Gene Therapy Is

Gene therapy is now Annual report and accounts 2017 Oxford BioMedica in brief Oxford BioMedica is a pioneer of gene and cell therapy with a leading position in lentiviral vector and cell therapy research, development and bioprocessing. Gene and cell therapy is the treatment of disease by the delivery of therapeutic DNA into a patient’s cells. This can be achieved either in vivo (referred to as gene therapy) or ex vivo (referred to as cell therapy), the latter being where the patient's cells are genetically modified outside the body before being re-infused. Oxford BioMedica is focused on developing life changing treatments for serious diseases. Oxford BioMedica and its subsidiaries (the "Group") have built a sector leading lentiviral vector delivery platform (LentiVector®), which the Group leverages to develop in vivo and ex vivo products both in-house and with partners. The Group has created a valuable proprietary portfolio of gene and cell therapy product candidates in the areas of oncology, ophthalmology and CNS disorders. The Group has also entered into a number of partnerships, including with Novartis, Sanofi, GlaxoSmithKline, Bioverativ, Orchard Therapeutics, GC LabCell and Immune Design, through which it has long-term economic interests in other potential gene and cell therapy products. Oxford BioMedica is based across several locations in Oxfordshire, UK and employs more than 300 people.

Introducing Oxford BioMedica 1 At the front and centre 3 Multi-billion $ market sector 3 Targeting unmet needs 4 Enabling new treatments 4 Sharing in success 8 Journey to profitability 8 Ideally placed

Sector and technology overview 10 Gene and cell therapy sector 12 LentiVector® delivery platform 13 Products

Strategic report 16 Our business model 18 Operational highlights 19 Financial highlights 20 Chairman’s statement 23 Management team 24 Chief Executive’s statement 26 2017 performance review 30 Delivery of our 2017 objectives 31 Objectives for 2018 32 Financial review 38 Corporate responsibility

Corporate governance 44 Principal risks, uncertainties and risk management 52 The Board of Directors 56 Corporate governance report 63 Directors’ remuneration report 84 Directors’ report 90 Independent auditors’ report

Group financial statements 98 Consolidated statement of comprehensive income 99 Balance sheets 100 Statements of cash flows 101 Statements of changes in equity attributable to owners of the parent 102 Notes to the consolidated financial statements

Other matters 133 Glossary 136 Advisers and contact details Oxford BioMedicaplc |Annualreport andaccounts 2017 proprietary LentiVector-Enabled and experiencingstrong demandfor ourworld-leading We are atthe front andcentre ofgeneandcelltherapy of the world’s mostseriousdiseasesfar more than hope. marketed products –giving people suffering from some and mostofallthe patients whoare now benefitingfrom It's anexcitingtimefor science,ourpartners, shareholders, life changing treatments. company andourwork isnow beginningto deliver Oxford BioMedicaisaleadinggeneandcelltherapy At the front andcentre ™ technology.

Introducing Oxford BioMedica 1 2 Oxford BioMedicaplc |Annualreport andaccounts 2017 as avaluable research tool. The LentiVector Valuable research tool clinical benefit following asingleadministration. offering patients the prospect oflong-term be maintained indefinitely (for more than six years), LentiVector Enabling 'one shot'treatments ® studiessuggestgeneexpression may ® platform isalsoused

Multi-billion $ market sector 3 The use of DNA to treat diseases is expected to grow into a multi-billion $ sector over the next few years with several products already approved in the US and Europe. The large growth in lentiviral vector based clinical trials shows ex vivo treatments are leading the way. Introducing Oxford BioMedica Oxford Introducing Read more about the gene and cell therapy sector on page 10.

Targeting unmet needs Oxford BioMedica's pipeline focuses on a diverse range of cancers, Parkinson’s, central nervous system disorders, and ocular conditions. However, our LentiVector® delivery system could be used for many more diseases for which there are currently unmet needs. Our LentiVector® delivery platform is used in all of our own gene and cell therapy products in development.

See our LentiVector® based product pipeline on page 13 for more information.

>20 years Gene and cell therapy expertise The LentiVector® delivery system, built on more than 20 years of experience, has the potential to be used for many unmet conditions and disease areas.

140 sites Clinical trials There are currently over 140 sites worldwide carrying out clinical trials with lentiviral vectors.

Oxford BioMedica plc | Annual report and accounts 2017 4 Enabling new treatments LentiVector® is a key component of Novartis' Kymriah™ cell therapy treatment for blood cancer and the first lentiviral enabled product to be approved in the USA. We are the sole lentiviral vector manufacturer for this product which was launched in the USA in September 2017.

Find out more about our commercial supply agreement with Novartis and our new collaboration and licence agreement with Bioverativ in the Chief Executive's statement on page 24 and the 2017 performance review on page 26.

Sharing in success In addition, we have partnerships and collaborations with Bioverativ, Orchard Therapeutics, GC LabCell and Immune Design where we retain a potentially royalty generating financial interest in their products in return for expertise and bioprocessing work. Oxford BioMedica also has products and IP licensed to Sanofi and GSK.

1st approved FDA approved advanced therapy The Novartis Kymriah™ treatment for leukaemia that uses Oxford BioMedica's LentiVector® technology is the first FDA approved advanced therapy.

Oxford BioMedica plc | Annual report and accounts 2017 Oxford BioMedicaplc |Annualreport andaccounts 2017 poor outcomes. which haslimited treatment optionsandhistorically an 83%overall remission rate inthis patient population B-cell acute lymphoblastic leukaemia. Trials showed approach for paediatric andyoung adultpatients with Novartis' Kymriah First-in-class therapy subheadRunning head Running ™ (CTL019) isanovel treatment

Introducing Oxford BioMedica 5 6

Progressing our own pipeline We are progressing towards approval to start Phase I/II clinical trials of OXB-102 for Parkinson's disease. 7 products Oxford BioMedica pipeline OXB-102 genetically modifies cells to produce dopamine, Our own product development programmes have replacing that which is lost during the course of the had seven regulatory approvals for clinical studies in the USA and Europe in ocular indications and disease. Unlike current drug treatment options, which Parkinson's disease. loses efficacy with long-term use, OXB-102 is designed to provide patient benefit for a number of years following a single administration.

Read more about OXB-102 and our other product

candidates in the 2017 performance review on page 28.

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Oxford BioMedica plc | Annual report and accounts 2017 Running head 7 Running subhead Introducing Oxford BioMedica Oxford Introducing

Developing our partners' products We help partners by providing unrivalled lentiviral IP and technical know-how such as our state-of-the-art laboratories and GMP clean 200 room suites. Patients treated With our own and partners products using our The US FDA completed a pre-licence inspection of our facilities as part LentiVector-Enabled™ delivery based therapy. of the Biologics License Application (BLA) review process for Novartis' Kymriah™. The UK MHRA granted Oxford BioMedica a manufacturer/ importer licence for commercial production and supply of lentiviral vectors following a successful inspection of our facilities.

Download our latest 'Discover the facts' brochure on lentiviral vector development, scale-up, analytics and GMP bioprocessing from the Oxford BioMedica website: www.oxfordbiomedica.co.uk G lo

Oxford BioMedica plc | Annual report and accounts 2017 8 the 15% costofthe Oberland facility. fees willbearound 13%, asignificant reduction from agreement. The costofthe loan including allrelated much better terms than ourprevious Oberland The new$55 millionloan facility with Oaktree ison restructuringDebt -2% receive inexcessof$100 million. CAR-T products from Novartis, andcouldpotentially lentiviral vectors for CTL019 andother undisclosed In July2017 we signedanagreement to supply Licence to supply LentiVector +$100m on page 32. a sustainable businessinthe financial review and how we are gettingcloser to ourgoal ofbecoming Understand more aboutourfinancialposition Oxford BioMedicaplc |Annualreport andaccounts 2017 generating partnerships. Continuedpositive revenue growth revenues from process development, bioprocessing androyalty Oxford BioMedicaisnow abusinesswith rapidly growing toJourney profitability coming years. to benefitfrom the growth in this valuable sector over the therapyGene isnow comingofageandwe are ideallyplaced gene andcelltherapy concepts. and we willcontinueto invest intechnology andproprietary financialinterestOur inadiverse range ofproducts isgrowing Ideally placed is driving uscloser to profitability. ® to Novartis

Oxford BioMedicaplc |Annualreport andaccounts 2017 12

100 102 136 Glossary 133 101 20 90 Principal risks, uncertainties uncertainties risks, Principal 44 84 30 56 52 osldtd statement Consolidated 98 26 99 24 38 iaca review Financial 32 23 63 10 18 19 16 31 13 8 8 4 4 3 3 1 financial statements of the parent equity attributable to owners of comprehensive income and riskmanagement Ideally placed toJourney profitability Targeting unmetneeds $marketMulti-billion sector LentiVector andcelltherapyGene sector overview Secto Sharing insuccess Enabling newtreatments At the front andcentre Oxford BioMedica Introducing Independent auditors’ report ofour2017Delivery objectives 2017 performance review Chief Executive’s statement Advisers andcontact details Other matters Notes to the consolidated Statements ofchanges in Statements ofcashflows Balance sheets Group financialstatements Directors’ report Directors’ remuneration report Corporate governance report The Board ofDirectors Corporate governance Corporate responsibility Objectives for 2018 Management team Chairman’s statement Financial highlights Operational highlights businessmodel Our Strategic report Products r andtechnology ® delivery platform

Sector and technology overview 9 10 — — — important advantages over other vector systems: associated (AAV). viruses Lentiviral vectors have several viral vector families are lentiviral vectors andadeno- both genetic payloads into patients’ cells.Cellscanbetreated andcelltherapiesGene useviral vectors to deliver with lentiviral vectors to benefitfrom this opportunity. dollar sector andOxford BioMedicahasthe expertise market hasthe potential to grow into amulti-billion approaching the market. The geneandcelltherapy commercial products now launched andothers rapidly The sector holds significantpromise, with the first therapy products are inlate stage development. over the nextfew years asseveral geneandcell launched. We expectfurther products to belaunched (inherited retinal disease)have beenrecently (for r/rBcelllymphoma), aswell asSpark’s Luxturna (for r/rpaediatric ALL); Kite/Gilead’s Yescarta (for immunodeficiency); Novartis’ Kymriah cell therapies such asGlaxoSmithKline’s Strimvelis diseases. Indeed,several therapies, especially curative treatment optionsfor awiderange of medicine, providing longterm andpotentially andcelltherapyGene hasthe potential to transform Great potential andcelltherapyGene sector Sector andtechnology overview Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — There isnopre-existing immunity for lentiviral vectors of diseasesandgeneticdisorders payloads (upto 9kb) sothey cantreat awiderrange Lentiviral vectors much larger cancarry genetic This isimportant for so that the geneticpayload willreplicate ascellsdivide. Lentiviral vectors integrate into the DNAoftarget cells in vivo in and ex vivo ex ex vivo ex . The two mostcommonly used therapies ™

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ex vivo ex

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product inthe United States, aCAR-T therapy for the 2017 that the USFDA approved the firstgene therapy deficiency).Adenosine Deaminase It wasn’t untilAugust ADA-SCID (Severe CombinedImmunodeficiency due to therapy to treat patients with rare avery diseasecalled approved inEurope, the first cause severe pancreatitis. In2016, Strimvelis deficiency (LPLD), a rare inherited disorder which can was Glybera, The firstgene therapy approved inEurope back in 2012 Medicine. in theofGene Journal lentiviral vector clinical studiesunderway asdescribed product development inthe sector. There are 149 vectors are the preferred choice for much ofthe current vivo Ex field isespeciallybusywith disorders, neurological diseasesandcancers. The cancer are for monogenicdisorders (such asdiabetes), ocular Most ofthe clinical trialsfor gene andcelltherapies at www.oxfordbiomedica.co.uk can befound onthe Group’s website Further information onthe sector approved by the USFDA. (an (a CAR-T therapy) 2017, andinDecember Spark’s Luxturna product. InNovember 2017, Kite/Gilead’s Yescarta This was the world’s firstlentiviral enabled approved treatment ofblood cancers,Kymriah in vivo in therapies require integrating vectors andlentiviral treatment ofinherited retinal disease)were ™ an in vivo in treatment for lipoprotein lipase

ex vivo ex ex vivo ex

CAR-T therapies. stem cell gene stem cellgene ™ from Novartis. ™ was also was also ™ ex vivo ex

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200 300 250 350 100 150 50 20 25 30 35 10 15 Oxford BioMedicaplc |Annualreport andaccounts 2017 0 0 5 Source: Journal of Gene Medicine,April2017Source: ofGene Journal Phase by year andphase Initiated lentiviral vector clinical trials Source: Journal of Gene Medicine,April2017Source: ofGene Journal Total numberofclinical trials or lentiviral vectors therapyGene clinical trialswith AAV • • • Cardiovascular (AAV 10, Lenti 1) Cancer (AAV 23,Lenti 83) Neurological (AAV 18, Lenti 5) (AAVOcular 16, Lenti 4) Monogenic (AAV 102, Lenti 45) Total Phase I Phase II Phase I/II 2009 340 4 1 2010 918 4 1 147 • • 2011 Phase III Phase II/III 3 6 20 2012 6 773 1 23 2013 118 7 4 1 106 Total (AAV 182, Lenti 158) Others (AAV 6,Lenti 1) (AAVInflamatory 3, Lenti 0) Infectious (AAV 4, Lenti 19) 2014 11 9 3 11 2015

15 10 3 2 23 2016 11 4 5 1 3 • • Lentiviral (dark tints) AAV (lighttints) 7 will reach $10 billionby 2021”, October 2015 Source: Clive Glover, GE Healthcare “Sales ofcellandgenetherapy to grow into amulti-billion dollar sector. The geneandcelltherapy market hasthe potential andcelltherapyGene market potential $10bn remission within three months. and young adults.83%hadtheir cancersgointo The trialfor Novartis' Kymriah FDA approved 83% success ™ treated 63 children

Sector and technology overview 11

12 Sector and technology overview LentiVector® delivery platform

® World-leading LentiVector gene delivery platform 01–02. During 2017 Oxford BioMedica continued to make good operational progress in developing and exploiting its integrated LentiVector® gene delivery platform. The platform is the product of over 20 years’ research and development, and brings together a unique combination of patents and know-how, world-class bioprocessing facilities and an expert workforce. Indeed, in 2017 our platform became the world’s first lentiviral vector enabled product (Novartis' Kymriah™), to be approved by the US FDA. This world-leading position provides a foundation for both Oxford BioMedica and its partners to discover and develop novel gene and cell therapies, targeting conditions without current treatments, or with a significant unmet clinical need.

® The Group’s LentiVector platform provides a number 03. of important advantages over other gene delivery systems. Notably, lentiviral vectors have a large payload capacity and integrate into the nucleus of target cells, allowing maintenance of the beneficial genetic payload when the target cells divide. As a result, the rapidly expanding cell therapy sector is increasingly recognising the strengths of the LentiVector® platform, and the Group has already established several partnerships with leading companies in the field. These generate significant revenues by providing collaborators access to Oxford BioMedica’s intellectual property, process development expertise and bioprocessing facilities. In addition, the Group has used its LentiVector® platform to discover and advance a number of pipeline products.

Example of in vivo gene therapy CAR T-cell therapy for cancer (a Novartis product) 04–05. 01. Oxford BioMedica produces GMP lentiviral vector encoding CAR targeting CD19 which is expressed on B-cell cancers 02. T-cells isolated from patients 03. Lentiviral vector encoding CAR targeting CD19 used to transduce expanded T-cells T-cells harvested from a patient are transduced with the lentiviral vector encoding the anti-CD19 chimeric antigen receptor. The resulting CTL019 modified T-cells are expandedex vivo prior to infusion into the patient 04. The modified T-cells are infused back into the patient 05. Once inside the patient, the CTL019 cells multiply and target ‘hunt’ cancer cells and destroy them The CTL019 cells destroy tumour cells expressing CD19 and persist in the body to guard against residual or recurring disease

To see other examples of how our LentiVector® delivery system works see our website: www.oxfordbiomedica.co.uk/lentivector

Oxford BioMedica plc | Annual report and accounts 2017

Sector and technology overview 13 Products overview and technology Sector

Product pipeline We are working on several internal product candidates and have interests in an expanding range of partner programmes.

Research/ Product/programme pre-clinical Phase I Phase I/II Phase II Phase III Approved Oxford BioMedica proprietary products To be spun-out or out-licensed OXB-102 Parkinson’s disease (Central Nervous System)

OXB-202 Corneal graft rejection (Ophthalmology)

OXB-302 Cancer multiple (Oncology)

OXB-201 Wet age related macular degeneration (Ophthalmology)

Oxford BioMedica partnered products Development milestones and royalties SAR422459 Stargardt disease (Ophthalmology)

SAR421869 Usher syndrome type 1B (Ophthalmology)

Partners' products Process development and bioprocessing revenues, and royalties CTL019 Cancer r/r ALL (Oncology)

CTL019 Cancer r/r DLBCL (Oncology)

Undisclosed CAR-T Cancer (Oncology)

CMB305 Advanced (Relapsed or metastatic sarcoma)

LV305 Cancer multiple (Oncology)

ADA-SCID Metabolic disorder (ADA severe combined immunoeficiency)

MP S IIIA Sanfilippo syndrome(Mucopolysaccharidosis type III)

Undisclosed

Factor VIII Haemophilia A

Factor IX Haemophilia B

Oxford BioMedica plc | Annual report and accounts 2017

Oxford BioMedicaplc |Annualreport andaccounts 2017 12

Strategic report 15 16 Our businessmodel Our Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 Process development fees |process development incentives |bioprocessing revenues |royalties Partners' programmes Multiple incomestreams Bioprocessing Technical developments R&D investment Patents andknow-how |facilities |expertise |quality systems LentiVector Development Process

® platform Oxford BioMedicaproducts Development milestones |royalties | Via spin-outorout-license R&D investment Early stage/pre-clinical bioprocessing revenues or out-license Spin-out

Oxford BioMedicaplc |Annualreport andaccounts 2017 know-how andpatents. term royalties based onlicencesto ourextensive receive shortandmediumterm revenues, andlonger lentiviral vector programmes. Inreturn for which, we who want to accelerate the development oftheir own development expertiseandfacilities to third parties We canprovide ourbioprocessing andprocess Partnering clinical studies. to buildingapipelineofcandidates ready for development andpre-clinical studies,with aview continue to invest inearly stage product concept and process development revenues. We willhowever milestone androyalty payments, aswell asbioprocessing equity stakes inthe SPVs,and/orpotential upfront, clinical development, whileproviding uswith potential significantly reduce the costandriskassociated with one ormore vehicles specialpurpose (SPVs). This will out-licensing orby spinningoutthe programmes into will bedeveloped with third party finance,usingeither We decided that clinical studiesofthese candidates platform geneandcelltherapy product candidates. We have ourown portfolio ofLentiVector-Enabled In-house development value through: opportunities to generate short- andlonger-term LentiVector-Enabled promising newgeneandcelltherapies, andsoour Lentiviral vectors are key componentsofmany delivery platform. facilities, combineto form ourLentiVector which, together with ourGMPclean room andlaboratory unique combinationofskills,patents andknow-how and effective. This work was the foundation ofour manufacturing processes which would beboth safe therefore we hadto designanddevelop vectors and to uselentiviral vectors inan Oxford BioMedicawas the firstorganisation globally using lentiviral vectors, initially for 20 years ofpioneeringscienceandprocess development LentiVector businessmodel,built on ourworld-leading Our businessmodeland strategyOur ® genedelivery platform isthe result ofover ™ platform provides uswith in vivo in in vivo in setting and settingand therapies. ® gene gene

™

Principal risksfacing the business to work with us. position, asthis iswhatattracts other companies in improving the technology to retain ourleading fully mature sowe are continuingto invest R&Dfunds The platform technology isstillsomeway from being and collaborators. and asaresult ofourrelationship with partners products which canbeboth internally generated interests inadiverse range ofgeneandcelltherapy platform, andourgoal isto exploit this by gaining The foundation isourworld-leading LentiVector The graphic opposite illustrates ourbusinessmodel. safety features andmanufacturing efficiencies. to useourimportant patents relating to lentiviral vector We canprovide other organisations with licences Freedom-to-operate licensing — — — — — — to 51.on pages 44 The mainrisksare: they are managedandmitigated, are setoutindetail The principal risksfacing the business,including how — — — — — — Inability to attract and/orretain highlyskilledemployees development stops priority product development candidates sothat Failure to out-licence orspin-outthe Group’s loan facility Failure to comply with the terms ofthe Oaktree requiring ourservices to develop their products andthereby nolonger Exposure to oneormore ofourpartners ceasing manufacture lentiviral vector to the required standard Risks to ourbioprocessing revenue from failure to of efficacy, and failure to obtain approval regulatory development including product safety issues,lack Risks associated with pharmaceutical product

Strategic report 17 18 — — — — Preparing the to expected service lentiviral vector demand — — — Progress with proprietary product development — — — — Novartis' Kymriah (tisagenlecleucel) (CTL019); the path to royalties — — — Leading LentiVector delivery platform for geneandcelltherapy partnerships Operational highlights Delivered in2017 Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — — — — — — — — — — viral vectors andensure adequate supply to meetfuture demand £3 milliongrant awarded by Innovate UKto supportthe UK’s efforts to produce suspension technology £2 millionInnovate UKcollaboration established to further enhanceLentiVector four GMPmanufacturing suites, fill/finish facilitiesand warehousing Additional premises identifiedinOxford for newbioprocessing facility comprising and supply FDA approval andMHRA granted for lentiviral vector commercial manufacture facilitiesSuccessful inspectionscompleted by USandUKregulators; OXB-102 inParkinson’s diseaseto further enhanceproduct value Phase I/IIclinical studyto beinitiated shortly for leadin-houseprogramme and to continueto enhancetheir value The Group continuedto invest modestly inprogrammes to maintain momentum to beputinplace for ourocularproducts development programmes, with aplanned spin-outlegalstructure ready Partnering discussionsongoingfor Oxford BioMedica’s in-housepriority r/r DLBCL, adifficult-to-treat cancer (tisagenlecleucel) sustained complete responses atsixmonths inadultswith analysisofresultsPrimary from the pivotal JULIET trialdemonstrating that Kymriah r/r B-cellALL inchildren andyoung adultsandfor r/rDLBCL inadults CTL019 European Marketing Authorisation (EMA)application filed by Novartis for breakthrough designation B-cell lymphoma (DLBCL) inadults;product undergoing expedited review under Tisagenlecleucel (CTL019) submitted sBLA inthe USby Novartis inr/rdiffuselarge leukaemia (ALL) inthe US (tisagenlecleucel) inchildren andyoung adultswith r/rB-cellacute lymphoblastic First ever LentiVector-Enabled regarding arange ofadditionalcollaborations Lentiviral vector demand isincreasing andthe Group isinseveral discussions technologies for haemophilia genetherapies year-end to accessOxford BioMedica’s LentiVector $105 millioncollaboration andlicenceagreement completed with Bioverativ post potential over three years to produce CTL019 andadditionalCAR-T products; over $100 millionrevenue Major commercial supply agreement signedwith Novartis for the lentiviral vector ™ ® ™ product approval for Novartis' Kymriah ® platform andmanufacturing

™

–20 –25 –30 –10 –15 Oxford BioMedicaplc |Annualreport andaccounts 2017 in 2016 to aninflow of£1.0 million. reduced from anoutflow of £8.3million Cash outflow before financing activities Cash inflow £1.0m 50% to £5.7 million(2016: £11.3million). Operating lossfor the year reduced Operating loss £5.7m (2016: £7.1 million). EBITDA lossreduced to £1.9 million EBITDA £1.9m by 12%to £22.9 million(2016: £26.1million). amortisation andshare based payments decreased Operating expensesexcluding depreciation and Operating expenses –12% (2016: £30.8 million). Gross incomeincreased by 28%to £39.4 million Gross income +28% Financial highlights Delivered in2017 –5 0 5 3 2 1 Key Alternative financial indicator definitions(non-GAAP Performance Measures) £m Cash outflow before financing activities

EBITDA Before isEarnings Interest, Tax, Depreciation, Amortisation,revaluation ofinvestments andshare based payment (p34) Operating expensesisResearch, Development andBioprocessing costsplus Administrative costslessDepreciation, Amortisationandshare based payments (p34) Gross Incomeisthe aggregate ofrevenue (£37.6 million)andother operating income(£1.8million)(2016: £27.8 millionand£3.0 millionrespectively) (p34) 2013 3 loss(year) 2014 1 2015 2 2016 2017

–10 –12 further expansion ofbioprocessing capacity. £20.5Successful millionequity placing to fund Equity placing inMarch 2018 £20.5m 2016:(31 December £15.3 million). Cash of£14.3 million Cash £14.3m with $55 millionOaktree Capital facility. refinancedDebt onsignificantly improved terms refinancedDebt $55m (2016: £6.5million). Capital expenditure £2.0 million Capital expenditure £2.0m –14 –8 –2 –4 –6 0 £m EBITDA loss 2013 2014 2015

2016 2017

Strategic report 19 20 " Chairman’s statement Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 Chairman Dr.Lorenzo Tallarigo to continue." shareholder value –we expectthis strategy is delivering significant dollar opportunity andthe Group's rapidly transforming into amulti-billion The geneandcelltherapy market is

This strategic approach balances the risksandrewards on salesofpartners’ products. long-term economicinterests, including royalties generates upfront licensingfees, complemented by technologies, intellectual property andknow-how partners with accessto Oxford BioMedica’s world-class of the Group’s in-housepriority programmes. Providing therapy products, both for partners andas the foundations enables the development ofrevolutionary geneandcell Oxford BioMedica’s world-class LentiVector shareholder value andwe expectthis to continue. out inlastyear’s Annualreport isdelivering significant opportunity, the Group’s refined strategy that Ilaid rapidly transforming into amulti-billiondollar current year. With the geneandcelltherapy market progress, andthis momentumiscontinuinginthe 2017During Oxford BioMedicamadeimpressive Strategic progress and GCLabCell. including Orchard Therapeutics, ImmuneDesign good progress initswork with the Group’s other partners, and the USFDA. Inparallel, the team continuedto make successfully navigating inspectionsfrom the UKMHRA Manufacturing andControl elementsofthe dossiersand tisagenlecleucel regulatory filings,preparing Chemistry, team. The team madeimportant contributionsto Novartis’ day-to-day operational delivery ofthe Oxford BioMedica theUnderpinning Group’s strategic progress isthe Operational delivery partners for itsin-housedevelopment programmes. and hasattracted anumberofadditionalpotential collaboration with Bioverativ inhaemophilia genetherapy, Oxford BioMedicarecently established amajorstrategic potential partners. Capitalising onthis momentum opportunities, with the Group indiscussion with several Enabled widely acknowledged successofthis first LentiVector- being usedcommercially inorder to treat patients. The milestone for the Group, with itsLentiVector The approval ofNovartis’ Kymriah sales-based royalties. that encodesthe product, aswell asreceiving commercial manufacturer ofthe lentiviral vector the Group now generates revenues asthe sole product, Kymriah the approval ofNovartis’ potential blockbuster CAR-T development andlentiviral vector production. Following generates significantongoingincomefrom process to the Group’s state-of-the-art bioprocessing facilities development. Inaddition,providing partners with access and develop newproduct conceptsfor future clinical market, whileallowing the Group to invest initsplatform, associated with bringingnextgeneration therapies to ™ product hasfacilitated additionalpartnering ™ (tisagenlecleucel; formerly CTL019), ™ represents astrategic ® platform ®

platform

Oxford BioMedicaplc |Annualreport andaccounts 2017 to royalties onproduct sales. across two haemophilia programmes, inaddition has the potential to generate inexcessof$105 million recentlyOur signedpartnership with Bioverativ Bioverativ partnership $105m in-house priority programmes. for partners andasthe foundations ofthe Group’s of revolutionary geneandcelltherapy products, both The LentiVector 1. 1. ol-ls platform World-class ® platform enables the development

created by future clinical progress. financial strength and the potential upside value This decisionreflects Oxford BioMedica’s increasing initiation ofthe product’s first-in-human clinical study. in this asset,andtherefore the Board hasauthorised the to the Group asindicated by expressions ofinterest programme, OXB-102, hasthe greatest potential value and to continueto enhancetheir value. The leadpriority modestly inprogrammes to maintain momentum potential upside. The Group hascontinuedto invest products whileretaining afinancialinterest in their a legalstructure to facilitate the spin-outofitsocular into clinical studies.Additionally, itispoisedto establish final preparations for the OXB-102 programme to move rejection) andOXB-302 (for cancer). The Group isin (for Parkinson's disease),OXB-202 (for graft corneal in-house priority development programmes, OXB-102 The Group’s operational progress extends to its royalties dueto the Group. in the comingthree years, excluding sales-related which hasthe potential to deliver over $100 million under anewNovartis commercial supply agreement, complemented by commercial production revenue payments to itsrevenue streams. These are the Group willnow beadding sales-based royalty Following the launch ofKymriah the platform, ourfacilities, andmodestly inourproducts. by targeting ourinvestment across the Group – the Board isable to maximiseshareholder value and the Group’s widerportfolio ofstrategic partnerships, ongoing successofthe collaboration with Novartis, business andisingoodfinancialhealth. With the Oxford BioMedicaisbuildingastrong commercial Financial progress with catalytic grant fundingfrom Innovate UK. headquarters, andfacilities designunderway, together close to beingsecured nearby to the Group’s Oxford expansion isadvancing atpace, with additionalpremises support ongoingtechnology development. The new designed to accommodate additionalpartners and a further expansion ofthe Group’s capacity. This is continuing to grow, the Board recently authorised development andproduction oflentiviral vectors of Oxford BioMedica’s leadingpositioninthe design, proprietary suspensiontechnology. With recognition UK collaboration that isworking to enhancethe Group’s LentiVector while alsoproviding capacity to further develop the Oxford BioMedicato meetthe needsofitspartners, production suites andlaboratories. These have enabled programme in2016, providing additionalstate-of-the-art The Group completed amajorfacilities expansion Facilities development ® platform, asevidencedby the Innovate ™ inSeptember 2017,

Strategic report 21 22 recently from histimeatShire Pharmaceuticals. biotechnology andpharmaceutical industry, most Stuart Paynter, whobringsextensive experience ofthe years. Atthe sametimewe welcome warmly hissuccessor, significant contribution to the business over the past five September a Chief FinancialOfficerin having made Finally, Iwould like to thank Tim Watts, who retired as to beaconsultant to the Group. since 1996, andIampleased to say that hewillcontinue like to thank Peter for to Oxford hisservices BioMedica after the Group’s AnnualGeneral Meetingin2018. Iwould will step down from the Board, which hejoinedin2002, Officer having worked with the Group since 1996. Peter Peter Nolan isretiring from hisrole asChiefBusiness New York.in medical products consultingpractice atMcKinsey&Co. Partners. Priorto that sheledthe pharmaceutical and of TPG Biotech andhaspreviously worked atJPMorgan Europe. Sheiscurrently apartner andManagingDirector at many life sciencecompanies, both inthe USand highly experiencedadvisor, investor andboard member Group’s Board asanon-executive director. Heather isa I ampleased to welcome Dr. Heather Preston to the Organisation andBoard property andcommercial GMPbioprocessing capabilities. development, scale-up, analytics,accessto intellectual BioMedica’s uniquecapabilities involving lentiviral vector to cater for the rapidly growing demandfor Oxford institutions to fundfurther facilities expansion inorder a £20.5 millionequity placing with leadingfinancial facility ongreatly improved terms. Recently, itcompleted financial strength.Group InJune, the refinanced itsdebt 2017, the Group took measures to leverage itsincreasing With itsbusinessstrengthening significantly throughout on product sales. two haemophilia programmes, inadditionto royalties the potential to generate inexcessof$105 millionacross portfolio. This newpartnership with Bioverativ alsohas this progress, addingafurther majoragreement to its 2018In February the Group continuedbuilding on Chairman’s statement Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017

develop the sector’s nextgeneration ofworkers. Government andother life scienceorganisations to help programme ispart ofthe Group’s collaboration with the Oxford 2018. BioMedicainJanuary This apprenticeship opportunity to welcome the newapprentices whojoined will beinplace by 3April.Iwould alsolike to take the as ChiefOperations Officer. All thenewpersonnel Stephenson-Ellis asChiefPeople OfficerandNick Page Lisa GilesasChiefProject &Development Officer, Helen Team hasbeenaugmented with the appointmentof increased activities ofthe Group, the Management Senior ongoing facilities expansion programme. To supportthe increase inheadcountisanticipated aspart ofthe growth inthe quality andproduction teams, andafurther and the additionoffurther partners, hasledto significant commercial supply underthe newNovartis agreement, dedication andhard work. The recent transition to the Group, andIwishto thank the whole team for their The past year hasbeenaperiodofintense activity for Chairman Dr.Lorenzo Tallarigo gene andcelltherapy companies. to strengthen itspositionasonethe world’s leading year for Oxford BioMedica,asthe Group continues programmes. Ibelieve 2018 willbeanother important to the spin-outorout-licensing ofin-housepriority including with newpartner Bioverativ, andIlook forward progress inthe Group’s widerportfolio ofcollaborations, sales-based royalties. Additionally, Iexpectcontinued supply ofthe product’s lentiviral vector inadditionto is well positionedto drive revenue growth from itssole of the product inEurope andthe US,Oxford BioMedica anticipated for Novartis’ tisagenlecleucel, andthe roll out confidence in the coming year. With further approvals significant shareholder value and the Board has Oxford BioMedica. The Group’s strategy isdelivering 2017 hasbeenaperiodofsignificantprogress for Outlook

Oxford BioMedicaplc |Annualreport andaccounts 2017 can befound onpages 54to 55. Full biographies for the Board ofDirectors Management team Strategic report 3. 2. 1. 5. 4. it was founded in 1996. Priorto joining been aseniorleaderatthe Company since BioMedica’s Board inMay 2002 having Peter Nolan was appointed to Oxford Chief BusinessOfficer 3. Peter Nolan in Englandand Wales. Institute ofChartered Accountants plc. LaRue HeDe isamemberofthe head offinancebusiness partnering at Prior to joiningOxford BioMedica hewas becoming the global headofinternal audit. moved to acorporate finance role before for allbusinessoutsideofthe US. He then senior director offinancebusiness partnering where Pharmaceuticals hebecamethe Finance Director. He then moved to Shire divisions priorto becomingthe European roles within the healthcare andlife sciences joined Steris, andworked inavariety of before moving to EDS.He subsequently a chartered accountant with Haines Watts and healthcare sectors. He qualifiedas 16 years’ experienceinthe pharmaceutical and the Board inAugust2017. He has Stuart Paynter joinedOxford BioMedica Chief FinancialOfficer 2. StuartPaynter a non-executive director ofPaion AG. Laboratories Limited. He iscurrently (UK) of FinanceandAdministration ofSerono to this timeatCephalon hewas Director acquisition ofZeneusby Cephalon. Prior US dollars andin2005 ledthe $360 million and to aturnover ofseveral hundred million European businessto over 1,000 people, Cephalon heledmany dealsbuildingthe of BusinessDevelopment Europe. While at including ChiefFinancialOfficerand Head European operations ofCephalon Inc., senior managementpositionsinthe OctoberOfficer in 2008. Previously, heheld 2008 andhewas appointed ChiefExecutive Board asnon-executive director inAugust John Dawson joinedOxford BioMedica’s Chief Executive Officer 1. John Dawson Network. oftheChairman Oxfordshire Bioscience Association and of the UKBioIndustry organisations,industry including director He hasheldanumberofsenior postsin he was aseniorforensic scientist. Metropolitan Police Laboratory where the Government Chemistandalsothe senior positionsinthe Laboratory of research councils.Previously heheld programmes between andthe industry he was responsible for collaborative research of Trade for andIndustry eightyears, where Biotechnology Unitatthe UKDepartment Oxford asHead BioMedicaheserved ofthe

Chief Technical Officer 5. JamesMiskin a director Association. ofthe UKBioIndustry research atthe University ofOxford. He is London andhasconducted post-doctoral in Molecular Biology from University College and LentiVector Oxford BioMedica’s newproduct candidates he isresponsible for the development of Human Gene Therapy. Inhiscurrent role have beenpublished in The Lancetand author ofanumberkey papers, which numerous lentiviral vector patents andan expert inthe field,anamedinventor on and analytics.He isarecognised world-class delivery platform technologies, bioprocessing development ofgeneandcelltherapies, of technical disciplines, including the vector experiencecovering arange in 1997. He hasover 20 years oflentiviral Dr. Mitrophanous joinedOxford BioMedica Officer Chief Scientific 4. Kyriacos Mitrophanous Advisory Committee. Advisory AssociationManufacturing UK BioIndustry number ofyears. He isamemberofthe research at The Pirbright Institute for a subsequently conducted post-doctoral Biology from the University ofLeeds and degreeof Science andPhDinMolecular patents inthe field. He holds aBachelor work. He isalsoanamedinventor onseveral activities, aswell asitsprocess development BioMedica’s biomanufacturing andsupply he hasoverall responsibility for Oxford and cGMPproduction. Inhiscurrent role, based vector bioprocessing development development, analyticaltesting, lentiviral He has15 years ofexperienceinGxPassay Dr. MiskinjoinedOxford BioMedicain2000. ® platform. He holds aPhD

Strategic report 23 24 " Chief Executive’s statement Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 Chief Executive Officer John Dawson to both patients andshareholders." is now inastrong positionto deliver value leader inthis space, Oxford BioMedica therapies to becomeareality. Asaworld in enabling revolutionary geneandcell The Group hasplayed role acrucial

following the FDA’s approval ofourpartner Novartis’ our LentiVector-Enabled In September 2017 the firstever product featuring to administer an Oxford BioMedicawas the firstorganisation ever patients andshareholders. it isnow inastrong positionto deliver value to both to becomeareality. Asaworld leaderinthis space, rolea crucial inenabling this newgeneration oftherapies sector ofthe life sciencesindustry. The Group hasplayed BioMedica andgiven birth to ahighly-innovative new from asingleadministration, hassustained Oxford life-changing treatments for seriousdiseases,potentially field ofmedicineis challenging, but the promise of benefit patients around the world. Pioneeringanew developing revolutionary geneandcelltherapies to Oxford BioMedicahasbeen resolutely focused on Delivering onourpromise — — — LentiVector is builtonthree strategic pillars, each leveraging our As we outlined inour2016 Annualreport, ourbusiness becoming increasingly recognised leader. asthe industry Oxford BioMedica’s lentiviral vector technology is designed to encodeanddeliver their therapeutic payload, With geneandcelltherapies builtonvectors specifically Building asuccessfulgeneandcelltherapy business these revolutionary products. LentiVector the value ofOxford BioMedica’s world-leading class oftherapies. This ongoingsuccessishighlighting product isdemonstrating the potential ofthis new and for both indicationsinEurope, this breakthrough filings inanadditionaloncology indicationin the US, Kymriah — — — and royalties onfuture product sales. efficiency processes, wegenerate licensing fees such aspatented safety features andmanufacturing to our proprietary lentiviral vector technologies, licensing: Technology and production revenues. and the potential to generate process development retaining significanteconomicinterest in the products associated with later stage clinical development, while or spin-out. This enables usto reduce the riskandcost and celltherapy candidates prior to out-licensing in-house portfolio ofLentiVector-Enabled development: In-house on future product sales. ongoing revenues, aswell aslonger-term royalties production capabilities we generate immediate and our uniquelentiviral vector design,development and Partnering: ™ (tisagenlecleucel). With aseriesofsubsequent ® ® platform: technology, anditsrole inenabling by providing strategic partners accessto in vivo in lentiviral vector into patients. ™ by providing partners access technology was launched we are progressing an ™ gene gene

