Final results

10 August 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.

Fusion Antibodies plc (AIM: FAB), specialists in pre-clinical antibody discovery, engineering and supply for both therapeutic drug and diagnostic applications, announces its final results for the year ended 31 March 2021. 

   

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Commercial and operational highlights

  • Commercial roll out and revenues from Rational Affinity Maturation Platform (“RAMPTM”)
  • Investment in R&D increased by 57% from prior year
  • Full year revenues increased by 7% to £4.2m (2020: £3.9m)
  • Deferred tax asset of £1.8m derecognised, but tax losses of £9.0m remain available to offset future profits
  • Loss for the year of £2.9m (2020: loss £0.7m)
  • £3.0m equity fundraise
  • Cash position at the year-end £2.7m (31 March 2020: £1.5m)

Post period end highlights

  • Receipt of first success milestone payment of £150,000 from a key client

Presentation on the results

Fusion will host an online live presentation open to all investors on Monday, 23 August at 11am, delivered by Richard Jones, CEO and James Fair, CFO. The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the meeting. 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

Richard Jones, CEO of Fusion Antibodies commented: “We are pleased with our performance in what has been a challenging year for everyone. We have made significant progress with sustained revenue growth, progress on the R&D pipeline, and continue to expand our range of services.

“On behalf of the Board, I would like to thank our shareholders for their continued support and we hope to be able to provide further positive updates as we go through the year.”

 

Enquiries: 

Fusion Antibodies plc www.fusionantibodies.com
Richard Jones, Chief Executive Officer
James Fair, Chief Financial Officer
Via Walbrook PR
 
Allenby Capital Limited Tel: +44 (0)20 3328 5656
James Reeve (Corporate Finance)
Tony Quirke (Sales and Corporate Broking)
   
Walbrook PR Tel: +44 (0)20 7933 8780 or [email protected]
Anna Dunphy Mob: +44 (0)7876 741 001
Paul McManus Mob: +44 (0)7980 541 893
     

 

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 TM platform and the production of antibody generating stable cell lines to provide material for use in clinical trials. Since 2012, the Company has successfully sequenced and expressed over 250 antibodies and successfully completed over 200 humanisation projects and has an international, blue-chip client base, which has included eight of the top 10 global pharmaceutical companies by revenue.

The Company was established in 2001 as a spin out from Queen's University Belfast. The Company's mission is to enable pharmaceutical and diagnostic companies to develop innovative products in a timely and cost-effective manner for the benefit of the global healthcare industry. Fusion Antibodies provides a broad range of services in antibody generation, development, production, characterisation and optimisation.

Fusion Antibodies growth strategy is based on combining the latest technological advances with cutting edge science to deliver new platforms that will enable Pharma and Biotech companies get to the clinic faster, with the optimal drug candidate and ultimately speed up the drug development process. 

The global monoclonal antibody therapeutics market was valued at $135.4 billion in 2018 and is forecast to surpass $212.6 billion in 2022, an increase at a CAGR of 12.0 per cent. for the period 2018 to 2022. In 2017, seven of the world's ten top selling drugs were antibody-based therapeutics with the combined annual sales of these drugs exceeding $63.2 billion. 

 

Chairman’s Statement

Due to the pandemic, this year has been a difficult year for the Company, our staff and many of our customers. However, our staff have been flexible, committed and dedicated to continue to grow our services and deliver a positive year, something for which I would like to thank them. Where possible, staff have worked from home and in the case of the Technical and R&D teams good social distancing and control has allowed a challenging but safe working environment. Overall, the Board believes that Company was able to meet the challenges presented as a result of the pandemic which affected the whole financial year.   

Revenues increased in both H1 and H2 to deliver year on year revenue growth of 7% with revenue of £4.2m for FY2021 marginally above market expectation. This growth came from good performance across all of the business areas with our humanisation service significantly outperforming the previous year. The loss for the year was £2.9m (FY2020: £0.7m loss) as is explained in the Chief Executive Officer’s report. 

