REG - Oxford BioDynamics - Preliminary Results and Notice of AGM
17/01/2024 07:00
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RNS Number : 9177Z Oxford BioDynamics PLC 17 January 2024
Oxford Biodynamics Plc
("OBD" or the "Company" and, together with its subsidiaries, the "Group")
Preliminary results for the year ended 30 September 2023
and
Notice of Annual General Meeting
Oxford, UK - 17 January 2024 - Oxford BioDynamics Plc (AIM: OBD), a
biotechnology company developing precision medicine tests based on the
EpiSwitch® 3D genomics platform, today announces its final results for the
year ended 30 September 2023.
Highlights
Corporate and operational highlights
§ 516 EpiSwitch® CiRT tests processed in the year, ordered by 57 doctors
(FY22: 79 tests, 7 doctors)
§ Second FNIH PACT Award, investigating immuno-oncology-related Hyper
Progressive Disease (HPD), worth $963,000 over one year (May 2023)
§ US clinical laboratory established in Frederick, MD (from April 2023)
§ Two successful fundraises: raising gross proceeds of £9.3m (October 2022)
and £6.1m (August 2023)
§ Successful launch of EpiSwitch® PSE Prostate Screening Test in the US and
UK, ahead of schedule (September 2023)
Financial highlights
§ Revenue of £0.5m (FY22: £0.2m)
§ Other operating income of £0.8m (FY22: £0.4m)
§ Operating loss of £10.2m (FY22: £8.6m); increase reflecting investment in
team and infrastructure to support CiRT and PSE
§ Cash and term deposits of £5.3m as at 30 September 2023 (FY22: £1.0m)
Post-year end highlights
§ Unique CPT-PLA code assigned for PSE, available for use from 1 January
2024, enabling accurate reimbursement in the US from Medicare, Medicaid or
private payors (October 2023)
§ Agreement with leading UK health insurer, Bupa UK, to cover EpiSwitch CiRT
(October 2023)
§ Confidential discussions commenced with third parties regarding monetizing
OBD's two most advanced pipeline assets: EpiSwitch® NST (No Stool Test) for
colorectal/bowel cancer and EpiSwitch® SCB (Specific for Canine Blood) blood
test for detection of multiple types of canine cancer
§ Total PSE orders to date of 144, total CiRT orders to date of 770
Commenting on the results, Chief Executive Officer Jon Burrows said:
"This year we again made significant, rapid progress in the transformation of
OBD that began with our expanded strategy in late 2020.
"We now have two precision medicine tests on the market, each with a unique
CPT-PLA code in the US. We established and are now running PSE tests from our
own CLIA-registered clinical operations laboratory in Frederick, MD, with a UK
lab scheduled to begin operation by the end of March 2024. We received a
second prestigious PACT Award, a further sign of the growing recognition of
the power of our EpiSwitch® technology to address seemingly intractable
problems with non-invasive precision medicine testing.
"We have achieved all this thanks to the support of our investors, both
longstanding and new to OBD, from whom we raised over £15 million during the
year.
"This year, we are dedicated to growing sales of both EpiSwitch® CiRT and
EpiSwitch® PSE across all our markets and channels and to pursuing
opportunities to monetize assets from within our pipeline of deployable
tests."
-Ends-
Notice of Annual General Meeting
The Company's Annual General Meeting will be held at 3140 Rowan Place, John
Smith Drive, Oxford Business Park South, Oxford, OX4 2WB, UK on 27 March 2024
at 12.00 pm.
The information included in this announcement is extracted from the Annual
Report, which was approved by the Directors on 16 January 2024. Defined terms
used in the announcement refer to terms as defined in the Annual Report unless
the context requires otherwise. This announcement should be read in
conjunction with, and is not a substitute for, the full Annual Report.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 which is part of domestic UK law pursuant to the Market Abuse
(Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). Upon the
publication of this announcement, this inside information (as defined in UK
MAR) is now considered to be in the public domain.
Investor webinar
The Company's management team will conduct a live presentation via the
Yellowstone Advisory webinar platform to investors, at 3pm GMT on Wednesday 17
January 2024.
The online presentation is open to both existing and potential shareholders.
Questions will be addressed at the end of the presentation and may be
submitted either before the presentation by
emailing info@yellowstoneadvisory.com (mailto:info@yellowstoneadvisory.com)
or during the presentation.
To register for the presentation, please visit:
https://us02web.zoom.us/webinar/register/7417006471039/WN_ZqpvQz8hQOKMufXOKPwH1A
(https://us02web.zoom.us/webinar/register/7417006471039/WN_ZqpvQz8hQOKMufXOKPwH1A)
or alternatively via the Yellowstone events calendar
at www.yellowstoneadvisory.com/events
(http://www.yellowstoneadvisory.com/events) .
For further details please contact:
Oxford BioDynamics Plc Tel: +44 (0)1865 518910
Jon Burrows, CEO
Paul Stockdale, CFO
Shore Capital - Nominated Adviser and Broker Tel: +44 (0)20 7408 4090
Advisory: Stephane Auton / Iain Sexton
Broking: Fiona Conroy
Instinctif Partners - Financial PR Tel: +44 (0)20 7457 2020
Melanie Toyne-Sewell / Katie Duffell / Jack Kincade OxfordBioDynamics@instinctif.com
Chief Executive Officer's review
Introduction
We had two main objectives during the year to September 2023: to continue to
grow orders of our flagship EpiSwitch® CiRT (Checkpoint Inhibitor Response
Test) and to accelerate the development and launch of our next test, the
EpiSwitch® PSE Prostate Screening Test. We are pleased with the progress made
in pursuit of both these objectives. CiRT orders grew consistently over the
year and we launched PSE - "the 94% test" - in the US and UK ahead of schedule
on 26 September 2023.
Alongside this work, we received a second FNIH PACT Award to fund work on
immuno-oncology (IO)-related hyper progressive disease, announced compelling
results using OBD's EpiSwitch platform in the diagnosis and stratification of
amyotrophic lateral sclerosis (ALS, or motor neurone disease) and completed
two successful fundraises, raising a total of £15.4m (before costs) in the
year.
The last year has been a successful one for the Company on several fronts.
CiRT is becoming established in the US market and PSE is also now launched
after we expedited its final development in response to unprecedented
interest. OBD's EpiSwitch technology, through which all of our commercial
products are developed, is increasingly recognised as able to address the
clinical challenges of personalized medicine, cancer treatment, and immune
health.
Our financial results reflect the Company's ongoing commercial development.
Revenues of £0.51m (2022: £0.15m) included the first significant amounts
from the Group's proprietary tests as we began to receive reimbursements from
US payors for EpiSwitch CiRT, alongside revenues from projects for pharma and
other customers. Other operating income, from our two PACT Awards and our
involvement in the EU-funded HIPPOCRATES Consortium also increased, to £0.83m
(2022: £0.35m). Our investment in supporting CiRT and bringing PSE to market
led to cost increases, the largest of which were in staff and general and
administrative costs. Overall, the operating loss for the year was 18% higher
than last year, at £10.17m (2022: £8.60m). More detail is provided in the
financial review that follows.
We begin 2024 with continued focus on our products - seeking to continue to
increase adoption of both PSE and CiRT - and on our promising product pipeline
and R&D work. We have already commenced discussions with third parties, to
explore the potential monetization of the two most advanced assets in our
pipeline (EpiSwitch® NST for colorectal/bowel cancer and EpiSwitch® SCB for
canine cancer), which we believe could lead to significant non-dilutive
funding for the Company.
EpiSwitch® CiRT (Checkpoint Inhibitor Response Test)
Launched in February 2022, EpiSwitch® CiRT is OBD's flagship product, a
first-of-its-kind predictive test of a patient's likely response to immune
checkpoint inhibitors (ICIs), which work to stimulate a patient's immune
system to find and fight cancer. 516 CiRT tests were ordered in the year to 30
September 2023, by a total of 57 doctors (FY22: 79 tests, ordered by 7
doctors). Up to the date of this report, a total of 770 CiRT tests have now
been ordered.
Building on early progress in a single territory in the prior year, we
expanded our sales and market access team to two more territories to introduce
the test to more doctors. A unique CPT-PLA code, allowing reimbursement for
CiRT tests from US insurers, has been available throughout the period. We have
achieved strong reimbursements from US payors under the unique code, against a
list price of $4,950. As previously outlined, the Group has worked with its
partner laboratory, NEXT Molecular Diagnostics, to manage the claim
reimbursement process. The extensive experience and specialist knowledge of
members of both the OBD and NEXT teams continues to be invaluable in
optimising claims reimbursement for the test. With NEXT, we have maintained an
excellent level of service, with an average turn-around time for CiRT
(measured from sample receipt to provision of a final test report) for the
period of just over four days.
