REG - Oxford Biomedica PLC - 2021 Annual report and accounts & AGM notification

Oxford BioMedicaAnnouncement

27/04/2022 15:00

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RNS Number : 5768J  Oxford Biomedica PLC  27 April 2022

 

 

Oxford Biomedica

2021 Annual report and accounts & AGM notification

 

London, UK - 27 April 2022:  Oxford Biomedica plc (LSE:OXB) ("Oxford
Biomedica", "the Company" or "the Group"), a leading gene and cell therapy
group, gives notice that copies of the 2021 Annual report and accounts and the
Notice of Annual General Meeting ("AGM") are being sent to shareholders. These
documents are available on the "Investors" section of the Group's website at
www.oxb.com (http://www.oxb.com) . Oxford Biomedica announced its preliminary
results for the year ended 31 December 2021 on 20 April 2022.

Copies of these documents have been submitted to the Financial Conduct
Authority for publication through the National Storage Mechanism and will
shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Further copies of the 2021 Annual report and accounts are available from the
Company Secretary, Oxford Biomedica plc, Windrush Court, Transport Way,
Oxford, OX4 6LT, United Kingdom (telephone number: +44 (0) 1865 783 000).

In accordance with the announcement on 17 January 2022 that John Dawson had
signalled his  intention to  retire  after 13 years service, the Company
 announces that, Mr Dawson will not be seeking re-election at the forthcoming
AGM.  Consequently, Mr Dawson will step down as a Director with effect from
27 May 2022.

The Company intends to hold its AGM on Friday 27 May 2022 at the offices of
Oxford Biomedica, Windrush Court, Transport Way, Oxford OX4 6LT, commencing at
3:00 p.m.

In light of public health guidance and legislation issued by the UK Government
in relation to the COVID-19 pandemic, the Company's 2022 AGM will be held as a
combined physical and electronic meeting. This means that attendance in person
is likely to be restricted in terms of numbers and shareholders and other
attendees are encouraged not to attend the AGM in person, save for such
persons nominated by the Chair of the meeting in order to establish a quorum.
The Company will continue to monitor public health guidance and legislation
issued by the UK Government in relation to the COVID-19 pandemic. Should it
become appropriate to revise the current arrangements for the AGM, any such
changes will be notified to shareholders through the Company's website,
www.oxb.com (http://www.oxb.com) , and, where appropriate, by announcement
made by the Company to a Regulatory Information Service. Notwithstanding the
foregoing, the Company is pleased to be able to offer facilities for
Shareholders to attend virtually, ask questions and vote at the AGM
electronically in real time should they wish to do so. The details of how to
do this are set out in the Notice of Annual General Meeting.

In accordance with the requirements of Rule 6.3.5 of the Disclosure Guidance
and Transparency Rules of the UK Financial Conduct Authority, the appendix to
this announcement contains descriptions of the principal risks and
uncertainties affecting the Group and material related party transactions, and
a responsibility statement which has been extracted from the 2021 Annual
report and accounts. This announcement should be read in conjunction with, and
not as a substitute for, reading the full 2021 Annual report and accounts.

- Ends -

 

 For further information, please contact:

 Oxford Biomedica plc:                     Tel: +44 (0)1865 783 000

 Natalie Walter, Company Secretary

 

Notes for editors

 

Oxford Biomedica (LSE:OXB) is an innovative leading viral vector specialist
focused on delivering life changing therapies to patients.

 

Oxford Biomedica plc and its subsidiaries (the Group) work across key viral
vector delivery systems including those based on lentivirus, adeno-associated
virus (AAV) and adenovirus, providing innovative solutions to cell and gene
therapy biotechnology and biopharma companies for their process development,
analytical development and manufacturing needs. Oxford Biomedica has built a
sector leading lentiviral vector delivery system, LentiVector(®) platform,
which the Group leverages to develop product candidates in-house, before
seeking partners to take the products into clinical trials.

 

Oxford Biomedica is based across several locations and headquartered in
Oxfordshire, UK. In early 2022, the Group established Oxford Biomedica
Solutions, a new US based subsidiary AAV manufacturing and innovation
business, based near Boston, US.

 

Oxford Biomedica employs more than 940 people. Further information is
available at www.oxb.com.