Oxford BioMedicaplc |Annualreport andaccounts 2017 to the product asitprogresses towards the clinic. business, whileaddingsignificant additional value leverages the growing financialstrength of the development. This relatively modestinvestment OXB-102 for Parkinson’s disease,into initial clinical we have taken the step to move ourleadprogramme, cost oflater-stage development. Aspart ofthis strategy candidates for partnering whilereducing the riskand products. This willallow usto focus ondeveloping new a numberofthird-parties to out-license orspin-outthe move into the clinic, andare inactive discussionswith the year. We completed preparations for OXB-102 to in-houseprogrammesOur alsoprogressed during shortfall inthe UKto produce viral vectors. Innovate UKto helpaddress the current andpredicted 2018,on 23January we received a£3milliongrant from bioreactor suspensionproduction process. Inaddition, will apply novel technologies to further enhanceour innovation agency, Innovate UK. Thepartnership collaboration co-fundedby the UKgovernment’s products. InAugustwe established a£2milliontwo-year bioprocessing revenues andaroyalty onnetsalesof payments, aswell asprocess development and potential to generate over $100 millioninmilestone access payment of$5million,the partnership hasthe gene therapies. Inaddition to anupfront technology Bioverativ to advance lentiviral vector-based haemophilia completed amajorpartnership agreement with achieved notable 14 2018 successes.On February we gene andcelltherapyDuring field.the year both areas technology development work to retain ourleadinthe our growing roster ofpartners, aswell asourongoing of utilisationreflects the increasing level ofactivity from compared with 2016, itselfarecord year. This highlevel increased significantly to £39.4 million,growing 28% capacity for much ofthe year, ourgross income suites fullyoperational throughout 2017, andatnear With ourstate-of-the-art laboratories andbioprocessing Kymriah our role assole supplier ofthe vector encodingfor for lentiviral vector commercial supply, underpinning facilities, andwe subsequently received formal approval the FDA undertook andMHRA inspectionsofour bioprocessing for the product’s 2017, launch. During regulatory filingsandfrom ourcommercial-scale from oursubstantial contributionsto Kymriah has continuedto drive strong revenue growth, both area work ofourbusiness.Our with partner Novartis theDuring lastyear we madegoodprogress ineach A year ofprogress ™ , andsupportingourwork with other partners. ™ ’s ’s

strongly andthe businessistransitioning towards product cameto market, ourrevenues are growing for Oxford BioMedica. The first LentiVector-Enabled The past year hasbeen aperiodofgreat transformation An excitingfuture with anumberofleadinginstitutionalinvestors. raised £20.5 million(gross) through anequity placing growing global demandfor lentiviral vectors, we recently To fundthis expansion plan the that rapidly willservice warehouse, effectively doubling ourexisting facilities. 200 litre production suites, afill/finish facility and coming 18 months we intend to fitout four GMP headquarters to allow further expansion. Over the a large vacant facility nearour Court Windrush facilities. Consequently, we are progressing to lease expertise, we are rapidly filling the capacity inour current our lentiviral vector design,development andproduction As aresult ofthe industry’s growing recognition of Chief Executive Officer John Dawson therapy business,both for patients andourshareholders. to expanding ourrole asaworld-leading geneandcell the sector isnow established, firmly and we look forward in-house development programmes. positionin Our conclude discussionswith potential partners for our expand ourportfolio ofstrategic collaborations, and proprietary lentiviral vector technology, we plan to further and ImmuneDesign. With demandgrowing for our collaborations with Orchard Therapeutics, GCLabCell new Bioverativ partnership andadvancing ourongoing tisagenlecleucel, aswell asinitiatingwork underour to further approvals andlaunches ofNovartis’ to beanother excitingyear ofprogress. We look forward our technology andwidercapabilities, 2018 promises and the signingofthe Bioverativ agreement validating profitability. With the successofour Novartis partnership

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Strategic report 25 26 in 2018. regulatory filingsinanumberofadditionalcountries and adultpatients with r/rDLBCL. Novartis plans further assessment for children, young adultswith r/rB-cellALL r/r DLBCL andalsoreceived from the EMAaccelerated US FDA Priority Review for Kymriah ineligible for ASCT. 2018, InJanuary Novartis received ALL inchildren andyoung adults,andr/rDLBCL inadults The application covers the treatment ofboth r/rB-cell Application to the European MedicinesAgency. the FDA, it submitted aMarketing Authorisation United States, andaweek after itssecondfiling with Novartis plans to roll outthe product beyond the coming weeks. product’s secondindication isanticipated inthe the FDA review process. Asaresult, approval ofthe received breakthrough designationwhich willexpedite this difficult to treat cancer. Earlier in the year, Kymriah responses were sustained sixmonths after treatment in investigators presented follow-up data showing complete centre PhaseIIJULIET the trial,andinDecember study based onpositive results achieved inthe global, multi- for autologous stem celltransplant (ASCT). The filing was diffuse large B-celllymphoma (DLBCL) whoare ineligible forBLA the treatment ofadultswith relapsed orrefractory and atthe endofOctober Novartis filedasupplemental Tisagenlecleucel hascontinuedto make rapid progress, Committee. Advisory a unanimouspositive vote by itsOncologic Drugs expected, the FDA approved the product following leukaemia (ALL). Atthe endofAugustandearlier than relapsed orrefractory (r/r)B-cellacute lymphoblastic treatment ofpaediatric andyoung adultpatients with States Administration Food andDrug (FDA) for the forApplication (BLA) tisagenlecleucel with the United In early 2017 Novartis filedaBiologics License Regulatory progress Consensus Forecast Jan2018). at least$1.4 billionperannum(source: Global Data blockbuster potential, with predicted peaksalesof Analysts believe the breakthrough celltherapy has first ever approval for a LentiVector-Enabled (tisagenlecleucel; formerly CTL-019) received the antigen receptor T cell(CAR-T) therapy Kymriah achieved amajormilestone whenNovartis’ chimeric In August2017 Oxford BioMedica’s leadpartnership Novartis partnership 2017 performance review Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 ™ for adultswith ™ product.

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potential to receive over $100 million. This includes for afurther two years, Oxford BioMedicahasthe terms ofthe three-year agreement, which isextendable commercial supply agreement inJuly2017. Underthe approval andlaunch, the companies established amajor during the product’s development. Inanticipation of investigational lentiviral vector encoding tisagenlecleucel with Novartis, Oxford BioMedicasuccessfullysupplied the Under the 2014 collaboration andlicensingagreement Commercial supply agreement for regulatory approval. to manufacturing the validation batches required components ofthe regulatory dossiers,inaddition Chemistry, Manufacturing andControls (CMC) BioMedica madesignificantcontributions to the a key role inthe USandEuropean filings.Oxford encodes tisagenlecleucel, Oxford BioMedicaplayed As the sole manufacturer ofthe lentiviral vector that product sales. a $5millionupfront payment androyalties onfuture the potential to receive over $100 million,including Under the terms ofthe agreement Oxford BioMedicahas vectors for useinthe treatment ofhaemophilia AandB. covers the development andmanufacturing oflentiviral Oxford BioMedica’s lentiviral vector technology and The agreement provides Bioverativ with accessto haemophilia specialist, Bioverativ 2018. inFebruary completed acollaboration andlicenceagreement with LentiVector has significantly raised the profile ofOxford BioMedica’s culminating inthe firstever approval of aCAR-T therapy, The ongoingsuccessofourpartnership with Novartis, Bioverativ partnership in the Novartis pipeline. on commercial salesofallCAR-T related products Oxford BioMedicawillreceive royalty payments CAR-T product currently indevelopment. Inaddition, vectors usedto generate tisagenlecleucel andasecond andthedevelopment supply services oflentiviral a $10 millionupfront payment, andrevenues for ® platform. Buildingonthis momentum,we

Oxford BioMedicaplc |Annualreport andaccounts 2017 portfolio ofpartnerships: theDuring year we alsomadeprogress inourwider Partnership portfolio In-house product development — — — clinical development. while reducing the riskandcostofin-house milestone payments andsales-based royalties, stakes, vector development andbioprocessing revenues, has the potential to benefitfrom upfront fees orequity products into vehicles, specialpurpose Oxford BioMedica development. Byout-licensing orspinning-outthe our priority in-houseproduct candidates into clinical discussions with anumberof third-parties to advance strategy laidoutinits2016 Annualreport, we initiated Following the Group’s refined product development the year we advanced anumberofproduct concepts. life-threatening diseases,such ascancer, andduring gene modifiedNKcell-based therapies targeting on the discovery andearly-stage development of product candidates. The 50:50 partnership isfocused of ourstrategy to develop apipelineofnextgeneration GC LabCell’s natural celltechnology aspart killer(NK) Oxford BioMedica’s proven LentiVector progressing towards PhaseIIIclinical testing. and other NY-ESO-1 expressing tumoursiscurrently The leadprogramme targeting softtissuesarcoma therapies for the treatment andprevention ofcancer. is focused onthe useoflentiviral vector-based gene expanded collaboration with which ImmuneDesign, fora BLA OTL-101 duringthe secondhalfof2018. (OTL-201). Itisanticipated that Orchard willfile therapies for ADA-SCID (OTL-101) andMPS-IIIA lentiviral vectors designedto encodethe gene 2017During we advanced the development of development andcommercialisation ofthe products. Orchard Therapeutics isresponsible for the clinical deficiencies andinherited metabolic disorders. vivo ex 2016, focusing onthe development ofautologous collaboration with Orchard Therapeutics inNovember Orchard Therapeutics: we established our GC LabCell:ourcollaboration bringstogether weImmune Design: continue to progress our lentiviral genetherapies for immune primary ® platform with

product candidates into clinical development. of third-parties to advance ourpriority in-house theDuring year we initiated discussionswith anumber 2. In-houseclinical development of Oxford BioMedica’s LentiVector a CAR-T therapy, hassignificantly raised the profile Novartis, culminatinginthe firstever approval of The ongoingsuccessofourpartnership with 1. 2. 1. Raised profile ® platform.

Strategic report 27 28 — and celltherapy: position inthe fieldof LentiVector-Enabled development programme designed to retain ourleading and enhancethe platform aspart ofthe continuous platform. the During year we continuedto refine property. Together, these comprisethe LentiVector expertise, manufacturing capabilities andintellectual world-leading lentiviral vector technology, development Oxford BioMedica’s by businessisunderpinned its LentiVector platform development and technologies. would alsoconsiderin-licensingsuitable targets and celltherapy field. Where appropriateGroup the Oxford BioMedica’s leadershippositioninthe gene also buildingnewintellectual property to maintain pipeline ofnextgeneration product candidates while platform. This approach isdesignedto provide anongoing therapy products based onthe LentiVector and early stage development ofnovel geneandcell The Group willcontinueto invest inthe identification potential financingincluding venture capital funding. the spin-out,andare exploring anumberofsources of degeneration. We are currently indiscussionsto launch rejection, aswell asOXB-201 for wet age-related macular programme OXB-202, which targets graft corneal in the firsthalfof 2018. Thiswillencompass ourpriority we are looking to establish adedicated legalstructure To facilitate the spin-outofourin-houseocularassets, to the programme’s value. we anticipate that clinical progress willaddsignificantly Following earlier encouraging proof-of-concept results, place, andOxford BioMedica’s growing financialstrength. study leverages the significantpreparations already in The modestinvestment required to conductthis PhaseI/II data from the firstcohort of the studywithin one year. gene therapy inthe firsthalfof 2018 and we anticipate and London. The first patient islikely to receive the novel started working onpreparing trialcentres inCambridge manufacture ofclinical trial materials for the study, and disease towards the 2017 clinic. During we completed programme by progressing OXB-102 for Parkinson’s We modestly invested inourmostadvanced in-house 2017 performance review Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 following asuccessfulinspection ofourfacilities. commercial production andsupply oflentiviral vectors BioMedica aManufacturer /Importer Licencefor the UK regulatory authority, granted the MHRA, Oxford Novartis’ Kymriah and systems aspart review ofthe BLA process for FDA completed apre-licence inspectionofourfacilities Regulatory approvals: duringthe firsthalfof 2017 the ® ™ . Inthe secondhalfofthe year, the ® ™ gene delivery genedelivery gene gene

— — — innovation agency, Innovate UK. Thetwo-year of partners, partly fundedby the UKgovernment established a£2millioncollaboration with anumber therapy fieldcontinues to expand. significant licensingpotential as the geneandcell programmes. Additionally, our TRiP system has development scalefor useinpartners’ andinternal These novel systems are now established at range ofvectors, including those based onlentiviruses. which significantly enhancesproduction yields a for introduced the useofourproprietary TRiP system, and significantly reducing costofgoods.In parallel we providing majorincreases incapacity andefficiency supply. This represents aproduction step change, bioreactor system at200L scalefor lentiviral vector bioprocessing to ournextgeneration single-use transition from manual,labour-intensive cellfactory adequate supply to meetfuture demand. the UK’s efforts to produce viral vectors andensure award of£3millionfrom Innovate UKto support productivity. 2018 InJanuary we received agrant bioreactor production system to further enhance technologies to Oxford BioMedica’s industrial-scale collaboration willapply novel control andoperating for external warehousing. requirements, the newsite willeliminate the need warehousing. Inadditionto meeting future capacity complemented by afill /finish facility and (upgradable to larger bioreactors whenrequired), GMP suites each containing a200 litre bioreactor the site. This firststage ofexpansion willinclude two second halfof2019, with the optionto further develop to fitoutandbring25,000ft our Courtheadquarters.Windrush Initially, we plan (7,400m future capacity. We are planning to leasean80,000ft a programme offurther expansion to ensure sufficient to increase, we recently took the decision to initiate for lentiviral vectors, andfor ourexpertise,continues is now close to running fullcapacity. Asglobal demand activities, the facilities expansion we completed in2016 partnerships andourin-houseplatform development collaboration with Novartis, ourexpanding portfolio of Innovate UKcollaboration: inAugust2017 we Next generation bioprocessing: we recently began the Facilities expansion: with the ongoingsuccessofour 2 ) site onthe Oxford BusinessPark close to 2 (2,300m 2 ) on line by the ) onlineby the

Oxford BioMedicaplc |Annualreport andaccounts 2017 our business. intend to leverage this positionto further develop LentiVector The the sector isincreasingly recognising our 2. Leveraging LentiVector at 200L scalefor lentiviral vector supply. next generation single-usebioreactor system labour-intensive cellfactory bioprocessing to our We recently beganthe transition from manual, 1. 2. 1. Next generation bioprocessing ® platform asthe world leaderandwe ®

Promising outlook expanding the programme inthe comingyears. joined the 2018, Group inJanuary andwe anticipate expanding the sector’s firstapprentices skillsbase. Our and develop the nextgeneration ofworkers, further sciences organisations, the scheme isdesigned to train scheme. Working with Government andother life theDuring year we alsointroduced anew apprentice and expanded both itsquality andregulatory teams. maintained astrong focus onitsquality processes, tisagenlecleucel regulatory filings, the organisation and supply, andsignificantcontributions to Novartis’ the transition to commercial lentiviral vector production activities andin-housedevelopment work. Aspart of its organisation inlinewith itsexpanding partnership 2017,During Oxford BioMedicacontinuedto develop Organisational development therapy business. as apatient-focused, world-class geneandcell Oxford BioMedicaispoisedto leverage itsposition development work enhancingourcapabilities, ourbusiness,andin-house underpinning with devastating diseases. With ourstrategic partnerships development ofrevolutionary therapies for patients intellectual property andfacilities, isenabling the platform oflentiviral vector technologies, expertise, LentiVector-Enabled businessistruly Our as we move towards aPhaseI/IIstudy. value to ourin-house Parkinson’s diseasetherapy third-party funding. We alsolook forward to adding ocular andcancerprogrammes into the clinic with strategic collaborations andto progress ourin-house with anumberoforganisations, we hopeto addto our further develop ourbusiness. With discussionsongoing the world leader, we intend to leverage this positionto increasingly recognises ourLentiVector and generating sales-based royalties. Asthe sector with Novartis, growing ourproduction revenues, to delivering underourcommercial supply agreement and inafurther indicationinthe US,we look forward The launch oftisagenlecleucel anticipated inEurope, we look forward to continuingthis progress in2018. accomplishments for Oxford BioMedicaand The past year hasbeen aperiodofmajor ® platform as ™ . Our unique unique . Our

Strategic report 29 30 objectives. performance and further organisational improvement confidential targets relating Group’sto the financial The Board hassetthe management team certain Corporate andorganisational Objective 4 and buildfurther onthose we already have. and royalty generating partnership relationships, LabCell. In2017 we intend to secure further revenue also established aR&Dcollaboration with Green Cross with Orchard Therapeutics and ImmuneDesign. We (Novartis) to three, with newandextended relationships In 2016 we increased ourproduct partners from one Business development Objective 3 for OXB-102, OXB-202 andOXB-302. by third goal parties. isto Our achieve this during2017 out-licensing orspinning them outinto SPVsfunded financial interest inour priority programmes by stage product development whileretaining significant our intention isto reduce the financialriskof clinical from products. Aswe have previously announced, base ofourbusiness,ultimately the mostvalue isderived Although the LentiVector Product development Objective 2 process improvement targets. viral vector for commercial use,andseveral confidential partners, to secure regulatory approval, to manufacture bioreactor process to manufacture viral vector for our us. Targets for 2017 include the useofournew200 litre to develop itto maintain the leadershippositionitgives of ourbusinessandwe therefore plan to continue The LentiVector LentiVectorthe Developing platform Objective 1 2017 objectives ofour2017Delivery objectives Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 ®

platform isthe fundamental base ® platform isthe fundamental ®

In 2017, although we were close to spinningoutthe ocular process improvement targets. we alsosuccessfullyachieved several confidential use for Novartis' Kymriah toMHRA manufacture viral vector for commercial secured regulatory approval from both the FDA and manufacture viral vector for ourpartners, andalso the useofournew200 litre bioreactor process to These goals have beenmet. We successfullyvalidated Performance againstpriorities financial footing. with increased revenues, have put the Group onfirmer able to reduce the ofthe cashburn Group which along Group.financial positionof the In addition, we have been with Oaktree inJune2017 hashelpedto improve the Re-financing of the debtonsignificantly improved terms we already have. partnership relationships, andbuildfurther onthose intend to secure further revenue androyalty generating supply agreement with Novartis. 2018 During we we alsosecured a$100 millioncommercial andclinical and licenceagreement with Bioverativ. InJune2017 partners from three to four with anewcollaboration 2017During andearly in2018 we increased ourproduct transactions were notcompleted by the year-end. regarding partnering OXB-102 (Parkinson’s disease),these progammes into aSPV andwere indetailed discussions ™ product. Inaddition,

Oxford BioMedicaplc |Annualreport andaccounts 2017 as well asfurther organisational improvement objectives. targets relating to the Group’s financial performance, The Board hassetmanagement certain confidential Corporate andorganisational Objective 4 on those we already have. generating partnership relationships, andto buildfurther In 2018 we intend to secure further revenue androyalty Business development Objective 3 of OXB-102 andthe ocularprogrammes. significant financialinterest) by partneringorspin-out of clinical stage product development (whileretaining as previously announced,to reduce the financialrisk new pre-clinical products to the Group, andalso, progression ofkey programmes againstplan, to deliver goals forOur 2018 include achieving the successful Progress actiononimplementing strategy for products Objective 2 on ourcommitmentsto partners. of programmes into the clinic, andalsodeliver in both the USandEU, supportthe progress in order to gainapproval andlaunch key products Targets for 2018 include supportingourpartners partnerSupport portfolio advancement Objective 1 Objectives setfor 2018 Objectives for 2018 Strategic report

Strategic report 31 32 " Financial review Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 Chief FinancialOfficer Stuart Paynter to grow strongly in2018." income andEBITDA willcontinue The Group expectsthat gross

bioprocessing clinical batch orders for Novartis and The growth ingross incomewas driven by increased — — — — Selected highlightsare asfollows: Group discussedinthe 2015 &2016 financial reviews. 2017 hascontinuedthe financialtransformation of the Financial transformation drawn down in July2017. down inJuneandthe remaining $5million was financing cost.$50 millionof the facility was drawn provides for increased fundingtogether with alower with Oaktree Capital Management. The newfacility Oberland loan facility with anew$55 millionfacility In Junethe Group was able to re-finance itsexisting maximal returns to shareholders accordingly. reward profile of these projects andwillseek to provide studies. We willcontinue to assessthe financialrisk/ and riskby seekingpartnerships for later stage clinical proprietary products whilstminimisingourexpenditure We are continuing ourstated strategy ofdeveloping our in the shortto mediumterm. is expected to bethe key growth driver for the Group and existingcustomers (such asOrchard Therapeutics), as well asthe continuedgrowth ofbusinesswith new relationship with Novartis. The 2018 dealwith Bioverativ, Revenue growth to date hasbeenlargely driven by our from 2016 256atDecember to 321atthe endof2017. demand andfuture plans for growth. Headcount rose subcontracted costshave increased to meetincreasing payments are excluded. Manpower, materials and 9% whendepreciation, amortisationandshare option including CostofSales,grew by only12%and by only Whilst gross incomegrew by 28%,ouroperating costs, shows the growth inoutputsince2013. third increasing production over 2016. The chart opposite facilities continuouslyduringthe running year andthe during 2017 with two outofthe three bioprocessing volume andrevenue growth. This growth continued laboratory facilities cameonlineduring2016, driving Orchard Therapeutics. newbioprocessing Our and — — — — £2.9 millionandanoperating profit of£0.2 million The Platform segmentmadeanEBITDA profit of £0.8 millionin2017 were reduced from £3.4 millionto aprofit of “EBIDA” losses(EBITDA adjusted by the R&Dtax credit) to £1.9 millionin2017 EBITDA lossespared back from £7.1 millionin2016 towardsThe journey profitability continuedwith has now increased by 168% since2014 Gross incomeincreased by 28%over 2016 and

2,000 5,000 4,000 2,500 5,500 4,500 3,000 3,500 1,000 1,500 500 40 20 44 28 24 32 36 Oxford BioMedicaplc |Annualreport andaccounts 2017 12 16 0 0 8 4 £m Gross income Bioprocessing volumes 2013 2013 2014 2014 2015 2015 1 2016 2016 2017 2017

development (dark tints) (light tints) Licence, milestones andgrants Bioprocessing andprocess Financing Cash flow Operations Gross income £m Key FinancialIndicators which are lumpy by nature. (2016 £6.8million)despite comprisingindividual items has remained broadly constant over the past four years upfront payments, performance incentives andgrants The £6.8millionincomegenerated from licence orders for Novartis andOrchard Therapeutics. generated from increased bioprocessing clinical batch The maincontributor to growth hasbeenthe revenues (from £24 millionin2016), andisup353% since2014. development increased by 36%to £32.6 million Revenues generated from bioprocessing/commercial 28% growth ascompared to 2016 (£30.8 million). Gross incomeincreased to £39.4 million providing Gross income performance over time. provide the mostaccurate reflectionGroup’s of the are measures non-GAAP which the Group believes of itsKey Financial Indicators (refer table above). These of anumberalternative performance measures aspart The Group evaluates itsperformance by makinguse 4 3 2 1 Headcount Normalised cashburn Normalised Cash burn Capex Cash usedinoperations Operating loss EBIDA EBITDA Licences, incentives, grants development Bioprocessing/commercial Average Year-end Loan Cash EBIDA isaninternal measure usedby the Group, definedasEBITDA with the R&D tax credit included. EBITDA Before (Earnings Interest, Tax, Depreciation, Amortisation,revaluation ofinvestments and of Oberland facility. after interestCash burn excluding accrued andearly repayment charges paid dueto extinguishment offsetsGroup's the R&Dexpenditure. The Board refers to EBIDA periodicallyasthe R&Dtax credit is,inessence,asubsidyorgrant which as itexcludes from operating profit orlossallnon-cashitems, including the charge for share options. Share BasedPayments) measure isanon-GAAP often usedasasurrogate for operational cashflow Gross incomeisthe aggregate ofrevenue andother operating income. 3 2 1 4 2017 (5.7) (1.9) 32.6 36.9 39.4 14.3 295 321 2.0 6.8 0.8 3.0 1.5 9.8 (11.3) 2016 24.0 (3.4) 30.8 34.4 15.3 11.5 11.5 256 (7.1) 247 6.8 6.5 5.9 (12.1) 2015 (14.1) (8.1) 29.8 29.8 18.8 12.4 14.9 16.7 27.3 196 231 6.4 9.4

(10.6)

2014 (9.3)

14.2 (7.2) 14.7 11.6 11.6 134 113 5.6 1.0

7.5 7.2 7.4

Strategic report 33 34 in 2017. the EBITDA lossfrom £7.1 millionin2016 to £1.9 million factors ledto great progress beingmadeinreducing £37.9 millionin2016 to £41.3 millionin2017. These two partly offset by a9%growth inourcost base from bioprocessing/commercial development was only The 36%increase inincomegenerated from 2 1 Operating loss revaluation ofinvestments option charge andgainon Depreciation, amortisation,share EBITDA Total expenses Gross income £m EBITDA/EBIDA Gross income Other operating income Revenue £m growing substantially asaportionofthe overall total. Orchard Therapeutics aswell asother customers, are Novartis, revenue generated from partnerships with continues to bederived from ourrelationship with Although asubstantial portionofourgross income over the past five years. The chart onpage 33shows the revenue evolution Financial review Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 Operating expenses Cost ofsales EBITDA Before (Earnings Interest, Tax, Depreciation, Amortisation,revaluation ofinvestments and Research, development, bioprocessing andadministrative expensesexcluding depreciation, as itexcludes from operating profit orlossallnon-cashitems, including the charge for share options. Share BasedPayments) measure isanon-GAAP often usedasasurrogate for operational cashflow amortisation andshare optioncharge. 2 1 (22.9) (18.4) (41.3) 2017 2017 (3.8) (5.7) (1.9) 39.4 39.4 37.6 1.8 (26.1) (11.8) (11.3) 2016 2016 (37.9) (4.2) 30.8 30.8 27.8 (7.1) 3.0 (30.9) (25.1) (12.1) 2015 2015 (14.1) (2.0) (5.8) 18.8 18.8 15.9 2.9

(24.0) (10.6) (19.6) 2014 2014

(4.4) (9.3)

(1.3) 13.6 14.7 14.7

1.1 — — Total expenses Other costs External R&Dexpenditure Manpower-related other external bioprocessing costs Raw materials, consumables and £m Net loss (non-cash) Foreign exchange revaluation R&D tax credit Interest Operating loss Revaluation ofinvestments share optioncharge Depreciation, amortisationand EBITDA £m Operating loss andnetloss of £0.8 millionin2017. improved from alossof£3.4 millionin2016 to profit toDue the reduction inEBITDA losses,EBIDA has 3 EBIDA R&D tax credit EBITDA — — — — — — EBIDA isaninternal measure usedby the Group, definedasEBITDA with the R&D tax credit included. the growth inyear-end headcountnumbers, development activities. The chart opposite shows of the increased bioprocessing andcommercial 247 in2016 to 295 in2017. Again,this isasaresult to the increase inthe average headcountfrom The increase inmanpower-related costsisdue development revenues, of the increase inbioprocessing andcommercial bioprocessing costshave increased asaresult Raw materials, consumables andother external offsetsGroup's the R&Dexpenditure. The Board refers to EBIDA periodicallyasthe R&Dtax credit is,inessence,asubsidyorgrant which thatof running facility notincurred in2017. laboratories atthe endofOctober 2016 with the costs Other costsdecreased aswe exited the Medawar minimising ourexpenditure onclinical stage projects, of onlydeveloping ourproprietary products and External R&Dexpenditure decreased with the strategy 3

2017 2017 (9.0) (6.1) (5.7) (1.9) (1.9) (9.3) 0.8 2.3 3.3 2.7 2.7 (16.6) (11.3) 2016 2016 2017 41.3 13.2 (4.2) (3.4) (4.9) 19.3 (4.1) (7.1) (7.1) 1.7 3.7 3.7 7.1 – (13.0) (12.1) (12.1) 2015 2015 (14.1) 2016 (2.0) (1.0) (8.1) (1.9) 37.9 17.4 2.8 4.0 4.0 8.4 9.3 –

2015 (10.6) 2014 2014 (0.2) (8.7) (9.3) (9.3) 30.9 (1.3) (7.2) 13.6 8.2 3.0 2.1 2.1 6.1 – – 280 350 Oxford BioMedicaplc |Annualreport andaccounts 2017 210 140 70 0 Year-end headcount 2013 2014 2015 2016 2017

Admin andcorporate (lighttint) Production related (dark tint) Development (midtint) Bavarian Nordic’s Prostvac product failed itsphase IIIstudy. technology patent andpoxvirus intangible assetafter charge to accountfor the write down ofthe PrimeBoost Amortisation in2017 includes a£1.0 millionimpairment in 2016. receipt atthe timethe licenseagreement was signed Orchard Therapeutics which was acquired asanupfront arisen from the revaluation ofthe equity investment in The £2.3milliongainonrevaluation ofinvestments has we saw the fullyear impact ofthis depreciation. took place between October 2014 andJune2016. In2017 of the £26millioncapacity expansion programme that triggering the start ofthe depreciation charge onmuch 2016During the newfacilities entered operation thereby (£6.1 millionin2017 compared with £4.2 millionin2016). depreciation, amortisationandshare optioncharge with £11.3millionin2016. 2017 saw ahighercharge for The operating lossin2017 was £5.7 million,compared the change. Prior year figures have beenadjusted to reflect of researching anddeveloping newproduct candidates. segment, “Product“ (previously R&D),includes the costs development activities for third parties. The other the revenue generating bioprocessing andprocess ‘Platform’ segment(previously ‘Partnering’) alongwith costs down isnow included within the newlynamed processes and bringdevelopment andmanufacturing new potentially saleable technology, improve ourcurrent Executive Team. Internal technology projects to develop way the businessisbeingmanagedby the Senior disclosed inthe 2017 Annualreport to better reflect the 2017During achange was madeto the businesssegments analysis Segmental from Novartis’ salesto Kymriah be $denominated, such asthe royalty stream arising portion ofitsanticipated future revenues are likely to a currency hedgeagainstthis liability asasignificant of Brexit. To someextent the Group expectsto have This isincontrast to the lossessuffered in 2016 asa result the improvement insterling againstthe $across the year. sterling ofthe $denominated Oaktree loan caused by The netlossin2017 benefitted from the revaluation in supports R&Dexpenditure inthe UK. credit results from aUKGovernment scheme which to alower level ofqualifying R&Dexpenditure. The tax The R&Dtax credit in2017 was lower than 2016 due on the increased value ofthe newOaktree facility. of the Oberland facility, andthe higherinterest charge in 2016 dueto acombinationofthe costoftermination higher at£9.3 million in 2017 compared with £4.9 million The interest charge onour$loan facility was significantly ™ patients.

Strategic report 35 36 — — — — movements across the year are explained below. having begunthe year with £15.3 million.Significant The Group held£14.3 2017, millioncashat31December Cash flow share optioncharges. increasing dueto the increase indepreciation and remained broadly the samewith the operating loss first quarter of 2017. Costsand therefore EBITDA have down slightly asthe OXB-202 grant endedduringthe The Product segmenthasseengrant incomecome this segmentwillincrease itsprofitability. royalty payments from partners continueto grow £0.2 million The of £2.9 millionthis year, animprovement of£5.3 million. advance from EBITDA lossesin2016 to anEBITDA profit volumes andrevenues have enabled this segmentto to the increase inbioprocessing revenues. The additional income of30%from £29.8 millionto £38.6 milliondue The Platform segmentin2017 saw anincrease ingross Operating loss EBITDA Gross income 2016 Operating profit/(loss) EBITDA Gross income 2017 Financial review Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — tax receipt, up £0.4 millionfrom the prior year at £3.0 million was helpedby a £4.5 millionR&D Net cashgenerated from operations during2017 at £1.9 million in operations beinginlinewith the EBITDA loss of £0.4 millionin2017 resulted inthe cashused A slightly favourable working capital movement the £7.1 millionlossin2016 at alossof£1.9 million,issignificantly better than This improvement flowed through to EBITDA which manufacturing volumes a result ofthe higherrevenues from increased batch The operating lossimproved by £5.6 millionas segment alsogenerated anoperating profit of in2017. Asbioprocessing volumes and Platform 38,6 (6.2) (2.4) 29.8 £m 0.2 2.9

Product (5.9) (4.8) (5.1) (4.7) £m 0.8 1.0

Total (11.3)

(5.7) (1.9) 39.4 30.8

(7.1) £m

— — — — and arequirement to hold aminimumof$5millioncash. terms alsoinclude covenants covering revenue targets The loan issecured over the assetsofthe Group andthe the Company hasissued134,351,226 warrants to Oaktree. of 9.0% plus US$three Underthe agreement month LIBOR. increased funding together with alower interest rate Capital Management. The newfacility provides for Healthcare with anew$55 millionfacility with Oaktree existing $50 millionloan facility with Oberland Capital 29On June2017 the Group was able to re-finance its Loans Movement inyear Net proceeds from financing Cash burn Capex Interest paid, lessreceived Net cashgenerated from/(used in)operations R&D tax credit received Cash usedinoperations Working capital movement EBITDA loss Non-cash items included inoperating loss Operating loss Cash flow movements — — — — — — funds received from the refinancing of the Oberland £8.8 million,consistingalmostentirely ofadditional The netproceeds from financingduring 2017 were charges ofextinguishingthe Oberland facility exclude theinterest accrued andearly repayment 2017, anddrops down even further to £3.0 millionifwe reduced from £11.5millionin2016 to £9.8 millionin theCash burn, aggregate ofthese items, was therefore back down to ongoinglevels normal in2017 the firsthalfof 2016 with subsequentspend dropping major capacity expansion programme concluded in from £6.5millionto £2.0 millionasourthree year Purchases ofproperty, plant andequipmentdecreased drawdown ofthe loan interestaccrued covering the periodsinceinitial repayment ofthe Oberland loan facility aswell asthe £7.5 millionfrom the prioryear dueto the costof Interest paid duringthe year was £10.8 million,up in cashof£1millionfrom £15.3 millionto £14.3 million The result ofthe above movements isanet decrease of share issuesduringthe year £17.5 millionnetoffees was received asaresult facility with the enlarged Oaktree facility. In2016, (10.8) 2017 (2.0) (1.5) (1.0) (9.8) (1.9) (5.7) 4.5 8.8 0.4 3.0 3.8 (11.5) (11.3) 2016 (5.9) (6.4) (3.3) (1.8) (7.1) 17.5 6.0 4.2 1.2 4.1

2015 (29.8) (16.6) (14.9) (12.1) (14.1) (11.7) (2.8) 25.0 (4.8) (1.5) 2.0 3.2 Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — — — — changes from 2016, 31December are asfollows: The mostnotable items onthe balance sheet,including Balance sheetreview — — — — — — — — net ofexpensesincurred inthe refinancing Oberland facility with the enlarged Oaktree facility to £36.9 millionasaresult ofthe refinancing of the The loan balance hasincreased from £34.4 million slots reserved manufacturing orders placed andmanufacturing due to incomereceived inadvance inrelation to at the endof2016 to £13.1 millionatthe endof2017 Deferred incomeincreased from £3.3million as compared to the endof2016 to £8.7 million,dueto increased operational activities Trade andother payables increased from £6.0 million and manufacturing orders placed atyear-end timing ofprocess development milestones achieved £6.9 millionto £17.1 million,duepredominantly to the Trade andother receivables increased from commitments across 2017 andinto 2018 increasing asaresult ofongoingbioprocessing to £3.3milliondueto work inprogress balances Inventories have increased from £2.2million of £2.0 million of £4.1 millionwas onlypartially offset by additions £2.1 millionto £25.4 millionasthe depreciation Property, plant andequipmenthasdecreased by was signedin2016 upfront receipt atthe timethe licenseagreement in Orchard Therapeutics which was acquired asan arising from the revaluation ofthe equity investment Investments increased by £2.3millionfrom again product failed itsphase IIIstudy patent intangible assetafter Bavarian Nordic’s Prostvac down ofthe PrimeBoosttechnology andpoxvirus £1.0 charge millionimpairment asaresult ofthe write £0.1 millionasaresult ofamortisationanda Intangible assetsdecreased from £1.3millionto

seeking to spinoutorout-license those candidates at proprietary products andpre-clinical pipelinewhilst statedOur plan, to continuethe development ofour towardsbase andcontinueourjourney profitability. relationships in2018 to further diversify ourcustomer in ourability to continueto establish newcommercial forecasts andfuture prospects. We are confident our customer base andstrengthens ourrevenue a $105 millioncontract with BioVerativ which diversifies of ourgross income.Lastly, we have recently signed increasing itsactivities, andgrowing asa percentage therapeutics continuesto move itspipelineforward, commercial launch ofKymriah by the newsupply agreement signedinJulyandthe continues to gofrom strength to strength asevidenced to improve in2018. relationship Our with Novartis The Group expectsitsfinancialperformance to continue Financial outlook Chief FinancialOfficer Stuart Paynter the financialstatements basis. onagoingconcern financial statements andhave therefore prepared for notlessthan twelve months from the date ofthese cash resources andcashinflows to continueitsactivities flows, Directorsthe consider Groupthat the hassufficient in conjunctionwith currently known andprobable cash expect further progress in2018. Taking this into account, and reduced capital expenditure andthe Directors as aresult ofimproved cashflow from operations 2017During the was significantly cashburn reduced placing inorder to fundfurther facilities expansion. the Company completed a£19.3 million(net)equity and £16.4 2018. millionat28February InMarch 2018, The Group held£14.3 millionofcashatthe endof2017 concern Going our financial targets. our costbase carefully andadjustspendto meet technology platform. We willcontinueto monitor pre-clinical studies,andalsoinourkey LentiVector We will continueto invest inearly stage conceptsand of OXB-102, OXB -201, OXB-202 andOXB-302 willbelow. will meanthat the costofthe proprietary programmes an appropriate timepriorto large clinical expenditures,

