Building the future

Annual report and accounts 2018 Oxford Biomedica in brief The arrival of gene and cell therapy is clear. 1 Oxford Biomedica is a pioneer of gene and cell therapy with a leading Landmark regulatory approvals of these position in lentiviral vector research, development and bioprocessing. Gene and cell therapy is the treatment of disease by the delivery of life-changing treatments are now happening, therapeutic DNA into a patient’s cells. This can be achieved either in vivo and include the very first commercial use of (referred to as gene therapy) or ex vivo (referred to as cell therapy), Oxford Biomedica’s LentiVector® technology. the latter being where the patient’s cells are genetically modified outside the body before being re-infused. Our science is now a therapeutic reality for Oxford Biomedica is focused on developing life changing treatments patients suffering from some of the most serious for serious diseases. Oxford Biomedica and its subsidiaries (the “Group“) diseases. What we are witnessing is just the Introducing Oxford Biomedica have built a sector leading lentiviral vector delivery platform, LentiVector, which the Group leverages to develop in vivo and ex vivo products beginning... 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, Axovant Gene Therapies, Orchard Therapeutics, Boehringer Ingelheim, the UK Cystic Fibrosis Gene Therapy Consortium and Imperial Innovations, 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 430 people. 1 Introducing Oxford Biomedica

11 Sector and technology overview 12 Gene and cell therapy sector 13 LentiVector delivery platform 16 Products

19 Strategic report 20 Our business model 22 Operational highlights 23 Financial highlights 24 Chairman’s statement 26 Chief Executive Officer's review 30 Management team 32 2018 performance review 36 Delivery of our 2018 objectives 37 Objectives for 2019 38 Financial review 44 Corporate responsibility

51 Corporate governance 52 Principal risks, uncertainties and risk management 59 The Board of Directors 62 Corporate governance report 69 Directors’ remuneration report 90 Directors’ report We are delivering 96 Independent auditors’ report

103 Group financial statements 104 Consolidated statement of comprehensive income 105 Balance sheets 106 Statements of cash flows 107 Statements of changes in equity attributable to owners of the parent 108 Notes to the consolidated financial statements

145 Other matters 145 Glossary 148 Advisers and contact details

Oxford Biomedica plc | Annual report and accounts 2018 2 Oxford Biomedica plc|Annual report andaccounts2018 Innovating Oxford Biomedica plc|Annual report andaccounts2018 for everyone’sbenefit. new standards andbenchmarks We continuetoleadtheway, setting pioneers of geneandcelltherapy. Oxford Biomedicaisoneof theoriginal ——— curative treatments. are playingacrucialroleinmakingnew We have always seenitspotentialand around manyunmetneeds. of healthcare burstingwithnewideas entering themainstream.Itisanarea Personalised gene-basedmedicineis

Introducing Oxford Biomedica 3 4 Oxford Biomedica plc|Annual report andaccounts2018 Turning ideasintotherapeuticreality Innovating Read more abouttheopportunitieswithinsectoronpage12. Read more aboutourLentiVector platform onpage13. mean it. mean it. know-how andexperiencewereally manufacturing. Whenwesayhave for commercial scalelentiviralvector the worldwithaGMP-approved facility Oxford Biomedicaistheonlygroup in taken usmanyyearstoperfect. specialised process, andonethat has into patients isacomplexandhighly The deliveryof geneandcelltherapies who candothisrightnow We aretheonlypeopleinworld than anyother. platform hasmore compellingresults data nowavailable, ourLentiVector With severalyearsof clinical pre existing immunityunlike withAAV. T cellsandstemcells,there isno modification of dividingcellssuchas better payloadcapacityandpermanent clear advantagesoverAAV suchas viruses (AAV). Lentiviralvectorsoffer on lentivirusesandadeno-associated for geneandcelltherapyare based The mostcommonlyusedvectors becoming increasinglyattractive Our LentiVector technologyis

delivery Efficient 2. use ourLentiVector technology. of clinicaltrials,manyof whichcouldpotentially CAR-T celltherapymarket are stillintheearlystages to 2022 Forecast togrow at aCAGR of over63%from 2018 Global CAR-T cell therapy market 63% 1. with globalsalesof $1.4 billionby2025 is expectedtobecomethesecondbiggestplayer with whomwehave twopartnered pipelineproducts, Projected toincrease to$8billionby2026. Sanofi, Haemophilia AandBmarket $8bn Lentiviral Vectors vsAAV Vector Ease of manufacture IP protection of dividingcells Permanent modification No pre-existing immunity Large therapeuticpayload Safe andwelltolerated Source: Technavio, October2018 Source: GlobalData, July2017 2 . The majority of therapies in the global . Themajorityof therapiesintheglobal gene in vivogene

Lentiviral Lentiviral Vectors • • • • • • • 1 . Vectors

• •

AAV

• • •

•

Oxford Biomedica plc|Annual report andaccounts2018 See ourproduct developmentpipelineonpage16. developments onpage33. Read more abouttheTRiPSystem andotherLentiVector platform development pipeline. motor neurone diseases,toaddour unmet need,suchasrare retinal and treatments for diseaseswithserious forward withourefforts todiscovernew our LentiVector platform weare pushing As weuncovergreater potentialfrom our ownproducts underdevelopment. our partners’products, butwealsohave We have already experiencedsuccesswith in key areasofunmetneed Developing ourownnewproducts We have developedtheTRiPSystem safer andmore costeffective. gene andcelltherapyworkbetter, be innovating andfindingwaystomake burgeoning sector, weare constantly As wecontinuetotrailblaze this standards therapy industry Introducing thenextgeneandcell benefit alldeliverysystemsincludingAAV. function andpurification. Itcanbeusedto potential detrimentaleffects on vector This newdevelopmentsubstantiallylimits and standardise downstream processes. maximise vectoryieldsandparticlepurity ™

to to

70-year history. making itoneof thefastestfundingapprovals inits 10 daysafter Kymriah wonmarketing authorisation, with advancedleukaemia. IttooktheNHSlessthan which usesourLentiVector technology, tochildren to offer ground-breaking CAR-T therapy Kymriah, The NHSagreed acommercial dealwithNovartis Hospitals areofferingCAR-T therapy Kymriah

Introducing Oxford Biomedica 5 6 Oxford Biomedica plc|Annual report andaccounts2018 Expanding Oxford Biomedica plc|Annual report andaccounts2018 gene and cell therapy concepts. gene andcelltherapyconcepts. to investintechnologyandproprietary products is alsogrowing andwecontinue Our economicinterest inadiverserangeof the pastfew years. and royalty generating partnershipsover from process development,bioprocessing We have seenrapidlygrowing revenues ——— lentiviral vectormanufacture. continue tobeapartnerofchoicefor are investinginourfuturesothatwe To exploitourleadingpositionwe to meetthedemand. growing rapidlyandweareexpanding is The geneandcelltherapyindustry

Introducing Oxford Biomedica 7 8 Oxford Biomedica plc|Annual report andaccounts2018 Gene andcelltherapyisgrowing fast Expanding Read more inthesectorandtechnologyoverviewonpage12. 1. bursting with potential. bursting withpotential. year from 2020. Itisaboomingsector forecast another200applications each investigational newdrugsonfileandhas active geneandcelltherapy-based (FDA) currently hasaround 800 The USFoodandDrugAdministration area of healthcare. makes itanincredibly exciting, andurgent of diseaseswithinadequate options for curative treatments for abroad range The potentialgeneandcelltherapyholds Upsurge ingeneandcelltherapies to beworth$800millionby2026. manufacturing market alonewillgrow We estimate that thelentiviralvector developing intoamulti-billion$market. The geneandcelltherapysectoris A highlyvaluablemarket Company estimates 1

laboratories, with space available for future expansion. laboratories, withspaceavailable for future expansion. QC finish suitesaswell offices, warehousing and for four GMPcleanroom suitesandtwofill expansion willfitoutaround 45,000 sqft(4,200 sqm) 84,000 sqft(7,800 sqm).ThePhase1and2 Our newmanufacturingfacilityisapproximately Manufacturing facility opportunity andmeetexpectedlong-termdemand. will allowustoexploittheimmediate market successful PlacinginMarch 2018. Thisinvestment Our newfull-servicesitewasfundedthrough our Investment innewfacility £20m and celltherapies. to meettheexpectedgrowth indemandfor gene skilled positionsat ourfacilitiesinOxford in2019 We are planningtocreate over160newhighly Increase inworkforce 40%

Oxford Biomedica plc|Annual report andaccounts2018 Read more inthe Read more inthe of another160highlyskilledpositions. workforce considerablywiththecreation During 2019weintendtoincrease our with atrulyone-stop-shop-solution. is inauniquepositiontoprovide partners in-house expertiseandknow-how Oxford Biomedicahasawealthof A uniqueposition and innovation facility. building whichwillbecomeourdiscovery addition, wehave taken aleaseonanother contracts andtake onnewones.In our capacityenablingustomeetexisting operations in2020, willmore thandouble manufacturing facility, duetobegin and analyticalcababilities.Ournew laboratories withprocess development facilities, togetherwithstate-of-the-art GMP approved manufacturing We already have twoindependent to fullcapacity. revenue stream isrunningat full,orclose manufacturing services.Thisimportant technology, process developmentand huge demandfor ourLentiVector and celltherapies.We are experiencing helping themtoprogress anddelivergene some of thebiggestnamesinpharma, Oxford Biomedicaisalready workingwith Doubling ourcapacity Chief Executive Officer's reviewonpage 29. Chief Executive Officer's reviewonpage 29.

10,000 12,000 11,000 1. milestones androyalties). We are targeting 25%to30%of thismarket (excluding is expectedtogrow rapidlyoverthenextfew years. The globallentiviralvectorbioprocessing market expected togrow$800millionby2026 Lentiviral vectorbioprocessingmarket over thenext18months. capacity for bioprocessing andGMPmanufacturing We are planningtomore thandoubleourcurrent Bioprocessing capacitythroughto2020 8,000 6,000 4,000 2,000 9,000 3,000 5,000 1,000 7,000 0 Company estimates $200m 2017 2013 2014 2015 2016 $800m 2017 2026 2018 25–30% 2019

1

2020 25–30%

Introducing Oxford Biomedica 9 11 10 Sector and technology overview

We are ready 1 Introducing Oxford Biomedica

11 Sector and technology overview 12 Gene and cell therapy sector 13 LentiVector delivery platform

16 Products

19 Strategic report 20 Our business model 22 Operational highlights 23 Financial highlights 24 Chairman’s statement 26 Chief Executive Officer's review 30 Management team 32 2018 performance review 36 Delivery of our 2018 objectives 37 Objectives for 2019 Gene and cell therapy is very much here and now 38 Financial review and we’re right at the heart of this healthcare 44 Corporate responsibility Well positioned revolution, working on our own life-changing 51 Corporate governance 52 Principal risks, uncertainties products and those of our partners. and risk management and in great shape 59 The Board of Directors We’re ready to deliver the next wave of new 62 Corporate governance report Summary copy to talk about: 69 Directors’ remuneration report weapons for patients to fight back. 90 Directors’ report ——— • New era for personalised gene based medicine is now 96 Independent auditors’ here report 103 Group financial statements • Ideally placed to seize on increased demand 104 Consolidated statement of comprehensive income 105 Balance sheets 106 Statements of cash flows 107 Statements of changes in equity attributable to owners of the parent 108 Notes to the consolidated financial statements

145 Other matters 145 Glossary 148 Advisers and contact details

Oxford Biomedica plc | Annual report and accounts 2018 Oxford Biomedica plc | Annual report and accounts 2018 12 800 400 600 900 200 300 500 10–20 newgeneandcelltherapyproducts ayear. the upsurge. By2025, theFDA predicts itmayapprove stated itsintentiontohire 50clinicalreviewers tohandle has more than800suchapplications inprocess andhas permission tobegingeneandcelltherapytrials.Italready it willseemore than200applications ayearrequesting preparing for thecomingwave andexpectsthat, by2020, to come.TheUSFoodandDrugAdministration (FDA) is the way for more advanced therapy approvals in the years field from experimentaltocommercial andtheypave These landmarkapprovals marked atransitionfor the Luxturna wasapproved inlate 2017for visionloss. to beapproved. SparkTherapeutics’genetherapy lymphoma, becamethesecondCAR-T celltherapy Kite PharmaasYescarta, indicated for Non-Hodgkin’s indications. Gileadfollowed suitafter itsacquisitionof CAR-T celltherapytobeapproved for twodifferent acute lymphocyticleukaemia. Itwasthefirstandonly partner, Novartis,Kymriah received initialapproval for innovative geneandcelltherapiesin2017. From our into themainstream. Thisfollowed theapproval of three delivered thetruepotentialof thisburgeoning sector medicines intopublicdiscourse.Butitwas2018that and product approvals have allpropelled regenerative large pharmaceuticalcompanies,globalpartnerships Participation inmerger andacquisitions(M&A)bythe is experiencingunprecedentedgrowth. (ATMPs), andgenecelltherapiesinparticular, The market foradvancedtherapymedicinalproducts A globalopportunity Gene andcelltherapysector Sector andtechnologyoverview 700 100 Oxford Biomedica plc|Annual report andaccounts2018 0 Source: Companyestimates Lentiviral vectorbioprocessingmarket ($m) 2015 2016 2017 2018 2019

15.4% CAGR 2020 2021 2022 2023 2024 2025

2026 increase indemand. ideally positionedtotake advantageof theexpected lentiviral vectormanufacturing,Oxford Biomedicais with aGMP-approved facilityfor commercial-scale on theGroup’s websiteat www.oxb.com. Further information onthesectorcanbefound *Source: Companyestimates $800 millionby2026. annual growth rate from $158millionin2015to in 2017andthat itwillgrow at a15.4 percent.compound manufacturing wasworthapproximately $200million We estimate that themarket for lentiviralvector and geneticdisorders. payloads sotheycantreat awiderrangeof diseases material intonon-proliferating cells,andtocarrylarger their abilitytoefficientlyand effectively introduce genetic increasingly attractive for clinicalapplications dueto applications howeverlentiviralvectorshave become associated viralvectors,orAAV. Eachhasitsown vectors suchusourLentiVector platform, andadeno- common viralvectorsusedfor thispurposeare lentiviral genetic material intopatients’ cells.Thetwomost Gene andcelltherapiesuseviralvectorstodeliver 40 60 20 30 50 10 0 Source: Journalof GeneMedicine,December2018 Phase by yearandphase Number oflentiviralvectorclinical trialsinitiated • • •  Phase II Phase I/II Phase I 2009 4 1 2010 918 4 1 • •  2011 Phase III Phase II/III 3 6 2012 6 773 1 * As the only Group in the world AstheonlyGroup intheworld 2013 118 7 1 4 2014 11 9 3 2015 15 10 3 2 2016

11 4 5 1 2017

31 16 4 2 2018 26 17 6 1 7

Oxford Biomedica plc|Annual report andaccounts2018 — — — — — gene andcelltherapyapplications: key features that make themwellsuitedtoarangeof and payloadcapacity. Lentiviralvectorsprovide several including target celltype,duration of geneexpression Several factorsaffect thechoice of genedeliverysystem, direct stable, dose-dependentgeneexpression inpatients after We have data demonstrating more thansevenyearsof dividing cellswhere permanentmodification is required. in thebrainandretinal cellsintheeye,aswell localised deliverytonon-dividingcells,suchasneurons The LentiVector platform hasparticularadvantagesin term expression. therapeutic benefitthrough geneintegration andlong- with veryhighefficiency. Itachievespermanent Our LentiVector platform provides stablegenedelivery World-leading LentiVector platform genedelivery platform LentiVector delivery Sector andtechnologyoverview — — — — — Long-term geneexpression. No pre-existing immunity. T-cells orstemcells. Permanent modification of dividingcells,suchas Target specificcelltypesbypseudotyping of envelope. Significant payloadcapacity. in vivoadministration.

07 . vector systems. vector manufacturingandcanbeusedinotherviral The TRiPSystem offers anewstandard inlentiviral 07. TRiPSystem free mediumisalsoasignificantsafety advantage. less manualhandlingandsingleusesystems.Ourserum- efficiency while reducing cross-contamination risks with Our suspensionprocess improves production yieldand 06. 200Lserum-free suspensionculture reducing costs. simplified andscalablemanufacturingprocess while Our packaging andproduction celllinesenablea 05. Packaging andproducer celllines and timelydeliveryof pipelineproducts. Our engineeringprinciplesensure cost-effective 04. Vector engineering timings andprocess risk. has increased productivity whilereducing development Our significantinvestmentinautomation and robotics 03. Automation androbotics increasing theperformance of ourplatform. learning tooptimiseourmanufacturingprocess, further development experiencethat enablesustousemachine We have collecteduniquedata from ourextensiveprocess 02. Data analyticsandartificialintelligence satisfying international regulatory expectations. production andsupplyprocesses whichare essentialfor Our analyticscapabilitieshave beendevelopedtosupport 01. Analytics Continuous innovation 01. Technology innovator 06. 02. 05 . 03 .

04

. ®

Sector and technology overview 13 14 Oxford Biomedica plc|Annual report andaccounts2018 vector payload. removed; thisalsocreates spacefor thetherapeutic To make asafe vectorsystemtheviralgenesare 02. Makingasafe vectorfromavirus region that islowindopamine. genes needtobedelivered tothecellsinbrain the vectorgenome.Incaseof AXO-Lenti-PD three the target celltotreat thediseaseare engineered into The therapeuticgenesthat needtobedelivered to 01. Therapeuticgeneexpressioncassette disease (anAxovant product) AXO-Lenti-PD genetherapytreatment forParkinson’s How ourtechnologyworksforParkinson’sdisease platform LentiVector delivery Sector andtechnologyoverview 03 .

Parkinson’s disease. making dopamine,theneurotransmitter lackingin and modifiesthemtocreate endogenousfactories to thetarget tissue.Thevectorenterstheneuronal cells Stereotactic surgery isusedtodeliverthevectorproduct to thetargettissue 04. AXO-Lenti-PD vectorisadministered GMP conditionsat large scalesuitablefor useintheclinic. High qualitylentiviralvectorproduct isproduced under 03. Lentiviralvectorgeneration

02. 04

.

01. Oxford Biomedica plc|Annual report andaccounts2018 expanded receptor. Theresulting CTL019modified T-cells are lentiviral vectorencodingtheanti-CD19 chimericantigen T-cells harvestedfrom apatient are transducedwiththe to transduceexpandedT-cells 03. LentiviralvectorencodingCARtargetingCD19used 02. T-cells isolated frompatients targeting CD19whichisexpressedonB-cell cancers 01. OXB producesGMPlentiviralvectorencodingCAR (a Novartisproduct) Kymriah (CTL019)–aCART-cell therapyforcancer How ourtechnologyworksforcancer ex vivopriortoinfusion intothepatient.

01.

02. recurring disease. and persistinthebodytoguard againstresidual or The CTL019cellsdestroy tumourcellsexpressing CD19 and target,’hunt’cancercellsdestroythem 05. Onceinsidethepatient, theCTL019cellsmultiply 04. Themodified T-cells areinfusedbackintothepatient 03. 05.

04.

Sector and technology overview 15

Sector and technology overview 17 Products Sector and technology overview 16 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-202 Corneal graft rejection | Ophthalmology

OXB-302 Cancer multiple | Oncology

OXB-201 Wet age related macular degeneration | Ophthalmology

OXB-204 LCA10 | Ophthalmology

OXB-208 RP1 | Ophthalmology

OXB-103 ALS | Central Nervous System

Oxford Biomedica partnered products Development milestones and royalties SAR422459 Stargardt disease | Ophthalmology

SAR421869 Usher syndrome type 1B | Ophthalmology

AXO-Lenti-PD Parkinson’s disease | Central Nervous System

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

OTL-101 Metabolic disorder | ADA severe combined immunoeficiency

OTL-201 Sanfilippo syndrome | Mucopolysaccharidosis type III

Other Undisclosed

Factor VIII Haemophilia A

Factor IX Haemophilia B

CFTR gene Cystic Fibrosis

Oxford Biomedica plc | Annual report and accounts 2018 Oxford Biomedica plc | Annual report and accounts 2018 Oxford Biomedica plc|Annual report andaccounts2018

19 16 145 103 108 Consolidated statement statement Consolidated 104 106 105 148 107 Glossary 145 Independent auditors’ auditors’ Independent 96 90 44 20 69 30 iaca review Financial 38 62 26 26 36 59 24 51 22 32 23 Principal risks, uncertainties uncertainties risks, Principal 52 11 37 12 13 1

Group financialstatements report Directors’ report Directors’ remuneration report Corporate governancereport The Board of Directors and riskmanagement Advisers andcontactdetails Notes totheconsolidated Other matters financial statements of theparent equity attributable toowners Statements of changesin Statements of cashflows Balance sheets of comprehensive income Corporate governance Corporate governance Corporate responsibility Objectives for 2019 Delivery of our2018objectives 2018 performance review Management team Chief Executive Officer's review Chairman’s statement Financial highlights Operational highlights Our businessmodel Introducing Strategic report Products LentiVector deliveryplatform Gene andcelltherapysector overview Sector andtechnology Oxford Biomedica

Strategic report 19 21 20 Strategic report Our business model Strategic report

Our business model and strategy Partnering During 2018 the Board reviewed the Group’s current We can provide our bioprocessing and process business model and strategy. It was decided that the development expertise and facilities to third parties LentiVector platform business model and strategy was still very relevant but who want to accelerate the development of their own

IP – patents and know-how | facilities | expertise | quality systems required minor modifications. The Group is now willing lentiviral vector programmes. In return for which, we to make modest investment into internal and external receive short and medium term revenues, and longer assets up to early clinical stage before looking to spin term royalties based on licences to our extensive out or out-licence to a partner. This strategy has been know-how and patents. validated through the Axovant deal for OXB-102 (now AXO-Lenti-PD) for Parkinson’s disease entered Freedom-to-operate licensing into in June 2018. We can provide other organisations with licences Arising IP Arising IP Our business model, built on our world-leading to use our important patents relating to lentiviral vector LentiVector gene delivery platform is the result of over safety features and manufacturing efficiencies. 20 years of pioneering science and process development The graphic opposite illustrates our business model. using lentiviral vectors, initially for in vivo therapies. The foundation is our world-leading LentiVector Oxford Biomedica was the first organisation globally platform, and our goal is to exploit this by gaining to use lentiviral vectors in an in vivo setting and interests in a diverse range of gene and cell therapy therefore we had to design and develop vectors and R&D investment / Investment into products which can be both internally generated internal and external assets manufacturing processes which would be both safe technical developments and as a result of our relationship with partners up to early clinical stage and effective. This work was the foundation of our and collaborators. Technology unique combination of skills, patents and know-how and scientific The platform technology is still some way from being knowledge which, together with our GMP clean room and transfer laboratory facilities, combine to form our fully mature so we are continuing to invest R&D funds LentiVector gene delivery platform. in improving the technology to retain our leading position, as this is what attracts other companies Platform Product Lentiviral vectors are key components of many and process development to work with us. development promising new gene and cell therapies, and so our LentiVector-Enabled platform provides us with Principal risks facing the business opportunities to generate short- and longer-term The principal risks facing the business, including how value through: they are managed and mitigated, are set out in detail on pages 52 to 58. The main risks are: In-house development Partners’ programmes OXB products We have our own portfolio of LentiVector-Enabled ——Risks associated with pharmaceutical product platform gene and cell therapy product candidates. development including product safety issues, lack We decided that later stage clinical studies of these of efficacy, and failure to obtain regulatory approval. candidates will be developed with third party finance, Process ——Risks to our bioprocessing revenue from failure to Royalties development Royalties using either out-licensing or by spinning out the manufacture lentiviral vector to the required standard. fees programmes into one or more special purpose vehicles (SPVs). This will significantly reduce the cost and risk ——Exposure to one or more of our partners ceasing associated with clinical development, while providing us to develop their products and thereby no longer Spin out /out-licence Upfront and with potential equity stakes in the SPVs, and/or potential requiring our services. milestones Bioprocessing upfront, milestone and royalty payments, as well as —— Failure to comply with the terms of the Oaktree revenues bioprocessing and process development revenues. loan facility. We will modestly invest in internal and external assets Process up to early stage clinical development, with a view to ——Failure to out-licence or spin-out the Group’s development priority product development candidates Multiple incentives Development building a pipeline of candidates ready for clinical studies. income funding so that development stops. streams —— Inability to attract and/or retain highly skilled employees.

Oxford Biomedica plc | Annual report and accounts 2018 Oxford Biomedica plc | Annual report and accounts 2018 22 — — — Capacity building — — — productdevelopment Proprietary — — LentiVector platform forgeneandcelltherapypartnerships delivery — — Oxford Biomedica plc|Annual report andaccounts2018 — Novartis’ commercialisedproductKymriah Operational highlights Delivered in2018 — — — — — — — — — — — March 2019tosupporttheinitiative. times andcostof goods.Announcedand R&Dcollaboration withMicrosoft in capabilities designedtodriveimprovements inanalyticalmethodology, supply from Innovate UK,theUK’sinnovation agency, tobuilddigitalandrobotics Formed a£4milliondigitalframeworkinitiative, supported bya£2milliongrant technical advancestosupportourpipelineandplatform. development expertstodriveinnovations that willleadtonew scientificand a multidisciplinaryteamof researchers, automation, bioprocessing andprocess and innovation facilitynexttoWindrushCourt.The willbringtogether Signed afurtherleaseonanadditional32,000 sqft (2,975 sqm)discovery operational in2020. warehousing are nowinoperation, withtheadditionalGMPsuitesexpectedtobe in Oxford, closetoOxford Biomedica’sWindrushCourtheadquarters.Offices and Signed afifteenyearleaseonnew84,000 sqft(7,800 sqm)manufacturingfacility OXB-201 isindevelopmentfor thetreatment of amyotrophic lateral sclerosis (ALS). development: OXB-204 andOXB-208 target inheritedretinal diseases,while Three proprietary OXB assetsselectedtoadvancefrom research through pre-clinical received inMarch 2019, Axovant planstoproceed totheseconddose cohort. cohort have beentreated. Basedoninitialfeedback from membersof theDMC, clinicalstudyfor AXO-Lenti-PDPhase 1/2 beganandpatients from thefirstdose for thetreatment of Parkinson’sdisease. (now Axovant GeneTherapies)for OXB-102 (nowknownasAXO-Lenti-PD) $842.5 millionexclusive worldwideagreement signedwithAxovant Sciences gene therapyfor cysticfibrosis. Boehringer IngelheimandImperialInnovations todevelopanovelinhaled Partnership formed withtheUKCystic Fibrosis GeneTherapyConsortium, and manufacturingtechnologiesinthefield of haemophilia. (now partof Sanofi) toaccessOxford Biomedica’sLentiVector platform $105 millioncollaboration andlicenceagreement signedwithBioverativ adults inEnglandandthefirstpatients have nowbeentreated. NHS Englandannouncedthat Kymriah willbemadeavailable tochildren andyoung patients with r/r/ DLBCL. patients withr/r/DLBCL. and youngadultswithr/rB-cell acutelymphoblasticleukaemia (r/rALL)andadult Administration of Australiaalsoapproved Kymriah for thetreatment of children The European Commission,HealthCanadaandtheTherapeuticGoods the secondindication intheUS. of relapsed andrefractory B-cell diffuselarge B-cell lymphoma(r/rDLBCL), Kymriah approved bytheUSFoodandDrugAdministration for thetreatment

–20 –30 –25 –10 Operating EBITDA loss converted into a profit Operating EBITDA lossconvertedintoaprofit Oxford Biomedica plc|Annual report andaccounts2018 by £1.8 millionto£2.8 million(2017:£1.0 million). Cash inflow before financingactivitiesincreased Cash inflow £2.8m of £13.4 million(2017:£1.9 millionloss). Operating EBITDA £13.4m Adjusted operating expenses +38% (2017: £39.4 million). Gross incomeincreased by72%to£67.9 million Gross income +72% Financial highlights Delivered in2018 38% to£31.7 million(2017:£22.9 million). Adjusted operating expensesincreased by –15 –5 0 5 3. 2. 1. Key financialindicator definitions(non-GAAP Alternative PerformanceMeasures) £m Cash outflowbeforefinancingactivities A reconciliation toGAAPmeasures isprovided onpage 40. Operating EBITDA isEarningsBefore Interest, isTax, Depreciation, Amortisation, revaluation of investmentsandshare basedpayment. Amortisation andshare basedpayments. Areconciliation toGAAPmeasures isprovided onpage 40. Adjusted operating expensesis Research, DevelopmentandBioprocessing costsplusAdministrative costs lessDepreciation, (2017: £37.6 millionand£1.8 millionrespectively). Areconciliation toGAAPmeasures isprovided on Gross Incomeistheaggregate of revenue (£66.8 million)andotheroperating income(£1.1million) 2013 2014 1 2015 3 profit profit 2016 2017 2 2018

capacity. to fundfurtherexpansionof bioprocessing Successful £20.5 millionequityplacing Equity placinginMarch2018 £20.5m (31 December2017:£14.3 million). Cash of £32.2million Cash £32.2m £28.9 millionto£37.1 million. Operating expensesincreased by28%from Operating expenses +28% to £66.8 million. Revenue increased by78%from £37.6 million Revenue +78% –20 –10 –15 –5 10 15 0 5 £m Operating EBITDA 2013 2014 2015

2016 page 40. 2017 2018

in Orchard Therapeutics. recognised onrevaluation of ourinvestment £6.0 million (2017:£2.3million)gain Revaluation £6.0m of £13.9 million(2017:£5.7 millionloss). Operating lossconvertedintoaprofit Operating profit £13.9m the Axovant andBioverativ deals. £18.3 millionworthof incomereceived from License income £18.3m (2017: £2.0 million). Capital expenditure £10.8 million Capital expenditure £10.8m

Strategic report 23 24 " Oxford Biomedica plc|Annual report andaccounts2018 Chairman’s statement Strategic report Chairman Dr. Lorenzo Tallarigo this tocontinue." shareholder value–weexpect strategy isdeliveringsignificant dollar opportunityandtheGroup’s rapidly transforming intoamulti-billion The geneandcelltherapymarket is

and commercialisation. long-term economicinterest through theirdevelopment out-licensed programmes provides potential, additional our strategy toseekretain manufacturingrightsfor our similar toourrecent landmark dealwithAxovant. Inaddition, expertise, andtocreate future out-licensingopportunities of our in-houseprogrammes, where wehave particular significant opportunitiesbothtoadvancethedevelopment Moving forward into2019andbeyond,weseefurther in afocused anddisciplinedway. continue toexplore thepotentialof ourproduct pipeline created inearly clinicalstudies.Itisfor thisreason that we late-stage trialsishighandtherefore muchvaluecanbe of gene therapydevelopment,reproducibility of results in strategy andbusinessmodelthat works. Asisthenature Our recent successesdemonstrate that wehave a through earlyclinicaldevelopment. pursuing aselectivegeneandcelltherapyportfolio internally world-leading manufacturingcapabilitieswhileinaddition their owngeneandcelltherapyprogrammes withour our partnersinthedevelopmentandcommercialisation of therapies topatients. Itencompassesourstrategy tosupport Our missionistodeliverlife-changing geneandcell Strategic opportunities of lentiviralvectors,andtheexpertiseitspeople. in theinnovation, developmentandmanufacturing testament toOxfordBiomedica’sleadingposition profitability. Thesegreat stridesmadein2018are growth andcashflowgeneration butalsoinreaching Oxford Biomedica,notonlywithsignificantrevenue It hasbeenayearoftransformation for

to succeedonourgrowth journey. to ensure wehave thenecessaryskillsthat weneed talent, andweare committedtotheirdevelopment to driveperformance andhelpattract andretain thebest during thepastyear. Ourculture andvalues willcontinue their continuedcommitmentandexcellent contributions and experience.We are verygrateful toourpeoplefor workforce withadiverserangeof capabilities, knowledge it istoday. Withinthebusinesswehave ahighlyengaged Biomedica whohave helpedtogettheGroup towhere to recognise allof ourfantasticemployeesat Oxford On behalfof theBoard Iwouldlike totake thisopportunity Organisation andculture and twoExecutive Directors. the Board isnowcomposedof fiveNon-Executive since itsinceptionin1996. Withthesedevelopments, having madeasignificantcontributiontothebusiness formally retired from hisrole asChiefBusinessOfficer, Non-Executive Director inMarch 2018. PeterNolanhas profile,a with the appointment of Heather Preston as We have continuedtobenefitfrom achangingBoard Board to take advantageof theexpectedgrowth indemand. lentiviral vectorproduction, webelieveare wellplaced By applyingourexpertiseandcontinuingtoinnovate in from thesecondquarterof 2020. is progressing toplanandweexpectbeoperational headquarters inOxford. Constructionof thenewfacilities rooms and fill/finishsuitesonanewsiteclosetoour with thedevelopmentof newstate-of-the-art clean we are more thandoublingourmanufacturingcapacity futureproof Oxford Biomedica’smarket leadingposition, To meettheexpectedlong-termdemandand values to’deliverinnovation’. a core group objectivethat alignswithoneof ourthree continuous improvement inourmanufacturingprocesses, we are not resting onourlaurels. We strivetoachieve vectors. Whilewe’re immenselyproud of thisaccreditation, only FDA-approved commercial supplierof lentiviral expertise andcapabilities.To date, Oxford Biomedicaisthe We’ve spentthepast20yearshoningourmanufacturing Driving innovation Oxford Biomedica plc|Annual report andaccounts2018

Chairman Dr. LorenzoTallarigo to thefuture withmuchconfidence andoptimism. advantage of thisburgeoning industry. Ilookforward and world-leadingpositiontobeideallyplacedtake Oxford Biomedicaisfortunate withitsscientificexcellence therapy spacecontinuestobuild. The excitement andmomentuminthecellgene The future in theUK. new treatments andmedicaltechnologiesare produced through itsLife Sciencessectordeal,toensure pioneering shareholders aswellthat of theUKGovernment activity; weare grateful for thesupportof our Biomedica hasbeenabeneficiary of thisinvestment and clinicaldevelopmentactivityinthesector. Oxford and alongwiththemwe’veseenaraft of newinvestment manufacturer -have beenmadeavailable topatients which Oxford Biomedicaisthesolelentiviralvector therapy products –including Novartis’Kymriah for therapeutic reality. Inthepast18months,three gene decades of hopetempered bysetbacks, itisnowa to beat theforefront of geneandcelltherapy. Afterthree Despite thisuncertainty, itisneverthelessanexciting time for ourworkforce andourbusinessoperations. agreement onthefinalexittermsthat willprovide stability for allexpectedeventualities.We lookforward toan from the European Unionthisyearandare wellprepared continue toprepare for allscenariosaround theUK’sexit constant intheenvironment inwhichweare living.We Biomedica isexperiencedat adaptingtochange,nowa trade andfuture partnershipsbetweencountries.Oxford around the world,includingquestionsaboutinternational We findcombinedeconomicandpoliticalchallenges The globalenvironment

Strategic report 25 26 " Oxford Biomedica plc|Annual report andaccounts2018 Chief Executive Officer'sreview Strategic report Chief Executive Officer John Dawson to bothpatients andshareholders." is nowinastrong positiontodelivervalue leader inthisspace,Oxford Biomedica therapies tobecomeareality. Asaworld in enablingrevolutionary geneandcell The Group hasplayedacrucialrole

1. a placingwhichraised£20.5 million(gross) inMarch 2018. £32.2 millionreflecting ourstronger financialpositionand trading performance. We endedtheyearwithcashof on theprevious year,improved reflecting thesignificantly financing was£2.8 million,animprovement of £1.8 million provided toourcustomers.Positivecashflowbefore (now Sanofi) deals,andbyincreased developmentservices Axovant (nowAxovant GeneTherapies)andBioverativ by £18.3 millioninlicenceincome,largely from the of £67.9 millionincreased by72percent intheyeardriven commercial andoperational achievements.Gross income and positivecashgeneration in2018following significant I ampleasedtoreport astrong financialperformance 2018 Performance long-term benefits for ourshareholders. manage ourgrowth inasustainablewaytodeliver remain focused onourstrategy andwillhelpusto workforce development.Theywillensure that ourpeople the therapeuticpipeline,operational deliveryand manufacturing andtheplatform, technologyinnovation, These objectivesare focused onfinancialperformance, out sixcompanyobjectivestohelpdriveperformance. strategic imperatives. That iswhy, for 2019, Ihave set developments whilekeeping aclearfocus onour our leadingpositionandrespond effectively tosector that our greatest challengeistoensure that wemaintain our businessmodelare many, however, Iamcognisant As westandtoday, theopportunitiestocreate valuefrom confidence tomaximisetheopportunityweseeahead. position, Iamnowabletoplanfor thefuture with platform. WithOxford Biomedica’sstrengthened financial development strategy, leveragingourlentiviralvector the successfuldeliveryof ourpartneringandin-house Against thisbackdrop, Iamdelightedtoreport on a centralrole. patients –andwhereOxfordBiomedicahasplayed treatment hasbecomeatherapeuticrealityformany inwhichlife-changing,curative therapy industry have witnessedatransformation ofthegeneandcell Biomedica’s 2018Annualreport.Inthepastyearwe It iswithgreat pleasurethat IamintroducingOxford Reconciliation toGAAPmeasure provided onpage40.

1 where Oxford Biomedicahasplayedacentralrole. a therapeuticreality for manypatients –and life-changing, curative treatment hasbecome of thegeneandcelltherapyindustryinwhich In thepastyearwehave witnessedatransformation Oxford Biomedicaplayingacentralrole of theSanofi team. continues toadvanceunderitsnewownershipaspart manufacturing of lentiviralvectorstotreat haemophilia with Bioverativ (Sanofi) for thedevelopmentand Our $105millioncollaboration andlicenceagreement agreement Bioverativ (Sanofi)collaboration andlicence $105m gene therapyfor Parkinson’sdisease. $842.5 millionfor OXB-102, ourinternallydeveloped Our landmarkagreement withAxovant, worthupto OXB-102 forParkinson’sdisease $842.5m Oxford Biomedica plc|Annual report andaccounts2018

a newtherapeuticarea for Oxford Biomedica. the versatility of ourLentiVector platform andrepresents therapy for cysticfibrosis. Theagreement demonstrates Imperial Innovations todevelopanovelinhaledgene Gene TherapyConsortium,BoehringerIngelheimand established acollaboration withtheUKCystic Fibrosis In ourthird partnershipagreement of theyear, we recent portfolio review. for Usher’sSyndrome type1b,following Sanofi’s SAR422459 for Stargardt disease andSAR421869 previously-licensed ophthalmologyprogrammes, We are ready tosupportthenewpartnerfor our area andoneinwhichthecompanyisseekingtoexpand. potential tocure life-threatening conditionsare akey comments from Sanofi that genetherapies withthe of the Sanofi team. We were encouragedby recent continues toadvanceunderitsnewownershipaspart manufacturing of lentiviralvectorstotreat haemophilia with Bioverativ (Sanofi) for thedevelopmentand Our $105millioncollaboration andlicenceagreement now beendosedandinitialdata expectedin2019. clinical studyinOctober2018, withthefirstpatients having should itbesuccessful.Axovant commencedaPhase1/2 benefit for manyyears following asingleadministration, synthesis inthebrain.Itisexpectedtoprovide patient critical enzymesrequired for end-to-enddopamine gene therapythat enablestheexpression of asetof three OXB-102, renamed AXO-Lenti-PD, isaninvestigational also from tiered royalties onnetsalesof 7-10percent. due todevelopment,regulatory andsalesmilestonesbut significant revenues, bothnowandlongerterm,notonly in action.Ifsuccessful,ithasthepotentialtogenerate therapy for Parkinson’sdisease,isevidenceof ourstrategy $842.5 millionfor OXB-102, ourinternally developed gene Our landmarkagreement withAxovant, worthupto LentiVector platform. commercial product incorporating Oxford Biomedica’s fight cancer. It a represents thefirsteverapproval of (CAR-T) therapythat usesapatient’s ownTcellsto breaking one-time chimericantigenreceptor Tcell other territories,whichare ongoing.Kymriah isaground- (tisagenlecleucel) intheUS, EU, Canada,Australiaand launches andcommercialisation of Kymriah We continuetosupportNovartisthoughitssubmissions, Partnering Delivering thestrategy

Strategic report 27 28 Oxford Biomedica plc|Annual report andaccounts2018 our lentiviralvectorplatform. product opportunitiesorsupportthedevelopmentof new innovative technologiesthat eitheropenupnew Our focus for 2019istodrivethediscoveryof two discussions withpotentiallicenseesare ongoing. Cell &GeneTherapyInsightsinJanuary2019and Methods for thenewsystem were publishedin efficient, cost-effective genedeliverywithviralvectors. to stayaheadof themarket andsatisfy thedemandfor therapy –TRiPisanexampleof howweare innovating adenoviral andadeno-associated virus-basedgene or vaccineplatform –itcanbeusedwithlentiviral, multiples. Universallyapplicabletoanyviralvector is designedtoincrease viralvectoryieldsbyseveral as Transgene Repression invectorProduction orTRiP, programme. Ournewmanufacturingtechnology, known our technologyaspartof ourcontinuousimprovement To thisend,wecontinuetoinnovate, refine andenhance platform develops. proprietary lentiviralvectortechnologies,asour on future products salesbyproviding accesstoour opportunities togenerate licensingincomeandroyalties partnering agreements, wecontinuetoseekadditional incorporate technologylicencesintoourbroader is core toourbusinessmodel.Whilepriorityis lentiviral vectortechnologyandlicensing Our businessisunderpinnedbyourworld-leading Technology licensing for twoprogrammes from ourproprietary portfolio. priority in2019istosecure preclinical proof of concept a group of rare, progressive neurological diseases.Our for thetreatment of amyotrophic lateral sclerosis (ALS), on ophthalmologyindications. OXB-103 isindevelopment where we have extensiveexperiencefrom ourearlyfocus OXB-204 andOXB-208 target inheritedretinal diseases, research through pre-clinical development. three additional proprietary assetstoadvancefrom subsequent out-licensingtoAxovant, wehave selected development of OXB-102 for Parkinson’sdiseaseandits spin-out. Followingamodestinvestmentintheearly with unmetmedicalneeds,for future out-licensingor pipeline of innovative genetherapiestotreat diseases We continuetoinvestinthedevelopmentof aproprietary In-house development Chief Executive Officer'sreview Strategic report

commercialisation. centre for lentiviralvectordevelopmentand around 226,000 sqft,securingthecityasaglobal now occupiesfivefacilitiesaround Oxford covering From ourroots inOxford University, Oxford Biomedica 2. Aglobalcentreofexcellence several multiples. or TRiP, isdesignedtoincrease viralvectoryieldsby known asTransgene Repression invectorProduction programme. Ournewmanufacturingtechnology, technology aspartof ourcontinuousimprovement We continuetoinnovate, refine andenhanceour 1. 2. 1. Innovators management process. them astheyare integrated intoournewperformance values andduring2019wewillseektofurtherembed excellent examplesof employees demonstrating these way our people work together. We have already seen some mission, thesevaluesdefineourpurposeandshapethe Be InspiringandDeliverInnovation. Together withour introduced three companyvalues:toHave Integrity, their developmentandafoster apositiveculture, we number toincrease to600bytheendof 2019To support our workforce from 321to432employees,andexpectthat During theyear, weexperiencedgrowth of 35percentin important tous. to patients. That iswhybeingagreat placetoworkisso mission: todeliverlife-changing geneandcelltherapies talented employeesworkingtogetherfor ourshared Our successasacompanyismadepossiblebyour Creating awinningculture for lentiviralvectordevelopmentandcommercialisation. around 226,000 sqft, securing thecityasaglobalcentre now occupiesfivefacilitiesaround Oxford covering From ourroots inOxford University, Oxford Biomedica to beready for occupation inthefirsthalf of 2019. Development of thespaceisongoinganditexpected roughly equallybetweenlaboratories andoffices. building islocated nexttoourheadquartersandissplit advances tosupportourpipelineandplatform. The innovations that willleadtonewscientificandtechnical development specialistsaround ashared purpose:todrive of research, automation, bioprocessing andprocess The centre willbringtogetheramultidisciplinaryteam and formed anewdiscoveryandinnovation facility. growth, we have taken aleaseonfifthfacilityinOxford Aligned toourvaluesandfurtheraccommodate our years andisontrackfor operation in2020. highly skilledpositionsthecompanyovernexttwo expansion. Thenewfacilitywillcreate upto100new, and QClaboratories, withspaceavailable for future and twofill/finishsuitesaswell offices, warehousing 45,000 sqft(4,200 sqm)for four GMPcleanroom suites The plannedPhase1and2expansionswillfitoutaround of anew84,000 sqft(7,800 sqm)manufacturingfacility. vectors, weare investing£20millioninthedevelopment To meettheexpectedgrowth indemandfor lentiviral Building capacity Oxford Biomedica plc|Annual report andaccounts2018

