Preliminary Results

Oxford Biomedica PLC
14 March 2006



For Immediate Release                                             14 MARCH 2006



                              OXFORD BIOMEDICA PLC
            PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005


Oxford, UK - 14 March 2006: Oxford BioMedica (LSE: OXB), the leading gene
therapy company, today announces its preliminary results for the year ended 31
December 2005.



Operational highlights:

TroVax(R) (cancer)

•   Initial analyses of results from Phase II trials in metastatic
    colorectal cancer with chemotherapy suggest that TroVax improves survival as
    well as tumour response rate

•   Initial results from Phase II trials in renal cell carcinoma with
    interleukin-2 showed good safety and strong immune responses (initial tumour
    response data from the first few patients will be published at the time of 
    ASCO, June 2006)

•   Phase III pivotal study protocol for renal cell carcinoma submitted to FDA

•   Entered discussions with QUASAR on proposed Phase III trial in Stage
    II/III colorectal cancer

MetXia(R) (cancer)

•   Results from stage one of the Phase II trial in pancreatic cancer
    confirmed the product's safety and tolerability and showed dose-related gene
    transfer at the tumour site

•   Stage two dose escalation of cyclophosphamide progressing according to plan

Targeted Antibody Therapy (cancer)

•   Wyeth presented preclinical data showing encouraging efficacy, including 
    improved survival in a lung cancer model

ProSavin(R) (Parkinson's disease)

•   Preclinical studies confirmed previous conclusions on safety and
    showed that the product induces almost full recovery to the most recent time
    point of 20 weeks

RetinoStat(R) (retinopathy)

•   Preclinical results from studies conducted with the Institute of
    Ophthalmology and Johns Hopkins University showed statistically significant
    efficacy

Technology licensing

•   Strategic alliance with Sigma-Aldrich to develop and commercialise
    LentiVector(R)-RNAi reagents

•   Licensing agreements for the LentiVector technology for research
    applications with Pfizer and two undisclosed global biopharmaceutical 
    companies



Financial highlights:

•   Revenue £0.8 million: increased £0.3 million (64%) over 2004
•   Operating expenses £12.2 million: £1.2 million (9%) less than 2004
•   Loss for the year £9.1 million: £1.4 million (13%) less than 2004
•   Cash burn £7.7 million: £2.0 million (21%) less than 2004
•   Total of £29.0 million raised from issue of shares in 2005
•   Year end cash, cash equivalents and current asset investments £43.8
    million (2004: £22.4 million)


Board changes:

•   Dr Mike McDonald, Chief Medical Officer appointed on 2 February 2006

•   Raj Uppal, Non-Executive Director, resigned from the Board on 13 March
    2006



Professor Bob Hawkins, Clinical Director of Medical Oncology at the Christie
Hospital in Manchester and Principal Investigator for several TroVax trials
commented on the data from the Phase II studies of TroVax with chemotherapy,
saying: 'The data using TroVax in combination with chemotherapy in colorectal
cancer look very encouraging particularly considering the size of the study.  If
these data were reproduced in a suitably powered pivotal study then they would
likely support an efficacy claim in a license application.'



Commenting on the annual results, Oxford BioMedica's Chief Executive, Professor
Alan Kingsman said: 'We are very pleased to report strong progress across the
entire development portfolio and in our licensing and business development
activities during 2005. Our lead candidate, TroVax, continues to report
promising results in clinical trials and we look forward to reporting more data
at ASCO in June 2006. The preliminary analysis of patient survival in the Phase
II colorectal cancer trials is encouraging and these data add further value as
we progress our deal discussions. We remain focussed on achieving our key
objectives of securing a commercial partner for TroVax and commencing Phase III
trials. The fund raising in 2005 provides us with the financial strength to add
value to our programmes while pursuing licensing deals and product
collaborations.'





Analyst meeting and web cast:

An analyst briefing will be held at 10:00 am today at the offices of Buchanan
Communications, 45 Moorfields, London EC2. Simultaneously to the analyst
briefing at 10.00 am, there will be a live audio web cast of the results
presentation. To connect to the web cast facility, please go to the Company's
website: http://www.oxfordbiomedica.co.uk/ approximately 10 minutes (09:50 am)
before the start of the briefing. This will also be available for replay shortly
after the presentation.



                                     -Ends-


For further information, please contact:
Oxford BioMedica plc:

Professor Alan Kingsman, Chief Executive                Tel: [phone]
City/Financial Enquiries:

Lisa Baderoon/ Mark Court/ Mary-Jane Johnson Buchanan   Tel: [phone]
Communications

Scientific/Trade Press Enquiries:
Katja Stout/ Gemma Bradley                              Tel: [phone]
Northbank Communications



Notes to editors:

1. Oxford BioMedica

Oxford BioMedica (LSE: OXB) is a biopharmaceutical company specialising in the
development of novel gene-based therapeutics with a focus on the areas of
oncology and neurotherapy. The Company was established in 1995 as a spin out
from Oxford University, and is listed on the London Stock Exchange.



Oxford BioMedica has core expertise in gene delivery, as well as in-house
clinical, regulatory and manufacturing know-how. In oncology, the pipeline
includes an immunotherapy and a gene therapy in multiple Phase II trials, and a
preclinical targeted antibody therapy in collaboration with Wyeth. In
neurotherapy, the Company's lead product is a gene therapy for Parkinson's
disease, which is expected to enter clinical trials in 2006, and four further
preclinical candidates. The Company is underpinned by over 80 patent families,
which represent one of the broadest patent estates in the field.



The Company has a staff of approximately 70 split between its main facilities in
Oxford and its wholly owned subsidiary, BioMedica Inc, in San Diego, California.
Oxford BioMedica has corporate collaborations with Wyeth, Intervet,
Sigma-Aldrich, Viragen, MolMed, Virxsys and Kiadis; and has licensed technology
to a number of companies including Merck & Co, Biogen Idec and Pfizer. Further
information is available at www.oxfordbiomedica.co.uk


CHAIRMAN'S REPORT



The year 2005 was a breakthrough for Oxford BioMedica. The Company achieved a
number of 'firsts'. These included: first Phase II results with TroVax(R) in
renal cell carcinoma; first Phase II results of TroVax in the adjuvant setting
of colorectal cancer; first discussions with the FDA regarding Phase III
development of TroVax; first Phase II results of MetXia(R) in pancreatic cancer;
first preclinical efficacy data from the Company's partner Wyeth for the
targeted antibody cancer therapy; and first strategic alliance to develop and
commercialise LentiVector(R)-based systems.



During 2005, the Company also reported further encouraging results from the
Phase II trials of TroVax in colorectal cancer, more preclinical proof of
principle data from the neurotherapy portfolio and licensing agreements for the
LentiVector technology with Pfizer and two leading biopharmaceutical companies.



I am pleased to announce that we have achieved this development progress while
also maintaining firm financial control. Total operating expenses were £1.2
million lower than 2004. As a result of higher tax credit receipts, the cash
burn (total of net cash used in operating activities and capital expenditure)
for 2005 was £2.0 million less than 2004 at £7.7 million (2004: £9.7 million).
In December 2005, we were delighted that new and existing investors supported a
successful share offering, which raised £30.1 million before expenses including
an investment of £2.9 million by Sigma-Aldrich. The Directors believe that the
Company's cash and bank deposits at the end of 2005 of £43.8 million provide the
financial strength to deliver on our objectives to add further value to the
pipeline and to secure the anticipated commercial collaborations for our lead
products. The financial report for 2005 is the Company's first report to be
prepared in accordance with International Financial Reporting Standards (IFRS).



I am grateful to all those that have supported and contributed to Oxford
BioMedica during the year. We welcome our eight new staff who joined during the
year, in particular, Dr Mike McDonald, who was appointed in September 2005 to
the new position of Chief Medical Officer. Mike brings considerable experience
in clinical development and regulatory affairs from 20 years in the
pharmaceutical and biotechnology industry and has already made a significant
contribution to the progress of TroVax. In February 2006, Mike joined the Board
as an Executive Director. I would also like to thank Raj Uppal, one of our
Non-Executive Directors, who resigned from the Board on 13 March 2006. Raj has
made a valuable contribution to the Board and has been an excellent source of
advice over the years, having joined the Board in February 2001.



I would also like to recognise the support and commitment shown to Oxford
BioMedica by our partners. In particular during 2005, I would like to thank our
new strategic alliance partner, Sigma-Aldrich, and our three new technology
licensees, Pfizer and two leading biopharmaceutical companies, and I would like
to congratulate Wyeth on its progress with the targeted antibody therapy. Also,
as ever, I want to thank our dedicated staff for their efforts during the year,
without whom we would not be able to report such significant achievements.



