OXFORD BIOMEDICA PLC (OTC: OXB) Q2 2020 earnings call dated Sep. 17, 2020
Corporate Participants:
Catherine Isted — Head of Corporate Development and Investor Relations
John Dawson — Chief Executive Officer
Stuart Paynter — Chief Financial Officer
Analysts:
Amy Walker — Peel Hunt — Analyst
Charles Weston — RBC Capital Markets — Analyst
Joe Pantginis — H.C. Wainwright & Co., LLC — Analyst
Julie Simmonds — Panmure Gordon — Analyst
Alistair Campbell — Liberum — Analyst
Stefan Hamill — Numis Securities Ltd — Analyst
Peter — Jefferies — Analyst
Presentation:
Catherine Isted — Head of Corporate Development and Investor Relations
Good afternoon, ladies and gentlemen, and welcome to Oxford Biomedica’s Interim Results Conference Call. We are delighted today to talk through what hopefully you’ll agree is a strong set of results for the six months ended the 30th of June, on a backdrop of what for all of us has been unprecedented times. As you’ll see Oxford Biomedica has never been busier, not only in our core area of Lenti-based cell and gene therapy, but also in the fight against COVID through our work on AstraZeneca’s vaccine.
On the call with me today is our CEO, John Dawson; and CFO, Stuart Paynter. [Operator Instructions]
With that, I’d like to hand over to John Dawson.
John Dawson — Chief Executive Officer
Thank you, Catherine, and we show currently the forward-looking statement slide and during the presentation, we’ll make forward-looking statements which cannot be relied upon. Now let’s go to slide 3, please. So in 2020 highlights, a summary here of what’s been going on in the first half of the year. It’s true to say we think we’ve had a very strong first half of 2020 despite the COVID-19 pandemic. I can cite many reasons why it’s gone well for us. But I think the one I want to home in on is actually our people, dedication, resilience and sheer hard work to get us through these hard times we’ve been going through.
Moving onto the highlights, we saw the number of CDMO partner programs grow by more than 50% from 13 to 20. We saw underlying revenues in bioprocessing and commercial development grow by 24%, and we’re really excited to talk about the new partnerships with Juno/BMS, Beam Therapeutics and AstraZeneca.
On to Oxbox, construction completed back end of 2019, we’ve now seen three of the GMP suites approved by the MHRA with one to follow. And looking at June, we actually did our successful GBP40 million placing with new and existing shareholders as well, at that point in time.
On slide 4, please. So looking at our strategy and leveraging our LentiVector delivery platform, the backbone of our company. This has four main pillars as we go forward, the IP: patents and know-how, so important to our royalty streams of the future. Facilities; now we have six sites in Oxford totaling more than 220,000 square feet. Expertise, we have some of the leading people in the world working in our company. We’ve grown from 80 people back in January 2014, December 2018 was 432. And by the end of this year, we should be about 650.
One of the really important things that differentiate us from competitors is the quality systems in the business. And again, we got those by working with Novartis for the approval of Kymriah. So important though in the other deals we do, Big Pharma love to see these systems in place.
Moving now to two pillars behind the business that would be the CDMO partner programs. We have 20 of those currently, being in multiple revenue streams, process development fees, incentives, bioprocessing revenues, and of course, the all important royalties. There’s a long list of companies. I’ll go through those in a few minutes. To the right hand side of the slide, we talk about the gene therapeutics proprietary pipeline. Eight drugs in those areas, and we choose here to out license or internally develop our proprietary wholly-owned pipeline. That license example A, would be Axovant for AXO-Lenti-PD. And I’ll cover that in a few minutes during the presentation.
On slide 5, please, now move towards the CDMO part of the business. We call it customer-centric. At that point I’ll go on to slide 6 to talk about the CDMO highlights in the year so far. In March, we signed a deal with Juno/BMS, a $227 million deal for license in a five year clinical supply agreement for four CAR-T and TCR-T programs. Very exciting place to set up programs there and a great deal for Oxford Biomedica.
In August, we signed a deal with Beam Therapeutics for development, manufacturing, and the license to Beam Therapeutics for the next generation of CAR-T therapies. Of course, we are building for the future. The complete construction of Oxbox, our 84,000 square feet manufacturing facility at the end of 2019. Two of the suites were approved by the MHRA in May, one is September and one to follow we expect in October.
You’ll be aware we’re now working with AstraZeneca about a COVID-19 vaccine. We originally joined the Jenner Institute and the other consortium members in April ’20 to rapidly develop, scale up and manufacture potential candidate for COVID-19. In May 20, we signed a 12 month clinical and commercial supply agreement with AZ for COVID-19 vaccine protection, closely followed by the post period deal in August, an 18 months supply agreements under a three year master services agreement with AZ for large scale manufacture of AZD1222. In 2020, number of programs has grown by more than 50%, from 13 to 20. And looking back to June 30, 2019, to June 30, 2020, they’ve grown from 10 to 20. Oxbox is fundamental in being able to meet this demand in bioprocessing.
On to slide 7, please, the graphical picture of the pipeline for CDMO side of things is very interesting. If I’d shown you the Novartis part of this back in early December, it would have had two drugs. We got three more from Novartis, when we did the deal with them to extend the manufacturing agreement for five years and another one in the first quarter. So now we work with six drugs for Novartis, all very exciting.
