Today (14th October) the newly-installed Labour government makes its first attempt to lance the boil that has dogged the UK economy for nearly two decades – a lack of investment. According to the OECD, the last time the UK was above the G7 median level of investment as a proportion of GDP was in 1990. Business investment is lower in the UK than any other country in the G7.
That is why today’s investment summit in the Guildhall, London is so important for the government’s long-term economic plans, and one of the priorities that Prime Minister Starmer has highlighted is attracting more investment in biosciences and life sciences businesses to the UK. However, the UK is none-too-shabby in the field of biotech and life sciences, boasting global titan, AstraZeneca LON:AZN, one of the world’s leading pharmaceutical companies and Oxford Nanopore LON:ONT, renowned for its cutting-edge DNA sequencing technologies.
Oxford Biodynamics working on curing cancer
One smaller biotech company that has been making waves is AIM-listed Oxford Biodynamics LON:OBD which has developed its business around its EpiSwitch checkpoint inhibitor response test (EpiSwitch CiRT) for cancer. The company also developed a rapid-response Coronavirus prognosis test to check the severity of Covid infections and the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery, marketed through the brand name, EpiSwitch Explorer Array Kit.
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The company has participated in more than forty partnerships with big pharma and leading institutions including Pfizer NYSE:PFE, EMD Serono, Genentech, Roche, Biogen NASDAQGS:BIIB, Mayo Clinic, Massachusetts General Hospital and Mitsubishi Tanabe Pharma and has created a valuable technology portfolio, including biomarker arrays, molecular diagnostic tests, bioinformatic tools for 3D genomics and an expertly curated 3D genome knowledgebase comprising hundreds of millions of data points from over 10,000 samples in more than 30 human diseases. Headquartered in Oxford, Oxford Biodynamics also has a commercial office in Maryland in the US and a reference laboratory in Penang, Malaysia.
The core EpiSwitch product analyses the 3D configuration of the genome, which plays a critical role in gene regulation. EpiSwitch maps the genome’s architecture, seeking abnormal configurations and is used to diagnose patients and then establish how a patient might respond to the disease and a course of treatment. The product has been tested on 30 disease areas and is used by Big Pharma in their own analysis.
The company published a commercial report today. We last wrote about Oxford Biodynamics after the company secured a commercial deal with Bupa, the UK’s largest private health insurance company, to offer access to EpiSwitch CiRT, the company’s shares had been on an upward trajectory following validation of its EpiSwitch Prostate Screening Evaluation (PSE) test.
Tough year at the coalface
Today’s update confirmed that it had had a tougher 2024 than 2023, and the biotech firm was cutting its costs and controlling its expenditure, undertaking a strategic review. That said, the company reported orders for EpiSwitch CiRT up 25% when compared to the first half of its financial year with the PROWES Registry Study, an observational study that is investigating the long-term outcomes of patients who have undergone prostate cancer surgery being conducted and funded by the National Institute for Health Research (NIHR). The majority of EpiSwitch CiRT orders were coming through PROWES and it became evident that CiRT would need to be integrated into the the National Comprehensive Cancer Network Guidelines in order for the company to gain significant traction from oncologists, and Oxford Biodynamics reallocated sales support to growing orders for the PSE test base, something that would see, the company hoped, increased revenues without significantly increased costs.
The ongoing priority is now to complete patient enrolment into PROWES and support the oncologists already using CiRT on a daily basis. PSE orders were up 86% when compared to the first half of the year, a result of increasing sales resource five-fold by diverting them from other products. CiRT, the company believes, is an amazing product, but faces much higher barriers to entry to the market than PSE, as PSE already passes the American Urological Association’s guideline definition for prostate cancer screening, and it makes sense in PSE’s case to reach for the lower-hanging fruit whilst CiRT moves through its various approvals procedures.
The company explained that PSE has already received a high level of attention within the industry because of its accuracy and ease of use. This has led to ongoing discussions with two of the leading diagnostic services companies in the US for a distribution deal that would widen access to the test and have the potential to add significant volume.
Increasing awareness and availability
Dr Brian White, an analyst at Shore Capital, which has Oxford Biodynamics under research explained: “[OBD’s focus has been] raising awareness and steadily converting sales: With two highly differentiated cancer tests on the market, the past year […] has been about increasing awareness and making these tests available to as wide a population as possible following an integrated commercial strategy.”
He continued: “The EpiSwitch CiRT test helps tailor immunotherapy treatment so that it is used only for those patients who will benefit, while the EpiSwitch PSE test brings a best-in-class approach to transform the detection of prostate cancer, avoiding the need for unnecessary costly and invasive testing.”
The company also has developed two other tests for colorectal cancer and canine cancer, which White think will be partnered and have an “expeditious commercialisation” and offset the company’s cash burn, which he notes has been running at a high level as Oxford Biodynamics has been pushing the commercialisation of it marketed tests.
ShoreCap is supportive of Oxford Biodynamics’ decision to reallocate sales resources to PSE to capture a share of the US concierge market, but White notes that this process takes time and patience, although, he said: “the early availability of reimbursement has been reassuring.”
White explained: “Capitalising on the private pay concierge market has been a long-standing ambition for OBD with PSE, recognising that this is a large dynamic opportunity with 2,000 concierge clinics in the US providing an addressable market of 150,000 cash pay tests per year, largely underpinning the company’s aspirational target of 1,000 tests per month.”
Meagre investment landscape
The company has found access to capital in the UK limited – and today’s investment conference, it is hoped might start to change that picture. With limited capital to access in the market, and a high burn rate to get where it is today, the management of Oxford Biodynamics must be hoping for a sea change in the biotech investment landscape.
To address the cash burn, Oxford Dynamics announced today that its directors, management and some senior staff agreed to take a quarter of their net salary in newly-issued shares. CEO Jon Burrows is taking 35% of his net pay in shares, but despite this the company really needs more cash by 1Q25. As a result, the management is undertaking a strategic review to identify new financing, which could include licencing or sale of assets, and a hive-off of the company US business into a separately-funded entity. The company is, as of today, not entertaining any acquisition offers.
In its last results, for the six months to the end of March, Oxford Biodynamics reported revenue up to GBP327,000 from GBP220,000 the year previously, but also saw operating losses expand to nearly GBP6m, against GBP4.76m year-on-year, with its cash pile falling to GBP1.2m from GBP3.6m the year before. The company placed GBP9.9m of shares in March. The next set of results, for the half-year to end-September are due in January.
Oxford Biodynamics’ shares opened the week at 3.2p and had fallen to 1.742p by noon. Shares are down 90.8% on opening price from a year ago, and down 88.6% year-to-date with its shares ranging between 2.50p and 41.9p over a 52-week period. The company has a market cap of GBP11.4m.
Despite facing significant challenges, Oxford Biodynamics remains committed to its mission of developing innovative diagnostic tests for cancer. The company’s recent strategic review highlights the need for additional funding to support its growth and commercialisation efforts, but the pot of gold at the end of the rainbow is a tantalising goal.
As the biotech landscape continues to evolve, it will be crucial for Oxford Biodynamics to adapt and secure the necessary resources to capitalise on its promising technology pipeline, this may lead to changes in the structure and commercial operations of the company, however, Oxford Biodynamics’ current state of being is sadly widespread in the UK life sciences and biotech landscape; something that needs to be addressed if the UK is to remain at the leading edge of the industry, despite fighting with one arm tied behind its back due to the paucity of investment in a sector that will be a critically important industry of the future.
