Oxford Biomedica Regulatory News (OXB)

10 Mar 2008 07:01

Oxford Biomedica PLC10 March 2008 Simultaneously to the analyst briefing at 10:30am, there will be a live audioweb cast of the results presentation. To connect to the web cast facility,please go to http://mediaserve.buchanan.uk.com/webcasts/livegold/lrframes.htmapproximately 10 minutes (10:20am) before the start of the briefing. In additionto the web cast there will also be a conference callplease dial +44 (0)20 8609 1435 and use pin number 131567# For Immediate Release 10 MARCH 2008 OXFORD BIOMEDICA PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 Oxford, UK - 10 March 2008: Oxford BioMedica (LSE: OXB), a leading gene therapycompany, today announces its preliminary results for the year ended 31 December2007. Operational highlights: TroVax(R): cancer • Global collaboration with sanofi-aventis • Achieved two milestones under sanofi-aventis agreement • Three successful DSMB reviews of TRIST study in renal cancer • Further Phase II results in renal cancer suggest therapeutic potential ProSavin(R): Parkinson's disease • Initiated Phase I/II trial in Parkinson's disease • Efficacy in ongoing preclinical studies exceeds 27 months Hi-8(R) MEL: melanoma • Phase II follow-up confirms survival advantage in immune responders Other development products • Recruitment progressing in Phase II trial of MetXia(R) in pancreatic cancer • Preclinical results with RetinoStat(R) in wet AMD confirm proof of concept • Preclinical results with StarGen(TM) in Stargardt's disease confirm proof of concept • Initiated EndoAngio-GT anti-cancer programme Technology and corporate • Acquisition of Oxxon Therapeutics • Technology licensing agreement with major US biotech company • Secured rights to therapeutic use of Nobel Prize-winning RNAi technology Financial highlights (audited financial results): • Payments from sanofi-aventis £25.8 million (2006: nil) • Revenue £7.2 million (2006: £0.8 million) • Research & development costs £22.1 million (2006: £19.5 million) • Loss for the year £15.3 million (2006: £17.6 million) • Positive operational cash flow £5.9 million (2006: cash burn £15.9 million) • Net cash1 £38.1 million (31 December 2006: £28.5 million) Commenting on the annual results, Oxford BioMedica's Chief Executive, ProfessorAlan Kingsman said: "2007 has been a transformational year for Oxford BioMedicawith the achievement of our two main corporate objectives: a global alliancewith sanofi-aventis for TroVax; and the initiation of a Phase I/II trial withProSavin in Parkinson's disease. We have ended 2007 with four products inclinical development; support for our lead product from a partner that is amajor player in oncology and vaccines; and a strengthened balance sheet. In2008, we will maintain our focused and financially prudent strategy for growth.Over the next 18 months, key clinical results are expected from trials of bothTroVax and ProSavin, which could dramatically enhance the value of theseprogrammes and could support the registration of our first therapeutic product." 1. Cash, cash equivalents and current financial assets -Ends- For further information, please contact: Oxford BioMedica plc:Professor Alan Kingsman, Chief Executive Tel: +44 (0)1865 783 000 JPMorgan Cazenove Limited:James Mitford/ Gina Gibson Tel: +44 (0)20 7588 2828 City/Financial Enquiries:Lisa Baderoon/ Mark Court/ Mary-Jane Johnson Tel: +44 (0)20 7466 5000Buchanan Communications Scientific/Trade Press Enquiries:Gemma Price/ Holly Griffiths/ Katja Stout Tel: +44 (0)20 7457 2020College Hill Life Sciences US Enquiries:Thomas Fechtner Tel: (646) 378 2900The Trout Group LLC Notes to editors 1. Oxford BioMedica Oxford BioMedica (LSE: OXB) is a biopharmaceutical company specialising incancer immunotherapy and gene-based therapies. The Company was established in1995, as a spin-out from Oxford University, and is listed on the London StockExchange. The Company has a platform of gene delivery technologies, which are based onhighly engineered viral systems. Oxford BioMedica also has in-house clinical,regulatory and manufacturing know-how. The lead product candidate is TroVax(R),an immunotherapy for multiple solid cancers, which is licensed to sanofi-aventisfor global development and commercialisation. TroVax is in Phase IIIdevelopment. Oxford BioMedica has three other products in clinical development,including ProSavin(R), a novel gene-based treatment for Parkinson's disease, ina Phase I/II trial. The Company is underpinned by over 80 patent families, whichrepresent one of the broadest patent estates in the field. The Company has astaff of approximately 85. Oxford BioMedica has collaborations withsanofi-aventis, Wyeth, Sigma-Aldrich, MolMed and Virxsys. Technology licenseesinclude Biogen Idec, Merck & Co, GlaxoSmithKline and Pfizer. Further information is available at www.oxfordbiomedica.co.uk CHAIRMAN'S STATEMENT 2007 has been a transformational year for Oxford BioMedica with the achievementof our two main corporate objectives. Firstly, the global alliance withsanofi-aventis for TroVax, signed in March 2007, is one of the most valuablelicensing agreements for an active cancer immunotherapy and provides both nearand long-term value for Oxford BioMedica. TroVax will benefit fromsanofi-aventis' substantial development expertise in oncology and vaccines aswell as its global commercial infrastructure. Together with sanofi-aventis, weare preparing for commercialisation of TroVax, with the first of three plannedPhase III trials progressing well. Secondly, in December 2007, we initiated aPhase I/II trial of ProSavin, which is a potentially revolutionary treatment forParkinson's disease. This is the first clinical trial of a product that utilisesour proprietary LentiVector technology, which is the backbone of multipleproduct candidates in our pipeline and various licensing deals. The start ofthis trial is the culmination of over ten years of research at Oxford BioMedica.In summary, we ended 2007 stronger than ever in terms of our developmentpipeline, and our financial position has also been strengthened following theinitial payments from sanofi-aventis. Strategic focus Owing to the current risk-adverse capital markets, we have reassessed ourdevelopment priorities to ensure that internal efforts are focused on thoseproduct candidates that offer the greatest potential value to Oxford BioMedica.The strategic purpose of this review was to ensure that the Company continues togrow and expand, but maintains prudent management of its financial resources. Weown some exceptional assets in the field of cancer immunotherapy and gene-basedmedicines with a deep and robust pipeline of product candidates. The strength ofthese assets means that we are well positioned to pursue our strategy ofpartnering certain assets to access additional resources, while investing in thefurther development of key programmes. As part of our strategy, we have sought to broaden our technology platformcreating opportunities both for near-term revenue streams from licensing andalso new in-house development programmes. In 2007 we acquired OxxonTherapeutics, which has brought complementary intellectual property inimmunotherapy and a novel vaccine for melanoma in Phase II development.Furthermore, in January 2008, we secured exclusive rights to use NobelPrize-winning RNA interference (RNAi) technology in therapeutic approaches wherethe active RNAi molecules are delivered using our LentiVector technology. RNAirepresents a new treatment approach based on turning off gene expression (genesilencing). We will continue to evaluate new opportunities that are consistent with ourstrategy and can accelerate the growth of our business. Our core strategicthemes are described in the Strategy section of the Business Review. People Our employees are crucial to the success of Oxford BioMedica and we arecommitted to the development of a motivated and professional workforce. It istheir skill and expertise that has enabled us to achieve our progress to date.In 2007, we expanded our staff count to 82 from 73. We will continue to add toour existing team, as we broaden our activities and move towards thecommercialisation of our first product, to ensure that we have the appropriateskill base to address these challenges. On behalf of the entire Board, I wouldlike to thank our staff for their hard work in 2007 and their continued supportand commitment. Looking Ahead The fundamentals of the biotechnology industry remain strong, particularly forcompanies that are developing novel biological therapies for major unmet medicalneeds. The pharmaceutical industry is under pressure to improve its research anddevelopment