2021 Annual report and accounts & AGM notification
Oxford Biomedica
2021 Annual report and accounts & AGM notification
London, UK - 27 April 2022: Oxford Biomedica plc (LSE:OXB) ("Oxford Biomedica", "the Company" or "the Group"), a leading gene and cell therapy group, gives notice that copies of the 2021 Annual report and accounts and the Notice of Annual General Meeting ("AGM") are being sent to shareholders. These documents are available on the "Investors" section of the Group's website at www.oxb.com. Oxford Biomedica announced its preliminary results for the year ended 31 December 2021 on 20 April 2022.
Copies of these documents have been submitted to the Financial Conduct Authority for publication through the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Further copies of the 2021 Annual report and accounts are available from the Company Secretary, Oxford Biomedica plc, Windrush Court, Transport Way, Oxford, OX4 6LT, United Kingdom (telephone number: +44 (0) 1865 783 000).
In accordance with the announcement on 17 January 2022 that John Dawson had signalled his intention to retire after 13 years service, the Company announces that, Mr Dawson will not be seeking re-election at the forthcoming AGM. Consequently, Mr Dawson will step down as a Director with effect from 27 May 2022.
The Company intends to hold its AGM on Friday 27 May 2022 at the offices of Oxford Biomedica, Windrush Court, Transport Way, Oxford OX4 6LT, commencing at 3:00 p.m.
In light of public health guidance and legislation issued by the UK Government in relation to the COVID-19 pandemic, the Company's 2022 AGM will be held as a combined physical and electronic meeting. This means that attendance in person is likely to be restricted in terms of numbers and shareholders and other attendees are encouraged not to attend the AGM in person, save for such persons nominated by the Chair of the meeting in order to establish a quorum. The Company will continue to monitor public health guidance and legislation issued by the UK Government in relation to the COVID-19 pandemic. Should it become appropriate to revise the current arrangements for the AGM, any such changes will be notified to shareholders through the Company's website, www.oxb.com , and, where appropriate, by announcement made by the Company to a Regulatory Information Service. Notwithstanding the foregoing, the Company is pleased to be able to offer facilities for Shareholders to attend virtually, ask questions and vote at the AGM electronically in real time should they wish to do so. The details of how to do this are set out in the Notice of Annual General Meeting.
In accordance with the requirements of Rule 6.3.5 of the Disclosure Guidance and Transparency Rules of the UK Financial Conduct Authority, the appendix to this announcement contains descriptions of the principal risks and uncertainties affecting the Group and material related party transactions, and a responsibility statement which has been extracted from the 2021 Annual report and accounts. This announcement should be read in conjunction with, and not as a substitute for, reading the full 2021 Annual report and accounts.
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For further information, please contact: |
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Oxford Biomedica plc: Natalie Walter, Company Secretary |
Tel: +44 (0)1865 783 000 |
Notes for editors
Oxford Biomedica (LSE:OXB) is an innovative leading viral vector specialist focused on delivering life changing therapies to patients.
Oxford Biomedica plc and its subsidiaries (the Group) work across key viral vector delivery systems including those based on lentivirus, adeno-associated virus (AAV) and adenovirus, providing innovative solutions to cell and gene therapy biotechnology and biopharma companies for their process development, analytical development and manufacturing needs. Oxford Biomedica has built a sector leading lentiviral vector delivery system, LentiVector® platform, which the Group leverages to develop product candidates in-house, before seeking partners to take the products into clinical trials.
Oxford Biomedica is based across several locations and headquartered in Oxfordshire, UK. In early 2022, the Group established Oxford Biomedica Solutions, a new US based subsidiary AAV manufacturing and innovation business, based near Boston, US.
Oxford Biomedica employs more than 940 people. Further information is available at www.oxb.com .
