TIDMOXB
RNS Number : 5824W
Oxford Biomedica PLC
28 April 2016
OXFORD BIOMEDICA: PRELIMINARY RESULTS FOR THE YEAR ENDED 31
DECEMBER 2015
Oxford, UK - 28 April 2016: Oxford BioMedica plc (LSE: OXB),
("OXB" or "the Group"), a leading gene and cell therapy group,
today announces its preliminary financial results for the twelve
months ended 31 December 2015.
OPERATIONAL HIGHLIGHTS (including post-period end):
-- Strong progress from LentiVector(R) delivery platform
-- Portfolio review in Q1 2016: focus on OXB-102, OXB-202 and OXB-302
-- OXB-102: On track for Phase I/II study in Parkinson's disease
-- OXB-202: Phase I/II study preparations continued; CTA filing
planned for 2016 in corneal graft rejection
-- OXB-302: pre-clinical data demonstrates efficacy in tumour challenge model (CAR-T 5T4)
-- OXB-201 safety, tolerability, dose responsive protein expression in eye
-- Lentiviral vector production volumes increased by 71%
-- Investment in people, facilities and plant
-- Headcount increased from 134 to 231
-- New Yarnton facility operational
-- Harrow House extension and Windrush Court laboratories currently being validated
-- Partnerships broadened
-- Novartis extend beyond CTL019 with second CAR-T product
-- Immune Design LV305 collaboration extended and new IP licence
-- GSK acquired IP licence for two rare disease product candidates
-- Board strengthened
-- Dr Lorenzo Tallarigo joined as Chairman and Stuart Henderson
joins as non-executive Director and Chair of Audit Committee in
February 2016 and June 2016, respectively.
FINANCIAL HIGHLIGHTS(1) :
-- 28% growth in gross income (2) from GBP14.7 million to GBP18.8 million
-- 72% growth in income from process development and
bioprocessing from GBP7.2 million to GBP12.4 million
-- Loss and total comprehensive expense for the year GBP13.0 million (2014: GBP8.7 million)
-- GBP14.9 million cash used in operations (2014: GBP7.4 million)
-- GBP16.7 million capital expenditure (2014: GBP5.6 million)
-- GBP9.4 million cash at 31 December 2015 (2014: GBP14.2
million); GBP7.6 million net proceeds from placing in February
2016
(1) Audited financial results
(2) Aggregate of Revenue and Other operating income
Commenting on the financial results, John Dawson, Chief
Executive officer of Oxford BioMedica, said: "Oxford BioMedica is
ideally placed to capitalise on the rapid progress that is ongoing
across the gene and cell therapy sector. We have a unique
lentiviral vector delivery platform, LentiVector(R) , based on our
intellectual property, expert staff, and state-of-the-art
facilities and equipment. This platform is at the core of our
business, enabling us to build a leading gene and cell therapy
presence with both our own proprietary product candidates and, as
the partner-of-choice for other companies operating in the sector,
a long term economic interest in an increasing number of partners'
products.
"The outlook for the business is excellent and I look forward to
further success in 2016 as we advance our focused in-house
pipeline, look forward to progress with our partners' programmes,
and secure further partnerships."
Conference call for analysts
A briefing for analysts will be held at 11am GMT on 28 April
2016 at the offices of Consilium
Strategic Communications, 41 Lothbury, London, EC2R 7HG. There
will be a simultaneous live conference call with Q&A and the
presentation will be available on the Group's website at
www.oxfordbiomedica.co.uk.
Please visit the website approximately 10 minutes before the
conference call, at 11am GMT, to download the presentation slides.
Conference call details:
Participant dial-in: 08006940257
International dial-in: +44 (0) 1452 555566
Participant code: 61358755
An audio replay file will be made available shortly afterwards
via the Group's website: www.oxfordbiomedica.co.uk
For further information, please contact:
Oxford BioMedica plc: Tel: +44 (0)1865 783 000
John Dawson, Chief Executive Officer
Tim Watts, Chief Financial Officer
Financial PR Enquiries: Tel: +44 (0)20 3709 5700
Mary-Jane Elliott / Matthew Neal / Chris Welsh / Laura
Thornton
Consilium Strategic Communications
Disclaimer
This press release contains "forward-looking statements",
including statements about the discovery, development and
commercialisation of products. Various risks may cause Oxford
BioMedica's actual results to differ materially from those
expressed or implied by the forward-looking statements, including
adverse results in clinical development programmes; failure to
obtain patent protection for inventions; commercial limitations
imposed by patents owned or controlled by third parties; dependence
upon strategic alliance partners to develop and commercialise
products and services; difficulties or delays in obtaining
regulatory approvals and services resulting from development
efforts; the requirement for substantial funding to conduct
research and development and to expand commercialisation
activities; and product initiatives by competitors. As a result of
these factors, prospective investors are cautioned not to rely on
any forward-looking statements. Oxford BioMedica disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Notes for editors
About Oxford BioMedica(R)
Oxford BioMedica (LSE:OXB) is a leading gene and cell therapy
company focused on developing life changing treatments for serious
diseases. Oxford BioMedica has built a sector leading lentiviral
vector delivery platform (LentiVector(R) ) through which the Group
develops in vivo and ex vivo products both in-house and with
partners. The Group has created a valuable proprietary portfolio of
gene and cell therapy product candidates in the areas of oncology,
ophthalmology and CNS disorders. The Group has also entered into a
number of partnerships, including with Novartis, Sanofi, GSK, and
Immune Design, through which it has long-term economic interests in
other potential gene and cell therapy products. Oxford BioMedica is
based across several locations in Oxfordshire, UK and employs more
than 230 people. Further information is available at
www.oxfordbiomedica.co.uk.
CHAIRMAN'S STATEMENT
Having joined the Group as the new Chairman of Oxford BioMedica
in February 2016, I am pleased to have the opportunity to report on
the Group's significant achievements during the past year. The gene
and cell therapy sector is continuing to advance at considerable
pace and, as one of the pioneers in the field, Oxford BioMedica is
well placed to capitalise on this growth and generate significant
value across its integrated business. This is what attracted me to
Oxford BioMedica.
Focusing our strategy
There have been very significant developments in the sector and
at the Group over the past eighteen months and the management team
and the Board has recently conducted a review to ensure that our
business model and strategy are both clear and robust. Our
conclusions from this review are that the Group has, over its 20
year existence, created and is continuing to develop a
highly-valuable lentiviral vector gene delivery platform
(LentiVector(R) ). The platform is based on our unique combination
of patents and know-how, expert and experienced employees and
state-of-the-art bioprocessing and laboratory facilities. We are
using the LentiVector(R) platform to develop our own focused
portfolio of gene and cell therapy product candidates. We can also
partner with other companies to help them develop better gene and
cell therapy products more quickly than they could without our
LentiVector(R) platform, in return for which we can obtain short
and long-term economic interest in their products. We are already
partner-of-choice for leading companies in the gene and cell
therapy sector including Novartis, Sanofi, GSK and ImmuneDesign. We
are also in specific discussions with further potential partners.
The gene and cell therapy sector is now set to grow rapidly and the
LentiVector(R) platform is our path to creating valuable products
for patients and sustainable shareholder value.
During 2015 and early 2016 we also conducted a portfolio review
of our in-house product candidates. Taking into consideration a
full range of factors such as probability of technical success,
time to market, and value to patients we have made the decision to
prioritise our portfolio and focus our efforts in clinical
development on three product candidates: OXB-102, for the treatment
of advanced Parkinson's disease; OXB-202, for the prevention of
patients becoming permanently blinded by recurrent corneal graft
rejection; and OXB-302, a novel CAR-T cell approach to targeting
solid cancer tumours. During 2015 we made good progress with these
product candidates as we completed pre-clinical and toxicological
studies with OXB-102 and OXB-202 and started preparing for their
clinical studies. In the next 12 months we expect both OXB-102 and
OXB-202 to begin Phase I/II clinical studies and we will receive
pre-clinical results for OXB-302.
