Investing for future growth

Oxford Biomedica 1 October 2019 Update
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Oxford Biomedica

Investing for future growth

Corporate update

Pharma & biotech

1 October 2019

Price

540p

Market cap

£415m

1$:£0.8; 1€:0.88; 1$:€0.91

Net cash (£m) at 30 June 2019 (excluding £11.5m Axovant milestone)

26.1

Shares in issue

76.8m

Free float

69%

Code

OXB

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.5)

(21.9)

(40.9)

Rel (local)

(15.8)

(22.0)

(40.0)

52-week high/low

913.8p

496.5p

Business description

Oxford Biomedica’s (OXB) LentiVector technology underpins the company’s strategy. OXB generates significant revenue from partners that use its technology, notably Novartis, Bioverativ (Sanofi), Orchard Therapeutics and Immune Design. OXB is implementing significant capacity upgrades to enable more partnering/out-licensing agreements.

Next events

New out-licence or partnership

H219

AXO-Lenti-PD cohort 2 data

Q419

OTL-101 BLA/MAA submission

2020

Analysts

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Dr Susie Jana

+44 (0)20 3077 5700

Oxford Biomedica is a research client of Edison Investment Research Limited

Oxford Biomedica’s (OXB) interim results highlight strong operational and financial momentum to date. The Novo Holdings equity investment (£53.5m) in May has enabled OXB to fully repay the debt facility, effectively strengthening the balance sheet. It is investing ahead of increasing demand for its lentiviral vector manufacturing capacity with the build-out of OxBox. The new facility will more than double capacity and is expected to be ready for commercial vector production in H120. Top-line growth continues to benefit from the near-term ramp-up of Kymriah and rapid advancement of partnered asset AXO-Lenti-PD (Axovant), crystallising in a $15m development milestone payment. We value OXB at £673m.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/17

37.6

(13.1)

(16.7)

0.0

N/A

N/A

12/18

66.8

0.3

4.3

0.0

125.6

N/A

12/19e

76.9

(7.9)

(7.3)

0.0

N/A

N/A

12/20e

89.8

2.9

7.4

0.0

73.0

N/A

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

Partnerships advancing through financial milestones

Partner Axovant has swiftly accelerated AXO-Lenti-PD into the clinic, with a Phase I/II dose-escalation study (SUNRISE-PD) in advanced PD patients ongoing. Following positive early data in the lowest dose cohort (n=2), a second dose cohort is enrolling (OXB received a $15m milestone payment on enrolment of first patient) for which data are expected by year end. We anticipate further milestone payments (up to $40m remaining in development milestones) as progress continues. The haemophilia development partnership with Sanofi (previously Bioverativ) is progressing towards clinical development material in the coming 12 months, which could begin to trigger milestones (up to $100m). With Kymriah now approved for reimbursement in over 19 countries, we expect OXB to benefit from an increasing royalty stream. OXB continues to garner new partners including R&D collaborations with Santen (gene therapy for an inherited retinal disorder) and Microsoft (to improve the yield and quality of vectors utilising machine learning).

Debt removed, investment is the strategy

Novo’s £53.5m investment has multiple consequences. It has enabled OXB to fully repay the costly revolving debt facility, leading to a much improved debt-free balance sheet, and boosted cash for developing its platform and own portfolio of assets. Capital expenditure increased to £14.9m in H119, highlighting the significant investment in OxBox (84,000 sq ft bioprocessing manufacturing facility), which is a pre-requisite of meeting future demand. In addition, a 32,000 sq ft discovery facility has been leased to boost R&D capabilities.

Valuation: £673m vs £649m previously

We value OXB at £673m (£8.77/share) vs £649m previously, as a result of updating for FY19 cost and revenue forecasts, rolling forward our model and updating for exchange rates and net cash. Our sales forecasts are unchanged and our core drivers remain OXB’s partnerships, which represent £5.36/share of our total value.

Balance sheet strengthened as partners progress

We continue to expect ongoing growth in the top line, driven in the near term by Kymriah (Novartis), the progression of Sanofi’s (previously Bioverativ) haemophilia products to the clinic (via development milestone payments) and the rapid advancement of OXB’s partnered products with Orchard (notably OTL-101, where a biologics licence application (BLA)/marketing authorisation application(MAA) is expected in 2020) and Axovant (cohort 2 data expected in Q419). Additionally, early-stage collaborations with Santen and Boehringer Ingelheim/the UK Cystic Fibrosis Gene Therapy Consortium will continue to contribute a growing share of the top line as OXB undertakes development work.

