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Oxford Biomedica is due to report results for the year to December on the 29th April. We expect updates on the order book, number of clients and medium-term guidance to be better indicators of future performance than the 2023 results themselves which we anticipate will demonstrate a downturn in most metrics. However, we expect the significant restructuring in H2 2023 to have placed the company on a sustainable footing with the cost base and expertise aligned with the new CDMO strategy. In our view the shares are significantly undervalued, trading below replacement value for the facilities, and we believe the announcement of a strong positive trend in KPI’s could result in outperformance of the shares. We expect OXB to report revenue of £90.4m for FY 2023 (consensus £90.3m) a 36% decline on FY 2022 primarily due to the fall away in revenue from AstraZeneca (circa £40m FY 2022) and lower licensing revenue. However, we expect H2 performance to be slightly better than H1. We expect gross margin to be similar, 46.7% vs 50% FY 2022. We expect high operating costs (£137.8m FY 2023E, £112.5m FY 2022A) in addition to the lower revenue, translate to an expected increase in EBITDA and operating loss. Our estimates indicate that the company will report an EBITDA loss of £60.2m (-£13.4m FY 2022, consensus -£59.2m) and operating loss of £96.1m (-£46.2m FY 2022, consensus -£89.1m), including circa £10m of restructuring expenses. We expect OXB to end the period with £65m Net Cash (£91.0m H1 2023, consensus £40.5m). Oxford Biomedica set medium term guidance in early March, targeting a FY CAGR 2023-26 of 35% with operating margins expected to be in excess of 20% by 2026, slightly above previous guidance as it now includes ABL Europe following the January completion of the transaction. This statement also indicated that FY 2024 expectations were aligned with current consensus (revenue £127.6m, EBITDA loss £9.2m). Evidence to back up the turnaround is provided by the rapid rise in the order book with £131m of orders received in 2023 (£85m FY 2022) and bodes well for future expansion given the new commercial team was put in place in late 2022. It has been further expanded during 2023, adding business development, sales and marketing expertise. At the end of 2023 OXB announced that the current contracted value signed in during the year was c. £110m, a 70% growth in pipeline value since the end of 2022. In mid-March OXB released further details on recent orders which give support to management’s confidence in its ability to deliver a revenue CAGR of 35% by 2026. It highlighted four new, later stage contracts. These contracts are across a range of geographies and vectors, with both new clients and existing customers. This emphasises the breadth of capabilities now within Oxford Biomedica. We believe OXB is now well positioned in the viral vector manufacturing sector. In our view the shares are trading below facility replacement value and confidence in the turnaround has the potential to trigger a rerating. Our 478p TP is based on a combination of DCF and peer multiple.
Oxford BioMedica plc
A further update to progress at Oxford Biomedica provides some details behind management’s confidence in its ability to deliver a revenue CAGR of 35% by 2026. Four new contracts are highlighted. Unlike the early customer wins in 2023 these are later stage contracts and as such are likely to be significantly larger in scope than the agreements announced to date. That these contracts are also diverse in both geography and viral vector is also encouraging and bodes well for utilization of the broader Oxford Biomedica network. The announcement does not change guidance, unsurprising at this stage, however it gives increasing confidence in the company’s ability to deliver. This morning’s announcement highlighted four new recently signed later stage contracts. As these products are closer to market, they are likely to have taken longer to negotiate and required more verification work to close, hence the earlier uplift in contracts was primarily earlier stage products. In H1 2023 the client profile was weighted towards Emerging Biotech (63% clients, 36% H1 2022). At the end of 2023 OXB announced that the current contracted value signed in 2023 was c. £110m, a 70% growth in pipeline value since the end of 2022. We expect an update on these metrics at the results on the 29th April. The announcement does not change guidance, which for the medium term targets a FY CAGR 2023-26 of 35% with operating margins expected to be in excess of 20% by 2026. The first contract is with a new undisclosed US-based biotechnology company for the manufacture of lentiviral vectors as the client prepares for the commercial launch of its CAR-T programme targeting multiple myeloma. This product is to be manufactured in the UK at Oxford Biomedica’s Oxbox facility. The product is not specified but earlier this week two CAR-T products for multiple myeloma, Abecma (BMS/2seventy bio) and Carvykti (J&J/Legend Biotech) both received a recommendation by the FDA Oncologic Drugs Advisory committee that their approvals be expanded to allow them to be used at an earlier stage of treatment. Historically, both companies have manufacturing capacity challenges which have limited availability. Oxford Biomedica has also signed two new programmes with existing clinical stage clients for projects including process development and GMP manufacturing. We see new contracts with existing customers as a validation of customer satisfaction with Oxford Biomedica’s services. Over one third of clients are working with the group on more than one programme. Finally, a new agreement with a US based company in cardiac gene therapy for the tech transfer, optimization and manufacture of an adeno-associated virus (AAV) based process. Oxford Biomedica gained AAV manufacturing capability in the on acquisition of the Homology Medicines facility which closed in March 2022. Following the completion of the ABL Europe acquisition OXB now has 14 GMP production suites across the EU, UK and US which we believe makes it the largest specialist cell and gene therapy CDMO. The market for outsourced viral vector supply is expected to grow to $3.8bn by 2028, with a CAGR of circa 20%. Although the transition to CDMO is proving more painful for shareholders than expected, we believe OXB is now well positioned in the viral vector manufacturing sector. In our view the shares are trading below facility replacement value and confidence in the turnaround has the potential to trigger a rerating. Our 478p TP is based on a combination of DCF and peer multiple.
There is often far more ‘under the hood’ when it comes to Biotech companies than investors realise. With this in mind, we visited Oxford BioMedica to showcase part of the impressive facilities, as well as try and unpick some of the science.
Oxford BioMedica has released the long-awaited update to guidance. This gives confidence that 2023 performance was as expected, 2024 expectations are in line with current consensus and includes an uplift to the medium-term guidance. We update our estimates accordingly and believe this is the start of a rerating of the shares which have languished in recent months. We reiterate our BUY. The update confirms FY 2023 revenue of approximately £90m (consensus £91m), suggesting a 10% uplift on H1, and operating EBITDA loss on track to be £10m better than H1 (H1 loss £35.2m, consensus -£57.7m FY 2023E). To meet this expectation the company needed to reduce costs by circa £10m in the period, with the annualized effect expected to result in a £30m lower cost base in 2024. The company ended 2023 with cash of £103.7m (Net Cash £65m) to be supplemented by a further subscription from Institute Merieux enabling investment in the ABL Europe facility. The update also provides initial guidance for 2024, broadly in line with consensus, and including the acquisition of ABL Europe which completed at the end of January. Revenue is expected to be £126-£134m including ABL Europe (FY 2022 revenue EUR15m), consensus (pre-ABL) assumes revenue of £118m. A H2 weighting to revenue is expected, we forecast a 46:54 split. EBITDA guidance remains unchanged, at ‘broadly breakeven’ excluding the ABL Europe consensus -£6.5m, with the acquisition expected to contribute a ‘modest operating loss’. We update our forecasts accordingly. As previously EBITDA profitability is expected in 2025. Medium term guidance, to FY 2026 has been increased slightly, with CAGR 2023-26 of 35% anticipated (previously +30%) with operating margins continuing to be expected in excess of 20% by 2026. This would put the company in line with our expectations for long term performance from a gene therapy CDMO. We believe OXB is very well positioned in the viral vector manufacturing sector (CAGR 15-30%). We believe the ABL Europe acquisition makes OXB the largest specialist CDMO globally. It is one of only a handful of specialist global manufacturers with experience of both development and commerical production in gene therapy and the regulatory understanding this brings. Evidence of the need for these services is provided in the rapid increase in the order book with £131m of order received in 2023 (£85m FY 2022) and bodes well for future expansion given the new commercial team was only put in place from late 2022. We reiterate our BUY recommendation and maintain our 478p target price.
Lots to like but 2H weighting may see investors wait – We continue to like the OXB story, especially so since the ‘turnaround began’, but recognise that the marginal investor may now wait to see the 1H24 print. We maintain our Buy rating on a 12-month view and make no changes to our 475p TP.
The cell and gene therapy contract development and manufacturing organization has confirmed that FY23 revenues and EBITDA will be in line with prior guidance (NSe £90m in sales and a c.£58m Operating EBITDA loss) with full results to be reported on 29 April. Following the completion of the ABL Euro
As we reinstate our forecasts and Buy recommendation, following Oxford BioMedica’s repositioning as a pureplay CDMO, we also publish a video interview with Chief Innovation Officer Dr Kyriacos Mitrophanous. Kyri describes the company’s heritage in viral vector design and manufacturing, as well as how this led to it developing superior capabilities to service customer needs.
Positive signals in business update OXB has released a business update this morning, reiterating previous guidance of approx. £90m of revenue for FY’23, a £10m HoH improvement in operating EBITDA for H2’23 and at least a doubling of annual revenue by FY’26, in line with our expectations. Guidance excludes the impact of the ABL Europe SAS acquisition (expected to complete in Q1’24). As announced yesterday, Oxford BioMedica has entered into a sale and purchase agreement with Institut Mérieux for the acquisition of ABL Europe for a consideration of €15 million, expanding the company’s capability across all viral vector types and establishing a footprint in the EU, with facilities in Lyon and Strasbourg. In the US, significant progress is being made in transferring viral vector development and manufacturing capability to the company’s site in Bedford, MA. Our view A positive update, reiterating guidance for a performance in line with our expectations. We place our target price under review. Reiterate Hold.
We reinstate our Buy, but move our TP from UR to 475p – OXB currently trades on just 1.4x FY24E revenues vs peers at 4.2x, and is world leader in viral CDMO.
OXB has stepped up the rate of change to becoming a fully-fledged CDMO. It has a highly commercially focused management, a strong pipeline of customers (24 vs 14 H1 2022), products (41 vs 28 H1 2022) and an aggressive approach to costs, which should bring earlier profitability. However, an unexpectedly weak first half, an ongoing slowdown in the market and the exclusion of milestones, resulted in a large reduction in FY revenue guidance at the interims. We update our base forecasts ahead of the completion of the ABL Europe acquisition expected prior to the year end. Recent share price weakness has resulted in shares trading at close to facility replacement cost. We retain our BUY and reduce our target price to 478p (prev 758p).
OXB’s interim results were full of surprises. On the -ve side, H1 revenue was materially behind expectations, significant cost cuts were announced, and forecasts were reset at much lower levels. On the +ve side, the Institut Mérieux deal alongside the cost-cutting has helped mitigate the immediate cash concern (our analysis agrees with this, but risk remains) and the new strategic investor has provided support for the shares. Our view is that interims mark a line in the sand: the new CEO has set out his stall and the new plan looks credible, but it entirely hinges on revenue growth. Given the poor track record on that front, we remain wary, and our forecasts are set below new guidance. We remain holders but with a lower 310p TP.
The cell and gene therapy service provider has announced interim results alongside a flurry of other news that reveal a 33% decline in H1 sales to £43m and an operating EBITDA loss of £34m ending the period with £90m in net cash. The company has seen a decline in SARS-CoV-2 spike-protein gene injec
A transformative year – Whilst the FY23E changes (and potentially some for FY24E) might be painful, in our view there is a real opportunity here for OXB and management are doing the right thing (guidance is clear). We do not believe we are too far out on company expectations in outer years, but the scale of change in FY23E moves us to Under Review whilst we rebuild the model.
Oxford Biomedica interims show a step change in speed of transformation. The appointment of the new CEO in March has supercharged the change with a proposed acquisition of an EU manufacturing site, discontinuation of the internal programmes, a focus on customer acquisition (which has already resulted in a pipeline expansion) and robust guidance. Although the interim results themselves are disappointing, the outlook and underlying trajectory are much more encouraging, with mid-term guidance meeting our expectations of the company’s potential, given the underlying growth in the cell and gene therapy market. We expect the more ambitious strategy to result in a step change in the share price and reiterate our BUY recommendation.
