Oxford BioDynamics Plc (LON: OBD), a biotechnology company focused on the discovery and development of epigenetic biomarkers based on regulatory genome architecture, for use within the pharmaceutical and biotechnology industry, has today announced its audited results for the year ended 30 September 2018.
Corporate, operational and recent highlights
- Six revenue-generating research and development projects for commercial customers in diverse fields including immuno-oncology, fibrosis and thyroid cancer.
- Successful completion of Innovate UK grant-funded ALS project, followed by validation in peer-reviewed publication and expressions of commercial interest.
- Announcement of strategic partnership in China with GL Capital Group (“GL”), a leading Chinese Healthcare Investment Group, with GL investing £9.75m and becoming a holder of 5% of the Company.
- Significant progress in applying the EpiSwitch™ platform to areas of human and equine fitness, and announcement of a collaboration in the area of sports-related concussion.
- Grant of core patents covering the EpiSwitch™ platform technology in the US, Canada and India. Two new patents filed along with extensive exemplification on previously filed patents.
Financial highlights
- Revenue of £1.2m (FY17: £1.2m).
- Operating loss of £2.6m (FY17: £4.0m).
- Cash of £18.3m as at 30 September 2018 (FY17: £10.8m).
Post-period end
- Announcement of fifth immuno-oncology collaboration, with a well-known US biopharmaceutical company.
- Announcement of collaboration with Casa Sollievo della Sofferenza, a key national biomedical and healthcare institution in Italy, to develop a panel of epigenetic biomarkers for the diagnosis of Autistic Spectrum Disorder.
- Exercise of option over 30% shareholding in commercial partner, Holos Life Sciences Pte Ltd.
- Signing of two exclusive licence agreements with Holos, in the fields of human and equine performance and wellness.
- Filing of one further patent, covering the use of the EpiSwitch™ platform in detecting disseminating biomarkers in the context of strength and endurance training for fitness and in professional sports.
Commenting on the results, Christian Hoyer Millar, Chief Executive Officer of Oxford BioDynamics, said:
“In 2018 we have continued to build on the strong foundations established in 2017 following our successful IPO. Investment in our commercial infrastructure has allowed us to further our customer and geographical reach, with our EpiSwitch™ technology increasingly becoming the leading industry standard for identifying epigenetic biomarkers. We have signed multiple commercial development partnerships, in Europe, the US and China in new and challenging clinical indications. Our EpiSwitch™ platform is fast becoming internationally recognised as an effective and novel platform to improve therapeutic options. We were delighted to sign a strategic partnership with GL earlier this year, not only strengthening our cash position but also further establishing our position in the rapidly growing Chinese market. We look forward to reporting progress on the multiple projects currently underway.”
Hard copies of the Company’s Annual Report and Accounts for the year ended 30 September 2018 and Notice of Annual General Meeting will be posted to shareholders in due course. Electronic copies of the Annual Report and Accounts (incorporating the Notice of Annual General Meeting) will be made available on its website at www.oxfordbiodynamics.com, within the Investor Relations section, at the same time.
Notice of Annual General Meeting
The Company’s Annual General Meeting will be held at The Linbury Room, Worcester College, Oxford, OX1 2HB at 11.00 am on 14 March 2019.
The information included in this announcement is extracted from the Annual Report, which was approved by the Directors on 10 December 2018. Defined terms used in the announcement refer to terms as defined in the Annual Report unless the context otherwise requires. This announcement should be read in conjunction with, and is not a substitute for, the full Annual Report.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Oxford BioDynamics Plc
Oxford BioDynamics Plc is a biotechnology company focused on the discovery and development of epigenetic biomarkers based on regulatory genome architecture for use within the pharmaceutical and biotechnology industry.
The Company’s award-winning, proprietary technology platform, EpiSwitch™, aims to accelerate the drug discovery and development process, improve the success rate of therapeutic product development and take advantage of the increasing importance of personalised medicine.