Over the year, OBD's US sales and market access professionals have spent time
learning from oncologists how the test has aided them in determining treatment
pathways for their patients. Later in the year, we began a series of peer
group advisory sessions, at which doctors who routinely order CiRT tests
shared their experience of the test with colleagues. We expect to continue
with this peer-to-peer approach to growing demand for CiRT through the current
financial year, as part of the comprehensive strategy for the test outlined
below.
After particularly strong growth into June 2023, we expected and saw lower
orders through the summer months. Post-year end, in the final quarter of the
calendar year, orders per day have remained at similar levels to the summer:
this reflected a combination of continued growth in some territories but at
the same time, the impact of an unexpected staff leave of absence that
affected orders in our prime territory and the operation of some of our
recently introduced clinical advisory boards. It is positive to note that we
had continued orders from a core group of oncologists in this territory, but
this has demonstrated the current extent of our reliance on what is still a
relatively small team.
In the meantime, to enhance the leadership of the CiRT sales team, we brought
Ryan Mathis, MD onboard at the beginning of December 2023. Dr Mathis is a
physician who, along with clinical expertise, has an impressive background in
business development and running sales teams for innovative healthcare
products. He also brings an added level of gravitas to our peer-to-peer
approach with doctors. To date, CiRT has been sold primarily to innovator and
early adopter oncologists, who are specialists in providing expert care to
cancer patients. Ryan has started to analyze our progress and success in
selling bottom-up into this segment of oncologists, to understand how these
doctors are applying CiRT with respect to the algorithms they have been
trained to use to treat their patients. He intends to refine our speaker
programs and clinical advisory boards to continue to take advantage of and
grow our peer-to-peer sales strategy. He will also implement a rigorous
clinical sales training program, along with a national conference strategy.
HEOR (Health Economics and Outcomes Research) data is critical for payors
seeking to use their resources as effectively and efficiently as possible and
informs their decisions on coverage and payment / reimbursement for the test
and IO treatments. Dr Mathis will use the clinical data from the 750-plus
real-world cases we have gathered so far from oncologists to present the
test's usage and clinical utility, engaging with an expert third party
consulting group to set out the compelling HEOR story of CiRT.
Building the HEOR case for CiRT with this real-world evidence, we also expect
to prepare data to support an assertive campaign for CiRT to be added to the
National Comprehensive Cancer Network (NCCN) Guidelines® and physician
compendia, published resources from independent professional organizations
which are the recognized standard for clinical direction and policy in cancer
care and which drive physician behaviour. The NCCN alliance includes 33 cancer
centers across the US with its own peer-reviewed journal. The intent of the
NCCN Guidelines is to assist in the decision-making process of individuals
involved in cancer care - including physicians, nurses, pharmacists, payers,
patients and their families-with the ultimate goal of improving patient care
and outcomes. Inclusion in the NCCN Guidelines is vital for bringing the test
into the orbit of as many oncologists as possible. Tests that are included in
the guidelines are regularly added by default to the databases of the
electronic medical record (EMR) systems used in doctors' practices and
healthcare networks. This would therefore rapidly bring CiRT to the attention
of more doctors, make ordering the test easier for oncologists and likely lead
to more patients benefiting from the test. Inclusion in the Guidelines can
also be relevant to some payors' coverage decisions.
Post-year end, in October 2023, we announced our agreement with the UK's
leading health insurer Bupa UK, to give Bupa patients who are being considered
for or already on ICI therapy access to OBD's EpiSwitch CiRT. This marked our
first direct agreement with a private medical insurer for the reimbursement of
CiRT and the first agreement with a major customer outside of the US. As well
as agreeing to reimburse EpiSwitch CiRT, the partnership represents the first
time that Bupa will be actively marketing a genomic test to their network of
healthcare providers. Bupa is advocating for CiRT's adoption by facilitating a
series of OBD roadshows in some of the UK's largest private cancer care
clinics throughout the first half of 2024. Bupa UK provides health and dental
insurance to over 3 million people. We expect that joining forces with a
pioneering healthcare organization like Bupa will significantly enhance access
to EpiSwitch CiRT across the UK. Gaining reimbursement from the UK's leading
health insurer was a milestone for OBD and we intend to capitalize on this
with similar agreements with other insurers and healthcare networks, in all
our markets, over the coming months.
The market opportunity for CiRT is significant, with unmet need for patients,
doctors and payors alike. Nine anti-PD-(L)1 ICIs are now approved by the FDA
for a variety of cancer indications. Hundreds of thousands of patients are
treated with these therapeutics each year, but, whilst efficacy is improving
and varies across different types of cancer, on average fewer than one third
of patients show a positive response from treatment and many experience
unwelcome, sometimes serious, side effects. Doctors have shared several case
studies in which the actionable information provided by CiRT has helped them
to determine treatment pathways for their patients with increased confidence.
From the perspective of payors, it is estimated that in excess of $10 billion
is spent on ineffective ICI therapy every year in the US alone, meaning that
smart testing with CiRT has the potential to offer more efficient, effective
use of patients' and payors' financial resources. CiRT also offers obvious
potential advantages for pharmaceutical development programs, by helping to
stratify and analyse patients in more targeted clinical trials.
We therefore aim, with Ryan leading the CiRT sales team, to resume growth in
orders of CiRT through 2024 and our build process is continuing to that end,
with the mindful allocation of finite resources to targeted expansion of the
team, with a particular focus on major accounts, generating the HEOR story for
CiRT and getting the test included in the NCCN Guidelines, alongside expansion
into more territories.
EpiSwitch® PSE (Prostate Screening Test)
EpiSwitch PSE ("the 94% test") is a non-invasive blood test that accurately
detects prostate cancer risk, reducing the number of men referred for an
unnecessary biopsy and treatment. The PSE test measures five epigenetic
biomarkers and combines these with a patient's PSA (prostate-specific antigen)
score to accurately predict the presence or absence of prostate cancer.
PSE has high overall accuracy of 94% (sensitivity 86%, specificity 97%),
representing a huge boost in accuracy compared to a PSA test alone. Crucially,
the positive predictive value (PPV) of PSE is 93%, compared to just 32% for
PSA. This low PPV is one of the main impediments to using PSA as a
population-wide screening test. Fewer than one third of men with a raised PSA
will go on to be diagnosed with prostate cancer. PSE's PPV of 93%, means that
93 of every 100 men who receive a "high probability" PSE result will go on to
receive a prostate cancer diagnosis.
Our work on EpiSwitch PSE, culminating in its launch in September 2023,
represents a major achievement for the year. Publication in February 2023 of
compelling results involving OBD's technology in the multi-disciplinary
PROSTAGRAM study led to such significant interest that we decided to expedite
the final development and commercial launch of the test. Indeed, the paper
co-authored by members of the OBD team and investigators from the University
of East Anglia, Imperial College London and King's College London entitled
"Circulating chromosome conformation signatures significantly enhance PSA
positive predicting value and overall accuracy for prostate cancer detection"
and published in the journal Cancers(1), was one of the most viewed papers in
that journal on cancer causes, screening and diagnosis in 2023.
Following publication of the groundbreaking results, OBD completed the
development and validation of the commercial test and leased, staffed and
commissioned a CLIA-registered(†) US clinical laboratory in Frederick, MD,
where the test is performed. An application for a unique CPT-PLA(‡) code for
PSE was submitted in early July 2023 and the code, 0433U, was assigned in
September 2023 and has been available for use by Medicare, Medicaid and
private payors from 1 January 2024. We also announced plans to develop a UK
clinical laboratory, compliant with the requirements of ISO 15189:2012
(Medical Laboratories), in our existing Oxford HQ. We will begin validation
procedures in January 2024 and expect the UK lab to begin processing PSE
clinical samples by the end of March 2024.
The addressable market for PSE is very large: there are approximately 47
million men aged between 50 and 74 in the US and approximately 10 million men
in the same age bracket in the UK. There is no population-wide screening
programme for prostate cancer, although some 25 million PSA tests are
performed annually in the US, which lead to around one million biopsies being
carried out. With a prostate cancer incidence rate of approximately 250,000
new cases in the US each year, there are too many needless, invasive
procedures currently being performed. We believe PSE represents an opportunity
to build an efficient screening regimen to go from PSA through PSE and onto
invasive biopsy then treatment only when necessary. A screening programme
which would be minimally invasive, fast, accurate and cost-effective could
improve early detection of this terrible disease, thereby improving treatment
outcomes at the same time as minimising unnecessary biopsies.
Our sales and marketing approach for PSE reflects its applicability to all men
in the at-risk age bracket (rather than those already diagnosed with cancer
and being considered for a particular therapy, as is the case with the CiRT
test). OBD's online advertising in the US therefore addresses men and their
families, educating them, as well as their physicians on the benefits of "the
94% test". Like CiRT, PSE must be ordered by a registered doctor.