 

Appendix

 

Principal risks and uncertainties

The Group is exposed to a range of risks. Some of them are specific to the
Group 's current operations, others are common to all development-stage
biopharmaceutical companies. The Directors have carried out a robust
assessment of the emerging and principal risks facing the Group, including
those, which could threaten its business model, future performance, solvency
or liquidity.

The Group operates in the cell and gene therapy biotechnology sector which, by
its nature, is relatively high risk compared with other industry sectors.
During 2021, there have only been a few additional cell and gene therapy
products that have been approved for commercial use and, consequently, there
are still significant financial and development risks in the sector, and the
regulatory authorities have shown caution in their regulation of such
products.

Risk assessment and evaluation is an integral and well-established part of the
Group's management processes. The Group's risk management framework
incorporates the implementation of a mitigation strategy, each tailored to the
specific risk in question. The Group has taken the decision to disclose the
steps it has taken to mitigate the risks facing its operations during the
period as described in the prior year approach to the disclosure of risks.

 

Risk management framework

The Group's risk management framework is as follows:

-       Board of Directors - the Board has overall responsibility for
risk management, determining the Group's risk tolerance, and for ensuring the
maintenance of a sound system of internal control. The Board considers risk in
the context of its agenda items at each of its formal meetings, of which there
at least six annually. However, twice a year, in March and September, a full
presentation to the Board on risk is provided by the Risk Management
Committee. The risk management processes are the responsibility of the Senior
Executive Team (SET) with emerging risks identified by horizon scanning and
discussed at the Risk Management Committee. The Audit Committee monitors the
processes and their implementation as well as reviewing the Group 's internal
financial controls and the internal control systems. The Audit Committee also
monitors the integrity of the financial statements of the Group and any formal
announcements relating to the Group's financial performance, reviewing
significant financial reporting judgements contained in them.

 

-       Senior Executive Team (SET) - During 2021, the SET generally met
every week, with twice monthly-extended SET sessions to discuss current
business issues and consider relevant risks. The SET also held regular
COVID-19 update sessions. At least twice a year, the SET meets with
representatives from the Risk Management Committee to consider the operational
risk management processes and risks identified.

 

-       Key management committees - the Group currently has three key
management sub-committees which meet monthly and through which much of the
day-to-day business is managed. These are the extended Operational Leadership
Team (which incorporates the Quality and Manufacturing Operations Committee),
the Product Development Committee and the Technical Development Committee. SET
members attend these meetings and risk management is a key feature of each
sub-committee.

 

-       Risk Management Committee - the Group has a Risk Management
Committee comprising senior managers from each area of the business and
chaired by the Chief of Staff. This group meets quarterly with a remit to
identify and assess risks in the business and to consider mitigation and risk
management steps that can be taken. The risk register is regularly reviewed by
the SET and key risks are highlighted to the Board at each formal meeting.

 

-       Standard Operating Procedures - all areas of the business have
well established Standard Operating Procedures (SOPs) which are required be
followed to minimise the risks inherent in the business operations. Where
these are required for GMP, GCP and GLP any deviations from the SOPs must be
identified and investigated. Compliance with such SOPs are routinely subject
to audit by the relevant regulators and customers. Other SOPs, such as
financial processes, are also subject to audits.

 

Key risks specific to the Group's current operations

Pharmaceutical product development risks

To develop a pharmaceutical product, it is necessary to conduct pre-clinical
studies and human clinical trials for product candidates to demonstrate safety
and efficacy. The number of pre-clinical studies and clinical trials that will
be required varies depending on the product candidate, the indication being
evaluated, the trial results and the regulations applicable to the particular
product candidate. In addition, the Group or its partners will need to obtain
regulatory approvals to conduct clinical trials and bioprocess drugs before
they can be marketed. This development process takes many years. The Group may
fail to develop successfully a product candidate for many reasons, including:

-       Failure to demonstrate long-term safety;

-       Failure to demonstrate efficacy;

-       Failure to develop technical solutions to achieve necessary
dosing levels or acceptable delivery mechanisms;

-       Failure to establish robust bioprocessing processes;

-       Failure to obtain regulatory approvals to conduct clinical
studies or, ultimately, to market the product; and

-       Failure to recruit sufficient patients into clinical studies.

