FUNDRAISING OF £10 MILLION

RNS Number : 6532J

Oxford Biomedica PLC

13 September 2016

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR WITHIN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO SELL OR ISSUE, OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR, ANY NEW ORDINARY SHARES, NOR SHALL IT (OR ANY PART OF IT), OR THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH OR ACT AS ANY INDUCEMENT TO ENTER INTO, ANY CONTRACT OR COMMITMENT WHATSOEVER WITH RESPECT TO THE PLACING, SUBSCRIPTION AND RELATED PARTY TRANSACTION (THE "FUNDRAISING") OR OTHERWISE. THIS ANNOUNCEMENT IS NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY NEW ORDINARY SHARES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT SOLELY ON THE BASIS OF INFORMATION IN THE PROSPECTUS EXPECTED TO BE PUBLISHED TODAY. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM OXFORD BIOMEDICA'S HEAD OFFICE AT WINDRUSH COURT, TRANSPORT WAY, OXFORD OX4 6LT.

THE SECURITIES DISCUSSED HEREIN MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. NO PUBLIC OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE UNITED STATES AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES AND THE COMPANY DOES NOT CURRENTLY INTEND TO REGISTER ANY SECURITIES UNDER THE SECURITIES ACT. ADDITIONALLY, THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER SECURITIES COMMISSION OR REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE PROPOSED FUNDRAISING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

THE PROSPECTUS WILL ALSO BE AVAILABLE ON THE COMPANY'S WEBSITE AT: WWW.OXFORDBIOMEDICA.CO.UK.

PROPOSED FUNDRAISING OF £10 MILLION BY WAY OF A PLACING, SUBSCRIPTION AND RELATED PARTY TRANSACTION

Oxford, UK - 13 September 2016: Oxford BioMedica plc ("Oxford BioMedica" or the "Company", together with its subsidiaries, the "Group") (LSE: OXB), a leading gene and cell therapy group, is pleased to announce that it intends to raise net proceeds of £10 million by the issue of 184,255,000 New Ordinary Shares by means of a Placing and 199,116,665 New Ordinary Shares by means of a Subscription at a price of 3 pence per New Ordinary Share. The Offer Price of 3 pence per New Ordinary Share represents a 28.6 per cent. discount to the Closing Price of 4.2 pence on 12 September 2016 (being the last practicable date prior to the announcement of the Fundraising).

Jefferies International Limited (''Jefferies'') is acting as Sponsor, Global Co-ordinator and Bookrunner for the Company, WG Partners LLP (''WG Partners'') and Scott Harris UK Limited ("Scott Harris") are acting as UK Placement Agents and Roth Capital Partners, LLC (''Roth Capital'') is acting as US Placement Agent for the Company in connection with the Fundraising.

TRANSACTION SUMMARY

·    Issue of 184,255,000 New Ordinary Shares by means of a placing (the "Placing") and 199,116,665 New Ordinary Shares by means of a subscription (the "Subscription").

·    The Offer Price of 3 pence per New Ordinary Share (the "Offer Price") represents a 28.6 per cent. discount to the Closing Price of 4.2 pence on 12 September 2016 (being the latest practicable date prior to this announcement).

·    The Placing has been fully underwritten by Jefferies. The Subscription is not underwritten. Pursuant to Subscription Agreements with the Company, Subscribers have subscribed for the Subscription Shares at the Offer Price.

·    Vulpes Life Sciences Fund has agreed to subscribe for 66,666,667 New Ordinary Shares as part of the Subscription at the Offer Price and Vulpes Testudo Fund has agreed to subscribe for 33,333,333 New Ordinary Shares as part of the Subscription at the Offer Price. Both Vulpes Life Sciences Fund and Vulpes Testudo Fund are managed by Vulpes Investment Management of which Martin Diggle, a Non-executive Director of the Company, is a founder. Vulpes Life Sciences Fund and Vulpes Testudo Fund's participation in the Subscription constitutes a ''related party transaction'' for the purposes of Chapter 11 of the Listing Rules (the "Related Party Transaction").

·    The Fundraising, the Offer Price and the Related Party Transaction are conditional, inter alia, on shareholder approval. A General Meeting of the Company (the "General Meeting") is expected to be convened for 10.00 am on 29 September 2016.

·    The principal purposes of the Placing and Subscription are to:

o  further progress its discovery and pre-clinical projects with the objective of identifying at least

one new product into clinical development within a two year horizon;

o  continue to develop valuable intellectual property relating to the LentiVector^® platform; and

o  to provide the Group with working capital whilst it continues to grow its bioprocessing

revenues.

·    The Prospectus (including Notice of General Meeting) containing full details of the Fundraising is expected to be posted to shareholders shortly. Terms capitalised in this announcement have the meaning given to them in the Prospectus.

John Dawson, Chief Executive Officer of Oxford BioMedica, said:

"Oxford BioMedica is increasingly recognised as a world-leading gene and cell therapy company with a pipeline of highly valuable and attractive clinical assets coupled with leading bioprocessing expertise in the field of lentiviral vectors, all underpinned by our broad intellectual property position.

"We would like to thank our major shareholders for their continued support and also welcome and express our gratitude to Green Cross, who are already an R&D collaborator with the Group, and who have now taken an equity stake in the Company. 

 "The new funds raised will enable us to progress our discovery and pre-clinical projects, develop valuable intellectual property relating to the LentiVector^® platform and provide working capital for the Group to generate demand for our bioprocessing capabilities that will accelerate the growth of revenues. We believe we are an excellent position to progress our partners' programmes, secure further partnerships and advance our in-house pipeline through out-licensing or spin outs. We look forward to the future with great confidence."

