Half year Report

02 December 2019

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information for the purposes of Article 7 under the Market Abuse Regulations (EU) No. 596/2014 (“MAR”). With the publication of this announcement, this information is now considered to be in the public domain.

Fusion Antibodies plc (AIM: FAB), specialists in pre-clinical antibody discovery, engineering and supply for both therapeutic drug and diagnostic applications, announces its unaudited interim results for the six months ended 30 September 2019 (H1 FY2020).

Highlights

Operational

  • Increase in orders and revenues in H1 FY2020 over H1 FY2019
  • First commercial projects of the new Rational Affinity Maturation Platform (“RAMP™”) service
  • Continuing development of Mammalian Antibody Library, on track for delivery in 2020

Financial

  • Continued improvement in revenues for H1 FY2020 of £1.75m (H1 FY2019: £0.66m)
  • Continued reduction in loss for H1 FY2020 of £0.47m (H1 FY2019: £0.74m loss)
  • Cash position at 30 September 2019 was £1.31m (31 March 2019: £1.98m)
  • Trading for the year ending 31 March 2020 to date has been in line with market expectations

Commenting on the interim results, Paul Kerr, CEO of Fusion Antibodies plc, said:Our revenues are growing apace, and we have seen a solid improvement in the performance of the business for this period, compared to the previous six months. We have received our first commercial revenues from early adopters ofRAMP™, and the feedback from the service has been very promising. We are on target to deliver significant revenue growth year on year and, as always, I would like to thank our shareholders and staff for all their valued support.”

 

Enquiries:

Fusion Antibodies plc www.fusionantibodies.com
Dr Paul Kerr, Chief Executive Officer Via Walbrook PR
James Fair, Chief Financial Officer  
Allenby Capital Limited Tel: +44 (0)20 3328 5656
James Reeve / Asha Chotai  
Walbrook PR Tel: +44 (0)20 7933 8780 or fusion@walbrookpr.com
Anna Dunphy Mob: +44 (0)7876 741 001
Paul McManus Mob: +44 (0)7980 541 983

 

About Fusion Antibodies plc - www.fusionantibodies.com

Fusion is a Belfast based contract research organisation ("CRO") providing a range of antibody engineering services for the development of antibodies for both therapeutic drug and diagnostic applications.

The Company's ordinary shares were admitted to trading on AIM on 18 December 2017. Fusion provides a broad range of services in antibody generation, development, production, characterisation and optimisation. These services include antigen expression, antibody production, purification and sequencing, antibody humanisation using Fusion's proprietary CDRxTM platform and the production of antibody generating stable cell lines to provide material for use in clinical trials. Since 2012, the Company has successfully sequenced and expressed over 250 antibodies and successfully completed over 150 humanisation projects for its international, blue-chip client base, which has included eight of the top 10 global pharmaceutical companies by revenue.

The Company was established in 2001 as a spin out from Queen’s University Belfast. The Company’s mission is to enable pharmaceutical and diagnostic companies to develop innovative products in a timely and cost-effective manner for the benefit of the global healthcare industry. Fusion Antibodies provides a broad range of services in antibody generation, development, production, characterisation and optimisation.
Fusion Antibodies growth strategy is based on combining the latest technological advances with cutting edge science to deliver new platforms that will enable Pharma and Biotechs get to the clinic faster and ultimately speed up the drug development process. 

The global monoclonal antibody therapeutics market was valued at $95.5 billion in 2017 and is forecast to surpass $174.2 billion in 2026, an increase at a CAGR of 6.9 per cent. for the period 2018 to 2026. In 2018, seven of the world’s ten top selling drugs were antibody-based therapeutics with the combined annual sales of these drugs exceeding $62 billion.

 

Operational Review

As announced in October 2019, the Company’s order levels and revenues in the first six months of the financial year showed significant growth on the previous six-month period and a marked recovery from the comparable period last year. This has been achieved by addressing a number of external competitive pressures seen over the last two years, and by improving the Company’s marketing function and business development strategy.

In this period the Company recorded its first commercial revenues from the new RAMP™ service. RAMP™ provides customers with improvements to antibody affinity and other biophysical characteristics to optimise performance of their antibody. This service is available either as part of the suite of Fusion’s services or as a standalone service to companies with existing antibodies with sub-optimal performance. Initial results from early adopting customers are very promising and the commercial roll out of the service will continue throughout the year with presentations at scientific conferences and targeted marketing.

Having now launched the RAMP™ service, the next service in the development pipeline is the Mammalian Antibody Library (“the Library”). The Library will add an important new offering for antibody discovery and the Directors believe it will represent a technologically superior solution when compared to traditional methods and to other library offerings already available in the market. The Library is also expected to provide the additional benefit of a significant reduction in the time taken for this initial drug development phase. The Library will complement the Company’s existing discovery services and it will be offered alongside the traditional techniques providing an improved range of options to our customers.

