21st Mar 2005 07:03
Oxford Biomedica PLC21 March 2005 FOR IMMEDIATE RELEASE 21 MARCH 2005 OXFORD BIOMEDICA PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 Oxford, UK - 21 March 2005: Oxford BioMedica (LSE: OXB), the leading genetherapy company, today announces its preliminary results for the year ended 31December 2004. Highlights: Oncology • TroVax: Phase II results in colorectal cancer alongside chemotherapy exceeded expectations, demonstrating immune responses in all patients and clinical benefit in the majority. Announced on 2 March 2005 • TroVax: Phase I/II follow-up analysis showed a highly significant correlation between immune responses and time to disease progression • TroVax: Phase II trial in renal cell carcinoma commenced in the United States • TroVax: commercial manufacture established with over 22,000 doses produced • TroVax: plans for registration trials to be discussed with the FDA imminently • Anti-5T4 targeted antibody: Wyeth completed its preclinical evaluation and clinical trials are under consideration • MetXia: Phase I rolling to Phase II trial in pancreatic cancer underway Neurotherapy • ProSavin: preclinical results showed almost complete recovery in movement behaviour in Parkinson's disease • ProSavin: regulatory discussions ongoing prior to formal submissions for clinical trials • MoNuDin: preclinical results demonstrated a highly significant increase in life expectancy in ALS, published in Nature • SMN-1G: preclinical results showed a statistically significant improvement in survival in spinal muscular atrophy, published in the Journal of Clinical Investigation • Innurex: preclinical results showed restoration of limb function in avulsion or stretch injury Technology licensing • Four technology licensing agreements signed during 2004 and another since the year end, generating sustainable revenue • Merck & Co and Biogen Idec licensed the LentiVector technology for research use • Viragen licensed the LentiVector technology for biomanufacturing using avian transgenics • MolMed licensed the retroviral ex vivo gene delivery technology for therapeutic applications Financial • Revenue for the year ended 31 December 2004 increased 34 per cent to £0.5 million (2003: £0.4 million) reflecting growing income from licensing • Loss before tax and exceptional items for the year reduced to £11.1 million (2003: £12.7 million) • Operating expenses for the year were essentially unchanged at £13.5 million (2003: £13.7 million) • Cash and short term investments at 31 December 2004 of £22.4 million (2003: £31.8 million) • Cash resources sufficient to support development activities into 2007, before taking account of new licensing agreements Board appointment • Nick Woolf, Senior Vice President for Corporate Strategy, appointed to the Board as an executive director on 3 March 2005 Commenting on the results, Oxford BioMedica's Chief executive, Professor AlanKingsman said: "We have made good progress during 2004 in both productdevelopment and licensing. In particular, the recent successful Phase II resultswith TroVax have confirmed the potential for our lead product. The value of ourtechnology platforms is also becoming evident. In 2004 and since the year end,we have secured five technology licensing deals, which are generating growingand sustainable revenue. More deals on technology and products are expected. Atthe same time, we are moving TroVax towards registration trials and taking thelead neurotherapy products towards clinical development. With our solid cashposition, we are well placed to deliver on our objectives. We look forward tothe coming year as our products and technologies advance towardscommercialisation." -Ends- For further information, please contact:Oxford BioMedica plc: Professor Alan Kingsman, Chief Executive Tel: +44 (0)1865 783 000City/Financial Enquiries: Lisa Baderoon/ Mark Court/ Mary-Jane Johnson Tel: +44 (0)20 7466 5000Buchanan Communications Scientific/Trade Press Enquiries:Sue Charles/ Katja Stout/ Ashley Lilly Tel: +44 (0)20 7886 8150Northbank Communications Notes to editors 1. Oxford BioMedica Oxford BioMedica (LSE: OXB) is a biopharmaceutical company specialising in thedevelopment of novel gene-based therapeutics with a focus on the areas ofoncology and neurotherapy. The Company was established in 1995 as a spin outfrom Oxford University, and is listed on the London Stock Exchange. Oxford BioMedica has core expertise in gene delivery, as well as in-houseclinical, regulatory and manufacturing know-how. In oncology, the pipelineincludes an immunotherapy and a gene therapy in multiple Phase II trials, and apreclinical targeted antibody therapy in collaboration with Wyeth. Inneurotherapy, the Company's lead product is a gene therapy for Parkinson'sdisease, which is expected to start clinical trials in 2006, and four furtherpreclinical candidates. The Company is underpinned by over 80 patent families,which represent one of the broadest patent estates in the field. The Company has a staff of approximately 65 split between its main facilities inOxford and its wholly owned subsidiary, BioMedica Inc, in San Diego, California.Oxford BioMedica has corporate collaborations with Wyeth, Intervet, Amersham,Viragen, MolMed and Kiadis; and has licensed technology to a number of companiesincluding Merck & Co and Biogen Idec. Further information is available at www.oxfordbiomedica.co.uk. Chairman's and Chief Executive's Report Oxford BioMedica made good progress in product development and licensing during2004. The company's primary goals were achieved in another successful year. Boththe oncology and neurotherapy pipelines have advanced. The lead anti-cancerproducts, TroVax(R) and MetXia(R), are being evaluated in multiple clinicaltrials, and the lead neurotherapy product, ProSavin(R) for Parkinson's disease,is in manufacturing scale-up for clinical trials. Furthermore, the company'slicensing activities for its gene delivery technologies are generatingsustainable revenue. Four licensing agreements were signed in 2004, and anadditional licensee has been secured since the year end. In oncology, over 70 patients have now been treated with TroVax, OxfordBioMedica's advanced cancer immunotherapy product, in five clinical trials incolorectal cancer and renal cell carcinoma. Clinical data reported during 2004and on 2 March 2005 from the Phase I/II and Phase II trials confirmed theexcellent safety profile of TroVax, its ability to mount a consistentanti-cancer immune response, and its potential to improve both time to diseaseprogression and survival of patients. The company is entering discussions withthe FDA for the design of randomised trials with TroVax that could form thebasis of a registration application and potential approval in 2008-09. Whilepartnership discussions continue, Oxford BioMedica is adding substantial valueto the product through its clinical development programme. The second clinical product candidate, MetXia for pancreatic cancer, issimilarly progressing in clinical trials. The initial