This announcement contains inside information.

For further information, please contact:
Oxford BioMedica: John Dawson, Chief Executive Officer Tim Watts, Chief Financial Officer	Tel: [phone]
Jefferies (Sponsor, Global Co-Ordinator and Bookrunner) Gil Bar-Nahum Simon Hardy Lee Morton Max Jones Nicholas Moore	Tel: [phone]
WG Partners (UK Placement Agent) David Wilson Claes Spång	Tel: [phone]
Scott Harris UK Limited (UK Placement Agent) Alice Squires Jamie Blewitt	Tel: [phone]
Financial and corporate communications enquiries: Consilium Strategic Communications Mary-Jane Elliott/Matthew Neal/Chris Welsh/Laura Thornton	Tel: [phone]

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the times and dates in the below timetable is subject to change, in which event details of the new times and/or dates will be notified by an announcement through an RIS.

Announcement of the Fundraising and publication and dispatch of the Prospectus (including Notice of General Meeting) and Form of Proxy	13 September 2016
Latest time and date for receipt of Forms of Proxy and electronic proxy appointments via the CREST system	10.00 a.m. on 27 September 2016
General Meeting	10.00 a.m. on 29 September 2016
Announcement of the results of the General Meeting through an RIS	29 September 2016
Admission and commencement in dealings in the New Ordinary Shares expected to commence	8.00 a.m. on 4 October 2016
CREST Stock accounts expected to be credited for New Ordinary Shares	as soon as practicable after 8.00 a.m. on 4 October 2016
Share Certificates for New Ordinary Shares(1) expected to be dispatched	within 14 days of Admission

STATISTICS RELATING TO THE FUNDRAISING

Offer Price per New Ordinary Share	3 pence
Discount to Existing Ordinary Shares(1)	28.6 per cent.
Number of Existing Ordinary Shares in issue as at 12 September 2016 (being the latest practicable date prior to the publication of the Prospectus)	2,703,806,022
Number of Placing Shares to be issued pursuant to the Placing	184,255,000
Number of Subscription Shares to be issued pursuant to the Subscription	199,116,665
Aggregate number of New Ordinary Shares to be issued pursuant to the Fundraising	383,371,665
Enlarged Share Capital immediately following completion of the Fundraising (2)	3,087,177,687
Estimated gross proceeds of the Fundraising	£11.5 million
Estimated net proceeds of the Fundraising receivable by the Company	£10 million
Placing Shares and Subscription Shares as a percentage of the Enlarged Share Capital	12.4 per cent.
(1) The discount is to the middle price of Existing Ordinary Shares at the close of business on 12 September 2016, being the latest practicable date prior to the announcement of the Fundraising. (2) This assumes no further exercise of options under the Share Schemes.

The Placing Shares and Subscription Shares will be New Ordinary Shares in the Company whose ISIN will be GB0006648157.

1.   STRATEGY OF OXFORD BIOMEDICA AND BACKGROUND TO AND REASONS FOR THE FUNDRAISING

Business model and strategy

The Company's business model is based on its integrated proprietary LentiVector^® gene delivery platform technology. The Group has created, and is still developing, a lentiviral vector gene delivery platform (LentiVector^®) which can be used for both in vivo and ex vivo gene and cell therapy products. The LentiVector^® platform, which underpins Oxford BioMedica's business model, is a unique combination of intellectual property (patents, trademarks and proprietary know-how), the Group's bioprocessing and laboratory facilities, and the Group's highly skilled workforce. This platform, which has been developed over twenty years, is the foundation for the design and development of gene and cell therapy products both by Oxford BioMedica and by its partner companies. The strengths of the platform have increasingly been recognised through commercial relationships with Sanofi, Novartis, GlaxoSmithKline and Immune Design and the R&D collaboration with Green Cross LabCell. In addition, the Company has entered into an agreement with MolMed for a non-exclusive licence to Oxford BioMedica's LentiVector^® platform technology patents for manufacturing and development services. The Company is also in discussions with other companies seeking to make use of the LentiVector^® platform. Lentiviral vectors have demonstrated advantages over other vector types, particularly adeno associated viruses, for specific applications. These advantages include:

·      having a larger genetic payload capacity, as such lentiviral vectors can address certain diseases

and genetic disorders which other vector types currently cannot;

·      being able to integrate with target cells, meaning that they can be used with non-dividing and

dividing cells which is important for ex vivo cell therapies; and

·      patients do not have pre-existing immunity to lentiviral vectors, because very few humans are

infected by lentiviruses in comparison to the many who have been infected with adeno

associated viruses.

The Group's strategy is to discover and develop novel, potentially single dose and/or curative treatments for patients with conditions where either no therapy currently exists, or where the current standard of care has significant limitations by using its integrated LentiVector^® gene delivery platform technology. This strategy will be pursued through:

·      Generating revenues by providing process development and bioprocessing services to third parties. The Group aims to maintain its leading position in lentiviral vector bioprocessing by further improving its vector bioprocessing processes, thus extending the intellectual property protecting its platform bioprocessing processes (both patents and know-how). In particular the Group is currently developing bioreactor bioprocessing processes which have the potential to increase yields and reduce unit bioprocessing costs of a patient dose. At the same time, the Group expects to continue to grow its process development and bioprocessing services through partnering opportunities, currently based largely on its Novartis contracts, and the Group is in discussions with a number of other companies that are developing lentivirus-based products and require process development and/or bioprocessing, and the Company also anticipates that further potential but as yet unknown partners will emerge in due course. The Company expects that some of these discussions will be converted into partnership contracts and that the revenues from process development and bioprocessing in the short and medium term will help over time to defray the costs in the business including the Company's expenditure on R&D.

