Oxford Biomedica Plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

OXFORD BIOMEDICA PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

Oxford Biomedica delivers record first half results

Oxford, UK – 22 September 2021: Oxford Biomedica plc (“Oxford Biomedica” or “the Group”) (LSE: OXB), a leading gene and cell therapy group, today announces interim results for the six months ended 30 June 2021.

John Dawson, Oxford Biomedica’s Chief Executive Officer, said:

“Everyone at Oxford Biomedica can be truly proud of what they have continued to achieve in 2021. The tireless commitment of the whole team has helped to save thousands of lives, in line with our mission, whilst gaining global recognition for our role in the fight against COVID-19. The exceptional financial results that we have reported reflect our strong progress across the business as we continue to demonstrate our world leading expertise in gene and cell therapy. As we move from strength to strength, and with rapid growth in the cell and gene therapy market, we are in a great position to maximise on the opportunities ahead, both in lentiviral vectors as well as other viral vector types and look forward to the remainder of 2021 and beyond with considerable confidence.”

FINANCIAL HIGHLIGHTS

• Revenue increased by 139% to £81.3 million (H1 2020: £34.0 million)
• Exceptional growth was seen in bioprocessing and commercial development, where revenues increased by 223% to £75.6 million (H1 2020: £23.4 million) largely driven by the highly successful COVID-19 vaccine agreement with AstraZeneca
• Licences, milestones & royalties were £5.7 million (H1 2020: £10.6 million), the reduction of 47% resulting from no significant licence fees arising in H1 2021, whilst H1 2020 saw the £6.2 million Juno licence fee
• Operating expenses decreased by 19% to £23.6 million (H1 2020: £29.1 million) due to the higher recovery of batch manufacturing costs which is reflected in increased cost of goods
• Operating EBITDA¹ and operating profit were £27.1 million and £19.7 million respectively (H1 2020 losses of £0.4 million and £5.8 million respectively)
• Cash generated from operations was £22.2 million compared to £0.9 million consumed in H1 2020
• Cash at 30 June 2021 was £61.3 million (31 December 2020: £46.7 million), an increase of £14.6 million due to operational cash flow generated
• The Group’s capital expenditure of £3.5 million (H1 2020: £5.3 million) consisted mainly of purchases of equipment required for the manufacturing and laboratory facilities

.
        ¹Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 12.

OPERATIONAL HIGHLIGHTS (including post period-end events)

COVID-19 Vaccine and Agreement with AstraZeneca

• Oxford Biomedica continues large-scale commercial manufacture of AstraZeneca’s adenovirus vector-based COVID-19 vaccine, running three manufacturing suites at 1000L scale
  • In May, the Group announced that AstraZeneca had committed to an increase in the number of batches required from Oxford Biomedica in the second half of the 2021. This resulted in the Group raising its expectation for cumulative revenues from the contract to be in excess of £100 million by the end of 2021
• In the period, the Group agreed to purchase equipment provided to Oxford Biomedica by VMIC (Vaccines Manufacturing and Innovation Centre) for vaccine manufacture for £3.8 million, to enable longer term use
  
  

Boehringer Ingelheim

• In April, Oxford Biomedica announced a new three year Development and Supply agreement with Boehringer Ingelheim for the manufacture and supply of a range of viral vectors and the Group intends to manufacture GMP batches for Boehringer Ingelheim to support the development of viral vectors and viral vector products, further demonstrating growing expertise beyond lentiviral vectors
  
  

Novartis

• The Group continues its strong relationship with Novartis with global roll out of Kymriah® continuing to build momentum with more than 330 qualified treatment centres in 30 countries having coverage for at least one indication
  
  
• Indication expansion of Kymriah® continues to progress and Novartis plans to file for use in relapsed or refractory follicular lymphoma in the second half of 2021 in the US and EU
  
  

