Oxford Biomedica plc

Everyone, obviously good morning to those on the other side of the ocean. Thank you for joining today's analyst briefing of our 23 interim results. It's a pleasure to speak to you today alongside with our chief financial officer, Stuart Painter, who many of you should know by now. And for the first time, our Chief Commercial Officer, Dr. Sébastien Ribault, who most of you will not have met probably before. Sébastien, thank you for joining. I will start by presenting our new strategy. Sébastien will provide the commercial update afterwards, and Stuart will follow with financial results for the first half of the year. After the presentation, we will open the room up for questions. We have a live webcast running, and for those joining us remotely, we will turn to you for any question after the presentation, and we'll also accept any written questions which will be responded by our investor relations team following the presentation. Our clear company-wide goal is to create a, why not the, world-leading quality and innovation-driven CDMO in the field of cell and gene therapy. I'm now six months into my role as CEO at Oxford Biomedica. I have spent the first months getting to really understand the business Sorry, here's a slide. So I've spent the first few months getting to really understand the business in depth. We have put in place a three-pillar plan, which you can see here, which will form the foundation for the company to deliver long-term sustainable growth and success. At the forefront of this plan is a clear and solid strategy. A clear strategy so that we can remain focused on our ambition to become a leading global quality and innovation-led CDMO in the field of cell and gene therapy. So we really and clearly moved away from the hybrid model. The second pillar, probably the most important one, is centered on having a strong implementation plan to ensure that we can remain disciplined in the execution of our new strategy. The third pillar sets out the clear pathway to profitability so that we can continue to offer exceptional client experiences, invest in next-generation technologies, and deliver significant shareholders' returns. So Oxford Biomedica is already recognized as a market leader in the cell and gene therapy market. Our expertise and unmatched track record sets us apart, and our position as the early independent end-to-end CDMO capable of serving clients across both sides of the Atlantic and across all viral vectors modalities gives us, in my view, a unique position in this fast-growing market. The new strategy that we have put in place is focused on ensuring that we continue to build on our market-leading position, lay the foundation for sustainable growth, and accelerate us towards profitability in 2024. At the forefront of this strategy is the development into a pure CDMO with a clear client focus. As a company, we are at the right place at the right time in a very attractive high-growth market. With no doubt, our industry has reached now an inflection point, and after decades of development, cell and gene therapies have gained traction in recent years and now becoming mature with about 20 approved therapies already on the market. We have now transformed the company so that we can concentrate on our core competencies and focus our full attention on building the world leading CDMO we know we can be. To maintain our competitive edge, we plan to scale our operation. A truly global footprint underlines our ambition to provide excellent service to our clients and In continuing to add capacities and capabilities, we can service a growing pipeline of opportunities. The multi-site model that we are adopting will not only allow us to operate more efficiently, but also better serve our clients through offering them more flexibility. That is what clients want and what clients need. We have a strong implementation plan. We all know that a strategic plan is nothing if we don't have implementation in a disciplined way afterwards. So we have this strong implementation plan. That's why we are confident that it will allow us to deliver on our new strategy to transform the company. And in fact, we have already started to implement the plan. Firstly, we have significantly expanded our commercial team around Sébastien Ribault. This team comprises highly experienced individuals who have a wealth of CDMO experience and are now located across the East Coast, West Coast and Europe within close proximity to current and future clients. The second part of the implementation plan is centered on adapting our structure and processes to better serve our clients and work more efficiently. With this, we now work together across our sites as a unified company, so we can become a higher performing organization, develop more streamlined ways of working and ultimately better serve our clients. We will also introduce Lenti in Boston by the first quarter of 24, meaning that we will be operational for Lenti in Boston at the end of the first quarter 2024, and subsequently also bring AAV into Oxford. And finally, as many of you may already have read, today not only are we announcing our interim results for the first half of the year, but I'm especially excited to announce the proposed acquisition of the French company ABL from Institut