Oxford Biomedica Share Discussion Threads

[harry s truman] 11/2/2024 21:47

I agree with that thought, but just a few things to ponder:-

For as long as I have held OXB then I've expected someone to buy them out. Early days the prime contender for that was Sanofi, later the question was why would Novartis not want to corner the supply for the key vector in current CAR-T production? Obviously neither of those 2 happened.

If you listen to Seb, or even read press reports external to OXB, there isn't a world shortage of CGT CDMO capacity (that is only a combination of a building and equipment), the shortage is in capability. We not only have the capability, but it is proven over a very long period of time via 2 commercial products (Kymriah and the AZ vaccine - yes the latter not strictly our usual, but it was an AV) and many 10s of that in successful trial support.

Seb's words (I think) but that is why OXB have never lost a partner to a competitor, but do have a lot of customers coming to OXB after being let down elsewhere.

All the huge CDMOs only have CGT as a small division. They make the majority of their income from supply of more traditional medicines on a large scale. OXB is 100% CGT CDMO and that isn't normal / typical.

So a potential buyer is much more likely to be another specialist, or someone who wants to become a specialist. I'm struggling for a better explanation there, but on the upstream side OXB are a bit like someone who is happy to provide individual bespoke small scale service in process development for each client.

A very large CDMO might not even be interested in upstream work, wanting to concentrate on downstream which is production / purification / fill and finish of something which is essentially already developed (or very nearly there) at that point and ideally ready for repeat runs of commercial supply.

Does that make sense? They may not want the small scale work which comes before the large scale work, even though the two would be tied together if using our own vectors (not if it was the customer's vector on which we were simply providing process development).

It's very difficult to predict these things, but we may never interest a large traditional CDMO. Similarly, it might actually be IM who are seeing the future need for a large 100% CGT CDMO and thinking "we could do that".

So, interesting to mull over but just guess upon guess at this point (certainly from me anyway).

What I am pretty confident of at the moment (and I know not everybody sees it the same way) is that our two biggest issues of the last 2 dire years (our covid work ending earlier than expected and our pre-covid work not coming back as quickly as hoped) is now history.

We saw last year that the work is back now and from here on the pendulum swings the other way again.

I realise some here include the Homology deal as the third component in a trinity of doom for those last 2 years, but if we wanted to ever be anything more than "the" LentiVector company then Roch needed to get an AAV. He got what was available and it is a good one, but yes he may have paid too much. With the benefit of hindsight he could have waited until Homology nearly went out of business / merged with that other non-CGT company, but what if someone else then bought that AAV / facility / staff before us?

It's a lot easier to be wise with hindsight. The market is a herd. It might be a depleted herd at the moment due to the post-covid economy, but once the market decides that OXB is a buy again then I'm sure they will overdo it the other way (again).

But the next step in that process is the update of the guidance for this year. Hopefully this week, but who knows?

[bedford1976] 11/2/2024 17:32

I think if we prove ourselves as a CDMO and work with our new friends at Institut Merieux our lowly value will be corrected without the need for a dual listing.
I don't know at what stage the likes of LONZA in Switzerland might start
looking at OXB, but if we achieve the success I anticipate. Well we might get a new home within a larger CDMO organisation.

[brucie5] 11/2/2024 15:09

Thanks Harry. Lucid explanation.

[catch007] 11/2/2024 13:19

It is evident to most investors that the UK stock market labours due a myriad of incompetence over the years including Governments basically stealing income by windfall taxes on dividends or levies from the owners of the business - the shareholders to which they have no right!

Hopefully the OXB transformational strategy will start to bear fruit and a move to long term profitability path becomes visible - still some way off imho at present. However I do believe the current share price is considerably undervalued. Now that there is a degree of stability with Novo & IM as major shareholders I think this may be an appropriate time for the BOD to consider a dual listing in the US. They could generate significant investor interest and demand in the company. Despite the significant listing costs there could a major benefit for the company over the long term.

[harry s truman] 10/2/2024 19:55

Brucie,

Kind words (thank you) but I know that I go on a lot about OXB and others have pointed it out.

I'm not going into too much personal detail because this is an open forum and whilst most people are fine, some aren't and my preference is to give the latter as little ammunition as possible.

I will repeat something I wrote here once before when someone queried my motives and that reply was around early covid and I had 13 holdings at that time. When OXB was later £15+ then yes it was out of balance and that was a big fraction of my portfolio value (remember I hold a lot of very old shares). These days it isn't as big of a fraction (again), but I do try to keep things in balance. Sorry if that is a non-answer.