Axovant, our CDMO customer, making batches for them now, going through and great guns a Phase 1/II trial. Of course, they’re so excited about this new deal with BMS, four CAR-Ts and TCR-T, one more advanced than the others but some very exciting indications. If you look back a few years and think about the CAR-T world, you have Novartis, Kite and Juno. Now we have two of those companies working with us. It’s very, very exciting.
On slide 8 please. Orchard Therapeutics, we have three types with them, ADA SCID, MPS-IIIA and one undisclosed. The new deal with Beam Therapeutics around cancer cell, CAR-T using their base editing very exciting, new generation of CAR-T. We’re working with Sanofi, Factor VIII and Factor IX, Haemophilia A and B and we are on schedule for things which we are producing for them at this point in time. Same can be said about work with Boehringer and the UK cystic fibrosis gene therapy consortium for cystic fibrosis that’s on schedule as well. Work with Santen on an inherited retinal disease. Of course, as you all know, we’re working with AstraZeneca on the COVID-19 vaccine.
On to slide 9 please, talk a little about the Juno/BMS deal in a bit more detail. Obviously, we get royalties here. It’s our normal business model. We’re working with them on a five year clinical supply agreements, where we also receive undisclosed post development and batch revenues. The deal here had an upfront $10 million development and regularity milestones of $86 million and back ended sales related milestones of $131 million, is a very exciting deal for us as a company. All the work is being done in our Oxbox facility.
On slide 10, please. We are delighted to be working with AZ on COVID vaccine, AZD1222. We want to play our part here. We want to make sure we try and beat this pandemic for mankind going forward. As such we’re not charging quite our full rates on this but we are making sure we make some margins. The New Deal of the 18-month supply agreement actually will take us forward to working 1,000 liter bioreactors, turn them in two suites. We have a GBP15 million upfront payment as a capacity reservation fee and potentially in excess of GBP35 million in revenues, plus certain material costs reimbursed to us.
Three of our GMP suites at peak will be used by this particular drug, very exciting. Chronologically, we got involved in the consortium in April, first deal with AZ in May, did a deal with VMIC to get out two of our GMP suites with bioreactors and other equipment in June, and of course, the more recent deal, the important one here was in September.
Slide 11 please. I move now to our Gene Therapeutics which we call patient-centric, moving on to slide 12. The highlights here; Axovant, have had a busy year, in January they presented the 12-month data from the first cohort with their SUNRISE-PD trial. This showed a 37% improvement in motor function from baseline as assessed by the UPDRS Part III scores — OFF score I should say. This is up from the six month number of 29%. We expect to see six months data from the second cohort in the fourth quarter. And in July this year we signed a three year clinical supply agreement with Axovant.
Moving on to our own in house portfolio, we have had a complete review of that and decided where to invest in the future. Our lead candidate currently is OXB-302, working on CAR-T 5T4 to haematological tumors. That pre-clinical work is ongoing, and we’re trying to move things towards the clinic as quickly as possible. We’re working on OXB-203 in Wet AMD and this is still using our gene delivery system to express afibercept. This follows on from our work in OXB-201, which had long term gene expression. Also doing a lot of preclinical work on LCA10, ALS and unnamed liver indication.
In June this year, Sanofi informed us that they wish to return Stargardt’s and Usher Syndrome 1B programs to us, that will come to us by the end of the year, and we’ll decide on what action to take with those as and when we get them back.
On slide 13, please. This is a graphical representation of our gene therapeutics pipeline. Axovant, doing a great job, driving forward Axo-Lenti -PD. Stargardt’s and Usher Syndrome 1B coming back to us from Sanofi and then we’re working in the Haematological malignancies, Wet-AMD, LCA10, ALS and the liver indication which is unnamed at this point in time.
On to slide 14, please. Here we just we go back to our slide we had originally for Axovant, just reiterating the high level terms of the deal, having done a new supply agreement with them. The value of the deal was $842.5 million, $30 million upfront; $55 million of development milestones, and another $757 million of specified regulatory and sales milestones. And again, we see Axovant as a great partner and want this moving very quickly.
On to slide 15 please. At that point, I’ll pass to Stuart to take us through the platform, as well as the financial results.
Stuart Paynter — Chief Financial Officer
Thank you, John. Good morning, everyone. Thank you for attending the meeting. It’s my pleasure to take you through the platform. As John’s gone through the various centricities of our business. This one is very firmly innovation centric. And it really does have a meaningful mission driving the industrialization of Lentiviral vectors. We believe and I think everyone can see that gene therapy and in particular Lentiviral vectors in their, in their work with Kymriah have really proved their utility. And when things prove their utility, they start their journey to become more robust, more repeatable and cheaper. And we want to be at the forefront of that in creating those technologies.
So this is the mission of the platform to keep it strong, keep that market lead. So if I advance you to the next slide, slide 16. And, as part of the building the future the John’s just taking you through in terms of the CDMO capacity through Oxbox. We’ve also started work on updating both the GMP laboratories, the Windrush Court and the Windrush Innovation Center. We took a lease out on that at the end of 2019. And we’ve now raised the capital in order to expand refurbish and really look at building an infrastructure there, that’s going to help formulate drive innovation within Oxford Biomedica. We’ve been looking at labs of the future and there are some very exciting developments there. And there’s obviously the platform innovation partnership we have with Microsoft. And this is really exciting for us, this is sort of combining the cutting edge of biotech with the cutting edge of traditional tech.