safety stage of the PhaseI rolling into Phase II trial in pancreatic cancer is ongoing and there havebeen no adverse events associated with MetXia. The efficacy stage of the trialis expected to commence in the first half of 2005 and the company anticipatespreliminary efficacy data before the end of the year with final results in 2006. The collaboration with Wyeth on the targeted antibody therapy for cancer hasadvanced successfully in 2004 following Wyeth's decision to exercise its optionon the product at the end of 2003. Wyeth has completed its preclinicalevaluation, process development is underway and clinical trials are underconsideration. In neurotherapy, the therapeutic potential of Oxford BioMedica's LentiVector(R)technology was strengthened in 2004. The company reported preclinical efficacydata in Parkinson's disease, motor neuron disease, spinal muscular atrophy andspinal cord injury. Some of the data were published in leading scientificjournals in 2004, validating the potential of these products and the LentiVectorplatform. Ongoing and new sponsorship from US charitable research organisationsprovided a further endorsement during 2004. ProSavin for Parkinson's disease ison track for clinical trials despite some minor delays in manufacturingscale-up. Oxford BioMedica expects to make its first regulatory submission forthe start of trials with ProSavin in the second half of 2005. The company's LentiVector and proprietary gene delivery technologies have becomea source of sustainable revenue and deal generation. In 2004, the companyimplemented a licensing initiative for its technologies as tools in research,drug discovery and gene therapy. Since the beginning of 2004, Oxford BioMedicahas signed five licensing agreements with leading companies, including Merck &Co and Biogen Idec. These agreements have secured upfront and annual maintenancepayments as well as the potential for milestone and royalty payments in someinstances. Further licensing deals are anticipated. Oncology Oxford BioMedica is developing novel cancer therapies that deliver a combinationof improved efficacy and safety. The company has created three majoropportunities in this area: TroVax, an active immunotherapy; MetXia, apotentiator of cyclophosphamide chemotherapy; and a targeted antibody therapy,partnered with Wyeth. TroVax(R) TroVax is Oxford BioMedica's advanced cancer immunotherapy product. It isdesigned to stimulate an anti-cancer immune response and has potentialapplication in most solid tumour types. TroVax targets the tumour antigen 5T4,which is broadly distributed throughout a wide range of solid tumours. Theproduct consists of a pox virus (MVA) gene transfer system, which delivers thegene for 5T4. MVA is known to induce the breaking of immune tolerance toself-antigens that are expressed from the gene delivery system. Novel cancer immunotherapy products, such as TroVax, could provide new andpowerful weapons in the arsenal of anti-cancer treatments. In 2004, OxfordBioMedica achieved a number of important milestones in its development ofTroVax. Over 70 patients have now been treated in clinical trials with TroVax.The clinical programme could see the total number of patients treated withTroVax increase to over 200 in the next 12 months. There are four Phase II trials ongoing, three in colorectal cancer and one inrenal cell carcinoma. A Phase II trial in breast cancer is also expected tostart later in the year. A major US clinical trials consortium, the SouthwestOncology Group, will conduct the breast cancer trial, at minimal cost to OxfordBioMedica. Recent data, reported on 2 March 2005, from the Phase II trials incolorectal cancer have been highly encouraging, and the company is now planningpivotal trials. The development strategy is designed to generate data frompivotal trials that could support initial product registration for TroVax in theUnited States in 2008-09. In preparation for pivotal trials and potential product registration, themanufacturing process has been upgraded for commercial production of TroVax.Oxford BioMedica signed a contract in 2003 with a major biologicalsmanufacturer, which led to the successful scale-up of manufacture during 2004.The company now holds over 22,000 doses of commercial-grade material. The following sections provide a detailed update of the trials in colorectalcancer, renal cell carcinoma and breast cancer, and also the developmentstrategy for initial product registration of TroVax. TroVax in Colorectal Cancer In March 2004, Oxford BioMedica's scientists presented survival data from thecompleted Phase I/II trial with TroVax as a single agent in second linetreatment of patients with metastatic colorectal cancer at the AmericanAssociation for Cancer Research meeting. Five of the 17 evaluable patientsshowed tumour responses following treatment with TroVax. In addition, a morerecent analysis showed a highly significant correlation between the magnitude ofpatients' immune response to TroVax and time to disease progression. Thistranslated into a correlation with improved overall survival. Standard of care for first line treatment of metastatic colorectal cancer tendsto be the chemotherapy combination of 5-fluorouracil and leucovorin with eitheririnotecan, usually referred to as IFL, or oxaliplatin, denoted as FOLFOX. A newdrug for first line treatment received approval from the FDA in February 2004.The product, AvastinTM (bevacizumab) from Genentech and Roche is approved foruse in combination with 5FU-based chemotherapy regimens, including both IFL andFOLFOX, although a drug warning was issued in August 2004 that links the productto an increased risk of blood clots. Oxford BioMedica started two open label Phase II trials in first line treatmentof metastatic colorectal cancer in 2003. These trials were designed toinvestigate whether concomitant chemotherapy affected patients' immune responsesto TroVax. Enrolment in both trials was completed in September 2004. In theTroVax plus IFL trial, 19 patients have been recruited. The treatment regimencomprises six immunisations of TroVax and up to 12 cycles of the chemotherapycombination. The TroVax plus FOLFOX trial has recruited 17 patients, similarlyreceiving six immunisations of TroVax alongside chemotherapy. The recruitmentobjective of these two trials is to have at least ten evaluable patients in eachsetting. On 1 September 2004, the company reported that the primary endpoints in thesetwo trials were likely to be achieved based on preliminary data from 13 patientswho had reached the interim analysis point, defined as four TroVax immunisationsand more than eight cycles of chemotherapy. Of these patients, 11 (85 per cent)had mounted antibody and/or cellular anti-5T4 immune responses. These encouraging results have been confirmed as the trials have progressed. On2 March 2005, the company reported that the primary endpoints of safety andimmunological responses had been achieved and that the secondary endpoint ofclinical benefit had exceeded expectation. Twenty-five