REG - Oxford Biomedica PLC - Preliminary Results
20/04/2022 07:00
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RNS Number : 7185I Oxford Biomedica PLC 20 April 2022
Oxford Biomedica plc
Preliminary results for the year ended 31 December 2021
Saving Lives
Oxford, UK - 20 April 2022: Oxford Biomedica plc (LSE: OXB), ("Oxford
Biomedica" or "the Group"), a leading cell and gene therapy group, today
announces its preliminary results for the year ended 31 December 2021.
Dr. Roch Doliveux, Chair and Interim Chief Executive Officer of Oxford
Biomedica, said:
"I am delighted with our performance in 2021 which was a true testament to the
hard work of all our employees. 2021 financial performance was exceptional due
to large-scale manufacture of the adenovirus-based Oxford AstraZeneca COVID-19
vaccine, and we have successfully manufactured over 100 million doses since
the partnership began. During the year we also built on our existing
partnerships, including with Boehringer Ingelheim, as well as signed two new
partnerships with innovative biotech companies, Immatics and Arcellx.
"2022 will be another important year as we execute on our strategy to become a
global viral vector leader, providing life-changing therapies and vaccines to
patients. With the outsourced vector manufacturing supply market growing
rapidly, we see significant potential to build upon our success with
lentiviral vectors and expand the scope of our innovative process development
and manufacturing to all classes of viral vectors.
"Our recently launched Boston, US-based Adeno-Associated Virus (AAV)
manufacturing and innovation business, brings a fully established and
operating 'Plug & Play' platform, four patent families, and the full
breadth of AAV capabilities and capacity into Oxford Biomedica. This lays the
foundation to increase our presence in the strategically important US market
and build our global footprint.
"I would like to sincerely thank our employees, partners and shareholders for
their continued support."
FINANCIAL HIGHLIGHTS
Selected highlights are as follows:
· Total revenues increased by 63% over 2020 to £142.8 million
(2020: £87.7 million).
· Revenues from bioprocessing and commercial development continued
its upward trend, growing 87% due to large scale commercial manufacture of the
Oxford AstraZeneca COVID-19 vaccine.
· Revenues from milestones, licences and royalties, which included
recognition of the £4.0 million license fee from Boehringer Ingelheim,
decreased by 25% to £14.4 million. In 2020 a license fee from Juno
Therapeutics/Bristol Myers Squibb of £7.8 million ($10 million) was
recognised.
· Operating EBITDA(1) and operating profits improved by £28.5
million and £26.5 million respectively, with the Group generating an
Operating EBITDA(1) profit of £35.9 million and an operating profit of £20.8
million.
· The Platform division made an Operating EBITDA(1) profit of
£45.3 million (2020: £13.9 million profit) and an operating profit of £31.4
million (2020: £2.0 million profit), whilst the Product division made an
Operating EBITDA(1) loss of £9.4 million (2020: £6.6 million loss), and an
operating loss of £10.6 million (2020: £7.7 million loss).
· Cash generated from operations of £24.5 million in 2021 (2020:
£3.9 million used in operations) increased as a result of vaccine manufacture
for AstraZeneca, offset by further operational investments required.
· Gross proceeds of £50.0 million were raised through a placing
with Serum Life Sciences Ltd in September 2021 to develop the fallow area of
the Oxbox manufacturing facility.
· Cash at 31 December 2021 was £108.9 million and £144 million at
31 March 2022.
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. However,
deferred bonus share option charges are not added back to operating profits in
the determination of Operating EBITDA as they may be paid in cash upon the
instruction of the Remuneration Committee. A reconciliation to GAAP measures
is provided on page 18.
OPERATIONAL HIGHLIGHTS
COVID-19 Vaccine and Agreement with AstraZeneca
- Continued large-scale commercial manufacture of the adenovirus-based
Oxford
AstraZeneca COVID-19 vaccine at the Group's Oxbox facility, running three
manufacturing suites at 1000L scale to maximise production of vaccine
- Cumulative revenues from AstraZeneca by the end of 2021 were in
excess of
£100 million, contributing to significant growth in Group Operating EBITDA in
2021
Novartis Partnership
- In December, Novartis and Oxford Biomedica extended their commercial
supply
agreement for the manufacture of lentiviral vectors for several Novartis CAR-T
products
to the end of 2028
- Global roll out of Kymriah® in both paediatric and young adult
relapsed or refractory
B-cell acute lymphoblastic leukaemia (r/r ALL) and relapsed or refractory
diffuse large
B-cell lymphoma (r/r DLBCL) indications continued to expand with more than 365
qualified treatment centres in 30 countries having coverage for at least one
indication
Boehringer Ingelheim
- In April, Oxford Biomedica announced that it had entered into a new
three-year
development and supply agreement with Boehringer Ingelheim for the manufacture
and supply of various types of viral vectors, demonstrating the versatility of
the
Group's platform
- In October, the Group announced that Boehringer Ingelheim had
exercised its option
to license Oxford Biomedica's lentiviral vector technology to manufacture,
register
and commercialise BI 3720931 as a long-lasting therapeutic option for patients
with
cystic fibrosis
Other Partnership News and Strategic Updates
- Oxford Biomedica continues to actively progress its exciting
collaborations with
Juno Therapeutics Inc. (a wholly owned subsidiary of Bristol Myers Squibb
Inc.)
and Beam Therapeutics
- In March, Oxford Biomedica announced that Sanofi had given notice of
their intent
to terminate their collaboration and license agreement for the process
development
and manufacturing of lentiviral vectors to treat haemophilia. Oxford Biomedica
expects a negligible impact on revenue over the coming 18-month period
- In November, OXB signed a new agreement with Immatics, a leading
company
developing T-cell-redirecting cancer immunotherapies
- In December, Oxford Biomedica announced a new license and supply
agreement and
a three-year clinical supply agreement with leading next-generation CAR-T
developer
Arcellx, and is currently working on their lead CAR-T programme
- In May, Orchard Therapeutics announced it would be returning the
rights
to its OTL-101 programme to the academic originators of that programme
- Post-period end, Oxford Biomedica announced a license and supply
agreement
with Cabaletta Bio for their DSG3-CAART programme (now in Phase I) (January
2022)
- Post-period end, Oxford Biomedica announced that Sio Gene Therapies
had given
notice of their intention to return the rights for AXO-Lenti-PD; Oxford
Biomedica
plans to out-license the programme in due course (February 2022)
- During 2021, the Group concluded an internal review of its
proprietary pipeline and,
following this, identified a set of select assets for development
Investment from Serum Life Sciences Ltd
- In September, Serum Life Sciences Ltd (a subsidiary of Serum
Institute of India) made an
investment of £50 million in the Company in return for 3.9% of the share
capital at the time
- The proceeds of the transaction will fund the development of the
fallow area at Oxbox
into a flexible advanced manufacturing space for a variety of viral vector
based products,
including cell and gene therapy products, vaccines and other advanced
therapeutics
at 2,000L scale
Transaction with Homology Medicines, Inc and creation of Oxford Biomedica
Solutions (post-period end)
- In January 2022, Oxford Biomedica announced that it had agreed
with Homology
Medicines to establish Oxford Biomedica Solutions, a high-performing, full
scope
AAV manufacturing and innovation business near Boston, US
- The transaction completed on 10 March 2022 and is immediately
accretive to the
Group's revenue growth
- The transaction has expanded the Group's suite of viral vector
capabilities into the large
and growing AAV segment
- Oxford Biomedica, Inc acquired an 80% ownership interest in
Oxford Biomedica
Solutions for $130 million (£97 million) cash consideration, with a further
$50 million
(£37 million) capital injection into Oxford Biomedica Solutions to fund
growth
Expansion of Capacity
- In January 2021, Oxford Biomedica hosted the Prime Minister, the
Rt. Hon Boris Johnson MP,
to formally open the Oxbox manufacturing facility following MHRA approval of
four
manufacturing suites
- Planning permission for redevelopment of the Windrush Innovation
Centre was granted in
June 2021, and is planned to provide next generation laboratory facilities;
project
anticipated to commence in second half of 2022
Corporate Governance and Organisational Progress
- Post-period end, Dr. Roch Doliveux assumed the role of Interim
CEO of the Company,
simultaneous with the announcement of John Dawson's decision to retire as CEO
after
more than 13 years of service. A process to appoint a new CEO is underway
- The Company welcomed three new Board members in 2021; Professor
Dame Kay Davies,
a world-renowned geneticist and Dr. Lee's Professor of Anatomy Emeritus at
Oxford
University, Dr. Michael Hayden, with decades of industry defining
contributions and
achievements, and Ms Catherine Moukheibir, with extensive international
experience
in finance, capital markets and life sciences
- During the period two long-standing Board members also stepped
down; Martin Diggle,
Partner at Vulpes Investment Management, stepped down in February and Dr.
Andrew
Heath retired from the Board at the AGM in May
- In April 2022, the Company welcomed Namrata P Patel to the Board
as an Independent
Non-Executive Director. Ms Patel brings extensive international experience in
manufacturing
and product supply, and ESG
Analyst briefing
Management will be hosting a briefing for analysts via conference call and
webcast at 13:00 BST (8:00 ET) today, 20 April 2022.
A live webcast of the presentation will be available via this link.
(https://webcasting.brrmedia.co.uk/broadcast/62506143e1d0d456b32a5995)
If you would like to dial-in to the call and ask a question during the live
Q&A, please email Oxfordbiomedica@consilium-comms.com
Notes
Unless otherwise defined, terms used in this announcement shall have the same
meaning as those used in the Annual report and accounts.
Enquiries:
Oxford Biomedica plc: T: +44 (0)1865 783 000 / E: ir@oxb.com
Stuart Paynter, Chief Financial Officer
Sophia Bolhassan, Head of Investor Relations
Consilium Strategic Communications:
T: +44 (0)20 3709 5700 / E: Oxfordbiomedica@consilium-comms.com
Mary-Jane Elliott / Matthew Neal
About Oxford Biomedica
Oxford Biomedica (LSE:OXB) is an innovative leading viral vector specialist
focused on delivering life changing therapies to patients.
