Corporate News & RNS

2023

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Fusion Antibodies plc (AIM: FAB), a pharmaceutical contract research organisation specialising in antibody engineering services, announces its unaudited interim results for the six months ended 30 September 2018.

Operational

• Planned facilities and technical capacity expansion completed on time and within budget
• Affinity maturation service on schedule to launch in December 2018
• New contract signed with MAB Discovery GmbH ("MAB")
• Orders and revenues in the six months to 30 September 2018 ("H1 2019") below expectations, as previously announced
• Mammalian antibody library on track for delivery in 2020

Financial

• Revenues of £658k (H1 2018: £1,414k)
• Loss for the period of £742k (H1 2018: £166k)
• Cash and cash equivalents at 30 September 2018 of £2,802k (31 March 2018: £4,490k)

Post-period end

• Patent application covering affinity maturation filed in October 2018
• Strong recovery in order levels seen in October and November 2018

Commenting on the interim results, Paul Kerr, CEO of Fusion Antibodies plc, said: "As we have previously announced, the first six months of the current financial year have been challenging due to increasing competition and consequential pricing pressures. However, order levels have started to accelerate in October and November and I am cautiously optimistic that we have turned a corner. I am pleased that the laboratory capacity expansion was completed on time and within budget, in August 2018, and the launch of the Rational Affinity Maturation Platform (RAMP™) is on schedule for completion in December 2018. These important developments will reinforce our market-leading offering and enable us to resume growth of the business."

Enquiries:

About Fusion Antibodies plc

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 CDRx™ 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 over 250 antibodies and successfully completed over 100 humanisation projects for its international, blue-chip client base.

The Company was established in 2001 as a spin out from Queen's University Belfast. It was initially a drug development business but revised its operations to focus on CRO work in 2011. The Company has a highly experienced management team with a combined 47 years' experience in the biopharma industry. The global monoclonal antibody therapeutics market, which accounted for 43 per cent. of the global biologics market in 2016, was valued at between $85.4 billion and $86.7 billion in 2015 and is forecast to increase at a CAGR of between 8.2 per cent. and 12.2 per cent. for the period 2016 to 2024.

Operational Review

As announced in August 2018, the Company's order levels and revenues in the second six months of the previous financial year and the first few months of the current financial year were substantially below original market expectations and previously achieved levels. The Directors believe that this market disruption has been caused by intense competition recently in the antibody engineering market. The Directors are firmly of the view that the fundamental market for Fusion's antibody engineering services remains attractive and that customers appreciate the high-quality services that Fusion provides. The Company has therefore continued to invest in the development of new and improved services and the expansion of its facilities, believing that these will be rewarded in due course.

The Company was therefore pleased to announce in August that the laboratory expansion was completed within budget. This will provide the Company with the capacity to grow revenues substantially over the next few years. 

The development of the new proprietary Rational Affinity Maturation Platform (RAMP™) is nearing completion and the Company has begun marketing the service to potential users. The Board believes RAMP™ is highly innovative, represents highly valuable intellectual property and will offer the Company a significant competitive advantage. The company filed a patent application covering the technology in October 2018. The Board is confident that this new service will support further long-term growth.

Progress on the new proprietary mammalian antibody library is also on schedule and is expected to be completed and available as a service offering to customers during 2020.

In June 2018, the Company announced that it was in discussions intended to lead to a revised agreement with MAB Discovery GmbH which would provide greater clarity around the nature of services that Fusion provides to MAB.  A new fee for service only contract has now been agreed and the Company and MAB are planning to commence a project under the new agreement.

The Company has recruited more staff for business development, delivery of services and for research and development. The cost of these recruits has been partially offset by grants from Invest Northern Ireland, as announced in May 2018. The Company is in the process of recruiting a Commercial Director.

Financial Review

Revenues for the six-month period to 30 September 2018 (H1 2019) were £658k compared with £1,414k in the six months to 30 September 2017 (H1 2018). As previously announced and as discussed in the Operational Review above, this performance was substantially below the Directors' expectations and has been caused by more intense competition. The bulk of the revenues came from antibody humanisation and mammalian expression projects for customers.

Cost of sales in H1 2019 were £545k, compared with £597k in H1 2018. The recruitment and training of additional scientists for the new laboratories has resulted in these costs not reducing in direct proportion to revenues.

