CTL019 and product out-licensing to drive 2017

Oxford BioMedica 5 April 2017 Update
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Oxford BioMedica

CTL019 and product out-licensing to drive 2017

Post FY16 results

Pharma & biotech

5 April 2017

Price

5.20p

Market cap

£161m

Net debt (£m) at end December 2016

19.1

Shares in issue

3,088m

Free float

83%

Code

OXB

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

4.0

25.3

(4.9)

Rel (local)

4.5

22.4

(19.3)

52-week high/low

6.5p

3.0p

Business description

Oxford BioMedica has a leading position in gene-based therapy. The lenti-vector technology is wide ranging and underpins much of the development pipeline, notably OXB-102, OXB-202 and OXB-302. OXB’s manufacturing expertise is gaining valuable commercial traction.

Next events

CTL019 Approval in B-ALL

Q417

CTL019 BLA in DLBCL

H217

Further partnership deals

2017/18

Licensing deals/spin-outs

2017/18

Analysts

Dr Susie Jana

+44 (0)20 3077 5700

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Oxford BioMedica is a research client of Edison Investment Research Limited

We expect Oxford BioMedica’s (OXB’s) strategic vision to come to further fruition through 2017/18 with both the potential approval of Novartis’s CTL019 in the US by year end and the possible spin-out/out-licensing of its priority development pipeline assets (OXB-102, OXB-202, and OXB-302). Full year 2016 results revealed robust growth in partnering revenues and 2017 will benefit from lower R&D expenses; we forecast a narrowing of EBITDA loss for the year. The net £17.5m equity fundraising and the Oberland debt facility has extended the current cash runway to 2019, aided by the reduction in near-term R&D; further funding and value may arise from additional manufacturing or IP licensing deals. Our revised valuation for OXB is £208.5m (6.75p/share).

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/15

15.9

(16.6)

(0.49)

0.0

N/A

N/A

12/16

27.8

(20.0)

(0.59)

0.0

N/A

N/A

12/17e

39.0

(7.5)

(0.11)

0.0

N/A

N/A

12/18e

41.3

(2.8)

0.04

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

CTL019 next steps: Potential for US launch in 2017

The global registration trial (ELIANA) of CTL019 in paediatric r/r B-cell acute lymphoblastic leukaemia (B-ALL) demonstrated overwhelming efficacy; 82% of patients treated achieved a complete remission or complete remission with incomplete blood count recovery. FDA have accepted Novartis’ Biologics License Application (BLA) and granted priority review for CTL019. We assume launch in 2017 (US) and Europe (2018) to directly benefit OXB, given its lentiviral technology remains vital to the manufacture of CTL019. We currently assume that a substantial portion of the $76m receivable from Novartis under the October 2014 contract has been delivered by mid-2017.

Priority assets: Spin-out to optimise returns

In order to balance risk and maximise reward OXB continues to focus on the priority assets in its portfolio, notably OXB-102 (Parkinson’s disease), OXB-202 (corneal graft rejection) and OXB-302 (multiple solid cancer indications). The near-term goal is to crystallise value from the internally developed product pipeline either by out-licensing or by securing externally-funded spin-outs.

Valuation: Manufacturing and pipeline at £208.5m

Our revised valuation of £208.5m (previously £173m) or 6.75p/share has mainly benefited from rolling forward our DCF. Our rNPV model consists of the clinical-stage pipeline, coupled with a DCF value for OXB’s manufacturing and IP income net of corporate costs and 2016 net debt of £19.1m. In the near term, the valuation is underpinned by manufacturing deals; longer term, the upside potential is dependent on the performance of CTL019 and the revenues OXB receives from the use of its lentiviral vectors.

Balancing risk to optimise rewards

Oxford BioMedica is a leading player in gene- and cell-based medicines, with several programmes in the clinic, a proven delivery system and multiple GMP production facilities in place. OXB’s commercial production of cell therapies is expected to continue to be a main source of revenue in the near term; prominently with Novartis, where OXB provides a key component (lentiviral vector) for its CD19 CAR-T (CTL019); the potential US regulatory approval for which could be by end-2017. OXB’s expertise with the various aspects of developing and commercialising lentiviral products continues to be recognised, as highlighted by deals in 2016 with Orchard Therapeutics, Green Cross LabCell and Immune Design. OXB’s commercial production of cell therapies is expected to continue to be a main source of revenue in the near term and should lead to further contracts.