In particular, EpiSwitch™ can reduce time to market, failure rates and the costs at every stage of drug discovery. Additionally, the technology provides significant insights into disease mechanisms for drug discovery and product re‐positioning programmes, and enables the personalisation of therapeutics for patients in the context of challenging pricing environments where improved clinical outcomes are critical.
CHIEF EXECUTIVE OFFICER’S REVIEW
Chief Executive Officer’s review
Introduction
It is with great pleasure that we report on another transformative year for Oxford BioDynamics. During the year to 30 September 2018 we completed multiple projects for commercial partners in diverse fields and published and presented the results of our work to growing recognition and interest from industry leaders. Improvements in the efficiency and capability of our processes, investment to increase our UK laboratory capacity and expansion of our international commercial infrastructure has allowed us to address growing interest in our EpiSwitch™ platform. We also announced our strategic partnership with GL Capital Group (“GL”) in China, and significantly strengthened our balance sheet. We have again made solid progress toward our strategic goal: making OBD’s EpiSwitch™ technology the leading industry standard for epigenetic biomarkers for the pharmaceutical and biotechnology industry.
International commercial progress
During the year, the Company announced or completed biomarker discovery projects for several customers, including four of the top 30 global pharmaceutical and biotech companies by revenue1. These projects focused on immuno-oncology (“IO”), lung fibrosis, rheumatoid arthritis, and a number of non-clinical applications. Overall, the Company had an increased level of activity on revenue-generating and grant-funded research and development projects during this year compared to last. After the year end, in November 2018, the Company entered into its fifth IO collaboration since 2016, with a major US biopharmaceutical company, and announced a collaboration agreement with Casa Sollievo della Sofferenza, an important Italian research and biomedical institution, to identify EpiSwitch™ biomarkers for the blood-based diagnosis of Autism Spectrum Disorder (ASD).
The Company made further progress in protecting and expanding its intellectual property, announcing the grant of key patents covering EpiSwitch™ technology in the US, Canada and India during the year. OBD now has a total of eleven patent families, including two that were filed during the year, and one that was filed shortly after the year end.
Increased range of clinical and non-clinical applications for EpiSwitch™
This year OBD has shown the applicability of the EpiSwitch™ platform in a number of new clinical and non-clinical fields. For the first time, the Company reported compelling results in two neurodegenerative diseases. In amyotrophic lateral sclerosis (“ALS”, also known as motor neurone disease or Lou Gehrig’s disease), the Company successfully concluded its Innovate UK-funded collaboration with the University of Oxford, and the Neurology Clinical Research Institute, Massachusetts General Hospital, Harvard Medical School and reported the discovery of a distinct chromosome conformation signature (“CCS”) biomarker that was diagnostic for ALS, demonstrating a highly promising, potential new approach to the diagnosis of this disease. Post-year end, the results of OBD’s proprietary research in Huntington’s disease (“HD”) were presented. In this project, OBD’s scientists analysed small volume blood samples from a number of healthy controls and HD patients, and observed discrete and measurable epigenetic changes in a HD-relevant gene locus which could differentiate HD patients from unaffected individuals and importantly, could also differentiate between pre-symptomatic and symptomatic HD patients.
The Company also made progress in the application of EpiSwitch™ to two non-clinical fields in contracts with our Singapore-based partner Holos Life Sciences Pte Ltd (“Holos”, formerly named EpiFit Pte Ltd). The first results of the EpiFit project (which was announced in January 2017) were shared with Holos at the end of the year. This project involved the identification of biomarkers indicative of an individual’s suitability to aerobic or anaerobic training. The Company also worked with Holos on a similar project seeking to discover equivalent biomarkers to those identified in the EpiFit project, but in thoroughbred horses. These non-clinical (and non-human) applications of EpiSwitch™ are potentially valuable opportunities, in markets in which the Group has limited experience. To that end, after the year end, the Group has exercised a pre-existing option to acquire, for a nominal amount, a 30% shareholding in Holos, and also participated in an interim fundraising by Holos, investing US$540,000 in that entity. Holos has also exercised options to enter into exclusive licensing agreements with the Group in both human and equine fitness, in both cases after the year end. These licences offer the Group a combination of upfront and milestone fees and sales-based royalties. In January 2018 the Company also announced a collaboration with Holos to develop non-invasive epigenetic biomarkers associated with sports-related concussions, and research on this project will begin as samples become available during 2019.