·      Use the Group's LentiVector^® platform to develop cell and gene therapy products and spin-out or out-licence the Group's existing in-house clinical product candidates. The Group's product candidates comprise three ''Priority Programmes'', OXB-102 for Parkinson's Disease, OXB-202 for corneal graft rejection and OXB-302 for cancer, which are the focus of the Company's development pipeline; two ''Other Candidates'', OXB-201 for wet AMD and OXB-301 for cancer; and two ''Partnered'' ocular product candidates which have already been out-licensed to Sanofi. Taking into account the balance of risk and reward in the context of the substantial investment required over the next two to three years to conduct the Phase I/II studies, the Group has decided that the optimal development model for the current wholly-owned in-house clinical product candidates is to spin them out into one or more product-focused special purpose vehicles (SPVs) with dedicated externally-sourced funding or to out-license them. This approach aims to ensure that the Group's priority clinical assets are advanced via external funding as expediently as possibly whilst Oxford BioMedica captures value via a potential combination of upfront payments and/or equity stakes, development milestones and royalties. In addition, it is also the intention that the terms of the SPV or out-licensing agreements would require the partner to contract back to the Group any further vector engineering or process development that is required and also the manufacturing requirements for clinical studies and commercialisation. The Group plans to continue to work on earlier-stage research and pre-clinical concepts to build new intellectual property and to identify the next generation of product candidates for clinical stage development which could either be out-licensed or spun out. When appropriate opportunities arise, the Group will also consider in-licensing technologies and/or products to which the Group can add value.

·      Developing relationships with companies, universities and hospitals which require the Group's expertise and intellectual property to accelerate their own programmes by means of collaborations, in-licensing or out-licensing and, potentially, acquisitions. In the past several years, the Group has entered into commercial relationships with Novartis, Sanofi, GlaxoSmithKline, Immune Design and Green Cross LabCell, which have given the Group an active participation in the development of, and a financial interest in, some of their gene and cell therapy programmes, for example Novartis' CTL019 as indicated in the ''Partnered and IP Enabled & Royalty Bearing Product Candidates'' candidates, as set out below.

Further information on the Company's current product candidate portfolio and strategy can be found at Part 2 "Information on Oxford BioMedica plc" of the Prospectus.

Background to and reasons for the Fundraising

Following the signing of the Novartis contract in October 2014, the Board decided to expand the Company's bioprocessing and laboratory capacity. This was partly to meet the commitments given under the Novartis contract and partly to enable the Company to take advantage of the increase in demand for lentiviral vector process development and bioprocessing which was beginning to emerge in 2014. Since October 2014, the Company has added two new state-of-the-art GMP clean room facilities, an additional one at the Harrow House facility and one on a separate site at Yarnton, near Oxford. The Company has also acquired Windrush Court in Oxford in which it has installed a completely new suite of biological laboratories for product and process development, and analytical testing of GMP material. The Company has also, during the last eighteen months, recruited and trained the staff necessary to operate the expanded facilities. The new state-of-the-art facilities are completely developed and fully operational and the Group is now in a position to handle significantly higher levels of activity than it was capable of before this year.

In parallel with the capacity expansion, the Group has continued with the development of its Priority Programmes: OXB-102, its Parkinson's Disease programme; OXB-202, its corneal graft rejection programme; and OXB-302, its cancer programme. A Phase I/II dose escalation study for OXB-102 has been designed and the study protocol is in the process of being approved by the regulatory authorities. The study could commence by early 2017 subject to successfully out-licensing or spinning out the product. In respect of OXB-202, it is anticipated that the clinical trial application for the Phase I/II clinical study will be submitted by the end of 2016, and patients could commence treatment in the first half of 2017, again, subject to successfully out-licensing or spinning out the product. Furthermore OXB-302, the Group's CAR-T 5T4 programme, should complete its pre-clinical studies by the end of 2016.

The Company raised £20.1 million net of expenses through a placing and open offer in June 2014 for the purpose of continuing the development of its product portfolio. The capacity expansion programme, which is now complete, cost the Company approximately £26 million between October 2014 and June 2016 and has been funded by drawing down $40 million (£26.1 million) of a $50 million loan facility put in place with Oberland Capital Healthcare (the "Oberland Facility"). The Group raised a further £7.5 million net of expenses through a placing in February 2016, in order to continue the investment in the product portfolio

If any of the Resolutions in the Notice of General Meeting are not approved the Fundraising will not proceed. In these circumstances the Directors are of the opinion that the Group will have sufficient finances to only fund the business until towards the end of the fourth quarter of 2016.  This assumes that the Group will only generate those revenues which have already been contracted or which the Directors believe have a high probability of being realised. However, it does not take into account any potential upfront licence payments should the Company be successful in partnering any of the Group's product candidates before the end of the fourth quarter of 2016, nor does it include potential revenue from other IP partnering or licensing transactions. Although it is possible that near term milestone payments and partnering transactions could increase available funds, the Directors cannot be certain that any such revenues will materialise before the end of the fourth quarter of 2016, if at all, and the receipt of such funds lies outside the full control of the Company.   

The Company would need £9 million to fund the business to the end of 2017, based on the Board's current plans, which highlights the significance of the current financial position, if any of the Resolutions in the Notice of General Meeting are not approved. In the event that any of the Resolutions are not passed by Shareholders and the Fundraising fails to proceed, the Directors will seek to implement alternative financing and cost-saving measures that are likely to reduce the capabilities of the Group in order to conserve cash.