An example of the growing awareness and recognition of PSE was the appearance
in December 2023 of OBD's Laboratory Medical Director, Dr Robert Heaton, on
the Prostate Health Podcast(2), hosted by Garrett D. Pohlman, MD, a
board-certified urologist who has treated over 4,000 men for various prostate
conditions and has begun using the PSE test for his patients. The podcast,
focused on prostate health education, reached many thousands of viewers and
listeners in 148 countries in 2023. As an experienced board-certified
pathologist, Dr Heaton is eminently qualified to explain how the test is being
used to benefit patients, by providing physicians with a precise tool to
assess whether a patient should undergo a biopsy or opt for continued
monitoring.
In addition, post-year end in November 2023, we were pleased to announce that
we had recruited experienced life science business development executive Dr
Steve Arrivo to the OBD team. Steve joined OBD as SVP, Business and Corporate
Development. Dr Arrivo has a big job, starting with an initial focus on
analyzing and evolving our direct-to-customer marketing approach, engaging
partners for national distribution, and selling access to PSE to larger
accounts. This begins with the large concierge groups and will expand into the
integrated delivery networks (IDNs), other healthcare systems and the General
Purchasing Organizations (GPOs) that all hospitals work through. During 2024
he will also lead initiatives to craft and distil the Health Economics and
Outcomes Research (HEOR) story for PSE, drive awareness and utilization of the
test with KOLs, attend and present at strategic conferences, collaborate with
advocacy groups and petition for inclusion of PSE into the National
Comprehensive Cancer Network (NCCN) Guidelines®.
Early uptake of the PSE test has been positive, with more than 140 tests
processed up to the date of this report, for patients in the US and UK.
Encouragingly, even before Steve's initiatives, the number of tests ordered
per day - a key metric - has increased from just over one a day in October to
just over two a day in December. US PSE test orders can now be invoiced under
our unique CPT-PLA code (with effect from 1 January 2024). Tests self-paid by
patients, or otherwise reimbursed by non-US insurers, have accounted for
around 15% of orders to date, at a rate of £750 (or equivalent) per test.
Development Pipeline
During the year our R&D and product development teams have worked on
internal, grant-funded and contractual projects in a wide range of indications
and therapy areas. Excellent progress has been made with our programs in
colorectal/bowel cancer, canine oncology (animal health), amyotrophic lateral
sclerosis (ALS, or motor neurone disease), rheumatoid arthritis,
psoriasis/psoriatic arthritis, immuno-oncology and non-alcoholic
steatohepatitis (NASH).
From OBD's extensive pipeline of deployable molecular tests, two programs are
now ready for commercialization, whether as OBD proprietary tests, or
co-developed or out licensed products. These two tests are EpiSwitch® NST (No
Stool Test), a screening blood test for colorectal/bowel cancer and
EpiSwitch® SCB (Specific for Canine Blood), a multi-indication diagnostic
test for the most commonly occurring types of canine cancer.
We recognize that early monetization and commercialization of each of these
two programs is more likely to occur with, and would benefit from, the
involvement of a partner organization with significant presence in the
relevant market. To this end, as noted above, confidential discussions with
third parties have already commenced to explore possible options for these two
most advanced pipeline assets. As well as expediting the launch and
availability of these high-performing tests, we believe this approach could
potentially lead to significant non-dilutive funding for the Company.
EpiSwitch® Explorer Array Kit
The EpiSwitch Explorer Array Kit (EAK), launched in 2022, allows members of
the life science research community to access OBD's EpiSwitch 3D genomics
technology, using Agilent-manufactured EpiSwitch whole genome microarrays and
OBD's proprietary biochemical reagents for sample preparation.
The EAK allows whole genome-wide interrogation of just under 1 million of the
most critical interactions between 3D anchor sites (the Company's proprietary
"EpiSwitch loci") on the human genome, offering powerful new discovery
information to researchers, including confirmation or clarification of their
hypotheses. Included in the purchase price of the EAK is access to first tier
analysis software developed in-house by OBD's Data team. For researchers
without access to appropriate microarray equipment, the Company's scientists
can analyse samples of interest using the Kit as a paid-for service.
Explorer Array Kits have been purchased by scientists from several prestigious
academic research institutions, including The Francis Crick Institute, the
University of Oxford Department of Biochemistry and the University of the
Algarve. Results from academic life-science research based on EpiSwitch
Explorer Arrays have already been presented at national and international
scientific peer group meetings.
Second PACT Award
In May 2023, the Company was granted a second Partnership for Accelerating
Cancer Therapies ("PACT") Award. PACT is a five-year, $220 million,
public-private research collaboration between the National Institutes of
Health (NIH), the US Food and Drug Administration (FDA) and 12 leading pharma
companies, all managed by the FNIH.
The second Award to OBD is worth $963,000 over one year (of which £388,000 is
recognised as other operating income in the year ended 30 September 2023) and
is funding the reduction to practice of an EpiSwitch prognostic blood test for
cancer patients most likely to present IO-triggered Hyper-Progressive Disease
(HPD) if given an ICI. HPD is a critical condition observed in a subset of
cancer patients (it has an average prevalence of 12%), who react adversely to
treatment with immune checkpoint inhibitors (ICIs). In HPD patients, ICI
treatment triggers a life-shortening opposite effect - accelerated tumour
growth, with reduced survival. With increasing adoption of ICI treatments for
cancer patients, the lack of prognostic biomarkers has become an urgent issue
for practising clinicians, drug developers, payors and regulators. The work
enabled by the PACT Award will help to complete the development of the
Hyper-ICI Response Test (HiRT), a blood test to identify patients at risk of
HPD prior to ICI therapy.
Fundraising to support short-term activity
We remain in the early stages of our commercialization of OBD's technology (we
initiated our expanded strategy to include development of proprietary products
only three years ago, in December 2020). During the year we completed two
successful fundraises, in October 2022 and August 2023, to support the
Company's immediate term plans, raising a total of £15.4 million before
costs.
Existing and new investors took part in both fundraises. In the most recent
raise in August 2023, we were pleased to welcome a number of new institutional
investors to our register and to receive over £0.5 million from 194
individual investors who took part in the fundraise through a PrimaryBid
offer. I would again like to thank all investors in the Company for the
support they have shown throughout the year.
Conclusion and focus for 2024
At the start of the financial year, our primary focus was expected to be on
growing orders of EpiSwitch CiRT. The OBD team achieved this objective, in
addition to meeting the extra challenge of expediting the development and
launch of EpiSwitch PSE. I am pleased that we set ourselves this stretch goal
- as well as the obvious promising commercial prospects for the Group, there
are clear benefits for patients and their families to having PSE launched and
available as soon as possible.
We remain committed to working with commercial and other partners to provide
unique and critical insight with our 3D genomics technology. At the same time,
we see the unpredictable pace at which such projects are often agreed as
validation of OBD's determination to develop our own products, directly
building the market for 3D genomics ourselves.
Looking forward to 2024, my team and I will be focused on four main areas:
· Following the initial introduction of EpiSwitch PSE into the market
last year, with the leadership of Dr Arrivo, we aim to drive significant
awareness and adoption by targeting large organization accounts and partnering
to generate nationwide access and distribution of the test. This will involve
extensive business development and sales and marketing activity, within our
available resources. We will also bring PSE online in our UK clinical
laboratory by the end of March 2024.
· We will continue to drive adoption and increase orders of EpiSwitch
CiRT. Dr Mathis's approach will allow us to capitalize on the foundation of
the 750 tests used to date. We will focus our efforts by identifying insights
from the data such as usage niches, algorithm alignment and key accounts.
Distilling the HEOR story and petitioning for adoption into NCCN Guidelines
and compendia will put the test in the hands of a greater number of
oncologists, not just the early adopters. We expect this will also help us to
enter into further direct agreements with insurers and healthcare delivery
networks (IDNs, GPOs and hospitals).
· We will continue the recently initiated confidential discussions with
third parties regarding our two most advanced pipeline assets, EpiSwitch NST
for colorectal/bowel cancer and EpiSwitch SCB for canine cancer and will
assess and explore opportunities for monetizing these and other programs from
our extensive portfolio of deployable 3D genomic tests.
· Finally, we will continue to work on internal and grant- and
award-funded research and development and on projects for commercial partners.
We are already accelerating on all of these fronts and look forward to
reporting back to shareholders later in the year.
Dr Jon Burrows
Chief Executive Officer
Oxford BioDynamics Plc
16 January 2024
† CAP-CLIA regulated laboratories are accredited by the College of American
Pathologists as being compliant with the Clinical Laboratory Improvement
Amendments, 1988 (42 CFR, Part 493).
‡ A Current Procedural Terminology - Proprietary Laboratory Analysis
(CPT-PLA) code is used in the US to report medical and diagnostic services to
entities such as health care professionals and payors.
