Building the future
Annual report and accounts 2018
Oxford Biomedica in brief
Oxford Biomedica is a pioneer of gene and cell therapy with a leading
position in lentiviral vector research, development and bioprocessing.
Gene and cell therapy is the treatment of disease by the delivery of
therapeutic DNA into a patient’s cells. This can be achieved either in vivo
(referred to as gene therapy) or ex vivo (referred to as cell therapy),
the latter being where the patient’s cells are genetically modified outside
the body before being re-infused.
Oxford Biomedica is focused on developing life changing treatments
for serious diseases. Oxford Biomedica and its subsidiaries (the “Group“)
have built a sector leading lentiviral vector delivery platform, LentiVector,
which the Group leverages to develop in vivo and ex vivo products
both in-house and with partners. The Group has created a valuable
proprietary portfolio of gene and cell therapy product candidates in
the areas of oncology, ophthalmology and CNS disorders.
The Group has also entered into a number of partnerships, including
with Novartis, Sanofi, Axovant Gene Therapies, Orchard Therapeutics,
Boehringer Ingelheim, the UK Cystic Fibrosis Gene Therapy Consortium
and Imperial Innovations, through which it has long-term economic
interests in other potential gene and cell therapy products. Oxford Biomedica
is based across several locations in Oxfordshire, UK and employs more
than 430 people.
The arrival of gene and cell therapy is clear.
Landmark regulatory approvals of these
life-changing treatments are now happening,
and include the very first commercial use of
Oxford Biomedica’s LentiVector® technology.
Our science is now a therapeutic reality for
patients suffering from some of the most serious
diseases. What we are witnessing is just the
beginning...
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1
Introducing
Oxford Biomedica
11 Sector and technology
overview
12 Gene and cell therapy sector
13 LentiVector delivery platform
16 Products
19 Strategic report
20 Our business model
22 Operational highlights
23 Financial highlights
24 Chairman’s statement
26 Chief Executive Officer's review
30 Management team
32 2018 performance review
36 Delivery of our 2018 objectives
37 Objectives for 2019
38
Financial review
44 Corporate responsibility
51 Corporate governance
52
Principal risks, uncertainties
and risk management
59 The Board of Directors
62 Corporate governance report
69 Directors’ remuneration report
90 Directors’ report
96
Independent auditors’
report
103 Group financial statements
104
Consolidated statement
of comprehensive income
We are delivering
105 Balance sheets
106 Statements of cash flows
107
Statements of changes in
equity attributable to owners
of the parent
Notes to the consolidated
financial statements
108
145 Other matters
145
Glossary
148 Advisers and contact details
Oxford Biomedica plc | Annual report and accounts 2018
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Innovating
Personalised gene-based medicine is
entering the mainstream. It is an area
of healthcare bursting with new ideas
around many unmet needs.
We have always seen its potential and
are playing a crucial role in making new
curative treatments.
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Oxford Biomedica is one of the original
pioneers of gene and cell therapy.
We continue to lead the way, setting
new standards and benchmarks
for everyone’s benefit.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
4
Innovating
Turning ideas into therapeutic reality
Our LentiVector technology is
becoming increasingly attractive
The most commonly used vectors
for gene and cell therapy are based
on lentiviruses and adeno-associated
viruses (AAV). Lentiviral vectors offer
clear advantages over AAV such as
better payload capacity and permanent
modification of dividing cells such as
T cells and stem cells, and there is no
pre existing immunity unlike with AAV.
With several several years of clinical
data now available, our LentiVector
platform has more compelling results
than any other.
Read more about our LentiVector platform on page 13.
We are the only people in the world
who can do this right now
The delivery of gene and cell therapies
into patients is a complex and highly
specialised process, and one that has
taken us many years to perfect.
Oxford Biomedica is the only group in
the world with a GMP-approved facility
for commercial scale lentiviral vector
manufacturing. When we say we have
know-how and experience we really
mean it.
Read more about the opportunities within the sector on page 12.
Efficient in vivo gene
delivery
Safe and well tolerated
Large therapeutic payload
No pre-existing immunity
Permanent modification
of dividing cells
IP protection
Ease of manufacture
Lentiviral
Vectors
AAV
Vectors
• • •
• • •
• • •
• • •
• • •
• •
• •
• • •
• • •
•
• •
Lentiviral Vectors vs AAV Vector
$8bn
Haemophilia A and B market
Projected to increase to $8 billion by 2026. Sanofi,
with whom we have two partnered pipeline products,
is expected to become the second biggest player
with global sales of $1.4 billion by 20251.
1. Source: GlobalData, July 2017
63%
Global CAR-T cell therapy market
Forecast to grow at a CAGR of over 63% from 2018
to 20222. The majority of therapies in the global
CAR-T cell therapy market are still in the early stages
of clinical trials, many of which could potentially
use our LentiVector technology.
2.
Source: Technavio, October 2018
Introducing the next gene and cell
therapy industry standards
As we continue to trail blaze this
burgeoning sector, we are constantly
innovating and finding ways to make
gene and cell therapy work better, be
safer and more cost effective.
We have developed the TRiP System™ to
maximise vector yields and particle purity
and standardise downstream processes.
This new development substantially limits
potential detrimental effects on vector
function and purification. It can be used to
benefit all delivery systems including AAV.
Read more about the TRiP System and other LentiVector platform
developments on page 33.
Developing our own new products
in key areas of unmet need
We have already experienced success with
our partners’ products, but we also have
our own products under development.
As we uncover greater potential from
our LentiVector platform we are pushing
forward with our efforts to discover new
treatments for diseases with serious
unmet need, such as rare retinal and
motor neurone diseases, to add to our
development pipeline.
See our product development pipeline on page 16.
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Hospitals are offering CAR-T therapy Kymriah
The NHS agreed a commercial deal with Novartis
to offer ground-breaking CAR-T therapy Kymriah,
which uses our LentiVector technology, to children
with advanced leukaemia. It took the NHS less than
10 days after Kymriah won marketing authorisation,
making it one of the fastest funding approvals in its
70-year history.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Expanding
The gene and cell therapy industry is
growing rapidly and we are expanding
to meet the demand.
To exploit our leading position we
are investing in our future so that we
continue to be a partner of choice for
lentiviral vector manufacture.
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We have seen rapidly growing revenues
from process development, bioprocessing
and royalty generating partnerships over
the past few years.
Our economic interest in a diverse range of
products is also growing and we continue
to invest in technology and proprietary
gene and cell therapy concepts.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Expanding
Gene and cell therapy is growing fast
A highly valuable market
The gene and cell therapy sector is
developing into a multi-billion $ market.
We estimate that the lentiviral vector
manufacturing market alone will grow
to be worth $800 million by 2026. 1
Upsurge in gene and cell therapies
The potential gene and cell therapy holds
for curative treatments for a broad range
of diseases with inadequate options
makes it an incredibly exciting, and urgent
area of healthcare.
The US Food and Drug Administration
(FDA) currently has around 800
active gene and cell therapy-based
investigational new drugs on file and has
forecast another 200 applications each
year from 2020. It is a booming sector
bursting with potential.
1. Company estimates
Read more in the sector and technology overview on page 12.
40%
Increase in workforce
We are planning to create over 160 new highly
skilled positions at our facilities in Oxford in 2019
to meet the expected growth in demand for gene
and cell therapies.
£20m
Investment in new facility
Our new full-service site was funded through our
successful Placing in March 2018. This investment
will allow us to exploit the immediate market
opportunity and meet expected long-term demand.
Manufacturing facility
Our new manufacturing facility is approximately
84,000 sqft (7,800 sqm). The Phase 1 and Phase 2
expansion will fit out around 45,000 sqft (4,200 sqm)
for four GMP clean room suites and two fill and
finish suites as well as offices, warehousing and QC
laboratories, with space available for future expansion.
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12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2013
2014
2015
2016
2017
2018 2019
2020
Bioprocessing capacity through to 2020
We are planning to more than double our current
capacity for bioprocessing and GMP manufacturing
over the next 18 months.
25–30%
25–30%
$800m
2026
$200m
2017
Lentiviral vector bioprocessing market
expected to grow to $800 million by 2026 1
The global lentiviral vector bioprocessing market
is expected to grow rapidly over the next few years.
We are targeting 25% to 30% of this market (excluding
milestones and royalties).
1. Company estimates
Doubling our capacity
Oxford Biomedica is already working with
some of the biggest names in pharma,
helping them to progress and deliver gene
and cell therapies. We are experiencing
huge demand for our LentiVector
technology, process development and
manufacturing services. This important
revenue stream is running at full, or close
to full capacity.
We already have two independent
GMP approved manufacturing
facilities, together with state-of-the-art
laboratories with process development
and analytical cababilities. Our new
manufacturing facility, due to begin
operations in 2020, will more than double
our capacity enabling us to meet existing
contracts and take on new ones. In
addition, we have taken a lease on another
building which will become our discovery
and innovation facility.
Read more in the Chief Executive Officer's review on page 29.
A unique position
Oxford Biomedica has a wealth of
in-house expertise and know-how and
is in a unique position to provide partners
with a truly one-stop-shop-solution.
During 2019 we intend to increase our
workforce considerably with the creation
of another 160 highly skilled positions.
Read more in the Chief Executive Officer's review on page 29.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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We are ready
Gene and cell therapy is very much here and now
and we’re right at the heart of this healthcare
revolution, working on our own life-changing
products and those of our partners.
We’re ready to deliver the next wave of new
weapons for patients to fight back.
———
Well positioned
and in great shape
Summary copy to talk about:
• New era for personalised gene based medicine is now
here
• Ideally placed to seize on increased demand
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1
Introducing
Oxford Biomedica
11 Sector and technology
overview
12 Gene and cell therapy sector
13 LentiVector delivery platform
16 Products
19 Strategic report
20 Our business model
22 Operational highlights
23 Financial highlights
24 Chairman’s statement
26 Chief Executive Officer's review
30 Management team
32 2018 performance review
36 Delivery of our 2018 objectives
37 Objectives for 2019
Financial review
38
44 Corporate responsibility
51 Corporate governance
52
Principal risks, uncertainties
and risk management
59 The Board of Directors
62 Corporate governance report
69 Directors’ remuneration report
90 Directors’ report
96
Independent auditors’
report
103 Group financial statements
104
Consolidated statement
of comprehensive income
105 Balance sheets
106 Statements of cash flows
107
Statements of changes in
equity attributable to owners
of the parent
Notes to the consolidated
financial statements
108
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
145 Other matters
145
Glossary
148 Advisers and contact details
2
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Sector and technology overview
Gene and cell therapy sector
Sector and technology overview
LentiVector delivery platform
World-leading LentiVector gene delivery platform
Our LentiVector platform provides stable gene delivery
with very high efficiency. It achieves permanent
therapeutic benefit through gene integration and long-
term expression.
The LentiVector platform has particular advantages in
localised delivery to non-dividing cells, such as neurons
in the brain and retinal cells in the eye, as well as in
dividing cells where permanent modification is required.
We have data demonstrating more than seven years of
stable, dose-dependent gene expression in patients after
direct in vivo administration.
Several factors affect the choice of gene delivery system,
including target cell type, duration of gene expression
and payload capacity. Lentiviral vectors provide several
key features that make them well suited to a range of
gene and cell therapy applications:
— Significant payload capacity.
— Target specific cell types by pseudotyping of envelope.
— Permanent modification of dividing cells, such as
T-cells or stem cells.
— No pre-existing immunity.
— Long-term gene expression.
A global opportunity
The market for advanced therapy medicinal products
(ATMPs), and gene and cell therapies in particular,
is experiencing unprecedented growth.
Participation in merger and acquisitions (M&A) by the
large pharmaceutical companies, global partnerships
and product approvals have all propelled regenerative
medicines into public discourse. But it was 2018 that
delivered the true potential of this burgeoning sector
into the mainstream. This followed the approval of three
innovative gene and cell therapies in 2017. From our
partner, Novartis, Kymriah received initial approval for
acute lymphocytic leukaemia. It was the first and only
CAR-T cell therapy to be approved for two different
indications. Gilead followed suit after its acquisition of
Kite Pharma as Yescarta, indicated for Non-Hodgkin’s
lymphoma, became the second CAR-T cell therapy
to be approved. Spark Therapeutics’ gene therapy
Luxturna was approved in late 2017 for vision loss.
These landmark approvals marked a transition for the
field from experimental to commercial and they pave
the way for more advanced therapy approvals in the years
to come. The US Food and Drug Administration (FDA) is
preparing for the coming wave and expects that, by 2020,
it will see more than 200 applications a year requesting
permission to begin gene and cell therapy trials. It already
has more than 800 such applications in process and has
stated its intention to hire 50 clinical reviewers to handle
the upsurge. By 2025, the FDA predicts it may approve
10–20 new gene and cell therapy products a year.
Gene and cell therapies use viral vectors to deliver
genetic material into patients’ cells. The two most
common viral vectors used for this purpose are lentiviral
vectors such us our LentiVector platform, and adeno-
associated viral vectors, or AAV. Each has its own
applications however lentiviral vectors have become
increasingly attractive for clinical applications due to
their ability to efficiently and effectively introduce genetic
material into non-proliferating cells, and to carry larger
payloads so they can treat a wider range of diseases
and genetic disorders.
We estimate that the market for lentiviral vector
manufacturing was worth approximately $200 million
in 2017 and that it will grow at a 15.4 per cent. compound
annual growth rate from $158 million in 2015 to
$800 million by 2026.* As the only Group in the world
with a GMP-approved facility for commercial-scale
lentiviral vector manufacturing, Oxford Biomedica is
ideally positioned to take advantage of the expected
increase in demand.
*Source: Company estimates
Further information on the sector can be found
on the Group’s website at www.oxb.com.
A G R
5 . 4 % C
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900
800
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500
400
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200
100
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40
30
20
10
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1
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2015
2016
2017
2018
2019
2020 2021
2022
2023
2024
2025
2026
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Lentiviral vector bioprocessing market ($m)
Source: Company estimates
Number of lentiviral vector clinical trials initiated
by year and phase
Phase
• Phase I
• Phase I/II
• Phase II
• Phase II/III
• Phase III
Source: Journal of Gene Medicine, December 2018
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Continuous innovation
01. Analytics
Our analytics capabilities have been developed to support
production and supply processes which are essential for
satisfying international regulatory expectations.
02. Data analytics and artificial intelligence
We have collected unique data from our extensive process
development experience that enables us to use machine
learning to optimise our manufacturing process, further
increasing the performance of our platform.
03. Automation and robotics
Our significant investment in automation and robotics
has increased productivity while reducing development
timings and process risk.
04. Vector engineering
Our engineering principles ensure cost-effective
and timely delivery of pipeline products.
05. Packaging and producer cell lines
Our packaging and production cell lines enable a
simplified and scalable manufacturing process while
reducing costs.
06. 200L serum-free suspension culture
Our suspension process improves production yield and
efficiency while reducing cross-contamination risks with
less manual handling and single use systems. Our serum-
free medium is also a significant safety advantage.
07. TRiP System
The TRiP System offers a new standard in lentiviral
vector manufacturing and can be used in other viral
vector systems.
02.
01.
03.
Technology innovator
04.
®
07.
06.
05.
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Sector and technology overview
LentiVector delivery platform
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How our technology works for Parkinson’s disease
AXO-Lenti-PD gene therapy treatment for Parkinson’s
disease (an Axovant product)
03. Lentiviral vector generation
High quality lentiviral vector product is produced under
GMP conditions at large scale suitable for use in the clinic.
01. Therapeutic gene expression cassette
The therapeutic genes that need to be delivered to
the target cell to treat the disease are engineered into
the vector genome. In the case of AXO-Lenti-PD three
genes need to be delivered to the cells in the brain
region that is low in dopamine.
02. Making a safe vector from a virus
To make a safe vector system the viral genes are
removed; this also creates space for the therapeutic
vector payload.
04. AXO-Lenti-PD vector is administered
to the target tissue
Stereotactic surgery is used to deliver the vector product
to the target tissue. The vector enters the neuronal cells
and modifies them to create endogenous factories
making dopamine, the neurotransmitter lacking in
Parkinson’s disease.
How our technology works for cancer
Kymriah (CTL019) – a CAR T-cell therapy for cancer
(a Novartis product)
01. OXB produces GMP lentiviral vector encoding CAR
targeting CD19 which is expressed on B-cell cancers
02. T-cells isolated from patients
03. Lentiviral vector encoding CAR targeting CD19 used
to transduce expanded T-cells
T-cells harvested from a patient are transduced with the
lentiviral vector encoding the anti-CD19 chimeric antigen
receptor. The resulting CTL019 modified T-cells are
expanded ex vivo prior to infusion into the patient.
04. The modified T-cells are infused backinto the patient
05. Once inside the patient, the CTL019 cells multiply
and target, ’hunt’ cancer cells and destroy them
The CTL019 cells destroy tumour cells expressing CD19
and persist in the body to guard against residual or
recurring disease.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
03.01.04.02.01.02.03.04.05.
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Research/
pre-clinical
Phase I
Phase I/II
Phase II
Phase III
Approved
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Sector and technology overview
Products
Product pipeline
We are working on several internal product candidates and have interests in an expanding range of partner programmes.
Product/programme
Oxford Biomedica proprietary products
To be spun-out or out-licensed
OXB-202
Corneal graft rejection | Ophthalmology
OXB-302
Cancer multiple | Oncology
OXB-201
Wet age related macular degeneration | Ophthalmology
OXB-204
LCA10 | Ophthalmology
OXB-208
RP1 | Ophthalmology
OXB-103
ALS | Central Nervous System
Oxford Biomedica partnered products
Development milestones and royalties
SAR422459
Stargardt disease | Ophthalmology
SAR421869
Usher syndrome type 1B | Ophthalmology
AXO-Lenti-PD
Parkinson’s disease | Central Nervous System
Partners’ products
Process development and bioprocessing revenues, and royalties
CTL019
Cancer r/r ALL | Oncology
CTL019
Cancer r/r DLBCL | Oncology
Undisclosed CAR-T
Cancer | Oncology
OTL-101
Metabolic disorder | ADA severe combined immunoeficiency
OTL-201
Sanfilippo syndrome | Mucopolysaccharidosis type III
Other
Undisclosed
Factor VIII
Haemophilia A
Factor IX
Haemophilia B
CFTR gene
Cystic Fibrosis
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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1
Introducing
Oxford Biomedica
11 Sector and technology
overview
12 Gene and cell therapy sector
13 LentiVector delivery platform
16 Products
19 Strategic report
20 Our business model
22 Operational highlights
23 Financial highlights
24 Chairman’s statement
26 Chief Executive Officer's review
30 Management team
32 2018 performance review
36 Delivery of our 2018 objectives
37 Objectives for 2019
Financial review
38
44 Corporate responsibility
51 Corporate governance
52
Principal risks, uncertainties
and risk management
59 The Board of Directors
62 Corporate governance report
69 Directors’ remuneration report
90 Directors’ report
96
Independent auditors’
report
103 Group financial statements
104
Consolidated statement
of comprehensive income
105 Balance sheets
106 Statements of cash flows
107
Statements of changes in
equity attributable to owners
of the parent
Notes to the consolidated
financial statements
108
145 Other matters
145
Glossary
148 Advisers and contact details
Oxford Biomedica plc | Annual report and accounts 2018
0
2
Strategic report
Our business model
LentiVector platform
IP – patents and know-how | facilities | expertise | quality systems
Arising IP
Arising IP
R&D investment /
technical developments
Technology
and scientific
knowledge
transfer
Investment into
internal and external assets
up to early clinical stage
Platform
and process
development
Product
development
Partners’ programmes
OXB products
Royalties
Process
development
fees
Royalties
Spin out /out-licence
Upfront and
milestones
Bioprocessing
revenues
Process
development
incentives
Multiple
income
streams
Development
funding
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Our business model and strategy
During 2018 the Board reviewed the Group’s current
business model and strategy. It was decided that the
business model and strategy was still very relevant but
required minor modifications. The Group is now willing
to make modest investment into internal and external
assets up to early clinical stage before looking to spin
out or out-licence to a partner. This strategy has been
validated through the Axovant deal for OXB-102
(now AXO-Lenti-PD) for Parkinson’s disease entered
into in June 2018.
Our business model, built on our world-leading
LentiVector gene delivery platform is the result of over
20 years of pioneering science and process development
using lentiviral vectors, initially for in vivo therapies.
Oxford Biomedica was the first organisation globally
to use lentiviral vectors in an in vivo setting and
therefore we had to design and develop vectors and
manufacturing processes which would be both safe
and effective. This work was the foundation of our
unique combination of skills, patents and know-how
which, together with our GMP clean room and
laboratory facilities, combine to form our
LentiVector gene delivery platform.
Lentiviral vectors are key components of many
promising new gene and cell therapies, and so our
LentiVector-Enabled platform provides us with
opportunities to generate short- and longer-term
value through:
In-house development
We have our own portfolio of LentiVector-Enabled
platform gene and cell therapy product candidates.
We decided that later stage clinical studies of these
candidates will be developed with third party finance,
using either out-licensing or by spinning out the
programmes into one or more special purpose vehicles
(SPVs). This will significantly reduce the cost and risk
associated with clinical development, while providing us
with potential equity stakes in the SPVs, and/or potential
upfront, milestone and royalty payments, as well as
bioprocessing and process development revenues.
We will modestly invest in internal and external assets
up to early stage clinical development, with a view to
building a pipeline of candidates ready for clinical studies.
Partnering
We can provide our bioprocessing and process
development expertise and facilities to third parties
who want to accelerate the development of their own
lentiviral vector programmes. In return for which, we
receive short and medium term revenues, and longer
term royalties based on licences to our extensive
know-how and patents.
Freedom-to-operate licensing
We can provide other organisations with licences
to use our important patents relating to lentiviral vector
safety features and manufacturing efficiencies.
The graphic opposite illustrates our business model.
The foundation is our world-leading LentiVector
platform, and our goal is to exploit this by gaining
interests in a diverse range of gene and cell therapy
products which can be both internally generated
and as a result of our relationship with partners
and collaborators.
The platform technology is still some way from being
fully mature so we are continuing to invest R&D funds
in improving the technology to retain our leading
position, as this is what attracts other companies
to work with us.
Principal risks facing the business
The principal risks facing the business, including how
they are managed and mitigated, are set out in detail
on pages 52 to 58. The main risks are:
— Risks associated with pharmaceutical product
development including product safety issues, lack
of efficacy, and failure to obtain regulatory approval.
— Risks to our bioprocessing revenue from failure to
manufacture lentiviral vector to the required standard.
— Exposure to one or more of our partners ceasing
to develop their products and thereby no longer
requiring our services.
— Failure to comply with the terms of the Oaktree
loan facility.
— Failure to out-licence or spin-out the Group’s
priority product development candidates
so that development stops.
— Inability to attract and/or retain highly skilled employees.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Delivered in 2018
Operational highlights
Delivered in 2018
Financial highlights
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Novartis’ commercialised product Kymriah
— Kymriah approved by the US Food and Drug Administration for the treatment
of relapsed and refractory B-cell diffuse large B-cell lymphoma (r/r DLBCL),
the second indication in the US.
— The European Commission, Health Canada and the Therapeutic Goods
Administration of Australia also approved Kymriah for the treatment of children
and young adults with r/r B-cell acute lymphoblastic leukaemia (r/r ALL) and adult
patients with r/r/ DLBCL.
— NHS England announced that Kymriah will be made available to children and young
adults in England and the first patients have now been treated.
LentiVector delivery platform for gene and cell therapy partnerships
— $105 million collaboration and licence agreement signed with Bioverativ
(now part of Sanofi) to access Oxford Biomedica’s LentiVector platform
and manufacturing technologies in the field of haemophilia.
— Partnership formed with the UK Cystic Fibrosis Gene Therapy Consortium,
Boehringer Ingelheim and Imperial Innovations to develop a novel inhaled
gene therapy for cystic fibrosis.
Proprietary product development
— $842.5 million exclusive worldwide agreement signed with Axovant Sciences
(now Axovant Gene Therapies) for OXB-102 (now known as AXO-Lenti-PD)
for the treatment of Parkinson’s disease.
— Phase 1/2 clinical study for AXO-Lenti-PD began and patients from the first dose
cohort have been treated. Based on initial feedback from members of the DMC,
received in March 2019, Axovant plans to proceed to the second dose cohort.
— Three proprietary OXB assets selected to advance from research through pre-clinical
development: OXB-204 and OXB-208 target inherited retinal diseases, while
OXB-201 is in development for the treatment of amyotrophic lateral sclerosis (ALS).
Capacity building
— Signed a fifteen year lease on a new 84,000 sqft (7,800 sqm) manufacturing facility
in Oxford, close to Oxford Biomedica’s Windrush Court headquarters. Offices and
warehousing are now in operation, with the additional GMP suites expected to be
operational in 2020.
— Signed a further lease on an additional 32,000 sqft (2,975 sqm) discovery
and innovation facility next to Windrush Court. The facility will bring together
a multidisciplinary team of researchers, automation, bioprocessing and process
development experts to drive innovations that will lead to new scientific and
technical advances to support our pipeline and our platform.
— Formed a £4 million digital framework initiative, supported by a £2 million grant
from Innovate UK, the UK’s innovation agency, to build digital and robotics
capabilities designed to drive improvements in analytical methodology, supply
times and cost of goods. Announced and R&D collaboration with Microsoft in
March 2019 to support the initiative.
+72%
+78%
£10.8m
Gross income 1
Gross income increased by 72% to £67.9 million
(2017: £39.4 million).
Revenue
Revenue increased by 78% from £37.6 million
to £66.8 million.
Capital expenditure
Capital expenditure £10.8 million
(2017: £2.0 million).
+38%
+28%
£18.3m
Adjusted operating expenses 2
Adjusted operating expenses increased by
38% to £31.7 million (2017: £22.9 million).
Operating expenses
Operating expenses increased by 28% from
£28.9 million to £37.1 million.
License income
£18.3 million worth of income received from
the Axovant and Bioverativ deals.
£13.4m
£32.2m
£13.9m
Operating EBITDA 3 profit
Operating EBITDA loss converted into a profit
of £13.4 million (2017: £1.9 million loss).
Cash
Cash of £32.2 million
(31 December 2017: £14.3 million).
Operating profit
Operating loss converted into a profit
of £13.9 million (2017: £5.7 million loss).
£2.8m
£20.5m
£6.0m
Cash inflow
Cash inflow before financing activities increased
by £1.8 million to £2.8 million (2017: £1.0 million).
Equity placing in March 2018
Successful £20.5 million equity placing
to fund further expansion of bioprocessing
capacity.
Revaluation
£6.0 million (2017: £2.3 million) gain
recognised on revaluation of our investment
in Orchard Therapeutics.
2013
2014
2015
2016
2017
2018
2013
2014
2015
2016
2017
2018
5
0
–5
–10
–15
–20
–25
–30
15
10
5
0
–5
–10
–15
–20
Cash outflow before financing activities
£m
Operating EBITDA
£m
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
Key financial indicator definitions (non-GAAP Alternative Performance Measures)
1.
Gross Income is the aggregate of revenue (£66.8 million) and other operating income (£1.1 million)
(2017: £37.6 million and £1.8 million respectively). A reconciliation to GAAP measures is provided on page 40.
Adjusted operating expenses is Research, Development and Bioprocessing costs plus Administrative costs less Depreciation,
Amortisation and share based payments. A reconciliation to GAAP measures is provided on page 40.
Operating EBITDA is Earnings Before Interest, is Tax, Depreciation, Amortisation, revaluation of investments and share based payment.
A reconciliation to GAAP measures is provided on page 40.
2.
3.
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Chairman’s statement
It has been a year of transformation for
Oxford Biomedica, not only with significant revenue
growth and cash flow generation but also in reaching
profitability. These great strides made in 2018 are
testament to Oxford Biomedica’s leading position
in the innovation, development and manufacturing
of lentiviral vectors, and the expertise of its people.
Strategic opportunities
Our mission is to deliver life-changing gene and cell
therapies to patients. It encompasses our strategy to support
our partners in the development and commercialisation of
their own gene and cell therapy programmes with our
world-leading manufacturing capabilities while in addition
pursuing a selective gene and cell therapy portfolio internally
through early clinical development.
Our recent successes demonstrate that we have a
strategy and business model that works. As is the nature
of gene therapy development, reproducibility of results in
late-stage trials is high and therefore much value can be
created in early clinical studies. It is for this reason that we
continue to explore the potential of our product pipeline
in a focused and disciplined way.
Moving forward into 2019 and beyond, we see further
significant opportunities both to advance the development
of our in-house programmes, where we have particular
expertise, and to create future out-licensing opportunities
similar to our recent landmark deal with Axovant. In addition,
our strategy to seek to retain manufacturing rights for our
out-licensed programmes provides potential, additional
long-term economic interest through their development
and commercialisation.
" The gene and cell therapy market is
rapidly transforming into a multi-billion
dollar opportunity and the Group’s
strategy is delivering significant
shareholder value – we expect
this to continue."
Dr. Lorenzo Tallarigo
Chairman
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Driving innovation
We’ve spent the past 20 years honing our manufacturing
expertise and capabilities. To date, Oxford Biomedica is the
only FDA-approved commercial supplier of lentiviral
vectors. While we’re immensely proud of this accreditation,
we are not resting on our laurels. We strive to achieve
continuous improvement in our manufacturing processes,
a core group objective that aligns with one of our three
values to ’deliver innovation’.
To meet the expected long-term demand and
futureproof Oxford Biomedica’s market leading position,
we are more than doubling our manufacturing capacity
with the development of new state-of-the-art clean
rooms and fill/finish suites on a new site close to our
headquarters in Oxford. Construction of the new facilities
is progressing to plan and we expect to be operational
from the second quarter of 2020.
By applying our expertise and continuing to innovate in
lentiviral vector production, we believe we are well placed
to take advantage of the expected growth in demand.
Board
We have continued to benefit from a changing Board
profile, with the appointment of Heather Preston as a
Non-Executive Director in March 2018. Peter Nolan has
formally retired from his role as Chief Business Officer,
having made a significant contribution to the business
since its inception in 1996. With these developments,
the Board is now composed of five Non-Executive
and two Executive Directors.
Organisation and culture
On behalf of the Board I would like to take this opportunity
to recognise all of our fantastic employees at Oxford
Biomedica who have helped to get the Group to where
it is today. Within the business we have a highly engaged
workforce with a diverse range of capabilities, knowledge
and experience. We are very grateful to our people for
their continued commitment and excellent contributions
during the past year. Our culture and values will continue
to drive performance and help attract and retain the best
talent, and we are committed to their development
to ensure we have the necessary skills that we need
to succeed on our growth journey.
The global environment
We find combined economic and political challenges
around the world, including questions about international
trade and future partnerships between countries. Oxford
Biomedica is experienced at adapting to change, now a
constant in the environment in which we are living. We
continue to prepare for all scenarios around the UK’s exit
from the European Union this year and are well prepared
for all expected eventualities. We look forward to an
agreement on the final exit terms that will provide stability
for our workforce and our business operations.
Despite this uncertainty, it is nevertheless an exciting time
to be at the forefront of gene and cell therapy. After three
decades of hope tempered by setbacks, it is now a
therapeutic reality. In the past 18 months, three gene
therapy products – including Novartis’ Kymriah for
which Oxford Biomedica is the sole lentiviral vector
manufacturer - have been made available to patients
and along with them we’ve seen a raft of new investment
and clinical development activity in the sector. Oxford
Biomedica has been a beneficiary of this investment
activity; we are grateful for the support of our
shareholders as well as that of the UK Government
through its Life Sciences sector deal, to ensure pioneering
new treatments and medical technologies are produced
in the UK.
The future
The excitement and momentum in the cell and gene
therapy space continues to build.
Oxford Biomedica is fortunate with its scientific excellence
and world-leading position to be ideally placed to take
advantage of this burgeoning industry. I look forward
to the future with much confidence and optimism.
Dr. Lorenzo Tallarigo
Chairman
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
6 Strategic report
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Chief Executive Officer's review
" The Group has played a crucial role
in enabling revolutionary gene and cell
therapies to become a reality. As a world
leader in this space, Oxford Biomedica
is now in a strong position to deliver value
to both patients and shareholders."
John Dawson
Chief Executive Officer
It is with great pleasure that I am introducing Oxford
Biomedica’s 2018 Annual report. In the past year we
have witnessed a transformation of the gene and cell
therapy industry in which life-changing, curative
treatment has become a therapeutic reality for many
patients – and where Oxford Biomedica has played
a central role.
Against this backdrop, I am delighted to report on
the successful delivery of our partnering and in-house
development strategy, leveraging our lentiviral vector
platform. With Oxford Biomedica’s strengthened financial
position, I am now able to plan for the future with
confidence to maximise the opportunity we see ahead.
As we stand today, the opportunities to create value from
our business model are many, however, I am cognisant
that our greatest challenge is to ensure that we maintain
our leading position and respond effectively to sector
developments while keeping a clear focus on our
strategic imperatives. That is why, for 2019, I have set
out six company objectives to help drive performance.
These objectives are focused on financial performance,
manufacturing and the platform, technology innovation,
the therapeutic pipeline, operational delivery and
workforce development. They will ensure that our people
remain focused on our strategy and will help us to
manage our growth in a sustainable way to deliver
long-term benefits for our shareholders.
2018 Performance
I am pleased to report a strong financial performance
and positive cash generation in 2018 following significant
commercial and operational achievements. Gross income1
of £67.9 million increased by 72 percent in the year driven
by £18.3 million in licence income, largely from the
Axovant (now Axovant Gene Therapies) and Bioverativ
(now Sanofi) deals, and by increased development services
provided to our customers. Positive cash flow before
financing was £2.8 million, an improvement of £1.8 million
on the previous year, reflecting the significantly improved
trading performance. We ended the year with cash of
£32.2 million reflecting our stronger financial position and
a placing which raised £20.5 million (gross) in March 2018.
1. Reconciliation to GAAP measure provided on page 40.
Oxford Biomedica playing a central role
In the past year we have witnessed a transformation
of the gene and cell therapy industry in which
life-changing, curative treatment has become
a therapeutic reality for many patients – and
where Oxford Biomedica has played a central role.
$842.5m
OXB-102 for Parkinson’s disease
Our landmark agreement with Axovant, worth up to
$842.5 million for OXB-102, our internally developed
gene therapy for Parkinson’s disease.
$105m
Bioverativ (Sanofi) collaboration and licence
agreement
Our $105 million collaboration and licence agreement
with Bioverativ (Sanofi) for the development and
manufacturing of lentiviral vectors to treat haemophilia
continues to advance under its new ownership as part
of the Sanofi team.
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Delivering the strategy
Partnering
We continue to support Novartis though its submissions,
launches and commercialisation of Kymriah
(tisagenlecleucel) in the US, EU, Canada, Australia and
other territories, which are ongoing. Kymriah is a ground-
breaking one-time chimeric antigen receptor T cell
(CAR-T) therapy that uses a patient’s own T cells to
fight cancer. It represents the first ever approval of a
commercial product incorporating Oxford Biomedica’s
LentiVector platform.
Our landmark agreement with Axovant, worth up to
$842.5 million for OXB-102, our internally developed gene
therapy for Parkinson’s disease, is evidence of our strategy
in action. If successful, it has the potential to generate
significant revenues, both now and longer term, not only
due to development, regulatory and sales milestones but
also from tiered royalties on net sales of 7-10 per cent.
OXB-102, renamed AXO-Lenti-PD, is an investigational
gene therapy that enables the expression of a set of three
critical enzymes required for end-to-end dopamine
synthesis in the brain. It is expected to provide patient
benefit for many years following a single administration,
should it be successful. Axovant commenced a Phase 1/2
clinical study in October 2018, with the first patients having
now been dosed and initial data expected in 2019.
Our $105 million collaboration and licence agreement
with Bioverativ (Sanofi) for the development and
manufacturing of lentiviral vectors to treat haemophilia
continues to advance under its new ownership as part
of the Sanofi team. We were encouraged by recent
comments from Sanofi that gene therapies with the
potential to cure life-threatening conditions are a key
area and one in which the company is seeking to expand.
We are ready to support the new partner for our
previously-licensed ophthalmology programmes,
SAR422459 for Stargardt disease and SAR421869
for Usher’s Syndrome type 1b, following Sanofi’s
recent portfolio review.
In our third partnership agreement of the year, we
established a collaboration with the UK Cystic Fibrosis
Gene Therapy Consortium, Boehringer Ingelheim and
Imperial Innovations to develop a novel inhaled gene
therapy for cystic fibrosis. The agreement demonstrates
the versatility of our LentiVector platform and represents
a new therapeutic area for Oxford Biomedica.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Looking to the future
It is a privilege to lead this fantastic company through
a new era for personalised, gene-based medicine.
Given the momentum we are seeing, both within
Oxford Biomedica and in the gene and cell industry
as a whole, I am confident in our ability to deliver
increased revenue growth through our partnering
endeavours, and to create value from our therapeutic
pipeline to deliver meaningful returns to shareholders.
I would like to say thank you to each and every one of
our employees for their contributions to our performance
in 2018, and for helping Oxford Biomedica to become
the company it is today. I look forward to their continued
contributions in 2019 and beyond to achieve our
objectives and deliver our strategy.
John Dawson
Chief Executive Officer
8 Strategic report
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Chief Executive Officer's review
In-house development
We continue to invest in the development of a proprietary
pipeline of innovative gene therapies to treat diseases
with unmet medical needs, for future out-licensing or
spin-out. Following a modest investment in the early
development of OXB-102 for Parkinson’s disease and its
subsequent out-licensing to Axovant, we have selected
three additional proprietary assets to advance from
research through pre-clinical development.
OXB-204 and OXB-208 target inherited retinal diseases,
where we have extensive experience from our early focus
on ophthalmology indications. OXB-103 is in development
for the treatment of amyotrophic lateral sclerosis (ALS),
a group of rare, progressive neurological diseases. Our
priority in 2019 is to secure preclinical proof of concept
for two programmes from our proprietary portfolio.