Other Partnership news and strategic updates

• The Group continues to successfully progress its collaborations signed in 2020 with Juno / Bristol Myers Squibb and Beam Therapeutics with the combined revenues from these two partnerships meaningfully contributing toward the total commercial development revenues expected in the year
• In the period the Group announced that Sanofi had given notice that they intend to terminate their collaboration and licence agreement for the process development and manufacturing of lentiviral vectors to treat haemophilia. The Group expects the impact on revenues will be negligible over the coming 24 months period.
• Additionally, Orchard Therapeutics announced it would be returning the rights to its OTL-101 programme to the academic originators of that programme
• Post period end, the Group decided to extend its scope of work to all types of viral vectors. In addition, an internal review of the Group's proprietary pipeline is nearing completion with the focus being on OXB-302, a 2nd generation CAR-T product, and liver gene therapy

Corporate Governance and Organisational Progress

• Oxford Biomedica remains committed to best practice corporate governance as it continues to grow and the evolution of the Board of Directors is a key part of this
• The Group has welcomed two new Board members in the year to date. In March, Professor Dame Kay Davies, a world-renowned geneticist and Professor Emeritus at Oxford University, was appointed as an Independent Non-Executive Director. Additionally, post period end, Dr. Michael Hayden, with decades of industry defining contributions and achievements, was appointed to the Group's Board as a Non-Executive Director.
• During the period, two long standing Board members also stepped down from the board. Martin Diggle, a Partner at Vulpes Investment Management stepped down in February after nearly nine years and Dr. Andrew Heath, retired from the Board at the AGM in May, after more than eleven years of service to the Group
  
  

Analyst briefing

Management will be hosting a briefing for analysts at 13:00 BST / 8:00 EST on 22 September at 85 Gresham Street London, EC2R 7HE. There will a simultaneous live conference call with Q&A and the presentation will be available on the Group’s website at www.oxb.com

A live webcast of the presentation will be available via this link.

If you would like to dial-in to the call and ask a question during the live Q&A, please follow this link to register and receive dial-in details.

Enquiries:
Oxford Biomedica plc John Dawson, Chief Executive Officer Stuart Paynter, Chief Financial Officer Catherine Isted, Head of Corporate Development & IR Sophia Bolhassan, Director of IR T: +44 (0)1865 783 000/ E: ir@oxb.com

Consilium Strategic Communications Mary-Jane Elliott/Matthew Neal T: +44 (0)20 3709 5700

Peel Hunt (Joint Corporate Brokers):                         

James Steel
Dr. Christopher Golden

T: +44 (0)20 7418 8900

WG Partners (Joint Corporate Brokers):                              

David Wilson
Claes Spång

T: +44 (0)20 3705 9321

About Oxford Biomedica
Oxford Biomedica (LSE:OXB) is a leading, fully integrated, gene and cell therapy group focused on developing life changing treatments for serious diseases. Oxford Biomedica and its subsidiaries (the "Group") have built a sector leading lentiviral vector delivery platform (LentiVector®), which the Group leverages to develop in vivo and ex vivo products both in-house and with partners. The Group has created a valuable proprietary portfolio of gene and cell therapy product candidates in the areas of oncology, CNS disorders and liver diseases. The Group has also entered into a number of partnerships, including with Novartis, Bristol Myers Squibb, Sio Gene Therapies, Orchard Therapeutics, Santen, Beam Therapeutics and Boehringer Ingelheim, through which it has long-term economic interests in other potential gene and cell therapy products. Additionally, the Group has signed a 3-year master supply and development agreement with AstraZeneca for large-scale manufacturing of the adenoviral based COVID-19 vaccine candidate, AZD1222. Oxford Biomedica is based across several locations in Oxfordshire, UK and employs more than 740 people. Further information is available at www.oxb.com

OVERVIEW

The first half of 2021 has produced an exceptional set of financial results with a very strong operating performance largely driven by the Group’s work with AstraZeneca on the highly successful manufacture of the COVID-19 vaccine. Outside of the vaccine work, the Group has further developed its relationship with Boehringer Ingelheim, signing a new three-year agreement to manufacture and supply a range of viral vectors, further highlighting Oxford Biomedica’s growing expertise beyond lentiviral vectors. Existing partnerships with Novartis, Juno / BMS and Beam continue to progress well in the period as the various partner programmes continue through development.

