Abzena Regulatory News (ABZA)

ABZENA PLC

("Abzena", the "Company" or the "Group")

Interim Results for the Six Months Ended 30 September 2014

11 December 2014

Cambridge, UK - Abzena plc (AIM: ABZA), a life sciences company providing services and technologies that enable the development of better biopharmaceutical products, today announces its interim results for the six months ended 30 September 2014.

Corporate highlights

· Successful completion of Initial Public Offering and Admission to the AIM market of the London Stock Exchange on 10 July 2014, raising £20 million (before expenses)

· Launch of the Abzena brand in May 2014 to provide group identity whilst maintaining the two individually strong brands of Antitope and PolyTherics

· Relocation of its corporate headquarters and the scientific operations of PolyTherics from London to the Babraham Research Campus near Cambridge, UK, consolidating the Group's main operations in the heart of one of the world's leading clusters for biopharmaceutical innovation

· Board strengthened with Peter Grant, CEO of Skyepharma plc, joining as a Non-executive Director of Abzena in July 2014 prior to the AIM admission

· Sixth therapeutic antibody candidate derived from Antitope's Composite Human Antibody™ platform and being developed by Vascular Pharmaceuticals Inc. progresses into Phase 2 clinical study for diabetic nephropathy

· Multiple new agreements for services or technology licences including those announced with Alpha Cancer Technologies, Baylor Institute of Immunology Research, Synthon and University College London

Post-period highlights

· Data presented at World ADC Summit demonstrating the advantages of the ThioBridge ADC conjugation technology and novel ADC payloads developed by PolyTherics

· NKT Therapeutics has presented positive Phase 1 clinical data for its lead compound NKTT120, derived from the Composite Human Antibody platform, in patients with sickle cell disease (SCD), as well as supportive data in a preclinical model of that condition at the American Society of Hematology Annual Meeting

Financial summary

· Revenues of £2.4 million (H1 2013: £0.8 million)

· Research and Development expenditure of £1.7 million (H1 2013: £1.1 million)

· Reported loss of £2.7 million (H1 2013: £2.4 million)

· Cash and cash equivalents of £18.7 million up from £2.8 million at 31 March 2014

John Burt, CEO of Abzena, said: "The evolution of the business during the first six months of our financial year has been substantial with the rebranding of the parent company, our admission to AIM, accompanied by significant investment to finance future growth, and relocation from London to Cambridge. We are now in a good position to move forward with our plans to grow the business based on the expansion and delivery of our services and technologies to support research & development in biopharmaceutical companies throughout the world."

"We are delighted to have secured the continued commitment of high calibre investors at our IPO, with significant further investments from Invesco Perpetual and Imperial Innovations, and new investment from Woodford Investment Management, to enable the continued growth of the Company."

"With six products derived from our antibody humanization technology now being developed in the clinic by our partners, and a portfolio of licence and option agreements for products at research and early development stage, all potentially revenue-bearing in the future, we will be watching the progress made by our partners with keen interest."

"The business pipeline gives us confidence that we will achieve a strong second half of the year, comfortably ahead of the first half."

"The completion of the IPO and relocation to Cambridge over the summer have been significant events for the business and I would like to thank the Abzena team for their commitment to achieving their scientific goals and to maintaining the high quality of the work delivered to our partners."

About Abzena

Abzena provides proprietary technologies and complementary services to enable the development of better biopharmaceuticals. The Group comprises PolyTherics and Antitope which have established a broad suite of services and technologies that are designed to improve the chances of successful development of antibodies and proteins with enhanced therapeutic benefits.

Antitope provides immunogenicity assessment, protein engineering to create humanized antibodies and deimmunised therapeutic proteins, and cell line development for manufacture.

PolyTherics specializes in proprietary site-specific conjugation technologies for antibody drug conjugate development and solutions for optimization of the therapeutic properties of biopharmaceuticals.

The Group has built a global customer base over the past decade which includes the majority of the top 20 biopharmaceutical companies, many large and small biotech companies, and academic groups.

