Interim Results for the Six Months Ended 30 June 2024
Press release
OXFORD BIOMEDICA PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
Delivering Pure-Play CDMO Growth Strategy
- Continued execution of "One OXB" strategy with global integration progressing across UK, US and French operations
- Existing near-term and medium-term financial guidance reiterated, supported by positive growth trajectory of the business
- Continued strong demand for OXB's CDMO services, with an increase in number of late stage programmes
- Client portfolio is maturing and now includes 37 clients and 48 programmes as of September 2024 (September 2023: 24 clients and 41 programmes), representing a growth of 54% for clients and 17% for programmes year-on-year
- Successfully onboarded multiple new clients, including signing 7 early-stage AAV programmes in the US
- Currently supporting late stage activities for 4 clients preparing for commercial launch of CAR-T products, compared to 1 late stage programme in September 2023
- Strong commercial KPIs underpin expected momentum in second half of 2024 and beyond:
- Contracted value of client orders in the first eight months of the year reflect strong demand for CDMO services at approximately £94 million; this is supported by a high level of GMP suite utilisation for 2025
- The total potential revenue pipeline grew by 29% from $438 million to $565 million, since the start of the year (as of 13 September 2024)
- Post-period end, Dr. Lucinda Crabtree joined as CFO on 2 September; transition process well-progressed
Oxford, UK - 23 September 2024: OXB (LSE: OXB), a quality and innovation-led cell and gene therapy CDMO, today announces interim results for the six months ended 30 June 2024.
Dr. Frank Mathias, OXB's Chief Executive Officer, said: "The first half of 2024 has been a period of significant progress for OXB as we continue to execute our multi-vector, multi-site 'One OXB' strategy.
"The integration of our global network of sites is progressing well, delivering operational benefits that enhance our ability to meet diverse client needs and accelerate project timelines. We've experienced strong demand across our viral vector services, with particularly robust revenue growth in lentiviral vector manufacturing. Importantly, we're also seeing encouraging progress in AAV, including the signing of several new early stage programmes in the US.
"Our commercial momentum is strong across all our key regions - the UK, US and France. We're particularly pleased with the growth in our late-stage programmes, now supporting late stage activities for four clients preparing for commercial launch of CAR-T products.
"The positive trajectory of our key performance indicators, including our growing revenue backlog and the high level of GMP suite reservations for 2025, gives us confidence in our future performance. These metrics reflect the increasing maturity of our client programmes and the growing demand for our services in the cell and gene therapy sector.
"As we look ahead, we remain focused on further integrating our operations and growing our global portfolio of clients and projects across all stages of clinical development. I'm proud of the OXB team whose expertise and dedication are driving our achievements, enabling our clients to deliver life-changing therapies to patients and create long-term value for our shareholders."
FINANCIAL HIGHLIGHTS (including post-period events)
- Double-digit revenue growth; total revenues increased by 18% to £50.8 million (H1 2023: £43.1 million). Organic revenue growth was 38%. Organic growth excludes the impact of the acquisition of OXB France and the loss of revenues from Homology Medicines, Inc ("Homology").
- Revenue growth was driven by higher levels of manufacturing and commercial development activity, including:
- New client acquisition and revenue growth in lentiviral vector manufacturing as a result of an increase in the number of batches manufactured and clients transitioning to Process C, OXB’s best-in-class perfusion bioreactor process for lentiviral vector manufacturing.
- New contributions from OXB France following the acquisition of ABL Europe in January 2024, total revenues in France of £5.7 million in H1 2024.
- Offset by a decline in US revenues due to Homology ceasing clinical activities, revenues from Homology in H1 2024 were £0.2 million (H1 2023: £12.9 million).
- Lower cost base as a result of the 2023 reorganisation:
- Operating EBITDA loss of £(20.3) million (H1 2023: £(33.7 million) and operating loss of £(32.2) million (H1 2023: £(50.7) million).
- Sufficient capital to achieve current strategic plan:
- Cash at 30 June 2024 was £81.4 million (31 Dec 2023: £103.7 million); Net cash was £41.7 million (31 Dec 2023: £65.2 million).
- Commercial KPIs underpin expected momentum for the second half of 2024 and beyond:
- The contracted value of client orders1 signed during the first 8 months of 2024 was approximately £94 million as at 31 August 2024.
