6th Mar 2007 07:01
Oxford Biomedica PLC06 March 2007 For Immediate Release 6 MARCH 2007 OXFORD BIOMEDICA PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 Oxford, UK - 6 March 2007: Oxford BioMedica (LSE: OXB), the leading gene therapycompany, today announces its preliminary results for the year ended 31 December2006. Operational highlights: TroVax(R) (cancer) • Licensing discussions at advanced stage • International Phase III TRIST trial for renal cancer in progress • FDA Special Protocol Assessment for Phase III TRIST trial • Positive recommendation for orphan drug designation in EU for renal cancer • Encouraging results from Phase II trials in renal, colorectal and prostate cancer • UK clinical network committed to Phase III trial in colorectal cancer MetXia(R) (cancer) • Three dose levels of cyclophosphamide alongside MetXia successfully evaluated in second stage of Phase II trial in pancreatic cancer Targeted Antibody Therapy/CME-548 (cancer) • Wyeth completed key preclinical studies ProSavin(R) (Parkinson's disease) • ProSavin outperformed standard treatment in preclinical studies • Manufacturing of clinical material initiated in GMP facility • Regulatory process for start of clinical trials underway RetinoStat(R) (retinopathy) • Preclinical results with optimised clinical candidate confirmed efficacy • Preparations for clinical trials initiated StarGen(TM) (Stargardt's disease) • Preclinical programme initiated in collaboration with the Foundation Fighting Blindness Technology licensing • LentiVector(R) technology licensing agreement with GlaxoSmithKline Financial highlights (audited financial results): • Revenue of £0.8 million (2005: £0.8 million) • Research and development costs of £19.5 million (2005: £9.3 million) • Loss for the year of £17.6 million: (2005: £9.1 million) • Net cash used in operating activities of £15.7 million (2005: £7.3 million) • Year end cash, cash equivalents and current asset investments of £28.5 million (2005: £43.8 million) Commenting on the annual results, Oxford BioMedica's Chief Executive, ProfessorAlan Kingsman said: "2006 has been a landmark year for Oxford BioMedica withTroVax entering Phase III development that, if successful, should lead toproduct launch in 2009 for the treatment of renal cancer. We made excellentprogress with our lead neurotherapy programmes as well as expanding ourtechnology licensing activities. Furthermore, following extensive commercialdiscussions with potential partners for TroVax we are now negotiating finalcontractual terms and, subject to agreement on these terms and final approvals,we hope to conclude a licensing agreement in the near future." Analyst meeting:An analyst briefing will be held at 10:00 am today at the offices of BuchananCommunications, 45 Moorfields, London EC2Y 9AE. Web cast:Simultaneously to the analyst briefing at 10.00 am, there will be a live audioweb cast of the results presentation. To connect to the web cast facility,please go to the Company's website: http://www.oxfordbiomedica.co.uk/approximately 10 minutes (09:50 am) before the start of the briefing. This willalso be available for replay shortly after the presentation. -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 CommunicationsScientific/Trade Press Enquiries: Gemma Price/ Holly Griffiths/ Katja Stout Tel: +44 (0)20 7268 3002 Northbank 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 oncology andneurotherapy. The Company was established in 1995 as a spin out from OxfordUniversity, 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 two clinical candidates and a preclinical targeted antibody therapy,which is being developed in collaboration with Wyeth. The Company has startedPhase III development of its lead cancer immunotherapy product, TroVax, in renalcancer and has an ongoing Phase II programme in various cancer settingsincluding renal, colorectal and prostate cancer. In neurotherapy, the Company'slead product, ProSavin, is expected to enter clinical trials in Parkinson'sdisease in 2007. The preclinical pipeline includes gene-based products forvision loss, motor neuron disease and nerve repair. The Company is underpinned by over 80 patent families, which represent one ofthe broadest patent estates in the field. The Company has a staff of 72 splitbetween its main facilities in Oxford and its wholly owned subsidiary, BioMedicaInc, in San Diego, California. Oxford BioMedica has corporate collaborationswith Wyeth, Intervet, Sigma-Aldrich, Viragen, MolMed and VIRxSYS; and haslicensed technology to a number of companies including Merck & Co, Biogen Idec,GlaxoSmithKline and Pfizer. Further information is available at www.oxfordbiomedica.co.uk CHAIRMAN'S REPORT I am pleased to report another year of excellent progress for Oxford BioMedica.We have advanced both our development and our commercialisation activities. In2006, we achieved a key development milestone by commencing a Phase III clinicaltrial with TroVax, our lead cancer immunotherapy product, and made good progresstowards the objective of starting clinical trials of ProSavin, our product forParkinson's disease. Our key commercial focus in 2006 was to secure a commercialpartner for TroVax. We have progressed to an advanced stage of negotiations withpotential partners and remain committed to achieving this goal. Also in 2006,the Company celebrated its ten year anniversary. I am extremely proud that wehave established one of the world's leading gene therapy companies with a broadpipeline and suite of technologies in that time. We remain committed to ourcorporate mission to improve patient lives by bringing safe and effectivegene-based treatments to the market and, in doing so, to create long term valuefor shareholders. Oncology Overview The need for new cancer therapies has never been greater and the pharmaceuticalindustry has recognised that vaccines could play a significant role asadditional treatment options for patients. We believe that TroVax has thepotential to be one of the first of a new generation of cancer vaccines, andthat it could provide benefit in a number of different cancers. In 2006, wereported further positive data from the Phase II programme of TroVax, includingfinal data from the colorectal cancer trials and interim data from trials inpatients with renal and prostate cancer. Over 180 patients have now been treatedwith TroVax, and the product has an excellent safety profile with evidence ofefficacy in multiple cancer settings. Starting the Phase III TRIST trial ofTroVax in renal cancer in November 2006 was a major milestone for the Company.We are very encouraged to have support from the FDA, which earlier in the yearagreed a Special Protocol Assessment for the trial. This provides a clear pathto approval and launch of TroVax in the USA if the trial is successful. Weexpect further data from the TroVax clinical programme during 2007, includingthe first review by the Data Safety Monitoring Board of TRIST. Our commercialnegotiations for TroVax are well advanced and, subject to final agreement, weexpect to conclude a global licensing deal with a major pharmaceutical company. Our second clinical candidate, MetXia, has progressed in clinical development,but more slowly than anticipated due to the aggressiveness of the disease and,hence, poor patient recruitment. A Phase II trial of MetXia as a localisedtherapy alongside chemotherapy in patients with operable pancreatic cancer isongoing. The data continue to look encouraging and we are taking steps toaccelerate patient recruitment, whilst considering our commercial options forthe programme. Also in oncology, during 2006, we were delighted that our partnerWyeth announced that it is continuing its preclinical evaluation of ourcollaborative product candidate, CME-548. The commencement of clinicaldevelopment will trigger a milestone payment under our agreement. As our TroVax development programme matures, we are considering strategicopportunities to broaden our oncology portfolio and exploit our expertise incancer immunotherapy and biological products. Neurotherapy Overview The development of novel neurobiological products is one of the fastest growingsectors in the pharmaceutical industry. Our neurotherapy pipeline, which isbased on the Company's core LentiVector gene delivery technology, continues toattract interest from industry and support from charitable and patientorganisations. Our products are addressing debilitating diseases with unmetmedical need. With an aging population, neurodegenerative diseases are a growingburden to the healthcare