ABH Angel Biotech

TIDMABH

RNS Number : 0347P

Angel Biotechnology Holdings Plc

19 October 2012

19 October 2012

Angel Biotechnology Holdings plc

("Angel" or "the Group")

Trading Update

On 14 September 2012 the Group announced in a market update the status of operations and developments covering the whole of the Group's activities. The Group intends that it shall provide regular announcements of the progress of such activities.

In the 14 September 2012 announcement the Group described the market conditions as very difficult and there has been little change since then with funding constraints of clients forcing delays and changed priorities with a number of potential customers. However, the Group is currently seeing an upturn in the volume of enquiries and bids, especially in areas opened up by the Group's wider commercial offering in biomedical collagen. The Group is focusing its efforts on the conversion of those opportunities which are adjudged to be the least dependent on external factors such as funding and offer the most immediate prospect of contracts to fill its facility at Cramlington and to utilise capacity at Angel Biomedical Limited. The Group anticipated that one of the first projects to be undertaken at Cramlington following receipt of its license was the contract with TransGenRx Inc. (Baton Rouge, USA), announced on 17 April 2012, for the development and scale up of a recombinant interferon product. The Group has reason to believe that TransGenRx Inc. is not currently in a position to proceed with the contract and, although the contract is still in place, the resulting delay to the start of commercial operations at Cramlington will have an adverse impact on earnings in the current financial year. The Group shall continue to press TransGenRx Inc. for a resolution of the current inactivity and will report as soon as TransGenRx Inc. has clarified its situation.

The Group continues to make good progress towards finalising the joint venture that will encompass the product development contracts for OOO "NPF Materia Medica Holding" ("MMH"). This joint venture was first announced in October 2011 and the Group is aware that the elapse of time has created some uncertainty in the marketplace. The proposed joint venture covers contracts and resources that currently form a substantial part of the Group's business and every care is being taken to ensure that the joint venture agreements will present an optimal result not only in the balance of commercial terms between the parties but also in providing a practicable and sustainable working relationship going forward and all this has taken time. At present the final versions of the legal agreements covering the joint venture and the services to be provided by Angel to the joint venture are being worked through and MMH has placed a project manager with Angel to oversee the smooth transfer of work from Angel to the joint venture. The Group's priority is that the joint venture is completed before the end of the calendar year and it is assured that this matches the intentions of MMH. In the meantime the Group is continuing to work on the contracts with MMH under the agreement announced on 14 September 2012 as a prelude to transferring the contracts and their work in progress into the joint venture. The agreement provides for a monthly fee structure which has been designed to be broadly cash neutral in line with the transfer of commercial risks to the joint venture.

The operational resource review, including staff rationalisation, announced on 14 September 2012 continues and, as the Group announced on 12 October 2012, has reached board level. The new Chairman will be actively working with the Executive team over the current and next quarter to conclude the review and execute a strategy to deliver the shortest and most sustainable route to positive earnings. A particular challenge is balancing the need to maintain levels of capability in the core contract manufacturing business, which costs money, against the current capriciousness of the core business market. Staffing levels will have fallen to 24 by the end of November 2012 from an average of 37 as reported in our Annual Report and Accounts for the period ended 31 March 2012 and, whilst the staff reduction also reduces the Group's cash consumption, the Group does not desire or expect to see it fall much further. Therefore, the next phase of the review is cautiously to build up and reinforce capability in the locations of the Group's future growth.

Mr Nicholas Smith said: "In the next few months the Group has to deliver the joint venture involving the MMH product development work and execute a strategy that broadens our commercial offering and reduces our exposure to uncontrollable third party risks. Success in the completion of the tasks and delivery of earnings is fundamental and the board and the Group's management are clear on what is expected of them."

For further information:

Angel Biotechnology Holdings plc

Nicholas Smith, Chairman +44 (0) 131 445 6077

enquiries@angelbio.com

Grant Thornton, Corporate Finance

Colin Aaronson / Melanie Frean +44 (0) 20 7383 5100

Hybridan LLP (Broker)

Claire Noyce, Deepak Reddy +44 (0) 20 7947 4350

Media enquiries:

The Communications Portfolio Ltd

Philip Ranger / Caolan Mahon +44 (0) 20 7536 2028 / 2029

Philip.ranger@communications-portfolio.co.uk

Notes to Editors:

Angel Biotechnology Holdings plc is a full service contract bio-manufacturing partner to biotechnology and pharmaceutical companies worldwide. Angel specialises in advanced biologics including biopharmaceutical proteins and cell therapies, such as cellular vaccines and stem cells. At present, Angel's products are principally used in pre-clinical studies and clinical trials with a view to becoming the contract manufacturer of choice on a continuing basis.

Drug development companies outsource their biopharmaceutical manufacturing requirements to Angel to reduce their own capital requirements and enable them to develop products more rapidly. In addition, Angel provides complete regulatory services and documentation to its customers while its manufacturing processes adhere to the most stringent regulatory requirements. Products are produced to current Good Manufacturing Practice (cGMP) standards as required by the US Food and Drug Administration (FDA), and in facilities that are certified to European standards by the Medicines and Healthcare products Regulatory Agency (MHRA).

Its customers range from early-stage biotechnology companies including ReNeuron plc and US-based Pathfinder Cell Therapy, to established pharmaceutical companies such as Russian-based Materia Medica Holdings.

Angel has three facilities: Pentlands Science Park near Edinburgh, a site in Cramlington, near Newcastle-upon-Tyne and Angel Biomedical Ltd facility in Glasgow.

More information is available at www.angelbio.com .

- Ends -

This information is provided by RNS

The company news service from the London Stock Exchange

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