Final Results

Oxford Biomedica PLC 04 March 2003 Embargoed until 0700 Tuesday 4 March 2003 OXFORD BIOMEDICA PLC (LSE:OXB) PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002 HIGHLIGHTS Â£21 million cash life extended to Q4 2004 TroVax(R) and MetXia(R) Phase I/II clinical trial results met all expectations TroVax advancing into a Phase II trial in colorectal cancer, ready for Phase III trials within 12 months TroVax VET collaboration with top ten veterinary company MetXia to enter Phase I/II trial in pancreatic cancer ProSavin(R) for Parkinson's disease demonstrated efficacy in rodent preclinical model, expected to enter clinical development by the end of 2003. Continued progress with anti-5T4 antibody collaboration with Wyeth, valued at $24 million in upfront and milestone payments Senior appointments in Commercial Development, Corporate Strategy and Business Development Â£1.0 million grant funding obtained between December 2002 and February 2003 Commenting on the preliminary results Chairman Dr Peter Johnson said 'During 2002 Oxford BioMedica graduated from being a research oriented company to a mid-stage product development company with successful trials being completed for the lead cancer products, TroVax and MetXia. TroVax is advancing into a Phase II trial in colorectal cancer and is expected to be ready for Phase III trials within 12 months. During 2003, subject to regulatory approval, TroVax will enter additional Phase II studies in breast cancer and renal cancer. MetXia is also expected to enter efficacy studies initially in pancreatic cancer. In addition, the Company's lead neurobiological product for Parkinson's disease, ProSavin, will enter clinical development by the end of 2003. In 2002 the biotechnology industry continued to suffer from the general market downturn, with many share prices dropping below cash levels and many companies running short of working capital. Oxford BioMedica has suffered a share price reduction along with others in the sector, but by prudent management of our programmes we have been able to extend our cash life by almost a year and bring our products closer to market. Despite the depressed public markets, the fundamentals of the Company are stronger than ever in 2003 with the lead programmes ready for partnership with the pharmaceutical industry. The Company's year-end cash position of Â£21 million provides flexibility in our development and partnering strategy, and eliminates our immediate dependency on the capital markets. Oxford BioMedica has weathered the storms of 2002 and is prepared for the challenges of 2003. The cash position is good and the product pipeline goes from strength to strength. Despite the state of the markets, the Company will strive to enhance shareholder value from commercial deals and clinical and preclinical data. We thank our hard-working staff for their unfailing energy and dedication to the Company and we thank our loyal shareholders for their support.' -Ends- For further information, please contact: Oxford BioMedica plc Professor Alan Kingsman, Chief Executive Tel: +44 (0)1865 783 000 City/Financial Enquiries: Mike Wort, James Chandler: Beattie Financial Tel: +44 (0)20 7398 3300 Scientific/Trade Press Enquiries: Sue Charles, Katja Stout: Northbank Communications Tel: +44 (0)20 7321 3870 Notes to Editors Oxford BioMedica Established in 1995 as a spin out from Oxford University, Oxford BioMedica plc specialises in the development of novel gene-based therapeutics for the treatment of cancer, neuro-degenerative disease and other disorders with major unmet clinical needs. The development pipeline includes two novel anti-cancer products in clinical trials and a gene therapy treatment for Parkinson's disease, which is in late preclinical studies. This is underpinned by a broad research pipeline and over 70 patent families, about quarter of which are issued. Oxford BioMedica's products use genes as the mediators of a therapeutic effect and/or immune response. The Company's gene therapy products deliver therapeutic molecules in vivo whilst its gene-based immunotherapy products deliver genes that recruit the patient's immune system to mediate a therapeutic effect. The genes are delivered by the Company's highly engineered viruses or cells. BioMedica's lead product TroVax(R) is an anti-cancer therapeutic vaccine expected to be useful against a broad range of tumour types. It is entering Phase II trials in a number of indications including colorectal and renal cancer, and is expected to be ready for Phase III trials at the end of 2003. The Company's second cancer product, MetXia(R), is completing Phase I/II studies in breast cancer. Oxford BioMedica is headquartered in Oxford, UK and has a wholly-owned subsidiary in San Diego, USA. BioMedica has corporate collaborations with Wyeth, IDM, Intervet, Aliga Pharmaceuticals, Amersham and Arius Research. Oxford BioMedica plc was floated on the Alternative Investment Market of the London Stock Exchange in December 1996, and was promoted to the United Kingdom Listing Authority Official List in April 2001 following a successful Â£35.5 million fund-raising. Further information is available on the World Wide Web at http:// www.oxfordbiomedica.co.uk CHAIRMAN'S AND CHIEF EXECUTIVE'S REPORT Lead Products TroVax(R) TroVax is Oxford BioMedica's leading cancer immunotherapy product. It is designed specifically to stimulate an anti-cancer immune response and has potential application in most solid tumour types. TroVax targets the tumour antigen 5T4, which is broadly distributed throughout a wide range of solid tumours. The presence of 5T4 is correlated with poor prognosis. 