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Near term risks, long term reward potential with small cap pharmaceutical firm
Thursday 02 Mar 2017 Author: Lisa-Marie Janes

Gene therapy company Oxford BioMedica (OXB) could be on the cusp of receiving a lucrative flow of money over many years, potentially worth up to $65m to $75m annually in the medium term.

Novartis is expected to submit its CTL019 therapy for regulatory approval by the US Food & Drug Administration (FDA) very soon; a decision could be made later this year.

Oxford BioMedica has been the sole manufacturer of lentiviral vectors for the CTL019 therapy and hopes it will also be the supplier for the commercial launch of the product.

Jefferies analyst Peter Welford last October forecast at least $1bn worldwide peak sales for CTL019, potentially resulting in a recurring revenue stream for Oxford BioMedica.

‘The collaboration with Novartis is a significant endorsement of Oxford BioMedica’s technology, and cements its place as a world leader in the field of lentiviral vectors, in our view,’ says Welford.

What does the small cap do?

Oxford BioMedica uses its LentiVector technology platform to create viral vectors with new genes, which are used to deliver genetic material into cells.

White blood cells (also known as T-cells) are taken from the patient and the new genes are placed inside the cells.

DNA in the cells are designed to ensure receptors called chimeric antigen receptors (CAR) on the cell surface seek antigens (CD19) expressed on cancer cells.

The T-cells and genes are put back into the body so they can multiply, detect CD19 on cancer cells and kill them.

Compared to other treatments, the T-cells stay in the body to ensure the disease does not return.

DNA molecule

Tell me more about the CTL019 therapy

In 2014, Oxford BioMedica agreed an initial three-year contract to manufacture CTL019 for Novartis, which believes the therapy has ‘blockbuster potential’.

The therapy is designed to treat relapsed/refractory (r/r) in paediatric and young people with B-cell acute lymphoblastic leukaemia (ALL).

Novartis’ Phase II clinical trial ELIANA evaluated the efficacy and safety of CTL019 for r/r B-cell ALL. The therapy met its primary endpoint with a strong overall response rate and an acceptable safety profile.



Daniel Wilkinson, associate analyst (healthcare) at Edison gives his view on the investment case:

‘While it is a complex business, investing in Oxford BioMedica offers the opportunity for investors to gain exposure to gene and cell therapies, both directly through its own internal pipeline and its partnerships, notably Novartis.

‘Near term Oxford BioMedica is subject to the usual biotech risks, notably in relation to the clinical and commercial success of Novartis’ CTL019 CAR-T therapy (a drug which Novartis recently in its Q4 results labelled as a potential blockbuster); OXB manufacture a key component of this.

‘In the longer term, the unique nature of Oxford BioMedica’s manufacturing capabilities within cell and gene therapy could attract further partnerships and may provide investors with a pure-play entry in to the cell and gene therapy space without the typical binary biotech risks.’

Royalty-generating partnerships

The company generates royalties through partnerships including GlaxoSmithKline (GSK) and Sanofi that use the technology to conduct clinical trials.

Its LentiVector platform has been used in 144 clinical trials to develop treatments. It is protected by several patents, with the earliest expiring in two years, and other safety features and manufacturing patents expiring in 2023 and 2034, respectively.

Oxford BioMedica uses its platform to develop products to help reduce specific symptoms of Parkinson’s disease, a progressive disease of the nervous system. It is currently in a Phase I trial.

It is also in Phase I trials for corneal graft rejection and wet age-related macular degeneration, which can cause problems with vision.

In the future, Oxford BioMedica plans to spin-out or out-license its product pipeline, which will allow another party to use it without infringing intellectual property rights for a fee.

The business is in discussions with big pharmaceutical companies concerning potential licensing deals and venture capitalists regarding spin-outs.

Are there risks to gene therapy?

While gene therapy is targeted, there are risks as normal B cells also express CD19 and are destroyed, although intravenous immunoglobulin replacement is used to prevent infection.

The rapid destruction of cancer cells produces a cytokine storm, a dangerous and possibly fatal immune response.

It essentially means your immune system can work against you, although this can be managed with effective drug treatment.

Within the healthcare and pharmaceutical sector, investors should tread with caution.

Oxford BioMedica is still undergoing trials as part of its product pipeline and if these fail to produce results, it may delay future revenue streams.

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