- Revenue backlog2 as at 31 August 2024 stood at approximately £120 million, compared to £94 million at 31 December 2023. This is the amount of future revenue available to earn from current orders.
OUTLOOK AND FINANCIAL GUIDANCE
- The Group reiterates its existing near-term and medium-term financial guidance communicated to the market:
- 2024 total Group revenues of between £126 million and £134 million, with a three-year revenue CAGR of more than 35% for 2023-2026.
- Low double-digit Operating EBITDA loss in 2024, including the impact of the acquisition of OXB France and investment in talent to support increased late stage client activity in 2025.
- The Group expects to achieve Operating EBITDA margins in excess of 20% by the end of 2026, and to be profitable on an EBITDA level in 2025.
1 Contracted value of client orders represent the value of customer orders for which the customer has signed a financial commitment, whereby any changes to agreed values will be subject to either change orders or cancellation fees.
2 Revenue backlog represents ordered CDMO revenues available to earn. It is calculated on a cumulative basis by adding new contracted client orders less the value of revenues already recognised or no longer available after project scope adjustments or cancellations.
Analyst briefing
OXB's management team, led by Dr. Frank Mathias, CEO, Dr. Lucinda Crabtree, CFO and Dr. Sebastien Ribault, CBO will be hosting a briefing and Q&A session for analysts at 13:00 BST / 8:00 EST today, 23 September, at Chartered Accountants Hall, One Moorgate Place, London EC2R 6EA, United Kingdom.
A live webcast of the presentation will be available via this link. The presentation will be available on OXB's website at www.oxb.com
If you would like to dial in to the call and ask a question during the live Q&A, please email OXB@icrhealthcare.com
Notes
Unless otherwise defined, terms used in this announcement shall have the same meaning as those used in the Annual report and accounts.
Enquiries
Oxford Biomedica plc | T: +44 (0)1865 509 737/ E: ir@oxb.com |
Sophia Bolhassan, Head of Investor Relations | |
ICR Consilium | T: +44 (0)20 3709 5700 / E: OXB@icrhealthcare.com |
Mary-Jane Elliott Angela Gray Davide Salvi | |
RBC Capital Markets (Joint Corporate Brokers): | T: +44 (0)20 7653 4000 |
Rupert Walford Kathryn Deegan | |
JP Morgan (Joint Corporate Brokers): | T: +44 (0)207 1347329 |
James Mitford Manita Shinh Jem de los Santos |
About OXB
OXB (LSE: OXB) is a quality and innovation-led contract development and manufacturing organisation (CDMO) in cell and gene therapy with a mission to enable its clients to deliver life changing therapies to patients around the world.
One of the original pioneers in cell and gene therapy, OXB has more than 25 years of experience in viral vectors; the driving force behind the majority of cell and gene therapies. OXB collaborates with some of the world's most innovative pharmaceutical and biotechnology companies, providing viral vector development and manufacturing expertise in lentivirus, adeno-associated virus (AAV), adenovirus and other viral vector types. OXB's world-class capabilities span from early stage development to commercialisation. These capabilities are supported by robust quality-assurance systems, analytical methods and depth of regulatory expertise.
OXB offers a vast number of unique technologies for viral vector manufacturing, including a 4th generation lentiviral vector system (the Tetravecta™ system), dual plasmid system for AAV production, suspension and perfusion process using process enhancers and stable producer and packaging cell lines.
OXB, a FTSE4Good constituent, is headquartered in Oxford, UK. It has bioprocessing and manufacturing facilities across Oxfordshire, UK, Lyon and Strasbourg, France and near Boston, MA, US. Learn more
at www.oxb.com, and follow us on LinkedIn and YouTube.
Overview
In the first half of 2024 Oxford Biomedica plc ("OXB" or "the Group") remained firmly focused on the execution of its new multi-vector multi-site "One OXB" strategy, laying the foundations for further sustainable growth. Despite the challenges of continuing unfavourable global economic conditions, this strategy is gaining traction. This is demonstrated by the high demand for OXB’s CDMO services across all key viral vector types, alongside strong commercial KPIs. These factors underpin expected momentum for the second half of 2024 and beyond.
