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RNS Number : 5705Z
Oxford Biomedica PLC
15 September 2022
OXFORD BIOMEDICA PLC
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
SIGNIFICANT STRATEGIC AND OPERATIONAL PROGRESS TOWARDS BECOMING
A GLOBAL VIRAL VECTOR LEADER
Oxford, UK - 15 September 2022: Oxford Biomedica plc ("Oxford
Biomedica" or "the Group") (LSE: OXB), a leading gene and cell
therapy group, today announces interim results for the six months
ended 30 June 2022.
Roch Doliveux, Oxford Biomedica's Chair and Interim Chief
Executive Officer, said:
"We have made significant strategic and operational progress
towards our goal of becoming a global viral vector leader. In the
first half of 2022 we achieved double digit revenue growth in our
core business and since the start of the year have signed numerous
new or expanded partnership deals, including a new AAV deal,
resulting in an over 70% increase in the number of customers with
whom we work. In addition, we executed the transformational launch
of Oxford Biomedica Solutions which brings innovative AAV
capabilities, further capacity and a significant platform in the
US, delivering on our strategic objective to become vector agnostic
and provide world-leading innovative process development and
manufacturing services to our clients. With a strong cash position,
a robust and growing business and entry into the fast-growing AAV
market, Oxford Biomedica is in an excellent position to achieve
long-term future profitable growth as a leading partner of choice
to deliver life-saving cell and gene therapies to patients."
H1 2022 FINANCIAL HIGHLIGHTS
- Double digit revenue growth in the core business (excluding
COVID-19 vaccine manufacturing) compared to H1 2021 offset by the
decrease in COVID-19 vaccine manufacturing; total revenue decreased
by 21% to GBP64.0 million (H1 2021: GBP81.3 million)
- Bioprocessing and commercial development revenues decreased by
24% to GBP57.3 million (H1 2021: GBP75.6 million) largely driven by
a reduction in COVID-19 vaccine manufacturing revenues but partly
offset by an increase in revenues from lentiviral vector and AAV
commercial development and manufacturing activities
- Licences, milestones & royalties were GBP6.7 million (H1
2021: GBP5.7 million), the increase of 18% resulting from licence
fees from new partner programmes
- The launch of Oxford Biomedica Solutions, enabling entry into
the fast-growing AAV market whilst also establishing a key
strategic presence in the US, including one-off acquisition-related
costs, drove an increase in operating expenses to GBP56.2 million
(H1 2021: GBP23.6 million). Active cost control initiatives were
initiated to reduce the Group's operating cost base as the COVID-19
pandemic continues to ease
- Operating EBITDA (1) loss and operating loss of GBP5.8 million
and GBP19.2 million respectively (H1 2021 EBITDA(1) profit and
operating profit of GBP27.1 million and GBP19.7 million
respectively); this included one-off acquisition-related due
diligence costs of GBP5.1 million relating to the transaction with
Homology Medicines to establish Oxford Biomedica Solutions
- Cash used in operations was GBP24.5 million compared to GBP22.2 million generated in H1 2021
- The Group's capital expenditure of GBP6.0 million (H1 2021:
GBP3.5 million) consisted mainly of purchases of equipment required
for manufacturing and laboratory facilities
- Cash at 30 June 2022 was GBP118.5 million and GBP115.8 million
at 31 August 2022; net cash at 30 June 2022 was GBP50.1 million and
GBP42.1 million at 31 August 2022
OTHER RECENT DEVELOPMENTS AND OUTLOOK
- The Group is in the process of part-repaying and refinancing
the $85 million Oaktree loan facility taken out in March 2022 and a
process is underway for the sale and leaseback of the Group's
Windrush Court facility in Oxford
- The Group expects similar levels of revenues in the second
half of 2022 as those achieved in the first half of 2022 and is
expecting to deliver broadly break-even Operating EBITDA for the
second half of the year
(1) Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 12.
OPERATIONAL HIGHLIGHTS (including post-period events)
- Entered into fast-growing AAV market through a
transformational deal with Homology Medicines, completed in March
2022, to establish Oxford Biomedica Solutions LLC ("Oxford
Biomedica Solutions"), a high-performing full-scope scope AAV
manufacturing and innovation business near Boston, US; new AAV
partnership announced in September
- Expanded customer base by more than 70%, currently working on
more than 20 programmes, with a robust new business pipeline across
all key vector types
- Amended and expanded existing License and Clinical Supply
Agreement with Juno Therapeutics ("Juno"), a wholly-owned
subsidiary of Bristol Myers Squibb Company, to include two new
viral vector programmes
- Continued strong relationship with Novartis with Kymriah(R)
available in more than 400 qualified treatment centres in 30
countries having coverage for at least one indication, and
expansion into a third indication
- Signed a new three-year Master Services and Development
Agreement with AstraZeneca to facilitate potential future
manufacturing opportunities for the AstraZeneca COVID-19
vaccine
- Signed four new US-based customer agreements with Cabaletta
Bio ("Cabaletta"), with an undisclosed private biotechnology
company advancing a new generation of adoptive cell therapies, with
an undisclosed late-stage cell and gene therapy company, and with
an undisclosed new partner for Oxford Biomedica Solutions' AAV
platform
- Continued to strengthen the Board with the appointment of
Namrata Patel as an Independent Non-Executive Director. John Dawson
stepped down as CEO, with Chair Roch Doliveux assuming the role of
Interim CEO in January 2022. The formal process to appoint a
successor is progressing well
Analyst briefing
Management will be hosting a virtual briefing and Q&A
session for analysts at 13:00 BST / 8:00 EST today, 15 September.
The presentation will be available on the Group's website at
www.oxb.com
A live webcast of the presentation will be available via this
link .
If you would like to dial-in to the call and ask a question
during the live Q&A, please email
Oxfordbiomedica@consilium-comms.com
Notes
Unless otherwise defined, terms used in this announcement shall
have the same meaning as those used in the Annual report and
accounts.
Enquiries:
Oxford Biomedica plc T: +44 (0)1865 783 000/ E: ir@oxb.com
Stuart Paynter, Chief Financial Officer
Sophia Bolhassan, VP, Corporate Affairs and IR
Consilium Strategic Communications T: +44 (0)20 3709 5700
Mary-Jane Elliott
Matthew Cole
Peel Hunt (Joint Corporate Brokers): T: +44 (0)20 7418 8900
James Steel
Dr. Christopher Golden
JP Morgan (Joint Corporate Brokers): T: +44 (0)207 1347329
James Mitford
Gautham Baliga
About Oxford Biomedica
Oxford Biomedica (LSE:OXB) is an innovative leading viral vector
specialist focused on delivering life changing therapies to
patients.
Oxford Biomedica plc and its subsidiaries (the Group) work
across key viral vector delivery systems including those based on
lentivirus, adeno-associated virus (AAV) and adenovirus, providing
innovative solutions to cell and gene therapy biotechnology and
biopharma companies for their process development, analytical
development and manufacturing needs. Oxford Biomedica has built a
sector leading lentiviral vector delivery system, LentiVector(R)
platform, and is working on programmes from pre-clinical to
commercial stage across a range of therapeutic areas with global
partners.
Oxford Biomedica employs more than 900 people, is based across
several locations and headquartered in Oxfordshire, UK. In 2022,
the Group established Oxford Biomedica Solutions, a US based
subsidiary AAV manufacturing and innovation business, based near
Boston, US.
Further information is available at www.oxb.com.
OVERVIEW
Oxford Biomedica is a leading viral vector specialist focussed
on delivering life-changing therapies to patients. The Group
applies its innovative process development and manufacturing
capabilities, world leading expertise and platform technology to
develop and manufacture commercially scalable products. The Group
is working on partner programmes for severe diseases ranging from
pre-clinical to commercial across a range of therapeutic areas,
including oncology, haematology, immunology, respiratory and
ophthalmology.
During the first half of the year, the Group delivered on its
strategy of becoming an innovative global viral vector leader,
advancing into AAV, whilst diversifying and growing its global
customer base. The Group's transformational deal with Homology
Medicines in January to establish Oxford Biomedica Solutions has
further broadened the Group's offering into the large and
fast-growing AAV segment, whilst delivering on its strategy to
become vector agnostic with a presence in the key US market. Under
the terms of the deal, Homology Medicines became Oxford Biomedica
Solutions' first customer, and will contribute minimum revenues of
c.$25 million (GBP21 million) in the period to March 2023.
Additionally, in September, the Group announced an AAV deal with an
undisclosed partner.
The initiation of new customer relationships and expansion of
existing customer agreements has increased in momentum in recent
months, with six new or expanded partnerships announced since the
start of the year. The Group is currently working with 14 customers
on more than 20 programmes (in addition to Homology Medicines'
programmes through Oxford Biomedica Solutions) representing a more
than 70% increase in the number of customers compared to the same
time last year.
In July, the Group announced an expansion to the original
License and Clinical Supply Agreement signed with Juno (a wholly
owned subsidiary of Bristol Myers Squibb Company) to include two
new viral vector programmes as well as announcing a new three-year
Master Services and Development Agreement with AstraZeneca in
relation to potential future manufacturing opportunities for the
AstraZeneca COVID-19 vaccine. Oxford Biomedica continues to expect
to recognise aggregate revenues of approximately GBP30 million from
AstraZeneca in the current financial year, of which the bulk of
revenues were recognised in the first half of 2022.
In January, John Dawson stepped down as CEO after 13 years, and
simultaneously Roch Doliveux assumed the role of Interim CEO. The
formal process to appoint a successor to lead the Group through its
next phase of growth is progressing well and Oxford Biomedica will
update the market once the recruitment has been completed.
The Group heads into the second half of the year with a strong
cash position of GBP118.5 million and a net cash position of
GBP50.1 million (as at 30 June 2022). The Group is in the process
of part-repaying and refinancing the 12-month $85 million Oaktree
loan facility taken out in March 2022. In order to provide
additional liquidity and financial flexibility, the Group recently
initiated a process for the sale and leaseback of the Group's
cutting-edge 36,000 sq. ft. Windrush Court facility in Oxford and
is currently seeking offers exceeding GBP55 million. The Group is
also reviewing its gene therapeutics pipeline, including strategic
options to externally fund an appropriate future pipeline of
products and other novel opportunities.
Oxford Biomedica expects a highly active remainder of 2022 and
the Group has a high level of visibility over revenues for the
remainder of the year with more than 90% of forecasted revenues for
the second half of the year covered by existing binding purchase
orders and rolling customer forecasts. The Group is confident of
delivering similar levels of revenues in the second half of 2022 as
those achieved in the first half. As a result of ongoing cost
control initiatives, including right-sizing of headcount as the
pandemic eases, and a non-recurrence of one-off costs incurred in
the first half of 2022 the Group expects to deliver a broadly
break-even operating EBITDA in the second half of 2022.
The Group continues to focus on building its number of customers
and partner programmes, and delivering on its mission of enabling
the biotech and biopharma industry to deliver life-saving therapies
to patients.
OPERATIONAL REVIEW
Innovative CDMO Services
Oxford Biomedica Solutions: US-based AAV manufacturing and
innovation business
In January 2022, Oxford Biomedica announced that it had entered
into an agreement with Homology Medicines to establish Oxford
Biomedica Solutions, a high-performing, full-scope 25,000 sq. ft.
AAV manufacturing and innovation business in Boston, US. The
transaction completed on 10 March 2022 and was immediately
accretive to the Group's revenues.
Under the agreement, Oxford Biomedica US, Inc. acquired an 80%
ownership interest in the newly formed AAV-focused manufacturing
and innovation business for a $130 million (GBP97 million) cash
consideration, and a $50 million (GBP38.2 million) capital
injection into Oxford Biomedica Solutions to fund growth.
Oxford Biomedica Solutions offers a scalable, high-quality
manufacturing platform to global customers, including Homology
Medicines, through a 3-year Manufacturing and Supply agreement as a
preferred customer with minimum contracted revenue of c.$25 million
(GBP21 million) from Homology Medicines for the first twelve months
post completion.
Integration of the business is progressing smoothly with the
transfer of 124 technical operation employees from Homology
Medicines now completed. Oxford Biomedica Solutions is led by Tim
Kelly, Chief Executive Officer and Chair of its Board of
Directors.