Dr Peter Johnson
CHAIRMAN



OPERATING REVIEW



The Company's core development pipeline is focused on treatments for cancer and
neurobiological diseases. Two products are in clinical trials and a further
three candidates are expected to enter clinical development in 2006-07. The
internal pipeline of seven product candidates has attracted considerable support
from research and clinical funding agencies as well as charitable organisations,
which have provided grants or services in kind. A further two products are in
development with commercial partners.



Oxford BioMedica established an active licensing programme for its suite of
gene-delivery technologies in early 2004. This initiative has secured nine
licensees or partners to date, including Pfizer and Sigma-Aldrich during 2005.



ONCOLOGY

The oncology pipeline exploits the expertise of the Company and its partners in
tumour biology, immunology and product development. It comprises three major
product candidates as well as a product for treating cancer in companion
animals. These novel cancer therapies are designed to deliver a combination of
improved efficacy and safety over existing treatments.



The in-house cancer pipeline is focussed on TroVax and MetXia, which have both
generated encouraging clinical results in 2005. The Company has two main goals
within the TroVax programme. The first is to secure a commercial partner and the
second is to maintain the planned product registration date of 2009. For MetXia,
the Company expects to report further clinical data in 2006 and to open
discussions with regulatory authorities and potential partners. The Company's
partners, Wyeth and Intervet, made progress with their respective cancer
programmes during 2005. Product optimisation and preparations for clinical/field
trials are expected to be completed during 2006 for both candidates.



TroVax(R)

TroVax is Oxford BioMedica's lead cancer immunotherapy product candidate. It is
designed to stimulate a specific anti-cancer immune response and has potential
application in many tumour types. The product induces an immune response against
the tumour antigen 5T4, which is broadly distributed throughout a wide range of
solid tumours. The product consists of a pox virus (MVA) gene-transfer system,
which delivers the gene for 5T4. MVA is known to induce the breaking of immune
tolerance to self antigens, such as 5T4, that are expressed from this
gene-delivery system. Over 100 patients have now been treated with TroVax in six
clinical trials (collectively over 400 doses). TroVax has attracted external
support from Cancer Research UK and the US National Cancer Institute. These
organisations are conducting or plan to conduct clinical trials with TroVax,
which would otherwise cost Oxford BioMedica the equivalent of approximately
US$5.5 million.



There are five Phase II trials of TroVax ongoing, three in colorectal cancer and
two in renal cell carcinoma. In 2004, recruitment was completed in Phase II
trials of TroVax in first-line treatment of metastatic colorectal cancer
alongside irinotecan-based (IFL) and oxaliplatin-based (FOLFOX) chemotherapy.
The complete safety and immunology data from 23 'per protocol' patients from
these two trials were presented at the International Colorectal Cancer Congress
in Aventura, Florida, USA, in October 2005.



These data showed that the primary endpoints of safety and anti-tumour
immunological responses were achieved, and confirmed the excellent safety
profile of TroVax with no serious adverse events being attributed to the
product. All 23 patients mounted an anti-tumour immune response following TroVax
treatment and these responses were, on average, of higher magnitude and longer
duration than those seen in later stage patients in the Company's previously
completed Phase I/II trial in colorectal cancer. This suggests that the
chemotherapy regimens do not impair the ability of TroVax to elicit an
anti-tumour response and, in fact, may enhance some aspects of the response. The
Company is particularly encouraged by the high frequency and level of anti-5T4
cytotoxic (killer) T-cells (CD8) induced by TroVax. Over 70% of the patients
showed identifiable CD8 responses. In some patients, the CD8 levels were
comparable with the high levels that are generally only seen in response to
viral infections. This was the first comprehensive demonstration by the Company
that TroVax induces the production of these cells, which are generally regarded
by the industry as being the key anti-tumour effectors. This observation alone
has increased the interest of potential partners in TroVax.



In the two Phase II trials of TroVax with chemotherapy, the secondary endpoint
of clinical benefit exceeded the Directors' expectation from their assessment of
previously reported data for chemotherapy alone. Based on unaudited data across
both trials, 91% of per protocol patients, who received TroVax with
chemotherapy, showed disease control: 17% had complete responses; 49% had
partial responses; and 25% had stable disease. These figures are based on CT
scan data according to industry-standard criteria for measuring tumour response,
known as Response Evaluation Criteria in Solid Tumours (RECIST).



There were differences between the results for the two chemotherapy regimens. In
the TroVax plus IFL trial, 58% of patients showed complete or partial responses
according to RECIST. In the TroVax plus FOLFOX trial, 73% showed complete or
partial responses. Although these trials were small in terms of patient numbers
and were not designed with control arms, the Directors believe that these levels
of clinical benefit are encouraging when compared to published trial data for
chemotherapy alone in similar settings. Interestingly, like the earlier Phase I/
II study, there was a trend showing a relationship between clinical benefit and
immune response. In the TroVax plus FOLFOX trial, an independent statistician
identified a statistically significant (p < 0.02) correlation between the
5T4-specific immune response and tumour responses. For both trials, final
audited tumour response rates, statistical analyses and patient survival data
are anticipated in 2006.



The Company is currently accumulating survival information for these two studies
and preliminary analysis of patients who had received at least two injections of
TroVax suggests that the product may provide a survival benefit when compared
with the published data for the chemotherapies alone. However, it should be
noted that patient numbers are too small to provide a rigorous conclusion and
comparisons with historical data can be unreliable. In order to improve the
statistical value of the analysis the combined published survival curves for the
two chemotherapies were compared with the combined survival of patients
receiving TroVax in addition to the chemotherapies. This showed that TroVax
extended median survival from 72 weeks to 88 weeks and improved survival at
twelve months from 70% to 90%. At the time of writing, 13 of the 30 patients in
this survival analysis remained alive with follow-up times exceeding 75 weeks
through to 128 weeks. The Directors regard these data as encouraging and believe
that, if these observations were reproduced in a pivotal study, they would be
sufficient to support a Biologics License Application (BLA). The Company expects
to report further data from these trials at the American Society of Clinical
Oncology (ASCO) annual meeting in Atlanta, Georgia, USA, on 2-6 June 2006.



A third Phase II trial, initiated by an investigator with sponsorship from
Cancer Research UK, completed enrolment in October 2005. The trial is evaluating
TroVax in colorectal cancer patients who have operable liver metastases.
Patients receive TroVax immunisations before surgery (neoadjuvant) and after
surgery (adjuvant). Preliminary data were presented at the National Cancer
Research Institute conference in Birmingham, UK, in October 2005. The data
showed that TroVax was well tolerated in patients undergoing resection of
colorectal cancer liver metastases and that the liver metastases expressed 5T4
on the tumour cells and/or tumour stroma. Encouragingly, all patients in the
trial mounted an anti-tumour immune response to 5T4. The clinical outcomes of
trial participants will be followed up and presented by Cancer Research UK in
due course.



In addition to colorectal cancer, the Company is targeting metastatic renal cell
carcinoma (RCC) as a lead indication for the development of TroVax. The
Directors believe that RCC is an indication where TroVax might achieve a rapid
route to product registration. In 2004, a Phase II trial in this setting was
initiated at the New York-Presbyterian Hospital, New York, USA, under an
approved Investigational New Drug protocol. The principal investigator for the
trial is Dr Howard Kaufmann, a leading expert in clinical immunotherapy and an
advisor on TroVax. The trial is designed to gather information on the safety of
TroVax in this setting and also on the ability of TroVax to elicit immune
responses to the tumour antigen 5T4.



Dr Kaufmann gave a presentation in October 2005 at the World Vaccine Congress in
Lyon, France, highlighting the potential of TroVax as a treatment for RCC. The
Phase II trial is an open-label study of TroVax in combination with high dose
interleukin-2 (IL-2) therapy, which is a treatment for RCC approved by the US
Food and Drug Administration (FDA). In his presentation, Dr Kaufmann reported
that there had been no serious adverse events related to TroVax, which is
consistent with the safety profile of the product across all trials, and TroVax
treatment was well tolerated. Five patients were 'immune response evaluable',
having received at least two TroVax immunisations. All five patients showed high
anti-tumour antibody responses to 5T4. The antibody levels were at the top end
of the range reported from the Phase II trials with TroVax in patients with
colorectal cancer undergoing chemotherapy.



This trial is intended to recruit up to 25 patients. To date, 14 patients have
been recruited. Further data, including more detailed immunological analyses and
efficacy as measured by objective tumour responses, are expected to be presented
at ASCO in June 2006.



The Company initiated a second Phase II trial in RCC at the Methodist Hospital
in Houston, Texas, USA, in November 2005. The principal investigator for this
trial is Dr Robert Amato, who is Associate Professor of Urology at the Methodist
Hospital and a renowned expert on the treatment of RCC. This trial is designed
to evaluate the safety and immunogenicity of TroVax in conjunction with low dose
IL-2, which is commonly used as standard of care treatment for RCC. To date,
there are 13 patients in the study, out of a target enrolment of 25 patients.
The Company plans to report safety, immunology and preliminary clinical outcomes
from the trial at ASCO in June 2006.



