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Oxford Biomedica PLC
15 April 2021
Oxford Biomedica plc
Preliminary results for the year ended 31 December 2020
Saving Lives
Oxford, UK - 15 April 2021: Oxford Biomedica plc (LSE: OXB),
("OXB" or "the Group"), a leading cell and gene therapy group,
today announces its preliminary results for the year ended 31
December 2020.
John Dawson, Chief Executive Officer of Oxford Biomedica,
said:
" I am truly proud of the Group's achievements over the period.
We not only secured major new partnerships, brought the Oxbox
manufacturing facility online in record time and responded to the
challenges of the pandemic, but the team has also been able to
rapidly work with AstraZeneca to provide a vaccine solution for
COVID-19. This is a true testament to the world-class calibre and
dedication of our staff in the year that the Group also gained
entry to the FTSE250. Looking to the future, with the continued
tide of growth in cell and gene therapy, coupled with the Group's
leadership position in the lentiviral vector field, we are well
positioned to advance both our own proprietary pipeline and that of
our current and future partners' programmes. I would like to thank
all of Oxford Biomedica's employees for their hard work throughout
2020 and our shareholders and partners for their continued support,
and I look forward to a successful 2021."
FINANCIAL HIGHLIGHTS
- Total revenues increased by 37% to GBP87.7 million (2019: Revenue of GBP64.1 million)
- Bioprocessing and commercial development revenues increased by
45% to GBP68.5 million (2019: GBP47.3 million) with double digit
growth across both activities, driven by new customers AstraZeneca,
Beam Therapeutics and Juno/BMS
- Revenues from licences, milestones & royalties increased
to GBP19.2 million (2019: GBP16.8 million) due to the recognition
of a GBP7.8 million ($10 million) licence fee from Juno/BMS as well
as other licence fees, milestones and royalties from customers
- Operating expenses(1) increased by less than revenues, growing
by 23% in the year to GBP51.7 million (2019: GBP41.9 million) aided
by the move to the lower cost bioreactor manufacturing process
- Operating EBITDA(2) profit of GBP7.3 million (2019: GBP5.2
million loss), marginally above guided range
- Operating loss incurred of GBP5.7 million (2019: GBP14.5 million loss)
- The platform segment generated an operating profit of GBP2.0
million ( 2019: 20.2 million loss) whilst the Product segment made
a loss of GBP7.7 million ( 2019: GBP5.7 million profit)
- Capital expenditure decreased to GBP13.4 million (2019:
GBP25.8 million) mainly reflecting the Windrush Court laboratory
conversion and equipment purchases and leasehold improvements at
Oxbox
- Cash of GBP46.7 million at 31 December 2020 (2019: GBP16.2
million) and GBP65.9 million at 31 March 2021
- Cash used in operations of GBP3.9 million in 2020 (2019:
GBP6.6 million) decreased as a result of the increased revenues as
explained above, offset by further operational investments
required
- Successful GBP38.3 million (net) equity fundraise in June 2020
to exploit the growth in the cell and gene therapy market
1. Operating expenses is made up out of Bioprocessing expenses,
Research and development expenses and Administrative expenses. A
reconciliation to GAAP measures is provided on page 15.
2. Operating EBITDA (Earnings Before Interest, Tax,
Depreciation, Amortisation, revaluation of investments and assets
at fair value through profit & loss, and Share Based Payments)
is a non-GAAP measure often used as a surrogate for operational
cash flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 16.
OPERATIONAL HIGHLIGHTS
Juno Therapeutics / Bristol Myers Squibb partnership
- New licence and five-year clinical supply agreement with Juno
Therapeutics/Bristol Myers Squibb for multiple CAR-T and TCR-T
programmes, signed in March. A GBP7.8 million ($10 million) upfront
payment was recognised by the Group and up to $217 million could be
paid in development, regulatory and sales related milestones in
addition to undisclosed process development, scale up and batch
revenues, and with an undisclosed royalty on sales
COVID-19 vaccine partnership with AstraZeneca
- The Group is a key manufacturer of the Oxford AstraZeneca
COVID-19 vaccine, AZD1222. Having signed an initial agreement in
May, in September the Group signed an 18-month supply agreement
under a three-year master supply and development agreement for the
large-scale manufacture of the Oxford AstraZeneca COVID-19 vaccine.
The Group received a GBP15 million capacity reservation fee with
additional revenue in excess of GBP35 million expected by the end
of
2021
- By the fourth quarter, the Group was manufacturing the Oxford
AstraZeneca COVID-19 vaccine in three suites at 1000L scale ahead
of the MHRA granting emergency use for the Oxford AstraZeneca
COVID-19 vaccine in December
Novartis partnership
- Collaboration with Novartis continued to strengthen with a
sixth vector construct added in the first quarter of 2020, with
partnership having been previously extended by five years in
December 2019
- The roll out of Kymriah(R) continues to accelerate in relapsed
and refractory B-cell acute lymphoblastic leukaemia and relapsed
and refractory diffuse large B-cell lymphoma with reimbursement
approved in 28 countries in at least one indication in over 300
qualified treatment centres
Other partnership updates
- In July, the Group signed a three-year clinical supply
agreement with Sio Gene Therapies for the manufacture and supply of
Parkinson's disease gene therapy programme AXO-Lenti-PD, building
on the worldwide licence agreement signed between the two companies
in June 2018
- In August, the Group signed a development, manufacture and
licence agreement with Beam Therapeutics for next generation CAR-T
programmes including a three-year clinical supply agreement
- Post period end in March 2021, the Group announced that Sanofi
had given notice that they intend to terminate the 2018
collaboration and licence agreement for the process development and
manufacturing of lentiviral vectors to treat haemophilia. The Group
expects the impact on revenue will be negligible over the coming 24
month period
- Post period end in April 2021, the Group signed a three-year
development and supply agreement with Boehringer Ingelheim for the
manufacture and supply of viral vectors, building on the
partnership that started in 2018
Facilities and capacity expansion
- By October 2020, the MHRA had approved all four suites in the
first phase of development of Oxbox, the Group's new 84,000 sq. ft.
manufacturing facility. Three suites are producing the Oxford
AstraZeneca COVID-19 vaccine at 1000L scale and one suite added to
the existing capabilities of producing lentiviral vector-based
products for the Group's partners at 200L scale
- Building work at Windrush Court to convert office space into
GMP laboratories progressed throughout the year, with the first of
the laboratories completed by the end of 2020
- Opening of the new Corporate Head Office on new site within the Oxford Business Park
Corporate Governance and Organisational Progress
- In June, the Group welcomed Dr Roch Doliveux as Non-Executive
Chairman, following the retirement of prior Chair, Dr. Lorenzo
Tallarigo
- The Group has made significant strides forward in its
commitment to best practice in Corporate Governance and
diversification of talent on the Board. In November, Dr. Sam Rasty
was appointed to the Board as an Independent Non-Executive
Director. Post period-end in February, the Group announced the
appointment of Professor Dame Kay Davies as an Independent
Non-Executive Director and Martin Diggle stepped down as a
Non-Independent Director after nine years. Dr. Andrew Heath will
not be standing for re-election at the 2021 AGM having served on
the Board since 2010
Analyst briefing
Management will be hosting a briefing for analysts via
conference call and webcast at 13:00 BST (8:00 ET) on 15 April
2021.
A live webcast of the presentation will be available via this
link.
If you would like to dial-in to the call and ask a question
during the live Q&A, please follow this link to register and
receive dial-in details.
Enquiries:
Oxford Biomedica plc T: +44 (0)1865 783 000
John Dawson, Chief Executive Officer T: +44 (0)1865 783 000
Stuart Paynter, Chief Financial Officer T: +44 (0)1865 954 161 / E: ir@oxb.com
Catherine Isted, Head of Corporate
Development & IR
T: +44 (0)20 3709 5700
Consilium Strategic Communications
Mary-Jane Elliott/Matthew Neal
About Oxford Biomedica
Oxford Biomedica (LSE:OXB) is a leading, fully integrated, cell
and gene therapy group focused on developing life changing
treatments for serious diseases. Oxford Biomedica and its
subsidiaries (the "Group") have built a sector leading lentiviral
vector delivery platform (LentiVector(R) ), which the Group
leverages to develop in vivo and ex vivo products both in-house and
with partners. The Group has created a valuable proprietary
portfolio of gene and cell therapy product candidates in the areas
of oncology, ophthalmology, CNS disorders and liver diseases. The
Group has also entered into a number of partnerships, including
with Novartis, Bristol Myers Squibb, Sio Gene Therapies, Orchard
Therapeutics, Santen, Beam Therapeutics, Boehringer Ingelheim, the
UK Cystic Fibrosis Gene Therapy Consortium and Imperial
Innovations, through which it has long-term economic interests in
other potential gene and cell therapy products. Additionally the
group has signed a 3 year master supply and development agreement
with AstraZeneca for large-scale manufacturing of the adenoviral
based COVID-19 vaccine, AZD1222. Oxford Biomedica is based across
several locations in
Oxfordshire, UK and employs more than 670 people. Further
information is available at www.oxb.com
CHAIRMAN'S STATEMENT
A Purpose of which to be Proud
Our Purpose
It is with great pride that I present my first statement as the
Chair of Oxford Biomedica (OXB). I was first attracted to the
Company by its strong purpose and great technology. Saving
patients' lives is what the healthcare industry strives to do and
OXB is delivering on that promise in both its cell and gene therapy
work, and now with the manufacture of the Oxford AstraZeneca
COVID-19 vaccine. Cell and gene therapies have the potential to be
curative for many untreated diseases and to be able to play my part
in realising this potential is my duty.
It has been a challenging time to assume my role, as our
organisation has found new ways of working. Face to face contact
has been kept to a minimum for the right reasons, and I thank the
Board and the wider OXB team, key opinion leaders and investors for
helping me to gain an in-depth understanding of the business. It's
inspiring to me that OXB is now a key part of the global effort to
return life to normality, and I am looking forward to supplementing
the relationships built online with in-person discussions.
I could not be more proud to lead the Company's Board through
its next phase of growth.
Our Culture
Underlying the purpose of OXB is a strong culture. The pandemic
response has both tested and fortified that culture. We pride
ourselves on our core values including delivering innovation with
integrity.
Our ability to deliver the Oxford AstraZeneca COVID-19 vaccine
in the most challenging of circumstances given global demand, has
impressed me and has demonstrated that these values run deep
through our organisation. This has been achieved whilst continuing
to execute the underlying Group strategy, and I give my admiration
and appreciation to the team for continuing to deliver on all
fronts whilst adapting to new working environments.
Utilising our capabilities to play our part against one of the
biggest challenges humankind has recently faced is inspirational
and all stakeholders of OXB are, justifiably, proud to be involved
in this effort.
During the year we also implemented a Group-wide bonus scheme to
ensure all staff benefit from the Group achieving its
objectives.
