Oxford Biomedica plc (OXB) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Jem de los Santos, I'm a Vice President in JPMorgan's Healthcare Investment Banking team based in London. Very happy to present Oxford Biomedica. And without further ado, I'll hand it over to Stuart Paynter, the CFO.

Thank you very much, and good afternoon to everyone. Thank you for attending on the graveyard shift on a Wednesday afternoon. It's been a really nice conference, and thank you for JPMorgan for hosting and letting us tell our story. So Oxford Biomedica, we're a focused cell and gene therapy CDMO. We've been on this journey from becoming a product company to an innovation at CDMO for a while now. And that journey is now complete. I'm going to take you through the story, a little bit of history and how we're positioned to really make a big splash in the cell and gene therapy market and where we see some of the opportunities for growth. So there are going to be some forward-looking statements. So here's Oxford Biomedica in a nutshell. So we are, first of all, positioned as an innovation-led CDMO because we believe that solving customers' problems is at the heart of providing a service in this industry. So we have got a deep-rooted legacy knowledge in lentiviral vectors, a newly acquired highly technical expertise in AAV, and we've been working very recently with adeno vaccines as well with the AstraZeneca COVID vaccine. But we believe we've got the technologies, the capacity and the skills to really help customers solve their issues, which is a big part of cell and gene therapy at the moment. We believe viral vectors, obviously have a key -- critical role to play in today's gene and cell therapy space. There are -- there have been some significant issues around getting viral vectors to do what you want them to do. And some of the innovations which we're working on and have worked on have rolled out performed part of the solution and a part of the future solution. So what we're aiming to do is make safe, high-quality, cost-effective vector for our partners. And cell and gene therapy is on the precipice of making a significant impact on medicine globally. I mean we're seeing 500 biotechs in the space. We've seen big pharma come in and out of the space, but there's a good portion of big pharma in the space. And it's accounting for a significant portion of the clinical pipeline and the preclinical pipeline of the industry. And we've seen the -- in fact, our partner, Novartis, we've seen 5-year efficacy data just reported, which is quite astonishing of 50% complete remission after 5 years for end-of-life patients. We have a track record, which is very important in this industry. So our track record of being able to produce at pace and scale and of sufficient quality, commercially viable and commercially licensed vectors. So we've obviously got our relationship with Novartis, where we've manufactured Kymriah and we've been the sole manufacturer of Kymriah. We've also turned our hand over the vaccine periods to manufacturing AstraZeneca COVID-19 vaccine, which went from 0 to 100 miles an hour. I mean, our first interaction with Oxford University was in March. And the first time you could take the vaccine was December that year. So that was super-fast. And it just goes to show that we focus both from the companies and from the regulatory authorities, you can do -- making a big impact very quickly. And then like I said, capabilities, it's key for a service provider to have multiple strands and our capabilities now run across all 3 major vector types. So I said a little bit of the picture over the last 5 years. This is where we've come from and where we are today. So 5 years ago, revenues just under GBP 40 million, as of today roughly GBP 130 million. We did GBP 65 million worth of revenue in the first half, and we guided that we'd do something similar in the second. Viral vector partnerships, all lenti 5 years ago. Now we've got 17 across lenti, AAV and adeno and you can see some of the names there, an impressive list. Novartis have obviously stayed with us, and we've added BMS and [ Boehringer ] just to name but a couple on the big side, and then some real innovative names in the field on the smaller side as you can see there. And some of the them have fallen away, but this goes to show that actually, what you need to do is have a [ portfolio ] effect. Some of these products won't work, but it won't be for the lack of us trying and we are now at a significant stage of [ portfolio ] effect in our partnerships. You can see Kymriah only just been launched 5 years ago, and it's $540 million now. It was the first of a real trailblazing product with 5-year data just out as I mentioned. And it's been a pleasure to work with Novartis over that time period, and we know they'll look to continue working with Novartis on their existing and new programs. The viral vector markets, it's always been quite difficult for us to gauge quite how big the markets are. When you look at the markets, some of the market is addressable, some of the market is in-house, but make their own vectors, of course. But we believe that GBP 2.8 billion addressable market by 2026, for all vectors. It's about where we see the marketplace is. The data is getting better there, but that's a significant market to grow into. So we're hoping to grow, obviously, with the market and beat that by growing our market share within that market. And I think we've got a great chance for the technologies we have to get that done. So proprietary programs, we've always had proprietary