oxford biomedica
annual report  accounts 2009
improving vision enhanced potential
oxford biomedica
annual report  accounts
2009 introduction
highlights
chairman’s statement business review corporate information financial statements appendix
oxford biomedica plc
annual report  accounts 2009
01
1 net cash generatedused in operating activities plus sales and purchases of noncurrent assets
2 cash cash equivalents and current financial assets
during 2009 we have strengthened our financial resources and enhanced
the potential of our core lentivector and 5t4 antigen technologies our new
collaboration with sanofiaventis enables us to advance the development of
four lentivectorbased products to treat ocular diseases
lentivector®
ocular gene therapies
lentivector®
prosavin® parkinson’s disease
financial
y ear ended 31 december 2009
highlights
• landmark partnership with
sanofiaventis in ophthalmology
• received us26 million upfront
payment
• committed funding for three years to
develop four gene therapies
• retinostat and stargen on track to
enter clinic in 2010
• first dose level in phase iii trial
showed sustained efficacy at 12
months
• enhanced administration has
potential to accelerate development
• regulatory approval to evaluate
higher dose level
• groundbreaking preclinical results
published in journal
5t4 tumour antigen
trovax® cancer
• further analysis of phase iii trist
study confirmed subset efficacy
• received us174 million regarding
termination from sanofiaventis
• support from fda for further trials in
multiple cancers
• phase ii trial in prostate cancer
expected to start in 2010
• revenue of £191 million 2008 £184 million
• research  development costs of £183 million 2008 £270 million
• net loss before exceptional items of £95 million 2008 £55 million
• net loss after exceptional items of £35 million 2008 £100 million
• net cash generated
1
of £30 million 2008 net cash burn
1
of £169 million
• net cash
2
of £253 million 2008 £219 million
oxford biomedica plc
annual report  accounts 2009
our mission
our mission is to change the face of healthcare and to improve the
quality of life for patients with high unmet medical needs by
exploiting stateoftheart technology working as a fullyaligned
highly qualified team and by employing the highest standards of
integrity to develop lifechanging medicines
our vision
our vision is to build a leading biopharmaceutical company that is
sustainable selfsufficient and highly profitable and to generate
significant returns for shareholders through the application of
scientific operational and commercial excellence
introduction
01 highlights
02 company overview
04 chief executive’s viewpoint strategy and objectives
06 business development prosavin® parkinson’s disease
08 ocular gene therapies
10 trovax® cancer
chairman’s statement
12 chairman’s statement
business review
14 the team
16 chief executive’s statement
18 operational review lentivector®
22 5t4 tumour antigen
25 other products
26 technology overview proprietary technologies
28 financial review
corporate information
34 board of directors
36 principal risks and uncertainties
37 corporate governance statement
39 corporate social responsibility
40 directors’ report
44 directors’ remuneration report
financial statements
50 independent auditors’ report
51 consolidated statement of comprehensive income
52 balance sheets
53 statements of cash flows
54 statement of changes in equity
55 notes to the consolidated financial statements
appendix
82 appendix – technology and product glossary
84 advisors
introduction
oxford biomedica
contents
oxford biomedica
oxford biomedica is a leading biopharmaceutical company in gene
therapy and immunotherapy that designs and develops highly
innovative genebased medicines for the treatment of agerelated or
inherited neurodegenerative disorders cancer and ocular diseases oxford biomedica plc
annual report  accounts 2009
03 oxford biomedica plc
annual report  accounts 2009
02
introduction
company overview
introduction
company overview
chairman’s statement business review corporate information financial statements appendix
gene therapy and immunotherapy have enormous potential to benefit
the lives of patients oxford biomedica is one of the leading companies in
this field with a platform of exclusive and innovative technologies to
design and develop unique genebased medicines
through inhouse and collaborative development we have established a
broad pipeline of genebased medicines our inhouse capabilities span
research clinical development regulatory affairs and manufacturing
at the end of 2009 our staff numbered 65 mainly based in our
laboratories and offices in oxford we also have a wholly owned
subsidiary biomedica inc based in san diego usa
our two lead programmes are a gene therapy for parkinson’s disease
prosavin in phase iii development and a therapeutic cancer vaccine
trovax in phase ii developmentthrough our collaboration with
sanofiaventis two of the four gene therapies for ocular diseases are
expected to enter clinical development in 2010
in addition to sanofiaventis our partners include pfizer sigmaaldrich
and charitable organisations such as the foundation fighting blindness
the als therapy development institute and the motor neurone disease
association our proprietary lentivector technology is used extensively
in drug discovery and has been licensed by leading pharmaceutical
companies including biogen idec glaxosmithkline merck  co and
pfizer for their own research activities
we maintain the highest standards of integrity in our dealings with
all parties including shareholders employees patients healthcare
professionals partners and licenseesthrough scientific commercial and
operational excellence we aim to maximise returns for shareholders
oxford biomedica
company overview
our novel genebased medicines have the potential to transform
treatment prospects thus improving the quality and duration of
life for patients with debilitating and life threatening diseases
1 amyotrophic lateral sclerosis therapy development institute 2 genedirected enzyme prodrug therapy
prosavin®
sanofiaventis
retinostat®
sanofiaventis
stargen™
sanofiaventis
ushstat™
sanofiaventis
encorstat®
sanofiaventis
monudin®
als tdi
1
parkinson’s disease
wet agerelated macular degeneration
stargardt disease
usher syndrome
corneal graft rejection
motor neuron disease
prostate cancer
cancer
melanoma
pancreatic cancer
cancer
lentivector®
trovax®
antist4 antibody
pfizer
hi8® mel
metxia®
endoangiogt
gdept
2
prime boost
5t4 tumour
antigen
anti
angiogenesis
phase iii trial ongoing
ind preparation
cta preparation
preclinical
preclinical
research
phase ii trial preparation
preclinical
phase iia trial completed
phase iia trial completed
research
platform product
partnerfunding
indication stage of development
product pipeline oxford biomedica plc
annual report  accounts 2009
05 oxford biomedica plc
annual report  accounts 2009
04
introduction
chief executive’s viewpoint
strategy and objectives
introduction
chief executive’s viewpoint
strategy and objectives
chairman’s statement business review corporate information financial statements appendix
chief executive’s viewpoint
strategy and objectives
“our strategy is to retain maximum value from
the commercialisation of our technology
platform by working with academic and
industry partners to manage internal risk
and resources and also to explore new
opportunities for sustainable value creation”
john dawson chief executive officer of
oxford biomedica sets out the three
interrelated themes of the company’s core
strategy he reflects on the progress made
and actions taken during 2009 and describes
the company’s strategic priorities and goals
we operate a business model that combines inhouse
and collaborative research and development rd
our development priorities and inhouse rd investment
are a tradeoff between benefit risk and budget constraints
naturally our strategy is to optimise our investment in rd
to get the maximum return however as we are constrained
by a limited budget we have implemented a rigorous
project evaluation process and have set clearly defined
targets for gonogo decisions
in 2009 our rd activities were focused on trovax
prosavin and the funded ocular programmeswe also
maintained important investment in our lentivector
platform and we continue to work with various academic
groups and charitable organisations as a costeffective
means of advancing some earlystage opportunities by
expanding our use of external clinical and regulatory
experts and engaging more scientific advisors our project
teams have access to medical opinion leaders and
experienced industry professionals
for our inhouse priority programmes we have set a budget
to achieve specific value creation development milestones
within our current financial resourcesthese include
completion of the ongoing phase iii trial of prosavin and
conducting costeffective phase ii studies of trovax with
support from clinicians or trial networkswe believe that
further investment in these two programmes is the most
effective use of our resources as we seek to create value
secure partnerships and accelerate our path to profitability
2 resource allocation
our genebased treatments have the potential to change
the face of healthcare but realising the value of innovation
within the field of biotechnology comes with inherent risk
our strategy is to mitigate both technical and financial
risk through partnerships that bring the clinical and
commercialisation capabilities required to maximise the
market potential of our products
the structure of our ophthalmic collaboration with
sanofiaventis illustrates our approach to risk management
with funding from sanofiaventis we are able to drive the
development of our four gene therapy candidates for ocular
diseases and as these products move closer to market
we will benefit from the development and commercial
expertise of our partnerthe broad scope of our partnership
mitigates our risk and leverages our technology platform
we are pursuing multiple partnering initiatives in 2010 with
a primary focus on trovax and prosavinwe are seeking
collaborations for both products as we plan the next stages
of their developmentwith patience and tenacity i believe
that we can secure the right deal with the right partner to
take these programmes forwardwe are also seeking
partners for our other clinical programmes hi8 mel
and metxia
1 risk management
the history of biological drug development is beset with
challenges that have extended the time to market for many
of today’s most commercially successful drugs consistent
with other biotech companies in the sector forecasting
development timelines is particularly exacting for products
such as ours which are based on groundbreaking science
that offer new treatment approaches
as a leader in the field of gene therapy we are working in
partnership with regulatory agencies to define de novo
development paths for our lentivectorbased product
candidateswe are committed to provide guidance on
timelines that is based on realistic assumptions and
transparency with regards to the regulatory uncertainties
we continuously review the efficiency of our inhouse
rd efforts to ensure that roles and responsibilities are
aligned with the company’s strategic priorities in 2009
we implemented several organisational changes that are
designed to enhance our productivity and the timely
delivery of our inhouse development goals
3 timely delivery introduction
business development
prosavin parkinson’s disease
introduction
business development
prosavin parkinson’s disease
chairman’s statement business review corporate information financial statements appendix
prosavin has the potential to address an unmet medical need in
parkinson’s disease offering longlasting benefit from a single
administration with an excellent safety profilethe product could
also reduce the social care burden that is associated with mid to
latestage disease
lentivector®
prosavin® parkinson’s disease
parkinson’s
disease
dopamine replacement
prosavin is a genebased dopamine replacement strategy
using the lentivector system to deliver three genes
required for the synthesis of dopamine prosavin creates a
new source of dopamine production in the striatum of the
brain by boosting continuous dopamine release prosavin
aims to restore patients’ motor function without the
sideeffect associated with oral dopamine therapies
development progress
a phase iii trial in patients with midstage parkinson’s
disease is advancing to a third cohort of patentsthe first
two dose levels were safe and well tolerated in all patients
and showed encouraging evidence of efficacy one year
after treatment patients at the lowest dose level
demonstrated an average improvement in motor function
of 28 and an average enhancement in quality of life
of 42
market opportunity
parkinsons disease affects approximately 41 million
people worldwide and the prevalence is rising owing to
demographic changes none of the current treatments
provide longterm relief from symptoms yet by 2012
sales could exceed us46 billion in the major developed
countries source lead discovery
more on
page 18
oxford biomedica plc
annual report  accounts 2009
07 oxford biomedica plc
annual report  accounts 2009
06 introduction
business development
ocular gene therapies
in collaboration with sanofiaventis we are advancing four
lentivectorbased product candidates into clinical trials for the
treatment of ocular diseases these genebased approaches have
unique potential to benefit patients and families affected by these
debilitating ocular diseases
lentivector®
ocular gene therapies
introduction
business development
ocular gene therapies
chairman’s statement business review corporate information financial statements appendix
ocular disease
landmark collaboration
the collaboration signed in april 2009 was a landmark
for oxford biomedica and also for the field gene therapy
the potential commercial value of this genetherapy
partnership is arguably unprecedented in both value and
field of application its broad scope is testament to the
quality and utility of our lentivector gene delivery system
furthermore sanofiaventis’ investment in the lentivector
platform benefits our development programmes in other
therapeutic areas
development on track
the first two gene therapy candidates are expected to
enter clinical development in 2010 our lead programme
retinostat for wet agerelated macular degeneration is
designed to block aberrant blood vessel growth by
delivering two antiangiogenic genesthe second
candidate stargen for stargardt disease delivers a
corrected version of a defective gene associated with this
inherited disease
market opportunity
retinostat® wet agerelated macular degeneration
amd affects an estimated 25 to 30 million people in the
western world and the wet form accounts for 90 of all
severe vision loss from the disease
stargen™ stargardt disease
stargardt disease is the most common juvenile
degenerative retinal disease with a us and eu prevalence
of approximately 50000 patients
ushstat™ usher syndrome 1b
usher syndrome is the most common form of deaf
blindness and affects around 70000 people in the usa
and eu an estimated 8000 have the 1b subtype
encorstat® corneal graft rejection
corneal graft rejection is a significant issue for many of
the estimated 60000 corneal transplant performed in
the usa and eu each year
more on
page 20
oxford biomedica plc
annual report  accounts 2009
09 oxford biomedica plc
annual report  accounts 2009
08 trovax is a novel therapeutic cancer vaccine that has the potential to offer
a safe and effective treatment option by stimulating a cancerspecific
immune response it has the potential to prevent metastatic spread
which has proved challenging with traditional cancer treatment
5t4 tumour antigen
trovax® cancer
cancer
unique anticancer target
trovax targets a tumour antigen called 5t4the 5t4
tumour antigen is a unique protein which is highly
prevalent on both primary and also metastatic cancerous
cells but is only minimally evident on normal tissues
the fact that 5t4 is found on most common types of solid
cancer makes it a potentially valuable target for targeted
anticancer interventions
patient selection
the effectiveness of cancer vaccines depends on a
patient’s ability to mount the requisite immune response
the recent phase iii trist study in renal cancer showed
that patients’ blood cell counts affected the magnitude of
their 5t4specific immune response and hence their
trovaxrelated survival selecting patients on this basis
may identify those more likely to benefit from treatment
planning new trials
as previously reported the trist study did not achieve
its primary endpoint however there is wide support from
the oncology community for conducting further trials of
trovax a phase ii trial in prostate cancer is expected to
start in 2010 in addition the company is working with
clinical trial networks to explore opportunities in other
cancer settings including ovarian cancer and breast cancer
market opportunity
the global cancer market is expected to generate sales in
excess of us60 billion by 2010therapeutic cancer
vaccines have proved to be an elusive goal for the
industry although recent development successes have
boosted confidence in the fieldvaccine strategies that
are specific to tumourassociated antigens such as 5t4
are among the most promising approaches
more on
page 22
introduction
business development
trovax cancer
introduction
business development
trovax cancer
chairman’s statement business review corporate information financial statements appendix
oxford biomedica plc
annual report  accounts 2009
11 oxford biomedica plc
annual report  accounts 2009
10 landmark collaboration
our new collaboration with sanofiaventis in
ophthalmology was a landmark agreement
for oxford biomedica and also for the field of
gene therapy the potential commercial value
of this gene therapy partnership is arguably
unprecedented in both value and field of
application its broad scope is testament to the
quality and utility of our lentivector gene delivery
system besides being an endorsement of our
technology the commitment of sanofiaventis
to fund four preclinical programmes through
phase iii trials is a good example of the
implementation of our risk management strategy
building value
our two lead programmestrovax and prosavin
were strengthened during 2009 to put this
into context firstly further analysis of the trist
study of trovax has shown clear clinical benefit
in a substantial subset of patients secondly
12month data from the phase iii study of
prosavin have confirmed the product’s
longterm clinical activity and therefore its
substantial potential to benefit patients with
parkinson’s disease furthermore both
programmes have clear development paths
following the outcome of regulatory reviews
this progress was in the context of sanofiaventis’
decision not to progress their therapeutic
cancer vaccine programmes which were corner
stoned by trovax following their portfolio
review in addition our successful proposal to
introduce additional dose levels and a refined
delivery procedure within the prosavin clinical
study required protracted discussions with the
french regulatory agency but is expected to
accelerate clinical progress in the later phases of
clinical development and thus accelerate time
to market it would therefore be fair to say that
these programmes are far stronger today than
they were a year ago
strategy commitment
in the 2008 annual report we outlined a new
strategy to achieve sustainable profitability
having implemented decisive cost reduction
measures during the second half of 2008we
remain committed to this strategy and we are
pursuing several partnerships as well as
evaluating other opportunities to build the
company
board changes
two new nonexecutive directors paul blake
and andrew heath were appointed to the
board at the start of 2010 both paul and
andrew are industry veterans with extensive
experience in building successful
biopharmaceutical companies internationally
mark berninger retired from the board having
served as a nonexecutive director for more
than ten years i would like to record my sincere
thanks to mark for his dedicated service to the
company and to welcome paul and andrew to
the board
in conclusion
our progress during 2009 was only made
possible by the talent and hard work of our staff
i would like to thank all of our employees our
partners and our shareholders for their support
with a strong platform and robust strategy we
are well positioned to build on the achievements
of 2009 and i believe that our management
team has the experience and capability to
deliver real value over the coming year
professor alan kingsman
chairman
oxford biomedica plc
annual report  accounts 2009
13 oxford biomedica plc
annual report  accounts 2009
12
introduction chairman’s statement chairman’s statement business review corporate information financial statements appendix
chairman’s statement
professor alan kingsman chairman
“2009 was a good year for oxford biomedica in what has
been a difficult period for emerging biopharmaceutical
companies globally notable achievements included
our landmark collaboration in gene therapy with
sanofiaventis and new valueenhancing data for trovax
and prosavin i am pleased to report that we entered
2010 with a stronger cash
1
balance than last year and
a number of exciting opportunities ahead of us”
1 cash cash equivalents and shortterm financial investments
gene therapy and immunotherapy have enormous
potential to benefit the lives of patients oxford biomedica
continues to be one of the leading companies in this field
and has established a valuable pipeline of development
candidates addressing diseases that are untreatable
or poorly treated today our strategy aims to realise
the potential of our innovation through inhouse and
collaborative development we have set challenging
targets and the management team under the leadership
of john dawson as chief executive officer has been
working tirelessly and effectively in pursuit of these goals the executive team at oxford biomedica understands the
importance of sound management – the right people with the right
skills in the right placethe team is highly motivated and comprises
individuals with relevant expertise and experience committed to
the successful future of the company
the team
taking us forward
the team
john dawson
chief executive officer
john dawson joined oxford biomedica’s board
as nonexecutive director in august 2008 and
was appointed chief executive officer on
13 october 2008 from 1996 to 2007 he held
senior management positions in the european
operations of cephalon inc where he led the
many deals that built the european business
from having no sales in 1998 to a turnover of
several hundred million us dollars
andrew wood
chief financial officer
andrew wood has been a director of oxford
biomedica since 1996 he is a chartered
accountant with wide industry experience he
also holds a first class degree in biochemistry
from oxford university before joining oxford
biomedica he was finance director at the
yorkshire cable group part of general cable
stuart na ylor
chief scientific officer
dr stuart naylor joined oxford biomedica
in 1997 and was appointed to the board in
july 2008 he established an international
reputation at two world class cancer institutes
the imperial cancer research fund and the
institute of cancer research
peter nolan
executive director and senior vice
president commercial development
peter nolan was appointed to oxford
biomedicas board in may 2002 having been a
senior member of the company since its
foundation he is also a director of the uk
bioindustry association and is a past chairman
of the oxfordshire bioscience network prior to
joining oxford biomedica he served as head of
the biotechnology unit at the uk department
of trade  industry for eight years
nick woolf
chief business officer
nick woolf was appointed to the board of
oxford biomedica in march 2005 and was
appointed chief business officer in july 2008
nick joined oxford biomedica in 2002 from
abn amro where he was a director and
head of european biotechnology research
directors
page 34
business review
the team
introduction chairman’s statement business review
the team
corporate information financial statements appendix
oxford biomedica plc
annual report  accounts 2009
14 oxford biomedica plc
annual report  accounts 2009
15
left to right peter nolan
andrew wood
nick woolf
john dawson
stuart naylor development progress
the phase iii study of prosavin in parkinson’s
disease continues to yield promising data
we are excited by the potential for further
enhancement in 2010 by incorporating the
new administration procedure and escalating
the dose for trovax we have gained valuable
insights for optimising the design of further
trials from our analyses of the phase iii trist
study in renal cancer and we are preparing to
start new studies in 2010 in partnership with
sanofiaventis we are on track with the
development plans for our four ocular
programmes and we are completing nonclinical
activities to support applications for clinical trials
partnering progress
our ocular collaboration with sanofiaventis
signed in april 2009 was an important value
driver during the yearthe deal included an
upfront receipt of us26 million £17 million
and committed funding over three years
separately following a reprioritisation and
change of focus by sanofiaventis we regained
worldwide rights to trovax and subsequently
implemented a new initiative to partner the
product our other key partnering priority is
prosavin and discussions are progressing with
several key players in the field of parkinson’s
disease furthermore we are exploring other
opportunities to maximise the value of our
pipeline and to leverage our extensive intellectual
property portfolio through strategic deals
financial management
we were cash generative in 2009 increasing
cash cash equivalents and shortterm
investments by £3 million and ended the year
with a balance of £25 million as a result of our
decisive steps to focus resources and reduce
underlying operating cash burn we can support
our operations through to the beginning of 2012
we recognise the importance of maintaining
our financial flexibility and we are allocating
resources to achieve key milestones within our
current cash runway
outlook
the next 12 months could be transformational
for oxford biomedicawe have clear targets for
our inhouse and collaborative development
programmes by the end of 2010 we aim to
reach the optimal dose of prosavin for
evaluation in randomised trials and to have a
partnership in place for the next stage of
developmentwe are also targeting new phase
ii trials of trovax in prostate cancer and other
metastatic cancers as part of a strategic process
of adding value and attracting a partner
furthermore with two of our ocular products
retinostat and stargen earmarked for clinical
development in 2010 the pipeline will be
significantly strengthened by the end of the
yearwe are committed to doing the right
transactions with the right partners for our lead
programmes and to bringing these deals to
fruition at the earliest opportunitywe are also
considering other corporate activity to add new
growth drivers and to expand our capabilities
the successful and timely execution of these
goals will further enhance the value of our
business and accelerate sustainable profitability
john dawson
chief executive officer
oxford biomedica plc
annual report  accounts 2009
17 oxford biomedica plc
annual report  accounts 2009
16
introduction business review
chief executive’s statement
chairman’s statement business review
chief executive’s statement
corporate information financial statements appendix
chief executive’s statement
john dawson chief executive officer
“we made significant progress during the year in
both our development and our commercial activities
we enhanced the value of our lead programmes secured
a major collaboration and made headway towards our
key strategic objectives looking back over my first full
year as chief executive officer i am pleased to reflect
on our achievements and i look forward to building on
these going forward”
the new data and analyses in 2009 from the prosavin
and trovax programmes have boosted our expectations
we now have regulatory guidance and support to initiate
the next development steps for both programmes
furthermore our groundbreaking collaboration
with sanofiaventis in ophthalmology enables us to
leverage our lentivector technology and accelerate the
development of our four product candidates addressing
debilitating causes of vision loss transforming patients’ lives
professor stéphane palfi stated that prosavin showed
profound and prolonged efficacy in preclinical
models of latestage parkinson’s disease prosavin
potentially offers significant advantages to the
current alternatives of deep brain stimulation or
mechanical delivery of continuous dopamine
groundbreaking publication
our groundbreaking preclinical results were
published in the 14 october 2009 issue of science
translational medicine a leading scientific journal
the paper described several proofofconcept studies
in the industrystandard preclinical model of severe
parkinson’s disease in this model prosavin significantly
increased dopamine production without the addition
and sideeffects of standard ldopa therapy and
suggested for the first time that prosavin may
ameliorate dyskinesiathe publication has attracted
substantial interest from the medical community and
has bolstered our partnering discussions
oxford biomedica plc
annual report  accounts 2009
19 oxford biomedica plc
annual report  accounts 2009
18
introduction business review
operational review
lentivector
chairman’s statement business review
operational review
lentivector
corporate information financial statements appendix
operational review
lentivector®
our lentivector technology is a highly efficient
system for the delivery of therapeutic genes to a
wide range of tissues and it has specific advantages
for targeting diseases of the central nervous system
and the eye our most advanced lentivector product
candidate is prosavin for parkinson’s disease in
partnership with sanofiaventis we are applying our
lentivector technology to develop treatments for
ocular diseases and we are working with leading
scientific teams to address other unmet needs such
as in the treatment of motor neuron disease
prosavin® parkinson’ s disease
prosavin is being evaluated in a phase iii trial in
patients with midstage parkinson’s disease who
are experiencing reduced benefit on ldopa
‘equivalent’ therapythe first stage of the study
is an openlabel dose escalation of prosavin in
cohorts of three patientstwo dose levels have
been evaluated to datethe principal investigator
is professor stéphane palfi and the trial is being
conducted at the henri mondor hospital in
paris which is a european centre of excellence
for neurosurgery
potential longterm efficacy
the first two dose levels were safe and well
tolerated in all patients and showed encouraging
evidence of efficacy one year after treatment
patients at the lowest dose level demonstrated
an average improvement in motor function of
28 and a maximum of 44the average
increase in patients’ quality of life was 42
based on a standard measure of benefit that is
recorded by the patient in october 2009 we
reported that patients at the second dose level
had completed their sixmonth assessments of
motor function and achieved an average
improvement of 34 and a maximum of 53
if these results are confirmed in placebo
controlled studies prosavin would represent
a significant advancement to current treatment
options given its potential to enhance quality of
life and to suppress the complications caused
by oral ldopa therapy however as the clinical
programme goes forward it is conceivable that
higher levels of efficacy may be achieved
clear path forward
in the second half of 2009 we made a
submission to the french regulatory agency
afssaps to amend the trial design to
incorporate our improved administration
procedure and to increase the dose levelthe
new administration procedure reduces surgery
time which should increase the throughput of
patients at clinical sites furthermore preclinical
studies suggest that it provides a broader
distribution of prosavin throughout the
striatum of the brain and potentially higher
efficacy per dose relative to the current
administration technique
in our constructive dialogue with afssaps
we concluded that it was important to evaluate
the relative efficacy of the new procedure prior
to dose escalation in march 2010 afssaps
provided its verbal approval to continue the
studythe next cohort of patients will be treated
using the new technique at the second dose
level to inform our assumptions or possibly
negate the need for a third dose level patient
treatment is expected to start in may 2010
accelerating development
the inclusion of the enhanced administration
procedure in the phase iii trial has prolonged
our advancement into randomised trials but
is expected to reduce the overall clinical
development timeline for the programme
to accelerate the completion of the current trial
we are planning to open a second clinical site in
the uk and the regulatory process to achieve
this is well underway in parallel we are seeking
guidance from the european medicines agency
ema and the us food and drug administration
fda regarding our development plan that aims
to achieve registration in both territories
manufacturing development has accelerated
to optimise the production process of prosavin
for larger studies and for commercial supply
we have designed stable producer cell lines as
a basis for a readily scalable processthese
improvements could significantly reduce the
costs per dose and the regulatory risk
associated with manufacturing