Administrative expenses of £1,063k in H1 2019 were 7% higher than £995k in H1 2018. Administrative costs in H1 2018 included £241k of non-recurring costs, reflecting a 41% increase in like-for-like costs occurred. As part of the capacity expansion plans, the Company has leased additional premises and all related occupation costs have increased as a result of this. Depreciation charges have also increased significantly as laboratory capacity has been expanded.

The total cost base (cost of sales and administrative expenses) in H1 2019 was therefore £1,608k, £16k (1%) higher than £1,592k in H1 2018 (or an increase of 19% on the underlying costs).

Other operating income of £58k (H1 2018: £29k) includes revenue grants relating to employment costs, as announce in May 2018.

As a consequence of the lower revenues, operating loss for H1 2019 was £892k (H1 2018: £148k).

After adjusting the net loss for non-cash items such as depreciation, amortisation and share based payments, and for cash flow timing differences arising on working capital movements, cash used in operations was £446k compared with £51k in H1 2018. £1,232k was invested in H1 2019 (H1 2018: £137k), predominantly in the planned expansion of the facilities, so that together with other minor cash flows, the overall cash outflow for the six months to 30 September 2018 was £1,688k. The resulting cash balance at 30 September 2018 was £2,803k.

Having considered the current trading and expenditure forecasts in light of going concern, the Directors have satisfied themselves that the Company has adequate funds in place to continue to meet its obligations as they fall due.

The total expenditure on the investment in facilities in the last 12 months (i.e. H2 2018 and H1 2019) was £1,677k which is significantly below the £2,600k expected to be incurred at the time of the Company's admission to AIM in December 2017.  This underspend has been achieved by reconfiguring the expansion to achieve the same capacity expansion at a lower cost and less disruption to operations than originally expected.

Basic loss per share was 3.4 pence per share (H1 2018 loss per share: 30.4 pence). This includes the effect of the issue of new shares in H2 2018. For the six months ended 30 September 2017 the number of shares, and therefore the loss per share, has not been adjusted to take account of the subsequent division of each ordinary share of £1 each into 25 shares of 4 pence each.

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:

* Earnings before interest, tax, depreciation and amortisation

Outlook

Although revenues for the first six months were below expectation, the board continues to believe that modest revenue growth can be achieved in 2018-19. This is based on the orders already in hand, our extensive pipeline of opportunities and the recent marked improvement is order intake.

RAMP™ is set to be introduced in December 2018 and is not expected to impact revenues in Q4 in the current financial year. However, the Board is optimistic that the launch of RAMPTM will have a positive impact on revenues for FY 2020.

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
Chairman

26 November 2018

Condensed Statement of Comprehensive Income
For the six months ended 30 September 2018

Condensed Statement of Financial Position
As at 30 September 2018

Condensed Statement of Changes in Equity
For the six months ended 30 September 2018

Cash Flow Statement
For the six months ended 30 September 2018

2022

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Fusion Antibodies plc (AIM: FAB), a pharmaceutical contract research organisation specialising in antibody engineering services, announces its unaudited interim results for the six months ended 30 September 2018.

Operational

• Planned facilities and technical capacity expansion completed on time and within budget
• Affinity maturation service on schedule to launch in December 2018
• New contract signed with MAB Discovery GmbH ("MAB")
• Orders and revenues in the six months to 30 September 2018 ("H1 2019") below expectations, as previously announced
• Mammalian antibody library on track for delivery in 2020

Financial

• Revenues of £658k (H1 2018: £1,414k)
• Loss for the period of £742k (H1 2018: £166k)
• Cash and cash equivalents at 30 September 2018 of £2,802k (31 March 2018: £4,490k)

Post-period end

• Patent application covering affinity maturation filed in October 2018
• Strong recovery in order levels seen in October and November 2018

Commenting on the interim results, Paul Kerr, CEO of Fusion Antibodies plc, said: "As we have previously announced, the first six months of the current financial year have been challenging due to increasing competition and consequential pricing pressures. However, order levels have started to accelerate in October and November and I am cautiously optimistic that we have turned a corner. I am pleased that the laboratory capacity expansion was completed on time and within budget, in August 2018, and the launch of the Rational Affinity Maturation Platform (RAMP™) is on schedule for completion in December 2018. These important developments will reinforce our market-leading offering and enable us to resume growth of the business."

Enquiries:

About Fusion Antibodies plc

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 CDRx™ 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 over 250 antibodies and successfully completed over 100 humanisation projects for its international, blue-chip client base.