™ inAugust.Orchard

Strategic report 37 38 bring usnewperspectives. touch andcelebrate the diversity and differences that business. We respect the rightsofallwhose lives we ourselves, actingwith integrity area inevery ofour we aimto treat others aswe would expectto betreated and “Be Inspiring” “Deliver Innovation”. Consequently, by ourGroup values which include “Have Integrity”, commitmenttoOur corporate responsibility isgoverned Values in the UKandoverseas. ethical conductandintegrity initsbusinessactivities The Group iscommitted to the higheststandards of Integrity andEthics and disposal. water, electricity andgasaswell aswaste production We monitor ourfacilities’ carbon emissions,useof Environment and control ouremissionsandwaste. manner. We comply with locallaws andregulations our facilities, conductingourbusinessinaresponsible We focus onthe wellbeing ofthe community around Community to employ staff whobecomedisabled. and promotion, andto continue wherever possible opportunities for their training, career development to job applications from disabled people, to provide It isgroup policy to give fullandfair consideration in the widercommunity. of patients inourclinical studies,andofourneighbours respect for diversity. We are equallyfocused onthe safety satisfaction, andensuringequality ofopportunity and welfare ofouremployees, their engagementandjob We are resolutely focused onthe health, safety andthe People responsibility efforts on anumberofmainareas: ensure we meetthis objective. We focus ourcorporate business andwe have arange ofpolicies inplace to Oxford BioMedicaiscommitted to itsrole asaresponsible Corporate responsibility Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017

record. Health andSafety issuesare astanding item Oxford BioMedicacontinuesto have afirst-class safety in scientific work and reflect changesinlegislation. continuous improvement, andto adaptto variations Management System isreviewed andupdated to ensure of laboratory equipment. The Health andSafety biological andchemical materials andthe operation System covers allwork activities, such asworking with and detailed training. Health Our andSafety Management equipment to the higheststandards andthrough specific to managethrough maintaining ourfacilities and facilities face additionalriskswhich we endeavor working inourbioprocessing, engineeringandlaboratory The safety ofallemployees isimportant, andthose visitors andcontractors atourbusinessisfirstpriority. The health, safety andwelfare ofouremployees, Safety People Total All other employees managers Senior non-executive directors Board including organisation 2017: asat31December The table below shows the gendersplit across our we embrace diversity inallforms. disability orany other personalcharacteristics, and irrespective ofrace, gender, religion, nationalorigin, to providing equalopportunities to allemployees, The Board andseniormanagementare fullycommitted Diversity regulation andbestpractice. to meetboth the letter andspiritofallhealth andsafety on the Board’s agendaandthe Group iscommitted

Male 146 124 15 7 Female 176 169 0 7 Total 322 293 22 7 100% Male 45% 42% 68%

Female

55% 58% 32% 0% % Oxford BioMedicaplc |Annualreport andaccounts 2017 productivity we needto succeedasabusiness. us to achieve the outcomes, compliance and complex andhighlyregulated andourtraining helps Bioprocessing, laboratory andclinical processes are 2. Training of ourbusiness. treated ourselves, actingwith integrity area inevery We aimto treat others aswe would expectto be 1. 2. 1. Integrity

and clinical processes are complex andhighlyregulated discussed above. Secondly, ourbioprocessing, laboratory of ouremployees andothers we interact with, as Firstly training isessential for the safety andwellbeing Training personalised approach to pensionplanning. to enable employees to take amore flexible and insurance for allstaff, alongwith apension facility all employees to participate, andwe provide medical structure. We have share modern optionplans to allow non-financial remuneration for each level within our and provide the appropriate levels offinancialand a well-established andstructured managementsystem and retain highquality employees. Asaresult, we have procedures to ensure that we are well placed to attract to 321atyear-end, we have invested instrong internal With the continuedgrowth inemployee numbers Remuneration our traffic impact on thelocal area. and interest-free seasonticket loans to helpminimise We have awell-established Cycle-To-Work scheme planning andthe traffic impact caused by our employees. particularly with regard to emissionsand waste, property complying with nationalandlocallaws andregulations, We seekto behave asaresponsible neighbour, schools andother localeducationalestablishments. apprenticeship scheme andby establishing linkswith such ascreating newhighquality jobs, establishing an this by delivering positive benefits for the community, in the Oxford community. We endeavour to achieve We recognise the value ofbeing agoodlocalcitizen Community factors affectingGroup's the performance. enhance understanding ofthe financialandeconomic informed ofbusinessandemployee activities, and and accessto work-related socialmediakeep employees circulation ofpress announcements, internal newsletters decisions that are likely to affect their interests. The views ofemployees canbetaken into accountinmaking issues andother matters ofinterest, andto ensure the are heldto keep employees informed ofgeneral business briefings, R&Dseminarsandinformal all-staff meetings and consultation across ourbusiness.Group-wide We acknowledge the importance ofcommunication Communication develop, supportandmotivate their teams. to ensure that they are well prepared to manage, business. Finally, we provide training to ourlinemanagers compliance and productivity we needto succeedasa and ourtraining helpsusto achieve the outcomes,

Strategic report 39 40 travel waste disposaland (estimated) including Other activities 2016 Total travel waste disposaland (estimated) including Other activities important indicator ofouractivity. “environmental onaperemployee intensity” basis, an 1 Total Water supply Gas Electricity Water supply Gas Electricity 2017 estimated ourtotal CO energy andwater atoursites inOxford, UK. We have also The tables below show ourusagein2017 and2016 of Greenhouse gasemissionsreport emissions andwaste. caused by ouractivities by closely managingour the localcommunity safe from any potential harm sites. We make effort every to keep ourneighboursin biological materials. No laboratory waste goesto landfill and disposalofchemical waste anddecontaminated and usesqualifiedlicensedcontractors for the collection covering the processing anddisposaloflaboratory waste, update regularly. The Group complies with allregulations objectives andguidelinesinplace which we review and environment andwe have astrong environmental policy, We fullyrecognise ourresponsibility to protect the Environmental policies &initiatives Environment Corporate responsibility Strategic report Oxford BioMedicaplc |Annualreport andaccounts 2017 Reduction dueto large waste reduction andslightreduction intravel MW hours MW hours MW hours MW hours 2 metres metres emissionsandhave indicated our Cubic Cubic Cubic Cubic Unit Unit Usage Usage 5,628 4,947 3,108 4,124 2,517 3,139 employee employee Usage Usage Usage 22.9 10.2 12.7 14.7 11.1 17.6 per per per

emission emission emission (tonnes) (tonnes) 2,815 2,472 1,055 1,450 1,295

447 CO CO 463 573 2 2 2 2 1

as aparamount concern. clinical studies areOur designedwith patient safety 2. Patient safety biological materials. disposal ofchemical waste anddecontaminated qualified licensedcontractors for the collection and processing anddisposaloflaboratory waste, and uses The Group complies with allregulations covering the 1. 2. 1. Biological materials

Oxford BioMedicaplc |Annualreport andaccounts 2017 reporting to relevant authorities. where necessary, upto andincluding dismissaland thoroughly investigated with actiontaken disciplinary without fear ofretaliation. andallegations are Concerns suspected casesofmisconductin confidenceand effort,Group’s the employees are encouraged to report implementation, training andmonitoring. Aspart ofthis prevention anddetection ofmisconductthrough policy Oxford BioMedica’s compliance activities include the Whistleblowing and eliminate bribery. to implementing effective measures to prevent, monitor acting onitsbehalf. managementiscommitted Senior employees, agentsorconsultants orany personorbody does nottolerate any form by, ofbribery orof, its as well asother relevant overseas legislation. The Group isinfullaccordancebribery with Act2010 the UKBribery Oxford BioMedica’s policy onpreventing andprohibiting Anti-bribery in the UKandoverseas. ethical conductandintegrity initsbusinessactivities The Group iscommitted to the higheststandards of Integrity andEthics — — to managewaste more effectively. Thisincludes: We continueto review ourwaste managementsystems Waste management extinguished inareas that are notcurrently inuse. infrared lightsensorsinallareas to ensure lightingis In ourrefurbished laboratoriesWindrush we have passive more energy efficient than traditional lighting systems. replacing we switch to LED lightswhich are significantly possible. For instance, whenexistinglightingneeds number ofpolicies to decrease energy usagewhere We are committed to energy efficiency and a have Energy efficiency — — processing efficiency Use ofdifferent waste streams to increase cans, glass,plastics andprinter toner/cartridges Recycling allpaper andcardboard waste, aluminum

website (www.clinicaltrials.gov). disclose ourtrialsonaUSgovernment-sponsored Register (www.clinicaltrialsregister.eu) andwe also EEA are automatically posted onthe EUClinical Trials on ongoingclinical trials.Relevant trialsinthe EUand (www.oxfordbiomedica.co.uk) provides information We are alsocommitted to transparency, andourwebsite compliance with appropriate guidelinesandlegislation. under acontrolled Quality ManagementSystem to ensure We alsohave standard operating procedures inplace boards atclinical trialsites, before any patients are treated. as well aslocalethics committees andinstitutionalreview agreed with the relevant nationalregulatory authorities, safety asaparamount andthe concern protocols are clinical studiesareclinical trials.Our designedwith patient of ourbusiness,including the designandconductofour We instiltransparency, safety andethics inallaspects Clinical trials Chief Executive Officer John Dawson signed onitsbehalfby: by the Board ofDirectors on15 March 2018 andwas The Strategic report onpages 16 to 41 was approved platform data packages for regulatory authorities. the useofanimalmodelsby cross-referring LentiVector where there are noalternatives. The Group minimises that animaltesting isonlyemployed and whennecessary and reduction ofanimaltesting. These principles ensure of the three “Rs” insafety testing: replacement, refinement process. We are committed to following the principles no alternative to usinganimalmodelsaspart ofthis they are administered to patients, andthere iscurrently products mustbeappropriately tested for safety before It isaregulatory requirement that allnewtherapeutic Animal testing with strong commitmentsto humanrightssafeguarding. regulations andoursupply chain operates interritories wherein the UK, ourpolicies accord with humanrights be found onourwebsite. facilities Our are alllocated in compliance with section54ofthe Actwhich can approved Slavery aModern Transparency Statement Act 2015. Oxford BioMedica’s Board ofDirectors has UK HumanRightslegislationandtheSlavery UKModern our businessinaccordance with the letter andspiritof The Group fullyrespects humanrightsandwe conduct Human rightsandanti-slavery

Strategic report 41

Oxford BioMedicaplc |Annualreport andaccounts 2017 12

Corporate governance 43 44 — — — — — The Group’s riskmanagementframework isasfollows: Risk managementframework model andfuture performance. out arobust assessmentofthe risksfacing the Group, including those which couldthreaten itsbusiness others are commonto alldevelopment-stage biopharmaceutical companies. The directors have carried The Group isexposedto arange ofthem ofrisks.Some are specific to Oxford BioMedica’s current operations, and evaluation istherefore anintegral andwell-established part ofOxford BioMedica’s managementprocesses. and the regulatory authorities have shown cautionintheir regulation ofsuch products. Riskassessment yet beenapproved for commercial usesothere are significantfinancialanddevelopment risksin thesector, is relatively highriskcompared sectors. with other industry Very few geneandcelltherapy products have Oxford BioMedicaoperates inthe geneandcelltherapy biotechnology sector which, by itsnature, Principal risks,uncertainties andriskmanagement Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — such asfinancialprocesses, are alsosubject to audits. Compliance with such SOPs are routinely subjectto auditby the relevant regulators andcustomers. Other SOPs, Where these are required for GMP, GCPandGLP any deviationsfrom the SOPs mustbe identified andinvestigated. (SOPs) which are required to befollowed inorder to minimisethe risksinherent inthe businessoperations. Standard Operating Procedures –allareas ofthe businesshave well established Standard Operating Procedures highlighted to the Board ateach formal meeting. and riskmanagementsteps that canbetaken. The riskregister isregularly reviewed by SET andkey risksare This group meetsquarterly with aremit to identifyand assessrisksinthe business,andto considermitigation managers from each area ofthe businessandchaired by the Director ofCorporate Activities &Strategy. Risk ManagementGroup –Oxford BioMedicahasestablished a RiskManagementGroup comprisingsenior of each sub-committee. Technical Development Committee. SET membersattend these meetingsandriskmanagementisakey feature Operations Committee, the Product Development Committee, the BusinessDevelopment Committee and the and through which much ofthe day-to-day businessismanaged. These are the Quality andManufacturing Key management committees –the Group hasfour key managementsub-committees which meetmonthly the RiskManagementGroup to considerthe operational riskmanagementprocesses andrisksidentified. and considersrelevant risksoneach occasion.Atleasttwice ayear the SET meetswith representatives from ExecutiveSenior Team –the SET generally meetstwice monthly to discusscurrent businessissues contained inthem. announcements relating to the Group’s financialperformance, reviewing significantfinancial reportingjudgements The AuditCommittee alsomonitors the integrity ofthe financialstatements ofOxford BioMedicaandany formal implementation, aswell asreviewing the Group’s internal financialcontrols and the internal control systems. are the responsibility ofthe Executive Senior Team, butthe AuditCommittee monitors the processes andtheir within the Group ateach ofitsformal meetings,ofwhich there atleastsixannually. The riskmanagementprocesses tolerance andfor ensuringthe maintenance ofasoundsystem ofinternal control. The Board reviews key risks Board ofDirectors –the Board hasoverall responsibility for riskmanagement,determining the Group’s risk

Oxford BioMedicaplc |Annualreport andaccounts 2017 There isno certainty that such technical improvements orsolutions canbeidentified. the product candidates characteristics such asthe delivery mechanism orthe bioprocessing process. theDuring courseofaproduct’s development, further technical development may berequired to improve (iii) Technicalrisks be given amarketing authorisation. Group’s product candidates willbesufficient tosatisfy the relevant authorities regulatory that the product should There can be noassurance that the efficacy data collected from the pre-clinical studiesand clinicaltrialsof the stages ofclinical trialsmay fail to show the desired efficacy despite having progressed through initial clinicaltrials. candidates donotnecessarilypredict the results oflater stage clinical trials.Unapproved product candidates inlater or existingalternative therapies. The results ofpre-clinical studies andinitialclinical trialsofthe Group’s product Human clinical studiesare required to demonstrate efficacy inhumanswhencompared against placeboand/ risks (ii) Efficacy ultimately besuccessfullycompleted. of aparticular studyafter review by the DSMBorreview bodydoesnotnecessarily indicate that allclinical trialswill development ofproduct candidates, consequently affectingGroup’s the timeline for profitability. Thecontinuation use. Adverse orinconclusive results from pre-clinical testing orclinical trialsmay substantially delay, orhalt,the There canbenoassurances that any ofthe Group’s product candidates willultimately prove to besafe for human (DSMB), the relevant regulatory authorities orthe Group itselfmay suspendorterminate clinical trialsatany time. Safety issuesmay ariseatany stage ofthedevelopment drug process. safety Anindependentdrug monitoring board (i) Safety risks ability to enter into collaborations inrespect ofproduct candidates. development couldhave anadverse effect on the development ofother product candidates,Group’s or on the adverse impact onthe Group’s share price. There isalsothe riskthat the failure ofoneproduct candidate inclinical of the Group. There isariskthat the failure ofany oneproduct candidate couldhave asignificantandsustained The failure ofthe Group to develop successfullyaproduct candidate couldadversely affect the future profitability — — — — — — for many reasons, including: This development process takes many years. The Group may fail to develop successfullyaproduct candidate need to obtain regulatory approvals to conductclinical trialsandbioprocess before drugs they canbemarketed. and the regulations applicable to the particular product candidate. Inaddition,the Group oritspartners will that willberequired varies dependingonthe product candidate, the indicationbeingevaluated, the trialresults for product candidates to demonstrate safety andefficacy. Thenumberof pre-clinical studiesand clinicaltrials To develop apharmaceutical product to conductpre-clinical itisnecessary studiesandhumanclinical trials productPharmaceutical development risks Key risksspecific to Oxford BioMedica’s current operations failure to recruit sufficient patientsinto clinicalstudies. failure to obtain regulatory approvals to conductclinical studiesor, ultimately, to market the product; and failure to establish robust bioprocessing processes; failure to develop technical solutions to achieve dosinglevels oracceptable necessary delivery mechanisms; failure to demonstrate efficacy; failure to demonstrate long-term safety;

Corporate governance 45 46 development activities andto review progress regularly inthe Group’s Product Development Committee. and other external parties, such asContract Research Organisations to plan, implement andmonitor itsproduct changed fundamentally over the lastyear. The Group aimsto mitigate these risksby employing experiencedstaff The threats from the above product development risksare inherent andhave inthe pharmaceutical industry not inthedrug clinical stage ofdevelopment. population ofsuitable patients, orthe emergence either ofacompetingdrug, onethat isapproved oranother by avariety ofreasons, such asthe specified characteristics being too tightly defined, small resultingina very specified characteristics, potentially causingdelays oreven abandonment of the clinical study. Thiscouldbecaused be accepted into the study. The riskexists that itproves difficultin practice to recruitthe numberof patientswith the specify the numberofpatients to berecruited into the studyandthe characteristics ofpatients whocanandcannot Clinical trialsare established under specificprotocols which specifyhow the trialsshouldbeconducted. Protocols (vi) Failure to recruit sufficient patientsinto clinicalstudies until corrective actionshave beenimplemented andaccepted by the regulator. such standards could result in the laboratories or the bioprocessing site being closed or the clinical studies suspended subject to regular auditsby to the MHRA ensure that they comply with GMP, GCPandGLP standards. Failure to meet be withdrawn orrestricted. The Group’s laboratories, bioprocessing facility andconductofclinical studiesare also and bioprocessor willbesubjectto continualreview andthere canbenoassurance that such anapproval willnot use ormay require additionaldata before granting approval. If regulatory approval isobtained, the product candidate commercialise products indevelopment. Regulatory authorities may imposerestrictions onaproduct candidates development timelines.Similarly, there canbenoassurance marketing ofgaining the necessary approvals to theDuring development stage, regulatory reviews ofclinical trialapplications oramendmentscanprolong facility, are regulated by healthcare regulatory agencies,such asthe FDA (USA),EMA(Europe), (UK). andMHRA The clinical development andmarketing approval ofthe Group’s product candidates, andthe Group’s bioprocessing (v) Regulatory risk will beable to provide sufficientbioprocessing capacity when required. clinical development orcommercial supply inatimelyorcost-effective manner, nor that contract bioprocessors will beable to adaptcurrent processes ordevelop newprocesses suitable for the scalerequired by later stages of required for later stages ofclinical development orfor commercial supply. There canbenoassurance that the Group at the smallscalerequired by the early stages ofclinical development may notbeappropriate atthe larger scale prices, orthat suitable newcontractors willenter the market. Bioprocessing processes that are effective andpractical are currently able to bioprocess the Group’s product candidates willcontinue to make capacity available ateconomic that the Group willbeable to bioprocess the Group’s product candidates at economiccostorthat contractors who processes for which there are onlyafew suitable bioprocessors including the Group itself. There canbenoassurance quantities atacceptable cost. The Group’s LentiVector There canbenoassurance that the Group’s product candidates willbecapable ofbeingproduced incommercial (iv) Bioprocessing process risk Principal risks,uncertainties andriskmanagement Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 ® platform product candidates usespecialised bioprocessing

Oxford BioMedicaplc |Annualreport andaccounts 2017 adversely affectGroup’s the businessoperations, financialpositionand prospects. Failure to comply with the terms ofthe loan agreement couldpotentially place the Group indefault, which could The Group hasa$55 millionloan facility provided by Oaktree Capital Management,secured onthe Group’s assets. Loan facility review (page 37), the Directors’ report (page 86)andinNote 1to the consolidated financialstatements (page 102). have considered the cashpositioninthe context andtheir ofgoingconcern conclusions are setoutinthe Financial an integrated platform genedelivery company anddevelops itsportfolio ofdevelopment products. The Directors The Group hasincurred significantlossessinceincorporation andcontinues to incursignificantcostsasitbuilds Financial position potential revenues. to continueto develop the relevant product candidates for any reason couldresult inthe Group losing candidates by partners inwhich the Group hasafinancialinterest through IPlicences. Failure of the partners The Group hasentered into several collaborations andpartnerships involving the development ofproduct Collaborator andpartner risk to mitigate the riskofbeingoverly reliant onNovartis by seekingbioprocessing contracts with other parties. equipment andemployees and,inparticular, inquality managementprocesses. The Group isalsoendeavouring months. The Group mitigates the riskoffailing to meetrequired specifications by investing inhighquality facilities, As the Group’s revenues from bioprocessing are growing the riskto the Group hasincreased inthe lasttwelve operations beingsuspendeduntilthe issuesare rectified, with the potential for lossof revenue. and approval by regulators andcustomers. Failure to comply with the standards required couldresult inproduction theharm Group’s business. The Group’s bioprocessing andanalyticalfacilities are subjectto regular inspection of raw materials andcertain out-sourced Ifsuch suppliers perform services. inanunsatisfactory manneritcould lead to lossofrevenues. Furthermore, the Group relies onthird parties, insomecasessole suppliers, for the supply specification due to contamination orinadequate yield. Failure to deliver batches to the required specification may for Novartis. Bioprocessing oflentiviral vectors iscomplex andbioprocessing batches may fail to meetthe required The Group receives significant revenues from bioprocessing lentiviral vectors for third parties, andin particular Bioprocessing revenue risk

Corporate governance 47 48 Advances inother technologies inthe sector the couldundermine Group’s commercial prospects. The geneandcelltherapy sector ischaracterised by rapidly changing technologies andsignificantcompetition. Rapid technical change development ofgeneandcelltherapy products. requirements willnot beimposedinthe future. This may increase the costandtimerequired for successful those imposedonother products, apply to geneandcelltherapies andthere canbenoassurance that additional been approved inEurope, andonlythree inthe USA.Furthermore, specific regulatory requirements, over andabove public for the prevention and/ortreatment ofdiseases. To date onlyalimited numberofgenetherapy products have in the sector, willdependonthe acceptance ofgeneandcelltherapy by the widermedicalcommunity andthe The Group’s commercial success,both from itsown product development andfrom supportingother companies andcelltherapyGene risk Broader businessriskswhich are applicable to Oxford BioMedica offered to employees iscomparable with competingemployers. mitigates this riskby creating anattractive working environment andensuringthat the remuneration package or to retain staff with the required skillsandexperiencecouldadversely affect the Group’s performance. The Group customers’ needs. The market for such employees isbecomingincreasingly competitive andfailure to recruit The Group dependsonrecruiting andretaining highlyskilledemployees to deliver itsobjectives andmeetits Recruitment andretention and partners receive they the expect. service reduce this risk,anditalsotakes extremely seriouslycustomer relationship managementto ensure that customers to businesspartners andcollaborators. The Group iscontinuingto invest inLentiVector vector technology, b)becominguncompetitive from apricingperspective, c)failure to provide anadequate service be unsuccessfulinbuildingthis businessfor reasons including a)failing to maintain aleadershippositioninlentiviral in return for revenues derived from process development, bioprocessing andfuture royalties. The Group may The Group isbuildingarevenue generating businessby providing itsLentiVector the development ofthe products to bedelayed orcurtailed. candidates. The Group may notbesuccessfulinitsefforts to build these third party relationships which may cause programmes, andmay seekto develop strategic partnerships for developing certain ofthe Group’s other product The Group isseekingto out-licence orspinoutinto externally fundedvehicles itsin-houseproduct development Business development Principal risks,uncertainties andriskmanagement Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 ® platform to third parties ® technology inorder to

Oxford BioMedicaplc |Annualreport andaccounts 2017 the relevant intellectual property from others. licence agreements willnotaffect the entitlementGroup of the to the relevant intellectual property or to license agreements covering such intellectual property. There canbenoassurance that changes to the terms within including the circumstances underwhich the intellectual property was created and the provisions ofany Rights ofownership over, andrightsto licenceanduse,intellectual property dependonanumberoffactors, independently develop the sameorsimilarproduct candidates ortechnology. product candidates ortechnology, there canbenoassurance that acompetitor orpotential competitor willnot develop orobtain alternative technology. Where copyright, designrightand/or protect how” “know the Group’s assurance that the Group willbeable to obtain licencesto these patents atreasonable cost,ifatall,orbeable to Third party patents may emerge containing claims that impact the Group’s freedom to operate. There canbeno could involve substantial costsandanuncertain outcome. protected by intellectual property. Furthermore, ifthe Group’s patents are challenged, the defence ofsuch rights portfolio. However, there canbenoguarantee that the Group’s product candidates andtechnologies are adequately technologies andthe Board gives highpriority to the strategic managementofthe Group’s intellectual property The Group’s successdepends,amongstother things, onmaintaining proprietary rightsto itsproducts and Intellectual property andpatent protection risk and milestones from commercial partners couldbereduced. Any orallofthese riskscouldresult inthe Group’s future profitability beingadversely affected asfuture royalties — — — — regulatory andcommercial environment several years into the future. Future commercialisation risksinclude: In the longerterm, the successofthe Group’s product candidates andthose ofitspartners willdependonthe Longer-term commercialisation risks The willingnessofphysicians and/orhealthcare systems to adoptnewtreatment regimes. therapies willdependonassessmentsoftheir cost-benefit andcosteffectiveness; and the uniquepotential to provide therapeutic permanent benefitfrom asingleadministration. Thepricingof these justify the investment. Basedonclinical studiesto date, the Group’s LentiVector regarding safety; Group’s product candidates ormake them obsolete; pharmaceutical industriesare subjectto rapid technological change which couldaffect the successof the Governments orother payers beingunwilling to pay for/reimburse genetherapy products atalevel which would Regulatory authorities becomingincreasingly demandingregarding efficacy standards orrisk averse The emergence ofnewand/orunexpected competitor products ortechnologies. The biotechnology and ® platform product candidates have

Corporate governance 49 50 payments willincrease. is 9.0% plus US$three subject to aminimumof1%. month LIBOR, Asthree month LIBORrises,the Group’s interest The Group isexposedto interest rate movements, primarily arisingonthe Oaktree loan facility. The interest rate (c) Interest rate exposure the Group’s future profitability. its cashbalances weaken againstthe currencies inwhich itincursitsexpenses,this couldadversely affect stated inpoundssterling. Inaddition,ifthe currencies inwhich the Group itsrevenues earns and/orholds or decrease the Group’s results ofoperations andmay adversely affectGroup’s the financialcondition,each unrealised gainsandlossesontranslation ofthe underlying currency into poundssterling. This may increase fluctuations inexchange rates between poundssterling, the USdollar and the Euro may result in realised and account. To the extent that the Group’s foreign currency assetsandliabilitiesinthe longerterm are notmatched, Oaktree Capital Management.Underthat facility the Group isrequired to maintain $5millioninaringfenced bank in order to hedgeforeseen foreign currency expenses. The Group alsohasaUSdollar loan facility provided by in poundssterling although the Group’s Treasury Policy cashbalances to permits beheldinother currencies a proportion ofitsexpenditure inUSdollars andthe Euro. The Group’s cashbalances are predominantly held income from collaborative agreements andpatent licencesisreceived inUSdollars, andthe Group incurs The Group records itstransactions andprepares itsfinancialstatements inpoundssterling.Group’sSome of the (b) Foreign currency exposure other claim would nothave amaterial andadverse effectGroup’s on the future profitability andfinancialcondition. claim, the level ofinsurance by carried the Group now orinthe future willbeadequate, orthat aproduct liability or insurancenecessary cover willbeavailable to the Group atanacceptable cost,ifatall,orthat, inthe event ofany products. While the Group iscurrently able to obtain insurance cover, there canbenoassurance that any future are inherent inthe research, pre-clinical andclinical evaluation, bioprocessing, marketing anduseofpharmaceutical from customers, suppliers and/orinvestors. Inaddition,the Group isexposedto potential product liability risksthat outitsactivities the GroupIn carrying potentially faces contractual andstatutory claims, orother types ofclaim (a) Product liability andinsurance risk Financial risks Principal risks,uncertainties andriskmanagement Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017

Oxford BioMedicaplc |Annualreport andaccounts 2017 and impact the regulatory approval processes for itsproduct candidates. it may impact the Group’s ability to comply with the extensive government regulation to which itissubject, have amaterial adverse effectGroup’s on the business,financialconditionand resultsofoperations. Inaddition, it isnotpossible atthis pointintimeto predict fullythe effects ofanexit the UKfrom the European Union,itcould Union market andto the global trade dealsnegotiated by the European Uniononbehalfofitsmembers.Although negotiated between EUMemberStates andthe UKfollowing Brexit, the UKcouldloseaccessto the singleEuropean growth ofitsindustries,including the pharmaceutical andbiotechnology onthe industries.Depending exitterms andregulatory andcouldhavemonetary landscapeinthe UK, amaterial impact onitseconomy andthe future The impact ofthe UK’s decisionto leave the European Unionisnotyet clear butitmay significantly affect thefiscal, UK departure from European Union(“Brexit”)

Corporate governance 51 52 The Board ofDirectors Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 Oxford BioMedicaplc |Annualreport andaccounts 2017 Andrew Heath, John Dawson, StuartPaynter Peter Nolan, Lorenzo Tallarigo, StuartHenderson, MartinDiggle, Left to right:

Corporate governance 53 54 — None Committee membership: — Appointment: director ofPaion AG. Limited. He iscurrently(UK) anon-executive of FinanceandAdministration ofSerono Laboratories Cephalon. Priorto histimeatCephalon hewas director 2005 ledthe $360 millionacquisitionofZeneusby turnover ofseveral hundred millionUSdollars andin the European businessto over 1,000 people, andto a Europe. While atCephalon heledmany dealsbuilding Financial OfficerandDevelopment HeadofBusiness European operations ofCephalon Inc.,including Chief Previously heheldseniormanagementpositionsinthe appointed ChiefExecutive October Officerin 2008. a non-executive director inAugust2008, andwas John Dawson joinedOxford BioMedica’s Board as Chief Executive Officer John Dawson (58) — Committee membership: — Appointment: from Harvard BusinessSchool. degree from the University ofPisa(Italy) andaPMD of International Operations. He hasaDoctor ofMedicine and general management,and ultimately asPresident clinical research, product management,marketing of increasing seniority inanumberofareas including he worked atEliLilly, where heheldvarious positions develop novel treatments andtechnologies. Previously, life scienceresearch to create successfulbusinessesthat of Genextra, aholding company focused onidentifying also ChiefExecutive Officerand remainsa Board member where heledthe company’s successfulIPO. He was was previously ofIntercept Chairman Pharmaceuticals ofOxfordChairman 2016. BioMedicainFebruary He Dr. Lorenzo Tallarigo was appointed asnon-executive Chairman Dr. Lorenzo Tallarigo (67) The Board ofDirectors Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 in February 2016in February director andChairman in October 2008 and becameChiefExecutive Officer Appointed adirector inAugust 2008 Nomination Committee Appointed asnon-executive

— Appointment: a director Association. ofthe UKBioIndustry of Novacyt SAandIHT Partners, LLC. He was previously of Shield Therapeutics plc, andanon-executive director as Associate MedicalDirector. He iscurrently Chairman Vice President Marketing &Sales,andatGlaxoSweden senior positionsatAstra ABandAstra USA,including acquisition by BTG for £220 million.Previously, heheld managed the company’s significantgrowth andeventual he was ChiefExecutive Officerof Protherics plcwherehe IndependentDirectorand Senior inMay 2011. Previously Board 2010 inJanuary andbecameDeputy Chairman Dr. Andrew Heath was appointed to Oxford BioMedica’s IndependentDirector andSenior Deputy Chairman Dr. Andrew Heath (69) — None Committee membership: — Appointment: and Wales. Institute ofChartered Accountants inEngland plc. partnering LaRue He atDe isamemberof the Oxford BioMedicahewas headoffinancebusiness the global headofinternal audit.Priorto joining moved to acorporate finance role before becoming partnering for allbusinessoutsideofthe US.He then where hebecame the seniordirector offinancebusiness Finance Director. He then moved to Shire Pharmaceuticals life sciencesdivisions priorto becoming the European worked inavariety ofroles within the healthcare and moving to EDS.He subsequently joinedSteris, and as achartered accountant with Haines Watts before the pharmaceutical andhealthcare sectors. He qualified Board inAugust2017. He has16 years’ experiencein Stuart Paynter joinedOxford BioMedicaandthe Chief FinancialOfficer Stuart Paynter (45) — Nomination Committee — Remuneration Committee — AuditCommittee Committee membership: in May 2011 IndependentDirector and Senior and becameDeputy Chairman Chief FinancialOfficerinAugust 2017 Appointed adirector 2010 inJanuary Appointed adirector and

55 governance Corporate

Martin Diggle (55) Stuart Henderson (59)

Non-executive director Independent non-executive director Martin Diggle was appointed to Oxford BioMedica’s Stuart Henderson was appointed a non-executive Board in October 2012. He is a founder of Vulpes director and Chair of the Audit Committee in June 2016. Investment Management which manages a number Previously, he was a partner at Deloitte, where he of funds, including the Vulpes Life Sciences Fund, was Head of European Healthcare and Life Sciences. Oxford BioMedica’s largest shareholder. He has over Prior to this he was a partner at Arthur Andersen, 30 years’ experience in investment banking and fund where he was Head of Emerging Biotechnology. management, and has been an investor in life sciences He has extensive audit and transaction experience and biotech for nearly 20 years. He is also an expert in and has worked with life sciences businesses ranging emerging markets and Russia, in particular, where he from start-ups to multinationals, as well as acting as was previously a partner and director of UBS Brunswick. reporting accountant on numerous IPO and Class 1 He holds a Master’s Degree in Philosophy, Politics transactions. As Audit Partner, he has reported to the and Economics from University of Oxford. audit committees of publicly quoted companies for Appointment: over 20 years. He is a former director of the Babraham — Appointed a director Institute and currently sits as a non-executive director in October 2012 on the Boards of OneNucleus (the Life Sciences trade Committee membership: — None body for Cambridge and London) and the Cell Therapy Catapult Limited. Appointment: — Appointed a director in June 2016 Committee membership: — Audit Committee — Remuneration Committee — Nomination Committee

Peter Nolan (65)

Chief Business Officer Peter Nolan was appointed to Oxford BioMedica’s Board in May 2002 having been a senior leader at the Company since it was founded in 1996. Prior to joining Oxford BioMedica he served as Head of the Biotechnology Unit at the UK Department of Trade and Industry for eight years, where he was responsible for collaborative research programmes between industry and the research councils. Previously he held senior positions in the Laboratory of the Government Chemist and also the Metropolitan Police Laboratory where he was a senior forensic scientist. He has held a number of senior posts in industry organisations, including as a director of the UK BioIndustry Association, and Chairman of the Oxfordshire Bioscience Network. Appointment: — Appointed a director in May 2002 Committee membership: — None

Oxford BioMedica plc | Annual report and accounts 2017 56 in February 2016in February as non-executive director andChairman Lorenzo Tallarigo was appointed Chairman Lorenzo Tallarigo The following pages setoutinmore detail the activities andmajormatters considered by the Board in2017. director individually. The key areas to improve were then bediscussedatthe forthcoming 2018 board meeting. the completion ofaquestionnaire covering the various aspectsofboard activities andprivate discussionswith each I aminthe process ofconductingareview ofthe board’s performance during2017.The review process willcomprise managing the key risksfacing the Group. Group’s strategy remains appropriate andthat managementisfocused ondelivering the Group’s key prioritiesand with Bioverativ. With this amountofchange andactivity the Board haspaid particular attention to ensuringthat the outfeasibilitybeen carrying studiesfor other potential partners andwere able to recently announceapartnership regulatory filingandsubsequentapproval, andbioprocessing for the products' commercial launch. We have also workOur with partner Novartis hascontinuedto drive this revenue growth, both from ourcontributionsto Kymriah’s operational throughout the year, ourbioprocessing activities during2017 increased substantially compared to 2016. shareholder value andwe expectthis to continue. With ourstate-of-the artlaboratories andbioprocessing suites fully cell therapy rapidly transforming into amulti-billiondollar opportunity, the Group’s strategy isdelivering significant The Group continuedto make impressive progress in2017, with the momentumcontinuinginto 2018. With geneand He leaves the Group inagreat positionfor the future. of September. Iwishto thank Tim for allhishard work for the Group over five years asChiefFinancialOfficer. Officer, and the Board asanexecutive director. Tim Watts retired asa Board memberexecutive director at theend There have beentwo changes to the Board during2017. InAugustStuartPaynter joinedthe Group asChiefFinancial the forum for external andindependentreview andchallenge to the managementofthe business. of the Board anditscommittees. The Board comprisesboth non-executive andexecutive directors andprovides governanceGood isessentialfor the longterm successofthe businessandthis isultimately the responsibility I ampleased to present Oxford BioMedica’s Corporate Governance Report for 2017. ShareholderDear Corporate governance report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017

Oxford BioMedicaplc |Annualreport andaccounts 2017 The table below setsouthow the Group hasapplied the mainprinciples in the UKCGC. Compliance with the UKCorporate Governance Code(UKCGC) C.2 C.1 B.7 B.6 B.5 B.4 B.3 B.2 B.1 A.4 A.3 A.2 A.1 reference UKCGC E.2 E.1 D.2 D.1 C.3

to encourage their participation. The board shouldusethe general meetings to communicate with investors and dialogue with shareholders takes place. of objectives. The board asawhole hasresponsibility for ensuringthat asatisfactory There shouldbeadialoguewith shareholders based onthe mutualunderstanding directors. No director shouldbeinvolved in decidinghisorherown remuneration. executive remuneration andfor fixing the remuneration packages ofindividual There shouldbeaformal andtransparent procedure for developing policy on stretching andrigorously applied. success ofthe Company. Performance-related elementsshouldbetransparent, Executive directors’ remuneration shouldbedesignedto promote the long-term auditor. principles, andfor maintaining anappropriate relationship with the Company’s how they shouldapply the corporate reporting riskmanagement,internal control The board shouldestablish formal andtransparent arrangements for considering sound riskmanagementandinternal control. systems. it iswillingto take inachieving itsstrategic objectives. The board shouldmaintain The board isresponsible for determining the nature and extent ofthe principal risks Company’s positionandprospects. The board shouldpresent afair, balanced andunderstandable assessmentof the continued satisfactory performance. All directors shouldbesubmitted for re-election atregular intervals, subjectto performance andthat ofitscommittees andindividual directors. The board shouldundertake aformal andrigorous annualevaluation ofitsown of aquality appropriate to enable itto discharge itsduties. The board shouldbesupplied inatimelymannerwith information inaform and update andrefresh their skillsandknowledge. All directors shouldreceive inductiononjoiningthe board andshouldregularly their responsibilities effectively. All directors shouldbeable to allocate sufficienttime to theCompany todischarge of newdirectors to the board. There shouldbeaformal, rigorous andtransparent procedure for the appointment discharge their respective dutiesandresponsibilities effectively. experience, independenceandknowledge ofthe Company to enable them to The board anditscommittees shouldhave the appropriate balance ofskills, constructively challenge andhelpdevelop proposals onstrategy. As part oftheir role board, asmembersofaunitary non-executive directors should on allaspectsofitsrole. isresponsibleThe chairman for leadershipofthe board andensuringitseffectiveness decision. of the Company’s business.No oneindividual shouldhave unfettered powers of between theof running board andthe executive responsibility for the running There shouldbeaclear division ofresponsibilities atthe headofthe Company responsible for the long-term successofthe Company. Every company shouldbeheadedby aneffective board which iscollectively Main Principle

the non-executive directors inconsultation with the ChiefExecutive Officer. the directors aspart ofthe selectionprocess. The finalselectiondecision was made by employed to help identifypotential candidates. Short-listed candidates metmostof The process to appointStuartPaynter was ledby Asearch the Chairman. was firm non-executive directors. The AuditandRemuneration Committees are comprisedsolely ofindependent industry,Pharmaceutical financingandinvestment, andUKcorporate governance. The current board membershave abroad mixofexperienceincluding the involved inperiodicstrategic reviews. All ofthe non-executive directors participate atallBoard meetingsandalsoare for discussion. the agendafor itsmeetingsandfor ensuringthere isadequate timeallowed providesThe Chairman leadershipto the Board andisresponsible for setting Chief Executive Officer. There isaclear division ofresponsibilities between theand Chairman as several other timesfor specificadhocmatters. directors. The board meteighttimesduring2017 for regular board meetingsaswell The Company’s board comprisesboth non-executive directors andexecutive Application sufficient timeisallowed forquestioning byshareholders whoattend themeeting. All board membersendeavour to attend the Annual General Meetinginpersonand Company’s other large shareholders. Chief Executive the OfficerandChiefFinancialmeetperiodically with board by which provides MartinDiggle aclear lineofcommunication. The Chairman, Vulpes Life Fund,the Sciences Company’s largest shareholder isrepresented onthe No director isinvolved with settinghisown remuneration. Meeting. Anewpolicy willbeputto shareholders atthe 2018 AGM to approve. recommended policy was approved by shareholders atthe 2015 AnnualGeneral advice from the compensationandbenefitspracticeDeloitte of LLP. Thecurrent The remuneration policy was designedby the Remuneration Committee with which was approved by shareholders atthe 2015 AGM. Executive directors’ remuneration issetinaccordance with the remuneration policy following AuditCommittee meetings. the responsibility ofthe AuditCommittee which provides feedback to the fullboard Corporate reporting, internal controls andrelations with the Company’s auditors are control systems. is monitored by the AuditCommittee. The AuditCommittee alsoreviews the internal meeting. Asystem ofriskmanagementhasbeenestablished inthe Company andthis The board’s remit includes riskmanagementwhich isanagendaitem formal atevery and understandable. in the report confirming that they consider the report to be fair, balanced The directors formally review the Annualreport each year andmake astatement re-election by rotation each year. The Articles alsorequire that one-third ofthe directors submitthemselves for themselves forGeneral electionatthe firstAnnual Meetingafter their appointment. All newdirectors are required by the Company’s Articles ofAssociationto submit performance review currently ongoing. evaluation took place 2016/January duringDecember 2017. 2017/2018 Board The board conductsaperformance evaluation annually. The mostrecent completed papers are circulated to allboard membersseveral days priorto each meeting. in consultation with the ChiefExecutive OfficerandCompany Secretary. Relevant The board meetsformally atleastsixtimesperannum. setstheThe Chairman agenda in the business. the Company’s auditors, lawyers, financialandother advisersandseniormanagers Stuart Paynter received inductionduringthe year including meetingswith investors, All directors have beenable to participate atthe majority ofmeetingsheldin2017.