partnering progress
as we advance to larger trials we are negotiating
with prospective partners who could add value
through their expertise in parkinson’s disease
and could bring additional resources for the
next stage of development our collaboration
strategy is to license out certain territorial rights
to retain others in order that we may establish our
own specialist sales force for commercialisation
of prosavin our objective is to complete the
phase iii study and advance into larger studies
with a partner at the earliest opportunity
next milestones
the patients in the first and second cohorts
continue to be assessed and we aim to report 24
month and 12month respective motor function
scores in june 2010following regulatory clearance
to incorporate the enhanced administration
procedure we are recruiting patients for the
third cohort and anticipate first treatment in
may 2010 based on our revised timelines we
could start the third and theoretically optimal
dose level in the fourth quarter of 2010
market opportunity
parkinsons disease affects approximately 41
million people worldwide and the prevalence is
rising owing to demographic changes none of
the current treatments provide longterm relief
from symptoms yet by 2012 sales of these
treatments could exceed us46 billion in the
major developed countries source lead
discovery prosavin has the potential to
address an unmet medical need in parkinson’s
disease offering longlasting benefit from a
single administration with an excellent safety
profilethe product could also reduce the social
care burden that is associated with the mid to
latestage of disease
prosavin®
highlights
• first dose level in phase iii trial showed
sustained efficacy at 12 months
• enhanced administration has potential to
accelerate development
• regulatory approval to evaluate higher
dose levels
• groundbreaking preclinical results
published in journal gene therapy advantages
the current leading treatment for wet agerelated
macular degeneration requires repeated injections
directly into the eye retinostat could require only
a single or infrequent administration and could
also provide a safer and more efficient means of
inhibiting angiogenesis
leveraging inhouse expertise
given our expertise and knowhow in developing gene
therapies we have primary responsibility for advancing
the four ocular programmes through phase iii trials and
the associated costs will be reimbursed by our partner
sanofiaventis then has the option to assume responsibility
for further development and commercialisation of these
productswe have established an experienced inhouse
team to drive the programmes forward furthermore
there is considerable scope to expand the collaboration
with the addition of other indications and related product
candidates for example retinostat could be evaluated as
a treatment for diabetic macular oedema
introduction business review
operational review
lentivector
chairman’s statement business review
operational review
lentivector
technology overview financial statements appendix
operational review
lentivector®
ocular gene therapies
in collaboration with sanofiaventis we are
advancing four preclinical lentivectorbased
product candidates into clinical trials for the
treatment of ocular diseases retinostat for wet
agerelated macular degeneration stargen for
stargardt disease ushstat for usher syndrome
1b and encorstat for corneal graft rejection
this landmark collaboration is a significant
milestone for the company and an
endorsement of our lentivector technology
furthermore sanofiaventis’ investment in the
lentivector platform benefits our development
programmes in other therapeutic areas
financial support
the collaboration signed in april 2009
included an upfront receipt of us26 million
£17 million and up to a further us24 million
in development funding over three years
this committed funding is based on a joint
development plan that is designed to progress
all four candidates into the clinic in 201011
if successful oxford biomedica will receive
further undisclosed license fees milestone
payments and royalties on product sales the
terms of which are consistent with other deals
of this scope and size
development on track
retinostat is the most advanced clinical
candidate in 2009 we reached agreement with
the fda on the requirements for retinostat’s
investigational new drug ind application
we are on track to complete the nonclinical
package and submit the ind application for
retinostat in the third quarter of 2010we aim
to conduct the phase iii trial at the wilmer eye
institute at johns hopkins in baltimore usa in
partnership with a renowned expert in ocular
gene therapy our second candidate stargen
is also expected to enter clinical development
before the end of 2010we are working with
a prospective principal investigator based in
paris who is a leading clinician in stargardt
disease and we plan to submit a clinical trial
application for stargen to afssaps in the
second half of 2010
orphan drug designation
stargen and ushstat received orphan
designation from the committee for orphan
medicinal products of the european medicines
agency ema for stargardt disease and retinitis
pigmentosa arising as a result of usher syndrome
1b respectively both of these hereditary
disorders are caused by abnormalities in
specific diseaserelated genes and can lead to
vision loss from an early agethe ema grants
orphan drug designation to products that
may provide a significant advantage in the
treatment of chronically debilitating conditions
affecting up to five in 10000 people in the
european unionwith orphan drug designation
stargen and ushstat will benefit from
development regulatory and commercial
advantages including reduced regulatory fees
and ten years of marketing exclusivitywe are
seeking a similar designation in the usa
market opportunity
our lead candidate retinostat is addressing a
major cause of blindness agerelated macular
degeneration amd affects an estimated 25 to
30 million people in the western world and the
wet form accounts for 90 of all severe vision
loss from the disease retinostat is designed to
require less frequent injections into the eye
than current therapies for wet amd a major
marketing advantage for this disease our three
other product candidates are also addressing
important unmet needs in ophthalmology
there are currently no existing treatments for
stargardt disease usher syndrome and corneal
graft rejection our genebased approaches
have unique potential to benefit patients and
families affected by these debilitating ocular
diseases
monudin® motor neuron disease
the preclinical development of monudin is
supported by the uk motor neurone disease
association the us als therapy development
institute and the us muscular dystrophy
association monudin has shown promising
results in early preclinical studies and we are
optimising the product for clinical trials
our lentivector technology has the ability to
deliver genes safely and efficiently to the
neuronal cells affected by motor neuron
diseasewe are working with uk and us non
profit organisations to accelerate monudin’s
development and to explore new disease
specific pathways as potential targets for
genetic intervention
extended collaboration
in 2009 we successfully completed the first
phase of our research collaboration with the
us nonprofit organisation the als therapy
development institute als tdithe
collaboration is funded by the us muscular
dystrophy association and provides access to
the als tdi’s extensive gene expression
database and drug screening capabilities for
motor neuron diseasethe first phase of the
collaboration included the development of
new techniques to evaluate and identify gene
therapy candidates at the als tdi’s us research
facility in cambridge ma
we announced the extension of this
collaboration with the als tdi in january 2010
in the second phase the als tdi is conducting
further preclinical efficacy studies of monudin
in established models of motor neuron disease
furthermore the joint teams are exploring
other lentivectorbased approaches to inhibit
or regulate specific genetic pathways associated
with disease onset or progression
market opportunity
despite being one of the most common
neurodegenerative diseases of adult onset
motor neuron disease has a high unmet need
amyotrophic lateral sclerosis als often
referred to as lou gehrigs disease is the most
prevalent type of motor neuron disease in the
usa there are an estimated 30000 patients
with als and nearly 6000 new cases are
diagnosed annually source als association
only one drug is approved for the treatment of
als and its only benefit is a modest increase in
survival time if monudin proves to be an
effective neuroprotective treatment that can
slow or arrest injury to patients’ motor neurons
it would have compelling competitive
advantages
oxford biomedica plc
annual report  accounts 2009
21 oxford biomedica plc
annual report  accounts 2009
20
ocular gene therapies
highlights
• landmark partnership with
sanofiaventis in ophthalmology
• received us26 million upfront payment
• committed funding for three years to
develop four gene therapies
• retinostat and stargen on track to enter
clinic in 2010 clinical opportunities
the fda supported our proposal to pursue clinical
development of trovax in other metastatic cancers
notably colorectal ovarian hormonerefractory
prostate and triplenegative breast cancerthe
agency provided a clear path for further development
in these settings
oxford biomedica plc
annual report  accounts 2009
23 oxford biomedica plc
annual report  accounts 2009
22
introduction business review
operational review
5t4 tumour antigen
chairman’s statement business review
operational review
5t4 tumour antigen
corporate information financial statements appendix
the 5t4 antigen is an ideal target for anticancer
treatment given its restricted expression on
normal tissues and its high prevalence on the
surface of cancerous cells our 5t4specific
therapeutic vaccine candidatetrovax is in
phase ii development and in collaboration with
pfizer our 5t4targeted antibody therapy is
expected to enter the clinic in 2011 another
therapeutic approach using bispecific antibodies
is also the subject of collaboration discussions
operational review
5t4 tumour antigen
trovax® cancer
the followup analysis of the phase iii trist study
of trovax in renal cancer has yielded valuable
insights into the efficacy of trovax and the
selection of patients who are more likely to
benefit from treatmentwe are working with
clinical centres and networks to start new cost
effective phase ii trials and have implemented
a new partnering initiative having regained
worldwide rights from sanofiaventiswith
support from the fda we are targeting several
cancer settings for further developmentincluding
prostate ovarian colorectal and breast cancer
valuable insights from trist
detailed results from the trist study were
presented at the joint congress of the european
cancer organisation and the european society for
medical oncology in september 2009as previously
reportedthe trist study did not achieve its primary
endpoint of an improvement in survival however
the results confirmed the findings from previous
trials demonstrating that the anti5t4 immune
response induced by trovax is associated with
enhanced survival encouragingly in one of the
predefined patient subsetstrovax showed
statistically significant survival benefit comparable
to market leading treatment for renal cancer
fda guidance
in july 2009 we received final comments from
the fda following its review of the trist data
in which the agency acknowledged all of the
points raised by our analysisthe competitive
landscape for the treatment of renal cancer is
considerably more crowded today than when the
trist study was initiated hence we presented to
the fda several alternative settings for future
clinical trials of trovaxthese included ovarian
cancer hormonerefractory prostate cancer and
triplenegative breast cancer which have clear
unmet needs and a lack of effective treatments
the agency was supportive of pursuing trials in
these proposed indications and provided a clear
path for further development of trovax
planning new trials
in future trials the ability to select patients who
are more likely to mount stronger anti5t4
immune responses and benefit from trovax
could increase the predictability of clinical
outcome and the likelihood of successful
developmentthere is wide support from
clinicians for conducting further trials in our
targeted settings and we are exploring funding
options through clinical networks our aim is to
initiate at least one new phase ii trial in 2010
the first of which will be in prostate cancerwe
expect that some of the proposed studies will
be partially funded reducing oxford biomedica’s
investmentthrough these studies we are
seeking to demonstrate proofofconcept in our
targeted cancer settings at the earliest opportunity
partnering initiative
the reprioritisation of sanofiaventis’ portfolio
in april 2009 resulted in our regaining the
worldwide rights to trovax as part of this
agreement we received an immediate payment
of us165 million from sanofiaventis which
included an amount for reimbursement of
certain previously committed development
costs following the outcome of the fda’s
review and our followup analysis of trist we
embarked on an initiative to repartner trovax
partnering trovax for phase iii development
remains a key strategic priority for oxford
biomedica and discussions are underway
market opportunity
the global cancer market is expected to
generate sales in excess of us60 billion in 2010
the market for therapeutic cancer vaccines
although minimal at present has the potential
to mirror the growth seen in the monoclonal
antibody market and reach sales in excess of
us5 billion by 2012 source research and
marketswith the potential to benefit patients
with some of the most common cancerstrovax
could capture a significant share of the market
we believe that unlike renal cancer abnormal
haematology is less evident in patients with
most other types of solid tumours hence we
believe the exclusion of such patients from
future trials has only a modest impact on the
market opportunity for trovax
crosslicense agreement
in january 2010 we reached a settlement and
crosslicense agreement with bavarian nordic to
resolve patent litigation by bavarian nordic in
the usa and our opposition to bavarian nordic’s
european mvabn® patents under the
agreement bavarian nordic granted oxford
biomedica a license to its patents in return for
being granted a license to our heterologous
primeboost patents and a sublicense to
poxvirus patents that we licensed from
sanofiaventis all pending litigation has ceased
and we are exploring possible collaboration
opportunities with bavarian nordic to leverage
both companies’ expertise in poxvirus vaccines
oxford biomedica and bavarian nordic are
entitled to undisclosed milestone and royalty
payments on commercialisation of the other’s
respective product
trist insights
exploratory analyses of the trist data
identified a relationship between patients’
blood cell counts and trovaxrelated survival
benefittrovax was less beneficial in patients
with aberrant levels of certain blood cells at
the start of the study excluding these patients
there was a promising survival trend in favour
of trovax versus placebo and the indicative
efficacy was consistent with the study’s
primary endpoint
trovax®
highlights
• further analysis of phase iii trist study
confirmed subset efficacy
• received us165 million settlement fee
from sanofiaventis
• support from fda for further trials in
multiple cancers
• phase ii trial in prostate cancer expected to
start in 2010 from wyeth to pfizer
wyeth licensed global rights to oxford biomedica’s
5t4specific antibodies in 2001 following pfizer’s
acquisition of wyeth in 2009 and subsequent
portfolio review pfizer has indicated its continuing
commitment to the collaboration and to the
development of the product
preclinical optimisation
pfizer has responsibility for the development
and commercialisation of the 5t4targeted
antibody therapytheir product candidate
comprises a toxin linked to a humanised
5t4specific antibody for targeted delivery of
the anticancer agent payload to cancer cells
preclinical evaluation is ongoing to optimise
the product for clinical development and pfizer
may submit an ind application during 2011
oxford biomedica plc
annual report  accounts 2009
25 oxford biomedica plc
annual report  accounts 2009
24
introduction business review
operational review
5t4 tumour antigen
chairman’s statement business review
operational review
other products
corporate information financial statements appendix
operational review
5t4 tumour antigen other products
targeted antibody therapy cancer
we licensed global rights to develop antibodies
targeting the 5t4 tumour antigen for the
treatment of cancer to wyeth in 2001the
agreement is potentially worth us24 million
plus royalties on product sales and the next
milestone payment is triggered by the start of
clinical trials following pfizer’s acquisition of
wyeth in 2009 and subsequent portfolio review
pfizer has indicated its continuing commitment
to the collaboration
market opportunity
the concept of an anticancer therapy which
has antibodylike specificity as well as
chemotherapylike potency is clearly attractive
the 5t4targeted antibody therapy has the
potential to benefit patients with any solid
cancer that expresses the 5t4 tumour antigen
which represents a multibillion us dollar
market based on the product’s profile it could
have application as a single agent or could be
used in combination with other treatments
including therapeutic vaccines such as trovax
these programmes continue to have significant
potential and we aim to realise the value of
these assets through partnerships furthermore
we continue to pursue technology licensing
opportunities to leverage our broad intellectual
property estate our objective is to retain a
financial interest in the successful development
and commercialisation of any product
candidate that derives from our technologies
through milestone payments and royalties
hi8® mel melanoma
the two completed clinical trials of hi8 mel
showed encouraging proof of concept in
metastatic melanoma demonstrating good
safety and dosedependent efficacythese
results support further evaluation in
randomised phase ii trials and we aim to
advance the programme with a suitable
partnerwe are increasing our partnering
activities on hi8 mel in 2010 to realise the
investment made in this programme to date
market opportunity
more than 100000 people are diagnosed with
melanoma each year in the seven major
pharmaceutical markets existing therapies for
stage iiiiv metastatic melanoma offer limited
efficacy and often have serious sideeffects
worldwide sales of treatments for melanoma
are expected to exceed us775 million in 2010
source datamonitor
endoangiogt cancer
we have identified a potentially optimal gene
delivery system for our anticancer endoangio
gt programmewith further preclinical
development we believe that the product could
be a potentially valuable clinical candidate
market opportunity
there is substantial interest within the industry
for novel antiangiogenic approaches for the
treatment of cancerthe market leader in the
field avastin® rochegenentech generated
sales in excess of us4 billion in 2008
endoangiogt could have competitive
advantages in terms of safety and potency
metxia® pancreatic cancer
we are finalising the clinical study report for the
completed phase iii trial of metxia in 35 patients
with nonresectable pancreatic cancer in this
trial we identified the optimal dose of metxia
and the prodrug for evaluation randomised
studies median survival for evaluable patients
who received at least one dose of metxia and
three doses of cyclophosphamide was 27 weeks
increased cycles of cyclophosphamide
appeared to be associated with longer survival
our objective is to partner this product for
further development
market opportunity
pancreatic cancer is the fifth leading cause of
cancerrelated mortality in the usa with over
30000 deaths attributable to this disease
annually it is one of the most aggressive forms
of cancer with a fiveyear survival rate in the low
single percentage digitsthe us pancreatic
cancer drug market is expected to reach us11
billion by 2013 source epiq market intelligence
preclinical development
of our genebased anti
angiogenic therapy for
cancer endoangiogt
is ongoing however
following our strategic
realignment during the
second half of 2008 we
curtailed development
expenditure on two
clinical programmes
hi8® mel and metxia® oxford biomedica plc
annual report  accounts 2009
27
introduction chairman’s statement business review
technology overview
other technologies
corporate information financial statements appendix
oxford biomedica plc
annual report  accounts 2009
26
business review
technology overview
proprietary technologies
technology overview
proprietary technologies
dr stuart naylor chief scientific officer
“our proprietary technologies are based on scientific
innovation we have core inhouse expertise in genetic
engineering immunology and manufacturing we also
work closely with leading academic groups in the field
our development candidates have the potential to
benefit patients in many therapeutic areas”
lentivector®
our lentivector technology is one of the most
advanced gene delivery systems currently
available which has many applications in
product development and in discovery research
it is the system of choice for genebased
treatments addressing chronic and inherited
diseases oxford biomedica has established a
dominant intellectual property estate in the
field of lentiviralvector mediated gene delivery
through its inhouse research and from work
conducted by the company’s cofounders at
oxford university
rationale
gene therapy is ‘the treatment or prevention
of disease by gene transfer and involves the
genetic modification of human cells by the
introduction of one or more genesthe ability
to deliver genes effectively has been a key
challenge for the successful development of
gene therapyviral vectors are widely used for
gene delivery since they have a natural ability
to enter a cell and deliver genetic material both
efficiently and in a defined manner while there
is no universal delivery system that can be used
to treat every disorder our lentivector system is
the vector of choice for longterm therapy
opportunity gene therapy
the versatility of our lentivector system to
deliver genetic material safely and efficiently
to various cell types makes it ideal for gene
therapy or for gene silencing using rna
interferencethe technology could be used in
many therapeutic areas but it has specific
advantages as a gene delivery system for the
treatment of neurological and ophthalmic
disorders in these settings a single
administration of a lentivectorbased gene
therapy could achieve permanent therapeutic
benefit
opportunity research tool
gene delivery has become an important tool
for biological researchthe efficiency of
lentivectormediated gene transfer makes the
technology the preferred system for stable
sustained transgene expression in drug
discovery target validation and biological
manufacturing our technology is being applied
in many research laboratories including those
of glaxosmithkline merck  co and pfizer
5t4 tumour antigen
the 5t4 tumour antigen is a unique protein
found on most common types of cancer which
makes it a potentially valuable target for novel
anticancer interventionsthe 5t4 antigen was
discovered by scientists at cancer research uk
formerly cancer research campaign which
was a founding shareholder of oxford biomedica
in 1996 and which granted the company
exclusive rights to its intellectual property
relating to the 5t4 antigen
rationale
when cells mutate and become cancerous they
often produce and display different proteins
known as tumourspecific antigens which in
some circumstances can trigger an immune
response some tumour antigens are unique to
tumours while others may also be found on
normal cells in certain organs often at lower
concentrations than on cancerous cells immune
responses to these antigens may be suppressed
because they are considered self
cancer was traditionally treated by a
combination of surgery radiation andor
chemotherapy however preventing the
metastatic spread of tumours has proved
challenging and requires therapies that can be
targeted to the disseminated cancerous cells
the 5t4 antigen is an ideal target given its
restricted expression in normal tissues and its
high prevalence on the surface of both primary
and metastatic cancerous cells
opportunity immunotherapy
active immunotherapy also called therapeutic
vaccination is designed to treat cancer by
stimulating a patient’s own immune system to
eradicate disseminated cancerous cells and
metastases in distant organsvaccine strategies
that are specific to tumourassociated antigens
such as 5t4 are among the most promising
approaches for active immunotherapy
opportunity antibody therapy
monoclonal antibodies targeting tumour
antigens are widely used for the treatment of
cancer today antibodies can function alone
naked or as conjugates linked to active
moieties such as radioactive isotopes
chemotherapeutics or other toxins preclinical
studies suggest that 5t4 has ideal
characteristics as a target for conjugated
antibody therapy
antiangiogenesis
the creation of new blood vessels known as
angiogenesis is a critical element in tumour
formation and growth a number of anti
angiogenic treatments have proven effective
against solid tumours with the added benefit of
having less toxicity than chemotherapy oxford
biomedica secured exclusive rights to two anti
angiogenic agents endostatin and angiostatin
for anticancer gene therapy from the children’s
hospital boston in 2007the company also has
rights to employ these genes for ocular gene
therapy endostatin and angiostatin are the
genetic payload in both retinostat and
encorstat which are designed to block aberrant
blood vessel growth in the retina and cornea
respectively
opportunity
manufacturing challenges have prevented
further development of the two proteins as
product candidates a genebased approach
could overcome the limitations of direct
administration to exploit the full potential of
these antiangiogenic agents for the treatment
of cancer and ocular diseases
hi8® primeboost
heterologous primeboost immunotherapy
involves priming the immune system to a target
antigen using one delivery system and then
boosting the response by administration of the
same antigen but using a different vectorthis
strategy can stimulate greater levels of
immunity particularly cellular immune
responses oxford biomedica’s hi8 primeboost
technology is based on the use of dna vaccines
and recombinant poxvirus vectors
opportunity
hi8 primeboost is a flexible and powerful
technology that could be applied to any disease
that can be controlled by a diseasespecific
cellular immune response such as cancer or
infection in clinical and preclinical studies the
technology stimulated potent and specific
cellular immune responses targeting melanoma
hepatitis b hivaids and tuberculosis
gdept
genedirected enzyme prodrug therapy gdept
is based on delivering into diseased cells a gene
encoding an enzyme that can activate a non
toxic prodrug into a toxic agent oxford
biomedica has intellectual property covering
genetic delivery of p450 enzymes and broader
claims covering other retroviralbased prodrug
strategies
opportunity
gdept strategies could be used to treat any
solid tumour that is accessible either directly or
via local perfusionthe technology could also
benefit therapeutic strategies in other types of
disease including graft versus host disease
dr stuart naylor
chief scientific officer
further detailed information on these
technologies and associated development
programmes can be found in the appendix
on pages 82 and 83 oxford biomedica plc
annual report  accounts 2008
business review
financial review
28 oxford biomedica plc
annual report  accounts 2009
financial overview
the termination of the trovax collaboration in april 2009 and the revised strategy for trovax development following the fda review of the trist study
in june 2009 had a material effect on the company and resulted in a £60 million exceptional profit in the statement of comprehensive income in
contrast in 2008 we recognised an exceptional loss of £46 million from impairment of intangible assets before exceptional items revenue for 2009 was
£90 million 2008 £184 million and costs cost of sales research and development costs and administrative expenses were significantly reduced at
£209 million 2008 £276 million
cash cash equivalents and current financial assets increased by £34 million in 2009 leaving a balance of £253 million at 31 december 2009
revenue £19120000 2008 £18394000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
trovax collaboration – nonexceptional revenue 2609 18064 6970 ––
ocular collaboration revenue 6224 –– ––
technology licences and other revenue 198 330 249 760 824
total nonexceptional revenue 9031 18394 7219 760 824
trovax collaboration – exceptional revenue 10089 –– ––
total revenue 19120 18394 7219 760 824
nonexceptional trovax revenue of £26 million in 2009 comprised the recognition of deferred income up to the termination of the collaboration
in april 2009the remaining £57 million of deferred trovax income was recognised in 2009 as exceptional revenue a termination payment of
us65 million £44 million paid by sanofiaventis made up the remainder of exceptional revenue
the ocular collaboration with sanofiaventis contributed revenue of £62 million in 2009the collaboration has two elements an upfront payment of
us26 million £166 million was received in 2009 and rd funding of up to us24 million will be receivable over the current phase of the collaboration
revenue recognised in 2009 comprised £31 million of the upfront payment and £31 million of rd funding deferred income of £137 million is
expected to be recognised between 2011 and 2013
cost of sales £437000 2008 £1295000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
royalty payable on third party licenses
nonexceptional creditcost of sales 90 1295 449 ––
exceptional cost of sales 527 –– ––
total cost of sales 437 1295 449 ––
cost of sales is the royalty payable to third party licensors attributable to upfront and milestone payments that are recognised as revenuewhere the
recognition of upfront andor milestone payments is deferred in part or in full the appropriate proportion of cost of sales is also deferred and is
classified as a prepayment in 2009 a credit of £545000 was recognised within nonexceptional cost of sales following a reduction in the estimated
royalty rate that had been applied to trovax collaboration revenue in 2007 and 2008
29
financial review
andrew wood chief financial officer
“we maintained our financial strength through 2009
making the transition from the trovax collaboration
with sanofiaventis that had been a key feature of the
financial results for the two previous years to the new
ocular collaboration in 2009the cash inflows associated
with the sanofiaventis collaborations together with
continuing careful focus on expenditure resulted in
a stronger cash balance at the end of 2009 than at
the beginning”
our present funds together with licence income and
anticipated revenues from current collaborations are
sufficient to meet operational needs until the beginning
of 2012this gives the group a strong platform from
which to build a profitable sustainable business
introduction chairman’s statement business review
financial review
corporate information financial statements appendix oxford biomedica plc
annual report  accounts 2009
oxford biomedica plc
annual report  accounts 2009
business review
financial review
30 31
operating expenses before exceptional items £20955000
2008 £26322000 2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
nonexceptional research and development costs 14899 22482 22142 19523 9327
nonexceptional administrative expenses 6056 3840 4282 2699 2865
total nonexceptional operating expenses 20955 26322 26424 22222 12192
nonexceptional operating expenses were £54 million lower than 2008 at £210 millionthe reduction in rd costs came mainly from lower external
clinical costs and in particular from lower trist expenditure costs incurred in the sanofiaventis ocular programme are included in rd costs
the increase in expenditure on these products has offset some of the reduction in trovax expenditure administrative expenses increased in 2009
principally due to foreign exchange losses bonus payments and legal costs related to patent litigation
research  development costs £14899000 2008 £22482000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
external preclinical  clinical costs 6328 13397 11833 11153 1730
inhouse rd costs uk 8138 8660 9848 7983 7310
inhouse rd costs usa 433 425 461 387 287
total nonexceptional research  development costs 14899 22482 22142 19523 9327
rd costs comprise inhouse expenditure staff rd consumables intellectual property facilities and depreciation of rd assets and external costs
preclinical studies gmp manufacturing regulatory affairs and clinical trials external clinical and preclinical costs from 2006 to 2008 had been high due
to trovax development costs particularly costs of the trist study as expected these costs fell back significantly in 2009 with nonexceptional external
trovax development costs recognised in 2009 down to £07 million compared to £100 million in 2008 costs related to the trist study from june 2009
onwards are part of exceptional rd costs offsetting some of the reduction ocular product and prosavin external costs were £27 million higher in
