Interim Results for the Period Ended 31 January 2019

Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and research reagents, announces its unaudited interim results for the period ended 31 January 2019.

Operating highlights

Affimer Therapeutics

  • Major development 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 a further $5.5m plus payment of Avacta’s research costs to develop Affimer therapeutics for oncology and the treatment of inflammatory diseases.
  • Continuing to build the in-vivo pharmacology data packages for our lead immune checkpoint programmes – PD-L1 and LAG3 antagonists; aiming to initiate first-in-human clinical studies for the Affimer drug platform in 2020.
  • Research collaboration and licensing agreement, to access novel drug conjugate technology developed at Tufts University Medical School, established to underpin pipeline of innovative “TMAC” Affimer drug conjugates and combination therapies.
    • Pre-clinical development of first TMAC drug conjugate has started and initial in-vivo efficacy data from a combination of the lead Affimer PD-L1 candidate with a DDP8/9 inhibitor (AVA100) are promising.

Affimer Research and Diagnostics Reagents

  • Ongoing paid-for technology evaluations and custom Affimer services projects with commercial partners include:
    • Global in vitro diagnostic companies
    • Pharma and biotech companies
    • Bioprocessing companies
  • Marketing campaign for anti-idiotypic Affimer reagents has helped grow the size of the custom Affimer sales pipeline to its largest value to date.  This includes multiple pharma and biotech, several global diagnostic and life sciences reagents companies.
  • 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.
  • Strong focus on generating further license deals during 2019 arising from multiple ongoing technology evaluations.
  • Good progress in building a proprietary pipeline of Affimer reagents against specific diagnostic targets with the aim of generating two diagnostic assets with the supporting data packages during 2019 for future licensing.

Board and Senior Management

  • Dr Jose Saro appointed in December 2018 as Chief Medical Officer to lead the pre-clinical and clinical development of the Affimer® therapeutic platform.  Dr Saro joined Avacta from Roche where he held the role of Senior Translational Medicine Leader at the Roche Innovation Center Zurich.
  • Alan Aubrey, Non-executive Director retired from the Board at the recent Annual General Meeting following 12 years of service to the Group.
  • Dr Sam Williams was appointed to the Board as a Non-executive Director.

Financial highlights

  • First up-front milestone payment of $2.5m received from LG Chem Life Sciences.
  • Fund raising completed August 2018, with £11.6m gross received.
  • Cash balances £11.8m (£5.2m 31 July 2018).
  • Half year revenues of £1.0m (£1.5m FY18) reduced due to absence of research services revenue for FTEs working on the Moderna collaboration now that assets have been transferred into their development pipeline.  LG Chem funded research services work commenced February 2019 and will contribute to second half-year figures.
  • Operating loss £5.9m (£4.5m FY18), with research and development costs increasing to £2.4m (£1.5m FY18).
  • Increased R&D costs leading to reported loss of £5.2m (£3.9m FY18).

Post-period highlights

  • ModernaTX, Inc. (NASDAQ: MRNA) exercised its option to enter into an exclusive licensing agreement with respect to certain Affimers against a potential therapeutic target that has been part of an ongoing research collaboration between the two companies. Under the terms of the agreement Avacta may receive undisclosed payments upon future clinical development milestones and royalties in connection with future product sales.

Alastair Smith, Chief Executive Officer, commented:

“The Group remains focused on the key objective of first-time-in-human data for the Affimer therapeutic programme and growing a profitable Affimer reagents business.

First-time-in-human data is a significant value inflection point for the technology and a major de-risking point from a deal making perspective.  The Group remains on track, to a tight schedule, to dose first patients in late 2020.  The addition of Dr Jose Saro as Chief Medical Officer is a significant strengthening of the senior management team with regards this translation of programmes into the clinic.

Whilst the lead programmes progress into the clinic, the Group will continue to build-out its pipeline of immuno-oncology assets.  The Group believes that the TMAC platform incorporating a range of Affimer immune checkpoint mono- and multi-specific therapies, and the complimentary development of co-administered combinations of Affimers with the chemotherapy drugs arising from the TMAC programme, provides the potential to develop an extensive, highly differentiated and valuable drug pipeline in the years ahead.

The Group has recently reported a substantial collaboration and license agreement with LG Chem and the exercise of a commercial license option by Moderna with whom the Group has been collaborating with since 2015.  This combination of the growing technical and commercial progress is expected to help catalyse further significant partnerships in due course.

As a proven platform technology addressing multiple non-therapeutic markets the Group has the opportunity to establish a profitable reagents business, and there is significant upside potential as it builds a pipeline of valuable Affimer drug assets.”