Corporate governance 57 58 Regular board papers cover Product and Technical Development, Production, Business Development, Finance, Company Secretary. Board papers covering the agendaitems are circulated several days aheadofeach meeting. setstheThe Chairman agenda for the board meetinginconsultation with the ChiefExecutive Officerand the standing items onitsmeetingagendas. The Board takes aclose interest inQuality, Health, Safety &Environment and Risk Managementandhasthese as — — — — — — — — schedule ofmatters reserved for the Board’s approval which include: The Board’s powers and responsibilities are setoutinthe Company’s articles ofassociationandithas aformal to beindependent. four non-executive directors andthree executive directors. are andMartinDiggle The Chairman considered not and riskmanagementprocesses inplace. Following the changes inthe secondhalfof2017 the Board comprises Group’s activities to create shareholder value. Indoingsoitensures that there are robust corporate governance The Board iscollectively responsible for promoting the successofthe Group by directing the andsupervising The Board RMG BDC QMOC TDC PDC SET sub-committees: Oxford BioMedica’s governance framework comprisesthe Board, the Executive Senior Team andtheir respective Corporate Governance Framework (theor “UKCGC”). “Code” The Board considersthat ithascomplied throughout the year with the UKCorporate Governance Code Corporate governance report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 Investor Quality, Relations, HR, Health , Safety &Environment andRiskManagement. — — — — — — — —

Appointment andremuneration ofauditors Board membershipandremuneration Internal control andriskmanagement Corporate governance Financing andcapital structure Acquisitions, disposalsandcapital expenditure The financialstatements andaccountingpolicies The Group’s strategy – – BusinessDevelopment Committee – – – – Risk ManagementGroup Quality andManufacturing Operations Committee Technical Development Committee Product Development Committee Executive Team Senior PDC TDC CEO –John Dawson QMOC SET BDC Chair –Lorenzo Tallarigo The Board RMG Remuneration Committee Chair –StuartHenderson Chair –Lorenzo Tallarigo Nomination Committee Chair –Andrew Heath Audit Committee

Oxford BioMedicaplc |Annualreport andaccounts 2017 Board meetings. The attendance ofindividual directors atBoard andCommittee meetingswas asfollows: The Board meetsregularly, with meetingdates agreed for each year 2017 inadvance. During there were eightregular Board meetings is amatter for the Board asawhole to consider. and alsoto external professional advisersasrequired. The appointmentandremoval ofthe Company Secretary All Directors, andthe Board anditscommittees have accessto ofthe the Company adviceandservices Secretary, Each director isprovided with anappropriate inductiononappointment. — — — — — The current Board membersare setoutonpages 52 to 55. remuneration report isonpages 63 to 83incorporating the Remuneration Committee report. Group’s website. Reports from the AuditandNomination Committees are included inthis sectionandthe Directors’ Committees. These Committees operate underclearly defined of terms reference which are disclosed on the Certain responsibilities are delegated to three board committees –the Audit,Nomination andRemuneration There isaclear division ofresponsibilities between theandChiefExecutive Chairman Officer. Stuart Henderson Andrew Heath Martin Diggle John Dawson in attendance. holdsThe Chairman meetingsfrom timeto timewith non-executive directors without the executive directors statements andthe interim 2017 financial results. on anumberofother occasions to considerspecificadhocmatters including the approval of the 2016 financial In additionto the above regular meetings,the Board (oranappointed sub-committee ofthe Board) met Tim Watts Lorenzo Tallarigo Stuart Paynter Peter Nolan — — — — — directors excluding the Chairman. company, definedasonewhich isnotin the FTSE350, shouldhave atleast two independentnon-executive The Group therefore hasbeenincompliance with provision B.1.2ofthe Codewhich recommends that asmall is the Group’s largest investor andassuch heisnotconsidered independentunderthe Code. isafounderMartin Diggle of Vulpes Investment Managementwhich, through its Vulpes Life Fund, Sciences Stuart Henderson isthe ofthe chairman AuditCommittee. He isconsidered to beindependent. Andrew Heath, the IndependentDirector, Senior isconsidered to beindependent. by the UKCGC atthe timeofhisappointment. Lorenzo Tallarigo isthe non-executive Dr. chairman. Tallarigo metthe independencecriteria recommended Possible 8 8 8 8 8 8 2 7 Regular Board Attended 8 8 8 8 8 8 2 7 Possible Audit Committee 5 5 Attended 5 4 Remuneration Committee Possible 6 6 Attended 6 6 Nominations Committee Possible 1 1 1

Attended

1 1 1

Corporate governance 59 60 Social media Social Investor relations Website 2016 Annualreport Results announcementsandpresentations Meetings with potential investors 2017 AnnualGeneral Meeting The Group hasengagedwith shareholders andpotential investors through the various channels below: largest investor, isrepresented onthe Board by ensuringaclear channel ofcommunicationwith MartinDiggle VLSF. Director are alsoavailable for meetingswith investors ifrequired. theVulpes Company’s Life Fund(“VLSF”), Sciences points ofcontact are the ChiefExecutive OfficerandChiefFinancialOfficer, SeniorIndependent butand theChairman The Board recognises the importance ofeffective communicationwith shareholders andpotential investors. Theprimary Communication with shareholders of Association. retire from the Board andstand for re-election inaccordance with Articles 33and38ofthe Company’s Articles At the 2018 annual general meetingStuartPaynter, Heather Preston, StuartHenderson andJohn Dawson will is notamultiple ofthree the numbernearest to butnotexceedingonethird) retire from office by rotation. last annualgeneral for meetingorhasserved three years, andonethird ofthe other directors (oriftheir number In accordance with the articles ofassociation,ateach annualmeetingany director whowas appointed after the Retirement ofdirectors which hewillthen summarisefor discussionat a2018 board meeting. of the Board’s performance. The completed questionnaires willbesentto Dr. Tallarigo for hisconfidential review process willcomprisethe completion by each director of acomprehensive questionnaire covering allaspects Lorenzo Tallarigo isinthe process ofconductingareview ofthe board’s performance during2017. The review Review ofperformance — — — — — — Board matters during2017 included: Board activity during2017 Corporate governance report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — — Ongoing reviewsOngoing ofthe Group’s riskmanagementprocesses andkey risks The appointmentofStuartPaynter asadirector Reviewing businessdevelopment opportunitiesincluding partnering andcollaboration transactions Monitoring the progress ofthe Group’s priority product development programmes A review ofthe Group’s strategy, conducted duringthe first few months of the year the 2016 preliminary results andAnnualreport, andthe 2017 interim results announcement Routinely recurring items such asthe approvals ofthe 2017 financialbudgetand objectives, directors after the meetingclosed. presentation by the ChiefExecutive Officer followed byaQ&Asessionand chance to meet meeting which lasted for about2hoursandwhich, aswell asthe formal business,included a The 2017 AGM was heldinLondon on23May 2017. Shareholders were invited to attend this The Group alsouses Twitter to alertfollowers to sector newswhich isrelevant to the Group. investors received through inbox:[email protected] itsenquiry The Group alsoendeavours to respond to allenquiries from shareholders andpotential whichsubscribe to provides ane-mailalert service notificationsofannouncements. statements, andterms ofreference for the Board Committees. Investors andothers can well ascopiesofregulatory announcementsandpress releases, copiesof the Group’s financial The Group’s website www.oxfordbiomedica.co.uk contains details ofthe Group’s activities as The Group published its2016 Annualreport inApril2017. made available onthe Group’s website. analyst conference callswhich are accessible to allshareholders, andrecordings ofwhich are its 2017 halfyear interim results inAugust2017 through RNSannouncementsaccompanied by The Group announcedits2016 fullyear performance andfinancial results inMarch 2017, and roadshows periodicallywhich provide further opportunities to meetpotential investors. basis atinvestor conferences inEurope andthe USA. The Company alsoconductsinvestor The CEOandCFO regularly make presentations andmeetpotential investors onaone-to-one

Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — on the Group’s website, are to: dutiesofthe AuditCommittee,The primary assetoutinitswritten terms ofreference which isavailable in their briefbiographies onpages 54and55. Audit Committee and,inMr. Henderson’s case,to beChairofthe Committee. Their experienceissetout Mr. Henderson andDr. Heath both have relevant experiencewhich qualifies them for membershipof the The AuditCommittee comprises StuartHenderson andAndrew Heath. Audit Committee report Board committee reports financial, compliance andother risks. directors inthe managementsub-committees allows them to monitor andassesssignificantbusiness, operational, identifying the risksfacing the Group andformulating riskmitigationplans. The active involvement ofthe executive the conductofthe riskmanagementprocesses within the Group whilstthe SET isaccountable for those processes, objectives ofthe Group anditreviews current key Board risksatevery meeting. The AuditCommittee monitors The Board isresponsible for determining the nature andextent ofthe risksitiswillingto take inachieving the Risk management Important matters from allofthese committees are referred to the SET. — — There are two other important committees: budget, andriskmanagement. against targets, ensuringcompliance with GxPandother relevant requirements, monitoring expenditure against Within their area ofresponsibility these committees cover objective and target setting,monitoring performance — — — These sub-committees are: meet monthly andare attended by SET membersandother relevant seniormanagersfrom the business. There are three SET sub-committees covering the majorbusinessoperational areas. These committees financial performance, organisational andemployment matters, riskmanagementand Health, Safety &Environment. meets approximately two every weeks anditsagendacovers the fullrange ofactivities ofthe Group, including and JamesMiskin,form the Executive Senior Team (SET). The ChiefExecutive Officeris John Dawson. The SET Operational managementisconducted by the executive directors who, together with Kyriacos Mitrophanous ExecutiveThe Senior Team (SET) anditscommittees — — — — — — — — Review andrecommend to the Board the financialstatements and associated announcements by shareholders atthe AGM, remuneration, independence,andthe provision ofnon-auditservices Oversee the relationship with the external auditors including their appointment, subjectto approval Keep underreview the Group’s reporting andinternal control policies andprocedures and managementactions The Group meetsatleastquarterly to identifyandassessrisksfacing the business,andto propose riskmitigation Risk ManagementGroup (RMG)–this group comprisesseniormanagersfrom allparts ofthe business. and product development in-licence technology orproduct candidates, andalsoto generate partnership opportunitiesfor bioprocessing –which coversBusiness Development Committee the (BDC) external opportunitiesto out-licence and Quality andManufacturing Operations –covering Committee the (QMOC) Group’s bioprocessing activities production andother processes, including cellandvector engineering Technical –covering Development Committee the (TDC) development of newandimproved assays and from initialconceptthrough to clinical development Product –covering Development Committee the (PDC) development ofnewgeneandcelltherapy products

Corporate governance 61 62 The information aboutthe share capital required by the Takeover Directive isinthe Directors’ report onpage 85. Share capital ultimately, the appointmentofStuartPaynter as a ChiefFinancialOfficerandmemberof the Board. The Nomination Committee metseveral timesin2017 onan ad hocbasis to consider the recruitment process and non-executive directors. The Nomination Committee leadsthe process for makingappointments to the Board, andcomprisesthe Nomination Committee report and ChiefFinancialOfficer. Thefinancial results are also reviewed by SeniorExecutive the Teamand the Board. results and externally reported financialstatements are subject to thorough review Groupby the FinancialController orders, payroll anddisbursements, an organisation ofthe financefunction such that monthly management reporting processes include clear separation ofdutieswithin the financialprocesses such asapproval ofpurchase The mainfeatures ofthe internal control andriskmanagementprocesses which apply to the Group’s financial Group FinancialController, andwas reviewed atthe March 2018 Audit Committee meeting. compliance controls andriskmanagement. The review for 2017 was prepared by the ChiefFinancialOfficerand the annually reviews the effectiveness ofallsignificantaspectsinternal control, including financial,operationaland only provide reasonable, andnotabsolute, assurance againstmaterial misstatement or loss. The AuditCommittee The system isdesignedto manage,rather than eliminate, the riskoffailure to achieve businessobjectives, andcan The Directors are responsible for Oxford BioMedica’s system ofinternal control, andfor reviewing itseffectiveness. Internal control 2017out duringDecember 2018, andJanuary andwill bediscussedatthe forthcoming Board meeting. The effectiveness of the AuditCommittee isbeingconsidered as part of the Board performance review carried — — — — — The AuditCommittee metfive timesin 2017: internal auditfunction.However, the Committee annuallyreviews this atitsmeetingswith the external auditors. audit function. The AuditCommittee considers that, given the size ofthe Group, for itisunnecessary itto have an Provision C.3.5ofthe Codestates that the AuditCommittee shouldreview the effectivenessGroup’s of the internal Corporate governance report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — candidate to replace PwCasourauditors goingforward. This willbeputto the shareholders atthe 2018 AGM Merits anddetractions ofallthe audittender candidates were discussedandKPMG was selected asthe audit audit willnow beconducted by newauditors. Oxford BioMedicacompleted anaudittender process inlate 2017. after the 2017 auditcompletes. Noted that newauditor cameinto independencerules effect in 2017. The 2018 The auditfees for 2017 were approved. The current PwCpartner isdueto rotate off the Oxford BioMedicaaudit process andrecommendation for 2018 audit. The Committee accepted the 2017 auditstrategy proposed by PwC. 201713 December –to review the 2017 auditstrategy andauditfees, discussauditor rotation andthe audittender the interim results for 2017, andthe related RNSannouncement 16 August2017 –to approve the sixmonths’ financial results to 30June 2017. TheAuditCommittee approved discussed, alongwith the valuation ofthe Oaktree loan andwarrants issues that require further attention. Recognition ofNovartis revenues, andOrchard milestone payments were 3 August2017 –to review progress to date for the sixmonths’ financial results to 30June 2017 andidentifyany and warrants andthe revaluation ofthe Orchard Therapeutics investment 30 June2017. The mainitems which were discussedrelated to the accountingtreatment ofthe Oaktree loan 21 July2017 –to review the specifiedprocedures undertaken by PwCon the sixmonths’ financialto results observations regarding the financialinternal control procedures Annual report. No significantauditadjustmentshadbeenidentified by theauditors, and there were nomaterial rates appointed for assetlives. The auditors hadalsoreviewed thestatement goingconcern anddisclosure inthe previously agreed. The auditors concurred with the accountingfor the Oberland loan facility andthe depreciation risks identified. Revenues from the Novartis contract hadbeen recognised consistently with the methodology 9 March 2017 –to review the auditprocess atthat hadariseninrespect time.No majorconcerns ofthe key audit

Oxford BioMedicaplc |Annualreport andaccounts 2017 LTIP for the CEO. This isexplained onpage 65. The onlychange to quantuminthe policy iswith regards to the maximumaward which canbemadeunderthe HMRC may viewsome benefitscommonlyprovided inconnection with the performance ofdutiesasbeing taxable. widely within the Group. Further, that appropriate benefitsmay beprovided to non-executive directors, reflecting that car orallowance may beprovided to executive directors, reflecting the intention to introduce such abenefitmore broadly the sameasthe old policy, butwith changes to aiditsadministration andoperation, including that acompany the policy remained appropriate, andeffectively supportedGroup’s the strategic aims.Accordingly, the newpolicy is requirement to seekshareholder approval for the newpolicy atthe 2018 AGM. The Committee’s conclusion was that 2017,During the Committee reviewed the policy approved by shareholders atthe 2015 AGM inconnectionwith the Approach to the newpolicy and the impact ofthe newpolicy which willbeimplemented in2018, subjectto itsapproval by shareholders. in 2015. The annualreport onremuneration provides details of the inrespect amountsearned ofthe 2017 financial year, The policy setsoutourforward looking policy for Directors’ remuneration andisareplacement for the policy approved the Directors’ remuneration policy, followed by the annualreport onremuneration. I ampleased to introduce ourremuneration report for the 2017 financial year. The report isdivided into two sections: ShareholderDear (not subjectto audit) Annual statement from the Remuneration Committee chair from the chair ofthe Remuneration Committee andthe policy report are notsubjectto audit. accordance with the relevant regulations. The parts ofthe report that are subjectto auditare indicated. The statement remuneration report andto state whether, intheir opinion,those parts ofthe report have beenproperly prepared in The Companies Act2006 requires the auditors to report to the shareholders oncertain parts ofthe Directors’ The annualstatement andthe annualreport onremuneration are vote subjectto anadvisory atthe Company’s 2018 AGM. — — — and Medium-sized Companies andGroups (AccountsandReports) Regulations 2008 (asamended). The report contains: This report isonthe activities ofthe Remuneration Committee. Itisprepared inaccordance with 8to Schedule the Large Introduction for the year 2017 ended31December Directors’ remuneration report Corporate governance — — — the 2018 AnnualGeneral Meeting (AGM), andshalltake bindingeffect from the close of that meeting The Directors’ remuneration policy (the "policy"), settingoutthe policy which issubjectto shareholder approval at between company performance andremuneration for the 2017 financial year The annualreport onremuneration showing payments andawards madeto the directors andexplaining the link The annualstatement from the Remuneration Committee chair

Corporate governance 63 64 of Stuart’s remuneration received duringthe year are setout inthe singlefigure table on page Stuart Paynter was appointed asCFO with effect from 29 August 2017. was setat£207,500. Hissalary Details shareholder approved Directors’ remuneration policy; further information issetoutonpage arrangements inrelation to Tim’s retirement from the Board have beendetermined inaccordance with the Tim Watts resigned from the Board andretired from the Company on29 September 2017. The remuneration Board changes 25% vested, with the balance ofthe awards lapsing. Details are provided onpage 70. in June2015. No further banking occurred in2016 andthe share pricein2017 was such that onlythe banked part ofthe awards based oninterim share priceperformance which resulted in25%ofthe awards being “banked” The awards vested in2017. Asreported inprevious Annualreports, the awards contained a provision for “banking” 7.5p andabove 5p –7.5p Less than 5p Share priceat20 June2017 was 2.38p;the vesting conditionswere asfollows: LTIP awards were granted on20 June2014 to John Dawson, Peter Nolan and Tim Watts whenthe share price Vesting ofthe 2014 LTIP award bonus targets translated into bonuspayment. will bepaid fullyincash.Further details are provided be paid 50% incashand50% indeferred share awards. Reflecting his retirement from the business, Tim Watt’s bonus for inthe year. hisperiodofservice The 2017 by bonusesearned John Dawson, StuartPaynter andPeter Nolan will in the year to the date ofcessationemployment, andStuartPaynter abonusof106% ofsalary, alsoprorated a bonusof110% ofsalary, Tim Watts abonusof110% ofsalary, which hasbeenpro-rated to reflect hisservice factors into accountthe Committee decidedto award John Dawson abonusof performance againstcorporate objectives issetoutonpage The performance ofthe businessin2017 issetoutindetail inthe Strategic report from pages award for 2017. 2018In February the Committee metto considerthe achievement of2017 objectives andthe annualbonus 2017 businessperformance andincentive impact for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 100% Calculated onastraight linebasis between 25%and100% 0% Percentage ofthe optionsgranted that willvest on page 69 with regards to how performance underthe annual 69 ofthis Remuneration report. Taking allofthese 106 % of base salary Peter% ofbase salary Nolan 72 26 68 . to to . 30 and the andthe

Oxford BioMedicaplc |Annualreport andaccounts 2017 across athree month period to avoid rewarding for shortterm spikes inperformance. considers that the overall performance ofthe businessacross the periodjustifiesit.Share pricewillalsobe averaged There will be aperformance such that underpin, the awards would onlyvest to the extent that the Committee 2018 share pricegrowth targets are 10% CAGR for threshold performance and17.5% for maximumperformance. be keeping the LTIP measures underreview asthe businessgrows inrevenue potential. and earnings The proposed at this stage, financialmeasures are notappropriate given the nature ofourbusiness. However, the Committee will vesting, ensuringthat awards are onlymadewhere significant value isdelivered to shareholders and recognising that, Committee’s viewthat share pricegrowth remains the mostappropriate performance measure for determining LTIP The Company hashistorically usedshare pricegrowth measure asitsprimary for LTIP awards anditisthe of grant in2018 the Committee isanticipating that there would benoscaleback ofLTIP for the 2018 award. shareholders, andto avoid the opportunity for windfall gains.Ifthe current share priceismaintained to the point to 90% ofsalary, reflecting the share priceat that time,and taking into accountboth the dilutive impact on The Committee hasalways taken approach aprudent to LTIP awards –in2017 the awards were scaledback vesting atthreshold ascurrently. The maximumLTIP award for the other executive directors willremain at100% ofsalary, with 25%ofthe award (or 20% ofthe total award). The additional25%would therefore onperformance onlybeearned above threshold. However the amountwhich John atthreshold couldearn willnotchange i.e. itwillstillbe25%ofsalary The Committee isproposing to increase the maximumaward for the CEOunderthe LTIP to 125%ofsalary. and willbedisclosed retrospectively aswith the 2017 bonusonpage 69. following the grant ofthe award. Performance measures willcontinueto besetbased onkey strategic measures, policy. 50% ofthe bonusispaid incash,50% ispaid inshares which vest inequaltranches from oneto three years Under the existingpolicy the maximumbonusopportunity is125%ofsalary. No change isproposed underthe new and priorto that were nilin2013 and2014. for John have beeninlinewith, orlessthan, those awarded to the widerworkforce over the past three years responsibilities asthe operational size ofthe businesshasgrown substantially over recent years. Pay increases the increase inJohn’s experienceandthe strong performance hehasshown inrole andalsothe growth in The Committee hasincreased John Dawson’s by 8.5%from salary £350,000 to £380,000. This reflects in the 2018 Directors' remuneration report. a pay increase; the treatment ofPeter's receivable remuneration willbedetermined induecourseanddisclosed that of Tim Watts ourexitingCFO. Peter Nolan isretiring from the Board in2018 andas such, was notawarded When Stuartwas appointed to the Board asCFO inAugust2017 was setat£207,500 hissalary which was below Stuart Paynter willreceive apay increase of3%which isin linewith the widerOxford BioMedicaworkforce. performance, whileremaining inlinewith market practice. price andunderlying performance. The proposed changes to hisremuneration acknowledge the extent ofthis of growth andstability over recent years, with businesschanging contracts which have beenreflected in the share performance ofJohn Dawson asCEO. John’s experienceandstrong leadershiphassteered the businessto one and seniormanagementisheavily performance driven. However the Committee alsowishesto recognise the toDue the financialconstraints underwhich the Company operates, itispivotal that remuneration Directors’for Proposed approach to executive remuneration for 2018

Corporate governance 65 66 Annual report onremuneration (subject to auditexceptwhere indicated) Chair, Remuneration Committee Andrew Heath invited to approve the 2017 annualremuneration report andthe Directors’ remuneration policy atthe 2018 AGM. 2016 Directors’ remuneration report received votes infavour inexcessof99%atthe 2017 AGM. Shareholders willbe The Committee recognises the expectations ofourshareholders onexecutive pay andwe were pleased that the Other matters Non-executive director fees were increased to reflect the increased sizeGroup of the andprevailing market rates. Andrew Heath Stuart Henderson Non-executive director fees have beenincreased asfollows: Non-executive director fees to berelated to share priceperformance. policy. The awards willbesubjectto performance measures which will case ofthe CEOand100% inthe caseofother executive directors inaccordance with the approved remuneration The Committee alsointends to grant LTIP optionsto the executive directors during2018 inthe upto 125%ofsalary based onthe Company’s strategic priorities,andfurther information isgiven onpage 31. performance againstthose objectives andinlinewith the remuneration policy. The performance measures are bonuses for 2018 are willbedetermined by earned the Remuneration Committee early in2019 inthe lightof Performance objectives for the Group have beenagreed by the Board andthe extent to which executive directors’ Stuart Paynter Peter Nolan and Senior IndependentDirectorand Senior inMay 2011 2010in January andbecameDeputy Chairman Andrew Heath was appointed adirector John Dawson Committee outthis hascarried review 2018 inFebruary andhasawarded the following increases: base salary Under the remuneration policy executive directors’ base salariesare reviewed normally annually. The Remuneration ofchanges to executiveSummary remuneration for 2018 for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017

Current salary £350,240 £207,500 £216,430 Percentage increase Current fee £52,500 £45,500 0.0% 8.5% 3.0% be setatthe timeofgrant butwhich are likely Total ofincrease Total ofincrease £12,500 £19,500 £29,760 £6,225 Nil New salary £380,000 £216,430 £213,725 New fee £65,000 £65,000

Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — 2017During the Committee metsixtimes. The mainactivities anddecisionswere asfollows: Remuneration Committee activities during2017 to attend allmeetings.Other directors are invited to attend meetingsonanagendadriven basis. Committee. He retains “observer” status andtherefore continuesto receive allpapers, andhasastanding invitation explained inthe Corporate Governance Report (page 59), hehasstepped down from formal membershipofthe was amemberofthe Committee 2016 until31December but,asheisnotconsidered to beindependentfor reasons The Remuneration Committee membersare currently Andrew Heath andStuartHenderson. MartinDiggle (Chairman) — — — — — on the Group’s website andinclude: The responsibilities ofthe Remuneration Committee are setoutinitsterms ofreference which are available Remuneration Committee role andmembers — — — — — — — — — — directors’ remuneration approval. Itwas agreed to extend the window for completion ofevents to allow qualification for 2017 executive objectives would beamendedfollowing further discussion,andwillbepresented to the Board 2018 inJanuary for window ofcompletion ofevents for executive directors’ remuneration. Itwas decidedthat the draft 2018 corporate 201713 December –the Committee reviewed the proposed draft 2018 corporate objectives, andto extend the grant ofoptionsunderthis offer to participate inthe 2017 offer under the Company’s ShareSaveOctober Plan.In the Committee approved the 5 September 2017 and13 October 2017 –inSeptember the Committee approved aninvitation to allemployees of the share options Incentive Plan,Deferred BonusPlanandEmployee Share Scheme. Option The Committee approved the granting 13 July2017 – the Committee considered the granting ofoptionsto employees underthe Group’s Long Term anniversaries ofthe grant granted in2014, 2015 and2016. DBPoptionsvest inthree equalinstalments onthe first,secondand third vest andthe remaining 75% willlapse. The Committee alsoapproved the vesting ofDeferred BonusPlanoptions June 2014 LTIP grant ofoptions hadbeenmet. The outcome was that 25%ofthe optionsgranted in2014 would 20 June2017 –the Committee considered the extent to which the share priceperformance conditionsfor the increasesbe salary for 2017. The outcome ofthese discussionswas reported inthe 2016 Annualreport in respect of2016 inlightofthe performance againstthe Group’s 2016 objectives, andalsowhether there should 10 2017 February –the Committee considered whether ornotbonusesshouldbepaid to the executive directors Approval ofoptionsgranted to allemployees underthe Group’s share optionplan and awards granted underthe plan Approval ofthe Group’s Long Term Incentive Plan(LTIP) for executive directors andseniormanagement, Approval ofannualperformance incentive plans andbonusespayable Approval ofindividual remuneration packages for executive directors and seniormanagement. The remuneration ofthe non-executive directors isamatter for the Chairman Recommending to the Board the policy andframework for the remuneration ofthe executive directors

Corporate governance 67 68 6. 5. 4. 3. 2. 1. Tim Watts Peter Nolan John Dawson Tim Watts Peter Nolan Total Paul Blake 2016 Total Stuart Paynter John Dawson 2017 figures for 2016. The following tables show asingletotal figure of remuneration for 2017 for each director andcomparative Single total figure of remuneration for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 Paul Blake stepped down from the Board atthe AGM on7June2016 andhisemployment contract expired on31August2016. Tim Watts stepped down from the Board on29 September 2017. His2017 remuneration isinrespect ofthe periodto hisretirement from the Board, including his2017 bonus. Stuart Paynter was appointed CFO with effect from 29 August 2017. His 2017 remuneration isin respect of the periodfrom hisappointment to the Board. Pension contributionsare madeinto the Group’s definedcontributionscheme orat the electionof the director asacashallowance– inlieuofacompany pensioncontribution This comprisesthe LTIP awards granted in2014 which vested inJune2017. The relevant performance criteria andthe performance againstthem are setoutonpage 64. Benefits comprisemedicalinsurance Paul Blake and Tim Watts hadelected to receive such acashallowance. The values are calculated by reference to the share average priceof2.78p over the 3months to 20 June2014. 5 6 4 Salary Salary Salary £’000 £’000 806 939 350 342 219 216 169 167 211 71

Benefits Benefits £’000 £’000 19 17 – – 3 1 1 1 1 1 1 1

Bonus Bonus Bonus £’000 £’000 506 238 871 144 185 372 211 151 76 –

£’000 £’000 LTIP LTIP 101 25 22 76 29 35 47 19 – – 2

Pension Pension £’000 £’000 138 121 25 22 52 29 35 32 53 11

3 3

£’000 £’000 1,703 1,877 Total Total

506 206 402 428 653 158 416 811

Oxford BioMedicaplc |Annualreport andaccounts 2017 first anniversary of the award. Reflecting his retirement from thebusiness, Tim Watts'bonuswillbe paidfullyincash. on the first three anniversary dates after the award date provided that the relevant participant remains employed at the awards. The deferred share awards are notsubjectto further performance targets andwillvest inthree equalinstalments The 2017 bonusesfor John Dawson, StuartPaynter andPeter Nolan willbepaid 50% incashand50% indeferred share — — — — Accordingly, by bonusesearned the executive directors inrespect of2017 were: Mr. Paynter andMr. Watts were awarded 100% oftheir personaltargets. Stuart Paynter and Tim Watts are 80% linked to corporate objectives and20% linked to personal objectives. Mr. Nolan, John Dawson’s bonusisentirely linked to the achievement ofthe corporate objectives. Bonusesfor Peter Nolan, were set. improvement objectives Further organisational Corporate objectives of the debt. were set,including ref-financing Confidential financial targets Financial objectives we already have. and buildfurther onthose royalty generating relationships Secure further revenue and Business development pre-clinical projects a process for discovery our key products andformulate Look to out-licence orspin-out Product development commercial use. approval andmanufacture for for ourpartners, secure regulatory new 200L bioreactor process Targets include the useofour is the base ofourbusiness. The LentiVector LentiVector Developing the Objective Performance againstthe Group objectives for 2017, onwhich the executives’ bonusesare based, was asfollows: award for 2017. The performance ofthe businessin2017 issetoutindetail inthe Strategic report from pages 16 to 41. 2018In February the Committee metto considerthe achievement ofthe 2017 objectives andthe annualbonus — — — — Tim Watts:£ Stuart Paynter: £76,000 (110% and ofsalary); Peter Nolan: £ John Dawson: £

® platform ®

platform 185,000

238,000

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110 ( % ofsalary, after pro-rating to reflect in the hisperiodofservice year). 106 10% 15% 10% 25% 40% Weighting % of salary); % ofsalary); % of salary); % ofsalary); of key employees leaving the business. plansSuccession putinplace to mitigate the risk facility atimproved financial terms. Oberland loan refinanced with $55Oaktree million EBITDA lossdecreased from £7.1 millionto £1.9 million. Gross incomegrowth of28%achieved whilst 2018.in February andcollaboration agreement signedwith Bioverativ Completed negotiationsfor the $105 millionlicence were notachieved. related to OXB-102, plus out-licence for OXB-302 However, the spin-out,out-licence andclinical trials pre-clinical projects andtimelinesfor 2017 was met. Agreed that the process andcriteria for discovery manufacturing licencesawarded. facilities’and MHRA inspectionscompleted with bioprocessing process for CTL019. FDA Successful milestone for successfulscaleupofthe suspension authorisation submissionfor ALL; andachieved submission for DLBCL; supported EMAmarketing with Novartis. Supported Novartis intheir sBLA Major newcommercial supply agreement signed Performance assessed

Partially met Met infull against objective Assessment Met infull Met infull Met infull

10% 40% % ofbonusawarded 10% 15% 10%

Corporate governance 69 70 1 Tim Watts Peter Nolan John Dawson The value ofthe awards vesting during2017 are detailed below: of the awards lapsing. banking occurred in2016 andthe share pricein2017 was such that onlythe banked 25%vested, with the balance on interim share priceperformance which resulted in25% ofthe awards being inJune2015.“banked” No further As reported inprevious AnnualReports, the awards contained aprovision for part ofthe awards “banking” based 7.5p andabove 5p –7.5p Less than 5p Share priceat20 June2017 was 2.38p, the vesting conditionswere asfollows: LTIP awards were granted on20 June2014 to John Dawson, Peter Nolan and Tim Watts whenthe share price LTIPs vesting during2017 Total Non-executive directors fees Bonuses LTIP Aggregate directors’ emoluments haselectedMartin Diggle to receive nofees for asadirector. hisservices Total Pension /cashalternative Benefits Salaries Nick Rodgers Stuart Henderson Andrew Heath Lorenzo Tallarigo Fees The singletotal figures of remuneration for non-executive directors are shown in the table below: for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 The values are calculated by reference to the share price of5.36p on20 June2017. granted that vested Number ofawards 1,257,300 699,383 800,101 Calculated onastraight linebasis between 25%and100% Share priceatthe date on which the shares vest Percentage ofthe optionsgranted that willvest 5.36p 5.36p 5.36p £’000 £’000 2,126 2017 2017 806 150 249 249 121 871 46 53 76 – 3 Value ofawards on

vesting £42,855 £37,487 £67,391

100% £’000 £’000 1,943 2016 2016

0% 506 240 240 939 138 138 101 25 46 19 31 1 Stuart Paynter 2. 1. Stuart Henderson Andrew Heath Martin Diggle Lorenzo Tallarigo Non-executive directors Tim Watts Peter Nolan John Dawson of their retirement) were asfollows: The interests inshares ofthe directors duringthe whoserved year 2017 asat31December (or, ifearlier, the date The executive directors are encouraged to buildupashareholding, butthere isnospecific required target level. Statement ofdirectors’ shareholding andshare interests Committee considersthat the overall performance ofthe businessacross the periodjustifiesit. There willalsobeaperformance such that underpin, the awards willonlyvest to the extent that the Remuneration * Oxford BioMedicaplc |Annualreport andaccounts 2017 Executive directors 20% ormore (i.e. 73%over 3years) Between 10% and20% 10% (i.e. 33%over 3years) Less than 10% three year periodstarting with the date ofgrant* Average annualcompoundshare pricegrowth over the anniversary ofthe award, subjectto the achievement ofthe performance conditionsetoutbelow: The awards are nilcostoptionsandare subjectto athree year vesting period. They are exercisable from the third recruitment package, andinorder to alignseniormanagementlongerterm interests with those ofthe Group. Stuart Paynter was granted anLTIP award over 2,894,003 shares representing 120% ofsalary, aspart ofhis September 2017: 8.6p). divided by the average share priceinthe five businessdays preceding the relevant award (July 2017: 9.9p, The numberofoptionsawarded inJuly2017 andSeptember 2017 was calculated by reference to 90% ofsalary LTIP scheme: 13 Julyand25SeptemberOn 2017, the executive directors were awarded the following optionsunderthe Group’s LTIPs awarded during2017 Stuart Paynter (awarded 25September 2017) Peter Nolan (awarded 13 July2017) John Dawson (awarded 13 July2017) Includes the interest of Vulpes Life Fund, Science Vulpes Testudo Fundandother parties connected to MartinDiggle. Tim Watts stepped down from the Board on29 September 2017. Shareholding andshare interests are asatthe date ofstepping down from the board. The starting share pricefor July2017 andSeptember 2017 is9.9p and8.6p respectively, beingthe average share priceover the five businessdays preceding the date of grant. The endshare priceshall be calculated asthe average ofthe closing pricefor the three months periodpriorto 13 July2020 and25September 2020. 1 2 581,008,834 17,181,767 3,925,685 2,173,087 1,607,086 1,918,321 333,833 Shares heldoutright 2017 – 580,765,333 1,500,000 3,925,685 1,668,634 1,784,122 7,395,124 333,833

2016 –

15,279,313 7,681,944 unexercised options 2017 – – Vested but 12,302,989 8,864,136 5,967,406 2016 – Calculated onastraight linebasis between 25%and100% 2,588,639 1,759,534 1,737,078 Percentage ofthe optionsgranted that willvest Number of options Number ofoptions 2017 Unvested deferred – bonus plan 2,894,003 1,961,197 2,024,806 2,089,348 3,173,741 3,242,816 granted 2016 – performance conditions 2,894,003 3,560,697 8,721,803 5,373,071 Unvested LTIP awards 2017

Face value 10,498,062 subject to 6,165,349 £248,884 £314,200 6,710,697 £194,159 of grant

