Oxford Biomedica Plc (OTCPK:OXBDF) Q4 2021 Earnings Conference Call April 20, 2022 8:00 AM ET
Company Participants
Dr. Roch Doliveux – Chairman, Interim Chief Executive Officer
Sophia Bolhassan – Director of Investor Relations
Kyri Mitrophanous – Chief Scientific Officer
Stuart Paynter – Chief Financial Officer
Conference Call Participants
Alistair Campbell – Liberum
Myles Dixon – Peel Hunt
Charles Weston – RBC Capital Markets
Joseph Pantginis – H.C. Wainwright
Julie Simmonds – Panmure Gordon
Operator
Good afternoon, ladies and gentlemen, and welcome to the Oxford Biomedica Preliminary Results 2021 conference call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. We will only be taking questions from the phone line today, and any questions submitted through the webcast will be answered after the call. As a reminder, today’s conference call is being recorded.
Sophia Bolhassan
Welcome, everybody, and thank you for joining us for our preliminary results 2021 conference call. I am Sophia Bolhassan, Head of Investor Relations, and I’m joined here today by Roch Doliveux, Chairman Interim Chief Executive, Officer, Stuart Paynter, Chief Financial Officer, and Kyri Mitrophanous, Chief Scientific Officer. I’m going to hand over to Roch to begin the presentation.
Dr. Roch Doliveux
Thank you very much Sophia and welcome everybody to the 2021 financial results for Oxford Biomedica. I will just share with you a couple of slides on where the company and then let Stuart highlight the financial results and carry on strip talk about the future. And first of all, I’m delighted about the 2021 performance, which was clearly exceptional, [Indiscernible] several factors. The most important one being the large-scale manufacturing of the adenovirus -based COVID vaccine from Oxford University such as AstraZeneca.
And I’m proud that we have successfully manufactured over 100 million doses of the AstraZeneca vaccine. And just for the sake of — because I know several of you have questions or comments. Just to highlight that, we do expect to continue activity with AstraZeneca this year. We are in advanced stages of discussion and the — discussion around how much and when, and not if. So I just want to be very clear on that.
The underlying business, if I could have the first slide, please. The underlying businesses is growing very nicely, royalty new customers, and the — can I have the first slide, please? We are building on this — I’m not seeing the first slide, so I don’t know if the first slide is appearing.
Sophia Bolhassan
I can confirm that the first slide is on the webcast for Europe.
Dr. Roch Doliveux
We don’t see it. So that’s okay. Thank you for following that. I apologize. So we are indeed delivering on our strategy to become a global viral vector. I think we are in a very unique position in the biotech space of being an innovative CDMO and then innovative service providers to cell and gene therapy companies, whether biotech or large pharma. And what makes us unique is our proprietary platform, our IP, our [Indiscernible] for which customers are willing to pay [Indiscernible].
The strengths of our quality system monitored by large pharma and regulatory bodies all around the world and our expertise, and the same recipient of success apply to our AAV business with the Plug & Play platform that we acquired investing earlier in 2022. If I could have the next slide, please. The three reasons to really invest in Oxford Biomedica is the fact that we are a leader in viral vectors.
Today, we’re leader in the anti-viral vectors and we aim to become leader in the largest of the viral vector and the fastest-growing, which is the AAV business by the acquisition of our new platform, which has record-setting quality and yields performance. The second is the fact that we have a diversified business of both process development. Again, a lot of the innovative and the IP is coming through this activity, but also manufacturing revenues.
And then, the ability to have a long-term upside from our proprietary pipeline, which will require external funding and we’ll come back to that in the training, I’m sure. And last but not least, the fact that we have an amazing management team with an operational infrastructure that has delivered, I think the delivery on the lentiviral vectors, on the adeno viral vector, and the — and now on the AAV is truly unique and the fact that we have commercial supply capabilities for both small biotech and big pharma is a huge strength to build in.
I just want to highlight before I hand over to Stuart for the financial results that we really believe that this unique platform-based business is coming at the right time of a challenging biotech market for companies not to reinvent the wheel and consider going to Oxford Biomedica as he place to go for any of their process development and manufacturing topic around viral vectors. And as you know, viral vectors is the key to unleash the potential of the vast majority of challenging therapy products.
So as you can hear, maybe from my energy and even mo re bullish than I was when I joined as chair two years ago, and great progress has been made to maximize the potential of the company to become the more viral vector leader now across the world. Now, to strip for the financial results 2021.
Stuart Paynter
Thank you very much, Roch. And so I’ll ask the presenter just to forward on the slide to Page 6. And so this is just a bit of a highlight as to where we’ve been in 2021. So we really wanted to present the business with a state of play. The strategy which Roch’s just given is already the backward look at 2021 financially, and from an operational perspective. And then something about the transformative acquisition that we just made in Oxford Biomedica Solutions and the impact that’s going to have on the future and some of the other opportunities there in front of us.
So Slide 6, this is the start of our look back at the year of 2021, which is a year of substantial growth for us. So revenues grew 60 plus percent to £143 million from about £87 million the year before. Of course that was largely driven by the large scale manufacture of the Oxford, AstraZeneca vaccine, which we’ve done at high cadence. And also with some very nice success in terms of completed batches and yields, which at AstraZeneca have been the very trying to us to say that we were towards so we’re at the top of their league tables in terms of those key performance indicators.