2009 at £52 million most of the 2009 ocular programme spend was covered by rd funding from sanofiaventis inhouse rd costs in 2009 were 6
lower than in 2008 at £81 million
administrative expenses £6056000 2008 £3840000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
administrative staff costs 2815 2016 1958 1123 1224
legal costs 1411 867 852 353 119
net foreign exchange lossesgains 465 695 3 2 24
other administrative expenses 1365 1652 1469 1221 1546
total nonexceptional administrative expenses 6056 3840 4282 2699 2865
administrative expenses in 2009 were overall £22 million 58 higher than 2008 foreign exchange losses account for £12 million of the increase
the exchange loss of £05 million in 2009 was mainly due to weakening of the us dollar over the course of the year in 2008 foreign exchange gains of
£07 million were recognised administrative staff costs were £08 million 40 higher than 2008 at £28 million due mostly to bonuses 2009 bonuses
included £03 million costs in relation to a sharesettled bonus paid to john dawson chief executive officerthere were no bonuses in 2008 legal costs
in 2009 were £05 million higher than 2008 at £14 million £10 million of the 2009 legal costs related to the bavarian nordic litigation and patent
oppositions in january 2010 the bavarian nordic litigation was settled
headcount
2009 2008 2007 2006 2005
number number number number number
rd headcount year end 53 64 69 63 61
administrative headcount year end 12 12 13 10 10
total headcount at year end 65 76 82 73 71
rd headcount average for the year 58 73 68 62 59
administrative headcount average for the year 11 12 12 10 10
total headcount average for the year 69 85 80 72 69
in 2009 there was a net reduction in headcount of 11 continuing a downward trend that started in july 2008 following the trist setback subsequent to
the year end this trend has begun to reverse with a net gain of 4 in january and february 2010 one fulltime employee and one parttime employee
are based at the wholly owned subsidiary biomedica inc in san diego usa all other staff are based at the main offices and laboratories in oxford uk
exceptional operating expenses £3561000 2008 £4561000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
research and development costs
arising on termination of the trovax collaboration 676 –– ––
provision for trist study closeout 2202 –– ––
writeoff re planned quasar clinical trial 514 –– ––
impairment of intangible assets – 4561 –– –
total exceptional research and development costs 3392 4561 –– –
administrative expenses
arising on termination of the trovax collaboration 169 –– ––
restructuring costs –– 335 ––
total exceptional administrative expenses 169 – 335 ––
total exceptional operating expenses 3561 4561 335 ––
exceptional items are described fully in note 5 to the financial statements on termination of the trovax collaboration with sanofiaventis net
unrecoverable costs of £08 million were written offthis is net of receipts of us109 million £72 million – reimbursements by sanofiaventis as part of
the termination process following the fda review of trist in june 2009 and the revision of the development strategy for trovax £22 million was
provided to meet the costs of closing out the trist study and £05 million of expenses related to the planned quasar trovax clinical trial were written off
between june 2009 and the end of the year costs of £14 million were incurred and set against the trist provision
finance income £636000 2008 £1638000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
interest receivable – bank 642 1661 2113 1743 955
other interest receivable 27 1 4 – 14
interest payable – discount on provisions 10 19 30 29 20
other interest payable 23 5 –– 11
net finance income 636 1638 2087 1714 938
average balance on deposit in the year 24549 28941 37731 37689 19955
average rate of interest on deposits 261 573 558 462 477
the group places its cash in bank deposits for periods of up to 12 months and generates interest on those depositsthe maturity profile of deposits is
intended to match planned expenditure as expected the dramatic fall in market rates from the end of 2008 has resulted in much lower interest income
in 2009the group has no debt but is recognising as a finance expense the discount on a lease provision and a dilapidation provisionthe lower charge
in 2009 reflects the level of interest rates in the year
financial review
introduction chairman’s statement business review
financial review
corporate information financial statements appendix oxford biomedica plc
annual report  accounts 2009
oxford biomedica plc
annual report  accounts 2009
business review
financial review
32 33
tax credit £1579000 2008 £1992000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
uk rd tax credit – current year 1650 2119 2526 1709 1175
uk rd tax credit – prior year adjustment – 72 – 75 101
overseas tax payable – current year 61 59 60 38 43
overseas tax payable – prior year adjustment 10 4 14 16 23
net tax credit 1579 1992 2452 1762 1210
debtor for rd tax credit 2269 2119 2623 2309 1175
our uk operating subsidiary is entitled to claim rd tax creditthe credit is based on certain eligible expenses to which a markup of 75 and a tax rate
of 14 are applied restricted where appropriate to the lower of uk payroll tax income tax and national insurance paid in the year and corporation tax
losses for the yearthe lower tax credit in 2009 results from restriction due to the amount of tax losses in 2009 the group received a £15 million
payment on account of the 2008 rd tax creditthe remaining £06 million of the 2008 claim was paid in january 2010the group’s us subsidiary
supplies services to the uk subsidiary subject to a fixed markup interest is charged by the subsidiary at statutory rates for an intercompany loanthis
generates a low level of taxable income in the usa
loss for the financial year including exceptional items £3515000 2008 £10041000
as a result of recognising an exceptional profit of £60 million in 2009 2008 exceptional loss of £46 million the group’s net loss for the year was 65
lower than 2008 at the preexceptional level however despite lower operating costs in 2009 the net loss was 74 higher principally this is due to the
higher level of recognised revenue in 2008 which included a total of £181 million under the trovax collaboration
intangible assets £11119000 2008 £11119000
intangible assets were unchanged at 31 december 2009the group continues to monitor the carrying value of intangibles no additional impairment
was required following the impairment review for 2009
trade and other receivables £4628000 2008 £7305000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
trade receivables 88 106 91 241 119
accrued income 1925 – 34 223 93
other costs recoverable from sanofiaventis – 3913 109 ––
other receivables 298 481 1020 765 676
prepaid clinical trial expenses 70 790 969 ––
prepaid royalty on deferred income 1465 870 1330 11 –
prepayments 487 652 587 592 442
other tax receivable vat and us income tax 150 333 414 220 242
rent deposit on us lease 145 160 118 150 205
total trade and other receivables 4628 7305 4672 2202 1777
trade and other receivables reduced by £27 million in 2009 to £46 million £19 accrued income at 31 december 2009 was rd funding recoverable
from sanofiaventis £39 million of recoverable costs related to the development of trovax that was included in receivables in 2008 was settled as part
of the us109 £72 million reimbursement of costs by sanofiaventis in 2009
trade and other payables £7669000 2008 £10558000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
trade payables 1965 3298 2948 1579 397
accruals – clinical  preclinical costs 1924 3924 3536 1782 721
accruals – royalties on sales 1788 2259 1483 68 68
accruals – staff costs 639 94 210 74 68
accruals – other 1049 847 962 853 558
other taxation and social security 304 136 418 315 263
total trade and other payables 7669 10558 9557 4671 2075
trade and other payables reduced by £29 million in 2009 most of the reduction is attributable to lower trade creditors and accruals for external clinical
and preclinical costs staff cost accruals at december 2009 included £396000 for bonuses
deferred income £13765000 2008 £8443000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
ocular deferred income current 4665 –– ––
ocular deferred income noncurrent 9024 –– ––
other deferred income current 76 119 90 92 105
trovax deferred income – 8324 18823 ––
total deferred income 13765 8443 18913 92 105
deferred revenue reflects payments received under licensing agreements that exceed the amount of recognised revenue receipts in 2009 from the
ocular collaboration with sanofiaventis are being recognised as revenue over a period of 42 to 51 months £26 million of deferred trovax income was
recognised as nonexceptional revenue prior to the termination of the collaboration in 2009the remaining £57 million deferred trovax income has
been recognised as exceptional revenue
share issues
at the end of 2009 the company had 541185828 shares in issue during the year shares issued for cash raised £04 million
cash and deposits £25302000 2008 £21891000
operational cash generated £3026000 2008 cash burn £16889000
the total of cash cash equivalents and current asset investments at the end of 2009 was £253 million an increase of £34 million over the year
the format of the cash flow statement under ifrs does not readily confer an assessment of cash burn however based on the aggregate of cash from
operating activities proceeds of sale of property plant and equipment and purchases of property plant and equipment and intangible assets the cash
inflow in 2009 was £30 million in contrast to a cash burn of £169 million in 2008
financial outlook
the new collaboration with sanofiaventis has strengthened the balance sheet through the upfront payment and is providing rd funding to take our
four ocular products into their first clinical trialstaking account of licensing income and anticipated receipts from existing collaborations the present
level of funds is sufficient to meet operational needs up to the beginning of 2012this gives the group a strong platform from which to build a
sustainable profitable businesswe aim to develop our pipeline through a combination of focussed investment in certain programmes and further
partnerships and collaborations sustainable profitability depends on the ability of oxford biomedica and our collaborators to develop and bring to
market safe and effective medicines that benefit patients and achieve commercial success we also continue to explore opportunities to accelerate
profitability through valueenhancing corporate activity
andrew wood
chief financial officer
financial review
introduction chairman’s statement business review
financial review
corporate information financial statements appendix oxford biomedica plc
annual report  accounts 2009
corporate information
board of directors
34
board of directors
alan kingsman
chairman
professor alan kingsman age 59 is a cofounder
of oxford biomedica and served as chief
executive officer from 1996 to 2008 he was
appointed chairman in july 2008 he is an
internationally recognised authority on gene
expression and retrovirus research and has
over 25 years’ experience in this field including
17 years as codirector with susan kingsman of
the retrovirus molecular biology group within
the biochemistry department of the university
of oxford he continues to hold the title of
professor of biochemistry at oxford university
and is a former fellow of st catherine’s college
oxford he has published extensively in the field
and is named inventor on numerous patent
applications and issued patents he has acted as
an advisor or consultant to uk research councils
world health organization who and a
number of uk and international companies
john dawson
chief executive officer
john dawson age 50 joined oxford biomedica’s
board as nonexecutive director on 1 august
2008 he was then appointed chief executive
officer on 13 october 2008 having served as
acting chief executive officer since 29 august
2008 from 1996 to 2007 he held senior
management positions in the european
operations of cephalon inc including from
2005 a management board position as
chief financial officer and head of business
development europe in his time at cephalon
he led the many deals that built the european
business to over 1000 people taking the
business from having no sales in 1998 to a
turnover of several hundred million us dollars
in 2005 he led the us360 million acquisition of
zeneus by cephalon
andrew wood
chief financial officer
andrew wood age 51 has been a director of
oxford biomedica since 1996 he is a chartered
accountant with wide experience of financial
management in a number of industries he also
holds a first class degree in biochemistry from
oxford university before joining oxford
biomedica he was finance director at the
yorkshire cable group part of general cable
previously he held senior financial positions
with subsidiaries of the burton group
associated newspapers and fenner plc
stuart na ylor
chief scientific officer
dr stuart naylor age 46 joined oxford biomedica
in 1997 and was appointed to the board in july
2008 he established an international reputation
at two world class cancer institutes the imperial
cancer research fund and the institute of
cancer research his career has covered many
aspects of tumour biology from its molecular
basis to the clinic he has published numerous
primary and review articles notably in the field
of cytokine research and brings with him an
extensive network of collaborators in many
aspects of basic research and clinical oncology
peter nolan
executive director and senior vice president
commercial development
peter nolan age 56 was appointed to oxford
biomedicas board in may 2002 having been a
senior member of the company since its
foundation he is also a director of the uk
bioindustry association and is a past chairman
of the oxfordshire bioscience network he has
broad experience and knowledge of the
biotechnology sector prior to joining oxford
biomedica he served as head of the
biotechnology unit at the uk department of
trade  industry for eight years in that role he
was responsible for establishing and managing
complex collaborative research programmes
involving industry research councils and other
government departments previously he held
senior positions in the laboratory of the
government chemist and also the metropolitan
police laboratory in london where he was a
senior forensic scientist
nick woolf
chief business officer
nick woolf age 41 was appointed to the board
of oxford biomedica in march 2005 and was
appointed chief business officer in july 2008
he has extensive experience in investment
banking and equity research in the
biotechnology and pharmaceutical sectors
nick joined oxford biomedica in 2002 from
abn amro where he was a director and head
of european biotechnology research prior to
abn amro he was a vice president and senior
european biotechnology analyst at robertson
stephens and was previously at nomura and
sbc warburg nick is a qualified fcca
accountant and holds an ma in chemistry from
the university of oxford
oxford biomedica plc
annual report  accounts 2009
35
introduction chairman’s statement business review corporate information
board of directors
financial statements appendix
andrew wood
paul blake
john dawson
nick rodgers nick woolf
alan kingsman stuart naylor
andrew heath
peter nolan
alex lewis
nick rodgers
deputy chairman and senior
independent director
nick rodgers age 51 was appointed to oxford
biomedicas board in march 2004 he is a former
investment banker with considerable experience
in the life sciences sector he is now chief
executive of ipso ventures plc an intellectual
property commercialization business having
been head of life sciences and joint head of
corporate finance at evolution beeson gregory
until december 2003 nick joined beeson
gregory in 1989 from accountants ernst  young
having also worked in the listing department of
the london stock exchange he is chairman of
oxford biomedica’s audit committee
paul blake
nonexecutive director
paul blake aged 62 was appointed to oxford
biomedica’s board in january 2010 dr blake has
over 30 years international pharmaceuticalbiotech
experience and is currently senior vice
president and chief medical officer of æterna
zentaris inc a global biopharmaceutical
company focused on oncology and endrocrine
therapy from 2001 to 2006 he held senior
management positions at cephalon inc
including executive vice presidentworldwide
medical  regulatory operations from 2005
dr blake’s previous positions include senior vice
president and medical director clinical research
and development at smithkline beecham
pharmaceuticals he gained his medical degree
from the london university royal free hospital
andrew heath
nonexecutive director
andrew heath aged 60 was appointed to
oxford biomedica’s board in january 2010
dr heath is a healthcare and biopharmaceutical
executive with indepth knowledge of us and
uk capital markets and international experience
in marketing and sales r  d and business
development he was chief executive officer
of protherics plc from 1997 to 2008 taking the
company from 30 to 350 staff and managing its
eventual acquisition by btg for £220 million
prior to this dr heath was president and chief
executive officer of aerogen inc and previously
held senior positions at astra ab and astra usa
including vice president marketing  sales and
at glaxo sweden as associate medical director
he is currently a nonexecutive director of xl
techgroup inc anew inc pioneer technology
inc and is a director of the bioindustry
association
alex lewis
nonexecutive director
dr alex lewis age 47 was appointed to oxford
biomedica’s board in april 2008 dr lewis is an
experienced consultant to the pharmaceutical
and biotech industry with a background in
medical research and drug development
24 years dr lewis is directortransactions and
due diligence at datamonitor previously he
was head of the partnering and due diligence
practice of consultants wood mackenzie
dr lewis has been involved in the provision of
expert reports and technical advice for the
initial public offerings ipos and fundraising
activities for biotech companies based in the
us and europe he is chairman of oxford
biomedica’s remuneration committee oxford biomedica plc
annual report  accounts 2009
36
principal risks and uncertainties
risk assessment and evaluation is an integral
part of our planning most of our risks and
uncertainties are common to all development
stage biopharmaceutical companieswhere
possible our strategy is designed to manage
and mitigate these issues
intellectual property and patent protection
risk
our commercial success depends amongst
other things on maintaining proprietary rights
to our products and technologies and the board
gives high priority to the strategic management
of our intellectual property portfoliothere can
be no assurance that our products and
technologies are adequately protected by
intellectual property if proceedings are initiated
against our patents the defence of such rights
could involve substantial costs and an uncertain
outcome
thirdparty patents may emerge containing
claims that impact our freedom to operate
there can be no assurance that we will be
able to obtain licences to these patents at
reasonable cost if at all or be able to develop
or obtain alternative technology
development and regulatory risk
safety or efficacy issues may arise at any stage
of the drug development process adverse or
inconclusive results from preclinical testing or
clinical trials may substantially delay or halt
the development of our product candidates
consequently affecting our timelines for
profitability
the clinical development and marketing
approval of our product candidates are
regulated by healthcare regulatory agencies
such as the fda ema afssaps and mhra in
respective territories during the development
stage regulatory reviews of clinical trial
applications or amendments can prolong our
anticipated development timelines similarly
there can be no assurance of gaining the
necessary marketing approvals to
commercialise our products each regulatory
authority may impose its own restrictions on
the product’s use or may require additional
data before granting approval
collaboration and third party risk
collaborations and licensing are an important
component of our strategy to realise value and
manage riskthere can be no assurance that our
existing relationships will not be terminated or
require renegotiation for reasons that may be
unrelated to the potential of the programme
circumstances may also arise where the failure
by collaborators and third parties such as
contract manufacturers to perform their
obligations in accordance with our agreements
could delay or halt entirely development
production or commercialisation of our
products or adversely impact our cash flows
pharmaceutical pricing risk
the ability of oxford biomedica and our
partners to commercialise our products may
depend on the availability of reimbursement
from government health administration
authorities private health coverage insurers and
other organisationsthere is no assurance that
adequate reimbursement will be available or
that satisfactory price levels will be reached
there is pressure in all territories to contain
healthcare costs by limiting both coverage and
the level of reimbursement our lentivector
based product candidates have the unique
potential to provide permanent therapeutic
benefit from a single administrationthe pricing
of these therapies will depend on assessments
of their costbenefit and cost effectiveness
competition risk
our competitors and potential competitors
include major pharmaceutical and
biotechnology companies many of whom
have substantially greater resources than us
through our collaborative strategy we aim to
work with leading companies in respective
therapeutic areas however there can be no
assurance that competitors will not succeed in
developing products and technologies that are
more effective or economic than ours
financial risk
we recorded a net cash inflow from operations
in 2009 as a result of our business development
activities under the terms of our collaborations
the receipt of further income is dependent on
the achievement of specific milestones related
to development regulatory or commercial
progress similarly the timing and magnitude of
income from new collaborations is inherently
unpredictable
our strategy is to add value to our priority
inhouse programmes by investing in further
developmentwe aim to offset our operating
costs through partnering and other licensing
income based on our current budget we have
sufficient working capital to support our
operating activities until the beginning of
2012 in the absence of income from new
collaborations
we may require additional financing for the
future operation of our business including
further equity funding as appropriatethere is
no certainty that adequate resources will be
available on a timely basis particularly if the
difficult conditions of financial markets persist
staff risk
while we have employment contracts with all
of our personnel the retention of their services
cannot be guaranteed recruiting and retaining
key management and scientific personnel is
critical to our success
gene therapy risk
no genebased medicines are currently
approved for sale in the usa or euthe
commercial success of our products will
depend in part on acceptance by the medical
community and the public furthermore
specific regulatory requirements over and
above those imposed on other products apply
to gene therapy and there can be no assurance
that additional requirements will not be
imposed in the futurethis may increase the
cost and time required for successful
development of our products
corporate information
principal risks and
uncertainties corporate governance statement
application of the principles in the
frc combined code on corporate
governance
the policy of the board is to manage the affairs
of oxford biomedica to the highest standards of
corporate governance and in accordance with
the principles of good governance and the code
of best practice as set out in the frc combined
code on corporate governance as revised in
june 2008 the ‘combined code’ a copy of the
code is available from wwwfrcorg
the board considers that it has complied
throughout the year with the provisions for
companies set out in section 1 of the combined
code unless otherwise indicated below
compliance with the provisions
of the combined code
the board
oxford biomedica is led and controlled by a
board currently consisting of a chairman four
nonexecutive directors and five executive
directorsthroughout 2009 there were three
nonexecutive directors as set out in their
biographies on pages 34 and 35 the directors
have significant experience of the management
and development of a biopharmaceutical group
and of pharmaceutical research and the new
drug development processthere is a clear
division of responsibilities set out in writing
between the chairman and chief executive
officerthe board considers that the non
executive directors other than the chairman
are independent of managementthis includes
mark berninger who has now retired from the
board having served as a director for 10 years
all directors have access to advice and services
of the company secretary who is responsible to
the board for ensuring that board procedures
are complied withthe appointment and
removal of the company secretary is a matter
for the board as a whole to consider provision
a22 of the combined code requires that the
chairman should meet the independence
criteria on appointmentthe present chairman
was until july 2008 the chief executive officer
and for the first year of his tenure as chairman
held an executive position hence he did not
meet this requirementthe chairman also holds
share options and long term incentive plan
awards that were granted when he was ceo
and while he was executive chairman which is
contrary to the requirements for independence
set out in provision a31 since july 2009 the
position of chairman has been nonexecutive
the chairman has no significant external
commercial commitments that would impact
the performance of his duties provision a32 of
the combined code requires a small company
to have at least two independent nonexecutive
directorsthe company has fully met this
requirement
board meetings
the board meets regularly and at least eight
times per year with meeting dates agreed for
each year in advancethere is a formal schedule
of matters reserved to the board for its decision
the schedule covers senior appointments
business strategy and budgets substantial
transactions contracts and commitments
financing treasury and risk policies and the
approval of certain documents and
announcements including the annual report
there is frequent contact between executive
and nonexecutive directors and each director
is supplied on a timely basis with financial and
operational information sufficient for the board
to discharge its duties all directors have access
as required to independent professional advice
during 2009 there were 10 board meetingsthe
attendance of individual directors at board
meetings was as follows
number number of
director attended meetings
professor alan kingsman 10 10
mark berninger 9 10
dr alex lewis 10 10
nick rodgers 10 10
john dawson 10 10
dr stuart naylor 9 10
peter nolan 10 10
andrew wood 9 10
nick woolf 9 10
as required the chairman holds meetings with
nonexecutive directors without the executive
directors in attendance
board committees
as appropriate the board has delegated certain
responsibilities to board committees which
operate within defined terms of reference
and constitutionthere is a remuneration
committee the report and membership of which
is set out on pages 44 to 49the remuneration
committee met nine times in 2009 all meetings
were attended by both members
audit committee
there is also an audit committeethroughout
2009 the audit committee comprised two
nonexecutive directors nick rodgers chairman
and dr alex lewis on 1 january 2010
dr andrew heath joined the committee
the board consider that all the members of the
audit committee possess recent and relevant
financial experiencethe audit committee has
written terms of reference which have been
published on the company’s web site
it monitors the integrity of the financial
statements of oxford biomedica and any formal
announcements relating to the company’s
financial performance reviewing significant
financial reporting judgements contained in
them it reviews internal financial controls and
the internal control and risk management
systems it makes recommendations to the
board for it to put to shareholders for their
approval in general meeting in relation to the
appointment reappointment and removal of
the external auditors and approves the
remuneration and terms of engagement of the
external auditors
pricewaterhousecoopers llp have been
auditors to the company and the group since
1997the audit committee considers that the
relationship with the auditors is working well
and remains satisfied with their effectiveness
accordingly it has not considered it necessary
to date to require the firm to tender for the
audit workthere are no contractual obligations
restricting the company’s choice of external
auditorthe incumbent independent auditors
continue to operate procedures to safeguard
against the possibility that their objectivity and
independence could be compromisedthis
includes the use of quality review partners use
of a technical review board where appropriate
and annual independence procedures
including confirmations by all staffthe auditors
report to the audit committee on matters
including independence and nonaudit fees on
an annual basis in addition the role of the audit
partner is rotated on a periodic basisthe audit
committee reviews and monitors the external
auditors’ independence and objectivity and the
effectiveness of the audit process taking into
consideration relevant uk professional and
regulatory requirementsthe audit committee
is advised of and approves all non audit services
provided by the company’s auditors as part of
this approval process the audit committee
ensures that the provision of non audit services
will not impact the auditors’ objectivity and
independence it reports to the board as
necessary identifying matters in respect of
which it considers that action or improvement is
needed making recommendations as to the
steps to be taken
oxford biomedica has a public interest
disclosure policy and the audit committee is
responsible for reviewing arrangements by
which staff may raise concerns about possible
improprieties it also reviews from time to time
the need for an internal audit function given
the group’s current size and simple structure
the committee considers there not to be a
requirement for internal audit at the
committee’s invitation or request the chief
executive officer and other directors may
attend meetings of the audit committee
the audit committee met twice in 2009 with
the chief financial officer present at the
committee’s invitation and also in private all
meetings were attended by the full committee
oxford biomedica plc
annual report  accounts 2009
37
introduction chairman’s statement business review corporate information
corporate governance
statement
financial statements appendix oxford biomedica plc
annual report  accounts 2009
38
corporate governance statement
nomination committee
the nomination committee comprises the non
executive directors and the company chairman
nick rodgers senior independent director is
the committee chairmanthe nomination
committee met once in 2009 to consider the
appointments of dr paul blake and dr andrew
heath as nonexecutive directors all members
of the committee attended the meeting
the nomination committee evaluates the
balance of skills knowledge and experience on
the board and in the light of this evaluation
determines the role and capabilities required for
particular appointments
for the appointments of dr paul blake and dr
andrew heath effective from 1 january 2010
the committee used its own network of contacts
and consulted with the company’s financial
advisors prior to making the appointments
consequently external search consultancy and
open advertising were not required
retirement of directors
in accordance with the articles of association at
each annual meeting any director who was
appointed after the last annual general meeting
or has served for three years and one third of
the other directors or if their number is not a
multiple of three the number nearest to but not
exceeding one third retire from office by
rotation
review of performance
provision a6 of the combined code requires an
annual review of the performance of the board
the committees and the individual directors
the chairman senior independent director and
the chief executive officer have kept this matter
under review throughout 2009 and some
procedural and other changes have been
introduced as a result of these reviewsthe
chairman and the senior independent director
have also conducted an informal review of the
performance of the committees and the
individual directors at least once per year the
nonexecutive directors meet under the
leadership of the senior independent director
to appraise the chairman’s performance
management committees
the board retains overall responsibility for and
control of the company management is
conducted by the chief executive officer and
the executive directors who together with
other senior managers form the senior
management team executive directors sit on
the following committees and management
groups the senior management group the
executive research group the clinical
development group the safety committee the
commercial development committee the
quality committee and the internal patent