Chief Executive Officer John Dawson objectives anddeliverourstrategy. contributions in2019andbeyondtoachieveour the companyitistoday. Ilookforward totheircontinued in 2018, andfor helpingOxford Biomedicatobecome our employeesfor theircontributionstoourperformance I wouldlike tosaythankyoueachandeveryoneof pipeline todelivermeaningfulreturns toshareholders. endeavours, andtocreate valuefrom ourtherapeutic increased revenue growth through ourpartnering as awhole,Iamconfident inourabilitytodeliver Oxford Biomedicaandinthegenecellindustry Given themomentumweare seeing,bothwithin a newerafor personalised,gene-basedmedicine. It isaprivilegetoleadthisfantasticcompanythrough Looking tothefuture

Strategic report 29 30 Oxford Biomedica plc|Annual report andaccounts2018 research at The Pirbright Institute for research at ThePirbrightInstitutefor subsequently conductedpost-doctoral the Universityof Leedsand and aPhDinMolecularBiologyfrom He holdsaBachelorof Sciencedegree inventor onseveralpatents inthefield. management. Heisalsoanamed programmes andalliance development, aswellclient lentiviral basedbioprocessing Quality systems,analyticaltestingand responsibility for Oxford Biomedica’s current role, hehasoverall (good practice)environment. Inhis 14 of whichhave beenintheGxP experience ingeneandcelltherapy, in 2000. Hehasmore than 18years’ Dr MiskinjoinedOxford Biomedica Chief Technical Officer 5. JamesMiskin of Paion AG. currently aNon-Executive Director Laboratories (UK)Limited.Heis and Administration of Serono Cephalon hewasDirector of Finance by Cephalon.Priortothistimeat US$360 millionacquisitionof Zeneus million USdollarsandin2005ledthe to aturnoverof severalhundred business toover1,000 people,and many dealsbuildingtheEuropean Europe. While at Cephalonheled and Headof BusinessDevelopment Inc., includingChiefFinancialOfficer European operations of Cephalon senior managementpositionsinthe October 2008. Previously, heheld in appointed ChiefExecutive Officer Director in August2008andhewas Biomedica’s Board asNon-Executive John DawsonjoinedOxford Chief Executive Officer 1. JohnDawson Industry Partnership (MMIP). of TheMedicinesManufacturing and theAdvancedTherapies section Manufacturing AdvisoryCommittee of theUKBioIndustryAssociation a numberof years.Heisamember Management team Strategic report

Association Board. Member of theUKBioIndustry University of Oxford. HeisaCorporate post-doctoral research at the College Londonandhasconducted in MolecularBiologyfrom University LentiVector platform. HeholdsaPhD new product candidates and development of Oxford Biomedica’s role, heisresponsible for the number of key papers.Inhiscurrent vector patents andanauthorof a named inventoronnumerous lentiviral a world-class expertinthefield, and analytics.Heisarecognised platform technologies,bioprocessing of gene andcelltherapies,delivery disciplines, includingthedevelopment covering arangeof technical years of lentiviralvectorexperience Biomedica in1997. Hehasover20 Dr Mitrophanous joinedOxford Chief ScientificOfficer 6. Kyriacos Mitrophanous and Wales. Chartered AccountantsinEngland He isamemberof theInstituteof business partneringat DeLaRueplc. Biomedica hewasheadof finance internal audit.PriortojoiningOxford before becomingtheglobalheadof moved toacorporate finance role business outsideof theUS. Hethen of finance businesspartnering for all where hebecametheSenior Director then movedtoShire Pharmaceuticals the European FinanceDirector. He sciences divisionspriortobecoming of roles withinthehealthcare andlife joined Steris, andworked inavariety moving toEDS. Hesubsequently accountant withHainesWatts before sectors. Hequalifiedasachartered the pharmaceuticalandhealthcare 2017. Hehas16years’experiencein Biomedica andtheBoard inAugust Stuart PaynterjoinedOxford Chief FinancialOfficer 2. StuartPaynter an MBAfrom TheOpenUniversity. Chartered Chemistandalsohas a roles. Heoriginallyqualifiedas in ChinaandIndiaaswellGlobal he hasspentseveralyearsworking manufacturing. Duringhiscareer innovative, genericandcontract in variousorganisations encompassing Radiopharmaceutical manufacturing Solid oraldose,Sterile, and industry experienceincludeAPI, within Novartis.His40+yearsof as Platform Headof Anti-infectives pharmaceutical industry, mostrecently leadership positionsinthe held anumberof senioroperational April 2018. Priortojoininghehas Nick joinedOxford Biomedicain Chief Operations Officer 7. NickPage Business Schoolin2002. MBA withdistinctionfrom London London. Jasonwasalsoawarded an genetics from ImperialCollege completed aPhDincomplexdisease College, Oxford Universityandalso in Biochemistryfrom Magdalen awarded a1stclassBA(Hons) company 1997-2000. Hewas Biomedica andfirstworked at the a post-doctoralscientistat Oxford and UK.Jasonstartedhiscareer as capital backed companyinAustria and CEO of ProtAffin AG,aventure and Intercell AG andwasco-founder development roles at SoseiCo.,Ltd. worked ininternational business vaccines andgenetherapy. Hehas biotechnology industryinbiologics, He has20years’experienceinthe Chief BusinessOfficerinMay2018. Development andwaspromoted to in 2015asHeadof Business Jason joinedOxford Biomedica Chief BusinessOfficer 3. JasonSlingsby

Development. the Chartered Instituteof Personneland University intheUKandisamember of BA (Hons)degree from Northumbria Vernalis’ UKandUSsites.Sheholdsa for Vernalis plc,leadingHRacross was Group HumanResources Director Prior tojoiningOxford Biomedica,she Global HRDirector withinAstraZeneca. site there, followed byaperiodas UK toheadupHRfor MedImmune’s MedImmune, shemovedtoCambridge Following AstraZeneca’s acquisitionof in GSK,Merck andAstraZeneca. in variousHRBusinessPartneringroles sector, includinganumberof years roles withintheBiopharmaceutical experience inseniorHumanResources in April2018. Shebrings25years’ Helen joinedOxford Biomedica Chief PeopleOfficer 8. HelenStephenson-Ellis University of Warwick. in Microbiology andVirology from patient. SheholdsaBSc(Hons)degree supporting lifesaving treatments tothe commercial andmanufacturing at the labbenchtodevelopment, product developmentfrom discovery brings withheradeepknowledgeof Strategy andLifecycle Function. She returning toheaduptheProduct International Commercial before Business PartnertoHeadof Management functions,movingto Management andCorporate Project 10 yearstosettinguptheAlliance management expandingthisover in product strategy andlifecycle joined Shire Pharmaceuticalsinitially in thepharmaceuticalindustry. She 2018. Shehasover25years’experience Lisa joinedOxford BiomedicainMarch Officer Chief ProjectsandPerformance 4. LisaGiles Oxford Biomedica plc|Annual report andaccounts2018

60 to61. Directors canbefound onpages Full biographiesfor theBoard of 5. 3. 1. 7.

6. 4. 2. 8.

Strategic report 31 32 beyond the end of the pre-clinical phase. beyond theendof thepre-clinical phase. pre-stated strategy toexternaliseproduct development successfully executes onOxford Biomedica’s to $842.5million.Thisagreement withAxovant AXO-Lenti-PD) for Parkinson’sdisease,worthup commercialise OXB-102 (now renamed as (now Axovant GeneTherapies) todevelopand worldwide licensingagreement withAxovant Sciences In June2018, theGroup entered intoanexclusive to pursuepotentialnewpartnershiparrangements. the priorityprogrammes for clinicalstudiesand During theperiod,Group continuedtoprepare point for itsproprietary products. the Group’s partneringbusinessandisthestarting The LentiVector genedeliveryplatform underpins Product development Imperial Innovations partnership. Gene TherapyConsortium,BoehringerIngelheimand Bioverativ (nowpartof Sanofi) andtheUK Cystic Fibrosis portfolio of strategic collaborations withtheadditionof The Group continueditsactivitiestofurthergrow its stable producer celllinesinoneof theirprogrammes. partnerships, withOrchard Therapeuticsadoptingthe The Group ismakinggoodprogress withitsstrategic Oxford Biomedica plc|Annual report andaccounts2018 Partnering progress outcome isawaited. treated. Regulatory review isunderwayinJapanandthe Kymriah for r/rALL,andthefirstpatients have nowbeen and youngadultsinEnglandwouldbeabletoreceive September 2018, NHSEnglandannouncedthat children and theTherapeuticGoodsAdministration of Australia.In received from theEuropean Commission,HealthCanada Additional regulatory approvals for bothindications were is considerablylarger thantheinitialALLindication. The target patient population for thissecondindication r/r DLBCLwasapproved bytheUSFDA inMay2018. The supplementalBLAtotreat adultpatients with and youngadultswithr/rALL. Kymriah (tisagenlecleucel)for thetreatment of children in 2017of thechimericantigenreceptor Tcelltherapy progressed wellfollowing theUSapproval andlaunch Oxford Biomedica’scollaboration withNovartishas Novartis collaboration progress 2018 performancereview Strategic report

partnership. Boehringer IngelheimandImperialInnovations and theUKCystic Fibrosis GeneTherapyConsortium, with theadditionof Bioverativ (nowpartof Sanofi) During theyearweaddedstrategic collaborations 2. Newstrategic collaborations is considerablylarger thantheinitialALLindication. target patient population for thissecondindication children andyoungadultsin2017asexpected.The treatment inadultsfollowed theearlierapproval for The USFDA approval tousetheNovartisKymriah 1.  2. 1. Novartis collaboration

Oxford Biomedica plc|Annual report andaccounts2018 opportunities. offering andprovide additional revenue-generating These developmentscontinuetoenhanceourpartner in-house developmentprogrammes. quality andreduce thecostof goodsfor ourpartnersand while reducing cost.Theseadvancesenhanceproduct enabling asimplifiedandscalablemanufacturingprocess We have generated packaging andproducer celllines licensees are ongoing. Insights inJanuary2019anddiscussionswithpotential new systemwere publishedinCell&GeneTherapy biogenesis, functionorpurification. Methods for the otherwise mayhave detrimentaleffects onvector of the transgeneinthevectorproduction cellthat process. TheTRiPSystem substantiallylimitsexpression yields andparticlepurity, andstandardise downstream We have developedtheTRiPSystem tomaximisevector development timelines. and robotics toincrease productivity andreduce efficiency. We have invested significantlyinautomation developments enhancepotency, purity, yieldand serum-free suspensionprocesses. Thesetechnical the production of genetherapyproducts intoscalable, technologies andprocesses tosignificantlyimprove Over anumberof yearswe’vedevelopedandlicensed LentiVector platform development progressive neurological diseases. of amyotrophic lateral sclerosis (ALS),agroup of rare, indications. OXB-103 isindevelopmentfor thetreatment experience from itsearlyfocus onophthalmology retinal diseases, where Oxford Biomedicahasextensive development. OXB-204 andOXB-208 target inherited selected toadvancefrom research through pre-clinical programme, three additionalproprietary assetshave been Following theout-licensingof theParkinson’sdisease patients have beentreated. sponsored byAxovant, isnowunderwayandthefirst of thestudy. studyfor AXO-Lenti-PD, ThePhase1/2 study centres inCambridgeandLondon,UKfor initiation sufficient supplies forthestudyandto prepare theclinical manufacture of asecondbatch of thevector toensure the regulatory1/2 study, filings for theplannedPhase the During thesecondhalfof 2018theGroup completed

downstream process. vector yieldsandparticlepurity, andstandardise We have developedtheTRiPSystem tomaximise 2. TRiPSystem development timelines. and robotics toincrease productivity andreduce We have investedsignificantlyinautomation 1.  1. 2. Automation androbotics

™

Strategic report 33 34 Oxford Biomedica plc|Annual report andaccounts2018 and commercialisation. city asaglobalcentre for lentiviral vectordevelopment Oxford coveringaround 226,000 sqft,securingthe Oxford Biomedicanowoccupiesfivefacilitiesaround to beready for occupation inthefirst half of 2019. Development of thespaceisongoingand expected split roughly equallybetweenlaboratories andoffices. located nexttoOxford Biomedica’sheadquartersandis support ourpipelineandplatform. Thebuildingis that will leadtonewscientificandtechnicaladvances specialists around ashared purpose:todriveinnovations automation, bioprocessing andprocess development bring togetheramultidisciplinaryteamof research, was signedonafifthfacilityinOxford. Thefacility will innovation, andtofurtheraccommodate growth, alease Aligned totheGroup’s values, whichincludedelivering futureproof theGroup’s market leadingposition. opportunity, meettheexpectedlong-termdemandand Oxford Biomedicatoexploittheimmediate market through thesuccessfulPlacinginMarch 2018, itwillallow new, highlyskilledjobsoverthenexttwoyears.Funded centre for Oxford Biomedicaandwillcreate upto100 The capacity expansion secures Oxford asa bioprocessing laboratories, withspaceavailable for future expansion. QC fill/finish suitesaswell offices, warehousingand (4,200 sqm)for four GMPcleanroom suitesandtwo Phase 2expansionwillfitoutaround 45,000 sqft headquarters inOxford, UK.TheplannedPhase 1and 84,000 sqft(7,800 sqm)facilityneartoOxford Biomedica’s In September2018, aleasewassignedonnew, is expandingitsmanufacturingcapacity. growth in demandfor lentiviralvectors,theGroup current partners’ requirements. To supporttheexpected capacity for in-houseplatform developmentworkand LentiVector platform bioprocessing capabilities,with laboratory facilitiesoffering current andnextgeneration state-of-the-art, custom-builtGMPcleanrooms and technology isestablishedat commercial scalewiththree vector deliverysystem,theLentiVector platform. The field of geneandcelltherapy, underpinnedbyitslentiviral Oxford Biomedicaisapioneerandworldleaderinthe Building capacity 2018 performancereview Strategic report

84,000 ft Oxford Biomedica’sheadquartersinOxford, UK. on anew, 84,000 sqft(7,800 sqm)facilitynearto In September2018, aleasewassigned New facility work andcurrent partners’requirements. with capacityfor in-houseplatform development LentiVector platform bioprocessing capabilities, facilities offering current andnextgeneration custom-built GMPcleanrooms andlaboratory commercial scalewiththree state-of-the-art, Our LentiVector technologyisestablishedat An establishedtechnologyplatform 2

Oxford Biomedica plc|Annual report andaccounts2018 as aworld-leadinggeneandcelltherapybusiness. is ideallypositionedtodelivervalueshareholders supporting itscontinuedgrowth, Oxford Biomedica leading industryposition.WiththeGroup’s collaborations Oxford Biomedica’sprogress during2018demonstrates its products. clinical developmentof itswholly-ownedproprietary and toattract third-party investment toaccelerate the The Group intends to expand its portfolio of collaborations, leadership toboostitsbusinessdevelopmentactivities. partnering credentials, theGroup expectsitstechnology collaboration validating itsLentiVector platform and in 2018. Withtheongoingsuccessof itsNovartis Oxford Biomedicahasmadeconsiderableprogress Outlook and highskilledjobsare created inBritain. treatments, innovative medicalresearch andtechnologies, Deal tohelpensure that thenextwave of breakthrough aligned withtheUKGovernment’sLife SciencesSector next-generation medicines.Theaimsof bothprojects are framework initiative tostreamline theproduction of Biomedica tosupporttheformation of adigital as partof atotalinvestmentof £4millionbyOxford of vector GMPfacilities.Afurther£2millionwasawarded as wellotheritemsthat are essentialfor theoperation for manufacturing,storageandanalyticalequipment, in lentiviralvectordevelopment,£3millionwasawarded agency, Innovate UK.To supporttheGroup’s investment award of twograntsbytheUKGovernment’sinnovation During theyear, Oxford Biomedicabenefitted from the and steppeddownfrom theBoard on2July2018. Peter Nolanretired from his role asChiefBusinessOfficer Project & Performance Officer. Operations Officer, aChiefPeopleOfficerand the firsthalf of 2018, withtheappointment of aChief the SeniorManagementTeam wasaugmentedduring To supporttheincreased activitiesof theGroup, investing publicbothoverseasandintheUK. range of institutionalinvestorsandothermembersof the May 2018tomake theshares more attractive toabroader successfully completedashare capitalconsolidation in for capacityexpansionandfitout.Inaddition,theGroup successfully completeda£20.5 millionequityfundraising During thefirsthalf of 2018, Oxford Biomedica Corporate andorganisational development

totalling £5million. the UKGovernment’sinnovation agency, Innovate UK, In 2018webenefittedfrom theaward of twograntsby 3. UKGovernmentawards ustwogrants to boostourbusinessdevelopmentactivities. credentials, weexpectourtechnologyleadership validating ourLentiVector platform andpartnering With theongoingsuccessof itsNovartiscollaboration 2. Businessdevelopment overseas andintheUK. and othermembersof theinvestingpublicboth attractive toabroader rangeof institutionalinvestors consolidation inMay2018tomake theshares more We successfullycompletedashare capital 1.  3. 2. 1. Next generation bioprocessing

Strategic report 35 36 Oxford Biomedica plc|Annual report andaccounts2018 as furtherorganisational improvement objectives. relating totheGroup’s financialperformance, aswell The Board setmanagement certainconfidential targets Corporate andorganisational Objective 4 build furtheronthosewealready had. royalty generating partnershiprelationships, andto In 2018weintendedtosecure furtherrevenue and Business development Objective 3 of OXB-102 andtheocularprogrammes. significant financialinterest) bypartneringorspin-out of clinical stageproduct development(whileretaining as previously announced,toreduce thefinancialrisk new pre-clinical products totheGroup, andalso, progression of key programmes againstplan,todeliver Our goalsfor 2018includedachievingthesuccessful Progress action on implementing strategy for products Objective 2 on ourcommitmentstopartners. of programmes intotheclinicandalsodeliver in boththeUSandEU, supporttheprogress in order togainapproval andlaunchkey products Targets for 2018includedsupportingourpartners Support partnerportfolioadvancement Objective 1 2018 objectives ofour2018objectives Delivery Strategic report

growth are covered. managers toensure allskillsetsare required for future 2018) andintroduced key individual trainingfor senior three newSeniorExecutive Team membersin (SET) transforming themanagement structure (brought in of theOaktree debtwasnotpursued.Intermsof from operating activitiesof £6.6 million.There-finance around £2.6 millionwasmetalongwithnetcashinflow The goaltoachieveanOperating EBITDA target of assets wasunderreview. However, ourplantospin-out/out-licenceof theocular Parkinson’s diseasetoAxovant for more than$840million. to out-licenceOXB-102 (nowAXO-Lenti-PD) for These goalswere partiallymet.We successfullymanaged the schedule. and theadvancementoneof theirproducts according to production of documentsrequired for theBLAsubmission Orchard Therapeutics,wewere alsokey insupportingthe process approval. Intermsof ourcollaboration with producing documentsinorder tosupportthesuspension scheduled/requested. We were alsosuccessfulin Batches of material were alsodelivered toNovartisas progression of anundisclosedproduct intotheclinic. for paediatric ALLandDLBCL.We alsosupportedthe Novartis intheEU/USapprovals andlaunchof Kymriah These targets were successfullymet.We supported Consortium and Imperial Innovations for development Consortium andImperialInnovations for development Ingelheim, theUKCystic Fibrosis GeneTherapy products inFebruary2018andwithBoehringer with Bioverativ, (nowpartof Sanofi), for haemophilia These goalswere fullymetaswesignedanagreement August 2018. of agenetherapyproduct totreat cysticfibrosis in Performance againstpriorities

Oxford Biomedica plc|Annual report andaccounts2018 more favourable terms. deal, alongwithextinguishingrefinancing theloanon new manufacturingdealsandaproduct outlicensing significant challenge.Assumptionsinthebudgetinclude with strictcontrol of costs,theseare goingtobea budget. Setinaregime of aggressively growing sales revenue andEBITDA targets whichare drivenbythe The financialobjectivessetout for 2019are toachieve Financial Objective 3 forward inclinicaldevelopment. bring great value totheOxford Biomedica,move products suchasAXO-Lenti-PD, that wehave seen to keep usaheadof thecompetition.Valuable pipeline data driveninnovations inourplatform that are essential alongside technical(twonewpatentable inventions)and Advance twonewplatform products intoourportfolio, Patent/product advancementandinnovation Objective 2 and Bioverativ (nowSanofi). milestones for Novartis,Orchard Therapeutics customers asagreed withthemandreach key The key objectivefor 2019istoserviceour Partners/Capacity/Technology advancement Objective 1 Objectives setfor2019 Objectives for2019 Strategic report

new manufacturingfacilityontimeandwithinbudget. with thecreation of ournewfacilityandcomplete fundamental toourfuture successthat weinnovate our organisation effectiveness programmes. Itis productive workforce for thefuture. Plantoenhance and staff supportsystemstoensure abalanced that we buildaculture, competitiverewards/benefits with competitionfor key staff inourfielditisessential With therapidpaceof growth for theGroup, together Organisational development Objective 5 technology dealsandstarttwofeasibility studies. is toout-licenceoneproduct, agree three platform A criticalsuccessfactorfor 2019isnewdeals.Theplan Business development Objective 4

Strategic report 37 38 “ Chief FinancialOfficer Stuart Paynter financial performance in2019.” The Group istargeting improved Oxford Biomedica plc|Annual report andaccounts2018 Financial review Strategic report

— — 1. established. and hasexceeded theexpectations setwhenoriginally Orchard Therapeuticshasproven tobeverysuccessful after itsIPOat theendof 2018. Ourpartnershipwith £6 milliononourequityinvestmentinOrchard Therapeutics of the Axovant andBioverativ £18.3 millionworthof licenseincomereceived asaresult — Selected highlightsare asfollows: EBITDA profit andalsoaprofit aftertaxation of £7.5 million. culminated intheGroup achievingitsfirstOperating announced inFebruary, JuneandAugust2018. Thishas UK GeneTherapyCystic Fibrosis Consortiumagreements the signingof theBioverativ (nowSanofi), Axovant and Group with significantcommercial achievements,and 2018 hascontinuedthefinancialtransformation of the Financial transformation — — Novartis, Bioverativ development servicesprovided toOrchard Therapeutics, revenues generated from increased commercial The Group has also recognised a revaluation gain of The Group hasalsorecognised arevaluation gainof rose from 321at December2017to432at theendof 2018. future growth inactivities2019andbeyond.Headcount development services,butalsoincludesanexpectation of customer demand,bothfor bioprocessing andcommercial subcontracted costshave increased tomeetincreasing payments are excluded. Manpower, materials and by 38%whendepreciation, amortisation andshare option Operating costs,includingCostof Sales,grew by28%,and shows thegrowth inoutputsince2013. year andvolumes15%upin2018. Thechartopposite bioprocessing facilitiesrunningcontinuouslyduringthe results in2018increased from theprioryearwith allthree The growth in gross income was largely driven by The growth ingross incomewaslargely drivenby — — — — — A reconciliation toGAAPmeasures isprovided onpage122(note 4, Segmentalanalysis). of £9.8 million The Platform segmentmadeanOperating EBITDA profit Bioverativ (Sanofi) andAxovant licenceincome received. exceeded the£1.5milliondeployedin2017asaresult of the Cash generated from operations of £9.2 millionin2018far Gross income increased by72%over2017, and to largely lossesin2017. £15.8 millionand£13.9 millionrespectively asopposed profit being converted intoprofits of£13.4 million, Operating EBITDA, Operating EBIDA andOperating Improved operational results have resulted in now increased by1,137%since2013. Revenue increased by78%over2017, andhas the Platform divisionwascreated. has nowincreased by1,135%since2013when 1 andanoperating profit of £11.4 million. (Sanofi) and Axovant. Bioprocessing andAxovant. Bioprocessing (Sanofi) deals, as well as deals,aswell

6,000 4,000 2,000 3,000 5,000 4,500 2,500 3,500 5,500 Oxford Biomedica plc|Annual report andaccounts2018 1,000 1,500 500 40 60 20 30 50 45 65 70 25 35 55 10 15 0 0 5 £m Gross income Bioprocessing volumes

2013 2013 development (darktints) Bioprocessing andprocess (light tints) Licence, milestonesandgrants 2014 2014 2015 2015 1 2016 2016 2017 2017 2018 2018

4. Key FinancialPerformanceIndicators to provide maximalreturns toshareholders accordingly. financial risk/reward profile ofthese projects andwillseek stage clinicalstudies.We willcontinuetoassessthe proprietary products byseekingpartnershipsfor later We willcontinueourproven strategy of developingour on theplatform of establishedgrowth. targeting newstrategic commercial partnershipstobuild relationships, whilstcontinuingtheGroup’s stated aimof continue tofoster ourcurrent strong customer diversified ourcustomerbase. We willensure that we 2018 wehave strengthened ourcommercial pipelineand With thesigningof three newcommercial contractsin £m Operations Revenue Cash flow Financing Headcount reflection of theGroup’s performance overtime. together with relevant GAAP measures, provide anaccurate The Group believesthat these Non-GAAP measures, Key FinancialPerformance Indicators (refer tableabove). number of alternative performance measures aspartof its The Group evaluates itsperformance bymakinguseof a 2. 1.  3. 5. Gross income 

 Loan Licences, milestones,grants development Bioprocessing/commercial Operating EBITDA Operating profit/(loss) Cash burn Capex operations Cash generated from/(used in) Normalised cashburn Cash Average Year-end Operating EBIDA Cash burnisnetcashgenerated from operations plusnetinterest paidpluscapitalexpenditure. and Share BasedPayments)isanon-GAAP measure often usedasasurrogate for operational cashflow Operating EBITDA (EarningsBefore Interest, Tax, Depreciation, Amortisation, revaluation of investments measures isprovided onpage40. Gross income istheaggregate of revenue andotheroperating income.Areconciliation toGAAP which offsets theGroup’s R&Dexpenditure. A reconciliation toGAAPmeasures is credit included. TheBoard refers toEBIDA periodicallyastheR&Dtaxcredit is,inessence,asubsidyorgrant Operating EBIDA isaninternalmeasure usedbytheGroup, definedasOperating EBITDA withtheR&Dtax of the Oberlandfacility. A reconciliation toGAAPmeasures is as itexcludes from operating profit orlossallnon-cash items,includingthecharge for share options. Cash burnafter excluding accruedinterest andearlyrepayment charges paidduetoextinguishment A reconciliation toGAAPmeasures is 4 1 3 2 5 provided on page40. provided onpage42. 2018 40.6 66.8 32.2 41.2 67.9 15.8 13.9 13.4 10.1 27.3 432 377 9.2 1.9 1.9 2017 36.9 32.6 39.4 (5.7) (1.9) (1.5) 14.3 37.6 295 321 0.8 6.8 2.0 3.0 9.8 provided on page40. 2016 (11.3) 30.8 24.0 (5.9) 34.4 (3.4) 27.8 15.3 256 11.5 11.5 (7.1) 247 6.8 6.4

(14.9) 2015 (12.1) (14.1) 29.8 29.8 18.8 16.6 (8.1) 15.9 27.3 12.4 196 231

6.4 9.4

Strategic report 39 40 Operating EBITDA Oxford Biomedica plc|Annual report andaccounts2018 improvements seenacross the lastfour years. and buildson thesignificantOperating EBITDA loss incurred in2017, agreat achievementfor the Group, £13.4 millionis£15.3 millionbetterthanthe£1.9 million to £54.5 million in2018. TheOperating EBITDA profit of a 32%growth inourcostbasefrom £41.3million in2017 Gross Incomeincreased by72%in2018partlyoffset by 2. 1. Total expenses £m Operating EBITDA/ Operating EBIDA £m stated goalof diversifyingourcustomerbase. proportion of ourgross income,thereby achievingour continues togrow andnowmakes upasignificant generated from partnershipswithourothercustomers derived from ourrelationship withNovartis,butincome The largest portionof ourgross incomecontinuestobe Income overthepastsixyears. The chartonpage39showstheevolutionof Gross Bioverativ (Sanofi) andAxovant. services provided toOrchard Therapeutics,Novartis, generated from increased commercial development main contributortogrowth hasbeentherevenues £32.6 millionin2017),andisup464%since2014. The development increased by25%to£40.6 million (from Income generated from bioprocessing/commercial in 2017to£66.8 millionin2018. Revenue increased by78%from £37.6 million 72% growth ascompared to2017(£39.4 million). Gross income increased to£67.9 millionproviding Gross income/Revenue Revenue, Operating EBITDA andOperating Profit infuture. Performance Indicators andwillinsteadmake useof using Gross IncomeandOperating EBIDA asKey Financial The Board hastaken thedecisiontomoveawayfrom Financial review Strategic report Gross income 3. option charge option charge Depreciation, amortisation, share Gross income Revenue Other operating income Operating profit/(loss) Revaluation of investments and Share BasedPayments)isanon-GAAP measure often usedasasurrogate for operational cashflow Operating EBITDA (EarningsBefore Interest, Tax, Depreciation, Amortisation, revaluation of investments depreciation, amortisation andtheshare optioncharge. Cost of goodsplusresearch, development,bioprocessing andadministrative expensesexcluding a subsidyorgrantwhichoffsets theGroup’s R&Dexpenditure. tax credit included.TheBoard refers toOperating EBIDA periodicallyastheR&Dtaxcredit is,inessence, Operating EBIDA isaninternalmeasure usedbytheGroup, definedasOperating EBITDA withtheR&D as itexcludes from operating profit orlossallnon-cashitems,includingthecharge for share options. 1 2 (54.5) 2018 2018 66.8 (5.4) 67.9 67.9 13.9 13.4 6.0 1.1 (41.3) 2017 2017 39.4 39.4 (1.9) (5.7) (6.1) 37.6 2.3 1.8 (37.9)

2016 2016 (11.3) 30.8 30.8 (4.2) 27.8 (7.1) 3.0 –

(30.9) 2015 2015 (12.1) (14.1) (2.0) 18.8 18.8 15.9 2.9

–

Total expenses External R&Dexpenditure Manpower-related Other costs Operating EBIDA — — — — other externalbioprocessing costs £m Amortisation £m Total Expenses continues tomake alossfor taxpurposes. decreased slightlyfrom theprioryearasGroup of £15.8 millionin2018. TheR&Dtaxcredit hasonly a large Due totheconversionof £m Total Expenses Share optioncharge Depreciation Cost of sales Adjusted operating expenses improved from aprofit of £0.8 millionin2017toaprofit R&D taxcredit Raw materials, consumables and Raw materials, consumablesand Bioprocessing costs Research, Development& Operating EBITDA Operating expenses Administrative expenses — — — — against thedollar. by aforex gainof £1.3millionassterlingweakened new licenseagreements. Theseincreases were offset expanded, androyalties payableon income from the costs, andlegalprofessional fees asthegroup Other costshave increased duetoincreases infacility spend. commercial customerandtechnicalproject related External R&Dexpenditure washigherduetoincreased capacity inlinewithourincreased revenues. our commercial developmentandbioprocessing 2017 to377in2018. Thisisasaresult of increasing the increase intheaverage headcountfrom 295in The increase inmanpower-related costsisdueto bioprocessing volumes. increase incommercial developmentactivitiesand bioprocessing costshave increased asaresult of the Raw materials, consumablesandotherexternal Operating 1 3 2 EBITDA profit, Operating

2018 2018 2018 (4.3) 22.8 54.5 54.5 Operating 26.7 29.7 18.3 15.8 13.4 (1.1) 31.7 37.1 2.5 1.9 7.6 7.4 – EBITDA losses into EBITDA lossesinto 2017 2017 2017 28.9 41.3 22.9 (0.7) 41.3 (1.9) 21.6 (4.1) 18.4 (1.2) 19.3 13.2 0.8 2.7 7.3 1.7 7.1 EBIDA has EBIDA has 2016 2016 2016 (0.6) 30.3 (0.3) 24.3 (3.3) (3.4) 26.1 37.9 37.9 11.8 (7.1) 17.4 6.0 2.8 8.4 9.3 3.7

2015 2015 2015 (12.1)

30.9 30.9 20.3 (0.2) (0.4) (8.1) 27.0 (1.3) 13.6

25.1 4.0 8.2 3.0 5.8 6.7 6.1 Net profit/(loss) (non-cash) Foreign exchange revaluation stream arisingfrom Novartis’salestoKymriah patients. are likely tobedollardenominated, suchastheroyalty as asignificantportion of itsanticipated future revenues expects tohave acurrency hedgeagainstthisliability around theBrexit outcome.To someextentthe Group across thelastthree yearsasaresult of uncertainties fluctuations in foreign exchange rates versussterling £3.3 millionwasrecognised. We have seenlarge against thedollarandaforeign exchange gainof The situation wasreversed in2017assterlingimproved upon revaluation of thedollardenominated Oaktree loan. a foreign exchange lossof £2.7 millionbeingrecognised devaluation of sterlingagainstthedollarwhichhasleadto The netprofit in2018wasnegatively impactedbythe make alossfor taxpurposes. slightly from theprioryearasGroup continuesto The R&Dtaxcredit in2018hasonlydropped down of termination of theOberlandfacilityin2017. with £9.3 millionin2017duetothenon-recurring cost was significantlylower at £6.2 millionin2018compared The interest charge onourdollardenominated loanfacility failed itsPhase3study. intangible assetafter Bavarian Nordic’s Prostvac product of the PrimeBoosttechnologyandpoxvirus patent impairment charge in2017toaccountfor thewritedown was lowerthan2017duetoanon-recurring £1.0 million The depreciation, amortisation andshare optioncharge on NasdaqinNovember2018. Therapeutics investmentafter thecompanylisted by a£6milliongainonrevaluation of theOrchard Operating EBITDA profit for theyear, isfurtherimproved The significantachievements of 2018, culminating inan Operating EBITDA £m Operating andNetprofit/(loss) R&D taxcredit Oxford Biomedica plc|Annual report andaccounts2018 Interest Operating profit/(loss) Revaluation of investments share optioncharge Depreciation, amortisation and 2018 (6.2) (5.4) (2.7) 13.9 13.4 6.0 2.5 7.5 2017 (9.0) (9.3) (5.7) (1.9) (6.1) 2.3 3.3 2.7 (16.6) 2016 (11.3) (4.9) (4.2) (4.1) (7.1) 3.7 –

(13.0) 2015 (12.1) (14.1)

(2.0) (1.0) (1.9) 4.0 – 400 200 300 450 250 350 100 150 50 0 Year-end headcount

2013 Production related (darktint) Development (midtint) Admin andcorporate (lighttint) 2014 2015 2016 2017 2018

Strategic report 41 42 Operating profit/(loss) Operating EBITDA Gross income 2017 Operating profit/(loss) Operating EBITDA Gross income 2018 A reconciliation toGAAPmeasures isprovided onpage122. Oxford Biomedica plc|Annual report andaccounts2018 researching anddevelopingnewproduct candidates. The othersegment,“Product“, includesthecostsof and bringdevelopmentmanufacturingcostsdown. saleable technology, improve ourcurrent processes internal technologyprojects todevelopnewpotentially and process developmentactivitiesfor third parties,and which includestherevenue generating bioprocessing within twosegments,namelythe’Platform’ segment the SeniorExecutive Team, theGroup reports itsresults Reflecting thewaybusinessisbeingmanagedby Segmental analysis Financial review Strategic report — movements across theyearare explainedbelow. having beguntheyearwith£14.3 million.Significant The Group held£32.2millioncashat 31December2018, Cash flow of £2.5million. The segmentalsogenerated anoperating profit recognised aspartof theAxovant OXB-102 agreement. of £3.6 millionlargely asaresult of thelicenseincome of £12.2millionandanOperating EBITDA profit The Product segmenthasgenerated revenues commercial developmentservicestocustomers. increased royalty paymentsfrom partnersandadditional segment through higherbioprocessing volumes, continues totarget increased profitability from this £11.4 millionin2018(2017:£0.2 million).TheGroup The segmentalsogenerated anoperating profit of to £9.8 millionin2018, animprovement of £6.9 million. Operating EBITDA profit from £2.9 millionin2017 have resulted inthePlatform segmentincreasing its development servicesprovided. Theadditionalrevenues deals,aswellincreased commercial Bioverativ (Sanofi) to licenseincomereceived asaresult of theAxovant and income of 44%from £38.6 millionto£55.7 milliondue The Platform segmentin2018sawanincrease ingross — development servicesprovided. as increased revenues from commercial Axovant andBioverativ (Sanofi) deals,aswell principally asaresult of revenue generated by The operating profit improved by£19.6 million Platform 38.6 55.7 11.4 £m 9.8 0.2 2.9

Product

(4.8) (5.9) 12.2 £m 0.8 3.6 2.5

Total

67.9 13.9 13.4 39.4 (5.7) (1.9) £m

Movement inyear — — — — — 1. Cash flowmovements — — — Operating profit/(loss) Operating EBITDA profit/(loss) operating profit/(loss) Non-cash itemsincludedin R&D taxcredit received operations Cash generated from/(used in) Working capitalmovement operations Net cashgenerated from/(used in) Interest paid,lessreceived Capex Net proceeds from financing Cash burn — — — — — — — — covering theperiodsinceinitialdrawdownof theloan. Oberland loanfacilityaswelltheaccruedinterest 2017 interest paidincluded theredemption fee onthe was onlymadeupof Oaktree interest paymentswhilst from £10.8 millionintheprior year. 2018interest paid Interest paid duringtheyearwas£4.7 million,down cash of £17.9 millionfrom £14.3 millionto£32.2million. The result of the abovemovementsisanetincrease in Excludes interest paidwhichisshownseparately above. 2018, mainlyasaresult of theimprovement inthe reduced from £9.8 millionin2017to£1.9 millionin Cash burn,theaggregate of theseitems,wastherefore for thenewOxBox manufacturing facility. purchases of equipment andleaseholdimprovements from £2.0 millionto£10.1 million,mainlyconsistingof Purchases of property, plantandequipmentincreased net of fees. raise inFebruary2018whichgenerated £19.1 million £19.8 million,consistingalmostentirely of the equity The netproceeds from financingduring 2018were cash generated from ouroperations. of theimproved results in2017ascompared to2016. This wasduetothetaxcredit beingcappedasaresult tax receipt, down£0.8 millionfrom theprioryear. at £12.9 millionwashelpedbya£3.7 millionR&D Net cashgenerated from operations during2018 over 2017. which resulted ina£10.7 millionimprovement Cash generated from operations was£9.2 million of £13.4 million(2017:£1.9 millionloss). EBITDA whichimproved by£15.3 milliontoaprofit This improvement flowedthrough toOperating 1 (10.1) 2018 (0.5) (4.2) (4.7) (1.9) 19.8 12.9 13.9 13.4 17.9 9.2 3.7

(10.8) 2017 (2.0) (9.8) (1.0) (5.7) (1.9) (1.5) 8.8 3.0 3.8 0.4 4.5 2016 (11.3) (11.5) (5.9) (6.4) (3.3) (1.8) 17.5 (7.1) 6.0 4.2 4.1 1.2

2015 (29.8) (16.6) (14.9) (12.1) (14.1) (11.7)

25.0 (2.8) (1.5) 2.0 3.2 — — — — — — — changes from 31December2017, are asfollows: The mostnotableitemsonthebalancesheet,including Balance sheetreview Oxford Biomedica plc|Annual report andaccounts2018 — — — — — — — Contract liabilities and deferred Income increased Contract liabilitiesanddeferred Incomeincreased OxBox andnewdiscoveryinnovation facilityleases. £4.0 millionof depositsheldinescrow aspartof the manufacturing orders placedat year-end, aswell process developmentmilestonesachievedand to £30.6 million,duepredominantly tothetimingof Trade andotherreceivables increased from £17.1 million slots reserved. manufacturing orders placed,andmanufacturing process developmentwork,grantfunding, to 2018 duetoincomereceived inadvancerelation (of which £6.4 millionisnon-current) at theendof from £13.1 millionat theendof 2017to£23.5 million interest of £1.6 million. loss onrevaluation of theloan,aswellaccrued to £41.2millionduea£2.7 millionforeign exchange The loanbalancehasincreased from £36.9 million manufacturing facility. leasehold improvements for thenewOxBox to £11.4 million,duetopurchases of equipmentand Trade andotherpayablesincreased from £8.7 million Brexit planning. as plannedincreases instocklevelsasaresult of commitments across 2018andinto2019, aswell increasing asaresult of ongoingbioprocessing to £4.3 millionduetoworkinprogress balances Inventories have increased from £3.3 million OxBox manufacturingfacility. and leaseholdimprovements for thenew £10.8 million,mainlypurchases of equipment of £4.3 milliononlypartiallyoffset additions of by £6.4 millionto£31.8 millionasdepreciation Property, plantandequipmenthasincreased based onthequotedOrchard share priceat yearend. as aresult of therevaluation of ourOrchard investment milestones worth£2.0 million,andtheremainder as aresult of theachievementof three equity Investments increased by£8.0 millionto£11.0 million

Chief Financial Officer Stuart Paynter on page58. Further detailsof our contingencyplanningisprovided the future impactof Brexit on its operations tobeminor. regulatory landscapeintheUK,Group hasassessed and may significantly affect the fiscal,monetary Although theUK’sdecisiontoleave theEuropean Union statements onagoingconcernbasis. statements andhave therefore prepared thefinancial least twelvemonthsfrom thedate of thesefinancial resources andcashinflows tocontinueitsactivities for at the Directors considerthat theGroup hassufficientcash conjunction withcurrently knownandprobable cashflows, to continueitsgrowth strategy. Taking thisintoaccount,in Group expectstogenerate sufficientoperational cashflow investment inextendingourbioprocessing capacity, the flows, andalthoughtheGroup ismakingafurtherstrategic During 2018theGroup generated positiveoperational cash The Group held£32.2millionof cashat theendof 2018. Going concern carefully andadjustspendtomeetourfinancialtargets. platform. We willcontinuetomanageourcostbase studies, andalsoinourkey LentiVector technology continue toinvestinearlystageconceptsandpre-clinical shareholder valueandimprove patient outcomes.We will technologies where theopportunityexiststoincrease investments inourproducts, aswellacquiringenabling to large clinicalexpenditures. We willseektomake strategic out-license thosecandidates at anappropriate timeprior and pre-clinical pipelinewhilstseekingtospin-outor continuing thedevelopmentof ourproprietary products We willcontinuetoexecute ourstated strategy, of our customerbase. the platform of growth weestablishedandextending strategic commercial relationships in2019, buildingon our revenue expectations. We willcontinuetotarget new Our customerbasecontinuestodiversify, strengthening bioprocessing andcommercial developmentcapacity. product portfolio whichwecontinuetosupportina in anticipation of thecommercial launchof itsstrategic globe. Orchard TherapeuticsIPO’dat theendof theyear to supportthecontinuedlaunchof Kymriah across the with Novartis,buildingadditionalbioprocessing capacity and wecontinuetomaintainanexcellent relationship commercial developmentandbioprocessing pipelines, Gene TherapyConsortiumwhichwillbolsterour Axovant, Bioverativ (Sanofi) andtheUK Cystic Fibrosis in 2019. We have signednewcommercial contractswith The Group istargeting improved financialperformance Financial outlook

Strategic report 43 44 Oxford Biomedica plc|Annual report andaccounts2018 scientific excellence bynurturing ourtalentedpeople. engages andexcites us,andwedeliverground-breaking to create anenvironment whichpositivelychallenges, and partnersdeliveringonourcommitments.We aim means doingtherightthingfor ouremployees,patients “Be Inspiring”and“Deliver Innovation”. Inpractice,this governed byourGroup valueswhichare “Have Integrity”, Our commitmenttocorporate responsibility is Values in theUKandoverseas. ethical conductandintegrityinitsbusinessactivities The Group iscommittedtothehigheststandards of Integrity andEthics waste production anddisposal. emissions, useof water, electricityandgasaswell We monitorandresponsibly manageourfacilities’carbon Environment control ouremissionsandwaste. manner. We complywithlocallawsandregulations and facilities, conductingourbusinessinaresponsible We focus onthewellbeingof thecommunityaround our Community staff whobecomedisabled. promotion, andtocontinuewherever possibletoemploy opportunities for theirtraining,career developmentand to jobapplications from disabledpeople,toprovide It isgroup policytogivefullandfairconsideration in thewidercommunity. of patients inourclinicalstudies,andof ourneighbours respect for diversity. We are equallyfocused onthesafety satisfaction, andensuringequalityof opportunityand welfare of ouremployees,theirengagementandjob We are resolutely focused onthehealth,safety andthe People responsibility efforts onanumber of mainareas: to ensure wemeetthisobjective.We focus ourcorporate business andwehave arangeof evolvingpoliciesinplace Oxford Biomedicaiscommittedtoitsrole asaresponsible Corporate responsibility Strategic report

Total All otheremployees Senior managers Board including website at www.oxb.com. gap ratio. Forfulldetailsof thereport pleasevisitour has hadapositiveimpactontheCompany’sgenderpay levels of theorganisation overthepast12months.This representation of female employeesat themore senior and theGroup ispleasedtoreport anincrease in The GenderPayGapReportfor 2018hasbeenprepared Non-Executive Directors our organisation asat 31December2018: The tablebelowshowsthegendersplitacross we embracediversityinallforms. disability oranyotherpersonalcharacteristics,and irrespective of race,gender, religion, national origin, to providing equalopportunitiestoallemployees, The Board andseniormanagementare fullycommitted Diversity health andsafety regulation andbestpractice. is committedtomeetboththeletterandspiritof all are astandingitemontheBoard’s agendaandtheGroup have afirst-classsafety record. HealthandSafety issues changes inlegislation. Oxford Biomedicacontinuesto to adaptvariations inscientificworkand reflect and updated toensure continuousimprovement, and The HealthandSafety ManagementSystem isreviewed materials andtheoperation of laboratory equipment. activities, suchasworkingwithbiologicalandchemical Health andSafety ManagementSystem coversallwork standards andthrough specificanddetailedtraining.Our maintaining ourfacilitiesandequipmenttothehighest additional risks whichweendeavour tomanagethrough bioprocessing, engineeringandlaboratory facilitiesface employees isimportant,andthoseworkinginour and contractorsisourfirstpriority. Thesafety of all The health,safety andwelfare of ouremployees,visitors Safety People

Male 204 178 20 6 Female 228 216 11 1 Total 432 394 31 7

Male 47% 86% 45% 65% %

Female

53% 35% 55% 14% % Group’s performance. of thefinancialandeconomicfactors affecting the and employeeactivities,enhanceunderstanding related socialmediakeep employeesinformed of business announcements, internalnewslettersandaccesstowork- that are likely toaffect theirinterests. Thecirculation of press of employees canbetaken intoaccountinmakingdecisions issues andothermatters of interest, andtoensure theviews are heldtokeep employeesinformed of generalbusiness briefings, R&Dseminarsandinformal all-staff meetings and consultation across ourbusiness.Group-wide We acknowledgetheimportanceof communication Communication motivate theirteams. they are wellprepared tomanage,develop,supportand We provide trainingtoourlinemanagersensure that and productivity weneedtosucceedasabusiness. our traininghelpsustoachievetheoutcomes,compliance clinical processes are complexandhighly regulated and above. Inaddition,ourbioprocessing, laboratory and employees andothersweinteractwith,asdiscussed Training isessentialfor thesafety andwellbeingof our Training approach tosaving for theirfuture. to enableemployeestake amore flexibleandpersonalised medical insurancefor allstaff, alongwithapensionfacility to participate inthesuccessof theorganisation. We provide we have modernshare optionplanstoallowemployees structure. Inadditiontocash-basedreward programmes, and non-financial remuneration for eachlevelwithinour We continuetoreview theappropriate levelsof financial structure, whichisbeingimplementedduringearly2019. independently validated andmarket alignedremuneration quality employees.Thisincludesthedevelopmentof an to ensure that weare wellplacedtoattract andretain high year-end, wecontinuetoinvestinstrong internalprocedures With thecontinuedgrowth inemployeenumbersto432at Remuneration Oxford Biomedica plc|Annual report andaccounts2018

through specificanddetailedtraining. facilities andequipmenttothehigheststandards and endeavour tomanagethrough maintainingour laboratory facilitiesfaceadditionalrisks whichwe working inourbioprocessing, engineeringand The safety of allemployeesisimportant,andthose Safety

Strategic report 45 46 Oxford Biomedica plc|Annual report andaccounts2018 Total SeeSaw Sobell House Charity the localarea on season ticket loanstohelpminimiseourtraffic impact a well-establishedCycle-To-Work schemeandinterest-free traffic impactcausedbyouremployees. We have to emissionsandwaste,property planningandthe and locallawsregulations, particularlywithregard behave asaresponsible neighbour, complyingwithnational and otherlocaleducational establishments.We seekto apprenticeship schemeandbybuildinglinks withschools such ascreating newhighqualityjobs,establishingan this bydeliveringpositivebenefits for thecommunity, in theOxford community. We endeavour toachieve We recognise thevalueof beingagoodlocalcitizen Community Corporate responsibility Strategic report charity providing griefsupportfor bereaved children. SeeSaw (charityregistration 1076321)isalocalbased provides palliative andendof life care inOxfordshire and were SobellHouse(charityregistration 1118646)which donations totwolocalcharities.Thecharitiesselected Children’s Hospital,JohnRadcliffe andalsofinancial This includedanemployeedrivengiftgivingfor the employees tosupportlocallyfocused charitiesthisyear. In furthersupportof thecommunityweworked with Charitable Giving and expandingtheschemeinfuture. the apprentices through mentoringandtraining and Analyticaltesting.We are committedtosupporting scheme inthehighlyskilledareas of Manufacturing from thelocalcommunityare enrolled onatraining and theUniversityof Kent. Currently three schoolleavers with AdvancedTherapiesApprenticeship Community launched anapprenticeship schemeincollaboration providing highskilledjobstolocalcommunitywe As partof ourfocus of deliveringlocalbenefitsand Apprenticeship Scheme .

