Final Results
19 August 2020
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 Regulation (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, is pleased to announce its final results for the year ended 31 March 2020.
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Highlights
- Full year revenues increased by 79% to £3.9m (2019: £2.2m)
- Loss for the year of £0.7m (2019: loss £1.3m)
- Commercial roll out and revenues from Rational Affinity Maturation Platform (RAMPTM)
- Cash position at the year-end £1.5m (2019: £2.0m)
Post year end and looking ahead
- £3.0m equity fundraise post year end
- Covid-19 programme introduced as part of the Mammalian Antibody Library Development Plan to assist clients working towards solutions for Covid-19
- Partnership with MAB Discovery continues with further development work being undertaken
- Investment in laboratory automation equipment
Paul Kerr, CEO of Fusion Antibodies commented:"We have had a strong year with the increased revenue performance in H1 and H2 driven by the expansion of our existing services and newly introduced RAMPTM. The Company has also seen strong geographical growth in FY20 with the appointment of two new distributors in Asia as well carrying out a RAMPTM project for a large indigenous company in China. While Covid-19 has brought a lot of uncertainty for FY21, trading so far has been in line with expectations and the £3.0m fundraise in April has allowed Fusion to expand the existing proof-of-concept work on the Mammalian Antibody Library to include Covid-19 as a new target. We are positive about the next 12 months and are grateful to our shareholders for their continued 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 (Corporate Finance) | |
| Tony Quirke (Sales) | |
| Walbrook PR | Tel: +44 (0)20 7933 8780 or [email protected] |
| Anna Dunphy | Mob: +44 (0)7876 741 001 |
| Paul McManus | Mob: +44 (0)7980 541 893 |
Chairman’s Statement
This year has seen the Company build on the success and growth that was seen in the latter part of FY2019. Revenues grew in both H1 and H2 to deliver year on year revenue growth of 79%. This progress has come from both our existing services and the introduction of the RAMPTM platform which generated its first commercial projects for customers during the year. The RAMPTM service has contributed materially to the revenues for the year and we anticipate increased revenue contribution in coming years as this unique service becomes established. The Company has continued with its strategy to invest for growth which has resulted in a loss for the year of £697,000 (FY2019: £1.3m loss) as is explained in the Chief Executive Officer’s report below.
Strategy and progress
The strong performance seen in the second half of FY2019 has continued and the revenues for FY2020 were 79% higher than the previous year. All areas of the business have grown but in particular our humanization service remains strong and continues to be a core foundation for us. Our new RAMPTM service, which can improve the structure and performance of antibody based drugs, was launched this year and has started to see some traction although like any innovative technology platform, it takes time for it to become an established methodology. As the use of antibodies as therapeutic drugs continues to grow, we expect that our wide range of services will continue to be the first choice for many Pharmaceutical and Biotech companies outsourcing their R&D activities.
As part of our core strategy we continue to invest in the science behind the services and I am pleased to report that the proof-of-concept R&D for our Mammalian Antibody Library Discovery Platform (the “Library”) currently under development is on track for completion in this financial year. At that point we expect to have demonstrated that we can create a fully human antibody library which will allow for the screening of novel targets and the faster identification of lead antibody drugs compared with conventional practices.
As I have previously mentioned, it takes time for any innovative technology platform to become an established methodology, and 2021 will be dedicated to optimization of the Library and the generation of a body of data from a range of targets before launch and revenues in 2022.
In addition to the R&D programme focussing on well understood oncology targets, I can report that we will be adding Covid-19 to the Library panel. The outbreak of this virus presents an ideal opportunity for us to test the Library in a real-world setting against an unmet and critical medical need. In addition to vaccines, effective treatments, both prophylactic and therapeutic drugs will be required to produce a long-term solution for this disease and a neutralising antibody against Covid-19 could be one of the solutions in the control of the virus. In addition to validating the Library in readiness for commercialisation there is the longer-term potential to out-licence successfully produced human antibodies to Covid-19 to commercial partners for further development.
In order to provide the Company with the resources required to undertake the additional proof-of-concept work on the Library in respect of Covid-19, as well as for the existing oncology targets, a placing of 3,333,333 new ordinary shares in April 2020 resulted in us raising gross cash proceeds of £3.0m (£2.8m net of costs).
Strategically the business is organised in three core service areas to meet our customer needs:
- Discovery: the creation, screening and sequencing of novel monoclonal antibodies for therapeutic and diagnostic applications;
- Engineering: maximising the performance of an antibody drug including CDRxTM humanisation, ADDTM and RAMPTM; and
- Supply: the production of material for clinical production or further research, including cGMP ready stable cell line development and transient expression.