Oxford Biomedica plc and its subsidiaries (the Group) work across key viral
vector delivery systems including those based on lentivirus, adeno-associated
virus (AAV) and adenovirus, providing innovative solutions to cell and gene
therapy biotechnology and biopharma companies for their process development,
analytical development and manufacturing needs. Oxford Biomedica has built a
sector leading lentiviral vector delivery system, LentiVector® 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 (http://www.oxb.com) .
CHAIR'S STATEMENT
Saving lives through innovative cell and gene therapy services
Introduction
2021 was an outstanding year for Oxford Biomedica as we continued to succeed
in our mission to deliver life-changing therapies and vaccines to patients.
Our business model is built upon using science to save lives and the
innovative work we are doing is enabling our customers, the biotech and
biopharma industry, to deliver life-saving therapies to reach more patients.
We continued the large-scale manufacture of the adenovirus-based Oxford
AstraZeneca COVID-19 vaccine, successfully manufacturing more than 100 million
doses of the vaccine and demonstrating Oxford Biomedica's world class
facilities, expertise and strength of our team. We expanded upon other
existing partnerships, including with Boehringer Ingelheim for the manufacture
and supply of various types of viral vectors, whilst also signing two new
partnerships.
In line with our aim of becoming a global viral vector leader, not only did we
invest in the expansion of our world class facilities in the UK, but we also
announced a transformational deal with Homology Medicines which was completed
in early 2022. This transaction has enabled us to broaden our vector offering
into adeno-associated virus (AAV) whilst enhancing our process development and
manufacturing capabilities and expanding our US presence.
Innovation in our platform remains integral to the future of our business. We
conducted an internal review of our additional assets in development in 2021
and as of the end of the year we had several assets in our gene therapeutics
pipeline.
We have entered 2022 in a robust financial position, providing us with a
stable foundation for future growth. In September, we received an investment
by Serum Life Sciences Ltd of £50 million, which enables us to further expand
the capacity of our world class facilities as we continue anticipating growing
demand for our capabilities in viral vector manufacturing.
Our Culture
Our purpose is at the heart of our culture. During 2021, our culture became
even stronger despite being tested by the COVID-19 pandemic. The Group's
approach to employee wellbeing continued to focus on mental wellbeing and, in
particular, resilience. The pandemic has emphasised that whilst we cannot
control the external environment around us, we can support employees and
provide them with the tools to manage their personal response to these
external factors.
As a Group, employee engagement remains a key priority. We are committed to
making sure employees are regularly asked for their views and suggestions on a
variety of issues, through multiple channels and forums. In 2021, we launched
our first ever company-wide employee engagement survey. The results were
positive, and the Group's sustainable engagement score, a key overall
engagement indicator, was above those of other benchmarked groups. We will
continue to take action to further improve our performance in this area.
Our Strategy
The Group's goal is focused on becoming an innovative global viral vector
leader that provides solutions to cell and gene therapy companies.
In September, having conducted a strategic review and following our success in
both lentiviral vectors and our performance above other CDMOs with the
adenovirus-based Oxford AstraZeneca COVID-19
vaccine, we announced that we would expand the scope of our innovative process
development and manufacturing to all classes of viral vectors. The global
outsourced vector manufacturing supply market for lentiviral vector, AAV and
adenoviral vector is growing rapidly and is expected to reach
c.$2.8bn by 2026, and we see significant potential to build upon our success
with lentiviral vectors and capitalise on the opportunities available.
In line with this vector agnostic strategy, our recent transaction with
Homology Medicines has enabled us to further broaden our leading viral vector
capabilities into the large and fast-growing AAV segment. We believe that the
transaction will accelerate our strategy of becoming an innovative global
viral vector leader, providing solutions to cell and gene therapy biotech and
biopharma companies for their process development and manufacturing needs
across key viral vectors.
Our focus is now on the delivery of this strategy. Process development is one
of the most critical success factors to ensure the efficacy, safety,
affordability and wider applicability of cell and gene therapies and therefore
an increased focus on this is a natural evolution for the company.
Over the long-term, our process development has the potential to help build a
proprietary pipeline of assets for which we will seek external funding and
continue to progress in-house before seeking partners to take the products
into clinical trials.
Governance
As a FTSE 250 company, best practice corporate governance is paramount to
Oxford Biomedica and the Board plays a key role in promoting the long-term
success of the Company, ensuring that we maintain sustainable practices.
Alongside this, the Group is firmly committed to strengthening and
diversifying the Board. During 2021 we made significant strides enhancing
diversity, moving from one to three women on the Board, of whom two chair
committees that advise the Board.
In March, Professor Dame Kay Davies, a world-renowned geneticist and Dr. Lee's
Professor of Anatomy Emeritus at Oxford University, was appointed to the Board
as an Independent Non-Executive Director. Dame Kay Davies is the Chair of our
newly formed Science and Technology Advisory Committee, an advisory committee
to the Board on science and technology matters which reaffirms our commitment
to innovation. The Board was further bolstered in July when we appointed Dr.
Michael Hayden as a Non-Executive Director. Dr. Hayden has decades of
industry defining scientific contributions and achievements, including
developing the world's first approved gene therapy treatment. In December,
the Board was pleased to appoint Catherine Moukheibir to the Board as
an Independent Non-Executive Director. Ms. Moukheibir has
extensive international experience in finance, capital markets and life
sciences and currently serves on the board of six other companies. Post
period end, we added a fourth female Non-executive Director, with Namrata P
Patel joining the Board in April 2022. Ms Patel brings extensive international
experience in manufacturing and product supply and Environmental Social and
Governance (ESG) matters.
In addition to chairing the Board, I assumed the role of Interim CEO of the
Company in January 2022, after John Dawson announced his decision to retire
after more than 13 years of service, which was closely followed by the
announcement of the transformational deal with Homology Medicines. On behalf
of the Board, I would like to express my sincere appreciation for John
Dawson's leadership and achievements as CEO during his lengthy tenure. His
successful career and pivotal role in the manufacture of the life-saving
adenovirus-based Oxford AstraZeneca COVID-19 vaccine were recognised at the
end of 2021 by a much-deserved Commander of the Order of the British Empire
(CBE) award for services to UK Life Science. Under his leadership, Oxford
Biomedica has grown into a global industry leader in viral vectors and its
market cap has multiplied over 20 times and delivered multiple high-value
partnerships alongside successfully manufacturing the adenovirus-based Oxford
AstraZeneca COVID-19 vaccine at unprecedented speed. We have commenced a
formal process to appoint a successor who will lead the Group through its next
phase of growth.
During the period two long-standing Board members also stepped down after many
years of service. Martin Diggle, a Partner at Vulpes Investment Management
stepped down as a Non-Executive Director in February after nearly nine years
of service and Dr. Andrew Heath, Non-Executive Director, retired from the
Board at the AGM in May, after more than eleven years of service to the Group.
We thank them both for their contribution.
In August 2021, Matthew Treagus, Chief Information Officer (CIO) joined the
Senior Executive Team as a permanent member, having worked with Oxford
Biomedica on the development and implementation of its digital strategy since
2019. This announcement reflects the Group's commitment to driving its
digitalisation agenda. Dave Backer joined the Senior Executive Team in
September 2021 as Chief Commercial Officer (CCO), broadening the Group's
business development expertise as it expands beyond lentiviral manufacturing
into other vectors, including adeno and AAV.
The Group remains committed to its role as a responsible business and
continues work on implementing its ESG, which is focused on five pillars:
People; Community; Environment; Innovation and Supply Chain. Throughout 2021,
the Group made progress towards strengthening its involvement in the local
community adding a further 16 apprentices across the organisation and raising
£17,000 for our chosen charity SeeSaw. We are pleased with the progress we
are making towards reducing our environmental footprint and work alongside our
team of 40 environmental representatives to identify areas where further
efficiencies can be made. The Group endeavours to gain an environmental
certification as part of its sustainability plan.
Summary
The Board expects 2022 to be a year of growth for the Group, excluding the
one-time impact of the Oxford AstraZeneca COVID-19 vaccine. We continue to
build our global footprint as a vector-agnostic provider of life-changing
therapies to a group of high calibre customers globally. In particular, the
Group is expected to increase its presence in the strategically important US
market, following the transformational transaction with Homology Medicines,
which has culminated in the establishment of Oxford Biomedica Solutions. This
transaction has provided Oxford Biomedica with entry into the high value AAV
market, which is expected to grow at a CAGR of 25% over the next five years.
Innovation in cell and gene therapy remains key to our strategy, where our
platforms and capabilities are sought after by global customers. Underpinned
by our purpose of saving lives, the innovative work Oxford Biomedica is doing
will allow our customers, the biotech and biopharma industry to deliver the
breakthroughs of cell and gene therapies which have the amazing potential to
cure patients.
Dr. Roch Doliveux
Chair
2021 Performance Review
Introduction
2021 was a year of significant progress for Oxford Biomedica, as reflected by
the strong financial performance during the year, largely driven by the
Group's significant efforts to produce COVID vaccines for AstraZeneca. Over
the course of the period, Oxford Biomedica has continued to deliver on its
strategy of becoming a global viral vector leader and further demonstrated its
world-leading expertise in cell and gene therapy. Now, more than ever, the
Group is in a strong position to enable its customers to bring their new
life-changing therapies to patients.
COVID-19 vaccine and agreement with AstraZeneca
Throughout the year, Oxford Biomedica continued the large-scale commercial
manufacture of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine at the
Group's Oxbox facility. Manufacturing was at full pace in three manufacturing
suites running at 1000L scale to maximise production of the vaccine. In May
2021, the Group announced that AstraZeneca had committed to an increase in the
number of batches required from Oxford Biomedica in the second half of 2021.
As a result of this, cumulative revenues from AstraZeneca by the end of 2021
were in excess of £100 million, contributing to significant growth in Group's
revenues and Operating EBITDA in the year ending 2021.
Oxford Biomedica has a three-year master supply and development agreement with
AstraZeneca for large-scale commercial manufacture of the adenovirus-based
Oxford AstraZeneca COVID-19 vaccine, announced in September 2020. The Group
has successfully manufactured over 100 million doses of the adenovirus-based
Oxford AstraZeneca COVID-19 vaccine, working alongside AstraZeneca and other
manufacturing organisations internationally to enable the supply of COVID-19
vaccines on a global scale. The worldwide network has now been responsible for
the manufacture of over 2.9 billion doses of COVID-19 vaccines to more than
180 countries, supporting significant unmet demand for vaccines in high,
middle and low income countries.