Disappointing FY’23 guidance, but improving business focus Revenue for the period was £43.1m vs. £64.0m in H1’22, with Bioprocessing / Commercial Development and Licensing revenue of £40.6m / £2.5m, respectively, and Operating EBITDA (as reported) of £(33.7)m vs. £(5.8)m in H1’22. Net cash at period-end stood at £90.1m. Group revenue for FY’23 is expected at approx. £90m, below current market expectations due to lower milestone and licensing payments and reduced or delayed bioprocessing orders. A key highlight during the period was the appointment of Dr. Frank Mathias, formerly CEO of Rentschler Biopharma, as CEO from 27th March. New guidance for FY’24 includes significant YoY revenue growth, with an acceleration towards broadly breakeven Operating EBITDA by the end of the year. In addition, the company expects to deliver 3-year revenue CAGR >30%, resulting in at least a doubling of total revenue by 2026, with an Operating EBITDA margin of >20% by the end of 2026. Acquisition of ABL Europe In addition, the company is in exclusive negotiations to acquire ABL Europe for £12.9m (EUR15m) including the value of £8.6m pre-completion funding from Institute Merieux. Our view Although cash losses escalated further through H1’23, with guidance for a FY’23 performance below expectations, we welcome the increasing focus on commercial execution and a more externally focused R&D effort under new management. We note that the current market capitalisation roughly equals the amount of new equity capital issued over FY’18-22. We place our forecasts and target price under review. We reiterate Hold.
Oxford Biomedica interims are expected on 20th September. This will be the first formal update from the company since the FY results, and the first at which we expect an informed strategic comment from the CEO. We expect broadly flat revenue, as the comparative period included c. £20m of vaccine production revenue, and higher losses due to the full year impact of Oxford Biomedica Solutions. We believe OXB is well positioned for the maturing of the cell and gene therapy market; this is creating a demand for viral vector manufacturing growing with a CAGR of 21-26%, as a rising number of programmes reach the clinic and there is an acceleration in product approvals. We reiterate our BUY recommendation ahead of the results.
We are downgrading our forecasts as we have fallen out of kilter with consensus. This was partly as we had underestimated changes flowing from the FY22 prelims, but also reflects management guiding forecasts down over the last few months. The net outcome is that we now expect a greater loss this year and only expect EBITDA profitability in 2025, two years later than we did this time last year. In addition, cash is becoming a concern once again and, unless addressed, there is the risk of dilutive financing. The company is due to update medium-term guidance with upcoming interims (scheduled for 20th September) and in our view it is hard to see the shares performing against this backdrop without a material change in revenue prospects. We move from Buy to Hold with a new target price of 350p, until the new team set out their stall.
Meeting Notes - Jun 29 2023
OXB IGG SFOR BPT III DLAR TBLD MGNS LIO DOM
Oxford Biomedica has over two decades of experience working with viral vectors to engineer cell and gene-based therapies (CGT). It has commenced the transition to becoming a fully fledged Contract Development and Manufacturing Organisation (CDMO) focused exclusively on this breakthrough segment of
The transformation of OXB continues, with the focus on increasing its credibility as a CDMO, shifting from a technical leader into a high quality manufacturing partner, guided by the new CEO. We expect the period of investment to continue, hence a lower TP, but the opportunity is expanding as FDA approvals in the sector accelerate. We reiterate our BUY and update our TP to 758p (prev 880p).
The 2022 prelims highlighted the encouraging operational progress as the CDMO pipeline continues to expand, and our initial thoughts on the new CEO’s debut were positive. However, we were expecting EBITDA profitability for the first (non-covid) time this year, but guidance is now for a loss in FY23E. We now estimate OXB to achieve profitability in 2024. This may be frustrating for investors, but we think investors need to look through the short-term pain, and see that foundations are being laid for long-term sustainable growth. We believe there will be enough news flow in FY’23E to catalyst the shares, but the delay to profitability will restrict upside. We therefore remain Buyers but have lowered our price target from 1010p to 800p.
A transformed business – There are some changes to mix we are likely to make, but we think OXB looks great value and the business is utterly transformed since 2017/18. Investors should refresh their understanding as the mood-music (for viral therapies) begins to change with regulators.
OXB results were broadly in line with expectations, and disguise strong underlying growth in revenue from the core business, hidden by a decline in COVID vaccine revenues. Although the expansion into the US, in addition to the scale up in the US has resulted in a high cost base, still being right -sized, a stronger commercial operation is building a broader pipeline of clients and we believe the company is very well positioned in the rapidly growing viral vector manufacturing market. We expect the biggest influence on the share price today will be the performance of the new CEO who started his role in late March. The analyst meeting is at 1pm. Encouragingly the message so far is consistent with the OXB strategy, with the full focus on the CDMO operations. We retain our BUY recommendation.
FY’22 revenue a touch ahead, with a Windrush EBITDA windfall Revenue for the period was £140m (-2% YoY), at touch ahead of our and consensus estimates and guidance at the interim stage that suggested a broadly flat HoH top-line performance (H1: £64.0m, -21% YoY). Adjusted (operating) EBITDA for the period was £1.6m, importantly including a larger than expected (£21.4m) gain from the sale & leaseback of property (Windrush Court), with adj PBT of £(46.0)m. Performance dominated by services provision Revenue from bioprocessing and commercial development (which included vaccine vector revenue of >£40m) was flat YoY at £128m, whilst Licensing revenue declined by 17% YoY to £11.9m. The integration of Oxford Biomedica Solutions (OBS) was completed over the period. We remain positive on the outlook for OBS and the added AAV capability. For 2023, OXB is targeting double-digit growth in manufacturing and commercial development revenue. Our view Although the company remained loss-making in FY’22, in spite of a significant Covid-related contribution from AstraZeneca early in the year, we continue to expect an improving financial performance over FY’23e and beyond, primarily driven by rising core services business revenue at a commercial margin in the UK and, particularly, in the US. Our stance remains cautious against a backdrop of uncertainty regarding the timeframe over which improved cash returns on the substantial investment in Oxbox (UK) and OBS (US) can be achieved. We place our forecasts and target price under review.
With no formal trading update since September last year, next week’s prelims will be an important event for OXB both in terms of news flow and for the new CEO to make an impression. While OXB may look like a proverbial swan on the surface, we suspect there may be a flurry of activity underneath the surface. Given the lack of update, the numbers should not hold any nasty surprises, and we believe that the company is on track to deliver against market expectations. Our focus will also be on 2023 guidance and whether the company is on the brink of EBITDA breakeven this year as consensus expects. If 2023 guidance is reconfirmed, we believe it could be a catalyst for shares to revert to previous levels after recent declines. We remain Buyers with an unchanged 1010p target price.
CEO Video - HydrogenOne Capital, Oxford Biomedica, NewRiver, Mining LOWdown, SMID Market Highlights
OXB NRR HGEN WKP
CEO Video - HydrogenOne Capital, Oxford Biomedica, NewRiver, Mining LOWdown, Market Highlights
Oxford Biomedica is expected to report FY results on 20th April. We expect headline numbers to look underwhelming due to the combination of a fall away in AstraZeneca vaccine revenue and an increase in underlying costs following the creation of Oxford Biomedica Solutions. However, in our view the company enters 2023 in a much stronger position, with a US manufacturing site adding to UK operations, a broader customer pipeline (including AAV contracts), appropriately financed following the sale and leaseback of Windrush Court, and a new CEO with CDMO expertise to add focus on delivery to the long-term strategy. The shares remain undervalued in our view, we retain our BUY recommendation ahead of the results.
The Alliance for a Stronger FDA – laid out a roadmap to boost gene therapy approvals, and describes 2-3 approvals per year as “failure”. The target is to progress from 2022’s five approvals –there have now been 12 gene therapies, with 2022’s the highest number by far. A four-point plan –Peter Marks, Head of FDA’s Centre for Biologics Evaluations and Research/CEBR, sets out a four point plan. Read across to Oxford Biomedica & Syncona – OXB is transformed as a business, and is on the cusp of EBITDA +ve, yet trades on a similar EV (£400m) as it did in 2017. SYNC has a broad and mature pipeline with a very robust balance sheet (c.£625m) and a track record of execution.
Oxford BioMedica plc Syncona Ltd GBP
Dr Frank Mathais starts his tenure as CEO of Oxford BioMedica today following the announcement of his appointment in November 2022. Dr Mathais has spent the last seven years running a global CDMO, Rentschler Biopharma, very relevant experience. OXB is well positioned in the rapidly growing viral vector sector, with both innovative process development and the ability to scale to commercial volumes. We expect Dr Mathais to focus on customer acquisition and retention, and driving profitability, with his appointment signaling the move to full focus on the CDMO model. We reiterate our BUY recommendation and 880p target price.
Oxford Biomedica (OXB) is a leading CDMO provider of high-quality viral vector products, but its pan-vector offering is yet to reach a scale for it to be able to deliver sustainable profitability. Continued contract wins will be key to achieving this. In this note we evaluate the next wave of CAR-T therapies predicted to drive long-term growth and show that the macro impact on R&D funding is not as negative as perceived. We push through 5-15% near-term sales upgrades today and, encouragingly, now look for EBITDA breakeven in 2023. We have also streamlined our valuation to reflect the markets attitude to risk and now only value based on known customers. We set our new TP at £10.10 (from £13.90). In our view, this is a conservative base for attractive investor returns. We reiterate BUY.
Oxford Biomedica has ended the year with three new AAV partnerships, adding to the recent announcement of a new CEO and the sale and leaseback of the Windrush Court facility clearing cash concerns and securing the future outlook. We see the opportunity for a rerating and maintain our 880p target price.
Sterling's comeback case, Oxford Biomedica, Pollen Street, Cerillion, Bango, Yü Group, SMID Market Highlights
OXB POLN CER BGO YU/ PRE SHG
Sterling's comeback case, Oxford Biomedica, Pollen Street, Cerillion, Bango, Yü Group, Market Highlights
Oxford Biomedica has announced the appointment of Dr Frank Mathias as its new CEO. Previously CEO of Rentschler Biopharma Mathias has a strong background in running a global CDMO and also in immuno-oncology making him well suited for the job. Although he does not start until March 2023, we believe the appointment removes one of the uncertainties which has recently held back the OXB shares. In our view the stock remains substantially undervalued on a fundamental basis. We reiterate our BUY recommendation and 880p TP
OXB has announced the appointment of a new CEO and Board Director, Dr. Frank Mathias, effective March 2023. Dr. Frank Mathias’s profile fits extremely well with the strategic direction of OXB, with over 30 years’ of industry experience within the CDMO industry and working with gene and T-cell based therapies. In our view, this is a high-calibre appointment, and with the share price where it is, there is arguably no better time for a CEO armed with share options to come on board. The full-time CEO role has been left vacant since January, but today’s news clears a share overhang. Executing on growth and profitability estimates, and diversifying and scaling the CDMO customer base will be key to closing the disconnect to fair value. We reiterate our positive stance.
Oxford Biomedica has completed the sale and leaseback of its Windrush Court facility raising £60m, we expect the company to end the year with around £150m cash. We believe this is more than sufficient to sustain OXB through the expansion into the US and development of the AAV opportunity and also build out the second half of Oxbox when required. The completion of this transaction removes one of the uncertainties around OXB, however, we believe the appointment of a CEO remains necessary before a rerating of the shares is likely; although in our view the stock is substantially undervalued on a fundamental basis. We reiterate our BUY recommendation and 880p TP.