group by this means a direct and ongoing link
exists between the determination of strategy by
the board and the execution of the company’s
policies by its employees
relations with shareholders
we attach a high priority to effective
communication with both private and
institutional shareholdersthe annual report
contains a detailed business review and a
description of our candidate products and of
our research and development portfolio an
interim business review is also provided with
the halfyear report sent to shareholderswith
these documents and the company’s press
releases we seek to present a balanced and
understandable assessment of oxford
biomedica’s position and prospects our website
wwwoxfordbiomedicacouk provides
extensive other information about the
company
the annual general meeting is the principal
forum for dialogue with private shareholders a
business presentation is made by the chief
executive officer and there is an opportunity for
shareholders to put questions to the directors
at the agm the directors’ service contracts or
letters of appointment are available for
inspection
we maintain regular contact with institutional
shareholders through a programme of oneto
one visits and briefingsthe senior independent
director has contact with a range of major
shareholders to listen to their views in order to
help develop a balanced understanding of their
views and concerns in addition the senior
independent director is available to
shareholders if contact through the normal
channels is inappropriate or has failed to
resolve concerns
internal control
the directors are responsible for oxford
biomedica’s system of internal control and for
reviewing its effectiveness such a system is
designed to manage rather than eliminate the
risk of failure to achieve business objectives and
can only provide reasonable and not absolute
assurance against material misstatement or loss
as described above the active involvement of
the executive directors in our management
committees allows the board continually to
monitor and assess significant business
operational financial compliance and other
risks and to review the effectiveness of internal
controlthis is reinforced by the provision to the
board by the executive directors of regular and
detailed reports covering inter alia financing
investor relations research and development
clinical development financial performance
commercial interactions and intellectual
property management in addition the board
annually reviews the effectiveness of all
significant aspects of internal control including
financial operational and compliance controls
and risk managementthe review for 2009 did
not highlight any matters that require reporting
to shareholders
oxford biomedica has procedures in place
which incorporate the recommendations on
internal control guidance for directors on the
combined code turnbull
corporate information
corporate governance
statement oxford biomedica plc
annual report  accounts 2009
39
corporate social responsibility
corporate social responsibility csr requires
consideration of the economic social and
environmental impacts of our business
activitiesthe board recognises the potential
benefits of csr for the competitiveness of
oxford biomedica and encourages a culture of
continuous improvement in csrrelated issues
we have set specific policies that cover key
aspects of csr and we strive to operate at the
highest level of integrity
employees
attracting motivating and retaining a highly
skilled workforce are critical to our business
success our employment policies are based on
guidelines for best practicethey recognise the
rights of all employees and ensure equal
opportunities for all staff without
discrimination
we aim to develop and maintain a motivated
and professional workforce through career
development performance evaluation and
feedback training and promotiontraining is
given in a wide variety of ways including
onthejob coaching and inhouse or external
courses our staff appraisal process continues to
function well by providing a formal process for
setting objectives and reviewing performance
in 2009 we undertook a review of the working
space in our offices on the oxford science park
following a consultation process with staff we
implemented various recommendations
including the creation of a new breakout and
coffee area and other refurbishments
health and safety
oxford biomedica is committed to protecting
the health safety and welfare of all its
employees our health and safety management
system covers all work activities such as the
usage of biological chemical and radioactive
materials and the operation of laboratory
equipment
we recently upgraded our containment level 3
facility which has specially engineered design
features for the production of our lentivector
based productsthese enhancements support
the increased development activities
particularly in relation to our ocular
programmesthis highcategory laboratory
successfully passed an hse specified animal
pathogen order sapo inspection in
september 2009
furthermore the environmental agency
conducted a routine inspection of all our
laboratory activities including our radiation
management system in february 2009
encouragingly there were no critical or major
findings from the agency’s inspection and our
systems were deemed to be robust
our quality management system ensures good
practice for all of our staff particularly those
working in our research development and
manufacturing team who receive suitable
training and adhere to our guidelines for good
practice in january 2010 the uk medicines and
healthcare products regulatory agency mhra
completed a successful gmp audit again no
major or critical observations were noted
we strive to maintain an effective health
and safety culture within oxford biomedica
the importance of health and safety to our
organisation is reflected through the active
involvement of senior management and
representation at board level
external relationships
our external stakeholders include suppliers
advisors shareholders patients healthcare
professionals partners and licenseesthese
relationships are a fundamental aspect of our
business activitieswe are committed to
interacting with these third parties in an ethical
manner and to ensuring that the relationships
are maintained at a professional and
appropriate level our internal procedures for
dealing with third parties are reviewed annually
we have a policy for the management of
clinical trials to ensure compliance with
appropriate guidelines and legislation
our website wwwoxfordbiomedicacouk
provides information on ongoing clinical trials
and we also list our usbased trials on a us
governmentsponsored website
wwwclinicaltrialsgov
the chief executive and executive directors
have primary responsibility for communication
with shareholders and related stakeholderswe
also use the services of external financial and
corporate communications agencieswe seek to
disseminate information in a timely reliable and
comprehensive fashion and we comply with
the rules and guidelines of the uk listing
authority for a company on the official list
environment
we fully recognise our responsibility to protect
the environment and we review our
environmental policy objectives and guidelines
regularlythe company complies with all
regulations that cover the processing and
disposal of laboratory waste using qualified
licensed contractors for the collection and
disposal of chemical and radioactive waste and
decontaminated biological materials no
laboratory waste goes to landfill sites
as part of our commitment to the environment
our policies are designed to motivate our staff
to be energy conscious and environmentally
friendlythe company’s recycling program
continues to function effectively and the
majority of our cardboard and office paper is
recycled again given its importance to oxford
biomedica environmental issues are
represented at board level
introduction chairman’s statement business review corporate information
corporate social
responsibility
financial statements appendix oxford biomedica plc
annual report  accounts 2009
40
directors’ report
for the year ended 31 december 2009
the directors present their annual report and the audited financial statements for the year ended 31 december 2009
principal activity
oxford biomedica lse oxb is a biopharmaceutical company developing innovative genebased medicines and therapeutic vaccines that aim to
improve the lives of patients with high unmet medical needsthe company was established in 1995 as a spinout from oxford university and has its
primary listing on the london stock exchange
the company has a platform of gene delivery technologies which are based on highly engineered viral systems oxford biomedica also has inhouse
clinical regulatory and manufacturing knowhowthe company’s technology platform includes a highly efficient gene delivery system lentivector®
which has specific advantages for targeting diseases of the central nervous system and the eye and a unique tumour antigen 5t4 which is an ideal
target for anticancer therapy
prosavin® oxford biomedica’s novel genebased therapeutic for the treatment of parkinsons disease is in a phase iii clinical trial at the henri mondor
hospital in paris france prosavin utilises oxford biomedica’s proprietary lentivector system to deliver three genes which reprogramme cells in the
striatum in the brain to manufacture and secrete dopamine thereby replacing the dopamine synthesising cells lost during the course of parkinson’s
disease
in collaboration with sanofiaventis oxford biomedica is developing four novel lentivectorbased product candidates in the field of ophthalmology
retinostat® for wet agerelated macular degeneration stargen™ for stargardt disease ushstat™ for usher syndrome 1b and encorstat™ for corneal
graft rejection in 2009 oxford biomedica granted sanofiaventis a license to develop the products and an option for further development
manufacture and commercialisation on a worldwide basis
the lead vaccine product candidate is trovax® an immunotherapy for multiple solid cancers in a phase iii trial of trovax in renal cancer the trist
study a significant survival advantage was shown in a predefined subset namely in patients with a good prognostic profile receiving interleukin2 il
2 as standard of care n  100 p  0046 additional exploratory analyses have confirmed that the anti5t4 immune response induced by trovax is
associated with enhanced survival p  0002 and have also identified haematological factors that were predictive of a more favourable immune
response and greater survival benefit from trovax overall however the trist study did not show a significant survival advantage for trovax
compared to placebo in the total population
the company is underpinned by over 60 patent families which represent one of the broadest patent estates in the field oxford biomedica’s partners
include sanofiaventis sigmaaldrich and pfizertechnology licensees include biogen idec glaxosmithkline merck  co and pfizer
at 31 december 2009 the group had a staff of 65 all fulltime employees but one are based at the main operational site in oxfordthe group has a
wholly owned subsidiary biomedica inc in san diego california
oxford biomedica plc is a public limited company incorporated in england and wales domiciled in england with its registered office at the medawar
centre robert robinson avenuethe oxford science park oxford ox4 4ga united kingdom
further information is available at wwwoxfordbiomedicacouk
review of the business and future developments
the consolidated statement of comprehensive income for the year is set out on page 51 a review of the group’s activities and future developments is
contained within the highlights the company overview the chief executive’s viewpoint the chairman’s statement and the business review on pages
1 to 5 and 12 to 33
share capital
during 2009 the company issued a total of 3896067 new ordinary shares 187025 on the exercise of share options by employees 2209042 in a cash
subscription linked to funding the development of stargen for the treatment of stargardt disease and 1500000 in a sharesettled bonus payment to
the chief executive officer john dawson subsequent to the year end a further 173330 shares were issued on the exercise of share options by
employees and on 21 january 2010 1699876 shares were issued in connection with the purchase of intellectual property rights
dividends
the directors do not recommend payment of a dividend 2008 nil
group research and development activities
during the year the group incurred nonexceptional research and development expenditure of £14899000 2008 £22482000 and exceptional
research and development expenditure of £3392000 2008 £4561000 all of which was written off in the statement of comprehensive income
charitable donations
the group made no charitable donations in 2009 2008 nil
corporate information
directors’ report oxford biomedica plc
annual report  accounts 2009
41
directors
the directors of the company at the date of signing the financial statements who had been directors for the whole of 2009 unless otherwise
indicated were
professor alan kingsman chairman
mark berninger
1
nonexecutive director member of the nomination committee
dr paul blake
1
nonexecutive director member of the remuneration committee and the nomination committee
dr andrew heath
1
nonexecutive director member of the audit committee and the nomination committee
dr alex lewis nonexecutive director chairman of the remuneration committee member of the audit and nomination committees
nick rodgers deputy chairman and senior independent director chairman of the nomination and audit committees
member of the remuneration committee
john dawson chief executive officer
dr stuart naylor chief scientific officer
peter nolan senior vice president commercial development
andrew wood chief financial officer
nick woolf chief business officer
1 on 1 january 2010 mark berninger retired from the board and dr paul blake and dr andrew heath were appointed
all directors are subject to election by shareholders at the first opportunity after their appointment and to reelection thereafter at intervals of not
more than three years at the 2010 annual general meeting the following directors will retire from the board
directors appointed subsequent to the 2009 annual general meeting who will retire in accordance with article 99 of the company’s articles of
association and offer themselves for reelection
• dr paul blake
• dr andrew heath
other directors retiring in accordance with article 93 of the companys articles of association all of whom will offer themselves for reelection
• dr alex lewis
• peter nolan
• nick rodgers
• andrew wood
the appointments of nonexecutive directors are subject to three months noticethe contracts of employment of executive directors are subject to
twelve months’ notice
biographical details of all the directors including those submitted for reelection are given on pages 34 and 35
the interests of the directors at 31 december 2009 in the share capital of the company are disclosed in the directors’ remuneration report on pages
44 to 49
directors’ third party indemnity provision
the company maintains insurance to provide cover for legal action against its directors
employees
the group communicates and consults regularly with employees throughout the year employees’ involvement in the group’s performance is
encouraged with all employees eligible to participate in the share incentive plan and either the share option scheme or the long term incentive
plan certain employees participate in discretionary bonus schemes
the group’s aim for all members of staff and applicants for employment is to fit the qualifications aptitude and ability of each individual to the
appropriate job and to provide equal opportunity regardless of sex religion or ethnic originthe group does all that is practicable to meet its
responsibility towards the employment and training of disabled people
further details on employees health and safety environmental matters and corporate social responsibility are in the corporate social responsibility
statement on page 39
introduction chairman’s statement business review corporate information
directors’ report
financial statements appendix oxford biomedica plc
annual report  accounts 2009
42
directors’ report
for the year ended 31 december 2009
substantial shareholdings
at 23 february 2010 the latest practical date prior to approval of the directors’ report the company had been notified of the following shareholdings
amounting to 3 or more of the ordinary share capital of the company
shareholder number of ordinary shares percentage of issued share capital
mg investment management limited 67620223 1245
cubana investments limited 48765201 898
barclays plc 31055905 572
td waterhouse 29496135 543
gam london limited 29339574 540
legal  general group plc 26512625 488
lloyds tsb share dealing 18776806 346
halifax share dealing limited 17700965 326
sputnik group 17155576 316
no other person has reported an interest in the ordinary shares of the company required to be notified to the company
no person holds shares carrying special rights with regard to control of the company
employee share schemes
the company has a share incentive plan under which shares may be held in trust for employeesthe trustees may only exercise the voting rights in
respect of such shares in accordance with the employees’ instructions currently there are no such shares held in trust
agreements that take effect alter or terminate because of a takeover bid or on change of control
there are no such agreements that the directors consider are materialthere are no agreements providing for compensation for loss of office for
directors or employees in the event of a takeover bid
creditor payment policy
the company and its subsidiaries agree the terms of payment when agreeing the terms and conditions for their transactions with suppliers payment
is made in compliance with those terms subject to the terms and conditions of the relevant transaction having been met by the supplierthe group’s
average creditor payment period at 31 december 2009 was 30 days 2008 44 daysthe company has no trade creditors 2008 nil
going concern
oxford biomedica plc is a research and development based business with no currently marketed productsthe group’s business activities together
with the factors likely to affect its future development performance and position are set out in the chief executive’s viewpoint the chairman’s
statement the business review and the principal risks and uncertainties on pages 4 and 5 12 to 27 and 36the financial position of the group
including its cash flows is described in the financial review on pages 28 to 33 in addition note 2 to the financial statements includes the group’s
objectives policies and processes for managing its capital its financial risk management objectives and its exposure to cash flow and liquidity risk
the group is expected to incur significant further costs as it continues to develop its portfolio of candidate products and related technologythe
directors expect that these costs will be met from existing financial resources the proceeds of licensing agreements and ultimately from the proceeds
of sales of products however there is no certainty that adequate resources will be available on a timely basis and the group may require additional
financing for the future operation of its business including further equity funding as appropriate before it reaches sustained profitabilitythe current
turbulence in credit markets has no direct impact on the group as it has no borrowings and no plans to issue debt instruments
after making enquiries the directors have a reasonable expectation that the company and the group have adequate resources to continue in
operational existence for the foreseeable future accordingly they have adopted the going concern basis in preparing the financial statements
bia code
the uk bioindustry association ‘bia’ of which the company is a member adopted a code of best practice in 1999the bia code includes principles
and provisions relating to corporate governance matters access to external advice confidentiality dealings in the company’s shares and standards of
public announcements it is intended to operate by reference to the particular circumstances of bioscience companies and in support of the combined
code and the rules of the financial services authoritythroughout 2009 the company has complied with the relevant provisions of the bia code
information required to be disclosed by the takeover directive
structure of the company’s capital
the company’s share capital comprises a single class of 1p ordinary shares each carrying one vote and all ranking equally with each otherat 9 march 2010
the authorised share capital was £10000000 comprising 1000000000 1p ordinary shares 543059034 1p ordinary shares were allotted and fully paid
there are no restrictions on the transfer of shares in the company or on voting rights all shares are admitted to trading on the london stock exchange
rights to issue and buy back shares
each year at the annual general meeting the directors seek rights to allot sharesthe authority when granted lasts for 15 months or until the
conclusion of the next annual general meeting if sooner at the last annual general meeting held on 4 june 2009 authority was given to allot up to
179832900 shares subject to the normal preemption rights reserved to shareholders contained in the companies act 2006 that number being one
third of total issued share capital of the company at the time authority was also given subject to certain conditions to waive preemption rights over
up to 83624700 shares being 15 of the shares then in issue no rights have been granted to the directors to buy back shares
corporate information
directors’ report oxford biomedica plc
annual report  accounts 2009
43
appointment and replacement of directors
directors may be appointed by an ordinary resolution at any general meeting of shareholders or may be appointed by the existing directors
provided that any director so appointed shall retire at the next following annual general meeting and may offer himself for reelection at each annual
general meeting any director who has served for three years and one third of the other directors must retire and may offer themselves for reelection
a director may be removed in the following ways if he is prohibited by law from being a director in the event of bankruptcy if he is suffering from
specified mental disorders if he is absent without consent for more than six months or by request in writing by all the other directors any director
may appoint another director or another person approved by the other directors as an alternate director
amendment of the company’s articles of association
amendment of the company’s articles may be made by special resolution at a general meeting of shareholders
statement of directors’ responsibilities
the directors are responsible for preparing the annual report the directors’ remuneration report and the financial statements in accordance with
applicable law and regulations
company law requires the directors to prepare financial statements for each financial year under that law the directors have elected to prepare the
group and parent company financial statements in accordance with international financial reporting standards ifrss as adopted by the european
union under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the group and the company and of the profit or loss of the group for that period in preparing these financial statements the
directors are required to
• select suitable accounting policies and then apply them consistently
• make judgements and estimates that are reasonable and prudent
the directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and
disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial
statements and the directors’ remuneration report comply with the companies act 2006 and as regards the group financial statements article 4 of
the ias regulationthey are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity of the company’s website wwwoxfordbiomedicacouk legislation in the united
kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions
each of the directors whose names and functions are listed in this section confirm that to the best of their knowledge
• the group financial statements which have been prepared in accordance with ifrss as adopted by the eu give a true and fair view of the assets
liabilities financial position and loss of the group and
• the directors’ report contained in this section includes a fair review of the development and performance of the business and the position of the
group together with a description of the principal risks and uncertainties that it faces
statement as to disclosure of information to auditors
so far as each director is aware there is no relevant audit information of which the company’s auditors are unaware and each director has taken all
the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the
company’s auditors are aware of that information
auditors
the auditors pricewaterhousecoopers llp  have indicated their willingness to continue in office and a resolution concerning their reappointment will
be proposed at the annual general meeting
corporate governance
the company’s statement on corporate governance is included in the corporate governance report on pages 37 and 38 of these financial statements
by order of the board
andrew wood
company secretary
introduction chairman’s statement business review corporate information
directors’ report
financial statements appendix oxford biomedica plc
annual report  accounts 2009
44
directors’ remuneration report
only paragraphs marked with ‘’ within this report have been audited
throughout 2009 the remuneration committee comprised two nonexecutive directors dr alex lewis chairman and nick rodgers on 1 january
2010 dr paul blake joined the committeethe committee determines on behalf of the board the company’s policy for executive remuneration and
the individual remuneration packages of the executive directors including awards under the long term incentive planthe committee also
determines the remuneration package of the chairman at the committee’s invitation or request the chief executive officer and other directors may
be in attendance at the meetings of the remuneration committeethe committee has access to professional advice both inside and outside the
company as required
remuneration policy
the company’s policy on remuneration is to attract retain and incentivise the best staff in a manner consistent with the goals of corporate
governance in setting the company’s remuneration policy the remuneration committee considers a number of factors including the basic salaries
and benefits available to directors of comparable companies as provided by information in independent remuneration reports and the level of pay
for other employees in the group
remuneration of executive directors and the chairman
consistent with this policy the company’s remuneration packages awarded to executive directors are intended to be competitive and comprise a mix
of performancerelated and nonperformancerelated elements salaries are normally reviewed on 1 january each year other than for dr stuart naylor
who was appointed as a director on 1 july 2008 and whose salary was increased in 2009 executive director salaries have been frozen at their
2008 levels
there is a discretionary nonpensionable bonus scheme for executive directors subject to the achievement of agreed goals and targets that are
designed to incentivise them to perform at the highest levels and to align their interests with those of the shareholdersthe principal part of
performancelinked remuneration is related to overall measures of group performance with a small amount being linked to individual targets for
2009 the group performance measures related to partnering of the company’s products and achievement of clinical and development milestones
for the executive directors the performancerelated annual bonus potential is up to 60 of basic salarythe committee approved bonuses of
4248 of salary for 2009 based on the achievements in 2009 in 2008 no annual bonuses were paid
professor alan kingsman was chief executive officer until 1 july 2008 when he became chairman in his first year as chairman year ended 30 june
2009 he continued to hold an executive position in order to support the ceo and senior management in a transition phase for the company with a
salary of £175000 per annum in 2009 a bonus of £30000 was paid and an award was made over 899000 ordinary shares under the long term
incentive plan both items being linked to his service as an executive up to 30 june 2009 as agreed with the committee from 1 july 2009 the position
of chairman became nonexecutive with a nonpensionable fee of £75000 per annum a oneoff additional pension contribution of £50000 was paid
on termination of alan kingsman’s executive position in june 2009 in order for the company to continue to have access to alan’s expertise and time
he entered into a consultancy agreement with the group commencing 1 july 2009 for an initial period of 2 years at the rate of £75000 per annum
dr susan kingsman wife of professor alan kingsman and former chief scientific officer also has a consultancy agreement with the group from 1 july
2008 for an initial period of 2 years at the rate of £50000 per annum
on 1 september 2009 1500000 new ordinary shares of 1p each were allotted to john dawsonthe shares were fully paid and were a oneoff share
based bonus payment in accordance with his contract of employment for successful achievement of the transactions with sanofiaventis in april
2009the value of the shares at the closing midmarket price on 28 august 2009 the trading day immediately prior to issue was £172500the
company has borne an additional cost of £119873 required to gross up the value of the shares for income tax and national insurance
benefits detailed in the table of directors’ emoluments mainly comprise healthcare insurance
the company makes contributions to defined contribution personal pension schemes for the executive directors at 10 of salary
directors and senior managers may participate in a sharebased long term incentive plan ltip details of the awards made in 2009 under the ltip are
on page 48 awards under the ltip may be conditional shares or nilcost options the release of which will depend on the completion of a holding
period of at least three years and the satisfaction of performance conditions it is the intention of the remuneration committee to have one main
performance condition attached to share awards granted under the ltip  which is comparative total shareholder return measured against a
comparator group of companiesthe comparator group for the ltip awards made in march 2009 was
alizyme plc
2
 allergy therapeutics plc antisoma plc ark therapeutics group plc axisshield plc biocompatibles international plc btg plc corin group
plc dechra pharmaceuticals plc goldshield group plc gw pharmaceuticals plc optos plc prostrakan group plc proteome sciences plc renovo plc
silence therapeutics plc sinclair pharma plc skyepharma plc summit corporation plc
1 this is the same group used for the 2008 ltip awards apart from the substitution of acambis plc meldex international plc and protherics plc by
gw pharmaceuticals plc renovo plc and sinclair pharma plc
2 after the comparator group was selected alizyme plc went into administration on 24 july 2009 it remains in the comparator group but with a share
price of zero from that date
no awards under the ltip will be released for less than median performance at the testing date median performance will result in release of 25 of
the shares upper quartile performance ie greater than 75th percentile performance will result in release of 100 of the shares with straight line
release between these points if the performance conditions are not satisfied or are partially satisfied at the end of the holding period the ltip award
or the balance of the award as appropriate not released shall lapsethere will be no retesting of the performance conditions
corporate information
directors’ remuneration
report oxford biomedica plc
annual report  accounts 2009
45
the maximum level of awards under the ltip in any calendar year is 150 of each eligible employee’s emolumentsthe committee intends that
annual awards to executive directors will not normally exceed 100 of salarytaking account of the level of the company’s share price in march 2009
and of the potentially high number of shares and the dilutive impact of an award of 100 the 2009 ltip award was scaled back to 3046 of salary
the overall limit on dilution from share schemes allows the company to issue up to 10 of its shares within a ten year period to satisfy awards to
participants in the ltip and any other share plan operated by the company under which shares are issued including the ltip and all other share plans
assuming that 100 of presently unvested ltip awards and share options vest and are exercised and taking into account all options granted in the
last 10 years that had been exercised by 31 december 2009 the maximum potential dilution against this limit was 701
following the introduction of the ltip in 2007 it is no longer the group’s policy to award share options to executive directors share options continue
to be awarded to other eligible employees prior to 2007 share options were awarded to executive directors including the present chairmanthe
exercise price for all share options is the market price of the company’s ordinary shares on the last trading day before the date of grant full details of
directors’ share options are on page 47 a summary of all share options outstanding at 31 december 2009 is given in note 22 to the financial