Scientific and technical validation
The latest results of OBD’s biomarker development and validation activity have been published in peer-reviewed publications such as the Journal of Translational Medicine (validation of predictive biomarkers for treatment in Rheumatoid Arthritis, co-authored with Pfizer), The Lancet’s EBioMedicine (non-invasive diagnostic for ALS, co-authored with Massachusetts General Hospital, Department of Neurology, and Nuffield Department of Clinical Neurosciences, John Radcliffe Hospital, Oxford), and, after year end, Faculty of 1000 Research (evidence for the first prognostic biomarkers for progression of Huntington’s disease) and Surgery (evidence that an EpiSwitch™ assay shows high sensitivity in detecting thyroid cancer). OBD has also contributed a chapter to a forthcoming book, “Handbook of Biomarkers and Personalized Medicine”, to be published soon.
OBD team members have presented results in talks at a number of prestigious conferences including the Foundation of NIH Cancer Biomarkers Steering Committee Annual Symposium (Washington DC), the American Society of Hematology (ASH) Summit on Emerging Immunotherapies for Hematologic Diseases (Washington DC), Molecular Medicine Tri-Conference on Immuno-oncology Biomarkers and Companion Diagnostics (San Francisco, CA), 28th International Symposium on ALS/MND (Boston, MA), 6th World CNS Summit (Boston, MA), 2017 Annual Northeast ALS Consortium (NEALS) Meeting (Clearwater, FL), Diabetes Asia 2017 (Kuala Lumpur, Malaysia), and the Cantor Fitzgerald Global Healthcare Conference (New York, NY).
Strategic partnership with GL Capital Group
In August 2018, the Group announced its strategic partnership with GL, a Greater China healthcare-focused investment management group with over $1 billion of assets under management. GL will apply its extensive industry network and local knowledge to identify, screen and recommend suitable business partners in China. The Chinese healthcare market is growing rapidly and represents an excellent opportunity for the Group to deploy its EpiSwitch™ technology with new business partners. As I remarked at the time: “We are delighted to announce this agreement with GL Capital Group, which builds on our strategy to increase our global reach. We identified Asia as a core focus for international expansion and this co-operation agreement will allow us to address the many opportunities that we see in this region. We have been impressed by the depth of scientific and commercial understanding GL have shown in our interactions to date, and we are convinced that they are the right strategic partner as we begin to engage with the important Chinese market.”
Strengthened balance sheet
This year the Company has raised over £10 million from share issues, most of which came from the subscription in August 2018 by GL Capital Group for 4,688,000 new shares (representing approximately 5% of the Company) at 208p per share, raising £9.75 million. The increased cash balance greatly strengthened the Group’s balance sheet whilst minimising dilution for existing shareholders, at a time of some uncertainty in the capital markets. Throughout the year, the Group has exercised close control on spending: net cash outflow on operating activities was below £2 million, and with £18.3 million in cash at 30 September 2018, the Board is satisfied that the Group is well resourced to make continued progress over the short-to-medium term.
Increased capacity and efficiency to meet demand
The year ended 30 September 2018 was a busy one for OBD’s laboratories. As well as increased levels of activity on revenue-generating and in-house projects, the Company’s scientists made significant improvements to the capacity and efficiency of processes, including through more use of robotics and increases in data analysis capability. The Company expanded its facilities in Oxford, UK, to add laboratory, office and meeting space, this work being completed shortly after the year end. Also, the Group’s reference laboratory in Penang, Malaysia obtained the ISO 13485 certification (which is also held by the UK lab).