productivity and many of the major pharmaceutical firms have raisedtheir targets for revenue from in-licensed and biological products within thenext few years. Oxford BioMedica aims to be the leading company in thespecialised areas of cancer immunotherapy and gene-based medicines. During 2007,the pharmaceutical industry showed increased interest in these fields and madesome significant investments, as evidenced by several recent collaborations,including our alliance with sanofi-aventis. Over the next few years, we expectto benefit from further convergence between the pharmaceutical industry andinnovative biotechnology companies. In 2008, as TroVax moves towardscommercialisation and data emerge from the Phase I/II trial of ProSavin, we willmaintain our focused and financially prudent strategy for growth. Dr Peter Johnson CHAIRMAN STRATEGY Our goal is to create a profitable biopharmaceutical company through thecommercialisation of novel safe and effective gene-based medicines to treatunmet medical needs. To mitigate the inherent risks of drug development, we haveadopted a hybrid business model that combines in-house and collaborativeresearch and development, enabling us to establish a portfolio of productcandidates that address multiple therapeutic areas. We also actively out-licenseour proprietary technologies for use in research or drug development to generatenear-term revenue streams and, in some cases, royalties on product sales. In2007, we undertook a review of our pipeline to prioritise our developmentefforts and maximise the potential return from our in-house investment. Withrigorous financial management, we aim to deliver sustained growth and value forour shareholders and other stakeholders. OPERATIONAL REVIEW ADVANCED CANDIDATES TROVAX(R) Development of our lead product candidate, TroVax, is progressing in multiplecancer types. The product is one of the most advanced therapeutic cancervaccines in development. Therapeutic vaccines have the potential to play asignificant role in cancer therapy as additive treatment options for patients.We believe that TroVax could be one of the first registered products in thisfield. Sanofi-aventis Collaboration In March 2007, we secured a licensing agreement with sanofi-aventis for theglobal development and commercialisation of TroVax. The agreement is one of thelargest alliances in the field of cancer immunotherapy. Oxford BioMedica received payments from sanofi-aventis totalling €38 million in2007, comprising an initial payment of €29 million and an early developmentmilestone payment of €9 million. A further milestone payment of €10 million wastriggered in February 2008 following the third successful interim analysis ofthe TRIST study by the Data Safety Monitoring Board. Further development andregulatory milestone payments could yield up to €470 million if TroVax isapproved for a small number of defined cancer types. Oxford BioMedica isentitled to additional milestone payments for other cancer types, commercialmilestone payments when sales reach certain targets and tiered escalatingroyalty income on global sales. The Phase III TRIST study of TroVax in renal cancer is being managed by OxfordBioMedica and co-funded with sanofi-aventis. All other TroVax activities,including development, registration and commercialisation, will be funded bysanofi-aventis. As part of the agreement, sanofi-aventis is committed to therapid initiation of a Phase III trial in colorectal cancer. In terms ofcommercialisation, Oxford BioMedica retains an option to participate in thepromotion of TroVax in the USA and the European Union. Phase III TRIST Study Progress The Phase III TRIST (TroVax Renal Immunotherapy Survival Trial) study isprogressing well. We are approaching full recruitment of 700 patients. The rateof recruitment has been encouraging. Over 100 centres are participating in theUSA, Western Europe and Eastern Europe. It is rare for such a large trial torecruit to plan. One factor that affects the rate of recruitment, but isdifficult to predict at the outset of a multi-centre trial, is clinicians'enthusiasm for the product. Clinicians have been highly supportive of the trial,which reflects TroVax's excellent safety profile and potential to improvepatients' survival and quality of life. The trial has been recruiting at a rate of about 50 patients per month. This iscomparable to the recruitment rate for the Phase III trial of Pfizer's Sutent(R)(sunitinib), which was one of the recently launched targeted agents for renalcancer that has had rapid uptake in terms of commercial sales. In January 2007,the UK National Cancer Research Network (NCRN), which provides the UK NationalHealth Service (NHS) with the infrastructure to support cancer clinical trials,agreed to adopt the trial. The NCRN's adoption of TRIST means that multiple NHScentres are participating in the study. In reaching its decision to adopt theTRIST trial, the Renal Cancer Clinical Studies Group of the NCRN evaluatedTroVax and the trial design and concluded that the product offers potentialimprovement in care for patients within the NHS. The study is being conducted in patients with locally advanced or metastaticclear cell renal carcinoma. It is a randomised, placebo-controlled, two-armstudy comparing TroVax in combination with standard of care to placebo withstandard of care. The standard of care therapy can be sunitinib,interferon-alpha or interleukin-2. The protocol stratifies treatment between thethree standards of care to ensure that the allocation of TroVax and placebo isrigorously balanced. The primary endpoint for the trial is overall survival;secondary endpoints include the percent of patients with progression-freesurvival at week 26, tumour response rates and quality-of-life scores. The trialis being conducted under a Special Protocol Assessment (SPA) agreement from theFDA. The SPA specifies the design, conduct, analysis and endpoints of the trial.With this in place, this single comparative trial may be used to support anefficacy claim in a regulatory submission to the FDA. The independent DSMB for the TRIST study has completed three scheduled interimanalyses, the most recent one being in February 2008. Following each review, theDSMB concluded that the trial should continue as planned without modification.The role of the DSMB is to evaluate unblinded data from the ongoing trial todetermine whether there are safety or efficacy issues that would warrantmodification of the protocol or early termination of the study. The DSMB isindependent of Oxford BioMedica and sanofi-aventis. To preserve the studyblinding, the DSMB provides no additional information other than itsrecommendation. Based on the current progress, we expect the trial to reach its primary endpointin the first half of 2009, which is aligned with our expectations at the outsetof the study. If the primary endpoint is achieved, sanofi-aventis could file itsfirst regulatory submission for registration of TroVax in renal cancer within afew months of the trial results. With Priority Review from the FDA, theregulatory review period could be six months from submission. Colorectal Cancer Phase III Trials Starting Sanofi-aventis is starting an international, randomised, placebo-controlledPhase III trial of TroVax in colorectal cancer. The Phase III trial, which hasbeen named FLAMENCO, is designed to assess TroVax as a first line treatment ofpatients with Stage IV metastatic colorectal cancer. It is expected to enrolapproximately 1,300 patients. The trial design is similar to the TRIST study, inthat it will evaluate TroVax in combination with standard of care versus placeboplus standard of care. The standard treatment will be chemotherapy with orwithout Avastin(R) (bevacizumab), which will be stratified between the two armsof the study. The primary endpoint will be overall survival and the trial willinclude an interim analysis to evaluate time to disease progression. The trialwill be conducted under a SPA with the FDA and patient recruitment is expectedto start in mid-2008. Results from the interim analysis are anticipated in 2010. In addition to the Phase III trial in metastatic colorectal cancer, the UKclinical trials network QUASAR is starting a trial of TroVax in early-stagecolorectal cancer. This trial is supported by both sanofi-aventis and OxfordBioMedica. Sanofi-aventis will act as the US regulatory agent for the trial,which has been submitted to the US and UK regulatory authorities. The trial willassess TroVax in patients with Stage II/III colorectal cancer who have hadsurgical resection of their primary tumours and been treated with adjuvantchemotherapy. It is expected to enrol approximately 3,000 