The Company was established in 2001 as a spin out from Queen's University Belfast. It was initially a drug development business but revised its operations to focus on CRO work in 2011. The Company has a highly experienced management team with a combined 47 years' experience in the biopharma industry. The global monoclonal antibody therapeutics market, which accounted for 43 per cent. of the global biologics market in 2016, was valued at between $85.4 billion and $86.7 billion in 2015 and is forecast to increase at a CAGR of between 8.2 per cent. and 12.2 per cent. for the period 2016 to 2024.

Operational Review

As announced in August 2018, the Company's order levels and revenues in the second six months of the previous financial year and the first few months of the current financial year were substantially below original market expectations and previously achieved levels. The Directors believe that this market disruption has been caused by intense competition recently in the antibody engineering market. The Directors are firmly of the view that the fundamental market for Fusion's antibody engineering services remains attractive and that customers appreciate the high-quality services that Fusion provides. The Company has therefore continued to invest in the development of new and improved services and the expansion of its facilities, believing that these will be rewarded in due course.

The Company was therefore pleased to announce in August that the laboratory expansion was completed within budget. This will provide the Company with the capacity to grow revenues substantially over the next few years. 

The development of the new proprietary Rational Affinity Maturation Platform (RAMP™) is nearing completion and the Company has begun marketing the service to potential users. The Board believes RAMP™ is highly innovative, represents highly valuable intellectual property and will offer the Company a significant competitive advantage. The company filed a patent application covering the technology in October 2018. The Board is confident that this new service will support further long-term growth.

Progress on the new proprietary mammalian antibody library is also on schedule and is expected to be completed and available as a service offering to customers during 2020.

In June 2018, the Company announced that it was in discussions intended to lead to a revised agreement with MAB Discovery GmbH which would provide greater clarity around the nature of services that Fusion provides to MAB.  A new fee for service only contract has now been agreed and the Company and MAB are planning to commence a project under the new agreement.

The Company has recruited more staff for business development, delivery of services and for research and development. The cost of these recruits has been partially offset by grants from Invest Northern Ireland, as announced in May 2018. The Company is in the process of recruiting a Commercial Director.

Financial Review

Revenues for the six-month period to 30 September 2018 (H1 2019) were £658k compared with £1,414k in the six months to 30 September 2017 (H1 2018). As previously announced and as discussed in the Operational Review above, this performance was substantially below the Directors' expectations and has been caused by more intense competition. The bulk of the revenues came from antibody humanisation and mammalian expression projects for customers.

Cost of sales in H1 2019 were £545k, compared with £597k in H1 2018. The recruitment and training of additional scientists for the new laboratories has resulted in these costs not reducing in direct proportion to revenues.

Administrative expenses of £1,063k in H1 2019 were 7% higher than £995k in H1 2018. Administrative costs in H1 2018 included £241k of non-recurring costs, reflecting a 41% increase in like-for-like costs occurred. As part of the capacity expansion plans, the Company has leased additional premises and all related occupation costs have increased as a result of this. Depreciation charges have also increased significantly as laboratory capacity has been expanded.

The total cost base (cost of sales and administrative expenses) in H1 2019 was therefore £1,608k, £16k (1%) higher than £1,592k in H1 2018 (or an increase of 19% on the underlying costs).

Other operating income of £58k (H1 2018: £29k) includes revenue grants relating to employment costs, as announce in May 2018.

As a consequence of the lower revenues, operating loss for H1 2019 was £892k (H1 2018: £148k).

After adjusting the net loss for non-cash items such as depreciation, amortisation and share based payments, and for cash flow timing differences arising on working capital movements, cash used in operations was £446k compared with £51k in H1 2018. £1,232k was invested in H1 2019 (H1 2018: £137k), predominantly in the planned expansion of the facilities, so that together with other minor cash flows, the overall cash outflow for the six months to 30 September 2018 was £1,688k. The resulting cash balance at 30 September 2018 was £2,803k.

Having considered the current trading and expenditure forecasts in light of going concern, the Directors have satisfied themselves that the Company has adequate funds in place to continue to meet its obligations as they fall due.

The total expenditure on the investment in facilities in the last 12 months (i.e. H2 2018 and H1 2019) was £1,677k which is significantly below the £2,600k expected to be incurred at the time of the Company's admission to AIM in December 2017.  This underspend has been achieved by reconfiguring the expansion to achieve the same capacity expansion at a lower cost and less disruption to operations than originally expected.

Basic loss per share was 3.4 pence per share (H1 2018 loss per share: 30.4 pence). This includes the effect of the issue of new shares in H2 2018. For the six months ended 30 September 2017 the number of shares, and therefore the loss per share, has not been adjusted to take account of the subsequent division of each ordinary share of £1 each into 25 shares of 4 pence each.

