PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DEC 2010

RNS Number : 1393C
Oxford Biomedica PLC
02 March 2011
 

 

 

2011/OB/04

EMBARGOED UNTIL 7.00AM 2 MARCH 2011

2 MARCH 2011

 

 

OXFORD BIOMEDICA PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

 

Oxford, UK - 2 March 2011: Oxford BioMedica plc ("Oxford BioMedica" or "the Company") (LSE: OXB), a leading gene therapy company, today announces its preliminary results for the year ended 31 December 2010.

 

Operational highlights:

ProSavin®: Parkinson's disease

·       Safety and tolerability endpoints sustained for >2 years, now extended to nine patients

·       Two-year Phase I/II data indicate long-term efficacy at lowest (1x) dose level

·       Improvements in "ON" time and quality of life, with stable or reduced L-DOPA, in all cohorts to date

·       Enhanced administration procedure is safe and reduced surgery delivery time at the 2x dose

·       Data Monitoring Committee supports progression to higher (5x) dose level cohort with initial data expected mid-2011

 

Ocular gene therapies: partnered with sanofi-aventis

·       RetinoStat® IND approval received from the FDA

·       StarGen™ CTA and IND dossiers submitted to AFSSAPS and FDA

·       First data from RetinoStat® Phase I study expected H1 2012

 

TroVax®: cancer

·       Phase II study in hormone refractory prostate cancer initiated with initial data expected from mid-2012

·       Positive TRIST analyses published in Clinical Cancer Research

·       Multiple collaborative studies expected to start in 2011

 

Financial highlights1:

·       Revenue of £11.2 million (2009: £19.1 million including exceptional revenue £10.1 million)

·       Research & development costs incl. exceptional items of £19.9 million (2009: £18.3 million)

·       Exceptional loss (impairment) of £3.9 million (2009: exceptional profit of £6.0 million)

·       Net loss before exceptional items of £6.3 million (2009: £9.5 million)

·       Net loss after exceptional items of £10.3 million (2009: £3.5 million)

·       Net cash burn2 of £13.0 million (2009: net cash generated2 £3.0 million)

·       Net cash3 of £12.3 million (2009: £25.3 million)

 

1.    Audited financial results

2.    Net cash used in /generated from operating activities plus sales and purchases of non-current assets and interest received

3.    Cash, cash equivalents and available for sale investments

 

Post-period end highlights:

·       Fundraising of £20 million before expenses, completed on 10 January 2011

·       Acquisition of manufacturing facility for £1.9 million, completed in February 2011

 

John Dawson, Chief Executive Officer at Oxford BioMedica, said: "2010 has been a successful year for Oxford BioMedica and our progress to date underlines the Company's strong fundamentals.  We continue to build the value of our lead programmes and expect key data and milestones over the next 12-18 months for ProSavin®, TroVax® and the ocular products partnered with sanofi-aventis. Thanks to existing and new shareholders we were also able to secure £20 million of funding which will enable us to maximise the opportunities ahead, including the enhancement of our specialist manufacturing processes.  With exciting future prospects, we remain committed to driving momentum and delivering value for shareholders."

 

-Ends-

 

Analyst meeting: An analyst briefing will be held at 9:30am GMT on Wednesday 2 March 2011 at the offices of M:Communications, CityPoint, 1 Ropemaker Street, London, EC2Y 9AW.

 

Webcast: Simultaneously to the analyst briefing at 9:30am GMT, there will be a live audio webcast of the presentation.  To connect to the webcast facility, please visit the Company's website: www.oxfordbiomedica.co.uk approximately 10 minutes (9:20am GMT) before the start of the briefing.  A replay will be made available shortly after the presentation.

 

 

For further information, please contact:


Oxford BioMedica plc:

John Dawson, Chief Executive Officer

Andrew Wood, Chief Financial Officer

Lara Mott, Head of Corporate Communications

 

Tel: +44 (0)1865 783 000

 

Singer Capital Markets Limited:

Shaun Dobson/Claes Spång

 

Tel: +44 (0)20 3205 7500

 

Media/Financial Enquiries:

Emma Thompson/Amber Bielecka/Katja Toon

M:Communications

 

Tel: +44 (0)20 7920 2342

 

 

 

Notes to editors

 

1. Oxford BioMedica

Oxford BioMedica plc (LSE: OXB) is a biopharmaceutical company developing innovative gene-based medicines and therapeutic vaccines that aim to improve the lives of patients with high unmet medical needs. The Company's technology platform includes a highly efficient LentiVector® gene delivery system, which has specific advantages for targeting diseases of the central nervous system and the eye; and a unique tumour antigen (5T4), which is an ideal target for anti-cancer therapy. Through in-house and collaborative research, Oxford BioMedica has a broad pipeline and its partners include sanofi-aventis, Sigma-Aldrich and Pfizer.  Further information is available at www.oxfordbiomedica.co.uk.

CHAIRMAN'S STATEMENT

 

"2010 was an important year for Oxford BioMedica.  In particular, we made considerable progress across our lead development programmes and this, in turn, has augmented active discussions with potential partners.  The Company is actively pursuing partnering deals on a number of fronts in order to deliver real shareholder value.  In addition, Oxford BioMedica completed a £20 million fundraising in January 2011 and, while this was highly dilutive for some shareholders who did not participate in the issue, the Directors believe that strengthening the balance sheet, securing funds for a dedicated LentiVector® platform manufacturing facility and being able to keep ProSavin® on track will be fundamental to maximising the opportunities to complete revenue-generating deals over the next 18 months."

 

Oxford BioMedica is one of the leading companies in gene therapy and immunotherapy with a platform of exclusive and pioneering technologies to design and develop unique gene-based medicines.  Our pipeline addresses diseases for which there is currently no treatment or that are inadequately treated today, including cancer, neurodegenerative and ocular diseases, and our product candidates have the potential to transform treatment landscapes. Through our in-house development programmes and our collaborations with leading industry partners, our goal is to improve the lives of patients with debilitating and life-threatening diseases.

 

World-class industry collaborations

In January 2011 the first of four ocular gene therapies partnered with sanofi-aventis, RetinoStat®, started Phase I clinical development in the first US study using our LentiVector® platform technology.  This represents a major event for the Company and demonstrates our ability to bring novel products into first-in-man studies within an impressive timeframe following the initiation of this landmark collaboration in 2009.  In addition, Pfizer has strengthened its commitment to develop product strategies to target Oxford BioMedica's proprietary 5T4 tumour antigen for the treatment of cancer.  These partnerships are an endorsement of our innovative LentiVector® technology and 5T4 tumour antigen platforms.

 

Increasing value

Our lead development programmes, ProSavin® and TroVax®, also made strong progress during the period.  The final cohort using the higher 5x dose of ProSavin® is underway and is expected to generate key results in H2 2011.  Following approval  by the US regulatory agencies, TroVax® is also in Phase II development after positive analyses of previous Phase III data (published in Clinical Cancer Research in November 2010) demonstrated that patients who are likely to respond well to TroVax® can be identified by a simple blood test.  Data generated from these clinical programmes add further value to these important assets and take the Company closer to securing licensing deals.

 

Board changes

Two new independent Non-Executive Directors, Dr Paul Blake and Dr Andrew Heath, were appointed to the Board at the start of 2010.  Both Paul and Andrew are industry veterans with extensive experience in building successful biopharmaceutical companies internationally.  At the same time, Mark Berninger retired from the Board having served as a Non-Executive Director for more than ten years.  In June 2010 Nick Woolf stepped down as Chief Business Officer and Executive Director following seven years as a member of the senior management team.  I would like to record my sincere thanks to Mark and Nick for their dedicated services to the Company.

 

Strategy commitment

Our mission is to build a top-tier profitable biopharmaceutical company founded on the successful development and commercialisation of novel gene-based medicines.  In addition, we continue to evaluate partnership opportunities and value-enhancing corporate activity to accelerate profitability.

 

In conclusion

Firstly, I would like to thank our staff for their commitment and hard work over the past year; we could not have accomplished as much during 2010 without their dedication.  Secondly, I would also like to thank our partners and shareholders for their support.  With significant opportunity ahead, I believe that Oxford BioMedica is poised to deliver strong growth and success.

 

Dr Alan Kingsman

Chairman

 

CHIEF EXECUTIVE'S STATEMENT

 

"During 2010 we delivered positive momentum across our lead development programmes as a result of favourable data, successful regulatory approvals and continuous hard work within the Company.  We also secured further financial support, thanks to existing and new shareholders, in January 2011.  Looking forward, we have established a strong platform from which to maximise opportunity and achieve further success."

 

Encouraging ProSavin® data, positive TroVax® analyses and the successful initiation of our first ocular clinical study all contributed to a great year for the Company.  Our lead programmes have significant potential to fight Parkinson's disease, cancers and vision loss and we are working closely with our partners, external collaborators and regulatory authorities to advance these novel products towards commercialisation. 