Appendix
Principal risks and uncertainties
The Group is exposed to a range of risks. Some of them are specific to the Group 's current operations, others are common to all development-stage biopharmaceutical companies. The Directors have carried out a robust assessment of the emerging and principal risks facing the Group, including those, which could threaten its business model, future performance, solvency or liquidity.
The Group operates in the cell and gene therapy biotechnology sector which, by its nature, is relatively high risk compared with other industry sectors. During 2021, there have only been a few additional cell and gene therapy products that have been approved for commercial use and, consequently, there are still significant financial and development risks in the sector, and the regulatory authorities have shown caution in their regulation of such products.
Risk assessment and evaluation is an integral and well-established part of the Group's management processes. The Group's risk management framework incorporates the implementation of a mitigation strategy, each tailored to the specific risk in question. The Group has taken the decision to disclose the steps it has taken to mitigate the risks facing its operations during the period as described in the prior year approach to the disclosure of risks.
Risk management framework
The Group's risk management framework is as follows:
- Board of Directors- the Board has overall responsibility for risk management, determining the Group's risk tolerance, and for ensuring the maintenance of a sound system of internal control. The Board considers risk in the context of its agenda items at each of its formal meetings, of which there at least six annually. However, twice a year, in March and September, a full presentation to the Board on risk is provided by the Risk Management Committee. The risk management processes are the responsibility of the Senior Executive Team (SET) with emerging risks identified by horizon scanning and discussed at the Risk Management Committee. The Audit Committee monitors the processes and their implementation as well as reviewing the Group 's internal financial controls and the internal control systems. The Audit Committee also monitors the integrity of the financial statements of the Group and any formal announcements relating to the Group's financial performance, reviewing significant financial reporting judgements contained in them.
- Senior Executive Team (SET) -During 2021, the SET generally met every week, with twice monthly-extended SET sessions to discuss current business issues and consider relevant risks. The SET also held regular COVID-19 update sessions. At least twice a year, the SET meets with representatives from the Risk Management Committee to consider the operational risk management processes and risks identified.
- Key management committees -the Group currently has three key management sub-committees which meet monthly and through which much of the day-to-day business is managed. These are the extended Operational Leadership Team (which incorporates the Quality and Manufacturing Operations Committee), the Product Development Committee and the Technical Development Committee. SET members attend these meetings and risk management is a key feature of each sub-committee.
- Risk Management Committee -the Group has a Risk Management Committee comprising senior managers from each area of the business and chaired by the Chief of Staff. This group meets quarterly with a remit to identify and assess risks in the business and to consider mitigation and risk management steps that can be taken. The risk register is regularly reviewed by the SET and key risks are highlighted to the Board at each formal meeting.
- Standard Operating Procedures -all areas of the business have well established Standard Operating Procedures (SOPs) which are required be followed to minimise the risks inherent in the business operations. Where these are required for GMP, GCP and GLP any deviations from the SOPs must be identified and investigated. Compliance with such SOPs are routinely subject to audit by the relevant regulators and customers. Other SOPs, such as financial processes, are also subject to audits.
Key risks specific to the Group's current operations
Pharmaceutical product development risks
To develop a pharmaceutical product, it is necessary to conduct pre-clinical studies and human clinical trials for product candidates to demonstrate safety and efficacy. The number of pre-clinical studies and clinical trials that will be required varies depending on the product candidate, the indication being evaluated, the trial results and the regulations applicable to the particular product candidate. In addition, the Group or its partners will need to obtain regulatory approvals to conduct clinical trials and bioprocess drugs before they can be marketed. This development process takes many years. The Group may fail to develop successfully a product candidate for many reasons, including:
- Failure to demonstrate long-term safety;
- Failure to demonstrate efficacy;
- Failure to develop technical solutions to achieve necessary dosing levels or acceptable delivery mechanisms;
- Failure to establish robust bioprocessing processes;
- Failure to obtain regulatory approvals to conduct clinical studies or, ultimately, to market the product; and
- Failure to recruit sufficient patients into clinical studies.