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:

* Earnings before interest, tax, depreciation and amortisation

Outlook

Although revenues for the first six months were below expectation, the board continues to believe that modest revenue growth can be achieved in 2018-19. This is based on the orders already in hand, our extensive pipeline of opportunities and the recent marked improvement is order intake.

RAMP™ is set to be introduced in December 2018 and is not expected to impact revenues in Q4 in the current financial year. However, the Board is optimistic that the launch of RAMPTM will have a positive impact on revenues for FY 2020.

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
Chairman

26 November 2018

Condensed Statement of Comprehensive Income
For the six months ended 30 September 2018

Condensed Statement of Financial Position
As at 30 September 2018

Condensed Statement of Changes in Equity
For the six months ended 30 September 2018

Cash Flow Statement
For the six months ended 30 September 2018

2021

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Fusion Antibodies plc (AIM: FAB), a pharmaceutical contract research organisation specialising in antibody engineering services, announces its unaudited interim results for the six months ended 30 September 2018.

Operational

• Planned facilities and technical capacity expansion completed on time and within budget
• Affinity maturation service on schedule to launch in December 2018
• New contract signed with MAB Discovery GmbH ("MAB")
• Orders and revenues in the six months to 30 September 2018 ("H1 2019") below expectations, as previously announced
• Mammalian antibody library on track for delivery in 2020

Financial

• Revenues of £658k (H1 2018: £1,414k)
• Loss for the period of £742k (H1 2018: £166k)
• Cash and cash equivalents at 30 September 2018 of £2,802k (31 March 2018: £4,490k)

Post-period end

• Patent application covering affinity maturation filed in October 2018
• Strong recovery in order levels seen in October and November 2018

Commenting on the interim results, Paul Kerr, CEO of Fusion Antibodies plc, said: "As we have previously announced, the first six months of the current financial year have been challenging due to increasing competition and consequential pricing pressures. However, order levels have started to accelerate in October and November and I am cautiously optimistic that we have turned a corner. I am pleased that the laboratory capacity expansion was completed on time and within budget, in August 2018, and the launch of the Rational Affinity Maturation Platform (RAMP™) is on schedule for completion in December 2018. These important developments will reinforce our market-leading offering and enable us to resume growth of the business."

Enquiries:

About Fusion Antibodies plc

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 CDRx™ 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 over 250 antibodies and successfully completed over 100 humanisation projects for its international, blue-chip client base.

The Company was established in 2001 as a spin out from Queen's University Belfast. It was initially a drug development business but revised its operations to focus on CRO work in 2011. The Company has a highly experienced management team with a combined 47 years' experience in the biopharma industry. The global monoclonal antibody therapeutics market, which accounted for 43 per cent. of the global biologics market in 2016, was valued at between $85.4 billion and $86.7 billion in 2015 and is forecast to increase at a CAGR of between 8.2 per cent. and 12.2 per cent. for the period 2016 to 2024.

Operational Review

As announced in August 2018, the Company's order levels and revenues in the second six months of the previous financial year and the first few months of the current financial year were substantially below original market expectations and previously achieved levels. The Directors believe that this market disruption has been caused by intense competition recently in the antibody engineering market. The Directors are firmly of the view that the fundamental market for Fusion's antibody engineering services remains attractive and that customers appreciate the high-quality services that Fusion provides. The Company has therefore continued to invest in the development of new and improved services and the expansion of its facilities, believing that these will be rewarded in due course.

The Company was therefore pleased to announce in August that the laboratory expansion was completed within budget. This will provide the Company with the capacity to grow revenues substantially over the next few years. 

The development of the new proprietary Rational Affinity Maturation Platform (RAMP™) is nearing completion and the Company has begun marketing the service to potential users. The Board believes RAMP™ is highly innovative, represents highly valuable intellectual property and will offer the Company a significant competitive advantage. The company filed a patent application covering the technology in October 2018. The Board is confident that this new service will support further long-term growth.

Progress on the new proprietary mammalian antibody library is also on schedule and is expected to be completed and available as a service offering to customers during 2020.

In June 2018, the Company announced that it was in discussions intended to lead to a revised agreement with MAB Discovery GmbH which would provide greater clarity around the nature of services that Fusion provides to MAB.  A new fee for service only contract has now been agreed and the Company and MAB are planning to commence a project under the new agreement.