In June 2020, the Group announced a five-year collaboration agreement with
Vaccines Manufacturing and Innovation Centre (VMIC) 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 purchased this
equipment to allow for longer term use, which consisted of a capital outlay of
£3.8 million paid in the first half of 2021. The collaboration was terminated
by mutual consent in April 2022 following the sale of VMIC to Catalent.
Novartis
Throughout 2021, the Group continued to deliver under its partnership with
Novartis for the commercial and clinical supply of lentiviral vectors for
Kymriah® (tisagenlecleucel, formerly CTL019) and Novartis' broader CAR-T
portfolio. The Novartis collaboration was extended in December 2021, building
on the strategic partnership the Group has had with them since 2014. Under the
terms of the updated agreement, Oxford Biomedica regained the rights to its
LentiVector® platform relating to three CAR-T targets, including CD19
targeted therapies. In addition, Novartis has been granted additional
flexibility in the ordering of GMP batches across Oxford Biomedica's multiple
GMP facilities but will no longer have a minimum order commitment. Oxford
Biomedica continues to be Novartis' sole global supplier of lentiviral vector
for Kymriah®.
Global roll out of Kymriah® in both paediatric and young adult relapsed or
refractory B-cell acute lymphoblastic leukaemia (r/r ALL) and relapsed or
refractory diffuse large B-cell lymphoma (r/r DLBCL) indications continued to
expand with more than 365 qualified treatment centres in 30 countries having
coverage for at least one indication. Kymriah® continued to see double-digit
growth showing 24% growth in the 2021 financial year, over the 2020 financial
year, reporting sales in 2021 of $587 million.
Indication expansion for Kymriah® continues to progress well, and in October,
Novartis filed regulatory submissions for Kymriah® in relapsed or refractory
follicular lymphoma (r/r FL) in the US and EU (with a positive CHMP opinion
received in March 2022).
The Group is currently working with Novartis on four partner programmes, in
addition to Kymriah®.
Boehringer Ingelheim
During 2021, Oxford Biomedica's partnership with Boehringer Ingelheim
continued to progress through development. In April, Oxford Biomedica
announced that it had entered into a new three-year development and supply
agreement with Boehringer Ingelheim for the manufacture and supply of various
types of viral vectors, demonstrating the versatility of the Group's platform.
In October, the Group announced that Boehringer Ingelheim had exercised its
option to license Oxford Biomedica's lentiviral vector technology to
manufacture, register and commercialise BI 3720931, a lentiviral vector based
gene therapy for the treatment of cystic fibrosis (in an inhaled formulation).
The agreement builds on the existing partnership established between the two
companies in 2018 with the UK Cystic Fibrosis Gene Therapy Consortium and IP
Group to develop BI 3720931 as a long-lasting therapeutic option for patients
with cystic fibrosis. Boehringer Ingelheim is accelerating the start of
First-in-Human studies as much as possible in close collaboration with
patients, investigators and regulators.
Under the terms of the agreement originally announced in 2018, the Group
received and recognised a £3.5 million cash option exercise fee and is
entitled to receive a further £27.5 million in development, regulatory and
sales milestones, in addition to tiered low single digit royalties on net
sales.
Immatics
In November, OXB signed a new license and supply agreement with Immatics, a
Tübingen, Germany-based clinical-stage biopharmaceutical company active in
the discovery and development of T cell-redirecting cancer immunotherapies.
The agreement grants Immatics a non-exclusive licence to Oxford Biomedica's
LentiVector® platform for its application in select TCR-T programmes and puts
in place a three-year Clinical Supply Agreement.
Arcellx
In December, OXB signed a license and supply agreement with Arcellx, a
clinical-stage cell therapy company developing treatments for patients with
cancer and other incurable diseases. The agreement grants Arcellx a
non-exclusive licence to Oxford Biomedica's LentiVector® platform for its
application in select Arcellx CAR-T programmes, and also puts in place a
three-year clinical supply agreement, for which the Group will receive
payments related to the development and manufacturing of lentiviral vectors
for use in clinical trials. In addition, the Group will receive payments for
the manufacture and supply of lentiviral vectors for commercial use. The Group
is currently working on two programmes with Arcellx, including Arcellx's lead
CAR-T programme CAR-T ddBCMA.
Further partner updates
The Group's collaborations with Juno Therapeutics Inc. (a wholly owned
subsidiary of Bristol Myers Squibb Inc.) and Beam Therapeutics continue to
progress through development. The combined revenues from these two
partnerships are expected to continue to provide a meaningful contribution to
commercial development revenues.
Sanofi
In March, the Group announced that Sanofi had given notice of their intent to
terminate the 2018 collaboration and license agreement for the process
development and manufacturing of lentiviral vectors to treat haemophilia. The
Group expects that the impact on revenue will be negligible over the coming 18
month period, and continues to believe that a lentivector-based approach to
treat haemophilia is a very attractive opportunity.
Orchard Therapeutics
The MPS-IIIA (OLT-201) partner programme with Orchard is currently being
evaluated in an ongoing proof-of-concept clinical trial. Clinical data,
including early clinical outcomes of cognitive function, is expected by year
end 2022.
In May, Orchard Therapeutics announced that it would be returning the rights
to their OTL-101 programme for ADA-SCID to the academic originators of the
programme, following its decision to deprioritise that programme in a prior
portfolio review.
While this news means that Oxford Biomedica will no longer be working with
Orchard on the OTL-101 programme, the Group awaits further information on
whether it can be of assistance to the academic partners at UCLA and UCL.
Cabaletta Bio
Post period end in January 2022, Oxford Biomedica announced a license and
supply agreement with Philadelphia, US-based Cabaletta Bio for their lead
product candidate, DSG3-CAART. DSG3-CAART is being evaluated in the
DesCAARTes™ Phase 1 clinical trial as a potential treatment for
patients with Mucosal Pemphigus Vulgaris (mPV), and is designed to selectively
target and kill the B cells that produce DSG3 antibodies while preserving the
healthy B cells critical to immune function. No DLTs were observed in the
first four cohorts of the trial with the 28-day safety data for the fifth
cohort expected to be announced in mid-2022.
Sio Gene Therapies (formerly Axovant Gene Therapies)
Post-period end in February 2022, Oxford Biomedica announced that Sio Gene
Therapies had given notice that they intend to return the global rights for
AXO-Lenti-PD which they had originally out-licensed in 2018 and to terminate
their programme in Parkinson's Disease. The Group expects that the impact on
revenue will be negligible through at least 2022 and 2023. Oxford Biomedica
plans to out-license the programme in due course to a suitable partner with
resource capabilities and funding to further develop this asset.
Innovation and platform development
Innovation and the development of the platform are core to Oxford Biomedica's
goal of industrialising viral vector manufacturing not just with lentiviral
vectors but across all viral vector classes. By industrialising viral vector
production thereby reducing the cost and improving quality attributes through
innovation, the Group will broaden the therapeutic indications that are
amenable to treatment with cell and gene therapy. It is expected that the
reduction in cost will help drive adoption by payors into indications where
there are far larger numbers of patients, by bringing down the overall cost
per patient treated.
Multiple elements of IP and innovation are relevant across all viral vector
classes. Development of technologies such as TRiPSystem™, SecNuc™,
LentiStable™ and U1 and U2, along with the corresponding IP, continue to
move ahead. A number of the Group's platform technologies developed for
lentiviral vectors such as TRiPSystem™, SecNuc™ and perfusion technology,
can also be used commercially for AAV. The Group also continues to utilise
automation and the use of robotics, artificial intelligence and machine
learning to further drive productivity improvements.
Process C, which incorporates enhancers (such as U1, U2) and perfusion coupled
with improvements in downstream processing into the manufacturing process is
now proven at 200L scale in GMP, with general roll out expected in the first
half of 2022, thereby enabling process D utilising LentiStable™ technology.
The Group has additionally started development work in the area of in vivo
CAR-T, which the Group believes would offer greater patient access and
superior efficacy to existing treatment options.
R&D collaborations
During the year, the Group continued to progress R&D to develop next
generation manufacturing processes for viral vectors. In October 2021, the
Group entered into a research collaboration with Circularis Biotechnologies to
identify novel tissue specific promoters for incorporation into the Group's in
vivo lentiviral gene therapy products.
Post period end, in January 2022, the Group announced a new R&D
partnership with Virica Biotech, a leading developer of solutions for scaling
of viral medicines, to improve the yield and production efficiency of the
Group's lentiviral vector manufacturing platform using Virica's Viral
Sensitizers (VSEs™).
OXB also entered into a research collaboration with Isolere Bio, a
bioprocessing company that provides a platform technology for tackling
downstream inefficiencies in the manufacturing of biologics. By bringing
together both companies' technologies, the research collaboration aims to
develop an easily scalable purification process for lentiviral vectors with
significantly improved yields and vector quality.
Finally, in March 2022, the Group announced a new agreement with BiologIC
Technologies, the biocomputer computer, to collaborate on a novel biocomputer
system for viral vector development.
These R&D collaborations with companies developing innovative solutions
for viral vector manufacturing, represent the Group's ongoing commitment to
continuously innovate and improve Oxford Biomedica's LentiVector® platform,
with the goal of including these technologies in the Group's gene therapy
products and making these proprietary technologies available to its customers
in the future.
Proprietary product pipeline
The Group concluded an internal review of its proprietary products pipeline in
2021, and following this, has a select set of products being developed for
which external funding will be sought. This includes the gene therapy
programme for Parkinson's disease, AXO-Lenti-PD, which is available for
out-licensing.
The most advanced programme, OXB-302, which targets 5T4, is currently being
investigated in Acute Myeloid Leukaemia with preparation for clinical trial
initiation ongoing. 5T4 is an oncofoetal antigen specifically expressed on the
cell surface of most cancers including AML. The restricted expression profile
of 5T4 on normal tissues combined with its broad expression on tumour cells
(including cancer stem cells) makes 5T4 an attractive target.
OXB-302 is a second-generation CAR-T product generated via an optimised
lentiviral vector, manufactured utilising the latest generation of vector
processing, and a T-cell transduction protocol and expression process that
generates more potent cells than more conventional CAR-T production processes.