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:01 ET (06:01 GMT)
Our LentiVector(R) delivery technology also meets an important
strategic need in the broader gene and cell therapy sector which,
having expanded rapidly in recent years, has outgrown available
development and bioprocessing resources. By providing partners with
access to our expanded world-class facilities, expertise and
industry-leading intellectual property, we have the opportunity to
generate near and medium-term revenues as well as longer-term
value-sharing through royalty payments. Consequently, we have the
potential to support the ongoing development of our wholly-owned
portfolio and to provide future income based on the success of
partners' products. In 2015, we continued to perform strongly in
our CTL-019 contract with Novartis and we expanded our work with
this industry leader when they entrusted to us a second CAR-T
product candidate. In addition, our expanded collaboration and new
IP licence with Immune Design further validates the demand from
partners to access our capabilities and IP, and we expect to be
able to announce further collaborations during the course of 2016.
We also made good progress with GSK who during the year exercised
their option on two of the targets covered by Oxford BioMedica's IP
license.
Financing the strategy
At the end of 2014 and during 2015 Oxford BioMedica embarked on
a major capacity expansion programme which the Group financed by
raising a $50 million loan facility from Oberland Capital. This
expansion programme is now virtually complete and we are in a
position to exploit our new state-of-the-art facilities to grow the
business by supporting partners' product development and
bioprocessing requirements.
During this important expansion phase we are grateful to our
shareholders for their support for our strategy and we look forward
to their continued support as we transition towards a
self-sustaining business.
We estimate that we have sufficient cash to last well into the
third quarter of 2016, without including any potential inflows from
further contracts or licence agreements. We have confidence that we
will be able to secure adequate further cash but, as this is not
yet committed, these circumstances create a material uncertainty
and I draw readers' attention to the going concern statement in the
Financial Review and in Note 1 to the Preliminary Financial
Information.
Encouraging outlook
After a significant period of development across the wider gene
and cell therapy sector, I believe that the field is now truly
coming of age, and the ex vivo cell therapy sector in particular is
beginning to deliver on its promise. With our sector leading
LentiVector(R) platform, Oxford BioMedica is well placed to
capitalise on this growth, and our significant investment in
facilities, expertise and intellectual property is advancing us
towards our goal of creating value for shareholders.
During 2016, we look forward to progress across all areas of our
business. Our in-house pipeline will move forward with our
prioritised programmes for Parkinson's disease, corneal graft
rejection and oncology; we look forward to continuing our strong
performance under our Novartis partnership, contributing to the
filing of CTL-019 and progressing work on a second CAR-T product;
we will advance our expanded collaboration with Immune Design on
LV305; and with an increasing number of companies working in the
field, we also anticipate additional opportunities to create value
through our integrated business model.
Since joining Oxford BioMedica, I have been greatly impressed by
the quality of the team, the level of expertise and world-class
facilities and I believe that our LentiVector(R) platform gives us
a powerful tool to benefit from the growth of the sector. I am
proud to chair a Group that is a world-leader in its field, with a
clear strategy for success and commitment to achieve its goals. I
have no doubt that Oxford BioMedica is in a strong position, and
2016 promises to be a year of important achievements.
Dr. Lorenzo Tallarigo
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
The past year has been an important period of investment and
growth for Oxford BioMedica, building on the significant progress
we made in 2014. Operationally, we have continued to make strong
advances in each part of our integrated business, as we execute our
strategy to build a world-class, self-sustaining gene and cell
therapy group. In the past eighteen months our business has evolved
significantly. Operationally, we have continued to make good
progress with our in-house pipeline and licensing of our
intellectual property, and our bioprocessing work with partners is
now well established.
Pipeline advancements: priority programmes
OXB-101/OXB-102
In May 2015 we presented encouraging clinical results from one
of our priority pipeline programmes, OXB-101, a gene-based
treatment for late stage Parkinson's disease that utilises our
LentiVector(R) technology to carry three genes that encode the key
enzymes for the synthesis of dopamine. The data showed long-term
follow up demonstrating that the improvements seen in patients
during the Phase I/II study had been sustained in the majority of
patients for up to three years following treatment with a single
dose despite the neurodegenerative nature of the disease. We are
continuing to follow patients from this study and expect soon to be
able to present further evidence of the long-lasting effect. These
results form the foundations for the ongoing development of
OXB-102, an enhanced OXB-101 construct that has demonstrated up to
five times greater potency in preclinical testing. During 2015, the
OXB-102 development programme made good progress and we expect to
initiate clinical studies for a phase I/II study in mid-2016.
OXB-202
OXB-202, our lentiviral vector based treatment designed to
prevent corneal graft rejection, is currently nearing completion of
its pre-clinical and non-clinical development programme, and we are
planning to initiate a phase I/II clinical study at the Moorfields
Eye hospital at the end of 2016 or early 2017. Cornea grafts are
one of the most successful tissue transplants but, over time, a
significant number of grafts are rejected due to corneal
neovascularisation. OXB-202 is designed to genetically modify human
donor corneas to secrete two anti-angiogenesis proteins, endostatin
and angiostatin, to inhibit neovascularisation and prevent
rejection.
OXB-302
OXB-302 is a novel oncology product that combines our
proprietary lentiviral vector and 5T4 technology platforms. This
cell therapy uses our LentiVector(R) system to engineer harvested
T-cells to express an antibody against the 5T4 antigen, which is
expressed on cancer cells in many common solid tumours. These
T-cells are then infused, and subsequently recognise the 5T4 tumour
antigen and initiate cell killing mechanisms. During pre-clinical
testing the product has demonstrated efficacy in an industry
standard model. If successful, this could open up the possibility
of using CAR-T cells to treat solid tumours.
Other candidates
OXB-201
The results of the OXB-201 Phase I study were announced as a
"Hot Topic" at the Association for Research in Vision and
Ophthalmology (ARVO) conference on 4 May 2015. The 21 patient study
met the primary endpoints of safety and tolerability. Patients also
showed signs of clinical benefit, with visual acuity stabilisation
and a reduction in vascular leakage consistent with the mechanism
of endostatin and angiostatin function in vivo in this severe wet
AMD population. The study also demonstrated stable dose-dependent
gene expression over 12 months which is important supporting
evidence for the strength of our LentiVector(R) platform more
broadly.
OXB-301
OXB-301 is a cancer vaccine currently undergoing four
investigator sponsored Phase I/II and Phase II clinical trials in
mesothelioma, inoperable metastatic colorectal cancer, ovarian
cancer and early prostate cancer. The patients are selected using a
biomarker, and the product utilises a 5T4 tumour associated
antigen-encoding gene delivered by a poxvirus vector to stimulate
the immune system to destroy cancerous cells expressing the
antigen. In May 2015, investigators presented encouraging interim
data from the colorectal cancer study at The Cancer Vaccine
Institute's Second International Symposium on Immunotherapy. The
mesothelioma study completed recruitment during 2015, and the data
analysis is underway. Results from these two studies are expected
during 2016.
An outcome of our portfolio review is that we have decided to
give OXB-102, OXB-202 and OXB-302 high and focused priority
compared to OXB-201 and OXB-301 due to the risk/reward balance. We
will continue to explore ways of progressing OXB-201 and OXB-301
which could include partnering or out-licensing.
Novartis CTL-019 partnership
Throughout 2015, we made good progress in our partnership with
Novartis, with much of the capacity in our existing GMP1 facility
devoted to CTL-019 production.
CTL-019, which was awarded breakthrough therapy designation by
the FDA in 2014, is a lentiviral vector based chimeric antigen
receptor (CAR) T-cell therapy for the treatment of relapsed /
refractory acute lymphoblastic leukaemia (r/r ALL). During 2015,
the product made significant progress, with Novartis announcing
highly positive data in paediatric r/r ALL patients, with 93%
achieving complete remission. In October 2015, Novartis confirmed
that the marketing application for CTL-019 in r/r ALL is on track
for submission in late 2016 or early 2017, and as a key partner
Oxford BioMedica will support the bioprocessing components of the
filing. In addition, Novartis has announced encouraging new data
showing the potential of CTL-019 to treat certain types of
hard-to-treat non-Hodgkinson's lymphoma.