The Company has recruited more staff for business development, delivery of services and for research and development. The cost of these recruits has been partially offset by grants from Invest Northern Ireland, as announced in May 2018. The Company is in the process of recruiting a Commercial Director.

Financial Review

Revenues for the six-month period to 30 September 2018 (H1 2019) were £658k compared with £1,414k in the six months to 30 September 2017 (H1 2018). As previously announced and as discussed in the Operational Review above, this performance was substantially below the Directors' expectations and has been caused by more intense competition. The bulk of the revenues came from antibody humanisation and mammalian expression projects for customers.

Cost of sales in H1 2019 were £545k, compared with £597k in H1 2018. The recruitment and training of additional scientists for the new laboratories has resulted in these costs not reducing in direct proportion to revenues.

Administrative expenses of £1,063k in H1 2019 were 7% higher than £995k in H1 2018. Administrative costs in H1 2018 included £241k of non-recurring costs, reflecting a 41% increase in like-for-like costs occurred. As part of the capacity expansion plans, the Company has leased additional premises and all related occupation costs have increased as a result of this. Depreciation charges have also increased significantly as laboratory capacity has been expanded.

The total cost base (cost of sales and administrative expenses) in H1 2019 was therefore £1,608k, £16k (1%) higher than £1,592k in H1 2018 (or an increase of 19% on the underlying costs).

Other operating income of £58k (H1 2018: £29k) includes revenue grants relating to employment costs, as announce in May 2018.

As a consequence of the lower revenues, operating loss for H1 2019 was £892k (H1 2018: £148k).

After adjusting the net loss for non-cash items such as depreciation, amortisation and share based payments, and for cash flow timing differences arising on working capital movements, cash used in operations was £446k compared with £51k in H1 2018. £1,232k was invested in H1 2019 (H1 2018: £137k), predominantly in the planned expansion of the facilities, so that together with other minor cash flows, the overall cash outflow for the six months to 30 September 2018 was £1,688k. The resulting cash balance at 30 September 2018 was £2,803k.

Having considered the current trading and expenditure forecasts in light of going concern, the Directors have satisfied themselves that the Company has adequate funds in place to continue to meet its obligations as they fall due.

The total expenditure on the investment in facilities in the last 12 months (i.e. H2 2018 and H1 2019) was £1,677k which is significantly below the £2,600k expected to be incurred at the time of the Company's admission to AIM in December 2017.  This underspend has been achieved by reconfiguring the expansion to achieve the same capacity expansion at a lower cost and less disruption to operations than originally expected.

Basic loss per share was 3.4 pence per share (H1 2018 loss per share: 30.4 pence). This includes the effect of the issue of new shares in H2 2018. For the six months ended 30 September 2017 the number of shares, and therefore the loss per share, has not been adjusted to take account of the subsequent division of each ordinary share of £1 each into 25 shares of 4 pence each.

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:

* Earnings before interest, tax, depreciation and amortisation

Outlook

Although revenues for the first six months were below expectation, the board continues to believe that modest revenue growth can be achieved in 2018-19. This is based on the orders already in hand, our extensive pipeline of opportunities and the recent marked improvement is order intake.

RAMP™ is set to be introduced in December 2018 and is not expected to impact revenues in Q4 in the current financial year. However, the Board is optimistic that the launch of RAMPTM will have a positive impact on revenues for FY 2020.

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
Chairman

26 November 2018

Condensed Statement of Comprehensive Income
For the six months ended 30 September 2018

Condensed Statement of Financial Position
As at 30 September 2018

Condensed Statement of Changes in Equity
For the six months ended 30 September 2018

Cash Flow Statement
For the six months ended 30 September 2018

2020

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Fusion Antibodies plc (AIM: FAB), a pharmaceutical contract research organisation specialising in antibody engineering services, announces its unaudited interim results for the six months ended 30 September 2018.