system. A recent US study raised concerns about thelack of long term effective treatments for Parkinson's disease, which is costingsociety US$27 billion a year in medical bills and lost wages. In 2006, we made good progress towards the goal of starting clinical trials ofour novel gene therapy product for Parkinson's disease, ProSavin. The process ofscaling-up the manufacture and transferring this to a facility capable ofproducing clinical-grade material was a technical challenge. The product isentirely novel and therefore required the development of a completely newmanufacturing process. As a result we had to overcome some unforeseen hurdlesalong the way. However, these issues have now been addressed, the manufacturingtechnology has been successfully transferred to a contract manufacturer andinitial regulatory meetings have been held. Final toxicology and dosing studiesremain to be completed and we expect to make formal regulatory submissions forthe first clinical trial of ProSavin in 2007. We have also made progress with our other neurotherapy programmes, including thecompletion of further preclinical studies to support the start of human trialswith both RetinoStat for vision loss and MoNuDin for motor neuron disease.Furthermore, we are currently in discussions with patient groups and charitiesto secure funding to support the ongoing development of our drug candidate forspinal muscular atrophy, SMN-1G. During 2006, we expanded our neurotherapy pipeline by formally commencingpreclinical development of a LentiVector-based therapy to treat an inheritedocular condition, Stargardt's disease. A leading US blindness charity, theFoundation Fighting Blindness, the National Neurovision Research Institute and aconsortium of investors are funding the development of this product, namedStarGen. Our strategy is to expand our pipeline further by following a similarapproach for other inherited ocular diseases. These diseases tend to havelimited prevalence but represent an unmet medical need for safe and effectivetherapies. As the timelines for development of these therapies would berelatively short, the commercial opportunity could be considerable. We have beenencouraged by the active support of dedicated charities in these disease areas,which enables us to share the risk of product development whilst maintainingcommercial flexibility. Licensing and Collaborations Overview Our LentiVector technology is becoming the gold standard gene delivery tool inpharmaceutical research as evidenced by an increasing number of users ofLentiVector-based reagents through our alliance partner, Sigma-Aldrich, andthrough direct licensees of the technology. Sigma-Aldrich has launched a suiteof reagents based on our technology, and is planning further launches in 2007.Oxford BioMedica receives royalties on Sigma-Aldrich's global sales of thesereagents. In 2006, GlaxoSmithKline joined other major pharmaceutical andbiotechnology companies by licensing our LentiVector technology for research usein a joint agreement with Oxford BioMedica and Sigma-Aldrich. Also during theyear, another of our licensees expanded its agreement to a worldwide perpetuallicence. Financial Overview Our financial results for 2006 reflect increased investment in clinicaldevelopment, most notably relating to TroVax. Net cash used in operatingactivities during 2006 rose to £15.7 million (2005: £7.3 million). Revenue,which is primarily annual fees for technology licensing, was unchanged at £0.8million. The start of the Phase III TRIST trial of TroVax contributed to anincrease of 109% in research and development costs for 2006 to £19.5 million(2005: £9.3 million). We closed the year with a net balance of cash, cashequivalents and short term deposits of £28.5 million (2005: £43.8 million). Ourcurrent resources are sufficient to support operations, including the TRISTtrial, until mid-2008 and we do not anticipate the need to raise additionalfunds ahead of achieving our major commercial objective of a globalcollaboration for TroVax. Board and People Our total staff headcount has remained relatively stable during 2006 atapproximately 72 full-time employees. During the year, there were two changes tothe Board. Dr Michael McDonald, who joined Oxford BioMedica in 2005 as ChiefMedical Officer, was appointed to the Board as an Executive Director in February2006. Mike has considerable experience in clinical development and regulatoryaffairs gained over 20 years in the pharmaceutical and biotechnology industry,and I welcome him to the Board. Raj Uppal, a Non-Executive Director, resignedfrom the Board in March 2006 to pursue other interests. I would like to thankRaj for his valuable contribution to Oxford BioMedica. He has been an excellentsource of advice over the years, having joined the Board in February 2001. Areplacement Non-Executive Director is being sought. Outlook As we move into our next decade, I am more confident than ever that we have theelements in place to become a successful biopharmaceutical company. We have setclear, near-term development and commercial objectives for our lead programmes.As we achieve these key milestones, we expect to accelerate some of ourearly-stage product candidates and to expand the pipeline with new developmentopportunities that make the best use of our strengths and expertise. We lookforward to delivering on these goals during 2007. I would also like to recognise the support and commitment shown to OxfordBioMedica by our partners, licensees and shareholders, and most importantly, theskills, knowledge and dedication of our staff, which are critical to the successof Oxford BioMedica. I am, as ever, grateful to them for their efforts, whichhave helped to shape our progress. Dr Peter JohnsonCHAIRMAN OPERATING REVIEW ONCOLOGY The oncology pipeline at Oxford BioMedica exploits the expertise of the Companyand its partners in tumour biology, immunology and product development. Theoncology pipeline comprises three major product candidates as well as a productfor treating cancer in companion animals. These novel cancer therapies aredesigned to deliver a combination of improved efficacy and safety over existingtreatments. In 2006, Oxford BioMedica achieved key milestones in the development of TroVax,including the start of the Phase III TRIST trial in renal cancer, which couldsupport product registration in 2009. During the year, the Company also receivedfurther commitment from QUASAR, a UK-based clinical trials network, which isexpected to conduct a Phase III trial in colorectal cancer. In parallel,discussions with major pharmaceutical companies for a global commercial licencefor TroVax have reached an advanced stage. The Phase II trial of MetXia inpancreatic cancer is progressing more slowly than anticipated and the Companyhas implemented changes that are designed to accelerate patient recruitment. TheCompany's partners, Wyeth and Intervet, made progress with their respectivecancer programmes during 2006. TroVax(R) TroVax is Oxford BioMedica's lead cancer immunotherapy product. It is designedto stimulate a specific anti-cancer immune response and has potentialapplication in many tumour types. The product induces an immune response againstthe tumour antigen 5T4, which is broadly distributed throughout a wide range ofsolid tumours. The product consists of a Modified Vaccinia Ankara (MVA) virus,which delivers the gene for 5T4. Vaccinia viruses are widely used as deliverysystems for antigen-specific vaccines. MVA is the vaccinia virus strain ofchoice because of its excellent safety profile and its effectiveness instimulating an immune response. Once the immune system is activated by TroVax,antibodies and killer T-cells can migrate round the body seeking out anddestroying cancer cells bearing 5T4. Over 180 patients have now been treated with TroVax in ten clinical trials incolorectal, renal and prostate cancer. Four Phase II trials in renal cancer anda Phase II trial in prostate cancer are ongoing and continue to show encouragingresults. About 100 patients have been enrolled in these five trials to date. In November 2006, the Company achieved an important milestone by starting itsplanned Phase III trial, TRIST (TroVax Renal Immunotherapy Survival Trial) inrenal cancer. More than 40 clinical centres in the USA, European Union andEastern Europe are now actively recruiting patients. In January 2007, the UKNational Cancer Research Network (NCRN), which provides the UK National HealthService (NHS) with the infrastructure to support cancer clinical trials, agreedto adopt the trial. The