patients have now beenassessed at the interim stage of the trial. There have been no serious adverseevents attributed to TroVax treatment and the number of patients mounting animmune response has risen to 100 per cent, with all 25 patients showing antibodyand/or cellular responses to the tumour antigen. Furthermore, 19 patients have now been assessed for tumour responses (tumourstabilisation and tumour shrinkage), having received at least three TroVaximmunisations and one or more computed tomography scans. Patients entered thetrial with progressive disease, and 18 of 19 patients had a tumour responsefollowing treatment. Thirteen of 19 patients were classified as clinicalresponders, comprising three complete and ten partial responses. To set these results in context, two independent studies of the chemotherapyregimens alone, IFL and FOLFOX, reported clinical response rates in evaluablepatients of 41 and 50 per cent* respectively (Douillard et al., The Lancet 2000,vol 355, pp 1041-1047; de Gramont et al., Journal of Clinical Immunology 2000,vol 18, pp 2938-2947). It should be noted, however, that a precise comparisonwith the TroVax trials is not possible owing to differences in the trialprotocols and patient numbers. Data from the two Phase II trials of TroVax will be presented at the AmericanSociety of Clinical Oncology meeting in Orlando, Florida, USA, in May 2005. Thetrials are on track to report full safety and immunological data as well asfinal tumour response statistics in the second half of 2005. Patient survival,which can be compared to historical controls, will be reported once the mediansurvival has been reached in the two trials. This is anticipated towards the endof 2005. In January 2004, an investigator initiated, open label Phase II trial started,with sponsorship from Cancer Research UK, in colorectal cancer patients who haveoperable liver metastases. Patients receive TroVax immunisations before surgery(neoadjuvant) and after surgery (adjuvant). Recruitment into this 20-patienttrial is over halfway completed. On 2 March 2005, the company provided an update on the trial status. Elevenpatients have received the initial regimen of TroVax immunisations, but two weresubsequently withdrawn for being ineligible for surgery. All eight of theremaining patients, who could be assessed, achieved the primary endpoint ofimmune responses to the 5T4 tumour antigen, and were eligible for further TroVaxdoses. The most recent patient has not progressed far enough through the trialto assess immune responsiveness. TroVax has been safe and well tolerated in allpatients treated to date in this trial. The treatment schedule comprises two immunisations with TroVax before and afterliver surgery and, potentially, a further two vaccinations. The endpoints of thestudy are safety, immunological responses to 5T4 and clinical benefit. Followingsurgery, these patients have a lower tumour burden and longer survivalexpectation than patients in Oxford BioMedica's other Phase II trials incolorectal cancer. This potentially makes them even more responsive toimmunotherapy approaches such as TroVax. Patients are generally not givenchemotherapy following liver surgery and there is a need for safe and effectivetreatments to prevent disease relapse. The preliminary results from this Phase II trial of TroVax in the (neo) adjuvantsetting will be presented on 22 March 2005 at the Keystone Symposia on BasicAspects of Tumour Immunology in Keystone, Colorado, USA. Cancer Research UKplans to publish the full results in an appropriate clinical journal once thetrial is completed. More than 65 patients with colorectal cancer have been treated with TroVax todate in four clinical trials. Across all the trials, the safety profile ofTroVax has been excellent and the majority (98 per cent) of assessable patients(50 patients) have mounted immune responses following treatment with TroVax.This is an exceptionally high response rate in the context of clinical studieswith other cancer vaccines (Mocellin et al., Lancet Oncology 2004, vol 5: pp681-689). TroVax has been investigated in different settings in these trials -first line treatment with chemotherapy, second line treatment and the (neo)adjuvant setting with surgery - and has achieved its primary endpoints in eachtrial. The immunological data emerging from the Phase II trials in colorectal cancersuggest that the magnitude and duration of immune responses may be even greaterin first line treatment with concomitant chemotherapy and in the (neo) adjuvantsetting with surgery than in the Phase I/II studies in second line treatment.When considered together with the high level of tumour responses, there isgrowing evidence that TroVax may have therapeutic potential across all stages ofcolorectal cancer, supporting the notion that the product may reach largemarkets in this disease. TroVax in Renal Cell Carcinoma Oxford BioMedica believes that metastatic renal cell carcinoma (RCC) alsopresents a prime opportunity for the development of TroVax. To date, neitherradiation, chemotherapy, nor hormonal therapy prolongs the survival ofmetastatic RCC patients. Commonly used treatments for patients with metastaticRCC include cytokines such as interferon-alpha, which has limited efficacy, andinterleukin-2, which is associated with severe side effects. About 40 per centof patients with RCC develop metastases after surgery. Analyses of sample tissues from patients with RCC have shown that the 5T4 tumourantigen is present at high levels on approximately 90 per cent of tumours.Hence, RCC is a logical target for a 5T4-targeted immunotherapeutic. The numberof patients with metastatic RCC means that TroVax is likely to qualify forOrphan Drug designation in this indication, which confers various benefits indevelopment and commercialisation. In addition, TroVax may also receive FastTrack designation, which is designed to expedite the review process of drugcandidates that address life threatening diseases where there is an unmetmedical need for new therapeutic approaches. With Fast Track designation, thereis the opportunity for more frequent interactions with the FDA and thepossibility of a Priority Review, which could shorten the standard reviewperiod. Oxford BioMedica initiated a Phase II trial in first line treatment ofmetastatic RCC at the Presbyterian Hospital, Columbia University Medical Centerin New York, New York, USA, in 2004. The FDA approved the company's INDapplication in April 2004 and recruitment is ongoing. The open label trial isdesigned to evaluate TroVax in combination with high dose interleukin-2treatment in approximately 25 patients. The trial is on track to reportpreliminary results on safety and immunological responses in mid-2005. TroVax in Breast Cancer In 2004, the US Southwest Oncology Group (SWOG), a clinical trials consortiumsponsored by the National Cancer Institute (NCI), established plans for a largemulticentre trial with TroVax in late stage (Stage III/IV) breast cancer. ThisPhase II trial, the first with TroVax in