The failure of the Group to successfully develop a product candidate could
adversely affect the future profitability of the Group. There is a risk that
the failure of any one product candidate could have a significant and
sustained adverse impact on the Group's share price. There is also the risk
that the failure of one product candidate in clinical development could have
an adverse effect on the development of other product candidates, or on the
Group's ability to enter into collaborations in respect of product candidates
.

The Group has accepted this risk but looks to mitigate via several product
candidates in the pipeline and to collaborate with other larger more
experienced partners on product development.

 

(i)  Safety risks

Safety issues may arise at any stage of the drug development process. An
independent drug safety monitoring board (DSMB), the relevant regulatory
authorities or the Group itself may suspend or terminate clinical trials at
any time. There can be no assurances that any of the Group's product
candidates will ultimately prove to be safe for human use. Adverse or
inconclusive results from pre-clinical testing or clinical trials may
substantially delay, or halt, the development of product candidates,
consequently affecting the Group's timeline for profitability. The
continuation of a particular study after review by the DSMB or review body
does not necessarily indicate that all clinical trials will ultimately be
successfully completed. The Group has accepted this risk but looks to mitigate
the impact as much as possible through careful assessment of any safety issues
arising from the product early in the development process and to stop the
development if required.

 

(ii) Efficacy risks

Human clinical studies are required to demonstrate efficacy in humans when
compared against placebo and/or existing alternative therapies. The results of
pre-clinical studies and initial clinical trials of the Group's product
candidates do not necessarily predict the results of later stage clinical
trials. Unapproved product candidates in later stages of clinical trials may
fail to show the desired efficacy despite having progressed through initial
clinical trials. There can be no assurance that the efficacy data collected
from the pre-clinical studies and clinical trials of the Group's product
candidates will be sufficient to satisfy the relevant regulatory authorities
that the product should be given a marketing authorisation. The Group has
accepted this risk but looks to mitigate the impact as much as possible
through consultation with the regulatory authorities early in the development
process to determine what is required for market authorisation.

 

(iii) Technical risks

 

During the course of a product's development, further technical development
may be required to improve the product candidate's characteristics such as the
delivery mechanism or the bioprocessing process. There is no certainty that
such technical improvements or solutions can be identified. The Group
continues to innovate in this area using its R&D expertise in
collaboration with its customers to mitigate this risk.

 

(iv)        Bioprocessing process risk

 

There can be no assurance that the Group's product candidates will be capable
of being produced in commercial quantities at acceptable cost. The Group's
LentiVector® and AAV platform product candidates use specialised
bioprocessing processes for which there are only a few suitable bioprocessors
including the Group itself. There can be no assurance that the Group will be
able to bioprocess the Group's product candidates at an economically viable
cost or that contractors who are currently able to bioprocess the Group's
product candidates will continue to make capacity available at economic
prices, or that suitable new contractors will enter the market. Bioprocessing
processes that are effective and practical at the small scale required by the
early stages of clinical development may not be appropriate at the larger
scale required for later stages of clinical development or for commercial
supply. There can be no assurance that the Group will be able to adapt current
processes or develop new processes suitable for the scale required by later
stages of clinical development or commercial supply in a timely or
cost-effective manner, nor that contract bioprocessors will be able to provide
sufficient bioprocessing capacity when required. The Group continues to
monitor and review the platform and production processes to ensure that
innovative steps are taken to increase production yields.

 

(v) Regulatory risk

 

The clinical development and marketing approval of the Group's product
candidates and the Group's bioprocessing facilities, are regulated by
healthcare regulatory agencies, such as the FDA (USA), EMA (Europe) and MHRA
(UK). During the development stage, regulatory reviews of clinical trial
applications or amendments can prolong development timelines. Similarly, there
can be no assurance of gaining the necessary marketing approvals to
commercialise products in development. Regulatory authorities may impose
restrictions on a product candidate's use or may require additional data
before granting approval. If regulatory approval is obtained, the product
candidate and bioprocessor will be subject to continual review and there can
be no assurance that such an approval will not be withdrawn or restricted. The
Group's laboratories, bioprocessing facility and conduct of clinical studies
are also subject to regular audits by the MHRA and the FDA to ensure that they
comply with GMP, GCP and GLP standards. Failure to meet such standards could
result in the laboratories or the bioprocessing site being closed or the
clinical studies suspended until corrective actions have been implemented and
accepted by the regulator. The Group consults with the regulator early in the
development process to understand any concerns identified and looks to remedy
these before they become a major issue.

