Oxford Biomedica Plc - INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 (as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018). Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

*OXFORD BIOMEDICA PLC*
*INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023*

· Newly appointed Chief Executive Officer, Dr. Frank Mathias, is leading a transformation to position Oxford Biomedica as a pure-play CDMO; strategic and operational streamlining ongoing· Transformation into a pure-play CDMO by 1 January 2024, with £30 million of annualised costs savings· Strong execution and delivery of commercial strategy evidenced by client base expanding by 50% since the end of 2022, with a robust growing business pipeline across all key vector types and clinical stages· On track for revenue growth in 2024 from existing and new client programmes, targeting broadly breakeven Operating EBITDA by year-end 2024· Medium term guidance provided; 3-year revenue CAGR in excess of 30% and Operating EBITDA margins in excess of 20% by the end of 2026· Entered into exclusive negotiations with respect to a proposed acquisition of ABL Europe from Institut Mérieux, as part of pure-play CDMO transformation. The proposed transaction would include:
· Addition of ABL Europe’s facilities in Lyon and Strasbourg allowing Oxford Biomedica to gain a footprint in the EU and expand Oxford Biomedica’s capacity to address increased client demand · Consideration of £12.9 million (€15 million), including the value of £8.6 million (€10million) of pre-completion cash funding in ABL Europe from Institut Mérieux
· Institut Mérieux providing an additional £17.2 million (€20 million) of committed future funding in exchange for Oxford Biomedica shares, with timing at Oxford Biomedica’s discretion
· Institut Mérieux to become a major shareholder in Oxford Biomedica by building its ownership of Oxford Biomedica shares through purchases in the open market with the intention of reaching, in aggregate, approximately 10 per cent of the Company’s enlarged issued share capital

*Oxford, UK – 20 September 2023: *Oxford Biomedica plc (“Oxford Biomedica” or “the Group”) (LSE: OXB), a quality and innovation-led cell and gene therapy CDMO today announces interim results for the six months ended 30 June 2023.

*Dr. **Frank Mathias, Oxford Biomedica’s Chief Executive Officer, said: *

“Oxford Biomedica is a market leader in the fast-growing gene and cell therapy market. Our expertise and unmatched track record sets us apart, and our focus on being a pure-play cell and gene therapy CDMO gives us a unique position in the market. Six months into the role, I am fully focused on sustainable growth and our path to profitability - accelerating us to being a pure-play CDMO. With the cell and gene therapy industry at an inflection point, I believe that we are in the right market at the right time, and well-equipped to succeed with our highly skilled workforce and leading-edge technology.

“This has required a transformation and a change of mindset. We are adapting our structure and processes to better serve our clients and work more efficiently. We will now work together as one company with aligned operations from our headquarters here in Oxford, UK, a footprint in the US, and will offer multiple vector types from our multiple sites. I value our staff tremendously and thank everyone for their hard work and contribution to Oxford Biomedica both now and into the future.

“’I’m especially excited to announce the potential acquisition of ABL Europe today, from Institut Mérieux, as part of our transformation strategy. This would bring us the opportunity to gain a footprint in the EU and greatly enhance our capacity to address the increase in client demand we are seeing. It would also enable us to become an end-to-end CDMO capable of serving customers across both sides of the Atlantic and across vector modalities, leveraging cutting edge science and innovation.

“We are already seeing the success of our new commercial strategy and increased market recognition. Not only did we grow our client base by 50% since the start of the year, but at the end of July we had signed more client orders than we had in the whole of 2022 (excluding COVID-19 vaccine manufacturing). We aim to be the partner of choice for pharma and biotech companies developing life changing cell and gene therapies, enabling them to get their products to market faster and reach more patients. Having already made significant progress, the Board and I are extremely excited about the future of Oxford Biomedica.”

*FINANCIAL **HIGHLIGHTS (including post-period events)*

· Total revenue decreased by 33% to £43.1 million (H1 2022: £64.0 million) and bioprocessing and commercial development revenues decreased by 29% to £40.6 million (H1 2022: £57.3 million), with the non-recurrence of COVID-19 vaccine revenue partly offset by double-digit growth in lentiviral vector revenues and a full six months of revenues from Oxford Biomedica Solutions.· License, milestones & royalties were £2.5 million (H1 2022: £6.7 million), a decrease of 63% due to a generally lower level of milestone payments from existing clients and relatively lower license fees from new clients in the period.· Operating EBITDA^1 loss and operating loss of £33.7 million and £50.7 million respectively (H1 2022: Operating EBITDA loss and operating loss of £5.8 million and £19.2 million respectively), the higher losses compared to prior year driven by the non-recurrence of COVID-19 vaccine revenue as well the full six-monthly impact of operating expenditure from the acquisition of Oxford Biomedica Solutions in March 2022.· Cash at 30 June 2023 was 9% higher at £129.4 million compared to £118.5 million at 30 June 2022. The net cash position was 16% higher at £90.1 million as of 30 June 2023 (30 June 2022: £78.7 million).· Cash and net cash at 31 August 2023 were £121.4 million and £83.0 million respectively.                1 Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 14.

*OUTLOOK AND FINANCIAL GUIDANCE:*

Significant revenue growth anticipated in 2024 vs. 2023 as existing client programmes progress through development, supplemented by new client wins reflecting a significant step up in business development activities.

· Accelerating towards broadly breakeven Operating EBITDA^1 by the end of 2024; the Group’s revenue backlog^1 at 30 June 2023 stood at £95 million; this is the amount of future revenue available to earn from current orders. The Group expects to grow this backlog significantly going forward based on high levels of business development activity driving new client acquisition as well as orders from existing clients.· Aiming to achieve three-year revenue CAGR in excess of 30% resulting in at least a doubling of revenues by the end of 2026 compared to c.£90 million in 2023. With increased operational efficiencies, targeted cost management and targeted investment, the Group aims to achieve Operating EBITDA^1 margins in excess of 20% by the end of 2026.· As a result of the business transformation towards a quality and innovation-led pure-play CDMO, cost reductions will be completed by the end of December 2023. The ongoing cost base from 1 January 2024 is anticipated to be reduced by c.£30 million on an annualised basis compared to 2023. A one-off restructuring cost of c.£10 million is expected to be incurred in the current financial year.· Group revenues for 2023 are expected to be approximately £90 million; below current market expectations due to lower milestone and license payments than previously expected and reduced or delayed bioprocessing orders from clients. More than 90% of forecasted revenues for the second half of the year are covered by existing binding purchase orders and rolling client forecasts.· Financial impact from the proposed transaction to acquire ABL Europe announced today is excluded from mid-term guidance pending completion of the transaction.
1. Revenue backlog represents ordered CDMO revenues available to earn. The value of customer orders included in revenue backlog only includes the value of work for which the customer has signed a financial commitment for OXB to undertake, whereby any changes to agreed values will be subject to either change orders or cancellation fees.
*ANALYST BRIEFING *

Oxford Biomedica’s management team, led by new CEO, Dr. Frank Mathias, Stuart Paynter, CFO, and Dr. Sebastien Ribault, CCO, will be hosting a briefing and Q&A session for analysts at 13:00 BST / 8:00 EST today, 20 September, at One Moorgate Place Chartered Accountants Hall, 1 Moorgate Pl, London EC2R 6EA, United Kingdom.

