TIDMOXB
RNS Number : 3403H
Oxford Biomedica PLC
13 March 2015
OXFORD BIOMEDICA: PRELIMINARY RESULTS FOR THE YEAR ENDED 31
DECEMBER 2014
Oxford, UK - 13 March 2015: Oxford BioMedica plc (LSE: OXB),
("OXB" or "the Group") a leading gene and cell therapy group, today
announces its preliminary results for the twelve months ended 31
December 2014.
OPERATIONAL HIGHLIGHTS:
-- IP, technology and manufacturing capability is validated
- Major new licensing and manufacturing contract with Novartis
worth up to $90 million over the next three years signed in
October
- Licensing royalties when CTL019 is commercialised
-- Revenues increased
- Licensing revenues increased to GBP5.1 million (2013: GBP1.0
million) including GBP4.8 million from Novartis upfront
payments
- Manufacturing revenue increased to GBP7.7 million (2013:
GBP2.6 million) from the provision of manufacturing and process
development services to third parties
- R&D collaboration revenue of GBP0.8 million (2013: GBP1.7
million) representing residual revenue under the 2009 Sanofi
agreement
-- Pipeline advanced
- Four clinical programmes in active development and two other
products being prepared for Phase I/II
- RetinoStat(R) recruitment completed in Phase I trial which will report in 2015
- New CART-5T4 programme initiated in-house, combining both
OXB's LentiVector(R) and 5T4 technology platforms
- GBP2.2 million grant from the Technology Strategy Board (now
Innovate UK) to fund a Phase I/II clinical trial of OXB-102 in
Parkinson's disease commencing in early 2016
- Sanofi granted global rights to StarGen(TM) and UshStat(R)
across all ocular indications; Oxford BioMedica is entitled to
development and commercialisation milestone payments and
royalties
-- Balance sheet strengthened
- Successful fundraising in June which contributed net proceeds of GBP20.1 million
FINANCIAL HIGHLIGHTS(1) :
-- Total revenues of GBP13.6 million (excluding grants) in 2014 (2013: GBP5.4 million)
-- Total revenues include profit-generating revenues(2) of
GBP7.7 million (2013: GBP2.6 million)
-- Cash used in operations, before capital expenditure of GBP7.4
million (2013: GBP13.0 million)
-- Cash burn of GBP11.6 million(3) (2013: GBP11.9 million)
-- GBP14.2 million cash balance at end 2014 (GBP2.2 million at the start of the year)
_______________________________
(1) Audited financial results (2) Revenues from the provision of manufacturing and process development services to third parties (3) Net cash used in/generated from operations plus sales and purchases of non-current assets and interest received
John Dawson, Chief Executive Officer at Oxford BioMedica, said:
"Oxford BioMedica is now demonstrably a world-leading gene and cell
therapy group with a valuable proprietary pipeline. 2014 was a
transformational year for the Group due largely to the signature of
our major contract with Novartis. This second contract with
Novartis further validated the strength of our lentivector IP and
our associated manufacturing expertise. The deal also gave us a
significantly strengthened financial position and so now the group
has a highly promising future. Our overall goal is to deliver
significant value to both patients and shareholders in the
near-term and we are excited and well positioned to do this."
Conference call for analysts
A briefing for analysts will be held at 9am GMT on 13 March 2015
at the offices of Consilium
Strategic Communications, 41 Lothbury, London, EC2R 7HG. There
will be a simultaneous live conference call 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 9am GMT, to download the presentation slides.
Conference call details:
Participant dial-in: 08006940257
International dial-in: +44 (0) 1452 555566
Participant code: 2837070
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 plc (LSE: OXB) is a leading gene and cell
therapy group with an unrivalled portfolio of gene therapy products
in development, and a platform of exclusive and pioneering
technologies with which it designs, develops and manufactures
unique gene-based medicines for some of world's largest
pharmaceutical companies. Leveraging its proprietary LentiVector(R)
IP and gene delivery system technology platform and unique tumour
antigen (5T4), Oxford BioMedica is advancing its pipeline of seven
gene therapy products addressing diseases for which there are
currently no treatments or that are inadequately treated today,
including ocular and central nervous system disorders. OXB
Solutions, the Group's industry-leading manufacturing and
development business, provides services to collaborators and
partners working in gene and cell therapy, including Novartis and
Immune Design Corp. In addition, the Group has licenced products
and IP to Sanofi, Pfizer, MolMed, Sigma-Aldrich, Biogen Idec,
Emergent BioSolutions and ImaginAb. Further information is
available at www.oxfordbiomedica.co.uk and
www.oxbsolutions.co.uk
CHAIRMAN'S STATEMENT
The main event in 2014 was undoubtedly the signing of a second
agreement with Novartis following our initial agreement in 2013.
The importance of this deal must not be underestimated for two main
reasons. Firstly, the validation of our patent estate, know-how and
capability to deliver firmly establishes us as the leader in the
industry for lentiviral vector based gene and cell therapy
products. Secondly, in addition to the upfront payment and equity
investment we have already received, the contract promises
significant potential revenues over the next three years and
potentially a royalty stream on CTL019 after that. This provides us
with an opportunity to deliver a balanced business model whereby
revenues support the Group's overheads and help us to fund the
development of our proprietary product pipeline.
Although the Novartis contract gives us financial strength, I
was pleased to see encouraging progress in the development of our
product pipeline in 2014 as I am convinced that this remains our
single most valuable asset. With four programmes in active clinical
development, and two more being readied for the clinic, our
pipeline is full of potential value and we continue evaluating new
pipeline opportunities.
Funding and share price performance
I was delighted with the support we received from our existing
shareholders, and the investment of new shareholders, as part of
our successful GBP21.6m (before expenses) fundraise completed in
June. M&G Investments increased its stake to nearly 20% and
Aviva Investors took a near 10% stake. We are particularly grateful
to Vulpes, now our second largest shareholder, for its continued
support in providing the GBP5.0 million loan facility in 2014.
These timely funds gave us the platform to complete the Novartis
negotiations on the best possible terms.
I would also like to praise the Government for its valuable
support to the Group and to the UK biotech industry in general. I
have no doubt that the Advanced Manufacturing Supply Chain
Initiative (AMSCI) funding announced in 2013 helped to give us
credibility in Novartis' eyes, while the award of a GBP2.2 million
grant from Innovate UK (formerly the Technology Strategy Board) in
2014 will help us fund a Phase I/II clinical trial of OXB-102 in
Parkinson's disease.
It was especially pleasing to see that the strong year
operationally was matched by the performance of our share price
which is now starting to reflect the value in our business.