 

Development progress

ProSavin® continues to generate positive data in the current Phase I/II study in Parkinson's disease.  Two-year data from the first patient cohort indicate long-term efficacy at the lowest dose, with safety and tolerability endpoints sustained for 30 months post-treatment.  Facilitated by our enhanced administration method, we have now escalated to a higher 5x dose of ProSavin® in the final patient cohort.  Following approval by the US Food and Drug Administration (FDA) we initiated a new Phase II trial for TroVax® in hormone refractory prostate cancer and made progress with sponsored studies in other indications expected to start in 2011.  Our ocular Phase I/II programme, comprising four products partnered with sanofi-aventis, is on track and following FDA approval we initiated our first Phase I trial with RetinoStat® for "wet" AMD in January 2011.

 

Proprietary manufacturing

With the anticipated growth of our clinical LentiVector® platform portfolio from one lead product to five products in development, we conducted a manufacturing review in 2010.   Following this review, we made a strategic investment to establish our own specialist manufacturing facility in January 2011.  The new manufacturing facility, acquired from RecipharmCobra Biologics, is expected to deliver long-term operational and financial efficiencies and will support our products through Phase II, Phase III and to market.  It also provides the opportunity for us to become the LentiVector® platform supplier of choice for our current and future partners which could provide additional revenues.

 

Partnering progress

Negotiating the right transaction to maximise the potential of both ProSavin® and TroVax® remains a key strategic priority for management.  By continuing to generate positive and value-enhancing clinical data, these products become increasingly attractive.  We continue to seek the best partners in order to combine scientific and operational expertise and bring ProSavin® and TroVax® to commercialisation as rapidly as possible.  Oxford BioMedica also has one of the broadest patent estates in the field which gives the Company significant potential to leverage the value of its intellectual property through strategic partnerships.

 

Financial management

Our cash position at 31 December 2010 was £12.3 million, with a further £18.4 million of net proceeds from the placing and open offer which closed in January 2011.  Our strengthened cash position will allow us to maintain our financial flexibility and move forward with confidence in order to capitalise the opportunities ahead.

 

Outlook

At the start of 2010 we set a number of challenging objectives for our in-house and collaborative development programmes and the strong progress across our core pipeline demonstrates our success to date.  Our strategy remains to commercialise the current pipeline and realise the highest value from our class-leading technologies through in-house development and partnerships.  Over the next 12-18 months we expect multiple value-driving events with key data from ProSavin®, TroVax® and RetinoStat®, in addition to our other ocular products moving into first-in-man studies.  With an improved cash position, Oxford BioMedica has strong fundamentals, an exciting development pipeline and a commercially-focused management team committed to delivering growth and expediting sustainable profitability.

 

John Dawson

Chief Executive Officer

OPERATIONAL REVIEW

 

LENTIVECTOR®PLATFORM

Oxford BioMedica's proprietary LentiVector® technology platform is a highly efficient system for the delivery of therapeutic genes to a wide range of tissues, and it has specific advantages for targeting diseases of the central nervous system and the eye.  The Company's most advanced LentiVector® platform candidate is ProSavin® for Parkinson's disease.  In partnership with sanofi-aventis, Oxford BioMedica is also developing four products for the treatment of ocular diseases.  These five core LentiVector® platform candidates benefit from considerable crossover of manufacturing technology and regulatory procedures.  The Company is also working with leading scientific teams to address other unmet needs, such as the treatment of motor neuron disease. 

 

PROSAVIN®: gene-based therapy for Parkinson's disease

ProSavin® is being evaluated in a Phase I/II trial in patients with mid-stage Parkinson's disease who are experiencing reduced benefit on L-DOPA "equivalent" therapy.  The first stage of the trial is designed to assess the safety, efficacy and dose evaluation of ProSavin®.  Two dose levels and an enhanced administration technique have been evaluated in nine patients to date and the current six-patient cohort is assessing a higher dose of ProSavin®; the scaled equivalent to the optimal pre-clinical dose.  The trial is being conducted at two centres of excellence for neurosurgery; the Henri Mondor Hospital in Paris with Professor Stéphane Palfi as Principal Investigator and Coordinating Investigator, and at Addenbrookes Hospital in Cambridge, UK, with Dr Roger Barker as Principal Investigator.

 

Two-year data show long-term, stable improvement

The first two dose levels were safe and well-tolerated in all patients and evidence of encouraging clinical benefit at two years has been seen with the lowest dose.  The first cohort assessed a 1x dose of ProSavin® in three patients, the second cohort assessed a 2x dose in three patients and the third cohort assessed a repeat of the 2x dose using an enhanced administration technique developed by the Company.  Motor function improvement is assessed according to the Unified Parkinson's Disease Rating Score (UPDRS) in patients' "OFF" state (i.e. after withdrawal of Parkinson's disease medication). 

 

Table 1: Summary of improvements in motor function to date1:

 

Cohort2

Dose

Administration method

3 months (UPDRS)

6 months

(UPDRS)

1 year

(UPDRS)

2 years

(UPDRS)

1, n=3

1x

Original

Mean 27%

Max. up to 30%

Mean 30%

Max. up to 50%

Mean 29%

Max. up to 44%

Mean 20%

Max. up to 30%

2, n=3

2x

Original

Mean 28%

Max. up to 53%

Mean 34%

Max. up to 53%

Mean 29%

Max. up to 56%

-

3, n=3

2x

Enhanced

Mean 26%

Max. up to 52%

-

-

-

1.     ProSavin® also continued to have a favourable safety profile 30 months post-treatment at the 1x dose, and 18 months post-treatment at the 2x dose, reported in December 2010.

2.     Patients in cohort 3 had more severe baseline UPDRS symptoms than in previous cohorts.

 

Improving quality of life

It is important to note that Parkinson's disease is a progressive neurodegenerative disorder and deterioration of symptoms and increases in daily L-DOPA therapy would be expected over a two-year period.  However, across all three patient cohorts treated to date, L-DOPA "equivalent" therapy has either reduced or remained stable, quality of life has either improved or remained stable where it would usually be expected to worsen, and patient diary data show an increase in "ON" time (when PD symptoms are not present).  Quality of life is assessed based on a standard measure of clinical benefit using a patient questionnaire known as PDQ-39.

 

Encouragingly, patients in cohort 3 showed analogous results despite having more severe baseline UPDRS symptoms than the other cohorts.  Based on the current data set, with improvements sustained over a two-year period in the context of an inexorably degenerating disease, if these results are confirmed in placebo-controlled studies ProSavin® would represent a significant advancement to current treatment options given its potential to enhance quality of life and suppress the motor function complications caused by oral L-DOPA therapy.

 

Higher dose cohort underway

In December 2010, Oxford BioMedica reported that ProSavin® continues to be safe and well-tolerated following treatment of the third cohort of patients with a 2x dose using an enhanced administration technique developed by the Company.  The enhanced technique will facilitate higher dosing and has the potential to provide better reproducibility of administration as the number of study centres expands. 

 

The study's independent Data Monitoring Committee (DMC) supported Oxford BioMedica's proposal to proceed to a higher 5x dose, facilitated by the enhanced administration technique, in a cohort of six patients.  The 5x dose is the allometrically-scaled equivalent to the optimal pre-clinical dose (i.e. a dose that is scaled for the difference in brain size between humans and the pre-clinical model) so it is conceivable that higher levels of efficacy may be achieved. 

 

Following approval from the MHRA in October 2010, the DMC also gave its support to open the second site in the UK at Addenbrookes Hospital, Cambridge, with Dr Roger Barker as Principal Investigator.  The first patient in the 5x dose cohort was treated in Paris in February 2011 and, following an obligatory observation period of one month, subsequent patients will be treated at both sites in parallel which is expected to increase the rate of recruitment and accelerate completion of the current Phase I/II trial.  Three-month results from the first three patients in the 5x dose cohort are expected mid-2011 and will be announced in H2 2011 following a review by the study's DMC.

 

Regulatory agencies support route to registration

Oxford BioMedica works closely with the European Medicines Agency (EMA) and FDA on the development of its pipeline products and in June 2010 the Company received formal scientific advice from the EMA on the development path for ProSavin®.  Importantly, the advice validated the Company's current strategy and supported the view that, subject to continued demonstration of efficacy and safety, potentially only a single pivotal study may be likely at Phase III rather than multiple Phase III trials, thereby reducing the time and cost to registration.

 

In May and July 2010, Oxford BioMedica submitted orphan drug applications to the EMA and FDA, respectively, for the use of ProSavin® in a subset of patients with advanced Parkinson's disease.  In September 2010 the EMA decided that ProSavin® may be of significant benefit to a much wider patient population and therefore that orphan drug designation was not appropriate.  The FDA also indicated that the patient numbers in the proposed target population exceed the threshold for orphan drug designation.  These opinions further support the substantial worldwide potential for ProSavin® in the treatment of Parkinson's disease.

 

Advancing towards randomised Phase II development

Oxford BioMedica plans to use part of the recent £20 million fundraising to progress ProSavin® into placebo-controlled studies at the earliest opportunity.  Planning is underway for a double-blind, controlled Phase II study that will recruit up to 50 patients.  The control group of patients will receive a small incision in the scalp under anaesthetic to represent sham surgery.  Depending on the results from the 5x dose cohort and the independent opinion from the study's DMC, a randomised Phase II trial of ProSavin® could be initiated in the EU/US in 2012.