Mérieux. This transaction would expand our viral vector service offering into areas including poxvirus, MVA and vaccinia. It will also allow us to build a European footprint which is urgently needed by diversifying development and manufacturing into Europe and also significantly enhance our business development proposition, expands our client base and provides flexibility with supply across European borders. It's nice to say that the acquisition will be immediately revenue-accretive and cash flow neutral. And I believe you will come back to that Stuart. It will also not affect our pathway to profitability, which I will cover in the next slide. This proposed acquisition is so far another step in the pursuit of our strategy. So the transformation we are embarking on provides us with a clear pathway to profitability. In becoming a pure-play CDMO and adapting our structure and processes, we will reduce our cost base by around £30 million per year. Our united approach to work and our aligned operations will create greater synergies and lead to more efficient use of our resources. Moreover, we are already seeing the success in the new commercial strategy and structure. At this point in 2023, we have already seen a 50% growth in our number of clients compared to the whole year 2022. In addition, we have seen over 70% growth in our pipeline value, and I have so far in 2023 signed more orders than in the whole of 2022, and I'm sure you will come back to this point. All the measures we have taken pave the way to profitability with an anticipated medium growth CAGR greater than 30% and an EBITDA margin greater than 20% by 2026. This is our commitment, meaning that we will double our revenues in the next three years. This is not only a wish list. It's more than that. And to show you that, I will hand over now to Sebastian, who will provide you with more detail on our transformation and why commercial progress gives us such a great confidence in our new strategy.

Thank you, Frank. Good morning, good afternoon, everyone. Happy to be here and present the first result of the new commercial strategy. Indeed, when I joined the company in Q4 last year, it was clear that we needed together to develop a new commercial strategy to fuel the company transformation. And it's what we have done collectively over the past nine months now. The new commercial strategy has an implementation panel, which is obviously the go-to-market plan, and that go-to-market plan was centered around three pillars. We want to continue being a client-centric company. The CGT market is not the biologics market. The biologics market is quite commoditized when you look at the CDMO space. That is not the case for the CGT area. Each client has unique needs. Each vector is very specific still, and we're not at the step where we have a full template that addresses everyone's needs. So we want to stay that client-centric company that is making the link between the innovation needed to accelerate this treatment, the process development, the manufacturing, and the access to market. We want to continue delivering with quality. That is absolutely key, and I'll come back to that when we talk about track record, including the regulatory track record. But we also want to continue being a solution provider that covers the spectrum end-to-end. We start with the gene of interest. We design the vector. We optimize the vector for the highest productivity and the highest quality. We drive the project through process analytical development, clinical, and then commercial manufacturing. We have a history as a company of serving very big names, seen as the big farmers of this world. The fact is that the vast majority of the needs today, when I look at our portfolio of clients, is with small companies, the one called emerging biotechs or mid-sized established biotech. And that's where we knew that we could do a lot more. So that has been a focus for the beginning of 2023. We were also very well known as a lentivirus company. Now, I think, looking at the feedback we're having from our clients, that they understand that we can deliver not only lentiviruses, but AAVs and adenos and a number of other vectors that we don't very openly promote. And it would be a long discussion, much longer than the time suggested. that we have today. So let's say that we have focused 2023 on lentiviruses, AAVs and adenos. We want to serve all clients. And if you look at the pie charts that you have on this slide here, you see that in H1 2022, we had 14 clients, not programs. And it was about one third in the big pharma segment, one third emerging biotechs, and one third established biotechs. It seems from the picture we see in H1 2023 that the segment big pharma has decreased. It has not. We've grown all the segments, but we've grown faster the segments of emerging biotechs, which makes sense. I mean, about two-thirds of the projects at preclinical stage are with these small companies, which will become much more mature biotech and eventually will have partnership with big pharma. That's what we see across the board looking at our portfolio. But we've moved from 14 to 24 clients, and we see even a bigger increase in the number of projects, but I will come to that in a minute. So what does that mean? It means that our pipeline