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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 products developed with its LentiVector® platform. In the six months to end June 2017, Novartis made considerable progress towards approval of CTL019, improving sentiment for OXB which supplies vector essential for its manufacture. Post-period, a new deal was signed with Novartis, with OXB potentially receiving >$100m over three years. The cash position @31st July was £22.1m.

  • Strategy: Oxford BioMedica has four strategic objectives: delivery of process development services that embed its technology in partners’ commercial products; commercial manufacture of lentiviral vector; out-licensing of proprietary candidates; and investment in R&D and the LentiVector platform.
  • Interim results: Revenue from process development/bioprocessing and licensing income increased +26% to £15.7m (£12.5m), improving underlying EBIT losses to -£4.23m (-£6.68m). Period-end cash was £10.2m, which increased to £22.1m in July 2017 after the $10m Novartis up-front and 2016 tax credits.
  • Novartis deal: Extending its existing relationship with Novartis, OXB will supply clinical and commercial vector for CTL019 and other (undisclosed) Chimeric Antigen Receptor T cell (CAR-T) therapies. Key points are $10m up-front, >$90m from a minimum off-take contract over three years, plus royalties on net sales.
  • Debt refinancing: A new $55m loan agreement was signed on 30th June with Oaktree Capital which is being used to repay the significantly more expensive existing loan from Oberland Capital, saving OXB ca.$1.2m per annum, whilst also freeing up the $10m unusable cash that is ring-fenced.
  • Investment summary: OXB is at an interesting juncture. Heavy investment in state-of-the-art GMP manufacturing facilities for production of gene therapy vector has enabled the deal with Novartis, placing the group on the cusp of significant service income and royalties. Forecasts suggest OXB will turn EBITDA positive in 2017, and become profitable overall at the EBIT level in 2018. Bioprocessing royalties are likely to result in significant upside potential in the near future.
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