Our Strategy
OXB continues to deliver on its core strategy of being the
leading provider of lentiviral based vectors for cell and gene
therapy companies, growing our customer base and service.
Significant progress has been made in 2020 both in new technologies
and new customers such as Juno Therapeutics/Bristol Myers Squibb
and Beam Therapeutics. Our successful work on the adenovirus based
Oxford AstraZeneca COVID-19 vaccine has also demonstrated our
ability to also broaden our Contract Development and Manufacturing
Organisation (CDMO) to more viral vectors.
Significant value to stakeholders can also be provided by
applying our knowledge to our own therapeutic products. The Board
realises that the re-balancing of the Group towards products in
this way is not easy, as we wish to first build on the CDMO
momentum, but given the medical need and the number of nascent
technologies and therapeutic programmes using lentiviral based
vectors, we are committed to making it happen over time and as
opportunities arise.
The continued innovation of OXB's platform is key to providing
solutions for both partners and patients. We will accelerate this
effort, and retain and build upon our leadership role in this
space.
It is also clear, through our Oxford AstraZeneca COVID-19
vaccine efforts, that our manufacturing capabilities and state of
the art facilities are inherently valuable, and there is the
opportunity to leverage these capabilities and facilities to help
more partners. We shall be pursuing more partnerships in these
adjacencies.
Governance
The role of boards in ensuring the societal impact,
sustainability and viability of businesses has never been more
critical than in the uncertain times of 2020. I joined the Board in
June 2020, and would like to thank Dr. Lorenzo Tallarigo for his
stewardship of the Board prior to this time, culminating with OXB
entering the FTSE250 index.
The level of engagement and collegiality in all Board members is
impressive as we have been delivering upon our commitment to both
strengthen the capabilities on the Board and increase
diversity.
To that end, I am delighted to welcome both Dr. Sam Rasty and
Professor Dame Kay Davies to the Board. Sam's contributions have
already been very insightful and I know Kay will also add
significant insights and enormous value to the Board. Meanwhile,
Dr. Andrew Heath is retiring from the Board and I wish to thank him
for his guidance and defining role on the Board over the past 10
years. After 9 years on the Board, Martin Diggle has also stepped
down as a Non-Executive Director, but remains invested in our
journey as a supportive shareholder. I thank Martin for his
relentless support of OXB at several defining moments over his
tenure.
We continue to assess the capabilities needed at Board level to
set and deliver strategy, apply best in class governance practices
and ensure succession plans are in place, and we will look to
strengthen these capabilities and diversity, where appropriate.
The Future
We enter 2021 and beyond with a rapid growth, a proven strategy,
experienced leadership and financial strength which gives me great
confidence to continue to succeed in our mission to deliver
lifesaving therapies to patients and continue to help in the fight
against the pandemic.
We continue to push the boundaries of our platform technologies,
and develop the capabilities of the Group and my thanks go to all
the staff at OXB for the very important work that each of them are
doing. I also thank our customers for their trust, our suppliers
who have responded with resilience to the demands we have placed
upon them, and our shareholders for their support.
We are in the initial phase of the cell and gene therapy
revolution in healthcare and OXB is particularly well positioned to
play a major role in this rapidly expanding field. I look forward
to enabling OXB to fulfil its potential.
Dr. Roch Doliveux
Chair
CHIEF EXECUTIVE OFFICER'S AND 2020 PERFORMANCE REVIEW
Introduction
2020 was an unprecedented year globally. The challenges borne by
the COVID-19 virus were managed well by the Group and, due to our
world-leadership position in lentiviral vectors and the strength
and expertise of our staff, the Group thrived. The Group's model is
now focused on the provision of its cell and gene therapy CDMO
offering coupled with its own proprietary product development.
The Group's number of partner programmes grew by 54% from 13 to
20 in the year, adding Juno/Bristol Myers Squibb and Beam
Therapeutics to the list of cell and gene therapy leaders that the
Group collaborates with. In the period Novartis and Sio Gene
Therapies also extended their partnerships with the Group.
Outside of cell and gene therapy, the Group's work with Oxford
University and then AstraZeneca has been historic. The Group has
successfully brought three extra manufacturing suites online for
vaccine production and has rapidly scaled the manufacturing of
AZD1222, an adenovirus-based vaccine, to 1000L scale, in under nine
months.
Financially, the Group, which entered the FTSE250 this year, had
a strong year with revenues increasing by 37% to GBP87.7 million
driven by strong growth in commercial development and bioprocessing
revenues. In addition, our market capitalisation has more than
doubled from a 12 month average capitalisation of c.GBP350 million
in 2018 to over GBP750 million currently. The oversubscribed GBP40
million gross fundraise in June gave the Group the ability to
progress its planned expansion projects and invest in both sides of
the Group, to capitalise on its world leading position and the
opportunities that present themselves in the fast growing cell and
gene therapy market.
CDMO - Partner Programmes
Juno Therapeutics / Bristol Myers Squibb Partnership
In March, the Group announced it had entered into a major new
licence and five-year clinical supply agreement with Juno
Therapeutics Inc. (a wholly owned subsidiary of Bristol Myers
Squibb Inc.), one of the major innovators in the cell and gene
therapy field. The deal is worth up to $227 million for multiple
CAR-T and TCR-T programmes in oncology and other indications. There
are currently four active programmes in development.
Under the terms of the agreement Oxford Biomedica received and
recognised a GBP7.8 million ($10 million) licence fee and announced
OXB could potentially receive up to $86 million in development and
regulatory milestones and up to a further $131 million in
sales-based milestone payments as well as undisclosed royalties on
sales. In addition, the Group will receive undisclosed process
development, scale up and batch revenues for these programmes. As
part of the agreement Oxford Biomedica will provide Juno
Therapeutics access to its new approved manufacturing facility,
Oxbox.
COVID-19 Vaccine production and Partnership with AstraZeneca
The Group's initial involvement with the Oxford AstraZeneca
COVID-19 vaccine was in April 2020 when the Group joined a
consortium led by the Oxford University, Jenner Institute, to
rapidly develop, scale and manufacture a potential vaccine for
COVID-19, ChAdOx1 nCOV-19.
Shortly afterwards, AstraZeneca entered into an agreement with
Oxford University for the global development and distribution of
the vaccine, renaming the programme AZD1222. In May, the Group
entered into an initial one year clinical and commercial supply
agreement with AstraZeneca to GMP manufacture the adenovirus
vector-based COVID-19 vaccine candidate. This initial agreement
required the Group to manufacture a small number of batches as the
programme progressed through development.
In June, the Group signed a five-year collaboration agreement
with VMIC (Vaccines Manufacturing and Innovation Centre) to enable
the rapid manufacture of viral vector based vaccines. As part of
the agreement VMIC provided equipment for 1000L scale production in
two GMP manufacturing suites in Oxbox to further scale up
production of AZD1222. The Group is currently engaged in
discussions with VMIC regarding the purchasing of this equipment to
allow for longer term use, which would require a capital outlay of
GBP3.8 million to be paid in 2021.
Following positive data readouts from the early clinical trials
of AZD1222, in September, the Group announced a second agreement
with AstraZeneca which consisted of an 18-month supply agreement
under a three-year master supply and development agreement for the
large-scale manufacture of AZD1222. This agreement was for up to
three manufacturing suites running at 1000L scale. The Group was
paid a GBP15 million capacity reservation fee and expects to
receive additional revenue in excess of GBP35 million until the end
of 2021.
By October, the Group received approval from the MHRA for the
third of its three 1000L suites for the purpose of vaccine
production. To be able to cope with the heightened demand, new
extended shift patterns were introduced to maximise vaccine
production and for the first time in the Group's history,
production continued through Christmas and New Year to ensure the
maximum number of batches were able to be delivered in the early
part of 2021.
At the end of December 2020, the MHRA approved the Oxford
AstraZeneca COVID-19 vaccine for emergency use in the UK and
manufacturing continues at full pace to maximise production of
vaccine from the Group's facilities.
Novartis Partner Progress
Following the extension of the Novartis collaboration In
December 2019 by a further five years and expansion of the number
of vector constructs (including Kymriah(R) ) from two to five, the
partnership was further expanded with a sixth vector construct
added in the first quarter of 2020. The Group continues to be
Novartis' sole global supplier of lentiviral vector for Kymriah(R)
(tisagenlecleucel, formerly CTL019).
Global roll out of Kymriah(R) in both relapsed or refractory
B-cell acute lymphoblastic leukaemia (r/r ALL) and relapsed or
refractory diffuse large B-cell lymphoma (r/r DLBCL) indications
continues at pace with more than 28 countries worldwide having
approved reimbursement in at least one indication in over 300
qualified treatment centres. Kymriah(R) continues to build momentum
showing 71% growth for the full year 2020 over 2019, with sales of
$474 million.
Indication expansion of Kymriah(R) continued to progress well
and in December, Novartis announced positive data from the Phase II
ELARA trial of Kymriah(R) in patients with relapsed or refractory
follicular lymphoma, with the filing in this indication anticipated
in the US in the second half of 2021. Novartis also plans to file
Kymriah(R) for extended use in patients with r/r DLBCL in first
relapse in the second half of 2021.
The Group continues to progress other partner programmes with
Novartis and will update the market when further data is
available.
Beam Therapeutics
In August, the Group signed a development, manufacture and
license agreement with Beam Therapeutics (Beam), a pioneering
biotech company which utilises base editing to develop precision
genetic medicines. The agreement grants Beam a non-exclusive
license to Oxford Biomedica's LentiVector(R) platform for its
application in next generation CAR-T programmes in oncology, and
also puts in place a three-year clinical supply agreement.
Under the terms of the Agreement, the Group could receive
additional licence fees, as well as payments related to development
and manufacturing of lentiviral vectors for use in clinical trials,
and certain development and regulatory milestones. In addition, the
Group will receive an undisclosed royalty on the net sales of
products sold by Beam that utilise the Group's LentiVector(R)
platform.
Further partner updates
In May, Orchard Therapeutics (Orchard) announced a new strategic
plan with an emphasis on neurometabolic disorders, such as their
MPS-IIIA (OLT-201) programme, while reducing investment on other
programmes such as ADA-SCID (OTL-101). OLT-201 is moving ahead in
clinical trials with interim data from their proof-of-concept study
expected to be released in 2021.
Post period end in March 2021, the Group announced that Sanofi
had given notice that they intend to terminate the 2018
collaboration and licence agreement for the process development and
manufacturing of lentiviral vectors to treat haemophilia. The Group
expects the impact on revenue will be negligible over the coming 24
month period.
The Group's partnership with Boehringer Ingelheim and the UK
Cystic Fibrosis Gene Therapy Consortium also continued to progress
through development. In April 2021, post period end, the Group
signed a three-year development and supply agreement with
Boehringer Ingelheim for the manufacture and supply of viral
vectors, building on the partnership that started in 2018.
