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Avacta Group PLC
22 April 2021
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22 April 2021
Avacta Group plc
("Avacta", the "Group" or the "Company")
Preliminary Results for the year ending 31 December 2020
Significant progress in Diagnostics and Therapeutics
Divisions
Avacta Group plc (AIM: AVCT), the developer of diagnostics and
innovative cancer therapies based on its proprietary Affimer(R) and
pre|CISION(TM) platforms, is pleased to announce its preliminary
results for the year ending 31 December 2020.
Operating highlights
Operating highlights - Diagnostics
-- Rapid generation of a range of Affimer(R) reagents that bind
the SARS-CoV-2 coronavirus spike antigen for diagnostic testing
applications.
-- Collaboration with several partners to develop a rapid test
for the COVID-19 infection for mass population screening.
-- Appointed BBI Solutions, part of BBI Group ('BBI'), and
Abingdon Health to manufacture the saliva-based rapid SARS-CoV-2
antigen test.
-- Entered a collaboration with the Liverpool School of Tropical
Medicine ('LSTM') to provide analytical and clinical validation of
the rapid coronavirus antigen test.
-- Announced launch of an ELISA laboratory test for the
SARS-CoV-2 spike protein to support global research efforts into
the coronavirus that causes COVID-19.
-- Collaboration with Adeptrix (Beverly, MA, USA) to develop a
high throughput Affimer-based SARS-CoV-2 antigen bead-assisted mass
spectrometry test ('BAMS(TM) ' test) to be used on hospitals'
existing installed base of mass spectrometers to diagnose COVID-19
infection. Initiated clinical evaluation of BAMS(TM) SARS-CoV-2
antigen test at a UK NHS hospital site.
-- Exclusive distribution agreement announced with Medusa19
Limited ('Medusa19') for direct-to-consumer sales of a rapid
antigen self-test for Covid-19.
-- Major licensing agreement with Astrea Bioseparations Limited
('Astrea') for the use of the Affimer(R) platform in affinity
purification applications.
-- Successfully passed first audit by the Group's Notified Body
(BSI Group) of the Company's Quality Management System as first
step in establishing ISO13485 accreditation, a critical quality
assurance system for a developer and legal manufacturer of
diagnostic products and medical devices. The final audit will take
place in April 2021.
-- Strengthened and expanded diagnostics management team with
the appointment of a Product Manager, Head of Product Development
and Operations Director.
Post-period highlights - Diagnostics
-- AffiDX(R) SARS-CoV-2 Antigen Lateral Flow Test shows
excellent analytical sensitivity of 50 pg/ml of S1 spike protein
with a read time of 20 minutes. As far as the Group is aware and on
the basis of laboratory testing to date, this is currently the most
sensitive S1 spike lateral flow test available. On 16 February
2021, we announced the initial clinical evaluation of this test
using anterior (front) nasal swab samples (30 positive and 26
negative samples) which demonstrated a sensitivity of 96.7% for
samples with an infectious viral load (PCR Ct value < 26) and a
specificity of 100%. Subsequently, on 20 April we announced the
completion of the clinical validation of the AffiDX(R) SARS-CoV-2
antigen lateral flow test with excellent performance data (clinical
sensitivity of 98.0% for samples with Ct values up to 31 and
clinical specificity of 99.0%).
-- On 28 January 2021, we entered a collaboration agreement with
Bruker Corporation to evaluate the clinical utility and commercial
potential of the BAMS(TM) SARS-CoV-2 Antigen Test.
-- On 8 February 2021, we established a commercial partnership
with Mologic following several months' collaborative work to
provide Avacta with a faster route to market for the lateral flow
rapid antigen test by CE marking it for professional use under
Mologic's existing ISO13485 quality system. The CE mark will then
be transferred to Avacta after it receives ISO13485 accreditation,
which is expected in April 2021.
-- The collaboration with Mologic also provides initial
manufacturing capacity with the benefit of a short set-up time for
the lateral flow test with Global Access Diagnostics ('GAD'), in
addition to the agreements with BBI Group, Abingdon Health and
others, that will provide manufacturing capabilities that can be
scaled to several millions of tests per month.
-- On 9th March 2021, we announced a royalty bearing license
agreement with Biokit, a Werfen Company, to develop and
commercialise an Affimer-based in-vitro diagnostic test.
Operating highlights - Therapeutics
-- Established a partnered programme ('AffyXell Therapeutics') in South Korea with Daewoong Pharmaceutical Co. Ltd., to develop the next generation of cell and gene therapies, incorporating Affimer (R) proteins to enhance the immune-modulatory effects. Programme subsequently expanded to provide access to the Affimer(R) platform for neutralising Affimer(R) therapies for the treatment of seriously ill patients with COVID-19 and to also prepare to rapidly develop similar therapies for future global pandemics.
-- Demonstrated initial proof-of-concept for its proprietary new
class of drug conjugate, 'TMAC(R) ', in a pre-clinical animal model
of cancer.
-- Expanded the existing multi-target collaboration and
development agreement with LG Chem Life Sciences ('LG Chem') to
include new programmes incorporating Avacta's Affimer XT(TM) serum
half-life extension system, deal worth up to $98.5 million plus
royalties.
-- Appointment of Neil Bell as Chief Development Officer
responsible for the late stage pre-clinical and early clinical
development of Avacta's pipeline of pre|CISION(TM) pro-drugs and
Affimer(R) immunotherapies.
-- Submitted the Clinical Trial Authorisation (CTA) to the UK
Medicines and Healthcare products Regulatory Agency (MHRA) for a
phase I dose-escalation and expansion study of AVA6000
pro-doxorubicin, Avacta's first pre|CISION(TM) FAP-activated
prodrug.
-- On schedule to select the next pre|CISION(TM) prodrug
chemotherapy clinical development candidate from the pipeline by
the end of 2021.
-- Significant progress with in-house Affimer(R) bispecific
programmes towards selection of a clinical development candidate by
the end of 2021. Two new programmes initiated, building on the
AVA004 PD-L1 antagonist programme: AVA027, a PD-L1/TGf<BETA>
receptor trap combination, and AVA028, a PD-L1/IL2 bispecific.
Post-period highlights - Therapeutics
-- On 7 January 2021, we announced the licensing agreement with
Point Biopharma Inc to provide access to Avacta's pre|CISION(TM)
technology for the development of tumour-activated
radiopharmaceuticals.
-- Key appointments of Head of Chemistry, Manufacturing and
Controls (CMC), Head of Clinical Operations and Head of
Translational Sciences will together manage an extensive outsourced
network of drug development service providers.
-- On 1 February 2021, AffyXell Therapeutics ('AffyXell'), the
partnered programme with Daewoong Pharmaceuticals ('Daewoong'),
closed a series A venture capital investment of $7.3m to further
develop its pipeline of next generation cell and gene
therapies.
-- On 18 February 2021, the Medicines and Healthcare products
Regulatory Agency ('MHRA') approved the CTA for AVA6000
pro-doxorubicin for a phase I, first-in-human, open label,
dose-escalation and expansion study in patients with locally
advanced or metastatic selected solid tumours. The Group
anticipates dosing first patients in mid-2021 subject to COVID-19
restrictions on hospital resources with first pharmacokinetics
read-out possible before the year end.
Financial and Corporate highlights
-- Fundraisings completed during the period raising GBP53.8
million to expand Diagnostics and Therapeutics programmes.
-- Cash and short-term deposit balances at 31 December 2020 of
GBP47.9 million (31 December 2019: GBP8.8 million)
-- Revenues of GBP3.6 million for year ended 31 December 2020
(17-month period to 31 December 2019: GBP5.5 million)
-- Operating loss of GBP21.3 million for year ended 31 December
2020 (17-month period to 31 December 2019: GBP18.0 million)
-- Increased R&D investment across diagnostics and
therapeutic programmes, leading to reported loss of GBP18.9 million
(17-month period to 31 December 2019: GBP15.6 million)
-- Loss per ordinary share 8.4p (17-month period to 31 December 2019: 13.0p)
-- Paul Fry appointed as Non-executive Director. Paul is Chief
Financial Officer of Vectura Group plc, an industry-leading inhaled
drug delivery specialist listed on the FTSE Main Market.
Dr Alastair Smith, Chief Executive Officer of Avacta Group,
commented:
"There is no doubt that 2020 was a momentous year for Avacta. I
am enormously proud of the entire team who have been instrumental
in delivering this transformational growth and creating substantial
commercial and clinical opportunities for the Group for 2021 and
beyond, despite the difficult working conditions imposed on
laboratory working by the COVID-19 pandemic.
We are now very close to self-declaration of the CE mark of the
AffiDX(R) rapid antigen test for professional use and commercial
launch in early May. We have made very good commercial progress
with potential distributors, licensing partners and large-scale end
users and demand is strong. We also expect to see the first
pharmacokinetic data for AVA6000 before the end of the year which
will give us the first indication of the effectiveness of the
pre|CISION(TM) chemistry in humans so I am very much looking
forward to updating the market on these events and other progress
across the Group during the coming months."
- Ends -
For further information from Avacta Group plc, please
contact:
Avacta Group plc Tel: +44 (0) 844 414 0452
Alastair Smith, Chief Executive www.avacta.com
Officer
Tony Gardiner, Chief Financial
Officer
finnCap Ltd (Nominated Adviser Tel: +44 (0) 207 220 0500
and Joint Broker)
Geoff Nash / Giles Rolls - Corporate www.finncap.com
Finance
Tim Redfern - ECM
Stifel Nicolaus Europe Limited Tel: +44 (0) 207 710 7600
(Joint Broker)
Nicholas Moore / Nick Adams www.stifel.com
/ Fred Walsh / Ben Maddison
FTI Consulting (Financial Media Tel: +44 (0) 203 727 1000
and IR)
Simon Conway / Stephanie Cuthbert Avacta.LS@fticonsulting.com
Zyme Communications (Trade Tel: +44 (0) 7787 502 947
and Regional Media)
Katie Odgaard katie.odgaard@zymecommunications.com
About Avacta Group plc - https://www.avacta.com
Avacta Group is developing novel cancer immunotherapies through
its Therapeutics division and powerful diagnostics through its
Diagnostics division, based on its two proprietary platforms -
Affimer(R) biologics and pre|CISION(TM) tumour-targeted
chemotherapies.
