TIDMOXB
RNS Number : 3573X
Oxford Biomedica PLC
25 April 2023
OXFORD BIOMEDICA PLC
Preliminary results for the year ended 31 December 2022
ENHANCING OUR POSITION AS A GLOBAL
QUALITY AND INNOVATION-LED VIRAL VECTOR CDMO
Oxford, UK - 25 April 2023: Oxford Biomedica plc ("Oxford
Biomedica" or "the Company") (LSE: OXB), a quality and
innovation-led viral vector CDMO, announces its preliminary results
for the year ended 31 December 2022.
Dr. Frank Mathias, Oxford Biomedica's Chief Executive Officer,
said:
"I am honoured to present my inaugural set of financial results
as CEO of Oxford Biomedica. Under the leadership of Roch and the
Senior Executive Team, the Company has delivered another strong set
of results from its growing international platform.
"In 2022, we have successfully grown our core business by
expanding our global reach, establishing Oxford Biomedica Solutions
in the US and broadening our expertise in key viral vector types,
including AAV. The expansion of our development and manufacturing
capabilities has enabled us to drive innovation whilst both
attracting new international biopharma clients and expanding
existing collaborations. We have also successfully right-sized our
business and we are now in a robust financial situation to
strengthen our position as a global quality and innovation-led
viral vector CDMO.
"Our mission is centred on enabling our clients to deliver
life-changing therapies to patients worldwide and in my brief
tenure to date, I have been profoundly inspired by our team's
unwavering commitment and exceptional talent, which serve as the
driving force behind our success.
"With a clearly defined vision for the future, I look forward to
working closely with our team, and our clients, and to making a
lasting impact on the lives of patients worldwide."
FINANCIAL HIGHLIGHTS
-- Total revenues broadly in line with last year at GBP140.0
million (2021: GBP142.8 million) due to strong performance
by Oxford Biomedica Solutions despite lower COVID-19 vaccine
bioprocessing volumes. Double digit revenue growth in the
core business (excluding COVID-19 vaccine manufacturing)
compared to FY 2021.
-- Revenues from bioprocessing and commercial development activities
were maintained at GBP128.1 million (2021: GBP128.4 million).
This included aggregate vaccine revenues in excess of GBP40.0
million.
-- Revenues from milestones, licences and royalties, which,
in the prior year, included recognition of a GBP4.0 million
license fee from Boehringher Ingelheim, decreased by 17%
to GBP11.9 million (2021: GBP14.4 million), this decrease
was driven by lower license fees from new client programmes.
-- The launch of Oxford Biomedica Solutions, enabling entry
into the fast-growing AAV market whilst also establishing
a key strategic presence in the US, drove an increase in
operating expenses to GBP123.0 million (2021: GBP62.5 million)
which included one-off acquisition-related costs. Active
cost control initiatives were initiated to reduce the Group's
operating cost base as the COVID-19 pandemic eased.
-- Operating EBITDA and operating profit benefited from a profit
on the sale and leaseback of the Windrush Court facility
for GBP21.4 million.
-- Operating EBITDA profit of GBP1.6 million and operating loss
of GBP30.2 million (2021: operating EBITDA profit and operating
profit of GBP35.9 million and GBP20.8 million respectively)
due to reduced AstraZeneca vaccine production, consolidation
of the investment in Oxford Biomedica Solutions investment
and one-off acquisition-related due diligence costs of GBP5.1
million.
-- Entered into a US$85 million short-term loan facility with
Oaktree Capital Management, L.P. ("Oaktree") to finance a
portion of the transaction with Homology Medicines Inc. ("Homology
Medicines") to establish Oxford Biomedica Solutions. The
loan was refinanced in October, partially repaid, and amended
to a US$50 million four-year term loan facility.
-- Cash at 31 December 2022 was GBP141.3 million (2021: GBP108.9
million); Net cash at 31 December 2022 was GBP101.5 million
and GBP98.8 million at 31 March 2023.
OPERATIONAL HIGHLIGHTS DELIVERED IN 2022
-- Established Oxford Biomedica Solutions, an innovative service
provider and adeno-associated virus (AAV) product developer
with complete end-to-end chemistry, manufacturing and controls
capabilities and expertise, from preclinical development
through to clinical drug supply.
-- Significantly increased client base with 13 new or expanded
client relationships across lentiviral vectors and AAV (including
3 post-period). The Group's CDMO portfolio currently comprises
more than 30 programmes for its clients.
-- Amended and expanded the original License and Clinical Supply
Agreement signed with Juno Therapeutics, Inc. (Juno) a wholly
owned subsidiary of Bristol Myers Squibb Company, to include
two new viral vector programmes.
-- Expanded capacity through innovation and advanced technologies,
rolling out Process C at 200L scale in GMP, with several
clients adopting or evaluating the next-generation lentiviral
manufacturing platform due to the evident gains in vector
quantity and quality it affords.
-- Oxbox, the Group's largest manufacturing facility, received
MHRA approval for its fill finish suite in August 2022. This
high quality, state-of-the art value-added capability is
now being rolled out to clients.
-- Reviewed strategic options and started exploring external
funding opportunities for the gene therapeutics portfolio
to realise the potential of its innovative and differentiated
programmes that address unmet medical needs.
CORPORATE HIGHLIGHTS
-- Continued to strengthen Board and leadership team with the
appointment of Dr. Frank Mathias as CEO (post-period) and
the appointment of Namrata Patel as an Independent Non-Executive
Director. John Dawson stepped down as CEO in January 2022.
-- New hires added to the leadership team in 2022 included Tim
Kelly, CEO and Chair of Oxford Biomedica Solutions, Dr. Ravi
Rao, Chief Medical Officer and Dr. Sebastien Ribault, Chief
Commercial Officer.
OUTLOOK
-- In 2023, targeting double-digit growth in lentiviral vector
and AAV manufacturing and commercial development revenues
through existing client relationships and new agreements.
-- Continuously investing in new technologies to maintain a
competitive edge in lentiviral vectors and build a leading
position in AAV.
-- Aspiring to achieve market leadership in the viral vector
outsourced supply market across all key vector types, while
exceeding long-term revenue growth rates of the broader market.
Analyst briefing
Oxford Biomedica's management team, led by new CEO, Dr. Frank
Mathias and Stuart Paynter, CFO, will be hosting a briefing and
Q&A session for analysts at 13:00 BST / 8:00 EST today, 25
April, at Etc. Venues St Paul's, 200 Aldersgate, London, EC1A
4HD.
A live webcast of the presentation will be available via this
link . The presentation will be available on the Company's website
at www.oxb.com
If you would like to dial in to the call and ask a question
during the live Q&A, please email
Oxfordbiomedica@consilium-comms.com
Notes
Unless otherwise defined, terms used in this announcement shall
have the same meaning as those used in the Annual report and
accounts.
Enquiries:
Oxford Biomedica plc:
Taylor Boyd, VP, Head of IR T: +1 (984) 268 8488/ E: ir@oxb.com
Sophia Bolhassan, VP, Corporate T: +44 (0)1865 783 000
Affairs and IR
Consilium Strategic Communications: T: +44 (0)20 3709 5700
Mary-Jane Elliott
Matthew Neal
Davide Salvi
Peel Hunt (Joint Corporate Brokers): T: +44 (0)20 7418 8900
James Steel
Dr. Christopher Golden
JP Morgan (Joint Corporate Brokers): T: +44 (0)20 7134 7329
James Mitford
Gautham Baliga
About Oxford Biomedica
Oxford Biomedica (LSE: OXB) is a quality and innovation-led
viral vector CDMO with a mission to enable its clients to deliver
life changing therapies to patients around the world.
One of the original pioneers in cell and gene therapy, the
Company has more than 25 years of experience in viral vectors; the
driving force behind the majority of gene therapies. The Company
collaborates with some of the world's most innovative
pharmaceutical and biotechnology companies, providing viral vector
development and manufacturing expertise in lentivirus,
adeno-associated virus (AAV) and adenoviral vectors. Oxford
Biomedica's world-class capabilities span from early-stage
development to commercialisation. These capabilities are supported
by robust quality-assurance systems, analytical methods and depth
of regulatory expertise.
Oxford Biomedica, a FTSE4Good constituent, is headquartered in
Oxford, UK. It has locations across Oxfordshire, UK and a US-based
subsidiary, Oxford Biomedica Solutions, based near Boston, MA, US.
Learn more at www.oxb.com, www.oxbsolutions.com, and follow us on
LinkedIn, Twitter and YouTube.
CHAIR'S STATEMENT
Commitment to our purpose of transforming lives through cell and
gene therapy
In 2022, Oxford Biomedica made significant progress towards
establishing a global leadership position in viral vector
development and supply. We broadened our viral vector CDMO offering
and expanded our business into the US, and into new viral vector
types, building on our recognised expertise in lentiviral vectors.
Our transformational deal with Homology Medicines, Inc. (Homology
Medicines) allowed us to capitalise on our successful work
developing and producing the adenovirus-based Oxford AstraZeneca
COVID-19 vaccine and immediately took us into the fast-growing AAV
market with our first US-based business, Oxford Biomedica
Solutions. With this move we expanded our innovative development
and manufacturing expertise, enabling more biotech and pharma
clients to deliver life-saving therapies to patients.
Importantly, in November 2022, we announced that Dr. Frank
Mathias would join us as our new Chief Executive Officer. Frank's
experience and track record of success running both an innovative
biopharma company and a high-performing CDMO will be key to the
Group as we build on our leading position and cell and gene therapy
continues on its rapid growth trajectory.
Enhancing our position as a global quality and innovation-led
CDMO
Viral vectors are the most established and powerful delivery
mechanism for cell and gene therapies. As the driving force behind
the majority of approved gene therapy trials, viral vectors unlock
the possibility of safe and targeted one-time treatments.
Over the last year, Oxford Biomedica has expanded its viral
vector capabilities into all key viral vector types including
lentivirus, adenovirus and AAV. Our AAV business has grown from
strength to strength already, with five clients at the end of 2022,
exceeding our initial expectations. In late 2022, we also
significantly upgraded our commercial organisation with new key
hires. The momentum we are seeing in business development
activities across lentivirus, AAV and adenoviruses validates client
confidence in the business, team, and our capabilities. With the
lentiviral vector and AAV manufacturing markets poised for
projected 27% and 28% CAGRs respectively from 2018-2026 (Source:
Mordor Intelligence, 2021), our expansion into the US AAV market
and the growing lentivirus segment will enable our success in our
aim for market leadership in viral vector CDMO services. Despite
the challenging macroeconomic backdrop, we have a strong and
diversified business development pipeline , and our business has
continued to thrive with new client agreements and expanded remits
from existing clients. Our annual revenues and number of clients
have more than doubled since 2017, with 18 clients (including three
added post-period) now across multiple viral vector types.
Looking to the future, we have positioned ourselves to
capitalise on the expected wave of cell and gene therapy approvals.
It is estimated that there could be up to 14 cell and gene therapy
regulatory decisions in 2023 in the US alone (Source: Alliance for
Regenerative Medicine). Furthermore, favourable regulatory
tailwinds with regard to efficiencies in underlying manufacturing
processes lead us to believe there will be a step-up in appetite
for cell and gene therapy approvals and a need to make the
manufacturing process for gene therapies more efficient. To ensure
that we are efficiently and properly resourced for future growth,
we have right-sized our business while maintaining our financial
strength. We are in a strong cash position, ending 2022 with our
strongest ever year-end cash position, which allows us to respond
effectively to the external environment and position ourselves for
continued success, as we build our market share in anticipation of
the expected demand for quality, innovation-led viral vector
manufacturing capabilities.
Governance
Throughout the year, we made significant strides in
strengthening and diversifying our leadership team and Board,
ensuring that we are well-positioned to drive the Company through
its next phase of growth. After more than 13 years of dedicated
service and leadership to Oxford Biomedica, and following the
announcement of our AAV acquisition in the US, John Dawson stepped
down as Chief Executive Officer and I assumed the role of Interim
CEO, in addition to my existing role as Chair, to ensure
continuity.
Furthermore, we are proud of the progress we made to diversify
the Board during the year, which now comprises 40% women,
collectively possess a diverse range of skills and expertise, and
come from a variety of ethnic and societal backgrounds.
Growing a sustainable business for our employees, clients and
patients
At Oxford Biomedica, we are committed to upholding our values of
integrity, inspiration, and innovation, embedded in everything we
do. This includes a responsible and sustainable approach to our
business, managing people, engaging with communities, protecting
the environment and governing our operations. We are proud of our
inclusion in the FTSE4Good index in 2022, in recognition of our
commitment to responsible business practices.
We empower our diverse and inclusive workforce to find
innovative solutions that benefit our business and the patients we
serve. We are dedicated to continuously improving our processes to
minimise our impact on the planet and engage with our communities
to create partnerships that benefit everyone.
The future: delivering on our mission of enabling our clients to
deliver life-changing therapies to patients
Having sharpened our strategic focus to be a quality and
innovation-led CDMO, we have decided to fund our therapeutics
portfolio externally, to realise the transformational potential of
our gene therapeutics assets that have emanated from our lentiviral
platform.
I am looking forward to continuing to work with Dr. Frank
Mathias, our new CEO. Under Frank's leadership, we will make
further investments in scalability and leverage automation to
deliver even more innovative services to our biopharma clients
enabling them to discover and deliver therapies that transform
patients' lives. Our focus will remain on client acquisition,
innovation, people, and most importantly, improving the lives of
patients in need.
We have a clear strategy and vision for a successful,
sustainable, long-term future at Oxford Biomedica as it continues
to build as a world-leading quality and innovation-led viral vector
CDMO. As we look forward, we are more excited than ever to continue
delivering on our mission of enabling our clients to deliver
life-changing therapies to patients around the world.
Dr. Roch Doliveux
Chair
2022 PERFORMANCE REVIEW
Introduction
2022 was a significant year for Oxford Biomedica, as the Group
expanded internationally and made its first strategic acquisition,
entering the larger and fast-growing adjacent AAV market. The core
business performed strongly, validating the Group's position in the
market as a leading quality and innovation-led CDMO. This success
is testament to the Group's world-class capabilities spanning
early-stage development through to commercialisation.