Operational

• Planned facilities and technical capacity expansion completed on time and within budget
• Affinity maturation service on schedule to launch in December 2018
• New contract signed with MAB Discovery GmbH ("MAB")
• Orders and revenues in the six months to 30 September 2018 ("H1 2019") below expectations, as previously announced
• Mammalian antibody library on track for delivery in 2020

Financial

• Revenues of £658k (H1 2018: £1,414k)
• Loss for the period of £742k (H1 2018: £166k)
• Cash and cash equivalents at 30 September 2018 of £2,802k (31 March 2018: £4,490k)

Post-period end

• Patent application covering affinity maturation filed in October 2018
• Strong recovery in order levels seen in October and November 2018

Commenting on the interim results, Paul Kerr, CEO of Fusion Antibodies plc, said: "As we have previously announced, the first six months of the current financial year have been challenging due to increasing competition and consequential pricing pressures. However, order levels have started to accelerate in October and November and I am cautiously optimistic that we have turned a corner. I am pleased that the laboratory capacity expansion was completed on time and within budget, in August 2018, and the launch of the Rational Affinity Maturation Platform (RAMP™) is on schedule for completion in December 2018. These important developments will reinforce our market-leading offering and enable us to resume growth of the business."

Enquiries:

About Fusion Antibodies plc

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 CDRx™ 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 over 250 antibodies and successfully completed over 100 humanisation projects for its international, blue-chip client base.

The Company was established in 2001 as a spin out from Queen's University Belfast. It was initially a drug development business but revised its operations to focus on CRO work in 2011. The Company has a highly experienced management team with a combined 47 years' experience in the biopharma industry. The global monoclonal antibody therapeutics market, which accounted for 43 per cent. of the global biologics market in 2016, was valued at between $85.4 billion and $86.7 billion in 2015 and is forecast to increase at a CAGR of between 8.2 per cent. and 12.2 per cent. for the period 2016 to 2024.

Operational Review

As announced in August 2018, the Company's order levels and revenues in the second six months of the previous financial year and the first few months of the current financial year were substantially below original market expectations and previously achieved levels. The Directors believe that this market disruption has been caused by intense competition recently in the antibody engineering market. The Directors are firmly of the view that the fundamental market for Fusion's antibody engineering services remains attractive and that customers appreciate the high-quality services that Fusion provides. The Company has therefore continued to invest in the development of new and improved services and the expansion of its facilities, believing that these will be rewarded in due course.

The Company was therefore pleased to announce in August that the laboratory expansion was completed within budget. This will provide the Company with the capacity to grow revenues substantially over the next few years. 

The development of the new proprietary Rational Affinity Maturation Platform (RAMP™) is nearing completion and the Company has begun marketing the service to potential users. The Board believes RAMP™ is highly innovative, represents highly valuable intellectual property and will offer the Company a significant competitive advantage. The company filed a patent application covering the technology in October 2018. The Board is confident that this new service will support further long-term growth.

Progress on the new proprietary mammalian antibody library is also on schedule and is expected to be completed and available as a service offering to customers during 2020.

In June 2018, the Company announced that it was in discussions intended to lead to a revised agreement with MAB Discovery GmbH which would provide greater clarity around the nature of services that Fusion provides to MAB.  A new fee for service only contract has now been agreed and the Company and MAB are planning to commence a project under the new agreement.

The Company has recruited more staff for business development, delivery of services and for research and development. The cost of these recruits has been partially offset by grants from Invest Northern Ireland, as announced in May 2018. The Company is in the process of recruiting a Commercial Director.

Financial Review

Revenues for the six-month period to 30 September 2018 (H1 2019) were £658k compared with £1,414k in the six months to 30 September 2017 (H1 2018). As previously announced and as discussed in the Operational Review above, this performance was substantially below the Directors' expectations and has been caused by more intense competition. The bulk of the revenues came from antibody humanisation and mammalian expression projects for customers.

Cost of sales in H1 2019 were £545k, compared with £597k in H1 2018. The recruitment and training of additional scientists for the new laboratories has resulted in these costs not reducing in direct proportion to revenues.

Administrative expenses of £1,063k in H1 2019 were 7% higher than £995k in H1 2018. Administrative costs in H1 2018 included £241k of non-recurring costs, reflecting a 41% increase in like-for-like costs occurred. As part of the capacity expansion plans, the Company has leased additional premises and all related occupation costs have increased as a result of this. Depreciation charges have also increased significantly as laboratory capacity has been expanded.

The total cost base (cost of sales and administrative expenses) in H1 2019 was therefore £1,608k, £16k (1%) higher than £1,592k in H1 2018 (or an increase of 19% on the underlying costs).

Other operating income of £58k (H1 2018: £29k) includes revenue grants relating to employment costs, as announce in May 2018.

As a consequence of the lower revenues, operating loss for H1 2019 was £892k (H1 2018: £148k).