And interestingly, you’ll see the disproportionate impact of the increased revenue throughput as we get to the P&L a bit later and the EBITDA generated. It really does illustrate the fact that commercial manufacture — high throughput commercial manufacture really is a — something to be learned from and aimed for in the world of innovative services which we find ourselves in. The more commercial products, the more high throughput production you can get, the more efficient you’re going to be at utilizing your footprint and your fixed costs essentially, which is what we found.
We signed two year partnerships. In fact, three new names have appeared on that sheet since this time last year. Arcellx, Cabaletta being the top two. Immatics being another really interesting small biotechs in the Lenti field, who has Roch mentioned, have gone down the CDMO route, looking to utilize our expertise to help them achieve their clinical goals, which is exactly where we want to be.
We want to be helping companies, both big and small and we do have the big pharma endorsement, achieving their goals and ultimately providing them with a solution from very early stage, processing, all the way through to commercial manufacture. Which of course, is the goal to help up on us get [Indiscernible] the way through that program, at which point, the royalties we mentioned again, start kicking in. We have also, post balance sheet completed, as well as moving from pure Lenti into adeno which was done in 2020.
We’ve now completed the full suite of viral vector types in terms of our investment into AAV in North America and just outside Boston. We think that’s a really smart use of the pandemic efforts we’ve put in. The success we’ve had in that area, are really crystallizing that into something that’s going to be really, really interesting and trans-formative to us, in the medium to long term, which is our entrance into the AAV business and leveraging our technologies and our brand across Lenti through adeno virus with AstraZeneca into AAV.
[Indiscernible] will take you through some of the technology points [Indiscernible]. So if we just move on to — Point 4, not to be addressed [Indiscernible] on this slide, is about strengthening of the board. Roch being in — since his two years as chair, as being slightly transforming the board into real world-class gene therapy expertise on the board both chemical, technical, manufacturing, financial.
And so we think we’re in a really good governance place now to drive the future strength of the business in the right way for a 250 company to do it. And so next slide, I’m not going to take you through the points here, but I’ll let you read through them. The three key points for us are always revenues, and we’ve through the revenue growth that we’ve achieved in 2021. EBITDA and that number was about £35 million for the year 2021. Like I say, driven by that efficiency where we were generating through the — high throughout the campaign of the adeno viral vaccine.
And then how we are transforming that EBITDA into cash-generation, so you’ll see that we had £35 million of operating cash generating from the business, £25 million of operating cash generated from the business which we’ve seen as substantial over the previous year. And that enables us to make interesting choices both in terms of how we fund the business and how we then reinvest into the business whether it’d be into R&D for future innovations or where it’s necessary into lap expansion, capital expansion to further forward our infrastructural footprint.
Worth mentioning that we did the deal back in September with Serum Institute to fully fund the Phase 2 of Oxbox. So many of you will know, many of you who visited the Oxbox facility in Oxford and know that there’s 25,000-30,000 square feet of fallow area there, which was deliberately designed for a future proofed expansion plan and that we believe the time is right to be looking at delivering Oxbox Phase 2. So we will have a multi — an offering to our partners, which is multi-scale all the way from 50-1,000 liter and beyond in terms of the GMP capacity we can offer.
And that provides a commercial solution, not just for our existing partners for Lenti but it provides a solution for AAV as well, and then potentially, other vaccine where I wish we can do. And we’ve recently signed a memorandum of understanding with Serum on how a future collaboration will look. We’re very excited by that in terms of us helping them with their strategy of building up their capacity and capabilities in the U.K for vaccine manufacturer.
The other area, of course, more importantly, is cash. Cash at the end of the year was [Indiscernible] of a 100 million pounds, cash at the end of the first-quarter was under 44 million pounds, of course. That was after some [Indiscernible] inflows and outflows having transacted the deal and capital rise in order to fund the deal as well as loan financing. So you can see we’re still in a strong net cash position at this juncture. This was a bridging loan to get us through — the capital rise was put together in the quite circular.
But we’ve come out of the pandemic period with an acquisition which we’re really excited about and a strong financial position. So if we just scroll to Slide 8 please. Many of you have seen this slide before. This is the six months review of [Indiscernible] growth. The blue on the top chart being down the line business and the purple being the more lumpy milestones and unlicensed space.
And you can see that we get something very regularly in [Indiscernible] every six months. We’ll see some of that purple stuff coming through very difficult to predict. The underlying business are easy to predict and you will see that looking back to the first half of 2015 when we pivoted to be an innovative service provider, initially just from Novartis, There’s some substantial growth capped off in the year of 2021 with north of a $140 million. The seasonal split there is lots to do with the throughput of vaccines in the first half and the arrangement with AstraZeneca on pricing, etc.
So we are again, very proud of that underlying growth and we expect that to post-pandemic and with the acquisition we’ve made in the medium to long term to continue very aggressively. The bottom chart, operating EBITDA, we’ve communicated this for a while now that now is — we don’t set an announcement the time to generate, to be able to aim to generate EBITDA. EBITDA has come from the good delivery that we’ve made this year. And it gives us those flexible re-investment opportunities, whether that’s to strengthen the balance sheet or whether that’s to invest back in R&D.