The Group has a robust business development pipeline and is
targeting one further new AAV customer partnership by the year-end,
with one already announced. In September, the Group announced that
it had signed an agreement with an undisclosed, US based private
biotechnology company, granting the new customer access to Oxford
Biomedica Solutions' AAV platform for their pre-clinical gene
therapy programmes.
The Group estimates the AAV outsourced supply market to grow to
c.$2.2 billion by 2026, and to c.$3.7 billion by 2030. To
accommodate the expected increase in customer demand, an additional
c.23,000 sq ft of fallow area at the Oxford Biomedica Solutions
Boston site is being developed for analytical, office, warehouse,
& GMP space. This is to be funded by existing funds from the
$50 million (GBP38.2 million) capital injection into the business
in March 2022. As previously guided, Oxford Biomedica Solutions is
expected to break-even on an Operating EBITDA basis by the third
year after the closing of the transaction (the first half of
2025).
Juno Therapeutics, Inc. (a wholly owned subsidiary of Bristol
Myers Squibb Company)
Oxford Biomedica has continued to build on its partnership with
Juno, (a wholly owned subsidiary of Bristol Myers Squibb Company),
which started in 2020. In July 2022, the Group announced it had
amended and expanded the original License and Clinical Supply
Agreement signed with Juno to include two new viral vector
programmes.
Under the terms of the agreement, Oxford Biomedica received an
undisclosed target nomination fee, and is eligible to receive
potential payments upon the achievements of certain milestones.
This latest agreement demonstrates the Group's ability to expand
work with existing partners and takes the total number of
programmes that it is working on with Bristol Myers Squibb to
six.
COVID-19 vaccine and Agreement with AstraZeneca
Oxford Biomedica continued to manufacture the Oxford AstraZeneca
COVID-19 vaccine at the Group's Oxbox facility at the beginning of
2022. Post-period end, in July, the Group announced the signing of
a new three-year Master Services and Development Agreement with
AstraZeneca. The new agreement will facilitate potential future
manufacturing opportunities for the Oxford AstraZeneca COVID-19
vaccine, expanding the original three-year master supply and
development agreement announced between the two companies in
September 2020.
Under the new agreement, manufacturing of vaccines at Oxford
Biomedica's world class 84,000 sq. ft. manufacturing facility,
Oxbox, will be available to AstraZeneca on an as needed basis
beyond the last quarter of 2022, when the manufacture of COVID-19
vaccines is expected to complete as part of the original
commitment.
In accordance with the terms of the original agreement and
inclusive of revenues for batches already manufactured in the first
half of 2022, Oxford Biomedica expects to recognise aggregate
revenues of approximately GBP30 million from AstraZeneca in the
current financial year.
Novartis
The Group continues its strong and long-term relationship with
Novartis as its sole global supplier of lentiviral vector for
Kymriah(R) (tisagenlecleucel, formerly CTL019).
Kymriah(R) , which is designed to be a one-time treatment, was
the first-ever FDA-approved CAR-T cell therapy and recently
expanded into a third indication in May 2022, after the accelerated
approval from the FDA and approval by the European Commission for
Kymriah(R) for the treatment of adult patients with relapsed or
refractory follicular lymphoma (FL), after two or more lines of
systemic therapy. This the third B-cell malignancy indication for
Kymriah(R) , joining approvals in indications in children and young
adults with r/r paediatric and young adult acute lymphoblastic
leukaemia (ALL), and r/r adult diffuse large B-cell lymphoma
(DLBCL). In June 2022, Novartis announced five-year Kymriah(R) data
showing durable remission and long-term survival maintained in
children and young adults with advanced B-cell ALL.
Kymriah(R) is available in more than 400 qualified treatment
centres in 30 countries having coverage for at least one
indication.
The Group is currently working with Novartis on four partner
programmes, in addition to Kymriah(R) .
Cabaletta Bio
In January 2022, Oxford Biomedica announced a License and Supply
Agreement with Philadelphia, US-based Cabaletta for their lead
product candidate, DSG3-CAART. DSG3-CAART is being evaluated in the
DesCAARTes(TM) Phase I clinical trial as a potential treatment for
patients with Mucosal Pemphigus Vulgaris and is designed to
selectively target and kill the B cells that produce DSG3
antibodies while preserving the healthy B cells critical to immune
function.
In May 2022, Cabaletta presented data showing that DSG3-CAART
has a favourable safety profile with no DLTs or cytokine release
syndrome of any grade. Cabaletta recently announced 6 month
clinical and translational data from cohort A4 and 28-day safety
and persistence data from cohort A5 at the European Dermatology and
Venereology Congress in September 2022.
Further partner updates
In July 2022, Oxford Biomedica announced a new Licence and
Supply Agreement with an undisclosed US-based private biotechnology
company advancing a new generation of adoptive cell therapies. The
Licence and Supply Agreement grants the new partner a non-exclusive
licence to utilise Oxford Biomedica's LentiVector(R) platform for
its application in their lead CAR-T programme and puts in place a
three-year Clinical Supply Agreement.
In September 2022, Oxford Biomedica announced a further Licence
and Supply Agreement with an undisclosed US-based late-stage cell
and gene therapy company. The Licence and Supply Agreement grants
the new partner a non-exclusive licence to utilise Oxford
Biomedica's LentiVector(R) platform for its application in their
lead programme, a cell-based therapy targeting a rare indication,
putting into place a five-year clinical supply arrangement.
The Group continues to actively progress its collaborations with
Boehringer Ingelheim, Immatics, Arcellx and Beam Therapeutics with
the combined revenues from these partnerships contributing
meaningfully towards the total bioprocessing and commercial
development revenues expected in the current financial year.
The MPS-IIIA (OTL-201) partner programme with Orchard
Therapeutics ("Orchard") is currently being evaluated in an ongoing
proof-of-concept clinical trial, with interim data from this study
expected to be released by the year end 2022.
Innovation and Platform Development
Innovation and the development of the platform are core to the
Group's goal of industrialising viral vector manufacturing not just
with lentiviral vectors but across all viral vector classes. By
industrialising viral vector production, reducing costs and
improving quality through innovation, the Group will broaden the
therapeutic indications that are amenable to treatment with cell
and gene therapy. It is expected that the reduction in cost will
help drive more projects through clinical development and
ultimately adoption by payors into indications where there are a
far greater number of patients, by bringing down the overall cost
per patient treated.
Multiple elements of IP and innovation are relevant across all
viral vector classes. Development of the Group's technologies such
as TRiPSystem(TM), SecNuc(TM), LentiStable(TM) and U1 and U2, along
with the corresponding IP, continue to move ahead. In addition, the
Group is utilising automation and the use of robotics, artificial
intelligence and machine learning to further drive productivity and
capacity improvements.
Process C, which utilises perfusion-mode production, as opposed
to the more typical batch-mode production, coupled with
improvements in downstream processing into the manufacturing
process has been proven and rolled out at 200L scale in GMP.
Process C works together with production enhancers (such as U1, U2)
which are adopted to realise even greater gains in productivity and
quality. The Group has begun to offer Process C commercially, with
several customers adopting the technology due to the evident gains
in vector quantity and quality it affords.
Post-period, in July 2022, Oxford Biomedica announced that it
had initiated a new project with Orchard utilising the Company's
proprietary LentiStable(TM) technology. As part of the project,
Oxford Biomedica's LentiStable(TM) technology platform will be used
to develop a producer cell line capable of stably expressing
lentiviral vectors. Orchard is exploring the technology to increase
the manufacturing efficiency and scalability of their
investigational haemopoietic stem cell (HSC) gene therapy in
development for the potential treatment of mucopolysaccharidosis
type I Hurler syndrome (MPS-IH).
The Group continues development work in the area of in vivo
CAR-T, which the Group believes would offer great patient access
and superior efficacy to existing treatment options.
Gene Therapeutics Pipeline
Dr Ravi Rao joined Oxford Biomedica as Chief Medical Officer in
April 2022, with responsibility for assessing and developing the
Group's therapeutic product strategy, which is expected to be
completed by the end of calendar year 2022.
The Group is reviewing strategic options to externally fund an
appropriate future pipeline of products and other novel
opportunities with the intention for this to be executed in 2023.
It is anticipated that this will allow the Group to maintain a long
term economic interest in a number of therapeutic products with a
potential material reduction in annual operating expenditure. In
the first half of 2022 the Group's Product segment generated an
operating EBITDA loss of GBP5.0 million.
The Group's work on targeting the liver is progressing well with
the initial indications identified, and pre-clinical studies
ongoing. The liver is an attractive target for lentiviral vectors
due to the possibility of a one-off treatment giving life-long
benefit to patients with high unmet need or heavy medical
burden.
In addition, the Group is evaluating opportunities for
cell-based therapy, using its proprietary platform technology to
generate specific CAR-T constructs for haematologic and solid
tumours, including 5T4 (an oncofoetal antigen specifically
expressed of the cell surface of many cancers) as a potential
target.
In January, Oxford Biomedica was informed by Sio Gene Therapies
("Sio") of their intention to return the rights for AXO-Lenti-PD
following Sio's deprioritising of the programme due to resourcing
constraints. The rights to AXO-Lenti-PD were returned to the Group
in March 2022, and the Group is now seeking a suitable partner for
out-licensing. To date, six patients have been dosed in the Phase
II SUNRISE-PD trial with AXO-Lenti-PD.
Facilities and capacity expansion
Oxbox, the Group's largest manufacturing facility spanning
84,000 sq. ft received MHRA approval for the fill finish suite
post-period in August 2022, bringing this previously outsourced
function in-house.
The manufacture of COVID-19 vaccines at Oxbox took place in
three suites at the start of the year, with the remaining suites
being used for 200L viral vector manufacturing. As part of the
expanded agreement with AstraZeneca announced in June 2022, further
manufacturing of AstraZeneca COVID-19 vaccines is planned for the
last quarter of 2022, with the suites being available for
AstraZeneca on an as needed basis beyond 2022.
The second phase of Oxbox development is expected to provide
additional flexible manufacturing capacity for a variety of viral
vector-based products, including cell and gene therapy products,
vaccines, and other advanced therapeutics up to 2,000L scale.
Design work for this next phase of Oxbox development, is
progressing, with the proceeds from the GBP50 million investment
from Serum Life Sciences Ltd (a subsidiary of Serum Institute of
India) funding the development.
Oxford Biomedica has a Memorandum of Understanding with Serum
Life Sciences Ltd, granting them the right of first refusal to the
exclusive use of one of two 2,000L bioreactor facilities that
Oxford Biomedica is building in the expansion of its Oxbox
manufacturing facility. Exclusive use will require Serum Life
Sciences to commit to a minimum contract value per year for up to
ten years.
With regard to the planned redevelopment of the Windrush
Innovation Centre into next generation laboratory facilities, the
Group is currently conducting a review of required capacity and
alternative laboratory options, in parallel with the strategic
review of the gene therapeutics pipeline and ongoing development of
lab space at Oxford Biomedica Solutions.
A process is underway for the sale and leaseback of the Group's
Windrush Court facility in Oxford, which will potentially provide
additional liquidity and financial flexibility. Windrush has 36,000
sq. ft. of GMP grade facilities and office space, and is currently
on the market seeking offers exceeding GBP55 million.
To ensure the Group has sufficient warehouse capacity to meet
expected near-term commercial development from both current and
future potential partners, the Group has acquired the leasehold of
a new 45,000 sq ft warehouse in Wallingford, Oxfordshire to store
ambient raw materials. The first phase of fit-out is expected to be
complete shortly with the site being ready for occupation in the
last quarter of 2022.
Short-term loan facility
In March, the Group entered into an $85m short-term loan
facility with Oaktree Capital Management, L.P. The proceeds were
used by the Company, together with the Company's existing cash, to
finance a portion of the transaction with Homology Medicines to
establish Oxford Biomedica Solutions. The loan carries an interest
rate of 8.5% with the principal amount due at the facility's
maturity date in March 2023.
The Group is in the process of part-repaying and refinancing
this loan facility. The Group heads into the second half of the
year with a strong cash position of GBP118.5 million and a net cash
position of GBP50.1 million as at 30 June 2022.
Corporate and organisational development
During the period, new appointments were made across the Board
and the Senior Executive Team, further diversifying its areas of
expertise and strengthening Oxford Biomedica's position as a
leading gene and cell therapy company.