The equity investment in May of £53.5m by Novo Holdings (for 10.1% of the outstanding share capital) has enabled OXB to fully repay the £43.6m debt facility with Oaktree Capital Management. This is a welcome move as the debt cost was substantial (as evidenced by the H119 interest payment of £4.8m) and its removal will allow OXB to fully focus its cash resources on growing the business.

To this end, OXB has made significant progress in H119 in building out its manufacturing and R&D capacity in addition to its workforce. In September 2018, the group signed a lease on 84,000 sq ft facility located about a mile from the main residence. Initially the company will fit out approximately 45,000 sqft with four GMP clean room suites, two fill and finish suites, offices, warehousing and QC laboratories. Completion of the building phase is expected by the end of 2019, with validation of the manufacturing and necessary regulatory approvals expected by the end of the second quarter 2020. In December 2018, OXB signed a lease on a 32,000 sq ft building adjacent to its main residence in Windrush Court. The new facility, named the Windrush Innovation Centre, will focus on innovation and technological advances to support both the product pipeline and LentiVector platform. Teams started moving into the facility in Q219 and the centre is expected to be fully operational within a year. At 30 June 2019, the employee count had risen to 465 from 352 at 30 June 2018 and the company expects it to rise to 600 staff by year end. Hiring the correct talent will be critical to OXB’s long-term success.

OXB proving its worth as Kymriah fights headwinds

OXB’s successful transition to Process B bioreactor vector production for Kymriah (a tenfold yield over Process A) in H119 demonstrates its expertise in vector manufacturing. Due to low Kymriah sales to date (Q219: $58m), vector supply has been possible with adherent cell manufacturing (Process A). However, to make sure Kymriah sales in the long term are not limited by vector supply, a transition to bioreactors was needed.

In July 2017, OXB and Novartis signed a three-year commercial supply agreement in support of Kymriah that comes to an end in July 2020. We believe OXB and Novartis are currently likely to be in discussions to extend this contract. OXB’s technology is deeply embedded in Kymriah’s production and swapping to another vector manufacturer (either in house at Novartis or external) would require a significant technology transfer undertaking (12–18 months of work), which would materially affect Novartis’s ability to supply Kymriah into H220 and beyond.

Kymriah is now approved for reimbursement in 19 countries. However, it continues to face headwinds that have slowed uptake. In August, the Centers for Medicare and Medicaid Services (CMS) announced that current CAR-T treatments (Kymriah and Yescarta) will now be reimbursed by Medicare when patients are treated at approved healthcare centres. However, the amount reimbursed remains contentious, with many hospitals claiming these new rules do not cover the total cost of treatment.

While OXB provides the vectors that encode a patient’s T-cells to express the cancer-targeting chimeric antigen receptor (CAR), it is Novartis that undertakes the cell engineering of a patient’s cells. This is a complex and difficult process and, since the launch of Kymriah, Novartis’s cell manufacturing has come under scrutiny as some Kymriah products have not met commercial specification requirements (although they did meet clinical requirements). As a result, some Kymriah products had to be provided to patients for free; while this affects royalties received by OXB, the company still receives vector batch payments. A request to broaden the specification requirements has been approved by the EMA, although the FDA has yet to alter its requirements.

In addition to Kymriah, Novartis and OXB are working on a second undisclosed CAR-T, which is expected to progress into the clinic in the next 12 months.

AXO-Lenti-PD hitting development milestones

Partner Axovant has swiftly undertaken clinical development of AXO-Lenti-PD, with three-month data published early this year from the first two patients in the ongoing Phase I/II dose-escalation study (SUNRISE-PD) in advanced PD patients. Updated six-month data were announced in June. The study highlighted mean improvements (Exhibits 1 and 2) in Unified Parkinson’s Disease Rating Scale (UPDRS) scores for motor function (Part III) of 17 points (individual patients demonstrated 14- and 20-point improvements) and daily living (Part II) of 20 points at the lowest dose to be tested of 4.2 x 106 transducing units (TU). This compared favourably to that observed for the highest dose used in the ProSavin study (Exhibits 1 and 2). The next data are expected in Q4 from the second cohort of patients treated at 1.4 x 107 TU. OXB is eligible for remaining milestones of up to c $800m ($40m left for development) and 7–10% tiered royalties on any sales. The Axovant partnership currently represents 23.4% (£2.07/share) of our value of OXB.

