biomedica plc (LSE: OXB), (“OXB” or “the Group”), a leading gene and cell therapy group, today announces its preliminary results for the year ended 31 December 2019.
FINANCIAL HIGHLIGHTS
- Bioprocessing and commercial development revenues increased to £47.3 million (2018: £40.5 million). Despite the capacity constraints within the business, growth in full year revenues of 17% was achieved, driven by double digit growth across both activities
- Licences, milestones & royalties revenues were £16.8 million (2018: £26.3 million) with a £11.5 million ($15 million) contribution from the Axovant milestone and strongly growing royalties. These revenues were 36% lower than the prior year which saw significant licence income received on signing the Sanofi (Bioverativ) and Axovant agreements in 2018
- Total revenues decreased by 4% to £64.1 million (2018: Revenue of £66.8 million) due to lower milestone and licensing revenue
- Operating expenses increased by 57% from £26.6 million to £41.8 million reflecting investment in bioprocessing operations and people in preparation for the Oxbox bioprocessing facility coming online in 2020
- Operating EBITDA loss incurred of £5.2 million (2018: £13.4 million profit)
- Operating loss incurred of £14.5 million (2018: £13.9 million profit)
- Capital expenditure £25.8 million (2018: £10.1 million) reflecting the continued capital expenditure on the new Oxbox bioprocessing facility
- Cash of £16.2 million (31 December 2018: £32.2 million)
- Cash outflow before financing activities increased by £25.7 million to £22.9 million (2018: £2.8 million inflow)
- £53.5 million of equity raised from new Investor Novo Holdings which was used to fully repay the £43.6 million ($55 million) Oaktree loan facility
OPERATIONAL HIGHLIGHTS (including post period-end events)
Novartis partnership
- Novartis extended its commercial supply agreement by a further five years in December and extended the number of lentiviral vector programmes in the collaboration from two to five. The agreement includes a minimum of $75 million over five years in manufacturing batch revenues in addition to undisclosed process development fees, with other financial terms, such as royalties, as previously agreed
- Kymriah® roll out accelerating in relapsed and refractory B-cell acute lymphoblastic leukaemia and relapsed and refractory diffuse large B-cell lymphoma with reimbursement approved in 20 countries in at least one indication
- Continued strong performance as sole global supplier of lentiviral vector for Kymriah® CAR-T therapy
New partnerships
- Collaboration, option and licence agreement established with Santen Pharmaceutical Co Ltd for development of gene therapy vectors targeting an inherited retinal disease
- Collaboration established with Microsoft Research to leverage machine learning and cloud computing to improve process efficiency and reduce costs
Proprietary product development
- First patient dosing in second cohort of SUNRISE-PD phase II study in Parkinson’s disease triggered £11.5 million ($15 million) milestone payment from partner Axovant
- The Group’s partner, Axovant, announced twelve month follow-up data in January 2020 from the first cohort of the SUNRISE-PD study on two patients where a continued improvement in UPRDS Part III ‘OFF’ Score at twelve months over the six month data was reported
Expansion of bioprocessing and laboratory facilities
- Development of major new 84,000 sqft (7,800 sqm) bioprocessing facility on target with initial building phase completed, validation ongoing and first commercial batches anticipated H1 2020
- Occupation of new 32,000 sqft (2,970 sqm) Windrush Innovation Centre (WIC) commenced during 2019 with increased utilization expected during 2020.
Post Period Highlights
- In March new licence and five-year clinical supply agreement signed with Juno Therapeutics / Bristol Myers Squibb for initially four CAR-T and TCR-T programmes. $10 million upfront payment and up to $217 million in development, regulatory and sales related milestones in addition to undisclosed process development, scale up and batch revenues and an undisclosed royalty on sales
- In the first quarter of 2020 the Group started work on an additional vector construct for Novartis which now takes the total number of active vector constructs to six
- In April the Group has joined a Consortium led by the Jenner Institute, Oxford University, to rapidly develop, scale-up and manufacture a potential vaccine candidate for COVID-19 called ChAdOx1 nCoV-19. AstraZeneca subsequently entered into an agreement with Oxford University for the global development and distribution of the vaccine on 30th April. While the potential impact on the Group is currently uncertain, should clinical trials be successful the Group will provide access to its large scale GMP manufacturing facilities including Oxbox to support the manufacturing scale up for Oxford University and AstraZeneca.
- Subsequent to year end the Group identified an issue regarding an aspect of certain process development work performed on behalf of a customer in 2018 and 2019 which potentially could give rise to a material claim against the Group. The Group has been in communication with the third party but is not yet in a position to verify or validate any information relating to this matter due to the very recent timing of this issue being identified.