NCRN's adoption of TRIST means that multiple NHS centresare able to participate in the study, which should facilitate rapid recruitmentof patients in the UK. In reaching its decision to adopt the TRIST trial, theRenal Cancer Clinical Studies Group of the NCRN evaluated TroVax and the trialdesign and concluded that the product offers potential improvement in patientcare for the NHS. In May 2006, Oxford BioMedica secured an agreement with the US Food and DrugAdministration (FDA) on a Special Protocol Assessment (SPA) for the TRIST trial.The written agreement from the FDA specifies the design, conduct, analysis andendpoints of the trial. With an SPA in place, the trial can be used to supportan efficacy claim in a regulatory submission for product registration in theUSA. The TRIST study is designed to evaluate whether TroVax immunotherapy, incombination with first-line standard-of-care therapies, prolongs the survival ofpatients with locally advanced or metastatic clear cell renal adenocarcinoma.The study is randomised, double-blinded and placebo-controlled. Approximately700 patients will be recruited. The primary endpoint is improvement of survivaland secondary endpoints include progression-free survival, tumour response ratesand quality of life scores. The Company has appointed an independent Data Safety Monitoring Board (DSMB) toassess the safety and potential efficacy of TroVax at various time points duringthe trial. The first DSMB review is anticipated in the second half of 2007. Theduration of the trial will be determined by the number of survival events(deaths) in the study group, and the trial is expected to reach a conclusion in2008-09. If the trial is successful, TroVax could be submitted for productregistration in 2009. In December 2006, Oxford BioMedica received a positive opinion from theCommittee for Orphan Medicinal Products (COMP) recommending orphan drugdesignation for TroVax for the treatment of patients with renal cancer in theEuropean Union (EU). The COMP is part of the European Medicines Agency (EMEA).The European Commission adopted this opinion in January 2007, which ensures aten-year marketing exclusivity for TroVax within the EU. In addition, OxfordBioMedica and its prospective partner will benefit from a simplified,accelerated and cost-effective approval procedure under the consultativeguidance of the EMEA. The Company plans to request the equivalent orphan drugstatus in the USA. During the year, data from the Phase II trials of TroVax were presented at anumber of key oncology meetings. The Annual Meeting of the American Society ofClinical Oncology in June 2006 was an important forum for TroVax. OxfordBioMedica's scientists along with external clinical investigators from cancercentres in the USA and from Cancer Research UK presented data from five Phase IIstudies of TroVax in colorectal and renal cancer. Ongoing analysis of two completed Phase II trials in 36 patients, in whichTroVax was evaluated as a first-line treatment for metastatic colorectal canceralongside chemotherapy, showed that 95% of patients who received both TroVax andat least six cycles of chemotherapy experienced disease control based onunaudited tumour response data. Encouragingly, 60% showed complete or partialtumour responses (tumour shrinkage). In the analysis of patients that receivedat least two TroVax immunisations and were therefore able to raise ananti-tumour immune response, TroVax extended median survival to 80 weeks from 72weeks based on historical controls for chemotherapy alone. Similarly, TroVaximproved survival at twelve months from 70% to 90%. Importantly, as at 21 August2006, nine patients (25%) remained alive with an average follow-up time ofalmost two and a half years. This level of survival is higher than expected andmay indicate that TroVax is providing a long term therapeutic effect aftertreatment has halted. As reported previously in 2005, the primary endpoints ofsafety and anti-tumour immunological responses were achieved in both trials andthe results confirmed the excellent safety profile of TroVax with no seriousadverse events being attributed to the product. Data from Cancer Research UK's Phase II trial of TroVax as an adjuvant therapyin patients with colorectal cancer undergoing surgery for liver metastasesshowed that 95% of patients produced an anti-tumour immune response. Hence, theprimary endpoint of immunological response was achieved. Again, TroVax was welltolerated in all patients with no serious adverse events associated with theproduct. Of the 20 patients recruited, 16 had successful surgical resection oftheir colorectal cancer liver metastases. All evaluable resected tumours werepositive for the 5T4 antigen, the target for TroVax, confirming previouslyreported data on the broad distribution of 5T4 on solid tumours. In November 2006, a principal clinical investigator, who is conducting two PhaseII trials of TroVax alongside standard therapy in renal cancer and a Phase IItrial in prostate cancer, presented encouraging data from all three trials atthe EORTC-NCI-AACR Symposium on "Molecular Targets and Cancer Therapeutics". Inrenal cancer, data were available from 33 patients, who had been heavilypre-treated and were at an advanced stage of disease prior to entering thetrials. TroVax was well tolerated and showed promising anti-tumour activity. Onepatient had a complete response, i.e. the tumour mass was completely eradicated.Two patients developed a partial response. A further 15 patients showed diseasestabilisation for periods exceeding three months, including one patient that hasbeen stable for more than 46 weeks. It is still too early to assess the endpointof median survival in the two studies, as more than 50% of patients remainalive. The immunological analysis is ongoing. However, a preliminary assessmentshowed that TroVax induced 5T4-specific antibody responses in 96% of evaluablepatients. Importantly, in patients with clear cell renal cancer, there was astatistically significant correlation (p=0.028) between the immune response to5T4 and a reduction in patients' tumour burden. This is particularly encouragingsince it supports the rationale that the 5T4-specific immune response induced byTroVax has therapeutic benefit. Clear cell is the most common subtype of renalcancer and is the patient group for the ongoing Phase III TRIST study. The Phase II trial in prostate cancer is evaluating TroVax as a single agent andin combination with standard therapy. The trial has enrolled 27 patients withhormone-refractory prostate cancer. An initial assessment showed that TroVax hasbeen well tolerated and that all patients have developed a strong 5T4-specificantibody response. In 2006, Oxford BioMedica advanced its discussions with the QUASAR groupregarding a Phase III trial of TroVax in early-stage (Stage II/III) colorectalcancer. QUASAR is a UK-based clinical trials network that is funded from avariety of sources including the UK Medical Research Council and the Departmentof Health. QUASAR completed its evaluation of TroVax and the proposed trial inMay 2006. QUASAR has confirmed its commitment to conduct the Phase III trial andis seeking financial support from the appropriate agencies. The proposed QUASAR trial will be randomised and placebo-controlled and isexpected to enrol approximately 3,000 patients. The study is designed to supportproduct registration in Europe and the USA, and is expected to start before theend of 2007. The US clinical trials co-operative group, Southwest Oncology Group (SWOG), hasmade progress towards the start of a Phase II trial with TroVax in breastcancer, which will be sponsored by the US National Cancer Institute. In thefirst half of 2006, the proposed trial was submitted to the FDA and no issueswere raised. In August 2006, the study was submitted to the US Recombinant DNAAdvisory Committee and was similarly accepted, which means that the trial cancommence. Approximately 120 patients will be enrolled in the trial. It has takenlonger than expected for SWOG to finalise its trial plan and submit to theauthorities but, based on recent discussions, Oxford BioMedica expects SWOG tocommence patient recruitment during 2007. Oxford BioMedica remains committed to securing a suitable commercial partner forTroVax. The clinical data that have been generated to date place TroVax amongstthe leading cancer immunotherapy candidates in development worldwide. The valueof the programme continues to increase as more data emerge and with the start ofPhase III development. Discussions with our lead