breast cancer patients, will beconducted and funded by SWOG. The proposed trial plan, announced in March 2004,is an open label study to recruit 120 patients with Stage III/IV breast cancer.The start of the trial has been delayed by a few months owing to minor revisionsrequested by the NCI. However, SWOG remains fully committed to this Phase IItrial, which will yield valuable clinical data in this sizable yet poorlytreated patient group. Importantly, the trial will be conducted at minimal costto Oxford BioMedica with no loss of commercial rights. TroVax Registration Strategy The company's clinical priority for TroVax in 2005-06 is to commence at leastone pivotal trial of TroVax in the United States. Given the very encouragingclinical data, both colorectal cancer and RCC are under consideration as thelead indication. Oxford BioMedica plans to submit a formal request to the FDA inthe first half of 2005 for a pre-Phase III trial meeting. Following thisregulatory meeting and discussions with its clinical advisors, Oxford BioMedicaexpects to finalise the protocol of the new trials by the middle of the year.There is also the potential to apply for a Special Protocol Assessment (SPA)from the FDA. This ensures that successful results can be used for a clinicalbenefit claim in the registration submission. The company is targeting potentialapproval of TroVax in 2008-09. By advancing TroVax into pivotal trials, Oxford BioMedica hopes to enhancesubstantially the value of the product, and thus improve the terms of potentiallicensing deals. Assuming an appropriate level of efficacy, the approval andlaunch of TroVax in the United States could be achieved through a single pivotaltrial. The initiation of a pivotal trial with an SPA maintains the company'stimelines for potential product registration. Anti-5T4 Targeted Antibody Therapy Oxford BioMedica's 5T4 technology and intellectual property include monoclonalantibodies that bind to the 5T4 antigen. Wyeth, is developing a targetedantibody therapy for the treatment of cancer using a humanised version of OxfordBioMedica's anti-5T4 antibody linked to a cytotoxic molecule, calicheamicin. A major problem with chemotherapy is the damage that the drugs cause to normaltissues. The product from Oxford BioMedica and Wyeth is a 'magic bullet'approach, which is designed to deliver the cytotoxic drug directly andspecifically to tumour cells, sparing healthy cells. Wyeth has pioneeredtargeted antibody therapy through the launch of Mylotarg(R) for acute myeloidleukaemia. A similar strategy is being applied in the collaboration with OxfordBioMedica to develop a targeted therapy that could have application in all solidtumours where the 5T4 antigen is present. The collaboration with Wyeth has the potential to bring US$24 million to thecompany in milestone payments, and significant royalties on product sales. Wyethhas responsibility for and is funding the development of the product. Wyeth confirmed its commitment to the programme at the end of 2003 by exercisingits option to license the rights to the anti-5T4 antibody following successfultechnical evaluation of the product in preclinical studies. This triggered amilestone payment. The product continues to meet Wyeth's high standards forfurther development. During 2004, Wyeth commenced preparations for clinicaldevelopment, including process development, and clinical trials are underconsideration. TroVax-Vet(R) TroVax-Vet is a veterinary version of TroVax that uses a canine or felineversion of the 5T4 gene instead of the human form. Oxford BioMedica isdeveloping TroVax-Vet in collaboration with Intervet, which is a unit of AkzoNobel of Arnhem, the Netherlands, ranked among the top three in the globalanimal health sector. Under the terms of the agreement, Intervet funds allpreclinical and clinical studies and Oxford BioMedica will receive developmentmilestones and royalties on sales. During 2004, Intervet delivered on its objectives in the preclinical developmentof TroVax-Vet for dogs. Studies in healthy animals were completed, demonstratingthat the product is safe, well tolerated and induces immune responses againstthe canine 5T4 antigen. In 2005, Intervet expects to complete GMP manufacture ofthe product and initiate pivotal preclinical safety studies. These data arerequired to support a regulatory submission for clinical field trials. MetXia(R) MetXia is Oxford BioMedica's lead gene-based cancer therapeutic. The productcomprises a highly engineered retrovirus that delivers a specific humancytochrome P450 gene to tumour cells. The enzyme encoded by the P450 geneactivates the commonly used cancer chemotherapy drug, cyclophosphamide (CPA), toa form that destroys cells. MetXia converts the tumour into a 'drug factory',enabling local production of the anti-tumour, cytotoxic derivative of CPA.MetXia is potentially useful in the treatment of all solid tumours and theirmetastases, particularly those where cyclophosphamide has proven efficacy. The initial indication for the development of MetXia is the treatment ofpancreatic cancer through direct administration of both MetXia and CPA to thetumour. Published data from trials with locally administered CPA andencapsulated cells carrying the P450 enzyme have validated the concept oftreating pancreatic cancer with this approach. However, the use of encapsulatedcells is likely to be limited by manufacturing constraints. MetXia uses OxfordBioMedica's gene therapy technology to deliver the P450 gene efficiently topancreatic tumour cells. In April 2004, Oxford BioMedica reported that recruitment started in a UK PhaseI trial rolling into a Phase II trial of MetXia in patients with pancreaticcancer. Recruitment has been slower than expected in the initial Phase I(safety) stage of the trial owing to the restrictive criteria for patientenrolment. The objective is to recruit six patients in the safety stage and afurther 21 patients in the Phase II (efficacy) stage. Oxford BioMedica is indiscussions with the UK regulatory authorities to broaden the criteria forinclusion and, hence, accelerate patient recruitment. Additional clinicalcentres are also being opened, which should ensure that the efficacy stage ofthe trial remains on track. The company expects to report safety data in thefirst half of 2005 and preliminary efficacy data before the end of 2005 withfinal results in 2006. The company intends to utilise data from the current trial in its discussionswith the regulatory authorities to determine the most expeditious route toobtain approval of MetXia. The company has preliminary plans for a pivotal trialin pancreatic cancer to start in 2006-07, subject to successful completion ofthe current trial. In September 2004, the company strengthened its intellectualproperty for MetXia by extending its license agreement with MassachusettsGeneral Hospital, Boston University and Dana-Faber Cancer Institute for the P450gene to include pancreatic cancer. As the programme progresses, Oxford BioMedica is seeking suitable partners forthe