John Dawson, Chief Executive Officer of Oxford Biomedica, said:
“Oxford Biomedica made good progress during 2019, extending our commercial supply agreement with Novartis for another five years, establishing a new partnership with Santen and delivering our new facilities expansion on target. Beyond the period end we also signed a new major new agreement with Juno Therapeutics / Bristol Myers Squibb. The cell and gene therapy sector continues to grow rapidly and we remain at the forefront of its innovation. Our new collaboration with Microsoft is harnessing the power of artificial intelligence to further boost the efficiency of our world-leading LentiVector® delivery platform, as we continue the process to industrialise lentiviral vector development and manufacture. We are building an exciting business, and with the significant investment by Novo Holdings in 2019, our simplified Statement of financial position places us in a stronger position to realise the potential of our world-leading technology.”
Analyst briefing
Management will be hosting a briefing for analysts via conference call and webcast at 13:00 BST (8:00 ET) on 6 May 2020.
Dial-in details are:
UK dial-in: +44 (0) 203 0095709
US dial-in: +16467871226
Participant code: 2898781
A live webcast of the presentation will be available on Oxford Biomedica’s website at https://edge.media-server.com/mmc/p/5h7ea8cf
Enquiries: | |
Oxford Biomedica plc John Dawson, Chief Executive Officer Stuart Paynter, Chief Financial Officer Catherine Isted, Head of Corporate Development & IR | T: +44 (0)1865 783 000 T: +44 (0)1865 783 000 T: +44 (0)1865 954 161 / E: ir@oxb.com |
Consilium Strategic Communications Mary-Jane Elliott/Matthew Neal | T: +44 (0)20 3709 5700 |
About Oxford Biomedica
Oxford Biomedica (LSE:OXB) is a leading, fully integrated, gene and cell therapy group focused on developing life changing treatments for serious diseases. Oxford Biomedica and its subsidiaries (the "Group") have built a sector leading lentiviral vector delivery platform (LentiVector®), which the Group leverages to develop in vivo and ex vivo products both in-house and with partners. The Group has created a valuable proprietary portfolio of gene and cell therapy product candidates in the areas of oncology, ophthalmology, CNS disorders, liver diseases and respiratory disease. The Group has also entered into a number of partnerships, including with Novartis, Bristol Myers Squibb, Sanofi, Axovant Gene Therapies, Orchard Therapeutics, Santen, Boehringer Ingelheim, the UK Cystic Fibrosis Gene Therapy Consortium and Imperial Innovations, through which it has long-term economic interests in other potential gene and cell therapy products. Oxford Biomedica is based across several locations in Oxfordshire, UK and employs more than 550 people. Further information is available at www.oxb.com
CHAIRMAN’S STATEMENT
Introduction
The Group achieved strong revenue growth in its underlying bio-processing and process development business, established new and extended partnerships and delivered on its capacity expansion programme. With these strong foundations in place, the Group is ideally placed to deliver value by pursuing its mission of curing patients as a fully integrated gene therapy company.
Building a gene and cell therapy leader
As a pioneer in its field, Oxford Biomedica has built an enviable position as a world leading lentiviral vector company. The Group brings together innovation, expertise and infrastructure that spans the entire product development and commercialisation process. This provides a uniquely diversified business model offering the prospect of long-term sustainable growth.
By spearheading the industrialisation of the lentiviral vector, Oxford Biomedica can capture significant value from the rapidly growing gene and cell therapy sector, without the major financial and clinical risks associated with a more traditional biotechnology business. The Group’s underlying bioprocessing and process development business is complemented by its wholly-owned pipeline of earlier-stage product candidates, which offer major upside potential.
Investing in innovation
The gene and cell therapy sector is maturing rapidly, as ever more products move towards commercialisation. Oxford Biomedica is taking advantage of this opportunity to lead in the industrialisation of lentiviral vectors, through ongoing investment in platform innovation, development capabilities, production capacity and expert people building the Group’s critical mass.
The Group’s investment strategy is making good progress, and a strategic investment from leading life sciences investor Novo Holdings has further strengthened our ability to accelerate this. The Group used the proceed from the Novo Holdings investment to fully repay debt and further boost its Statement of financial position to support its LentiVector® platform and in-house pipeline. By investing across its business, Oxford Biomedica is building its long-term, sustainable future. As it reaches optimal scale, the Group anticipates a smoother growth trajectory with increasingly robust and predictable income.