Under the terms of our partnering contract with Novartis, we
have the potential to receive payments of up to $90 million over
three years for process development, production and intellectual
property licensing, plus royalties on future sales of CTL-019 and
other CAR-T products.
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:01 ET (06:01 GMT)
Based on our strong performance on CTL-019, Novartis has
recently extended our partnership to include a second CAR-T
product. Under this further agreement, we will support the Novartis
programme with process development, scale-up and production,
mirroring our activities on CTL-019. This new partnership
demonstrates Novartis' faith in our LentiVector(R) platform, and
work on this new Novartis product is now underway.
Partnership with Sanofi
In 2014, we announced that Sanofi had taken exclusive licenses
to SAR422459 and SAR421869 for the treatment of Stargardt disease
and Usher Syndrome type 1B respectively. As a result, Sanofi has
taken over development and commercialisation activities, and we
will receive milestone payments and royalties on future sales. Both
lentiviral vector based products are currently in phase I/II
studies, and during 2015 we completed the technology transfer for
clinical trial material production to Sanofi, which now controls
the development of these two promising treatments. We continue to
support Sanofi by providing production advice and clinical analysis
of patients' samples following treatment.
Expanded agreement with Immune Design
In addition, we have been working with Immune Design over the
past few years, mainly in developing analytical assays for their
LV305 programmes. As further validation of our capabilities and our
IP, we have recently signed a licence agreement with Immune Design
for access to our lentiviral vector intellectual property, and an
expanded collaboration contract.
Further collaborations
The rapidly growing gene and cell therapy sector, much of which
requires lentiviral vectors, has created a demand for the expertise
which Oxford BioMedica has built up over many years. Our investment
in expanding our manufacturing and laboratory capacity means that
we now have the opportunity to offer our services to a wider range
of customers. Our work with Novartis has enhanced our credibility
in the sector and we are in discussions with a number of third
parties working in a variety of cell therapy areas to provide such
services and IP licences.
As an original pioneer of gene and cell therapy, we have built a
dominant position in lentiviral vector intellectual property, with
our LentiVector(R) platform protected by over 100 granted and
pending patents. These provide comprehensive coverage of gene-based
delivery technologies and their therapeutic application, providing
us and our partners with robust protection. This is complemented by
our extensive world-class know-how associated with process
development, scale-up and production, covering the route to
commercialisation.
Capacity expansion
Throughout 2015 our existing Harrow House GMP1 clean room
facility ran at full capacity and, to ensure availability for our
in-house and partners' programmes, we made good progress expanding
our facilities. As a result, we have now established a second
facility (GMP4) at Yarnton, Oxford, and recently completed a second
clean room (GMP2) in Harrow House, which is working towards MHRA
licensure in 2016. Our new Yarnton facility has now completed
validation and been approved by the UK's Medicines and Healthcare
products Regulatory Agency (MHRA) for cGMP production, and this has
now commenced. As a result, we now have dual sourcing,
strengthening the robustness of our supply chain, and our cGMP
clean room capacity has more than doubled to 950m(2) . We are
expanding this capacity further, and with the recent completion of
GMP2 will have three independent production suites totalling
1,200m(2) . In addition, we have significantly expanded and
upgraded our process development, analytics and quality
laboratories at our wholly-owned Windrush Court facility, which is
adjacent to our Harrow House bioprocessing facility, and we
anticipate completing our relocation to these new laboratories in
the next six months. This significant growth in our capabilities is
the result of approximately GBP19 million of investment between
October 2014 and December 2015, which we anticipate will reach a
final total of GBP26 million by the end of H1 2016. Oxford
BioMedica now has the facilities to address further significant
partnering demand for access to our process development and
bioprocessing expert capabilities.
Strengthening our Board and operational capabilities
Board changes
The past 12 months have been a period of significant growth for
the Group. In February 2016 we strengthened our Board, welcoming
new Chairman Dr Lorenzo Tallarigo. He brings significant
international and commercial experience to Oxford BioMedica having
held a number of senior roles in the industry. Until 2014, Dr
Tallarigo was Chairman of Intercept Pharmaceuticals (NASDAQ: ICPT)
and Chief Executive of Genextra, prior to which he was President of
International Operations at Eli Lilly.
We are also delighted to have announced on 26 April 2016 that Mr
Stuart Henderson is joining the board as a non-executive Director
and Chair of the Audit Committee with effect from 1 June 2016. Mr
Henderson was Head of European Healthcare and Life Sciences at
Deloitte and was previously Head of Emerging Biotechnology at
Arthur Andersen. He has extensive experience in audit and
transaction support in life sciences.
Team expansion
During 2015, we also strengthened our internal teams to support
our rapidly expanding operations. As a result, we have recruited an
additional 97 colleagues, expanding our workforce by over 70%
compared with the end of 2014. In addition, we completed the move
of our offices to our Windrush Court facilities in Cowley, Oxford
which we acquired in 2014. We have also upgraded and renovated the
laboratories at Windrush Court, and have now started relocating
staff from our Medawar Centre facility. We plan to complete the
transition to Windrush Court by the end of September. We expect
that once complete, the consolidation of the bulk of our activities
at one location will further increase the efficiency and
operational advantages we have achieved to date.
Encouraging outlook
During the past year Oxford BioMedica, and the wider gene and
cell therapy sector, has continued to make significant progress,
demonstrating the major potential the field offers for patients,
physicians and shareholders. We expect that in 2016 this trend will
continue, and we plan to advance our integrated business through a
number of inflection points.
We are working hard to advance OXB-102 and OXB-202 into clinical
development in the coming year and complete the OXB-302
pre-clinical programme by the end of 2016.
We also await follow-up data from patients who received OXB-101
four years previously, as well as results from OXB-301 oncology
studies, following an encouraging interim analysis presented in
2015 in colorectal cancer.
In addition, we expect to complete our capacity expansion in the
first half of the year, which will ideally position us to capture
further value through strategic partnering, as well as supporting
the development of our in-house pipeline. During 2016, we plan to
continue our important partnership with Novartis on CTL-019
supporting the product filing, and progressing our work on the
second CAR-T therapy. We also intend to provide access to our
world-class IP and process development and bioprocessing
capabilities to an expanding number of players in the gene and cell
therapy sector.
Overall, we expect that 2016 will be year of significant
progress for the Group as we strengthen our position as a leader in
the increasingly exciting field of gene and cell therapy.
John Dawson
Chef Executive Officer
FINANCIAL REVIEW
2015 has been a year of significant progress for Oxford
BioMedica. We have continued to make steady progress with the
development of our in-house pipeline of gene and cell therapy
products with Phase I/II clinical studies expected to start for
OXB-102 in mid-2016 and for OXB-202 by the end of 2016/early 2017.
In the past 15 months we have also invested significantly in our
LentiVector(R) platform and partnering capabilities.
Our commitments to Novartis have required us to increase our
capacity for viral vector bioprocessing and the associated
analytical testing, and also to expand our process development
capabilities. We have seen this as a unique opportunity to develop
our capabilities to partner with the increasing number of companies
working with lentiviral vectors, particularly in the ex vivo cell
therapy arena. We have therefore brought into use a completely new
bioprocessing clean room facility at Yarnton ("GMP4"), near Oxford;
are nearing completion of the expansion of our existing Harrow
House site, creating a new "GMP2" clean room and Quality Control
(QC) laboratory to add to the existing "GMP1" clean room; and also
nearing completion of the laboratories in the Windrush Court
complex we acquired in October 2014. During 2015, in parallel, we
have been recruiting the staff that we will need to operate the new
facilities and support the increased activity levels. At the same
time, the original GMP1 clean room in Harrow House has been
operated at full capacity throughout the period, except for planned
maintenance shut down periods, producing batches mainly for
Novartis and for our own needs.