Donation

£3,000 £1,500 £1,500

in 2018, SobellHouseandSeeSaw. We madefinancialdonations totwolocalcharities 2. Donations and waste. by ouractivitiescloselymanagingemissions community safe from anypotentialharmcaused every effort to keep ourneighboursinthelocal No laboratory wastegoestolandfillsites. We make 1. Responsibility toprotecttheenvironment 2. 1.

Total travel waste disposaland (estimated) including Other activities Total travel waste disposaland (estimated) including Other activities Water supply Water supply Gas Gas important indicator of ouractivity. “environmental intensity”onaperemployeebasis,an Electricity Electricity 2017 2018 estimated ourtotalCO energy andwater at oursitesinOxford, UK.We have also The tablesbelowshowourusagein2018and2017of Greenhouse gasemissionsreport section of ourresponsible Businesspolicy. from theauditwillbeincorporated intotheEnvironmental all aspectsof ourenergy usage.Therecommendations Phase 2energy assessmentbasedon2018data covering Efficiency Directive (2012/27EU).ThishasinvolvedanESOS have engagedwithESOS, incompliancewithEUEnergy As weare nowanorganisation of over250employeeswe Energy SavingsOpportunityScheme(ESOS) our activitiesbycloselymanagingemissionsandwaste. local communitysafe from anypotentialharmcausedby sites. We make everyeffort to keep ourneighboursinthe biological materials. Nolaboratory wastegoestolandfill and disposalof chemicalwasteanddecontaminated and usesqualifiedlicensedcontractors for thecollection covering theprocessing anddisposalof laboratory waste, update regularly. TheGroup complieswithallregulations objectives andguidelinesinplacewhichwereview and environment andwehave astrong environmental policy, We fullyrecognise ourresponsibility toprotect the Environmental policies&initiatives Environment Oxford Biomedica plc|Annual report andaccounts2018 MW hours MW hours MW hours MW hours 2 metres metres emissions and have indicated our emissionsandhave indicated our Cubic Cubic Cubic Unit Unit Usage Usage 6,330 4,947 3,108 3,225 4,169 4,124 employee employee Usage Usage Usage 14.7 17.6 17.3 11.4 11.1 per per per 8.8

emission emission emission (tonnes) (tonnes) 2,365 2,472 1,450 1,180 CO CO 590 447 593 573 2 2 2 2

4.000 2.000 3.000 5.000 (2017: 2,472). from theprevious yearat 2,365tonnesin2018 CO Our totalCO 1.000 0 2 emissions2018% Electricity andgasuse(MWh) 0.2 25.1 24.9 2017 2 emissions have reduced slightly emissionshave reduced slightly 2018 49.9 Gas activities Other supply Water Gas Electricity Electricity

Strategic report 47 48 Anti-bribery in theUKandoverseas. of ethical conductandintegrityinitsbusinessactivities The Group iscommittedtothehigheststandards Integrity andEthics — Oxford Biomedica plc|Annual report andaccounts2018 reporting torelevant authorities. where necessary, uptoand includingdismissaland thoroughly investigated withdisciplinaryactiontaken without fear of retaliation. Concernsand allegations are suspected casesof misconductinconfidence and effort, theGroup’s employeesare encouraged to report implementation, trainingandmonitoring.Aspartof this prevention anddetectionof misconductthrough policy Oxford Biomedica’scomplianceactivitiesincludethe Whistleblowing measures toprevent, monitorandeliminate bribery. Senior managementiscommittedtoimplementingeffective consultants oranypersonbodyactingonitsbehalf. any form of briberyby, orof, itsemployees,agentsor receive traininginthismatter. TheGroup doesnottolerate well asotherrelevant overseas legislation andallemployees bribery isinfullaccordance withtheUKBriberyAct2010as Oxford Biomedica’spolicyonpreventing andprohibiting — to managewastemore effectively. Thisincludes: We continuetoreview ourwastemanagementsystems Waste management currently inuse. ensure lighting isextinguishedinareas that are not light sensorsinallareas that have beenrefurbished to In ourWindrushlaboratories wehave passiveinfrared more energy efficientthantraditionallightingsystems. replacing weswitchtoLEDlightswhichare significantly possible. Forinstance,whenexistinglightingneeds number of policiestodecrease energy usagewhere We a are committedtoenergy efficiencyand have Energy efficiency Corporate responsibility Strategic report — — processing efficiency. use of different wastestreams toincrease cans, glass,plasticsandprintertoner/cartridges. recycling allpaperandcardboard waste,aluminum

4.000 6,000 2.000 3.000 5.000 1.000 7,000 0 Water use(cubicmetres) 2017 2018 Chief Executive Officer John Dawson on itsbehalfby: the Board of Directors on14 March 2019andwassigned The Strategic report onpages20to49wasapproved by for regulatory authorities. by cross-referring LentiVector platform data packages The Group minimisestheuseof animalmodels when necessaryandwhere there are noalternatives. principles ensure that animaltestingisonlyemployed refinement and reduction of animaltesting.These of thethree “Rs” insafety testing:replacement, process. We are committedtofollowing theprinciples no alternative tousinganimalmodelsaspartof this they are administered topatients, andthere iscurrently products mustbeappropriately testedfor safety before It isaregulatory requirement that allnewtherapeutic Animal testing to humanrightssafeguarding. operates interritorieswithstrong commitments with humanrightsregulations andoursupplychain are alllocated intheUK,where ourpoliciesaccord be found onourwebsitewww.oxb.com. Ourfacilities in compliancewithsection54of theActwhichcan approved aModernSlavery Transparency Statement Act 2015. Oxford Biomedica’s Board of Directors has UK HumanRightslegislation andtheUKModernSlavery our businessinaccordance withtheletterandspiritof The Group fullyrespects humanrightsandweconduct Human rightsandanti-slavery (www.clinicaltrials.gov). our trialsonaUSgovernment-sponsored website (www.clinicaltrialsregister.eu) andwealsodisclose automatically postedontheEUClinicalTrials Register clinical trials.RelevanttrialsintheEUandEEAare (www.oxb.com) provides information onongoing We are alsocommittedtotransparency, andourwebsite compliance withappropriate guidelinesandlegislation. under acontrolled QualityManagementSystem toensure We alsohave standard operating procedures inplace boards at clinicaltrialsites,before anypatients are treated. well aslocalethicscommitteesandinstitutionalreview agreed with therelevant national regulatory authorities,as safety asaparamountconcernandtheprotocols are clinical trials.Ourstudiesare designedwithpatient our business,includingthedesignandconductof our We instilltransparency, safety andethicsinallaspectsof Clinical trials Oxford Biomedica plc|Annual report andaccounts2018

packages for regulatory authorities. cross-referring LentiVector platform data We minimisetheuseof animalmodelsby 2. Animaltesting safety asaparamountconcern. Our clinicalstudiesare designedwithpatient 1. Clinicaltrials 2. 1.

Strategic report 49

Oxford Biomedica plc|Annual report andaccounts2018

19 16 145 103 108 Consolidated statement statement Consolidated 104 106 105 148 107 Glossary 145 Independent auditors’ auditors’ Independent 96 90 44 20 69 30 iaca review Financial 38 62 26 26 36 59 24 51 22 32 23 Principal risks, uncertainties uncertainties risks, Principal 52 11 37 12 13 1

Group financialstatements report Directors’ report Advisers andcontactdetails Notes totheconsolidated Directors’ remuneration report Corporate governancereport Other matters financial statements of theparent equity attributable toowners Statements of changesin Statements of cashflows Balance sheets of comprehensive income The Board of Directors and riskmanagement Corporate governance Corporate governance Corporate responsibility Objectives for 2019 Delivery of our2018objectives 2018 performance review Management team Chief Executive Officer's review Chairman’s statement Financial highlights Operational highlights Our businessmodel Introducing Strategic report Products LentiVector deliveryplatform Gene andcelltherapysector overview Sector andtechnology Oxford Biomedica

Corporate governance 51 52 — — — — Oxford Biomedica plc|Annual report andaccounts2018 — The Group’sriskmanagementframeworkisasfollows: Risk managementframework risks facingthecompany, includingthosewhichcouldthreaten itsbusinessmodelandfutureperformance. development-stage biopharmaceuticalcompanies.TheDirectorshavecarriedoutarobustassessmentofthe a rangeofrisks.SomethemarespecifictoOxfordBiomedica’scurrentoperations, othersarecommonto all an integralandwell-establishedpartofOxfordBiomedica’smanagementprocesses.TheGroupisexposedto authorities haveshowncautionintheirregulation ofsuchproducts.Riskassessmentandevaluation istherefore for commercialusesotherearesignificantfinancialanddevelopmentrisksinthesector, andtheregulatory sectors.Onlyafewgeneandcelltherapyproductshavebeenapproved high riskcomparedwithotherindustry Oxford Biomedicaoperates inthegeneandcelltherapybiotechnologysectorwhich,byitsnature, isrelatively Principal risks,uncertaintiesandriskmanagement Corporate governance — — — — — each formal meeting. steps that canbetaken. Theriskregister isregularly reviewed bySETandkey risks are highlightedtotheBoard at quarterly witharemit toidentifyandassessrisks inthebusinessandtoconsidermitigation andriskmanagement from key areas of thebusinessandchaired bytheDirector of Corporate Activities&Strategy. ThisCommitteemeets Risk ManagementCommittee–Oxford Biomedica hasaRiskManagementCommitteecomprisingseniormanagers with suchSOPsare routinely subjecttoauditbytherelevant regulators andcustomers.Other SOPs,suchasfinancial required for GMP, GCPandGLPanydeviations from theSOPsmustbeidentifiedandinvestigated. Compliance which are required befollowed inorder tominimisetherisks inherent inthebusinessoperations. Where theseare Standard Operating Procedures –allareas of thebusinesshave well establishedStandard Operating Procedures management isakey feature of eachsub-committee. Committee andtheTechnical DevelopmentCommittee.SETmembersattend thesemeetingsandrisk Leadership Team (incorporates theQualityandManufacturingOperations Committee),theProduct Development monthly andthrough whichmuchof theday-to-daybusinessismanaged.Theseare theextendedOperational Key managementcommittees–theGroup currently hasthree key managementsub-committeeswhichmeet the RiskManagementCommitteetoconsideroperational riskmanagementprocesses andrisks identified. considers relevant risks oneachoccasion.At leastfour timesayear, the SET meetswithrepresentatives from Senior Executive Team –theSETgenerally meetstwicemonthlytodiscusscurrent businessissuesand framework appropriate for ourlarger Group. judgements containedinthem.During2018, wereceived externalassistancefrom PwCLLPtodevelopourrisk formal announcementsrelating totheCompany’sfinancialperformance, reviewing significantfinancial reporting The AuditCommitteealsomonitorstheintegrityof thefinancialstatements of Oxford Biomedicaandany implementation aswellreviewing theGroup’s internalfinancialcontrols andtheinternalcontrol systems. are theresponsibility of theSeniorExecutive Team buttheAuditCommitteemonitorsprocesses andtheir in March andSeptemberafullpresentation totheBoard onRiskisexpected.Theriskmanagement processes risks withintheGroup at eachof itsformal meetings,of whichthere at leastsixannually. However, twiceayear tolerance andfor ensuringthemaintenanceof asoundsystemof internalcontrol. TheBoard reviews key Board of Directors –theBoard hasoverallresponsibility for riskmanagement,determiningtheGroup’s risk processes, are alsosubjecttoaudits.

certainty that suchtechnicalimprovements orsolutions canbeidentified. product candidates characteristicssuchasthedeliverymechanism orthebioprocessing process. There isno During thecourseof aproduct’s development,furthertechnicaldevelopment mayberequired toimprove the (iii) Technical risks be givenamarketing authorisation. Group’s product candidates willbesufficientto satisfy the relevant regulatory authoritiesthat the product should There canbenoassurancethat theefficacy data collected from the pre-clinical studiesandclinicaltrials of the stages of clinicaltrialsmayfailtoshowthedesired efficacydespite having progressed through initial clinicaltrials. candidates donotnecessarilypredict theresults of later stageclinical trials.Unapproved product candidates inlater existing alternative therapies.Theresults of pre-clinical studiesandinitialclinical trialsof theGroup’s product Human clinicalstudiesare required todemonstrate efficacyinhumanswhencompared againstplaceboand/or (ii) Efficacy risks ultimately besuccessfullycompleted. of a particular studyafter review bytheDSMBorreview bodydoesnotnecessarilyindicate that allclinicaltrialswill development of product candidates, consequentlyaffecting theGroup’s timeline for profitability. Thecontinuation use. Adverseorinconclusiveresults from pre-clinical testingorclinicaltrialsmaysubstantiallydelay, orhalt,the There canbenoassurancesthat anyof theGroup’s product candidates willultimately prove tobesafe for human (DSMB), therelevant regulatory authoritiesortheGroup itselfmaysuspendorterminate clinicaltrialsat anytime. Safety issuesmayariseat anystageof thedrugdevelopmentprocess. Anindependentdrugsafety monitoringboard (i) Safety risks to enterintocollaborations inrespect of product candidates. development couldhave anadverseeffect onthedevelopment of otherproduct candidates, oron theGroup’s ability adverse impactontheGroup’s share price.There isalsotheriskthat thefailure of oneproduct candidate inclinical of the Group. There is ariskthat thefailure of anyoneproduct candidate couldhave asignificantandsustained The failure of theGroup todevelopsuccessfullyaproduct candidate couldadverselyaffect thefuture profitability — — — — — — including: process takes manyyears.TheGroup mayfailtodevelopsuccessfullyaproduct candidate for manyreasons, regulatory approvals toconductclinical trialsandbioprocess drugsbefore theycanbemarketed. Thisdevelopment the regulations applicabletotheparticularproduct candidate. Inaddition,theGroup oritspartnerswillneedtoobtain that will be required variesdependingon the product candidate, theindication beingevaluated, thetrialresults and product candidates todemonstratefor safety andefficacy. Thenumber of pre-clinical studiesandclinicaltrials To developapharmaceuticalproduct itisnecessarytoconductpre-clinical studiesandhumanclinicaltrials Pharmaceutical productdevelopmentrisks Key risksspecifictoOxfordBiomedica’scurrentoperations Oxford Biomedica plc|Annual report andaccounts2018 — — — — — — Failure torecruit sufficient patients intoclinicalstudies. Failure toobtainregulatory approvals toconductclinicalstudiesor, ultimately, tomarket theproduct; and Failure toestablishrobust bioprocessing processes; Failure todeveloptechnicalsolutionsachievenecessarydosinglevelsoracceptabledeliverymechanisms; Failure todemonstrate efficacy; Failure todemonstrate long-termsafety;

Corporate governance 53 54 Oxford Biomedica plc|Annual report andaccounts2018 development activitiesandtoreview progress regularly intheGroup’s Product DevelopmentCommittee. and otherexternalparties,suchasContractResearch Organisations to plan,implementandmonitoritsproduct changed fundamentallyoverthelastyear. TheGroup aimstomitigate theserisks by employingexperiencedstaff The threats from the above product developmentrisks are inherent inthepharmaceuticalindustryandhave not stage of development. of suitable patients, ortheemergence of acompetingdrug,eitheronethat isapproved oranotherdrugintheclinical variety of reasons suchasthespecifiedcharacteristicsbeingtootightlydefined resultinginaverysmallpopulation characteristics, potentiallycausingdelaysorevenabandonmentof theclinicalstudy. Thiscouldbecausedbya into thestudy. Theriskexiststhat itproves difficult inpracticeto recruitthenumber of patients withthespecified number of patients toberecruited intothestudyandcharacteristicsof patients whocanandcannotbeaccepted Clinical trialsare establishedunderprotocols whichspecifyhowthetrialsshouldbeconducted.Protocols specifythe (vi) Failure torecruit sufficient patients intoclinicalstudies until corrective actionshave beenimplementedandacceptedbytheregulator. standards couldresult inthelaboratories orthebioprocessing sitebeingclosedortheclinicalstudies suspended audits bytheMHRAandFDA toensure that theycomplywithGMP, GCPandGLPstandards. Failure tomeetsuch restricted. TheGroup’s laboratories, bioprocessing facilityandconductof clinicalstudiesare alsosubjecttoregular will besubjecttocontinualreview andthere canbenoassurancethat suchanapproval willnotbewithdrawnor additional data before grantingapproval. Ifregulatory approval isobtained,theproduct candidate andbioprocessor products indevelopment.Regulatory authoritiesmayimposerestrictions onaproduct candidates useormayrequire timelines. Similarly, there canbenoassuranceof gainingthenecessary marketing approvals tocommercialise the developmentstage,regulatory reviews of clinicaltrialapplications oramendmentscanprolong development facility, are regulated byhealthcare regulatory agencies,suchastheFDA (USA),EMA(Europe), andMHRA(UK).During The clinicaldevelopmentandmarketing approval of theGroup’s product candidates, andtheGroup’s bioprocessing (v) Regulatory risk bioprocessors willbeabletoprovide sufficientbioprocessing capacitywhen required. stages of clinicaldevelopmentorcommercial supplyinatimelyorcost-effective manner, northat contract Group will beabletoadaptcurrent processes ordevelopnewprocesses suitablefor thescalerequired bylater required for later stagesof clinicaldevelopmentorfor commercial supply. There canbenoassurancethat the at thesmallscalerequired bytheearly stages of clinicaldevelopmentmaynotbeappropriate at thelarger scale prices, orthat suitablenewcontractorswillenterthemarket. Bioprocessing processes that are effective andpractical are currently abletobioprocess theGroup’s product candidates willcontinuetomake capacityavailable at economic that theGroup willbeabletobioprocess theGroup’s product candidates at economiccostorthat contractorswho processes for whichthere are onlyafew suitablebioprocessors includingtheGroup itself. There canbenoassurance quantities at acceptablecost.TheGroup’s LentiVector platform product candidates usespecialisedbioprocessing There can benoassurancethat theGroup’s product candidates willbecapableof beingproduced incommercial (iv) Bioprocessing process risk Principal risks,uncertaintiesandriskmanagement Corporate governance

the relevant product candidates for anyreason couldresult intheGroup losingpotentialrevenues. partners inwhichtheGroup hasafinancialinterest through IPlicenses. Failure of thepartnerstocontinuedevelop The Group hasentered severalcollaborations andpartnerships,involvingthedevelopmentof product candidates by Collaborator andpartnerrisk to mitigate theriskof beingoverlyreliant onNovartisbyseekingbioprocessing contractswithotherparties. equipment andemployeesand,inparticular, inqualitymanagementprocesses. TheGroup isalsoendeavouring months. TheGroup mitigates theriskof failingtomeetrequired specifications byinvestinginhighqualityfacilities, As theGroup’s revenues from bioprocessing are growing therisktoGroup hasincreased inthelasttwelve Group’s business. and certainout-sourced services.Ifsuchsuppliersperform inanunsatisfactory manneritcouldharmthe Furthermore, theGroup relies onthird parties,insomecasessolesuppliers,for thesupplyof rawmaterials lead tolossof revenues. specification duetocontamination orinadequate yield. Failure todeliverbatches tothe required specification may for Novartis.Bioprocessing of lentiviralvectorsiscomplexandbioprocessing batches mayfailtomeettherequired The Group receives significant revenues from bioprocessing lentiviralvectors for third partiesandinparticular Bioprocessing revenuerisk Oxford Biomedica plc|Annual report andaccounts2018

Corporate governance 55 56 Oxford Biomedica plc|Annual report andaccounts2018 Advances inothertechnologiesthesectorcouldundermineGroup’s commercial prospects. The geneandcelltherapysectorischaracterisedbyrapidlychangingtechnologiessignificantcompetition. Rapid technicalchange development of geneandcelltherapyproducts. requirements willnotbeimposedinthefuture. Thismayincrease thecostandtimerequired for successful those imposedonotherproducts, applytogeneandcelltherapiesthere canbenoassurancethat additional been approved inEurope, andonlythree intheUSA.Furthermore, specific regulatory requirements, over andabove for theprevention and/ortreatment of diseases.To date onlyalimitednumberof genetherapyproducts have in thesector, willdependontheacceptanceof geneandcelltherapybythemedicalcommunity andthepublic The Group’s commercial success,bothfrom itsownproduct developmentandfrom supportingothercompanies Gene andcelltherapyrisk Broader businessriskswhichareapplicabletoOxfordBiomedica that the remuneration package offered toemployeesiscomparablewithcompetingemployers. Group’s performance. TheGroup mitigates thisriskbycreating anattractive workingenvironment andensuring staff from the EUduetoBrexit orto retain staffthe withthe required skillsandexperiencecouldadversely affect customers’ needs.Themarket for suchemployeesisbecomingincreasingly competitiveandthefailure torecruit The Group dependsonrecruiting andretaining highlyskilledemployeestodeliveritsobjectivesandmeet Attraction andretentionofhighlyskilledemployees the servicetheyexpect. also takes extremely seriouslycustomerrelationship managementtoensure that customersandpartnersreceive and collaborators. TheGroup iscontinuingtoinvestintheLentiVector platform inorder toreduce thisrisk,andit b) becominguncompetitivefrom apricingperspective,c)failure toprovide anadequate servicetobusinesspartners in buildingthisbusinessfor reasons includinga)failingtomaintainaleadershippositioninlentiviralvectortechnology, for revenues derivedfrom process development,bioprocessing andfuture royalties. TheGroup maybeunsuccessful The Group isbuildingarevenue generating businessbyproviding itsLentiVector platform tothird partiesinreturn development of theproducts tobedelayedorcurtailed. The Group maynotbesuccessfulinitsefforts tobuildthesethird party relationships whichmaycausethe funded vehiclesandmayseektoarrangestrategic partnershipsfor developingtheGroup’s otherproduct candidates. The Group isseekingtoout-licenseorspin-outitsin-houseproduct developmentprogrammes intoexternally Business development Principal risks,uncertaintiesandriskmanagement Corporate governance

— regulatory andcommercial environment severalyearsintothefuture. Future commercialisation risks include: In thelongerterm,successof theGroup’s product candidates andthoseof itspartnerswilldependonthe Longer-term commercialisation risks — property from others. will notaffect theentitlement of theGroup tothe relevant intellectualproperty ortolicensethe relevant intellectual covering suchintellectualproperty. There canbenoassurancethat changestothetermswithinlicenceagreements including thecircumstances underwhichtheintellectualproperty wascreated andtheprovisions of anyagreements Rights of ownershipover, andrightstolicenseuse,intellectualproperty dependonanumber of factors, independently developthesameorsimilarproduct candidates ortechnology. product candidates ortechnology, there canbenoassurancethat acompetitororpotential willnot to developorobtainalternative technology. Where copyright,designrightand/or“knowhow”protect theGroup’s no assurancethat theGroup willbeabletoobtainlicencesthesepatents at reasonable cost,ifat all,orbeable Third partypatents mayemerge containingclaimsthat impacttheGroup’s freedom tooperate. There canbe could involvesubstantialcostsandanuncertainoutcome. protected byintellectualproperty. Furthermore, iftheGroup’s patents are challenged,thedefence of suchrights portfolio. However, there canbenoguaranteethat theGroup’s product candidates and technologiesare adequately technologies andtheBoard giveshighprioritytothestrategic managementof theGroup’s intellectualproperty The Group’s successdepends,amongstotherthings,onmaintainingproprietary rightstoitsproducts and Intellectual propertyandpatent protectionrisk and milestonesfrom commercial partnerscouldbereduced. Any orallof theserisks couldresult intheGroup’s future profitability beingadversely affected asfuture royalties — — Oxford Biomedica plc|Annual report andaccounts2018 — — — — Regulatory authoritiesbecomingincreasingly demandingregarding efficacystandards orrisk averse regarding safety; of theGroup’s product candidates ormake themobsolete; and pharmaceuticalindustriesare subjecttorapidtechnologicalchangewhichcouldaffect thesuccess The emergence of newand/orunexpectedcompetitorproducts ortechnologies.Thebiotechnology The willingnessof physiciansand/orhealthcare systemstoadoptnewtreatment regimes. therapies willdependonassessmentsof theircost-benefitandcosteffectiveness; the uniquepotentialtoprovide permanenttherapeuticbenefitfrom asingleadministration. Thepricing of these justify theinvestment.Basedonclinicalstudiestodate, theGroup’s LentiVector platform product candidates have Governments orotherpayersbeingunwillingtopayfor/reimburse genetherapyproducts at alevelwhichwould

Corporate governance 57 58 Oxford Biomedica plc|Annual report andaccounts2018 and assuch,wehave undertaken stepstoestablishasubsidiaryinIreland. Short termregulatory impactsincludetherequirement for QP certification tobeperformed inanEUmemberstate short term.AllEUNationals currently employed willbeabletostayintheUKunder“settled status” directive. Significant recruitment hastaken placeoverthelastyear, to theextentstaff basecansupport growth overthe to recruitment of individualsfrom theEUandimpact ontheregulatory relationships betweentheUKandEU. the impactwouldbeminor onOxford Biomedicawithanticipated effects beingmanaged. Key uncertainties relate is notpossibleat thispointintimetopredict fullytheeffects of anexit of theUKfrom theEuropean Union,webelieve Union market andtotheglobaltradedealsnegotiated bytheEuropean Uniononbehalfof itsmembers.Althoughit negotiated betweenEUMemberStates andtheUKfollowing Brexit, theUKcouldloseaccesstosingleEuropean growth of itsindustries,includingthepharmaceuticalandbiotechnology industries.Dependingontheexitterms fiscal, monetaryand regulatory landscapeintheUK,andcouldhave a material impactonitseconomyandthefuture The impactof theUK’sdecisiontoleave theEuropean Unionisnotyet clear butitmaysignificantly affect the UK departurefromEuropeanUnion (“Brexit”) adversely affect theGroup’s businessoperations, financial positionand prospects. Failure tocomplywiththetermsof theloanagreement couldpotentiallyplacetheGroup indefault,whichcould The Group hasa$55millionloanfacilityprovided byOaktree CapitalManagement, secured ontheGroup’s assets. Loan facility (page 108). the Financialreview page43, in theDirector’s report page92andinnote1totheConsolidated financialstatements The Directors have considered thecashpositionincontextof goingconcernandtheirconclusionsare setout Financial position may increase. 9.0% plusUS$LIBOR,subjecttoaminimumof 1%.If3monthLIBORrisesabove1%the Group’s interest payments The Group isexposedtointerest rate movements,primarilyarisingontheOaktree loanfacility. theinterest rate is (c) Interest rate exposure the currencies inwhichitincursitsexpenses,thiscouldadverselyaffect theGroup’s future profitability. In additionifthecurrencies inwhichtheGroup earnsitsrevenues and/orholdsitscashbalancesweaken against results of operations andmayadverselyaffect theGroup’s financialcondition,eachstated in poundssterling. and lossesontranslation of theunderlyingcurrency intopoundssterlingthat mayincrease ordecrease theGroup’s in exchange rates betweenpoundssterling,theUSdollarandEuro mayresult inrealised andunrealised gains To theextentthat theGroup’s foreign currency assetsandliabilities inthelongertermare notmatched, fluctuations Capital Management.Underthat facilitytheGroup isrequired tomaintain$2.5millioninaringfenced bank account. to hedgeforeseen foreign currency expenses.TheGroup alsohasaUSdollarloan facilityprovided byOaktree pounds sterling,althoughtheGroup’s Treasury Policypermitscashbalancestobeheldinothercurrencies inorder a proportion of itsexpenditure inUSdollarsandtheEuro. TheGroup’s cashbalancesare predominantly heldin Group’s income from collaborative agreements andpatent licencesisreceived inUSdollarsandtheGroup incurs The Group records itstransactionsandprepares itsfinancialstatements inpoundssterling,butsome of the (b) Foreign currency exposure other claimwouldnothave amaterial andadverseeffect ontheGroup’s future profitability andfinancialcondition. claim, thelevelof insurancecarriedbytheGroup noworinthefuture willbeadequate, orthat aproduct liabilityor necessary insurancecoverwillbeavailable totheGroup at anacceptablecost,ifat all,orthat, intheeventof any products. WhiletheGroup iscurrently abletoobtaininsurancecover, there canbenoassurancethat anyfuture inherent in theresearch, pre-clinical andclinicalevaluation, bioprocessing, marketing anduse of pharmaceutical customers, suppliersand/orinvestors.Inaddition,theGroup isexposedtopotentialproduct liabilityrisks that are In carryingoutitsactivitiestheGroup potentiallyfacescontractualandstatutory claims,orothertypesof claimfrom (a) Product liabilityandinsurancerisk Financial risks Principal risks,uncertaintiesandriskmanagement Corporate governance

Stuart Henderson,Heather Preston, Stuart Paynter Andrew Heath, MartinDiggle,Lorenzo Tallarigo, JohnDawson, Left toright: The BoardofDirectors Corporate governance Oxford Biomedica plc|Annual report andaccounts2018

Corporate governance 59 60 — None Committee membership: —  Committee membership: Oxford Biomedica plc|Annual report andaccounts2018 —  Appointment: of PaionAG. (UK) Limited.Heiscurrently aNon-Executive Director of FinanceandAdministration of Serono Laboratories Cephalon. Priortohistimeat CephalonhewasDirector 2005 ledthe$360millionacquisitionof Zeneus by turnover of severalhundred millionUSdollarsandin the European businesstoover1,000 people,andtoa Europe. Whileat Cephalonheledmanydealsbuilding Financial OfficerandHead ofBusinessDevelopment European operations of CephalonInc.,includingChief Previously heheldseniormanagementpositionsinthe appointed ChiefExecutive OfficerinOctober2008. a Non-Executive Director inAugust2008, andwas John DawsonjoinedOxford Biomedica’sBoard as Chief Executive Officer John Dawson —  Appointment: Business School. the Universityof Pisa(Italy)andaPMDfrom Harvard Operations. HehasaDoctorof Medicinedegree from management, andultimately asPresident of International research, product management,marketing andgeneral increasing seniorityinanumberof areas includingclinical he worked at EliLilly, where heheldvariouspositionsof develop noveltreatments andtechnologies.Previously, life scienceresearch tocreate successfulbusinessesthat of Genextra,aholdingcompanyfocused onidentifying also ChiefExecutive Officerand remainsaBoard member where he ledthecompany’ssuccessfulIPO. Hewas was previously Chairmanof Intercept Pharmaceuticals Chairman of Oxford BiomedicainFebruary2016. He Dr. Lorenzo Tallarigo wasappointedasNon-Executive Chairman Dr. LorenzoTallarigo The BoardofDirectors Corporate governance in October2008 and becameChiefExecutive Officer Nomination Committee and ChairmaninFebruary2016 Appointed a Director in August 2008 Appointed aDirector inAugust2008 Appointed asNon-Executive Director

— None Committee membership: — AuditCommittee Committee membership: —  Appointment: and Wales. Institute of Chartered AccountantsinEngland partnering at DeLaRueplc.Heisamemberof the Oxford Biomedicahewasheadof financebusiness the globalheadof internalaudit.Priortojoining moved toacorporate finance role before becoming partnering for allbusiness outsideof theUS. Hethen where hebecametheseniorDirector of financebusiness Finance Director. Hethen moved toShire Pharmaceuticals life sciencesdivisionsprior tobecomingtheEuropean worked inavarietyof roles withinthehealthcare and moving toEDS. HesubsequentlyjoinedSteris, and as achartered accountant with HainesWatts before the pharmaceuticalandhealthcare sectors.Hequalified Board inAugust2017. Hehas16years’experiencein Stuart PaynterjoinedOxford Biomedicaandthe Chief FinancialOfficer Stuart Paynter — Nomination Committee — Remuneration Committee —  Appointment: of theUKBioIndustryAssociation. Director of NovacytSA.Hewaspreviously aDirector as Associate MedicalDirector. HeisaNon-Executive Vice President Marketing &Sales,andat Glaxo Sweden positions at AstraABandUSA,including acquisition byBTG for £220 millionandheldsenior managed thecompany’ssignificantgrowth andeventual he wasChiefExecutivehe Officer of Protherics plcwhere and SeniorIndependentDirector inMay2011.Previously Board inJanuary2010andbecameDeputyChairman Dr. Andrew Heath wasappointedtoOxford Biomedica’s Deputy ChairmanandSeniorIndependentDirector Dr. AndrewHeath Chief FinancialOfficerinAugust2017 in May2011 and SeniorIndependentDirector and becameDeputyChairman Appointed a Director and Appointed aDirector and Appointed aDirector inJanuary2010

Oxford Biomedica plc|Annual report andaccounts2018 — Nomination Committee — Remuneration Committee(March 2019) — AuditCommittee Committee membership: — AppointedaDirector inMarch 2018 Appointment: a degree inMedicinefrom theUniversityof Oxford. in life sciencesandBiotechfor thelast16years. Sheholds management consultantandshehasbeenaninvestor of experience inhealthcare, asascientist,physicianand Managing Director of TPGBiotech.Shehasover25years Board inMarch 2018. Dr. Preston isaPartnerand Dr. Heather Preston wasappointedtoOxford Biomedica’s Independent Non-Executive Director Heather Preston — None Committee membership: —  Appointment: and Economics from Universityof Oxford. He holdsaMaster’sDegree inPhilosophy, Politics was previously apartnerandDirector of UBSBrunswick. emerging markets andRussia,inparticular, where he and biotechfor nearly20years.Heisalsoanexpertin management, andhasbeenaninvestorinlife sciences 30 years’experienceininvestmentbankingandfund Oxford Biomedica’slargest shareholder. Hehasover of funds,includingtheVulpes Life SciencesFund, Investment Managementwhichmanagesanumber Board inOctober2012.Heisafounder of Vulpes Martin DigglewasappointedtoOxford Biomedica’s Non-Executive Director Martin Diggle Appointed aDirector inOctober2012

— Nomination Committee — Remuneration Committee — AuditCommittee Committee membership: —  Appointment: Catapult LimitedandBioCityGroup Limited. body for CambridgeandLondon),theCellTherapy on theBoards of OneNucleus(theLife Sciencestrade Institute andcurrently sitsas aNon-Executive Director over 20years.Heisaformer Director of theBabraham audit committeesof publiclyquotedcompaniesfor transactions. AsAuditPartner, hehasreported tothe reporting accountantonnumerous IPOandClass1 from start-ups tomultinationals, aswellacting and hasworked withlife sciencesbusinessesranging He hasextensiveauditandtransactionexperience where he wasHeadof Emerging Biotechnology. Prior tothishewasapartnerat ArthurAndersen, was Headof European Healthcare andLife Sciences. Previously, hewasapartnerat Deloitte,where he Director and Chairof theAuditCommitteeinJune2016. Stuart HendersonwasappointedaNon-Executive Independent Non-Executive Director Stuart Henderson Appointed aDirector inJune2016

Corporate governance 61 62 Oxford Biomedica plc|Annual report andaccounts2018 Chairman inFebruary2016 as Non-Executive Director and Lorenzo Tallarigo wasappointed Chairman Lorenzo Tallarigo The following pagessetoutinmore detailtheactivitiesandmajormatters considered bytheBoard in2018. working towards implementingpartsof theRevisedCodeasbestpractice. The Board considersthat ithasbeencompliantwiththe2016UKCorporate GovernanceCode(2016Code), while The FinancialReportingCouncil(FRC)produced arevised UKCorporate GovernanceCodeinJuly2018(RevisedCode). and implementappropriate changesbasedontherecommendations of thereport. observation of aBoard meeting.Theindependentreport istheprocess of beingfinalised.TheBoard willassess aspects of Board activities,interviewswitheachDirector individuallybytheexternalevaluator andanactive performance during2018. Thereview process comprisedthecompletionof aquestionnaire coveringthevarious Between December2018andFebruary2019wehave hadDeloitteLLPperform an externalevaluation of theBoard’s risks facingtheGroup. remains appropriate andthat management isfocused ondeliveringtheGroup’s key prioritiesandmanagingthekey With thisamountof changeandactivitytheBoard haspaidparticularattention toensuringthat theGroup’s strategy have notyetbeenfinalisedandIlook forward to reporting ontheseinthe2019Annual report. structure andcommitteesare appropriate for alarger company. Thefinalgovernancestructure andcommittees framework andcommitteesare intheprocess of beingreviewed inorder tounderstandwhetherthecurrent and beingprofitable for thefirsttime.As Group has grown substantiallyovertheyear, thecorporate governance The Group hashadatransformational year, withasubstantialincrease inthe Group’s revenues duringtheyear Peter Nolanfor allhishard workfor theGroup overthelast20years. Non-Executive Director. InJuly, PeterNolanretired asaBoard memberandExecutive Director. Iwishtothank There have beentwochangestotheBoard during2018. InMarch Dr. Heather Preston joinedtheBoard asan for externalandindependentreview andchallengetotheExecutives. Board anditscommittees.TheBoard comprisesbothNon-Executive andExecutive Directors andprovides theforum Good governanceisessentialfor thelongtermsuccessof thebusinessandthisisultimately theresponsibility of the I ampleasedtopresent Oxford Biomedica’sCorporate Governance Reportfor 2018. Dear Shareholder Corporate governancereport Corporate governance