In the event that any of the Resolutions are not passed and the Fundraising does not proceed, the Directors do not believe that such cost-saving measures will successfully make up the cash shortfall to allow the Company to continue as a going concern significantly beyond December 2016. If the Company were to be unsuccessful in pursuing alternative courses of action by the fourth quarter of 2016, the Directors will be obliged to cease operations, the consequences of which could include administration or receivership, or liquidation or other insolvency proceedings. In such circumstances, Shareholders could lose all or a substantial amount of the value of their investment in the Company. Accordingly, it is important that Shareholders vote in favour of all of the Resolutions in order that Fundraising may proceed.

2.   USE OF PROCEEDS

The Company intends to use the net proceeds of £10 million raised pursuant to the Fundraising as follows:

Use	approx. million
Funding discovery and pre-clinical projects	£5
Funding the development of LentiVector® platform	£3
Increase in working capital	£2
Net Proceeds	£10

Expenses of the Fundraising are expected to be approximately £1.5 million. No expenses will be charged to subscribers of New Ordinary Shares in connection with the Fundraising.

The Fundraising is conditional upon Shareholder approval being obtained at the General Meeting and is conditional upon the Placing Agreement and the Subscription Agreements becoming unconditional and remaining in full force and effect and not having lapsed or been terminated prior to the admission of the New Ordinary Shares to the premium listing segment of the Official List of the FCA and to trading on the London Stock Exchange's main market for listed securities, (the "Admission"). In the event that any of the Resolutions are not passed at the General Meeting, the Fundraising will not proceed. In addition, Admission will not go ahead in the event that the Placing Agreement or any of the Subscription Agreements do not become unconditional, or are otherwise terminated, prior to Admission.

3.   PRINCIPAL TERMS OF THE FUNDRAISING

Oxford BioMedica intends to issue 184,255,000 New Ordinary Shares through a Placing, and 199,116,665 New Ordinary Shares through a Subscription in each case, at 3 pence per New Ordinary Share to raise gross proceeds of £11.5 million. The Offer Price of 3 pence per New Ordinary Share represents a 28.6 per cent. discount to the Closing Price of an Existing Ordinary Share of 4.2 pence on 12 September 2016 (being the latest practicable date prior to the announcement of the Fundraising) and Shareholders should note that the issue of the New Ordinary Shares to be allotted pursuant to the Fundraising, Shareholders will suffer a dilution of approximately 14.2  per cent. to their interests in the Company.

Application will be made by the Company to the UK Listing Authority and the London Stock Exchange for 383,371,665 ordinary shares of 1 pence each in the Company to be admitted to the premium listing segment of the Official List of the UK Listing Authority and to be traded on the main market of the London Stock Exchange. The shares will be issued fully paid and will rank pari passu in all respects with the existing issued ordinary shares of 1 pence each of the Company. It is expected that admission of the shares will become effective at 8.00 a.m. on 4 October 2016, and that dealings will commence at that time.

Placing

Jefferies, WG Partners and Scott Harris, as agents for Oxford BioMedica, have conditionally placed, on the terms set out in the Placing Agreement, the Placing Shares at the Offer Price with existing Shareholders and other institutional investors outside the United States, representing gross proceeds of £5.5 million. The Placing is being fully underwritten by Jefferies on the terms and subject to the conditions set out in the Placing Agreement. A summary of the Placing Agreement is set out in paragraph 10 of Part 6 of the Prospectus.

Subscription

Pursuant to Subscription Agreements with the Company, Subscribers have conditionally subscribed for the Subscription Shares at the Offer Price representing gross proceeds of £6 million. The Subscription is not underwritten. A summary of the terms of a Subscription Agreement is set out in paragraph 11(b) of Part 6 of the Prospectus.

4.   FINANCIAL EFFECTS OF THE FUNDRAISING

Had the Fundraising occurred at the start of the financial period, the net assets as at 30 June 2016 would have increased by the net proceeds.

This statement does not constitute a profit forecast and should not be interpreted to mean that the earnings per share in any financial period will necessarily match or be lesser or greater than those for the relevant preceding period.

5.   DILUTIVE EFFECT OF FUNDRAISING

Upon Admission, and assuming the passing of all the Resolutions, and no further exercise of options under the Share Schemes, the Enlarged Share Capital is expected to be 3,087,177,687 Ordinary Shares. On this basis, New Ordinary Shares issued through the Fundraising will represent 12.4 per cent. of the Enlarged Share Capital.

Following the issue of the New Ordinary Shares to be allotted pursuant to the Fundraising, Shareholders will suffer a dilution of approximately 14.2 per cent. to their interests in the Company

6.   TRADING UPDATE AND OUTLOOK

Financials update

In the first six months of 2016, gross income (the aggregate of revenue and other operating income) amounted to £14.0 million (unaudited), up 141 per cent. on the same period in 2015 (unaudited), and the Group continues to expect to make further progress during the remainder of the year.

The Group began 2016 with £9.4 million cash and raised a further £7.5 million (net) from a placing of shares in February 2016. As at 30 June 2016, the Group's net debt was £19.4 million, including £11.9 million of cash. On 28 April 2016 the Group indicated that it had sufficient cash to last well into the third quarter of 2016, without including any potential inflows from further contracts or licence agreements. Since then, the Group has received a number of firm purchase orders for bioprocessing batches of lentiviral vector later this year and in the first half of 2017 which have extended the period until towards the end of the fourth quarter of 2016.

Overall, the Group is continuing to trade in line with management expectations and, on Admission, the Directors believe it will be in an excellent position to progress its partners' programmes, secure further partnerships and advance its in-house pipeline through out-licensing or spin outs.