Unprecedented Buying opportunity: a viral vector leader Whilst developments in the story have justifiably weighed on the shares in 2022 (beyond just the macro backdrop), we believe this has gone far too far (-72% YTD). We lower our FY22E EBITDA forecast to -£3.9m, bringing it in line with consensus, but lift FY24E+, as growth in both lentivirus and AAV is clearly picking up. Our TP drops from 1,780p to 1,170p (mostly on macro-driven CAPM changes). We see OXB as set for a re-rating once a few issues are resolved (eg the appointment of a new CEO), and note that the business is utterly transformed since it last traded on an EV of <£400m in January 2018. Miles.Dixon@peelhunt.com 30-page note
A woeful performance from the shares has disguised a transformative twelve months, with OXB demonstrating underlying bioprocessing growth, expansion into the US and AAV manufacturing and an increase in both partners and products giving a secure future outlook. The shares now look substantially undervalued compared to peers. However, this compelling investment case is undermined by difficult to interpret headline numbers where the fall away in COVID related revenue needs to be factored in, a major acquisition which has tipped the company back into losses, albeit temporarily, and the lengthy search for a new CEO which remains ongoing. We expect these factors to unwind over the next six – 12 months and see the opportunity for a rapid rerating. We update estimates and adjust our TP to 880p (prev 857p). BUY.
Higher FY’22e EBITDA offset by finance costs. As shown overleaf, we raise FY’22e revenue and EBITDA to reflect guidance at the H1’22 stage of broadly similar HoH revenue and adjusted EBITDA breakeven in H2’22. However, the upgrade is offset by higher expected costs of servicing USD-denominated borrowings, resulting in FY’22e adjusted PBT of £(35.7)m from £(34.2)m. Positive steps on debt and CapEx. The $85m debt facility with Oaktree was refinanced in October and replaced with a $50m 4-year term loan, with interest capped at 10.25%. In addition, near-term CapEx plans have been scaled down, with the c.£30m rebuild of the Windrush Innovation Centre on hold and the next phase of Oxbox development (intended use of the £50m investment by Serum Life Sciences in 2021) unlikely to start until next year. Finally, the planned sale and leaseback of OXB’s Windrush Court HQ (not currently in our model) is expected to generate around £55m, and a potential partnering of OXB’s early-stage, proprietary pipeline would reduce expected cash burn. Improving cash flow. We continue to expect sustainable free cash flow generation from FY’25e, supported by an increasing level of recurring revenue from major partners (notably Juno/BMS) and a rising contribution by Oxford Biomedica Solutions (OBS) in the US. Valuation downgrade on slower expected licensing revenue progression. Licensing revenue from partners represents an important valuation driver, but with limited visibility. We reduce expected medium- to long-term licensing revenue from partners in the UK, partially offset by upgraded revenue expectations for OBS in the US. We also raise our discount rate, from 10% to 12%, to reflect the deferred nature of major bioprocessing revenue and net cash generation. We reiterate Hold with a reduced TP of 360p.
Biotech funding and Operation Moonshot Forgive us for getting on our ‘soap box’ this week, but some of the Life Science policy/issues under discussion internationally are worth covering (and presumably anything different to the macroeconomic woes is a welcome distraction). Operation Moonshot should underpin US Biotech/manufacturing for some time (read across for Oxford BioMedica#), and will the UK Government follow suit and dust-off previous White Papers? Also, to resume more regular service: one piece of research at Bristol caught our eye: protocells (a bit like a melted terminator). Miles.Dixon@peelhunt.com
Interim results are broadly in line with expectations, and on track for our FY estimates. As expected, revenues showed a decline on H1 2021 due to the high revenues generated from vaccine manufacturing in the comparative period. Underlying double digit growth in bioprocessing, and the increase in both the number of active customers and products in the pipeline gives a strong future outlook. We retain our BUY recommendation and 857p target price.
The cell and gene therapy pharma service provider has reported an 21% decline in sales to £64m driven by a 24% decline in revenues from Bioprocessing and Commercial Development revenues partly offset by 21% growth in Licences, Royalties and Milestones. Operationally, the company has made good progr
Oxford Biomedica has made significant progress in its CDMO pipeline and has delivered a strong set of H1 results with higher non-COVID bioprocessing revenues pushing total Group revenues to £64.0m. We foresee progress in the core business and the full year outlook has been maintained although FY EBITDA is expected to be modestly negatively. As the business development pipeline continues to build, we expect further deal announcements in H2, and encouragingly management has visibility on 90% of forecasted revenues for the 2nd half. We will review our forecasts in due course but retain our BUY rating and our £13.90 TP.
1H22: progress justifies investment, on-course for FY22E OXB’s interims for the period to 30 June 2022 reveal the progress being made to capitalise on its rise to prominence in FY21, as it transitions to a global, viral-vector-agnostic CDMO. The core business (adjusting out coronavirus revenues) grew at a double-digit rate. Operating costs (£56.2m) are high vs 1H21 (£23.6m), but this reflects investment in the new US-based ‘beachhead’ into a huge AAV market (as well as one-off costs and legacy operating costs for vaccine manufacture). The Group is on course for consensus FY22E EBITDA (-£6.5m) and we believe the prospects are better than ever. Miles.Dixon@peelhunt.com
An eventful period Revenue and adjusted EBITDA for the period was £64.0m (H1’21: £81.3m) and £(5.8)m (H1’21: £27.1m profit), respectively. Results reflect an eventful period, during which Oxford Biomedica Solutions (‘OBS’) in the US was established, funded by a £80m (gross) Placing and Retail Offer at 810p/share; John Dawson retired from the CEO role; Sio Gene Therapies returned rights to the clinical-stage AXO-Lenti-PD programme in Parkinson’s Disease; and a 3-year deal was struck with AZN to make viral vector manufacturing capacity at the Oxbox facility available to AZN on an as-needed basis beyond 2022. As anticipated, bioprocessing revenue reduced significantly during the period (-24% YoY) whilst licensing revenue increased by 18% YoY to £6.7m. Cash and equivalents at period-end stood at £118.5m. New guidance for FY’22 The Group anticipates an H2 revenue performance broadly similar to H1, and broadly break-even adjusted EBITDA for the second half, with a high level of revenue visibility (>90% of expected H2 revenue covered by existing purchase orders and rolling customer forecasts), supported by a range of cost control initiatives including headcount reduction. Our view Today’s interims reflect significant YoY business change, in particular the drop-off of Covid vaccine vector revenue and the formation of Oxford Biomedica Solutions, in collaboration with US-based Homology Medicines, Inc.. We note with interest that OBS announced its first, external (pre-clinical) service agreement with a US-based, private biotech on 14th Sept. We are not making any changes to our forecasts at this time but place our recommendation and target price under review.
A new 5-year lentivector license and supply agreement, the 5th new or expanded agreement in 2022, shows growing momentum following the significant expansion of facilities over the last two years. Interim results are due on 15th September, we expect a significant decline in headline numbers over the comparative period due to high AZ vaccine revenue in H1 2021. However, we believe the company is in a strong position with a promising long-term outlook. We retain our BUY recommendation and 857p target price ahead of the results.
AlphaFold, the Biotech CAR-Ty and Franken-Swine After a temporary hiatus Cutting Edge is back! Firstly, something we have discussed in previous publications: we look at AlphaFold’s ongoing developments (essentially having ‘completed’ the study of protein structures) and its uses in drug discovery. With Coronavirus expected to make a resurgence (did it ever go away?) in the Autumn, we look at mix-and-match vaccinations and also reference exciting (CAR-T) news, which has caused some volatility in biotech this week (positive read-across for OXB#). For you science fiction fans, we saw a study that alludes to the possibility of reanimated pigs. Miles.Dixon@peelhunt.com #Corporate client of Peel Hunt
The OXB-BMS license & clinical supply agreement extension announced today is very pleasing to see, taking the total number of programme collaborations to six. It also sets a path for future agreements related to commercial supply. Today’s material expansion of a collaboration thought by many to have gone cold, is highly encouraging and emphasises the quality of OXB’s vector supply and CDMO services. Despite recent positive news, the shares are down >60% YTD. We believe OXB offers excellent value, and our unchanged TP of £13.90 offers material upside.
Oxford Biomedica (OXB) announced that it has signed a new three-year Master Services and Development Agreement with AstraZeneca (AZN) for future production of the AZN COVID-19 vaccine. As an expansion of the original agreement signed in September 2020, AZN will now have access to OXB’s world-class Oxbox manufacturing facilities on an as-needed basis from the start of 2023. Management expects revenues of approximately £30m from AZN in FY22 for batches of the vaccine already manufactured in 2022 under the original agreement. In addition, Novartis recently announced encouraging five-year follow-up data from the ELIANA clinical trial investigating the use of Kymriah in the treatment of relapsed or refractory (r/r) B-cell acute lymphoblastic leukaemia (ALL). OXB is the sole global supplier of lentiviral vector for Kymriah. We view both announcements as a positive for OXB’s future revenues. Our valuation and forecasts are currently under review.
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Early downgrades and a bear rally?, Oxford Biomedica, Ferro-Alloy Resources, ReNeuron, Market Highlights
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Oxford Biomedica has announced a new Master Services Agreement (MSA) with AstraZeneca and updated guidance from the relationship. The new MSA extends the previous agreement, which ends in September 2022, for a further three years. OXB has also indicated that it expects to recognise £30m of revenue from AstraZeneca in 2022. We update our forecasts and reiterate our BUY recommendation and 857p target price, which is based on a combination of a DCF and peer multiples.
OXB has extended its AstraZeneca vaccine collaboration signing a master service agreement framework for OXB to provide Oxbox capacity for further extensions for the next three years. This new deal provides a path for generating revenue beyond 2022, although there is no reservation fee as part of the new master service agreement. The company has guided to an additional £5m of incremental revenue under the original agreement, which drops through to a modest EBITDA improvement in 2022. Overall, this extension agreements adds endorsement for OXB’s services, although for the immediate doesn’t have a financial impact. Nevertheless, this gives partial answers to one of the bear concerns for OXB, showing that OXB can deliver on high-quality adeno-viral vector manufacture and secure repeat work. We reiterate our £13.90 target price.
Signs new three-year agreement with AstraZeneca In a positive update this morning, and lending yet further weight to the company’s reputation as a viral vector agnostic CDMO, OXB announced it has signed a new three-year master service and development agreement (MSDA) with AstraZeneca. OXB also updated that it now expects FY22E revenue from AZ (under the previous MSDA signed in FY20) to be c.£30m. This is an uplift to our current FY22E expectations (current PHe of £14.2m) and should see a c.£6m benefit to FY22E gross profit. We do not yet assume any further revenues for FY23/24E but are encouraged by the length of the new agreement. Miles.Dixon@peelhunt.com
Oxford Biomedica is differentiated within the viral vector CDMO field - small enough for innovation, but large enough for full commercialisation, with experience in both. We believe this positions it well within the growing gene therapy field, and against its CDMO peers, and although the shares are seeing near-term headwinds we believe now is a good entry point. There is the potential for significant upside as OXB begins to make headway in AAV, benefits from the increased commercial presence in the US and investment in new manufacturing technologies opens up wider opportunities. We reiterate our BUY but taking into account market conditions reduce our 12-month TP to 857p (previously 1514p), with significantly more value in the long term.
OXB is building significant capacity for AAV contract manufacturing. Our analysis of the AAV clinical landscape has identified 86 active AAV gene therapies in early stages of clinical development. These are the projects set to transition to later development and will require GMP-quality manufacturing options. Three quarters of the projects are in the hands of small biotech or academia, where in-house GMP manufacturing capability is lacking, creating a broad potential customer base for OXB. With a major opportunity to build a leading pan-vector CDMO we reiterate our BUY and £13.90 target price (from £13.80).
2021 was a transformative year for OXB. The completion of Oxbox enabled the AZ vaccine contract, which generated both the confidence and cash for expansion into the broader vector field and the Homology Medicines site acquisition. We expect 2022 to be a transition year as OXB consolidates its broader focus, and we anticipate downgrades to consensus as it invests in the broader strategy. On longer term view the company looks extremely well positioned in the growing cell therapy field, and the 2021 results show the returns possible at high levels of facility utilisation. We look for the roster of clients to continue to grow. We reiterate our BUY recommendation.