In the period the Group received the news that Sanofi would no longer be taking forward the development of its haemophilia programmes, although the Group still believes there is much merit in a lentivector-based approach to this disease. It was also announced that Orchard would be handing back the rights for its ADA SCID programme to the academic originators of the programme, following its decision to deprioritise that programme in a prior portfolio review.

Following a strategic review, the Group is extending its scope to all types of viral vectors, building on its world leading position in lentiviral vectors and success in the adenovirus vector-based AstraZeneca COVID-19 vaccine. Additionally an internal review of the Group’s proprietary pipeline is nearing completion with the focus being on OXB-302 and liver gene therapy.

Since the start of the year several Board changes have occurred, in line with the commitment to best practice corporate governance, strengthening Oxford Biomedica’s science and translational expertise. The Group has been pleased to welcome to the Board Professor Dame Kay Davies, a world-renowned geneticist and Professor Emeritus at Oxford University and Dr. Michael Hayden with decades of industry defining contributions and achievements.

Oxford Biomedica ended the period with £61.3 million in cash on the balance sheet and 744 employees. With the business development pipeline looking stronger than ever, the Group looks forward to a busy second half of 2021 and maximising the many opportunities ahead.

        

OPERATIONAL REVIEW

COVID-19 Vaccine and Agreement with AstraZeneca

Oxford Biomedica continues the large-scale commercial manufacture of AstraZeneca’s adenovirus vector-based COVID-19 vaccine at the Group’s Oxbox facility. Manufacturing has continued at full pace in three manufacturing suites running at 1000L scale to maximise production of vaccine. In May 2021, the Group announced that AstraZeneca had committed to an increase in the number of batches required from Oxford Biomedica in the second half of 2021. As a result of this cumulative revenues from AstraZeneca by the end of 2021 are expected to be in excess of £100 million, with significant growth in Group Operating EBITDA in the year ending 2021.

Oxford Biomedica has an 18 month supply agreement under a three-year Master Supply and Development Agreement with AstraZeneca for large-scale commercial manufacture of the adenovirus vector-based COVID-19 vaccine, announced in September 2020. This follows on from an initial one year clinical and commercial supply agreement with AstraZeneca, announced in May 2020.

The Group also has a five-year collaboration agreement with VMIC (Vaccines Manufacturing and Innovation Centre), announced in June 2020, to enable the rapid manufacture of viral vector based vaccines. As part of the agreement VMIC provided equipment for 1000L scale production in two GMP manufacturing suites in Oxbox to further scale up production of AZD1222. The Group has now purchased this equipment to allow for longer term use, which consisted of a capital outlay of £3.8 million paid in the first half of 2021.

Boehringer Ingelheim

Oxford Biomedica has continued to build on its partnership with Boehringer Ingelheim, which started in 2018. In April 2021, the Group announced a new three-year Development & Supply Agreement with Boehringer Ingelheim for the manufacture and supply of various types of viral vectors.

Under the terms of the agreement, Oxford Biomedica intends to manufacture GMP batches for Boehringer Ingelheim to support the development of viral vectors. The agreement also allows for the Group to manufacture and supply viral vector products in the future, demonstrating the Group’s growing expertise beyond lentiviral vectors.

Novartis Partnership

The Group continues its strong relationship with Novartis as its sole global supplier of lentiviral vector for Kymriah® (tisagenlecleucel, formerly CTL019). Global roll out of Kymriah® in both relapsed or refractory B-cell acute lymphoblastic leukaemia (r/r ALL) and relapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL) indications continued to build momentum with more than 330 qualified treatment centres in 30 countries having coverage for at least one indication. Kymriah® continued to see double-digit growth showing 41% growth in the first half of 2021, over the first half of 2020, reporting sales in H1 2021 of $298 million.