Technology licensing
Our business is underpinned by our world-leading
lentiviral vector technology and technology licensing
is core to our business model. While our priority is to
incorporate technology licences into our broader
partnering agreements, we continue to seek additional
opportunities to generate licensing income and royalties
on future products sales by providing access to our
proprietary lentiviral vector technologies, as our
platform develops.
To this end, we continue to innovate, refine and enhance
our technology as part of our continuous improvement
programme. Our new manufacturing technology, known
as Transgene Repression in vector Production or TRiP,
is designed to increase viral vector yields by several
multiples. Universally applicable to any viral vector
or vaccine platform – it can be used with lentiviral,
adenoviral and adeno-associated virus-based gene
therapy – TRiP is an example of how we are innovating
to stay ahead of the market and satisfy the demand for
efficient, cost-effective gene delivery with viral vectors.
Methods for the new system were published in
Cell & Gene Therapy Insights in January 2019 and
discussions with potential licensees are ongoing.
Our focus for 2019 is to drive the discovery of two
new innovative technologies that either open up new
product opportunities or support the development of
our lentiviral vector platform.
1.
2.
1. Innovators
We continue to innovate, refine and enhance our
technology as part of our continuous improvement
programme. Our new manufacturing technology,
known as Transgene Repression in vector Production
or TRiP, is designed to increase viral vector yields by
several multiples.
2. A global centre of excellence
From our roots in Oxford University, Oxford Biomedica
now occupies five facilities around Oxford covering
around 226,000 sqft, securing the city as a global
centre for lentiviral vector development and
commercialisation.
Building capacity
To meet the expected growth in demand for lentiviral
vectors, we are investing £20 million in the development
of a new 84,000 sqft (7,800 sqm) manufacturing facility.
The planned Phase 1 and 2 expansions will fit out around
45,000 sqft (4,200 sqm) for four GMP clean room suites
and two fill/finish suites as well as offices, warehousing
and QC laboratories, with space available for future
expansion. The new facility will create up to 100 new,
highly skilled positions the company over the next two
years and is on track for operation in 2020.
Aligned to our values and to further accommodate our
growth, we have taken a lease on a fifth facility in Oxford
and formed a new discovery and innovation facility.
The centre will bring together a multidisciplinary team
of research, automation, bioprocessing and process
development specialists around a shared purpose: to drive
innovations that will lead to new scientific and technical
advances to support our pipeline and our platform. The
building is located next to our headquarters and is split
roughly equally between laboratories and offices.
Development of the space is ongoing and it is expected
to be ready for occupation in the first half of 2019.
From our roots in Oxford University, Oxford Biomedica
now occupies five facilities around Oxford covering
around 226,000 sqft, securing the city as a global centre
for lentiviral vector development and commercialisation.
Creating a winning culture
Our success as a company is made possible by our
talented employees working together for our shared
mission: to deliver life-changing gene and cell therapies
to patients. That is why being a great place to work is so
important to us.
During the year, we experienced growth of 35 per cent in
our workforce from 321 to 432 employees, and expect that
number to increase to 600 by the end of 2019 To support
their development and a foster a positive culture, we
introduced three company values: to Have Integrity,
Be Inspiring and Deliver Innovation. Together with our
mission, these values define our purpose and shape the
way our people work together. We have already seen some
excellent examples of employees demonstrating these
values and during 2019 we will seek to further embed
them as they are integrated into our new performance
management process.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Management team
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1. John Dawson
2. Stuart Paynter
3. Jason Slingsby
4. Lisa Giles
Chief Executive Officer
John Dawson joined Oxford
Biomedica’s Board as Non-Executive
Director in August 2008 and he was
appointed Chief Executive Officer in
October 2008. Previously, he held
senior management positions in the
European operations of Cephalon
Inc., including Chief Financial Officer
and Head of Business Development
Europe. While at Cephalon he led
many deals building the European
business to over 1,000 people, and
to a turnover of several hundred
million US dollars and in 2005 led the
US$360 million acquisition of Zeneus
by Cephalon. Prior to this time at
Cephalon he was Director of Finance
and Administration of Serono
Laboratories (UK) Limited. He is
currently a Non-Executive Director
of Paion AG.
Chief Financial Officer
Stuart Paynter joined Oxford
Biomedica and the Board in August
2017. He has 16 years’ experience in
the pharmaceutical and healthcare
sectors. He qualified as a chartered
accountant with Haines Watts before
moving to EDS. He subsequently
joined Steris, and worked in a variety
of roles within the healthcare and life
sciences divisions prior to becoming
the European Finance Director. He
then moved to Shire Pharmaceuticals
where he became the Senior Director
of finance business partnering for all
business outside of the US. He then
moved to a corporate finance role
before becoming the global head of
internal audit. Prior to joining Oxford
Biomedica he was head of finance
business partnering at De La Rue plc.
He is a member of the Institute of
Chartered Accountants in England
and Wales.
Chief Business Officer
Jason joined Oxford Biomedica
in 2015 as Head of Business
Development and was promoted to
Chief Business Officer in May 2018.
He has 20 years’ experience in the
biotechnology industry in biologics,
vaccines and gene therapy. He has
worked in international business
development roles at Sosei Co., Ltd.
and Intercell AG and was co-founder
and CEO of ProtAffin AG, a venture
capital backed company in Austria
and UK. Jason started his career as
a post-doctoral scientist at Oxford
Biomedica and first worked at the
company 1997-2000. He was
awarded a 1st class BA (Hons)
in Biochemistry from Magdalen
College, Oxford University and also
completed a PhD in complex disease
genetics from Imperial College
London. Jason was also awarded an
MBA with distinction from London
Business School in 2002.
Chief Projects and Performance
Officer
Lisa joined Oxford Biomedica in March
2018. She has over 25 years’ experience
in the pharmaceutical industry. She
joined Shire Pharmaceuticals initially
in product strategy and lifecycle
management expanding this over
10 years to setting up the Alliance
Management and Corporate Project
Management functions, moving to
Business Partner to Head of
International Commercial before
returning to head up the Product
Strategy and Lifecycle Function. She
brings with her a deep knowledge of
product development from discovery
at the lab bench to development,
commercial and manufacturing
supporting lifesaving treatments to the
patient. She holds a BSc (Hons) degree
in Microbiology and Virology from
University of Warwick.
5. James Miskin
6. Kyriacos Mitrophanous
7. Nick Page
8. Helen Stephenson-Ellis
Chief Technical Officer
Dr Miskin joined Oxford Biomedica
in 2000. He has more than 18 years’
experience in gene and cell therapy,
14 of which have been in the GxP
(good practice) environment. In his
current role, he has overall
responsibility for Oxford Biomedica’s
Quality systems, analytical testing and
lentiviral based bioprocessing
development, as well as client
programmes and alliance
management. He is also a named
inventor on several patents in the field.
He holds a Bachelor of Science degree
and a PhD in Molecular Biology from
the University of Leeds and
subsequently conducted post-doctoral
research at The Pirbright Institute for
a number of years. He is a member
of the UK BioIndustry Association
Manufacturing Advisory Committee
and the Advanced Therapies section
of The Medicines Manufacturing
Industry Partnership (MMIP).
Chief Scientific Officer
Dr Mitrophanous joined Oxford
Biomedica in 1997. He has over 20
years of lentiviral vector experience
covering a range of technical
disciplines, including the development
of gene and cell therapies, delivery
platform technologies, bioprocessing
and analytics. He is a recognised
world-class expert in the field, a
named inventor on numerous lentiviral
vector patents and an author of a
number of key papers. In his current
role, he is responsible for the
development of Oxford Biomedica’s
new product candidates and
LentiVector platform. He holds a PhD
in Molecular Biology from University
College London and has conducted
post-doctoral research at the
University of Oxford. He is a Corporate
Member of the UK BioIndustry
Association Board.
Chief Operations Officer
Nick joined Oxford Biomedica in
April 2018. Prior to joining he has
held a number of senior operational
leadership positions in the
pharmaceutical industry, most recently
as Platform Head of Anti-infectives
within Novartis. His 40+ years of
industry experience include API,
Solid oral dose, Sterile, and
Radiopharmaceutical manufacturing
in various organisations encompassing
innovative, generic and contract
manufacturing. During his career
he has spent several years working
in China and India as well as in Global
roles. He originally qualified as a
Chartered Chemist and also has
an MBA from The Open University.
Chief People Officer
Helen joined Oxford Biomedica
in April 2018. She brings 25 years’
experience in senior Human Resources
roles within the Biopharmaceutical
sector, including a number of years
in various HR Business Partnering roles
in GSK, Merck and Astra Zeneca.
Following AstraZeneca’s acquisition of
MedImmune, she moved to Cambridge
UK to head up HR for MedImmune’s
site there, followed by a period as
Global HR Director within AstraZeneca.
Prior to joining Oxford Biomedica, she
was Group Human Resources Director
for Vernalis plc, leading HR across
Vernalis’ UK and US sites. She holds a
BA (Hons) degree from Northumbria
University in the UK and is a member of
the Chartered Institute of Personnel and
Development.
Oxford Biomedica plc | Annual report and accounts 2018
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1.
3.
5.
7.
2.
4.
6.
8.
Full biographies for the Board of
Directors can be found on pages
60 to 61.
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™
1. Automation and robotics
We have invested significantly in automation
and robotics to increase productivity and reduce
development timelines.
2. TRiP System
We have developed the TRiP System to maximise
vector yields and particle purity, and standardise
downstream process.
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2018 performance review
Novartis collaboration progress
Oxford Biomedica’s collaboration with Novartis has
progressed well following the US approval and launch
in 2017 of the chimeric antigen receptor T cell therapy
Kymriah (tisagenlecleucel) for the treatment of children
and young adults with r/r ALL.
The supplemental BLA to treat adult patients with
r/r DLBCL was approved by the US FDA in May 2018.
The target patient population for this second indication
is considerably larger than the initial ALL indication.
Additional regulatory approvals for both indications were
received from the European Commission, Health Canada
and the Therapeutic Goods Administration of Australia. In
September 2018, NHS England announced that children
and young adults in England would be able to receive
Kymriah for r/r ALL, and the first patients have now been
treated. Regulatory review is underway in Japan and the
outcome is awaited.
Partnering progress
The Group is making good progress with its strategic
partnerships, with Orchard Therapeutics adopting the
stable producer cell lines in one of their programmes.
The Group continued its activities to further grow its
portfolio of strategic collaborations with the addition of
Bioverativ (now part of Sanofi) and the UK Cystic Fibrosis
Gene Therapy Consortium, Boehringer Ingelheim and
Imperial Innovations partnership.
Product development
The LentiVector gene delivery platform underpins
the Group’s partnering business and is the starting
point for its proprietary products.
During the period, the Group continued to prepare
the priority programmes for clinical studies and
to pursue potential new partnership arrangements.
In June 2018, the Group entered into an exclusive
worldwide licensing agreement with Axovant Sciences
(now Axovant Gene Therapies) to develop and
commercialise OXB-102 (now renamed as
AXO-Lenti-PD) for Parkinson’s disease, worth up
to $842.5 million. This agreement with Axovant
successfully executes on Oxford Biomedica’s
pre-stated strategy to externalise product development
beyond the end of the pre-clinical phase.
1.
2.
1. Novartis collaboration
The US FDA approval to use the Novartis Kymriah
treatment in adults followed the earlier approval for
children and young adults in 2017 as expected. The
target patient population for this second indication
is considerably larger than the initial ALL indication.
2. New strategic collaborations
During the year we added strategic collaborations
with the addition of Bioverativ (now part of Sanofi)
and the UK Cystic Fibrosis Gene Therapy Consortium,
Boehringer Ingelheim and Imperial Innovations
partnership.
During the second half of 2018 the Group completed
the regulatory filings for the planned Phase 1/2 study, the
manufacture of a second batch of the vector to ensure
sufficient supplies for the study and to prepare the clinical
study centres in Cambridge and London, UK for initiation
of the study. The Phase 1/2 study for AXO-Lenti-PD,
sponsored by Axovant, is now underway and the first
patients have been treated.
Following the out-licensing of the Parkinson’s disease
programme, three additional proprietary assets have been
selected to advance from research through pre-clinical
development. OXB-204 and OXB-208 target inherited
retinal diseases, where Oxford Biomedica has extensive
experience from its early focus on ophthalmology
indications. OXB-103 is in development for the treatment
of amyotrophic lateral sclerosis (ALS), a group of rare,
progressive neurological diseases.
LentiVector platform development
Over a number of years we’ve developed and licensed
technologies and processes to significantly improve
the production of gene therapy products into scalable,
serum-free suspension processes. These technical
developments enhance potency, purity, yield and
efficiency. We have invested significantly in automation
and robotics to increase productivity and reduce
development timelines.
We have developed the TRiP System to maximise vector
yields and particle purity, and standardise downstream
process. The TRiP System substantially limits expression
of the transgene in the vector production cell that
otherwise may have detrimental effects on vector
biogenesis, function or purification. Methods for the
new system were published in Cell & Gene Therapy
Insights in January 2019 and discussions with potential
licensees are ongoing.
We have generated packaging and producer cell lines
enabling a simplified and scalable manufacturing process
while reducing cost. These advances enhance product
quality and reduce the cost of goods for our partners and
in-house development programmes.
These developments continue to enhance our partner
offering and provide additional revenue-generating
opportunities.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Strategic report
2018 performance review
Building capacity
Oxford Biomedica is a pioneer and world leader in the
field of gene and cell therapy, underpinned by its lentiviral
vector delivery system, the LentiVector platform. The
technology is established at commercial scale with three
state-of-the-art, custom-built GMP clean rooms and
laboratory facilities offering current and next generation
LentiVector platform bioprocessing capabilities, with
capacity for in-house platform development work and
current partners’ requirements. To support the expected
growth in demand for lentiviral vectors, the Group
is expanding its manufacturing capacity.
In September 2018, a lease was signed on a new,
84,000 sqft (7,800 sqm) facility near to Oxford Biomedica’s
headquarters in Oxford, UK. The planned Phase 1 and
Phase 2 expansion will fit out around 45,000 sqft
(4,200 sqm) for four GMP clean room suites and two
fill/finish suites as well as offices, warehousing and QC
laboratories, with space available for future expansion.
The capacity expansion secures Oxford as a bioprocessing
centre for Oxford Biomedica and will create up to 100
new, highly skilled jobs over the next two years. Funded
through the successful Placing in March 2018, it will allow
Oxford Biomedica to exploit the immediate market
opportunity, meet the expected long-term demand and
futureproof the Group’s market leading position.
Aligned to the Group’s values, which include delivering
innovation, and to further accommodate growth, a lease
was signed on a fifth facility in Oxford. The facility will
bring together a multidisciplinary team of research,
automation, bioprocessing and process development
specialists around a shared purpose: to drive innovations
that will lead to new scientific and technical advances to
support our pipeline and our platform. The building is
located next to Oxford Biomedica’s headquarters and is
split roughly equally between laboratories and offices.
Development of the space is ongoing and expected
to be ready for occupation in the first half of 2019.
Oxford Biomedica now occupies five facilities around
Oxford covering around 226,000 sqft, securing the
city as a global centre for lentiviral vector development
and commercialisation.
An established technology platform
Our LentiVector technology is established at
commercial scale with three state-of-the-art,
custom-built GMP clean rooms and laboratory
facilities offering current and next generation
LentiVector platform bioprocessing capabilities,
with capacity for in-house platform development
work and current partners’ requirements.
84,000 ft2
New facility
In September 2018, a lease was signed
on a new, 84,000 sqft (7,800 sqm) facility near to
Oxford Biomedica’s headquarters in Oxford, UK.
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1.
2.
3.
1. Next generation bioprocessing
We successfully completed a share capital
consolidation in May 2018 to make the shares more
attractive to a broader range of institutional investors
and other members of the investing public both
overseas and in the UK.
2. Business development
With the ongoing success of its Novartis collaboration
validating our LentiVector platform and partnering
credentials, we expect our technology leadership
to boost our business development activities.
3. UK Government awards us two grants
In 2018 we benefitted from the award of two grants by
the UK Government’s innovation agency, Innovate UK,
totalling £5 million.
Corporate and organisational development
During the first half of 2018, Oxford Biomedica
successfully completed a £20.5 million equity fundraising
for capacity expansion and fit out. In addition, the Group
successfully completed a share capital consolidation in
May 2018 to make the shares more attractive to a broader
range of institutional investors and other members of the
investing public both overseas and in the UK.
To support the increased activities of the Group,
the Senior Management Team was augmented during
the first half of 2018, with the appointment of a Chief
Operations Officer, a Chief People Officer and a Chief
Project & Performance Officer.
Peter Nolan retired from his role as Chief Business Officer
and stepped down from the Board on 2 July 2018.
During the year, Oxford Biomedica benefitted from the
award of two grants by the UK Government’s innovation
agency, Innovate UK. To support the Group’s investment
in lentiviral vector development, £3 million was awarded
for manufacturing, storage and analytical equipment,
as well as other items that are essential for the operation
of vector GMP facilities. A further £2 million was awarded
as part of a total investment of £4 million by Oxford
Biomedica to support the formation of a digital
framework initiative to streamline the production of
next-generation medicines. The aims of both projects are
aligned with the UK Government’s Life Sciences Sector
Deal to help ensure that the next wave of breakthrough
treatments, innovative medical research and technologies,
and high skilled jobs are created in Britain.
Outlook
Oxford Biomedica has made considerable progress
in 2018. With the ongoing success of its Novartis
collaboration validating its LentiVector platform and
partnering credentials, the Group expects its technology
leadership to boost its business development activities.
The Group intends to expand its portfolio of collaborations,
and to attract third-party investment to accelerate the
clinical development of its wholly-owned proprietary
products.
Oxford Biomedica’s progress during 2018 demonstrates its
leading industry position. With the Group’s collaborations
supporting its continued growth, Oxford Biomedica
is ideally positioned to deliver value to shareholders
as a world-leading gene and cell therapy business.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Strategic report
Delivery of our 2018 objectives
Strategic report
Objectives for 2019
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2018 objectives
Objective 1
Support partner portfolio advancement
Targets for 2018 included supporting our partners
in order to gain approval and launch key products
in both the US and EU, support the progress
of programmes into the clinic and also deliver
on our commitments to partners.
Objective 2
Progress action on implementing strategy for products
Our goals for 2018 included achieving the successful
progression of key programmes against plan, to deliver
new pre-clinical products to the Group, and also,
as previously announced, to reduce the financial risk
of clinical stage product development (while retaining
significant financial interest) by partnering or spin-out
of OXB-102 and the ocular programmes.
Objective 3
Business development
In 2018 we intended to secure further revenue and
royalty generating partnership relationships, and to
build further on those we already had.
Objective 4
Corporate and organisational
The Board set management certain confidential targets
relating to the Group’s financial performance, as well
as further organisational improvement objectives.
Performance against priorities
These targets were successfully met. We supported
Novartis in the EU/US approvals and launch of Kymriah
for paediatric ALL and DLBCL. We also supported the
progression of an undisclosed product into the clinic.
Batches of material were also delivered to Novartis as
scheduled/requested. We were also successful in
producing documents in order to support the suspension
process approval. In terms of our collaboration with
Orchard Therapeutics, we were also key in supporting the
production of documents required for the BLA submission
and the advancement one of their products according to
the schedule.
These goals were partially met. We successfully managed
to out-licence OXB-102 (now AXO-Lenti-PD) for
Parkinson’s disease to Axovant for more than $840 million.
However, our plan to spin-out/out-licence of the ocular
assets was under review.
These goals were fully met as we signed an agreement
with Bioverativ, (now part of Sanofi), for haemophilia
products in February 2018 and with Boehringer
Ingelheim, the UK Cystic Fibrosis Gene Therapy
Consortium and Imperial Innovations for development
of a gene therapy product to treat cystic fibrosis in
August 2018.
The goal to achieve an Operating EBITDA target of
around £2.6 million was met along with net cash inflow
from operating activities of £6.6 million. The re-finance
of the Oaktree debt was not pursued. In terms of
transforming the management structure (brought in
three new Senior Executive Team (SET) members in
2018) and introduced key individual training for senior
managers to ensure all skill sets are required for future
growth are covered.
Objectives set for 2019
Objective 1
Partners/Capacity/Technology advancement
The key objective for 2019 is to service our
customers as agreed with them and reach key
milestones for Novartis, Orchard Therapeutics
and Bioverativ (now Sanofi).
Objective 4
Business development
A critical success factor for 2019 is new deals. The plan
is to out-licence one product, agree three platform
technology deals and start two feasibility studies.
Objective 2
Objective 5
Patent/product advancement and innovation
Advance two new platform products into our portfolio,
alongside technical (two new patentable inventions) and
data driven innovations in our platform that are essential
to keep us ahead of the competition. Valuable pipeline
products such as AXO-Lenti-PD, that we have seen
bring great value to the Oxford Biomedica, move
forward in clinical development.
Organisational development
With the rapid pace of growth for the Group, together
with competition for key staff in our field it is essential
that we build a culture, competitive rewards/benefits
and staff support systems to ensure a balanced
productive work force for the future. Plan to enhance
our organisation effectiveness programmes. It is
fundamental to our future success that we innovate
with the creation of our new facility and complete our
new manufacturing facility on time and within budget.
Objective 3
Financial
The financial objectives set out for 2019 are to achieve
revenue and EBITDA targets which are driven by the
budget. Set in a regime of aggressively growing sales
with strict control of costs, these are going to be a
significant challenge. Assumptions in the budget include
new manufacturing deals and a product out licensing
deal, along with extinguishing refinancing the loan on
more favourable terms.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Strategic report
Financial review
“ The Group is targeting improved
financial performance in 2019.”
Stuart Paynter
Chief Financial Officer
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
2013
2014
2015
2016
2017
2018
Bioprocessing volumes
2013
2014
2015
2016
2017
2018
Gross income1
£m
Licence, milestones and grants
(light tints)
Bioprocessing and process
development (dark tints)
Financial transformation
2018 has continued the financial transformation of the
Group with significant commercial achievements, and
the signing of the Bioverativ (now Sanofi), Axovant and
UK Gene Therapy Cystic Fibrosis Consortium agreements
announced in February, June and August 2018. This has
culminated in the Group achieving its first Operating
EBITDA profit and also a profit after taxation of £7.5 million.
Selected highlights are as follows:
— Gross income increased by 72% over 2017, and
has now increased by 1,135% since 2013 when
the Platform division was created.
— Revenue increased by 78% over 2017, and has
now increased by 1,137% since 2013.
— Improved operational results have resulted in
Operating EBITDA, Operating EBIDA and Operating
profit being converted into profits of £13.4 million,
£15.8 million and £13.9 million respectively as opposed
to largely losses in 2017.
— Cash generated from operations of £9.2 million in 2018 far
exceeded the £1.5 million deployed in 2017 as a result of the
Bioverativ (Sanofi) and Axovant licence income received.
— The Platform segment made an Operating EBITDA profit
of £9.8 million1 and an operating profit of £11.4 million.
The growth in gross income was largely driven by
£18.3 million worth of license income received as a result
of the Axovant and Bioverativ (Sanofi) deals, as well as
revenues generated from increased commercial
development services provided to Orchard Therapeutics,
Novartis, Bioverativ (Sanofi) and Axovant. Bioprocessing
results in 2018 increased from the prior year with all three
bioprocessing facilities running continuously during the
year and volumes 15% up in 2018. The chart opposite
shows the growth in output since 2013.
Operating costs, including Cost of Sales, grew by 28%, and
by 38% when depreciation, amortisation and share option
payments are excluded. Manpower, materials and
subcontracted costs have increased to meet increasing
customer demand, both for bioprocessing and commercial
development services, but also includes an expectation of
future growth in activities in 2019 and beyond. Headcount
rose from 321 at December 2017 to 432 at the end of 2018.
The Group has also recognised a revaluation gain of
£6 million on our equity investment in Orchard Therapeutics
after its IPO at the end of 2018. Our partnership with
Orchard Therapeutics has proven to be very successful
and has exceeded the expectations set when originally
established.
1. A reconciliation to GAAP measures is provided on page 122 (note 4, Segmental analysis).
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With the signing of three new commercial contracts in
2018 we have strengthened our commercial pipeline and
diversified our customer base. We will ensure that we
continue to foster our current strong customer
relationships, whilst continuing the Group’s stated aim of
targeting new strategic commercial partnerships to build
on the platform of established growth.
We will continue our proven strategy of developing our
proprietary products by seeking partnerships for later
stage clinical studies. We will continue to assess the
financial risk/reward profile of these projects and will seek
to provide maximal returns to shareholders accordingly.
Key Financial Performance Indicators
£m
Gross income1
Bioprocessing/commercial
development
Licences, milestones, grants
Revenue
Operations
Operating EBITDA2
Operating EBIDA3
Operating profit/(loss)
Cash flow
Cash generated from/(used in)
operations
Capex
Cash burn4
Normalised cash burn5
Financing
Cash
Loan
Headcount
Year-end
Average
2018
2017
2016
2015
40.6
27.3
67.9
32.6
6.8
39.4
24.0
6.8
30.8
12.4
6.4
18.8
66.8
37.6
27.8
15.9
13.4
15.8
13.9
9.2
10.1
1.9
1.9
(1.9)
0.8
(5.7)
(7.1)
(3.4)
(11.3)
(12.1)
(8.1)
(14.1)
(1.5)
2.0
9.8
3.0
(5.9)
6.4
11.5
11.5
(14.9)
16.6
29.8
29.8
32.2
41.2
14.3
36.9
15.3
34.4
432
377
321
295
256
247
9.4
27.3
231
196
1.
2.
3.
4.
5.
Gross income is the aggregate of revenue and other operating income. A reconciliation to GAAP
measures is provided on page 40.
Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation, revaluation of investments
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 options.
A reconciliation to GAAP measures is provided on page 40.
Operating EBIDA is an internal measure used by the Group, defined as Operating EBITDA with the R&D tax
credit included. The Board refers to EBIDA periodically as the R&D tax credit is, in essence, a subsidy or grant
which offsets the Group’s R&D expenditure. A reconciliation to GAAP measures is provided on page 40.
Cash burn is net cash generated from operations plus net interest paid plus capital expenditure.
A reconciliation to GAAP measures is provided on page 42.
Cash burn after excluding accrued interest and early repayment charges paid due to extinguishment
of the Oberland facility.
The Group evaluates its performance by making use of a
number of alternative performance measures as part of its
Key Financial Performance Indicators (refer table above).
The Group believes that these Non-GAAP measures,
together with relevant GAAP measures, provide an accurate
reflection of the Group’s performance over time.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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450
400
350
300
250
200
150
100
50
0
2013
2014
2015
2016
2017
2018
Year-end headcount
Admin and corporate (light tint)
Development (mid tint)
Production related (dark tint)
0 Strategic report
4
Financial review
The Board has taken the decision to move away from
using Gross Income and Operating EBIDA as Key Financial
Performance Indicators and will instead make use of
Revenue, Operating EBITDA and Operating Profit in future.
£m
Operating EBITDA2
R&D tax credit
Operating EBIDA3
2018
13.4
2.5
15.8
2017
(1.9)
2.7
0.8
2016
(7.1)
3.7
(3.4)
2015
(12.1)
4.0
(8.1)
Gross income/Revenue
Gross income increased to £67.9 million providing
72% growth as compared to 2017 (£39.4 million).
Revenue increased by 78% from £37.6 million
in 2017 to £66.8 million in 2018.
Income generated from bioprocessing/commercial
development increased by 25% to £40.6 million (from
£32.6 million in 2017), and is up 464% since 2014. The
main contributor to growth has been the revenues
generated from increased commercial development
services provided to Orchard Therapeutics, Novartis,
Bioverativ (Sanofi) and Axovant.
The chart on page 39 shows the evolution of Gross
Income over the past six years.
The largest portion of our gross income continues to be
derived from our relationship with Novartis, but income
generated from partnerships with our other customers
continues to grow and now makes up a significant
proportion of our gross income, thereby achieving our
stated goal of diversifying our customer base.
£m
Revenue
Other operating income
Gross income
2018
66.8
1.1
67.9
Operating EBITDA/ Operating EBIDA
£m
Gross income
Total expenses1
Operating EBITDA2
Depreciation, amortisation, share
option charge
Revaluation of investments
Operating profit/(loss)
2018
67.9
(54.5)
13.4
(5.4)
6.0
13.9
2017
37.6
1.8
39.4
2017
39.4
(41.3)
(1.9)
(6.1)
2.3
(5.7)
2016
27.8
3.0
30.8
2016
30.8
(37.9)
(7.1)
(4.2)
–
(11.3)
2015
15.9
2.9
18.8
2015
18.8
(30.9)
(12.1)
(2.0)
–
(14.1)
1.
2.
3.
Cost of goods plus research, development, bioprocessing and administrative expenses excluding
depreciation, amortisation and the share option charge.
Operating EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation, revaluation of investments
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 options.
Operating EBIDA is an internal measure used by the Group, defined as Operating EBITDA with the R&D
tax credit included. The Board refers to Operating EBIDA periodically as the R&D tax credit is, in essence,
a subsidy or grant which offsets the Group’s R&D expenditure.
Gross Income increased by 72% in 2018 partly offset by
a 32% growth in our cost base from £41.3 million in 2017
to £54.5 million in 2018. The Operating EBITDA profit of
£13.4 million is £15.3 million better than the £1.9 million
loss incurred in 2017, a great achievement for the Group,
and builds on the significant Operating EBITDA
improvements seen across the last four years.
Due to the conversion of Operating EBITDA losses into
a large Operating EBITDA profit, Operating EBIDA has
improved from a profit of £0.8 million in 2017 to a profit
of £15.8 million in 2018. The R&D tax credit has only
decreased slightly from the prior year as the Group
continues to make a loss for tax purposes.
Total Expenses
£m
Research, Development &
Bioprocessing costs
Administrative expenses
Operating expenses
Depreciation
Amortisation
Share option charge
Adjusted operating expenses
Cost of sales
Total Expenses1
2018
2017
2016
2015
29.7
7.4
37.1
(4.3)
–
(1.1)
31.7
22.8
54.5
21.6
7.3
28.9
(4.1)
(1.2)
(0.7)
22.9
18.4
41.3
24.3
6.0
30.3
(3.3)
(0.3)
(0.6)
26.1
11.8
37.9
20.3
6.7
27.0
(1.3)
(0.4)
(0.2)
25.1
5.8
30.9
£m
Raw materials, consumables and
other external bioprocessing costs
Manpower-related
External R&D expenditure
Other costs
Total expenses
2018
2017
2016
2015
18.3
26.7
1.9
7.6
54.5
13.2
19.3
1.7
7.1
41.3
9.3
17.4
2.8
8.4
37.9
6.1
13.6
3.0
8.2
30.9
— Raw materials, consumables and other external
bioprocessing costs have increased as a result of the
increase in commercial development activities and
bioprocessing volumes.
— The increase in manpower-related costs is due to
the increase in the average headcount from 295 in
2017 to 377 in 2018. This is as a result of increasing
our commercial development and bioprocessing
capacity in line with our increased revenues.
— External R&D expenditure was higher due to increased
commercial customer and technical project related
spend.
— Other costs have increased due to increases in facility
costs, and legal and professional fees as the group
expanded, and royalties payable on income from the
new license agreements. These increases were offset
by a forex gain of £1.3 million as sterling weakened
against the dollar.
Operating and Net profit/(loss)
£m
Operating EBITDA
Depreciation, amortisation and
share option charge
Revaluation of investments
Operating profit/(loss)
Interest
R&D tax credit
Foreign exchange revaluation
(non-cash)
Net profit/(loss)
2018
13.4
2017
(1.9)
2016
(7.1)
2015
(12.1)
(5.4)
6.0
13.9
(6.2)
2.5
(2.7)
7.5
(6.1)
2.3
(5.7)
(9.3)
2.7
3.3
(9.0)
(4.2)
(2.0)
–
(11.3)
(4.9)
3.7
(4.1)
(16.6)
–
(14.1)
(1.9)
4.0
(1.0)
(13.0)
The significant achievements of 2018, culminating in an
Operating EBITDA profit for the year, is further improved
by a £6 million gain on revaluation of the Orchard
Therapeutics investment after the company listed
on Nasdaq in November 2018.
The depreciation, amortisation and share option charge
was lower than 2017 due to a non-recurring £1.0 million
impairment charge in 2017 to account for the write down
of the Prime Boost technology and poxvirus patent
intangible asset after Bavarian Nordic’s Prostvac product
failed its Phase 3 study.
The interest charge on our dollar denominated loan facility
was significantly lower at £6.2 million in 2018 compared
with £9.3 million in 2017 due to the non-recurring cost
of termination of the Oberland facility in 2017.
The R&D tax credit in 2018 has only dropped down
slightly from the prior year as the Group continues to
make a loss for tax purposes.
The net profit in 2018 was negatively impacted by the
devaluation of sterling against the dollar which has lead to
a foreign exchange loss of £2.7 million being recognised
upon revaluation of the dollar denominated Oaktree loan.
The situation was reversed in 2017 as sterling improved
against the dollar and a foreign exchange gain of
£3.3 million was recognised. We have seen large
fluctuations in foreign exchange rates versus sterling
across the last three years as a result of uncertainties
around the Brexit outcome. To some extent the Group
expects to have a currency hedge against this liability
as a significant portion of its anticipated future revenues
are likely to be dollar denominated, such as the royalty
stream arising from Novartis’ sales to Kymriah patients.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Segmental analysis
Reflecting the way the business is being managed by
the Senior Executive Team, the Group reports its results
within two segments, namely the ’Platform’ segment
which includes the revenue generating bioprocessing
and process development activities for third parties, and
internal technology projects to develop new potentially
saleable technology, improve our current processes
and bring development and manufacturing costs down.
The other segment, “Product“, includes the costs of
researching and developing new product candidates.
2018
Gross income
Operating EBITDA
Operating profit/(loss)
2017
Gross income
Operating EBITDA
Operating profit/(loss)
Platform
£m
Product
£m
Total
£m
55.7
9.8
11.4
38.6
2.9
0.2
12.2
3.6
2.5
0.8
(4.8)
(5.9)
67.9
13.4
13.9
39.4
(1.9)
(5.7)
A reconciliation to GAAP measures is provided on page 122.
The Platform segment in 2018 saw an increase in gross
income of 44% from £38.6 million to £55.7 million due
to license income received as a result of the Axovant and
Bioverativ (Sanofi) deals, as well as increased commercial
development services provided. The additional revenues
have resulted in the Platform segment increasing its
Operating EBITDA profit from £2.9 million in 2017
to £9.8 million in 2018, an improvement of £6.9 million.
The segment also generated an operating profit of
£11.4 million in 2018 (2017: £0.2 million). The Group
continues to target increased profitability from this
segment through higher bioprocessing volumes,
increased royalty payments from partners and additional
commercial development services to customers.
The Product segment has generated revenues
of £12.2 million and an Operating EBITDA profit
of £3.6 million largely as a result of the license income
recognised as part of the Axovant OXB-102 agreement.
The segment also generated an operating profit
of £2.5 million.
Cash flow
The Group held £32.2 million cash at 31 December 2018,
having begun the year with £14.3 million. Significant
movements across the year are explained below.
— The operating profit improved by £19.6 million
principally as a result of revenue generated by
Axovant and Bioverativ (Sanofi) deals, as well
as increased revenues from commercial
development services provided.
— This improvement flowed through to Operating
EBITDA which improved by £15.3 million to a profit
of £13.4 million (2017: £1.9 million loss).
— Cash generated from operations was £9.2 million
which resulted in a £10.7 million improvement
over 2017.
— Net cash generated from operations during 2018
at £12.9 million was helped by a £3.7 million R&D
tax receipt, down £0.8 million from the prior year.
This was due to the tax credit being capped as a result
of the improved results in 2017 as compared to 2016.
— Interest paid during the year was £4.7 million, down
from £10.8 million in the prior year. 2018 interest paid
was only made up of Oaktree interest payments whilst
2017 interest paid included the redemption fee on the
Oberland loan facility as well as the accrued interest
covering the period since initial drawdown of the loan.
— Purchases of property, plant and equipment increased
from £2.0 million to £10.1 million, mainly consisting of
purchases of equipment and leasehold improvements
for the new OxBox manufacturing facility.
— Cash burn, the aggregate of these items, was therefore
reduced from £9.8 million in 2017 to £1.9 million in
2018, mainly as a result of the improvement in the
cash generated from our operations.
— The net proceeds from financing during 2018 were
£19.8 million, consisting almost entirely of the equity
raise in February 2018 which generated £19.1 million
net of fees.
— The result of the above movements is a net increase in
cash of £17.9 million from £14.3 million to £32.2 million.
Cash flow movements
Operating profit/(loss)
Non-cash items included in
operating profit/(loss)
Operating EBITDA profit/(loss)
Working capital movement
Cash generated from/(used in)
operations
R&D tax credit received
Net cash generated from/(used in)
operations
Interest paid, less received
Capex
Cash burn
Net proceeds from financing1
Movement in year
2018
13.9
2017
(5.7)
2016
(11.3)
2015
(14.1)
(0.5)
13.4
(4.2)
9.2
3.7
12.9
(4.7)
(10.1)
(1.9)
19.8
17.9
3.8
(1.9)
0.4
(1.5)
4.5
3.0
(10.8)
(2.0)
(9.8)
8.8
(1.0)
4.2
(7.1)
1.2
(5.9)
4.1
(1.8)
(3.3)
(6.4)
(11.5)
17.5
6.0
2.0
(12.1)
(2.8)
(14.9)
3.2
(11.7)
(1.5)
(16.6)
(29.8)
25.0
1. Excludes interest paid which is shown separately above.
Balance sheet review
The most notable items on the balance sheet, including
changes from 31 December 2017, are as follows:
— Investments increased by £8.0 million to £11.0 million
as a result of the achievement of three equity
milestones worth £2.0 million, and the remainder
as a result of the revaluation of our Orchard investment
based on the quoted Orchard share price at year end.