OXB delivered robust 2021 performance, with revenues growing 63% to £143m and operating EBITDA more than quadrupling to £36m. This was significantly boosted by the Astra COVID vaccine contract, which has now completed its first phase. As a result, the company anticipates lower revenues in 2022, albeit significantly higher than the 2020 result of £88m. As already reflected in our forecasts, OXB expects to be loss-making at the EBITDA level in 2022 largely driven by one-off costs for the set up and integration of OBS. The company also announced several contractual developments, including the signing of a memorandum of understanding with Serum Life Sciences, granting them right of first refusal to the exclusive use of one 2,000L bioreactor facility in the Oxbox expansion. We remain buyers of the shares, £13.80 target price.
Huge FY21 operational progress, FY22 numbers yet to settle After a transformative year, where OXB’s capabilities were really put in the international shop window (100 million doses of the Oxford AstraZeneca vaccine manufactured), the FY21A financials and operational progress look impressive, with 63% growth in revenues and a glut of new partners coming on line. The 1Q deal where OXB acquired a new 25,000 sq ft US facility is compelling (25% revenue CAGR), but it means consensus remains wide, with numbers yet to settle. For our own part, we need to revisit FY22E EBITDA (current PHe of £9.5m), as we include no ‘exceptional costs’ for this transaction. Miles.Dixon@peelhunt.com
FY’21 performance driven by AZN’s anti-Covid vaccine Revenue for the year was £142.8m, in line with consensus expectations, as previously announced, with cash & equivalents at period-end of £108.9m. Adj. EBITDA for the period was £35.9m, at the high end of the approx. £25-37m consensus range. Results mark the end of an eventful year, during which OXB’s viral vectors played a key role in containing the Covid pandemic, as part of AZN’s anti-Covid vaccine. AZN revenue also represented the main driver of financial performance, with over 100m doses produced. An important post-period event was the raising of £80m equity (gross) at 810p/share, in addition to an $85m short-term loan agreement, to fund the acquisition of an 80% interest in a newly formed US CDMO, Oxford Biomedica Solutions LLC (‘OBS’). The 20% balance is owned by Homology Medicines, Inc. (‘Homology’), a US-based developer of in vivo gene therapies. In return for its 80% holding, OXB agreed to pay Homology $130m and make a $50m capital injection into the new company. New FY’22 guidance includes adjusted EBITDA loss Vaccine production volumes are expected to be substantially lower in FY’22 YoY, with manufacturing activity currently paused and discussions continuing on a potential extension of the supply agreement between the parties. Admin and bioprocessing costs are also expected to rise as a result of investment in OBS, resulting in guidance for an adjusted EBITDA loss for FY’22 but strong growth thereafter, driven by existing and new CDMO agreements. Our view Our recommendation, forecasts and valuation remain under review since the recent completion of the OBS deal. We remain concerned about high capital intensity and low cash returns on non-Covid related vector supply to date. However, the company’s OXB's strategic position as a leading viral vector CDMO, with an offering that was recently extended into the (more dynamic, in our view) AAV segment, provides us with increasing confidence in the longer-term outlook.
OXB FY results to December are expected on 20th April. The last 12 months have been a period of significant change for OXB with the AstraZeneca vaccine contract transforming the revenue line, profitability and cash position of the company during 2021. The creation of Oxford Biomedica Solutions in the US through acquisition marks the next step in the company’s development. We believe there is demand for the services it offers and expect the results to give clarity on both near term and mid term goals. We maintain our BUY recommendation ahead of the results.
Strategic acquisition broadens the platform offering Oxford BioMedica has recently completed an £80m equity raise to acquire a US-based CDMO. This expands OXB’s expertise in viral vector manufacturing to include the high-growth ‘AAV’ (adeno-associated virus) technology. OXB is now truly a vector-agnostic platform which transforms the CDMO component of our SOTP valuation into a NPV contributor (+463p), which achieves 2.5x the equity dilution impact (-184p). We also revisit our valuation metrics in light of the current macro, but still see OXB as very undervalued and a standout winner in both specialist-CDMO and Cell & Gene Therapy thematics alike. Miles.Dixon@peelhunt.com 28-page note
New AAV manufacturing and innovation company to be established On 28th January, Oxford Biomedica (‘OXB’) announced a Firm Placing, Conditional Placing & Retail Offer at 810p/share raising £80m (gross) to fund the acquisition of an 80% interest in a newly formed US CDMO, Oxford Biomedica Solutions LLC (‘OBS’). The 20% balance will be owned by Homology Medicines, Inc. (‘Homology’), a US-based developer of in vivo gene therapies. An $85m short-term loan agreement was also announced. Completion of the deal was announced after close yesterday (10th March). The deal will provide OXB with full access to Homology’s proprietary platform for delivery of genetic payloads using bone-marrow derived AAV (adeno-associated virus) vectors. Excluding adenovirus-vectored vaccines, AAV vectors represent the largest segment (estimated at >$1bn by 2023) of the outsourced viral vector market. In addition to its technology platform including 125 staff, IP and >40 validated analytical assays, Homology will contribute its existing GMP facility to OBS, incl. three 500l bioreactors, currently operating at around 1/3rd capacity. In return for its 80% holding, OXB will pay Homology $130m and make a $50m capital injection into the new company (1/3rd of which expected CapEx). The arrangement also includes a multi-year agreement to supply Homology with viral vectors on commercial terms. OXB expects OBS to reach breakeven within 3 years. Our view: strategically sound In our view, the expansion of OXB’s capabilities in the AAV vector space is strategically sound. We have previously expressed a positive view on the AAV market, and in particular the outlook for in vivo gene therapy. In conjunction with the original announcement, Oxford Biomedica also reported a net cash position at 31st December 2021 of £109m, in line with our £109m estimate, and FY’21 revenue in line with market expectations. Following the completion announcement we have placed our forecasts, recommendation, and valuation under review.
We update our estimates to include the Homology acquisition, with the related placing which we expect the GM to approve on 8th March. We believe the acquisition puts OXB in a strong position in the rapidly growing market for contract development and manufacturing in Cell and Gene Therapy. OXB now has a global footprint, with commercial capabilities across the range of viral vectors. We update our target price to 1514p (previously 1669p) and retain our BUY recommendation. In our view, the uncertainty around the fundraising and acquisition, in association with weak biotech markets has created a strong buying opportunity.
We update our model to reflect OXB’s deal with Homology to create Oxford Biomedica Solutions (OBS). In addition, we have updated forecasts to reflect Sio Gene’s decision to return rights for AXO-Lenti-PD, lower forecast income from the Oxford COVID vaccine and lower peak Kymriah sales. While these changes result in lower near-term EBITDA, we believe OXB’s pan-vector CDMO platform will build significant long-term value. Our TP (£13.80, from £18.40) represents an average of four valuation approaches. We reiterate our BUY recommendation.
Oxford BioMedica is to acquire an FDA approved AAV manufacturing site in the US including the related personnel and IP. This is in line with its previously stated strategy. Although the transaction is not cheap, we see this as a strategically sound step; the ongoing relationship with Homology Medicines as preferred customer reduces the risk in the transaction as it gives OXB immediate CDMO revenue from the site. We continue to expect new contracts for the UK facilities in the near term, including the extension of the AZ vaccine contract, consequently see the shares as very good value. We update our target price for the discounted placing reducing it to 1669p (previously 1780p) and expect to update our estimates in due course.
Oxford BioMedica has signed a new lentivector partnership, in line with the target set at the interims, and also renegotiated its partnership with Novartis. Although the latter is expected to reduce 2021 estimates slightly, it opens up the market for OXB, as it removes the exclusivity initially attached to this relationship. On balance we see this as a positive. We continue to await another non-lentivector collaboration, and also an announcement on the AstraZeneca COVID vaccine contract. We retain our BUY recommendation in anticipation of these broader applications of the OXB technology.
This morning OXB and Novartis announced an extension of their CAR-T collaboration to the end of 2028. This is good news as Novartis has reiterated its commitment to the CAR-T field with new data for Kymriah presented at ASH over the weekend, plus excitement about its new T-Charge technology, where we are confident OXB is involved with vector supply. However, Novartis has removed its minimum order requirement, which will have a minor negative impact on near term financials. In return, OXB regains full rights to work with any partner on any target in the CAR-T field. Our DCF-derived TP of £18.40 is unchanged and we reiterate our BUY recommendation.
Boehringer Ingelheim has exercised its option relating to a novel inhaled gene therapy for treatment of cystic fibrosis, resulting in a small upfront to OXB. We make no changes to our forecasts, but view this as further validation of the technology. We continue to see OXB well positioned for growth as a CDMO specializing in viral vector manufacture and global demand for these services is high (albeit visibility on new contracts is currently limited). We retain our BUY recommendation and 1780p target price.
We upgrade our target price to take into account both the additional capacity in development following the £50m investment from Serum Life Sciences and the likely upgrades assuming an extension to the AZ vaccine contract. OXB is well positioned for growth as a CDMO specializing in viral vector manufacture and global demand for these services is high (albeit visibility on new contracts is currently limited). We retain our BUY recommendation and increase our target price to 1780p.
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OXB’s success with the Astra adenovirus-based COVID vaccine has proven their capability with viral vectors beyond lenti. The company is now pivoting to an all-vector strategy, quadrupling their addressable market in 2026. To meet this demand, the company will now develop the fallow area at Oxbox, potentially doubling capacity. Funding comes from a strategic investment by Serum Life Sciences of c.£50m. We assume this creates a path to a doubling of CDMO revenues by the end of the decade, which lifts our DCF-based target price from £15.60 to £18.40. We retain our BUY recommendation.
Upgrading forecasts on the back of strong 1H21 results We update our model to reflect the recent 1H21 results. A higher gross margin and lower R&D expense increase our operating profit estimates by £6.7m (43%) in 2021E and by £2-3m (19-28%) in subsequent years. This is offset modestly by the higher number of shares resulting from the Serum Life Sciences equity investment. Our new 2021E EPS is 23p vs 17p previously; our new 2022E EPS is 8p vs 6p previously. The removal of three early-stage proprietary pipeline products from our NPV sum-of-the-parts and the higher share count leave our target price unchanged. We remain conviction buyers of OXB. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com 7-page note
OXB interim results are in line on revenue but significantly ahead on profitability as the scale of the AZ contract enables the covering of central costs. We expect consensus EBITDA to rise significantly as this trend continues to H2. An expected extension to the AZ contract is also likely in our view, this would result in an further uplift to 2022 estimates. The results confirm the strategic shift to broader viral manufacture, though scope and timing remain elusive. In addition, a £50m strategic investment by Serum life Sciences allows expansion of capacity at OxBox and is likely to result in additional contracts, and potentially a closer relationship in time. We maintain our BUY recommendation.
£50m equity investment by Serum Institute for expansion Serum Life Sciences, a subsidiary of the Serum Institute of India, said it will invest >£50m in OXB in equity representing 3.9% of the outstanding shares after the capital increase at a price equal to last night’s close. Proceeds will be used to fund the development of the fallow area at Oxbox, OXB’s 84,000 sq. ft manufacturing facility in Oxford, into a flexible advanced manufacturing space and the validation of several cGMP (good manufacturing practice) suites, expected to come online in mid-2023, including manufacturing capacity for viral vector-based products, including vaccines. This is a further significant positive, for which we will update our model shortly. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
H1 trends in line with expectations Revenue for the period was £81.3m vs. £34.0m in H1’20, with ‘operating EBITDA’ (including other operating income) of £27.1m vs. £(0.4)m in H1’20 and PBT of £19.2m vs. £(6.2)m in H1’20. Reported trends are in-line with the upgraded FY21 guidance provided on 18th May, highlighting cumulative revenue from AstraZeneca (for large-scale manufacturing of the adenovirus-vectored anti-COVID-19 vaccine AZD1222) of in excess of £100m by the end of 2021. AZN is currently operating 3 manufacturing suites at OxBox. Juno and Beam on track The Group’s collaborations with Juno/BMS and Beam Therapeutics continue, and are expected to contribute meaningfully to FY’21e commercial development revenue. Our view Oxford Biomedica continues to play an important role in the fight against SARS-CoV-2, and AstraZeneca-related economics have transformed the near-term outlook. We remain, however, uninspired by the proprietary pipeline, including the partnered, clinical-stage AXO-Lenti-PD programme, and welcome management’s decision to focus its internal development efforts on the currently preclinical, CAR-T programme OXB-302. Although estimates and guidance for FY’21 indicate a further rise in headcount, R&D expenditure and capex, we continue to expect sustainable future profitability, assuming partner-funded facility expansion. Our forecasts remain unchanged, with our recommendation and target price (formerly 1,354p) under review.