A live webcast of the presentation will be available via this link. The presentation will be available on Oxford Biomedica’s website at www.oxb.com

If you would like to dial in to the call and ask a question during the live Q&A, please email Oxfordbiomedica@consilium-comms.com

*Notes*
Unless otherwise defined, terms used in this announcement shall have the same meaning as those used in the 2022 Annual report and accounts.

*Enquiries:*

*Oxford Biomedica plc: *  
Sophia Bolhassan, VP, Corporate Affairs and IR T: +44 (0)1865 783 000/ E: ir@oxb.com  
*ICR **Consilium:* T: +44 (0)20 3709 5700
Mary-Jane Elliott  
Matthew Neal  
Davide Salvi  

*Peel Hunt (Joint Corporate Brokers):* T: +44 (0)20 7418 8900
James Steel  
Dr. Christopher Golden    
*JP Morgan (Joint Corporate Brokers):*         T: +44 (0)20 7134 7329
James Mitford  
Manita Shinh
 

*ABOUT OXFORD BIOMEDICA*
Oxford Biomedica (LSE: OXB) is a quality and innovation-led cell and gene therapy CDMO with a mission to enable its clients to deliver life changing therapies to patients around the world.

One of the original pioneers in cell and gene therapy, the Company has more than 25 years of experience in viral vectors; the driving force behind the majority of gene therapies. The Company collaborates with some of the world’s most innovative pharmaceutical and biotechnology companies, providing viral vector development and manufacturing expertise in lentivirus, adeno-associated virus (AAV) and adenoviral vectors. Oxford Biomedica’s world-class capabilities span from early-stage development to commercialisation. These capabilities are supported by robust quality-assurance systems, analytical methods and depth of regulatory expertise.

Oxford Biomedica, a FTSE4Good constituent, is headquartered in Oxford, UK. It has locations across Oxfordshire, UK and near Boston, MA, US. Learn more at www.oxb.com, www.oxbsolutions.com, and follow us on LinkedIn and YouTube.
*OVERVIEW*

The Group is completing its strategy to transform into a quality and innovation-led pure-play CDMO, and further establishing its global leadership in developing and manufacturing high-quality viral vectors for cell and gene therapy. These efforts have been led by Dr. Frank Mathias, the Group’s newly appointed CEO, who joined in March this year. During this period, Dr. Mathias has reviewed the Group’s operations and is now executing his plan to finalise the transformation of the Group into a pure-play CDMO, dedicated to serving pharmaceutical and biotech clients across the cell and gene therapy space.

As part of this transformation, the Group is streamlining operations for enhanced efficiency and client-centricity. The Group now operates as a unified global company, headquartered in Oxford, UK, with operations in Oxford, UK, and Bedford, MA, US. This global alignment ensures that Oxford Biomedica is able to service its growing pipeline of potential new business opportunities and win more clients and programmes at different stages and across different vector types.

To accelerate the Group’s transformation into a pure-play CDMO, the Group is taking necessary steps to reorganise the business and its workforce. As a result, Oxford Biomedica has decided to discontinue the development of its therapeutic products and focus on building a high-quality, high-service, innovation-led CDMO. Ultimately the Group expects to accelerate towards broadly Operating EBITDA breakeven by the end of 2024, and deliver strong shareholder returns. The reorganisation of the business completes the Group’s evolution into a commercially high-performing entity, primed for sustained growth, and providing the highest levels of service and technical capabilities to its target client base.

*OPERATIONAL REVIEW*

*CDMO Services *

The Group, with its global leadership position in developing and manufacturing high-quality viral vectors for cell and gene therapies, continues to see momentum in the number of client programmes across all key viral vector types. Currently, its CDMO portfolio comprises 41 client programmes at various stages of clinical development, spanning preclinical studies through to commercial stage. This diversified client portfolio is a testament to Oxford Biomedica’s capabilities across all key viral vectors and the breadth of its service offerings.

During the first half of 2023, the Group grew its portfolio of clients and programmes, with multiple expanded and new agreements signed for the development and manufacture of lentivirus, AAV and adenoviral vectors. The Group’s client portfolio includes 24 clients, with over a third of these clients working with the Group on more than one programme. This successful growth demonstrates Oxford Biomedica’s success in executing its new commercial strategy, including lead generation and qualification, and ability to convert pipeline to client onboarding.
H1 2022* *H1 2023** 14 clients *24 clients* 28 client programmes *41 client programmes*
*Cell line, process development & pilot scale production** *(Preclinical) 
15 *25*
*Early-stage clinical supply* (Phase I / 2) 
10 *14*
*Late-stage, process characterization & validation *(Phase 3)
1 *1*
*Commercial product supply* (Commercial)
2*** *1*

* H1 2022 as per the H1 2022 results release, including post-period events. H1 2023 as of this results release.  
** Includes undisclosed stage programmes ***Includes the manufacture of the Oxford AstraZeneca COVID-19 vaccine.

*Novartis *
Oxford Biomedica continues its strong and long-term relationship with Novartis and is currently working with Novartis on multiple client programmes. These include vector supply for Novartis’ new T-Charge™ platform, a next-generation platform that aims to revolutionise CAR-T cell therapy, which is being studied in a Phase II trial to assess YTB323 treatment in participants with severe refractory systemic lupus erythematosus.

The Group remains the sole global supplier of lentiviral vectors for Kymriah® (tisagenlecleucel, formerly CTL019), the first ever FDA-approved CAR-T cell therapy which is available for the treatment of three different indications. Kymriah^® is available in more than 400 qualified treatment centres in 30 countries having coverage for at least one indication. 