— Property, plant and equipment has increased
by £6.4 million to £31.8 million as depreciation
of £4.3 million only partially offset additions of
£10.8 million, mainly purchases of equipment
and leasehold improvements for the new
OxBox manufacturing facility.
— Inventories have increased from £3.3 million
to £4.3 million due to work in progress balances
increasing as a result of ongoing bioprocessing
commitments across 2018 and into 2019, as well
as planned increases in stock levels as a result of
Brexit planning.
— Trade and other receivables increased from £17.1 million
to £30.6 million, due predominantly to the timing of
process development milestones achieved and
manufacturing orders placed at year-end, as well as
£4.0 million of deposits held in escrow as part of the
OxBox and new discovery and innovation facility leases.
— Trade and other payables increased from £8.7 million
to £11.4 million, due to purchases of equipment and
leasehold improvements for the new OxBox
manufacturing facility.
— Contract liabilities and deferred Income increased
from £13.1 million at the end of 2017 to £23.5 million
(of which £6.4 million is non-current) at the end of
2018 due to income received in advance in relation
to process development work, grant funding,
manufacturing orders placed, and manufacturing
slots reserved.
— The loan balance has increased from £36.9 million
to £41.2 million due to a £2.7 million foreign exchange
loss on revaluation of the loan, as well as accrued
interest of £1.6 million.
Financial outlook
The Group is targeting improved financial performance
in 2019. We have signed new commercial contracts with
Axovant, Bioverativ (Sanofi) and the UK Cystic Fibrosis
Gene Therapy Consortium which will bolster our
commercial development and bioprocessing pipelines,
and we continue to maintain an excellent relationship
with Novartis, building additional bioprocessing capacity
to support the continued launch of Kymriah across the
globe. Orchard Therapeutics IPO’d at the end of the year
in anticipation of the commercial launch of its strategic
product portfolio which we continue to support in a
bioprocessing and commercial development capacity.
Our customer base continues to diversify, strengthening
our revenue expectations. We will continue to target new
strategic commercial relationships in 2019, building on
the platform of growth we established and extending
our customer base.
We will continue to execute our stated strategy, of
continuing the development of our proprietary products
and pre-clinical pipeline whilst seeking to spin-out or
out-license those candidates at an appropriate time prior
to large clinical expenditures. We will seek to make strategic
investments in our products, as well as acquiring enabling
technologies where the opportunity exists to increase
shareholder value and improve patient outcomes. We will
continue to invest in early stage concepts and pre-clinical
studies, and also in our key LentiVector technology
platform. We will continue to manage our cost base
carefully and adjust spend to meet our financial targets.
Going concern
The Group held £32.2 million of cash at the end of 2018.
During 2018 the Group generated positive operational cash
flows, and although the Group is making a further strategic
investment in extending our bioprocessing capacity, the
Group expects to generate sufficient operational cash flow
to continue its growth strategy. Taking this into account, in
conjunction with currently known and probable cash flows,
the Directors consider that the Group has sufficient cash
resources and cash inflows to continue its activities for at
least twelve months from the date of these financial
statements and have therefore prepared the financial
statements on a going concern basis.
Although the UK’s decision to leave the European Union
may significantly affect the fiscal, monetary and
regulatory landscape in the UK, the Group has assessed
the future impact of Brexit on its operations to be minor.
Further details of our contingency planning is provided
on page 58.
Stuart Paynter
Chief Financial Officer
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Safety
The safety of all employees is important, and those
working in our bioprocessing, engineering and
laboratory facilities face additional risks which we
endeavour to manage through maintaining our
facilities and equipment to the highest standards and
through specific and detailed training.
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Corporate responsibility
Oxford Biomedica is committed to its role as a responsible
business and we have a range of evolving policies in place
to ensure we meet this objective. We focus our corporate
responsibility efforts on a number of main areas:
People
We are resolutely focused on the health, safety and the
welfare of our employees, their engagement and job
satisfaction, and ensuring equality of opportunity and
respect for diversity. We are equally focused on the safety
of patients in our clinical studies, and of our neighbours
in the wider community.
It is group policy to give full and fair consideration
to job applications from disabled people, to provide
opportunities for their training, career development and
promotion, and to continue wherever possible to employ
staff who become disabled.
Community
We focus on the wellbeing of the community around our
facilities, conducting our business in a responsible
manner. We comply with local laws and regulations and
control our emissions and waste.
Environment
We monitor and responsibly manage our facilities’ carbon
emissions, use of water, electricity and gas as well as
waste production and disposal.
Integrity and Ethics
The Group is committed to the highest standards of
ethical conduct and integrity in its business activities
in the UK and overseas.
Values
Our commitment to corporate responsibility is
governed by our Group values which are “Have Integrity”,
“Be Inspiring” and “Deliver Innovation”. In practice, this
means doing the right thing for our employees, patients
and partners and delivering on our commitments. We aim
to create an environment which positively challenges,
engages and excites us, and we deliver ground-breaking
scientific excellence by nurturing our talented people.
People
Safety
The health, safety and welfare of our employees, visitors
and contractors is our first priority. The safety of all
employees is important, and those working in our
bioprocessing, engineering and laboratory facilities face
additional risks which we endeavour to manage through
maintaining our facilities and equipment to the highest
standards and through specific and detailed training. Our
Health and Safety Management System covers all work
activities, such as working with biological and chemical
materials and the operation of laboratory equipment.
The Health and Safety Management System is reviewed
and updated to ensure continuous improvement, and
to adapt to variations in scientific work and reflect
changes in legislation. Oxford Biomedica continues to
have a first-class safety record. Health and Safety issues
are a standing item on the Board’s agenda and the Group
is committed to meet both the letter and spirit of all
health and safety regulation and best practice.
Diversity
The Board and senior management are fully committed
to providing equal opportunities to all employees,
irrespective of race, gender, religion, national origin,
disability or any other personal characteristics, and
we embrace diversity in all forms.
The table below shows the gender split across
our organisation as at 31 December 2018:
Board including
Non-Executive Directors
Senior managers
All other employees
Total
Male Female
Total
%
Male
%
Female
6
20
178
204
1
11
216
228
7
31
394
432
86%
65%
45%
47%
14%
35%
55%
53%
The Gender Pay Gap Report for 2018 has been prepared
and the Group is pleased to report an increase in
representation of female employees at the more senior
levels of the organisation over the past 12 months. This
has had a positive impact on the Company’s gender pay
gap ratio. For full details of the report please visit our
website at www.oxb.com.
Remuneration
With the continued growth in employee numbers to 432 at
year-end, we continue to invest in strong internal procedures
to ensure that we are well placed to attract and retain high
quality employees. This includes the development of an
independently validated and market aligned remuneration
structure, which is being implemented during early 2019.
We continue to review the appropriate levels of financial
and non-financial remuneration for each level within our
structure. In addition to cash-based reward programmes,
we have modern share option plans to allow employees
to participate in the success of the organisation. We provide
medical insurance for all staff, along with a pension facility
to enable employees to take a more flexible and personalised
approach to saving for their future.
Training
Training is essential for the safety and wellbeing of our
employees and others we interact with, as discussed
above. In addition, our bioprocessing, laboratory and
clinical processes are complex and highly regulated and
our training helps us to achieve the outcomes, compliance
and productivity we need to succeed as a business.
We provide training to our line managers to ensure that
they are well prepared to manage, develop, support and
motivate their teams.
Communication
We acknowledge the importance of communication
and consultation across our business. Group-wide
briefings, R&D seminars and informal all-staff meetings
are held to keep employees informed of general business
issues and other matters of interest, and to ensure the views
of employees can be taken into account in making decisions
that are likely to affect their interests. The circulation of press
announcements, internal newsletters and access to work-
related social media keep employees informed of business
and employee activities, and enhance understanding
of the financial and economic factors affecting the
Group’s performance.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Corporate responsibility
Community
We recognise the value of being a good local citizen
in the Oxford community. We endeavour to achieve
this by delivering positive benefits for the community,
such as creating new high quality jobs, establishing an
apprenticeship scheme and by building links with schools
and other local educational establishments. We seek to
behave as a responsible neighbour, complying with national
and local laws and regulations, particularly with regard
to emissions and waste, property planning and the
traffic impact caused by our employees. We have
a well-established Cycle-To-Work scheme and interest-free
season ticket loans to help minimise our traffic impact on
the local area.
Apprenticeship Scheme
As part of our focus of delivering local benefits and
providing high skilled jobs to local community we
launched an apprenticeship scheme in collaboration
with Advanced Therapies Apprenticeship Community
and the University of Kent. Currently three school leavers
from the local community are enrolled on a training
scheme in the highly skilled areas of Manufacturing
and Analytical testing. We are committed to supporting
the apprentices through mentoring and training
and expanding the scheme in the future.
Charitable Giving
In further support of the community we worked with
employees to support locally focused charities this year.
This included an employee driven gift giving for the
Children’s Hospital, John Radcliffe and also financial
donations to two local charities. The charities selected
were Sobell House (charity registration 1118646) which
provides palliative and end of life care in Oxfordshire and
SeeSaw (charity registration 1076321) is a local based
charity providing grief support for bereaved children.
Charity
Sobell House
SeeSaw
Total
Donation
£1,500
£1,500
£3,000
1.
2.
1. Responsibility to protect the environment
No laboratory waste goes to landfill sites. We make
every effort to keep our neighbours in the local
community safe from any potential harm caused
by our activities by closely managing our emissions
and waste.
2. Donations
We made financial donations to two local charities
in 2018, Sobell House and SeeSaw.
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25.1
0.2
24.9
49.9
Electricity
Gas
Water supply
Other activities
CO2 emissions 2018 %
Our total CO2 emissions have reduced slightly
from the previous year at 2,365 tonnes in 2018
(2017: 2,472).
5.000
4.000
3.000
2.000
1.000
0
Electricity
Gas
2017
2018
Electricity and gas use (MWh)
Environment
Environmental policies & initiatives
We fully recognise our responsibility to protect the
environment and we have a strong environmental policy,
objectives and guidelines in place which we review and
update regularly. The Group complies with all regulations
covering the processing and disposal of laboratory waste,
and uses qualified licensed contractors for the collection
and disposal of chemical waste and decontaminated
biological materials. No laboratory waste goes to landfill
sites. We make every effort to keep our neighbours in the
local community safe from any potential harm caused by
our activities by closely managing our emissions and waste.
Energy Savings Opportunity Scheme (ESOS)
As we are now an organisation of over 250 employees we
have engaged with ESOS, in compliance with EU Energy
Efficiency Directive (2012/27EU). This has involved an ESOS
Phase 2 energy assessment based on 2018 data covering
all aspects of our energy usage. The recommendations
from the audit will be incorporated into the Environmental
section of our responsible Business policy.
Greenhouse gas emissions report
The tables below show our usage in 2018 and 2017 of
energy and water at our sites in Oxford, UK. We have also
estimated our total CO2 emissions and have indicated our
“environmental intensity” on a per employee basis, an
important indicator of our activity.
2018
Electricity
Gas
Water supply
Other activities
(estimated) including
waste disposal and
travel
Total
2017
Electricity
Gas
Water supply
Other activities
(estimated) including
waste disposal and
travel
Total
Unit
MW hours
MW hours
Cubic
metres
Usage
per
employee
11.4
8.8
CO2
emission
(tonnes)
1,180
593
Usage
4,169
3,225
6,330
17.3
2
590
2,365
Unit
MW hours
MW hours
Cubic
metres
Usage
per
employee
14.7
11.1
CO2
emission
(tonnes)
1,450
573
Usage
4,124
3,108
4,947
17.6
2
447
2,472
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
7,000
6,000
5.000
4.000
3.000
2.000
1.000
0
2017
2018
Water use (cubic metres)
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Corporate responsibility
Energy efficiency
We are committed to energy efficiency and have a
number of policies to decrease energy usage where
possible. For instance, when existing lighting needs
replacing we switch to LED lights which are significantly
more energy efficient than traditional lighting systems.
In our Windrush laboratories we have passive infrared
light sensors in all areas that have been refurbished to
ensure lighting is extinguished in areas that are not
currently in use.
Waste management
We continue to review our waste management systems
to manage waste more effectively. This includes:
— recycling all paper and cardboard waste, aluminum
cans, glass, plastics and printer toner/cartridges.
— use of different waste streams to increase
processing efficiency.
Integrity and Ethics
The Group is committed to the highest standards
of ethical conduct and integrity in its business activities
in the UK and overseas.
Anti-bribery
Oxford Biomedica’s policy on preventing and prohibiting
bribery is in full accordance with the UK Bribery Act 2010 as
well as other relevant overseas legislation and all employees
receive training in this matter. The Group does not tolerate
any form of bribery by, or of, its employees, agents or
consultants or any person or body acting on its behalf.
Senior management is committed to implementing effective
measures to prevent, monitor and eliminate bribery.
Whistleblowing
Oxford Biomedica’s compliance activities include the
prevention and detection of misconduct through policy
implementation, training and monitoring. As part of this
effort, the Group’s employees are encouraged to report
suspected cases of misconduct in confidence and
without fear of retaliation. Concerns and allegations are
thoroughly investigated with disciplinary action taken
where necessary, up to and including dismissal and
reporting to relevant authorities.
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1.
2.
1. Clinical trials
Our clinical studies are designed with patient
safety as a paramount concern.
2. Animal testing
We minimise the use of animal models by
cross-referring LentiVector platform data
packages for regulatory authorities.
Clinical trials
We instill transparency, safety and ethics in all aspects of
our business, including the design and conduct of our
clinical trials. Our clinical studies are designed with patient
safety as a paramount concern and the protocols are
agreed with the relevant national regulatory authorities, as
well as local ethics committees and institutional review
boards at clinical trial sites, before any patients are treated.
We also have standard operating procedures in place
under a controlled Quality Management System to ensure
compliance with appropriate guidelines and legislation.
We are also committed to transparency, and our website
(www.oxb.com) provides information on ongoing
clinical trials. Relevant trials in the EU and EEA are
automatically posted on the EU Clinical Trials Register
(www.clinicaltrialsregister.eu) and we also disclose
our trials on a US government-sponsored website
(www.clinicaltrials.gov).
Human rights and anti-slavery
The Group fully respects human rights and we conduct
our business in accordance with the letter and spirit of
UK Human Rights legislation and the UK Modern Slavery
Act 2015. Oxford Biomedica’s Board of Directors has
approved a Modern Slavery Transparency Statement
in compliance with section 54 of the Act which can
be found on our website www.oxb.com. Our facilities
are all located in the UK, where our policies accord
with human rights regulations and our supply chain
operates in territories with strong commitments
to human rights safeguarding.
Animal testing
It is a regulatory requirement that all new therapeutic
products must be appropriately tested for safety before
they are administered to patients, and there is currently
no alternative to using animal models as part of this
process. We are committed to following the principles
of the three “Rs” in safety testing: replacement,
refinement and reduction of animal testing. These
principles ensure that animal testing is only employed
when necessary and where there are no alternatives.
The Group minimises the use of animal models
by cross-referring LentiVector platform data packages
for regulatory authorities.
The Strategic report on pages 20 to 49 was approved by
the Board of Directors on 14 March 2019 and was signed
on its behalf by:
John Dawson
Chief Executive Officer
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1
Introducing
Oxford Biomedica
11 Sector and technology
overview
12 Gene and cell therapy sector
13 LentiVector delivery platform
16 Products
19 Strategic report
20 Our business model
22 Operational highlights
23 Financial highlights
24 Chairman’s statement
26 Chief Executive Officer's review
30 Management team
32 2018 performance review
36 Delivery of our 2018 objectives
37 Objectives for 2019
Financial review
38
44 Corporate responsibility
51 Corporate governance
52
Principal risks, uncertainties
and risk management
59 The Board of Directors
62 Corporate governance report
69 Directors’ remuneration report
90 Directors’ report
96
Independent auditors’
report
103 Group financial statements
104
Consolidated statement
of comprehensive income
105 Balance sheets
106 Statements of cash flows
107
Statements of changes in
equity attributable to owners
of the parent
Notes to the consolidated
financial statements
108
145 Other matters
145
Glossary
148 Advisers and contact details
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Principal risks, uncertainties and risk management
Oxford Biomedica operates in the gene and cell therapy biotechnology sector which, by its nature, is relatively
high risk compared with other industry sectors. Only a few gene and cell therapy products have been approved
for commercial use so there are significant financial and development risks in the sector, and the regulatory
authorities have shown caution in their regulation of such products. Risk assessment and evaluation is therefore
an integral and well-established part of Oxford Biomedica’s management processes. The Group is exposed to
a range of risks. Some of them are specific to Oxford Biomedica’s current operations, others are common to all
development-stage biopharmaceutical companies. The Directors have carried out a robust assessment of the
risks facing the company, including those which could threaten its business model and future performance.
Risk management framework
The Group’s risk management framework is as follows:
— Board of Directors – the Board has overall responsibility for risk management, determining the Group’s risk
tolerance and for ensuring the maintenance of a sound system of internal control. The Board reviews key
risks within the Group at each of its formal meetings, of which there at least six annually. However, twice a year
in March and September a full presentation to the Board on Risk is expected. The risk management processes
are the responsibility of the Senior Executive Team but the Audit Committee monitors the processes and their
implementation as well as reviewing the Group’s internal financial controls and the internal control systems.
The Audit Committee also monitors the integrity of the financial statements of Oxford Biomedica and any
formal announcements relating to the Company’s financial performance, reviewing significant financial reporting
judgements contained in them. During 2018, we received external assistance from PwC LLP to develop our risk
framework appropriate for our larger Group.
— Senior Executive Team – the SET generally meets twice monthly to discuss current business issues and
considers relevant risks on each occasion. At least four times a year, the SET meets with representatives from
the Risk Management Committee to consider the operational risk management processes and risks identified.
— Key management committees – the Group currently has three key management sub-committees which meet
monthly and through which much of the day-to-day business is managed. These are the extended Operational
Leadership Team (incorporates the Quality and Manufacturing Operations Committee), the Product Development
Committee and the Technical Development Committee. SET members attend these meetings and risk
management is a key feature of each sub-committee.
— Risk Management Committee – Oxford Biomedica has a Risk Management Committee comprising senior managers
from key areas of the business and chaired by the Director of Corporate Activities & Strategy. This Committee meets
quarterly with a remit to identify and assess risks in the business and to consider mitigation and risk management
steps that can be taken. The risk register is regularly reviewed by SET and key risks are highlighted to the Board at
each formal meeting.
— Standard Operating Procedures – all areas of the business have well established Standard Operating Procedures
which are required be followed in order to minimise the risks inherent in the business operations. Where these are
required for GMP, GCP and GLP any deviations from the SOPs must be identified and investigated. Compliance
with such SOPs are routinely subject to audit by the relevant regulators and customers. Other SOPs, such as financial
processes, are also subject to audits.
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Key risks specific to Oxford Biomedica’s current operations
Pharmaceutical product development risks
To develop a pharmaceutical product it is necessary to conduct pre-clinical studies and human clinical trials
for product candidates to demonstrate safety and efficacy. The number of pre-clinical studies and clinical trials
that will be required varies depending on the product candidate, the indication being evaluated, the trial results and
the regulations applicable to the particular product candidate. In addition, the Group or its partners will need to obtain
regulatory approvals to conduct clinical trials and bioprocess drugs before they can be marketed. This development
process takes many years. The Group may fail to develop successfully a product candidate for many reasons,
including:
— Failure to demonstrate long-term safety;
— Failure to demonstrate efficacy;
— Failure to develop technical solutions to achieve necessary dosing levels or acceptable delivery mechanisms;
— Failure to establish robust bioprocessing processes;
— Failure to obtain regulatory approvals to conduct clinical studies or, ultimately, to market the product; and
— Failure to recruit sufficient patients into clinical studies.
The failure of the Group to develop successfully a product candidate could adversely affect the future profitability
of the Group. There is a risk that the failure of any one product candidate could have a significant and sustained
adverse impact on the Group’s share price. There is also the risk that the failure of one product candidate in clinical
development could have an adverse effect on the development of other product candidates, or on the Group’s ability
to enter into collaborations in respect of product candidates.
(i) Safety risks
Safety issues may arise at any stage of the drug development process. An independent drug safety monitoring board
(DSMB), the relevant regulatory authorities or the Group itself may suspend or terminate clinical trials at any time.
There can be no assurances that any of the Group’s product candidates will ultimately prove to be safe for human
use. Adverse or inconclusive results from pre-clinical testing or clinical trials may substantially delay, or halt, the
development of product candidates, consequently affecting the Group’s timeline for profitability. The continuation
of a particular study after review by the DSMB or review body does not necessarily indicate that all clinical trials will
ultimately be successfully completed.
(ii) Efficacy risks
Human clinical studies are required to demonstrate efficacy in humans when compared against placebo and/or
existing alternative therapies. The results of pre-clinical studies and initial clinical trials of the Group’s product
candidates do not necessarily predict the results of later stage clinical trials. Unapproved product candidates in later
stages of clinical trials may fail to show the desired efficacy despite having progressed through initial clinical trials.
There can be no assurance that the efficacy data collected from the pre-clinical studies and clinical trials of the
Group’s product candidates will be sufficient to satisfy the relevant regulatory authorities that the product should
be given a marketing authorisation.
(iii) Technical risks
During the course of a product’s development, further technical development may be required to improve the
product candidates characteristics such as the delivery mechanism or the bioprocessing process. There is no
certainty that such technical improvements or solutions can be identified.
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Bioprocessing revenue risk
The Group receives significant revenues from bioprocessing lentiviral vectors for third parties and in particular
for Novartis. Bioprocessing of lentiviral vectors is complex and bioprocessing batches may fail to meet the required
specification due to contamination or inadequate yield. Failure to deliver batches to the required specification may
lead to loss of revenues.
Furthermore, the Group relies on third parties, in some cases sole suppliers, for the supply of raw materials
and certain out-sourced services. If such suppliers perform in an unsatisfactory manner it could harm the
Group’s business.
As the Group’s revenues from bioprocessing are growing the risk to the Group has increased in the last twelve
months. The Group mitigates the risk of failing to meet required specifications by investing in high quality facilities,
equipment and employees and, in particular, in quality management processes. The Group is also endeavouring
to mitigate the risk of being overly reliant on Novartis by seeking bioprocessing contracts with other parties.
Collaborator and partner risk
The Group has entered several collaborations and partnerships, involving the development of product candidates by
partners in which the Group has a financial interest through IP licenses. Failure of the partners to continue to develop
the relevant product candidates for any reason could result in the Group losing potential revenues.
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Corporate governance
Principal risks, uncertainties and risk management
(iv) Bioprocessing process risk
There can be no assurance that the Group’s product candidates will be capable of being produced in commercial
quantities at acceptable cost. The Group’s LentiVector platform product candidates use specialised bioprocessing
processes for which there are only a few suitable bioprocessors including the Group itself. There can be no assurance
that the Group will be able to bioprocess the Group’s product candidates at economic cost or that contractors who
are currently able to bioprocess the Group’s product candidates will continue to make capacity available at economic
prices, or that suitable new contractors will enter the market. Bioprocessing processes that are effective and practical
at the small scale required by the early stages of clinical development may not be appropriate at the larger scale
required for later stages of clinical development or for commercial supply. There can be no assurance that the
Group will be able to adapt current processes or develop new processes suitable for the scale required by later
stages of clinical development or commercial supply in a timely or cost-effective manner, nor that contract
bioprocessors will be able to provide sufficient bioprocessing capacity when required.
(v) Regulatory risk
The clinical development and marketing approval of the Group’s product candidates, and the Group’s bioprocessing
facility, are regulated by healthcare regulatory agencies, such as the FDA (USA), EMA (Europe), and MHRA (UK). During
the development stage, regulatory reviews of clinical trial applications or amendments can prolong development
timelines. Similarly, there can be no assurance of gaining the necessary marketing approvals to commercialise
products in development. Regulatory authorities may impose restrictions on a product candidates use or may require
additional data before granting approval. If regulatory approval is obtained, the product candidate and bioprocessor
will be subject to continual review and there can be no assurance that such an approval will not be withdrawn or
restricted. The Group’s laboratories, bioprocessing facility and conduct of clinical studies are also subject to regular
audits by the MHRA and FDA to ensure that they comply with GMP, GCP and GLP standards. Failure to meet such
standards could result in the laboratories or the bioprocessing site being closed or the clinical studies suspended
until corrective actions have been implemented and accepted by the regulator.
(vi) Failure to recruit sufficient patients into clinical studies
Clinical trials are established under protocols which specify how the trials should be conducted. Protocols specify the
number of patients to be recruited into the study and the characteristics of patients who can and cannot be accepted
into the study. The risk exists that it proves difficult in practice to recruit the number of patients with the specified
characteristics, potentially causing delays or even abandonment of the clinical study. This could be caused by a
variety of reasons such as the specified characteristics being too tightly defined resulting in a very small population
of suitable patients, or the emergence of a competing drug, either one that is approved or another drug in the clinical
stage of development.
The threats from the above product development risks are inherent in the pharmaceutical industry and have not
changed fundamentally over the last year. The Group aims to mitigate these risks by employing experienced staff
and other external parties, such as Contract Research Organisations to plan, implement and monitor its product
development activities and to review progress regularly in the Group’s Product Development Committee.
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Business development
The Group is seeking to out-license or spin-out its in-house product development programmes into externally
funded vehicles and may seek to arrange strategic partnerships for developing the Group’s other product candidates.
The Group may not be successful in its efforts to build these third party relationships which may cause the
development of the products to be delayed or curtailed.
The Group is building a revenue generating business by providing its LentiVector platform to third parties in return
for revenues derived from process development, bioprocessing and future royalties. The Group may be unsuccessful
in building this business for reasons including a) failing to maintain a leadership position in lentiviral vector technology,
b) becoming uncompetitive from a pricing perspective, c) failure to provide an adequate service to business partners
and collaborators. The Group is continuing to invest in the LentiVector platform in order to reduce this risk, and it
also takes extremely seriously customer relationship management to ensure that customers and partners receive
the service they expect.
Attraction and retention of highly skilled employees
The Group depends on recruiting and retaining highly skilled employees to deliver its objectives and meet its
customers’ needs. The market for such employees is becoming increasingly competitive and the failure to recruit
staff from the EU due to Brexit or to retain staff with the required skills and experience could adversely affect the
Group’s performance. The Group mitigates this risk by creating an attractive working environment and ensuring
that the remuneration package offered to employees is comparable with competing employers.
Broader business risks which are applicable to Oxford Biomedica
Gene and cell therapy risk
The Group’s commercial success, both from its own product development and from supporting other companies
in the sector, will depend on the acceptance of gene and cell therapy by the medical community and the public
for the prevention and/or treatment of diseases. To date only a limited number of gene therapy products have
been approved in Europe, and only three in the USA. Furthermore, specific regulatory requirements, over and above
those imposed on other products, apply to gene and cell therapies and there can be no assurance that additional
requirements will not be imposed in the future. This may increase the cost and time required for successful
development of gene and cell therapy products.
Rapid technical change
The gene and cell therapy sector is characterised by rapidly changing technologies and significant competition.
Advances in other technologies in the sector could undermine the Group’s commercial prospects.
Longer-term commercialisation risks
In the longer term, the success of the Group’s product candidates and those of its partners will depend on the
regulatory and commercial environment several years into the future. Future commercialisation risks include:
— The emergence of new and/or unexpected competitor products or technologies. The biotechnology
and pharmaceutical industries are subject to rapid technological change which could affect the success
of the Group’s product candidates or make them obsolete;
— Regulatory authorities becoming increasingly demanding regarding efficacy standards or risk averse regarding safety;
— Governments or other payers being unwilling to pay for/reimburse gene therapy products at a level which would
justify the investment. Based on clinical studies to date, the Group’s LentiVector platform product candidates have
the unique potential to provide permanent therapeutic benefit from a single administration. The pricing of these
therapies will depend on assessments of their cost-benefit and cost effectiveness;
— The willingness of physicians and/or healthcare systems to adopt new treatment regimes.
Any or all of these risks could result in the Group’s future profitability being adversely affected as future royalties
and milestones from commercial partners could be reduced.
Intellectual property and patent protection risk
The Group’s success depends, amongst other things, on maintaining proprietary rights to its products and
technologies and the Board gives high priority to the strategic management of the Group’s intellectual property
portfolio. However, there can be no guarantee that the Group’s product candidates and technologies are adequately
protected by intellectual property. Furthermore, if the Group’s patents are challenged, the defence of such rights
could involve substantial costs and an uncertain outcome.
Third party patents may emerge containing claims that impact the Group’s freedom to operate. There can be
no assurance that the Group will be able to obtain licences to these patents at reasonable cost, if at all, or be able
to develop or obtain alternative technology. Where copyright, design right and/or “know how” protect the Group’s
product candidates or technology, there can be no assurance that a competitor or potential competitor will not
independently develop the same or similar product candidates or technology.
Rights of ownership over, and rights to license and use, intellectual property depend on a number of factors,
including the circumstances under which the intellectual property was created and the provisions of any agreements
covering such intellectual property. There can be no assurance that changes to the terms within licence agreements
will not affect the entitlement of the Group to the relevant intellectual property or to license the relevant intellectual
property from others.
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Principal risks, uncertainties and risk management
Corporate governance
The Board of Directors
Left to right:
Andrew Heath, Martin Diggle, Lorenzo Tallarigo, John Dawson,
Stuart Henderson, Heather Preston, Stuart Paynter
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Financial risks
(a) Product liability and insurance risk
In carrying out its activities the Group potentially faces contractual and statutory claims, or other types of claim from
customers, suppliers and/or investors. In addition, the Group is exposed to potential product liability risks that are
inherent in the research, pre-clinical and clinical evaluation, bioprocessing, marketing and use of pharmaceutical
products. While the Group is currently able to obtain insurance cover, there can be no assurance that any future
necessary insurance cover will be available to the Group at an acceptable cost, if at all, or that, in the event of any
claim, the level of insurance carried by the Group now or in the future will be adequate, or that a product liability or
other claim would not have a material and adverse effect on the Group’s future profitability and financial condition.
(b) Foreign currency exposure
The Group records its transactions and prepares its financial statements in pounds sterling, but some of the
Group’s income from collaborative agreements and patent licences is received in US dollars and the Group incurs
a proportion of its expenditure in US dollars and the Euro. The Group’s cash balances are predominantly held in
pounds sterling, although the Group’s Treasury Policy permits cash balances to be held in other currencies in order
to hedge foreseen foreign currency expenses. The Group also has a US dollar loan facility provided by Oaktree
Capital Management. Under that facility the Group is required to maintain $2.5 million in a ring fenced bank account.
To the extent that the Group’s foreign currency assets and liabilities in the longer term are not matched, fluctuations
in exchange rates between pounds sterling, the US dollar and the Euro may result in realised and unrealised gains
and losses on translation of the underlying currency into pounds sterling that may increase or decrease the Group’s
results of operations and may adversely affect the Group’s financial condition, each stated in pounds sterling.
In addition if the currencies in which the Group earns its revenues and/or holds its cash balances weaken against
the currencies in which it incurs its expenses, this could adversely affect the Group’s future profitability.
(c) Interest rate exposure
The Group is exposed to interest rate movements, primarily arising on the Oaktree loan facility. the interest rate is
9.0% plus US$ LIBOR, subject to a minimum of 1%. If 3 month LIBOR rises above 1% the Group’s interest payments
may increase.
Financial position
The Directors have considered the cash position in the context of going concern and their conclusions are set out
in the Financial review page 43, the Director’s report page 92 and in note 1 to the Consolidated financial statements
(page 108).
Loan facility
The Group has a $55 million loan facility provided by Oaktree Capital Management, secured on the Group’s assets.
Failure to comply with the terms of the loan agreement could potentially place the Group in default, which could
adversely affect the Group’s business operations, financial position and prospects.
UK departure from European Union (“Brexit”)
The impact of the UK’s decision to leave the European Union is not yet clear but it may significantly affect the
fiscal, monetary and regulatory landscape in the UK, and could have a material impact on its economy and the future
growth of its industries, including the pharmaceutical and biotechnology industries. Depending on the exit terms
negotiated between EU Member States and the UK following Brexit, the UK could lose access to the single European
Union market and to the global trade deals negotiated by the European Union on behalf of its members. Although it
is not possible at this point in time to predict fully the effects of an exit of the UK from the European Union, we believe
the impact would be minor on Oxford Biomedica with anticipated effects being managed. Key uncertainties relate
to recruitment of individuals from the EU and impact on the regulatory relationships between the UK and the EU.
Significant recruitment has taken place over the last year, to the extent the staff base can support growth over the
short term. All EU Nationals currently employed will be able to stay in the UK under the “settled status” directive.
Short term regulatory impacts include the requirement for QP certification to be performed in an EU member state
and as such, we have undertaken steps to establish a subsidiary in Ireland.
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Dr. Lorenzo Tallarigo
Dr. Andrew Heath
Martin Diggle
Stuart Henderson
Chairman
Dr. Lorenzo Tallarigo was appointed as Non-Executive
Chairman of Oxford Biomedica in February 2016. He
was previously Chairman of Intercept Pharmaceuticals
where he led the company’s successful IPO. He was
also Chief Executive Officer and remains a Board member
of Genextra, a holding company focused on identifying
life science research to create successful businesses that
develop novel treatments and technologies. Previously,
he worked at Eli Lilly, where he held various positions of
increasing seniority in a number of areas including clinical
research, product management, marketing and general
management, and ultimately as President of International
Operations. He has a Doctor of Medicine degree from
the University of Pisa (Italy) and a PMD from Harvard
Business School.
Appointment:
— Appointed as Non-Executive Director
and Chairman in February 2016
Committee membership:
— Nomination Committee
Deputy Chairman and Senior Independent Director
Dr. Andrew Heath was appointed to Oxford Biomedica’s
Board in January 2010 and became Deputy Chairman
and Senior Independent Director in May 2011. Previously
he was Chief Executive Officer of Protherics plc where he
managed the company’s significant growth and eventual
acquisition by BTG for £220 million and held senior
positions at Astra AB and Astra USA, including
Vice President Marketing & Sales, and at Glaxo Sweden
as Associate Medical Director. He is a Non-Executive
Director of Novacyt SA. He was previously a Director
of the UK BioIndustry Association.
Appointment:
— Appointed a Director in January 2010
and became Deputy Chairman
and Senior Independent Director
in May 2011
Committee membership:
— Audit Committee
— Remuneration Committee
— Nomination Committee
Non-Executive Director
Martin Diggle was appointed to Oxford Biomedica’s
Board in October 2012. He is a founder of Vulpes
Investment Management which manages a number
of funds, including the Vulpes Life Sciences Fund,
Oxford Biomedica’s largest shareholder. He has over
30 years’ experience in investment banking and fund
management, and has been an investor in life sciences
and biotech for nearly 20 years. He is also an expert in
emerging markets and Russia, in particular, where he
was previously a partner and Director of UBS Brunswick.
He holds a Master’s Degree in Philosophy, Politics
and Economics from University of Oxford.
Appointment:
— Appointed a Director in October 2012
Committee membership:
— None
Independent Non-Executive Director
Stuart Henderson was appointed a Non-Executive
Director and Chair of the Audit Committee in June 2016.
Previously, he was a partner at Deloitte, where he
was Head of European Healthcare and Life Sciences.
Prior to this he was a partner at Arthur Andersen,
where he was Head of Emerging Biotechnology.
He has extensive audit and transaction experience
and has worked with life sciences businesses ranging
from start-ups to multinationals, as well as acting as
reporting accountant on numerous IPO and Class 1
transactions. As Audit Partner, he has reported to the
audit committees of publicly quoted companies for
over 20 years. He is a former Director of the Babraham
Institute and currently sits as a Non-Executive Director
on the Boards of OneNucleus (the Life Sciences trade
body for Cambridge and London), the Cell Therapy
Catapult Limited and BioCity Group Limited.
Appointment:
— Appointed a Director in June 2016
Committee membership:
— Audit Committee
— Remuneration Committee
— Nomination Committee
John Dawson
Stuart Paynter
Heather Preston
Chief Executive Officer
John Dawson joined Oxford Biomedica’s Board as
a Non-Executive Director in August 2008, and was
appointed Chief Executive Officer in October 2008.
Previously he held senior management positions in the
European operations of Cephalon Inc., including Chief
Financial Officer and Head of Business Development
Europe. While at Cephalon he led many deals building
the European business to over 1,000 people, and to a
turnover of several hundred million US dollars and in
2005 led the $360 million acquisition of Zeneus by
Cephalon. Prior to his time at Cephalon he was Director
of Finance and Administration of Serono Laboratories
(UK) Limited. He is currently a Non-Executive Director
of Paion AG.
Appointment:
— Appointed a Director in August 2008
and became Chief Executive Officer
in October 2008
Committee membership:
— None
Chief Financial Officer
Stuart Paynter joined Oxford Biomedica and the
Board in August 2017. He has 16 years’ experience in
the pharmaceutical and healthcare sectors. He qualified
as a chartered accountant with Haines Watts before
moving to EDS. He subsequently joined Steris, and
worked in a variety of roles within the healthcare and
life sciences divisions prior to becoming the European
Finance Director. He then moved to Shire Pharmaceuticals
where he became the senior Director of finance business
partnering for all business outside of the US. He then
moved to a corporate finance role before becoming
the global head of internal audit. Prior to joining
Oxford Biomedica he was head of finance business
partnering at De La Rue plc. He is a member of the
Institute of Chartered Accountants in England
and Wales.