And, we have to be able to potentially speak more about that data as we go forward. And the in house innovation and I’ll take you through a graphic example on the next slide. But we really are trying to attack this from all angles. The industrialization of this process is going to involve innovation in several areas. They’re ongoing, they’re exciting, as well as that we believe now we have the financial firepower, to deliver upon that mission, not just from in house innovation, because we don’t believe for one moment that every good innovation in Lenti is going to come out of our labs in Oxford. But horizon scanning for the best technologies that we can either licensing or potentially acquire in order that we keep the strongest IP, a state in Lenti. And we are acting as a centralization agent for those technologies so we can give the best services to both partners and our own products. And it is something where we believe that now is the right time for that investment. We’ve gone to the markets, we’ve received strong report and now the work starts in earnest. We’ll be in the middle of quite challenging times.
So if I lead you on slide 17. And this really is what we call our innovation wheel. And this just highlights the fact that innovation is going on in many different areas right from regulated and expression and targeting the next generation of vector itself. Two innovations in upstream and downstream like the U1 & U2 that you can see around four o’clock on this wheel, the second unique, stable producer cell lines, which we believe will be vitally important to working at that scale as the industry matures, and then all the way through as we go clockwise around that wheel, to automation through limbs, and driving efficiency and scalability in our businesses, as we grow all the way through to the AI and machine learning piece, which is the leading edge of industry.
And that doesn’t even include some of the mechanical innovations we’ve been making in terms of the next generation of suspension processes going on within the CDMO. So there are plenty of areas for us to explore. And there are many, many opportunities to invest and return on that investment. So we’re very excited by the scope of the innovations going on, the ability to give our world class scientists the best environment in which to innovate, and also to supplement that innovation by looking at best of what’s going on in academia in small companies outside of Oxford Biomedica.
So, if I just skip you on a couple of slides now, slide 19 onto more of my data field. And just take you through the H1 2020 financial highlights in a bit more detail, I’ll just draw out some of the highlights that John has already mentioned and dive into a bit more detail here. So I’m not going to go through every point on this slide, but I’m going to try and pick out the two or three things which I think make a meaningful difference. Second, point down. John’s already highlighted but the underlying revenues and we do point at those underlying revenues, the Predictable Revenue Streams which we highlight, have grown 24% in challenging circumstances without extra GMP capacity.
So, I think as John mentioned testament to the people working on Oxford Biomedica and our partners who have absolutely shown patient centricity and have plowed on during these difficult times, and third point down licenses milestones and this is the more lumpy side. It’s worth pointing out at this stage that given the accounting regulations, in particular IFRS15. We recognized about 80% of the Juno upfront in revenues in the first half. There’s another couple of million dollars, GBP1.5 million to be recognized no later than March 2021. So, somewhere down the line, there’s going to be a couple of million dollars being recognized. And it’s the, it’s the, the intricacies of that particular accounting standard that made us account for the up front in this way.
Operating expenses, as you’d imagine, have increased largely due to the annualization of an extra staff that we have had on board for a long period. And towards the end of the period. Well, in fact, quite steadily through the period, building up for staffing and Oxbox. So Oxbox was completed, round about the end of the first half of 2020. And of course, we have to bring on staff between three and six months early to get them trained up, et cetera. And that effort has continued as we sign the AstraZeneca deal. And in fact, I think most of you know that the initial plan was to open two clean rooms and the full finished suite to begin with in the first phase of launch. That was very quickly accelerated with the AstraZeneca deal to four clean rooms. And of course, we need to staff up those clean rooms as well.
So there’s a little bit of the early stage of that creep into the first half year as we started hiring at risk for the vaccine, which was absolutely the right thing to do. So you’d have noticed in the release that we’ve had GMP seven approved by MHRA, and we are currently working on the licensing of GMP eight. So that would be four clean rooms in Oxbox up and running, two accelerated the best part of the year. So we really are moving forward at a pace in difficult circumstances. And what that leads to essentially, is operating EBITDA of roughly breakeven slight loss GBP0.4 million. Of course, that’s the variability there around the recognition of the upfront from Juno.
But we are delivering what we say we’re going to deliver. So even during difficult circumstances in the first half, we have always said that, we are not trying to leverage this business for profitability quite yet. It’s too early in its lifecycle. Investments need to be made to secure infrastructure, expertise and innovation for the future. And we are going ahead with that with very nice results. And the last thing to mention, of course, is cash. And again, there was quite a lot of uncertainty as we entered the first period of lockdown. And are very proud of the way that the story resonated with both existing and new investors, which enabled us to raise on this application GBP40 million which was and we actually had around about twice the demand for that. And it was more or less at par depending on the wide raise of share price movements on the day, which was very volatile at the time. So a pretty successful raise and people understand the dual strategy. It really resonates.