100% 2016 25% 0% –

Corporate governance 71 72 retained hisLTIP award granted in2014, which remained subjectto itsoriginalperformance conditions. As disclosed inthe 2016 Directors’ Remuneration Report, onhisretirement from the Group inAugust2016, Paul Blake bonus shares butnotyet earned vested, inrespect of2014, 2015 and2016 bonuses. These willvest atthe usual time. two thirds ofthe originalaward willvest, (subjectto the performance conditions). Tim willalsoretain the deferred vestingnormal dates, subjectto the performance conditions. The awards madein2016 willbeprorated such that LTIP, hewillretain the unvested share awards madeunderthe LTIP granted in2015 and2016, which willvest ontheir cessation ofhisemployment. Consistent with the terms ofthe Company’s remuneration policy andtheof rules remuneration onpage 68.He willnotreceive any payment for lossofofficeor any other payments in relation to the toearned that date andtheinrespect bonushehasearned of2017 isincluded inthe singlefigure table of Tim Watts stepped down from the Board andretired from the Company on29 September 2017. Hisremuneration Payment to past directors andpayments for lossofoffice 25% ormore (i.e. 95.3% over 3years) Between 15% and25% 15% (i.e. 52.1% over 3years) Less than 15% the three year periodstarting with the date ofgrant Average annualcompoundshare pricegrowth over share pricefor the five businessdays preceding 10 June 2015 was 9.7p and vesting conditions were setas follows: 10On June2018 the performance criteria for the LTIP awards granted on10 June2015 willbeassessed. The average Tim Watts Peter Nolan John Dawson Deferred bonus Tim Watts Peter Nolan Stuart Paynter John Dawson LTIP 2017During the following optionshave vested andlapsed: for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017

1 January 20171 January Unvested at 10,498,062 6,165,349 6,710,697 100% Calculated onastraight linebasis between 25%and100% 25% 0% Percentage ofthe optionsgranted that willvest -

1 January 20171 January Vested during Unvested at 2,024,806 2,089,348 3,242,816 1,257,300 699,383 800,101 2017 –

Lapsed during Lapsed during Vested during 2,054,092 3,692,700 2,349,899 1,015,155 1,719,024 1,087,781 2017 2017 –

Awarded during Awarded during 2,894,003 1,064,847 1,961,197 3,173,741 727,427 757,967 2017 2017 – 31 December 201731 December 201731 December Unvested at Unvested at 2,894,003 2,588,639 3,560,697 8,721,803 1,759,534 5,373,071 1,737,078

Oxford BioMedicaplc |Annualreport andaccounts 2017 (not subjectto audit) CEO’s remuneration inlastnineyears biotech companies, provides asecondbenchmark that isamore specificcomparator. broad-based measure ofinvestment return from equities. The FTSEtechMARK index,comprising mediScience and the FTSEtechMARK index. MediScience The FTSEall-share indexhasbeenselected becauseitrepresents a The chart below illustrates the Company’s TSR performance 2009 relative sinceJanuary to the FTSEall-share index (not subjectto audit) Performance graph andcomparison with CEO’s remuneration 1 Annual bonus LTIP vesting of remuneration CEO’s total singlefigure Year Year other than the CEOwhowere employed throughout the whole ofboth 2016 and2017. significant changes inheadcountnumbers, the Committee has chosen as the comparator group all those employees compares with the equivalent changes inthose componentsfor agroup ofemployees. As2016 and2017 have seen The table below shows how the percentage change inthe CEO’s salary, benefitsand bonusbetween 2016 and 2017 (not subjectto audit) Percentage change inCEO’s remuneration employee group Comparator John Dawson 400 500 200 600 300 100 0 On 1September 2009On 1,500,000 newOrdinaryShares were allotted to John Dawson. The shares were fullypaid, andwere aone-offshare based bonus payment, tax andNational Insurance. Mr. Dawson alsoreceived aregular bonusof80% ofmaximum. price onthe trading day immediately priorto issuewas £172,500 andthe Company bore anadditionalcostof£120,000 required to gross upthe value ofthe shares for income in accordance with hiscontract ofemployment, for successfulachievement ofcertain transactions with SanofiinApril 2009. The value of the shares at the closing mid-market Dec 09 Dec Key:

FTSE all-share index Oxford BioMedicaplc Dec 10Dec % ofmaximum % ofmaximum

6,800 2017 350 £’000 Dec 11 Dec Salary 6,292 2016 342 2009

NASDAQ Biotech index FTSE techMARK mediscienceindex 80 817 0% % 1 % increase Dec 12 Dec 2010 2.5% 8.1% 42 450 0% % Dec 13 Dec 2011 413 0 0% 2017 % 80 1 Benefits 2012 40% 17 401 Dec 14Dec % 2016 85 1 2013 % increase 30 468 0% % (6.3%) Dec 15Dec 0% 2014 75 680 0% % 2017 863 Dec 16Dec 372 100% 2015 42 732 % Bonus 2016 594 211 2016 50 50%

Dec 17Dec 653 % % increase

45.4% 76.3%

2017 85 25% 914 %

Corporate governance 73 74 remuneration report Approval ofthe Directors’ Resolution At the 2017 AGM, the 2016 Directors’ remuneration report was approved by shareholders asfollows: remuneration report Approval ofthe Directors’ Resolution At the 2016 AGM, the 2015 Directors’ Remuneration Report was approved by shareholders asfollows: (not subjectto audit) Statement ofvoting atAGM Since the Group doesnot make dividend orother distributions,these have not beenincluded inthe table. The chart below illustrates the spendonemployee remuneration compared with the Group’s key cashmeasures. (not subjectto audit) Relative importance ofspendonpay for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017

£m 20 40 25 30 35 10 15 0 5 Staff pay Non-payroll costs discretionary) discretionary) 1,609,806,952 1,482,856,907 (including (including (including (including Votes for Votes for

operating activities Net cash used in Net cashusedin 99.9% 99.7% % for % for

Votes against Votes against 1,251,449 4,701,911 Net cashburn

% against % against 0.3% 0.1%

Cash revenues (excluding votes (excluding votes Total votes cast Total votes cast 1,484,108,356 1,614,508,863 withheld) withheld)

Votes withheld Votes withheld (abstentions) (abstentions) 2017 2016 2015 282,721,528 7,772,168

Oxford BioMedicaplc |Annualreport andaccounts 2017 effect from the close of that meeting. shareholder approval willbesoughtatthe 2018 AGM. to Subject shareholder approval, the policy willapply with The following sectionsofthis Directors’ remuneration report setoutthe Directors’ remuneration policy for which policyOur reflects this ethos. — — — The ethos underlying the executive directors’ remuneration structure isto: (not subjectto audit) Approach to executive directors’ remuneration 63 and65. are proposed to the policy, assummarisedinthe statement by ofthe the Chairman Committee onpages at 100%. There isnochange to the overall structure ofthe variable remuneration. Other, minorchanges is to increase the maximumaward underthe LTIP to the CEOto 125%. The executive directors willremain overhaul ofitisnotproposed. The onlychange proposed to the maximumvariable remuneration opportunities Committee’s view, that policy continuesto supportthe executionofthe Group’s strategy and,accordingly, aradical the Company isrequired to seekapproval for anewDirectors' remuneration policy atthe 2018 AGM. Inthe at the 2015 AGM andtook effect from the close of that meeting.Inaccordance with the applicable legislation, The Company’s Directors’ remuneration policy setoutinthe 2014 Annualreport was approved by shareholders (not subjectto audit) Directors’ remuneration policy 15 March 2018 Chair, Remuneration Committee Andrew Heath Deloitte doesnothave any such interests orconnectionswith the Group that may impair independence. The Committee reviewed the potential conflictsofinterest and the safeguards against them andissatisfied that Deloitte’s fee for adviceto the Committee during2017 were £4,550 plus VAT. Consultants Group andadheres to itsCodeofConductinrelation to executive remuneration consultinginthe UK. Deloitte LLP acted asadviserto the Committee during2017. Deloitte isafounding memberofthe Remuneration (not subjectto audit) Advisers to the Committee — — — package determined by stretch targets linked to the Group’s performance Have acompetitive andshortlong term incentives, mixofbase salary with anappropriate proportion ofthe Provide appropriate alignmentbetween the Group’s strategic goals, shareholder returns andexecutive reward are rigorously applied Promote the longterm successofthe Group, with transparent andstretching performance conditionswhich

Corporate governance 75 76 performance. incentive for continued provide anongoing with Shareholders and To alignExecutives guidelines Share ownership for retirement. To provide funding Retirement benefits basis. on amarket competitive To provide benefits Benefits calibre. executives ofasuitable to attract andretain which issufficient salary To provide abase Base salary Executive directors Component andpurpose Policy table for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017

In appropriate circumstances, such as including executive directors. contribution scheme for allemployees The Group operates adefined example, travel expenses. circumstances. These may include, for may beprovided based onindividual by the Committee. Additionalbenefits other appropriate benefitsdetermined company caroraallowance and health insurance, provision ofa insurance, life assurance, permanent practice andmay include medical Benefits are provided inline with market from 1January. Any changes are effective normally − − − − not limited to): of factors which may include (butare annually taking into accountanumber Base salariesare reviewed normally package ofthe newdirector. account the experienceandprevious time ofappointmentandtaking into reference to market information atthe Base salariesare initiallysetby Operation ownership guidelinehasbeen satisfied. under the annualbonus, untilthe share incentive plans, anddeferred shares which vest underthe long-term to retain halfofany post-tax awards Executive directors willberequired shares (onanetof tax basis). together with deferred annualbonus towards the shareholding guideline no outstanding vesting criteria count Shares which are fullyowned with of the contributionsto apensionplan. cash supplement instead ofsomeorall directors may bepermitted to take a or lifetime allowance. Executive where contributionsexceedthe annual pay andconditionselsewhere competitive levels andmarket salary role, experienceandindividual underlying Group performance; in the Group. forces; and performance;

− − − as, butnotlimited to: awarded incertain circumstances, such increasesSalary above this level may be employees inthe Group. percentage terms) to ofsalary other increaselevel ofsalary awarded (in increases belinewith willnormally the While there isnomaximumsalary, Maximum potential andpayment atthreshold level ofshareholding. and maintain 150% minimum ofsalary Executive directors are required to build 15% ofbase salary. by the Remuneration Committee. but the totals are reviewed annually There isnopredetermined maximum Committee deemsappropriate. over such timeperiodasthe increasesSuch may beimplemented − where there hasbeen a change in an individual’s development or where anexecutive director has where there hasbeen a change in market practice; or with thesalary market over time); newly appointed executive director’s performance inrole (e.g. to aligna in scopeorresponsibility; been promoted orhashadachange business. size and/orcomplexity ofthe

salary increase.salary is taken into accountindetermining any apply, anindividual’s performance inrole While noformal performance conditions Performance targets andmetrics Not applicable. Not applicable. Not applicable. Oxford BioMedicaplc |Annualreport andaccounts 2017 LTIP awards vest. performance before requiring challenging interests inshares whilst with longerterm executive directors alignment by providing To augmentshareholder Plan (LTIP) Long Term Incentive interests. with shareholders’ the incentive package deferred shares aligns bonus payment via of50%Delivery ofany Group’s objectives. reward delivery ofthe To incentivise and Annual bonus of ownership. and promote asense with the Group To create alignment Sharesave Scheme Component andpurpose

table onthe nextpage. summarised inthe notes to the policy Recovery provisions apply as HMRC EMIplan where appropriate. Awards have beenmadeunder an into shares onacumulative basis. assume the reinvestment ofdividends delivered incashorshares andmay These dividend equivalents may be between the grant andvesting date. include dividend equivalents earned Awards granted underthe LTIP may over athree year performance period. performance targets, typically assessed to the achievement ofspecified cost share optionswhich vest subject annual grants ofconditionalnominal At the discretion ofthe Committee, summarised atthe foot ofthis table. Recovery provisions apply as into shares onacumulative basis. assume the reinvestment ofdividends be delivered incashorshares andmay period. These dividend equivalents may to the deferred shares over the deferral equivalentsDividend may beattached adjusted atthe Committee’s discretion. discretionary andcanberemoved or appropriate. Bonusawards are under anHMRC EMIplan where Deferred share awards may bemade subject to further performance targets. award. The deferred shares are not second andthird anniversaries ofthe in three equalinstalments onthe first, deferred shares which ordinarily vest 50% ofthe bonusisdelivered through 50% ofthe bonusisdelivered ascash. by the Committee. Annual bonusesare determined applicable legislationfrom timeto time). discount asmay bepermitted by the value ofshares atgrant (orsuch other discount ofupto 20% to the market an optionpricewhich canbeata option over the Company’s shares with five years linked to the grant ofan contributions over aperiodofthree or which they may make monthly savings employee Sharesave under Scheme participate inatax qualifyingall Executive directors are entitled to Operation

will notexceed125%ofbase salary. The maximumbonusopportunity UK tax authorities from timeto time. exercise priceare those setby the of discountpermitted insettingthe Participation limitsandthe level Maximum potential andpayment atthreshold recruitment ofanexecutive director. exceptional circumstances such asthe award limitwillonlybeexceeded in of base salary. maximum The normal respect ofafinancial year is 200% opportunity that may begranted in plan the rules overall maximum is 125%ofbase salary. Under the share the CEOfor whomthe maximumaward year for executive directors, other than inrespectof base salary ofafinancial maximumawardThe normal is100%

significantly each year. objectives andmetricsmay change Given the nature ofthe business,these of the business. taking into accountthe strategic needs are decidedannuallyby the Committee The performance metricsandtargets in linewith HMRC practice. Not subjectto performance measures Performance targets andmetrics the measure hasbeenachieved. assessment ofthe extent to which depending uponthe Committee’s be determined between 0%and100% For strategic measures, vesting will performance, noneofthe award willvest. performance; for below threshold 100% ofthe award willvest for maximum will vest for threshold performance and measure, nomore than 25%ofthe award performance inrespect ofafinancial measures. For the achievement ofgrowth not limited to) share priceandrevenue Financial measures may include (butare or the achievement ofstrategic objectives. and willbebased onfinancialmeasures determined inadvance ofgrant ofawards Performance conditionswillbe if threshold performance isnotmet. There isnominimumbonusearned

Corporate governance 77 78 and that amendmentisrequired sothat they achieve their originalpurpose. market conditions)which causethe Committee to determine that the measures are nolongerappropriate a change instrategy, a material acquisitionand/oradivestment ofaGroup business,orachange inprevailing The Committee retains the ability to adjustorsetdifferent performance measures ifevents occur(such as price growth andrevenue. the Group’s situationatthe time;awards to begranted in2018 willbesubjectto measures based onshare The performance metricsfor the LTIP are determined to ensure that the mostappropriate targets are setfor targets related to generating recurring revenues such asmanufacturing to ordevelopment third services parties. depending onthe stage ofdevelopment ofeach opportunity. The annualobjectives are alsolikely to include out-licensing. Targets for aparticular year are therefore likely to include specificproduct development targets pre-clinical proof ofconceptthrough to the endofPhaseIorIIclinical studiesbefore partnering or of the business.Akey componentofthe Group’s strategy isto develop geneandcelltherapy products from Performance targets for the annualbonusare setby the Committee after taking into accountthe strategic needs Performance targets andmetrics — — — Clawback may beapplied inthe event of: — — — — — Malus may beapplied inthe event of: the repayment ofsomeorallthe award inthe relevant circumstances (clawback). circumstances (malus).For upto two years following the vesting ofaLTIP award the Committee may require The Committee hasthe rightto reduce, cancelorimposefurther conditionsonunvested awards inthe relevant LTIP: in the relevant circumstances (clawback). instalment ofdeferred shares the Committee may require the repayment ofsomeorallthe deferred shares be cancelledorreduced inthe relevant circumstances (malus).For upto oneyear following the vesting ofthe first of someorallthe cashaward inthe relevant circumstances (clawback). Unvested deferred bonusawards may For upto two years following the payment ofanannualbonusaward the Committee may require the repayment Annual bonus: The annualbonusandLTIP are subjectto malusandclawback provisions asfollows: Recovery provisions Notes to the policy table for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — — — — Material misconductonthe part ofthe participant. an error inassessingany applicable performance conditions;or An error inthe information orassumptionsonwhich the award was granted orvests including A material misstatement ofthe Group’s financial results; Material misconductonthe part ofthe participant. reputationalSerious damageto the Group; or A material failure ofriskmanagementby the Group; an error inassessingany applicable performance conditions; An error inthe information orassumptionsonwhich the award was granted orvests including A material misstatement ofthe Group’s financial results;

Oxford BioMedicaplc |Annualreport andaccounts 2017 wider workforce istaken into accountwhendetermining increase any salary for executive directors. and implementing the policy for Directors’ remuneration, andasnoted above, the increase level ofsalary for the remuneration, the Committee considersthe pay andemployment conditionsofallother employees whensetting While the Committee hasnotconsulted with other employees whenpreparing the policy for Directors’ implementing increases the salary andbonuses. increase inpayroll costandthe total amountto bepaid inbonuseswith the Chairofthe Committee before majority ofstaff andwhich informs the decisionmakingprocess. TheChiefExecutive Officerdiscusses the overall directors. The Group participates inanannualbenchmarking exercise across the UKBiotech sector which covers the The ChiefExecutive Officerdetermines increases any salary andbonuses forallemployees other than theexecutive Consideration ofemployment conditionselsewhere inthe Group are eligible to participate inthe Employee Share Scheme. Option ExecutiveSenior Team membersparticipate inthe LTIP butnotthe Employee Share All other Scheme. staff Option management are delivered by deferred shares, whereas allother staff receive 100% of their bonusesincash. receivable varies between the participating employees. 50% ofthe bonusesofthe executive directors’ andsenior Executive directors, seniormanagersandcertain other staff receive annualbonuses. Themaximumbonuspotentially contribution pensionscheme to which the Group contributes. All employees receive andare abase salary entitled to participate inbenefits,includingGroup’s the defined Differences in remuneration policy for allemployees in any territoryprevented the Company from offering shares to anexecutive director. the Committee would onlyusethese cashprovisions for operational flexibility, for example ifa regulatory restriction over anotionalnumberofshares, andthat share awards may besettled incashatthe electionofthe Committee; may beoperated inaccordance with their terms, including that awards may begranted ascashbased awards accordance with theof Share rules LTIP Scheme, Option andDeferred BonusPlan. The Company’s share plans Awards andoptionsmay beadjusted inthe event ofavariation ofshare capital orother relevant amendmentin Operation ofshare plans Non-executive directors Component andpurpose the Group. directors for to their services To compensate non-executive Non-executive directors’ fees

may beappropriate. travel costsorother benefits that the useofsecretarial support, eligible to receive benefitssuch as Non-executive directors may be other non-executive directors. Chairman’s fees are setby the appointment ofadirector. The attheChairman timeof determined by the Group’s Non-executive directors’ fees are Operation at other times. directors’ fees may bemade increases innon-executive period ofappointment.However, at the start ofeach three year Fees would bereviewed normally a Board committee. responsibilities such aschairing supplementary fee for additional receive abase fee anda Non-executive directors may and expected timecommitment. the responsibilities ofthe role but fees are settaking into account There isnooverall maximum, at threshold Maximum potential andpayment

Not applicable. Performance targets andmetrics

Corporate governance 79 80 Maximum performance On-target performance Minimum performance Component andpurpose of Peter Nolan, recognising that hewillretire from the Board in2018. policy in2018 underthree different performance levels isshown below. A chart hasnotbeenprepared in respect The total remuneration for John Dawson andStuartPaynter that couldresult from the proposed remuneration Total remuneration opportunity for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 1,000 1,200 1,400 1,600 400 200 800 600 0 Total remuneration (£000) John Dawson 1 2 3 ntre performance On-target 3 performance Minimum 2 1 bonus Annual LTIP Maximum performance Base salary, benefits andpension As above. As above. – – – only: Fixed elementsofremuneration Fixed pay on page 68. stated inthe singlefigure table benefits – for as 2017 and salary; 15% applied to the assumed contribution/supplement rate of supplement –assuminga pension contributionorsalary proposed for salary 2018 –beingthe base salary No bonus. deferred underthe DBP) Annual Bonus(including any amount achieving maximumperformance. awarded125% ofsalary for achieving target performance. awarded62.5% ofsalary for 400 500 200 800 600 300 700 100 0 Total remuneration (£000) Stuart Paynter 1 2 3 ntre performance On-target 3 performance Minimum 2 1 bonus Annual LTIP Maximum performance Base salary, benefits andpension No LTIP vesting. LTIP maximum performance. maximum performance. other directors) for achieving the CEOand100% for ofsalary (equivalent for to 125%ofsalary 100% ofmaximumaward vesting target performance. vesting forof salary achieving Award equivalent to 25%

Oxford BioMedicaplc |Annualreport andaccounts 2017 for similarcompanies orgroups. Fees for newnon-executive directors willbedetermined by reference to market rates for non-executive director fees be allowed to continueaccording to the originalterms. Where aposition isfilledinternally, any ongoing remuneration obligations oroutstanding variable pay elements shall forfeiture or “malus” and/or “clawback” onearly departure. value ofthe forfeited awards. Where considered appropriate, such specialrecruitment awards willbe liable to for like basis to the remuneration arrangements forfeited. Any such payments orawards are limited to the expected on acase-by-case basis. The Committee willgenerally seekto structure such awards“buyout” orpayments onalike Compensation for the forfeit ofany award underarrangements with aprevious employer would beconsidered the recruitment ofanexecutive director. as permitted underthewhich allow ListingRules for the grant ofawards to facilitate, inunusualcircumstances, If necessary, andsubjectto the limitsreferred to above, recruitment awards may be granted outsideofthese plans Any share awards referred to inthis sectionwillbegranted asfar aspossible underthe Group’s existingshare plans. — — — — — — and limitsreferred to below: previous package ofthe newdirector. The remuneration package ofthe newdirector willbesubjectto the principles of prevailing market conditions,remuneration ofother executive directors, the calibre ofthe newdirector andthe existing directors. The Committee would determine the individual componentsandoverall package inthe light remuneration package of the newdirector from the sameelementsdescribedinthe policy table asare applied to to recruitShould itbecomenecessary anewexecutive director, the Committee would ordinarily negotiate the Approach to recruitment remuneration — — — — — — to below) is325%ofsalary The maximumlevel ofvariable remuneration which may begranted (excluding awards“buyout” asreferred such alteration. The rationale willbeclearly explained inthe following Directors’ remuneration report bonus, Deferred BonusPlanorLTIP ifthe Committee determines that the circumstances ofthe recruitment merit The Committee may alsoalter the performance measures, performance period andvesting periodofthe annual Others elementsmay beincluded inthe following circumstances: sign-on bonus”) The Committee willnotoffer non-performance related incentive payments (for example a “guaranteed Retirement andother benefitswillbeprovided inlinewith the policy responsibilities, subjectto goodperformance, where itisconsidered appropriate This may include agreement onfuture increases upto amarket rate, inlinewith increased experienceand/or willbesetatalevel appropriateBase salary to the role andthe experienceofthe director beingappointed. — — — — of the Committee reasonable relocation, travel andsubsistence payments. Any such payments willbeatthe discretion if the director willberequired to relocate inorder to take upthe position,itisthe Group’s policy to allow may betransferred to the subsequentyear sothat reward isprovided onafair andappropriate basis on variable remuneration setoutbelow, the quantuminrespect ofthe months employed duringthe year incentive award for that year asthere would notbesufficienttime toassessperformance. Subject to thelimit function onashort-term basis if adirector isrecruited atatimeinthe year whenitwould beinappropriate to provide abonusorlong-term if exceptionalcircumstances require that theoranon-executive Chairman director takes onanexecutive an interim appointmentbeingmadeto filladirector role onashort-term basis

Corporate governance 81 82 Peter Nolan John Dawson contractsService contractsThe details ofservice andletters ofappointmentthose asdirectors whoserved duringthe year are: full noticeperiod. Directors may berequired to work duringthe noticeperiodorbepaid inlieuofnoticeifnotrequired to work for the Executive directors’ contracts service are subjectto 12months’ noticefrom both the Group andfrom the director. contractsService andpolicy onpayment for lossofoffice for the year 2017 ended31December Directors’ remuneration report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 Stuart Paynter Tim Watts LTIP Deferred BonusPlan Annual Bonus Payment inlieuofnotice The principles onwhich the determination ofpayments for lossofofficewillbeapproached are setoutbelow: to re-election atintervals ofnotmore than three years. All directors are subjectto electionby shareholders atthe firstopportunity after their appointment,and thereafter Stuart Henderson Andrew Heath Martin Diggle Lorenzo Tallarigo Letters ofappointment the extent ofvesting willbedetermined by the Committee, taking into account,unlessthe Committee determines Committee shalldetermine whether the award willvest atcessationorthevesting normal date. Ineither case, ill-health, injury, disability, the sale ofhisemployer orany other reason, atthe discretion ofthe Committee, the Unvested awards lapseoncessation ofemployment. willnormally However, ifaparticipant leaves dueto death, Bonus Plan. The extent to which any unvested award willvest willbedetermined inaccordance with theof rules Deferred year ofdeparture andpreceding year incash. in appropriate circumstances). The Committee hasdiscretion to pay the whole ofany for bonusearned the performance, bepaid atthe usualtime(although the Committee retains discretion to pay the bonusearlier amounts paid willtypically bepro-rated for duringthe bonusperiodandwill, subjectto timeinservice individual’s departure andtheir contribution to the businessduringthe bonusperiodinquestion.Any bonus to award abonusinfull orinpart willbedependentonanumberoffactors, including the circumstances ofthe This willbeatthe discretion ofthe Committee onanindividual basis andthe decisionasto whether ornot contributions andany applicable supplement) for salary the noticeperiod. Contractual termination payments may notexceed the director’s currentandbenefits(including pension salary Policy may beexercised for such periodas the Committee determines. during such periodasthe Committee determines. Awards which have already vested atthe date ofcessation from the date ofgrant to the date ofcessationrelative to the performance period.Awards may then beexercised performance conditionissatisfiedand,unless the Committee determines otherwise, the periodoftimeelapsed case, the extent ofvesting willbedetermined by the Committee taking into accountthe extent to which the the Committee shalldetermine whether the award willvest vesting atcessationorthe normal date. Ineither death, ill-health, injury, disability, the saleofhisemployer orany other reason atthe discretion ofthe Committee, Unvested awards lapseoncessationofemployment. willnormally However, ifaparticipant leaves dueto The extent to which any unvested award will vest willbedetermined inaccordance with theof rules LTIP. vested atthe date ofcessationmay beexercised for such periodasthe Committee determines. Awards may then beexercised duringsuch periodasthe Committee determines. Awards which have already theotherwise, periodoftimeelapsedfrom the date ofgrant to the date ofcessationrelative to the deferral period. Date ofappointment 10 October 2008 9 February 20129 February 1 February 20161 February 4 October 2015 29 August2017 1 January 2016 1 January Contract date 1 June2016 1 May 2002

31 December 201731 December 201731 December Unexpired term at Unexpired term at 12 months 13 months 17 months 9 months N/A N/A N/A N/A

Notice period Notice period 12 months 12 months 12 months 12 months 3 months 3 months 3 months 3 months

Oxford BioMedicaplc |Annualreport andaccounts 2017 15 Chair, Remuneration Committee Andrew Heath By order of the Board time to timewith the Company’s other majorinvestors. and isable to communicate the viewsof Vulpes onthis matter. IndependentDirectorThe Senior alsoconsultsfrom a founder of Vulpes Life Fund(“Vulpes”), Sciences the Company’s largest investor, isobserver ofthe Committee The Committee takes into account viewsofshareholders with regard to directors’ remuneration. MartinDiggle, Statement ofconsideration ofshareholder views to anaward over shares, the terms ofthe payment are agreed atthe timethe award isgranted. For these purposes, “payments” includes the satisfaction ofawards ofvariable remuneration and,inrelation — — — policy inthis report: The Committee retains discretion to make any remuneration payment orpayment for lossofoffice outside the Existing contractual arrangements Other payments Change ofcontrol — — — March 2018 to satisfycontractual commitmentsunderlegacy remuneration arrangements. a director ofthe Group; and Group and,inthe opinionofthe Committee, the payment was notinconsideration ofthe individual becoming where the terms ofthe payment were agreed atatimewhen the relevant individual was notadirector ofthe at that meeting); any payment agreed after the Company’s 2015 AnnualGeneral Meeting,they are inlinewith the policy approved where the terms ofthe payment were agreed before the policy cameinto effect (provided that, in the caseof or employment. or employment. way ofsettlement orcompromise ofany claim arisinginconnectionwith the termination ofadirector’s office faith indischarge ofanexistinglegalobligation (orby way ofdamagesfor breach ofsuch anobligation) orby The Committee retains discretion to make additionalexitpayments where such payments are madeingood and legalfees. In appropriate circumstances, payments may alsobemadeinrespect holiday, ofaccrued outplacement treatment for leavers oronachange ofcontrol under this scheme. which isgoverned by andthe itsrules legislationrelating to such tax qualifyingplans. There isnodiscretionary Payments may bemadeeither inthe event ofalossofficeor changeofcontrol under theSharesave Scheme, of the relevant corporate event relative to the performance period. and, unlessthe Committee the determines otherwise, periodoftimeelapsedfrom the date ofgrant to the date will determine the level ofvesting taking into accountthe extent to which the performance conditionissatisfied Awards underthe LTIP willvest early onatakeover, merger orother relevant corporate event. The Committee corporate event. Awards underthe Deferred BonusPlanwillvest infullthe event ofatakeover, merger orother relevant in accordance with ofthe the rules relevant plan. The extent to which unvested awards underthe Deferred BonusPlanandLTIP willvest willbedetermined

Corporate governance 83 84 Please refer to note 34ofthe financialstatements on page 132 where details ofsubsequentevents are outlined. eventSubsequent the Company 2017 at31December are disclosed inthe Directors’ remuneration report onpages 63 to 83. are subject to atwelve months’ noticeperiod. The directors’ remuneration andtheir interests inthe share capital of statements are detailed onpages 54to 55 andonpage 64. The contracts ofemployment ofthe executive directors Details ofthe directors ofthe Company whowere inofficeduring the yearandup to thedate ofsigning thefinancial Directors The directors donotrecommend payment ofadividend (2016: £nil). Dividends (Note 3:financialrisk management). The Group’s exposure to 51 to risksissetoutonpages 44 (principal risksanduncertainties) andonpage 112 Risk management The Group’s statement oncorporate governance isincluded inthe corporate governance report onpages 56to 62. Corporate governance Key financial performance indicators are outlined in the ChiefFinancialOfficer’s reviewon pages32 to 37. Key financial performance indicators (KPIs) to make this judgement. met eighttimesfor routine meetingsin2017 the directors considerthat they are sufficiently wellinformed tobe able for the 2017 audit,andthe fullBoard reviewed the contents ofthe report atits5March 2018 meeting.Sincethe Board the AuditCommittee initiallydiscussedthe requirements with the Group’s auditors whendiscussingthe strategy the Annualreport andaccounts,taken asawhole, are fair, balanced andunderstandable. Inreaching this conclusion, The Strategic report including the outlook for 2018 onpage 22,isonpages 16 to 41. The directors considerthat Strategic report looking statements. results ofthe Group may differ materially from the plans, goals andexpectations expressed orimplied insuch forward Company. Readers are cautionedthat, asaresult, the actualfuture financialcondition,businessperformance and uncertainty becausethey relate to future events andcircumstances that are beyond the control ofthe Group and performance andresults ofthe Group andCompany. Bytheir nature, allforward looking statements involve riskand with respect to certain ofthe plans, current goals andexpectations relating to the future financialcondition,business regardingDiscussions financialinformation contained in this Annual report may contain forward-looking statements governance to report 51. onpages 44 201731 December assetoutonpages 98 to 132. This report shouldberead inconjunctionwith the corporate The directors present their Annualreport andaudited consolidated financialstatements for the year ended for the year 2017 ended31December Directors’ report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017

Oxford BioMedicaplc |Annualreport andaccounts 2017 been granted to the directors to buyback shares. to waive pre-emption rightsover upto 308,831,200 shares, being10% ofthe shares then inissue.No rightshave up to afurther 1,029,437,800 shares, solely inarightsissue.Authority was alsogiven, subjectto certain conditions, subject to thepre-emption normal rightsreserved to shareholders contained inthe Companies Act2006, andto allot allot upto 1,029,437,800 shares (that numberbeingonethird oftotal issuedshare capital ofthe Company atthe time), or untilthe conclusion ofthe nextAGM ifsooner. Atthe lastAGM heldon23May 2017, authority was given to Each year atthe AGM the directors seekrightsto allotshares. The authority, when granted lastsfor 15 months Rights to issueandbuyback shares are admitted to trading onthe London Stock Exchange. and fullypaid. There are norestrictions onthe transfer ofshares inthe Company oronvoting rights.Allshares of the Company isunlimited. 2017 At31December the Company had3,107,704,224 shares inissue,allallotted equally with each other. Following the adoptionofnewarticles ofassociationin2010, the authorised share capital The Company’s share capital comprises asingleclass of1pordinary shares, onevote each carrying andallranking Structure ofthe Company’s capital Share capital its directors. This was inforce throughout 2017 andatthe date ofapproval ofthe financialstatements. The Group maintains aqualifying third party indemnity insurance policy to provide cover for legalactionagainst Directors’ third party indemnity provision or another personapproved by the other directors asanalternate director. more than sixmonths; orby request inwritingby allthe other directors. Any director may appointanother director in the event ofbankruptcy; ifheissuffering from specifiedmental disorders; ifheisabsentwithout consent for the following ways: by anordinary resolution atageneral meeting;ifheisprohibited by law from beingadirector; third ofthe other directors mustretire, andmay offer themselves for re-election. Adirector may be removed in (AGM) andmay offer himself for re-election. Ateach AGM any director whohasserved for three years, andone by the existingdirectors, provided that any director soappointed shallretire atthe nextannualgeneral meeting Directors may beappointed by anordinary resolution atany general meetingofshareholders, ormay beappointed Appointment andreplacement ofdirectors

Corporate governance 85 86 therefore prepared the financialstatements basis. onagoingconcern to continueitsactivities for notless than twelve months from the date ofthese financialstatements andhave known andprobable cashflows, Directorsthe consider Groupthat the hassufficientcash resources andcashinflows expenditure andthe Directors expect further progress in2018. Taking this into account,inconjunctionwith currently 2017 thewas significantly cashburn reduced asa result ofimproved cashflow from operations and reducedcapital the Company completed a£19.3 million(net)equity placing inorder to fundfurther facilities expansion. During The Group held£14.3 millionofcashatthe endof2017 and£16.4 2018. millionat28February InMarch 2018, concern Going compensation for lossofoffice fordirectors oremployees in the event ofa takeover bid. There are nosuch agreements that the directors considerare material. There are noagreements providing for Agreements that take effect, alter, or terminate becauseofa takeover bidoron change ofcontrol for further information. 5,836,218 shares onwhich allthe related optionshave vested. Note See 25of the consolidated financialstatements awarded to executive directors andother seniormanagersunderthe Deferred BonusPlan. The EBT currently holds The Group hasestablished anEmployee Benefit (EBT)Trust to hold shares purchased inorder to settle shares Employee share schemes are inthe corporate responsibility statement onpages 38to 41. Further details onemployees, health andsafety, environmental matters andcorporate socialresponsibility training ofdisabled people. or ethnic origin. The Group doesallthat ispracticable to meetitsresponsibility towards the employment and and ability ofeach individual to the appropriate job, andto provide equalopportunity regardless ofsex,religion The Group’s aimfor allmembersofstaff andapplicants for employment is to fit thequalifications,aptitude or the LTIP. Certain employees participate indiscretionary bonusschemes. in the Group’s performance isencouraged, with allemployees eligible to participate inthe share optionscheme The Group communicates and consultsregularly with employees throughout the year. Employees’ involvement Employees to the Company. No personholds sharesspecialrightswith regard carrying to control ofthe Company. No other personhasreported aninterest inthe ordinary shares ofthe Company required to benotified Interactive Investor Sharedealing Mr. SShah Hargreaves Lansdown Asset Management Aviva Investors M&G Investments Vulpes Investment Management Shareholder of the following shareholdings amountingto 3%ormore ofthe ordinary share capital ofthe Company. 2018,At 15 February the latest practical date priorto approval ofthe Directors’ report, the Company hadbeennotified shareholdingsSubstantial for the year 2017 ended31December Directors’ report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 Number ofordinary shares 558,825,646 581,008,834 124,454,986 213,412,908 173,689,397 137,188,596 Percentage ofissuedshare capital

18.0% 18.7% 4.0% 5.6% 4.4% 7.2% Oxford BioMedicaplc |Annualreport andaccounts 2017 LR 9.8.4 (7)and(8) LR 9.8.4 (5)and(6) Listing Rule but the following are applicable. The directors have reviewed the requirements ofLR 9.8.4R. The majority ofthese donotapply to the Group Compliance 9.8.4R with ListingRule Amendment ofthe Company’s articles may bemadeby specialresolution atageneral meeting ofshareholders. Amendment ofthe Company’s articles ofassociation expectations, the Group mightneedto secure alternative sources offinancing to continue to funditsoperations. as they fall dueover the three-year periodto 2020. December Ifadditionalrevenues were to fall below the director’s expectation, although notacertainty, that the Group willbeable to continueinoperation andmeetitsliabilities forecasts developed reflect these assumptionsand therefore the directors have concluded that there isa reasonable generating additionalrevenues inlinewith the increased revenues across the past four years. The Group’s financial The directors anticipate that the Group hasreasonable prospects for attracting further newcustomers and product candidates, andalsothe growing importance ofOrchard Therapeutics asacustomer ofthe Group. evidenced by the 2018 $105 millioncollaboration with Bioverativ to develop andbioprocess their haemophilia to retain aleadershippositionandby seekingadditionalcustomers soasto diversify itsexposure to Novartis. This is short ofcurrent expectations. The Group isseekingto mitigate this riskby continuingto develop itstechnology soas parties and,inparticular, that the requirements from Novartis, the Group’s current majorcustomer, fall substantially fails to generate enoughrevenue from the process development andbioprocessing itprovides services to third The mainarea ofriskto the viability ofthe Group within the three-year periodto 2020 December isthat the Group Assessment ofviability process development andbioprocessing to itspartners services willbesufficient to create asustainable company. 2020December the directors believe that revenues from licensingitstechnology to third parties andfrom providing from fees for providing process development andbioprocessing to other services companies. Over the three years to and other operating incomefrom licensingitsplatform technology, generating upfront receipts androyalties, and portfolio andto supportthe development ofother companies’ products. The Group isgenerating growing revenues The Group’s strategy isto exploit itsLentiVector of the businessover the lasttwelve months. Group operates. The assessmenthasbeeninformed by the strategy adopted by the Board in2016 andthe evolution significant uncertainties of forecasting beyond this timehorizon given the nature of the businesssector inwhich the of the Group over the three years to 2020. December They believe three years to beappropriate dueto the inherent In accordance with provision C.2.2ofthe UKCorporate Governance Code, the directors have assessedthe prospects Assessment ofprospects Viability statement Information required to holdings. existing shareholders inproportion Allotment ofshares other than to or future emoluments. a director haswaived current Arrangement underwhich ® platform to develop geneandcelltherapy products initsown

share schemes (Note 23,page 125). Allotment ofshares onexercise ofoptions by employees underapproved haselectedMartin Diggle to receive nofees for asdirector hisservices (page 69). Response

