Oxford BioMedica takes out $50M loan to service Novartis CAR-T alliance

Oxford BioMedica (AIM:OXB) has secured a $50 million (€45 million) loan, half of which it will take out immediately to expand its laboratory and manufacturing facilities. The first tranche of money will help OXB service its CAR-T alliance with Novartis ($NVS).

OXB CEO John Dawson

Oxford, U.K.-based OXB turned to Oberland Capital Healthcare for the loan, the terms of which have turned heads. OXB will pay interest quarterly at an annual rate of at least 10.5%, possibly more if the three-month Libor rate set by leading banks in London rises above 1%. Libor is currently well below 1%, but the loan still gives a guaranteed double-digit interest rate to Oberland, a healthcare investment firm set up by former partners at Paul Capital. Oberland raised $425 million for a royalty and credit fund last month.

OXB CEO John Dawson thinks taking out a loan with the fund will work out cheaper than alternatives in the long run. "We considered various forms of debt as well as equity," Dawson told FierceBiotech. The business generates cash through its manufacturing and process development operations that can service a debt facility, and as such Dawson felt it represented the best option. "It allows us to avoid shareholder dilution and we believe that in the longer term it will work out less expensive than equity."

The British gene and cell therapy specialist has the option to draw down the remaining $25 million of debt made available by Oberland in tranches of $5 million or more any time before 2017. OXB can also opt to receive one of the final four tranches as an equity investment. Dawson has yet to decide whether OXB will need any of the $25 million but has retained the option to access the cash in case he sees an opportunity to advance or expand its pipeline. Disease areas in which lentiviral vectors may have an advantage over adeno-associated viruses are in the company's sights.

OXB's lentiviral gene delivery technology has snagged it partnerships with GlaxoSmithKline ($GSK), Novartis and Sanofi ($SNY) and underpins most of its clinical-phase candidates, including Parkinson's disease treatment ProSavin. Stéphane Palfi presented three-year safety and efficacy data from a Phase I/II trial of ProSavin--which delivers genes for dopamine-synthesizing enzymes to the brain--at the American Association of Neurological Surgeons this week. Palfi called the data "very encouraging," but OXB has yet to say how many people are still feeling the effects of the drug.

- read the loan release
- here's the Parkinson's news