Oxford Biomedica has delivered a strong set of H1 results, with a jump in bioprocessing revenues (largely from the Astra vaccine) pushing revenues to £81.3m (+139%) and delivering H1 EBITDA of £27.1m (versus broadly breakeven in 2020). While H2 will not be as strong (planned suite cleandown) the company anticipates FY EBITDA of around £35-40m which is ahead of our forecast. Importantly, OXB now sees itself as an all-vector platform (as delivered in the recent BI deal) and can address a significantly larger end market. As a result the BD pipeline is full and the company expects further deal announcements in H2. Buy, TP £15.60.
New guidance implies c.14% FY21 EBITDA upgrade 1H revenue growth was very strong, driven by the AZN vaccine collaboration. New FY21 guidance is in line with our revenue projection, but implies a minimum c.£5m (14%) upgrade to our EBITDA forecast. Capex plans have been upgraded (though capex for 2021 is guided to be less than we currently carry), and the in-house proprietary pipeline is being honed for greater focus, all of which we believe should be well received by investors. We reiterate our conviction Buy recommendation. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
OXB H1 results to June are expected on 22nd September. We maintain our forecasts and target price of 1479p ahead of the results, we look for commentary on the likely increase in contribution from AstraZeneca and visibility on future bioprocessing contracts with either lentivector or other viral vectors to guide changes.
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Novartis’ cell therapy, Kymriah, has emerged as an important growth driver in its oncology franchise, and thus also a strong value driver for Oxford Biomedica. Already approved for DLBCL and ALL, recent data at ASCO in follicular lymphoma should underpin label expansion next year, while data from the BELINDA trial (second line DLBCL) in H2, should further reinforce its blockbuster potential. We now attach greater value to OXB’s proven CDMO capability, based on recent deals in the field. Our TP climbs from £13.30 to £15.60 and we reiterate our BUY.
The AstraZenca COVID-19 vaccine contract has demonstrated the versatility of the OXB platform, and highlighted that the skills that make it a leader in lentiviral manufacture are transferable to other viral vectors. We estimate this increases OXB's addressable market 2-3 times. With an expanded pipeline of opportunities, we expect OXB to announce more manufacturing contracts. We move our recommendation to BUY and increase our target price to 1479p (previously 1033p).
Step-change up in our target price on strong execution In this note, we explain why we believe the share price has a lot of catching up to do with the pace of positive change at OXB over 2020. The recent guidance upgrade increases our 2021E EBITDA 70% and raises our EPS to 17p from 6p previously. Forecasts beyond 2021 remain volatile, but over-focusing on near-term P&L moves misses the value in OXB’s much-enhanced position in the burgeoning gene and cell therapy space. We introduce a new TP methodology based on the weighted average of our bull/bear/base valuations for a 2,150p TP. Buy. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com 14-page note
Oxford Biomedica (OXB) is one of few global lentiviral vector manufacturers with capacity in a thriving cell and gene therapy industry, and its FY20 results highlight strong operational progress throughout the business. OXB boasts a diversified revenue base; and FY20 benefited from new deals including Juno/BMS covering multiple CAR-T programmes, as well as increased bioprocessing and commercial development activities for several customers including Novartis and the AZN COVID-19 vaccine. Post period, OXB upgraded its financial guidance for the COVID-19 vaccine supply agreement with AZN to in excess of £100m by end FY21. In the long term, much value resides in OXB’s ability to develop and monetise its own CGT assets, which are progressing towards the clinic. Bolt on acquisitions that complement the pipeline or enhance technology capabilities represent further opportunities. We value OXB at £846m or 1,027p/share.
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More cell & gene M&A highlighting strong value in OXB US Contract Research, Development and Manufacturing major Charles River has announced another strategic acquisition in the cell & gene therapy space, this time for 9x EV/sales 2021E. Based on what we see as OXB’s superior capabilities, track record and growth, we believe this implies strong upside to OXB’s valuation (currently c.5x EV/sales 2021E). We reiterate our conviction Buy recommendation and continue to see OXB as a Top 3 pick in UK small & midcap healthcare. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
This morning Oxford Biomedica has announced a significant increase in this year’s Astra vaccine contract. By year-end the cumulative expected revenues will be in excess of £100m (previously in excess of £50m). We have added this additional revenue, at an EBITDA margin of around 30%, to our forecasts. At this stage, we have not adjusted forecasts beyond 2021, but a further Astra extension feels increasingly likely. Our target price climbs from £13 to £13.30 on the additional income, and with 33% upside we reiterate our BUY recommendation.
Material upgrade to 2021 guidance from vaccine demand In a material positive surprise, OXB has doubled its guidance for cumulative revenue from the vaccine collaboration to end 2021 to >£100m. We estimate this implies a c.40% increase to our revenue estimate and a double-digit £m upgrade to our £18m EBITDA for 2021. We continue to expect an extension of the current agreement in H2 21, given OXB’s clear status as the collaboration’s most reliable CDMO partner. Reiterate Buy. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
FY’20 was in line with expectations. FY’20 results on 16th April were in line with our expectations for revenue and adjusted PBT, with a larger than expected RDEC tax credit (£4.6m included in FY’20 R&D spend) offset by higher than expected depreciation. Our EBITDA forecast changes, detailed overleaf, mainly relate to a shift in the timing of milestones and royalties. Spare capacity at Oxbox. Currently, AZN uses 3 Oxbox cleanrooms for the production of adenoviral vaccine vectors. Encouragingly, a potential migration of manufacturing for Juno and Novartis to Oxbox can be achieved through capacity re-configuration: OXB is not planning to expand Oxbox further without a substantial upfront commitment by AZN or another partner. We remain uninspired, however, by the proprietary pipeline. In our view, OXB-302’s target (5T4) has already been heavily exploited; OXB-203 targets a competitive indication dominated by Bayer/Regeneron’s Eylea®, with Novartis’ Beovu® and Eylea® biosimilars threatening; and AXO-Lenti-PD carries high risk given the small Phase I/II Part A dataset (2 patients, open-label) and the limited resources of the partner (NASDAQ: SIOX $150m). Increased confidence in the outlook. Although guidance for FY’21 indicates a further rise in headcount, R&D expenditure and capex, we expect sustainable profitability from FY’21e. Our revised DCF-based valuation (assuming only partner-funded expansion) implies a revised target price of 1,007p, including AXO-Lenti-PD at 80p/share. We move to Hold.
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The Cutting Edge: cool stuff from the frontiers of medicine Gene switches that can be turned on to self-heal your heart after a heart-attack, a self-propagating genetic warhead against malaria and zombie genes that remodel the brain after death. Medical science that is stranger than fiction . . . Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
Yesterday, Oxford Biomedica reported on an excellent 2020 and set the scene for continued progress in 2021 and beyond. The benefits of OXB’s involvement in the Astra COVID vaccine programme are shining through. The company expects revenues from Astra to total over £50m by the end of 2021 and is in early conversations regarding next steps beyond 2021. More importantly, this project has proven OXB’s capability in adenoviral vectors and this opens up a new CDMO customer opportunity at least as significant as the lentiviral field. We expect deal momentum to continue. Our combined DCF / peer value target price increases to £13.00 (from £12.80) and we reiterate our BUY.
FY20 beat, strong Q1 FY21 cash generation, bullish outlook In January, we named OXB among our top 3 picks for 2021 and today’s release cements our confidence. FY20 revenue and EBITDA were above our forecasts and consensus. The first three months of 2021 has seen cash increase to £65.9m, up from £46.7m in December, as projects incl AZN ramp up. OXB is exercising its option to buy two of the 1000L bioreactors currently on loan to it, indicating confidence in the demand outlook, and expects to increase new partners and programmes with existing partners again in 2021. We reiterate our Buy rating. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com 2-page note
Today Oxford Biomedica has announced that Sanofi will move to terminate their collaboration in the field of haemophilia gene therapy. Sanofi previously said it wanted to move into phase 3 next year. We understand that OXB was providing clinical batches on schedule and this doesn’t indicate an issue on OXB’s side in terms of ability to manufacture. More likely, this is a re-prioritisation in the pipeline from Sanofi’s perspective. While disappointing, we didn’t include this project in our DCF given its challenging nature, thus our £12.80 TP is unchanged.
Sanofi terminating collaboration in haemophilia Sanofi has terminated its haemophilia gene therapy collaboration with OXB, post a review by Sanofi of its pipeline position in haemophilia. The early stage of the project means this has no effect on our explicit forecasts for OXB, and reduces our NPV SOTP-based TP by a modest 50p to 1,150p from 1,200p. OXB’s business development pipeline remains strong, as does the activity related to manufacture of the Oxford/AZN vaccine. We reiterate our conviction Buy recommendation on OXB and would use any sentiment-driven weakness in the shares today as a buying opportunity. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
Sanofi terminates early-stage collaboration agreement in Haemophilia Oxford Biomedica has this morning announced that Sanofi intends to terminate its Collaboration and License Agreement with the company. Deal signed in March 2018 Oxford Biomedica entered into the partnership deal with Bioverativ (now part of Sanofi) in March 2018, to develop in vivo gene therapies for haemophilia A (Factor VIII deficiency) and haemophilia B (Factor IX deficiency). Under the terms of the agreement, Oxford Biomedica received $5m upfront (upon granting Bioverativ a licence to the lentiviral vector platform) and was eligible for up to $100m of additional milestone payments relating to process development, technology transfer, regulatory progress and sales levels, in addition to a royalty of potential sales and technology access fees over the period in which the lentivirus technology is provided. No change to forecasts The agreement has not generated material revenue, and we were not including any future economics from the early-stage collaboration in our model. We are not making any changes to forecasts, and our recommendation remains Sell on valuation grounds. Our target price is under review in the run-up to FY results on 15th April.
The Cutting Edge: cool stuff from the frontiers of medicine Innovations that caught our eye this week include a promising approach to making universal vaccines using a method worthy of Dr Frankenstein. Meanwhile, “organs-on-a-chip” are helping to unravel the mysteries of Parkinson’s and other complex diseases, which could unlock new avenues to potential cures. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
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Charles River acquisition highlights growth in cell & gene Charles River Laboratories has acquired Cognate, a private cell & gene therapy CDMO company, for US$875m in cash. The deal multiples and - more importantly, the strategic rationale with respect to the cell & gene growth fundamentals - are highly supportive of our conviction Buy rating on OXB, which we highlighted in our 2021 outlook piece last month as one of our Top 3 picks for 2021. We reiterate our conviction Buy rating on OXB. Amy.Walker@peelhunt.com, Miles.Dixon@peelhunt.com, Anchal.Verma@peelhunt.com
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2020 was an eventful year with several major new collaborations and the approval of the second product powered by OXB’s viral vector capabilities, the Oxford / Astra vaccine. Although not a big product in financial terms, it is a major validation of OXB’s platform. Investor attention may be focussed on the vaccine but we are excited by the further 24 projects in development, and particularly around the high potential Novartis and Juno projects where we should see value-inflecting data. We raise our TP to 1280p (from 1050p) and reiterate our BUY recommendation.