The Affimer(R) platform is an alternative to antibodies derived
from a small human protein. Despite their shortcomings, antibodies
currently dominate markets, such as diagnostics and therapeutics,
worth in excess of $100 billion. Affimer(R) technology has been
designed to address many of these negative performance issues,
principally: the time taken to generate new antibodies and the
reliance on an animal's immune response; poor specificity in many
cases; their large size, complexity and high cost of
manufacture.
Avacta's pre|CISION(TM) targeted chemotherapy platform releases
active chemotherapy in the tumour, which limits the systemic
exposure that causes damage to healthy tissues, and thereby
improves the overall safety and therapeutic potential of these
powerful anti-cancer treatments.
The Group comprises two Life Sciences divisions - Therapeutics
and Diagnostics - and an Animal Health division. Therapeutics
development activities are based in Cambridge, UK and the Group is
generating near-term revenues from Affimer(R) reagents for
diagnostics, bioprocessing and research through a separate
diagnostics business unit based in Wetherby, UK and an Animal
Health division also based in Wetherby.
Avacta's Diagnostics division works with partners world-wide to
develop bespoke Affimer(R) reagents for third-party products. The
Group is also developing an in-house pipeline of Affimer-based
diagnostic assays including the AffiDX (R) SARS-CoV-2 Antigen
Lateral Flow Test and an AffiDX (R) BAMS(TM) SARS-CoV-2 Assay in
partnership with Adeptrix Inc.
Avacta's Therapeutics division is addressing a critical gap in
current cancer treatment - the lack of a durable response to
current immunotherapies experienced by most patients. By combining
its two proprietary platforms, the Group is building a wholly owned
pipeline of novel cancer therapies deigned to be effective for all
cancer patients. In 2021 Avacta will commence a phase I
first-in-human, open label, dose-escalation and expansion study of
AVA6000 pro-doxorubicin, the Group's lead pre|CISION(TM) prodrug,
in patients with locally advanced or metastatic selected solid
tumours.
Avacta has established drug development partnerships with pharma
and biotech, including a research collaboration with ModernaTX,Inc.
(formerly Moderna Therapeutics Inc.), a multi-target deal with LG
Chem worth up to $400 million, a partnered programme in South Korea
with Daewoong Pharmaceutical focused on cell and gene therapies
incorporating Affimer(R) immune-modulators, a partnership with ADC
Therapeutics to develop Affimer-drug conjugates and a collaboration
with Point Biopharma to develop radiopharmaceuticals based on the
pre|CISION(TM) platform. Avacta continues to actively seek to
license its proprietary platforms in a range of therapeutic
areas.
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Chairman and Chief Executive Officer's Statement
The significant progress achieved in both the Diagnostics and
Therapeutics divisions during 2020 has already enabled us to
deliver further major value inflection points during the first four
months of 2021.
We are very excited by the commercial potential of our scalable,
rapid coronavirus test. The recently announced excellent clinical
validation data (sensitivity of 98.0% for samples with Ct values up
to 31 and specificity of 99.0%) strongly reflects the excellent
analytical performance demonstrated in the lab and suggests that it
may be, to date, the most sensitive S1 spike protein lateral flow
test.
Despite unprecedented pressures on the Diagnostics division, we
now have the infrastructure in place to support the commercial
launch of this test. Importantly, we are close to completing the
establishment of a complex supply chain for the scalable
manufacture of the test kits and we are making timely progress in
instituting a quality management system to support the required
ISO13485 accreditation for medical devices.
In line with commitments we made during the fund-raise last
summer, in the Therapeutics division we expanded our in-house
pre-clinical pipeline and kept our partnered programmes moving
forwards despite the restrictions of COVID-19 safe-working. We also
appointed Neil Bell as Chief Development Officer, who has now
established a clinical development team to drive the Company's
transition to a clinical stage biotech.
In December, we submitted a Clinical Trial Authorisation ('CTA')
to the UK's MHRA for our lead pre|CISION(TM) platform drug
candidate, AVA6000 pro-doxorubicin, and I am delighted that we
recently received approval from the Agency to proceed with the
phase I study, which we expect will dose first patient around the
middle of the year.
Fund-raising
During 2020, the Group completed two fund-raises, which
delivered a combined GBP53.8 million, transforming the Group's
abilities to develop both its diagnostics and therapeutics
businesses. These fund-raises have significantly strengthened the
Group balance sheet, with GBP47.9 million of cash and short-term
deposits at 31 December 2020 and will provide funding for the Group
into 2023.
Board changes
In February 2020, Paul Fry joined the Board as a Non-executive
Director and has become the Chairman of the Audit Committee. Paul,
who is also Chief Financial Officer of Vectura plc, brings with him
a wealth of financial experience across several sectors including
biotech, pharmaceutical and telecommunications.
On 24 March 2021, Dr Mike Owen stepped down from his Board role
as Non-executive Director having served as a Director since 2015.
We would like to thank Mike for his significant commercial and
scientific input to the Board. Mike will continue to chair the
Scientific Advisory Group in a non-Board role.
Our people
The commitment of our employees during the last year has been
exceptional. Despite significant restrictions on normal working
practices due to the pandemic their efforts have transformed the
Group. Our employees are actively engaged in our strategic plans
and in delivering shareholder value, and many of them are also
shareholders in the Group. Their work in implementing quality
systems, developing Affimer(R) reagents for COVID-19 development
projects in very short timescales, submitting the relevant
submissions for our first clinical trials and maintaining
development programmes with our partners across the world has been
truly inspiring.
Effects of the COVID-19 pandemic
The ability of the Group's Diagnostics division to react to the
COVID-19 pandemic and help provide a solution, which could bring
the impacts of pandemic on daily life to an end has been
transformational for the Group. The interest generated with
shareholders created the opportunity to raise significant funds to
support the Group in developing its diagnostics and therapeutics
platforms.
The downsides of the pandemic have led to many challenges in
working practices across the Group, with scientific staff working
shifts to ensure safe laboratory working practices and support
staff working from home where possible to reduce the number of
staff at each site. Additional premises have been taken on in both
Cambridge and Wetherby and either have been fitted out, or are
being fitted out, to provide further laboratory space for all the
scientific teams to return to the laboratories full time and allow
for the expansion of the teams over the coming months.
There has been an impact on the therapeutic programmes and some
changes to work programmes were necessary in the early lockdown
period whilst we managed staff numbers on site. Our contract
manufacturing and clinical operations partners also reduced
staffing levels, which caused some delays to programmes. This also
had an impact on our partnered programme revenues recognised during
2020, with some revenues based on FTE work slipping back into 2021.
However, the teams are now focused on bringing the programmes to
fruition with our partners.
The dosing of first patients in our AVA6000 phase I study, now
that we have regulatory approval, is due to commence in the middle
of 2021. The exact timings of this will be determined by how
quickly the pressure on clinicians and hospitals is reduced from
the COVID-19 pandemic.
Our Animal Health division's revenues were impacted during the
first lockdown as veterinary practices were focusing on emergency
cases, with more routine appointments in relation to allergy or
therapy testing being put on hold. The division took the
opportunity to assess its product portfolio and routes to market
during this time. Whilst some staff transferred across to our
diagnostics team there were unfortunately two redundancies because
of this process and new routes to market. Following a non-cash
impairment charge of GBP1.74 million, and with the business
recovering strongly in the second half of the year to deliver a
small operating profit, it is now positioned well for trading in
2021.
The Board continues to monitor and assess the impact of COVID-19
and the impact it has on the Group's businesses.
Outlook
We are very proud of the Avacta team and how they have overcome
the substantial challenges presented by the pandemic and continued
to progress our programmes and generate substantial shareholder
value. There are several significant milestones to deliver during
2021, with the dosing of the first patient in the AVA6000 clinical
trial, the anticipation of initial pharmacokinetic data for AVA6000
and the pre|CISION(TM) platform before year end, and the launch of
the SARS-CoV-2 antigen lateral flow test with the potential to
generate substantial revenues. We look forward to updating the
market on these very exciting milestones ahead of us in due
course.
Eliot Forster Alastair Smith
Non-executive Chairman Chief Executive Officer
22 April 2021 22 April 2021
Diagnostics Division
-- Poised to capitalise on a substantial commercial opportunity
for high quality rapid testing for COVID-19.
-- A pipeline of non-COVID-related in-house diagnostic tests for
a range of diseases and conditions being developed to be brought to
market from 2022 onwards, adding to long-term COVID-19 testing
revenues.
-- Affimer (R) reagent licensing deals for diagnostic and other
applications now being delivered for a pipeline of Affimer (R)
technology evaluations creating the potential for long-term royalty
income.
AffiDX (R) SARS-CoV-2 Lateral Flow Rapid Antigen Test for
potential mass deployment
During the past year Avacta, in conjunction with its partners,
has made substantial progress in the development of its Affimer(R)
based, SARS-CoV-2 antigen lateral flow test. Laboratory studies
showed that it may be the most sensitive S1 spike protein lateral
flow test available to date and recent clinical validation data has
reflected this strong analytical performance. The clinical study
tested 98 positive COVID-19 samples across a broad range of high
and low viral loads (31 with Ct<26; 65 with Ct 26-30 and 2 with
Ct 30-31). The test identified 96/98 of these correctly as positive
with a 20 minute read time resulting in a clinical sensitivity of
98.0% for samples within this broad range down to low viral loads.
Out of a total of 102 negative samples tested with the lateral flow
device, the test correctly identified 101 as negative, giving a
clinical specificity of 99.0%.
The test is therefore capable of identifying individuals with
infectious viral loads using an anterior nasal swab sample. Such a
test is suitable for mass deployment to identify those people who
are likely to infect others so that they can isolate and reduce the
spread of the infection.
Lateral flow tests are a complement to, not a replacement for,
PCR testing.
How a diagnostic test is used, called the 'Intended Use Case',
is extremely important and it must be adhered to in order to avoid
a test being used inappropriately. A rapid antigen test with high
specificity and good sensitivity can be used effectively to
identify the majority of people with a high viral load that makes
them infectious so that they can isolate themselves. Frequent
testing, at least once every few days and ideally daily, is
important so that as soon as the viral load of an infected person
becomes high enough to be infectious that person is identified.