statementsthe remaining share options held by directors at 31 december 2009 are subject to the rules of the oxford biomedica 1996 no1 share
option schemethese options became exercisable three years from the date of grant and will cease to be exercisable seven years from the date of
grant all awards of share options are at the discretion of the remuneration committee share options held by directors are mostly subject to a
performancebased condition described in note 1 on page 47
in september 2009 nick woolf agreed to surrender the right to exercise a vested option over 801124 shares that had been granted in september
2002 with an exercise price of 875p per share and were required to be exercised within 7 years of the grant a taxable compensation payment of
£19211 was paid for this surrenderthis course of action was agreed on after the company’s broker advised that a sale at the time would have a
significant negative effect on the share price due to the size of the transaction a lack of liquidity and the nature of the salethe committee was
consulted and agreed that it would be in the best interest of shareholders as a whole to allow the share options to lapse and to make the payment
to nick woolf in compensation
remuneration of nonexecutive directors
the fees paid to nonexecutive directors and prior to july 2008 to the chairman are determined by the board nonexecutive directors do not
receive pension contributions or a bonus nonexecutive directors do not participate in the company’s share option schemes
the nonexecutive directors have appointments that are for three years unless terminated by three months’ written notice by either party
nonexecutive directors’ appointments may be renewed by mutual agreement as recommended by combined code provision a72 any term
beyond six years for a nonexecutive director is subject to considered review by the board nonexecutive directors serving beyond nine years are
subject to renewal for one year at a time and are submitted for reelection each year at the annual general meeting
directors’ service contracts
it is oxford biomedica plc’s policy that directors’ service contracts should have notice periods of not more than one year and that the contractual
termination payments should not exceed the director’s current salary benefits and bonus entitlement for the notice period
the details of service contracts of those who served as directors during the year are
unexpired term at contractual termination
contract date 31 december 2009 notice period payments
mark berninger 30 january 2009 nil
1
3 months notice period only
john dawson 10 october 2008 nil
2
12 months notice period only
professor alan kingsman
3
20 may 2009 2 years 6 months 3 months notice period only
dr alex lewis 3 april 2008 1 year 3 months 3 months notice period only
dr stuart naylor 1 july 2008 nil
2
12 months notice period only
peter nolan 1 may 2002 nil
2
12 months notice period only
nick rodgers 2 march 2007 2 months 3 months notice period only
andrew wood 31 october 1996 nil
2
12 months notice period only
nick woolf 3 march 2005 nil
2
12 months notice period only
1 1mark berninger resigned from the board on 1 january 2010
2 executive directors’ contracts are for an initial term of 12 months and thereafter are subject to 12 months notice
3 in addition to his appointment as chairman professor alan kingsman entered into a consultancy agreement with the group commencing 1 july
2009 for an initial period of 2 years
introduction chairman’s statement business review corporate information
directors’ remuneration
report
financial statements appendix oxford biomedica plc
annual report  accounts 2009
46
directors’ remuneration report
directors’ remuneration 
details of individual directors’ emoluments for the year are as follows
compensation
salary and annual for loss other 2009 total 2009
1
2008 total
1
2008
name of director fees bonus benefits of office payments emoluments pension emoluments pension
££ £££ ££ £ £
chairman
professor alan kingsman
2
112500 30000 6073 50000 37500 186073 6250 223239 22034
dr peter johnson
3
–– ––– – – 57750 –
executive
john dawson 330000 158400 3204 –– 491604 33000 123944 5500
john dawson oneoff
sharesettled bonus
4
– 292373 –– – 292373 – ––
dr stuart naylor 170833 84000 2921 –– 257754 17083 78568 7750
peter nolan 173565 78104 4559 –– 256228 17357 177410 17357
andrew wood 219945 98975 2986 –– 321906 21995 222057 21995
nick woolf
5
174515 74521 5284 –– 254320 17743 179307 17743
professor susan kingsman
6
–– ––– – – 64576 6363
dr michael mcdonald –– ––– – – 477095 –
nonexecutive
mark berninger
37
32402 –– 8030 – 40432 – 34675 –
dr alex lewis 38947 –– –– 38947 – 28396 –
nick rodgers
3
48968 –– –– 48968 – 52926 –
1301675 816373 25027 58030 37500 2188605 113428 1719943 98742
1 comparative figures for 2008 may not be for a full year 2008 figures for john dawson dr stuart naylor and dr alex lewis are for the periods from their
dates of appointment to the board respectively 1 august 2008 1 july 2008 and 3 april 2008 for 3 directors who left the board in 2008 the 2008
figures are for the periods from 1 january 2008 up to the dates that they resigned 1 july 2008 for dr peter johnson and professor susan kingsman
and 28 august 2008 for dr michael mcdonald
2 professor alan kingsman was chief executive officer until 1 july 2008 when he became chairmanthe amounts reported for 2008 include his
remuneration both as chief executive officer and as chairman a oneoff additional pension contribution of £50000 was paid in 2009 when the position
of chairman became nonexecutive in addition to the amounts above professor alan kingsman received consultancy fees of £37500 2008 nil
3 these amounts represent amounts payable to third parties for the services of nonexecutive directors
4 in addition to the annual remuneration above john dawson received a oneoff sharebased bonus payment in 2009the value grossedup for income
tax and national insurance was £292373
5 in addition to the amounts above a compensation payment of £19211 was paid to nick woolf in relation to the surrender of certain share options
6 in addition to the amounts above professor susan kingsman was paid consultancy fees of £50000 2008 £25000
7 mark berninger resigned from the board on 01 january 2010
retirement benefits are accruing to five directors 2008 six under oxford biomedica uk limiteds money purchase pension scheme
directors ’ interests
interest in shares
the interests of the directors in the shares of the company at 31 december 2009 together with their interests at 1 january 2009 were as follows
number of ordinary shares
1
31 december 1 january
the company – ordinary shares of 1p each 2009 2009
john dawson 1500000 –
professor alan kingsman 13032590 13032590
dr alex lewis 100000 100000
dr stuart naylor 8921 8921
peter nolan 263638 263638
nick rodgers 52000 52000
andrew wood 305067 305067
nick woolf 195000 195000
1 includes shares held by persons connected with the director
2 mark berninger did not have any interest in the company’s shares at 1 january or 31 december 2009
there were no changes in the directors shareholdings between 31 december 2009 and the date of this report
corporate information
directors’ remuneration
report oxford biomedica plc
annual report  accounts 2009
47
interests in share options 
the interests of the directors in options over the ordinary shares of the company were as follows
options over ordinary shares of 1p each
date from
1 january 31 december exercise which expiry
2009 granted exercised lapsed 2009 price exerciseable date
prof alan kingsman
1
180000 –– – 180000 1925p 271006 271010
prof susan kingsman
12
150000 –– – 150000 1925p 271006 271010
prof alan kingsman
1
190000 –– – 190000 205p 121007 121011
prof susan kingsman
12
155000 –– – 155000 205p 121007 121011
prof alan kingsman
1
208000 –– – 208000 290p 151208 151212
prof susan kingsman
12
170000 –– – 170000 290p 151208 151212
1053000 –– – 1053000
dr michael mcdonald
3
379500 –– 379500 – 4275p 270908 270912
dr michael mcdonald
3
759000 –– 759000 – 290p 151208 151212
dr michael mcdonald
13
209000 –– 209000 – 310p 060909 060913
1347500 –– 1347500 –
dr stuart naylor 97485 –– – 97485 205p 121007 121011
dr stuart naylor
1
120750 –– – 120750 290p 151208 151212
218235 –– – 218235
peter nolan
1
140000 –– – 140000 205p 121007 121011
peter nolan
1
153000 –– – 153000 290p 151208 151212
293000 –– – 293000
andrew wood
1
175000 –– – 175000 205p 121007 121011
andrew wood
1
193000 –– – 193000 290p 151208 151212
andrew wood
4
172531 –– – 172531 290p 210309 210313
andrew wood
4
172531 –– – 172531 310p 060909 060913
andrew wood
4
– 25000 – 18402 6598 61p 250312 250319
713062 25000 – 18402 719660
nick woolf
5
801124 –– 801124 – 875p 160905 160909
nick woolf 132000 –– – 132000 1925p 271006 271010
nick woolf
1
153000 –– – 153000 290p 151208 151212
1086124 –– 801124 285000
1 a performancebased condition applies to these optionsthe options are exercisable only if at the time of exercise or for a period of at least 12
months in aggregate in the three years before exercise the percentage increase in oxford biomedica plc’s total shareholder return since the grant of
the option exceeds the percentage increase in the ftse techmark mediscience indexthis target was chosen because the directors believe that the
ftse techmark mediscience index should be a benchmark that reflects the factors bearing on the uk biotechnology sector
2 dr susan kingsman resigned from the board on 1 july 2008 and became a senior scientific consultant in accordance with the rules of the oxford
biomedica 1996 no1 share option scheme the options held at 1 july 2008 remain in place on their original terms dr susan kingsman is the wife
of professor alan kingsman
3 dr michael mcdonald resigned on 28 august 2008 in accordance with the rules of the oxford biomedica 1996 no1 share option scheme these
options remained in place but subsequently lapsed on 28 february 2009
4 as part of companywide awards of share options to employees of oxford biomedica uk limited in 2006 and 2009 a total of 370062 options have
been awarded to sharon wood wife of andrew wood who was a group employee until 31 december 2009 on the termination of sharon wood’s
employment on 31 december 2009 in accordance with the option scheme rules 6598 of the options granted on 25 march 2009 vested and the
remaining 18402 options lapsed all of sharon wood’s remaining share options are exercisable until 30 june 2010 at which point if not exercised
they will lapse
5 in september 2009 nick woolf agreed not to exercise these options and they lapsed on 16 september 2009 a compensation payment of £19211
was made
introduction chairman’s statement business review corporate information
directors’ remuneration
report
financial statements appendix oxford biomedica plc
annual report  accounts 2009
48
longterm incentive plan 
awards have been made to executive directors under the ltip as follows
1 january 31 december award vesting
2009 awarded vested lapsed 2009 date date
john dawson 2500000 ––– 2500000 131008 131011
john dawson – 2500000 –– 2500000 250309 250312
2500000 2500000 –– 5000000
prof alan kingsman 735533 ––– 735533 030407 030410
prof alan kingsman 1291871 ––– 1291871 130308 130311
prof susan kingsman – 899000 –– 899000 250309 250312
2027404 899000 –– 2926404
dr stuart naylor 215975 ––– 215975 030407 030410
dr stuart naylor 311284 ––– 311284 130308 130311
dr stuart naylor – 811000 –– 811000 250309 250312
527259 811000 –– 1338259
peter nolan 547955 ––– 547955 030407 030410
peter nolan 711400 ––– 771400 130308 130311
peter nolan – 854000 –– 854000 250309 250312
1319355 854000 –– 2173355
andrew wood 694379 ––– 694379 030407 030410
andrew wood 977533 ––– 977533 130308 130311
andrew wood – 1082000 –– 1082000 250309 250312
1671912 1082000 –– 2753912
nick woolf 560161 ––– 560161 030407 030410
nick woolf 788582 ––– 788582 130308 130311
nick woolf – 873000 –– 873000 250309 250312
1348743 873000 –– 2221743
1 awards made under the ltip are nilcost share options
2 the performance condition for these awards compares the company’s tsr to the tsr of a chosen group of healthcare and biotechnology companies
over a three year period a median ranking must be achieved before any part of the award vests 25 of the award and an upper quartile ranking
must be achieved for the award to vest in full
the company has reviewed the performance conditions that apply to the ltip awards in order to estimate the extent to which the awards might vest
assuming that relative share price performance in the comparator groups remains consistent with performance up to 31 december 2009 the directors
estimate that the ltip awards would vest as follows
• award made on 3 april 2007 less than median performance – none of this award would vest
• award made on 17 march 2008 less than median performance – none of this award would vest
• award made on 13 october 2008 performance ranked at 75th percentile – all of this award would vest
• award made on 25 march 2009 performance ranked at 85th percentile – all of this award would vest
the market value of ordinary shares as at 31 december 2009 was 1125p 31 december 2008 663pthe market value of ordinary shares during the year
ranged from 588p to 170p
except as detailed above no directors had interests in shares or share options of the company or any other group company at 31 december 2009there
have been no changes in the interests of the directors in ordinary shares of the company between 31 december 2009 and the date of this report
directors’ remuneration report
corporate information
directors’ remuneration
report oxford biomedica plc
annual report  accounts 2009
49
comparison of five year total shareholder return
the chart shows the value at the end of each year of £100 invested on 31 december 2004 in oxford biomedica 1p ordinary shares oxb compared to
the change in the ftse allshare index and the ftse techmark mediscience index over the same period as we have seen in previous years the
company’s share price tends to follow the trends shown by the benchmark indices but with significantly greater volatility in 2005 when the market was
generally rising the oxb share price rose very stronglythe abrupt drop in the oxb share price in the 4th quarter of 2005 reflects the pricing of an oxb
share issue in december 2005 despite this oxb still outperformed the benchmark indices in 2005 by a wide margin in the second half of 2006 the oxb
share price recovered strongly and once again significantly outperformed a rising marketthis cycle reached a peak when we secured a partner for the
development of trovax in quarter 1 of 2007 however through the rest of 2007 and 2008 the oxb price followed the established pattern in a falling
market falling more rapidly than the market on top of this the abrupt drop in quarter 3 of 2008 was a result of the setback with trist which was
announced on 11 july 2008the market as a whole made a recovery from quarter 2 of 2009 and as usual the oxb share price rose more rapidly than the
benchmark indices over the whole of 2009 the oxb share price rose by 70 compared to a gain in the ftse allshare index of 25 and a gain of 29 in
the ftse techmark index
the directors consider that this extreme volatility in share price is not unique to oxford biomedica but is a feature shared by many hightech companies
whose valuations are significantly influenced by newsflow investor sentiment and attitude to risk
in the opinion of the directors the ftse allshare index should be a reasonable index against which the total shareholder return of oxford biomedica plc
may be measured over a fiveyear term because it represents a broadbased objective measure of investment return from equitiesthe ftse techmark
mediscience index made up of emerging healthcare companies in the early stages of growth provides a second benchmark that may better reflect the
factors bearing on valuations in the uk biotechnology sector
dr alex lewis
chairman of the remuneration committee
0
50
100
150
200
250
300
dec04 dec05 dec06 dec07 dec08 dec09
oxford biomedica plc
ftse allshare index
ftse techmark mediscience index
rebased to 100
introduction chairman’s statement business review corporate information
directors’ remuneration
report
financial statements appendix oxford biomedica plc
annual report  accounts 2009
50
we have audited the financial statements of
oxford biomedica plc for the year ended
31 december 2009 which comprise the
consolidated statement of comprehensive
income the group and parent company
balance sheets the group and parent company
statements of cash flows the group and parent
company statements of changes in equity and
the related notesthe financial reporting
framework that has been applied in their
preparation is applicable law and international
financial reporting standards ifrss as
adopted by the european union and as regards
the parent company financial statements as
applied in accordance with the provisions of the
companies act 2006
respective responsibilities of directors and
auditors
as explained more fully in the directors’
responsibilities statement set out on page 43
the directors are responsible for the preparation
of the financial statements and for being
satisfied that they give a true and fair view our
responsibility is to audit the financial
statements in accordance with applicable law
and international standards on auditing uk
and irelandthose standards require us to
comply with the auditing practices board’s
ethical standards for auditors
this report including the opinions has been
prepared for and only for the company’s
members as a body in accordance with chapter
3 of part 16 of the companies act 2006 and for
no other purposewe do not in giving these
opinions accept or assume responsibility for
any other purpose or to any other person to
whom this report is shown or into whose hands
it may come save where expressly agreed by
our prior consent in writing
scope of the audit of the financial
statements
an audit involves obtaining evidence about the
amounts and disclosures in the financial
statements sufficient to give reasonable
assurance that the financial statements are free
from material misstatement whether caused by
fraud or errorthis includes an assessment of
whether the accounting policies are
appropriate to the group’s and the parent
company’s circumstances and have been
consistently applied and adequately disclosed
the reasonableness of significant accounting
estimates made by the directors and the overall
presentation of the financial statements
opinion on financial statements
in our opinion
• the financial statements give a true and fair
view of the state of the group’s and of the
parent company’s affairs as at 31 december
2009 and of the group’s loss and the group’s
and parent company’s cash flows for the year
then ended
• the group financial statements have been
properly prepared in accordance with ifrss
as adopted by the european union
• the parent company financial statements
have been properly prepared in accordance
with ifrss as adopted by the european union
and as applied in accordance with the
provisions of the companies act 2006 and
• the financial statements have been prepared
in accordance with the requirements of the
companies act 2006 and as regards the
group financial statements article 4 of the
ias regulation
opinion on other matters prescribed by the
companies act 2006
in our opinion
• the part of the directors’ remuneration
report to be audited has been properly
prepared in accordance with the companies
act 2006
• the information given in the directors’ report
for the financial year for which the financial
statements are prepared is consistent with
the financial statements and
• the information given in the corporate
governance statement set out on pages 37
and 38 with respect to internal control and
risk management systems and about share
capital structures is consistent with the
financial statements
matters on which we are required to report
by exception
we have nothing to report in respect of the
following
under the companies act 2006 we are required
to report to you if in our opinion
• adequate accounting records have not been
kept by the parent company or returns
adequate for our audit have not been
received from branches not visited by us or
• the parent company financial statements and
the part of the directors’ remuneration
report to be audited are not in agreement
with the accounting records and returns or
• certain disclosures of directors’ remuneration
specified by law are not made or
• we have not received all the information and
explanations we require for our audit or
• a corporate governance statement has not
been prepared by the parent company
under the listing rules we are required to
review
• the directors’ statement set out on page 42
in relation to going concern and
• the parts of the corporate governance
statement relating to the company’s
compliance with the nine provisions of the
june 2008 combined code specified for our
review
miles saunders senior statutory auditor
for and on behalf of
pricewaterhousecoopers llp
chartered accountants and registered auditors
reading
9 march 2010
independent auditors’ report
to the members of oxford biomedica plc
financial statements
independent auditors’
report oxford biomedica plc
annual report  accounts 2009
51
consolidated statement of comprehensive income
for the year ended 31 december 2009
2009 2008
pre exceptional pre exceptional
exceptional items exceptional items
items note 5 total items note 5 total
notes £000 £000 £000 £000 £000 £000
revenue 3 9031 10089 19120 18394 – 18394
cost of sales creditcharge 7 90 527 437 1295 – 1295
gross profit 9121 9562 18683 17099 – 17099
research and development costs 7 14899 3392 18291 22482 4561 27043
administrative expenses 7 6056 169 6225 3840 – 3840
other operating income grants receivable 103 – 103 113 – 113
operating lossprofit 11731 6001 5730 9110 4561 13671
finance income 6 669 – 669 1662 – 1662
finance costs 6 33 – 33 24 – 24
lossprofit before tax 11095 6001 5094 7472 4561 12033
taxation 8 1579 – 1579 1992 – 1992
lossprofit for the year 25 9516 6001 3515 5480 4561 10041
other comprehensive income
exchange adjustments 16 – 16 67 – 67
total recognised comprehensive
expenseincome for the year 9500 6001 3499 5547 4561 10108
basic loss and diluted loss per ordinary share 9 176p 111p 065p 102p 085p 187p
the results for the years above are derived entirely from continuing operations
there is no difference between the loss before tax and the loss for the years stated above and their historical cost equivalents
introduction chairman’s statement business review corporate information financial statements
consolidated statement of
comprehensive income
appendix oxford biomedica plc
annual report  accounts 2009
52
balance sheets
as at 31 december 2009
group company
2009 2008 2009 2008
notes £000 £000 £000 £000
assets
noncurrent assets
intangible assets 11 11119 11119 – –
property plant and equipment 12 631 688 – –
financial assets investments in subsidiaries 13 – – 60953 35671
11750 11807 60953 35671
current assets
trade and other receivables 14 4628 7305 2 3
current tax assets 2269 2119 – –
financial assets available for sale investments 15 18500 13750 – –
cash and cash equivalents 15 6802 8141 1 –
32199 31315 3 3
current liabilities
trade and other payables 16 7669 10558 73 52
deferred income 17 4741 4486 – –
provisions 18 898 88 – –
13308 15132 73 52
net current assetsliabilities 18891 16183 70 49
noncurrent liabilities
other noncurrent liabilities 102 131 – –
deferred income 17 9024 3957 – –
provisions 18 539 631 – –
9665 4719 – –
net assets 20976 23271 60883 35622
shareholders’ equity
share capital 21 5412 5373 5412 5373
share premium 24 110043 109686 110043 109686
merger reserve 26 14310 14310 13599 13599
other reserves 26 676 692 3329 2521
retained losses 25 108113 105406 71500 95557
total equity 20976 23271 60883 35622
the company’s registered number is 3252665
the financial statements on pages 51 to 81 were approved by the board of directors on 9 march 2010 and were signed on its behalf by
john dawson
chief executive officer
financial statements
balance sheets oxford biomedica plc
annual report  accounts 2009
53
statements of cash flows
for the year ended 31 december 2009
group company
2009 2008 2009 2008
notes £000 £000 £000 £000
cash flows from operating activities
cash generated byused in operations 27 904 20610 136 173
net interest received 976 2162 – –
tax credit received 1500 2551 – –
overseas tax paid 67 74 – –
net cash generated byused in operating activities 3313 15971 136 173
cash flows from investing activities
loan to subsidiary – – 259 438
proceeds from sale of property plant and equipment 1 10 – –
purchases of property plant and equipment 247 162 – –
purchases of intangible assets 41 766 – –
net purchasematurity of available for sale investments 4750 13435 – –
net cash used ingenerated by investing activities 5037 12517 259 438
cash flows from financing activities
net proceeds from issue of ordinary share capital 396 611 396 611
net cash generated by financing activities 396 611 396 611
net decreaseincrease in cash and cash equivalents 1328 2843 1 –
cash and cash equivalents at 1 january 8141 10962 – –
effect of exchange rate changes 11 22 – –
cash and cash equivalents at 31 december 15 6802 8141 1 –
introduction chairman’s statement business review corporate information financial statements
statements of cash flows
appendix oxford biomedica plc
annual report  accounts 2009
54
statement of changes in equity
for the year ended 31 december 2009
share share merger other retained
capital premium reserve reserves losses total
group notes £000 £000 £000 £000 £000 £000
at 1 january 2008 5347 109101 14310 625 96201 31932
year ended 31 december 2008
exchange adjustments –– – 67 – 67
loss for the year –– –– 10041 10041
total comprehensive expense for the year –– – 67 10041 10108
transactions with owners
share options
proceeds from shares issued 2124 2 50 ––– 52
value of employee services 23 –– –– 836 836
issue of shares excluding options 2124 24 545 ––– 569
costs of share issues 24 – 10 ––– 10
at 31 december 2008 5373 109686 14310 692 105406 23271
year ended 31 december 2009
exchange adjustments –– – 16 – 16
loss for the year –– –– 3515 3515
total comprehensive expense for the year –– – 16 3515 3499
transactions with owners
share options
proceeds from shares issued 2124 2 13 ––– 15
value of employee services 23 ––– – 808 808
issue of shares excluding options 2124 37 308 ––– 345
net credit for shares issue costs 24 – 36 ––– 36
at 31 december 2009 5412 110043 14310 676 108113 20976
share share merger other retained
capital premium reserve reserve losses total
company notes £000 £000 £000 £000 £000 £000
at 1 january 2008 5347 109101 13599 1685 10340 119392
year ended 31 december 2008
loss for the year –– –– 85217 85217
total comprehensive expense for the year –– –– 85217 85217
transactions with owners
share options
proceeds from shares issued 2124 2 50 ––– 52
credit in relation to
employee share schemes 26 –– – 836 – 836
issue of shares excluding options 2124 24 545 ––– 569
costs of share issues 24 – 10 ––– 10
at 31 december 2008 5373 109686 13599 2521 95557 35622
year ended 31 december 2009
profit for the year –– –– 24057 24057
total comprehensive income for the year –– –– 24057 24057
transactions with owners
share options
proceeds from shares issued 2124 2 13 ––– 15
credit in relation to
employee share schemes 26 ––– 808 – 808
issue of shares excluding options 2124 37 308 ––– 345
net credit for share issue costs 24 – 36 ––– 36
at 31 december 2009 5412 110043 13599 3329 71500 60883
financial statements
statement of changes
in equity oxford biomedica plc
annual report  accounts 2009
55
notes to the consolidated financial statements
for the year ended 31 december 2009
1 accounting policies
the principal accounting policies adopted in the preparation of these financial statements are set out belowthese policies have been consistently
applied to all the financial years presented unless otherwise stated
basis of preparation
the financial statements have been prepared in accordance with international financial reporting standards ‘ifrs’ as adopted by the european union
and international financial reporting interpretations committee ‘ifric’ interpretations endorsed by the european union and with those parts of the
companies act 2006 applicable to companies reporting under ifrsthe financial statements are prepared in accordance with the historical cost convention
as modified by revaluation of available for sale investmentsas more fully explained in the directors’report on page 42 the going concern basis has been
adopted in preparing the financial statements
accounting developments
a standards amendments and interpretations mandatory in 2009
the following new standards amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 january 2009
• ifrs 8‘operating segments’ effective 1 january 2009 ifrs 8 replaces ias 14‘segment reporting’  it requires a ‘management approach’ under which
segment information is presented on the same basis as that used for internal reporting purposes management considers that there is only one
reportable segment biotechnology research and development operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decisionmakerthe chief operating decisionmaker has been identified as the senior management
group that makes strategic decisions assets liabilities and overheads are allocated to this one segment
• ias 1 revised‘presentation of financial statements’ effective 1 january 2009the revised standard prohibits the presentation of items of income
and expenses that is ‘nonowner changes in equity’ in the statement of changes in equity requiring ‘nonowner changes in equity’ to be presented
separately from owner changes in equity all ‘nonowner changes in equity’ are required to be shown in a performance statement entities can
choose whether to present one performance statement the statement of comprehensive income or two statements the income statement and
statement of comprehensive incomethe group has elected to present a single statement of comprehensive incomethese financial statements
have been prepared under the revised disclosure requirements
• ifrs 2 amendment‘sharebased payment’ effective 1 january 2009 ifrs 2 amendment deals with vesting conditions and cancellations it
clarifies that vesting conditions are either service or performance conditions only other features of a sharebased payment would need to be
included in the grant date fair value calculation for transactions with employees and others providing similar services they would not impact the
number of awards expected to vest or valuation thereof subsequent to grant date all cancellations whether by the entity or by other parties
should receive the same accounting treatmentthe amendment does not have a material impact on the groups financial statements
• ifrs 7 amendment‘financial instruments disclosures’ effective 1 january 2009this requires all financial instruments that are measured at fair
value in the balance sheet to be classified into a threelevel fair value hierarchythe amendments are designed to assist understanding of the
determination of fair value measurements and are provided in note 19
• ias 32 amendment‘financial instruments presentation’ effective 1 january 2009 puttable financial instruments and obligations arising on
liquidation require certain instruments to be classified as equity puttable financial instrumentsthe amendment does not have a material impact
on the group’s financial statements
b standards amendments and interpretations mandatory in 2009 but not relevant
the following amendments and interpretations to published standards are effective for accounting periods beginning on or after 1 january 2009 but
are not relevant to the group’s operations
• ias 16 amendment‘property plant and equipment’ effective 1 january 2009where entities routinely sell items of property plant and equipment
that have been held for rental to others they shall
− transfer such assets to inventories at their carrying amount when they cease to be rented and become held for sale
− recognise the income on disposal of such assets in revenue in accordance with ias 18 revenue
− classify cash flows upon the purchase and disposal of such assets within operating activities in the consolidated cash flow statement
• ias 23 amendment‘borrowing costs’ effective 1 january 2009this removes the option of immediately recognising as an expense those
borrowing costs which relate to assets that take a substantial period of time to prepare for their intended use
• ias 39 and ifric 9 amendments regarding embedded derivatives effective 1 july 2008 ifric 9‘financial instruments’ introduces new
requirements for the classification and measurement of financial assets simplifying the mixed measurement model currently applied under ias 39
‘financial instruments recognition and measurement’  by defining two primary measurement categories for financial assets amortised cost and fair
valuethe basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial assetthe new
standard also requires a single impairment method to be used replacing the many different impairment methods in ias 39
• ifric 13‘customer loyalty programmes’ effective 1 july 2008 but euendorsed for use 1 january 2009 provides guidance on the treatment of
customer loyalty programmes an entity shall account for award credits which are granted as part of customer loyalty programmes as separately
identifiable components of a sales transactionthe fair value of the consideration received or receivable in respect of the initial sale shall be
allocated between the award credits and other components of the sale
• ifric 14‘ias 19 – the limit on a defined benefit asset minimum funding requirements and their interaction’ effective 1 july 2008 but euendorsed