prospective partners for aglobal licence to TroVax are at an advanced stage, and the Company expects theseto reach a successful conclusion. MetXia(R) MetXia is Oxford BioMedica's cancer therapeutic, designed to enhance theeffectiveness of cyclophosphamide, which is a widely used cancer therapy. MetXiauses a highly-engineered retrovirus gene delivery system to deliver a specifichuman cytochrome P450 gene. The product is administered locally to the tumoursite, enabling the P450 enzyme to be produced locally. The enzyme activates theprodrug cyclophosphamide at the tumour site, thus increasing the effectiveconcentration of the anti-tumour, cytotoxic derivative of cyclophosphamide inthe tumour mass. In principle, this should enhance the local efficacy ofcyclophosphamide and reduce the need for systemic administration. This in turnshould reduce the dose limiting toxicity of the drug and expand the therapeuticwindow. MetXia is potentially useful in the treatment of a number of solid tumours andtheir metastases, particularly those where cyclophosphamide is commonly used asa treatment. The Company is targeting its development efforts for MetXia on thetreatment of pancreatic cancer through direct administration of both MetXia andcyclophosphamide to the tumour. A two-stage Phase II trial is ongoing inpatients with non-resectable pancreatic tumours. The Company successfully completed the first stage of the trial in 2005. Patientrecruitment continues for the second stage of the trial using a fixed, optimaldose of MetXia and increasing doses of cyclophosphamide in up to 25 patients, attwo centres in the UK. The objective of the second stage is to determine theoptimal dose of cyclophosphamide and to evaluate clinical benefit in addition tosafety. Recruitment of patients into this part of the trial is purposefullystaged since each patient must be carefully reviewed for their response totherapy prior to treatment of subsequent patients. Three dose levels of cyclophosphamide alongside MetXia have been evaluated andpatient recruitment at a fourth dose level is ongoing. The patients are at anadvanced stage of their disease, and most have previously failed to respond toother therapies. To date, there have been no serious adverse events associatedwith MetXia. Recruitment of patients into the trial has been slower thanexpected and the Company has implemented changes that are designed to acceleratethe study. Oxford BioMedica expects to report further safety and outcome data from thistrial during 2007. In addition, the Company intends to open discussions with theregulatory authorities to determine the most expeditious route to obtainregulatory approval of MetXia for the treatment of pancreatic cancer. MetXia could provide a novel treatment option for the unmet need in pancreaticcancer and other tumour types. To maximise the commercial opportunity forMetXia, the Company is evaluating various strategic options, including licensingthe programme to potential partners. 5T4 Targeted antibody therapy/CME-548 (Wyeth) Wyeth has licensed the rights to Oxford BioMedica's proprietary antibody againstthe 5T4 tumour antigen for the treatment of cancer. Wyeth is using the antibodyto develop an antibody-toxin conjugate, based on its expertise with theanti-cancer agent calicheamicin. Wyeth has previously demonstrated the validityof the concept of targeted toxins through its successful development of Mylotarg(R) for the treatment of acute myeloid leukaemia. In 2006, Wyeth completed key preclinical studies of the 5T4-targeted antibodytherapy in collaboration with Oxford BioMedica. The product has been denoted byWyeth as CME-548 and was described in detail in an R&D presentation to analystsand investors hosted by Wyeth in October 2006. Wyeth continues to evaluate theproduct in preclinical models. The expectation is that, if warranted oncompletion of preclinical studies, Phase I/II development of CME-548 will be inpatients with any solid tumours that express the 5T4 tumour antigen. The startof clinical development will trigger a milestone payment to Oxford BioMedicaunder its US$24 million collaboration with Wyeth. TroVax-VET(R) (Intervet) TroVax-Vet is Oxford BioMedica's veterinary 5T4 tumour antigen-targetedimmunotherapy programme for the treatment of cancer in companion animals,focusing on dogs and cats. The product is licensed to Intervet, which is theworld's largest animal vaccine company and a unit of Akzo Nobel. In 2006, Intervet completed its preclinical optimisation of the canine versionof TroVax-Vet, in collaboration with Oxford BioMedica, in readiness to commenceinitial field trials of the product. Intervet anticipates a regulatorysubmission for the start of field trials in dogs with naturally occurring cancerin 2007. NEUROTHERAPY The neurotherapy pipeline exploits the Company's proprietary LentiVector genedelivery technology, and addresses a range of neurological and ophthalmicconditions. These are primarily disorders associated with ageing, inheriteddiseases and vision loss. Oxford BioMedica's novel gene-based neurotherapycandidates offer potentially safe and effective therapies for diseases, where,in some cases, there are currently no available treatment options. In 2006, the key objective for the neurotherapy pipeline was to prepare the twolead product candidates, ProSavin for Parkinson's disease and RetinoStat forretinopathy, for clinical development. The Company has made progress on bothprogrammes. The Company faced some unexpected manufacturing issues related toProSavin, which have been successfully addressed. The regulatory process thatwill lead to a formal submission for the start of trials with ProSavin isunderway. The Company started pivotal non-clinical studies with RetinoStat andis preparing for manufacturing scale-up to support a regulatory submission forclinical trials. Given the commonality of the LentiVector system to all the neurotherapyproducts, the infrastructure for ProSavin that relates to manufacturing scale-upand safety testing can be applied to the entire portfolio. Hence, the timeinvested in ProSavin should accelerate the programmes for the other developmentcandidates. The Company anticipates starting clinical development of ProSavinand RetinoStat for age-related macular degeneration within 12 to 18 months withat least one neurotherapy product candidate advancing to clinical developmenteach year thereafter. The neurotherapy portfolio continues to attract support from charitable andpatient organisations. In 2006, a sixth preclinical programme was added to theneurotherapy portfolio. This new gene-based product candidate, StarGen for thetreatment of an inherited ocular condition, Stargardt's disease, is beingdeveloped in collaboration with the US charity, Foundation Fighting Blindnessand the National Neurovision Research Institute. ProSavin(R) The Company's lead neurobiology product, ProSavin, provides a novel approach tothe treatment of Parkinson's disease. ProSavin uses a LentiVector system todeliver the genes for three enzymes that are required for the synthesis ofdopamine. The product is administered locally to the region of the brain calledthe striatum, converting cells into a replacement dopamine factory within thebrain, thus replacing the patient's own lost source of the neurotransmitter. In 2006, Oxford BioMedica made good progress towards the goal of startingclinical trials of ProSavin in Parkinson's disease. The manufacturing processfor production scale-up was successfully transferred to a facility that is incompliance with Good Manufacturing Practice (GMP). This step was moretime-consuming than anticipated, and this has delayed the formal regulatorysubmission to start trials. However, all remaining issues have been addressedand the manufacture of GMP clinical material is now underway and relevant safetystudies using the final product are ongoing. The manufactured material will besufficient for the Company's proposed Phase I/II trial in patients with moderateto late-stage Parkinson's disease. In the second half of 2006, Oxford BioMedica had two formal meetings with aEuropean regulatory agency to discuss the application to start trials and thedevelopment plan for ProSavin. The proposed development plan is to conduct aPhase I/II trial, then, subject to the efficacy results in the Phase I/II study,to move directly to a Phase III trial that would be designed to support productregistration and could commence in 2009. Interactions with the regulatory agencyhave been encouraging and the Company anticipates a regulatory submission