The failure of the Group to successfully develop a product candidate could adversely affect the future profitability of the Group. There is a risk that the failure of any one product candidate could have a significant and sustained adverse impact on the Group's share price . There is also the risk that the failure of one product candidate in clinical development could have an adverse effect on the development of other product candidates, or on the Group ' s ability to enter into collaborations in respect of product candidates .
The Group has accepted this risk but looks to mitigate via several product candidates in the pipeline and to collaborate with other larger more experienced partners on product development.
(i) Safety risks
Safety issues may arise at any stage of the drug development process. An independent drug safety monitoring board (DSMB), the relevant regulatory authorities or the Group itself may suspend or terminate clinical trials at any time. There can be no assurances that any of the Group's product candidates will ultimately prove to be safe for human use. Adverse or inconclusive results from pre-clinical testing or clinical trials may substantially delay, or halt, the development of product candidates, consequently affecting the Group's timeline for profitability. The continuation of a particular study after review by the DSMB or review body does not necessarily indicate that all clinical trials will ultimately be successfully completed . The Group has accepted this risk but looks to mitigate the impact as much as possible through careful assessment of any safety issues arising from the product early in the development process and to stop the development if required .
(ii) Efficacy risks
Human clinical studies are required to demonstrate efficacy in humans when compared against placebo and/or existing alternative therapies . The results of pre-clinical studies and initial clinical trials of the Group's product candidates do not necessarily predict the results of later stage clinical trials. Unapproved product candidates in later stages of clinical trials may fail to show the desired efficacy despite having progressed through initial clinical trials. There can be no assurance that the efficacy data collected from the pre-clinical studies and clinical trials of the Group's product candidates will be sufficient to satisfy the relevant regulatory authorities that the product should be given a marketing authorisation. The Group has accepted this risk but looks to mitigate the impact as much as possible through consultation with the regulatory authorities early in the development process to determine what is required for market authorisation .
(iii) Technical risks
During the course of a product's development, further technical development may be required to improve the product candidate's characteristics such as the delivery mechanism or the bioprocessing process. There is no certainty that such technical improvements or solutions can be identified . The Group continues to innovate in this area using its R&D expertise in collaboration with its customers to mitigate this risk.
(iv) Bioprocessing process risk
There can be no assurance that the Group's product candidates will be capable of being produced in commercial quantities at acceptable cost. The Group's LentiVecto r® and AAV platform product candidates use specialised bioprocessing processes for which there are only a few suitable bioprocessors including the Group itself . There can be no assurance that the Group will be able to bioprocess the Group's product candidates at an economically viable cost or that contractors who are currently able to bioprocess the Group's product candidates will continue to make capacity available at economic prices, or that suitable new contractors will enter the market. Bioprocessing processes that are effective and practical at the small scale required by the early stages of clinical development may not be appropriate at the larger scale required for later stages of clinical development or for commercial supply . There can be no assurance that the Group will be able to adapt current processes or develop new processes suitable for the scale required by later stages of clinical development or commercial supply in a timely or cost-effective manner, nor that contract bioprocessors will be able to provide sufficient bioprocessing capacity when required. The Group continues to monitor and review the platform and production processes to ensure that innovative steps are taken to increase production yields.
(v) Regulatory risk
The clinical development and marketing approval of the Group's product candidates and the Group's bioprocessing facilities, are regulated by healthcare regulatory agencies, such as the FDA (USA), EMA (Europe) and MHRA (UK). During the development stage, regulatory reviews of clinical trial applications or amendments can prolong development timelines. Similarly, there can be no assurance of gaining the necessary marketing approvals to commercialise products in development. Regulatory authorities may impose restrictions on a product candidate's use or may require additional data before granting approval. If regulatory approval is obtained, the product candidate and bioprocessor will be subject to continual review and there can be no assurance that such an approval will not be withdrawn or restricted . The Group's laboratories, bioprocessing facility and conduct of clinical studies are also subject to regular audits by the MHRA and the FDA to ensure that they comply with GMP , GCP and GLP standards . Failure to meet such standards could result in the laboratories or the bioprocessing site being closed or the clinical studies suspended until corrective actions have been implemented and accepted by the regulator. The Group consults with the regulator early in the development process to understand any concerns identified and looks to remedy these before they become a major issue .