After adjusting the net loss for non-cash items such as depreciation, amortisation and share based payments, and for cash flow timing differences arising on working capital movements, cash used in operations was £446k compared with £51k in H1 2018. £1,232k was invested in H1 2019 (H1 2018: £137k), predominantly in the planned expansion of the facilities, so that together with other minor cash flows, the overall cash outflow for the six months to 30 September 2018 was £1,688k. The resulting cash balance at 30 September 2018 was £2,803k.

Having considered the current trading and expenditure forecasts in light of going concern, the Directors have satisfied themselves that the Company has adequate funds in place to continue to meet its obligations as they fall due.

The total expenditure on the investment in facilities in the last 12 months (i.e. H2 2018 and H1 2019) was £1,677k which is significantly below the £2,600k expected to be incurred at the time of the Company's admission to AIM in December 2017.  This underspend has been achieved by reconfiguring the expansion to achieve the same capacity expansion at a lower cost and less disruption to operations than originally expected.

Basic loss per share was 3.4 pence per share (H1 2018 loss per share: 30.4 pence). This includes the effect of the issue of new shares in H2 2018. For the six months ended 30 September 2017 the number of shares, and therefore the loss per share, has not been adjusted to take account of the subsequent division of each ordinary share of £1 each into 25 shares of 4 pence each.

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:

* Earnings before interest, tax, depreciation and amortisation

Outlook

Although revenues for the first six months were below expectation, the board continues to believe that modest revenue growth can be achieved in 2018-19. This is based on the orders already in hand, our extensive pipeline of opportunities and the recent marked improvement is order intake.

RAMP™ is set to be introduced in December 2018 and is not expected to impact revenues in Q4 in the current financial year. However, the Board is optimistic that the launch of RAMPTM will have a positive impact on revenues for FY 2020.

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
Chairman

26 November 2018

Condensed Statement of Comprehensive Income
For the six months ended 30 September 2018

Condensed Statement of Financial Position
As at 30 September 2018

Condensed Statement of Changes in Equity
For the six months ended 30 September 2018

Cash Flow Statement
For the six months ended 30 September 2018

2019

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Fusion Antibodies plc (AIM: FAB), a pharmaceutical contract research organisation specialising in antibody engineering services, announces its unaudited interim results for the six months ended 30 September 2018.

Operational

• Planned facilities and technical capacity expansion completed on time and within budget
• Affinity maturation service on schedule to launch in December 2018
• New contract signed with MAB Discovery GmbH ("MAB")
• Orders and revenues in the six months to 30 September 2018 ("H1 2019") below expectations, as previously announced
• Mammalian antibody library on track for delivery in 2020

Financial

• Revenues of £658k (H1 2018: £1,414k)
• Loss for the period of £742k (H1 2018: £166k)
• Cash and cash equivalents at 30 September 2018 of £2,802k (31 March 2018: £4,490k)

Post-period end

• Patent application covering affinity maturation filed in October 2018
• Strong recovery in order levels seen in October and November 2018

Commenting on the interim results, Paul Kerr, CEO of Fusion Antibodies plc, said: "As we have previously announced, the first six months of the current financial year have been challenging due to increasing competition and consequential pricing pressures. However, order levels have started to accelerate in October and November and I am cautiously optimistic that we have turned a corner. I am pleased that the laboratory capacity expansion was completed on time and within budget, in August 2018, and the launch of the Rational Affinity Maturation Platform (RAMP™) is on schedule for completion in December 2018. These important developments will reinforce our market-leading offering and enable us to resume growth of the business."

Enquiries:

About Fusion Antibodies plc

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 CDRx™ 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 over 250 antibodies and successfully completed over 100 humanisation projects for its international, blue-chip client base.

The Company was established in 2001 as a spin out from Queen's University Belfast. It was initially a drug development business but revised its operations to focus on CRO work in 2011. The Company has a highly experienced management team with a combined 47 years' experience in the biopharma industry. The global monoclonal antibody therapeutics market, which accounted for 43 per cent. of the global biologics market in 2016, was valued at between $85.4 billion and $86.7 billion in 2015 and is forecast to increase at a CAGR of between 8.2 per cent. and 12.2 per cent. for the period 2016 to 2024.

Operational Review

As announced in August 2018, the Company's order levels and revenues in the second six months of the previous financial year and the first few months of the current financial year were substantially below original market expectations and previously achieved levels. The Directors believe that this market disruption has been caused by intense competition recently in the antibody engineering market. The Directors are firmly of the view that the fundamental market for Fusion's antibody engineering services remains attractive and that customers appreciate the high-quality services that Fusion provides. The Company has therefore continued to invest in the development of new and improved services and the expansion of its facilities, believing that these will be rewarded in due course.