 

(vi)        Failure to recruit sufficient patients into clinical
studies

 

Clinical trials are established under specific protocols which specify how the
trials should be conducted. Protocols specify the number of patients to be
recruited into the study and the characteristics of patients who can and
cannot be accepted into the study. There is a risk that it proves difficult in
practice to recruit the number of patients with the specified characteristics,
potentially causing delays or even abandonment of the clinical study. This
could be caused by a variety of reasons, such as the specified characteristics
being too tightly defined resulting in a very small population of suitable
patients, or the emergence of a competing drug, either one that is approved or
another drug in the clinical stage of development.

The threats from the above product development risks are inherent in the
pharmaceutical industry. The Group aims to mitigate these risks by employing
experienced staff and other external parties, such as contract research
organisations, to plan, implement and monitor its product development
activities and to review progress regularly in the Group's Product Development
Committee.

 

Bioprocessing revenue risk

The Group receives significant revenues from bioprocessing lentiviral vectors,
AAV vectors and adenoviral based vaccines for third parties. Bioprocessing of
lentiviral vectors, AAV vectors and adenovirus-based vaccines is complex and
bioprocessing batches may fail to meet the required specification due to
contamination or inadequate yield. Failure to deliver batches to the required
specification may lead to loss of revenues. Furthermore, the Group relies on
third parties, in some cases sole suppliers, for the supply of raw materials
and certain out-sourced services. If such suppliers perform in an
unsatisfactory manner, it could harm the Group's business. The Group's
bioprocessing and analytical facilities are subject to regular inspection and
approval by regulators and customers. Failure to comply with the standards
required could result in production operations being suspended until the
issues are rectified with the potential for loss of revenue.

As the Group's revenues from bioprocessing continue to grow, the risk to the
Group has increased as a result in the last twelve months. The Group mitigates
the risk of failing to meet required specifications by investing in high
quality facilities, equipment and employees and, in particular, in quality
management processes. In addition, the Group mitigates the supply chain issues
in the UK with looking to source second suppliers and stockpile three months
of critical material supplies. The Group plans to mirror its approach of
mitigating supply chain risk in the US by ensuring that Oxford Biomedica
Solutions continues to stockpile several months' worth of critical material
supplies and source back-up sources of supplies.  The Group has also asked
key suppliers to hold stocks in UK warehouses to cover any immediate supply
issues. Outsourcing of fill and finish has also been seen as a risk but the
Group is looking to bring this in-house to have more control on the process.

 

Collaborator and partner risk

The Group has entered several collaborations and partnerships, involving the
development of product candidates by partners in which the Group has a
financial interest through IP licences. Failure of the Group's partners to
continue to develop the relevant product candidates for any reason could
result in the Group losing potential revenues. The Group looks to mitigate
this risk through having a close relationship with its partners via steering
group meetings that look at candidate selection and progression.

 

Business development

The Group may seek to out-license or spin out its in-house product development
programmes into externally funded vehicles and may seek to develop strategic
partnerships for developing certain of the Group's other product candidates.
The Group may not be successful in its efforts to build these third-party
relationships, which may cause the development of the products to be delayed
or curtailed. The Group has enhanced the commercial development function
within the Group and is thus putting significant resources behind the effort
to find good strategic partners to assist in developing the Group's other
product candidates.

The Group has looked to mitigate its dependency and the associated risk of its
partnerships being lentiviral dependent by expanding into other viral vector
areas including adenovirus and AAV. This mitigation was exemplified via the
Group's establishment in early 2022 of Oxford Biomedica Solutions a new US
based subsidiary AAV manufacturing and innovation business, based near Boston,
Massachusetts, US.

The Group is building a revenue generating business by providing its
LentiVector(®) and AAV platform to third parties in return for revenues
derived from process development, bioprocessing and future royalties. The
Group may be unsuccessful in building this business for reasons including:

a)  Failing to maintain a leadership position in lentiviral vector technology
or failing to develop a leading position in AAV technology;

b) Becoming uncompetitive from a pricing perspective; and

c) Failure to provide an adequate service to business partners and
collaborators .