programs in-house. We've recently announced that we are going to spin those out. We think that a pure-play CDMO in this space is what is necessary to maximize value for shareholders. When you think about the risk profile of an innovation that CDMO and a risk profile of a small biotech, taking binary risk, we're very different and they need to be in different hands. And we've made that call. With the conversations we've had in the last few days, actually, we've been talking about pivoting, but it's taken 10 years. So it's not really a pivot. It's more of a very slow turn, turn from a service provider with products into finally a pure-play CDMO, but we think this is the right place to be. And we are very excited about those assets, which are going to be spun out. They're very, very excited with the preclinical data, and we're looking in the first half of 2023 to make a splash in that area. And then the facilities, I mean, we've been very busy building. We have -- used to have 3 facilities in 2017. And now we've got 6 internationally. We've got our facility in Boston from March this year, doing AAV, the AAV Center of Excellence. And we've since opened Oxbox, which is an approved multisuite vector manufacturing state-of-the-art, the vaccine is approved for commercial supply and now has fill/finish, which has been approved at the end of last year. So a bit more about the addressable markets. AAV is a big market. AAV is the biggest market, and it's largely because the vector requirements for AAV is higher. They're typically systemic delivery. So it's going to be a higher volume of vector required. There's some amazing innovation going on in that field. And there's just a few examples of that innovation. We're new to the field but we have some real amazing technology suite, which we've acquired in our Oxford Biomedica Solutions asset, really, really impressive titer, really impressive full-to-empty capsid ratio data. And we're super excited to make a splash in that marketplace. We said that we would do -- sign up 2 new customers by the end of 2022, and we actually ended up signing 4, excluding Homology who are also an importantly the anchor client there. Integrating vectors, a slightly smaller market but still growing at 17% CAGR, very, very active. We have got partnerships in Novartis, of course, Bristol Myers Squibb, of course, a whole bunch of other people doing really, really important work in CAR-T and to in vivo stuff as well. So Boehringer Ingelheim with the CF program is extremely exciting and that could obviously really turn the dial when it comes to commercial clinical manufacture of an indication like CF. And then adenovirus, it's not a growing market, but there is some interesting activity ongoing, and we need to be able to address that. And obviously, with our experience with AstraZeneca, we put ourselves in a good spot to be able to address that. So we will offer that. It's not going to form the backbone of Oxford Biomedica going forward, but it's certainly an interesting offering to potential clients. So this is where -- how we position ourselves in -- against that addressable marketplace. So what do partners want? Partners want someone from an expertise perspective, who can advise them, guide them through the early-stage process development. It's tough. They also want people who can guide them towards the end of the process with regulatory requirements, filings, process characterization I mean it's a big ask for a CDMO, and of course, we've got a track record of doing that with Novartis. They want flexibility. They want capacity. They want you to really be involved and care about solving their problems. And we are of the size where we really do care. So getting a client from clinical stage to commercial as a CDMO really does make a big difference to us. So we really do go the extra mile in terms of customer centricity. And then the technical capabilities people want, they just want to be able to derisk. They want someone who's been there, seen it, done it, been able to produce scale of quality. We are multiply timed FDA audited, MHRA audit, Japanese FDA and audited by our clients as well, BMS, Novartis, Boehringer, et cetera, et cetera. So we have very, very high quality standards of GMP, and that does not come simply and easily to people. And this is one of the key differentiators for us. So what are we innovating? Well, you can see there's the list of 7 there. I mean we're working on all of these. These will produce patents. Some of them will produce know-how. But this is what enables us to maintain our licensing model on lenti and this is what people come to us for. So there's the customer centricity, problem solving and the ability to tap into these areas of innovation, which is going to help them ultimately succeed. So this is a picture of -- as a CFO, this is the main [ drink ]. How do we actually make money from this model. And we try to sort of segment this into 5 different areas. So we've got early stage going through to commercial supply and fill/finish and where money is made. So we've got different revenue streams. We've got potential upfronts and license fees. They're variable, of course. And you typically find that big pharma are willing to pay a license fee and they want to minimize their royalties and maybe small biotechs slightly the other way around. But we are big enough now and we've got the financial flexibility to be flexible there on the license fees. Development revenues are where they're going to R&D, and you help them solve their issues. So you'll typically make money early