REG - Fusion Antibodies - Half-year Report
06/12/2021 07:00
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RNS Number : 5847U Fusion Antibodies PLC 06 December 2021
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.
6 December 2021
Fusion Antibodies plc
("Fusion" or the "Company")
Half year Report
Fusion Antibodies plc (AIM: FAB), a 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 2021 ("H1 FY2022").
Operational highlights
· Major new RAMP(TM) platform contract win with minimum contract value
of US$1.83m over next two years
· Collaboration with Eurofins Discovery for Fusion to supply antibody
development services
· R&D projects progressing well with continued investment of
resources
Financial highlights
· Revenues of £2.4 million, including one-off milestone of £150k (H1
FY2021: £1.9 million)
· 20% underlying growth in revenues over H1 FY2021
· Loss of £0.6 million (H1 FY2021: £0.5 million loss)
· Cash position at 30 September 2021 was £2.0 million (31 March 2021:
£2.7 million)
Commenting on the interim results, Richard Jones, CEO of Fusion Antibodies
plc, said: "We are delighted to report a strong all-round performance for the
first half of the year with good revenue growth, major new contracts,
collaboration agreements and increased investment into our research
programmes. Throughout the period there have been continued challenges
associated with the global pandemic and I would like to thank our staff for
continuing to meet and overcome these as they arise, in support of the Company
and colleagues."
Investor briefing
As a reminder, Fusion will host an online live presentation open to all
investors this Thursday, 9 December 2021 at 11.00am, delivered by Dr Richard
Jones, CEO and James Fair, CFO via the Investor Meet Company platform. 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
(https://www.investormeetcompany.com/fusion-antibodies-plc/register-investor)
Enquiries:
Fusion Antibodies plc www.fusionantibodies.com (http://www.fusionantibodies.com)
Richard Jones PhD, Chief Executive Officer Via Walbrook PR
James Fair, Chief Financial Officer
Allenby Capital Limited Tel: +44 (0)20 3328 5656
James Reeve, Vivek Bhardwaj (Corporate Finance)
Tony Quirke (Sales)
Walbrook PR Tel: +44 (0)20 7933 8780 or fusion@walbrookpr.com
Anna Dunphy Mob: +44 (0)7876 741 001
Paul McManus Mob: +44 (0)7980 541 893
About Fusion Antibodies plc
Fusion is a Belfast-based Collaborative Research Organisation ("CRO") company,
listed on AIM, providing a 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. 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 Board is pleased to report that the six-month period ending 30 September
2021 has seen good operational progress with two major new commercial
collaborations and increased investment in our R&D programmes. The global
pandemic has continued to present operational challenges, not least of which
has been to ensure the safety of our staff on and off the premises while we
continued to operate throughout the period.
The absence of international travel during H1 FY2022 has continued to change
the way we and our clients do business as conferences are attended virtually
and client visits to the Fusion laboratories have not been possible. In light
of these circumstances, the Directors are pleased with the strong revenue
growth in H1 FY2022 compared with H1 FY2021 and are delighted with the
exciting new collaborations recently entered into with Eurofins Discovery, an
established global CRO provider of testing and laboratory services, for the
supply of our services to its customers, and with a US based biotechnology
company for a research and development project using RAMP(TM). We believe that
both of these collaborations demonstrate that Fusion is seen as having
sector-leading technology and skills and we hope to build on these
successes. As international travel restrictions ease, our representatives
plan to attend conferences and hold meetings in person from now onwards.
As well as underlying revenues of £2.3 million, the Company also secured the
receipt of a £150,000 success milestone arising from a humanised antibody
project carried out in 2018 for a client which subsequently developed and
commercialised the drug by way of transfer of rights for value to a third
party. This is the first such receipt by the Company and, although the
Directors do not expect further milestone receipts in the near term, there are
a further five contracts in place with potential milestones of up to £1.4
million in aggregate.
In order to maintain our sector-leading expertise and expand our range of
services, the Company continues to invest resources into research and
development ("R&D") programmes and pipeline to enable the development of
new services and technology platforms which will become key future growth
drivers for the business. The next service in the Company's R&D pipeline
is the Mammalian Antibody Library Discovery Platform ("the Library"), branded
OptiMAL(TM). The Library will provide an important new offering to the
antibody discovery service; the Directors believe it will represent a
technologically advanced solution when compared to traditional discovery
methods and to other library offerings already available in the market. We are
also investing in further optimisation of the RAMP(TM) platform and our B-cell
cloning capabilities.