The first challenge in developing a clinically useful rapid
coronavirus test for mass population screening is to understand
what viral load should be considered infectious.
Patient samples can be characterised in a number of ways, but
the most common are as follows:
-- Genome copies per millilitre (i.e., how many copies of the
virus RNA are present in a millilitre of sample)
-- Plaque forming units ('pfu') per millilitre (i.e., how many
viable viruses that can infect cells and multiply are present in a
millilitre of sample). The number of pfu/ml and genomes/ml are
different because there is RNA present in samples that is not
assembled into viable virus particles (i.e., the genomes per ml is
higher than the pfu per ml). These two measures of infection vary
in a way which has not yet been fully characterised, but there is
probably between 10 - 10,000 more genomes/ml than pfu/ml in a
sample
-- Cycle time ('Ct'), which is the number of amplification
cycles of PCR required to detect the virus (i.e., a low Ct value
means that the person has higher viral load because it took fewer
amplification cycles to become detectable). Ct values vary between
different PCR tests, and even between different laboratories
running the same test, so this should also be taken into
account
A reasonable assumption, based upon the growing combined
understanding of SARS-CoV-2 and COVID-19, is that a person is
infectious and likely to infect others if their viral load is >
10,000 genomes/ml (i.e., approximately > 100 pfu/ml and Ct <
25). According to recently published data from the Liverpool Covid
Smart Pilot, a viral load of < 10,000 genome/ml leads to a
likelihood of infecting others of around 10%. Therefore, at this
low end of the infectious range the risk of infecting others
appears to be quite low. Whereas the risk of a person with a viral
load 1,000,000 genome copies/ml is around 50%. Highly infectious
people can have viral loads > 100,000,000 genome copies/ml.
With all this in mind, for a rapid antigen test to have clinical
utility (and therefore sustainable commercial value) it should be
able to detect SARS-CoV-2 viral load of a few hundred pfu/ml, or Ct
of 25 or below, or > 10,000 genomes/ml. Clearly, the lower the
detection limit the better, and a test must be able to achieve this
limit of detection in real patient samples and not just in
contrived 'clean' laboratory samples.
Laboratory testing suggests that the AffiDX (R) SARS-CoV-2
Antigen Lateral Flow Test could be the most sensitive spike antigen
test so far available.
The AffiDX(R) SARS-CoV-2 Antigen Lateral Flow Test detects the
SARS-CoV-2 S1 spike protein and has an analytical limit of
detection ('LOD') in nasal swab samples of 50 pg/ml. This can be
achieved with a visual read time of 10 minutes. The test line is
clearer if a longer read time is used, therefore a read time of 20
minutes has been adopted as the standard for this test.
How does this analytical sensitivity translate into pfu/ml of
virus, which is the clinically relevant measure? Avacta has
established this relationship using Avacta's research ELISA for S1
protein and inactivated virus provided by Public Health England
(Porton Down, UK). Using this safe form of the virus, we have shown
that an analytical LOD of 50pg/ml corresponds to the amount of S1
spike protein in a virus sample containing 500 pfu/ml.
A significant proportion of the development time of the
AffiDX(R) SARS-CoV-2 Antigen Lateral Flow Test has been focused on
achieving this level of sensitivity in human saliva and nasal swab
clinical samples. The development work has been carried out
in-house and with our development partners using saliva and
anterior nasal swab samples taken from healthy volunteers to which
the S1 spike protein has subsequently been added to known
concentrations to generate a contrived clinical sample. The key
challenge in developing the test has been to get these complex
human fluids to flow properly in the device and to eliminate false
positive results arising from unknown material in nasal samples and
saliva. This has been achieved through detailed studies evaluating
a range of different additives to the lateral flow test and sample
extraction buffer for both nasal and saliva samples. The Group
announced in Q4 2020 that it would focus on anterior nasal sampling
because of the variability of saliva samples, although the test
works with both sample types. The UK Department of Health and
Social Care has also recently focused on nasal and other swab
samples rather than saliva.
In summary, the AffiDX(R) SARS-CoV-2 Antigen Lateral Flow Test
has excellent analytical sensitivity (LOD) of 50 pg/ml S1 spike
protein, which appears sensitive enough to detect the lowest viral
loads of relevance to the Intended Use Case, with a read time of 20
minutes. As far as the Group is aware, this is the most sensitive
S1 spike lateral flow test available.
The analytical specificity of the Affimer(R) reagents has been
reported previously with no cross-reactivity with the S1 spike
proteins from closely related coronaviruses: MERS-CoV S1,
SARS-CoV-1 S1, HC0V-229E S1, HCoV-HKU1 S1, HCoV-NL63 S1 or
HCoV-OC43 S1.
The test detects the D641G mutant of the original coronavirus,
and the Group expects that the test will also detect the newer
coronavirus variants. Work is ongoing with Public Health England to
confirm this.
Clinical evaluation of AffiDX (R) SARS-CoV-2 Antigen Lateral
Flow Test
The clinical performance of a diagnostic test cannot simply be
inferred from the analytical performance because of the complex
pathology of diseases which control the amount of a biomarker that
is available in a sample when added to the test. In the case of
COVID-19, there is a complex series of biological processes that
determine how much of the virus spike protein is actually present
in the anterior (front) part of the nose to be picked up on a swab
and then released into a buffer to be added to the lateral flow
test strip. A clinical evaluation of the test is the only way to
determine whether it is capable of identifying infectious
individuals.
The initial evaluation of Avacta's lateral flow rapid antigen
test with clinical samples was carried out at two sites, one in the
EU and one in the UK using patient samples with viral loads
confirmed by PCR. 30 positive samples were tested with Ct values of
26 and below, with half of those in the range 22-26, and the
lateral flow test identified 29/30 of these correctly as positive.
This indicates a clinical sensitivity of 96.7% for samples with a
Ct value below 26. Importantly, out of a total of 26 negative
samples tested with the lateral flow device, the test correctly
identified all 26 as negative, giving a clinical specificity of
100%. High specificity is critical for a lateral flow test for mass
screening so that large numbers of false positives are not
generated, which would create a major burden on follow-on testing
resources, and result in a significant socio-economic cost of
unnecessarily isolating people.
The second clinical validation for CE marking purposes was
carried out at a single site in Europe and reported on recently.
The study tested 98 positive samples (31 with Ct<26; 65 with Ct
26-30 and 2 with Ct 30-31). Avacta's rapid antigen test identified
96/98 of these correctly as positive with a 20 minute read time
resulting in a clinical sensitivity of 98.0% for samples within
this broad range down to low viral loads. Out of a total of 102
negative samples tested with the lateral flow device, the test
correctly identified 101 as negative, giving a clinical specificity
of 99.0%.
On the basis of these excellent clinical data, the Group will
now complete the technical file, including accelerated stability
data, for CE marking the test for professional use early in May
followed immediately by commercial roll-out.
Avacta Diagnostics division expects ISO13485 accreditation early
in Q2 2021
Avacta's Diagnostics division has completed the two audits of
the Group's Quality Management System that are required by its
external auditor in order to award ISO13485 accreditation and is
awaiting confirmation of the outcome.
Medical device manufacturing is a highly regulated sector in
which stringent quality systems and product performance
requirements must be satisfied. These regulatory requirements are
intended to ensure that manufacturers consistently design, produce
and place onto the market medical devices that are safe and fit for
their intended purpose. ISO13485 certification provides a practical
foundation for diagnostics and medical device manufacturers to
address these regulatory requirements and obligations of the
industry, as well as demonstrating a commitment to device safety
and quality.
The Diagnostics division has established a Quality Management
System and the first external audit by the Group's Notified Body
(BSI Group) was passed in December successfully. The second and
final audit was scheduled in March 2021, but due to a COVID-19 case
at Avacta's Wetherby site, the second audit has been split into two
with the final site visit now occurring in early April. The Group
is awaiting confirmation of a positive outcome to this second
audit. This certification sets the organisational and operational
framework for all current and future diagnostic product
developments and it is an essential accreditation that underpins
future commercial success.
Mologic partnership enables near-term AffiDX (R) CE mark for
professional use
Whilst the Group establishes its own ISO13485 accreditation, in
order to achieve the fastest possible and lowest risk route to CE
marking, Avacta has established a partnership with Mologic Ltd. so
that the AffiDX(R) SARS-CoV-2 Antigen Lateral Flow Test can be CE
marked for professional use quickly under Mologic's established
ISO13485 Quality System. The CE mark will then be transferred to
Avacta when it achieves ISO13485 accreditation, which is expected
early in May 2021. As part of the collaboration between the two
companies, Avacta and Mologic are also exploring the possibility of
combining Avacta's spike antigen test with Mologic's nucleocapsid
antigen test in a single device which would be a world first and
has the potential to deliver the most sensitive rapid antigen test
possible. The two companies will evaluate whether the two tests can
be combined in a single device and then make a commercial decision
on whether to pursue this second generation COVID-19
diagnostic.
Avacta will immediately be able access initial manufacturing
capacity through Mologic's close partner Global Access Diagnostics
(GAD), in addition to scale-up manufacturing capacity with BBI and
Abingdon Health. Combined, these manufacturing partnerships can
scale up to several million tests per month and potentially much
higher with further investment. Avacta is also continuing its
discussions with other manufacturers in the UK and overseas in
order to be able to access additional capacity to ensure that it
can meet the expected demand.
The Group continues its commercial discussions with potential
customers for the AffiDX(R) SARS-CoV-2 Antigen Lateral Flow Test
and expects demand to be present for rapid testing for at least two
years and probably for longer. Only by having a high-quality test
that identifies the majority of infectious individuals can this
clinical need be translated into commercial success and the Group
believes that the recent initial clinical data are extremely
encouraging in that regard.
Healthcare services providers and governments are likely to be
the largest volume customers of a professional use rapid antigen
test and with an estimated price point in the mid-single digit GBP
range. A higher price point is anticipated for sales to corporates
for workforce testing.
