OXFORD BIOMEDICA

Oxford, England - 16 August 2000. Oxford BioMedica plc (AIM-OXB) today announced its interim results for the 6 months to 30 June 2000. The key points of the results are as follows:

Summary

• Income rose 77% to £344,000 (1999: £ 194,000);
  
  
• Loss before tax was £2.69 million (1999: £2.10 million);
  
  
• Cash balance at 30 June 2000 was £5.92 million, with net cash burn of £2.44 million for the first six months;
  
  
• £13.55 million new funds raised this year, comprising £5.05 million (net) raised in January 2000 and a further £8.5 million (net) raised in August 2000;
  
  
• Clinical trials - MetXia-P450™ progressing through BC1 trial, with first results of the study available shortly. TroVax™ is proceeding through its regulatory approval process;
  
  
• Collaborations
• Aventis: with respect to BioMedica's hypoxia response element, the collaboration has been extended to include a second gene and a feasibility study has been initiated for the use of the LentiVector^® technology;
-
• Virbac SA: veterinary version of TroVax™ licensed and collaboration making progress;
• Nycomed Amersham: agreement to develop a tumour imaging product to identify patients most suited for treatment with TroVax™;
• Modex SA - ongoing collaboration to produce a novel diabetes therapy achieving significant success;
• IDM - cell-based therapy collaboration making progress.
  
  
• New division - recently announced creation of new Gene Discovery Division based on BioMedica's LentiVector^® technology for target validation and drug discovery programmes, and the new proprietary Smartomics™ technology for new gene discovery. Data presented this week demonstrating the identification of 23 new disease related genes using the Smartomics™ technology;
  
  
• New Board appointment - Dr Paul Durrands appointed as Commercial Director of Oxford BioMedica and Chief Operating Officer to the new Gene Discovery Division

Commenting on the results, BioMedica's CEO, Professor Alan Kingsman said:
"We have continued to follow our strategy of managing risk by seeking as many commercial opportunities for our technology and product components as possible, whilst retaining firm control on spending. This has been achieved through creative deal structures and by pursuing internal product development programmes. We have also used our core gene delivery technologies in the field of gene discovery to enhance shareholder value.

"By the year end, we expect there to be further progress in the Gene Therapy and Gene-based Immunotherapy programmes and that the Gene Discovery Division will be fully up and running, and we look forward to reporting on these going forward."

EXTRACTS FROM THE CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

The first half of 2000 has been a busy time for the Company with significant progress being made on a number of fronts. The Directors have continued their strategy of managing risk by placing BioMedica's technology and product components into as many commercial opportunities as possible while retaining firm control on spending. This has been achieved through creative deal structures with both large and small companies as well as by pursuing internal product development programmes. In addition, the Company has recently further enhanced shareholder value by using its core gene delivery technologies in the field of gene discovery through the formation of a new Gene Discovery Division.

Clinical Developments
MetXia-P450T is progressing well through the BC1 trial, a study in late stage cancer patients with residual skin nodules. The trial is proceeding according to plan and the first results from the dose ranging part of the study will be available shortly. Earlier in the year the Company initiated the OC1 trial, in which the product is being administered to ovarian cancer patients.

TroVax™, the Company's lead immunotherapy product, is proceeding through its regulatory approval process. It has received conditional approval by the Gene Therapy Advisory Committee subject only to some non-technical revisions to the protocol and patient information leaflet. The product has been manufactured in preparation for the trial, TV1, to start at the end of the year. The trial will test TroVax™in patients suffering from colorectal cancer and will be conducted at the Christie Hospital in Manchester. Although there has been significant commercial interest in TroVax™, the Directors have decided to fund the first trial from the Company's own resources in order to increase the value of any future licensing deal with a pharmaceutical company.

Preclinical Research and Development
The research and development pipeline in BioMedica goes from strength to strength with significant developments in a number of areas. For example, in the neurodegenerative disease programme the Company's gene transfer systems for the brain were described at the Forum for European Neurosciences 2000 conference in June. The presentation was very well received and we anticipate that contacts made at the conference will develop into collaborations in the future involving the Company's Parkinson's disease product, ProSavin®, and other opportunities.

In the gene-based immunotherapy field, the Company has obtained preclinical efficacy data using one of its proprietary anti-tumour antibodies. These data are now the focus of early-stage discussions with a major pharmaceutical company.