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 that are expressed from the gene delivery system. The major highlight of the year has been the results from the Phase I/II trial of TroVax. Data from the study have been reported at national and international cancer conferences during the year. The trial was a complete success in that there were no safety issues, the product was exceptionally effective at inducing an anti-tumour immune response and, even though the number of patients in a Phase I/II trial is small, some interesting clinical improvements and disease stabilisation were observed. Our conclusions from the initial TroVax trials are that TroVax has the potential to become a major cancer product and that its further clinical development should aim to achieve two goals. The first is to bring TroVax to the market in the shortest possible time and the second is to broaden the cancer indications for which TroVax will be used. Following extensive consultation with leading cancer clinicians in the UK, Europe and the USA, the Company released its clinical development plans for TroVax at an analyst meeting in November 2002. We believe that the fastest route to the market is to use TroVax alongside current chemotherapy in late stage colorectal cancer patients. The main reason to choose this route is that the clinical end-points of a pivotal trial can be achieved relatively quickly, with product registration being targeted for 2007/8 if survival endpoints are required. If the regulatory authorities accept time to progression of disease as an appropriate endpoint, registration could be earlier. As a pre-requisite for a full Phase III study with chemotherapy, TroVax will enter a Phase II study this year where the immunological properties of the product will be evaluated in patients receiving the current 'standard of care' chemotherapy, i.e. either 5FU and irinotecan or 5FU and oxaliplatin. This study should be complete by the end of the year making TroVax ready for Phase III efficacy studies in 2004. TroVax will also enter clinical trials this year in earlier stage colorectal cancer patients who have not received chemotherapy. This will begin to prepare the ground for extending the use of TroVax to patients with less advanced disease, thereby expanding substantially the market potential of the product. The planned broadening of the clinical indications, and therefore the market, for TroVax is possible because 5T4, the tumour antigen used in the product, is present on a broad range of tumour types. With this in mind, TroVax will also enter clinical trials in patients with breast cancer and renal cancer in the coming year. Both of these trials will be conducted in the USA under FDA regulations. These plans for TroVax place it amongst the leading cancer immunotherapy products worldwide and will enhance the Company's efforts to seek partners for TroVax's co-development and marketing. MetXia(R) MetXia is Oxford BioMedica's leading gene-based cancer therapeutic. The product is based on a highly engineered retrovirus gene delivery system expressing a specific human cytochrome P450 gene. MetXia converts the tumour into a 'drug factory', enabling increased local production of the anti-tumour, cytotoxic derivative of the pro-drug cyclophosphamide. MetXia is potentially useful in the treatment of all solid tumours and their metastases, particularly those where cyclophosphamide is commonly used. At a cancer conference in February 2002 the Company released results from the Phase I/II trial of MetXia in patients with readily accessible solid tumours. These patients were very late stage breast cancer and melanoma patients. The aim of the trial was to assess the safety of MetXia and determine the effectiveness of the gene delivery technology used in the product. In order to achieve these goals it was important to access localised tumours for direct injection of MetXia and then be able to take biopsy samples to measure the delivery efficiency, without causing undue trauma. It was these considerations that led to the selection of this particular patient group. MetXia is designed to be effective in a broad range of tumour types and this first trial was designed to provide a body of data that would justify further trials in various cancers. The trial was completely successful in that the product was safe and gene delivery was readily detected in the treated tumours. In addition there was clinical benefit in some patients, including tumour size reduction. Most remarkable, however, was the observation, in one