Sources:
(1) Pchejetski, D., et al. (2023). Circulating Chromosome Conformation
Signatures Significantly Enhance PSA Positive Predicting Value and Overall
Accuracy for Prostate Cancer Detection. Cancers, 15(3),
821. http://dx.doi.org/10.3390/cancers15030821
(2)
https://www.prostatehealthpodcast.com/96-advancing-precision-medicine-episwitch-pse-prostate-cancer-screening-test-with-94-accuracy-robert-heaton-md/
(https://www.prostatehealthpodcast.com/96-advancing-precision-medicine-episwitch-pse-prostate-cancer-screening-test-with-94-accuracy-robert-heaton-md/)
Business performance and position: financial review
Overview
The year ended 30 September 2023 saw increased revenue (£0.51m, FY22:
£0.15m) and other operating income (£0.83m, FY22: £0.35m) compared to the
prior year. Revenue included amounts in respect of sales of proprietary tests
and work for commercial customers. Product revenue predominantly arose from
reimbursement by US payors for CiRT tests, which is recognized only on receipt
of funds and therefore lags performance of the relevant test.
As noted in the CEO's review, during the year the Company raised a total of
£15.4m before costs (FY22: £3.6m before costs) in two equity fundraisings to
support the immediate term plans of the Group.
The tables below present summary explanations of what comprises the main
elements of the Group's financial performance for the year and its position at
the year end, together with the main drivers of movements compared to the
prior year.
Further detail is provided in the financial information and notes on the
following pages, which are extracted from the Company's annual report and
accounts for the year ended 30 September 2023.
Note 2 includes a description of the Board's assessment and conclusion that it
is appropriate to adopt the going concern assumption in preparing the
accounts, but that, as at the previous three year ends, a number of factors
exist that, taken together, present a material uncertainty which may cast
significant doubt on the Company's ability to continue as a going concern and,
therefore, it may be unable to realize its assets and discharge its
liabilities in the normal course of business.
Financial performance
Element Comprising: 2023 2022 Year-on-year change Main drivers of movement
£m £m £m
Revenue Revenue from test sales and contracts with pharma customers 0.51 0.15 0.36 increase Increase driven by recognition of first significant revenue from proprietary
tests and an increase in work performed for Pharma customers.
Cost of sales Amounts payable to the Group's partner lab and other costs relating to (0.24) (0.04) 0.20 increase These costs relate to EpiSwitch® CiRT tests ordered and processed during the
proprietary tests processed and/or reimbursed in the period. year, with some additional amounts recognized on receipt of reimbursement for
tests from payors.
R&D expenditure (excluding staff costs) Lab consumables, equipment maintenance and similar costs (0.76) (0.53) 0.23 increase R&D activity was increased relative to the prior year. The final stages of
the development of the EpiSwitch® PSE test were expedited during the year.
Staff costs Staff and directors' remuneration and benefits (5.40) (4.48) 0.92 increase Full year impact of FY22 recruits, FY23 in-year recruitment. Average FTEs were
similar to FY22, but a higher proportion of the Group's employees were in
senior and/or US-based roles. Inflationary pay increases awarded in calendar
2023 were higher than in recent years.
General and other admin costs Other costs including marketing, legal and other professional services (3.41) (2.45) 0.96 increase Increases of c.£0.3m in marketing-related costs to promote EpiSwitch® CiRT
and EpiSwitch® PSE tests, c.£0.3m in premises-related costs, reflecting
increased charges for utilities and site service charges for the UK HQ, and
costs for the new laboratory in the US, c.£0.2m in travel-related expenses
for sales teams and conference attendance, and c.£0.1m in website development
and other IT services.
Share option charges Non-cash charge spreading fair value of share options over their vesting (0.33) (0.39) 0.06 decrease Options charges are spread over vesting periods of up to three years. More
period options were granted than in the prior year and this was offset by reductions
in the amounts recognized in the year in respect of options granted prior to
October 2021.
Depreciation and amortization Depreciation and amortization of intangible assets, property plant and (1.36) (1.21) 0.15 increase Increase results from higher depreciation of right-of-use assets (because of
equipment and right-of-use assets. the lease of the Group's US clinical laboratory in the year) and amortization
of patents and a smaller increase in property, plant and equipment
depreciation.
Other operating income Income associated with grants and awards 0.83 0.35 0.48 increase Income arises from the Company's two PACT Awards and its membership of the
HIPPOCRATES consortium, funded by an EU grant.
Operating loss (10.17) (8.60) 1.57 increase As noted above.
Fair value (loss) / gain on financial liabilities designated as FVTPL Non-cash movement in fair value of liability recognised in connection with (1.25) 1.10 2.35 decrease The fair value of the warrant liability increased over the period, generating
warrants issued in November 2021 this loss, mainly because of the increase in the Company's share price.
Gain reclassified to profit or loss on disposal of foreign operation Non-cash gain arising on the deregistration of the Group's former Australian 0.11 - 0.11 increase This is a crystallised foreign currency translation gain, offset by a
subsidiary entity. reduction in the value of the translation reserve, recognised in other
comprehensive income.
Finance income Interest income and foreign exchange gains 0.10 0.13 0.03 decrease Decrease relates to losses from exchange rate movements, partly offset by an
increase in interest receivable on invested cash and term deposit balances
during the year.
Finance costs Calculated lease interest, foreign exchange losses (0.21) (0.20) 0.01 increase Increase driven by lease interest costs on new US laboratory, partly offset by
reducing interest charges in respect of the UK HQ lease.
Tax UK R&D tax credits offset by current and deferred taxes in subsidiaries 0.59 0.86 0.27 decrease Decrease driven by higher current tax charges in subsidiary entities, and
lower amounts claimable in respect of R&D tax credits following
legislative changes in the UK.
Loss per share Loss for the year divided by weighted average number of shares in issue (7.3)p (6.7)p 0.6p increase Results from the increased loss and the higher average number of shares in
issue for FY23 compared to FY22.
Cash flow
Element Comprising: 2023 2022 Year-on-year change Main drivers of movement
£m £m £m
Net cash used in operating activities Operating loss, adjusted for non-cash items and movements in working capital. (8.29) (5.18) 3.11 increase Approximately £4m increased loss before tax and c.£0.1m decrease in tax
credits received. Adjustments for movements in working capital, foreign
exchange and non-cash items were c.£1m higher than in the prior year.
Net cash (used in) / generated by investing activities Expenditure on fixed assets, offset by interest income and maturing term (0.62) 1.25 1.87 decrease Receipts on term deposit maturities were c.£2.1m lower, offset by c.£0.2m
deposits. decrease in net expenditure on property, plant and equipment and intangible
assets and c.£0.06m higher interest receipts.
Net cash generated by financing activities Proceeds from equity issues offset by lease payments. 13.21 2.56 10.65 increase Driven by a c.£10.58m increase in net receipts from equity issues, a £0.04m
increase in rent payments and the one-off £0.11m buy-back of minority
interest in a subsidiary in FY22.
Financial position
Element Comprising: 2023 2022 Year-on-year change Main drivers of movement
£m £m £m
Cash and term deposits Cash and term deposits 5.25 1.00 4.25 increase Cash and term deposits increased as a result of the two fundraisings during
the year, which provided net funds of £14.14m, offset by the operating cash
outflow of c.£8.29m, capital expenditure and rent of c.£1.49m and minor
movements in cash held in foreign currencies.
Total assets "Right-of-use" assets associated with the Group's leased properties, tangible 16.13 11.34 4.79 increase The main component of the increase is the movement in cash and term deposits.
and intangible fixed assets, deferred tax assets, inventories, debtors and
prepayments and cash and term deposits.
Total liabilities Trade creditors, accruals, contract liabilities, lease liabilities, (10.07) (8.76) 1.31 increase The £1.25m increase in the estimate of the fair value of the warrant
provisions, deferred tax liabilities, and warrant liability. liability (which is mainly driven by the increase in the Company's share price
over the period) is the main driver of the overall increase in liabilities.
