Interim Results for the Period Ended 31 July 2019

Avacta announces its unaudited interim results for the 12 months ended 31 July 2019

Operating highlights

Affimer Therapeutics

  • Major validating partnership and license agreement with LG Chem Life Sciences (LG Chem).  Potentially worth over $300m, plus future royalties on product sales, the agreement included an upfront payment of $2.5m, near-term milestone payments of up to $5.5m plus payment of Avacta’s full research costs to generate Affimer molecules for oncology and the treatment of inflammatory diseases.
  • Research collaboration and licensing agreement established to access technology for tumour targeting drugs developed at Tufts University Medical School, Boston, USA.  Avacta is combining this tumour targeting platform with Affimer immunotherapies aimed at improving outcomes for patients who do not respond to existing immunotherapies.
  • Acceleration of Tufts collaboration with planned regulatory submission in the first quarter of 2020.  The aim is to test the first tumour targeted chemotherapy for breast cancer, maintain the effectiveness but dramatically reducing the serious side effects of this cancer drug and creating a multi-billion dollar commercial opportunity.
  • Critical milestone of selecting the Affimer molecule in order to remain on track for a regulatory submission for first-in-human trials for the Affimer platform in the fourth quarter of 2020 has been achieved.  The AVA004 PD-L1 blocker clinical candidate is now completing the first stages of manufacturing which is progressing very well.
  • Moderna Therapeutics Inc exercised its option to enter into an exclusive licensing agreement for Affimers against non-disclosed targets; part of an ongoing research collaboration between the two companies.  A Moderna determined regulatory submission, for a clinical candidate would trigger the next milestone payment to Avacta.
  • Appointment of Dr Jose Saro as Chief Medical Officer to drive Avacta’s therapeutics programmes into the clinic.  Dr Saro brings over 20 years’ experience in the pre-clinical, translational and early clinical development of oncology assets, spanning small molecules, biologics and drug conjugates.  Dr Saro joins Avacta from Roche and prior to that he held senior leadership positions at Bristol Myers Squibb, Novartis, Eisai and Wyeth.


Affimer Research and Diagnostics Reagents

  • Combined revenue plus order intake to 31 July 2019 of £1.2m shows strong growth at 130% compared with previous 12 months, plus strong business development pipeline going in to FY2020.
  • Excellent range of ongoing paid-for technology evaluations and custom Affimer services projects with high quality, global commercial partners:
    • 7 diagnostics evaluations including 4 with top 10 global in vitro diagnostic companies all of which could lead to licensing deals.
    • 14 projects with pharma and biotech companies including 4 out of the top 10 large pharma.
    • 2 evaluations with bioprocessing companies, one being a global leader in affinity purification, and both with the potential to deliver licensing deals.
  • Agreed commercial license with New England Biolabs® (NEB®), a global leader in the discovery and production of enzymes for molecular biology applications.  This agreement is to commercialise a product using the Affimer technology for use in both life science research and diagnostics assays.  NEB is now working with customers in field testing.
  • A proprietary pipeline of Affimer diagnostic assays aimed at accelerating licensing deals, continues to grow.  The target of having two such assays completed by the end of 2019 is on track with a D-dimer and an estradiol assay nearing completion.

Financial highlights

  • Initial up-front milestone payment of $2.5m received from LG Chem Life Sciences.
  • Cash balances £6.5m (£5.2m 31 July 2018).
  • Revenues of £4.1m greater than expectation (£2.8m FY18) due to recognition of up-front milestone payment of $2.5m from LG Chem Life Sciences.
  • Operating loss of £11.2m (£10.4m FY18) due to significant investment in research and development increasing to £5.9m (£3.8m FY18).
  • Increased R&D investment leading to reported loss of £9.7m (£8.8m FY18).

Post-period highlights

  • The Company has today also announced a fundraising to raise gross proceeds of up to £9 million to deliver the next key value inflection points.
  • Collaboration and option agreement with ADC Therapeutics SA (Lausanne, CH) to develop Affimer-drug conjugates combining Avacta’s Affimer® technology with ADC Therapeutics’ warhead and linker technologies.  Under the terms of the agreement, ADC Therapeutics will cover all Avacta’s research costs during the collaboration and Avacta will also receive option fees, development and commercialization milestones, as well as a single-digit royalty on sales of successfully developed products.
  • Appointment of David Wilson, a diagnostics industry veteran with over 25 years of experience, as Commercial Director for Affimer research and diagnostics reagents.

Alastair Smith, Chief Executive Officer, commented:

“I am very pleased to see the strong growth in Affimer® reagents revenue and order intake over the reporting period.  This has been driven by the growing reputation of the Affimer technology particularly in the diagnostics and pharmaceutical sectors; two markets where the Company will be focusing our resources in the reagents business going forwards. We have numerous evaluation projects ongoing with large diagnostics partners, each of which could lead to a lucrative license deal. In order to reduce the time taken to reach the point of signing license deals, we are close to completing the first two in-house Affimer diagnostic assays, as set out last year.  Building a profitable Affimer reagents business remains a high priority for the Group.

I am also delighted to report that the collaboration and license deal established with Professor Bill Bachovchin of Tufts University Medical School is progressing very well.  The opportunity to test the tumour targeting chemistry in the clinic as early as next year is well ahead of schedule and could be game-changing for Avacta.  Doxorubicin is a $1bn drug despite severe cardiotoxicity issues that limits its effectiveness.  In the case of Avacta’s improved version of this drug, AVA6000 pro-Doxorubicin that is based on the Tufts technology, we have seen a dramatic improvement in safety in pre-clinical animal models.  If we see a similar reduction in cardiotoxicity in humans in the planned phase I clinical trial of AVA6000 in 2020, then there is the potential for a major license deal that could generate a transformational, non-dilutive, upfront payment of tens of millions of dollars.  This funding would support all our other programmes in future. We should also be able to apply the Tufts technology to improve the safety of a large number of other established chemotherapies and generate similar licensing opportunities.  For this reason, we are prioritising this programme with respect to use of the proceeds of today’s successful placing.

Our continued good progress across our Affimer therapeutic programmes helps our business development efforts and I am confident that these will manifest in further commercial deals in the near future that will be fully funded by the new partner.

It is an exciting time on all fronts for the Group.  I look forward to updating the market as we deliver on key commercial and technical milestones for both therapeutics and diagnostics in the next twelve months.”