I look at OXB in a different way to you (which is fine) but to my mind then 20 years ago it was exactly what you describe - high risk with the potential of high reward and the 20 year younger me thought that TroVax (if approved) would retire me early.

But of course OXB hasn't really been a drug discovery company for a long time now and ceased what was left of that previous business completely last year.

These days I get my drug discovery fix with Scancell, which has just as much (if not more) potential of a massive return as TroVax ever had (both companies having / had experimental cancer drugs which would / will work alongside the best approved drugs). Huge potential market (if successful).

But essentially I agree with what both Bedford and takeiteasy have written in the posts following yours, in that OXB began to be de-risked the day Novartis signed them up to develop then produce a vector for a CAR-T drug.

What started with one external company partnership there with services for Novartis has evolved to such an extent that at the interims back in September we had 24 such partnerships covering 41 programmes and it was already more than that at the December 7th update. On top of this of course our cessation of the inhouse drugs also means that whilst our CDMO business booms, our costs of speculative drug development have gone.

Things change and as I have written here before, 20 years ago I thought the risk reward with the punt on TroVax was the way to go. Two decades later the 20 year older me is happy to swap that for £180m+ sales by 2026 on better than 20% margin.

I'm a big fan of Peter Lynch and I realise he's 80 now, but there are lots of old videos of him on YouTube from when he was big on Wall Street. One of his quips that I like is that if a company makes money and has no debt, then it's pretty near impossible for it to go bust.

Now I realise that since Roch did the Homology deal we have a 50m USD 4 year loan with Oaktree (up in March 2026 I think) interest on which is capped at 10.25%, but as I mentioned in the previous post, at the end of H1 last year OXB had £129m in cash which now of course will be minus whatever H2 cost us, but as long as we are breakeven (or better) from now on, then it's a technical debt really - isn't it?

If they can find a way to get out of the loan early which is cheaper than simply sticking to the full term, then that would be great, but I doubt it would be cheaper and I also feel that in this climate OXB will be happier paying the interest to keep the cash balance higher. That one remains to be seen.

Our only other obligation is the put option for the 20% of the US operation which we don't own and at 30 June 2023 the put option liability was £20.3 million.

I'm thinking that we must have ended the year with something around £100m in cash, though that is another thing which will become clear in the fullness of time, but assuming it is that, then:-

Breakeven OXB with c£100m cash - c£40m loan - c£20m put option + c£17m from IM for new shares this year? Wouldn't that be c£50m nett cash and growing with whatever else comes our way this year?

I appreciate that turning Boston into a LentiVector hub isn't going to be cheap (IM of course paying for that in France) and I seem to remember c£5m mentioned for the last reporting period where I read about capex in Boston, but Stuart will be including that in his "rough breakeven without including ABL".

The timescales here are big (process development to large scale production of the successful) and it's likely another 5+ years before downstream needs will be at the position we were at in early stage recently / before the ABL deal (near full capacity). By then I'm expecting OXB to have made enough money to resolve any downstream capacity issues before they arise without having to resort to the money lenders.

[takeiteasy] 10/2/2024 17:59

IM appears to be bending over backwards with financial support to help us succeed so our economic value is maximised at the earliest opportunity. Their pro-active support and engagement in this way is the game changer for me.

I suspect they want to get ducks lined up in a row before any further announcements and I am now reconciled to waiting worst case to March/April time. Frustrating yes, but it is such an interesting situation I like to think that the management will have things in the best possible position before announcing stuff.

I doubt things may drop much further, more that we drift at these low level for months and years and the opportunity cost when some biotechs are on fire - my largest biotech holding has risen 400% from the depths of despair back into profit in the very recent past.

dyor etc

[brucie5] 10/2/2024 12:40

Harry, you do us all a great service wiring in depth about this share; and it must take up a lot of your time of research, for which thanks. I think for most peeps this would qualify as very high risk and of course, without any income at all, which excludes many and has made me think at least three times. ;). But -and without giving away any "secrets" - what sort of weighting do you give to this in your own folio; and assuming that it's quite large, how do you justify the risk?
To answer my own question, and being a scaredy cat, I rarely give anything over 3%. OXB and CWR, in which I see such similar traits of risk/reward that they could almost be two sides of the same coin, amount between them to just over 4%. Were either to show confirmed chart strength, which implies a breakout over the £3 level, I would probably build to a full position in each. But I'm sensing that you and others here have a lot more confidence in the proposition?