*Arcellx*
During the period, Oxford Biomedica continued to progress its relationship with Arcellx around their lead programme, CART-ddBCMA, which is currently being investigated in a pivotal Phase 2 study and has been granted Fast Track, Orphan Drug, and Regenerative Medicine Advanced Therapy Designations by the FDA, for the treatment of relapsed or refractory multiple myeloma.

*Juno Therapeutics, Inc. (a wholly owned subsidiary of Bristol Myers Squibb Company) *
The Group maintains its collaboration with Juno Therapeutics (Juno), focusing on multiple distinct CAR-T/TCR-T programmes.

Juno has adopted Process C, the Group’s best-in-class perfusion bioreactor process for one Phase I and one preclinical programme. This cutting-edge technology offers the potential to deliver superior yield and quality, whilst reducing the costs of goods for manufacturing.

*Cabaletta *
In August 2023, Oxford Biomedica announced its expanded relationship with Cabaletta Bio, Inc., adding CD19 as a new target, following the License and Supply Agreement announced in January 2022. Oxford Biomedica initially licensed its LentiVector® platform to Cabaletta Bio for their DSG3-CAART product candidate, and the agreement has now been extended to grant a non-exclusive license to Cabaletta under Oxford Biomedica’s LentiVector® platform IP for Cabaletta’s CD19-CAR T programme, CABA-201, a 4-1BB-containing fully human CD19-CAR T cell investigational therapy. Cabaletta Bio has received two IND clearances to date for CABA-201 and plans to initiate a Phase 1/2 clinical trial for patients with systemic lupus erythematosus and lupus nephritis and a separate Phase 1/2 clinical trial for patients with myositis.

*Further **client **updates *
Among the new lentiviral vector programmes initiated during the period, one stands out as the Group's inaugural 'transferred-in' lentiviral vector technology project. In this arrangement, the new client has predefined the methods and processes, with the Group undertaking the development work. This collaboration is with an undisclosed US-based biotech firm dedicated to engineering cells as medicines. The Group is responsible for manufacturing and supplying viral vectors for the company's primary oncology programme.

Post-period end, Oxford Biomedica signed an agreement with Kyverna Therapeutics (“Kyverna”), a clinical-stage cell therapy company with the mission of engineering a new class of therapies for serious autoimmune diseases. Kyverna’s anti-CD19 chimeric antigen receptor (CAR) T-cell therapies, KYV-101 and KYV-201, have the potential to offer new hope to patients who have exhausted current treatment options. Kyverna’s KYV-101 CAR T-cell product is currently being tested in a Phase 1 clinical trial in lupus nephritis in the U.S. and a Phase 1/2 trial in Germany.

The Group’s AAV business also continued to mature, with agreements signed with three new AAV clients for process development work for programmes in indications including cystic fibrosis, and gene therapies targeting rare diseases and auditory indications.

Following the success of the adenoviral vector work with AstraZeneca to manufacture the Oxford AstraZeneca COVID-19 vaccine, the Group has continued to grow its portfolio of adenoviral vector programmes. Two new adenoviral vector agreements with Oxford University have been signed, including a Clinical Supply Agreement for the manufacture and supply of adenoviral vectors for a vaccine against the Lassa virus, and a second agreement for the supply of adenoviral vector for their programme in Middle East Respiratory Syndrome (MERS) signed post-period. The Lassa virus and MERS have both been identified by the World Health Organisation as priority disease areas for research and development in emergency contexts.

Client programmes using the Group’s platform technologies continue to advance, including next-generation CAR-T developer, Beam Therapeutics Inc., announcing post-period end, the dosing of the first patient into their Phase 1/2 trial of BEAM-201 in relapsed/refractory T-cell acute lymphoblastic leukaemia/T-cell lymphoblastic lymphoma (T-ALL/ T-LL). BEAM-201 is a CD7-targeting allogeneic CAR-T therapy that incorporates four edits to increase the potency and persistence of cells and Phase 1/2 trials are expected to start in Q3 2023.

*Business development *
Work has progressed to ensure that the commercial team is sufficiently resourced and optimally positioned to leverage the expected increase in cell and gene therapy opportunities under the leadership of the Group’s newly appointed Chief Commercial Officer, Dr. Sebastien Ribault, who joined the Group from Merck KGaA in November 2022. To support this growth, the commercial team has doubled in size over the last year, and now has a vector-agnostic approach covering lentivirus, AAV, and other vectors including adenoviral vectors. The team operates in three different areas; Commercial Operations, Sales, and Strategy, Marketing and Corporate Development and are located across the East and West Coast of the US as well as Europe, within close proximity to potential and existing clients.

As part of this commercial strategy, the Group is planning the introduction of manufacturing of lentiviral vectors at our Bedford, MA site and AAV to our Oxford site, opening up new potential revenue opportunities. It is expected that by adding lentiviral vector and AAV capabilities to both sites, investing in our platform and innovating in a client-focussed way, we will work with a broader range of companies and support them as they grow and progress through clinical trials, further expanding our reach into the cell and gene therapy sector. This global-focused strategy not only aims to drive sustainable and predictable revenue growth but also ensures the Group is strategically positioned to cater to the anticipated surge in demand from the rapidly maturing gene and cell therapy sector – marked by more approvals, more late-stage trials, and an increasing number of therapies in development.

The Group’s new commercial strategy has already started to show success and momentum as demonstrated by a growth in both orders and pipeline. The orders signed at the end of July 2023 were materially in excess of the number of orders signed for the financial year ended 2022 (excluding COVID-19 vaccine orders). There has also been consistent growth in the business development pipeline, which grew by over 40% from January to July 2023, and includes all segments from early phase clinical programmes through to late-stage programmes close to commercialisation.

*Innovation *

The Group takes a client-centric approach to innovation, developing solutions in response to challenges experienced in the cell and gene therapy field that deliver value to our clients. The TetraVecta™ system, the Group’s latest innovation, launched in May 2023. This 4th generation lentiviral vector delivery system allows for higher quality, potency, safety and packaging capacity of lentiviral vectors, and enables cell and gene therapy companies to overcome previous barriers in therapeutic development, due to the size, complexity, or interference of the payload to be delivered. The TetraVecta™ system is the result of years of development and understanding of industry challenges and can be used to accelerate the adoption of in vivo gene therapies, as well as support the creation of high-titre stable producer cell lines for previously unachievable payloads. The new technology is currently being investigated by a number of existing clients and several CDMOs.