OXB has a broad gene therapy-based pipeline including five wholly owned in-house developed assets plus two fully out-licensed products and a number of IP-enabled and royalty-bearing products. Following a strategic review in 2016, OXB announced it is seeking to out-license or spin-out priority assets (OXB-102, OXB-202, and OXB-302) in order to capture the value of its Lentiviral-based product portfolio without the associated costs. The goal of each is to be advanced to at least proof of concept in humans via out-licensing or through the formation of externally-funded special purpose vehicles (SPVs). At the FY16 results, the company announced that OXB-102 (for Parkinson’s disease) and OXB-202 (for corneal graft rejection) are both ready to start phase I/II studies following out-licensing/spin-out. Preclinical proof of concept data achieved on OXB-302 (for solid tumours) means it is ready for further development following out-licensing/spin-out. Management has stated that the process to spin-out or out-license the priority product development candidates is underway and the company is optimistic of success with this in 2017. Details of OXB’s pipeline can be found in our note entitled Balancing risk to optimise reward.

Furthermore, 2016 saw significant resources directed towards upgrading and extending OXB’s manufacturing and technical resources; as a result, lentiviral vector production capacity has increased substantially. This expansion allows for the continued delivery of vectors to Novartis, with additional production utilised for OXB assets and the potential for further collaborative deals with new and existing partners. We forecast manufacturing income streams through to 2029. In the main, these are based on the Novartis contract being extended (assuming CTL019 is approved). The partnership with Novartis is focused around CTL019 (OXB is the sole supplier of the lentiviral vector for the CTL019 clinical study) and an undisclosed CAR-T programme is set to provide up to $76m of performance-based milestones under the October 2014 contract; we assume that a substantial portion this is delivered by mid-2017. Regulatory approval for CTL019 could see production rates of the lentiviral vector used in CTL019 increase, which we believe could add significantly to OXB’s revenue stream via royalty payments.

Novartis’s CTL019 at the fore in 2017

Positive results from the ELIANA trial have prompted Novartis to publically confirm its timelines for filing CTL019 in paediatric B-ALL; the FDA has accepted the BLA filing and has granted priority review, and Novartis will file with the EMA later in 2017. A priority review means FDA aims to make an approval decision on an application within six months (vs 10months under a standard review). The positive data for CTL019 mean we retain our expectations for a US launch in 2017, from which OXB will generate revenues (milestones, manufacturing and royalties) from the production of its lentiviral vectors, which are a key component of CTL019. Additionally, three-month interim data from the pivotal JULIET Phase II trial in 3rd line r/r diffuse large B-cell lymphoma (DLBCL) patients is expected shortly with primary analysis expected by the summer. Positive data in this larger indication would enable Novartis to file it for approval in both the US and EU in Q417. Approval would generate additional significant manufacturing and royalty revenues for OXB as demand from Novartis for its lentiviruses would increase accordingly. While we expect competition in this indication from Kite Pharmaceuticals who could launch six to 12 months ahead of Novartis, we believe Novartis still has an opportunity to capture significant market share on the back of positive data from the JULIET trial. Key to this will be the long-term duration of the complete or partial responses from the competing CAR-T products; any marked difference in either product could enable Novartis or Kite to capture significant market share.

CTL019 is an investigational chimeric antigen receptor T-cell (CAR-T) therapy, which Novartis is testing across multiple Phase II trials. OXB’s lentiviral technology is utilised to enable the chimeric antigen receptor expression on the T-cell. T-cells are isolated from the patient and are then modified ex vivo with lentiviral vector. The lentiviral vector encodes for the anti-CD19 chimeric antigen receptor. These chimeric antigen modified t-cells (CAR-T) are then expanded before infusion back into the patient.

Changes in the regulatory landscape both in Europe with the launch of PRIME (March 2016) and in the US with the introduction of ‘breakthrough therapy designation in 2012 allow for innovative therapeutics that demonstrate major therapeutic benefit to reach the market faster than under standard regulatory approval pathways. Recently in June, the EMA granted PRIME designation to CTL019 for the treatment of paediatric patients with ALL.

Novartis presented overwhelmingly positive clinical trial data from its global registration trial (ELIANA) of CTL019 in relapsed/refractory (r/r) paediatric and young adults with B-cell acute lymphoblastic leukaemia (B-ALL) at the 58th American Society of Hematology (ASH) annual meeting December 2016. In one of the largest CAR-T trials to date, 41 out of 50 (82%) treated patients achieved a complete remission or complete remission with incomplete blood count recovery. While a key concern for CAR-Ts in general has been duration of response, Novartis reported an impressive estimated relapse-free rate of 60% six months after the administration of treatment. Additionally, following the suspension of development of Juno’s CD19 CAR-T (JCAR015) after the death of a further two patients (in addition to a previous three) due to neurotoxicity, it is positive to see that Novartis in the same indication (r/r B-ALL but in adult patients) reported no grade 4 or above neurotoxic events. In line with most CAR-Ts to date, 48% of patient’s experienced grade 3 or 4 cytokine release syndrome. Novartis reported no patient deaths relating to treatment.