Process development and bioprocessing progress

The Group expects to make further progress growing its process development and bioprocessing services in the remainder of 2016 and 2017 by entering into new contracts structured in a similar way to the Group's current agreements with Novartis and Immune Design. The Group is in discussions with a number of other companies that are developing lentivirus-based products and require process development and/or bioprocessing and, although there can be no assurances that any definitive agreements will be concluded, the Company expects that some of these discussions will be converted into partnership contracts.

R&D update

The Group is continuing to invest in further development of its LentiVector^® platform to improve the volumes and yields that can be obtained from the manufacturing processes and to improve the efficacy of the vectors when they transduce target cells. This work will add to the Company's knowhow and help to retain its leadership in lentiviral vector expertise.

As stated earlier, the Board has decided that in order to optimise the use of the Group's cash resources, its product programmes will be out-licensed or spun out prior to the start of Phase I/II clinical studies. Over the course of the past six months, the Group has continued to make progress on these programmes, and this progress will continue as outlined below, subject to agreeing terms for an out-licensing or spin out agreement with one or more third parties:

·      OXB-102 for Parkinson's Disease: Patients will be treated at the same Paris and Cambridge sites that were involved in the earlier OXB-101 clinical study. The regulatory approval process for a Phase I/II study is underway in the UK, and it is anticipated that the first patient could commence treatment by early 2017, with the French regulatory submission potentially towards the end of 2016. In May 2016, Professor Stephane Palfi, the lead investigator, presented information at the 19th Annual Meeting of the American Society of Gene and Cell Therapy (ASGCT) showing evidence of encouraging long-term sustained benefit of at least four years duration to patients treated in the original OXB-101 study.

·      OXB-202 for corneal graft rejection: It is anticipated that the clinical trial application for Phase I/II clinical study will be submitted by the end of 2016 and that patients could commence treatment in the first half of 2017. The first site for the clinical study is likely to be at Moorfields Eye Hospital in London although further sites, potentially in the US, may be opened once the study is underway.

·      OXB-302 for cancer: Expected to complete pre-clinical studies by the end of 2016. Following demonstration of pre-clinical concept, clinical planning is likely to be initiated.

Oxford BioMedica continues to invest in earlier stage gene and cell therapy product concepts, sometimes with partners, with the aspiration to be able to identify one new product (in addition to the ones named above) suitable for clinical development over the next two years which could be considered for partnering, out-licensing or being spun out.

The net investment in the above R&D activities in 2015 was £10.2 million and £6 million in the first half of 2016 after grant income and deduction of its share of support and corporate overheads. The Group expects its net investment in its R&D in the second half of 2016 to continue at around this level as the preparations for clinical studies of OXB-102 and OXB-202 are finalised and the OXB-302 pre-clinical work is completed. However, investment in R&D is expected to decline by between 20 per cent. to 30 per cent. in 2017 as the financing of the Priority Programmes is transferred to third parties in line with the decision to out-license or spin out clinical stage product development outlined above.

Facility expansion

In January 2016, the Group brought into production the new state-of-the-art GMP bioprocessing facility at Yarnton, Oxford, and is now producing CTL019 vector batches for Novartis in both its original Harrow House clean room and at Yarnton. The expansion of the Harrow House facility by adding a second clean room suite has also been completed and MHRA approval for bioprocessing obtained. This facility is intended to be used for the Group's newly developed bioprocessing activities and several bioreactor batches are scheduled for the second half of 2016. The construction of the new laboratory complex at Windrush Court was completed in May 2016 and this facility has also been approved for the analytical testing of GMP material. All laboratory-based staff have relocated from the Medawar Centre to Windrush Court and the Medawar Centre will be fully vacated by the end of October 2016. The total capital expenditure to complete all these facilities in the period from October 2014 to mid-2016 was approximately £26 million, of which £6 million was incurred in the first half of 2016. The Group's headcount at 30 June 2016 was 252 and this is expected to rise to approximately 280 by the end of 2016 to enable the Group to fully utilise the new facilities.

7.   RELATED PARTY TRANSACTION

In accordance with a Subscription Agreement, Vulpes Life Sciences Fund has agreed to subscribe for 66,666,667 New Ordinary Shares as part of the Subscription at the Offer Price and Vulpes Testudo Fund has agreed to subscribe for 33,333,333 New Ordinary Shares as part of the Subscription at the Offer Price.

Both Vulpes Life Sciences Fund and Vulpes Testudo Fund are managed by Vulpes Investment Management of which Martin Diggle, a Non-executive Director of the Company, is a founder. The participation in the Subscription by Vulpes Life Sciences Fund, being a ''substantial shareholder'' as defined by the Listing Rules, constitutes a "related party transaction" for the purposes of Chapter 11 of the Listing Rules. As an "associate of a related party", Vulpes Testudo Fund's  participation in the Subscription also constitutes a ''related party transaction'' for the purposes of Chapter 11 of the Listing Rules. Vulpes Life Sciences Fund's interests as a "substantial shareholder" and  Vulpes Testudo Fund's interests as an ''associate of a related party'' may diverge from those of the other Shareholders.

The Company is required by Chapter 11 of the Listing Rules to seek Shareholder approval for any ''related party transaction'' which it proposes to enter into. Resolution 4 set out in the Notice of General Meeting seeks, by way of ordinary resolution, the approval of Shareholders for Vulpes Life Sciences Fund and Vulpes Testudo Fund to participate in the Subscription.

Pursuant to the requirements of Chapter 11 of the Listing Rules, Vulpes Life Sciences Fund, as a Related Party, will not vote on Resolution 4 approving the Related Party Transaction and has undertaken to take all reasonable steps to ensure that its associates will not do so either.