More details on financial performance are given in the Chief Executive Officer’s report.
Corporate governance
The long-term success of the business and delivery on strategy depends on good governance. The Company complies with the Quoted Companies Alliance Corporate Governance Code 2018 as explained more fully in the Governance Report.
Current trading
Growth throughout the year was strong as the Company continued to deliver on the foundations laid last year. The successful introduction of RAMPTM has not only contributed to revenues but allowed the Company to maintain its position at the forefront of innovative services for the drug discovery industry, a part of our core ongoing strategy. The emergence of the Sars-cov-2 virus late in the year did not have a significant impact on operations as the Company was able to swiftly put procedures in place to maintain and protect our laboratory services through a combination of remote working for desk-based staff and staggered working hours for those working in a laboratory.
Post year end trading has been in line with expectations. There continues to be considerable uncertainty around the world as countries ease or increase restrictions to manage the global Covid-19 pandemic. Working with an international customer base presents opportunities and challenges as governments and companies respond to the immediate crisis and plan for a way forward in new circumstances. The Board believe the Company has the expertise to meet these challenges and capitalise on opportunities, and, having raised capital post year end it also has the financial resources to face the coming months with confidence.
I would like to commend our staff for their flexibility, speed of adapting to new practices, their commitment and hard work during this Covid-19 restrictive period and beyond, and to thank our shareholders for their ongoing support.
Dr Simon Douglas
Chairman
19 August 2020
CEO’s report and operations review
This year has been one of strong revenue growth, continued innovation and continued investment for growth. As a result of our ongoing investment for growth and in R&D the Company continues to return losses which decreased this year to £0.7m (FY2019: £1.3m loss). I am delighted to report that actions taken in the latter half of the prior year have continued to produce improved revenues exceeding previous expectations both for revenue and EBITDA, as announced in January 2020.
In addition, the Company has been well placed to deal with the uncertainties which arose in the final quarter of FY2020 as companies and governments around the world took steps to control the spread of the Coronavirus pandemic. Due to the inherent uncertainties in markets around the world, the Board believes it is not yet clear how FY2021 will develop but performance in the early months give us some confidence for the year. The Company will continue its strategy of investment in revenue growth and R&D over the short to medium term, and particularly in the development of the Mammalian Antibody Library.
Business review
Revenue performance across the financial year to 31 March 2020 has been strong with 79% annual growth coming from improved performance in both H1 and H2. Most of this growth has come from expansion of our existing services augmented by a material contribution from RAMPTM, the most recent addition to our suite of platforms and services. We have seen a robust introduction of the new RAMPTM service and promising results achieved for our early customers provide a good base for the wider marketing of the service in the coming year.
Early in the year we strengthened our Business Development and Marketing functions with new senior appointments. This has enabled us to enhance our branding and better promote our key services: CDRx™ Humanization, RAMPTM and Cell Line Development.
I am pleased to report that the Company saw strong growth in all our geographical markets this year including our home UK market, Europe and North America. We see a lot of potential in Asia and our sales and marketing efforts have begun to translate into sales growth and during the year members of the Fusion team made several visits to Japan to support our distributor there. We have expanded our presence in Asia with the appointment of two new distributors A-Frontier in South Korea and Biotickle in India and made visits to both those countries during the year. In addition, in China we carried out a RAMPTM project for a large indigenous company.
We continue to invest in refining the RAMPTM platform and have begun to develop machine learning capabilities for the current platform.
The development of a Mammalian Antibody Library Platform is the next phase of the R&D programme that began with RAMPTM. During the year, the team was strengthened, and the initial stages of work have continued apace testing all the elements that make up this platform. We are very pleased with the progress made.
With the Covid-19 crisis reaching the UK towards the year end, the Company took the decision to expand the original development programme for the Library. Shortly after the year end we raised additional funds to enable the Company to broaden the Library programme testing to include Covid-19 as a new target alongside the Immuno-oncology and GPCR targets in the existing plans, thus accelerating the overall programme. This provides the Company with the opportunity to showcase the application of the new platform and may also present opportunities to out-license the novel antibodies discovered as a result.
The MAB Discovery partnership continues as we work with them to deliver their antibodies onward towards clinical development. We maintain our interest in in several molecules developed by MAB Discovery and other customers and have added new milestones for customer projects completed during the year.
The Fusion Technical team continues to innovate and add value to our clients’ projects. We have multiple clients applying for new patents where Fusion technical staff are listed as inventors and authors in manuscripts under development, using both the CDRx™ humanisation and RAMP™ platforms. The technical team has presented the advantages of the technologies at multiple international conferences during the year. This continuous improvement and innovation here at Fusion Antibodies helps us stay at the forefront of our industry.