Earlier in the year the Company continued with its strategy to invest for growth and raised a further £3.0 million (gross proceeds) via a placing of new ordinary shares in order to expand the ongoing programme to develop a Mammalian Antibody Library Discovery Platform (OptiMALTM). The Covid-19 pandemic presented us with an opportunity to add this new target to the already planned oncology targets and validate OptiMALTM in a real-world setting. This proof-of-concept project is ongoing with the control models demonstrated. The next steps to optimise the screening and selection of antibodies are in progress with the selection of validation partners and the generation of a body of data from the range of targets expected towards the end of the current financial year and initial revenues from OptiMALTM in 2022.    

The scientific approach behind RAMPTM, our affinity maturation platform, has been expanded and being marketed under the OptiMASTM brand. We now offer an exciting broader service which encompasses the potential to improve the antibody yield from cell culture, optimizing the manufacturing efficiency and reducing the overall cost of goods. Additionally, in many cases the overall stability of the antibody can be improved and the immunogenicity reduced, with the opportunity to maximize the efficiency of a client’s therapeutic antibody drug.

As we grow our range of services, which are underpinned by world class scientific expertise, we are attracting more new clients looking for the ideal development partner with the flexibility and skills to meet all of their needs. We will be targeting companies at the earlier stage of their journey who are committed to outsourcing much of their drug development program and we are positioning ourselves as a partner who works and acts as an extension of their business. To identify and attract companies at the earlier stage of development we are also looking at extending our global reach over the coming year through working with new partners and distributors who can offer our services to a wider audience. 

This year has seen a change in our leadership and I am delighted to welcome our new CEO, Dr Richard Jones, who joined the Company in February this year. Richard Jones is an accomplished life sciences executive with 25 years’ experience in the pharmaceutical industry both in big pharma and biotech companies as well as running a contract development and manufacturing organisation (“CDMO”). He replaces Dr Paul Kerr who I would like to thank for his contribution to the business over the last 10 years and his enthusiastic attitude in taking the business to where it is today.  I am looking forward to working with Richard for the next phase of our exciting journey in creating a world class service company and adding value both to customers and to you as shareholders.

 

Corporate governance

The long-term success of the business and delivery on strategy depends on good governance. The Company complies with the Quoted Companies Alliance Corporate Governance Code.

 

Current trading

Despite a uniquely challenging year we continued to see growth and invest further in our core scientific based services.  Our commitment to new R&D projects was maintained and OptiMALTM remains on track to deliver initial revenues in 2022. The Covid-19 pandemic did not have a material impact on operations as the Company implemented procedures to protect our laboratory services.  Again, our thanks to all the staff who, as a team, were committed to maintaining the full operations of the Company though either working from home or, for those in the laboratories, working flexible hours.in controlled conditions. I would also like to thank the shareholders for their continued support.

Post year end trading has been in line with expectations. While conditions in the UK have improved significantly over the past few months, there remains considerable uncertainty around the world as countries ease or increase restrictions to manage the global Covid-19 pandemic.  Challenges remain for much of our international customer base, but the Board believe the Company has the expertise to meet these challenges and capitalise on opportunities as we have done over the past year. 

 

Dr Simon Douglas

Chairman

10 August 2021

 

Business model – milestone and royalty payments

Payment for current services is primarily by way of “fee for service” revenue model. In certain circumstances, particularly when there is a significant contribution to the client’s intellectual property, the Company will also obtain a commercial interest in the client project. This may take the form of a milestone based success payment or it may be by way of a royalty on future income streams. The number and potential value of such interest increases periodically as the Company enters into new agreements and reduces either when a milestone is realised or when a project is ceased before a payment milestone is reached.

At the reporting date the Company had an interest in fifteen such client projects which it understands its clients to be actively developing: six projects have fixed success payments with a maximum potential income of £1,525,000 and nine projects carry royalty agreements. Such payments would be expected a number of years after the service is performed and would depend on the successful further progression of the project by the client. Due to the uncertainty of the success of such development programmes and the commercial sensitivities for our clients, the Company will not be fully aware of a project’s status at any given point in time, and therefore does not intend to regularly update the market on the above figures nor does it estimate a potential value of future revenues or include such a value in its Statement of Financial Position.