Oxford Biomedica Solutions: US-based AAV manufacturing and
innovation business
In January 2022, Oxford Biomedica announced that it had entered
into an agreement with Homology Medicines to establish Oxford
Biomedica Solutions, an innovative service provider and AAV product
developer with complete end-to-end chemistry, manufacturing, and
controls capabilities and expertise, from pre-clinical development
through to clinical drug supply. The 91,000 sq. ft. facility is
located near Boston, US. The transaction completed on 10 March 2022
and was immediately accretive to the Group's revenues.
Under the agreement, Oxford Biomedica US, Inc. acquired an 80%
ownership interest in the newly formed AAV-focused manufacturing
and innovation business for a US$130 million (GBP97 million) cash
consideration, and a US$50 million (GBP38.2 million) capital
injection into Oxford Biomedica Solutions to fund the entity to
break even.
Following the transaction, the Group immediately benefited from
a three-year Manufacturing and Supply agreement with Homology
Medicines as a preferred partner, which provided for minimum
contracted revenue of c.US$25 million (GBP21 million) for Oxford
Biomedica Solutions for the first twelve months post-completion.
Oxford Biomedica Solutions is targeting double-digit growth in AAV
manufacturing and clinical development revenues through services
provided to Homology Medicines, as well as existing and new clients
during 2023.
Oxford Biomedica Solutions is led by Tim Kelly, Chief Executive
Officer and Chair of its Board of Directors. The business has a
robust business development pipeline and in 2022 signed agreements
with four new, undisclosed, U.S. based biotechnology companies,
exceeding the previously stated target of two by the end of
2022.
Post-period end, in 2023, Oxford Biomedica Solutions signed
additional agreements with three new clients.
Juno Therapeutics, Inc. (a wholly owned subsidiary of Bristol
Myers Squibb Company)
Oxford Biomedica has continued to build on its partnership with
Juno Therapeutics, Inc. (a wholly-owned subsidiary of Bristol Myers
Squibb Company), which started in 2020. In July 2022, the Group
announced it had amended and expanded the original License and
Clinical Supply Agreement signed with Juno to include two new viral
vector programmes. This latest agreement demonstrates the Group's
ability to expand work with existing partners and took the total
number of programmes that it is working on with Bristol Myers
Squibb to six.
Novartis
The Group continues its strong and long-term relationship with
Novartis as its sole global supplier of lentiviral vector for
Kymriah(R) (tisagenlecleucel, formerly CTL019).
Kymriah(R) , which is designed to be a one-time treatment, was
the first ever FDA-approved CAR-T cell therapy and in May 2022
expanded into a third indication, after its approval from the FDA
and European Commission for the treatment of adult patients with
relapsed or refractory follicular lymphoma , following two or more
lines of systemic therapy. This is the third B-cell malignancy
indication for Kymriah(R) , joining approvals in indications in
children and young adults with r/r paediatric and young adult acute
lymphoblastic leukaemia (ALL), and r/r adult diffuse large B-cell
lymphoma. In June 2022, Novartis announced five-year Kymriah(R)
data showing durable remission and long-term survival maintained in
children and young adults with advanced B-cell ALL.
Kymriah(R) is available in more than 400 qualified treatment
centres in 30 countries having coverage for at least one
indication. The Group is currently working with Novartis on four
partner programmes, in addition to Kymriah(R) .
Vaccine manufacturing
Oxford Biomedica continued to manufacture the Oxford AstraZeneca
COVID-19 vaccine at the Group's Oxbox facility during 2022, with
manufacture of COVID-19 vaccines completing in the last quarter of
2022. In July 2022, the Group announced the signing of a new
three-year Master Services and Development Agreement (MSDA) with
AstraZeneca to facilitate potential future vaccine manufacturing
opportunities on an as needed basis beyond 2022.
Oxford Biomedica has signed a 10-year MSDA with Serum Life
Sciences Ltd (Serum, a subsidiary of Serum Institute of India), for
the manufacture of a variety of vaccine and protein-based
therapeutic products. This agreement follows on from the Memorandum
of Understanding agreed with Serum in 2021. The MSDA allows for
Serum to access the Group's Oxbox facility to manufacture a variety
of vaccines at scales of up to 1,000L.
Serum is also able to secure exclusive access to one of the two
new large scale multi 2,000L facilities in the second phase of
Oxbox facility expansion for a period of 10 years from facility
readiness. Serum will be required to commit to a minimum order
value over the relevant period in order to secure exclusive access
to the new large-scale suite.
Cabaletta
In January 2022, Oxford Biomedica announced a License and Supply
Agreement with Philadelphia, US-based Cabaletta Bio for their lead
product candidate, DSG3-CAART. DSG3-CAART is being evaluated in the
DesCAARTes(TM) Phase I clinical trial as a potential treatment for
patients with Mucosal Pemphigus Vulgaris and is designed to
selectively target and kill the B cells that produce DSG3
antibodies while preserving the healthy B cells critical to immune
function. In late 2022, Cabaletta released six-month clinical and
translation data from cohorts A1 through A4 and 28-day safety and
persistence data from cohorts A1 through A5.
Further client updates
In July 2022, Oxford Biomedica announced a new Licence and
Supply Agreement with an undisclosed US-based private biotechnology
company advancing a new generation of adoptive cell therapies. The
Licence and Supply Agreement grants the new client a non-exclusive
licence to utilise Oxford Biomedica's LentiVector(R) platform for
its application in their lead CAR-T programme, and puts in place a
three-year Clinical Supply Agreement.
In September 2022, Oxford Biomedica announced a further Licence
and Supply Agreement with an undisclosed US-based late-stage cell
and gene therapy company. The Licence and Supply Agreement grants
the new client a non-exclusive licence to utilise Oxford
Biomedica's LentiVector(R) platform for its application in their
lead programme, a cell-based therapy targeting a rare indication,
putting into place a five-year clinical supply arrangement.
The Group continues to actively progress its collaborations with
Boehringer Ingelheim, Immatics, Arcellx, Orchard and Beam
Therapeutics with the combined revenues from these client
relationships expected to contribute meaningfully towards the total
bioprocessing and commercial development revenues in the current
financial year.
In December 2022, Arcellx announced a global strategic
collaboration with Kite Pharma to co-develop and co-commercialise
CART-ddBCMA, Arcellx's lead late-stage product candidate.
CART-ddBCMA is currently being investigated in a pivotal Phase 2
study and has been granted Fast Track, Orphan Drug, and
Regenerative Medicine Advanced Therapy Designations by the FDA.
Innovation and platform development
Innovation and the development of the platform are core to the
Group's goal of industrialising viral vector manufacturing, not
just with lentiviral vectors but across all viral vector classes.
By industrialising viral vector production, reducing costs and
improving quality through innovation, the Group seeks to broaden
the therapeutic indications that are amenable to treatment with
cell and gene therapy. It is expected that the reduction in cost
per dose brought about through the Group's combined platform and
process innovation will help drive more projects successfully
through clinical development and ultimately adoption by payors into
indications where there are a far greater number of patients, by
bringing down the overall cost per patient treated.
Multiple elements of IP and innovation are relevant across all
viral vector classes. Development of the Group's technologies such
as TRiPSystem(TM), SecNuc(TM), LentiStable(TM) and U1 and U2, along
with the corresponding IP, continue to move ahead. In addition, the
Group is utilising automation and the use of robotics, artificial
intelligence and machine learning to further drive productivity and
capacity improvements. One example is the successful development
and implementation of automated methods for both the replication
competent lentivirus assay and the titre (TU/mL) assay, enhancing
method robustness, providing additional capabilities to meet future
capacity needs whilst ensuring continuous improvement of platform
analytics. The Group is expecting to launch a fourth generation of
lentiviral vectors in the second quarter of 2023 which will enable
higher expression, have additional safety features and a larger
capacity to deliver greater amounts of DNA.
Process C, which utilises perfusion-mode production, as opposed
to the more typical batch-mode production, coupled with
improvements in downstream processing into the manufacturing
process has been proven and rolled out at 200L scale in GMP during
2022. Process C works together with production enhancers (such as
U1, U2) and has resulted in process improvements by as much as
tenfold, without the need for an increase in bioreactor size, and
yielding significantly more lentiviral vector per batch. The Group
has begun to offer Process C commercially, with several clients
adopting or evaluating the next-generation lentiviral manufacturing
platform due to the evident gains in vector quantity and quality it
affords.
In July 2022, the Group announced that it had initiated a new
project with Orchard utilising the Company's proprietary
LentiStable(TM) technology. As part of the project, Oxford
Biomedica's LentiStable(TM) technology platform will be used to
develop a producer cell line capable of stably expressing
lentiviral vectors. Orchard is exploring the technology to increase
the manufacturing efficiency and scalability of their
investigational haematopoietic stem cell (HSC) gene therapy in
development for the potential treatment of mucopolysaccharidosis
type I Hurler syndrome (MPS-IH).
The Group continues development work in the area of in vivo
CAR-T, which the Group believes would offer greater patient access
and superior efficacy compared to existing treatment options.
Business development and CDMO pipeline
Oxford Biomedica continues to have strong new business momentum
and demand for its expertise and services, demonstrated by the
addition of 11 new clients (majority in AAV) since the end of 2021,
taking the Group's total number of clients to 18 (including three
added post-period). This compares to six clients at the end of
2017, when the Group was solely focused on lentiviral vectors. The
Group's CDMO portfolio currently comprises more than 30 programmes
for its clients.
In November 2022, the Group welcomed a new Chief Commercial
Officer, Dr. Sebastien Ribault, to lead the Commercial and Business
Development team with a focus on the expansion of the Group's
client base, complementing the nature of the Group's CDMO business.
Dr. Ribault has over 25 years of experience across the
biotechnology industry and CDMO space, and was previously at Merck
Life Sciences, where he was Vice President & Head of Biologics
and Viral Vector CDMO.
Under the leadership of Dr. Ribault, the Commercial team now
consists of Commercial Operations, Business Development and
Licensing specialists in multiple locations across the US, UK and
Europe.
Gene therapeutics pipeline
Dr. Ravi Rao joined Oxford Biomedica as Chief Medical Officer in
April 2022, with responsibility for assessing and developing the
Group's therapeutic product strategy. The Group has reviewed
strategic options and is now exploring external funding
opportunities for its therapeutics portfolio to realise the
potential of its innovative and differentiated programmes to
address unmet medical needs. It is anticipated that this will allow
the Group to maintain a long-term economic interest in a number of
therapeutic products. No costs associated with the therapeutics
portfolio are expected to be carried by the Group post 2023.
The global rights to AXO-Lenti-PD, which the Group had licensed
to Sio Gene Therapies (Sio) were returned to the Group in March
2022, following Sio's decision to deprioritise the programme due to
resourcing constraints. The Group continues to explore
out-licensing opportunities for this asset.
Facilities and capacity expansion
As part of the transaction to establish Oxford Biomedica
Solutions, the Group acquired the leasehold to a state-of-the-art
AAV manufacturing facility based near Boston. The facility covers
approximately 91,000 sq. ft including GMP space for drug substance,
drug product, QC testing, quality and warehousing, with three 500L
single-use bioreactors with proven scalability to 2,000L for
commercial supply.
Oxbox, the Group's largest manufacturing facility spanning
84,000 sq. ft received MHRA approval for its fill finish suite in
August 2022, bringing this previously outsourced function in-house.
This high quality, state-of-the art value-added capability is now
being rolled out to clients .
The second phase of Oxbox development is expected to provide
additional flexible manufacturing capacity for a variety of viral
vector-based products, including cell and gene therapy products,
vaccines, and other advanced therapeutics up to 2,000L scale.
Design work for this next phase of Oxbox development is
progressing, with the proceeds from the GBP50 million investment
from Serum funding the development.
With regard to the planned redevelopment of the Windrush
Innovation Centre into next generation laboratory facilities, the
Group is currently conducting a review of required capacity and
alternative laboratory options.
In November 2022, the Group completed the sale and leaseback of
its Windrush Court facility in Oxford to Kadans for GBP60 million,
exceeding the GBP55 million which the Group was initially seeking.
Kadans has granted Oxford Biomedica an occupational lease of the
facility for 15 years.
To ensure the Group has sufficient warehouse capacity to meet
expected near-term commercial development from both current and
future potential clients , the Group has entered into a lease
agreement in respect of a new 45,000 sq. ft warehouse in
Wallingford, Oxfordshire to store ambient raw materials. The first
phase of fit-out is complete, with the site expected to be ready
for occupation in the second quarter of 2023.
Short-term loan facility
In March 2022, the Group entered into an US$85 million (GBP64.9
million) secured short-term loan facility with Oaktree. The
proceeds were used by the Group, together with the Group's existing
cash, to finance a portion of the transaction with Homology
Medicines to establish Oxford Biomedica Solutions. The loan carried
an interest rate of 8.5% with the principal amount due at the
facility's maturity date in March 2023.
In October 2022, the Group refinanced this US$85 million
(GBP64.9 million) loan facility and the Company partially repaid
the outstanding amounts and amended the facility into a new senior
secured US$50 million (GBP42.9 million) four-year term loan
facility provided by Oaktree. The loan carries a variable interest
rate, which is capped at 10.25% per annum. The refinanced facility
also carries the option for Oxford Biomedica, subject to customary
conditions and available for a three-year period, to drawdown a
further US$25 million (GBP21.5 million) from Oaktree to fund
certain permitted acquisitions.
Corporate and organisational development
During the period, new appointments were made across the Board
and the Senior Executive Team, adding further expertise to ensure
that the Group's leadership is well positioned to drive the next
phase of growth.
In January 2022, John Dawson stepped down as CEO after 13 years
and simultaneously Dr. Roch Doliveux assumed the role of Interim
CEO, in addition to his existing role as Chair. John Dawson stepped
down from the Board at the AGM in May 2022 and remained an adviser
to the Company throughout the year. Post-period end, in March 2023,
the Group welcomed Dr. Frank Mathias as CEO and Dr. Roch Doliveux
stepped down as Interim CEO and resumed as Chair. Dr. Mathias
brings world-class innovation and CDMO experience to Oxford
Biomedica, and joined the Group from Rentschler Biopharma SE, where
he had served as CEO since 2016.