Work continues on the project which Oxford Biomedica initiated last year with Orchard Therapeutics utilising the Group’s proprietary LentiStable™ technology. As part of the project, Oxford Biomedica’s LentiStable™ technology platform is being used to develop a producer cell line capable of producing high titre lentiviral vectors. The project is focusing on developing high-performing candidate clones for Orchard Therapeutics’ OTL-203, an investigational hemopoietic stem cell (HSC) gene therapy in development for the potential treatment of mucopolysaccharidosis type I Hurler’s syndrome (MPS-IH).

*Gene therapeutics pipeline*

The Group has concluded the review of strategic options for its therapeutics portfolio and, in line with its strategy to become a pure play CDMO, has decided to discontinue work on internal product development from the second half of 2023.

No material costs associated with the therapeutics portfolio are expected to be carried by the Group post 2023.

*Corporate and organisational development*

The Group’s Bedford, MA site is based near Boston, US and is led by Mark Caswell who joined the Group in July 2023 and has succeeded Tim Kelly who has stepped down from the business. Mark Caswell joined the Group as Site Head of US Operations and has more than 25 years’ experience in the biopharmaceutical industry, including as Head of Operations at the Portsmouth, New Hampshire site of Lonza Biologicals. Before Lonza, Mr. Caswell worked for over 18 years at Sanofi Genzyme (previously Genzyme) in positions of increasing responsibility, most recently as Director, Global Engineering and Technology.

In January, Dr. Sam Rasty announced his intention not to stand for re-election at the Group’s AGM and stepped down from the Board in June. Sam joined the Board in December 2020 and was a member of the Scientific and Technology Advisory Committee, and also a member of the Audit Committee until December 2021.

In April, Leone Patterson was appointed to the Board as an Independent Non-Executive Director. Ms. Patterson has extensive public company biotech experience, including in the cell and gene therapy industry, and has managed significant growth within international commercial companies working across areas including strategy, finance, operations, and governance.

*Potential transaction to a**cqui**re* *ABL Europe*

Oxford Biomedica has entered into exclusive negotiations with respect to the proposed acquisition by Oxford Biomedica of ABL Europe SAS (“ABL Europe”) from Institut Mérieux SA (“Institut Mérieux”). ABL Europe is a pure play European CDMO with specialised expertise in the development and manufacturing of solutions for biotechs and biopharma including viruses for gene therapy, oncolytic viruses and vaccine candidates. This proposed transaction would form part of Oxford Biomedica’s transformation to be a world-leading quality-focused and innovation-led CDMO in the cell and gene therapy field.

Under the proposed transaction, Oxford Biomedica would acquire ABL Europe for a consideration of £12.9 million (€15 million), including the value of £8.6 million (€10 million) of pre-completion cash funding from Institut Mérieux in ABL Europe, in exchange for new Oxford Biomedica shares. In addition, as part of the proposed transaction, Institut Mérieux would also commit to provide Oxford Biomedica with £17.2 million (€20 million) of additional funding, to cover capex and potential future operating losses, in exchange for new Oxford Biomedica shares.

Under the proposed transaction, Institut Mérieux would further build its ownership of Oxford Biomedica by acquiring up to £8.6 million (€10 million) of additional Oxford Biomedica existing ordinary shares in the market from the date of this announcement to 31 March 2024. Institut Mérieux intends to build its ownership of Oxford Biomedica shares through purchases in the open market so as to reach, in aggregate, approximately 10 per cent of the Company’s enlarged issued share capital.

*ENVIRONMENTAL, SOCIAL AND GOVERNANCE *

The Group remains committed to its role as a responsible business and implementing its Environmental, Social and Governance (ESG) strategy, which is focused on five pillars: People; Community; Environment; Innovation and Supply Chain.

The Group has continued its commitment to review OXB policies to ensure they are inclusive, progressive and offer equal opportunities to all our employees.

On the environmental pillar, the Group has undertaken climate-based risk modelling, with an expert advisor, to assess resilience against physical and transitional risks posed by climate change.

The Group is fully committed to responsible supply chain management and the Group’s supplier code of conduct has been distributed to its top 250 suppliers for their acceptance or submission of their own equivalent code of conduct.

On the community pillar, the Group donated £50,000 to the Disasters and Emergencies Committee for the Turkey and Syria earthquake appeal and further donations of £3,000 have been made to the Group’s nominated charities, Oxfordshire Mind (Registered Charity No. 261476) and Homeless Oxfordshire (Registered Charity No. 297806).

Full details on our ESG pillars, including the supplier code of conduct, can be found on our ESG webpage at www.oxb.com

*Financial Review *

The first half of 2023 has been a period of transition with the Group executing on its strategy of transforming into a quality and innovation-led pure-play cell and gene therapy CDMO. Lentiviral vector manufacturing volumes have continued their post pandemic upward trajectory, with revenues from the core business achieving double digit revenue growth compared to the first half of 2022. COVID-19 vaccine bioprocessing volumes reduced to zero, which is reflected in the overall variance from the prior year.

As part of its evolution into a quality and innovation-led pure-play viral vector CDMO, the Group has made the difficult decision to streamline roles, affecting approximately 200 positions in both the UK and the US. This move will ensure strategic alignment of resources while optimising cost efficiency.

The Group achieved total revenues of £43.1 million and incurred an Operating EBITDA loss of £33.7 million in the first half of 2023 compared to revenues of £64.0 million and an Operating EBITDA loss of £5.8 million in the prior year. The variance in revenues from the prior year reflects the non-recurrence of any COVID-19 vaccine bioprocessing volumes in H1 2023, partly offset by double-digit growth in lentiviral vector revenues and a full six months of revenues from Oxford Biomedica Solutions. At a cost level, there was an increase in operating expenditure in the first half of 2023 due to the impact of the full six months of operational expenditure of Oxford Biomedica Solutions which was acquired during March 2022, and inflationary cost increases.

In September, post-period end, Oxford Biomedica announced that it had entered into exclusive negotiations with Institut Mérieux for the proposed acquisition of ABL Europe. This potential transaction would broaden the Company’s customer base in Europe and the cell and gene therapy space and offer cross-selling opportunities with ABL Europe’s existing customer base. ABL Europe had forecasted revenues of c.€15million for the year ended 31 December 2023 and EBITDA of c.€ (1.7)m at 31 December 2022

In July, post-period end, Homology Medicines Inc. (“Homology”), a genetic medicines company and client of Oxford Biomedica’s US business announced an update on their business, including a review of strategic alternatives. Any amounts outstanding at period end and expected to be billed during H2 2023 for bioprocessing and commercial development work are expected to be received in the normal course of business, however the Group is assuming that no further revenues will be received from Homology beyond the current financial year.