The Company is adding to its Phase II programme in RCC with a third trial that
is expected to commence at the Christie Hospital in Manchester, UK, in the next
few weeks. The principal investigator is Professor Robert Hawkins who is a
leading expert in the treatment of RCC and who has been involved in several
studies of TroVax. This new trial is designed to evaluate TroVax in combination
with interferon-alpha, which is widely used as standard of care for treatment of
RCC in the UK. The trial is open-label, with a target to recruit about ten
patients, in order to assess safety and immunological responses following the
combination treatment.



In addition to the Phase II studies described above, the US clinical trials
consortium, Southwest Oncology Group (SWOG), is finalising the design of a Phase
II trial with TroVax in breast cancer, which will be sponsored by the US
National Cancer Institute (NCI). These organisations provide valuable funding
and endorsement of TroVax and plan to conduct a trial that is expected to enrol
120 patients with late stage breast cancer. The NCI and SWOG are responsible for
all aspects of the trial, including the date of commencement. Although the
anticipated timetable for initiating this trial has been extended, Oxford
BioMedica remains encouraged by the level of commitment towards TroVax and this
Phase II trial shown by the NCI and SWOG. The current expectation is for the
trial to start in the second half of 2006.



In considering the future development of TroVax and its commercial launch, the
Company has taken account of several factors. The broad distribution of 5T4 on
many tumours and the fact that, as expected, the immune response appears similar
in patients with different tumour types and in different clinical settings
provide a wide choice of indications for further development. The Company is
focusing initially on the two cancer types where it has clinical experience,
colorectal cancer and RCC.



Metastatic RCC tends to be an aggressive cancer with median survival of
approximately one year from diagnosis. The relatively rapid progress of the
disease in the majority of patients creates an opportunity for a definitive
study to demonstrate the impact of TroVax on prolonging survival within a
relatively short time frame. Studies in tumour types with slower progression
would take longer to complete pivotal trials. Therefore, the Directors believe
that RCC provides the fastest route to registration.



Colorectal cancer represents a very large market opportunity but the Directors
believe that trials in this setting would take longer to generate data for
product registration. A number of new combination therapies for metastatic
colorectal cancer have extended median survival from approximately 16 months to
20 months. The Company intends to pursue both colorectal cancer and RCC but it
will give RCC initial priority because of the Directors' focus on bringing the
product to market as quickly as possible. However, it is important to note that
the Directors believe that product approval for the treatment of RCC will
facilitate rapid regulatory review of subsequent registration applications for
colorectal and other cancer types. Furthermore, the Company expects that any
prospective partner for the TroVax programme would pursue several indications,
including colorectal cancer.



The Company has two near-term goals within the TroVax programme. The first is to
secure a commercial partner and the second is to maintain the planned
registration date of 2009. In order to achieve the latter the Company plans to
initiate a Phase III trial of TroVax in RCC in 2006. Based on its proposed trial
design, the Directors believe that registration in 2009 is possible. This plan
will be implemented in parallel with negotiations with potential partners for
TroVax. In preparation for Phase III trials and product registration, the
manufacturing process for TroVax has been scaled for commercial production.



Another objective is to broaden the clinical experience with TroVax to other
cancer types where the 5T4 antigen is evident. The NCI Phase II trial in breast
cancer is part of this strategy but the Company may initiate Phase II trials in
other cancer types during 2006. The Company is discussing trial plans with
clinicians, and is seeking to offset some of the trial costs through external
funding.



The Company reported its provisional Phase III trial design in RCC in November
2005, based on a combination treatment of TroVax with IL-2. Following
consultation with clinical advisors and the FDA, the Company has broadened the
scope of the trial such that TroVax would be used in combination with either
IL-2, interferon-alpha or Sutent(R) (sunitinib). The revised trial design
broadens the utility of TroVax, and hence, increases its commercial potential in
RCC.



The planned Phase III trial, referred to as TRIST (TroVax Renal Immunotherapy
Survival Trial), is a randomised, placebo controlled, two-arm study of TroVax in
combination with standard of care, versus placebo and standard of care. The
current plan is to recruit about 700 patients and will involve about 120 centres
in the USA, European Union and Eastern Europe. The proposed primary endpoint is
survival improvement. The protocol includes the appointment of a Safety and
Efficacy Monitoring Board (SEMB) to assess the safety and potential efficacy of
the drug combinations at various time points during the trial.



The Company has requested a Special Protocol Assessment (SPA) from the FDA for
TRIST. The SPA is a process for official FDA evaluation and guidance on Phase
III trial design. At the conclusion of the SPA process, Oxford BioMedica expects
to receive a written agreement that if the study achieves its proposed endpoint
then it may be used to support an efficacy claim in a submission to the FDA for
product registration. The Company expects to complete the SPA process and other
trial preparations for the start of patient recruitment in the second half of
2006. However, the SPA process could take longer than expected and the FDA may
demand significant changes to the trial design, which could change the Company's
timelines.



The Company plans to seek 'orphan drug' designation for TroVax in both the USA
and Europe for the RCC indication. The granting of orphan drug status is
intended to encourage the development of new treatments for life-threatening or
chronically debilitating diseases where patient numbers are below certain
thresholds. It would provide Oxford BioMedica and any prospective commercial
partner with various benefits in terms of regulatory exclusivity, assistance
with clinical development and a waiver of filing fees.



In addition to the Phase III programme in RCC described above, the Company
disclosed in November 2005 that it is in discussion with QUASAR, a UK-based
clinical trial network funded from a variety of sources including the UK
government's Department of Health. QUASAR has expressed interest in conducting a
Phase III trial in Stage II/III colorectal cancer patients. TroVax would be used
at or around the time of surgery with the endpoint being an increase in
disease-free survival at three years. The study would be configured to achieve
registration in Europe and the USA and could involve several thousand patients.



The Company's financial contribution to this trial would be in the order of £4
million. If the Company were to run such a trial without QUASAR, the Directors
estimate that it would cost approximately £70 million. The proposal is subject
to a number of further review processes and QUASAR may conclude not to conduct
its proposed Phase III trial for reasons that may be unrelated to the product.



The clinical data that have been generated so far place TroVax amongst the
leading candidate cancer immunotherapy products in development worldwide. As
such, it has attracted interest from companies and research organisations
throughout the world. The Company has made good progress with prospective
commercial partners for TroVax, and securing a commercial partner for TroVax in
at least one major territory remains a key objective for the Company during
2006.



MetXia(R)

MetXia is Oxford BioMedica's gene-based cancer therapeutic development
candidate. The product is based on a highly-engineered retrovirus gene delivery
system expressing a specific human cytochrome P450 gene. Cytochrome P450,
delivered in this way, activates the chemotherapeutic prodrug cyclophosphamide
at the tumour site, thereby increasing the effective concentration of the
anti-tumour, cytotoxic derivative in the tumour mass.



MetXia is potentially useful in the treatment of a number of solid tumours and
their metastases, particularly those where cyclophosphamide is commonly used as
a treatment. The Company is targeting its development efforts for MetXia on the
treatment of pancreatic cancer through direct administration of both MetXia and
cyclophosphamide to the tumour. A two-stage Phase II trial was initiated in
2004. In August 2005, the Company announced that the first stage was
successfully completed.



The objectives of the first stage were to assess the safety of administering
MetXia locally to the pancreatic tumour, to confirm gene transfer at the tumour
site following local delivery and to identify an optimal dose of MetXia for the
second stage of the trial. In the first stage of the trial, two dose levels of
MetXia were assessed in six patients, in combination with a low dose of
cyclophosphamide. Each patient had two administrations of MetXia, prior to and
subsequent to surgery, followed by administration of cyclophosphamide. Both dose
levels of MetXia were safe and well tolerated. Importantly, dose-dependent
expression of the P450 gene delivered by MetXia was observed in tumour biopsies
taken at surgery.



Patient recruitment is ongoing for the second stage of the trial using a fixed,
optimal dose of MetXia and increasing doses of cyclophosphamide, in up to 25
patients, at two centres in the UK: the Royal Liverpool University Hospital,
Liverpool, and the Sir John McMichael Centre for Clinical Investigation and
Research at the Hammersmith Hospital, London. The objective of this stage is to
determine the optimal dose of cyclophosphamide and to evaluate clinical benefit
as well as safety. To date, three patients have been treated in the second stage
of the Phase II trial. Patient recruitment has been slower than expected owing
to the restrictive criteria for patient selection and poor tolerability of
surgery, although the Company still expects to report initial efficacy and to
identify the optimal dose of cyclophosphamide during 2006.



The Company plans to open discussions with the regulatory authorities to
determine the most expeditious route to obtain approval of MetXia in pancreatic
cancer. A pivotal trial in pancreatic cancer could start in 2007, although the
regulatory authorities may recommend more extensive Phase II development.