forthe start of the Phase I/II trial in 2007. At the European Society of Gene Therapy Annual Congress in November 2006, aleading neuroscientist presented new preclinical data from the ProSavinprogramme. In industry-standard models of the disease, ProSavin outperformed thestandard treatment for Parkinson's disease, L-DOPA, in terms of efficacy withoutinducing any of the disabling dyskinesias (movement disorders) that occurfollowing prolonged treatment with L-DOPA. In addition, long term data showedthat ProSavin's therapeutic benefit from a single administration was maintainedfor at least 15 months, the most recent time point, without any loss of effect,whereas the benefit of continuous L-DOPA therapy waned significantly. The superior efficacy of ProSavin combined with the absence of side effectssuggest that ProSavin could be used to replace standard L-DOPA therapy inmoderate to late-stage Parkinson's disease. The results from these and otherpreclinical proof of principle studies are being submitted for publication in amedical journal during 2007. Oxford BioMedica's strategy is to secure commercial partners after demonstratingefficacy in clinical trials. In the case of ProSavin, the Company has haddiscussions with potential partners that may lead to an earlier agreement ifsufficiently attractive terms can be negotiated. RetinoStat(R) RetinoStat is the Company's novel gene-based treatment for neovascularage-related macular degeneration (AMD) and diabetic retinopathy (DR), which arecaused by the unregulated and aberrant growth of leaky and disruptive bloodvessels in the retina. The product uses the LentiVector system to deliver twoanti-angiogenic genes that block the formation of new blood vessels in theretina. The therapeutic genes, angiostatin and endostatin, have been exclusivelylicensed by Oxford BioMedica for use in treatments of ocular diseases fromEntremed Inc. In 2006, Oxford BioMedica and its collaborators at Johns Hopkins UniversitySchool of Medicine, Baltimore, Maryland, USA, presented encouraging preclinicaldata with RetinoStat at the Association for Research in Vision and Ophthalmology(ARVO) Annual Meeting. The data confirmed that RetinoStat provides statisticallysignificant efficacy in an industry-standard preclinical model of neovascularage-related macular degeneration (AMD). In addition, by precisely engineeringgene switches in the product, the Company achieved highly specific geneexpression in the target cells of the retina. This substantially enhances thepotential safety and efficacy of RetinoStat. Oxford BioMedica and Johns Hopkins University, in partnership with theFoundation Fighting Blindness (FFB) and its support organisation, the NationalNeurovision Research Institute, are conducting pivotal non-clinical studies withRetinoStat that are designed to support a regulatory submission for the start ofclinical trials in patients with neovascular AMD. Following completion of theGMP manufacture of ProSavin, the Company plans to scale-up the manufacturing ofRetinoStat during 2007. The objective is to submit an Investigational New Drug(IND) application to the US FDA for the start of trials in 2008. As with other preclinical candidates in its pipeline, Oxford BioMedica maycollaborate on the development of RetinoStat prior to demonstrating clinicalefficacy. Initial discussions with potential partners have taken place. StarGen(TM) In October 2006, Oxford BioMedica announced a new preclinical developmentprogramme for the treatment of Stargardt's disease, which is the most commonjuvenile degenerative retinal disease. The Company is evaluating its LentiVectortechnology for the treatment of several ocular diseases, and the Stargardt'sdisease programme, called StarGen, is the most advanced. The programme is partof a broad collaboration with FFB and its support organisation, the NationalNeurovision Research Institute, and it builds on the existing agreement with FFBfor the development of RetinoStat. Under the agreement, FFB and a consortium ofinvestors made an upfront payment and committed to a staged subscription forapproximately US$3.9m of Oxford BioMedica ordinary shares at a 10% premium tothe market price at the time of investment. An initial subscription ofUS$300,000 was made in 2006. These funds support the development of StarGen,and, in return, FFB and the investors will receive a royalty oncommercialisation of the product. The Company also reported initial preclinical data with StarGen, showingefficacy in an industry-standard model of Stargardt's disease. The product waseffective for the duration of the study, which was approximately six months.Further preclinical development is ongoing at Columbia University in the USA. MoNuDin(R), SMN-1G and Innurex(R) The three early-stage neurological programmes, MoNuDin, SMN-1G and Innurex,continue to progress through preclinical development. These gene-basedtherapeutics are addressing motor neuron disease, spinal muscular atrophy andnerve repair for spinal cord injury, respectively. In 2006, the Company and itsscientific collaborators continued to build the preclinical data packages thatwill support advancement of the product candidates into clinical development. New data with MoNuDin for amyotrophic lateral sclerosis, the most common form ofmotor neuron disease, showed that the product successfully reached motor neuronsfollowing remote, intramuscular administration. Further data from the MoNuDinprogramme are expected to be presented at a medical conference in 2007. The UKMotor Neurone Disease Association continues to fund this programme. In 2006, the SMN-1G product configuration was further optimised. The objectivefor 2007 is to define the clinical strategy for SMN-1G with support from leadingclinicians in the field of spinal muscular atrophy. In addition, the Company isseeking further funding from charities and patient groups associated with thisinherited disease. Oxford BioMedica and its collaborators at King's College London, UK, publishedpreclinical efficacy results with Innurex in Nature Neuroscience in February2006. The data were based on a preclinical study of Innurex in spinal cordinjury, which showed a statistically significant improvement in both sensory andmotor functional ability with Innurex compared to placebo for most measurements.The results were also presented at the British Society for Gene Therapy AnnualConference in March 2006. Further preclinical studies are ongoing and theCompany aims to define a clinical plan for initial trials of Innurex during2007. OTHER PROGRAMMES Outside of its core therapeutic focus, the Company has advanced its preclinicalprogramme, for the blood clotting disorder, haemophilia A. This congenitalcondition is caused by a deficiency of the blood clotting protein, Factor VIII.The Company's product, ReQuinate(R), is designed to restore levels of thedeficient protein by delivering the gene for Factor VIII using the LentiVectorsystem. The Company presented preclinical data from the ReQuinate programme at theBritish Society for Gene Therapy Annual Conference in March 2006. The datashowed that the product produced potentially therapeutic levels of the FactorVIII protein in liver cells. The Company is conducting further optimisation workwith ReQuinate to improve the delivery of the Factor VIII gene to the liver. Theprogramme is funded by a grant from the UK Department of Health. The Company continues to evaluate opportunities for therapeutic productdevelopment using the LentiVector technology as a delivery mechanism formolecules that can silence genes via a process known as RNA interference (RNAi).The Company's research efforts are focused on the evaluation of the LentiVectorsystem for the delivery of micro-RNA, which can be used to regulate theexpression of disease-related genes. These programmes are at the discovery or early preclinical stage and are outsideof the Company's core focus. Hence, their successful application and progressionare uncertain and may be subject to priority changes within the Company. TECHNOLOGY LICENSING Oxford BioMedica's technology licensing strategy is to exploit the potential ofits suite of gene delivery technologies by providing third-party access eitherfor research, product development or specific applications. In 2006, OxfordBioMedica delivered on its broad goals of attracting new licensees and expandingexisting agreements. Oxford BioMedica added two new licensees, VIRxSYS andGlaxoSmithKline, during the year, bringing the total number of active licensingagreements to nine. In addition, one existing licence was