Release Date: September 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Oxford BioMedica PLC (OXBDF, Financial) reported an 18% increase in first half 2024 revenues to GBP50.8 million compared to GBP43.1 million in the same period last year.
- The company achieved organic revenue growth of 38%, excluding the impact of acquisitions and loss of revenues from Homology.
- Strong commercial momentum with a 55% year-on-year increase in the client base and significant growth in the order book, which stood at GBP115 million.
- The company has successfully transferred its lentiviral vector capabilities to its Bedford site near Boston and is beginning to transfer this technology to France.
- Oxford BioMedica PLC (OXBDF) expects to be profitable on an EBITDA level in 2025 and achieve operating EBITDA margins in excess of 20% by 2026.
Negative Points
- The macroeconomic environment remains challenging, which could impact future growth and revenue projections.
- The company reported an operating EBITDA loss of GBP20.3 million for the first half of 2024, though this is an improvement from the GBP33.7 million loss in the same period last year.
- Cash reserves decreased to GBP81.4 million at the end of June 2024 from GBP103.7 million at the end of December 2023.
- The integration of the OXB France acquisition is still ongoing, with full integration expected to take more time and potentially incur additional costs.
- The company faces high demand for its services, which could strain its capacity and resources, potentially leading to delays in project execution.
Q & A Highlights
Q: What is your visibility on the remaining 20% of 2024 revenues not covered by binding contracts, and what's the equivalent percentage visibility for 2025?
A: We have full visibility on the remaining orders for 2024 and have already started discussions with clients for 2025. Our GMP suites are fully booked for the end of the year, and we have good visibility on 2025 revenues as well.
Q: What are your expectations for the contribution from the France and U.S. sites into the end of the year and 2025?
A: We view OXB as one entity, but there is significant potential for growth in France and the U.S. We have signed 7 new AAV programs, which gives us confidence in future growth across all platforms.
Q: How high is the level of GMP suite reservations for 2025 compared to this time last year, and what percentage of reservations typically translate to revenue?
A: We have planned for 80% suite utilization in 2025, keeping 20% for maintenance and flexibility. Historically, we have not had a CDMO capacity utilization number before 2023, but we are confident in our current planning.
Q: How should we think about the cost lines developing in the second half of 2024?
A: We expect to grow revenues more than our cost base. The first half of 2024 saw an impact from the acquisition of France and a decline in U.S. revenue, but this is not indicative of future margins.
Q: When do you predict that OXB France will be fully integrated, and are there any associated costs?
A: We are halfway through the integration process and expect full integration of delivery activities by next year. There are no large associated costs expected for the remaining integration activities.
Q: Can you provide some color around headcount expectations for 2025 and geographical split?
A: We will look carefully and add sensibly to our headcount as required, retaining a prudent outlook on the cost base. Specific numbers are not available at this time.
Q: How competitive is your AAV platform compared to Lenti, and how is it performing in the market?
A: Our AAV platform is very competitive, and client feedback has been positive. We signed 7 new AAV programs in the first half of the year, and we see increasing orders, indicating strong performance.
Q: How long does it take to sign on new clients, and what is the runway for new clients given current capacity?
A: It depends on the type of project. Feasibility studies can start in 2-4 weeks, while full programs for Phase III can take longer. We are currently booking new process characterization programs for Q1 next year.
Q: What is driving the increase in your probability of converting the pipeline in 2024 compared to 2023?
A: The increase is due to larger-scale opportunities and more mature discussions with existing clients. The conversion rate remains similar, but the pipeline's maturity has improved.
Q: What is the average stay time in the pipeline before conversion to the backlog, and are there any revenues in the backlog where customers haven't been able to get their capacity reservation?
A: The average negotiation time is between 3-9 months. There are no projects in the backlog waiting for capacity; all are either ongoing or about to start.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