In January, John Dawson stepped down as CEO after 13 years and
simultaneously Roch Doliveux assumed the role of Interim CEO, in
addition to his existing role as Chair. John Dawson stepped down
from the Board at the AGM in May 2022 and remains an adviser to the
Company. The recruitment process to appoint a successor to lead
Oxford Biomedica through its next phase of growth is progressing
well and Oxford Biomedica will update the market once the
recruitment process has been completed.
In April, Namrata Patel was appointed to the Board as an
Independent Non-Executive Director. Ms. Patel has extensive
international experience in manufacturing and end-to-end supply
chain with experience in the commercialised regulated industry and
has held senior positions across several major global markets. Her
experience in sustainability includes playing a key role in
delivering on Procter & Gamble's 2040 Sustainability Ambition
Goals for its Beauty Business portfolio.
In April, Ravi Rao, Chief Medical Officer joined the Senior
Executive team, dividing his time between his role at Oxford
Biomedica with roles at SV Health Investors and Sitryx. Dr. Rao
brings long-standing biopharmaceutical and translation experience
across multiple therapeutic areas with different treatment
modalities.
Environmental, Social and Governance
The Group remains committed to its role as a responsible
business and implementing its Environmental, Social and Governance
(ESG) strategy, which is focused on five pillars: People;
Community; Environment; Innovation and Supply Chain.
The People pillar continued to be an area of particular focus.
As part of the Equality, Diversity and Inclusion (EDI) three-year
plan, a working group was formed, applying equality and diversity
principles across the whole of Oxford Biomedica's UK business.
Sixteen new representatives from across the business have been
elected to our Workforce Engagement Panel (WEP). Following feedback
from our first annual all employee engagement survey 'Your Voice',
the Senior Executive Team (SET) established a fortnightly Q&A
briefing, providing SET with a platform to share business updates,
and employees with an open forum to ask questions. The Group has
introduced further wellbeing initiatives, including webinars
focussed on stress, debt and budget management.
On the Community pillar, a community volunteering activity
scheme was introduced, allowing employees to request up to seven
hours of paid time off for volunteering each year, whilst
fundraising efforts for Oxfordshire Mind and Homeless Oxfordshire
continued during the year.
The Group has been focussing on waste reduction initiatives and
ways to improve energy efficiency as part of the Group's commitment
to reducing its environmental footprint under the Environment
pillar. The Group has engaged with waste operators to increase
levels of recycling and participated in an external programme to
improve energy efficiency in laboratory cold storage. The Group has
engaged with waste operators to increase levels of recycling and in
June, welcomed a specialist waste management company onsite to
perform a waste awareness day. The Group participated in an
external programme to improve energy efficiency in laboratory cold
storage, and tree planting schemes have been investigated to offset
paper use.
On the Innovation pillar, the Group continues to work to promote
science and build strong academic collaborations. The Group
continued to support PhD studentships through ABViP, a
multidisciplinary training programme for next-generation bioscience
leaders, where the first cohort of students is due to start at
Oxford Biomedica in October 2022. The Group has 35 apprentices
enrolled across different programmes in the business and was
recently recognised as "Apprenticeship Employer of the Year 2022"
in the Oxfordshire Apprenticeship Awards.
The Group is fully committed to responsible supply chain
management, and work continues to progress in achieving the Group's
2022 ESG supply chain objectives. A supplier code of conduct has
been rolled out and published on the Group's website, detailing the
standards it expects the Group's suppliers to adopt, focussing on
the core principles of quality; ethics; people; health, safety and
environment and related management systems.
The Group's commitment to responsible business practices were
recognised with inclusion in the FTSE4Good index in June 2022.
Created by the global index provider FTSE Russell, the FTSE4Good
Index Series is designed to measure the performance of companies
demonstrating strong Environmental, Social and Governance (ESG)
practices. The FTSE4Good indices are used by a wide variety of
market participants to create and assess responsible investment
funds and other products.
Full details on our ESG pillars, including the supplier code of
conduct, can be found on our ESG webpage at www.oxb.com.
Financial Review
The initiation of new customer relationships and expansion of
existing customer agreements has increased in momentum in recent
months with the Group currently working with 14 customers compared
to 8 customers at the same time last year. Lentiviral vector
manufacturing volumes have continued their post pandemic upward
trajectory, with revenues from the core (excluding COVID-19 vaccine
manufacturing) business achieving double digit revenue growth
compared to the first half of 2021. COVID-19 vaccine bioprocessing
volumes were much lower with the variance from the prior year
reflecting the exceptional results achieved in 2021 when vaccine
manufacturing was at full pace.
The Group announced license and supply agreements with
Cabaletta, Juno, (a wholly owned subsidiary of Bristol Myers Squibb
Company) and three undisclosed US-based private biotechnology
companies, including one new AAV partner. These agreements are
expected to bolster the Group's development and manufacturing
pipeline over the coming years.
In June, the Group also expanded its original supply and
development agreement with AstraZeneca, allowing the Group to be
able to recognise aggregate revenues of approximately GBP30.0
million from AstraZeneca in the current financial year, of which
the bulk of revenues have been recognised in the first half of the
year.
The Group achieved total revenues of GBP64.0 million and
incurred an Operating EBITDA loss of GBP5.8 million in the first
half of 2022 compared to revenues of GBP81.3 million and an
Operating EBITDA profit of GBP27.1 million in the prior year. The
variance in revenues from the prior year reflects the exceptional
results achieved in 2021, predominantly driven by much higher
COVID-19 vaccine bioprocessing volumes with manufacturing at full
pace. At a cost level, there was an increase in operating
expenditure in the first half of 2022 as a result of increased
personnel and other operational expenditure incurred due to the
consolidation of the results of Oxford Biomedica Solutions,
acquisition-related due diligence costs of GBP5.1 million and,
throughout the wider Group, inflationary operational cost increases
including employee salary increases to help ensure the Group
continues to attract and retain high quality employees. Oxford
Biomedica Solutions' operating expenditure continues to be fully
funded from the $50.0 million (GBP38.2 million) capital injection
into the new business.
During the period, whilst the Group has continued to invest
selectively in the future growth of the business, we have also
taken appropriate measures to reduce the Group's operating cost
base particularly as the COVID-19 pandemic continues to ease, which
has included a degree of right-sizing its staff base and initiating
a headcount freeze (except for critical hires). Whilst the Group
continues to experience inflationary pressures, it is expected that
active cost management can more than offset the impact of
inflation.
In March 2022, the Group acquired an 80% ownership interest in
Oxford Biomedica Solutions, an AAV-focused manufacturing and
innovation business for $180 million (GBP137.4 million), with
Homology Medicines Inc. retaining a 20% ownership stake. As part of
the financing arrangements, the Group raised gross proceeds of
GBP80.0 million through a placing of shares and secured a
short-term loan facility of $85.0 million (GBP64.9 million) which
is repayable 12 months after the closing date.
Concurrently with the Oxford Biomedica Solutions transaction,
the Group entered into a manufacturing and supply agreement with
Homology Medicines which has made a promising contribution to
revenues since the completion of the transaction, with Oxford
Biomedica Solutions generating revenues of GBP7.3 million in the
period. Homology Medicines is Oxford Biomedica Solutions' first
customer, and under the terms of the agreement will contribute
minimum revenues of circa GBP21.0 million ($25.0 million) in the
period to March 2023.
The Group's balance sheet expanded with the establishment of
Oxford Biomedica Solutions through the recognition of identifiable
net assets of GBP133.2 million. The transaction was funded through
a combination of GBP77 million of net equity raised in 2 tranches,
the Oaktree loan of $85.0 million (GBP64.9 million) and the
recognition of a put option liability to acquire the remaining 20%
of Oxford Biomedica Solutions from Homology Medicines of $51.1
million (GBP42.0 million).
The key financial indicators used by the Board are set out in
the table below and the highlights are:
- Revenue (GBP64.0 million) decreased by 21% over H1 2021
(GBP81.3 million) as a result of the decrease in vaccine batches
manufactured for AstraZeneca, partly offset by an increase in
revenues from lentiviral vector and AAV commercial development and
manufacturing activities.
- Operational results (Operating EBITDA (1) loss and Operating
loss) of GBP5.8 million and GBP19.2 million respectively, were
lower than the prior year due to much lower vaccine bioprocessing
volumes, as well as increased operating expenditure from Oxford
Biomedica Solutions operating spend, inflationary increases, and
acquisition related due diligence costs of GBP5.1 million.
- Operational activities consumed cash of GBP24.5 million
compared to generating cash of GBP22.2 million in H1 2021 due to
much higher vaccine manufacturing revenues in H1 2021 and
consolidation of the new business, Oxford Biomedica Solutions in H1
2022.
- Capital expenditure increased from GBP3.5 million in H1 2021
to GBP6.0 million with H1 2022 capital expenditure consisting
mainly of the purchase of bioprocessing and laboratory equipment,
as well as various other equipment and leasehold improvements
required for commercial activities and production.
- Cash burn (2) was GBP32.2 million in H1 2022 (H1 2021 inflow
of GBP18.7 million) due mainly to decreased cash inflows from
vaccine production, increased operational cash flows and due
diligence fees paid.
- Cash at 30 June 2022 was GBP118.5 million compared to GBP61.3
million at 30 June 2021. The net cash position was GBP50.1 million
as at 30 June 2022
-
KEY FINANCIAL INDICATORS (GBPm) H1 2022 H1 2021
Revenues
------------ ---------
Bioprocessing/commercial development 57.3 75.6
------------ ---------
Licence fees, milestones & royalties 6.7 5.7
------------ ---------
Total 64.0 81.3
------------ ---------
Operating (loss)/profit (19.2) 19.7
------------ ---------
Operating EBITDA(1 2) (5.8) 27.1
------------ ---------
Cash (consumed by)/generated from operating
activities (24.5) 22.2
------------ ---------
Capital expenditure (6.0) (3.5)
------------ ---------
Cash (burn)/inflow(3) (32.2) 18.7
------------ ---------
Period end cash 118.5 61.3
------------ ---------
Net cash(4) 50.1 61.3
------------ ---------
Headcount
------------ ---------
Period end 959 744
------------ ---------
Average 920 716
------------ ---------
1 Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 12.
2 Included GBP5.1 million in one-off acquisition-related due
diligence costs relating to the transaction to acquire Oxford
Biomedica Solutions. Includes operational expenditure for Oxford
Biomedica Solutions from March 2022.
3 Cash (burn)/inflow is net cash generated from operating
activities less net finance costs paid and capital expenditure. A
reconciliation to GAAP measures is provided on page 15.
4 Net cash is cash less external loans.
The Group evaluates its performance inter alia by making use of
two alternative performance measures as part of its Key Financial
Performance Indicators (see table above). The Group believes that
these Non-GAAP measures, together with the relevant GAAP measures,
provide an accurate reflection of the Group's performance over
time. The Board has taken the decision that the Key Financial
Performance Indicators against which the business will be assessed,
are Revenue, Operating EBITDA and Operating profit/(loss).
Revenue
Revenues were GBP64.0 million in H1 2022, 21% below the GBP81.3
million achieved in H1 2021.
GBPm H1 2022 H1 2021
--------------------------------------- --------- ---------
Bioprocessing/commercial development 57.3 75.6
Licence fees, milestones & royalties 6.7 5.7
Revenue 64.0 81.3
Revenues from bioprocessing/commercial development were 24%
lower in H1 2022 as compared to H1 2021, due largely to the
decrease in the volume of vaccine batches manufactured for
AstraZeneca, offset to an extent by an increase in revenues from
lentiviral vector and AAV commercial development and manufacturing
activities. Bioprocessing and commercial development activities
performed on behalf of the Group's other customers have increased
due to the new development and manufacturing agreements entered
into with customers over the last 12 months including Boehringer
Ingelheim, Arcellx and Homology Medicines.
Revenues from licence fees, milestones and royalties have
remained largely stable when compared to the prior year.
Operating EBITDA
GBPm H1 2022 H1 2021
------------------------------------------- --------- ---------
Revenue 64.0 81.3
Other operating income 0.9 0.4
Total expenses (1) (70.7) (54.6)
Operating EBITDA (5.8) 27.1
Depreciation, amortisation, share option
charge and fair value adjustments of
available-for-sale assets (13.4) (7.4)
--------- ---------
Operating (loss)/profit (19.2) 19.7
(1) Cost of goods plus research, development, bioprocessing and
administrative expenses excluding depreciation, amortisation and
share option charge. A reconciliation to GAAP measures is provided
on page 12.