Indication expansion of Kymriah® in relapsed or refractory follicular lymphoma continues to progress well and in June at ASCO, Novartis presented robust data from the Phase II ELARA trial of Kymriah® in this indication with the filing anticipated in the US and EU in the second half of 2021.

The Group continues to progress other partner programmes with Novartis and will update the market when further data is available.

Other existing partner updates

The Group continues to actively progress its exciting collaborations signed in 2020 with Juno Therapeutics Inc. (a wholly owned subsidiary of Bristol Myers Squibb Inc.) and Beam Therapeutics with the combined revenues from these two partnerships meaningfully contributing toward the total commercial development revenues expected in the year. The Group will look to update the market with further data / progress when able to do so.

Sanofi Partnership

In March 2021, the Group announced that Sanofi had given notice that they intend to terminate the 2018 collaboration and licence agreement for the process development and manufacturing of lentiviral vectors to treat haemophilia. The Group expects the impact on revenue will be negligible over the coming 24-month period. The Group continues to believe that a lentivector-based approach to haemophilia is a very attractive opportunity.

Orchard Therapeutics

In May 2021, Orchard Therapeutics (Orchard) announced it would be returning the rights to their OTL-101 programme for ADA-SCID to the academic originators of the programme, University of California at Los Angeles (UCLA) and University College London (UCL). This follows on from Orchard’s May 2020 announcement on their new strategic plan with an emphasis on neurometabolic disorders, such as their MPS-IIIA (OLT-201) programme, with a reduction in investment on other programmes such as ADA-SCID (OTL-101). While this news means that Oxford Biomedica will no longer be working with Orchard on the OTL-101 programme, the Group awaits further information on whether it can be of assistance to the academic partners at UCLA and UCL.

The MPS-IIIA (OLT-201) partner programme with Orchard is currently being evaluated in an ongoing proof-of-concept clinical trial, with interim data from this study expected to be released in the second half of 2021 and 2022.

Innovation and Platform Development

Innovation and the development of the platform are core to the Group's goal of industrialising viral vector manufacturing not just with lentivectors but across all viral vector classes. By industrialising viral vector production and reducing the cost through innovation, the Group will open up therapeutic indications that are currently inaccessible in the field of cell and gene therapy due to the amount (and therefore cost) of the vector needed to address these targets. In addition, the reduction in cost will help drive adoption by payors into indications where there are far larger numbers of patients, by potentially bringing down the overall cost per patient treated.

Multiple elements of IP and innovation are relevant across all viral vector classes. Development of technologies such as TRiPSystem™, SecNuc™, LentiStable™ and U1 and U2, along with the corresponding IP, continue to move ahead. In addition, the Group is utilising automation and the use of robotics, artificial intelligence and machine learning to further drive productivity improvements.

Process C, which incorporates U1, U2 and perfusion in to the manufacturing process is developing well with general roll out expected in the first half of 2022, with process D utilising LentiStable™ expected to come on stream a year later.

The Group has additionally started development work in the area of in vivo CAR-T, which the Group believe would offer great patient access and superior efficacy to existing treatment options.

Proprietary Gene Therapeutics Development

Sio Gene Therapies

The Group continues to progress work on its clinical supply agreement with Sio Gene Therapies (Sio) for the manufacture and supply of Parkinson's disease gene therapy programme AXO-Lenti-PD. Following prior third-party fill/finish issues, two batches have been manufactured using the updated suspension-based process and have now completed fill/finish. Certification of at least one batch of clinical trial material is expected in the fourth quarter of 2021 with enrolment of patients into the AXO-Lenti-PD clinical programme expected to resume in 2022.

Unencumbered proprietary pipeline programmes

A review of the in-house proprietary pipeline is currently ongoing with the review expected to be finalised in the fourth quarter of 2021.

The lead programme is OXB-302 which targets 5T4, this is currently being investigated in Acute Myeloid Leukaemia with clinical trial expected to be initiated in 2023. 5T4 is an oncofoetal antigen specifically expressed of the cell surface of most cancers including AML. The restricted expression profile of 5T4 on normal tissues combined with its broad expression on tumour cells (including cancer stem cells) makes 5T4 an attractive target.

