Oxford Biomedica : Preliminary Results of the year ended 31 December 2023 29 April 2024

Dr. Frank Mathias:

Thank you so much for joining today's analyst briefing for our '23 Preliminary

results. I'm Frank Mathias, the CEO of Oxford Biomedica and it's a pleasure to

see so many familiar faces here in this room, so thank you for coming, to be

here to speak to those on the webcast and those joining via the conference call

lines today.

With me, I have our Chief Financial Officer, Stuart Paynter, our Chief

Commercial Officer, Dr. Sébastien Ribault, and I'm also proud for the first time

to have, joining me, Thierry Cournez, our relatively new appointed Chief

Operating Officer who is also in charge of the UK operations. As I believe that

you have all met Stuart and Sébastien before, I will let Thierry introduce himself

when he starts his section of the presentation shortly.

So, looking at 2023, it's obvious that '23 was a year of transformation for Oxford

Biomedica as we began building a global pure play cell and gene therapy CDMO.

Throughout the year we have met significant milestones and celebrated many

successes, which have provided me and the board with confidence in our new

strategy and its ability to deliver long-term sustainable growth. I will begin this

presentation by highlighting these achievements and the progress we have

made to transform the company before handing over to Thierry to discuss the

integration and transformation of our global operations in greater detail.

Sébastien will then provide an update on the strong momentum we are seeing

on the commercial side, and Stuart finally will give an overview of our financial

performance for the year and also a midterm outlook.

As you know at the core at Oxford Biomedica, we have a mission to enable our

clients to deliver life-changing therapies to patients. This mission underpins the

incredibly important work we do. The strategy that we are implementing is

geared towards helping us achieving this by providing best-in-class CDMO

practices and accelerating the time it takes to our clients to bring the treatment

to the market.

I will return to a slide we showed in September last year for our interim

presentation when we announced our three-pillar plan. As you will soon hear,

we are progressing through the plan to deliver long-term sustainable growth

and have moved into the implementation phase now delivering on what we had

promised last year.

In the last year we took important steps towards our vision of becoming a global

pure play, world-leading CDMO in cell and gene therapies increasing our

geographical footprint into now three geographies - UK, US, and recently the

European Union, re-organising and aligning our operation and streamlining our

structure. The ongoing transformation will provide us with a multi-vector, multi-

site model giving us a platform to better serve our clients through offering

greater flexibility while benefiting from synergies at the same time.

this figure excludes a new order with a US client preparing for commercial

launch, which we announced in March recently.

As you can see, we made and continue to make immense progress, and I would

also like to highlight that a lot of this progress has been made since September

last year, so in the last six to seven months. Also, it allows me to reiterate the

guidance communicated to the market recently. We expected full year 2024

revenues to grow by 40% to 50% over last year and to achieve broadly

breakeven in 2024, as mentioned before.

I will now hand over to Thierry to discuss our One OXB transformation and

integration work stream. Thierry.

Thierry Cournez:

Thank you, Frank. Thierry Cournez, I'm the Chief Operating Officer for Oxford

Biomedica. I'm also the Site Head for the UK site. I joined the company last

October after 27 years in a large company organisation in the pharmaceutical

industry with different experience in sales, marketing and operations. I'm

pleased to be here with you today.

As Frank highlighted, we have a new strategy to become One OXB. We have laid

on different initiative, and we focus on six strategic pillars to integrate and

transform the company. Within these six strategic pillars, we have structured 20

work streams globally aligned with different experts from the different

geographies, which focus on leading the transformation of the organisation to

become a pure play CDMO with a global network.

This slide is illustrating the strategy of some of the examples which can explain

the advancement that we take in transforming the organisation. We focus first

on the quality of our people and experts in the organisations. We want this

company to get one company culture with the same values. We want to

become a workplace for a CDMO expert to join and drive the clients' projects.