And we believe we’re in a really good spot that led to a cash balance at the half year of just north of GBP50 million. So now we believe that gives us the financial firepower to continue to invest in that innovation to horizon scan, the best innovations elsewhere across the business. And it sees us — it sets us fair for anything that Covid, the environment would thrown at us which we are still very well aware. We are not out of the woods, although our best efforts on the vaccine gives us a lot pride in being involved in the solution as well as being involved in the risk assessments around COVID.
And if I just take note of just a very brief graphical representation on slide 20 and you’ll see comparing the last bar on the top charts of H1 2022 to the bar to back H1 2019, we do have slightly seasonal businesses we’ve explained regarding access to capacity in terms of shutdown and other things. But in the blue bar, you’ll see the impressive 24% growth in the underlying revenues, and the lumpy nature of the purple and we say we shouldn’t be scared of this, this is a great opportunity to bring working capital and access to pay from new innovations into the business. But it’s difficult to predict based on the timing.
So we continue to have people focus on the underlying business growth, which now has had the capacity constraint largely removed with, as I said, three licensed new clean rooms and hotspots in our existing footprint. And we are very confident we can grow this fairly significantly over the next few years, as well as bringing in milestones, license fees, and other things which will keep us keep the purple bar interesting.
On the bottom chart that is just indicative of where we’re at. We are still in a heavy investment mode in this business, building out the infrastructure. It’s resonating with the wider investment community. We are seeing that our market capitalization and our share price. And we believe that gene cell therapy is going to be the paradigm for medicines in the 2020s maybe the early 2030s we need to be a scales player in that and that’s what we’re trying to do at the moment.
And in terms on slide 21, of just looking at the raw P&L, and I’ll just call out a couple of things here, which may form some element of interest to the audience here is that you already know about the revenues in the growth, the cost of sales that we’re listing there. The reduction in cost of sales has come roughly from three different areas. Firstly, in 2019, we’ll be just finishing off the process A batches, which had a higher cost of sales. It was the inherent process rather than suspension process, which we all know produces a lot more for less money. Its part of the innovation we’ve already embedded into the business.
The sales mix between commercial development and bioprocessing that mix is being skewed towards bioprocessing in 2019, and commercial development in 2020. So, that is naturally a slightly higher margin. And there was also a provision that was built up over time as we’ve become a more operational business, we are providing for any errors, batch failures that take place over time, which fields do still happen occasionally, even with the processes becoming more and more robust. So, a combination of those three things is somewhat skewed that number.
And if we go down the page in terms of the increase in the cost and an apology here on the second line, where it says research and development of our processing costs, ignore by processing costs, just research and development, the bioprocessing costs split out above. And you’ll see a fairly steady increase across all three lines, the bioprocessing costs of I’ve explained from the scale up and staffing of Oxbox in the first half of 2020, which was necessary because obviously you need to get people trained, it’s not a productive capacity in the first half as we were doing various quality runs, but the staff needed to be brought on and trained.
So that’s the explanation for the jump there. And then in R&D, we’ve got the annualization of the resources we’ve already added. We were for the first half being very cautious in our external R&D spend, as you’ll see in the in the press release. But we are still making ceded investments given our financial strength so we’ve been able to navigate this rather well. So growing businesses, John mentioned, we’re going to be 650 by the end of the year. In this time period, it was a jump of about 20% in staff. So that explains the extra cost.
And one last thing worth pointing out is what we’re very proud of is the finance costs. We are debt free as we all know, we did that just over a year ago with no other investment enable us to clear our debt, which eliminates that drag on loss before tax essentially, or profit before tax and enables us to truly invest the levels that we believe without having to service venture debt.
So all those things I think, are telling the story of a company in very good financial health, who have navigated a difficult situation really well in the first half and in terms of the guidance we gave, looking forward to a second half, which is highly variable in terms of what we can produce, but gives us the challenge and gives us a fortify view throughout our organization or doing something meaningful to as John said, to help alleviate the economic and social stresses that are on all of us through COVID-19.
So I think at that point, as we flip to slide 22, I hand back to John to close out for Q&A.
John Dawson — Chief Executive Officer
Thanks, Stuart. So first of all, I’ve got a new slide to talk about that around the partner programs and CDMO. We do expect to do further deal this year. Timing can always be difficult to predict, but that’s our expectation. Within Oxbox, we plan to be fully operational in the second half of the year, producing the COVID-19 vaccine, along with our other partner programs. We expect to see Novartis CAR-T programs progress and development during the year. And we also expect to see further data on the COVID-19 vaccine during the second half of this year.
Moving to the proprietary pipeline, we do target to spin out or out license one of our in house products during 2020 is even harder to predict timelines. We expect to see the data from the sixth-month efficacy from cohort two to SUNRISE-PD trial with Axovant in Q4 and we do expect also to progress internal candidates into our portfolio and towards the clinic during 2020.
On slide 23 please. Looking forward, the outlook for the year is positive. We are seeing improved financial performance in 2021 building on growth of bioprocessing and commercial development partnerships. And we’re also benefiting now from the increased utilization of the capacity in Oxbox. Work with AZ, this is likely to boost our revenues in the year in excess of GBP10 million subjects of course to scale up things accessible and regulator approval of the fourth GMP suite in the fourth quarter. All that said this is leading us to believe we’re having EBITDA for the group this year to be in the low to mid single digit million ranges for the year on the basis described above.