Development of the Library programme continued throughout the period with two
project areas: a SARS-CoV-2 strand which has been evolving as new variants of
concern have arisen; and, secondly, several known oncology targets. These
projects form the ongoing development work to demonstrate the full process
required to create a final library and the ability to select human antibodies
specific to a therapeutic target. We are pleased to report that several
preliminary libraries have been created with work ongoing to optimise the
Library's genetic content. The development of screening protocols is
progressing with the current challenge being the structure, modification and
quality of the target antigen at the required sensitivity. To meet this
challenge, the Company's in-house antibody engineering expertise has been
harnessed to design fluorescent antigens that will increase the efficiency of
selection and these are currently being tested. This antigen approach will be
used to test the Library against the new Omicron variant. It is intended that,
once introduced, the Library will complement and be offered alongside the
Company's existing discovery services and provide our clients with a method of
speeding up their drug discovery programme.
Financial Review
Revenues for the six-month period ending 30 September 2021 were £2.44 million
(H1 FY2021: £1.90 million). Included in the H1 FY2022 revenues was the
one-off £150,000 milestone, as mentioned above. The underlying revenues of
£2.3 million represent a 20% increase over H1 FY2021.
The 46% gross profit percentage on underlying revenues was similar to that in
the prior period (H1 FY2021: 46%).
R&D expenditure in H1 FY2022 was £424,000, an increase of more than 50%
over the comparable period in FY2021, reflecting the investment, in
particular, in the Library project.
SG&A expenditure of £1.5 million was £0.3 million higher than in H1
FY2021 due in part to professional fees incurred in relation to the two major
collaboration agreements and increased depreciation costs.
Operating loss for the period resulting from the above was £0.65 million (H1
FY2021: £0.56 million loss), or £0.8 million excluding the one-off
milestone.
Cash used in operations was £0.5 million compared with £0.7 million used in
H1 FY2021. The H1 FY2022 operational outflow includes the £0.4 million
investment in research & development as well as £0.2 million increased
working capital to support the growth in H1 FY2021. The Company has increased
holding levels of consumable stocks to mitigate against current supply chain
risks caused by both the pandemic and Brexit. After investing £0.2 million in
plant and equipment, the total outflow was £0.7 million and the closing cash
balance at 30 September 2021 was £2.0 million.
Key Performance Indicators
The key performance indicators (KPIs) regularly reviewed by the board are:
KPI H1 2022 H1 2021
Underlying revenue growth 20% 9%
EBITDA* (£0.275m) (£0.218m)
Cash used in operations (£0.505m) (£0.727m)
* Earnings before interest, tax, depreciation and amortisation
The investment in R&D and the impact on EBITDA is set out in Note 13 to
these statements. EBITDA for the period was a loss of £275,000 (H1 FY2021:
£218,000 loss) and adjusting for research and development expenditure shows a
positive EBITDA from the revenue generating client services of the Company:
EBITDA excluding R&D was £149,000 for the period (H1 FY2021: £53,000).
Outlook
The Directors have been encouraged by the positive first half of FY2022 and in
particular the two major contracts which were secured which, taken together
with the remaining pipeline of projects with other customers, give the Board
confidence that revenues for the full year will be in line with current
expectations. However, the pandemic and the status of the Brexit
negotiations, particularly as they relate to Northern Ireland, continue to
provide significant uncertainties.
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.
By order of the Board
Dr Simon Douglas
Non-executive Chairman
6 December 2021
Condensed Statement of Comprehensive Income
For the six months ended 30 September 2021
6 months to 30.09.21 6 months to 30.09.20 Unaudited Year to 31.03.21 Audited
Unaudited £'000 £'000
Notes £'000
Revenue 2,441 1,905 4,165
Cost of sales (1,240) (1,032) (2,141)
Gross profit 1,201 873 2,024
Other operating income 10 46 43 194
Administrative expenses 3 (1,896) (1,479) (3,467)
Operating loss (649) (563) (1,249)
Finance income 4 1 1 3
Finance costs 4 (3) (10) (18)
Loss before tax (651) (572) (1,264)
Income tax credit/(charge) 5 67 101 (1,635)
Loss for the period (584) (471) (2,899)
Total comprehensive expense for the period
(584) (471) (2,899)
Pence Pence Pence
Basic loss per share 6 (2.3) (1.9) (11.4)
Condensed Statement of Financial Position
As at 30 September 2021
As at As at 30.09.20 As at
30.09.21 Unaudited 31.03.21
Notes Unaudited £'000 Audited
£'000 £'000
Assets
Non-current assets
Intangible assets 1 3 2
Property, plant and equipment 7 941 1,401 1,123
Deferred tax assets - 2,045 -
942 3,449 1,125
Current assets
Inventories 562 373 480
Trade and other receivables 1,715 1,171 1,440
Current tax receivable 166 69 99
Cash and cash equivalents 1,987 3,243 2,686
4,430 4,856 4,705
Total assets 5,372 8,305 5,830
Liabilities