stage and at process characterization and validation where you're doing a ton of work, helping them file and helping them guide them through the regulatory pathway. But once it turns commercial, those revenue streams drop away. And then you get bioprocessing revenues, which are of nothing at the beginning because you're doing process development work, you're doing scale down models. And then you go into early stage, late stage process characterization, ultimately commercial. And that's where CDMOs can really lever up making money, which is when you get a certain proportion of commercial clients as opposed to clinical clients. Cell and gene therapy, obviously, we're waiting for the market to mature. There aren't that many commercial assets to go for. We've got one in Kymriah. We had another one with the vaccine, but with -- as time goes, but time is our friend here. Time will -- if you've got enough shots on goal with your partnerships and your programs, some will make it to commercial. And of course, we're looking to add to that to the hopper all the time with our commercial efforts going into the marketplace looking for new clients. And then you have milestones. Again, milestones, the orange box means it can be variable, but it's all gravy. So we can't predict sometimes when we're going to get these milestones, it takes time. But when they come, they're very helpful for cash flow purposes, and they generate revenue. And then ultimately, royalties when all of the clients that you saw on the lenti side have taken a license to our platform, which includes a royalty on the back end. So we share in the long-term economic benefit of these products. The same is not true of AAV. That's not a licensing model. but on lenti it is, and it forms an important part of future value. So how have we achieved what have we got? New agreements announced in 2022 is 10, which was great, particularly busy. Four at the end of the year on the AAV side. And then we have lenti throughout the year, and we'll take you through some of those in a moment. And just what do we have in terms of size and scale? Well, you can see the technicians there. There are just shy of 500 people at Oxford Biomedica working on those solutions, which I talked to you about whether they be on the front end or downstream in quality and ASG. These are all -- this is significant expertise at scale in 2 of the major scientific hubs, Boston and Oxford. Then we have 120-something people in operations that people actually make the vector itself, in manufacturing 159. So you can see another 300 people there making what we offer to our clients. And then we've got -- 18 commercially is actually an important number because we're doubling the investment in the commercial area because now we've got both an AAV offering, adeno offering and lenti offering. We really need to get out there and shout and scream about the technology and the capabilities we have and make sure that we give our sales teams the best chance to win. So a little bit about 2022 in the progress. I just said I'd give you a bit of an update here and here it is. So in January, license supply agreement with Cabaletta. In March, we did our transformative AAV deal, which was, what we think is, a really innovative deal with Homology Medicines. So we formed a JV between Homology Medicines and ourselves, Oxford Biomedica Solutions. We own 80% and Homology owned 20%. And we carved out their technical operations into a CDMO. So obviously, as a technical operation, they weren't running at full capacity. They were running at par capacity and that latent capacity was immediately available for new clients, which we thought was quite smart. And of course, it came with the anchor contract with Homology themselves with minimum, $25 million in the last 12 months. We got a plug-and-play platform, which has since proved itself with -- in the published data to be we think best-in-class, and we're making a lot of noise about that in terms of publications -- scientific publications, and that will eventually translate into marketing materials. And we had some very, very important deal with BMS/Juno for a couple of undisclosed new viral vector programs, which we're very excited about. Another undisclosed partner. We always like to be able to disclose the partners, but sometimes it makes more sense not to for the time being, the names will tend to become public in the end. But sometimes, we're finding these days -- if someone is coming to us from another CDMO, they don't want to give that commercial information a way that there's another CDMO involved. And we're very happy to be customer-centric and do what we can for our clients in terms of their privacy. We also signed a longer Master Services agreement with AstraZeneca. We just finished making at the end of last year the last commercial batches of the vaccine. We consider there won't be any revenues from the vaccine in 2023. But that work was extremely important. And firstly, proving to ourselves that we can turn our hand to something we've not done before, which was adeno and be pretty successful in their supply chain in creating 100 million-plus doses of the vaccine. And secondly, it provided, frankly, it provided the returns that enabled us to make the expansion into AAV. In August, like I said, fill finish came online. First time we've had fill finish proper offering of soup to nuts now for potential clients. We can take them right through from inception of idea, gene of interest, choosing an envelope all the way through to fill finishing. And that's important because we're