 

Partnering progress

Over the past year there has been considerable interest in ProSavin® from potential partners.  The negotiations have raised three key issues that have influenced the terms: the risk associated with the early stage of the product; the ability to control future manufacturing; and the regulatory path to registration given that ProSavin® is an entirely novel product.  Following the EMA's validation of the planned route to registration and the acquisition of a UK manufacturing facility, a strategic use of proceeds from the recent £20 million fundraising, Oxford BioMedica has successfully addressed two of these key issues. 

 

In terms of the risk associated with ProSavin®'s stage of development, generating further positive data in larger numbers of patients will continue to de-risk the product and moving into a randomised Phase II study will add further value.  Data from the higher 5x dose cohort could catalyse a partnering deal; the Company is in discussions with potential partners who are monitoring the progress of the current Phase I/II clinical programme.  Oxford BioMedica could retain certain territorial rights and market ProSavin® with a specialised sales force in these regions.  Another option is to co-fund ProSavin®'s development using the recently raised funds; this strategy could allow the Company to retain much greater downstream value from a partnering deal. Maximising the worldwide potential for the commercialisation of ProSavin® remains a key strategic priority for the Company.

 

 

Next milestones

Oxford BioMedica aims to report six-month data from the third cohort at the 2x dose in H1 2011.  Key results from the first three patients in the higher 5x dose cohort will emerge mid-2011 and will be reported in H2 2011 following review by the study's independent Data Monitoring Committee.  Depending on the results from the 5x dose cohort, a placebo-controlled Phase II trial of ProSavin® could be initiated in the EU/US in 2012.

 

Market opportunity

Parkinson's disease affects approximately 1.5 million patients in the seven major markets (US, Japan, UK, France, Germany, Italy and Spain) which is projected to rise to 1.7 million by 2019.  None of the current treatments provide long-term relief from symptoms, yet, by 2019, sales of these treatments could exceed US$2.8 billion in the seven major markets (source: Datamonitor, Dec-2010).  ProSavin® has the potential to address a major unmet medical need in Parkinson's disease, offering long-lasting benefit from a single administration with an excellent safety profile.  The product could therefore also significantly reduce the social care burden that is associated with the mid to late-stage of disease.

 

OCULAR PROGRAMME: gene-based therapies

In collaboration with sanofi-aventis, Oxford BioMedica is developing four LentiVector® platform product candidates for the treatment of ocular diseases: RetinoStat® for "wet" age-related macular degeneration (AMD); StarGen™ for Stargardt disease; UshStat® for Usher syndrome 1B; and EncorStat® for corneal graft rejection.  This partnership is an endorsement of the Company's LentiVector® platform and, furthermore, sanofi-aventis' investment in the platform technology benefits Oxford BioMedica's development programmes in other therapeutic areas.

 

Landmark partnership with global player

The ocular collaboration with sanofi-aventis, signed in April 2009, included an upfront receipt of US$26 million and up to US$24 million in development funding over the initial phase of development.  The committed funding is based on a joint development plan that is designed to progress four product candidates into Phase I/II trials within three years.  Following successful Phase I/II completion, Oxford BioMedica may receive further undisclosed license fees, milestone payments and royalties on product sales, the terms of which are consistent with other deals of this scope and size.  Furthermore, there is considerable scope to expand the collaboration with the addition of other indications and related product candidates.  For example, RetinoStat® could be evaluated as a treatment for diabetic macular oedema.

 

First LentiVector® platform study in the USA

Since the start of the collaboration in Q2 2009, Oxford BioMedica has made rapid progress with pre-clinical studies, manufacturing and regulatory submissions resulting in the initiation of the first US clinical study using the Company's LentiVector® platform technology in January 2011 for RetinoStat®.  This was a major event for Oxford BioMedica and will support the Chemistry Manufacturing and Controls (CMC) package and manufacturing elements for subsequent LentiVector® platform products.

 

Lead product RetinoStat® in clinical development

RetinoStat® is the lead product in the Phase I/II ocular programme.  A protocol for a Phase I study was submitted to the US Recombinant DNA Advisory Committee (RAC) in July 2010 and, following unanimous RAC approval, an Investigational New Drug (IND) application was submitted to the FDA in September 2010.  Oxford BioMedica received IND approval from the FDA in November 2010 and, with local approvals in place, the study commenced in January 2011. 

 

The open label, dose escalation, Phase I study will evaluate the safety and tolerability of a single injection of RetinoStat® directly to the retina.  Led by Professor Peter Campochiaro at the Wilmer Eye Institute at Johns Hopkins, Baltimore (USA), the study will enrol 18 patients with "wet" AMD and will evaluate three dose levels.  The six-month primary endpoints include safety, aspects of visual acuity and ocular physiology.  The study will also assess anti-angiogenic bioactivity of RetinoStat®.  First results from this trial are expected during H1 2012.

 

StarGen™ CTA and IND submitted

The next product expected to enter Phase I/IIa clinical development will be StarGen™.  Oxford BioMedica submitted the CTA application to the French regulatory agency AFSSAPS in December 2010.  Feedback is expected by the end of Q1 2011.  Oxford BioMedica also submitted the protocol to the RAC in December 2010 andan IND application was made to the FDA in February 2011 to allow the opening of a second clinical site in the US.  Feedback is also expected by the end of Q1 2011.  Subject to regulatory approval, Oxford BioMedica therefore anticipates that a Phase I/IIa study will be initiated in Q2 2011.  StarGen™ has already received orphan drug designation from the EMA and FDA.

 

UshStat® development on track

Oxford BioMedica attended a pre-IND meeting with the FDA in January 2011 and preparation continues for IND application submission to the FDA by the end of H1 2011.  According to this timeline, the Company expects UshStat® to begin Phase I/II clinical development in the US in H2 2011.  UshStat® has already received orphan drug designation from the EMA and FDA.

 

EncorStat® pre-IND supporting studies underway

In September 2010, Oxford BioMedica met with the Innovation Task Force (ITF) at the EMA who provide a forum for early dialogue regarding new therapies.  Although the ITF does not provide formal advice, Oxford BioMedica regards the discussions as encouraging.  Supporting pre-clinical studies are underway and the Company expects to hold a pre-IND meeting with the FDA in H2 2011.  Together with sanofi-aventis, Oxford BioMedica continues to evaluate the optimal route for commercial development of this novel product.

 

Market opportunity

AMD is a major cause of blindness affecting an estimated 25 to 30 million people worldwide and the incidence of AMD is expected to triple by the year 2025.  Neovascular "wet" AMD accounts for 90% of all severe vision loss from the disease with up to 4.5 million patients worldwide (source: AMD Alliance International).  On the basis of pre-clinical data, it is anticipated that RetinoStat® will require only a single administration which would give the product a significant advantage in the market over currently available treatments that require frequent, repeated administration.  There are currently no approved treatments for Stargardt disease, Usher syndrome and corneal graft rejection. RetinoStat®, StarGen™, UshStat® and EncorStat® have a common technology platform, manufacturing technique and toxicology profiles and it is these sorts of niche indications that can build significant business value.  Again, it is anticipated that a single application of Oxford BioMedica's gene-based products could provide long-term or potentially permanent benefits for patients suffering from these debilitating diseases.

 

MONUDIN®: motor neuron disease

The pre-clinical development of MoNuDin® is supported by the UK Motor Neurone Disease Association, the US ALS Therapy Development Institute and the US Muscular Dystrophy Association. MoNuDin® has shown promising results in early pre-clinical studies and Oxford BioMedica is optimising the product for clinical trials.  The Company's LentiVector® platform technology has the ability to deliver genes safely and efficiently to the neuronal cells affected by motor neuron disease.  Oxford BioMedica is working with UK and US non-profit organisations to accelerate MoNuDin®'s development and to explore new disease-specific pathways as potential targets for genetic intervention.

 

Collaborations with leading research groups

In July 2010 Oxford BioMedica announced a collaborative research project with VIB/University of Leuven, funded by a £255,000 grant from the Motor Neurone Disease Association (MNDA), to develop MoNuDin® for the treatment of Amyotrophic Lateral Sclerosis (ALS).  The collaboration builds on previous work funded by MNDA and will utilise Oxford BioMedica's LentiVector® platform to compare the therapeutic potential of two forms of vascular endothelial growth factor (VEGF).  The collaboration will also evaluate the optimal delivery protocol for these gene therapy approaches. Initial goals pointing to an optimised route of administration have been established by Oxford BioMedica and will be further evaluated in the collaborative studies to determine the therapeutic potential of these approaches in established models of motor neuron disease.