patient, of a dramatic improvement in a cancerous lesion that was not treated, following treatment of skin tumours elsewhere on her body. In February 2002 expert opinion was that this might be due to a systemic anti-tumour immune response induced in the patient by the action of MetXia on the skin tumour. Since then the existence of that immune response has been confirmed and the nature of the response characterised. It is now clear that the patient had indeed mounted a broad immune response against known markers that exist only on cancer cells. This means that although MetXia must be administered directly to a tumour, the tumour cell death that it causes may induce an immune response that will destroy other tumours in the same patient. MetXia becomes, therefore, an even more exciting potential product. Currently the Company is pursuing two clinical development routes for MetXia. A second Phase I/II trial, similar to the first, is being conducted with a higher potency version of the product. This trial is monitoring immune responses more closely than the first trial and is expected to add more data to support the notion that the product may be used for disseminated metastatic disease. Although patient recruitment has been slower than we had hoped, the trial will deliver results within the next few months. In parallel the Company is seeking regulatory approval for a Phase I/II study in pancreatic cancer, a disease where there is a clear unmet medical need and rapid product approval is a possibility. This trial should start during 2003. Phase II studies in disseminated but accessible cancers are currently being planned, with a view to MetXia being ready for pivotal Phase III trials during 2005. The Company believes that MetXia will be ready for marketing to the industry after the current Phase I/II study is completed in 2003. ProSavin(R) The Company's lead neurobiology product, ProSavin, is an innovative approach to the treatment of Parkinson's disease. Parkinson's disease affects 1% of the over 50 population, and approximately 10% of the over 60s(1). A patient with Parkinson's disease progressively loses the ability to make the neurotransmitter dopamine, the mediator of the control of movement. ProSavin is designed to convert a small area of the brain into a replacement dopamine factory by supplying the genes for dopamine synthesis to the target cells. It is the first of a series of products based on Oxford BioMedica's proprietary LentiVector(R) system, arguably the most powerful technology currently available for gene delivery to the central and peripheral nervous system. The development of novel neurobiological products is the fastest growing sector of R&D in the pharmaceutical industry, a reflection of new opportunities and demographic change. During 2002, having demonstrated the efficacy of ProSavin in an industry standard preclinical model for Parkinson's disease, the Company moved the development of ProSavin to its San Diego team to take advantage of their manufacturing skills and close working relationship with the FDA. A manufacturing process, quality control procedures and potency testing have now been put in place for the planned Phase I/II trials. Clinical centres in the USA have been identified for the trials, and initial regulatory discussions with the FDA have taken place. Although ProSavin is the first LentiVector product that has been presented to the FDA, the discussions were positive and there are no obvious barriers to achieving approval for the first trials. During 2003 the ProSavin programme will complete the requirements for filing an Investigational New Drug (IND) application in order to start a clinical trial in late stage Parkinson's patients early in 2004. Once the IND is in place, the Company believes that the product can be marketed aggressively to potential pharmaceutical partners. RetinoStatTM In May 2002, the Company announced an important new research collaboration with the Institute of Ophthalmology in London in order to develop RetinoStat, a new product programme in the field of vision loss. RetinoStat utilises the Company's LentiVector gene delivery technology to treat age-related macular degeneration (AMD) and diabetic retinopathy (DR). These two diseases are the major causes of blindness in the developed world and create a market opportunity for effective treatments estimated to be in excess of $1 billion per annum. AMD and DR affect 12 million people in the US. AMD is the most common cause of visual loss in the elderly: one in six people aged between 55 and 64 and one in four between the ages of 64 and 74 will develop a form of AMD. Each year 200,000 people lose all central vision due to AMD. DR is the most common cause of visual loss in the working population with 40,000 new patients per year(2). Both AMD and DR are caused by aberrant growth of leaky and disruptive blood vessels in the retina. This is caused by a hyper-response to localised regions of low oxygen arising from compromised blood supply within the retina. The Company has shown that its LentiVector technology can target this region