Half year Report
20 November 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 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 2020 (“H1 FY2021”).
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Highlights
Operational
- 9% growth in revenues in H1 FY2021 over H1 FY2020
- COVID-19 programme introduced as part of the Mammalian Antibody Library development project
- Recruitment of a Director of Research & Development, and additional research scientist appointments
Financial
- Trading for the period has been in line with the Directors’ expectations
- Continued improvement in revenues: H1 FY2021 revenues of £1.90 million (H1 FY2020: £1.75 million)
- R&D expenditure of £271,000, an increase of 50% on H1 FY2020
- Losses held at same level as same period last year: H1 FY2021 loss of £0.47 million (H1 FY2020: £0.47 million loss)
- £3.0 million (gross proceeds) raised via placing of new ordinary shares
- Cash position at 30 September 2020 was £3.24 million (31 March 2020: £1.54 million)
Commenting on the interim results, Paul Kerr, CEO of Fusion Antibodies plc, said: “I’m pleased to report that our revenues have grown despite the fact that the period has been dominated by the COVID-19 pandemic. We have expanded our R&D programme to include a COVID-19 target along with our oncology targets, with the goal of using our Mammalian Antibody Library, which will be branded as “OptiMAL™”, to produce neutralising antibodies against the virus, and have raised capital for that purpose. We have remained operational throughout changing levels of government restrictions and have taken the steps to sustain the business in the coming months. I would like to thank our shareholders and staff for all their valued support to enable us to continue to grow in these challenging times.”
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 541 983 |
About Fusion Antibodies plc - www.fusionantibodies.com
Fusion is a Belfast based biotechnology company 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 200 humanisation projects for its international, blue-chip client base, which has included eight of the top 10 global pharmaceutical companies by revenue.
Fusion is a Collaborative Research Organisation (CRO) which provides antibody discovery, engineering and supply, through to cell line development. At every stage, our client’s vision is central to how we work, ensuring the best molecule goes to the clinic. Our world-class humanization and antibody optimization platforms harness the power of the natural diversity of antibodies. To address remaining market needs in antibody discovery, Fusion is creating a fully human antibody library to capture the entire human antibody repertoire.
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 Biotech companies 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
The period began early in the United Kingdom’s COVID-19 lockdown which was a time of high uncertainty as we and our customers adjusted to new working arrangements. The Company continued to operate throughout the initial lockdown and varying levels of restrictions and has delivered a 9% increase in revenues compared to the same period of the previous year.
The pandemic has created unusual patterns in customer needs as businesses have adapted their working practices and their research priorities. This has established opportunities for the Company to provide additional services to some customers, which has balanced out certain projects that have been delayed or paused by other customers. In particular, our core Antibody Engineering service continues to deliver and our Antibody Supply offering has performed well during the period, together underpinning the revenue growth achieved. As companies globally have adjusted to new circumstances, we have begun to see improved customer confidence.
The next service in the Company’s development pipeline is the Mammalian Antibody Library Discovery Platform (“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 discovery methods and to other library offerings already available in the market. The Company had originally planned to use three therapeutic targets in the proof-of-concept R&D programme but early in the period added a new COVID-19 project. We successfully completed a £3.0m equity raise in April to support this and to provide additional working capital.
We are pleased to report that development work to date has progressed well throughout the period and potential antibodies from the Library are currently being screened prior to being evaluated against the COVID-19 target. This project is supported by an Invest Northern Ireland grant with Queen’s University Belfast to test the resultant antibodies against the live virus in the University’s virology facility.
To further demonstrate the potential of the Library, the next two development projects against oncology targets are underway. The fourth planned project is against a challenging target, and we are currently in discussions with a potential development partner to collaborate on this project. The Library will complement the Company’s existing discovery services and will be offered alongside these, thus providing a broader range of services to our customers. Commercial collaborations are planned to commence in in FY2022, with meaningful revenues anticipated in FY2023. To aid marketing and promotion, the Company has registered the trademark OptiMALTM for the Library and will use this name in future reports and marketing material.
Senior R&D scientists have been recruited to accelerate the research programmes and a newly created post of Director of Research and Development has recently been filled.
Financial Review
Revenues for the six-month period to 30 September 2020 were £1.90 million (H1 FY2020: £1.75 million).
Operating loss for the first half was £0.56 million (H1 FY2020: £0.62 million). This result reflects R&D expenditure of £271,000, an increase of 50% compared with H1 FY2020 and the continued programme of expansion of capacity and development of sales and marketing.
In April 2020, the Company raised £3.0 million of equity (gross proceeds) by issuing 3,333,333 new ordinary shares in an oversubscribed placing. The primary purpose of this raise was to finance the additional COVID-19 project of the Library development.
