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Research: Healthcare
Oxford Biomedica (OXB) and Santen Pharmaceutical have entered into an R&D collaboration to develop gene therapy vectors for an undisclosed inherited retinal disease. The collaboration will focus on generating preclinical proof of concept and includes a licence to OXB’s LentiVector platform, in addition to access to its manufacturing capabilities. 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. This new collaboration continues to demonstrate OXB’s track record of signing partnerships and again validates its position as a leading global developer of lentiviral vectors. We retain our valuation of OXB at £649m. We do not currently include the Santen deal in our valuation, but will reassess this once more details on financial terms and development strategy (including indication) are available.
Written by
Oxford Biomedica |
Santen - a global player in ophthalmology |
New partnership |
Pharma & biotech |
26 June 2019 |
Share price performance
Business description
Analysts
Oxford Biomedica is a research client of Edison Investment Research Limited |
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Oxford Biomedica (OXB) and Santen Pharmaceutical have entered into an R&D collaboration to develop gene therapy vectors for an undisclosed inherited retinal disease. The collaboration will focus on generating preclinical proof of concept and includes a licence to OXB’s LentiVector platform, in addition to access to its manufacturing capabilities. 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. This new collaboration continues to demonstrate OXB’s track record of signing partnerships and again validates its position as a leading global developer of lentiviral vectors. We retain our valuation of OXB at £649m. We do not currently include the Santen deal in our valuation, but will reassess this once more details on financial terms and development strategy (including indication) are available.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
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 |
164.4 |
N/A |
12/19e |
75.8 |
5.5 |
11.4 |
0.0 |
62.0 |
N/A |
12/20e |
88.6 |
12.5 |
19.9 |
0.0 |
35.5 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Santen is a Japan-listed (market cap: c £5.2bn) specialist in ophthalmology and commercialises a range of products globally (FY18 sales of c £1.7bn). Gene therapies hold significant potential in inherited retinal diseases, as genes can be integrated into the eye to correct for defective or non-existent genes often resulting in significant improvements in vision. The first (US) approval of a gene therapy for a retinal disease in 2017 (Luxturna) validated the approach and has led to a rapid increase in the number of companies developing ophthalmology gene therapies. Santen has worldwide commercialisation rights, but OXB has retained an option to co-fund and participate in development and commercialisation in the US and EU. Significant commercial potential exists in gene therapies and this option to co-develop and commercialise any product (in the US and EU) would enable OXB to capture more of any value. For an overview of OXB’s pipeline and its assets, please see our recent outlook note, In a cell and gene therapy sweet spot.
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Research: Industrials
Given the pre-restructuring history of Sureserve, the absence of any surprises or exceptionals in this set of interims is a cause for celebration. The more streamlined group is now focused on compliance and energy services, where growth is underpinned by regulatory drivers. H119 results showed revenues expanding by 13% y-o-y and EBITDA growing by 17%. The current FY19e P/E of 7.1x is in marked contrast to the 15.5x recently offered by Macquarie for PTSG, one of Sureserve’s peers, and highlights the relative attraction of the business.