[harry s truman] 10/2/2024 11:39

Those "biotech tiddlers on nasdaq" bursting back into life is actually really good news for us - as it means that an industry nearly destroyed (slowly running out of money when the hospitals which hosted / supported their clinical trials were denied to them for 2 years) is now returning to normal and the surviving proportion of those companies who are in CGT and need vectors will be looking for a supplier.

We just closed another week with not a squeak out of any of the 9 covering brokers. This to me reaffirms the argument that OXB have said nothing to anybody, the only question is why?

So why delay the update when the market view is so important and the covering brokers are the main interface to that market? Surely it has to be that they are waiting for something.

I've mooted many possibilities for that (as you know), but I think it's likely to be something bigger than simply "the next contract" when Seb told us in the interims that when he joined the company they were seeing 2 enquiries per month and by the time he spoke it was 2 per week.

My opinion is that it very likely means something brewing which they are waiting to close first. Big deal? New business partnership? Too many possibilities really and our guesses are just that.

Regardless of my hope of an exceptional event there, surely (from what we know) it always boils down to these (most likely options) though:-

1) they are just taking their time - remember Stuart and others have said updated guidance after the ABL deal close. They didn't say "at the full year results" and there is quite a gap between those two events to do it. But surely if nothing else is happening now then there's not a lot of point in waiting?

2) they are waiting for something which either confirms breakeven for 2024 (not "roughly breakeven") or tips us into profit for 2024 (on booked in sales) - or - there is something much more significant brewing which is why they are very quiet.

Remember, £129m at the end of June in cash and Stuart has confirmed that 2023 was as guided (i.e. although a big loss there will still be the bulk of that cash left). He has guided rough breakeven for this year and we are due another 20m euros from IM for new shares at our discretion should we actually need more money for something.

So there is no cash crisis. The cash burn is over. The reason for this little Mexican standoff (can I still say that without being arrested?) is anyone's guess.

Could it be to do with the remains of Homology? Serum? A completely new strategic partnership with xyz?

Remember that wording recently (last year) where they talked about the possibilities of staff windfalls? They obviously see this current situation as unfortunate but temporary.

[takeiteasy] 10/2/2024 09:03

page 95 of the ARK 2024 big ideas document (PDF on their website) is worth a read for the discussion of the opportunity in precision medicine ....

[takeiteasy] 09/2/2024 20:51

and while we sit and wait the biotech tiddlers on nasdaq are bursting into life so we cannot blame the general market malaise any more for being stuck so lowly down share price wise

[harry s truman] 09/2/2024 15:41

Earnings alone will make a huge difference jez, assuming they can manage just to tip into profitability.

We don't know that yet of course, but they were forecasting rough breakeven without ABL and we now have the ability to send work to them which Oxford wouldn't have been able to do this year. I don't think it's unrealistic to expect a small profit - which in a year following two years of huge post-covid losses would be a turnaround worthy of Lazarus.

Remember one of the brokers covering OXB is still forecasting a loss of £101.6m for 2023 and a loss of £53.1m in 2024. Now admittedly they haven't revised that yet, mainly because OXB haven't issued updated guidance - but if you managed a fund with 100 shares and that broker was your preferred advisor, what would you think?

We of course (mostly) trust what OXB said as recently as the 7th of December "The Company also remains on track to deliver broadly breakeven Operating EBITDA in 2024." but that's a big difference in view isn't it?

Unfortunately we can only go with the flow here. You will have read my thoughts many times, but they just are my view as an OXB watcher of many years.

In house drugs? Maybe they can be sold, and obviously the most likely candidate is ProSavin / Axo-Lenti-PD, as that's the only one we have which is proven in people, but the pre-clinical drugs might never be taken any further.

Is the most likely / only possible home for those Transgene? (controlled of course by IM and next door to one of our new French plants). I for one would be happy to give them away (no up front) on the assumption that there would be payment later if successful. But maybe hope over expectation with that one as there are a lot of trial drugs for sale and most of them go nowhere (hence us moving into services after seeing how much money there was in making a vaccine).

So maybe ProSavin / Axo-Lenti-PD will find a home.

Maybe something from Serum, because the deal they did with us and the fill/finish plant in Wales does imply that they have something big planned.

Maybe the late stage drug we partner will get approved this year (maybe end of March) and lead to commercial supply.