BAMS(TM) SARS-CoV-2 assay
In collaboration with Adeptrix Inc, Avacta has developed a mass
spectrometry assay on Adeptrix's BAMS(TM) platform which combines
enrichment of the sample using Avacta's SARS-CoV-2 spike protein
Affimer(R) binders to improve sensitivity with the power of
mass-spectrometry for analysis. Up to one thousand samples per day
can be analysed by a single technician using BAMS, exceeding the
capacity of a single PCR machine.
In January, Avacta established a collaboration with Bruker
Corporation (Billerica, MA) (NASDAQ: BRKR, 'Bruker') to evaluate
the Affimer-based SARS-CoV-2 BAMS(TM) assay and assess the
suitability of the test as a professional-use in-vitro diagnostic
('IVD') product for SARS-CoV-2 infection to run on Bruker's
MALDI-TOF instruments.
Bruker is one of the world's leading analytical instrumentation
companies, providing high-performance scientific instruments and
high-value analytical and diagnostic solutions to scientists
globally. It is also one of the foremost suppliers of mass
spectrometers with a significant installed based in clinical
microbiology laboratories in hospitals world-wide.
Having successfully developed a prototype test with Adeptrix,
Avacta, has been working with its clinical partners in the UK to
refine the assay to fit into the typical workflows in a clinical
microbiology laboratory and to work well on the type of simplified
mass spectrometer that is found in this setting. Avacta is working
closely Bruker and Adeptrix on this process.
There is now a well-established PCR-testing capacity in most
countries that is capable of dealing with current demand, making
the commercial case for mass spectrometer based additional capacity
less compelling than anticipated by the two companies. In light of
this rapidly changing COVID-19 hospital testing market Avacta is
working closely with Bruker and Adeptrix to review the commercial
strategy for the SARS-CoV-2 assay and for a wider range of BAMS
proteomics tests in general.
Non-COVID diagnostics update
Post-period end, the Group entered into a licence agreement with
Astrea for the use of the Affimer(R) platform in affinity
purification applications.
Astrea is a leading provider of affinity separation solutions to
the pharmaceutical and biomanufacturing industries. It is a
division of Gamma Biosciences, the life sciences tools platform
created by KKR, to build a leading position in next generation
bioprocessing for advanced therapies.
This is an important validation of one part of the Group's
business model for non-therapeutic Affimer(R) applications - that
of third-party technical evaluations of bespoke Affimer(R) reagents
generated for a specific application leading to licensing of those
Affimer(R) reagents and long-term royalty-based revenue streams.
Astrea has evaluated certain Affimer(R) reagents for affinity
separation, resulting in the agreement between the two companies
for a non-exclusive licence for the use of the Affimer(R)
technology in this field.
The agreement includes a GBP0.5 million upfront payment to
Avacta which gives Astrea the rights to generate and develop
Affimer(R) reagents in-house for affinity separation using an
Affimer(R) library to be provided by Avacta. It also provides
Astrea with an option to convert the agreement into an exclusive
licence if certain commercial performance criteria are met over the
next three years and subject to the payment of an additional
undisclosed option exercise fee.
Avacta will receive royalties on future sales of Astrea's
purification products that contain Affimer(R) reagents.
Although the pandemic has affected the Group's business
development activities, it continues to generate new projects and
to work on established Affimer(R) evaluations with partners to
generate further licensing agreements.
The Group is also developing an in-house pipeline of
Affimer-based diagnostic tests. Resources have been focused during
2020 primarily on the immediate COVID testing opportunities, and
since the lateral flow test is now in clinical evaluation the Group
is in a position to begin to refocus its research and development
resources onto non-COVID diagnostic tests, which include assays for
D-dimer, cortisol, vitamins D and B12 and C-reactive protein, a
test with regard to liver function. Avacta has recently appointed a
Product Manager who joined the Group in March whose role is to
define the market opportunity and performance requirements for new
tests to feed the product development pipeline in the future. This
appointment is part of a wider expansion of the Diagnostics
division's management team which also includes a Head of Product
Development and Operations Director.
During the pandemic, in order to maintain a COVID safe working
environment the Group has not been able to have all laboratory
staff on site at the same time and has worked in two teams. New CAT
2 laboratory facilities in Wetherby have been completed and
equipment that has been installed and validated to satisfy the
requirements of ISO13485. The new facilities can house about 20
staff and all scientific staff are now able to work full time in
the laboratories.
Therapeutics Division
Wholly-owned Therapeutic Pipeline
-- Poised to transition into a clinical stage biotech with the
dosing of first patient in mid-2021 with the first pre|CISION (TM)
pro-drug, AVA6000 pro-doxorubicin, in a phase I study in patients
with locally advanced or metastatic selected solid tumours.
-- Pipeline of multiple Affimer (R) and pre|CISION (TM) clinical
candidates to be generated in 2021 and 2022 for pre-clinical and
clinical development.
Approval of CTA for AVA6000, the Group's lead pre|CISION(TM)
prodrug, is a key milestone.
The Group achieved a significant milestone with the submission
in Q4 2020 and subsequent approval on 19 February 2021 from the
MHRA (Medicines and Healthcare products Regulatory Agency) of the
Clinical Trial Authorisation (CTA) for AVA6000 pro-doxorubicin, the
Group's lead pre|CISION(TM) prodrug, for a phase I, first-in-human,
open label, dose-escalation and expansion study in patients with
locally advanced or metastatic selected solid tumours. The Group
anticipates dosing first patients in mid-2021, subject to COVID-19
restrictions on hospital resources, with first pharmacokinetics
read-out possible before the year-end.
Instrumental in achieving the CTA submission milestone was the
appointment of Chief Development Officer, Neil Bell, who has
rapidly established a highly experienced clinical development team
including a Head of Chemistry, Manufacturing and Controls (CMC),
Head of Clinical Operations and Head of Translational Medicine
appointed in-house to manage an extensive outsourced network of
service providers.
In AVA6000, Doxorubicin has been modified with Avacta's
pre|CISION(TM) chemistry, which renders the modified drug inactive
in the circulation until it enters the tumour micro-environment.
Here it is activated by an enzyme called FAP (fibroblast activation
protein), which is in high abundance in most solid tumours but not
in healthy tissue such as the heart. AVA6000 has been shown in
animal models to significantly increase the amount of active drug
in a tumour compared with the heart and should thereby improve
tolerability and achieve better clinical outcomes for patients
Phase I study will be clinical proof-of-concept of the
pre|CISION (TM) platform
The phase I study is a first-in-human, open-label, multi-centre
study to be carried out in the UK in patients with locally advanced
or metastatic solid tumours which are known to be FAP positive,
including pancreatic, colorectal, breast, ovarian, bladder and
non-small cell lung cancers, squamous cell carcinoma of the head
and neck and soft-tissue sarcoma.
The dose-escalation phase of the study, which will be carried
out in 15 to 20 patients, is designed to evaluate the safety of
AVA6000 in humans and establish the appropriate dosing levels for
the dose expansion phase of the study.
The dose expansion phase will consist of up to three studies in
specific tumour types to further evaluate safety and tolerability
and to explore the anti-tumour activity of AVA6000 when
administered as a monotherapy. This phase of study will comprise 45
to 60 patients in total.
If the AVA6000 study shows that the pre|CISION(TM) chemistry is
effective in reducing systemic toxicity of Doxorubicin in humans,
then it can be applied to a range of other established
chemotherapies to improve their safety and efficacy. This would
open up a pipeline of next generation chemotherapies for the Group,
with significant clinical and commercial value in a chemotherapy
market that is expected to grow to $56 billion by 2024.
The Group is on schedule to select the next clinical development
candidate by the end of 2021 from the pre|CISION(TM) prodrug
pipeline. Lead programmes include: AVA3996, a FAP<ALPHA>
activated proteasome inhibitor; AVA7500, a FAP<ALPHA>
activated platin; and AVA7000, a FAP<ALPHA> activated taxane.
These are being developed in close collaboration with Professor
William Bachovchin at Tuft's University School of Medicine.
Building a pre-clinical pipeline of valuable
chemotherapy/immunotherapy drug assets
In the oncology field it has become clear in recent years that
cancer immunotherapies used singly, so-called 'monotherapies' have
limited overall response rates and that combining immune checkpoint
modulators such as PD-1, or PD-L1, with chemotherapy improves
patients' outcomes. Avacta is in a unique position, with two
proprietary platforms, to address this urgent clinical need.
The Company's strategy is to harness the benefits of the
Affimer(R) platform to build single Affimer(R) drug molecules that
can hit two drug targets simultaneously, called 'bispecifics', and
to bring together Affimer(R) immunotherapies with the
pre|CISION(TM) targeted chemotherapies, in order to develop
superior cancer treatments with better patient outcomes.
Bispecifics Affimer (R) immunotherapies
Good progress has also been made with the in-house Affimer(R)
bispecific programmes towards selection of a clinical development
candidate by the end of 2021. Two new programmes have been
initiated that build upon the AVA004 PD-L1 antagonist programme:
AVA027, a PD-L1/TGF- b receptor trap combination, and AVA028, a
PD-L1/IL2 bispecific.
TGF- b largely plays a pro-tumour signalling role by suppressing
the immune response and helping to build the blood supply to the
tumour, as well as promoting the growth of the tumour in other
ways. Reducing the amount of TGF- b in the tumour microenvironment
is therefore expected to have an anti-cancer effect which can be
combined with PD-L1 checkpoint inhibition to support the immune
response to the tumour. In AVA027 this is being achieved by
combining a TGF- b trap that helps to mop up the TGF- b in the
tumour along with an Affimer(R) PD-L1 blockade in a single drug
molecule.
IL-2 is a cytokine that plays a signalling role in expanding the
number of activated immune cells (T and NK cells). It has been
developed as a cancer therapy, but it suffers from challenging
systemic toxicity and therefore the concept in AVA028 is to combine
IL-2 with an Affimer(R) PD-L1 inhibitor in a bispecific drug
molecule to not only support the immune response in the tumour
through blocking of the PD-L1 / PD-1 interaction but also to help
target the IL-2 to tumours which have an increased level of PD-L1
compared with healthy tissue.
The Group has set the objective of selecting a bispecific
clinical candidate from either the AVA027 or AVA028 programmes by
the end of 2021 to be taken into pre-clinical development.