Gene and cell therapy
It is clear that industry and investors are increasingly excited
and encouraged by developments in the gene and cell therapy field
in general. 2014 saw a number of very successful gene and cell
therapy IPOs in the US led by Juno Therapeutics Inc., which was the
most highly valued biotech IPO of the year, raising $265m with a
market capitalisation in excess of $3bn. We also saw some major,
high-value industry collaborations in the space, including deals
announced between GSK and Adaptimmune (up to $350m) and Pfizer and
Cellectis (up to $2.8bn).
US valuations in the gene and cell therapy space, and in general
in the sector, continue to exceed those in the EU, but we believe
we can close this valuation gap by continuing to invest in our
products and IP.
Investing for growth as industry momentum builds
The growing investment and activity in gene and cell therapy
presents the Group with increasing opportunities for licensing and
partnering across our business. We are starting a programme of
investments in 2015 to substantially expand our manufacturing and
analytical capacity, primarily to ensure that we meet our
obligations under the Novartis contract. However, we will also be
looking to generate further manufacturing related contracts with
the wider industry.
As part of our planned expansion, we are in the process of
relocating our offices and laboratories to a new facility directly
opposite our manufacturing facility in Oxford, UK. In October 2014,
we acquired the freehold of Windrush Court for a cash consideration
of GBP3.2 million. The Board expects to recoup this purchase cost
within four years through savings in rental costs and service
charges once the current lease of the Medawar Centre expires in
March 2016.
Summary
Oxford BioMedica is very well placed to capitalise on the
positive change in sentiment towards gene and cell therapy. I
believe approaches in this field have the potential to become the
mainstay of currently unmet therapies in the future. We saw this
with antibody based products and I believe we will now see this
with gene and cell therapy products.
I would like to thank and congratulate our staff on their
immense achievements during the year. We hope for further successes
in 2015 as we progress our pipeline, expand our manufacturing
business, and seek further technology licensing deals. Our future
is very bright indeed.
Nick Rodgers
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
2014 was a transformational year for Oxford BioMedica.
Negotiations with Novartis that were starting around this time last
year were successfully completed. This resulted in the October 2014
announcement of a licensing and manufacturing agreement with a
value of up to $90 million over the next three years, and with the
prospect of further royalty revenues on any future product sales.
The new contract with Novartis, together with the completion of a
successful GBP21.6m (before expenses) fundraise, puts us in a
strong financial position from which to leverage our technology
platform.
I am pleased to report that we made good progress across our
clinical development pipeline during the year, while also
initiating an exciting CART-5T4 programme which combines both of
our main technologies (LentiVector(R) and 5T4 platforms), and takes
us directly into the cell therapy space.
The Novartis deal
I am proud to say that it was our strong team performance under
the initial contract signed in May 2013 with Novartis for CTL019
that led to the signing of the expanded agreement with Novartis in
October 2014. The terms of this agreement include:
-- A non-exclusive licence granted to Novartis covering Oxford BioMedica's LentiVector(R) platform IP in oncology
-- A process development collaboration under which any arising IP is owned by Oxford BioMedica and Novartis has an
exclusive licence to such arising IP as it relates to CAR-T cell products
-- An initial three-year manufacturing contract for clinical supply for Novartis' CTL019 programme with the
potential for extension
Financial terms include:
-- $4.3m equity investment that was paid on signing the agreement
-- Consideration for the IP licence was a $9.7m non-refundable upfront payment and undisclosed royalties on CTL019
and other CAR-T products
-- Potential payments of up to $76 million over three years for manufacturing and process development
Fundraising strengthened our negotiating position with
Novartis
We were delighted to announce in June 2014 the completion of a
successful GBP21.6 million (before expenses) fundraise from
existing and new investors. Importantly, this provided us with the
time and a robust financial position from which to complete our
negotiations with Novartis and achieve the best possible terms. It
has been pleasing to see the share price appreciate progressively
following the fundraising and the Novartis announcement, which is a
sign of market confidence in our expertise and a wider realisation
that the field of gene and cell therapy now provides real treatment
options. I would also like to thank Vulpes, who were our largest
shareholder at the time, for the loan facility it agreed with us at
the start of 2014 to help facilitate the fundraising.
Pipeline advances
We made strong progress across our development pipeline during
the year:
LentiVector(R) platform
In February 2014 we announced that we had granted Sanofi a
development and commercialisation license for StarGen(TM) and
UshStat(R) , while providing for the return to us of the full
product rights for EncorStat(R) . Under the new license agreement,
we are eligible for development and commercialisation milestone
payments and royalties on any future sales of StarGen(TM) and
UshStat(R) . Sanofi are now fully responsible for the development
of these products and have taken over management of the current
clinical trials.
We announced in April 2014 the completion of patient recruitment
and dosing in the Phase I study of RetinoStat(R) . We also
announced later that month that Sanofi had decided not to exercise
the option to license RetinoStat(R) , but had confirmed that this
decision was not linked to unexpected results from the study. We
now look forward to receiving the final clinical study report in
mid-2015. We are beginning to evaluate the best way forward for
RetinoStat(R) and alternative ways of achieving this.
In January 2014, The Lancet published encouraging results from
the previously reported Phase I/II study of ProSavin(R) in patients
with advanced Parkinson's disease. These included an excellent
safety profile and a significant improvement in motor function
relative to baseline at six and 12 months. We are fast-tracking
OXB-102 as a second-generation, more potent version of ProSavin(R)
, as we believe OXB-102 could have even greater efficacy in this
indication based on dose response observations. In April 2014 we
were awarded a GBP2.2 million grant from Innovate UK (formerly the
Technology Strategy Board) to fund a Phase I/II clinical trial of
OXB-102 in Parkinson's disease patients, and we are currently
preparing for the start of this study in 2016. I am pleased to
report that our other CNS asset, MoNuDin, continues to progress
well in preclinical development.
5T4 platform
We initiated our own CAR-T programme in 2014, which leverages
both our LentiVector(R) and 5T4 technologies. While relatively
early-stage, this moves us directly into the cell therapy space.
Meanwhile, investigator-led Phase II studies of TroVax(R) in
colorectal cancer, ovarian cancer and mesothelioma remain on course
to report over the next 12-18 months.
Manufacturing operations: OXB Solutions
Our delivery on the 2013 Novartis contract was a major
determinant in the Group being awarded the expanded contract
announced in October 2014. Oxford BioMedica has the potential to
earn up to $76 million over the next three years from delivering on
manufacturing and process development targets agreed with Novartis.
We now need to invest further in our manufacturing facilities to
ensure we have the necessary capacity to achieve these targets, and
a series of investments are planned over the next 12-18 months.