of the eye with great accuracy and deliver anti-angiogenic proteins to treat these diseases. RetinoStat is currently in preclinical evaluation and could enter clinical development early in 2004. The preclinical models for these diseases are sufficiently predictive of efficacy in man that the Company believes that a partner could be secured following completion of the preclinical studies. Development Candidates The most exciting events of the year within the development candidate pipeline have been from the RequinateTM and InnurexTM programmes. Requinate is a new development candidate employing the proprietary LentiVector technology for the treatment of haemophilia A. It delivers a highly engineered version of the human Factor VIII gene to provide an endogenous factory for the blood clotting factor for the haemophilia patient. The product will enter preclinical development during 2003 and the Company will initiate discussions with potential partners following those studies. Innurex is the Company's nerve repair product for spinal injury and is the subject of a research collaboration with King's College, London. There is no product on the market for severe spinal injury, yet there is a substantial medical need mainly from car, motorcycle and sports injuries. During 2002 the Company demonstrated that its LentiVector technology was able to deliver the gene encoding RARb2 to spinal tissue, in vitro, very efficiently. This had the desired effect of triggering nerve outgrowth from the tissue samples. During 2003 the Company will assess the product in well-established preclinical models in preparation for entering clinical development during 2004. The Company intends to seek a pharmaceutical partner after the preclinical proof of principle studies are complete. Research collaborations The two main research programmes in tumour antigen discovery and Focused Target Identification (FTI) have both resulted in partnerships that create new product opportunities. In addition the Company has obtained grant funding for the motor neuron disease programme. Arius Research In July 2002, the Company announced a collaboration with Arius Research Inc. Under this 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. Arius and Oxford BioMedica share the resulting intellectual property and commercialisation rights. In October 2002, the Company announced that this collaboration had already attracted its first development partner, Protein Design Labs Inc (PDL), a leading player in the development of humanised monoclonal antibodies. PDL was granted an option to develop the first two antibodies in the Oxford BioMedica/Arius collaboration. Aliga Pharmaceuticals During 2002 Oxford BioMedica started to see the first tangible results emerging from its target discovery programme, particularly in the field of blood vessel growth in response to low oxygen concentration. This is a condition seen in cancer, arthritis and ischaemic diseases such as peripheral arterial disease and coronary disease. An enzyme target was identified from the FTI programme, which is ideal for a small molecule discovery project. The initial goal is a product for the highly lucrative wound-healing field. The recent announcement of the collaboration with the European company Aliga Pharmaceuticals (formerly called Kiadis) provides the necessary chemistry expertise and puts in place Oxford BioMedica's first small molecule programme. Wound healing has been selected as the first target because of the speed with which products can be taken into the clinic in this field. However, products arising from this collaboration may be effective in various cardiovascular conditions in addition to wound healing. ALS Association and Andrew's Buddies During 2002, the Company was invited to talk at several neurobiology conferences. The presentations included descriptions of Oxford BioMedica's unique ability to target motor neurons with its LentiVector technology. This attracted the attention of two USA charities, the American Amyotrophic Lateral Sclerosis (ALS) Association, which is devoted to finding treatments for the major form of motor neuron disease, and Andrew's Buddies, an organisation committed to developing treatments for the inherited neuromuscular disease Spinal Muscular Atrophy (SMA). Together these two charities have awarded grants of over US$600,000 to the Company to pursue products for motor neuron disease (MoNuDinTM) and SMA. The Company retains all intellectual property and commercial rights and a commercial partner will be sought following proof of principle studies which should be completed by 2004. Commercial Collaborations In addition to its lead products, development candidates and research collaborations, Oxford BioMedica has a number of commercial collaborations where the commercial partners are wholly responsible for funding and managing the programmes. Wyeth The antibody-toxin collaboration with Wyeth, valued at $24 million in upfront and milestone payments, is progressing well. In February 2002, Wyeth extended the collaboration and the option to develop the product. The Company