D.1 C.2 A.1 E.1 D.2 A.2 implementing partsof theRevised Codeasbestpractice. The Board considersthat ithascompliedthroughout theyearwith the2016Code,whileworkingtowards The tablebelowsetsouthowtheGroup hasappliedthemainprinciplesin2016Codeduring2018: Compliance withthe2016UKCorporate GovernanceCode reference UKCGC E.2 C.3 C.1 B.7 B.6 B.5 B.4 B.3 B.2 B.1 A.4 A.3 Oxford Biomedica plc|Annual report andaccounts2018

stretching andrigorously applied. success of thecompany. Performance-related elementsshouldbetransparent, Executive Directors’ remuneration shouldbedesignedtopromote thelong-term The Board isresponsible for determiningthenature andextentof theprincipalrisks responsible for thelong-termsuccessof thecompany. Every companyshouldbeheadedbyaneffective Board whichiscollectively There should be a dialogue with shareholders based on the mutual understanding There should beadialoguewithshareholders basedonthemutualunderstanding Directors. NoDirector shouldbeinvolvedindecidinghisorherownremuneration. executive remuneration andfor fixingthe remuneration packages of individual There should beaformal andtransparent procedure for developingpolicy on between therunningof theBoard andtheExecutive responsibility for therunning There shouldbeacleardivisionof responsibilities at theheadof thecompany and toencouragetheirparticipation. dialogue withshareholders takes place. of objectives.TheBoard asawholehasresponsibility for ensuringthat asatisfactory sound riskmanagementandinternalcontrol systems. it iswillingtotake inachievingitsstrategic objectives.Theboard shouldmaintain of thecompany’spositionandprospects. to continuedsatisfactory performance. of itsownperformance andthat of itscommitteesandindividualDirectors. and of aqualityappropriate toenableitdischarge itsduties. of newDirectors totheBoard. of decision. of thecompany’sbusiness.Nooneindividualshouldhave unfettered powers Main Principle The Board should use the general meetings to communicate with investors The Board shouldusethegeneralmeetingstocommunicate withinvestors auditor. control principles andfor maintaininganappropriate relationship withthecompany’s how theyshouldapplythecorporate reporting andriskmanagementinternal The Board shouldestablishformal andtransparent arrangementsfor considering The Board shouldpresent afair, balancedandunderstandableassessment All Directors shouldbesubmittedfor re-election at regular intervals,subject The Board shouldundertake aformal andrigorous annualexternalevaluation The Board shouldbesuppliedinatimelymannerwithinformation inaform update andrefresh theirskillsandknowledge. All Directors shouldreceive inductiononjoiningtheboard andshouldregularly their responsibilities effectively. All Directors shouldbeabletoallocate sufficienttime to thecompanydischarge There shouldbeaformal, rigorous andtransparent procedure for theappointment discharge theirrespective dutiesandresponsibilities effectively. experience, independenceandknowledgeof thecompanytoenablethem The Board anditsCommitteesshouldhave theappropriate balanceof skills, constructively challengeandhelpdevelopproposals onstrategy. As partof theirrole asmembersof aunitaryBoard, Non-Executive Directors should on allaspectsof itsrole. The Chairmanisresponsible for leadershipof theBoard andensuringitseffectiveness

and sufficienttimeisallowed forquestioningbyshareholders who attendthemeeting. board following AuditCommitteemeetings. are theresponsibility of theAuditCommitteewhichprovides feedback tothefull understandable. in thereport confirming that theyconsiderthe report tobefair, balanced and Application which wasapproved byshareholders at the2018AGM. Executive Directors’ remuneration issetinaccordance withtheremuneration policy as severalothertimesfor specificadhocmatters. Directors. TheBoard metseventimesduring2018for regular board meetingsaswell The Company’sBoard comprisesbothNon-Executive Directors andExecutive Meeting. NoDirector isinvolvedwithsettinghisownremuneration. recommended policywasapproved byshareholders at the2018AnnualGeneral from the compensation andbenefitspractice of DeloitteLLP. The current The remuneration policywasdesignedbytheRemuneration Committeewithadvice All Board members endeavour to attend the Annual General Meeting in person All Board membersendeavour toattend theAnnualGeneralMeetinginperson Company’s otherlarge shareholders. the Chief Executive OfficerandChiefFinancialmeetperiodicallywith Board byMartinDigglewhichprovides aclearlineof communication. TheChairman, Vulpes Life SciencesFund, theCompany’slargest shareholder isrepresented onthe Committee alsoreviews theinternalcontrol systems. advice givenbyPwCLLPandthisismonitored bytheAuditCommittee.The meeting. Asystemof riskmanagementhasbeenestablishedintheCompanywith The Board’s remit includesriskmanagementwhichisanagendaitemat everyformal The Directors formally review theAnnualreport eachyearandmake astatement all Directors willsubmitthemselvesfor electioneveryyear. re-election byrotation eachyear. In2019, inorder tocomplywiththeRevisedCode The Articlesalsorequire that one-third of theDirectors submitthemselvesfor themselves for electionat thefirstAnnualGeneralMeeting after theirappointment. All newDirectors are required bytheCompany’sArticlesof Association tosubmit took placeduringDecember2018toFebruary2019. The Board conductsaperformance evaluation annually. Themostrecent evaluation papers are circulated to all Board membersseveraldayspriortoeachmeeting. in consultation withtheChiefExecutive OfficerandCompanySecretary. Relevant The Board meetsformally at leastsixtimesperannum.TheChairmansetstheagenda by theNon-Executive Directors inconsultation withtheChiefExecutive Officer. of theDirectors aspartof theselectionprocess. Thefinalselectiondecisionwasmade was employedtohelpidentifypotentialcandidates. Short-listedcandidates metmost The process toappointDr. Heather Preston wasledbytheChairman.Asearch firm Officer. There isacleardivisionof responsibilities betweentheChairmanandChiefExecutive Corporate reporting, internalcontrols andrelations withtheCompany’sauditors managers inthebusiness. investors, theCompany’sauditors,lawyers,financialandotheradviserssenior Dr. Heather Preston received inductionduringtheyearincludingmeetingswith All Directors have beenabletoparticipate at themajorityof meetingsheldin2018. Non-Executive Directors. The AuditandRemuneration Committeesare comprised solelyof independent Pharmaceutical industry, financingandinvestment,UKcorporate governance. The current Board membershave abroad mixof experienceincludingthe involved inperiodicstrategic reviews. All of theNon-Executive Directors participate at allBoard meetingsandalsoare agenda for itsmeetingsandfor ensuringthere isadequate timeallowedfor discussion. The Chairmanprovides leadershiptotheBoard andisresponsible for settingthe

Corporate governance 63 64 Investor Relations, HR,Quality, Safety, Health &Environment andRiskManagement. Regular board papers coverProduct andTechnical Development,Production, BusinessDevelopment, Finance, Company Secretary. Board paperscovering theagendaitemsare circulated severaldaysaheadof eachmeeting. The Chairmansetstheagenda for theBoard meetinginconsultation withtheChiefExecutive Officerandthe as standingitemsonitsmeeting agendas. The Board alsotakes acloseinterest inQuality, Health,Safety &Environment andRiskManagementhasthese — — — — — — — Oxford Biomedica plc|Annual report andaccounts2018 — schedule of matters reserved for theBoard’s approval whichinclude: The Board’s powersandresponsibilities are setoutintheCompany’sarticlesof association andithasaformal and twoExecutive Directors. TheChairmanandMartinDiggleare considered nottobeindependent. management processes inplace.Followingchangesduring2018theBoard comprisesfiveNon-Executive Directors activities tocreate shareholder value.Indoingsoitensures that there are robust corporate governanceandrisk The Board iscollectivelyresponsible for promoting thesuccess of theGroup bydirecting andsupervisingtheGroup’s The Board RMC CDC EOLT TDC PDC SET Board andtheSeniorExecutive Team andtheirrespective sub-committeesassetoutbelow: The finalstructure andcommitteeshave notyetbeenfinalised,sothecurrent governanceframeworkcomprisesthe process of beingreviewed inorder tounderstandwhetherthestructure andcommitteesare fit for alarger company. As theGroup hasgrown substantiallyovertheyear, thecorporate governanceframeworkandcommitteesare inthe Corporate GovernanceFramework Corporate governancereport Corporate governance — — — — — — — — appointment andremuneration of auditors. board membershipand remuneration; internal control andriskmanagement; corporate governance; financing andcapitalstructure; acquisitions, disposalsandcapitalexpenditure; the financialstatements andaccountingpolicies; the Group’s strategy; – – Commercial DevelopmentCommittee – – – – Risk ManagementCommittee Extended Operations LeadershipTeam (incorporates theQualityandManufacturingOperations Committee) Technical DevelopmentCommittee Product DevelopmentCommittee Senior Executive Team PDC TDC CEO –JohnDawson EOLT SET CDC Chair –Lorenzo Tallarigo The Board RMC Remuneration Committee Chair –Stuart Henderson Chair –Lorenzo Tallarigo Nomination Committee Chair –Andrew Heath Audit Committee

Board meetings.Theattendance of individualDirectors at Board andCommitteemeetingswasasfollows: The Board meetsregularly withmeetingdates agreed for eachyearinadvance.During2018there were sevenregular Board meetings for theBoard asawholetoconsider. also toexternalprofessional advisersasrequired. Theappointmentandremoval of theCompanySecretary isamatter All Directors andtheBoard anditscommitteeshave accesstoadviceandservicesof theCompanySecretary, and Each Director isprovided withanappropriate inductiononappointment. — — — — — — The current Board membersare setoutonpages60to61. remuneration report isonpages69to 89 incorporating theRemuneration Committeereport. website. Reportsfrom theAuditandNomination Committeesare includedinthissectionandtheDirectors’ Committees. TheseCommitteesoperate underclearlydefinedterms of reference whichare disclosedonthe Group’s Certain responsibilities are delegated tothree Board committees–theAudit,Nomination andRemuneration There isa cleardivisionof responsibilities betweentheChairmanandChiefExecutive Officer. in attendance. The Chairmanholdsmeetingsfrom timetowithNon-Executive Directors withouttheExecutive Directors the interim2018financial results. of otheroccasionstoconsiderspecificadhocmatters including theapproval of the2017financialstatements and In additiontotheaboveregular meetings,theBoard (oranappointedsub-committeeof theBoard) metonanumber 1. Oxford Biomedica plc|Annual report andaccounts2018 John Dawson Lorenzo Tallarigo Martin Diggle Andrew Heath Stuart Henderson Peter Nolan Stuart Paynter Heather Preston — — — — — — Appointed toRemuneration Committee12March 2019. Directors excluding theChairman. small company, definedasonewhichisnotintheFTSE350, shouldhave at leasttwoindependentNon-Executive The Group therefore hasbeenincompliancewithprovision B.1.2 of the2016Codewhichrecommends that a is theGroup’s largest investorandassuchheisnotconsidered independentunderthe2016Code. Martin Diggleisafounder of Vulpes InvestmentManagementwhich,through itsVulpes Life SciencesFund, Heather Preston isconsidered tobeindependent. Stuart Hendersonisthechairmanof theAuditCommittee.Heisconsidered tobeindependent. Andrew Heath, theSeniorIndependentDirector, isconsidered tobeindependent. UKCGC at thetimeof hisappointment. Lorenzo Tallarigo istheNon-Executive Chairman. DrTallarigo mettheindependencecriteriarecommended bythe 1 Possible 4 5 7 7 7 7 7 7 Regular Board Attended 4 5 5 7 7 7 7 7 Possible Audit Committee 2 3 3 Attended 2 3 3 Remuneration Committee Possible 0 9 9 Attended 0 9 9 Nominations Committee Possible 1 1 1 1

Attended

1 1 1 1

Corporate governance 65 66 Communication withshareholders Committee meetings,andhasthefullsupportof theotherBoard membersinthe activitiesheundertakes. satisfied that Andrew Heath remains independentinthoughtandactionterms of hisparticipation inBoard and January 2020of hisoriginalappointmentasaNon-Executive Director. Followinganinternalreview, theBoard is subject tore-election. Ifre-elected totheBoard at theAGM, Andrew Heath, willreach the10thanniversaryin Heath, Stuart Henderson,MartinDiggle,Heather Preston, JohnDawsonandStuart Paynterallwillretire andbe Accordingly, at theAnnualGeneralMeetingin 2019, andinlinewiththeRevisedCode,Lorenzo Tallarigo, Andrew that we complywiththeRevisedCodeallDirectors willnowbesubjecttoannualre-election. the numbernearest tobutnotexceeding onethird) retire from office by rotation ateach AGM. However, toensure (AGM) orhasservedfor three years,andonethird of theotherDirectors (oriftheirnumberisnotamultipleof three In accordance withthearticlesof association, anyDirector whowasappointedafter thelastAnnual GeneralMeeting Retirement ofDirectors appropriate changes basedontherecommendations of thereport. of a Board meeting.Theindependentreport isintheprocess of beingfinalised.TheBoard willassessandimplement questionnaire coveringallaspectsof theBoard’s performance, interviewwitheachDirector andanactiveobservation performance during2018. Thereview process comprisedthecompletionbyeachDirector of acomprehensive Between December2018andFebruary2019, DeloitteLLPconductedanindependentreview of theBoard’s Review ofperformance — — — — — Oxford Biomedica plc|Annual report andaccounts2018 Meetings withexistingshareholders VLSF. TheGroup hasengagedwithshareholders andpotentialinvestorsthrough thevariouschannelsbelow: second largest investor, isrepresented ontheBoard byMartinDiggleensuringaclearchannelof communication with Director are alsoavailable for meetingswithinvestorsifrequired. Vulpes theCompany’s Life SciencesFund (“VLSF”), points of contactare theChiefExecutive OfficerandChiefFinancialbuttheChairmanSeniorIndependent The Board recognises theimportanceof effective communication withshareholders andpotentialinvestors.Theprimary — Board matters during2018included: Board activityduring2018 Corporate governancereport Corporate governance Social media Investor relations Website 2017 Annualreport Results announcementsandpresentations Meetings withpotentialinvestors 2018 AnnualGeneralMeeting — — — — — — Ongoing reviews of theGroup’s riskmanagementprocesses andkey risks. The appointmentof Heather Preston asaDirector. Reviewing businessdevelopmentopportunitiesincludingpartneringandcollaboration transactions. Monitoring theprogress of theGroup’s priorityproduct developmentprogrammes. A review of theGroup’s strategy, conductedinSeptember. results and Annual report, and the 2018 interim results announcement. results and Annualreport, andthe2018interimresults announcement. Routinely recurring itemssuchastheapprovals of the2018financialbudgetandobjectives,2017preliminary John DawsonandStuart Payntermetwithmajorshareholders during2018. Lorenzo Tallarigo The Group usesTwitter toalertfollowers torelevant sectornewswhich isrelevant totheGroup. received through itsenquiryinbox [email protected]. The Group alsoendeavours to respond toallenquiriesfrom shareholders andpotentialinvestors which provides notifications of announcements. of reference for theBoard Committees.Investorsandotherscansubscribe toane-mailalertservice of regulatory announcementsandpress releases, copiesof theGroup’s financialstatements, and terms The Group’s websitehttp://www.oxb.com contains detailsof theGroup’s activitiesaswellcopies The Group publishedits2017Annualreport inApril2018. which are accessibletoallshareholders andrecordings of whichare madeavailable ontheGroup’s website. interim results inSeptember2018through RNSannouncementsaccompaniedbyanalystconference calls The Group announcedits2017fullyearperformance andfinancial results inMarch 2018, andits2018halfyear conducts investorroadshows periodicallywhichprovide furtheropportunitiestomeetpotential investors. investors onaone-to-onebasisat investorconferences inEurope andtheUSA.Thecompanyalso The ChiefExecutive OfficerandChiefFinancial regularly make presentations andmeet potential Executive Officer followedbyaQ&Asession andachancetomeetDirectors afterthemeetingclosed. lasted for about1hourandwhich,aswelltheformal business,includedapresentation bytheChief The 2018AGM washeldinLondon on29May2018. Shareholders were invitedtoattend thismeetingwhich has alsometwithmajorshareholders.

— — — on theGroup’s websitewww.oxb.com, are to: The primarydutiesof theAudit Committee, assetoutinitswrittentermsof reference whichisavailable biographies onpage60and61. Audit Committeeand,inMr. Henderson’s case,tobeChairof theCommittee.Theirexperienceissetoutintheirbrief Mr. Henderson,Dr. Preston andDr. Heath allhave relevant experiencewhichqualifiesthem for membership of the The AuditCommitteecomprisesStuart Henderson,Dr. Heather Preston andDr. Andrew Heath. Audit Committeereport Board committeereports financial, complianceandotherrisks. Directors inthemanagementsub-committeesallowsthemto monitorandassesssignificantbusiness,operational, identifying therisks facingtheGroup andformulating riskmitigation plans.Theactiveinvolvementof theExecutive the conductof theriskmanagementprocesses withintheGroup whilsttheSETisaccountablefor thoseprocesses, objectives of theGroup anditreviews current key risks at everyBoard meeting.TheAuditCommitteemonitors The Board isresponsible for determiningthenature andextentof therisks itiswillingtotake inachievingthe Risk management Important matters from allof thesecommitteesare referred totheSET. — — There are twootherimportantcommittees: budget andriskmanagement. against targets, ensuringcompliancewithGxPandotherrelevant requirements, monitoringexpenditure against Within theirarea of responsibility thesecommitteescoverobjectiveandtarget setting,monitoringperformance — — — committees are: monthly andare attended bySETmembersandotherrelevant seniormanagersfrom thebusiness.Thesesub- There are three SETsub-committees coveringthemajorbusinessoperational areas. Thesecommitteesmeet risk managementandSafety, Health&Environment. the fullrangeof activitiesof theGroup, includingfinancialperformance, organisational andemploymentmatters, The ChiefExecutive OfficerisJohnDawson.TheSETmeetsapproximately everytwoweeks anditsagendacovers Kyriacos Mitrophanous, NickPage,JasonSlingsbyandHelenStephenson-Ellis form theSeniorExecutive Team (SET). Operational managementisconductedbytheExecutive Directors who,togetherwithLisaGiles, JamesMiskin, The SeniorExecutive Team anditscommittees (SET) Oxford Biomedica plc|Annual report andaccounts2018 — — — — — — — — Review andrecommend totheBoard thefinancialstatements and associated announcements. by shareholders at theAGM, remuneration, independence,andtheprovision of non-audit services; Oversee therelationship withtheexternal auditorsincludingtheirappointment,subjecttoapproval Keep underreview theGroup’s reporting and internalcontrol policiesandprocedures; actions. at least quarterlytoidentifyandassessrisks facingthebusinessandtopropose riskmitigation andmanagement Risk ManagementCommittee(RMC)–whichcomprisesseniormanagersfrom allpartsof thebusiness,meets and product development. in-licence technologyorproduct candidates, andalsotogenerate partnershipopportunitiesfor manufacturing Commercial DevelopmentCommittee(CDC)–whichcoverstheexternalopportunitiestoout-licenceand Committee andcoversquality, operational andmanufacturingmatters. Extended Operational LeadershipTeam (eOLT) –incorporates theQualityandManufacturingOperations and production andotherprocesses, includingcellandvectorengineering. Technical –coveringthedevelopmentof newandimproved assays DevelopmentCommittee(TDC) from initial conceptthrough toclinicaldevelopment. Product Development Committee(PDC)–coveringthedevelopmentof newgeneandcelltherapyproducts

Corporate governance 67 68 The information abouttheshare capitalrequired bytheTakeover Directive isintheDirectors’ report onpage91. Share capital and ultimate appointmentof Dr. Heather Preston asaNon-Executive Director memberof Board. The Nomination Committeemet severaltimesin2018onanadhocbasistoconsider therecruitment process Non-Executive Directors. The Nomination Committeeleadstheprocess for makingappointmentstotheBoard, andcomprisesallof the Nomination Committeereport and ChiefFinancialOfficer. The financial results arealso reviewedbytheSenior Executive Team andtheBoard. results andexternallyreported financialstatements are subjectto thorough review bytheGroup FinancialController orders, payroll anddisbursements, andanorganisation of thefinancefunctionsuchthat monthlymanagement reporting processes includeclearseparation of dutieswithinthefinancialprocesses suchasapproval of purchase The mainfeatures of theinternalcontrol andriskmanagementprocesses whichapplytotheGroup’s financial the FinancialController andwasreviewed at theMarch 2019AuditCommitteemeeting. compliance controls andriskmanagement.Thereview for 2018wasprepared bytheChiefFinancialOfficerand annually reviewsand theeffectiveness of allsignificantaspects ofinternalcontrol, includingfinancial,operational only provide reasonable, andnotabsolute, assuranceagainstmaterial misstatement orloss.TheAuditCommittee The systemisdesignedtomanage,rather thaneliminate, theriskof failure toachievebusinessobjectives,andcan The Directors are responsible for Oxford Biomedica’ssystemof internalcontrol andfor reviewing itseffectiveness. Internal control — — Oxford Biomedica plc|Annual report andaccounts2018 — The AuditCommitteemetthree timesin2018: auditors. have aninternalauditfunction.However, theCommitteeregularly reviews thisat itsmeetingsandwiththeexternal internal auditfunction.TheAuditCommitteeconsidersthat, giventhesize of theGroup, itisunnecessaryfor itto Provision C.3.5 of the2016Codestates that theAuditCommitteeshouldreview theeffectiveness of theGroup’s Corporate governancereport Corporate governance — — — that a financialcontrol assessmentwillbeperformed onanannualbasis. current treasury policyanddiscussedthefinancialcontrol assessmentwiththeGroup. TheCommitteeagreed An update ontheriskmanagementprocess waspresented totheCommittee.TheCommitteeapproved the 2018/2019 insurancestrategy wasdiscussedandagreed. TheCommitteealsoagreed withthecurrent taxstrategy. policy andfinancialcontrol assessment.TheCommitteeacceptedthe2018year-end auditstrategy. Theupdated 03 December2018–toreview thefull2018auditstrategy; insurancestrategy, taxstrategy, riskprocess, treasury risk managementsystemfor thelarger Group. An update ontheriskmanagementprocess waspresented relating tothePwCLLPassistanceindevelopingour issues that require further attention andanupdate onrisk.TheCommitteeagreed withtheinterimreview strategy. 16 August2018–toreview progress todate for thesixmonths’financial results to30June2018;identifyany audit and no significant concerns arose. audit andnosignificantconcernsarose. reviewed andnoissuesorconcernswere raised.TheCommitteereviewed anumberof areas of thequalityof the procedures. Thecommitteediscussedandagreed thewording of theviabilitystatement. Theauditors’opinionwas had beenidentifiedbytheauditors,andthere were nomaterial observations regarding the financial internalcontrol the goingconcernstatement andassociated disclosure intheAnnualreport. Nosignificantauditadjustments were comfortable withtheproposed accountingtreatments inlinewithIFRS15. Theauditors hadalsoreviewed revaluation of equityinstruments.Theauditorsconcurred withtheaccountingfor theOaktree loanfacilityand the Novartiscontracthadbeenrecognised consistentlywiththemethodologypreviously agreed, aswasthe had ariseninrespect of thekey auditrisks identifiedbutanumber of areas required attention. Revenuesfrom auditors’ opinionandrepresentation letterandreview theoverallqualityof theauditprocess. Nomajorconcerns IFRS 15;review thegoingconcernandviabilityassessmenttheirdisclosure intheAnnualreport; review revenue recognition, revaluation of equityinstruments,accountingfor theOaktree loanandtheadoptionof 5 March 2018 –toreview the2017auditandauditors’report; review specificaccountingissuesincluding

Directors’ remunerationreport Corporate governance on page75withregards tohow performance undertheannualbonustargets translated intobonuspayment. Peter Nolan’sbonusearnedduringtheyearwillbepaid incash,linewiththepolicy. Further detailsare provided Stuart Paynterwillbepaid50%incashanddeferred share awards. Reflectinghis retirement from thebusiness, in theyeartodate of cessation of employment(1July2018).The2018 bonusesearnedbyJohnDawsonand of 117%of salary. PeterNolanwasawarded abonusof 118%of salary, whichhasbeenpro-rated toreflect hisservice into accounttheCommitteedecidedtoaward JohnDawsonabonusof 116%of salaryandStuart Paynterabonus performance againstcorporate objectivesissetoutonpage75of thisremuneration report. Taking allof thesefactors The performance of thebusiness in2018issetoutdetailtheStrategic report from pages24 to43andthe for 2018. In February2019theCommitteemettoconsiderachievementof 2018objectivesandtheannualbonusaward 2018 businessperformanceandincentiveimpact developing market practices. review theapplication of thispolicyregularly, toensure itremains appropriate, linked tostrategy andreflective of The policywasapproved by shareholders at theAGM on29May2018, withover97%of allvotescastinfavour. We The policy which isavailable at www.oxb.com. policy asapproved byshareholders at the2018AGM isincludedintheCompany’s2018annualreport andaccounts, Directors’ remuneration report, wehave includedthosepartswethinkshareholders willfindmostuseful.Thefullnew will notbesoughtat the2019AGM. Althoughtherelevant regulations donotrequire ustoincludethepolicy inthe The Committeeconsidersthat thepolicyremains appropriate and,accordingly shareholder approval for anewpolicy approved at the 2018AGM. the annualreport onremuneration followed byextractsfrom ourDirectors’ remuneration policy(“thepolicy”) I ampleasedtointroduce ourremuneration report for the2018financialyear. The report isdividedintotwosections: Dear Shareholder Annual statement fromtheRemuneration Committeechair from thechairof theRemuneration Committeeandthepolicyreport are notsubjecttoaudit. accordance withtherelevant regulations. Thepartsof thereport that are subjecttoauditare indicated. Thestatement remuneration report andtostate whether, intheiropinion,thosepartsof thereport have beenproperly prepared in The CompaniesAct2006requires theauditorstoreport totheshareholders oncertainpartsof theDirectors’ The annualstatement andtheannualreport onremuneration are subjecttoanadvisoryvoteat theCompany’s2019AGM. — — — The report contains: Large andMedium-sized CompaniesandGroups (AccountsandReports)Regulations 2008(asamendedin2013). This report isontheactivitiesof theRemuneration Committee.Itisprepared inaccordance withSchedule8to the Introduction for theyearended31December2018 Oxford Biomedica plc|Annual report andaccounts2018 — — — Meeting (AGM), andtookbindingeffect from theclose of that meeting. Extracts from theDirectors’ remuneration policy(the"policy"),whichwasapproved at the2018AnnualGeneral between companyperformance andremuneration for the2018 financialyear, The annualreport onremuneration showing paymentsandawards madetotheDirectors andexplainingthelink The annualstatement from theRemuneration Committeechair,

Corporate governance 69 70 Oxford Biomedica plc|Annual report andaccounts2018 The proposed 2019performance measures andtargets are discussedonpage 37. believes that thesemeasures willensure significantvaluewillcontinueto bedelivered toshareholders. a mixture of financialmeasures andshare pricegrowth isconsidered tobemore appropriate. TheCommittee growth asitsprimarymeasure for LTIP awards. However, itistheCommittee’s viewthat asthebusinesshasgrown, of theCEO and100%inthecaseof theotherExecutive Directors. TheCompanyhashistoricallyusedshare price The Committeehasagreed that Executive Directors willbegrantedLTIP awards of upto125%of salaryinthecase information isgivenonpage37. the opportunityfor 2018. Theperformance measures are basedontheCompany’sstrategic priorities,andfurther The maximumannualbonusopportunityfor ourExecutive Directors willremain upto125%of salary, inlinewith sector andthesechangesnowneedtobereflected inthecompensation paidtoourExecutive Directors. into seniormanagement.Oursuccesshasbeenachieved byoffering acompetitivepackage inthishighlycompetitive organisation, from 321in2017tomore than432today, hasresulted inanincrease inthequalityof individualshired are significantlybelowmarket for companies of oursize andcomplexity andthat therapidgrowth instaff inthe and Stuart Paynter’ssalaryby6.7% to£228,000. Theseincreases recognise that ourExecutive Director salaries As discussedonpage69, theRemuneration Committee increased JohnDawson’ssalaryby7.9% to£410,000 Implementation ofourpolicyin2019 Preston’s remuneration received duringtheyearare setoutinthesinglefigure tableonpage76. Heather Preston wasappointedasaNon-Executive Director witheffect from 15March 2018. Details of Heather have vestedat theendof theirthree yearperformance periods.Further information issetoutonpage 79. made todate. Peterwillalsoretain anyunvestedLTIPs previously granted,totheextentthat theseare assessedto service intheyeartodate of cessation of employment,andwillretain allvestedLTIPs anddeferred bonusawards Directors’ remuneration policy. Insummary, PeterNolanwillreceive abonusof 118%of salary, pro-rated toreflect his in relation to Peter’s retirement from the Board have beendeterminedinaccordance with theshareholder approved Peter Nolanresigned from theBoard andretired from theCompanyon1July2018. Theremuneration arrangements Board changes be appropriate. Clawbackandmalusprovisions willapplytotheawards. Remuneration Committeereviewed performance againstthisunderpinandconcludedthe overallLTIP paymentsto Remuneration Committeeconsidered that theoverallperformance of thebusinessacross theperiodjustified it.The The awards were alsosubjecttoaperformance underpin, suchthat theawards wouldonlyvesttotheextentthat the period. Detailsare provided onpage77. week extensionof thedate of theperformance assessmentof the2015LTIP duetotheCompanybeinginaclosed of theassessmentperiod.Inaccordance withtherulesof thescheme,Committeeconsidered andagreed atwo The 2015LTIP awards vestedduring2018. Theshare price wasaveraged across 20businessdayspriortotheend with thedate ofgrant growth overthethreeyearperiodstarting Average annualcompoundshareprice was 485p;thevestingconditionswere asfollows: LTIP awards were grantedon10June2015toJohnDawson,PeterNolan and TimWatts whentheshare price Vesting ofthe2015LTIP award for theyearended31December2018 Directors’ remunerationreport Corporate governance 25% ormore (i.e.95.3% over3years) Between 15%and25% 15% (i.e.52.1%over3years) Less than15%

Percentage of the Percentage ofthe 100% Calculated onastraightlinebasisbetween25%and100% 25% 0% will vest options grantedthat

and SeniorIndependentDirector inMay2011 in January2010andbecameDeputyChairman Andrew Heath wasappointedaDirector Chair, Remuneration Committee Andrew Heath visit ourwebsiteat www.oxb.com. 12 months.ThishashadapositiveimpactontheCompany’sgenderpaygap.Forfulldetailsof thereport please and theincrease inrepresentation of female employeesat themore seniorlevelsof theorganisation overthepast The Committeereviewed the GenderPayGapReportfor 2018andwaspleasedwiththegrowth of theCompany we have donesoonavoluntarybasis;thedetailissetoutpage81. workforce. Althoughweare notrequired toincludethisuntilwepublishour2019Directors’ remuneration report, We have alsoincludedinthisreport aCEO payratio, comparingtheremuneration of ourCEO tothat of thewider in thepolicywhenwenextseekshareholder approval for it,whichiscurrently intendedtobeat the2021 AGM. Where relevant, wehave describedthesechangeslater inthisreport –ourapproach willbeformally enshrined — — — — including: Reflecting theintroduction of theRevisedCode,weare makingsomechangestothewayweimplementpolicy, to approve the2018annualremuneration report at the2019AGM. Directors’ remuneration report received votesinfavour inexcess of 99%at the2018AGM. Shareholders willbeinvited The Committeerecognises theexpectations of ourshareholders onexecutive payandwewere pleasedthat the2017 Other matters Oxford Biomedica plc|Annual report andaccounts2018 — — — — the adoptionof apost-cessation shareholding guideline. 150% of salaryto200%of salary;and an increase, witheffect from 1January2019, toourshare ownershipguidelines for ourExecutive Directors from in theeventof material corporate failure andseriousreputational damage); the enhancementof recovery provisions applyingtovariableremuneration (enablingustooperate theseprovisions the introduction of atwoyearholdingperiodfor LTIP awards;

Corporate governance 71 72 — — — — — — — — — — Oxford Biomedica plc|Annual report andaccounts2018 — During 2018theCommitteemetninetimes.Themainactivitiesanddecisionswere asfollows: Remuneration Committeeactivitiesduring2018 to attend meetingsonanagendadrivenbasis. continues toreceive allpapers, andhasastandinginvitation toattend allmeetings.OtherDirectors are invited he hassteppeddownfrom formal membershipof theCommittee.Heretains “observer” status andtherefore as heisnotconsidered tobeindependentfor reasons explainedintheCorporate GovernanceReport (page67), 12 March 2019)andStuart Henderson.MartinDigglewasamemberof theCommitteeuntil31December2016but, The Remuneration Committeemembersare currently Andrew Heath (Chairman),Heather Preston (appointed — on theGroup’s websiteandhave beenamendedtoreflect the revised Corporate GovernanceCodetoinclude: The responsibilities of theRemuneration Committeeare setoutinitstermsof reference whichare available Remuneration Committeeroleandmembers for theyearended31December2018 Directors’ remunerationreport Corporate governance — — — — — — — — — — — — allowance (carallowance)tomembersof theSeniorExecutive Team. 01 October2018–theCommitteeconsidered andapproved theproposal toaward anon-pensionableadditional approved thegrantof optionsunderthisoffer. to participate inthe2018offer under theCompany’sSave As You EarnScheme.InOctobertheCommittee 26 September2018and10October–in theCommitteeapproved aninvitation toallemployees of theshare options. Incentive Plan,Deferred BonusPlan andEmployeeShare OptionScheme.TheCommitteeapproved thegranting 06 August2018–theCommitteeconsidered thegrantingof options toemployeesundertheGroup’s LongTerm Approval of optionsgrantedtoallemployeesundertheGroup’s share optionplan. anniversaries of thegrant. options grantedin2015, 2016and2017. DBPoptionsvestinthree equalinstalmentsonthefirst,secondandthird vest andtheremaining 20.3% willlapse.TheCommitteealsoapproved thevestingof Deferred BonusPlan(DBP) June 2015LTIP grantof optionshadbeenmet.Theoutcomewasthat 79.7% of theoptionsgrantedin2015would 25 June2018–theCommitteeconsidered theextenttowhichshare priceperformance conditionsfor the (Senior Executive Team), andawards grantedundertheplan. Approval of theGroup’s LongTerm IncentivePlan(LTIP) for Executive Directors andseniormanagement a closedperiod. assessment of the2015LTIP. Thiswaspermitted withintherulesof thescheme,whenCompanyisin 10 May2018–theCommitteeconsidered andagreed atwoweekextensionof thedate of theperformance Approval of annualperformance incentiveplansandbonusespayable. 20 March 2018–theCommitteeconsidered andagreed theproposed new2018Director’s Remuneration Policy. Approval of individualremuneration packages for Executive Directors andtheSeniorExecutive Team. Annual report. whether there shouldbesalary increases for 2018. Theoutcomeof thesediscussionswasreported inthe2017 the Executive Directors inrespect of 2017inlightof theperformance againsttheGroup’s 2017objectives,andalso 09 February2018and22–theCommitteeconsidered whetherornotbonusesshouldbepaidto is amatter for theChairman. and seniormanagement(SeniorExecutive Team). Theremuneration of the Non-Executive Directors Recommending totheBoard thepolicyandframeworkfor theremuneration of theExecutive Directors

Committee hascarriedoutthisreview inFebruary2019andhasawarded thefollowing basesalaryincreases: Under theremuneration policyExecutive Directors’ basesalariesare normallyreviewed annually. TheRemuneration (subject toaudit) ofchangestoexecutive remuneration for2019 Summary Annual reportonremuneration be released, sothat theExecutive Director isnotentitled toacquire thevestedshares untiltheendof theholdingperiod. following theendof theperformance period.Awards willvestfollowing theendof theperformance periodbutwillnot As notedinthestatement from theCommittee’sChairman,awards willbesubjecttoatwoyearholdingperiod a three monthperiodtoavoid rewarding for shorttermspikes inperformance. overall performance of thebusinessacross theperiod justifiesit.Share pricegrowth will alsobe averaged across performance underpin, such that theawards willonlyvesttotheextentthat theCommitteeconsidersthat the growth (requiring 15%CAGR for threshold vestingand24% orgreater for maximumvesting).There willbea growth (requiring 10%CAGR for threshold vestingand17.5% CAGR orgreater for maximumvesting)andrevenue remuneration policy. Theproposed 2019performance criteriawillbeequally weightedbetweenshare price in thecaseof theCEO and100%inthecaseof otherExecutive Directors inaccordance withtheapproved The CommitteeintendstograntLTIP optionstotheExecutive Directors during 2019of upto125%of salary will continuetobedelivered toshareholders. is considered tobemore appropriate. TheCommitteebelievesthat thesemeasures willensure significantvalue the Committee’sviewthat asthebusinesshasgrown, amixture of financialmeasures andshare pricegrowth The Companyhashistoricallyusedshare pricegrowth asitsprimarymeasure for LTIP awards. Howeveritis (subject toaudit) LTIP on theCompany’sstrategic priorities,andfurtherinformation isgivenonpage37. performance againstthoseobjectivesandinlinewiththeremuneration policy. Theperformance measures are based bonuses for 2019are earnedwillbedeterminedbytheRemuneration Committeeearlyin2020thelightof Performance objectivesfor theGroup have beenagreed bytheBoard andtheextenttowhichExecutive Directors’ (subject toaudit) Annual bonus and £260,000 for Stuart Paynterovertwotothree years. company andtheindividuals,Committee’sintentionistoachieveabasesalaryof £450,000 for JohnDawson last yearandhave implementedthesesalaryincreases for 2019. Subjecttocontinuedstrong performance bythe the compensation paidtoourExecutive Directors, anditiswiththisinmindthat weincreased JohnDawson’s salary by offering acompetitivepackage inthishighlycompetitivesector.in Thesechangesnowneedtobe reflected there has beenanincrease inthequalityof individualshired intoseniormanagement.Oursuccesshasbeenachieved size andcomplexity. Withtherapidgrowth instaff intheorganisation, from 321in2017tomore than432today, The Committeerecognises that salariesfor ourCEO andCFOare significantlybelowmarket for companies of our Oxford Biomedica plc|Annual report andaccounts2018 John Dawson Stuart Paynter Current salary £380,000 £213,725 Percentage increase 6.7% 7.9% Total ofincrease £30,000 £14,275

New salary

£228,000 £410,000

Corporate governance 73 74 2017 Oxford Biomedica plc|Annual report andaccounts2018 2. 1. 2018 The following tablesshowasingletotalfigure of remuneration for 2018 for eachDirector andcomparative figures for2017. (subject toaudit) Single totalfigureofremuneration for theyearended31December2018 Directors’ remunerationreport Corporate governance 6. 5. 4. 3. John Dawson John Dawson Peter Nolan Total Total Stuart Paynter Stuart Paynter Tim Watts Peter Nolan This comprisestheLTIP awards granted in2015whichvestedJune2018. Therelevant performance criteriaandtheperformance againstthemare setoutonpage77. Benefits comprisemedicalinsuranceandtheprovision of acarallowance. Tim Watts steppeddownfrom theBoard on29September2017. His2017remuneration isinrespect of theperiodtohisretirement from theBoard, includinghis2017bonus. Stuart PaynterwasappointedCFOwitheffect from 29August2017. His2017 remuneration isin respect of theperiodfrom hisappointmenttotheBoard. Peter Nolansteppeddownfrom theBoard on1July2018. His2018remuneration isinrespect of theperiodtohisretirement from theBoard, includinghis2018bonus. Tim Watts andJohnDawsonhadelectedto receive suchacashallowance. Pension contributionsare madeintotheGroup’s definedcontributionscheme,or at theelection of theDirector,– asacashallowanceinlieu of acompanypensioncontribution The valuesare calculated byreference totheshare priceat thelastdayof theperiodoverwhichshare pricewasawarded todetermine theextentof vesting. 6 4 5 Salary Salary Salary Salary £’000 £’000 806 380 702 350 108 169 216 214 71

Benefits Benefits Benefits £’000 £’000 – 9 4 4 3 1 1 1 1 1

Bonus Bonus Bonus £’000 £’000 439 238 817 871 372 185 251 127 76

£’000 £’000 LTIP LTIP 706 268 438 146 42 67 37 – – 2

Pension Pension £’000 £’000 121 98 50 32 32 25 53 16 11 3

£’000 £’000 2,332 1,947 Total Total 1,311 843 520 422

524 501 158

were set. on thosewealready have. relationships andbuildfurther royalty generating partnership programmes. spin outof OXB-102 andocular to completethepartneringor significant financialinterest; look development whileretaining clinical stageproduct to reduce thefinancialrisk of and also,aspreviously announced pre-clinical products totheGroup for apartner;todelivernew of key programmes againstplan Achieving successfulprogression implementing strategy commitments topartners. the clinicandalsodeliveronour the progress of programmes into products in bothUS and EU, support gain approval andlaunchof key Supporting ourpartnersinorder to advancement Support partnerportfolio Objective Performance againsttheGroup objectivesfor 2018, onwhichtheexecutives’ bonusesare based,wasasfollows: award for 2018. Theperformance of thebusiness2018issetoutindetailStrategic report from pages32to36. In February2019theCommitteemettoconsiderachievementof the2018objectivesandannualbonus Oxford Biomedica plc|Annual report andaccounts2018 Secure further revenue and Secure furtherrevenue and Business development improvement objectives improvement objectives Further organisational Management structure Group’s financialperformance. Confidential targets relating tothe Financial objectives Progress actionon

Weighting 5% 25% 20% 35% 15% The re-finance of theOaktree debtwasnotpursued. Performance assessed skill setsare covered for future growth. key individualtrainingfor seniormanagerstoensure all in three newSETmembersin2018)andintroduction of Transformation of themanagementstructure (brought to treat cysticfibrosis inAugust2018(25%). Innovations for developmentof agenetherapyproduct Cystic Fibrosis GeneTherapyConsortiumandImperial February 2018andwithBoehringerIngelheim,theUK with Bioverativ, nowSanofi, for haemophiliaproducts in These goalswere fullymetaswesignedanagreement ocular assetswasputunderreview. (17.5%). However, our planfor spinout/out-licenceof our Parkinson’s diseasetoAxovant for more than$840million to out-licenceOXB-102 (nowAXO-Lenti-PD) for These goalswere partiallymet.We successfullymanaged of oneof theirproducts according totheschedule(5%). required for theBLAsubmissionandadvancement key insupportingtheproduction of documents collaboration withOrchard Therapeutics,wewere also the suspensionprocess approval. Intermsof our successful inproducing documentsinorder tosupport Novartis asscheduled/requested (10%).We were also (7.5%). Batches of material were also delivered to submission documentswere approved byNovartis product intotheclinic(5%)andensured process We alsosupportedtheprogression of anundisclosed launch of Kymriah for paediatric ALLandDLBCL(7.5%). We supportedNovartisintheEU/USapprovals and cash inflow from operating activities of £6.6 million(5%). £2.6 millionasperthebudgetwasmet(5%)alongwithnet The goaltoachieveanoperating EBITDA target around

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

% ofbonusawarded 10% 5% 25% 17.5% 35%

Corporate governance 75 76

Aggregate Directors’emoluments Martin Digglehaselectedtoreceive nofees for hisservicesasaDirector. is inrespect of theperiodfrom herappointmenttotheBoard. Heather Preston wasappointedasaNon-Executive Director witheffect from 15March 2018. Her2018 remuneration The singletotalfigures of remuneration for Non-Executive Directors are showninthetablebelow: bonus out-turnandconcludedtheoverallpaymentstobeappropriate. Nolan’s bonuswillbepaidfullyincash.TheRemuneration Committeereviewed performance againsttheannual first anniversary of theaward. Reflectinghis retirement from thebusinessandinaccordance withthepolicy, Peter the firstthree anniversarydates after theaward date provided that the relevant participant remains employed at the The deferred share awards are notsubjecttofurtherperformance targets andwillvestinthree equalinstalmentson The 2018bonusesfor JohnDawsonandStuart Paynterwillbepaid50%incashand 50%indeferred share awards. — — — Oxford Biomedica plc|Annual report andaccounts2018 Fees Accordingly, bonusesearnedbytheExecutive Directors inrespect of 2018were: cash. date of retirement. Thebonuswillbeassessedagainsttheprescribed performance targets andmaybepaidfully in respect of thefinancialyearendingon31December2018 reflecting hisperiod ofemploymentwiththe Group tothe In accordance withtheS430(b)statement ontheGroup’s website,Peterwillbeeligibletoreceive anannualbonusin equal to20%of salarytoeachof Stuart PaynterandPeterNolan. respect to theirpersonalobjectives,andbasedonthoseobjectiveshaving beenachievedinfull,awarded bonuses The Remuneration Committeeundertookarobust assessmentof theachievementsof eachExecutive Director with Peter Nolan:Managedthebusinessdevelopmentteamtoincrease dealflow. Stuart Paynter:Managedthefinanceteamtoachievefinancialtargets. and soare notdisclosedbelow. However, theprincipalareas are summarisedbelowfor eachExecutive Director: by theCompanytobecommercially sensitive,astheywillgiveourcompetitorsinsightintostrategic plans, and targets whichsupportedthestrategic objectivesof thebusiness.Theobjectivesandtargets are considered The personalelementof thebonuswasassessedbyreference totheachievementof clearpersonalobjectives and Stuart Paynterare 80%linked tocorporate objectivesand20%linked topersonalobjectives. John Dawson’sbonusisentirely linked totheachievementof thecorporate objectives.Bonusesfor PeterNolan for theyearended31December2018 Directors’ remunerationreport Corporate governance Salaries Lorenzo Tallarigo Benefits Andrew Heath Pension /cashalternative Stuart Henderson LTIP Heather Preston Bonuses Total Non-Executive Directors fees Total — — — Peter Nolan:£127,000 (118%of salary, after pro-rating toreflect hisperiod of serviceintheyear). Stuart Paynter:£251,000 (117%of salary);and John Dawson:£439,000 (115%of salary); £’000 £’000 2,664 2018 2018 706 702 332 332 150 817 98 65 65 52 9