We focus as well on becoming a client-centric organisation as a pure play CDMO

focusing on executions, high-quality delivery. We have worked on looking at our

efficiency and how we organise to ensure that we increase resource allocation

on client projects. We have developed strong activities toward our CDMO

services in our portfolio, refining our go-to-market strategy and intensifying our

marketing efforts and brand recognition to be seen as a global CDMO player in

the cell and gene therapy space.

In terms of increasing the revenue and increasing the returns, we look at

streamlining our processes, ensuring efficiency gain and implementing site-

based structures in the three geographies in the US, in the UK and France.

Last but not least, we continue to invest in innovations, making sure that our

innovation roadmap is focusing on the client needs to accelerate the pipeline

and to reduce our cost. I will now hand over to Sébastien.

commercial launch of a new product, that is giving us a total of 51 to be

compared to 28 as of 2022. We're now serving clients, as you can see from the

logo at the bottom of the page on many different types of vectors as it was

planned when we spoke about a year ago.

It was important to grow the capacity. It was important to add some new

capabilities. It was also important to give access to our clients who want to be

next to our process development scientists, analytical development scientists or

GMP teams when the activities happen in our plants, which was one of the

drivers of the acquisition of the two new sites in Lyon and Strasbourg that we

acquired from ABL Europe. So the geographical location was one of the drivers.

Increasing the number of vectors that we can deliver was another one of these

drivers. You see here some examples listed of vectors that we inherit from ABL.

The last driver was to be able, as I said earlier, to deliver for all geographies and

obviously having now two sites in continental Europe is giving us the

opportunity to deliver in Europe for Europe, but also deliver for some of our

APAC customers who wanted to have a delivery site in Europe when they want

either to target the European market or minimise the time difference with, for

example, the US when they are historically working with the US CDMOs. So,

we'll continue to strengthen our commercial efforts to fill these capacities, and

Thierry already demonstrated that the integration effort is ongoing to make One

OXB out of these three geographies. I'm going to now hand over to Stuart for

the financial part.

Stuart Paynter:

Thank you, Sébastien. Good afternoon to everyone. So I'm going to take you

through three slides, the first one is a review of 2023, the second one looks at

near term guidance in 2024, and the last is a distillation of what Sébastien was

talking about in terms of our position within this market and our growth

opportunity over the next two to three years, which as you'll see is very exciting.

So for 2023, first thing to say about both the revenue and the costs is that when

we guided in September, we've come out more or less spot on where we

guided. So revenues at the end of 2023 of just a shy under £90 billion compared

to 2022 of £140 with a number greater than £40 million in the vaccine revenues

in 2022, which were non-recurring. In the underlying piece of the business,

there was a very modest growth. So we really consider this to be the baseline

revenue that we're currently at £90 million.

Unfortunately, that was supporting a much bigger cost base. So if we go onto

pillar number two here, the cost base supported meant that we made an

EBITDA loss of £52 million in the year, which obviously is unsustainable, and we

took actions throughout the year to make sure that we were rebasing those to

both give us a launch pad for '24 and beyond in terms of delivering the growth

and being able to do the transformation programmes, which Thierry outlined

new ways of working and becoming a pure play CDMO. That exercise generated

a sort of perpetualised £30 million of savings, which we completed the project

in the second half of 2023, and we'll see those benefits coming forward.

CapEx will be limited so we are looking at particularly strategic initiatives, things

like transferring of platforms from one location to the other. We are really,

really well set from a CapEx perspective. We've made significant investments, as

people know, in the last few years, including Oxbox and other things, and we've

got a really nice infrastructure base to support the growth out to about 2028.

No big infrastructural investments in things like GMP suites until that time.

We've got some human resources to play around with to make sure we can

deliver for our clients, but nothing big in terms of CapEx. And we're on track to

achieve that medium term profitability in 2025 and then beyond because we've

made this commitment. We've made this commitment for the medium term to

2026, and we've said, and we are reiterating here, 35% revenue CAGR, including

France now. You can see what that means to that chart.