 

In 2009, the Company successfully completed the first phase of the research collaboration with the US non-profit organisation, the ALS Therapy Development Institute (ALS TDI), which included validation of the techniques to evaluate and identify gene therapy candidates at the ALS TDI's research facility in Cambridge, MA (USA).  Oxford BioMedica announced an extension of this collaboration with the ALS TDI, to be funded by the Muscular Dystrophy Association, in January 2010.  In the second phase, the ALS TDI will conduct pre-clinical efficacy studies of MoNuDin® in models of motor neuron disease that have been extensively characterised by their team.  Furthermore, the joint teams will also explore approaches to inhibit or regulate specific genetic pathways associated with disease onset or progression using the LentiVector® platform.

 

Market opportunity

Despite being one of the most common neurodegenerative diseases of adult onset, motor neuron disease has a high unmet need.  Amyotrophic lateral sclerosis (ALS), often referred to as Lou Gehrig's disease, is the most prevalent type of motor neuron disease. In the US, there are an estimated 30,000 patients with ALS and nearly 6,000 new cases are diagnosed annually (source: ALS Association).  Only one drug has been approved for the treatment of ALS, and its only benefit is a modest increase in survival time.  If MoNuDin® proves to be an effective neuroprotective treatment that can slow or arrest injury to patients' motor neurons, it would have compelling competitive advantages.

 

LENTIVECTOR® PLATFORM MANUFACTURING

Historically, all of Oxford BioMedica's manufacturing to Good Manufacturing Practice (GMP) standards has been outsourced to a contract manufacturing organisation (CMO).  However, given the pivotal role of manufacturing in biological drug development and the impending growth of the clinical LentiVector® platform portfolio from one lead product, ProSavin®, to five products in development over a relatively short period, the Company conducted a strategic review in 2010 to maximise control and minimise risks associated with manufacturing. 

 

Following the strategic review, in January 2011 the Company announced the £1.9 million acquisition of a manufacturing facility based in Oxford, UK from RecipharmCobra Biologics, the specialist biologics division of Recipharm AB, which completed in February 2011.  This investment in Oxford BioMedica's specialist manufacturing processes will ensure the rapid progression of the Company's core LentiVector® platform products through Phase II, Phase III and to market and, importantly, also provides the opportunity for Oxford BioMedica to become the LentiVector® platform supplier of choice for its current and future partners.

 

An integrated team comprising manufacturing, development, quality control, quality assurance, engineering and logistics expertise are currently engaged in re-commissioning the facility which should take a minimum of 12 months and will make significant progress towards a fully optimised supply chain for the LentiVector® platform.  A key part of supply chain optimisation will be the continued strategic partnership with Oxford BioMedica's current CMO to ensure additional flexibility and appropriate transition.  In addition, on-going process development aims to optimise manufacturing for larger studies and commercial supply.  The target of this development is a readily-scalable upstream production process that can feed larger quantities of material into the well-established downstream (purification) process with greater speed, control and efficiency than is possible using the current production methods. 

 

5T4 TUMOUR ANTIGEN

The 5T4 antigen is an ideal target for anti-cancer treatment given its restricted expression on normal tissues and its high prevalence on the surface of cancerous cells across a wide range of solid tumours.  TroVax® is Oxford BioMedica's 5T4-specific therapeutic vaccine candidate which is in Phase II development.  In collaboration with Pfizer, pre-clinical evaluation of Oxford BioMedica's 5T4-targeted antibody therapy to optimise the product for clinical development continues and Pfizer may submit an IND application during 2011.

 

TROVAX® (MVA-5T4): therapeutic cancer vaccine

TroVax® is currently being evaluated in a Phase II study in hormone refractory prostate cancer and was selected by Windhover and Campbell Alliance as one of the "top 10 most interesting oncology projects to watch" in September 2010.  Oxford BioMedica continues to receive interest from oncologists and clinicians in Europe and the USA regarding the future development of TroVax® in several cancer indications which have a clear unmet medical need and a lack of effective treatments.  The Company therefore anticipates several sponsored studies (in mesothelioma, ovarian and colorectal cancer) to start in 2011.  Not only do these collaborations provide cost-effective ways of generating new and valuable data, they also demonstrate the support for TroVax® within the practising oncology community.  Oxford BioMedica is privileged to be working with leading experts in the oncology field and looks forward to the progression of these external studies.

 

Phase II study in hormone refractory prostate cancer

In July 2010 Oxford BioMedica received approval from the FDA and Recombinant DNA Advisory Committee to initiate a clinical Phase II study to assess the activity of TroVax® in patients with progressive hormone refractory prostate cancer (HRPC).  The randomised, open-label Phase II study will enrol 80 patients with metastatic HRPC and will assess the activity of TroVax® plus chemotherapy drug docetaxel, versus docetaxel alone.  The study is being led by Dr Anna Ferrari, NYU Clinical Cancer Center (USA), and has been carefully designed to give early proof-of-concept by monitoring changes in prostate specific antigen kinetics, one of the most widely used oncological biomarkers in clinical research. 

 

The first centre started recruiting patients in September 2010 and recruitment is in line with the Company's expectations.  It is vital that patients meet the correct enrolment criteria which include identifying those patients who are likely to respond well to TroVax® by assessing their blood profile.  Oxford BioMedica completed all study centre initiation assessments in January 2011 and the rate of enrolment is anticipated to increase as the number of recruiting clinical sites expands to seven during 2011.  Initial results from this study are expected from mid-2012.

 

TRIST results published in peer-reviewed journal

In November 2010, the results from the TroVax® Renal Immunotherapy Survival Trial ("TRIST"), a randomised, double-blind, placebo-controlled Phase III study were published in Clinical Cancer Research, a journal of the American Association for Cancer Research.  Amongst other key factors for consideration, the TRIST results show that survival was prolonged in patients who had normal haematology prior to receiving TroVax® i.e. normal levels of platelets, monocytes and haemoglobin in their blood profile.  It is important for the cancer vaccine community to learn as much as possible from the data available and, as such, the continuing analyses may help identify those patients who are more likely to benefit from this class of therapy.  The fact that patients who are likely to respond well to TroVax® can be identified by a simple blood test is pivotal for the planning of all future studies.

 

Phase II study in mesothelioma

In June 2010 Oxford BioMedica announced a collaboration agreement with a team of cancer immunologists to evaluate TroVax® in mesothelioma.  Led by Dr Zsuzsanna Tabi at Cardiff University and Dr Jason Lester, an oncologist at Velindre Cancer Centre in Cardiff, the study will be funded by the June Hancock Mesothelioma Research Fund and Oxford BioMedica will provide TroVax®.  Dr Zsuzsanna Tabi's team submitted a Phase II study protocol to the Gene Therapy Advisory Committee (GTAC) which was reviewed in December 2010 and a clinical trial application (CTA) was submitted to the UK Medicines and Healthcare products Regulatory Agency (MHRA) in February 2011.  Based on these timelines, Oxford BioMedica expects the study to be initiated in H1 2011.

 

Phase II study in ovarian cancer

Oxford BioMedica is in the final stages of developing a Phase II metastatic ovarian cancer protocol with the UK National Cancer Research Network (NCRN) which will be reviewed by a panel of gynaecology experts in Q1 2011.  Subject to final agreement, the protocol will be submitted to the regulatory bodies in Q2 2011.  Based on these timelines, Oxford BioMedica expects the study to be initiated in H2 2011.

 

Phase II study in colorectal cancer

Oxford BioMedica has entered into a collaboration agreement with Cardiff University to evaluate TroVax® in patients with inoperable metastatic colorectal cancer.  The Phase II study, led by Dr Andrew Godkin at the Department of Infection, Immunity and Biochemistry, will be sponsored by Cardiff University and Oxford BioMedica will provide TroVax®.  Dr Godkin's team submitted the study protocol to GTAC which was reviewed in February 2011 and, subject to receiving GTAC approval, it will be submitted to the UK Medicines and Healthcare products Regulatory Agency (MHRA).  Based on these timelines, Oxford BioMedica expects the study to be initiated in H1 2011.

 

Partnering initiative

Oxford BioMedica takes careful consideration in allocating resources to its products under clinical development, and expenditure on TroVax® is closely monitored.  The Company is exploring collaborations through clinical networks which provide significant leverage for Oxford BioMedica's investment and generate key data to further build the value of the product.  Partnering TroVax® for Phase III development remains a key strategic priority for the Company.

 

Market opportunity

At $47.7 billion, cancer is one of the largest, fastest growing markets in the pharmaceutical industry, according to MarketResearch.com.  In prostate cancer, the global vaccine market is expected to reach US$2.3billion in 2017 growing at a compound annual rate of 66% (source: GlobalData) with some analysts forecasting peak sales for Dendreon Inc.'s prostate cancer vaccine of US$4.3 billion in 2020 (Canaccord Genuity).  TroVax® is not prostate cancer specific and is administered in the same way as most infectious disease vaccines are given; a simple injection in the arm.  If TroVax® is shown to be efficacious in a pivotal registration trial for even just one of the major cancers where it is known that 5T4 is present on the tumours, it has significant potential.

