Corporate Governance

Our Mission

Our Mission is to improve patients’ lives and grow shareholder value by developing novel cancer therapies and powerful diagnostics using our proprietary Affimer^® and pre|CISION™ platforms.

Investment opportunity

• Avacta operates through two separate divisions; in the oncology drug development market and the diagnostics sector.
• The Therapeutics Division is leveraging Avacta’s proprietary technologies to develop innovative oncology drugs that transform treatment outcomes to improve cancer patients’ lives.
• The Diagnostics Division is focused on supporting healthcare professionals and broadening access to testing.

Technology platforms

Avacta has two proprietary platform technologies – the Affimer^® and pre|CISION™ platforms – which are being used to deliver a robust portfolio of products that address multi-billion dollar markets.

• The pre|CISION™ targeted chemotherapy platform releases active chemotherapy directly in the tumour, limiting systemic exposure and side effects associated with many commonly used cancer treatments.
• Affimer^® molecules are engineered alternatives to antibodies that have significant competitive advantages including size, stability, versatility, rapid development and ease of production.

Therapeutics Division

• Avacta Therapeutics’ strategy is to build an in-house pipeline of first-in-class and best-in-class targeted cancer therapies and immunotherapies, and to accelerate the development of its platform technologies by working with partners.
• Data from the Phase I trial for the first candidate, AVA6000, confirms the pre|CISION^TM platform’s ability to target a toxin to the tumour microenvironment and transform the safety profile of such cancer therapies.
• AVA6000, a tumour targeted form of doxorubicin, has also shown encouraging preliminary clinical signs of anti-tumour activity.
• There is also significant longer-term potential to combine the two platforms to create next generation targeted ‘drug conjugate’ cancer treatments.
• The second pre|CISION™tumour-targeted chemotherapy candidate for development was announced in January 2022 and is a proteasome inhibitor referred to as AVA3996.
• Preclinical data regarding AVA3996, the second pre|CISION™ programme, a tumour targeted proteasome inhibitor, were presented at the American Association of Cancer Research Annual Meeting in April, and at AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in October along with data from other research programmes.
• AffyXell Therapeutics (“AffyXell”), the joint venture between Avacta and Daewoong Pharmaceutical (“Daewoong”) continued to progress well with the triggering of a second milestone payment. This will result in an increase in Avacta’s shareholding in AffyXell to approximately 25% from its current 19%, which will be determined when a formal valuation has been completed as was done for the first milestone payment.
• The growing body of clinical and pre-clinical data validating the pre|CISION^TM platform has supported an acceleration in the Group’s commercial activities including the appointment of Dr Simon Bennett as Chief Business Officer of the Therapeutics Division.

Diagnostics Division

• Avacta’s Diagnostics Division completed the acquisition of Belgium-based Coris Bioconcept SRL, a developer and manufacturer of rapid tests focused on infectious diseases, on 1 June 2023 for an upfront consideration of £7.3 million with an earnout based on future business performance of up to £3.0 million payable in cash, adding a broad range of marketed professional-use rapid tests to the Division.
• The Diagnostics Division, which also includes Launch Diagnostics, a leading UK IVD distributor that was acquired in October 2022, reported revenues of £21.2 million during 2023.
• The Group’s strategy is to divest the Diagnostics Division to create a pure-play oncology biopharmaceutical company in a manner which maximises value and strategic benefits for shareholders.

The Board believes that given its balance sheet at the end of 2023 and following the fundraise at the beginning of 2024, it has the right strategy in place to be able to deliver significant value inflection points driven primarily by its well-funded therapeutic programmes, and also from growing its Diagnostic Division into an attractive profitable business the short term will together drive significant future shareholder value.  

The Board has a collective responsibility and legal obligation to promote the interests of the Company and to define the corporate governance arrangements. At 30 April 2024, the Board comprised five Non-executive Directors and two Executive Directors. The profiles of the Directors are set out here. 

The division of responsibilities between the Chairman and the Chief Executive Officer is clearly defined. The Chairman’s primary responsibility is ensuring the effectiveness of the Board and setting its agenda. The Chairman is not involved in the day-to-day business of the Group. The Chief Executive has direct charge of the Group on a day-to-day basis and is accountable to the Board for the financial and operational performance of the Group.