Proprietary Product Development
Sio Gene Therapies (formally Axovant Gene Therapies)
Following the initial worldwide licence agreement signed in June
2018, in July 2020 the Group signed a three-year clinical supply
agreement with Sio Gene Therapies (Sio) for the manufacture and
supply of Parkinson's disease gene therapy programme AXO-Lenti-PD.
Under the terms of the agreement, the Group will manufacture GMP
batches for Sio to support the ongoing and future clinical
development of AXO-Lenti-PD.
Sio is currently conducting a Phase 2 SUNRISE-PD trial with
AXO-Lenti-PD. In October, Sio announced positive six-month follow
up data from the second cohort of the trial, showing a 21-point
mean improvement in UPDRS Part III 'OFF' score, a 40% improvement
from baseline based on the two evaluable patients in the study.
AXO-Lenti-PD continued to be shown to be well-tolerated with no
treatment-related serious adverse events at six months.
Unencumbered proprietary pipeline programmes
In the first quarter of 2020 the Group undertook an internal
pipeline review to prioritise where pre-clinical investment will be
made on its wholly-owned early-stage pipeline assets. The current
portfolio consists of five programmes targeting a number of
indications in ophthalmology, oncology, liver and CNS
disorders.
OXB-302 (CART-5T4) is currently the Group's priority candidate
and targets haematological tumours. The 5T4 antigen has been shown
to be highly expressed on various haematological tumours as well as
most solid tumours with restricted expression on normal tissues.
The Group continues to advance pre-clinical work on OXB-302 as the
Group gets the programme ready for entry into the clinic.
OXB-203, currently in pre-clinical studies, is targeting Wet AMD
and uses the Group's technology to deliver a gene to express
afibercept (a VEGF-trap). This programme builds on the demonstrated
long term gene expression data seen with its predecessor OXB-201.
In addition, the Group is continuing preclinical work on OXB-204
(LCA10) and OXB-103 (ALS) and a new preclinical program, OXB-401
(liver indication) was initiated.
Sanofi - Ocular assets
In June, the Group announced it had been informed by Sanofi that
it intended to return the rights to ophthalmology programmes
SAR422459 for Stargardt's disease and SAR421869 for Usher Syndrome
type 1b. This process is still on-going and, once returned, the
Group will undertake its own internal evaluation to determine the
potential future for these programmes and decide whether to commit
further resources to them.
Research Collaborations
During the year, Oxford Biomedica entered into two CAR-T
research collaboration, firstly one with Papyrus Therapeutics Inc.
(Papyrus) then one with PhoreMost Limited (PhoreMost) later in the
year.
The Group signed the research collaboration agreement with
Papyrus, an emerging biopharmaceutical company developing novel
extracellular tumour suppressor therapies for the treatment of
cancer, in August. This early stage collaboration will assess what
impact and potential therapeutic benefit Papyrus' PYTX-002, a
potential first-in-class gene replacement therapy, may confer on a
CAR-T cell therapy developed by the Group, initially in preclinical
in vivo models of solid tumours.
In November, the Group entered into a gene therapy discovery
collaboration with PhoreMost to develop next-generation CAR-T cell
therapies with improved efficacy and durability. This will use
PhoreMost's SITESEEKER platform to identify active peptides to be
deployed within the Group's LentiVector(R) delivery system.
Both of these early stage collaborations highlight the continued
focus on the developments of the Group's proprietary pipeline.
Innovation and LentiVector(R) platform development
Innovation and the development of the platform are core to the
Group's goal of industrialising lentiviral vectors. By
industrialising lentiviral vector production and reducing the cost
through innovation, the Group will open up therapeutic indications
that are currently inaccessible in the field of cell and gene
therapy due to the amount (and therefore cost) of the vector needed
to address these targets. In addition, the reduction in cost will
help drive adoption by payors into indications where there are far
larger numbers of patients, by potentially bringing down the
overall cost per patient treated.
Development of technologies such as TRiPSystem(TM), SecNuc(TM),
LentiStable(TM) and most recently U1 and U2, along with the
corresponding IP, continue to move ahead. In addition, the Group is
utilising automation and the use of robotics to further drive
productivity improvements and is collaborating with Microsoft in an
exciting project using artificial intelligence and machine learning
to improve yields and quality of next generation vectors.
Facilities and Capacity Expansion
Post completion of the building phase of the new 84,000 sqft
manufacturing facility (Oxbox) at the end of 2019, the Group
received MHRA regulatory approval for the first two suites and
supporting areas such as the warehouse, cold chain facilities and
QC laboratories, in May 2020. The first partner batches were being
produced within Oxbox by the end of the second quarter.
Following on from the agreement with VMIC for equipment for the
two further suites, the MHRA approved the third and fourth
manufacturing suites in September and October, respectively. This
meant that by early in the fourth quarter of 2020, Oxbox had four
suites approved and manufacturing was underway; one at 200L scale
for the Groups LentiVector(R) platform partners and three at 1000L
scale for the Oxford AstraZeneca COVID-19 vaccine.
The instalment of the equipment for the first fill/finish suite
is progressing well and is expected to be completed and approved
during 2021. This first phase of development fits out approximately
45,000 sq. ft. with the remaining fallow area available for
flexible expansion in the future.
In January 2021, the Group was delighted to host the Prime
Minister, the Rt. Hon Boris Johnson MP, to formally open the
Group's Oxbox manufacturing facility.
Building work is also currently being undertaken at Windrush
Court to convert office space into GMP laboratories to meet the
expected near term demand in commercial development and analytics.
The conversion of the first of these areas to laboratories was
completed by the end of 2020 and is now operational. A further area
within Windrush Court will be converted during the course of 2021
and work will also start on the development of the Windrush
Innovation Centre (WIC) a dedicated building for both platform and
proprietary product innovation.
In the first half of 2020, a lease was taken on a new 11,000 sq.
ft. site within the Oxford Business Park, close to Oxbox, as a new
Corporate Head Office to house the Senior Executive Team and
various support functions.
Investment progress
In June 2020, the Group successfully completed a GBP40 million
equity fundraising which included new and existing investors, with
net proceeds of GBP38.3 million. The proceeds of the equity
fundraising provided funding to enable the Group to continue to
exploit the significant opportunities in the growing cell and gene
therapy market both with current and future partners. The fundraise
also strengthened the Group's cash positioning allowing it to
remain at the forefront of innovation of lentiviral technology and
progress towards the Group's goal of industrialising lentiviral
vectors and further develop its own propriety products. It also
provided additional resources to be used for the Group's
involvement in the Oxford AstraZeneca COVID-19 vaccine or other
vaccine candidates as required.
Organisational Progress
In the past 12 months the Group has made significant progress in
its commitment to best practice in Corporate Governance and the
diversification of talent on the Board.
In June, the Group announced the appointment of Dr. Roch
Doliveux as Non-executive Chair following the retirement of former
Chair, Dr. Lorenzo Tallarigo. Dr. Doliveux was previously the Chief
Executive Officer of UCB SA for ten years during which time he
transformed the Company from a diversified chemical group into a
global biopharmaceutical leader and he is currently the Chair of
the Board of Directors at Pierre Fabre S.A and a Non-Executive
Director at Stryker Corporation and UCB SA.
In November, Dr. Sam Rasty was appointed to the board as an
Independent Non-Executive Director, and brings invaluable
experience in building and growing successful gene therapy
companies. Post period end, in February 2021, the Group announced
the appointment to the board as of 1 March of Professor Dame Kay
Davies as an Independent Non-Executive Director. Kay is a
world-renowned geneticist and Professor at Oxford University. At
the same time as Kay's appointment, it was announced the Martin
Diggle, a Partner at Vulpes Investment Management would step down
from the Board as a Non-Executive Director after nearly nine years.
Dr. Andrew Heath will not be standing for re-election at the 2021
AGM having served on the board since 2010.
During the year, the wider Oxford Biomedica team also continued
to grow, reflecting the expansion of the business and the extra
employees recruited as part of the scale of vaccine manufacture for
AstraZeneca. Headcount increased by over 20% reaching 673 at the
end of the year, compared with 554 at the end of 2019.
Environmental, Social and Governance
The Group remains committed to its role as a responsible
business having developed a strategy over the past few years which
is now deeply embedded in everything that the Group does.
Throughout 2020, the Group particularly focussed on the wellbeing
of our staff with the introduction of a number of initiatives,
including, workshops and access to mental health professionals. We
were delighted to receive the "Commitment to Workforce Wellbeing"
award from Oxfordshire Mind, in recognition of our various
initiatives.
Outlook
With the growth in partner programmes during 2020, the Group
expects an increase in underlying LentiVector(R) platform based
revenues in 2021 from both bioprocessing and commercial development
activities. In addition, following approval of the Oxford
AstraZeneca COVID-19 vaccine and with production at the Oxbox
manufacturing facilities progressing well, subject to the continued
manufacture of the vaccine, the Group expects total cumulative
revenues from this programme to be in excess of GBP50 million by
the end of 2021. It is therefore expected that revenues for the
Group should grow strongly in 2021.
At an Operating EBITDA level, the Group also expects an increase
from 2020, albeit at a more modest rate than revenues due to
increased R&D spend as we invest for the future.
Discussions and feasibility studies are ongoing with various
potential cell and gene therapy partners and the Group aims to
increase not only the number of partners but also the number of
programmes worked on by existing partners during the course of
2021.
Looking to 2021 and beyond, with the Group's ever increasing
number of partners programmes and continued broader market growth
in cell and gene therapy, the future has never looked more exciting
and the Group is well positioned to maximise the opportunities
ahead.
John Dawson
Chief Executive Officer
FINANCIAL REVIEW
Operational resilience
2020 has been a period of operational resilience, adaptability
and revenue growth for the Group. Whilst the COVID-19 pandemic
enforced changes to the Group's operating methods, with employees
working from home where possible, the Group has been able to
continue its bioprocessing and commercial development activities
throughout the period. This great achievement allowed the Group to
generate revenue growth during a very difficult period for
businesses across the world. From first joining the Oxford
University Jenner Institute consortium in April, the Group
ultimately signed an agreement with AstraZeneca in May to develop
and bioprocess batches of the Oxford AstraZeneca COVID-19 vaccine,
which was then converted into a full commercial supply agreement in
September 2020. These additional vaccine bioprocessing batches,
together with the new commercial agreements entered into with Juno
Therapeutics/Bristol Myers Squibb and Beam Therapeutics earlier in
the year, has seen the Group deliver increased commercial activity
and revenues throughout 2020.
