Corporate News & RNS

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), an Early Discovery Contract Research Organisation (“CRO”) specialising 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 2022 (“H1 FY2023”) and provides an update on R&D projects as well as the development of an Integrated Therapeutic Antibody Services offering.

Operational highlights

• New approach introduced for selling combined services: Integrated Therapeutic Antibody Services
• Appointment of Adrian Kinkaid as CEO in August 2022
• Continued successful progress in development of the OptiMAL^TM library
• Small number of projects delayed by clients as they seek further investment
  

Financial highlights

• Revenues of £1.9 million (H1 FY2022: £2.4 million)
• Expenditure on R&D increased by 7% to £0.45 million (H1 FY2022: £0.42 million)
• Loss of £1.1 million (H1 FY2022: £0.6 million loss)
• Cash position at 30 September 2022 was £1.2 million (31 March 2022: £2.0 million)
  

Commenting on the interim results, Adrian Kinkaid, CEO of Fusion Antibodies plc, said: “We are re-positioning the Company’s service offering to best serve our clients in therapeutic antibody drug discovery. Following the restructuring of our commercial team and once again attending in-person conferences this is the right time to re-align our services with client needs. By integrating our current Discovery, Engineering and Supply services into one integrated end-to-end service we aim to enhance the client journey with the development of high performing antibodies to their targets. The integrated approach has been trialed with an existing client with exceptionally good results and will be augmented by the new OptiMAL^TM mammalian display technology in due course. While this has been a challenging period, the Board believes that we can deliver the H2 performance necessary to continue to build shareholder value in the Company.”

Fusion will host a presentation on the results open to all investors via the Investor Meet Company platform at 10.00am on Friday, 9 December 2022, delivered by Dr Adrian Kinkaid, CEO and James Fair, CFO. The Company is committed to providing an opportunity for all existing and potential investors to hear directly from management on its results whilst additionally providing an update on the business and current trading.

Investors can sign up to Investor Meet Company for free and add to meet Fusion Antibodies plc via the following link: https://www.investormeetcompany.com/fusion-antibodies-plc/register-investor 

Enquiries:

About Fusion Antibodies plc

Fusion is a Belfast-based Collaborative Research Organisation (“CRO”) company, listed on AIM, providing an integrated end-to-end range of antibody engineering services for the development of antibodies for both therapeutic drug and diagnostic applications.

Fusion provides a broad range of services in antibody generation, development, characterisation, optimisation, and small-scale production. These services include antigen expression, purification and sequencing, antibody humanisation using Fusion's proprietary CDRx^TM platform and cell line development, producing antibody generating stable cell lines optimised for use downstream by the customer to produce material for clinical trials. Since 2012, the Company has successfully sequenced and expressed over 250 antibodies and successfully completed over 200 humanisation projects for its international customer base, which has included eight of the top 10 global pharmaceutical companies by revenue.

At every stage, our client’s vision is central to how we work in combining the latest technological advances with cutting edge science. In this work our world-class humanization and antibody optimization platforms harness the power of natural somatic hypermutation (SHM) to ensure the best molecule goes to the clinic. Fusion Antibodies’ growth strategy is based on enabling Pharma and Biotech companies get to the clinic more effectively, using molecules with optimized therapeutic profile and enhanced potential for successful development and approval and, ultimately, on speeding up the drug discovery and development process. The announced Integrated Therapeutic Antibody Services (“ITA”) offering will enhance the efficiency of this process by providing a continuous service offering from target nomination to stable cell line. Fusion’s use of SHM to create a fully human antibody library to capture the human antibody repertoire will address a continuing market need in antibody discovery.

Fusion Antibodies’ emphasis on antibody therapeutics is based on the size and growth rate in the sector, with the market valued at $135.4 billion in 2018 and forecast to surpass $300 billion by 2025, a CAGR of 14.26%. As of May 2021, there were 100 approved antibody therapies on the market and more than 570 antibody therapies in clinical development.

Operational Review

The Company has had a commercially challenging six months to 30 September 2022. In this backdrop, the Company is introducing a new integrated approach in response to client needs and to ultimately increase revenues. The focus for our R&D has continued on the OptiMAL^TM library project, with investment in R&D increased by 7% over the same period in the previous year.

Revenues for the six-months ended 30 September 2022 were lower than the same period last year, due to a combination of factors. Notably a small number of valuable projects have been suspended by clients due to delayed investment into those businesses. Clients have suggested that we should expect these projects to recommence once their funding is secured. We saw a return to some face-to-face conferences and events in FY2022. However, the effect on new orders from the reduction of contact and lead generation while the Covid-19 pandemic restrictions were in place continues. Alternative measures that were implemented during the exceptional period of travel restrictions did not yield as good as results in comparison to face-to-face meetings due to the highly technical nature of the business.