And you'll remember what Sébastien said about the market as well, we are

looking to significantly beat the market in terms of growth. We believe we've

got great visibility, a great client roster to be able to do that and take advantage

of this maturing industry with no further huge CapEx investments required to at

least double our revenues and beyond to '28. And that's really, really exciting

and this is going to be high quality revenue streams coming through in the next

few years.

That's going to lead in the year 2026 to an operating EBITDA margin of greater

than 20%. We know that the journey does not stop there, we know that the

best-in-class CDMOs in our area making 30%, but that's going to take a few

years for us to again build the scale to be able to do that, but you can see there

the list of the reasons why we believe this is a true possibility. Because when

you think about it, we are sitting on this infrastructure. We can more than

double the revenues into that infrastructure and that's going to really drive the

EBITDA growth in the business.

With the visibility we have and with the opportunities ahead of us, we think this

is a very deliverable plan and we're fully committed to it. And I'll hand back to

Frank.

Dr. Frank Mathias:

Thank you so much, Stuart, and thank you so much also for the outlook. For the

remainder of 2024, we continue to execute on our new strategy and focus will

turn to integrating all sites to fully create as Thierry has shown, one OXB, a

united company alongside growing our global portfolio of clients and

programmes.

This slide shows us our flywheel, which is a nice summary of our strategy.

Central to everything at OXB is our employees. Our employees are the most

valuable assets and are crucial for us to be able to operate a client-centric

organisation and to deliver excellent client experience. This will in turn lead to

expanded client partnerships, as we already see, will attract new clients as we

already also see. Will generate increasing revenues, will allow us to invest to

serve our clients and so on. It's a typical flywheel so the ultimate goal is to get

the flywheel to turn on its own.

While we have made significant progress, it is important to note that the

numbers obviously we are presenting are backward looking. But as CEO, I have

to look forward, and as you have seen in the presentation, we reiterate the

guidance for this year. The share price may not currently reflect the progress

made by OXB throughout the year. However, we are confident, the team here is

confident, the Board is confident that we are on the right trajectory and that

our efforts and performance will be recognised in due course.

Before we open the room for questions, I would like to take this opportunity

also to thank our employees for their hard work and contributions as well as

their ability to embrace change. And there is a lot of change currently, both now

and in the future. That dedication and hard work has been instrumental in our

transformation in achieving the many successes along the way. We'll now be

pleased to take the questions from those in the room and Sophia will bring a

microphone, before we take questions then from the conference call line.

Sophia, please. There's one question from Charles.

Charles Weston:

This is Charles Weston from RBC. Thanks for taking the questions. Three, please.

The first is on the revenue backlog, you've provided an April update on the

business development backlog, but you've only given us a March update for the

revenue backlog, and I know you said you've signed this big contract.

Presumably not going to give us the number, but can you give us an order of

magnitude of a potential increase? Are we talking 20%, 50%? What's the broad

uplift that we should be looking for?

Stuart Paynter:

Charles, we can't calculate the backlog because we need to calculate the April

revenues to put into the backlog. It's a formulaic calculation, it's an auditable

number. Backlog plus orders, less revenue equals closing backlog. We haven't

done bit that. We can't until we're in April, and as Sébastien said, I think that's a

good word, significant. We can't give any more details now. They will come in

due course. As you know, we're committed to the communication plan of being

far more frequent into the market now and give more frequent updates on our

progress in terms of trading updates, and you'll see that when we do our next

trading update.

Charles Weston:

Okay. It was worth a go. Secondly, on network utilisation, obviously you've got a

lot of capacity as Stuart was talking about, and relatively lower utilisation at the

moment. Can you give us a sense of what is your percentage capacity utilisation,

where we stand today? And what I'm obviously trying to drive out there is what

full looks like from a revenue generating capacity within the current network

without any more meaningful CapEx.

Dr. Frank Mathias:

Yes. Capacity has different components in terms of infrastructure, resources,

equipment. Right now, we do have the capacity to deliver on the GMP batches,

which are planned for making our numbers this year. France and the US site give