Oxford Biomedica Hails Novartis Contract, Narrows Loss

(Rewrites throughout.)

By Simon Zekaria and Razak Musah Baba

LONDON--Oxford Biomedica PLC (OXB.LN) Friday said it has a highly promising future backed up by a strengthened balance as the British biopharmaceutical group hailed a recent deal with Swiss drug giant Novartis AG (NOVN.VX) and posted a narrowed earnings loss after more than doubling its sales.

The Oxford, England-based gene and cell therapy group, which last year raised tens of millions of dollars in fundraising, recorded a pretax loss of 10.8 million pounds ($16.1 million) in the 12 months to the end of December compared with a loss of GBP12.8 million in the same period a year earlier. Revenue more than doubled to GBP13.6 million from GBP5.4 million in the same period a year earlier.

Last year was a "transformational year" for the group due largely to the signature of a major contract with Novartis, which is the second deal struck by the company with the Swiss giant, Chief Executive Officer John Dawson said.

Oxford Biomedica said a licensing and manufacturing contract with Novartis signed last October is worth up to $90 million over the next three years, with the prospect of further royalty revenues on any future product sales.

Overall for the group, licensing revenues increased to GBP5.1 million from GBP1.0 million. including GBP4.8 million from Novartis upfront payments, the company said. Manufacturing revenue increased to GBP7.7 million from GBP2.6 million.

"Our overall goal is to deliver significant value to both patients and shareholders in the near-term and we are excited and well positioned to do this," Mr. Dawson said.

Nick Rodgers, chairman of Oxford Biomedica, which also licenses products and its intellectual property to French pharmaceutical giant Sanofi SA (SAN.FR) and U.S. peer Pfizer Inc. (PFE) said growing global investment in gene and cell therapy presents the U.K. group with increasing opportunities across its business.

"We are working hard across the business to ensure that 2015 is another year of strong progress for the group," said Mr. Dawson.

At 1537 GMT, Oxford Biomedica's shares rose 3.1% to 10.1 pence. Singer analyst Sheena Barry said the new agreement with Novartis is a notable highlight for the company, raising investor sentiment.

"We believe the deal provides the group with a significant opportunity which could potentially lead to an extension with Novartis or agreements with other companies within the industry."

Still, the broker said the company's plan to expand its manufacturing facilities to meet the demands of the Novartis contracts could strain its cash resources.

The group said in the absence of any further upfront receipts from potential product or license deals, the cash held by the group including known inflows is sufficient to support its current level of business activity into the first quarter of 2016.

Write to Simon Zekaria at [e-mail] and Razak Musah Baba at [e-mail]

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