ongoing development and commercialisation of MetXia. MetXia's mechanism may be relevant in a number of malignant tumours, includingbreast cancer, prostate cancer and glioma (brain cancer). The two successfulproof of principle trials, completed in 2003, were primarily in late stagebreast cancer patients. Oxford BioMedica is considering breast cancer and othercancer types for further trials with MetXia, which could be pursued with apartner. Neurotherapy Oxford BioMedica is developing gene-based products for a range of neurologicalconditions. These include programmes targeting neurodegenerative disorders suchas Parkinson's disease and motor neuron disease; neuro-ophthalmologic conditionssuch as age-related macular degeneration and diabetic retinopathy; and alsonerve regeneration for spinal cord and related injuries. All of the Company's neurotherapy products are based on the proprietaryLentiVector delivery technology. Oxford BioMedica's LentiVector technology isone of the most powerful systems for safe and effective delivery of genes to thebrain, eyes and nervous system. The company has five LentiVector-basedneurotherapy products in advanced preclinical development. A regulatorysubmission for clinical trials is being prepared for the lead product forParkinson's disease, and preclinical optimisation and clinical planning areongoing for the other programmes. Oxford BioMedica has set an objective ofinitiating clinical trials with at least one product per year from theneurotherapy pipeline starting in 2006. ProSavin(R) The company's lead neurotherapy product, ProSavin, is an innovative approach tothe treatment of Parkinson's disease. In Parkinson's disease, nerve cells in thepart of the brain that produces dopamine, the substantia nigra, decrease innumber due to slow progressive cell death. This causes a decrease in the amountof available dopamine, the modulator of movement control. ProSavin uses aLentiVector system to deliver the genes required for dopamine synthesis toneurons in the striatum of the brain, thus creating a new 'dopamine factory'. Oxford BioMedica announced in early 2004 that clinical trials with ProSavin wereexpected to start in 2005-06. This was due to an extension of productoptimisation that enabled higher dopamine levels to be produced per unit ofdrug. The company has also faced challenges in process development, which havenow been addressed with the achievement of substantially higher yields in themanufacture of clinical material. The company is aiming to complete itsregulatory submission for clinical trials in the second half of 2005.Importantly, the infrastructure put in place by the company to take ProSavininto clinical trials can be used for all of the LentiVector-based products inthe portfolio. Oxford BioMedica presented preclinical efficacy data with ProSavin in anindustry standard in vivo model of Parkinson's disease at the American Societyfor Gene Therapy meeting in June 2004. Further data were presented at theprestigious Society for Neuroscience meeting in October 2004. In these studies,treatment with ProSavin resulted in almost complete recovery of movementbehaviour, an extremely significant result compared to other treatments forParkinson's disease reported in the literature. The company is conducting further preclinical toxicity and efficacy studies withProSavin, which will support the regulatory submission. Data from these studiesare expected later in 2005. The planned Phase I/II trial, to be conducted at theJohn Radcliffe Hospital in Oxford, UK, in patients with late stage Parkinson'sdisease, is expected to commence in the first half of 2006. Initial data fromthe first patients are anticipated by the end of 2006. RetinoStat(R) RetinoStat is Oxford BioMedica's novel gene-based treatment for wet age-relatedmacular degeneration and diabetic retinopathy. The product uses a LentiVectorsystem to deliver genes to the retina, which block the formation of new bloodvessels that cause retinopathy. The company is evaluating two versions ofRetinoStat with the anti-angiogenesis genes, endostatin and angiostatin,licensed from EntreMed of Rockville, Maryland, USA. These two biologicalproducts have been investigated extensively in various trials. The publisheddata suggest that endostatin and angiostatin have very low toxicity, are welltolerated long term, and can shut down aberrant blood vessel growth. Macular degeneration is a retinal degenerative disease that causes progressiveloss of central vision. The risk of developing macular degeneration increaseswith age. Macular degeneration is the most common cause of vision loss inindividuals over the age of 55. Wet age-related macular degeneration (AMD)accounts for about ten per cent of cases, but is responsible for 90 per cent ofsevere vision loss. During 2004, Oxford BioMedica demonstrated preclinical efficacy with twoconfigurations of RetinoStat in industry standard in vivo models of wet AMD. Thestudies were conducted at the Institute of Ophthalmology in London, UK, and atthe Johns Hopkins Hospital in Baltimore, USA, with financial support from the UScharity, Foundation Fighting Blindness. In 2005, the company expects to complete pivotal preclinical efficacy and doseranging studies, and optimisation of the RetinoStat configuration for clinicaltrials. The results from these studies will be published and presented atrelevant conferences, including the prestigious American Association forResearch in Vision and Ophthalmology meeting in May in Fort Lauderdale, Florida,USA. The company's objective is to initiate clinical trials with RetinoStat inwet AMD in 2006-07. MoNuDin(R) Through modifications to the LentiVector system, Oxford BioMedica has developeda technology for delivering genes to motor neurons indirectly by injecting theproduct into muscle groups. Injection into a particular muscle efficientlytargets the motor neurons that control that muscle. MoNuDin is based on thismodified LentiVector technology, carrying the gene for the neuroprotectiveprotein, vascular endothelial growth factor. The product is being investigatedfor the treatment of amyotrophic lateral sclerosis (ALS), the most common formof motor neuron disease. ALS, often referred to as Lou Gehrig's disease, is a progressiveneurodegenerative disease that affects nerve cells in the brain and the spinalcord. Motor neurons reach from the brain to the spinal cord and from the spinalcord to the muscles throughout the body. The progressive degeneration of themotor neurons in ALS eventually leads to their death. When the motor neuronsdie, the ability of the brain to initiate and control muscle movement is lost.With voluntary muscle action progressively affected, patients in the laterstages of the disease may become totally paralysed. Preclinical in vivo efficacy data with MoNuDin in an industry standard model ofALS were published in Nature in May 2004, and were also presented at the Societyfor Neuroscience meeting in October 2004. The studies showed that both the onsetand progression of disease were slowed and