MetXia's mechanism may be relevant in a number of malignant tumours, including
breast cancer, prostate cancer and glioma (brain cancer). The Directors believe
that the commercial opportunity for MetXia may be considerable and the Company
plans to seek commercial partners for the product following successful
completion of the current Phase II trial.



5T4 Targeted Antibody Therapy (Wyeth)

Wyeth has licensed rights to Oxford BioMedica's proprietary antibody against the
5T4 tumour antigen for the treatment of cancer. Wyeth is using the antibody to
develop an antibody-toxin conjugate based on its expertise with the anti-cancer
agent calicheamicin. The collaboration with Wyeth has the potential to generate
US$24 million in upfront and milestone payments, plus royalties on product
sales. The collaboration was signed in 2001 as an option to license and, in
2003, Wyeth exercised its option to develop the product.



In 2005, Wyeth continued its preparations for clinical development, including
manufacturing scale-up and pivotal non-clinical safety studies. The product is
described as a 'development candidate' in Wyeth's R&D pipeline. During the year,
for the first time, Wyeth reported some of its preclinical data at a scientific
meeting.



Preclinical efficacy data were presented at the World Congress on Advances in
Oncology and International Symposium on Molecular Medicine in Crete, Greece in
October 2005. The presentation included preclinical data showing that the
antibody-toxin is cytotoxic against tumour cells expressing the 5T4 antigen, and
that the product inhibited tumour growth in in vitro models of various human
5T4-expressing cancers. In a preclinical model of lung cancer, 100% of mice
treated with the antibody-toxin survived through an observation period of 150
days, whereas those treated with a control had a median survival of 40 to 60
days.



Like TroVax, the product could, in principle, be used to treat a range of
cancers. Thus, the Directors believe that the antibody-toxin may have
substantial commercial potential. Wyeth has full responsibility and control over
the development of the product. In 2006, Wyeth is expected to submit its
Investigational New Drug (IND) application for the start of clinical trials with
the antibody-toxin, disclose the initial patient group and commence clinical
development. The start of clinical trials triggers a further milestone payment
to Oxford BioMedica under the terms of the collaboration.



TroVax-Vet(R) (Intervet)

TroVax-Vet is Oxford BioMedica's veterinary 5T4 tumour antigen-targeted
immunotherapy programme for the treatment of cancer in companion animals,
focusing on dogs and cats. The development and commercialisation collaboration
with Intervet, the veterinary unit of Akzo Nobel, was signed in 2003. Intervet
is one of the world's top veterinary companies. Under the Intervet
collaboration, Intervet funds the programme and Oxford BioMedica receives
development milestones and royalties on product sales.



Intervet completed a relevant preclinical efficacy study with canine TroVax-Vet
in 2005. The data demonstrate that the product stimulates a strong immune
response against the canine version of the 5T4 antigen. In 2005, Intervet
initiated further product optimisation studies, evaluating different vaccine
configurations, dosages and routes of administration. Intervet anticipates the
start of field trials in dogs with naturally occurring cancer towards the end of
2006 or in early 2007.



NEUROTHERAPY

Oxford BioMedica's neurotherapy development portfolio addresses Parkinson's
disease, vision loss, nerve injury and acquired and inherited motor neuron
disease. The pipeline comprises five therapeutic candidates based on the
Company's proprietary LentiVector(R) technology. All five programmes continue to
meet expectations in their ongoing preclinical development. The Company is
preparing regulatory submissions for the start of clinical trials with the most
advanced product, ProSavin for Parkinson's disease. Given the commonality of the
LentiVector system to all the neurotherapy products, the infrastructure for
ProSavin that relates to manufacturing scale-up and safety testing can be
applied to the entire portfolio. Hence, the time invested in the preclinical
development of ProSavin should accelerate the programmes for the other
development candidates. The Company anticipates entering clinical development
with at least one neurotherapy product each year from 2006, starting with
ProSavin.



ProSavin(R)

The Company's lead neurobiology candidate product, ProSavin, is a novel approach
to the treatment of Parkinson's disease. ProSavin uses a LentiVector system to
deliver the genes for three enzymes that are required for the synthesis of
dopamine. The product is administered locally to the striatum, converting cells
into a replacement dopamine factory within the brain.



The Company first presented preclinical efficacy data with ProSavin in an
industry standard in vivo model of Parkinson's disease in 2004. In these
studies, treatment with ProSavin resulted in almost complete recovery of
movement behaviour, which is seldom achieved in this model according to the
literature. During the past year, the Company has confirmed these results by
conducting long-term efficacy and safety studies and dose ranging studies, which
have established the parameters for setting the human dose. The expanded body of
data suggests that a single treatment with ProSavin has a statistically
significant (p<0.05) therapeutic effect after two weeks, and restores almost
normal movement after five to eight weeks. The therapeutic benefit has been
maintained throughout the duration of the studies, with the latest time point
being 20 weeks. This preclinical proof of principle study is expected to be
published in 2006.



The Company is planning a submission to the regulatory authorities in the second
half of 2006 to start clinical trials with ProSavin. The timetable for this
submission has been extended by a few months, due largely to manufacturing
complexities in the scale-up for clinical development. The clinical
manufacturing process was finalised towards the end of 2005. The Company is
currently completing relevant safety studies with the clinical material, and is
preparing the regulatory documentation.



The Directors do not foresee any obvious barriers to achieving approval for the
start of Phase I/II trials, although the regulatory authorities may request
additional data prior to the start of trials that may delay the process. The
planned trial is to be conducted in patients with late stage Parkinson's
disease, and the Company expects to commence the trial before the end of 2006 or
in early 2007.



While it is the Company's strategy to secure a development partner for ProSavin
after the increase in value that follows successful initial clinical results,
the Company may enter commercial agreements at the preclinical stage if
sufficiently attractive terms can be negotiated.



RetinoStat(R)

RetinoStat is the Company's novel gene-based treatment for wet age-related
macular degeneration (AMD) and diabetic retinopathy (DR). The product uses the
LentiVector system to deliver genes to the retina that block the formation of
new blood vessels.



Oxford BioMedica has exclusive rights to two proprietary anti-angiogenic genes,
angiostatin and endostatin, for use in treatments of ocular diseases under a
licensing agreement with Entremed Inc. The Company has evaluated both genes in
its RetinoStat programme.



In April 2005, the Company and its collaborators from the Institute of
Ophthalmology, London, UK, presented encouraging preclinical data from the
programme at the Annual Meeting of the Association for Research in Vision and
Ophthalmology (ARVO) in Fort Lauderdale, Florida, USA. In an industry standard
in vivo model of AMD, two versions of RetinoStat were evaluated and both were
shown to be safe and well tolerated, both reduced the area of the eye with
abnormal blood vessel growth, and both reduced blood vessel leakage in the eye,
which leads to the distortion and loss of central vision in AMD. The two product
configurations demonstrated a statistically significant improvement in all
efficacy scores.



The Company completed its optimisation of RetinoStat in September 2005. The
optimised version of the product, which will now proceed to clinical
development, carries both the angiostatin and endostatin anti-angiogenic genes
and shows significantly greater efficacy than versions containing single genes.
Further preclinical efficacy studies are being conducted at the Johns Hopkins
Hospital in Baltimore, Maryland, USA, with support from the Foundation Fighting
Blindness. These studies will be presented at ophthalmology conferences in 2006,
including the ARVO meeting in Fort Lauderdale, Florida, USA, on 30 April to 4
May 2006.



The Company's objective is to start clinical trials with RetinoStat in wet AMD
in 2007. Oxford BioMedica's strategy is to secure commercial partners after
demonstrating efficacy in clinical trials, although collaborations may be
entered into at an earlier stage of development if suitably attractive terms can
be agreed.



MoNuDin(R)

MoNuDin is the Company's LentiVector-based product candidate for treating motor
neuron disease. The product is administered by injection into relevant muscle
groups to deliver a vascular endothelial growth factor (VEGF) gene, which is
neuroprotective for motor neurons. The product is being developed initially for
the treatment of amyotrophic lateral sclerosis (ALS).



The programme has received financial support from two disease-specific
charitable organisations: the US ALS Association and the UK Motor Neurone
Disease (MND) Association. A grant of £350,000 from the MND Association was
announced in July 2005, to fund a pivotal non-clinical study. Recently the MND
Association has offered to increase this funding. Other US and UK charities are
considering further sponsorship that could fund initial clinical trials of
MoNuDin for the treatment of ALS. In common with the Company's other external
sponsorships by charitable groups, Oxford BioMedica retains intellectual
property and commercial rights for the programme.



Preclinical in vivo efficacy data with MoNuDin in an industry standard model of
ALS were presented and published in 2004. The results suggested that MoNuDin may
be one of the most effective potential therapies in the field to date. During
2005, the Company commenced additional preclinical toxicology and confirmatory
efficacy studies. Further data are expected to be reported during 2006 from
these studies, which are designed to support a regulatory submission for the
start of clinical trials with MoNuDin in 2008.



