Oxford BioMedica: Financed Through To Early 2014

Oxford BioMedica’s (OXB.L) investment case is geared to the striking of worthwhile commercial partnerships for its late-stage clinical assets. The next key inflection point is whether Sanofi decides to opt-in for the further development of RetinoStat, a gene-based treatment for “wet” AMD (age-related macular degeneration). A positive outcome would help validate the LentiVector platform and could kick-start additional collaborations. We currently value the company at £58.5m (down from £62.5m).

RetinoStat opt-in by Sanofi is keenly awaited
Oxford BioMedica is essentially a bet on the merits of gene therapy in general and the LentiVector delivery platform in particular. The approach is promising; particularly in ophthalmology indications where a single administration could safely provide a sustained (or even permanent) effect. Having opted-in for two smaller ocular projects, Sanofi’s decision on RetinoStat could be the defining moment for Oxford BioMedica.

Collaborations have been slow
Oxford BioMedica has endured a difficult period, especially as collaboration discussions failed to conclude, yet gene-based medicines offer the prospect of dramatically altering the outcomes of a number of devastating diseases. The recent (November 2012) European approval of UniQure’s Glybera marks a pivotal point for gene therapy, effectively mapping a regulatory pathway. Meanwhile, Oxford BioMedica has successfully de-risked several critical aspects of the process, especially production.

Currently financed through to early-2014
Net cash was reported as £14.1m at the end-2012, which with forecast FY13 R&D (net) spend of £11.3m and underlying G&A expenditure of £3.3m, suggests the current cash runway extends through to early-2014. Were Sanofi to opt-in to RetinoStat (a decision is expected before Q114), we estimate a $20m milestone payment would be triggered, so extending the runway to around mid-2015. Further income could arise from manufacturing revenues and other partnering milestones (eg around $1-2m from Pfizer for the clinical start for the anti-5T4 antibody project).

Valuation: Pipeline alone supports a £58.5m value
Clearly much depends of the successful development of the ocular programmes (in collaboration with Sanofi). Our valuation of £58.5m, down from our previous £62.5m, is based on an rNPV model of the late-stage pipeline alone. We have conservatively chosen not to include the value of other less visible, but arguably just as important, assets such as the manufacturing facility and intellectual property estate.

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