New headquarters acquired
We announced in October 2014 that we had acquired the freehold
of the Windrush Court office and laboratory facilities in Oxford,
England, for a cash consideration of GBP3.2 million. This new
facility, which is opposite our existing manufacturing facility,
will enable us to consolidate all our activities in one location.
This is expected to improve operational efficiency, providing
additional capacity to accommodate our expansion and scale up,
while also delivering significant cost savings in the medium term
compared to our current premises.
Management updates
We further strengthened our management team with a number of
senior management changes during the year. Oxford BioMedica's
senior executive decision-making body is now the Senior Executive
Team, comprising the four executive directors, John Dawson, Tim
Watts, Paul Blake and Peter Nolan, together with Kyriacos
Mitrophanous and James Miskin.
Outlook
It is an exciting time to be at Oxford BioMedica, and in the
gene and cell therapy field in general. We remain focused on
driving our product pipeline forward to deliver its considerable
value, in parallel with delivering under the contract with Novartis
to offset our cash burn and help fund our wider activities. We have
four products in active clinical development and keenly anticipate
the complete results of the RetinoStat(R) Phase I study in
mid-2015. We are busy preparing both EncorStat(R) and OXB-102 for
entry into the clinic in 2016 and also continuing to evaluate new
product opportunities, such as our exciting CART-5T4 cell therapy
programme.
We are actively seeking further revenue-generating opportunities
from licensing our technology or winning further process
development and manufacturing contracts from third parties. I
anticipate that as more gene and cell therapy products enter
clinical development, there will be demand from other companies for
our manufacturing capabilities.
We will be expanding our physical capacity during 2015 and the
first half of 2016 to ensure that we can meet our deliverables
under the Novartis contract. This we believe could put us in a
position that by the end of 2016, revenues from our OXB Solutions
manufacturing business will largely offset our general business
overheads (excluding any project funding requirements). Further
licensing and royalty income beyond the Novartis contract could
allow us to fund our own product pipeline going forwards.
We are working hard across the business to ensure that 2015 is
another year of strong progress for the Group, our shareholders and
ultimately the patients we hope will benefit from our business
success.
John Dawson
Chief Executive Officer
OPERATIONAL REVIEW
2014 performance - progress against strategy
We believe that gene therapy will become a mainstay of patient
therapy in the future. Our long term goal is to become a
standalone, self-financing gene therapy medicines business with the
capabilities and capacity to take our products through to market.
We have made pleasing advances in executing our strategy over the
last 12-24 months, and in particular, taken great strides towards
delivering a balanced business model.
Delivering a balanced portfolio: Lentiviral vector ophthalmology
products
RetinoStat(R)
In April 2014, we announced the completion of the recruitment
and dosing of 21 patients in the Phase I trial. This open-label
study evaluated three dose levels, in four cohorts, to assess
safety and aspects of biological activity in the eye following a
single administration of RetinoStat(R) . We announced in November
2014 that the study had met its primary end points of safety and
tolerability based on a six-month follow up. However, the study
protocol requires the patients to be followed up for 48 weeks after
dosing, meaning that the last patient visit is scheduled for March
2015.
We have conducted interim analysis of patients' samples
available to date, as permitted under the open-label study. As
previously reported, we observed a substantial increase in both the
target gene products in the eye: endostatin and angiostatin
proteins. Encouragingly, protein expression has been sustained for
more than 12 months, the longest time-point assessed to date in the
first three cohorts, and a clear proportional dose response has
been seen.
The final study report should be available in mid-2015 and we
intend to publish the results in an appropriate forum.
We announced in April 2014 that we had regained the worldwide
rights to RetinoStat(R) after Sanofi elected not to exercise their
option to licence the product for development and
commercialisation, for reasons unrelated to the study. Once the
final results have been analysed we will evaluate the best
development pathway for the product and whether to continue the
development internally or to partner with a third party.
StarGen(TM)
StarGen(TM) is currently in a Phase I/II study as an intended
treatment for Stargardt disease. We announced in February 2014,
that Sanofi had licensed the product and taken over responsibility
for the product's continued development and commercialisation.
Management of the ongoing clinical study has been successfully
transferred to Sanofi. We manufactured a new batch of StarGen(TM)
at our own expense to enable the current Phase I/II studies to be
completed by Sanofi. A technology transfer process is underway
which will enable Sanofi to manufacture clinical trial material in
future. Under the license agreement, we are due to receive
development and commercialisation milestone payments and royalties
on any future sales of the product. Although Stargardt disease is
quite rare, the market size for StarGen(TM) is significant, at an
estimated market opportunity of around $500 million.
UshStat(R)
UshStat(R) is currently in a Phase I/II study as an intended
treatment for Usher Syndrome type 1B. We announced in February
2014, that Sanofi had licensed the product and taken over
responsibility for the product's continued development and
commercialisation. Management of the ongoing clinical study has
been successfully transferred to Sanofi and, as for StarGen(TM) ,
we were also required to manufacture a new batch of the product at
our own expense to enable the current Phase I/II studies to be
completed by Sanofi. Sanofi will manufacture the product in future
once the ongoing technology transfer process is complete. Under the
new license agreement, we are eligible to receive development and
commercialisation milestone payments, and royalties on any future
sales of the product. The market size for UshStat(R) is estimated
by Oxford BioMedica to be around $90 million globally per
annum.
EncorStat(R)
We are currently working towards the start of a Phase I/II study
for EncorStat(R) for the prevention of corneal graft rejection.
Clinical study material has been manufactured at our facility and
study design discussions have been held with the MHRA. While good
progress has generally been made in 2014, the completion of
pre-clinical work has taken longer than expected and the study is
now expected to start in 2016. The study will be partially funded
by the Innovate UK grant we announced in 2013. The potential peak
year sales for EncorStat(R) are estimated by Oxford BioMedica to be
$60-$80 million.
Glaucoma-GT: pre-clinical
In November 2013, we announced encouraging results from
pre-clinical studies conducted in conjunction with the Mayo Clinic
in the US. We have demonstrated that the product is well-tolerated,
reaches the intended target cells at the back of the eye following
transcorneal injection, and resulted in long-term gene expression
for five months, the furthest time point evaluated. A pre-clinical
study is now underway to demonstrate proof of concept by lowering
of intraocular pressure, and is likely to complete in 2016.
Delivering a balanced portfolio: Lentiviral vector CNS
products
OXB-102/ProSavin(R)
OXB-102 is a new, more potent, form of ProSavin(R) for the
treatment of Parkinson's disease. ProSavin(R) completed a Phase
I/II clinical trial in 2012, and in January 2014 the results were
published in The Lancet. It was reported that ProSavin(R)
demonstrated excellent safety and tolerability, and also showed a
statistically significant improvement in motor function at both six
and 12 months post-treatment relative to baseline. Patients
receiving the 5x dose appeared to respond the most, suggesting that
even higher doses may be more efficacious. We therefore decided in
April 2012 to evaluate OXB-102, a more potent construct of
ProSavin(R) before progressing further clinical development.