 

TARGETED ANTIBODY THERAPY FOR CANCER: Partnered with Pfizer

Oxford BioMedica licensed global rights to develop antibodies targeting the 5T4 tumour antigen for the treatment of cancer to Wyeth in 2001.  The agreement is potentially worth US$24 million plus royalties on product sales, and the next milestone payment is triggered by the start of clinical trials.  Following Pfizer's acquisition of Wyeth in 2009 and subsequent portfolio review, Pfizer has indicated its continuing commitment to the collaboration.

 

Pre-clinical optimisation

Pfizer has responsibility for the development and commercialisation of the 5T4-targeted antibody therapy.  The product candidate comprises a toxin linked to a humanised 5T4-specific antibody, which facilitates targeted delivery of the anti-cancer agent payload to cancer cells.  Pre-clinical evaluation is on-going to optimise the product for clinical development during 2011 in preparation for an Investigational New Drug application.

 

Market opportunity

The concept of an anti-cancer therapy, which has antibody-like specificity as well as chemotherapy-like potency, is clearly attractive.  The 5T4-targeted antibody therapy has the potential to benefit patients with any solid cancer that expresses the 5T4 tumour antigen, which represents a multi-billion US dollar market.  Based on the product's profile, it could have application as a single agent or could be used in combination with other treatments, including therapeutic vaccines, such as TroVax®.

 

OTHER PRODUCTS

Oxford BioMedica has some non-core assets where, although development is no longer funded by the Company, there remains significant potential from previously completed clinical and pre-clinical studies.  These products include EndoAngio-GT, a gene-based anti-angiogenic therapy for cancer, Hi-8® MEL, a therapeutic vaccine for metastatic melanoma and MetXia®, a gene-directed enzyme prodrug therapy (GDEPT) strategy for pancreatic cancer.  Oxford BioMedica aims to realise the value of these assets through partnerships.  A divestment process for out-licensing Hi-8® MEL is currently under way.  The outcome of this process is currently uncertain.  Consequently, an impairment charge of £3.3 million was recognised in respect of Hi-8® MEL in 2010.

 

TECHNOLOGY LICENSING

In January 2010 Oxford BioMedica secured exclusive rights to intellectual property owned by Research Development Foundation (RDF), the technology transfer entity for the Clayton Foundation for Research of Houston, Texas that supports the Company's ocular products RetinoStat® and EncorStat®.  The purchase was funded by the issue of Oxford BioMedica shares, and as a result RDF acquired 1,699,876 new ordinary shares of 1p each at £0.11575 per share. 

 

In June 2010 Oxford BioMedica signed an amendment to its licence agreement with Cancer Research Technology (CRT) covering the use and exploitation of the 5T4 antigen.  This technology underpins TroVax®, the targeted antibody product being developed by Pfizer, and other potential applications.  The licence amendment clarifies royalty rates and the timing of royalty payments to CRT, and has allowed us to settle the payment of royalties that had been due to CRT relating to amounts received under the former sanofi-aventis TroVax® agreement.  This settlement is staged according to agreed TroVax® commercial and clinical milestones, with an initial cash payment of £100,000, together with the issue of Oxford BioMedica shares valued at £185,316.  Accordingly, Oxford BioMedica issued a total of 1,807,961 new ordinary shares of 1p each at £0.1025p per share.  Further royalties in respect of the sanofi-aventis TroVax® receipts could become payable when specified future commercial and clinical milestone events occur.

 

Oxford BioMedica signed a licensing agreement in August 2010 with Emergent Product Development Germany GmbH ("Emergent"), a wholly-owned subsidiary of Emergent BioSolutions Inc.  The agreement grants Emergent non-exclusive rights to the Company's Hi-8® PrimeBoost technology patents and a sub-licence under poxvirus patents licensed to us for the development and commercialisation of vaccines and therapeutics targeting eight infectious diseases.  Under the terms of the agreement Emergent has paid an upfront licensing fee of $1 million (of which the final part was received in February 2011), potential milestone payments of up to $20.4 million, and undisclosed royalties on sales.  The milestone payments are based on specified development successes and will be paid out over several years.

 

Oxford BioMedica has the potential to enjoy future milestone payments and royalties from a number of licensing agreements with partners who are developing mid- to late-stage products including:

 

MolMed:

2004: Licensed Oxford BioMedica's retroviral ex vivo gene delivery technology (TK008 in Phase III for transplant rejection in patients with acute leukaemia)

 

VIRxSYS Corporation:

2006: Licensed  Oxford BioMedica's VSV-G viral envelope technology in the production process of its anti-HIV/AIDS product, VRX496 (Phase II)

 

Bavarian Nordic:

2010: Licensed  Oxford BioMedica's heterologous prime-boost technology patents and poxvirus patents (PROSTVACTM is in Phase II for advanced prostate cancer)

 

Emergent BioSolutions:

2010: Licensed Oxford BioMedica's heterologous prime-boost technology patents and poxvirus patents (Tuberculosis vaccine is in Phase II)

 

PATENT LITIGATION

In January 2010 Oxford BioMedica reached a global settlement with Bavarian Nordic to resolve the patent litigation by Bavarian Nordic and the Company's oppositions to Bavarian Nordic's European MVA-BN® patents. Under a settlement and cross license agreement, Bavarian Nordic granted a license to its MVA-BN® patents in return for Oxford BioMedica granting a license to its heterologous prime-boost patents and a sub-license under poxvirus patents licensed to Oxford BioMedica by sanofi-aventis. Both Bavarian Nordic and Oxford BioMedica will make undisclosed milestone and royalty payments on the future development of their respective products.

 

FINANCIAL REVIEW

 

"2010 was a year of significant developments for Oxford BioMedica, culminating in the raising of £20 million before expenses in a placing and open offer which closed on 10 January 2011. The new strength that this has brought to the cash position in 2011 gives us a sound platform from which to reach key value-generating events in the future."

 

Financial overview

2010 saw progress in all three of Oxford BioMedica's lead programmes, ProSavin®, the ocular products and TroVax®.  With a full year of the funded ocular R&D programme, R&D expenditure on these products and the corresponding revenue both increased in 2010.  Administration expenses were lower than 2009, in particular because the high legal costs in relation to patent litigation in 2009 came to an end.  We recognised an exceptional research and development charge of £3.9 million in 2010 from impairment of intangibles, in particular a further write-down in the carrying value of Hi8®-MEL which we acquired in 2007 and are in the process of divestment.  In 2009 an exceptional net profit of £6.0 million related to the termination of the TroVax® collaboration and the revised strategy for TroVax® development.  Before exceptional items, the net loss for 2010 was 33% lower than 2009 at £6.3 million. Including exceptional items the 2010 net loss was £10.3 million (2009: £3.5 million).

 

Cash, cash equivalents and current financial assets at 31 December 2010 amounted to £12.3 million, and were added to by net proceeds of £18.4 million from the placing and open offer in January 2011.

 

Revenue £11,153,000 (2009: £19,120,000)

The ocular collaboration with sanofi-aventis which was initiated in April 2009, contributed the majority of the Group's income in 2010.  The collaboration has two elements: an upfront payment of US$26 million (£16.6 million) which was received in 2009, and R&D funding of up to US$24 million which is receivable over the current phase of the collaboration.  Revenue recognised for this collaboration comprised £4.7 million in respect of the upfront payment (2009: £3.1 million) and £5.6 million of R&D funding (2009: £3.1 million).  Deferred income of £9.3 million is expected to be recognised between 2011 and 2013. In addition, $1 million (£0.6 million) was recognised in 2010 in respect of the prime-boost technology licence with Emergent BioSolutions.

 

Cost of sales credit £593,000 (2009: expense of £437,000)

Cost of sales is the royalty payable to third party licensors attributable to upfront and milestone payments that are recognised as revenue.  In 2010 we wrote back an accrual of £1.1 million on re-negotiation of the licence with Cancer Research Technology (CRT) covering the 5T4 cancer antigen.  Dependent on certain future commercial milestones that relate to the partnering, development and approval of TroVax®, up to £1.1 million could become payable to CRT. A further write-back of £545,000 was made in respect of this licence in 2009, recognised within non-exceptional cost of sales, following a reduction in the estimated royalty rate.

 

Operating expenses before exceptional items £19,850,000 (2009: £20,955,000)

Non-exceptional operating expenses were £1.1 million lower than 2009 at £19.9 million, principally due to lower administrative expenses, in particular legal costs, staff costs and foreign exchange differences. This was offset by an increase of £1.0 million in R&D costs, of which £0.7 million was due to amortisation of intangibles. The balance of R&D spending moved further away from TroVax® and towards ProSavin® and the ocular products. Increased ocular spending was matched by an increase in revenue receivable from sanofi-aventis.

 

Research & development costs (pre-exceptional) £15,931,000 (2009: £14,899,000)

R&D costs comprise external costs (preclinical studies, GMP manufacturing, regulatory costs, and clinical trials), in-house expenditure (staff, R&D consumables, intellectual property, facilities and, depreciation of R&D assets), and amortisation of intangibles.  External clinical and preclinical costs from 2006 to 2008 had been high due to TroVax® development, particularly the TRIST study.  In 2009 and 2010 the balance of expenditure shifted away from TroVax®, which accounted for less than 5% of external costs in 2010, to ProSavin® and particularly to the ocular programme which is funded by sanofi-aventis.  In-house R&D costs in 2010 were 5% lower than 2009. Amortisation of intangibles (£0.7 million in 2010) is a systematic charge to the income statement to write off capitalised intellectual property rights over their expected useful lives.  

