Oxford BioMedica Update: Fundraise And Sanofi Option Exercise

Payment of $3m on opt-in by Sanofi to exclusive global licences on two ocular assets, coupled with an intention to raise up to £16m gross (£14.5m net) via a firm placing and open offer (up to c 641m shares at 2.5p) will significantly strengthen Oxford BioMedica’s (OXB.L) balance sheet. The company will have a cash runway into 2014 and the funds to fully leverage its proprietary LentiVector gene delivery platform and manufacturing capability, as well as to dedicate investment into its growing ocular portfolio. The latter is strategically important given the focus of its growth strategy on high value, fast growing markets. ProSavin and TroVax development continues, with the aim of generating further data to support partnering efforts, although no new money from the fund raise will be allocated to these programmes.


StarGen and UshStat: Sanofi opts in
Sanofi has licensed US/EU orphan drugs, StarGen (Stargardt’s disease) and UshStat (Usher Syndrome), which may have a faster path to market than RetinoStat (wet AMD) and EncorStat (corneal graft rejection). Sanofi retains the option to license the latter, although timing of exercise is uncertain. Oxford BioMedica is eligible for undisclosed development/commercialisation milestones and royalties under the licences; terms could be weighted based on commercial potential. Further data is expected in H2.

Cash runway extended into 2014
The equity raise and £9m of cash (end-April 2012) provides funds into 2014, in the absence of additional payments from Sanofi, under new partnering and/or technology licensing deal(s). We now expect Oxford BioMedica to end 2012 with net cash of c £15.9m; 2012 revenue assumes full recognition of the $3m Sanofi milestone.

Use of proceeds: Ocular portfolio and manufacturing
Proceeds of the firm placing (£11m gross, £9.6m net) have been allocated to the ophthalmology portfolio (£4m) and LentiVector manufacturing process development (£1m to fund scale-up for Phase III trials and commercial supply) with the remaining £4.6m for working capital and strengthening the balance sheet.

Valuation: Ex-cash rNPV of £62.5m vs EV of £22m
Successful development of the ocular assets with Sanofi and securing funds/partners for ProSavin and TroVax development underpin the investment case. We ascribe a £62.5m ex-cash rNPV pending updated clinical plans for StarGen and UshStat. Our valuation does not include potential LentiVector supply agreements, preclinical programmes other than EncorStat, or deal economics for technology IP.

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