Investing in the team
Throughout 2019, the Group continued its transformation, with the completion of the first phase of its new Oxbox manufacturing facilities and continued delivery across its partnerships. This ongoing progress was supported by significant growth in the Oxford Biomedica team, and during the year the Group welcomed over 100 new colleagues who bring a range of production, analytical and research expertise. They are complemented by a broadened Senior Executive Team and the addition of a further Non-Executive Board Director, Robert Ghenchev, who joins the Company from Novo Holdings. The Group continues to grow at a rapid pace and is looking to strengthen the Board further with the appointment of additional Non-Executive Directors. In addition, having served four years as Chairman, I have informed the Group of my intention to retire from Oxford Biomedica's board. I will continue as Chairman while the Group completes a search for my replacement. On behalf of the Board, I would like to welcome our new colleagues, and thank all our employees for their fantastic dedication and hard work during the year, which has enabled Oxford Biomedica to build the world-leading position it holds today.
Positive outlook
The growth of the gene and cell therapy field continues at an exciting pace. With its unique capabilities and diversified business model Oxford Biomedica is ideally positioned to contribute to the sector’s success, capture value and build a world-leading business. The Group has delivered a large number of its targets in 2019, and during the coming year Oxford Biomedica looks forward to progressing each of its operating segments as it continues to meet the growing demands of the burgeoning gene and cell therapy industry.
Dr Lorenzo Tallarigo
Chairman
CHIEF EXECUTIVE OFFICER’S AND 2019 PERFORMANCE REVIEW
Introduction
Oxford Biomedica continued to make strong progress in 2019, consolidating its position as a world leading lentiviral vector company. It increased its portfolio of collaborations, with the addition of Santen to its list of partners, and advanced its pipeline of proprietary products, supporting the clinical development of AXO-Lenti-PD following its out-licensing in 2018. It continued to develop its LentiVector® cell and gene delivery platform and boosted its manufacturing business with the extension of the supply agreement for Novartis’ CAR-T portfolio. In parallel, expansion of the Group’s industrial-scale bioprocessing facilities continued on track, and its newly established collaboration with Microsoft is applying innovative machine learning to further enhance its LentiVector® platform.
Oxford Biomedica’s financial performance demonstrates the Group’s growing maturity as a leading gene and cell therapy business. The Group’s underlying business enjoyed continued strong growth, with its bioprocessing and process commercial development revenues increasing by 17%. While this was offset to some extent by lower licensing income, the Group strengthened its Statement of financial position with a major investment from Novo Holdings. As Oxford Biomedica continues its strong underlying growth, the Group anticipates further increase in manufacturing revenues smoothing its revenue trajectory as it builds an exciting long-term business maximizing the opportunity in the fast growing cell and gene therapy market.
Novartis partnership progress
Throughout 2019, the Group continued to deliver under its partnership with Novartis for the commercial and clinical supply of lentiviral vectors for Kymriah® (tisagenlecleucel, formerly CTL019) and Novartis’ broader CAR-T portfolio. Kymriah® is a ground-breaking CAR-T therapy that uses patients’ T cells to target cancer. It is indicated in relapsed and refractory B-cell acute lymphoblastic leukaemia (r/r ALL) and relapsed and refractory diffuse large B-cell lymphoma (r/r DLBCL). During 2019 it continued its rapid global roll out, and both product approvals and reimbursement continue to grow. Currently, 20 countries, including the US, Canada, Japan, Australia and a number of countries in Europe, have approved reimbursement in at least one indication. Kymriah® remains the first and only CAR-T therapy to receive regulatory approval in two distinct B-cell malignancies in these territories, and was the first lentiviral vector based therapy to be approved in the US and Europe.
In December, the success of the Novartis partnership culminated in the extension of the supply agreement for an additional five years, covering five lentiviral vectors for CAR-T products, including Kymriah®. Under the terms of the agreement, Oxford Biomedica will receive $75 million minimum of manufacturing revenues over the five years, in addition to process development and facility reservation fees and royalties on product sales as agreed in the initial 2014 collaboration. The Group remains the sole global supplier of lentiviral vector for Kymriah® and will allocate a dedicated manufacturing facility at its new Oxbox commercial production site to the partnership.
Santen partnership
In June 2019, the Group established a new partnership with leading multinational ophthalmology company Santen Pharmaceutical Co Ltd. Santen is the market leader for ophthalmic prescription pharmaceuticals in Japan and has a global presence in over 60 countries.