Abzena is quoted on the AIM market of the London Stock Exchange under the symbol ABZA.

A pdf copy of the results is available at: http://www.abzena.com/results-and-presentations

For more information, please contact:

John Burt (Chief Executive Officer)

Julian Smith (Chief Financial Officer)

Abzena plc

Tel: +44 1223 903498

Email: john.burt@abzena.com or julian.smith@abzena.com

Christopher Golden and Bobbie Hilliam

Cenkos Securities (Nominated Adviser and Broker)

Tel: +44 20 7397 8900

Mark Swallow, Sita Taylor or Chris Gardner

Citigate Dewe Rogerson (Corporate and Financial PR)

Tel: +44 20 7638 9571

Email: abzena@citigatedr.co.uk

Chairman's and Chief Executive Officer's Report

Introduction

The first half of the current financial year has been both eventful and productive with significant developments across the business. 

With the funds raised through the IPO providing a significantly stronger, debt-free, balance sheet and the higher profile of the business as a public company, we are well placed to drive the further growth of Abzena. We successfully launched the Abzena brand just before the IPO and we are continuing to raise awareness of the new name and the integrated offering of the Antitope and PolyTherics brands within the Group.

We are seeing the benefits of the Abzena business model translate into a stronger engagement with our partners, creating the opportunity to drive further growth by offering a broader and more integrated service for the development of better biopharmaceuticals. We are expanding and deepening our offering through investment in the immunology assessment, protein engineering and production, and bioconjugation fields.

Having relocated the Group's corporate offices and PolyTherics' research laboratories from London to Cambridge, we are operating from the heart of one of the world's leading clusters for biopharmaceutical innovation. Since the move we have continued to build our scientific team which now includes over 70 scientists, with expertise in immunology, molecular and cell biology, synthetic and polymer chemistry and bioconjugation, all focused on providing high-value services and complementary technologies to identify and create better therapeutic proteins and antibodies.

We are pleased with the overall performance of the business, the progress made by our partners in developing products created using our antibody humanisation technology, and the greater commercial traction achieved with our next-generation technologies for antibody drug conjugates.

Business Review

The Group's strategy is to continue its growth as a provider of services and technologies to address critical R&D issues to enable the development of better biopharmaceuticals. Growth of the service revenues will be driven through leveraging of our brands and cross-selling to existing and new customers. Additional longer term revenue growth will be realised through the receipt of milestone payments and royalties as customers' products that have been enhanced by Abzena's technologies progress through development to the market.

Abzena offers a range of proprietary services and technologies through its two trading brands, Antitope and PolyTherics, which cover the following complementary areas: 

· Assessment of the immunogenicity of antibodies and proteins;

· Protein engineering to create humanized antibodies and deimmunised proteins;

· Development of manufacturing cell lines;

· Bioconjugation for the creation of antibody drug conjugates ("ADCs"); and

· Bioconjugation of polymers to proteins for pharmacokinetic optimisation.

During the period, more than 30 immunogenicity assessment studies were completed for more than 20 different companies, cell-line development programmes were completed for both US and European customers and a diverse range of protein engineering projects are ongoing or have been completed. These include a research and licence agreement with University College London to develop fully humanized antibodies as potential therapeutics for ophthalmic diseases. 

Antitope has recently applied for the necessary licence from the Human Tissue Authority (HTA) to cover storage of processed blood used in its immunogenicity assessment assays. There is ongoing engagement on the application with the HTA and the Group expects the matter to be resolved in the near future.