grew, diversified, and we've converted a number of these opportunities. What does conversion mean? Frank touched it briefly. We've signed so far 110 million pounds of orders, which is more than the entire of 2022, including the COVID vaccine. But there is no COVID order in that. We're talking only about the CDMO business here. The pipeline has grown significantly, 50% more clients, 70% more value. And if we want to look at the confidence we have that we will deliver the revenues of the end of the year and next year, we need to look at the revenue backlog. And the revenue backlog as of June was 95 million, the backlog being the amount of future revenue available to us. and that backlog keeps growing. I'm not going to elaborate on the Q3 number. That will be for another meeting, but it keeps growing very, very nicely. In terms of programs, we've moved from 28 programs in September 2022 to 41 active client program in September 2023. You see a massive increase of the cell line process analytical development, and pilot-scale production, which makes sense. We've acquired these projects at the very beginning, either at the tech transfer stage, if we're talking about a phase two or phase three, where we have some scale adaptation, or if we're talking about early stage projects, we're talking about process development only. Over one-third of the clients you see on that slide are existing clients from the group who gave us an additional program and continue to work with us on new targets or completely new programs, including for some of them different type of vectors, because the companies don't look only at AAV or Lanty or Adeno. We also see a mix of virus requests from the same clients. That was possible after we had restructured the commercial team to make sure we had a significant presence in U.S. on the West Coast, in U.S. on the East Coast, and in Europe as well. That is an analysis that we made of the market that is accessible to us. And why are we targeting today U.S. and Europe? I think it's obvious when you look at the map here. And when you look at the number total of projects here for AAV, ADENO, and LENTI above 1,600, it explains why today we want to focus on these three vectors, although we're not limiting our efforts to these vectors. We're also talking about HSV, VSV, RNA viruses, and many others. As I said, 65% of these projects are preclinical, which explains why we've seen that boom in the early phase projects that I showed on the previous slide. Asia-Pacific is a significant area as well. We've decided that we wouldn't fight on too many fronts at the same time, and that's why today we're focusing on US and Europe. We start to explore Asia-Pacific, and we have some requests from Asia-Pacific, but these clients are happy to be served from Oxford, UK, and Bedford, Massachusetts. So we do not have plans to expand beyond this geography for now, except... talking about ABL expanding into continental Europe, that I will touch on one of the next slides. We've seen the change over the past nine months on the order side, and I often have the question, what is the impact on revenue? Looking at the time it takes to make a process development, which is roughly six months, obviously the big impact on revenue is coming after process development, and that's why it's an impact that we'll see at the end of this year and into next year. Why do we win? That's often a question I have from people joining the team. Why have we won? Why do we continue winning projects? Because we have a very strong track record where one of the very few companies was a track record of more than 25 years in the CGT space and a track record in the regulatory space with above 30 INDs successfully submitted. and one commercial product that is today available in more than 40 countries around the world. And if you look at the CDMO landscape out there, specifically in the cell and gene therapy space, there are not that many companies who can say, we've been doing that for more than 25 years, we've been successful at clinical scale, and we've been successful at commercial scale. We also have good timings for development and we're constantly bringing innovation to the market. Not innovation just for innovation, but innovation to move the needle, to accelerate the timeline of the development, to bring more capacity in the vector for larger gene of interest, to improve the productivity and decrease the cost per dose, to improve the quality of the product and accelerate the access to this treatment for the patients serving our clients. As I said on one of the first slides, we've been known a lot as a Lanty company, and there is a lot of demand on the Lanty side, specifically in the U.S., and that's the reason why we've accelerated our plan to deliver not only Lanty in the U.S., but all vectors from all geographies to address the client needs and the client requests that we have at the moment. We don't want to be blocked by our capacity. That's why we've been extremely proactive at tech transferring the platform. And talking about the ABL deal, we're already discussing how we can make sure that as part of our effort in continental Europe, we'll also be able to deliver in the future all the vectors from all the geographies. I am taking here three names, some that we know very