for use 1 january 2009this applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early
payment of contributions to cover those requirements
• ifric 15‘agreements for the construction of real estate’ effective 1 january 2009 but euendorsed for use 1 january 2010 addresses the
accounting for revenue and associated expenses by entities that undertake the construction of real estate
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
56
notes to the consolidated financial statements
for the year ended 31 december 2009
1 accounting policies continued
c standards amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group
the following standards and amendments to existing standards have been published and are mandatory for the group’s accounting periods
beginning on or after 1 january 2010 or later periods but the group has not adopted them early
• ias 39 amendment‘financial instruments recognition and measurement’ effective 1 july 2009 has been amended to be consistent with ifrs
8 operating segments which requires disclosure for segments to be based on information reported to the chief operating decisionmaker
• ifric 17‘distributions of noncash assets to owners’ effective 1 july 2009 applies to the entity making the distribution not to the recipient
when noncash assets are distributed to owners or when the owner is given a choice of taking cash in lieu of the noncash assets in particular a
dividend payable should be recognised when the dividend is appropriately authorised and is no longer at the discretion of the entity and should
be measured at the fair value of the net assets to be distributed
• ifric 18‘transfer of assets from customers’ effective 1 july 2009 clarifies the requirements for agreements in which an entity receives from a
customer an item of property plant and equipment that the entity must then use either to connect the customer to a network or to provide the
customer with ongoing access to a supply of goods or serviceswhen the item of property plant and equipment transferred from a customer
meets the definition of an asset under the iasb framework from the perspective of the recipient the recipient must recognise the asset in its
financial statements
d interpretations and amendments to existing standards that are not yet mandatory and not relevant for the group’s operations
the following interpretations and amendments to existing standards have been published and are mandatory for the group’s accounting periods
beginning on or after 1 january 2010 or later periods but are not relevant for the group’s operations
• ias 27 revised‘consolidated and separate financial statements’  and ifrs 1 revised‘first time adoption’ both effective 1 july 2009 allow first
time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of
investments in subsidiaries jointly controlled entities and associates in the separate financial statementsthe amendment also removes the
definition of the cost method from ias 27 and replaces it with a requirement to present dividends as income in the separate financial statements
of the investorthe revised standard also specifies the accounting where there is no change in control or control is lostwhere there is a change in
control the effects of all transactions with noncontrolling interests are recorded in equity and these transactions will no longer result in goodwill
or gains and losses any remaining interest in the entity is remeasured to fair value and a gain or loss is recognised in profit or loss
• ifrs 3 revised‘business combinations’ effective 1 july 2009 requires that all payments to purchase a business are recorded at fair value at the
acquisition date with contingent payments classified as debt subsequently remeasured through the income statementthere is a choice on an
acquisitionbyacquisition basis to measure the noncontrolling interest in the acquiree either at fair value or at the noncontrolling interest’s
proportionate share of the acquiree’s net assets all acquisitionrelated costs should be expensed
• ifric 12‘service concession arrangements’ effective 30 march 2009 applies to contractual arrangements whereby a private sector operator
participates in the development financing operation and maintenance of infrastructure for public sector services for example under private
finance initiative pfi contracts under these arrangements assets are assessed as either intangible assets or finance receivables
• ifric 16‘hedges of a net investment in a foreign operation’ effective 1 october 2008 but euendorsed for use 1 july 2009 provides guidance on
net investment hedging including
− which foreign currency risks qualify for hedge accounting and the amount that may be designated
− where within the group the hedging instrument may be held and
− the amount which is reclassified to the income statement upon disposal of the hedged foreign operation
use of estimates and assumptions
the preparation of financial statements in conformity with ifrs requires the use of certain critical accounting estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period estimates and judgements are continually made and are based on historic experience and other factors including
expectations of future events that are believed to be reasonable in the circumstances
critical accounting estimates and assumptions
where the group makes estimates and assumptions concerning the future the resulting accounting estimates will seldom exactly match actual
results due to the amounts involved the estimates and assumptions regarding revenue recognition costs accrued for clinical trials and impairment
of intangible assets have the greatest risk of causing a material adjustment to the carrying amounts of assets and liabilities
in 2009 the group received an upfront nonrefundable payment of us26 million £16641000 from sanofiaventis under the ocular product
collaborationthis is being recognised as revenue on a straight line basis over 42 to 51 months the expected duration of the initial stage of the
collaboration for each of the four products revenue of £3110000 was recognised under this collaboration in 2009 with the remaining
£13531000 classified as deferred income if the revenue recognition periods had been six months longer the amount of revenue recognised in
2009 would have been reduced by £383000 and the amount of deferred income increased by the same amount had the revenue recognition
period been six months less the amount of revenue recognised in 2009 would have increased by £508000
for clinical trial costs the group uses a percentageofcompletion method to accrue for such coststhis method requires the group to estimate the
services performed by contractors to date as a proportion of total services to be performed if the accruals calculated using this method were
overunder estimated by 5 with all other variables held constant there would have been an increasedecrease in research and development costs
of £127000 2008 £193000
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
57
the group has significant intangible assets arising from purchases of intellectual property rights and from the acquisition of oxxon therapeutics limited in
2007 under ifrs intangible assets that have an indefinite useful life or which are not yet available for use are tested annually for impairmentthe
impairment analysis is principally based on estimated discounted future cash flows actual outcomes could vary significantly from such estimates of
discounted future cash flows due to the highly sensitive assumptions usedthe determination of the assumptions is subjective and requires the exercise of
considerable judgement any changes in key assumptions about the group’s business and prospects or changes in market conditions could materially
affect the amount of impairment
basis of consolidation
the consolidated statement of comprehensive income the group balance sheet and the group statement of cash flows include the accounts of the
company and its subsidiary undertakings made up to 31 december subsidiaries are consolidated from the date at which control is transferred to the
group
subsidiaries are entities that are directly or indirectly controlled by the group control exists where the group has the power to govern the financial
and operating policies of the entity so as to obtain benefits from its activities in assessing control potential voting rights that are currently exercisable
or convertible are taken into account
the purchase method of accounting is used to account for the acquisition of subsidiaries by the groupthe cost of an acquisition is measured as the
fair value of the assets given equity instruments issued and liabilities incurred or assumed at the date of exchange plus costs directly attributable to
the acquisition identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date irrespective of the extent of any minority interestthe excess of the cost of the acquisition over the fair value of the
group’s share of the identifiable net assets acquired is recorded as goodwill if the cost of acquisition is less than the fair value of the net assets of the
subsidiary acquired the difference is recognised directly in the statement of comprehensive incomewhere necessary adjustments are made to the
financial statements of subsidiaries to bring accounting policies used into line with those of the group
intercompany transactions balances and unrealised gains on transactions between group companies are eliminated unrealised losses are also
eliminated but considered an impairment indicator of the asset transferred accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the group
the group and company have elected not to apply ifrs 3 ‘business combinations’ retrospectively to business combinations which took place prior to
1 january 2004 namely the acquisition in 1996 of 100 of the issued share capital of oxford biomedica uk limited that has been accounted for by
the merger accounting method
joint ventures
entities that are jointly controlled are consolidated using the proportionate consolidation method on a line by line basis which combine’s the group’s
assets liabilities income and expenses with the group’s share of assets liabilities income and expenses of the joint venture in which the group has an
interest
revenue
the group generates revenue from product and technology licence transactions and from funded research and development programmes
product licence transactions typically have an initial upfront nonrefundable payment on execution of the licence and the potential for further
payments conditional on achieving specific milestones plus royalties on product salestechnology licence transactions typically have an initial
upfront nonrefundable payment on execution of the licence and the potential for further annual maintenance payments for the term specified in
the licencewhere the initial fee paid is nonrefundable and there are no ongoing commitments from the group and the licence has no fixed end date
the group recognises the element received up front as a payment in consideration of the granting of the licence on execution of the contract
amounts receivable in respect of milestone payments are recognised as revenue when the specific conditions stipulated in the licence agreement
have been met payments linked to “success” such as regulatory filing or approval achievement of specified sales volumes are recognised in full when
the relevant event has occurred maintenance fees within the contracts are spread over the period to which they relate usually a year otherwise
amounts receivable are recognised in the period in which related costs are incurred or over the estimated period to completion of the relevant phase
of development or associated clinical trials
research and development funding is recognised as revenue over a period that corresponds with the performance of the funded research and
development serviceswhere the group incurs passthrough expenses in relation to collaborative partners’ own research and development
programmes such costs are included in the group’s financial statements as operating expenses net of collaborator reimbursement and the
reimbursement received does not form part of the group’s revenue
amounts recognised exclude value added tax differences between cash received and amounts recognised are included as deferred revenue where
cash received exceeds revenue recognised and as accrued revenue where revenue has yet to be billed to the customer
cost of sales
the group’s products and technologies include technology elements that are licensed from third parties cost of sales is the royalty arising on such
third party licenseswhere royalty due on revenue has not been paid it is included in accrualswhere revenue is spread over a number of accounting
periods the royalty attributable to the deferred revenue is included in prepayments passthrough costs reimbursed by collaborative partners do not
form part of cost of sales
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
58
notes to the consolidated financial statements
for the year ended 31 december 2009
1 accounting policies continued
segmental reporting
the group has one single business segment based upon its proprietary technology operated out of two geographical locations – oxford uk
which is the principal operating site generating all the revenue and san diego usa which provides intellectual property management and
business development services to the uk subsidiary in prior years the group also carried out laboratorybased research and development in san
diego on termination of laboratorybased activities in san diego the us subsidiary relocated to smaller premisesthe redundant laboratory
premises were sublet to offset rental costs
clinical trial expenses
where advances are made to clinical trial sites or stocks of materials for use of clinical trials are purchased and stored the relevant costs are included
in trade and other receivables as prepaid clinical trial expenses as described on page 56 under ‘critical accounting estimates and assumptions’ 
expenses are charged to the statement of comprehensive income as clinical trial services are carried out or clinical trial materials are used
exceptional items
exceptional items represent significant items of income and expense which due to their nature or the expected infrequency of the events giving
rise to them are presented separately on the face of the statement of comprehensive income to give a better understanding to shareholders of the
elements of financial performance in the period so as to facilitate comparison with prior periods and to better assess trends in financial
performance exceptional items include nonrecurring reorganisation costs costs to complete onerous or futile contracts and intangible asset
impairments
financial instruments
the group and company’s financial instruments comprise investments in subsidiaries and joint ventures cash and cash equivalents together with
available for sale investments and receivables and payables arising directly from operations cash and cash equivalents comprise cash in hand and
short term deposits which have an original maturity of three months or less and are readily convertible into known amounts of cash availablefor
sale financial assets are nonderivatives that are either designated in this category or not classified in any of the other categoriesthey are included
as noncurrent assets unless management intends to dispose of the investments within 12 months of the financial year end bank deposits with
maturity of more than three months at the date of inception are included in the classification ‘financial assets available for sale investments’  and are
carried at their historic purchase price unless there is objective evidence of impairment in which case they are written down to fair value such
assets are classified as current where management intend to dispose of the asset within twelve months of the financial year end financial
instruments are valued at fair value subject to review for impairment at the financial year end charges or credits for impairment are passed
through the statement of comprehensive income
other than short term currency options the group does not enter into derivative transactions and it is the group’s policy not to undertake any
trading in financial instrumentsthe group does not have any committed borrowing facilities as its cash cash equivalents and available for sale
investments are sufficient to finance its current operations cash balances are mainly held on short and medium term deposits with financial
institutions with a credit rating of at least a in line with the group’s policy to minimise the risk of lossthe main risks associated with the group’s
financial instruments relate to interest rate risk and foreign currency riskthe group’s policy in relation to interest rate risk is to monitor short and
medium term interest rates and to place cash on deposit for periods that optimise the amount of interest earned while maintaining access to
sufficient funds to meet day to day cash requirements in relation to foreign currency risk the group’s policy is to hold the majority of its funds in
sterling and to use short term currency options and interestbearing foreign currency deposits to manage short term fluctuations in exchange
rates no other hedging of foreign currency cash flows is undertaken
leases
assets acquired under leases are reviewed to see if they are operating leases or finance leases based on the following assumptions
• if the leases transfer ownership of the assets at the end of the lease
• if they have a bargain purchase option
• if the lease term is for the major part of the economic life of the asset
• if the leased assets are specialised for the lease only
no leases have been classified as finance leases costs in respect of operating leases are charged on a straight line basis over the lease term
property plant and equipment
property plant and equipment are carried at their historical purchase cost together with any incidental expenses of acquisition less depreciation
depreciation is calculated so as to write off the cost of property plant and equipment less their estimated residual values on a straight line basis
over the expected useful economic lives of the assets concernedthe principal annual rates used for this purpose are

short leasehold improvements 20 or the remaining lease term if shorter
computer equipment 33
office and laboratory equipment fixtures and fittings 20
the assets’ residual values and useful lives are reviewed and adjusted if appropriate at each financial year end
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
59
intangible assets
intangible fixed assets relating to intellectual property rights acquired through licensing or assigning patents and knowhow are carried at historic
cost less accumulated amortisation and impairments where the useful economic life of the asset is finite and the asset will probably generate
economic benefits exceeding costswhere a finite useful life of the acquired intangible asset cannot be determined the asset is tested annually for
impairment amortisation would commence when products underpinned by the intellectual property rights became available for commercial use
amortisation would be calculated on a straight line basis over the shorter of the remaining useful life of the intellectual property or the estimated
sales life of the products no amortisation has been charged to date as the products underpinned by the intellectual property rights are not yet
available for commercial use
expenditure on product development is capitalised as an intangible asset and amortised over the expected useful economic life of the product
concerned capitalisation commences from the point at which technical feasibility and commercial viability of the product can be demonstrated and
the group is satisfied that it is probable that future economic benefits will result from the product once completed capitalisation ceases when the
product receives regulatory approval for launch no such costs have been capitalised to date
expenditure on research and development activities that do not meet the above criteria including ongoing costs associated with acquired
intellectual property rights and intellectual property rights generated internally by the group is charged to the statement of comprehensive income
as incurred intellectual property and inprocess research and development from acquisitions are recognised as intangible assets at fair value any
residual excess of consideration over the fair value of net assets in an acquisition is recognised as goodwill in the financial statements
impairment of nonfinancial assets
the carrying value of nonfinancial assets with indefinite lives is reviewed annually for impairment and provision made where appropriate charges or
credits for impairment are passed through the statement of comprehensive income an impairment loss is recognised for the amount by which the
assets carrying amount exceeds its recoverable amountthe recoverable amount is the higher of an assets fair value less costs to sell and value in use
for the purposes of assessing impairments assets are grouped at the lowest levels for which there are separately identifiable cash flows or cash
generating units
financial assets investments
financial assets investments of the group are carried at cost less any provision made for impairment
trade receivables
trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision
for impairment a provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to
collect all amounts due according to the original terms of the receivables
cash and cash equivalents
cash and cash equivalents include cash in hand deposits held on call with banks and other short term highly liquid investments with original
maturities of three months or less bank deposits with original maturities between three months and twelve months are included in current assets and
are classified as available for sale financial assets
provisions
provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pretax rate that reflects
current market assessments of the time value of money and the risks specific to the obligationsthe increase in the provision due to the passage of
time is recognised as interest expense
when leasehold properties become redundant or excess space arises in those properties the group provides for all costs to the end of the lease or the
anticipated date of surrender of the lease net of anticipated income onerous lease provisions are discounted using the uk government zerocoupon
bond yield applicable to the term of the cashflows
the group recognises dilapidations provisions when property leases have a legal or constructive obligation to reinstate any alterations or to make
good dilapidations at the end of the lease it is probable that an outflow of resources will be required to settle the obligation and the amount has
been reliably estimated dilapidations provisions are discounted using the uk government zerocoupon bond yield applicable to the remaining term
of the relevant leases
share capital
ordinary shares are classified as equity
government and other grants
income from government and other grants is recognised over the period necessary to match them with the related costs which they are intended to
compensate on a systematic basisthis grant income is included as other operating income within the statement of comprehensive income and the
related costs are included within research and development costs and administrative expenseswhere the purchase of property plant and equipment
is supported by a grant the relevant asset is included in the balance sheet at its full purchase price and grant income is recognised over the useful life
of the assetthe difference between grant income receivable and income recognised is included in accruals
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
60
notes to the consolidated financial statements
for the year ended 31 december 2009
1 accounting policies continued
rental income
rental income from the group’s redundant former research and development facility in san diego usa is offset in the statement of comprehensive
income against the rent payable under the head lease
employee benefit costs
the group operates a defined contribution pension scheme for its directors and employeesthe assets of the scheme are held in independently
administered fundsthe pension cost charge recognised in the period represents amounts payable by the group to the scheme
share based payment
equity settled share based payments under which the group receives services from employees as consideration for equity instruments options
are measured at fair value at the date of grant and expensed on a straightline basis over the vesting period of the award options issued on the
same date are valued in batches where the valuation model assumptions are the same at each financial year end the group revises its estimate of
the number of options in each batch that are expected to become exercisable at the end of the vesting period for each batch of options the
cumulative charge for sharebased payment reflects the actual options that have vested with no charge for those options which were forfeit prior
to vestingthe financial consequences of revisions to the original estimates if any are recognised in the current year statement of comprehensive
income either as an addition to or a deduction from the charge for sharebased payment with a corresponding adjustment to equity
the fair value of share options is measured using a blackscholes option pricing modelwhere complex market performance criteria exist a monte
carlo model has been used to establish the fair value on grantwhen share options are exercised the proceeds received are credited to share capital
nominal value and share premium
other employee benefits
the expected cost of compensated short term absence eg holidays is recognised when employees render services that increase their entitlement
accrual is made for holidays earned but not taken and prepayments recognised for holidays taken in excess of days earned
foreign currency translation
items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in
which the entity operates the ‘functional currency’the consolidated financial statements are presented in sterling which is the company’s
functional and the group’s presentational currency
monetary assets and liabilities in foreign currencies are translated into the functional currency at the rates of exchange ruling at the end of the
financial yeartransactions in foreign currencies are translated into the functional currency at the rates of exchange ruling at the date of the
transaction foreign exchange differences are taken to the statement of comprehensive income in the year in which they arise
assets and liabilities of the company’s us subsidiary are translated to sterling at the yearend exchange rate whilst its statements of income and
cash flows are translated at monthly average rates redundant assets at the us subsidiary’s former laboratories have been written down to a book
value of zero and have no impact on present or future exchange differencestranslation differences that arise are taken directly to a currency
translation account within equity
taxation including deferred income tax
the chargecredit for current tax is based on the results for the year adjusted for items which are nonassessable or disallowed it is calculated using
tax rates that have been enacted or substantially enacted at the financial year end
deferred income tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit in principle
deferred income tax liabilities are recognised for all taxable temporary differences and deferred income tax assets are recognised to the extent that
it is probable that taxable profits will be available against which deductible temporary differences can be utilised
deferred income tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates and interests
in joint ventures except where the group and company are able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future
deferred income tax is calculated at the average tax rates that are expected to apply to the period when the asset is realised or the liability is
settled deferred income tax is charged or credited in the statement of comprehensive income except when it relates to items credited or charged
directly to equity in which case the deferred income tax is also dealt with in equity
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
61
2 financial risk management
financial risk factors
the group’s relatively simple structure principally operating in the united kingdom and the lack of debt financing reduces the range of financial risks
to which it is exposed monitoring of financial risk is part of the board’s ongoing risk management the effectiveness of which is reviewed annuallythe
group’s agreed policies are implemented by the chief financial officer who submits reports at each board meeting other than occasional use of short
term currency options the group does not use financial derivatives and it is the group’s policy not to undertake any trading in financial instruments
a foreign exchange risk
at the current timethe group’s revenues are mostly receivable in united states dollars and certain of its expenditures are payable in euros and
us dollarsthe majority of operating costs are denominated in sterlingthe group’s ongoing rd funding from sanofiaventis is receivable in
us dollarsthis presents a possible source of foreign exchange risk in respect of future receipts funds received from sanofiaventis to date have been
converted to sterling so they no longer represent a foreign exchange riskthe group uses short term currency purchase options and interestbearing
deposits in euros and us dollars to manage short term fluctuations in exchange rates
b interest rate risk
the group does not have any committed borrowing facilities as its cash balances are sufficient to finance its current operationsthe group’s policy is
to maximise interest receivable on deposits subject to maintaining access to sufficient liquid funds to meet day to day operational requirements and
preserving the security of invested fundsto date interest received on bank deposits has made a significant contribution to providing funding for the
group interest receivable on bank deposits in 2009 was £642000 2008 £1661000 interest rates across the market fell dramatically at the end of
2008 and this is reflected in much lower bank interest in 2009
if interest rates had been 100 basis points higherlower in 2009 the impact on net loss in 2009 would have been a decreaseincrease of £236000
2008 £289000 due to changes in the amount of interest receivable
c credit risks
the group’s policy is to place funds with financial institutions rated at least a and to distribute deposits between several banks
d cash flow and liquidity risk
at present the group’s operations are funded from its cash and shortterm investmentsthe maturity profile of investments is structured to ensure
that sufficient liquid funds are available to meet planned operating requirementsto date the group’s funding has been provided mainly by the issue
of shares and from commercial collaborations including the trovax and ocular collaborations with sanofiaventis future working capital is expected
to be provided by commercial collaborations such collaborations typically provide funding from milestonebased payments which are significant in
size but infrequentthere can be no certainty that this source of funding will be sufficient and that additional funding from other sources including
the issue of further shares will not be required in planning the group’s activities and its financial resources the directors take account of the
probability receiving income from commercial collaborations and of the likely availability of other sources of fundingthe higher degree of risk
aversion that we continue to see in equity capital markets makes the issue of new share capital challenging in the near termthe group’s spending
plans have been set to achieve a balance between adding value to the key development programmes while seeking to maximise the operating
window provided by current fundsthe directors’ current financial projections provide a reasonable basis from which they have concluded that the
group’s financial resources are sufficient for the foreseeable future and that there is presently no material cash flow or liquidity risk
e pricing risk
currently revenue derives from collaboration milestones and reimbursement of funded research and development which are not sensitive to pricing risk
derivative financial instruments and hedging
there were no derivatives at 31 december 2009 or 31 december 2008 and hedge accounting has not been used
fair value estimates
the fair value of short term deposits with a maturity of one year or less is assumed to be the book value
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
62
notes to the consolidated financial statements
for the year ended 31 december 2009
3 segmental anal ysis
the chief operating decisionmaker has been identified as the senior management group smgthe smg reviews the group’s internal reporting in
order to assess performance and allocate resources management has determined the operating segments based on internal management reports
the smg considers that the business comprises a single activity which is biotechnology research and developmentthe smg reviews the group’s
profit or loss and its cash flows assets and liabilities on a wholecompany basis in carrying out these reviews the smg considers all material items of
income and expenditures that are directly attributable to individual development programmesthe internal management reports do not allocate