Current liabilities
Trade and other payables 954 607 833
Borrowings 8 128 161 163
1,082 768 996
Net current assets 3,348 4,088 3,709
Non-current liabilities
Borrowings 8 24 148 67
Provisions for other liabilities and charges
20 20 20
Total liabilities 1,126 936 1,083
Net assets 4,246 7,369 4,747
Equity
Called up share capital 12 1,037 1,017 1,024
Share premium reserve 7,611 7,535 7,547
(Accumulated losses)/retained earnings
(4402) (1,183) (3,824)
Equity 4,246 7,369 4,747
Condensed Statement of Changes in Equity
For the six months ended 30 September 2021
6 months ended 30 September 2021 Called up share capital Share premium reserve
Unaudited £'000 £'000 Accumulated losses
£'000 Equity
£'000
At 1 April 2021 1,024 7,547 (3,824) 4,747
Loss for the period - - (584) (584)
Issue of share capital 13 64 - 77
Share options - value of employee services
- - 6 6
Total transactions with owners, recognised directly in equity
13 64 6 83
At 30 September 2021 1,037 7,611 (4,402) 4,246
6 months ended 30 September 2020 Called up share capital Share premium reserve
Unaudited £'000 £'000 Retained earnings
£'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
Year ended 30 March 2021 (Accumulated losses)/
Audited Called up share capital Share premium reserve Retained earnings
£'000 £'000 £'000
Equity
£'000
At 1 April 2020 884 4,872 (944) 4,812
Loss for the year - - (2,899) (2,899)
Issue of share capital 140 2,879 - 3,019
Cost of issuing share capital - (204) - (204)
Share options - value of employee services
- - 19 19
Total transactions with owners, recognised directly in equity
140 2,675 19 2,834
At 31 March 2021 1,024 7,547 (3,824) 4,747
Statement of Cash Flows
For the six months ended 30 September 2021
6 months to 6 months to 30.09.20 Year to 31.03.21
30.09.21 Unaudited Audited
Unaudited £'000 £'000
£'000
Cash flows from operating activities
Loss for the period (584) (471) (2,899)
Adjustments for:
Share based payment expense 7 21 19
Depreciation 373 344 712
Amortisation of intangible assets 1 1 2
Finance income (1) (1) (3)
Finance costs 3 10 18
Income tax (credit)/charge (67) (101) 1,635
(Increase) in inventories (82) (33) (140)
(Increase)/decrease in trade and other receivables (275) (276) (553)
(Decrease)/increase in trade and other payables 120 (221) 5
Cash used in operations (505) (727) (1,204)
Income tax received - - 68
Net cash used in operating activities (505) (727) (1,136)
Cash flows from investing activities
Purchase of property, plant and equipment (191) (275) (365)
Finance income - interest received 1 1 3
Net cash used in investing activities (190) (274) (362)
Cash flows from financing activities
Proceeds from issue of share capital 77 2,796 2,815
Proceeds from new borrowings - - 14
Repayments of borrowings (78) (85) (164)
Finance costs - interest paid (3) (4) (18)
Net cash generated (used in)/generated from financing activities (4) 2,707 2,647
Net (decrease)/increase in cash and cash equivalents (699) 1,706 1,149
Cash and cash equivalents at the beginning of the period 2,686 1,537 1,537
Cash and cash equivalents at the end of the period 1,987 3,243 2,686
Notes to the Interim Results
For the six months ended 30 September 2021
1 Basis of Preparation
The condensed financial statements comprise the unaudited results for the six
months to 30 September 2021 and 30 September 2020 and the audited results for
the year ended 31 March 2021. The financial information for the year ended 31
March 2021 does not constitute the full statutory accounts for that period.
The Annual Report and Financial Statements for the year ended 31 March 2021
have been filed with the Registrar of Companies. The Independent Auditor's
Report on the Annual Report and Financial Statements for 2021 was unmodified
and did not contain a statement under s498(2) or s498(3) of the Companies Act
2006.
The condensed financial statements for the period ended 30 September 2021 have
been prepared in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with IAS 34 'Interim Financial Reporting' in
conformity with the Companies Act 2006. The information in these condensed
financial statements does not include all the information and disclosures made
in the annual financial statements.
Going concern
At 30 September 2021 the Company had a cash balance of £1.99 million. The
Directors have reviewed detailed projections for the Company. These
projections are based on estimates of future performance and have been
adjusted to reflect various scenarios and outcomes that could potentially
impact the forecast outturn. Based on these estimates, the Directors have a
reasonable expectation that the Company has adequate resources to continue in
operational existence for 12 months from the reporting date. Accordingly, they
have prepared these condensed financial statements on the going concern basis.
Accounting policies
The condensed financial statements have been prepared in a manner consistent
with the accounting policies set out in the financial statements for the year
ended 31 March 2021 and on the basis of the International Financial Reporting
Standards (IFRS) in conformity with the Companies Act 2006 that the Company
expects to be applicable at 31 March 2021. IFRS are subject to amendment and
interpretation by the International Accounting Standards Board (IASB).