In the first half of the year the Group obtained MHRA approval
for the bioprocessing of batches in two of its suites at its new
Oxbox bioprocessing facility. All four cleanroom suites ended up
being approved and extensively used in the second half of 2020 to
meet both lentiviral vector and adenovirus vaccine clinical and
commercial bioprocessing requirements. Construction of the Group's
fill/finish suite was completed during 2020 and this is expected to
be brought online during 2021. Once validated and operational the
Group will be able to provide its customers with an end-to-end
offering. Subject to the impact of the global COVID-19 pandemic on
the Group's financial position, the Group will continue to look to
make selective investments in infrastructure to both have the
capacity for new customers and to innovate valuable intellectual
property to add to the Group's offering.
The Group has had a very good year in terms of both an increase
in commercial activities as well as revenues. Bioprocessing and
commercial development revenue increased by 45%, and the Group
achieved an Operating EBITDA profit of GBP7.3 million, with growth
driven by the commercial development and bioprocessing activities
undertaken for Juno Therapeutics/Bristol Myers Squibb and
AstraZeneca. New commercial agreements were signed with Juno
Therapeutics/Bristol Myers Squibb, Beam Therapeutics and
AstraZeneca, and new research and development collaborations signed
with PhoreMost and Papyrus Therapeutics. As a result of the
execution of the Juno Therapeutics/Bristol Myers Squibb licence and
supply agreement, a licence fee of GBP7.8 million ($10 million) was
recognised in 2020.
The Group also made further significant improvements to its
Statement of financial position, raising GBP40 million of new
equity (GBP38.3 million net of expenses) in June 2020 in order to
refurbish its Windrush Innovation Centre and Windrush Court sites,
exploit new opportunities in the cell and gene therapy market, and
also provide additional resources required for the Oxford
AstraZeneca COVID-19 vaccine.
Selected highlights are as follows:
- Total revenues increased by 37% over 2019, and have now
increased by 1,524% since 2013 when the revenue generating Platform
division was created
- Revenues from the underlying bioprocessing and commercial
development business continued its upward trend, growing 45% due to
additional activities performed for new customers AstraZeneca, Beam
Therapeutics and Juno Therapeutics/Bristol Myers Squibb. Double
digit growth was achieved across both activities with revenues from
these areas now having increased by 2,183% since 2013
- Revenues from milestones, licences and royalties increased to
GBP19.2 million due to the recognition of a GBP7.8 million ($10
million) licence fee from Juno Therapeutics/Bristol Myers Squibb as
well as various other licence fees, milestones and royalties from
customers
- Operating EBITDA(1) and operating losses improved by GBP12.5
million and GBP8.8 million respectively, with the Group generating
an Operating EBITDA(1) profit of GBP7.3 million and an operating
loss of GBP5.7 million
- The Platform division made an Operating EBITDA profit of
GBP13.9 million (2019: GBP11.7 million loss) and an operating
profit of GBP2.0 million (2019: GBP20.2 million loss), whilst the
Product division made an Operating EBITDA loss of GBP6.6 million
(2019: GBP6.5 million profit) and an operating loss of GBP7.7
million (2019: GBP5.7 million profit)
- Cash used in operations of GBP3.9 million in 2020 (2019:
GBP6.6 million) decreased as a result of the increased revenues as
explained above, offset by further operational investments
required
- Gross proceeds of GBP40.0 million (GBP38.3 million net of
expenses) were raised from new and existing investors through a
successful equity fundraising in June 2020
- Cash at 31 December was GBP46.7 million bolstered by the
equity fundraising in the year
1. Operating EBITDA (Earnings Before Interest, Tax,
Depreciation, Amortisation, revaluation of investments and assets
at fair value through profit & loss, and Share Based Payments)
is a non-GAAP measure often used as a surrogate for operational
cash flow as it excludes from operating profit or loss all non-cash
items, including the charge for share options. A reconciliation to
GAAP measures is provided on page 16.
Overview
The Group saw a large increase in revenues which was driven by a
45% increase in bioprocessing and commercial development revenues.
As a result of the new commercial contract signed with Juno
Therapeutics/Bristol Myers Squibb and the vaccine development and
bioprocessing contracts signed with AstraZeneca. Double digit
growth was seen across both bioprocessing and commercial
development activities. Licences, milestones and royalty revenues
increased 14% due to the achievement of the GBP7.8 million Juno
Therapeutics/Bristol Myers Squibb licence fee, as well as various
milestones and royalties.
Operating costs, including Cost of Sales, grew by 20%, and by
16% when non-cash items(1) are excluded. Manpower and facility
costs have increased as the Group saw the full year effect of its
investments in people, facilities and operations required for the
Oxbox bioprocessing facility and the development and manufacture of
batches of the Oxford AstraZeneca COVID-19 vaccine. The Group will
continue to invest in its people and facilities in 2021 to allow it
to meet increasing customer demand for the Group's bioprocessing
and commercial development services. Headcount rose from 554 at
December 2019 to 673 at the end of 2020.
The Group made an Operating EBITDA profit of GBP7.3 million, an
improvement of GBP12.5 million from the prior year. Once non-cash
items(1) are added back, the Group made an Operating loss of GBP5.7
million, an improvement of GBP8.8 million on the prior year.
1. Non-cash items include depreciation, amortisation,
revaluation of investments, fair value adjustments of assets held
at fair value through profit & loss and the share based payment
charge. A reconciliation to GAAP measures is provided on page
16.
Key Financial and Non-Financial Performance Indicators
The Group evaluates its performance by making use of alternative
performance measures as part of its Key Financial Performance
Indicators (refer to the table below). The Group believes that
these Non-GAAP measures, together with the relevant GAAP measures,
provide an accurate reflection of the Group's performance over
time. The Board has taken the decision that the Key Financial
Performance Indicators against which the business will be assessed
are Revenue, Operating EBITDA and Operating profit/(loss). The
figures presented within this section for prior years are those
reported in the Annual Reports for those years and have not been
restated where a change in accounting standards may have required
this (e.g. revenue under IFRS 15 during 2018 to 2020 but IAS 18
during 2015 to 2017).
Key Financial and Non-Financial Indicators
Key Financial Performance Indicators
GBPm 2020 2019 2018 2017 2016
-------------------------------------- ---------------- ---------------- ---------------- ---------------- ----------------
Revenue
Bioprocessing/commercial
development 68.5 47.3 40.5 31.8 22.6
Licences, milestones &
royalties 19.2 16.8 26.3 5.8 5.2
Total Revenues 87.7 64.1 66.8 37.6 27.8
Operations
Operating EBITDA(1) 7.3 (5.2) 13.4 (1.9) (7.1)
Operating profit/(loss) (5.7) (14.5) 13.9 (5.7) (11.3)
Cash flow
Cash (used in) / generated from
operations (3.9) (6.6) 9.2 (1.5) (5.9)
Capex(2) 13.4 25.8 10.1 2.0 6.4
Cash burn(3) 7.8 26.3 1.9 9.8 11.5
Financing
Cash 46.7 16.2 32.2 14.3 15.3
Loan - - 41.2 36.9 34.4
-------------------------------------- ---------------- ---------------- ---------------- ---------------- ----------------
Non-Financial Key Indicators
Headcount
Year-end 673 554 432 321 256
Average 609 500 377 295 247
-------------------------------------- ---------------- ---------------- ---------------- ---------------- ----------------
1. Operating EBITDA (Earnings Before Interest, Tax,
Depreciation, Amortisation, revaluation of investments and assets
at fair value through profit & loss, and Share Based Payments)
is a non-GAAP measure often used as a surrogate for operational
cash flow as it excludes from operating profit or loss all non-cash
items, including the charge for share based payments. A
reconciliation to GAAP measures is provided on page 16.
2. This is Purchases of property, plant and equipment as per the
cash flow statement which excludes additions to Right-of-use
assets. A reconciliation to GAAP measures is provided on page
17.
3. Cash burn is net cash generated from operations plus net
interest paid plus capital expenditure. A reconciliation to GAAP
measures is provided on page 17.
Revenue
Revenue increased by 37% to GBP87.7 million (2019 GBP64.1
million). Revenue generated from bioprocessing/commercial
development increased by 45% to GBP68.5 million (from GBP47.3
million in 2019), and is up 2,183% since 2013. The main contributor
to growth in 2020 has been the revenues generated from increased
bioprocessing batches produced for AstraZeneca as part of the
vaccine manufacturing efforts, and also increased commercial
development services provided to new customers Juno
Therapeutics/Bristol Myers Squibb, Beam Therapeutics, and
AstraZeneca.
Revenues from licence fees, milestones and royalties of GBP19.2
million (2019: GBP16.8 million), which included a licence fee from
Juno Therapeutics/Bristol Myers Squibb of GBP7.8 million ($10
million), and other customer licences, milestones and royalties of
GBP11.4 million, increased 14% from the prior year when the GBP11.5
million ($15 million) Sio Gene Therapies milestone was
achieved.
The Group's customer base and revenue streams have continued to
diversify, although the largest portion of its revenues came from
its development and supply agreement with AstraZeneca as part of
their worldwide COVID-19 vaccine rollout.
GBPm 2020 2019 2018 2017 2016
--------- ----- ----- ----- ----- -----
Revenue 87.7 64.1 66.8 37.6 27.8
--------- ----- ----- ----- ----- -----
Operating EBITDA
GBPm 2020 2019 2018 2017 2016
------------------------- ------- ------- ------- ------- -------
Revenue 87.7 64.1 66.8 37.6 27.8
Other income 0.8 0.9 1.1 1.8 3.0
Total expenses (81.2) (70.2) (54.5) (41.3) (37.9)
Operating EBITDA(1) 7.3 (5.2) 13.4 (1.9) (7.1)
Non cash items(2) (13.0) (9.3) 0.5 (3.8) (4.2)
Operating (loss)/profit (5.7) (14.5) 13.9 (5.7) (11.3)
------------------------- ------- ------- ------- ------- -------
1. Operating EBITDA (Earnings Before Interest, Tax,
Depreciation, Amortisation, revaluation of investments and assets
at fair value through profit & loss, and Share Based Payments)
is a non-GAAP measure often used as a surrogate for operational
cash flow as it excludes from operating profit or loss all non-cash
items, including the charge for share based payments. A
reconciliation to GAAP measures is provided on page 16.
2.Non-cash items include depreciation, amortisation, revaluation
of investments, fair value adjustments of available-for-sale assets
and the share based payment charge. A reconciliation to GAAP
measures is provided on page 16.
Revenue increased by 37% in 2020 whilst the Group's cost base
grew by 16% to GBP81.2 million as we saw the full year effect of
the Group's investments in people, facilities and operations
required to bring the additional Oxbox bioprocessing capacity
online in the first half of 2020. Further additional investments
were made in order to facilitate the development and manufacture of
batches of Oxford AstraZeneca COVID-19 vaccine on behalf of
AstraZeneca. The Operating EBITDA profit of GBP7.3 million is
GBP12.5 million higher than the GBP5.2 million loss generated in
2019, as a result of the large increase in revenues when compared
to the prior year.