The Group is continuing to invest in its LentiVector(®) and AAV technology
to reduce this risk, and takes customer relationship management extremely
seriously to ensure that customers and partners receive the service they
expect, as indicated by the Group on pages 30 to 33 of the Annual report and
accounts.

 

Attraction and retention of highly skilled employees

The Group depends on recruiting and retaining highly skilled employees to
deliver its objectives and meet its customers' needs. The market for such
employees is increasingly competitive, especially in the Boston area in the
US, and failure to recruit or to retain employees with the required skills and
experience could adversely affect the Group's performance. The Group mitigates
this risk by creating an attractive working environment and conducting
benchmarking reviews to ensure that the remuneration package offered to
employees is comparable with competing employers in the relevant jurisdiction
as indicated by the Group on pages 58 to 60 of the Annual report and accounts.

 

Broader business risks which are applicable to the Group

The broader business risks, which the Group face as outlined below are
important and the Group looks to identify these risks early through a horizon
scanning project with the assistance of external healthcare consultants and
then outlines actions for the business development team, the SET and
ultimately the Board to follow by way of mitigation.

 

Cell and gene therapy risk

The Group's commercial success, both from its own product development and from
supporting other companies in the sector, will depend on the acceptance of
cell and gene therapy by the medical community and the public for the
prevention and/or treatment of diseases. To date there are only a small number
of gene therapy products which have been approved either in Europe and/or in
the US. Furthermore, specific regulatory requirements, over and above those
imposed on other products, apply to cell and gene therapies and there can be
no assurance that additional requirements will not be imposed in the future.
This may increase the cost and time required for successful development of
cell and gene therapy products. The Group looks to mitigate this risk through
market assessments of the product development pathway and conducts pricing and
reimbursement studies for the cell and gene therapy product.

 

Rapid technical change

The cell and gene therapy sector is characterised by rapidly changing
technologies and significant competition.   Advances in other technologies
in the sector could undermine the Group's commercial prospects. The Group
looks to  mitigate this risk through a horizon scanning project in order to
identify the competition and technology advances in the sector and to develop
either in-house or via in-licensing, new technologies for the Group's products
and platform.

 

Longer-term commercialisation risks

In the longer term, the success of the Group's product candidates and those of
its partners will depend on the regulatory and commercial environment several
years into the future. Future commercialisation risks include:

-      The emergence of new and/or unexpected competitor products or
technologies. The biotechnology and pharmaceutical industries are subject to
rapid technological change which could affect the success of the Group's
product candidates or make them obsolete;

-      Regulatory authorities becoming increasingly demanding regarding
efficacy standards or risk averse regarding safety;

-      Governments or other payers being unwilling to pay for/reimburse
gene therapy products at a level which would justify the investment. Based on
clinical studies to date, the Group's LentiVector(®) platform product
candidates have the unique potential to provide permanent therapeutic benefit
from a single administration. The pricing of these therapies will depend on
assessments of their cost-benefit and cost effectiveness; and

-      The willingness of physicians and/or healthcare systems to adopt
new treatment regimes.

 

Any or all of these risks could result in the Group's future profitability
being adversely affected as future royalties and milestones from commercial
partners could be reduced. The Group looks to mitigate this long-term
commercialisation risk through a horizon scanning project in order to identify
the competition and technology advances early, consult with regulatory
authorities on a regular basis and perform pricing and reimbursement studies
on the Group 's products to identify any serious issues in advance.

 

Intellectual property and patent protection risk

The Group's success depends, amongst other things, on maintaining proprietary
rights to its products and technologies and the Board gives high priority to
the strategic management of the Group's intellectual property portfolio, with
the Board monitoring actions to bolster the intellectual property portfolio as
appropriate from time to time. However, there  can be no guarantee that the
Group's product candidates and technologies are adequately protected by
intellectual property. Furthermore, if the Group's patents are challenged, the
defence of such rights could involve substantial costs and an uncertain
outcome.

Third party patents may emerge containing claims that impact the Group's
freedom to operate. There can be no assurance that the Group will be able to
obtain licences to these patents at reasonable cost, if at all, or be able to
develop or obtain alternative technology. Where copyright, design right and/or
"know how" protect the Group's product candidates or technology, there can be
no assurance that a competitor or potential competitor will not independently
develop the same or similar product candidates or technology.