(vi) Failure to recruit sufficient patients into clinical studies
Clinical trials are established under specific protocols which specify how the trials should be conducted . Protocols specify the number of patients to be recruited into the study and the characteristics of patients who can and cannot be accepted into the study. There is a risk that it proves difficult in practice to recruit the number of patients with the specified characteristics, potentially causing delays or even abandonment of the clinical study. This could be caused by a variety of reasons, such as the specified characteristics being too tightly defined resulting in a very small population of suitable patients, or the emergence of a competing drug, either one that is approved or another drug in the clinical stage of development.
The threats from the above product development risks are inherent in the pharmaceutical industry. The Group aims to mitigate these risks by employing experienced staff and other external parties, such as contract research organisations, to plan, implement and monitor its product development activities and to review progress regularly in the Group's Product Development Committee.
Bioprocessing revenue risk
The Group receives significant revenues from bioprocessing lentiviral vectors, AAV vectors and adenoviral based vaccines for third parties . Bioprocessing of lentiviral vectors, AAV vectors and adenovirus-based vaccines is complex and bioprocessing batches may fail to meet the required specification due to contamination or inadequate yield . Failure to deliver batches to the required specification may lead to loss of revenues . Furthermore, the Group relies on third parties, in some cases sole suppliers, for the supply of raw materials and certain out-sourced services. If such suppliers perform in an unsatisfactory manner, it could harm the Group ' s business. The Group's bioprocessing and analytical facilities are subject to regular inspection and approval by regulators and customers. Failure to comply with the standards required could result in production operations being suspended until the issues are rectified with the potential for loss of revenue.
As the Group's revenues from bioprocessing continue to grow, the risk to the Group has increased as a result in the last twelve months. The Group mitigates the risk of failing to meet required specifications by investing in high quality facilities, equipment and employees and, in particular, in quality management processes . In addition, the Group mitigates the supply chain issues in the UK with looking to source second suppliers and stockpile three months of critical material supplies. The Group plans to mirror its approach of mitigating supply chain risk in the US by ensuring that Oxford Biomedica Solutions continues to stockpile several months ' worth of critical material supplies and source back-up sources of supplies. The Group has also asked key suppliers to hold stocks in UK warehouses to cover any immediate supply issues . Outsourcing of fill and finish has also been seen as a risk but the Group is looking to bring this in-house to have more control on the process.
Collaborator and partner risk
The Group has entered several collaborations and partnerships, involving the development of product candidates by partners in which the Group has a financial interest through IP licences . Failure of the Group's partners to continue to develop the relevant product candidates for any reason could result in the Group losing potential revenues . The Group looks to mitigate this risk through having a close relationship with its partners via steering group meetings that look at candidate selection and progression.
Business development
The Group may seek to out-license or spin out its in-house product development programmes into externally funded vehicles and may seek to develop strategic partnerships for developing certain of the Group's other product candidates. The Group may not be successful in its efforts to build these third-party relationships, which may cause the development of the products to be delayed or curtailed. The Group has enhanced the commercial development function within the Group and is thus putting significant resources behind the effort to find good strategic partners to assist in developing the Group's other product candidates.
The Group has looked to mitigate its dependency and the associated risk of its partnerships being lentiviral dependent by expanding into other viral vector areas including adenovirus and AAV. This mitigation was exemplified via the Group's establishment in early 2022 of Oxford Biomedica Solutions a new US based subsidiary AAV manufacturing and innovation business, based near Boston, Massachusetts, US.