It should be noted that the Company has three neurotherapy product candidates,
MoNuDin, SMN-1G and Innurex(R), that could enter clinical development in 2008.
Hence, clinical trials of MoNuDin may be delayed for reasons related to
resources and priorities.



SMN-1G

In addition to the ALS programme, Oxford BioMedica is developing a gene-based
therapeutic to treat another motor neuron disease, spinal muscular atrophy
(SMA). SMN-1G is a specific treatment for SMA, which restores levels of survival
motor neuron (SMN) protein by delivering the corrected version of the SMN1 gene
using the LentiVector system. In previous years, the programme has received
financial support from the US charity, FightSMA.



Preclinical in vivo efficacy data with SMN-1G were published in 2004 in a model
of SMA. During 2005, the Company started further preclinical studies to optimise
the SMN-1G product configuration and it is currently planning the clinical
development strategy. In 2006, the Company expects to report further results
from the ongoing preclinical studies and to commence preparations for clinical
trials. The Company believes that clinical trials with SMN-1G could start in
2008.



It should be noted that the Company has three neurotherapy product candidates,
MoNuDin, SMN-1G and Innurex, that could enter clinical development in 2008.
Hence, clinical trials of SMN-1G may be delayed for reasons related to resources
and priorities.



Innurex(R)

Innurex is the Company's gene-based product for nerve regeneration for the
treatment of spinal cord and related injuries. Based on the LentiVector
technology, the product carries the gene for a subtype of the retinoic acid
receptor (RARss2) that induces nerve cells to re-grow. Oxford BioMedica
collaborates with King's College, London, UK, on the Innurex programme.



In June 2005, the Company presented preclinical efficacy data at the annual
meeting of the American Society of Gene Therapy (ASGT) in St. Louis, Missouri,
USA. In a preclinical in vivo study of spinal cord injury, there was a
statistically significant improvement in both sensory and motor functional
ability with Innurex compared to placebo for most measurements. These data add
to previous encouraging observations in preclinical models of avulsion (stretch)
injury and suggest that Innurex may be useful in the clinical treatment of both
stretch injury and the technically more challenging spinal cord damage.



The Company is conducting further preclinical studies and is defining a clinical
plan for initial trials of Innurex. The Directors believe that Innurex could
enter clinical development in 2008.



Again, it should be noted that the Company has three neurotherapy product
candidates, MoNuDin, SMN-1G and Innurex, that could enter clinical development
in 2008. Hence, clinical trials of Innurex may be delayed for reasons related to
resources and priorities.



OTHER PROGRAMMES

The Company's prime focus for its research efforts is in its key therapeutic
areas: oncology and neurotherapy. In oncology, the Company has a tumour antigen
discovery programme in collaboration with ARIUS Research Inc. Under the
agreement, ARIUS is supplying a number of anti-tumour antibodies and Oxford
BioMedica is using technology developed within the TroVax programme to identify
the cognate antigens. Any intellectual property arising from the collaboration
is jointly owned. At the end of 2004, the joint programme progressed from the
successful identification of novel cancer targets to focus on a target that is
over expressed in gastrointestinal and other cancers and could be related to
cancer metastasis. In 2005, the Company has made progress in the validation of
this novel target.



In neurotherapy the Company has investigated some of the fundamental biology of
Innurex-mediated nerve re-growth through its collaboration with King's College,
London, which was partially funded by a DTI LINK grant. The project has
identified a novel gene that is activated by Innurex and which may act
synergistically with RARss2, the therapeutic gene in Innurex. Oxford BioMedica
owns all of the intellectual property arising from the programme.



Outside of the core therapeutic focus, the Company is evaluating a limited
number of product opportunities and novel technology applications. These
programmes are primarily funded through collaborations or grants. One
potentially valuable preclinical product candidate is ReQuinate(R) for the blood
clotting disorder, haemophilia A. This LentiVector-based programme is funded by
a grant of £0.5 million from the UK government's Department of Health. The
Company is planning a preclinical efficacy study with ReQuinate in 2006.



The Company has also evaluated the LentiVector technology as a delivery
mechanism for gene silencing molecules in RNA interference (RNAi). RNAi is a new
area of focus for the pharmaceutical and biotechnology industry that allows
genes of choice to be switched off. This technology platform has applications in
research, target validation and therapeutics. The Company's LentiVector
technology has been shown to be highly effective in delivering these molecules.



In March 2005, the journal Nature Medicine published a paper on the Company's
RNAi work, describing the results from a preclinical study. The LentiVector gene
delivery system was used to deliver a specific RNA molecule that effectively
shut down expression of the gene that causes disease in a model of the
neurodegenerative disease, familial ALS. The Company has had collaboration and
licensing discussions with a number of interested parties for access to the
LentiVector technology for RNAi applications. It announced a strategic alliance
with Sigma-Aldrich, a leading RNAi reagents company, on 20 October 2005 (see
Technology Licensing), focusing on the research market.



The Company has a discovery programme in collaboration with Kiadis BV to develop
novel drugs that target an enzyme identified in Oxford BioMedica's gene
discovery programme. Applications could be in wound healing and cardiovascular
disease. During 2005, Kiadis continued its 'hit' screening for possible lead
drug candidates.



These programmes are at the discovery or early preclinical stage. Hence, their
successful application and progression are uncertain and may be subject to
priority changes within the Company.



TECHNOLOGY LICENSING

In 2004, Oxford BioMedica established an active licensing programme for its
suite of gene delivery technologies to facilitate third party access and to
leverage the broad potential of these systems. This strategy is generating
sustainable revenue. Four licensing agreements were secured in 2004, a further
three agreements plus a strategic alliance were signed in 2005, and the
Company's ninth agreement was signed in March 2006.



In addition to its application in gene-based therapeutic products, the Company's
LentiVector technology is an effective tool for genomics-based target
validation, drug screening, production systems and the creation of transgenic
animals. In February 2005, the Company signed an agreement with a leading
biopharmaceutical company granting nonexclusive worldwide rights to the
LentiVector technology for research activities. Similar licensing deals were
signed with Pfizer Inc. in June 2005, and with a Fortune 500 global
biopharmaceutical company in October 2005. Under the terms of these agreements,
Oxford BioMedica receives upfront licence payments and annual maintenance fees.



Viragen Inc. has a license to the LentiVector system for the development of its
avian transgenic biomanufacturing, known as the OVATM System, for efficient and
economical manufacturing of therapeutic proteins in chicken eggs. The Viragen
agreement includes upfront and annual licence payments in addition to milestone
payments on the achievement of technical goals and royalties on
commercialisation. In June 2005, Viragen achieved a key objective, announcing
that it had produced a functional humanised antibody selectively in the whites
of eggs laid by transgenic hens. This achievement was replicated with a second
protein, which was disclosed to be interferon-beta, in January 2006. Viragen
expects to report more detail on its interferon-beta product and other proteins
produced through its OVATM System during 2006.



In October 2005, the Company announced a strategic alliance with Sigma-Aldrich
providing exclusive rights to commercialise reagents and research tools
incorporating the LentiVector technology. This strategic alliance identifies
Sigma-Aldrich as Oxford BioMedica's exclusive global partner in the development
and marketing of research products based on the LentiVector technology.
Sigma-Aldrich plans to develop a range of high value LentiVector-based research
products for its extensive customer base in the pharmaceutical, biotechnology
and academic sectors. Under the terms of this agreement, Oxford BioMedica
received an upfront payment, and is entitled to annual minimum payments and
royalties on sales. In addition, Sigma invested US$5 million in equity as part
of the Company's successful fund raising in December 2005.



Potential licensees in the future that request access to the LentiVector
technology for research purposes may be channelled through Sigma-Aldrich under
the Company's strategic alliance. However, Oxford BioMedica anticipates further
LentiVector licensing deals in areas outside of the scope of the alliance during
2006.



Other gene delivery platforms for which the Company has patent coverage include
retroviral vector systems for gene delivery of prodrug-activating enzymes and
viral envelope technology for efficient delivery of genes into human cells.
MolMed SpA was the first licensee of the retroviral vector technology, which was
licensed for development of MolMed's ex vivo gene therapies, including its lead
clinical candidate, TK therapy. The product concept is based on engineering
T-cells to express a suicide gene (TK gene) that makes them sensitive to a
particular drug. The administration of such modified T-cells promotes
immuno-reconstitution of a patient following bone marrow transplantation. If
Graft versus Host Disease (GvHD) occurs, which is the major complication of bone
marrow transplantation, the patient receives the drug that leads to the
selective elimination of all grafted T-cells, thus removing the cause of GvHD.
In December 2005, MolMed reported a significant improvement in survival of
patients with acute leukaemia receiving its TK therapy in a 30-patient
multi-centre Phase I/II trial in Europe. In 2006, MolMed plans to conduct a
second Phase I/II study in the USA and to start a Phase III trial in Europe.