Exhibit 1: UPDRS-III score improvement after six months for motor function

Source: Adapted from Axovant corporate presentation

Exhibit 2: UPDRS-II score improvement after six months for daily living

Source: Adapted from Axovant corporate presentation

New collaborations add to the mix

In June, OXB signed an R&D collaboration, in addition to an option and licence agreement with Santen Pharmaceuticals, a publicly listed, leading Japanese ophthalmic pharmaceutical company operating in 60 countries worldwide. The agreement covers the development of gene therapy vectors for an undisclosed rare inherited retinal disorder. Under the terms of the initial agreement, OXB will provide preclinical proof of concept with its lentiviral vector platform. The collaboration includes a licence to OXB’s LentiVector platform and access to its manufacturing facilities. OXB is entitled to an undisclosed milestone payment on Santen exercising the option to the LentiVector platform, as well as development milestones and an up to 10% royalty on net sales.

Santen has worldwide commercial rights to the programme, while OXB retains an option to co-fund and participate in the development and commercialisation in the US and Europe. The structure of this deal is interesting as it is of minimal risk at this early stage , but provides the opportunity to share in the upside if this gene therapy has commercial viability in the US/EU.

Additionally, in an effort to ensure it remains at the cutting edge, in March OXB announced a collaboration with Microsoft Research to utilise its machine learning technology to develop insights into OXB’s processes. The aim of the partnership is to improve the yield and quality of OXB’s next-generation gene therapy vectors. The partnership will initially run for two years, but can be extended by either party.

Financials

OXB reported H119 gross income of £32.1m (-9% y-o-y from £35.3m). Licence fees, milestone and royalty (LMR) revenue dropped to £13.3m in H119, as H118 (£19.9m) benefited from large upfront payments from signing the Axovant and Sanofi (Bioverativ) partnerships. LMR revenue in H119 comprised an £11.5m ($15m) milestone from Axovant (actual cash received post period) and, although undisclosed, we assume the remainder is £1.8m in royalties for Kymriah.

Bioprocessing/commercial development revenues (segmental data in Exhibit 3), which are historically more predictable, grew to £18.8m (+23% y-o-y from £15.4m), driven by a greater volume of development activity, notably for Novartis and Orchard. Production of clinical and commercial batches for Novartis and Orchard were slightly lower y-o-y, as production was affected by conversion of the Yarnton bioprocessing facility from an adherent process (Process A) to bioreactors (Process B). Additionally, OXB has now been approved by the US FDA to provide vectors produced by cell Process B instead of the original (at time of filling) Process A vectors. This has the additional effect of lowering the required number of vector batches OXB needs to provide to Novartis as Process B can provide 10x the vector quantity per batch than Process A (enabling 10x the amount of royalties paid to OXB per batch). However, as the number of patients treated with Kymriah continues to grow, we expect bioprocessing revenues to pick up once again.

Exhibit 3: Platform/Product revenue split

H118 (£m)

H119 (£m)

Edison forecast FY19 (£m)

Platform

Bioprocessing/commercial development

15.4

17.6

47.3

Licence fees, milestones & royalties

9.7

1.8

4.6

Product

Bioprocessing/commercial development

0

1.3

3.7

Licence fees, milestones & royalties

10.3

11.5

21.3

Total

35.3

32.1

76.9

Source: Oxford Biomedica, Edison Investment Research

We have made minor adjustments to our FY19 revenue forecasts of £76.9m (from £75.8m previously). R&D and COGS increased to £17.6m in H119 (H118: £13.4m) and £11.7m (H118: £10.1m) respectively. For R&D, this was a result of increased investments in commercial and technical projects, while the increase in COGS was driven by growth in bioprocessing. R&D has grown more quickly than we originally forecast, and we have therefore adjusted our FY19 R&D forecasts upwards to £44.3m (vs £31.9m previously). Our FY19 COGS forecast remains broadly in line with our previous assumptions (£24.2m vs £24.0m previously). Admin costs rose to £4.0m (vs £2.4m in H118) and we retain our full year forecast of £10.0m.

We note that bioprocessing costs increased to £4.1m (vs £0.7m in H118) as a result of headcount, facility costs and related spend on OxBox. Costs were also affected by the downtime at the Yarnton bioprocessing facility (switch from Process A to B) where the associated downtime costs were accounted for in bioprocessing costs rather than as COGS (as no goods were sold in the downtime). We currently include forecast bioprocessing costs in our R&D line.