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:01 ET (06:01 GMT)
As a result of these activities, our gross income (the aggregate
of revenues and other operating income) and our operating costs
have grown significantly in 2015, and we have also incurred
substantial capital expenditure.
Key financial indicators 2015 (GBPm) 2014 (GBPm)
--------------------------------------- ------------ ------------
Gross income (1) 18.8 14.7
--------------------------------------- ------------ ------------
Bioprocessing and process development
income (2) 12.4 7.2
--------------------------------------- ------------ ------------
License, milestone and grant
income 6.4 7.5
--------------------------------------- ------------ ------------
Operating Loss 14.1 10.6
--------------------------------------- ------------ ------------
Cash used in operations 14.9 7.4
--------------------------------------- ------------ ------------
Capital Expenditure 16.7 5.6
--------------------------------------- ------------ ------------
Cash burn (3) 29.8 11.6
--------------------------------------- ------------ ------------
Year End
--------------------------------------- ------------ ------------
Cash balance 9.4 14.2
--------------------------------------- ------------ ------------
Loan balance 27.3 1.0
--------------------------------------- ------------ ------------
Headcount at year end 231 134
--------------------------------------- ------------ ------------
(1) Aggregate of revenues and other operating income
(2) Income from providing bioprocessing and process development
expertise to partners
(3) Net cash used in operations plus purchases of non-current
assets and interest received
Gross income
Gross income - the aggregate of revenue and other operating
income - amounted to GBP18.8 million in 2015, an increase of 28% in
2015 over GBP14.7 million in 2014.
- GBP12.4 million of this (2014: GBP7.2 million) was derived
from bioprocessing and process development with partners, mainly
Novartis. This type of income is of a recurring nature and has the
potential to be more sustainable than licence up front receipts,
performance-based milestones and grant income. Bioprocessing and
process development income therefore grew by 72% in 2015 over
2014.
- Income from licences, milestones and grants was GBP6.4 million
in 2015, slightly lower than the GBP7.5 million in 2014. In 2015
this income came largely from performance-related milestones from
Novartis and GlaxoSmithKline's exercise of options to licence our
intellectual property, whereas in 2014 the source was mainly the
upfront receipts from Novartis on signing the October 2014
contracts.
Note that process development income in 2015 arising from the
October 2014 Novartis collaboration is included in Other operating
income whereas process development income in 2014, which arose
under the May 2013 contract, is included in Revenue. This
difference in accounting treatment is due to the differing nature
of the two contracts with process development income under the 2014
contract essentially being the reimbursement of R&D costs
incurred in developing IP which Oxford BioMedica will own.
Operating loss
Operating loss 2015 (GBPm) 2014 (GBPm)
--------------------------- ------------ ------------
Gross income 18.8 14.7
--------------------------- ------------ ------------
Cost of sales (5.8) (4.4)
--------------------------- ------------ ------------
R&D + Bioprocessing costs (20.3) (17.0)
--------------------------- ------------ ------------
Administrative expenses (6.7) (4.0)
--------------------------- ------------ ------------
Operating loss (14.1) (10.6)
--------------------------- ------------ ------------
Despite the increase in gross income the operating loss for 2015
was GBP14.1 million, compared with GBP10.6 million in 2014.
Cost of sales represents the cost of producing lentiviral vector
batches which are sold to partners and includes raw materials,
direct labour, indirect labour (including facility support staff
and the significant effort required for quality control and
analytical testing), as well as facility costs and overheads. Cost
of sales also includes royalties payable on any licence income
recognised as revenue by the Group. Excluding such royalties
payable, the cost of sales increase in 2015 was around 45% and is
broadly in line with the increased number of batches sold compared
with 2014.
R&D and Bioprocessing costs
R&D and Bioprocessing costs increased from GBP17.0 million
in 2014 to GBP20.3 million in 2015. The 2014 costs included certain
one-off R&D items, without which the underlying costs in 2014
would have been GBP14.7 million. The underlying increase in R&D
and Bioprocessing costs has therefore been GBP5.6 million.
The main components of these costs are:
- Payroll and other manpower-related costs such as recruitment,
training, and travel. These costs account for just over half of the
GBP20.3 million in 2015 compared with just under half of the
underlying GBP14.7 million in 2014. The growth in these costs
accounts for GBP4.1 million of the overall GBP5.6 million increase
and has been caused by the increase in R&D and Bioprocessing
employees from an average of 97 in 2014 to 176 in 2015.
- Facility costs including depreciation account for just over
10% of the costs in both years. The growth, which accounts for
around GBP1.0 million of the increase, has been caused by the
expansion in the facilities and because we have been incurring
costs at both Windrush Court and the Medawar Centre during 2015
while we prepare the Windrush Court laboratories. We are planning
to vacate the Medawar Centre during 2016 so the facility costs on
that site will fall in 2016.
- External expenditure on clinical and pre-clinical costs,
including regulatory and pharmacovigilance costs, was around GBP3
million in both 2015 and 2014.
Administrative expenses
Administrative expenses were GBP6.7 million in 2015 compared
with GBP4.0 million in 2014, an increase of GBP2.7 million. The
growth in costs has been caused by payroll and other
manpower-related costs due to the increase in administrative staff
from an average of 16 in 2014 to 20 in 2015, additional facility
costs, depreciation, IT and insurance caused by the growth in the
business, and advisor fees in respect of new business development
opportunities arising as a consequence of the business's higher
profile caused by our relationship with Novartis.
Segmental analysis
Given the growth of the partnering revenue-generating business
the Senior Executive Team has recently started to monitor the
business performance split between a) strategic partnering and b)
the proprietary research and development activities ("R&D")
which cover clinical and pre-clinical product development and also
the development of technical intellectual property. We have
therefore for the first time presented a segmental analysis in the
Notes to the Financial Statements, summarised below:
Partnering R&D GBPm Total GBPm
GBPm
---------------- ----------- ---------- -----------
Gross income 16.3 2.5 18.8
---------------- ----------- ---------- -----------
Operating loss (3.9) (10.2) (14.1)
---------------- ----------- ---------- -----------
Most of the Group's gross income is attributed to Partnering
except for some corporate licence income and the grant income
received from Innovate UK for the OXB-102 and OXB-202 development
projects which are included in R&D. Each segment is then
charged with the direct and indirect costs which are readily
attributable to the segments. The remaining support and corporate
costs which cannot be easily attributed are then allocated to each
segment, primarily based on levels of activity and direct cost.
Broadly the allocation process results in approximately two-thirds
of the support and corporate costs being allocated to Partnering
and one-third to R&D.
The purpose of this analysis is to monitor the net costs of each
segment and ensure that they are being operated efficiently.
The operating loss of the Partnering activities was GBP3.9
million after allocation of support and corporate costs. During
2015 we built up the cost base in anticipation of the activity
expected in 2016. With the anticipated higher bioprocessing
volumes, and therefore revenues, the Partnering segment revenues
should cover all of its costs in 2016, thereby being at least cash
neutral.
The net investment in R&D in 2015 was GBP10.1 million after
deduction of its share of support and corporate overheads.
Approximately 60% of this was incurred on our product development
programmes and the remaining 40% on investment in lentiviral vector
technology which in due course should generate value through
enabling future IP licences and catalysing Partnering deals with
third parties.
Employee numbers
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To enable us to fulfil the anticipated 2016 partnering demand we
have built up during 2015 we have recruited the employees needed to
service this demand. To this end our headcount has risen from 134
at the end of 2014 to 231 at the end of 2015.
