Oxford Biomedica (LON:OXB) is a leader in lentivirus based gene technology and ongoing manufacturing deals (CTL019 with Novartis) underpin the valuation. We expect pipeline focus in the near term as OXB aims to optimise development via out-licensing or externally funded SPVs. The newly announced strategy takes into account the balance of risk versus reward for stakeholders (against the backdrop of the significant financial resources required over the next two to three years to advance OXB’s value, driving assets to the next stage). The recent net £10m equity fund-raising will extend the current cash runway beyond 2017 due to reduced R&D expenditure; further funding and value may arise from additional manufacturing or IP licensing deals. We value OXB at £173m.
Expanded capacity to trigger more deals
Novartis’s use of the OXB’s GMP-approved lentiviral vector manufacturing for its CTL019 programme is an important source of revenues (up to $76m over three years has been announced). The recently upgraded and extended capacity allows for the continued delivery of vectors to Novartis, with additional production utilised for OXB assets and new deals, eg Immune Design and Green Cross LabCell. Regulatory approval of CTL019 (Novartis expects to file the BLA in early 2017) could translate into a significant increase in delivery of vectors for its commercial launch, transforming OXB’s business further as royalties on sales materialise.