Corporate governance 87 88 — — — of their knowledge: Each ofthe directors, whosenamesandfunctionsare listed in The Board ofDirectors confirm that, to the best business modelandstrategy. and provides the information for necessary shareholders to assessthe Group andcompany’s performance, The directors considerthat the annualreport andaccounts, taken asawhole, isfair, balanced andunderstandable may differ from legislationinother jurisdictions. Legislation inthe United Kingdomgoverning the preparation anddisseminationoffinancialstatements The directors are responsible for the maintenance andintegrity ofthe Group andcompany’s website. for taking reasonable steps for the prevention anddetection offraud andother irregularities. The directors are alsoresponsible for safeguarding the assetsofthe Group andcompany andhence IAS Regulation. report comply with the Companies Act2006 and,asregards the Group financialstatements, Article 4of the of the Group andcompany andenable them to ensure that the financialstatements andDirectors’the remuneration the Group andcompany's transactions anddisclose with reasonable accuracy atany timethe financial position The directors are responsible for keeping adequate accountingrecords that are sufficient toshow andexplain — — — — for that period.Inpreparing the financialstatements, the directors are required to: fair viewofthe state ofaffairsGroup of the andcompany andof the profit orlossof the Group andcompany law the directors mustnotapprove the financialstatements unless they are satisfied that they givetrue and a with International FinancialReporting Standards (IFRSs)asadopted by the European Union.Undercompany Standards (IFRSs)asadopted by the European Unionandparent company financialstatements inaccordance the directors have prepared the Group financialstatements inaccordance with International Financial Reporting Company law requires the directors to prepare financialstatements for each financial year. Under that law with applicable law andregulation. The directors are responsible for preparing the Annualreport andthe financialstatements inaccordance Statement ofdirectors’ responsibilities inrespect ofthe financial statement for the year 2017 ended31December Directors’ report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — — — of the Group andcompany, together with adescriptionofthe principal risksanduncertainties that itfaces. the Directors' Report includes afair review ofthe development andperformance ofthe businessandthe position European Union, give andfair atrue viewoftheGroup; assets,liabilities, financialpositionandlossof the and the Group financialstatements, which have beenprepared inaccordance with IFRSsasadopted by the the European Union,give andfair atrue viewofthe assets,liabilities,financialpositionandlossof the Company; the parent company financialstatements, which have beenprepared inaccordance with IFRSsasadopted by and company willcontinueinbusiness Prepare the financialstatements on basis unlessitisinappropriatethe goingconcern to presume Group that the Make judgementsandaccountingestimates that are reasonable andprudent statements, subjectto any material departures disclosed andexplained inthe financialstatements statements andIFRSsasadopted by the European Unionhave beenfollowed for the Company financial State whether applicable IFRSsasadopted by the European Unionhave beenfollowed for the Group financial suitableSelect accountingpolicies andthen apply them consistently

Oxford BioMedicaplc |Annualreport andaccounts 2017 in August2017 a director andChiefFinancialOfficer Stuart Paynter was appointed 15 March 2018 Company Secretary Stuart Paynter By order ofthe Board of Covington &Burling LLP. The AnnualGeneral Meetingwillbeheldat11:00a.m. on Tuesday 29 May 2017 atthe London offices Annual General Meeting Details ongreenhouse gasemissionsare setoutinthe corporate socialresponsibility sectiononpage 40. Greenhouse gasemissionsreport PricewaterhouseCoopers LLP willcontinueinofficeuntil the releaseof the 2017 financial statements. 2017During atender process was completed with KPMG LLP beingappointed asindependentauditors. Independent auditors and to establish that the Group andCompany’s auditors are aware ofthat information. that heoughtto have taken asadirector inorder to make himselfaware ofany relevant auditinformation information ofwhich the Group andCompany’s auditors are unaware, andeach director hastaken allthe steps In accordance with s418 ofthe Companies Act2006, sofar aseach director isaware, there isnorelevant audit Statement asto disclosure ofinformation to auditors

Corporate governance 89 90 Group orthe Company inthe periodfrom 2017 1January to 2017. 31December Other than those disclosed innote 7to the financialstatements, we have provided to nonon-auditservices the were notprovided to the Group orthe Company. To the bestofourknowledge andbelief, we declare prohibited that non-auditservices by the FRC’s Ethical Standard entities, andwe have fulfilledourother ethical responsibilities inaccordance with these requirements. of the financialstatements which includes intheFRC’sthe UK, Ethical Standard, asapplicable to listed public interest We remained independentofthe Group inaccordance with the ethical requirements that are relevant to ouraudit Independence to provide abasis for ouropinion. statements sectionofourreport. We believe that the auditevidencewe have obtained issufficientandappropriate are responsibilitiesOur further underISAs(UK) describedinthe Auditors’ responsibilities for the auditofthe financial We conducted ourauditinaccordance andapplicable with law. International Standards (“ISAs(UK)”) onAuditing(UK) Basis for opinion opinionisconsistentOur with ourreporting to the AuditCommittee. statements, which include adescriptionofthe significantaccountingpolicies. of changes inequity attributable to owners ofthe parent for the year then ended;andthe notes to the financial comprehensive income,the Group andcompany statements ofcashflows,Group and the andcompany statements which comprise:the Group and company balance2017; sheetsasat31December the consolidated statement of We have audited the financialstatements, included within the Annual report andaccounts 2017 (the “Annual report”), — — — statements”): (the “financial In ouropinion,Oxford BioMedica plc’s Group financialstatements andcompany financial statements Opinion Report onthe auditofthe financialstatements to the membersofOxford BioMedicaplc Independent auditors’ report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — the Group financialstatements, Article 4of the IAS Regulation Have beenprepared inaccordance with the requirements ofthe Companies Act2006 and,asregards Companies Act2006 as regards the Company’s financialstatements, asapplied inaccordance with the provisions of the Have beenproperly prepared inaccordance with IFRSsasadopted by the European Unionand, and ofthe Group’s lossandthe Group’s andthe Company’s cashflows for the year then ended Give andfair atrue viewofthe state ofthe Group’s andofthe Company’s affairsDecember asat312017

Oxford BioMedicaplc |Annualreport andaccounts 2017 provide aseparate opinionon these matters. This isnotacomplete listofallrisksidentified by ouraudit. context ofourauditthe financial statements asawhole, andin ouropinion forming thereon, and we do not team. These matters, andany commentswe make onthe results ofourprocedures thereon, were addressed inthe on: the overall auditstrategy; the allocationofresources inthe audit;anddirecting the efforts of the engagement misstatement (whether ornotdueto fraud) identified by the auditors, including those which had the greatest effect audit ofthe financialstatements of the current periodandinclude the mostsignificantassessedrisksofmaterial Key auditmatters are those matters that, inthe auditors’ professional judgement, were ofmostsignificancein the Key auditmatters there was evidenceofbias by the directors that represented ariskofmaterial misstatement dueto fraud. addressed the riskofmanagementoverride ofinternal controls, including testing andevaluating whether journals We didnotidentifyany key auditmatters relating to irregularities, including fraud. Asinallofouraudits we also we would become aware of it. with laws andregulations isfrom the events andtransactions reflected in the financial statements, thelesslikely There are inherent limitations inthe auditprocedures describedabove andthe further removed non-compliance included, butwere notlimited to, review ofcorrespondence with the regulators, enquiriesofmanagement. Companies Act2006, andFDA UKtax the ListingRules, legislationandMHRA licensingregulations. tests Our to amaterial misstatement inthe Group andcompany financialstatements, including, butnotlimited to, the or intentional misrepresentations, orthrough collusion. We focused onlaws andregulations that couldgive rise of notdetecting oneresulting from error, asfraud may involve deliberate concealmentby, for example, forgery to the risk,recognising that the riskofnotdetecting amaterial misstatement dueto fraud ishigherthan the risk regulations, including fraud. We designedauditprocedures atGroup andsignificantcomponentlevel to respond in which itoperates, andconsidered the riskofactsby the Group which were contrary to applicable laws and We gained anunderstanding ofthe legalandregulatory framework applicable to the Group andthe industry that are inherently uncertain. in respect ofsignificantaccountingestimates that involved makingassumptionsandconsideringfuture events financial statements. In particular, we looked atwhere the directors madesubjective judgements, for example As part ofdesigningouraudit,we determined materiality andassessedthe risksofmaterial misstatement inthe The scopeofouraudit — — — Key auditmatters — — Audit scope — — Materiality Overview auditapproachOur — — — — — — — Going concern Going Loan refinancing Contract accountingandrevenue recognition evidence over the year-end inventory balance We alsoconducted site visitsofthe Group’s manufacturing andprocess development facilities, primarily to obtain revenue and99.9% ofitsassets information ofthe trading subsidiary, Oxford Limited, asthis entity BioMedica(UK) accounted for allofthe Group’s work,Our which was conducted atthe Group’s headoffice inOxford, included anauditof thecomplete financial Overall Company materiality: £723,000 (2016: £714,000), based on1% oftotal assets Overall Group materiality: £760,000 (2016: £700,000), based on5%of4year average oflossbefore tax

Corporate governance 91 92 We determined that there were nokey auditmatters applicable to the Company to communicate inourreport. support the expansion ofbioprocessing facilities. it hadplaced shares raising approximately £19m netofexpensesto plans aswell as adownside 9March case.On 2018 the Group announced Management prepared asetofcashflow forecasts from Board approved a numberofjudgementsinherent inassessingthe Group’s cashflows. 2017 butcontinuedin2017 to consumecash.Asaresult there are The Group hadcashandequivalents of£14.3 millionat31December basis. going concern statements andhave therefore prepared thea financialstatements on activities for notlessthan twelve months from the date of these financial the Group hassufficientcash resources andcashinflowsits tocontinue The directors have concluded (seeNote 1to the financialstatements) that concern Going — — in respect ofthe newfacility: on inception. We have focused onthe following key areas ofjudgement Management hasprepared avaluation ofthe elementsofthe debtfacility Oberland Management. Oaktree Capital Managementandextinguisheditsprevious loan with theDuring year the Group agreed anew$55m debtfacility with of the related accountingpolicies, judgementsandestimates. Refer to Notes 1-2 to the financialstatements for the directors’ disclosures Loan refinancing — — — judgements madeby management: considerationOur ofrevenue recognition focuses onthe following key relating to capacity reservation ofthe Group’s manufacturing facilities. Revenue alsoincludes up-front fees recognised over aperiod oftime dependent upondevelopment activity ormilestones. these arrangements, including certain more judgemental elements Novartis. Amountsalsoarose from process development activities under bioprocessing activities underthe Group’s collaboration agreements with A significantproportion of the revenue generated in the year arose from of the related accountingpolicies, judgementsandestimates. Refer to Notes 1-2 to the financialstatements for the directors’ disclosures Contract accountingandrevenue recognition Key auditmatter to the membersofOxford BioMedicaplc Independent auditors’ report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 afinancialliability orequity — — — — — Determination oftheDetermination initialfair value ofthe facility Classification ofeach elementof the arrangement aseither of completion accountinghasbeenapplied onunfinished batches The appropriateness ofrevenue recognised where percentage of the year final signoff from thecustomer wasnotbeen received by theend The appropriateness ofrevenue recognised for clinical support where fees based onbatch production volumes The appropriateness ofrevenue recognised for capacity reservation

and consistent with the Group’s policy andexistingpractice. We concluded that management’s revenue recognition was supported at the balance sheetdate. documentation to understand the stage ofcompletion ofsuch batches employees outsideofthe financefunctionandexamined related For unfinishedmanufacturing batches we helddiscussionswith was obtained subsequentto the year end. customer priorto the year end,andthat approval ofthe support evidence that procedures were completed andsubmitted to the For clinical supportrevenues we obtained third party supporting number ofbatches completed. that the reservation fee was allocated appropriately based onthe minimum capacity requirement was met. We have alsoconfirmed of the total minimumbatch requirement, andevidencethat the of the numberofbatches completed duringthe year asapercentage For capacity reservation fees we obtained supportingevidence How ourauditaddressed the key auditmatter accounting isincluded inthesectionof goingconcern report below. conclusion on management’sOur useofthebasis of goingconcern agreements andconsidered the status ofany covenant requirements. to these cashflow forecasts. We reviewedGroup’s the finance management’s downside caseandalsoperformed ourown sensitivities We considered the reasonableness ofthe assumptionswithin funds received from the recent placing. projections to these judgements. We have obtained of confirmation the management’sunderpinning forecast, aswell asthe sensitivity ofthe We assessedthe reasonableness andsupportfor the judgements of the debtfacility andassociated warrants to beappropriate. methodology usedto classify andvalue the various elements From the evidenceobtained we found the assumptionsand this to supportingevidence. initial fair value oftheandwhere financialinstrument relevant agreed We have alsoconsidered management’s estimates inrelation to the of the financialinstrument. available alternative data. We have alsobenchmarked the fair value either by verifying andusingthe data utilisedby management,orusing We have recalculated the valuation ofeach elementofthe agreement relevant standards. the classification ofeach element based on the requirements of the We read the relevant underlying contractual agreements andassessed

Oxford BioMedicaplc |Annualreport andaccounts 2017 inconsistent with ourknowledge obtained inthe audit. inaccordanceConcern with 9.8.6R(3) ListingRule ismaterially We are required to report ifthe directors’ statement relating to Going of the financialstatements. over aperiodofat leasttwelve months from the date ofapproval to the Group’s andthe Company’s ability to continueasagoingconcern statements andthe directors’ identificationofany material uncertainties adopt thebasis ofaccountinginpreparing goingconcern the financial statements aboutwhether the directors considered itappropriate to draw attention to inrespect ofthe directors’ statement inthe financial We are required to report ifwe have anything material to addor Reporting obligation In accordance we report with ISAs(UK) asfollows: concern Going those amountsthat, inourview, warranted reporting for qualitative reasons. £38,000 (Group audit)(2016: £35,000) and£36,000 (Company audit)(2016: £36,000) aswell as misstatements below We agreed with the AuditCommittee that we would report to them misstatements identified duringourauditabove materiality, which isalsolessthan ouroverall group materiality. materiality. The materiality allocated to the significantcomponent was £632,000. Thisis the localstatutory audit For each componentinthe scopeofourGroup audit,we allocated amateriality that islessthan ouroverall Group Rationale for benchmark applied How we determined it Overall materiality Based onourprofessional judgement,we determined materiality for the financialstatements asawhole as follows: in evaluating the effect ofmisstatements, both individually andinaggregate on the financial statements asawhole. nature, timingandextent ofourauditprocedures onthe individual financialstatement lineitems anddisclosures and materiality. These, together with qualitative considerations, helpedusto determine the scopeofourauditandthe The scopeofourauditwas influenced by ourapplication ofmateriality. We setcertain quantitative thresholds for Materiality evidence over the year-end inventory balance. We alsoconducted site visitsofthe Group’s manufacturing andprocess development facilities, primarilyto obtain revenue and99.9% ofitsassets. information ofthe trading subsidiary, Oxford Limited, asthis entity BioMedica(UK) accounted for allofthe Group’s work,Our which was conducted atthe Group’s headoffice inOxford, included anauditof thecomplete financial processes andcontrols, inwhich they andthe operate. industry financial statements asawhole, taking into account the structureGroup of the and the Company, the accounting We tailored the scopeofourauditto ensure that we performed enoughwork to beable to give anopiniononthe How we tailored the auditscope

the business. may notbeafair representation ofthe activities of payments, which meanthat results from oneyear business and,inparticular, upfront andmilestone fluctuation arisingfrom the contractual nature of the last 4years asthe results ofthe Group are subjectto the prioryear, we useanaverage ofthe lossover the assessing the Group’s performance. Consistent with commonly usedby the shareholders asabodyin Loss before tax isthe metricthat, we believe, ismost 5% of4year average oflossbefore tax £760,000 (2016: £700,000) Group financialstatements

We have nothing to report. to continueasagoingconcern. statement isnotaguarantee asto the Group’s andcompany’s ability because notallfuture events orconditionscanbepredicted, this We have nothing material to addorto draw attention to. However, Outcome Company financialstatements not trade andassuch isnotprofit driven. assessing the parent company's performance asitdoes commonly usedby the shareholders asabodyin Total assetsisthe metricthat we believe ismost 1% oftotal assets £723,000 (2016: £714,000)

Corporate governance 93 94 In ouropinion,the part ofthe Directors’ remuneration report to beaudited hasbeenproperly prepared inaccordance with the Companies Act2006. (CA06) Directors’ Remuneration — — — We have nothing to report inrespect ofourresponsibility to report when: Other CodeProvisions knowledge andunderstanding ofthe Group andcompany andtheir environment obtained inthe course ofthe audit.(ListingRules) the relevant provisions ofthe UKCorporate Governance Code(the “Code”); andconsideringwhether the statements are consistent with the consisted ofmakinginquiriesandconsideringthe directors’ process supportingtheir statements; checking that the statements are in alignmentwith facing the Group andstatement inrelation to the longer-term viability ofthe Group. review Our was substantially lessinscopethan anauditandonly We have nothing to report having performed areview ofthe directors’ statement that they have outarobust carried assessmentofthe principal risks — — — We have nothing material to addordraw attention to regarding: that would threaten the solvency orliquidity ofthe Group The directors’ assessmentofthe prospects ofthe Group andofthe principal risks identify any material misstatements inthe Strategic report andDirectors’ report. (CA06) In lightofthe knowledge andunderstanding ofthe Group andcompany andtheir environment obtained inthe courseofthe audit,we didnot 2017ended 31December isconsistent with the financialstatements andhasbeenprepared inaccordance with applicable legal requirements. (CA06) In ouropinion,based onthe work undertaken inthe courseofthe audit,the information given inthe Strategic report andDirectors’ report for the year Strategic report andDirectors’ report certain opinionsandmatters asdescribedbelow (required stated). unlessotherwise by ISAs(UK) andthe ofthe ListingRules FinancialConductAuthorityAct 2006, (FCA) (CA06),ISAs(UK) require usalsoto report Based onthe responsibilities describedabove andourwork undertaken inthe courseofthe audit,the Companies by the UKCompanies Act2006 have beenincluded. With respect to the Strategic report andDirectors’ report, we alsoconsidered whether the disclosures required we are required to report that fact. We have nothing to report based onthese responsibilities. on the work we have performed, we conclude that there isamaterial misstatement ofthis other information, a material misstatement ofthe financialstatements oramaterial misstatement of the other information. If, based inconsistency ormaterial misstatement, we are required to perform procedures to conclude whether there is knowledge obtained inthe appearsto audit,orotherwise bematerially misstated. Ifwe identifyanapparent material in doingso, considerwhether the other information ismaterially inconsistent with the financialstatements orour In connectionwith ourauditofthe financialstatements, our responsibility is to read the other information and, to the extent explicitly otherwise stated inthis report, any form ofassurance thereon. statements doesnotcover the other information and,accordingly, we donotexpress anauditopinionor, except and ourauditors’ report thereon. The directors are responsible for the other information. opiniononthe Our financial The other information comprisesallofthe information inthe Annualreport other than the financialstatements Reporting onother information to the membersofOxford BioMedicaplc Independent auditors’ report Corporate governance Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — — — — of the Codespecified, under Rules, the Listing for review by the auditors. The directors’ statement relating to the Company’s compliance with the Codedoesnot properly disclose adeparture from arelevant provision communicated by usto the AuditCommittee. The sectionofthe Annualreport onpage 61describingthe work ofthe AuditCommittee doesnotappropriately address matters our audit. business modelandstrategy ismaterially inconsistent with ourknowledge ofthe Group andcompany obtained inthe courseofperforming understandable, andprovides the information for necessary the membersto assessthe Group’s andcompany’s positionandperformance, The statement given by the directors, onpage 84, that they considerthe Annualreport taken asawhole to befair, balanced and disclosures drawing attention to qualificationsorassumptions. any necessary the Group willbeable to continueinoperation andmeetitsliabilitiesasthey fall dueover the periodoftheir assessment,including any related have donesoandwhy they considerthat periodto beappropriate, andtheir statement asto whether they have areasonable expectation that The directors’ explanation onpage 87 ofthe Annualreport asto how they have assessedthe prospects ofthe Group, over whatperiodthey The disclosures inthe Annualreport that describethose risksandexplain how they are beingmanagedormitigated. the Group, including those that would threaten itsbusinessmodel,future performance, solvency orliquidity. The directors’44 of the Annual on report page confirmation that they have outa carried robust assessmentof the principal risks facing

Oxford BioMedicaplc |Annualreport andaccounts 2017 15 March 2018 Chartered Accountants andStatutory Auditors, Reading for andonbehalfofPricewaterhouseCoopers LLP Auditor)Stuart NewmanStatutory (Senior uninterrupted engagementis22years, covering the years ended29 October 1996 to 2017. 31December financial statements for the periodended October29 1996 andsubsequentfinancialperiods. Theperiodof total Following the recommendation ofthe AuditCommittee, we were appointed by the membersin1996 to auditthe Appointment We have noexceptionsto report arisingfrom this responsibility — — — — Under the Companies Act2006 we are required to report to you if, inouropinion: Companies Act2006 exceptionreporting Other required reporting is shown orinto whosehandsitmay comesave where expressly agreed by ourpriorconsentinwriting. these opinions,acceptorassumeresponsibility for any otherorto purpose any other personto whomthis report accordance with Chapter 3ofPart 16 ofthe Companies Act2006 andfor noother purpose. We donot,ingiving This report, including the opinions,hasbeenprepared for andonlyfor the Company’s membersasabodyin Use ofthis report www.frc.org.uk/auditorsresponsibilities. This descriptionforms part ofourauditors’ report. A further descriptionofourresponsibilities for the auditofthe financialstatements islocated on the FRC’s website at: economic decisionsofuserstaken onthe basis ofthese financialstatements. are considered material if, individually orinthe aggregate, they couldreasonably beexpected to influence the willalways detectISAs (UK) amaterial misstatement when itexists.Misstatements canarisefrom fraud orerror and Reasonable assurance isahighlevel ofassurance, butisnotaguarantee that anauditconducted inaccordance with from material misstatement, whether dueto fraud orerror, andto issueanauditors’ report that includes ouropinion. objectivesOur are to obtain reasonable assurance aboutwhether the financialstatements asawhole are free Auditors’ responsibilities for the auditofthe financialstatements operations, orhave norealistic alternative butto doso. basis ofaccountingunlesstheconcern directors either intend to liquidate the Group orthe Company orto cease ability to disclosing asapplicable, continueasagoingconcern, matters related to andusingthe goingconcern In preparing the financialstatements, the directors are responsible Group’sfor assessing the and the Company’s free from material misstatement, whether dueto fraud or error. for such internal control to asthey determineenable isnecessary the preparation offinancialstatements that are applicable framework andfor beingsatisfied that they give and atrue fair view. Thedirectors are also responsible out onpage 88,the directors are responsible for the preparation ofthe financialstatements inaccordance with the As explained more fullyinthe Statement ofdirectors' responsibilities inrespect ofthe financialstatements set Responsibilities ofthe directors for the financialstatements Responsibilities for the financialstatements and the audit — — — — are notin agreement with the accountingrecords andreturns The Company financialstatements and the part ofDirectors’the Remuneration Report to beaudited Certain disclosures ofdirectors’ remuneration specified by law are notmade;or not beenreceived from branches notvisited by us;or Adequate accountingrecords have notbeenkept by the Company, orreturns adequate for ouraudithave We have notreceived allthe information andexplanations we require for ouraudit;or

Corporate governance 95

Oxford BioMedicaplc |Annualreport andaccounts 2017 12

Group financial statements 97 98 ordinary share Basic lossanddiluted lossper expense for the year Loss andtotal comprehensive Taxation Operating loss Other gains Other operating income Administrative expenses bioprocessing costs Research, development and Gross profit Cost ofsales Revenue Continuing operations for the year 2017 ended31December Consolidated statement ofcomprehensive income Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 The lossfor the year is attributable to the owners ofthe parent. There was noother comprehensive income orloss. Loss before tax Finance costs Finance income Note 27 13 8 4 4 4 9 6 6 (18,442) (21,611) (11,761) (0.29p) (5,668) (6,131) (9,017) (7,276) 37,590 19,148 £’000 2,744 2,297 1,774 2017 38 (24,299) (20,307) (11,835) (16,641) (11,313) (0.60p) (9,028) (5,957) 15,941 27,776 £’000 3,002 3,666 2016 34 – Oxford BioMedicaplc |Annualreport andaccounts 2017 Assets 2017as at31December Balance sheets Group financialstatements Inventories Current assets Investments Property, plant andequipment Intangible assets Non-current assets Loans Non-current liabilities Net current assets/(liabilities) Deferred income Trade andother payables Current liabilities Cash andcashequivalents Current tax assets Trade andother receivables Chief Executive Officer John Dawson and were signedonitsbehalfby: The financialstatements on pages The Company madealossfor the year of£1,207,000 (2016: £1,781,000). The Company’s registered numberis03252665. Total equity Accumulated losses Other reserves Share premium account Ordinary shares of the parent Equity attributable to owners Net assets Provisions

Note 20 28 24 23 27 12 18 15 19 16 14 13 17 11 8 98 to to 132 were approved by the Board ofDirectors on (182,663) 154,224 36,864 28,421 25,370 36,981 21,762 14,329 15,219 31,076 13,072 37,494 17,088 £’000 2,954 3,509 8,690 2,232 6,146 6,146 3,332 2017 630 Group 97 (174,489) 154,036 15 15 34,389 30,879 29,501 15,335 18,125 12,615 12,615 35,011 7441 27,4 27,514 £’000 3,000 2,202 6,904 6,003 2,189 1,330 9,316 3,313 2016 622 657 March 2018 (122,590) 154,224 72,350 72,350 72,309 72,309 31,076 £’000 9,599 2017 Company (41) 40 81 81 31

– – – – – – – – 9 (121,383) 154,036 65,808 65,808 30,879 71,164 71,164 £’000 5,529 5,356 5,532 7,632 2016 176 176 – – – – – – – – 3

Group financial statements 99 100 at 31December Cash andcashequivalents at 1January Cash andcashequivalents cash andequivalents Net (decrease) /increase in financing activities Net cash(usedin)/generated from Loans repaid Loans received Interest paid Costs ofshare issues ordinary share capital Proceeds from issueof from financingactivities Cash flows Net cashusedininvesting activities Interest received and equipment Purchases ofproperty, plant Loan to subsidiary from investing activities Cash flows operating activities Net cashgenerated from/(used in) Overseas tax paid Tax credit received Cash usedinoperations from operating activities Cash flows for the year 2017 ended31December Statements ofcashflows Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017

23, 24 Note 24 29 12 16 19 (10,800) (30,536) (2,054) (1,006) (1,969) (1,533) (1,931) 15,335 38,897 14,329 £’000 4,530 2,979 2017 (18) 385 Group 38 – – (6,458) (3,258) (5,929) (1,848) (2,125) 19,622 14,239 15,335 (6,411) £’000 5,980 9,355 4,131 2016 (50) 47 – – – (5,498) (1,308) (1,308) (4,575) (4,575) £’000 5,529 2017 Company 385 385 31 – – – – – – – – (10,346) (10,346) (2,125) (1,623) (1,623) 19,622 17,497 £’000 5,528 5,529 2016 – – – – – – – 1 Oxford BioMedicaplc |Annualreport andaccounts 2017 Transactions with owners: Total comprehensive expensefor the year 2016At 1January Group for the year 2017 ended31December Statements ofchanges inequity attributable to owners ofthe parent Group financialstatements Year 2016: ended31December 2016At 1January Company Loss for the year Year 2017: ended31December 2016At 31December Cost ofshare issues Issue ofshares excluding options Share options Loss for the year Year 2016: ended 31December Loss for the year At 31 December 2017At 31December Issue ofwarrants Share options Total comprehensive expensefor the year Loss for the year Year 2017: ended31December 2016At 31December Cost ofshare issues Issue ofshares excluding options Share options Transactions with owners: Total comprehensive expensefor the year 2017At 31December Vesting ofdeferred share award Issue ofwarrants Share options Transactions with owners: Total comprehensive expensefor the year Value ofemployee services Proceeds from shares issued share schemes Credit inrelation to employee Proceeds from shares issued Value ofemployee services Proceeds from shares issued employee share schemes Credit inrelation to Proceeds from shares issued

Notes Notes 26, 28 26, 28 23, 24 23, 24 23, 24 23, 24 23, 24 23, 24 28 28 24 24 27 27 27 10 10 Ordinary Ordinary Ordinary 30,879 30,879 31,076 31,076 shares shares 25,741 25,741 £’000 £’000 5,118 5,118 197 197 20 20 – – – – – – – – – – – – – – – – –

premium premium account account 154,224 154,224 154,036 154,036 141,677 141,677 (2,125) (2,125) 14,445 14,445 £’000 £’000 Share Share 188 188 39 39 – – – – – – – – – – – – – – –

Merger Merger 1,580 1,580 £’000 £’000 2,291 2,291 1,580 2,291 – – – – – – – – – – – – – – – – – – – – – – –

Reserves Reserves Treasury Warrant £’000 £’000 1,218 1,218 (102) (102) 102 – – – – – – – – – – – – – – – – – – – – – – – –

Warrant Other 6,052 £’000 £’000 6,801 1,218 1,218 5,552 500 749 – – – – – – – – – – – – – – – – – – – – – –

Accumulated Accumulated (122,590) (182,663) (121,383) (174,489) (119,602) (158,713) (16,641) (16,641) (1,207) (1,207) (9,017) (9,017) (1,781) (1,781) losses losses £’000 £’000 (102) 945 865 – – – – – – – – – – – – (16,641) (16,641) (1,207) (1,207) 72,309 (9,017) (9,017) 12,615 54,948 71,164 (2,125) (2,125) 10,894 equity equity 19,563 19,563 (1,781) (1,781) £’000 £’000 6,146 1,218 1,218 Total Total 500 945 385 385 865 749 59 59 –

Group financial statements 101 102 therefore prepared the financialstatements basis. onagoing concern to continueitsactivities for notlessthan twelve months from the date ofthese financialstatements andhave known andprobable cashflows, Directorsthe consider Groupthat the hassufficientcash resources andcashinflows expenditure andthe Directors expectfurther progress in2018. Taking this into account,inconjunctionwith currently the was significantly cashburn reduced asa result ofimproved cashflow from operations and reducedcapital Company completed a£19.3 million(net)equity placing inorder to fundfurther facilities 2017 expansion. During The Group held£14.3 millionofcashatthe endof2017 and£16.4 2018. millionat28February InMarch 2018, the concern Going significant to the financial statements, are disclosed in Note 2. policies. The areas involving ahigherdegree ofjudgementorcomplexity, orwhere assumptionsandestimates are estimates. Italsorequires managementto exercise itsjudgementinthe process ofapplying the Group’s accounting The preparation ofthe financialstatements inconformity with IFRS requires the useofcertain criticalaccounting ofthe moreA summary important Group accountingpolicies are setoutbelow. adopted inpreparing the financialstatements. As more fullyexplained inthe Directors’ report onpages to 84 89 andbelow, thebasis hasbeen goingconcern cost convention asmodified by the revaluation offinancialassetsat fair value through profit andloss. 2006 asapplicable to companies reporting under IFRS. The financialstatements have beenprepared under the historic IFRS Interpretations interpretations Committee ('IFRSIC') asadopted by the European Unionandwith the Companies Act The financialstatements have beenprepared inaccordance with International Financial Reporting Standards (‘IFRS’)and These policies have beenconsistently applied to allthe financial years presented, stated. unlessotherwise The principal accountingpolicies adopted inthe preparation ofthese financialstatements are setoutbelow. Basis ofpreparation marketed pharmaceutical products. business providing bioprocessing andprocess to development third services parties. The Group currently hasno The Group isageneandcelltherapy research anddevelopment businesswhich isalsobuilding The Company’s isOxford principal subsidiary Limited. BioMedica(UK) 2017 comprisethe results ofthe Company undertakings (together anditssubsidiary referred to asthe Group). and listed onthe London Stock Exchange. The consolidated financialstatements for the December year ended31 Oxford BioMedicaplc (the Company) isapublic company limited by shares, incorporated anddomiciledinEngland, 1, Accountingpolicies for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 a revenue-generating

Oxford BioMedicaplc |Annualreport andaccounts 2017 capital ofOxford Limited that hasbeenaccounted BioMedica (UK) for by the merger accounting method. combinations which took place 2004, priorto 1 January namelythe acquisitionin1996 of100% ofthe issuedshare The Group andCompany have elected notto apply IFRS 3 ‘Business combinations’ retrospectively to business financial statements ofsubsidiaries to bringaccountingpolicies usedinto linewith Group.those of the is recognised directly inthe statement ofcomprehensive income. Where necessary, adjustmentsare made to the goodwill. Ifthe costofacquisition islessthan the fair value ofthe acquired, netassetsofthe subsidiary the difference cost ofthe acquisitionover the fair value ofthe Group’s share ofthe identifiable netassetsacquired is recorded as initially attheir fair values at the acquisitiondate, irrespective ofthe extent ofany minority interest. Any excessofthe Identifiable assetsacquired, andliabilitiescontingentassumedinabusinesscombinationare measured of exchange. as the fair value ofthe assetstransferred, equity issued,andliabilitiesincurred instruments orassumedatthe date Business combinationsare accounted for usingthe acquisitionmethod. The costofanacquisitionismeasured All intragroup transactions andbalances are eliminated onconsolidation. not currently have any associates. to govern the financialandoperating policies of the entity soas to obtain benefits from itsactivities. The Group does consolidated from the date atwhich control istransferred to the Group. Control existswhere the Group hasthe power each year.31 December are Subsidiaries entitiesthat are directly orindirectly controlled by the Group. are Subsidiaries The consolidated financialstatements comprise the Company undertakings anditssubsidiary for the year to Basis ofconsolidation — IFRIC23, ‘Uncertainty over incometax treatments’ — — — — — — — — — The following standards are notexpected to have asignificantimpactGroup: on the — — — issued butare noteffective for the financial yearbeginning1January 2017 and have notbeenadopted early. The newstandards, newinterpretations andamendmentsto standards andinterpretations listed below have been, Accounting developments — — — — — — — — — — — — IFRIC 22, ‘Foreign currency transactions andadvance consideration’ (notyet endorsedby the EU) IFRS 17, ‘Insurance contracts’ (notyet endorsedby the EU) Annual improvements 2014–2016, (notyet endorsedby the EU) by the EU) Amendments to IAS40, ‘Investment property’ relating to transfer ofinvestment property (notyet endorsed Amendments to IFRS4, ‘Insurance contracts’ regarding the implementation ofIFRS9, ‘Financial instruments’ Amendments to IAS28,(notyet endorsedby the EU) endorsed by the EU) Amendment to IFRS9, ‘Financial instruments’, onprepayment features with negative compensation(notyet IFRS 9, ‘Financial instruments’ transactions (notyet endorsed by the EU) Amendments to IFRS2, ‘Share based payments’ onclarifying how to accountfor certain types ofshare-based payment IFRS 16, ‘Leases’ (endorsedby the EU) Amendment to IFRS15, ‘Revenue from contracts with customers’ IFRS 15, ‘Revenue from contracts with customers’

Group financial statements 103 104 Non-cash revenues are recognised atfair value through profit andloss. of the fundedresearch anddevelopment activities. Research anddevelopment fundingisrecognised asrevenue over aperiodthat corresponds with the performance to completion ofthe relevant phase ofdevelopment orassociated clinical trials. amounts receivable are recognised inthe periodinwhich related costsare incurred, orover the estimated period or achievement ofspecifiedsales volumes, are recognised infullwhen the relevant event hasoccurred. Otherwise, stipulated inthe licenceagreement have beenmet.Payments linked to “success” such asregulatory filingorapproval, Amounts receivable inrespect ofmilestone payments are recognised asrevenue whenthe specificconditions as apayment inconsideration ofthe granting ofthe licenceonexecutionofthe contract. from the Group andthe licencehasnofixedenddate,Group the recognises the amount received upfront on product sales. Where the initialamountreceived isnon-refundable andthere are noongoingcommitments of the licence,andthe potential for further payments conditionalonachieving specificmilestones, plus royalties Product andtechnology licencetransactions typically have aninitialupfront non-refundable payment onexecution of the deliverable. areservices recognised onapercentage ofcompletion basis, buttaking into accountthe likelihood ofachievement and whenthere isahighprobability that the incentive willbereceived. Incentives related to the provision ofsupport recognised onaprobability adjusted basis oncemostofthe work oridentifiable deliverables have beencompleted stipulated inthe relevant agreements orcontracts. Incentives related to the achievement ofspecificdeliverables are Incentive receivables relating to bioprocessing orprocess development activities are determined by specificconditions isrenderedthe service onapercentage ofcompletion basis. Revenues for providing process development activities to partners are recognised duringthe periodinwhich will bedeferred untilsuch timeasitisappropriate to recognise the revenue. is presented asanassetseparately onthe balance sheet.Consideration received inexcessofthe stage ofcompletion customers onallpartnerships inprogress for which costsincurred plus recognised profits exceedprogress billings ‘percentage ofcompletion’ basis dependentonthe stage ofcompletion ofthe contract. The gross amountduefrom Bioprocessing ofclinical product for partners isrecognised underIAS18, Revenue, with revenues recognised ona development programmes. todevelopment partners, services product andtechnology licencetransactions, andfundedresearch and Revenue comprisesincomederived from bioprocessing ofclinical product for partners, fees charged for providing Revenue income inthe periodinwhich they arise. sheet date. Differences arisingdue to exchange rate fluctuations are taken to the statement ofcomprehensive Assets andliabilitiesinforeign currencies are retranslated into sterling atthe rates atthe ofexchange ruling balance Transactions inforeign currencies are translated into sterling atthe rate atthe ofexchange ruling transaction date. Foreign currencies for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017

Oxford BioMedicaplc |Annualreport andaccounts 2017 are exercised the proceeds received are credited to equity. options that have vested, with nocharge for those optionswhich were forfeit priorto vesting. When share options exercisable based onforfeiture such that atthe endofthe vesting periodthe cumulative charge reflects the actual At each financial Groupyear end, the revises itsestimate of the numberof options that are expected to become of optionsgranted underthe deferred bonusplan isbased onthe market value atthe date ofgrant ofthese options. Carlo modeltaking into accountthe performance conditionsunderwhich the optionswere granted. The fair value granted underthe LTIP schemes, which includes market conditionperformance criteria, ismeasured usingaMonte share optionschemes andshare save scheme ismeasured usingthe Black-Scholes model. The fair value ofoptions which the employees becomeunconditionallyentitled to the options. The fair value ofoptionsgranted underthe a corresponding increase inequity. The fair value ismeasured atthe date ofgrant andspread over the period during of optionsgranted isrecognised asanexpenseofemployment inthe statement ofcomprehensive incomewith bonus plans allow group employees to acquire shares ofthe Company subjectto certain criteria. The fair value The Group’s employee share optionschemes, longterm incentive plans, save asyou scheme anddeferred earn Share based payments post-retirement benefits. held separately from those ofthe Group inindependently administered funds. The Group doesnotoffer any other are charged to the statement ofcomprehensive basis. incomeonanaccruals The assetsofthe pensionscheme are Employee benefitcosts,notably holiday pay and contributions Group’sto the definedcontribution pension plan, Employee benefitcosts to date. Other development expenditure isrecognised asanexpensewhenincurred. of the product onastraight-line basis over the periodofitsexpected benefit. No such costshave beencapitalised has beencapitalised andhasafinite usefullife isamortisedfrom the commencementof the commercial production feasibility, status ofregulatory approval, andthe ability to measure costsreliably. Development expenditure which project willgenerate future economicbenefit,considering factors including itscommercial and technological Expenditure incurred ondevelopment projects isrecognised asanintangible assetwhenitisprobable that the in the periodinwhich itisincurred. Research, development andbioprocessing expenditure ischarged to the statement ofcomprehensive income Research, development andbioprocessing attributable to the deferred revenue isincluded inprepayments. paid they are included inaccruals. Where revenue isspread over anumberofaccountingperiods,the royalty Royalties arisingfrom such partners’ licencesare treated ascostofsales. Where royalties duehave notbeen The Group’s products andtechnologies include technology elementsthat are licensedfrom third parties. in progress untilsuch time asitisappropriate to recognise the cost. stage ofcompletion ofthe contract. Costsincurred inexcessofthe stage ofcompletion are recognised aswork other directly attributable costs.Costsare recognised onapercentage ofcompletion basis dependent onthe The costofbioprocessing clinical product for partners includes the raw materials, labourcosts,overheads and on partners’ licences. Cost ofsalescomprisesthe costofbioprocessing clinical product for partners androyalties arising Cost ofsales