Product Collaborations
The Company's collaboration in cardiovascular disease with Aventis is making good progress. In June BioMedica announced that the scope of the relationship had expanded. In line with the original agreement, Aventis nominated a second gene to be used in association with the Company's hypoxia response element in cardiovascular disease. In addition, a new agreement was reached with Aventis whereby it is conducting a feasibility study for the use of our gene delivery technology in cardiovascular products. If successful, this could lead to a further full commercial license agreement with associated access payments, milestones and royalties.

In February and March two deals involving products related to TroVax™were signed. In the first of these a veterinary version of TroVax™was licensed to the major European veterinary company, Virbac S.A.. The goal of this collaboration is to produce an anti-cancer immunotherapy for companion animals. Many dogs, in particular, die of cancer and there is an increasing willingness on the part of owners to pay significant sums to extend the life of their pets. Therefore, there is substantial market potential. Revenues will be shared with Virbac, who will meet the costs of product development.

In the second TroVax™-related deal the Company agreed to Nycomed Amersham developing a tumour-imaging product based on a proprietary antibody that specifically recognises those tumours that should respond to TroVax™. This is important on two counts. First, it provides BioMedica with another route to revenues at no additional cost to the Company. Secondly, it provides a diagnostic/prognostic product that will support the use of TroVax™in the market by identifying those patients that are most suited to the treatment.

The ongoing collaboration with Modex S.A. of Switzerland, aimed at producing a novel diabetes therapy has achieved significant success in that BioMedica's LentiVector^® technology has now been specifically configured for the product. In addition the Company has achieved high-level gene transfer to b-islet cells from the pancreas.

In cell-based therapy, IDM and BioMedica are making progress in matching the Company's MacroGen^® technology to IDM's cell processor in a programme that is aimed at taking a joint cell-based therapy into clinical trial as soon as possible.

Gene Discovery
BioMedica has successfully established a strong gene therapy activity and a very exciting gene-based immunotherapy programme. Both of these have products in clinical development, a pipeline of future clinical products and collaborations with both large and small companies. In February, BioMedica signed an agreement granting AstraZeneca certain rights to use the Company's LentiVector^® technology, outside the fields of gene therapy and gene-based immunotherapy, for its internal target validation and drug discovery programmes. This was the second such deal that BioMedica had signed, the first being an early agreement with Aventis, and it showed that there is a clear commercial opportunity for the Company to generate short-term revenue from a series of similar deals.

The key to the opportunity is the fact that the pharmaceutical industry, via its various activities in genomics and proteomics, is identifying a very large number of genes that are in some way linked to disease processes. The challenge that they have now is to pinpoint those relatively few important genes that are mechanistically linked to disease and are therefore worthy of further substantial investment as part of a drug development programme. This narrowing of focus is the process of target validation and it requires a range of technologies including high efficiency, non-toxic gene transfer into various model systems that mimic disease processes. BioMedica's LentiVector^® technology is ideally suited to meet this challenge. The recognition of this opportunity prompted the Company to announce the formation of a Drug Discovery Unit in February.

Since February, the scope for target validation deals has further increased and the Company has completed the testing of a new gene discovery technology, called Smartomics™, which has now been shown to accelerate the process of identifying genes that are mechanistically linked to disease processes. The Company has already used this technology to identify genes that may be active in cancer, arthritis and cardiovascular disease and it has gene discovery programmes in asthma and in neurodegenerative disease.

Smartomics™ has considerable potential to generate shareholder value via patents covering a variety of genes and through collaborative agreements with the pharmaceutical industry. In order to realise this potential BioMedica has recently established a Gene Discovery Division that will have a headcount of about 20 and will focus on maximising shareholder value in the important and emerging field of genomics. The Company will not be competing directly with the major genomics and proteomics companies but will, instead, be taking a complementary, more focussed approach to gene discovery. Indeed, some of the larger genomics companies are potential partners in collaborations based on Smartomics™ and LentiVector^®-based target validation.

Intellectual Property
BioMedica continues to pursue its aggressive intellectual property strategy and a number of new technologies have been acquired by the Company during the first half of the year. In addition a number of our patents are now proceeding through the US and European examination process. In February BioMedica was awarded a US patent covering important aspects of gene transfer technology. Further successful applications are expected in the coming year.

Changes to the Board
In March the Company was pleased announce that Dr Paul Durrands had agreed to join the Board of Oxford BioMedica as Commercial Director with special responsibility for new corporate opportunities. In addition, he has taken on the role of Chief Operating Officer for the new Gene Discovery Division in which he will be responsible for driving forward the commercial success of the new activity.