upgraded to anall-territory perpetual licence. The Company's strategic alliance partner,Sigma-Aldrich, commenced commercialisation of LentiVector-based reagents, andanother licensee, Viragen, reported progress with its LentiVector-basedtransgenic programme. The agreement with VIRxSYS, signed in March 2006, provides a licence to OxfordBioMedica's patents for the VSV-G viral envelope system for the production ofVIRxSYS' product for the treatment of AIDS, VRX496. This novel gene therapy isthe first lentiviral-based drug candidate to have entered clinical developmentin the USA. VIRxSYS is conducting two Phase II trials of VRX496 in patients withHIV. Under the agreement, Oxford BioMedica received an upfront licence fee in2006 and receives annual maintenance payments, clinical and regulatory milestonepayments and royalties on product sales. In December 2006, GlaxoSmithKline (GSK) licensed the Company's LentiVector genedelivery technology for research activities in a joint agreement withSigma-Aldrich. GSK has joined other major pharmaceutical and biotechnologycompanies, including Biogen Idec, Merck & Co and Pfizer, in utilising theLentiVector system in its research and drug discovery programmes. Also inDecember 2006, Oxford BioMedica expanded an existing research licence agreementfor the LentiVector technology with a major undisclosed pharmaceutical company.The amendment broadens the agreement from an annual licence for researchactivities in the USA to a worldwide perpetual licence. In all of theseagreements the licence is restricted to research, and a more substantialcommercial licence would need to be obtained from Oxford BioMedica to use thetechnology for a commercial product or process. Sigma-Aldrich commenced its commercialisation efforts as part of the strategicalliance with Oxford BioMedica, which was signed in October 2005. During 2006,Sigma-Aldrich launched a range of high-value LentiVector-based research productsfor its extensive customer base in the pharmaceutical, biotechnology andacademic sectors. Further launches are anticipated in 2007. Under the agreementwith Sigma-Aldrich, Oxford BioMedica receives annual minimum payments androyalties on sales of these products. Viragen, which licensed the LentiVector technology in 2004 for the developmentof an avian transgenic biomanufacturing system, published results and reportedfurther progress with its programme in January 2007. An article in a leadingscientific journal profiled the avian transgenic (OVA(TM)) system's ability toexpress two therapeutic proteins in the whites of eggs of transgenic hens.Following this publication, Viragen reported the successful expression of athird protein, human interferon alpha-2a, in the OVA(TM) system. The Viragenagreement includes annual licence payments, milestone payments on theachievement of technical goals and royalties on commercialisation. The LentiVector technology is becoming a gold standard tool for variousapplications in research and drug discovery. The current revenue stream from theCompany's technology licensing is modest, although some of the agreements havethe potential to generate significant additional income. In 2007, the ongoingobjective is to broaden the portfolio of licensed users of the Company'stechnologies. The Company also aims to expand its existing relationships,particularly the research-based agreements, into more substantial, longer-termcollaborations. INTELLECTUAL PROPERTY Maintenance and expansion of the Company's intellectual property estate isfundamental to the Company's commercial strategy. The Company's patent portfoliocovering its products and technologies comprises 39 US and 12 European grantedpatents. This portfolio increased by four patents in the USA and two in Europefrom the figure in the 2005 Annual Report. A further 66 patents have been issuedin other jurisdictions, an increase of one since last year. In total, 162 patentapplications are currently pending. Another 14 patent families, covering keytechnologies, are licensed from third parties. Key events related to intellectual property during 2006 included a Notice ofAllowance from the US Patent Office for a key patent application for ProSavin,strengthening of the LentiVector patent portfolio, and the grant of a Europeanpatent for Innurex. The US patent for ProSavin, that received a Notice of Allowance, significantlyextends the protection of the Company's lead product candidate for Parkinson'sdisease. This patent describes the genetic composition of ProSavin and, as such,is an important addition to the portfolio of patents that protect the product.The patent also provides protection for new product candidates that the Companymay develop for the treatment of other neurodegenerative conditions such asAlzheimer's disease. The patent estate covering the LentiVector technology was strengthened by theissue of one new US patent and a Notice of Allowance on another patentapplication. These patents broaden the protection of the LentiVector deliveryand production systems. Patents covering aspects of this technology havepreviously been granted in Europe and China. The Innurex programme benefitedfrom the grant of a European patent that covers the genetic delivery of thetherapeutic gene, which is a subtype of the retinoic acid receptor that inducesnerve cells to re-grow. In 2006, Sigma-Aldrich and Oxford BioMedica filed a lawsuit against OpenBiosystems Inc for infringement of two US patents relating to the use of theLentiVector technology for RNA interference research tools. The costs of thelitigation are being covered by Sigma-Aldrich. FINANCIAL REVIEW Income statement overview In line with expectation, investment in research and development more thandoubled in 2006 with the start of the TRIST Phase III trial of TroVax, leadingto a net loss almost twice the level of 2005 and a comparable increase in cashburn. As in previous years, revenue was not significant compared to the level ofR&D spending. Revenue £760,000 (2005: £824,000) Revenue in 2006 derived from licences to the Group's proprietary gene deliverytechnology. The small reduction in total revenue was due partly to the weaker USDollar in 2006 but mostly due to the impact on last year's revenue of theinitial payment received under the Sigma-Aldrich licence. Two new gene deliverylicenses were signed in 2006 and an existing licence was upgraded to anall-territory perpetual licence. Under the Group's revenue recognition policy,the non-refundable one-off payments under such licences are recognised asrevenue in the year in which the agreements are signed. Revenue was also earnedin 2006 from the ongoing collaboration with Viragen Inc, using LentiVector genedelivery in the field of avian transgenics. The new ocular gene therapydevelopment agreement with the US charity Foundation Fighting Blindness broughtrevenue of £53,000 (US$100,000) in 2006. Operating expenses £22,222,000 (2005: £12,192,000) Operating expenses in 2006 were significantly higher than 2005 due to investmentin the TroVax Phase III TRIST study and increased spending on ProSavin. Thisincrease in spending was anticipated at the time that new funds were raised atthe end of 2005. Administration costs were £166,000 (6%) lower than in 2005. Research & development costs £19,523,000 (2005: £9,327,000) The Group's R&D costs comprise in-house costs (staff salaries and expenses, R&Dconsumables, IP costs, facilities costs and depreciation of R&D assets) andexternal preclinical and clinical costs (preclinical development, GMPmanufacturing, regulatory costs, clinical trials and clinical consultants).Following the fundraising at the end of 2005, there was a modest increase inin-house R&D spending and a significant increase in external developmentexpenditure, particularly for TroVax and ProSavin. There were three additionalPhase II studies of TroVax (two in renal cancer and one in prostate cancer) inaddition to starting the Phase III TRIST study. TroVax manufacturing costs in2006 included £3,454,000 for large-scale validation of the manufacturingprocess, which is not expected to be a recurring expense. Increased costs forProSavin were mainly for preclinical studies (increased from £328,000 in 2005 to£1,487,000 in 2006). Manufacturing and process development costs for ProSavinwere up £290,000 at £424,000. External clinical and preclinical costs are expected to remain high in 2007 and2008 with continuing expenditure on the TRIST programme, and the move ofProSavin into clinical trials. Grant income £360,000 (2005: £135,000) Grant income was higher in 2006, due to