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.