outsourcing fill finish. It was an area of risk we identified. And now we have a world-class gene therapy fill finish suite in our Oxbox facility. And then in December, like I said, a very busy month. We had a late-stage license supply agreement announced on the lenti side and then 4 on the AAV side. So we finished the year with a bang. And we added, as you can see there, we went from 10 to 17 partners in the last 12 months. So momentum is good. So just a bit about upcoming news flow. I mean, we've had an interim CEO in place for a while, Roch Doliveux, who's our Chair. He's itching to get back to being the Non-Exec Chair, and we've been successful in appointing Frank Mathias as our new CEO. He joins us in March from Rentschler. So obviously, a world-class CDMO in and of themselves. So we're very happy that Frank comes on board to lead the charge as a very focused innovation led CDMO. We completed the sale and leaseback process where we generated an extra GBP 60 million onto the balance sheet from an owned asset, which we thought was pretty smart sort of capital management. And we've been doing a lot of stuff in terms of new agreements. We're hoping to announce many more in 2023. We haven't given any guidance yet, but we expect this positive momentum to continue. We're launching fourth-generation lentiviral vectors in 2020. There will be a scientific conference, which we will choose to do that in. Vectors, higher expression. You can see their safety features, larger capacity. These are the next-gen sort of developments we're looking to make on the lenti side, which really fortify the licensing model. And then the therapeutic strategy, which I mentioned earlier, we look to have executed by 2023, but ideally by the end of the first half of 2023, we want these to be given an opportunity to have life. They're very exciting, but they need to be backed by investors who understand the science, who understand the risk profile and we're pretty excited about getting this done, which leaves us with potentially an investment on the balance sheet. But no more cash burn on the product leads us as a laser-focused innovation at CDMO. So it's a bit of an odd time to be giving sort of operational and financial outlook, given our prelims a couple of months away and the year is finished, and we're still giving this sort of guidance. But like I said, we are expecting to do probably GBP 130-odd million worth of revenue this year. That's all booked in and it was fine. We know that there will be continued growth in lentiviral AAV manufacturing volumes with the AstraZeneca volumes coming down and completely off. We have been actively rightsizing the organization in terms of understanding what it means to be in a post-COVID world. I mean for us, we had to staff up very quickly to get that vaccine work done. And now we're in a very managed and controlled way. We're just rightsizing the organization to be able to deliver on its mission for viral vectors rather than the vaccine as well. And we've completed that process in 2022. Broadly, breakeven second half of 2022 was our guidance. And that's really a sort of indication of where cell and gene therapy is. So even with a commercial product and a load of programs working on and generating a lot of revenues, it's not a mature marketplace where there are 3, 4, 5, 6 commercial assets to go for where you can really build your margins. But one of the things we are looking to do is provide more clarity and transparency on the way we report our numbers during 2023. And maybe look to guide on sort of revenue CAGRs and when we can be expected to reach EBITDA margins, which would be considered gold standard in the CDMO industry, sort of mid-20s and how we think that's going to evolve as the market evolves. Importantly, very strong cash position. So at the half year, it was north of GBP 110 million, but then we did the sale and leaseback and we pushed our gross cash in excess of GBP 150 million. So to all intents and purposes, we are -- given the breakeven nature of the business, we've got a sort of infinite cash runway here, which gives us a very nice position to be in and that we're not out seeking funds or anything. But we are also looking for the next sort of strategic leg to add to our offering here. We've got some significant ambitions in the M&A field. So yes, we're a strong, robust real company with revenue streams looking to significantly grow over the next 3, 4, 5 years as the market matures. So just the last slide is just a summary rapidly growing market, the proven expertise, which is important. People like people who have done this before to deliver and manufacture at pace. We are vector agnostic. So we'll help our clients choose the best vector and the best envelope in which to put their gene of interest. We've got the big pharma endorsement, which is all important. Big pharma is willing to take a license to a platform, which means that, that platform is real. We've had lots of IP lawyers from big pharma calling all over the IP and the know-how and it's real, it's there. It's making a difference in patients' lives. The internal reorganization is important as we are now, like I say, this focused innovation at CDMO. And we are looking to deliver on that promise to deliver growth, do better than the market, which is going to grow. Everyone arises at a time, but we're looking, obviously, to grow market share at the same time and to deliver the best return we can for our shareholders. So that's just back to the original summary, so I'll thank you for listening, and I'll leave it there.