Rights of ownership over and rights to license and use intellectual property
depend on a number of factors, including  the circumstances under which the
intellectual property was created and the provisions of any agreements
covering such intellectual property. There can be no assurance that changes to
the terms within licence agreements will not affect the entitlement of the
Group to the relevant intellectual property or to license the relevant
intellectual property from others.

 

Financial risks

(a) Product liability and insurance risk

In carrying out its activities the Group potentially faces contractual and
statutory claims or other types of claim from customers, suppliers and/or
investors . The Group monitors these potential claims on an ongoing basis and
undertakes mitigating actions, which include taking expert advice on the
validity of the claim and using insurance coverage against the claim to cover
any loss as required. In addition, the Group is exposed to potential product
liability risks that are inherent in the research, pre-clinical and clinical
evaluation, bioprocessing, marketing and use of pharmaceutical products. While
the Group is currently able to obtain insurance cover, there can be no
assurance that any future necessary insurance cover will be available to the
Group at an acceptable cost, if at all, or that, in the event of any claim,
the level of insurance carried by the Group now or in the future will be
adequate, or that a product liability or other claim would not have a material
and adverse effect on the Group's future profitability and financial
condition.

 

(b) Foreign currency exposure

The Group records its transactions and prepares its financial statements in
pounds sterling, but some of the Group's income from collaborative agreements
and patent licences is received in US dollars and the Group incurs a
proportion of its expenditure in US dollars and the Euro. Following the
establishment of Oxford Biomedica Solutions, the Group expects that the
proportion of income received in US dollars and expenditure incurred in US
dollars will increase significantly. During 2021, the Group's cash balances
were predominantly held in pounds sterling, although the Group's Treasury
Policy permits cash balances to be held in other currencies to hedge foreseen
foreign currency expenses. The Group keeps this unhedged position under
constant review. To the extent that the Group's foreign currency assets and
potential liabilities are not matched, fluctuations in exchange rates between
pounds sterling, the US dollar and the Euro may result in realised and
unrealised gains and losses on translation of the underlying currency into
pounds sterling that may increase or decrease the Group's results of
operations and may adversely affect the Group's financial condition, each
stated in pounds sterling. In addition, if the currencies in which the Group
earns its revenues and/or holds its cash balances weaken against the
currencies in which it incurs its expenses, this could adversely affect the
Group's future profitability.

 

Loan facility

The Group entered into a $85 million short term loan facility in March 2022
provided by Oaktree Capital Management, secured on the Group's assets. Failure
to comply with the terms of the loan agreement could potentially place the
Group in default, which could adversely affect the Group's business
operations, financial position and prospects.

 

Special interest groups and adverse public opinion

During 2021, the Group continued to perform large-scale commercial manufacture
of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine. Such work can be
subject to adverse public opinion and has attracted the attention of special
interest groups, including those opposed to vaccination programmes, also
referred to as "anti-vaxxers". To date, the Group has not been targeted by
anti-vax campaigners, but there can be no assurance that such groups will not,
in the future, focus on the Group's activities, or that any such public
opinion would not adversely affect the Group's operations. Adverse publicity
about the Group, its role in the manufacture of the adenovirus-based Oxford
AstraZeneca COVID-19 vaccine, or any other part of the industry may hurt the
Group's public image, which could harm its operations, cause its share price
to decrease or impair its ability to gain market acceptance for its products.
The Group has looked to mitigate this risk through assistance from the UK
government (Centre for Protection of National Infrastructure) on the
protection of its facilities/infrastructure and scenario planning with its
external public relations agency with regard to strategic communications.

 
Oxford Biomedica Solutions

In early 2022, together with Homology Medicines, the Group established Oxford
Biomedica Solutions, a new US based subsidiary AAV manufacturing and
innovation business, based near Boston, Massachusetts, US. The Group has
identified        risks associated with the successful transaction and
proposed mitigation actions.