Pre-clinical efficacy studies carried out in 2013 using behavioural
and movement analysis indicate that OXB-102 is at least five times
more potent than ProSavin(R) . OXB-102 also provides the additional
benefits of extended patent protection and a reduction in cost of
goods over ProSavin(R) .
As a result, we are now moving OXB-102 into clinical studies. In
April 2014, we announced that we had been awarded a GBP2.2 million
grant from Innovate UK (formerly the Technology Strategy Board),
under the Biomedical Catalyst funding programme, to fund a Phase
I/II clinical trial of OXB-102 in Parkinson's disease. We have
manufactured the clinical trial material in our Cowley facility and
are preparing for the planned start of the study in 2016. We
believe that OXB-102 could present a major opportunity, given the
high unmet need and an anticipated 2.8 million patients forecasted
by 2021 in the USA, Japan and five largest European markets alone
(source: Datamonitor Epidemiology April 2012).
MoNuDin(R) : pre-clinical
MoNuDin(R) is a gene therapy product designed to deliver a VEGF
gene to the neuronal cells affected by motor neurone disease via
direct administration into the cerebrospinal fluid. An early
version of MoNuDin(R) has shown promising results in initial
pre-clinical studies and we are now optimising the product for
clinical trials. A pre-clinical programme involving two forms of
VEGF is underway in collaboration with VIB/University of Leuven,
and supported by funding from the UK Motor Neurone Disease
Association (MNDA).
5T4 Tumour Antigen platform
The Group has exclusive rights to intellectual property
regarding the 5T4 antigen. This unique protein (onco-foetal tumour
antigen) is expressed on the surface of tumours and appears to be
involved in the metastatic spread of cancers. It is found in
abundance on most common types of solid tumours but is present only
in very low levels in some healthy tissues, making it a potentially
valuable target for novel anti-cancer therapies.
TroVax(R)
TroVax(R) is a therapeutic cancer vaccine designed to stimulate
the immune system to destroy cancerous cells expressing the 5T4
antigen. The product comprises a 5T4 tumour associated
antigen-encoding sequence delivered by a poxvirus (MVA) vector.
One Phase I/II and two Phase II investigator-sponsored studies
are currently underway in the UK to assess the safety and
immunological activity of the product in patients with inoperable
metastatic colorectal cancer, mesothelioma and ovarian cancer. All
of these studies are using a biomarker to select patients for the
studies. To support these studies, Oxford BioMedica is contributing
clinical trial material and retains full product rights to
TroVax(R) . These studies should report towards the end of 2015 and
in 2016, providing a potential value-driver and out-licensing
opportunity should these studies demonstrate efficacy in these
biomarker-selected patients.
PF-06263507
In 2001, Oxford BioMedica licensed a 5T4-antibody to Wyeth
(acquired by Pfizer in 2009). Pfizer's product contains the 5TA
targeting antibody connected to a cytotoxic drug capable of killing
the target cancer cells. In August 2013, Pfizer paid a contractual
US$1 million milestone payment upon the start of clinical
development of the drug, and a Phase I study remains ongoing. We
have the potential to earn up to US$28 million from Pfizer in
upfront, option fees and milestone payments relating to the
development of the product.
5T4 cancer imaging agent
In 2012, ImaginAB acquired an exclusive worldwide license for
commercialisation of an in vivo 5T4-based imaging diagnostic that
was being developed in collaboration with Oxford BioMedica. Under
the terms of this license, Oxford BioMedica could receive up to
US$4 million in future development milestone payments, with an
additional royalty on potential product sales.
CART-5T4 programme
The Group is developing a product which combines both its
LentiVector(R) and 5T4 technology platforms. The product is based
on a gene modified autologous T cell which is engineered using a
lentiviral vector to express an antibody against 5T4. The T-cell is
then infused into the patient where it recognises the 5T4 tumour
antigen and triggers the "normal" T cell killing mechanisms which
kill the cancer cell. This innovative approach directly primes the
immune system against the 5T4 antigen, by presenting the antigen on
T-cells which are responsible for detecting foreign antigens. This
new product is currently in pre-clinical stage development.
Intellectual property and technology licensing
We actively manage our intellectual property estate to provide
robust protection for its products and platform technologies and to
identify and protect new inventions. Granting third parties
licenses to our IP also has the potential to be an increasingly
important revenue stream for the Group through upfront, milestone
and royalty payments. To date, we have granted LentiVector(R) and
other platform licenses to a number of third party companies.
In October 2014, we signed a non-exclusive worldwide development
and commercialisation licence in oncology under the Group's
existing LentiVector(R) platform with Novartis.
In December 2013, we signed an option agreement with
GlaxoSmithKline (GSK) that grants GSK an option to a non-exclusive
licence to our LentiVector(R) platform for six orphan
indications.
Bavarian Nordic have a license for the Group's heterologous
PrimeBoost technology patents and poxvirus patents for PROSTVAC(TM)
which is now in Phase III for advanced prostate cancer. Emergent
BioSolutions, have a license to our heterologous PrimeBoost
technology patents and poxvirus patents for the development of a
tuberculosis vaccine which is now in Phase II.
OXB solutions
We identified a gap in the industry and recognised that a lack
of gene and cell therapy manufacturing expertise in the industry
was a potential bottleneck to bringing these types of products to
market. As a result, we decided to expand our manufacturing
capability to enable the production of clinical trial material for
patient studies and the market. In 2013 we were able to secure a
mix of grant (GBP1.8 million) and loan (GBP5.3 million) funding
under the UK Government's Advanced Manufacturing Supply Chain
Initiative (AMSCI) which was of significant assistance. Expanding
our capacity and resources allows us to seek further process
development and manufacturing contracts with additional industry
partners.
This was confirmed in 2014 when we were able to announce that,
building on an initial contract in 2013, Novartis had commissioned
us for manufacture of batches of CTL019 lentiviral vector for
clinical study, and to carry out further process development work.
The Novartis requirements exceed our current capacity and even the
capacity we will have once the AMSCI project is completed in 2016.
As a result, we decided to expand our current Cowley facilities
still further by establishing a new manufacturing facility at
Yarnton, Oxford, and to move into larger laboratory and office
facilities at Windrush Court.
Management and other operational updates
To support our growing operations we made a number of senior
management changes during the year. Paul Blake was appointed Chief
Development Officer from 1 September 2014, with responsibility for
the clinical development of the Group's pipeline of gene and cell
therapies. Paul was previously a non-Executive Director and remains
a Director of the Group.