Paul Stockdale
Chief Financial Officer
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 30 SEPTEMBER 2023
2023 2022
£000 £000
Continuing operations Note
Revenue 3 510 154
Cost of sales (244) (38)
Gross profit 266 116
Research & development costs (excluding staff costs) (758) (526)
Staff costs (5,403) (4,483)
General & other admin costs (3,411) (2,452)
Share option charges (332) (394)
Depreciation and amortization (1,357) (1,213)
Other operating income 4 827 351
Operating loss (10,168) (8,601)
Fair value (loss) / gain on financial liabilities designated as FVTPL 12 (1,246) 1,095
Gain reclassified to profit or loss on disposal of foreign operation 113 -
Finance income 103 134
Finance costs (213) (195)
Loss before tax (11,411) (7,567)
Income tax 585 857
Loss for the year from continuing operations 6 (10,826) (6,710)
Loss attributable to:
Owners of the Company (10,826) (6,710)
Non-controlling interest - -
(10,826) (6,710)
Earnings / (loss) per share
From continuing operations
Basic and diluted (pence per share) 7 (7.3) (6.7)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 SEPTEMBER 2023
2023 2022
£000 £000
Note
Loss for the year 6 (10,826) (6,710)
Exchange differences on translation of foreign operations that may be (182) (40)
reclassified to the income statement
Total comprehensive income for the year (11,008) (6,750)
Total comprehensive income attributable to:
Owners of the Company (11,008) (6,750)
Non-controlling interest - -
(11,008) (6,750)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
2023 2022
£000 £000
Assets Note
Non-current assets
Intangible fixed assets 8 1,913 1,601
Property, plant and equipment 9 2,238 2,582
Right-of-use assets 10 4,759 4,396
Deferred tax asset 50 -
Total non-current assets 8,960 8,579
Current assets
Inventories 274 337
Trade and other receivables 1,643 1,429
Fixed-term deposits - 25
Cash and cash equivalents 5,250 974
Total current assets 7,167 2,765
Total assets 16,127 11,344
Equity and liabilities
Capital and reserves
Share capital 11 2,023 1,004
Share premium 32,144 19,020
Translation reserves (63) 119
Share option reserve 2,776 3,154
Retained earnings (30,825) (20,709)
Equity attributable to owners of the Company 6,055 2,588
Non-controlling interest - -
Total equity 6,055 2,588
Current liabilities
Trade and other payables 1,707 2,000
Warrant liability 12 1,360 114
Lease liabilities 13 818 736
Provisions - -
Current tax liabilities 116 61
Total current liabilities 4,001 2,911
Non-current liabilities
Lease liabilities 13 5,621 5,400
Provisions 440 424
Deferred tax 10 21
Total non-current liabilities 6,071 5,845
Total liabilities 10,072 8,756
Total equity and liabilities 16,127 11,344
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 SEPTEMBER 2023
Share Share premium Transla- Share Retained Attribu- Non-con- Total
capital tion option earnings table to trolling
reserve reserve share- interest
holders
£000 £000 £000 £000 £000 £000 £000 £000
At 1 October 2022 1,004 19,020 119 3,154 (20,709) 2,588 - 2,588
Loss for the year - - - - (10,826) (10,826) - (10,826)
Other comprehensive income for the period - - (182) - - (182) - (182)
Total comprehensive income for the period - - (182) - (10,826) (11,008) - (11,008)
Subscription for new shares 1,019 14,368 - - - 15,387 - 15,387
Transaction costs for new shares - (1,244) - - - (1,244) - (1,244)
Share option credit - - - 332 - 332 - 332
Lapse of vested share options - - - (710) 710 - - -
At 30 September 2023 2,023 32,144 (63) 2,776 (30,825) 6,055 - 6,055
YEAR ENDED 30 SEPTEMBER 2022
Share Share premium Transla- Share Retained Attribu- Non-con- Total
capital tion option earnings table to trolling
reserve reserve share- interest
holders
£000 £000 £000 £000 £000 £000 £000 £000
At 1 October 2021 926 16,740 159 3,022 (14,171) 6,676 17 6,693
Loss for the year - - - - (6,710) (6,710) - (6,710)
Other comprehensive income for the period - - (40) - - (40) - (40)
Total comprehensive income for the period - - (40) - (6,710) (6,750) - (6,750)
Subscription for new shares 78 3,545 - - - 3,623 - 3,623
Issue of warrants to subscribe for new shares - (1,209) - - - (1,209) - (1,209)
Transaction costs for new shares - (56) - - - (56) - (56)
Share option credit - - - 394 - 394 - 394
Lapse of vested share options - - - (262) 262 - - -
Buy-back and cancellation of minority interest shares - - - - (90) (90) (17) (107)
At 30 September 2022 1,004 19,020 119 3,154 (20,709) 2,588 - 2,588
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 SEPTEMBER 2023
2023 2022
£000 £000
Note
Loss before tax for the financial year 6 (11,411) (7,567)
Adjustments to reconcile loss for the year to net operating cash flows:
Net interest 141 184
Loss on disposal of property, plant and equipment 4 1
Depreciation of property, plant and equipment 9 548 539
Depreciation of right-of-use assets 10 663 574
Amortization of intangible assets 8 146 100
Net foreign exchange movements (122) (278)
Movement in provisions 16 16
Share based payments charge 332 394
Fair value loss / (gain) on financial liabilities 1,246 (1,095)
Working capital adjustments:
(Increase) / decrease in trade and other receivables (448) 469
Decrease in inventories 63 55
(Decrease) / increase in trade and other payables (286) 475
Operating cash flows before interest and tax paid (9,108) (6,133)
R&D tax credits received 896 969
Tax paid (82) (13)
Net cash used in operating activities (8,294) (5,177)
Investing activities
Interest received 71 14
Lease incentive received - -
Purchases of property, plant and equipment (250) (363)
Purchases of intangible assets (466) (538)
Decrease in term deposits 25 2,138
Net cash (used in) / generated by investing activities (620) 1,251
Financing activities
Interest paid (213) (195)
Repayment of lease liabilities (723) (703)
Acquisition of minority interest shares in subsidiary entity - (107)
Issue of equity shares and warrants 15,387 3,623
Transaction costs relating to issue of equity shares (1,244) (56)
Net cash generated by financing activities 13,207 2,562
Net increase / (decrease) in cash and cash equivalents 4,293 (1,364)
Foreign exchange movement on cash and cash equivalents (17) 163
Cash and cash equivalents at beginning of year 974 2,175
Cash and cash equivalents at end of year 5,250 974
1. Corporate information
Oxford Biodynamics plc is a public limited company incorporated in the United
Kingdom, whose shares were admitted to trading on the AIM market of the London
Stock Exchange on 6 December 2016. The Company is domiciled in the United
Kingdom and its registered office is 3140 Rowan Place, John Smith Drive,
Oxford Business Park South, Oxford, OX4 2WB. The registered company number is
06227084 (England & Wales).
The Group is primarily engaged in the commercialization of proprietary
molecular diagnostics products and biomarker research and development.
2. Basis of the announcement
Basis of preparation
The final results for the year ended 30 September 2023 were approved by the
Board of Directors on 16 January 2024. The final results do not constitute
full accounts within the meaning of section 434 of the Companies Act 2006 but
are derived from audited accounts for the year ended 30 September 2023 and the
year ended 30 September 2022.
This announcement is prepared on the same basis as set out in the audited
statutory accounts for the year ended 30 September 2023. The accounts for the
years ended 30 September 2023 and 30 September 2022, upon which the auditors
issued unqualified opinions, also had no statement under section 498(2) or (3)
of the Companies Act 2006. The auditors' report includes reference to the
material uncertainty relating to going concern. See below for more details of
the going concern assessment performed by the Board of Directors.
While the financial information included in this results announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards in conformity with the Companies
Act 2006 (IFRS), this announcement does not in itself contain sufficient
information to comply with IFRS.
Reporting currency
The consolidated financial statements are presented in pounds sterling (GBP),
which is also the Company's functional currency.
Going concern
In assessing the appropriateness of adopting the going concern assumption, the
Group and Parent Company has prepared a detailed budget ("the budget") for the
two-year period ending 30 September 2025. The budget includes:
· estimates of likely revenue arising from EpiSwitch® CiRT and
EpiSwitch® PSE (based on the Group's own assessments of market
opportunities);
· anticipated revenues from contracts with pharmaceutical partners;
· expected income from existing grants and awards;
· operating costs reflecting the current cost base (plus inflationary
increases), with some increases in activity to support the commercial tests
already launched; and
· capital expenditure, primarily to maintain and extend the Group's
patent estate.
Combined revenue and other operating income during the year ended 30 September
2023 was increased compared to the previous year, but the Group remained
lossmaking with income significantly exceeded by operating costs, which
included spending necessary to expedite the development and launch of the PSE
test during the year. The Group was able to maintain its cash reserves during
the year, including through the raising of £9.3m (before costs) through a
placing, subscription and open offer in October 2022 and £6.1m (before costs)
through a placing, subscription and PrimaryBid offer in August 2023.
The Board considers that the budget represents a reasonable best estimate of
the Group's performance over the period to 30 September 2025 and the Directors
are satisfied that in the scenario modelled in the budget, the Group and
Parent Company would be able to continue as a going concern. The Directors
note, however, that the budget includes estimates of product and contract
revenue reflecting significant increases in the volume of CiRT tests to be
ordered in FY24 compared to FY23, significant increases, post-launch, in
orders of PSE tests and expectations of a number of new contracts with pharma
customers. Forecast cash balances in the budget, whilst positive throughout
the period covered, are expected to be reduced to a low level relative to the
Group's cost base through much of 2024.
The Directors also draw attention to several significant uncertainties
inherent in the preparation of the budget, primarily relating to balances
associated with the revenue / income cycle, since most of the Group's costs
are reasonably predictable and controllable. These uncertainties include
volumes of orders of the Group's tests, particularly PSE which was launched
just before the end of FY23; reimbursement rates and timing of the
reimbursement cycle (and consequent impact on the Group's working capital);
and the number and value of new pharma/biotech agreements.