OXB-302 is a 2^nd generation CAR-T product generated via an optimised lentiviral vector transduction protocol and expression process to generate more potent cells. OXB-302 has demonstrated potent in vitro and in vivo activity against a panel of human solid and liquid tumour cell line and the Group believes it has high commercial potential for the treatment of multiple liquid and solid tumours.

Separately, the potential of lentiviral vectors in liver gene therapy is seen as a highly promising area due to the potential of one-off therapies giving long term benefits. The Group intends to provide further information about this work post completion of the internal review.

The Group has chosen to deprioritise OXB-203, OXB-204 and OXB-103 at this time.

Sanofi – Ocular assets

As previously announced in June 2020, the Group had been informed by Sanofi that it intended to return the rights to ophthalmology programmes SAR422459 for Stargardt's disease and SAR421869 for Usher Syndrome type 1b. This process and review of the programmes has now been completed with the decision that the Group will not commit further resources into these programmes internally at this time. 

Expansion of capacity

In January 2021, the Group was delighted to host the Prime Minister, the Rt. Hon Boris Johnson MP, to formally open the Oxbox manufacturing facility following MHRA approval of four manufacturing suites during 2020, three of which are running at 1000L scale for AstraZeneca COVID-19 vaccine production with the fourth suite dedicated to 200L lentiviral vector manufacturing.

The final step of this first phase of development within Oxbox is the completion of the first fill/finish suite. The instalment of the equipment for this suite is progressing well and is expected to be completed during 2021, with approval for use expected in the first half of 2022. This first phase of development fits out approximately 45,000 sq. ft. with the remaining fallow area (39,000 sq. ft) available for flexible expansion in the future.

In June 2021, the Group was granted planning permission for redevelopment of the Windrush Innovation Centre (WIC) site. The scope of the re-development of the site has increased from that originally communicated at the time of the capital raise in June 2020, with now a new dedicated building being built, rather than a refurbishment of the existing building. This new dedicated building will be the key hub of both innovation for the platform as well as proprietary product development and has been specifically designed with these goals in mind. Work will start during 2021 and will continue into the first half of 2023, with an increase in Capex spend of approximately £15 million over the original c.£15 million set aside at the time of the capital raise.

Building work continues at Windrush Court to convert office space into GMP laboratories to meet the expected near-term demand in commercial development and analytics, with a further area within Windrush Court expected to be converted during the course of 2021.

Corporate and organisational development

A number of Board changes occurred during the period, which further augment the Group’s science and translational expertise and strengthen Oxford Biomedica's position as a leading gene and cell therapy company.

On 1^st March, Professor Dame Kay Davies, a world-renowned geneticist and Professor Emeritus at Oxford University, was appointed to the Board as an Independent Non-Executive Director. Additionally, post period end, in July, Dr. Michael Hayden was appointed to the Group's Board as a Non-Executive Director. Dr. Hayden has decades of industry defining scientific contributions and achievements, including developing the world’s first approved gene therapy treatment.

During the period two long standing Board members also stepped down from the board after many years of service. Martin Diggle, a Partner at Vulpes Investment Management stepped down from the Board as a Non-Executive Director in February after nearly nine years of service and Dr. Andrew Heath, Non-Executive Director, retired from the Board at the AGM in May, after more than eleven years of service to the Group.

The Board intends to continue to strengthen and diversify the Board having initiated a search for an additional independent Non-Executive Director, targeting the selection of female and ethnically diverse candidates.

Post period end, on 1^st August, Matthew Treagus, Chief Information Officer (CIO) joined the Senior Executive team as a permanent member, having worked with Oxford Biomedica on the development and implementation of its digital strategy since 2019. This announcement reflects the Group’s commitment to driving its digitalisation agenda.