TMAC (R) drug conjugates
The pre|CISION(TM) substrate can also be incorporated into a
chemical linker joining an Affimer(R) immunotherapy with a
chemotoxin to create a single drug conjugate molecule that can be
delivered to the patient in a single infusion. The linker is cut by
the FAP enzyme in the tumour microenvironment releasing and
activating the chemotherapy in the tumour alongside the Affimer(R)
immunotherapy. By selecting the chemotherapy to have a mechanism of
action that stimulates and recruits the immune system to the
tumour, the Affimer(R) checkpoint blockade provides synergistic
support for this immune response. This tumour microenvironment
activated drug conjugate (TMAC(R) ) is a new class of drug
conjugate for which the Company has made a patent application with
Tufts University Medical School.
The first of Avacta's TMACs combines an Affimer(R) PD-L1
inhibitor with a powerful chemotherapy called AVA100 I-DASH (also
known as Val-boro-Pro (VbP)) that kills macrophage in the tumour
microenvironment leading to a significant inflammatory event that
attracts the immune system to the tumour. The postulated mechanism
of action is that the immune response to the pro-inflammatory cell
killing in the tumour is then supported by the presence of the
Affimer(R) PD-L1 blockade.
In-vivo studies of the lead TMAC(R) programmes are ongoing to
support the selection of a clinical development candidate from the
pipeline. The first of these programmes is AVA04-VbP, a TMAC(R)
combining a PD-L1 Affimer(R) antagonist with VbP. The second
TMAC(R) programme combines an Affimer(R) against an undisclosed
target with VbP.
These in vivo studies will continue through 2021 and are
expected to support the selection of the first TMAC(R) drug
candidate during 2022 for pre-clinical and clinical
development.
Drug Development Collaborations
-- Good progress in existing partnered programmes during 2020
despite the restrictions imposed by COVID safe working.
-- Expansion of the partnership with LG to include Affimer XT
(TM) half-life extension platform.
-- AffyXell, a partnered programme with Daewoong Pharmaceutical,
established in South Korea to develop next-generation cell and gene
therapies incorporating Affimer (R) immuno-therapies; successful
series A funding for AffyXell of $7.3 million post-period end.
-- Establishment of new collaboration with POINT Biopharma for
pre|CISION (TM) radiopharmaceuticals.
The Group has established several significant therapeutic
partnerships with biotech and pharma partners including Moderna
Therapeutics Inc., LG Chem Life Sciences, Daewoong Pharmaceuticals,
ADC Therapeutics and recently with POINT Biopharma. Despite the
effects of the pandemic, the Group has continued to make solid
progress on those programmes in which Avacta plays an active
research and development role (LG Chem, Daewoong and ADC
Therapeutics).
In August 2020 Avacta agreed to expand the existing multi-target
collaboration and development agreement with LG Chem to include new
programmes incorporating Avacta's Affimer XT(TM) serum half-life
extension system. The expansion of the partnership includes an
undisclosed additional upfront payment, plus near-term pre-clinical
milestones and longer-term clinical development milestones
totalling up to $98.5 million for two therapeutics to be developed
using the Affimer XT(TM) technology. Under the terms of the
extended agreement, LG Chem has the exclusive rights to develop and
commercialise, on a world-wide basis, Avacta's Affimer(R) PD-L1
inhibitor with Affimer XT(TM) serum half-life extension.
The expanded partnership also provides LG Chem with rights to
develop and commercialise other Affimer (R) and non-Affimer (R)
biotherapeutics combined with Affimer XT (TM) half-life extension
for a range of indications and Avacta could earn up to an
additional $55 million in milestone payments for each of these new
products. In addition, under the agreement Avacta will earn
royalties on all future Affimer XT (TM) product sales by LG
Chem.
The Group is working with ADC Therapeutics SA (Lausanne, CH) to
develop conventional Affimer-drug conjugates combining Avacta's
Affimer(R) technology with ADC Therapeutics' pyrrolobenzodiazepine
(PBD)-based warhead and linker technologies.
As part of the multi-target collaboration, Avacta is in the
process of generating and optimising Affimer(R) binders against
three undisclosed cancer targets so that ADC Therapeutics can use
these to target its cytotoxic PBDs to the site of the tumour. ADC
Therapeutics will carry out pre-clinical research and development
programmes to evaluate each of the Affimer-drug conjugates with a
view to generating clinical candidates.
The Group continues to make excellent progress in its
collaboration with Daewoong Pharmaceutical through the partnered
programme, AffyXell. AffyXell was established in January 2020 by
Avacta and Daewoong as a partnered programme to develop novel stem
cell therapies. AffyXell is combining Avacta's Affimer(R) platform
with Daewoong's mesenchymal stem cell (MSC) platform such that the
stem cells are primed to produce and secrete therapeutic Affimer(R)
proteins in situ in the patient. The Affimer(R) proteins are
designed to enhance the therapeutic effects of the stem cells,
creating a novel, next-generation cell therapy platform.
The Group recently announced, post-period end, that AffyXell has
closed a Series A venture capital investment of $7.3 million to
further develop its pipeline of next-generation cell and gene
therapies. The Series A funding has been raised from a group of
venture funds including Samsung Venture Investment Corporation,
Shinhan Venture Investment, Smilegate Investment, Shinhan
Investment Corporation, Kolon Investment, Stonebridge Ventures, and
Gyeongnam Venture Investment.
The capital raised will be used by AffyXell to continue the
development of MSCs engineered to produce Affimer (R) molecules
generated by Avacta that inhibit inflammatory and autoimmune
pathways and promote tissue regeneration.
While initially focusing on inflammatory and autoimmune diseases
and prevention of organ transplant rejection, longer term goals
could also include applications in regenerative medicine,
infectious diseases and oncology.
Post-period end the Group entered into a new licensing agreement
with POINT Biopharma Inc. to provide access to Avacta's
pre|CISION(TM) technology for the development of tumour-activated
radiopharmaceuticals.
The radiopharmaceutical market is expected to grow to $15
billion by 2025 ([1]) and there is a substantial opportunity to
grow much faster if safety and tolerability of these effective
treatments can be improved. POINT Biopharma is a clinical-stage
pharmaceutical company focused on developing radioligands ([2]) as
precision medicines for the treatment of cancer.
Avacta's proprietary pre|CISION(TM) chemistry can be used to
modify a radioligand drug to form a tumour-activated prodrug. The
prodrug form is inactive in circulation until it enters the tumour
micro-environment, where it is activated by an enzyme called
fibroblast activation protein (or FAP) that is present in high
abundance in most solid tumours but not in healthy tissue. Avacta's
pre|CISION(TM) technology therefore has the potential to improve
the tolerability and achieve better clinical outcomes for patients
compared with standard radiopharmaceuticals by targeting the
radioligand treatment more specifically to cancer cells.
The agreement provides POINT with an exclusive licence to the
pre|CISION(TM) technology for use in the first radiopharmaceutical
prodrug the company intends to develop, and a non-exclusive licence
to the pre|CISION(TM) platform for the development of a broader
pipeline of FAP-activated radiopharmaceuticals.
Under the terms of the agreement, Avacta will receive an upfront
fee and development milestones for the first radiopharmaceutical
prodrug totalling $9.5 million. Avacta will also receive milestone
payments for subsequent radiopharmaceutical prodrugs of up to $8
million each, a royalty on sales of FAP-activated
radiopharmaceuticals by POINT and a percentage of any sublicensing
income received by POINT.
Animal Health Division
Avacta's Animal Health division, is a UK-based laboratory,
research and development business focused on delivering
evidence-based animal health solutions, centred on the work-up and
management of allergic disease. The business works in partnership
with veterinary professionals and allergy experts to offer
unrivalled service and technical support to its customers, with a
tailored and personal approach. Its customers include veterinary
professionals, laboratories, large commercial organisations, SMEs
and academic groups.
The division's revenues were impacted during the first UK
lockdown as veterinary practices were forced to focus only on
emergency cases, meaning more routine consultations, including
allergy or therapy testing, were put on hold. Face-to-face contact
with customers also ceased but the launch of Avacta Animal Health's
new website in April 2020 allowed them to continue providing
veterinary practices with a wealth of valuable digital resources
throughout, via the dedicated Practice Portal. This was supported
by a strengthening of the social media campaign.
During this time, the division took the opportunity to assess
its product portfolio and routes to market. Following a non-cash
impairment charge of GBP1.74 million, and with the business
recovering strongly in the second half of the year to deliver a
small operating profit, it is now positioned well for trading in
2021.
Competitive strengths
Avacta Animal Health remains the only UK laboratory with
end-to-end test control, with years of dedication to research and
development that underpins its constant drive to make a real-life
difference to animal health.
-- Experts in the work-up and management of allergic disease
-- Strong veterinary focused team including a number of qualified vets and vet nurses
-- Experienced and innovative research and development team
-- Evidence-based test and therapy solutions
-- Dedicated technical team including dermatology consultants
-- Renowned for exceptional level of service and support
-- Practice Portal providing a wealth of comprehensive and practical veterinary literature
-- Informative pet owner resources
-- Educational and training resources for veterinary professionals
Products and market focus
As the change within the veterinary industry continues at a
rapid pace both in practice, for suppliers and for pet owners,
Avacta Animal Health's commitment to innovation within the field of
allergy remains its core focus and its key to success. The
development of the new Avacta Allergy+ portfolio (launched in March
2021) was a key focus throughout 2020 and now offers veterinary
practices a range of testing options with enhanced performance.
Avacta Animal Health continues to support vets in their
interpretation of results and supply tailor-made allergen-specific
immunotherapy ('ASIT') to aid with the long-term management of
allergic skin disease for veterinary practices in the UK.
Avacta Animal Health's export reach and international customer
base is growing, alongside dedicated provision of tailored and
trusted support to veterinary professionals across the UK. In
addition to providing UK-specific testing services and therapy
options via its own authorised laboratories. it continues to expand
in Europe, as well as in parts of the Asian and Latin American
markets.
Research and development
The dedicated in-house team of development scientists are highly
regarded in the field of dermatology and work alongside
world-leading dermatologists to develop, manufacture and run our
own tests, allowing them the aforementioned end-to-end control.
Development of the new Avacta Allergy+ tests were a key focus of
the research and development team in 2020, with enhancements to
both the canine and feline environmental tests, as part of the
focused new portfolio.