Finance costs of £6.1m (H118: £4.2m) consisted of interest payments on OXB’s loan facility with Oaktree Capital Management, which increased to £4.8m (H118: £3.0m), a foreign exchange revaluation loss of £1.0m driven by weak sterling (vs a loss of £1.2m in H118) and lease liability interest (as recognised under IFRS 16) of £0.3m. In the period, OXB repaid the Oaktree loan (interest rate of 9% plus Libor, subject to a minimum of 1%) following Novo’s equity investment of £53.5m. Tax credits of £1.9m were received in H119 versus none in H118.

Capital expenditure in H119 was £14.9m (vs £6.0m in H118), driven mainly by the ongoing build and fit of OxBox and the expansion of the business as a whole. Capex was substantially above expectations and we now forecast FY19 capex of £26.3m (vs £14.1m previously).

Gross and net cash was £26.1m at 30 June (vs gross cash of £32.3m and net debt of £8.9m at 31 December 2018). This does not include the £11.5m Axovant upfront, which is expected in H219.

We now forecast a £6.6m net loss in FY19, but note that multiple sensitivities remain around this figure, including cost sensitivities in R&D, facilities and personnel, in addition to revenue sensitivities with regard to Kymriah sales growth, the extent of bioprocessing revenue, milestone payments and the execution of any new deals.

Valuation: £673m (£8.77/share)

We value OXB at £673m (£8.77/share) vs £649m previously, as a result of updating for FY19 cost and revenue forecasts, rolling forward our model, and updating for exchange rates and net cash. Our valuation is based on a risk-adjusted NPV of partnered products with Novartis (Kymriah and undisclosed second CAR-T: £1.82/share), Orchard Therapeutics (OTL-101 and OTL-201: 18p/share + 12p/share for the equity stake), Bioverativ/Sanofi (Factor VIII and Factor IX: 81p/share), Sanofi (SAR422459 and SAR421869: 31p/share), AXO-Lenti-PD (PD: £2.07/share), OXB-201 (wet AMD: 49p/share), OXB-202 (corneal graft rejection: 43p/share) and OXB-302 (cancer: 5p/share). We include net cash (33p/share) and a terminal value (£2.14/share).

For extensive details of our valuation, please see our outlook note, In a cell and gene therapy sweet spot.

Exhibit 4: Valuation summary

Product/partner/indication/status

Estimated launch year

Peak royalties (£m)

Peak manufacturing revenue (£m)

Probability of success

NPV
(£m)

rNPV
(£m)

rNPV/share (p/share)

Kymriah/Novartis/r/r pALL/ approved in US & EU

Launched

£3

£2

100%

£36

£36

46.94

Kymriah/Novartis/DLBCL/approved in US & EU

Launched

£23

£13

100%

£85

£85

110.59

2nd CAR-T/Novartis/Cancers/Phase I/II

2022

£26

£33

20%

£97

£19

24.91

OTL-101/Orchard/ADA-SCID/Phase II/III

2020

£0

£1

70%

£8

£6

7.98

OTL-201/Orchard/Sanf A synd/Preclinical

2025

£12

£10

5%

£35

£8

10.06

OXB Orchard stake

N/A

N/A

N/A

N/A

£10

£10

12.49

Factor VIII/Bioverativ/Haemophilia A/Preclinical

2025

£488

£117

5%

£827

£46

60.08

Factor IX/Bioverativ/Haemophilia B/Preclinical

2025

£122

£29

5%

£220

£16

20.55

SAR422459/Sanofi/Stargardt/Phase II

2025

£35

N/A

25%

£56

£15

19.88

SAR421869 Sanofi/Usher/Phase I/II

2026

£28

N/A

20%

£40

£9

11.27

AXO-LENTI-PD/NA/Parkinson's/Phase I/II

2022

£81

£17

30%

£442

£159

206.59

OXB-202/NA/Corneal graft/Phase I

2025

£118

£13

20%

£166

£33

43.32

OXB-302/NA/Cancer/Preclinical

2025

£62

£62

5%

£92

£4

5.42

OXB-201/NA/Wet AMD/Phase I/II

2025

£131

£15

20%

£188

£38

49.01

Total pipeline and partnership value

 

 

 

 

£483

629.10

Terminal value

£164

213.83

Net cash

£26

33.96

Total

£673

876.89

Source: Edison Investment Research

Exhibit 5: Financial summary

Accounts: IFRS, year-end: December, £000s

 

2016

2017

2018

2019e

2020e

INCOME STATEMENT

 

 

 

 

 

 

Total revenues

 

27,776

37,590

66,778

76,907

89,799

Cost of sales

 

(11,835)

(18,442)

(22,763)

(24,240)

(26,807)

Gross profit

 

15,941

19,148

44,015

52,667

62,991

Administrative expenses

 