£’000 £’000 2,196 2017 2017 806 249 249 150 146 871 121 46 53 – 3 the three year period starting with the date of grant the threeyearperiodstartingwithdate ofgrant Average annualcompoundsharepricegrowthover 485p, thevestingconditionswere asfollows: LTIP awards were grantedon10June2015toJohnDawson,PeterNolan and TimWatts whentheshare pricewas (subject toaudit) LTIPs vestingduring2018 The valueof theawards vestingduring2018are detailedbelow: payments tobeappropriate. Clawbackandmalusprovisions willapplytotheawards. it. TheRemuneration Committeereviewed performance againstthisunderpinandconcludedtheoverallLTIP the Remuneration Committeeconsidersthat theoverallperformance of thebusinessacross theperiod justifies The awards were alsosubjecttoaperformance underpin, suchthat theywouldvestonlytotheextentthat The outcomewasthat 79.7% of theoptionsgrantedin2015wouldvestandremaining 20.3% willlapse. compound share pricegrowth was 83.6%. LTIP grantof optionshadbeenmet.Overthethree yearperformance periodfrom thedate of grant,theannual period. TheCommitteeconsidered theextenttowhichshare priceperformance conditionsfor theJune2015 week extensionof thedate of theperformance assessmentof the2015LTIP duetotheCompanybeinginaclosed of theassessmentperiod.Inaccordance withtherulesof thescheme,Committeeconsidered andagreed atwo The 2015LTIP awards vestedduring2018. Theshare price wasaveraged across 20businessdayspriortotheend Tim Watts Peter Nolan John Dawson * 17.5% ormore (i.e.63%over3years) Between 10%and17.5% 10% (i.e.33%over3years) Less than10% three yearperiodstartingwiththe date ofgrant* Average annualcompoundsharepricegrowth overthe anniversary of theaward, subject totheachievementof theperformance conditionsetoutbelow: The awards are nilcostoptionsandare subjecttoathree yearvestingperiod.Theyare exercisable from thethird Paynter) of salarydividedbytheaverage share priceof 904pinthefivebusiness dayspreceding the relevant award. The numberof optionsawarded inAugust2018wascalculated byreference to125%(JohnDawson)and100% (Stuart On 8August2018, theExecutive Directors were awarded thefollowing optionsundertheGroup’s LTIP scheme: (subject toaudit) LTIPs awarded during2018 2. 1. Oxford Biomedica plc|Annual report andaccounts2018 25% ormore (i.e.95.3% over3years) Between 15%and25% 15% (i.e.52.1%over3years) Less than15% John Dawson John Dawson Stuart Paynter Stuart Paynter The startingshare pricefor 8August2018is904prespectively, beingtheaverage share priceover thefivebusinessdayspreceding thedate of grant.The end share priceshall Number of shares post30May2018share consolidation. The valuesare calculated byreference totheshare priceof 1,000p onthelastdayof theaveraging period. be calculated astheaverage of the closingpricefor the three months periodpriorto8August2021.

granted that vested Number of awards Number ofawards 43,824 28,126 26,817 Calculated onastraightlinebasisbetween 17.5% and 100% 2 Calculated onastraightlinebasisbetween25%and100% Share price at the date on Share priceat thedate on which thesharesvest Percentage oftheoptionsgranted that willvest Percentage oftheoptionsgrantedthat willvest Number of options Number ofoptions granted 1,000p 1,000p 1,000p 23,647 52,555 Value ofawards on

Face value Face value £438,230 £268,167 £281,253 £474,572 £213,532 of grant vesting

100% 100%

20% 25% 0% 0%

1

Corporate governance 77 78 Peter Nolan John Dawson Stuart Paynter Executive Directors Heather Preston Stuart Henderson Andrew Heath 3. 2. 1. Martin Diggle Lorenzo Tallarigo Non-Executive Directors Oxford Biomedica plc|Annual report andaccounts2018 of their retirement) were asfollows: The interests inshares of theDirectors whoservedduringtheyearasat 31December2018(or, ifearlier, thedate the date of cessation) meettheshareholding guidelines,withStuart Paynterworkingtowards meetingthisguideline. prevailing closingshare priceon31December2018).UnderthiscriteriabothJohnDawsonandPeterNolan(asat The valueof theshares asat 31December 2018hasbeendeterminedbasedonashare priceof 707.2p (beingthe our Executive Directors to200%of salary. Committee hasdecidedtoincrease, witheffect from 1January2019, theshareholding guidelines requirement for a shareholding equivalentto150%of basesalaryasfurtherdescribedintheRemuneration policy. TheRemuneration The Remuneration Committeehasadoptedashareholding guidelinefor theExecutive Directors, whichspecifies (subject toaudit) Statement ofDirectors’shareholdingandshareinterests to rectify anerror inthe2017LTIP award grantedon25September2017. Stuart Paynterwasalsograntedanaward overanadditional7,235 shares (£65,404) undertheGroup’s LTIP scheme to avoid thepotentialfor windfallgains.TheCommitteeagreed that there wouldbenoscalebackof LTIP for the2018award. taken aprudentapproach toLTIP awards, reflecting theshare price at thetimeanddilutiveimpacttoshareholders, and Committee considersthat theoverallperformance of thebusinessacross theperiodjustifiesit.The Committee hasalways There willalsobeaperformance underpin,suchthat theawards willonlyvesttotheextentthat theRemuneration for theyearended31December2018 Directors’ remunerationreport Corporate governance Heather Preston wasappointedtotheBoard asaNon-Executive Director witheffect from 15March 2018. Includes theinterest of Vulpes Life ScienceFund, Vulpes Testudo Fund andotherpartiesconnectedtoMartinDiggle. Peter Nolansteppeddownfrom theBoard on1July2018. Hisshare heldoutrightisasat thedate of steppingdownfrom theBoard. 1 2 3 11,640,177 36,000 88,468 45,795 47,942 Shares heldoutright 6,677 2018 1,753 – 11,620,177 38,366 43,462 32,142 78,514 6,677 2017 – –

356,313 23,006 unexercised options 2018 – Vested but 305,586 153,639 2017 – 30,425 45,455 4,354 2018 Unvested deferred bonus plan 34,742 51,773 2017 – performance conditions Unvested LTIP awards 172,006 107,461 88,762 2018 subject to 174,436 107,461 57,880

2017

Peter Nolan Peter Nolan Stuart Paynter Stuart Paynter earned butnotyetvestedinrespect of 2015, 2016and2017bonuses.Thesewillvestat theusualtime. normal vestingdates, subjecttotheperformance conditions.Peterwillalsoretain thedeferred bonusshares he willretain theunvestedshare awards made undertheLTIP grantedin2016and2017, whichwill vestontheir of hisemployment.Consistentwiththetermsof theGroup’s remuneration policyand therulesof theLTIP, on page74. Hewillnotreceive anypaymentfor loss of office oranyotherpaymentsin relation tothecessation to that date andthebonushehasearnedinrespect of 2018isincludedin the singlefigure table of remuneration Peter Nolansteppeddownfrom theBoard andretired from theGroup on1July2018. Hisremuneration earned (subject toaudit) Payment topastDirectorsandpaymentsforlossofoffice the threeyearperiodstartingwithdate ofgrant Average annualcompoundsharepricegrowthover share pricefor thefivebusinessdayspreceding 18May2016was275pandvestingconditionswere setas follows: On 18May2019theperformance criteriafor theLTIP awards grantedon18May2016willbeassessed.Theaverage of £168,000. During 2018JohnDawsonexercised 20,000 optionswhichwere duetoexpire duringtheyear, realising again Note 2:PeterNolansteppeddownfrom theBoard on1July2018. Note 1:Quantitieshave beenamendedfor 50to1share consolidation on30May2018. John Dawson Deferred bonus John Dawson LTIP During 2018thefollowing optionshave vestedandlapsed: in lightof developingmarket practicebefore formally enshriningitinthenextpolicy. the post-cessation shareholding guidelineinappropriate circumstances andwillcontinuetoreview theguideline to shares whichtheExecutive Director haspurchased. TheRemuneration Committeeretains discretion tovary fewer thantherequired numberof shares, heorshemustretain theshares held.Theguidelinedoesnotapply (as at cessation) equalto100%of basesalaryfor twoyearsfollowing cessation. IftheExecutive Director holds cessation shareholding guideline.Thisrequires that anExecutive Director mustretain shares withavalue Reflecting bestpractice,theRemuneration Committeehasadopted,witheffect from 1January2019, apost- Oxford Biomedica plc|Annual report andaccounts2018 25% ormore (i.e.95.3% over3years) Between 15%and25% 15% (i.e.52.1%over3years) Less than15%

2 2

1 January 2018 1 January Unvested at Unvested at 174,436 107,461 57,880 100% Calculated onastraightlinebasisbetween25%and100% 25% 0% Percentage oftheoptionsgrantedthat willvest 1

1 January 2018 1 January Vested during Unvested at Unvested at 43,824 34,742 26,817 51,773 2018 – – 1 1

Lapsed during Lapsed during Vested during 26,904 17,487 11,161 2018 2018 6,830 – – 1 1

Awarded during Awarded during Awarded during 20,586 30,882 52,555 13,170 4,354 2018 2018 – 31 December 31 December

Unvested at Unvested at Unvested at Unvested at

172,006

88,762 30,425 45,455 73,814

2018 2018 4,354

1 1

Corporate governance 79 80 400 600 200 300 500 100 Oxford Biomedica plc|Annual report andaccounts2018 1. of remuneration Year CEO’s remuneration inlasttenyears biotech companies,provides asecondbenchmarkthat isamore specificcomparator. broad-based measure of investmentreturn from equities.TheFTSEtechMARKmediScienceindex,comprising and theFTSEtechMARKMediScienceindex.Theall-share indexhasbeenselectedbecauseitrepresents a The chartbelowillustrates theCompany’sTSRperformance sinceJanuary2009relative tothe FTSEall-share index Performance graphandcomparisonwithCEO’s remuneration for theyearended31December2018 Directors’ remunerationreport Corporate governance LTIP vesting CEO’s total single figure CEO’s totalsinglefigure Annual bonus 0 income taxandNational Insurance.Mr. Dawsonalsoreceived aregular bonusof 80%of maximum. mid-market priceonthetradingdayimmediately priortoissuewas£172,500andtheCompanybore anadditionalcostof £120,000 required togross upthevalueof theshares for bonus paymentinaccordance withhiscontractof employmentfor successfulachievementof certaintransactionswithSanofi inApril2009. Thevalue of theshares at theclosing On 1September20091,500,000 (consolidated to30,000 shares) newOrdinary Shares were allottedtoJohnDawson.Theshares were fullypaidandwere aone-off share based Dec 09 Key:

FTSE all-share index Oxford Biomedicaplc Dec 10

% of maximum % of maximum Dec 11 £’000

NASDAQ Biotechindex FTSE techMARKmediscienceindex 2009 80% 817 0% Dec 12 1 2010 42% 450 0% Dec 13 2011 413 0% 0 % 2012 40% 17% 401 Dec 14 2013 30% 468 0% Dec 15 2014 680 75% 0% 100% 2015 Dec 16 42% 732 2016 50% 50% 653 Dec 17 2017 85% 25% 811 1,294 Dec 18 2018 80% 92% Year 2018 Pay detailsfor theindividualsare setoutbelow: Financial year median payratio tobeconsistentwiththeGroup’s widerpoliciesonemployeepay, reward andprogression. of the Group andtoapplythispolicyfairlyconsistentlyattract andmotivate staff. TheGroup considersthe Group aimstoprovide acompetitiveremuneration package whichisappropriate topromote thelong-termsuccess in theShare OptionSchemeortheLTIP. Certainemployeesalsoparticipate indiscretionary bonusschemes.The of 2018. Employees’involvementintheGroup’s performance isencouraged, withallemployeeseligibletoparticipate percentile payratios were calculated using the fulltimeequivalentremuneration for allUKemployeesasat theend calculation methodologyfor theratios wasconsidered tobethemostaccurate method.The25th, medianand75th The Group usedOptionAasdefinedinTheCompanies(MiscellaneousReporting)Regulations 2018, asthis The tablebelowsetsouttheCEO payratio at the25th,medianand75thpercentile employeewithintheorganisation. CEO’s payratio The increase intheCEO’s benefitsisduetotheprovision of acarallowanceinitiated duringtheyear. other thantheCEO whowere employedthroughout thewholeof both2017and2018. significant changesinheadcountnumbers,theCommitteehaschosenascomparator group allthoseemployees compares withtheequivalentchangesinthosecomponentsfor agroup of employees.As2017and2018have seen The tablebelowshowshowthepercentage changeintheCEO’s salary, benefitsandbonusbetween20172018 Percentage changeinCEO’s remuneration Oxford Biomedica plc|Annual report andaccounts2018 Salary (£’000) 2018 Total remuneration (£’000) John Dawson employee group Comparator 8,008 2018 380 CEO Method £380 Option A £1,294 Salary 7,423 2017 350 % increase 8.6% 7.9% 25th percentile 25th percentile payratio £25 1:48 £27 2018 88 4 Benefits 2017 93 1 Median Median payratio £32 1:37 £35 % increase (5.4%) 300% 2018 439 832 75th percentile 75th percentile payratio £44 1:27 £48 Bonus 2017 618 372 % increase 35% 18%

Corporate governance 81 83 82 Corporate governance Directors’ remuneration report for the year ended 31 December 2018 Corporate governance Corporate

Relative importance of spend on pay Statement of voting at AGM The chart below illustrates the spend on employee remuneration compared with the Group’s key cash measures. At the 2018 AGM, the 2017 Directors’ remuneration report was approved by shareholders as follows: Since the Group does not make dividend or other distributions, these have not been included in the table. The Group’s key cash measures were chosen by the Directors because they illustrate very clearly the importance Votes for Total votes cast (including (excluding votes Votes withheld

of employee remuneration as a fundamental element of operational spend and our activities, as well as the continued Resolution discretionary) % for Votes against % against withheld) (abstentions) investment of the business in its people. The key cash measure amounts were identified as being: Approval of the Directors’ remuneration report 1,989,086,555 99.7% 4,411,157 0.2% 1,993,497,712 1,733,366 ——Non-payroll costs ——Net cash used in operating activities At the 2018 AGM, the 2018 Directors’ remuneration policy was approved by shareholders as follows: ——Net cash burn Votes for Total votes cast ——Cash revenues (including (excluding votes Votes withheld Resolution discretionary) % for Votes against % against withheld) (abstentions) Approval of the Directors’ remuneration report 1,930,039,150 97.2% 56,288,698 2.8% 1,986,327,848 8,903,541

Advisers to the Committee 70 Deloitte LLP acted as adviser to the Committee during 2018 Deloitte is a founding member of the Remuneration Consultants Group and adheres to its Code of Conduct in relation to executive remuneration consulting in the UK. 60 Deloitte’s fees for advice to the Committee during 2018 were £7,325 plus VAT. The advice received from Deloitte LLP was both objective and independent. Deloitte also advised the Group in relation to the operation of its share plans 50 during 2018. The Committee reviewed the potential conflicts of interest and the safeguards against them and is satisfied 40 that Deloitte does not have any such interests or connections with the Group that may impair independence.

30 £m Andrew Heath Chair, Remuneration Committee 20 14 March 2019

10

0

2016 2017 -10 2018

Staff pay Non-payroll costs Cash generated from / (used in) Net cash burn Cash revenues operations

Oxford Biomedica plc | Annual report and accounts 2018 Oxford Biomedica plc | Annual report and accounts 2018 84 Oxford Biomedica plc|Annual report andaccounts2018 performance. incentive for continued provide anongoing with Shareholders and for retirement. calibre. executives of asuitable to attract andretain salary whichissufficient To provide abase Base salary Executive Directors Policy table Directors’ remuneration policy for theyearended31December2018 Directors’ remunerationreport Corporate governance To alignExecutives guidelines Share ownership To provide funding Retirement benefits basis. on amarket competitive To provide benefits Benefits

Shares which are fully owned with Shares whichare fullyownedwith guideline hasbeen satisfied. annual bonus,untiltheshare ownership plans, anddeferred shares underthe vest underthelong-termincentive retain halfof anypost-taxawards which Executive Directors willberequired to shares (onanetof taxbasis). together withdeferred annual bonus towards theshareholding guideline no outstandingvestingcriteriacount of thecontributionstoapensionplan. cash supplementinsteadof someorall Directors maybepermittedtotake a or lifetime allowance.Executive where contributionsexceed theannual In appropriate circumstances, suchas including Executive Directors. contribution schemefor allemployees The Group operates adefined for example,travel expenses. circumstances. Thesemayinclude, may beprovided basedonindividual by theCommittee.Additionalbenefits other appropriate benefitsdetermined company caroraallowanceand health insurance,provision of a insurance, life assurance,permanent practice andmayincludemedical Benefits are provided inlinewithmarket − − − − not limitedto): of factorswhichmayinclude(butare annually takingintoaccountanumber Base salariesare normallyreviewed of thenewDirector. the experienceandprevious package appointment andtakingintoaccount to market information at thetimeof Base salariesare initiallysetbyreference from 1January. Any changesare normallyeffective pay and conditions elsewhere pay andconditionselsewhere forces; and competitive salarylevelsandmarket performance; role, experienceandindividual underlying Group performance; in theGroup.

level of shareholding. and maintain150%of salaryminimum Executive Directors are required tobuild − − − − as, butnotlimitedto: awarded incertaincircumstances, such Salary increases abovethislevelmaybe terms) tootheremployeesintheGroup. increase awarded (inpercentage of salary will normallybelinewiththelevelof salary While there isnomaximumsalary, increases 15% of basesalary. by theRemuneration Committee. but thetotalsare reviewed annually There isnopredetermined maximum Committee deemsappropriate. over suchtimeperiodasthe Such increases maybeimplemented

where there has been a change where there hasbeenachange market practice;or where there hasbeenachangein over time); Director’s salarywiththemarket newly appointedExecutive performance inrole (e.g.toaligna an individual’sdevelopmentor in scopeorresponsibility; been promoted orhashadachange where anExecutive Director has the business. in size and/orcomplexityof

Not applicable. Not applicable. Not applicable. salary increase. is taken intoaccountindeterminingany apply, anindividual’sperformance inrole While noformal performance conditions

a senseof ownership. the Group andpromote To create alignmentwith Sharesave Scheme Component andpurpose Oxford Biomedica plc|Annual report andaccounts2018 awards vest. performance before LTIP requiring challenging interests inshares whilst with longerterm Executive Directors alignment byproviding To augmentshareholder Plan (LTIP) Long Term Incentive interests. with shareholders’ the incentivepackage deferred shares aligns bonus paymentvia Delivery of 50%of any Group’s objectives. reward deliveryof the To incentiviseand Annual bonus table onthenextpage. summarised inthenotestopolicy Recovery provisions applyas HMRC EMIplanwhere appropriate. Awards have beenmadeunderan into shares onacumulative basis. assume thereinvestment of dividends delivered incashorshares andmay These dividendequivalentsmaybe between thegrantandvestingdate. include dividendequivalentsearned Awards grantedundertheLTIP may over athree yearperformance period. performance targets, typicallyassessed to theachievementof specified cost share optionswhichvestsubject annual grantsof conditionalnominal At thediscretion of theCommittee, summarised at thefoot of thistable. Recovery provisions applyas into shares onacumulative basis. assume thereinvestment of dividends be delivered incashorshares andmay period. Thesedividendequivalentsmay to thedeferred shares overthedeferral Dividend equivalentsmaybeattached adjusted at theCommittee’sdiscretion. discretionary andcanberemoved or appropriate. Bonusawards are under anHMRCEMIplanwhere Deferred share awards maybemade subject tofurtherperformance targets. award. Thedeferred shares are not second andthird anniversariesof the three equalinstalmentsonthefirst, deferred shares whichordinarily vestin 50% of thebonusisdelivered through 50% of thebonusisdelivered ascash. by theCommittee. Annual bonusesare determined applicable legislation from timetotime). discount asmaybepermittedbythe value of shares at grant(orsuchother discount of upto20%themarket an optionpricewhichcanbeat a option overtheCompany’sshares with five yearslinked tothegrant of an contributions overaperiodof three or which theymaymake monthlysavings employee Sharesave Schemeunder participate inataxqualifyingall Executive Directors are entitledto Operation

Maximum potentialandpaymentat threshold recruitment of anExecutive Director. exceptional circumstances suchasthe award limitwillonlybeexceeded in of basesalary. Thenormalmaximum respect of afinancialyearis200% opportunity that maybegrantedin plan rulestheoverallmaximum is 125%of basesalary. Undertheshare the CEO for whomthemaximumaward year for Executive Directors, otherthan of basesalaryinrespect of afinancial The normalmaximumaward is100% will notexceed 125%of basesalary. The maximumbonusopportunity authorities from timetotime. exercise priceare thosesetbytheUKtax of discountpermittedinsettingthe Participation limitsandthelevel

Performance targetsandmetrics measure hasbeenachieved. assessment of theextenttowhich depending upontheCommittee’s be determinedbetween0%and100% For strategic measures, vestingwill performance, noneof theaward willvest. performance; for belowthreshold 100% of theaward willvestfor maximum will vestfor threshold performance and measure, nomore than25%of theaward performance inrespect of afinancial measures. Fortheachievementof growth not limitedto)share priceandrevenue Financial measures mayinclude(butare or theachievementof strategic objectives. and willbebasedonfinancialmeasures determined inadvanceof grantof awards Performance conditionswillbe if threshold performance isnotmet. There isnominimumbonusearned significantly eachyear. objectives andmetricsmaychange Given thenature of thebusiness,these of thebusiness. taking intoaccountthestrategic needs are decidedannuallybytheCommittee The performance metricsandtargets in linewithHMRCpractice. Not subjecttoperformance measures

Corporate governance 85 86 required sothat theyachievetheiroriginalpurpose. which causetheCommittee todeterminethat themeasures are nolongerappropriate andthat amendmentis strategy, amaterial acquisition and/oradivestmentof aGroup business,orachangeinprevailing market conditions) The Committee retains the ability to adjust or set different performance measures if events occur (such as a change in and revenue. Group’s situation at thetime;awards tobe grantedin2019willbesubjecttomeasures basedonshare pricegrowth The performance metrics for theLTIP are determinedtoensure that themostappropriate targets are setfor the recurring revenues suchasmanufacturingordevelopmentservicestothird parties. development of eachopportunity. Theannualobjectivesare alsolikely toincludetargets related togenerating for aparticularyearare therefore likely toincludespecificproduct development targets dependingonthestage of proof of conceptthrough totheendof PhaseIorIIclinicalstudiesbefore partneringorout-licensing.Targets the business.Akey componentof theGroup’s strategy istodevelopgeneandcelltherapyproducts from pre-clinical Performance targets for theannualbonusare setbytheCommitteeafter takingintoaccountthestrategic needsof Performance targetsandmetrics — — — Clawback maybeappliedintheeventof: — — — — Oxford Biomedica plc|Annual report andaccounts2018 — Malus maybeappliedintheeventof: the repayment of someorallof theaward intherelevant circumstances (clawback). circumstances (malus).Foruptotwoyearsfollowing thevestingof aLTIP award theCommitteemayrequire The Committeehastherighttoreduce, cancelorimposefurtherconditionsonunvestedawards intherelevant LTIP: in therelevant circumstances (clawback). instalment of deferred shares theCommitteemayrequire therepayment of someorallof thedeferred shares be cancelledorreduced intherelevant circumstances (malus).Foruptooneyearfollowing thevestingof thefirst of someorallof thecashaward intherelevant circumstances (clawback).Unvesteddeferred bonusawards may For uptotwoyearsfollowing thepaymentof anannualbonusaward theCommitteemayrequire therepayment Annual bonus: The annualbonusandLTIP are subjecttomalusandclawbackprovisions asfollows: provisions Recovery Notes tothepolicytable for theyearended31December2018 Directors’ remunerationreport Corporate governance — — — — — — — — Material misconduct on the part of the participant. Material misconductonthepartof theparticipant. any applicableperformance conditions;or An error intheinformation orassumptionsonwhichtheaward wasgrantedorvestsincludinganerror inassessing A material misstatement of theGroup’s financial results; Material misconductonthepartof theparticipant. Serious reputational damagetotheGroup; or A material failure of riskmanagement bytheGroup; any applicableperformance conditions; An error intheinformation orassumptionsonwhichtheaward wasgrantedorvestsincludinganerror inassessing A material misstatement of theGroup’s financial results;

Group. Directors for theirservicestothe To compensate Non-Executive Non-Executive Directors’fees Non-Executive Directors Component andpurpose in anyterritoryprevented theCompanyfrom offering shares toanExecutive Director. Committee wouldonlyusethesecashprovisions for operational flexibility, for exampleifa regulatory restriction a notionalnumberof shares, andthat share awards maybesettledincashat theelectionof theCommittee; the may beoperated inaccordance withtheirterms,includingthat awards maybegrantedascashbasedawards over accordance withtherulesof theShare OptionScheme,LTIP andDeferred BonusPlan.TheCompany’sshare plans Awards andoptionsmaybeadjustedintheeventof avariation of share capitalorotherrelevant amendmentin Operation ofshareplans Oxford Biomedica plc|Annual report andaccounts2018 may beappropriate. travel costsorotherbenefitsthat as theuseof secretarial support, be eligibletoreceive benefitssuch Operation Non-Executive Directors may other Non-Executive Directors. Chairman’s fees are setbythe appointment of aDirector. The Chairman at thetimeof determined bytheGroup’s Non-Executive Directors’ fees are

responsibilities such as chairing responsibilities suchaschairing supplementary fee for additional receive abasefee anda Non-Executive Directors may and expectedtimecommitment. the responsibilities of therole but fees are settakingintoaccount There isnooverallmaximum, at othertimes. Directors’ fees maybemade increases inNon-Executive period of appointment.However, at thestartof eachthree year Fees wouldnormallybereviewed a Board committee. at threshold Maximum potential and payment Maximum potentialandpayment

Not applicable. Performance targetsandmetrics

Corporate governance 87 88 Oxford Biomedica plc|Annual report andaccounts2018 contracts Service The detailsof servicecontractsandlettersof appointmentof thosewhoservedasDirectors duringtheyearare: the fullnoticeperiod. Directors mayberequired toworkduringthenoticeperiodorbepaidinlieuof noticeifnotrequired toworkfor Executive Directors’ servicecontractsare subjectto12months’noticefrom boththeGroup andfrom theDirector. contractsandpolicyonpaymentforlossofoffice Service for theyearended31December2018 Directors’ remunerationreport Corporate governance Letters ofappointment with therevised Corporate GovernanceCode,thereafter, tore-election onanannualbasis. All Directors are subjecttoelectionbyshareholders at thefirstopportunity after theirappointment,andinline Stuart Paynter Peter Nolan John Dawson Heather Preston Stuart Henderson Andrew Heath Martin Diggle Lorenzo Tallarigo Date ofappointment 10 October2008 1 February2016 4 October2015 29 August2017 1 January 2016 1 January2016 15 March 2018 Contract date 1 June2016 1 May2002

31 December2018 31 December2018 Unexpired term at Unexpired termat Unexpired term at Unexpired termat 34 months 27 months 0 months 5 months 1 month N/A N/A N/A

Notice period Notice period 12 months 12 months 12 months

3 months 3 months 3 months 3 months 3 months

Other payments Change ofcontrol LTIP Deferred BonusPlan The principlesonwhichthedetermination of paymentsfor lossof office willbeapproached are setoutbelow: 14 Chair, Remuneration Committee Andrew Heath By order of theBoard Annual Bonus Payment inlieuofnotice Oxford Biomedica plc|Annual report andaccounts2018 March 2019 In appropriate circumstances, paymentsmayalsobemadeinrespect of accruedholiday, outplacement treatment for leavers oronachangeof control underthisscheme. which isgovernedbyitsrulesandthelegislation relating tosuchtaxqualifying plans.There isnodiscretionary Payments maybemadeeitherintheeventof alossof office orachange ofcontrol undertheSharesave Scheme, The extenttowhichunvestedawards undertheDeferred BonusPlanandLTIP willvestbedetermined be exercised for suchperiodastheCommitteedetermines. during suchperiodastheCommitteedetermines.Awards whichhave already vestedat thedate of cessation may from thedate of granttothedate of cessation relative totheperformance period.Awards maythenbeexercised performance conditionissatisfied and,unlesstheCommittee determinesotherwise,theperiod of timeelapsed case, theextentof vestingwillbedeterminedbytheCommitteetakingintoaccountextenttowhich the Committeeshalldeterminewhetheraward will vestat cessation orat thenormalvestingdate. Ineither death, ill-health,injury, disability, thesaleof hisemployeroranyotherreason at thediscretion of theCommittee, Unvested awards willnormallylapseoncessation of employment. However, ifaparticipantleaves dueto The extenttowhichanyunvestedaward willvest bedeterminedinaccordance withtherulesof theLTIP. vested at thedate of cessation maybeexercised for suchperiodastheCommitteedetermines. Awards maythenbeexercised duringsuchperiodastheCommitteedetermines. Awards whichhave already otherwise, theperiodof timeelapsedfrom thedate of granttothedate of cessation relative tothedeferral period. the extentof vestingwillbedeterminedbytheCommittee,takingintoaccount,unlessCommitteedetermines Committee shalldeterminewhethertheaward willvest at cessation orat thenormalvestingdate. Ineithercase, ill-health, injury, disability, thesaleof hisemployeroranyotherreason, at thediscretion of theCommittee, Unvested awards willnormallylapseoncessation of employment.However, ifaparticipantleaves duetodeath, Bonus Plan. The extenttowhichanyunvestedaward willvestbedeterminedinaccordance withtherulesof theDeferred or employment. of settlementorcompromise of anyclaimarisinginconnectionwiththetermination of aDirector’s office in discharge of anexistinglegalobligation (orbywayof damagesfor breach of suchanobligation) orbyway The Committeeretains discretion tomake additional exitpaymentswhere suchpaymentsare madeingoodfaith and legalfees. relevant corporate eventrelative totheperformance period. unless theCommitteedeterminesotherwise,periodof timeelapsedfrom thedate of granttothedate of the determine thelevelof vestingtakingintoaccounttheextenttowhichperformance conditionissatisfied and, Awards undertheLTIP willvestearlyonatakeover, merger orotherrelevant corporate event.TheCommitteewill corporate event. Awards undertheDeferred BonusPlanwillvestinfulltheeventof atakeover, merger orotherrelevant in accordance withtherulesof therelevant plan. of departure andpreceding yearincash. in appropriate circumstances). TheCommitteehasdiscretion topaythewholeof anybonusearnedfor theyear performance, bepaidat theusualtime(althoughCommitteeretains discretion topaythebonusearlier amounts paidwilltypicallybepro-rated for timeinservice duringthebonusperiodandwill,subjectto the individual’sdeparture andtheircontributiontothebusinessduringbonusperiodinquestion.Any Policy to award a bonus in full or in part will be dependent on a number of factors, including the circumstances of to award abonusinfullorpartwillbedependentonnumberof factors,includingthecircumstances of This willbeat thediscretion of theCommitteeonanindividualbasisanddecisionastowhetherornot contributions andanyapplicablesalarysupplement)for thenoticeperiod. Contractual termination paymentsmaynotexceed theDirector’s current salaryandbenefits(includingpension

Corporate governance 89 90 Oxford Biomedica plc|Annual report andaccounts2018 Company at 31December2018are disclosedintheDirectors’ remuneration report onpages69to89. subject toatwelvemonths’noticeperiod.TheDirectors’ remuneration andtheirinterests intheshare capital of the statements are detailedonpages60to61andpage70. Thecontractsof employmentof theExecutive Directors are Details of theDirectors of theCompanywhowere inoffice duringtheyearandupto date ofsigningthefinancial Directors The Directors donotrecommend paymentof adividend(2017:£nil). Dividends (note 3:financialriskmanagement). The Group’s exposure torisks issetoutonpages52to58(principalrisks anduncertainties)onpage121 Risk management The Group’s statement oncorporate governanceisincludedinthecorporate governancereport onpages52to68. Corporate governance Key financialperformance indicators are outlinedintheChiefFinancialOfficer’s reviewonpages38to 43. Key financialperformanceindicators (KPIs) to make thisjudgement. met seventimesfor routine meetingsin2018theDirectors considerthat theyare sufficientlywell informed tobeable the 2018audit,andfullBoard reviewed thecontentsof thereport at its12March 2019meeting.SincetheBoard the AuditCommitteeinitiallydiscussedrequirements withtheGroup’s auditorswhendiscussingthestrategy for the Annualreport andaccounts,taken asawhole,are fair, balancedandunderstandable.Inreaching thisconclusion, The Strategic report includingtheoutlookfor 2019onpage37, isonpages20to49. TheDirectors considerthat Strategic report forward lookingstatements. and results of theGroup maydiffer materially from theplans,goalsandexpectations expressed orimpliedinsuch and Company. Readersare cautionedthat, asaresult, theactualfuture financialcondition,businessperformance and uncertaintybecausetheyrelate tofuture eventsandcircumstances that are beyondthecontrol of theGroup performance andresults of theGroup andCompany. Bytheirnature, allforward lookingstatements involverisk with respect tocertainof theplans,current goalsandexpectations relating tothefuture financialcondition,business Discussions regarding financialinformation containedinthisAnnual report maycontain forward-looking statements governance report onpages52to68. 31 December2018assetoutonpages104to144. Thisreport shouldberead inconjunctionwiththecorporate The Directors present theirAnnualreport andauditedconsolidated financialstatements for theyearended for theyearended31December2018 Directors’ report Corporate governance

No rights have been granted to the Directors to buy back shares. No rightshave beengrantedtotheDirectors tobuybackshares. conditions,to waivepre-emption rightsoverupto6,568,024 shares, being10%of theshares theninissue. to allotupafurther21,893,424 shares, solelyinarightsissue.Authoritywasalsogiven, subjecttocertain subject tothenormalpre-emption rightsreserved toshareholders containedintheCompaniesAct2006, and to allotup21,893,424 shares (that numberbeingonethird of totalissuedshare capitalof theCompanyat thetime), or untiltheconclusionof thenextAGM ifsooner. At thelastAGM heldon29May2018, authoritywasgiven Each yearat theAGM theDirectors seekrightstoallot shares. The authority, whengrantedlastsfor 15months Rights toissueandbuybackshares All shares are admittedtotradingontheLondonStock Exchange. all allottedandfullypaid.There are norestrictions onthetransfer of shares intheCompanyoronvotingrights. consolidated ordinary shares of 50penceeach.At 31December2018theCompanyhad66,103,528 shares inissue, On 30May2018, Oxford Biomedicaconsolidated itsexistingordinary shares of 1penceeachto65,701,073 new of the Companyisunlimited. equally witheachother. Followingtheadoptionof newarticlesof association in2010, theauthorisedshare capital The Company’sshare capitalcomprisesasingleclassof 1pordinary shares, eachcarryingonevote andallranking capital Structure oftheCompany’s Share capital its Directors. Thiswasinforce throughout 2018anduptothedate of approval of thefinancialstatements. The Group maintainsaqualifyingthird partyindemnityinsurancepolicytoprovide coverfor legalactionagainst Directors’ thirdpartyindemnityprovision alternate Director. Directors. AnyDirector mayappointanotherDirector oranotherpersonapproved bytheotherDirectors asan disorders; ifheorsheisabsentwithoutconsentfor more thansixmonths;orbyrequest inwritingbyalltheother prohibited bylawfrom beingaDirector; intheeventof bankruptcy;ifheorsheissuffering from specifiedmental A Director mayberemoved inthefollowing ways:byanordinary resolution at ageneralmeeting;ifheorsheis Governance CodeallDirectors willretire at eachannualgeneralmeetingandmayoffer themselves for re-election. (AGM) andmayoffer himself for re-election. Inorder toensure that wecomplywiththe revised Corporate by theexistingDirectors, provided that anyDirector soappointedshallretire at thenextannualgeneralmeeting Directors maybeappointedbyanordinary resolution at anygeneralmeetingof shareholders, ormaybeappointed Appointment andreplacementofDirectors Oxford Biomedica plc|Annual report andaccounts2018

Corporate governance 91 92 Oxford Biomedica plc|Annual report andaccounts2018 of ourcontingencyplanningis provided onpage58. landscape intheUK,the Group hasassessedthefuture impactof Brexit onitsoperations tobeminor. Further details Although theUK’sdecisiontoleave theEuropean Unionmaysignificantly affect thefiscal,monetaryand regulatory statements andhave therefore prepared thefinancialstatements on a goingconcernbasis. cash resources andcashinflows tocontinueitsactivities for at leasttwelvemonthsfrom thedate of thesefinancial in conjunctionwithcurrently knownandprobable cashflows,theDirectors consider that theGroup hassufficient Group expectstogenerate sufficientoperational cashflowtocontinue its growth strategy. Takingthis intoaccount, flows, andalthoughtheGroup ismakingafurtherstrategic investment inextendingourbioprocessing capacity, the The Group held£32.2millionof cashat theendof 2018. During 2018theGroup generated positiveoperational cash Going concern of office forDirectors oremployeesintheevent ofatakeover bid. agreements that theDirectors considerare material. There are noagreements providing for compensation for loss Agreements that take effect, alter, orterminate because of atakeover bidoronchange of control. There are nosuch statements for furtherinformation. holds 116,724 shares onwhich alltherelated optionshave vested.Seenote25of theconsolidated financial awarded toExecutive Directors andotherseniormanagersunderthe2013Deferred BonusPlan.TheEBTcurrently The Group hasestablishedanEmployeeBenefit to hold shares purchased inorderTrust (EBT) tosettleshares Employee shareschemes corporate responsibility statement onpages44to49. Further detailsonemployees,healthandsafety, environmental matters andcorporate socialresponsibility are inthe The Group doesallthat ispracticabletomeetitsresponsibility towards theemploymentandtrainingof disabledpeople. of each individualtotheappropriate job,andtoprovide equalopportunityregardless of sex,religion orethnicorigin. The Group’s aimfor allmembersof staff andapplicants for employment istofitthequalifications, aptitudeandability in discretionary bonusschemes. all employeeseligibletoparticipate intheshare optionschemeortheLTIP. Certainemployeesparticipate employees throughout theyear. Employees’involvementintheGroup’s performance isencouraged,with In accordance withs172of theCompaniesAct2006, theGroup communicates andconsultsregularly with Employees to theCompany. Nopersonholdsshares carrying specialrightswithregard tocontrol of theCompany. No otherpersonhasreported aninterest intheordinary shares of theCompanyrequired tobenotified Vulpes InvestmentManagement Shareholder of thefollowing shareholdings amountingto3%ormore of theordinary share capitalof theCompany. At 15February2019, thelatest practicaldate priortoapproval of theDirectors’ report, theCompany hadbeennotified Substantial shareholdings for theyearended31December2018 Directors’ report Corporate governance M&G Investments Hargreaves LansdownAssetManagement Cannaccord GenuityWealth Management Mr. SShah Aviva Investors Interactive InvestorSharedealing Number of ordinary shares Number ofordinary 11,598,648 11,640,177 2,897,000 2,328,085 3,684,136 3,727,030 2,811,681 Percentage ofissuedsharecapital

17.6% 17.5% 4.3% 5.6% 5.6% 4.4% 3.5%

but thefollowing are applicable. The Directors have reviewed therequirements of LR9.8.4R. Themajorityof thesedonotapplytotheGroup Compliance withListingRule9.8.4R Amendment of theCompany’sarticlesmay bemadebyspecialresolution at ageneralmeetingof shareholders. articlesofassociation Amendment oftheCompany’s the Group mightneedtosecure alternative sources of financingtocontinuefunditsoperations. the three-year periodtoDecember2021.Ifadditionalrevenues were tofallbelowtheDirector’s expectations, although notacertainty, that theGroup willbeabletocontinueinoperation andmeetits liabilitiesastheyfalldueover developed reflect theseassumptionsandtherefore theDirectors have concludedthat there isa reasonable expectation, additional revenues inlinewith theincreased revenues across thepastfiveyears.TheGroup’s financial forecasts The Directors anticipate that theGroup hasreasonable prospects for attracting furthernewcustomersandgenerating also assumedthat regulatory approval for ourbioprocessing facilitiesremains inplaceacross theperiod. to refinance theloan at thesameormore favourable termsthanthosecurrently inplace.TheDirectors have Although theloanisrepayable intheviabilityperiod,Directors are confident that theGroup willbeable portfolio whichwecontinuetosupportinabioprocessing andcommercial developmentcapacity. importance having IPO’dat theendof theyearinanticipation of thecommercial launchof itsstrategic product our technologysoastoretain aleadershippositionwithinthefield.Orchard Therapeuticshasagaingrown in consortium whichwillbolsterourcommercial developmentandbioprocessing pipelines.We continuetodevelop by signingnewcommercial contractswithAxovant, Bioverativ (Sanofi) andtheUK Cystic Fibrosis GeneTherapy this wouldhave amaterially negative impactontheGroup. However, theGroup hasstartedtomitigate thisrisk requirements of Novartis, intermsof theglobalroll-out of Kymriah fallsubstantiallyshortof current expectations, parties tocoveritsoperational spendandloaninterest payments.Inparticular, shouldthecommercial supply fails togenerate sufficient revenue from the process developmentandbioprocessing servicesit provides tothird The mainarea of risktotheviabilityof theGroup withinthethree-year periodtoDecember2021isthat theGroup Assessment ofviability process development andbioprocessing servicestoitspartnerswillbesufficient create asustainable Group. to December2021theDirectors believethat revenues from licensingitstechnologytothird partiesandfrom providing from fees for providing process developmentandbioprocessing servicestoothercompanies.Overthethree years and otheroperating incomefrom licensingitsplatform technology, generating upfront receipts androyalties, and portfolio andtosupportthedevelopmentof othercompanies’products. TheGroup isgenerating growing revenues The Group’s strategy istoexploititsLentiVector platform todevelopgeneandcelltherapyproducts initsown of thebusinessoverlasttwelvemonths. Group operates. Theassessmenthasbeeninformed bythestrategy adoptedbytheBoard in2016andtheevolution significant uncertainties of forecasting beyondthistimehorizon giventhenature of thebusinesssectorinwhich of theGroup overthethree yearstoDecember2021.Theybelievethree yearstobeappropriate duetotheinherent In accordance withprovision C.2.2 of theUKCorporate GovernanceCode,theDirectors have assessedtheprospects Assessment ofprospects Viability statement LR 9.8.4 (7)and(8) LR 9.8.4 (5)and(6) Listing Rule Oxford Biomedica plc|Annual report andaccounts2018 to holdings. existing shareholders inproportion Allotment of shares otherthanto future emoluments. Director haswaivedcurrent or Arrangement underwhicha Information required share schemes(note25, page138). Allotment of shares onexercise of optionsbyemployees underapproved Response (page 76). Martin Digglehaselectedtoreceive nofees for hisservicesasDirector

Corporate governance 93 94 information necessaryfor shareholders toassesstheGroup’s positionandperformance, business modelandstrategy. We considertheannualreport andaccounts,taken asawhole,isfair, balanced andunderstandableprovides the — — We confirm that tothebest of ourknowledge: Responsibility statement oftheDirectorsinrespect oftheannualfinancialreport may differ from legislation inotherjurisdictions. on theGroup’s website.Legislation intheUKgoverningpreparation anddissemination of financialstatements The Directors are responsible for themaintenanceandintegrityof thecorporate andfinancialinformation included regulations. Report, Directors’ Remuneration ReportandCorporate GovernanceStatement that complieswiththat lawandthose Under applicablelawandregulations, theDirectors are alsoresponsible for preparing aStrategic Report,Directors’ and otherirregularities. such stepsasare reasonably opento themtosafeguard theassetsof theGroup andtoprevent anddetectfraud that are free from material misstatement, whetherduetofraudorerror, andhave generalresponsibility for taking responsible for suchinternalcontrol astheydetermineisnecessarytoenablethepreparation of financialstatements Company andenablethemtoensure that itsfinancialstatements complywiththeCompaniesAct2006. Theyare parent Company’stransactionsanddisclosewithreasonable accuracyat anytimethefinancialposition of theparent The Directors are responsible for keeping adequate accountingrecords that are sufficienttoshowandexplainthe — — — — Oxford Biomedica plc|Annual report andaccounts2018 — In preparing eachof theGroup andparent Companyfinancialstatements, theDirectors are required to: a trueandfairviewof thestate of affairs of theGroup andparent Companyand of theirprofit orloss forthat period. Under companylawtheDirectors mustnotapprove thefinancialstatements unlesstheyare satisfied that theygive and have electedtoprepare theparent Companyfinancialstatements onthesamebasis. Financial ReportingStandards asadoptedbytheEuropean Union(IFRSsasadoptedbytheEU)andapplicablelaw year. Underthat lawtheyare required toprepare theGroup financialstatements inaccordance withInternational Company lawrequires theDirectors toprepare Group andparent Companyfinancialstatements for eachfinancial statements inaccordance withapplicablelawandregulations. The Directors are responsible for preparing theAnnualreport andtheGroup andparent Companyfinancial Statement ofDirectors’responsibilitiesinrespectthefinancialstatements for theyearended31December2018 Directors’ report Corporate governance — — — — — — — the principal risks and uncertainties that they face. the principalrisks anduncertaintiesthat theyface. of theissuerandundertakingsincludedinconsolidation taken asawhole,togetherwithdescription of the Directors’ report includesafairreview of thedevelopmentandperformance of thebusinessandposition included in the consolidation taken as a whole; and included intheconsolidation taken asawhole;and and fairviewof theassets,liabilities,financialpositionand profit orloss oftheCompanyandundertakings the financialstatements, prepared inaccordance withtheapplicable set of accountingstandards, giveatrue or toceaseoperations, orhave norealistic alternative buttodoso. use thegoingconcernbasisof accountingunlesstheyeitherintendtoliquidate theGroup ortheparent Company matters related to going concern; and matters related togoingconcern;and assess theGroup andparent Company’sabilitytocontinueasagoingconcern,disclosing,applicable, state whethertheyhave beenprepared inaccordance withIFRSsasadoptedbythe EU; make judgementsandestimates that are reasonable, relevant andreliable; select suitable accounting policies and then apply them consistently; select suitableaccountingpoliciesandthenapplythemconsistently;

in August 2017 in August2017 a Director andChiefFinancialOfficer Stuart Paynterwasappointed Company registered number:03252665 14 March 2019 Company Secretary Stuart Paynter By order of theBoard of Covington &BurlingLLP. The AnnualGeneralMeetingwillbeheldat 11:00a.m.onWednesday 29May2019at theLondonoffices Annual GeneralMeeting Details ongreenhouse gasemissionsare setoutinthecorporate socialresponsibility sectiononpage47. Greenhouse gasemissionsreport which KPMGLLPtookupoffice. PricewaterhouseCoopers LLPcontinuedinoffice untilthe release ofthe2017financial statements, after During 2017atenderprocess wascompletedwithKPMGLLPbeingappointedasindependentauditors. Independent auditors that theGroup andCompany’sauditorsare aware of that information. he oughttohave taken asaDirector inorder tomake himselfaware of anyrelevant auditinformation andtoestablish information of whichtheGroup andCompany’sauditorsare unaware, andeachDirector hastaken allthestepsthat In accordance withs418of theCompaniesAct2006, sofaraseachDirector isaware, there isnorelevant audit Statement astodisclosureofinformation toauditors Oxford Biomedica plc|Annual report andaccounts2018

Corporate governance 95 96 appropriate basis for ouropinion.Ourauditopinionisconsistentwithreport totheauditcommittee. Our responsibilities are describedbelow. We believethat theauditevidencewehave obtainedisasufficientand We conductedourauditinaccordance withInternational Standards onAuditing(UK)(“ISAs (UK)”)andapplicablelaw. Basis foropinion — — — Oxford Biomedica plc|Annual report andaccounts2018 — Key auditmatters (recurringrisks): — Coverage:100.0% of Group revenue. — Materiality: Group financialstatements asawhole:£570k, 0.85% of revenue. Overview to listedpublicinterest entities.Nonon-audit servicesprohibited bythat standard were provided. independent of theGroup inaccordance with,UKethicalrequirements includingtheFRCEthical Standard asapplied is for thefinancialyearended31December2018. We have fulfilledourethical responsibilitiesunder, andwe remain We were firstappointedasauditorbytheshareholders on29May2018. Theperiod of totaluninterruptedengagement — In ouropinion: in equityattributable toownersof theparent, andtherelated notes,includingtheaccountingpoliciesinnote1. sheets, theGroup andparent Companystatements of cashflows,theGroup andparent Companystatements of changes 2018 whichcomprisetheconsolidated statement of comprehensive income,theGroup andparent Companybalance We have auditedthefinancialstatements of Oxford Biomedicaplc(“theCompany”) for theyearended31December 1. Ouropinionisunmodified To themembersofOxfordBiomedicaplc Independent auditors’report — — — — and, asregards theGroup financialstatements, Article4 of theIASRegulation. the financialstatements have beenprepared inaccordance withthe requirements of theCompaniesAct2006 by theEUandasappliedinaccordance withtheprovisions of theCompaniesAct2006;and the parent Companyfinancialstatements have beenproperly prepared inaccordance withIFRSsasadopted Reporting Standards asadoptedbytheEuropean Union(IFRSsasadoptedbytheEU); the Group financialstatements have beenproperly prepared inaccordance withInternational Financial 2. 1. affairs as at 31December2018and of theGroup’s profit fortheyearthenended; the financialstatements giveatrueandfairview of thestate of theGroup’s and of theparent Company’s Recoverability of parent Company’sinvestmentinanddebtduefrom subsidiaries. Revenue recognition.