Total Expenses
In order to provide the users of the accounts with a more
detailed explanation of the reasons for the year on year movements
of the Group's operational expenses included within Operating
EBITDA, the Group has added together research and development,
bioprocessing and administrative costs and has removed
depreciation, amortisation and the share option charge as these are
non-cash items which do not form part of the Operating EBITDA
alternative performance measure. As Operating profit/(loss) is
assessed separately as a key financial performance measure, the
year on year movement in these non-cash items is then individually
analysed and explained specifically in the Operating and Net
profit/(loss) section. Expense items included within Total Expenses
are then categorised according to their relevant nature with the
year on year movement explained in the second table on the next
page.
GBPm 2020 2019 2018 2017 2016
-------------------------------- ------ ------ ------ ------ ------
Research & development(1) 29.7 22.6 18.0 21.6 24.3
Bioprocessing costs 10.7 7.4 1.2 - -
Administrative expenses 11.3 11.9 7.4 7.3 6.0
-------------------------------- ------ ------ ------ ------ ------
Operating expenses 51.7 41.9 26.6 28.9 30.3
Depreciation (9.8) (5.8) (4.3) (4.1) (3.3)
Amortisation - - - (1.2) (0.3)
Share option charge (2.4) (1.6) (1.1) (0.7) (0.6)
-------------------------------- ------ ------ ------ ------ ------
Adjusted operating expenses(2) 39.5 34.5 21.2 22.9 26.1
Cost of sales 41.7 35.7 33.3 18.4 11.8
Total expenses(3) 81.2 70.2 54.5 41.3 37.9
-------------------------------- ------ ------ ------ ------ ------
1 Includes the RDEC Tax Credit
2 Research, development, bioprocessing and administrative
expenses excluding depreciation, amortisation and the share option
charge.
3 Cost of goods plus research, development, bioprocessing and
administrative expenses excluding depreciation, amortisation and
the share option charge.
GBPm 2020 2019 2018 2017 2016
------------------------------------- ------ ------ ----- ----- -----
Raw materials, consumables and
other external bioprocessing costs 22.0 22.8 18.3 13.2 9.3
Manpower-related 45.3 35.2 26.7 19.3 17.4
External R&D expenditure 1.4 1.4 1.9 1.7 2.8
Other costs 17.1 12.0 7.6 7.1 8.4
RDEC tax credit (4.6) (1.2) - - -
Total expenses 81.2 70.2 54.5 41.3 37.9
------------------------------------- ------ ------ ----- ----- -----
- Raw materials, consumables and other external bioprocessing
costs have remained stable as, although volumes were higher, the
Group moved away from performing high cost adherent manufacturing
to the lower cost bioreactor process. The Group is also not
responsible for fill/finish of vaccine batches manufactured on
behalf of AstraZeneca leading to lower external bioprocessing
costs.
- The increase in manpower-related costs is due to the increase
in the average headcount from 500 in 2019 to 609 in 2020. As the
Group was able to bring Oxbox and additional laboratory space at
Windrush Court online in 2020, the Group was able to increase the
Group's commercial development and bioprocessing capacity resulting
in increased Group revenues.
- External R&D expenditure remained the same in 2020 with
activities slowed down in the first half of the year due to the
impact of the COVID-19 pandemic, before resuming more fully in the
second half of 2020.
- Other costs were higher as a result of the operational and
facility costs incurred due to the additional Oxbox bioprocessing
capacity coming online, as well as the additional laboratory space
put in place at Windrush Court. Increased costs included GBP0.6
million to settle a customer development claim, and were offset by
a forex gain of GBP0.5 million (2019: GBP0.6 million loss) as
sterling strengthened against the dollar.
- Whilst the RDEC tax credit has increased to GBP4.6 million
(2019: GBP1.2 million), total R&D related tax credits have
decreased significantly as the Group ceased being eligible to claim
a research and development tax credit under the Government's small
company scheme in 2020 (see Operating and Net profit/(loss)
commentary below), with most of those costs now being eligible
under the Governments' large company RDEC tax credit scheme.
Operating and Net profit/(loss)
GBPm 2020 2019 2018 2017 2016
----------------------------------------- ------- ------- ------ ------ -------
Operating EBITDA 7.3 (5.2) 13.4 (1.9) (7.1)
Depreciation, amortisation and share
option charge (12.2) (7.4) (5.5) (6.1) (4.2)
Revaluation of investments/Change
in fair value of assets at fair value
through profit & loss (0.8) (1.9) 6.0 2.3 -
----------------------------------------- ------- ------- ------ ------ -------
Operating (loss)/profit (5.7) (14.5) 13.9 (5.7) (11.3)
Interest (0.8) (5.4) (6.2) (9.3) (4.9)
R&D tax credit 0.3 4.8 2.5 2.7 3.7
Foreign exchange revaluation (non-cash) - (1.0) (2.7) 3.3 (4.1)
Net (loss)/profit (6.2) (16.1) 7.5 (9.0) (16.6)
----------------------------------------- ------- ------- ------ ------ -------
In arriving at Operating loss/profit it is necessary to deduct
from Operating EBITDA the non-cash items referred to above. The
depreciation charge was much higher in 2020 due to Oxbox becoming
operationally active in the first half of the year. The Orchard
Therapeutics investment asset incurred a loss of GBP0.8 million
after the share price gave up more of the gains achieved in 2017
and 2018. Amortisation of intangible assets is insignificant, and
the share option charge was higher due to the increased employee
headcount. The interest charge of GBP0.8 million was lower than the
prior year as a result of the early repayment of the Oaktree loan
in June 2019, with only interest arising on the IFRS 16 leases
remaining as compared to the prior year. The R&D tax credit in
2020 has decreased significantly as the Group ceased being eligible
to claim a research and development tax credit under the
Government's small company scheme in 2020, whilst now being
eligible to make a claim under the Governments' large companies
RDEC scheme (see the last bullet under Total expenses in the
previous section). The credit of GBP0.3 million is made up of a
GBP1.5 million small company credit related to prior years, and a
GBP1.2 million liability on the large company research and
development taxation credit included under Other costs which the
Group is still able to claim. There was no foreign exchange
revaluation gain/(loss) during 2020 as the Oaktree loan was repaid
in 2019.
Segmental analysis
Reflecting the way the business is currently being managed by
the Senior Executive Team, the Group reports its results within two
segments, namely:
I. The 'Platform' segment which includes the revenue generating
bioprocessing and process development activities for third parties
(i.e. the Partner programmes CDMO business), and internal
technology projects to develop new potentially saleable technology,
improve the Group's current processes, and bring development and
manufacturing costs down within the LentiVector(R) platform.
II. The "Product" segment, which includes the costs of
researching and developing new gene therapeutic product
candidates.
GBPm Platform Product Total
------------------------- --------- -------- -------
2020
Revenue 87.1 0.6 87.7
Operating EBITDA 13.9 (6.6) 7.3
Operating profit/(loss) 2.0 (7.7) (5.7)
2019
Revenue 51.0 13.1 64.1
Operating EBITDA (11.7) 6.5 (5.2)
Operating (loss)/profit (20.2) 5.7 (14.5)
------------------------- --------- -------- -------
The Platform segment in 2020 saw an increase in revenue of 71%
from GBP51.0 million to GBP87.1 million due to the Juno
Therapeutics/Bristol Myers Squibb licence fee received, as well as
increased bioprocessing and commercial development activities for
customers AstraZeneca, Juno Therapeutics/Bristol Myers Squibb, Beam
Therapeutics and Sanofi. This was offset by a decrease in revenues
from existing customers Orchard and also Novartis, where revenues
were impacted in 2020 due to the transition over to the more
profitable bioreactor process which occurred during 2019.
Operational results saw the positive impact of the large
increases in revenues but this did come at the cost of additional
investment in headcount and facilities, resulting in an Operating
EBITDA profit of GBP13.9 million, and an operating profit of GBP2.0
million. The Group will target maintaining 2020 operating margins
and improve revenues and operating results from this segment
through higher bioprocessing volumes, increased licence and royalty
payments from partners and additional commercial development
services to customers.
The Product segment has generated revenues of GBP0.6 million
(2019: GBP13.1 million) and an Operating EBITDA loss of GBP6.6
million (2019: GBP6.5 million profit), as no further significant
licences or milestones from Sio Gene Therapies (2019: GBP11.5
million) or other customers was achieved during 2020.
Cash flow
The Group held GBP46.7million cash at 31 December 2020, having
begun the year with GBP16.2 million. Significant movements across
the year are explained below.
Cash flow movements 2020 2019 2018 2017 2016
------------------------------------------- ------- ------- ------- ------- -------
Operating (loss)/profit (5.7) (14.5) 13.9 (5.7) (11.3)
Non-cash items included in operating
profit/(loss) 13.0 9.3 (0.5) 3.8 4.2
------------------------------------------- ------- ------- ------- ------- -------
Operating EBITDA profit /(loss) 7.3 (5.2) 13.4 (1.9) (7.1)
Working capital movement (11.2) (1.4) (4.2) 0.4 1.2
------------------------------------------- ------- ------- ------- ------- -------
Cash (used in)/ generated from operations (3.9) (6.6) 9.2 (1.5) (5.9)
R&D tax credit received 7.0 3.1 3.7 4.5 4.1
------------------------------------------- ------- ------- ------- ------- -------
Net cash (used in)/generated from
operations 3.1 (3.5) 12.9 3.0 (1.8)
Interest paid, less received - (3.3) (4.7) (10.8) (3.3)
Sale of available for sale asset 2.5 6.3
Capex (13.4) (25.8) (10.1) (2.0) (6.4)
------------------------------------------- ------- ------- ------- ------- -------
Cash burn (7.8) (26.3) (1.9) (9.8) (11.5)
Net proceeds from financing 38.3 10.3 19.8 8.8 17.5
------------------------------------------- ------- ------- ------- ------- -------
Movement in year 30.5 (16.0) 17.9 (1.0) 6.0
------------------------------------------- ------- ------- ------- ------- -------
- The operating loss in 2020 was GBP8.8 million better than the
operating loss of GBP14.5 million achieved in 2019. These improved
operational results flowed through to Operating EBITDA profit of
GBP7.3 million (2019: GBP5.2 million loss).
- The negative working capital movement of GBP11.2 million is
driven largely by an increase in Trade and other debtors (GBP25.9
million) and inventory (GBP4.3 million) offset by an increased in
Trade and other payables (GBP5.4 million) and Contract liabilities
(GBP13.4 million). These movements were driven by increased revenue
generating activities and the impact of this increase on the
Group's operational activities.
- The Group received GBP7.0 million R&D tax funding in 2020
in respect of the 2019 claim, up GBP3.9 million from the prior
year. The increase in 2020 was due to the tax credit received in
2019 being capped as a result of the profits achieved in 2018.
- Interest paid during the year was nil, down from GBP3.3
million in the prior year as the Oaktree loan facility was repaid
at the end of June 2019.