the full-year effect of two grants thatstarted in 2005. The UK Department of Health is supporting a developmentprogramme for haemophilia which contributed £127,000 in 2006 (2005: £89,000).The UK charity Motor Neurone Disease Association (MNDA) is supportingdevelopment in motor neurone disease, and contributed £190,000 to otheroperating income in 2006 (2005: £48,000). In addition the MNDA grant hascontributed £79,000 towards laboratory equipment in 2005-2006. Net interest receivable £1,714,000 (2005:£938,000) The Group places its cash on deposit for periods of up to 12 months andgenerates interest on those deposits. The maturity profile of deposits isintended to match planned patterns of expenditure. As a result of the cashreceived from the share issue in December 2005, net interest receivable in 2006was considerably higher than 2005 at £1,743,000 (2005: £969,000). The Group hasno debt, but is recognising as an interest charge the discount on an onerouslease provision and, from 2006, a dilapidation provision. Taxation: net credit £1,762,000 (2005: £1,210,000) The UK operating subsidiary Oxford BioMedica (UK) Limited is entitled to claim R&D tax credit. The credit is based on certain eligible expenses, to which a 50%mark-up and a tax rate of 16% is applied. R&D costs in 2006 were more thandouble the level of 2005, but due to the capping rules for R&D credit, the 2006claim was up by just 45% on the year before, and was capped at the total ofIncome Tax and National Insurance on the UK payroll. There was a prior yearcredit of £75,000 reflecting the release of a contingency provision followingagreement with the UK tax authorities on the R&D claim for 2005. However,agreement was not secured in time to receive payment in 2006, and the year enddebtor comprises £600,000 for 2005 and £1,709,000 for 2006. The final part ofthe 2005 claim was received in February 2007. Loss for the financial year £17,626,000 (2005: £9,085,000) The net effect of higher operating expenses, offset by increased grant income,interest receivable and tax credit was an increase of £8,541,000 in the loss forthe year to £17,626,000. Intangible assets £1,665,000 (2005: £1,641,000) Since the adoption of IFRS the balance sheet has contained substantialintangible assets for purchased intellectual property rights. These assets areeither amortised or reviewed for impairment at each balance sheet date. Noamortisation has been charged to date, as the products underpinned by theintellectual property have not yet generated positive cashflows. Purchasedintellectual property costs of £24,000 were capitalised in 2006 (2005: £14,000). Trade and other receivables £2,202,000 (2005: £1,777,000) Trade and other receivables (debtors) were £425,000 higher in 2006 than in 2005.Increased trade receivables and accrued income at 31 December 2006 reflect theincreased revenue receivable under two new gene delivery licence agreementssigned in December 2006. Included in other receivables is grant incomereceivable, which was reduced from £516,000 in 2005 to £65,000 in 2006. However,this reduction was offset by higher interest accrued on bank deposits in 2006and by legal costs incurred in the litigation with Open Biosystems that are tobe reimbursed by Sigma-Aldrich. Increased prepayments in 2006 included prepaidinsurance for the expanded clinical trial programme. Trade and other payables £4,763,000 (2005: £2,180,000) Trade and other payables (creditors) were dramatically higher in 2006,reflecting the increased costs of the expanded clinical programme. Tradepayables at December 2006 included £800,000 for two of the key contractors inthe TRIST programme (manufacturing and trial management). Accrued costs forclinical programmes rose from £721,000 in 2005 to £1,782,000 in 2006. Share issues in 2006 During 2006 a total of 2,446,260 shares were issued on the exercise of shareoptions, raising proceeds of £466,000. In September 2006 485,185 shares wereissued under the Foundation Fighting Blindness collaboration for ocular genetherapy, raising proceeds of £160,000. This is modest when compared to 2005,when share option exercises raised proceeds of £1,038,000 and an open offer,placing and subscription raised £28,013,000 net of costs. Cash and deposits £28,543,000 (2005: £43,817,000), cash burn £15,876,000 (2005:£7,665,000) The placing, open offer and subscription in December 2005 raised the total ofcash, cash equivalents and available for sale investments (bank deposits) to£43,817,000 at the end of 2005. Over the course of 2006 this total fell by£15,274,000 to £28,543,000 as the result of the significantly increased clinicalspending and relatively low proceeds from share issues. However, the presentbalance keeps the Group in a strong position as it negotiates the licensing dealfor TroVax, while keeping up the pace of investment in the Phase III programme. The format of the cash flow statement under IFRS does not make it easy to assessthe overall level of operational cash outflow (the 'cash burn') that hastraditionally been a key performance indicator for development-stagebiotechnology companies. However, it can be calculated by taking the total ofcash used in operating activities, less proceeds of sale of property, plant andequipment, plus purchases of property, plant and equipment and purchases ofintangible assets. On this measure, cash burn for 2005 was £7,665,000 while 2006was more than double at £15,876,000. 2005 was a little lower than might havebeen expected due to receipt of overdue R&D tax credits in that year, and 2006was affected by delays to some of the tax credit expected to be received. Buteven allowing for this, cash outflow in 2006 was much higher than the yearbefore because of the increased research and development expenditure. Financial outlook The present level of spending will continue through 2007 if, as expected, theGroup continues to be responsible for paying the costs of the Phase III TRISTtrial of TroVax. However, the Directors expect these costs will be covered bythe proceeds of a global licensing deal for TroVax. Progress by Wyeth with itsCME-548 Targeted Antibody Therapy, advances in the Company's other existingcollaborations, and new technology licensing agreements are expected to generateadditional revenue. The Group's good financial position at the end of 2006, itsexciting commercial potential and the pipeline of novel products provide astrong platform from which to deliver value to shareholders in the future. Consolidated income statementfor the year ended 31 December 2006 Notes 2006 2005 £'000 £'000Revenue 1 760 824 Research and development costs (19,523) (9,327)Administrative expenses (2,699) (2,865)Other operating income: grants receivable 360 135Operating loss (21,102) (11,233) Interest payable and similar charges (29) (31)Interest receivable 1,743 969Loss before tax (19,388) (10,295)Taxation 2 1,762 1,210Loss for the financial year (17,626) (9,085)Basic loss and diluted loss per ordinary share 3 (3.5p) (2.4p) The results for the years above are derived entirely from continuing operations. There is no difference between the loss before tax and the loss for the yearsstated above, and their historical cost equivalents. Consolidated balance sheetat 31 December 2006 Notes 2006 2005 £'000 £'000AssetsNon-current assetsIntangible assets 4 1,665 1,641Property, plant and equipment 5 819 831 2,484 2,472Current assetsTrade and other receivables 6 2,202 1,777Current tax assets 2,309 1,175Financial assets: Available for sale investments 7 20,500 23,500Cash and cash equivalents 7 8,043 20,317 33,054 46,769Current liabilitiesTrade and other payables 8 4,763 2,180Current tax liabilities - 1Provisions 9 58 67 4,821 2,248Net current assets 28,233 44,521Non-current liabilitiesProvisions 9 627 393Net assets 30,090 46,600 Shareholders' equityOrdinary shares 5,014 4,984Share premium 106,732 106,097Other reserves 84 84Retained losses (81,740) (64,565)Total equity 30,090 46,600 Consolidated cash flow statementfor the year ended 31 December 2006 Notes 2006 2005 £'000 £'000Cash used in operating activitiesCash used in operations 10 (17,726) (10,074)Interest received 1,440 1,040Interest paid - (11)Tax credit received 650 1,786Overseas tax paid (25) (65)Net cash used in operating activities (15,661) (7,324) Cash flows from investing activitiesProceeds from sale of property, plant and equipment 1 -Purchases of property, plant and equipment (192) (327)Purchases of intangible assets (24) (14)Net maturity/(purchase) of available for sale 3,000 (6,000)investmentsNet cash generated by/(used in) investing