patients and has beendesigned with a primary endpoint of three-year disease-free survival. Thefunding of the QUASAR trial derives from a variety of sources, including the UKMedical Research Council and the Department of Health as well as OxfordBioMedica and sanofi-aventis. Patient recruitment is expected to commence inmid-2008. Update on US-sponsored Breast Cancer Trial Over the last two years, we have been liaising with the SouthWest Oncology Group(SWOG), which is one of the largest cancer clinical trials cooperative groups inthe USA, funded by research grants from the US National Cancer Institute, partof the National Institutes of Health. SWOG was planning to conduct a Phase IItrial of TroVax in patients with advanced breast cancer. Since TroVax is beingevaluated in a major Phase III programme, SWOG, Oxford BioMedica andsanofi-aventis have now concluded that an open-label Phase II study of TroVax toevaluate safety and immunology in this patient group is no longer necessary.SWOG remains committed to the TroVax programme, and we are working with theorganisation to design a larger study of TroVax in breast cancer. Encouraging Results from Phase II Trials in Renal Cancer At the Annual Meeting of the American Society of Clinical Oncology (ASCO) inJune 2007, new data were reported from two Phase II trials of TroVax in renalcancer. TroVax was well tolerated with no serious adverse events attributable tothe treatment and the product induced anti-5T4 antibody responses in 91% ofpatients. Twenty-four of 35 evaluable patients with clear cell renal carcinoma(68%) showed disease control. Two patients had complete responses (i.e. theirtumours were completely eradicated), three had partial responses (i.e. tumourshrinkage) and 19 had stable disease for periods exceeding three months,including three patients that were stable for more than 17 months. Preliminaryanalysis of clinical benefit showed a statistically significant relationshipbetween reduction in tumour burden in patients with clear cell renal carcinomaand patients' anti-5T4 antibody responses (p=0.028). These encouraging new datasupport the hypothesis that the 5T4-specific immune response induced by TroVaxhas therapeutic benefit. Presentation of Final Phase II Results Together with sanofi-aventis, we aim to present final data from all fouropen-label Phase II trials of TroVax in renal cancer at ASCO in May/June 2008.The trials evaluated TroVax as a single agent and in combination with high-doseinterleukin-2, low-dose interleukin-2 or interferon-alpha. Separately, we plan to report results from the completed Phase II trial ofTroVax in prostate cancer at the Targeted Anticancer Therapies meeting, 20-22March 2008, in the USA. The trial, in 27 patients with hormone-refractoryprostate cancer, evaluated TroVax as a single agent and in combination with thestandard therapy, granulocyte-macrophage colony-stimulating factor (GM-CSF).Preliminary data from this trial were previously reported in April 2007 at theAnnual Meeting of the American Association for Cancer Research, showing thatTroVax was well tolerated and all patients developed anti-5T4 antibodyresponses. Pre-commercialisation Plan The presentation of clinical data at upcoming conferences is part of thepre-commercialisation plan for TroVax ahead of the Phase III TRIST study resultsand potential registration in 2009. Sanofi-aventis is implementing acommunications initiative to inform and educate the oncology community withregards to TroVax ahead of its potential launch. The companies have secured manufacturing for commercial launch, together withmaterial for the Phase III trials in colorectal cancer. Discussions are ongoingwith sanofi-aventis and our contract manufacturer regarding longer-term supply.Sanofi-aventis is evaluating its manufacturing strategy, which may include anin-house manufacturing facility for TroVax. Summary We are delighted by the progress of the TroVax programme and by the commitmentof our partner, sanofi-aventis. By combining Oxford BioMedica's expertise incancer immunotherapy and the experience of sanofi-aventis in clinicaldevelopment and commercialisation of oncology products, we hope to be able tobring this innovative and potentially valuable medicine to patients as soon aspossible. PROSAVIN(R) The first clinical trial of ProSavin in Parkinson's disease is underway inFrance. It is the first trial using our proprietary LentiVector technology and,as such, represents a major event for Oxford BioMedica and the future of thepipeline of products that use the same technology. The superior efficacy ofProSavin combined with the absence of side effects in preclinical studiessuggest that ProSavin could be used to replace standard L-DOPA therapy inpatients with moderate to late-stage Parkinson's disease. Following ourdiscussions with the regulatory agency in France, we have started preparationsto move from this Phase I/II trial directly into a Phase III trial, which couldstart at the end of 2009 or early 2010. Phase I/II Trial Initiated In December 2007, we opened the Phase I/II trial of ProSavin, having receivedregulatory clearance from the French Health Products Safety Agency (AFSSAPS) forour Clinical Trial Application (CTA). The CTA was submitted in July 2007.Patient recruitment is underway at the Henri Mondor Hospital in Paris, which isa European centre of excellence for neurosurgery and a member of the AssistancePublique Hopitaux de Paris (APHP) in France. Several patients are undergoingdetailed evaluation of their baseline Parkinsonian status prior to surgicaladministration of ProSavin. Treatment of the first patient is imminent. The primary objectives of the trial are to assess the safety and efficacy ofProSavin. The analyses of patients will include the application of advancednon-invasive neuro-imaging techniques. Phase I/II Trial Design Patients in the trial will have been diagnosed with Parkinson's disease and willbe failing on current treatment with L-DOPA but they will not have progressed toexperiencing drug-induced movement disorders (dyskinesias). It is a two-stagestudy. The first stage is an open-label dose escalation to evaluate two doselevels of ProSavin in cohorts of three patients each. In the second stage of thetrial, a further 12 patients will be recruited. Four of the 12 patients will actas a control group and only receive "sham" surgery. ProSavin is administered locally to the brain, converting the target cells intoa dopamine factory, thus replacing the patient's own lost source of theneurotransmitter. The surgical procedure for administration of ProSavin entailsstereotactic bilateral injection into the striatum of the brain under generalanaesthesia using MRI-imaging and mapping. The procedure is designed to benon-destructive to tissue and does not leave any device in the brain. The efficacy of ProSavin will be assessed using the Unified Parkinson's DiseaseRating Score (UPDRS). Patients will be monitored at regular intervals, with theprimary endpoint being an efficacy assessment at six months after treatment. Thesecondary objective of the trial is to asses the extent to which patients'current therapy (L-DOPA) can be reduced or removed following administration ofProSavin. Sustained Efficacy in Preclinical Studies We continue to assess the long-term efficacy data of ProSavin in a preclinicalsetting. In the industry-standard preclinical model of Parkinson's disease,known as the MPTP model, ProSavin induces almost complete recovery of movementfunction and other behavioural measurements following a single administration.In this model, the most recent time point shows that the therapeutic effect ofProSavin has been maintained for over 27 months with no diminution. Efficacy wassimilar to that expected with standard daily treatment with L-DOPA but with noevidence of the dyskinesias associated with prolonged L-DOPA treatment. Phase III Preparations If the safety and efficacy observed in preclinical studies of ProSavin isreplicated in the Phase I/II trial, then we would aim to move directly to aPhase III trial. Based on our anticipated timelines for the Phase I/II trial andfor scaling-up the manufacture of ProSavin for Phase III and commercialisation,the Phase III trial could start in late 2009 or early 2010. The trial could becompleted within two years, supporting first product registration in 2012-13. Summary Current standard therapy for Parkinson's disease is only partially effective inthe mid to late stage of disease and can induce debilitating side effects afterlong-term use. ProSavin has the potential to address this unmet medical need,offering long-lasting benefit from a single administration with an excellentsafety profile. We