Group financial statements 105 106 the assetorliability isrecovered orsettled. Measurement ofdeferred tax liabilities andassetsreflects the tax consequenceexpected to fall from the manner inwhich or liability settled, based ontax rates andlaws that have beenenacted orsubstantially enacted by the balance sheetdate. Deferred tax ismeasured atthe average tax rates that are expected to apply inthe periodsinwhich the assetisrealised against which the deductible temporary difference canbeutilised. regarded asprobable that there willbesuitable taxable profits within the samejurisdiction in the foreseeable future group. Any remaining deferred tax assetisrecognised only when,onthe basis ofallavailable evidence,itcanbe Deferred tax liabilitiesmay beoffset againstdeferred tax assetswithin the same taxable entity orqualifyinglocal tax differences are differences between amountof the Group’s thecarrying assetsandliabilities their tax base. Deferred tax iscalculated inrespect ofalltemporary differences identifiedat the balancesheetdate. Temporary using the tax rates andlaws that have beenenacted, orsubstantially enacted, by the balance sheetdate. Current tax, including UKcorporation tax andforeign tax, isprovided atamountsexpected to bepaid (orrecovered) included within current assetsinthe balance sheetuntilsuch timeasitisreceived. an assessmentoflikely receipt, isrecognised inthe statement ofcomprehensive incomewith the corresponding asset The credit ispaid in arrears oncetax returns have beenfiledandagreed. The tax credit in earned theperiod, based on The Group isentitled to claim tax credits inthe United Kingdomfor certain research anddevelopment expenditure. Taxation interest rate method. Italsoincludes the revaluation ofexternal loans denominated inaforeign currency. Finance incomeandcostscompriseinterest incomeandinterest payable duringthe year, calculated usingthe effective Finance incomeandcosts comprehensive income. andlossesonthe revaluationGains ofequity are instruments recognised atfair value inthe statement of Revaluation ofequity instruments and bioprocessing costs. income within the statement ofcomprehensive incomeandthe related costsare included within research, development rights to any intellectual property and patents created by these programmes, this incomeisincluded asother operating Where research anddevelopment programmes are partially fundedby external parties, andthe Group retains certain Partially fundedresearch anddevelopment incomeontheaccrued balance sheet. income onthe balance sheet,whilstwhere grant incomerecognised exceedsgrant incomereceived, itisincluded within administrative expenses. Where grant incomereceived exceedsgrant incomerecognised, itisincluded within deferred comprehensive income,andthe related costsare included within research, development andbioprocessing costs,and which they are intended to compensate. Grant incomeisincluded asother operating incomewithin the statement of Income from government andother grants isrecognised over to the match periodnecessary them with the related costs Grants basis over the leaseterm. leases. Costsinrespect ofoperating leasesare charged to the statement ofcomprehensive incomeonastraight-line of ownership to the lessee.No leaseshave beenclassified as financeleases.All other leases are classifiedasoperating Leases are classified asfinanceleaseswhenever the of thelease terms transfer substantially all therisksand rewards Leases for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017

Oxford BioMedicaplc |Annualreport andaccounts 2017 No in-houseresearch anddevelopment orpatent costsare included inintangible assets. Intellectual property rightscomprisethird party patent rightsthat have beenpurchased by the Group. in the statement ofcomprehensive income. and amortisationchargesImpairment are included within research, development andbioprocessing costs assumptions againstpast experience. toDue the novelty andearly stage ofdevelopment ofthe Group’s products, itisnotpossible to benchmark these The key assumptionsare managementestimates, based where possible onavailable information for similarproducts. — — — — — Key assumptions inthe discounted cashflow calculationsare whether: of disposalisusedasthe recoverable amount. Value inuseiscalculated usingestimated discounted future cashflows. less coststo sellandvalue inuse. Where the assetisnolongerbeingdeveloped by the Group fair value lesscosts asset’s amount exceedsitsrecoverable carrying amount. The recoverable amountisthe higherofanasset’s fair value identifiable cash flows orcash-generating losses units.Impairment are recognised for theamount bywhich each For assetsare theofassessingimpairments, purposes grouped atthe lowest levels for which there are separately of comprehensive income. occurs andprovision madewhere appropriate. Charges orcredits for are impairment passed through the statement value ofnon-financialassetsis The carrying reviewed annually orearlierfor impairment ifanindicationofimpairment Impairment over the length ofthe patent life; current lives range from 5to 19 years. be determined, theatcostbuttested assetiscarried annuallyfor Intangible impairment. assetsare amortised economic life from the timethey becomeavailable for use. Where the usefullife ofthe intangible assetcannot Where the intangible asset hasafinite life amortisationis charged onastraight-line basis over the remaining useful Amortisation recognised asintangible assetsatfair value. Other acquired intangible assetsare initiallyrecognised atcost. Intellectual property andin-process research anddevelopment acquired through businesscombinationsare Initial recognition Intangible assets — — — — — of the development cycle for innovative medicines,this period issignificantly longer than five years The cashflow projections are along-term view, based on the expected patent life.Due to the length The resulting cashreceipts are discounted atanappropriate discount rate disease incidenceandmarket penetration The cashflow projections include estimates for sellingprice, royalty rates, populationgrowth, The Group receives aninitial licence fee, milestone payments androyalties onsales and markets the product The product isdeveloped by acollaborative partner whofundsallfuture development costs

Group financial statements 107 108 Freehold property begins whenitisavailable for use. The principal annualrates usedfor thisare: purpose on astraight-line basis over the expected usefuleconomiclives oftheDepreciation assetsconcerned. ofanasset Depreciation iscalculated to write off the costofproperty, plant andequipmentless their estimated residual values to itsworking conditionfor itsintended use. depreciation. Costincludes the originalpurchase priceofthe assetandany costsattributable to bringingthe asset Property, plant andequipmentare atcost,together carried with any incidental expensesofacquisition,less Property, plant andequipment for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 of these awards asacapital contributionto the subsidiaries,resulting inanincrease inthe costofinvestment. have beenawarded to employees companies. ofsubsidiary Investments are atcostlessany carried provision madefor over Options impairment. the Company’s shares Financial assets:investments insubsidiaries review isperformed. The bioprocessing plants are reviewed annuallyfor triggersand,where impairment necessary, afullimpairment The assets’ residual values andusefullives are reviewed annually. Bioprocessing andlaboratory equipment Office equipmentandcomputers Leasehold improvements value isthe estimated selling priceinthe ordinary courseofbusiness, lessapplicable variable sellingexpenses. and related production overheads operating (based onnormal capacity). Itexcludes borrowing costs.Net realisable method. The costoffinishedgoodsand work inprogress comprises raw materials, direct labour, other direct costs Inventories are stated atthe lower ofcost andnetrealisable value. Costisdetermined using the weighted average Inventories are measured attheir fair value. and are classified as available for salefinancial assets.After initial recognition, available forsale investments Bank depositswith originalmaturities between three months andtwelve months are included incurrent assets Bank deposits Other investments held by the Group are classified as fair value through profit andloss. Investments Financial assets:available for saleinvestments of future beingrequired impairments after awrite back was accounted for. will bethe Groups track record ofimproved financial results across the last three to four years, as well as the expectation recognised onitsinvestment insubsidiaries.Factors which willbetaken into accountwith regards to this decision At year endthe directors willassessthe requirement to write back aportionorallofany previously impairment subsidiaries for this purpose. reference to the market capitalisation ofthe Group isanappropriate external measure ofthe value ofthe Company's value ofthe Company’sout inIAS36,andthe carrying investments insubsidiariesisadjusted. The directors considerthat resulting inadecrease in market capitalisation, the directors considerthis to review beatrigger ofanimpairment asset is amaterial andsustained shortfall inthe market capitalisation, orasignificantandsustained change in the business At each year endthe directors review value ofthe Company’s the carrying investment insubsidiaries. Where there investmentsSuch are subjectto review, andany ischarged impairment to the statement ofcomprehensive income. Investments undertakings, including shares insubsidiary andloans, are atcostlessany carried provision. impairment In accordance with IFRS2,the Company treats the value (or the remaining leaseterm ifshorter)

20 –33%

20%

10% 10% 10%

Oxford BioMedicaplc |Annualreport andaccounts 2017 provision dueto the passage oftimeisrecognised asfinancecost. market assessmentsofthe timevalue ofmoneyandthe risksspecific to the obligations. Theincrease in the expenditure expected to berequired to settle the obligation usingapre-tax discount rate that reflects the current Provisions are notrecognised for future operating losses.Provisions are measured atthe present value ofthe the obligation; andthe amount hasbeenreliably estimated. constructive obligation asaresult ofpast events; itisprobable that anoutflow of resources willbe required to settle Provisions for dilapidationcostsandother potential liabilitiesare recognised whenthe Group hasapresent legalor Provisions of anequity asaresidual instrument interest. requirements for initialmeasurement ofafinancial liability inIAS 39, and the definitionsinIAS32,and the framework component from amountoftheasawhole. instrument the initialcarrying This method isconsistent with the The equity componentismeasured asthe residual amountthat results from deductingthe fair value ofthe liability initialrecognition,On thefirstmeasures issuerofacompoundinstrument the liability componentatits fair value. equity instruments. The liability andthe equity componentsshouldbepresented separately onthe balance sheet. for the separating loan asacompoundfinancialinstrument out or the individual elementsinto financialliabilities If the Group assessesthat aloan haselementsofboth aliability andanequity component,the Group will account including any embedded derivatives which are notsubjectto separation. into accountthe estimated cashflows which considerall the contractual of terms the financialinstrument, and allocatingthe interest expenseover the relevant period. The calculationofthe effective interest rate takes method. The effective interest rate method isamethod ofcalculating the amortisedcostofafinancialliability subsequentmeasurement,On external loans are measured atamortisedcostunderthe effective interest rate initialrecognition,On external loans are measured atfair value plus directly attributable transaction costs. Financial Liability: loans amounts recognised asrevenue. revenue for activities provided to partners, andcommercial bioprocessing ofclinical product for partners, over the Deferred incomeisthe excessofcashreceived under licensetransactions, grants, fundedresearch anddevelopment, Deferred income they are presented asnon-current liabilities. interest method. Trade payables are classified ascurrent liabilitiesif payment isduewithin one year orless.Ifnot, Trade payables are recognised initiallyatfair value andsubsequently measured atamortisedcostusingthe effective Trade payables investments with originalmaturitiesofthree months orless. Cash andcashequivalents include cashinhand,bank depositsrepayable ondemand,andother shortterm highlyliquid Cash andcashequivalents of the receivables. when there isevidencethat the Group willnotbeable to collect allamountsdueaccording to the originalterms effective interest method, lessprovision Aprovisionfor impairment. oftradefor impairment receivables isestablished Trade receivables are recognised initiallyatfair value andsubsequently measured atamortisedcostusingthe Trade receivables

Group financial statements 109

Group financial statements Notes to the consolidated financial statements for the year ended 31 December 2017 110 Share capital Ordinary shares are classified as equity. Costs of share issues are charged to the share premium account.

Merger reserve A merger reserve is used where more than 90% of the shares in a subsidiary are acquired and the consideration includes the issue of new shares by the Company, thereby attracting merger relief under s612 and s613 of the Companies Act 2006.

Warrant reserve The warrant reserve comprises warrants exercisable on the enlarged Group’s share capital which have been fair valued and are exercisable over a period of time.

2, Critical accounting judgements and estimates In applying the Group’s accounting policies, management is required to make judgements and assumptions concerning the future in a number of areas. Actual results may be different from those estimated using these judgements and assumptions. The key sources of estimation uncertainty and the critical accounting judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

IFRS 15 The Group is required to implement a new accounting standard, IFRS 15 ‘Revenue from contracts with customers’, from 1 January 2018. The new standard provides a single principles-based approach to the recognition of revenue from all contracts with customers and requires revenue to be recognised when or as performance obligations in a contract are reformed. In its financial statements for 2018, the Group will adopt IFRS 15 applying the modified retrospective approach. In accordance with the requirements of the standard where the modified retrospective approach is adopted, prior year results will not be restated. In application of the standard the Group has identified two key areas of judgement within the existing collaboration agreements, firstly in relation to the number of distinct performance obligations contained within each collaboration agreement, which include a licence and bioprocessing and process development activities within a single contract, secondly the appropriate allocation of revenue to each performance obligation to represent the fair value of the obligation. The sales royalties contained within the collaboration agreements qualify for the royalty exemption available under IFRS 15 and will continue to be recognised as the underlying sales are made. As part of the revenue analysis performed, the Group is planning to recognise partially funded research and development incomes, currently recognised within Other income in the statement of comprehensive income, within Revenue in this statement, in line with the development of this service within the business. In 2017, the Group recognised £0.8 million of this type of income. There are not expected to be any other material impacts on reported revenue.

Revenue recognition Under the 2017 Novartis contract an up-front fee of $10 million was due for a three year minimum capacity reservation covering the period from 2017 to 2019. The Group have determined that this revenue should be recognised over the capacity reservation term based on the number of batches completed per year, capped at the minimum capacity requirement per year per the contract. In 2017 the Group have therefore recognised revenues of £2 million with regards to this item. The Group has recognised a contractually agreed milestone for $1.8 million for the provision of support to Novartis in preparation of their suspension process clinical submission. Although the milestone was formally agreed by Novartis in January, the Group concluded that the criteria for revenue recognition had been met on the basis that they had completed the procedures and the submission had been through the first levels of review with Novartis. Accordingly, a total of $1.8 million (£1.3 million) was recognised as revenue in 2017.

Oxford BioMedica plc | Annual report and accounts 2017

111 financial statements Group

The Group has a contractually agreed step milestone based on the increased scale-up of their suspension process. Dependent on productivity the Group can be awarded up to $4 million. $250,000 was recognised in 2016. During 2017 the Group achieved the target scale up and submitted documents supporting this. This was formally accepted by Novartis in January 2018. The Group concluded that the criteria for revenue recognition had been met on the basis that they had achieved the scale up, and the submission had been through the first levels of review with Novartis. Accordingly, the remaining $3.8 million (£2.8 million) of revenue was recognised in 2017. At the end of 2016, under the October 2014 contract with Novartis, management judged that $1.2 million of a $2 million incentive payment for provision of source documentation to support a proposed BLA submission by Novartis should be recognised on the basis that, based on the level of work performed, it is certain that the economic benefits of the transaction will flow to the entity, and the revenue and related costs can be measured reliably. In 2016 the Group received £1.4 million in one-off payments related to IP licences. Since these payments are non- refundable and there are no ongoing commitments from the Group, the amounts received have been recognised as revenue in the year. £657,000 of these items were received in the form of shares in a partner company. These have been recognised at fair value.

IFRS 9 The Group is required to implement a new accounting standard, IFRS 9 ‘Financial instruments, from 1 January 2018. The Group does not expect there to be any material impacts on reported balances within the financial statements, specifically trade receivables, trade payables, investments and the loan and warrant balances.

Loan valuation On 29 June 2017 the Group completed a new $55 million debt facility with Oaktree Capital Management ("Oaktree"). The facility has been used to redeem the debt facility with Oberland Capital Healthcare. The Oaktree loan is repayable no later than 29 June 2020 although it may be repaid, at the Group's discretion, at any time subject to early prepayment fees and an exit fee. The loan carries an interest rate of 9.0% plus US$ three month LIBOR, subject to a minimum of 1%. Upon achievement of certain conditions, the interest rate could reduce by 0.25% in the second year and a further 0.25% in the third year. The loan was issued at an original discount of 2.5%, and under the agreement the Company has issued 134,351,226 warrants to Oaktree (note 28). On initial recognition, the Oaktree loan, net of the expenses incurred in the refinancing which are treated as prepaid expenses, was fair valued at £37.7 million using an implied market interest rate of 13%. We have assessed that 13% presents a market interest rate which would be offered if no warrants were issued as part of the refinancing. The warrants are therefore calculated as being the residual amount of £1.2 million after subtracting the fair value of the loan from the initial carrying amount of the instrument of £38.9 million. The warrants of £1.2 million are accounted for as equity within the balance sheet.

Intangible asset impairment The Group has intangible assets arising from purchases of intellectual property rights and in-process R&D. Amortisation is charged over the assets’ patent life on a straight-line basis from the date that the asset becomes available for use. When there is an indicator of a significant and permanent reduction in the value of intangible assets, an impairment review is carried out. The impairment analysis is principally based on estimated discounted future cash flows. Actual outcomes could vary significantly from such estimates of discounted future cash flows due to the sensitivity of the assessment to the assumptions used. The determination of the assumptions is subjective and requires the exercise of considerable judgement. Any changes in key assumptions about the Group’s business and prospects, or changes in market conditions affecting the Group or its development partners, could materially affect whether impairment exists. During the year, the Group wrote off the value of the PrimeBoost technology and poxvirus patent following the failure of Bavarian Nordics Prostvac in phase 3. As at 31 December 2017 the remaining book value of intangible assets was £0.1 million.

Revaluation of equity investments On 29 November 2016, as part of a strategic alliance with Orchard Therapeutics, the Group received a 1.95 % equity stake in Orchard Therapeutics. A revaluation of this investment has been carried out and a gain of £2.3 million recognised during the year. As Orchard Therapeutics is a private company the investment has not been valued based on observable market data, but rather the value of the latest placing of shares by Orchard Therapeutics.

Oxford BioMedica plc | Annual report and accounts 2017 112 Trade debtors are monitored to minimise the riskofloss(note 15). of atleastA,inlinewith the Group’s policy to minimisethe riskofloss. Cash balances are mainlyheldonshortandmedium-term deposits with financialinstitutions with acredit rating (c) Credit risks would benodifference between cashinterest paid andinterest payable. required 15% rate ofreturn to Oberland. Allinterest onthe Oaktree facility ispaid on aquarterly basis sothere income would notbeaffected by a 1% increase ininterest rates as the charge to incomeisdetermined by the With regards to the Oberland facility, interest payable asdisclosed inthe consolidated statement ofcomprehensive (2016: £295,000). If interest rates had been1% higherin2017 the impact oncashinterest paid would have been£403,000 low level of bank interest rates, interest receivable onbank depositsin2017 was just£38,000 (2016: £34,000). funds to meetday to day operational requirements andpreserving the security ofinvested funds. With the current The Group’s policy isto maximiseinterest receivable ondeposits,subjectto maintaining accessto sufficientliquid of the warrants of£1.2millionisaccounted for asequity. and associated financecostshasbeenaccounted for asa£37.7 million balance within loans, and the fair value $5 millionofthe loan facility was drawn down inJuly2017. The fair value ofthe loan netofcapitalised legal Capital Management.$50 millionofthe facility was drawn down asat30June2017 whilethe remaining 29On June2017 the Group was able to re-finance this loan facility with anew$55 million facility withOaktree to finance the capacity expansion programme between late 2014 andmid-2016. 1MayOn 2015 the Group established a$50 million loan facility with Oberland Capital Healthcare which was used (b) Interest rate risk hedging offoreign currency cashflows isundertaken. £37,000 (2016: £57,000). The Group’s policy isto hold the majority ofitsfundsinSterling andUSDollars. No other Had the poundbeen10% weaker inrelation to the Euro, the increased costin2017 would have beenapproximately The Group alsohasexposure to the £/€exchange rate dueto the needto fundexpenditure denominated inEuros. gain/loss of£3.3milliononthe outstanding loan balance. approximately £336,000 (2016: £98,000) onnetcostsover the year andwould leadto anunrealised foreign exchange details with regards to the Oaktree loan). A10% difference in the £/$exchange rate would have hadanimpact of finance costsandany related future repayment ofcapitalDollars willbein (please refer to Interest rate risk for further were payable inEuros andUSDollars. The majority ofoperating costsare denominated inSterling butmostofthe In 2017 the Group’s revenues were mostly receivable inSterling andUSDollars, andcertain ofitsexpenditures (a) Foreign exchange risk any trading infinancialinstruments. at each board meeting. The Group doesnotusefinancialderivatives,Group’s anditis the policy not to undertake reviewed annually. The Group’s agreed policies are implemented by the ChiefFinancialOfficer, whosubmits reports domiciled. Monitoring offinancialriskis part of the Board’s ongoing riskmanagement, the effectivenessis ofwhich The Group hasasimple corporate structure with the Company anditsonlyoperating both beingUK subsidiary Financial riskfactors 3, Financialriskmanagement annual report including the Directors Report (page 86)andNote 1to the financialstatements (page 102). status oftheconcern Group. The conclusions ofthese estimates andjudgementsare reported inseveral places inthis Management andthe directors have hadto make estimates andimportant judgementswhenassessingthe going concern Going for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017

Oxford BioMedicaplc |Annualreport andaccounts 2017 in place duringthe year. structure to minimisethe costofcapital. There have beennocovenant breaches inrelation to the loan agreements in order to provide returns to shareholders andbenefits for other stakeholders, and to maintain anoptimalcapital The Group’s objectives whenmanagingcapital are to safeguard the Group’s ability to continueasagoingconcern Capital Management The fair value ofshortterm depositswith amaturity ofoneyear orlessisassumedto bethe book value. Fair value estimates and hedgeaccountinghasnotbeenused. There were nomaterial derivatives 2017 at31December 2016 or31December which have required separation, Derivative andhedging financialinstruments technology, improve ourcurrent processes andbringdevelopment &manufacturing costsdown isnow included being managedby the Executive Senior Team. Internal technology projects to develop newpotentially saleable 2017During achange was madeto the businesssegmentsmonitored by SET to better reflect the way the businessis (ii) (i) business segments: directors, OfficerandChief ChiefScientific Technical Officer. The SET monitors thethe performanceof Grouptwo in The chief operating decision-maker hasbeenidentifiedas Senior Executivethe Team (SET), comprising the executive reportingSegmental 4, analysis Segmental Debt/equity% Equity Net debt Group 2. 1. Operating loss EBITDA Gross income 2016 Operating loss EBITDA Gross income 2017 for the ofmakingdecisionsaboutallocatingresources purpose andassessingperformance ofsegments. EBITDA andOperating lossrepresent ourmeasures ofsegmentprofit &lossas they are measure aprimary used Revenues, other operating incomeandoperating lossby segment (previously ‘R&D’). segment within the newlynamed ‘Platform’ segment(previously ‘Partnering’), rather than forming part ofthe “Product“ EBITDA Before (Earnings Interest, Tax, Depreciation, Amortisation, revaluation ofinvestments andShare BasedPayments) measure isanon-GAAP often used Gross incomeisthe aggregate ofrevenue andother operating income. as asurrogate for operational cashflow asitexcludes from operating profit orlossallnon-cash items, including the charge forshare options. therapy products which are owned by the Group. undertaken for third parties. Italsoincludes internal technology developments andtechnical intellectual property. Product –this segmentconsistsofthe clinical andpreclinical development of Platform –this segmentconsistsofthe revenue generating bioprocessing andprocess development activities 2 2 1 1 Platform Platform Platform in vivo in (2,340) (6,239) 38,537 29,789 £’000 £’000 2,917 179

and ex vivo ex Product Product (5,847) (4,720) (4,786) (5,074) £’000 £’000 989 827 gene and cell geneandcell 22,535 £’000 6,695 337% 2017 2017

(11,313) (5,668) (1,869) (7,060) £’000 £’000

39,364 30,778 £’000 19,054 12,615 Total Total 2016 2016 181%

Group financial statements 113 114 Total employee benefitcosts Share based payments (note 26) Other pensioncosts(note 30) Social securitySocial costs Wages andsalaries Employee benefitcosts The Company hadnoemployees duringthe year (2016: zero). financial statements. director, isprovided inthe audited part of the Directors’ remuneration report on page 68which forms part ofthese ExecutiveSenior Team. Further information aboutthe remuneration ofindividual directors, including the highestpaid The key managementfigures above include executive andnon-executive directors and the other membersof the Total Share based payments Other pensioncosts securitySocial costs Wages andsalaries Key managementcompensation Total and bioprocessing Research, development Office andmanagement By activity The monthly average numberofpersons(including executive directors) employed by the Group duringthe year was: 5, Employees anddirectors Total revenue Rest ofworld Europe Revenue by customer location revenue derives predominantly from Europe. The Group’s revenue derives wholly from assetslocated inthe United Kingdom.Analysedby locationofcustomers, Revenue by geographical location or reviewed by the chief operating decision-maker. Allassetsare located within the United Kingdom. A segmental orgeographical split ofassetsandliabilitiesisnotprovided becausethis information isnotreceived by the chief operating decision-maker andthe originofallrevenues isthe United Kingdom. A geographical split ofoperating lossisnotprovided becausethis information isnotreceived orreviewed specifically are apportionedbetween the segmentsusing relevant metricssuch asheadcountordirect costs. Costs are allocated to the segmentsonaspecific basis as far aspossible. Costswhich cannot readily beallocated is included within Platform. Process development incomeisincluded within the Platform segment. from AMSCI(UKGovernment’s Advanced Manufacturing Supply ChainInitiative) to develop oursupply chain capabilities to fundclinical andpre-clinical development isincluded within the Product segmentwhilstgrant incomeof£0.2 million Gross incomeincludes grant incomeof£1.0 million(2016: £1.6 million).Grant incomeof£0.8 millionfrom Innovate UK for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017

Number 18,094 36,398 37,590 14,771 £’000 £’000 £’000 2,334 3,307 1,192 1,616 2017 2017 2017 2017 2017 2017 420 958 295 395 158 271 749 24

Number

26,442 £’000 £’000 £’000 13,484

16,197 27,776 2016 2016 2016 2016 2016 2016 2,409 3,097 1,465 1,334 500

290 247 221 748 313 85 26

Oxford BioMedicaplc |Annualreport andaccounts 2017 6, Financeincomeandcosts 7, Expensesby nature on the $55 millionOaktree facility. of £9.4 million.For the remainder of2017, interest payable consisted ofinterest paid at9%plus 3-month US$LIBOR also incurred alossonearly extinguishmentofthe Oberland facility of£3.9 millionincluded within interest payable as well asthe remaining 4.5% previously to accrued provide areturn of15% perannumto Oberland. The Group Up to 29 June2017, interest payable consisted ofthe cashinterest paid onthe Oberland loan facility at10.5%, Net financeincome Total financecosts Interest payable foreign currency Revaluation ofliabilitiesin Unwinding ofdiscountinprovisions (note 20) Finance costs: Total financeincome Bank interest receivable Finance income: Group by the Group’s auditors provided Services as detailed below: theDuring year the Group (including itssubsidiaries)obtained from services the Group’s auditors andtheir associates Depreciation ischarged to research, development andbioprocessing costsinthe statement ofcomprehensive income. BioMedica UKLtd andrecharged to the Company. Company employee benefit costs of£280,000 (2016: £267,000) relates to non-executive costs paid by Oxford Total Fees payable for other services: Fees payable for the auditofthe parent company andconsolidated financialstatements Net lossonforeign exchange Operating leasepayments used inbioprocessing Raw materials andconsumables ofintangibleImpairment assets Amortisation and equipment Depreciation ofproperty, plant Employee benefitcosts Services relatingServices to company finance andbusinessdevelopment transactions Tax compliance services Tax services advisory Other services Additional fees relating to prioryear audit The auditofthe Company’s subsidiaries

Notes 12 11 11 5 18,094 £’000 4,113 7,833 2017 262 287 143 971 Group 16,197 £’000 4,200 3,340 2016 335 610 132 78 (6,093) (9,414) (6,131) £’000 3,291 £’000 £’000 2017 2017 2017 2017 Company 200 280 120 (8) 38 38 Group 25 35 15 – – – – – – – – 5

(8,994) (9,028) £’000 (4,104) (4,919) £’000 £’000 2016 2016 2016 2016 264 463 267 102

(5) 20 25 34 34 18 15 19 – – – – – –

Group financial statements 115 116 There isno deferred tax recognised (seenote 22). (2016: £90.9 million).Ofthe Group tax losses,£ 2017,At 31December the Group had tax lossesto forward becarried ofapproximately £ Total tax credit for the year Adjustments inrespect ofpriorperiods Tax forward lossescarried to future periods Overseas tax Tax deductionfor share optionslessthan share optionaccountingcharge Income nottaxable R&D relief mark-up onexpenses Expenses notdeductible for tax purposes Tax depreciation andother timingdifferences Effects of: by the standard rate ofcorporation tax inthe UKof19.25% (2016: 20.25%) Loss onordinary activities before tax multiplied Loss onordinary activities before tax are explained below: The tax credit for the year ishigher(2016: lower) than the standard rate ofcorporation tax inthe UK. Thedifferences The Company hasnotax liability, norisitentitled to tax credits (2016: £nil). Taxation credit United Kingdomcorporation tax research anddevelopment credit Adjustments inrespect ofpriorperiods: Overseas taxation United Kingdomcorporation tax research anddevelopment credit Current tax The amountsfor 2017 have notyet beenagreed with the relevant tax authorities. recognised inthe financialstatements butnot yet received isincluded incurrent tax assetsin the balance sheet. tax research anddevelopment credit ispaid inarrears oncetax returns have beenfiledandagreed. The tax credit the credit receivable by the Group for the year lessoverseas tax paid inthe year. The United Kingdomcorporation The amountincluded inthe statement ofcomprehensive incomefor the year 2017 ended31December comprises The Group isentitled to claim tax credits inthe United Kingdomfor certain research anddevelopment expenditure. 8, Taxation for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017

96.3 million(2016: £90.9 million)arose inthe United Kingdom. (11,761) (2,264) (2,744) (1,333) £’000 1,326 (442) (556) (134) 2017 645 Group 14 96.3 (20,307) (3,666) (1,056) (4,061) £’000 1,707 (738) 2016 115 317 million million 50 –

(1 ,207) (2,232) (2,214) (2,744) £’000 £’000 (530) (232) 2017 2017 Company 232 Group 18 – – – – – – –

(3,000)

(2,950) (3,666) (1,781) £’000 £’000 (356) 2016 2016 (716)

356 50 – – – – – – – Oxford BioMedicaplc |Annualreport andaccounts 2017 Intangible assetscompriseintellectual property rights. 11, Intangible assets not beenincluded inthese financialstatements. TheCompany’s loss for the year was £1,207,000 (2016: £1,781,000). As permitted by section408 ofthe Companies Act2006, the Company’s statement ofcomprehensive incomehas 10, Loss for the financial year between the basic lossperordinary share andthe diluted lossperordinary share. As the Group isloss-making, there were nopotentially dilutive optionsineither year. There istherefore nodifference average numberofshares inissueduringthe year 2017 ended 31 December of3,095,667,161; (2016: 2,778,182,534). The basic losspershare of0.29p (2016: 0.60p) hasbeencalculated by dividing the lossfor the year by the weighted 9, Basiclossanddiluted lossperordinary share At 31 December chargeImpairment for the year Amortisation charge for the year At 1January Accumulated amortisationandimpairment and31 December Cost at1January The Company hadnointangibles 2017 at31December 2016. or31December for the entity. There are currently noassetswith indefinite usefullives. factors, there isnoforeseeable limitto the periodover which the assetisexpected to generate netcashinflows An intangible assetisregarded ashaving anindefinite usefullife when, based onananalysisofall the relevant development andbioprocessing costs’ inthe statement ofcomprehensive income. over the remaining patent life ofthe asset.Amortisationof£262,000 (2016: £335,000) isincluded in ‘Research, by the intellectual property rightsbecomeavailable for use.Amortisationiscalculated onastraight-line basis For intangible assetsregarded as having afinite usefullife amortisationcommenceswhenproducts underpinned Bavarian Nordic’s Prostvac product failed initsphase IIIstudy. theDuring year, there was awrite down ofthe PrimeBoosttechnology patent andpoxvirus intangible assetafter Net book amountat31 December £’000 5,494 5,591 4,261 2017 262 971 97

£’000 3,848 5,591 4,261 1,330

2016 335 78

Group financial statements 117 118 The Company hadnoproperty, plant 2017 andequipmentat31December 2016. or31December 1 2016 Net book amountat31 December 2016At 31 December Disposals 2016At 1January Charge for the year Accumulated depreciation 2016At 31 December Disposals Reclassification Additions atcost 2016At 1January Cost Net book 2017 amountat31 December 2017At 31 December Disposals Charge for the year 2017At 1January 2017At 31 December Accumulated depreciation Disposals Additions atcost 2017At 1January Cost 12, Property, plant andequipment for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 Assets under construction representsAssets underconstruction the capitalisationworks ofconstruction atthe Harrow House and Yarnton manufacturing facilities andthe Courtlaboratories.Windrush Freehold property 20,902 18,596 13,964 2,306 £’000 6,938 1,385 921 – – – improve-ments Leasehold Leasehold Freehold property 16,865 20,902 21,171 4,306 £’000 £’000 2,000 6,970 2,798 2,909 4,172 2,306 (633) (633) 7,397 206 522 269 – – – equipment and equipment and improvements computers Leasehold Leasehold (2,290) (2,290) Office Office £’000 1,651 £’000 4,689 (229) (229) 6,970 3,711 2,798 1,374 506 877 353 774 753 978 470 – 9 equipment and equipment and and Laboratory Bioprocessing computers equipment (2,612) (2,612) Office Office £’000 1,862 6,488 £’000 3,179 2,516 3,972 1,317 4,048 1,528 1,080 1,526 1,651 7,574 985 877 – – – and Laboratory Bioprocessing Construction Assets under Assets under equipment (13,964) £’000 £’000 4,220 6,651 3,477 6,488 3,174 9,744 2,516 658 163 – – – – – – – _ _ 1 35,690 25,370 10,320 (2,290) (2,290) 36,011 27,514 33,027 (3,474) (3,474) 36,011 £’000 £’000 8,497 6,458 3,340 8,497 1,969 8,631 Total Total 4,113 – Oxford BioMedicaplc |Annualreport andaccounts 2017 The aggregate fair value ofthe equity investment inOrchard Therapeutics is£3.0 million(2016: £0.7 million). based onobservable market data. recognised duringthe year. AsOrchard Therapeutics isaprivate company the investment hasnotbeenvalued stake inOrchard Therapeutics. Arevaluation ofthis investment outandagainof£2.3million hasbeencarried 29On November 2016, aspart ofastrategic alliancewith Orchard Therapeutics, the Group received a1.95 %equity Investments: Group 13, Investments At 1 January and31December At 1January Shares ingroup undertakings Investments: Company At 31December Revaluation ofinvestments Recognition ofmilestones/upfronts At 1January Total investments At 1January Capital contributioninrespect ofemployee share schemes Net book amountat31 December and31December At 1January Accumulated impairment Total investments inshares and loans to group undertakings At 31 December Loan advanced inthe year At 1January Loans to group undertakings At 31 December Additions inthe year (note 26) 126,065 176,432 170,639 191,614 65,549 72,350 15,182 £’000 £’000 6,052 2,954 6,801 2,297 5,793 2017 2017 657 749 –

126,065 160,293 185,821 170,639 65,808 59,756 10,346 15,182 £’000 £’000 6,052 5,552 2016 2016 500 657 657 – –

Group financial statements 119 120 which were past dueatthe reporting date, allofwhich have sincebeenreceived. Included inthe Group’s trade receivable balance are amountof£65,000 debtors with acarrying (2016: £47,000) The fair value oftrade andother receivables are the current book values. Total trade andother receivables Prepayments Other tax receivable Other receivables income Accrued Trade receivables 15, Trade andother receivables production orsold onwards. The Company holds noinventories. 2017,During the Group wrote down £53,000 (2016: £29,000) ofinventory which isnotexpected to beused in related to contractual bioprocessing obligations. Inventories constitute raw materials heldfor commercial bioprocessing andwork-in-progress purposes, inventory Total inventory Work-in-progress Raw Materials Group 14, Inventories assessed to berequired. Cumulative of£126.0 impairment millionhasbeenrecognised upto 2017. 31December of the Group for thisFollowing purpose. review animpairment 2017 at31December charge noimpairment was consider that reference to the market capitalisation ofthe Group isanappropriate external measure ofthe value value ofthe Company’sas setoutinIAS36,andthe carrying investments insubsidiariesisadjusted. The directors resulting inadecrease inmarket capitalisation, the directors considerthis to review beatriggerofanimpairment is amaterial andsustained shortfall inthe market capitalisation, orasignificantandsustained change in the business At each year endthe directors review value ofthe Company’s the carrying investment insubsidiaries. Where there All ofthe above subsidiarieshave beenconsolidated inthese financialstatements. shares to settle the 2013 deferred bonusshare awards madeto executive directors andemployees (Note 25). In addition,during2014, the Group setupthe Oxford BioMedicaEmployee Benefit (EBT)Trust to hold market-purchased The registered officeofboth subsidiariesis Court, Windrush Transport Way, Oxford, OX4 6LT. Oxxon TherapeuticsLimited Oxford Limited BioMedica(UK) Interests undertakings insubsidiary for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 incorporation Great Britain Great Britain Country of of Country 1p ordinary shares 1p ordinary shares Description of of Description shares held

Proportion ofnominalvalue of issuedshares heldby the 17,088 Group andCompany £’000 5,705 1,288 8,681 1,391 2017 Group 23 £’000 6,904 100% 100% 2,919 1,969 1,330 2016 448 238 Gene therapyGene research £’000 £’000 1,895 3,332 1,437 2017 2017 Company Nature ofbusiness and development – – – – 9 9 Dormant

£’000 £’000 2,202 2,120

2016 2016

82 – – – – 3 3

Oxford BioMedicaplc |Annualreport andaccounts 2017 Ageing ofpast duebutnotimpaired trade receivables: 17, Trade andother payables (£3.7 million)whilethe Oaktree Facility isoutstanding. The Group isrequired underthe Oaktree Facility to maintain cashandequivalents ofnotlessthan $5.0 million 16, Cashandcashequivalents The Group doesnothold any collateral assecurity. The maximumexposure to credit riskatthe reporting date isthe fair value ofeach class ofreceivable above. The Company’s receivables are alldenominated inSterling. US Dollar Sterling amountsofthe Group’sThe carrying trade andother receivables are denominated inthe following currencies: related work package completes. and commercial development work orders onapercentage accrued complete basis which willbeinvoiced asthe milestones which have asthe beenaccrued specificconditionsstipulated in the licenseagreement have beenmet, from third parties, butwhich hasnotyet beeninvoiced. The balance mainlyrelates to commercial development incomeof£8.7Accrued million(2016: £2.9 million)ariseswhere work hasbeenundertaken which isrecoverable days 30 –60 days 0 –30 The Company hadnodeferred incomein2017 or2016. beingprovided.of the services Deferred incomeariseswhenthe Group hasreceived payment for inexcess ofthe stage services ofcompletion 18, Deferred income Total trade andother payables Accruals Other taxation andsocialsecurity Trade payables £’000 8,690 4,429 3,682 2017 579 Group £’000 6,003 3,985 1,576 2016 442 16,684 17,088 £’000 £’000 £’000 2017 2017 2017 Company 404 65 65 81 81 – – –

