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).
Oxford BioMedica’s development portfolio is essentially a bet on the merits of gene therapy in general and the lenti-vector delivery platform in particular. The approach is promising; notably in ophthalmology indications where a single administration could safely provide a sustained (or even permanent) effect. RetinoStat and ProSavin/OXB102 are the most advanced clinical candidates with proof-of-concept trials likely to start in 2016. Other programmes, such as the 5T4-based projects for various cancers, are also approaching value-inflection points.
The commercial manufacture of cell- and gene-based medicines is complex and challenging; plagued by low productivity and poor efficiency, coupled with a lack of batch consistency. Oxford BioMedica’s expertise in production and process scaleup, quality control & assurance and regulatory affairs is particularly relevant as a raft of such products approaches the market. Novartis’ use of the OXB Solutions expertise for its CTL019 programme is not just a source of revenues (up to $76m over three years), but a powerful external validation.
Our valuation of £356.1m (13.9p per share) is based on an rNPV model of the pipeline (£122.6m, 4.7p a share) coupled with a DCF value for the OXB Solutions business (£233.5m, 9.2p a share). We have conservatively not included the value of other less visible assets such as the intellectual property estate, which could provide material upside. Success in terms of clinical progression or timely delivery on the various aspects of the Novartis contract would increase our valuation.