Under the terms of the R&D collaboration, option and licence agreement, Oxford Biomedica will develop and manufacture lentiviral vectors for novel gene therapy products targeting the treatment of an inherited retinal disease. On exercise of the option to access the Group’s LentiVector® platform and industrial-scale production capabilities, Santen will pay an undisclosed milestone, in addition to future development milestones and single-digit royalties on product sales. Under the agreement, Oxford Biomedica retains an option to partner and co-fund product development and commercialisation in the United States and Europe.
Other existing partner programmes
During the year, the Group continued to progress its portfolio of existing collaborations. These provide partners with access to its innovative LentiVector® gene and cell therapy delivery platform, development and production expertise and world-leading industrialisation capabilities.
The portfolio includes the Group’s $105 million strategic partnership with Sanofi (formally Bioverativ) for the development and manufacture of lentiviral vectors targeting the treatment of haemophilia, Orchard Therapeutics in the treatment of adenosine deaminase severe combined immunodeficiency (ADA-SCID), MPS-III A and a third undisclosed programme, as well as a collaboration with the UK Cystic Fibrosis Gene Therapy Consortium, Boehringer Ingelheim and Imperial Innovations developing a novel inhaled gene therapy for cystic fibrosis.
Proprietary product development:
Axovant Gene Therapies licensing agreement
In 2018, the Group signed an agreement estimated to be worth up to $842.5 million agreement with Axovant Sciences (now Axovant Gene Therapies) for the exclusive worldwide development and commercialisation rights to Oxford Biomedica’s internally developed gene therapy candidate for Parkinson’s disease, OXB-102 (subsequently renamed AXO-Lenti-PD). This landmark agreement validated the Group’s proprietary portfolio strategy, with product innovation and initial development conducted in-house prior to attracting partner funding for clinical development and commercialisation, while retaining significant economic interest for Oxford Biomedica. In April 2019, dosing of the first patient in the second cohort of the SUNRISE-PD phase II study of AXO-Lenti-PD triggered a £11.5 million ($15 million) milestone payment to Oxford Biomedica.
In June 2019, six-month data from the first dose cohort showed patients continued to improve across multiple metrics with no serious adverse events related to the treatment, which was generally well tolerated. In January 2020, 12-month data from this group demonstrated a continued favourable safety profile and a 37% improvement in motor function from baseline as assessed by the UPDRS Part III ‘OFF’ score. This followed an improvement of 29% at six months on the same scale. Enrolment into the second dose cohort continues and Axovant anticipates announcing six-month data from the first six patients in cohort one and two by the fourth quarter of 2020. Based on the outcome of the dose-escalation phase, and development of a suspension-based manufacturing process, Axovant expects to begin the randomised, sham-controlled portion of the study by the end of the year.
Proprietary in-house product development
In line with the Group’s proprietary portfolio strategy, Oxford Biomedica is engaged in partnering discussions to out-license or spinout a number of its pipeline product candidates. The current portfolio consists of five patient-centric products targeting a number of indications in ophthalmology, oncology, liver and CNS disorders.
Following an internal pipeline review priorities have now been set for where preclinical investment will be made to potentially take through into early stage clinical studies in the coming 12-18 months. OXB-302 is the Group’s priority candidate and targets haematological tumours with a CAR-T 5T4. Advanced preclinical work is continuing on OXB-302 as the programme moves towards entry into the clinic. OXB-203, currently in preclinical studies, is targeting Wet AMD and uses Oxford Biomedica’s technology to deliver a gene to express afibercept. This programme builds on the demonstrated long term gene expression data seen with its predecessor OXB-201, for which work has now been halted. In addition, the Group is continuing preclinical work on OXB-204 (LCA10) and OXB-103 (ALS) and a new preclinical program, OXB-401 (liver indication), has been initiated.
LentiVector® platform development
Oxford Biomedica’s LentiVector® platform is a unique combination of expertise, intellectual property and world-class facilities, all focused on the industrialisation of the lentiviral vector. This world-leading, innovationcentric platform is the foundation of the Group’s collaborations and proprietary pipeline. Oxford Biomedica’s investment strategy is designed to maintain the LentiVector® platform's leading position through constant innovation, enhanced operational efficiency and expanded capacity.
Innovation
During 2019, Oxford Biomedica extended its programme of innovation, establishing a collaboration with Microsoft Research. This aims to harness the power of artificial intelligence to enhance vector development and industrial-scale production by improving process efficiency and consistency. The collaboration will apply machine learning and cloud computing to the large datasets generated during process development, analysis and manufacture. By combining computational modelling, novel algorithms and laboratory automation the project aims to improve vector yield and purity, providing quicker, cheaper and more reliable manufacture.