Peter Nolan's role has broadened to become Chief Business
Officer, covering Business Development, IP, Quality Control &
Assurance, Health & Safety and Facility Management. Peter
joined Oxford BioMedica in 1997 and has been a Board member since
2002.
Kyriacos Mitrophanous was promoted to Chief Scientific Officer,
covering identification/evaluation of new scientific opportunities,
cell & vector engineering, analytical development, and
pre-clinical product development. Kyriacos joined the Group in
1997.
James Miskin was promoted to Chief Technical Officer, covering
manufacturing operations and manufacturing process development,
including the capacity expansion projects. James joined the Group
in 2000.
Oxford BioMedica's senior executive decision making body is now
the Senior Executive Team, comprising the four Executive Directors,
John Dawson, Tim Watts, Paul Blake and Peter Nolan, together with
Kyriacos Mitrophanous and James Miskin.
We announced in October 2014 that we had acquired the freehold
of the Windrush Court office and laboratory facilities in Oxford,
England, for a total cash consideration of GBP3.2 million. This
6,684 sq m facility is located directly opposite our manufacturing
facility and we intend to relocate our Cowley laboratories and
office activities there in stages before the current lease of the
Medawar Centre, Oxford, expires in March 2016. We anticipate
significant operational advantages from consolidating our
activities on one site, while providing more room for expansion as
we continue to scale our operations.
CHIEF FINANCIAL OFFICER'S REVIEW
In my 2013 review I said that we had started to see the
emergence of new and profitable revenues that could potentially
develop over the next two to three years into a significant and
sustainable cash contributor, offsetting our cash burn. As
evidenced by the signing of our second agreement with Novartis -
this is now being achieved. The agreements with Novartis provide us
with the opportunity to earn significant revenues over the next
three years, potentially allowing the Group to become cash flow
positive by the end of 2016 based on our current plans.
To that end, we saw a substantial step up in manufacturing and
process development revenues in 2014, and these will recur and grow
through 2015 and beyond. After the allocation of relevant and
appropriate costs, these revenues are profitable and are starting
to offset the Group's overall cost base - thereby reducing the cash
burn from R&D expenditure whilst we advance our product
pipeline. We also benefited in 2014 from the receipt of upfront
payments from Novartis worth $9.7 million (GBP6.1 million) for a
licence to use our lentiviral vector IP.
We are now actively increasing our manufacturing capacity to
ensure we are able to meet our delivery targets. We started
expanding our cost base in 2014 with additional employees hired to
support the expansion of manufacturing activities as the Group
scales up work with Novartis. This is set to continue in 2015, and
beyond, particularly as we seek to win further manufacturing
contracts from Novartis and other third parties.
Capital expenditure also increased in 2014. The largest single
item was the GBP3.2 million acquisition of Windrush Court, our new
laboratory and office complex. As well as being operationally more
suitable for our needs, the new site will, over the long term,
reduce our cash burn as we will avoid the significant rental costs
previously incurred at the Medawar Centre. Our capital expenditure
programme will also continue over the next two years as we increase
our manufacturing capacity.
Key performance indicators
-- Profit-generating revenues* GBP7.7 million (2013: GBP2.6 million)
-- Cash used in operations GBP7.4 million (2013: GBP13.0 million)
-- Cash burn** GBP11.6 million (2013: GBP11.9 million)
-- Cash balance GBP14.2 million (GBP2.2 million at the start of the year)
-- Headcount 134 employees at year end (106 at the start of the year)
* Revenues from the provision of manufacturing and process
development services to 3(rd) parties
** Net cash used in/generated from operations plus sales and
purchases of non-current assets and interest received
Revenues (excluding grants) GBP13.6 million (2013: GBP5.4
million)
Revenues grew substantially in 2014 to GBP13.6 million from
GBP5.4 million in 2013. The three main components of revenues
were:
-- GBP7.7 million (2013: GBP2.6 million) from provision of manufacturing and process development services to third
parties. The majority of this came from Novartis for process development activities including optimisation of the
CTL019 lentiviral vector manufacturing process
-- GBP5.1 million (2013: GBP1.0 million) from licence deals. The majority (GBP4.8 million) of the 2014 licence
revenue is from the Novartis upfront payments announced in October
-- GBP0.8 million (2013: GBP1.7 million) residual revenue from the 2009 Sanofi collaboration
Building towards a sustainable revenue-generating business
Importantly, apart from short-term recognition timing
differences, all of our 2014 revenues represent current cash
generation. This differs significantly from recent years when a
very substantial part of our revenues comprised the deferred
recognition of the $26m upfront received from Sanofi in 2009, and
was therefore not current cash generation. The 2014 revenues and
the new Novartis contracts show that we are now building a
sustainable revenue-generating business.
Cost of sales GBP4.4 million (2013: GBP1.1 million)
The bulk of our cost of sales arose from Novartis-related
manufacturing activities. However, small amounts were incurred in
both years relating to royalties payable on licence payments
received from Novartis in 2014, and Pfizer in 2013. The
manufacturing-related cost of sales arose from the fully-over
headed cost of manufacturing viral vectors. This includes raw
materials, direct manufacturing labour, and indirect labour
(including facility support staff and the significant effort
required for quality control and analytical testing), as well as
facility costs and overheads.
Gross profit GBP9.2 million (2013: GBP4.2 million)
Gross profit increased by GBP5.0 million. Of this around GBP3.8
million is due to the higher licence receipts, net of upstream
royalty payments, and around GBP2.1 million from greater
manufacturing and process development activities. These were offset
by a decline in the revenues from Sanofi relating to the 2009
collaboration.
Research & development costs GBP17.0 million (2013: GBP13.8
million)
R&D costs include all costs of manufacturing and R&D
activities excluding the amounts which have been transferred to
cost of sales. Included in R&D are two one-off items:
One-off R&D costs in 2014 of GBP2.3 million
One-off R&D costs in 2014 were associated with two items 1)
the manufacture of new batches of StarGen(TM) and UshStat(R)
required to complete the ongoing Phase I/II clinical studies under
the terms of the agreement with Sanofi. Although these studies have
now been transferred to Sanofi, Oxford BioMedica was responsible
under the 2009 collaboration agreement for the supply of all the
clinical material; and 2) the manufacture of a viral vector in
respect of an unnamed pilot project which may translate to fees in
due course. In aggregate these items amounted to GBP2.3
million.
Without the one-off items in 2014, R&D costs would have been
GBP14.7 million, only 7% above 2013. This increase was partly due
to the need to build up headcount in anticipation of the new
Novartis contracts. There was also expenditure on the previously
announced manufacturing project partially funded by the grant from
the UK Government's Advanced Manufacturing Supply Chain Initiative
(AMSCI). These higher costs are offset by the grants receivable
which are disclosed separately in the financial statements.