are pleased to have started our first clinical trial of thispotentially important new treatment approach for Parkinson's disease. Theproduct could significantly expand the worldwide market for Parkinson's diseasetherapies, which are estimated to generate sales in excess of US$3 billion, byreducing the social care burden associated with the mid to late-stage ofdisease. The LentiVector system used within ProSavin is common to multiple preclinicalcandidates in our pipeline. The infrastructure for ProSavin that relates tomanufacturing scale-up and safety testing can be applied across this portfolio.Hence, the time invested in the ProSavin programme should benefit our otherLentiVector-based programmes. HI-8(R) MEL Hi-8 MEL is a therapeutic vaccine for metastatic melanoma, which was added tothe pipeline following the Company's acquisition of Oxxon Therapeutics in March2007. Oxxon Therapeutics had previously evaluated Hi-8 MEL in two clinicaltrials. These trials showed that the vaccine was well tolerated and producedstrong killer T-cell immune responses against the cancerous cells at certaindose levels. The product has the potential to reduce mortality in patients withadvanced disease, and can be used alongside standard therapy without addingsignificant toxicity. Hi-8 MEL is based on the same MVA vector technology asTroVax, together with a DNA-based configuration of the vaccine. If melanoma istreated early it can be cured by surgical resection. However, half of those withmetastatic melanoma die of the disease within five years. A melanoma vaccinewould offer new hope to such patients. Encouraging Update on Phase II Trial in Melanoma Updated results from a Phase II trial were presented at the American Associationof Immunologists Annual Meeting in May 2007. The trial, in 41 patients withStage III/IV melanoma, was designed to evaluate the immune and clinicalresponses elicited by Hi-8 MEL. The product was highly immunogenic with 91% ofpatients that received the optimal dose showing an antigen-specific immuneresponse. Eight patients (20%) showed periods of disease control. Thepresentation included follow-up of one patient that exhibited a sustainedpartial response for more than two years. The median survival for immuneresponders was 100 weeks versus 37 weeks for non-responders (p < 0.001). Strategy for future development The Company believes information garnered from the ongoing TroVax studies willprovide additional useful information on how best to develop Hi-8 MEL, which isa MVA-based tumour vaccine, like TroVax. We are reviewing the currentformulation and data generated by Oxxon to ensure that Hi-8 MEL is ready forfull development pending successful completion of the Phase III TRIST study ofTroVax. Summary Melanoma is one of only a few cancers in which the immune system appears to playa prominent role. The 5T4 antigen, that is the basis of TroVax, is not found onmelanoma cells. Hence, Hi-8 MEL is an ideal complement to the potentialapplications of TroVax in solid tumours. Through our experience with TroVax, wehave substantial expertise in cancer immunotherapy. We will apply this knowledgeto the further development of Hi-8 MEL. METXIA(R) 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 product is being evaluated in a Phase II trial in pancreaticcancer. The trial is a dose-escalation study to identify the optimal dose levelsfor MetXia and cyclophosphamide. In 2007, we initiated commercial discussionswith potential partners for both MetXia and our associated technology forGene-Directed Enzyme Prodrug Therapy (GDEPT). Patient Recruitment Progressing in Phase II Trial We initiated the Phase II trial of MetXia in 2004 in patients withnon-resectable pancreatic tumours. The recruitment of patients has beenpurposefully staged since each patient needs to be carefully reviewed for theirresponse to therapy prior to treatment of subsequent patients. However, the rateof enrolment in this trial has been problematic due to the strict criteria forpatient suitability and the poor health of the majority of patients presentingfor surgery. The patients are at an advanced stage of their disease, and mosthave previously failed to respond to other therapies. To date, 23 patients have been treated in the study, in which MetXia andcyclophosphamide are delivered directly to the pancreatic tumour via a catheterinserted through an artery. Two dose levels of MetXia and five dose levels ofcyclophosphamide have been evaluated to assess the efficiency of P450 genetransfer and to determine the maximum tolerated dose of the prodrug. Preliminary Proof of Concept Results in Phase II Trial Patients who received the optimal dose of MetXia and higher doses ofcyclophosphamide are still being assessed. Preliminary results suggest thatMetXia induces gene expression of P450 enzyme at the tumour site and that therehave been no unexpected adverse events when MetXia and cyclophosphamide are usedtogether in this manner. To date, disease stabilisation has been evident in six of 12 evaluable patients(50%). Patient survival is difficult to interpret for this heterogeneous patientgroup but has ranged from four to almost 110 weeks. Median survival for theevaluable patients is 26 weeks. Additional patients are being recruited at themaximum tolerated dose to establish more efficacy data in this patient group. Weplan to report further data from this trial during 2008. Initiated Commercial Discussions Following our strategic review in 2007, we initiated discussions with potentialpartners for further development and commercialisation of MetXia. This willenable us to focus our resources on higher development priorities within thepipeline. MetXia is the most advanced product candidate to derive from ourproprietary GDEPT technology. To maximise the commercial opportunity for MetXiaand our GDEPT technology, we are seeking industry partners to provide additionalresources and expertise. Summary Preliminary data from the Phase II trial in non-resectable pancreatic cancer areencouraging and demonstrate proof of concept for our GDEPT technology. Thisplatform technology has the potential for broad application. With appropriateinvestment, MetXia could be the first of multiple GDEPT-based products developedfor the treatment of localised, accessible tumours. RETINOSTAT(R) RetinoStat is designed to provide long-term inhibition of aberrant blood vesselgrowth in the retina for the treatment of vision loss caused by conditions suchas wet age-related macular degeneration (AMD) and diabetic retinopathy (DR). Wehave identified RetinoStat as our next LentiVector-based programme for clinicaldevelopment, behind ProSavin. Our aim is to conduct an initial clinical trial inthe USA, since the programme is supported by US organisations, namely JohnsHopkins University and the Foundation Fighting Blindness with its supportorganisation, the National Neurovision Research Institute. New Proof of Concept Preclinical Results In May 2007, Oxford BioMedica and our collaborators at Johns Hopkins Universityin Baltimore presented encouraging preclinical data with RetinoStat at theAssociation for Research in Vision and Ophthalmology Annual Meeting. Thepresentation included preclinical proof of principle in an industry-standardmodel of neovascular AMD. Ongoing Clinical Preparations We have initiated the scale-up process for manufacturing clinical material. Wehave commissioned Good Manufacturing Practice (GMP) production of a keycomponent of RetinoStat and we aim to have final clinical material within thenext 12 months. With our US collaborators, we are conducting additionalnon-clinical studies with RetinoStat that are required for our regulatorysubmission to start clinical trials. During 2007, our internal resources forLentiVector-based programmes were prioritised to ProSavin, which has extendedour anticipated timelines for RetinoStat. However, the development of RetinoStatshould benefit considerably from our investment in the manufacturing ofProSavin. We expect to submit an Investigational New Drug (IND) application tothe FDA for the start of trials in patients with wet AMD during 2009. Summary We have had initial discussions with potential partners for further developmentand commercialisation of RetinoStat. The industry is clearly interested in newanti-angiogenic treatment strategies for wet AMD, which have potential forsuperior efficacy and a lower injection frequency than the current standardtherapy, which is Novartis' Lucentis(R). Treatment with Lucentis requiresinjections into the eye every one to two months. Given the long-term geneexpression capabilities of our LentiVector technology, a single administrationof RetinoStat could be