assets and liabilities or shared overheads to individual products as the group does not consider it meaningful in the present development phase to
attempt to attribute profits or losses to individual products
based on the above considerations there is considered to be one reportable segment biotechnology research and development
internal and external reporting is on a consolidated basis with purchases and sales between subsidiaries eliminated on consolidationtherefore the
segment financial information is the same as that set out in the consolidated statement of comprehensive income the consolidated balance sheet
the consolidated statement of cash flows and the statement of changes in equity
the group’s revenue derives wholly from assets located in the united kingdom analysed by location of customers revenue derives from the
european union and the united states of america
2009 2008
revenue by customer location £000 £000
europe 18991 18141
united states of america 129 253
total revenue 19120 18394
revenues attributable to the collaborations with sanofiaventis were £18922000 2008 £18064000
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
63
4 employees and directors
the average monthly number of persons including executive directors employed by the group during the year was
2009 2008
by activity number number
office and management 11 12
research and development 58 73
total 69 85
2009 2008
employee benefit costs £000 £000
wages and salaries 4716 4289
social security costs 634 369
pension costs note 28 295 302
share based payments note 23 808 836
compensation for loss of office 149 350
total employee benefit costs 6602 6146
2009 2008
key management compensation £000 £000
salaries and short term employee benefits 1754 1708
pension costs 125 109
share based payments 656 496
compensation for loss of office 50 291
total 2585 2604
the key management figures above include executive and nonexecutive directors further information about the remuneration of individual
directors is provided in the audited part of the directors’ remuneration report on pages 44 to 49 which forms part of these financial statements
the company had no employees during the year 2008 nil
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
64
notes to the consolidated financial statements
for the year ended 31 december 2009
5 exceptional items
exceptional items represent significant items of income or expense which due to their nature or the expected infrequency of the events giving rise to
them are presented separately on the face of the statement of comprehensive income to give a better understanding to shareholders of the elements
of financial performance in the year so as to facilitate comparison with prior periods and to better assess trends in financial performance
trovax trovax 31 december 31 december
collaboration clinical trials 2009 2008
group £000 £000 £000 £000
revenue 10089 – 10089 –
cost of sales 527 – 527 –
research and development costs 676 2716 3392 4561
administrative expenses 169 – 169 –
exceptional operating profitloss 8717 2716 6001 4561
on 28 april 2009 the group’s development partner sanofiaventis terminated the trovax collaboration and returned the worldwide rights relating to
trovax in connection with the termination sanofiaventis made payments totalling us17425000 £11599000 of which us6500000 £4372000
was a termination fee and us10925000 £7227000 was reimbursement of trovax development expenditure incurred by the group for the planned
sanofiaventis clinical development programme treated as a passthrough cost to sanofiaventis exceptional expenses in 2009 are net of
reimbursement received from sanofiaventis
the group has classified the following as exceptional items in connection with the sanofiaventis collaboration the termination fee of £4372000 the
remaining deferred trovax income at the date of termination £5717000 the writeoff of prepaid cost of sales royalty of £527000 attributable to
the deferred income and the writeoff of £845000 rd costs £676000 administrative expenses £169000 that had the collaboration continued
were expected to be reimbursed by sanofiaventis
on 3 june 2009 the fda held a type c meeting with oxford biomedica to discuss the trist clinical trial and the future development of trovaxthe
fda supported oxford biomedica’s proposal to pursue clinical development of trovax in metastatic disease including colorectal ovarian hormone
refractory prostate cancer and triplenegative breast cancer prior to further trials in renal cancer proof of concept from new phase ii studies in these
indications will be key to the successful development of trovax in the future data from the trist study in renal cancer will support the development
of trovax but will not be a pivotal component it is probable that proof of concept from phase ii studies in metastatic disease will be required prior to
commencing clinical trials in adjuvant settings
the group has classified £2716000 as exceptional rd costs in connection with the fda review of trovax development comprising a provision of
£2202000 for the estimated costs to close out the trist study in renal cancer and the writeoff of £514000 prepaid clinical trial expenses in respect
of the planned quasar clinical trial in adjuvant colorectal cancer
exceptional costs of £4561000 in the year ended 31 december 2008 resulted from impairment of intangible assets inprocess rd and intellectual
property rights
6 finance income and expense
2009 2008
group £000 £000
finance income
bank interest receivable 642 1661
other interest receivable 27 1
total finance income 669 1662
finance expense
unwinding of discount in provisions note 18 10 19
other interest payable 23 5
total finance expense 33 24
net finance income 636 1638
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
65
7 expenses by nature
group company
2009 2008 2009 2008
£000 £000 £000 £000
excluding exceptional items
cost of sales royalties payable 90 1295 – –
employee benefit costs note 4 6602 6146 – –
consumables used 986 820 – –
depreciation amortisation and impairment charges notes 111213 311 298 24215 85054
profit on disposal of property plant and equipment 1 10 – –
loss on disposal of intangible asset 78 – – –
repairs and maintenance expenditure on property plant and equipment 203 238 – –
operating lease payments note 12 1095 1005 – –
rental income from sublease note 12 458 376 – –
consultants and subcontracted research 507 514 – –
externally contracted clinical and preclinical development 7505 13397 – –
legal and professional fees including patent costs 2753 2226 149 154
net lossgain on foreign exchange 377 695 – –
other expenses 997 2759 9 9
total before exceptional items 20865 27617 24057 85217
exceptional items
cost of sales royalties payable 527 – – –
externally contracted clinical and preclinical development 3356 – – –
legal and professional fees 169 – – –
other expenses 36 – – –
impairment of intangible assets – 4561 – –
total for exceptional items 4088 4561 – –
total cost of sales research and development and administrative expenses 24953 32178 24057 85217
during the year the group obtained services from the group’s auditor as detailed below
group company
2009 2008 2009 2008
services provided by the group’s auditor £000 £000 £000 £000
fees payable to the company’s auditor for the audit of the
parent company and consolidated financial statements 36 34 36 34
fees payable to the company’s auditor and its associates for other services
the audit of the company’s subsidiaries pursuant to legislation 29 25 – –
other services pursuant to legislation 18 15 10 9
tax compliance and advisory services 33 53 – –
total 116 127 46 43
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
66
notes to the consolidated financial statements
for the year ended 31 december 2009
8 taxation
the group is entitled to claim tax credits in the united kingdom for certain research and development expenditurethe amount included in the
statement of comprehensive income for the year ended 31 december 2009 comprises the credit receivable by the group for the year less overseas tax
paid in the yearthe united kingdom corporation tax research and development credit is paid in arrears once tax returns have been filed and agreed
the tax credit recognised in the financial statements but not yet received is included in current tax assets in the balance sheetthe amounts for 2009
have not yet been agreed with the relevant tax authorities
group company
2009 2008 2009 2008
continuing operations £000 £000 £000 £000
current tax
united kingdom corporation tax research and development credit 1650 2119 – –
overseas taxation 61 59 – –
1589 2060 – –
adjustments in respect of prior periods
united kingdom corporation tax research and development credit – 72 – –
overseas taxation 10 4 – –
taxation credit 1579 1992 – –
the tax credit for the year is higher 2008 lower than the standard rate of corporation tax in the ukthe differences are explained below
group company
2009 2008 2009 2008
£000 £000 £000 £000
lossprofit on ordinary activities before tax 5094 12033 24057 85217
lossprofit on ordinary activities before tax multiplied by the standard rate
of corporation tax in the uk of 28 2008 285 1426 3430 6736 24287
effects of
accelerated tax depreciation and other timing differences 117 319 – –
expenses not deductible for tax purposes permanent differences 15 1662 6780 24240
rd relief markup on expenses 2044 1834 – –
difference in rate re rd tax credits 1650 1916 – –
tax deduction for share options less than ifrs 2 charge 32 108 – –
overseas tax 6 6 – –
tax losses carried forward to future periods 44 47 44 47
overseas tax difference in rate 17 – – –
adjustments in respect of prior periods 10 68 – –
current tax credit for the year 1579 1992 – –
at 31 december 2009 the group had tax losses to be carried forward of approximately £802 million 2008 £797 million of which £801 million has
been agreed with the revenue authorities of the group tax losses £802 million 2008 £797 million arose in the united kingdom
there is no deferred tax recognised see note 20
9 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 539872996 in issue during
the year ended 31 december 2009 2008 537176196
as the group is lossmaking there were no potentially dilutive options in either yearthere is therefore no difference between the basic loss per
ordinary share and the diluted loss per ordinary share
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
67
10 loss for the financial year
as permitted by section 408 of the companies act 2006 the company’s statement of comprehensive income has not been included in these financial
statementsthe company’s profit for the year was £24057000 2008 loss of £85217000the profitloss includes a £24215000 writeback of charges
for impairment of investments in subsidiaries 2008 impairment charge of £85054000
11 intangible assets
intellectual
inprocess rd property rights total
group £000 £000 £000
cost
at 1 january 2009 10400 5505 15905
additions – 78 78
disposal – 78 78
at 31 december 2009 10400 5505 15905
accumulated amortisation and impairment
at 1 january and 31 december 2009 3598 1188 4786
net book amount at 31 december 2009 6802 4317 11119
cost
at 1 january 2008 10400 4780 15180
additions – 761 761
disposal – 36 36
at 31 december 2008 10400 5505 15905
accumulated amortisation and impairment
at 1 january 2008 – 270 270
impairment in the year 3598 954 4552
disposal – 36 36
at 31 december 2008 3598 1188 4786
net book amount at 31 december 2008 6802 4317 11119
inprocess rd relates to the product hi8mel acquired as part of the acquisition of oxxon therapeutics limited in 2007 intellectual property rights
comprise third party patent rights that have been purchased by the group no inhouse research and development or patent costs are included in
intangible assets
impairment charges are included within research and development costs in the statement of comprehensive income
impairment losses are recognised for the amount by which each assets carrying amount exceeds its recoverable amountthe recoverable amount is
the higher of an assets fair value less costs to sell and value in usevalue in use is calculated using estimated discounted future cash flows key
assumptions in the discounted cash flow calculations are
• the product is developed by a collaborative partner who funds all future development costs and markets the product
• the group receives an initial licence fee milestone payments and royalties on sales
• the cash flow projections include estimates for selling price royalty rates population growth disease incidence and market penetration
• the resulting cash receipts are discounted at 12 per annum
• the cash flow projections are a longterm view based on the expected patent life and a period after expiry of the patents due to the length of the
development cycle for innovative medicines this period is significantly longer than 5 years
the key assumptions are management estimates based where possible on available information for similar products due to the novelty and early
stage of development of the group’s products it is not possible to benchmark these assumptions against past experience
the company had no intangibles at 31 december 2009 or 31 december 2008
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
68
notes to the consolidated financial statements
for the year ended 31 december 2009
12 property  plant and equipment
office
short equipment
leasehold fixtures computer laboratory
improvements and fittings equipment equipment total
group £000 £000 £000 £000 £000
cost
at 1 january 2009 2783 99 309 2821 6012
exchange adjustments 43 – 2 – 45
additions at cost 140 2 20 92 254
disposals 16 – 33 54 103
at 31 december 2009 2864 101 294 2859 6118
accumulated depreciation
at 1 january 2009 2547 89 177 2511 5324
exchange adjustments 43 – 2 – 45
charge for the year 109 3 58 141 311
disposals 16 – 33 54 103
at 31 december 2009 2597 92 200 2598 5487
net book amount at 31 december 2009 267 9 94 261 631
cost
at 1 january 2008 2632 95 295 2826 5848
exchange adjustments 118 16 – 125
additions at cost 33 3 88 59 183
disposals –– 80 64 144
at 31 december 2008 2783 99 309 2821 6012
accumulated depreciation
at 1 january 2008 2344 84 202 2408 5038
exchange adjustments 118 14 – 123
charge for the year 85 4 51 167 307
disposals –– 80 64 144
at 31 december 2008 2547 89 177 2511 5324
net book amount at 31 december 2008 236 10 132 310 688
the company had no property plant and equipment at 31 december 2009 or 31 december 2008
lease rentals amounting to £1072000 2008 £988000 and £23000 2008 £17000 relating to the lease of property and machinery respectively and
sublease income of £458000 2008 £376000 are included in the statement of comprehensive income note 7
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
69
13 investments
2009 2008
fixed asset investments company £000 £000
shares in group undertakings
at 1 january 17158 17158
additions in the year – –
at 31 december 17158 17158
loans to group undertakings
at 1 january 110161 109723
loan advanced in the year 259 438
at 31 december 110420 110161
total investments in shares and loans to group undertakings 127578 127319
impairment
at 1 january 94169 9115
impairment writebackcharge in the year 24215 85054
at 31 december 69954 94169
net book amount at 31 december 57624 33150
capital contribution in respect of employee share schemes see note 26
at 1 january 2521 1685
additions in the year 808 836
at 31 december 3329 2521
total investments 60953 35671
the group had no investments at 31 december 2009 2008 nil
interests in subsidiary undertakings
proportion of nominal
value of issued shares
country of description of held by the group
name of undertaking incorporation shares held and company nature of business
gene therapy research
oxford biomedica uk limited great britain 1p ordinary shares 100 and development
united states gene therapy research
biomedica inc of america 0001 common stock 100 and development
oxxon therapeutics limited great britain 1p ordinary shares 100 dormant
all of the above subsidiaries have been consolidated in these financial statements
at each year end the directors review the carrying value of the company’s investment in subsidiaries by reference to the group’s market capitalisation
on the london stock exchangewhere there is a material and sustained shortfall or a significant and sustained change in the business resulting in an
increase in market capitalisation the directors consider this to be a trigger of an impairment review as set out in ias 36 and the carrying value of the
company’s investments in subsidiaries is adjustedthe directors consider that reference to the market capitalisation of the group is an appropriate
external measure of the value of the group for this purpose following an impairment review at 31 december 2009 £24215000 impairment
recognised in prior years was written back a cumulative impairment of £69954000 was held at 31 december 2009
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
70
notes to the consolidated financial statements
for the year ended 31 december 2009
13 investments continued
interests in joint ventures
the company’s subsidiary oxford biomedica uk limited holds 10000 ordinary shares of 5000 won each representing 50 of the issued share
capital of virotech limited a company incorporated in south koreavirotech limited’s business is gene therapy research and developmentto date
no significant level of transactions has been entered into and the directors of oxford biomedica are in discussions with the joint venture partner to
dispose of oxford biomedica’s interest in virotech limitedthe accounting yearend for virotech limited is 31 december at 31 december 2009 the
share capital and reserves of virotech limited were approximately £74000 2008 £75000the directors have written down the group’s investment
in virotech limited to zero due to the immaterial size of the joint venture it had been included in the group accounts as a fixed asset investment
14 trade and other receivables
group company
2009 2008 2009 2008
£000 £000 £000 £000
noncurrent
other receivables – rent deposit 145 160 – –
current
trade receivables 88 106 – –
accrued income 1925 – – –
other receivables 298 4394 – –
other tax receivable 150 333 – –
prepaid clinical trial expensess 70 790 – –
other prepayments 1952 1522 2 3
4483 7145 2 3
total trade and other receivables 4628 7305 2 3
the fair value of trade and other receivables are the current book values
at 31 december 2009 and 31 december 2008 none of the trade receivables was aged over three months no receivables were impaired noncurrent
receivables are not discounted as the impact of discounting would not be material
accrued income of £1925000 in 2009 relates to rd funding from sanofiaventis other receivables in 2008 includes £3913000 research and
development passthrough expenditure to be reimbursed by sanofiaventis
prepaid clinical trial expenses comprise stocks of materials for use in clinical trials and advance payments to clinical trial sites
the carrying amounts of the group’s trade and other receivables are denominated in the following currencies
2009 2008
£000 £000
sterling 2367 3046
us dollar 2261 4241
euro – 18
4628 7305
the company’s receivables are all denominated in sterling
the maximum exposure to credit risk at the reporting date is the fair value of each class of receivable abovethe group does not hold any collateral
as security
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
71
15 cash and cash equivalents
group company
2009 2008 2009 2008
£000 £000 £000 £000
cash at bank and in hand 3802 3141 1 –
short term bank deposits 3000 5000 – –
total cash and cash equivalents 6802 8141 1 –
in addition to the cash and cash equivalents described above the group held sterling bank deposits of £18500000 2008 £13750000 with an initial
term to maturity between three and twelve months classified as available for sale investments none of these deposits is past due or impaired
cash at bank and in hand includes £4000 2008 £33000 held in escrow for expenses of the trist phase iii clinical trial
the company held no available for sale investments in 2009 or 2008
16 trade and other pa y ables – current
group company
2009 2008 2009 2008
£000 £000 £000 £000
trade payables 1965 3298 – –
other taxation and social security 304 136 – –
accruals 5400 7124 73 52
total trade and other payables 7669 10558 73 52
17 deferred income
2009 2008
group £000 £000
current 4741 4486
noncurrent 9024 3957
total deferred income 13765 8443
on 28 april 2009 the group entered into a new collaborative programme with sanofiaventis to develop four gene therapy products to treat ocular
diseases an initial nonrefundable payment of us26 million £16641000 was receivedthis is being recognised as revenue on a straight line basis
over 42 to 51 months the expected duration of the initial stage of the collaboration for each of the four products revenue of £3110000 has been
recognised under this collaboration in 2009the remaining £13531000 is classified as deferred income £4665000 is expected to be recognised as
income in the next 12 months and is classified as current the remaining £8866000 is classified as noncurrent
over the term of the ocular gene therapy collaboration oxford biomedica may recover from sanofiaventis up to us24 million in research and
development funding project costs in excess of us24 million will be borne by oxford biomedica £3114000 has been recognised as revenue in 2009
and £158000 has been classified as noncurrent deferred income
deferred income at 31 december 2008 was mainly attributable to the trovax collaboration with sanofiaventis on termination of this collaboration on
28 april 2009 the remaining deferred balance of £5717000 was released in the statement of comprehensive income and has been classified as
exceptional revenue see note 5
the company had no deferred income in 2009 or 2008
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
72
notes to the consolidated financial statements
for the year ended 31 december 2009
18 provisions
clinical onerous
trial dilapidations lease total
group £000 £000 £000 £000
at 1 january 2009 – 411 308 719
exchange adjustments –– 27 27
provided in the period 2202 –– 2202
utilised in the period 1385 – 88 1473
amortisation of discount –5 5 10
change of discount rate –
charged in the statement of comprehensive income –– 2 2
change of discount rate – adjustment to recognised fixed asset –4 – 4
at 31 december 2009 817 420 200 1437
at 1 january 2008 – 371 279 650
exchange adjustments –– 82 82
utilised in the year –– 75 75
amortisation of discount – 11 8 19
change of discount rate –
charged in the statement of comprehensive income –– 14 14
change of discount rate – adjustment to recognised fixed asset – 29 – 29
at 31 december 2008 – 411 308 719
2009 2008
£000 £000
current 898 88
noncurrent 539 631
total provisions 1437 719
the clinical trial provision was established following the fda review of trovax development in june 2009 see note 5 it represents the anticipated
costs to complete the trist study in renal cancer from the date of the fda reviewthe trist study reached full recruitment 733 patients in march
2008 following an interim dsmb review dosing of patients with trovax was stopped in july 2008the closeout of the study was in progress at
31 december 2009 with all sites expected to be closed by 31 march 2010 in light of the relatively short timeline this provision has not been
discounted as the directors do not consider the impact would be material
the dilapidations provision relates to anticipated costs of restoring the leasehold property in oxford uk to its original condition at the end of the
present leases in 2016 discounted at 340 per annum 2008 159the provision will be utilised at the end of the leases if they are not renewed
the onerous lease provision relates to the estimated rental shortfall in respect of a redundant property in san diego usa which has been sublet for
the remainder of the lease term until june 2012 discounted at 177 per annum 2008 223 per annumthe provision will be utilised over the term
of the lease
the company had no provisions at 31 december 2009 or 31 december 2008
financial statements
notes to the consolidated
financial statements 19 financial instruments
the group’s and company’s financial instruments comprise investments in subsidiaries and joint ventures cash and cash equivalents together with
available for sale investments trade and other receivables and trade and other payables additional disclosures are set out in the corporate
governance statement relating to risk management
the group had the following financial instruments at 31 december each year
assets liabilities
2009 2008 2009 2008
£000 £000 £000 £000
cash and cash equivalents 6802 8141 – –
available for sale investments 18500 13750 – –
trade receivables and other receivables see note 14 531 4660 – –
trade and other payables excluding tax – – 7365 10422
25833 26551 7365 10422
all the available for sale investments held at 31 december 2009 and 31 december 2008 were denominated in sterling
the weighted average interest rates and average deposit terms for fixed rate deposits are shown below floating rate instant access deposits earned
interest at prevailing bank rates
2009 2008
y ear end deposits y ear average year end deposits year average
weighted weighted weighted weighted weighted weighted
average average average average average average
rate term rate rate term rate
sterling 145 195 days 254 470 244 days 575
euro 045 31 days 158 287 33 days 445
us dollars 043 31 days 309 160 33 days 357
in accordance with ias 39 ‘financial instruments recognition and measurement’ the group has reviewed all contracts for embedded derivatives that
are required to be separately accounted for if they do not meet certain requirements set out in the standardthere were no such derivatives identified
at 31 december 2009 or 31 december 2008
fair value
the directors consider that the fair values of the group’s financial instruments do not differ significantly from their book values
20 deferred taxation
neither the company nor the group had any recognised deferred tax assets or liabilities at 31 december 2009 2008 nil in light of the group’s
continuing losses recovery of the deferred tax asset is not sufficiently certain and therefore no asset has been recognised
accelerated tax
group depreciation provisions tax losses share options total
deferred tax liabilitiesassets – not recognised £000 £000 £000 £000 £000
at 1 january 2009 3047 332 22305 47 19637
origination and reversal of temporary differences 998 4 400 193 1595
at 31 december 2009 2049 336 22705 240 21232
at 1 january 2008 2915 222 21530 143 18980
origination and reversal of temporary differences 132 110 775 96 657
at 31 december 2008 3047 332 22305 47 19637
oxford biomedica plc
annual report  accounts 2009
73
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
74
notes to the consolidated financial statements
for the year ended 31 december 2009
21 calledup share capital
group and company 2009 2008
authorised £000 £000
1000000000 2008 650000000 ordinary shares of 1p each 10000 6500
2009 2008
issued and fully paid £000 £000
ordinary shares of 1p each
at 1 january – 537289761 2008 534655843 shares 5373 5347
subscription by collaborative partner – 2209042 shares 22 –
allotted on exercise of share options – 187025 2008 264100 shares 2 2
one off sharesettled bonus payment – 1500000 shares 15 –
allotted for cash in 2008 to licensors of patent rights – 2369818 shares – 24
at 31 december – 541185828 2008 537289761 shares 5412 5373
on 4 february 2009 the company issued 2209042 ordinary shares of 1p each in a followon subscription of us250000 £172000 under a
collaboration agreement with the foundation fighting blindness through its translational research arm the national neurovision research institute
nnrithe subscription supporting the development of stargen originated from paul manning a director of the nnri costs of £10000 in respect of
this share issue have been charged to the share premium account
between 28 may 2009 and 16 october 2009 the company issued 187025 ordinary shares of 1p each on the exercise of share options under share
option schemes for aggregate cash consideration of £15000there were no costs in respect of these share issues
on 1 september 2009 the company allotted 1500000 new ordinary shares of 1p each to john dawson chief executive officerthe shares are fully
paid and were a oneoff sharebased bonus payment for successful achievement of key objectivesthe value of the shares at the closing midmarket
price on 28 august 2009 the trading day immediately prior to issue was £173000 costs of £5000 in respect of this share issue have been charged to
the share premium account
during 2009 the company recovered £51000 of previously disallowed vat on share issue costs a ‘fleming’ claim
subsequent to the year end on 21 january 2010 the company issued a further 1699876 new ordinary shares in a cash subscription linked to the
acquisition of patent rights relating to the retinostat programme between 18 february 2010 and 3 march 2010 173330 shares were issued on the
exercise of share options by employees
22 options over shares of oxford biomedica plc
the company has issued share options under the following schemes
• the oxford biomedica 1996 no1 share option scheme closed october 2006
• the oxford biomedica 1996 share option plan closed october 2006
• the oxford biomedica 2007 share option scheme approved february 2007
• the long term incentive plan ltip for executive directors and senior executives approved february 2007
options have also been granted to a small number of individuals mainly employees of the company’s us subsidiary biomedica inc under individual
option agreements
the total number of options over ordinary shares of 1p each that had been granted and had not been exercised or lapsed at 31 december 2009 was
as follows
options granted to employees including directors under the oxford biomedica 1996 no 1 share option scheme
2009 2008 exercise price date from which
number of shares number of shares per share exercisable expiry date
– 1033405 875p to 330p 140105 to 160905 140109 to 160909
748895 881017 70p to 1925p 070306 to 271006 070310 to 271010
2108713 2284145 165p to 230p 260307 to 291107 260311 to 291111
2163887 3420419 2025p to 4325p 010408 to 151208 010412 to 151212
1387151 1898190 2825p to 310p 210309 to 060909 210313 to 060913
6408646 9517176
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
75
options granted to employees under the oxford biomedica 2007 share option scheme
2009 2008 exercise price date from which
number of shares number of shares per share exercisable expiry date
1301091 1690230 220p to 4925p 080310 to 141210 080317 to 141217
1864421 2477453 575p to 225p 130311 to 131011 130318 to 131018
2726789 – 610p to 1125p 250312 to 081012 250319 to 081019
5892301 4167683
options granted under the oxford biomedica long term incentive plan
2009 2008 exercise price date from which
number of shares number of shares per share exercisable expiry date
2754003 2754003 1p 030410 040417
4140670 4140670 1p 130311 130318
2875000 2875000 1p 131011 131018
7296000 – 1p 250312 250319
17065673 9769673
options granted under the oxford biomedica 1996 share option plan
2009 2008 exercise price date from which
number of shares number of shares per share exercisable expiry date
– 211100 310p 020105 020109
options granted under individual contracts
2009 2008 exercise price date from which
number of shares number of shares per share exercisable expiry date
3865194 4023519 430p to 510p 250502 to 250602 250511 to 250611
– 87500 2925p 060607 060616
3865194 4111019
33231814 27776651
options granted to uk employees after 5 april 1999 could give rise to a national insurance ni liability on exercise all relevant options granted prior
to 7 march 2003 have either been exercised or have lapsed so there is no ni liability in respect of these options for options granted between 7 march
2003 and 6 september 2006 the company obtained undertakings from the holders of the relevant options to pay any secondary ni on exercise so
there is no ni liability in respect of these options in respect of options including ltip awards granted on or after 8 march 2007 there are no such
employee undertakings so an ni liability could arise on the exercise of the options a provision of £108000 2008 £22000 is included in accruals for
the potential ni liability accrued to 31 december on relevant options that were above water based on the yearend share price of 1125p 2008 663p
per share
23 share based pa yments
all eligible employees of the group are awarded share options options granted to uk employees have been awarded under the oxford biomedica
1996 no1 share option scheme “the 1996 scheme” or its successor the oxford biomedica 2007 share option scheme “the 2007 scheme” it is the
company’s policy under these schemes to make six grants of options to uk employees at approximately sixmonth intervals during their first three
years of employment at the discretion of the remuneration committee additional options have also been granted to employees under the share
schemes in force from time to time since the introduction of the long term incentive plan “the ltip” in 2007 directors and certain senior managers
are not eligible to participate in the 2007 scheme
options granted under the 1996 scheme have a fixed exercise price based on the market price at the date of grantthe contractual life of the options
is seven years options cannot normally be exercised before the third anniversary of the date of grant for options granted to directors and to certain
other employees since 2001 the options are exercisable only if at the time of exercise or for at least 12 months in aggregate during the three years
before exercise the percentage increase in oxford biomedica plc’s total shareholder return since the grant of the option exceeds the percentage
