Oxford Biomedica plc (LON:OXB) is up about 11% today with the announcement of a collaboration & License Agreement with Bioverativ to develop some key haemophilia products using gene/cell therapy. Under the agreement, OXB is eligible to receive an upfront payment of $5 million + payments in excess of $100 million and undisclosed royalties on sales of the Bioverativ’s products. Not bad eh. Oxford BioMedica’s LentiVector’s platform appears to be really gaining traction.
Actually, the company has had a lot of good press lately. In January, it was awarded a £3 million grant by Innovate UK; and one of the Novartis’ products on the LentiVector platform Kymriah was recently accepted by the FDA for Priority review. The European Medicines Agenty has also granted accelerated assessment as well for Kymriah.
It’s not surprising therefore, why this company is at near all time highs at the moment. The company had a low share price of 3.77p over the past year, vs a price of 12p now (over 300% rise); definately not bad in my books. The big question is now though, at a market capitalization of £372.96M, is it worth it to buy in now? Can a purchaser expect shares to possibly treple the value of their shares 3 years from now?
The reality is that the company has several products in development, any one of which could be a runaway success. The company also has license agreements with many leading pharmaceutical firms like Novartis and Bioverativ.
Full year results should be coming out shortly, but taking a look at the numbers from the interim half year report
- Revenue increased by 26%
- Losses narrowed from £6.9 million to £2.2 million
- Cash burn was about £5 million in 6 months (Dec 2016 – Jun 2017), leaving cash at a balance of £10.2 million. However, cash has been topped up by one off payments (e.g 31 July 2017, cash was £22 million from a payment from Novartis)
- Debt was £23 million
Given that the company continues to receive one off payments, I don’t see it running into any issues in the immediate future cash wise. The only question is then; is the company under valued, fairly valued or over valued at £372.96M?
£372.96M for a company that made a half year loss of £2.2 million seems a bit pricey, but with the company continuing to secure deals for its gene/cell therapy platform; and with so many products in the pipeline; there is no doubt that the company is definitely growing. With the gene/cell therapy sector to be worth multiple billions in the not too distant future, I would not be surprised if Oxford Biomedica turns out to be a major player.
Please do your own research, but for me, I think it’s a long term buy.