effective for over a year. EARLY-STAGE CANDIDATES We have established a diverse early-stage pipeline that comprises eightpreclinical product candidates. The in-house programmes are all gene-basedtherapies that utilise our LentiVector technology. In 2007, several of theseprogrammes benefited from financial support provided by disease-focusedcharitable organisations through direct funding of studies or grants. During2007, we initiated a new anti-cancer programme, EndoAngio-GT, and presentedpreclinical proof-of-concept results with StarGen in Stargardt's disease. Initiated EndoAngio-GT Anti-cancer Programme In July 2007, we secured a licence from Children's Hospital Boston to theanti-angiogenic genes that are utilised in our RetinoStat vision loss programmefor the treatment of cancer. This new anti-cancer programme, EndoAngio-GT, isbased on a similar construct to RetinoStat. In 2007, we initiated preclinicaloptimisation of the product. Presentation of StarGen(TM) Preclinical Results StarGen is designed to deliver a normal functional gene to treat an inheritedocular condition, Stargardt's disease. The programme is funded by the FoundationFighting Blindness, the National Neurovision Research Institute and a consortiumof associated investors. At the Association for Research in Vision andOphthalmology Annual Meeting in May 2007, we presented preclinical data withStarGen, showing efficacy in an industry-standard model of the disease.Additional preclinical studies are underway at Columbia University in New York,which could support advancement to clinical development in this niche commercialmarket. In addition to our relationship around StarGen and RetinoStat, we are exploringa commercial collaboration with the Foundation Fighting Blindness to developLentiVector-based therapeutic approaches for other ocular diseases. TECHNOLOGY LICENSING Our technology licensing activities exploit the potential of our suite of genedelivery technologies by providing third-party access for research or specificdevelopment applications. We have added two new industry partners to our list oflicensed LentiVector users and we entered the field of RNA interference usingour LentiVector system for genetic delivery. In addition, one of our partnersannounced the start of a Phase III trial with a product that uses another of ourtechnologies, which triggered a milestone payment. New LentiVector Licensing Agreement In July 2007, another major US-based biotechnology company licensed theLentiVector gene delivery technology for research activities in a jointagreement with Sigma-Aldrich. Sigma-Aldrich is our strategic partner andexclusive licensee for the commercialisation of the LentiVector technology forresearch use. In addition, in March 2008, as part of a patent disputesettlement, Open Biosystems acquired certain rights for use of our LentiVectortechnology in research activities. Expanding into Therapeutic RNA Interference In January 2008, we signed a license agreement with the Carnegie Institution ofWashington and the University of Massachusetts Medical School that grants OxfordBioMedica rights to key RNA interference (RNAi) technology invented by NobelPrize-winning scientists Andrew Z. Fire, PhD, and Craig C. Mello, PhD. Thelicence is exclusive for therapeutic RNAi strategies using our LentiVectortechnology. RNAi represents a potential new strategy for treating diseases bygene silencing. We plan to develop LentiVector-based RNAi therapiesindependently, but also offer this technology to our existing LentiVectorlicensees and other industry players as part of our technology licensingactivities. MolMed Initiates Phase III Trial Also in January 2008, one of our partners, MolMed, received regulatory approvalto start a Phase III trial of its TK therapy. The Phase III trial is beingconducted in Italy in patients with high risk acute leukaemia who are receivinghaematopoietic stem cell transplantation. The product is a cell/gene-basedtherapy that is designed to control the complications of graft versus hostdisease associated with these transplantations. The product employs our ex vivoretroviral gene delivery technology. The start of this Phase III trial triggereda milestone payment to Oxford BioMedica under the terms of our agreement. Viragen Streamlines its Research Another partner, Viragen, which licensed our LentiVector technology for thedevelopment of an avian transgenic biomanufacturing system, reported furtherprogress with the technology and published results in a leading medical journalin January 2007. However, in June 2007, Viragen halted development as part ofits efforts to cut costs and has subsequently sought bankruptcy protection. Withthe Roslin Institute, which was collaborating with Viragen on this programme, weare exploring alternative ways to advance and commercialise the avian transgenictechnology. INTELLECTUAL PROPERTY Our intellectual property estate is fundamental to our business to ensure thatwe control and protect our products in development and our technologies. In2007, we bolstered our proprietary position in immunotherapy through theacquisition of Oxxon Therapeutics. At the end of 2007, our estate comprised 46US and 20 European issued patents compared to 39 and 12, respectively, in theprevious year. During 2007, we were granted five patents in the USA and five inEurope. We have a further 76 patents issued in other jurisdictions, with four ofthese being granted in 2007. In total, 198 patent applications are currentlypending. Another 24 patent families, covering key technologies, are licensedfrom third parties. In 2007 and early 2008, respectively, we announced two significant in-licensingdeals of intellectual property. Firstly, we extended our rights to use twoanti-angiogenic genes for the treatment of cancer. Secondly, we securedexclusive rights in the field of RNA interference for the development oftherapeutics using our LentiVector technology. Furthermore, in March 2008,Oxford BioMedica, our partner, Sigma-Aldrich, and Open Biosystems settled apatent dispute over use of our LentiVector technology in research reagents. Oxxon Acquisition Adds Immunotherapy IP Our acquisition of Oxxon Therapeutics in March 2007 has added intellectualproperty in immunotherapy to our estate. Its Hi-8(R) PrimeBoost technology is apioneering method for producing a potent and specific T-cell immune responseagainst diseased cells. This platform has potential applications in developingprophylactic as well as therapeutic vaccines. Oxxon owned or had exclusivelylicensed a number of patent families covering the PrimeBoost technology andthese patents and licences are now part of Oxford BioMedica's estate. Extended Rights to Anti-angiogenic Genes In July 2007, we signed a license agreement with Children's Hospital Boston toextend our existing rights for the anti-angiogenic genes, endostatin andangiostatin, for the treatment of cancer. This has enabled us to initiate a newanti-cancer development programme, EndoAngio-GT. We previously licensed rightsto these genes solely for the treatment of ocular diseases, and the genes arebeing successfully employed in RetinoStat. We expect the development ofEndoAngio-GT to benefit from synergies with RetinoStat. New Rights in Therapeutic RNA Interference In January 2008, (as described in Technology Licensing above) we licensed Nobelprize-winning RNA interference (RNAi) technology from the Carnegie Institutionof Washington and the University of Massachusetts Medical School. This agreementprovides exclusive rights to use our LentiVector technology for therapeutic RNAiapplications. We plan to develop LentiVector-based RNAi therapies, bothindependently and through collaborations. FINANCIAL REVIEW Financial overview The TroVax collaboration with sanofi-aventis has transformed the Group'sfinances. A total of £25.8 million cash was received in 2007 fromsanofi-aventis. Of this amount, £7.0 million was recognised as revenue in 2007and £18.8 million is classified as deferred income. In addition, the acquisitionof Oxxon Therapeutics Limited (Oxxon) in March 2007 for £16.0 million, which wassatisfied by Oxford BioMedica shares, brought with it cash and cash equivalentsof £3.8 million. Overall, there was a net increase in cash, cash equivalents andcurrent asset investments in the year of £9.6 million. Revenue £7,219,000 (2006: £760,000) The TroVax collaboration with sanofi-aventis accounts for the majority ofrevenue in 2007. A total of £25.8 million cash was received in 2007, comprisingan initial payment of £19.7 million (€29 million) on commencement in March 2007and the first development milestone payment of £6.1 million (€9 million) inSeptember 2007. Revenue from these payments