Oxford BioMedica Plc (OXB)

Oxford BioMedica PLC (OXB) is a United Kingdom (Oxford) based biopharmaceutical company. The group provides research, development and bioprocessing services of gene and cell therapy. The Group has also entered into several partnerships through which it has long-term economic interests in other potential gene and cell therapy products and has created a valuable proprietary portfolio of gene and cell therapy products in diverse areas. The group’s operations are differentiated in two operating segments: Platform and Product. John Dawson is the Chief Executive Officer of the group.

Key Financial Highlights (FY 2018, in £m)

(Source: Company Filings)

Driven by revenues generated from increased commercial development services and license income received as a result of the Axovant and Bioverativ (Sanofi) deals, a 72% increase in gross income to £67.9 million was reported in 2018, while revenue increased by 78% over 2017 to £66.8 million. Adjusted operating expenses during the year increased to £31.7 million, up by 38% against last year. Due to improved operational results, the company converted Operating EBITDA and Operating profit into profits of £13.4 million and £13.9 million respectively, compared to losses reported in the previous year. Reflecting significantly improved placing proceeds and trading performance, cash generated from operations were £9.2 million in 2018, while cash at 31 December 2018 was £32.2 million.

Valuation Methodology
Method:  EV/Sales Approach (NTM)


Share Price Commentary

Daily Chart as at May-15-19, before the market closed (Source: Thomson Reuters)
 
On 15^th May 2019, at the time of writing (before the market closed, GMT 11:35 am), OXB shares were trading at GBX 673, down by 1.6 per cent against its previous day closing price. Stock's 52 weeks High and Low is GBX 1,064.38/GBX 575.32. Total outstanding market capitalisation was around £472.89 million.

Conclusion
The company’s commercial success will depend on acceptance of gene and cell therapy by the community and on the regulatory and commercial environment several years into the future. This may impact the time and cost to successfully develop gene and cell therapy products. The success of a product candidate can be impacted by the emergence of new or unexpected competitor products and technologies, or the willingness of physicians and/or healthcare systems to adopt new treatment regimes. A material impact on the future growth of the pharmaceutical and biotechnology industries might be impacted by the decision by Britain to leave the European Union, as the post-Brexit fiscal, monetary and regulatory landscape in the UK is not clear. However, the company’s commercial pipeline remains robust and its customer base continues to diversify, enhancing its revenue expectations. The company signed three new commercial contracts in 2018 which will bolster its commercial development and bioprocessing pipelines. To support the continued launch of Kymriah, the group is building additional bioprocessing capacity. Based on a strong prospect and supported by valuation done using the above method, we have given a SPECULATIVE BUY recommendation at the closing price of GBX 684.00 (as on 14^th May 2019) with a single digit-upside potential based on 6.33x NTM EV/Sales (approx.) on FY19E Sales (approx.).
 
*The speculative buy recommendation is valid for the current price as covered in the report (as on May-15-19)
*All forecasted figures have been taken from Thomson Reuters.

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