Cash resources as predicted in the budget are very sensitive to changes in the
assumptions related to these uncertainties: this was noted in two alternative
scenarios considered by the Directors: a "possible" scenario that reflects
significantly reduced test volumes compared to the budget and a "downside"
scenario with still lower test volumes and no new pharma projects assumed.
Without any remedial action to reduce costs or delay expenditure, in these
scenarios the Group and Company would need to obtain additional funds during
the second quarter of 2024 in order to continue as a going concern.
The Group successfully raised a total of £15.4m (before costs) from new and
existing shareholders in two fundraises during the year ended 30 September
2023. The Company's share price and the level of interest in the Company's
shares, as measured by average daily trading volumes, increased significantly
following the launch of the PSE test in September 2023. The Directors consider
that these developments tend to increase confidence that the Company will be
able to access further cash resources from investors in future. However, as at
the date of publication of this report, this is not guaranteed.
The Directors do not believe that any of the factors above is unusual or
unexpected for the Group at this point in its development. However,
shareholders should be aware that there is uncertainty around its ability to
generate sufficient revenues and the timing of receipts from customers, as
well as the ability of the Group to raise sufficient finance to meet its
expected costs. These conditions present a material uncertainty which may
cast significant doubt on the Group and Parent Company's ability to continue
as a going concern and, therefore, it may be unable to realize its assets and
discharge its liabilities in the normal course of business.
Critical judgements in applying the Group's accounting policies
The following are the critical judgements that the Directors have made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognized in the consolidated financial
statements.
Treatment of revenue arising from test sales reimbursed by US insurance payors
The Group recognizes revenue when or as the relevant performance obligations
in its contracts with customers are completed. Sales of the Group's
proprietary tests can be paid for by patients, payors with whom the Group has
direct agreements in place, or by US insurers through the reimbursement
process. In this final case, the Group may also obtain an acknowledgement of
financial responsibility from a patient before processing a test.
EpiSwitch® CiRT tests were regularly reimbursed by several US insurers
throughout the year for a range of amounts and this has continued post-year
end. The amount received is influenced by several factors, including the terms
of individual patients' policies such as requirements for co-payment, the
price listed for the test, if any, in the Centers for Medicare and Medicaid
Services (CMS) Clinical Laboratory Fee Schedule (CLFS), insurers' own coverage
policies in respect of the test, and claim denials. Where reimbursement for a
test is initially denied, or reimbursed at a lower-than-expected amount, the
Group avails itself of the appeals process that exists in the reimbursement
system. At the year end, a number of appeals were in process but not yet
complete. Reimbursement claims for a further group of processed tests were
held by the Group pending confirmation of coverage decisions by insurers or
the relevant Medicare Administrative Contractor (MAC), in order to ensure the
most positive likely outcome in terms of eventual reimbursement.
The above factors are relevant to Management's decision on whether a contract
with a customer exists and therefore whether the five-step process of revenue
recognition included in IFRS 15 Revenue from Contracts with Customers should
be followed or whether instead revenue should be recognized on final receipt
of funds from a payor.
Management exercised judgement in determining that, for most of the Group's
test orders in the period, the appropriate accounting treatment is to
recognize revenue on receipt of funds and not to follow the five-step process.
Management anticipate that in future periods, as the Group's historical
collections experience increases in volume and specificity in relation to
particular payors and policies and the proportion of test sales for which an
acknowledgement of financial responsibility is obtained from patients also
increases, it is likely that the five-step process will apply to an increased
proportion of test sales and that judgement will be required in determining
the extent to which variable consideration relating to those tests is
unconstrained and should therefore be recognized.
Identification of the Group's cash-generating unit
In carrying out the impairment review of patent assets set out in more detail
below, Management exercised judgement in determining that the Group currently
has one cash-generating unit (CGU). Guidance states that CGUs are "the
smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows for other assets or groups of assets".
The Group's strategy was expanded in December 2020, to include the development
and commercialization of proprietary tests. As at 30 September 2023, three lab
developed test products had been launched, with two of these (EpiSwitch® CiRT
and EpiSwitch® PSE) being actively marketed as well as the Group's
EpiSwitch® Explorer Array Kit, which is marketed to the life science research
community. Revenue from products and customer contracts is reported separately
to Directors in the Group's internal management accounts. However, it is not
currently possible to assign separate groups of OBD assets to particular
cashflows. With very limited exceptions, people, premises, equipment and
patents are generally applied to both product and customer contract revenue
streams. This position may change as i) dedicated product sales and marketing
teams are more fully developed, ii) the Group's LDTs are consistently
processed through the Group's US and UK clinical laboratories and iii)
test-specific revenue streams become more predictable.
At present, Management continues to conclude that the Group has one CGU,
relating to all commercial exploitation of its EpiSwitch® technology. If this
judgement were to be incorrect and the Group determined to contain more than
one separately identifiable CGU, as part of the impairment review of the
Group's patent assets conducted at the year end, it would have been necessary
to estimate the recoverable value of each CGU separately and to allocate
patents to those CGUs.
Impairment review
Intangible assets are reviewed for indicators of impairment at the end of each
reporting period. An impairment review of patent assets was conducted as at
the year end, principally because the Group's financial performance for the
year resulted in a larger than budgeted loss and this was considered to be an
indicator of potential impairment. In addition, an impairment review is
required for any assets not yet being amortized and certain patent assets fall
into this category.
As noted above, Management identified that at the current stage in the Group's
development, it includes a single CGU, to which all patent assets are
allocated. Management consider that the recoverable amount of the Group's
single CGU is based on its fair value less cost of disposal (FVLCOD), and that
this value is attributable to its intellectual property, including patents and
know-how, and its other assets, including property plant and equipment. The
most reliable available estimate for the fair value of the Group's CGU as a
whole is the enterprise value of the Group, which is in turn given by the
market value of the Company on a cash- and debt-free basis.
The Group had a year-end market capitalisation of £74.9m (37p x 202,303,415
shares then in issue). For the 30 September 2023 year end, Management also
considered the significant increase in the share price and market
capitalization of the Company following the announcement of the launch on 26
September 2023 of the EpiSwitch® PSE test and for the purposes of the
impairment review, the increase in enterprise value that followed the launch
announcement was assumed to relate only to the PSE test. On 25 September 2023,
the latest date prior to the announcement of the launch, the Group had a
market capitalisation of £21.1m (10.45p x 202,303,415 shares in issue).
Cash/cash equivalents and term deposits at 30 September 2023 of £5.3m are
deducted from market value in arriving at the enterprise value. Following
review of available guidance, Management determined that neither the warrant
not the lease liabilities associated with the Group's rented property should
be added back to the market value in determining the enterprise value. This
results in an estimate of the year-end enterprise value of the Group as a
whole of approximately £69m and an enterprise value shortly pre-year-end of
the underlying business "excluding" the PSE test, of approximately £16m.
In estimating the cost of disposal (COD), Management used a round sum estimate
of £2.5m, representing a COD of approximately 12% of the pre-uplift market
value, which is within the range of estimates of disposal costs reviewed by
Management. The FVLCOD of the Company as at 30 September 2023 was therefore
estimated to be £13.5m prior to the launch of PSE and £66.5m at the year
end, after the launch of PSE. Management then compared the FVLCOD of the
Company to the gross value of the Group's assets excluding patents (£9m as at
30 September 2023). The excess of the Company's FVLCOD over its gross assets
excluding patents, prior to the launch of PSE, was therefore approximately
£7m, compared to a carrying value of patent assets (including patents linked
to the PSE test) of £1.82m. Management further reviewed each of the Company's
patent families for other indicators of impairment, principally obsolescence,
and determined that no such indicators existed at the year end. Management
therefore concluded that no impairment of the Company's capitalized patents
existed at the year end.
Management considers that a reduction in the Company's estimated FVLCOD to an
amount comparable to the carrying value of its non-patent assets would lead to
a reduction in the recoverable amount of its patent assets, potentially to
nil. Management will continue to assess, at the end of each reporting period
and more frequently if necessary, whether there are indicators that any of the
Group's assets may be impaired.
3. Revenue
All revenue is derived from the Group's principal activities, namely sales of
proprietary products and biomarker research and development. Analysis of the
Group's revenue by principal activities, geography and pattern of revenue
recognition is as follows:
2023 2022
£000 £000
Continuing operations:
Sales of proprietary products
USA 160 -
Rest of World 34 -
194 -
Biomarker research and development
USA 228 107
Rest of World 88 47
316 154
Consolidated revenue 510 154
2023 2022
£000 £000
Continuing operations:
Revenue recognized at a point in time 194 -
Revenue recognized over time 316 154
510 154
2023 2022
£000 £000
Revenue from individual customers each representing more than 10% 280 152
of revenue for the period:
Number Number
Number of individual customers each representing more than 10% 2 2
of revenue for the period:
4. Other operating income
2023 2022
£000 £000
Continuing operations:
Other operating income (awards and grants)
- recognized at a point in time - -
- recognized over time 827 351
827 351
During the year, the Company was granted a second FNIH Partnership for
Accelerating Cancer Therapies (PACT) Award. Income was recognized in respect
of each of the Company's PACT awards and OBD's involvement in the EU-funded
HIPPOCRATES consortium (income in the prior year related only to the Company's
first PACT award).