After the reporting date, the Company announced in July that it had received £150,000 milestone payment as a result of a humanised antibody project which was successfully commercialised by a key client. This was the first such payment received by the Company and is in line with our strategic objectives of unlocking the intrinsic value that our service offerings represent to our clients where we have access to the downstream value of successful projects.

 

 

Chief Executive Officer’s Statement

FY 2021 was a remarkable and challenging year for all of us due to the COVID-19 pandemic.  Despite these head winds, the Company continued to make progress on multiple fronts with continued revenue growth and progress on the R&D pipeline. As a result of our ongoing investment for growth and in R&D, the Company continues to return losses which increased this year to £2.9m (FY2020: £0.7m loss for the year).  I am delighted to have joined the Company as the CEO, building on the Company’s strong foundations and generating shareholder value from its current and future technology platform and services. I am also proud of how, despite the challenges throughout the year, the Company staff were able to work diligently, delivering on the financial performance, enabling our clients to advance their discovery and development projects and progressing our pipeline of projects. 

In addition, the Company has been well placed to deal with the uncertainties which arose as companies and governments around the world took steps to control the spread of the Coronavirus pandemic.   Early in the financial year, the Company successfully raised additional capital funds of £3m to continue its strategy of investment in revenue growth and R&D over the short to medium term, and particularly in the development of the Mammalian Antibody Library, now branded as OptiMALTM.

 

Business review

The Company’s revenue performance for the financial year to 31 March 2021 grew by 7% vs FY2020 to £4.2m which was marginally ahead of market expectations. Growth was seen in both H1 and H2 of FY2021 compared to the comparable periods in FY2020, although growth in H2 was modest as the effects of the worldwide pandemic continued.

The majority of this growth has come from the expansion of our existing services such as discovery, engineering and supply, as well as increasing interest and uptake of our new RAMPTM technology service platform which represents a key driver of growth for the business. Over the course of the year, Fusion has initiated and successfully completed a number of RAMPTM client projects which further affirms the value contribution of this new service offering to both the Company and to our customers. I am pleased to report that the Company saw continued growth in our key geographical markets, in particular in North America which represented 41% of revenues and with an increasing number of key client accounts. Our main Asia Pacific markets such as Japan, India and Korea, where we have appointed distributors, continue to be impacted by the global pandemic, although client relationships and opportunities are increasing.  However, I am pleased to report that progress is being made with Biotickle, our distributor in India, with the successful initiation of client projects as well as with Bizcom, our distributor in Japan, who successfully secured a client humanisation project.

In addition to the current ‘Fee for Service’ revenue model, and where this significant contribution to the client’s intellectual property we will look to enter into a collaboration agreement structure which will enable Fusion to access the downstream value of the services and share in the commercial success.  This will further enable Fusion to unlock the intrinsic value that our service platforms provide to our clients and generate additional shareholder value. 

We continued to drive investment and innovation into the R&D pipeline of new service offerings.  In the financial year, we made further progress on the development work of OptiMALTM with the successful production of control models having been achieved and work commencing on two further oncology targets to be developed in addition to the SARS-CoV-2 work. I strongly believe that OptiMALTM represents a key future driver of growth for the business and will enable the Company to access a sizeable addressable market which will generate significant shareholder value.

I am also pleased to report that as part of our commitment and drive into R&D, Dr Richard Buick will assume the role of Chief Scientific Officer, overseeing and managing the R&D platform and pipeline.  Dr Buick will be fully focused on driving the Library and B-Cell Cloning programs as well as exploring early stage R&D pipeline experimental work which can be further developed into exciting new service offerings.  As part of this focus on R&D, Dr Buick will be establishing a Scientific Advisory Panel of industry experts and thought leaders in the field of antibody discovery and services.