- GBP2.5 million of funds was generated from the sale of shares
in Orchard Therapeutics, an asset held at fair value through profit
& loss.
- Purchases of property, plant and equipment decreased from
GBP25.8 million to GBP13.4 million, mainly as a result of main
construction phase of the new Oxbox manufacturing facility being
completed in 2019 and cash preservation measures put in place in
the first half of 2020.
- The net proceeds from financing during 2020 was GBP38.3
million, consisting of the June 2020 equity fundraise of GBP38.3
million, share option issues of GBP1.1 million, and reduced by
lease payments of GBP1.1 million in the year.
- The result of the above movements is a net increase in cash of
GBP30.5 million from GBP16.2 million to GBP46.7 million.
Statement of financial position review
The most notable items on the Statement of financial position,
including changes from 31 December 2019, are as follows:
- Assets at fair value through profit & loss decreased by
GBP2.5 million as a result of the sale of GBP2.5 million worth of
Orchard Therapeutics shares.
- Property, plant and equipment has increased by GBP10.4 million
to GBP72.3 million as depreciation of GBP9.6 million only partially
offset additions of GBP19.7 million, mainly purchases of equipment
and leasehold improvements for the new Oxbox manufacturing
facility, additional laboratory space at Windrush Court, and right
to use assets recognised upon signing the VMIC equipment lease and
the Corporate Head Office lease in Oxford.
- Inventories have increased from GBP2.6 million to GBP6.9
million due to increased raw material balances as a result of
forecasted increased bioprocessing vaccine manufacturing
activities, but also due to Brexit and COVID-19 stock building.
- Trade and other receivables increased from GBP33.7 million to
GBP57.5 million due to increased levels of bioprocessing and
process development activities across the year end, as well as the
increased RDEC tax credit receivable.
- Tax assets decreased from GBP5.4 million to GBP0.1 million as
the Group ceased being eligible to claim a research and development
tax credit under the Government's small company scheme in 2020. The
balance of GBP0.1 million is made up of a GBP1.0 million small
company credit related to prior years, and a GBP1.1 million
corporate tax liability on the large company research and
development taxation credit included under Trade and other
receivables.
- Trade and other payables increased from GBP14.3 million to
GBP19.7 million due to the increased level of operational activity,
including the increased headcount levels.
- Contract liabilities increased from GBP14.9 million in 2019 to
GBP28.3 million due to funds received in advance for future
bioprocessing and process development activities.
- Deferred Income decreased from GBP4.3 million in 2019 to
GBP3.5 million due to the release of amounts deferred as part of
the Innovate UK capex grant funding.
- Provisions increased as a result of the recognition of a
GBP0.8 million liability for future dilapidations cost on the
corporate office and Oxbox leases.
- Lease liabilities increased from GBP8.4 million to GBP13.8
million due to the recognition of an IFRS 16 liability with regard
to the new corporate office lease entered into in 2020, as well as
a GBP3.8 million liability with regard to bioprocessing equipment
used within the Oxbox manufacturing facility.
The Company had no provisions at 31 December 2020 or 31 December
2019.
Financial outlook
The Group will continue to target improved financial performance
in 2021. The contracts signed in 2020 with AstraZeneca, Juno
Therapeutics/Bristol Myers Squibb, Beam Therapeutics and Sio Gene
Therapies, together with continued bioprocessing and commercial
development activities performed for existing customers, have
driven the growth in revenues in 2020. Additive bioprocessing and
commercial development revenues are expected from these
partnerships in the future with the Group expecting to continue to
increase its commercial activities, assisted by an expanded Oxbox
facility being in use throughout 2021.
The Group continues to recognise the importance of focusing on
building and maintaining the Group's commercial relationships with
the Group's customers, both old and new. The success of the Group's
existing customers is seen as key to the Group's success, including
driving growth in new customer relationships in 2021 and beyond.
The Group will continue to target new strategic commercial
relationships in 2021, but also remain focused on meeting the
growing demands of the Group's existing customer base.
R&D expenditure in 2021 is expected to be above the GBP29.7
million seen in 2020. The Group intends to invest in the
development of its platform to accelerate the ambition to
industrialise lentiviral vector production as well as increased
investment in R&D on propriety programmes to progress them
towards the clinic. Headcount is also likely to increase but by
lower levels than seen in 2020. This investment means that while
Operating EBITDA is expected to be above 2020 levels it will not
grow at the same rate as revenues.
Capex for 2021 will be above 2020 levels due to the expansion
being undertaken at both Windrush Court and Windrush Innovation
Centre, as highlighted in the equity fundraise in June 2020. The
Group continues to make selective strategic investments in its
products and enabling technologies where the opportunity exists to
improve patient outcomes and increase shareholder value.
Going concern
The Group made a loss for the year ended 31 December 2020 of
GBP6.2 million, but generated net cash flows from operating
activities for the year of GBP3.1 million. Furthermore, the Group
raised an additional GBP38.3 million in cash through a successful
equity placement in June 2020. The Group ended the year with cash
and cash equivalents of GBP46.7 million.
In considering the basis of preparation of the Annual Report and
financial statements, the Directors have prepared cash flow
forecasts for a period of at least 12 months from the date of
approval of these financial statements, based in the first instance
on the Group's 2021 annual budget and forecasts for 2022. These
cash flow forecasts also take into consideration severe but
plausible downside scenarios including:
- A substantial revenue downside affecting the core LentiVector
(R) platform business,
- No revenues from new customers,
- Significant decreases in forecasted existing customer
milestone and royalty revenues,
- The impacts of COVID-19 on the Group and its customers
including expected revenues from existing customers under long term
contracts.
The Board has confidence in the Group's ability to continue as a
going concern for the following reasons:
- As noted above the Group has cash balances of GBP46.7 million
at the end of December 2020 and GBP65.9 million at the end of March
2021,
- The Group has the ability to control capital expenditure costs
and lower other operational spend, as necessary,
- A large proportion of 2021 forecasted revenues are covered by
binding purchase orders and rolling customer forecasts which give
additional certainty to revenues over the next 12 months,
- The Group has key worker status which allows continuity of
providing services to the Group's financially stable customer base
throughout the lockdown period,
- The Group's history of being able to access capital
markets.
The Directors have also considered the impact of the UK's
decision to leave the European Union. Although Brexit has
significantly affected the fiscal, monetary and regulatory
landscape in the UK, the Group has assessed its impact on its
operations to be minor.
Taking account of the matters described above, the Directors are
confident that the Group will have sufficient funds to continue to
meet its liabilities as they fall due for at least 12 months from
the date of approval of the financial statements and therefore have
prepared the financial statements on a going concern basis.
Stuart Paynter
Chief Financial Officer
Consolidated statement of comprehensive income
for the year ended 31 December 2020
Group
2020 2019
Total Total
Continuing operations Note GBP'000 GBP'000
------------------------------ ---- ---------- ----------
Revenue 87,728 64,060
Cost of sales (41,655) (35,723)
------------------------------ ---- ---------- ----------
Gross profit 46,073 28,337
------------------------------ ---- ---------- ----------
Research, development costs (29,749) (22,546)
Bioprocessing costs (10,720) (7,378)
Administrative expenses (11,262) (11,881)
Other operating income 795 884
Change in fair value of asset
held at fair value through
profit & loss 6 (831) (1,883)
------------------------------ ---- ---------- ----------
Operating loss (5,694) (14,467)
Finance income 34 104
Finance costs (912) (6,526)
---- ---------- ----------
Loss before tax (6,572) (20,889)
------------------------------ ---- ---------- ----------
Taxation 3 327 4,823
------------------------------ ---- ---------- ----------
Loss and total comprehensive
expense for the year (6,245) (16,066)
There was no other comprehensive income or loss.
The loss for the year is attributable to the owners of the
parent.
The notes on pages 24 to 31 form part of this preliminary
information.
Statement of financial position
as at 31 December 2020
Group
2020 2019
Note GBP'000 GBP'000
------------------------------------ ---- --------------------- ---------
Assets
Non-current assets
Intangible assets 73 95
Property, plant and equipment 5 72,304 61,932
Trade and other receivables 3,605 3,605
Deferred tax assets - 359
------------------------------------ ---- --------------------- ---------
75,982 65,991
------------------------------------ ---- --------------------- ---------
Current assets
Inventories 7 6,912 2,579
Assets at fair value through profit
& loss 6 239 2,719
Trade and other receivables 8 53,926 30,045
Current tax assets 126 5,351
Cash and cash equivalents 46,743 16,243
------------------------------------ ---- --------------------- ---------
107,946 56,937
------------------------------------ ---- --------------------- ---------
Current liabilities
Trade and other payables 9 19,716 14,297
Contract liabilities 10 27,258 13,156
Deferred income 10 1,006 1,006
Lease Liabilities 4,475 482
52,455 28,941
------------------------------------ ---- --------------------- ---------
Net current assets 55,491 27,996
------------------------------------ ---- --------------------- ---------
Non-current liabilities
Provisions 11 5,839 5,086
Contract liabilities 10 1,003 1,695
Deferred income 10 2,515 3,310
Lease liabilities 9,370 7,907
Deferred tax liability - 359
------------------------------------ ---- --------------------- ---------
18,727 18,357
------------------------------------ ---- --------------------- ---------
Net assets 112,746 75,630
------------------------------------ ---- --------------------- ---------
Equity attributable to owners
of the parent
Ordinary share capital 41,161 38,416
Share premium account 258,017 222,618
Other reserves 2,291 2,291
Accumulated losses (188,723) (187,695)
------------------------------------ ---- --------------------- ---------
Total equity 112,746 75,630
------------------------------------ ---- --------------------- ---------
The notes on pages 24 to 31 form part of this preliminary
information.
Statement of cash flows
for the year ended 31 December 2020
Group
2020 2019
Note GBP'000 GBP'000
------------------------------------- ----- ---------------------------- --------
Cash flows from operating activities
Cash used in operations 12 (3,889) (6,636)
Tax credit received 7,005 3,128
Net cash generated from/(used
in) operating activities 3,116 (3,508)
------------------------------------- ----- ---------------------------- --------
Cash flows from investing activities
Purchases of property, plant
and equipment (13,358) (25,774)
Proceeds on disposal of property,
plant and equipment - 2
Proceeds on disposal of investment
assets 2,523 6,270
Interest received 34 104
Net cash used in investing
activities (10,801) (19,398)
------------------------------------- ----- ---------------------------- --------
Cash flows from financing activities
Proceeds from issue of ordinary
share capital 41,060 54,132
Costs of share issues (1,724) (769)
Proceeds from the exercise
of warrants - 1,345
Interest paid - (2,513)
Redemption fee - (866)
Payment of lease liabilities (1,151) (835)
Loans repaid - (43,589)
------------------------------------- ----- ---------------------------- --------
Net cash generated from financing
activities 38,185 6,905
------------------------------------- ----- ---------------------------- --------
Net increase/(decrease) in
cash and cash equivalents 30,500 (16,001)
Cash and cash equivalents at
1 January 16,243 32,244
Cash and cash equivalents at
31 December 46,743 16,243
------------------------------------- ----- ---------------------------- --------
The notes on pages 24 to 31 form part of this preliminary
information.