Five companies have received ADCs produced using our proprietary linker technology, ThioBridge, for evaluation, and two further companies have received novel conjugate products based on the ThioBridge platform for evaluation. A US West Coast biotech company has been granted an option for the ThioBridge technology to be used to create up to ten ADCs, and commercial terms for licences to the ThioBridge technology have been agreed with a number of other partners. Separately, the TheraPEG licence agreement with Nuron Biotech Inc. for the development of a long-acting interferon beta product has been terminated and the Group is pursuing interest from other parties in this technology.At the time of the IPO, five products derived from the Composite Human Antibody platform were disclosed as being in clinical development. These were the most advanced products created using the Group's technologies under development by its partners and are part of the portfolio of more than 30 licence and licence option agreements granted by the Group. During the period, Gilead Sciences (Foster City, CA, USA) disclosed that a study involving simtuzumab combined with a chemotherapy drug for difficult-to-treat advanced pancreatic cancer patients did not provide clinical benefit. Gilead continues to explore simtuzumab in clinical trials in other areas of cancer and unmet medical need. Vascular Pharmaceuticals (Research Triangle Park, NC, USA) disclosed its candidate for diabetic nephropathy had entered Phase 2 studies. NKT Therapeutics (Waltham MA, USA) has presented positive Phase 1 clinical data for its lead compound NKTT120 in patients with sickle cell disease (SCD), as well as supportive data in a preclinical model of that condition at the American Society of Hematology Annual Meeting in December 2014 held in San Francisco, CA, USA. 

Abzena's partners now have six candidates in clinical development and progressing towards the market for a broad range of disease indications:

· Simtuzumab (Gilead Sciences, Phase 2, multiple indications including fibrosis, cancer and liver disease)

· OPN-305 (Opsona Therapeutics, Phase 2, delayed renal graft function)

· VPI-2690B (Vascular Pharmaceuticals, Phase 2, diabetic nephropathy)

· GS-5745 (Gilead Sciences, Phase 1, multiple autoimmune and inflammatory indications and cancers)

· NKTT120 (NKT Therapeutics, Phase 1, sickle cell disease)

· SDP 051 (Adheron Therapeutics, Phase 1, rheumatoid arthritis, fibrosis and cancer)

Abzena's intellectual property patent portfolio has further expanded through the granting of additional patents in Europe, USA, Australia, Canada, China, Israel, Japan and South Korea. A European polymerisation patent, relevant to the PolyPEG technology, has successfully been maintained following resolution of an Opposition process initiated by Carnegie Mellon University. The Group has continued to invest in technology development across all areas of its business to enhance its intellectual property estate with further patent applications being filed during the period.

Research and Development

The group has continued its investment in R&D with further development of the ThioBridge ADC technology platform that has the potential to provide more stable and homogeneous ADCs. Further R&D investment is being made to expand the immunology assessment and cell line development service lines with additional offerings to be rolled out through the coming year.

Board Changes

The Board is grateful to the contributions made by Mark Payton and Stephane Mery who stepped down as directors of PolyTherics prior to the IPO. The Board was strengthened with the appointment of Peter Grant, CEO of Skyepharma plc, who joined the Abzena board in July as a Non-executive director, and brings a wealth of commercial, financial and management experience to the Group.

Financial Review

Group revenues for the six months to 30 September 2014 were £2.4 million (H1 2013: £0.8 million) providing a gross profit of £1.2 million (H1 2013: £0.4 million).

Research & development expenditure during the period was £1.7 million (H1 2013: £1.1 million); all R&D expenditure has been expensed during the period in which it is incurred.

The Group reports a loss of £2.7 million (H1 2013: £2.4 million) resulting from an operating loss for the period of £3.0 million (H1 2013: £2.6 million) after reflecting the R&D tax credit repayable from HMRC of £0.3 million (H1 2013: £0.2 million).

The total raised at Admission to AIM for the Company was £20.6 million with £20.0 million raised on the issue of new equity and £0.6 million raised through the exercise of warrants. After all costs and expenses, the net proceeds of the IPO were £19.0 million. A total issue cost of £1.6 million has been reflected as a movement through reserves to reduce the share premium account as the entire rationale for the IPO was to raise equity capital for the Group.

Cash and cash equivalents at 30 September 2014 were £18.7 million up from £2.8 million at the start of the year.

Outlook

Abzena is focused on developing a sustainable business with the dual value drivers of the service business combined with future revenues from its portfolio of licences derived from the Group's proprietary technologies. These licences enable our partners to develop better biopharmaceutical products and provide the opportunity for Abzena to participate in the commercial success of these products.