OXB-302 has demonstrated potent in vitro and in vivo activity against a panel
of human solid and liquid tumour cell lines and the Group believes it has high
commercial potential for the treatment of multiple liquid and solid tumours.
Work has also been initiated on assets for liver indications including
OXB-401, where preclinical work began in 2021. The potential use of lentiviral
vectors in liver gene therapy is recognised as highly promising due to the
potential for one-off therapies giving long term benefits.
The Group has chosen to deprioritise OXB-203, OXB-204 and OXB-103 at this
time.
Facilities and capacity expansion
In January 2021, the Group was delighted to host the Prime Minister, the Rt.
Hon Boris Johnson MP, to formally open the Oxbox manufacturing facility
following MHRA approval of four manufacturing suites during 2020, three of
which were dedicated to running at 1000L scale for adenovirus-based Oxford
AstraZeneca COVID-19 vaccine production with the fourth suite dedicated to
200L lentiviral vector manufacturing. The first fill / finish suite has been
qualified and regulatory submission to the MHRA has been made, with approval
and start of commercial use expected in the second half of 2022.
Design work for the next phase of Oxbox development, including fit out of the
fallow area, is progressing. This will provide additional flexible
manufacturing capacity for a variety of viral vector based products, including
cell and gene therapy products, vaccines and other advanced therapeutics at
2,000L scale, and will be funded by the proceeds of the £50 million equity
investment received from Serum Life Sciences Ltd.
In June 2021, the Group was granted planning permission for redevelopment of
the Windrush Innovation Centre (WIC) site. The new WIC building will provide
next generation laboratory facilities, with this project anticipated to
commence in the second half of 2022.
Conversion of office space into GMP grade laboratories at Windrush Court was
completed in the last quarter of 2021 and the laboratories are now in place to
meet expected near-term demand in commercial development and analytics.
Investment from Serum Life Sciences Ltd
In September, Oxford Biomedica announced that Serum Life Sciences Ltd (a
subsidiary of Serum Institute of India) agreed to invest just over £50
million in the Group in return for new ordinary shares representing 3.9% of
the share capital at the time.
The proceeds of the investment by Serum Life Sciences are being used to fund
the development of the fallow area at Oxbox, the Group's 84,000 sq. ft
manufacturing facility based in Oxford, UK, and will allow Oxford Biomedica to
continue to expand the capacity of the Group's world class facilities in
anticipation of growing demand for the Group's capabilities.
Oxford Biomedica has recently signed a memorandum of understanding with Serum
Life Sciences Ltd, granting them the right of first refusal to the exclusive
use of one of two 2,000L bioreactor facilities that Oxford Biomedica is
building in the expansion of its Oxbox manufacturing facility. Exclusive use
will require Serum Life Sciences to commit to a minimum contract value per
year for up to ten years.
Transaction with Homology Medicines, Inc and creation of Oxford Biomedica
Solutions
In January 2022, Oxford Biomedica announced that it had entered into an
agreement with Homology Medicines to establish Oxford Biomedica Solutions, a
high-performing, full scope AAV manufacturing and innovation business in
Boston, US. The transaction completed on 10th March 2022 and is immediately
accretive to the Group's revenue growth.
The newly formed company will offer a scalable, high quality manufacturing
platform to global customers, including Homology Medicines, through a
multi-year supply agreement as a preferred customer with minimum contracted
revenue of approximately $25 million ($19 million) from Homology Medicines for
the first twelve months.
Under the agreement, Oxford Biomedica US, Inc. acquired an 80% ownership
interest in the newly formed AAV focused manufacturing and innovation business
for $130 million (£97 million) cash consideration, and a $50 million (£37
million) capital injection into Oxford Biomedica Solutions to fund growth.
Oxford Biomedica Solutions now includes approximately 125 technical operations
employees based at a state of the art AAV manufacturing facility with
approximately 25,000 sq. ft of GMP space.
Tim Kelly, former Chief Operating Officer of Homology Medicines joined Oxford
Biomedica Solutions as Chief Executive Officer and Chair of its Board of
Directors.
Upon completion, the transaction immediately expanded Oxford Biomedica's suite
of viral vector capabilities into the large and growing AAV segment, as well
as giving Oxford Biomedica a US presence within close proximity to current and
potential biotech and pharma customers.
Outlook
The Group targets growth in manufacturing and commercial development revenues
from both new and existing lentiviral vector customers as well as new AAV
revenues from US-based Oxford Biomedica Solutions. Currently, total revenues
in 2022 are expected to be lower than in 2021 (but significantly ahead of
2020) due to a pause in vaccine manufacturing activity while discussions with
AstraZeneca continue on a potential extension of the supply agreement.
Oxford Biomedica Solutions will contribute minimum revenues of c.US$25 million
for the first twelve months (post deal completion in March 2022) from its
multi-year supply agreement with Homology Medicines. With Oxford Biomedica
Solutions full scope AAV manufacturing and innovation business currently
operating at approximately one third of its overall capacity, the Group is
committed to securing new AAV customer partnerships within the first 12 months
of operation.
The Group expects to be loss-making on an Operating EBITDA level in 2022,
after consolidation of Oxford Biomedica Solutions. This is driven by one-off
costs for integrating the new business, as well as R&D costs, which are
targeted to be higher than in 2021 as the Group invests in innovation.
Capital expenditure is targeted to be higher than 2021. However the Group
intends to implement a cautious strategy when planning significant new
projects.
The Group's growing customer base and new base in the US puts it in an ideal
position to maximise growth and achieve its goal of becoming an innovative
global viral vector leader.
FINANCIAL REVIEW
Exceptional results
In 2021 the Group performed well from an operational perspective,
manufacturing the adenovirus-based Oxford AstraZeneca COVID-19 vaccine in
three of its manufacturing suites across the whole year (excluding maintenance
periods) in order to meet its customer obligations. As a result, batch volumes
were up 210% from the prior year, and this resulted in exceptional revenue
growth of 63% in 2021. Bioprocessing and commercial development activities
continued as normal, albeit with some continued adjustments in terms of social
distancing, mask wearing and employees working from home where possible due to
the COVID-19 pandemic.
2021 was a very successful year for the Group in terms of revenue generation.
In terms of customer agreements, OXB signed new license and supply agreements
with Arcellx, Cabaletta Bio and Immatics. These partnerships with leaders in
the CAR-T, cancer and autoimmune disease fields builds on the longstanding
partnerships with Novartis and Juno Therapeutics/Bristol Myers Squibb, as well
as the more recently announced partnership with Beam Therapeutics.
In April 2021, OXB also signed a new three-year development and supply
agreement with Boehringer Ingelheim for the manufacture and supply of various
types of viral vectors to support Boehringer Ingelheim's ongoing development
programmes, including potential future programmes.
In December 2021, OXB extended the terms of its commercial supply agreement
with Novartis to the end of 2028. The Group also regained the exclusive rights
to its LentiVector® platform with regards to three CAR-T targets, including
CD19 targeted therapies. This now allows the Group to work with pharmaceutical
and biotech partners other than Novartis in these areas. In exchange for the
return of these exclusive rights, Novartis has been granted additional
flexibility in the ordering of GMP batches and will no longer have a minimum
order commitment. OXB continues to work on multiple CAR-T programs with
Novartis, including Kymriah®, from which the Group earns manufacturing
revenues, process development fees and royalties on net sales.
In March 2021, Sanofi gave notice of their intention to terminate the
collaboration and license agreement originally signed in 2018 for the process
development and manufacturing of lentiviral vectors to treat haemophilia. The
collaboration ended amicably and the Group remains open to working with Sanofi
again in the future should an opportunity arise.
In January 2022, the Group was informed that Sio Gene Therapies intends to
return the global rights for AXO-Lenti-PD, and that it would cease work on
this gene therapy programme in Parkinson's Disease due to a constraint on its
resource requirements. All rights will be returned to Oxford Biomedica at no
cost to the Group. The Group plans to out-license the programme again in due
course to a suitable partner with resource capabilities and funding to further
develop this asset.
In the first half of 2022, OXB's 18-month supply agreement (under a three-year
master supply and development agreement) for manufacture of the
adenovirus-based Oxford AstraZeneca COVID-19 vaccine will end. Discussions are
ongoing with AstraZeneca on potential extension of this supply agreement while
AstraZeneca completes its supply chain planning. The Group announced the
existing three-year master supply and development agreement with AstraZeneca
in September 2020 and since then has successfully manufactured over 100
million doses of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine. We
remain committed to resuming vaccine manufacture and supporting AstraZeneca to
enable the supply of COVID-19 vaccines on a global scale, and will update the
market when further information is available.
In March 2022, the Group acquired an 80% ownership interest in a newly formed
AAV focused manufacturing and innovation business, Oxford Biomedica Solutions,
for $180 million (£134 million), with Homology Medicines Inc as a 20% owner.
As part of the financing arrangements, the Group raised gross proceeds of £80
million through a placing of shares, and secured a short term loan facility of
$85 million (£64 million) which is repayable 12 months after completion of
the acquisition. Oxford Biomedica Solutions is expected to generate a minimum
first 12 months contracted revenues of approximately US$25 million from
Homology under a three-year manufacturing and supply agreement.
In September 2021, the Group also raised £50 million of new equity, through a
strategic investment by Serum Life Sciences Ltd, a subsidiary company of Serum
Institute India. These funds will be used to develop the fallow area at its
Oxbox manufacturing facility into a flexible advanced manufacturing space,
including the validation of several independent cGMP suites to exploit new
opportunities in the cell and gene therapy market.
Overview
The Group saw a 63% increase in revenues which was driven by the volume of the
adenovirus-based Oxford AstraZeneca COVID-19 vaccine. This was offset by a
decrease in commercial development revenues from existing customers
AstraZeneca, Novartis and Orchard as activities transitioned to clinical and
commercial batch manufacture. Revenues from license fees, milestones and
royalties, which included recognition of the £4.0 million license fee from
Boehringer Ingelheim, decreased by 25%.
Operating costs, including Cost of Sales, grew by 31%, and by 32% when
non-cash items(2) are excluded. Manpower, raw material and facility costs have
increased due to the cost of manufacturing the adenovirus-based Oxford
AstraZeneca COVID-19 vaccine at full capacity throughout the year, as well as
the full year effect of the Group's investments in the employees required to
maintain operations at this level. Headcount rose from 673 at the end December
2020 to 815 at the end of 2021.