The Company was therefore pleased to announce in August that the laboratory expansion was completed within budget. This will provide the Company with the capacity to grow revenues substantially over the next few years. 

The development of the new proprietary Rational Affinity Maturation Platform (RAMP™) is nearing completion and the Company has begun marketing the service to potential users. The Board believes RAMP™ is highly innovative, represents highly valuable intellectual property and will offer the Company a significant competitive advantage. The company filed a patent application covering the technology in October 2018. The Board is confident that this new service will support further long-term growth.

Progress on the new proprietary mammalian antibody library is also on schedule and is expected to be completed and available as a service offering to customers during 2020.

In June 2018, the Company announced that it was in discussions intended to lead to a revised agreement with MAB Discovery GmbH which would provide greater clarity around the nature of services that Fusion provides to MAB.  A new fee for service only contract has now been agreed and the Company and MAB are planning to commence a project under the new agreement.

The Company has recruited more staff for business development, delivery of services and for research and development. The cost of these recruits has been partially offset by grants from Invest Northern Ireland, as announced in May 2018. The Company is in the process of recruiting a Commercial Director.

Financial Review

Revenues for the six-month period to 30 September 2018 (H1 2019) were £658k compared with £1,414k in the six months to 30 September 2017 (H1 2018). As previously announced and as discussed in the Operational Review above, this performance was substantially below the Directors' expectations and has been caused by more intense competition. The bulk of the revenues came from antibody humanisation and mammalian expression projects for customers.

Cost of sales in H1 2019 were £545k, compared with £597k in H1 2018. The recruitment and training of additional scientists for the new laboratories has resulted in these costs not reducing in direct proportion to revenues.

Administrative expenses of £1,063k in H1 2019 were 7% higher than £995k in H1 2018. Administrative costs in H1 2018 included £241k of non-recurring costs, reflecting a 41% increase in like-for-like costs occurred. As part of the capacity expansion plans, the Company has leased additional premises and all related occupation costs have increased as a result of this. Depreciation charges have also increased significantly as laboratory capacity has been expanded.

The total cost base (cost of sales and administrative expenses) in H1 2019 was therefore £1,608k, £16k (1%) higher than £1,592k in H1 2018 (or an increase of 19% on the underlying costs).

Other operating income of £58k (H1 2018: £29k) includes revenue grants relating to employment costs, as announce in May 2018.

As a consequence of the lower revenues, operating loss for H1 2019 was £892k (H1 2018: £148k).

After adjusting the net loss for non-cash items such as depreciation, amortisation and share based payments, and for cash flow timing differences arising on working capital movements, cash used in operations was £446k compared with £51k in H1 2018. £1,232k was invested in H1 2019 (H1 2018: £137k), predominantly in the planned expansion of the facilities, so that together with other minor cash flows, the overall cash outflow for the six months to 30 September 2018 was £1,688k. The resulting cash balance at 30 September 2018 was £2,803k.

Having considered the current trading and expenditure forecasts in light of going concern, the Directors have satisfied themselves that the Company has adequate funds in place to continue to meet its obligations as they fall due.

The total expenditure on the investment in facilities in the last 12 months (i.e. H2 2018 and H1 2019) was £1,677k which is significantly below the £2,600k expected to be incurred at the time of the Company's admission to AIM in December 2017.  This underspend has been achieved by reconfiguring the expansion to achieve the same capacity expansion at a lower cost and less disruption to operations than originally expected.

Basic loss per share was 3.4 pence per share (H1 2018 loss per share: 30.4 pence). This includes the effect of the issue of new shares in H2 2018. For the six months ended 30 September 2017 the number of shares, and therefore the loss per share, has not been adjusted to take account of the subsequent division of each ordinary share of £1 each into 25 shares of 4 pence each.

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:

* Earnings before interest, tax, depreciation and amortisation

Outlook

Although revenues for the first six months were below expectation, the board continues to believe that modest revenue growth can be achieved in 2018-19. This is based on the orders already in hand, our extensive pipeline of opportunities and the recent marked improvement is order intake.

RAMP™ is set to be introduced in December 2018 and is not expected to impact revenues in Q4 in the current financial year. However, the Board is optimistic that the launch of RAMPTM will have a positive impact on revenues for FY 2020.

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
Chairman

26 November 2018

Condensed Statement of Comprehensive Income
For the six months ended 30 September 2018

Condensed Statement of Financial Position
As at 30 September 2018