In April 2022, Namrata Patel was appointed to the Board as an
Independent Non-Executive Director. Ms. Patel brings a wealth of
international experience in manufacturing and end-to-end supply
chain management with experience in the commercialised regulated
industry as well as a wealth of sustainability experience.
Post period-end, Dr. Siyamak (Sam) Rasty informed the Board that
he will not be standing for re-election at the Company's AGM in
June 2023. Dr. Rasty joined the Board in December 2020 and is a
member of the Scientific and Technology Advisory Committee and was
a member of the Audit Committee until December 2021.
FINANCIAL REVIEW
Setting firm foundations for growth
In 2022, the Group expanded its capabilities beyond lentiviral
vectors and evolved into a multi-vector, quality and innovation-led
CDMO. Oxford Biomedica is incredibly proud of its work in producing
the Oxford AstraZeneca COVID-19 vaccine and the lives that were
saved in this effort, which afforded the Group the opportunity to
broaden its viral vector CDMO offering and expand the business into
the US. During 2022, the Group continued to focus on growing the
underlying business by attracting new clients , expanding offerings
with existing clients and expansion through acquisition of
technologies, capabilities and clients .
In March 2022, the Group acquired an 80% ownership interest in
Oxford Biomedica Solutions, an AAV-focused manufacturing and
innovation business for US$180 million (GBP137.4 million), with
Homology Medicines retaining a 20% ownership stake. Concurrently
with the Oxford Biomedica Solutions transaction, the Group entered
into a manufacturing and supply agreement with Homology Medicines.
Subsequently four new AAV client agreements were signed in 2022,
exceeding the previously stated target of two for the year, which
are expected to generate further revenues in the future. Oxford
Biomedica Solutions generated revenues of GBP23.7 million in the
year since completion of the transaction in March 2022.
Throughout 2022 the Group continued to form new client
relationships whilst also expanding existing client agreements. The
Group is currently working with 18 clients (including three added
post-period) compared to 10 clients at the end of 2021. Lentiviral
vector manufacturing volumes have continued their post-pandemic
upward trajectory, with revenues from the core LentiVector(R)
business achieving strong double-digit revenue growth compared to
2021. As expected, COVID-19 vaccine bioprocessing volumes were
lower reflecting the exceptional results achieved in 2021 when
vaccine manufacturing was at full pace during the pandemic.
During the period, the Group announced new or expanded licence
and supply agreements with Cabaletta, Juno, two undisclosed
US-based private biotechnology companies and four new AAV clients ,
in addition to Homology Medicines. These agreements are expected to
bolster the Group's development and manufacturing pipeline over the
coming years. In June, the Group also expanded its original supply
and development agreement with AstraZeneca to facilitate potential
future manufacturing opportunities for the AstraZeneca COVID-19
vaccine on an as-needed basis beyond 2022.
The Group achieved total revenues of GBP140.0 million and an
Operating EBITDA profit of GBP1.6 million in 2022 compared to
revenues of GBP142.8 million and an Operating EBITDA profit of
GBP35.9 million in the prior year. Total revenues were broadly flat
compared to the prior year despite lower COVID-19 vaccine
bioprocessing volumes, due to revenues achieved by Oxford Biomedica
Solutions in 2022. At a cost level, there was an increase in
operating expenditure as a result of increased personnel and other
operational expenditure incurred due to the consolidation of Oxford
Biomedica Solutions, acquisition-related due diligence costs of
GBP5.1 million and inflationary operational cost increases
including employee salary increases to help ensure the Group
continues to attract and retain high quality employees. Oxford
Biomedica Solutions' operating expenditure continues to be fully
funded from the US$50.0 million (GBP38.2 million) capital injection
into the new business.
In order to fund the Oxford Biomedica Solutions transaction, the
Group raised gross proceeds of GBP80.0 million through a placing of
shares, and secured a short-term loan facility of US$85.0 million
(GBP64.9 million) which was repayable 12 months after the closing
date. In October, the Group repaid US$35 million of the US$85
million short term loan facility as part of extending the
relationship with Oaktree via a new four-year term loan facility of
US$50 million. Interest is payable quarterly and the principal
outstanding amount is repayable at the end of the four-year term.
The Group also secured the option to draw down a further US$25
million from Oaktree to fund certain permitted acquisitions.
The Group ended the year with its strongest-ever year end-cash
position. Throughout the year, the Group has been strategically
investing in the future growth of the business while also taking
proactive steps to manage operating costs, particularly given the
easing of the COVID-19 pandemic, which had required the Group to
increase employee numbers significantly to help meet demand. This
included right-sizing its employee base, which was successfully
completed without the need for compulsory redundancies, as well as
a headcount freeze for non-critical hires, further supporting the
Group's cost management efforts.
In November, the Group completed a sale and leaseback of its
Windrush Court facility for GBP60 million to Kadans Science
Partner. The sale proceeds of GBP60 million exceeded the target
offer figure of GBP55 million that the Group previously announced
it was seeking. Under the agreement, Kadans have granted the Group
an occupational lease of the property for 15 years at a rent of
GBP3.5 million per annum rising to GBP4.7 million per annum after
five years, with a market rent review at 10 years. In the year, the
Group has recognised a profit on the sale of GBP21.4 million, a
right of use asset of GBP5.9 million and a lease liability of
GBP35.6 million.
The Group's balance sheet expanded with the establishment of
Oxford Biomedica Solutions through the recognition of identifiable
net assets of GBP133.2 million. The transaction was funded through
a combination of GBP77.0 million of net equity raised in two
tranches, and drawing down the Oaktree loan of US$85.0 million
(GBP64.9 million). The transaction also involved the recognition of
a put option liability of US$51.1 million (GBP39.0 million) that,
if exercised, requires the Group to acquire the remaining 20% of
Oxford Biomedica Solutions from Homology Medicines. Further, as a
result of the sale and leaseback of the Windrush Court facility,
the Group's cash position strengthened to GBP141.3 million at the
end of December 2022.
Key Financial and Non-Financial Performance Indicators
The Group evaluates its performance by making use of alternative
performance measures as part of its Key Financial Performance
Indicators (refer to the table below). The Group believes that
these Non-GAAP measures, together with the relevant GAAP measures,
provide a comprehensive, accurate reflection of the Group's
performance over time. The Board has taken the decision that the
Key Financial Performance Indicators against which the business
will be assessed are Revenue, Operating EBITDA and Operating
profit/(loss). The figures presented within this section for prior
years are those reported in the Annual report and accounts for
those years and have not been restated where a change in accounting
standards may have required this.
GBPm 2022 2021 2020 2019 2018
Revenue
Bioprocessing/commercial
development 128.1 128.4 68.5 47.3 40.5
---------- --------- --------- --------- ------------
Licences, milestones and
royalties 11.9 14.4 19.2 16.8 26.3
---------- --------- --------- --------- ------------
140.0 142.8 87.7 64.1 66.8
---------- --------- --------- --------- ------------
Operations
Operating EBITDA (1) 1.6 35.9 7.3 (5.2) 13.4
---------- --------- --------- --------- ------------
Operating (loss)/profit (30.2) 20.8 (5.7) (14.5) 13.9
---------- --------- --------- --------- ------------
Cash flow
Cash (used in)/generated
from/ operations (13.2) 24.5 (3.9) (6.6) 9.2
---------- --------- --------- --------- ------------
Capex(2) 16.3 9.5 13.4 25.8 10.1
---------- --------- --------- --------- ------------
Cash (burn)/inflow(3) (33.0) 16.0 (7.8) (26.3) (1.9)
---------- --------- --------- --------- ------------
Financing Cash 141.3 108.9 46.7 16.2 32.2
---------- --------- --------- --------- ------------
Loan 39.8 - - - 41.2
---------- --------- --------- --------- ------------
Non-Financial Key Indicators
---------- --------- --------- --------- ------------
Headcount
Year-end 904 815 673 554 432
---------- --------- --------- --------- ------------
Average 929 759 609 500 377
---------- --------- --------- --------- ------------
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation,
Amortisation, revaluation of investments and assets at fair value
through profit and loss, and Share Based Payments) is a non-GAAP
measure often used as a surrogate for operational cash flow as it
excludes from operating profit or loss all non-cash items,
including the charge for share based payments. However, deferred
bonus share option charges are not added back to operating profits
in the determination of Operating EBITDA as they may be paid in
cash upon the instruction of the Remuneration Committee.A
reconciliation to GAAP measures is provided on page 14.
2 This is Purchases of property, plant and equipment as per the
cash flow statement which excludes additions to Right-of-use
assets. A reconciliation to GAAP measures is provided on page
16.
3 Cash burn/(inflow) is net cash generated from operations plus
net interest paid plus capital expenditure. A reconciliation to
GAAP measures is provided on page 16.
Revenue
The Group's revenues decreased by 2% to GBP140.0 million (2021
GBP142.8 million). Revenues generated from bioprocessing/commercial
development were maintained at GBP128.1 million (2021: GBP128.4
million) despite a decrease in the volume of vaccine batches
manufactured for AstraZeneca. This was partially offset by an
increase in revenues from lentiviral vector and AAV commercial
development and manufacturing activities. Bioprocessing and
commercial development activities performed on behalf of the
Group's other clients have increased due to increased development
and manufacturing activities performed on behalf of Boehringer
Ingelheim, Juno, Arcellx, Homology Medicines and other new clients
.
Revenues from licence fees, milestones and royalties of GBP11.9
million (2021: GBP14.4 million), decreased by 17% when compared to
the prior year. In 2021 a licence fee from Boehringer Ingelheim of
GBP4.0 million was recognised.
GBPm 2022 2021 2020 2019 2018
========== ======= ======= ====== ====== ==============
Revenue 140.0 142.8 87.7 64.1 66.8
========== ======= ======= ====== ====== ==============
Operating EBITDA
=========================== ========= ========= ======== ======== ========
2022 2021 2020 2019 2018
=========================== ========= ========= ======== ======== ========
Revenue 140.0 142.8 87.7 64.1 66.8
Other income 2.3 0.9 0.8 0.9 1.1
Gain on sale of property 21.4 - - - -
Total expenses (3) (162.0) (107.8) (81.2) (70.2) (54.5)
--------------------------- --------- --------- -------- -------- --------
Operating EBITDA (1) 1.6 35.9 7.3 (5.2) 13.4
Non cash items(2) (31.8) (15.1) (13.0) (9.3) 0.5
--------------------------- --------- --------- -------- -------- --------
Operating loss/(profit) (30.2) 20.8 (5.7) (14.5) 13.9
=========================== ========= ========= ======== ======== ========
1. Operating EBITDA (Earnings Before Interest, Tax,
Depreciation, Amortisation, revaluation of investments and assets
at fair value through profit and loss, and Share Based Payments) is
a non-GAAP measure often used as a surrogate for operational cash
flow as it excludes from operating profit or loss all non-cash
items, including the charge for share based payments. However,
deferred bonus share option charges are not added back to operating
profits in the determination of Operating EBITDA as they may be
paid in cash upon the instruction of the Remuneration Committee.A
reconciliation to GAAP measures is provided on page 14.
2. Non-cash items include depreciation, amortisation,
revaluation of investments, fair value adjustments of
available-for-sale assets and the share based payment charge. A
reconciliation to GAAP measures is provided on page 13.
3. Total expenses are operational expenses including cost of
goods incurred by the Group. A reconciliation to GAAP measures is
provided on page 13.
Revenue decreased by 2% in 2022 whilst the Group's cost base
grew by 50% to GBP162.0 million due to an increase in operational
spend due to the consolidation of the results of Oxford Biomedica
Solutions, as well as inflationary increases and
acquisition-related due diligence costs of GBP5.1 million. The
Group benefited from a profit on the sale of its Windrush Court
facility of GBP21.4 million in a sale and lease back transaction.
The Operating EBITDA profit of GBP1.6 million is therefore GBP34.3
million lower than the GBP35.9 million Operating EBITDA profit
generated in 2021 as a result of the decrease in revenues, profit
on sale of building and an increased cost base.
Total Expenses
In order to provide the users of the accounts with a more
detailed explanation of the reasons for the year on year movements
of the Group's operational expenses included within Operating
EBITDA, the Group has added together research and development,
bioprocessing and administrative costs and has removed
depreciation, amortisation and the share option charge as these are
non-cash items which do not form part of the Operating EBITDA
alternative performance measure. As Operating profit/(loss) is
assessed separately as a key financial performance measure, the
year on year movement in these non-cash items is then individually
analysed and explained specifically in the Operating and Net
profit/(loss) section. Expense items included within Total Expenses
are then categorised according to their relevant nature with the
year on year movement explained in the second table below.
GBPm 2022 2021 2020 2019 2018
================================ ======== ======== ======== ======== ===========
Research and development(1.4) 60.9 40.2 29.7 22.6 18.0
Bioprocessing costs(4) 33.9 7.2 10.7 7.4 1.2
Administrative expenses(4,5) 28.2 15.1 11.3 11.9 7.4
================================ ======== ======== ======== ======== ===========
Operating expenses 123.0 62.5 51.7 41.9 26.6
Depreciation (20.3) (12.4) (9.8) (5.8) (4.3)
Amortisation (6.1) - - - -
Share option charge (5.4) (2.5) (2.4) (1.6) (1.1)
================================ ======== ======== ======== ======== ===========
Adjusted Operating Expenses
2 91.2 47.6 39.5 34.5 21.2
Cost of sales 70.8 60.2 41.7 35.7 33.3
================================ ======== ======== ======== ======== ===========
Total Expenses 3 162.0 107.8 81.2 70.2 54.5
================================ ======== ======== ======== ======== ===========
1 Includes the RDEC tax credit.
2 Research, development, bioprocessing and administrative
expenses excluding depreciation, amortisation and the share option
charge.
3 Cost of goods plus research, development, bioprocessing and
administrative expenses excluding depreciation, amortisation and
the share option charge.
4 Includes operational expenditure for Oxford Biomedica Solutions from March 2022 onwards.
5 Included GBP5.1 million in one-off acquisition-related due
diligence costs relating to the transaction to acquire Oxford
Biomedica Solutions.