The Chairman, Dr Eliot Forster, was appointed as Chairman to the Board in June 2018. Prior to his appointment to the Board, he was not involved with any part of the Avacta Group and has been considered to be independent since his appointment. Eliot has significant experience within US and European life science companies, in particular in the therapeutics area where the Group’s Affimer^® and pre|CISION^™ technologies have a significant focus. Eliot’s time commitment is one to two days per month.

The Chief Executive Officer, Dr Christina Coughlin, was appointed to the Board March 2022. Christina has an extensive background in the pharmaceutical and biotechnology fields, with a broad background of drug development from pre-IND to filing experience in global companies. Christina’s time commitment is full time.

Dr Trevor Nicholls was appointed as Non-executive Director in August 2013 and was Chairman from August 2013 to June 2018. Prior to his appointment to the Board, he was not involved with any part of the Avacta Group and has been considered to be independent since his appointment. Trevor has vast experience with life science and reagents companies and has provided significant oversight into the development of the Affimer^® reagents and diagnostics proposition. During the period Trevor has been Chairman of the Remuneration Committee. Trevor’s time commitment is one to two days per month.

Paul Fry was appointed as a Non-executive Director in February 2020. Prior to his appointment to the Board, he was not involved with any part of the Avacta Group and has been considered independent since his appointment. Paul has an extensive financial background within the life sciences sector and has been Chairman of the Audit Committee since his appointment to the Board. Paul’s time commitment is one to two days per month.

Dr Mark Goldberg was appointed as a Non-executive Director in August 2021. Prior to his appointment to the Board, he was not involved with any part of the Avacta Group and has been considered independent since his appointment. Mark has an extensive background as an Executive and Non-executive Director within the US biotechnology sector and is also a medical oncologist. Mark’s time commitment is one to two days per month.

Shaun Chilton was appointed as a Non-executive Director in June 2023. Prior to his appointment to the Board, he was not involved with any part of the Avacta Group and has been considered independent since his appointment. Shaun has held a number of senior and executive commercial positions over more than 30 years in companies in pharmaceutical and pharmaceutical services industries. Shaun’s time commitment is one to two days per month.

Tony Gardiner was appointed as an Executive Director in January 2016 and fulfils the role of Chief Financial Officer for the Group. Tony has over 25 years’ experience in senior financial and operational roles across small and large organisations and has previously served as CFO in an AIM-listed business. In addition to this role, Tony is also Company Secretary and provides advice and guidance to the Board and Non-executive Directors. The Board acknowledges that best corporate governance practice would not combine the role of an Executive Director and Company Secretary; however, given the relative size of the Group at this stage, the Board is comfortable with Tony performing both roles but will review the position as the Group grows. Tony’s time commitment is full time.

The Board met regularly throughout the year, either in person  or by video conferencing methods, with ad hoc meetings also being held. The role of the Board is to provide leadership of the Company and to set strategic aims but within a framework of prudent and effective controls which enable risk to be managed to acceptable levels. The Board has agreed the Schedule of Matters reserved for its decision, which includes ensuring that the necessary financial and human resources are in place to meet its obligations to its shareholders and others. It also approves acquisitions and disposals of businesses, major capital expenditure, annual financial budgets and recommends interim and final dividends. It receives recommendations from the Audit Committee in relation to the appointment of an auditor, their remuneration and the policy relating to non-audit services. The Board agrees the framework for Executive Directors’ remuneration with the Remuneration Committee and determines fees paid to Non-executive Directors. Given the relative size of the Company, there is currently no separate Nomination Committee and the Board, with advice from the Remuneration Committee, takes responsibility for any recruitment of Executive and Non-executive Directors, together with succession planning. Board papers are circulated before Board meetings in sufficient time to allow meaningful review and preparation by all Board members.

Each Director has a duty to avoid situations in which he or she has or can have a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Group. The Board requires each Director to declare to the Board the nature and extent of any direct or indirect interest in a proposed transaction or arrangement with the Group and the Company Secretary maintains a register of Directors’ other interests. The Board has power to authorise any potentially conflicting interests that are disclosed by a Director.