Total expenses in H1 2022 were GBP70.7 million, compared with
GBP54.6 million in H1 2021, a 29% increase over H1 2021. The
increase was driven by an increase in operational spend from
consolidation of the results of Oxford Biomedica Solutions,
inflationary increases and acquisition-related due diligence costs
of GBP5.1 million.
As a result of the lower revenues and increased operational
spend, the Operating EBITDA loss in H1 2022 was GBP5.8 million,
GBP32.9 million lower than the prior period (H1 2021 Operating
EBITDA profit of GBP27.1 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 cost of goods, research and
development, bioprocessing and administrative costs and has removed
depreciation, amortisation and the share option charge as these are
non-cash items which do not form part of the Operating EBITDA
alternative performance measure. As Operating profit/(loss) is
assessed separately as a key financial performance measure, the
year-on-year movement in these non-cash items is then individually
analysed and explained specifically in the Operating and Net
profit/(loss) section. Expense items included within Total Expenses
are then categorised according to their relevant nature with the
year-on-year movement explained in the second table below:
GBPm H1 2022 H1 2021
------------------------------------- --------- ---------
Research and development costs (1) 27.3 14.7
Bioprocessing costs (1) (2) 12.4 2.9
Administrative expenses (1 3) 16.5 6.0
Operating expenses 56.2 23.6
Depreciation, amortisation & share
option charge (13.4) (7.4)
--------- ---------
Adjusted operating expenses 42.8 16.2
Cost of Sales 27.9 38.4
--------- ---------
Total expenses (1) 70.7 54.6
(1) Includes operational expenditure for Oxford Biomedica
Solutions from March 2022 onwards.
(2) Bioprocessing costs have increased from the prior period due
to the lower recovery of batch manufacturing costs which is also
reflected in decreased cost of goods in H1 2022.
(3) Included GBP5.1 million in one-off acquisition-related due
diligence costs relating to the transaction to acquire Oxford
Biomedica Solutions.
The table below shows total expenses by type of expenditure
(excluding depreciation, amortisation and other non-cash
items):
GBPm H1 2022 H1 2021
--------------------------------------- --------- ---------
Raw materials, consumables and other
external bioprocessing costs 15.8 18.8
Personnel-related 40.4 27.2
External R&D expenditure 1.9 2.0
Due diligence costs 5.1 1.2
Other costs 7.5 5.4
--------- ---------
Total expenses 70.7 54.6
--------------------------------------- --------- ---------
Raw materials, consumables and other external bioprocessing
costs have decreased as a result of lower number of vaccine batches
manufactured in H1 2022 as compared to H1 2021. Personnel related
costs are higher due to average employee numbers increasing from
716 in H1 2021 to 920 in H1 2022, mostly as a result of 124
employees acquired as part of the transaction to establish Oxford
Biomedica Solutions but also reflecting employee salary increases.
External R&D expenditure was in line with the prior year. Due
diligence costs relate to the establishment of Oxford Biomedica
Solutions. Other costs have increased compared to prior year due to
the administrative expenditure of Oxford Biomedica Solutions, and
inflationary increases.
Operating profit/(loss) and net profit/(loss)
GBPm H1 2022 H1 2021
--------------------------------------- --------- ---------
Operating EBITDA (1) (5.8) 27.1
Depreciation, amortisation and share
option charge (13.4) (7.4)
Operating (loss)/profit (19.2) 19.7
Interest (8.2) (0.5)
Taxation (0.2) (1.1)
--------- ---------
Net (loss)/profit (27.6) 18.1
--------------------------------------- --------- ---------
(1) Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 12.
In arriving at the Operating loss, the Operating EBITDA loss of
GBP5.8 million was further impacted by depreciation and the share
option charge.
Depreciation and amortisation increased by GBP5.0 million mainly
due to Oxford Biomedica Solutions fixed assets and intangible asset
depreciation and amortisation for the period from when they were
acquired. The share option charge increased by GBP0.9 million due
to the increased employee headcount of the Group.
The impact of these charges resulted in an operating loss of
GBP19.2 million in the first half of 2022 compared to a profit of
GBP19.7 million in the prior year corresponding period.
The interest charge increased by GBP7.7 million largely due to
interest and foreign exchange on the Oaktree loan, as well as IFRS
16 interest on the lease liability related to the Oxford Biomedica
Solutions Boston facility.
The corporation tax expense in H1 2022 decreased as the
corporation tax charge in 2022 is limited to the notional tax
charge on the RDEC tax credit included within research and
development costs and the release of the deferred tax on the
acquired intangibles assets.
Other Comprehensive Income
The Group recognised other comprehensive income in H1 2022 of
GBP10.8 million (2021: nil) in relation to movements on the foreign
currency translation reserve.
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations, including gains arising from
monetary items that in substance form part of the net investment in
foreign operations.
Segmental analysis
The Group reports its results within two segments, namely the
"Platform" segment which includes the revenue generating
bioprocessing and process development activities for third parties,
and internal technology projects to develop new potentially
saleable technology, improve the Group's current processes and
bring development and manufacturing costs down. The other segment,
"Product", includes the costs of researching and developing new
product candidates.
H1 2022
GBPm Platform Product Total
Revenues 64.0 0.0 64.0
---------- --------- --------
Operating EBITDA(1) (0.8) (5.0) (5.8)
---------- --------- --------
Operating loss (13.2) (6.0) (19.2)
---------- --------- --------
H1 2021
GBPm Platform Product Total
Revenues 81.2 0.1 81.3
---------- --------- -------
Operating EBITDA(1) 31.2 (4.1) 27.1
---------- --------- -------
Operating profit/(loss) 24.5 (4.8) 19.7
---------- --------- -------
1 Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 12.
Revenues from the platform segment decreased when compared to H1
2021 due to the lower volumes of vaccine batches manufactured for
AstraZeneca. Operating results were negatively impacted by the
lower revenues as well as Oxford Biomedica Solutions' operational
expenditure in the period since they were acquired.
Revenues from the product segment were higher due to an
increased level of clinical development activities for customers.
Product operating expenses were higher due to increased research,
development and pre-clinical product expenditure, but also
increased manpower costs.
Cash flow
GBPm H1 2022 H1 2021
----------------------------------------------- --------- ---------
Operating (loss)/profit (19.2) 19.7
Depreciation, amortisation and share
option charge 13.4 7.4
Operating EBITDA(1) (5.8) 27.1
Working capital (19.3) (5.9)
R&D tax credit received 0.6 1.0
--------- ---------
Cash (consumed in)/generated from operations (24.5) 22.2
Interest paid less received (1.7) -
Capital expenditure (6.0) (3.5)
Cash (burn) (32.2) 18.7
--------- ---------
1 Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 12.
Operating losses for the first six months of 2022 were GBP38.9
million lower than the GBP19.7 million profit achieved in H1 2021.
The negative outflow from working capital was mainly as a result of
the increase in contract assets due to amounts receivable as part
of the AstraZeneca contract agreed in June 2022. Capital
expenditure increased by GBP2.5 million in H1 2022 due mainly to
the purchase of bioprocessing and laboratory equipment, but also
various other equipment and leasehold improvements required for
commercial activities and production.
Statement of financial position
The most notable items on the Statement of financial position,
including changes from 31 December 2021, are as follows:
Non-current assets - Intangible assets and goodwill increased
from GBP0.1 million to GBP123.9 million due to GBP102.9 million of
technology assets and GBP14.4 million of goodwill acquired as part
of the acquisition of Oxford Biomedica Solutions. Property, plant
and equipment increased from GBP69.7 million to GBP136.3 million
due to GBP58.9 million of property plant and equipment acquired as
part of the transaction to establish Oxford Biomedica Solutions,
GBP9.6 million of capital expenditure incurred, positive foreign
exchange movements of GBP4.5 million offset by depreciation of
GBP8.8 million.
Current assets - Inventories increased to GBP13.9 million from
GBP9.5 million at 31 December 2021 mainly as a result of the
acquisition of the inventories of Oxford Biomedica Solutions, but
also stock purchased in preparation of the expected increased
bioprocessing activities in the second half of 2022. Trade and
other receivables and Contract assets have increased by GBP26.0
million mainly as a result of the recognition of a receivable for
the contracted vaccines batches ordered by AstraZeneca.
Current liabilities - Trade and other payables have increased
from GBP19.1 million at the start of the year to GBP26.3 million
due to the inclusion of the trade and other payables of Oxford
Biomedica Solutions. Contract liabilities have increased by GBP0.4
million to GBP12.9 million due to the invoicing of orders received
in advance of the goods and services being provided by the Group. A
GBP64.9 million ($85 million) loan facility was entered into with
Oaktree Capital Management in March, with a balance of GBP68.4
million at the period end due to the devaluation of sterling versus
the dollar. Deferred income decreased due to the recognition of
grant income related to production capacity expansion.
Non-current liabilities - Provisions increased by GBP2.6 million
as a result of the recognition of an increased liability for the
costs of restoring existing properties to their original state, as
well as the recognition of a liability for the costs of restoring
the newly leased Wallingford warehouse property to its original
state at the end of the lease term. Lease liabilities increased by
GBP28.6 million to GBP37.0 million due to the inclusion of the
lease liabilities for the Wallingford and Bedford, Massachusetts
property lease as part of the acquisition of Oxford Biomedica
Solutions. The Group has recognised a liability of GBP41.3 million
for the put option to acquire the remaining 20% of Oxford Biomedica
Solutions that it doesn't already own.
The Group's cash resources at 1 January 2022 were GBP108.9
million. Cash used in operations was GBP24.5 million. Other
significant cash flows were GBP77.0 million received from equity
fundraises, GBP64.9 million received from drawing down the Oaktree
loan, GBP99.2 million paid to Homology Medicines upon completion of
the transaction to establish Oxford Biomedica Solutions, GBP6.0
million of capex and GBP1.5 million of lease liability payments.
The cash balance at 30 June 2022 was GBP118.5 million with a net
cash position of GBP50.1 million.
Financial outlook
Oxford Biomedica anticipates continued growth in lentiviral
vector and AAV manufacturing volumes, lower vaccine volumes, and
for process development activities for customers to continue at
higher levels in 2022 than those seen in 2021. Oxford Biomedica
continues to expect to recognise aggregate revenues of
approximately GBP30 million from AstraZeneca for vaccine
manufacturing in the current financial year.
Overall, the Group has a high level of visibility over revenues
for the remainder of 2022 with more than 90% of forecasted revenues
for the second half of the year covered by existing binding
purchase orders and rolling customer forecasts. Accordingly, the
Group is confident of delivering similar levels of revenues in the
second half of 2022 as those achieved in the first half.
As a result of ongoing cost control initiatives, including
right-sizing of headcount as the pandemic eases, and a
non-recurrence of one-off costs incurred in the first half of 2022,
the Group expects to deliver a broadly break-even Operating EBITDA
position for the second half of 2022. Capex levels are expected to
be similar in the second half of 2022 to the first half of 2022
with the Group taking a cautious approach to planning significant
new projects.
One further new AAV customer partnership is expected before the
end of calendar year 2022, with one new customer already announced.
Oxford Biomedica Solutions has generated revenues of GBP7.3 million
in the first half of 2022, with a ramp up in revenues expected as
the new business builds its customer base. The integration of
Oxford Biomedica Solutions is on target for completion by H1 2023.
As previously guided, Oxford Biomedica Solutions is expected to
break-even on an Operating EBITDA basis by the third year after the
closing of the transaction (the first half of 2025).
Cost of goods, which includes material costs and the transfer of
bioprocessing manpower and overheads, is expected to be similar to
the first half, with an increase in bioprocessing costs from Oxford
Biomedica Solutions. Research and development costs are expected to
remain at consistent levels as the Group continues to invest in new
technologies in order to maintain its competitive edge in
lentiviral vectors, and to also build a leading position in AAV.
Administrative expenditure is expected to decrease due to one-off
costs related to the Oxford Biomedica Solutions transaction and
ongoing cost control initiatives.
With a cash position of GBP115.8 million and a net cash position
of GBP42.1 million as at 31 August 2022, the Group is well
financed. A process is underway for the sale and leaseback of the
Group's Windrush Court facility in Oxford, and, simultaneously, the
Group is in the process of part re-paying and refinancing the $85
million Oaktree loan facility taken out in March 2022.
