Interactive Investor

Oxford Biomedica surges on AstraZeneca vaccine deal

1st September 2020 15:53

Graeme Evans from interactive investor

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Gene and cell therapy company inks agreement to supply new Covid-19 drug as shares surge.

A transformational year for Oxford BioMedica (LSE:OXB) was further enhanced today when the gene and cell therapy firm unveiled a new Covid-19 vaccine supply agreement with AstraZeneca (LSE:AZN).

The blue-chip pharmaceuticals giant will give Oxford Biomedica £15 million upfront to reserve manufacturing capacity at its new Oxbox facility, with the potential for £35 million or more from the making of multiple large-scale batches of  the AZD1222 vaccine until the end of 2021.

Oxford Biomedica has been part of a consortium working with Astra and the Jenner Institute at the University of Oxford on the development of AZD1222 as a vector-based vaccine candidate. It is now in the third phase of clinical testing in the United States.

Shares in Oxford Biomedica surged more than 5% to 885p at one point today before settling 1% higher at 853p in a weak market. The stock has quadrupled in value over the past four years, with the rally since March enough to give the company a place in the FTSE 250 index.

The progress enabled it to raise up to £40 million from investors in June following a placing of new shares priced at 800p. The proceeds are being used to support the group's work on Covid-19 vaccine candidates, as well as other significant opportunities in the growing cell and gene therapy market.

Oxford Biomedica, which was spun out of the University of Oxford in 1995, already has multi-product partnerships with the likes of Novartis, Bristol Myers Squibb and Sanofi.

It now boasts around 19 partner programmes, eight proprietary products, over 550 staff and facilities in Oxfordshire covering over 200,000 sq. ft. More details on its financial performance will be revealed in interim results due on 17 September. 

Oxford Biomedica said today it will have three manufacturing suites at Oxbox dedicated to the AstraZeneca agreement, although it does not expect any impact on current partnerships or its ability to secure and support additional deals in the cell and gene therapy field.

The parties may also extend the supply period for AZD1222 by a further 18 months into 2022 and 2023 by mutual agreement.

Analysts at Peel Hunt reiterated their ‘buy’ recommendation and 1,000p target price in the wake of today's manufacturing deal, adding that the company had further proved its clout. RBC raised its price target from 1,000p to 1,050p.

Trading has not always been so rosy, however, with chief executive John Dawson pointing out in an interview with the Times newspaper last week that the company had faced a number of cash crunches, including one as recently as four years ago.

Its fortunes have been transformed since then by a recognition that cell and gene therapy can change the face of healthcare, including in the treatment of diseases such as cancer.

Dawson, who has led the company since 2008, said today:

“We look forward to continuing to work with AstraZeneca to rapidly contribute to the global effort to support the large-scale manufacturing of AZD1222 to ensure that the vaccine candidate is available if and when it is approved by regulatory authorities.”

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