GBPm 2022 2021 2020 2019 2018
==================================== ======= ======= ======= ======= ======
Raw materials, consumables
and other external bioprocessing
costs 45.6 34.2 22.0 22.8 18.3
Manpower-related 84.4 55.0 45.3 35.2 26.7
External R&D expenditure 3.6 2.5 1.4 1.4 1.9
Due diligence costs 5.1 1.2 - - -
Other costs 27.8 20.0 17.1 12.0 7.6
RDEC tax credit (4.5) (5.1) (4.6) (1.2) -
==================================== ======= ======= ======= ======= ======
Total expenses 1 162.0 107.8 81.2 70.2 54.5
==================================== ======= ======= ======= ======= ======
1 Total expenses are operational expenses including cost of
goods incurred by the Group. A reconciliation to GAAP measures is
provided on page 13.
-- Raw materials, consumables and other external bioprocessing
costs have increased as a result of increased LentiVector(R)
batch manufacturing and also materials used by Oxford Biomedica
Solutions during 2022, as compared to 2021.
-- The increase in manpower-related costs is due to the increase
in the average headcount from 759 in 2021 to 929 in 2022
primarily as a result of 124 employees gained as part of
the transaction to establish Oxford Biomedica Solutions but
also reflecting employee salary increases.
-- External R&D expenditure remained increased as a result of
additional research and development project spend incurred
in both the platform and product divisions.
-- Due diligence costs in both years relate to the establishment
of Oxford Biomedica Solutions.
-- Other costs were higher as a result of the inclusion of the
administrative expenditure of Oxford Biomedica Solutions,
and inflationary increases.
-- The RDEC credit has decreased to GBP4.5 million (2021: GBP5.1
million) due to a decrease in the level of eligible research
and development expenditure, mainly employee costs and raw
materials.
Operating and Net profit/(loss)
GBPm 2022 2021 2020 2019 2018
---------------------------------- -------- -------- -------- -------- -------
Operating EBITDA (1) 1.6 35.9 7.3 (5.2) 13.4
Depreciation, Amortisation
and share option charge (31.8) (14.9) (12.2) (7.4) (5.5)
Change in fair value of assets
at fair value through profit
and loss - (0.2) (0.8) (1.9) 6.0
---------------------------------- -------- -------- -------- -------- -------
Operating (loss)/ profit (30.2) 20.8 (5.7) (14.5) 13.9
Interest (7.8) (0.9) (0.8) (5.4) (6.2)
Forex (8.0) - - (1.0) (2.7)
Taxation 0.8 (0.9) 0.3 4.8 2.5
Net (loss)/profit (45.2) 19.0 (6.2) (16.1) 7.5
---------------------------------- -------- -------- -------- -------- -------
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation,
Amortisation, revaluation of investments and assets at fair value
through profit and loss, and Share Based Payments) is a non-GAAP
measure often used as a surrogate for operational cash flow as it
excludes from operating profit or loss all non-cash items,
including the charge for share based payments. However, deferred
bonus share option charges are not added back to operating profits
in the determination of Operating EBITDA as they may be paid in
cash upon the instruction of the Remuneration Committee.A
reconciliation to GAAP measures is provided on page 14 .
In arriving at Operating (loss)/profit it is necessary to deduct
from Operating EBITDA the non-cash items referred to above. The
depreciation (GBP20.3 million) and amortisation (GBP6.1 million)
charge was higher in 2022 due to the acquisition of the fixed
assets of Oxford Biomedica Solutions, as well as amortisation of
intangible assets recognised as a result of the acquisition of
Oxford Biomedica Solutions in March 2022. The share option charge
increased by GBP2.9 million due to the increased employee headcount
of the Group, mainly as a result of the Oxford Biomedica Solutions
acquisition.
The impact of these charges resulted in an operating loss of
GBP30.2 million in 2022 compared to a profit of GBP20.8 million in
the prior year.
The interest charge increased by GBP6.9 million largely due to
interest charges on the Oaktree loan, as well as IFRS 16 interest
on the lease liability related to the Oxford Biomedica Solutions
Boston facility. Forex increased by GBP8.0 million due to foreign
exchange movements on the Oaktree loan. The corporation tax expense
in 2022 decreased as the corporation tax charge in 2022 is limited
to the notional tax charge on the RDEC tax credit included within
research and development costs and the release of the deferred tax
on the Oxford Biomedica Solutions intangible assets arising on
acquisition.
Other Comprehensive Income
The Group recognised other comprehensive income in 2022 of
GBP10.6 million (2021: nil) in relation to movements on the foreign
currency translation reserve.
The translation reserve comprises all foreign currency
differences arising from the translation of the financial
statements of foreign operations, including gains arising from
monetary items that, in substance, form part of the net investment
in foreign operations.
Segmental analysis
The Group reports its results within two segments, namely:
I. the 'Platform' segment which includes the revenue generating
bioprocessing and process development activities for third
parties (i.e. the Partner programmes CDMO business), and
internal technology projects to develop new potentially saleable
technology, improve the Group's current processes, and bring
development and manufacturing costs down within the LentiVector(R)
and AAV platforms.
II. the 'Product' segment, which includes the costs of research
and development of new gene therapeutic product candidates.
GBPm Platform Product Total
-------------------------- ----------- --------- ---------
2022
Revenue 139.9 0.1 140.0
Operating EBITDA(1) 11.7 (10.0) 1.6
Operating (loss)/ profit (17.9) (12.3) (30.2)
2021
Revenue 142.7 0.1 142.8
Operating EBITDA(1) 45.3 (9.4) 35.9
Operating profit/ (loss) 31.4 (10.6) 20.8
-------------------------- ----------- --------- ---------
1 Operating EBITDA (Earnings Before Interest, Tax, Depreciation,
Amortisation, revaluation of investments and assets at fair value
through profit and loss, and Share Based Payments) is a non-GAAP
measure often used as a surrogate for operational cash flow as it
excludes from operating profit or loss all non-cash items,
including the charge for share based payments. However, deferred
bonus share option charges are not added back to operating profits
in the determination of Operating EBITDA as they may be paid in
cash upon the instruction of the Remuneration Committee.A
reconciliation to GAAP measures is provided on page 14..
In 2022 the Platform segment experienced a decrease in revenue
of 2% from GBP142.7 million to GBP139.9 million due to the lower
volumes of vaccine batches manufactured for AstraZeneca partly
offset by increased manufacturing volumes for lentiviral vector and
AAV clients. Commercial development revenues increased due to
activities performed on behalf of existing clients Arcellx,
Boehringer Ingelheim, Homology Medicines and other clients.
Operating results were negatively impacted by the lower revenues as
well as Oxford Biomedica Solutions' operational expenditure in the
period since they were acquired, but positively impacted by a gain
of GBP21.4 million on the sale and lease back of the Windrush Court
facility.
The Product segment has generated revenues of GBP0.1 million
(2021: GBP0.1 million) and an Operating EBITDA loss and operating
loss of GBP10.0 million and GBP12.3 million respectively (2021:
loss of GBP9.4 million and GBP10.6 million respectively). Product
operating expenses were higher due to increased research,
development and pre-clinical product expenditure, but also
increased manpower costs.
In the first quarter of 2023, the Senior Executive Team has
re-assessed the reporting segments to reflect the way the business
will be managed in future. Management reporting is currently being
reworked to align with these new segments going forward and the
Group expects to be able to report on these new segments during
2023 and thereafter. No changes from the current basis has been
reflected in the 2022 Annual report and accounts.
Cash flow
The Group held GBP141.3 million of cash at 31 December 2022,
having begun the year with GBP108.9 million. Significant movements
across the year are explained below.
GBPm 2022 2021 2020 2019 2018
=============================== ======== ======== ======== ======== ========
Operating (loss)/ profit (30.2) 20.8 (5.7) (14.5) 13.9
Non-cash items (1) included
in operating loss 31.8 15.1 13.0 9.3 (0.5)
=============================== ======== ======== ======== ======== ========
Operating EBITDA (2) 1.6 35.9 7.3 (5.2) 13.4
Working capital movement
(3) (14.8) (11.4) (11.2) (1.4) (4.2)
=============================== ======== ======== ======== ======== ========
Cash (used in)/generated
from operations (13.2) 24.5 (3.9) (6.6) 9.2
R&D tax credit received 0.6 1.0 7.0 3.1 3.7
=============================== ======== ======== ======== ======== ========
Net cash (used in)/generated
from operations (12.6) 25.5 3.1 (3.5) 12.9
Interest paid, less received (4.1) - - (3.3) (4.7)
Sale of investment asset - - 2.5 6.3 -
Capex(4) (16.3) (9.5) (13.4) (25.8) (10.1)
=============================== ======== ======== ======== ======== ========
Cash burn (5) (33.0) 16.0 (7.8) (26.3) (1.9)
Acquisition of subsidiary (99.2) - - - -
Sale of building 60.0 - - - -
Net proceeds from financing
(6) 104.6 46.2 38.3 10.3 19.8
=============================== ======== ======== ======== ======== ========
Movement in year (7) 32.4 62.2 30.5 (16.0) 17.9
=============================== ======== ======== ======== ======== ========
1 Depreciation, Amortisation, revaluation of investments and
assets at fair value through profit and loss, and Share Based
Payments.
2 Operating EBITDA (Earnings Before Interest, Tax, Depreciation,
Amortisation, revaluation of investments and assets at fair value
through profit and loss, and Share Based Payments) is a non-GAAP
measure often used as a surrogate for operational cash flow as it
excludes from operating profit or loss all non-cash items,
including the charge for share based payments. However, deferred
bonus share option charges are not added back to operating profits
in the determination of Operating EBITDA as they may be paid in
cash upon the instruction of the Remuneration Committee.A
reconciliation to GAAP measures is provided on page 14
3 The working capital movement includes the movement in trade
and other receivables (-GBP17.9 million), trade and other payables
(+GBP17.0 million), deferred income (-GBP0.7 million), contract
liabilities (+GBP5.9 million), inventory (+GBP0.7 million), as well
as adding the amortisation of loan fees (+GBP0.6 million), the
deferred bonus portion of the share option charge (+GBP1.0
million), and the gain on sale and leaseback (+21.4 million) as
outlined on page 39.
4 This is Purchases of property, plant and equipment as per the
cash flow statement which excludes additions to Right-of-use
assets. A reconciliation to GAAP measures is provided on page
16.
5 Cash (burn)/inflow is net cash generated from operations plus
net interest paid plus capital expenditure.
6 Net proceeds from financing consists of Proceeds from issue of
ordinary share capital, Costs of share issues, Payment of lease
liabilities, Loans received and Loan arrangement fees as outlined
on page 22.
7 The movement in the year is made up out of the net increase in
cash and cash equivalents of GBP29.5 million and the effect of
movements in exchange rates on cash held of GBP2.8 million.
-- The negative working capital movement of GBP14.8 million
is driven mainly by adding back the profit on the sale
of the Windrush Court facility of GBP21.4 million offset
by an increase in trade payables and contract liabilities
due to the acquisition of Oxford Biomedica Solutions, and
a decrease in trade and other receivables.
-- Interest paid less interest received increased by GBP4.1
million due to interest paid on the Oaktree loan.
-- The Group received GBP0.6 million from an SME R&D tax claim
related to the 2020 financial year.
-- Purchases of property, plant and equipment increased from
GBP9.5 million to GBP16.3 million, mainly as a result of
the purchase of manufacturing and laboratory equipment
required by Oxford Biomedica Solutions for its activities.
-- The Group acquired an 80% ownership stake in Oxford Biomedica
Solutions for GBP99.2 million net of cash acquired.
-- The Group sold its Windrush Court facility in a sale and
lease back transaction, receiving proceeds of GBP60.0 million.
-- The net proceeds from financing during 2022 was GBP104.6
million, consisting of GBP77.0 million equity share placement
in two tranches, GBP33.4 million in loans received from
Oaktree, share option equity issued of GBP0.2 million and
foreign exchange gains on cash held of GBP2.8 million and
reduced by lease payments of GBP4.2 million and loan arrangement
fees of GBP4.6 million in the year.
-- The result of the above movements is a net increase in
cash of GBP32.4 million from GBP108.9 million to GBP141.3
million.
Statement of financial position review
The most notable items on the Statement of financial position,
including changes from 31 December 2021, are as follows:
-- Intangible assets increased from GBP0.1 million to GBP105.9
million due mainly to GBP102.9 million of technology assets
and GBP0.6 million of goodwill acquired as part of the
acquisition of Oxford Biomedica Solutions.
-- Property, plant and equipment has increased by GBP64.0
million to GBP133.8 million due to GBP58.9 million of property
plant and equipment acquired as part of the transaction
to establish Oxford Biomedica Solutions, GBP29.3 million
of capital expenditure incurred, positive foreign exchange
movements of GBP4.9 million, offset by depreciation of
GBP20.3 million, a change in estimate of GBP1.3 million
and GBP7.5 million as a result of the disposal of the Windrush
Court facility.
-- Inventories have increased from GBP9.5 million to GBP12.6
million due to inventory balances held by Oxford Biomedica
Solutions at year end.
-- Trade and other receivables increased from GBP44.7 million
to GBP61.6 million due to invoices raised at year end for
contracted bioprocessing and process development activities.
-- Trade and other payables have increased from GBP19.1 million
at the start of the year to GBP36.6 million due to the
inclusion of the trade and other payables of Oxford Biomedica
Solutions.
-- Contract liabilities increased from GBP12.6 million in
2021 to GBP18.4 million due to invoices raised at the end
of 2022 for future process development activities.
-- Deferred Income decreased from GBP2.7 million in 2021 to
GBP2.0 million due to the release of amounts deferred as
part of the Innovate UK capex grant funding.
-- Provisions increased by GBP2.2 million as a result of the
recognition of an decreased liability for the costs of
restoring existing properties to their original state,
as well as the recognition of a liability for the costs
of restoring the newly leased Windrush Court head office
and laboratories, and Wallingford warehouse property to
its original state at the end of the lease term.