As reported in October 2020, the Company received grants from Invest Northern Ireland to support Fusion’s COVID-19 Discovery programme as part of the NI COVID-19 Antibody Development Alliance (NICADA) a collaboration between Fusion and Queen's University Belfast with an aim to develop and test antibodies to assist in tackling the COVID-19 pandemic.  A portion of the grant was used to support the OptiMALTM programme and to reinforce the work being performed at Fusion to produce fully human antibodies targeting the SARS-CoV-2 virus which could be used in therapeutic and diagnostic applications.

Inventory of consumables was increased at the year end to allow for any supply chain disruption from the UK’s planned departure from the European Union and the Coronavirus outbreak reaching Europe in the final quarter of the financial year. In the year, 27% of the Company’s revenues arose from exports to the EU countries. The Company continues to monitor potential risks and opportunities arising as the future EU trade deal is negotiated. We also continue to develop other export markets to mitigate risks of overexposure to any one geographical market.

I am very grateful for the commitment, dedication and resilience shown both by those staff who continued to come into work each day throughout the lockdown and those who adjusted their working arrangements to work remotely. I also want to thank our collaborators and partners who also had to adjust to the challenges and enabled us to continue to operate throughout the year.

The Company held current net assets of £3.7m at 31 March 2021 (2020: £1.8m) which mainly comprised inventories and cash and cash equivalents.

The Company ended the year with £2.7m of cash and cash equivalents, having used £1.1m of cash in operations during the year, invested £0.4m in property, plant and equipment and £0.2m servicing asset-based borrowings. This cash level put the Company in a strong position to progress plans for growth in existing services in FY2022.

 

Post year end events

  • Receipt of first success milestone payment of £150,000 from a key client

 

Financial Results

The Company has continued to build on the revenue growth in the second half of FY2020 with revenue growth seen in both H1 and H2. Full year revenues for the year in total were up 7% to £4.2m (FY2020: £3.9m).

The EBITDA loss for the year was £0.5m (FY2020: £0.4m loss) (see note 27). Continued losses are a result of ongoing investment in operations and research which are expected to contribute towards future revenue growth. The loss before tax increased to £1.3m (FY2020: £1.1m loss).

An additional tax charge was incurred upon the decision to derecognise the deferred tax asset, which has resulted in an additional tax charge of £1.8m in the year. IAS12 requires that a deferred tax asset relating to unused tax losses is carried forward to the extent that it is probable that future taxable profits will be available. The Company raised £2.8m to continue investment in R&D and business development. After the investment period the Board expects the Company to generate healthy profits but considering the immediate outlook for the business, it is difficult at this stage to reliably estimate the period over which profits many arise in the future.  The Board has therefore determined that derecognising the asset in the current year is the most appropriate course of action. This approach does not affect the future availability of the tax losses for offset against future profits.

The Company used £1.1m of cash in operations (2020: £0.2m) and invested £0.4m in expenditure on capital equipment and a further £0.2m servicing asset-based borrowings. Cash and cash equivalents as at 31 March 2021 totaled £2.7m (2020: £1.5m).

 

Key performance indicators

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

KPI FY2021 FY2020
Revenue change year on year 7% 79%
     
EBITDA (£0.5m) (£0.4m)
     
Cash used in operations (£1.1m) (£0.2m)

 

Corporate strategy

The Company continues to grow by following the existing Corporate Strategy of investing for growth through market development and the introduction of new services developed in-house.

Fusion is at a key value inflection point in its evolution. The Company has world class and cutting-edge Antibody Discovery, Engineering and Supply technology platforms with the potential to generate significant future shareholder value.

The Company’s vision is to move into the next phase of its evolution as a commercially successful antibody service provider with a diversified range of technology platforms to enable our customers in pharma and biotech to identify and commercialise antibodies more cost effectively, more rapidly, with a higher probability of success and with a more competitive profile.

 

Outlook

There continues to be a level of uncertainty around the world as countries ease or increase restrictions to manage the global COVID-19 pandemic though we are seeing the situation improving. 