Employee numbers 31 Dec 31 Dec
2015 2014
------------------------------------ ------- -------
Bioprocessing, including QA,
QC and analytical 116 58
------------------------------------ ------- -------
Product and technology development 95 57
------------------------------------ ------- -------
Administrative and corporate 20 19
------------------------------------ ------- -------
Total 231 134
------------------------------------ ------- -------
Although the most rapid period of growth is now over, headcount
will continue to grow in 2016 as we complete the recruitment needed
to underpin the expected activities.
Cash used in operations
Cash used in operations increased from GBP7.4 million in 2014 to
GBP14.9 million in 2015, an increase of GBP7.5 million.
- GBP3.5 million of this increase is due to the higher operating
loss explained above although, when non-cash items included in net
loss are eliminated (e.g. depreciation, amortisation and employee
share scheme charges), the increase in cash outflow due to the
operating loss is reduced to GBP11.8 million, GBP2.7 million more
than the 2014 equivalent of GBP9.1 million.
- 2015 working capital increased by GBP3.1 million compared with
a reduction in 2014 of GBP1.7 million which explains a further
GBP4.8 million of the increased cash outflow. The increase in
working capital in 2015 is driven mainly by the increase in trade
and other receivables and inventory, caused by the growth in
commercial activity.
Cash used in operations 2015 GBPm 2014 GBPm
----------------------------------- ---------- ----------
Operating loss (14.1) (10.6)
----------------------------------- ---------- ----------
Non-cash items included in
operating loss (1) 2.3 1.5
----------------------------------- ---------- ----------
Operating loss excluding non-cash
items (11.8) (9.1)
----------------------------------- ---------- ----------
Working capital movement (3.1) 1.7
----------------------------------- ---------- ----------
Cash used in operations (14.9) (7.4)
----------------------------------- ---------- ----------
(1) Depreciation, amortisation, charge in relation to share
schemes
Cash burn
Cash burn is the aggregate of the cash used in operations,
interest payments, R&D tax credit receipts, and the purchase of
property, plant and equipment.
Cash burn 31 Dec 31 Dec
2015 GBPm 2014 GBPm
------------------------------ ----------- -----------
Cash used in operations (14.9) (7.4)
------------------------------ ----------- -----------
Purchases of property, plant
and equipment (16.7) (5.6)
------------------------------ ----------- -----------
Interest paid, less received (1.5) (0.2)
------------------------------ ----------- -----------
R&D tax credit recieved 3.2 1.6
------------------------------ ----------- -----------
(29.8) (11.6)
------------------------------ ----------- -----------
Capital expenditure
Most of the capital expenditure in 2014 and 2015 is due to the
capacity expansion programme in our manufacturing and laboratory
facilities.
Purchase of property, plant 2015 GBPm 2014 GBPm
and equipment
-------------------------------- ---------- ----------
Freehold property (1) - 3.7
-------------------------------- ---------- ----------
Short-leasehold improvements 0.9 -
(2)
-------------------------------- ---------- ----------
Office equipment and computers 0.6 0.2
-------------------------------- ---------- ----------
Manufacturing and laboratory
equipment 2.2 1.1
-------------------------------- ---------- ----------
Assets under construction (3) 13.0 0.6
-------------------------------- ---------- ----------
Total 16.7 5.6
-------------------------------- ---------- ----------
(1) Freehold property includes the purchase cost of the Windrush
Court facility.
(2) Expenditure on short-leasehold improvements relates to our
Yarnton site over which we have a 10 year lease.
(3) Assets under construction is the expenditure to date on the
fabric and enabling services at our facilities, such as power,
water and air handling, which has not yet been completed.
The GBP5.6 million in 2014 largely comprised capacity expansion
with the GBP3.5 million acquisition of Windrush Court being the
largest item.
Purchases of property, plant and equipment in 2015 were GBP16.7
million. GBP15.2 million of this was spent on the capacity
expansion work at Harrow House, Yarnton and Windrush Court. During
2015 we successfully brought on line a new clean room manufacturing
facility at Yarnton, Oxford, which, from the beginning of 2016,
doubles our manufacturing capacity compared with 2015. We have also
been developing our Harrow House facility to include a new Quality
Control (QC) laboratory and a further clean room facility which we
intend to use for manufacturing lentiviral vectors using a new
bioreactor process. Viral vector GMP manufacture requires very
substantial amounts of QC and Quality Assurance (QA) testing before
the product can be released and we would not have been able to
handle the volume of testing required in 2016 and 2017 in our
Medawar centre facility. We are therefore in the process of
installing a completely new suite of biological laboratories in the
North Wing of Windrush Court.
Including the purchase of Windrush Court, in the 15 months from
October 2014 to the end of 2015 we have incurred GBP19.6 million of
capital expenditure on these expansion projects and will spend a
further approximately GBP6 million in the first few months of 2016
to complete the work. This will bring the aggregate expenditure on
the expansion programme since October 2014 to around GBP26
million.
The capital expenditure on capacity expansion is being financed
by the Oberland loan facility. $40 million has been drawn down to
date, approximately GBP26 million, which broadly matches the
expenditure to date plus the further amount of approximately GBP6
million which will be spent in the first few months of 2016.
Interest and R&D tax credit
Interest paid in 2015 was GBP1.5 million, principally due on the
Oberland loan facility. $25 million was drawn down in May 2015 and
a further $15m in September 2015. In 2014 the interest was incurred
on the loan from Vulpes Life Sciences Fund and the AMSCI loan, both
of which have been fully repaid.
The R&D tax credit in respect of 2014 which was received in
2015 was GBP3.2 million, double that received in 2014 in respect of
2013. This increase is partly due to the increase in activity in
2014 compared to 2013, and partly due to changes to the underlying
tax credit rates which were implemented from April 2014.
Cash balance
The Group began the year with GBP14.2 million cash balances.
GBP29.8 million has been spent in the year, offset by net loan
receipts of GBP24.8 million and GBP0.1 million proceeds from
issuing shares related to employee share options exercised during
the year, leading to a closing cash balance of GBP9.4 million.
In February 2016 the Group raised a further GBP7.6 million net
of expenses from the placing of 128,383,528 shares in the
Company.
Loan balance
We began the year with a loan balance of GBP1 million which was
the first tranche drawn down under the GBP5.3 million AMSCI loan
facility established in 2013. In the first quarter of 2015 we drew
down a further GBP2 million but the entire GBP3 million was
subsequently repaid when we established the $50 million Oberland
loan facility in May 2015. $25 million (GBP16.3 million) of this
facility was drawn down in May 2015, with a further $15 million
(GBP9.8 million) drawn down in September.
The GBP27.3 million loan balance at the end of 2015 includes
GBP1.0 million of currency revaluation losses on the $40 million
Oberland loan balance.
Balance sheet
The most significant changes to the balance sheet have been
- the increase in property, plant and equipment from GBP8.9
million at 31 December 2014 to GBP24.4 million at 31 December 2015.
This increase is explained by the GBP16.7 million purchases offset
by GBP1.3 million of depreciation
- the increase in the loans balance from GBP1.0 million to
GBP27.3 million. The balance at the end of 2014 was the GBP1.0
million which had been drawn down from the AMSCI facility; at the
end of 2015 the balance is the $40 million loan drawn down valued
at the exchange rate at 31 December 2015.
- Trade and other receivables have increased from GBP5.2 million
to GBP10.9 million. The 2015 balance includes amounts receivable
from Novartis in respect of performance milestones.
- Inventories have risen from GBP1.4 million to GBP2.7 million
because of the higher levels of production in the past few months
of 2015 compared with the same period in 2014, and also the
anticipated step up in production volumes expected in 2016 with the
new Yarnton facility coming on line from early 2016.