129 (financial disclosures). (financial 129 judgement). accounting (critical 117 page and policy) (accounting 115 page to Refer (£91.8 million). Investments andloans page and policy) (accounting 110 page to Refer development. receivables andpaymentsprocess Product andtechnologylicenses,milestone Revenue a separate opiniononthesematters. a whole,andinforming ouropinionthereon, andconsequentlyare incidentaltothat opinion,andwedonotprovide on procedures undertaken, inthecontextof, andsolelyfor thepurposeof, ourauditof thefinancialstatements as for publicinterest entities,ourresults from thoseprocedures. Thesematters were addressed, andourresults are based in arrivingat ourauditopinionabove,togetherwithkey auditprocedures toaddress thosematters and,asrequired resources intheaudit;anddirecting theefforts of theengagementteam. We summarise belowthe key auditmatters, fraud) identifiedbyus,includingthosewhichhadthegreatestof effect on:theoverallauditstrategy; theallocation to financial statements andincludethemostsignificantassessedrisks of material misstatement (whetherornotdue Key auditmatters are thosematters that, inourprofessional judgment,were of mostsignificanceintheaudit of the 2. Key auditmatters: includingourassessmentofrisksmaterial misstatement Oxford Biomedica plc|Annual report andaccounts2018 —  —  effect onouroverall parent Companyaudit. considered tobethearea that hadthegreatest Company financialstatements, thisis their materiality inthecontextof theparent to significantjudgement.However, dueto high riskof significantmisstatement orsubject total assets.Theirrecoverability isnotat a subsidiary represents 98.8% of theCompany’s investment andloaninthesoletrading The carryingamountof theparent Company’s Low risk,highvalue. investment inanddebtduefromsubsidiaries: Recoverability ofparentCompany’s —  by theGroup inthefollowing areas: are inherent judgementsrequired tobemade element contractswithdiffering terms.There The Companyentersintoanumberof multiple Accounting treatment The risk over timeorat apointintime. obligation satisfies thecriteria for recognition Whether revenue for eachperformance of FTErates applied,and alone sellingprice,includingconsideration obligation withreference totheirstand- transaction pricetoeachperformance Assessing theallocation of thetotal work, milestones andcommercial development of thecontract,primarilylicensefees, Identification of performance obligations Identification of performance obligations

—  —  Our procedures included: loan tosubsidiariesbeacceptable. of therecoverability of theinvestmentinand Our results: We found theGroup’s assessment —  Our procedures included: Our response judgements tobeacceptable. recognition andrelated disclosures of the Our results: We found theGroup’s revenue —  reference tosignificantcontracts,including: in linewithaccountingpoliciesand challenging theGroup’s judgementsmade, Testing application: Assessingand the accountingstandard. Group’s revenue accountingpolicyagainst Accounting analysis:Evaluation of the on themarket capitalisation of theGroup. with theexpectedvalueof thebusinessbased carrying amountof theinvestmentandloans Comparing valuations: Comparingthe of revenue. the judgementsinvolvedinrecognition adequacy of theGroup’s disclosures about Assessing transparency:the —  —  —  The revenue recognition over time The revenue recognition overtime customer contracts,and benchmarking across theGroup’s other individual componentsthrough The stand-alone sellingpricesof performance obligations, they are distinctandtherefore separate promised inthecontractandwhether The identification of thegoodsorservices accounting policy. services beingprovided andGroup’s contract terms,nature of goodsand or pointintimewithreference tothe

Independent auditors’ report 97 98 — — Oxford Biomedica plc|Annual report andaccounts2018 — most likely toadverselyaffect theCompany’s available financial resources over thisperiodwere: financial resources orabilitytocontinueoperations overthegoingconcernperiod.Therisks that we considered business model,includingtheimpactof Brexit, andanalysedhowthose risks mightaffect theGroup’s andCompany’s In ourevaluation of theDirectors’ conclusions,weconsidered theinherent risks totheGroup’s and Company’s report isnotaguaranteethat theGroup andtheCompanywillcontinuein operation. that were reasonable at thetimetheywere made,theabsenceof reference to amaterial uncertaintyinthisauditor’s future eventsorconditionsandassubsequentmayresult inoutcomes that are inconsistentwithjudgements uncertainty related togoingconcern,make reference tothat inthisauditreport. However, aswecannotpredict all Our responsibility istoconcludeontheappropriateness of theDirectors’ conclusionsand, hadthere beenamaterial of approval of thefinancialstatements (“thegoingconcernperiod”). that could have castsignificantdoubtovertheirabilitytocontinueasagoingconcern for at leastayearfrom thedate Group’s financialpositionmeansthat thisis realistic. Theyhave alsoconcludedthat there are nomaterial uncertainties the CompanyorGroup ortoceasetheiroperations, andastheyhave concludedthat theCompany’sand The Directors have prepared the financialstatements onthegoingconcernbasisastheydonotintendtoliquidate 4. We havenothing toreportongoingconcern by theGroup team. components. Theworkonallof thecomponents,includingauditof theparent Company, wasperformed total assets.TheGroup teamapproved thecomponentmaterialities, whichwere setat £540kfor bothinscope The componentswithinthescopeof ourworkaccountedfor 100%of group revenue, profit before taxand on qualitative grounds. Ofthegroup’s 3 components,wesubjected2tofullscopeauditsfor group purposes. identified misstatements exceeding £28k,inadditiontootheridentifiedmisstatements that warranted reporting assets, of whichitrepresents 0.6%. We agreed toreport totheAuditCommitteeanycorrected oruncorrected financial statements asawholewasset at £540k,determinedwith reference toabenchmark of Companytotal it provides amore stablemeasure yearonthangroup profit before tax.Materiality for theparent Company of revenue (of whichitrepresents 0.85%. We considertotalrevenue tobethemostappropriate benchmarkas Materiality for theGroup financialstatements asawholewasset at £570k,determinedwith reference toabenchmark 3. ofthescopeouraudit Ourapplication ofmateriality andanoverview To themembersofOxfordBiomedicaplc Independent auditors’report £66.8m (2017:£37.6m) Revenue  — — — Current covenantcomplianceandthe abilitytorefinance. Capital expenditure commitments, and The reliance onfuture receipts from bothcurrent andnewcustomers, Group materiality Revenue £570k Group Materiality Audit Committee Misstatements reported tothe £28k Materiality at 2components £540k Whole financialstatements materiality £570k

— — — attention toinrelation to: Based ontheknowledgeweacquired duringourfinancialstatements audit,wehave nothingmaterial toaddordraw Disclosures ofprincipalrisksandlonger-termviability in accordance withtheCompaniesAct2006. In ouropinionthepartof theDirectors’ Remuneration Reporttobeauditedhasbeenproperly prepared Directors’ remuneration report — — — Based solelyonourworktheotherinformation: Strategic reportandDirectors’ knowledge. Basedsolelyonthat workwehave notidentifiedmaterial misstatements intheotherinformation. audit work,theinformation therein ismaterially misstated orinconsistentwiththefinancialstatements or ouraudit responsibility istoread theotherinformation and,indoingso,considerwhether, basedonourfinancialstatements not express anauditopinionor, except asexplicitlystated below, anyform of assuranceconclusionthereon. Our statements. Ouropiniononthefinancialstatements doesnotcovertheotherinformation and,accordingly, wedo The Directors are responsible for theotherinformation presented intheAnnualreport together withthefinancial 5. We havenothingtoreportontheotherinformation intheAnnual report We have nothingtoreport intheserespects, andwedidnotidentifygoingconcernasakey auditmatter. — — Based onthiswork,weare required toreport toyouif: as theimpactof Brexit, whichcouldresult inarapidreduction of available financial resources. position shouldtherisks materialise. We alsoconsidered lesspredictable butrealistic secondorder impacts,such and collectivelyevaluated theachievabilityof theactionsDirectors considertheywouldtake toimprove the taking accountof reasonably possible(butnotunrealistic) adverseeffects that couldarisefrom theserisks individually we considered sensitivitiesoverthelevelof available financial resources indicated bytheCompany’sfinancial forecasts As thesewere risks that couldpotentiallycastsignificantdoubtontheCompany’sabilitytocontinueasagoingconcern, Oxford Biomedica plc|Annual report andaccounts2018 — — — — — — — — to anynecessaryqualifications orassumptions. liabilities astheyfalldueover theperiodof theirassessment,includinganyrelated disclosures drawingattention to whethertheyhave areasonable expectation that theGroup willbeabletocontinueinoperation andmeetits what periodtheyhave donesoand why theyconsidered that periodtobeappropriate, andtheir statement as the Directors’ explanation intheviability statement of howtheyhave assessedtheprospects of the Group, over managed andmitigated; and the Principalrisks facingthebusinessdisclosures describingtheserisks and explaininghowtheyare being solvency andliquidity; of theprincipalrisks facingtheGroup, includingthosethat wouldthreaten itsbusiness model, future performance, the Directors’ confirmation withintheviabilitystatement onpage93that theyhave carriedouta robust assessment in ouropinionthosereports have beenprepared inaccordance withtheCompaniesAct2006. statements; and in ouropiniontheinformation giveninthosereports for thefinancialyearisconsistentwith we have notidentifiedmaterial misstatements inthestrategic report andtheDirectors’ report; knowledge. the related statement undertheListingRulessetoutonpage92ismaterially inconsistentwithouraudit the date of approval of thefinancialstatements; or cast significantdoubtovertheGroup andCompany’suse of that basis for aperiod of at leasttwelvemonthsfrom financial statements ontheuse of thegoingconcernbasis of accountingwithnomaterial uncertaintiesthat may we have anythingmaterial toaddordrawattention toinrelation totheDirectors’ statement innote1tothe

Independent auditors’ report 99 100 — A fullerdescriptionof ourresponsibilities isprovided ontheFRC’s websiteat www.frc.org.uk/auditorsresponsibilities. reasonably beexpectedtoinfluence the economicdecisions of userstaken onthebasis of the financialstatements. can arisefrom fraud,otherirregularities orerror and are considered material if, individuallyorinaggregate, they could conducted inaccordance withISAs(UK)willalways detectamaterial misstatement whenitexists.Misstatements in anauditor’sreport. Reasonableassuranceisahighlevelof assurance,butdoesnot guaranteethat anaudit material misstatement, whetherduetofraudorotherirregularities (see below), orerror, andtoissueouropinion Our objectivesare toobtainreasonable assuranceaboutwhetherthefinancialstatements as awholeare free from Auditor’s responsibilities alternative buttodoso. they eitherintendtoliquidate theGroup ortheparent Companyortoceaseoperations, orhave norealistic disclosing, asapplicable,matters related togoingconcern;andusingthe goingconcernbasisof accountingunless whether duetofraudorerror; assessingtheGroup andparent Company’sability tocontinueasagoingconcern, determine isnecessarytoenablethepreparation of financial statements that are free from material misstatement, financial statements includingbeingsatisfied that theygiveatrue andfairview;suchinternalcontrol asthey As explainedmore fullyintheir statement setoutonpage94, theDirectors are responsible for: thepreparation of the Directors’ responsibilities 7. Respective responsibilities We have nothingtoreport intheserespects. — — — Oxford Biomedica plc|Annual report andaccounts2018 — Under theCompaniesAct2006, weare required toreport toyouif, inouropinion: 6. We havenothingtoreportontheothermatters onwhichwearerequiredtoreportbyexception We have nothingtoreport intheserespects. — We are required toreport toyouif: Corporate governancedisclosures of anythingtoreport onthesestatements isnotaguaranteeastotheGroup’s andCompany’slonger-term viability. outcomes that are inconsistentwithjudgmentsthat were reasonable at thetimetheywere made,theabsence statements audit.Aswecannotpredict allfuture eventsorconditionsandassubsequentmayresult in Our workislimitedtoassessingthesematters inthecontextof onlytheknowledgeacquired duringourfinancial Under theListingRulesweare required toreview theviabilitystatement. We have nothingtoreport inthisrespect. To themembersofOxfordBiomedicaplc Independent auditors’report — — — — — — specified bytheListingRules for our review. Statement doesnotproperly discloseadeparture from theelevenprovisions of theUKCorporate GovernanceCode communicated byustotheAuditCommittee.We are required toreport toyouiftheCorporate Governance the sectionof theannualreport describingtheworkof theAuditCommitteedoesnotappropriately address matters we have notreceived alltheinformation andexplanations werequire for ouraudit. certain disclosures of Directors’ remuneration specified bylaware notmade;or are notinagreement withtheaccounting records andreturns; or the parent Companyfinancialstatements andthepart of theDirectors’ Remuneration Reporttobeaudited have notbeenreceived from branchesnotvisitedbyus;or adequate accountingrecords have notbeenkept bytheparent Company, orreturns adequate for ouraudit the Group’s positionandperformance, businessmodelandstrategy; or a wholeisfair, balancedandunderstandableprovides theinformation necessaryfor shareholders toassess audit andtheDirectors’ statement that theyconsiderthat theannualreport andfinancialstatements taken as we have identifiedmaterial inconsistenciesbetweentheknowledgeweacquired duringourfinancialstatements

Oxford Biomedica plc|Annual report andaccounts2018 14 March 2019 CB2 1JZ Cambridge 98-100 HillsRd Botanic House Chartered Accountants for andonbehalfofKPMGLLP, Auditor Statutory Auditor) Charles leStrangeMeakin(SeniorStatutory members, asabody, for ourauditwork,for thisreport, orfor theopinionswehave formed. permitted bylaw, wedonotacceptorassumeresponsibility toanyoneotherthantheCompanyandCompany’s matters weare required tostate totheminanauditor’sreport andfor nootherpurpose.To thefullestextent Companies Act2006. Ourauditworkhasbeenundertaken sothat wemightstate totheCompany’smembers those This report ismadesolelytotheCompany’smembers,asabody, inaccordance withChapter3of Part16of the 8. Thepurposeofourauditworkandtowhomweoweresponsibilities and cannotbeexpectedtodetectnon-compliancewithalllawsregulations. misrepresentations, or theoverrideof internalcontrols. We are notresponsible for preventing non-compliance a higherriskof non-detectionof irregularities, asthesemayinvolvecollusion,forgery, intentionalomissions, limited procedures required byauditingstandards wouldidentifyit.Inaddition,aswithanyaudit,there remained (irregularities) isfrom theeventsandtransactionsreflected inthefinancialstatements, thelesslikely theinherently in accordance withauditingstandards. Forexample, thefurtherremoved non-compliancewithlawsandregulations material misstatements inthefinancialstatements, eventhoughwehave properly plannedandperformed ouraudit Owing totheinherent limitations of anaudit,there isanunavoidable riskthat wemaynothave detectedsome These limitedprocedures didnotidentify actualorsuspectednon-compliance. and legalcorrespondence, ifany. with theselawsandregulations toenquiryof theDirectors andothermanagementinspectionof regulatory nature of theGroup’s activities.Auditingstandards limittherequired auditprocedures toidentifynon-compliance Administration (FDA) andMedicinesHealthcare products Regulatory Agency(MHRA)recognising theregulated those mostlikely tohave suchan effect: those related tothepharmaceuticalindustryimposedbyFoodandDrug imposition of finesorlitigation ortheloss of thegroup’s licencetooperate. as We identifiedthe following areas could have amaterial effect onamountsordisclosures inthefinancialstatements, forinstancethrough the Secondly, thegroup issubjecttomanyotherlawsandregulations where theconsequencesof non-compliance financial statement items. We assessedtheextentof compliancewiththeselawsandregulations aspartof ourprocedures ontherelated reporting legislation (includingrelated companieslegislation), distributableprofits legislation andtaxation legislation. Firstly, thegroup issubjecttolawsandregulations that directly affect thefinancialstatements includingfinancial The potentialeffect of theselawsand regulations onthefinancialstatements variesconsiderably. regulations throughout ourteamandremained alerttoanyindications of non-compliancethroughout theaudit. the policiesandprocedures regarding compliancewithlawsandregulations. We communicated identifiedlawsand and othermanagement(asrequired byauditingstandards), anddiscussedwiththeDirectors andothermanagement financial statements from ourgeneralcommercial andsectorexperiencethrough discussionwiththeDirectors We identifiedareas of lawsand regulations that could reasonably beexpectedtohave amaterial effect onthe Irregularities –abilitytodetect

Independent auditors’ report 101 Oxford Biomedica plc|Annual report andaccounts2018

19 16 145 103 108 Consolidated statement statement Consolidated 104 106 105 148 107 Glossary 145 Independent auditors’ auditors’ Independent 96 90 44 20 69 30 iaca review Financial 38 62 26 26 36 59 24 51 22 32 23 Principal risks, uncertainties uncertainties risks, Principal 52 11 37 12 13 1

Group financialstatements report Directors’ report Advisers andcontactdetails Notes totheconsolidated Directors’ remuneration report Corporate governancereport Other matters financial statements of theparent equity attributable toowners Statements of changesin Statements of cashflows Balance sheets of comprehensive income The Board of Directors and riskmanagement Corporate governance Corporate governance Corporate responsibility Objectives for 2019 Delivery of our2018objectives 2018 performance review Management team Chief Executive Officer's review Chairman’s statement Financial highlights Operational highlights Our businessmodel Introducing Strategic report Products LentiVector deliveryplatform Gene andcelltherapysector overview Sector andtechnology Oxford Biomedica

Group financial statements 103 104 The lossfor theyearisattributable totheownersof theparent. There wasnoothercomprehensive incomeorlossineitheryear. share per ordinary share per ordinary Oxford Biomedica plc|Annual report andaccounts2018 Continuing operations for theyearended31December2018 Consolidated statementofcomprehensiveincome Group financial statements Finance costs Taxation Profit / (loss) beforetax Revaluation of investments Other operating income Administrative expenses bioprocessing costs Research, developmentand Gross profit Cost of sales Operating profit / (loss) Basic earnings / (loss) Basic earnings / (loss) Revenue Finance income income / (expense) for theyear Profit / (loss) andtotalcomprehensive Diluted earnings / (loss) Diluted earnings / (loss)

Note 27 13 8 4 4 4 6 6 9 9 (22,763) (29,714) 10.89p 44,015 (8,972) 66,778 (7,433) 13,915 11.57p £’000 1,064 5,983 5,014 2,527 7,541 2018 71 (14.50p) (14.50p) (18,442) (21,611) (11,761) (5,668) 37,590 (9,017) (7,276) 19,148 (6,131) £’000 2,297 2,744 1,774 2017 38 Inventories Current assets Loans Non-current liabilities Net currentassets/(liabilities) Equity attributable to owners Equity attributable toowners Net assets Trade andother payables Current liabilities Intangible assets Non-current assets Assets Property, plantandequipment Deferred taxliability Deferred taxassets Trade andotherreceivables Accumulated losses Contract liabilitiesanddeferred income Investments andloans Share premium account Cash andcashequivalents Other reserves Provisions Current taxassets Contract liabilitiesanddeferred income Total equity The financialstatements onpages108to144 The Companymadealossfor theyearof £446,000 (2017:£1,207,000). The Company’sregistered number is 03252665. Ordinary share capital of theparent as at 31December2018 Balance sheets Group financial statements Oxford Biomedica plc|Annual report andaccounts2018 Chief Executive Officer John Dawson and were signedonitsbehalfby:

Note 20 28 24 22 22 22 23 27 18 18 16 19 14 12 13 15 17 11 8 were approved bytheBoard of Directors on14 (173,876) 172,074 28,506 32,244 41,020 42,874 33,034 30,585 69,526 10,966 49,153 17,084 34,741 34,741 11,422 41,153 31,791 2,446 £’000 6,434 3,509 4,251 1,287 2018 279 117 Group – (182,663) 154,224 36,864 25,370 36,981 31,076 14,329 37,494 28,421 17,088 13,072 21,762 15,219 £’000 8,690 3,509 2,954 2,232 3,332 6,146 6,146 2017 630 97 – – – March 2019 March 2019 ( 123,077) 172,074 33,034 92,762 92,762 91,786 92,915 10,731 ( 153) £’000 1,129 2018 Company 164 164 11 11 – – – – – – – – – – –

(122,590) 154,224 72,309 72,309 72,350 72,350 31,076 £’000 9,599 2017 (41) 40 81 81 31 – – – – – – – – – – – 9

Group financial statements 105 106 Net cash generated from/ (used in) Net cashgenerated from/ (used in) Loans repaid Cash flows Cash flows operating activities Net cashgenerated from/(used in) Overseas taxpaid Tax credit received Cash flows Cash flows Net cashusedininvestingactivities Interest received Purchases of intangibleassets Cash flows Loans received Interest paid Costs of share issues Purchases of property, plant Loan tosubsidiary from investingactivities operations Cash generated from / (used in) from operating activities and equipment Oxford Biomedica plc|Annual report andaccounts2018 at 31December at 1January Cash andcashequivalents in cashandequivalents Net increase / (decrease) financing activities ordinary share capital Proceeds from issueof from financingactivities for theyearended31December2018 Statements ofcashflows Group financial statements Cash and cash equivalents Cash andcashequivalents

23, 24 Note 29 24 16 19 12 11 (10,096) (10,103) (4,665) 32,244 12,868 14,329 21,184 (1,376) 15,143 17,915 £’000 3,654 9,214 2018 (45) Group 52 – – – – (10,800) (30,536) (2,054) 38,897 (1,006) (1,969) 14,329 (1,533) 15,335 (1,931) £’000 4,530 2,979 2017 385 (18) 38 – – – (18,304) (18,304) (1,483) (1,483) (1,376) 21,143 19,767 £’000 2018 Company (20) 31 11 – – – – – – – – (5,498) (1,308) (1,308) (4,575) (4,575) £’000 5,529 2017 385 385 31 – – – – – – – – – Share options Transactions withowners: Total comprehensive expensefor theyear Share options Transactions withowners: Loss for theyear Year ended31December2017: Total comprehensiveincomefortheyear Total comprehensive expensefor theyear Total comprehensiveexpensefortheyear Issue of warrants At 31December2017 Vesting of deferred share award Issue ofsharesexcluding options At 31December2018 Share options Transactions with owners: Cost ofshareissues Share options At 31December2017 Issue of warrants Issue ofsharesexcluding options Cost ofshareissues At 1January2017 Group for theyearended31December2018 Statements ofchangesinequityattributabletoownerstheparent Group financial statements Income fortheyear Year ended31December2018: At 1January2017 Loss for theyear Year ended31December2017: Company Loss fortheyear Year ended31December2018: Oxford Biomedica plc|Annual report andaccounts2018 At 31December2018 Proceeds from shares issued Proceeds fromsharesissued Value of employeeservices Value ofemployeeservices Credit in relation to employee Credit inrelation toemployee Credit in relation to Credit inrelation to Proceeds from shares issued Proceeds fromsharesissued share schemes employee shareschemes

26, 28 26, 28 Notes Notes 23, 24 23, 24 23, 24 23, 24 23, 24 28 28 28 24 24 10 10 27 27 27 Ordinary Ordinary Ordinary Ordinary 33,034 33,034 31,076 31,076 30,879 30,875 shares shares £’000 £’000 1,712 1,712 246 246 197 197 – – – – – – – – – – – – – – – – –

premium premium premium premium account account 154,224 154,224 172,074 172,074 154,036 154,036 ( 1,376) ( 1,376) 18,748 18,748 £’000 £’000 Share Share Share Share 478 478 188 188 – – – – – – – – – – – – – – –

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

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

Warrant £’000 £’000 Other 6,801 6,052 7,933 1,218 1,218 1,132 1,218 749 – – – – – – – – – – – – – – – – – – – –

Accumulated Accumulated ( 173,876 ) ( 123,077 ) (182,663) (122,590) (174,489) (121,383) (1,207) (1,207) (9,017) (9,017) losses losses £’000 £’000 1,246 (446) (446) 7,541 7,541 (102) 945 (41) – – – – – – – – – – ( 1,376) ( 1,376) 20,460 20,460 72,309 92,762 34,741 (1,207) (1,207) (9,017) (9,017) 71,164 12,615 equity equity £’000 £’000 6,146 1,246 1,091 (446) (446) 7,541 7,541 1,218 1,218 Total Total 945 724 724 385 385 749 –

Group financial statements 107 108 Oxford Biomedica plc|Annual report andaccounts2018 of ourcontingencyplanningisprovided onpage58. landscape intheUK,the Group has assessedthefuture impactof Brexit onitsoperations tobeminor. Further details Although theUK’sdecisiontoleave theEuropean Unionmaysignificantly affect thefiscal,monetaryand regulatory statements andhave therefore prepared thefinancialstatements onagoingconcernbasis. cash resources andcashinflows tocontinueitsactivities for at leasttwelvemonthsfrom thedate of thesefinancial in conjunctionwithcurrently knownandprobable cashflows,theDirectors considerthat theGroup hassufficient Group expectstogenerate sufficientoperational cashflowtocontinueits growthstrategy. Takingthisintoaccount, flows, andalthoughtheGroup ismakingafurtherstrategic investmentinextendingourbioprocessing capacity, the The Group held£32.2millionof cashat theendof 2018. During2018theGroup generated positiveoperational cash Going concern significant tothefinancialstatements, are disclosedinnote2. policies. Theareas involvingahigherdegree of judgementorcomplexity, orwhere assumptionsandestimates are estimates. Italsorequires managementtoexercise itsjudgementintheprocess of applyingtheGroup’s accounting The preparation of thefinancialstatements inconformity withIFRS requires theuse of certaincriticalaccounting A summaryof themore importantGroup accountingpoliciesare setoutbelow. adopted inpreparing thefinancial statements. As more fullyexplainedintheDirectors’ report onpages90to95andbelow, thegoingconcernbasishasbeen under thehistoriccostconventionasmodifiedby revaluation of financialassets atfairvaluethrough profit andloss. Companies Act2006asapplicabletocompaniesreporting underIFRS. Thefinancialstatements have beenprepared and IFRSInterpretations Committee(’IFRSIC’)interpretations asadoptedbytheEuropean Unionandwiththe The financialstatements have beenprepared inaccordance withInternational FinancialReporting Standards (’IFRS’) These policieshave beenconsistentlyappliedtoallthefinancialyearspresented, unlessotherwisestated. The principalaccountingpoliciesadoptedinthepreparation of thesefinancialstatements are setoutbelow. Basis ofpreparation marketed pharmaceuticalproducts. business providing bioprocessing andprocess developmentservicestothird parties.TheGroup currently hasno The Group isageneandcelltherapyresearch anddevelopmentbusinesswhichisalsobuildingarevenue-generating The Company’sprincipalsubsidiaryisOxford Biomedica(UK)Limited. comprise theresults of theCompanyanditssubsidiaryundertakings(togetherreferred toastheGroup). and listedontheLondonStock Exchange. Theconsolidated financialstatements for theyearended31December2018 Oxford Biomedicaplc(theCompany)isapubliccompanylimitedbyshares, incorporated anddomiciledinEngland, 1. Accountingpolicies for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements

£10,057,760 andrightof useassetsof £9,820,408 witharetained earningsimpactof £237,352 at 1 January2019. Based oninformation currently available, the Group estimates that itwillrecognise additionalleaseliabilitiesof and theexpenserecognised. recognised assetsandliabilitiesonlytotheextentthat there wasatimingdifference betweenactualleasepayments Previously, theGroup recognised operating leaseexpensesonastraight-line basisoverthetermof thelease,and depreciation charge for right-of-use assetsand interest expenseonleaseliabilities. (see note31).Thenature of expensesrelated tothoseleaseswill now changebecausetheGroup willrecognise a Lessee a is The Group willrecognise newassetsandliabilitiesfor itsoperating leasesof laboratory office facilitiesandequipment Group the which in Leases involving theLegalFormof aLease’. contains aLease’,SIC-15 ’Operating Leases–Incentives’andSIC-27 ’Evaluating theSubstanceof Transactions IFRS 16replaces existingleasesguidance,includingIAS17’Leases’,IFRIC4’DeterminingwhetheranArrangement similar tothecurrent standard –i.e.lessorscontinuetoclassifyleasesaseitherafinanceoroperating lease. payments. There are recognition exemptions for theshort-termleasesandlow-valueitems.Lessoraccountingremains asset representing itsrighttousetheunderlyingassetandaleaseliabilityrepresenting itobligation tomake lease IFRS 16introduces asingle, on-balance sheetleaseaccountingmodelfor lessees.Alesseerecognises aright-of-use to changeuntiltheGroup presents itsfirstfinancialstatements that includethe date ofinitialapplication. impacts of adoptingthestandard on1January2019maychangebecausethenew accountingpoliciesare subject that initial application of IFRS16willhave onitsconsolidated financialstatements, asdescribedbelow. Theactual The Group isrequired toadoptIFRS16’Leases’from 1January2019. TheGroup hasassessedtheestimated impact IFRS 16’Leases’ statements intheperiodof initialapplication. Of thosestandards that are notyeteffective, IFRS16isexpectedtohave amaterial impactontheGroup financial consolidated financialstatements. is permitted;howevertheGroup hasnotearlyadoptedtheneworamendedstandards inpreparing these A numberof newstandards are effective for theannualperiodbeginning after 1January2019andearlierapplication Standards issuedbutnotyeteffective — — — The following newIFRSshave beenendorsedbutare notyeteffective: — — — — The Group hasadoptedthefollowing IFRSsinthesefinancialstatements. Accounting developments Oxford Biomedica plc|Annual report andaccounts2018 — — — — — — — Amendments to IFRS 9 Financial Instruments. Amendments toIFRS9FinancialInstruments. IFRIC 23UncertaintyoverIncomeTax Treatments. IFRS 16Leases(note1). IFRS 15Revenuefrom ContractswithCustomers(note2). (non material impact). Amendments toIFRS2:Classification andMeasurement of Share-based Payment Transactions Contracts IFRS 9FinancialInstruments(nonmaterial impact). IFRIC 22Foreign Currency Transactions andAdvanceConsideration (nonmaterial impact).

Group financial statements 109 110 Oxford Biomedica plc|Annual report andaccounts2018 at whichthelicence transfers tothecustomer. rather than“righttoaccess”licences. Assuch,therevenue from these licencesisrecognised at thepointintime Technology licencesthat have beenestablished bythegroup have allbeendeterminedas“righttouse”licences, the serviceisrendered onapercentage of completionbasis. Revenues for providing process developmentactivitiestopartners are recognised duringtheperiod inwhich to recognise therevenue. Consideration received inexcess of thestage of completion willbedeferred untilsuchtimeasitisappropriate recognised profits exceed progress billingsispresented asacontractasset separately onthebalancesheet. process. Thegross amountduefrom customersonallpartnershipsinprogress for which costsincurred plus time astheprocesses are carriedout.Progress isdeterminedbasedontheachievement of verifiable stages of the Bioprocessing of clinical/commercial product for partners isrecognised onapercentage of completionbasisover Platform research anddevelopmentprogrammes. development servicestopartners,product andtechnologylicencetransactions, royalties, options,andfunded Revenue comprisesincomederivedfrom bioprocessing of clinicalproduct for partners,fees charged for providing Revenue income intheperiodwhichtheyarise. sheet date. Differences arisingduetoexchange rate fluctuations are taken tothestatement ofcomprehensive Assets andliabilitiesinforeign currencies are retranslated intosterlingat therates of exchange rulingat the balance Transactions inforeign currencies are translated intosterlingat therate of exchange rulingat thetransactiondate. Foreign currencies capital of Oxford Biomedica(UK)Limitedthat hasbeen accounted for bythemerger accountingmethod. combinations whichtookplacepriorto1January2004, namelytheacquisitionin1996of 100%of theissuedshare The Group andCompanyhave electednottoapplyIFRS3’Businesscombinations’ retrospectively tobusiness financial statements of subsidiariestobringaccountingpoliciesusedintolinewiththose of theGroup. is recognised directly inthestatement of comprehensive income.Where necessary, adjustmentsare madetothe goodwill. Ifthecostof acquisitionislessthanthefairvalueof thenetassetsof thesubsidiaryacquired, thedifference cost of theacquisitionoverfairvalueof theGroup’s share of theidentifiablenetassetsacquired is recorded as initially at theirfairvaluesat theacquisitiondate, irrespective of theextentof anyminorityinterest. Anyexcess of the Identifiable assetsacquired, andliabilitiescontingentassumedinabusinesscombination are measured fair valueof theassetstransferred, equityinstrumentsissued,andliabilitiesincurred orassumedat thedate of exchange. Business combinations are accountedfor usingtheacquisitionmethod.Thecostof anacquisitionismeasured asthe All intragroup transactionsandbalancesare eliminated onconsolidation. Group does notcurrently have anyassociates. power togovernthefinancialandoperating policies of theentitysoastoobtainbenefits from itsactivities.The are consolidated from thedate at whichcontrol istransferred totheGroup. Control existswhere theGroup hasthe 31 Decembereachyear. Subsidiariesare entitiesthat are directly orindirectly controlled bytheGroup. Subsidiaries The consolidated financialstatements comprisetheCompanyanditssubsidiaryundertakings for theyearto Basis ofconsolidation with IAS17andIFRIC4. that itwillapplyIFRS16toallcontractsentered intobefore 1January2019andidentifiedasleasesinaccordance The Group planstoapplythepracticalexpedientsgrandfather thedefinition of aleaseontransition.Thismeans earnings at 1January2019, withnorestatement of comparative information. the cumulative effect of adoptingIFRS16willbe recognised asanadjustmenttotheopening balance of retained The Group planstoapplyIFRS16initiallyon1January2019, using themodified retrospective approach. Therefore, Transition for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements

incurred, orovertheestimated periodtocompletionof therelevant phaseof developmentorassociated clinicaltrials Non-binary milestonesare recognised onapercentage of completionbasisintheperiodwhichrelated costsare or achievementof specifiedsalesvolumes,are recognised infullwhenthe relevant eventhasoccurred. stipulated inthelicenceagreement have beenmet.Paymentslinked to“success”suchasregulatory filingorapproval, are binaryandwillberecognised infullonceitisdeemedhighlyprobable that thespecificperformance obligations Amounts receivable inrespect of milestonepaymentsare considered tobeseparate performance obligations which the licencetransfers tothecustomer. than “righttoaccess”licences.Assuch,therevenue from theselicencesisrecognised at thepointintimeat which Product licencesthat have beenestablishedbytheGroup have allbeendeterminedas“righttouse”licences,rather Product Non-cash revenues are recognised at fairvaluethrough profit andloss. Options totechnologylicencesare recognised whenthecustomerexercises theoptiontoobtainthat licence. been allocated totherelevant performance obligation. Amounts receivable ondeliveryof amilestoneperformance obligation represents variableconsideration andhave on apercentage of completionbasis,buttakingintoaccountthelikelihood of achievementof thedeliverable. Milestones related totheprovision of supportservicesare considered tobenon-binaryincentivesandare recognised incentives andwillberecognised infullonceitisdeemedhighlyprobable that theobligation willbemet. of, for example,support.Incentivesrelated totheachievementof specificdeliverablesare considered tobebinary Milestones that are considered tobebinary relate totheachievementof specificeventsrather thantheprovision stipulated intherelevant agreements or contracts.Eachmilestoneisdeterminedaseitherbinaryornon-binary. obligations astheyinvolvethetransfer of adistinctgoodorservice,determinedwithreference toconditions Milestones relating tobioprocessing orprocess developmentactivitieshave beenidentifiedasseparate performance deferred revenue isincludedinprepayments. included inaccruals.Where revenue isspread overanumberof accountingperiods, theroyalty attributable tothe arising from suchpartners’licencesare treated ascostof sales.Where royalties duehave notbeenpaidtheyare The Group’s products andtechnologiesincludetechnologyelementsthat are licensed from third parties.Royalties until suchtimeasitisappropriate torecognise thecost. completion of thecontract.Costsincurred inexcess of thestageof completionare recognised asworkinprogress directly attributable costs.Costsare recognised onapercentage of completionbasisdependent onthestageof The costof bioprocessing clinicalproduct for partnersincludestherawmaterials, labourcosts,overheadsandother licences. Cost of salescomprisesthecostof bioprocessing clinicalproduct for partnersandroyalties arisingonpartners’ Cost ofsales on thecost-to-costmethod. Research anddevelopmentrevenue andassociated costsare recognised overtime.Progress isdeterminedbased Royalty revenue isrecognised asthe underlyingsalesoccur. been allocated totherelevant performance obligation. Amounts receivable ondeliveryof amilestoneperformance obligation represents variableconsideration andhave Oxford Biomedica plc|Annual report andaccounts2018

.