We do expect OPEX operating expenses to increase due to number of employees going towards 650 by the year end. CapEx in the second half of the year should be greater than the first half the year because we continue to convert office space into GMP laboratories and Windrush Court. And we’re seeing the final costs associated with the completion of the installation of the fill/ finish line with Oxbox.
Despite the COVID-19 pandemic, we’re really excited about capitalizing on our leading global Lentiviral vector market position with a dynamic and fast growing cell and gene therapy sector.
Thank you very much. And are there any questions?
Questions and Answers:
Operator
[Operator Instructions] Our first question comes from Amy Walker of Peel Hunt.
Amy Walker — Peel Hunt — Analyst
Hey team, I have I think three questions if I may, and I’ll ask them individually so you have a chance to respond. And with the new GMP suites that you will have completed by the end of this year. I mean overall, one of your GMP suites is fully committed to Novartis, if I remember correctly. For the others, can you remind us, do you need an entire GMP suite for commercial development work for the duration of a year or more than one? I suppose what I’m really asking is by January 2022, how many of your available GMP suites will you need to service your commercial customers and your commercial development work, not including what you’re doing on the AstraZeneca vaccine.
John Dawson — Chief Executive Officer
So to answer that question, the reason we’re helping out with AZ asset, the vaccine asset, Amy, is because we had the space to, we hadn’t planned to bring some of these suites online quite as quickly. And I can tell you that no shaping or form or in any way affects our LentiVector business as we go forward. And that remain our current or future customers and we are still talking to future customers to bring them in as well, to go down to exact suites, it’s a difficult thing for me to answer sitting here today, because depends on demand and how things come through to last part of the year. But suffice to say we have capacity to do what we need to do. And of course you know already that the Oxbox facilities only half use at this point in time with the four GMP suites plus that we are going to finish. We have the other half to actually build out when we need to.
Amy Walker — Peel Hunt — Analyst
Okay, thanks, John. My next question was around Stuart’s talk about the innovation investments that he went into in some detail in slide 16. I just wondered if you could help us understand the economics of those investments. So what proportion of your R&D spend that you present as pure R&D is devoted to those investments? And how are you baking returns for that innovation into your contracts? Are you offering your clients a menu of things like you can have trip and seek — and then you tell them well, the royalty rate scales depending on how many things you choose, or just to give us some understanding of how the economics on that works.
John Dawson — Chief Executive Officer
Well, cost to sale, I’ll pass to Stuart in a second. But as far as when we embed new IP into a deal, we do expect to have some return for that. So it generally would embed it new IP as we have it now into the contracts. And that would bring an increased royalty rates in general should that be used in a deal we do. I’ll pass it to Stuart for the first part what we spend on it to actually get the return.
Stuart Paynter — Chief Financial Officer
Yes, it’s an interesting question, Amy, I’m going to answer partially, because we are obviously not drawing that level of detail currently. What I would say is that both the way that we interact with customers in terms of our commercial strategy is evolving. And as we do more of these big, big deals, it becomes more business as usual for us, which is great because it closes the start to finish time on some of these deals. And in terms of the investment in the individual innovations, it’s something that we’ve been investing in, but we know that to a degree, we need to make an element of change in the way we invest in the platform itself. So is one of those areas which I think we’ve already talked about as being more transparent about potentially by this year and in terms of how we spend across the business segments we’ve laid out here.
I think it’s something that you’ll find out more about I can’t really say at the moment without going beyond what we’re currently disclosing, suffice to say that we are well funded to make those investments in the platform as it was a distinct use of funds in the fundraise, and as we go through with our new Chairman, the strategy of Oxford Biomedica is something that we’re all very interested in and how to get the best returns. Obviously, as John said, we expect to like fortify our position, give our customers the best opportunity to access whichever technologies make the most sense, and to make a good commercial return upon those decisions they made. The details which we can’t disclose at the moment.
Amy Walker — Peel Hunt — Analyst
Okay, thanks, Stuart. I mean, I guess aligned to that the reason for doing all that innovation, part of the reason is to maintain your competitive advantage. And I wondered if you’d be able to update us a bit on the status of your closest competitors, because it’s something clients ask us about regularly. Are the closest competitors in Lentiviral vectors still the lentigines in the moments of the world? Have they made any progress in closing the gap to you? And something that I’m often asked is about the likes of Brammer and Thermo Fisher. They’ve obviously got money available to invest to try to catch up with the innovation that you guys are doing all the time. Are you seeing evidence that they’re doing that? And if they’re not, why do you think they’re so happy to just let you continue to dominate that Lentiviral vector space yourself?