Demand for our core Humanisation and RAMP^TM services has continued to be strong with modest growth in revenues compared with H1 FY2022. Transient gene expression has also performed well. The geographic spread was similar to that for full year FY2022 including business through our Asian-distributors.

In April 2022 a new Head of Commercial activities joined the Company and, as previously announced, the new CEO, Adrian Kinkaid, joined in August this year. They are working together to raise the profile of the Company in our market and promote our services internationally, including Company attendance at eight specialist conferences in Europe and North America between September and December. There has also been a significant restructuring of the Company’s commercial team and a curation of the customer relationship management database. We are pleased to note that customer visits to Fusion’s laboratories have also recommenced in recent weeks with customers from Japan and USA as well as a team from our partner, Eurofins Discovery.

Integrated Therapeutic Antibody Service (“ITA”)

At every stage, our client’s vision is central to how we address their project. ITA pulls together all our current services to enhance the efficiency of this process and provide a continuous service from target discovery to a final stable cell line ready for larger scale production and is consistent with Fusion’s established philosophy to “begin with the end in mind”. This approach is a natural evolution of the aim to be a research partner with our customer, providing more services and with additional success milestones and royalties arising from such projects. When the OptiMAL^TM platform is commercially ready it will be incorporated into the ITA.

Research and Development

Additional resources have been invested in R&D and development work on OptiMAL^TM, the class leading Mammalian Antibody Library, has continued throughout the period. Each stage of the programme has now been validated and work is currently ongoing on extracting and evaluating antibodies to oncology targets. We continue to build a body of data with a view to establishing commercial relationships for further validation by the end of the financial year.

To maintain our position at the forefront of the antibody sector we take advantage of technological advances in the delivery of our existing services. This involves in-house innovation, continuing professional development of our scientific staff and periodic updating of our equipment.

Financial Review

Revenues for the six-month period ending 30 September 2022 were £1.86 million (H1 FY2022: £2.44 million). Included in the H1 FY2022 revenues was the one-off £150,000 milestone with no milestones received in H1 FY 2023. The Company continues to retain an interest of a future success milestone or royalty in 13 client projects. The revenues of £1.86 million represents a reduction from the underlying £2.3 million revenues in H1 FY2022.

The 33% gross profit percentage on underlying revenues was lower than in the same period last year due to an under-utilisation of available capacity for fee generating projects (H1 FY2022: 46%), some of the spare capacity being deployed to support the internal R&D efforts.

R&D expenditure in H1 FY2023 was £452,000, an increase of 7% over the comparable period in FY2022 reflecting the continuing investment particularly in in the OptiMAL^TM Library project.

SG&A expenditure of £1,419,000 was £53,000 lower than in H1 FY2022 due in part to professional fees incurred in the previous period.

Operating loss for the period resulting from the above was £1,256,000 (H1 FY2022: £650,000 loss).

Cash used in operations was £754,000 compared with £505,000 used in H1 FY2022. The H1 FY2023 operational outflow includes the £452,000 investment in R&D. The Company continues to hold elevated levels of consumable stocks to mitigate against current supply chain risks caused by both the COVID-19 pandemic and Brexit. The total outflow was £851,000 and the closing cash balance at 30 September 2022 was £1,198,000.

Key Performance Indicators

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

* Earnings before interest, tax, depreciation and amortisation

The investment in R&D and the impact on EBITDA is set out in Note 12 to these statements. EBITDA for the period was a loss of £1,008,000 (H1 FY2022: £275,000 loss) and adjusting for research and development expenditure shows an EBITDA loss excluding R&D of £556,000 for the period (H1 FY2022: £149,000 profit).

Outlook

In the Company’s Annual Report 2022 we commented on the considerable uncertainty arising from global macro conditions. Events since that date have not eased concerns with political uncertainty and market volatility in the UK along with other global factors, although predictions are suggesting less volatility and reducing inflationary pressures ahead. Challenges remain for our international customer base and we continue to meet these challenges and capitalise on the opportunities presented.

Based on a current assessment of the sales pipeline and as a result of greater lead generation from face-to-face meetings, the Board believe we can deliver an improved performance in H2 and continue to build value in the Company.

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’;
• 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.

On behalf of the Board

Dr Simon Douglas
Non-executive Chairman

5 December 2022

Condensed Statement of Comprehensive Income

For the six months ended 30 September 2022

Condensed Statement of Financial Position

As at 30 September 2022

Condensed Statement of Changes in Equity

For the six months ended 30 September 2022

Statement of Cash Flows

For the six months ended 30 September 2022