well and you don't. Cargo is one. The agreement has not been made public yet. It's the first time that we're using publicly their logo and some information here, although we had signed with them back last year a first agreement on their lead program. We're currently in phase two, extremely successful. I'll let you look at the successes of Cargo, but we're extremely happy to support them. Cabaleta is one of these clients who has with us more than one program. Additional targets signed very recently on a CD19 CAR-T program. And last but not least, an agreement signed with Caverna, it's written September, actually it should say last week. It's one of these companies who understand now that we don't only have an approach based on our very good platform on the Lenti side, but we're happy to take a non-platform approach and revisit entirely the way we develop to make sure that we can have very aggressive timelines in terms of process development. Again, I think it is one of the reasons why we win new business. To continue to win more business, bring more capacity, more capabilities, and serve all the clients around the world, that potential acquisition of ABL, I think, will change the configuration of the Oxford Biomedica network in the near future in a very good way. What would this add? Track record, like us, existing GMP experience since 1995, expertise and experience on multiple vector platforms, including oncolytic viruses, MVA, vaccinia, poxvirus, AV, you name it. The list is very long in suspension and adherence mode. Because we still have demands in both, it's important that we can offer it to our clients. They have been operating as a CDMO for a long time. And Frank mentioned the transformation of the company. We're only a CDMO now. So adding an entity, a European, a continental Europe entity that has been acting as a CDMO will help us accelerating our transformation as a CDMO. The new Oxford Biomedica network will have expanded capabilities and capacity from very small scale manufacturing up to 2,000 litre scale, perfusion, non-perfusion, high productivity that goes in the right direction. They have a commercial team in place that will be integrated to the existing commercial team. I think that the effort of both teams will help solidify the long-range plan that we put together recently, in which we did not add the ABL numbers, by the way. we'll continue to keep the clients at the center of our network. And I'm very happy to see that we have complementary capabilities. They're bringing new experience, new expertise, new vectors, and it's exactly what our clients are expecting, that we bring something new and that we continue to support the CGT market. I'm going to stop here and hand over to Stuart.

Thank you, Sebastian. And good morning, good afternoon to everyone. So I'm gonna just take you through the pathway to profitability. So I'm gonna take you through some of the short-term numbers, the H1 results, the short-term guidance we're giving, and then interestingly and excitingly, the longer term, the three-year guidance we've come out and given. And hopefully we'll tie that back to what Sebastian's been talking about in terms of the confidence of delivery of those numbers. So I'm going to highlight a couple of points from H1. We've still grown the underlying revenue by a strong double digit, which is still good progress, not the sort of progress that we are anticipating going forward, as I'll take you through in the next few slides, but still good underlying growth. And of course, we've eventually seen the end of the COVID vaccine. So that was in H1 2022 and not in H1 2023. Really importantly, the moment that Frank came in, we started working on this transformation. And this transformation has already started to yield various efficiencies. And we will continue to work on this towards the end of the year. And I'll give you some more numbers in the full year guidance. The other thing I'd highlight is just from a cash position. So from a cash position, we're still in a very strong cash position, 129 million in 30th of June, 2023. And you'll notice there that the operational activities consume low cash. We're working very hard in the background in H1 on the working capital efficiencies of the business because we want to be lean, not just in terms of working practices and personnel, but also the infrastructure of the ongoing business. So if we move to the near-term financial outlook, again, what we're saying is full year, we're expected to come in about 90 million. We have got a really, really good visibility on that, given we've got more than 90% covered by binding purchase orders at this point. And we expect significant revenue growth in 2024. So we've been talking about what that revenue growth is going to look like. And we'll give further guidance on that once the ABL deal is completed. That should be towards the end of this year. I'll take you through some of the details on ABL, which aren't in any of my outlook slides because they're not in our outlook at all, as Sebastian mentioned. And that will give us a good chance to give you an update on progress we're making towards the end of this year. From an EBITDA perspective, we've identified the cost base is too high. It's something that we've addressed, gone through this