Great. Thank you, Stuart. So we're now going to progress through the Q&A portion of the presentation. Now as you guys know, there's a few ways you can ask questions. You can either go on the digital conference book and ask them there and then they'll appear and I'll be able to ask them. Alternatively, you can also just raise your hand at which point we will have a mic runner run a mic to you so that you can ask the question. Are there any questions in the room at this time?

Great. All right. In that case, I'm going to ask a question, Stuart. So Stuart, I think in previous instances, you discussed your willingness to share the economic benefits of innovation with customers in an efficient way, when that provides sort of upside for both parties involved. I know you also just kind of discussed the new pricing model that you're kind of looking to flow through. So I guess my question is, is that pricing model now been implemented? And what's the perception of that model? And how is that resonating with your customers?

Yes. I think that's a great question. I mean the key thing, if you're going to be an innovation-led CDMO that is being able to monetize that innovation because you can create innovation, you can create more doses per batch, et cetera. But if you give that away, then what was the point of making the investment in the first place. So the sensible way that we've been addressing this is to stop or not to stop -- just to start morphing the discussion from price per batch to one of price per dose. And actually, when you think about it, if you're dealing with our customers, you're largely pushing on a bit of an open door because people really want to know what dose is going to cost them. And if you can reduce the amount of a dose, then the math is very simple. I say, yes, please, if you can reduce the dose by making more doses per batch, I'm willing to pay more for the batch to get more doses. So a mathematical example would be, if I can create twice as many doses as you're currently making, I'm not going to charge you twice as much for the batch, but I may charge you 50% more, you're saving 33% on your dose cost. And I'm really making the biggest return I can for my fixed cost and that fixed cost is timing the GMP suite, which you cannot avoid. The quality and the stainless steel in the handling and all the rest, how do you maximize your revenue for each chunk of time you spend there? And that seems to be a sensible thing for us. So as a CFO, I'd much prefer to spend $1 on innovation-led R&D to get more doses out of a batch than I would in expanding our footprint because I want to expand our footprint, but only once we've completely selected the assets and implemented all the technology, which is going to get our clients to where they need to be because ultimately, reducing the price of a dose is key because that gives our partners the flexibility to be more flexible with the price to attack either bigger patient populations or make more money. But the price -- we know the price of therapies has to come down if we really want to democratize gene therapy because at the moment, it's niched in rare diseases and there has to be a solution, and we're very proud to be a key player driving down the cost by increasing the efficiency of the manufacturing processes.

Great. Thank you, Stuart. I think there's a question in the room.

So it's interesting to see how the business has pivoted from more of a kind of proprietary pipeline to a CDMO business. So I was just wondering what you kind of see as the kind of key strategic objectives that you're hoping to deliver on over the next, say, 3 to 5 years?