£’000 £’000 £’000 6,904 6,893 2016 2016 2016 176 176 42 47 11 – – 5

Group financial statements 121 122 At 31December The Company hadnoprovisions 2017 at31December 2016. or 31December Centre was released in2016 atthe endofthe lease. utilised atthe endofthe leasesifthey are notrenewed, andfor that reason, the provision inrespect ofthe Medawar the rate perthe BankofEngland nominalyieldcurve. The equivalent rate was usedin2016. The provisions willbe in Oxford, UKto their originalcondition atthe endofthe leaseterms in2016 and2024 respectively, discounted using The dilapidationsprovisions relate to anticipated costsofrestoring the leasehold Medawar and Yarnton properties Total provisions Non-current Current Additional provision recognised Utilisation ofprovision Unwinding ofdiscount At 1January Group 20, Provisions loss onearly extinguishmentof£5.3 million. The Oberland Facility was fullyrepaid on29 June2017 atacostof£36.3millionincluding theinterest accrued and whilst the Oberland Facility was outstanding. loan. The Group was alsorequired to maintain a cash balance ofnotlessthan $10 millioninaring-fenced account payment payable to ensure that Oberland received anaggregate return of15% perannumover the periodofthe As the loan was repaid after the secondanniversary, underthe terms ofthe agreement, there was atrue-up net revenue from 1April2017 to 2025 31December for each $5millionofloan drawn down over $30million. to interest, the Group would alsohave beenrequired to pay anadditionalamount of0.35% ofitsannualworldwide LIBOR. The loan was issuedatanoriginaldiscountof2.5%,andarepayment fee was alsodueonrepayment. Inaddition term, cashinterest was payable quarterly atanannualinterest rate of9.5% plus the greater of1% andthree-month to enable itto deliver oncommitmentsunderitsbioprocessing agreement with Novartis. Over the courseofthe loan (£26.1 million)ofthe facility toGroup’s finance the expansion ofitsbioprocessing andlaboratory capacity inorder In May 2015, the Group entered into a$50 millionloan facility with Oberland. The Group drew down $40million expenses, was fair valued at£37.7 million. initialrecognition,On the Oaktree loan, netofthe expensesincurred inthe refinancing which are treated asprepaid achievement ofrevenue targets andarequirement to hold aminimumof$5millioncashatalltimes. all assetsofthe Group including intellectual property. The terms alsoinclude financialcovenants relating to the under the agreement the Company hasissued134,351,226 warrants to Oaktree (note 28). The loan issecured over in the secondyear andafurther 0.25% inthe third year. The loan was issuedatanoriginaldiscountof2.5%,and subjectto aminimumof1%.LIBOR, to Subject achieving certain conditions,the interest rate couldreduce by 0.25% time subjectto early prepayment fees andanexitfee. aninterestThe loan carries rate of9.0% plus US$three month The Oaktree loan isrepayable nolater than 29 June2020 although itmay berepaid, atthe Group's discretion, atany The facility hasbeenusedto redeem the debtfacility with Oberland Capital Healthcare. 29On June2017 the Group completed anew$55 milliondebtfacility with Oaktree Capital Management("Oaktree"). 19, Loans for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 £’000 £’000 2017 2017 630 630 630 622 – – – 8

£’000 £’000 (833) 1,371 2016 2016

622 622 622

79 – 5 Oxford BioMedicaplc |Annualreport andaccounts 2017 The Group hadthe followingDecember each at31 financialinstruments year: and innote 3relating to riskmanagement. loans, andtrade andother payables. Additionaldisclosures are setoutinthe corporate governance statement The Group andCompany’s comprisecashandequivalents, financialinstruments trade andother receivables, 21, Financialinstruments receivables (note 15) Trade receivables andother Cash andcashequivalents (note 16) for further information. The investment inOrchard Therapeutics isclassified asat fair value through profit andloss.Please refer13 tonote Financial liabilitiesclassified aslevel 3inhierarchy US Dollar Sterling amountsofthe Group’sThe carrying cashandequivalents are denominated inthe following currencies: book values. The directors considerthat the fair values ofthe Group’s donotdiffer financialinstruments significantly from their Fair value set outinthe standard. There were nosuch derivativesDecember identifiedat31 2017December or312016. contracts for embeddedderivatives that are required to beseparately accounted for ifthey meetcertain requirements In accordance with IAS39 Recognition‘Financial instruments: andmeasurement’ the Group hasreviewed all US Dollars Sterling Floating rate instantinterest accessdepositsearned atprevailing bank rates. Loans (note 19) tax (note 17) Trade andother payables excluding Investments (note 13) value through profit &loss Financial assets at fair Financial assetsatfair £’000 2,954 2,954 2017 – – – – £’000 2016 657 657 – – – – 14,409 28,738 14,329 £’000 receivables 2017 Loans & Loans & – – –

20,461 15,335 £’000 5,126 2016 – – – Year average average rate Amortised costs, loans Amortised costs,loans Weighted & other liabilities 44,975 36,864 10,486 14,329 0.49% 0.66% £’000 £’000 3,843 8,111 2017 2017 2017 – – – Year average average rate

Weighted 39,950 34,389 15,335 0.26% 0.46% £’000 £’000 8,259 5,561 7,076 2016 2016 2016

– – –

Group financial statements 123 124 December 2016At 31 December 2016At 1January 2017At 31 December and reversalOrigination oftemporary differences 2017At 1January 2017At 31December (note 19) Warrants recognised separately (note 28) Interest payable 2017At 1January Oaktree Capital Management andreversalOrigination oftemporary differences Deferred tax (assets)/liabilities–notrecognised Group further to 17% with effect from 1April 2020. The mainrate ofcorporation tax inthe UKreduced from 20% to 19% with effect from 1April 2017 andwill reduce and therefore noassethasbeenrecognised. (2016: £nil).Inlightofthe Group’s continuinglosses,recovery ofthe deferred tax assetisnotsufficiently certain, Neither the Company northe Group hadany recognised deferred tax 2017 assetsorliabilitiesat31December 22, Deferred taxation Oaktree facility drawn down Oberland loan repayment Cash interest paid Foreign exchange movement Reconciliation inliabilitiesfrom financingactivities at the endofthe term isfixed. All contractual payments are inUSdollars. Interest payments are floating rate payments whilst the capital repayment Capital Interest prevailing 2017: at31December are notincluded inthe following table. Any cashflows based onfloating interest rates are basedoninterest rates The Group alsohasshort-term receivables andpayables that ariseinthecourseofbusinessandthese normal of interest payments are calculated usinginterest rates applicable atthe date ofthe statement offinancialposition. fair value ofGroup borrowings atthe date ofthe statement offinancialposition.Contractual cashflows in respect The following table analysesthe contractual undiscounted cashflows payable, as value and well as the carrying Maturity analysisofthe Group’s financialliabilities for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 depreciation (1,281) (1,071) within within (1,281) 1 year £’000 £’000 4,144 4,144 (309) (972) Due Due 210 Tax Tax – and 2years between 1 Provisions £’000 4,043 £’000 (255) 4,043 (133) (255) (270) Due Due 122 15 – and 3years between 2 Tax losses (16,025) (16,378) (16,025) (17,869) 43,490 41,494 £’000 £’000 1,844 1,996 (353) Due Due Share options payments to maturity 51,677 41,494 10,183 £’000 £’000 (288) Total (148) (288) (192) (96) 140

Carrying Carrying

(17,849) (10,800) (17,730) (30,536) (19,303) (17,849)

36,864 36,864

(3,283) 36,864 34,389 38,897 (1,218) £’000 £’000 value £’000 1,454 9,414 Total 2017

119 – Oxford BioMedicaplc |Annualreport andaccounts 2017 shares23, Ordinary At 1 January –3,088,047,310At 1January (2016: 2,574,252,580) shares sharesOrdinary of1peach Issued andfullypaid Group andCompany vest in tranches of25%from the first to fourth anniversaries of the grant dates. anniversary ofthe date ofgrant. granted Options underthe 2007 during2012 Scheme to 2014, with oneexception, after which the optionsexpire. granted Options priorto 2012 beexercised cannotnormally before the third date of grant. They are notsubjectto market conditionperformance criteria andthe lives of the optionsare ten years, grantedOptions underthe 2007 Share have Scheme Option fixed exercise prices based on the market priceat the at either par oranilcostonthe third anniversary ofthe date ofgrant, andlapse10 years after beinggranted. The performance criteria are describedinthe Directors’ remuneration report. LTIP awards madeto date are exercisable Failure to meet the minimumperformance criteria by the third anniversary results inallthe granted optionslapsing. performance criteria andwillvest onlyif, atthe third anniversary ofthe grant, the performance criteria have beenmet. grantedOptions underthe 2007 and2015 LTIPs to directors andother seniormanagersare subjectto market condition of the Remuneration Committee. Incentive Plans(LTIP) and to other employees underthe Share All option grants Schemes. Option are atthe discretion Share options are granted to executive directors andselected seniormanagersunder the Company’s Long Term — — — — — — — The Company hasoutstanding share optionsthat were issuedunderthe following schemes: 25, over Options shares ofOxford BioMedicaplc At 31December Costs associated with the issueofshares Premium onexercise ofshare options Premium onshares issuedfor cashinplacing andsubscription At 1January Group andCompany 24, Share premium account for 383,371,665 ordinary shares atapriceof3.0 pencepershare. Net proceeds after expenseswere £10.0 million. In September 2016 the Company raised £11.5milliongross proceeds by way ofaplacing ofandsubscription shares atapriceof6.3pencepershare. Net proceeds after expenseswere £7.5 million. 2016In February the Company raised £8.1milliongross proceeds by way ofaplacing of128,383,528 ordinary –3,107,704,224At 31December (2016: 3,088,047,310) shares Allotted onexercise ofshare options–19,656,914 (2016: 2,039,537) shares Allotted for cashinplacing andsubscription–nil(2016: 511,755,188) shares — — — — — — — The 2015 Save As You (approved Scheme Earn May 2015) The 2015 Deferred BonusPlan(approved May 2015) The 2013 Deferred BonusPlan(approved 2014) February The 2015 Long Term Incentive Plan(LTIP) (approved May 2015) The 2007 Long Term Incentive Plan(LTIP) (approved 2007) February The 2015 Executive Share (approved Scheme Option May 2015) The 2007 Share (approved Scheme Option 2007) February 154,224 154,036 30,879 31,076 £’000 £’000 2017 2017 188 197 – – –

154,036 141,677 (2,125) 14,445 30,879 25,741 £’000 £’000

5,118 2016 2016 20 39

Group financial statements 125 126 Note granted 2–Options underthe 2015 LTIP Note 1– These LTIP awards willvest provided that performance conditionsspecifiedinDirectors’the remuneration report are met Options grantedOptions underthe Oxford BioMedica2007 and2015 Long Term Incentive Plans grantedOptions to employees underthe Oxford BioMedica2015 Save As You Scheme Earn Note granted 2–Options underthe 2015 Executive share optionscheme Note 1– grantedOptions to employees underthe Oxford BioMedica2007 and2015 Share Schemes Option Share optionsoutstanding 2017 at31December have the following date andexercise expiry prices: years, after which the optionsexpire. cannotbeexercised Options before the third anniversary ofthe date ofgrant. at the date ofgrant. They are notsubjectto market conditionperformance criteria andthe lives ofthe optionsare ten grantedOptions underthe 2015 Save As You have Scheme Earn fixedexercise prices based on the market price before the third anniversary ofthe date ofgrant. are ten years, after which the optionsexpire. granted Options underthe 2015 beexercised cannotnormally Scheme price atthe date ofgrant. They are notsubjectto market conditionperformance criteria andthe lives ofthe options grantedOptions underthe 2015 Executive Share have Scheme Option fixedexercise prices based on the market for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 2017 Numberofshares 2017 Numberofshares 2017 Numberofshares shows the date onwhich the first25% vests With oneexception,optionsgranted in2012, 2013 and2014 vest in25%tranches onthe first to fourth anniversaries of the grant date. Thedate from which exercisable 119,558,013 10,545,754 11,201,233 18,955,516 11,805,241 8,945,532 50,306,218 14,953,826 54,297,969 8,792,934 10,880,000 1,000,000 4,000,051 1,906,324 4,015,401 3,351,096 3,271,308 1,156,967 7,602,679 6,358,508 5,366,942 300,000 102,527 1,2 1,2 1,2 2 2 2

2016 Numberofshares 2016 Numberofshares 2016 Numberofshares 121,667,890 10,545,754 70,826,153 8,945,532 12,507,384 20,480,000 20,879,740 13,576,673 1,000,000 38,334,353 4,214,046 8,293,338 2,822,537 5,475,269 9,172,881 5,164,133 1,545,983 8,975,127 425,000 151,877 – – 1,2 1,2 – 2 2 1 1 1 1 Exercise pricepershare Exercise pricepershare Exercise pricepershare 2.0p to 4.0p 5.4p to 5.8p 1.6p to 2.8p 2.3p to 3.1p 5.8p 5.5p 6.2p 2.9p 6.6p 9.8p 9.9p 6.1p 0p 0p 0p 1p 1p 1p 1p Date from which exercisable Date from which exercisable Date from which exercisable 22/05/14 to 19/11/14 03/06/15 to 17/10/15 17/07/20 to 25/09/20 13/03/18 to 01/06/18 16/05/19 to 13/10/19 12/10/20 16/05/19 10/01/18 01/10/18 13/07/20 13/10/19 Vested Vested Vested Vested Vested Vested Vested Vested 1 1 08/05/22 to 21/12/22 13/03/25 to 10/06/25 16/05/26 to 13/10/26 22/05/23 to 19/11/23 03/06/24 to 17/10/24 15/03/21 to 04/10/21 17/07/27 to 25/09/27 20/6/24 to 17/10/24 Expiry date Expiry date Expiry date Expiry 30/06/22 16/05/26 12/06/23 10/01/25 01/10/25

25/03/19 13/10/26 12/10/27 13/10/18 13/10/18 13/07/27

Oxford BioMedicaplc |Annualreport andaccounts 2017 Fair value peroption Risk free rate (weighted average) Expected life (years) Expected volatility (weighted average) Total numberofshares underoption The fair values ofoptionsgranted duringthe year were calculated usingthe following assumptions: 26, Share based payments exercisable optionsthat were above water, based onthe year-end share priceof8.85p(2016: 4.07p) pershare. of £168,000 (2016: £80,000) for isincluded inaccruals the potential NIliability to on accrued 31December Certain optionsgranted to UKemployees couldgive riseto anationalinsurance (NI)liability onexercise. Aprovision The optionsgranted under the 2015 Deferred BonusPlanwillbesatisfied by newissueshares at the timeofexercise. reserve within equity (Note the 28).During year 1,325,035 shares from the EBT were exercised. had vested. The EBT isconsolidated atyear endwith the shares accounted heldintrust for aspart ofthe treasury by the Oxford BioMedicaEmployee Benefit (EBT).Trust December Asat312017, allshares held by the EBT The optionsgranted under the 2013 Deferred BonusPlanwillbesatisfied by market-purchased shares held 2017 (2016: £365,000). anniversary ofthe grant dependentonthe with optionconditions.Options avalue of£314,000 vested during specified future dates andare exercisable atnilponeither the first three anniversaries of the grant or the third of share options. These optionswillvest provided that the managersare stillemployed by the Group oncertain The executive directors andcertain other seniormanagershave beenawarded deferred bonusesinthe form Deferred Share Awards Share priceatgrant date Save As You scheme awards Earn Fair value peroption Risk free rate (weighted average) Expected life (years) Expected volatility (weighted average) Total numberofshares underoption Vesting period(years) Exercise price Share priceatgrant date Share options Fair value peroption Risk free rate (weighted average) Expected life (years) Expected volatility (weighted average) Total numberofshares underoption Vesting period(years) Exercise price Share priceatgrant date LTIP awards Vesting period(years) Exercise price (Modelused:Monte Carlo) (Model used:Black Scholes) (Model used:Black Scholes) LTIPs awarded 13 July2017 8,307,230 and2,894,003 and 25September 2017 Options awardedOptions awardedOptions 0.37% and0.50% 12 October 2017 8.85p and8.75p 5.13p and5.14p

62% and63%

13 July2017 20,905,921

4,000,051 0.55% 0.37% 8.85p 9.00p 6.56p 9.93p

0.0p 4.6p 3.4p 63% 63% 3 3 3 3 3 3

Group financial statements 127 128 LTIP: 7p + 5p to 7p 3p to 5p 1p to 3p Options: Exercisable atpar oratnil cost Range ofexercise prices Exercisable at31 December Outstanding at31 December Exercised Expired Granted Outstanding at1January Outstanding at31 December Cancelled Exercised Granted LTIP awards (optionsexercisable atpar value 1pornilcost) exercise priceat31 December Exercisable andwhere market priceexceeds Exercisable at31 December Forfeited Outstanding at1January Share optionsexcluding LTIP all ofwhich related to equity-settled share based payment transactions. The total charge for the year relating to employee share-based payment plans was £749,000 (2016: £500,000), 19,656,914 optionswere exercised in2017 (2016: 2,039,537), including 1,490,755 ofdeferred bonusoptions(2016: nil). granted duringthe year was 9.4p (2016: 4.5p). Excluding the LTIP awards which are exercisable atpar/nil value, the weighted average exercise pricefor options the year, together with the related weighted average exercise prices. The tables below show the movements inthe Share Save Scheme, Option As You andthe Scheme LTIP Earn during for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017

exercise price Weighted average (4,202,453) 65,260,044 (4,439,429) (1,060,474) 24,120,663 50,841,737 9,478,677 9,478,677 Number 2.5p 5.8p 3.5p 0.4p 9.9p 119,558,013 20,715,882 13,513,532 54,297,969 27,748,450 3,282,180 of shares Number Number Weighted average exercise price (14,002,687) Contractual (13,726,730) 23,605,450 70,826,153 11,201,233 remaining remaining 54,297,969 life (years) Weighted Number average 2017 2017 2017 5.0p 2.8p 3.0p 3.0p 5.1p 9.4p 6.7p 6.7p 5.4 8.9 8.1 7.5 7.0

exercise price Weighted average (2,348,886) (1,302,240) (1,186,440) 22,602,217 10,109,530 50,841,737 33,077,086 7,986,670 2.5p Number 3.5p 9.8p 0.7p 5.7p 121,667,890 70,826,153 19,913,529 17,137,416 9,172,881 of shares 4,617,911 Number Number Weighted average exercise price Contractual (9,750,907) 70,826,153 30,455,127 72,407,302 remaining life (years) Weighted 8,945,532

(775,774) Number average 2016 2016 2016 6.0p 2.5p 5.5p 6.2p 2.4p 4.6p 5.1p 3.1p 8.4 8.3 6.3 8.7 7.1

Oxford BioMedicaplc |Annualreport andaccounts 2017 27, Accumulated losses Under the Oaktree loan agreement the Company hasissued134,351,226 warrants to Oaktree, equivalent to All shares previously held inthe treasury reserve have now vested leaving abalance ofnil(2016: 4,053,751) (Note 25). of merger relief to the purchase ofOxxon Therapeutics Limited in2007. of Oxford Ltd usingthe merger BioMedica(UK) method ofaccountingin1996, and£1,580,000 from the application The Group merger reserve 2017 at31December and2016 comprised£711,000 arisingfrom the consolidation 2016 and31 December At 1January 2017At 31December Issue ofwarrants 2017At 1January 28, Other reserves 2016.or 31December Neither the Company undertakings hadreserves noritssubsidiary available for 2017 distributionat31December At 31 December Vesting ofdeferred share award Share based payments Loss for the year At 1January and acorresponding credit to reserves. to the subsidiaries,resulting inanincrease inthe costofinvestment of£749,000 (2016: £500,000) (seenote 13) statements (seenote 26).Inaccordance with IFRS 2the Company hastreated the awards asacapital contribution with IFRS2 ‘Share-based Payment’ the expenseinrespect of these awards isrecognised inthe subsidiaries’ financial overOptions the Company’s shares have beenawarded to employees companies. Inaccordance ofsubsidiary 2016At 31December Credit inrelation to employee share schemes 2016At 1January 2017At 31December Issue ofwarrants Credit inrelation to employee share schemes 2017At 1January Company expenses andthis amounthasbeencredited to the warrant reserve. be exercised atany timeover the nextten years. The warrants have beenfair valued at£1.2millionnetofrelated 4.4% ofthe enlarged Group's share capital. The warrants are exercisable atthe nominalshare priceof1pandmay Group Note 1– of these deferred share awards (note 25). (2016: £365,000) related to the vesting ofdeferred share awards madeto executive directors andseniormanagers,less£118,000 (2016: nil)inrelation to the exercise of1,325,035 The credit to accumulated lossesismadeupoutofthe charge for the year relating to employee share-based payment plans of£749,000 (2016: £500,000) (note 26),£314,000 (182,663) (174,489) Warrant Warrant reserve reserve (9,017) £’000 £’000 £’000 1,218 1,218 (102) 1,218 1,218 2017 945 Group – – – – – – – 1

(174,489) (158,713) (16,641) reserve reserve Merger Merger 1,580 1,580 £’000 £’000 £’000 2,291 2,291 1,580 1,580 2,291 2016 865 – – – – – 1 (122,590) (121,383) Treasury Scheme Reserve reserve (1,207) £’000 6,052 £’000 £’000 6,801 Share 6,052 5,552 (102) 2017 (102) Company 500 102 749 – – – –

(119,602) (121,383)

(1,781)

3,509 £’000 £’000 £’000 9,599 2,189

7,632 1,320 2,189 1,218 Total Total 7,632 2016 7,132

500 749

– –

Group financial statements 129 130 Adjustment for: Operating loss Continuing operations Reconciliation oflossbefore tax to netcashusedinoperations: 29, Cashflows from operating activities for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 30, Pension commitments Changes inworking capital: Group The future aggregate minimumleasepayments undernon-cancellable operating leasesare asfollows: 31, Operating leasecommitments–minimumpayments wereincluded inaccruals, payable to the scheme atthe year-end. represents amounts payable by the Group to the scheme. Contributionsof£138,000 (2016: £109,000), scheme are heldinindependently administered funds. The pensioncostcharge of£958,000 (2016: £748,000) The Group operates adefinedcontributionpensionscheme for itsdirectors andemployees. The assets of the The Company hadnooperating leasecommitments duringthe year (2016: none). a non-cancellable operating leaseagreement. The leaseshave various terms, escalationclauses andrenewal rights. Centre laboratories andofficesup until 2016, andcontinues tolease themanufacturing site at Yarnton, Oxford under The Group leasesequipmentundernon-cancellable operating leaseagreements. The Group alsoleaseditsMedawar Total leasecommitments Over five years Later than oneyear andnotlater than five years Not later than oneyear Net cashusedinoperations Non-cash gains Charge inrelation to employee share schemes Charge for impairment Amortisation ofintangible assets Depreciation (Increase)/decrease ininventory Increase/(decrease) inprovisions Increase indeferred income Increase/(decrease) intrade andother payables (Increase)/decrease intrade andother receivables (11,183) (5,668) (2,297) (1,533) (1,130) £’000 2,687 9,759 4,113 2017 945 262 971 Group 8 (11,313) (5,929) (3,283) £’000 3,340 4,683 (657) 2016 (749) 504 268 865 335 78 (1,308) (1,207) £’000 £’000 2017 2017 Company

(95) 568 330 144 (6) 94 – – – – – – – – (1,623) (1,781) £’000 £’000 2016 2016 226 669 150 104 339 – – – – – – – – 8 Oxford BioMedicaplc |Annualreport andaccounts 2017 Parent company expensespaid by subsidiary Purchases: Company: transactions with subsidiaries payments, including the expensesof the parent company. Oxford Limited asaloan, and Oxford BioMedica(UK) Limited managesgroup BioMedica(UK) fundsandmakes intellectual property. The proceeds from the issueofshares by the parent are passed from Oxford BioMedicaplc to out the Group strategy, employs allthe UKstaff including the directors, and Group’sowns andmanagesallof the The parent company isresponsible for financingandsettinggroup strategy. Oxford Limited carries BioMedica(UK) The registered address for the Company andallofitssubsidiaries is Court, Windrush Transport Way, Oxford OX4 6LT. acquired in2007 andbecamedormant whenitsassetsandtrade were transferred to Oxford Limited. BioMedica(UK) Limited), the principal trading company, (Oxxon subsidiary andonedormant Therapeutics Limited), which was The Group consistsofaparent, Oxford BioMedicaplc, onewholly-owned trading (Oxford subsidiary BioMedica(UK) Identity ofrelated parties 33, Related party transactions not provided for inthe financialstatementsDecember at312017 (2016: £237,000). The Group hadcommitmentsof£ 32, Contingentliabilitiesandcapital commitments (2016: none).Key personremuneration canbeseeninnote 5ofthe financialstatements. other outstanding balances inrespect oftransactions with directors andconnected 2017 personsat31December There isan outstanding balance of£5,000 (2016: £28,000) owed to Lorenzo Tallarigo atyear end. There were no Company: transactions with related parties There were notransactions (2016: none)with Oxxon Therapeutics Limited. to the subsidiaries, resulting inacumulative increase inthe costofinvestment of£6,801,000 (2016: £6,052,000). companies. Inaccordanceof subsidiary with IFRS2,the Company hastreated the awards asacapital contribution In additionto the transactions above, optionsover the Company’s shares have beenawarded to employees in previous years. The investment inthe subsidiary, ofwhich the loan forms part, hasbeenimpaired by £126million(note 13) Loan to subsidiary Company: year-end balance ofloan due for repayment within 12months ofthe year end. The year-end balance onthe loan was: The loan from Oxford BioMedicaplc to Oxford Limited isunsecured BioMedica(UK) andinterest free. The loan isnot Cash loaned by parent to subsidiary Cash management: Issue ofwarrants for shares aspart ofconsideration for loan obtained by subsidiary Warrants: 850, 000 for capital expenditure for leasehold improvements, plant andequipment 176,432 £’000 £’000 5,551 1,218 (976) 2017 2017

170,639 (2,448) 12,794 £’000 £’000 2016 2016

–

Group financial statements 131 132 including any possible release ofdata, to have amaterial effect onitsoperations orfinancialposition. The Group hascontacted those clients itbelieves may have beenaffected. Group The doesnotexpect the incident, shareholders andother stakeholders that this incidenthasnotaffected, anddoesnotaffect, itsability todobusiness. includes anongoingreview ofthe Group's information security systems. The Group would like to reassure clients, the personorpersonsbehindthe incidentmay release somedata. The Group's investigation iscontinuingand access was gainedviaasingleandisolated useraccountwhich hassincebeendisabled. However, itispossible that respond to andmanagethe incidentappropriately. The Group's initialinvestigations have indicated that unauthorised access to part ofthe Group's computer systems. As soonasitwas discovered, the Group took immediate steps to The Group notes that duringMarch 2018 itwas subjectto acybersecurity incidentwhich involved unauthorised suspension cultures. part ofthe grant willbeusedto supportthe planning for the transition ofGMPsuites from the useofadherent to analytical equipment,aswell asother items that are key for the operation ofvector GMPfacilities. Inaddition,asmall The grant willbeusedto supportinvestment inequipmentfor vector development, vector manufacture, storage and Innovate to support the UK's UK, efforts to produce viral vectors andensure adequate supply to meetfuture demand. 2018The Group announcedinJanuary that ithasbeenawarded a£3milliongrant by the UK's innovation agency, on 30June2017. Placing representing an increase of0.1% over the 134,351,226 warrants already issuedto Oaktree asannounced Consequently, Oxford BioMedicaisrequired to issue133,156 warrants to Oaktree following completion ofthe on the priceatwhich the newordinary shares are issuedrelative to anaverage trailing volume weighted share price. which, ifthe Group issuesnew ordinary shares, the numberofwarrants heldby Oaktree willbeadjusted depending The $55 milliondebtfacility with Oaktree Capital Management("Oaktree") contains ananti-dilutionprovision under £20.5 million,netproceeds were £19.3 million. a 6%discountto the closing priceof12.48 pencepershare on8March 2018. Gross proceeds from the placing were price of11.75 pencepershare with both newandexistinginvestors. The priceof11.75 pencepershare represented 9MarchOn 2018, the Group announcedthat ithadplaced 174,346,817 newordinary shares inthe Company ata Oxford BioMedica. for the parties to putinplace aclinical supply agreement for GMPmanufacturing ofhaemophilia products by process development andscale-upactivities for itslentiviral vector haemophilia products. The agreement allows and undisclosed royalties onnetsalesofBioverativ's lentiviral vector haemophilia products. Bioverativ willfund Oxford BioMedicaisalso eligible to receive various milestone payments, potentially worth inexcessof$100 million, Under the terms ofthe agreement, Oxford BioMedicawillreceive a$5millionupfront payment from Bioverativ. manufacturing technology. includes alicenceto useOxford BioMedica's LentiVector-Enabled with Bioverativ Inc.for the development and manufacturing oflentiviral vectors to treat haemophilia. The agreement 2018, 15On February the Group announcedthat ithad completed amajornewcollaboration andlicence agreement 34. events Subsequent for the year 2017 ended31December Notes to the consolidated financialstatements Group financialstatements Oxford BioMedicaplc |Annualreport andaccounts 2017 ™ technology andaccessto itsindustrial-scale

Oxford BioMedicaplc |Annualreport andaccounts 2017 provide long-term orpotentially correction. permanent administration ofthe product directly to the retina could to deliver acorrected version ofthe ABCRgene.Asingle uses the Company’s LentiVector photoreceptors inthe retina andvisionloss.SAR422459 of the ABCRgenewhich leadsto the degeneration of of Stargardt disease. The diseaseiscausedby amutation SAR 422459 isagene-based therapy for the treatment SAR 422459: Stargardt disease angiostatin, directly to the retina. to deliver two anti-angiogenicgenes,endostatin and uses the Company’s LentiVector blocking the formation ofnewblood vessels. The product improve the visionofpatients through anti-angiogenesis; diabetic retinopathy (DR).OXB-201 aimsto preserve and “wet” age-related maculardegeneration (AMD)and OXB-201 isagene-based treatment for neovascular OXB-201: “wet” age-related maculardegeneration the patient’s own lostsource ofthe neurotransmitter. dopamine factory within the brain, thus replacing the striatum,converting cellsinto areplacement is administered locallyto the region ofthe brain called are required for the synthesis ofdopamine. The product technology to deliver the genesfor three enzymes that brain. OXB-102 usesthe Company’s LentiVector degeneration ofdopamine producing cellsinthe nerve disease, aprogressive movement disorder causedby the OXB-102 isagene-based treatment for Parkinson’s OXB-102: Parkinson’s disease accommodate multiple therapeutic genes. capacity than mostother vector systems andcan The LentiVector that geneexpression couldbemaintained indefinitely. retinal cellsinthe eye. Insuch celltypes, studiessuggest into non-dividing cellsincluding neurons inthe brain and cells with upto 100% efficiency andcanintegrate genes systems. The technology canstably deliver genesinto problems associated with earlier generations ofvector which isdesignedto overcome the safety anddelivery an advanced lentiviral vector based genedelivery system Oxford BioMedica’s LentiVector LentiVector Oxford BioMedicaspecific terminology Glossary Other matters ® platform ® platform technology alsohasalarger ® platform technology is ® ® platform technology platform technology ® platform

of grafts are rejected dueto vascularisation. OXB-202 successfully transplanted tissues,asignificant number causing cornea ‘clouding’. Although oneofthe most a needto remove andreplace pathology arisinginthe graftof corneal rejection. grafting Corneal arisesfrom OXB-202 isagene-based treatment for the prevention OXB-202: graft corneal rejection or potentially correction. permanent administration ofthe product couldprovide long-term deliver acorrected version ofthe MYO7A gene.Asingle the Company’s LentiVector address visionlossdueto retinitis pigmentosa by using with acongenital hearingdefect. intends SAR421869 to which leadsto progressive retinitis pigmentosa combined mutation ofthe geneencodingmyosin VIIA (MY07A), of Ushersyndrome 1B. The diseaseiscausedby a isagene-basedSAR 421869 therapy for the treatment UshersyndromeSAR 421869: type 1B solid tumoursandsomehaematological malignancies. 5T4 tumourantigenexpressed onthe surface of most platform and5T4antigento target cancercellsexpressing 5T4 tumourantigen.Itusesthe Group’s LentiVector OXB-302 aimsto destroy cancerous cellsexpressing the OXB-302 (CAR-T5T4): cancer cancer isbased onsimilarmechanisms. the process ofimmunological escapeinpregnancy and cells andalsoby placental andfoetal cells,suggestingthat progression ofcancer. 5T4isproduced by both cancerous development ofthe placenta duringpregnancy andthe through research into the similaritiesbetween the cancerous cells. The 5T4tumourantigenwas identified prevalence onthe surface andmetastatic ofboth primary its restricted expression tissuesanditshigh innormal a valuable target for novel anti-cancerinterventions given on mostcommontypes ofsolid cancer. Itispotentially The 5T4tumourantigenisauniqueprotein found 5T4 tumourantigen vascularisation andto prevent graft rejection. priortodonor corneas transplant inorder to block to deliver endostatin andangiostatin uses the Company’s LentiVector ® platform technology to ® platform technology ex vivo ex to to

Other matters 133 134 — — — approved by the regulatory authorities successfully passes through allphases it may be through the phases over many years. Ifthe drug The drug-development process proceed willnormally approval process istreated asa separate clinical trial. classified into three phases. Each phase of the drug Clinical trialsinvolving are newdrugs commonly Clinical trials(testing inhumans) in an cells inapatient for the treatment ofadiseaseoften Cell therapy isdefinedas the administration oflive whole Cell therapy virtually any tumourassociated antigen. as CAR-modified T cellscanbeengineered to target Antigen Receptors (CAR)isananti-cancertherapeutic Adoptive transfer of T cellsexpressing Chimeric CAR-T therapy the USmarket. or deliver for introduction, abiological product into isarequestThe BLA for to permission introduce Biologics LicenseApplication (BLA) in combination. models andapotentially additive effect whenused have shown potent anti-canceractivity inpreclinical and the Harvard MedicalSchool inBoston. The proteins angiogenesis, Dr. JudahFolkman ofChildren’s Hospital by oneofthe bestknown researchers inthe fieldof and growth. Endostatin andangiostatin were discovered angiogenesis, isacriticalelementintumourformation The creation ofnewblood vessels, known as Anti-angiogenisis supply chains. competitiveness ofUKadvanced manufacturing is afundingcompetitiondesignedto improve the global The Advanced Manufacturing Supply ChainInitiative (AMSCI) Advanced Manufacturing Supply ChainInitiative infects humansandsomeother primate species. Adeno-associated (AAV) viruses which isasmallvirus AAV Terminology notspecific to Oxford BioMedica Glossary Other matters Oxford BioMedicaplc |Annualreport andaccounts 2017 — — — Phase III: final confirmation ofsafetyPhase III:final confirmation andefficacy usually againstaplacebo Phase II:establishing the efficacy ofdrug, the Phase I:screening for safety ex vivo ex setting.

Ex Vivo Ex genetic information. acid(DNA)isamoleculeDeoxyribonucleic that carries DNA lymphoma amongadults. antibodies. Itisthe mostcommontype ofnon-Hodgkin a type ofwhite blood cellresponsible for producing largeDiffuse B-celllymphoma (DLBCL) isacancerofBcells, DLBCL B celllymphoma. chronic lymphocytic leukemia (CLL) anddiffuselarge B cellnon-Hodgkin lymphoma (NHL),adultdisease cancers such asacute lymphoblastic leukemia (ALL), CTL019 isaCAR-T celltherapy for patients with Bcell CTL019 environment outside ofaliving organism. of performing agiven procedure inacontrolled Latin term (for within the glass)refers to the technique Vitro In partners, inorder to accelerate economicgrowth. stimulate innovation, working with businessand other Innovate UKisthe UK’s innovation agency. Itsrole isto Innovate UK manufacturing, clinical andlaboratory activities. to guidelineslaiddown by relevant agenciesfor GMP, GCPandGLP are the practices required to conform GxP isageneral term for (Anything) Good Practice. GxP, GMP, GCP, GLP to provide treatment. or usingDNAthat encodesatherapeutic protein drug Other forms involve directly correcting amutation, a functional,therapeutic geneto replace amutated gene. form ofgenetherapy involves usingDNAthat encodes can beinan delivering therapeutic DNAinto apatient’s cellswhich therapyGene isthe useofDNAto treat diseaseby therapyGene and medicaldevices. veterinary vaccines andother drugs, biological products, effectiveness, quality, andsecurity ofhumanand for protecting the public health by assuringthe safety, AdministrationUS Food andDrug (FDA) isresponsible FDA place outside the bodiesofliving organisms. Latin term usedto describebiological events that take ex vivo ex or in vivo in setting. The mostcommon

Oxford BioMedicaplc |Annualreport andaccounts 2017 biologists to deliver geneticmaterial into cells. Are tools usedby commonlybased onviruses molecular Viral vectors accountability andrelations with shareholders. leadership andeffectiveness, remuneration, standards ofgoodpractice inrelationship to board by the UKFinancialReporting Councilandsetsout The UKCorporate Governance Codeispublished UK Corporate Governance Code(the Code) is created to fulfilspecific objectives. with anasset/liability structure andlegalstatus that Purpose Special Vehicle company (SPV)isasubsidiary SPV resistant to treatment. B lymphocytes (atype ofwhite blood cell)that are in children andyoung adultsmake too many immature (ALL) isatype ofcancerinwhich the bonemarrow Relapsed orrefractory (r/r)acute lymphoblastic leukaemia r/r paediatric ALL iterative testing safety anddrug data iscollected. trials canbeginduringwhich important feasibility, is the stage ofresearch that takes place before clinical Pre-clinical studies(alsoknown asnon-clinical studies) Pre-clinical studies delivery vectorGene based onlentiviruses. Lentiviral vectors A pharmaceutical substance beingtested inaclinical trial. Investigational MedicinalProduct (IMP) areas; copyright, trademarks, designrightsandpatents. Intellectual property rightsfall principally into four main which canbetreated asanassetorphysical property. Intellectual Property (IP)refers to creative work IP place insidethe bodiesofliving organisms. Latin term usedto describebiological events that take Vivo In

Operating income. Gross incomeisthe aggregate ofRevenue andOther Gross income as EBITDA with the R&Dtax credit included. EBIDA isaninternal measure usedby the Group, defined EBIDA Cash flow. measure andisoften usedasasurrogate for operational Amortisation andshare based payments) isanon-GAAP EBITDA before (Earnings Interest, Tax, Depreciation, EBITDA measures ofnon-GAAP Definitions

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