But I think more pertinent here is what Seb's team can sell. The majority of work out there at the moment seems to be upstream, but if he can simply max Oxford, Boston and France out with that then we would all be happy - and that's long before some of it transitions to downstream.

I'm sure that Frank and team are all trying to find something to do with the three 1,000 litre bioreactors used for the AZ vaccine. The economy of scale there makes that a no-brainer, but none of our regular CGT customers would need that much of anything for a trial.

Yes Serum have a right of first refusal on one of them, but finding something to make with the other two would be very lucrative. I expect quite a bit of effort has gone into looking for another vaccine (maybe the new OU work eventually) to utilise those.

Lots of great possibilities, but the update first would be good. If they leave it much longer then it seems natural to do the big reveal at the same time as the preliminary FY results for 2023, but that leaves a genuine risk that the resulting headlines will be the loss for 2023 rather than the forecast for 2024.

[jezmundo] 09/2/2024 12:58

We definitely need some form of Hollywood news this year, i.e vaccine news or selling in house drugs.Something big is needed to, as it were, kick start this stock.

[steeplejack] 09/2/2024 11:46

Just to lighten the mood,extract from todays Telegraph business section!........"UK stock market, and the wider City. Some senior fund managers think the stock market will be dead in the next 10 years anyway, such is the direction of travel.That feels a touch premature to me but the enthusiasm that has greeted Arm's arrival in New York certainly risks compounding the image of London as a place to either avoid or escape."

[harry s truman] 09/2/2024 10:35

You're never going to get headhunted by the Samaritans sj.

[harry s truman] 09/2/2024 10:33

takeiteasy,

That's actually a straightforward answer and it's simply that ABL had no vector of their own to offer.

When we did the deal with Homology (roughly 10x the headline ABL cost, but in reality more) that was because OXB had decided that they needed a clinical stage AAV to offer and that was the price for a good one.

As OXB said in the webcast, IM could have funded ABL to develop their own vectors to offer from scratch, but there is a time penalty for that (more than a decade) and you never really catch up with the leaders.

We currently offer a LentiVector (plus add on process improvement tech) which has 3x the industry standard yield. The AAV we got in the Homology deal is 10x plus a lot of other advantages regarding storage and such.

IM looked at that and decided that the best way forward was to swap ABL Europe for a percentage of OXB. As the analyst in the webcast said - if you can't beat them, join them.

That was why it was so cheap and now ABL can offer in house LV and AAV.

[steeplejack] 09/2/2024 10:28

Commentary on Bloomberg radio today suggested that markets were 'broken'.The suggestion was that stockmarkets are now dominated by 'machine' money and algorithm trading that has no opinion on value only price.This trading environment is particularly tough for smaller stocks.The observation certainly makes sense.

[harry s truman] 09/2/2024 10:25

Isn't that impressive building part Novartis Marcus? I'm pretty sure that's a long term partnership, so no prizes for guessing who paid for it.

If it brings on more Novartis work then great, but of course it's quite a long time from research to market.

[takeiteasy] 09/2/2024 06:48

Harry, yes please keep the positivity up. Most helpful.

An earlier comment got me thinking - why do we think the price for the recent purchase was so low. is is simply depressed market conditions for all biotechs in 2023 or is there a wider point do you think?

[steeplejack] 08/2/2024 23:23

"On a much smaller scale we are waiting for our managers to give us their vision for OXB. There are many possibilities here for it to be much better than we currently dare hope .."Harry,i love it,its positively Churchillian post Dunkirk!.....hope you're right!

[marcusl2] 08/2/2024 20:51

BioNTech has already been tinkering with its manufacturing processes in the run up to CAR-T BNT211 entering pivotal trials. Now, the German biotech has brought British company Autolus Therapeutics on board in an intriguing $250 million upfront collaboration.

[gareth jones] 08/2/2024 16:49

ARM Holdings listed on NASDAQ at $55 in September, big rise today, currently $120. Apples and pears I know.

[steeplejack] 08/2/2024 16:21

More than bad,its dire.Western economies have been running a well organised(unaccountable) Ponzi scheme for years.The books don't balance but the key is to keep consumer demand buoyant providing 'bread and games' .We're reaching a pivotal moment as this pantomime plays out.In recent years,China has been instrumental in alleviating adverse consequences of the West's addiction to debt.However,China now has its own problems.Short term,things might look improved as China aggressively exports.Inflation will give way to deflation,interest rates will fall but the next chapter is less sanguine.Job losses in Western economies,trade wars and then trade barriers.....hello...is that you Mr Trump!