John Dawson — Chief Executive Officer
The first part of that would be I think the barriers to entry to come into working in LentiVector are very high. And that’s clear even just work with the buyback to get that to that point not many companies can do that. So there is competition out there, I wouldn’t want to go into individuals where they’re standing where they don’t stand. What we do want to do is industrialize the process which is why we’re innovating so actively here to bring new things into the platform. And I think we still stand, we believe with the best in the world at this moment. And we are ahead of the competition. Why we better because we keep improving what we do and putting new techniques into it. Our idea is to have scalable manufacturing and have a cost efficient price for the customer, therefore treat as many patients as possible. And of course, in our business model lack of this amount to later on as well [Phonetic]
Stuart Paynter — Chief Financial Officer
Yes, I think we can probably categorize it as what we’ve got a healthy paranoia about being caught up. And that’s why we’re doing what we’re doing. I think to your point, Amy, the way we break down the competition is largely into three areas, the vector cos who aren’t direct competition, they’re not trying to be GMP manufacturers, but using innovative new technologies, companies of our size and scale and you mentioned a couple of them. And then the really big guys were now they have loads of resources. And that we try and partner with the vector cos, we try and beat the companies like us. And we keep a very friendly, a friendly demeanor with the companies are much bigger than us. And we sort of know what we’re up to in that sense. So healthy paranoia is a good place to be. We’ve got the lead, as John said, and with the combination of healthy paranoia, world class science and good funding, we will we believe we can keep the lead.
Operator
Our next question comes from the line of Charles Weston from RBC.
Charles Weston — RBC Capital Markets — Analyst
Hello, and thanks for taking my questions. And I also take them one at a time, please. The first question is on whether you can give us any color around the latest trends and pharma companies thinking for Lentiviral vectors rather — versus other vectors. And give us some color on the health of your pipeline of discussions that might deliver in 2021 with basically nice run rate going on with accelerating, any color would be helpful.
John Dawson — Chief Executive Officer
I mean — I think we see lenti becoming more popular. There are reasons why that’s the case. We think it can do a great job because it does show great long-term expression. As far as thinking about where we’re going 21 and the deal flow, we certainly have a very active deal discussions ongoing at this point in time and the measure for us as well about how many deals will get done is generally feasibility studies ongoing as well. Some people want to do those and go straight further than that. But the majorities, which do feasibility gives us a really good judgment point as to what we’re working on. We don’t tend to lose anything if we do a good feasibility study. We don’t tend to do bad feasibility studies. So once we get them into that position with reasonably confident and we will come through the deals later on.
As far as the view of the world of lenti vectors, I can only see them getting larger not smaller. There are many indications we’re working on, as you well know. The lung, the liver, CAR-Ts, plain [Phonetic] eye, I think these things are becoming profound. And literally, I think, our projections we did back in 2018, to justify the building of Onbox and we predicted there I think there are conservative estimates as well. Then to vector manufacturing the world then would be about $800 million, that’s just the manufacturing costs not the royalties, we hoped we’d get between 25% and 30% of that again being conservation, so I think we see we are not taking LentiVector and we believe that will continue to grow as well and just want some time.
Charles Weston — RBC Capital Markets — Analyst
And just to clarify, you’ve done single asset deals, you’ve done multi asset deals with big companies. Is that still the mix that you have discussions in or other way of doing that? Or are they all sort of single asset type of deals you’re talking about?
John Dawson — Chief Executive Officer
It does depend upon the type of company we’re talking to. I mean, a lot of companies do a lot of ideas with them and want to work on all of them at once. Others might have one asset, they might be lucratively attractive. So we tend to do a lot of homework to make sure we understand what we’re going into. Our ambition here is to have a partner we work with the goal to commercialization and things as far as and manufacturing at that stage, doing one batch for [Indecipherable] is not particularly attractive to us because we turned something else down to do that. So we are particularly careful what we take and again, I think we’re happy to take one program or programs, most of our activities with customers have led us to a place where you have something to start with it tends to be implemented later on. And that’s what we work towards as well.
Charles Weston — RBC Capital Markets — Analyst
Thank you. And then moving on the IP that you’ve been developing, such as trip [Phonetic] and empty status [Phonetic] is just following on from Amy’s question that would generate higher royalty levels. Have they already started to be integrated into some of your more recent deals, all the discussions that you’re having now?
John Dawson — Chief Executive Officer
They have been integrated into deals already. And again, it depends on what they used or not talking about and being into the deal is one thing than being used if — was another. And we’re still working through to make sure that the technology we’re embedding gives the right returns to be included and something we are working on. So yes, we had embedded before and we will embed again to that question.
Charles Weston — RBC Capital Markets — Analyst
Thank you and last question for me and I note from the press release a deal with Papyrus Therapeutics, if I pronounced that right. Can you give us a little bit more color there, please?
John Dawson — Chief Executive Officer
Sorry, loudly again. Not able to hear you.
Charles Weston — RBC Capital Markets — Analyst
So just out could you provide more color about the deal with Papyrus Therapeutics?
John Dawson — Chief Executive Officer
That’s a quite exciting deal. It’s and as you can might imagine, it’s quite a small one a lead in working with our old CMO actually in and other companies working in, but it’s something that’s going to aid our technologies. It’s one of those things that we are basically excited about, and we think it could be something that makes up that goes better with you just so I think it’s something that’s very early stage without question, but has a way to go before we know it’s going to be useful to us, we have all the work to do.
Operator
Our next question comes from Joe Pantginis of H.C. Wainwright.
Joe Pantginis — H.C. Wainwright & Co., LLC — Analyst
Hope you’re all doing well. And thanks for taking the question. Two questions, actually. So number one, wanted to build upon some of your earlier comments regarding the innovation wheel. And look to build upon that a little bit. Obviously, you can’t go into any of the proprietary nature of the innovation wheel. But I wanted to see at least from a broad stroke standpoint, is there anything through your innovation process right now that’s particularly exciting to continue to keep you guys as the go to player?