Avacta Animal Health have a strong team, including a number of
qualified vets and vet nurses, who maintain regular communication
to gain insight from veterinary professionals and experts in the
field, allowing them to analyse and review what is clinically
relevant on a regular basis.
Avacta Animal Health will attend and support a number of UK
conferences and events throughout 2021, providing visibility within
the industry and ensuring it remains informed of developments.
These events also provide the opportunity to convene and converse
in person with new and existing customers, as well as with industry
experts and academics.
Via Avacta's Diagnostics business there is an opportunity to
scope out new projects using the Affimer(R) technology and, with
experience in reproducible research and statistical analysis, all
future work will continue to see a strong steer towards data-driven
projects involving machine learning and data visualisation. Such
analytical techniques will benefit both internal projects and
contracted project work.
Financial Review
Revenue
Reported Group revenues for the year ended 31 December 2020
decreased to GBP3.64 million compared to the longer 17-month period
ended 31 December 2019 ('2019'): GBP5.51 million.
Revenues for the Diagnostics division were GBP0.52 million
(2019: GBP0.81 million), with the reduction due to a decrease in
the number of custom Affimer(R) reagent projects given the working
restrictions with some customers and a re-focus of the business on
developing the COVID-19 lateral flow tests and other related
COVID-19 projects.
Revenues for the Therapeutics division were GBP1.63 million
(2019: GBP2.52 million), with the 2019 revenue including an upfront
technology access fee arising from the LG Chem collaboration,
whilst 2020 revenues reflected a much smaller milestone payment in
the LG Chem collaboration and reduced revenues from funded FTE
development projects due to restricted working practices at the
Cambridge site.
Revenues for the Animal Health division were GBP1.49 million
(2019: GBP2.18 million), with the revenues in the second quarter of
2020 severely restricted due to the closure of most veterinary
practices during the first lockdown. Revenues for the second half
of 2020 recovered and were only slightly behind the corresponding
period for 2019.
Research and amortisation of development costs
During the year, the Group expensed through the income statement
GBP8.96 million (2019: GBP7.86 million) research costs relating to
the in-house Affimer(R) and pre|CISION(TM) therapeutic programmes
which are expensed given their pre-clinical stage of development in
addition to research costs on Affimer(R) diagnostics products which
have not yet completed product development and obtained regulatory
approval to become commercial products.
In addition, development costs capitalised in prior periods from
the development of the Affimer(R) reagents and diagnostics platform
together with new Animal Health allergy tests have been amortised,
resulting in a charge of GBP1.01 million (2019: GBP2.20
million).
Furthermore, development costs amounting to GBP0.17 million
(2019: GBP1.88 million) were capitalised within intangible assets
during the period and will be amortised over future periods.
The share of losses from the research costs of the therapeutics
partnered programme with Daewoong Pharmaceutical, AffyXell
Therapeutics, accounted for as an investment in associate,
amounting to GBP0.22 million (2019: GBPnil) have been expensed
using the equity method.
Following completion of the annual impairment reviews, an
impairment charge of GBP1.74 million (2019: GBPnil) has been
recognised against the intangible assets associated with the Animal
Health division comprising of goodwill and capitalised development
costs. The charge arose as the business restructured, in the light
of the COVID-19 pandemic and how the business intends to operate in
the veterinary industry, with short-term revenue estimates being
revised downwards.
Selling, general and administrative expenses
Administrative expenses have fallen during the year to GBP7.32
million (2019: GBP10.06 million) alongside depreciation at GBP1.13
million (2019: GBP1.64 million) due to the 12-month versus 17-month
reporting comparative reporting period.
Net finance costs
The Group adopted the new accounting standard IFRS16 Leases
during the previous reporting period, which resulted in an interest
charge of GBP0.1 million (2019: GBP0.1 million) being
recognised.
Losses before taxation
Losses before taxation from continuing operations for the year
were GBP21.34 million (2019: GBP18.05 million).
Taxation
The Group claims each year for research and development tax
credits and, since it is loss-making, elects to surrender these tax
credits for a cash rebate. The amount is included within the
taxation line of the consolidated statement of profit and loss in
respect of amounts received and receivable for the surrender of
research and development expenditure amounting to GBP2.45 million
(2019: GBP2.44 million). The Group has not recognised any tax
assets in respect of trading losses arising in the current
financial year or accumulated losses in previous financial
years.
Loss for the period
The reported loss for the period was GBP18.89 million (2019:
GBP15.62 million). The loss per ordinary share reduced to 8.37
pence (2019: 12.98 pence) based on an average number of shares in
issue during the period of 229,673,873 (2019: 120,336,858).
Cash flow
The Group reported cash and short-term deposit balances of
GBP47.91 million at 31 December 2020 (2019: GBP8.79 million).
Operating cash outflows from operations amounted to GBP13.35
million (2019: GBP14.44 million). Within the net operating cash
outflows there were cash receipts in respect of research and
development tax credits amounting to GBP2.75 million (2019: GBP1.63
million) which represented the tax refund for the previous 17-month
financial period.
During the year, capital expenditure increased to GBP1.28
million (2019: GBP0.62 million) as facility expansion at both
Wetherby and Cambridge sites were underway. Capitalised development
costs fell during the year to GBP0.17 million (2019: GBP1.88
million) as the majority of diagnostic development work was not at
the stage of gaining regulatory approval for commercial launch of
products.
The Group completed two fund-raises via a combination of
placings and subscriptions during the reporting period. The first
fund-raise, which was announced in April 2020, raised GBP5.75
million gross (GBP5.36 million net). The second fund-raise was
announced in June 2020 and raised GBP48.00 million gross (GBP45.43
million net).
Financial position
Net assets as at 31 December 2020 were GBP61.93 million (2019:
GBP25.81 million) of which short-term deposits, cash and cash
equivalents amounted to GBP47.91 million (2019: GBP8.79
million).
Intangible assets reduced to GBP9.42 million (2019: GBP11.80
million) following the impairment of the Animal Health goodwill and
the amortisation charge of GBP1.01 million (2019: GBP2.20 million)
exceeding the capitalised development costs in the period of
GBP0.17 million (2019: GBP1.88 million).
The adoption of IFRS16 Leases and the expansion of leasehold
premises in both Wetherby and Cambridge results in the recognition
of a 'right-of-use' asset amounting to GBP2.10 million (2019:
GBP0.78 million) in relation to the Group's three leasehold
properties together with a corresponding lease liability of GBP2.04
million (2019: GBP0.82 million).
Dividends
No dividends have been proposed for the year ended 31 December
2020 (2019: GBPnil).
Key performance indicators
At this stage of the Group's development, the non-financial key
performance indicators focus around two areas:
-- the progression of the Affimer(R) and pre|CISION(TM)
technologies into clinical trials within the Therapeutics division;
and
-- the development of Affimer(R) diagnostic products and the
number of customers evaluating Affimer(R) reagents which might lead
to commercial licensing agreements within the Diagnostics
division.
The financial key performance indicators focus around three
areas:
-- Group revenues
-- Research and development expenditure, which is either
expensed through the Income Statement or capitalised
-- Cash and short-term deposit balances
Going concern
These financial statements have been prepared on a going concern
basis, notwithstanding a loss of GBP18.89 million and operating
cash outflows of GBP13.35 million for the year ended 31 December
2020. The Directors consider this to be appropriate for the
following reasons.
The Directors have prepared detailed cash flow forecasts that
extend at least 12 months from the date of approval of the
financial statements. The forecasts take into account the
Directors' views of current and future economic conditions that are
expected to prevail over the period. These forecasts include
assumptions regarding the status of therapeutic development
collaborations, the AVA6000 pro-doxorubicin phase I clinical
trials, diagnostic product development projects and sales pipeline,
future revenues and costs together with various scenarios which
reflect growth plans, opportunities, risks and mitigating actions.
The forecasts also include assumptions regarding the timing and
quantum of investment in the therapeutic and diagnostic research
and development programmes.
Whilst there are inherent uncertainties regarding the cash flows
associated with the development of both the therapeutic and
diagnostic platforms, together with the timing and delivery of
diagnostic product development projects and future therapeutic
collaboration transactions, the Directors are satisfied that there
is sufficient discretion and control as to the timing and quantum
of cash outflows to ensure that the Company and Group are able to
meet their liabilities as they fall due for at least 12 months from
the date of approval of the financial statements. The key factors
considered in reaching this conclusion are summarised below:
-- The Group continues to develop its therapeutic and diagnostic
platform technologies. The development of a SARS-CoV-2 antigen
lateral flow test, which is in the late stages of clinical
validation and CE marking, could generate significant revenue and
profits for the Group in the near term, which have not been
included in the base case assessment.
-- As at 31 December 2020, the Group's short-term deposits and
cash and cash equivalents were GBP47.91 million (2019: GBP8.79
million).
-- The Group has a tax refund in relation to R&D tax credits
due in the second half of 2021 amounting to GBP2.20 million (a
comparable tax refund of GBP2.75 million was received in October
2020 relating to the 17-month period to 31 December 2019).
-- The Group does not have external borrowings, or any covenants
based on financial performance.
-- The Directors have considered the position of the individual
trading companies in the Group to ensure that these companies are
also in a position to continue to meet their obligations as they
fall due.
The Directors have also reviewed these cash flow forecasts in
the light of potential impacts from the COVID-19 pandemic. The
short-term impact centres around the commencement of clinical
trials for the AVA6000 pro-doxorubicin phase I clinical trials
which are due to commence in mid-2021, the ability to recruit
patients to the trial given potential COVID-19 follow-on issues and
any delay this may have on the initial phase I study readouts. This
could potentially delay expenditures and reduce cash burn during
the forecast period. The Directors are confident that the current
level of funding will be sufficient for the Group and Company to
meet their liabilities for the forecast period
Based on these indications, the Directors are confident that the
company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
Cautionary statement
The preliminary statements contain forward-looking statements
that are subject to risk factors associated with, amongst other
things, economic and business circumstances occurring from time to
time within the markets in which the Group operates. The
expectations expressed within these statements are believed to be
reasonable but could be affected by a wide variety of variables
outside of the Group's control. These variables could cause the
results to differ materially from current expectations. The
forward-looking statements reflect the knowledge and information
available at the time of preparation.