But we are absolutely committed as an innovative service provider to generating the next tranche of innovations, which is going to enable this industry to make a really big impact in healthcare and bring gene therapies not just to very rare diseases, but beyond that to more prevalent diseases in a cost-effective way. And we believe we’ve got a really big part to play in both by making it more robust as a process, cheaper, and safer. And we’re excited towards [Indiscernible] and both Lenti, and AAV. And Slide 9 is our P&L. We show — you’ll see revenue we’ve already talked about.
Costs will go up, of course, cost of goods with the increase in revenue. There’s been a shift as you can see there from bioprocessing costs into cost of sales, given the extra efficiency we managed to create and the absorption of those overheads into cost of sales. R&D expenses have gone off as we continue to invest. It’s absolutely the right thing to what we committed to do for the next few years. Administrative expenses have increased too as we have built the governance around our company which is going to spring bold now from the lower ends of [Indiscernible] 250 with very insignificant credit ambitions the board has set us for the next three to five years.
We’ve set fair that in terms of building that back office to control our environment, the govern structures to be able to make the next leap forward. Obviously, there’s various headwinds in the marketplace as well in terms of supply chain and inflation running. But we are in a financially very robust position to be able to not just cope with those changes, but actively push those — push the agenda forward with a multi-geography approach now that we’re taking. On to Slide 11. This is more of a future look now, so Kyri will take you through some of the science in one or two slides a time.
I just wanted to reiterate, we’ve gone through this a couple of times now, why we wanted — the board and the executive team here wanted to make the leap into AAV. Having seen the performance levels in adenos, which is brand new to us, we were convinced that the technology is in the know-how that we have — in having worked in Lenti, which is very tricky place to be for the last 20 years, really does lend itself well to that transfer of know-how to cross that modality through adenos and into AAV.
So here, I think we’ve made a smart acquisition in a very smart way of a fledgling innovative service provider who is currently just providing services to a single client, which we have received the contract for. With latent capacity, we can do that very quickly. If we would have done this organically, it would have taken us a few years. This is a really smart way to make an impact in the AAV with a best-in-class Plug & Play platform. But the reason we were doing this is because you will see in that top graph, that the lentiviral gamma retro area is growing at 17% pay load, which is not too shabby and we’re already very sculpted in that market. But you’ll see the level of activity going on in AAV.
And furthermore, AAV really does have a problem with some of the CMC the FDA has identified, which we truly believe we can form part of the solution for. So we believe the time is right for us to bring our know-how capabilities, technologies, and ultimately, our brand, and big pharma endorsement into this area. When you see the market size, this makes a lot of sense. So we will continue to deliver on the alignment and integration and ultimately delivering new customers into that part of the business. And it’s going to form part of the great strategy for Oxford Biomedica group for the next 2, 3, 4 years.
And everyone’s aligned, both the management Oxford Biomedica Solutions, we, Oxford Biomedica group and homology are all aligned that in the next three years the job of Oxford Biomedica Solutions is to bring clients and generate revenue and essentially, grab the biggest portion of this market share we can as the market materials. I’ll hand you over to Kyri, who will take you through some of the science and the technology that we’re excited about in the next two slides.
Kyri Mitrophanous
Thank you, Stuart. Slide 12, please. Today, I’m going to share with you some of our plans for future innovation around our platform technologies as Joe was saying. These are focused on realizing the potential of AAV lentiviral vectors to revolutionize medicine. Then I will describe how we are strengthening our product pipeline. First, with the continued development of OXB-302 for Acute Myeloid Leukaemia. Second, with the application of lentiviral vectors to modify their liver for therapeutic benefits. And finally, the development of In – vivo CAR-T therapy. Very exciting area. So first on platform technologies.
Excuse me, our expertise, IP and investments, make us well, leading producers of lentiviral vectors. In the last few years, we have leveraged this expertise into other vector platforms as we’ve heard with our very successful manufacturer of the Oxford AstraZeneca COVID-19 vaccine. Our long-term goal is to become vector agnostic, and to that end together with Homology medicines, we’ve established Oxford Biomedica Solutions at high performing full scope AAV manufacturing and innovation business near foster.
We see clear areas of synergy between our current capabilities and our new AAV expertise in Oxford Biomedica Solutions. And I’m really looking forward to the exciting developments we will make by combining our strengths. By improving the amounts and quality of that that we can generate, we’re opening up new therapeutic indications for both AAV and lentiviral vector products right now. So we are focusing co-development activities initially in four areas. First, transfection.
Both AAV and lentiviral vector production currently rely on transient transfection. For Lenti production we have learned to make stable transfection mixes that are particularly useful at large scale in GMP. By optimizing the transfection conditions and also switching from three to two plasmids, Oxford Biomedica Solutions have increased the potency of the AAV particles produced. These are the ones that have the vector genome inside them. They’re ones containing the therapeutic kings.
Combining these technologies of a stable transfection mix, superior transfection conditions should allow further improvements in titer and quality of vector produced, both for AAV and Lenti, thereby obtaining superior cost of goods. In terms of upstream and downstream production, we will look to combine two industry-leading technologies, 2000-liter transient transfection and perfusion technology for improved quantity and quality of vaccine. In addition, the trip system allows for the production of high titer AAV and Lenti vectors irrespective of the trans gene.
In terms of analytical testing, through Oxford Biomedica Solutions, we have a full suite of analytical methods for AAV characterization and product release. By combining this with our state-of-the-art automation and vector characterization, we expect faster and more efficient testing characterization and also batch release. Now, we recognize that having the right production cells is key to successful products and our XP has developed screening technologies for obtaining high titer production cell lines for Lenti, and also developed methodologies for making stable lentiviral vectors producer cell lines.