The Group is building a revenue generating business by providing its LentiVector ® and AAV platform to third parties in return for revenues derived from process development, bioprocessing and future royalties. The Group may be unsuccessful in building this business for reasons including:
a) Failing to maintain a leadership position in lentiviral vector technology or failing to develop a leading position in AAV technology;
b) Becoming uncompetitive from a pricing perspective; and
c) Failure to provide an adequate service to business partners and collaborators .
The Group is continuing to invest in its LentiVector ® and AAV technology to reduce this risk , and takes customer relationship management extremely seriously to ensure that customers and partners receive the service they expect, as indicated by the Group on pages 30 to 33 of the Annual report and accounts.
Attraction and retention of highly skilled employees
The Group depends on recruiting and retaining highly skilled employees to deliver its objectives and meet its customers ' needs. The market for such employees is increasingly competitive, especially in the Boston area in the US, and failure to recruit or to retain employees with the required skills and experience could adversely affect the Group's performance. The Group mitigates this risk by creating an attractive working environment and conducting benchmarking reviews to ensure that the remuneration package offered to employees is comparable with competing employers in the relevant jurisdiction as indicated by the Group on pages 58 to 60 of the Annual report and accounts.
Broader business risks which are applicable to the Group
The broader business risks, which the Group face as outlined below are important and the Group looks to identify these risks early through a horizon scanning project with the assistance of external healthcare consultants and then outlines actions for the business development team, the SET and ultimately the Board to follow by way of mitigation.
Cell and gene therapy risk
The Group's commercial success, both from its own product development and from supporting other companies in the sector, will depend on the acceptance of cell and gene therapy by the medical community and the public for the prevention and/or treatment of diseases . To date there are only a small number of gene therapy products which have been approved either in Europe and/or in the US. Furthermore, specific regulatory requirements, over and above those imposed on other products, apply to cell and gene therapies and there can be no assurance that additional requirements will not be imposed in the future. This may increase the cost and time required for successful development of cell and gene therapy products. The Group looks to mitigate this risk through market assessments of the product development pathway and conducts pricing and reimbursement studies for the cell and gene therapy product.
Rapid technical change
The cell and gene therapy sector is characterised by rapidly changing technologies and significant competition. Advances in other technologies in the sector could undermine the Group's commercial prospects. The Group looks to mitigate this risk through a horizon scanning project in order to identify the competition and technology advances in the sector and to develop either in-house or via in-licensing, new technologies for the Group's products and platform.
Longer-term commercialisation risks
In the longer term, the success of the Group's product candidates and those of its partners will depend on the regulatory and commercial environment several years into the future . Future commercialisation risks include:
- The emergence of new and/or unexpected competitor products or technologies. The biotechnology and pharmaceutical industries are subject to rapid technological change which could affect the success of the Group's product candidates or make them obsolete;
- Regulatory authorities becoming increasingly demanding regarding efficacy standards or risk averse regarding safety;
- Governments or other payers being unwilling to pay for/reimburse gene therapy products at a level which would justify the investment. Based on clinical studies to date, the Group's LentiVector ® platform product candidates have the unique potential to provide permanent therapeutic benefit from a single administration. The pricing of these therapies will depend on assessments of their cost-benefit and cost effectiveness; and
- The willingness of physicians and/or healthcare systems to adopt new treatment regimes.
Any or all of these risks could result in the Group's future profitability being adversely affected as future royalties and milestones from commercial partners could be reduced. The Group looks to mitigate this long-term commercialisation risk through a horizon scanning project in order to identify the competition and technology advances early, consult with regulatory authorities on a regular basis and perform pricing and reimbursement studies on the Group 's products to identify any serious issues in advance.
Intellectual property and patent protection risk
The Group's success depends, amongst other things, on maintaining proprietary rights to its products and technologies and the Board gives high priority to the strategic management of the Group's intellectual property portfolio, with the Board monitoring actions to bolster the intellectual property portfolio as appropriate from time to time. However, there can be no guarantee that the Group's product candidates and technologies are adequately protected by intellectual property. Furthermore, if the Group's patents are challenged, the defence of such rights could involve substantial costs and an uncertain outcome.