(5,957)

(7,276)

(7,433)

(10,035)

(13,547)

R&D and bioprocessing costs

 

(24,299)

(21,611)

(29,714)

(44,264)

(46,532)

Other income/(expense)

 

3,002

1,774

1,064

0

0

Exceptionals and adjustments

 

0

2,297

5,983

(1,411)

0

Operating profit/(loss)

 

(11,313)

(5,668)

13,915

(3,043)

2,913

Finance income/(expense)

 

(8,994)

(6,093)

(8,901)

(6,238)

6

Reported PBT

 

(20,307)

(11,761)

5,014

(9,280)

2,919

Income tax expense (includes exceptionals)

 

3,666

2,744

2,527

2,653

2,786

Reported net income

 

(16,641)

(9,017)

7,541

(6,627)

5,705

Basic average number of shares, m

 

56

62

65

71

77

Basic EPS (p)

 

(29.9)

(14.6)

11.6

(9.3)

7.4

Adjusted EBITDA

 

(6,773)

(2,645)

13,535

5,333

10,868

Adjusted EBIT

 

(10,448)

(7,020)

9,178

(1,632)

2,913

Adjusted PBT

 

(19,442)

(13,113)

277

(7,869)

2,919

Adjusted EPS (p)

 

(28.4)

(16.7)

4.3

(7.3)

7.4

BALANCE SHEET

 

 

 

 

 

 

Property, plant and equipment

 

27,514

25,370

31,791

51,119

58,422

Intangible assets

 

1,330

97

117

113

109

Other non-current assets

 

657

2,954

10,966

0

0

Total non-current assets

 

29,501

28,421

42,874

51,232

58,532

Cash and equivalents

 

15,335

14,329

32,244

8,532

1,256

Inventories

 

2,202

3,332

4,251

4,527

5,006

Trade and other receivables

 

6,904

17,088

30,585

37,927

44,284

Other current assets

 

3,000

2,232

2,446

13,619

13,752

Total current assets

 

27,441

36,981

69,526

64,605

64,298

Non-current loans and borrowings

 

34,389

36,864

41,153

0

0

Contract liabilities and deferred income

 

0

0

6,434

6,434

6,434

Other non-current liabilities

 

622

630

1,566

9,735

9,735

Total non-current liabilities

 

35,011

37,494

49,153

16,169

16,169

Trade and other payables

 

6,003

8,690

11,422

12,163

13,451

Contract liabilities and deferred income

 

3,313

13,072

17,084

17,084

17,084

Total current liabilities

 

9,316

21,762

28,506

29,247

30,535

Equity attributable to company

 

12,615

6,146

34,741

70,420

76,125

CASH FLOW STATEMENT

 

 

 

 

 

 

Opertaing profit/(loss)

 

(11,313)

(5,668)

13,915

(3,043)

2,913

Depreciation and amortisation

 

3,675

4,375

4,357

6,964

7,955

Share based payments

 

865

945

1,246

0

0

Other adjustments

 

(579)

(1,326)

(8,012)

0

0

Movements in working capital

 

1,423

141

(2,292)

(6,876)

(5,549)

Income taxes paid

 

4,081

4,512

3,654

2,446

2,653

Cash from operations (CFO)

 

(1,848)

2,979

12,868

(509)

7,973

Capex

 

(6,458)

(1,969)

(10,148)

(26,288)

(15,255)

Other investing activities

 

47

38

52

43

6

Cash used in investing activities (CFIA)

 

(6,411)

(1,931)

(10,096)

(26,245)

(15,249)

Net proceeds from issue of shares

 

17,497

385

19,808

50,475

0

Movements in debt

 

0

8,361

0

(41,153)

0

Interest paid

 

(3,258)

(10,800)

(4,665)

(6,280)

0

Other financing activities

 

0

0

0

0

0

Cash from financing activities (CFF)

 

14,239

(2,054)

15,143

3,042

0

Increase/(decrease) in cash and equivalents

 

5,980

(1,006)

17,915

(23,712)

(7,276)

Currency translation differences and other

 

0

0

0

0

0

Cash and equivalents at beginning of period

 

9,355

15,335

14,329

32,244

8,532

Cash and equivalents at end of period

 

15,335

14,329

32,244

8,532

1,256

Net (debt)/cash

 

(19,054)

(22,535)

(8,909)

8,532

1,256

Source: Oxford Biomedica accounts, Edison Investment Research

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Oxford Biomedica and prepared and issued by Edison, in consideration of a fee payable by Oxford Biomedica. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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