So, yes, I think that's a great question. I mean 3 to 5 years in gene therapy is a long time. So in 3 to 5 years, we can genuinely see many, many more commercial assets coming to market. We've seen the green shoots with a number of approvals in the last 3 to 6 months. And how do we best position ourselves? Well, we need to keep innovating. You've seen fourth-generation lenti. We need to get the AAV technology story out there. I mean we genuinely think we've got one of the best platforms in class from the published data so far. And we've been brave and we've got out early and published, titer [ vector ] is very strong. Full-to-empty capsid [ ratio ] is very strong. So if I shorten that time frame, and apologies of changing the question just a bit shorter, we need to keep attracting clients onto our platform, both lenti and AAV. We need to execute on our product portfolio strategy, as you mentioned. As we pivoted, we need to get that out, and we need to give that home with -- where we're retaining a long-term investment interest in that but not burning cash. And frankly, we need to onboard our new CEO, who's going to have these ideas. He's completely behind the strategy, so we're not going to see any sharp turns in the strategy but we may see some course corrections here. So we need to understand what Frank is going to bring. But it may be the best indicator is where we're making an active investment now, which is our commercial teams. We truly believe that the missing piece of the jigsaw has been the ability to take what we have and communicate that into the market. So we're upskilling and putting far more resources into that commercial effort. Now we've got -- we got all the technical capabilities in the world. We're now shouting about it. So I would say in the next 1 year to 18 months we really need to maximize that investment. We really need to see new clients, more presence of the clients and really accelerated. And the more late-stage assets, the better.

Just maybe leading off that -- sorry, you have a follow-up question.

Yes, maybe if I just could sneak a follow-up in there as well. So I guess, as a kind of cell and gene therapy-focused CDMO, who would you see as your kind of closest peers then? And kind of how would you say you differentiate yourself versus them?

Yes. So that's a nice question we get asked all the time. I mean, now I've got some colleagues in the room who -- right now who have spent time who know exactly who the competition are. I mean, so typically, when we are talking to clients, they're talking to the usual -- the Thermo Fishers, Lonzas, Catalents of the world. And the key question is how we differentiate because if we have the same offering as those guys, we don't have the size and scale to accurately compete there. I mean we're going to get kicked in the end because we're just not going to be able to do it cheaply enough. So how we differentiate ourselves is those first 2 words, which we always say, which is innovation-led. So I -- if someone comes to us with the proposition of I need 20 batches, what we -- as a team, what we would say to them is, do you really need 20 batteries or do you need 70 doses, and maybe we can do that for less batches to create the same amount of doses and we can share that economic benefit by making your process more efficient. And some of our competitors would say, well, you bring us the process, and we'll make it for you. We're always looking to embed innovation because it's a way for us to share the economic benefit, of course, but it's ultimately a way of bringing the cost down. The innovation has to be embedded, otherwise, gene and cell therapy is not going to achieve everything it could achieve in terms of reaching as many patients as it could achieve. So we have, obviously, a strong platform -- a licensing platform in lenti, which others don't have, and that's all down to innovation. So we'll continue to proudly spend money innovating the manufacturing technologies in order that we can keep making those offerings and keep differentiating ourselves against some of those bigger players.

Great. So I guess then Stuart, like you also mentioned commercialization was going to be strategic priority kind of going forward of the business. And so, I guess, I want to understand just obviously we're in kind of the middle of a difficult, you could say, fundraising environment, and it looks like that's going to maybe remain challenging for just a little bit longer than maybe any of us would like to. And, I guess, I was just wondering whether maybe the limitations on biotech funding have led to the prioritization of certain assets over others and whether you're beginning to see this maybe in regards to some of the customers you talk to, who may be, I guess, a little bit crunch for funding?