The Directors (excluding Martin Diggle) hold 12,711,458 Existing Ordinary Shares representing approximately 0.5 per cent. of the existing issued ordinary share capital of the Company in aggregate. All of the Directors (excluding Martin Diggle) have subscribed for New Ordinary Shares as part of the Subscription amounting to 3,466,665 New Ordinary Shares in aggregate. Immediately following Admission, the Directors' holdings, excluding Martin Diggle, are expected to represent 0.5 per cent. of the issued Ordinary Shares of the Company.

8.   IRREVOCABLE COMMITMENTS

The Directors (excluding Martin Diggle), who in aggregate hold 12,711,458 Existing Ordinary Shares, representing approximately 0.5 per cent. of the existing issued ordinary share capital of the Company, have irrevocably undertaken to vote in favour of the Resolutions at the General Meeting.

In addition, Vulpes Life Sciences Fund, which holds 475,850,000 Existing Ordinary Shares, representing approximately 17.6 per cent. of the existing issued ordinary share capital of the Company, has irrevocably undertaken to vote in favour of Resolutions 1 to 3 at the General Meeting and not to vote on Resolution 4 approving the Related Party Transaction. Vulpes Life Sciences Fund has also undertaken to take all reasonable steps to ensure that its associates will not vote on Resolution 4 approving the Related Party Transaction.

9.   GENERAL MEETING

You will find set out at the end of the Prospectus a notice convening the General Meeting to be held at the offices of Covington & Burling LLP, 265 Strand, London WC2R 1BH on 29 September 2016 at 10.00 a.m. where the following Resolutions will be proposed:

Resolution 1

An ordinary resolution to approve the issue of New Ordinary Shares at 3 pence per share, at a discount in excess of 10 per cent. of the Closing Price of the Existing Ordinary Shares at the time of agreeing the Fundraising. This resolution is required because the Listing Rules require shareholder approval for a discount in excess of 10 per cent.

Resolution 2

An ordinary resolution to authorise the Directors to allot relevant securities for the purposes of section 551 of the Companies Act provided that such power be limited to the allotment of the New Ordinary Shares up to an aggregate nominal amount of £3,833,716.65 This resolution is conditional upon the passing of Resolution 1 and 4.

Resolution 3

A special resolution to grant the Directors authority to allot equity securities for cash pursuant to the authority conferred on them by Resolution 2 and to dis-apply statutory pre-emption rights in respect of the allotment of such shares as if section 561 of the Companies Act did not apply to such allotment, provided that such power shall be limited to the allotment of the New Ordinary Shares up to an aggregate nominal amount of £3,833,716.65. This resolution is conditional upon the passing of Resolutions 1, 2 and 4.

Resolution 4

An ordinary resolution to approve, as a related party transaction, Vulpes Life Sciences Fund and Vulpes Testudo Fund's participation in the Subscription. This resolution is conditional upon the passing of Resolutions 1, 2 and 3.

All the Resolutions are inter-conditional, therefore, if any of the Resolutions are not passed the Fundraising will not proceed. It should be noted that whilst the provisions of section 570 of the Companies Act confer on Shareholders rights of pre-emption on the allotment of equity securities for cash, Resolution 3 seeks to disapply this right for the purpose of the Fundraising.

The authority and the power described in Resolutions 2 and 3 above will (unless previously revoked or varied by the Company in general meeting) expire on the date 15 months from the passing of such resolutions or at the conclusion of the next annual general meeting of the Company following the passing of the resolutions, whichever occurs first. The authority and the power described in Resolutions 2 and 3 above are in addition to any like authority or power previously conferred on the Directors.

As described in paragraph 8 above, Vulpes Life Sciences Fund will abstain, and has undertaken to take all reasonable steps to ensure that its respective associates will abstain, from voting on Resolution 4 at the General Meeting.

10.  ACTIONS TO BE TAKEN

In respect of the General Meeting

A Form of Proxy for use at the General Meeting is enclosed with the Prospectus. Whether or not you intend to be present at the meeting, the Form of Proxy should be completed in accordance with the instructions printed thereon and returned to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU or submitted electronically through CREST or via www.capitashareportal.com as soon as possible, but in any event so as to be received by no later than 10.00 a.m. on 27 September 2016. The completion and return, or submission electronically, of a Form of Proxy will not preclude you from attending the General Meeting and voting in person, if you so wish.

11.  DIVIDEND POLICY

The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions (if any) declared, paid or made by Oxford BioMedica after Admission. However, at present, it is intended that no dividends will be paid by Oxford BioMedica, as the Company continues to finance the operation of its business.

12.  ADDITIONAL INFORMATION

You are recommended to read all the information contained in the Prospectus and not just rely on the key or summarised information and your attention is drawn to the information set out in Parts 2 to 6 of the Prospectus.

13.  RISK FACTORS

Shareholders and investors should consider fully the Risk Factors associated with the Group, the Fundraising and the New Ordinary Shares. Your attention is drawn to the Risk Factors set out in the Prospectus.

14.  TAXATION

Information about United Kingdom and United States taxation is set out in paragraphs 15 and 16 of Part 6 ''Additional Information'' of the Prospectus. This information is a general guide only as to the current tax position in those jurisdictions. If you are in any doubt as to your tax position, or you are subject to tax in a jurisdiction other than the United Kingdom or the United States, you should consult your own independent professional adviser without delay.

15.  WORKING CAPITAL

The Company is of the opinion that, taking into account existing cash balances and the net proceeds of the Fundraising, the Group has sufficient working capital for its present requirements, that is for at least 12 months following the publication of the Prospectus.

16.  IMPORTANCE OF THE VOTE

If any of the Resolutions in the Notice of General Meeting are not approved the Fundraising will not proceed. In these circumstances the Directors are of the opinion that the Group will have sufficient finances to only fund the business until towards the end of the fourth quarter of 2016.