To align with the new focus of the business, OXB made several strategic updates to its Board and senior leadership team including the post-period end appointment of Lucinda (Lucy) Crabtree as the new Chief Financial Officer. Smoothly taking over from Stuart Paynter, Lucy Crabtree has already begun working closely with Frank Mathias and the rest of the leadership team to execute the new OXB strategy.
OXB has continued to gain market share in the rapidly growing cell and gene therapy market. The contracted value of client orders signed during 2024 stood at approximately £94 million as of 31 August 2024, including an increase in orders signed towards the end of the first half of 2024 and continuing momentum post-period end. OXB expects strong cadence of new orders to continue in the second half of 2024 and beyond, underpinned by a strong business development pipeline, with a high level of GMP suite utilisation for 2025 giving increased visibility.
Operational Review
CDMO Services
Demand for OXB's CDMO services remains strong across all key viral vector types, with an expected increase in AAV and adenovirus-based programmes. OXB has capitalised on this demand, growing and diversifying its
CDMO portfolio throughout the year. The Group has successfully onboarded multiple new clients, including signing 7 early stage AAV programmes in the US. Concurrently, existing client programmes have advanced, with the Group supporting late stage activities for 4 clients as they prepare for the commercial launch of CAR-T products and subsequent Biologics License Application (BLA) submissions. Approximately a quarter of OXB's clients are working with the Group on more than one programme, underscoring the strength and embedded commercial opportunity of these relationships.
In January, OXB completed the acquisition of ABL Europe SAS, now renamed Oxford Biomedica (France) SAS ("OXB France"), significantly enhancing the Group's capacity to meet growing client demand. This move has transformed OXB's operational footprint, which now spans three key regions: UK, US and France, and solidified OXB's position as a world-leading quality and innovation-led CDMO in the cell and gene therapy field. The acquisition has also expanded OXB's capabilities significantly, complementing its established expertise in Adenovirus, Lentiviral vectors and AAV with OXB France's advanced capabilities in Pox viruses, including MVA and Vaccinia.
The integration of OXB France is significantly progressed, with the site already delivering process development and GMP manufacturing for clients across multiple vector types.
The resulting multi-vector, multi-site model is already demonstrating significant operational benefits alongside commercial benefits. A key operational advantage is the Group's ability to seamlessly allocate projects across its international network of facilities. This cross-border collaboration enables OXB to:
- Optimise resource utilisation across all sites
- Balance workloads efficiently
- Leverage specialised expertise from different locations
- Manage multiple work packages simultaneously
- Increase flexibility in line with client preferences
As a result, the Group has enhanced its capacity to meet diverse client needs and accelerate project timelines.
This expanded operational model, combined with OXB's strong track record, expertise and know-how in manufacturing viral vectors, strengthens the Group's position as a leading CDMO in the cell and gene therapy sector.
Programme stage | September 20231 | September 20242 |
24 clients | 37 clients | |
41 client programmes | 48 client programmes | |
Pre-clinical through to early stage clinical | 393 | 42 |
Late stage clinical | 1 | 4 |
Commercial agreements | 1 | 2 |
- As per the H1 2023 results release
- As of this results release (includes post-period events)
- Includes undisclosed stage programmes
Business Development
OXB has continued to strengthen its business development activities throughout 2024. The Group's focus on utilising its multi-viral vector CDMO capabilities to broaden its client base and deepen existing client
relationships has started to deliver results, reflecting sustained demand for OXB's services from a diverse range of pharmaceutical and biotechnology companies.
The contracted value of client orders signed during 2024 was approximately £94 million as at 31 August 2024. Clients transitioning from early stage manufacturing to late stage and commercial activities have moved from a batch reservation model to a binding forecast model, providing increased revenue visibility for late stage client programmes.
The Group tracks its pipeline of potential revenue opportunities through a rigorous internally developed process.
The total potential revenue pipeline grew by 29% from $438 million at the start of year to $565 million as of 13 September 2024. Growth has also been seen in the risk adjusted pipeline (adjusted for conversion probability) demonstrating OXB’s increased efficiency in progressing potential commercial opportunities.
The pipeline is well-balanced, with approximately half representing potential revenue opportunities with existing clients. It includes opportunities across all stages of development, including commercial manufacturing.