-- Lease liabilities increased by GBP65.2 million to GBP74.5
million due to the inclusion of the lease liabilities for
Windrush Court, as part of the sale and lease back of the
building, the Bedford, Massachusetts, property lease as
part of the acquisition of Oxford Biomedica Solutions,
and the new Wallingford warehouse lease.
-- Loans have increased from GBPnil to GBP39.8 million as
the Group entered into a 4-year US$50 million loan facility
with Oaktree in October, after repaying US$35 million of
the initial one year US$85 million (GBP64.9 million) loan
entered into in March 2022.
-- Put option liability - the Group has recognised a liability
of GBP38.2 million for the put option to acquire the remaining
20% of Oxford Biomedica Solutions that it does not already
own.
Financial outlook
The Group is building a quality and innovation-led, high growth,
global viral vector leader, operating across all viral vector
types. To achieve this, the Group is targeting new client
relationships for lentiviral vector and AAV while also broadening
existing client relationships. Oxford Biomedica has a strong,
diversified and growing business development pipeline and has seen
a strong increase in pipeline opportunities in the last quarter,
giving the Group confidence in growth prospects.
In 2023, the Group is targeting double-digit growth in
lentiviral vector manufacturing and commercial development revenues
driven by the successful progression, development and expansion of
existing client programmes. Further, the Group is expecting to
secure multiple new agreements across both lentiviral vector and
AAV.
Oxford Biomedica Solutions is targeting double-digit growth in
AAV manufacturing and clinical development revenues through
services provided to existing and new clients.
Overall, the Group expects total revenues to be marginally lower
in 2023 than 2022 due to the cessation of COVID-19 vaccine
manufacturing which generated in excess of GBP40 million of
revenues in 2022. However, the Group expects to deliver strong
double-digit growth in both lentiviral vector and AAV related
revenues in 2023.
Cost of goods, which includes material costs and the transfer of
bioprocessing manpower and overheads, is expected to be at similar
levels to 2022, with the impact of marginally lower revenues offset
by ongoing inflationary pressures. Bioprocessing and research and
development costs are expected to increase due to the full year
impact of Oxford Biomedica Solutions. Administrative expenditure is
expected to decrease due to one-off costs related to the Oxford
Biomedica Solutions transaction not recurring and successful cost
containment measures.
Oxford Biomedica Solutions continues to be funded through the
Group's US$50 million (GBP38.2 million) capital injection into the
business in March 2022 and is expected to break even on an
Operating EBITDA basis during 2025 as previously indicated. As a
result of the financial consolidation of this initially loss-making
part of the Group, the Group expects to deliver an Operating EBITDA
loss in 2023.
With the significant revenue growth targeted in the Group's
viral vector business, the cost base has been right-sized to
anticipate future growth and the Group maintains a strong balance
sheet. Progress is being made on potential external funding for the
therapeutics portfolio. No costs associated with the therapeutics
portfolio are expected to be carried by the Group after 2023.
Capex levels are expected to be similar to those incurred in
2022 with the Group taking a suitably cautious approach to planning
significant new projects. The Group will continue to invest in new
technologies in order to maintain its competitive edge in
lentiviral vectors, and to continue to build a leading position in
AAV.
Building on its leading position in lentiviral vectors, the
Group aims to ultimately have a market leading position in the
viral vector outsourced supply market across all key vector types,
with long term revenue growth rates exceeding the broader
market.
Going concern
The financial position of the Group, its cash flows and
liquidity position are described in the strategic report, primary
statements and notes to these financial statements.
The Group made a loss for the year ended 31 December 2022 of
GBP45.2 million and consumed net cash flows from operating
activities for the year of GBP12.6 million. The Group also:
-- raised GBP77.0 million (net of GBP3 million of share issue
cost) in cash from an equity fundraise in January and March
2022;
-- entered into a one year US$85 million (GBP63 million) loan
facility with Oaktree as part of the acquisition of Oxford
Biomedica Solutions in March 2022 which was then converted
into a four-year term loan facility together with repayment
of US$35 million of the initial principal amount in October
2022;
-- during November 2022, sold its Windrush Court facility in
a sale and leaseback transaction for GBP60 million to Kadans,
whilst also agreeing an occupational lease of the property
for 15 years; and
-- ended the year with cash and cash equivalents of GBP141.3
million.
In considering the basis of preparation of the Annual report and
accounts, the Directors have prepared cash flow forecasts for a
period of at least 12 months from the date of approval of these
financial statements, based in the first instance on the Group's
2023 annual budget and forecasts for 2024. The Directors have
undertaken a rigorous assessment of this base case forecast and
have also assessed the potential impact from the principal risks
and uncertainties outlined in the strategic report of the Group's
Annual report and accounts, taking into consideration the magnitude
and likelihood of these risks and uncertainties occurring to
prepare a downside scenario with associated mitigated actions.
The cash flow forecast prepared for the severe but plausible
downside scenario with mitigating actions assumes the
following:
-- Commercial challenges leading to a substantial manufacturing
and development revenue downside affecting both the LentiVector(R)
platform and AAV businesses;
-- Significant decreases in forecasted existing customer milestone
and royalty revenues;
-- The product development spin out strategy taking longer,
or ultimately being unsuccessful; and
-- The potential impacts of the current ongoing war in Ukraine
on the Group and its clients including expected revenues
from existing clients under long term contracts.
Under both the base case and mitigated downside scenario, the
Group and parent company has sufficient cash resources to continue
in operation for a period of at least 12 months from the date of
approval of these financial statements.
In the event of the downside scenarios crystallising, the Group
would continue to meet its existing loan covenants until June 2024
without taking any mitigating actions, but the Board has mitigating
actions in place that are entirely within its control that would
enable the Group to reduce its spend within a reasonably short
time-frame to increase its cash covenant headroom as required by
the loan facility with Oaktree Capital Management.
The Board has confidence in the Group's ability to continue as a
going concern for the following reasons:
-- The Group has cash balances of GBP141.3 million at the
end of December 2022 and GBP139.1 million at the end of
March 2023;
-- Approximately two-thirds of 2023 forecasted revenues are
covered by binding purchase orders which give certainty
to revenues over the next 12 months;
-- The Group's history of being able to access capital markets
including raising GBP77 million of equity during 2022;
-- The Group's history of being able to obtain loan financing
when required for purposes of both capital expenditure
and operational purposes, as recently evidenced by the
US$85 million one-year facility and US$50 million replacement
four-year facility obtained with Oaktree;
-- The Group's ability to continue to be successful in winning
new clients and building its brand as demonstrated by successfully
entering into new and expanding existing Client agreements
with AstraZeneca, Juno Therapeutics (a wholly owned subsidiary
of Bristol Myers Squibb Company), Homology Medicines and
multiple other new clients over the last twelve months.
Taking account of the matters described above, the Directors are
confident that the Group and parent company will have sufficient
funds to continue to meet their liabilities as they fall due for at
least 12 months from the date of approval of the financial
statements and therefore have prepared the financial statements on
a going concern basis.
Stuart Paynter
Chief Financial Officer
Consolidated statement of comprehensive income
for the year ended 31 December 2022
Group
2022 2021
Total Total
Continuing operations Note GBP'000 GBP'000
------------------------------------------- ------ ------------ ----------
Revenue 139,989 142,797
Cost of sales (70,808) (60,157)
------------------------------------------- ------ ------------ ----------
Gross profit 69,181 82,640
------------------------------------------- ------ ------------ ----------
Research and development costs (60,937) (40,189)
Bioprocessing costs (33,886) (7,233)
Administrative expenses (28,223) (15,152)
Other operating income 2,307 867
Gain on sale and leaseback 21,389 -
Change in fair value of asset held
at fair value through profit and loss (51) (165)
------------------------------------------- ------ ------------ ----------
Operating (loss) / profit (30,220) 20,768
Finance income 973 -
Finance costs 5 (16,729) (888)
------------------------------------------- ------ ------------ ----------
(Loss)/profit before tax (45,976) 19,880
Taxation 3 817 (869)
------------------------------------------- ------ ------------ ----------
(Loss)/ profit for the period (45,159) 19,011
------------------------------------------- ------ ------------ ----------
Other comprehensive income/(expense)
Items that will not be reclassified
to profit and loss
Foreign currency translation differences 10,575 -
------------------------------------------- ------ ------------ ----------
Other comprehensive income 10,575 -
------------------------------------------- ------ ------------ ----------
Total comprehensive (expense)/income (34,584) 19,011
------------------------------------------- ------ ------------ ----------
(Loss)/profit attributable to:
Owners of the company (39,157) 19,011
Non-controlling interest 20 (6,002) -
------------------------------------------- ------ ------------ ----------
(45,159) 19,011
------------------------------------------- ------ ------------ ----------
Total comprehensive (expense)/ income
attributable to:
Owners of the company (31,332) 19,011
Non-controlling interest 20 (3,252) -
------------------------------------------- ------ ------------ ----------
(34,584) 19,011
------------------------------------------- ------ ------------ ----------
Basic (loss)/profit per share 4 (41.29p) 22.77p
------------------------------------------- ------ ------------ ----------
Diluted (loss)/profit per share 4 (41.29p) 22.2p
------------------------------------------- ------ ------------ ----------
Statement of financial position
as at 31 December 2022
Group
2022 2021
Note GBP'000 GBP'000
--------------------------------------- ------ ----------- -----------
Assets
Non-current assets
Intangible assets 6 105,886 52
Property, plant and equipment 7 133,780 69,728
Deferred tax asset - -
Trade and other receivables 10 5,010 3,605
244,676 73,385
--------------------------------------- ------ ----------- -----------
Current assets
Inventories 9 12,625 9,521
Assets at fair value through profit
and loss 8 23 74
Trade and other receivables 10 61,571 44,747
Current tax assets - 558
Cash and cash equivalents 141,285 108,944
--------------------------------------- ------ ----------- -----------
215,504 163,844
--------------------------------------- ------ ----------- -----------
Current liabilities
Trade and other payables 11 36,579 19,058
Contract liabilities 12 18,370 12,502
Deferred income 12 894 894
Lease liabilities 16 3,295 853
Deferred tax 525 -
59,663 33,307
--------------------------------------- ------ ----------- -----------
Net current assets 155,841 130,537
--------------------------------------- ------ ----------- -----------
Non-current liabilities
Provisions 13 8,424 6,244
Contract liabilities 12 76 92
Deferred income 12 1,069 1,760
Loans 14 39,780 -
Lease liabilities 16 71,206 8,488
Put Option liability 15 38,182 -
Deferred tax liabilities 5,588 -
164,325 16,584
--------------------------------------- ------ ----------- -----------
Net assets 236,192 187,338
--------------------------------------- ------ ----------- -----------
Equity attributable to owners of the
parent
Ordinary share capital 17 48,132 43,088
Share premium account 17 379,953 307,765
Other reserves (24,887) 2,291
Accumulated losses (198,545) (165,806)
--------------------------------------- ------ ----------- -----------
Equity attributable to owners of the
Company 204,653 187,338
--------------------------------------- ------ ----------- -----------
Non-controlling interest 31,539 -
--------------------------------------- ------ ----------- -----------
Total equity 236,192 187,338
--------------------------------------- ------ ----------- -----------
The notes on pages 24 to 41 form part of this preliminary
information.
Statement of cash flows
for the year ended 31 December 2022
Group
2022 2021
Note GBP'000 GBP'000
----------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Cash generated (used in)/from operations 18 (13,173) 24,461
Tax credit received 558 994
Net cash generated (used in)/from operating
activities (12,615) 25,455
----------------------------------------------- ------ ---------- ----------
Cash flows from investing activities
Acquisition of subsidiary, net of cash (99,206) -
acquired
Purchases of property, plant and equipment 7 (16,296) (9,461)
Proceeds on disposal of PPE 7 60,000 -
Other direct costs in relation to leases (1,420) -
Interest received 460 -
Net cash used in investing activities (56,462) (9,461)
----------------------------------------------- ------ ---------- ----------
Cash flows from financing activities
Proceeds from issue of ordinary share
capital 17 80,154 51,600
Costs of share issues 17 (2,952) -
Payment of lease liabilities capital (1,120) (4,520)
Payment of lease liabilities interest (3,124) (873)
Loans received 64,866 -
Loans repaid (31,424) -
Interest paid (4,554) -
Loans arrangement fees (3,224) -
----------------------------------------------- ------ ---------- ----------
Net cash generated from financing activities 98,622 46,207
----------------------------------------------- ------ ---------- ----------
Net increase in cash and cash equivalents 29,545 62,201
Cash and cash equivalents at 1 January 108,944 46,743
----------------------------------------------- ------ ---------- ----------
Effects of movements in
exchange rates on cash held 2,796 -
Cash and cash equivalents at 31 December 141,285 108,944
----------------------------------------------- ------ ---------- ----------
The notes on pages 24 to 41 form part of this preliminary
information.