This assumes that the Group will only generate those revenues which have already been contracted or which the Directors believe have a high probability of being realised. However, it does not take into account any potential upfront licence payments should the Company be successful in partnering any of the Group's product candidates before the end of the fourth quarter of 2016, nor does it include potential revenue from other IP partnering or licensing transactions. Although it is possible that near term milestone payments and partnering transactions could increase available funds, the Directors cannot be certain that any such revenues will materialise before the end of the fourth quarter of 2016, if at all, and the receipt of such funds lies outside the full control of the Company. For the avoidance of doubt, the Company is required under the Oberland Facility to maintain cash and cash equivalents of not less than $10 million (approximately £7.6 million) while the Oberland Facility is outstanding (in pounds sterling terms, this sum is subject to variation depending on the prevailing exchange rate) and therefore this sum is excluded from the Company's assessment of its available funds.

The Company would need £9 million to fund the business to the end of 2017, based on the above assumptions and the Board's current plans, which highlights the significance of the current financial position, if any of the Resolutions in the Notice of General Meeting are not approved.

In the event that any of the Resolutions are not passed by Shareholders and the Fundraising fails to proceed, the Directors will seek to implement the actions detailed below immediately.

·      The Group would seek to access the $10 million (approximately £7.6 million) of cash and cash equivalents which is restricted under the terms of the Oberland Facility. This would require Oberland's consent and there can be no certainty that Oberland would consent to the Group having access to the restricted $10 million (approximately £7.6 million) within the timeframe required, or that their requested compensation for doing so would be acceptable to the Group, to prevent a working capital shortfall, or at all.

·      The Group would seek alternative forms of financing. However, the Directors cannot guarantee that it will be possible to obtain any such alternative forms of financing within the required timeframe, if at all, or that such financing, if obtained, will be on terms as attractive as the Fundraising for Shareholders.

·      The Group would seek to accelerate some of its partnering and out-licensing transactions. However, the Directors cannot guarantee that it will be possible to agree terms that are as favourable as they would have been if the programmes were not accelerated and there can be no guarantee that terms could be agreed within the timeframe required to prevent a working capital shortfall.

·      The Group would seek to reduce its cost base by suspending all discretionary pre-clinical and internal product development activities, potentially mothballing one or more of the GMP clean room suites and also by implementing redundancies and cutting back on all other non-project related discretionary expenditure, which is likely to reduce the capabilities of the Group in order to conserve cash. While the implementation of such reductions to the Group's cost base may improve the Group's ability to conserve cash, there can be no guarantee that any resulting cost savings will be realised quickly enough to prevent a working capital shortfall, or at all, and, in any event, the Directors do not anticipate that the quantum of such savings would be sufficient enough to prevent a working capital shortfall.

Notwithstanding the measures outlined above, in the event that any of the Resolutions are not passed and the Fundraising does not proceed, the Directors do not believe that the above actions will successfully make up the cash shortfall to allow the Company to continue as a going concern significantly beyond December 2016. If the Company were to be unsuccessful in pursing these alternative courses of action by the fourth quarter of 2016, the Directors will be obliged to cease operations, the consequences of which could include administration or receivership, or liquidation or other insolvency proceedings. In such circumstances, Shareholders could lose all or a substantial amount of the value of their investment in the Company. Accordingly, it is important that Shareholders vote in favour of all of the Resolutions in order that the Fundraising may proceed.

17.  FINANCIAL ADVICE

The Board has received financial advice from Jefferies in relation to the Fundraising. In providing its financial advice to the Board, Jefferies has relied on the Board's commercial assessment of the Fundraising.

18.  RECOMMENDATION

The Board believes that the Fundraising, the Offer Price (which represents a discount in excess of 10 per cent. of the Closing Price at the time of the announcement of the Fundraising) and the Related Party Transaction are in the best interests of Oxford BioMedica and the Shareholders as a whole.

The Board (excluding Martin Diggle who has not taken part in the Board's consideration of the matter) which has been so advised by Jefferies, believes that the Related Party Transaction is fair and reasonable so far as Shareholders are concerned. In providing such advice to the Directors (excluding Martin Diggle), Jefferies has taken into account the Directors' commercial assessments of the Related Party Transaction.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of all of the Resolutions to be proposed at the General Meeting, as those Directors who hold shares have irrevocably undertaken to do, (although Vulpes will abstain, as required, and has undertaken to take all reasonable steps to ensure that its respective associates will abstain, from voting on the Related Party Resolution relating to its Related Party Transaction).

IMPORTANT NOTICE

This Announcement and the information contained in this Announcement is not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or within the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada, Japan or South Africa, or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction.

This Announcement does not constitute or form part of any offer or any solicitation to purchase or subscribe for securities in the United States.

The securities referred to herein have not been, and will not be, registered under the Securities Act or under the applicable securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, taken up, resold, transferred or delivered, directly or indirectly within, into or in the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any relevant state or other jurisdiction of the United States. There will be no public offer of securities in the United States.

The New Ordinary Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Japan or South Africa and, subject to certain exceptions, may not be offered or sold, directly or indirectly, in Australia, Canada, Japan or South Africa. There will be no public offering of the New Ordinary Shares in Australia, Canada, Japan or South Africa or elsewhere.

This Announcement has been issued by, and is the sole responsibility, of the Company. This Announcement is not an offer to sell nor a solicitation to buy any securities in any jurisdiction, nor is it a prospectus for the purposes of Directive 2003/71/EC as amended (including amendments by Directive 2010/73/EU, to the extent implemented in the relevant member state) (the "Prospectus Directive") and investors should not subscribe for or purchase any New Ordinary Shares referred to in this Announcement except solely on the basis of information in the Prospectus.