Innovation
The Group focuses on client-centric innovation that addresses the unique challenges of cell and gene therapy. By enhancing viral vector production, the Group is not only industrialising the process, but also achieving higher productivity, better quality and lower costs, thereby benefiting clients and ultimately patients. This combination of platform and process innovation is expected to significantly reduce the cost per dose, accelerating clinical development and expanding patient access to these therapies.
At the start of the year, the Group launched the inAAVate™ platform, which offers a proprietary ‘plug and play’
Dual-Plasmid system for transient transfection, as well as a standard triple transfection system for AAV-based gene therapies. The inAAVate™ platform has demonstrated cell culture titre to over 1E15 vg/L for multiple serotypes across multiple genomes, and shown a significant increase in AAV vector productivity and quality with >50% full capsids in the bioreactor and >90% full capsids in the final drug substance. The Dual-Plasmid system, together with the Group's proprietary transfection process has been successfully scaled up to 2,000L with multiple GMP runs at 500L scale, and represents a high-quality platform with industry-leading productivity to enable successful AAV product development.
Additionally, the Group has developed additive technologies that are already being used in GMP for client programmes (U1) or expected later in the second half of 2024 / first half of 2025 (I3A). These allow for an increase
in the number of lentiviral particles generated and an improvement in their potency such that less vector has to be used to achieve the same benefit; a continuing challenge for the industry.
Corporate & Organisational Development
The Group has undergone changes in its Board composition and leadership team during the period, better aligning the Board's skills and expertise with its focus as a pure-play cell and gene therapy CDMO.
In March 2024, Peter Soelkner joined the Board as a Non-Executive Director. Mr. Soelkner brings over 30 years of experience in the global pharmaceutical services industry, with significant CDMO expertise. He is currently
Managing Director of Vetter Pharma, where he has helped grow revenues from $200 million to more than $1 billion over the past 15 years.
Catherine Moukheibir and Dr. Michael Hayden did not stand for re-election at the June 2024 Annual General Meeting, as part of the Group’s efforts to streamline the Board while bolstering its CDMO expertise. Dr. Hayden continues to serve as an adviser to the Science and Technology Advisory Committee.
In July 2024, Laurence Espinasse was appointed as a Non-Executive Director. Ms. Espinasse brings more than two decades of experience across the legal and healthcare sectors and currently serves as the General Counsel and Compliance Officer at Institut Mérieux SA ("Institut Mérieux").
On 17 July 2024, post-period, the Group announced the appointment of Dr. Lucinda (Lucy) Crabtree as Chief Financial Officer (CFO) and Board member, effective 2 September 2024. Dr. Crabtree brings extensive experience in the biopharmaceutical and investment sectors, having previously served as CFO at MorphoSys AG and Autolus Therapeutics. Concurrently, Stuart Paynter stepped down as CFO and from the Board after almost seven years
of service.
One OXB: integrated global CDMO strategy
The Group has made significant progress with the integration of its global network of sites under its new multi-vector multi-site strategy as a pure-play CDMO. The Group continues to deliver on the 20 "One OXB"
workstreams, improving efficiency of operations, retaining talent and focusing on client-centric innovation, aiming for full integration by the end of 2025.
Key achievements include:
- Successfully transferring its lentiviral vector capabilities to its Bedford, Massachusetts site, with rollout to US clients underway and plans to enable OXB’s French sites to provide similar lentiviral vector services by the end of 2024.
- Developing a new product introduction process that significantly speeds up clients' transition from clinical stages to GMP manufacturing. This new process is expected to significantly reduce internal resource usage and shorten the time needed to transfer new products onto OXB's platform.
- Extending the Sales and Operations Planning (S&OP) process to French sites, following successful implementation in the UK and US. This allows the Group to use a systematic and consistent approach to deciding where to best allocate client projects according to key criteria such as delivery and business impact.
Post-period end in September, the Group announced the launch of its new corporate brand. As part of this rebrand, the Group has rebranded as OXB, unveiling a more modern and recognisable visual identity that reflects the global nature of the Group’s operations and its transformation into a pure-play cell and gene therapy CDMO.