Appointment:
— Appointed a Director and
Chief Financial Officer in August 2017
Committee membership:
— None
Independent Non-Executive Director
Dr. Heather Preston was appointed to Oxford Biomedica’s
Board in March 2018. Dr. Preston is a Partner and
Managing Director of TPG Biotech. She has over 25 years
of experience in healthcare, as a scientist, physician and
management consultant and she has been an investor
in life sciences and Biotech for the last 16 years. She holds
a degree in Medicine from the University of Oxford.
Appointment:
— Appointed a Director in March 2018
Committee membership:
— Audit Committee
— Remuneration Committee (March 2019)
— Nomination Committee
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Corporate governance
Corporate governance report
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Dear Shareholder
I am pleased to present Oxford Biomedica’s Corporate Governance Report for 2018.
Compliance with the 2016 UK Corporate Governance Code
The table below sets out how the Group has applied the main principles in the 2016 Code during 2018:
Good governance is essential for the long term success of the business and this is ultimately the responsibility of the
Board and its committees. The Board comprises both Non-Executive and Executive Directors and provides the forum
for external and independent review and challenge to the Executives.
There have been two changes to the Board during 2018. In March Dr. Heather Preston joined the Board as an
Non-Executive Director. In July, Peter Nolan retired as a Board member and Executive Director. I wish to thank
Peter Nolan for all his hard work for the Group over the last 20 years.
The Group has had a transformational year, with a substantial increase in the Group’s revenues during the year
and being profitable for the first time. As the Group has grown substantially over the year, the corporate governance
framework and committees are in the process of being reviewed in order to understand whether the current
structure and committees are appropriate for a larger company. The final governance structure and committees
have not yet been finalised and I look forward to reporting on these in the 2019 Annual report.
With this amount of change and activity the Board has paid particular attention to ensuring that the Group’s strategy
remains appropriate and that management is focused on delivering the Group’s key priorities and managing the key
risks facing the Group.
Between December 2018 and February 2019 we have had Deloitte LLP perform an external evaluation of the Board’s
performance during 2018. The review process comprised the completion of a questionnaire covering the various
aspects of Board activities, interviews with each Director individually by the external evaluator and an active
observation of a Board meeting. The independent report is the process of being finalised. The Board will assess
and implement appropriate changes based on the recommendations of the report.
The Financial Reporting Council (FRC) produced a revised UK Corporate Governance Code in July 2018 (Revised Code).
The Board considers that it has been compliant with the 2016 UK Corporate Governance Code (2016 Code), while
working towards implementing parts of the Revised Code as best practice.
The following pages set out in more detail the activities and major matters considered by the Board in 2018.
Lorenzo Tallarigo
Chairman
Lorenzo Tallarigo was appointed
as Non-Executive Director and
Chairman in February 2016
UKCGC
reference
Main Principle
Every company should be headed by an effective Board which is collectively
responsible for the long-term success of the company.
There should be a clear division of responsibilities at the head of the company
between the running of the Board and the Executive responsibility for the running
of the company’s business. No one individual should have unfettered powers
of decision.
Application
The Company’s Board comprises both Non-Executive Directors and Executive
Directors. The Board met seven times during 2018 for regular board meetings as well
as several other times for specific ad hoc matters.
There is a clear division of responsibilities between the Chairman and Chief Executive
Officer.
The Chairman is responsible for leadership of the Board and ensuring its effectiveness
on all aspects of its role.
The Chairman provides leadership to the Board and is responsible for setting the
agenda for its meetings and for ensuring there is adequate time allowed for discussion.
As part of their role as members of a unitary Board, Non-Executive Directors should
constructively challenge and help develop proposals on strategy.
All of the Non-Executive Directors participate at all Board meetings and also are
involved in periodic strategic reviews.
The Board and its Committees should have the appropriate balance of skills,
experience, independence and knowledge of the company to enable them to
discharge their respective duties and responsibilities effectively.
There should be a formal, rigorous and transparent procedure for the appointment
of new Directors to the Board.
All Directors should be able to allocate sufficient time to the company to discharge
their responsibilities effectively.
All Directors should receive induction on joining the board and should regularly
update and refresh their skills and knowledge.
The Board should be supplied in a timely manner with information in a form
and of a quality appropriate to enable it to discharge its duties.
The current Board members have a broad mix of experience including the
Pharmaceutical industry, financing and investment, and UK corporate governance.
The Audit and Remuneration Committees are comprised solely of independent
Non-Executive Directors.
The process to appoint Dr. Heather Preston was led by the Chairman. A search firm
was employed to help identify potential candidates. Short-listed candidates met most
of the Directors as part of the selection process. The final selection decision was made
by the Non-Executive Directors in consultation with the Chief Executive Officer.
All Directors have been able to participate at the majority of meetings held in 2018.
Dr. Heather Preston received induction during the year including meetings with
investors, the Company’s auditors, lawyers, financial and other advisers and senior
managers in the business.
The Board meets formally at least six times per annum. The Chairman sets the agenda
in consultation with the Chief Executive Officer and Company Secretary. Relevant
papers are circulated to all Board members several days prior to each meeting.
The Board should undertake a formal and rigorous annual external evaluation
of its own performance and that of its committees and individual Directors.
The Board conducts a performance evaluation annually. The most recent evaluation
took place during December 2018 to February 2019.
All Directors should be submitted for re-election at regular intervals, subject
to continued satisfactory performance.
The Board should present a fair, balanced and understandable assessment
of the company’s position and prospects.
The Board is responsible for determining the nature and extent of the principal risks
it is willing to take in achieving its strategic objectives. The board should maintain
sound risk management and internal control systems.
The Board should establish formal and transparent arrangements for considering
how they should apply the corporate reporting and risk management and internal
control principles and for maintaining an appropriate relationship with the company’s
auditor.
Executive Directors’ remuneration should be designed to promote the long-term
success of the company. Performance-related elements should be transparent,
stretching and rigorously applied.
There should be a formal and transparent procedure for developing policy on
executive remuneration and for fixing the remuneration packages of individual
Directors. No Director should be involved in deciding his or her own remuneration.
There should be a dialogue with shareholders based on the mutual understanding
of objectives. The Board as a whole has responsibility for ensuring that a satisfactory
dialogue with shareholders takes place.
All new Directors are required by the Company’s Articles of Association to submit
themselves for election at the first Annual General Meeting after their appointment.
The Articles also require that one-third of the Directors submit themselves for
re-election by rotation each year. In 2019, in order to comply with the Revised Code
all Directors will submit themselves for election every year.
The Directors formally review the Annual report each year and make a statement
in the report confirming that they consider the report to be fair, balanced and
understandable.
The Board’s remit includes risk management which is an agenda item at every formal
meeting. A system of risk management has been established in the Company with
advice given by PwC LLP and this is monitored by the Audit Committee. The Audit
Committee also reviews the internal control systems.
Corporate reporting, internal controls and relations with the Company’s auditors
are the responsibility of the Audit Committee which provides feedback to the full
board following Audit Committee meetings.
Executive Directors’ remuneration is set in accordance with the remuneration policy
which was approved by shareholders at the 2018 AGM.
The remuneration policy was designed by the Remuneration Committee with advice
from the compensation and benefits practice of Deloitte LLP. The current
recommended policy was approved by shareholders at the 2018 Annual General
Meeting. No Director is involved with setting his own remuneration.
Vulpes Life Sciences Fund, the Company’s largest shareholder is represented on the
Board by Martin Diggle which provides a clear line of communication. The Chairman,
Chief Executive Officer and Chief Financial Officer meet periodically with the
Company’s other large shareholders.
The Board should use the general meetings to communicate with investors
and to encourage their participation.
All Board members endeavour to attend the Annual General Meeting in person
and sufficient time is allowed for questioning by shareholders who attend the meeting.
A.1
A.2
A.3
A.4
B.1
B.2
B.3
B.4
B.5
B.6
B.7
C.1
C.2
C.3
D.1
D.2
E.1
E.2
The Board considers that it has complied throughout the year with the 2016 Code, while working towards
implementing parts of the Revised Code as best practice.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Corporate governance report
Corporate Governance Framework
As the Group has grown substantially over the year, the corporate governance framework and committees are in the
process of being reviewed in order to understand whether the structure and committees are fit for a larger company.
The final structure and committees have not yet been finalised, so the current governance framework comprises the
Board and the Senior Executive Team and their respective sub-committees as set out below:
The Board
Chair – Lorenzo Tallarigo
SET
CEO – John Dawson
Audit Committee
Chair – Stuart Henderson
Remuneration Committee
Chair – Andrew Heath
Nomination Committee
Chair – Lorenzo Tallarigo
PDC
TDC
EOLT
CDC
RMC
– Senior Executive Team
SET
PDC – Product Development Committee
TDC – Technical Development Committee
EOLT – Extended Operations Leadership Team (incorporates the Quality and Manufacturing Operations Committee)
CDC – Commercial Development Committee
RMC – Risk Management Committee
The Board
The Board is collectively responsible for promoting the success of the Group by directing and supervising the Group’s
activities to create shareholder value. In doing so it ensures that there are robust corporate governance and risk
management processes in place. Following changes during 2018 the Board comprises five Non-Executive Directors
and two Executive Directors. The Chairman and Martin Diggle are considered not to be independent.
The Board’s powers and responsibilities are set out in the Company’s articles of association and it has a formal
schedule of matters reserved for the Board’s approval which include:
— the Group’s strategy;
— the financial statements and accounting policies;
— acquisitions, disposals and capital expenditure;
— financing and capital structure;
— corporate governance;
— internal control and risk management;
— board membership and remuneration;
— appointment and remuneration of auditors.
The Board also takes a close interest in Quality, Health, Safety & Environment and Risk Management and has these
as standing items on its meeting agendas.
The Chairman sets the agenda for the Board meeting in consultation with the Chief Executive Officer and the
Company Secretary. Board papers covering the agenda items are circulated several days ahead of each meeting.
Regular board papers cover Product and Technical Development, Production, Business Development, Finance,
Investor Relations, HR, Quality, Safety, Health & Environment and Risk Management.
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There is a clear division of responsibilities between the Chairman and Chief Executive Officer.
Certain responsibilities are delegated to three Board committees – the Audit, Nomination and Remuneration
Committees. These Committees operate under clearly defined terms of reference which are disclosed on the Group’s
website. Reports from the Audit and Nomination Committees are included in this section and the Directors’
remuneration report is on pages 69 to 89 incorporating the Remuneration Committee report.
The current Board members are set out on pages 60 to 61.
— Lorenzo Tallarigo is the Non-Executive Chairman. Dr Tallarigo met the independence criteria recommended by the
UKCGC at the time of his appointment.
— Andrew Heath, the Senior Independent Director, is considered to be independent.
— Stuart Henderson is the chairman of the Audit Committee. He is considered to be independent.
— Heather Preston is considered to be independent.
— Martin Diggle is a founder of Vulpes Investment Management which, through its Vulpes Life Sciences Fund,
is the Group’s largest investor and as such he is not considered independent under the 2016 Code.
— The Group therefore has been in compliance with provision B.1.2 of the 2016 Code which recommends that a
small company, defined as one which is not in the FTSE350, should have at least two independent Non-Executive
Directors excluding the Chairman.
Each Director is provided with an appropriate induction on appointment.
All Directors and the Board and its committees have access to advice and services of the Company Secretary, and
also to external professional advisers as required. The appointment and removal of the Company Secretary is a matter
for the Board as a whole to consider.
Board meetings
The Board meets regularly with meeting dates agreed for each year in advance. During 2018 there were seven regular
Board meetings. The attendance of individual Directors at Board and Committee meetings was as follows:
John Dawson
Martin Diggle
Andrew Heath
Stuart Henderson
Peter Nolan
Stuart Paynter
Heather Preston1
Lorenzo Tallarigo
Regular Board
Attended
7
5
7
7
4
7
5
7
Possible
7
7
7
7
4
7
5
7
1. Appointed to Remuneration Committee 12 March 2019.
Audit Committee
Attended
Possible
Remuneration Committee
Attended
Possible
Nominations Committee
Attended
Possible
3
3
2
3
3
2
9
9
0
9
9
0
1
1
1
1
1
1
1
1
In addition to the above regular meetings, the Board (or an appointed sub-committee of the Board) met on a number
of other occasions to consider specific ad hoc matters including the approval of the 2017 financial statements and
the interim 2018 financial results.
The Chairman holds meetings from time to time with Non-Executive Directors without the Executive Directors
in attendance.
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Corporate governance report
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Board activity during 2018
Board matters during 2018 included:
— Routinely recurring items such as the approvals of the 2018 financial budget and objectives, the 2017 preliminary
results and Annual report, and the 2018 interim results announcement.
— A review of the Group’s strategy, conducted in September.
— Monitoring the progress of the Group’s priority product development programmes.
— Reviewing business development opportunities including partnering and collaboration transactions.
— The appointment of Heather Preston as a Director.
The Senior Executive Team (SET) and its committees
Operational management is conducted by the Executive Directors who, together with Lisa Giles, James Miskin,
Kyriacos Mitrophanous, Nick Page, Jason Slingsby and Helen Stephenson-Ellis form the Senior Executive Team (SET).
The Chief Executive Officer is John Dawson. The SET meets approximately every two weeks and its agenda covers
the full range of activities of the Group, including financial performance, organisational and employment matters,
risk management and Safety, Health & Environment.
There are three SET sub-committees covering the major business operational areas. These committees meet
monthly and are attended by SET members and other relevant senior managers from the business. These sub-
committees are:
— Product Development Committee (PDC) – covering the development of new gene and cell therapy products
— Ongoing reviews of the Group’s risk management processes and key risks.
from initial concept through to clinical development.
Review of performance
Between December 2018 and February 2019, Deloitte LLP conducted an independent review of the Board’s
performance during 2018. The review process comprised the completion by each Director of a comprehensive
questionnaire covering all aspects of the Board’s performance, interview with each Director and an active observation
of a Board meeting. The independent report is in the process of being finalised. The Board will assess and implement
appropriate changes based on the recommendations of the report.
Retirement of Directors
In accordance with the articles of association, any Director who was appointed after the last Annual General Meeting
(AGM) or has served for three years, and one third of the other Directors (or if their number is not a multiple of three
the number nearest to but not exceeding one third) retire from office by rotation at each AGM. However, to ensure
that we comply with the Revised Code all Directors will now be subject to annual re-election.
Accordingly, at the Annual General Meeting in 2019, and in line with the Revised Code, Lorenzo Tallarigo, Andrew
Heath, Stuart Henderson, Martin Diggle, Heather Preston, John Dawson and Stuart Paynter all will retire and be
subject to re-election. If re-elected to the Board at the AGM, Andrew Heath, will reach the 10th anniversary in
January 2020 of his original appointment as a Non-Executive Director. Following an internal review, the Board is
satisfied that Andrew Heath remains independent in thought and in action in terms of his participation in Board and
Committee meetings, and has the full support of the other Board members in the activities he undertakes.
Communication with shareholders
The Board recognises the importance of effective communication with shareholders and potential investors. The primary
points of contact are the Chief Executive Officer and Chief Financial Officer but the Chairman and Senior Independent
Director are also available for meetings with investors if required. Vulpes Life Sciences Fund (“VLSF”), the Company’s
second largest investor, is represented on the Board by Martin Diggle ensuring a clear channel of communication with
VLSF. The Group has engaged with shareholders and potential investors through the various channels below:
Meetings with existing shareholders
2018 Annual General Meeting
Meetings with potential investors
Results announcements and presentations
2017 Annual report
Website
Investor relations
Social media
John Dawson and Stuart Paynter met with major shareholders during 2018. Lorenzo Tallarigo
has also met with major shareholders.
The 2018 AGM was held in London on 29 May 2018. Shareholders were invited to attend this meeting which
lasted for about 1 hour and which, as well as the formal business, included a presentation by the Chief
Executive Officer followed by a Q&A session and a chance to meet Directors after the meeting closed.
The Chief Executive Officer and Chief Financial Officer regularly make presentations and meet potential
investors on a one-to-one basis at investor conferences in Europe and the USA. The company also
conducts investor roadshows periodically which provide further opportunities to meet potential investors.
The Group announced its 2017 full year performance and financial results in March 2018, and its 2018 half year
interim results in September 2018 through RNS announcements accompanied by analyst conference calls
which are accessible to all shareholders and recordings of which are made available on the Group’s website.
The Group published its 2017 Annual report in April 2018.
The Group’s website http://www.oxb.com contains details of the Group’s activities as well as copies
of regulatory announcements and press releases, copies of the Group’s financial statements, and terms
of reference for the Board Committees. Investors and others can subscribe to an e-mail alert service
which provides notifications of announcements.
The Group also endeavours to respond to all enquiries from shareholders and potential investors
received through its enquiry inbox enquiries@oxb.com.
The Group uses Twitter to alert followers to relevant sector news which is relevant to the Group.
— Technical Development Committee (TDC) – covering the development of new and improved assays
and production and other processes, including cell and vector engineering.
— Extended Operational Leadership Team (eOLT) – incorporates the Quality and Manufacturing Operations
Committee and covers quality, operational and manufacturing matters.
Within their area of responsibility these committees cover objective and target setting, monitoring performance
against targets, ensuring compliance with GxP and other relevant requirements, monitoring expenditure against
budget and risk management.
There are two other important committees:
— Commercial Development Committee (CDC) – which covers the external opportunities to out-licence and
in-licence technology or product candidates, and also to generate partnership opportunities for manufacturing
and product development.
— Risk Management Committee (RMC) – which comprises senior managers from all parts of the business, meets
at least quarterly to identify and assess risks facing the business and to propose risk mitigation and management
actions.
Important matters from all of these committees are referred to the SET.
Risk management
The Board is responsible for determining the nature and extent of the risks it is willing to take in achieving the
objectives of the Group and it reviews current key risks at every Board meeting. The Audit Committee monitors
the conduct of the risk management processes within the Group whilst the SET is accountable for those processes,
identifying the risks facing the Group and formulating risk mitigation plans. The active involvement of the Executive
Directors in the management sub-committees allows them to monitor and assess significant business, operational,
financial, compliance and other risks.
Board committee reports
Audit Committee report
The Audit Committee comprises Stuart Henderson, Dr. Heather Preston and Dr. Andrew Heath.
Mr. Henderson, Dr. Preston and Dr. Heath all have relevant experience which qualifies them for membership of the
Audit Committee and, in Mr. Henderson’s case, to be Chair of the Committee. Their experience is set out in their brief
biographies on page 60 and 61.
The primary duties of the Audit Committee, as set out in its written terms of reference which is available
on the Group’s website www.oxb.com, are to:
— Keep under review the Group’s reporting and internal control policies and procedures;
— Oversee the relationship with the external auditors including their appointment, subject to approval
by shareholders at the AGM, remuneration, independence, and the provision of non-audit services;
— Review and recommend to the Board the financial statements and associated announcements.
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Corporate governance report
Corporate governance
Directors’ remuneration report
for the year ended 31 December 2018
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Provision C.3.5 of the 2016 Code states that the Audit Committee should review the effectiveness of the Group’s
internal audit function. The Audit Committee considers that, given the size of the Group, it is unnecessary for it to
have an internal audit function. However, the Committee regularly reviews this at its meetings and with the external
auditors.
Introduction
This report is on the activities of the Remuneration Committee. It is prepared in accordance with Schedule 8 to the
Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended in 2013).
The report contains:
The Audit Committee met three times in 2018:
— 5 March 2018 – to review the 2017 audit and the auditors’ report; review specific accounting issues including
revenue recognition, revaluation of equity instruments, accounting for the Oaktree loan and the adoption of
IFRS 15; review the going concern and the viability assessment and their disclosure in the Annual report; review
auditors’ opinion and representation letter and review the overall quality of the audit process. No major concerns
had arisen in respect of the key audit risks identified but a number of areas required attention. Revenues from
the Novartis contract had been recognised consistently with the methodology previously agreed, as was the
revaluation of equity instruments. The auditors concurred with the accounting for the Oaktree loan facility and
were comfortable with the proposed accounting treatments in line with IFRS 15. The auditors had also reviewed
the going concern statement and associated disclosure in the Annual report. No significant audit adjustments
had been identified by the auditors, and there were no material observations regarding the financial internal control
procedures. The committee discussed and agreed the wording of the viability statement. The auditors’ opinion was
reviewed and no issues or concerns were raised. The Committee reviewed a number of areas of the quality of the
audit and no significant concerns arose.
— 16 August 2018 – to review progress to date for the six months’ financial results to 30 June 2018; identify any
issues that require further attention and an update on risk. The Committee agreed with the interim review strategy.
An update on the risk management process was presented relating to the PwC LLP assistance in developing our
risk management system for the larger Group.
— 03 December 2018 – to review the full 2018 audit strategy; insurance strategy, tax strategy, risk process, treasury
policy and financial control assessment. The Committee accepted the 2018 year-end audit strategy. The updated
2018/2019 insurance strategy was discussed and agreed. The Committee also agreed with the current tax strategy.
An update on the risk management process was presented to the Committee. The Committee approved the
current treasury policy and discussed the financial control assessment with the Group. The Committee agreed
that a financial control assessment will be performed on an annual basis.
Internal control
The Directors are responsible for Oxford Biomedica’s system of internal control and for reviewing its effectiveness.
The system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can
only provide reasonable, and not absolute, assurance against material misstatement or loss. The Audit Committee
annually reviews the effectiveness of all significant aspects of internal control, including financial, operational and
compliance controls and risk management. The review for 2018 was prepared by the Chief Financial Officer and
the Financial Controller and was reviewed at the March 2019 Audit Committee meeting.
The main features of the internal control and risk management processes which apply to the Group’s financial
reporting processes include clear separation of duties within the financial processes such as approval of purchase
orders, payroll and disbursements, and an organisation of the finance function such that monthly management
results and externally reported financial statements are subject to thorough review by the Group Financial Controller
and Chief Financial Officer. The financial results are also reviewed by the Senior Executive Team and the Board.
Nomination Committee report
The Nomination Committee leads the process for making appointments to the Board, and comprises all of the
Non-Executive Directors.
The Nomination Committee met several times in 2018 on an ad hoc basis to consider the recruitment process
and ultimate appointment of Dr. Heather Preston as a Non-Executive Director member of Board.
Share capital
The information about the share capital required by the Takeover Directive is in the Directors’ report on page 91.
— The annual statement from the Remuneration Committee chair,
— The annual report on remuneration showing payments and awards made to the Directors and explaining the link
between company performance and remuneration for the 2018 financial year,
— Extracts from the Directors’ remuneration policy (the "policy"), which was approved at the 2018 Annual General
Meeting (AGM), and took binding effect from the close of that meeting.
The annual statement and the annual report on remuneration are subject to an advisory vote at the Company’s 2019 AGM.
The Companies Act 2006 requires the auditors to report to the shareholders on certain parts of the Directors’
remuneration report and to state whether, in their opinion, those parts of the report have been properly prepared in
accordance with the relevant regulations. The parts of the report that are subject to audit are indicated. The statement
from the chair of the Remuneration Committee and the policy report are not subject to audit.
Annual statement from the Remuneration Committee chair
Dear Shareholder
I am pleased to introduce our remuneration report for the 2018 financial year. The report is divided into two sections:
the annual report on remuneration followed by extracts from our Directors’ remuneration policy (“the policy”)
approved at the 2018 AGM.
The Committee considers that the policy remains appropriate and, accordingly shareholder approval for a new policy
will not be sought at the 2019 AGM. Although the relevant regulations do not require us to include the policy in the
Directors’ remuneration report, we have included those parts we think shareholders will find most useful. The full new
policy as approved by shareholders at the 2018 AGM is included in the Company’s 2018 annual report and accounts,
which is available at www.oxb.com.
The policy
The policy was approved by shareholders at the AGM on 29 May 2018, with over 97% of all votes cast in favour. We
review the application of this policy regularly, to ensure it remains appropriate, linked to strategy and reflective of
developing market practices.
2018 business performance and incentive impact
In February 2019 the Committee met to consider the achievement of 2018 objectives and the annual bonus award
for 2018.
The performance of the business in 2018 is set out in detail in the Strategic report from pages 24 to 43 and the
performance against corporate objectives is set out on page 75 of this remuneration report. Taking all of these factors
into account the Committee decided to award John Dawson a bonus of 116% of salary and Stuart Paynter a bonus
of 117% of salary. Peter Nolan was awarded a bonus of 118% of salary, which has been pro-rated to reflect his service
in the year to the date of cessation of employment (1 July 2018). The 2018 bonuses earned by John Dawson and
Stuart Paynter will be paid 50% in cash and 50% in deferred share awards. Reflecting his retirement from the business,
Peter Nolan’s bonus earned during the year will be paid in cash, in line with the policy. Further details are provided
on page 75 with regards to how performance under the annual bonus targets translated into bonus payment.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
0 Corporate governance
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Directors’ remuneration report
for the year ended 31 December 2018
Vesting of the 2015 LTIP award
LTIP awards were granted on 10 June 2015 to John Dawson, Peter Nolan and Tim Watts when the share price
was 485p; the vesting conditions were as follows:
Average annual compound share price
growth over the three year period starting
with the date of grant
Less than 15%
15% (i.e. 52.1% over 3 years)
Between 15% and 25%
25% or more (i.e. 95.3% over 3 years)
Percentage of the
options granted that
will vest
0%
25%
Calculated on a straight line basis between 25% and 100%
100%
The 2015 LTIP awards vested during 2018. The share price was averaged across 20 business days prior to the end
of the assessment period. In accordance with the rules of the scheme, the Committee considered and agreed a two
week extension of the date of the performance assessment of the 2015 LTIP due to the Company being in a closed
period. Details are provided on page 77.
The awards were also subject to a performance underpin, such that the awards would only vest to the extent that the
Remuneration Committee considered that the overall performance of the business across the period justified it. The
Remuneration Committee reviewed performance against this underpin and concluded the overall LTIP payments to
be appropriate. Clawback and malus provisions will apply to the awards.
Board changes
Peter Nolan resigned from the Board and retired from the Company on 1 July 2018. The remuneration arrangements
in relation to Peter’s retirement from the Board have been determined in accordance with the shareholder approved
Directors’ remuneration policy. In summary, Peter Nolan will receive a bonus of 118% of salary, pro-rated to reflect his
service in the year to the date of cessation of employment, and will retain all vested LTIPs and deferred bonus awards
made to date. Peter will also retain any unvested LTIPs previously granted, to the extent that these are assessed to
have vested at the end of their three year performance periods. Further information is set out on page 79.
Heather Preston was appointed as a Non-Executive Director with effect from 15 March 2018. Details of Heather
Preston’s remuneration received during the year are set out in the single figure table on page 76.
Implementation of our policy in 2019
As discussed on page 69, the Remuneration Committee increased John Dawson’s salary by 7.9% to £410,000
and Stuart Paynter’s salary by 6.7% to £228,000. These increases recognise that our Executive Director salaries
are significantly below market for companies of our size and complexity and that the rapid growth in staff in the
organisation, from 321 in 2017 to more than 432 today, has resulted in an increase in the quality of individuals hired
into senior management. Our success has been achieved by offering a competitive package in this highly competitive
sector and these changes now need to be reflected in the compensation paid to our Executive Directors.
The maximum annual bonus opportunity for our Executive Directors will remain up to 125% of salary, in line with
the opportunity for 2018. The performance measures are based on the Company’s strategic priorities, and further
information is given on page 37.
The Committee has agreed that Executive Directors will be granted LTIP awards of up to 125% of salary in the case
of the CEO and 100% in the case of the other Executive Directors. The Company has historically used share price
growth as its primary measure for LTIP awards. However, it is the Committee’s view that as the business has grown,
a mixture of financial measures and share price growth is considered to be more appropriate. The Committee
believes that these measures will ensure significant value will continue to be delivered to shareholders.
The proposed 2019 performance measures and targets are discussed on page 37.
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Other matters
The Committee recognises the expectations of our shareholders on executive pay and we were pleased that the 2017
Directors’ remuneration report received votes in favour in excess of 99% at the 2018 AGM. Shareholders will be invited
to approve the 2018 annual remuneration report at the 2019 AGM.
Reflecting the introduction of the Revised Code, we are making some changes to the way we implement the policy,
including:
— the introduction of a two year holding period for LTIP awards;
— the enhancement of recovery provisions applying to variable remuneration (enabling us to operate these provisions
in the event of material corporate failure and serious reputational damage);
— an increase, with effect from 1 January 2019, to our share ownership guidelines for our Executive Directors from
150% of salary to 200% of salary; and
— the adoption of a post-cessation shareholding guideline.
Where relevant, we have described these changes later in this report – our approach will be formally enshrined
in the policy when we next seek shareholder approval for it, which is currently intended to be at the 2021 AGM.
We have also included in this report a CEO pay ratio, comparing the remuneration of our CEO to that of the wider
workforce. Although we are not required to include this until we publish our 2019 Directors’ remuneration report,
we have done so on a voluntary basis; the detail is set out on page 81.
The Committee reviewed the Gender Pay Gap Report for 2018 and was pleased with the growth of the Company
and the increase in representation of female employees at the more senior levels of the organisation over the past
12 months. This has had a positive impact on the Company’s gender pay gap. For full details of the report please
visit our website at www.oxb.com.
Andrew Heath
Chair, Remuneration Committee
Andrew Heath was appointed a Director
in January 2010 and became Deputy Chairman
and Senior Independent Director in May 2011
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Corporate governance
Directors’ remuneration report
for the year ended 31 December 2018
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Remuneration Committee role and members
The responsibilities of the Remuneration Committee are set out in its terms of reference which are available
on the Group’s website and have been amended to reflect the revised Corporate Governance Code to include:
— Recommending to the Board the policy and framework for the remuneration of the Executive Directors
and senior management (Senior Executive Team). The remuneration of the Non-Executive Directors
is a matter for the Chairman.
— Approval of individual remuneration packages for Executive Directors and the Senior Executive Team.
— Approval of annual performance incentive plans and bonuses payable.
— Approval of the Group’s Long Term Incentive Plan (LTIP) for Executive Directors and senior management
(Senior Executive Team), and awards granted under the plan.
— Approval of options granted to all employees under the Group’s share option plan.
The Remuneration Committee members are currently Andrew Heath (Chairman), Heather Preston (appointed
12 March 2019) and Stuart Henderson. Martin Diggle was a member of the Committee until 31 December 2016 but,
as he is not considered to be independent for reasons explained in the Corporate Governance Report (page 67),
he has stepped down from formal membership of the Committee. He retains “observer” status and therefore
continues to receive all papers, and has a standing invitation to attend all meetings. Other Directors are invited
to attend meetings on an agenda driven basis.
Remuneration Committee activities during 2018
During 2018 the Committee met nine times. The main activities and decisions were as follows:
— 09 February 2018 and 22 February 2018 – the Committee considered whether or not bonuses should be paid to
the Executive Directors in respect of 2017 in light of the performance against the Group’s 2017 objectives, and also
whether there should be salary increases for 2018. The outcome of these discussions was reported in the 2017
Annual report.
— 20 March 2018 – the Committee considered and agreed the proposed new 2018 Director’s Remuneration Policy.
— 10 May 2018 – the Committee considered and agreed a two week extension of the date of the performance
assessment of the 2015 LTIP. This was permitted within the rules of the scheme, when the Company is in
a closed period.
— 25 June 2018 – the Committee considered the extent to which the share price performance conditions for the
June 2015 LTIP grant of options had been met. The outcome was that 79.7% of the options granted in 2015 would
vest and the remaining 20.3% will lapse. The Committee also approved the vesting of Deferred Bonus Plan (DBP)
options granted in 2015, 2016 and 2017. DBP options vest in three equal instalments on the first, second and third
anniversaries of the grant.
— 06 August 2018 – the Committee considered the granting of options to employees under the Group’s Long Term
Incentive Plan, Deferred Bonus Plan and Employee Share Option Scheme. The Committee approved the granting
of the share options.
— 26 September 2018 and 10 October 2018 – in September the Committee approved an invitation to all employees
to participate in the 2018 offer under the Company’s Save As You Earn Scheme. In October the Committee
approved the grant of options under this offer.
— 01 October 2018 – the Committee considered and approved the proposal to award a non-pensionable additional
allowance (car allowance) to members of the Senior Executive Team.
Annual report on remuneration
Summary of changes to executive remuneration for 2019
(subject to audit)
Under the remuneration policy Executive Directors’ base salaries are normally reviewed annually. The Remuneration
Committee has carried out this review in February 2019 and has awarded the following base salary increases:
John Dawson
Stuart Paynter
Current salary
£380,000
£213,725
Percentage increase
7.9%
6.7%
Total of increase
£30,000
£14,275
New salary
£410,000
£228,000
The Committee recognises that salaries for our CEO and CFO are significantly below market for companies of our
size and complexity. With the rapid growth in staff in the organisation, from 321 in 2017 to more than 432 today,
there has been an increase in the quality of individuals hired into senior management. Our success has been achieved
by offering a competitive package in this highly competitive sector. These changes now need to be reflected in
the compensation paid to our Executive Directors, and it is with this in mind that we increased John Dawson’s salary
last year and have implemented these salary increases for 2019. Subject to continued strong performance by the
company and the individuals, the Committee’s intention is to achieve a base salary of £450,000 for John Dawson
and £260,000 for Stuart Paynter over two to three years.
Annual bonus
(subject to audit)
Performance objectives for the Group have been agreed by the Board and the extent to which Executive Directors’
bonuses for 2019 are earned will be determined by the Remuneration Committee early in 2020 in the light of
performance against those objectives and in line with the remuneration policy. The performance measures are based
on the Company’s strategic priorities, and further information is given on page 37.
LTIP
(subject to audit)
The Company has historically used share price growth as its primary measure for LTIP awards. However it is
the Committee’s view that as the business has grown, a mixture of financial measures and share price growth
is considered to be more appropriate. The Committee believes that these measures will ensure significant value
will continue to be delivered to shareholders.
The Committee intends to grant LTIP options to the Executive Directors during 2019 of up to 125% of salary
in the case of the CEO and 100% in the case of other Executive Directors in accordance with the approved
remuneration policy. The proposed 2019 performance criteria will be equally weighted between share price
growth (requiring 10% CAGR for threshold vesting and 17.5% CAGR or greater for maximum vesting) and revenue
growth (requiring 15% CAGR for threshold vesting and 24% or greater for maximum vesting). There will be a
performance underpin, such that the awards will only vest to the extent that the Committee considers that the
overall performance of the business across the period justifies it. Share price growth will also be averaged across
a three month period to avoid rewarding for short term spikes in performance.
As noted in the statement from the Committee’s Chairman, the awards will be subject to a two year holding period
following the end of the performance period. Awards will vest following the end of the performance period but will not
be released, so that the Executive Director is not entitled to acquire the vested shares until the end of the holding period.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
4 Corporate governance
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Directors’ remuneration report
for the year ended 31 December 2018
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Single total figure of remuneration
(subject to audit)
The following tables show a single total figure of remuneration for 2018 for each Director and comparative figures for 2017.
In February 2019 the Committee met to consider the achievement of the 2018 objectives and the annual bonus
award for 2018. The performance of the business 2018 is set out in detail in the Strategic report from pages 32 to 36.
Performance against the Group objectives for 2018, on which the executives’ bonuses are based, was as follows:
2018
John Dawson
Stuart Paynter
Peter Nolan 4
Total
2017
John Dawson
Stuart Paynter 5
Peter Nolan
Tim Watts 6
Total
Salary
£’000
380
214
108
702
Salary
£’000
350
71
216
169
806
Benefits 1
£’000
4
4
1
9
Benefits
£’000
1
–
1
1
3
Bonus
£’000
439
251
127
817
Bonus
£’000
372
76
238
185
871
LTIP 2
£’000
438
–
268
706
LTIP
£’000
67
–
37
42
146
Pension 3
£’000
50
32
16
98
Pension
£’000
53
11
32
25
121
Total
£’000
1,311
501
520
2,332
Total
£’000
843
158
524
422
1,947
1. Benefits comprise medical insurance and the provision of a car allowance.
2.
This comprises the LTIP awards granted in 2015 which vested in June 2018. The relevant performance criteria and the performance against them are set out on page 77.
The values are calculated by reference to the share price at the last day of the period over which the share price was awarded to determine the extent of vesting.
Pension contributions are made into the Group’s defined contribution scheme, or at the election of the Director, as a cash allowance in lieu of a company pension contribution –
Tim Watts and John Dawson had elected to receive such a cash allowance.
3.
4. Peter Nolan stepped down from the Board on 1 July 2018. His 2018 remuneration is in respect of the period to his retirement from the Board, including his 2018 bonus.
5. Stuart Paynter was appointed CFO with effect from 29 August 2017. His 2017 remuneration is in respect of the period from his appointment to the Board.
6. Tim Watts stepped down from the Board on 29 September 2017. His 2017 remuneration is in respect of the period to his retirement from the Board, including his 2017 bonus.
Weighting
Performance assessed
Assessment
against objective
% of bonus awarded
35%
20%
We supported Novartis in the EU/US approvals and
launch of Kymriah for paediatric ALL and DLBCL (7.5%).
We also supported the progression of an undisclosed
product into the clinic (5%) and ensured process
submission documents were approved by Novartis
(7.5%). Batches of material were also delivered to
Novartis as scheduled/requested (10%). We were also
successful in producing documents in order to support
the suspension process approval. In terms of our
collaboration with Orchard Therapeutics, we were also
key in supporting the production of documents
required for the BLA submission and the advancement
of one of their products according to the schedule (5%).
These goals were partially met. We successfully managed
to out-licence OXB-102 (now AXO-Lenti-PD) for
Parkinson’s disease to Axovant for more than $840 million
(17.5%). However, our plan for spin out/out-licence of our
ocular assets was put under review.
Met in full
35%
Partially met
17.5%
Objective
Support partner portfolio
advancement
Supporting our partners in order to
gain approval and launch of key
products in both US and EU, support
the progress of programmes into
the clinic and also deliver on our
commitments to partners.
Progress action on
implementing strategy
Achieving successful progression
of key programmes against plan
for a partner; to deliver new
pre-clinical products to the Group
and also, as previously announced
to reduce the financial risk of
clinical stage product
development while retaining
significant financial interest; look
to complete the partnering or
spin out of OXB-102 and ocular
programmes.