Yes. I mean, I've just stood up and said we've got a strong balance sheet, we don't need to raise funds. But of course, we are enormously empathetic to those biotechs who are trying to do great work, who are really feeling significant pain and in some cases, trading below cash, et cetera. That's no fun. And we speak to them all the time. We do what we can to let them continue. I mean the good news is that the work we do for them is on the critical path. So for the programs they do prioritize, they need to keep pushing this forward because they need to generate the data, which is going to hopefully create a value inflection point for our partners. That being said, there is certainly some prioritization going on. I mean, sensibly. I mean -- so some of the products which have been worked on have gone away. So a good example of that is our partners, Homology, who went to the gene editing PKU from their first program that -- I think that was a plan. But ultimately, they pulled the trigger on that, and that will make sense. But there are 2 things that protect us. Firstly, the critical path element, but secondly, the portfolio effect. We have a significant portion of our work coming from big pharma, they won't stop. In fact, they'll accelerate because they see a way of gaining an advantage. But it hasn't -- it won't be a meaningful impact on us. It will -- it may impact incrementally, but we have a big enough portfolio effect and the backing of partnerships through big pharma where we have an inherent protection against that.

Great. And, I guess, maybe in regards to inflation, because that appears to be the theme of the day in this environment. I think [ CMOs ] have historically been able to sort of, I guess, is a better sector than those been able to pass through a lot of the times these costs to their customers. Could you maybe comment on maybe like any internal initiatives or anything you guys are doing to help protect the business against this?

Yes. So pricing is one thing. And of course, most of our contracts come with the ability to raise prices, and we do that according to the contract, which is fine. We've got to understand in a GMP environment, I mean you use a lot of utilities. And utilities particularly are rising in a way that's going to outstrip any price increase we can give to our clients because our electricity might be several 100% higher than it was once. But again, we've been sensible in buying forward contracts on utilities, which has protected us. What we'll hope and wish that obviously, this doesn't go on for very long because it's got a human cost as well as a financial cost to businesses like ours. But the other area we're actually investing in is procurement within the business because we think we do have -- we need to more actively procure our costs. And there's some low-hanging fruit there, which we can make a big impact with very quickly. And we've tasked our Chief Operations Officer to get going on that with the budget. So, yes, we do the sensible things and we've got controls in place, but this sort of high inflation environment is going to have an impact. There's just no getting around it because it's very, very high. And the other thing to note that we have done is with our staff -- we -- but just before the end of last year, we gave cost of living paid to the sort of the lowest strata of paid individuals in the organization to sort of counter. We're not going to chase inflation with pay rises, but we will make sure that our staff were looked after in a way which doesn't make the inflation problem worse, but make sure we're recognizing that we have to give people some relief for the increased cost of living.

I think we have time for one more question. I just wanted to check if there's any in the room. Okay. In that case, so Stuart, I think you could say that Oxford Biomedica has historically been concentrated maybe on a smaller number of customers, Novartis, AstraZeneca. But now that the company sort of established and built out a lot of, you could say, bioprocessing infrastructure. Would you say that the focus is now to I guess, try and sign up as many agreements to fill out that infrastructure as quickly as possible? And then maybe if you could also comment on sort of the nature of the deals that you guys are trying to focus on because I think right now, it might be skewed maybe towards the earlier stage rather than the later stage?

Yes, it's a great question. I mean if you -- dealing with the last part of your question first and very quickly because the my orange light of death is on here and just gone red. The key for us is to generate value in any way we can generate value. And if you get too many clients upfront at the early stage, you're going to clog up PR&D, and then you're not going to get a throughput, you need clients to come on at each of those stages, early-stage pre-IND, pre-BLA. And what will happen in the next few years is second source supply will become a marketable thing. So people will be looking to second source supply as the market matures, and we're looking across that piece. We're also looking strategically at gene and cell therapy revenue, but also opportunistically other revenues. So if we can sign an opportunistic commercial deal like we did with the vaccine, for example, which helps us generate income before the market matures and it uses largely the equipment we have, why wouldn't we do that? So we're also looking opportunistically to sort of fill the hopper as well.

Great. I think that's all the time we have. Thank you very much, Stuart, and thank you, everyone, for attending.