Acquisition of ABL Europe from Institut Merieux
In September 2023, OXB announced its intention to acquire ABL Europe from Institut Mérieux, for a deal value of €15 million (including €10 million of post-completion cash funding in ABL Europe from Institut Mérieux). Under IFRS 3: Business Combinations, accounting, the fair value of the shares paid as consideration was €6.6m, which
comprises the shares issued of 3,149,374 at the acquisition date share price of 180.6p. ABL Europe, renamed OXB France post the acquisition, is a pure-play European CDMO with specialised expertise in the development and manufacturing of viral vectors for biotech and biopharma companies including viruses for cell and gene therapy, oncolytic viruses and vaccine candidates.
The transaction completed on 29 January 2024, providing the Group with bioprocessing and manufacturing facilities in the EU, through sites in Lyon and Strasbourg, France. This strategic acquisition increases access to EU-based clients and broadens the Group's international development, manufacturing and testing presence, whilst increasing its capacity in process and analytical development and early stage manufacturing, with over 1,800m2 of GMP manufacturing space. The addition of the sites in France brings more than 100 CDMO experts to the Group and adds expertise in Pox viruses, including MVA and Vaccinia, to OXB's client offering.
On 18 June 2024, TSGH SAS, a subsidiary of Institut Mérieux, invested €20 million (£16.9 million) through the subscription of 5,201,107 new ordinary shares at a price of 325p per share.
Following this subscription, the acquisition, and previous market purchases, Institut Mérieux now holds a 10.9% stake in OXB, making it a major, long-term shareholder and further underpinning its conviction in OXB's strategy.
Environmental, Social & Governance
The Group remains committed to its role as a responsible business and its ESG mission to deliver life-changing cell and gene therapies to patients in an ethical and socially responsible way. The ESG strategy has been reviewed to reflect OXB’s strategic reset as a pure-play CDMO. As a result of this review, OXB will focus on four pillars: People; Community; Environment and Supply Chain.
The Group's newly formed Environment, Social, Governance and Risk (" ESGR") Committee is responsible for the governance and oversight of all of OXB's ESG commitments and reports to the Corporate Executive Team (CET) and ultimately to the Board. The ESGR Committee is chaired by Thierry Cournez, the Group's Chief Operating Officer.
Namrata Patel, Independent Non-Executive Director is responsible for providing strategic insight and practical solutions to shape and achieve objectives with regards to the Group's sustainability strategy and presents progress updates to the Audit Committee and the Board.
Full details on our ESG pillars can be found on our ESG webpage at
www.oxb.com
Financial review
The Group has made significant progress under its new multi-vector multi-site strategy as a pure-play CDMO during the first six months of 2024. This included the acquisition of OXB France, the successful transfer of OXB’s lentiviral vector capabilities to its Bedford, MA site and the continued integration of its global network of
sites. Following the discontinuation of its Product segment at the end of 2023, the Group now operates solely as a pure-play CDMO. Consequently, for 2024, the Group reports as a single segment.
Selected highlights of the Group's financial results are as follows:
- Total revenues increased by 18% to £50.8 million (H1 2023: £43.1 million). Organic revenue growth was 38%. Organic growth excludes the impact of the acquisition of OXB France and the loss of revenues from Homology.
- Revenue growth was driven by higher levels of manufacturing and commercial development activity, including:
- New client acquisition and revenue growth in lentiviral vector manufacturing.
- New contributions from OXB France following the acquisition of ABL Europe in January 2024; total revenues in France of £5.7 million in H1 2024.
- Offset by a decline in US revenues due to Homology ceasing clinical activities, revenues from Homology in H1 2024 were £0.2 million (H1 2023: £12.9 million).
- New client acquisition and revenue growth in lentiviral vector manufacturing.
- Revenues from bioprocessing and commercial development activities increased by 15% to £46.9 million (OXB France £5.7 million) (H1 2023: £40.6 million). This was driven by double digit revenue growth in lentiviral vector manufacturing as a result of an increase in the number of batches manufactured and clients transitioning to Process C, OXB’s best-in-class perfusion bioreactor process for lentiviral vector manufacturing.
- Revenues from milestones, licences and royalties increased by 56% to £3.9 million (H1 2023: £2.5 million); due to completion of a client milestone in relation to first patient dosing in a pivotal clinical trial.
- Acquisition of ABL Europe from Institut Mérieux for a fair value consideration of €6.6 million by means of a share-for-share exchange increasing net assets of the Group by £7.4 million and giving rise to a bargain purchase gain of
£1.7 million. Refer to note 19.