Financial objectives
Confidential targets relating to the
Group’s financial performance.
15%
Business development
Secure further revenue and
royalty generating partnership
relationships and build further
on those we already have.
Management structure
Further organisational
improvement objectives
were set.
25%
5%
The goal to achieve an operating EBITDA target around
£2.6 million as per the budget was met (5%) along with net
cash inflow from operating activities of £6.6 million (5%).
The re-finance of the Oaktree debt was not pursued.
Partially met
10%
These goals were fully met as we signed an agreement
with Bioverativ, now Sanofi, for haemophilia products in
February 2018 and with Boehringer Ingelheim, the UK
Cystic Fibrosis Gene Therapy Consortium and Imperial
Innovations for development of a gene therapy product
to treat cystic fibrosis in August 2018 (25%).
Met in full
25%
Transformation of the management structure (brought
in three new SET members in 2018) and introduction of
key individual training for senior managers to ensure all
skill sets are covered for future growth.
Met in full
5%
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
6 Corporate governance
7
Directors’ remuneration report
for the year ended 31 December 2018
John Dawson’s bonus is entirely linked to the achievement of the corporate objectives. Bonuses for Peter Nolan
and Stuart Paynter are 80% linked to corporate objectives and 20% linked to personal objectives.
The personal element of the bonus was assessed by reference to the achievement of clear personal objectives
and targets which supported the strategic objectives of the business. The objectives and targets are considered
by the Company to be commercially sensitive, as they will give our competitors insight into our strategic plans,
and so are not disclosed below. However, the principal areas are summarised below for each Executive Director:
Stuart Paynter: Managed the finance team to achieve financial targets.
Peter Nolan: Managed the business development team to increase deal flow.
The Remuneration Committee undertook a robust assessment of the achievements of each Executive Director with
respect to their personal objectives, and based on those objectives having been achieved in full, awarded bonuses
equal to 20% of salary to each of Stuart Paynter and Peter Nolan.
In accordance with the S430(b) statement on the Group’s website, Peter will be eligible to receive an annual bonus in
respect of the financial year ending on 31 December 2018 reflecting his period of employment with the Group to the
date of retirement. The bonus will be assessed against the prescribed performance targets and may be paid fully in
cash.
Accordingly, bonuses earned by the Executive Directors in respect of 2018 were:
— John Dawson: £439,000 (115% of salary);
— Stuart Paynter: £251,000 (117% of salary); and
— Peter Nolan: £127,000 (118% of salary, after pro-rating to reflect his period of service in the year).
The 2018 bonuses for John Dawson and Stuart Paynter will be paid 50% in cash and 50% in deferred share awards.
The deferred share awards are not subject to further performance targets and will vest in three equal instalments on
the first three anniversary dates after the award date provided that the relevant participant remains employed at the
first anniversary of the award. Reflecting his retirement from the business and in accordance with the policy, Peter
Nolan’s bonus will be paid fully in cash. The Remuneration Committee reviewed performance against the annual
bonus out-turn and concluded the overall bonus payments to be appropriate.
The single total figures of remuneration for Non-Executive Directors are shown in the table below:
Fees
Lorenzo Tallarigo
Andrew Heath
Stuart Henderson
Heather Preston
Total
2018
£’000
150
65
65
52
332
2017
£’000
150
46
53
–
249
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LTIPs vesting during 2018
(subject to audit)
LTIP awards were granted on 10 June 2015 to John Dawson, Peter Nolan and Tim Watts when the share price was
485p, the vesting conditions were as follows:
Average annual compound share price growth over
the three year period starting with the date of grant
Less than 15%
15% (i.e. 52.1% over 3 years)
Between 15% and 25%
25% or more (i.e. 95.3% over 3 years)
Percentage of the options granted that will vest
0%
25%
Calculated on a straight line basis between 25% and 100%
100%
The 2015 LTIP awards vested during 2018. The share price was averaged across 20 business days prior to the end
of the assessment period. In accordance with the rules of the scheme, the Committee considered and agreed a two
week extension of the date of the performance assessment of the 2015 LTIP due to the Company being in a closed
period. The Committee considered the extent to which the share price performance conditions for the June 2015
LTIP grant of options had been met. Over the three year performance period from the date of grant, the annual
compound share price growth was 83.6%.
The outcome was that 79.7% of the options granted in 2015 would vest and the remaining 20.3% will lapse.
The awards were also subject to a performance underpin, such that they would vest only to the extent that
the Remuneration Committee considers that the overall performance of the business across the period justifies
it. The Remuneration Committee reviewed performance against this underpin and concluded the overall LTIP
payments to be appropriate. Clawback and malus provisions will apply to the awards.
The value of the awards vesting during 2018 are detailed below:
John Dawson
Peter Nolan
Tim Watts
Number of awards
granted that vested2
43,824
26,817
28,126
Share price at the date on
which the shares vest
1,000p
1,000p
1,000p
Value of awards on
vesting1
£438,230
£268,167
£281,253
1. The values are calculated by reference to the share price of 1,000p on on the last day of the averaging period.
2. Number of shares post 30 May 2018 share consolidation.
LTIPs awarded during 2018
(subject to audit)
On 8 August 2018, the Executive Directors were awarded the following options under the Group’s LTIP scheme:
Heather Preston was appointed as a Non-Executive Director with effect from 15 March 2018. Her 2018 remuneration
is in respect of the period from her appointment to the Board.
John Dawson
Stuart Paynter
Martin Diggle has elected to receive no fees for his services as a Director.
Aggregate Directors’ emoluments
Salaries
Benefits
Pension /cash alternative
LTIP
Bonuses
Non-Executive Directors fees
Total
2018
£’000
702
9
98
706
817
332
2,664
2017
£’000
806
3
121
146
871
249
2,196
The number of options awarded in August 2018 was calculated by reference to 125% (John Dawson) and 100% (Stuart
Paynter) of salary divided by the average share price of 904p in the five business days preceding the relevant award.
The awards are nil cost options and are subject to a three year vesting period. They are exercisable from the third
anniversary of the award, subject to the achievement of the performance condition set out below:
Average annual compound share price growth over the
three year period starting with the date of grant*
Less than 10%
10% (i.e. 33% over 3 years)
Between 10% and 17.5%
17.5% or more (i.e. 63% over 3 years)
Percentage of the options granted that will vest
0%
20%
Calculated on a straight line basis between 17.5% and 100%
100%
*
The starting share price for 8 August 2018 is 904p respectively, being the average share price over the five business days preceding the date of grant. The end share price shall
be calculated as the average of the closing price for the three months period prior to 8 August 2021.
Number of options
granted
52,555
23,647
Face value
of grant
£474,572
£213,532
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Corporate governance
Directors’ remuneration report
for the year ended 31 December 2018
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There will also be a performance underpin, such that the awards will only vest to the extent that the Remuneration
Committee considers that the overall performance of the business across the period justifies it. The Committee has always
taken a prudent approach to LTIP awards, reflecting the share price at the time and the dilutive impact to shareholders, and
to avoid the potential for windfall gains. The Committee agreed that there would be no scale back of LTIP for the 2018 award.
Stuart Paynter was also granted an award over an additional 7,235 shares (£65,404) under the Group’s LTIP scheme
to rectify an error in the 2017 LTIP award granted on 25 September 2017.
Statement of Directors’ shareholding and share interests
(subject to audit)
The Remuneration Committee has adopted a shareholding guideline for the Executive Directors, which specifies
a shareholding equivalent to 150% of base salary as further described in the Remuneration policy. The Remuneration
Committee has decided to increase, with effect from 1 January 2019, the shareholding guidelines requirement for
our Executive Directors to 200% of salary.
The value of the shares as at 31 December 2018 has been determined based on a share price of 707.2p (being the
prevailing closing share price on 31 December 2018). Under this criteria both John Dawson and Peter Nolan (as at
the date of cessation) meet the shareholding guidelines, with Stuart Paynter working towards meeting this guideline.
The interests in shares of the Directors who served during the year as at 31 December 2018 (or, if earlier, the date
of their retirement) were as follows:
Executive Directors
John Dawson
Peter Nolan1
Stuart Paynter
Non-Executive Directors
Lorenzo Tallarigo
Martin Diggle 2
Andrew Heath
Stuart Henderson
Heather Preston 3
Shares held outright
2017
78,514
38,366
–
2018
88,468
45,795
1,753
Vested but
unexercised options
2017
305,586
153,639
–
2018
356,313
23,006
–
Unvested deferred
bonus plan
2017
51,773
34,742
–
2018
45,455
30,425
4,354
Unvested LTIP awards
subject to
performance conditions
2017
174,436
107,461
57,880
2018
172,006
107,461
88,762
47,942
11,640,177
36,000
6,677
–
43,462
11,620,177
32,142
6,677
–
Reflecting best practice, the Remuneration Committee has adopted, with effect from 1 January 2019, a post-
cessation shareholding guideline. This requires that an Executive Director must retain shares with a value
(as at cessation) equal to 100% of base salary for two years following cessation. If the Executive Director holds
fewer than the required number of shares, he or she must retain the shares held. The guideline does not apply
to shares which the Executive Director has purchased. The Remuneration Committee retains discretion to vary
the post-cessation shareholding guideline in appropriate circumstances and will continue to review the guideline
in light of developing market practice before formally enshrining it in the next policy.
During 2018 the following options have vested and lapsed:
LTIP
John Dawson
Stuart Paynter
Peter Nolan2
Deferred bonus
John Dawson
Peter Nolan2
Stuart Paynter
Unvested at
1 January 20181
174,436
57,880
107,461
Vested during
20181
43,824
–
26,817
Unvested at
1 January 20181
51,773
34,742
–
Lapsed during
20181
11,161
–
6,830
Vested during
20181
26,904
17,487
–
Awarded during
2018
52,555
30,882
–
Unvested at
31 December 20181
172,006
88,762
73,814
Awarded during
2018
20,586
13,170
4,354
Unvested at
31 December 20181
45,455
30,425
4,354
Note 1: Quantities have been amended for 50 to 1 share consolidation on 30 May 2018.
Note 2: Peter Nolan stepped down from the Board on 1 July 2018.
During 2018 John Dawson exercised 20,000 options which were due to expire during the year, realising a gain
of £168,000.
On 18 May 2019 the performance criteria for the LTIP awards granted on 18 May 2016 will be assessed. The average
share price for the five business days preceding 18 May 2016 was 275p and vesting conditions were set as follows:
Average annual compound share price growth over
the three year period starting with the date of grant
Less than 15%
15% (i.e. 52.1% over 3 years)
Between 15% and 25%
25% or more (i.e. 95.3% over 3 years)
Percentage of the options granted that will vest
0%
25%
Calculated on a straight line basis between 25% and 100%
100%
1. Peter Nolan stepped down from the Board on 1 July 2018. His share held outright is as at the date of stepping down from the Board.
2.
3. Heather Preston was appointed to the Board as a Non-Executive Director with effect from 15 March 2018.
Includes the interest of Vulpes Life Science Fund, Vulpes Testudo Fund and other parties connected to Martin Diggle.
Payment to past Directors and payments for loss of office
(subject to audit)
Peter Nolan stepped down from the Board and retired from the Group on 1 July 2018. His remuneration earned
to that date and the bonus he has earned in respect of 2018 is included in the single figure table of remuneration
on page 74. He will not receive any payment for loss of office or any other payments in relation to the cessation
of his employment. Consistent with the terms of the Group’s remuneration policy and the rules of the LTIP,
he will retain the unvested share awards made under the LTIP granted in 2016 and 2017, which will vest on their
normal vesting dates, subject to the performance conditions. Peter will also retain the deferred bonus shares
earned but not yet vested in respect of 2015, 2016 and 2017 bonuses. These will vest at the usual time.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Corporate governance
Directors’ remuneration report
for the year ended 31 December 2018
Performance graph and comparison with CEO’s remuneration
The chart below illustrates the Company’s TSR performance since January 2009 relative to the FTSE all-share index
and the FTSE techMARK MediScience index. The FTSE all-share index has been selected because it represents a
broad-based measure of investment return from equities. The FTSE techMARK mediScience index, comprising
biotech companies, provides a second benchmark that is a more specific comparator.
600
Key:
Oxford Biomedica plc
FTSE all-share index
FTSE techMARK mediscience index
NASDAQ Biotech index
500
400
300
200
100
0
Dec 09
Dec 10
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
CEO’s remuneration in last ten years
Year
CEO’s total single figure
of remuneration
LTIP vesting
Annual bonus
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
£’000
% of maximum
% of maximum
8171
0%
80%
450
0%
42%
413
0%
0%
401
40%
17%
468
0%
30%
680
0%
75%
732
100%
42%
653
50%
50%
811
25%
85%
1,294
80%
92%
1.
On 1 September 2009 1,500,000 (consolidated to 30,000 shares) new Ordinary Shares were allotted to John Dawson. The shares were fully paid and were a one-off share based
bonus payment in accordance with his contract of employment for successful achievement of certain transactions with Sanofi in April 2009. The value of the shares at the closing
mid-market price on the trading day immediately prior to issue was £172,500 and the Company bore an additional cost of £120,000 required to gross up the value of the shares for
income tax and National Insurance. Mr. Dawson also received a regular bonus of 80% of maximum.
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Percentage change in CEO’s remuneration
The table below shows how the percentage change in the CEO’s salary, benefits and bonus between 2017 and 2018
compares with the equivalent changes in those components for a group of employees. As 2017 and 2018 have seen
significant changes in headcount numbers, the Committee has chosen as the comparator group all those employees
other than the CEO who were employed throughout the whole of both 2017 and 2018.
Salary
Benefits
Bonus
Year
John Dawson
Comparator
employee group
2018
380
8,008
2017
350
7,423
% increase
8.6%
7.9%
2018
4
88
2017
1
% increase
300%
93
(5.4%)
2018
439
832
2017
372
% increase
18%
618
35%
The increase in the CEO’s benefits is due to the provision of a car allowance initiated during the year.
CEO’s pay ratio
The table below sets out the CEO pay ratio at the 25th, median and 75th percentile employee within the organisation.
The Group used Option A as defined in The Companies (Miscellaneous Reporting) Regulations 2018, as this
calculation methodology for the ratios was considered to be the most accurate method. The 25th, median and 75th
percentile pay ratios were calculated using the full time equivalent remuneration for all UK employees as at the end
of 2018. Employees’ involvement in the Group’s performance is encouraged, with all employees eligible to participate
in the Share Option Scheme or the LTIP. Certain employees also participate in discretionary bonus schemes. The
Group aims to provide a competitive remuneration package which is appropriate to promote the long-term success
of the Group and to apply this policy fairly and consistently to attract and motivate staff. The Group considers the
median pay ratio to be consistent with the Group’s wider policies on employee pay, reward and progression.
Financial year
2018
Method
Option A
25th percentile pay ratio
1:48
Median pay ratio
1:37
75th percentile pay ratio
1:27
Pay details for the individuals are set out below:
2018
Salary (£’000)
Total remuneration (£’000)
CEO
£380
£1,294
25th percentile
£25
£27
Median
£32
£35
75th percentile
£44
£48
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Corporate governance
Directors’ remuneration report
for the year ended 31 December 2018
Relative importance of spend on pay
The chart below illustrates the spend on employee remuneration compared with the Group’s key cash measures.
Since the Group does not make dividend or other distributions, these have not been included in the table.
The Group’s key cash measures were chosen by the Directors because they illustrate very clearly the importance
of employee remuneration as a fundamental element of operational spend and our activities, as well as the continued
investment of the business in its people. The key cash measure amounts were identified as being:
— Non-payroll costs
— Net cash used in operating activities
— Net cash burn
— Cash revenues
70
60
50
40
m
£
30
20
10
0
-10
Staff pay
Non-payroll costs
Cash generated from / (used in)
operations
Net cash burn
Cash revenues
2016
2017
2018
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Statement of voting at AGM
At the 2018 AGM, the 2017 Directors’ remuneration report was approved by shareholders as follows:
Resolution
Approval of the Directors’
remuneration report
Votes for
(including
discretionary)
% for
Votes against
% against
Total votes cast
(excluding votes
withheld)
Votes withheld
(abstentions)
1,989,086,555
99.7%
4,411,157
0.2%
1,993,497,712
1,733,366
At the 2018 AGM, the 2018 Directors’ remuneration policy was approved by shareholders as follows:
Resolution
Approval of the Directors’
remuneration report
Votes for
(including
discretionary)
% for
Votes against
% against
Total votes cast
(excluding votes
withheld)
Votes withheld
(abstentions)
1,930,039,150
97.2%
56,288,698
2.8%
1,986,327,848
8,903,541
Advisers to the Committee
Deloitte LLP acted as adviser to the Committee during 2018 Deloitte is a founding member of the Remuneration
Consultants Group and adheres to its Code of Conduct in relation to executive remuneration consulting in the UK.
Deloitte’s fees for advice to the Committee during 2018 were £7,325 plus VAT. The advice received from Deloitte LLP
was both objective and independent. Deloitte also advised the Group in relation to the operation of its share plans
during 2018.
The Committee reviewed the potential conflicts of interest and the safeguards against them and is satisfied
that Deloitte does not have any such interests or connections with the Group that may impair independence.
Andrew Heath
Chair, Remuneration Committee
14 March 2019
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Directors’ remuneration report
for the year ended 31 December 2018
Directors’ remuneration policy
Policy table
Executive Directors
Base salary
To provide a base
salary which is sufficient
to attract and retain
executives of a suitable
calibre.
Base salaries are initially set by reference
to market information at the time of
appointment and taking into account
the experience and previous package
of the new Director.
Base salaries are normally reviewed
annually taking into account a number
of factors which may include (but are
not limited to):
−
−
underlying Group performance;
role, experience and individual
performance;
competitive salary levels and market
forces; and
pay and conditions elsewhere
in the Group.
−
−
Any changes are normally effective
from 1 January.
Benefits
To provide benefits
on a market competitive
basis.
Retirement benefits
To provide funding
for retirement.
Share ownership
guidelines
To align Executives
with Shareholders and
provide an ongoing
incentive for continued
performance.
Benefits are provided in line with market
practice and may include medical
insurance, life assurance, permanent
health insurance, provision of a
company car or a car allowance and
other appropriate benefits determined
by the Committee. Additional benefits
may be provided based on individual
circumstances. These may include,
for example, travel expenses.
The Group operates a defined
contribution scheme for all employees
including Executive Directors.
In appropriate circumstances, such as
where contributions exceed the annual
or lifetime allowance. Executive
Directors may be permitted to take a
cash supplement instead of some or all
of the contributions to a pension plan.
Shares which are fully owned with
no outstanding vesting criteria count
towards the shareholding guideline
together with deferred annual bonus
shares (on a net of tax basis).
Executive Directors will be required to
retain half of any post-tax awards which
vest under the long-term incentive
plans, and deferred shares under the
annual bonus, until the share ownership
guideline has been satisfied.
While there is no maximum salary, increases
will normally be line with the level of salary
increase awarded (in percentage of salary
terms) to other employees in the Group.
While no formal performance conditions
apply, an individual’s performance in role
is taken into account in determining any
salary increase.
Salary increases above this level may be
awarded in certain circumstances, such
as, but not limited to:
−
where an Executive Director has
been promoted or has had a change
in scope or responsibility;
an individual’s development or
performance in role (e.g. to align a
newly appointed Executive
Director’s salary with the market
over time);
where there has been a change in
market practice; or
where there has been a change
in size and/or complexity of
the business.
−
−
−
Such increases may be implemented
over such time period as the
Committee deems appropriate.
There is no predetermined maximum
but the totals are reviewed annually
by the Remuneration Committee.
Not applicable.
15% of base salary.
Not applicable.
Executive Directors are required to build
and maintain 150% of salary minimum
level of shareholding.
Not applicable.
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Component and purpose
Operation
Maximum potential and payment at threshold
Performance targets and metrics
Sharesave Scheme
To create alignment with
the Group and promote
a sense of ownership.
Executive Directors are entitled to
participate in a tax qualifying all
employee Sharesave Scheme under
which they may make monthly savings
contributions over a period of three or
five years linked to the grant of an
option over the Company’s shares with
an option price which can be at a
discount of up to 20% to the market
value of shares at grant (or such other
discount as may be permitted by the
applicable legislation from time to time).
Participation limits and the level
of discount permitted in setting the
exercise price are those set by the UK tax
authorities from time to time.
Not subject to performance measures
in line with HMRC practice.
Annual bonuses are determined
by the Committee.
The maximum bonus opportunity
will not exceed 125% of base salary.
The performance metrics and targets
are decided annually by the Committee
taking into account the strategic needs
of the business.
Given the nature of the business, these
objectives and metrics may change
significantly each year.
There is no minimum bonus earned
if threshold performance is not met.
Annual bonus
To incentivise and
reward delivery of the
Group’s objectives.
Delivery of 50% of any
bonus payment via
deferred shares aligns
the incentive package
with shareholders’
interests.
Long Term Incentive
Plan (LTIP)
To augment shareholder
alignment by providing
Executive Directors
with longer term
interests in shares whilst
requiring challenging
performance before LTIP
awards vest.
50% of the bonus is delivered as cash.
50% of the bonus is delivered through
deferred shares which ordinarily vest in
three equal instalments on the first,
second and third anniversaries of the
award. The deferred shares are not
subject to further performance targets.
Deferred share awards may be made
under an HMRC EMI plan where
appropriate. Bonus awards are
discretionary and can be removed or
adjusted at the Committee’s discretion.
Dividend equivalents may be attached
to the deferred shares over the deferral
period. These dividend equivalents may
be delivered in cash or shares and may
assume the reinvestment of dividends
into shares on a cumulative basis.
Recovery provisions apply as
summarised at the foot of this table.
At the discretion of the Committee,
annual grants of conditional nominal
cost share options which vest subject
to the achievement of specified
performance targets, typically assessed
over a three year performance period.
Awards granted under the LTIP may
include dividend equivalents earned
between the grant and vesting date.
These dividend equivalents may be
delivered in cash or shares and may
assume the reinvestment of dividends
into shares on a cumulative basis.
Awards have been made under an
HMRC EMI plan where appropriate.
Recovery provisions apply as
summarised in the notes to the policy
table on the next page.
The normal maximum award is 100%
of base salary in respect of a financial
year for Executive Directors, other than
the CEO for whom the maximum award
is 125% of base salary. Under the share
plan rules the overall maximum
opportunity that may be granted in
respect of a financial year is 200%
of base salary. The normal maximum
award limit will only be exceeded in
exceptional circumstances such as the
recruitment of an Executive Director.
Performance conditions will be
determined in advance of grant of awards
and will be based on financial measures
or the achievement of strategic objectives.
Financial measures may include (but are
not limited to) share price and revenue
measures. For the achievement of growth
performance in respect of a financial
measure, no more than 25% of the award
will vest for threshold performance and
100% of the award will vest for maximum
performance; for below threshold
performance, none of the award will vest.
For strategic measures, vesting will
be determined between 0% and 100%
depending upon the Committee’s
assessment of the extent to which the
measure has been achieved.
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Operation of share plans
Awards and options may be adjusted in the event of a variation of share capital or other relevant amendment in
accordance with the rules of the Share Option Scheme, LTIP and Deferred Bonus Plan. The Company’s share plans
may be operated in accordance with their terms, including that awards may be granted as cash based awards over
a notional number of shares, and that share awards may be settled in cash at the election of the Committee; the
Committee would only use these cash provisions for operational flexibility, for example if a regulatory restriction
in any territory prevented the Company from offering shares to an Executive Director.
Component and purpose
Operation
Maximum potential and payment
at threshold
Performance targets and metrics
Non-Executive Directors
Non-Executive Directors’ fees
To compensate Non-Executive
Directors for their services to the
Group.
Not applicable.
Non-Executive Directors’ fees are
determined by the Group’s
Chairman at the time of
appointment of a Director. The
Chairman’s fees are set by the
other Non-Executive Directors.
Non-Executive Directors may
be eligible to receive benefits such
as the use of secretarial support,
travel costs or other benefits that
may be appropriate.
There is no overall maximum,
but fees are set taking into account
the responsibilities of the role
and expected time commitment.
Non-Executive Directors may
receive a base fee and a
supplementary fee for additional
responsibilities such as chairing
a Board committee.
Fees would normally be reviewed
at the start of each three year
period of appointment. However,
increases in Non-Executive
Directors’ fees may be made
at other times.
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Corporate governance
Directors’ remuneration report
for the year ended 31 December 2018
Notes to the policy table
Recovery provisions
The annual bonus and LTIP are subject to malus and clawback provisions as follows:
Annual bonus:
For up to two years following the payment of an annual bonus award the Committee may require the repayment
of some or all of the cash award in the relevant circumstances (clawback). Unvested deferred bonus awards may
be cancelled or reduced in the relevant circumstances (malus). For up to one year following the vesting of the first
instalment of deferred shares the Committee may require the repayment of some or all of the deferred shares
in the relevant circumstances (clawback).
LTIP:
The Committee has the right to reduce, cancel or impose further conditions on unvested awards in the relevant
circumstances (malus). For up to two years following the vesting of a LTIP award the Committee may require
the repayment of some or all of the award in the relevant circumstances (clawback).
Malus may be applied in the event of:
— A material misstatement of the Group’s financial results;
— An error in the information or assumptions on which the award was granted or vests including an error in assessing
any applicable performance conditions;
— A material failure of risk management by the Group;
— Serious reputational damage to the Group; or
— Material misconduct on the part of the participant.
Clawback may be applied in the event of:
— A material misstatement of the Group’s financial results;
— An error in the information or assumptions on which the award was granted or vests including an error in assessing
any applicable performance conditions; or
— Material misconduct on the part of the participant.
Performance targets and metrics
Performance targets for the annual bonus are set by the Committee after taking into account the strategic needs of
the business. A key component of the Group’s strategy is to develop gene and cell therapy products from pre-clinical
proof of concept through to the end of Phase I or Phase II clinical studies before partnering or out-licensing. Targets
for a particular year are therefore likely to include specific product development targets depending on the stage of
development of each opportunity. The annual objectives are also likely to include targets related to generating
recurring revenues such as manufacturing or development services to third parties.
The performance metrics for the LTIP are determined to ensure that the most appropriate targets are set for the
Group’s situation at the time; awards to be granted in 2019 will be subject to measures based on share price growth
and revenue.
The Committee retains the ability to adjust or set different performance measures if events occur (such as a change in
strategy, a material acquisition and/or a divestment of a Group business, or a change in prevailing market conditions)
which cause the Committee to determine that the measures are no longer appropriate and that amendment is
required so that they achieve their original purpose.
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Corporate governance
Directors’ remuneration report
for the year ended 31 December 2018
Service contracts and policy on payment for loss of office
Executive Directors’ service contracts are subject to 12 months’ notice from both the Group and from the Director.
Directors may be required to work during the notice period or be paid in lieu of notice if not required to work for
the full notice period.
The details of service contracts and letters of appointment of those who served as Directors during the year are:
Service contracts
John Dawson
Peter Nolan
Stuart Paynter
Letters of appointment
Lorenzo Tallarigo
Martin Diggle
Andrew Heath
Stuart Henderson
Heather Preston
Contract date
10 October 2008
1 May 2002
29 August 2017
Date of appointment
1 February 2016
4 October 2015
1 January 2016
1 June 2016
15 March 2018
Unexpired term at
31 December 2018
N/A
N/A
N/A
Unexpired term at
31 December 2018
1 month
34 months
0 months
5 months
27 months
Notice period
12 months
12 months
12 months
Notice period
3 months
3 months
3 months
3 months
3 months
All Directors are subject to election by shareholders at the first opportunity after their appointment, and in line
with the revised Corporate Governance Code, thereafter, to re-election on an annual basis.
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The principles on which the determination of payments for loss of office will be approached are set out below:
Payment in lieu of notice
Annual Bonus
Policy
Contractual termination payments may not exceed the Director’s current salary and benefits (including pension
contributions and any applicable salary supplement) for the notice period.
This will be at the discretion of the Committee on an individual basis and the decision as to whether or not
to award a bonus in full or in part will be dependent on a number of factors, including the circumstances of
the individual’s departure and their contribution to the business during the bonus period in question. Any bonus
amounts paid will typically be pro-rated for time in service during the bonus period and will, subject to
performance, be paid at the usual time (although the Committee retains discretion to pay the bonus earlier
in appropriate circumstances). The Committee has discretion to pay the whole of any bonus earned for the year
of departure and preceding year in cash.
Deferred Bonus Plan
The extent to which any unvested award will vest will be determined in accordance with the rules of the Deferred
Bonus Plan.
Unvested awards will normally lapse on cessation of employment. However, if a participant leaves due to death,
ill-health, injury, disability, the sale of his employer or any other reason, at the discretion of the Committee, the
Committee shall determine whether the award will vest at cessation or at the normal vesting date. In either case,
the extent of vesting will be determined by the Committee, taking into account, unless the Committee determines
otherwise, the period of time elapsed from the date of grant to the date of cessation relative to the deferral period.
Awards may then be exercised during such period as the Committee determines. Awards which have already
vested at the date of cessation may be exercised for such period as the Committee determines.
LTIP
The extent to which any unvested award will vest will be determined in accordance with the rules of the LTIP.
Unvested awards will normally lapse on cessation of employment. However, if a participant leaves due to
death, ill-health, injury, disability, the sale of his employer or any other reason at the discretion of the Committee,
the Committee shall determine whether the award will vest at cessation or at the normal vesting date. In either
case, the extent of vesting will be determined by the Committee taking into account the extent to which the
performance condition is satisfied and, unless the Committee determines otherwise, the period of time elapsed
from the date of grant to the date of cessation relative to the performance period. Awards may then be exercised
during such period as the Committee determines. Awards which have already vested at the date of cessation may
be exercised for such period as the Committee determines.
Change of control
The extent to which unvested awards under the Deferred Bonus Plan and LTIP will vest will be determined
in accordance with the rules of the relevant plan.
Other payments
Awards under the Deferred Bonus Plan will vest in full in the event of a takeover, merger or other relevant
corporate event.
Awards under the LTIP will vest early on a takeover, merger or other relevant corporate event. The Committee will
determine the level of vesting taking into account the extent to which the performance condition is satisfied and,
unless the Committee determines otherwise, the period of time elapsed from the date of grant to the date of the
relevant corporate event relative to the performance period.
Payments may be made either in the event of a loss of office or a change of control under the Sharesave Scheme,
which is governed by its rules and the legislation relating to such tax qualifying plans. There is no discretionary
treatment for leavers or on a change of control under this scheme.
In appropriate circumstances, payments may also be made in respect of accrued holiday, outplacement
and legal fees.
The Committee retains discretion to make additional exit payments where such payments are made in good faith
in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way
of settlement or compromise of any claim arising in connection with the termination of a Director’s office
or employment.
By order of the Board
Andrew Heath
Chair, Remuneration Committee
14 March 2019
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Directors’ report
for the year ended 31 December 2018
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The Directors present their Annual report and audited consolidated financial statements for the year ended
31 December 2018 as set out on pages 104 to 144. This report should be read in conjunction with the corporate
governance report on pages 52 to 68.
Discussions regarding financial information contained in this Annual report may contain forward-looking statements
with respect to certain of the plans, current goals and expectations relating to the future financial condition, business
performance and results of the Group and Company. By their nature, all forward looking statements involve risk
and uncertainty because they relate to future events and circumstances that are beyond the control of the Group
and Company. Readers are cautioned that, as a result, the actual future financial condition, business performance
and results of the Group may differ materially from the plans, goals and expectations expressed or implied in such
forward looking statements.
Strategic report
The Strategic report including the outlook for 2019 on page 37, is on pages 20 to 49. The Directors consider that
the Annual report and accounts, taken as a whole, are fair, balanced and understandable. In reaching this conclusion,
the Audit Committee initially discussed the requirements with the Group’s auditors when discussing the strategy for
the 2018 audit, and the full Board reviewed the contents of the report at its 12 March 2019 meeting. Since the Board
met seven times for routine meetings in 2018 the Directors consider that they are sufficiently well informed to be able
to make this judgement.
Key financial performance indicators (KPIs)
Key financial performance indicators are outlined in the Chief Financial Officer’s review on pages 38 to 43.
Corporate governance
The Group’s statement on corporate governance is included in the corporate governance report on pages 52 to 68.
Risk management
The Group’s exposure to risks is set out on pages 52 to 58 (principal risks and uncertainties) and on page 121
(note 3: financial risk management).
Dividends
The Directors do not recommend payment of a dividend (2017: £nil).
Directors
Details of the Directors of the Company who were in office during the year and up to the date of signing the financial
statements are detailed on pages 60 to 61 and page 70. The contracts of employment of the Executive Directors are
subject to a twelve months’ notice period. The Directors’ remuneration and their interests in the share capital of the
Company at 31 December 2018 are disclosed in the Directors’ remuneration report on pages 69 to 89.
Appointment and replacement of Directors
Directors may be appointed by an ordinary resolution at any general meeting of shareholders, or may be appointed
by the existing Directors, provided that any Director so appointed shall retire at the next annual general meeting
(AGM) and may offer himself for re-election. In order to ensure that we comply with the revised Corporate
Governance Code all Directors will retire at each annual general meeting and may offer themselves for re-election.
A Director may be removed in the following ways: by an ordinary resolution at a general meeting; if he or she is
prohibited by law from being a Director; in the event of bankruptcy; if he or she is suffering from specified mental
disorders; if he or she is absent without consent for more than six months; or by request in writing by all the other
Directors. Any Director may appoint another Director or another person approved by the other Directors as an
alternate Director.
Directors’ third party indemnity provision
The Group maintains a qualifying third party indemnity insurance policy to provide cover for legal action against
its Directors. This was in force throughout 2018 and up to the date of approval of the financial statements.
Share capital
Structure of the Company’s capital
The Company’s share capital comprises a single class of 1p ordinary shares, each carrying one vote and all ranking
equally with each other. Following the adoption of new articles of association in 2010, the authorised share capital
of the Company is unlimited.
On 30 May 2018, Oxford Biomedica consolidated its existing ordinary shares of 1 pence each to 65,701,073 new
consolidated ordinary shares of 50 pence each. At 31 December 2018 the Company had 66,103,528 shares in issue,
all allotted and fully paid. There are no restrictions on the transfer of shares in the Company or on voting rights.
All shares are admitted to trading on the London Stock Exchange.
Rights to issue and buy back shares
Each year at the AGM the Directors seek rights to allot shares. The authority, when granted lasts for 15 months
or until the conclusion of the next AGM if sooner. At the last AGM held on 29 May 2018, authority was given
to allot up to 21,893,424 shares (that number being one third of total issued share capital of the Company at the time),
subject to the normal pre-emption rights reserved to shareholders contained in the Companies Act 2006, and
to allot up to a further 21,893,424 shares, solely in a rights issue. Authority was also given, subject to certain
conditions,to waive pre-emption rights over up to 6,568,024 shares, being 10% of the shares then in issue.
No rights have been granted to the Directors to buy back shares.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Directors’ report
for the year ended 31 December 2018
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Substantial shareholdings
At 15 February 2019, the latest practical date prior to approval of the Directors’ report, the Company had been notified
of the following shareholdings amounting to 3% or more of the ordinary share capital of the Company.
Shareholder
Vulpes Investment Management
M&G Investments
Hargreaves Lansdown Asset Management
Cannaccord Genuity Wealth Management
Mr. S Shah
Aviva Investors
Interactive Investor Sharedealing
Number of ordinary shares
11,640,177
11,598,648
3,727,030
3,684,136
2,897,000
2,811,681
2,328,085
Percentage of issued share capital
17.6%
17.5%
5.6%
5.6%
4.4%
4.3%
3.5%
No other person has reported an interest in the ordinary shares of the Company required to be notified
to the Company. No person holds shares carrying special rights with regard to control of the Company.
Employees
In accordance with s172 of the Companies Act 2006, the Group communicates and consults regularly with
employees throughout the year. Employees’ involvement in the Group’s performance is encouraged, with
all employees eligible to participate in the share option scheme or the LTIP. Certain employees participate
in discretionary bonus schemes.
The Group’s aim for all members of staff and applicants for employment is to fit the qualifications, aptitude and ability
of each individual to the appropriate job, and to provide equal opportunity regardless of sex, religion or ethnic origin.
The Group does all that is practicable to meet its responsibility towards the employment and training of disabled people.
Further details on employees, health and safety, environmental matters and corporate social responsibility are in the
corporate responsibility statement on pages 44 to 49.
Employee share schemes
The Group has established an Employee Benefit Trust (EBT) to hold shares purchased in order to settle shares
awarded to Executive Directors and other senior managers under the 2013 Deferred Bonus Plan. The EBT currently
holds 116,724 shares on which all the related options have vested. See note 25 of the consolidated financial
statements for further information.
Agreements that take effect, alter, or terminate because of a takeover bid or on change of control. There are no such
agreements that the Directors consider are material. There are no agreements providing for compensation for loss
of office for Directors or employees in the event of a takeover bid.
Going concern
The Group held £32.2 million of cash at the end of 2018. During 2018 the Group generated positive operational cash
flows, and although the Group is making a further strategic investment in extending our bioprocessing capacity, the
Group expects to generate sufficient operational cash flow to continue its growth strategy. Taking this into account,
in conjunction with currently known and probable cash flows, the Directors consider that the Group has sufficient
cash resources and cash inflows to continue its activities for at least twelve months from the date of these financial
statements and have therefore prepared the financial statements on a going concern basis.
Although the UK’s decision to leave the European Union may significantly affect the fiscal, monetary and regulatory
landscape in the UK,the Group has assessed the future impact of Brexit on its operations to be minor. Further details
of our contingency planning is provided on page 58.