The Group’s continuous improvement programme focuses on developing, refining and enhancing its technology. In recent years, Oxford Biomedica has developed its proprietary Transgene Repression in vector Production (TRiP) manufacturing system to dramatically improve vector yields, and its LentiStable™ packaging and producer cell lines to enable scalable, cost-effective manufacturing. Ongoing investment in high-throughput automation and robotics is streamlining production, reducing costs and enabling faster screening and analytical testing.
Capacity expansion
As the cell and gene therapy field continues to expand, the Group leased an additional facility in Oxford at the end of 2018 to meet the anticipated higher demand for lentiviral vectors. The new 84,000 sqft (7,800 sqm) facility, Oxbox, complements Oxford Biomedica’s three existing state-of-the-art GMP production suites. The development phase fits out approximately 45,000 sqft (4,200 sqm) in the new facility with four GMP clean rooms, two fill/ finish suites, offices, warehousing and QC laboratories, with the remaining fallow area to be developed in future at the appropriate time.
During 2019, facility development made good progress, with the production suites’ building phase completed by the end of the year as planned. Validation is currently ongoing, and the Group anticipates achieving regulatory approval and manufacture of the first commercial batches by the end of the second half of 2020. In parallel, development of the Fill / Finish suites is progressing well, with hand over expected by the end of the year. As announced in December, Oxford Biomedica will have a dedicated manufacturing suite for Novartis within Oxbox.
Alongside the expansion of Oxford Biomedica’s manufacturing capacity, the Group is in the process of establishing the Windrush Innovation Centre (WIC), a new 32,000 sqft (2,970 sqm) discovery and innovation hub. This brings together research, automation, process development and bioprocessing teams to drive LentiVector® platform innovation and progress the proprietary pipeline. Occupation of the facility began during the first half of 2019 with increased utilisation expected during 2020.
With the addition of these two new facilities, Oxford Biomedica has more than doubled its footprint, which now extends to over 226,000 sqft (21,000 sqm). With its five specialist facilities centred around Oxford, the Group has built a global hub for lentiviral vector development and commercialisation.
Investment progress
In the first half of 2019, Oxford Biomedica received major support from leading life sciences investor Novo Holdings. At the end of May 2019, Novo Holdings invested £53.5 million in the Group in return for new ordinary shares issued at the prevailing market rate, representing 10.1% of the newly enlarged outstanding share capital. Oxford Biomedica utilised the funds to repay the £43.6 million debt facility provided previously by Oaktree Capital Management, thereby simplifying and strengthening the Group’s Statement of financial position. The Group invested the balance of the proceeds in its LentiVector® platform and in-house pipeline programmes.
Organisational progress
As a highly-regarded long-term investor with a successful track record of working with innovative life sciences companies, Novo Holdings was granted the right to appoint a Non-Executive Director under the terms of its subscription agreement. Following the issuance of the new shares, the Group welcomed Robert Ghenchev to the Board. Robert is a Head of Novo Growth at Novo Holdings and brings a wealth of corporate finance experience to Oxford Biomedica.
During the year, the wider Oxford Biomedica team also continued to grow, reflecting the rapid expansion of the business. The Senior Executive Team was strengthened with the addition of two positions: General Counsel and Chief Medical Officer. This growth was mirrored across the business as the Group continued its facilities expansion programme. Headcount increased as planned with the total reaching 554 at the end of the year, compared with 432 at the end of 2018, with significant growth in the bioprocessing, analytics and platform research teams.
Assessment of COVID-19 Potential impact
The Group has conducted an assessment of the potential financial and operational risks to the business and has implemented a daily senior management working group to monitor current COVID-19 developments, GOV.UK guidance and to direct the Group’s phased response.
The Group takes comfort from:
- The day to day changes in working practices put in place to protect our employees seem to be effective, with work continuing on in an as near to normal way as possible
- Revenues and their subsequent receipts are based on long term contracts with financially sound and resilient companies
- The Group has a stronger and more diversified customer base than it has had previously
- The Group has key worker status which allows us to continue providing services to our customers throughout the lockdown period
While the Group is yet to experience any significant impact from the virus, there may be an impact on revenue, supply chain and operating facilities if the situation continues or worsens. Management continues to constantly monitor the ongoing situation.