Statement of changes in equity attributable to owners of the
parent company
for the year ended 31 December 2022
Share
Ordinary premium Other Accumulated Non-controlling Total
shares account Reserves losses Total interest equity
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------- ---------- ----------- ------------- ---------- ----------------- ----------
At 1 January 2021 41,161 258,017 2,291 (188,723) 112,746 - 112,746
Year ended 31
December
2021:
----------------------- ---------- ---------- ----------- ------------- ---------- ----------------- ----------
Profit for the
year - - - 19,011 19,011 - 19,011
----------------------- ---------- ---------- ----------- ------------- ---------- ----------------- ----------
Total comprehensive
expense for the
year - - - 19,011 19,011 - 19,011
Transactions with
owners:
Share options
Proceeds from shares
issued 236 1,439 - (75) 1,600 - 1,600
Value of employee
services - - - 3,523 3,523 - 3,523
Deferred tax on
share options - - - 458 458 - 458
Issue of shares
excluding options 1,691 48,309 - - 50,000 - 50,000
Cost of share issues - - - - - - -
Transfer of share - - - - - - -
premium related
to warrants
At 31 December
2021 43,088 307,765 2,291 (165,806) 187,338 - 187,338
Year ended 31
December 2022:
----------------------- ---------- ---------- ----------- ------------- ---------- ----------------- ----------
Loss for the year - - - (39,157) (39,157) (6,002) (45,159)
Foreign currency
translation
difference 7,825 7,825 2,750 10,575
----------------------- ---------- ---------- ----------- ------------- ---------- ----------------- ----------
Total comprehensive
loss for the year - - 7,825 (39,157) (31,332) (3,252) (34,584)
Transactions with
owners:
Share options
Proceeds from
shares issued 106 78 - (29) 155 - 155
Value of employee
services - - - 5,922 5,922 549 6,471
Tax on share options - - - 125 125 - 125
Deferred tax on - - - - - - -
share options
Issue of shares
excluding options 4,938 75,062 - - 80,000 - 80,000
Cost of share
issue - (2,952) - - (2,952) - (2,952)
----------------------- ---------- ---------- ----------- ------------- ---------- ----------------- ----------
Total contributions 5,044 72,188 - 6,018 83,250 549 83,799
Changes in ownership
interests:
Acquisition of
subsidiary with
NCI - - - - - 34,642 34,642
Acquisition of
NCI without a change
in control - - - 400 400 (400) -
Put option
recognition - - (38,996) - (38,996) - (38,996)
Put option
revaluation - - 3,993 - 3,993 - 3,993
At 31 December
2022 48,132 379,953 (24,887) (198,545) 204,653 31,539 236,192
----------------------- ---------- ---------- ----------- ------------- ---------- ----------------- ----------
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
for the year ended 31 December 2022
1 Basis of accounting
This preliminary announcement was approved by the Board of
Directors on 25 April 2023.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2021
or 2022 but is derived from those accounts.
Statutory accounts for 2021 have been delivered to the registrar
of companies, and those for 2022 will be delivered in due
course.
The auditor has reported on the 2022 accounts; their report was
(i) unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report; and (iii) did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006.
Going concern
The financial position of the Group, its cash flows and
liquidity position are described in the strategic report, primary
statements and notes to these financial statements.
The Group made a loss for the year ended 31 December 2022 of
GBP45.2 million and consumed net cash flows from operating
activities for the year of GBP12.6 million. The Group also:
-- raised GBP77.0 million (net of GBP3 million of share issue
cost) in cash from an equity fundraise in January and March
2022;
-- entered into a one year US$85 million (GBP63 million) loan
facility with Oaktree as part of the acquisition of Oxford
Biomedica Solutions in March 2022 which was then converted
into a four-year term loan facility together with repayment
of US$35 million of the initial principal amount in October
2022;
-- during November 2022, sold its Windrush Court facility in
a sale and leaseback transaction for GBP60 million to Kadans,
whilst also agreeing an occupational lease of the property
for 15 years; and
-- ended the year with cash and cash equivalents of GBP141.3
million.
In considering the basis of preparation of the Annual report and
accounts, the Directors have prepared cash flow forecasts for a
period of at least 12 months from the date of approval of these
financial statements, based in the first instance on the Group's
2023 annual budget and forecasts for 2024. The Directors have
undertaken a rigorous assessment of this base case forecast and
have also assessed the potential impact from the principal risks
and uncertainties outlined in the strategic report of the Group's
Annual report and accounts, taking into consideration the magnitude
and likelihood of these risks and uncertainties occurring to
prepare a downside scenario with associated mitigated actions.
The cash flow forecast prepared for the severe but plausible
downside scenario with mitigating actions assumes the
following:
-- Commercial challenges leading to a substantial manufacturing
and development revenue downside affecting both the LentiVector(R)
platform and AAV businesses;
-- Significant decreases in forecasted existing customer milestone
and royalty revenues;
-- The product development spin out strategy taking longer,
or ultimately being unsuccessful; and
-- The potential impacts of the current ongoing war in Ukraine
on the Group and its clients including expected revenues
from existing clients under long term contracts.
Under both the base case and mitigated downside scenario, the
Group and parent company has sufficient cash resources to continue
in operation for a period of at least 12 months from the date of
approval of these financial statements.
In the event of the downside scenarios crystallising, the Group
would continue to meet its existing loan covenants until June 2024
without taking any mitigating actions, but the Board has mitigating
actions in place that are entirely within its control that would
enable the Group to reduce its spend within a reasonably short
time-frame to increase its cash covenant headroom as required by
the loan facility with Oaktree Capital Management.
The Board has confidence in the Group's ability to continue as a
going concern for the following reasons:
-- The Group has cash balances of GBP141.3 million at the
end of December 2022 and GBP139.1 million at the end of
March 2023;
-- Approximately two-thirds of 2023 forecasted revenues are
covered by binding purchase orders which give certainty
to revenues over the next 12 months;
-- The Group's history of being able to access capital markets
including raising GBP77 million of equity during 2022;
-- The Group's history of being able to obtain loan financing
when required for purposes of both capital expenditure
and operational purposes, as recently evidenced by the
US$85 million one-year facility and US$50 million replacement
four-year facility obtained with Oaktree;
-- The Group's ability to continue to be successful in winning
new clients and building its brand as demonstrated by successfully
entering into new and expanding existing customer agreements
with AstraZeneca, Juno Therapeutics (a wholly owned subsidiary
of Bristol Myers Squibb Company), Homology Medicines and
multiple other new clients over the last six months.
Taking account of the matters described above, the Directors are
confident that the Group and parent company will have sufficient
funds to continue to meet their liabilities as they fall due for at
least 12 months from the date of approval of the financial
statements and therefore have prepared the financial statements on
a going concern basis.
2 Critical accounting judgements and estimates
In applying the Group's accounting policies, management is
required to make judgements and assumptions concerning the future
in a number of areas. Actual results may be different from those
estimated using these judgements and assumptions. The key sources
of estimation uncertainty and the critical accounting judgements
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Key accounting matters
Judgements
Contract revenues: Identification of performance obligations,
allocation of revenue and timing of revenue recognition
The Group has identified three key areas of judgement within the
collaboration agreements entered into during the period. Firstly,
in relation to the number of distinct performance obligations
contained within each collaboration agreement; secondly the fair
value allocation of revenue to each performance obligation; and
thirdly the timing of revenue recognition based on the achievement
of the relevant performance obligation. The sales royalties
contained within the collaboration agreements qualify for the
royalty exemption available under IFRS 15 and will only be
recognised as the underlying sales are made even though the
performance obligation, in terms of the technology license, has
already been met.
The judgements with regards to the number of distinct
performance obligations and the fair value allocation of revenue to
each performance obligation takes place on a contract-by-contract
basis across numerous contracts entered into by the Group. As these
judgements take place across numerous contracts, each with
different characteristics, it is not practical to provide a
quantitative analysis of the impact of applying different
judgements, and the Directors do not believe that disclosing a
range of outcomes resulting from applying different judgements
provides meaningful information to the reader of the financial
statements. Consequently, no quantitative analysis has been
provided for these judgements.
Number of distinct performance obligations
Upon review of certain customer contracts and preparation of
accounting papers setting out the accounting treatment as per IFRS
15, the Group is required to exercise judgement in identifying the
distinct performance obligations contained within the contract.
These have been identified as being:
-- The granting of technology licences
-- Milestones relating to bioprocessing or process development activities
The fair value allocation of revenue to each performance
obligation
Because there is no readily available market price for many of
the performance obligations contained in the customer contracts,
the Group exercises judgment in estimating the stand alone selling
price of each of these performance obligations. Key areas of
judgement are assessed to be:
-- The stand alone selling price of technology licences. The
Group assesses the stand alone selling price of licences
by reference to the stand alone selling price of previously
recognised customer technology licences, and the size of
the market of the target indication and other market related
observable inputs
-- The stand alone selling price of bioprocessing batches. The
Group assesses the stand alone selling price of the batches
in terms the stand alone selling price of its other customer
contract batch selling prices
-- The stand alone selling price in terms of the annual full
time equivalent rate to charge for process development activities.
The Group assesses the full time equivalent rate in terms
the stand alone equivalent rate of its other customer contract
equivalent rates
Timing of revenue recognition: technology licence revenues
One of the key judgemental areas identified within the
collaboration agreements is the timing of recognition of licence
revenue based on the achievement of the relevant performance
obligation. The individual factors and aspects relating to licence
revenue are assessed as part of the IFRS 15 accounting paper
prepared for each agreement and a judgement is made as to whether
the licence fee performance obligation related to the granting of
the licence to the customer has been achieved. If it was judged
that the performance obligations on licences granted in 2022 had
not been met, revenues would have been GBP3,385,000 lower with the
revenue expected to be recognised in future when the performance
obligations were deemed to have been met.
Modification of Oaktree loan agreement
When a loan agreement with an existing lender is modified, a
determination has to be made as to whether the modification is
treated as the extinguishment of the existing financial liability
and the recognition of a new liability, or accounting for the
modification of the agreement as a modification to the existing
financial liability.
On 10 March 2022, the Group entered into and drew down an US$85
million loan facility agreement with Oaktree Capital Management
under a 1 year facility agreement maturing in 2023 with a nominal
interest rate on the loan of 8.5%. On 7 October 2022, the Loan
Agreement was amended, US$35 million was repaid and the term
extended to October 2026, with a variable interest rate which is
capped at 10.25% per annum.
A substantial modification under IFRS 9 is deemed to have
occurred if the net present value of the cash flows under the new
terms, including any fees, differs by at least 10% from the present
value of the remaining cashflows under the original terms.
Management has determined that the modification of the Oaktree
loan agreement on 7 October 2022 does not meet the substantial
modification criteria and therefore will be recognised as a
non-substantial modification to the existing loan, with the loan
being restated to its present value and subsequently at amortised
cost under the effective interest rate method.
This was determined on the basis of the quanititative test
performed as required by IFRS 9 resulting in a 3% change to the net
present value of the remaining cash flows when comapred to the
original cash flows under the original terms. Management has also
performed a qualitative assessment to identify substantial
differences in terms that by nature were not captured by the
quantitative assessment. In considering the qualitative factors,
Management has considered the payment terms, options, change in
other terms and collaterals. Based on the quantitative and
qualitative assessment, Management has determined that the
modification of the loan does not meet the substantial modification
criteria.
If the Group had concluded that the amendment consititutes a
significant modification, this accounting treatment would have
resulted in the recognition of a loss on extinguisment of
GBP1,391,000, recognition of legal fees of GBP439,000, and an
increase in the loan balance of GBP409,000 on the 7th of October
2022.
Estimations
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below. The nature of estimation means that actual
outcomes could differ from those estimates.
Percentage of completion of bioprocessing batch revenues
Bioprocessing of clinical/commercial product for partners is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the bioprocessing process.
Revenues are recognised on a percentage of completion basis and as
such require estimation in terms of the assessment of the correct
stage of completion including the expected costs to completion for
that specific bioprocessing batch. The value of the revenue
recognised with regard to the bioprocessing batches which remain in
progress at year end is GBP32,051,000. If the assessed percentage
of completion was 10 percentage points higher or lower, revenue
recognised in the period would have been GBP3,866,000 higher or
lower.
Percentage of completion of fixed price process development
revenues
As it satisfies its performance obligations the Group recognises
revenue and the related contract asset with regard to fixed price
process development work packages. Revenues are recognised on a
percentage of completion basis and as such require estimation in
terms of the assessment of the correct percentage of completion for
that specific process development work package. The value of the
revenue recognised raised with regard to the work packages which
remain in progress at year end is GBP8,179,000. If the assessed
percentage of completion was 10 percentage points higher or lower,
revenue recognised in the period would have been GBP818,000 higher
or lower.
Provision for out of specification bioprocessing batches
Bioprocessing of clinical/commercial product for clients is
recognised on a percentage of completion basis over time as the
processes are carried out. Progress is determined based on the
achievement of verifiable stages of the process.
As the Group has now been bioprocessing product across a number
of years, and also in a commercial capacity, the Group has assessed
the need to include an estimate of bioprocessed product for which
revenue has previously been recognised and which may be reversed
should the product go out of specification during the remaining
period over which the product is bioprocessed. In calculating this
estimate, the Group has looked at historical rates of out of
specification batches across the last four years, and has applied
the percentage of out of specification batches to total batches
produced across the assessed period to the revenue recognised on
batches which have not yet completed the bioprocessing process at
year end. This estimate, based on the historical percentage, may be
significantly higher or lower depending on the number of
bioprocessing batches actually going out of specification in
future. If the historical percentage had been 10% higher or lower,
the estimate would be GBP259,000 higher or lower. The estimate will
increase or decrease based on the number of bioprocessing batches
undertaken, the percentage of completion of those bioprocessing
batches, and the number of batches which go out of specification
over the assessment period.
Consequently, bioprocessing revenue of GBP2,592,000 (2021:
GBP769,000 ) has not been recognised during 2022, with the
corresponding credit to contract liabilities (note 12). This
revenue will be recognised as the batches complete
bioprocessing.
Amortisation of intangibles assets (developed technology)
The estimated useful life of developed technology acquired by
the Group is 15 years as the Group expects the technology to
generate cash flows for a total of 15 years. The estimate of 15
years is based on management's experience of the time period over
which the technology acquired as part of the acquisition of Oxford
Biomedica Solutions will become fully obsolete. Over time as the
platform technology is improved, parts of the technology become
obsolete as they are superseded by new technology until after 15
years the original technology is expected to have been fully
replaced by newer/improved technology.
If the estimated useful life of the assets had been 10 years,
the estimated amortisation for the year ended 31 December 2022
would be GBP3,036,000 higher (2021: nil); whilst, if the estimated
useful life of the assets had been 20 years, the estimated
amortisation for the year ended 31 December 2022 would be
GBP1,518,000 lower (2021:nil).
Sale and leaseback - Lease liability discount rate
During November 2022 the Group sold its Windrush Court facility
property to Kadans for a cash consideration of GBP 60 million in a
sale and leaseback transaction (refer note 7). A key estimate
identified by the Group within the sale and leaseback agreement is
the incremental borrowing rate used to discount the lease liability
cash flows back to their present value to determine the lease
liability at year end.