The Group made an Operating EBITDA(1) profit of £35.9 million, an improvement
of £28.5 million from the prior year. Once non-cash items(2) are added back,
the Group made an Operating profit of £20.8 million, an improvement of £26.5
million on the prior year.
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation,
revaluation of investments and assets at fair value through profit and loss,
and Share Based Payments) is a non-GAAP measure often used as a surrogate for
operational cash flow as it excludes from operating profit or loss all
non-cash items, including the charge for share options. However, deferred
bonus share option charges are not added back to operating profits in the
determination of Operating EBITDA as they may be paid in cash upon the
instruction of the Remuneration Committee. A reconciliation to GAAP measures
is provided on page 18.
2 Non-cash items include depreciation, amortisation, revaluation of
investments, fair value adjustments of assets held at fair value through
profit and loss and the share based payment charge. A reconciliation to GAAP
measures is provided on page 18.
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 a comprehensive, 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 and accounts 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 2021 but IAS 18 during 2015 to 2017).
£m 2021 2020 2019 2018 2017 2016 2015
Revenue
Bioprocessing/commercial development 128.4 68.5 47.3 40.5 31.8 22.6 11.3
Licences, milestones and royalties 14.4 19.2 16.8 26.3 5.8 5.2 4.6
142.8 87.7 64.1 66.8 37.6 27.8 15.9
Operations
Operating EBITDA(1) 35.9 7.3 (5.2) 13.4 (1.9) (7.1) (12.1)
Operating profit/(loss) 20.8 (5.7) (14.5) 13.9 (5.7) (11.3) (14.1)
Cash flow
Cash generated from/(used in) operations 24.5 (3.9) (6.6) 9.2 (1.5) (5.9) (14.9)
Capex(2) 9.5 13.4 25.8 10.1 2.0 6.4 16.6
Cash inflow/(burn)(3) 16.0 (7.8) (26.3) (1.9) (9.8) (11.5) (29.8)
Financing
Cash 108.9 46.7 16.2 32.2 14.3 15.3 9.4
Loan - - - 41.2 36.9 34.4 27.3
Non-Financial Key Indicators
Headcount
Year-end 815 673 554 432 321 256 231
Average 759 609 500 377 295 247 196
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation,
revaluation of investments and assets at fair value through profit and loss,
and Share Based Payments) is a non-GAAP measure often used as a surrogate for
operational cash flow as it excludes from operating profit or loss all
non-cash items, including the charge for share based payments. However,
deferred bonus share option charges are not added back to operating profits in
the determination of Operating EBITDA as they may be paid in cash upon the
instruction of the Remuneration Committee. A reconciliation to GAAP measures
is provided on page 18.
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 20.
3 Cash inflow/(burn) is net cash generated from operations plus net interest
paid plus capital expenditure. A reconciliation to GAAP measures is provided
on page 20.
Revenue
Revenue increased by 63% to £142.8 million (2020 £87.7 million) due largely
to the volume of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine
batches manufactured for AstraZeneca. Revenue generated from
bioprocessing/commercial development increased by 87% to £128.4 million (from
£68.5 million in 2020). The main contributor to growth in 2021 has been the
revenues generated from increased bioprocessing batches produced for
AstraZeneca as part of the adenovirus-based Oxford AstraZeneca COVID-19
vaccine manufacturing efforts.
Revenues from license fees, milestones and royalties of £14.4 million (2020:
£19.2 million), which included recognition of the £4.0 million license fee
from Boehringer Ingelheim, decreased by 25%. In 2020 a license fee from Juno
Therapeutics/Bristol Myers Squibb of £7.8 million ($10 million) was
recognised.
Due to the signature of a number of license, development and supply agreements
during the year, the Group's customer base has continued to diversify.
However, the largest portion of its revenues in 2021 came from the manufacture
of the Oxford AstraZeneca COVID-19 vaccine under the development and supply
agreement.
£m 2021 2020 2019 2018 2017 2016 2015
Revenue 142.8 87.7 64.1 66.8 37.6 27.8 15.9
Operating EBITDA
£m 2021 2020 2019 2018 2017 2016 2015
Revenue 142.8 87.7 64.1 66.8 37.6 27.8 15.9
Other income 0.9 0.8 0.9 1.1 1.8 3.0 2.9
Total expenses (107.8) (81.2) (70.2) (54.5) (41.3) (37.9) (30.9)
Operating EBITDA(1) 35.9 7.3 (5.2) 13.4 (1.9) (7.1) (12.1)
Non cash items(2) (15.1) (13.0) (9.3) 0.5 (3.8) (4.2) (2.0)
Operating profit/(loss) 20.8 (5.7) (14.5) 13.9 (5.7) (11.3) (14.1)
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation,
revaluation of investments and assets at fair value through profit and loss,
and Share Based Payments) is a non-GAAP measure often used as a surrogate for
operational cash flow as it excludes from operating profit or loss all
non-cash items, including the charge for share based payments. However,
deferred bonus share option charges are not added back to operating profits in
the determination of Operating EBITDA as they may be paid in cash upon the
instruction of the Remuneration Committee. A reconciliation to GAAP measures
is provided on page 17.
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
17.
Revenue increased by 63% in 2021 whilst the Group's cost base grew by 32% to
£107.8 million due to an increased investment in raw materials for batches of
vaccine produced, as well the full year effect of the Group's investments in
people, equipment and operations required for the manufacturing of the
adenovirus-based Oxford AstraZeneca COVID-19 vaccine. The Operating EBITDA
profit of £35.9 million is £28.5 million higher than the £7.3 million
profit generated in 2020 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 below.
£m 2021 2020 2019 2018 2017 2016 2015
Research and development(1) 40.2 29.7 22.6 18.0 21.6 24.3 20.3
Bioprocessing costs 7.2 10.7 7.4 1.2 - - -
Administrative expenses 15.1 11.3 11.9 7.4 7.3 6.0 6.7
Operating expenses 62.5 51.7 41.9 26.6 28.9 30.3 27.0
Depreciation (12.4) (9.8) (5.8) (4.3) (4.1) (3.3) (1.3)
Amortisation - - - - (1.2) (0.3) (0.4)
Share option charge (2.5) (2.4) (1.6) (1.1) (0.7) (0.6) (0.2)
Adjusted Operating Expenses(2) 47.6 39.5 34.5 21.2 22.9 26.1 25.1
Cost of sales 60.2 41.7 35.7 33.3 18.4 11.8 5.8
Total Expenses(3) 107.8 81.2 70.2 54.5 41.3 37.9 30.9
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.
£m 2021 2020 2019 2018 2017 2016 2015
Raw materials, consumables and other external bioprocessing costs 34.2 22.0 22.8 18.3 13.2 9.3 6.1
Manpower-related 55.0 45.3 35.2 26.7 19.3 17.4 13.6
External R&D expenditure 2.5 1.4 1.4 1.9 1.7 2.8 3
Other costs 21.2 17.1 12.0 7.6 7.1 8.4 8.2
RDEC tax credit (5.1) (4.6) (1.2) - - - -
Total expenses 107.8 81.2 70.2 54.5 41.3 37.9 30.9
- Raw materials, consumables and other external bioprocessing costs have
increased substantially due to increased raw material cost as a result of the
large volumes of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine
batches produced.
- The increase in manpower-related costs is due to the increase in the average
headcount from 609 in 2020 to 759 in 2021. Additional investments were made in
staff required for vaccine manufacturing, as well as some required investment
in back-office staff.
- External R&D expenditure increased to normal levels as compared to 2020,
as activities continued throughout 2021, with limited activities having taken
place in the first half of 2020.
- Other costs were higher as a result of increased operational and facility
costs incurred due to the continuous running of the Oxbox manufacturing
facility during the year, as well as the additional laboratory space put in
place at Windrush Court. Other items included due diligence fees incurred in
establishment of an 80% ownership interest in Oxford Biomedica Solutions,
offset by an insurance payment received with regards to a previous customer
claim, and
- The RDEC credit has increased to £5.1 million (2020: £4.6 million) due to
an increase in eligible research and development expenditure, mainly increases
in employee cost, raw materials, consumables and qualifying external research
and development expenditure.
Operating and Net profit/(loss)
£m 2021 2020 2019 2018 2017 2016 2015
Operating EBITDA 35.9 7.3 (5.2) 13.4 (1.9) (7.1) (12.1)
Depreciation, amortisation and share option charge (14.9) (12.2) (7.4) (5.5) (6.1) (4.2) (2.0)
Change in fair value of assets at fair value through profit and loss (0.2) (0.8) (1.9) 6.0 2.3 - -
Operating profit/(loss) 20.8 (5.7) (14.5) 13.9 (5.7) (11.3) (14.1)
Interest (0.9) (0.8) (5.4) (6.2) (9.3) (4.9) (1.9)
Taxation (0.9) 0.3 4.8 2.5 2.7 3.7 4.0
Foreign exchange revaluation (non-cash) - - (1.0) (2.7) 3.3 (4.1) (1.0)
Net profit/(loss) 19.0 (6.2) (16.1) 7.5 (9.0) (16.6) (13.0)
In arriving at Operating profit/(loss) it is necessary to deduct from
Operating EBITDA the non-cash items referred to above. The depreciation charge
was higher in 2021 due to the full year impact of Oxbox becoming operationally
active, conversion of one of the Windrush facility floors into laboratories,
and then also due to additional bioprocessing equipment obtained to allow
vaccine manufacturing. The Orchard Therapeutics asset held at fair value
through profit and loss decreased by £0.2 million due to negative share price
movements. The interest charge of £0.9 million was slightly higher due to
additional interest on IFRS 16 leased bioprocessing equipment. The corporation
tax expense increased due to a corporation tax charge expected on the taxable
profits made by the Group during the period.
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® platform.
II. The "Product" segment, which includes the costs of
researching and developing new gene therapeutic product candidates.