In the medium term, the Group expects to continue to grow
lentiviral vector and AAV manufacturing and development revenues
through the successful development of existing customer
relationships and the continued targeting of new customer
relationships. Consistent with years prior to 2021 (when revenues
were significantly boosted by COVID-19 vaccine manufacturing
business) the Group expects future years' revenues to be second
half weighted.
Building on its leading position in lentiviral vectors, the
Group aims to ultimately have a market leading position in the
viral vector outsourced supply market across all key vector types,
with long term revenue growth rates exceeding the broader
market.
Principal risks and uncertainties
Except as noted below, the principal risks and uncertainties
facing the Group are unchanged from those set out in pages 24 to 38
of the 2021 Annual report & accounts which is available on the
Group's website at www.oxb.com.
The following additional elements have been identified in
respect of existing risks identified in the 2021 Annual report post
published in April 2022:
War in Ukraine and COVID-19
Inflationary cost pressures have accelerated in the wake of the
COVID-19 pandemic and the war in Ukraine and are expected to impact
the Group's operational expenditures, giving rise to an increased
risk that the Group may not be able to pass on resulting price
rises to customers. Further, there is a risk that such cost
pressures will negatively impact the Group's customers and could
result in a reduction in revenues from customers, including
expected revenues from customers under long term contracts.
In addition, the risk to the security of the Group's supply of
energy has increased considering the impact of the war in Ukraine
and the resulting Russian sanctions.
Foreign currency exposure and Loan facility
Sterling has devalued significantly versus the dollar over the
period since the 2021 Annual report and accounts were released
leading to increased levels of expenditure required to service
dollar denominated supplier spend, interest and loan refinancing
costs. This risk is partially offset by dollar balances held by the
Group.
Going concern
The financial position of the Group, its cash flows and
liquidity position are described in the primary statements and
notes to these interim financial statements.
The Group made a loss for the period ended 30 June 2022 of
GBP27.6 million, and consumed net cash flows from operating
activities for the year of GBP24.5 million. The Group also raised
GBP77.0 million in cash from an equity fundraise in January and
March 2022. The Group ended the period with cash and cash
equivalents of GBP118.5 million. In considering the basis of
preparation of the Interim financial statements, the Directors have
prepared cash flow forecasts for a period of at least 12 months
from the date of approval of these financial statements, based in
the first instance on the Group's 2022 latest view and forecasts
for 2023. The Directors have undertaken a rigorous assessment of
the forecasts in a base case scenario and assessed identified
downside risks and mitigating actions.
These cash flow forecasts also take into consideration severe
but plausible downside scenarios including:
-- A substantial manufacturing and development revenue downside
affecting the core LentiVector (R) platform business,
-- Vaccine manufacturing revenues only included to the extent contracted,
-- No revenues from new customers,
-- Significant decreases in forecasted existing customer milestone and royalty revenues, and
-- The potential impacts of the current ongoing war in Ukraine
on the Group and its customers including expected revenues from
existing customers under long term contracts.
The Group entered into an $85 million (GBP63 million) loan
facility with Oaktree Capital Management as part of the Group's
acquisition of an 80% stake in Oxford Biomedica Solutions in March
2022. The facility has been drawn down in full and the Group is
required to repay this one-year facility in March 2023. The Group
is in the process of considering its options for the above loan.
The Group is considering potential part repayment from cash
balances held and part refinancing the loan facility through a
combination of proceeds from a sale and leaseback of its owned
premises and rolling the remainder, or securing replacement loan
finance. There are a number of potential lenders and the sale and
leaseback transaction is expected to be completed by the end of
December 2022. Given the amount of cash available to the group the
refinancing is not critical to the going concern assumption. On
this basis in both the Group's cash flow forecast and the mitigated
downside scenario, the Group is able to refinance this loan before
the repayment term.
However, despite the above requirement, the Board has confidence
in the Group's ability to continue as a going concern for the
following reasons:
-- As noted above the Group has cash balances of GBP118.5
million at the end of June 2022 and GBP115.8 million at the end of
August 2022;
-- More than 90% of 2022 forecasted revenues are covered by
binding purchase orders and rolling customer forecasts which give
confidence in the level of revenues forecast over the next 12
months; and
-- The Group's history of being able to access capital markets
including raising GBP80 million of equity during the last six
months;
-- The Group's history of being able to obtain loan financing
when required for purposes of both capital expenditure and
operational purposes, as recently evidenced by the $85 million
one-year facility obtained with Oaktree Capital Management;
-- The Group is also reviewing its gene therapeutics pipeline,
including strategic options to externally fund an appropriate
future pipeline of products and other novel opportunities.
-- The Group's ability to continue to be successful in winning
new customers and building its brand as demonstrated by
successfully entering into new customer agreements with Astra
Zeneca, Juno (a wholly owned subsidiary of Bristol Myers Squibb
Company), Homology Medicines and two unnamed new partners over the
last 6 months;
-- The Group has the ability to control capital expenditure
costs and lower other operational spend, as necessary.
Taking account of the matters described above, the Directors
remain confident that the Group will have sufficient funds to
continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern
basis.
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2022
Six months ended Six months ended
30 June 2022 30 June 2021
Unaudited Unaudited
Notes GBP'000 GBP'000
--------------------------------------------- ------- ----------------- -----------------
Revenue 64,027 81,252
Cost of sales (27,899) (38,372)
--------------------------------------------- ------- ----------------- -----------------
Gross profit 36,128 42,880
Bioprocessing costs (12,383) (2,947)
Research and development costs (27,310) (14,708)
Administrative expenses (16,479) (6,009)
Other operating income 925 441
Change in fair value of available-for-sale
asset 9 (38) 1
--------------------------------------------- ------- ----------------- -----------------
Operating (loss)/profit (19,157) 19,658
Finance income 50 31
Finance costs 6 (8,277) (472)
--------------------------------------------- ------- ----------------- -----------------
(Loss)/profit before tax (27,384) 19,217
Taxation (250) (1,148)
(Loss)/profit for the period (27,634) 18,069
--------------------------------------------- ------- ----------------- -----------------
Other comprehensive income
Foreign currency translation 10,825 -
differences
Other comprehensive income
for the period 10,825
--------------------------------------------- ------- ----------------- -----------------
Total comprehensive (expense)/income (16,809) 18,069
(Loss)/profit attributable
to:
Owners of the Company (25,483) 18,069
Non-controlling interests (2,151) -
(27,634) 18,069
Total comprehensive (expense)/income
attributable to:
Owners of the Company (17,419) 18,069
Non-controlling interests 610 -
--------------------------------------------- ------- ----------------- -----------------
(16,809) 18,069
--------------------------------------------- ------- ----------------- -----------------
Basic (loss)/profit per share 5 (27.29p) 21.92p
Diluted (loss)/profit per
share 5 - 21.36p
--------------------------------------------- ------- ----------------- -----------------
The notes on pages 24 to 38 form part of this financial
information.
Consolidated statement of financial position
as at 30 June 2022
30 June 31 December
2022 2021
Unaudited Audited
Notes GBP'000 GBP'000
---------------------------------- ------- -------------------------- -----------------------
Assets
Non-current assets
Intangible assets & Goodwill 7 123,919 52
Property, plant and equipment 8 136,266 69,728
Trade and other receivables 11 3,605 3,605
263,790 73,385
---------------------------------- ------- -------------------------- -----------------------
Current assets
Inventory 10 13,853 9,521
Assets held for sale 9 36 74
Trade and other receivables 11 32,587 31,200
Contract assets 37,923 13,547
Current tax assets - 558
Cash and cash equivalents 12 118,510 108,944
---------------------------------- ------- -------------------------- -----------------------
202,909 163,844
---------------------------------- ------- -------------------------- -----------------------
Current liabilities
Trade and other payables 13 26,283 19,058
Contract liabilities 12,660 12,502
Deferred income 894 894
Lease liabilities 14 2,046 853
Loans 16 68,405 -
Deferred tax liabilities 525 -
110,813 33,307
---------------------------------- ------- -------------------------- -----------------------
Net current assets 92,096 130,537
---------------------------------- ------- -------------------------- -----------------------
Non-current liabilities
Lease liabilities 14 37,046 8,488
Provisions 15 8,869 6,244
Contract liabilities 84 92
Deferred income 1,404 1,760
Put option liability 17 41,286 -
Deferred tax liabilities 7,183 -
---------------------------------- ------- -------------------------- -----------------------
95,872 16,584
---------------------------------- ------- -------------------------- -----------------------
Net assets 260,014 187,338
---------------------------------- ------- -------------------------- -----------------------
Shareholders' equity
Share capital 18 48,038 43,088
Share premium 18 379,950 307,765
Other reserves (27,900) 2,291
Accumulated losses (178,056) (165,806)
---------------------------------- ------- -------------------------- -----------------------
Equity attributable to owner of
the Company 222,032 187,338
---------------------------------- ------- -------------------------- -----------------------
Non-controlling interests 21 37,982 -
---------------------------------- ------- -------------------------- -----------------------
Total equity 260,014 187,338
---------------------------------- ------- -------------------------- -----------------------
The notes on pages 24 to 38 form part of this financial
information.
Consolidated Statement of Cash Flows
for the six months ended 30 June 2022
Six months
ended Six months ended
30 June 2022 30 June 2021
Unaudited Unaudited
Notes GBP'000 GBP'000
---------------------------------------- ------- --------------- ------------------
Cash flows from operating activities
Cash (consumed in)/generated from
operations 19 (25,069) 21,205
Tax credit received 558 994
---------------------------------------- ------- --------------- ------------------
Net cash (used in)/generated from
operating activities (24,511) 22,199
---------------------------------------- ------- --------------- ------------------
Cash flows from investing activities
Acquisition of subsidiary, net (99,206) -
of cash acquired
Purchases of property, plant and
equipment 8 (6,009) (3,548)
Proceeds on disposal of property,
plant and equipment 35 9
Interest received 50 -
---------------------------------------- ------- --------------- ------------------
Net cash used in investing activities (105,130) (3,539)
---------------------------------------- ------- --------------- ------------------
Cash flows from financing activities
Proceeds from issue of ordinary
share capital 80,082 483
Costs of share issues (2,952) -
Interest paid (1,732) -
Loan arrangement fees (2,205) -
Payment of lease liabilities (1,484) (4,611)
Loans received 64,866 -
Net cash generated from /(used
in) financing activities 136,575 (4,128)
---------------------------------------- ------- --------------- ------------------
Net increase in cash and cash
equivalents 6,934 14,532
Cash and cash equivalents at 1
January 2022 108,944 46,743
Movement in foreign currency 2,632 -
balances
---------------------------------------- ------- --------------- ------------------
Cash and cash equivalents at
30 June 2022 12 118,510 61,275
---------------------------------------- ------- --------------- ------------------
The notes on pages 24 to 38 form part of this financial
information.
Statement of Changes in Equity Attributable to Owners of the
Parent
for the six months ended 30 June 2022 (Unaudited)
Share Share Merger Other Translation Accumulated Total Non- Total NCI
capital premium reserve Equity reserve Losses GBP'000 Controlling Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Interest GBP'000
GBP'000
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- ----------- -----
At 1 January
2021 41,161 258,017 2,291 - - (188,723) 112,746 - 112,746
Six months
ended 30 June
2021:
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
Profit for the
period - - - - - 18,069 18,069 - 18,069
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
Total
comprehensive
income
for the
period - - - - - 18,069 18,069 - 18,069
Transactions
with owners:
Share options
Proceeds
from shares
issued 146 457 - - - (120) 483 - 483
Value of
employee
services - - - - - 1,306 1,306 - 1,306
At 30 June
2021 41,307 258,474 2,291 - - (169,468) 132,604 - 132,604
Six months
ended 31
December
2021:
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
Profit for the
period - - - - - 942 942 - 942
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
Total
comprehensive
income
for the
period - - - - - 942 942 - 942
Transactions
with owners:
Share options
Proceeds
from shares
issued 90 982 - - - 45 1,117 - 1,117
Value of
employee
services - - - - - 2,217 2,217 - 2,217
Deferred tax
on share
options - - - - - 458 458 - 458
Issue of
shares
excluding
options 1,691 48,309 50,000 50,000
At 31 December
2021 43,088 307,765 2,291 - - (165,806) 187,338 - 187,338
At 1 January
2022
Six months
ended 30 June
2022:
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
Loss for the
period - - - - - (25,483) (25,483) (2,151) (27,634)
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
Other
comprehensive
income - - - - 8,064 - 8,064 2,761 10,825
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
Total
comprehensive
income
for the
period - - - - 8,064 (25,483) (17,419) 610 (16,809)
Transactions
with owners:
Share options
Proceeds
from shares
issued 12 75 - - - (4) 83 - 83
Value of
employee
services - - - - - 1,959 1,959 233 2,192
Issue of
shares
excluding
options 4,938 75,062 - - - - 80,000 - 80,000
Costs of share
issues - (2,952) - - - - (2,952) - (2,952)
Total
contributions 4,950 72,185 - - - 1,955 79,090 233 79,323
Changes in
ownership
interests:
Acquisition of
subsidiary
with NCI
(Note 19) - - - - - - - 48,418 48,418
Acquisition of
NCI without
change in
control - - - - - 11,279 11,279 (11,279) - -
Recognition of
put option - - - (38,996) - - (38,997) - (38,996)
Revaluation of
put option - - - 740 - - 740 - 7 740
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
At 30 June
2022 48,038 379,950 2,291 (38,256) 8,064 (178,055) 222,032 37,982 260,014
---------------- --------- ---------- --------- ----------- ------------- ------------- ----------- ------------- --- -----------
The notes on pages 24 to 38 form part of this financial
information.