Comparison with profit estimate
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On 23 February 2016 the Group announced a proposed Placing to
raise GBP8.1 million. included in the announcement was an unaudited
estimate of the financial results for the year ended 31 December
2015. The table below compares the estimates with the actual
audited results for the same period:
Estimate Actual GBPm
GBPm
--------------------- ------------ ------------
Gross income 18-19 18.8
--------------------- ------------ ------------
(15.5) -
Operating loss (16.5) (14.1)
--------------------- ------------ ------------
Loss for the period (13) - (14) (13.0)
--------------------- ------------ ------------
Cash 9.4 9.4
--------------------- ------------ ------------
Debt 27.3 27.3
--------------------- ------------ ------------
The primary reason for the lower Operating loss is that the
portion of the R&D tax credit which is claimed under the large
company scheme has been offset against the Operating Loss in the
Actual results whereas it was included in Taxation in the Estimate.
There is no net impact on the Loss for the Period.
Financial outlook
Partnering revenues should continue to grow strongly in 2016 as
our bioprocessing capacity will more than double with the addition
of the GMP4 (Yarnton) and GMP2 (Harrow House) clean room
facilities. We also have reasonable expectations of further process
development and bioprocessing contracts which will add to the
requirements from Novartis and Immune Design.
Investment will continue in our three key products and
technology development in 2016, broadly at the same level as in
2015, as we take OXB-102 and OXB-202 into their respective Phase
I/II clinical studies and complete the OXB-302 pre-clinical
programme. We will also continue to invest in our lentiviral vector
technology.
The capacity expansion programme will be largely completed
during the second quarter of 2016. Capital expenditure in 2016
required to complete the expansion is anticipated at approximately
GBP6 million.
Going concern
The Directors estimate that the cash held by the Group together
with known and probable receivables will be sufficient to support
the current level of activities into the third quarter of 2016.
This estimate does not include the potential benefit of any upfront
receipts from further contracts for process development and
bioprocessing services or from licencing-out the Group's
intellectual property, and the Directors are therefore continuing
to explore other sources of finance available to the Group.
The Directors have confidence that they will be able to secure
sufficient cash inflows for the Group to continue its activities
for not less than 12 months from the date of approval of these
financial statements, and have therefore prepared the financial
statements on a going concern basis. However, because the
additional finance is not committed at the date of approval of
these financial statements, these circumstances represent a
material uncertainty which may cast significant doubt on the
Group's ability to continue as a going concern. Should the Group be
unable to obtain further finance such that the going concern basis
of preparation were no longer appropriate, adjustments would be
required including to reduce balance sheet values of assets to
their recoverable amounts, to provide for further liabilities that
might arise and to reclassify fixed assets as current assets.
Tim Watts
Chief Financial Officer
Consolidated statement of comprehensive income
for the year ended 31 December 2015
Group
2015 2014
-------- --------
Continuing operations Total Total
Notes GBP'000 GBP'000
------------------------------ ----- -------- --------
Revenue 15,909 13,618
Cost of sales (5,839) (4,416)
------------------------------ ----- -------- --------
Gross profit 10,070 9,202
------------------------------ ----- -------- --------
Research, development and
bioprocessing costs (20,274) (16,986)
Administrative expenses (6,741) (3,957)
Other operating income 2,862 1,128
------------------------------ ----- -------- --------
Operating loss (14,083) (10,613)
------------------------------ ----- -------- --------
Finance income 26 53
Finance costs (2,925) (238)
----- -------- --------
Loss before tax (16,982) (10,798)
Taxation 3,963 2,137
------------------------------ ----- -------- --------
Loss and total comprehensive
expense for the year (13,019) (8,661)
Basic loss and diluted loss
per ordinary share 4 (0.51p) (0.43p)
------------------------------ ----- -------- --------
The notes on pages 19 to 24 form part of this preliminary
information.
Balance sheet
as at 31 December 2015
Group
2015 2014
Notes GBP'000 GBP'000
------------------------------ ----- --------- ---------
Assets
Non-current assets
Intangible assets 5 1,743 2,106
Property, plant and equipment 6 24,396 8,944
26,139 11,050
------------------------------ ----- --------- ---------
Current assets
Inventories 7 2,706 1,407
Trade and other receivables 8 10,930 5,153
Current tax assets 2,721 2,000
Cash and cash equivalents 9,355 14,195
------------------------------ ----- --------- ---------
25,712 22,755
------------------------------ ----- --------- ---------
Current liabilities
Trade and other payables 9 9,286 6,304
Deferred income 10 3,045 2,927
Provisions 12 838 -
------------------------------ ----- --------- ---------
13,169 9,231
------------------------------ ----- --------- ---------
Net current assets 12,543 13,524
------------------------------ ----- --------- ---------
Non-current liabilities
------------------------------ ----- --------- ---------
Loans 11 27,255 1,000
Provisions 12 533 535
------------------------------ ----- --------- ---------
27,788 1,535
------------------------------ ----- --------- ---------
Net assets 10,894 23,039
------------------------------ ----- --------- ---------
Equity attributable to owners
of the parent
Ordinary shares 25,741 25,659
Share premium account 141,677 141,615
Merger reserve 2,291 2,291
Treasury reserve (102) (226)
Other reserves - (682)
Accumulated losses (158,713) (145,618)
------------------------------ ----- --------- ---------
Total equity 10,894 23,039
------------------------------ ----- --------- ---------
The notes on pages 19 to 24 form part of this preliminary
information.
Statement of cash flows
for the year ended 31 December 2015
Group
2015 2014
Notes GBP'000 GBP'000
----------------------------------------------------- ----- -------- -------
Cash flows from operating activities
Cash used in operations 13 (14,866) (7,431)
Interest paid (1,494) (238)
Tax credit received 3,247 1,637
Overseas tax paid (5) -
----------------------------------------------------- ----- -------- -------
Net cash used in operating activities (13,118) (6,032)
----------------------------------------------------- ----- -------- -------
Cash flows from investing activities
Purchases of property, plant and equipment (16,716) (5,577)
Interest received 38 53
Net cash used in investing activities (16,678) (5,524)
----------------------------------------------------- ----- -------- -------
Cash flows from financing activities
Proceeds from issue of ordinary share capital 144 24,268
Costs of share issues - (1,460)
Purchase of treasury shares - (226)
Loans received 27,812 2,500
Loans repaid (3,000) (1,500)
----------------------------------------------------- ----- -------- -------
Net cash generated from financing activities 24,956 23,582
----------------------------------------------------- ----- -------- -------
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Net (decrease)/increase in cash and cash equivalents (4,840) 12,026
Cash and cash equivalents at 1 January 14,195 2,169
Cash and cash equivalents at 31 December 9,355 14,195
----------------------------------------------------- ----- -------- -------
The notes on pages 19 to 24 form part of this preliminary
information.
Statement of changes in equity attributable to owners of the
parent company
for the year ended 31 December 2015
Share
Ordinary premium Merger Treasury Other Accumulated Total
shares account reserve reserve reserves losses equity
Group Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------ -------- -------- -------- -------- --------- ----------- ---------
At 1 January
2014 14,162 130,304 14,310 - (682) (149,196) 8,898
Year ended 31
December 2014:
-------------------- ------ -------- -------- -------- -------- --------- ----------- ---------
Loss for the
year - - - - - (8,661) (8,661)
---------------------------- -------- -------- -------- -------- --------- ----------- ---------
Total comprehensive
expense for
the year - - - - - (8,661) (8,661)
Transactions
with owners:
Share options
Value of employee
services - - - - - 220 220
Issue of shares
excluding options 11,497 12,771 - - - - 24,268
Cost of share
issues - (1,460) - - - - (1,460)
Realisation
of merger reserve - - (12,019) - - 12,019 -
Deferred Share
Award - - - (226) - - (226)
---------------------------- -------- -------- -------- -------- --------- ----------- ---------
At 31 December
2014 25,659 141,615 2,291 (226) (682) (145,618) 23,039
Year ended 31
December 2015:
-------------------- ------ -------- -------- -------- -------- --------- ----------- ---------
Loss for the
year - - - - - (13,019) (13,019)
---------------------------- -------- -------- -------- -------- --------- ----------- ---------
Total comprehensive
expense for
the year - - - - - (13,019) (13,019)
Transactions
with owners:
Share options
Proceeds from
shares issued 82 62 - - - - 144
Value of employee
services - - - - - 730 730
Vesting of deferred
share award - - - 124 - (124) -
Liquidation
of BioMedica
inc. - - - - 682 (682) -
At 31 December
2015 25,741 141,677 2,291 (102) - (158,713) 10,894
---------------------------- -------- -------- -------- -------- --------- ----------- ---------
The notes on pages 19 to 24 form part of this preliminary
information.