Third party patents may emerge containing claims that impact the Group's freedom to operate. There can be no assurance that the Group will be able to obtain licences to these patents at reasonable cost, if at all, or be able to develop or obtain alternative technology. Where copyright, design right and/or "know how" protect the Group's product candidates or technology, there can be no assurance that a competitor or potential competitor will not independently develop the same or similar product candidates or technology .
Rights of ownership over and rights to license and use intellectual property depend on a number of factors, including the circumstances under which the intellectual property was created and the provisions of any agreements covering such intellectual property. There can be no assurance that changes to the terms within licence agreements will not affect the entitlement of the Group to the relevant intellectual property or to license the relevant intellectual property from others.
Financial risks
(a) Product liability and insurance risk
In carrying out its activities the Group potentially faces contractual and statutory claims or other types of claim from customers, suppliers and/or investors . The Group monitors these potential claims on an ongoing basis and undertakes mitigating actions, which include taking expert advice on the validity of the claim and using insurance coverage against the claim to cover any loss as required. In addition, the Group is exposed to potential product liability risks that are inherent in the research, pre-clinical and clinical evaluation, bioprocessing, marketing and use of pharmaceutical products. While the Group is currently able to obtain insurance cover, there can be no assurance that any future necessary insurance cover will be available to the Group at an acceptable cost, if at all, or that, in the event of any claim, the level of insurance carried by the Group now or in the future will be adequate, or that a product liability or other claim would not have a material and adverse effect on the Group's future profitability and financial condition.
(b) Foreign currency exposure
The Group records its transactions and prepares its financial statements in pounds sterling, but some of the Group ' s income from collaborative agreements and patent licences is received in US dollars and the Group incurs a proportion of its expenditure in US dollars and the Euro . Following the establishment of Oxford Biomedica Solutions, the Group expects that the proportion of income received in US dollars and expenditure incurred in US dollars will increase significantly . During 2021, the Group's cash balances were predominantly held in pounds sterling, although the Group's Treasury Policy permits cash balances to be held in other currencies to hedge foreseen foreign currency expenses. The Group keeps this unhedged position under constant review. To the extent that the Group ' s foreign currency assets and potential liabilities are not matched, fluctuations in exchange rates between pounds sterling, the US dollar and the Euro may result in realised and unrealised gains and losses on translation of the underlying currency into pounds sterling that may increase or decrease the Group's results of operations and may adversely affect the Group's financial condition, each stated in pounds sterling. In addition, if the currencies in which the Group earns its revenues and/or holds its cash balances weaken against the currencies in which it incurs its expenses, this could adversely affect the Group's future profitability.
Loan facility
The Group entered into a $85 million short term loan facility in March 2022 provided by Oaktree Capital Management, secured on the Group's assets. Failure to comply with the terms of the loan agreement could potentially place the Group in default, which could adversely affect the Group's business operations, financial position and prospects.
Special interest groups and adverse public opinion
During 2021, the Group continued to perform large-scale commercial manufacture of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine. Such work can be subject to adverse public opinion and has attracted the attention of special interest groups, including those opposed to vaccination programmes, also referred to as "anti-vaxxers". To date, the Group has not been targeted by anti-vax campaigners, but there can be no assurance that such groups will not, in the future, focus on the Group ' s activities, or that any such public opinion would not adversely affect the Group's operations. Adverse publicity about the Group , its role in the manufacture of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine, or any other part of the industry may hurt the Group's public image, which could harm its operations, cause its share price to decrease or impair its ability to gain market acceptance for its products. The Group has looked to mitigate this risk through assistance from the UK government (Centre for Protection of National Infrastructure) on the protection of its facilities/infrastructure and scenario planning with its external public relations agency with regard to strategic communications.