There is a risk that the Group fails to integrate Oxford Biomedica Solutions
successfully into the Group. The Group is mitigating this risk through
implementation of a detailed alignment plan, with advice from advisors. The
Group is aware that the employment market in the Boston area is highly
competitive and has sought to ensure that it has a competitive compensation
package in place and is able to offer additional non-financial benefits to
employees such that Oxford Biomedica Solutions can continue to retain and
attract current and prospective employees. The potential for significant risk
to the Group associated with moving into the AAV manufacturing sector has been
reduced based on the AAV experience and track record of Oxford Biomedica
Solutions. There is a risk to the Group that it now has an interest in another
jurisdiction outside of the UK, which is the US. The Group has looked to
mitigate this through use of professional advisors to provide appropriate
guidance and advice tailored to the US market and applicable laws and
regulations, so as to minimise any resulting risk that may arise.

 
Cyber security

Cyber-attacks seeking to compromise the confidentiality, integrity and
availability of IT systems and the data held on them are a continuing risk to
the Group. Indeed, with the Group operating in the manufacture of the
adenovirus-based Oxford AstraZeneca COVID-19 vaccine, this has increased the
risk of cyber-attack to the Group. Compromised confidentiality, integrity and
availability of the Group's assets resulting from a cyber-attack would impact
the Group 's ability to deliver to customers and, ultimately, its financial
performance and damage the Group's reputation. The Group has looked to
mitigate this risk through implementing robust security monitoring to provide
early detection of hostile activity on the Group's networks and has sought
assistance from the UK government (National Cyber Security Centre) to protect
the Group 's IT systems. Following the establishment of Oxford Biomedica
Solutions, the Group has worked        to ensure that its US-based IT
systems are subject to equally robust levels of security monitoring.

 

War in Ukraine

The Group has no operations, clients or suppliers arising in Russia or Ukraine
and, therefore, the war in Ukraine has no commercial consequences for the
Group. Following discussion, the SET has assessed that the only possible
effect the war in Ukraine may have on the Group could be an increase in
transportation costs as result of the increase in global oil prices.

 

COVID-19

As a result of the COVID-19 pandemic during 2021, the Group assessed the
potential financial and operational risks to the business. While the Group is
yet to experience any significant impact from the virus on revenues, the Group
continually monitors the potential impact on the Group's supply chain, with a
particular focus on key manufacturing and process development inventories.

The Group complies with government COVID-19 safe working practices. During
2021, the Group continued to hold weekly senior management working group
meetings to monitor current COVID-19 developments and GOV.UK guidance, to risk
assess the Group's supply chain and to direct the Group's phased response. The
Group has worked with employees, customers and suppliers to monitor any
potential disruption and, so far, the Group has not experienced any, and does
not currently expect to experience, significant supply issues or any changes
in overall customer demand. The Group recognises that COVID-19 restrictions
and working practices will differ outside of the UK and it is expected that
Oxford Biomedica Solutions will similarly monitor and comply with all relevant
COVID-19 developments and all applicable US federal and state guidance for the
purposes of risk assessing supply chain risk in the US and directing a
tailored response.

The Group is aware that there is the potential for global shortages in certain
inventories especially in the UK. As part of its mitigation strategy, the
Group has increased, where possible, the level of incoming materials and
components held in warehouses in the UK, which will mitigate the risk in the
short term against labour shortages and subsequent production delays at its
key suppliers. These mitigations have been successful to date but there is no
guarantee against future disruption. The Group is also seeking to mirror its
approach of increasing the level of incoming materials and components held by
Oxford Biomedica Solutions in the US as part of its mitigation strategy.

The Group has a duty of care towards all employees, and therefore the Group
expects some of its employees to be required to self-isolate to prevent the
possible spread of infection. There is also a risk that there could be
disruption to production in the event of employees becoming ill due to
COVID-19. As a result, the Group has taken action to provide a COVID-19 secure
workplace and to mitigate the spread of infection at the Group's facilities
through enhanced cleaning processes, staggering of shifts, regular lateral
flow testing, the provision of hand sanitiser in common areas and the
recommendation that employees work from home if possible.

The Board is updated on positive COVID-19 cases amongst the workforce at every
Board meeting and the SET receives weekly update s. There have not been any
employee fatalities resulting from COVID-19.

 

Climate change

The Group's governance and approach to climate change, including its voluntary
disclosure using recommendations of the Taskforce for Climate-related
Financial Disclosure (TCFD) is set out on pages 64 to 70 of the Strategic
Report.