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
for the year ended 31 December 2015
1 Basis of preparation
This financial information, for the years ended 31 December 2015
and 31 December 2014, does not constitute the statutory financial
statements for the respective years, and is an extract from the
financial statements. It is based on, and is consistent with, that
in the Group's statutory accounts for the year ended 31 December
2015 and those financial statements will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. Financial statements for the year ended 31 December 2014
have been delivered to the Registrar of Companies. The auditors'
reports on the financial statements for the years ended 31 December
2015 and 31 December 2014 were unqualified and did not contain
statements under section 498 of the Companies Act 2006. While the
auditors' opinion for the year ended 31 December 2015 is
unmodified, their report contains reference to the material
uncertainty disclosed below. The financial information in this
report does not constitute a statutory financial statement within
the meaning of sections 434-436 of the Companies Act 2006.
The financial statements have been prepared in accordance with
IFRIC interpretations, as applicable to companies using
International Financial Reporting Standards ('IFRS') as adopted by
the European Union and with the Companies Act 2006 under the
historic cost convention. Whilst the financial information included
in this preliminary announcement has been prepared in accordance
with IFRSs adopted for use in the European Union, this announcement
does not itself contain sufficient information to comply with
IFRSs.
Copies of this announcement and the Annual report for 2015 are
available from the Company Secretary, and are on the Group's
website. The audited statutory financial statements for the year
ended 31 December 2015 are expected to be distributed to
shareholders by 5 May 2016 and will be available at the registered
office of the Company, Windrush Court, Transport Way, Oxford, OX4
6LT. Details can also be found on the Group's website at:
www.oxfordbiomedica.co.uk.
This announcement was approved by the Board of Oxford BioMedica
plc on 27 April 2016.
Going concern
The Directors estimate that the cash held by the Group together
with known and probable receivables will be sufficient to support
the current level of activities into the third quarter of 2016.
This estimate does not include the potential benefit of any upfront
receipts from further contracts for process development and
bioprocessing services or from licencing-out the Group's
intellectual property, and the Directors are therefore continuing
to explore other sources of finance available to the Group. The
Directors have confidence that they will be able to secure
sufficient cash inflows for the Group to continue its activities
for not less than 12 months from the date of approval of these
financial statements, and have therefore prepared the financial
statements on a going concern basis. However, because the
additional finance is not committed at the date of approval of
these financial statements, these circumstances represent a
material uncertainty which may cast significant doubt on the
Group's ability to continue as a going concern. Should the Group be
unable to obtain further finance such that the going concern basis
of preparation were no longer appropriate, adjustments would be
required including to reduce balance sheet values of assets to
their recoverable amounts, to provide for further liabilities that
might arise and to reclassify fixed assets as current assets.
2 Critical accounting judgements and estimates
In applying the Group's accounting policies, management is
required to make judgements and assumptions concerning the future
in a number of areas. Actual results may be different from those
estimated using these judgements and assumptions. The key sources
of estimation uncertainty and critical accounting judgements 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.
Revenue recognition
In October 2014, the Group entered into a series of contractual
arrangements with Novartis, including a licence over the Group's
existing Lentivector(R) platform, a production and clinical supply
agreement and an agreement covering process development. Total
amounts of up to $90m, plus further potential royalties, are
receivable under these arrangements. These amounts include $4.3m of
shares subscribed for by Novartis on completion of the
arrangements.
Under these arrangements, the Group received $9.7m (GBP6.1m) in
upfront payments of which $7.7m (GBP4.8m) was received in respect
of a non-exclusive worldwide development and commericalisation
licence in oncology under the Group's existing Lentivector(R)
intellectual property gene delivery platform.
Management has judged that this amount should be recognised as a
separate deliverable in 2014 discrete from amounts to be recognised
over the period of the three year production contract. This
judgement is based on management being satisfied that the customer
is able and intends to realise value from this licence
independently from any further intellectual property generated in
the collaboration and that its fair value is sufficiently reliable.
In reaching this judgement management had regard to several
considerations including:
- The existing intellectual property covered by the licence is
sufficient to allow CTL-019 to be bioprocessed for commercial use,
and any intellectual property that might arise from the process
development under the contract is not a pre-requisite for its
commercial manufacture
- The licence allows Novartis to use the existing intellectual
property for other oncology products apart from CTL-019
- The other elements of the arrangements have an appropriate
price and fair value (the residual elements)
- The $7.7m rate is comparable with similar transactions with
third parties that the Group has previously contracted, taking into
account the stage of development and the market potential of the
product
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This judgement reflects both the separability of the licence for
the existing intellectual property and the assessment of the fair
values of each of the components of the Novartis agreements.
The remaining $2.0m of the $9.7m upfront payments are dependent
on certain events and activities over the 3 year period. As at 31
December 2015, $0.4m had been recognised as revenue (2014: nil)
Intangible asset impairment
The Group has intangible assets arising from purchases of
intellectual property rights and in-process R&D. Amortisation
is charged over the assets' patent life on a straight line basis
from the date that the asset becomes available for use. When there
is an indicator of a significant and permanent reduction in the
value of intangible assets, an impairment review is carried out.
The impairment analysis is principally based on estimated
discounted future cash flows. Actual outcomes could vary
significantly from such estimates of discounted future cash flows
due to the sensitivity of the assessment to the assumptions used.
The determination of the assumptions is subjective and requires the
exercise of considerable judgement. Any changes in key assumptions
about the Group's business and prospects, or changes in market
conditions affecting the Group, or its development partners, could
materially affect whether an impairment exists. This risk is now
concentrated on purchased patent rights which have been sublicensed
to collaborative partners. At 31 December 2015 the book value of
intangible assets was GBP1.7 million of which GBP1.3 million
related to PrimeBoost technology.
Going concern
Management and the Directors have had to make estimates and
important judgements when assessing the going concern status of the
Group. Going concern is as stated in several places in this report
including in note 1 and the Financial review.
3 Taxation
The Group is entitled to claim tax credits in the United Kingdom
for certain research and development expenditure. The amount
included in the statement of comprehensive income for the year
ended 31 December 2015 comprises the credit receivable by the Group
for the year, less overseas tax paid in the year. The United
Kingdom corporation tax research and development credit is paid in
arrears once tax returns have been filed and agreed. The tax credit
recognised in the financial statements, but not yet received, is
included in current tax assets in the balance sheet. The amounts
for 2015 have not yet been agreed with the relevant tax
authorities.
2015 2014
GBP'000 GBP'000
---------------------------------------------------------------- --------- --------
Current tax
United Kingdom corporation tax research and development credit (2,721) (2,000)
Overseas taxation 5 (51)
---------------------------------------------------------------- --------- --------
(2,716) (2,051)
Adjustments in respect of prior periods
United Kingdom corporation tax research and development credit (1,247) (86)
Taxation credit (3,963) (2,137)
---------------------------------------------------------------- --------- --------
4 Basic loss and diluted loss per ordinary share
The basic loss per share has been calculated by dividing the
loss for the year by the weighted average number of shares in issue
during the year ended 31 December 2015 (2,570,202,150; 2014:
2,019,291,808). As the Group is loss-making, there were no
potentially dilutive options in either year. There is therefore no
difference between the basic loss per ordinary share and the
diluted loss per ordinary share.