anticipates that Wyeth will exercise the option during 2003 following the completion of preclinical studies. Amersham The exploratory research programme to develop a cancer diagnostic with Amersham is continuing and the Company anticipates that the scope of the collaboration could broaden during 2003. Intervet Recently, the Company announced that it had changed its partner, from Virbac SA to Intervet SA, for the development of TroVax-VET, a version of TroVax for the treatment of cancer in companion animals. Intervet is one of the world's top ten veterinary companies and is committed to the rapid development of the product. This new collaboration also triggered the award of a â‚¬0.9 million EUREKA(3) grant to Oxford BioMedica for R&D related to the TroVax programme. Intellectual Property Intellectual property is the basis of the Company's fundamental value. As in previous years, Oxford BioMedica expanded its patent portfolio in 2002. A total of 100 individual patent applications have been granted in various territories. Ten new filings were made from Oxford and three from San Diego. The Company has the largest lentiviral vector patent estate in the world. Commercial Strategy All of the commercial collaborations that Oxford BioMedica has established to date have been technology or product component deals where new commercial opportunities have been created outside the Company's core focus. This has provided a route to additional revenues beyond those that will derive from marketing our major products. However, as the lead products mature, the rationale for out-licensing them to pharmaceutical and big biotech companies becomes stronger. TroVax and MetXia are now at the point where potential partners should be attracted by the exciting clinical data, and both ProSavin and RetinoStat should provide compelling preclinical proof of principle data during 2003. This means that substantial commercial activity is anticipated during the next two years. Financial We have managed our finances prudently in 2002, and by focusing on our key programmes we have extended the projected life of our cash reserves. If we were to discount the generation of all cash from our research and development programmes over the next two years, the present funds would be sufficient to fund operations until the fourth quarter of 2004. Given the status of our programmes, we anticipate that this period will be extended both by cash from commercial activities and from grants. In 2001 we set in train an expansion of our operations including a strategic investment in a US operating centre. In 2002 we continued to build our US presence, but as a result of increased focus on key programmes, we reduced capital expenditure and some UK activities. The Group's net cash outflow before management of liquid resources and financing (often referred to as the cash burn) was Â£11.6 million in 2002 compared to Â£11.9 million in 2001. In part this reduction was due to the timing of tax and interest receipts. The bank balance at 31 December 2002 was Â£21.0 million. The Group's loss for the year after tax was Â£11.7 million (2001: Â£8.4 million). US activities account for the increased loss: as we have continued the investment in our subsidiary in San Diego, the loss attributable to the US operation has increased from Â£0.8 million in 2001 to Â£3.4 million in 2002. Changes to the Board and Senior Management During the year the Company made a number of key senior appointments. In May 2002, Peter Nolan was appointed to the Board as Senior Vice President for Commercial Development. Peter has been a senior member of the Company since its foundation, and is a director of the UK BioIndustry Association. Prior to joining Oxford BioMedica, he was head of the Biotechnology Unit at the UK Department of Trade & Industry. At Oxford BioMedica, he has overall responsibility for the Company's patent portfolio and strategic in-licensing and technology acquisition activities. In September 2002, the Company appointed Nick Woolf as Senior Vice President of Corporate Strategy. With more than eight years experience as a biotechnology and pharmaceutical analyst, Nick has been involved in all aspects of company financing, ranging from IPOs to major corporate deals. Most recently he served as Director and Head of European Biotechnology Research at ABN AMRO, where he was responsible for developing its industry coverage. Prior to that, Nick was Vice President and Senior Analyst at Robertson Stephens International, and he was previously at both Nomura and SBC Warburg. Nick holds an MA in chemistry from Oxford University. In November 2002, the Company appointed Dr David Higgins as Vice President for Business Development. He has been appointed to the San Diego subsidiary to spearhead business development primarily in the USA. David has extensive experience in the biotech industry having worked in project management and business development for Invitrogen Corporation, Chiron Corporation and Idun Pharmaceuticals over the past 10 years. The Board accepted the resignations of Dr. Paul Durrands and Dr. Neill Mackenzie in