Statement of changes in equity attributable to owners of the
parent company
for the year ended 31 December 2020
Share
Ordinary premium Merger Treasury Warrants Accumulated
shares account reserve reserve reserve losses Total equity
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- -------- -------- ----------- ------------
At 1 January 2019 33,034 172,074 2,291 - 1,218 (173,876) 34,741
Year ended 31
December
2019:
--------------- -------- -------- -------- -------- -------- ----------- ------------
Loss for the year - - - - -- (16,066) (16,066)
------------------- -------- -------- -------- -------- -------- ----------- ------------
Total comprehensive
expense for the
year - - - - -- (16,066) (16,066)
Transactions
with
owners:
Share options
Proceeds from
shares
issued 162 495 - - -- - 657
Value of employee
services - - - - -- 2,247 2,247
Issue of shares
excluding
options 3,875 49,600 - - - - 53,475
Exercise of
warrants 1,345 1,218 (1,218) 1,345
Cost of share
issues - (769) - - - - (769)
At 31 December 2019 38,416 222,618 2,291 - -- (187,695) 75,630
Year ended 31
December
2020:
--------------- -------- -------- -------- -------- -------- ----------- ------------
Loss for the year - - - - -- (6,245) (6,245)
------------------- -------- -------- -------- -------- -------- ----------- ------------
Total comprehensive
income for the
year - - - - -- (6,245) (6,245)
Transactions
with
owners:
Share options
Proceeds from
shares
issued 245 841 - - -- (26) 1,060
Value of employee
services - - - - -- 3,752 3,752
Tax on share
options - - - - - -- 273 273
Issue of shares
excluding
options 2,500 37,500 - - -- - 40,000
Transfer of share
premium related to
warrants - (1,218) - - -- 1,218 -
Cost of share
issues - (1,724) - - - - (1,724)
At 31 December 2020 41,161 258,017 - - -- (188,723) 112,746
------------------- -------- -------- -------- -------- -------- ----------- ------------
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
for the year ended 31 December 2020
1 Basis of accounting
This preliminary announcement was approved by the Board of
Directors on 15 April 2021.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2020
or 2019 but is derived from those accounts.
Statutory accounts for 2019 have been delivered to the registrar
of companies, and those for 2020 will be delivered in due
course.
The auditor has reported on the 2020 accounts; their report was
(i) unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report; and (iii) did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006.
Going concern
The financial position of the Group, its cash flows and
liquidity position are described in the primary statements and
notes to these financial statements.
The Group made a loss for the year ended 31 December 2020 of
GBP6.2 million, but generated net cash flows from operating
activities for the year of GBP3.1 million. Furthermore, the Group
raised an additional GBP38.3 million in cash through a successful
equity fundraise in June 2020. The Group ended the year with cash
and cash equivalents of GBP46.7 million.
In considering the basis of preparation of the Annual Report and
financial statements, the Directors have prepared cash flow
forecasts for a period of at least 12 months from the date of
approval of these financial statements, based in the first instance
on the Group's 2021 annual budget and forecasts for 2022. These
cash flow forecasts also take into consideration severe but
plausible downside scenarios including:
- A substantial revenue downside affecting the core LentiVector
(R) platform business,
- No revenues from new customers,
- Significant decreases in forecasted existing customer
milestone and royalty revenues,
- The impacts of COVID-19 on the Group and its customers
including expected revenues from existing customers under long term
contracts.
The Board has confidence in the Group's ability to continue as a
going concern for the following reasons:
- As noted above the Group has cash balances of GBP46.7 million
at the end of December 2020 and GBP65.9 million at the end of March
2021,
- The Group has the ability to control capital expenditure costs
and lower other operational spend, as necessary,
- A large proportion of 2021 forecasted revenues are covered by
binding purchase orders and rolling customer forecasts which give
additional certainty to revenues over the next 12 months,
- The Group has key worker status which allows continuity of
providing services to the Group's financially stable customer base
throughout the lockdown period,
- The Group's history of being able to access capital
markets.
The Directors have also considered the impact of the UK's
decision to leave the European Union. Although Brexit has
significantly affected the fiscal, monetary and regulatory
landscape in the UK, the Group has assessed its impact on its
operations to be minor.
Taking account of the matters described above, the Directors are
confident that the Group will have sufficient funds to continue to
meet its liabilities as they fall due for at least 12 months from
the date of approval of the financial statements and therefore have
prepared the financial statements on a going concern basis.
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 the 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.
Key accounting matters
Judgements
Contract revenues: Identification of performance obligations,
allocation of revenue and timing of revenue recognition
The Group has identified three key areas of judgement within the
collaboration agreements entered into during the period. Firstly,
in relation to the number of distinct performance obligations
contained within each collaboration agreement; secondly the fair
value allocation of revenue to each performance obligation; and
thirdly the timing of revenue recognition based on the achievement
of the relevant performance obligation. The sales royalties
contained within the collaboration agreements qualify for the
royalty exemption available under IFRS 15 and will only be
recognised as the underlying sales are made even though the
performance obligation, in terms of the technology license, has
already been met.
Number of distinct performance obligations
Upon review of certain customer contracts and preparation of
accounting papers setting out the accounting treatment as per IFRS
15, the Group is required to exercise judgement in identifying the
distinct performance obligations contained within the contract.
These have been identified as being:
- The granting of the technology licences,
- Milestones relating to bioprocessing or process development
activities.
The fair value allocation of revenue to each performance
obligation
Because there is no readily available market price for many of
the performance obligations contained in the customer contracts,
the Group exercises judgment in estimating the stand alone selling
price of each of the performance obligations. Key areas of
judgement are assessed to be:
- The stand alone selling price of technology licences. The
Group assesses the stand alone selling price of licences in terms
the stand alone selling price of previously recognised customer
technology licences, but also the size of the market of the target
indication and other market related observable inputs,
- The stand alone selling price of bioprocessing batches. The
Group assesses the stand alone selling price of the batches in
terms the stand alone selling price of its other customer contract
batch selling prices,
- The stand alone selling price in terms of the annual full time
equivalent rate to charge for process development activities. The
Group assesses the full time equivalent rate in terms the stand
alone equivalent rate of its other customer contract equivalent
rates.
Timing of revenue recognition: technology licence revenues
One of the key areas identified within the collaboration
agreements is the recognition of licence revenue based on the
achievement of the relevant performance obligation. The individual
factors and aspects relating to licence revenue is assessed as part
of the IFRS 15 accounting paper prepared for each agreement and a
judgement is made as to whether the licence fee performance
obligation related to the granting of the licence to the customer
has been achieved. If it was judged that the performance
obligations on licences granted in 2020 had not been met, revenues
would have been GBP9.4 million lower with the revenue expected to
be recognised during 2021 when the performance obligations were
met.
Customer contract with varying bioprocessing batch prices
During 2020 the Group entered into a supply agreement with a
customer for the supply of bioprocessing batches where the batch
price will vary across the period of the contract. The Group has
deemed that the series guidance within IFRS 15 applies and has
therefore recognised revenue based on averaging the batch price
over the period of the contract where the series guidance applies.
If the revenue had been recognised based on an actual batch price,
revenues would have been GBP2.4 million higher with a corresponding
decrease in revenues in future years.
Estimations
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below. The nature of estimation means that actual
outcomes could differ from those estimates.
Percentage of completion of bioprocessing batch revenues
Bioprocessing of clinical/commercial product for partners is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the bioprocessing process.
Revenues are recognised on a percentage of completion basis and as
such require estimation in terms of the assessment of the correct
stage of completion including the expected costs of completion for
that specific bioprocessing batch. The value of the revenue
recognised and the related contract asset raised with regard to the
bioprocessing batches which remain in progress at year end is
GBP21,260,000. If the assessed percentage of completion was 10
percentage points higher or lower, revenue recognised in the period
would have been GBP2,126,000 higher or lower.
Percentage of completion of fixed price process development
revenues
As it satisfies its performance obligations the Group recognises
revenue and the related contract asset with regards to fixed price
process development work packages. Revenues are recognised on a
percentage of completion basis and as such require estimation in
terms of the assessment of the correct percentage of completion for
that specific process development work package. The value of the
revenue recognised and the related contract asset raised with
regards to the work packages which remain in progress at year end
is GBP6,677,000. If the assessed percentage of completion was 10
percentage points higher or lower, revenue recognised in the period
would have been GBP667,000 higher or lower.
Stock and equipment received in lieu of cash payment for
bioprocessing and development services
During 2020, as part of its supply and development agreements
with customers, the Group received certain stock items and fixed
assets in partial lieu of cash payments from customers. As required
by IFRS 15, the Group has valued the commercial development
services and bioprocessing batches it has provided at their market
value for revenue recognition purposes, with a corresponding entry
being passed within cost of goods, depreciation and operating lease
payments to account for the cost of these items. The value of
revenue recognised during 2020 related to these items amounts to
GBP3.3 million (2019: Nil).
Provision for out of specification bioprocessing batches
Bioprocessing of clinical/commercial product for partners is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the process.
As the Group has now been bioprocessing product across a number
of years, and also in a commercial capacity, the Group has assessed
the need to include an estimate of bioprocessed product for which
revenue has previously been recognised and which may be reversed
should the product go out of specification during the remaining
period over which the product is bioprocessed. In calculating this
estimate the Group has looked at historical rates of out of
specification batches across the last four years, and has applied
the percentage of out of specification batches to total batches
produced across the assessed period to the revenue recognised on
batches which have not yet completed the bioprocessing process at
year end. This estimate, based on the historical percentage, may be
significantly higher or lower depending on the number of
bioprocessing batches actually going out of specification in
future. If the historical percentage had been 10% higher or lower,
the estimate would be GBP137,000 higher or lower. The estimate will
increase or decrease based on the number of bioprocessing batches
undertaken, the percentage of completion of those bioprocessing
batches, and the number of batches which go out of specification
over the assessment period.
Consequently, bioprocessing revenue of GBP1.4 million (2019:
GBP1.8 million) has not been recognised during 2020 with the
corresponding credit to contract liabilities (note 10). This
revenue will be recognised as the batches complete
bioprocessing.
3 Taxation
During 2019 and before the Group was entitled to claim tax
credits in the United Kingdom under the Small company scheme for
certain research and development expenditure. During 2020 the Group
ceased being eligible to claim a research and development tax
credit under the Government's small company scheme.