£m Platform Product Total
2021
Revenue 142.7 0.1 142.8
Operating EBITDA 45.3 (9.4) 35.9
Operating profit/(loss) 31.4 (10.6) 20.8
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)
The Platform segment in 2021 saw an increase in revenue of 64% from £87.1
million to £142.7 million due to the volume of the adenovirus-based Oxford
AstraZeneca COVID-19 vaccine batches manufactured for AstraZeneca as part of
the COVID-19 pandemic efforts. This was offset by a decrease in commercial
development revenues from existing customers AstraZeneca, Novartis and Orchard
as activities transitioned over to more clinical and commercial batch
manufacture. Operational results were very positively impacted by the large
revenue increases, but especially the fact that the Oxbox manufacturing
facility operated at almost full capacity for most of the year which meant
that revenues more than offset the additional investment in headcount and
facilities, resulting in an Operating EBITDA profit of £45.3 million, and an
operating profit of £31.4 million. The Group will target increased
bioprocessing volumes and commercial development revenues from its customer
base in the coming year whilst recognising that the adenovirus-based Oxford
AstraZeneca COVID-19 vaccine volumes are not expected to be at the same levels
as seen during 2021.
The Product segment has generated revenues of £0.1 million (2020: £0.6
million) and an Operating EBITDA loss and Operating loss of £9.4 million and
£10.6 million respectively (2020: loss of £6.6 million and £7.7 million
respectively). Clinical development revenues decreased due to lower levels of
activities performed for Sanofi and Sio Gene Therapies.
Cash flow
The Group held £108.9 million of cash at 31 December 2021, having begun the
year with £46.7 million. Significant movements across the year are explained
below.
Cash flow movements 2021 2020 2019 2018 2017 2016 2015
Operating profit/(loss) 20.8 (5.7) (14.5) 13.9 (5.7) (11.3) (14.1)
Non-cash items included in operating profit/(loss) 15.1 13.0 9.3 (0.5) 3.8 4.2 2.0
Operating EBITDA 35.9 7.3 (5.2) 13.4 (1.9) (7.1) (12.1)
Working capital movement (11.4) (11.2) (1.4) (4.2) 0.4 1.2 (2.8)
Cash generated from/(used in) operations 24.5 (3.9) (6.6) 9.2 (1.5) (5.9) (14.9)
R&D tax credit received 1.0 7.0 3.1 3.7 4.5 4.1 3.2
Net cash generated from/(used in) operations 25.5 3.1 (3.5) 12.9 3.0 (1.8) (11.7)
Interest paid, less received - - (3.3) (4.7) (10.8) (3.3) (1.5)
Sale of investment asset - 2.5 6.3 - - - -
Capex (9.5) (13.4) (25.8) (10.1) (2.0) (6.4) (16.6)
Net cash inflow/(burn) 16.0 (7.8) (26.3) (1.9) (9.8) (11.5) (29.8)
Net proceeds from financing 46.2 38.3 10.3 19.8 8.8 17.5 25
Movement in year 62.2 30.5 (16.0) 17.9 (1.0) 6.0 (4.8)
( )
- The operating profit in 2021 was £26.5 million better than the operating
loss of £5.7 million achieved in 2020 due to the large increase in revenues
only partially offset by increased operating expenses. These improved
operational results flowed through to the Operating EBITDA profit of £35.9
million (2020: £7.3 million profit).
- The negative working capital movement of £11.4 million is driven by a
decrease in Contract liabilities (£15.7 million) offset by receipt of the
2020 RDEC tax credit.
- The Group received £1.0 million R&D tax funding in 2021 in respect of
the 2020 claim, down £6.0 million from the prior year. The decrease from 2020
was due to the Group not being eligible to claim a tax credit under the
Governments SME tax credit scheme from 2020 onwards due to its growth in size.
- No funds were generated from the sale of shares in Orchard Therapeutics
(2020: £2.5 million), an asset held at fair value through profit and loss.
- Purchases of property, plant and equipment decreased from £13.4 million to
£9.5 million, mainly as a result of the main construction phase of the new
Oxbox manufacturing facility being completed in 2020, with capex in 2021
relating to the purchase of manufacturing and laboratory equipment, and the
fit out of laboratory space on one of the floors of the Windrush Court Head
Office.
- The net proceeds from financing during 2021 was £46.2 million, consisting
of the £50.0 million equity investment by Serum Life Sciences Ltd, share
option issues of £1.6 million, and reduced by lease payments of £5.4 million
in the year. £3.7 million of lease payments made consisted of bioprocessing
equipment leased for purposes of vaccine manufacturing which the Group now
owns, and
- The result of the above movements is a net increase in cash of £62.2
million from £46.7 million to £108.9 million.
Statement of financial position review
The most notable items on the Statement of financial position, including
changes from 31 December 2020, are as follows:
- Property, plant and equipment has decreased by £2.6 million to £69.7
million as depreciation of £12.4 million more than offset additions of £9.5
million, mainly purchases of manufacturing and laboratory equipment and the
fit out of laboratory space on one of the floors of the Windrush Court head
office.
- Inventories have increased from £6.9 million to £9.5 million due to
increased raw material balances as a result of forecasted bioprocessing
manufacturing activities.
- Trade and other receivables decreased from £57.5 million to £48.4 million
due to decreased levels of bioprocessing and process development activities
across the year end as compared to 2020.
- Trade and other payables decreased slightly from £19.7 million to £19.1
million, due to a lower level of operational activity at the year end as
compared to the prior year end.
- Contract liabilities decreased from £28.3 million in 2020 to £12.6 million
as the high level of funds received in advance for future bioprocessing and
process development activities at the end of 2020 was recognised as revenue
during 2021 as the performance obligations were met.
- Deferred Income decreased from £3.5 million in 2020 to £2.7 million due to
the release of amounts deferred as part of the Innovate UK capex grant
funding.
- Provisions increased by £0.4 million as a result of the recognition of an
increased liability for the costs of restoring leased properties to their
original state at the end of the lease term.
- Lease liabilities decreased from £13.8 million to £9.3 million due to
lease payments made in the year, but specifically, £3.7 million of lease
payments made relating to bioprocessing equipment leased for purposes of
vaccine manufacturing which the Group now owns.
Financial outlook
The Group will continue to target growth in its lentiviral vector
manufacturing volumes, as well as growth in commercial development activities.
Oxford Biomedica Solutions is expected to contribute AAV manufacturing and
commercial development revenues through services provided to Homology
Medicines during 2022. In addition, the Group will seek to secure both new
lentiviral vector and AAV customer relationships in line with the strategy to
become an innovative global viral vector leader, operating in all viral vector
types.
Vaccine manufacturing volumes are expected to be substantially lower during
2022 due to the end of the 18-month supply agreement with AstraZeneca, and a
pause in manufacturing activity while discussions continue on a potential
extension of this supply agreement. As a result, overall revenues are expected
to be lower than in 2021 (but significantly ahead of 2020) with an expected
corresponding impact on Operating EBITDA.
The Group will be focused on making select investments, aimed at accelerating
Oxford Biomedica Solutions commercial activities and build market share in the
fast-growing AAV market. As a result, administrative expenses are expected to
be significantly higher than in 2021 as the Group makes one-off expenditures
in building and integrating Oxford Biomedica Solutions. Bioprocessing costs
are also expected to be higher as the Group builds the AAV customer base.
The Group will continue to accelerate investment in R&D in order to
maintain its competitive edge and build a leading position in AAV, in addition
to lentiviral vectors. Apart from investments aimed at building long term
revenue growth, the Group will be closely monitoring its operating cost base
and headcount, which we expect to be affected by inflation in both salaries
and costs.
The integration of Oxford Biomedica Solutions is expected to be ongoing during
the year and fully completed within 12 months. The consolidation of this
initially loss-making part of the Group is expected to result in the Group
being loss-making on an Operating EBITDA level in 2022, however with
significant growth targeted in 2023.
The contracts signed in 2021 with Arcellx, Immatics and Cabaletta Bio,
together with continued bioprocessing and commercial development activities
performed for existing customers, is expected to drive a broadening out of the
future revenue base and should put the Group in a strong position to achieve
future operational profitability.
Continuing the implementation of its long-term strategy, the Group will
continue to focus on building and maintaining the Group's commercial
relationships with customers, both existing and new. The success of the
Group's customers is seen as key to the Group's success, including driving
growth in new customer relationships in 2022 and beyond in its existing
LentiVector® and new AAV platform.
The Group will implement a cautious strategy with regards to capital
expenditure with significant new projects only implemented if the Group's
financial stability is not impacted and the business case details a clear long
term strategic benefit to the Group. 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 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 profit for the year ended 31 December 2021 of £19.0 million,
and generated net cash flows from operating activities for the year of £25.5
million. The Group also raised an additional £50.0 million in cash through a
successful equity placement by Serum Life Sciences Ltd in September 2021 and
post year end has raised £80 million in January to March 2022. The Group
ended the year with cash and cash equivalents of £108.9 million.
In considering the basis of preparation of the Annual report and accounts, the
Directors have prepared cash flow forecasts for a period of at least 12 months
from the date of approval of these financial statements, based in the first
instance on the Group's 2022 annual budget and forecasts for 2023. The
Directors have undertaken a rigorous assessment of the forecasts in a base
case scenario and assessed identified downside risks and mitigating
actions.
These cash flow forecasts also take into consideration severe but plausible
downside scenarios including:
- A substantial manufacturing and development revenue downside affecting the
core LentiVector® platform business,
- Vaccine manufacturing revenues only included to the extent contracted,
- No revenues from new customers,
- Significant decreases in forecasted existing customer milestone and royalty
revenues, and
- The potential impacts of the current ongoing war in Ukraine on the Group and
its customers including expected revenues from existing customers under long
term contracts.
The Group entered into a $85 million (£64 million) loan facility with Oaktree
Capital Management as part of the Group's acquisition of an 80% stake in
Oxford Biomedica Solutions in March 2022. The facility was drawn down in full
and the Group is required to repay this one year facility in March 2023. In
both the Group's cash flow forecast and the mitigated downside scenarios, the
Group is able to repay this loan in March 2023, but in the mitigated downside
scenarios, the Group would need to obtain additional equity or loan financing
in the third quarter of 2023 to continue operations.