- Refinancing ($30 million cash) completed of Oxford Biomedica (US) LLC ("OXB US") at 26 June 2024, resulting in an increase in ownership by OXB and dilution of Q32 Bio Inc ("Q32 Bio") (which acquired Homology in March 2024). OXB's ownership of OXB US as a result has increased to 90% from 80%.
- Operating EBITDA loss of £(20.3) million (H1 2023: £(33.7) million) and operating loss of £(32.2) million (OXB France (£4.4) million) (H1 2023: £(50.7) million). Reduced operating EBITDA loss as a result of the increase in revenues and the impact of the 2023 reorganisation lowering the overall cost base.
- Cash(burn) of £(43.6) million (H1 2023: £(10.2) million) arising principally from operating loss and the absence of positive one-off working capital movements which occured in the first half of 2023.
- Cash at 30 June 2024 was £81.4 million (31 Dec 2023: £103.7 million); Net cash was £41.7 million (31 Dec 2023: £65.2 million).
Key financial indicators
The Group evaluates its performance inter alia by making use of alternative performance measures as part of its Key Financial Performance Indicators (refer to the table below). The Group believes that these Non-GAAP measures, together with the relevant GAAP measures, provide a comprehensive, accurate reflection of the
Group's performance over time. The Board has taken the decision that the Key Financial Performance Indicators against which the business will be assessed are Revenue, Operating EBITDA and Operating profit/(loss). The figures presented in this section for prior years are those reported in the Interim Reports for those years.
£'m | H1 2024 | H1 2023 |
Revenue | ||
Bioprocessing/ commercial development | 46.9 | 40.6 |
Licences, milestones and royalties | 3.9 | 2.5 |
Total revenue | 50.8 | 43.1 |
Operations | ||
Operating EBITDA1 | (20.3) | (33.7) |
Operating (loss) | (32.2) | (50.7) |
Cash Flow | ||
Cash (used in) operations | (39.2) | (5.4) |
Capex2 | (4.8) | (4.9) |
Cash (burn)3 | (43.6) | (10.2) |
Financing | ||
Cash | 81.4 | 129.4 |
Loan | 39.7 | 90.1 |
Non-Financial Key Indicators | ||
Headcount | ||
Half Year4 | 834 | 891 |
Average4 | 845 | 891 |
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation, revaluation of investments and assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share based payments. However, deferred bonus share option charges are not added back to operating profits in the determination of Operating EBITDA as they may be paid in cash upon the instruction of the Remuneration Committee. A reconciliation to GAAP measures is provided on page 12.
2 This is purchases of property, plant and equipment as per the cash flow statement which excludes additions to right-of-use assets.
3 Cash burn is net cash consumed from operations plus net interest plus capital expenditure. A reconciliation to GAAP measures is provided on page 13.
4 Includes approx 130 heads as part of the acquisition of OXB France.
Revenue
£'m | H1 2024 | H1 2023 |
Revenue | ||
Bioprocessing/ commercial development | 46.9 | 40.6 |
Licences, milestones and royalties | 3.9 | 2.5 |
Total revenue | 50.8 | 43.1 |
The Group's revenues increased by 18% to £50.8 million (H1 2023: £43.1 million) with organic revenue growth of 38%, excluding the impact of the acquisition of OXB France and the loss of revenues from Homology.
Revenues from bioprocessing and commercial development activities increased by 15% to £46.9 million (H1 2023:
£40.6 million) driven by new client acquisition and revenue growth in lentiviral vector manufacturing as a result of an increase in the number of batches manufactured, and clients transitioning to Process C, OXB’s best-in-class perfusion bioreactor process for lentiviral vector manufacturing and £5.7 million of revenue from OXB France post-acquisition. This was offset by a decline in US revenues due to Homology ceasing clinical activities. Revenues from Homology in H1 2024 were £0.2 million (H1 2023: £12.9 million).
Revenues from milestones, licences and royalties increased by 56% to £3.9 million (H1 2023: £2.5 million); due to completion of a client milestone in relation to first patient dosing in a pivotal clinical trial.
Operating EBITDA
£'m | H1 2024 | H1 2023 |
Revenue | 50.8 | 43.1 |
Other income | 3.2 | 1.4 |
Gain on sale of property | - | 0.5 |
Total expenses1 | (74.4) | (78.7) |
Operating EBITDA2 | (20.3) | (33.7) |
Non cash items3 | (11.9) | (17.0) |
Operating (loss)/profit | (32.2) | (50.7) |
1 Total expenses are operational expenses including cost of goods incurred by the Group. A reconciliation to GAAP measures is provided on page 11.