Alastair Smith Tony Gardiner
Chief Executive Officer Chief Financial Officer
22 April 2021 22 April 2021
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 31 December 2020
2020 2019*
Note GBP000 GBP000
Revenue 4 3,636 5,511
Cost of sales (1,455) (1,440)
------------- -------------
Gross profit 2,181 4,071
Research costs (8,961) (7,860)
Share of loss of associate (217) -
Amortisation of development costs (1,007) (2,202)
Impairment of intangible fixed assets (1,741) -
Selling, general and administrative expenses (7,315) (10,064)
Depreciation expense (1,125) (1,636)
Share-based payment charge (3,108) (338)
------------- -------------
Operating loss (21,293) (18,029)
Finance income 43 73
Finance costs 6 (93) (98)
------------- -------------
Net finance costs (50) (25)
------------- -------------
Loss before tax (21,343) (18,054)
Taxation 2,452 2,439
------------- -------------
Loss and total comprehensive loss for the period (18,891) (15,615)
------------- -------------
Loss per ordinary share:
Basic and diluted 5 (8.37p) (12.98p)
-- ------------- -------------
* These results relate to the 17-month period ended 31 December 2019
All activities relate to the continuing operations of the
Group.
Consolidated Statement of Financial Position as at 31 December
2020
2020 2019
Note GBP000 GBP000
Assets
Property, plant and equipment 2,696 2,304
Right-of-use assets 6 2,095 780
Intangible assets 9,417 11,800
------------- -------------
Non-current assets 14,208 14,884
------------- -------------
Inventories 248 156
Trade and other receivables 2,895 2,082
Income tax receivable 2,200 2,500
Short-term deposits 20,017 -
Cash and cash equivalents 27,894 8,788
------------- -------------
Current assets 53,254 13,526
------------- -------------
Total assets 67,462 28,410
------------- -------------
Liabilities
Lease liabilities 6 (1,752) (646)
------------- -------------
Non-current liabilities (1,752) (646)
------------- -------------
Trade and other payables (3,491) (1,778)
Lease liabilities 6 (290) (177)
------------- -------------
Current liabilities (3,781) (1,955)
------------- -------------
Total liabilities (5,533) (2,601)
------------- -------------
Net assets 61,929 25,809
------------- -------------
Equity
Share capital 25,343 17,671
Share premium 54,137 9,877
Other reserve (1,729) (1,729)
Reserve for own shares (2,961) (2,932)
Retained earnings (12,861) 2,922
------------- -------------
Total equity 61,929 25,809
------------- -------------
Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2020
Share Share premium Other reserve Capital Reserve for Retained Total equity
capital reserve own shares earnings
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------- ------------- ------------- ------------- ------------- ------------- ------------
Balance at 1
August 2018 6,976 770 (1,729) 1,899 (2,802) 16,299 21,413
Total
comprehensive
loss for the
period - - - - - (15,615) (15,615)
Transactions with owners of the Company:
Issue of shares 10,625 8,674 - - - - 19,299
Exercise of
share options 32 341 - - - - 373
Own shares
acquired 38 92 - - (130) - -
Equity-settled
share-based
payment - - - - - 338 338
Transfer(1) - - - (1,899) - 1,899 -
----------- ------------- ------------ ------------ ------------- ------------- ------------
10,695 9,107 - (1,899) (130) 2,237 20,011
----------- ------------- ------------ ------------ ------------- ------------- ------------
Balance at 31
December 2019 17,671 9,877 (1,729) - (2,932) 2,922 25,809
----------- ------------- ------------ ------------ ------------- ------------- ------------
Total
comprehensive
loss for the
period - - - - - (18,891) (18,891)
Transactions with owners of the Company:
Issue of shares 7,195 43,596 - - - - 50,791
Exercise of
share options 467 645 - - - - 1,112
Own shares
acquired 10 19 - - (29) - -
Equity-settled
share-based
payment - - - - - 3,108 3,108
----------- ------------- ------------ ------------ ------------- ------------- ------------
7,672 44,260 - - (29) 3,108 55,011
----------- ------------- ------------ ------------ ------------- ------------- ------------
Balance at 31
December 2020 25,343 54,137 (1,729) - (2,961) (12,861) 61,929
----------- ------------- ------------ ------------ ------------- ------------- ------------
(1) The transfer from the capital reserve to retained earnings
related to the elimination of the original acquisition accounting
of Avacta Health Limited, which was dissolved during the
comparative period.
Consolidated Statement of Cash Flows for the Year Ended 31
December 2020
2020 2019*
GBP000 GBP000
Cash flows from operating activities
Loss for the period (18,891) (15,615)
Adjustments for:
Amortisation 1,029 2,313
Impairment losses 1,741 -
Depreciation 1,125 1,636
Net loss on disposal of property, plant and equipment 6 19
Share of loss of associate 217 -
Equity-settled share-based payment transactions 3,108 338
Net finance costs 50 25
Taxation (2,452) (2,439)
------------- -------------
Operating cash outflow before changes in working capital (14,067) (13,723)
Decrease/(increase) in inventories (91) 30
Increase in trade and other receivables (814) (825)
Increase in trade and other payables 1,627 78
------------- -------------
Operating cash outflow from operations (13,345) (14,440)
Interest received 42 72
Interest elements of lease payments (93) (86)
Tax credit received 2,754 1,631
Withholding tax paid - (192)
------------- -------------
Net cash used in operating activities (10,642) (13,015)
------------- -------------
Cash flows from investing activities
Purchase of plant and equipment (1,279) (618)
Purchase of intangible assets (221) (34)
Investment in associate (217) -
Development expenditure capitalised (165) (1,875)
Increase in balances on short-term deposit (20,017) -
------------- -------------
Net cash used in investing activities (21,899) (2,527)
------------- -------------
Cash flows from financing activities
Proceeds from issue of share capital 53,750 19,331
Transaction costs related to issue of share capital** (2,960) -
Proceeds from exercise of share options 1,112 -
Principal elements of lease payments (255) (221)
------------- -------------
Net cash from financing activities 51,647 19,110
------------- -------------
Net increase/(decrease) in cash and cash equivalents 19,106 3,568
Cash and cash equivalents at 1 January 2020 8,788 5,220
------------- -------------
Cash and cash equivalents at 31 December 2020 27,894 8,788
------------- -------------
* These results relate to the 17-month period ended 31 December 2019
** Please see Note 2 for further information
Notes to the Preliminary Results to 31 December 2020
1 General Information
These preliminary results have been prepared on the basis of the
accounting policies which are to be set out in Avacta Group plc's
annual report and financial statements for the year ended 31
December 2020.
The consolidated financial statements of the Group for the year
ended 31 December 2020 were prepared in accordance with
International Financial Reporting Standards ("IFRSs") as adopted
for use in the EU ("adopted IFRSs") and applicable law.
The financial information set out above does not constitute the
Company's statutory financial statements for the year ended 31
December 2020 or the 17-month period ended 31 December 2019 but is
derived from those financial statements. Statutory financial
statements for 2019 have been delivered to the Registrar of
Companies and distributed to shareholders, and those for 2020 will
be respectively delivered and distributed on or before 30 June
2021. The auditor has reported on those financial statements and
their report was:
(i) unqualified;
(ii) did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying their
report; and
(iii) did not contain a statement under section 498(2) or (3) of
the Companies Act 2006 in respect of the financial statements for
2018 or 2019.
2 Basis of preparation
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European Union. The Company has elected
to prepare its parent company financial statements in accordance
with applicable UK accounting standards, including Financial
Reporting Standard 102 - The Financial Reporting Standard
applicable in the United Kingdom and Republic of Ireland ('FRS
102'), and with the Companies Act 2006.
The financial statements have been prepared on the historical
cost basis.
During the prior period, the Group changed its accounting period
to 31 December to bring it in line with the calendar year and
therefore the accounts are showing a 12-month financial year to the
comparative 17-month financial period. As such, amounts presented
in the financial statements are not readily comparable.
Functional and presentation currency
These consolidated financial statements are presented in pound
sterling, which is the Company's functional currency. All amounts
have been rounded to the nearest thousand, unless otherwise
indicated.
Going concern
These financial statements have been prepared on a going concern
basis, notwithstanding a loss of GBP18.9 million and operating cash
outflows of GBP13.3 million for the year ended 31 December 2020.
The directors consider this to be appropriate for the following
reasons.
The Directors have prepared detailed cash flow forecasts that
extend to at least 12 months from the date of approval of the
financial statements. The forecasts take into account the
Directors' views of current and future economic conditions that are
expected to prevail over the period. These forecasts include
assumptions regarding the status of therapeutic development
collaborations, the AVA6000 pro-doxorubicin phase I clinical
trials, diagnostic product development projects and sales pipeline,
future revenues and costs together with various scenarios which
reflect growth plans, opportunities, risks and mitigating actions.
The forecasts also include assumptions regarding the timing and
quantum of investment in the therapeutic and diagnostic research
and development programmes.
Whilst there are inherent uncertainties regarding the cash flows
associated with the development of both the therapeutic and
diagnostic platforms, together with the timing and delivery of
diagnostic product development projects and future therapeutic
collaboration transactions, the Directors are satisfied that there
is sufficient discretion and control as to the timing and quantum
of cash outflows to ensure that the Company and Group are able to
meet their liabilities as they fall due for at least 12 months from
the date of approval of the financial statements. The key factors
considered in reaching this conclusion are summarised below:
-- The Group continues to develop its therapeutic and diagnostic
platform technologies. The development of a SARS-CoV-2 antigen
lateral flow test, which is in the late stages of clinical
validation and CE marking, could generate significant revenue and
profits for the Group in the near term, which have not been
included in the base case assessment.
-- As at 31 December 2020, the Group's short-term deposits and
cash and cash equivalents were GBP47.9 million (2019: GBP8.8
million).
-- The Group has a tax refund in relation to R&D tax credits
due in the second half of 2021 amounting to GBP2.2 million (a
comparable tax refund of GBP2.8 million was received in October
2020 relating to the 17-month period to 31 December 2019).
-- The Group does not have external borrowings, or any covenants
based on financial performance.
-- The Directors have considered the position of the individual
trading companies in the Group to ensure that these companies are
also in a position to continue to meet their obligations as they
fall due.