transformation, worked very hard on our ways of working, and we're looking to annualise cost savings of £30 million beginning 2024. So that transformation will be complete by the end of this calendar year. So we expect the second half loss to be 10 million better than the first half loss, albeit that there's a 10 million pound restructuring cost in there as well. So you can already see that some of those efficiencies are coming to bear. Transformation is all important. It's what we've been focused on for the last two or three months, and it's what we'll continue to be focused on for the next two or three months as we have announced the underlying job losses that we're going to put through the business. And this requires extremely close change management in the business, and it's going to be a real effort by the whole team to complete this transformation and generate these 30 million in savings we expect. There'll be no further spend on the product or on our own internal therapeutics portfolio post H2 2023. We've already said that. We can confirm that today. That's already done. And the reporting, importantly, we're just going through the final sort of pieces with our auditors. and by the end of the year for the full year we're hoping to move to a standard cdmo reporting package and you can see we've started talking about some of these metrics now so orders backlog those things which are the really early indicators of good financial performance um sebastian has outlined his pipeline and how it's transformed forming into into orders and we'll start giving more detail on that and we'll also make it clear to everyone that what we're going to be guiding on by the end of the year and what we're guiding on all the way through these presentations is the underlying business. No milestones, no license fees. They're all going to be in a separate segment of the business. We're not going to guide on those, given their unpredictability. And every time that we generate, and we still will generate milestones and license fees, they will just be upside, essentially. So we are no longer going to guide on those binary, unpredictable revenue streams. The last most exciting slide is our medium-term guidance. So built on this plan that both Frank and Sebastian have outlined, we see an exciting future in front of Oxford Biomedica. So this 30% revenue CAGR for the next three years to 2026, at least doubling the revenue in that time, and moving from around about a £60 million loss this year to a 20% EBITDA margin in that three-year period, really shows that this dual element we're tackling. So we're tackling the underlying cost base. That will be done by the end of this year. And then the commercial execution to get us to the revenues and opening up the capacity, which the ABL deal does for us. And we are really excited and confident that we can deliver these numbers over the next three years. And this delivery strategic plan, we expect to drive significant shareholder returns. So I did say I'll just cover off a bit of the the ABL deal just to add a bit of detail to the structure of the deal. No slides on this because it happened obviously at the same time as the as the interims did. But you'll see that the pre-cash and debt value of the operation is 5 million euros. And so that 5 million euros then comes with a 10 million euro cash injection. which we are paying for with a tranche of 15 million euros worth of Oxford Biomedica shares. That will be issued on completion of the deal, and it will be issued at at least £4.08. So it was a six-month VWAP coming up to the time of announcement. There is an underpin there in case the share price does move between um now and completion but it's going to be at least at that price so a significant premium to today's price and then there'll be a second tranche available to us on our discretion before september next year another 20 million euros of issued shares to institute merrier and that will be done at the 30-day rolling vwap to that point so obviously we're hoping to to increase that share price until then so we're very focused on Obviously cash and the cash neutrality of the deal, but as well dilution to our shareholders. And we believe this is a fantastically good deal. The other thing to mention is that Institute Meriere have also committed to buying 10 million euros worth of Oxford Biomedica shares in the market by the 31st of March 2024, with an intention to get to around about 10% holding in Oxford Biomedica. So this is a long term, stable, strategic shareholder with good experience in the CDMO field. And, you know, we think that this business with a value of standalone value of five million euros, already generating high teens of millions of euros of revenues and roughly broadly break even a very small EBITDA loss. is a fantastic deal, unlocks, unconstrains some of our process development capacity constraints we have, will give us that geographical flexibility and will allow us to grow very, very strongly. And that is not in these numbers. So once the deal is completed, we will obviously re-guide 2024 and we'll have a look at how this affects these particular numbers. So I think this is on the base deal. ABL is more to come, and I think we've done a fantastic deal this morning. And with that, I'll hand back to Frank.