is being recognised on astraight-line basis over the period to certain clinical events, which areanticipated in 2009 and 2010. £7.0 million was recognised as revenue in the 2007income statement. The remaining £18.8 million is classified as deferred income. Revenue from technology licensing in 2007 amounted to £0.2 million compared to£0.8 million in the previous year. Licenses that provide access to ourtechnology for research use generate minimal revenue but potentially facilitatecollaborations for product development. Cost of sales £449,000 (2006: £80,000 included in operating expenses) We have licensed a number of third-party technologies to expand our activitiesand to ensure that we have freedom to operate. Most licences include royaltiespayable on sales, and some include royalties payable on licensing income,including up-front and milestone income. In 2007, £0.4 million of royalties wererecognised in cost of sales in the Group's income statement. The amounts ofroyalty payable on revenue in previous years were lower, and were included inoperating expenses. Operating expenses £26,759,000 (2006: £22,222,000) Operating expenses increased by 20% in 2007 to £26.8 million, reflectingincreased employee costs, the acquisition of Oxxon and higher legal andprofessional expenses associated with our patent estate and the licensing ofTroVax. Research & development costs £22,142,000 (2006: £19,523,000) R&D costs increased by 13% in 2007 to £22.1 million. Our R&D expenditurecomprises in-house costs (staff, R&D consumables, intellectual property,facilities and depreciation of R&D assets) and external costs (preclinicalstudies, GMP manufacturing, regulatory affairs, and clinical trials). In 2007,as in 2006, external preclinical and clinical costs were the largestcontributors to R&D spend. The year was also impacted by the addition of £0.3million in R&D costs associated with Oxxon. Administrative expenses £4,617,000 (2006: £2,699,000) The increase in administrative expenses in 2007 was partly due to theacquisition of Oxxon and increased legal and professional costs. In 2007, therewas a charge of £0.3 million for exceptional closure and reorganisation ofOxxon, and £0.1 million for non-exceptional administrative expenses during theclose-down period. Legal and professional costs related to the collaborationwith sanofi-aventis and other negotiations were £0.4 million. Finance income £2,087,000 (2006:£1,714,000) The Group places its cash in bank deposits for periods of up to 12 months andgenerates interest on those deposits. The maturity profile of deposits isintended to match planned patterns of expenditure. The average balance ondeposit in 2007 was approximately the same as in 2006 at £37.7 million. However,due to higher interest rates in 2007, net interest receivable was up by 22%. TheGroup has no debt, but is recognising as a finance expense the discount on alease provision and a dilapidation provision. Taxation Our UK operating subsidiaries are entitled to claim R&D tax credit. The creditis based on certain eligible expenses, to which a 50% mark-up and a tax rate of16% are applied. Under the prevailing rules, the R&D tax credit cannot exceedthe total amount of UK payroll tax (Income Tax and National Insurance) paid inthe year. In 2007, our R&D tax credit increased 48% to £2.5 million, due tohigher employee benefit expenses during the year. The year-end debtor for R&Dtax credit of £2.6 million represents the estimated tax credit for the currentyear, including £0.1 million that is attributable to Oxxon in the period priorto our acquisition. Loss for the financial year £15,289,000 (2006: £17,626,000) The Group's loss for the year narrowed to £15.3 million from £17.6 milliondespite higher operating expenses in 2007. Intangible assets £14,910,000 (2006: £1,665,000) The Oxxon acquisition has resulted in a significant increase in intangibleassets. The principal acquired intangibles were in-process research anddevelopment on the melanoma vaccine Hi-8 MEL, and the PrimeBoost patentportfolio. The fair value of these assets was £13.1 million. In addition,purchased intellectual property rights of £0.2 million were capitalised. Trade and other receivables £4,672,000 (2006: £2,202,000) Trade and other receivables (debtors) were £2.5 million higher in 2007 than inthe previous year. There was an increase of £0.4 million in other receivablesprincipally due to higher bank interest fixed-term deposits. Prepaid clinicaltrial expenses of £1.0 million (2006: nil) are materials for clinical trials notyet shipped to site, and advance payments to clinical sites. Trade and other payables £9,557,000 (2006: £4,671,000) The increase in trade and other payables (creditors) in 2007 was principallyassociated with our expanded clinical development activities. Deferred income £18,913,000 (2006: £92,000) The Group's deferred revenue at the end 2007 was boosted to £18.9 million.Deferred revenue reflects payments received under our licensing agreements thatexceed the amount of recognised revenue. Receipts in 2007 from the TroVaxcollaboration with sanofi-aventis are being recognised as revenue over a two tothree-year period. The amount expected to be recognised as revenue in 2008 is£11.4 million. Share issues At the end of 2007, the Group had 534,655,843 shares in issue. During the year,shares issued for cash raised £0.3 million before expenses from the exercise ofshare options and other subscriptions. A total of 31,771,246 shares with a valueof £16.0 million were issued in the acquisition of Oxxon. Cash and deposits £38,147,000 (2006: £28,543,000). Operational cash generated£5,883,000 (2006: cash burn £15,876,000) The total of cash, cash equivalents and current asset investments at the end of2007 was £38.1 million, compared to £28.5 million in the previous years. Theformat of the cash flow statement under IFRS does not make it easy to assess theoverall level of operational cash flows that have traditionally been a keyperformance indicator for development-stage biotechnology companies. However, auseful measure can be calculated by taking the aggregate of cash from operatingactivities, proceeds of sale of property, plant and equipment and purchases ofproperty, plant and equipment and intangible assets. On this measure, there wasa positive operational cash flow of £5.9 million in 2007, in contrast to a(negative) cash burn in 2006 of £15.9 million. The key difference in 2007 wasthe receipt of £25.8 million from sanofi-aventis. In addition, cash and cashequivalents of £3.8 million were acquired with Oxxon. Financial outlook In 2007, we conducted a strategic review of our development pipeline to enableus to focus investment on opportunities that could generate the greatest value.The present level of operational expenses is expected to be maintained through2008 based on our current and planned development activities. We reached thesecond development milestone in our agreement with sanofi-aventis in February2008, which triggered a payment of €10 million. We will continue to monitor theinvestment requirements for each of our programmes and will expand our internaloperations as required to meet our objectives. Our financial goal is to beprofitable within 12 months of registration of our first product, which could bein 2009 following a successful outcome from the Phase III TRIST study of TroVaxin renal cancer. OUTLOOK With a focused strategy and a strong financial position, we are well placed todeliver on our objectives for 2008. We are delighted to have recently triggereda further development milestone payment in our collaboration withsanofi-aventis, following the third successful review of the Phase III TRISTstudy by the DSMB. We expect shortly to complete recruitment for this trial.Over the next few years, sanofi-aventis is planning a significant investment inthe TroVax programme. Our key goals for TroVax in 2008 include continuedmanagement of the TRIST study in renal cancer, and support for sanofi-aventis asit broadens the Phase III programme into colorectal cancer and prepares for thecommercialisation of the product. ProSavin, our novel treatment for Parkinson's disease is potentially the nextblockbuster opportunity in our pipeline. The Phase I/II trial is underway and weaim to report preliminary safety and efficacy data from the study during thisyear. Also in 2008, we aim take RetinoStat towards clinical development in wetAMD. As part of our strategy, we will continue to pursue collaboration opportunitiesfor certain programmes. In 2008, we intend to move forward with ourcollaboration discussions for MetXia and its associated GDEPT technology forlocalised cancer therapy. Also, having secured a proprietary