Oxford BioMedica Plc (LON:OXB) is a specialist advanced-therapy lentivirus vector biopharma company. It offers vector manufacturing and development services, and also has a proprietary drug pipeline. In addition to LentiVector® service contracts, OXB receives royalties on commercial therapies developed by its partners using the LentiVector platform. A partnership deal structure was established with Novartis for KymriahPPPTM in 2017,PP and was followed by a collaboration and licence agreement with Bioverativ Inc in February 2018. The latest deal, on 6 June 2018, is the first involving OXB’s proprietary platform: it will advance the Parkinson’s disease gene-therapy to the clinic.
Strategy: OXB has four strategic objectives: delivery of process development (PD) services that embed its technology in partners’ commercial products; commercial manufacture of lentiviral vector; out-licensing of proprietary candidates; and investment in R&D and the LentiVector platform.
New licensing deal: In the second deal of 2018, OXB has out-licensed its Parkinson’s gene-therapy candidate (formerly ProSavin, now AXO-Lenti-PD) to Axovant Sciences, Inc (AXON) for a potential total $842.5m/£624.1m (up-front $30m/£22m). This is potentially a large market, with significant unmet need.
Valuation: Our sum-of-the-parts valuation has been upgraded following the deal with Axovant. The new estimated group enterprise value is £616m (cf. £316 previously) with a risk-adjusted valuation of £9.60 per share (cf. £4.47 previously), of which £1.24 can be attributed directly to this deal.
Risks: The mid-term sales model and the ability to pay off debt, are dependent on successful progress of partners’ clinical trials and commercialisation of LentiVector-enabled products, for receipt of bioprocessing milestones and royalty payments. All gene-therapy candidates are subject to significant clinical risk.
Investment summary: Oxford BioMedica Plc is at a very interesting juncture. Heavy investment in state-of-the-art GMP manufacturing facilities for production of gene-therapy vector has resulted in supply agreements with Novartis, Bioverativ and AXON, on top of existing partnerships, positioning the group on the road to significant bioprocessing service income, milestones, and royalties.