It is planned that the Library will be delivered as a technologically ready project in H1 FY2021 (i.e. April to September 2020) with presentations to key opinion leaders, targeted marketing activity and performance of pilot studies commencing in the second half of FY2021. The Directors expect that the Company will be in a position to generate meaningful revenues from this service from FY 2022.

Financial Review

Revenues for the six-month period to 30 September 2019 were £1.75 million (H1 FY2019: £0.66 million). This continues the improvement seen in H2 FY2019 and is the Company’s strongest performance to date in a six-month period.

Operating loss for the first half was £0.62 million (H1 FY2019: £0.89 million). This result reflects that the Company has continued to invest in research and development of new services, expansion of capacity and development of sales and marketing, with a view to continued growth.

Basic loss per share has further reduced to £0.021 per share versus £0.034 loss per share in H1 FY2019.

Gross profit margin of 42% has improved on H1 FY 2019 (17%) although slightly below that seen in H2 FY2019 (45%) due to continued recruitment and training of scientists to enable the Company to deliver future growth. Revenue grants relating to employment are included in other income.

Administrative expenses include expenditure on overheads, board costs, sales and marketing, research and development as well as depreciation. Administrative expenses of £1.4 million have increased compared with H1 FY2019 of £1.1 million as a result of further investment in research and development, sales and marketing and an increase in depreciation arising from the investment in capital equipment throughout FY2019.

Cash used in operations was £0.55 million compared with £0.45 million used in H1 FY2019. The planned investment of funds in research and development, business development and marketing was expected to increase cash usage in H1 FY2020 and therefore this is in line with the Board’s expectations. EBITDA losses are reducing as shown in the Key Performance Indicators below and, as the laboratory expansion is complete, capital expenditure for the period reduced to £0.04 million compared with £1.22 million in H1 FY 2019. The cash at bank figure of £1.31million at 30 September 2019 is in line with Company plans. The Directors have reviewed detailed projections for the Company. These projections are based on estimates of future performance and have been adjusted to reflect various scenarios and outcomes that could potentially impact the forecast outturn. Based on these estimates, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for 12 months from the reporting date.  Accordingly, they have prepared these condensed financial statements on the going concern basis.

The Board is not recommending the payment of a dividend in relation to the first half of the current financial year.

Key Performance Indicators

The key performance indicators (KPIs) regularly reviewed by the board are:

KPI H1 2020 H1 2019
Revenue growth 166% (53%)
EBITDA* (£0.315m) (£0.712m)
Cash used in operations (£0.551m) (£0.446m)

* Earnings before interest, tax, depreciation and amortisation

Outlook

The Board is pleased to report that the company has restored revenues in all areas of its services, and is confident of sustained performance for the remainder of this year. The uptake of RAMP™ has been promising to date and the Company is optimistic for this to continue in the second half of the year.

The Directors believe that the antibody therapeutic market continues to grow, and that Fusion Antibodies remains in a strong position to grow and return to profitability.

However, the Company relies on multiple orders which, on average, are each worth below £100k and which the Company can execute within 2-3 months. The consequence of this is that the Board has limited visibility of orders and revenues beyond a three-month horizon.  However, the Directors continue to be confident that growth in order levels for existing and new services will continue.

Statement of Directors’ Responsibilities

The Directors confirm, to the best of their knowledge:

  • The condensed set of financial statements has been prepared in accordance with IAS34 ‘Interim Financial Reporting’, as adopted by the European Union;
  • The interim management report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules of the of the United Kingdom’s Financial Conduct Authority, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year, and gives a true and fair view of the assets, liabilities, financial positions and profit for the period of the company; and
  • The interim management report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules of the United Kingdom’s Financial Conduct Authority, being a disclosure of related party transactions and changes therein since the previous annual report.

 

By order of the Board

Dr Simon Douglas
Non-executive Chairman

2 December 2019

 

Condensed Statement of Comprehensive Income
For the six months ended 30 September 2019

  Notes   6 months to
30.09.19

Unaudited
£’000
6 months to
30.09.18
Unaudited
£’000
Year to
31.03.19
Audited
£’000
Revenue     1,753 658 2,182
Cost of sales     (1,014) (545) (1,378)
Gross profit     739 113 804
Other operating income 10   53 58 86
Administrative expenses     (1,408) (1,063) (2,398)
Operating loss     (616) (892) (1,508)
           
Finance income 3   4 7 13
Finance costs 3   (9) (2) (4)
Loss before tax     (621) (887) (1,499)
Income tax credit 4   148 145 235
Loss for the period     (473) (742) (1,264)
Total comprehensive expense for the period     (473) (742) (1,264)
           