We can apply these learnings to AAV production to meet the expected and current high demands for AAV and Lenti. I’m looking forward to sharing with you the exciting technologies and innovations that will arise by combining the strengths that we have put together in AAV and lentiviral vector, ultimately leading to the development of life-saving products for our patients. Now, please, can we move onto Slide 13? First, it’s with great pleasure that we welcome Dr. Ravi [Indiscernible] to our XP as our new Chief Medical Officer.
Ravi brings with him a wealth of experience gained through senior roles at Sobi [Indiscernible] and [Indiscernible]. Ravi is responsible for developing the XP therapeutic product strategy, both spot building on our existing product pipeline and further evaluating normal areas of opportunity. We have undertaken an internal review of our pre -clinical programs, this is ongoing, but I will share some of our latest thinking. Our lead clinical product candidate OXB-302 for the treatment of Acute Myeloid Leukaemia is in late pre -clinical and progressing well.
We’re developing a new set of products to target the liver that play to the strength of lentiviral vectors. The liver is a continually dividing organ. And because lentiviral vectors integrate into target cells, a one-off treatment is all that may be required to give life long benefit. Now, large quantities of high quality lentiviral vectors is required for leveraging therapy, which are XP’s particularly goods is making. And finally, we’re developing an exciting new innovation. The generation of CAR T-cells In-Vivo.
The aim with In-vivo CAR T Therapies to remove the need for all ex – vivo cell processing by directly administering the lentiviral vector into the body. We expect to be able to treat many more patients and treat them as a first or second line therapy rather than third or fourth, this should get better clinical outcome. To ensure that we adequately resource this new pipeline. We are de -prioritizing our XP 203, 204 and 103. Finally, on the third festive January 2022, to offset Biomedica was informed by CEO Gene Therapeutics of their intention to return the rights for excellent DPD. We planned to out license the program to a suitable partner. And thank you. And I’ll hand over to Stuart.
Stuart Paynter
Thanks, Kyri. If we just go on to Slide 15, we can just going to cover a bit of outlook and news flow full-year 2022. So the outlook is the — we expect that the revenues will be slightly lower than the 2021 as we work with AstraZeneca, as Roch said, to sort of reassess that supply needs going forward. We fully expect there will be vaccine revenues in the year 2022, but not at the same throughput levels as 2021. We do expect the number to be significantly more than the year 2020.
We are going to see the impact of the integration and alignment of Oxford Biomedica Solutions into our numbers, which will — as we’ve highlighted during the deal stage. This is an innovative service provider in waiting is aware and we need to bring them up to use the latent capacity in order to get them to a profitable state, and that will take a few years, we fully funded that by injecting $50 million into the business of the time of acquisition.
So we’ve tried to be entirely transparent about that, but as we are building up their customer base, there will be some losses which we will consolidate into the group accounts which lead to a slight negative EBITDA number for 2022. We expect that alignment transition integration period to be over in 12 months. We are making sure the business has the latitude to run itself absolutely according to the demands of the business, and we’re making sure that we take the best of both cultures, share technologies, and do those things which will make us stronger. It was not a cost synergy play, of course.
This is a new business into fast-growing area. So we needed to be agile, well-funded, and have the resources it needs to make an impact in that marketplace. What that leads onto is our approach for CapEx in the year 2022 is going to be relatively cautious as you’ll note, we did the deal back in September with Serum Institute of India to fully fund the £50 million pound expansion of Oxbox Phase 2 that’s in the planning stage.
Now, the main pieces of — the main cost on that is not going to be until 2023 and beyond, but we are making sure that we are integrating the solutions business priority number 1 making sure that we are aligned to existing customers and future customer needs on the Lenti side as well and making sure we’re fit for purpose in future in terms of full scale manufacturing up to and beyond the thousand liters. We make those calls as we see fit and the board level will make sure that we are spending our on net cash judiciously in that sense. Again, we expect 2 customers to come on the IV side in Boston.
And on the Lenti side, we expect to continue and build on the momentum of 2021 in terms of new customer signatures, both new deals in terms of expansion of existing customer work and completely new customers. So we believe the outlook is very strong for the year, and we find ourselves in a position where of course the capital markets are relatively softer than the half basis we did in November last year in that time frame. We’ve had the financial robustness to manage, to do a transformative acquisition, and we’re still in a strong net cash position coming out of that 6 month period.
Really, strong performance, we are excited about where we’re going in the future. And we’ve put the building blocks in place, we believe to be able to make a really big splash across the cell and gene therapy industry and becoming a security set with backtrack, no stick in that sense. So if I ask on for the last slide, which is a repeat of the first slide, the rock meant for — again, not to be underestimated, the big farmer docent, very important. The risk mix scheduled approach to challenge gene when all taking as big cynical risks, you see some companies have and ultimately navy, that the scale we have now changed the thousand people.
Across 2 continents, ordered to by the FDA in many other regulatory authorities, Japanese FDA, I mentioned all right. Now, this is a real barrier to entry. So we’ve really believe we’re in a strong position now to serve our customers, keep on innovating, and ultimately to aggressively growing the business in the medium to long term. And with that, I’ll hand back to Roch for closing comments and to open the Q and A.