Oxford Biomedica Solutions
In early 2022, together with Homology Medicines , the Group established Oxford Biomedica Solutions, a new US based subsidiary AAV manufacturing and innovation business, based near Boston, Massachusetts, US. The Group has identified risks associated with the successful transaction and proposed mitigation actions .
There is a risk that the Group fails to integrate Oxford Biomedica Solutions successfully into the Group . The Group is mitigating this risk through implementation of a detailed alignment plan, with advice from advisors . The Group is aware that the employment market in the Boston area is highly competitive and has sought to ensure that it has a competitive compensation package in place and is able to offer additional non-financial benefits to employees such that Oxford Biomedica Solutions can continue to retain and attract current and prospective employees . The potential for significant risk to the Group associated with moving into the AAV manufacturing sector has been reduced based on the AAV experience and track record of Oxford Biomedica Solutions. There is a risk to the Group that it now has an interest in another jurisdiction outside of the UK, which is the US. The Group has looked to mitigate this through use of professional advisors to provide appropriate guidance and advice tailored to the US market and applicable laws and regulations, so as to minimise any resulting risk that may arise .
Cyber security
Cyber-attacks seeking to compromise the confidentiality, integrity and availability of IT systems and the data held on them are a continuing risk to the Group . Indeed, with the Group operating in the manufacture of the adenovirus-based Oxford AstraZeneca COVID-19 vaccine, this has increased the risk of cyber-attack to the Group. Compromised confidentiality, integrity and availability of the Group's assets resulting from a cyber-attack would impact the Group ' s ability to deliver to customers and , ultimately, its financial performance and damage the Group's reputation . The Group has looked to mitigate this risk through implementing robust security monitoring to provide early detection of hostile activity on the Group ' s networks and has sought assistance from the UK government (National Cyber Security Centre) to protect the Group ' s IT systems. Following the establishment of Oxford Biomedica Solutions, the Group has worked to ensure that its US-based IT systems are subject to equally robust levels of security monitoring.
War in Ukraine
The Group has no operations, clients or suppliers arising in Russia or Ukraine and, therefore, the war in Ukraine has no commercial consequences for the Group . Following discussion, the SET has assessed that the only possible effect the war in Ukraine may have on the Group could be an increase in transportation costs as result of the increase in global oil prices.
COVID-19
As a result of the COVID-19 pandemic during 2021, the Group assessed the potential financial and operational risks to the business. While the Group is yet to experience any significant impact from the virus on revenues, the Group continually monitors the potential impact on the Group's supply chain, with a particular focus on key manufacturing and process development inventories.
The Group complies with government COVID-19 safe working practices. During 2021, the Group continued to hold weekly senior management working group meetings to monitor current COVID-19 developments and GOV.UK guidance, to risk assess the Group's supply chain and to direct the Group's phased response. The Group has worked with employees, customers and suppliers to monitor any potential disruption and, so far, the Group has not experienced any, and does not currently expect to experience, significant supply issues or any changes in overall customer demand. The Group recognises that COVID-19 restrictions and working practices will differ outside of the UK and it is expected that Oxford Biomedica Solutions will similarly monitor and comply with all relevant COVID-19 developments and all applicable US federal and state guidance for the purposes of risk assessing supply chain risk in the US and directing a tailored response .
The Group is aware that there is the potential for global shortages in certain inventories especially in the UK. As part of its mitigation strategy, the Group has increased, where possible, the level of incoming materials and components held in warehouses in the UK, which will mitigate the risk in the short term against labour shortages and subsequent production delays at its key suppliers. These mitigations have been successful to date but there is no guarantee against future disruption . The Group is also seeking to mirror its approach of increasing the level of incoming materials and components held by Oxford Biomedica Solutions in the US as part of its mitigation strategy.