 

Administrative expenses (pre-exceptional) £3,919,000 (2009: £6,056,000)

Non-exceptional administrative expenses of £3,919,000 in 2010 were £2.1 million (35%) lower than 2009. Legal costs charged to the income statement reduced from £1.4 million to £0.3 million, largely due to the costs in 2009 of defending patent litigation brought by Bavarian Nordic. In January 2010 the Bavarian Nordic litigation was settled.  Foreign exchange gains, compared to losses in 2009, account for a further £0.5 million of the cost reduction. Administrative staff costs were £0.8 million (30%) lower than 2009 due to lower bonuses and share-related costs.

 

Exceptional operating expenses £3,949,000 (2009: £3,561,000)

Exceptional items are described fully in note 3 to the preliminary financial information. An impairment charge of £3.9 million relating to Hi8®-MEL and two smaller technology assets was recognised in 2010.  Exceptional costs in 2009 related to the termination of the TroVax® collaboration with sanofi-aventis, and the revision of the development strategy for TroVax®.  The provision for TRIST closure costs that was set up in 2009 was fully utilised by the end of 2010.

 

Finance income £207,000 (2009: £636,000)

The Group places its cash in bank deposits for periods of up to 12 months and generates interest on those deposits.  The maturity profile of deposits is intended to match planned expenditure.  Lower net interest receivable in 2010 reflects lower interest rates and a lower amount of funds on deposit.  The dramatic fall in market rates from the end of 2008 had a full-year effect in 2010, when the average return on deposits was just 1.29%.  In the early part of 2009, deposits that had been placed earlier in 2008 continued to earn higher rates of interest.  The Group has no debt, but is recognising as a finance expense the discount on a lease provision and a dilapidation provision.  The modest increase in rates over 2010 is reflected in a slightly higher charge.

 

Tax credit £1,514,000 (2009: £1,579,000)

Oxford BioMedica's UK operating subsidiary is entitled to claim R&D tax credit.  The credit is based on certain eligible expenses, to which a mark-up of 75% and a tax rate of 14% are applied, restricted where appropriate to the lower of UK payroll tax (Income Tax and National Insurance) and Corporation Tax losses.  The reimbursement of R&D costs by sanofi-aventis reduces the net eligible expenses for R&D credit, and this has resulted in a lower tax credit for 2010.  This was offset by an increase of £239,000 in the amount of tax credit received in respect of 2009, compared to the estimate in the 2009 financial statements.  The Group's US subsidiary supplies services to the UK subsidiary subject to a fixed mark-up.  Interest is charged by the subsidiary at statutory rates for an inter-company loan.  This generates a low level of taxable income in the USA.

 

Loss for the financial year before exceptional items £6,341,000 (2009: £9,516,000)

Loss for the financial year including exceptional items £10,290,000 (2009: £3,515,000)

Before exceptional items, the lower net loss in 2010 is attributable principally to increased revenue from the sanofi-aventis ocular collaboration, the write-back of accrued cost of sales royalties and lower administrative expenses.  As a result of an exceptional impairment charge of £3.9 million in 2010, compared to the exceptional net profit in 2009 related to TroVax® of £6.0 million, the Group recorded a higher net loss including exceptional items than in 2009.

 

Intangible assets £6,683,000 (2009: £11,119,000)

Intangible assets at 31 December 2010 were £4.4 million lower than 2009 due principally to the recognition of an impairment charge (classified as an exceptional research and development cost) of £3.9 million and amortisation (classified as a non-exceptional research and development cost) of £0.7 million.  No impairment or amortisation was recognised in 2009. Intangible asset additions of £0.2 million in 2010 related to two patents supporting ocular gene therapy products.

 

Trade and other receivables £4,795,000 (2009: £4,628,000)

Trade and other receivables at 31 December 2010 were just a little higher than 2009 at £4.8 million.  Accrued income of £1.4 million (2009: £1.9 million) comprised R&D funding recoverable from sanofi-aventis.  Costs of £0.8 million relating to the placing and open offer which closed on 10 January 2011 were classified as prepayments at 31 December 2010, and were charged to the share premium account in 2011.

 

Trade and other payables £3,923,000 (2009: £7,669,000)

Trade and other payables reduced further in 2010. The reduction in accrued royalties on sales included the impact of writing back an accrual of £1.1 million for royalty payable to Cancer Research Technology.

 

Deferred income £9,402,000 (2009: £13,765,000)

Deferred revenue reflects payments received under licensing agreements that exceed the amount of recognised revenue. The initial receipt in 2009 from the ocular collaboration with sanofi-aventis is being recognised as revenue over a period of 42 to 51 months.

 

Share issues

At the end of 2010, the Company had 544,875,557 shares in issue.  During the year, shares issued for cash raised £0.2 million.  In addition, shares valued at £0.2 million were issued to settle a royalty debt due to Cancer Research Technology.  Subsequent to the year end, on 10 January 2011 the Company issued 400,000,000 new ordinary shares in a placing and open offer, raising £20.0 million before expenses.  Expenses of £0.8 million were incurred during 2010 in respect of this share issue, included in prepayments at 31 December 2010 and charged to the share premium account in 2011.  Further costs of £0.8 million were incurred in closing the share issue in 2011.  

 

Cash, cash equivalents and available for sale investments £12,256,000 (2009: £25,302,000).

Cash burn £13,038,000 (2009: cash generated £3,026,000)

The total of cash, cash equivalents and available for sale investments at the end of 2010 was in line with expectations at £12.3 million.  The format of the cash flow statement under IFRS does not readily confer an assessment of cash burn (a measure often used in the biotechnology sector).  Cash burn is the aggregate of cash from operating activities, proceeds of sale of property, plant and equipment and fixed asset investments, purchases of property, plant and equipment and intangible assets, and interest received. It was £13.0 million in 2010, compared to a net cash inflow in 2009 of £3.0 million.

 

Financial outlook

Successful developments with ProSavin®, the ocular products and TroVax® throughout 2010 have maintained the Group's progress towards its objectives to secure a development partner for ProSavin®, to move the ocular drugs in the collaboration with sanofi-aventis into the next (Phase II) stage of development and to re-partner TroVax®.  These objectives are expected to add value and to generate significant cash inflows over the next 1-2 years.  The fundraising of £20 million before expenses secured on 10 January 2011 provides the financial strength to allow the Group to move forward with confidence, and the resources to be able to co-invest in the next stages of ProSavin® development, and to invest in a manufacturing facility for LentiVector® platform products.    

 

The Group has a strong platform from which to build a sustainable, profitable business.  We aim to develop the product pipeline through a combination of focussed investment in certain programmes, together with partnerships and collaborations.  Sustainable profitability will depend on the ability of Oxford BioMedica and its collaborators to develop and bring to market safe and effective medicines that benefit patients and achieve commercial success.  We also continue to explore opportunities to accelerate profitability through value-enhancing corporate activity.

 

 

Andrew Wood

Chief Financial Officer

Consolidated statement of comprehensive income

for the year ended 31 December 2010

 

 



2010



2009



Notes

Pre-exceptional items

£'000

Exceptional items

(note 3)

£'000

Total

£'000

Pre-exceptional items

£'000

Exceptional items

(note 3)

£'000

Total

£'000

Revenue


11,153

-

11,153

9,031

10,089

19,120

Cost of sales credit/(charge)


593

-

593

90

(527)

(437)

Gross profit


11,746

-

11,746

9,121

9,562

18,683

 

Research and development costs

 

 

(15,931)

(3,949)

(19,880)

(14,899)

(3,392)

(18,291)

Administrative expenses


(3,919)

-

(3,919)

(6,056)

(169)

(6,225)

Other operating income: grants receivable


42

-

42

103

-

103

Operating (loss)/profit


(8,062)

(3,949)

(12,011)

(11,731)

6,001

(5,730)









Finance income


222

-

222

669

-

669

Finance costs


(15)

-

(15)

(33)

-

(33)

(Loss)/profit before tax


(7,855)

(3,949)

(11,804)

(11,095)

6,001

(5,094)

Taxation

4

1,514

-

1,514

1,579

-

1,579

(Loss)/profit for the year


(6,341)

(3,949)

(10,290)

(9,516)

6,001

(3,515)









Other comprehensive income

Exchange adjustments


(4)

-

(4)

16

-

16

Total recognised comprehensive (expense)/income for the year attributable to owners of the parent


(6,345)

(3,949)

(10,294)

(9,500)

6,001

(3,499)

 

Basic loss and diluted loss per ordinary share

5



(1.89p)



(0.65p)

 

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 19 to 24 form part of this preliminary financial information.