Since the rate implicity in the lease is not readily
determinable, the Group's incremental borrowing rate has been used
(the rate of interest that would have to be paid to borrow on a
collateralised basis over a similar term for an amount equal to the
lease payments in a similar economic environment) based on the
information available at commencement date in determining the
discount rate used to calculate the present value of lease
payments. The rates have been determined using previously available
information on borrowing rates as well as indicative borrowing
rates that would be available based on the value, currency and
borrowing term provided by financial institutions, adjusted for
company and market specific factors. Estimation of uncertainty is
involved in selecting an appropriate rate, and the rate selected
for each lease will have an impact on the value of the lease
liability and corresponding right-of-use (ROU) asset in the
Consolidated Statement of financial positions.
If the estimated lease liability discount rate had been one
percentage higher or lower, the gain recognised on the sale of
Windrush court would have been GBP1,775,000 higher or lower (2021:
GBP nil) with the other side of the entry decreasing or increasing
the lease liability by a GBP 2,027,000 (2021: GBP nil) and
decreasing and increasing right of use assets by a GBP 253,000
(2021: GBP nil).
Valuation of put option liability
Where a put option with non-controlling shareholders exists on
their equity interests, a liability for the fair value of the
exercise price of the option is recognised. On 10th March 2022, the
Group recognised a put option liability to acquire the remaining
20% of Oxford Biomedica Solutions that it doesn't already own, from
Homology Medicines. The fair value of the option at the date of
acquisition was assessed to be GBP39.0 million. At 31st December
2022 the fair value of the put option liability was GBP38.2 million
(Dec 2021: GBPnil).
The Group estimates the value of the put option liability using
a Monte Carlo simulation which calculates the expected future
exercise value of the put option, taking into consideration Oxford
Biomedica Solutions' forecasted revenues over the period up until
the expected exercise date along with the expected volatility of
those revenues over that same period. The expected future exercise
value is then discounted to the present using a discount rate in
order to capture the counter party risk of the expected
payment.
Key estimation uncertainty inputs which directly impact the
valuation of the put option liability are assessed to be:
-- Revenues of Oxford Biomedica Solutions- the revenues of Oxford
Biomedica Solutions are based on the management approved
forecast up until the end of the option period. Should the
forecast change or the actual results vary this may impact
the value of the put option liability.
-- Expected volatility of revenues - should the expected volatility
of Oxford Biomedica Solutions revenues vary, this may impact
the value of the put option liability,
-- Discount rate - the discount rate may be impacted by economic
and market factors, as well as changes to the risk free rate
of return which impacts debt borrowing rates. Should the
discount rate calculated by management be adjusted, this
may impact the value of the put option. Management has calculated
the discount rate based on the risk free rate, the expected
return from similar companies and the Group's cost of debt.
Put option liability Fair value
========================================== ======================
31 December 2022 Increase Decrease
Effect in thousands of pounds:
========================================== ========== ==========
Revenues of Oxford Biomedica Solutions:
10% higher or lower 2.1 (2.4)
Discount rate 2% lower or higher 1.4 (1.4)
------------------------------------------ ---------- ----------
Valuation of acquired intangible assets
As part of the acquisition accounting for the acquisition of
Oxford Biomedica Solutions LLC in 2022, we have performed an
assessment on the identification, fair value, and expected useful
economic lives of acquired intangible assets such as developed
technology assets at the date of acquisition. The fair value
attributed to intangible assets arising on acquisition is
recognised in accordance with IAS 38 Intangible assets and is based
on a number of estimates.
The acquired identifiable assets and liabilities have been
recognised at their fair values at acquisition date and in
accordance with the Group's accounting policies. The fair value of
the developed technologies intangible asset is considered a key
estimate subject to estimation uncertainty. Below are the details
for the valuation methodologies used for the intangible assets.
Acquired developed technology has been valued using the
multi-period excess earnings method (MPEEM) method, valued at
GBP102.8 million, The MPEEM method considers the present value of
net cash flows expected to be generated by the client
relationships, by excluding any cash flows related to contributory
assets.
Management considers the weighted average return on assets and
discount rates as critical estimates as a reasonably possible
change to these assumptions in aggregation, or in isolation, will
have an impact on the consolidated financial statements. The
weighted average return on assets and discount rate used by
management in the valuation of the developed technology is 17.3%
and 20.0% respectively. Below are the various sensitivities of
weighted average return on assets and discount rates and their
impact on the related intangible assets.
Sensitivities
================== ====================================== ==============
Weighted Adjusted Developed Impact GBP'm
Discount rate: average rate technology value
of return: GBP'm
================== ================ ==================== ==============
17% 15.0% 121.8 19.0
18% 15.8% 113.5 10.7
19% 16.5% 106.0 3.2
------------------ ---------------- -------------------- --------------
3 Taxation
During 2020 the Group ceased being eligible to claim a research
and development tax credits under the Government's small company
scheme.
2022 2021
Current tax GBP'000 GBP'000
----------------------------------------------------------------- --------- ---------
Corporation tax (1,282) (1,427)
----------------------------------------------------------------- --------- ---------
(1,282) (1,427)
Adjustments in respect of prior periods:
United Kingdom corporation tax research and development credit 307 558
----------------------------------------------------------------- --------- ---------
Current tax (975) (869)
----------------------------------------------------------------- --------- ---------
Deferred tax 1,792 -
----------------------------------------------------------------- --------- ---------
Taxation (Charge)/Credit 817 (869)
----------------------------------------------------------------- --------- ---------
The amount of GBP1,282,000 included as part of the taxation
charge within the statement of comprehensive income for the year
ended 31 December 2022 comprises the corporation tax payable on the
amount claimed as a Large Company Tax credit (RDEC) within research
and development expenses in the statement of comprehensive
income.
The adjustment of current tax in respect of the prior year of
GBP307,000 (2021: GBP558,000) relates to a lower (2021: higher)
than anticipated tax receipt.
The United Kingdom corporation tax research and development
(RDEC) credit which is included in research and development
expenses, is paid in arrears once tax returns have been filed and
agreed. The tax credit recognised in the financial statements but
not yet received is included in current tax assets in the Statement
of financial position.
During 2022 the Group recognised GBP125,000 (2021: GBP458,000)
of current tax relating to tax relief obtained on exercise of share
options directly within equity.
4 Basic and diluted profit/(loss) per ordinary share
The basic loss per share of 41.29p (2021: profit 22.77p) has
been calculated by dividing the (loss)/profit for the period by the
weighted average number of shares in issue during the year ended 31
December 2022 being, 94,829,892 (2021: 83,484,173).
As the Group made a loss this year, there is therefore no
difference between the basic loss per ordinary share and the
diluted loss per ordinary share in the prior period. The Group made
a profit in the prior period and the diluted earnings per share in
the year was (22.20p), which was calculated by dividing the
earnings for the period by the weighted average number of shares in
issue during the period after adjusting for the dilutive effect of
the share options outstanding at 31 December 2021 (2,134,494).
5 Finance Costs
Finance costs of GBP16.7 million (2021: GBP0.9 million) consists
of loan interest (GBP5.6 million), foreign exchange losses relating
to loans (GBP8.0 million) and lease liability interest recognised
in accordance with IFRS 16 (Leases) (GBP3.1million).
6 Intangibles
Goodwill Developed Patents Total
technology
GBP'000 GBP'000 GBP'000 GBP'000
=================================== ========== ============= ========= ==========
Cost
At 1 January 2021 - - 5,636 5,636
------------------------------------ ---------- ------------- --------- ----------
At 31 December 2021 - - 5,636 5,636
------------------------------------ ---------- ------------- --------- ----------
At 1 January 2022 - - 5,636 5,636
Aquisitions through business
combinations 610 102,869 - 103,479
Retirements - - (3,825) ( 3,825)
Effects of movements in exchange
rates 51 8,536 - 8,587
==================================== ========== ============= ========= ==========
At 31 December 2022 661 111,405 1,811 113,877
==================================== ========== ============= ========= ==========
Accumulated amortisation and
impairment
At 1 January 2021 - - 5,563 5,563
Charge for the year - - 21 21
------------------------------------ ---------- ------------- --------- ----------
At 31 December 2021 - - 5,584 5,584
------------------------------------ ---------- ------------- --------- ----------
At 1 January 2022 - - 5,584 5,584
Charge for the year - 6,072 16 6,088
Retirements - - (3,797) (3,797)
Effects of movements in exchange
rates - 116 - 116
At 31 December 2022 - 6,188 1,803 7,991
==================================== ========== ============= ========= ==========
Net book amount at 31 December
2021 - - 52 52
==================================== ========== ============= ========= ==========
Net book amount at 31 December
2022 661 105,217 8 105,886
==================================== ========== ============= ========= ==========
Intangible assets comprise Goodwill, Developed Technology and
Patents for intellectual property rights. The Group has not
capitalised any internally generated intangible assets.
7 Property, plant and equipment
Office Bioprocessing Right
Freehold Leasehold equipment and Laboratory of use
property improvements and computers equipment asset Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ----------- --------------- ---------------- ----------------- --------- ----------
Cost
At 1 January 2022 25,409 28,145 10,663 29,505 18,411 112,133
Additions at cost 113 7,767 955 7,461 13,038 29,334
Reallocations 14 (417) (6) 409 - -
Acquisitions through
business combinations 22,747 788 10,436 24,974 58,945
Disposals (15,688) - (45) (127) - (15,860)
Change in estimate - - - - (1,349) (1,349)
Effects of movements
in
Exchange rates - 1,986 65 912 2,072 5,035
At 31 December 2022 9,848 60,228 12,420 48,596 57,146 188,238
--------------------------- ----------- --------------- ---------------- ----------------- --------- ----------
Accumulated depreciation
At 1 January 2022 12,652 6,226 6,863 12,519 4,145 42,405
Charge for the year 2,052 5,167 2,204 5,916 4,932 20,271
Effects of movements
in
Exchange rates - 47 2 40 19 108
Disposals (8,210) - (27) (89) - (8,326)
--------------------------- ----------- --------------- ---------------- ----------------- --------- ----------
At 31 December 2022 6,494 11,440 9,042 18,386 9,096 54,458
--------------------------- ----------- --------------- ---------------- ----------------- --------- ----------
Net book amount
At 31 December 2022 3,354 48,788 3,378 30,210 48,050 133,780
--------------------------- ----------- --------------- ---------------- ----------------- --------- ----------
8 Assets at fair value through profit and loss
2022 2021
Assets at fair value through
profit and loss: GBP'000 GBP'000
---------------------------------------- --- -------------- ---- ---- --------- ---------
At 1 January 74 239
Additions - -
Sale of shares - -
Change in fair value of FVTPL
asset (51) (165)
---------
At 31 December 23 74
----------------------------------- -------------- ---- --------- ---------
9 Inventories
2022 2021
GBP'000 GBP'000
------------------ --------- ---------
Raw Materials 12,625 9,521
Total Inventory 12,625 9,521
------------------ --------- ---------
Inventories constitute raw materials held for commercial
bioprocessing purposes.
During the year, the Group wrote down GBP1,117,000 (2021:
GBP766,000) of inventory which is not expected to be used in
production or sold onwards. The Company holds no inventories.
During the year, the Group wrote off GBP11,717,000 of inventory as
a result of cancelled orders from a customer, which was recognised
as part of cost of sales in the year.
10 Trade and other receivables
2022 2021
GBP'000 GBP'000
------------------------------------ --------- ---------
Trade receivables 34,109 22,398
Contract assets 10,897 13,547
Other receivables 4,832 365
Other tax receivable 7,757 3,227
Prepayments 3,976 3,210
Total trade and other receivables 61,571 44,747
-------------------------------------- --------- ---------
Non-current trade and other receivables constitute other
receivables of GBP5,010,000 (2021: GBP3,605,000) which are deposits
held in escrow as part of the Windrush Innovation Centre and Oxbox
lease arrangements.
The fair value of trade and other receivables are the current
book values. The Group has performed an impairment assessment under
IFRS 9 and has concluded that the application of the expected
credit loss model has had an immaterial impact on the level of
impairment of receivables
Included in the Group's trade receivable balance are debtors
with a carrying amount of GBP1,336,000 (2021: GBP3,800,000) which
were past due at the reporting date and of which GBP1,333,000
(2021: GBP3,800,000) has been received after the reporting
date.
Contract assets
Contract assets relates to the Group's rights to consideration
for work completed but not invoiced at the reporting date for
commercial development work and bioprocessing batches. The contract
assets are transferred to receivables when the rights become
unconditional. This usually occurs when the Group issues an invoice
to the customer.
The balance of GBP10.9 million (2021: GBP13.5 million) mainly
relates to commercial development milestones which have been
accrued as the specific conditions stipulated in the licence
agreement have been met, commercial development work orders accrued
on a percentage complete basis which will be invoiced as the
related work package completes, and bioprocessing batches accrued
on a percentage of completion basis which will be invoiced as the
manufacturing of the batch is completed.
Contract assets have decreased from GBP13.5 million at the end
of 2021 to GBP10.9 million at the end of 2022 due to the timing of
bioprocessing and commercial development activities undertaken
during the year leading to a lower level of consideration for work
completed but not yet billed.
A portion of contract assets relates to fixed price process
development work packages which are recognised on a percentage of
completion basis and as such requires estimation in terms of the
assessment of the correct percentage of completion for that
specific work package. The value of the contract asset raised with
regard to these work packages is GBP8,179,000 (2021: GBP8,022,000).
If the assessed percentage of completion was 1 percentage point
higher or lower, revenue recognised in the period would have been
GBP82,000 higher or lower (2021: GBP80,000).
The Group performed an impairment assessment under IFRS 9 and
has concluded that the application of the expected credit loss
model has had an immaterial impact on the level of impairment on
contract assets. We have noted there has been no change in the time
frame for a right to consideration to become unconditional and the
performance obligation to be satisfied.
11 Trade and other payables
2022 2021
GBP'000 GBP'000
------------------------------------- --------- ---------
Trade payables 13,604 5,260
Other taxation and social security 2,347 1,899
Accruals 20,628 11,899
Total trade and other payables 36,579 19,058
--------------------------------------- --------- ---------
12 Contract liabilities and deferred income
Contract liabilities and deferred income arise when the Group
has received payment for services in excess of the stage of
completion of the services being provided.