life expectancy was extended by 30per cent with MoNuDin treatment. The results suggest that MoNuDin is one of themost effective potential therapies in the field to date. The MoNuDin programmehas attracted funding from the US ALS Association via the company'scollaboration with the leading ALS expert, Dr. Nicholas Boulis at the ClevelandClinic Foundation in Cleveland, Ohio, USA. The company is currently in discussion with the UK Motor Neurone DiseaseAssociation, with regard to additional financial support for the programme. Thisnational organisation, dedicated to the support of patients with the disease,may provide funding for initial clinical trials of MoNuDin. Oxford BioMedicaplans to conduct additional preclinical toxicology and efficacy studies during2005, designed to support a regulatory submission for the start of clinicaltrials with MoNuDin. SMN-1G In addition to the ALS programme, Oxford BioMedica is developing a gene-basedtherapeutic to treat another motor neuron disease, spinal muscular atrophy(SMA). SMA is one of the most common inherited causes of death in childhood andis, as yet, incurable. It is caused by a mutation in the SMN1 gene that producesa protein in the body called survival motor neuron (SMN) protein. Deficiency ofthis protein has a severe affect on motor neurons and leads to muscle deficiencythroughout the body. Oxford BioMedica's SMN-1G product is designed to restoreSMN protein levels by delivering the corrected version of the SMN1 gene, using amodified LentiVector system to reach motor neurons. In December 2004, preclinical efficacy results with SMN-1G were published in theJournal of Clinical Investigation. The preclinical studies were supported byFightSMA, a US charitable organisation, in collaboration with Dr. Arthur Burghesof The Ohio State University, a leading authority on SMA. In these studies, micewith a defective SMN gene were given intramuscular injections with either SMN-1Gor a control. The mice treated with SMN-1G showed a statistically significantimprovement in survival, together with improved motor neuron survival. Thecompany aims to conduct further preclinical optimisation of SMN-1G during 2005and preliminary planning for clinical development. Innurex(R) Innurex is Oxford BioMedica's gene-based product for nerve regeneration for thetreatment of spinal cord and related injuries. Again, based on the LentiVectortechnology, the product carries the gene for a subtype of the retinoic acidreceptor (RARBeta2) that induces nerve cells to regrow by a process known as'sprouting'. Within the field of neurobiology nerve repair has been a long sought goal forthe treatment of nerve damage and spinal injury. The objective is to developtreatments that induce nerve cells to regrow and bridge sites of injury, therebyreconnecting the nerve fibres and restoring function. During 2004, Oxford BioMedica made demonstrable progress in its Innurexprogramme. Key preclinical data were presented in June 2004 at the AmericanSociety for Gene Therapy meeting, and in October at the Society for Neurosciencemeeting. In these presentations, Oxford BioMedica scientists showed that Innurexrestores function to damaged limbs in a preclinical model of avulsion or stretchinjury. These results indicate that Innurex may benefit patients with nervedamage resulting from severe pull or stretch injury, a common consequence ofsporting and motor accidents. Further preclinical studies and clinical planningare underway and more data are expected in 2005. The company's collaborator on Innurex, King's College London, was awarded agrant of US$150,000 for the programme in April 2004 from the Christopher ReeveParalysis Foundation. This grant supports studies to explore the use of Innurexin spinal cord injury. Research Programmes The vast majority of Oxford BioMedica's resources go to support the developmentof its seven core products. However, the company has been opportunistic inpursuing projects that might deliver considerable value for only modestinvestment or where external agencies are prepared to meet the costs of the newopportunity. In March 2004, the UK Department of Health awarded the company a grant of £0.5million to develop novel treatments for single gene disorders. The focus of thegrant is on the blood clotting disorder, haemophilia A, which is caused by adefective Factor VIII gene. Oxford BioMedica has developed a product, namedRequinate(R), which carries a corrected version of the Factor VIII gene in aLentiVector system. The Department of Health's contribution will enable thecompany to progress the programme without compromising progress of the cancerand neurotherapy products. Preclinical studies with Requinate have started, andinitial data are encouraging. In August 2004, Oxford BioMedica scientists presented data at the AmericanSociety for Neurochemistry conference showing that a LentiVector-based productdelivering short interfering RNA (siRNA) can dramatically slow down thedevelopment of symptoms and increase life expectancy in a preclinical model ofan inherited neurodegenerative disease. These results were published in thejournal, Nature Medicine, in March 2005. While the company believes that thisparticular project would not lead to a commercial product, it does provide proofof principle for the use of the LentiVector system in the expanding field of RNAinterference (RNAi), with applications in disease modelling, drug discovery andRNAi-based therapies. The delivery of siRNA with the LentiVector technology ispotentially applicable in any disease where it is important to suppress geneactivity, including, for example, cancer and AIDS. Oxford BioMedica's research collaboration with ARIUS Research of Toronto,Canada, to discover and characterise novel cancer targets, reached a keymilestone in October 2004. The companies also agreed to move to the next phaseof their collaboration. Under the agreement, tumour antigen targets andantibodies can be out-licensed to commercial partners or developed by one orboth of the companies. In the initial phase of the collaboration, which began inJuly 2002, 50 functional anti-cancer antibodies from the ARIUS library were usedby Oxford BioMedica to look for novel targets using proprietary technologiesfrom its gene discovery and immunotherapy programmes. The milestone achievementrelated to the successful identification of three targets that offeropportunities in a range of cancer diseases. The extended collaboration willfocus on one novel target that is over-expressed in gastrointestinal and othercancers and is related to cancer metastasis. Technology Licensing In 2004, Oxford BioMedica established an active licensing programme for itssuite of gene delivery technologies to facilitate third party access and toleverage the broad potential of these systems. This strategy is generatingsustainable revenue. Four licensing agreements were secured in 2004, and afurther agreement has been signed since the year end. In addition to its application in gene-based therapeutic products, OxfordBioMedica's