CONSOLIDATED BALANCE SHEET

as at 31 December 2010

 

Notes

2010

£'000

2009

£'000

Assets




Non-current assets




Intangible assets

6

6,683

11,119

Property, plant and equipment


580

631



7,263

11,750

Current assets




Trade and other receivables

7

4,795

4,628

Current tax assets


1,331

2,269

Financial assets: Available for sale investments


5,603

18,500

Cash and cash equivalents


6,653

6,802



18,382

32,199

Current liabilities




Trade and other payables

8

3,923

7,669

Deferred income

9

5,201

4,741

Current tax liabilities


11

-

Provisions

10

83

898



9,218

13,308

Net current assets


9,164

18,891

Non-current liabilities




Other non-current liabilities


123

102

Deferred income

9

4,201

9,024

Provisions

10

498

539



4,822

9,665

Net assets


11,605

20,976





Equity attributable to owners of the parent




Ordinary shares


5,449

5,412

Share premium


110,387

110,043

Merger reserve


14,310

14,310

Other reserves


(680)

(676)

Retained losses


(117,861)

(108,113)

Total equity


11,605

20,976

 

The notes on pages 19 to 24 form part of this preliminary financial information.

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2010

 

 


2010

2009


Notes

£'000

£'000

Cash flows from operating activities




Cash (used in)/generated from operations

11

(15,289)

904

Interest paid


(1)

(23)

Tax credit received


2,508

1,500

Overseas tax paid


(46)

(67)

Net cash (used in)/generated from operating activities


(12,828)

2,314





Cash flows from investing activities




Proceeds from sale of property, plant and equipment


2

1

Proceeds from sale of fixed asset investments


36

-

Purchases of property, plant and equipment


(291)

(247)

Purchases of intangible assets


(266)

(41)

Net maturity/(purchase) of available for sale investments


12,897

(4,750)

Net cash generated from /(used in) investing activities


12,378

(5,037)





Cash flows from financing activities




Interest received


309

999

Proceeds from issue of ordinary share capital


210

360

Net (payments)/receipts for costs of share issues


(216)

36

Net cash generated from/(used in) financing activities


303

1,395





Net decrease in cash and cash equivalents


(147)

(1,328)

Cash and cash equivalents at 1 January


6,802

8,141

Effects of exchange rate changes


(2)

(11)

Cash and cash equivalents at 31 December


6,653

6,802

 

 

The notes on pages 19 to 24 form part of this preliminary financial information.

 

STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT

for the year ended 31 December 2010

 


Share capital

Share premium

Merger reserve

Other reserves

Retained losses

Total



£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2010


5,412

110,043

14,310

(676)

(108,113)

20,976

Year ended 31 December 2010:








Exchange adjustments


-

-

-

(4)

-

(4)

Loss for the year


-

-

-

-

(10,290)

(10,290)

Total comprehensive expense for the year


-

-

-

(4)

(10,290)

(10,294)

Transactions with owners:

Share options

  Proceeds from shares issued


2

11

-

-

-

13

Value of employee services


-

-

-

-

542

542

Issue of shares excluding options


35

347

-

-

-

382

Costs of share issues


-

(14)

-

-

-

(14)

At 31 December 2010


5,449

110,387

14,310

(680)

(117,861)

11,605

 


Share capital

Share premium

Merger reserve

Other reserves

Retained losses

Total



£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2009


5,373

109,686

14,310

(692)

(105,406)

23,271

Year ended 31 December 2009:








Exchange adjustments


-

-

-

16

-

16

Loss for the year


-

-

-

-

(3,515)

(3,515)

Total comprehensive expense for the year


-

-

-

16

(3,515)

(3,499)

Transactions with owners:

Share options

  Proceeds from shares issued


2

13

-

-

-

15

Value of employee services


-

-

-

-

808

808

Issue of shares excluding options


37

308

-

-

-

345

Net credit for share issue costs


-

36

-

-

-

36

At 31 December 2009


5,412

110,043

14,310

(676)

(108,113)

20,976

 

 

The notes on pages 19 to 24 form part of this preliminary financial information.

NOTES TO THE PRELIMINARY FINANCIAL INFORMATION

for the year ended 31 December 2010

 

1          Basis of preparation

 

This financial information for the years ended 31 December 2010 and 31 December 2009 does not constitute the statutory financial statements for the respective years and is an extract from the financial statements. It is based on, and is consistent with, that in the Group's statutory accounts for the year ended 31 December 2010 and those financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. Financial statements for the year ended 31 December 2009 have been delivered to the Registrar of Companies and included the auditors' report. The auditors' reports on the financial statements for the years ended 31 December 2010 and 31 December 2009 were unqualified and did not contain statements under section 498 of the Companies Act 2006. The financial information in this report does not constitute statutory financial statement within the meaning of sections 434-436 of the Companies Act 2006.

 

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements are prepared in accordance with the historical cost convention. Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRSs adopted for use in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.

 

Copies of this announcement and the interim report for 2010 are available from the Company Secretary. The audited statutory financial statements for the year ended 31 December 2010 are expected to be distributed to shareholders by 31 March 2011 and will be available at the registered office of the Company, Medawar Centre, Oxford Science Park, Oxford, OX4 4GA. Details can also be found on the Company's website at www.oxfordbiomedica.co.uk.

 

This announcement was approved by the Board of Oxford BioMedica plc on 1 March 2011.

 

Use of estimates and assumptions

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and judgements are continually made and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable in the circumstances.

 

Critical accounting estimates and assumptions

Where the Group makes estimates and assumptions concerning the future, the resulting accounting estimates will seldom exactly match actual results. Due to the amounts involved, the estimates and assumptions regarding revenue recognition and impairment of intangible assets have the greatest risk of causing a material adjustment to the carrying amounts of assets and liabilities.

 

In 2009 the Group received an upfront non-refundable payment of US$26 million (£16,641,000) from sanofi-aventis under the ocular product collaboration. This is being recognised as revenue on a straight line basis over 42 to 51 months (the expected duration of the initial stage of the collaboration for each of the four products). Up to 31 December 2010, revenue of £7,775,000 has been recognised under this collaboration, with the remaining £8,866,000 classified as deferred income.

 

Over the term of the ocular product collaboration with sanofi-aventis, Oxford BioMedica may recover up to US$24 million in research and development funding. Project costs in excess of US$24 million will be borne by Oxford BioMedica. The amount of research and development funding that is recognised as revenue is based on an estimate of the amount of project costs expected to be borne by the Group by the end of the collaboration. Up to 31 December 2010 £8,735,000 has been recognised as revenue and £457,000 has been classified as current deferred income.

 

The Group has significant intangible assets arising from purchases of intellectual property rights and from the acquisition of Oxxon Therapeutics Limited in 2007. When there is an indicator of a significant and permanent reduction in the value of intangible assets, an impairment review is carried out.  The impairment analysis is principally based on estimated discounted future cash flows. Actual outcomes could vary significantly from such estimates of discounted future cash flows, due to the highly sensitive assumptions used. The determination of the assumptions is subjective and requires the exercise of considerable judgement. Any changes in key assumptions about the Group's business and prospects or changes in market conditions could materially affect the amount of impairment.

 

 

2          Segmental analysis

In accordance with IFRS 8, Operating Segments, segment information is considered on the same basis as that which is used for internal reporting purposes.

 

The SMG considers that the business comprises a single activity, which is biotechnology research and development. The SMG reviews the Group's profit or loss and its cash flows, assets and liabilities on a whole-company basis. In carrying out these reviews, the SMG considers all material items of income and expenditures that are directly attributable to individual development programmes. The internal management reports do not allocate assets and liabilities or shared overheads to individual products, as the Group does not consider it meaningful, in the present development phase, to attempt to attribute profits or losses to individual products.

 

Based on the above considerations, there is considered to be one reportable segment: biotechnology research and development.

 

Internal and external reporting is on a consolidated basis, with purchases and sales between subsidiaries eliminated on consolidation. Therefore the segment financial information is the same as that set out in the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of cash flows and the statement of changes in equity.

 

 

3          Exceptional items

 

Exceptional items represent significant items of income or expense which due to their nature or the expected infrequency of the events giving rise to them, are presented separately on the face of the statement of comprehensive income to give a better understanding to shareholders of the elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial performance.

 




2010

£'000

2009

£'000

Revenue



-

10,089

Cost of sales



-

(527)

Research and development costs



(3,949)

(3,392)

Administrative expenses



-

(169)

Exceptional operating (loss)/profit



(3,949)

6,001

 

Following a review of the carrying value of intangible assets, the Directors have made a provision for impairment of £3,949,000 covering the product Hi8®-Mel, which is in the process of being divested, and two other in-licensed technologies which, due to prioritisation of investment in research and development, are not utilised in the current product portfolio. At 31 December 2010 the book value attributed to Hi8®-Mel was £3,254,000 (2009: £6,933,000). 

 

A net exceptional profit of £6,001,000 was recognised in 2009. In April 2009 the Group's development partner, sanofi-aventis, terminated the TroVax® collaboration and returned the worldwide rights relating to TroVax®. Exceptional items in 2009 comprise termination payments from sanofi-aventis, the recognition of the remaining deferred TroVax® income, the write-off of prepaid cost of sales (royalty) attributable to the deferred income, and the write-off of certain R&D costs and administrative expenses.