Stuart Paynter — Chief Financial Officer
Hi, Joe thanks. Thanks for making time. And, yes, thing that jumps out to me on that slide, as we saw, probably just because it’s the melding of two high tech sort of industries is the AI and machine learning piece. We are well aware that as a company, we produce tons and tons and tons of data. This is what bioreactors do. I mean, the vector substance, as it were, is a liquid and then you run rafts of analytical tests on that, to see what’s actually contained within. And within that data we all suspect that the answers lie to help industrialize this process. And it’s just too big a task for technicians to draw out that data. So in terms of combining AI and machine learning to gene therapy production, if this is the thing that we think can make a really big difference and probably one of the areas where it’s almost unique. I can’t say it’s absolutely unique. I don’t know everyone in the world, but as far as we’re aware with people who had sort of pushing the envelope on this one with a partner like Microsoft, it really does show that the scale of the business is now attracting some of the biggest players in the world with Novartis, Astra, BMS, Microsoft across different industries. It’s a real testament to the hard work going on in R&D and Oxford Biomedica.
Joe Pantginis — H.C. Wainwright & Co., LLC — Analyst
Got it. That’s actually really helpful. Thank you. And then I just wanted to focus on well, first, it’s very nice to see the pipeline visibility that you provided today, and I wanted to focus on one of these assets specifically the Wet-AMD program. So wanted to maybe discuss some of the differentiation around this. Now obviously, from a commercial standpoint, it’s certainly very promising to significantly reduce the number of direct injections to the eye with afibercept. So I guess with regard to the vector, I guess you have some sort of specific I guess therapy, I’m sorry, some arrangements you’ve made to the promoter and enhancer is of the vector that assist with tissue targeting in the eye.
John Dawson — Chief Executive Officer
We always had great success in the eye. If you go back to our original drug reduce [Indecipherable] one. We did show long term expression. [Indecipherable] make the same expression in the eye after seven or eight years and after look at the data. So we’re very confident we can reproduce that and it’s just now built doing our pre clinical work on this to make sure we’re in the right place to go forward.
Operator
Our next question comes from the line of Julie Simmonds of Panmure Gordon.
Julie Simmonds — Panmure Gordon — Analyst
All right, thanks so much for taking the question. Couples, firstly just on the bioprocessing cost in the P&L. Just wondering how they shape up now you’re actually starting to use Oxbox. I mean does some of the people that you’ve got in there that were being used on the sort of validation of the lines, that sort of cost move up to cost of goods now you’re actually utilizing to facilitate.
Stuart Paynter — Chief Financial Officer
Yes. I think that’s true, Julie. It’s a disproportionately high expense this year because of the essentially like you say, the validation and the water runs in the qualification of the facility. As they — as those, that group of five technicians begins to work on live projects, a good proportion of that cost will be moved up against the revenue lines.
Julie Simmonds — Panmure Gordon — Analyst
And we shouldn’t be looking at it continue at that level, it’s likely to sort of drop off a bit and more similar to it was last year type of thing.
John Dawson — Chief Executive Officer
Under those assumptions, yes, I mean, unless we are building this stuff. So, we often, as John mentioned, we keep an eye on that demand and if we see that demand that we need to get out if out of Oxbox. It’s a great problem to have. It will be infrastructure preceding demand.
Julie Simmonds — Panmure Gordon — Analyst
Excellent. And just on the innovation platform, again, you’re only talking about potentially looking more about in licensing or acquiring technologies to fit into that, alongside what you’re developing in house. I was just wondering were there particular areas that you were looking at to, to sort of acquire new technology in.
John Dawson — Chief Executive Officer
I think if we got — we meet there and we look at things that can make our business stronger, makes more competitive and give us — keep our edge we have over the others at this point in time. So it’s pretty wide and we look widely thought as…
Operator
Our next question comes from the line of Alistair Campbell of Liberum.
Alistair Campbell — Liberum — Analyst
Thanks very much for the questions. The first one really is just in terms of some of the early clinical development going on with Novartis and Juno, I mean, Novartis with Kymriah’s example basically, they’d see no COVID-19 disruption, which you can kind of understand it’s on the market and these patients are very sick. But I was kind of wondering if your experience with any of your partners, other sort of Juno or Novartis slows down activity and some of the earlier clinical programs, which could be linked to sort of COVID disruptions? That’s kind of the first question.
Second question is kind of more specific on Sanofi. So earlier this year, they basically flagged their intention to get into the clinic in 2022 with a Lentiviral gene therapy product for Haemophilia and as to be referenced the San Raffaele program. So just to confirm does that still, you’re involved in that program, that still program you’re heavily involved with Sanofi. And perhaps in that presentation, John have been somewhat disparaging of viral vector companies they’ve been working with but just to confirm you used to have very healthy relationship with Sanofi program. Thanks.
John Dawson — Chief Executive Officer
Well, first of all, pushing that to slow down. As you can tell by results, bioprocessing is being very active. We wouldn’t be doing it with our customers when taking the drug be late so yes, it’s been very active. Things haven’t slowed down and we’re working very hard to keep up with demand. On the second part, our relationship with Sanofi, I can tell you that that are very active with us, have a good relationship and the work we’re doing to get those drugs together for that transaction with Wet-AMD is on track to what we expected and is continued.
