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Abzena Says Performance "Below Expectations" So Far In Financial 2018

Thu, 14th Sep 2017 11:33

LONDON (Alliance News) - Life sciences group Abzena PLC said Thursday trading has "been below the board's expectations" in the first half of its year so far.

In a trading update issued ahead of Abzena's annual general meeting on Thursday, the company said it expects revenue for the six months to September 30 "to not be significantly higher" than the GBP9.0 million in revenue reported for the same period last year.

This will have "a corresponding impact on the group's expected loss". For the six months to September 30, 2016, Abzena reported a pretax loss of GBP4.3 million.

Abzena said it had a "robust" cash balance of GBP18.8 million, up from GBP9.4 million at the end of September 2016.

The "slower than expected start for the period can be attributed to lower volumes in certain areas of the business, a small number of large projects that are taking longer to complete than expected, and certain other projects being delayed until the second half of the year," the company said.

The long-term nature of its biomanufacturing service agreements had impacted results. "Revenue recognised under these contracts is based on management estimates of the stage of their completion," Abzena said. "The performance of the services under these agreements is subject to scientific uncertainty as well as being dependent on the performance of inter-related activities by the customer and/or third parties."

New business was seeing "high engagement levels", Abzena said. It therefore "expects revenue for the second half to be substantially stronger than the first half, but it does not expect the business to recover the entire shortfall to the board's expectations for the year as a whole."

Abzena also stated its investment in its San Diego manufacturing facilities has been delayed whilst the board "evaluates options for consolidation of its biologic process development and manufacturing operations." One option is to consolidate its Torrey Pines and Rehco Road facilities in the San Diego area, with the prospect of this becoming operational in the first half of financial 2019.

The company reiterated its commitment to the "growth strategy" announced on April 5.

"The slow start to this financial year arises from a combination of factors that Abzena's management has recognised and is addressing," Chief Executive Officer John Burt said. "The board anticipates improved performance in the second half as the conversion of new business contracts accelerates and is confident in longer-term growth prospects. The business remains committed to its path towards scale and sustainability across its biology, chemistry and manufacturing service lines."

Shares of Abzena were down 25% at 35.42p on Thursday.

By Ahren Lester;

Copyright 2017 Alliance News Limited. All Rights Reserved.

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