Viability statement
Assessment of prospects
In accordance with provision C.2.2 of the UK Corporate Governance Code, the Directors have assessed the prospects
of the Group over the three years to December 2021. They believe three years to be appropriate due to the inherent
significant uncertainties of forecasting beyond this time horizon given the nature of the business sector in which the
Group operates. The assessment has been informed by the strategy adopted by the Board in 2016 and the evolution
of the business over the last twelve months.
The Group’s strategy is to exploit its LentiVector platform to develop gene and cell therapy products in its own
portfolio and to support the development of other companies’ products. The Group is generating growing revenues
and other operating income from licensing its platform technology, generating upfront receipts and royalties, and
from fees for providing process development and bioprocessing services to other companies. Over the three years
to December 2021 the Directors believe that revenues from licensing its technology to third parties and from providing
process development and bioprocessing services to its partners will be sufficient to create a sustainable Group.
Assessment of viability
The main area of risk to the viability of the Group within the three-year period to December 2021 is that the Group
fails to generate sufficient revenue from the process development and bioprocessing services it provides to third
parties to cover its operational spend and loan interest payments. In particular, should the commercial supply
requirements of Novartis, in terms of the global roll-out of Kymriah fall substantially short of current expectations,
this would have a materially negative impact on the Group. However, the Group has started to mitigate this risk
by signing new commercial contracts with Axovant, Bioverativ (Sanofi) and the UK Cystic Fibrosis Gene Therapy
consortium which will bolster our commercial development and bioprocessing pipelines. We continue to develop
our technology so as to retain a leadership position within the field . Orchard Therapeutics has again grown in
importance having IPO’d at the end of the year in anticipation of the commercial launch of its strategic product
portfolio which we continue to support in a bioprocessing and commercial development capacity.
Although the loan is repayable in the viability period, the Directors are confident that the Group will be able
to refinance the loan at the same or more favourable terms than those currently in place. The Directors have
also assumed that regulatory approval for our bioprocessing facilities remains in place across the period.
The Directors anticipate that the Group has reasonable prospects for attracting further new customers and generating
additional revenues in line with the increased revenues across the past five years. The Group’s financial forecasts
developed reflect these assumptions and therefore the Directors have concluded that there is a reasonable expectation,
although not a certainty, that the Group will be able to continue in operation and meet its liabilities as they fall due over
the three-year period to December 2021. If additional revenues were to fall below the Director’s expectations,
the Group might need to secure alternative sources of financing to continue to fund its operations.
Amendment of the Company’s articles of association
Amendment of the Company’s articles may be made by special resolution at a general meeting of shareholders.
Compliance with Listing Rule 9.8.4R
The Directors have reviewed the requirements of LR 9.8.4R. The majority of these do not apply to the Group
but the following are applicable.
Listing Rule
LR 9.8.4 (5) and (6)
LR 9.8.4 (7) and (8)
Information required
Arrangement under which a
Director has waived current or
future emoluments.
Allotment of shares other than to
existing shareholders in proportion
to holdings.
Response
Martin Diggle has elected to receive no fees for his services as Director
(page 76).
Allotment of shares on exercise of options by employees under approved
share schemes (note 25, page 138).
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Directors’ report
for the year ended 31 December 2018
Statement of Directors’ responsibilities in respect of the financial statements
The Directors are responsible for preparing the Annual report and the Group and parent Company financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial
year. Under that law they are required to prepare the Group financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law
and have elected to prepare the parent Company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period.
In preparing each of the Group and parent Company financial statements, the Directors are required to:
— select suitable accounting policies and then apply them consistently;
— make judgements and estimates that are reasonable, relevant and reliable;
— state whether they have been prepared in accordance with IFRSs as adopted by the EU;
— assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and
— use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company
or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud
and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those
regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Group’s website. Legislation in the UK governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
— the financial statements, prepared in accordance with the applicable set of accounting standards, give a true
and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
— the Directors’ report includes a fair review of the development and performance of the business and the position
of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s position and performance, business model and strategy.
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Statement as to disclosure of information to auditors
In accordance with s418 of the Companies Act 2006, so far as each Director is aware, there is no relevant audit
information of which the Group and Company’s auditors are unaware, and each Director has taken all the steps that
he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish
that the Group and Company’s auditors are aware of that information.
Independent auditors
During 2017 a tender process was completed with KPMG LLP being appointed as independent auditors.
PricewaterhouseCoopers LLP continued in office until the release of the 2017 financial statements, after
which KPMG LLP took up office.
Greenhouse gas emissions report
Details on greenhouse gas emissions are set out in the corporate social responsibility section on page 47.
Annual General Meeting
The Annual General Meeting will be held at 11:00 a.m. on Wednesday 29 May 2019 at the London offices
of Covington & Burling LLP.
By order of the Board
Stuart Paynter
Company Secretary
14 March 2019
Company registered number: 03252665
Stuart Paynter was appointed
a Director and Chief Financial Officer
in August 2017
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Independent auditors’ report
To the members of Oxford Biomedica plc
1. Our opinion is unmodified
We have audited the financial statements of Oxford Biomedica plc (“the Company”) for the year ended 31 December
2018 which comprise the consolidated statement of comprehensive income, the Group and parent Company balance
sheets, the Group and parent Company statements of cash flows, the Group and parent Company statements of changes
in equity attributable to owners of the parent, and the related notes, including the accounting policies in note 1.
In our opinion:
— the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s
affairs as at 31 December 2018 and of the Group’s profit for the year then ended;
— the Group financial statements have been properly prepared in accordance with International Financial
Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU);
— the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted
by the EU and as applied in accordance with the provisions of the Companies Act 2006; and
— the financial statements have been prepared in accordance with the requirements of the Companies Act 2006
and, as regards the Group financial statements, Article 4 of the IAS Regulation.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the shareholders on 29 May 2018. The period of total uninterrupted engagement
is for the financial year ended 31 December 2018. We have fulfilled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied
to listed public interest entities. No non-audit services prohibited by that standard were provided.
Overview
— Materiality: Group financial statements as a whole: £570k, 0.85% of revenue.
— Coverage: 100.0% of Group revenue.
— Key audit matters (recurring risks):
1. Revenue recognition.
2. Recoverability of parent Company’s investment in and debt due from subsidiaries.
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2. Key audit matters: including our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the
financial statements and include the most significant assessed risks of material misstatement (whether or not due to
fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters,
in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required
for public interest entities, our results from those procedures. These matters were addressed, and our results are based
on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as
a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide
a separate opinion on these matters.
The risk
Our response
Accounting treatment
Our procedures included:
Revenue
Product and technology licenses, milestone
receivables and payments and process
development.
Refer to page 110 (accounting policy) and page
117 (critical accounting judgement).
The Company enters into a number of multiple
element contracts with differing terms. There
are inherent judgements required to be made
by the Group in the following areas:
— Identification of performance obligations
of the contract, primarily the license fees,
milestones and commercial development
work,
— Assessing the allocation of the total
transaction price to each performance
obligation with reference to their stand-
alone selling price, including consideration
of FTE rates applied, and
— Whether revenue for each performance
obligation satisfies the criteria for recognition
over time or at a point in time.
— Accounting analysis: Evaluation of the
Group’s revenue accounting policy against
the accounting standard.
— Testing application: Assessing and
challenging the Group’s judgements made,
in line with accounting policies and with
reference to significant contracts, including:
— The identification of the goods or services
promised in the contract and whether
they are distinct and therefore separate
performance obligations,
— The stand-alone selling prices of
individual components through
benchmarking across the Group’s other
customer contracts, and
— The revenue recognition over time
or point in time with reference to the
contract terms, nature of goods and
services being provided and Group’s
accounting policy.
— Assessing transparency: Assessing the
adequacy of the Group’s disclosures about
the judgements involved in the recognition
of revenue.
Our results: We found the Group’s revenue
recognition and related disclosures of the
judgements to be acceptable.
Our procedures included:
— Comparing valuations: Comparing the
carrying amount of the investment and loans
with the expected value of the business based
on the market capitalisation of the Group.
Our results: We found the Group’s assessment
of the recoverability of the investment in and
loan to subsidiaries to be acceptable.
Investments and loans
(£91.8 million).
Refer to page 115 (accounting policy) and page
129 (financial disclosures).
Recoverability of parent Company’s
investment in and debt due from subsidiaries:
Low risk, high value.
The carrying amount of the parent Company’s
investment and loan in the sole trading
subsidiary represents 98.8% of the Company’s
total assets. Their recoverability is not at a
high risk of significant misstatement or subject
to significant judgement. However, due to
their materiality in the context of the parent
Company financial statements, this is
considered to be the area that had the greatest
effect on our overall parent Company audit.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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3. Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £570k, determined with reference to a benchmark
of revenue (of which it represents 0.85%. We consider total revenue to be the most appropriate benchmark as
it provides a more stable measure year on year than group profit before tax. Materiality for the parent Company
financial statements as a whole was set at £540k, determined with reference to a benchmark of Company total
assets, of which it represents 0.6%. We agreed to report to the Audit Committee any corrected or uncorrected
identified misstatements exceeding £28k, in addition to other identified misstatements that warranted reporting
on qualitative grounds. Of the group’s 3 components, we subjected 2 to full scope audits for group purposes.
The components within the scope of our work accounted for 100% of group revenue, profit before tax and
total assets. The Group team approved the component materialities, which were set at £540k for both inscope
components. The work on all of the components, including the audit of the parent Company, was performed
by the Group team.
£570k
Whole financial statements materiality
£540k
Materiality at 2 components
Revenue
Group materiality
£28k
Misstatements reported to the
Audit Committee
Revenue
£66.8m (2017: £37.6m)
Group Materiality
£570k
4. We have nothing to report on going concern
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate
the Company or the Group or to cease their operations, and as they have concluded that the Company’s and the
Group’s financial position means that this is realistic. They have also concluded that there are no material uncertainties
that could have cast significant doubt over their ability to continue as a going concern for at least a year from the date
of approval of the financial statements (“the going concern period”).
Our responsibility is to conclude on the appropriateness of the Directors’ conclusions and, had there been a material
uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all
future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor’s
report is not a guarantee that the Group and the Company will continue in operation.
In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Group’s and Company’s
business model, including the impact of Brexit, and analysed how those risks might affect the Group’s and Company’s
financial resources or ability to continue operations over the going concern period. The risks that we considered
most likely to adversely affect the Company’s available financial resources over this period were:
— The reliance on future receipts from both current and new customers,
— Capital expenditure commitments, and
— Current covenant compliance and the ability to refinance.
As these were risks that could potentially cast significant doubt on the Company’s ability to continue as a going concern,
we considered sensitivities over the level of available financial resources indicated by the Company’s financial forecasts
taking account of reasonably possible (but not unrealistic) adverse effects that could arise from these risks individually
and collectively and evaluated the achievability of the actions the Directors consider they would take to improve the
position should the risks materialise. We also considered less predictable but realistic second order impacts, such
as the impact of Brexit, which could result in a rapid reduction of available financial resources.
Based on this work, we are required to report to you if:
— we have anything material to add or draw attention to in relation to the Directors’ statement in note 1 to the
financial statements on the use of the going concern basis of accounting with no material uncertainties that may
cast significant doubt over the Group and Company’s use of that basis for a period of at least twelve months from
the date of approval of the financial statements; or
— the related statement under the Listing Rules set out on page 92 is materially inconsistent with our audit
knowledge.
We have nothing to report in these respects, and we did not identify going concern as a key audit matter.
5. We have nothing to report on the other information in the Annual report
The Directors are responsible for the other information presented in the Annual report together with the financial
statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do
not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider whether, based on our financial statements
audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified material misstatements in the other information.
Strategic report and Directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the strategic report and the Directors’ report;
— in our opinion the information given in those reports for the financial year is consistent with the financial
statements; and
— in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared
in accordance with the Companies Act 2006.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw
attention to in relation to:
— the Directors’ confirmation within the viability statement on page 93 that they have carried out a robust assessment
of the principal risks facing the Group, including those that would threaten its business model, future performance,
solvency and liquidity;
— the Principal risks facing the business disclosures describing these risks and explaining how they are being
managed and mitigated; and
— the Directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over
what period they have done so and why they considered that period to be appropriate, and their statement as
to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention
to any necessary qualifications or assumptions.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Under the Listing Rules we are required to review the viability statement. We have nothing to report in this respect.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial
statements audit. As we cannot predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgments that were reasonable at the time they were made, the absence
of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to report to you if:
— we have identified material inconsistencies between the knowledge we acquired during our financial statements
audit and the Directors’ statement that they consider that the annual report and financial statements taken as
a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess
the Group’s position and performance, business model and strategy; or
— the section of the annual report describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee. We are required to report to you if the Corporate Governance
Statement does not properly disclose a departure from the eleven provisions of the UK Corporate Governance Code
specified by the Listing Rules for our review.
We have nothing to report in these respects.
6. We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
— adequate accounting records have not been kept by the parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
— the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited
are not in agreement with the accounting records and returns; or
— certain disclosures of Directors’ remuneration specified by law are not made; or
— we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 94, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they
determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other irregularities (see below), or error, and to issue our opinion
in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the
financial statements from our general commercial and sector experience and through discussion with the Directors
and other management (as required by auditing standards), and discussed with the Directors and other management
the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and
regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the group is subject to laws and regulations that directly affect the financial statements including financial
reporting legislation (including related companies legislation), distributable profits legislation and taxation legislation.
We assessed the extent of compliance with these laws and regulations as part of our procedures on the related
financial statement items.
Secondly, the group is subject to many other laws and regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in the financial statements, for instance through the
imposition of fines or litigation or the loss of the group’s licence to operate. We identified the following areas as
those most likely to have such an effect: those related to the pharmaceutical industry imposed by the Food and Drug
Administration (FDA) and Medicines and Healthcare products Regulatory Agency (MHRA) recognising the regulated
nature of the Group’s activities. Auditing standards limit the required audit procedures to identify non-compliance
with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory
and legal correspondence, if any.
These limited procedures did not identify actual or suspected non-compliance.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we have properly planned and performed our audit
in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations
(irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently
limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained
a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance
and cannot be expected to detect non-compliance with all laws and regulations.
8. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
members, as a body, for our audit work, for this report, or for the opinions we have formed.
Charles le Strange Meakin (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Botanic House
98-100 Hills Rd
Cambridge
CB2 1JZ
14 March 2019
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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1
Introducing
Oxford Biomedica
11 Sector and technology
overview
12 Gene and cell therapy sector
13 LentiVector delivery platform
16 Products
19 Strategic report
20 Our business model
22 Operational highlights
23 Financial highlights
24 Chairman’s statement
26 Chief Executive Officer's review
30 Management team
32 2018 performance review
36 Delivery of our 2018 objectives
37 Objectives for 2019
Financial review
38
44 Corporate responsibility
51 Corporate governance
52
Principal risks, uncertainties
and risk management
59 The Board of Directors
62 Corporate governance report
69 Directors’ remuneration report
90 Directors’ report
96
Independent auditors’
report
103 Group financial statements
104
Consolidated statement
of comprehensive income
105 Balance sheets
106 Statements of cash flows
107
Statements of changes in
equity attributable to owners
of the parent
Notes to the consolidated
financial statements
108
145 Other matters
145
Glossary
148 Advisers and contact details
Oxford Biomedica plc | Annual report and accounts 2018
4 Group financial statements
0
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Consolidated statement of comprehensive income
for the year ended 31 December 2018
Group financial statements
Balance sheets
as at 31 December 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Research, development and
bioprocessing costs
Administrative expenses
Other operating income
Revaluation of investments
Operating profit / (loss)
Finance income
Finance costs
Profit / (loss) before tax
Taxation
Profit / (loss) and total comprehensive
income / (expense) for the year
Basic earnings / (loss)
per ordinary share
Diluted earnings / (loss)
per ordinary share
Note
4
4
13
4
6
6
8
27
9
9
There was no other comprehensive income or loss in either year.
The loss for the year is attributable to the owners of the parent.
2018
£’000
66,778
(22,763)
44,015
(29,714)
(7,433)
1,064
5,983
13,915
71
(8,972)
5,014
2,527
2017
£’000
37,590
(18,442)
19,148
(21,611)
(7,276)
1,774
2,297
(5,668)
38
(6,131)
(11,761)
2,744
7,541
(9,017)
11.57p
(14.50p)
10.89p
(14.50p)
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments and loans
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Current liabilities
Trade and other payables
Contract liabilities and deferred income
Net current assets/(liabilities)
Non-current liabilities
Loans
Provisions
Contract liabilities and deferred income
Deferred tax liability
Net assets
Equity attributable to owners
of the parent
Ordinary share capital
Share premium account
Other reserves
Accumulated losses
Total equity
Note
11
12
13
22
14
15
8
16
17
18
19
20
18
22
23
24
28
27
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Group
2018
£’000
117
31,791
10,966
–
42,874
4,251
30,585
2,446
32,244
69,526
11,422
17,084
28,506
41,020
41,153
1,287
6,434
279
49,153
34,741
2017
£’000
97
25,370
2,954
–
28,421
3,332
17,088
2,232
14,329
36,981
8,690
13,072
21,762
15,219
36,864
630
–
–
37,494
6,146
Company
2018
£’000
2017
£’000
–
–
91,786
1,129
92,915
–
–
–
11
11
164
–
164
( 153 )
–
–
–
–
–
92,762
–
–
72,350
–
72,350
–
9
–
31
40
81
–
81
(41)
–
–
–
–
–
72,309
33,034
172,074
3,509
(173,876)
34,741
31,076
154,224
3,509
(182,663)
6,146
33,034
172,074
10,731
( 123,077)
92,762
31,076
154,224
9,599
(122,590)
72,309
The Company’s registered number is 03252665.
The Company made a loss for the year of £446,000 (2017: £1,207,000).
The financial statements on pages 108 to 144 were approved by the Board of Directors on 14 March 2019
and were signed on its behalf by:
John Dawson
Chief Executive Officer
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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6 Group financial statements
Statements of cash flows
for the year ended 31 December 2018
Group financial statements
Statements of changes in equity attributable to owners of the parent
for the year ended 31 December 2018
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Cash flows
from operating activities
Cash generated from / (used in)
operations
Tax credit received
Overseas tax paid
Net cash generated from/(used in)
operating activities
Cash flows
from investing activities
Loan to subsidiary
Purchases of property, plant
and equipment
Purchases of intangible assets
Interest received
Net cash used in investing activities
Cash flows
from financing activities
Proceeds from issue of
ordinary share capital
Costs of share issues
Interest paid
Loans received
Loans repaid
Net cash generated from/ (used in)
financing activities
Net increase / (decrease)
in cash and cash equivalents
Cash and cash equivalents
at 1 January
Cash and cash equivalents
at 31 December
Note
29
12
11
23, 24
24
19
16
Group
2018
£’000
2017
£’000
Company
2018
£’000
2017
£’000
9,214
3,654
–
(1,533)
4,530
(18)
(1,483)
–
–
(1,308)
–
–
12,868
2,979
(1,483)
(1,308)
–
–
(18,304)
(4,575)
(10,103)
(45)
52
(10,096)
(1,969)
–
38
(1,931)
–
–
–
(18,304)
–
–
–
(4,575)
21,184
(1,376)
(4,665)
–
–
385
–
(10,800)
38,897
(30,536)
21,143
(1,376)
–
–
–
15,143
(2,054)
19,767
385
–
–
–
–
385
17,915
(1,006)
(20)
(5,498)
14,329
15,335
32,244
14,329
31
11
5,529
31
Notes
Ordinary
shares
£’000
30,879
Share
premium
account
£’000
154,036
Reserves
Merger
£’000
2,291
Treasury
£’000
(102)
–
–
–
–
Group
At 1 January 2017
Year ended 31 December 2017:
Loss for the year
Total comprehensive expense for the year
Transactions with owners:
Share options
Proceeds from shares issued
Value of employee services
Issue of warrants
Vesting of deferred share award
At 31 December 2017
23, 24
27
28
27
197
–
–
–
31,076
188
–
–
–
154,224
Warrant
£’000
–
Accumulated
losses
£’000
(174,489)
–
–
(9,017)
(9,017)
–
–
1,218
–
1,218
–
945
–
(102)
(182,663)
–
–
7,541
7,541
Total
equity
£’000
12,615
(9,017)
(9,017)
385
945
1,218
–
6,146
7,541
7,541
–
–
–
–
1,218
–
1,246
–
–
( 173,876 )
724
1,246
20,460
( 1,376 )
34,741
–
–
–
–
–
–
2,291
–
–
–
–
–
–
2,291
–
–
–
–
–
102
–
–
–
–
–
–
–
–
–
–
–
–
246
–
1,712
–
33,034
478
–
18,748
( 1,376 )
172,074
Year ended 31 December 2018:
Income for the year
Total comprehensive income for the year
Transactions with owners:
Share options
Proceeds from shares issued
Value of employee services
Issue of shares excluding options
Cost of share issues
At 31 December 2018
Company
At 1 January 2017
Year ended 31 December 2017:
Loss for the year
Total comprehensive expense for the year
Transactions with owners:
Share options
Proceeds from shares issued
Credit in relation to employee
share schemes
Issue of warrants
At 31 December 2017
Year ended 31 December 2018:
Loss for the year
Total comprehensive expense for the year
Share options
Proceeds from shares issued
Credit in relation to
employee share schemes
Issue of shares excluding options
Cost of share issues
At 31 December 2018
23, 24
27
28
24
Notes
10
23, 24
26, 28
23, 24
10
23, 24
26, 28
28
24
Ordinary
shares
£’000
30,875
Share
premium
account
£’000
154,036
Reserves
Merger
£’000
1,580
Warrant
£’000
–
Accumulated
losses
£’000
(121,383)
Other
£’000
6,052
Total
equity
£’000
71,164
–
–
–
–
197
188
–
–
–
–
–
31,076
–
–
154,224
–
–
1,580
–
–
–
–
246
478
–
1,712
–
33,034
–
18,748
( 1,376 )
172,074
–
–
–
–
–
–
–
–
–
1,218
1,218
–
–
–
–
–
–
–
–
(1,207)
(1,207)
(1,207)
(1,207)
–
385
749
–
6,801
–
–
(122,590)
–
–
–
1,132
–
(446)
(446)
–
(41)
–
749
1,218
72,309
(446)
(446)
724
1,091
20,460
( 1,376 )
92,762
1,580
1,218
7,933
( 123,077 )
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
1. Accounting policies
Oxford Biomedica plc (the Company) is a public company limited by shares, incorporated and domiciled in England,
and listed on the London Stock Exchange. The consolidated financial statements for the year ended 31 December 2018
comprise the results of the Company and its subsidiary undertakings (together referred to as the Group).
The Company’s principal subsidiary is Oxford Biomedica (UK) Limited.
The Group is a gene and cell therapy research and development business which is also building a revenue-generating
business providing bioprocessing and process development services to third parties. The Group currently has no
marketed pharmaceutical products.
Basis of preparation
The principal accounting policies adopted in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the financial years presented, unless otherwise stated.
The financial statements have been prepared in accordance with International Financial Reporting Standards (’IFRS’)
and IFRS Interpretations Committee (’IFRS IC’) interpretations as adopted by the European Union and with the
Companies Act 2006 as applicable to companies reporting under IFRS. The financial statements have been prepared
under the historic cost convention as modified by the revaluation of financial assets at fair value through profit and loss.
As more fully explained in the Directors’ report on pages 90 to 95 and below, the going concern basis has been
adopted in preparing the financial statements.
A summary of the more important Group accounting policies are set out below.
The preparation of the financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are
significant to the financial statements, are disclosed in note 2.
Going concern
The Group held £32.2 million of cash at the end of 2018. During 2018 the Group generated positive operational cash
flows, and although the Group is making a further strategic investment in extending our bioprocessing capacity, the
Group expects to generate sufficient operational cash flow to continue its growth strategy. Taking this into account,
in conjunction with currently known and probable cash flows, the Directors consider that the Group has sufficient
cash resources and cash inflows to continue its activities for at least twelve months from the date of these financial
statements and have therefore prepared the financial statements on a going concern basis.
Although the UK’s decision to leave the European Union may significantly affect the fiscal, monetary and regulatory
landscape in the UK,the Group has assessed the future impact of Brexit on its operations to be minor. Further details
of our contingency planning is provided on page 58.
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Accounting developments
The Group has adopted the following IFRSs in these financial statements.
— IFRIC 22 Foreign Currency Transactions and Advance Consideration (non material impact).
— IFRS 9 Financial Instruments (non material impact).
— Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions Contracts
(non material impact).
— IFRS 15 Revenue from Contracts with Customers (note 2).
The following new IFRSs have been endorsed but are not yet effective:
— IFRS 16 Leases (note 1).
— IFRIC 23 Uncertainty over Income Tax Treatments.
— Amendments to IFRS 9 Financial Instruments.
Standards issued but not yet effective
A number of new standards are effective for the annual period beginning after 1 January 2019 and earlier application
is permitted; however the Group has not early adopted the new or amended standards in preparing these
consolidated financial statements.
Of those standards that are not yet effective, IFRS 16 is expected to have a material impact on the Group financial
statements in the period of initial application.
IFRS 16 ’Leases’
The Group is required to adopt IFRS 16 ’Leases’ from 1 January 2019. The Group has assessed the estimated impact
that initial application of IFRS 16 will have on its consolidated financial statements, as described below. The actual
impacts of adopting the standard on 1 January 2019 may change because the new accounting policies are subject
to change until the Group presents its first financial statements that include the date of initial application.
IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use
asset representing its right to use the underlying asset and a lease liability representing it obligation to make lease
payments. There are recognition exemptions for the short-term leases and low-value items. Lessor accounting remains
similar to the current standard – i.e. lessors continue to classify leases as either a finance or operating lease.
IFRS 16 replaces existing leases guidance, including IAS 17 ’Leases’, IFRIC 4 ’Determining whether an Arrangement
contains a Lease’, SIC-15 ’Operating Leases – Incentives’ and SIC-27 ’Evaluating the Substance of Transactions
involving the Legal Form of a Lease’.
Leases in which the Group is a Lessee
The Group will recognise new assets and liabilities for its operating leases of laboratory office facilities and equipment
(see note 31). The nature of expenses related to those leases will now change because the Group will recognise a
depreciation charge for right-of-use assets and interest expense on lease liabilities.
Previously, the Group recognised operating lease expenses on a straight-line basis over the term of the lease, and
recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments
and the expense recognised.
Based on information currently available, the Group estimates that it will recognise additional lease liabilities of
£10,057,760 and right of use assets of £9,820,408 with a retained earnings impact of £237,352 at 1 January 2019.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Notes to the consolidated financial statements
for the year ended 31 December 2018
Transition
The Group plans to apply IFRS 16 initially on 1 January 2019, using the modified retrospective approach. Therefore,
the cumulative effect of adopting IFRS 16 will be recognised as an adjustment to the opening balance of retained
earnings at 1 January 2019, with no restatement of comparative information.
The Group plans to apply the practical expedients to grandfather the definition of a lease on transition. This means
that it will apply IFRS 16 to all contracts entered into before 1 January 2019 and identified as leases in accordance
with IAS 17 and IFRIC 4.
Basis of consolidation
The consolidated financial statements comprise the Company and its subsidiary undertakings for the year to
31 December each year. Subsidiaries are entities that are directly or indirectly controlled by the Group. Subsidiaries
are consolidated from the date at which control is transferred to the Group. Control exists where the Group has the
power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The
Group does not currently have any associates.
All intragroup transactions and balances are eliminated on consolidation.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
fair value of the assets transferred, equity instruments issued, and liabilities incurred or assumed at the date of exchange.
Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. Any excess of the
cost of the acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as
goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference
is recognised directly in the statement of comprehensive income. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring accounting policies used into line with those of the Group.
The Group and Company have elected not to apply IFRS 3 ’Business combinations’ retrospectively to business
combinations which took place prior to 1 January 2004, namely the acquisition in 1996 of 100% of the issued share
capital of Oxford Biomedica (UK) Limited that has been accounted for by the merger accounting method.
Foreign currencies
Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the transaction date.
Assets and liabilities in foreign currencies are retranslated into sterling at the rates of exchange ruling at the balance
sheet date. Differences arising due to exchange rate fluctuations are taken to the statement of comprehensive
income in the period in which they arise.
Revenue
Revenue comprises income derived from bioprocessing of clinical product for partners, fees charged for providing
development services to partners, product and technology licence transactions, royalties, options, and funded
research and development programmes.
Platform
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
process. The gross amount due from customers on all partnerships in progress for which costs incurred plus
recognised profits exceed progress billings is presented as a contract asset separately on the balance sheet.
Consideration received in excess of the stage of completion will be deferred until such time as it is appropriate
to recognise the revenue.
Revenues for providing process development activities to partners are recognised during the period in which
the service is rendered on a percentage of completion basis.
Technology licences that have been established by the group have all been determined as “right to use” licences,
rather than “right to access” licences. As such, the revenue from these licences is recognised at the point in time
at which the licence transfers to the customer.
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Milestones relating to bioprocessing or process development activities have been identified as separate performance
obligations as they involve the transfer of a distinct good or service, determined with reference to conditions
stipulated in the relevant agreements or contracts. Each milestone is determined as either binary or non-binary.
Milestones that are considered to be binary relate to the achievement of specific events rather than the provision
of, for example, support. Incentives related to the achievement of specific deliverables are considered to be binary
incentives and will be recognised in full once it is deemed highly probable that the obligation will be met.
Milestones related to the provision of support services are considered to be non-binary incentives and are recognised
on a percentage of completion basis, but taking into account the likelihood of achievement of the deliverable.
Amounts receivable on delivery of a milestone performance obligation represents variable consideration and have
been allocated to the relevant performance obligation.
Options to technology licences are recognised when the customer exercises the option to obtain that licence.
Non-cash revenues are recognised at fair value through profit and loss.
Product
Product licences that have been established by the Group have all been determined as “right to use” licences, rather
than “right to access” licences. As such, the revenue from these licences is recognised at the point in time at which
the licence transfers to the customer.
Amounts receivable in respect of milestone payments are considered to be separate performance obligations which
are binary and will be recognised in full once it is deemed highly probable that the specific performance obligations
stipulated in the licence agreement have been met. Payments linked to “success” such as regulatory filing or approval,
or achievement of specified sales volumes, are recognised in full when the relevant event has occurred.
Non-binary milestones are recognised on a percentage of completion basis in the period in which related costs are
incurred, or over the estimated period to completion of the relevant phase of development or associated clinical trials.
Amounts receivable on delivery of a milestone performance obligation represents variable consideration and have
been allocated to the relevant performance obligation.
Royalty revenue is recognised as the underlying sales occur.
Research and development revenue and associated costs are recognised over time. Progress is determined based
on the cost-to-cost method.
Cost of sales
Cost of sales comprises the cost of bioprocessing clinical product for partners and royalties arising on partners’
licences.
The cost of bioprocessing clinical product for partners includes the raw materials, labour costs, overheads and other
directly attributable costs. Costs are recognised on a percentage of completion basis dependent on the stage of
completion of the contract. Costs incurred in excess of the stage of completion are recognised as work in progress
until such time as it is appropriate to recognise the cost.
The Group’s products and technologies include technology elements that are licensed from third parties. Royalties
arising from such partners’ licences are treated as cost of sales. Where royalties due have not been paid they are
included in accruals. Where revenue is spread over a number of accounting periods, the royalty attributable to the
deferred revenue is included in prepayments.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
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Research, development and bioprocessing
Research, development and bioprocessing expenditure is charged to the statement of comprehensive income
in the period in which it is incurred.
Revaluation of equity instruments
Gains and losses on the revaluation of equity instruments are recognised at fair value in the statement
of comprehensive income.
Expenditure incurred on development projects is recognised as an intangible asset when it is probable that the project
will generate future economic benefits, considering factors including its commercial and technological feasibility,
status of regulatory approval, and the ability to measure costs reliably. Development expenditure which has been
capitalised and has a finite useful life is amortised from the commencement of the commercial production of the
product on a straight-line basis over the period of its expected benefit. No such costs have been capitalised to date
as there was insufficient certainty about the recognition criteria having been met at the point the expenditure had
been incurred. Other development expenditure is recognised as an expense when incurred.
Employee benefit costs
Employee benefit costs, notably holiday pay and contributions to the Group’s defined contribution pension plan,
are charged to the statement of comprehensive income on an accruals basis. The assets of the pension scheme
are held separately from those of the Group in independently administered funds. The Group does not offer any
other post-retirement benefits.
Share based payments
The Group’s employee share option schemes, long term incentive plans, save as you earn scheme and deferred
bonus plans allow group employees to acquire shares of the Company subject to certain criteria. The fair value
of options granted is recognised as an expense of employment in the statement of comprehensive income with
a corresponding increase in equity. The fair value is measured at the date of grant and spread over the period during
which the employees become unconditionally entitled to the options. The fair value of options granted under the
share option schemes and share save scheme is measured using the Black-Scholes model. The fair value of options
granted under the LTIP schemes, which includes market condition performance criteria, is measured using a Monte
Carlo model taking into account the performance conditions under which the options were granted. The fair value
of options granted under the deferred bonus plan is based on the market value at the date of grant of these options.
At each financial year end, the Group revises its estimate of the number of options that are expected to become
exercisable based on forfeiture such that at the end of the vesting period the cumulative charge reflects the actual
options that have vested, with no charge for those options which were forfeit prior to vesting. When share options
are exercised the proceeds received are credited to equity.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. No leases have been classified as finance leases. All other leases are classified as operating
leases. Costs in respect of operating leases are charged to the statement of comprehensive income on a straight-line
basis over the lease term.
Grants
Income from government and other grants is recognised over the period necessary to match them with the related
costs which they are intended to compensate. Grant income is included as other operating income within the
statement of comprehensive income, and the related costs are included within research, development and
bioprocessing costs, and administrative expenses. Where grant income received exceeds grant income recognised,
it is included within deferred income on the balance sheet, whilst where grant income recognised exceeds grant
income received, it is included within other receivables on the balance sheet.
Finance income and costs
Finance income and costs comprise interest income and interest payable during the year, calculated using the
effective interest rate method. It also includes the revaluation of external loans denominated in a foreign currency.
Taxation
The Group is entitled to claim tax credits in the United Kingdom for certain research and development expenditure.
The credit is paid in arrears once tax returns have been filed and agreed. The tax credit earned in the period, based
on an assessment of likely receipt, is recognised in the statement of comprehensive income with the corresponding
asset included within current assets in the balance sheet until such time as it is received.
The Group also receives a Research and Development Expenditure Credit (’RDEC’) which is accounted for
as a reduction in research, development and bioprocessing costs in the statement of comprehensive income,
and within trade and other receivables in the balance sheet.
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted, or substantially enacted, by the balance sheet date.
Deferred tax is calculated in respect of all temporary differences identified at the balance sheet date. Temporary
differences are differences between the carrying amount of the Group’s assets and liabilities and their tax base.
Deferred tax liabilities may be offset against deferred tax assets within the same taxable entity or qualifying local tax
group. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it can be
regarded as probable that there will be suitable taxable profits within the same jurisdiction in the foreseeable future
against which the deductible temporary difference can be utilised.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the asset is
realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the balance
sheet date.
Measurement of deferred tax liabilities and assets reflects the tax consequence expected to fall from the manner
in which the asset or liability is recovered or settled.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
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Intangible assets
Initial recognition
Intellectual property and in-process research and development acquired through business combinations are
recognised as intangible assets at fair value. Other acquired intangible assets are initially recognised at cost.
Amortisation
Where the intangible asset has a finite life, amortisation is charged on a straight-line basis over the remaining useful
economic life from the time they become available for use. Where the useful life of the intangible asset cannot be
determined, the asset is carried at cost but tested annually for impairment. Intangible assets are amortised over the
length of the patent life; current lives range from 5 to 19 years.
Impairment
The carrying value of non-financial assets is reviewed annually for impairment or earlier if an indication of impairment
occurs and provision made where appropriate. Charges or credits for impairment are passed through the statement
of comprehensive income.
For the purposes of assessing impairments, assets are grouped at the lowest levels for which there are separately
identifiable cash flows or cash-generating units. Impairment losses are recognised for the amount by which each
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less costs to sell, and value in use. Where the asset is no longer being developed by the Group fair value less costs of
disposal is used as the recoverable amount. Value in use is calculated using estimated discounted future cash flows.
Key assumptions in the discounted cash flow calculations are whether:
— The product is developed by a collaborative partner who funds all future development costs and markets
the product.
— The Group receives an initial licence fee, milestone payments and royalties on sales.
— The cash flow projections include estimates for selling price, royalty rates, population growth, disease incidence
and market penetration.
— The resulting cash receipts are discounted at an appropriate discount rate.
— The cash flow projections are a long-term view, based on the expected patent life. Due to the length of the
development cycle for innovative medicines, this period is significantly longer than five years.
The key assumptions are management estimates, based where possible on available information for similar products.
Due to the novelty and early stage of development of the Group’s products, it is not possible to benchmark these
assumptions against past experience.
Impairment and amortisation charges are included within research, development and bioprocessing costs in the
statement of comprehensive income.
Property, plant and equipment
Property, plant and equipment are carried at cost, together with any incidental expenses of acquisition, less
depreciation. Cost includes the original purchase price of the asset and any costs attributable to bringing the asset
to its working condition for its intended use.
Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual values
on a straight-line basis over the expected useful economic lives of the assets concerned. Depreciation of an asset
begins when it is available for use. The principal annual rates used for this purpose are:
Freehold property
Leasehold improvements
Office equipment and computers
Bioprocessing and laboratory equipment
10%
10%
(or the remaining lease term if shorter)
20 – 33%
20%
The assets’ residual values and useful lives are reviewed annually.
The bioprocessing plants are reviewed annually for impairment triggers and, where necessary, a full impairment
review is performed.
Provisions for the anticipated cost of restoring the leasehold properties to their original condition are recognised as
leasehold improvements within fixed assets.