Dr. Roch Doliveux
Thank you, Stuart for key [Indiscernible] also exciting future, we started already. So the floor is open for question.
Question-and-Answer Session
Operator
[Operator Instructions] We can now take our first question from Alistair Campbell of Liberum, please go ahead.
Alistair Campbell
Thanks very much for taking my question. I’ve got a few actually, just — can I start with just picking up some of the R&D collaborations you signed during the last 12 months, deals with [Indiscernible] Isolea. Obviously, it looks like those are deals intended to improve your internal productivity and yield. I’m just intrigued, do they come with any significant economic pay-ways or profit shares that we should be aware of which could influence the economics of the business going forward.
Second question, well, having trouble, hopefully not have much, but just thinking about Novartis, increasingly, they seem to pointing towards their new T-Charge technology as the key to truly building a successful CAR T portfolio. We had data from one of these projects late last year, which is Kymriah upgrade and the data looked pretty good. And they’re talking about moving that into registrational trials this year. And thinking of digging around, it looks like that’s also powered by lentiviral technology.
Would I be foolish to assume that you’re involved in that? And just to confirm, any future products that come from that Novartis pipeline would they be on similar economic relationship arrangements that you currently have with Kymriah? Thanks.
Dr. Roch Doliveux
Kyri, you want to take two questions and administer some compliment.
Kyri Mitrophanous
Yes. In terms of the — thanks for the question. And so the collaborations you outlined with regard to very clear, et cetera, are as you said, to strengthen the platform with regard to lentiviral vectors, can we improve the quality and quantity of vector that we manufacture. I don’t want to disclose any of the financial terms. I don’t think that would be appropriate to do that. With regard to your question regarding T-touch technology, I think we’d have to refer to Novartis to confirm that they’re using retroviral vectors. But most CAR-T therapies are using retroviral vectors if I can say that. And in terms of the financial terms for CAR-T therapy, I’ll ask Stuart to comment on that.
Stuart Paynter
Yes. I think you’re right, Kyri. I mean, teach charges something that the vaccine will need to comment on is still in its investigational phases you mentioned out. We would expect we’ve got a long term path with Novartis now about how we work with them, and we will work with them for the best part of several years. And we wouldn’t expect a big difference between the economics of Kymriah, etc, to anything new we work on them with. They are still going to utilize our platform to do that.
Just to comment on the research pieces that you mentioned, [Indiscernible] etc. I mean, Kymriah is absolutely right. I mean, Kymriah we state, about extremely [Indiscernible] but we can’t make every single innovation necessary to continue cutting edge ourselves. It just come happens. And what we do is we carry and the business development team scale the wealth for some of the best innovation is ongoing. And we look to cash similarly. And they’ll collaboration’s tech licenses to technologies which will then falsify our platform and our offerings going forward.
So we’re trying to do this in a smart way. We’re not trying to do everything ourselves. We’re trying to look at the important stuff ourselves. We’re making sure that we’re leveraging these really small. And if it’s a small companies can help us spotify our platform, which ultimately it’s going to be the key to the offering, whether VIE, the all Lenti, if we’re going to be indicative serves provided we need to be offering the latest technologies to our partners in order to give them a robust, safe high yield process, which they’ll title.
Alistair Campbell
Kind of a slip in one strategic last one, which I think you referenced, CMC issues that the FDA seemed identified AAV and then obviously you’re hoping to address those. Can you sort of touched on sort of what some of the key areas you’re looking out there where you think you’re going to have technologies that can improve the quality of AAV?
Dr. Roch Doliveux
But I think the call and when we disclose about the acquisition of the homology Plug & Play platform is the ratio of full 20 capsid is one of the, it’s not the only one, but it’s one that got a lot of time because the quantum are so important of difference, and the average icing of the industry is around 70% or let me do you have 30% of empty capsid that just do nothing except compete for the efficacy of the field capsid and add to the toxicity. And that’s one area where we feel we have a leading edge with our AAV platform and where more is to come.
Alistair Campbell
Thanks very much.
Dr. Roch Doliveux
Thank you.
Operator
[Indiscernible] Our next question from Myles Dixon of Peel Hunt, please go ahead.
Myles Dixon
Hi there. Thank you. I read in the RNS this morning that you are working hard to bring in additional partners for ’22, for the USAAD footprint. I think it’s all wrapped up. Can you give us an update on how the integration is going on how it’s still early, but also where you see the maturity of the BD function in the U.S. and bringing those additional partners in on top of the 25 million from homology. Thank you.
Dr. Roch Doliveux
So the interest in the platform is very strong, we have several CDA signed, we have several business proposition, all that in a matter of less than 2 months, several businesses for position already out. I’m very confident with the guidance we’ve given that by the end of the year will bring 2 new customers in. The integration is not sure much an integration because we have an [Indiscernible] business and we have an AAV business.
So the key areas really is about innovation as Kyri talked about it, yes, slide where he showed and there’s already worked that has started on a few of this work stream that Kyri highlighted about enhancing your travel it’s about sales and marketing. Clearly, we have the sales team. Comment you to all our platforms. And I mentioned the very strong momentum we’re having there. And of course, where we’re mindful of the strong sensitivity. You bring 2 different cultures together and we want the best of both.