April and November respectively. We thank Paul and Neill for their contributions to the Company and wish them well in their new careers. Dr Peter Johnson CHAIRMAN Prof. Alan Kingsman CHIEF EXECUTIVE OFFICER Financial Review Financial overview In 2002 Oxford BioMedica increased the focus of its resources on its most advanced programmes. As a result of these resource adjustments, we have extended the projected life of our cash reserves. The balance of the Group's expenditures has also changed, with a greater emphasis on the USA and reduced expenditure in the UK. In 2001 the Company began a significant expansion of its operations. The scale of UK activities increased, and a new operating subsidiary in the USA was established. This followed the raising of Â£35.5 million in a placing and open offer in April 2001, and has allowed us to improve the Company's risk profile by developing a broadened portfolio of product programmes based on our core technology. We expected that the full-year impact of the expansion that began in 2001 would result in higher levels of expenditure in 2002. However, recognising the tough economic and market conditions that developed in 2001 and continued through 2002, we have reduced the scope of our expansion in the USA, and have made strategic cuts in the UK operation as we focus our resources on the lead programmes. The increase in operating expenses in 2002 was less than we had anticipated, and overall the net cash outflow before management of liquid resources and financing (the 'cash burn') in 2002 was lower than in 2001. At the start of 2001 the Group had 59 employees, all in Oxford, UK. By the end of that year, the headcount had risen by over a third in the UK to 80, with a further 9 employees in the USA. Throughout 2002 we continued the measured expansion of our US operation, albeit more slowly than originally planned. At 31 December 2002 we had a staff of 26 in the USA. In Oxford, however, the headcount of 55 at the end of 2002 was 35% less than its peak. This was the result of curtailing some earlier-stage research and development activities, and transferring certain programmes to the USA. This reduction involved a number of redundancies. The impact on our projected expenditure has been to extend the worst-case cash window - the period covered by current cash reserves, assuming that no new funds are received from revenues, grants or share issues - by 11 months to quarter four of 2004. We already know that this view is unduly pessimistic, as we have recently been awarded a Eureka grant of approximately â‚¬0.9 million, and we expect existing and new collaborations to add to our funds, further extending the cash window. Financial results The net cash outflow before management of liquid resources and financing in 2002 was lower than last year at Â£11.6 million (2001: Â£11.9 million). This was because lower capital expenditure, the receipt of R&D tax credit and increased receipts of bank interest had offset increased operating expenses. Because the expenditure reductions, tax credits and most of the interest receipts were in the UK, the UK cash outflow in 2002 was significantly less than 2001 at Â£7.0 million (2001: Â£10.6 million). The worst-case cash projections described above indicate, in the absence of revenues or grants, that the total Group cash outflow in 2003 and 2004 will be at a similar level to 2002. The loss for the year after tax was Â£11.7 million (2001: Â£8.4 million). Operations in the UK accounted for Â£8.3 million (2001: Â£7.6 million), with the loss from US operations Â£3.4 million (2001: Â£0.8 million). Net operating expenses for 2002 were Â£14.2 million (2001: Â£11.4 million). Nearly all of the increase over 2001 (Â£2.6 million) was in the US operation. Research and development costs were Â£10.8 million (2001: Â£8.6 million) and administration expenses were Â£3.4 million (2001: Â£2.8 million). UK expenses include Â£0.3 million in respect of staff redundancies and writing down redundant fixed assets. Revenue of Â£0.2 million (2001: Â£0.4 million) consisted mainly of a receipt from Wyeth under the immunotoxin collaboration. Grant income of Â£0.1 million in 2002 was from a European Community Framework V programme related to development of novel cancer vaccines. Interest receivable on bank deposits was Â£1.1 million (2001: Â£1.5 million). This year's figure is lower because of the lower average balance held on deposit and the reduction in interest rates in both the UK and the US. The net tax credit for 2002 of Â£1.3 million (2001: Â£1.2 million) represents the UK Research and Development Tax Credit, less tax payable in the USA. During 2002 R&D tax credits totalling Â£1.6 million relating to 2000 and 2001 were received. It is expected that the 2002 R&D tax credit will be received in 2003. Capital expenditure was Â£1.3 million (2001: Â£3.2 million). The majority of the 2002 capital expenditure (Â£1.0 million) was in the US, where we established new laboratories and offices in San Diego. Cash position and outlook The bank balance at 31 December 2002 was Â£21.0 million (2001: Â£32.6 