LentiVector technology is an effective tool for genomics-basedtarget validation, drug screening, production systems and the creation oftransgenic animals. On 5 February 2004, the company signed an agreement withMerck & Co of Whitehouse Station, New Jersey, USA, granting non-exclusiveworldwide rights to the LentiVector technology for research activities. Similarlicensing deals were signed with Biogen Idec of Cambridge, Massachusetts, USA,on 23 December 2004; and with another leading biopharmaceutical company on 1February 2005. Under the terms of these agreements, Oxford BioMedica receivesupfront licence payments and annual maintenance fees. On 5 July 2004, a LentiVector license agreement was signed with Viragen ofPlantation, Florida, USA, for use of the technology in the development of aviantransgenics for efficient and economical manufacturing of therapeutic proteinsin chicken eggs. The Viragen agreement includes upfront and annual licencepayments in addition to milestone payments on the achievement of technical goalsand royalties on commercialisation. These agreements confirm the broad utility of the LentiVector technology. OxfordBioMedica expects the technology to become the system of choice for safe andeffective gene delivery in drug discovery and transgenics. Further LentiVectorlicensing deals are anticipated in 2005 and there are currently five term sheetsunder discussion. In 2004, Oxford BioMedica granted the first licence to its retroviral ex vivogene delivery technology. The agreement with MolMed of Milan, Italy, wasannounced on 13 December 2004. The agreement provides MolMed with rights toutilise this technology in the development of MolMed's product pipeline. OxfordBioMedica received an upfront licence fee and is entitled to annual maintenancepayments, together with potential clinical and regulatory milestone payments andproduct royalties. The retroviral ex vivo gene delivery technology combinesOxford BioMedica's technology together with some of the gene therapy technologyacquired from Chiron Corporation in June 2004. Intellectual Property Oxford BioMedica has an extensive estate of approximately 80 patent families,which protect its pipeline of development candidates and suite of gene deliverytechnologies. In 2004, two new patents were filed, together with seven UScontinuation applications, which consolidate the portfolio. Seven patents weregranted in the period. Oxford BioMedica has a comprehensive portfolio of US and European patentscovering the LentiVector technology, supporting the LentiVector-based pipelineand its technology licensing activities. The patents include broad compositionof matter claims and methods of production claims for lentiviral vector genedelivery systems of both human and non-human origin. The Oxford BioMedica teamwas the first to construct lentiviral vectors that contain no viral genes atall, and which comprise the minimum number of viral components in the viralparticles. It is this minimisation of the vectors that is the subject of thesepatents. This work was done using vectors based on HIV and Equine InfectiousAnaemia Virus (EIAV), a horse virus that is not linked to any disease in humans. In June 2004, Oxford BioMedica acquired a number of patent families from ChironCorporation's gene therapy patent portfolio that complement the company'sexisting intellectual property. Separately, Chiron made an equity investment inOxford BioMedica and holds about 0.1 per cent of the company's shares. Corporate Developments Since the year end, on 19 January 2005, Oxford BioMedica announced that it hadreceived an approach from a third party regarding a potential merger. The Boardof Oxford BioMedica announced on 7 February that the discussions that followedthis unsolicited approach had terminated. On 3 March 2005, Nick Woolf was promoted to the Board as an executive director.He will maintain his title of Senior Vice President for Corporate Strategy. Hisprimary responsibilities include corporate finance, M&A evaluation and corporatecommunications as well as an important role, jointly with Peter Nolan, inbusiness development and deal negotiation. Conclusion Since its inception in 1996, Oxford BioMedica has been dedicated to research anddevelopment of novel gene-based medicines, which are both safe and effective forthe treatment of unmet medical needs. The progress made during 2004 in productdevelopment has taken the company to a new level of maturity. Results from theTroVax clinical programme continue to show highly encouraging evidence of safetyand efficacy. The company has also made progress towards the start of clinicaltrials of its first LentiVector-based product, ProSavin for Parkinson's disease. During 2005, the company expects to reach further important milestones in itslead programmes, which will bring these products closer to commercialisation andexpand its licensing and collaboration opportunities. For its most advanced product, TroVax, Oxford BioMedica expects to reportfurther Phase II trial results, and is planning pivotal trials to supportpotential product registration. The second clinical candidate, MetXia, isexpected to deliver safety and preliminary efficacy results from the Phase Itrial rolling into a Phase II trial in pancreatic cancer during 2005. For the LentiVector-based products, the company expects to complete theregulatory submissions for the start of clinical trials with ProSavin; and toadvance the pipeline such that one additional product candidate could enterclinical development each year. In terms of collaborations and licensing,discussions continue with potential partners for the lead products and furtherlicensing agreements are expected for the LentiVector technology. The company's corporate strategy remains focused on the development of its coreoncology and neurotherapy portfolio of novel gene-based medicines, whileenhancing value and reducing risk through collaborations and licensing. Onbehalf of the Board, we want to thank our shareholders, partners and dedicatedstaff for their ongoing support and commitment. Dr Peter Johnson Professor Alan KingsmanChairman Chief executive officer Financial Review Oxford BioMedica reported a reduction in its loss before tax in 2004, which wasbetter than anticipated, and within budget. The lower loss reflects higherrevenue from technology licensing and continued tight control over spending. Therestructuring of US operations and rationalisation of discovery research,announced in 2003, was completed in early 2004. Expenditure has been focused onthe lead development programmes in oncology and neurotherapy, particularly theexpanded clinical trials programme for TroVax and the scale-up of manufacturefor both TroVax and ProSavin. The group headcount increased to 66 employees at31 December 2004 from 61 at the end of 2003. This increase relates, primarily,to additional operational requirements in manufacturing and clinicaldevelopment. Fees from four technology licensing deals, that were signed during the year withMerck & Co, Viragen, MolMed and