Notes to the Financial Information
1. General information and basis of preparation
This condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK.
The annual financial statements of the Group are prepared in
accordance with UK-adopted international accounting standards. As
required by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies and
presentation that were applied in the preparation of the Group's
published consolidated financial statements for the year ended 31
December 2021. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
The financial information set out above does not constitute the
Company's Statutory Accounts. Statutory accounts for the year ended
31 December 2021 were approved by the Board of Directors and have
been delivered to the Registrar of Companies. The report of the
auditor (i) was unqualified, (ii) included no references to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006
These interim financial statements have been prepared applying
consistent accounting policies to those applied by the Group in the
2021 Annual Report.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 15 September 2022. They have
not been audited.
Oxford Biomedica plc, the parent company in the Group, is a
public limited company incorporated and domiciled in the UK and is
listed on the London Stock Exchange.
There have been no material related party transactions in the
first six months of 2022 and no material change in related parties
from those described in the last annual report other than Homology
Medicines which became a new related party post the Group's
acquisition of 80% of the voting interests of Oxford Biomedica
Solutions, with Homology Medicines retaining the remaining 20%.
Concurrently with the Oxford Biomedica Solutions transaction,
Oxford Biomedica Solutions entered into a manufacturing and supply
agreement with Homology Medicines which generated revenues of GBP7
million in the period. Homology Medicines is Oxford Biomedica
Solutions' first customer, and under the terms of the agreement
will contribute minimum revenues of circa GBP21 million ($25
million) in the period to March 2023.
2. Going concern
The financial position of the Group, its cash flows and
liquidity position are described in the primary statements and
notes to these interim financial statements.
The Group made a loss for the period ended 30 June 2022 of
GBP27.6 million, and consumed net cash flows from operating
activities for the year of GBP24.5 million. The Group also raised
GBP77.0 million in cash from an equity fundraise in January and
March 2022. The Group ended the period with cash and cash
equivalents of GBP118.5 million. In considering the basis of
preparation of the Interim financial statements, the Directors have
prepared cash flow forecasts for a period of at least 12 months
from the date of approval of these financial statements, based in
the first instance on the Group's 2022 latest view and forecasts
for 2023. The Directors have undertaken a rigorous assessment of
the forecasts in a base case scenario and assessed identified
downside risks and mitigating actions.
These cash flow forecasts also take into consideration severe
but plausible downside scenarios including:
-- A substantial manufacturing and development revenue downside
affecting the core LentiVector(R) platform business,
-- Vaccine manufacturing revenues only included to the extent contracted,
-- No revenues from new customers,
-- Significant decreases in forecasted existing customer milestone and royalty revenues, and
-- The potential impacts of the current ongoing war in Ukraine
on the Group and its customers including expected revenues from
existing customers under long term contracts.
The Group entered into an $85 million (GBP63 million) loan
facility with Oaktree Capital Management as part of the Group's
acquisition of an 80% stake in Oxford Biomedica Solutions in March
2022. The facility has been drawn down in full and the Group is
required to repay this one-year facility in March 2023. The Group
is in the process of considering its options for the above loan.
The Group is considering potential part repayment from cash
balances held and part refinancing the loan facility through a
combination of proceeds from a sale and leaseback of its owned
premises and rolling the remainder, or securing replacement loan
finance. There are a number of potential lenders and the sale and
leaseback transaction is expected to be completed by the end of
December 2022. Given the amount of cash available to the group the
refinancing is not critical to the going concern assumption. On
this basis in both the Group's cash flow forecast and the mitigated
downside scenario, the Group is able to refinance this loan before
the repayment term.
However, despite the above requirement, the Board has confidence
in the Group's ability to continue as a going concern for the
following reasons:
-- As noted above the Group has cash balances of GBP118.5
million at the end of June 2022 and GBP115.8 million at the end of
August 2022;
-- More than 90% of 2022 forecasted revenues are covered by
binding purchase orders and rolling customer forecasts which give
confidence in the level of revenues forecast over the next 12
months; and
-- The Group's history of being able to access capital markets
including raising GBP80 million of equity during the last six
months;
-- The Group's history of being able to obtain loan financing
when required for purposes of both capital expenditure and
operational purposes, as recently evidenced by the $85 million
one-year facility obtained with Oaktree Capital Management;
-- The Group is also reviewing its gene therapeutics pipeline,
including strategic options to externally fund an appropriate
future pipeline of products and other novel opportunities.
-- The Group's ability to continue to be successful in winning
new customers and building its brand as demonstrated by
successfully entering into new customer agreements with Astra
Zeneca, Juno (a wholly owned subsidiary of Bristol Myers Squibb
Company), Homology Medicines and two unnamed new partners over the
last 6 months;
-- The Group has the ability to control capital expenditure
costs and lower other operational spend, as necessary.
Taking account of the matters described above, the Directors
remain confident that the Group will have sufficient funds to
continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern
basis.
3. Accounting policies
The accounting policies, including the classification of
financial instruments, applied in these interim financial
statements are consistent with those of the annual financial
statements for the year ended 31 December 2021, as described in
those financial statements, except for the new policies detailed
below:
Business combinations
The Group accounts for business combinations using the
acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to
the Group. In determining whether a particular set of activities
and assets is a business, the Group assesses whether the set of
assets and activities acquired includes, at a minimum, an input and
substantive process and whether the acquired set has the ability to
produce outputs. The Group has an option to apply a 'concentration
test' that permits a simplified assessment of whether an acquired
set of activities and assets is not a business. The optional
concentration test is met if substantially all of the fair value of
the gross assets acquired is concentrated in a single identifiable
asset or group of similar identifiable assets. The consideration
transferred in the acquisition is generally measured at fair value,
as are the identifiable net assets acquired. Any goodwill that
arises is tested annually for impairment. Any gain on a bargain
purchase is recognised in profit or loss immediately. Transaction
costs are expensed as incurred, except if related to the issue of
debt or equity securities.
The consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts are
generally recognised in profit or loss.
Non-controlling interests (NCI)
NCI are measured initially at fair value at the date of
acquisition.
NCI are measured subsequently at their proportionate share of
the subsidiary's net assets at the reporting date. Changes in the
Group's interest in a subsidiary that do not result in a loss of
control are accounted for as equity transactions.
Goodwill & Intangible assets
i. Recognition and measurement
Goodwill Goodwill arising on the acquisition of subsidiaries
is measured at cost less accumulated impairment
losses.
Developed technology The developed technology was acquired by the
Group (see note 20) and has a finite useful
life. It measured at cost less accumulated amortisation
and any accumulated impairment losses.
----------------------------------------------------------
Patents Patents have finite useful lives and are measured
at cost less accumulated amortisation and any
accumulated impairment losses.
----------------------------------------------------------
ii. Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the
future economic benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on internally
generated goodwill and brands, is recognised in profit or loss as
incurred.
iii. Cash generating unit (CGU)
A cash generating unit is the smallest group of assets that
independently generates cash flow and whose cash flow is largely
independent of the cash flows generated by other assets
iv. Amortisation
Amortisation is calculated to write off the cost of intangible
assets less their estimated residual values using the straight-line
method over their estimated useful lives, and is generally
recognised in profit or loss. Goodwill is not amortised.
The estimated useful lives for current and comparative periods
are as follows:
- patents: 3-20 years
- developed technology: 15 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Financial liability: loans
On initial recognition, external loans are measured at fair
value plus directly attributable transaction costs. On subsequent
measurement, external loans are measured at amortised cost under
the effective interest rate method. The effective interest rate
method is a method of calculating the amortised cost of a financial
liability and allocating the interest expense over the relevant
period. The calculation of the effective interest rate takes into
account the estimated cash flows which consider all the contractual
terms of the financial instrument, including any embedded
derivatives which are not subject to separation.
Financial liability: Put Options
Where a Put Option with non-controlling shareholders exists on
their equity interests, a liability for the fair value of the
exercise price of the option is recognised. The corresponding entry
under the present access method is recognised in Other Equity. As
required by IFRS, Oxford Biomedica has chosen to apply an
accounting policy, to be applied consistently for all put
liabilities that, subsequent to initial recognition, changes in
fair value of the put liability will be recognised in equity.
The value of the put liability is determined using a Monte Carlo
simulation which calculates the expected future exercise value of
the put option, taking into consideration Oxford Biomedica
Solutions' forecasted cash flows over the period up until the
expected exercise date along with the expected volatility of those
cash flows over that same period. The expected future exercise
value is then discounted to the present using a discount rate in
order to capture the counter party risk of the expected payment.
The discount rate may be impacted by economic and market factors as
well as changes to the risk free rate of return which impacts debt
borrowing rates.
Judgements
Estimations
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below. The nature of estimation means that actual
outcomes could differ from those estimates.
Percentage of completion of bioprocessing batch revenues
Bioprocessing of clinical/commercial product for partners is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the bioprocessing process.
Revenues are recognised on a percentage of completion basis and as
such require judgement in terms of the assessment of the correct
stage of completion including the expected costs of completion for
that specific bioprocessing batch. The value of the revenue
recognised and the related contract asset raised with regards to
the bioprocessing batches which remain in progress at period end is
GBP9,207,000. If the assessed percentage of completion was 10
percentage points higher or lower, revenue recognised in the period
would have been GBP920,700 higher or lower.
Percentage of completion of fixed price process development
revenues
As it satisfies its performance obligations the Group recognises
revenue and the related contract asset with regards to fixed price
process development work packages. Revenues are recognised on a
percentage of completion basis and as such require judgement in
terms of the assessment of the correct percentage of completion for
that specific process development work package. The value of the
revenue recognised and the related contract asset raised with
regards to the work packages which remain in progress at period end
is GBP3,972,000. If the assessed percentage of completion was 10
percentage points higher or lower, revenue recognised in the period
would have been GBP397,000 higher or lower.
Provision for out of specification bioprocessing batches
Bioprocessing of clinical/commercial product for partners is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the process.
As the Group has now been bioprocessing product across a number
of years, and also in a commercial capacity, the Group has assessed
the need to include an estimate of bioprocessed product for which
revenue has previously been recognised and which may be reversed
should the product go out of specification during the remaining
period over which the product is bioprocessed. In calculating this
estimate the Group has looked at historical rates of out of
specification batches across the last five years and has applied
the percentage of out of specification batches to total batches
produced across the assessed period to the revenue recognised on
batches which have not yet completed the bioprocessing process at
period end. The Group makes specific provisions for product batches
where it is considered that the average overall historical failure
rate does not adequately cover the perceived risk of revenue
recognised on those specific batches having to be subsequently
reversed.
This estimate, based on the historical average percentage as
well as certain specific provisions, may be significantly higher or
lower depending on the number of bioprocessing batches actually
going out of specification in future. If the historical average
percentage had been 10% higher or lower, the estimate would be
GBP100,000 higher or lower. The estimate will increase or decrease
based on the number of bioprocessing batches undertaken, the
percentage of completion of those bioprocessing batches, and the
number of batches which go out of specification over the assessment
period.
Consequently, bioprocessing revenue of GBP1.0 million (31
December 2021: GBP0.7 million) has not been recognised during the
six months ended 30 June 2022 with the corresponding credit to
contract liabilities. This revenue will be recognised as the
batches complete bioprocessing.