The Group has assessed the impact of climate change and concluded that there
is likely to be some minor future financial risks, which would need to be
managed, but none that would materially impact the Group's business model.
This assessment is consistent with the Sustainability Accounting Standards
Board's (SASB) Materiality Map, which indicates that the issue is not likely
to be material for the biotechnology and pharmaceutical sector. The Group will
keep this assessment under review with reference to any future work prepared
on the Materiality Map by SASB or others. The Group expects that the impacts
are likely to be weather-related disruption at internal manufacturing sites
and to the Group's suppliers, with the prospect of increased costs of
resources and fuels. The Group plans to continue to develop its business
continuity plans with alternative manufacturing sites and a second sourcing
strategy, if possible, to mitigate these impacts.

 

Financial position

The Directors have considered the cash position in the context of going
concern and their conclusions are set out in the Financial review page 53, the
Director's report (page 132) and in note 1 to the Consolidated financial
statements (page 152) of the Annual Report.

 

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and the Group
and parent Company financial statements in accordance with applicable law and
regulations.

 

Company law requires the Directors to prepare Group and parent Company
financial statements for each financial year. Under that law the Directors
have prepared the Group and parent Company financial statements in accordance
with International Financial Reporting Standards (IFRSs) in conformity with
the requirements of the Companies Act 2006 and applicable law and have elected
to prepare the parent Company financial statements on the same basis. In
addition, the Group financial statements are required under the UK Disclosure
Guidance and Transparency Rules to be prepared in accordance with
International Financial Reporting Standards adopted pursant to Regulation (EC)
No. 1606/2002 as it applies in the European Union.

 

Under Company law the Directors must approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and parent Company and of the Group's profit and loss for that
period. In preparing each of the Group and parent Company financial
statements, the Directors are required to:

 

·         select suitable accounting policies and then apply them
consistently;

·         make judgements and estimates that are reasonable, relevant
and reliable;

·         state whether they have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006 and, as regards the Group financial statements,
International Financial Reporting Standards adopted pursuant to Regulation
(EC) No. 1606/2002 as it applies in the European Union;

·         assess the Group and parent Company ability to continue as
a going concern, disclosing as applicable, matters related to going concern;
and

·         use the going concern basis of accounting unless they
either intend to liquidate the Group or parent Company or to cease operations,
or to have no realistic alternatives but to do so.

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group and parent company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and the Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are responsible for such internal
control as they determine as necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error and have general responsibility for taking such steps as are reasonable
open to them to safeguard the assets of the Company and the Group and to
prevent and detect fraud and other irregularities.

 

Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Report that complies with that law and those
regulations.

 

The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.

 

The Directors consider that the Annual Report and accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group and parent Company's performance,
business model and strategy.

 

Each of the Directors, whose names and functions are listed below confirm
that, to the best of their knowledge:

 

·      the Group and parent Company's financial statements, which have
been prepared in accordance with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Group and parent company; and

 

·      the Directors' report contained on pages 130 to 136 of the Annual
report includes a fair review of the development and performance of the
business and the position of the Group, together with a description of the
principal risks and uncertainties that it faces.

 

 Name                       Function
 Roch Doliveux              Chair & Interim Chief Executive Officer
 John Dawson                Chief Executive Officer (until January 2022, Executive Director subsequently)
 Stuart Paynter             Chief Financial Officer
 Stuart Henderson           Deputy Chairman and Senior Independent Director
 Heather Preston            Non-Executive Director
 Robert Ghenchev            Non-Executive Director
 Sam Rasty                  Non-Executive Director
 Professor Dame Kay Davies  Non-Executive Director (from March 2021)
 Michael Hayden             Non-Executive Director (from July 2021)
 Catherine Moukheibir       Non-Executive Director (from December 2021)
 Namrata P. Patel           Non-Executive Director (from April 2022)

 

In accordance with Section 418 of the Companies Act 2006, Directors' report
shall include a statement, in the case of each Director in office at the date
the Directors' report is approved, that:

 

(a) so far as the Director is aware, there is no relevant audit information of
which the Company's auditors are unaware; and

 

(b) he/she has taken all the steps that he/she ought to have taken as a
Director in order to make himself/herself aware of any relevant audit
information and to establish that the Company's auditors are aware of that
information.

 

Company: transactions with related parties

There were no outstanding balances with respect of transactions with Directors
and connected persons at 31 December 2021 (2020: none). Key person
remuneration can be seen in note 6 of the financial statements.

 

 

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