position in thefield of therapeutic RNA interference, we plan to explore partneringopportunities that could provide additional near-term revenue. In summary, we are looking forward to an exciting period for Oxford BioMedica,which could see both TroVax and ProSavin reach key inflexion points in theirdevelopment. Both products address large markets and potentially providepatients with new safe and effective treatment options. Hence, in our view, bothproducts present substantial value propositions. Consolidated income statementfor the year ended 31 December 2007 Notes 2007 2006 £'000 £'000Revenue 2 7,219 760 Cost of sales (449) -Research and development costs (22,142) (19,523)Administrative expenses (4,617) (2,699) Administrative expenses comprise:Administrative expenses before exceptionals (4,282) (2,699)Exceptional administrative expenses 3 (335) -Total administrative expenses (4,617) (2,699) Other operating income: grants receivable 161 360Operating loss (19,828) (21,102) Finance costs (30) (29)Finance income 2,117 1,743Loss before tax (17,741) (19,388)Taxation 4 2,452 1,762Loss for the financial year (15,289) (17,626)Basic loss and diluted loss per ordinary share 5 (2.9p) (3.5p) The notes on pages 16 to 22 form part of this financial information. Consolidated balance sheetas at 31 December 2007 Notes 2007 2006 £'000 £'000AssetsNon-current assetsIntangible assets 6 14,910 1,665Property, plant and equipment 7 810 819 15,720 2,484Current assetsTrade and other receivables 8 4,672 2,202Current tax assets 2,623 2,309Financial assets: Available for sale investments 9 27,185 20,500Cash and cash equivalents 9 10,962 8,043 45,442 33,054Current liabilitiesTrade and other payables 10 9,557 4,671Deferred income 11 11,530 92Current tax liabilities 14 -Provisions 12 60 58 21,161 4,821Net current assets/(liabilities) 24,281 28,233Non-current liabilitiesOther non-current liabilities 96 -Deferred income 11 7,383 -Provisions 12 590 627 8,069 627Net assets 31,932 30,090 Shareholders' equityOrdinary shares 5,347 5,014Share premium 109,101 106,732Merger reserve 14,310 711Other reserves (625) (627)Losses (96,201) (81,740)Total equity 31,932 30,090 The notes on pages 16 to 22 form part of this financial information. Consolidated cash flow statementfor the year ended 31 December 2007 2007 2006 Notes £'000 £'000Cash flows from operating activitiesCash generated by/(used in) operations 13 2,307 (17,726)Interest received 1,567 1,440Tax credit received 2,480 650Overseas tax paid (57) (25)Net cash from operating activities 6,297 (15,661) Cash flows from investing activitiesProceeds from sale of property, plant and equipment 7 1Purchases of property, plant and equipment (259) (192)Purchases of intangible assets (162) (24)Net (purchase)/maturity of available for sale (6,685) 3,000investmentsCash and cash equivalents acquired with subsidiary 14 3,759 -Acquisition costs (382) -Net cash (used in)/generated by investing activities (3,722) 2,785 Cash flows from financing activitiesNet proceeds from issue of ordinary share capital 345 629 Effects of exchange rate changes (1) (27) Net increase/(decrease) in cash and cash equivalents 2,919 (12,274)Cash and cash equivalents at 1 January 8,043 20,317Cash and cash equivalents at 31 December 9 10,962 8,043 The notes on pages 16 to 22 form part of this financial information. Statement of changes in shareholders' equityfor the year ended 31 December 2007 Share Share Merger Translation Losses Total capital premium reserve reserve £'000 £'000 £'000 £'000 £'000 £'000At 1 January 2007 5,014 106,732 711 (627)(81,740) 30,090Exchange adjustments - - - 2 - 2Loss for the year - - - - (15,289)(15,289)Total recognised - - - 2 (15,289)(15,287)expense for the yearShares issued in 318 2,083 13,599 - - 16,000acquisitionShare options 13 199 - - - 212 Proceeds from sharesissuedValue of employee - - - - 828 828services Issue of shares 2 97 - - - 99excl. optionsCosts of share - (10) - - - (10)issuesAt 31 December 2007 5,347 109,101 14,310 (625)(96,201) 31,932 The notes on pages 16 to 22 form part of this financial information. Notes to the financial informationfor the year ended 31 December 2007 1 Basis of preparation This financial information for the years ended 31 December 2007 and 31 December2006 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 2006 have been delivered to the Registrar ofCompanies and included the auditors' report. Financial statements for the yearended 31 December 2007 have not yet been delivered to the Registrar. Theauditors' reports on the financial statements for the years ended 31 December2007 and 31 December 2006 were unqualified and did not contain statements undereither section 237(2) or section 237(3) of the Companies Act 1985. The financialinformation in this report does not constitute statutory accounts within themeaning of Section 240 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 2007 are available fromthe Company Secretary. The audited statutory financial statements for the yearended 31 December 2007 are expected to be distributed to shareholders by 31March 2008 and will be available at the registered office of the Company,Medawar Centre, Oxford Science Park, Oxford, OX4 4GA. Details can also be foundon the Company's website at www.oxfordbiomedica.co.uk. This announcement was approved by the Board of Oxford BioMedica plc on 7 March2008. Use of estimates and assumptions The preparation of financial statements in conformity with IFRS requires the useof certain critical accounting estimates and assumptions that affect thereported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Estimates and judgements are continually made and are based onhistoric experience and other factors, including expectations of future eventsthat are believed to be reasonable in the circumstances. Critical accounting estimates and assumptions Where the Group makes estimates and assumptions concerning the future, theresulting accounting estimates will seldom exactly match actual results. Due tothe amounts involved, the estimates and assumptions regarding revenuerecognition and the amounts accrued for clinical trial costs have a greater riskof causing a material adjustment to the carrying amounts of assets andliabilities. Revenue from payments in 2007 by sanofi-aventis under the TroVax collaborationis being recognised on a straight-line basis over the estimated period tospecific milestone events in 2009 and 2010, based on management's estimates ofthe timing of these events. Should the timing of these events differ frommanagement's estimates, there could be a material effect on the income statementand on the amount of deferred revenue in the balance sheet. For clinical trialcosts the Group uses a percentage-of-completion method to accrue for such costs.This method requires the Group to estimate the services performed by contractorsto date as a proportion of total services to be performed. Notes to the financial informationfor the year ended 31 December 2007 (continued) 2 Segmental analysis The Group's primary segment reporting is by geographical location of assets,with business sector as the secondary format. Revenue and loss on ordinaryactivities before taxation are derived entirely from the Group's one businesssegment, biotechnology research and development. All costs of acquisition ofproperty, plant and equipment and intangible assets as well as depreciationexpense borne by the Group relate to this one segment In addition, all othernon-cash expenses incurred by the Group relate to this one segment. The twogeographic locations comprise the Group's UK and US operations. The majority ofthe Group's activities take place in the United Kingdom, with the United Statessubsidiary providing intellectual property management and business developmentsupport to the United Kingdom operation. Purchases and sales betweensubsidiaries are eliminated on consolidation. The Group's revenue derives from assets located in the United Kingdom. Bydestination, revenue derives from the European Union and the United States ofAmerica. 2007 2006Revenue by destination £'000 £'000Europe 7,021 56United States of America 198 704Total revenue 7,219 760 3 Exceptional administrative expenses Exceptional administrative expenses of £335,000 (2006: nil) were restructuringcosts associated with the integration of Oxxon Therapeutics Limited ('Oxxon')and closure of the former Oxxon offices and laboratories following theacquisition of Oxxon in March 2007. Severance and related costs for former Oxxonemployees were £247,000. Fixed asset write-offs (mostly leasehold improvements)were £73,000. Other expenses were £15,000. The cash outflow associated with theexceptional expenses was £262,000 (2006: nil). 