Administration expenses GBP4.0 million (2013: GBP3.4
million)
Administration costs of GBP4.0 million were GBP0.6 million
higher than in 2013 mainly due to inflation and slightly higher
manpower costs required to provide support to our rapidly growing
business.
Grants receivable GBP1.1 million (2013: GBP0.1 million)
The increase in grants receivable during 2014 was from the
Advanced Manufacturing Supply Chain Initiative and the Innovate UK
(formerly Technology Strategy Board) grant for EncorStat(R) , both
of which were announced in 2013 but for which the activities
started in 2014.
Loss for the year GBP10.6 million (2013: GBP12.8 million)
The operating loss for the year of GBP10.6 million was GBP2.2
million lower than in 2013. This is explained by the GBP5.0 million
increase in gross profit offset by GBP2.8 million of higher costs,
net of the grants received which offset AMSCI and EncorStat(R)
project costs. If the one-off R&D costs described above were to
be excluded, the loss for the year would have been reduced to
GBP8.3 million.
Finance costs of GBP0.2 million arose primarily from the loan
facility provided by Vulpes Life Sciences Partners in the first
half of 2014. The tax credit at GBP2.1 million is GBP0.5 million
greater than in 2013 due to an increase in the tax credit
percentages which took effect in 2014. The overall after-tax loss
for the year was GBP8.7 million, being GBP2.4 million lower than in
2013.
Balance sheet
-- Property, plant and equipment have increased by GBP4.9 million in 2014, with GBP5.6 million of additions reduced
by GBP0.7 million depreciation. The main additions were the acquisition of Windrush Court, our new office and
laboratory facility in Oxford, which cost GBP3.5 million (GBP3.2 million plus stamp duty and acquisition costs),
GBP1.1 million for the purchase of manufacturing and laboratory equipment, with the bulk of the remainder
comprising expenditure on manufacturing capacity expansion
-- Inventory has increased to GBP1.4 million (2013: GBP0.7 million) as we have built up raw materials to meet the
manufacturing volumes required under the Novartis contract
-- Trade and other receivables at GBP5.2 million are GBP2.6 million greater than 2013, primarily due to Novartis
receivables being higher
-- Cash and cash equivalents are GBP14.2 million, GBP12.0 million above the balance at the end of 2013. The increase
is explained in the cash flow section below
-- Trade and other payables of GBP6.3 million are higher than 2013 (GBP2.9 million), due to a combination of
different timing of payments to suppliers over the year end, accruals for fixed asset purchases, and higher
bonuses in 2014
-- The GBP1.0 million loan is the first drawdown of the GBP5.3 million AMSCI loan facility which was announced in
2013. This loan is being used to finance the capacity expansion programme originally envisaged in early 2013.
However, this programme has now been significantly expanded as a result of the need to meet Novartis' production
needs. Therefore, our total capital expenditure over the next two years will be substantially greater than the
loan facility
-- Deferred income of GBP2.9 million principally arises because, under the manufacturing payment terms agreed with
Novartis, a portion of the price of each batch is invoiced on confirmation of order, and at the start of the
manufacturing process. At the end of the financial year, to the extent that a batch remains as work-in-progress,
a proportion of these invoices have not yet been recognised as revenue
Cash flow
Cash used in operations in 2014 was GBP7.4 million, compared
with GBP13.0 million in 2013. The operating loss was GBP10.6
million (2013: GBP12.8 million) but the cash impact of this was
reduced by GBP1.5 million of non-cash items (depreciation,
amortisation, impairment and share option charges) (2013: GBP1.4
million) and also benefited by a GBP1.7 million favourable movement
in working capital (2013: GBP1.6 million adverse movement).
The R&D tax credit receipt added GBP1.6 million to cash used
(2013: GBP2.0 million), while interest paid of GBP0.2 million
(2013: GBPnil) and, importantly, capital expenditure of GBP5.6
million (2013: GBP0.8 million) increased the cash burn to GBP11.6
million (2013: GBP11.9 million).
Headcount
The increase in headcount during 2014 is explained by the need
to fully staff the manufacturing operations to support the Novartis
contract including manufacturing, quality control and analytical
staff.
Financial outlook
Our key financial objectives for 2015 require that we deliver
the targets under the Novartis contracts - the fulfilment of which
requires recruitment of more staff and significant capital
expenditure on manufacturing capacity.
The Novartis contracts will generate further significant
manufacturing and process development revenues in 2015 and 2016
which will lead to the further reduction of our underlying
operational cash burn, at the same time as we continue to advance
our exciting pipeline in gene and cell therapy. We will also be
seeking similar contracts with other third parties. In conclusion,
Oxford BioMedica's business has been transformed, and is en-route
to becoming potentially cash positive by end 2016.
Going concern
The Group had GBP14.2m of cash at the end of 2014 and is now
generating profitable revenues from its manufacturing activities.
However, it will incur substantial capital expenditure over the
next 15 months as it expands manufacturing and analytical testing
capacity to enable it to meet the volumes expected under the
Novartis contracts. In the absence of any further upfront receipts
from potential product or IP licence deals, the Directors estimate
that the cash held by the Group including known cash inflows will
be sufficient to support the current level of activities into the
first quarter of 2016. Known cash inflows include a proportion of
the contractual milestone payments from Novartis which are based on
process development progress continuing at its current rate.
The Directors have also considered the range of potential
sources of cash to the Group and expect to be able to secure
adequate resources should they be required. Whilst the Directors
have confidence that such resources could be obtained, no such
additional resources are committed at the date of these financial
statements. In the absence of securing such funds or other sources
of cash, the Group would choose to curtail or suspend part of its
capital expenditure programme until such funds were secured.
After due consideration, the Directors are of the view that the
Group will have access to adequate resources to allow the Group to
continue for the foreseeable future and have therefore prepared the
financial statements on a going concern basis.
Tim Watts
Chief Financial Officer
-Ends-
Consolidated statement of comprehensive income
for the year ended 31 December 2014
Group
2014 2013
-------- --------
Continuing operations Total Total
Notes GBP'000 GBP'000
--------------------------- ----- -------- --------
Revenue 13,618 5,375
Cost of sales (4,416) (1,140)
--------------------------- ----- -------- --------
Gross profit 9,202 4,235
--------------------------- ----- -------- --------
Research and development
costs (16,986) (13,750)
Administrative expenses (3,957) (3,422)
Other operating income:
grants receivable 1,128 114
--------------------------- ----- -------- --------
Operating loss (10,613) (12,823)
--------------------------- ----- -------- --------
Finance income 53 64
Finance costs (238) (4)
----- -------- --------
Loss before tax (10,798) (12,763)
Taxation 3 2,137 1,667
--------------------------- ----- -------- --------
Loss for the year (8,661) (11,096)
Basic loss and diluted
loss per ordinary share 4 (0.43p) (0.79p)
--------------------------- ----- -------- --------
The notes on pages 18 to 24 form part of this preliminary
information.