The wider Oxford Biomedica team has continued to grow, reflecting the expansion of the business and the extra employees recruited as part of the scale of vaccine manufacture for AstraZeneca. Headcount increased by 27% reaching 744 at the end H1 2021, compared with 584 at the end of H1 2020.

Environmental, Social and Governance

The Group remains committed to its role as a responsible business and continued work on implementing its Environmental, Social and Governance (ESG) strategy, which is focused on five pillars: People; Community; Environment; Innovation and Supply Chain.

The People pillar continued to be an area of particular focus. A Diversity and Inclusion project has commenced and a working group established, in line with the Group’s 2021 ESG People objective to create an action plan for Equality, Inclusion and Diversity. Wellbeing initiatives for employees also continued throughout the period, focusing on topics of mental health and resilience with a variety of events delivered, alongside the introduction of two new wellbeing benefits.

On the Community pillar, including the Group’s commitment to provide support to a local charity, fundraising efforts for charity SeeSaw continued during the year. In addition, a Payroll giving scheme was introduced for regular salary charity donations.

The Group’s Windrush Court facility moved to renewable energy, showing good progress in achieving its 2021 ESG Environmental objective to reduce greenhouse gas emissions by optimising the Group’s energy usage.

On the Innovation pillar, the Group continued to provide further support for In2Science, an organisation that helps children from disadvantaged backgrounds enter STEM subjects in higher education. Work also continues to progress in achieving the Group’s 2021 ESG Supply Chain objectives, which include the launch of a code of conduct for suppliers. Full details on our ESG pillars can be found on our newly created ESG webpage at www.oxb.com.

The Group’s commitment to responsible business practices was recognised with Prime status by ISS ESG on 25 June 2021. ISS ESG is the responsible investment arm of ISS and one of the world’s leading rating agencies for sustainable investments. Prime status is awarded to companies with an ESG performance above the sector-specific Prime threshold, which means that they fulfil ambitious absolute performance requirements.

Outlook

Traditionally the Group has seen higher revenues in the second half of the year due to the annual clean and recalibration of all the manufacturing suites that occurs at the start of the year. However, with vaccine production in three suites continuing at pace, not only through Christmas and New Year but also through the full first half of the year, clean down and recalibration will now occur in these suites in the second half of the year. The Group is therefore targeting revenue for the second half to be similar to the first half.

For the second half of the year, outside of revenue growth expected from AstraZeneca, other new customer partnerships such as with Juno/ BMS and Beam are expected to drive growth in bioprocessing and commercial development versus the same period in 2020. The Group is confident of further announcements with new/existing partnerships during the course of the second half leading to additional revenue streams.

Group Operating EBITDA for the second half, while anticipated to be above the level achieved in H2 2020, is expected to be below the first half figure as a result of an increase in research and development, administrative and bioprocessing costs.

Capex will also accelerate in the second half of the year with the commencement of work relating to the redevelopment of the Windrush Innovation Center (WIC) as well as continued laboratory expansion work being undertaken at Windrush Court. Capex for the full year is expected to be similar to 2020 levels.

The pipeline of opportunities for the Group has never looked stronger with the business development team increasing in size and includes the Group’s first permanent US based employee, with more additions to the US team expected during the coming months. The Group expects to be able to announce further updates on partnering progress and new partnerships during the remainder of 2021.

Financial Review

The first half of 2021 has been a period of exceptional revenue growth but especially an outstanding operational performance in terms of vaccine manufacture. Although the impact of the COVID-19 pandemic continued to be felt in terms of the Group’s operating methods, the Group was able to continuously manufacture vaccine in three of its manufacturing suites for the whole period in order to meet its customer obligations. Bioprocessing and commercial development activities continued as normal, albeit with some continued adjustments in terms of social distancing, mask wearing and employees working from home where possible.

In April 2021 the Group also signed a new three-year Development & Supply Agreement with Boehringer Ingelheim for the manufacture and supply of various types of viral vectors to support Boehringer Ingelheim’s ongoing development programmes, including potential future programmes.