2020 2019
GBP'000 GBP'000
---------------------------------------------------------------- -------- --------
Current tax
United Kingdom corporation tax research and development credit 1,140 (5,018)
Overseas taxation - -
---------------------------------------------------------------- -------- --------
1,140 (5,018)
---------------------------------------------------------------- -------- --------
Adjustments in respect of prior periods
United Kingdom corporation tax research and development credit (1,467) 473
---------------------------------------------------------------- -------- --------
Current tax (327) (4,545)
---------------------------------------------------------------- -------- --------
Deferred tax
Relating to the origination of timing differences - (278)
Adjustments in respect of prior periods - -
--------------------------------------------------- ------ --------
Deferred tax (327) (278)
--------------------------------------------------- ------ --------
Taxation Credit (327) (4,823)
--------------------------------------------------- ------ --------
The amount of GBP1,140,000 included as part of the GBP327,000
taxation credit, within the statement of comprehensive income for
the year ended 31 December 2020 comprises the corporation tax
payable on the amount claimed as a Large Company Tax credit (RDEC)
within research and development expenses in the statement of
comprehensive income.
The adjustment of current tax in respect of the prior year of
GBP1,467,000 (2019: GBP473,000) relates to a higher than
anticipated tax receipt received in 2020 (GBP473,000), and an
expected tax repayment relating to prior years (GBP994,000). The
2019 sum of GBP5,018,000 represents the Small company tax credit
receivable by the Group in that 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 Statement
of financial position.
During 2020 the Group recognised GBP273,000 of current tax
relating to tax relief obtained on exercise of share options
directly within equity.
4 Basic and diluted loss per ordinary share
The basic loss per share of 7.81p (2019: earnings of 22.10p) has
been calculated by dividing the loss for the period by the weighted
average number of shares in issue during the year ended 31 December
2020 (79,944,911; 2019: 72,709,944).
The Group made a loss for the period ended 31 December 2020.
There is therefore no difference between the basic loss per
ordinary share and the diluted loss per ordinary share in the
period.
5 Property, plant and equipment
Office Bioprocessing Right of
Freehold Leasehold equipment and Laboratory use asset
property improve-ments and computers equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------------- -------------- --------------- ---------- -------
Cost
At 1 January 2020 21,427 21,908 7,395 20,174 11,400 82,304
Additions at cost 1,678 4,659 1,484 5,537 6,361 19,719
Reclassification 226 652 227 (1,105) - -
Disposals - - - - - -
Change in Estimate - - - - 251 251
At 31 December 2020 23,331 27,219 9,106 24,606 18,012 102,274
------------------------- --------- -------------- -------------- --------------- ---------- -------
Accumulated depreciation
At 1 January 2020 8,360 1,679 3,054 6,440 839 20,372
Charge for the year 2,084 1,840 1,556 2,737 1,381 9,598
At 31 December 2020 10,444 3,519 4,610 9,177 2,220 29,970
------------------------- --------- -------------- -------------- --------------- ---------- -------
Net book amount at
31 December 2020 12,887 23,700 4,496 15,429 15,792 72,304
------------------------- --------- -------------- -------------- --------------- ---------- -------
Office Bioprocessing Right of
Freehold Leasehold equipment and Laboratory use asset
property improve-ments and computers equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------------- -------------- --------------- ---------- -------
Cost
At 1 January 2019 21,283 7,735 5,088 12,337 - 46,443
Adoption of IFRS 16
(Leases) - (1,263) - - 7,618 6,355
Additions at cost 144 15,436 2,681 7,513 3,782 29,556
Reclassification - - (374) 374 - -
Disposals - - - (50) - (50)
At 31 December 2019 21,427 21,908 7,395 20,174 11,400 82,304
------------------------- --------- -------------- -------------- --------------- ---------- -------
Accumulated depreciation
At 1 January 2019 6,324 1,450 2,416 4,462 - 14,652
Adoption of IFRS 16
(Leases) - (188) - - 188 -
Charge for the year 2,036 417 877 1,784 651 5,765
Reclassification - - (239) 239 - -
Disposals - - - (45) - (45)
------------------------- --------- -------------- -------------- --------------- ---------- -------
At 31 December 2019 8,360 1,679 3,054 6,440 839 20,372
------------------------- --------- -------------- -------------- --------------- ---------- -------
Net book amount at
31 December 2019 13,067 20,229 4,341 13,734 10,561 61,932
------------------------- --------- -------------- -------------- --------------- ---------- -------
6 Assets at fair value through profit & loss
2020 2019
Assets at fair value through profit
& loss: GBP'000 GBP'000
------------------------------------------------ -------- --------
At 1 January 2,719 -
Reclassification of investment at fair value
through profit & loss - 10,966
Additions 874 -
Costs to sell asset at fair value
through profit & loss - (94)
Sale of shares (2,523) (6,270)
Change in fair value of available-for-sale
asset (831) (1,883)
--------
At 31 December 239 2,719
----------------------------------------------- -------- --------
Additions in 2020 relate to a contract asset milestone which was
met in 2019 with the shares received in 2020 as part of a non-cash
consideration.
During the first half of 2019 the Group determined that the
equity held in Orchard Therapeutics met the definition of an Asset
at fair value through profit and loss under IFRS 5. As such, the
equity investment was reclassified from Investments held at fair
value through profit and loss (non-current assets) to Assets at
fair value through profit and loss (current assets).
7 Inventories
2020 2019
GBP'000 GBP'000
---------------- ------- -------
Raw Materials 6,912 2,579
Total inventory 6,912 2,579
---------------- ------- -------
Inventories constitute raw materials held for commercial
bioprocessing purposes.
During the year, the Group wrote down GBP134,000 (2019:
GBP171,000) of inventory which is not expected to be used in
production or sold onwards. The Company holds no inventories.
8 Trade and other receivables
2020 2019
GBP'000 GBP'000
---------------------------------- ------- -------
Trade receivables 27,214 12,766
Contract assets 16,508 13,406
Other receivables 4,163 563
Other tax receivable 3,412 1,537
Prepayments 2,629 1,773
Total trade and other receivables 53,926 30,045
------------------------------------ ------- -------
The fair value of trade and other receivables are the current
book values. The Group has performed an impairment assessment under
IFRS 9 and has concluded that the application of the expected
credit loss model has had an immaterial impact on the level of
impairment of receivables.
Included in the Group's trade receivable balance are debtors
with a carrying amount of GBP9,502,000 (2019: GBP7,472,000) which
were past due at the reporting date and of which GBP9,460,000 has
been received after the reporting date.
Contract assets relates to the Group's rights to consideration
for work completed but not invoiced at the reporting date for
commercial development work and bioprocessing batches. The contract
assets are transferred to receivables when the rights become
unconditional. This usually occurs when the Group issues an invoice
to the customer.
A portion of contract assets relates to fixed price process
development work packages which are recognised on a percentage of
completion basis and as such requires estimation in terms of the
assessment of the correct percentage of completion for that
specific work package. The value of the contract asset raised with
regards to these work packages is GBP6,677,000. If the assessed
percentage of completion was 1 percentage point higher or lower,
revenue recognised in the period would have been GBP67,000 higher
or lower.
The Group has performed an impairment assessment under IFRS 9
and has concluded that the application of the expected credit loss
model has had an immaterial impact on the level of impairment on
contract assets. We have noted there has been no change in the time
frame for a right to consideration to become unconditional and the
performance obligation to be satisfied.
Non-current trade and other receivables constitute other
receivables of GBP3,605,000 (2019: GBP3,605,000) which consists of
deposits held in escrow as part of the Windrush Innovation Centre
and Oxbox lease arrangements.
9 Trade and other payables
2020 2019
GBP'000 GBP'000
----------------------------------- ------- -------
Trade payables 7,777 7,311
Other taxation and social security 1,585 1,042
Accruals 10,354 5,944
Total trade and other payables 19,716 14,297
------------------------------------- ------- -------
10 Contract liabilities and deferred income
Contract liabilities and deferred income arise when the Group
has received payment for services in excess of the stage of
completion of the services being provided.
Contract liabilities and deferred income have increased from
GBP14.9 million at the end of 2019 to GBP28.3 million at the end of
2020 due to funds received in advance for future bioprocessing and
process development activities. Of the GBP14.9 million balance
included in the statement of financial position at the end of 2019,
GBP11.6 million has been recognised as revenue during the 2020
financial year.
Contract liabilities consists primarily of deferred
bioprocessing and process development revenues, which are expected
to be released as the related performance obligations are satisfied
over the period as described below:
0-1 0-3 0-5 0-10 Total
Years GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- -------- -------- -------- --------
Contract liabilities 27,258 50 948 5 28,261
Bioprocessing income 24,327 - - - 24,327
Process development income 2,914 - - - 2,914
Licence fees and incentives 17 50 948 5 1,020
Deferred income 1,006 2,515 - - 3,521
Lease incentives - - - - -
Grant 1,006 2,515 - - 3,521
------------------------------ -------- -------- -------- -------- --------
Included within bioprocessing contract liabilities is revenue of
GBP1.4 million which has not been recognised during 2020 (2019:
GBP1.8 million) relating to the estimate of out of specification
batches (see note 2: 'Estimates' for additional information).
Deferred income relates to grant funding received from the UK
Government for capital equipment purchased as part of the Oxbox
bioprocessing facility expansion. The income will be recognised
over the period over which the purchased assets are
depreciated.
11 Provisions
2020 2019
GBP'000 GBP'000
-------------------------------- ------- -------
At 1 January 5,086 1,287
Unwinding of discount 38 58
New Provision - 3,741
Change in estimate 251 -
Additional provision recognised 464 -
At 31 December 5,839 5,086
---------------------------------- ------- -------
Provisions are exclusively in respect of dilapidations. The
dilapidations provisions relate to anticipated costs of restoring
the leasehold Yarnton, Oxbox, Windrush Innovation Centre and
Corporate Office properties in Oxford, UK to their original
condition at the end of the lease terms in 2024, 2033, 2028 and
2030 respectively, discounted using the rate per the Bank of
England nominal yield curve. The equivalent rate was used in 2019.
The provisions will be utilised at the end of the leases if they
are not renewed.
12 Cash flows from operating activities
Reconciliation of loss before tax to net cash used in
operations:
2020 2019
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Continuing operations
Operating loss (5,694) (14,467)
Adjustment for:
Depreciation 9,817 5,765
Amortisation of intangible assets 22 22
Loss on disposal of property, plant and equipment - 3
Charge in relation to employee share schemes 3,289 2,247
Non-cash gains 831 1,883
Changes in working capital:
Increase in trade and other receivables (25,893) (4,586)
Increase in trade and other payables 5,419 2,868
(Decrease)/ increase in deferred income (795) 1,533
Increase/(decrease) in contract liabilities 13,410 (3,634)
Increase in provisions 38 58
(Increase)/decrease in inventory (4,333) 1,672
---------------------------------------------------- -------- --------
Cash used in operations (3,889) (6,636)
---------------------------------------------------- -------- --------
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