Balance sheet
as at 31 December 2014
Group
2014 2013
Notes GBP'000 GBP'000
---------------------------- ----- --------- ---------
Assets
Non-current assets
Intangible assets 5 2,106 2,633
Property, plant and
equipment 6 8,944 4,070
11,050 6,703
---------------------------- ----- --------- ---------
Current assets
Inventories 7 1,407 680
Trade and other receivables 8 5,153 2,592
Current tax assets 2,000 1,500
Cash and cash equivalents 14,195 2,169
---------------------------- ----- --------- ---------
22,755 6,941
---------------------------- ----- --------- ---------
Current liabilities
Trade and other payables 9 6,304 2,934
Deferred income 10 2,927 1,280
---------------------------- ----- --------- ---------
9,231 4,214
---------------------------- ----- --------- ---------
Net current assets 13,524 2,727
---------------------------- ----- --------- ---------
Non-current liabilities
---------------------------- ----- --------- ---------
Loans 11 1,000 -
Provisions 12 535 532
---------------------------- ----- --------- ---------
1,535 532
---------------------------- ----- --------- ---------
Net assets 23,039 8,898
---------------------------- ----- --------- ---------
Equity attributable
to owners of the parent
Ordinary shares 25,659 14,162
Share premium account 141,615 130,304
Merger reserve 2,291 14,310
Treasury reserve (226) -
Other reserves (682) (682)
Accumulated losses (145,618) (149,196)
---------------------------- ----- --------- ---------
Total equity 23,039 8,898
---------------------------- ----- --------- ---------
The notes on pages 18 to 24 form part of this preliminary
information.
Statement of cash flows
for the year ended 31 December 2014
Group
2014 2013
Notes GBP'000 GBP'000
------------------------------------------------------- ----- ------- --------
Cash flows from operating activities
Cash used in operations 13 (7,431) (13,005)
Interest paid (238) (4)
Tax credit received 1,637 1,990
Net cash used in operating activities (6,032) (11,019)
------------------------------------------------------- ----- ------- --------
Cash flows from investing activities
Purchases of property, plant and equipment (5,577) (839)
Purchases of intangible assets - (98)
Net maturity of available for sale investments - 5,105
Interest received 53 64
Net cash (used in)/generated from investing activities (5,524) 4,232
------------------------------------------------------- ----- ------- --------
Cash flows from financing activities
Proceeds from issue of ordinary share capital 24,268 -
Costs of share issues (1,460) -
Net payments related to share award (226) -
Loans received 1,000 -
------------------------------------------------------- ----- ------- --------
Net cash generated from financing activities 23,582 -
------------------------------------------------------- ----- ------- --------
Net increase/(decrease) in cash and cash equivalents 12,026 (6,787)
Cash and cash equivalents at 1 January 2,169 8,956
Cash and cash equivalents at 31 December 14,195 2,169
------------------------------------------------------- ----- ------- --------
The notes on pages 18 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 2014
Share
Ordinary premium Merger Treasury Other Accumulated
shares account reserve reserve reserves losses Total equity
Group Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------ -------- -------- -------- -------- --------- ----------- ------------
At 1 January
2013 14,162 130,304 14,310 - (682) (138,451) 19,643
Year ended 31
December 2013:
-------------------- ------ -------- -------- -------- -------- --------- ----------- ------------
Loss for the
year - - - - - (11,096) (11,096)
---------------------------- -------- -------- -------- -------- --------- ----------- ------------
Total comprehensive
expense for
the year - - - - - (11,096) (11,096)
Transactions
with owners:
Share options
Value of employee
services - - - - - 351 351
At 31 December
2013 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
Costs 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
---------------------------- -------- -------- -------- -------- --------- ----------- ------------
The notes on pages 18 to 24 form part of this preliminary
information.
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
for the year ended 31 December 2014
1 Basis of preparation
This financial information, for the years ended 31 December 2014
and 31 December 2013, 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
2014 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 2013
have been delivered to the Registrar of Companies. The auditors'
reports on the financial statements for the years ended 31 December
2014 and 31 December 2013 were unqualified and did not contain
statements under section 498 of the Companies Act 2006. 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 2014 are
available from the Company Secretary, and are on the Group's
website. The audited statutory financial statements for the year
ended 31 December 2014 are expected to be distributed to
shareholders by 30 April 2015 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 12 March 2015.
Going concern
The Group had GBP14.2m of cash at the end of 2014 and is now
generating profitable revenues from its manufacturing activities.
However, it will incur substantial capital expenditure over the
next 15 months as it expands manufacturing and analytical testing
capacity to enable it to meet the volumes expected under the
Novartis contracts. In the absence of any further upfront receipts
from potential product or IP licence deals, the Directors estimate
that the cash held by the Group including known cash inflows will
be sufficient to support the current level of activities into the
first quarter of 2016. Known cash inflows include a proportion of
the contractual milestone payments from Novartis which are based on
process development progress continuing at its current rate.
The Directors have also considered the range of potential
sources of cash to the Group and expect to be able to secure
adequate resources should they be required. Whilst the Directors
have confidence that such resources could be obtained, no such
additional resources are committed at the date of these financial
statements. In the absence of securing such funds or other sources
of cash, the Group would choose to curtail or suspend part of its
capital expenditure programme until such funds were secured.
After due consideration, the Directors are of the view that the
Group will have access to adequate resources to allow the Group to
continue for the foreseeable future and have therefore prepared the
financial statements on a going concern basis.
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 platform, a manufacturing 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 the non-exclusive worldwide development and commercialisation
licence in oncology under the Group's existing Lentivector
intellectual property 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 3-year manufacturing 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 CTL019 to be manufactured 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 CTL019,
- 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.
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.
Intangible asset impairment
The Group has significant 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 2014 the book value of
intangible assets was GBP2.1 million of which GBP1.5 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 (page 18) and the Financial review (page
10).
2 Segmental analysis
The chief operating decision-maker has been identified as the
Senior Executive Team (SET), comprising the Executive Directors,
Kyriacos Mitrophanous and James Miskin. The SET considers that the
business comprises a single activity, which is biotechnology
research and development, and the related manufacturing. The SET
reviews the Group's financial performance on a whole-company,
consolidated basis in order to assess performance and allocate
resources. Therefore the segment financial information is the same
as that set out in the consolidated statement of comprehensive
income, the consolidated balance sheet, the consolidated statement
of cash flows and the consolidated statement of changes in
equity.