As a result of the increased number of shares in issue, basic loss per share has further reduced to £0.019 per share versus £0.021 loss per share in H1 FY2020.
Gross profit margin of 46% has improved on H1 FY 2020 (42%) and is similar to that achieved for the full year FY2020. In addition to the continued recruitment and training of scientists to enable the Company to deliver future growth, there were added costs arising from adjustments to working practices and higher consumable costs as a result of COVID-19 restrictions. Revenue grants relating to employment are included in other income.
Administrative expenses include expenditure on overheads, Board costs, sales and marketing, research & development as well as depreciation. Administrative expenses of £1.48 million have increased compared with H1 FY2020 of £1.41 million as a result of further investment in research and development.
Cash used in operations was £0.73 million compared with £0.55 million used in H1 FY2020. This includes planned investment of funds in research & development as well as increased working capital requirements in H1 FY2021. The Company expects to increase consumable stocks further to mitigate against supply chain risks from COVID-19 and from Brexit which is an added risk for H2 FY2021. EBITDA losses are reducing as shown in the Key Performance Indicators below and are mainly attributable to investment in research and development.
The Board is not recommending the payment of a dividend in relation to the first half of the current financial year (H1 FY2020: nil).
Key Performance Indicators
The key performance indicators (KPIs) regularly reviewed by the board are:
| KPI | H1 2021 | H1 2020 |
| Revenue growth against same period in prior year | 9% | (166%) |
| EBITDA* | (£0.218m) | (£0.315m) |
| Cash used in operations | (£0.727m) | (£0.551m) |
* Earnings before interest, tax, depreciation and amortisation
Outlook
The Board is pleased to report that the Company has maintained and slightly grown revenues in the first six months of the year, in what were unprecedented times.
The Directors believe that the antibody therapeutic market continues to grow, and that Fusion remains in a strong position to grow and return to profitability in future years. The Company’s core services are reliant on multiple orders which the Company can execute within two to three months, which limits the visibility of orders and revenues beyond that timeframe. However, the current pipeline is in line with the Board’s expectations and the Directors are confident that progress will be made.
There are two major factors of uncertainly facing the Company and its customers in the second half of this financial year. COVID-19 restrictions continue to play a major part in many of our key markets with unplanned workforce and supply chain interruptions having a global impact. However, we will continue to operate the business and make our services available to our customers to the extent possible which, to date, has been with limited disruption. In addition, the United Kingdom will leave the European Union on 31 December 2020 (“Brexit”). The Company will maintain unrestricted access to EU markets due to its location in Northern Ireland which the Directors believe will reduce the impact of Brexit. The Board continues to believe that the Company has the expertise and financial resources to meet these challenges and capitalise on opportunities in the remainder of this period and beyond.
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
20 November 2020
Condensed Statement of Comprehensive Income
For the six months ended 30 September 2020
| Notes |
6 months to 30.09.20 Unaudited £’000 |
6 months to 30.09.19 Unaudited £’000 |
Year to 31.03.20 Audited £’000 |
||
| Revenue | 1,905 | 1,753 | 3,895 | ||
| Cost of sales | (1,032) | (1,014) | (2,123) | ||
Gross profit |
873 |
739 |
1,772 |
||
| Other operating income |
10 |
43 |
53 |
56 |
|
| Administrative expenses | (1,479) | (1,408) | (2,887) | ||
| Operating loss | (563) | (616) | (1,059) | ||
| Finance income | 3 | 1 | 4 | 6 | |
| Finance costs | 3 | (10) | (9) | (20) | |
| Loss before tax | (572) | (621) | (1,073) | ||
| Income tax credit |
4 |
101 |
148 |
376 |
|
| Loss for the period |
(471) |
(473) |
(697) |
||
| Total comprehensive expense for the period |
(471) |
(473) |
(697) |
||
| Pence | Pence | Pence | |||
| Basic loss per share | 5 | (1.9) | (2.1) | (3.2) | |