However, despite the above requirement, the Board has confidence in the
Group's ability to continue as a going concern for the following reasons:
- The Group's history of being able to access capital markets including
raising £130 million of equity during the last nine months;
- The Group's history of being able to obtain loan financing when required for
purposes of both capital expenditure and operational purposes, as recently
evidenced by the $85 million one year facility obtained with Oaktree Capital
Management;
- The Group's ability to continue to be successful in winning new customers
and building its brand as demonstrated by successfully entering into new
customer agreements with Arcellx, Immatics, Caballetta Bio and Boehringer
Ingelheim;
- As noted above the Group has cash balances of £108.9 million at the end of
December 2021 and £144 million at the end of March 2022;
- More than two thirds of 2022 forecasted revenues are covered by binding
purchase orders and rolling customer forecasts which give confidence in the
level of revenues forecast over the next 12 months; and
- The Group has the ability to control capital expenditure costs and lower
other operational spend, as necessary.
Taking account of the matters described above, the Directors remain confident
that the Group will have sufficient funds to continue to meet its liabilities
as they fall due for at least 12 months from the date of approval of the
financial statements and therefore have prepared the financial statements on a
going concern basis.
Stuart Paynter
Chief Financial Officer
Consolidated statement of comprehensive income
for the year ended 31 December 2021
Group
2021 2020
Total Total
Continuing operations Note £'000 £'000
Revenue 142,797 87,728
Cost of sales (60,157) (41,655)
Gross profit 82,640 46,073
Research and development costs (40,189) (29,749)
Bioprocessing costs (7,233) (10,720)
Administrative expenses (15,152) (11,262)
Other operating income 867 795
Change in fair value of asset held at fair value through profit and loss 6 (165) (831)
Operating 20,768 (5,694)
profit/(loss)
Finance income - 34
Finance (888) (912)
costs
Profit/(Loss) before tax 19,880 (6,572)
Taxation 3 (869) 327
Profit/(Loss) and total comprehensive expense for the year
19,011 (6,245)
Basic profit/(loss) per share 22.77p (7.81p)
Diluted profit/(loss) per share 22.20p (7.81p)
There was no other comprehensive income or loss.
The profit for the year is attributable to the owners of the parent.
The notes on pages 28 to 36 form part of this preliminary information.
Statement of financial position
as at 31 December 2021
Group
Note 2021 2020
£'000 £'000
Assets
Non-current assets
Intangible assets 52 73
Property, plant and equipment 5 69,728 72,304
Trade and other receivables 3,605 3,605
73,385 75,982
Current assets
Inventories 7 9,521 6,912
Assets at fair value through profit and loss 6 74 239
Trade and other receivables 8 44,747 53,926
Current tax assets 558 126
Cash and cash equivalents 108,944 46,743
163,844 107,946
Current liabilities
Trade and other payables 9 19,058 19,716
Contract liabilities 10 12,502 27,258
Deferred income 10 894 1,006
Lease liabilities 853 4,475
33,307 52,455
Net current assets 130,537 55,491
Non-current liabilities
Provisions 11 6,244 5,839
Contract liabilities 10 92 1,003
Deferred income 10 1,760 2,515
Lease liabilities 8,488 9,370
16,584 18,727
Net assets 187,338 112,746
Equity attributable to owners of the parent
Ordinary share capital 43,088 41,161
Share premium account 307,765 258,017
Other reserves 2,291 2,291
Accumulated losses (165,806) (188,723)
Total equity 187,338 112,746
The notes on pages 28 to 36 form part of this preliminary information.
Statement of cash flows
for the year ended 31 December 2021
Group
2021 2020
Note £'000 £'000
Cash flows from operating activities
Cash generated from/ (used in) operations 12 24,461 (3,889)
Tax credit received 994 7,005
Net cash generated from/ (used in) operating activities 25,455 3,116
Cash flows from investing activities
Purchases of property, plant and equipment (9,461) (13,358)
Proceeds on disposal of investment assets - 2,523
Interest received - 34
Net cash used in investing activities (9,461) (10,801)
Cash flows from financing activities
Proceeds from issue of ordinary share capital 51,600 41,060
Costs of share issues - (1,724)
Payment of lease liabilities (4,520) (292)
Interest paid (873) (859)
Net cash generated from financing activities
46,207 38,185
Net increase in cash and cash equivalents 62,201 30,500
Cash and cash equivalents at 1 January 46,743 16,243
Cash and cash equivalents at 31 December 108,944 46,743
The notes on pages 28 to 36 form part of this preliminary information.
Statement of changes in equity attributable to owners of the parent company
for the year ended 31 December 2021
Ordinary shares Share premium account Merger Reserve Accumulated losses Total equity
Group £'000 £'000 £'000 £'000 £'000
At 1 January 2020 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 expense 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
Deferred tax on share options - - - 273 273
Issue of shares excluding
options
2,500 37,500 - - 40,000
Cost of share issues - (1,724) - - 1,724
Transfer of share premium related to warrants - (1,218) - 1,218 -
At 31 December 2020 41,161 258,017 2,291 (188,723) 112,746
Year ended 31 December 2021:
Loss for the year - - - 19,011 19,011
Total comprehensive income for the year - - - 19,011 19,011
Transactions with owners:
Share options
Proceeds from shares issued 236 1,439 - (75) 1,600
Value of employee services - - - 3,523 3,523
Tax on share options - - - - 458 458
Deferred tax on share options - - - - -
Issue of shares excluding options 1,691 48,309 - - 50,000
At 31 December 2021 43,088 307,765 2,291 (165,806) 187,338
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
for the year ended 31 December 2021
1 Basis of accounting
This preliminary announcement was approved by the Board of Directors on 20
April 2022.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2021 or 2020 but is derived
from those accounts.
Statutory accounts for 2020 have been delivered to the registrar of companies,
and those for 2021 will be delivered in due course.
The auditor has reported on the 2021 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 profit for the year ended 31 December 2021 of £19.0 million,
and generated net cash flows from operating activities for the year of £25.5
million. The Group also raised an additional £50.0 million in cash through a
successful equity placement by Serum Life Sciences Ltd in September 2021 and
post year end has raised £80 million in January to March 2022. The Group
ended the year with cash and cash equivalents of £108.9 million.
In considering the basis of preparation of the Annual report and accounts, the
Directors have prepared cash flow forecasts for a period of at least 12 months
from the date of approval of these financial statements, based in the first
instance on the Group's 2022 annual budget and forecasts for 2023. The
Directors have undertaken a rigorous assessment of the forecasts in a base
case scenario and assessed identified downside risks and mitigating
actions.
These cash flow forecasts also take into consideration severe but plausible
downside scenarios including:
- A substantial manufacturing and development revenue downside affecting the
core LentiVector® platform business,
- Vaccine manufacturing revenues only included to the extent contracted,
- No revenues from new customers,
- Significant decreases in forecasted existing customer milestone and royalty
revenues, and
- The potential impacts of the current ongoing war in Ukraine on the Group and
its customers including expected revenues from existing customers under long
term contracts.
The Group entered into a $85 million (£64 million) loan facility with Oaktree
Capital Management as part of the Group's acquisition of Oxford Biomedica
Solutions in March 2022. The facility was drawn down in full and the Group is
required to repay this one year facility in March 2023. In both the Group's
cash flow forecast and the mitigated downside scenarios, the Group is able to
repay this loan in March 2023, but in the mitigated downside scenarios, the
Group would need to obtain additional equity or loan financing in the third
quarter of 2023 to continue operations.
However, despite the above requirement, the Board has confidence in the
Group's ability to continue as a going concern for the following reasons:
- The Group's history of being able to access capital markets including
raising £130 million of equity during the last nine months,
- The Group's history of being able to obtain loan financing when required for
purposes of both capital expenditure and operational purposes, as recently
evidenced by the $85 million one year facility obtained with Oaktree Capital
Management,
- The Group's ability to continue to be successful in winning new customers
and building its brand as demonstrated by successfully entering into new
customer agreements with Arcellx, Immatics, Caballetta Bio and Boehringer
Ingelheim,
- As noted above the Group has cash balances of £108.9 million at the end of
December 2021 and £144 million at the end of March 2022,
- More than two thirds of 2022 forecasted revenues are covered by binding
purchase orders and rolling customer forecasts which give confidence in the
level of revenues forecast over the next 12 months, and
- The Group has the ability to control capital expenditure costs and lower
other operational spend, as necessary.
Taking account of the matters described above, the Directors remain confident
that the Group will have sufficient funds to continue to meet its liabilities
as they fall due for at least 12 months from the date of approval of the
financial statements and therefore have prepared the financial statements on a
going concern basis.
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 licence, 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 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 these 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 by reference to the stand alone selling
price of previously recognised customer technology licences, and 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 judgemental areas identified within the collaboration
agreements is the timing of recognition of licence revenue based on the
achievement of the relevant performance obligation. The individual factors and
aspects relating to licence revenue are 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 2021 had not been met, revenues
would have been £5.9 million lower with the revenue expected to be recognised
in future when the performance obligations were deemed to have been 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 £0.3 million (2020: £2.4 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 to completion for that
specific bioprocessing batch. The value of the revenue recognised with regard
to the bioprocessing batches which remain in progress at year end is
£15,195,000. The contract assets related to these batches, as at the year end
was £6,404,000. If the assessed percentage of completion was 10 percentage
points higher or lower, revenue recognised in the period would have been
£1,520,000 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 regard 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 raised with regard to the work packages which remain in
progress at year end is £8,022,000. The contract assets related to these work
packages as at the year end was £2,493,000. If the assessed percentage of
completion was 10 percentage points higher or lower, revenue recognised in the
period would have been £802,000 higher or lower.
Provision for out of specification bioprocessing batches
Bioprocessing of clinical/commercial product for partners is recognised on a
percentage of completion basis over time as the processes are carried out.
Progress is determined based on the achievement of verifiable stages of the
process.
As the Group has now been bioprocessing product across a number of years, and
also in a commercial capacity, the Group has assessed the need to include an
estimate of bioprocessed product for which revenue has previously been
recognised and which may be reversed should the product go out of
specification during the remaining period over which the product is
bioprocessed. In calculating this estimate the Group has looked at historical
rates of out of specification batches across the last 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 £67,000 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 £0.7 million (2020: £1.4 million) has
not been recognised during 2021 with the corresponding credit to contract
liabilities (note 19). This revenue will be recognised as the batches complete
bioprocessing.