Early in the final quarter of the financial year, it became apparent that the Coronavirus outbreak was becoming a pandemic which would affect all our lives and how we do business. The Company moved swiftly to safeguard employees by limiting travel and introducing remote working in advance of the restrictions imposed by Government. As we operate from one building, these steps were key to ensuring that the laboratory-based employees were able to continue to work in a safe environment by reducing the number of staff physically present and circulating in communal areas. Communicating this to our customers in a timely manner has enabled us to limit the impact on trading performance both pre and post year end so that trading in FY2021 to date has been in line with expectations and the pattern of customer payments is unchanged.
I am very grateful for the commitment and dedication shown both by those staff who continued to come into work each day throughout the lockdown and those who adjusted their working arrangements to work remotely.
The directors remain confident that the Coronavirus pandemic should continue to have only a limited impact on trading, however, with the number of new cases worldwide continuing to grow the situation remains fluid. The directors remain vigilant in strengthening the business operations to mitigate risks and take advantage of opportunities and greatly appreciate the support shown by investors in the equity fundraise following the year end. Fusion has managed the steps needed to keep our staff safe and we are well placed to continue to provide and expand our drug discovery and development services. Furthermore, we intend to demonstrate our expertise and the value of our platforms on a global level by developing key antigens and antibodies to Covid-19 for both diagnostic testing and therapeutic use.
Having completed the laboratory expansion in the previous year, limited investment was required in laboratory equipment during FY2020. Future investment in equipment will concentrate on automation of processes to increase productivity and capacity.
Inventory of consumables was increased at the year end to allow for any supply chain disruption from the UK’s planned departure from the European Union and the Coronavirus outbreak reaching Europe in the final quarter of the financial year. In the year, 32% of the Company’s revenues arose from exports to the EU countries. The Company continues to monitor potential risks and opportunities arising as the future EU trade deal is negotiated. We also continue to develop other export markets to mitigate risks of overexposure to any one geographical market.
Net current assets of £1.8m at 31 March 2020 (2019: £2.5m) mainly comprised inventories and cash and cash equivalents.
The Company ended the year with £1.5m of cash, having used £0.2m of cash in operations during the year, invested £0.1m in property, plant and equipment and £0.2m servicing asset-based borrowings. This cash level put the Company in a strong position to progress plans for growth in existing services in FY2021. Shortly after the reporting date the Company raised a further £3.0m gross from the issue of new shares to provide the resources to undertake additional proof-of-concept work on the Library in respect of Covid-19 and oncology targets as well as further working capital for the Company.
Post-period end events
- £3.0m capital (gross proceeds) raised post year end
- Covid-19 programme introduced as part of the Mammalian Antibody Library Development Plan
- Partnership with MAB Discovery continues with further development work being undertaken
- Investment in laboratory automation equipment
Financial Results
The Company has continued to build on the revenue growth in the second half of FY2019 with revenue growth seen in both H1 and H2. Full year revenues for the year in total were up 79% to £3.9m (FY2019: £2.2m). Revenues were higher in all geographical markets when compared with the previous year.
The EBITDA loss for the year was £0.4m (FY2019: £1.1m loss) (see note 30). Continued losses are a result of ongoing investment in operations and research which are expected to contribute towards future revenue growth. The Company reduced its loss before tax to £1.1m (FY2019: £1.5m loss).
The Company used £0.2m of cash in operations (2019: £1.1m) and invested £0.1m in expenditure on capital equipment and a further £0.2m on lease and hire purchase payments. Cash and cash equivalents as at 31 March 2020 totaled £1.5m (2019: £2.0m).
The Company’s full results are set out in the financial statements included with this report.
Key performance indicators
The key performance indicators (KPIs) regularly reviewed by the Board are:
| KPI | 2020 | 2019 |
| Revenue change year on year | 79% | (19%) |
| EBITDA | (£0.4m) | (£1.1m) |
| Cash used in operations | (£0.2m) | (£1.1m) |
Outlook
There continues to be considerable uncertainty around the world as countries ease or increase restrictions to manage the global Covid-19 pandemic. Working with an international customer base presents opportunities and challenges as governments and companies respond to the immediate crisis and plan for a way forward in new circumstances. The Board believes the Company has the expertise to meet these challenges and capitalise on opportunities, and having raised capital post year end, that it also has the financial resources to face the coming months with confidence.