4 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 2007 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. 2007 2006Continuing operations £'000 £'000Current taxUnited Kingdom corporation tax research and development credit (2,526) (1,709)Overseas taxation 60 38 (2,466) (1,671)Adjustments in respect of prior periodsUnited Kingdom corporation tax research and development credit - (75)Overseas taxation 14 (16)Taxation credit (2,452) (1,762) Notes to the financial informationfor the year ended 31 December 2007 (continued) 5 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 528,024,022 in issue during the yearended 31 December 2007 (2006: 499,865,620). 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. 6 Intangible assets In process Intellectual Total R&D property rights £'000 £'000 £'000CostAt 1 January 2007 - 1,927 1,927Additions - through business combination 10,400 2,686 13,086(note 14)Additions - 167 167At 31 December 2007 10,400 4,780 15,180Accumulated amortisation and impairmentAt 1 January 2007 - 262 262Impairment in the year - 8 8At 31 December 2007 - 270 262 Net book amount at 31 December 2007 10,400 4,510 14,910 Net book amount at 31 December 2006 - 1,665 1,665 In-process research and development acquired in 2007 comprises the fair value ofthe Hi8-MEL therapeutic vaccine for the treatment of melanoma. Intellectualproperty rights acquired through acquisition comprise the Oxxon Therapeuticspatent portfolio covering therapeutic vaccines and prime-boost methods. Notes to the financial informationfor the year ended 31 December 2007 (continued) 7 Property, plant and equipment Short Office Computer Laboratory Total leasehold equipment, equipment equipment improvements fixtures and fittings £'000 £'000 £'000 £'000 £'000CostAt 1 January 2007 2,608 87 281 2,670 5,646Exchange adjustments (4) - - - (4)Additions - through 79 10 2 8 99business combination(note 14)Additions - separately 20 7 75 174 276Dilapidation asset - 8 - - - 8effect of change indiscount rateDisposals (79) (9) (63) (26) (177)At 31 December 2007 2,632 95 295 2,826 5,848Accumulated depreciationAt 1 January 2007 2,267 81 224 2,255 4,827Exchange adjustments (4) - - - (4)Charge for the year 93 6 41 174 314Disposals (12) (3) (63) (21) (99)At 31 December 2007 2,344 84 202 2,408 5,038Net book amount at 288 11 93 418 81031 December 2007Net book amount at 31 341 6 57 415 819December 2006 8 Trade and other receivables 2007 2006 £'000 £'000Non-currentOther receivables - rent deposit 118 150CurrentTrade receivables 91 241Other receivables 1,129 765Other tax receivable 414 220Prepaid clinical trial expenses 969 -Other prepayments 1,917 603Accrued income 34 223 4,554 2,052Total trade and other receivables 4,672 2,202 Prepaid clinical trial expenses comprise stocks of materials for use in clinicaltrials and advance payments to clinical trial sites. Notes to the financial informationfor the year ended 31 December 2007 (continued) 9 Cash and cash equivalents 2007 2006 £'000 £'000Cash at bank and in hand 5,402 2,343Short term bank deposits 5,560 5,700Total cash and cash equivalents 10,962 8,043 In addition to the cash and cash equivalents described above, the Group heldSterling bank deposits of £27,185,000 (2006: £20,500,000) with an initial termto maturity between three and twelve months classified as available for saleinvestments. Group cash at bank and in hand includes £76,000 (2006: £182,000)held in escrow for expenses of the TRIST Phase III clinical trial. 10 Trade and other payables - current 2007 2006 £'000 £'000Trade payables 2,948 1,579Other taxation and social security 418 315Accruals 6,191 2,777Total trade and other payables 9,557 4,671 11 Deferred income In 2007 non-refundable payments totalling €38,000,000 (£25,793,000) werereceived from sanofi-aventis under the TroVax licence agreement. These paymentsare being recognised as revenue over a period of 24 to 36 months. To daterevenue recognised under the sanofi-aventis collaboration is £6,970,000. At 31 December 2007 the Group had deferred income of £18,913,000 (2006:£92,000). £11,530,000 (2006: £92,000) is expected to be recognised as revenuewithin 12 months of the balance sheet date, and is classified as current; theremaining £7,383,000 (2006: nil) is classified as non-current. 12 ProvisionsGroup Dilapidations Onerous Total lease £'000 £'000 £'000 At 1 January 2007 347 338 685Exchange adjustments - (5) (5)Utilised in the year - (71) (71)Amortisation of discount 16 14 30Change of discount rate - charged to income - 3 3statementChange of discount rate - adjustment to recognised 8 - 8fixed assetAt 31 December 2007 371 279 650At 31 December 2006 347 338 685 2007 2006 £'000 £'000Current 60 58Non-current 590 627Total provisions 650 685 Notes to the financial informationfor the year ended 31 December 2007 (continued) 12 Provisions (continued) 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 4.32% per annum (2006: 4.96%). Theprovision will be utilised 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 4.39% per annum(2006: 4.88% per annum).The provision will be utilised over the term of thelease. 13 Cash flow from operating activities Reconciliation of loss before tax to net cash from operations 2007 2006 £'000 £'000 Continuing operations Loss before tax (17,741) (19,388)Adjustment for:Depreciation 314 537Loss/(profit) on disposal of property, plant and 77 (1)equipmentImpairment of intangible assets 8 -Finance income (2,117) (1,743)Finance expense 30 29Charge in relation to employee share schemes 828 451 Changes in working capital:Increase in trade and other receivables (1,880) (107)Increase in payables 4,036 2,596Increase/(decrease) in deferred income 18,821 (13)(Decrease) in provisions (69) (87)Net cash generated by/(used in) operations 2,307 (17,726) 14 Acquisition of Oxxon Therapeutics Limited On 9 March 2007 the Company purchased the entire issued share capital includingall voting rights of Oxxon Therapeutics Limited ('Oxxon'). In addition, a loanof £1.7 million to Oxxon from the former owners of Oxxon was acquired. Thepurchase has been accounted for as an acquisition. The assets acquired includedcash and cash equivalents of £3.8 million. On 2 April 2007 in an internalreorganisation, the trade of Oxxon Therapeutics Limited together with all itsassets and liabilities was sold to the Group's principal operating subsidiaryOxford BioMedica (UK) Limited, and Oxxon is now dormant. The purchase consideration, including the acquisition of the loan was£16,000,000 which was satisfied by the issue of 31,771,246 new 1p ordinaryshares at 50.36p per share (the average market price over the 30 days ended 8March 2007). From the date of acquisition to 2 April 2007 the net loss of Oxxon was £95,000.From 2 April 2007 the Oxxon business was integrated with that of OxfordBioMedica (UK) Limited, and the facilities formerly occupied by Oxxon wereclosed down. Since 2 April 2007 the net loss attributable to the Oxxon businesswas approximately £517,000 of which closure and severance costs of £335,000 wereclassified as exceptional administrative expenses. Had the acquisition takenplace at the beginning of 2007 these amounts would not have been materiallydifferent. All intangible assets have been recognised at their respective fair values.There was no residual excess of the consideration over the fair value of netassets acquired, so no goodwill has been recognised in the financial statements. Notes to the financial informationfor the year ended 31 December 2007 (continued) 14 Acquisition of Oxxon Therapeutics Limited (continued) Acquisition of Oxxon Therapeutics Limited Carrying Fair value Fair value values pre adjustment acquisition £'000 £'000 £'000Intangible assets 243 12,843 13,086Property, plant and equipment 99 - 99Receivables 100 - 100Payables (930) - (930)R&D tax credit receivable 268 - 268Deferred tax liability on fair value of - (3,926) (3,926)intangiblesDeferred tax asset - tax losses - 3,926 3,926Cash and cash equivalents 3,759 - 3,759Loans (1,700) 1,700 -Net assets acquired 1,839 14,543 16,382Goodwill -Consideration 16,382Consideration satisfied by:Shares issued to acquire Oxxon share capital 13,875Shares issued to acquire loan from former 2,125parent of OxxonExpenses of acquisition 382 16,382 The net inflow of cash and cash equivalents on the acquisition of Oxxon was: £'000Cash and cash equivalents acquired 3,759Cash costs of acquisition (382) 3,377 The fair value of the intangibles acquired with Oxxon was: £'000In-process R&D: Hi-8 MEL melanoma vaccine 10,400Intellectual property rights: prime-boost technology 2,686 13,086 This information is provided by RNS The company news service from the London Stock Exchange