Axovant has released an update on the ongoing SUNRISE-PD study. This trial is testing AXO-Lenti-PD, a gene therapy developed in collaboration with Oxford Biomedica, in Parkinsons disease. The latest update (cohort 2) is just a handful of patients but shows clear signs of efficacy on a range of measures. The project will now progress to a controlled study (EXPLORE-PD) in 2021. We value AXO-Lenti-PD at £1.74 in our OXB target price, but note this assumes a heavy risk penalty of just 15% probability of approval. We reiterate our BUY recommendation.
Oxford Biomedica (OXB) is a pioneer and global leader in the development and manufacture of commercial-scale lentiviral vectors (LVVs), a critical component of cell and gene therapies (CGTs). An investment in OXB gives a broad exposure to this emergent industry. During the past 12 months, OXB has effectively doubled its CDMO partner programmes to 20, while broadening its own gene therapy R&D portfolio offering. Partner Axovant expects to report six-month efficacy data on AXO-Lenti-PD (end 2020), durability of its effect in Parkinson’s disease is key. Longevity to the OXB investment case rests on the growing diversity of its revenue streams and maintaining its position as an innovator. We expect OXB to lead the industrialisation of LVV manufacturing. This is critical to opening up new treatment areas where much higher vector quantities are required, especially for in vivo treatments. We value OXB at £711m.
Oxford Biomedica has made significant progress building its CDMO pipeline over the last year and now has 20 partnered projects, up from 10 a year ago. This has helped underpin 24% growth in bioprocessing and commercial revenues, and this is before any potential upside from the recently agreed vaccine supply relationship with AstraZeneca. The company expects a stronger second half with further partnered revenue momentum. We have raised our forecasts on this growing CDMO activity, but our product SOTP is unchanged at £10.52. We reiterate our BUY recommendation and £10.50 target price.
Oxford Biomedica delivered strong first half results, with a notably good performance from the underlying bioprocessing and commercial development operations, which grew 24% to £23.4m. This shows the excellent progress from existing deals (e.g. Kymriah) and the addition of new collaborations (e.g. Juno). The company expects an even stronger H2, with revenues from the AstraZeneca collaboration kicking in. Further ahead the company is confident that it will deliver more partnerships, with Oxbox coming on line to support this growth. Reiterate BUY, TP unchanged at £10.50.
This publication marks the launch of our new periodical series where we interview CEOs from some of the most disruptive UK listed healthcare companies. In today’s edition we interview the CEO of Diaceutics who explains how it is helping to break-down the barriers to the uptake of precision medicines, one of the fastest growing segments in pharma.
Today Oxford Biomedica and Astra announced an expanded supply agreement relating to the COVID vaccine candidate AZD1222. This three year Master Supply and Development Agreement has an initial 18-month phase with up to £50m in batch revenues (of which £15m is guaranteed as a reservation fee). It will involve three OxBox suites, one 200L facility that is currently operational, and two 1,000L facilities using VMIC equipment. It is expected to become operational within the next two months. While the commercial opportunity, measured in the tens of millions, is not game changing in itself, it is further validation of OXB’s state of the art viral manufacturing capability. Furthermore, this will accelerate and help fund the expansion and validation of the core OxBox facility.
Two notable events further support Oxford Biomedica's cell therapy operations this week. First, US biotech company Beam Therapeutics has signed a development, manufacture and license agreement with OXB including a 3 year clinical supply agreement to support CAR-T development at Beam.
Oxford Biomedica is a leading Contract Development and Manufacturing Organisation (CDMO) in the field of lentivirus vectors (LVVs), a well-established platform technology for gene transfer. The company’s strong industry position is evidenced by a number of collaborations, licensing & supply agreements with major advanced therapy companies, including Novartis, Juno Therapeutics (BMS), Orchard Therapeutics and Bioverativ (Sanofi). We expect continued strong top-line growth for the foreseeable future, powered by an ever-expanding industry pipeline of advanced therapies with a gene transfer component. We expect revenue growth from £64m in 2019 to £101m in 2021e (a mix of process development, manufacturing and licencing revenue), which could prove conservative in the event of additional, major CDMO agreements. The proprietary pipeline continues, however, to be a drag on profitability. Sanofi’s recent decision to return rights to SAR’459 and ‘869 has left AXO-Lenti-PD (Parkinson’s) as the only progressing, clinical-stage proprietary programme, and recruitment into the SUNRISE-PD Phase I/II trial has been slow. We await a potential licensing of OXB-302 in particular with interest, but economics could prove back-loaded. We initiate coverage with a Sell on valuation grounds. We expect the OxBox facility to enable sustained profitability from 2021e, but the continued re-investment requirement (£62m CapEx over 2020-22e, following £67m over 2014-19) dampens expected cash returns. Our valuation implies a TP of 574p (CDMO activity 432p, AXO-Lenti-PD 142p).
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Oxford Biomedica successfully raised £40m in gross proceeds from last week’s equity issuance. The majority will fund CAPEX expansion plans following a major year of progress with external partnerships.
Oxford Biomedica (OXB) has signed a five-year collaboration agreement with the Vaccines Manufacturing and Innovation Centre (VMIC), a non-profit organisation established as the UK’s response to emerging infectious diseases. The agreement focuses on the scale up and GMP manufacture of the adenovirus-based COVID-19 vaccine candidate AZD1222 (previously ChAdOx1 nCoV-19), which is in a Phase II/III study. Initial data from the precursory Phase I/II study are expected in Q320. AstraZeneca is now responsible for the global development, manufacture and distribution of the vaccine and in May signed a one-year clinical and commercial supply agreement with OXB for multiple batches expected in 2020. Our OXB forecasts and valuation of £709m are unchanged.
Oxford Biomedica joined the Oxford University COVID-19 vaccine consortium in mid-April as a manufacturing partner. A few weeks later AstraZeneca teamed up with Oxford in a major collaboration to develop and commercialise this vaccine on a global basis.
Oxford Biomedica’s (OXB) FY19 results highlight strong operational momentum despite capacity constraints. OXB is investing for future growth and its 84,000 sq ft state-of-the-art bioprocessing facility OxBox is on track to produce commercial grade batches in Q220. Deals made include expansion of its commercial supply agreement with Novartis by five years and R&D partnerships with Santen and Microsoft, followed post period with the BMS/Juno licence and supply agreement. We expect further platform deals to be announced in 2020, as OXB exploits its position as the only FDA-approved, commercial-scale lentiviral vector (LVV) manufacturer in the US. In the long term, much value resides in OXB’s ability to develop and monetise its own gene therapies, an out-licence deal is also on the cards and OXB plans to move several proprietary gene therapy assets into the clinic in the next 12 to 18 months.
Oxford Biomedica has delivered significant progress in the last 12 months, most clearly emphasised by the growth in partner programmes, from 9 to 19. Oxford Biomedica's ability to support these projects, and more to come, will depend upon their successful commissioning of their new manufacturing facility, Oxbox.
Oxford Biomedica delivered sales of £64.1m in 2019, with an operating EBITDA loss of £5.2m. Although heavy investment saw the cash burn at £26.3m for the year, the company ended 2019 with £16.2m cash.
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Oxford Biomedica has made enormous progress since our 2019 initiation. The completion of the new OxBox manufacturing facility is already unlocking demand for future capacity.
Following the 2017 commercial launch of partner Novartis’s Kymriah (a CD19-targeting CAR-T that is approved for pALL and DLBCL), Oxford Biomedica (OXB) is the only FDA-approved lentiviral vector manufacturer worldwide. Validation of its capabilities continues with the recent licence and clinical supply agreement (LSA) with Juno Therapeutics (part of BMS group), a pioneer in cell and gene therapy research. The LSA grants Juno a non-exclusive licence to OXB’s LentiVector platform for its application in a number of novel CAR-T and TCR-T programmes. This is a significant deal, albeit early stage, in terms of multiple programmes and further diversifies OXB’s revenue streams. As these assets move towards approval, commercial manufacturing supply provides further upside. Our valuation of OXB increases to £718m.
The University of Oxford's Jenner Institute is the leading UK body working on the development of a COVID-19 vaccine. Their consortium is moving fast -first in man trials will start later this month.
Today's announcement of a clinical supply agreement with Juno cements Oxford Biomedica's position as the premier lentiviral vector supplier for CAR-T therapy. At the outset of the cell therapy revolution there were 4 major pioneers: Novartis, Kite, Juno and Bluebird.
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Oxford Biomedica (OXB) is a pioneer and global leader in the development and manufacture of commercial-scale lentiviral vectors (LVV), a critical component of cell and gene therapies. Ongoing investment in manufacturing capacity and R&D is imperative to reap economic returns in this highly innovative and potentially lucrative therapy area, which has witnessed a step up in investment globally. Multiple deals in 2019 included an expansion of its commercial supply agreement with Novartis by five years and R&D partnerships with Santen and Microsoft. We expect further platform deals to be announced in 2020, as OXB exploits its position as the only FDA-approved commercial-scale LVV manufacturer. In the long term, much value resides in OXB’s ability to develop and monetise its own gene therapies. We value OXB at £692m.
Oxford Biomedica (OXB) has announced the expansion of its commercial supply agreement with Novartis by five years. While expected, this removes any uncertainty around the future of the partnership and is a validation of OXB’s investment in new manufacturing facilities. Novartis is now committed to paying OXB a minimum of $75m (for vector batches) in manufacturing revenue over the five-year extension. Additionally, OXB will be paid a mid-single digit £m facility reservation fee. As part of this, OXB will dedicate some of its new 7,800m2 manufacturing facility (OxBox) to Novartis while also ensuring that at least two of its GMP facilities are capable of commercial supply, essentially ensuring a dual-sourced supply if the need arose. We value OXB at £692m vs £673m previously.
Oxford Biomedica is the leading supplier of lentiviral vectors for gene therapy and Novartis’ Kymriah was the first lentiviral engineered therapy to reach the market. At its recent R&D day Novartis reiterated its commitment to Kymriah, which is set to become a blockbuster product, and a raft of new cell therapy products set to enter the clinic.
Oxford BioMedica (OXB) is a gene-based medicine viral-vector biopharma company. It offers vector manufacturing and development services, while developing proprietary therapies, with its LentiVector® platform. Growth in gross income and profitability were driven by new licensing deals in 2018. Despite steady growth in 1H’19 group sales (bioprocessing and commercial development), a reduction in licensing income resulted in a first-half operating loss; the absence of significant deals in 2019 has also dampened the shares. Although interim results were in line with our expectations, they highlight the importance of 2H’19 for a full-year profit.
Oxford Biomedica’s (OXB) interim results highlight strong operational and financial momentum to date. The Novo Holdings equity investment (£53.5m) in May has enabled OXB to fully repay the debt facility, effectively strengthening the balance sheet. It is investing ahead of increasing demand for its lentiviral vector manufacturing capacity with the build-out of OxBox. The new facility will more than double capacity and is expected to be ready for commercial vector production in H120. Top-line growth continues to benefit from the near-term ramp-up of Kymriah and rapid advancement of partnered asset AXO-Lenti-PD (Axovant), crystallising in a $15m development milestone payment. We value OXB at £673m.
Oxford Biomedica (OXB), founded in 1995, is a leading company in gene therapy research. After a long journey, the concept is coming of age. OXB’s technology is core to Novartis’ Kymriah, the first gene therapy approved in the US.
Oxford BioMedica’s (OXB’s) interim results were broadly in line with our expectations for 2019. The decrease in H119 revenues to £32.1m (-9%) largely reflects the exceptional performance in the previous period, which was bolstered by strong licence income (H119: £13.3m vs H118: £19.9m) primarily from upfront payments with the Axovant and Bioverativ deals signed (£18.5m combined). Importantly, in H119 bioprocessing revenues grew 23% to £18.8m, which we expect was driven by the continued uptake of Novartis’s CAR-T Kymriah. Typically, bioprocessing revenues are back-end loaded so a stronger performance can be expected in the second half of the year. With OXB transitioning one of its GMP suites across to bioreactor processing in H119 and its new OxBox bioprocessing facility expected to be fully operational in Q220, we expect this growth to continue in the near term. We retain our valuation of £649m.