On 10 March 2006, the Company announced a licensing agreement for the viral
envelope technology. Virxsys Corporation licensed Oxford BioMedica's VSV-G viral
envelope system for the production process of Virxsys's HIV/AIDS product,
VRX496, which is currently in Phase II trials. Under both the MolMed and Virxsys
agreements, Oxford BioMedica received upfront licence fees and is entitled to
annual maintenance payments, together with potential clinical and regulatory
milestone payments and royalties on product sales.



The technology licensing activities are generating a modest revenue stream
through annual maintenance payments and have the potential for significant
additional income in some cases.



INTELLECTUAL PROPERTY

The Company's corporate strategy to generate income from licensing and
commercialising its products and technologies is dependent upon there being
robust patents and know how covering the composition, manufacture and use of the
products and technologies. Maintaining strong intellectual property is,
therefore, fundamental to Oxford BioMedica's success. The Company's patent
portfolio comprises 35 US and ten European granted patents plus 65 patents that
have issued in other jurisdictions. In total, 160 patent applications are
currently pending. Another 15 patent families, covering key technologies, have
been licensed from third parties. In 2005, six new patents were filed and 11
patents were granted.



Patent news during 2005 included a strengthening of the intellectual property
surrounding TroVax. A key patent was granted by the European Patent Office and
received Notice of Allowance from the US Patent and Trademark Office. The patent
covers immunotherapy products directed against 5T4 and includes specific claims
to the use of viral delivery systems in 5T4-targeted vaccines. This is one of
several granted and pending patents that protect the company's ownership of
commercial applications of the 5T4 tumour antigen technology.



The patent portfolio that covers the LentiVector technology was similarly
strengthened during the year. A US patent was issued in August 2005 that
contains broad claims covering genetic modifications that are critical for the
safe and efficacious application of lentiviral vectors.



In July 2005, the Company announced that the Patent Office of the Peoples'
Republic of China had granted two patents that have broad claims covering
lentiviral vectors. The Company was later notified that two further patents had
been granted in China. These are the first patents covering the LentiVector
system and other aspects of the Company's technology in China, the only country
in the world with an approved gene therapy product and a country where
opportunities for innovative pharmaceutical development are predicted to grow
substantially over the next decade. Having these patents in place will help the
Company to commercialise its products in China.



FINANCIAL REVIEW



PROFIT AND LOSS OVERVIEW

With higher revenue from technology licensing and lower operating costs, the
operating loss for 2005 was £1,273,000 less than 2004 at £11,233,000. Slightly
lower bank interest was offset by a higher tax credit, making the net loss for
the year £9,085,000 (2004: £10,464,000).



REVENUE £824,000 (2004:£502,000)

Revenue in 2005 derived from licences to the Group's proprietary gene delivery
technology, particularly LentiVector. This revenue stream has been growing since
the Company established its technology licensing initiative in early 2004. Three
new LentiVector research licenses were signed in 2005. Also, in October 2005 a
key agreement was signed with Sigma-Aldrich to commercialise LentiVector
technology for the reagent and research tool market. Income recognised from the
initial payment under the Sigma-Aldrich agreement accounted for over half the
total gene delivery licence income in 2005. The agreement with Sigma-Aldrich
also led to a subscription of £2.9 million (US$5 million) for Oxford BioMedica
plc shares, alongside the placing and open offer in December 2005. In addition,
revenue was earned from the licence for retroviral technology with MolMed SpA,
and from the ongoing collaboration with Viragen Inc., using LentiVector gene
delivery in the field of avian transgenics.



OPERATING EXPENSES £12,192,000 (2004: £13,372,000)

Operating expenses in 2005 were £1.2 million lower than 2004, principally due to
one-off costs associated with the reorganisation of US activities in 2004. R&D
costs (£9,327,000) were £314,000 (3%) higher than 2004, but as a result of
rationalisation savings, they were over £1.2 million less than 2003.
Administration costs excluding exceptional reorganisation costs were close to
last year's level at £2,865,000. The impact of IFRS on these operating expenses
was modest, increasing 2005 costs by £196,000 (2%) and reducing 2004 costs by
£146,000 (1%) compared to UK GAAP.



RESEARCH & DEVELOPMENT COSTS £9,327,000 (2004: £9,013,000)

The Group's R&D costs comprise in-house costs (staff salaries and expenses, R&D
consumables, IP costs, facilities costs and depreciation of R&D assets) and
external preclinical and clinical costs (preclinical development, GMP
manufacturing, regulatory costs, clinical trials and clinical consultants). The
increase in R&D costs in 2005 is attributable to a modest expansion in the UK,
in part absorbing R&D workload from rationalisation of the US operations, but
also building up critical capabilities in clinical development and quality
assurance and control. External clinical and preclinical costs (£1,730,000) were
£231,000 lower in 2005 than 2004, but the balance of expenditure between the
programmes followed a broadly similar distribution with TroVax development
accounting for over 50% of the total.



External clinical and preclinical costs are expected to be higher in 2006 and
2007, with the planned start of the Phase III study of TroVax in renal cell
carcinoma.  The overall cost of the RCC Phase III study is estimated to be
approximately £25 million over the period 2005 to 2009. If a development and
commercialisation collaboration for TroVax is secured, then the cost borne by
Oxford BioMedica could be largely offset by income or other funding.



ADMINISTRATION EXPENSES £2,865,000 (2004: £2,791,000 excluding exceptional
costs)

Excluding the exceptional reorganisation cost incurred in 2004, administration
costs over the period 2003 to 2005 have been in a range approximately £2.8
million to £2.9 million per annum. This level is not expected to change
significantly in the short term. Reorganisation costs of £1,568,000 in 2004
(2005: nil) comprised redundancy costs, asset write-downs and loss on disposal,
fees related to the granting of a sub-lease and an onerous lease provision.
Provision was made for the present value of the anticipated rental shortfall to
the end of the lease in 2012. In 2005, £74,000 was released from the provision,
covering the deficit for the year on the sublease.



GRANT INCOME £135,000 (2004: £364,000)

The level of grant support has been declining from a peak in 2003. Many of the
grant programmes from the UK government and the European Commission are designed
to support applied research. The reduction in grant income from this source
reflects the evolution of Oxford BioMedica's focus from research to product
development. In 2005 two new grants were awarded by the UK Department of Health
and the UK Motor Neurone Disease Association, which together could amount to
£950,000 over three years. The Group has experienced delays of more than 24
months in payment of some government and EC grants, which is reflected in the
high debtor level of £516,000 at the year end (2004: £405,000). Since the year
end, £407,000 of accrued grant income was received.



NET INTEREST RECEIVED £938,000 (2004: £1,158,000)

The Group places its cash on deposit for periods of up to 12 months and
generates interest on those deposits. The maturity profile of deposits is
intended to match planned patterns of expenditure. As a result of the share
issue in December 2005, the year end balance on deposit was considerably higher
in 2005 than 2004 (£43,632,000 vs. £22,377,000). However, taking account of the
timing of the 2005 fund raising, the average balance invested during 2005 was
actually lower than the year before. Offsetting this, average interest rates
were slightly higher in 2005. Total interest receivable was £969,000 (2004:
£1,171,000). Interest payable and similar charges of £31,000 (2004: £13,000)
relate mainly to the unwinding of discount on the Group's lease provision. The
Group has no debt.



TAX CREDIT £1,210,000 (2004: £884,000)

The UK operating subsidiary Oxford BioMedica (UK) Limited is entitled to claim R
&D tax credit. The credit of £1,276,000 (2004: £885,000) is based on certain
eligible expenses, to which a 50% mark-up and a tax rate of 16% is applied. The
US subsidiary BioMedica Inc. supplies services to the UK subsidiary subject to a
5% mark-up, generating a low level of taxable income in the USA. Tax payable was
£66,000 (2004: £1,000). The dip in UK tax credit in 2004 reflected a downward
adjustment made in that year of £115,000 to prior years' R&D credit estimates.
The 2005 tax credit reflected a positive £101,000 prior year adjustment on
resolution of the claims for 2001 to 2004. As a result of a hold on payment of
tax credits in 2004, last year's debtor for R&D tax credit was unusually high at
£1,685,000. The review of claims by HM Revenue & Customs was completed in 2005,
and a total of £1,786,000 was received in the year (2004 cash received:
£400,000). Tax payable in 2005 included a prior year adjustment of £23,000
relating to 2004.