Amortisation of intangibles assets (developed technology)
The estimated useful life of developed technology acquired by
the Group is 15 years as the Group expects the technology to
generate cash flows for a total of 15 years. The estimate of 15
years is based on management's experience of the time period over
which the technology acquired as part of the acquisition of Oxford
Biomedica Solutions will become fully obsolete. Over time as the
platform technology is improved, parts of the technology become
obsolete as they are superseded by new technology until after 15
years the original technology is expected to have been fully
replaced by newer/improved technology.
If the estimated useful life of the assets had been 10 years,
the estimated amortisation for the six months ended 30 June 2022
would be GBP1.2 million higher (2021: GBPnil); whilst, if the
estimated useful life of the assets had been 20 years, the
estimated amortisation for the six months ended 30 June 2022 would
be GBP0.6 million lower (2021: GBPnil).
4. Segmental analysis
The chief operating decision-makers have been identified as the
Senior Executive Team (SET), comprising the Executive Directors,
Chief Technical Officer, Chief Medical Officer, Chief Scientific
Officer, Chief Business and Corporate Development Officer, Chief
Operations Officer, General Counsel, Chief People Officer and Chief
Information Officer. The SET monitors the performance of the Group
in two business segments:
(i) Platform - this segment consists of the revenue generating
bioprocessing and process development activities undertaken for
third parties. It also includes internal technology developments
and the costs involved in developing platform related intellectual
property;
(ii) Product - this segment consists of the clinical and
preclinical development of in vivo and ex-vivo gene and cell
therapy products which are owned by the Group.
Revenues, other operating income and operating profit/(loss) by
segment
Operating EBITDA and Operating profit/(loss) represent the
Group's measures of segment profit & loss as they are a primary
measure used for the purpose of making decisions about allocating
resources and assessing performance of segments.
Platform Product Total
H1 2022 GBP'000 GBP'000 GBP'000
============================================= =========== ========== ===========
Revenue 64,024 3 64,027
Other operating income 925 - 925
Operating EBITDA(1) (780) (5,005) (5,785)
Depreciation, amortisation and share based
payment (12,350) (984) (13,334)
Change in fair value of available-for-sale
asset (38) - (38)
Operating loss (13,168) (5,989) (19,157)
Net finance cost (8,227)
Loss before tax (27,384)
============================================= =========== ========== ===========
Platform Product Total
H1 2021 GBP'000 GBP'000 GBP'000
============================================= ========== ========== ==========
Revenue 81,202 50 81,252
Other operating income 441 - 441
Operating EBITDA(1) 31,216 (4,124) 27,092
Depreciation, amortisation and share based
payment (6,777) (658) (7,435)
Change in fair value of available-for-sale
asset 1 - 1
Operating profit/(loss) 24,440 (4,782) 19,658
Net finance cost (441)
Profit before tax 19,217
============================================= ========== ========== ==========
(1) Operating EBITDA (Earnings Before Net Finance Costs, Tax,
Depreciation, Amortisation, fair value adjustments of assets at
fair value through profit and loss, and Share Based Payments) is a
non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 12.
Other operating income of GBP0.9 million (2021: GBP0.4 million)
includes grant income of GBP0.4 million (2021: GBP0.4 million) and
GBP0.5m (2021: GBPnil) of income for the provision of support
services to Homology Medicines and is included within the Platform
segment. No grant income to fund clinical and preclinical
development is included within the Product segment.
Costs are allocated to the segments on a specific basis as far
as is possible. Costs which cannot readily be allocated
specifically are apportioned between the segments using relevant
metrics such as headcount or direct costs.
The acquired business of Oxford Biomedica Solutions has been
included in the Platform Segment.
Disaggregation of revenue
Revenue is disaggregated by the type of revenue which is
generated by the commercial arrangement. Revenue shown in the table
below is denominated in sterling and is generated in the UK and
US.
For the six months ended 30 June
Platform Product Total
2022 GBP'000 GBP'000 GBP'000
======================================= ========== ========= =========
Bioprocessing/Commercial development 57,301 3 57,304
Licence fees, Milestones & Royalties 6,723 - 6,723
--------------------------------------- ---------- --------- ---------
Total 64,024 3 64,027
--------------------------------------- ---------- --------- ---------
Platform Product Total
2021 GBP'000 GBP'000 GBP'000
======================================= ========== ========= =========
Bioprocessing/Commercial development 75,559 50 75,609
Licence fees, Milestones & Royalties 5,643 - 5,643
--------------------------------------- ---------- --------- ---------
Total 81,202 50 81,252
--------------------------------------- ---------- --------- ---------
Revenue by geographical location
30 June 30 June
2022 2021
Revenue by customer location GBP'000 GBP'000
------------------------------- ---------- ----------
Europe 43,160 70,252
Rest of world 20,867 11,000
------------------------------- ---------- ----------
Total 64,027 81,252
------------------------------- ---------- ----------
In the first half of 2022 AstraZeneca and Homology Medicines
generated more than 10% of the Group's revenue.
5. Basic earnings and diluted earnings per ordinary share
The basic loss per share of 27.29p (2021: 21.92p profit) has
been calculated by dividing the profit for the period attributable
to the owners of the company by the weighted average number of
shares in issue during the six months ended 30 June 2022, being
93,371,295 (2021: 82,430,408).
As the Group made a loss in the period, there were no
potentially dilutive options therefore there is no difference
between the basic loss per ordinary share and the diluted loss per
ordinary share. The diluted earnings per share in the prior period
was 21.36p which was calculated by dividing the earnings for the
period by the weighted average number of shares in issue during the
period after adjusting for the dilutive effect of the share options
outstanding at 30 June 2021 (84,599,862).
6. Finance Costs
Finance costs of GBP8.3 million (2021: GBP0.5 million) consists
of loan interest (GBP2.3 million), foreign exchange losses relating
to loans (GBP4.9 million) and lease liability interest recognised
in accordance with IFRS 16 (Leases) (GBP1.1million).
Developed
Goodwill technology Patents Total
Note GBP'000 GBP'000 GBP'000s GBP'000
---------------------------------- ----- ------ ---------- ------------- ---------- ---------
Cost
At 1 January 2022 - - 5,636 5,636
Acquisitions through business
combinations 20 14,386 102,869 - 117,255
Retirements - - (3,825) (3,825)
Effects of movements in
exchange rates 1,118 7,995 - 9,113
At 30 June 2022 15,504 110,864 1,811 128,179
----------------------------------- ---- ------ ---------- ------------- ---------- ---------
Amortisation and impairment
At 1 January 2022 - - 5,584 5,584
Charge for the period - 2,309 11 2,320
Effects of movements in
exchange rates - 153 - 153
Retirements - - (3,797) (3,797)
At 30 June 2022 - 2,462 1,798 4,260
----------------------------------- ---- ------ ---------- ------------- ---------- ---------
Net book amount at 30 June 2022 15,504 108,402 13 123,919
----------------------------------------- ------ ---------- ------------- ---------- ---------
Net book amount at 31 December
2021 - - 52 52
----------------------------------- ---- ------ ---------- ------------- ---------- ---------
7. Intangible assets & goodwill
The Cash-generating unit (CGU) identified is the manufacturing
and process development operation of Oxford Biomedica Solutions
located at the Bedford, Massachusetts site in the United States.
The CGU was not tested for impairment because there were no
impairment indicators at 30 June 2022.
Due to a tax deduction not being available on a portion of the
developed technology intangible asset, a deferred tax liability of
GBP7.3 million was recognised at the acquisition date, with the
liability expected to unwind in line with the 15 year useful life
of the developed technology intangible asset.
8. Property, plant & equipment
Bio-processing
Office and
Freehold Leasehold equipment Laboratory Right-of-use
property Improve-ments and computers equipment assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000s GBP'000
------------------- ------------ ------------------ ---------------- ---------------- -------------- ---------
Cost
At 1 January 2022 25,409 28,145 10,663 29,505 18,411 112,133
Additions at cost 102 527 660 4,719 3,609 9,617
Acquisitions
through business
combinations - 22,747 788 10,436 24,974 58,945
Disposals - - (45) (127) - (172)
Change of Estimate - - - - 2,373 2,373
Effects of
movements in
exchange rates - 1,768 61 871 1,941 4,641
At 30 June 2022 25,511 53,187 12,127 45,404 51,308 187,537
-------------------- ----------- ------------------ ---------------- ---------------- -------------- ---------
Depreciation
At 1 January 2022 12,652 6,226 6,863 12,519 4,145 42,405
Charge for the
period 1,020 2,323 1,102 2,339 2,033 8,817
Effects of
movements in
exchange rates - 10 13 79 63 165
Disposals - (27) (89) - (116)
At 30 June 2022 13,672 8,559 7,951 14,848 6,241 51,271
-------------------- ----------- ------------------ ---------------- ---------------- -------------- ---------
Net book amount at
30 June 2022 11,839 44,628 4,176 30,556 45,067 136,266
-------------------- ----------- ------------------ ---------------- ---------------- -------------- ---------
Net book amount at
31 December
2021 12,757 21,919 3,800 16,986 14,266 69,728
-------------------- ----------- ------------------ ---------------- ---------------- -------------- ---------
9. Assets held at fair value through profit and loss
Reconciliation of opening and closing balances:
30 June 31 December
2022 2021
GBP'000 GBP'000
--------------------------------------------------- ---------- -------------
At 1 January 74 239
Change in fair value of available-for-sale asset (38) (165)
At 30 June/31 December 36 74
--------------------------------------------------- ---------- -------------
The Asset at fair value through profit & loss under IFRS 5
is represented by the equity held in Orchard Therapeutics Plc, a
company listed on the Nasdaq stock exchange. The financial asset is
classified as level 1 in the hierarchy.
10. Inventory
30 June 31 December
2022 2021
GBP'000 GBP'000
---------------- ---------- -------------
Raw materials 13,853 9,521
Inventory 13,853 9,521
---------------- ---------- -------------
Inventories constitute raw materials held for bioprocessing,
research and development purposes.
During 2022, the Group wrote down GBP304,000 (2021: GBP290,000)
of inventory which is not expected to be used in production or sold
onwards.
11. Trade and other receivables
30 June 31 December
2022 2021
Current GBP'000 GBP'000
------------------------------------ ----------- -------------
Trade receivables 18,592 22,398
Other receivables 2,955 365
Other tax receivable 7,098 5,227
Prepayments 3,942 3,210
------------------------------------- ---------- -------------
Total trade and other receivables 32,587 31,200
------------------------------------- ---------- -------------
30 June 31 December
2022 2021
Non-current GBP'000 GBP'000
-------------------- ----------- -------------
Other receivables 3,605 3,605
--------------------- ---------- -------------
12. Cash and cash equivalents
30 June 31 December
2022 2021
GBP'000 GBP'000
--------------------------- --------- -------------
Cash at bank and in hand 118,510 108,944
--------------------------- --------- -------------
13. Trade and other payables
30 June 31 December
2022 2021
GBP'000 GBP'000
------------------------------------- ---------- -------------
Trade payables 9,487 5,260
Other taxation and social security 1,888 1,899
Accruals 14,908 11,899
------------------------------------- ---------- -------------
Total trade and other payables 26,283 19,058
------------------------------------- ---------- -------------
14. Leases
The Group leases many assets including land and buildings,
equipment and IT equipment. Information about leases for which the
Group is a lessee is presented below:
Right-of-use assets
Bioprocessing
and
Laboratory Office equipment
Property equipment and computers Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ----------------- -------------------- -----------
Balance at 1 January 2022 11,450 2,780 36 14,266
Additions 3,624 - - 3,624
Acquisitions through business
combinations 24,410 - - 24,410
Depreciation charge for ( 1,633 ( 2,032
the period ) ( 372 ) ( 27 ) )
Change in Estimate 2,357 - - 2,357
Effects of movements in
exchange rates 2,442 - - 2,442
-------------------------------- ------------ ----------------- -------------------- -----------
Balance at 30 June 2022 42,650 2,408 9 45,067
-------------------------------- ------------ ----------------- -------------------- -----------
The additions in the period related to the Wallingford lease
entered into in the first half of 2022 (2021: GBP37,000
manufacturing equipment assets).