Oxford BioMedica (OXB) is a specialist, advanced therapy, viral-vector biopharma company. It offers vector manufacturing and development services, while developing proprietary drug candidates, with its LentiVector® platform. 2018 saw significant growth in gross income, the majority through licensing deals. A new R&D collaboration deal with Santen, coupled with the recent equity financing and debt repayment, demonstrate OXB’s deal-making ability and its strategy to secure future, long-term potential. Near term, this R&D arrangement will provide modest additional profit, adding confidence to OXB’s new net cash status in 2019.
Oxford Biomedica (OXB) and Santen Pharmaceutical have entered into an R&D collaboration to develop gene therapy vectors for an undisclosed inherited retinal disease. The collaboration will focus on generating preclinical proof of concept and includes a licence to OXB’s LentiVector platform, in addition to access to its manufacturing capabilities. OXB is entitled to an undisclosed milestone payment on Santen exercising the option to the LentiVector platform, as well as development milestones and an up to 10% royalty on net sales. This new collaboration continues to demonstrate OXB’s track record of signing partnerships and again validates its position as a leading global developer of lentiviral vectors. We retain our valuation of OXB at £649m. We do not currently include the Santen deal in our valuation, but will reassess this once more details on financial terms and development strategy (including indication) are available.
Oxford BioMedica (OXB) is a specialist, advanced therapy, viral-vector biopharma company. It offers vector manufacturing and development services, while developing proprietary drug candidates, with its LentiVector® platform. 2018 saw significant growth in gross income, primarily through licensing deals, to deliver OXB’s first underlying operating profit. OXB is, however, carrying a significant loan of $55m, which is relatively expensive with an interest rate of 9% plus US LIBOR, and also exposes it to forex risk. Equity financing of £53.5m from Novo Holdings A/S has been agreed, allowing repayment of the loan and securing a strategic partner.
Oxford Biomedica (OXB) is a pioneer and global leader in the development and manufacture of commercial-scale lentiviral vectors (LVV), a critical component of cell and gene therapies (CGT). OXB has numerous value streams, including manufacturing, royalties and milestones on partnered product sales. Its technology and R&D pipeline have been validated by numerous partnerships (Novartis’s CAR-T Kymriah, Axovant deal for AXO-Lenti-PD). We believe the greatest opportunity lies in OXB’s own gene therapy R&D capabilities; higher investment now is imperative to reap future economic returns in this highly innovative and potentially lucrative therapy area. We value OXB at £649m.
Oxford BioMedica (OXB.L) receives strategic investment from Novo Holdings
OXB is a specialist, advanced therapy, viral-vector biopharmaceutical company. It offers vector manufacturing and development services, while developing proprietary drug candidates. OXB also receives royalties on commercial products developed with its LentiVector® platform. 2018 delivered significant growth in gross income, primarily through licensing income from new partnership deals with Axovant Sciences (AXON) and Bioverativ (BIVV). Licensing income was of a magnitude that delivered OXB’s first full-year underlying operating profit, despite weaker-thananticipated bioprocessing/commercial sales and investment to increase capacity.
Strong operational momentum at Oxford BioMedica (OXB), as evidenced by its interim maiden operating profit of £9.4m (vs a loss of £2.2m in H117), highlights the strength in the company’s diversified business model. We continue to expect ongoing growth in the top line, driven in the near term by the commercial ramp-up of Kymriah (Novartis), the progression of Bioverativ’s haemophilia products to the clinic and the rapid advancement of its partnered products with Orchard and Axovant. We note that Immune Design’s CMB305 clinical programme has been halted, but forecast that the operational and financial impact on OXB will be minimal. OXB has transitioned three new preclinical assets into its pipeline: OXB-204 (Ophthalmology-LCA10), OXB-208 (Ophthalmology- RP1) and OXB-103 (amyotrophic lateral sclerosis). Additionally, OXB has announced the expansion of its lentiviral manufacturing capacity with a fourth facility. We value OXB at £632m vs £614m previously.
OXB is a specialist advanced therapy viral-vector biopharmaceutical company. It offers vector manufacturing and development services, while retaining proprietary drug candidates. OXB will also receive royalties on commercial products developed with its LentiVector® platform. The first half of 2018 delivered significant growth in gross income, primarily through licensing income on signing new partnership deals with Axovant Sciences (AXON) and Bioverativ (BIVV). OXB out-licensed its proprietary Parkinson’s gene-therapy to AXON in a $842.5m deal, and the $105m BIVV deal is for haemophilia gene-therapy development.
OXB is a specialist, advanced-therapy, lentivirus vector biopharma company. It offers vector manufacturing and development services and has a proprietary drug pipeline. In addition to LentiVector® service contracts, OXB receives royalties on commercial therapies developed by its partners using the LentiVector platform. A partnership deal structure was established with Novartis for KymriahTM in 2017, followed by a collaboration with Bioverativ in February 2018 and by out-licensing its Parkinson’s disease gene-therapy to Axovant in June 2018. In August, OXB announced a second 2018 collaboration agreement, for cystic fibrosis gene-therapy.
OXB is a specialist advanced-therapy lentivirus vector biopharma company. It offers vector manufacturing and development services, and also has a proprietary drug pipeline. In addition to LentiVector® service contracts, OXB receives royalties on commercial therapies developed by its partners using the LentiVector platform. A partnership deal structure was established with Novartis for KymriahTM in 2017, and was followed by a collaboration and licence agreement with Bioverativ Inc in February 2018. The latest deal, on 6 June 2018, is the first involving OXB’s proprietary platform: it will advance the Parkinson’s disease gene-therapy to the clinic.
Oxford BioMedica (OXB) has signed an out-licensing deal with Axovant for its Parkinson’s disease (PD) gene therapy AXO-Lenti-PD (previously OXB-102) worth up to $842.5m. Axovant plans to accelerate it rapidly into the clinic, with a Phase I/II dose escalation study in advanced PD patients to be initiated by year end. In addition to OXB’s numerous other partnerships, notably the recently signed Bioverativ deal and the ongoing collaboration with Novartis on its launched CAR-T Kymriah, this deal demonstrates OXB’s continuing world-leading status in lentiviral technology. We now include the Axovant deal in our model and value OXB at £614m.
Following the commercial launch in 2017 of partner Novartis’s CAR-T Kymriah (in r/r paediatric ALL), Oxford BioMedica (OXB) has become one of a handful of regulatory approved gene and cell therapy manufacturers worldwide. This validation of its capabilities was most recently demonstrated in signing the £100m+ collaboration with Bioverativ to develop haemophilia gene therapies. We expect OXB to rapidly expand its manufacturing capacity to enable top-line growth. We have reassessed many of our valuation assumptions and now include the partnerships with Immune Design, Orchard and Bioverativ. Moreover, internal asset, OXB-102, will start a Phase II trial shortly. We value OXB at £513m (15.6p/share).
Oxford BioMedica’s full year results highlight the continued step up in bioprocessing and commercial development income, increasing 36% in the year, as the facilities operate close to capacity. The group announced on Friday that it had raised £20.5m to fund the expansion of its bioprocessing facilities as it continues to focus on establishing additional deals with its LentiVector® platform (as evident by the most recent deal with Bioverativ). The group’s partnered product pipeline continues to progress and we look forward to the additional expected approvals of Kymriah® later in the year.
Oxford BioMedica (OXB) is a specialist advanced therapy lentivirus-based vector biopharma company. It offers vector manufacturing and development services and is developing its own proprietary drug candidates. In addition to LentiVector® service contracts, OXB will receive royalties on commercial therapies developed with its platform. This deal structure was established with Novartis for KymriahTM, the first approved CAR-T therapy, and has now been followed by a collaboration and licence agreement adopting a similar structure with Bioverativ Inc (BIVV), for the development and potential clinical supply of vector to treat haemophilia.
Oxford BioMedica (OXB) has announced a collaboration and licence agreement with Bioverativ to develop gene therapy products for the treatment of haemophilia. Under the terms of the agreement OXB will receive a $5m upfront payment, plus milestone payments (potentially worth in excess of $100m) and royalties on net sales of any commercialised products. This agreement further validates the value partners see in OXB’s LentiVector expertise and manufacturing capabilities. OXB now has multiple partnered products in various stages of development. Clinical progression and potential commercialisation of these could lead to substantial milestone and royalty revenues over the coming years. We place our numbers under review.
We upgrade to Buy this morning following a site visit and increasing confidence in the group’s outlook. Over the next twelve months Oxford BioMedica is focused on establishing additional deals with its LentiVector® platform (with the potential to establish another deal with big pharma), progressing technical developments with its LentiVector® platform, reducing its debt profile and spinning out/out-licensing its internal pipeline programmes. There is also upside potential to our forecasts from additional approvals with Kymriah®/CTL019 where Oxford BioMedica is eligible to a royalty on net sales.
OXB is a specialist advanced therapy viral-vector biopharmaceutical company. It offers vector manufacturing and development services, whilst retaining proprietary drug candidates. OXB will also receive royalties on commercial therapies developed with its LentiVector® platform. The first such therapy, also the first CAR-T therapy to ever be approved, was licensed by the FDA on 30P th P August 2017: tisagenlecleucel (KymriahP TMP) is manufactured by Novartis using lentivirus vector supplied by OXB. OXB will be the first UK company to manufacture viral vector for commercial production of a licensed gene-based medicine.
Kymriah (tisagenlecleucel/CTL019), for which Oxford BioMedica (OXB) provides the key lentiviral vector component, has been approved by the FDA for the treatment of patients up to 25 years of age with refractory/relapsed (second or later relapse) B-cell acute lymphoblastic leukaemia (ALL). Novartis has announced that the price for the one-off treatment will be $475k (c £370k), an increase over our previous assumption of £300k. We have updated our model to reflect the higher price, which materially increases the associated royalties we expect OXB to receive. Our updated valuation is £284m (9.2p/share).
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Oxford BioMedica’s interim results highlight the continued step up in bioprocessing and commercial development income. A new agreement with Novartis for the commercial and clinical supply of lentiviral vectors was recently established following the FDA advisory committee unanimously recommending CTL019 for approval in acute lymphoblastic leukaemia (ALL). Approval is anticipated by early October 2017. Novartis also announced encouraging Phase II results in a trial evaluating CTL019 in diffuse large B-cell lymphoma (DLBCL) in June with full data and potential filing in Q4. Oxford BioMedica is eligible to a royalty on sales in both indications. We look forward to regulatory approval of CTL019 in ALL in the coming months.
We have updated our forecasts on Oxford BioMedica this morning following the new Novartis supply agreement (announced 6th July). The new supply agreement was established in anticipation of the potential commercial launch of CTL019 for the treatment of acute lymphoblastic leukaemia (ALL), which was recently unanimously recommended for approval by the FDA advisory committee. We continue to look forward to regulatory approval of CTL019, on which Oxford BioMedica is eligible to a royalty on sales. We maintain our Hold recommendation with a revised Target Price of 8.7p (from 7.8p).
With a probable approval for Novartis’s CTL019 (tisagenlecleucel) (OXB manufacture a key component) in both paediatric ALL and DLBCL on the horizon, Oxford BioMedica (OXB) is in position to crystallise a potentially significant revenue stream. Building on the original 2014 agreement with Novartis, the new commercial supply agreement for CTL019 includes $10m upfront and in excess of $90m in additional revenue over the next three years. Additionally, the company has refinanced its Oberland facility with Oaktree Capital Management to the tune of $55m (c $10m undrawn) on improved terms. Our valuation has increased to £251.6m (8.15p/share) vs £208.5m (6.75p/share), mainly as a result of updating CTL019 assumptions.