The Board believes that the Company has the expertise to meet these challenges and capitalise on opportunities and, having raised capital in the year, that it also has the financial resources to face the coming months with confidence.  We will continue to build on our current commercial performance accessing additional value generating opportunities, advancing the OptiMAL R&D program in preparation for commercialisation and growing the value from our current proprietary service platforms. 

 

Dr Richard Jones

Chief Executive Officer

10 August 2021

 

Statement of Comprehensive Income

Notes 2021 2020
  £’000 £’000
       
Revenue 4 4,165 3,895
Cost of sales   (2,141) (2,123)

Gross profit
 
2,024
 
1,772
 
Other operating income
 
194
 
56
 
Administrative expenses
 
(3,467)
 
(2,887)
     
Operating loss 5 (1,249) (1,059)
     
Finance income 8 3 6
Finance expense 8 (18) (20)
Loss before tax (1,264) (1,073)
 
Income tax (charge)/credit
 
10

(1,635)
 
376

Loss for the financial year


(2,899)
 
(697)

Total comprehensive expense for the year


(2,899)
 
(697)
Pence Pence
Loss per share    
Basic 11 (11.4) (3.2)

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

 

Statement of Financial Position

Notes 2021
£’000
2020
£’000
Assets      
Non-current assets      
Intangible assets 12 2 4
Property, plant and equipment 13 1,123 1,470
Deferred tax assets 15 - 1,764
    1,125 3,238
Current assets    
Inventories 16 480 340
Trade and other receivables 17 1,440 887
Current tax receivable   99 38
Cash and cash equivalents   2,686 1,537
    4,705 2,802
Total assets   5,830 6,040
   
Liabilities
Current liabilities
Trade and other payables 18 833 828
Borrowings 19 163 161
    996 989
     
Net current assets   3,709 1,813
 
Non-current liabilities
Borrowings 19 67 219
Provisions for other liabilities and charges  
20

20
 
20
    87 239
     
Total liabilities 1,083 1,228
     
Net assets   4,747 4,812
     
Equity    
Called up share capital 22 1,024 884
Share premium reserve   7,547 4,872
Accumulated losses   (3,824) (944)
Total equity   4,747 4,812

 

Statement of Changes in Equity

   
Called up share capital
£’000
 
Share premium reserve
£’000
 
Accumulated losses
£’000
 
Total
equity
£’000
At 1 April 2019 884 4,872 (402) 5,354
Loss and total comprehensive expense for the year  
-
 
-
 
(697)
 
(697)
Share options – value of employee services  
-
 
-
 
72
 
72
Tax charge relating to share option scheme  
-
 
-
 
83
 
83
Total transactions with owners, recognised directly in equity  
-
 
-
 
155
 
155
At 31 March 2020 884 4,872 (944) 4,812
         
At 1 April 2020 884 4,872 (944) 4,812
Loss and total comprehensive expense 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

  2021
£’000
2020
£'000
Cash flows from operating activities  
Loss for the year (2,899) (697)
Adjustments for:  
Share based payment expense 19 83
Depreciation 712 620
Amortisation of intangible assets 2 2
Finance income (3) (6)
Finance costs 18 20
Income tax charge/(credit) 1,635 (376)
Increase in inventories (140) (97)
(Increase)/decrease in trade and other receivables (553) 169
Increase in trade and other payables 5 99
Cash used in operations (1,204) (183)
Income tax received 68 23
Net cash used in operating activities (1,136) (160)
 
Cash flows from investing activities  
Purchase of property, plant and equipment (365) (109)
Finance income – interest received 3 6
Net cash used in investing activities (362) (103)
 
Cash flows from financing activities  
Proceeds from issue of share capital net of transaction costs 2,815 -
Proceeds from new borrowings 14 -
Repayment of borrowings (164) (172)
Finance costs – interest paid (18) (12)
Net cash generated from/(used in) financing activities 2,647 (184)
 
Net increase/(decrease) in cash and cash equivalents 1,149 (447)

Cash and cash equivalents at the beginning of the year

1,537
 
1,984

Cash and cash equivalents at the end of the year

2,686
 
1,537