Lease liabilities
30 June 2022
GBP'000
---------------------------------------------------------- --------------
Maturity analysis - contractual undiscounted cash flows
Less than one year 4,926
One to five years 17,532
More than five years 23,026
---------------------------------------------------------- --------------
Total undiscounted cash flows at 30 June 2022 45,484
---------------------------------------------------------- --------------
30 June 2022
GBP'000
----------------------------------------------------------- ---------------
Lease liabilities included in the Statement of Financial
Position
Current 2,046
Non-current 37,046
------------------------------------------------------------
Total lease liabilities at 30 June 2022 39,092
------------------------------------------------------------ --------------
Amounts recognised in the statement of comprehensive income
30 June 2022
GBP'000
---------------------------------------- --------------
Interest on lease liabilities 1,043
Expense relating to short-term leases -
---------------------------------------- --------------
Amounts recognised in the statement of cash flows
30 June 2022
GBP'000
-------------------------------- --------------
Total cash outflow for leases 1,484
-------------------------------- --------------
15. Provisions
The dilapidations provisions relate to the anticipated costs of
restoring the leasehold Oxbox, Yarnton, Corporate office and
Windrush Innovation Centre properties in Oxford, UK, to their
original condition at the end of the lease terms in 2024 and 2028
respectively, discounted using the rate per the Bank of England
nominal yield curve. The equivalent rate was used in 2021. The
provisions will be utilised at the end of the leases if they are
not renewed
In 2022 the Group signed a lease on a new Warehouse in
Wallingford, UK that is near its other sites. The new facility is
28,000 sq. ft. (2,601 sqm). This new facility has estimated
restoration costs of GBP255,000.
16. Loans
On 10 March 2022 the Group drew down an $85 million loan
facility with Oaktree Capital Management under a 1 year facility
agreement maturing in 2023 with a nominal interest rate on the loan
of 8.5%.
30 June 31 December
2022 2021
GBP'000 GBP'000
--------------------------------------- -------------
Balance at 1 January - -
New loan 62,661
Interest accrued 2,286 -
Interest paid (1,732) -
Foreign exchange movement 4,925 -
Amortised fees 265 -
----------------------------- --------- -------------
Closing balance 68,405 -
----------------------------- --------- -------------
17. Put option liability
30 June 31 December
2022 2021
GBP'000 GBP'000
-------------------------- --------- -------------
Balance at 1 January - -
Recognised at fair value 42,026 -
Revaluation (740) -
-------------------------- --------- -------------
Closing balance 41,286 -
-------------------------- --------- -------------
On 10(th) March 2022, the Group recognised a put option
liability to acquire the remaining 20% of Oxford Biomedica
Solutions that it doesn't already own from Homology Medicines. The
fair value of the option at the date of acquisition was assessed to
be GBP42 million.
At 30(th) June 2022 the fair value of the Put option liability
was GBP41.3 million (Dec 2021: GBPnil). The lower liability
valuation was due to increases in borrowing rates over the period
to 30 June 2022 leading to a higher discount rate applied at 30
June 2022 and a resultant lower put option liability.
18. Share capital and Share premium
At 31 December 2021 and 30 June 2022 Oxford Biomedica had an
issued share capital of 86,175,055 and 96,074,841 ordinary 50 pence
shares respectively.
23,242 shares were created as a result of the exercise of
options by employees during the period.
Between January and March 2022, the Group issued 9,876,544 new
ordinary shares at a price of GBP8.10 per share. Gross proceeds
from the placing were GBP80.0 million; net proceeds were GBP77.0
million.
19. Cash flows from operating activities
Reconciliation of operating (loss)/profit to net cash (used
in)/generated from operations
Six months ended Six months ended
30 June 2022 30 June 2021
GBP'000 GBP'000
----------------------------------------------- ------------------ ------------------
Continuing operations
(Loss)/profit before tax (27,384) 19,217
Adjustment for:
Depreciation 8,816 6,037
Amortisation of intangible assets 2,320 11
Loss on disposal of property, plant
and equipment 27 (10)
Loss on disposal of intangible assets 23 -
Amortisation of loan fees 283 -
Net finance costs 8,227 441
Charge in relation to employee share
scheme 2,202 1,343
Change in fair value of available-for-sale
asset 38 (1)
Changes in working capital:
(Decrease)/increase in contract assets
and trade and other receivables (26,365) 11
Increase in trade and other payables 7,282 3,581
Decrease in contract liabilities and
deferred income (6) (7,871)
Increase in inventories (532) (1,554)
----------------------------------------------- ------------------ ------------------
Net cash (used in)/generated from operations (25,069) 21,205
----------------------------------------------- ------------------ ------------------
20. Acquisition of subsidiary
On 10 March 2022, the Group acquired 74% of the shares and
voting interests in Oxford Biomedica Solutions LLC. As a result,
the Group's equity interest granted it control of Oxford Biomedica
Solutions. Immediately following the acquisition, the Group
acquired a further 6% interest in Oxford Biomedica Solutions (refer
note 21).
Included in the identifiable assets and liabilities acquired at
the date of acquisition of Oxford Biomedica Solutions
are inputs, production processes and an organised workforce. The
Group has determined that together the acquired inputs and
processes significantly contribute to the ability to create
revenue. The Group has concluded that the acquired inputs and
processes constitute a business.
A. Consideration Transferred
The following table summarises the acquisition date fair value
of each major class of consideration transferred.
GBP'000
---------------------------------------------
Cash 99,206
Total consideration transferred: 99,206
------------------------------------ --------
B. Acquisition related expenses:
The Group incurred acquisition related legal and due diligence
expenses of GBP5.1 million which is included in Administrative
expenses.
C. Identifiable assets acquired and liabilities assumed:
The following table summarises the recognised amounts of assets
acquired and liabilities assumed at the date of acquisition.
GBP'000
------------------------------------------------------
Property plant and equipment 58,945
Intangible assets 102,869
Inventory 3,476
Prepaid expenses 229
Lease liabilities (24,974)
Deferred tax liabilities (7,307)
Total identifiable net assets acquired: 133,238
------------------------------------------- ----------
The valuation techniques used for measuring the fair value of
material assets acquired were as follows.
Assets acquired Valuation technique
Property plant Market comparison technique and cost technique
and equipment - The valuation model considers market prices
for similar items when they are available, and
depreciated replacement cost when appropriate.
Depreciated replacement cost reflects adjustments
for physical deterioration as well as
functional and economic obsolescence
--------------------------------------------------------
Intangible Multi-period excess earnings method - The multi-period
assets excess earnings method considers the present value
of net cash flows expected to be generated by
the customer relationships, by excluding any cash
flows related to contributory assets.
--------------------------------------------------------
Inventory Market comparison - To determine the fair value
of the inventory, the Group obtained current prices
for each of the items making up the transferred
inventory.
--------------------------------------------------------
Fair values measured on a provisional basis
If new information obtained within one year of the date of
acquisition about facts and circumstances that existed at the date
of acquisition identifies adjustments to the above amounts, or any
additional provisions that existed at the date of acquisition, then
the accounting for the acquisition will be revised.
D. Goodwill
Goodwill arising from the acquisition has been recognised as
follows:
GBP'000
-------------------------------------------------------
Consideration transferred 99,206
Fair value of non-controlling interests 48,418
Fair value of identifiable assets: (133,238)
Goodwill 14,386
------------------------------------------- -----------
The goodwill is attributable mainly to the skills and technical
talent of Oxford Biomedica Solutions' workforce. None of the
goodwill recognised is expected to be deductible for tax
purposes.
21. Non-controlling interest ("NCI")
The following table summarises the information relating to the
Group's subsidiary that has material NCI:
2022 2021
GBP'000 GBP'000
-------------------------------------------- ----------- ---------
NCI percentage 20% 0%
Non-current assets 185,736 -
Current assets 44,040 -
Non-current liabilities (525) -
Current liabilities (39,342) -
----------- ---------
Net assets 189,909 -
Net assets attributable to NCI 37,982 -
Revenue 7,273 -
Loss (10,753) -
Other comprehensive income 13,801 -
----------- ---------
Total comprehensive income 3,048 -
Loss allocated to NCI (2,151) -
Other comprehensive income allocated 2,760 -
to NCI
Cash flows from operating activities (3,308) -
Cash flows from investment activities 37,672 -
Cash flow from financing activities 265 -
(dividends to NCI: nil)
-------------------------------------------- ----------- ---------
Net increase in cash and cash equivalents 34,629 -
-------------------------------------------- ----------- ---------
22. Acquisition of Non-controlling interest
On 10 March 2022, the Group acquired an additional 6% interest
in Oxford Biomedica Solutions from Homology Medicines, increasing
its ownership from 74% to 80%, with Homology Medicines holding the
remaining 20%. The carrying amount of Oxford Biomedica Solutions'
net assets in the Group's consolidated financial statements on the
date of the acquisition was GBP133.2 million.
GBP'000
------------------------------------- ---------
Carry amount of NCI acquired 11,279
Consideration paid to NCI -
------------------------------------- ---------
Increase in equity attributable to
owners of the Company 11,279
-------------------------------------- ---------
The increase in equity attributable to owners of the Company
comprised solely an increase to retained earnings.
23. Capital commitments
At 30 June 2022, the Group had commitments of GBP4,752,000 for
capital expenditure for leasehold improvements, plant and equipment
not provided in the financial statements (Dec 2021
GBP3,974,000).
24. Related party transactions
Transactions for Balance outstanding
the six months ended
30 June 30 June 30 June 31 December
2022 2021 2022 2021
GBP '000s GBP '000s GBP '000s GBP '000s
------------------------------------ ------------ ----------- ----------- -------------
Sales of goods and services
Homology Medicines, Inc. 7,273 - 7,273 -
Purchase of services
Homology Medicines, Inc. 1,661 - 1,661 -
Other
Homology Medicines, Inc. - rental
income 568 - 568 -
------------------------------------ ------------ ----------- ----------- -------------
All outstanding balances with related parties are to be settled
in cash within six months of the reporting date. None of the
balances is secured.
25. Statement of Directors' responsibilities
The Directors of Oxford Biomedica plc are set out on page 41 of
this report. We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
for use in the UK.
-- the interim management report includes a fair review of the information required by:
o DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
o DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Roch Doliveux
Chair of the Board and Interim Chief Executive Officer
15 September 2022
INDEPENT REVIEW REPORT TO OXFORD BIOMEDICA PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2022 which comprises the Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Financial Position, Consolidated Statement of Cash Flows, Statement
of Changes in Equity Attributable to Owners of the Parent and the
related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2022 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of conclusion
section of this report, nothing has come to our attention that
causes us to believe that the directors have inappropriately
adopted the going concern basis of accounting, or that the
directors have identified material uncertainties relating to going
concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK-adopted international
accounting standards
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
William Smith
for and on behalf of KPMG LLP
Chartered Accountants
2 Forbury Place
33 Forbury Road
Reading
RG1 3AD
15 September 2022
Shareholder Information
Doliveux (th) Floor
Chairman & Interim Chief Executive
Officer)
Director until 27 May 2022)
Directors Financial adviser and joint broker
Roch Doliveux Peel Hunt
(Chair & Interim Chief Executive 7(th) Floor
Officer) 100 Liverpool Street
John Dawson London EC2M 2AT
(Director until 27 May 2022)
Stuart Paynter Financial adviser and joint broker
(Chief Financial Officer) J.P. Morgan Cazenove
Stuart Henderson 60 Victoria Embankment
(Deputy Chairman and Senior London
Independent Director) EC4Y 0JP
Michael Hayden Financial and Corporate Communications
(Non-executive Director) Consilium Strategic Communications
Siyamak Rasty 85 Gresham St
(Independent Non-executive Director) London EC2V 7NQ
Heather Preston
(Independent Non-executive Director) Registered Auditor
Robert Ghenchev KPMG LLP
(Non-executive Director) 2 Forbury place
Kay Davies 33 Forbury Road
(Independent Non-executive Director) Reading
Catherine Moukheibir RG1 3AD
(Independent Non-executive Director)
Namrata P. Patel Solicitor
(Independent Non-executive Director Covington & Burling LLP
from 13 April 2022) 265 Strand
London WC2R 1BH
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Company Secretary and Registered
Office
Natalie Walter
Windrush Court
Transport Way
Oxford OX4 6LT
Tel: +44 (0) 1865 783 000
Fax: +44 (0) 1865 783 001
enquiries@oxb.com
www.oxb.com
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