million), slightly higher than we had anticipated at the beginning of 2002. We anticipate that the balance of expenditure between the UK and the US will shift a little further towards the US in 2003 and 2004, as the full year effects of the changes we have made in 2002 are felt. We expect clinical development to take a larger part of total expenditure in the next couple of years, particularly as the TroVax, MetXia and ProSavin programmes progress. Overall, however, we expect to hold expenditure close to current levels. This means that, in the absence of any revenues from collaborations (present or future), new grants or other new sources of funds, our cash resources are sufficient to fund operations until the fourth quarter of 2004. We have already been awarded a new government grant, and we are optimistic that our maturing clinical and development pipeline will create opportunities for significant revenues over that period. We therefore view our current position as an excellent platform for growth in value. Andrew Wood CHIEF FINANCIAL OFFICER Consolidated profit and loss account for the year ended 31 December 2002 Notes 2002 2001 Â£'000 Â£'000 Turnover 2 173 373 Research and development costs (10,833) (8,570) Administrative expenses (3,420) (2,859) Operating expenses (14,253) (11,429) Other operating income: government grants receivable 63 29 Net operating expenses (14,190) (11,400) Operating loss (14,017) (11,027) Interest receivable 1,094 1,486 Loss on ordinary activities before taxation 2 (12,923) (9,541) Tax credit on loss on ordinary activities 3 1,263 1,152 Loss for the year (11,660) (8,389) Basic loss and diluted loss per ordinary share 4 (4.9p) (3.8p) The results for the years above are derived entirely from continuing operations. There is no difference between the loss on ordinary activities before taxation and the loss for the years stated above, and their historical cost equivalents. Statement of Group total recognised gains and losses Note 2002 2001 Â£'000 Â£'000 Loss for the financial year (11,660) (8,389) Currency translation differences on foreign currency net investments 8 (395) (2) Total recognised losses for the year (12,055) (8,391) Consolidated balance sheet at 31 December 2002 Notes 2002 2001 Â£'000 Â£'000 Fixed assets Intangible assets 185 234 Tangible assets 5 3,394 3,647 Investments 26 26 3,605 3,907 Current assets Debtors 6 2,223 2,712 Cash at bank and in hand 20,964 32,645 23,187 35,357 Creditors: amounts falling due within one year 7 (1,254) (1,756) Net current assets 21,933 33,601 Total assets less current liabilities 25,538 37,508 Provisions for liabilities and charges (6) - Net assets 25,532 37,508 Capital and reserves Called-up share capital 2,388 2,382 Share premium account 58,762 58,689 Other reserve 711 711 Profit and loss account (deficit) (36,329) (24,274) Equity shareholders' funds 8 25,532 37,508 Consolidated cash flow statement for the year ended 31 December 2002 2002 2001 Notes Â£'000 Â£'000 Operating activities Net cash outflow from continuing operating activities a (13,390) (9,846) Returns on investments and servicing of finance Interest received 1,550 1,120 Taxation UK R&D tax credit received 1,553 - Overseas tax paid (9) (2) 1,544 (2) Capital expenditure Purchase of tangible fixed assets (1,349) (3,182) Net cash outflow before management of liquid resources and financing (11,645) (11,910) Management of liquid resources Transfer to deposit accounts (6) (32,190) Transfer to current accounts 11,741 10,886 11,735 (21,304) Financing Issue of ordinary shares 79 36,108 Expenses of share issue - (3,186) Net cash inflow from financing 79 32,922 Increase/(decrease) in cash in the year b 169 (292) Notes to the consolidated cash flow statement (a) Reconciliation of operating loss to net cash outflow 2002 2001 from operating activities Â£'000 Â£'000 Continuing activities Operating loss (14,017) (11,027) Amortisation of intangible fixed assets 49 49 Depreciation of tangible fixed assets 1,166 840 Loss on disposal of fixed assets 138 1 (Increase)/decrease in debtors due after more than one year (329) 37 Decrease in other debtors and other tax receivable 90 16 Increase in prepayments and accrued income (11) (163) (Decrease)/increase in trade creditors (230) 216 (Decrease)/increase in other taxation and social security (17) 58 (Decrease)/increase in accruals and deferred income (88) 127 Exchange rate differences (141) - Net cash outflow from continuing operating activities (13,390) (9,846) (b) Reconciliation of net cash flow to movement in net funds 2002 2001 Â£'000 Â£'000 Increase/(decrease) in cash in the year 169 (292) Cash (inflow)/outflow from change in liquid resources (11,735) 21,304 Change in net funds resulting from cash flows (11,566) 21,012 Exchange movements (115) (2) Net funds at beginning of the year 32,645 11,635 Net funds at end of the year 20,964 32,645 (c) Analysis of net funds At 1 January Cash flow Exchange At 31 December 2002 movements 2002 Â£'000 Â£'000 Â£'000 Â£'000 Cash 249 169 (115) 303 Liquid resources 32,396 (11,735) - 20,661 Net funds/cash at bank and in hand 32,645 (11,566) (115) 