But at the same time. This is not a big pharma integration. This is the hand on strategy business which is truly a comfortable, some of the ways aligned incentives. To our 3 year targets and so everybody’s incentivize the same way, so it makes seems very easy I should say.
Stuart Paynter
And Miles, if I could just add the investment we’ve made in sales. So we used the term BD, we used to use it. We use it slightly more advisively now or we’ve got sales function, a commercial function. And then we have a BD corporate development function led by — once led by Jason Slingsby, the BD in corporate development. The other led by Dave Backer who is somehow based in California that came from elevate by a very used to the AAV field and expert to AAV.
So we’re trying to speed up our sales side where we can enable commercial process rather than a big deal every time we do a deal. And we’ve invested both the East Coast and the West Coast rep reporting to Dave. So we have moved from basically in the last two years, Jason and a couple of colleagues based in Oxford to truly international sales team. And Jason with his bid in corporate development hats on let the process that got ourselves from Oxford Biomedica Solutions. So we bifurcated that area and we’ve made those investments in order that we can drive quicker and more volume of sales.
Myles Dixon
Thanks, Stuart. [Indiscernible] you talked as well about the increased cadence of deals. I wonder if you’d care to comment, not just in AAV, but more broadly across the group, how the profile of those deals and the types of companies that you’re working with has changed over the last 18 months in particular? Thanks.
Dr. Roch Doliveux
I can say that the momentum is much stronger than pre – COVID. So pre the big focus of the company on the vector for the vaccine. So pre that focus, our momentum on the lentiviral space is much stronger now. And the profile of customers is very different at this stage because in envy, we’re established, so large companies are our targets in addition to innovate biotech in the AAV space, refers to customers that we expect our small customers, that we validate the fact that the performance that was done on the clinical batches for the homology as a customer can be validated to other customers before big pharma or big biotech aligned with us on the AAV.
But I’m very confident because I’m impressed to see that even large customers are interested at this stage in the AAV. But to set up your expectations, I would expect the first two deals to be smaller deals to validate. And that’s our assumption before large customers come in. Whereas on the lentiviral space, you should expect more big customers also.
Myles Dixon
Many thanks, Roch. I’ll get back in the queue.
Dr. Roch Doliveux
Thank you.
Operator
We’ll now take our next question from Charles Weston of RBC. Please go ahead.
Charles Weston
Hello, and thanks for taking my questions about [Indiscernible] just to start by following up on Myles ‘ on new business development. You mentioned in the first couple of deals in the U.S. might be smaller ones. Beyond that, would you be targeting late-stage clinical or potentially even commercial products that could have caused us an immediate impact on revenues or particularly you will be targeting them. But how likely do you think it is that there will be a material mix of those larger projects rather than the earlier stage ones that of course taken longer to come to fruition?
Dr. Roch Doliveux
Yeah, it’s a great question. The one that takes longer in the earlier stage are the one that last longer too because you don’t compete on price and compete with the CDMOs, you basically said the process, help people solve their issues and then they stay, and as you’ve seen in our customer retention on the lentiviral space. So I expect seen dynamic there. And that being said, I think it will take a while before we get large manufacturing scales. When I say awhile, not this year and maybe not next year, but so you will take probably a couple of years before we get last year AAV in the activities.
Stuart Paynter
And then show goods to [Indiscernible] Charles. Just a follow-up on Roch’s answer there. In terms of the investment we’re making in Oxford, in Oxford space too that space is getting today genuinely flexible, advanced therapies manufacturing space. So we will credibly, we have to offer a solution from early stage, commercial development, prices development in the U.S. for AAV and in Oxford for Lenti.
All the way through clinical supply, all the way to a genuinely FDA approved commercial facility. So that really is differentiating factor for us. So we’re making sure that any future builds have that sort of strategy in mind as long term in terms of multi scale overlaps to vacillates potentially commercial manufacturing. This has been FDA approved.
Charles Weston
My second question is on the product R&D. Has your strategy develop further in terms of your thinking on how, what stage you’re likely to want to take assets before out-licensing them. And then if you can just provide the split between the product and the platform R&D expense in the P&L, that will be helpful.
Dr. Roch Doliveux
I will answer the first one and let Stuart comment on the second. So we have not yet answered your question. And Ravi, who joined us, Chief Medical Officer, that, first of all, is to provide an answer to your question. That being said, one thing that is pretty clear is that we plan to expand the product side through different type of funding and innovative approaches rather than self financing. And the fact that Ravi worked 50% of his time for Oxford Biomedica and 50% of his time for SV Venture I think is a good indicator of the type of thinking we have on the financing. How do we move ahead the product?
It’s not just a question on financing, it’s a question of management focus. Our focus in the next two to three years is entirely on delivering on the lentiviral vector platform and the innovation around it. And also the challenge is, how do we keep on moving our assets without distracting management attention nor financial resources, and that’s something that again, we’re working on. Stuart, do you want to add or correct?
Stuart Paynter
Yes, the second part of your question, Charles, in the appendix, here, we got a segmental split, which shows. But the products R&D, roughly mid to high single digit millions of pounds for the year. The remainder is the R&D we spend on innovation services, part of the business. I do want to address something that we did say at the half year about segmental reporting, we do will additionally different actually, we decided to suspend that given the acquisition of solutions to make sure that we don’t have to do it twice.