Operator
Our next question comes from the line of Stefan Hamill of Numis.
Stefan Hamill — Numis Securities Ltd — Analyst
Good afternoon, folks. Two for me, both on the topic of yield scale up and liver disease. I guess just following up on the comments on Sanofi, it’s ambitious in Haemophilia, particularly after what we’ve seen with biomarin, and just your ability being in question, they’ve stated pretty clearly that they want to enter the clinic in 2022. Does that imply that you guys need to sort of scale up your yield there to a significant extent in advance of that? Are you confident you can deliver sufficient material to enable those trials?
John Dawson — Chief Executive Officer
It’s an ongoing process and, Stefan, we’re working diligently at this point in time, we are achieving what we hope to achieve by this point, but we have to keep the pressure on keep things moving to be able to achieve what they asked us to do.
Stefan Hamill — Numis Securities Ltd — Analyst
Thanks and then just OXP-401, they’re in liver disease. Just any sort of more color on that indication? Is there an edge for the trans gene and just the timelines on that one? Thanks.
John Dawson — Chief Executive Officer
That’s very early stage of the maturity to speak about this point in time. It’s s very early stages, it’s one of our exciting things we seek to work on but a lot of pretty much do there to get through.
Operator
Our next question comes from one of Peter [Indecipherable] of Jefferies.
Peter — Jefferies — Analyst
Hi, thanks for taking my questions. I’ve got two left, please. And firstly, just on the AstraZeneca collaboration. I’m wondering if you could just outline if worst case and appreciate obviously none of us hope this happens. But if the worst case the vaccine were to fail and not go any further. Just trying to understand what sort of revenues I guess beyond the upfront you’ve got, you’re assured to receive or any sort of compensation I guess. Obviously, you’ve accelerated and you’ve done a lot of work here. And I guess I’m just trying to sort of understand what sort of this has been at risk, versus on the other hand funded by obviously AstraZeneca and the US government.
And then secondly, it really following on actually from sort of from the previous question, but I really didn’t give us any sort of idea to help us out over maybe the shift from process to Oxbox. And obviously, as you’re now going further, what sort of magnitude of yield improvement have you managed to achieve over the last year, two years and I guess, take your — but can you give us some sort of, I guess, quantification of how it has happened in terms of value of the change over a period, that will be helpful, thank you.
John Dawson — Chief Executive Officer
Okay, it’s go two ways. It’s fair to say GBP15 million reservation fee. We’ve also been working for a while now on purchase development, which they’re paying to us as well. So if things were to stop tomorrow, we would keep the GBP15 million. And we’ve already been or will be paid for the work we’re doing at this point in time. So we would not be out of pocket. We’re not doing anything at risk. But as I said earlier, we are doing these things at a reduced rate to our normal activities.
You are taking second part, Stuart?
Stuart Paynter — Chief Financial Officer
Yes. So it’s an interesting question, Peter. I mean, just adding a little bit color to John’s answer there. There is some variability around AstraZeneca because it really depends on when any event happens. That’s how far we through but they understand that they are driving the process and their suppliers who are working, if there is any risk needs to be covered, and that’s what they’ve been doing. It’s also worth mentioning that in terms of kicking out GMP seven and eight in Oxbox, it’s being done in conjunction with VMIC. And so they are — they have loaned us the equipment in those two facilities. So that is being done at zero CapEx. So we have de-risked this as far as we can, and on the other hand, Astra have been very good partners and understood that, they need to incentivize the smaller companies too to take these risks which they have.
On the second part of your question. Are these clear? We’ve always said that from the inherent process to the bioreactor process, process A to process B as we’ve labeled them, you get a tenfold increase in productivity by 10x as many doses per batch, I, the use of a clean room essentially, and we believe that we can probably push this at least to one, maybe two orders of magnitude further. So looking at analogues of other industries and how they push forward, we like to look at antibodies as a bit of an analogue as to where this technology could go, and how it becomes more repeatable, safer, more robust and cheaper over time. And we think we’re in the early stages. So what we want to be able to do is innovate the technologies which translate into royalties, as we’ve already mentioned, and which gives us, a unique selling proposition to potential partners. And then if we only have to make, we have to make fewer batches, that means we can be far more efficient in our manufacturing footprint and get higher quality revenue through royalties.
So, we believe we’ve got a cogent business strategy here were, frankly, our goals are aligned with our partners, which is to reduce their cost of sales. And we know that if we can successfully do that, we are going to assure ourselves higher quality revenues and less useful capacity, which means we don’t have to roll out so many clean rooms and keep on investing the capital we happy doing. So we believe it’s, one of the best sort of barometer test of if you’ve got a good business model is you aligned with your partners? And in that sense, we absolutely are.
Operator
And I’m showing no the further audio questions at this time. I’d like to turn it back over to John Dawson.
John Dawson — Chief Executive Officer
Thank you very much, and thanks for your questions. And thanks for attending the presentation. And we look forward to updating you on our full year progress in 2021. Thank you very much.
Operator
[Operator Closing Remarks]