This Announcement is not an invitation nor is it intended to be an inducement to engage in investment activity for the purpose of section 21 of the Financial Services and Markets Act 2000 (as amended) of the United Kingdom ("FSMA"). To the extent that this Announcement does constitute an inducement to engage in any investment activity included within this Announcement, it is directed at and is only being distributed to: (A) persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive; (B) if in the United Kingdom, persons who (i) have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or are high net worth companies, unincorporated associations or partnerships or trustees of high value trusts as described in Article 49(2) of the Order; and (ii) are "qualified investors" as defined in section 86 of FSMA; and (C) otherwise, to persons to whom it may otherwise be lawful to communicate it to (each a "Relevant Person"). No other person should act or rely on this Announcement and persons distributing this Announcement must satisfy themselves that it is lawful to do so. By accepting the terms of this Announcement you represent and agree that you are a Relevant Person.

Jefferies, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company as Sponsor, Global Co-Ordinator and Bookrunner and no-one else in relation to the Fundraising or Admission, and, will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Fundraising or Admission, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Jefferies nor for providing advice in relation to the Fundraising or Admission, or any other transaction or arrangement referred to in this Announcement and, apart from the responsibilities and liabilities, if any, which may be imposed on Jefferies by FSMA or the regulatory regime established thereunder, Jefferies accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for or in respect of the contents of this Announcement, including its accuracy, completeness or verification, nor for any other statement made or purported to be made by, on behalf of it, the Company, the Directors or any other person, in connection with the Company, the Fundraising or Admission. Jefferies and its directors, officers, employees, advisors and affiliates each accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this Announcement or any such statement.

WG Partners, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company as UK Placement Agent and no-one else in relation to the Fundraising or Admission, and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Fundraising or Admission, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of WG Partners nor for providing advice in relation to the Fundraising or Admission or any other transaction or arrangement referred to in this Announcement and, apart from the responsibilities and liabilities, if any, which may be imposed on WG Partners by FSMA or the regulatory regime established thereunder, WG Partners accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for or in respect of the contents of this Announcement, including its accuracy, completeness or verification, nor for any other statement made or purported to be made by, on behalf of it, the Company, the Directors or any other person, in connection with the Company, the Fundraising or Admission. WG Partners and its directors, officers, employees, advisors and affiliates each accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this Announcement or any such statement.

Scott Harris, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company as UK Placement Agent and no-one else in relation to the Fundraising or Admission, and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Fundraising or Admission, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Scott Harris nor for providing advice in relation to the Fundraising or Admission or any other transaction or arrangement referred to in this Announcement and, apart from the responsibilities and liabilities, if any, which may be imposed on Scott Harris by FSMA or the regulatory regime established thereunder, Scott Harris accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for or in respect of the contents of this Announcement, including its accuracy, completeness or verification, nor for any other statement made or purported to be made by, on behalf of it, the Company, the Directors or any other person, in connection with the Company, the Fundraising or Admission. Scott Harris and its directors, officers, employees, advisors and affiliates each accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this Announcement or any such statement.

Roth Capital, which is authorised in the US by the Financial Industry Regulatory Authority (''FINRA''), is acting exclusively for the Company as US Placement Agent and no-one else in relation to the Fundraising and Admission, will not regard any other person (whether or not a recipient of the Announcement) as a client in relation to the Fundraising or Admission and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Roth Capital nor for providing advice in relation to the Fundraising or any other transaction or arrangement referred to in the Announcement and, apart from the responsibilities and liabilities, if any, which may be imposed on Roth Capital by FINRA or any other US regulatory authority, Roth Capital accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for or in respect of the contents of the Announcement, including its accuracy, completeness or verification, nor for any other statement made or purported to be made by, or on behalf of, it, the Company, the Directors or any other person, in connection with the Company, the Fundraising or Admission. Roth Capital and its directors, officers, employees, advisors and affiliates each accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of the Announcement or any such statement.

This Announcement may contain forward-looking statements that reflect the Group's current expectations regarding future events, including the clinical development and regulatory clearance of the Group's product candidates, the Group's ability to find partners for the development and commercialisation of its product candidates, the business of the Company, and management plans and objectives. The Company considers any statements that are not historical facts as "forward-looking statements". Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including the success of the Group's research strategies, the applicability of the discoveries made therein, the successful and timely completion of pre-clinical and clinical studies with respect to the Group's product candidates, the uncertainties related to the regulatory process, the ability of the Group to identify and agree beneficial terms with suitable partners for the commercialisation and/or development of product candidates, as well as the achievement of expected synergies from such transactions, the acceptance of product candidates by consumers and medical professionals, the successful integration of completed mergers and acquisitions and achievement of expected synergies from such transactions and the ability of the Group to identify and consummate suitable strategic and business combination transactions, the scaling-up of the Group's bioprocessing activities and the risks described in the ''Risk Factors'' set out in the Prospectus.

When used in this Announcement the words "estimate", "project", "intend", "aim", "anticipate", "believe", "expect", "should" and similar expressions, as they relate to the Company or the management of the Group, are intended to identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement. Neither the Company nor any other member of the Group undertakes any obligation publicly to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, save in respect of any requirement under applicable laws, the Listing Rules, Prospectus Rules, Disclosure Rules and Transparency Rules and other regulations.

No statement in this Announcement or incorporation by reference into this Announcement is intended as a profit forecast or profit estimate and no statement in the Prospectus should be interpreted to mean that earnings or earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share.

Save where expressly stated otherwise, neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website is incorporated into, or forms part of, this Announcement.

 

END

 

 

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