The partnership with Novartis focused around CTL019 and an undisclosed CAR-T programme provided up to $76m of performance-based milestones ($14m of the $90m deal signed in 2014 was received upfront) the substantial proportion of which will be received by mid-2017. OXB’s lentiviral vector is a key component of CTL019 and a regulatory approval in the first indication (paediatric r/r B-ALL) for it could see a dramatic uplift in lentiviral vectors needed. We believe this could add significantly to OXB’s revenue stream as an increase in demand from Novartis feeds through. Novartis is at present dependent on OXB for vector supply, which is a critical part of the CTL019 manufacturing process. Additionally, we expect royalties from the sale of CTL019 to become substantial as sales progress. We estimate that Novartis will launch CTL019 for DLBCL and paediatric ALL in 2017, with combined royalties expected in 2017 of £978k and peak combined royalties in 2023 of £12.4m. We assume Novartis can capture 20% of the refractory DLBCL market and 30% of the refractory paediatric ALL market with an average £150k price. We point out that our pricing assumptions may be conservative due to the substantial costs required in delivering these personalised medicines. We believe increased competition from Kite in DLBCL will impact market share dynamics; however, it is lagging behind Novartis on plans to launch in paediatric ALL. We assume OXB receives royalty on sales of 1% on both indications.

Pipeline update

An internal review in April 2016 led to the prioritisation of three internally developed pipeline assets: OXB-102 (Parkinson’s disease – Phase I/II), OXB-202 (corneal graft rejection – Phase I/II) and OXB-302 (cancer, multiple types – preclinical), which could deliver the best potential economic returns. The goal for each is to be advanced to at least proof of concept in humans via out-licensing or through the formation of externally-funded SPVs. OXB will look to obtain value through upfront payments, equity stakes or developmental milestones and from royalty on sales.

Product candidates that fall outside the priority programme (OXB-201 for wet age related macular degeneration and OXB-301 for multiple cancers) will only be progressed once suitable opportunities, like partnering, enable reduced investment from OXB.

The group will continue to invest in earlier-stage gene and cell therapy concepts (eg in ocular, CNS and respiratory indication) with the aim of identifying new candidates for further development via out-licensing or spin-outs.

We note that SAR422459 (licensed to Sanofi) for Stargardt disease has progressed into Phase II development.

Valuation

Our sum-of-the-parts valuation consists of an rNPV model of the R&D pipeline, coupled with a simple DCF valuation of the projected manufacturing revenues and our forecast licence income and IP royalties and milestones (Exhibit 1). Our revised valuation of £208.5m (previously £173m) or 6.75p/share has mainly benefited from rolling forward our DCF. Our valuation is based on a number of assumptions, which are highlighted in the table below. We have applied a top-down analysis of the Parkinson’s disease and corneal graft rejection markets, which form the basis of our sales projections for clinical stage, priority assets OXB-102 and OXB-202, respectively.

Exhibit 1: OXB sum-of-the-parts valuation

Product(s)

Indication

Partner

Status

Probability of success

(%)

Estimated launch year

Estimated maximum royalty or margin (%)

Estimated peak sales ($m)

NPV (£m)

rNPV (£m)

rNPV/ share (p)

OXB-102

Parkinson's disease

 

Phase I/II

20%

2024

15%

$1,048.1

133.9

26.8

0.87

OXB-202

Corneal graft rejection

 

Phase I/II

20%

2026

15%

$381.3

37.6

7.5

0.24

OXB-201

Wet AMD

 

Phase I/II

20%

2026

15%

$337.5

49.9

10.0

0.32

OXB-301

Cancer (multiple)

 

Phase I/II

20%

2024

15%

$360.0

31.7

6.3

0.21

SAR422459 (StarGen)

Stargardt disease

Sanofi

Phase II

25%

2021

7%

$337.5

33.0

8.2

0.27

SAR421869 (UshStat)

Usher syndrome type 1B

Sanofi

Phase I/II

20%

2023

7%

$45.0

4.2

0.8

0.03

Manufacturing (including CTL-019)

 

Various

 

100%

 

40% operating margin

$81.9

123.9

123.9

4.01

Licence income & IP milestones

 

Various

 

100%

 

100% operating margin

 

44.0

44.0

1.42

Less net debt at December 2016 

 

 

 

 

 

 

-19.1

-19.1

-0.62

Total

 

 

 

 

 

 

 

439.2

208.5

6.75

Source: Edison Investment Research. Note: *Sanofi has fully licensed these products – we estimate a 7% royalty rate on forecast product sales. rNPV = risk-adjusted NPV.