INTANGIBLE ASSETS £1,641,000 (2004: £1,627,000)

The 2005 balance sheet contains significant intangible assets as a result of
adopting IFRS. Under IFRS, purchased intellectual property rights are
capitalised as intangibles and either amortised or reviewed for impairment at
each balance sheet date. No amortisation has been charged to date, as the
products underpinned by the intellectual property are not yet available for
commercial use. Under UK GAAP the costs of purchased intellectual property
rights were written off in the accounting period in which they were incurred,
with the exception of certain intellectual property rights acquired by the Group
at inception, which were capitalised as intangibles and amortised over ten
years. By re-classifying expenditure previously written off, intangibles of
£86,000 at 31 December 2004 under UK GAAP were increased to £1,627,000. A
further £14,000 was capitalised in 2005.



DEBTORS £1,777,000 (2004: £1,618,000) AND CREDITORS £2,180,000 (2004:
£1,741,000)

Debtors (trade and other receivables) and creditors (trade and other payables)
were both higher in 2005 than in 2004 - debtors by £159,000 and creditors by
£439,000. Recoverable VAT (identified in the accounts as 'other tax receivable')
was £118,000 higher than 2004, principally due to inclusion of VAT on share
issue expenses in the year end debtor. New developments in VAT law in 2005
allowed the Company to recover VAT on the costs of share issues. As described
above, the debtor for grant income was £111,000 higher than last year at
£516,000. Accruals at December 2005 were £325,000 higher than 2004. The most
significant increase was in accrued costs for external clinical and preclinical
studies, which were £184,000 higher than 2004.



SHARE ISSUES IN 2005

On 15 December 2005 the Company completed a major fund raising, comprising an
underwritten open offer for 27,007,869 shares (one new share for every 14
existing shares), an institutional placing of 81,792,131 shares, and a
subscription by our collaborative partner Sigma-Aldrich for 11,528,041 shares,
all at 25p per share. The open offer allowed shareholders to apply for
allocations in excess of their basic entitlement to the extent that other open
offer shares were not taken up. Overall, 80.54% of the open offer shares were
taken up, and the balance was placed by Evolution Securities with institutions.
There was strong demand for the institutional placing, which was significantly
oversubscribed. Total proceeds of the December 2005 share issue before costs
were £30,082,000. Net of costs the issue raised £28,013,000. Sigma-Aldrich's
shareholding represents 2.3% of the issued share capital at the end of 2005.
Also, during 2005 a total of 6,016,006 shares were issued on the exercise of
share options, raising cash of £1,038,000 for the Company.



CASH & DEPOSITS £43,817,000 (2004: £22,417,000) AND CASH BURN £7,665,000 (2004:
£9,692,000)

Following the placing, open offer and subscription in December 2005, the total
of cash, cash equivalents and available for sale investments (bank deposits) was
£43,817,000 (2004: £22,417,000). This provides the Group with the financial
resources to continue with the development of its products, including starting
its Phase III trial of TroVax, while negotiating product collaborations from a
position of relative strength.



Under IFRS the format of the cash flow statement is changed. The key measure '
cash burn' does not feature in the new format. However it can easily be
calculated, comprising the total of cash used in operating activities and net
capital expenditure (comprising proceeds of sale of property, plant and
equipment, purchases of property, plant and equipment and purchases of
intangible assets). Cash burn was dramatically better at £7,665,000 in 2005
(2004: £9,692,000). The year on year reduction was £2,027,000. The largest part
of this, £1,386,000, was due to receipt of tax credits. The 2003 claim had been
only partly paid in 2004. In 2005 the balance of the 2003 claim, together with
the whole of the 2004 claim, was paid. The rest of the improvement, £641,000,
was principally due to lower operational net cash outflows and working capital
movements.



If the Group goes on to finance the Phase III development of TroVax through
2006, it is likely that the 2006 cash burn will be considerably higher than
2005. Whether this happens will depend on a number of currently uncertain
factors, including the timing and structure of a collaborative deal for TroVax.



FINANCIAL OUTLOOK

With the present strong financial position, the Group is well placed to create
further value through the development and commercialisation of its product
pipeline and platform technology.




Consolidated income statement
for the year ended 31 December 2005


                                                                                Notes          2005         2004
                                                                                              £'000        £'000
Revenue                                                                           1             824          502


Research and development costs                                                              (9,327)      (9,013)
Administrative expenses                                                                     (2,865)      (4,359)
Other operating income: grants receivable                                                       135          364
Operating loss                                                                             (11,233)     (12,506)

Analysed as:
Operating loss before exceptional item                                                     (11,233)     (10,938)
Exceptional administrative expense                                                                -      (1,568)
Operating loss                                                                             (11,233)     (12,506)

Interest payable and similar charges                                                           (31)         (13)
Interest receivable                                                                             969        1,171
Loss before tax                                                                            (10,295)     (11,348)
Taxation                                                                          2           1,210          884
Loss for the financial year                                                                 (9,085)     (10,464)
Basic loss and diluted loss per ordinary share                                    3          (2.4p)       (2.8p)



The results for the years above are derived entirely from continuing operations.



There is no difference between the loss before tax and the loss for the years
stated above, and their historical cost equivalents.


Consolidated balance sheet

at 31 December 2005

                                                                                Notes          2005         2004
                                                                                              £'000        £'000
Assets
Non-current assets
Intangible assets                                                                 4           1,641        1,627
Property, plant and equipment                                                     5             831        1,237
                                                                                              2,472        2,864
Current assets
Trade and other receivables                                                       6           1,777        1,618
Current tax assets                                                                            1,175        1,685
Financial assets: Available for sale investments                                  7          23,500       17,500
Cash and cash equivalents                                                         7          20,317        4,917
                                                                                             46,769       25,720
Current liabilities
Trade and other payables                                                          8           2,180        1,741
Current tax liabilities                                                                           1            -
Provisions                                                                        9              67           73
                                                                                              2,248        1,814
Net current assets                                                                           44,521       23,906
Non-current liabilities
Provisions                                                                        9             393          391
Net assets                                                                                   46,600       26,379

Shareholders' equity
Ordinary shares                                                                               4,984        3,721
Share premium                                                                               106,097       78,309
Other reserves                                                                                   84           88
Retained losses                                                                            (64,565)     (55,739)
Total equity                                                                                 46,600       26,379





Consolidated cash flow statement
for the year ended 31 December 2005
                                                                                Notes          2005         2004
                                                                                              £'000        £'000
Cash used in operating activities
Cash used in operations                                                           10       (10,074)     (10,753)
Interest received                                                                             1,040        1,109
Interest paid                                                                                  (11)         (13)
Tax credit received                                                                           1,786          400
Overseas tax paid                                                                              (65)            -
Net cash used in operating activities                                                       (7,324)      (9,257)

Cash flows from investing activities
Proceeds from sale of property, plant and equipment                                               -          110
Purchases of property, plant and equipment                                                    (327)        (316)
Purchases of intangible assets                                                                 (14)        (229)
Net (purchase)/maturity of available for sale investments                                   (6,000)        5,650
Net cash (used in)/generated by investing activities                                        (6,341)        5,215

Cash flows from financing activities
Net proceeds from issue of ordinary share capital                                            29,043          281

Effects of exchange rate changes                                                                 22          (8)

Net increase/(decrease) in cash and cash equivalents                                         15,400      (3,769)
Cash and cash equivalents at 1 January                                                        4,917        8,686
Cash and cash equivalents at 31 December                                          7          20,317        4,917



Statement of changes in shareholders' equity


                                         Share        Share   Translation      Merger     Retained        Total
                                       capital      premium       reserve     reserve       losses
                                         £'000        £'000         £'000       £'000        £'000        £'000
At 1 January 2004                        3,703       78,045         (576)         711     (45,400)       36,483
Exchange adjustments                         -            -          (47)           -            -         (47)
Loss for the year                            -            -             -           -     (10,464)     (10,464)
Share options                               11          179             -           -            -          190

  Proceeds from shares
issued
  Value of employee services                 -            -             -           -          125          125
Issue of shares excl.                        7          104             -           -            -          111
options
Costs of share issues                        -         (19)             -           -            -         (19)
At 31 December 2004                      3,721       78,309         (623)         711     (55,739)       26,379
Exchange adjustments                         -            -           (4)           -            -          (4)
Loss for the year                            -            -             -           -      (9,085)      (9,085)
Share options                               60          978             -           -            -        1,038

  Proceeds from shares
issued
  Value of employee services                 -            -             -           -          259          259
Issue of shares excl.                    1,203       28,879             -           -            -       30,082
options
Costs of share issues                        -      (2,069)             -           -            -      (2,069)
At 31 December 2005                      4,984      106,097         (627)         711     (64,565)       46,600






Basis of preparation



The figures and financial information for the years ended 31 December 2005 and
31 December 2004 do not constitute the statutory financial statements for the
respective years. Financial statements for the year ended 31 December 2004 have
been delivered to the Registrar of Companies and included the auditors' report.
Financial statements for the year ended 31 December 2005 have not yet been
delivered to the Registrar. The auditors' reports on the financial statements
for the years ended 31 December 2005 and 31 December 2004 were unqualified and
did not contain statements under either section 237 (2) or section 237 (3) of
the Companies Act 1985.