increase in the ftse techmark mediscience index
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
76
notes to the consolidated financial statements
for the year ended 31 december 2009
23 share based pa yments continued
options granted under the 2007 scheme also have a fixed exercise price based on the market price at the time of grantthe contractual life of these
options is ten years options cannot normally be exercised before the third anniversary of the date of grant
options granted to employees at the group’s us subsidiary are generally awarded as a single grant at the time of joining the subsidiary and have a
contractual life of ten yearstwenty five percent of the total shares under option become exercisable twelve months after the date of grant with the
remainder becoming exercisable thereafter at the rate of 20834 percent per month
ltip awards made to date are nilcost options exercisable at par on the third anniversary of the date of grant release of the ltip award will depend on
the satisfaction of a performance condition based on comparative total shareholder return against a comparator group of companies
options other than ltip awards have been valued using a blackscholes option pricing modelthe ltip awards which contain complex marketbased
conditions were valued using a monte carlo model for each relevant option grant individual valuation assumptions were assessed based upon
conditions at the date of grantthe range of assumptions in the calculation of share based payment in 2009 is as follows
share options share options share options share options
granted granted granted granted
210306 080307 130308 250309
share options to 060906 to 141207 to 131008 to 081009
share price at grant date 275p to 3025p 220p to 4925p 68p to 2375p 608p to 1175p
exercise price 2825p to 310p 220p to 4925p 575p to 225pp 610p to 1125p
vesting period 1 to 2 years number of options 21875 –– –
vesting period 2 to 3 years number of options 2401023 2010309 2477453 2726789
total number of shares under option 2422898 2010309 2477453 2726789
expected volatility weighted average 632 632 712 752
expected life years weighted average 583 570 570 577
risk free rate weighted average 453 498 433 271
expected rate of forfeit before vesting weighted average 360 346 281 175
expectation of meeting performance criteria 100 na na na
fair value per option 167p to 222p 133p to 307p 48p to 148p 39p to 79p
l tip award l tip award l tip award l tip award
l tip awards 030407 130308 131008 250309
share price at grant date 485p 2375p 680p 608p
exercise price 10p 10p 10p 10p
vesting period years 300 300 300 300
total number of shares under option 4079495 5723852 2875000 7296000
expected volatility 570 604 836 600
expected life years 300 300 300 300
risk free rate 542 399 391 221
expected rate of forfeit before vesting 325 277 00 00
expectation of meeting performance criteria 66 74 85 74
fair value per option 329p 168p 51p 39p
except for the 25 march 2009 ltip award expected volatility is based on historical volatility for a period the same length as the expected option life
ending on the date of grant for the 25 march 2009 ltip award a volatility cone analysis was used as this approach provides better estimate of the
mean reverting annual rate of volatilitythe riskfree rate of return is the yield on zerocoupon uk government bonds of a term consistent with the
expected option life
financial statements
notes to the consolidated
financial statements oxford biomedica plc
annual report  accounts 2009
77
excluding the ltip awards which are exercisable at par subject to satisfaction of the performance condition the weighted average share price for
options granted during the year was 97p 2008 124pthe weighted average share price for options exercised during the year was 82p 2008
198pthe total charge for the year relating to employee share based payment plans was £808000 2008 £836000 all of which related to equity
settled share based payment transactions a reconciliation of movements in all options over the year to 31 december 2009 and an analysis of options
outstanding at the year end are shown below
2009 2008
weighted weighted
average average
exercise exercise
share options excluding l tip number price number price
outstanding at 1 january 18006978 302p 17232259 336p
granted 2726789 97p 2477453 124p
expired 2987071 247p 994595 461p
forfeited 1393530 264p 444039 363p
exercised 187025 82p 264100 198p
outstanding at 31 december 16166141 283p 18006978 302p
exercisable at 31 december 6408646 344p 11910118 322p
exercisable and where market price exceeds exercise price at 31 december 173330 70p – na
2009 2008
l tip awards options exercisable at par value 1p number number
outstanding at 1 january 9769673 4079495
granted 7296000 8598852
forfeited – 2908674
outstanding at 31 december 17065673 9769673
exercisable at 31 december – –
2009 2008
weighted weighted average weighted weighted average
average remaining life years average remaining life years
exercise number exercise number
range of exercise prices price of shares expected contractual price of shares expected contractual
ltip exercisable at par 10p 17065673 159 159 10p 9769673 210 210
options
under 10p 60p 1540482 419 685 73p 2079265 251 459
10p to 20p 124p 3423993 420 774 144p 1592940 336 608
20p to 30p 241p 5057789 131 304 246p 6643473 239 417
30p to 40p 335p 1113432 282 523 332p 2082484 313 511
40p to 50p 453p 1668411 219 441 451p 2246782 314 532
50p to 60p 510p 3362034 139 139 510p 3362034 239 239
total including l tip 33231814 27776651
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
78
notes to the consolidated financial statements
for the year ended 31 december 2009
24 share premium account
2009 2008
group and company £000 £000
at 1 january 109686 109101
premium on shares issued in subscription related to a stargen development collaboration 150 –
premium on shares issued during the year under share option schemes 13 50
premium on shares issued in a sharesettled bonus 158 –
premium on shares issued in connection with an intellectual property purchase – 545
net creditcharge for costs associated with issue of shares 36 10
at 31 december 110043 109686
25 retained losses
group company
2009 2008 2009 2008
£000 £000 £000 £000
at 1 january 105406 96201 95557 10340
lossprofit for the year 3515 10041 24057 85217
share based payments note 23 808 836 – –
at 31 december 108113 105406 71500 95557
neither the company nor its subsidiary undertakings had reserves available for distribution at 31 december 2009 or 31 december 2008
financial statements
notes to the consolidated
financial statements 26 other reserves
translation merger
reserve reserve total
group £000 £000 £000
at 1 january 2009 692 14310 13618
exchange adjustments 16 – 16
at 31 december 2009 676 14310 13634
at 1 january 2008 625 14310 13685
exchange adjustments 67 – 67
at 31 december 2008 692 14310 13618
the group merger reserve at 31 december 2009 and 2008 comprised £711000 arising from consolidation of oxford biomedica uk limited using the
merger method of accounting in 1996 and £13599000 from the application of merger relief to the purchase of oxxon therapeutics limited in 2007
merger share scheme
reserve reserve
company £000 £000
at 1 january 2009 13599 2521
credit in relation to employee share schemes – 808
at 31 december 2009 13599 3329
at 1 january 2008 13599 1685
credit in relation to employee share schemes – 836
at 31 december 2008 13599 2521
options over the company’s shares have been awarded to employees of subsidiary companies in accordance with ifrs 2 ‘sharebased payment’ the
expense in respect of these awards is recognised in the subsidiaries’ financial statements see note 23 in accordance with ifric 11 the company has
treated the awards as a capital contribution to the subsidiaries resulting in an increase in the cost of investment of £808000 2008 £836000 see
note 13 and a corresponding credit to reserves
27 cash flows from operating activities
group company
reconciliation of loss before tax to net cash 2009 2008 2009 2008
generated byused in operations £000 £000 £000 £000
continuing operations
lossprofit before tax 5094 12033 24057 85217
adjustment for
depreciation 311 307 – –
profit on disposal of property plant and equipment 1 10 – –
loss on disposal of intangible asset 78 – – –
chargewriteback for impairment – 4552 24215 85054
finance income 669 1662 – –
finance expense 33 24 – –
charge in relation to employee share schemes 808 836 – –
changes in working capital
decreaseincrease in trade and other receivables 2322 3074 1 1
decreaseincrease in trade and other payables 2937 983 21 9
increasedecrease in deferred income 5322 10470 – –
increasedecrease in provisions 731 63 – –
net cash generatedused in by operations 904 20610 136 173
oxford biomedica plc
annual report  accounts 2009
79
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix oxford biomedica plc
annual report  accounts 2009
80
notes to the consolidated financial statements
for the year ended 31 december 2009
28 pension commitments
the group operates a defined contribution pension scheme for its directors and employeesthe assets of the scheme are held in independently
administered fundsthe pension cost charge of £295000 2008 £302000 represents amounts payable by the group to the scheme contributions of
£29000 2008 £37000 included in accruals were payable to the scheme at the year end
29 operating lease commitments – minimum lease pa yments
the future aggregate minimum lease payments under noncancellable operating leases are as follows
2009 2008
plant and plant and
property equipment property equipment
group £000 £000 £000 £000
not later than one year 1165 12 1214 13
later than one year and not later than five years 2868 19 2233 31
later than five years 781 – ––
total lease commitments 4814 31 3447 44
total future minimum sublease payments receivable 1183 – 1797 –
the group leases equipment under noncancellable operating lease agreementsthe group also leases its laboratories and offices under non
cancellable operating lease agreementsthe leases have various terms escalation clauses and renewal rightsthe figures for property leases include a
redundant building in san diego usa which has been sublet a provision of £200000 2008 £308000 has been made for the expected rental
shortfall under this lease see note 18
the company had no operating lease commitments during the year 2008 none
30 contingent liabilities and capital commitments
the receipt in 2009 of the initial fee of us26 million £16641000 from sanofiaventis under the ocular collaboration triggered royalty liabilities to a
number of third party patent licensors which are accounted for as cost of sales in the financial statements each of the four ocular products is covered
by more than one third party patent licencethe patent licence agreements are complex and they incorporate ‘royaltystacking’ clauses which limit
the group’s overall cost where there are royalty obligations to more than one licensor one licensor whose patent is relevant to two of the four ocular
products was paid a royalty of us368000 £220000 in 2009the licensor has challenged oxford biomedica’s interpretation of the royalty stacking
clause in their licence and has sought to increase the royalty payable to them to us3315000the potential increase in the amount payable if the
licensor’s view was to prevail would be us2947000 £1823000 oxford biomedica has taken advice from a number of sources including counsel
who originally represented the licensor in negotiating the patent licence agreement in 2003 following its review oxford biomedica is confident that
the correct amount of royalty has been paid and that there is no further liability in connection with this matterthere were no other contingent
liabilities at 31 december 2009 or at 31 december 2008
the group had commitments of £77000 for capital expenditure for leasehold improvements plant and equipment not provided in the financial
statements at 31 december 2009 2008 £49000
financial statements
notes to the consolidated
financial statements 31 related party transactions
identity of related parties
the group consists of a parent oxford biomedica plc two whollyowned trading subsidiaries and one subsidiary oxxon therapeutics limited which
was acquired and became dormant in 2007 when its assets and trade were transferred to the principal trading company oxford biomedica uk
limitedthe second trading subsidiary biomedica inc provides services in the usa to oxford biomedica uk limited under a transfer pricing
agreement
the parent company is responsible for financing and setting group strategy oxford biomedica uk limited carries out the group strategy employs all
the uk staff including the directors and owns and manages all of the group’s intellectual propertythe proceeds of the issue of shares by the parent
are passed from oxford biomedica plc to oxford biomedica uk limited as a loan and oxford biomedica uk limited manages group funds and
makes payments including the expenses of the parent company
2009 2008
company transactions with subsidiaries £000 £000
purchases
parent company expenses paid by subsidiary 100 183
transactions involving parent company shares
proceeds of parent company share issues received by subsidiary 345 569
proceeds of subsidiary employee share sales received by parent 3 2
cash management
cash loaned by parent to subsidiary 17 54
the loan from oxford biomedica plc to oxford biomedica uk limited is unsecured and interest freethe loan is not due for repayment within 12
months of the year endthe year end balance on the loan was
2009 2008
company year end balance of loan £000 £000
loan to subsidiary 110420 110161
in addition to the transactions above options over the company’s shares have been awarded to employees of subsidiary companies in accordance
with ifric 11 the company has treated the awards as a capital contribution to the subsidiaries resulting in a cumulative increase in the cost of
investment of £3329000 2008 £2521000
there were no transactions 2008 none with oxxon therapeutics limited or with the dormant joint venture virotech limited
transactions with directors and connected persons
on 1 july 2009 when professor alan kingsman’s position as chairman became nonexecutive he entered into a consultancy agreement with the
group fees of £37500 were paid under this agreement in 2009
on 1 july 2008 when professor susan kingsman retired from the board she entered into a consultancy agreement with the group fees of £50000
2008 £25000 were paid under this agreement
a close family member of andrew wood was employed by the group up to 31 december 2009 and was paid at market ratetotal compensation cost
comprising salary bonus national insurance and pension was £73000 2008 £66000 in addition a termination payment of £30000 was paid
oxford biomedica plc
annual report  accounts 2009
81
introduction chairman’s statement business review corporate information financial statements
notes to the consolidated
financial statements
appendix appendix
technology and product
glossary
lentivector®
our lentivector technology is an advanced
lentiviralbased gene delivery system which is
designed to overcome the safety and delivery
problems associated with earlier generations
of viral vectors it can stably deliver genes into
cells with up to 100 efficiency and can
integrate genes into nondividing cells
including neurons in the brain and retinal cells
in the eye in such cell types studies suggest
that gene expression could be maintained
indefinitely it also has a larger capacity than
most other vector systems and can
accommodate multiple therapeutic genes
prosavin® parkinson’s disease
prosavin is a genebased treatment for
parkinson’s disease a progressive movement
disorder caused by the degeneration of
dopamine producing nerve cells in the brain
prosavin uses our lentivector system to deliver
the genes for three enzymes that are required
for the synthesis of dopaminethe product is
administered locally to the region of the brain
called the striatum converting cells into
dopamine factories thus replacing the patients
own lost source of the neurotransmitter
retinostat® wet agerelated macular
degeneration
retinostat is a genebased treatment for
neovascular “wet” agerelated macular
degeneration amd and diabetic retinopathy
dr retinostat aims to preserve and improve
the vision of patients through anti
angiogenesis blocking the formation of new
blood vesselsthe product uses our lentivector
system to deliver two antiangiogenic genes
endostatin and angiostatin directly to the
retina
stargen™ stargardt disease
stargen is a genebased therapy for the
treatment of stargardt diseasethe disease is
caused by a mutation of the abcr gene which
leads to the degeneration of photoreceptors in
the retina and vision loss stargen uses our
lentivector system to deliver a corrected
version of the abcr gene a single
administration of the product directly to the
retina could provide longterm or potentially
permanent correction
ushstat™ usher syndrome 1b
usher syndrome is a leading cause of deaf
blindness one of the most common subtypes is
usher syndrome 1b which is associated with a
mutation of the gene encoding myosin viia
myo7athis leads to progressive retinitis
pigmentosa combined with a congenital
hearing defect ushstat uses our lentivector
technology to deliver a corrected version of the
myo7a gene to retinal cells and a single
administration could provide longterm or
potentially permanent stabilisation of ocular
function
encorstat® corneal graft rejection
corneal grafting arises from a need to remove
and replace pathology arising in the cornea
causing ‘clouding’  although one of the most
successfully transplanted tissues a significant
number of grafts are rejected due to
vascularisation encorstat uses our lentivector
system to deliver endostatin and angiostatin ex
vivo to corneas prior to grafting in order to
block vascularisation and to prevent graft
rejection
monudin® motor neuron disease
monudin is a genebased treatment for motor
neuron diseasethis progressive usually fatal
neurodegenerative disease is caused by the
degeneration of motor neurons the nerve cells
in the central nervous system that control
voluntary muscle movement monudin uses our
lentivector system to deliver a neuroprotective
gene vascular endothelial growth factor vegf
to prevent further degeneration of the motor
neurons and potentially restore motor function
5t4 tumour antigen
the 5t4 protein is strongly expressed on
many types of cancer and studies suggest that
its presence correlates with metastatic spread
and poor clinical outcome it was identified
through research into the similarities between
the development of the placenta during
pregnancy and the progression of cancer 5t4
is produced by both cancerous cells and also
by placental and foetal cells suggesting that
the process of immunological escape in
pregnancy and cancer is based on similar
mechanisms
trovax® cancer
trovax is a therapeutic vaccine that stimulates
the immune system to destroy cancerous cells
expressing the 5t4 tumour antigenthe product
is based on an attenuated vaccinia virus called
modified vaccinia ankara mva which has been
engineered to deliver the 5t4 antigenvaccinia
viruses are commonly used as delivery systems
for the development of antigenspecific
vaccines mva is the vaccinia strain of choice
because of its excellent safety profile
targeted antibody therapy cancer
the 5t4targeted antibody therapy is a
humanised monoclonal antibody linked to the
potent anticancer agent calicheamicinthe
product binds to the 5t4 antigen on the surface
of cancerous cells once bound the complex is
internalised by the tumour cell the
calicheamicin is released from the antibody and
the free drug kills the cancerous cell
appendix
technology and product glossary
oxford biomedica plc
annual report  accounts 2009
82 introduction chairman’s statement business review corporate information financial statements appendix
technology and product
glossary
antiangiogenesis
the creation of new blood vessels known as
angiogenesis is a critical element in tumour
formation and growth endostatin and
angiostatin were discovered by one of the
best known researchers in the field of
angiogenesis dr judah folkman of childrens
hospital and the harvard medical school in
bostonthe proteins have shown potent anti
cancer activity in preclinical models and a
potentially additive effect when used in
combination
endoangiogt cancer
endoangiogt is a gene therapy for the
treatment of solid tumoursthe product uses a
viral vector to deliver the genes for endostatin
and angiostatin which inhibit tumour growth
by blocking the formation of new blood vessels
hi8® primeboost
heterologous primeboost immunotherapy
involves priming the immune system to a
target antigen using one delivery system and
then boosting the response by administration
of the antigen in a different vectorthis strategy
can stimulate greater levels of immunity
particularly cellular immune responses
oxford biomedica’s hi8 primeboost vector
combination can stimulate potentially potent
and specific cellular immune responses
against diseased cells even those expressing
very low levels of the antigen
hi8® mel melanoma
hi8 mel is a therapeutic vaccine for metastatic
melanomathe product employs two different
vector systems comprising plasmid dna and
mva respectively to induce a melanoma
specific cellular immune response both vectors
contain the mel3 polyepitope string which
encodes seven defined peptides from five
different melanomaspecific antigens
gdept
genedirected enzyme prodrug therapy
gdept is the use of genetic delivery to
administer an enzyme into diseased cells that
activates a nontoxic prodrug into a toxic
agent cyclophosphamide cpa is an anti
cancer prodrug that is activated in the liver by
a naturally occurring p450 enzyme and then
disperses via the circulation to the tumour
target
metxia® pancreatic cancer
metxia is a gdept strategy to deliver a p450
enzyme to cancerous cells thus enabling cpa to
be activated within the tumour metxia uses a
highlyengineered retroviral delivery system to
achieve efficient expression of the p450 enzyme
within the cancerous cells it can be
administered locally to nonresectable
pancreatic cancer prior to treatment with cpa
oxford biomedica plc
annual report  accounts 2009
83 financial advisor
nm rothschild  sons limited
new court
st swithin’s lane
london ec4p 4du
financial advisor
and broker
jp morgan cazenove limited
20 moorgate
london ec2r 6da
registered auditors
pricewaterhousecoopers llp
9 greyfriars road
reading rg1 1jg
solicitors
morrison  foerster mnp
7th floor citypoint
one ropemaker street
london ec2y 9aw
registrars
capita registrars
the registry
34 beckenham road
beckenham
kent br3 4tu
company secretary and
registered office
andrew wood
medawar centre
robert robinson avenue
the oxford science park
oxford ox4 4ga
advisors
appendix
advisors
oxford biomedica plc
annual report  accounts 2009
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introduction chairman’s statement business review corporate information financial statements appendix
oxford biomedica plc
annual report  accounts 2009 oxford biomedica
annual report  accounts
2009
oxford biomedica plc
medawar centre
robert robinson avenue
the oxford science park
oxford ox4 4ga
united kingdom
t 44 0 1865 783 000
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enquiriesoxfordbiomedicacouk
wwwoxfordbiomedicacouk oxford biomedica annual report  accounts 2009
spine is nominal 5mm width


Summary:
 oxford biomedica plc
annual report  accounts 2008
business review
financial review
28 oxford biomedica plc
annual report  accounts 2009
financial overview
the termination of the trovax collaboration in april 2009 and the revised strategy for trovax development following the fda review of the trist study
in june 2009 had a material effect on the company and resulted in a £60 million exceptional profit in the statement of comprehensive income in
contrast in 2008 we recognised an exceptional loss of £46 million from impairment of intangible assets before exceptional items revenue for 2009 was
£90 million 2008 £184 million and costs cost of sales research and development costs and administrative expenses were significantly reduced at
£209 million 2008 £276 million
cash cash equivalents and current financial assets increased by £34 million in 2009 leaving a balance of £253 million at 31 december 2009
revenue £19120000 2008 £18394000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
trovax collaboration – nonexceptional revenue 2609 18064 6970 ––
ocular collaboration revenue 6224 –– ––
technology licences and other revenue 198 330 249 760 824
total nonexceptional revenue 9031 18394 7219 760 824
trovax collaboration – exceptional revenue 10089 –– ––
total revenue 19120 18394 7219 760 824
nonexceptional trovax revenue of £26 million in 2009 comprised the recognition of deferred income up to the termination of the collaboration
in april 2009the remaining £57 million of deferred trovax income was recognised in 2009 as exceptional revenue a termination payment of
us65 million £44 million paid by sanofiaventis made up the remainder of exceptional revenue
the ocular collaboration with sanofiaventis contributed revenue of £62 million in 2009the collaboration has two elements an upfront payment of
us26 million £166 million was received in 2009 and rd funding of up to us24 million will be receivable over the current phase of the collaboration
revenue recognised in 2009 comprised £31 million of the upfront payment and £31 million of rd funding deferred income of £137 million is
expected to be recognised between 2011 and 2013
cost of sales £437000 2008 £1295000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
royalty payable on third party licenses
nonexceptional creditcost of sales 90 1295 449 ––
exceptional cost of sales 527 –– ––
total cost of sales 437 1295 449 ––
cost of sales is the royalty payable to third party licensors attributable to upfront and milestone payments that are recognised as revenuewhere the
recognition of upfront andor milestone payments is deferred in part or in full the appropriate proportion of cost of sales is also deferred and is
classified as a prepayment in 2009 a credit of £545000 was recognised within nonexceptional cost of sales following a reduction in the estimated
royalty rate that had been applied to trovax collaboration revenue in 2007 and 2008
29
financial review
andrew wood chief financial officer
“we maintained our financial strength through 2009
making the transition from the trovax collaboration
with sanofiaventis that had been a key feature of the
financial results for the two previous years to the new
ocular collaboration in 2009the cash inflows associated
with the sanofiaventis collaborations together with
continuing careful focus on expenditure resulted in
a stronger cash balance at the end of 2009 than at
the beginning”
our present funds together with licence income and
anticipated revenues from current collaborations are
sufficient to meet operational needs until the beginning
of 2012this gives the group a strong platform from
which to build a profitable sustainable business
introduction chairman’s statement business review
financial review
corporate information financial statements appendix oxford biomedica plc
annual report  accounts 2009
oxford biomedica plc
annual report  accounts 2009
business review
financial review
30 31
operating expenses before exceptional items £20955000
2008 £26322000 2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
nonexceptional research and development costs 14899 22482 22142 19523 9327
nonexceptional administrative expenses 6056 3840 4282 2699 2865
total nonexceptional operating expenses 20955 26322 26424 22222 12192
nonexceptional operating expenses were £54 million lower than 2008 at £210 millionthe reduction in rd costs came mainly from lower external
clinical costs and in particular from lower trist expenditure costs incurred in the sanofiaventis ocular programme are included in rd costs
the increase in expenditure on these products has offset some of the reduction in trovax expenditure administrative expenses increased in 2009
principally due to foreign exchange losses bonus payments and legal costs related to patent litigation
research  development costs £14899000 2008 £22482000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
external preclinical  clinical costs 6328 13397 11833 11153 1730
inhouse rd costs uk 8138 8660 9848 7983 7310
inhouse rd costs usa 433 425 461 387 287
total nonexceptional research  development costs 14899 22482 22142 19523 9327
rd costs comprise inhouse expenditure staff rd consumables intellectual property facilities and depreciation of rd assets and external costs
preclinical studies gmp manufacturing regulatory affairs and clinical trials external clinical and preclinical costs from 2006 to 2008 had been high due
to trovax development costs particularly costs of the trist study as expected these costs fell back significantly in 2009 with nonexceptional external
trovax development costs recognised in 2009 down to £07 million compared to £100 million in 2008 costs related to the trist study from june 2009
onwards are part of exceptional rd costs offsetting some of the reduction ocular product and prosavin external costs were £27 million higher in
2009 at £52 million most of the 2009 ocular programme spend was covered by rd funding from sanofiaventis inhouse rd costs in 2009 were 6
lower than in 2008 at £81 million
administrative expenses £6056000 2008 £3840000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
administrative staff costs 2815 2016 1958 1123 1224
legal costs 1411 867 852 353 119
net foreign exchange lossesgains 465 695 3 2 24
other administrative expenses 1365 1652 1469 1221 1546
total nonexceptional administrative expenses 6056 3840 4282 2699 2865
administrative expenses in 2009 were overall £22 million 58 higher than 2008 foreign exchange losses account for £12 million of the increase
the exchange loss of £05 million in 2009 was mainly due to weakening of the us dollar over the course of the year in 2008 foreign exchange gains of
£07 million were recognised administrative staff costs were £08 million 40 higher than 2008 at £28 million due mostly to bonuses 2009 bonuses
included £03 million costs in relation to a sharesettled bonus paid to john dawson chief executive officerthere were no bonuses in 2008 legal costs
in 2009 were £05 million higher than 2008 at £14 million £10 million of the 2009 legal costs related to the bavarian nordic litigation and patent
oppositions in january 2010 the bavarian nordic litigation was settled
headcount
2009 2008 2007 2006 2005
number number number number number
rd headcount year end 53 64 69 63 61
administrative headcount year end 12 12 13 10 10
total headcount at year end 65 76 82 73 71
rd headcount average for the year 58 73 68 62 59
administrative headcount average for the year 11 12 12 10 10
total headcount average for the year 69 85 80 72 69
in 2009 there was a net reduction in headcount of 11 continuing a downward trend that started in july 2008 following the trist setback subsequent to
the year end this trend has begun to reverse with a net gain of 4 in january and february 2010 one fulltime employee and one parttime employee
are based at the wholly owned subsidiary biomedica inc in san diego usa all other staff are based at the main offices and laboratories in oxford uk
exceptional operating expenses £3561000 2008 £4561000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
research and development costs
arising on termination of the trovax collaboration 676 –– ––
provision for trist study closeout 2202 –– ––
writeoff re planned quasar clinical trial 514 –– ––
impairment of intangible assets – 4561 –– –
total exceptional research and development costs 3392 4561 –– –
administrative expenses
arising on termination of the trovax collaboration 169 –– ––
restructuring costs –– 335 ––
total exceptional administrative expenses 169 – 335 ––
total exceptional operating expenses 3561 4561 335 ––
exceptional items are described fully in note 5 to the financial statements on termination of the trovax collaboration with sanofiaventis net
unrecoverable costs of £08 million were written offthis is net of receipts of us109 million £72 million – reimbursements by sanofiaventis as part of
the termination process following the fda review of trist in june 2009 and the revision of the development strategy for trovax £22 million was
provided to meet the costs of closing out the trist study and £05 million of expenses related to the planned quasar trovax clinical trial were written off
between june 2009 and the end of the year costs of £14 million were incurred and set against the trist provision
finance income £636000 2008 £1638000
2009 2008 2007 2006 2005
£000 £000 £000 £000 £000
interest receivable – bank 642 1661 2113 1743 955
other interest receivable 27 1 4 – 14
interest payable – discount on provisions 10 19 30 29 20
other interest payable 23 5 –– 11
net finance income 636 1638 2087 1714 938
average balance on deposit in the year 24549 28941 37731 37689 19955
average rate of interest on deposits 261 573 558 462 477
the group places its cash in bank deposits for periods of up to 12 months and generates interest on those depositsthe maturity profile of deposits is
intended to match planned expenditure as expected the dramatic fall in market rates from the end of 2008 has resulted in much lower interest income
in 2009the group has no debt but is recognising as a finance expense the discount on a lease provision and a dilapidation provisionthe lower charge
in 2009 reflects the level of interest rates in the year
financial review
introduction chairman’s statement business review
financial review
corporate information financial statements appendix