2 Segmental information
For all the financial periods included in these condensed financial
statements, all the revenues and costs relate to the single operating segment
of research, development and manufacture of recombinant proteins and
antibodies.
3 Administrative expenses
6 months to 30.09.21 6 months to 30.09.20 Year to 31.03.21
Unaudited Unaudited Audited
£'000 £'000 £'000
Research & development 424 271 613
Selling, general and administration 1,472 1,208 2,854
1,896 1,479 3,467
4 Finance income and costs
6 months to 30.09.21 6 months to 30.09.20 Year to 31.03.21
Unaudited Unaudited Audited
£'000 £'000 £'000
Income
Bank interest receivable 1 1 3
6 months to 30.09.21 6 months to 30.09.20 Year to 31.03.21
Unaudited Unaudited Audited
£'000 £'000 £'000
Cost
Interest expense on other borrowings 3 10 18
5 Income tax (credit)/charge
6 months to 30.09.21 6 months to 30.09.20 Year to 31.03.21
Unaudited Unaudited Audited
£'000 £'000 £'000
Current tax (67) (31) (129)
Deferred tax - (70) 1,764
Total tax (credit)/charge (67) (101) 1,635
6 Earnings per share
The calculation of earnings per share is based on loss after tax from
continuing operations for six months to 30 September 2021 of £584,000 (6
months to 30 September 2020: £471,000 loss, year to 31 March 2021:
£2,899,000 loss).
The weighted average number of shares used in the calculation of the basic
earnings per share are as follows:
6 months to 30.09.21 6 months to 30.09.20 Year to 31.03.21
Unaudited Unaudited Audited
Number Number Number
Issued ordinary shares at the end of the period
25,918,280 25,437,025 25,610,359
Weighted average number of shares in issue during the period 25,821,959 24,875,220 25,458,761
Basic earnings per share is calculated by dividing the basic earnings for the
period by the weighted average number of shares in issue during the period.
7 Property, plant and equipment
Right of use assets Fixtures, fittings & equipment
£'000 Leasehold Plant & £'000
property machinery Total
£'000 £'000 £'000
Cost
At 1 April 2021 240 784 2,181 247 3,452
Additions - - 152 39 191
Disposals - - - - -
At 30 September 2021 240 784 2,333 286 3,643
Accumulated depreciation
At 1 April 2021 139 583 1,446 161 2,329
Disposals - - - - -
Depreciation charged in the period
34 88 222 29 373
At 30 September 2021 173 671 1,668 190 2,702
Net book value
At 30 September 2021 67 113 665 96 941
At 31 March 2021 101 201 735 86 1,123
8 Borrowings
At 30 At 30 September At 31
September 2020 March
2021 £'000 2021
£'000 £'000
At 1 April 230 380 380
Additions in period - 14 14
Interest 3 10 18
Repayments (81) (95) (182)
At period end 152 309 230
Amounts due in less than 1 year 128 161 163
Amounts due after more than 1 year 24 148 67
152 309 230
Borrowings are secured by a fixed and floating charge over the whole
undertaking of the Company, its property, assets and rights in favour of
Northern Bank Ltd trading as Danske Bank.
9 Retirement benefits obligations
The Company operates a defined contribution scheme, the assets of which are
managed separately from the Company.
10 Transactions with related parties
The Company had the following transactions with related parties during the
period:
Invest Northern Ireland is a shareholder in the Company. The Company leases
its premises from Invest Northern Ireland and received invoices for rent and
estate services amounting to £41,000 (6 months ended 30 September 2020:
£40,000, year ended 31 March 2021: £78,000). A balance of £nil (30
September 2020: £nil, 31 March 2021: £nil) was due and payable to Invest NI
at the reporting date. The Company received various grants during the period
from Invest NI amounting to £21,000 (6 months ended 30 September 2020:
£43,000, year ended 31 March 2021 £194,000).
The total amount of other operating income for the period was £46,000,
comprising £21,000 of grants received from Invest Northern Ireland and
£25,000 of Covid-19 support from the Department of Finance.
11 Events after the reporting date
There have been no events from the reporting date to the date of approval
which need to be reported.
12 Share capital
During the period the Company issued 307,921 Ordinary Shares of 4 pence each
for proceeds of £77,000 before related expenses.
13 Reconciliation of loss to EBITDA and EBITDA excluding
R&D expenditure
6 months to 30.09.21 6 months to 30.09.20 Year to 31.03.21
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss before tax (651) (572) (1,264)
Finance income/expense 2 9 15
Operating loss (649) (563) (1,249)
Depreciation and amortisation 374 345 714
EBITDA (275) (218) (535)
Expenditure on research and development 424 271 613
EBITDA excluding research and development
149 53 78
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