Our DCF model for the manufacturing income streams forecasts the lentiviral production revenues (OXB solution) through to 2029. We separately model milestone and licence income to reflect the value of Novartis CTL019 (potential incoming royalty stream from CTL019 should the Novartis contract be extended; assuming CTL019 is approved) and other deals eg Immune Design and Green Cross LabCell. These are summed and discounted at 10%, in line with other revenue generating units under Edison coverage. We estimate that Novartis will launch CTL019 for DLBCL and paediatric ALL late 2017 to mid-2018, with combined royalties expected in 2017 of £978k and peak combined royalties in 2023 of £12.4m. We assume OXB will be due a 1% royalty on sales for both indications. Further information on our valuation methodology can be found in our recently published outlook note.

Financials

OXB reported FY16 gross income (the aggregate of revenues and other operating income) of £30.8m, an increase of 64% from £18.8m in FY15, driven by higher bioprocessing and process development income (£24.0m in FY16 vs £12.4m in FY15). This was due mainly to process development activities for Novartis (CTL019), but with a smaller contribution from new partnerships (Immune Design and Orchard Therapeutics). OXB has been manufacturing CTL019 at the new clean room facility at Yarnton from the start of the year in addition to ongoing manufacturing at Harrow House. R&D collaboration revenues (licenses, milestone, and grant income) increased slightly to £6.8m FY16 (£6.4m in FY15) related to higher process development fees and milestones from Novartis and the receipt of the upfront payment related to the Immune Design deal announced in March 2016. From 2017 we expect US approval and launch of CTL019 to aid gross income growth as OXB benefits from growth in bioprocessing and process development income in addition to receiving royalties on CTL019 sales. FY18 gross income should benefit from CTL019 launch in Europe. We forecast gross income of £40.0m in FY17 and £42.3m in FY18, compromised of £39.0m in revenues in 2017 and £41.3m in 2018. We forecast other operating income in both years to be flat at £1m. Gross income growth will also be aided by the new partnership agreements signed in 2016 (Immune Design, Orchard Therapeutics, and Green Cross LabCell).

R&D and bioprocessing costs increased to £24.3m FY16 (£20.3m in FY15); however, from 2017 we forecast a significant reduction reflecting the near-term strategy to out-license or spin-out the product portfolio (£21.5m in 2017 and £18.5m in 2018). We forecast profitability at the EBITDA level in 2017 of £1.2m and £5.8m in 2018 driven by the increase in bioprocessing and partner income, improvement in gross margin and the reduction of R&D expenses. Given the high levels of depreciation associated with the recent two-year manufacturing expansion programme (completed in 2016) and finance costs relating to the Oberland Capital loan weighing on PBT, we forecast a normalised loss before tax of £7.5m and £2.8m in FY17 and FY18, respectively.

Finance costs increased significantly in FY16 to £9.0m related to the Oberland loan facility ($25m drawn down in May, $15m in September 2015). From FY17 onwards, we expect cash burn to reduce significantly reflecting the reduction in capital requirements associated with plant expansion and R&D. The significant reduction in cash burn coupled with the move towards profitability in FY18 means the 2016 equity raise of £17.5m net should ensure sufficient cash to FY19.

Note that in May 2015 Oxford BioMedica secured a $50m loan facility from Oberland Capital as non-dilutive funding to progress its manufacturing expansion. The loan has to be repaid by 1 May 2022, but may be paid at any time (an undisclosed fee is payable upon any repayment). Interest is payable quarterly at an annual rate of 9.5% plus the greater of 1% or three-month Libor. A further 0.35% of net revenues is payable for eight years starting on 1 April 2017 for each $5m drawn down over $30m (this may be closed at any time but an undisclosed exit fee is payable). An initial $25m was drawn down immediately to fund the production expansion required for the Novartis contract and a further $15m was drawn down in September 2015. The remainder is available in tranches of a minimum of $5m prior to 31 December 2016. Due to the restrictive nature of the Oberland facility it can only be utilised for manufacturing expansion. The group is required under the Oberland facility to maintain cash and cash equivalents of not less than $10m while the Oberland loan is outstanding. The loan facility is secured on the group’s assets.