 

In June 2009 the Group reviewed its strategy for the development of TroVax® following an FDA type C review. As a result a provision was established for the estimated costs to close out the TRIST study, and certain prepaid clinical trial expenses in respect of the planned Quasar clinical trial in adjuvant colorectal cancer were written off.   

 

4          Taxation

 

The Group is entitled to claim tax credits in the United Kingdom for certain research and development expenditure. The amount included in the statement of comprehensive income for the year ended 31 December 2010 comprises the credit receivable by the Group for the year less overseas tax paid in the year. The United Kingdom corporation tax research and development credit is paid in arrears once tax returns have been filed and agreed. The tax credit recognised in this preliminary financial information but not yet received is included in current tax assets in the balance sheet. The amounts for 2010 have not yet been agreed with the relevant tax authorities.

 

2010

Continuing operations

£'000

Current tax



United Kingdom corporation tax research and development credit

(1,331)

(1,650)

Overseas taxation

70

61


(1,261)

(1,589)

Adjustments in respect of prior periods



United Kingdom corporation tax research and development credit

(239)

-

Overseas taxation

(14)

10

Taxation credit

(1,514)

(1,579)

 

 

5          Basic loss and diluted loss per ordinary share

 

 

6          Intangible assets

 

In-process R&D

Intellectual property rights

Total

Group

£'000

£'000

£'000

Cost




At 1 January 2010

10,400

5,505

15,905

Additions

-

229

229

Disposals

-

(445)

(445)

At 31 December 2010

10,400

5,289

15,689

Accumulated amortisation and impairment




At 1 January 2010

3,667

1,119

4,786

Amortisation charge for the year

409

290

699

Impairment provided in the year

3,162

787

3,949

Disposals

-

(428)

(428)

At 31 December 2010

7,238

1,768

9,006

 

Net book amount at 31 December 2010

3,162

3,521

6,683

 

Cost




At 1 January 2009

10,400

5,505

15,905

Additions

-

78

78

Disposal

-

(78)

(78)

At 31 December 2009

10,400

5,505

15,905

Accumulated amortisation and impairment




At 1 January and 31 December 2009

3,667

1,119

4,786

 

Net book amount at 31 December 2009

6,733

4,386

11,119

 

In-process R&D relates to the product Hi8®-MEL acquired as part of the acquisition of Oxxon Therapeutics Limited in 2007. Intellectual property rights comprise third party patent rights that have been purchased by the Group. No in-house research and development or patent costs are included in intangible assets.

 

Impairment and amortisation charges are included within research and development costs in the statement of comprehensive income.

 

During the year a process was initiated to divest Hi8®-MEL. The process is ongoing, but the outcome is currently uncertain. Based on the progress achieved towards divestment, Hi8®-MEL was further impaired in 2010.

 

Impairment losses are recognised for the amount by which each asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.Value in use is calculated using estimated discounted future cash flows. Key assumptions in the discounted cash flow calculations are:

 

·      The product is developed by a collaborative partner who funds all future development costs and markets the product.

·      The Group receives an initial licence fee, milestone payments and royalties on sales.

·      The cash flow projections include estimates for selling price, royalty rates, population growth, disease incidence and market penetration.

·      The resulting cash receipts are discounted at 12% per annum.

·      The cash flow projections are a long-term view, based on the expected patent life. Due to the length of the development cycle for innovative medicines, this period is significantly longer than 5 years.

 

The key assumptions are management estimates, based where possible on available information for similar products. Due to the novelty and early stage of development of the Group's products, it is not possible to benchmark these assumptions against past experience. 

 

 

7          Trade and other receivables

2010

2009


£'000

£'000

Non-current



Other receivables - rent deposit

150

145

Current



Trade receivables

394

88

Accrued income

1,366

1,925

Other receivables

108

298

Other tax receivable

109

150

Prepaid costs of share issues

777

-

Prepaid clinical trial expenses

368

70

Other prepayments

1,523

1,952


4,645

4,483

Total trade and other receivables

4,795

4,628

 

Accrued income of £1,366,000 (2009: £1,925,000) relates to R&D funding receivable from sanofi-aventis.

In January 2011 the Company raised £20 million before costs in a placing and open offer. Costs related to the share issue of £777,000 accrued up to 31 December 2010 have been classified as prepaid costs of share issues.

Prepaid clinical trial expenses mainly comprise advance payments to clinical trial sites.

 

 

8          Trade and other payables - current

2010

2009


£'000

£'000

Trade payables

1,277

1,965

Other taxation and social security

139

304

Accrued share issue costs

525

-

Other accruals

1,982

5,400

Total trade and other payables

3,923

7,669

 

 

9          Deferred income

Group

2010

£'000

2009

£'000

Current

5,201

4,741

Non-current

4,201

9,024

Total deferred income

9,402

13,765

 

In April 2009 the Group entered into a collaborative programme with sanofi-aventis to develop gene therapy products to treat ocular diseases.  An initial non-refundable payment of US$26 million (£16,641,000) was received.  This is being recognised as revenue on a straight line basis over 42 to 51 months (the expected duration of the initial stage of the collaboration for each of the four products).  Revenue to date of £7,775,000 has been recognised under this collaboration (£3,110,000 in 2009 and £4,665,000 in 2010).  The remaining £8,866,000 is classified as deferred income. £4,665,000 is expected to be recognised as income in the next 12 months and is classified as current: the remaining £4,201,000 is classified as non-current.

 

Over the term of the ocular gene therapy collaboration, Oxford BioMedica may recover from sanofi-aventis up to US$24 million in research and development funding.  Project costs in excess of US$24 million will be borne by Oxford BioMedica.  £5,621,000 has been recognised as revenue in 2010 (2009: £3,114,000) and £457,000 has been classified as current deferred income.

 

 

10        Provisions

Clinical trial

£'000

Dilapidations

£'000

Onerous lease

£'000

Total

£'000

At 1 January 2010

817

420

200

1,437

Exchange adjustments

-

-

8

8

Utilised in the year

(817)

-

(88)

(905)

Amortisation of discount

-

12

2

14

Change of discount rate - charged in the statement of comprehensive income

-

-

2

 

2

Change of discount rate - adjustment to recognised fixed asset

-

25

-

25

At 31 December 2010

-

457

124

581

 

At 1 January 2009

 

-

 

411

 

308

 

719

Exchange adjustments

-

-

(27)

(27)

Provided in the year

2,202

-

-

2,202

Utilised in the year

(1,385)

-

(88)

(1,473)

Amortisation of discount

-

5

5

10

Change of discount rate - charged in the statement of comprehensive income

-

-

2

 

2

Change of discount rate - adjustment to recognised fixed asset

-

4

-

4

At 31 December 2009

817

420

200

1,437

 

 


2010

£'000

2009

£'000

Current


83

898

Non-current


498

539

Total provisions


581

1,437

 

The clinical trial provision was established following a review of TroVax® development in June 2009. It represented the anticipated costs to complete the TRIST study in renal cancer from June 2009. The TRIST study close-out of the study was in progress at 31 December 2009 and was completed in 2010.

 

The dilapidations provision relates to anticipated costs of restoring the leasehold property in Oxford, UK to its original condition at the end of the present leases in 2016, discounted at 2.40% per annum (2009: 3.40%). The provision will be utilised at the end of the leases if they are not renewed.

 

The onerous lease provision relates to the estimated rental shortfall in respect of a redundant property in San Diego, USA which has been sub-let for the remainder of the lease term until June 2012, discounted at 0.82% per annum (2009: 1.77% per annum).The provision will be utilised over the term of the lease.

 

 

11        Cash flows from operating activities

            Reconciliation of loss before tax to net cash (used in)/generated from operations

 

2010

2009


£'000

£'000

Continuing operations



(Loss)/profit before tax

(11,804)

(5,094)

Adjustment for:



Depreciation

345

311

Amortisation of intangible assets

699

-

Loss/(profit) on disposal of property, plant and equipment

2

(1)

Loss on disposal of intangible asset

17

78

Profit on disposal of fixed asset investment

(36)

-

Impairment charge

3,949

-

Finance income

(222)

(669)

Finance expense

15

33

Charge in relation to employee share schemes

542

808




Changes in working capital:



Decrease in trade and other receivables

529

2,322

Decrease in trade and other payables

(4,059)

(2,937)

(Decrease)/increase in deferred income

(4,363)

5,322

(Decrease)/increase in provisions

(903)

731

Net cash (used in)/generated from operations

(15,289)

904

 

 

12        Events after the balance sheet date

 

On 10 January 2011 the Company issued 400,000,000 new ordinary shares of 1p each in a placing and open offer at 5p per share, raising £20.0 million before costs. Estimated costs of this share issue, including commission payable on completion, were £1,638,000. Costs of £777,000 that were incurred up to 31 December 2010 are classified as prepayments in the financial statement for the year ended 31 December 2010, and were applied to the share premium account in 2011.

 

 

 

-Ends-

 

 


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