Outlook
In the coming year, Oxford Biomedica plans to build on the progress made across its business in 2019. The Group anticipates continued strong revenue growth from its portfolio of bioprocessing and development partnerships, including its extended supply agreement with Novartis. With its new Oxbox manufacturing facility coming on stream during 2020, the Group will have significant additional capacity to serve the rapidly growing gene and cell therapy sector. The Group anticipates adding further partnerships during the year, as well as expanding the number of existing partner programmes
entering development.
During 2020, Oxford Biomedica intends to continue its investment strategy, bringing its Oxbox manufacturing facility online, increasing its laboratory capacity, training its newly-enlarged team and maintaining the innovation that underpins its world-leading LentiVector® platform and proprietary portfolio. With the Oxbox construction phase of the 45,000 sqft (4,200 sqm) building fully completed in 2019, the Group anticipates somewhat lower capex expenditure in 2020, with higher operating expenses due to the enlarged team working on the Group’s partnerships.
The Group also plans to attract third-party funding to progress the clinical development of its in-house proprietary products. While the timing of these transactions is less predictable than ongoing delivery under bioprocessing agreements, the 2018 $842.5 million Axovant collaboration demonstrates the potential to create significant shareholder value.
With the ongoing success of its Novartis collaboration and progress across its other partnerships validating the LentiVector® platform, the Group has built an industry leading position. As it continues to invest in its future, it intends to progress each segment of its business. By leveraging its strong and growing bioprocessing and development business to smooth less predictable but potentially significant licensing income, Oxford Biomedica intends to drive forwards long-term stable profitability whilst delivering major benefits for patients, partners and shareholders alike. Despite the COVID-19 pandemic, the Group looks forward to another successful year and is making encouraging progress towards this goal.
John Dawson
Chief Executive Officer
FINANCIAL REVIEW
Operational transformation
In 2019, the Group moved towards completion of phase 1 of its Oxbox bioprocessing facility and made many other investments in its goal to industrialise the process of making Lentiviral vectors. The first two clean rooms are expected to be producing commercial and clinical batches in 2020. Importantly, the Group will bring Fill & Finish in house for the first time in this new facility. This will provide our customers with an end to end offering. We will continue to make selective investments in infrastructure to both have the capacity for new customers and to innovate valuable Intellectual Property to add to our offering.
The Group has continued to build on the significant commercial success achieved during 2018. Bioprocessing and commercial development revenue increased by 17% with growth driven by the new commercial arrangements signed with Axovant, Sanofi (Bioverativ) and the UK Cystic Fibrosis Gene Therapy Consortium, and increased bioprocessing volumes as a result of Novartis’ continued commercial roll-out of Kymriah® across the globe with the product now having approved reimbursement in 20 countries.
A 5 year extension to the current commercial supply agreement with the Group’s long term partner, Novartis, was signed in December 2019, and a new research and development collaboration was signed with Santen. A significant clinical milestone was reached by Axovant with the dosing of the first patient in the second cohort of the AXO-Lenti-PD Parkinson’s disease clinical trial, triggering a £11.5 million ($15 million) milestone to Oxford Biomedica. The Group also made significant improvements to its Statement of financial position with £53.5 million of equity raised from new Investor Novo Holdings which was used to fully repay the £43.6 million ($55 million) Oaktree loan.
Selected highlights are as follows:
-Revenues from the underlying bioprocessing and commercial development business continued to show good year on year growth. Despite the capacity constraints within the business, growth in full year revenues of 17% was achieved driven by double digit growth across both activities. Revenues from the bioprocessing and commercial development business has now increased by 557% since 2013
— Revenues from milestones, licences and royalties declined 36% on the prior year with the £11.5 million ($15 million) Axovant milestone and strongly growing royalties unable to compensate for the sizable licence income received on signing the Sanofi (Bioverativ) and Axovant agreements in 2018. The timing of receipt of milestone and licence revenues are, by nature, hard to predict especially when connected to the execution of new licence and supply agreements
— Total revenues decreased by 4% over 2018, but has now increased by 371% since 2013 when the revenue generating Platform division was created
— In 2019 the Group did not recognise revenues of £1.8 million (2018: Nil) relating to an estimate of bioprocessed product for which revenue has previously been recognised and which may be reversed should the product go out of specification
— Operating EBITDA1 and operating profits slipped back into a loss-making position due to lower milestone and licensing revenue and investment by the Group into its bioprocessing operations and people in preparation for the Oxbox bioprocessing facility coming online in 2020
— The Product division made an Operating EBITDA1 profit of £6.5 million (2018: £3.6 million) and an operating profit of £5.7 million (2018: £2.5 million)
— Cash used in operations of £6.6 million in 2019 (2018: £9.2 million inflow) reflected revenue mix and the operational investments explained above
— £53.5 million of equity was raised from new Investor Novo Holdings which was used to fully repay our £43.6 million ($55 million) Oaktree loan facility
— Cash at 31 December was £16.2 million (2018: £32.2 million) reflecting the continued capital expenditure on the new Oxbox bioprocessing facility
1. Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation, revaluation of investments and assets at fair value through profit & loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 12.