           
      Pence Pence Pence
Basic loss per share 5   (2.1) (3.4) (5.7)

 

Condensed Statement of Financial Position
As at 30 September 2019

  Notes As at
30.09.19
Unaudited
£’000
  As at
30.09.18
Unaudited
£’000
  As at
31.03.19
Audited
£’000
Assets            
Non-current assets            
Intangible assets   5   7   6
Property, plant and equipment 6 1,558   1,592   1,588
Deferred tax assets 7 1,488   1,277   1,343
    3,051   2,876   2,937
Current assets            
Inventories   231   96   243
Trade and other receivables   1,200   650   1,056
Current tax receivable   39   13   23
Cash and cash equivalents   1,313   2,803   1,984
    2,783   3,562   3,306
Total assets   5,834   6,438   6,243
             
             
Liabilities            
Current liabilities            
Trade and other payables   580   521   729
Borrowings 8 124   35   67
    704   556   796
             
Net current assets   2,079   3,006   2,510
             
Non-current liabilities            
Borrowings 8 170   26   73
Provisions for other liabilities and charges   20   20   20
Total liabilities   894   602   889
             
Net assets   4,940   5,836   5,354
             
Equity            
Called up share capital   884   884   884
Share premium reserve   4,872   4,872   4,872
(Accumulated losses)/retained earnings 13 (816)   80   (402)
Equity   4,940   5,836   5,354

 

Condensed Statement of Changes in Equity
For the six months ended 30 September 2019

6 months ended 30 September 2019
Unaudited
Called up
share
capital

£’000
Share
premium
reserve

£’000
Accumulated
losses

£’000
Equity
£’000
At 1 April 2019 884 4,872 (402) 5,354
Loss for the period - - (473) (473)
Share options - value of employee services - - 46 46
Tax charge relating to share option scheme - - 13 13
Total transactions with owners, recognised directly in equity - - 59 59
At 30 September 2019 884 4,872 (816) 4,940
         
6 months ended 30 September 2018
Unaudited
Called up
share
capital
£’000
Share
premium
reserve
£’000
Retained
earnings
£’000
Equity
£’000
At 1 April 2018 884 4,872 819 6,575
Restatement (see note 12) - - (24) (24)
At 1 April 2018 restated 884 4,872 795 6,551
Loss for the period - - (742) (742)
Share options - value of employee services - - 47 47
Tax credit relating to share option scheme - - (20) (20)
Total transactions with owners, recognised directly in equity - - 27 27
At 30 September 2018 884 4,872 80 5,836
         
Year ended 30 March 2019
Audited
Called up
share
capital
£’000
Share
premium
reserve
£’000
(Accumulated
losses)/
Retained
earnings
£’000
Equity
£’000
At 1 April 2018 884 4,872 819 6,575
Restatement (see note 12) - - (24) (24)
At 1 April 2018 restated 884 4,872 795 6,551
Loss for the year - - (1,264) (1,264)
Share options - value of employee services - - 98 98
Tax credit relating to share option scheme - - (31) (31)
Total transactions with owners, recognised directly in equity - - 67 67
At 31 March 2019 884 4,872 (402) 5,354

 

Cash Flow Statement
For the six months ended 30 September 2019

  6 months to
 30.09.19
Unaudited
£’000
6 months to
30.09.18
Unaudited
£’000
Year to
31.03.19
Audited
£’000
Cash flows from operating activities      
Loss for the period (473) (742) (1,264)
Adjustments for:      
Share based payment expense 46 46 98
Depreciation 300 179 429
Amortisation of intangible assets 1 1 2
Finance income (4) (7) (13)
Finance costs 9 2 4
Income tax credit (148) (145) (235)
Decrease/(increase) in inventories 11 (14) (161)
(Increase)/decrease in trade and other receivables (144) 248 (158)
(Decrease)/increase in trade and other payables (149) (15) 193
Cash used in operations (551) (447) (1,105)
Income tax received - 2 7
Net cash used in operating activities (551) (445) (1,098)
       
Cash flows from investing activities      
Purchase of intangible assets - (8) (8)
Purchase of property, plant and equipment (44) (1,224) (1,373)
Net cash used in investing activities (44) (1,232) (1,381)
       
Cash flows from financing activities      
Repayments of borrowings (71) (16) (37)
Finance income - interest received 4 7 13
Finance costs - interest paid (9) (2) (4)
Net cash used in financing activities (76) (11) (28)
       
Net decrease in cash and cash equivalents (671) (1,688) (2,507)
Cash and cash equivalents at the beginning of the period 1,984 4,491 4,491
Cash and cash equivalents at the end of the period 1,313 2,803 1,984

 

Notes

Notes to the Financial Statements are available in the printable PDF version

 

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