5. Business segments
Products and services from which reportable segments derive their revenues
Information reported to the Group's Chief Executive Officer (who has been
determined to be the Group's Chief Operating Decision Maker) for the purposes
of resource allocation and assessment of segment performance is focused on
costs incurred to support the Group's main activities. The Group is currently
determined to have one reportable segment under IFRS 8, that of sales of
proprietary products and biomarker research and development. This assessment
will be kept under review as the Group's activity expands.
The Group's operating expenses and non-current assets, analysed by
geographical location were as follows:
2023 2022
£000 £000
Staff costs
UK 2,614 2,572
USA 2,692 1,815
Rest of World 97 96
Total staff costs 5,403 4,483
Research & development costs
UK 680 523
USA 77 -
Rest of World 1 4
Total research & development costs 758 527
General & other admin costs
UK 2,399 1,898
USA 969 479
Rest of World 43 75
Total general & other admin costs 3,411 2,452
Non-current assets
UK 7,446 7,954
USA 1,478 564
Malaysia 36 61
Total non-current assets 8,960 8,579
6. Loss for the year
Loss for the year has been arrived at after charging/(crediting):
2023 2022
£000 £000
Net foreign exchange losses (31) (123)
Research and development costs (excluding staff costs) 758 526
Amortization of intangible assets 146 100
Depreciation of property, plant and equipment 548 539
Depreciation of right-of-use assets 663 574
Staff costs 5,403 4,483
Share-based payments charged to profit and loss 332 394
Fair value loss / (gain) on financial liabilities designated as FVTPL 1,246 (1,095)
Gain reclassified to profit or loss on disposal of foreign operation (113) -
7. Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
2023 2022
£000 £000
Earnings for the purposes of basic earnings per share being net loss (10,826) (6,710)
attributable to owners of the Company
Earnings for the purposes of diluted earnings per share (10,826) (6,710)
2023 2022
No No
Number of shares
Weighted average number of ordinary shares for the purposes of 147,481,566 99,702,257
basic and diluted earnings per share*
Pence Pence
Earnings per share
(7.3) (6.7)
Basic and diluted earnings per share
*Ordinary shares that may be issued on the exercise of options or warrants are
not treated as dilutive as the entity is loss-making.
8. Intangible fixed assets
Group Website development costs Software development costs Patents Total
£000 £000 £000 £000
Cost
At 1 October 2022 62 144 1,674 1,880
Additions - 39 427 466
Exchange differences - (10) - (10)
At 30 September 2023 62 173 2,101 2,336
Accumulated amortization
At 1 October 2022 62 65 152 279
Charge for the year - 36 110 146
Exchange differences - (2) - (2)
At 30 September 2023 62 99 262 423
Carrying amount
At 30 September 2023 - 74 1,839 1,913
Group Website development costs Software development costs Patents Total
£000 £000 £000 £000
Cost
At 1 October 2021 62 57 1,208 1,327
Additions - 72 466 538
Exchange differences - 15 - 15
At 30 September 2022 62 144 1,674 1,880
Accumulated amortization
At 1 October 2021 54 36 85 175
Charge for the year 8 25 67 100
Exchange differences - 4 - 4
At 30 September 2022 62 65 152 279
Carrying amount
At 30 September 2022 - 79 1,522 1,601
As at 30 September 2023, in the Group and Company, a total of £304,000 (2021:
£263,000) of patent assets were not yet being amortized because their useful
life was determined not to have begun.
The Group and Company hold no intangible assets that are determined to have
indefinite useful life.
9. Property, plant and equipment
Group Leasehold Office Fixtures Laboratory Total
improvements equipment and fittings equipment
£000 £000 £000 £000 £000
Cost
At 1 October 2022 2,041 182 172 2,318 4,713
Additions 45 58 15 125 243
Disposals - (47) - (88) (135)
Exchange differences (2) (2) (2) (55) (61)
At 30 September 2023 2,084 191 185 2,300 4,760
Accumulated depreciation
At 1 October 2022 231 139 44 1,717 2,131
Charge for the year 208 37 34 269 548
Eliminated on disposals - (47) - (84) (131)
Exchange differences (2) (2) (1) (21) (26)
At 30 September 2023 437 127 77 1,881 2,522
Carrying amount
At 30 September 2023 1,647 64 108 419 2,238
Group Leasehold Office Fixtures Laboratory Total
improvements equipment and fittings equipment
£000 £000 £000 £000 £000
Cost
At 1 October 2021 2,001 160 106 2,140 4,407
Additions 38 24 65 102 229
Disposals - (7) - (9) (16)
Exchange differences 2 5 1 85 93
At 30 September 2022 2,041 182 172 2,318 4,713
Accumulated depreciation
At 1 October 2021 26 102 12 1,439 1,579
Charge for the year 204 42 31 262 539
Eliminated on disposals - (7) - (8) (15)
Exchange differences 1 2 1 24 28
At 30 September 2022 231 139 44 1,717 2,131
Carrying amount
At 30 September 2022 1,810 43 128 601 2,582
10. Right-of-use assets
Group Buildings Other Total
£000 £000 £000
Cost
At 1 October 2022 5,224 18 5,242
Additions 1,029 - 1,029
Exchange differences (12) - (12)
At 30 September 2023 6,241 18 6,259
Accumulated depreciation
At 1 October 2022 835 11 846
Charge for the year 657 6 663
Exchange Differences (9) - (9)
At 30 September 2023 1,483 17 1,500
Carrying amount
At 30 September 2023 4,758 1 4,759
Group Buildings Other Total
£000 £000 £000
Cost
At 1 October 2021 4,968 18 4,986
Additions 226 - 226
Derecognition (9) - (9)
Exchange differences 39 - 39
At 30 September 2022 5,224 18 5,242
Accumulated depreciation
At 1 October 2021 263 5 268
Charge for the year 568 6 574
Eliminated on derecognition (9) - (9)
Exchange Differences 13 - 13
At 30 September 2022 835 11 846
Carrying amount
At 30 September 2022 4,389 7 4,396
11. Share capital of the company
2023 2023 2022 2022
Number £ Number £
Authorized shares
Ordinary shares of £0.01 each - allotted and fully paid 202,303,415 2,023,034 100,351,574 1,003,516
Total 202,303,415 2,023,034 100,351,574 1,003,516
The Company has one class of ordinary shares which carry no right to fixed
income.
On 28 October 2022 and 31 October 2022, the Company issued a total of
46,360,806 new ordinary shares.
On 21 August 2023 and 22 August 2023, the Company issued a total of 55,591,035
new ordinary shares.
No shares were issued on the exercise of share options or warrants during the
year (2022: nil).
12. Warrants
As at 30 September 2023 there were 7,791,803 shares reserved for issue under
warrants (30 September 2022: 7,791,803).
The Warrants were issued during the prior year, on 11 November 2021. The
Warrants have an exercise price of 58.125p and may be exercised for a period
beginning one year and ending five years after the issue date.
In certain circumstances, the Warrants may be exercised by way of a 'cashless
exercise' whereby holders are entitled to receive a number of warrant shares
equal to [(A-B) x 7,791,803]/(A), where A is the value of the Company's
ordinary shares at the time, and B is the warrant exercise price of 58.125p.
Anti-dilution provisions are also in place such that if there is an adjustment
for any dividends paid or changes to ordinary share capital at any time whilst
the warrant is outstanding, the number of shares issued on exercise of the
warrant is adjusted to take into account the proportionate change (with a
limitation on fractional shares).
On award and at each subsequent reporting date, the fair value of the Warrants
has been estimated using the Black-Scholes option pricing model. Volatility
has been estimated by reference to historical share price data over a period
commensurate with the expected term of the options awarded (effectively the
remaining term at each reporting date).