Group financial statements 111 112 Oxford Biomedica plc|Annual report andaccounts2018 income received, itisincludedwithinotherreceivables onthebalance sheet. it isincludedwithindeferred income onthebalancesheet,whilstwhere grantincomerecognised exceeds grant bioprocessing costs,andadministrative expenses.Where grantincomereceived exceeds grantincomerecognised, statement of comprehensive income,andtherelated costsare includedwithinresearch, developmentand costs whichtheyare intendedtocompensate. Grantincomeisincludedasotheroperating incomewithinthe Income from governmentandothergrantsisrecognised overtheperiod necessarytomatch themwiththerelated Grants basis overtheleaseterm. leases. Costsinrespect of operating leasesare charged tothestatement of comprehensive income onastraight-line of ownership tothelessee.Noleaseshave beenclassifiedasfinanceleases.Allotherleases are classifiedasoperating Leases are classifiedasfinanceleaseswhenevertheterms oftheleasetransfer substantially alltherisks and rewards Leases are exercised theproceeds received are credited toequity. options that have vested,withnocharge for thoseoptionswhichwere forfeit priortovesting.Whenshare options exercisable basedonforfeiture suchthat at theendof thevestingperiod thecumulative charge reflects theactual At each financialyearend,theGroup revises itsestimate of thenumber of optionsthat are expectedtobecome of options grantedunderthedeferred bonusplanisbasedonthemarket valueat thedate of grantof theseoptions. Carlo modeltakingintoaccounttheperformance conditionsunderwhichtheoptionswere granted.Thefairvalue granted undertheLTIP schemes,whichincludesmarket conditionperformance criteria,ismeasured usingaMonte share optionschemesandshare save schemeismeasured usingtheBlack-Scholes model.Thefairvalueof options which theemployeesbecomeunconditionallyentitledtooptions.Thefairvalueof options grantedunderthe a corresponding increase inequity. Thefairvalueismeasured at thedate of grantandspread overtheperiodduring of options grantedisrecognised asanexpenseof employmentinthestatement of comprehensive incomewith bonus plansallowgroup employeestoacquire shares of theCompanysubjecttocertaincriteria.Thefairvalue The Group’s employeeshare optionschemes,longtermincentiveplans,save asyouearnschemeanddeferred Share basedpayments other post-retirement benefits. are heldseparately from thoseof theGroup inindependentlyadministered funds.TheGroup doesnotoffer any are charged tothestatement of comprehensive incomeonanaccrualsbasis.Theassetsof thepensionscheme Employee benefitcosts,notablyholidaypayandcontributionstotheGroup’s definedcontributionpensionplan, Employee benefitcosts been incurred. Otherdevelopmentexpenditure isrecognised asanexpensewhenincurred. as there was insufficientcertaintyaboutthe recognitioncriteria having beenmet atthepointexpenditure had product on astraight-linebasisovertheperiodof itsexpectedbenefit.Nosuchcostshave beencapitalisedtodate capitalised andhasafiniteusefullife isamortisedfrom thecommencement of thecommercial production of the status of regulatory approval, andtheabilitytomeasure costsreliably. Developmentexpenditure whichhasbeen will generate future economicbenefits,consideringfactorsincludingitscommercial andtechnological feasibility, Expenditure incurred ondevelopmentprojects isrecognised asanintangibleassetwhenitisprobable that theproject in theperiodwhichitisincurred. Research, developmentandbioprocessing expenditure ischarged tothestatement of comprehensive income Research, developmentandbioprocessing for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements

in whichtheassetorliabilityisrecovered orsettled. Measurement of deferred taxliabilitiesandassetsreflects thetaxconsequence expectedtofallfrom themanner sheet date. realised orliabilitysettled,basedontaxrates andlawsthat have beenenactedorsubstantiallybythebalance Deferred taxismeasured at theaverage taxrates that are expectedtoapplyintheperiodswhichassetis against whichthedeductibletemporarydifference canbeutilised. regarded asprobable that there willbesuitabletaxableprofits withinthesamejurisdictionin foreseeable future group. Anyremaining deferred taxassetisrecognised onlywhen,onthebasisof allavailable evidence, itcanbe Deferred taxliabilitiesmaybeoffset againstdeferred taxassetswithinthesametaxable entityorqualifyinglocaltax differences are differences betweenthecarryingamount ofthe Group’s assetsandliabilitiestheirtaxbase. Deferred taxiscalculated inrespect of alltemporarydifferences identified atthebalancesheet date. Temporary using thetaxrates andlawsthat have beenenacted,orsubstantiallybythebalancesheetdate. Current tax,includingUKcorporation taxandforeign tax,isprovided at amountsexpectedtobepaid(orrecovered) and withintradeotherreceivables inthebalancesheet. as areduction inresearch, developmentand bioprocessing costsinthestatement of comprehensive income, The Group alsoreceives aResearch andDevelopmentExpenditure Credit (’RDEC’) whichisaccountedfor asset includedwithincurrent assetsinthebalancesheetuntilsuchtimeasitisreceived. on anassessmentof likely receipt, isrecognised inthestatement of comprehensive incomewiththecorresponding The credit ispaidinarrears oncetaxreturns have beenfiledandagreed. Thetaxcredit earnedintheperiod,based The Group isentitledtoclaimtaxcredits intheUnitedKingdomfor certainresearch anddevelopmentexpenditure. Taxation effective interest rate method.Italsoincludesthe revaluation of externalloansdenominated ina foreign currency. Finance incomeandcostscompriseinterest incomeandinterest payableduringtheyear, calculated usingthe Finance incomeandcosts of comprehensive income. Gains andlossesontherevaluation of equityinstrumentsare recognised at fairvalueinthestatement Revaluation ofequityinstruments Oxford Biomedica plc|Annual report andaccounts2018

Group financial statements 113 114 research anddevelopmentorpatent costsare includedinintangibleassets. Intellectual property rightscomprisethird partypatent rights that have beenpurchased bytheGroup. Noin-house statement of comprehensive income. Impairment andamortisation charges are includedwithinresearch, developmentandbioprocessing costsinthe assumptions againstpastexperience. Due tothenoveltyandearlystageof developmentof theGroup’s products, itisnotpossibletobenchmarkthese The key assumptionsare managementestimates, basedwhere possibleonavailable information for similarproducts. — — — — Oxford Biomedica plc|Annual report andaccounts2018 — Key assumptionsinthediscountedcashflowcalculations are whether: disposal isusedastherecoverable amount.Value inuseiscalculated usingestimated discountedfuture cashflows. less coststosell,andvalueinuse.Where theassetisnolongerbeingdevelopedbyGroup fairvaluelesscostsof asset’s carryingamountexceeds itsrecoverable amount.Therecoverable amountisthehigherof anasset’sfairvalue identifiable cashflowsorcash-generating units.Impairmentlosses are recognised fortheamount bywhicheach For thepurposesof assessingimpairments,assetsare grouped at thelowestlevelsfor whichthere are separately of comprehensive income. occurs andprovision madewhere appropriate. Charges orcredits for impairmentare passedthrough thestatement The carryingvalueof non-financialassetsis reviewed annually for impairmentorearlierifanindication of impairment Impairment length of thepatent life; current livesrangefrom 5to19years. determined, theassetiscarriedat costbuttestedannuallyfor impairment.Intangibleassetsare amortisedoverthe economic life from thetimetheybecomeavailable for use. Where theusefullife of theintangibleassetcannotbe Where the intangibleassethasafinitelife, amortisation ischarged onastraight-linebasisover the remaining useful Amortisation recognised asintangibleassetsat fairvalue.Otheracquired intangibleassetsare initiallyrecognised at cost. Intellectual property andin-process research anddevelopmentacquired through business combinations are Initial recognition Intangible assets for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements — — — — — development cyclefor innovative medicines,thisperiodissignificantlylongerthan fiveyears. The cashflowprojections are along-term view, basedontheexpectedpatent life. Duetothelength of the The resulting cashreceipts are discountedat anappropriate discountrate. and market penetration. The cashflowprojections include estimates for sellingprice, royalty rates, population growth, diseaseincidence The Group receives aninitiallicencefee, milestonepaymentsandroyalties onsales. the product. The product isdevelopedbyacollaborative partnerwhofundsallfuture developmentcostsandmarkets

at theirfairvalue. are classifiedas available for salefinancialassets.Afterinitial recognition, available forsaleinvestments are measured Bank depositswithoriginalmaturities betweenthree monthsandtwelve monthsare includedincurrent assetsand Bank deposits Other investmentsheldbytheGroup are classifiedasfairvaluethrough profit andloss. Investments Financial assets expectation of future impairmentsbeingrequired after awritebackwasaccountedfor. will betheGroups trackrecord of improved financial results across thelastthree to four years,aswellthe recognised onitsinvestmentinsubsidiaries.Factors whichwillbetaken intoaccountwithregards tothisdecision At year endtheDirectors willassesstherequirement towritebackaportionorallof anyimpairmentpreviously appropriate external measure of thevalueof theCompany’ssubsidiariesfor thispurpose. subsidiaries isadjusted.TheDirectors considerthat reference tothemarket capitalisation of theGroup isan a triggerof animpairmentreview assetoutinIAS36, andthecarryingvalueof theCompany’sinvestmentsin and sustainedchangeinthebusinessresulting inadecrease inmarket capitalisation, theDirectors considerthistobe review performed concludesthat there isamaterial andsustainedshortfallinthemarket capitalisation, orasignificant At each yearendtheDirectors review thecarryingvalueof theCompany’sinvestmentinsubsidiaries.Where the Such investmentsare subjecttoreview, andanyimpairmentischarged tothestatement of comprehensive income. Investments insubsidiaryundertakings,includingshares andloans,are carriedat costlessanyimpairmentprovision. of these awards asacapitalcontributiontothesubsidiaries,resulting inanincrease inthecostof investment. been awarded toemployeesof subsidiarycompanies.Inaccordance withIFRS2,theCompanytreats thevalue Investments are carriedat costlessanyprovision madefor impairment.OptionsovertheCompany’s shares have Investments insubsidiaries leasehold improvements within fixed assets. Provisions for theanticipated costof restoring theleaseholdproperties totheiroriginalconditionare recognised as review isperformed. The bioprocessing plantsare reviewed annuallyfor impairmenttriggersand,where necessary, afullimpairment The assets’residual valuesandusefullivesare reviewed annually. Bioprocessing andlaboratory equipment Office equipmentandcomputers Leasehold improvements Freehold property begins whenitisavailable for use.Theprincipalannualrates usedfor thispurposeare: on astraight-linebasisovertheexpectedusefuleconomiclivesof theassetsconcerned.Depreciation of anasset Depreciation iscalculated towriteoff thecost of property, plantandequipmentlesstheirestimated residual values to itsworkingconditionfor itsintendeduse. depreciation. Costincludestheoriginalpurchase priceof theassetandanycostsattributable tobringingtheasset Property, plantandequipmentare carriedat cost,togetherwithanyincidentalexpensesof acquisition,less Property, plantandequipment Oxford Biomedica plc|Annual report andaccounts2018 (or theremaining leasetermifshorter) 20 –33%

20% 10% 10% 10%

Group financial statements 115

Group financial statements 117 Notes to the consolidated financial statements for the year ended 31 December 2018 Group financial statements 116 Inventories Provisions Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average Provisions for the anticipated cost of restoring the leasehold properties to their original condition are recognised method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable of resources will be required to settle the obligation; and the amount has been reliably estimated.

value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects the current Trade receivables market assessments of the time value of money and the risks specific to the obligations. The increase in the provision Trade receivables are recognised initially at the transaction price as these assets do not have significant financing due to the passage of time is recognised as finance costs. components and are subsequently measured at amortised cost. The Group recognises loss allowances for trade receivables under the expected credit loss model as established by evidence that the Group will not be able to collect Share capital all amounts due according to the original terms of the receivables. Ordinary shares are classified as equity. Costs of share issues are charged to the share premium account. Contract assets Merger reserve Contract assets relates to the Group’s rights to consideration for work completed but not billed at the reporting A merger reserve is used where more than 90% of the shares in a subsidiary are acquired and the consideration date for commercial development work and bioprocessing batches. The contract assets are transferred to trade includes the issue of new shares by the Company, thereby attracting merger relief under s612 and s613 of the receivables when the rights become unconditional. This usually occurs when the Group issues an invoice Companies Act 2006. to the customer. Warrant reserve Cash and cash equivalents The warrant reserve comprises warrants exercisable on the enlarged Group’s share capital which have been Cash and cash equivalents include cash in hand, bank deposits repayable on demand, and other short term highly fair valued and are exercisable over a period of time. liquid investments with original maturities of three months or less. 2. Critical accounting judgements and estimates Deposits In applying the Group’s accounting policies, management is required to make judgements and assumptions Deposits consists of amounts held in escrow and is included within other receivables within the Balance Sheet until concerning the future in a number of areas. Actual results may be different from those estimated using these such time as the restrictions relating to these items have been lifted. judgements and assumptions. We do not believe that there are any key sources of estimation uncertainty. The critical accounting judgements are set out below. Trade payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective IFRS 15 interest method. Trade payables are classified as current liabilities if payment is due within one year or less. If not, The Group has implemented a new accounting standard, IFRS 15 ’Revenue from contracts with customers’, from they are presented as non-current liabilities. 1 January 2018. Contract liabilities and deferred Income The new standard provides a single principles-based approach to the recognition of revenue from all contracts with The contract liabilities primarily relate to the advance consideration received from the customers for commercial customers and requires revenue to be recognised when or as performance obligations in a contract are performed. development work and bioprocessing batches, as well as options, grants and funded research and development The Group has adopted IFRS 15 applying the modified retrospective approach. No cumulative adjustment to equity activities. was required at 1 January 2018 as there was no change in the way performance obligations have been recognised due to the implementation of IFRS 15, other than as identified below. In accordance with the requirements of the Financial liability: loans Standard, where the modified retrospective approach is adopted, prior year results are not restated. On initial recognition, external loans are measured at fair value plus directly attributable transaction costs. In application of the standard the Group has identified three key areas of judgement within the existing collaboration On subsequent measurement, external loans are measured at amortised cost under the effective interest rate agreements, firstly in relation to the number of distinct performance obligations contained within each collaboration method. The effective interest rate method is a method of calculating the amortised cost of a financial liability agreement which include a licence, bioprocessing and process development activities within a single contract, and allocating the interest expense over the relevant period. The calculation of the effective interest rate takes secondly the appropriate allocation of revenue to each performance obligation to represent the stand-alone selling into account the estimated cash flows which consider all the contractual terms of the financial instrument, price of the obligation, and thirdly the appropriate recognition at a point-in-time or over time. The sales royalties including any embedded derivatives which are not subject to separation. 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. If the Group assesses that a loan has elements of both a liability and an equity component, the Group will account for the loan as a compound financial instrument separating out the individual elements into financial liabilities or equity As part of the IFRS 15 revenue analysis performed, the Group is planning to recognise partially funded research instruments. The liability and the equity components should be presented separately on the balance sheet. On initial and development incomes, previously recognised within other operating income in the statement of comprehensive recognition, the issuer of a compound instrument first measures the liability component at its fair value. The equity income, within revenue in this statement, in line with the development of this service within the business. In 2018, component is measured as the residual amount that results from deducting the fair value of the liability component the Group recognised £0.2 million (2017: £0.5 million) of this type of income. There are not expected to be any from the initial carrying amount of the instrument as a whole. This method is consistent with the requirements for other material impacts on reported revenue, and the prior period will not be restated. initial measurement of a financial liability in IFRS 9, and the definitions in IAS 32, and the framework of an equity instrument as a residual interest.

Oxford Biomedica plc | Annual report and accounts 2018 Oxford Biomedica plc | Annual report and accounts 2018 118 — Biomedica andBoehringerIngelheim.Aspartof theseagreements, theGroup hasrecognised revenues asfollows: fibrosis (CF).Concurrently withthis,aseparate optionand licenseagreement hasbeensignedbetweenOxford Gene TherapyConsortium(GTC) andImperialInnovations todevelopalong-termtherapyfor patients withcystic During 2018theGroup entered intoaprocess developmentcollaboration agreement withtheUKCystic Fibrosis — — — — — As partof thelicenseagreement theGroup isentitledtorecognise future revenues intermsof: — — — — — recognised revenues asfollows: During 2018theGroup entered intoalicenseagreement withAxovant. Aspartof thisagreement, the Group has — — — — As partof thecollaboration theGroup isentitledtorecognise future revenues intermsof: — Oxford Biomedica plc|Annual report andaccounts2018 — agreement, theGroup hasrecognised revenues asfollows: During 2018theGroup entered intoacollaboration andlicenseagreement withBioverativ (Sanofi). Aspart of this Revenue recognition for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements — — — — — — — — — — — — — — — — — which have been recognised as the work is completed. which have beenrecognised astheworkiscompleted. The provision of process developmentservicesandscale-upactivitiesfor itslentiviralvectorcysticfibrosis product Royalties basedonunderlyingsales. Bioprocessing incomeonapercentage of completionbasisasthemanufacturing iscompleted, recognised uponachievementof themilestone, Manufacturing andprocess development,diligence,product, regulatory andsalesmilestoneswhichwillbe vector OXB-102 (AXO-LENTI-PD) product astheworkiscompleted, The provision of process developmentservices,scale-upactivities,andtechnologytransfer activities for itslentiviral The transfer of know-howandongoingclinicaldevelopmentastheworkiscompleted, Provision of existing stockof OXB-102 asthat stockhasbeenmadeavailable toAxovant. (AXO-LENTI-PD) product whichhave beenrecognised astheworkiscompleted, The provision of process developmentservicesandscale-upactivitiesfor itslentiviralvectorOXB-102 The transfer of know-howandongoingclinicaldevelopmentastheworkiscompleted, £10.2 millionupongrantingof anexclusive licensetoourOXB-102 (nowAXO-LENTI-PD) and ProSavin products, £4.1 millionupongrantingof alicensetoourLentivectortechnology, provided. Royalties basedonunderlyingsalesandtechnologyaccessfees overtheperiodinwhichtechnologyis Bioprocessing incomeonapercentage of completionbasisasthemanufacturingiscompleted, upon achievementof themilestone, Process development, technologytransfer, product, regulatory andsalesmilestoneswhichwillberecognised as theworkiscompleted, The provision of process development servicesandscale-upactivitiesfor itslentiviralvectorhaemophiliaproducts which have beenrecognised astheworkiscompleted. The provision of process development servicesandscale-upactivitiesfor itslentiviralvectorhaemophiliaproducts £4.0 millionupongrantingof alicensetoourLentivectortechnology,

expected duration of oneyearorless, asallowedbyIFRS15. No information isprovided about remaining performance obligations at 31December2018that have anoriginal No revenue wasrecognised in2018for performance obligations satisfied inprevious periods. development workandbioprocessing batches, for whichrevenues are recognised onapercentage of completionbasis. The contractliabilitiesprimarilyrelate totheadvanceconsideration received from thecustomers for commercial when therightsbecomeunconditional.Thisusuallyoccurs whentheGroup issuesaninvoicetothecustomer. date for commercial developmentwork andbioprocessing batches. Thecontractassetsare transferred toreceivables The contractassetsrelates totheGroup’s rightstoconsideration for workcompletedbutnotbilledat thereporting with customers. The following tableprovides information aboutreceivables, contractassets andcontractliabilitiesfrom contracts Contract balances of review with Novartis.Accordingly, theremaining $3.8 million(£2.8 million)of revenue wasrecognised in2017. had beenmetonthebasisthat theyhadachievedthescaleup,andsubmissionbeenthrough thefirstlevels This wasformally acceptedbyNovartisinJanuary2018. TheGroup concludedthat thecriteriafor revenue recognition was recognised in2016. During2017theGroup achievedthetarget scale upandsubmitteddocumentssupportingthis. of their suspensionprocess. Dependentonproductivity theGroup couldbeawarded upto$4million.$250,000 In 2017theGroup wasdueacontractuallyagreed stepmilestonefrom Novartisbasedontheincreased scale-up with Novartis.Accordingly, atotalof $1.8 million(£1.3million)wasrecognised asrevenue in2017. on thebasisthat theyhadcompletedtheprocedures andthesubmissionhadbeenthrough thefirstlevels of review agreed byNovartisinJanuary2018, theGroup concludedthat thecriteriafor revenue recognition hadbeenmet to Novartisinpreparation of theirsuspensionprocess clinicalsubmission.Althoughthemilestonewasformally In 2017theGroup recognised acontractually agreed milestonefor $1.8 millionfor theprovision of support revenues of £2.8 million(2017:£2.0 million)withregards tothisitem. at the minimumcapacityrequirement peryearthecontract.In2018Group have therefore recognised be recognised overthecapacityreservation termbasedonthenumberof batches completedperyear, capped reservation coveringtheperiodfrom 2017to2019. TheGroup have determinedthat thisrevenue should Under the2017Novartiscontractanup-front fee of $10millionwasduefor athree yearminimumcapacity excursion onacustomerstockshipmentincludedwithinrevenues in2017. In 2018theGroup received £0.5 millionfrom ourinsurer withregards toalosssuffered duetoatemperature — — — — — As partof thelicenseagreement theGroup isentitledtorecognise future revenues intermsof: Contract Assets Trade Receivables Oxford Biomedica plc|Annual report andaccounts2018 Contract Liabilities — — — — — Royalties basedonunderlyingsales. Bioprocessing incomeonapercentage of completionbasisasthemanufacturingiscompleted, achievement of themilestone, Product development, technologytransfer, regulatory andsalesmilestones which willberecognised upon vector cysticfibrosis product astheworkiscompleted, The provision of process developmentservices,scale-upactivities,andtechnologytransfer activitiesfor itslentiviral The grantingof alicensetoourLentivectortechnology, (18,485) 15,408 £’000 8,886 2018 2018

(13,072) £’000

2017 2017 5,705 8,681

Group financial statements 119 120 Oxford Biomedica plc|Annual report andaccounts2018 stipulated intherelevant agreements orcontracts. Milestones are determinedbyspecificconditions Milestone paymentsrelating toproduct licences. property andknow-howof theGroup. The licencesestablishrightstotheintellectual Product andtechnologylicences. contracts. stipulated intherelevant agreements or Milestones are determinedbyspecificconditions or process developmentactivities. are madeunderexclusive licence. manufactured. Thisisbecausethoseproducts all of theworkinprogress astheproduct isbeing bioprocessing of product, thecustomercontrols The Group hasdeterminedthat for the product for partners. Bioprocessing of clinicalandcommercial of performanceobligations Nature andtimingofsatisfaction between 30and60days. services setoutbelow, paymenttermsare negotiated onacustomerbybasis, howeverthisistypically in contractswithcustomers,includingsignificantpaymentterms,andthe related revenue recognition policies.For The following tableprovides information aboutthenature andtimingof thesatisfaction of performance obligations Revenue ismeasured basedontheconsideration specifiedinacontractwithcustomer. Performance obligations andrevenuepolicies for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Research anddevelopmentfunding. Royalties. Milestone receivables relating tobioprocessing activities topartners. Revenues for providing process development

each milestone is determined as either binary each milestoneisdeterminedaseitherbinary When acontractwithcustomerisidentified, licence transfers tothecustomer. recognised at thepoint intimeat whichthe As such,therevenue from theselicencesis licences, rather than“righttoaccess”licences. Group have allbeendeterminedas“righttouse” The licencesthat have beenestablishedbythe percentage of completionbasis. Non-binary milestonesare recognised ona obligation willbemet. once itisdeemedhighlyprobable that the A binarymilestonewillberecognised infull support: events rather thantheprovision of, for example, binary relate totheachievementof specific non-binary. Milestonesthat are considered tobe each milestoneisdeterminedaseitherbinaryor When acontractwithcustomerisidentified, Un-invoiced amountsare presented as achievement of verifiablestages of theprocess. Progress isdeterminedbasedonthe over timeastheprocesses are carriedout. Revenue andassociated costsare recognised Revenue recognitionunderIFRS15 on apercentage of completionbasis. Non-binary milestonesare recognised obligation willbemet. once itisdeemedhighlyprobable that the A binarymilestonewillberecognised infull of, for example,support: of specificeventsrather thantheprovision to bebinaryrelate totheachievement or non-binary. Milestonesthat are considered contract assets. cost-to-cost method. over time.Progress isdeterminedbasedonthe Revenue andassociated costsare recognised Recognised astheunderlyingsalesoccur. basis. are provided onapercentage of completion Revenue isrecognised overtimeastheservices

execution of thelicence. the Group recognised revenue infullon the Group andthelicencehadnofixed enddate, and there were noongoingcommitmentsfrom Where theamountreceived wasnon-refundable likelihood of achievementof thedeliverable. completion basis,buttakingintoaccountthe services are recognised onapercentage of Milestones related totheprovision of support incentive willbereceived. and whenthere isahighprobability that the identifiable deliverableshave beencompleted adjusted basisoncemostof theworkor deliverables were recognised onaprobability Milestones related totheachievementof specific Revenue recognitionunderIAS18 in the period in which related costs incurred, in theperiodwhichrelated costsincurred, Otherwise, amountsreceivable were recognised relevant eventoccurred. sales volumes,are recognised infullwhenthe filing orapproval, orachievement of specified Payments linked to“success”suchas regulatory licence agreement have beenmet. when thespecificconditionsstipulated inthe Milestone paymentswere recognised asrevenue Revenue wasrecognised ona’percentage research anddevelopmentactivities. corresponds withtheperformance of thefunded Other incomewasrecognised overaperiodthat Recognised astheunderlyingsalesoccur. clinical trials. the relevant phaseof developmentorassociated or overtheestimated periodtocompletionof of completionbasis. in whichtheserviceisrendered onapercentage Revenue wasrecognised duringtheperiod completion of theprocess at thereporting date. of completion’basisdependentonthestageof

The fairvalueof shorttermdeposits withamaturity of oneyearorlessisassumed tobethebookvalue. Fair valueestimates and hedgeaccountinghas notbeenused. There were nomaterial derivatives at 31December2018or2017which have required separation, Derivative financialinstrumentsandhedging Trade debtorsare monitored tominimisetheriskof loss(note15). of at leastA,inlinewiththeGroup’s policytominimisetheriskof loss. Cash balancesare mainlyheldonshortandmedium-termdeposits withfinancialinstitutionsacredit rating (c) Credit risks (2017: £403,000). If interest rates hadbeen1%higherin2018theimpactoncashinterest paid wouldhave been£555,000 level of bankinterest rates, interest receivable onbank depositsin2018wasjust£71,000 (2017:£38,000). funds tomeetdayoperational requirements andpreserving thesecurityof investedfunds.Withthecurrent low The Group’s policyistomaximiseinterest receivable ondeposits,subjecttomaintainingaccesssufficientliquid of £1.2 millionisaccountedfor asequity. is accountedfor asa£41.2million(2017:£36.9 million)balancewithinloans,andthefairvalueof thewarrants in July2017. Thefairvalueof theloannetof capitalisedlegalandassociated finance costs at 31December2018 of the facilitywasdrawndownasat 30June2017whiletheremaining $5millionof theloanfacilitywasdrawndown On 29June2017theGroup establisheda$55millionloanfacilitywithOaktree CapitalManagement.$50million (b) Interest rate risk hedging of foreign currency cashflowsisundertaken. £156,000 (2017: £37,000). TheGroup’s policyistoholdthemajorityof itsfundsinSterling andUSDollars.Noother Had thepoundbeen10%weaker inrelation totheEuro, theincreased costin2018wouldhave beenapproximately The Group alsohasexposure tothe£/€exchange rate duetotheneedfundexpenditure denominated inEuros. to anunrealised foreign exchange gain/lossof £4.1 million(2017:£3.3 million)ontheoutstandingloanbalance. had animpactof approximately £3,054,000 (2017:£336,000) onnetrevenue overtheyearandwouldlead risk for furtherdetailswithregards totheOaktree loan).A10%difference inthe£/$exchange rate wouldhave of the financecostsandany related future repayment of capitalwillbeinDollars(please refer toInterest rate were payableinEuros andUSDollars. Themajorityof operating costsare denominated inSterling butmost In 2018theGroup’s revenues were mostlyreceivable inSterling andUSDollars,certainof itsexpenditures (a) Foreign exchange risk policy nottoundertake anytradinginfinancialinstruments. who submitsreports at eachboard meeting.TheGroup doesnotusefinancialderivatives, anditistheGroup’s of whichisreviewed annually. TheGroup’s agreed policiesare implementedbytheChiefFinancialOfficer, UK domiciled.Monitoringof financialriskispart of theBoard’s ongoingriskmanagement,theeffectiveness The Group hasasimplecorporate structure withtheCompanyanditsonlyoperating subsidiarybothbeing Financial riskfactors 3. Financialriskmanagement in thisannualreport includingtheDirectors Report(page90)andnote1tothefinancialstatements (page108). concern status of theGroup. Theconclusionsof theseestimates andjudgementsare reported inseveralplaces Management andtheDirectors have hadtomake estimates andimportantjudgementswhenassessingthegoing Going concern Oxford Biomedica plc|Annual report andaccounts2018

Group financial statements 121 122 Oxford Biomedica plc|Annual report andaccounts2018 Group in placeduringtheyear. structure tominimisethecostof capital.There have beennocovenantbreaches inrelation totheloanagreements in order toprovide returns toshareholders andbenefits for otherstakeholders, andtomaintainanoptimalcapital The Group’s objectiveswhenmanagingcapitalare tosafeguard theGroup’s abilitytocontinueasagoingconcern Capital Management for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Revenue 2018 of segments. a primarymeasure usedfor thepurposeof makingdecisionsaboutallocating resources andassessingperformance Revenues, Operating EBITDA andOperating profit/(loss) represent ourmeasures of segmentprofit &lossasthey are Revenues, Operating EBITDA andOperating profit/(loss)bysegment segment (previously ’Partnering’),rather thanforming partof the“Product“ segment(previously ’R&D’). processes andbringdevelopment&manufacturingcostsdownisnowincludedwithinthenewlynamed’Platform’ being managed.Internaltechnologyprojects todevelopnewpotentiallysaleabletechnology, improve ourcurrent During 2017achangewasmadetothebusinesssegmentsmonitored bySETtobetterreflect thewaybusinessis (ii)  (i) in twobusinesssegments: Business Officer, ChiefOperations OfficerandChiefPeopleOfficer. Group TheSET monitors the performance of the Executive Directors, ChiefProject andDevelopmentOfficer, Chief TechnicalOfficer, ChiefScientific Chief Officer, The chiefoperating decision-makers have beenidentifiedastheSeniorExecutive comprisingthe Team (SET), 4. Segmentalanalysis 1. Revenue 2017 Net debt Operating EBITDA Other operating income Profit before tax Net financecost Operating profit Revaluation of investments Depreciation, amortisation andshare basedpayment Operating EBITDA Other operating income Loss before tax Net financecost Operating profit/(loss) Revaluation of investments Depreciation, amortisation andshare basedpayment Equity Debt/equity Operating EBITDA, beingearningsbefore interest, tax,depreciation, amortisation, revaluation of investmentsandthe share based paymentcharge, isconsidered bytheDirectors to giveafairer viewof theyear-on-year comparisonof tradingperformance. therapy products whichare owned bytheGroup, orout-licensedtocustomers. Product –thissegmentconsistsof theclinicalandpreclinical developmentof invivoandexgenecell undertaken for third parties.Italsoincludesinternaltechnologydevelopmentsandtechnicalintellectualproperty. Platform –thissegmentconsistsof therevenue generating bioprocessing andprocess developmentactivities ¹ ¹ Platform Platform 55,004 (4,358) (5,035) 37,590 11,368 £’000 £’000 5,983 2,297 9,743 2,917 1,774 645 179

Product Product (1,090) (4,786) (5,847) (1,061) 11,774 £’000 £’000 2,547 3,637 419 34,741 £’000 8,909 – – – – 2018 2018 26%

(11,761) (6,096) (6,093) (5,668) (5,448) (8,901) (1,869) 66,778 13,380 37,590 £’000 £’000 £’000 22,535 13,915 Total Total 5,983 1,064 2,297 2017 2017 5,014 6,146 367%

1,774

Revenue bycustomerlocation revenues derivepredominantly from Europe withalarge increase inrest of world(UnitedStates) revenues in2018: The Group’s revenue deriveswhollyfrom assetslocated intheUnitedKingdom.Analysedbylocation theGroup’s Revenue bygeographicallocation more than10%of theGroup’s revenue in2018. Our customerbaseincludesNovartis,Axovant, Bioverativ (Sanofi) andOrchard Therapeutics whicheachgenerated development Bioprocessing/Commercial 2017 development Bioprocessing/Commercial 2018 Revenue showninthetablebelowisdenominated inGBPandisgenerated intheUK. Revenue isdisaggregated bythetypeof revenue whichisgenerated bythecommercial arrangement. Disaggregation ofrevenue or reviewed bythechiefoperating decision-maker. Allassets are located withintheUnitedKingdom. A segmentalorgeographicalsplitof assetsandliabilitiesisnotprovided becausethisinformation isnotreceived by thechiefoperating decision-maker andtheoriginof allrevenues istheUnitedKingdom. A geographicalsplitof operating lossisnotprovided becausethisinformation isnotreceived orreviewed specifically are apportionedbetweenthesegmentsusing relevant metricssuchasheadcountordirect costs. Costs are allocated tothesegmentsonaspecificbasisasfarpossible.Costswhichcannot readily beallocated segment. 2018includes£0.2 million(2017:£0.8 million)of partiallyfundeddevelopmentincome. income todevelopoursupplychaincapabilitiesof £0.5 million(2017:£0.2 million)isincludedwithinthePlatform which isusedtofundclinicalandpre-clinical developmentandisincludedwithintheProduct segment.Grant Other operating incomeof £1.1million(2017:£1.8 million)includesgrantincomeof £0.4 million(2017:£0.8 million)

Europe Oxford Biomedica plc|Annual report andaccounts2018 Total Licence fees &Milestones Total Licence fees &Milestones Rest of world Total revenue Platform Platform 55,004 55,004 39,034 37,590 31,849 31,849 15,970 £’000 £’000 5,741 5,741

Product Product 10,304 41,542 25,236 66,778 11,774 £’000 £’000 £’000 1,470 2018 2018 – – –

40,504 66,778 66,778 37,590

36,398 31,849 31,849 26,274 £’000 £’000 £’000 37,590 Total Total 2017 2017 5,741 1,192

Group financial statements 123 124 Oxford Biomedica plc|Annual report andaccounts2018 31 December2018duetothe devaluation of sterlingagainstthedollar, andinterest accruedonthecapitalisedbalance. US$ three monthLIBOR.Theloanbalance hasincreased from £36.9 millionat 31December 2017to£41.2millionat Capital Management.Thenew facilityprovides for increased fundingtogether withalowerinterest rate of 9%plus On 29June2017theGroup re-financed itsloanfacility at alowercash costwithanew$55.0 millionfacilitywithOaktree a lossonearlyextinguishment of theOberlandfacilityof £3.9 million included withininterest payableof £9.4 million. as theremaining 4.5% previously accruedtoprovide areturn of 15%perannumtoOberland.TheGroup alsoincurred Up to29June2017, interest payableconsistedof thecashinterest paidontheOberlandloanfacilityat 10.5%, aswell Unwinding of discountinprovisions (note20) Finance costs: Group 6. Financeincomeandcosts The Companyhadnoemployeesduringtheyear(2017:zero). financial statements. Director, isprovided intheauditedpartof theDirectors’ remuneration report onpage74 which forms partof these Senior Executive Team. Further information abouttheremuneration of individualDirectors, includingthehighestpaid The key managementfigures aboveincludeExecutive andNon-Executive Directors andtheothermembers of the Key managementcompensation Employee benefitcosts and bioprocessing By activity The monthlyaverage numberof persons(includingExecutive Directors) employedbytheGroup duringtheyearwas: 5. EmployeesandDirectors for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Total Total financeincome Bank interest receivable Finance income: Total Share basedpayments Other pensioncosts Social securitycosts Wages andsalaries Total employeebenefitcosts Share basedpayments(note26) Other pensioncosts(note30) Social securitycosts Wages andsalaries Research, development Research, development Office andmanagement Interest payable Revaluation of liabilitiesinforeign currency Total financecosts Net financeincome

Number 20,444 25,233 £’000 £’000 4,814 3,267 1,091 2,411 1,277 2018 2018 2018 2018 350 788 186 572 377 (6,220) (8,901) (2,744) (8,972) 27 £’000 2018 2018

(8) 71 71

Number

(6,093) 18,094 £’000 £’000 £’000 (9,414) (6,131) 14,771

2017 2017 2017 2017 2017 2017 2017 2,334 3,307 3,291 1,616 420 958 295 395 749 158 271 38 38 (8) 24

Total Total Net (profit)/loss on foreign exchange Operating leasepayments used inbioprocessing Raw materials andconsumables Impairment of intangibleassets Employee benefitcosts Amortisation Depreciation of property, plant Services provided provided Services and equipment 7. Expensesbynature as detailedbelow: During theyearGroup (includingitssubsidiaries)obtainedservicesfrom theGroup’s auditorsandtheirassociates income. Depreciation ischarged toresearch, developmentandbioprocessing costsinthestatement of comprehensive by Oxford BiomedicaUKLtd andrecharged totheCompany. Company employeebenefitcosts of £365,000 (2017:£280,000) relates toNon-Executive costspaid by theGroup’scurrentauditors Services provided provided Services Oxford Biomedica plc|Annual report andaccounts2018

by theGroup’spreviousauditors

Fees payablefor otherservices: Fees payablefor theauditof theparent companyandconsolidated financial statements Fees payablefor otherservices: Fees payablefor theauditof theparent companyandconsolidated financial statements

Tax complianceservices Other services Other services Review of interimresults Additional fees relating toprioryearaudit The auditof theCompany’ssubsidiaries The auditof theCompany’ssubsidiaries

Notes 12 11 11 5 (1,305) 25,223 £’000 9,825 4,332 2018 Group 30 25 – 18,094 £’000 7,833 4,113 2017 262 287 143 971

£’000 £’000 £’000 2018 2018 2018 Company 365 178 125 Group Group 20 39 25 25 14 – – – – – – – – – 8 £’000 £’000 £’000 2017 2017 2017 200 280 120 25 35 15 – – – – – – – – – – – 5

Group financial statements 125 126 Profit/(Loss) onordinary activitiesbefore taxmultiplied Profit/(Loss) onordinary activitiesbefore tax Current tax Current tax United Kingdomcorporation taxresearch anddevelopmentcredit Adjustments inrespect of priorperiods: Overseas taxation United Kingdomcorporation taxresearch anddevelopmentcredit R&D relief mark-up onexpenses Expenses notdeductiblefor taxpurposes Effects of: Total taxcreditfortheyear Adjustments inrespect of priorperiods Tax lossescarriedforward tofuture periods Overseas tax Deferred taxnotrecognised Tax rate changes Recognition of previously unrecognised taxlosses Tax deductionfor share options less thanshare optionaccountingcharge Income nottaxable by thestandard rate of corporation taxintheUKof 19.00% (2017:19.25%) (2017: £89.5 million).Of theGroup taxlosses,£91.1million(2017:£89.5 million)arose inthe UnitedKingdom. At 31December2018, theGroup hadtax lossestobecarriedforward of approximately £91.1million are explainedbelow: The taxcredit for theyearishigher(2017:higher)thanstandard rate of corporation taxintheUK.Thedifferences The Companyhasnotaxliability, norisitentitledtotaxcredits (2017:£nil). anticipated taxreceipt. The adjustmentof current taxinrespect of prior yearof £528,000 (2017:£530,000) relates toahigherthan Taxation Credit Deferred tax Adjustments inrespect of priorperiods Relating totheorigination of timingallowances Deferred tax Oxford Biomedica plc|Annual report andaccounts2018 The amountsfor 2018have notyetbeenagreed withtherelevant taxauthorities. recognised inthefinancialstatements butnotyet received isincludedincurrent taxassetsinthebalancesheet. tax research anddevelopmentcredit ispaidinarrears oncetaxreturns have beenfiledandagreed. Thetaxcredit the credit receivable bytheGroup for theyearlessoverseastaxpaidinyear. TheUnitedKingdomcorporation The amountincludedinthestatement of comprehensive incomefor theyearended31December 2018comprises The Group isentitledtoclaimtaxcredits intheUnitedKingdomfor certainresearch anddevelopmentexpenditure. 8. Taxation for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements

(1,880) (2,527) £’000 5,014 (963) (358) 2018 (387) 264 (32) (33) 953 (91) Group – – (11,761) (2,264) (2,744) (1,333) £’000 1,326 (442) (556) (134) 2017 645 14 – – –

(2,806) (1 ,575) (2,278) (2,278) (2,527) (1,129) £’000 £’000 (299) (963) (528) 2018 2018 Company (33) 279 312 133 Group – – – – – – – – –

(2,232) (2,744) (2,744) (1,207) (2,214) £’000 £’000 (530) (232)

2017 2017 232 18 – – – – – – – – – – – – _ Intangible assetscompriseintellectualproperty rights. 11. Intangibleassets not beenincludedinthesefinancialstatements. TheCompany’sloss for theyearwas£446,000 (2017:£1,207,000). As permittedbysection408of theCompaniesAct2006, theCompany’sstatement of comprehensive incomehas 10. Lossforthefinancialyear per ordinary share andthedilutedlossperordinary share inthepriorperiod. There were nopotentiallydilutiveoptionsinthepriorperiod.There istherefore nodifference betweenthebasicloss warrants outstandingat 31December2018(69,242,901). average numberof shares inissueduringtheperiodafter adjustingfor thedilutiveeffect of theshare optionsand The dilutedearningspershare of 10.89p hasbeencalculated bydividingtheearningsfor theperiodbyweighted (65,188,414; 2017:61,913,343 adjustedfor share consolidation (note23)). for theperiodbyweightedaverage numberof shares inissueduringtheyearended31December 2018 The basicearnings / (loss)pershare of 11.57p(2017:14.50p loss)hasbeencalculated bydividingtheearnings / (loss) 9. share Basicearnings / (loss)anddilutedearningsperordinary At 1January Accumulated amortisation andimpairment Net bookamountat 31 December At 31 December Impairment charge for theyear Amortisation charge for theyear The Companyhadnointangibleassetsat 31December2018 or31December2017. for theentity. There are currently noassetswithindefiniteusefullives. factors, there isnoforeseeable limittotheperiodoverwhich theassetisexpectedtogenerate netcashinflows An intangibleassetisregarded as having anindefiniteusefullife when,basedonananalysis of all of the relevant development andbioprocessing costs’inthestatement of comprehensive income. the remaining patent life of theasset.Amortisation of £25,000 (2017:£262,000) isincludedin ’Research, by theintellectualproperty rightsbecomeavailable for use.Amortisation iscalculated onastraight-line basisover For intangibleassetsregarded ashaving afiniteusefullife amortisation commenceswhenproducts underpinned During 2018, theGroup purchased adomainnamefor £45,000. Bavarian Nordic’s Prostvac product failedinitsphaseIIIstudy. During 2017, there wasawritedownof thePrimeBoosttechnologyandpoxvirus patent intangibleassetafter Oxford Biomedica plc|Annual report andaccounts2018 Cost at 31December Additions Cost at 1January £’000 5,494 5,636 5,519 5,591 2018 117 45 25 –

£’000

5,494 4,261 5,591 5,591 2017

262 971 97 –

Group financial statements 127 128 At 31December2018 Charge for theyear Additions at cost At 31December2018 At 1January2018 Accumulated depreciation The Companyhadnoproperty, plantandequipmentat 31December2018or2017. Net bookamountat 31 December2017 At 31 December2017 Disposals Charge for theyear At 1January2017 Accumulated depreciation Net bookamountat 31 December2018 Oxford Biomedica plc|Annual report andaccounts2018 At 31 December2017 Disposals Additions at cost At 1January2017 Cost 1. At 1January2018 Cost 12. Property, plantandequipment for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Included withinadditionstoleaseholdimprovements is£2,396,000 of assets underconstruction,representing ongoingconstructionworks at theOxBox bioprocessing facility. Freehold Freehold property property 20,902 16,865 14,959 21,283 21,171 21,171 4,306 £’000 £’000 2,000 6,324 4,306 2,306 2,018 269 112 – – improvements improvements Leasehold Leasehold Leasehold Leasehold (2,290) (2,290) 3,046 4,689 £’000 £’000 6,285 1,450 4,689 6,970 2,798 7,735 3,711 978 470 978 472 9 1 equipment and equipment and equipment and equipment and computers computers Office Office Office Office £’000 5,088 £’000 2,416 2,672 1,909 1,862 1,862 3,179 3,179 1,528 1,317 1,651 554 985 877 – – and laboratory and laboratory and laboratory and laboratory Bioprocessing Bioprocessing Bioprocessing Bioprocessing equipment equipment 12,337 £’000 4,462 £’000 5,686 6,488 6,651 3,477 1,288 7,875 3,174 6,651 2,516 3,174 658 163 – _

46,443 35,690 10,320 25,370 (2,290) (2,290) 35,690 14,652 10,320 31,791 10,753 36,011 £’000 £’000 4,332 8,497 1,969 4,113 Total Total investment inOrchard Therapeuticsis£11.0 million(2017:£3.0 million). of £6.0 million(2017:£2.3million)wasrecognised duringtheyear. Theaggregate fairvalue of theequity At year endtheinvestmentwasrevalued basedonthe31December2018share priceof $15.73, andagain from 1,111,924 to889,872. Subsequently, inNovember2018, Orchard Therapeuticsfloated onNasdaq. then re-designated asOrdinary shares, resulting inthenumberof shares ownedbyOxford Biomedicabeingadjusted In November2018, Orchard Therapeuticsconvertedeachof itsshares of capitalstockinto0.8003 shares. Thesewere Additional ordinary shares maybeissuedtoOxford BiomedicashouldtheGroup achievetheremaining milestones. of themostrecent placingof shares byOrchard Therapeuticspriortothemilestonebeingachieved. company at thetime,shares awarded were notvaluedbasedonobservablemarket data, butrather thevalue were recognised asrevenue duringtheyearuponachievementof themilestones.AsOrchard Therapeuticswasaprivate 188,462 ordinary shares inFebruary2018andafurther188,462 ordinary shares inAugust2018.These shares awarded Additional shares valuedat £2.0 millionwere awarded totheGroup ontheachievementof certainmilestones,being ordinary shares inOrchard Therapeuticsasconsideration for thelicensesgrantedunderagreement. On 29November2016, aspartof astrategic alliancewithOrchard Therapeutics,theGroup received 735,000 Investments: Group 13. Investmentsandloans Investments &Loans:Company At 1 January and31December At 1January Shares ingroupundertakings Total investmentsinsharesandloanstogroupundertakings At 31 December Loan advancedintheyear At 1January Financial assets:Loanstogroupundertakings Net bookamountat 31 December and31December At 1January Accumulated impairment At 31 December Additions intheyear(note26) At 1January Capital contributioninrespectofemployeeshareschemes Oxford Biomedica plc|Annual report andaccounts2018 The loantoOxford Biomedica(UK) hasnofixed terms of repayment. makes upalmostallof the value,considerablyexceeds thevalueof theloanandinvestmentmade bytheparent company. to group undertakingsasthemarket valueof theGroup, of whichOxfordBiomedica (UK)Ltd astheoperational company The application of theexpectedcredit lossmodel hashadnosignificantimpactonthelevel of impairment of the loan Total investmentsandloans At 31December Revaluation of investments Recognition of milestones At 1January

209,918 126,065 194,736 176,432 18,304 83,853 10,966 91,786 15,182

£’000 £’000 2,029 2,954 6,801 5,983 7,933 1,132 2018 2018

126,065 170,639 176,432 191,614

65,549 72,350 15,182 £’000 £’000 6,052

2,954 6,801 2,297 5,793 2017 2017 749 657 –

Group financial statements 129 130 Oxford Biomedica(UK)Limited in production orsoldonwards. TheCompanyholdsnoinventories. During 2018, theGroup wrote off £233,000 (2017:£53,000) of inventorywhichisnotexpectedtobeused to contractualbioprocessing obligations. Inventories are rawmaterials heldfor commercial bioprocessing purposesandwork-in-progress inventoryrelated Oxford Biomedica plc|Annual report andaccounts2018 Group 14. Inventories has beenrecognised upto31December2018. at 31 December2018noimpairmentcharge wasassessedtoberequired. Cumulative impairmentof £126.1 million Group isanappropriate externalmeasure of thevalue of theGroup for thispurpose.Followinganimpairmentreview in subsidiariesistoohigh,itadjusted.TheDirectors considerthat reference tothemarket capitalisation of the as setoutinIAS36. Where theimpairmentreview performed concludesthat thecarryingvalueof theinvestment resulting inadecrease inmarket capitalisation, theDirectors considerthistobeatriggerof animpairmentreview is amaterial andsustainedshortfallinthemarket capitalisation, orasignificantandsustainedchangeinthebusiness At eachyearendtheDirectors review thecarryingvalueof theCompany’sinvestmentinsubsidiaries.Where there All of theabovesubsidiarieshave beenconsolidated inthesefinancialstatements. shares to settlethe2013deferred bonusshare awards madetoExecutive Directors andemployees(note25). In addition,during2014, theGroup setuptheOxford BiomedicaEmployeeBenefit toholdmarket-purchased Trust (EBT) The registered office ofbothsubsidiariesisWindrushCourt, Transport Way, Oxford, OX4 6LT. Oxxon TherapeuticsLimited undertakings Interests insubsidiary for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Total inventory Work-in-progress Raw Materials incorporation Great Britain Great Britain Country of Country of 1p ordinary shares 1p ordinary shares Description of Description of shares held

