OXFORD BIOMEDICA

• Increased revenues: turnover for the year ended 31 December 1999 was £0.4 million (1998: £0.05 million), including research funding from Aventis and license income from Modex SA.
  
  
• Careful financial management: in line with expectations the loss for the period was £4.2 million (1998: £3.7 million).
  
  
• A strong cash position: rights issue in March 1999 generated £3.2 million (net). Cash balance was further supplemented after the year end by successful institutional placing of 13.7 million shares in January 2000, raising an additional £5.0 million (net).
  
  
• Expanding commercial opportunities: well-defined forward strategy for generating both short and long term revenue streams through the development of three complimentary commercial areas - gene therapy, gene-based immunotherapy and gene-based drug discovery.
  
  
• A strong clinical pipeline: MetXia-P450T in phase I/II clinical trials for breast cancer, with approval from GTAC and the MCA to proceed with testing in ovarian cancer patients. Preclinical data for the anti-cancer vaccine, TroVaxT assembled for GTAC approval to proceed to phase I/II clinical trials for colorectal cancer.
  
  
• Increased commercial activity: collaborative programmes and licensing deals with Aventis, Modex, IDM and Viromed, and since the year end with Virbac and AstraZeneca.
  
  
• Increasing investor confidence: signs of investors returning to the biotechnology sector and to Oxford BioMedica with the market capitalisation currently above £100 million for the first time.

-Ends-

CHAIRMAN'S STATEMENT

The Board of Oxford BioMedica plc is pleased to report on the Company's third year in which significant progress has been made, and to announce the preliminary results for the year ended 31 December 1999.

FINANCIAL REVIEW
Throughout 1999, the Board continued to maintain strong financial control, and to operate within budget. The net loss for the year was £4.2 million compared to £3.7 million in 1998.

Income of £436,000 included research funding from the cardiovascular disease programme with Rhone-Poulenc Rorer (now called Aventis) and license income from Modex SA, both of which were new sources of income in 1999.

Operating expenses were £5.1 million, of which research and development costs were £3.8 million. The increase from 1998 (operating expenses £4.2 million; research and development expenditure £3.0 million) reflects increased activity, particularly in preclinical development. Administrative expenses were £1.3 million compared to £1.2 million in 1998. Grant income, which is linked to certain research and development projects, was £0.3 million (1998: £0.2 million).

There was no tax charge, and the Group's tax losses are available for offset against future taxable profits.

Capital expenditure was modest at £0.1 million (1998: £0.2 million), and the net outflow of funds before new share issues was very close to 1998's level at £3.7 million (1998: £3.6 million). The bank balance at 31 December 1999 was £3.0 million. This was supplemented by the share placing in January 2000.

Fund raising
The climate for funding small biotechnology companies has been, to say the least, unfavourable over the last three years. Nonetheless, the one-for-five rights issue at 15p per share in March 1999 was successfully taken up, and raised £3.2 million net of expenses. The Board is pleased to see signs that investors are now returning to the UK biotechnology sector, and to Oxford BioMedica in particular. The Company's institutional placing of 13.7 million shares in January 2000 at 38p per share raised £5.0 million net of expenses, and was heavily oversubscribed. The subsequent rise in the Company's share price has benefited all shareholders. In mid-January 2000 the Company's market capitalisation was above £100 million ($160 million) for the first time.

The share placing has provided additional working capital to support continuing research, development and clinical programmes. Since it is the Company's commercial strategy to proceed with the clinical development of candidate products up to and including Phase I/II clinical trials, it will be necessary to raise further funds in due course. During the current year the board expects that the Company will qualify to move its shares from AIM to the Official List of the London Stock Exchange.

OPERATIONAL REVIEW
Oxford BioMedica has made considerable progress this year in the building of a broad base of activities from which both short and long term future earnings might be generated. To do this, the Company has developed its expertise in gene transfer technologies to a point where it now encompasses three complimentary commercial areas: gene therapy, gene-based immunotherapy, and gene-based drug discovery.