We are anticipating a strong second half of the year and the revenues of the Group will comfortably exceed those generated in the first half, resulting in full year revenues in line with last year's aggregate unaudited revenues of £5.8 million. 

Progress with the development of the portfolio of Composite Human Antibodies being developed by our partners is awaited with keen interest, including the results of Phase 2 clinical studies in a number of indications for Gilead's simtuzumab, as well as potential partnering news from other programmes and the potential entry of further products into clinical development.

As stated during the IPO process, opportunities to drive further growth through the acquisition of complementary services and technologies are being pursued.

With a strong balance sheet, a restructured capital structure, a balanced and sustainable business model, and the potential to create significant value for shareholders, the Board looks forward to the next period of the Group's development.

10 December 2014

Independent reviewreport to Abzena plc

Introduction

We have reviewed the accompanying balance sheet of Abzena plc as at 30 September 2014 and the related statements of income, changes in equity and cash flows the six month period then ended. Management is responsible for the preparation and presentation of this interim financial information in accordance with International Financial Reporting Standards adopted in the European Union. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of the Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with International Financial Reporting Standards adopted in the European Union.

James Cowper LLP

2 Chawley Park

Cumnor Hill

Oxford

OX2 9GG

10 December 2014

Consolidated Statement of Comprehensive Income

The accompanying notes are an integral part of these interim financial statements.

Consolidated Balance Sheet

The accompanying notes are an integral part of these interim financial statements.

The interim financial statements were approved by the Board of Directors on 10 December 2014 and were signed on its behalf by John Burt (Chief Executive Officer) and Julian Smith (Chief Financial Officer).

Consolidated Cash Flow Statement

The accompanying notes are an integral part of these interim financial statements.

Consolidated Statement of Changes in Equity

For the six month period to 30 September 2014

(1) In accordance with the statutory procedures set out in sections 641 to 644 of the Companies Act 2006, the Board of PolyTherics Limited, elected to reduce the share capital of that company, by cancelling the share premium account on 24 June 2014.

The share issue costs reflect the costs directly and wholly attributable to the raising of equity finance through the process of the IPO.

For the six month period to 30 September 2013

(1)£11.0 million of this amount was issued for cash with a further £2.5 million issued to the owners of Antitope Limited as partial consideration for its acquisition.

Consolidated Statement of Changes in Equity continued:

For the year ended 31 March 2014

(1)£11.0 million of this amount was issued for cash, with a further £2.5 million issued to the owners of Antitope Limited as partial consideration for its acquisition.

The accompanying notes are an integral part of these interim financial statements.

Notes to the interim financial information

1. Basis of preparation

These unaudited condensed consolidated interim financial statements have been prepared in accordance with the AIM Rules and European Union endorsed International Financial Reporting Standards. These comprise the consolidated statement of comprehensive income, the consolidated interim balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity and the related notes ("the condensed consolidated interim financial statements"). The Group has chosen not to adopt IAS 34, "Interim Financial Reporting", in the preparation of these condensed consolidated interim financial statements.

These condensed consolidated interim financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of certain financial assets at fair value, as required by IAS 39, "Financial instruments: Recognition and Measurement". The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 March 2014, as described in those financial statements, with the exception of the following new standards which have been applied for the first time during the period commencing 1 April 2014:

IFRS 13 "Fair value measurement". IFRS 13 measurement and disclosure requirements are applicable for the financial year commencing 1 April 2014. IFRS 13, 'Fair value measurement', aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. The Group will include the relevant disclosures required by IFRS13 in the Group's annual report for the year ending 31 March 2015.

In addition, IAS 19 "Employee benefits" is also applicable for the financial year commencing 1 April 2014 and is not expected to have a material impact on the Group.

These condensed consolidated interim financial statementsdo not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for PolyTherics Limited for the year ended 31 March 2014 were approved by the Board of Directors on 2 July 2014 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

PolyTherics Group Limited was incorporated on 25 March 2014; acquired the entire share capital of PolyTherics Limited on 14 May 2014 in a share for share exchange; changed its name to Abzena Limited on 20 May 2014; and was subsequently re-registered as Abzena plc on 3 July 2014.