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 2014 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 2014 have not yet been agreed with the relevant tax
authorities.
Group
2014 2013
GBP'000 GBP'000
---------------------------------------------------------------- -------- --------
Current tax
United Kingdom corporation tax research and development credit (2,000) (1,500)
Overseas taxation (51) (3)
---------------------------------------------------------------- -------- --------
(2,051) (1,503)
Adjustments in respect of prior periods
United Kingdom corporation tax research and development credit (86) (142)
Overseas taxation - (22)
---------------------------------------------------------------- -------- --------
Taxation credit (2,137) (1,667)
---------------------------------------------------------------- -------- --------
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 2014 (2,019,291,808; 2013:
1,416,149,005). 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
Intellectual
property
rights
Group GBP'000
--------------------------------- ------------
Cost
At 1 January 2014 5,591
Additions -
At 31 December 2014 5,591
----------------------------------- ------------
Accumulated amortisation
and impairment
At 1 January 2014 2,958
Amortisation charge for
the year 396
Impairment charge for the
year 131
----------------------------------- ------------
At 31 December 2014 3,485
----------------------------------- ------------
Net book amount at 31 December
2014 2,106
----------------------------------- ------------
Cost
At 1 January 2013 5,493
Additions 98
At 31 December 2013 5,591
----------------------------------- ------------
Accumulated amortisation
and impairment
At 1 January 2013 2,562
Amortisation charge for
the year 396
At 31 December 2013 2,958
----------------------------------- ------------
Net book amount at 31 December
2013 2,633
----------------------------------- ------------
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 GBP396,000 (2013: GBP396,000) is
included in 'Research and development costs' in the statement of
comprehensive income.
An intangible asset is regarded as having an indefinite useful
life when, based on an analysis of all of the relevant factors,
there is no foreseeable limit to the period over which the asset is
expected to generate net cash inflows for the entity. There are
currently no assets with indefinite useful lives.
Following the cancellation of the Fire and Mello RNai licenses
the related intangible asset was fully impaired resulting in an
impairment charge of GBP131,000.
6 Property, plant and equipment
Short Office Manufacturing
Freehold leasehold equipment & Laboratory
property improvements & computers equipment Total
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 4,142 166 199 1,070 5,577
At 31 December
2014 7,367 2,789 820 5,335 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 6,669 210 225 1,840 8,944
------------------------- --------- ------------- ------------ ------------- -------
Short Office Manufacturing
Freehold leasehold equipment & Laboratory
property improvements & computers equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------------- --------------------- ------------ ------------- -------
Cost
At 1 January 2013 3,130 2,604 591 3,570 9,895
Additions at cost 95 19 30 695 839
At 31 December 2013 3,225 2,623 621 4,265 10,734
-------------------------- ---------------- --------------------- ------------ ------------- -------
Accumulated depreciation
At 1 January 2013 258 2,449 467 2,819 5,993
Charge for the year 218 66 76 311 671
At 31 December 2013 476 2,515 543 3,130 6,664
-------------------------- ---------------- --------------------- ------------ ------------- -------
Net book amount at 31
December 2013 2,749 108 78 1,135 4,070
-------------------------- ---------------- --------------------- ------------ ------------- -------
On 13 October 2014, the Group announced that it had acquired the
freehold of the Windrush Court office and laboratory facilities for
a cash consideration of GBP3.2 million. This, together with stamp
duty and other related legal costs constitutes a significant part
of the Freehold property additions for 2014.
7 Inventories
Group
2014 2013
GBP'000 GBP'000
----------------- ------- -----------------
Raw Materials 1,214 558
Work in progress 193 122
Total inventory 1,407 680
----------------- ------- -----------------
Inventories constitute raw materials held for commercial
manufacturing purposes, and work-in-progress inventory related to
contractual manufacturing obligations.
8 Trade and other receivables
Group
2014 2013
GBP'000 GBP'000
---------------------------------- ------- --------
Current
Trade receivables 3,621 1,040
Accrued income 340 637
Other receivables 16 28
Other tax receivable 397 285
Prepayments 779 602
Total trade and other receivables 5,153 2,592
--------------------------------------- ------- --------
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 GBP66,000 (2013: GBP142,000) which are
past due at the reporting date. The Group does not hold any
collateral over these balances. No provision for impairment of
receivables has been recognised as the Directors do not believe
there has been a significant change in credit quality and consider
the remaining amounts to be recoverable in full.
9 Trade and other payables
2014 2013
GBP'000 GBP'000
----------------------------------- ------- -------
Trade payables 2,787 1,218
Other taxation and social security 270 201
Accruals 3,247 1,515
Total trade and other payables 6,304 2,934
------------------------------------- ------- -------
10 Deferred income
2014 2013
Group GBP'000 GBP'000
---------------------- ---------- --------
Current 2,927 1,280
Total deferred income 2,927 1,280
---------------------- ---------- --------
Deferred income arises from contractual agreements with
customers.
11 Loans
During April 2014 the Group drew down a tranche of GBP1.0
million of the GBP5.3 million facility made available under the UK
Government's Advanced Manufacturing Supply Chain Initiative. The
loan carries interest at 6% per annum and is repayable in equal
quarterly instalments between 30 June 2016 and 31 March 2017.
12 Provisions
Dilapidations
Group GBP'000
--------------------------------------------------------------------------------- -------------
At 1 January 2014 532
Unwinding of discount 3
At 31 December 2014 535
----------------------------------------------------------------------------------- -------------
At 1 January 2013 510
Unwinding of discount 4
Change of discount rate - adjustment to recognised property, plant and equipment 18
At 31 December 2013 532
----------------------------------------------------------------------------------- -------------
The dilapidations provision relates to anticipated costs of
restoring the leasehold property in Oxford, UK to its original
condition at the end of the present leases in 2016, 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 loss before tax to net cash used in
operations
Group
2014 2013
GBP'000 GBP'000
--------------------------------------------- -------- --------
Continuing operations
Loss before tax (10,798) (12,763)
Adjustment for:
Depreciation 703 671
Amortisation of intangible assets 396 396
Charge for impairment 131 -
Finance income (53) (64)
Finance expense 238 4
Charge in relation to employee share schemes 220 351
Changes in working capital:
Increase in trade and other receivables (2,561) (886)
Increase in trade and other payables 3,370 232
Increase/(decrease) in deferred income 1,647 (288)
Increase in provisions 3 22
Increase in inventory (727) (680)
-------------------------------------------------- -------- --------
Net cash used in operations (7,431) (13,005)
-------------------------------------------------- -------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EANDAFELSEFF
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