Oxford Biomedica could be in line for larger royalty from Novartis

Kymriah, which uses a patient's own T-cells to fight cancer, generated revenue of $16m in the latest quarter, bringing first-half sales to $28m.

Oxford BioMedica receives royalties from Novartis from Kymriah sales and bioprocessing revenues, as the London-listed company is the sole manufacturer of the lentiviral vector required for Kymriah’s production.

With its vectors used in other undisclosed CAR-T cell therapy products, Oxford BioMedica expects to receive in excess of $100m from Novartis over the next three years, it said last month.

Broker Peel Hunt said it believe the $28m Kymriah revenue from the second quarter is only derived from US sales in the initial paediatric acute lymphoblastic leukaemia indication, for which it had forecast $36m for the whole of 2018, therefore implying "significant upside" to its earlier assumptions.

Peel Hunt also expects a further $90m from a second, larger indication for Kymriah DLBCL, for which Kymriah was given US FDA approval in May and received a positive opinion from Europe’s CHMP in both indications in June.

"We note however that press reports at the time of the US DLBCL approval suggested that Novartis will match key competitor Gilead’s price point in that indication of c$370,000 per treatment, vs the $475,000 announced for the smaller ALL indication. In summary then, whilst the Q2 results from Novartis give reason to expect Kymriah could beat our full year in-market sales forecasts, we wait to see how the DLBCL and Europe launches progress before altering our forecasts," analysts wrote.

Kymriah-related revenue accounts for around two thirds of the broker's £67m 2018 revenue forecast for OxfordBioMedica, with the remainder driven by milestones and other development revenues.