Condensed Statement of Financial Position
As at 30 September 2020
| Notes |
As at 30.09.20 Unaudited £’000 |
As at 30.09.19 Unaudited £’000 |
As at 31.03.20 Audited £’000 |
|||
| Assets | ||||||
| Non-current assets | ||||||
| Intangible assets | 3 | 5 | 4 | |||
| Property, plant and equipment | 6 | 1,401 | 1,558 | 1,470 | ||
| Deferred tax assets | 7 | 2,045 | 1,488 | 1,764 | ||
| 3,449 | 3,051 | 3,238 | ||||
| Current assets | ||||||
| Inventories | 373 | 231 | 340 | |||
| Trade and other receivables | 1,171 | 1,200 | 887 | |||
| Current tax receivable | 69 | 39 | 38 | |||
| Cash and cash equivalents | 3,243 | 1,313 | 1,537 | |||
| 4,856 | 2,783 | 2,802 | ||||
| Total assets | 8,305 | 5,834 | 6,040 | |||
| Liabilities | ||||||
| Current liabilities | ||||||
| Trade and other payables | 607 | 580 | 828 | |||
| Borrowings | 8 | 161 | 124 | 161 | ||
| 768 | 704 | 989 | ||||
| Net current assets | 4,088 | 2,079 | 1,813 | |||
| Non-current liabilities | ||||||
| Borrowings | 8 | 148 | 170 | 219 | ||
| Provisions for other liabilities and charges | 20 |
20 |
20 |
|||
| Total liabilities | 936 | 894 | 1,228 | |||
| Net assets | 7,369 | 4,940 | 4,812 | |||
| Equity | ||||||
| Called up share capital | 13 | 1,017 | 884 | 884 | ||
| Share premium reserve | 7,535 | 4,872 | 4,872 | |||
| (Accumulated losses)/retained earnings | (1,183) |
(816) |
(944) |
|||
| Equity | 7,369 | 4,940 | 4,812 |
Condensed Statement of Changes in Equity
For the six months ended 30 September 2020
| 6 months ended 30 September 2020 Unaudited |
Called up share capital £’000 |
Share premium reserve £’000 |
Accumulated losses £’000 |
Equity £’000 |
|---|---|---|---|---|
| At 1 April 2020 | 884 | 4,872 | (944) | 4,812 |
| Loss for the period | - | - | (471) | (471) |
| Issue of share capital | 133 | 2,867 | - | 3,000 |
| Cost of issuing share capital | - | (204) | - | (204) |
| Share options - value of employee services | - |
- |
21 |
21 |
| Tax credit relating to share option scheme | - |
- |
211 |
211 |
| Total transactions with owners, recognised directly in equity | 133 |
2,663 |
232 |
3,028 |
| At 30 September 2020 | 1,017 | 7,535 | (1,183) | 7,369 |
| 6 months ended 30 September 2019 Unaudited |
Called up share capital £’000 |
Share premium reserve £’000 |
Retained earnings £’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 credit 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 |
| Year ended 30 March 2020 Audited |
Called up share capital £’000 |
Share premium reserve £’000 |
(Accumulated losses)/ Retained earnings £’000 |
Equity £’000 |
| At 1 April 2019 | 884 | 4,872 | (402) | 5,354 |
| Loss 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 |
Cash Flow Statement
For the six months ended 30 September 2020
| 6 months to 30.09.20 Unaudited £’000 |
6 months to 30.09.19 Unaudited £’000 |
Year to 31.03.20 Audited £’000 |
|
| Cash flows from operating activities | |||
| Loss for the period | (471) | (473) | (697) |
| Adjustments for: | |||
| Share based payment expense | 21 | 46 | 83 |
| Depreciation | 344 | 300 | 620 |
| Amortisation of intangible assets | 1 | 1 | 2 |
| Finance income | (1) | (4) | (6) |
| Finance costs | 10 | 9 | 20 |
| Income tax credit | (101) | (148) | (376) |
| Decrease/(increase) in inventories | (33) | 11 | (97) |
| (Increase)/decrease in trade and other receivables | (276) |
(144) |
169 |
| (Decrease)/increase in trade and other payables | (221) | (149) | 99 |
| Cash used in operations | (727) | (551) | (183) |
| Income tax received | - | - | 23 |
| Net cash used in operating activities |
(727) | (551) | (160) |
| Cash flows from investing activities | |||
| Purchase of intangible assets | - | - | - |
| Purchase of property, plant and equipment | (275) | (44) | (109) |
| Finance income – interest received | 1 | 4 | 6 |
| Net cash used in investing activities | (274) | (40) | (103) |
| Cash flows from financing activities | |||
| Proceeds from issue of share capital | 2,796 | - | - |
| Repayments of borrowings | (85) | (71) | (172) |
| Finance costs - interest paid | (4) | (9) | (12) |
| Net cash generated from/(used in) financing activities | 2,707 | (80) | (184) |
| Net increase/(decrease) in cash and cash equivalents | 1,706 | (671) | (447) |
Cash and cash equivalents at the beginning of the period |
1,537 |
1,984 |
1,984 |
Cash and cash equivalents at the end of the period |
3,243 |
1,313 |
1,537 |