2 Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation, revaluation of investments and assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share based payments. However, deferred bonus share option charges are not added back to operating profits in the determination of Operating EBITDA as they may be paid in cash upon the instruction of the Remuneration Committee. A reconciliation to GAAP measures is provided on page 12.
3 Non-cash items include depreciation, amortisation, revaluation of investments, fair value adjustments of available-for-sale assets and the share-based payment charge.
Operating EBITDA loss of £(20.3) million (H1 2023: £(33.7) million) and operating loss of £(32.2) million (H1 2023:
£(50.7) million) arose as a result of the increase in revenues and the ongoing impact of the 2023 restructure lowering the overall cost base.
In 2024, the Group benefited, in Other Income, from a £1.7 million one-off gain as a result of the fair value of the French acquisition. In 2023, the Group benefited from a one-off profit on sale of its Harrow House facility of £0.5 million in a sale and lease back transaction. Other operating income also includes sub lease rental income £1.2 million and grant income to further develop supply chain capabilities of £0.2 million.
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 (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 (loss) section. Expense items included within Total Expenses are then categorised according to their relevant nature with the year on year movement explained in the second table.
£'m | H1 2024 | H1 2023 |
Research and development1 | 15.8 | 31.4 |
Bioprocessing costs | 23.6 | 30.3 |
Administrative expenses | 14.1 | 12.9 |
Operating expenses | 53.5 | 74.6 |
Depreciation, Amortisation and share option charge | (11.9) | (17.0) |
Adjusted Operating expenses2 | 41.6 | 57.6 |
Cost of sales | 32.8 | 21.1 |
Total Expenses3 | 74.4 | 78.7 |
1 Includes the RDEC tax credit.
2 Research, development, bioprocessing and administrative expenses excluding depreciation, amortisation and the share option charge.
3 Cost of goods plus research, development, bioprocessing and administrative expenses excluding depreciation, amortisation and the share option charge.
Revenue increased by 18% in H1 2024 whilst the Group's cost base decreased by 6% to £(74.4) million. 2024 has seen a decrease in gross margin to 35% (H1 2023: 51%) due to client and product mix and the timing of client product lifecycles to support future commercial launches.
There was a decrease of £16.0 million (28%) in adjusted operating expenditure in H1 2024 to £41.6 million (H1 2023:
£57.6 million) reflecting the impact of the streamlining of roles, synergies achieved from the move to a site-based model; including £5.6 million savings from the closure of the Product division and £3.3 million reduction in amortisation and depreciation in 2024, primarily driven by the impact of the 2023 impairment of OXB US assets following the decision by Homology to cease clinical activities.
Administration costs have increased by £1.2 million primarily driven by the larger Group post acquisition of OXB France, changes in Group management and cost inflation.
The table below shows total expenses by type of expenditure (excluding depreciation, amortisation and other non-cash items):
£'m | H1 2024 | H1 2023 |
Raw materials, consumables and other external bioprocessing costs | 20.4 | 15.9 |
Manpower-related | 40.0 | 47.1 |
External R&D expenditure | 0.3 | 1.5 |
Other costs | 16.6 | 16.7 |
RDEC Credit | (2.9) | (2.5) |
Total Expenses1 | 74.4 | 78.7 |
1 Total expenses are operational expenses including cost of goods incurred by the Group. A reconciliation to GAAP measures is provided on page 11.
- Raw materials, consumables and other external bioprocessing costs used in lentivector and AAV batch manufacturing and development have increased in line with increased activities.
- The decrease in manpower-related costs is due to the restructuring completed at the end of 2023 with the loss of approximately 200 roles across the UK and the US business, offset by the addition of approximately 130 roles in the French business.
- External R&D expenditure decreased significantly as a result of the closure of the product division in the second half of 2023.
- Other costs were higher as a result of the inclusion of the administrative expenditure of OXB France and inflationary increases.
- The RDEC credit has increased to £2.9 million (H1 2023: £2.5 million) due to an increase in qualifying activity.
Operating (loss) and net (loss)