These group financial statements, therefore to the extent that they relate to the period to 14 May 2014, only pertain to PolyTherics Limited and its subsidiary companies Antitope Limited and Warwick Effect Polymers Limited. Subsequently these financial statements include Abzena plc, and the subsidiary companies PolyTherics Limited, Antitope Limited and Warwick Effect Polymers Limited.

The half year results to 30 September 2013 include the two months of Antitope Limited results from the date of acquisition on 25 July 2013. The full year audited statements include eight months of Antitope Limited's trading results.

2. General information

Abzena plc is a public limited company incorporated and domiciled in England and Wales with registered number 08957107.

The Company's registered office is Babraham Research Campus, Babraham, Cambridge, CB22 3AT. 

The principal activity of the Group is that of life science research and development and the provision of services and technology licensing to the biopharmaceutical industry.

The interim financial Information comprises a consolidation of the Company and the following subsidiary companies:

3. Segmental reporting

The Directors are of the opinion that under IFRS 8 the Group has only one operating segment, being the commercialisation of intellectual property through short-term service contracts and long-term licensing income. The Board of Directors assess the performance of the operating segment using financial information which is measured and presented in a manner consistent with that in the financial information.

An analysis of the Group's Revenue is as follows:

4. Exceptional items

Exceptional items have been expensed to the Statement of Comprehensive Income, and relate to the acquisition of Antitope Limited. These items are non-recurring in nature. 

5. Taxation

Analysis of taxation (credit) in the period

The Group is entitled to claim tax credits in the United Kingdom for certain research and development expenditure. The amount included in the financial information represents the credit receivable by the Group for the period.

Analysis of taxation credit in the period:

There is no current tax charge in the period as the Group has utilised losses brought forward and is entitled to a cash tax credit in the United Kingdom for certain research and development expenditure.

Deferred tax (asset) / liability

6. Losses per share

Basic losses per share is calculated by dividing the loss for the financial period by the weighted average number of Ordinary Shares in issue during the year. The losses and weighted average number of shares used in the calculations are set out below:

As net losses were recorded in the 6 months ended 30 September 2014, 30 September 2013 and the year ended 31 March 2014, the potentially dilutive share options are anti-dilutive for the purposes of the losses per share calculation and their effect is therefore not considered.

Between 1 April 2014 and 10 July 2014, a number of changes to share capital took place, to enable, and as a result of, the Company being admitted to the AIM market of the London Stock Exchange. The overall effect of these changes, was to increase the number of Ordinary shares in issue from 1.405 million shares in issue on 1 April 2014 to 97.429 million shares in issue on 30 September 2014.

7. Business Combinations

Acquisition of Antitope Limited

During the first half of 2013, the Group completed the acquisition of Antitope, a provider of antibody and protein engineering, manufacturing cell line development, and immunogenicity assessment services. The rationale for the acquisition was to leverage Antitope's and PolyTherics' combined customer base and portfolio of proprietary and complementary technologies and services to address key issues in biopharmaceutical development. The initial cash and equity consideration was £9.0 million cash and £2.5 million in shares with acquisition related costs of £0.3 million charged as an exceptional item in the consolidated statement of comprehensive income for the year ended 31 March 2014.

Intangible assets acquired relate to Antitope's licence portfolio, existing customer relationships, trade name and current technology. These are being amortised over their expected useful economic lives, which range from 8 to 10 years, with amortisation commencing at the date of acquisition, with the exception of the licence portfolio where the amortisation period will commence when brought into use by management. The goodwill arising on the acquisition is attributable to the assembled workforce and other attributes not meeting the criteria for capitalisation as an intangible asset. Goodwill is not amortised but is assessed for impairment at the end of each reporting period. None of the goodwill on this acquisition is expected to be deductible for tax.

The revenue included in the consolidated statement of comprehensive income since 25 July 2013 contributed by Antitope Limited was £3.6 million, Gross Margin of £2.0 million, Administration expenses of £0.9 million and net profit of £1.2 million.