Overview
The slight decrease in revenues was largely driven by the fact that the £11.5 million ($15 million) milestone triggered with the dosing of the first patient in the second cohort of the AXO-Lenti-PD Parkinson’s disease clinical trial, and the 17% increase in the Bioprocessing and commercial development revenue, was just not sufficient to offset the £18.3 million worth of license revenue received in 2018 as a result of the Axovant and Bioverativ (Sanofi) deals. Bioprocessing and commercial development revenues increased from the prior year with double digit growth across both activities.
Operating costs, including Cost of Sales, grew by 30%, and by 29% when non-cash items1 are excluded. Manpower and facility costs have increased as the Group invested heavily in its bioprocessing operations and people in preparation for the Oxbox bioprocessing facility coming online in 2020. This investment is expected to allow the Group to meet increasing customer demand, both for bioprocessing and commercial development services, thereby positioning for future growth in activities in 2020 and beyond. Headcount rose from 432 at December 2018 to 555 at the end of 2019.
The Group has also recognised a £1.9m loss on revaluation of the Orchard Therapeutics investment asset after the share price gave up some of the large gains (2018: £6.0 million) achieved during 2018, although this was fully offset by a £2.3 million increase in the R&D tax credit as the Group incurred additional qualifying research and development expenditure in 2019.
The signing of commercial contracts in 2018 with Axovant, Sanofi (Bioverativ) and the UK Cystic Fibrosis Gene Therapy Consortium, the five year extension to the current commercial supply agreement with Novartis, and a new research and development collaboration with Santen in 2019 have strengthened the Group’s commercial pipeline, diversified the Group’s customer base and bolstered the Group’s commercial development revenues in 2019. Additional commercial development and bioprocessing revenues are expected from these partnerships in the future. The Group will ensure that it continues to foster its current strong customer relationships, whilst continuing the Group’s stated aim of targeting new strategic commercial partnerships to build on the platform of established growth.
The Group will continue its proven strategy of developing its proprietary technologies, processes and products, and will seek partnerships for later stage clinical studies. The Group has recently undertaken a review of its pipeline to determine which programmes it would focus on in preclinical development to potentially take through into early stage clinical studies in the coming 12-18 months. The Group will continue to assess the financial risk/reward profile of these projects and will seek to provide maximal returns to shareholders accordingly
The Group evaluates its performance by making use of alternative performance measures as part of its Key Financial Performance Indicators (refer following table). The Group believes that these Non-GAAP measures, together with the relevant GAAP measures, provide an accurate reflection of the Group’s performance over time. The Board has taken the decision that the Key Financial Performance Indicators against which business will be assessed are Revenue, Operating EBITDA and Operating Profit/(loss).
Key Financial and Non-Financial Indicators
Key Financial Performance Indicators | |||||
£m | 2019 | 2018 | 2017 | 2016 | 2015 |
Revenue | |||||
Bioprocessing / commercial development | 47.3 | 40.5 | 31.8 | 22.6 | 11.3 |
Licences, milestones & royalties | 16.8 | 26.3 | 5.8 | 5.2 | 4.6 |
Total Revenues | 64.1 | 66.8 | 37.6 | 27.8 | 15.9 |
Operations | |||||
Operating EBITDA1 | (5.2) | 13.4 | (1.9) | (7.1) | (12.1) |
Operating profit/(loss) | (14.5) | 13.9 | (5.7) | (11.3) | (14.1) |
Cash flow | |||||
Cash generated from/(used in) operations | (6.6) | 9.2 | (1.5) | (5.9) | (14.9) |
Capex3 | 25.8 | 10.1 | 2.0 | 6.4 | 16.6 |
Cash burn2 | 26.3 | 1.9 | 9.8 | 11.5 | 29.8 |
Financing | |||||
Cash | 16.2 | 32.2 | 14.3 | 15.3 | 9.4 |
Loan | - | 41.2 | 36.9 | 34.4 | 27.3 |
Non-Financial Key Indicators Headcount | |||||
Year-end | 555 | 432 | 321 | 256 | 231 |
Average | 500 | 377 | 295 | 247 | 196 |
1. Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation, revaluation of investments and assets at fair value through profit & loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share based payments. A reconciliation to GAAP measures is provided on page 12.