Operational progress
Oxford BioMedica's first major collaboration, signed in December 1998 with Aventis has made a good start, and the board looks forward to a successful second year. The Company's first product, MetXia-P450T is in a phase I/II clinical trial for late stage breast cancer, and approval has been received from the UK regulatory authorities for a trial of MetXia-P450T in ovarian cancer. Compelling preclinical data has been generated from the Company's cancer vaccine TroVaxT, and there has been significant commercial interest for the product from the pharmaceutical industry. The deal with the leading veterinary company Virbac in February 2000 for the animal homologue of TroVaxT is the first of several that this exciting programme is expected to generate.

BioMedica has continued to pursue the strategy of placing its technology in as many product opportunities as possible, both through development of the Company's own product pipeline, and also in partnership with others. Throughout the last three years financial resources have been limited, and focus has been on taking BioMedica's lead programmes in cancer therapy into the clinic, with the Company's other programmes moving forward, but necessarily taking a lower profile. BioMedica has been active in seeking other companies in both the pharmaceutical and biotechnology industries with whom additional paths to markets can be found for its technology. The deals with Modex for a diabetes product, with IDM for cell therapy products, and the establishment of a joint venture with Viromed in Korea create new opportunities in multi-billion dollar markets in a highly cost-effective way. BioMedica has also targeted the pharmaceutical industry's drug-discovery programmes arising from their huge investment in genomics and proteomics as a way of further leveraging the value in its gene-delivery systems, and now has three deals in this area.

A growing part of the Company's portfolio of products and product opportunities involves the induction of immune responses to fight disease. TroVaxT is the most immediate of these, but the Company also has programmes with great potential in the use of therapeutic antibodies and antibody derivatives delivered as genes. The collaboration with IDM provides further opportunities in this field.

BioMedica also has the opportunity for short-term revenues from making its technology available to the pharmaceutical industry's drug discovery process, and also has substantial long-term potential for milestone and royalty earnings from its own and partners' product programmes.

This diverse commercialisation of BioMedica's technology means that the Company is not dependent for its commercial success on any single programme. The board recognises that the drug development process is inherently risky, but that the exciting long-term potential returns from successful gene-based products in major therapeutic markets will be an appropriate return for this risk. This strategy ensures that risk is mitigated by taking a wide range of paths to those markets, and that there is a spread of short-term and long-term revenue opportunities.

Appointments
Two additional non-executive directors were welcomed to the board in 1999. Mark Berninger and Peter Johnson bring invaluable experience in business development, intellectual property management and pharmaceutical product development to the Company.

In closing, the board would like to thank BioMedica's shareholders, old and new, who have supported the Company through the last 3 years and looks forward to further exciting developments in 2000, including the planned move up from AIM to the Official List of the London Stock Exchange.

Alan Goodman
Chairman

1999
(unaudited)
£'000

Turnover

436

50

Research and development

(3,764)

Administrative expenses

(1,346)

Operating expenses

(5,110)

Other operating
income: government
grants receivable

267

Net operating expenses

Operating loss

(4,407)

Interest receivable

218

263

Loss on ordinary
activities before taxation

(4,189)

(3,681)

Tax on loss on ordinary
activities

-

-

Loss for the period

(3.0p)

(3.4p)

1999
(unaudited)
£'000

Fixed assets

Intangible assets

332

381

Tangible assets

773

936

Current assets

Debtors: amounts falling
due within one year

432

358

Cash at bank and in
hand

3,039

3,566

Creditors: amounts
falling due within one
year

Net current assets

Net assets

Capital and reserves

Called-up share capital

1,422

1,185

Share premium account

12,549

9,557

Other reserves

711

711

Profit and loss account
(deficit)

(10,881)

(6,692)

Equity shareholders' funds

1999
(unaudited)
£'000

Continuing activities