5 Intangible assets
2015 2014
Intellectual property rights GBP'000 GBP'000
--------------------------------- ------- -------
Cost
At 1 January 5,591 5,591
Additions - -
At 31 December 5,591 5,591
---------------------------------- ------- -------
Accumulated amortisation
and impairment
At 1 January 3,485 2,958
Amortisation charge for the
year 363 396
Impairment charge for the
year - 131
---------------------------------- ------- -------
At 31 December 3,848 3,485
---------------------------------- ------- -------
Net book amount at 31 December 1,743 2,106
---------------------------------- ------- -------
For intangible assets regarded as having a finite useful life,
amortisation commences when products underpinned by the
intellectual property rights become available for use. Amortisation
is calculated on a straight line basis over the remaining patent
life of the asset. Amortisation of GBP363,000 (2014: GBP396,000) is
included in 'Research and development costs' in the statement of
comprehensive income.
6 Property, plant and equipment
Assets
Short Office Manufac-turing under
Freehold leasehold equipment and Laboratory constru-
property improve-ments and computers equipment ction(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------------- -------------- --------------- --------- -------
Cost
At 1 January 2015 6,887 2,623 820 5,335 646 16,311
Additions at cost 51 863 554 2,239 13,009 16,716
Reclassifications - 3,911 - - (3,911) -
------------------------- --------- -------------- -------------- --------------- --------- -------
At 31 December
2015 6,938 7,397 1,374 7,574 9,744 33,027
------------------------- --------- -------------- -------------- --------------- --------- -------
Accumulated depreciation
At 1 January 2015 698 2,579 595 3,495 - 7,367
Charge for the
year 223 330 158 553 - 1,264
At 31 December
2015 921 2,909 753 4,048 - 8,631
------------------------- --------- -------------- -------------- --------------- --------- -------
Net book amount
at 31 December
2015 6,017 4,488 621 3,526 9,744 24,396
------------------------- --------- -------------- -------------- --------------- --------- -------
Assets
Short Office Manufac-turing under
Freehold leasehold equipment and Laboratory constru-
property improve-ments and computers equipment ction(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------------- -------------- --------------- ------------- -------
Cost
At 1 January
2014 3,225 2,623 621 4,265 - 10,734
Additions at
cost 3,662 - 199 1,070 646 5,577
At 31 December
2014 6,887 2,623 820 5,335 646 16,311
------------------------- --------- -------------- -------------- --------------- ------------- -------
Accumulated depreciation
At 1 January
2014 476 2,515 543 3,130 - 6,664
Charge for the
year 222 64 52 365 - 703
At 31 December
2014 698 2,579 595 3,495 - 7,367
------------------------- --------- -------------- -------------- --------------- ------------- -------
Net book amount
at 31 December
2014 6,189 44 225 1,840 646 8,944
------------------------- --------- -------------- -------------- --------------- ------------- -------
(1) Assets under construction represents the capitalisation of
ongoing construction works at Harrow House and Yarnton
bioprocessing facilities and the Windrush Court laboratories. The
opening balance within Assets under construction was included in
Freehold property and Short leasehold improvements in the 2014
year-end financial statements.
7 Inventories
2015 2014
GBP'000 GBP'000
----------------- ------- -------
Raw Materials 2,217 1,214
Work in progress 489 193
Total inventory 2,706 1,407
----------------- ------- -------
(MORE TO FOLLOW) Dow Jones Newswires
April 28, 2016 02:01 ET (06:01 GMT)
Inventories constitute raw materials held for commercial
manufacturing purposes, and work-in-progress inventory related to
contractual manufacturing obligations.
8 Trade and other receivables
2015 2014
GBP'000 GBP'000
---------------------------------- ------- -------
Current
Trade receivables 7,374 3,621
Accrued income 1,155 340
Other receivables 31 16
Other tax receivable 1,522 397
Prepayments 848 779
Total trade and other receivables 10,930 5,153
------------------------------------ ------- -------
The fair value of trade and other receivables are the current
book values.
Included in the Group's trade receivable balance are debtors
with a carrying amount of GBP826,000 (2014: GBP66,000) which are
past due at the reporting date, all of which have since been
received.
9 Trade and other payables
2015 2014
GBP'000 GBP'000
----------------------------------- ------- -------
Trade payables 3,588 2,787
Other taxation and social security 384 270
Accruals 5,314 3,247
Total trade and other payables 9,286 6,304
------------------------------------- ------- -------
10 Deferred income
2015 2014
Group GBP'000 GBP'000
---------------------- ---------- ----------
Current 3,045 2,927
Total deferred income 3,045 2,927
---------------------- ---------- ----------
Deferred income arises from contractual agreements with
customers.
11 Loans
On 1 May 2015, an agreement was entered into with Oberland
Capital for a $50 million loan facility of which $25 million
(GBP16.3m) was drawn down immediately, and a further $15m (GBP9.8m)
was drawn down in September 2015.
The Oberland Facility is a loan facility agreement provided by
Oberland Capital Management LLC, to provide funds to invest in the
Group's capacity expansion and for pipeline advancements and
product acquisitions. The loan is repayable not later than 1 May
2022 and may be prepaid at any time. Over the course of the loan
term, interest is payable quarterly at an annual interest rate of
9.5% plus the greater of 1% and three month LIBOR. In addition to
interest, an exit fee is payable upon any repayment of the loan or
part thereof. The Group is also required to pay an additional
amount of 0.35% of annual worldwide net revenues for eight years
commencing 1 April 2017 for each $5 million of loan drawn down over
$30 million. This revenue participation may be retired at any time
upon payment of the exit fee. In the event that the loan is repaid
after the second anniversary of the facility, there may be a
true-up payment payable to Oberland in the event that the aggregate
of the interest payments, revenue participation payments and exit
fee do not in aggregate provide a return of 15% p.a. to
Oberland.
The Group is required under the Oberland Facility to maintain
cash and cash equivalents of not less than $10 million (GBP7.1
million) while the Oberland Facility is outstanding. The loan
facility is secured on the Group's assets.
During May 2015 the GBP5.3m loan facility provided by the UK
Government's Advanced Manufacturing Supply Chain Initiative was
terminated and the outstanding balance of GBP3 million repaid.
12 Provisions
Dilapidations
Group GBP'000
---------------------------------------------------- -------------
At 1 January 2015 535
Unwinding of discount 3
Recognised for Yarnton/Medawar leasehold properties 833
------------------------------------------------------ -------------
At 31 December 2015 1,371
------------------------------------------------------ -------------
At 1 January 2014 532
Unwinding of discount 3
At 31 December 2014 535
------------------------------------------------------ -------------
The dilapidations provision relates to anticipated costs of
restoring the leasehold Medawar and Yarnton properties in Oxford,
UK to their original condition at the end of the present leases in
2016 and 2024 respectively, discounted using the rate per the Bank
of England nominal yield curve. The equivalent rate was used in
2014. The provision will be utilised at the end of the leases if
they are not renewed.
13 Cash flows from operating activities
Reconciliation of operating loss to net cash used in
operations:
2015 2014
GBP'000 GBP'000
---------------------------------------------- -------- --------
Continuing operations
Operating loss (14,083) (10,613)
Adjustment for:
Depreciation 1,264 703
Amortisation of intangible assets 363 396
Charge for impairment - 131
Charge in relation to employee share schemes 730 220
Changes in working capital:
Increase in trade and other receivables (5,777) (2,561)
Increase in trade and other payables 2,982 3,370
Increase in deferred income 118 1,647
Increase in provisions 836 3
Increase in inventory (1,299) (727)
------------------------------------------------ -------- --------
Net cash used in operations (14,866) (7,431)
------------------------------------------------ -------- --------
14 Subsequent events
On 23 February 2016, the Group announced that it had placed
128,383,528 new ordinary shares in the Company at a price of 6.3
pence per share with both new and existing investors and Directors.
The price of 6.3 pence per share represented a 10% discount to the
closing price of 7.0 pence per share on 22 February 2016. Gross
proceeds from the placing were GBP8.1 million, net proceeds were
GBP7.6 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IRMLTMBTTBLF
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