At the end of June, the Group completed a sale and leaseback of its Harrow House facility for £4.5 million to Kadans Science Partner. Under the agreement, Kadans have granted the Group an occupational lease of the property for approximately 15 years at a rent of £0.5 million per annum rising to £0.6 million after 5 years, with a further market rent review after 10 years. In the year the Group has recognised a profit on the sale of £0.5 million, a right of use asset of £2.2 million and a lease liability of £3.1 million.

The key financial indicators used by the Board are set out in the table below and the highlights are:

· Total revenue (£43.1 million) decreased by 33% over H1 2022 (£64.0 million) with the non-recurrence of COVID-19 vaccine revenues partly offset by double-digit growth in lentiviral vector revenues and a full six months of revenues from Oxford Biomedica Solutions.
· Operational losses (Operating EBITDA^1 loss and Operating loss) of £33.7 million and £50.7 million respectively, were higher than the prior year due to the full six-monthly impact of operating expenditure from the acquisition of Oxford Biomedica Solutions in March 2022, inflationary cost increases and then also the non-recurrence of vaccine bioprocessing revenues.
· Operational activities consumed cash of £5.4 million compared to £24.5 million in H1 2022. The lower level of cash consumed was due to the larger operational loss in H1 2023 being offset by a large working capital inflow, as opposed to a working capital outflow in H1 2022.
· Capital expenditure decreased from £6.0 million in H1 2022 to £4.9 million due mainly to lower levels of purchasing of bioprocessing and laboratory equipment.
· Cash burn^2 was £10.2 million in H1 2023 (H1 2022: £32.2 million) mainly due to increased Operating EBITDA losses offset by positive working capital movements driven by a decrease in trade receivables and other debtors.
· Cash at 30 June 2023 was £129.4 million compared to £118.5 million at 30 June 2022. The net cash position was £90.1 million as at 30 June 2023 (30 June 2022: £78.7 million).

1. Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 14.
2. Cash (burn)/inflow is net cash generated from operating activities less net finance costs paid and capital expenditure. A reconciliation to GAAP measures is provided on page 14.
     
*KEY FINANCIAL INDICATORS (£m)* *H1 2023* *H1 2022**Revenues*    
Bioprocessing/commercial development 40.6 57.3
Licence fees, milestones & royalties 2.5 6.7
*Total* *43.1* *64.0*    
Operating loss (50.7) (19.2)
Operating EBITDA^1 (33.7) (5.8)
Cash consumed by operating activities (5.4) (24.5)
Capital expenditure (4.9) (6.0)
Cash burn^2       (10.2) (32.2)    
Period end cash 129.4 118.5
Net cash^3 90.1 78.7    
*Headcount*    
Period end 891 959
Average 891 920

1. Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 14.
2. Cash (burn)/inflow is net cash generated from operating activities less net finance costs paid and capital expenditure. A reconciliation to GAAP measures is provided on page 14.
3. Net cash is cash less external loans.
The Group evaluates its performance inter alia by making use of three alternative performance measures as part of its Key Financial Indicators (see table above). The Group believes that these Non-GAAP measures, together with the relevant GAAP measures, provide an accurate reflection of the Group’s performance over time. The Board has taken the decision that the Key Financial Performance Indicators against which the business will be assessed, are Revenue, Operating EBITDA and Operating profit/(loss).

*Revenue*

Revenues were £43.1 million in H1 2023, 33% below the £64.0 million achieved in H1 2022.

*£m* *H1 2023* *H1 2022*
Bioprocessing/commercial development 40.6 57.3
Licence fees, milestones & royalties 2.5 6.7
*Revenue* *43.1* *64.0*

Revenues from bioprocessing/commercial development were 29% lower in H1 2023 as compared to H1 2022, largely due to the non-recurrence of revenues from the manufacturing of vaccine batches for AstraZeneca. This was partly offset by a double digit increase in revenues from lentiviral vector as well as AAV commercial development and manufacturing activities performed on behalf of the Group’s existing clients.

Revenues from licence fees, milestones and royalties have decreased compared to the prior year due to a generally lower level of milestones achieved from existing clients and license fees from new clients, as compared to H1 2022.

*Operating EBITDA*

*£m* *H1 202**3* *H1 202**2*
Revenue 43.1 64.0
Other operating income 1.4 0.9
Gain on sale of property 0.5 -
Total expenses^1 (78.7) (70.7)
*Operating EBITDA* *(**33.7**)* *(5.8)*
Depreciation, amortisation, share option charge and fair value adjustments of available-for-sale assets (17.0) (13.4)
*Operating loss* *(**50.7**)* *(19.2)*

^1 Cost of goods plus research, development, bioprocessing and administrative expenses excluding depreciation, amortisation and share option charge. A reconciliation to GAAP measures is provided on page 12.

Total expenses in H1 2023 were £78.7 million, compared with £70.7 million in H1 2022, a 11% increase over H1 2022. The increase was driven by the full six month impact in H1 2023 of the consolidation of the results of Oxford Biomedica Solutions, acquired during March 2022, as well as inflationary increases.

As a result of the lower revenues and increased operational spend, the Operating EBITDA loss in H1 2023 was £33.7 million, £27.9 million higher than the prior period (H1 2022 Operating EBITDA loss of £5.8 million).

*Total expenses*

In order to provide the users of the accounts with a more detailed explanation of the reasons for the period-on-period movements of the Group’s operational expenses included within Operating EBITDA, the Group has added together cost of goods, research and development, bioprocessing and administrative costs and has removed depreciation, amortisation and the share option charge as these are non-cash items which do not form part of the Operating EBITDA alternative performance measure. As Operating profit/(loss) is assessed separately as a key financial performance measure, the year-on-year movement in these non-cash items is then individually analysed and explained specifically in the Operating and Net profit/(loss) section. Expense items included within Total Expenses are then categorised according to their relevant nature with the year-on-year movement explained in the second table below:
   
*£m* *H1 202**3* *H1 202**2*
Research and development costs^1 31.4 27.3
Bioprocessing costs^1^ 2 30.3 12.4
Administrative expenses^1 12.9 16.5
*Operating expenses* *74.**6* *56.2*
Depreciation, amortisation & share option charge (17.0) (13.4)
*Adjusted operating expenses* *57.**6* *42.8*Cost of Sales

21.1

27.9
*Total expenses*^*1* *78.**7* *70.7*    

^1 Includes operational expenditure for Oxford Biomedica Solutions for the full six months as opposed to from March onwards during 2022.
^2 Bioprocessing costs have increased from the prior period due to the lower recovery of batch manufacturing costs which is also reflected in decreased cost of goods in H1 2023.