Contract liabilities and deferred income have increased from
GBP15.2 million at the end of 2021 to GBP20.4 million at the end of
2022 due to funds received in advance for future licencing,
bioprocessing and process development activities. Of the GBP12.6
million contract liability balance included in the statement of
financial position at the end of 2021, GBP12.5 million has been
recognised as revenue during the 2022 financial year.
Years 0-1 1-3 3-5 5-10 Total
At 31 December 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- --------- --------- ---------
Contract liabilities 18,370 32 32 12 18,446
Bioprocessing income 10,218 - - - 10,218
Process development income 3,136 - - - 3,136
Licence fees and Milestones 5,016 32 32 12 5,092
Deferred income 894 1,069 - - 1,963
Grant 894 1,069 - - 1,963
--------------------------------------- --------- --------- --------- --------- ---------
Included within bioprocessing contract liabilities is revenue of
GBP2.6 million which has not been recognised during 2022 (2021:
GBP0.8 million) relating to the estimate of out of specification
batches (see note 2: 'Estimations' for additional information).
Deferred income relates to grant funding received from the UK
Government for capital equipment purchased as part of the Oxbox
bioprocessing facility expansion. The income will be recognised
over the period over which the purchased assets are
depreciated.
13 Provisions
2022 2021
GBP'000 GBP'000
---------------------------------- --------- ---------
At 1 January 6,244 5,839
Unwinding of discount 66 27
Change in estimate (1,349) 378
Additional provision recognised 3,463 -
At 31 December 8,424 6,244
------------------------------------ --------- ---------
2022 2021
GBP'000 GBP'000
---------------------------------- --------- ---------
Current - -
Non-current 8,424 6,244
------------------------------------ --------- ---------
Total provisions 8,424 6,244
------------------------------------ --------- ---------
Provisions are exclusively in respect of dilapidations. The new
provisions during the year relate to new lease liabilities at the
Wallingford Warehouse, and as a result of the sale and leaseback by
the Company of Windrush Court facility. The provisions are based on
the anticipated costs of restoring the leaseholds at the end of the
lease terms, both of which are 2037. The existing dilapidations
provisions relate to anticipated costs of restoring the leasehold
Yarnton, Oxbox, Windrush Innovation Centre and Corporate Office
properties in Oxford, UK to their original condition at the end of
the lease terms in 2024, 2033, 2028 and 2030 respectively.
The future anticipated costs of restoring the properties is
calculated by inflating the current expected restoration costs
using the 3 year historic inflation rate up to the end of the lease
term. The discount rate utilised for the purpose of determining the
present value of the provision is 5.41% based on the risk free rate
adjusted for inflation. The present value of the future anticpiated
costs of restoration is calculated by discounting the future
expected value using the nominal rate. The unwinding of this
discount over time is included within finance costs.
At the time of establishing the provision, a corresponding asset
is capitalised where it gives rise to a future benefit and
dpreciated over the remain life of the lease. The provision is
reviewed on an annual basis for changes in cost estimates, discount
rates or lease end date. Any change in the dilapidation provisions
or underlying assumtions will be recognised in the corresponding
asset and provision when they occur.
14 Loans
On 10 March 2022, the Group drew down an US$85 million loan
facility with Oaktree Capital Management to finance the acqusition
of OXB Solutions LLC under a 1 year facility agreement maturing in
2023. Over the course of the term loan interest was payable
quarterly with a nominal interest rate on the loan of 8.5%.
On 7 October 2022, the loan facility was refinanced with Oaktree
Capital Management. Under the terms of such refinancing, the
Company has partially repaid the outstanding amounts under the
Short-Term Loan Facility and amended the facility into a new senior
secured four year term loan facility provided by Oaktree in a
principal amount of US$50 million. The Term Loan will mature four
years after the date of completion and will not amortise, with the
full aggregate principal and outstanding amount being repayable on
the final maturity date. The Term Loan carries a variable interest
rate, which is capped at 10.25% per annum and payable quarterly in
cash, with up to 50% of interest for the first twelve months
payable in kind as additional loan principal, at the option of the
Company. The interest rate is subject to downward adjustment
following the satisfaction of certain commercial conditions.
The Company also has secured the option, subject to customary
conditions and available for a three-year period, to draw down a
further US$25 million from Oaktree to fund certain permitted
acquisitions.
Group
=============================
2022 2021
GBP'000 GBP'000
============================ ================ =========== ===
At 1 January - -
New Loan 64,866 -
Interest accrued 5,564 -
Interest paid (4,554) -
Foreign exchange movement 7,964 -
Amortised fees 588 -
Loan repayment (31,424) -
Arrangement fees (3,224)
============================ ================ =========== ===
At 31 December 39,780 -
============================ ================ =========== ===
The terms include financial covenants including holding a
minimum of US$20 million cash at all times, restrictions on the
level of indebtedness the Group may enter into or distributions
made by the Group. The Oaktree facility was secured by a pledge
over substantially all of the Group's assets.
15 Put option liability
2022 2021
GBP'000 GBP'000
-------------------------- --------- ---------
Balance at 1 January - -
Recognised at fair value 38,996 -
Revaluation (814) -
-------------------------- --------- ---------
At 31 December 38,182 -
-------------------------- --------- ---------
On 10th March 2022, the Group recognised a put option liability
to acquire the remaining 20% of Oxford Biomedica Solutions that it
doesn't already own from Homology Medicines. The fair value of the
option at the date of acquisition was assessed to be GBP39.0
million.
At 31st December 2022 the fair value of the Put option liability
was GBP38.2 million (Dec 2021: GBPnil). The lower liability
valuation was due to increases in borrowing rates over the period
leading to a higher discount rate applied and a resultant lower put
option liability.
16 Leases
Right-of-use assets
Property Equipment IT equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ ------------- ------------------ --------------------
Balance at 1 January
2022 11,450 2,780 36 14,266
Additions 13,038 - - 13,038
Acquisitions through
business combinations 24,974 - - 24,974
Depreciation charge
for the period (4,185) (730) (36) (4,951)
Change in Estimate (1,349) - - (1,349)
Effects of movements
in exchange rates 2,072 - - 2,072
------------------------- ------------ ------------- ------------------ --------------------
Balance at 31 December
2022 46,000 2,050 - 48,050
------------------------- ------------ ------------- ------------------ --------------------
Lease liabilities
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ---------- ----------
Maturity analysis - contractual undiscounted cash
flows
Less than one year 9,179 1,590
One to five years 43,035 5,883
Six to ten years 42,224 5,071
More than ten years 25,059 913
---------------------------------------------------- ---------- ----------
Total undiscounted cash flows 119,497 13,457
---------------------------------------------------- ---------- ----------
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ---------- ----------
Lease liabilities included in the Statement of
Financial Position
Current 3,295 853
Non-current 71,206 8,488
Total undiscounted cash flows at 31 December 2022 74,501 9,341
---------------------------------------------------- ---------- ----------
Amounts recognised in the statement of comprehensive income
2022 2021
GBP'000 GBP'000
---------------------------------------- ---------- ----------
Interest on lease liabilities 3,124 873
Expense relating to short-term leases 178 369
---------------------------------------- ---------- ----------
Amounts recognised in the statement of cash flows
2022 2021
GBP'000 GBP'000
-------------------------------- ---------- ----------
Total cash outflow for leases 4,244 5,393
-------------------------------- ---------- ----------
17 Share capital and Share premium
At 31 December 2021 and 31 December 2022 Oxford Biomedica had an
issued share capital of 86,175,055 and 96,264,245 ordinary 50 pence
shares respectively.
212,646 shares were created as a result of the exercise of
options by employees during the period.
Between January and March 2022, the Group issued 9,876,544 new
ordinary shares at a price of GBP8.10 per share. Gross proceeds
from the placing were GBP80.0 million; net proceeds were GBP77.0
million.
18 Cash flows from operating activities
Reconciliation of profit before tax to net cash used in
operations:
2022 2021
GBP'000 GBP'000
----------------------------------------------------- ---------- ----------
Continuing operations
Profit/(loss) before taxation (45,976) 19,880
Adjustment for:
Depreciation 20,271 12,435
Amortisation of intangible assets 6,088 21
(Gain) on sale and leaseback (21,389) -
Loss on disposal of PPE 28 -
Loss on disposal of intangible 27 -
Amortisation of loan fees 588 -
Net finance costs 15,756 888
Charge in relation to employee share schemes 6,471 3,981
Non-cash loss 51 165
Changes in working capital:
Increase/(decrease) in trade and other receivables (17,876) 6,891
Increase in trade and other payables 16,959 (657)
Increase/(decrease) in deferred income (691) (867)
Increase/(decrease) in contract liabilities 5,852 (15,667)
Decrease/(increase) in inventory 668 (2,609)
------------------------------------------------------- ---------- ----------
Net cash generated from/(used in) operations (13,173) 24,461
------------------------------------------------------- ---------- ----------
19 Acquisition of subsidiary
On 10 March 2022, the Group acquired 74% of the shares and
voting interests in Oxford Biomedica Solutions LLC. As a result,
the Group's equity interest granted it control of Oxford Biomedica
Solutions. Immediately following the acquisition, the Group
acquired a further 6% interest in Oxford Biomedica Solutions (refer
note 21).
Included in the identifiable assets and liabilities acquired at
the date of acquisition of Oxford Biomedica Solutions are inputs,
production processes and an organised workforce. The Group has
determined that together the acquired inputs and processes
significantly contribute to the Group's ability to create revenue.
The Group has concluded that the acquired inputs and processes is a
business.
A. Consideration Transferred
The following table summarises the acquisition date fair value
of each major class of consideration transferred.
GBP'000
--------------------------------------- ------------------------
Cash 99,206
Total consideration transferred: 99,206
-------------------------------------------------- -------------
B. Acquisition related expenses:
The Group incurred acquisition related legal and due diligence
expenses of GBP5.1 million which is included in Administrative
expenses.
C. Identifiable assets acquired and liabilities assumed:
The following table summarises the recognised amounts of assets
acquired and liabilities assumed at the date of acquisition.
GBP'000
------------------------------------------ ----------------
Property plant and equipment 58,945
Intangible assets 102,869
Inventory 3,476
Prepaid expenses 229
Lease liabilities (24,974)
Deferred tax liabilities (7,307)
Total identifiable net assets acquired: 133,238
------------------------------------------ ----------------
The valuation techniques used for measuring the fair value of
material assets acquired were as follows.
Assets acquired Valuation technique
Property plant Market comparison technique and cost technique
and equipment - The valuation model considers market prices
for similar items when they are available, and
depreciated replacement cost when appropriate.
Depreciated replacement cost reflects adjustments
for physical deterioration as well as
functional and economic obsolescence
--------------------------------------------------------
Intangible Multi-period excess earnings method - The multi-period
assets excess earnings method considers the present value
of net cash flows expected to be generated by
the customer relationships, by excluding any cash
flows related to contributory assets.
--------------------------------------------------------
Inventory Market comparison - To determine the fair value
of the inventory, the Group obtained current prices
for each of the items making up the transferred
inventory.
--------------------------------------------------------
D. Goodwill
Goodwill arising from the acquisition has been recognised as
follows:
GBP'000
---------------------------------------------------- -------------------------
Consideration transferred 99,206
Interest in the identifiable net assets of non-controlling
interests 34,642
Fair value of identifiable assets: (133,238)
Goodwill 610
---------------------------------------------------------------- -------------
The goodwill is attributable mainly to the skills and technical
talent of Oxford Biomedica Solutions' workforce. None of the
goodwill recognised is expected to be deductible for tax
purposes.
20 Non-controlling interest ("NCI")
The proportion of the identifiable net assets of the
Non-controlling interest in Oxford Biomedica Solutions on
acquisition was determined to be GBP34,642,000.
The following table summarises the information relating to the
Group's subsidiary that has material NCI:
2022
GBP'000
-------------------------------------------- -----------
NCI percentage 20%
Non-current assets 171,419
Current assets 29,732
Non-current liabilities (7,473)
Current liabilities (35,979)
-----------
Net assets 157,699
Net assets attributable to NCI 31,539
Revenue 23,722
Loss (30,011)
Other comprehensive income 13,756
-----------
Total comprehensive loss (16,255)
Loss allocated to NCI (6,002)
Other comprehensive income allocated
to NCI 2,750
Cash flows from operating activities (9,732)
Cash flows from investment activities 30,867
Cash flow from financing activities
(dividends to NCI: nil) (2,293)
-------------------------------------------- -----------
Net increase in cash and cash equivalents 18,842
-------------------------------------------- -----------
There was no Non Controlling interest in 2021.
21 Acquisition of Non-controlling interest
On 10 March 2022, the Group acquired an additional 6% interest
in Oxford Biomedica Solutions from Homology Medicines, increasing
its ownership from 74% to 80%, with Homology Medicines holding the
remaining 20%. The carrying amount of Oxford Biomedica Solutions'
net assets in the Group's consolidated financial statements on the
date of the acquisition was GBP133.2 million.
GBP'000
------------------------------------- ------------- -------------
Carry amount of NCI acquired 400
Consideration paid to NCI -
------------------------------------- ------------- -------------
Increase in equity attributable to
owners of the Company 400
---------------------------------------------------- -------------
The increase in equity attributable to owners of the Company
comprised solely of an increase to retained earnings.
22 Capital commitments
At 31 December 2022, the Group has a letter of credit
GBP1,405,000 (2021: nil) related to the deposit on the Patriots
park lease which is disclosed within Trade and other receivables in
non current assets.
At 31 December 2022, the Group had commitments of GBP2,882,000
for capital expenditure for leasehold improvements and plant and
equipment not provided in the financial statements (Dec 2021
GBP3,974,000).
23 Related party transactions
31 December 31 December
2022 2021
GBP '000s GBP '000s
----------------------------------- ------------- -------------
Sales of goods and services
Homology Medicines, Inc. 23,252 -
Purchase of services
Homology Medicines, Inc. 4,258 -
Other
Homology Medicines, Inc. - rental 1,085 -
income
----------------------------------- ------------- -------------
All outstanding balances with related parties are to be settled
in cash within six months of the reporting date. None of the
balances is secured.
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END
FR IAMATMTTTMLJ
(END) Dow Jones Newswires
April 25, 2023 02:00 ET (06:00 GMT)
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