OXB is a specialist gene and cell therapy viral-vector biopharmaceutical company. It offers vector manufacturing and development services, whilst retaining its own proprietary therapeutic candidates. Above service-fees, OXB will receive royalties on commercial products developed with its LentiVector® platform. OXB has made two significant announcements during the past week which reduce risk and greatly improve sentiment towards the stock. First, refinancing of its existing loan with a new, more favourable debt facility from Oakland Capital. Secondly, a deal with Novartis to supply vector for use in the manufacture of certain CAR-T therapies.
The new agreement with Novartis for the commercial and clinical supply of lentiviral vectors is very encouraging and builds on the existing relationship. Oxford BioMedica will receive a $10m upfront payment and could potentially receive in excess of $100m from Novartis over the next three years. The new supply agreement has been established in anticipation of the potential commercial launch of CTL019 for the treatment of acute lymphoblastic leukaemia. We had assumed Novartis would establish a new supply agreement with Oxford BioMedica but it is reassuring to have the agreement confirmed. We continue to look forward to regulatory approval of CTL019, on which Oxford BioMedica is eligible to a royalty on sales.
Oxford BioMedica has today announced a significant agreement with Novartis for the ongoing commercial and clinical supply of lentiviral vectors used to produce CTL019, confirming its status as a major component of Novartis’ future CAR-T plans. The agreement is an extension of the October 2014 collaboration and comes in anticipation of the launch of CTL019 in H217. In deal terms, OXB will receive a $10m upfront payment and could potentially receive $100m+ from Novartis over the next three years. Our forecasts and valuation are under review (in our last published outlook we noted peak royalties of £12.4m). We await the outcome of CTL019’s FDA advisory committee meeting (12 July) to shed more light on its path to approval and likely commercial success.
Oxford BioMedica has secured a new $55m debt facility with Oaktree, enabling it to redeem its existing $50m facility with Oberland. The new facility has more favourable terms. We continue to look forward to regulatory approval of Novartis’ CTL019 for acute lymphoblastic leukaemia, on which Oxford BioMedica is eligible to a royalty on sales. The group remains confident of supplying the vector following launch (our forecasts assume 2017) having supplied the lentiviral vector for its clinical trials. We remain at Hold.
We expect Oxford BioMedica’s (OXB’s) strategic vision to come to further fruition through 2017/18 with both the potential approval of Novartis’s CTL019 in the US by year end and the possible spin-out/out-licensing of its priority development pipeline assets (OXB-102, OXB-202, and OXB-302). Full year 2016 results revealed robust growth in partnering revenues and 2017 will benefit from lower R&D expenses; we forecast a narrowing of EBITDA loss for the year. The net £17.5m equity fundraising and the Oberland debt facility has extended the current cash runway to 2019, aided by the reduction in near-term R&D; further funding and value may arise from additional manufacturing or IP licensing deals. Our revised valuation for OXB is £208.5m (6.75p/share).
OXB is a specialist gene and cell therapy viral-vector biopharmaceutical company. It offers vector manufacturing and development services, whilst retaining its own proprietary therapeutic candidates. Above service-fees, OXB will receive royalties on commercial products developed with its LentiVector® platform: extensive IP, facilities, and know-how for production and development of lentiviral vectors to generate gene-based therapies. OXB intends to out-license its five clinical candidates and to continue investment in R&D. Bioprocessing royalties are likely to result in significant upside potential in the near future.
Oxford BioMedica, a UK-based, clinical stage biotech company, is a global leader in the exciting and rapidly advancing field of gene and cell therapy. They have their own portfolio of pre-clinical and clinical-stage product candidates and also have licensed technology and provide revenue-generating services to third parties, most notably Novartis. Novartis’s CTL019, a breakthrough therapy for leukaemia, may reach the market by year-end.
Oxford BioMedica’s full year results highlight a step up in bioprocessing and commercial development income following the manufacturing capacity expansion undertaken in 2015 and 2016. However, in the near term the financial outlook continues to look highly dependent on Novartis, which was responsible for the majority of the income increase as Oxford BioMedica supplied the lentiviral vector for CTL019 clinical trials. The group is confident of supplying the vector following regulatory approval of CTL019 for acute lymphoblastic leukaemia (our forecasts currently assume the product is launched in 2017). We remain at Hold.
At ASH this weekend, Novartis presented data from its global registration trial (ELIANA) of CTL019 in relapsed/refractory (r/r) paediatric and young adults with B-cell acute lymphoblastic leukaemia (B-ALL). In one of the largest CAR-T trials to date, 41 out of 50 (82%) treated patients achieved a complete remission or complete remission with incomplete blood count recovery. These positive results have prompted Novartis to reaffirm its timelines for filing in B-ALL, with a submission to the FDA expected in early 2017 and to the EMA later in 2017. This data, along with the restated timelines, reinforce our forecasts for Oxford BioMedica (OXB), which manufactures and supplies the vectors that are utilised in CTL019. We value OXB at £173m (6.2p/share).
Oxford BioMedica’s (OXB’s) recently announced strategic alliance with Orchard Therapeutics further underpins the value the wider cell therapy market sees in its in-house capabilities. OXB will develop and supply lentiviral vectors to Orchard for use in primary immune deficiency and inherited metabolic disorders. OXB has received a 1.95% equity stake in Orchard and will receive royalties on future of products covered by the deal. Our valuation for OXB remains unchanged at £173m (6.2p/share).
Oxford BioMedica is a leader in lentivirus based gene technology and ongoing manufacturing deals (CTL019 with Novartis) underpin the valuation. We expect pipeline focus in the near term as OXB aims to optimise development via out-licensing or externally funded SPVs. The newly announced strategy takes into account the balance of risk versus reward for stakeholders (against the backdrop of the significant financial resources required over the next two to three years to advance OXB’s value, driving assets to the next stage). The recent net £10m equity fund-raising will extend the current cash runway beyond 2017 due to reduced R&D expenditure; further funding and value may arise from additional manufacturing or IP licensing deals. We value OXB at £173m.
We have updated our forecasts on Oxford BioMedica this morning following interim results and £10m (net) fundraising announced on 13 September 2016. Novartis remains on track to file a biologics license application (BLA) for CTL019 (Acute Lymphoblastic Leukaemia) in early 2017. Oxford BioMedica is confident that it will become supplier for the commercial launch of the product in H2 2017 as well as benefit from a royalty on the product. Following the substantial capex programme undertaken in the last 18 months to increase manufacturing capacity, we believe Oxford BioMedica not only has the capability to continue to supply for Novartis but also the potential to establish additional agreements with other companies. However, in the near term the financial outlook is highly dependent on Novartis. Oxford BioMedica announced in its interim results its intention to out-license or spin out its internal clinical pipeline, providing additional near term news potential. We upgrade to Hold this morning with a 3.3p Target Price.
The collaboration with Green Cross LabCell has the potential to enhance Oxford BioMedica’s development pipeline and introduce gene-modified NK cell therapeutics. The collaboration is at an early stage and we look forward to development updates in due course. We remain concerned about the group’s cash position as it only has sufficient cash resources into Q3 2016. We remain at Sell with a 5.3p Target Price.
We have updated our forecasts on Oxford BioMedica this morning following full year results and portfolio review on 28 April 2015. We have increased our revenue forecasts in 2016 and 2017 however, the increase in administrative expenses more than offsets this, resulting in reduced LBT forecasts. Despite raising £8.1m in Q1 2016, the group currently only has sufficient cash resources into Q3 2016. We remain concerned about the group’s ability to maintain cash and cash equivalents of at least $10m as required under the terms of its Oberland loan facility. We assume the group draws down the final $10m of the facility in 2016 although note a further cash injection will be required in the short term. We believe the Novartis deal provides the group with a significant opportunity which could potentially lead to an extension with Novartis or agreements with other companies within the industry. However, we have already factored a longer term agreement into our forecasts and as such, capacity constraints could potentially become an issue in order to drive the top line further (excluding milestone payments). We remain at Sell with a 5.3p Target Price.
Oxford BioMedica’s full year results highlight that the manufacturing capacity expansion has progressed with all the work expected to be completed in the next six months. A portfolio review in Q1 2016 has led the group to focus on three internal product candidates (all currently pre-clinical) with trials anticipated to commence or data generated from each in 2016. 2015 has been a year the group has undertaken a substantial capex programme in order to increase its manufacturing space in order to deliver on its contract with Novartis and other potential customers. The group raised £8.1m in Q1 2016, providing it with sufficient cash resources into Q3 2016. We remain at Sell as further financing will need to be raised during 2016.
The expanded collaboration with Immune Design is encouraging, although financial terms are undisclosed, and the group is confident of announcing additional deals during the year. We have updated our forecasts and valuation this morning following Oxford BioMedica announcing an £8.1m placing in February. We have downgraded our operating forecasts in 2015, 2016 and 2017 by 36%, 84% and 126% respectively. Oxford BioMedica only has sufficient cash resources into H2 2016 and will need to raise further equity finance during 2016. Our revised valuation equates to a 6p Target Price (from 11p) and a Sell recommendation.
Oxford BioMedica intends to raise £8.1m to provide the group with working capital to fund its development pipeline and manufacturing-related technology. The group anticipates a number of business catalysts over the course of the next twelve months, all of which have previously been disclosed. Oxford BioMedica has sufficient cash resources into H2 2016 and will need to raise further equity finance during 2016. We will update our forecasts and valuation in due course. Our recommendation is currently under review.
The initiation of a second CART programme for Novartis is encouraging and follows Oxford BioMedica’s recent MHRA approval to manufacture at its Yarnton facility. The indication of the second programme is undisclosed and we leave our forecasts unchanged until additional information is provided. We continue to look forward to the first programme, CTL019 for acute lymphoblastic leukaemia, being filed by Novartis in 2017. We remain at Buy with a target price of 11p.
We have updated our forecasts on Oxford BioMedica this morning following the business update on 4 November 2015. Our LBT forecasts in our three year forecast horizon have been increased as the group continues to invest in expanding its business to support its manufacturing capabilities. 2015 has been a year the group has undertaken a substantial capex programme in order to increase its manufacturing space in order to deliver on its contract with Novartis and other potential customers. 2016 looks set to be a busy year for the group with the completion of the manufacturing expansion, commencement of clinical trials and data from others. We remain at Buy with a revised Target Price of 11p (12p) as we believe OXB has upside potential with its manufacturing capabilities and potential new contract opportunities.
Oxford BioMedica’s business update highlights that the manufacturing capacity expansion is progressing with all the work expected to be completed in early 2016. The development pipeline continues to progress with additional trials anticipated to commence in 2016. 2015 has been a year the group has undertaken a substantial capex programme in order to increase its manufacturing space in order to deliver on its contract with Novartis and other potential customers. 2016 looks set to be a busy year for the group with the completion of the manufacturing expansion, commencement of clinical trials and data from others. We remain at Buy as we believe OXB has upside potential with its manufacturing capabilities and potential new contract opportunities.
OXB’s interim results highlight the continued efforts in expanding its manufacturing capacity with its existing facility operating at full capacity in H1 2015. The development pipeline continues to progress with additional trials anticipated to commence in 2016. We will update our forecasts in due course although note that H1 results indicate that a significant pick up is required in H2 to meet our estimates. 2015 has previously been flagged as the year the group would undertake a substantial capex programme in order to increase its manufacturing space nearly five-fold and as a result, we should see a significant increase in manufacturing revenues over the coming years. We remain at Buy as we believe OXB has upside potential with its manufacturing capabilities and potential new contract opportunities.
Over the past year, Oxford BioMedica’s outlook has been transformed. The near term is now geared to the emerging specialist production capabilities, where the expertise in cell- and gene-based medicine is increasingly appreciated. Progress on the development pipeline, notably the RetinoStat programme and, further out, ProSavin/OXB102, would add to our valuation. The longer term should benefit from additional collaborations for the late-stage projects, license income from the patent estate and other pipeline products. Our valuation is £356.1m (13.9p a share), with OXB Solutions valued at £233.5m (9.2p a share) and the pipeline at £122.6m (4.7p a share).
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