Proportion of nominal value Proportion of nominalvalue of issued shares held by the of issuedshares heldbythe Group andCompany 100% 100% Gene therapy research Gene therapyresearch £’000 2,422 1,829 4,251 2018 Nature of business and development

Dormant £’000

3,332 1,895 1,437 2017

Total tradeandotherreceivables Prepayments Other taxreceivable Other receivables Contract assets Trade receivables Ageing of pastduebutnotimpaired tradereceivables: and innovation facilityandOxBox leasearrangements. Other receivables have increased dueto£4.0 millionof depositsheldinescrow aspartof thenewdiscovery which were pastdueat thereporting date, allof whichhave sincebeenreceived. Included intheGroup’s tradereceivables balanceare debtorswithacarryingamountof £1,768,000 (2017:£65,000) model hashadnosignificantimpactonthelevel of impairment of receivables. The fairvalueof tradeandotherreceivables isthecurrent bookvalues.Theapplication of theexpectedcredit loss 15. Trade andotherreceivables The carryingamountsof theGroup’s tradeandotherreceivables are denominated inthefollowing currencies: work package completes. commercial developmentworkorders accruedonapercentage completebasiswhichwillbeinvoicedastherelated which have beenaccruedasthespecificconditionsstipulated inthelicenseagreement have beenmet,and third parties,butwhichhasnotyetbeeninvoiced.Thebalancemainlyrelates tocommercial developmentmilestones Contract assetsof £8.9 million(2017:£8.7 million)ariseswhere workhasbeenundertaken whichisrecoverable from (£2.0 million)whiletheOaktree Facility isoutstanding(2017:$5million,£3.7 million). The Group isrequired undertheOaktree Facility tomaintaincashandequivalentsof notlessthan$2.5million 16. Cashandcashequivalents The Group doesnotholdanycollateral assecurity. The maximumexposure tocredit riskat thereporting date isthefairvalueof eachclassof receivable above. The Company’sreceivables are alldenominated inSterling. Oxford Biomedica plc|Annual report andaccounts2018 60+ days 30–60 days 0–30 days US Dollar Sterling 30,585 15,408 £’000 8,886 4,307 1,144 2018 840 Group 17,088 £’000 1,288 5,705 8,681 1,391 2017 23 28,098 30,585 £’000 £’000 £’000 2,487 1,768 1,768 2018 2018 2018 Company – – – – – – – –

16,684 17,088 £’000 £’000 £’000 2017 2017 2017 404 65 65 – – – – – – 9 9

Group financial statements 131 132 to bereleased astherelated performance obligations are satisfied overtheperiodasdescribedbelow: Contract liabilitiesconsistsprimarilyof deferred bioprocessing andprocess developmentrevenue, andisexpected from newcustomers. is Non-current) at theendof 2018dueto£0.5 millionof optionsand£5.0 millionof process developmentincome Contract liabilitieshasincreased from £13.1 millionat theendof 2017to£18.5 million(of which£1.8 million of theservicesbeingprovided. Contract liabilitiesariseswhentheGroup hasreceived paymentfor servicesinexcess of thestageof completion 18. Contract liabilitiesanddeferredIncome improvements for thenewOxBox facility. Accruals have increased significantlyfrom theprioryearasa result of purchases of equipmentandleasehold The Oaktree facilityissecured byapledgeover substantiallyallof theGroup’s assets. and theimpactof foreign exchange movements. expenses, wasfairvaluedat £37.7 million.Theloan balancehasincreased to£41.2milliondueaccruedinterest On initialrecognition, theOaktree loan,netof theexpenses incurred intherefinancing whichare treated asprepaid $2.5 million(2017:$5million)cashat alltimes. include financialcovenants relating totheachievement of revenue targets anda requirement tohold aminimum of the agreement theCompanyhasissued2,687,025 (postconsolidation) warrantstoOaktree (note28).Thetermsalso in thesecondyearandafurther0.25% inthethird year. Theloanwasissuedat anoriginaldiscountof 2.5%,andunder LIBOR, subjecttoaminimumof 1%.Subjecttoachievingcertain conditions,theinterest rate couldreduce by0.25% time subjecttoearlyprepayment fees andanexitfee. Theloancarriesaninterest rate of 9.0% plusUS$three month The Oaktree loanisrepayable nolater than29June2020althoughitmayberepaid, at theGroup’s discretion, at any The facilityhasbeenusedtoredeem thedebtfacilitywithOberland CapitalHealthcare. On 29June2017theGroup completedanew$55milliondebt facilitywithOaktree CapitalManagement("Oaktree"). and lossonearlyextinguishmentof £5.3 million. The OberlandFacility wasfullyrepaid on29June2017at acostof £36.3 millionincluding theaccruedinterest 19. Loans Years Oxford Biomedica plc|Annual report andaccounts2018 17. Trade andotherpayables for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Bioprocessing income Contract liabilities Process developmentincome Lease incentives Deferred Income Licence fees, optionsandmilestones Grant Total Total tradeandotherpayables Accruals Other taxation andsocialsecurity Trade payables £’000 9,242 9,074 168 0-1 – – –

11,422 £’000 6,906 £’000 8,589 3,746 1,504 7,085 2018 770 0-3 Group – – –

£’000 £’000 8,690 3,682 4,429 2017 500 500 0-5 579 – – – –

£’000 £’000 2,250 5,187 2,783 2018 0-10 Company 164 164 154 – – – –

10,578 23,518

£’000 2,250 2,783 7,085

Total 2017

822

81 81

– –

Loans (note19) tax (note17) Trade andotherpayablesexcluding Investments (note13) receivables (note15) Trade receivables andother Cash andcashequivalents(note16) Group 20. Provisions At 31December Additional provision recognised Utilisation of provision Unwinding of discount At 1January The Group hadthefollowing financialinstruments at 31Decembereachyear: in note3relating toriskmanagement. loans, andtradeotherpayables.Additionaldisclosures are setoutinthecorporate governancestatement and The Group andCompany’sfinancialinstrumentscomprisecashequivalents,tradeother receivables, 21. Financialinstruments The Companyhadnoprovisions at 31December2018or2017. therefore itisnotcurrently possibletoaccurately estimate therestoration costs. and QClaboratories, withspaceavailable for future expansion.Thisnewfacilityisstillunderconstructionand 45,000 sq.ft(4,200 sqm)for four GMPcleanroom suitesandtwofillfinishaswell offices, warehousing The newfacilityis84,000 sq. ft (7,800 sqm).TheGroup’s plannedPhaseIand2expansionwillfitoutaround The Group hassignedaleaseonnewfacilityinOxford, UK(OxBox) that isnearitsWindrushlaboratories. 2017. Theprovisions willbeutilisedat theendof theleasesiftheyare notrenewed. respectively, discountedusingtherate pertheBankof Englandnominalyieldcurve.The equivalentrate wasusedin innovation facilityproperties inOxford, UKtotheiroriginalconditionat theendof the leasetermsin2024 and2028 The dilapidations provisions relate totheanticipated costsof restoring theleaseholdYarnton andnewdiscovery

Oxford Biomedica plc|Annual report andaccounts2018 Total provisions Non-current Current Financial assets at fair value Financial assetsat fairvalue through profit&loss 10,966 10,966 £’000 2018 – – – – £’000 2,954 2,954 2017 – – – – 32,244 29,281 61,525 £’000 receivables 2018 Loans & Loans & – – –

28,738 14,409 14,329 £’000 2017 – – – Amortised costs, loans Amortised costs,loans & otherliabilities 52,108 10,652 41,153 £’000 £’000 £’000 1,287 1,287 1,287 2018 2018 2018 649 630 – – – – – 8

36,864 44,975 £’000 £’000 £’000 8,111 2017 2017 2017

630 630 630 622

– – – – – – 8

Group financial statements 133 134 US Dollars Sterling to theyearendduecompanyhaving IPO’dinNovember2018. There hasbeenachangeinthevaluation levelof theinvestmentinOrchard Therapeuticsfrom level3to1prior for furtherinformation. The investmentinOrchard Therapeuticsisclassifiedas at fairvaluethrough13 profit andloss.Please refer tonote Financial assetsclassifiedaslevel1inhierarchy Oxford Biomedica plc|Annual report andaccounts2018 The carryingamountsof theGroup’s cashandequivalentsare denominated inthefollowing currencies: book values. The Directors considerthat thefairvaluesof theGroup’s financialinstrumentsdonotdiffer significantly from their Fair value such derivatives identified at 31December2018or2017. are required tobeseparately accountedfor iftheymeetcertainrequirements setoutinthestandard. There were no In accordance withIFRS9’Financialinstruments:theGroup hasreviewed allcontractsfor embeddedderivatives that Floating rate instantaccessdepositsearnedinterest at prevailing bankrates. for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements US Dollar Sterling Year average average rate Weighted Weighted 28,684 32,244 0.48% 1.45% £’000 3,560 2018 2018 Year average average rate Weighted Weighted 10,486 14,329 0.66% 0.49% £’000 3,843 2017 2017

prevailing at 31December: are notincluded inthefollowing table.Anycashflowsbasedonfloating interest rates are basedoninterest rates The Group alsohasshort-termreceivables andpayablesthat ariseinthenormalcourseof businessandthese of interest paymentsare calculated usinginterest rates applicableat thedate of thestatement of financialposition. fair valueof Group borrowings at thedate of thestatement of financialposition.Contractualcashflowsin respect The following tableanalysesthecontractualundiscountedcashflowspayable, aswellthecarryingvalueand Maturity analysisoftheGroup’sfinancialliabilities Capital Interest Oaktree CapitalManagement 2018 Capital Interest Oaktree CapitalManagement 2017 Reconciliation inliabilitiesfromfinancingactivities at the endof thetermisfixed. All contractualpaymentsare inUSdollars.Interest paymentsare floating rate paymentswhilstthecapital repayment

Oxford Biomedica plc|Annual report andaccounts2018 At 31December2018(note19) Warrants recognised separately (note28) Oaktree facilitydrawndown Oberland loanrepayment Cash interest paid Foreign exchange movement Interest payable At 1January within within within within 1 year 1 year £’000 £’000 4,354 4,144 4,354 4,144 Due Due Due Due – – and 2years and 2years between 1 between 1 between 1 between 1 45,997 43,886 £’000 £’000 4,043 4,043 2,111 Due Due Due Due – and 3years and 3years between 2 between 2 between 2 between 2 43,490 41,494 £’000 £’000 1,996 Due Due Due Due – – – payments to payments to payments to payments to maturity maturity 36,864 (4,665) 43,886 50,351 41,153 41,494 51,677 10,183 £’000 £’000 £’000 2,744 6,210 6,465 2018 Total Total – – –

Carrying Carrying Carrying Carrying (10,800) (30,536)

36,864 36,864 36,864 34,389 38,897 (3,282) 41,153 (1,218) 41,153 £’000 £’000 £’000 value value 9,414 2017

– –

Group financial statements 135 136 At 31 December2017 Origination andreversal of temporarydifferences At 1January2017 At 31 December2018 Origination andreversal of temporarydifferences At 1January2018 At 31 December2018 Origination andreversal of temporarydifferences At 1January2018 Deferred tax(assets)/liabilities–notrecognised Group –notrecognised At 31 December2017 Origination andreversal of temporarydifferences At 1January2017 At 31 December2018 Origination andreversal of temporarydifferences At 1January2018 At 31 December2017 Origination andreversal of temporarydifferences At 1January2017 Oxford Biomedica plc|Annual report andaccounts2018 Deferred tax(assets)/liabilities Company –recognised Deferred tax(assets)/liabilities Group –recognised further to17%witheffect from 1April2020. The mainrate of corporation taxintheUKreduced from 20%to19%witheffect from 1April2017andwill reduce therefore onlyaportionof theassethasbeenrecognised. In lightof theGroup's historyof losses,recovery of thewholedeferred taxassetisnotsufficientlycertain,and The CompanyandtheGroup have recognised deferred taxbalancesasat 31December2018(2017:£nil). 22. Deferredtaxation for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements depreciation (1,071) (1,281) (1,071) £’000 (786) 285 285 210 Tax Tax Provisions £’000 (138) (133) (255) (133) 122 (5) (5) Tax losses Tax losses Tax losses (16,528) (16,378) (16,025) (16,378) (1,129) (1,129) (1,129) (1,129) (1,129) (1,129) £’000 £’000 £’000 (353) (150) (150) – – – – – – – – Share options investments investments Revaluation Revaluation Revaluation (1,564) (1,712) 1,408 £’000 £’000 £’000 1,408 (288) (148) (148) 140 of of of – – – – – – – – – –

(19,164) (17,730) (17,849) (17,730) (1,129) (1,434) (1,129) (1,129) £’000 £’000 £’000 Total Total Total 279 279 279 119 – – – – – – – – Share consolidation (3,285,053,650 1pshares convertedto65,701,073 50pshares) Allotted for cashinplacingandsubscription–174,346,817 (2017:nil)shares At 1January–3,107,704,224 (2017:3,088,047,310) shares sharesof1peach Ordinary Issued andfullypaid Group andCompany 23. Ordinary sharecapital 23. Ordinary Premium onexercise of share options Premium onshares issuedfor cashinplacingandsubscription At 1January Group andCompany 24. Sharepremiumaccount new consolidated ordinary shares of 50penceeach. On 30May2018, Oxford Biomedicaconsolidated itsexistingordinary shares of 1penceeachto65,701,073 at apriceof 11.7 pencepershare. Netproceeds after expenseswere £19.1 million. In March 2018theCompanyraised£20.5 million gross proceeds bywayof aplacingof 174,346,817 ordinary shares consolidation) shares Allotted onexercise of share options–462,507(2017:393,138 adjustedfor Costs associated withtheissueof shares Oxford Biomedica plc|Annual report andaccounts2018 At 31December–66,103,528 (2017:62,154,084 adjustedforconsolidation) shares At 31December 154,224 172,074 33,034 18,748 31,076 (1,376) £’000 £’000 1,712 2018 2018 246 478 –

154,036 154,224 30,879 31,076 £’000 £’000 2017 2017 188 197

– – – –

Group financial statements 137 138 Note 2–Optionsgrantedunderthe2015 Executive share optionscheme. Note 1–Restated following 50to1share consolidation. — — Oxford Biomedica plc|Annual report andaccounts2018 Options grantedtoemployeesundertheOxfordBiomedica 2007and2015ShareOptionSchemes Share optionsoutstandingat 31December2018have thefollowing expirydate andexercise prices: after whichtheoptionsexpire. Optionscannotbeexercised before thethird anniversaryof thedate of grant. date of grant.Theyare notsubjecttomarket conditionperformance criteriaandthelivesof theoptionsare tenyears, Options grantedunderthe2015Save AsYou EarnSchemehave fixed exercise pricesbasedonthemarket price at the the third anniversaryof thedate of grant. years, after whichtheoptionsexpire. Optionsgrantedunderthe2015Schemecannotnormallybeexercised before at the date of grant.Theyare notsubjecttomarket conditionperformance criteriaandthelivesof theoptionsare ten Options grantedunderthe2015Executive Share OptionSchemehave fixed exercise pricesbasedonthemarket price vest intranchesof 25%from thefirstto fourth anniversaries of thegrantdates. anniversary of thedate of grant.Optionsgrantedunderthe2007Schemeduring2012to2014, withoneexception, after whichtheoptionsexpire. Optionsgrantedpriorto2012cannotnormallybeexercised before thethird date of grant.Theyare notsubjecttomarket conditionperformance criteriaandthelivesof theoptionsare tenyears, Options grantedunderthe2007Share OptionSchemehave fixed exercise pricesbasedonthemarket price at the at either paroranilcostonthethird anniversaryof thedate of grant,andlapse10yearsafter being granted. The performance criteriaare describedintheDirectors’ remuneration report. LTIP awards made todate are exercisable Options grantedunderthe2007and2015LTIPs to — The Companyhasoutstandingshare optionsthat were issuedunderthefollowing schemes: 25. OptionsoversharesofOxfordBiomedica plc for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Failure tomeettheminimum performance criteriabythethird anniversaryresults inallthegrantedoptionslapsing. performance criteriaandwillvestonlyif, at thethird anniversaryof thegrant,performance criteriahave beenmet. as You Earn Scheme. Alloptiongrantsare at thediscretion of theRemuneration Committee. Incentive Plans(LTIP) andDeferred BonusPlan,andtootheremployeesunder theShare OptionSchemesandSave Share options are grantedtoExecutive Directors andselectedseniormanagersundertheCompany’sLongTerm — — — — 2018 Numberofshares — — — — — — — The 2007LongTerm IncentivePlan(LTIP) (approved February2007). The 2015Executive Share OptionScheme(approved May2015). The 2007Share OptionScheme(approved February2007). The 2015Save AsYou EarnScheme(approved May2015). The 2015Deferred BonusPlan(approved May2015). The 2013Deferred BonusPlan(approved February2014). The 2015LongTerm IncentivePlan(LTIP) (approved May2015). 1,057,559 340,995 271,506 221,256 101,757 22,406 40,314 47,114 12,211 – – 2 2 2 2 2017 Numberof shares 1,006,124 236,105 175,859 379,110 80,308 65,426 38,126 23,139 6,000 2,051 – 2 2 2 1 Exercise pricepershare Directors 100p to200p 270p to290p 115p to155p 80p to140p and other senior managers are subject to market condition andotherseniormanagersare subjecttomarket condition 490p 904p 290p 495p 305p 275p Date from whichexercisable

13/03/18 to01/06/18 16/05/19 to13/10/19 07/08/21 13/07/20 Vested Vested Vested Vested Vested Vested 13/03/25 to10/06/25 03/06/24 to17/10/24 08/05/22 to21/12/22 16/05/26 to13/10/26 15/03/21 to04/10/21 22/05/23 to19/11/23 Expiry date 07/08/28 25/03/19 13/07/27 13/10/18 Options grantedtoemployeesundertheOxfordBiomedica2015SaveAsYou EarnScheme Options grantedundertheOxfordBiomedica2007and2015LongTerm IncentivePlans Note 1–Restated following 50to1share consolidation. Options grantedtoemployeesundertheOxfordBiomedica 2013and2015DeferredBonusPlan The optionsgrantedunderthe2015Deferred BonusPlanwillbesatisfied bynewissueshares at thetime of exercise. (note 28).Duringtheyearnoshares (2017:1,325,035) from theEBTwere exercised. EBT isconsolidated at yearendwiththeshares heldintrustaccountedfor aspartof thetreasury reserve withinequity Oxford BiomedicaEmployeeBenefit As at 31December2018, Trust (EBT). allshares heldbytheEBThadvested.The The optionsgrantedunderthe2013Deferred BonusPlanwillbesatisfied bymarket-purchased shares heldbythe the grantdependentonoptionconditions.Optionswithavalueof £267,000 vestedduring2018(2017:£314,000). future dates and are exercisable at nilponeitherthefirstthree anniversaries of thegrantorthird anniversary of options. Theseoptionswillvestprovided that themanagersare stillemployedbytheGroup oncertainspecified The Executive Directors andcertainotherseniormanagershave beenawarded deferred bonusesintheform of share Deferred ShareAwards Note 3–Restated following 50to1share consolidation. Note 2–Optionsgrantedunderthe2015LTIP. Note 1–TheseLTIP awards willvestprovided that performance conditionsspecifiedintheDirectors’ remuneration report are met. of 707.20p (2017:8.85p pre-consolidation) per share. to 31December onexercisable optionsthat were above water, basedontheyear-end share price A provision of £437,000 (2017:£168,000) isincluded inaccrualsfor the potentialNIliabilityaccrued Certain optionsgrantedto UK employeescouldgiverisetoanational insurance(NI) liability onexercise. National Insuranceliability Note 1–Restated following 50to1share consolidation. Oxford Biomedica plc|Annual report andaccounts2018 2018 Numberofshares 2018 Numberofshares 2018 Numberofshares 2,449,380 1,028,263 178,909 231,256 144,466 379,209 363,558 116,723 114,731 113,158 142,000 196,912 48,422 53,900 78,907 27,078 81,257 77,283 93,349 72,679 1,2 1,2 – 2

2017 Numberof shares 2017 Numberof shares 2017 Numberof shares 1,085,960 2,391,161 224,025 383,982 178,911 103,484 299,077 152,054 210,915 116,724 63,808 99,966 217,600 80,001 107,339 67,022 127,170 20,000 – – – 1,2 1,2 3 1 1 2 Exercise pricepershare Exercise pricepershare Exercise pricepershare 330p 310p 725p 145p 50p 50p 50p 50p 0p 0p 0p 0p 0p 0p 0p 0p 0p Date from whichexercisable Date from whichexercisable Date from whichexercisable 04/08/19 to04/08/21 17/07/20 to25/09/20 14/05/17 to14/05/19 11/07/18 to11/07/20 11/07/18 04/08/21 12/10/20 16/05/19 01/10/18 10/10/21 13/10/19 Vested Vested Vested Vested Vested Vested Vested

17/07/27 to25/09/27 15/06/24 &14/10/24 20/6/24 to17/10/24

Expiry date Expiry date Expiry date 04/08/28 04/08/28 30/06/22 04/05/25 16/05/26 14/05/26 12/06/23 10/10/28 10/01/25 01/10/25 13/10/26 12/10/27 13/10/18 11/07/27

Group financial statements 139 140 Fair valueperoption Risk free rate (weightedaverage) Expected life (years) Expected volatility (weightedaverage) Total numberof shares underoption Vesting period(years) Exercise price Share priceat grantdate Fair valueperoption Risk free rate (weightedaverage) Expected life (years) Expected volatility (weightedaverage) Oxford Biomedica plc|Annual report andaccounts2018 LTIP awards (Modelused:MonteCarlo) Save AsYou Earnschemeawards (Modelused:BlackScholes) Share options(Modelused:BlackScholes) The fairvaluesof optionsgrantedduringtheyearwere calculated usingthefollowing assumptions: 26. Sharebasedpayments for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Fair valueperoption Risk free rate (weightedaverage) Expected life (years) Expected volatility (weightedaverage) Total numberof shares underoption Vesting period(years) Exercise price Share priceat grantdate Total numberof shares underoption Vesting period(years) Exercise price Share priceat grantdate Options awarded Options awarded Options awarded 10 October2018 LTIPs awarded 7 August2018 7 August2018 805.20p 342.06p 505.86p 888.10p 270.553 338.43p 724.66p 204,147 115,476 903.8p 888.1p 1.04% 0.81% 0.81% 0.0p 58% 58% 57% 3 3 3 3 3 3

350p+ 250p to350p 150p to250p 50p to150p Options: Exercisable at parorat nilcost Deferred bonus: Note 1–Restated following 50to1share consolidation. Exercisable at 31 December Outstanding at 31 December LTIP awards (optionsexercisable at parvalue1pornilcost) exercise priceat 31 December Exercisable at 31 December Outstanding at 31 December all of whichrelated toequity-settledshare basedpaymenttransactions. The totalcharge for theyearrelating toemployeeshare-based paymentplanswas£1,132,000 (2017:£749,000), 462,507 optionswere exercised in2018(2017:393,138), including53,174 of deferred bonusoptions(2017:56,316). price for optionsgrantedduringtheyearwas850.1p (2017:470p). Excluding theLTIP &Deferred Bonusawards whichare exercisable at par/nilvalue,theweightedaverage exercise during theyear, togetherwiththerelated weightedaverage exercise prices. The tablesbelowshowthemovementsinShare OptionScheme,Save AsYou EarnSchemeandtheLTIP Oxford Biomedica plc|Annual report andaccounts2018 Range ofexercise prices Share optionsexcluding LTIP Outstanding at 1January Exercisable at parorat nilcost LTIP: Outstanding at 1January Exercisable andwhere market priceexceeds Exercised Forfeited Share consolidation Granted Granted Cancelled Expired Exercised Exercised Share consolidation Granted Forfeited Exercised Cancelled

Weighted Weighted exercise exercise average average 290p 659p price 132p 175p (59,795,959) 15p 65,260,044 (2,056,185) (2,174,134) 0p (180,674) 1,421,117 (149,191) 250,880 250,880 Number 386,029 (28,985) 166,857 (6,685) 2,828,589 1,028,263 of shares 828,989 Number Number 379,209 337,828 215,881 38,419 Weighted average Weighted average Weighted average Weighted average exercise price (52,918,024) Contractual 54,297,969 remaining remaining life (years) life (years) 1,028,263 (300,000) (213,018) Number 204,147 421,186 (42,811) 474.9p 633.4p 299.7p 299.7p 419.2p 156.1p 337.7p 10.5p 2018 2018 2018 8.0p 6.8p 5.8p 6.7p 3.3p 8.8 6.8 6.9 4.4 8.1 7.5

Weighted Weighted exercise exercise average average price 495p 285p 125p 175p 20p 65,260,044 0p (4,202,453) (4,439,429) 24,120,663 (1,060,474) 50,841,737 9,478,677 9,478,677 1 Number 1,085,960 of shares 2,775,143 Number Number 554,969 383,982 270,270 414,318 65,644 – – – – – 1 Weighted average Weighted average exercise price (14,002,687) (13,726,730) Contractual

23,605,450 54,297,969 70,826,153 11,201,233 remaining remaining life (years) Number

2017 2017 2017 3.0p 3.0p 2.8p 5.0p 6.7p 9.4p 6.7p 5.1p 8.9 5.4 8.1 7.0 7.6 7.5 – – – – – – –

Group financial statements 141 142 At 31December2017 Issue of warrants Credit inrelation toemployeeshare schemes At 1January2017 At 31December2018 Share basedpayments At 31December2017 Credit inrelation toemployeeshare schemes Profit/(Loss) for theyear At 31 December Issue of warrants At 1January2018 At 1January Vesting of deferred share award Oxford Biomedica plc|Annual report andaccounts2018 At 1January2017 2018and31December At 1January 27. Accumulated losses for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Company related expensesandthisamounthasbeencredited tothewarrantreserve. and maybeexercised at anytimeoverthenexttenyears.Thewarrantshave beenfairvaluedat £1.2millionnetof equivalent to4.4% of theenlarged Group’s share capital.Thewarrantsare exercisable at thenominalshare priceof 1p Under theOaktree loanagreement theCompanyhasissued2,687,025 warrants(postconsolidation) toOaktree, All shares previously heldinthetreasury reserve have nowvestedleaving abalanceof nil(2017:nil)(note25). of merger relief tothepurchase of Oxxon TherapeuticsLimitedin2007. of Oxford Biomedica(UK)Ltd usingthemerger methodof accountingin1996, and£1,580,000 from theapplication The Group merger reserve at 31December2018and2017comprised£711,000 arisingfrom theconsolidation Group Group 28. Otherreserves or 31December2017. Neither theCompanynoritssubsidiaryundertakingshadreserves available for distributionat 31 December2018 Note 1– of 53,174 (2017:56,316 postconsolidation) of thesedeferred share awards (note25). (2017: £314,000) related tothevestingof deferred share awards madetoExecutive Directors andseniormanagers,less£153,000 (2017:118,000) inrelation totheexercise The credit toaccumulated lossesismadeupoutof thecharge for theyearrelating toemployeeshare-based paymentplansof £1,132,000 (2017:£749,000) (note26),£267,000 (182,663) (173,876) Warrant Warrant Warrant reserve reserve reserve 1,246 £’000 £’000 £’000 £’000 1,218 1,218 1,218 1,218 7,541 1,218 2018 1,218 1,218 Group – – – – – 1

(182,663) (174,489) reserve reserve reserve Merger Merger Merger (9,017) £’000 £’000 £’000 £’000 1,580 1,580 2,291 2,291 1,580 1,580 2,291 (102) 2017 945 – – – – (122,590) (123,077) Treasury Treasury Scheme Reserve reserve reserve £’000 £’000 £’000 £’000 6,801 6,052 Share 6,801 7,933 (446) 2018 1,132 (102) Company (41) 749 102 – – – –

(122,590) (121,383) 10,751 (1,207)

£’000 £’000 £’000 £’000 3,509 9,599 3,509 9,599 2,189 1,320 7,632

1,218 1,132 Total Total Total 2017 749 – – Net cashusedinoperations Adjustment for: Operating profit/(loss) Continuing operations 29. Cashflowsfromoperating activities and acorresponding credit toreserves. to thesubsidiaries,resulting inanincrease inthecostof investmentof £1,132,000 (2017:£749,000) (seenote13) statements (seenote26).Inaccordance withIFRS2theCompanyhastreated theawards asacapitalcontribution with IFRS2’Share-based Payment’theexpenseinrespect of theseawards isrecognised inthesubsidiaries’financial Options overtheCompany’sshares have beenawarded toemployeesof subsidiarycompanies. Inaccordance Changes inworkingcapital: Total leasecommitments Over fiveyears Later thanoneyearandnotlater thanfiveyears Not later thanoneyear Group The future aggregate minimumleasepaymentsundernon-cancellableoperating leasesare asfollows: 31. Operating leasecommitments–minimumpayments in accruals,were payableto theschemeat theyear-end. represents amountspayablebytheGroup tothescheme.Contributionsof £186,000 (2017:£138,000), included scheme are heldinindependentlyadministered funds.Thepensioncostcharge of £1,277,000 (2017:£958,000) The Group operates adefinedcontributionpensionscheme for itsDirectors andemployees.The assets of the 30. Pensioncommitments and againof £6.0 million(2017:£2.3million)ontherevaluation of theequityinvestmentat theendof theyear. Non cashgainsincludeequitystakes inOrchard Therapeuticsgrantedoncompletionof milestones(£2.0 million), The Companyhadnooperating leasecommitmentsduringtheyear(2017:none). Windrush laboratories inOxford, UK.Theleaseshave variousterms,escalation clauses andrenewal rights. a leasefor thenewdiscovery andinnovation facilityproperty andaleaseonnewfacility(Oxbox) that isneartoits manufacturing siteat Yarnton, Oxford underanon-cancellableoperating leaseagreement. TheGroup entered into The Group leasesequipmentundernon-cancellableoperating lease agreements. TheGroup continuestoleasethe Oxford Biomedica plc|Annual report andaccounts2018 Non-cash gains Increase ininventory Charge inrelation toemployeeshare schemes Increase/(decrease) inprovisions Charge for impairment Increase incontractliabilitiesanddeferred income Amortisation of intangibleassets Increase/(decrease) intradeandotherpayables Depreciation (Increase)/decrease intradeandotherreceivables (14,559) 10,446 (8,012) 13,915 £’000 4,332 1,246 9,214 2,732 2018 (919) Group 25 – 8

(11,183) (5,668) (2,297) (1,533) (1,130) £’000 2,687 9,759 4,113 2017 945 262 971 8 (1,483) 13,906 (1,575) £’000 £’000 4,532 8,532 2018 2018 Company 842 83 – – – – – – – – 9

(1,308)

(1,207)

£’000 £’000 2017 2017

568 330 (95) 144 94

(6) – – – – – – – –

Group financial statements 143 144 statements. persons at 31December2018(2017: none).Key personremuneration canbeseeninnote 5of thefinancial in January2019. There were nootheroutstanding balancesinrespect of transactionswithDirectors andconnected There isanoutstandingbalanceof £10,767 (2017:£5,000) owed toLorenzo Tallarigo at yearend.This waspaid Company: transactionswithrelated parties There were notransactions(2017:none)withOxxon TherapeuticsLimited. to thesubsidiaries,resulting inacumulative increase inthecostof investment of £7,892,000 (2017:£6,801,000). of subsidiarycompanies.Inaccordance withIFRS2,theCompanyhastreated theawards asacapitalcontribution In additiontothetransactionsabove,optionsover Company’sshares have beenawarded toemployees in previous years. The investmentinthesubsidiary, of whichtheloanforms part,hasbeenimpaired by£126million(note13) Issue of warrantsfor shares aspartof consideration for loanobtainedbysubsidiary Warrants: Oxford Biomedica plc|Annual report andaccounts2018 Company: year-endbalanceofloan on theloanwas: no fixed repayment termsandisnotexpectedtobe repaid within12months of theyearend.Theyear-end balance The loanfrom Oxford BiomedicaplctoOxford Biomedica(UK)Limitedisunsecured andinterest free. Theloanhas Cash loanedbyparent tosubsidiary Cash management: Company: transactionswithsubsidiaries payments, includingtheexpensesof theparent company. to Oxford Biomedica(UK)Limitedasaloan,and Oxford Biomedica(UK)Limited managesgroup fundsandmakes intellectual property. Theproceeds from theissueof shares bytheparent are passedfrom Oxford Biomedicaplc out theGroup strategy, employsalltheUKstaff includingtheDirectors, andownsmanagesall of theGroup’s The parent companyisresponsible for financingandsettinggroup strategy. Oxford Biomedica(UK)Limitedcarries In November2018itwassold.Itremained dormantfrom incorporation todate of sale. During theyear, OcQuila(UK)Ltd wasincorporated asawholly-owned subsidiaryof theparent company. The registered address for theCompanyandallof itssubsidiariesisWindrushCourt,Transport Way, Oxford OX4 6LT. acquired andbecamedormantin2007whenitsassetstradewere transferred toOxford Biomedica(UK)Limited. Limited), theprincipaltradingcompany, andonedormantsubsidiary(Oxxon TherapeuticsLimited),whichwas The Group consistsof aparent, Oxford Biomedicaplc,onewholly-ownedtradingsubsidiary(Oxford Biomedica(UK) Identity ofrelated parties 33. Related partytransactions bioprocessing facility. of the2018commitmentrelates totheleaseholdimprovements, andplantequipmentof thenewOxBox equipment notprovided for inthefinancialstatements at 31December2018(2017:£850,000). Thelargest part The Group hadcommitmentsof £15,723,000 for capitalexpenditure for leaseholdimprovements, plantand 32. Contingentliabilitiesandcapitalcommitments for theyearended31December2018 Notes totheconsolidatedfinancialstatements Group financial statements Loan tosubsidiary Parent companyexpensespaidbysubsidiary Purchases: 194,736 (1,370) 19,674 £’000 £’000 2018 2018 –

176,432

£’000 £’000 5,551 1,218 (976) 2017 2017

Oxford Biomedica plc|Annual report andaccounts2018 provide long-termorpotentiallypermanentcorrection. administration of theproduct directly totheretina could to deliveracorrected versionof theABCRgene.Asingle uses theCompany’sLentiVector platform technology photoreceptors intheretina andvisionloss.SAR422459 of theABCRgenewhichleadstodegeneration of of Stargardt disease.Thediseaseiscaused byamutation SAR 422459 isagene-basedtherapyfor thetreatment SAR 422459: Stargardtdisease endostatin andangiostatin, directly totheretina. technology todelivertwoanti-angiogenic genes, product usestheCompany’sLentiVector platform blocking theformation of newbloodvessels.The improve thevisionof patients through anti-angiogenesis; diabetic retinopathy (DR).OXB-201 aimstopreserve and “wet” age-related maculardegeneration (AMD)and OXB-201 isagene-basedtreatment for neovascular OXB-201: “wet”age-related maculardegeneration neurotransmitter. thus replacing thepatient’s ownlostsource of the a replacement dopaminefactorywithinthebrain, of the braincalledthestriatum, convertingcellsinto The product isadministered locallytotheregion enzymes that are required for thesynthesisof dopamine. platform technologytodeliverthegenesfor three in thebrain.OXB-102 usestheCompany’sLentiVector by thedegeneration of dopamineproducing nervecells disease, aprogressive movementdisorder caused OXB-102 isagene-basedtreatment for Parkinson’s OXB-102: Parkinson’sdisease and canaccommodate multipletherapeuticgenes. a larger capacitythanmostothervectorsystems indefinitely. TheLentiVector platform technologyalsohas studies suggestthat geneexpression couldbemaintained in thebrainandretinal cellsintheeye.Insuchcelltypes, integrate genesintonon-dividingcellsincludingneurons genes intocellswithupto100%efficiencyandcan of vectorsystems.Thetechnologycanstablydeliver and deliveryproblems associated withearliergenerations system whichisdesignedtoovercome thesafety is anadvancedlentiviralvectorbasedgenedelivery Oxford Biomedica’sLentiVector platform technology LentiVector platform Oxford Biomedicaspecificterminology Glossary Other matters

OXB-302 (CAR-T 5T4):cancer vascularisation andtoprevent graft rejection. donor corneaspriortotransplantinorder toblock solid tumoursandsomehaematological malignancies. 5T4 tumourantigenexpressed onthesurfaceof most platform and5T4antigentotarget cancercellsexpressing the 5T4tumourantigen.ItusesGroup’s LentiVector OXB-302 aimstodestroy cancerous cellsexpressing to deliverendostatin andangiostatin uses theCompany’sLentiVector platform technology of grafts are rejected duetovascularisation. OXB-202 successfully transplantedtissues,asignificantnumber cornea causing’clouding’.Althoughoneof themost a needtoremove andreplace pathology arisinginthe of cornealgraft rejection. Cornealgrafting arisesfrom OXB-202 isagene-basedtreatment for theprevention OXB-202: cornealgraft rejection or potentiallypermanentcorrection. administration of theproduct couldprovide long-term deliver acorrected versionof theMYO7A gene.Asingle the Company’sLentiVector platform technologyto address vision lossduetoretinitis pigmentosabyusing with acongenitalhearingdefect. SAR421869intendsto which leadstoprogressive retinitis pigmentosacombined mutation of thegeneencodingmyosinVIIA(MY07A), of Ushersyndrome 1B. Thediseaseiscausedbya SAR 421869isagene-basedtherapyfor thetreatment SAR 421869:Ushersyndrometype1B ex vivo ex to to

Other matters 145 146 — — — by theregulatory authorities: successfully passesthrough allphasesitmaybeapproved through thephasesovermanyyears.Ifdrug The drug-developmentprocess willnormallyproceed approval process istreated as a separate clinicaltrial. classified intothree phases.Eachphase of thedrug Clinical trialsinvolvingnewdrugsare commonly Clinical trials(testinginhumans) Oxford Biomedica plc|Annual report andaccounts2018 in an cells inapatient for thetreatment of adiseaseoften Cell therapyisdefinedastheadministration of livewhole Cell therapy virtually anytumourassociated antigen. as CAR-modified Tcellscanbeengineered totarget Antigen Receptors(CAR)isananti-cancertherapeutic Adoptive transfer of Tcellsexpressing Chimeric CAR-T therapy the USmarket. or deliverfor introduction, abiologicalproduct into The BLAisarequest for permissiontointroduce Biologics LicenseApplication (BLA) infects humansandsomeotherprimate species. Adeno-associated viruses(AAV) isasmallviruswhich AAV Terminology notspecifictoOxfordBiomedica Glossary Other matters — — — Phase III: finalconfirmation of safety andefficacy. usually againstaplacebo. Phase II: establishingtheefficacy ofthedrug, Phase I: screening for safety. ex vivo ex setting.

partners, inorder toaccelerate economicgrowth. stimulate innovation, workingwithbusiness andother Innovate UKistheUK’sinnovation agency. Itsrole isto Innovate UK manufacturing, clinicalandlaboratory activities. to guidelineslaiddownbyrelevant agenciesfor GMP, GCPandGLPare thepracticesrequired toconform GxP isageneraltermfor Good(Anything)Practice. GxP, GMP, GCP, GLP to provide treatment. or usingDNAthat encodesatherapeuticprotein drug Other forms involvedirectly correcting amutation, a functional,therapeuticgenetoreplace amutated gene. form of genetherapyinvolvesusingDNAthat encodes environment outsideof aliving organism. of performing agivenprocedure inacontrolled Latin term(for withintheglass)refers tothetechnique Vitro In can beinan by deliveringtherapeuticDNAintoapatient’s cellswhich Gene therapyistheuseof DNAtotreat disease Gene therapy and medicaldevices. veterinary drugs,vaccinesandotherbiologicalproducts, effectiveness, quality, andsecurity of humanand for protecting thepublichealthbyassuringsafety, US FoodandDrugAdministration (FDA) isresponsible FDA place outsidethebodiesof livingorganisms. Latin termusedtodescribebiologicaleventsthat take Vivo Ex genetic information. Deoxyribonucleic acid(DNA)isamoleculethat carries DNA of non-Hodgkin lymphomaamongadults. producing antibodies.Itisthemostcommontype of Bcells,atypeof whitebloodcellresponsible for Diffuse large B-cell lymphoma(DLBCL)isacancer DLBCL B celllymphoma. chronic lymphocytic leukemia (CLL)anddiffuselarge B cellnon-Hodgkin lymphoma(NHL),adultdisease cancers such as acute lymphoblastic leukemia (ALL), cancers suchasacutelymphoblasticleukemia (ALL), CTL019 isaCAR-T celltherapyfor patients withBcell CTL019 ex vivo ex or in vivo in setting. The most common setting.Themostcommon

Oxford Biomedica plc|Annual report andaccounts2018 biologists todelivergeneticmaterial intocells. Are toolscommonlybasedonvirusesusedbymolecular Viral vectors accountability andrelations withshareholders. leadership andeffectiveness, remuneration, standards of goodpracticeinrelationship toboard by theUKFinancialReportingCouncilandsetsout The UKCorporate GovernanceCodeispublished UK Corporate GovernanceCode(theCode) resistant totreatment. B lymphocytes(atypeof whitebloodcell)that are in children andyoungadultsmake toomanyimmature (ALL) isatypeof cancerinwhichthebonemarrow Relapsed orrefractory (r/r)acutelymphoblasticleukaemia r/r paediatric ALL testing anddrugsafety data iscollected. trials canbeginduringwhichimportantfeasibility, iterative is thestageof research that takes placebefore clinical Pre-clinical studies(alsoknownasnon-clinicalstudies) Pre-clinical studies Gene deliveryvectorbasedonlentiviruses. Lentiviral vectors areas; copyright, trademarks, designrightsandpatents. Intellectual property rightsfallprincipallyintofour main which canbetreated asanassetorphysicalproperty. Intellectual Property (IP)refers tocreative work IP place insidethebodiesof livingorganisms. Latin termusedtodescribebiologicaleventsthat take Vivo In

net interest paidpluscapitalexpenditure. Cash burnisnetcashgenerated from operations plus Cash burn revaluation of investments. Amortisation andShare basedpaymentsandthe Being Operating espensesbefore Depreciation, Adjusted Operating expenses Other operating income. Gross income istheaggregate of Revenueand Gross income credit included. Group, defined asOperating EBITDA withtheR&Dtax Operating EBIDA isaninternalmeasure usedbythe Operating EBIDA is often usedasasurrogate for operational Cashflow. and share basedpayments)isanon-GAAP measure and Depreciation, Amortisation, revaluation of investments Operating EBITDA (Earningsbefore Interest, Tax, Operating EBITDA Definitions ofnon-GAAPmeasures

Other matters 147 148 Oxford Biomedica plc|Annual report andaccounts2018 Botanic House KPMG LLP Registered independentauditors United Kingdom London EC2R 7HG 41 Lothbury Consilium Strategic Communications communications Financial andcorporate United Kingdom London EC2V 7NQ 85 Gresham Street WG Partners Financial adviserandjointbroker United Kingdom London EC2Y 5ET 120 LondonWall Moor House Peel Hunt Financial adviserandbroker Advisers Advisers andcontactdetails Other matters United Kingdom Oxford OX4 6LT Transport Way Windrush Court Stuart Paynter and registeredoffice Company secretary United Kingdom Kent BR34TU Beckenham 34 Beckenham Road The Registry Link AssetServices Registrars United Kingdom London WC2R 1BH 265 Strand Covington &BurlingLLP Solicitors United Kingdom Cambridge CB21JZ 98-100 HillsRd

Transport Way Windrush Court Headquarters: Oxford Biomedicaplc Contact details www.oxb.com [email protected] United Kingdom Oxford OX4 2JZ Oxford BusinessParkNorth Alec IssigonisWay Unit A,Plot7000 OxBox United Kingdom Oxford OX5 1QU Yarnton Oxford IndustrialPark Unit 5 United Kingdom Oxford OX4 6LX Cowley Transport Way County Trading Estate Harrow House Other locations: Tel: +44(0)1865783000 United Kingdom Oxford OX4 6LT

www.fsc-uk.org the Forest Stewardship Council of this2018report are certifiedby The papersusedfor theproduction www.pureprint.com Management andAuditScheme. and registered toEMAS, theEco Management System, ISO14001 is certifiedtoEnvironmental and company is aCarbonNeutral printing process. Pureprint Group environmental impactof the audited process that reduces the carbon, lowwaste,independently technology, aguaranteed,low their pureprint environmental print Printed byPureprint Group using www.philipgatward.com by PhilipGatward. Facilities andportraitphotography Credits: www.thinkerdoer.co.uk experts thinkerdoer: and produced byscientificbranding This report hasbeendesigned

Oxford Biomedica plc | Building the future | Annual report and accounts 2018

www.oxb.com [email protected] Windrush Court, Transport Way Windrush Court, Transport Oxford Biomedica plc +44 (0) 1865 783 000 Tel: Oxford OX4 6LT, United Kingdom 6LT, OX4 Oxford