20,964 Liquid resources relate to bank deposits which are not immediately accessible within 24 hours without financial penalty. Notes to the accounts for the year ended 31 December 2002 1 Basis of preparation The figures and financial information for the years ended 31 December 2002 and 31 December 2001 do not constitute the statutory financial statements for the respective years. Financial statements for the year ended 31 December 2001 have been delivered to the Registrar of Companies and included the auditors' report. Financial statements for the year ended 31 December 2002 have not yet been delivered to the Registrar. The auditors' reports on the financial statements for the years ended 31 December 2001 and 31 December 2002 were unqualified and did not contain statements under either section 237 (2) or section 237 (3) of the Companies Act 1985. The new accounting standard FRS 19 'Deferred Tax' has been adopted in the current year. This change of accounting policy did not result in any change to the prior year's financial position. Copies of this announcement are available from the Company Secretary. The audited statutory financial statements for the year ended 31 December 2002 are expected to be distributed to shareholders by 15 March 2003 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 3 March 2002. 2 Turnover and loss on ordinary activities before taxation The Group's turnover and loss on ordinary activities before taxation are derived entirely from its principal activity. The Group has operations in the United Kingdom and in the United States of America. Turnover 2002 2001 Geographical analysis Turnover by Turnover by Turnover by Turnover by destination origin destination origin Â£'000 Â£'000 Â£'000 Â£'000 United Kingdom 1 173 67 373 Rest of Europe - - 35 - North America 172 - 271 - 173 173 373 373 Loss on ordinary activities before taxation 2002 2001 Geographical analysis Â£'000 Â£'000 United Kingdom 9,541 8,770 North America 3,382 771 12,923 9,541 Net assets 2002 2001 Geographical analysis Â£'000 Â£'000 United Kingdom 3,020 4,352 North America 1,548 511 Net operating assets 4,568 4,863 Cash at bank and in hand 20,964 32,645 25,532 37,508 3 Tax credit on loss on ordinary activities 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 2002 represents the credit receivable by the Group for the year, less income tax payable by the Group's subsidiary in the United States of America. These amounts have not yet been agreed with the relevant tax authorities. Group 2002 2001 Â£'000 Â£'000 Current tax United Kingdom corporation tax research and development credit (1,262) (1,167) Overseas taxation - 15 (1,262) (1,152) Prior years' tax adjustments United Kingdom corporation tax research and development credit 7 - Overseas taxation (14) - Total current tax net credit (1,269) (1,152) Deferred tax Origination of timing differences: overseas tax 6 - Total deferred tax (note15) 6 - Tax credit on loss on ordinary activities (1,263) (1,152) 4 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 238,670,615 in issue during the year ended 31 December 2002 (2001: 219,196,867). 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. 5 Tangible fixed assets Short Office Computer Laboratory Total leasehold equipment, equipment equipment improve-ments fixtures and fittings Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Cost At 1 January 2002 1,874 211 921 2,459 5,465 Additions 466 39 75 670 1,250 Disposals - - (611) - (611) Exchange differences (52) (7) (6) (70) (135) At 31 December 2002 2,288 243 379 3,059 5,969 Depreciation At 1 January 2002 541 97 288 892 1,818 Charge for the year 334 37 312 483 1,166 Eliminated on disposals - - (399) - (399) Exchange differences - (1) (1) (8) (10) At 31 December 2002 875 133 200 1,367 2,575 Net book amount at 31 December 2002 1,413 110 179 1,692 3,394 Net book amount at 31 December 2001 1,333 114 633 1,567 3,647 6 Debtors 2002 2001 Â£'000 Â£'000 Amounts falling due after more than one year Other debtors - rent deposit 291 - Amounts falling due within one year Other debtors 123 531 Corporation tax receivable 1,262 1,560 Other tax receivable 115 193 Prepayments and accrued income 432 428 1,932 2,712 Total debtors 2,223 2,712 7 Creditors: amounts falling due within one year 2002 2001 Â£'000 Â£'000 Trade creditors 379 638 Overseas taxation - 13 Other taxation and social security 164 181 Accruals and deferred income 711 924 1,254 1,756 8 Reconciliation of movements in Group shareholders' funds 2002 2001 Â£'000 Â£'000 Loss for the year (11,660) (8,389) New share capital issued 79 36,108 Expenses of share issue - (3,186) Exchange differences (395) (2) Net (reduction)/addition to shareholders' funds (11,976) 24,531 Opening shareholders' funds 37,508 12,977 Closing shareholders' funds 25,532 37,508 -------------------------- (1) Decision resources Inc (2) the US National Institutes of Health (3) EUREKA is a pan-European network for market-oriented, industrial R&D This information is provided by RNS The company news service from the London Stock Exchange

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