The fair value of the Warrants and the assumptions used in estimating it are
shown below:
30 September 2023 30 September 2022
Share price at date of award / value date (p) 37 11.5
Exercise price (p) 58.125 58.125
Expected volatility 84.39% 59.86%
Dividend yield 0% 0%
Expected life of option 3.11 years 4.11 years
Risk free interest rate 4.55% 4.40%
Fair value per Warrant 17p 1p
Warrant liability £1,360,000 £114,000
Warrant liability - Group and Company Total
£000
At 1 October 2022 114
Issue of warrants -
Fair value loss on financial liability designated as FVTPL 1,246
At 30 September 2023 1,360
At 1 October 2021 -
Issue of warrants 1,209
Fair value gain on financial liability designated as FVTPL (1,095)
At 30 September 2022 114
13. Lease liabilities
Group 2023 2022
Maturity analysis: £000 £000
Year 1 1,045 910
Year 2 1,052 908
Year 3 1,051 820
Year 4 1,058 813
Year 5+ 3,101 3,470
7,307 6,921
Less: future interest charges (868) (785)
6,439 6,136
Analysed as:
Current 818 736
Non-current 5,621 5,400
6,439 6,136
14. Share-based payments
Equity-settled share option scheme
In November 2016, the Company established an Enterprise Management Incentive
("EMI") share option scheme, under which options have been granted to certain
employees, and a non-employee option scheme with similar terms, except that
options granted under it do not have EMI status. EMI and non-EMI share options
were also previously granted under a share option scheme established in
October 2008 ("the 2008 Scheme"). The Company does not intend to grant any
further options under the 2008 Scheme. All of the schemes are equity-settled
share-based payment arrangements, whereby the individuals are granted share
options of the Company's equity instruments, namely ordinary shares of 1 pence
each.
The schemes include non-market-based vesting conditions only, whereby the
share options may be exercised from the date of vesting until the 10(th)
anniversary of the date of the grant. In most cases options vest under the
following pattern: one-third of options granted vest on the first anniversary
of the grant date; one-third on the second anniversary and one-third on the
third anniversary. The only exception to this pattern is 84,000 options
which were granted in the year ended 30 September 2016 which vested
immediately upon grant.
The options outstanding as at 30 September 2023 have exercise prices in the
range of £0.156 to £2.10.
2023 2022
Number of Weighted Number of Weighted
options average Options average
exercise exercise
price price
£ £
Outstanding at start of period 9,447,658 0.67 8,526,484 0.76
Granted during the period 2,721,061 0.18 1,556,757 0.28
Forfeited during the period (2,185,576) (0.48) (635,583) (0.93)
Exercised during the period - - - -
Outstanding at end of period 9,983,143 0.57 9,447,658 0.67
Exercisable at end of period 5,983,853 0.76 6,622,162 0.68
Weighted average remaining contractual life (in years) of options outstanding 6.60 5.36
at the period end
2023 2022
£000 £000
Expense arising from share-based payment transactions 332 394
The fair value of share options has been estimated using the Black-Scholes
option pricing model. Volatility has been estimated by reference to historical
share price data over a period commensurate with the expected term of the
options awarded. The assumptions for the options granted during the current
and prior periods were as follows:
2023 2022
£000 £000
Share price at date of grant £0.156 to £0.189 £0.17 to £0.40
Exercise price £0.156 to £0.189 £0.17 to £0.40
Expected volatility 55% to 56% 52% to 54%
Dividend yield 0% 0%
Expected life of option 8.7 to 9.0 years 8.6 to 8.7 years
Risk free interest rate 3.45% to 3.70% 0.73% to 1.87%
15. Events after the balance sheet date
There were no events after the balance sheet requiring disclosure in these
financial statements.
Notes for Editors
About Oxford BioDynamics Plc
Oxford BioDynamics Plc (AIM: OBD) is a global biotechnology company, advancing
personalized healthcare by developing and commercializing precision medicine
tests for life-changing diseases.
Its flagship products are the EpiSwitch® CiRT
(https://url.avanan.click/v2/___https:/www.mycirt.com/___.YXAxZTpzaG9yZWNhcDphOm86OTRjOGE5ZDRmYWIwMTc2MWFhZjYyZTZkMWJhZTFmNDg6NjphN2EwOmU5ZDc2NmYxZjYxNTk4OGE3YzY3NzkzYWRmODlmMmZmMzBmZmU2ZDZlZmNhMWI0ZmRlYjE3Nzc5N2Q4NmUzZTc6cDpU)
(Checkpoint Inhibitor Response Test) and EpiSwitch® PSE
(http://www.94percent.com/) (EpiSwitch Prostate Screening test) blood tests.
CiRT is a predictive immune response profile for immuno-oncology (IO)
checkpoint inhibitor treatments, launched in February 2022. PSE is a blood
test that boosts the predictive accuracy of a PSA test from 55% to 94% when
testing the presence or absence of prostate cancer, which has been launched in
the US and UK in September 2023.
In March 2021, the Company launched its first commercial prognostic test,
EpiSwitch® CST
(https://url.avanan.click/v2/___https:/covidseveritytest.com/___.YXAxZTpzaG9yZWNhcDphOm86OTRjOGE5ZDRmYWIwMTc2MWFhZjYyZTZkMWJhZTFmNDg6NjpmZWY1OmMzOGIyYTk2Yjk1OTgyMDNlMGFkNmQwZGU3ZmNmYzQwMzZmMGIwZDQ5NzA0OTAzNDc0NzY2ZDQyZGZiYjk5YWU6cDpU)
(Covid Severity Test) and the first commercially available microarray kit for
high-resolution 3D genome profiling and biomarker discovery, EpiSwitch®
Explorer Array Kit
(https://url.avanan.click/v2/___https:/store.oxfordbiodynamics.com/___.YXAxZTpzaG9yZWNhcDphOm86OTRjOGE5ZDRmYWIwMTc2MWFhZjYyZTZkMWJhZTFmNDg6NjpiMWU2OjMzMTc0NWQ5ZWZhODg0MmY1N2EzZjY2YWRkZDI5YjBkOTRhM2M0ZTZkOGJkNWM2Y2I5MDE4MmQ4M2Y4ZjViMDY6cDpU)
, which is available for purchase by the life science research community.
The Company's product portfolio is based on a proprietary 3D genomic biomarker
platform, EpiSwitch®, which can build molecular diagnostic classifiers for
the prediction of response to therapy, patient prognosis, disease diagnosis
and subtyping, and residual disease monitoring in a wide range of indications.
Oxford BioDynamics has participated in more than 40 partnerships with big
pharma and leading institutions including Pfizer, EMD Serono, Genentech,
Roche, Biogen, Mayo Clinic, Massachusetts General Hospital and Mitsubishi
Tanabe Pharma.
The Company has created a valuable technology portfolio, including biomarker
arrays, molecular diagnostic tests, bioinformatic tools for 3D genomics and an
expertly curated 3D genome knowledgebase comprising hundreds of millions of
data points from over 15,000 samples in more than 30 human diseases.
OBD is headquartered in Oxford, UK and is listed on AIM of the London Stock
Exchange. It also has a commercial office in Gaithersburg and a clinical
laboratory in Frederick, MD, USA, and a reference laboratory in Penang,
Malaysia.
For more information, please visit the Company's website,
www.oxfordbiodynamics.com
(https://url.avanan.click/v2/___http:/www.oxfordbiodynamics.com___.YXAxZTpzaG9yZWNhcDphOm86OTRjOGE5ZDRmYWIwMTc2MWFhZjYyZTZkMWJhZTFmNDg6Njo3ZjFmOjUxZjRiNmRmMzBiMGI3ZjA2NDJjNjFkZTc2MTM5MThjYjUxZGNiN2ZhNmRhNWRkMjY0MTAwNWY4ODA3ZjE4ZjU6cDpU)
, or follow OBD on Twitter
(https://url.avanan.click/v2/___https:/twitter.com/OxBioDynamics___.YXAxZTpzaG9yZWNhcDphOm86OTRjOGE5ZDRmYWIwMTc2MWFhZjYyZTZkMWJhZTFmNDg6NjplM2FmOjIwMTI1ZWNlOWJkYjRjZDQ1YjA4YWI2NDc0NWY1OWYzNzg1NTEzYjM0NjIwYTZmNTljNjk0YTQ1YzBkMjg0OTM6cDpU)
(@OxBioDynamics) and LinkedIn
(https://url.avanan.click/v2/___https:/www.linkedin.com/company/oxford-biodynamics___.YXAxZTpzaG9yZWNhcDphOm86OTRjOGE5ZDRmYWIwMTc2MWFhZjYyZTZkMWJhZTFmNDg6Njo2YjgzOjcwMGI3YTM5ODdkMDVmNjA5ZDgxN2FmYWVjYTJkMjIzM2E3NTgzYzM0ZGIzMGIyZDIyYWZlZTVjN2QyZmY4ZGQ6cDpU)
.
About EpiSwitch®
The 3D configuration of the genome plays a crucial role in gene regulation. By
mapping this architecture and identifying abnormal configurations, EpiSwitch®
can be used to diagnose patients or determine how individuals might respond to
a disease or treatment.
Built on over 10 years of research, EpiSwitch® is Oxford Biodynamics'
award-winning, proprietary platform that enables screening, evaluation,
validation and monitoring of 3D genomic biomarkers. The technology is fully
developed, based on testing of over 15,000 samples in 30 disease areas, and
reduced to practice.
In addition to stratifying patients with respect to anticipated clinical
outcomes, EpiSwitch® data offer insights into systems biology and the
physiological manifestation of disease that are beyond the scope of other
molecular modalities. The technology has performed well in academic medical
research settings and has been validated through its integration in biomarker
discovery and clinical development with big pharma.
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