Prior to 2005 the Group prepared its statutory accounts in accordance with UK
Generally Accepted Accounting Practice (UK GAAP). For the year ended 31 December
2005 the Group is required to prepare its statutory financial statements in
accordance with International Financial Reporting Standards (IFRS). Accordingly,
the financial statements have been prepared in accordance with IFRS and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations endorsed by the European Union and with those parts of the
Companies Act 1985 applicable to companies reporting under IFRS. The financial
statements are prepared in accordance with the historical cost convention as
modified by revaluation of available for sale investments. Financial information
relating to the year ended 31 December 2004 has been restated in accordance with
IFRS and the accounting policies adopted under IFRS.



The Group's transition date for IFRS is 1 January 2004. IFRS 1 'First-time
adoption of International Financial Reporting Standards' sets out the procedure
that the Group must follow when it adopts IFRS for the first time as the basis
for preparing its consolidated financial statements. The Group has taken
advantage of two optional exemptions under IFRS 1:



1) Share-based payments: The Group operates share option schemes, which all of
its employees are entitled to participate in. Under IFRS, income statement
charges are based on the fair value of equity-settled share-based awards at
grant date. The cost is calculated using an option pricing model, and the Group
has taken the exemption provided in IFRS 1 which allows the charge to be
calculated only in respect of options granted to employees after 7 November 2002
which had not vested by 1 January 2005, amortised over the vesting period of the
options.



2) Business combinations: The Group has elected not to apply IFRS 3 'Business
combinations' retrospectively to business combinations which took place prior to
the transition date, namely that the acquisition in 1996 of 100% of the issued
share capital of Oxford BioMedica (UK) Limited has been accounted for by the
merger accounting method.



On 20 September 2005, with its interim results for 2005, the Group released an
analysis of the effects of adopting IFRS with effect from 1 January 2004. This
included reconciliations of the income statement, balance sheet and equity
together with explanations of the impacts of IFRS.



Copies of this announcement and the interim report for 2005 are available from
the Company Secretary. The audited statutory financial statements for the year
ended 31 December 2005 are expected to be distributed to shareholders by 27
March 2006 and will be available at the registered office of the Company,
Medawar Centre, Oxford Science Park, Oxford, OX4 4GA.



This announcement was approved by the Board of Oxford BioMedica plc on 13 March
2006.




Notes to the accounts
for the year ended 31 December 2005


seq level0 /h /r1 seq level1 /h /r0 seq level2 /h /r0 seq level3 /h /r0 seq
level4 /h /r0 seq level5 /h /r0 seq level6 /h /r0 seq level7 /h /r0 1       seq
level0 /h /r1 seq level1 /h /r0 seq level2 /h /r0 seq level3 /h /r0 seq level4 /
h /r0 seq level5 /h /r0 seq level6 /h /r0 seq level7 /h /r0 Segmental analysis



The Group's primary segment reporting is by geographical location of assets,
with business sector as the secondary format. The Group's revenue derives from
assets located in the UK. By destination, revenue derives from the UK, other EU
states and the USA.
                                                                                             2005          2004
Revenue by destination                                                                      £'000         £'000
United Kingdom                                                                                  -            35
Rest of Europe                                                                                 53            57
North America                                                                                 771           410
Total revenue                                                                                 824           502



2       Taxation



The Group is entitled to claim tax credits in the United Kingdom for certain
research and development expenditure. The amount included in the financial
statements for the year ended 31 December 2005 represents the credit receivable
by the Group for the year. These amounts have not yet been agreed with the
relevant tax authorities.
                                                                                                2005        2004
                                                                                               £'000       £'000
Current tax
United Kingdom corporation tax research and development credit                               (1,175)     (1,000)
Overseas taxation                                                                                 43           1
                                                                                             (1,132)       (999)
Prior years' tax adjustments
United Kingdom corporation tax research and development credit                                 (101)         115
Overseas taxation                                                                                 23           -
Taxation credit                                                                              (1,210)       (884)



3       Basic loss and diluted loss per ordinary share



The basic loss per share has been calculated by dividing the loss for the year
by the weighted average number of shares of 380,914,250 in issue during the year
ended 31 December 2005 (2004: 371,457,455).



The Company had no dilutive potential ordinary shares in either year which would
serve to increase the loss per ordinary share. There is therefore no difference
between the loss per ordinary share and the diluted loss per ordinary share.





4       Intangible assets
                                                                                    Intellectual     Intellectual
                                                                                 property rights  property rights
                                                                                            2005             2004
                                                                                           £'000            £'000
Cost
At 1 January                                                                               1,991            1,762
Additions                                                                                     14              229
Disposals                                                                                   (85)                -
At 31 December                                                                             1,920            1,991
Accumulated amortisation and impairment
At 1 January                                                                                 364              357
Impairment in the year                                                                         -                7
Disposals                                                                                   (85)                -
At 31 December                                                                               279              364
                                                                                           1,641            1,627

Net book amount at 31 December



5       Property, plant and equipment
                                                             Office                          
                                             Short       equipment,                                  
                                         leasehold         fixtures        Computer    Laboratory
                                      improvements     and fittings       equipment     equipment        Total          
                                             £'000            £'000           £'000         £'000        £'000
Cost
At 1 January 2005                            2,213               86             308         2,494        5,101
Exchange adjustments                            40                -               1             -           41
Additions at cost                               17                1              88           195          301
Disposals                                        -              (1)           (127)          (39)        (167)
At 31 December 2005                          2,270               86             270         2,650        5,276
Accumulated depreciation
At 1 January 2005                            1,768               59             267         1,770        3,864
Exchange adjustments                            40                -               1             -           41
Charge for the year                            285               16              40           333          674
Disposals                                        -              (1)            (96)          (37)        (134)
At 31 December 2005                          2,093               74             212         2,066        4,445
Net book amount at                             177               12              58           584          831
31 December 2005
Net book amount at 31 December                 445               27              41           724        1,237
2004





6       Trade and other receivables
                                                                                               2005        2004
                                                                                              £'000       £'000
Amounts falling due after more than one year
Other receivables - rent deposit                                                                205         214
Amounts falling due within one year
Trade receivables                                                                               119         162
Other receivables                                                                               676         619
Other tax receivable                                                                            242         124
Prepayments                                                                                     442         434
Accrued income                                                                                   93          65
                                                                                              1,572       1,404
Total trade and other receivables                                                             1,777       1,618





7       Cash and cash equivalents
                                                                                                2005        2004
                                                                                               £'000       £'000
Cash at bank and in hand                                                                         185          40
Short term bank deposits                                                                      20,132       4,877
Total cash and cash equivalents                                                               20,317       4,917



In addition to the cash and cash equivalents described above, the Group held
bank deposits of £23,500,000 (2004: £17,500,000) with an initial term to
maturity between six and twelve months classified as available for sale
investments.





8       Trade and other payables - current
                                                                                               2005        2004
                                                                                              £'000       £'000
Trade payables                                                                                  397         351
Other taxation and social security                                                              263         219
Accruals                                                                                      1,415       1,090
Deferred income                                                                                 105          81
Total trade and other payables                                                                2,180       1,741





9       Provisions


Onerous lease provision                                                                       2005         2004
                                                                                             £'000        £'000
At 1 January                                                                                   464            -
Exchange adjustments                                                                            50         (26)
Charged to the income statement                                                                  -          568
Utilised in the year                                                                          (74)         (91)
Amortisation of discount                                                                        20           13
Total provisions                                                                               460          464


                                                                                              2005         2004
                                                                                             £'000        £'000
Current                                                                                         67           73
Non-current                                                                                    393          391
Total provisions                                                                               460          464



The onerous lease provision relates to the estimated rental shortfall in respect
of a redundant property in San Diego, USA which has been sub-let for the
remainder of the lease term until June 2012, discounted at 4.09% per annum
(2004: 4.55% per annum).The provision will be utilised over the term of the
lease.





10     Cash flow from operating activities
       Reconciliation of operating loss to net cash used in operating activities
                                                                                               2005        2004
                                                                                              £'000       £'000
Continuing operations
Net loss                                                                                    (9,085)    (10,464)
Adjustment for:
Tax                                                                                         (1,210)       (884)
Depreciation                                                                                    674       1,040
Loss on disposal of property, plant and equipment                                                33         260
Impairment of fixed asset investments                                                             -          26
Impairment of intangibles                                                                         -           7
Interest income                                                                               (969)     (1,171)
Interest expense                                                                                 31          13
Charge in relation to employee share schemes                                                    259         125

Changes in working capital:
Increase in trade and other receivables                                                       (190)       (394)
Increase in payables                                                                            457         225
(Decrease)/increase in provisions                                                              (74)         464
Net cash used in operations                                                                (10,074)    (10,753)




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