In March 2021 the Group was disappointed to note that Sanofi had terminated the Collaboration and License Agreement originally signed in 2018 for the process development and manufacturing of lentiviral vectors to treat haemophilia. The collaboration ended on good terms and certainly does not preclude working together in the future if an opportunity arose.

Other commercial highlights include that, as part of its 18-month supply agreement with AstraZeneca, the Group received a commitment from AstraZeneca for the Group to manufacture additional vaccine batches during the second half of 2021 and into the first quarter of 2022.

Building on from the very strong results of 2020, the Group has had an exceptionally good half year in terms of both a strong increase in commercial activities, as well as revenues. Bioprocessing and commercial development revenue increased by 223%, and the Group achieved an Operating EBITDA profit of £27.1 million, with growth driven largely by the bioprocessing activities undertaken for AstraZeneca.

The ongoing vaccine manufacture, together with recent commercial agreements entered into, but also expected in the second half of 2021, should see the Group continue to deliver the increased revenues and operational success in the second half of 2021 which has been seen during the period under review.

The Group continued to strengthen its balance sheet position, generating a cash inflow of £18.7 million in additional cash since the 2020 year-end. The Group intends to start work on refurbishing its Windrush Innovation Centre in the second half of 2021 which is expected to negatively impact cash generated over the period of the refurbishment.

The key financial indicators used by the Board are set out in the table below and the highlights are:

• Revenue (£81.3million) increased by 139% over H1 2020 (£34.0 million) as a result of the 223% exceptional growth in bioprocessing and commercial development revenues as a result of the volume of vaccine batches manufactured for AstraZeneca
• Operational results (Operating EBITDA¹and Operating profit) of £27.1 million and £19.7 million respectively, were very significantly improved compared to prior year due to the higher bioprocessing revenues generated
• Operational activities generated cash of £22.2 million compared to consuming £0.9 million in H1 2020 as the significant revenue growth was successfully converted into operational cash flows
• Capital expenditure decreased from £5.3 million in H1 2020 to £3.5 million with H1 2021 capital expenditure consisting mainly of purchases of equipment required for the manufacturing and laboratory facilities
• Cash inflow² was £18.7 million in H1 2021 (H1 2020 Cash Burn of £3.7 million) due mainly to the operational cash generation from high volume vaccine manufacture
• Cash at 30 June 2021 was £61.3 million compared to £50.6 million at 30 June 2020

KEY FINANCIAL INDICATORS (£ m)		H1 2021	H1 2020
Revenues	Bioprocessing/commercial development	75.6	23.4
	Licence fees, milestones & royalties	5.7	10.6
	Total	81.3	34.0
Operating profit/(loss)		19.7	(5.8)
Operating EBITDA1		27.1	(0.4)
Cash generated from/(consumed by) operating activities		22.2	(0.9)
Capital expenditure		(3.5)	(5.3)
Cash inflow/(burn)2		18.7	(3.7)
Period end cash	Cash	61.3	50.6
Headcount	Period end	744	584
	Average	716	575

1. Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 12.
2. Cash inflow/(burn) is net cash generated from operating activities less net finance costs paid and capital expenditure. A reconciliation to GAAP measures is provided on page 13.

The Group evaluates its performance by making use of alternative performance measures as part of its Key Financial Performance Indicators (refer table above). The Group believes that these Non-GAAP measures, together with the relevant GAAP measures, provide an accurate reflection of the Group’s performance over time. The Board has taken the decision that the Key Financial Performance Indicators against which the business will be assessed, are Revenue, Operating EBITDA and Operating profit/(loss).

Revenue

Revenues were £81.3 million in H1 2021, 139% above the £34.0 million achieved in H1 2020.