The table below shows total expenses by nature (excluding depreciation, amortisation and other non-cash items):

*£m* *H1 202**3* *H1 202**2*
Raw materials, consumables and other external bioprocessing costs 15.9 15.8
Personnel-related 47.1 40.4
External R&D expenditure 1.5 1.9
Due diligence costs - 5.1
Other costs 14.2 7.5
*Total expenses* *78.**7* *70.7*

Raw materials, consumables and other external bioprocessing costs have increased slightly as a result of a higher number of lentiviral vector batches manufactured in H1 2023 as compared to H1 2022. Personnel related costs are higher due to the full six month impact of payroll costs of employees acquired as part of the acquisition of Oxford Biomedica Solutions in March 2022. External R&D expenditure was lower as a result of a lower level of research and development project spend incurred in the platform division. Due diligence costs relate to the establishment of Oxford Biomedica Solutions during 2022. Other costs have increased compared to H1 2022 due to the full six month impact of the expenditure of Oxford Biomedica Solutions, foreign exchange losses of £0.5 million (H1 2022: £2.4 million gain), and inflationary increases in the administrative and facility expenditure.

*Operating profit/(loss) and net profit/(loss)*

*£m* *H1 202**3* *H1 202**2*
*Operating EBITDA*^1 *(**33.7**)* *(5.8)*
Depreciation, amortisation and share option charge (17.0) (13.4)
* Operating loss* *(**50.7**)* *(19.2)*
Financing (1.7) (8.2)
Taxation (0.3) (0.2)
*Net loss* *(**52.**7**)* *(27.6)*

^1 Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided above.

In arriving at the Operating loss, the Operating EBITDA loss of £33.7 million was further impacted by depreciation, amortisation and the share option charge.

Depreciation and amortisation increased by £3.6 million mainly due to Oxford Biomedica Solutions’ fixed assets and intangible asset depreciation and amortisation for the full six month period as opposed to the period from when they were acquired. The share option charge remained relatively stable compared to the prior period.

The impact of these charges resulted in an operating loss of £50.7 million in the first half of 2023 compared to a loss of £19.2 million in the prior year’s corresponding period.

The finance charge decreased by £6.6 million mainly due to foreign exchange gains of £1.7 million as opposed to foreign exchange losses of £4.9 million on the Oaktree loan in H1 2022, an increase in interest received of £2.2 million due to improved interest rates on cash balances held by the Group but offset by a £2.1 million increase in IFRS 16 interest on the lease liabilities related to the Group’s Boston and Windrush Court facilities.

The corporation tax expense which is based on the notional tax charge on the RDEC tax credit, included within research and development costs, has increased due to the increase in corporation tax rates, as well as an increase in the expected RDEC tax credit.

*Other Comprehensive Income*
The Group recognised a loss on other comprehensive income in H1 2023 of £4.6 million (2022: £10.8 million gain) in relation to movements on the foreign currency translation reserve.

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, including gains arising from monetary items that in substance form part of the net investment in foreign operations.

*Segmental analysis*

The Group reports its results within two segments, namely the “Platform” segment which includes the revenue generating bioprocessing and process development activities for third parties, and internal technology projects to develop new potentially saleable technology, improve the Group’s current processes and bring development and manufacturing costs down. The other segment, “Product”, includes the costs of researching and developing new product candidates.

*H1 202**3*

*£m* *Platform* *Product* *Total*
Revenues 43.0 0.1 43.1
Operating EBITDA^1 (28.7) (5.0) (33.7)
Operating loss (44.6) (6.1) (50.7)

*H1 202**2*

*£m* *Platform* *Product* *Total*
Revenues 64.0 0.0 64.0
Operating EBITDA^1 (0.8) (5.0) (5.8)
Operating loss (13.2) (6.0) (19.2)

1 Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 14.

Revenues from the platform segment decreased when compared to H1 2022 due to the non-recurrence of vaccine batches manufactured for AstraZeneca, partly offset by higher lentiviral and AAV manufacturing volumes. Operating results were negatively impacted by the lower revenues as well as Oxford Biomedica Solutions’ operational expenditure for the full six months as opposed to, in 2022, the period since they were acquired.

Revenues from the product segment were higher due to an increased level of clinical development activities for clients. Product operating expenses were higher due to increased research, development and preclinical product expenditure, but also increased manpower costs. The Group has concluded the review of strategic options for its product portfolio and, in line with its strategy to become a pure-play CDMO, has decided to discontinue work on internal product development from the second half of 2023. No material costs associated with the Product segment are expected to be carried by the Group post 2023.

In 2023 the Senior Executive Team re-assessed the reporting segments to reflect the way the business will be managed in future. Management reporting is currently being reworked to align with these new segments and the Group expects to be able to report on these new segments during H2 2023 and thereafter. No changes from the current basis have been reflected in these Interim financial statements.

*Cash flow*
   
*£m* *H1 202**3* *H1 202**2*
Operating loss (50.7) (19.2)
Depreciation, amortisation and share option charge 17.0 13.4
*Operating EBITDA*^*1* *(**33.7**)* *(5.8)*
Working capital 24.8 (19.3)
R&D tax credit received 3.5 0.6
*Cash consumed in operations* *(**5.4**)* *(24.5)*
Interest received less paid/(paid less received) 0.1 (1.7)
Capital expenditure *(4.9)* (6.0)
*Cash burn* *(**10.**2**)* *(32.2)*

1 Operating EBITDA (Earnings Before Net Finance Costs, Tax, Depreciation, Amortisation, fair value adjustments of assets at fair value through profit and loss, and Share Based Payments) is a non-GAAP measure often used as a surrogate for operational cash flow as it excludes from operating profit or loss all non-cash items, including the charge for share options. A reconciliation to GAAP measures is provided on page 14.