The Audit Committee (‘the Committee’) is established by and is responsible to the Board.

Paul Fry is the Chair of the Committee and is considered to be an independent Non-executive Director. Paul is a member of the Chartered Institute of Management Accountants and brings significant breadth of recent and relevant financial experience including his current role as Chief Financial Officer of Argenta and his prior role as Chief Financial Officer of Vectura Group Ltd, which was listed on the Main Market of the London Stock Exchange until it was acquired by Philip Morris International Inc. and subsequently de-listed in October 2021. The current members of the Committee – Eliot Forster and Trevor Nicholls, both of whom are Non-executive Directors – have gained wide experience in regulatory, commercial and risk issues.

The terms of reference of the Audit Committee include the following responsibilities:

• To monitor and be satisfied with the truth and fairness of the Company’s financial statements before submission to the Board for approval, ensuring their compliance with the appropriate accounting standards, the law and the Listing Rules of the Financial Services Authority
• To monitor and review the effectiveness of the Company’s system of internal control
• To make recommendations to the Board in relation to the appointment of the external auditor and their remuneration, following appointment by the shareholders in the Annual General Meeting, and to review and be satisfied with the auditor’s independence, objectivity and effectiveness on an ongoing basis
• To implement the policy relating to any non-audit services performed by the external auditor

The Board is responsible for risk management and reviewing the internal controls systems. The internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable, and not absolute assurance against material misstatement or loss. Given the relative size of the Group, there is not currently a separate internal audit function.

The Group highlights potential financial and non-financial risks which may impact on the business as part of the risk management procedures in the form of a Risk Register. The Board receives these reports periodically and monitors the position at Board meetings. There are ongoing processes for identifying, evaluating and mitigating the significant risks faced by the Group, which are reviewed on a periodic basis. The review process involves a review of each area of the business to identify material risks and the controls in place to manage these risks given the production, regulatory and supply chain considerations within the Diagnostics Division and the commencement of the first clinical trials in the Therapeutics Division. The process is undertaken by the Chief Financial Officer and senior managers with responsibility for specific controls. Where any significant weakness or failing is identified, implementation of appropriate remedial action is completed following approval by the Board.

The Group maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material loss or claims against the Group. The insured values and type of cover are comprehensively reviewed on a periodic basis.

Responsibility for investor relations sits with the Chief Executive Officer, supported by the Chief Financial Officer and Group Communications Director together with input from other members of the Senior Management Team as required.

The Company is committed to communicating openly with its shareholders to ensure that its strategy and performance are clearly understood. We communicate with shareholders through the Annual Report & Accounts, full-year and half-year announcements, trading updates and the Annual General Meeting, and we encourage shareholders’ participation using technology platforms such as the Investor Meet Company platform.

A range of corporate information (including the Annual Report & Accounts) is also available to shareholders, investors and the public on our website, www.avacta.com. The Company uses intermediaries such as Investor Meet Company and Vox Markets to ensure that key updates provided via RNS releases are relayed to as many shareholders as possible. The Directors encourage the participation of all shareholders, including private investors, at the Annual General Meeting, with over 100 shareholders attending the 2023 AGM in person.

The Chief Executive Officer and Chief Financial Officer meet regularly with institutional shareholders to foster a mutual understanding of objectives and communicate back to the Board. The Chairman and Non-executive Directors are also available to discuss governance and other matters directly with major shareholders.

The Company also holds science days, where investors and significant private shareholders are provided with an update on the Group’s scientific activities by members of the Board and Senior Management Team.

The Company has adopted a code on dealings in relation to the securities of the Group. The Company requires the Directors and other relevant employees of the Group to comply with the Share Dealing Code and takes proper and reasonable steps to secure their compliance.

The Board recognises the importance of corporate social responsibility and seek to take account of all of the interests of the Group stakeholders, including shareholders, partners, employees, customers and suppliers. The Board wants to establish and maintain an environment in which employees, suppliers and partners act in an ethical and socially responsible way in operating the business and the impact of its activities relating to health, safety and environmental issues.