The Directors have also reviewed these cash flow forecasts in
the light of potential impacts from the COVID-19 pandemic. The
short-term impact centres around the commencement of clinical
trials for the AVA6000 pro-doxorubicin phase I clinical trials,
which are due to commence in mid-2021, the ability to recruit
patients to the trial given potential COVID-19 follow-on issues and
any delay this may have on the initial phase I study readouts. This
could potentially delay expenditures and reduce cash burn during
the forecast period. The Directors are confident that the current
level of funding will be sufficient for the Group and Company to
meet their liabilities for the forecast period.
Based on these indications, the Directors are confident that the
Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
Use of judgements and estimates
In preparing these consolidated financial statements, management
has made judgements and estimates that affect the application of
the Group's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
Information about judgements and estimates made by management
that have the most significant effects on the amounts recognised in
the financial statements is given below.
The Directors consider that the key judgements made in
preparation of the financial statements are:
Going concern - The judgement of whether or not the accounts
should be prepared on a going concern basis has been disclosed
above.
Revenue recognition - Judgements arise from the application of
IFRS 15 to the Group's revenue streams, as disclosed in Note 1 C of
the financial statements.
The Directors consider that the assumptions and estimation
uncertainties at 31 December 2020 that have a significant risk of
resulting in a material adjustment to the carrying amounts and
liabilities in the next financial year are:
Impairment - Impairment tests have been performed on the
carrying amounts of the Group's cash generating units. Key
assumptions underlie the recoverable amounts used in these
impairment tests, including the recoverability of development
costs. Information on the key assumptions used is disclosed in Note
10 of the financial statements.
Significant accounting policies
The Group has consistently applied the accounting policies to
all periods presented in these preliminary statements. Whilst there
are a number of new standards effective from periods beginning
after 1 January 2020, the Group has not early adopted the new or
amended standards and does not expect them to have a significant
impact on the Group's consolidated financial statements.
Transaction costs related to the issue of share capital
In the prior period, the Consolidated Statement of Cash Flows
presented proceeds from the issue of share capital, GBP20,617,000,
net of transactions related to the issue of share capital,
GBP1,286,000. The Directors have reviewed this prior year
presentation and have not restated the prior year figures as they
have concluded that the net presentation was not material to the
financial statements.
3 Segment reporting
Operating segments
In the view of the Board of Directors, the Group has three
(2020: three) distinct reportable segments, which are Diagnostics,
Therapeutics and Animal Health (2019: Diagnostics, Therapeutics and
Animal Health), and segment reporting has been presented on this
basis. The Directors recognise that the operations of the Group are
dynamic and therefore this position will be monitored as the Group
develops.
The principal activities of each reportable segment are as
follows:
Diagnostics: development of custom Affimer(R) proteins for
incorporation into customer products and in-house diagnostic
assays.
Therapeutics: development of novel cancer immunotherapies
combining proprietary platforms.
Animal Health: provision of tools and contract services to
assist diagnosis of conditions in animals to enable faster
treatment for veterinarians.
Segment revenue represents revenue from external customers
arising from sale of goods and services, plus inter-segment
revenues. Inter-segment transactions are priced on an arm's length
basis. Segment results, assets and liabilities include items
directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
The Group's revenue to destinations outside the UK amounted to
70% (2019: 69%) of total revenue. The revenue analysis below is
based on the country of registration of the customer:
For year ended 31 December 2020 17 months ended 31 December 2019
GBP'000 GBP'000
UK 1,076 1,691
Rest of Europe 685 851
North America 402 496
Asia 1,473 2,473
3,636 5,511
During the year, transactions with three external customers, two
in the Therapeutics segment and one in the Animal Health segment,
amounted individually to 10% or more of the Group's revenues, being
GBP768,000, GBP694,000 and GBP440,000 respectively. In the 17-month
period ended 31 December 2019, transactions with one individual
customer amounted to 10% or more of the Group's revenues. These
revenues were GBP2,442,000 for a customer in the Therapeutics
segment.
Operating segment analysis 2020
Diagnostics Therapeutics Animal
Health Total
GBP000 GBP000 GBP000 GBP000
Revenue 519 1,625 1,492 3,636
Cost of goods sold (321) (641) (493) (1,455)
------------- ------------- ------------- -------------
Gross profit 198 984 999 2,181
Research costs (2,458) (6,432) (71) (8,961)
Share of loss of associate - (217) - (217)
Amortisation of development costs (824) - (183) (1,007)
Selling, general and administrative expenses (2,525) (1,702) (966) (5,193)
Impairment charge - - (1,741) (1,741)
Depreciation expense (357) (701) (62) (1,120)
Share-based payment expense (636) (893) (38) (1,567)
------------- ------------- ------------- -------------
Segment operating loss (6,602) (8,961) (2,062) (17,625)
Central overheads (3,668)
------------- ------------- ------------- -------------
Operating loss (21,293)
Finance income 43
Finance expense (93)
-------------
Loss before taxation (21,343)
Taxation 2,452
-------------
Amount attributable to equity holders of the Company (18,891)
-------------
Operating profit/loss is the measure of profit or loss regularly
reviewed by the Board. Central overheads, which relate to
operations of the Group function, are not allocated to the
segments.
The information reported to the Board does not include balance
sheet information at the segment level. The key segmental balance
sheet information is considered to be the segment's non-current
assets.
All material segmental non-current assets are located in the
UK.
Operating segment analysis 2019
Diagnostics Therapeutics Animal
Health Total
GBP000 GBP000 GBP000 GBP000
Revenue 812 2,515 2,184 5,511
Cost of goods sold (454) (284) (702) (1,440)
------------- ------------- ------------- -------------
Gross profit 358 2,231 1,482 4,071
Research costs (620) (7,240) - (7,860)
Amortisation of development costs (1,600) - (602) (2,202)
Selling, general and administrative expenses (3,605) (2,269) (1,776) (7,650)
Depreciation expense (612) (678) (52) (1,342)
Share-based payment expense (55) (101) (34) (190)
------------- ------------- ------------- -------------
Segment operating loss (6,134) (8,057) (982) (15,173)
Central overheads (2,856)
------------- ------------- ------------- -------------
Operating loss (18,029)
Finance income 73
Finance expense (98)
-------------
Loss before taxation (18,054)
Taxation 2,439
-------------
Amount attributable to equity holders of the Company (15,615)
-------------
4 Revenue
The Group's revenue is all derived from contracts with
customers.
In the following table, revenue is disaggregated by both its
nature and the timing of revenue recognition. The table also
includes a reconciliation of the disaggregated revenue with the
Group's reportable segments (see Note 2).
For year ended 31 December 2020
Diagnostics Therapeutics Animal Health Total
GBP000 GBP000 GBP000
Nature of revenue
Sale of goods - - 846 846
Provision of services 519 1,436 646 2,601
License-related income - 189 - 189
------------ ------------- -------------- ------
519 1,625 1,492 3,636
Timing of revenue recognition
Products or services transferred at a point in time 8 189 1,459 1,656
Products or services transferred over time 511 1,436 33 1,980
------------ ------------- -------------- ------
519 1,625 1,492 3,636
17 months ended 31 December 2019
Diagnostics Therapeutics Animal Health Total
GBP000 GBP000 GBP000
Nature of revenue
Sale of goods - - 1,101 1,101
Provision of services 812 556 1,083 2,451
License-related income - 1,959 - 1,959
------------ ------------- -------------- ------
812 2,515 2,184 5,511
Timing of revenue recognition
Products or services transferred at a point in time 13 1,959 2,031 4,003
Products or services transferred over time 799 556 153 1,508
------------ ------------- -------------- ------
812 2,515 2,184 5,511
5 Earnings per ordinary share
The calculation of earnings per ordinary share is based on the
profit or loss for the period and the weighted average number of
equity voting shares in issue excluding own shares held jointly by
the Avacta Employees' Share Trust and certain employees and the
shares held within the Avacta Share Incentive Plan ('SIP').
At 31 December 2020, 22,904,846 options (2019: 10,588,313) have
been excluded from the diluted weighted-average number of ordinary
shares calculation because their effect would have been
anti-dilutive.
2020 2019
Loss (GBP000) (18,891) (15,615)
--------------- ---------------
Weighted average number of shares (number) 225,578,759 120,336,858
--------------- ---------------
Basic and diluted loss per ordinary share (pence) (8.37p) (12.98p)
--------------- -------------------
6 Leases
The Group leases a small number of properties for office and
laboratory use, as well as some laboratory equipment. Information
about leases for which the Group is a lessee is presented
below.
a) Amounts recognised in the balance sheet
Right-of-use assets Property Laboratory equipment Total
GBP'000
As at 1 August 2018 1,067 - 1,067
Depreciation charge (288) - (288)
----------- ----------- -----------
As at 31 December 2019 779 - 779
----------- ----------- -----------
Additions 1,382 179 1,561
Depreciation charge (235) (9) (244)
----------- ----------- -----------
As at 31 December 2020 1,926 170 2,096
----------- ----------- -----------
GBP'000 31 December 2020 31 December 2019
Property Laboratory equipment Total Property
Lease liabilities GBP000
Current 232 58 290 177
Non-current 1,659 93 1,752 646
---------- ---------- -------- ----------
1,891 151 2,042 823
---------- ---------- --------- -----------
Reconciliation of change in lease liability GBP000
As at 1 August 2018 1,033
Payment of lease liability - principal element (222)
Payment of lease liability - interest element (86)
Interest expense 98
---------
As at 31 December 2019 823
Additions to lease liability 1,474
Payment of lease liability - principal element (255)
Payment of lease liability - interest element (93)
Interest expense 93
---------
As at 31 December 2020 2,042
---------
b) Amounts recognised in profit or loss
2020 2019
GBP000 GBP000
Depreciation charge on right-of-use assets
Property 235 286
Equipment 9 -
------------ -------------
244 286
------------ -------------
Interest on lease liabilities 93 98
Expenses relating to leases of low-value assets 2 2
The total cash outflow for leases in the period was
GBP348,000.
- Ends -
[1] https://www.marketresearchfuture.com/reports/radio-pharmaceutical-market-1650
[2] For more information about radioligands visit https://www.radioligands.org
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