Operating losses for the first six months of 2023 were £31.5 million higher than the £19.2 million loss incurred in H1 2022. The positive inflow from working capital was mainly as a result of the decrease in trade and other receivables due to amounts received from clients outstanding as at December 2022. The 2021 RDEC tax credit was received in January 2023. Interest was received as opposed to paid (H1 2022) due to improved interest rates on cash balances held by the Group offset by increased IFRS 16 interest due on the lease liability related to the Group’s Boston and Windrush Court facilities. Capital expenditure decreased by £1.1 million compared to H1 2022 due mainly to lower levels of purchasing of bioprocessing and laboratory equipment.

*Statement of financial position*

The most notable items on the Statement of financial position, including changes from 31 December 2022, are as follows:

Non-current assets – Intangible assets and goodwill decreased from £105.9 million to £97.9 million due to amortisation of £3.6 million and foreign exchange movements of £4.4 million. Property, plant and equipment decreased from £133.8 million to £120.6 million due to disposals of property of £7.1 million, depreciation of £11.2 million, foreign exchange movements of £2.6 million, offset by capital expenditure of £8.2 million on mainly plant and equipment.

Current assets – Inventories increased slightly to £13.5 million from £12.6 million at 31 December 2022, mainly as a result of inventory purchased in preparation of the expected increased bioprocessing activities in the second half of 2023. Trade and other receivables have decreased by £26.9 million mainly as a result of the receipt of amounts outstanding from clients as at December 2022, but also lower levels of un-invoiced client work as compared to year end.

Current liabilities – Trade and other payables have decreased from £36.6 million at the start of the year to £26.2 million due to lower levels of client and other operational activities leading to lower levels of accruals and trade creditors outstanding. Contract liabilities have increased by £4.1 million due to the invoicing of orders received in advance for the goods and services being provided by the Group. Lease liabilities increased by £0.4 million as the recognition of the lease liability on our Harrow House facility more than offset lease payments during the period. Deferred income decreased due to the recognition of grant income related to production capacity expansion.

Non-current liabilities – Provisions increased by £0.5 million as a result of the recognition of a liability for the costs of restoring the newly leased Harrow House manufacturing facility to its original state at the end of the lease term. Contract liabilities have increased by £4.5 million due to the invoicing of orders received in advance for the goods and services being provided by the Group. The put option liability to acquire the remaining 20% of Oxford Biomedica Solutions that the Group doesn’t already own has decreased from £38.2 million at 31 December 2022 to £20.3 million at the end of June 2023 due to a decrease in the value at which the option is expected to be exercised.

The Group’s cash resources at 1 January 2023 were £141.3 million. Cash used in operations was £5.4 million. which includes £3.5 million RDEC tax credit received. Other significant cash flows were £4.4 million received from the sale of Harrow House facility, £4.9 million of capex expenditure, £5.3 million of lease liability payments and a negative impact from exchange rates on cash balances held of £1.3 million. The cash balance at 30 June 2023 was £129.4 million with a net cash position of £90.1 million.

*Post balance sheet event*

Homology Medicines Inc. strategic update
As a result of Homology Medicines Inc. announcing an update on their business, including strategic alternatives in July 2023, the Group will perform an impairment review for the Oxford Biomedica Solutions’ CGU as at 31 December 2023 to assess any potential impairment of the intangible assets and fixed assets of the CGU during H2 2023. Any resultant impairment charge will be booked in the December 2023 year-end financial statements.

Potential transaction to acquire ABL Europe
Oxford Biomedica has entered into exclusive negotiations for the proposed acquisition of ABL Europe SAS. Terms of the proposed transaction would include a consideration of €15million, (including the value of £8.6 million (€10 million) of pre-completion cash funding in ABL Europe from Institut Mérieux), in exchange for Oxford Biomedica shares. In addition, Institut Mérieux would also commit to provide Oxford Biomedica with £17.2 million (€20 million) of additional funding, to cover capex and potential future operating losses, in exchange for new Oxford Biomedica shares.

In addition, under the proposed transaction, Institut Mérieux would further build its ownership of Oxford Biomedica by acquiring up to £8.6 million (€10 million) of additional Oxford Biomedica existing ordinary shares in the market from the date of this announcement to 31 March 2024. Institut Mérieux intends to build its ownership of Oxford Biomedica shares through purchases in the open market so as to reach, in aggregate, approximately 10 per cent of the Company’s enlarged issued share capital.

*Financial outlook*

Oxford Biomedica is reorganising its business as it finalises its transformation towards a pure-play cell and gene therapy CDMO. As part of this transformation the Group is expected to incur a one-off restructuring cost of c.£10 million in the second half of 2023. The Group has concluded the review of strategic options for its therapeutics products portfolio and spend on therapeutic products will be ceased during H2 2023. In addition, there will be a streamlining of the organisational structure and adopting of a more client-focused R&D strategy.

Group revenues for 2023 are expected to be approximately £90 million, below current market expectations due to lower milestone and license payments than previously expected, and reduced or delayed bioprocessing orders from clients. Significant revenue growth is expected in 2024 vs. 2023, driven by high levels of business development activity. This includes existing client programmes progressing through development and the acquisition of new clients, notwithstanding a slowdown in the biotech funding environment.

The Group has a high level of visibility over revenues for the remainder of 2023 with more than 90% of forecasted revenues for the second half of the year covered by existing binding purchase orders and rolling client forecasts. The Group’s revenue backlog at 30 June 2023 stood at £95 million; this is the amount of future revenue available to earn from current orders. The Group expects to grow this backlog significantly going forward based on high levels of business development activity driving new client acquisition, as well as orders from existing clients. The strong execution and delivery of commercial strategy gives strong visibility in and confidence in 2024 revenue growth.

Whilst the outcome of Homology’s strategic review is not yet known, the Group expects Homology to remain a client of the Group with contracted revenues for the remainder of 2023; and is prudently assuming that no further revenues are expected from 2024 onwards. Homology remains well capitalised with cash and short term investments of £100.8 million ($127.1 million) as of 30 June 2023. In addition, they recently reported encouraging data from their Phase I trial evaluating gene editing candidate HMI-103 in adults with PKU.

The Operating EBITDA loss (after restructuring costs) for the second half of 2023 is expected to be approximately £10 million better than the first half. As a result of business transformation and cost reductions completed in 2023, the ongoing cost base from 2024 is anticipated to be reduced by c.£30m on an annualised basis compared to 2023.