 

Employee welfare and engagement

It is the Group’s policy to involve employees in its progress, development and performance. The Executive Directors regularly engage with employees, most of whom are either shareholders or holders of share options, to seek their views and provide briefings and presentations on key developments and strategy. The updates also follow key events within the financial reporting calendar and aim to give staff the same level of insight provided to institutional shareholders and analysts, providing details of the business objectives, strategy and business model, together with sharing of technical progress across the various teams within the Group. Senior management work across all the Group’s facilities and actively seek regular feedback from staff to ensure that the strategy and aims of the Group are readily understood.

Training, career development and promotion of disabled persons

Applications for employment by disabled persons are fully considered, bearing in mind the respective aptitudes and abilities of the applicants concerned. It is the policy of the Group that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who is fortunate enough not to suffer from a disability. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues.

 

Equal opportunities and diversity

The Group is a committed equal opportunities employer, and its employees and job applicants will receive equal treatment regardless of age, disability, gender reassignment, marital or civil partner status, pregnancy or maternity, race, colour, nationality, ethnic or national origin, religion or belief, sex or sexual orientation.

The Group does not have formal diversity quotas but recognises that a diverse employee profile is fundamental to the business. The gender profile across all employees as at 31 December 2023 was 52% female and 48% male.

Health and safety

The Group has well-defined health and safety policies and procedures, complying with current legislation and safeguarding staff, contractors and visitors. Tony Gardiner is the Executive Director responsible for health and safety, chairing Group meetings and reporting on health and safety matters to the Board. The Group’s policies and procedures form a part of staff induction and training programmes. Regular internal safety audits are carried out and no significant issues have been identified by these audits.

Ethics and compliance

The Group’s Diagnostics and Therapeutics Divisions operate around product development, drug development and clinical trials where there are highly regulated ethical frameworks in place.

Political and charitable donations

The Group does not make political or charitable donations, although charitable fundraising by employees is encouraged.

Modern slavery and human trafficking statement

The Group ensures that all employees are eligible to work in their country of employment. The majority of our workforce are employed directly; however, where agency workers are utilised, it is ensured that these same checks are performed by the supplier.

The Group has a Whistleblowing Policy, where anyone who raise concerns through a defined process, are protected. In addition, there are robust policies in place that ensure equality amongst colleagues, as well as deploying a zero-tolerance approach to harassment and bullying in all areas of the business.

Environment and greenhouse gas emissions

Due to the nature of the Group’s divisions, it has a low environmental impact, and seeks to minimise any environmental impact of its operations and complies with relevant regulations and legislation.

Work started during the period to develop the processes to measure and report on the Group’s Scope 1 and Scope 2 GHG emissions. This will allow the Group to better identify areas of focus in minimising the impact of its operations, as well as setting effective targets, and these will be refined over future periods.

In the table below:

• Scope 1 emissions cover direct emissions of greenhouse gas from fuel combustion
• Scope 2 emissions cover emissions from purchased electricity
• Scope 3 emissions cover all other indirect emissions that occur in a company’s value chain. They are not included in the reporting below but the Group will continue to develop its processes to allow measurement and reporting on these emissions in future periods.

	2023 GHG Emissions (CO2e metric tons)	2022 GHG Emissions (CO2e metric tons)
Scope 1	210	24
Scope 2	109	59
Total1	319	83

The increase in Scope 1 CO2_e metric tons in 2023 is largely attributable to the inclusion of a full year of emissions data relating to Launch Diagnostics, compared with a shorter two month period post-acquisition in 2022. These emissions are predominantly driven by car fleets of sales representatives and field service engineers. Launch Diagnostics is in the process of phasing out diesel vehicles in favour of hybrid or fully electric vehicles in an effort to reduce its Scope 1 emissions.

The increase in Scope 2 CO2_e metric tons in 2023 is again attributable to the inclusion of a full year of emissions dat for Launch Diagnostics, in addition to 7 months of emissions post-acquisition for Coris. In the year, Launch Diagnostics signed a lease for a new more energy efficient premises, with a better EPC rating. The new premises also has electric charging points for vehicles to support the change in car fleet.

In addition, the 2023 emissions data also includes reporting for Coris Bioconcept SRL since its acquisition date. Coris installed solar panels at their premises in Gembloux, Belgium to help minimise non-renewable energy usage.

Dr Eliot Forster
Chairman                                            

30 April 2024