Exhibit 2: Financial summary

£'000s

 

2015

2016

2017e

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

15,909

27,776

39,000

41,250

45,840

Cost of Sales

(5,839)

(11,835)

(15,240)

(15,240)

(16,709)

Gross Profit

10,070

15,941

23,760

26,010

29,131

R&D

(20,274)

(24,299)

(21,500)

(18,500)

(17,000)

Other operating income

2,862

3,002

1,000

1,000

1,000

EBITDA

 

 

(12,456)

(7,638)

1,230

5,831

10,101

Depreciation

(1,264)

(3,340)

(3,719)

(3,365)

(3,056)

Operating profit (before GW and except)

 

(13,720)

(10,978)

(2,489)

2,467

7,045

Amortisation

(363)

(335)

(268)

(214)

(171)

Exceptionals

0

0

0

0

0

Operating profit

 

 

(14,083)

(11,313)

(2,757)

2,253

6,874

Net Interest

(2,899)

(8,994)

(5,011)

(5,231)

(5,461)

Other

0

0

0

0

0

Profit Before Tax (norm)

 

 

(16,619)

(19,972)

(7,500)

(2,764)

1,584

Profit Before Tax (reported)

 

 

(16,982)

(20,307)

(7,767)

(2,978)

1,413

Tax

3,963

3,666

4,000

4,000

4,000

Profit After Tax (norm)

(12,656)

(16,306)

(3,500)

1,236

5,584

Profit After Tax (reported)

(13,019)

(16,641)

(3,767)

1,022

5,413

Average Number of Shares Outstanding (m)

2,574

2,778

3,087

3,087

3,087

EPS - normalised (p)

 

 

(0.49)

(0.59)

(0.11)

0.04

0.18

EPS - reported (p)

 

 

(0.51)

(0.60)

(0.12)

0.03

0.18

Dividend per share (p)

 

 

0.00

0.00

0.00

0.00

0.00

Gross Margin (%)

63.3%

57.4%

60.9%

63.1%

63.5%

EBITDA Margin (%)

(78.3%)

(27.5%)

3.2%

14.1%

22.0%

Operating Margin (before GW and except) (%)

(86.2%)

(39.5%)

(6.4%)

6.0%

15.4%

BALANCE SHEET

Fixed Assets

 

 

26,139

29,501

26,514

23,936

21,709

Intangible Assets

0

657

657

657

657

Intangible Assets

1,743

1,330

1,062

849

678

Tangible Assets

24,396

27,514

24,795

22,430

20,374

Current Assets

 

 

25,712

27,441

32,604

36,734

45,778

Stocks

2,706

2,202

2,836

2,836

3,109

Debtors

10,930

6,904

8,877

9,432

10,563

Cash

9,355

15,335

17,558

21,133

28,772

Other

2,721

3,000

3,334

3,334

3,334

Current Liabilities

 

 

(13,169)

(9,316)

(13,751)

(12,708)

(12,469)

Creditors

(9,286)

(6,003)

(10,438)

(9,395)

(9,156)

Provisions

(838)

0

0

0

0

Deferred income

(3,045)

(3,313)

(3,313)

(3,313)

(3,313)

Long Term Liabilities

 

 

(27,788)

(35,011)

(36,519)

(38,092)

(39,735)

Long term borrowings

(27,255)

(34,389)

(35,897)

(37,470)

(39,113)

Other long term liabilities

(533)

(622)

(622)

(622)

(622)

Net Assets

 

 

10,894

12,615

8,848

9,870

15,283

CASH FLOW

Operating Cash Flow

 

 

(14,871)

(5,979)

3,060

4,233

8,457

Net Interest

(1,494)

(3,258)

(3,518)

(3,672)

(3,833)

Tax

3,247

4,131

3,666

4,000

4,000

Capex

(16,716)

(6,458)

(1,000)

(1,000)

(1,000)

Acquisitions/disposals

0

0

0

0

0

Financing

144

17,497

0

0

0

Dividends

0

0

0

0

0

Other

38

47

15

15

15

Net Cash Flow

(29,652)

5,980

2,223

3,575

7,639

Opening net debt/(cash)

 

 

(13,195)

17,900

19,054

18,339

16,337

HP finance leases initiated

0

0

0

0

0

Other

(1,443)

(7,134)

(1,508)

(1,574)

(1,643)

Closing net debt/(cash)

 

 

17,900

19,054

18,339

16,337

10,341

Source: Edison Investment Research, Oxford Biomedica

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Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Oxford BioMedica and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Oxford BioMedica and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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