Capex levels are expected to be similar in the second half of 2023 to the first half of 2023 with the Group taking a cautious approach to planning significant new projects.

With a strong cash position of £121.4 million and a net cash position of £83.0 million as at 31 August 2023, the Group is well financed.

*Medium term guidance*

In 2024 and beyond, the Group expects to continue to grow lentiviral vector and AAV manufacturing and development revenues through the successful development of existing client relationships and the continued targeting of new client relationships. Further, the group is already accelerating towards broadly breakeven Operating EBITDA by the end of 2024 with a leaner cost base and positive momentum in business development activities, including growth in both orders and pipeline.

Building on its leading position in lentiviral vectors, the Group aims to ultimately have a market leading position in the viral vector outsourced supply market across all key vector types. The Group aims to achieve three-year revenue CAGR in excess of 30%, and at least a doubling of revenues by the end of 2026 from the approximately £90 million being indicated for 2023, with this growth being maintainable into the longer term. This will be supported by the strength of the Group’s revenue backlog, growing pipeline of potential new business opportunities, and the progress being made by the newly expanded business development team and the new commercial strategy.

With increased operational efficiencies, targeted cost management, and targeted investment the Group aims to achieve Operating EBITDA margins in excess of 20% by the end of 2026.

Financial impact from the potential transaction to acquire ABL Europe announced today is excluded from mid-term guidance pending completion of the transaction.

Finally, management reporting for the financial year 2023 will reflect the Group’s new structure as a pure-play CDMO. Future guidance is anticipated to be split by the new reporting segments.

*Principal risks and uncertainties*

Risk assessment and evaluation is an integral and well-established part of the Group’s management processes. The Group’s management framework incorporates the implementation of a mitigation strategy, each tailored to the specific risk in question. Details of our principal risks and uncertainties can be found on pages 64 to 68 of the 2022 Annual report & accounts which is available on the Group’s website at www.oxb.com. A summary of these risks is provided below. We have seen increased risk with regards to the execution of the business plan for Oxford Biomedica Solutions, and the risks associated with moving into the AAV sector, and a decrease in product liability risk as a result of the Group discontinuing product development. The remaining risks have been assessed not to have changed materially.

Commercialisation risks

· Failure or delays in the execution of the business plan for Oxford Biomedica Solutions
· Risks associated with the move into the AAV sector
· Discontinuation of product development by collaborators and partners
· Unable to keep up with rapid technological changes

Supply chain and business execution risks

· Failure of key third party suppliers
· Bioprocessing failures
· Cyber attacks
· Failure to attract, develop and retain talented and capable workforce

Legal, regulatory and compliance risks

· Adverse outcomes of litigation; governmental; or regulatory inspections
· Infringement of IP and patents

Economic and financial risks

· Impacts of climate change
· Exposure to foreign currency fluctuations
· Claims from product liability
· Impacts from the war in Ukraine and COVID-19

*Going concern*

The financial position of the Group, its cash flows and liquidity position are described in the primary statements and notes to these interim financial statements.

The Group made a loss for the period ended 30 June 2023 of £52.7 million, consumed net cash flows from operating activities of £5.4 million, and ended the period with cash and cash equivalents of £129.4 million. The Group sold its Harrow House facility in a sale and leaseback transaction for £4.5 million to Kadans, whilst also agreeing an occupational lease of the property for 15 years. In considering the basis of preparation of the Interim financial statements, the Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements, based in the first instance on the Group’s 2023 latest view,, and forecasts for 2023 and 2024. The Directors have undertaken a rigorous assessment of the forecasts in a base case scenario and assessed identified downside risks and mitigating actions.

These cash flow forecasts also take into consideration severe but plausible downside scenarios including:

· Commercial challenges leading to a substantial manufacturing and development revenue downside affecting both the LentiVector® platform and AAV businesses;
· No revenues from new customers;
· Decreases in forecasted existing customer milestones and removal of any future license revenues, and
· The potential impacts of a recession on the Group and its customers including expected revenues from existing customers under long term contracts.

Under both the base case and mitigated downside scenario, the Group and parent company has sufficient cash resources to continue in operation for a period of at least 12 months from the date of approval of these financial statements.

In the event of the downside scenarios crystallising, the Group would continue to meet its existing loan covenants until December 2024 without taking any mitigating actions, but the Board has mitigating actions in place that are entirely within its control that would enable the Group to reduce its spend within a reasonably short time-frame to increase its cash covenant headroom as required by the loan facility with Oaktree Capital Management.

The Board has confidence in the Group’s ability to continue as a going concern for the following reasons:

· As noted above, the Group has cash balances of £129.4 million at the end of June 2023, and £121.4 million at the end of August 2023;
· More than 90% of 2023 forecasted revenues are covered by binding purchase orders and rolling customer forecasts which give confidence in the level of revenues forecast over the next 12 months; and
· The Group’s history of being able to access capital markets including raising £77.0 million of equity during 2022;
· The Group’s history of being able to obtain loan financing when required for purposes of both capital expenditure and operational purposes, as recently evidenced by the US$85 million one-year facility and US$50 million replacement four-year facility obtained with Oaktree;
· The Group intends to delay the construction element of its OXBOX manufacturing facility expansion to now take place during 2028 and 2029;
· The completion of the potential transaction to acquire ABL Europe is subject to successful completion of due diligence, regulatory approvals and final Board approval. The Board of Oxford Biomedica do not intend to approve the transaction if it is expected to materially impact our ability to continue as a going concern;
· The Group’s ability to continue to be successful in winning new customers and building its brand as demonstrated by successfully entering into new customer agreements including with Arcellx, Cargo Therapeutics and Oxford University over the last 6 months;
· The Group has the ability to control capital expenditure costs and lower other operational spend, as necessary.

Taking account of the matters described above, the Directors remain confident that the Group will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

*Consolidated Statement of Comprehensive **Expense*
*for **t**he six months ended 30 June **202**3*
        *Six months ended *
*30 June 202**3*
*Unaudited* Six months ended
30 June 2022
Unaudited Notes *£’000* £’000
Revenue   *43,061* 64,027
Cost of sales   *(21,122)* (27,899)
*Gross profit*   *21,939* 36,128Bioprocessing costs   *(**30,314**)* (12,383)
Research and development costs   *(**31,417**)* (27,310)
Administrative expenses   *(**12,838**)* (16,479)
Other operating income   *1,40**2* 925
Gain on sale and leaseback   *472* -
Change in fair value of av