Biogen Idec respectively, bolstered revenue in2004. These agreements are expected to generate recurring revenue from annualmaintenance payments and, in the case of Viragen and MolMed, there is thepotential for additional income and royalties on commercialisation. Since theyear end, on 1 February 2005, a further research license with a leadingbiopharmaceutical company was secured for the LentiVector technology. The cash outflow for 2004 was essentially static from the previous year at £9.7million (2003: £9.6 million), and cash and short term investments at 31 December2004 were £22.4 million compared to £31.8 million at the end of 2003. Thecompany anticipates that current cash resources are sufficient to support thedevelopment activities into 2007, before taking account of additional incomefrom potential new collaborations and licensing agreements. Revenue The company reported an increase in revenue of 34 per cent to £0.5 million forthe year ended 31 December 2004 (2003: £0.4 million). Although the absolutefigure is not substantial relative to the company's cost base, it reflects agrowing and sustainable income stream from technology licensing. Reportedrevenue included the initial payment under the agreement with Viragen, and aproportion of the first-year payments from Merck & Co, MolMed and Biogen Idec. Operating Expenses and Income Operating expenses in 2004 were essentially unchanged at £13.5 million (2003:£13.7 million). As in previous years, operating expenses were largely relatedto research and development, where the mix continues to shift towards late stagepreclinical and clinical development. Research and development expenses werelower at £9.2 million (2003: £10.8 million). UK research and development costswere £0.4 million higher than last year, due to increased investment in processdevelopment, but as a result of restructuring savings, US research anddevelopment costs were £2.0 million lower. Administration costs in 2004,excluding exceptional expenses, were £2.8 million (2003: £2.9 million). Included in operating expenses was an exceptional charge of £1.6 million (2003:nil). This was related to restructuring the US operations, comprising headcountreduction and relocation to smaller premises in San Diego. The reorganisationwas completed in early 2004 and has resulted in an estimated annual cost savingin excess of £1 million. The cash outflow attributable to the exceptional itemin 2004, net of the proceeds of sale of fixed assets, was £0.4 million. Operating income from grants in 2004 was lower than the previous year at £0.4million. Grant income of £0.7 million in 2003 included arrears from 2002 for twogrant programmes. Operating Results Before the exceptional item, the operating loss in 2004 narrowed to £11.1million (2003: £12.7 million). After the exceptional item, the operating losswas the same as the previous year at £12.7 million. Interest Net interest receivable was £1.2 million in 2004 (2003: £0.7 million). Theincrease was a result of higher average cash and short term investment balancesduring the year, together with better rates of interest. The average return oncash balances throughout the year increased to 4.4 per cent in 2004 from 3.6 percent in 2003. Results Before Tax The loss before tax in 2004 narrowed to £11.5 million (2003: £11.9 million).This position was consistent with the increased technology licensing revenue,the restructuring savings and the focus of expenditure on the lead developmentprogrammes during 2004. Taxation Taxation for 2004 amounted to a credit of £0.9 million. The figure comprises,principally, the UK research and development tax credit, which was £1.0 millionin 2004, less an adjustment to previous years' claims of £0.1 million (2003 taxcredit: £1.2 million). This credit is an incentive designed to support thegroup's investment in product and technology development. Liquidity and Capital Resources Cash and short term investments at 31 December 2004 were £22.4 million (2003:£31.8 million). The net cash outflow before management of liquid resources andfinancing in 2004 was essentially static from the previous year at £9.7 million(2003: £9.6 million). The fixed asset base at the end of 2004 was lower at £1.3 million (2003: £2.5million), owing largely to the disposal of laboratory equipment and write-downof other assets at the US facility as part of the restructuring. Debtorsincreased to £3.3 million (2003: £2.4 million), of which £1.7 million (2003:£1.2 million) was research and development tax credit. Creditors of £1.7 million(2003: £1.5 million) comprised principally accruals and deferred income. Issue of Shares A total of 1.8 million shares were issued in 2004, raising £0.3 million. 1.1million shares were issued on the exercise of share options, and 0.7 millionshares were issued in connection with the acquisition of patent rights. Financial Outlook The company's financial position remains strong with year end cash and shortterm investments of £22.4 million. Internal financial projections, before takingaccount of revenue from new product licensing agreements, indicate that bymaintaining tight control on expenditure, current cash resources should besufficient until 2007. Andrew WoodChief financial officer Consolidated Profit and Loss Account for the year ended 31 December 2004 Notes 2004 2003 £'000 £'000Turnover 2 502 374 Research and development costs (9,190) (10,773) Administrative expenses (2,760) (2,922) Exceptional administrative expenses 3 (1,568) -Total administrative expenses (4,328) (2,922)Operating expenses (13,518) (13,695)Other operating income: government and other grants 364 669receivableNet operating expenses (13,154) (13,026) Loss before interest and exceptional item (11,084) (12,652) Exceptional item (1,568) -Operating loss (12,652) (12,652)Interest and similar items 1,158 711Loss on ordinary activities before taxation 2 (11,494) (11,941)Tax credit on loss on ordinary activities 4 884 1,203Loss for the year (10,610) (10,738)Basic loss and diluted loss per ordinary share 5 (2.9p) (3.9p) The results for the years above are derived entirely from continuing operations. There is no difference between the loss on ordinary activities before taxationand the loss for the years stated above, and their historical cost equivalents. Statement of Group Total Recognised Gains and Losses Note 2004 2003 £'000 £'000Loss for the financial year (10,610) (10,738) Currency translation differences on foreign currency 10 (47) (179)net investmentsTotal recognised losses for the year (10,657) (10,917) Consolidated Balance Sheet at 31 December 2004 Notes 2004 2003 £'000 £'000Fixed assetsIntangible assets 86 135Tangible assets 6 1,237 2,331Investments - 26 1,323 2,492Current assetsDebtors 7 3,303 2,386Investments 22,377 31,700Cash at bank and in hand 40 136 25,720 34,222Creditors: amounts falling due 8 (1,741) (1,501)within one yearNet current assets/(liabilities) 23,979 32,721Total assets less current 25,302 35,213liabilitiesRelated Shares:
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