Bioprocessing contract modification
On 13 December 2021, the Group announced an update to its Commercial Supply
Agreement with Novartis. The changes to the agreement have been determined to
be a licence modification, under IFRS 15. The contract has been accounted
for prospectively as if it were terminated and a new contract created; with
the remaining unrecognised transaction price allocated to remaining
performance obligations. This resulted in breakage revenue of £4.8 million
being recognised at modification from batch reservations to be manufactured in
2021, as there was no longer an expectation that remaining batches would be
ordered.
3 Taxation
During 2020 the Group ceased being eligible to claim a research and
development tax credits under the Government's small company scheme.
2021 2020
Current tax £'000 £'000
Corporation tax (1,427) (1,140)
(1,427) (1,140)
Adjustments in respect of prior periods:
United Kingdom corporation tax research and development credit 558 1,467
Current tax (869) 327
Taxation (Charge)/Credit (869) 327
The amount of £1,427,000 included as part of the taxation charge within the
statement of comprehensive income for the year ended 31 December 2021
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 £558,000 (2020:
£1,467,000) relates to a higher than anticipated tax receipt received in
2021: £nil (2020: £473,000), and an expected tax repayment relating to prior
years of £558,000 (2020: £994,000).
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 2021 the Group recognised £458,000 (2020: £273,000) of current tax
relating to tax relief obtained on exercise of share options directly within
equity.
4 Basic and diluted profit/(loss) per ordinary share
The basic profit per share of 22.77p (2020: loss of 7.81p) has been calculated
by dividing the profit for the period by the weighted average number of shares
in issue during the year ended 31 December 2021 (83,484,173; 2020:
79,944,911).
The diluted earnings per share of 22.20p has been calculated by dividing the
earnings for the period by the weighted average number of shares in issue
during the period after adjusting for the dilutive effect of the share options
outstanding at 31 December 2021 (2,134,494).
The Group made a loss in the prior period. There were no potentially dilutive
options in the prior period. There is therefore no difference between the
basic loss per ordinary share and the diluted loss per ordinary share in the
prior period.
5 Property, plant and equipment
Freehold property Leasehold Office Bioprocessing and Laboratory equipment Right of use asset Total
improve-ments equipment and computers
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2021 23,331 27,219 9,106 24,606 18,012 102,274
Additions at cost 2,078 939 1,557 4,886 21 9,481
Reclassification - (13) - 13 - -
Change in estimate - - - - 378 378
At 31 December 2021 25,409 28,145 10,663 29,505 18,411 112,133
Accumulated depreciation
At 1 January 2021 10,444 3,519 4,610 9,177 2,220 29,970
Charge for the year 2,208 2,707 2,253 3,342 1,925 12,435
At 31 December 2021 12,652 6,226 6,863 12,519 4,145 42,405
Net book amount at 31 December 2021 12,757 21,919 3,800 16,986 69,728
14,266
Freehold property Leasehold Office Bioprocessing and Laboratory equipment Right of use asset Total
improve-ments equipment and computers
£'000 £'000 £'000 £'000 £'000 £'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 72,304
15,792
6 Assets at fair value through profit and loss
2021 2020
Assets at fair value through profit and loss (FVTPL): £'000 £'000
At 1 January 239 2,719
Additions - -
Sale of shares - (2,523)
Change in fair value of FVTPL asset (165) (1,883)
At 31 December 74 239
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.
7 Inventories
2021 2020
£'000 £'000
Raw Materials 9,521 6,912
Total Inventory 9,521 6,912
Inventories constitute raw materials held for commercial bioprocessing
purposes.
During the year, the Group wrote down £134,000 (2020: £171,000) of inventory
which is not expected to be used in production or sold onwards. The Company
holds no inventories.
8 Trade and other receivables
2021 2020
£'000 £'000
Trade receivables 22,398 30,819
Contract assets 13,547 16,508
Other receivables 365 558
Other tax receivable 5,227 3,412
Prepayments 3,210 2,629
Total trade and other receivables 44,747 53,926
Non-current trade and other receivables constitute other receivables of
£3,605,000 (2020: £3,605,000) are deposits held in escrow as part of the
Windrush Innovation Centre and Oxbox lease arrangements.
The other tax receivable constitutes RDEC receivable £4,137,000; VAT
receivable £536,000 and recoverable Withholding Tax £554,000.
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 £3,800,000 (2020: £9,523,000) which were past due at the reporting
date and of which £3,800,000 (2020: £9,460,000) has been received after the
reporting date.
Contract assets
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.
The balance of £13.5 million (2020: £16.5 million) mainly relates to
commercial development milestones which have been accrued as the specific
conditions stipulated in the licence agreement have been met, commercial
development work orders accrued on a percentage complete basis which will be
invoiced as the related work package completes and bioprocessing batches
accrued on a percentage of completion basis which will be invoiced as the
manufacturing of the batch is completed.
Contract assets have decreased from £16.5 million at the end of 2020 to
£13.5 million at the end of 2021 due to the timing of bioprocessing and
commercial development activities undertaken during the year leading to a
lower level of consideration for work completed but not yet billed (2020:
Contract assets have increased from £13.4 million at the end of 2019 to
£16.5 million at the end of 2020 due to the increased levels of bioprocessing
and commercial development activities undertaken during the year leading to a
higher level of consideration for work completed but not yet billed).
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 regard to these work packages is £8,022,000 (2020: £6,677,000).
If the assessed percentage of completion was 1 percentage point higher or
lower, revenue recognised in the period would have been £80,000 higher or
lower (2020: £67,000).
The Group 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.
9 Trade and other payables
2021 2020
£'000 £'000
Trade payables 5,260 7,777
Other taxation and social security 1,899 1,585
Accruals 11,899 10,354
Total trade and other payables 19,058 19,716
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 decreased from £31.8 million at
the end of 2020 to £15.3 million at the end of 2021 due to funds received in
advance for future bioprocessing and process development activities. These
amounts received in advance are short term and do not constitute a significant
financing component. Of the £31.8 million balance included in the statement
of financial position at the end of 2020, £27.5 million has been recognised
as revenue during the 2021 financial year (2020: Contract liabilities and
deferred income have increased from £14.9 million at the end of 2019 to
£28.3 million at the end of 2020 due to funds received in advance for future
bioprocessing and process development activities).
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:
Years 0-1 1-3 3-5 5-10 Total
£'000 £'000 £'000 £'000 £'000
Contract liabilities 12,502 48 44 - 12,594
Bioprocessing income 9,755 - - - 9,755
Process development income 2,325 - - - 2,325
Licence fees and Milestones 422 48 44 - 514
Deferred income 894 1,760 - - 2,654
Grant 894 1,760 - - 2,654
Included within bioprocessing contract liabilities is revenue of £0.8 million
which has not been recognised during 2021 (2020: £1.4 million) relating to
the estimate of out of specification batches (see note 2: 'Estimations' 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
2021 2020
£'000 £'000
At 1 January 5,839 5,086
Unwinding of discount 27 38
Change in estimate 378 251
Additional provision recognised - 464
At 31 December 6,244 5,839
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 2020. The provisions will
be utilised at the end of the leases if they are not renewed.
12 Cash flows from operating activities
Reconciliation of profit before tax to net cash used in operations:
2021 2020
£'000 £'000
Continuing operations
Profit/(loss) before taxation 19,880 (6,572)
Adjustment for:
Depreciation 12,435 9,817
Amortisation of intangible assets 21 22
Net finance costs 888 878
Charge in relation to employee share schemes 3,981 3,289
Non-cash loss 165 831
Changes in working capital:
Increase/(decrease) in trade and other receivables 6,891 (25,893)
Increase in trade and other payables (657) 5,419
Decrease in deferred income (867) (795)
(Decrease)/increase in contract liabilities (15,667) 13,410
Increase in provisions - 38
Increase in inventory (2,609) (4,333)
Net cash generated from/(used in) operations 24,461 (3,889)
13 Subsequent events
On the 10th of March 2022 the Group acquired an 80% stake in the newly
established Oxford Biomedica Solutions LLC (Oxford Biomedica Solutions) from
Homology Medicines Inc., an AAV Manufacturing and Innovation Business, for
£96 million ($130 million). Homology Medicines will continue to own 20% of
the new company with both the Group and Homology Medicines retaining a
put/call option to buy or sell the remaining 20% of Oxford Biomedica Solutions
to the Group at any
time subsequent to the 3 year anniversary of the acquisition. As part of the
acquisition of the 80% stake, the Group also agreed to inject £37 million
($50 million) into Oxford Biomedica Solutions LLC for working capital
purposes. Oxford Biomedica Solutions leases a GMP facility near Boston,
Massachusetts, operating three 500-litre bioreactors using a serumfree
suspension process, which has also been successfully scaled to 2,000 litres.
This acquisition will be treated as a business combination under IFRS 3. The
total estimated purchase consideration of 100% of Oxford Biomedica Solutions
is $225 million with a provisional fair value consideration of £167 million
($225 million). The provisional value of acquired net tangible assets is $49
million with fair value adjustments relating to the current cost of acquiring
or constructing these assets. The remaining consideration will be allocated
between identifiable intangible assets (AAV platform-related) and goodwill,
with the majority expected to be intangibles being the AAV platform IP and
Know-how acquired from Homology Medicines as part of the acquisition. Goodwill
represents the control premium, the acquired workforce and the synergies
expected from integrating Oxford Biomedica Solutions into the Group's existing
business. The Group did not disclose an accounting method for non-controlling
interest recognition, amounts for each major class of asset and liability
acquired, and other requirements per IFR3 3, due to the short period of time
from the date of acquisition till issuance of the annual accounts.
As part of the financing arrangements, the Group raised gross proceeds of £80
million through a placing of 9,876,544 shares at 810 pence per share. The
placing was done in two tranches with 5,018,134 shares placed on the 28th of
January 2022, and a further 4,858,410 shares were placed on the 10th of March
2022. Oxford Biomedica PLC also entered into a secured short term loan with
Oaktree Capital Management for US$85 million (£64 million) which is repayable
in twelve months after completion of the acquisition. The $85 million Oaktree
loan is repayable no later than 10 March 2023 although it may be repaid, at
the Group's discretion, at any time subject to early prepayment fees and an
exit fee. The loan carries an interest rate of 8.5% The terms also include a
financial covenant relating to a requirement to hold a minimum of $10 million
cash at all times. The Oaktree facility is secured by a pledge over
substantially all of the Group's assets.
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