Dr Paul Kerr
Chief Executive Officer
19 August 2020
Statement of Comprehensive Income
For the year ended 31 March 2020
| Notes | 2020 £’000 |
2019 £’000 |
|
| Revenue | 4 | 3,895 | 2,182 |
| Cost of sales | (2,123) | (1,378) | |
| Gross profit | 1,772 | 804 | |
| Other operating income | 56 | 86 | |
| Administrative expenses | (2,887) | (2,398) | |
| Operating loss | 5 | (1,059) | (1,508) |
| Finance income | 8 | 6 | 13 |
| Finance expense | 8 | (20) | (4) |
| Loss before tax | (1,073) | (1,499) | |
| Income tax credit | 10 | 376 | 235 |
| Loss for the financial year | (697) | (1,264) | |
| Total comprehensive expense for the year | (697) | (1,264) | |
| Pence | Pence | ||
| Loss per share | |||
| Basic | 11 | (3.2) | (5.7) |
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
Statement of Financial Position
As at 31 March 2020
| Notes | 2020 £’000 |
2019 £’000 |
|
| Assets | |||
| Non-current assets | |||
| Intangible assets | 12 | 4 | 6 |
| Property, plant and equipment | 13 | 1,470 | 1,588 |
| Deferred tax assets | 15 | 1,764 | 1,343 |
| 3,238 | 2,937 | ||
| Current assets | |||
| Inventories | 16 | 340 | 243 |
| Trade and other receivables | 17 | 887 | 1,056 |
| Current tax receivable | 38 | 23 | |
| Cash and cash equivalents | 1,537 | 1,984 | |
| 2,802 | 3,306 | ||
| Total assets | 6,040 | 6,243 | |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | 18 | 828 | 729 |
| Borrowings | 19 | 161 | 67 |
| 989 | 796 | ||
| Net current assets | 1,813 | 2,510 | |
| Non-current liabilities | |||
| Borrowings | 19 | 219 | 73 |
| Provisions for other liabilities and charges | 20 | 20 | 20 |
| 239 | 93 | ||
| Total liabilities | 1,228 | 889 | |
| Net assets | 4,812 | 5,354 | |
| Equity | |||
| Called up share capital | 22 | 884 | 884 |
| Share premium reserve | 4,872 | 4,872 | |
| Accumulated losses | (944) | (402) | |
| Total equity | 4,812 | 5,354 |
Statement of Changes in Equity
For the year ended 31 March 2020
| Called up share capital £’000 |
Share premium reserve £’000 |
(Accumulated losses)/retained earnings £’000 |
Total equity £’000 |
|
| At 1 April 2018 | 884 | 4,872 | 795 | 6,551 |
| Loss and total comprehensive expense for the year | - | - | (1,264) | (1,264) |
| Share options – value of employee services | - | - | 98 | 98 |
| Tax charge 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 |
| At 1 April 2019 | 884 | 4,872 | (402) | 5,354 |
| Loss and total comprehensive expense for the year | - | - | (697) | (697) |
| Share options – value of employee services | - | - | 72 | 72 |
| Tax credit relating to share option scheme | - | - | 83 | 83 |
| Total transactions with owners, recognised directly in equity | - | - | 155 | 155 |
| At 31 March 2020 | 884 | 4,872 | (944) | 4,812 |
Statement of Cash Flows
For the year ended 31 March 2020
|
|
2020 £’000 |
2019 £'000 |
| Cash flows from operating activities | ||
| Loss for the year | (697) | (1,264) |
| Adjustments for: | ||
| Share based payment expense | 83 | 98 |
| Depreciation | 620 | 429 |
| Amortisation of intangible assets | 2 | 2 |
| Finance income | (6) | (13) |
| Finance costs | 20 | 4 |
| Income tax credit | (376) | (235) |
| Increase in inventories | (97) | (161) |
| Decrease/(increase) in trade and other receivables | 169 | (158) |
| Increase in trade and other payables | 99 | 193 |
| Cash (used in)/generated from operations | (183) | (1,105) |
| Income tax received | 23 | 7 |
| Net cash (used in)/generated from operating activities | (160) | (1,098) |
| Cash flows from investing activities | ||
| Purchase of intangible assets | - | (8) |
| Purchase of property, plant and equipment | (109) | (1,373) |
| Finance income – interest received | 6 | 13 |
| Net cash used in investing activities | (103) | (1,368) |
| Cash flows from financing activities | ||
| Repayment of borrowings | (172) | (37) |
| Finance costs – interest paid | (12) | (4) |
| Net cash (used in)/generated from financing activities | (184) | (41) |
| Net (decrease)/increase in cash and cash equivalents | (447) | (2,507) |
| Cash and cash equivalents at the beginning of the year | 1,984 | 4,491 |
| Cash and cash equivalents at the end of the year | 1,537 | 1,984 |