activities 2,785 (6,341) Cash flows from financing activities Net proceeds from issue of ordinary share capital 629 29,043 Effects of exchange rate changes (27) 22 Net (decrease)/increase in cash and cash equivalents (12,274) 15,400Cash and cash equivalents at 1 January 20,317 4,917Cash and cash equivalents at 31 December 7 8,043 20,317 Statement of changes in shareholders' equity Share Share Translation Merger Retained Total capital premium reserve reserve losses £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2005 3,721 78,309 (623) 711 (55,739) 26,379Exchange adjustments - - (4) - - (4)Loss for the year - - - - (9,085) (9,085)Share options 60 978 - - - 1,038 Proceeds from sharesissuedValue of employee - - - - 259 259servicesIssue of shares 1,203 28,879 - - - 30,082excl. optionsCosts of share - (2,069) - - - (2,069)issuesAt 31 December 2005 4,984 106,097 (627) 711 (64,565) 46,600Exchange adjustments - - - - - -Loss for the year - - - - (17,626) (17,626)Share options 25 441 - - - 466 Proceeds from sharesissuedValue of employee - - - - 451 451servicesIssue of shares 5 155 - - - 160excl. optionsRefund in respect of - 39 - - - 39share issuesAt 31 December 2006 5,014 106,732 (627) 711 (81,740) 30,090 Basis of preparation This financial information for the years ended 31 December 2006 and 31 December2005 does not constitute the statutory financial statements for the respectiveyears and is an extract from the financial statements. Financial statements forthe year ended 31 December 2005 have been delivered to the Registrar ofCompanies and included the auditors' report. Financial statements for the yearended 31 December 2006 have not yet been delivered to the Registrar. Theauditors' reports on the financial statements for the years ended 31 December2006 and 31 December 2005 were unqualified and did not contain statements undereither section 237(2) or section 237(3) of the Companies Act 1985. The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) and International Financial ReportingInterpretations Committee (IFRIC) interpretations endorsed by the European Unionand with those parts of the Companies Act 1985 applicable to companies reportingunder IFRS. The financial statements are prepared in accordance with thehistorical cost convention as modified by revaluation of available for saleinvestments. Whilst the financial information included in this preliminaryannouncement has been prepared in accordance with IFRSs adopted for use in theEuropean Union, this announcement does not itself contain sufficient informationto comply with IFRSs. Copies of this announcement and the interim report for 2006 are available fromthe Company Secretary. The audited statutory financial statements for the yearended 31 December 2006 are expected to be distributed to shareholders by 20March 2006 and will be available at the registered office of the Company,Medawar Centre, Oxford Science Park, Oxford, OX4 4GA. This announcement was approved by the Board of Oxford BioMedica plc on 5 March2007. Notes to the accountsfor the year ended 31 December 2006 1 Segmental analysis The Group's primary segment reporting is by geographical location of assets,with business sector as the secondary format. The Group's revenue derives fromassets located in the UK. By destination, revenue derives from Europe and theUSA. 2006 2005Revenue by destination £'000 £'000 Europe 56 53United States of America 704 771Total revenue 760 824 2 Taxation The Group is entitled to claim tax credits in the United Kingdom for certainresearch and development expenditure. The amount included in the financialstatements for the year ended 31 December 2006 represents the credit receivableby the Group for the year, and adjustments to prior periods. These amounts havenot yet been agreed with the relevant tax authorities. 2006 2005 £'000 £'000Current taxUnited Kingdom corporation tax research and development credit (1,709) (1,175)Overseas taxation 38 43 (1,671) (1,132)Adjustment in respect of prior periodsUnited Kingdom corporation tax research and development credit (75) (101)Overseas taxation (16) 23Taxation credit (1,762) (1,210) 3 Basic loss and diluted loss per ordinary share The basic loss per share has been calculated by dividing the loss for the yearby the weighted average number of shares of 499,865,620 in issue during the yearended 31 December 2006 (2005: 380,914,250). The Company had no dilutive potential ordinary shares in either year which wouldserve to increase the loss per ordinary share. There is therefore no differencebetween the loss per ordinary share and the diluted loss per ordinary share. 4 Intangible assets 2006 2005Intellectual property rights £'000 £'000CostAt 1 January 1,920 1,991Additions 24 14Disposals (17) (85)At 31 December 1,927 1,920Accumulated amortisation and impairmentAt 1 January 279 364Disposals (17) (85)At 31 December 262 279 1,665 1,641 Net book amount at 31 December 5 Property, plant and equipment Office Short equipment, leasehold fixtures Computer Laboratory Total improvements and fittings equipment equipment £'000 £'000 £'000 £'000 £'000CostAt 1 January 2006 2,270 86 270 2,650 5,276Exchange adjustments (47) - (2) - (49)Additions at cost 385 3 34 111 533Disposals - (2) (21) (91) (114)At 31 December 2006 2,608 87 281 2,670 5,646Accumulated depreciationAt 1 January 2006 2,093 74 212 2,066 4,445Exchange adjustments (47) - (1) - (48)Charge for the year 221 9 34 273 537Disposals - (2) (21) (84) (107)At 31 December 2006 2,267 81 224 2,255 4,827Net book amount at 31 December 2006 341 6 57 415 819Net book amount at 31 December 2005 177 12 58 584 831 Additions to short leasehold improvements include an asset of £335,000recognised on establishment of a dilapidation provision in respect of theGroup's leasehold property in Oxford. 6 Trade and other receivables 2006 2005 £'000 £'000Non-currentOther receivables - rent deposit 150 205CurrentTrade receivables 241 119Other receivables 765 676Other tax receivable 220 242Prepayments 603 442Accrued income 223 93 2,052 1,572Total trade and other receivables 2,202 1,777 7 Cash and cash equivalents 2006 2005 £'000 £'000Cash at bank and in hand 2,343 185Short term bank deposits 5,700 20,132Total cash and cash equivalents 8,043 20,317 In addition to the cash and cash equivalents described above, the Group heldbank deposits of £20,500,000 (2005: £23,500,000) with an initial term tomaturity between six and twelve months classified as available for saleinvestments. Cash at bank and in hand includes £182,000 (2005: nil) held in escrow forexpenses of the TRIST Phase III clinical trial. 8 Trade and other payables - current 2006 2005 £'000 £'000 Trade payables 1,579 397Other taxation and social security 315 263Accruals 2,777 1,415Deferred income 92 105Total trade and other payables 4,763 2,180 9 Provisions Onerous Onerous Dilapidations lease Total lease 2006 2006 2006 2005 £'000 £'000 £'000 £'000 At 1 January - 460 460 464Exchange adjustments - (52) (52) 50Tangible fixed asset recognised in the 344 - 344 -yearUtilised in the year - (79) (79) (81)Amortisation of discount 12 17 29 20Change of discount rate - charged to - (8) (8) 7income statementChange of discount rate - adjustment to (9) - (9) -recognised fixed assetAt 31 December 347 338 685 460 2006 2005 £'000 £'000 Current 58 67Non-current 627 393Total provisions 685 460 The dilapidations provision relates to anticipated costs of restoring theleasehold property in Oxford, UK to its original condition at the end of thepresent leases in 2011, discounted at 4.96% per annum. The provision will beutilised at the end of the leases if they are not renewed. The onerous lease provision relates to the estimated rental shortfall in respectof a redundant property in San Diego, USA which has been sub-let for theremainder of the lease term until June 2012, discounted at 4.88% per annum(2005: 4.09% per annum).The provision will be utilised over the term of thelease. 10 Cash flow from operating activities Reconciliation of loss before tax to net cash used in operations 2006 2005 £'000 £'000 Continuing operations Loss before tax (19,388) (10,295)Adjustment for: Depreciation 537 674(Profit)/loss on disposal of property, plant and equipment (1) 33Interest income (1,743) (969)Interest expense 29 31Charge in relation to employee share schemes 451 259 Changes in working capital: Increase in trade and other receivables (107) (190)Increase in payables 2,583 457Decrease in provisions (87) (74)Net cash used in operations (17,726) (10,074) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Oxford Biomedica