Summary and outlook
The year to 30 September 2018 has been one of both consolidation and planning for further growth. The Company has strengthened its balance sheet, broadened its intellectual property portfolio, improved internal processes and expanded its research facilities. The results of OBD’s research projects have been exceptional and crucially show real potential to improve outcomes for patients in an increasingly wide range of indications. Last year, we reported a growing acceptance in industry of the importance of epigenetic biomarkers and the high quality of results we can provide with EpiSwitch™, and this trend has continued this year. As the Group moves into 2019, the focus is on the expansion of its commercial and business development capacity (including in the US and China), and continued progress in the wide range of research projects already underway.
Christian Hoyer Millar
Chief Executive Officer
FINANCIAL REVIEW
Overview
During the year ended 30 September 2018, the Company continued to focus on developing contracts with global pharmaceutical and biotechnology companies and other commercial partners, investing in internal proprietary R&D projects, and strengthening its intellectual property portfolio. In August 2018, the Company also entered into a strategic partnership in China with GL Capital Group, raising approximately £9.75 million from the issue of 4,688,000 new ordinary shares to GL.
Financial performance
Revenue in the year ended 30 September 2018 was £1.19m (2017: £1.18m), comprising services fees received for commercial biomarker projects with pharmaceutical, biotechnology and other commercial companies, and services fees generated from collaborations with research institutions. In the prior year, revenue also included services and licence fees from agreements for the use of biomarkers in clinical diagnostics in Asia.
Operating expenses (excluding share option charges and, in the prior year, IPO costs) were £3.80m in the year ended 30 September 2018 (2017: £3.55m). Of the £0.25m increase in these operating expenses, £0.29m resulted from increased research and development activity, £0.14m was attributable to staff costs, in addition there was a £0.27m reduction in general and other admin costs, and approximately £0.09m in increased depreciation. This measure of operating expenses is quoted because it provides a better indicator of the costs of the Group’s continuing operations. IPO costs in the prior year were one-off in nature and share option charges are non-cash expenses that do not necessarily correlate with the Group’s underlying cost base. Both share option charges and IPO-related costs are shown in the consolidated income statement.
Other operating income in the year of £0.20m (2017: £0.25m) mainly comprised grant income from Innovate UK, supporting the Group’s ALS biomarker research and development programme.
Operating loss for the Group was £2.60m (2017: £4.00m, including IPO-related costs of £1.49m).
Financial income of £0.18m related to interest receivable and foreign exchange gains (2017: £0.09m comprised mainly interest receivable). Finance costs of £0.12m in the prior year related primarily to foreign exchange losses.
The taxation credit of £0.47m in the year (2017: £0.23m) represents tax relief on research and development expenditure during the period. The Group has not recognised any deferred tax assets in respect of trading losses arising in the current or prior financial periods.
Net loss for the year was £1.95m (2017: £3.80m). Loss per share was 2.2 pence (2017: 4.5 pence) and adjusted loss per share was 2.2 pence (2017: 2.7 pence, excluding one-off IPO costs of £1.49m).
Financial position
Cash and cash equivalents at 30 September 2018 totalled £18.3m (2017: £10.8m), reflecting the net cash proceeds of £10.0m raised from share issues during the year.
Total assets at 30 September 2018 were £20.94m (2017: £12.68m), reflecting the increased cash balance, investment in tangible and intangible fixed assets and modest increases in total debtors and inventory.
Total liabilities again decreased slightly to £0.89m at 30 September 2018 (2017: £1.09m) driven mainly by lower deferred income balances than in the prior year.
Cash flow
The Group has continued to exercise close control over cash expenditure during the year. Net cash used in operating activities for the year ended 30 September 2018 was £1.94m (2017: £1.53m). Net cash used in investing activities was £0.68m (2017: £0.32m) mainly reflecting increased expenditure on intangible fixed assets, and net cash generated by financing activities was £10.0m (2017: £5.4m). Overall there was a net cash increase for the year ended 30 September 2018 of £7.48m (2017: £3.51m) including exchange gains on opening non-GBP denominated cash and cash equivalents of £0.07m (2017: loss of £0.04m).
Paul Stockdale
Chief Financial Officer
