Oxford Biomedica : Interim results for the year ended 30 June 202320 September 2023

Oxford Biomedica

2023 Interim Results | Audio Webcast

20th September 2023

Transcript

Disclaimer

This transcript is derived from a recording of the event. Every possible effort has been made to transcribe accurately. However, neither Oxford Biomedica nor BRR Media Limited shall be liable for any inaccuracies, errors, or omissions.

Dr. Frank Mathias:	Good afternoon 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 Paynter, 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'll open the room up
	for questions.
	We have a live webcast running and for those joining us remotely, we'll turn
	to you for any question after the presentation, and we'll also accept any
	written questions which will be responded by our investor relation 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 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 is the most important one, is centred 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 shareholder return.
	So Oxford Biomedica is already recognised 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 only 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 strategiy that we have put in place is focused on ensuring that we continue to build on our market leading position, lays the foundation for sustainable growth, and accelerate us towards profitability in 2024.

At the forefront of this strategy is 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 the case of development, cell and gene therapies have gained traction in recent years and is 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 would 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 discipline 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 Kern and future clients.

The second part of the implementation plan is centred 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 organisation, develop more streamlined ways of working, and ultimately better serve our clients.

We'll also introduce lenti in Boston by the first quarter of '24, meaning that we'll 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 pox virus, MVA, and vaccinia. It'll also allow us to build a European footprint which is ultimately 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 cashflow 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 '23 signed more orders than in the whole of 2022, and I'm sure you will come back to this point, Sébastien.

All the measures we have taken paved 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'll double our revenues in the next three years.

So this is not only a wish list, it's more than that, and to show you that I will hand over now to Sébastien who will provide you with more detail on our transformation and why commercial progress gives us such a great confidence in our new strategy.

Dr. Sébastien Ribault: Thank you, Frank. Good morning, good afternoon, everyone. Happy to be here and present the first result of the new commercial strategy. And 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 centred 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 commoditised 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 optimise 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 pharmas 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 that we have today. So let's say that we are 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 programmes, 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 third of the projects at preclinical stage are with these small companies, which will become much more mature biotech and eventually will have partnership