Investments in subsidiaries
Investments are carried at cost less any provision made for impairment. Options over the Company’s shares have
been awarded to employees of subsidiary companies. In accordance with IFRS2, the Company treats the value
of these awards as a capital contribution to the subsidiaries, resulting in an increase in the cost of investment.
Investments in subsidiary undertakings, including shares and loans, are carried at cost less any impairment provision.
Such investments are subject to review, and any impairment is charged to the statement of comprehensive income.
At each year end the Directors review the carrying value of the Company’s investment in subsidiaries. Where the
review performed concludes that there is a material and sustained shortfall in the market capitalisation, or a significant
and sustained change in the business resulting in a decrease in market capitalisation, the Directors consider this to be
a trigger of an impairment review as set out in IAS 36, and the carrying value of the Company’s investments in
subsidiaries is adjusted. The Directors consider that reference to the market capitalisation of the Group is an
appropriate external measure of the value of the Company’s subsidiaries for this purpose.
At year end the Directors will assess the requirement to write back a portion or all of any impairment previously
recognised on its investment in subsidiaries. Factors which will be taken into account with regards to this decision
will be the Groups track record of improved financial results across the last three to four years, as well as the
expectation of future impairments being required after a write back was accounted for.
Intellectual property rights comprise third party patent rights that have been purchased by the Group. No in-house
research and development or patent costs are included in intangible assets.
Financial assets
Investments
Other investments held by the Group are classified as fair value through profit and loss.
Bank deposits
Bank deposits with original maturities between three months and twelve months are included in current assets and
are classified as available for sale financial assets. After initial recognition, available for sale investments are measured
at their fair value.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
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Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average
method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs
and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable
value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
Trade receivables
Trade receivables are recognised initially at the transaction price as these assets do not have significant financing
components and are subsequently measured at amortised cost. The Group recognises loss allowances for trade
receivables under the expected credit loss model as established by evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables.
Contract assets
Contract assets relates to the Group’s rights to consideration for work completed but not billed at the reporting
date for commercial development work and bioprocessing batches. The contract assets are transferred to trade
receivables when the rights become unconditional. This usually occurs when the Group issues an invoice
to the customer.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank deposits repayable on demand, and other short term highly
liquid investments with original maturities of three months or less.
Deposits
Deposits consists of amounts held in escrow and is included within other receivables within the Balance Sheet until
such time as the restrictions relating to these items have been lifted.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method. Trade payables are classified as current liabilities if payment is due within one year or less. If not,
they are presented as non-current liabilities.
Contract liabilities and deferred Income
The contract liabilities primarily relate to the advance consideration received from the customers for commercial
development work and bioprocessing batches, as well as options, grants and funded research and development
activities.
Financial liability: loans
On initial recognition, external loans are measured at fair value plus directly attributable transaction costs.
On subsequent measurement, external loans are measured at amortised cost under the effective interest rate
method. The effective interest rate method is a method of calculating the amortised cost of a financial liability
and allocating the interest expense over the relevant period. The calculation of the effective interest rate takes
into account the estimated cash flows which consider all the contractual terms of the financial instrument,
including any embedded derivatives which are not subject to separation.
If the Group assesses that a loan has elements of both a liability and an equity component, the Group will account for
the loan as a compound financial instrument separating out the individual elements into financial liabilities or equity
instruments. The liability and the equity components should be presented separately on the balance sheet. On initial
recognition, the issuer of a compound instrument first measures the liability component at its fair value. The equity
component is measured as the residual amount that results from deducting the fair value of the liability component
from the initial carrying amount of the instrument as a whole. This method is consistent with the requirements for
initial measurement of a financial liability in IFRS 9, and the definitions in IAS 32, and the framework of an equity
instrument as a residual interest.
Provisions
Provisions for the anticipated cost of restoring the leasehold properties to their original condition are recognised
when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow
of resources will be required to settle the obligation; and the amount has been reliably estimated.
Provisions are not recognised for future operating losses. Provisions are measured at the present value of the
expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects the current
market assessments of the time value of money and the risks specific to the obligations. The increase in the provision
due to the passage of time is recognised as finance costs.
Share capital
Ordinary shares are classified as equity. Costs of share issues are charged to the share premium account.
Merger reserve
A merger reserve is used where more than 90% of the shares in a subsidiary are acquired and the consideration
includes the issue of new shares by the Company, thereby attracting merger relief under s612 and s613 of the
Companies Act 2006.
Warrant reserve
The warrant reserve comprises warrants exercisable on the enlarged Group’s share capital which have been
fair valued and are exercisable over a period of time.
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. We do not believe that there are any key sources of estimation uncertainty.
The critical accounting judgements are set out below.
IFRS 15
The Group has implemented a new accounting standard, IFRS 15 ’Revenue from contracts with customers’, from
1 January 2018.
The new standard provides a single principles-based approach to the recognition of revenue from all contracts with
customers and requires revenue to be recognised when or as performance obligations in a contract are performed.
The Group has adopted IFRS 15 applying the modified retrospective approach. No cumulative adjustment to equity
was required at 1 January 2018 as there was no change in the way performance obligations have been recognised
due to the implementation of IFRS 15, other than as identified below. In accordance with the requirements of the
Standard, where the modified retrospective approach is adopted, prior year results are not restated.
In application of the standard the Group has identified three key areas of judgement within the existing collaboration
agreements, firstly in relation to the number of distinct performance obligations contained within each collaboration
agreement which include a licence, bioprocessing and process development activities within a single contract,
secondly the appropriate allocation of revenue to each performance obligation to represent the stand-alone selling
price of the obligation, and thirdly the appropriate recognition at a point-in-time or over time. The sales royalties
contained within the collaboration agreements qualify for the royalty exemption available under IFRS 15 and will
continue to be recognised as the underlying sales are made.
As part of the IFRS 15 revenue analysis performed, the Group is planning to recognise partially funded research
and development incomes, previously recognised within other operating income in the statement of comprehensive
income, within revenue in this statement, in line with the development of this service within the business. In 2018,
the Group recognised £0.2 million (2017: £0.5 million) of this type of income. There are not expected to be any
other material impacts on reported revenue, and the prior period will not be restated.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
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Revenue recognition
During 2018 the Group entered into a collaboration and license agreement with Bioverativ (Sanofi). As part of this
agreement, the Group has recognised revenues as follows:
— £4.0 million upon granting of a license to our Lentivector technology,
— The provision of process development services and scale-up activities for its lentiviral vector haemophilia products
which have been recognised as the work is completed.
As part of the collaboration the Group is entitled to recognise future revenues in terms of:
— The provision of process development services and scale-up activities for its lentiviral vector haemophilia products
as the work is completed,
— Process development, technology transfer, product, regulatory and sales milestones which will be recognised
upon achievement of the milestone,
— Bioprocessing income on a percentage of completion basis as the manufacturing is completed,
— Royalties based on underlying sales and technology access fees over the period in which the technology is
provided.
During 2018 the Group entered into a license agreement with Axovant. As part of this agreement, the Group has
recognised revenues as follows:
— £4.1 million upon granting of a license to our Lentivector technology,
— £10.2 million upon granting of an exclusive license to our OXB-102 (now AXO-LENTI-PD) and ProSavin products,
— The transfer of know-how and ongoing clinical development as the work is completed,
— The provision of process development services and scale-up activities for its lentiviral vector OXB-102
(AXO-LENTI-PD) product which have been recognised as the work is completed,
— Provision of existing stock of OXB-102 as that stock has been made available to Axovant.
As part of the license agreement the Group is entitled to recognise future revenues in terms of:
— The transfer of know-how and ongoing clinical development as the work is completed,
— The provision of process development services, scale-up activities, and technology transfer activities for its lentiviral
vector OXB-102 (AXO-LENTI-PD) product as the work is completed,
— Manufacturing and process development, diligence, product, regulatory and sales milestones which will be
recognised upon achievement of the milestone,
— Bioprocessing income on a percentage of completion basis as the manufacturing is completed,
— Royalties based on underlying sales.
During 2018 the Group entered into a process development collaboration agreement with the UK Cystic Fibrosis
Gene Therapy Consortium (GTC) and Imperial Innovations to develop a long-term therapy for patients with cystic
fibrosis (CF). Concurrently with this, a separate option and license agreement has been signed between Oxford
Biomedica and Boehringer Ingelheim. As part of these agreements, the Group has recognised revenues as follows:
As part of the license agreement the Group is entitled to recognise future revenues in terms of:
— The granting of a license to our Lentivector technology,
— The provision of process development services, scale-up activities, and technology transfer activities for its lentiviral
vector cystic fibrosis product as the work is completed,
— Product development, technology transfer, regulatory and sales milestones which will be recognised upon
achievement of the milestone,
— Bioprocessing income on a percentage of completion basis as the manufacturing is completed,
— Royalties based on underlying sales.
In 2018 the Group received £0.5 million from our insurer with regards to a loss suffered due to a temperature
excursion on a customer stock shipment included within revenues in 2017.
Under the 2017 Novartis contract an up-front fee of $10 million was due for a three year minimum capacity
reservation covering the period from 2017 to 2019. The Group have determined that this revenue should
be recognised over the capacity reservation term based on the number of batches completed per year, capped
at the minimum capacity requirement per year per the contract. In 2018 the Group have therefore recognised
revenues of £2.8 million (2017: £2.0 million) with regards to this item.
In 2017 the Group recognised a contractually agreed milestone for $1.8 million for the provision of support
to Novartis in preparation of their suspension process clinical submission. Although the milestone was formally
agreed by Novartis in January 2018, the Group concluded that the criteria for revenue recognition had been met
on the basis that they had completed the procedures and the submission had been through the first levels of review
with Novartis. Accordingly, a total of $1.8 million (£1.3 million) was recognised as revenue in 2017.
In 2017 the Group was due a contractually agreed step milestone from Novartis based on the increased scale-up
of their suspension process. Dependent on productivity the Group could be awarded up to $4 million. $250,000
was recognised in 2016. During 2017 the Group achieved the target scale up and submitted documents supporting this.
This was formally accepted by Novartis in January 2018. The Group concluded that the criteria for revenue recognition
had been met on the basis that they had achieved the scale up, and the submission had been through the first levels
of review with Novartis. Accordingly, the remaining $3.8 million (£2.8 million) of revenue was recognised in 2017.
Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts
with customers.
Trade Receivables
Contract Assets
Contract Liabilities
2018
£’000
15,408
8,886
(18,485)
2017
£’000
5,705
8,681
(13,072)
The contract assets relates to the Group’s rights to consideration for work completed but not billed 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 provision of process development services and scale-up activities for its lentiviral vector cystic fibrosis product
which have been recognised as the work is completed.
The contract liabilities primarily relate to the advance consideration received from the customers for commercial
development work and bioprocessing batches, for which revenues are recognised on a percentage of completion basis.
No revenue was recognised in 2018 for performance obligations satisfied in previous periods.
No information is provided about remaining performance obligations at 31 December 2018 that have an original
expected duration of one year or less, as allowed by IFRS 15.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
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Performance obligations and revenue policies
Revenue is measured based on the consideration specified in a contract with a customer.
The following table provides information about the nature and timing of the satisfaction of performance obligations
in contracts with customers, including significant payment terms, and the related revenue recognition policies. For
services set out below, payment terms are negotiated on a customer by customer basis, however this is typically
between 30 and 60 days.
Nature and timing of satisfaction
of performance obligations
Bioprocessing of clinical and commercial
product for partners.
The Group has determined that for the
bioprocessing of product, the customer controls
all of the work in progress as the product is being
manufactured. This is because those products
are made under exclusive licence.
Revenues for providing process development
activities to partners.
Milestone receivables relating to bioprocessing
or process development activities.
Milestones are determined by specific conditions
stipulated in the relevant agreements or
contracts.
Product and technology licences.
The licences establish rights to the intellectual
property and know-how of the Group.
Milestone payments relating to product licences.
Milestones are determined by specific conditions
stipulated in the relevant agreements or contracts.
Royalties.
Research and development funding.
Revenue recognition under IFRS 15
Revenue and associated costs are recognised
over time as the processes are carried out.
Progress is determined based on the
achievement of verifiable stages of the process.
Revenue recognition under IAS 18
Revenue was recognised on a ’percentage
of completion’ basis dependent on the stage of
completion of the process at the reporting date.
Un-invoiced amounts are presented as
contract assets.
Revenue is recognised over time as the services
are provided on a percentage of completion
basis.
When a contract with a customer is identified,
each milestone is determined as either binary or
non-binary. Milestones that are considered to be
binary relate to the achievement of specific
events rather than the provision of, for example,
support:
Revenue was recognised during the period
in which the service is rendered on a percentage
of completion basis.
Milestones related to the achievement of specific
deliverables were recognised on a probability
adjusted basis once most of the work or
identifiable deliverables have been completed
and when there is a high probability that the
incentive will be received.
A binary milestone will be recognised in full
once it is deemed highly probable that the
obligation will be met.
Non-binary milestones are recognised on a
percentage of completion basis.
The licences that have been established by the
Group have all been determined as “right to use”
licences, rather than “right to access” licences.
As such, the revenue from these licences is
recognised at the point in time at which the
licence transfers to the customer.
When a contract with a customer is identified,
each milestone is determined as either binary
or non-binary. Milestones that are considered
to be binary relate to the achievement
of specific events rather than the provision
of, for example, support:
A binary milestone will be recognised in full
once it is deemed highly probable that the
obligation will be met.
Non-binary milestones are recognised
on a percentage of completion basis.
Recognised as the underlying sales occur.
Revenue and associated costs are recognised
over time. Progress is determined based on the
cost-to-cost method.
Milestones related to the provision of support
services are recognised on a percentage of
completion basis, but taking into account the
likelihood of achievement of the deliverable.
Where the amount received was non-refundable
and there were no ongoing commitments from
the Group and the licence had no fixed end date,
the Group recognised revenue in full on
execution of the licence.
Milestone payments were recognised as revenue
when the specific conditions stipulated in the
licence agreement have been met.
Payments linked to “success” such as regulatory
filing or approval, or achievement of specified
sales volumes, are recognised in full when the
relevant event occurred.
Otherwise, amounts receivable were recognised
in the period in which related costs incurred,
or over the estimated period to completion of
the relevant phase of development or associated
clinical trials.
Recognised as the underlying sales occur.
Other income was recognised over a period that
corresponds with the performance of the funded
research and development activities.
Going concern
Management and the Directors have had to make estimates and important judgements when assessing the going
concern status of the Group. The conclusions of these estimates and judgements are reported in several places
in this annual report including the Directors Report (page 90) and note 1 to the financial statements (page 108).
3. Financial risk management
Financial risk factors
The Group has a simple corporate structure with the Company and its only operating subsidiary both being
UK domiciled. Monitoring of financial risk is part of the Board’s ongoing risk management, the effectiveness
of which is reviewed annually. The Group’s agreed policies are implemented by the Chief Financial Officer,
who submits reports at each board meeting. The Group does not use financial derivatives, and it is the Group’s
policy not to undertake any trading in financial instruments.
(a) Foreign exchange risk
In 2018 the Group’s revenues were mostly receivable in Sterling and US Dollars, and certain of its expenditures
were payable in Euros and US Dollars. The majority of operating costs are denominated in Sterling but most
of the finance costs and any related future repayment of capital will be in Dollars (please refer to Interest rate
risk for further details with regards to the Oaktree loan). A 10% difference in the £/$ exchange rate would have
had an impact of approximately £3,054,000 (2017: £336,000) on net revenue over the year and would lead
to an unrealised foreign exchange gain/loss of £4.1 million (2017: £3.3 million) on the outstanding loan balance.
The Group also has exposure to the £/€ exchange rate due to the need to fund expenditure denominated in Euros.
Had the pound been 10% weaker in relation to the Euro, the increased cost in 2018 would have been approximately
£156,000 (2017: £37,000). The Group’s policy is to hold the majority of its funds in Sterling and US Dollars. No other
hedging of foreign currency cash flows is undertaken.
(b) Interest rate risk
On 29 June 2017 the Group established a $55 million loan facility with Oaktree Capital Management. $50 million
of the facility was drawn down as at 30 June 2017 while the remaining $5 million of the loan facility was drawn down
in July 2017. The fair value of the loan net of capitalised legal and associated finance costs at 31 December 2018
is accounted for as a £41.2 million (2017: £36.9 million) balance within loans, and the fair value of the warrants
of £1.2 million is accounted for as equity.
The Group’s policy is to maximise interest receivable on deposits, subject to maintaining access to sufficient liquid
funds to meet day to day operational requirements and preserving the security of invested funds. With the current low
level of bank interest rates, interest receivable on bank deposits in 2018 was just £71,000 (2017: £38,000).
If interest rates had been 1% higher in 2018 the impact on cash interest paid would have been £555,000
(2017: £403,000).
(c) Credit risks
Cash balances are mainly held on short and medium-term deposits with financial institutions with a credit rating
of at least A, in line with the Group’s policy to minimise the risk of loss.
Trade debtors are monitored to minimise the risk of loss (note 15).
Derivative financial instruments and hedging
There were no material derivatives at 31 December 2018 or 31 December 2017 which have required separation,
and hedge accounting has not been used.
Fair value estimates
The fair value of short term deposits with a maturity of one year or less is assumed to be the book value.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns to shareholders and benefits for other stakeholders, and to maintain an optimal capital
structure to minimise the cost of capital. There have been no covenant breaches in relation to the loan agreements
in place during the year.
Group
Net debt
Equity
Debt/equity
2018
£’000
8,909
34,741
26%
2017
£’000
22,535
6,146
367%
4. Segmental analysis
The chief operating decision-makers have been identified as the Senior Executive Team (SET), comprising the
Executive Directors, Chief Project and Development Officer, Chief Technical Officer, Chief Scientific Officer, Chief
Business Officer, Chief Operations Officer and Chief People Officer. The SET monitors the performance of the Group
in two business segments:
(i) Platform – this segment consists of the revenue generating bioprocessing and process development activities
undertaken for third parties. It also includes internal technology developments and technical intellectual property.
(ii) Product – this segment consists of the clinical and preclinical development of in vivo and ex vivo gene and cell
therapy products which are owned by the Group, or out-licensed to customers.
During 2017 a change was made to the business segments monitored by SET to better reflect the way the business is
being managed. Internal technology projects to develop new potentially saleable technology, improve our current
processes and bring development & manufacturing costs down is now included within the newly named ’Platform’
segment (previously ’Partnering’), rather than forming part of the “Product“ segment (previously ’R&D’).
Revenues, Operating EBITDA and Operating profit/(loss) by segment
Revenues, Operating EBITDA and Operating profit/(loss) represent our measures of segment profit & loss as they are
a primary measure used for the purpose of making decisions about allocating resources and assessing performance
of segments.
2018
Revenue
Other operating income
Operating EBITDA¹
Depreciation, amortisation and share based payment
Revaluation of investments
Operating profit
Net finance cost
Profit before tax
2017
Revenue
Other operating income
Operating EBITDA¹
Depreciation, amortisation and share based payment
Revaluation of investments
Operating profit/(loss)
Net finance cost
Loss before tax
Platform
£’000
55,004
645
9,743
(4,358)
5,983
11,368
Platform
£’000
37,590
1,774
2,917
(5,035)
2,297
179
Product
£’000
11,774
419
3,637
(1,090)
–
2,547
Product
£’000
–
–
(4,786)
(1,061)
–
(5,847)
Total
£’000
66,778
1,064
13,380
(5,448)
5,983
13,915
(8,901)
5,014
Total
£’000
37,590
1,774
(1,869)
(6,096)
2,297
(5,668)
(6,093)
(11,761)
1.
Operating EBITDA, being earnings before interest, tax, depreciation, amortisation, revaluation of investments and the share based payment charge, is considered by the Directors
to give a fairer view of the year-on-year comparison of trading performance.
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Other operating income of £1.1 million (2017: £1.8 million) includes grant income of £0.4 million (2017: £0.8 million)
which is used to fund clinical and pre-clinical development and is included within the Product segment. Grant
income to develop our supply chain capabilities of £0.5 million (2017: £0.2 million) is included within the Platform
segment. 2018 includes £0.2 million (2017: £0.8 million) of partially funded development income.
Costs are allocated to the segments on a specific basis as far as possible. Costs which cannot readily be allocated
specifically are apportioned between the segments using relevant metrics such as headcount or direct costs.
A geographical split of operating loss is not provided because this information is not received or reviewed
by the chief operating decision-maker and the origin of all revenues is the United Kingdom.
A segmental or geographical split of assets and liabilities is not provided because this information is not received
or reviewed by the chief operating decision-maker. All assets are located within the United Kingdom.
Disaggregation of revenue
Revenue is disaggregated by the type of revenue which is generated by the commercial arrangement.
Revenue shown in the table below is denominated in GBP and is generated in the UK.
2018
Bioprocessing/Commercial
development
Licence fees & Milestones
Total
2017
Bioprocessing/Commercial
development
Licence fees & Milestones
Total
Platform
£’000
39,034
15,970
55,004
Platform
£’000
31,849
5,741
37,590
Product
£’000
1,470
10,304
11,774
Product
£’000
–
–
–
Total
£’000
40,504
26,274
66,778
Total
£’000
31,849
5,741
37,590
Our customer base includes Novartis, Axovant, Bioverativ (Sanofi) and Orchard Therapeutics which each generated
more than 10% of the Group’s revenue in 2018.
Revenue by geographical location
The Group’s revenue derives wholly from assets located in the United Kingdom. Analysed by location the Group’s
revenues derive predominantly from Europe with a large increase in rest of world (United States) revenues in 2018:
Revenue by customer location
Europe
Rest of world
Total revenue
2018
£’000
41,542
25,236
66,778
2017
£’000
36,398
1,192
37,590
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
5. Employees and Directors
7. Expenses by nature
The monthly average number of persons (including Executive Directors) employed by the Group during the year was:
By activity
Office and management
Research, development
and bioprocessing
Total
Employee benefit costs
Wages and salaries
Social security costs
Other pension costs (note 30)
Share based payments (note 26)
Total employee benefit costs
Key management compensation
Wages and salaries
Social security costs
Other pension costs
Share based payments
Total
2018
Number
27
2017
Number
24
350
377
2018
£’000
20,444
2,411
1,277
1,091
25,233
2018
£’000
3,267
788
186
572
4,814
271
295
2017
£’000
14,771
1,616
958
749
18,094
2017
£’000
2,334
395
158
420
3,307
The key management figures above include Executive and Non-Executive Directors and the other members of the
Senior Executive Team. Further information about the remuneration of individual Directors, including the highest paid
Director, is provided in the audited part of the Directors’ remuneration report on page 74 which forms part of these
financial statements.
The Company had no employees during the year (2017: zero).
6. Finance income and costs
Group
Finance income:
Bank interest receivable
Total finance income
Finance costs:
Unwinding of discount in provisions (note 20)
Revaluation of liabilities in foreign currency
Interest payable
Total finance costs
Net finance income
2018
£’000
2017
£’000
71
71
(8)
(2,744)
(6,220)
(8,972)
(8,901)
38
38
(8)
3,291
(9,414)
(6,131)
(6,093)
Up to 29 June 2017, interest payable consisted of the cash interest paid on the Oberland loan facility at 10.5%, as well
as the remaining 4.5% previously accrued to provide a return of 15% per annum to Oberland. The Group also incurred
a loss on early extinguishment of the Oberland facility of £3.9 million included within interest payable of £9.4 million.
On 29 June 2017 the Group re-financed its loan facility at a lower cash cost with a new $55.0 million facility with Oaktree
Capital Management. The new facility provides for increased funding together with a lower interest rate of 9% plus
US$ three month LIBOR. The loan balance has increased from £36.9 million at 31 December 2017 to £41.2 million at
31 December 2018 due to the devaluation of sterling against the dollar, and interest accrued on the capitalised balance.
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Group
2018
£’000
25,223
4,332
25
–
9,825
30
(1,305)
2017
£’000
18,094
4,113
262
971
7,833
143
287
Company
2018
£’000
365
2017
£’000
280
–
–
–
–
–
–
–
–
–
–
–
–
Notes
5
12
11
11
Employee benefit costs
Depreciation of property, plant
and equipment
Amortisation
Impairment of intangible assets
Raw materials and consumables
used in bioprocessing
Operating lease payments
Net (profit)/loss on foreign exchange
Company employee benefit costs of £365,000 (2017: £280,000) relates to Non-Executive costs paid
by Oxford Biomedica UK Ltd and recharged to the Company.
Depreciation is charged to research, development and bioprocessing costs in the statement of comprehensive
income.
During the year the Group (including its subsidiaries) obtained services from the Group’s auditors and their associates
as detailed below:
Services provided
by the Group’s current auditors
Fees payable for the audit of the parent company and consolidated financial statements
Fees payable for other services:
The audit of the Company’s subsidiaries
Review of interim results
Other services
Total
Services provided
by the Group’s previous auditors
Fees payable for the audit of the parent company and consolidated financial statements
Fees payable for other services:
The audit of the Company’s subsidiaries
Additional fees relating to prior year audit
Other services
Tax compliance services
Total
Group
2018
£’000
25
2017
£’000
–
125
20
8
178
Group
2018
£’000
–
–
25
14
–
39
–
–
–
–
2017
£’000
25
120
15
35
5
200
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
8. Taxation
The Group is entitled to claim tax credits in the United Kingdom for certain research and development expenditure.
The amount included in the statement of comprehensive income for the year ended 31 December 2018 comprises
the credit receivable by the Group for the year less overseas tax paid in the year. The United Kingdom corporation
tax research and development credit is paid in arrears once tax returns have been filed and agreed. The tax credit
recognised in the financial statements but not yet received is included in current tax assets in the balance sheet.
The amounts for 2018 have not yet been agreed with the relevant tax authorities.
Current tax
United Kingdom corporation tax research and development credit
Overseas taxation
Adjustments in respect of prior periods:
United Kingdom corporation tax research and development credit
Current tax
Deferred tax
Relating to the origination of timing allowances
Adjustments in respect of prior periods
Deferred tax
Taxation Credit
Group
2018
£’000
(2,278)
–
(2,278)
(528)
(2,806)
312
(33)
279
(2,527)
2017
£’000
(2,232)
18
(2,214)
(530)
(2,744)
–
–
–
(2,744)
The adjustment of current tax in respect of prior year of £528,000 (2017: £530,000) relates to a higher than
anticipated tax receipt.
The Company has no tax liability, nor is it entitled to tax credits (2017: £nil).
The tax credit for the year is higher (2017: higher) than the standard rate of corporation tax in the UK. The differences
are explained below:
Profit/(Loss) on ordinary activities before tax
Profit/(Loss) on ordinary activities before tax multiplied
by the standard rate of corporation tax in the UK of 19.00% (2017: 19.25%)
Effects of:
Expenses not deductible for tax purposes
R&D relief mark-up on expenses
Income not taxable
Tax deduction for share options less than share option accounting charge
Recognition of previously unrecognised tax losses
Tax rate changes
Deferred tax not recognised
Overseas tax
Tax losses carried forward to future periods
Adjustments in respect of prior periods
Total tax credit for the year
Group
2018
£’000
5,014
2017
£’000
(11,761)
Company
2018
£’000
(1 ,575)
2017
£’000
(1,207)
953
(2,264)
(299)
(232)
264
(1,880)
(32)
(387)
(963)
(33)
(358)
–
–
(91)
(2,527)
645
(1,333)
(442)
(134)
–
–
–
14
1,326
(556)
(2,744)
–
–
–
–
(963)
133
–
–
–
–
(1,129)
–
–
–
–
–
_
–
–
232
–
–
At 31 December 2018, the Group had tax losses to be carried forward of approximately £91.1 million
(2017: £89.5 million). Of the Group tax losses, £91.1 million (2017: £89.5 million) arose in the United Kingdom.
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9. Basic earnings / (loss) and diluted earnings per ordinary share
The basic earnings / (loss) per share of 11.57p (2017: 14.50p loss) has been calculated by dividing the earnings / (loss)
for the period by the weighted average number of shares in issue during the year ended 31 December 2018
(65,188,414; 2017: 61,913,343 adjusted for share consolidation (note 23)).
The diluted earnings per share of 10.89p has been 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 and
warrants outstanding at 31 December 2018 (69,242,901).
There were no potentially dilutive options in the prior period. There is therefore no difference between the basic loss
per ordinary share and the diluted loss per ordinary share in the prior period.
10. Loss for the financial year
As permitted by section 408 of the Companies Act 2006, the Company’s statement of comprehensive income has
not been included in these financial statements. The Company’s loss for the year was £446,000 (2017: £1,207,000).
11. Intangible assets
Intangible assets comprise intellectual property rights.
Cost at 1 January
Additions
Cost at 31 December
Accumulated amortisation and impairment
At 1 January
Amortisation charge for the year
Impairment charge for the year
At 31 December
Net book amount at 31 December
2018
£’000
5,591
45
5,636
5,494
25
–
5,519
117
2017
£’000
5,591
–
5,591
4,261
262
971
5,494
97
During 2017, there was a write down of the Prime Boost technology and poxvirus patent intangible asset after
Bavarian Nordic’s Prostvac product failed in its phase III study.
During 2018, the Group purchased a domain name for £45,000.
For intangible assets regarded as having a finite useful life amortisation commences when products underpinned
by the intellectual property rights become available for use. Amortisation is calculated on a straight-line basis over
the remaining patent life of the asset. Amortisation of £25,000 (2017: £262,000) is included in ’Research,
development and bioprocessing costs’ in the statement of comprehensive income.
An intangible asset is regarded as having an indefinite useful life when, based on an analysis of all of the relevant
factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows
for the entity. There are currently no assets with indefinite useful lives.
The Company had no intangible assets at 31 December 2018 or 31 December 2017.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
12. Property, plant and equipment
13. Investments and loans
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Cost
At 1 January 2018
Additions at cost
At 31 December 2018
Accumulated depreciation
At 1 January 2018
Charge for the year
At 31 December 2018
Net book amount at 31 December 2018
Freehold
property
£’000
Leasehold
improvements
£’000
Office
equipment and
computers
£’000
Bioprocessing
and laboratory
equipment
£’000
21,171
112
21,283
4,306
2,018
6,324
14,959
4,689
3,046 1
7,735
978
472
1,450
6,285
3,179
1,909
5,088
1,862
554
2,416
2,672
6,651
5,686
12,337
3,174
1,288
4,462
7,875
Total
£’000
35,690
10,753
46,443
10,320
4,332
14,652
31,791
1.
Included within additions to leasehold improvements is £2,396,000 of assets under construction, representing ongoing construction works at the OxBox bioprocessing facility.
Cost
At 1 January 2017
Additions at cost
Disposals
At 31 December 2017
Accumulated depreciation
At 1 January 2017
Charge for the year
Disposals
At 31 December 2017
Net book amount at 31 December 2017
Freehold
property
£’000
Leasehold
improvements
£’000
Office
equipment and
computers
£’000
Bioprocessing
and laboratory
equipment
£’000
20,902
269
–
21,171
2,306
2,000
–
4,306
16,865
6,970
9
(2,290)
4,689
2,798
470
(2,290)
978
3,711
1,651
1,528
–
3,179
877
985
–
1,862
1,317
6,488
163
_
6,651
2,516
658
–
3,174
3,477
Total
£’000
36,011
1,969
(2,290)
35,690
8,497
4,113
(2,290)
10,320
25,370
The Company had no property, plant and equipment at 31 December 2018 or 31 December 2017.
Investments: Group
On 29 November 2016, as part of a strategic alliance with Orchard Therapeutics, the Group received 735,000
ordinary shares in Orchard Therapeutics as consideration for the licenses granted under the agreement.
Additional shares valued at £2.0 million were awarded to the Group on the achievement of certain milestones, being
188,462 ordinary shares in February 2018 and a further 188,462 ordinary shares in August 2018.These shares awarded
were recognised as revenue during the year upon achievement of the milestones. As Orchard Therapeutics was a private
company at the time, the shares awarded were not valued based on observable market data, but rather the value
of the most recent placing of shares by Orchard Therapeutics prior to the milestone being achieved.
Additional ordinary shares may be issued to Oxford Biomedica should the Group achieve the remaining milestones.
In November 2018, Orchard Therapeutics converted each of its shares of capital stock into 0.8003 shares. These were
then re-designated as Ordinary shares, resulting in the number of shares owned by Oxford Biomedica being adjusted
from 1,111,924 to 889,872. Subsequently, in November 2018, Orchard Therapeutics floated on Nasdaq.
At year end the investment was revalued based on the 31 December 2018 share price of $15.73, and a gain
of £6.0 million (2017: £2.3 million) was recognised during the year. The aggregate fair value of the equity
investment in Orchard Therapeutics is £11.0 million (2017: £3.0 million).
At 1 January
Recognition of milestones
Revaluation of investments
At 31 December
Investments & Loans: Company
Shares in group undertakings
At 1 January and 31 December
Financial assets: Loans to group undertakings
At 1 January
Loan advanced in the year
At 31 December
Total investments in shares and loans to group undertakings
Accumulated impairment
At 1 January and 31 December
Net book amount at 31 December
Capital contribution in respect of employee share schemes
At 1 January
Additions in the year (note 26)
At 31 December
Total investments and loans
2018
£’000
2,954
2,029
5,983
10,966
2017
£’000
657
–
2,297
2,954
2018
£’000
2017
£’000
15,182
15,182
176,432
18,304
194,736
209,918
170,639
5,793
176,432
191,614
126,065
83,853
126,065
65,549
6,801
1,132
7,933
6,052
749
6,801
91,786
72,350
The application of the expected credit loss model has had no significant impact on the level of impairment of the loan
to group undertakings as the market value of the Group, of which OxfordBiomedica (UK) Ltd as the operational company
makes up almost all of the value, considerably exceeds the value of the loan and investment made by the parent company.
The loan to Oxford Biomedica (UK) has no fixed terms of repayment.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
Interests in subsidiary undertakings
15. Trade and other receivables
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Country of
incorporation
Description of
shares held
Proportion of nominal value
of issued shares held by the
Group and Company
Oxford Biomedica (UK) Limited
Great Britain
1p ordinary shares
Oxxon Therapeutics Limited
Great Britain
1p ordinary shares
100%
100%
Nature of business
Gene therapy research
and development
Dormant
The registered office of both subsidiaries is Windrush Court, Transport Way, Oxford, OX4 6LT.
In addition, during 2014, the Group set up the Oxford Biomedica Employee Benefit Trust (EBT) to hold market-purchased
shares to settle the 2013 deferred bonus share awards made to Executive Directors and employees (note 25).
All of the above subsidiaries have been consolidated in these financial statements.
At each year end the Directors review the carrying value of the Company’s investment in subsidiaries. Where there
is a material and sustained shortfall in the market capitalisation, or a significant and sustained change in the business
resulting in a decrease in market capitalisation, the Directors consider this to be a trigger of an impairment review
as set out in IAS 36. Where the impairment review performed concludes that the carrying value of the investment
in subsidiaries is too high, it is adjusted. The Directors consider that reference to the market capitalisation of the
Group is an appropriate external measure of the value of the Group for this purpose. Following an impairment review
at 31 December 2018 no impairment charge was assessed to be required. Cumulative impairment of £126.1 million
has been recognised up to 31 December 2018.
14. Inventories
Group
Raw Materials
Work-in-progress
Total inventory
2018
£’000
2,422
1,829
4,251
2017
£’000
1,895
1,437
3,332
Inventories are raw materials held for commercial bioprocessing purposes and work-in-progress inventory related
to contractual bioprocessing obligations.
During 2018, the Group wrote off £233,000 (2017: £53,000) of inventory which is not expected to be used
in production or sold onwards. The Company holds no inventories.
Trade receivables
Contract assets
Other receivables
Other tax receivable
Prepayments
Total trade and other receivables
Group
2018
£’000
15,408
8,886
4,307
1,144
840
30,585
2017
£’000
5,705
8,681
23
1,288
1,391
17,088
Company
2018
£’000
–
–
–
–
–
–
2017
£’000
–
–
–
–
9
9
The fair value of trade and other receivables is the current book values. The application of the expected credit loss
model has had no significant impact on the level of impairment of receivables.
Included in the Group’s trade receivables balance are debtors with a carrying amount of £1,768,000 (2017: £65,000)
which were past due at the reporting date, all of which have since been received.
Other receivables have increased due to £4.0 million of deposits held in escrow as part of the new discovery
and innovation facility and OxBox lease arrangements.
Ageing of past due but not impaired trade receivables:
0–30 days
30–60 days
60+ days
2018
£’000
–
–
1,768
1,768
2017
£’000
65
–
–
65
Contract assets of £8.9 million (2017: £8.7 million) arises where work has been undertaken which is recoverable from
third parties, but which has not yet been invoiced. The balance mainly relates to commercial development milestones
which have been accrued as the specific conditions stipulated in the license agreement have been met, and
commercial development work orders accrued on a percentage complete basis which will be invoiced as the related
work package completes.
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:
Sterling
US Dollar
2018
£’000
28,098
2,487
30,585
2017
£’000
16,684
404
17,088
The Company’s receivables are all denominated in Sterling.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable above.
The Group does not hold any collateral as security.
16. Cash and cash equivalents
The Group is required under the Oaktree Facility to maintain cash and cash equivalents of not less than $2.5 million
(£2.0 million) while the Oaktree Facility is outstanding (2017: $5 million, £3.7 million).
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
17. Trade and other payables
Trade payables
Other taxation and social security
Accruals
Total trade and other payables
Group
2018
£’000
3,746
770
6,906
11,422
2017
£’000
3,682
579
4,429
8,690
Company
2018
£’000
–
–
164
164
2017
£’000
–
–
81
81
Accruals have increased significantly from the prior year as a result of purchases of equipment and leasehold
improvements for the new OxBox facility.
18. Contract liabilities and deferred Income
Contract liabilities arises when the Group has received payment for services in excess of the stage of completion
of the services being provided.