£m	H1 2021	H1 2020
Bioprocessing/commercial development	75.6	23.4
Licence fees, milestones & royalties	5.7	10.6
Revenue	81.3	34.0

Revenues from bioprocessing/commercial development were 223% higher in H1 2021 as compared to H1 2020, due largely to the volume of vaccine batches manufactured for AstraZeneca. Bioprocessing and commercial development activities performed on behalf of the Group’s other customers have overall decreased mainly due to the cessation of the Sanofi and Orchard ADA SCID programmes, as well as the natural cycle of certain development programmes. The Group does expect an increase in commercial activity from existing customers in the second half of the year which is expected to continue into 2022.

Revenues from licence fees, milestones and royalties decreased by 47% when compared to the prior year as there were no significant license fees achieved in H1 2021 when compared to H1 2020 (£6.2 million ($8 million) Juno license fee recognised).

Operating EBITDA

£m	H1 2021	H1 2020
Revenue	81.3	34.0
Other operating income	0.4	0.3
Total expenses1	(54.6)	(34.7)
Operating EBITDA2	27.1	(0.4)
Depreciation, amortisation, share option charge and fair value adjustments of available-for-sale assets	(7.4)	(5.4)
Operating profit/(loss)	19.7	(5.8)

¹ Cost of goods plus research, development, bioprocessing and administrative expenses excluding depreciation, amortisation and share option charge. A reconciliation to GAAP measures is provided on page 11.
² Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 12.

Total expenses in H1 2021 were £54.6 million, compared with £34.7 million in H1 2020, a 57% increase on the H1 2020. The increase was driven by increased raw material costs on batches of vaccine produced as well as increased headcount compared to the comparative period.

As a result of the increased revenues which more than offset the increase in expenses, the Operating EBITDA in H1 2021 was £27.1 million (H1 2020 Operating EBITDA loss of £0.4 million).

Total expenses

In order to provide the users of the accounts with a more detailed explanation of the reasons for the year-on-year movements of the Group’s operational expenses included within Operating EBITDA, the Group has added together cost of goods, research and development, bioprocessing and administrative costs and has removed depreciation, amortisation and the share option charge as these are non-cash items which do not form part of the Operating EBITDA alternative performance measure. As Operating profit/(loss) is assessed separately as a key financial performance measure, the year-on-year movement in these non-cash items is then individually analysed and explained specifically in the Operating and Net profit/(loss) section. Expense items included within Total Expenses are then categorised according to their relevant nature with the year-on-year movement explained in the second table below:

£m	H1 2021	H1 2020
Research and development costs	14.7	15.2
Bioprocessing costs1	2.9	9.2
Administrative expenses	6.0	4.7
Operating expenses	23.6	29.1
Depreciation, amortisation & share option charge	(7.4)	(4.7)
Adjusted operating expenses	16.2	24.4
Cost of Sales	38.4	10.3
Total expenses	54.6	34.7

¹ Bioprocessing costs have decreased from the prior period due to the higher recovery of batch manufacturing costs which is reflected in increased cost of goods in H1 2021.

The table below shows total expenses by type of expenditure (excluding depreciation, amortisation and other non-cash items):

£m	H1 2021	H1 2020
Raw materials, consumables and other external bioprocessing costs	18.8	6.4
Personnel-related	27.2	21.2
External R&D expenditure	2.0	3.1
Other costs	6.6	4.0
Total expenses	54.6	34.7

Raw materials, consumables and other external bioprocessing costs have increased substantially as a result of the much higher number of batches manufactured in H1 2021 as compared to H1 2020. Personnel related costs are higher due to average employee numbers increasing from 575 in H1 2020 to 716 in H1 2021. External R&D expenditure was lower due to due to the cessation of certain customer programmes, as well as the natural cycle of other customer development programmes. Other costs had increased compared to prior year due to increased facility costs and foreign exchange losses on dollar balances, offset by an insurance payment received with regards to a previous customer claim.

Operating profit/(loss) and net profit/(loss)

Back to overview

£m	H1 2021	H1 2020
Operating EBITDA1	27.1	(0.4)
Depreciation, amortisation and share option charge	(7.4)	(4.7)
Change in fair value of assets held at fair value through profit & loss	-	(0.7)
Operating profit/(loss)	19.7	(5.8)