The Group has a duty of care towards all employees, and therefore the Group expects some of its employees to be required to self-isolate to prevent the possible spread of infection . There is also a risk that there could be disruption to production in the event of employees becoming ill due to COVID-19. As a result, the Group has taken action to provide a COVID-19 secure workplace and to mitigate the spread of infection at the Group's facilities through enhanced cleaning processes, staggering of shifts, regular lateral flow testing, the provision of hand sanitiser in common areas and the recommendation that employees work from home if possible.
The Board is updated on positive COVID-19 cases amongst the workforce at every Board meeting and the SET receives weekly update s . There have not been any employee fatalities resulting from COVID-19 .
Climate change
The Group's governance and approach to climate change, including its voluntary disclosure using recommendations of the Taskforce for Climate-related Financial Disclosure (TCFD) is set out on pages 64 to 70 of the Strategic Report.
The Group has assessed the impact of climate change and concluded that there is likely to be some minor future financial risks, which would need to be managed, but none that would materially impact the Group ' s business model. This assessment is consistent with the Sustainability Accounting Standards Board's (SASB) Materiality Map, which indicates that the issue is not likely to be material for the biotechnology and pharmaceutical sector. The Group will keep this assessment under review with reference to any future work prepared on the Materiality Map by SASB or others. The Group expects that the impacts are likely to be weather-related disruption at internal manufacturing sites and to the Group ' s suppliers, with the prospect of increased costs of resources and fuels. The Group plans to continue to develop its business continuity plans with alternative manufacturing sites and a second sourcing strategy, if possible, to mitigate these impacts.
Financial position
The Directors have considered the cash position in the context of going concern and their conclusions are set out in the Financial review page 53, the Director's report (page 132) and in note 1 to the Consolidated financial statements (page 152) of the Annual Report.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law the Directors have prepared the Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) in conformity with the requirements of the Companies Act 2006 and applicable law and have elected to prepare the parent Company financial statements on the same basis. In addition, the Group financial statements are required under the UK Disclosure Guidance and Transparency Rules to be prepared in accordance with International Financial Reporting Standards adopted pursant to Regulation (EC) No. 1606/2002 as it applies in the European Union.
Under Company law the Directors must approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of the Group's profit and loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable, relevant and reliable;
· state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards the Group financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union;
· assess the Group and parent Company ability to continue as a going concern, disclosing as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either intend to liquidate the Group or parent Company or to cease operations, or to have no realistic alternatives but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and parent company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine as necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and have general responsibility for taking such steps as are reasonable open to them to safeguard the assets of the Company and the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Report that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and parent Company's performance, business model and strategy.
Each of the Directors, whose names and functions are listed below confirm that, to the best of their knowledge:
· the Group and parent Company's financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and parent company; and
· the Directors' report contained on pages 130 to 136 of the Annual report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
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Name |
Function |
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Roch Doliveux |
Chair & Interim Chief Executive Officer |
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John Dawson |
Chief Executive Officer (until January 2022, Executive Director subsequently) |
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Stuart Paynter |
Chief Financial Officer |
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Stuart Henderson |
Deputy Chairman and Senior Independent Director |
|
Heather Preston |
Non-Executive Director |
|
Robert Ghenchev |
Non-Executive Director |
|
Sam Rasty |
Non-Executive Director |
|
Professor Dame Kay Davies |
Non-Executive Director (from March 2021) |
|
Michael Hayden |
Non-Executive Director (from July 2021) |
|
Catherine Moukheibir |
Non-Executive Director (from December 2021) |
|
Namrata P. Patel |
Non-Executive Director (from April 2022) |
|
|
|
In accordance with Section 418 of the Companies Act 2006, Directors' report shall include a statement, in the case of each Director in office at the date the Directors' report is approved, that:
(a) so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
(b) he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Company: transactions with related parties
There were no outstanding balances with respect of transactions with Directors and connected persons at 31 December 2021 (2020: none). Key person remuneration can be seen in note 6 of the financial statements.
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