Contract liabilities has increased from £13.1 million at the end of 2017 to £18.5 million (of which £1.8 million
is Non-current) at the end of 2018 due to £0.5 million of options and £5.0 million of process development income
from new customers.
Contract liabilities consists primarily of deferred bioprocessing and process development revenue, and is expected
to be released as the related performance obligations are satisfied over the period as described below:
Years
Contract liabilities
Bioprocessing income
Process development income
Licence fees, options and milestones
Deferred Income
Lease incentives
Grant
Total
0-1
£’000
0-3
£’000
0-5
£’000
0-10
£’000
9,074
–
168
–
–
9,242
1,504
7,085
–
–
–
8,589
–
–
500
–
–
500
–
–
154
2,250
2,783
5,187
Total
10,578
7,085
822
2,250
2,783
23,518
19. Loans
The Oberland Facility was fully repaid on 29 June 2017 at a cost of £36.3 million including the accrued interest
and loss on early extinguishment of £5.3 million.
On 29 June 2017 the Group completed a new $55 million debt facility with Oaktree Capital Management ("Oaktree").
The facility has been used to redeem the debt facility with Oberland Capital Healthcare.
The Oaktree loan is repayable no later than 29 June 2020 although it may be repaid, at the Group’s discretion, at any
time subject to early prepayment fees and an exit fee. The loan carries an interest rate of 9.0% plus US$ three month
LIBOR, subject to a minimum of 1%. Subject to achieving certain conditions, the interest rate could reduce by 0.25%
in the second year and a further 0.25% in the third year. The loan was issued at an original discount of 2.5%, and under
the agreement the Company has issued 2,687,025 (post consolidation) warrants to Oaktree (note 28). The terms also
include financial covenants relating to the achievement of revenue targets and a requirement to hold a minimum of
$2.5 million (2017: $5 million) cash at all times.
On initial recognition, the Oaktree loan, net of the expenses incurred in the refinancing which are treated as prepaid
expenses, was fair valued at £37.7 million. The loan balance has increased to £41.2 million due to accrued interest
and the impact of foreign exchange movements.
The Oaktree facility is secured by a pledge over substantially all of the Group’s assets.
20. Provisions
Group
At 1 January
Unwinding of discount
Utilisation of provision
Additional provision recognised
At 31 December
Current
Non-current
Total provisions
3
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2018
£’000
630
8
–
649
1,287
2018
£’000
–
1,287
1,287
2017
£’000
622
8
–
–
630
2017
£’000
–
630
630
The dilapidations provisions relate to the anticipated costs of restoring the leasehold Yarnton and new discovery and
innovation facility properties in Oxford, UK to their original condition at the end of the lease terms in 2024 and 2028
respectively, discounted using the rate per the Bank of England nominal yield curve. The equivalent rate was used in
2017. The provisions will be utilised at the end of the leases if they are not renewed.
The Group has signed a lease on a new facility in Oxford, UK (OxBox) that is near its Windrush laboratories.
The new facility is 84,000 sq. ft (7,800 sqm). The Group’s planned Phase I and Phase 2 expansion will fit out around
45,000 sq. ft (4,200 sqm) for four GMP clean room suites and two fill and finish suites as well as offices, warehousing
and QC laboratories, with space available for future expansion. This new facility is still under construction and
therefore it is not currently possible to accurately estimate the restoration costs.
The Company had no provisions at 31 December 2018 or 31 December 2017.
21. Financial instruments
The Group and Company’s financial instruments comprise cash and cash equivalents, trade and other receivables,
loans, and trade and other payables. Additional disclosures are set out in the corporate governance statement and
in note 3 relating to risk management.
The Group had the following financial instruments at 31 December each year:
Cash and cash equivalents (note 16)
Trade receivables and other
receivables (note 15)
Investments (note 13)
Trade and other payables excluding
tax (note 17)
Loans (note 19)
Financial assets at fair value
through profit & loss
2018
£’000
–
–
10,966
–
–
10,966
2017
£’000
–
–
2,954
–
–
2,954
Loans &
receivables
2018
£’000
32,244
29,281
–
–
–
61,525
2017
£’000
14,329
14,409
–
–
–
28,738
Amortised costs, loans
& other liabilities
2018
£’000
–
–
–
10,652
41,153
52,108
2017
£’000
–
–
–
8,111
36,864
44,975
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
Floating rate instant access deposits earned interest at prevailing bank rates.
Sterling
US Dollars
2018
2017
Year average Year average
Weighted
average rate
0.49%
0.66%
Weighted
average rate
0.48%
1.45%
In accordance with IFRS 9 ’Financial instruments: the Group has reviewed all contracts for embedded derivatives that
are required to be separately accounted for if they meet certain requirements set out in the standard. There were no
such derivatives identified at 31 December 2018 or 31 December 2017.
Fair value
The Directors consider that the fair values of the Group’s financial instruments do not differ significantly from their
book values.
The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies:
Sterling
US Dollar
2018
£’000
3,560
28,684
32,244
2017
£’000
3,843
10,486
14,329
Financial assets classified as level 1 in hierarchy
The investment in Orchard Therapeutics is classified as at fair value through profit and loss. Please refer to note 13
for further information.
There has been a change in the valuation level of the investment in Orchard Therapeutics from level 3 to level 1 prior
to the year end due to the company having IPO’d in November 2018.
5
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Maturity analysis of the Group’s financial liabilities
The following table analyses the contractual undiscounted cash flows payable, as well as the carrying value and
fair value of Group borrowings at the date of the statement of financial position. Contractual cash flows in respect
of interest payments are calculated using interest rates applicable at the date of the statement of financial position.
The Group also has short-term receivables and payables that arise in the normal course of business and these
are not included in the following table. Any cash flows based on floating interest rates are based on interest rates
prevailing at 31 December:
2018
Oaktree Capital Management
Interest
Capital
2017
Oaktree Capital Management
Interest
Capital
Due
within
1 year
£’000
Due
between 1
and 2 years
£’000
Due
between 2
and 3 years
£’000
Total
payments to
maturity
£’000
4,354
–
4,354
2,111
43,886
45,997
–
–
–
6,465
43,886
50,351
Due
within
1 year
£’000
Due
between 1
and 2 years
£’000
Due
between 2
and 3 years
£’000
Total
payments to
maturity
£’000
4,144
–
4,144
4,043
–
4,043
1,996
41,494
43,490
10,183
41,494
51,677
Carrying
value
£’000
–
41,153
41,153
Carrying
value
£’000
–
36,864
36,864
All contractual payments are in US dollars. Interest payments are floating rate payments whilst the capital repayment
at the end of the term is fixed.
Reconciliation in liabilities from financing activities
At 1 January
Interest payable
Foreign exchange movement
Cash interest paid
Oberland loan repayment
Oaktree facility drawn down
Warrants recognised separately (note 28)
At 31 December 2018 (note 19)
2018
£’000
36,864
6,210
2,744
(4,665)
–
–
–
41,153
2017
£’000
34,389
9,414
(3,282)
(10,800)
(30,536)
38,897
(1,218)
36,864
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
22. Deferred taxation
The Company and the Group have recognised deferred tax balances as at 31 December 2018 (2017: £nil).
In light of the Group's history of losses, recovery of the whole deferred tax asset is not sufficiently certain, and
therefore only a portion of the asset has been recognised.
The main rate of corporation tax in the UK reduced from 20% to 19% with effect from 1 April 2017 and will reduce
further to 17% with effect from 1 April 2020.
Group – recognised
Deferred tax (assets)/liabilities
At 1 January 2018
Origination and reversal of temporary differences
At 31 December 2018
At 1 January 2017
Origination and reversal of temporary differences
At 31 December 2017
Company – recognised
Deferred tax (assets)/liabilities
At 1 January 2018
Origination and reversal of temporary differences
At 31 December 2018
At 1 January 2017
Origination and reversal of temporary differences
At 31 December 2017
Group – not recognised
Deferred tax (assets)/liabilities – not recognised
At 1 January 2018
Origination and reversal of temporary differences
At 31 December 2018
At 1 January 2017
Origination and reversal of temporary differences
At 31 December 2017
Revaluation
of
investments
£’000
–
1,408
1,408
–
–
–
Revaluation
of
investments
£’000
–
–
–
–
–
–
Tax losses
£’000
–
(1,129)
(1,129)
–
–
–
Tax losses
£’000
–
(1,129)
(1,129)
–
–
–
Total
£’000
–
279
279
–
–
–
Total
£’000
–
(1,129)
(1,129)
–
–
–
Tax
depreciation
£’000
(1,071)
285
(786)
(1,281)
210
(1,071)
Provisions
£’000
Tax losses
£’000
Share options
£’000
Total
£’000
(133)
(5)
(138)
(255)
122
(133)
(16,378)
(150)
(16,528)
(16,025)
(353)
(16,378)
(148)
(1,564)
(1,712)
(288)
140
(148)
(17,730)
(1,434)
(19,164)
(17,849)
119
(17,730)
23. Ordinary share capital
Group and Company
Issued and fully paid
Ordinary shares of 1p each
At 1 January – 3,107,704,224 (2017: 3,088,047,310) shares
Allotted for cash in placing and subscription – 174,346,817 (2017: nil) shares
Share consolidation (3,285,053,650 1p shares converted to 65,701,073 50 p shares)
Allotted on exercise of share options – 462,507 (2017: 393,138 adjusted for
consolidation) shares
At 31 December – 66,103,528 (2017: 62,154,084 adjusted for consolidation) shares
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2018
£’000
31,076
1,712
–
246
33,034
2017
£’000
30,879
–
–
197
31,076
In March 2018 the Company raised £20.5 million gross proceeds by way of a placing of 174,346,817 ordinary shares
at a price of 11.7 pence per share. Net proceeds after expenses were £19.1 million.
On 30 May 2018, Oxford Biomedica consolidated its existing ordinary shares of 1 pence each to 65,701,073
new consolidated ordinary shares of 50 pence each.
24. Share premium account
Group and Company
At 1 January
Premium on shares issued for cash in placing and subscription
Premium on exercise of share options
Costs associated with the issue of shares
At 31 December
2018
£’000
154,224
18,748
478
(1,376)
172,074
2017
£’000
154,036
–
188
–
154,224
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
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25. Options over shares of Oxford Biomedica plc
The Company has outstanding share options that were issued under the following schemes:
— The 2007 Share Option Scheme (approved February 2007).
— The 2015 Executive Share Option Scheme (approved May 2015).
— The 2007 Long Term Incentive Plan (LTIP) (approved February 2007).
— The 2015 Long Term Incentive Plan (LTIP) (approved May 2015).
— The 2013 Deferred Bonus Plan (approved February 2014).
— The 2015 Deferred Bonus Plan (approved May 2015).
— The 2015 Save As You Earn Scheme (approved May 2015).
Share options are granted to Executive Directors and selected senior managers under the Company’s Long Term
Incentive Plans (LTIP) and Deferred Bonus Plan, and to other employees under the Share Option Schemes and Save
as You Earn Scheme. All option grants are at the discretion of the Remuneration Committee.
Options granted under the 2007 and 2015 LTIPs to Directors and other senior managers are subject to market condition
performance criteria and will vest only if, at the third anniversary of the grant, the performance criteria have been met.
Failure to meet the minimum performance criteria by the third anniversary results in all the granted options lapsing.
The performance criteria are described in the Directors’ remuneration report. LTIP awards made to date are exercisable
at either par or a nil cost on the third anniversary of the date of grant, and lapse 10 years after being granted.
Options granted under the 2007 Share Option Scheme have fixed exercise prices based on the market price at the
date of grant. They are not subject to market condition performance criteria and the lives of the options are ten years,
after which the options expire. Options granted prior to 2012 cannot normally be exercised before the third
anniversary of the date of grant. Options granted under the 2007 Scheme during 2012 to 2014, with one exception,
vest in tranches of 25% from the first to fourth anniversaries of the grant dates.
Options granted under the 2015 Executive Share Option Scheme have fixed exercise prices based on the market price
at the date of grant. They are not subject to market condition performance criteria and the lives of the options are ten
years, after which the options expire. Options granted under the 2015 Scheme cannot normally be exercised before
the third anniversary of the date of grant.
Options granted under the 2015 Save As You Earn Scheme have fixed exercise prices based on the market price at the
date of grant. They are not subject to market condition performance criteria and the lives of the options are ten years,
after which the options expire. Options cannot be exercised before the third anniversary of the date of grant.
Share options outstanding at 31 December 2018 have the following expiry date and exercise prices:
Options granted to employees under the Oxford Biomedica 2007 and 2015 Share Option Schemes
2018 Number of shares
–
–
12,211
22,406
40,314
47,114
101,7572
221,2562
340,9952
271,5062
1,057,559
2017 Number of shares1
6,000
2,051
23,139
38,126
65,426
80,308
175,8592
236,1052
379,1102
–
1,006,124
Exercise price per share
290p
305p
270p to 290p
115p to 155p
80p to 140p
100p to 200p
490p
275p
495p
904p
Date from which exercisable
Vested
Vested
Vested
Vested
Vested
Vested
13/03/18 to 01/06/18
16/05/19 to 13/10/19
13/07/20
07/08/21
Expiry date
13/10/18
25/03/19
15/03/21 to 04/10/21
08/05/22 to 21/12/22
22/05/23 to 19/11/23
03/06/24 to 17/10/24
13/03/25 to 10/06/25
16/05/26 to 13/10/26
13/07/27
07/08/28
Note 1 – Restated following 50 to 1 share consolidation.
Note 2 – Options granted under the 2015 Executive share option scheme.
Options granted to employees under the Oxford Biomedica 2015 Save As You Earn Scheme
2018 Number of shares 2017 Number of shares1
67,022
152,054
80,001
–
299,077
27,078
144,466
77,283
114,731
363,558
Note 1 – Restated following 50 to 1 share consolidation.
Exercise price per share
310p
145p
330p
725p
Date from which exercisable
01/10/18
13/10/19
12/10/20
10/10/21
Expiry date
01/10/25
13/10/26
12/10/27
10/10/28
Options granted under the Oxford Biomedica 2007 and 2015 Long Term Incentive Plans
2018 Number of shares 2017 Number of shares3
Date from which exercisable
Vested
20,000
–
Vested
217,600
142,000
Vested
127,170
72,679
Vested
107,339
93,349
210,9152
113,158 2
Vested
178,9111,2
178,909 1,2
16/05/19
224,0251,2
231,2561,2
17/07/20 to 25/09/20
04/08/21
–
196,912
1,085,960
1,028,263
Exercise price per share
50p
50p
50p
50p
0p
0p
0p
0p
2,449,380
2,391,161
Note 1 – These LTIP awards will vest provided that performance conditions specified in the Directors’ remuneration report are met.
Note 2 – Options granted under the 2015 LTIP.
Note 3 – Restated following 50 to 1 share consolidation.
Expiry date
13/10/18
30/06/22
12/06/23
20/6/24 to 17/10/24
10/01/25
16/05/26
17/07/27 to 25/09/27
04/08/28
Deferred Share Awards
The Executive Directors and certain other senior managers have been awarded deferred bonuses in the form of share
options. These options will vest provided that the managers are still employed by the Group on certain specified
future dates and are exercisable at nil p on either the first three anniversaries of the grant or the third anniversary of
the grant dependent on the option conditions. Options with a value of £267,000 vested during 2018 (2017: £314,000).
The options granted under the 2013 Deferred Bonus Plan will be satisfied by market-purchased shares held by the
Oxford Biomedica Employee Benefit Trust (EBT). As at 31 December 2018, all shares held by the EBT had vested. The
EBT is consolidated at year end with the shares held in trust accounted for as part of the treasury reserve within equity
(note 28). During the year no shares (2017: 1,325,035) from the EBT were exercised.
The options granted under the 2015 Deferred Bonus Plan will be satisfied by new issue shares at the time of exercise.
Options granted to employees under the Oxford Biomedica 2013 and 2015 Deferred Bonus Plan
2018 Number of shares 2017 Number of shares1
116,724
99,966
103,484
63,808
–
383,982
116,723
78,907
81,257
53,900
48,422
379,209
Note 1 – Restated following 50 to 1 share consolidation.
Exercise price per share
0p
0p
0p
0p
0p
Date from which exercisable
Vested
Vested
14/05/17 to 14/05/19
11/07/18 to 11/07/20
04/08/19 to 04/08/21
Expiry date
15/06/24 & 14/10/24
04/05/25
14/05/26
11/07/27
04/08/28
National Insurance liability
Certain options granted to UK employees could give rise to a national insurance (NI) liability on exercise.
A provision of £437,000 (2017: £168,000) is included in accruals for the potential NI liability accrued
to 31 December on exercisable options that were above water, based on the year-end share price
of 707.20p (2017: 8.85p pre-consolidation) per share.
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
26. Share based payments
The fair values of options granted during the year were calculated using the following assumptions:
Share options (Model used: Black Scholes)
Share price at grant date
Exercise price
Vesting period (years)
Total number of shares under option
Expected volatility (weighted average)
Expected life (years)
Risk free rate (weighted average)
Fair value per option
Save As You Earn scheme awards (Model used: Black Scholes)
Share price at grant date
Exercise price
Vesting period (years)
Total number of shares under option
Expected volatility (weighted average)
Expected life (years)
Risk free rate (weighted average)
Fair value per option
LTIP awards (Model used: Monte Carlo)
Share price at grant date
Exercise price
Vesting period (years)
Total number of shares under option
Expected volatility (weighted average)
Expected life (years)
Risk free rate (weighted average)
Fair value per option
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Options awarded
7 August 2018
888.1p
903.8p
3
270.553
58%
3
0.81%
342.06p
Options awarded
10 October 2018
805.20p
724.66p
3
115,476
57%
3
1.04%
338.43p
LTIPs awarded
7 August 2018
888.10p
0.0p
3
204,147
58%
3
0.81%
505.86p
The tables below show the movements in the Share Option Scheme, Save As You Earn Scheme and the LTIP
during the year, together with the related weighted average exercise prices.
Excluding the LTIP & Deferred Bonus awards which are exercisable at par/nil value, the weighted average exercise
price for options granted during the year was 850.1p (2017: 470p).
462,507 options were exercised in 2018 (2017: 393,138), including 53,174 of deferred bonus options (2017: 56,316).
The total charge for the year relating to employee share-based payment plans was £1,132,000 (2017: £749,000),
all of which related to equity-settled share based payment transactions.
Share options excluding LTIP
Outstanding at 1 January
Forfeited
Granted
Cancelled
Exercised
Share consolidation
Granted
Forfeited
Exercised
Cancelled
Outstanding at 31 December
Exercisable at 31 December
Exercisable and where market price exceeds
exercise price at 31 December
LTIP awards (options exercisable at par value 1p or nil cost)
Outstanding at 1 January
Exercised
Share consolidation
Granted
Expired
Exercised
Outstanding at 31 December
Exercisable at 31 December
Range of exercise prices
LTIP:
Exercisable at par or at nil cost
Deferred bonus:
Exercisable at par or at nil cost
Options:
50p to 150p
150p to 250p
250p to 350p
350p+
Note 1 – Restated following 50 to 1 share consolidation.
Number
65,260,044
(2,174,134)
166,857
(180,674)
(2,056,185)
(59,795,959)
386,029
(28,985)
(149,191)
(6,685)
1,421,117
250,880
250,880
2018
Weighted average
exercise price
6.7p
8.0p
10.5p
5.8p
3.3p
6.8p
633.4p
474.9p
337.7p
156.1p
Number
50,841,737
–
–
–
–
–
24,120,663
(4,202,453)
(4,439,429)
(1,060,474)
419.2p
65,260,044
299.7p
9,478,677
299.7p
9,478,677
2018
Number
54,297,969
(300,000)
(52,918,024)
204,147
(42,811)
(213,018)
1,028,263
421,186
2017
Weighted average
exercise price
5.1p
–
–
–
–
–
9.4p
6.7p
2.8p
5.0p
6.7p
3.0p
3.0p
2017
Number
70,826,153
–
–
11,201,233
(14,002,687)
(13,726,730)
54,297,969
23,605,450
Weighted
average
exercise
price
Number
of shares
2018
Weighted average
remaining
life (years)
Contractual
Weighted
average
exercise
price1
Number
of shares1
2017
Weighted average
remaining
life (years)
Contractual
15p 1,028,263
0p
379,209
132p
175p
290p
659p
215,881
38,419
337,828
828,989
2,828,589
8.1
6.9
6.8
4.4
7.5
8.8
20p 1,085,960
0p
383,982
125p
175p
285p
495p
270,270
65,644
414,318
554,969
2,775,143
7.0
7.6
7.5
5.4
8.1
8.9
Oxford Biomedica plc | Annual report and accounts 2018Oxford Biomedica plc | Annual report and accounts 2018
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
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27. Accumulated losses
At 1 January
Profit/(Loss) for the year
Share based payments
Vesting of deferred share award
At 31 December
Group
2018
£’000
(182,663)
7,541
1,2461
–
(173,876)
2017
£’000
(174,489)
(9,017)
945
(102)
(182,663)
Company
2018
£’000
(122,590)
(446)
(41)
–
(123,077)
2017
£’000
(121,383)
(1,207)
–
–
(122,590)
Note 1 – The credit to accumulated losses is made up out of the charge for the year relating to employee share-based payment plans of £1,132,000 (2017: £749,000) (note 26), £267,000
(2017: £314,000) related to the vesting of deferred share awards made to Executive Directors and senior managers, less £153,000 (2017: 118,000) in relation to the exercise
of 53,174 (2017: 56,316 post consolidation) of these deferred share awards (note 25).
Neither the Company nor its subsidiary undertakings had reserves available for distribution at 31 December 2018
or 31 December 2017.
28. Other reserves
Group
Warrant
reserve
£’000
Merger
reserve
£’000
Treasury
reserve
£’000
At 1 January 2018 and 31 December 2018
1,218
2,291
–
Group
At 1 January 2017
Issue of warrants
At 31 December 2017
Warrant
reserve
£’000
Merger
reserve
£’000
Treasury
reserve
£’000
–
1,218
1,218
2,291
–
2,291
(102)
102
–
Total
£’000
3,509
Total
£’000
2,189
1,320
3,509
The Group merger reserve at 31 December 2018 and 2017 comprised £711,000 arising from the consolidation
of Oxford Biomedica (UK) Ltd using the merger method of accounting in 1996, and £1,580,000 from the application
of merger relief to the purchase of Oxxon Therapeutics Limited in 2007.
All shares previously held in the treasury reserve have now vested leaving a balance of nil (2017: nil) (note 25).
Under the Oaktree loan agreement the Company has issued 2,687,025 warrants (post consolidation) to Oaktree,
equivalent to 4.4% of the enlarged Group’s share capital. The warrants are exercisable at the nominal share price of 1p
and may be exercised at any time over the next ten years. The warrants have been fair valued at £1.2 million net of
related expenses and this amount has been credited to the warrant reserve.
Company
At 1 January 2018
Credit in relation to employee share schemes
At 31 December 2018
At 1 January 2017
Credit in relation to employee share schemes
Issue of warrants
At 31 December 2017
Warrant
reserve
£’000
1,218
–
1,218
–
–
1,218
1,218
Merger
reserve
£’000
1,580
–
1,580
1,580
–
–
1,580
Share
Scheme
Reserve
£’000
6,801
1,132
7,933
6,052
749
–
6,801
Total
£’000
9,599
1,132
10,751
7,632
749
1,218
9,599
Options over the Company’s shares have been awarded to employees of subsidiary companies. In accordance
with IFRS 2 ’Share-based Payment’ the expense in respect of these awards is recognised in the subsidiaries’ financial
statements (see note 26). In accordance with IFRS 2 the Company has treated the awards as a capital contribution
to the subsidiaries, resulting in an increase in the cost of investment of £1,132,000 (2017: £749,000) (see note 13)
and a corresponding credit to reserves.
29. Cash flows from operating activities
Continuing operations
Operating profit/(loss)
Adjustment for:
Depreciation
Amortisation of intangible assets
Charge for impairment
Charge in relation to employee share schemes
Non-cash gains
Changes in working capital:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in contract liabilities and deferred income
Increase/(decrease) in provisions
Increase in inventory
Net cash used in operations
Group
2018
£’000
2017
£’000
Company
2018
£’000
2017
£’000
13,915
(5,668)
(1,575)
(1,207)
4,332
25
–
1,246
(8,012)
(14,559)
2,732
10,446
8
(919)
9,214
4,113
262
971
945
(2,297)
(11,183)
2,687
9,759
8
(1,130)
(1,533)
–
–
–
–
–
9
83
–
–
–
(1,483)
–
–
–
–
–
(6)
(95)
–
–
–
(1,308)
Non cash gains include equity stakes in Orchard Therapeutics granted on completion of milestones (£2.0 million),
and a gain of £6.0 million (2017: £2.3 million) on the revaluation of the equity investment at the end of the year.
30. Pension commitments
The Group operates a defined contribution pension scheme for its Directors and employees. The assets of the
scheme are held in independently administered funds. The pension cost charge of £1,277,000 (2017: £958,000)
represents amounts payable by the Group to the scheme. Contributions of £186,000 (2017: £138,000), included
in accruals, were payable to the scheme at the year-end.
31. Operating lease commitments – minimum lease payments
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Group
Not later than one year
Later than one year and not later than five years
Over five years
Total lease commitments
2018
£’000
842
4,532
8,532
13,906
2017
£’000
94
330
144
568
The Group leases equipment under non-cancellable operating lease agreements. The Group continues to lease the
manufacturing site at Yarnton, Oxford under a non-cancellable operating lease agreement. The Group entered into
a lease for the new discovery and innovation facility property and a lease on a new facility (Oxbox) that is near to its
Windrush laboratories in Oxford, UK. The leases have various terms, escalation clauses and renewal rights.
The Company had no operating lease commitments during the year (2017: none).
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SAR 421869: Usher syndrome type 1B
SAR 421869 is a gene-based therapy for the treatment
of Usher syndrome 1B. The disease is caused by a
mutation of the gene encoding myosin VIIA (MY07A),
which leads to progressive retinitis pigmentosa combined
with a congenital hearing defect. SAR 421869 intends to
address vision loss due to retinitis pigmentosa by using
the Company’s LentiVector platform technology to
deliver a corrected version of the MYO7A gene. A single
administration of the product could provide long-term
or potentially permanent correction.
OXB-202: corneal graft rejection
OXB-202 is a gene-based treatment for the prevention
of corneal graft rejection. Corneal grafting arises from
a need to remove and replace pathology arising in the
cornea causing ’clouding’. Although one of the most
successfully transplanted tissues, a significant number
of grafts are rejected due to vascularisation. OXB-202
uses the Company’s LentiVector platform technology
to deliver endostatin and angiostatin ex vivo to
donor corneas prior to transplant in order to block
vascularisation and to prevent graft rejection.
OXB-302 (CAR-T 5T4): cancer
OXB-302 aims to destroy cancerous cells expressing
the 5T4 tumour antigen. It uses the Group’s LentiVector
platform and 5T4 antigen to target cancer cells expressing
5T4 tumour antigen expressed on the surface of most
solid tumours and some haematological malignancies.
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Group financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2018
Other matters
Glossary
32. Contingent liabilities and capital commitments
The Group had commitments of £15,723,000 for capital expenditure for leasehold improvements, plant and
equipment not provided for in the financial statements at 31 December 2018 (2017: £850,000). The largest part
of the 2018 commitment relates to the leasehold improvements, and plant and equipment of the new OxBox
bioprocessing facility.
33. Related party transactions
Identity of related parties
The Group consists of a parent, Oxford Biomedica plc, one wholly-owned trading subsidiary (Oxford Biomedica (UK)
Limited), the principal trading company, and one dormant subsidiary (Oxxon Therapeutics Limited), which was
acquired and became dormant in 2007 when its assets and trade were transferred to Oxford Biomedica (UK) Limited.
The registered address for the Company and all of its subsidiaries is Windrush Court, Transport Way, Oxford OX4 6LT.
During the year, OcQuila (UK) Ltd was incorporated as a wholly-owned subsidiary of the parent company.
In November 2018 it was sold. It remained dormant from incorporation to date of sale.
The parent company is responsible for financing and setting group strategy. Oxford Biomedica (UK) Limited carries
out the Group strategy, employs all the UK staff including the Directors, and owns and manages all of the Group’s
intellectual property. The proceeds from the issue of shares by the parent are passed from Oxford Biomedica plc
to Oxford Biomedica (UK) Limited as a loan, and Oxford Biomedica (UK) Limited manages group funds and makes
payments, including the expenses of the parent company.
Company: transactions with subsidiaries
Purchases:
Parent company expenses paid by subsidiary
Warrants:
Issue of warrants for shares as part of consideration for loan obtained by subsidiary
Cash management:
Cash loaned by parent to subsidiary
2018
£’000
2017
£’000
(1,370)
(976)
–
1,218
19,674
5,551
The loan from Oxford Biomedica plc to Oxford Biomedica (UK) Limited is unsecured and interest free. The loan has
no fixed repayment terms and is not expected to be repaid within 12 months of the year end. The year-end balance
on the loan was:
Company: year-end balance of loan
Loan to subsidiary
2018
£’000
194,736
2017
£’000
176,432
The investment in the subsidiary, of which the loan forms part, has been impaired by £126 million (note 13)
in previous years.
In addition to the transactions above, options over the Company’s shares have been awarded to employees
of subsidiary companies. In accordance with IFRS 2, the Company has treated the awards as a capital contribution
to the subsidiaries, resulting in a cumulative increase in the cost of investment of £7,892,000 (2017: £6,801,000).
There were no transactions (2017: none) with Oxxon Therapeutics Limited.
Company: transactions with related parties
There is an outstanding balance of £10,767 (2017: £5,000) owed to Lorenzo Tallarigo at year end. This was paid
in January 2019. There were no other outstanding balances in respect of transactions with Directors and connected
persons at 31 December 2018 (2017: none). Key person remuneration can be seen in note 5 of the financial
statements.
Oxford Biomedica specific terminology
LentiVector platform
Oxford Biomedica’s LentiVector platform technology
is an advanced lentiviral vector based gene delivery
system which is designed to overcome the safety
and delivery problems associated with earlier generations
of vector systems. The technology can stably deliver
genes into cells with up to 100% efficiency and can
integrate genes into non-dividing cells including neurons
in the brain and retinal cells in the eye. In such cell types,
studies suggest that gene expression could be maintained
indefinitely. The LentiVector platform technology also has
a larger capacity than most other vector systems
and can accommodate multiple therapeutic genes.
OXB-102: Parkinson’s disease
OXB-102 is a gene-based treatment for Parkinson’s
disease, a progressive movement disorder caused
by the degeneration of dopamine producing nerve cells
in the brain. OXB-102 uses the Company’s LentiVector
platform technology to deliver the genes for three
enzymes that are required for the synthesis of dopamine.
The product is administered locally to the region
of the brain called the striatum, converting cells into
a replacement dopamine factory within the brain,
thus replacing the patient’s own lost source of the
neurotransmitter.
OXB-201: “wet” age-related macular degeneration
OXB-201 is a gene-based treatment for neovascular
“wet” age-related macular degeneration (AMD) and
diabetic retinopathy (DR). OXB-201 aims to preserve and
improve the vision of patients through anti-angiogenesis;
blocking the formation of new blood vessels. The
product uses the Company’s LentiVector platform
technology to deliver two anti-angiogenic genes,
endostatin and angiostatin, directly to the retina.
SAR 422459: Stargardt disease
SAR 422459 is a gene-based therapy for the treatment
of Stargardt disease. The disease is caused by a mutation
of the ABCR gene which leads to the degeneration of
photoreceptors in the retina and vision loss. SAR 422459
uses the Company’s LentiVector platform technology
to deliver a corrected version of the ABCR gene. A single
administration of the product directly to the retina could
provide long-term or potentially permanent correction.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Other matters
Glossary
Terminology not specific to Oxford Biomedica
AAV
Adeno-associated viruses (AAV) is a small virus which
infects humans and some other primate species.
Biologics License Application (BLA)
The BLA is a request for permission to introduce
or deliver for introduction, a biological product into
the US market.
CAR-T therapy
Adoptive transfer of T cells expressing Chimeric
Antigen Receptors (CAR) is an anti-cancer therapeutic
as CAR-modified T cells can be engineered to target
virtually any tumour associated antigen.
Cell therapy
Cell therapy is defined as the administration of live whole
cells in a patient for the treatment of a disease often
in an ex vivo setting.
Clinical trials (testing in humans)
Clinical trials involving new drugs are commonly
classified into three phases. Each phase of the drug
approval process is treated as a separate clinical trial.
The drug-development process will normally proceed
through the phases over many years. If the drug
successfully passes through all phases it may be approved
by the regulatory authorities:
— Phase I: screening for safety.
— Phase II: establishing the efficacy of the drug,
usually against a placebo.
— Phase III: final confirmation of safety and efficacy.
CTL019
CTL019 is a CAR-T cell therapy for patients with B cell
cancers such as acute lymphoblastic leukemia (ALL),
B cell non-Hodgkin lymphoma (NHL), adult disease
chronic lymphocytic leukemia (CLL) and diffuse large
B cell lymphoma.
DLBCL
Diffuse large B-cell lymphoma (DLBCL) is a cancer
of B cells, a type of white blood cell responsible for
producing antibodies. It is the most common type
of non-Hodgkin lymphoma among adults.
DNA
Deoxyribonucleic acid (DNA) is a molecule that carries
genetic information.
Ex Vivo
Latin term used to describe biological events that take
place outside the bodies of living organisms.
FDA
US Food and Drug Administration (FDA) is responsible
for protecting the public health by assuring the safety,
effectiveness, quality, and security of human and
veterinary drugs, vaccines and other biological products,
and medical devices.
Gene therapy
Gene therapy is the use of DNA to treat disease
by delivering therapeutic DNA into a patient’s cells which
can be in an ex vivo or in vivo setting. The most common
form of gene therapy involves using DNA that encodes
a functional, therapeutic gene to replace a mutated gene.
Other forms involve directly correcting a mutation,
or using DNA that encodes a therapeutic protein drug
to provide treatment.
GxP, GMP, GCP, GLP
GxP is a general term for Good (Anything) Practice.
GMP, GCP and GLP are the practices required to conform
to guidelines laid down by relevant agencies for
manufacturing, clinical and laboratory activities.
Innovate UK
Innovate UK is the UK’s innovation agency. Its role is to
stimulate innovation, working with business and other
partners, in order to accelerate economic growth.
In Vitro
Latin term (for within the glass) refers to the technique
of performing a given procedure in a controlled
environment outside of a living organism.
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In Vivo
Latin term used to describe biological events that take
place inside the bodies of living organisms.
IP
Intellectual Property (IP) refers to creative work
which can be treated as an asset or physical property.
Intellectual property rights fall principally into four main
areas; copyright, trademarks, design rights and patents.
Lentiviral vectors
Gene delivery vector based on lentiviruses.
Definitions of non-GAAP measures
Operating EBITDA
Operating EBITDA (Earnings before Interest, Tax,
Depreciation, Amortisation, revaluation of investments
and share based payments) is a non-GAAP measure and
is often used as a surrogate for operational Cash flow.
Operating EBIDA
Operating EBIDA is an internal measure used by the
Group, defined as Operating EBITDA with the R&D tax
credit included.
Gross income
Gross income is the aggregate of Revenue and
Other operating income.
Adjusted Operating expenses
Being Operating espenses before Depreciation,
Amortisation and Share based payments and the
revaluation of investments.
Cash burn
Cash burn is net cash generated from operations plus
net interest paid plus capital expenditure.
Pre-clinical studies
Pre-clinical studies (also known as non-clinical studies)
is the stage of research that takes place before clinical
trials can begin during which important feasibility, iterative
testing and drug safety data is collected.
r/r paediatric ALL
Relapsed or refractory (r/r) acute lymphoblastic leukaemia
(ALL) is a type of cancer in which the bone marrow
in children and young adults make too many immature
B lymphocytes (a type of white blood cell) that are
resistant to treatment.
UK Corporate Governance Code (the Code)
The UK Corporate Governance Code is published
by the UK Financial Reporting Council and sets out
standards of good practice in relationship to board
leadership and effectiveness, remuneration,
accountability and relations with shareholders.
Viral vectors
Are tools commonly based on viruses used by molecular
biologists to deliver genetic material into cells.
Oxford Biomedica plc | Annual report and accounts 2018
Oxford Biomedica plc | Annual report and accounts 2018
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Other matters
Advisers and contact details
Contact details
Oxford Biomedica plc
Headquarters:
Windrush Court
Transport Way
Oxford OX4 6LT
United Kingdom
Tel: +44 (0) 1865 783 000
Other locations:
Harrow House
County Trading Estate
Transport Way
Cowley
Oxford OX4 6LX
United Kingdom
Unit 5
Oxford Industrial Park
Yarnton
Oxford OX5 1QU
United Kingdom
OxBox
Unit A, Plot 7000
Alec Issigonis Way
Oxford Business Park North
Oxford OX4 2JZ
United Kingdom
enquiries@oxb.com
www.oxb.com
Advisers
Financial adviser and broker
Peel Hunt
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
Financial adviser and joint broker
WG Partners
85 Gresham Street
London EC2V 7NQ
United Kingdom
Financial and corporate
communications
Consilium Strategic Communications
41 Lothbury
London EC2R 7HG
United Kingdom
Registered independent auditors
KPMG LLP
Botanic House
98-100 Hills Rd
Cambridge CB2 1JZ
United Kingdom
Solicitors
Covington & Burling LLP
265 Strand
London WC2R 1BH
United Kingdom
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Company secretary
and registered office
Stuart Paynter
Windrush Court
Transport Way
Oxford OX4 6LT
United Kingdom
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Oxford Biomedica plc | Annual report and accounts 2018
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Oxford Biomedica plc
Windrush Court, Transport Way
Oxford OX4 6LT, United Kingdom
Tel: +44 (0) 1865 783 000
enquiries@oxb.com
www.oxb.com