2. Cash burn is net cash generated from operations plus net interest paid plus capital expenditure. A reconciliation to GAAP measures is provided on page 15.
3. This is Purchases of property, plant and equipment as per the cash flow statement which excludes additions to Right-of-use assets. A reconciliation to GAAP measures is provided on page 28.
Revenue
Revenue decreased by 4% to £64.1 million as compared to 2018 (£66.8 million). Revenue generated from bioprocessing/commercial development increased by 17% to £47.3 million (from £40.5 million in 2018), and is up 557% since 2013. The main contributor to growth has been the revenues generated from increased commercial development services provided to new customers Cystic Fibrosis Consortium, Axovant and Santen, as well as growth in Novartis commercial bioprocessing volumes.
Revenues from licence fees, milestones and royalties, including the £11.5 million ($15 million) Axovant milestone, represented a decrease of 36% from the prior year due to £18.3 million of licence income received in 2018 on the signing of the Sanofi (Bioverativ) and Axovant agreements not recurring.
The largest portion of the Group’s revenue continues to be derived from its relationship with Novartis, although this has now reduced to just over 50% of revenues, as the Group continues to diversify the customer base and revenue streams.
£m | 2019 | 2018 | 2017 | 2016 | 2015 |
Revenue | 64.1 | 66.8 | 37.6 | 27.8 | 15.9 |
Operating EBITDA
£m | 2019 | 2018 | 2017 | 2016 | 2015 |
Revenue | 64.1 | 66.8 | 37.6 | 27.8 | 15.9 |
Other income | 0.9 | 1.1 | 1.8 | 3.0 | 2.9 |
Total expenses | (70.2) | (54.5) | (41.3) | (37.9) | (30.9) |
Operating EBITDA1 | (5.2) | 13.4 | (1.9) | (7.1) | (12.1) |
Non cash items2 | (9.3) | 0.5 | (3.8) | (4.2) | (2.0) |
Operating profit/(loss) | (14.5) | 13.9 | (5.7) | (11.3) | (14.1) |
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation, revaluation of investments and assets at fair value through profit & loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share based payments. A reconciliation to GAAP measures is provided on page 12.
2 Non-cash items include depreciation, amortisation, revaluation of investments, Fair value adjustments of available-for-sale assets and the share based payment charge. A reconciliation to GAAP measures is provided on page 12.
Revenue decreased by 4% in 2019 whilst the Group’s cost base grew by 29% to £70.2 million both to accommodate the growth in bioprocessing and commercial development revenues and in bringing online in the first half of 2020 additional Oxbox bioprocessing capacity. The Operating EBITDA loss of £5.2 million is £18.6 million lower than the £13.4 million profit generated in 2018 as a result of increased operational cost and lower license revenues when compared to the prior year. If IFRS 16 (Leases) was not implemented at the start of 2019, the Operating EBITDA loss would be £6.0 million on a like for like basis with 2018.
Total Expenses
In order to provide the users of the accounts with a more detailed explanation of the reasons for the year on year movements of the Group’s operational expenses included within Operating EBITDA, the Group has added together research and development, bioprocessing and administrative costs and has removed depreciation, amortisation and the share option charge as these are non-cash items which do not form part of the Operating EBITDA alternative performance measure. As Operating profit/(loss) is assessed separately as a key financial performance measure, the year on year movement in these non-cash items is then individually analysed and explained specifically in the Operating and Net profit/(loss) section.
Expenses items included within Total Expenses are then categorised according to their relevant nature with the year on year movement explained in the second table below:
£m | 2019 | 2018 | 2017 | 2016 | 2015 |
Research & development | 22.6 | 18.0 | 21.6 | 24.3 | 20.3 |
Bioprocessing costs1 | 7.4 | 1.2 | - | - | - |
Administrative expenses | 11.9 | 7.4 | 7.3 | 6.0 | 6.7 |
Operating expenses | 41.9 | 26.6 | 28.9 | 30.3 | 27.0 |
Depreciation | (5.8) | (4.3) | (4.1) | (3.3) | (1.3) |
Amortisation | - | - | (1.2) | (0.3) | (0.4) |
Share option charge | (1.6) | (1.1) | (0.7) | (0.6) | (0.2) |
Adjusted operating expenses2 | 34.5 | 21.2 | 22.9 |
By: GlobeNewswire
- 06 May 2020
Return to news
Upcoming Life Sciences Events
Latest company news |