We’re going to do once and see how that fits in best and we can present that with transparency, but as Roch said, the key for us — their is very different with these profiles is to [Indiscernible] how best to bot not just to present but to preserve and enhance the value of these prepositions [Indiscernible] clear where investors money is going and how we want supply this Skype because there are January synergies in doing what we driven, the ability to generate new products. And it’s how to best give last to them.
And so they’re not repeating on capital with those areas that Roch mentioned have untapped its focus over the next 2 years, which is innovative services pay side, that why with these job we look forward to him getting you stay on the table both here and just have the job at [Indiscernible] and giving a proposal to the board in due course where we will then look to execute the strategy.
Charles Weston
Thank you. And just a very quick upfront [Indiscernible], could you clarify why the revenue out-turn for the year was less than the number that you indicated in January? Please.
Stuart Paynter
Yeah. I — we knew that question was coming Charles because it was — you put it in your note this morning. It’s shame haven’t got a response to it. It was — well, let me give you a bit of background. The control in governance we have over our revenues is — we tend to do quite big complicates deals, the Novartis deal at the end of the year being a good example of such. As you’ll recall, we negotiated back, the non-exclusive rights to CV19 and two other leading Karthik targets, back talks of Biomedica so now we are free to operate in those areas which we consider has significant commercial value and the proof of the putting is going to be in the first time we signed a day at around CV19 or those other two assets.
That’s up two targets I should say. And we hope to be doing that in due course. On the flip side, we released Novartis from the capacity reservation phase and minimum call offs, more to a pay-as-you-go type arrangement, which we are currently with, Novartis on that. Gave them flexibility and that was worth something to them. We as a governance, we have revenue recognition advisory firm, I think four, that works with us on putting together the accounting papers around these complicated deals And advises us on both IFRS 15 standards and whatever the relevant guidance is around the certainty points. And we performed back controlled the time, so we took the deal, looked at the contract, write paper, had it advice combining the big four.
The final part of the control is obviously agreeing the trade with the order says. And we’re in a situation where we did deal which was relative to unique and we had a different interpretation along with our advisors to the interpretation which the auditors had. Now, this is getting to be a bit of an occupational hazard for a company that does complex deals, and there wasn’t a good example even in the guidance of the deal anything like this.
So must we and our advisors, big four advisory firm believe that our initial belief of what the accounting would have look like with stands, it was a debatable new point, novel point no one that come across before and in-depth discussions with our auditors in another number was a greater form. I was going to the any strategic concepts because I think that’s commercially sensitive. Suffice to say that we ended up recognizing slightly less than we initially the regular counting paper and good advice.
But yes, it is an occupational hazard for company which does complex sales, which is another reason why my point earlier, but trying to bifurcate those complicated bd commercial development deals from these commercial strength sales tables. We won’t just to become faster, most standard. And we’ll predictable rather than having to fair value Sanjay pages of the contributable sources different bits in it, which relates to consequences which in terms of revenue recognition, we have to get advice on types or Otis’s, is that complicated? So for you guys general public, it really become very programmatic and trying to assess where we’re going to make from a revenue perspective. Sure question Charles long answer apologies for that the terminal, the essence of the issue that we faced.
Dr. Roch Doliveux
I think the important thing from us from NMB cash standpoint, there was no change.
Stuart Paynter
Charles, it was cash-neutral, it was not a cash issue.
Charles Weston
Yeah. Thank you very much for the clarity.
Operator
And we can now take our next question from Joe Pantginis of Wainwright. Please go ahead.
Joseph Pantginis
Hi. Good morning, everybody. Good morning and afternoon, I should say, and thanks for taking the question. So a couple of questions. First, with regard to the internal pipeline and this is going off some of your earlier comments, so I just wanted to take it a step forward. It’s always been evolving your strategy with regards to the pipeline. So if you just look at you’re most advanced right now, as of today, do you think you would take 302 into the clinic yourself?
Dr. Roch Doliveux
No.
Joseph Pantginis
Perfect answer. Thanks for that. So I guess next going backwards with regard to some of your prepared comments. When you look at the actual Lenti PD program, I guess the first part of the question is, how would you define the level of maturity for your discussions right now? And are there anything that potential partners might be considering? Because obviously the program has had a very positive evolution especially when you look at the improvements you made over ProSavin and the long term clinical data.
So our potential partners looking at anything beyond the current clinical data with regard to say, commercial landscape or potential future vector improvements, anything that we need to consider?
Dr. Roch Doliveux
Kyri, you want to take that?
Kyri Mitrophanous
We are in early stage formulations about discussions for the future. With regard to any additional technology improvements, obviously, we’ve carried on developing the lentiviral vectors and there are new improvements that we’ve made, Process C, and so on, that longer-term can be incorporated to give an improvement in the cost of goods. I don’t think we can — so those will be factored in our discussions in the future. I don’t think we can say more than that.
So the improvements that we’re making on the underlying lentiviral vector platform would likely apply to [Indiscernible] and therefore can be incorporated to improve the cost of goods and quality, which will be of value as you get into a commercial stage product. It won’t affect the current clinical plans because those are ongoing materials being made and so on.
Stuart Paynter
Maybe just to add, Joe.
Joseph Pantginis
That’s helpful.
Stuart Paynter
Sorry Joe, We did it obviously we did a ton of work in the background in the 3 years that these programs [Indiscernible] and we successfully translated the adherent process to suspension, which it was vitally important for the cost of goods. And one of the key things. And we got a nice premises working now. Ultimately, these discussions for the return varieties are still ongoing.
