I can see clearly
Oxford Biomedica's (OXB.LSE) near-term outlook is highly dependent on the outcome of Sanofi's (NYSE:SNY) decision on whether or not to opt in to the RetinoStat programme (a decision is expected by end-14). The longer term could benefit from an emerging manufacturing business, license income from the patent estate and other pipeline products. However, the current cash runway only extends to Q314. Funding may arise from an extension to the Novartis manufacturing tie-up or further collaborations and/or deals.
Ocular programmes are leading the way
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 the key RetinoStat (for wet age-related macular degeneration) could be a defining moment for Oxford BioMedica.
Manufacturing capabilities are considerable
The expertise in manufacturing and process scale-up, quality control, quality assurance, and regulatory affairs is particularly relevant as gene- and cell-therapy products approach the market. Novartis (NYSE:NVS) is using the OXB Solutions manufacturing facility for its CTL019 trials programme, an extension could halve the cash burn.
Funding is clearly a major consideration
Net cash at December 2014 was £2.2m (June 2013: £6.9m), which, with the £5m Vulpes loan facility, coupled with a forecast cash burn of around £1m per month, suggests the current cash runway does run through to Q314. Other sources of revenue are being pursued, most likely from additional manufacturing collaborations, but whether these will be sufficient to extend the cash runway to the point where Sanofi makes its RetinoStat decision remains the main unknown.
Valuation: Clinical pipeline valued at £57.8m
Our valuation of £57.8m (previously £60.1m) 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 assets such as the manufacturing facility and intellectual property estate, both of which could provide material upside. Our current valuation depends principally on whether Sanofi decides to opt in for RetinoStat, whilst the forecast cash burn is sensitive to prospective manufacturing and licensing deals.
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