Paul trained as a Chartered Accountant with Coopers & Lybrand and has a PhD in Molecular Biology from the University of Bath. After qualifying as an accountant he joined BOC's distribution division for 5 years in which time he was involved in acquisitions and major contracts. He subsequently spent 3 years as Group Finance Director for the Pig Improvement Company (PIC), a division of Dalgety, during which time he was involved in acquisitions and expansion of the business worldwide. His most recent role was as Finance Director of the joint venture between Yoplait and Dairy Crest (YDC), working on the strategy and integration of the Raines Dairy Foods business acquired by YDC.

Financing - £8.5M Placing
In August, subsequent to the half-year end, BioMedica completed a placing of 14.6 million shares at 60p per share thereby raising £8.5 million, net of costs, to fund the new Gene Discovery Division. The Company made use of a disapplication of pre-emption rights, approved at the last AGM to raise the funds quickly and cost-effectively. Moving fast is essential in what is generally regarded as a 'land-grab' race to identify the most important disease related genes amongst those that comprise the human genome. New developments in this field created the exceptional circumstances which led the Directors to issue a limited number of shares without going through the usual extended approval process. This is enabling the Company to quickly acquire facilities and staff for the new Division.

BioMedica has always made clear its intention to move from AIM to the Official List of the London Stock Exchange. When TroVax™enters clinical trials the Company will meet the performance criteria defined in Chapter 20 of The Listing Rules. Assuming the TroVax™ programme stays on target and assuming that market conditions are favourable, the Directors anticipate that a move to the Official List may be possible in the first quarter of 2001. No firm decision has been made, at this stage, about further fund raising at that time.

Financial Performance
We continued throughout the first half of 2000 to maintain the financial discipline that has characterised the period since BioMedica became a public company in 1996. As a result of deals with Modex S.A., Virbac S.A., AstraZeneca and Nycomed Amersham, income was up 77% on the first half of 1999. With increased research and development and clinical activity and in line with our budget, operating expenses were up 28% on 1999. Grant income, mostly in relation to the BC1 clinical programme, was lower than last year, while interest earned on deposits was higher. The pre-tax loss was £2.69 million, an increase of 28% on 1999. Following the introduction in April 2000 of R&D tax relief, there is a tax credit of £110,000 leading to a retained loss of £2.58 million for the first half of 2000.

The cash balance at 30 June 2000 was £5.92 million. The cash burn of £2.44 million included the payment of £275,000 for rights to certain genes, for which there was a corresponding receipt of £275,000 in respect of the issue of shares. In addition, 13.7 million shares were placed at 38p per share in January, raising net proceeds of £5.05 million.

6 months ended
30 June 1999
(unaudited)
£000's

Turnover

194

436

Research and development
Administrative expenses

(2,507)
(805)

(1,908)
(689)

Operating expenses
Other operating income: government
grants receivable

Net operating expenses

Operating loss

(2,222)

Interest receivable

119

218

Loss on ordinary
activities before taxation

(2,690)

(2,103)

(4,189)

Tax on loss on ordinary
activities

-

-

Loss for the period

The results for the above periods are derived entirely from continuing operations

The Group has no recognised gains and losses other than the above results, and therefore no separate statement of total recognised gains and losses has been presented.

There is no difference between the loss on ordinary activities before taxation for the periods stated above, and their historical cost equivalents.

As at
30 June 2000
(unaudited)
£000's

Fixed assets

Intangible assets

307

357

332

715

844

773

Current assets

Debtors: amounts falling
due within one year

708

497

432

Cash at bank and in
hand

5,915

4,977

3,039

Creditors: amounts
falling due within one
year

Net current assets

Net assets

Capital and reserves

Called-up share capital

1,564

1,422

1,422

Share premium account

17,727

12,549

12,549

Other reserves

711

711

711

Profit and loss account
(deficit)

(13,461)

(8,795)

(10,881)

Equity shareholders' funds

Operating activities

Net cash outflow from continuing operating activities

(2,547)

(1,861)

(3,800)

Returns on investments
and servicing of finance

Interest received

193

102

218

Capital expenditure
and financial investment

Net cash outflow before management of liquid resources and financing

Transfer to deposit accounts

(7,740)

(6,291)

(6,291)

Transfer to current accounts

1,899

1,371

6,291

Financing

Issue of ordinary shares

5,481

3,556

3,556

Expenses of share issue

(161)

(339)

(339)

Decrease in cash in the year

Continuing activities

Notes