As soon as they’re finalized, we got 1 or 2 people interested in opening discussions in terms of having a look at the data and potentially discussing with us how we can partner to get this to the market. I’m curious. Obviously, curious working on price average stroke off our expect one or two stroke excellence agitating for long time. And we’ve really do, as you mentioned, Joe, we really do believe that this product needs to be put into patients to really test that, the thesis of this increases these type me levels and gives long term release, so very under served market. And we believe we can still form partner solution. We’re [Indiscernible] when it comes back.
Joseph Pantginis
That’s very helpful, thanks for that. And my last question, I guess it’s really a technical question for Kyri and obviously, a lot of your processes that we’ve talked about at length in the past are quite proprietary. But I guess I wanted to focus on one part that’s intriguing, especially when you look at the trip system and the comment that the efficiency and quality and etc. is irrespective of the size of the transgene. So obviously that’s, I think, a very important improvement there. Any even high level description of that system, why you can make that statement?
Stuart Paynter
With regard to the TRiP System, the mechanism of action there is to suppress the expression of the protein during production. Usually, we find that depending on the trans-gene that can interfere with the vector production, both with AAV and with Lenti. It’s not so much a size issue, so it’s not — it doesn’t benefit in terms of the size, it benefits by the removing that protein and into a number of ways. One, as you get more vector particles, especially that protein interferes with particle formation. The other is, it isn’t present in your downstream purification, therefore, that protein, whatever it is, is like less likely to interfere.
And finally, as we touched on earlier, in terms of AAV and Lenti, it would be best not to have the trans-gene present in your dose of vector to be administered to you. You’re less likely to get an immune response and inflammatory response that could be problematic. So the TRiP System acts along in a number of different ways to improve the quality of the vaccine that is made, and that is both for AAV and Lenti. And some of the data coming out of the AAV clinical trials indicate that the presence of the trans-gene can cause an inflammatory or immune response to the trans-gene, which can then can tell a long-term expression. So that’s where the benefit is from the TRiP System.
Joseph Pantginis
Great. Thank you for all the color guys.
Operator
We can now take our next question from Julie Simmonds from Panmure Gordon, please go ahead.
Julie Simmonds
Thank you very much. Just a couple of questions on Oxbox, if that okay. I’m looking at the agreement you just signed with [Indiscernible]. You are looking at putting into 2 thousand liters scale reactors into that. What else are you are looking at putting in that part of the facility.
Stuart Paynter
Ideally, so I mean, we’ve began to the planning stage at the moment. So yes, you’re right to suggest that we won’t see that scale to give us full flexibility around commercial solutions by AAV and vaccine. And ultimately for Lenti in the future, when the process becomes a much bigger than at the start of 200 leads process. We have about 25 thousand square feet to play with, 2008 to suites big purely because of the water systems that it’s carrying and cost sizes, scale of the Bio-Rx as themselves.
And the fact that you need to have many far actors scaling up with what you depresses to two thousand. So we are currently in planning on seeing what we can fit in there comfortably. As you’ll recall, the first part of Oxbox, who’s built with the future in mind, so we already have met much of utilities work down, which is really helpful when it comes to that prices and planning, but we’re doing that planning in conjunction with some of the people who have come through as precious before, particularly our partners at Serum who will give us some really good technical advice on how to build flexible advanced therapy manufacturing spaces.
And getting my time three about cattle floor plans. So as soon as we got to find last plan, we were happy to share for the time being. And we’re looking at our flexibility, but you’re right to suggest 2008’s Bethany involved.
Julie Simmonds
Lovely, great. Just on the fill-finish suite. Looks like you own won’t be getting approval for that fairly shortly this year, I guess, from the time you didn’t comment. Does that help in terms of finding up new partners or are partners currently reasonably comfortable with going else where to get that part of the process done?
Dr. Roch Doliveux
Make it simpler, for sure.
Stuart Paynter
Yeah. We identified long ago, Judy, that we essentially, Oxford Biomedica has sub-contracted the fill-finish. So we were on the hook for it, we weren’t in control of it. And naturally, it has given us various elements of issues over the years. So in terms of our control, as Roch said, what we’re looking to do is offer our partners, complete control from getting the plasmids in, doing the production, all the way through to frozen vials and that’s what the fill-finish will allow us to do. You were right to say that it’s going through its validation process right now and we expect approval shortly.
Julie Simmonds
Brilliant, thanks very much.
Operator
We have finished the question-and-answer session. I would now like to hand the call back to your speakers for any additional or closing remarks.
Dr. Roch Doliveux
Thank you very much for your time. We’ll run assuming it’s over and thanks for your interest in Oxford Biomedica. That means there was a lot of questions and hopefully, we shared with you the enthusiasm of 2022 and beyond with both our LV business and our AAV business, which is starting on a very strong footing. And also hopefully we’ve clarified the misunderstandings perhaps around around the activities around our vaccine business for this year, which is continuing again, at a different level than last year.
Clearly, we are continuing manufacturing the vaccine this year and we’re in advanced discussions with AstraZeneca on the how much and when and have great relationship with them. So thanks for interest, again and any questions, feel free to contact Sophia who will be delighted to provide you more answers if you have questions after this call. Thanks for interest. Have a great day.
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