Avacta Group Regulatory News (AVCT)

Avacta Group plc

("Avacta" or "the Group")

Business Update

Avacta Group plc (AIM:AVCT), a global provider of innovative diagnostic tools, consumables and reagents aimed at reducing the cost of human and animal healthcare, today announces the following business update for the six month period to 31 January 2013 .

Analytical Division

Optim 2, the re-engineered second generation instrument replacing Optim 1000 was completed during the period and has commenced shipment. An enhanced product, Optim 2 has several significant incremental user benefits. The instrument has a new analysis software package that provides increased throughput and functionality with an applications-based workflow. Additionally, it has a significantly reduced laboratory bench footprint whilst maintaining the powerful protein characterisation capabilities that Optim 1000 delivered.

Furthermore, Optim 2 minimises operational downtime with simplified servicing and maintenance processes, whilst improved design and sourcing of components has enabled Avacta to increase material margins significantly. Avacta also engineered material cost savings into the consumable cartridge used with Optim 2.

The commercialisation of Optim 2 is underway through Avacta's distributor network. Pall, Avacta's longstanding partner in North America and South East Asia, is now also distributing in India, as announced in September 2012. Pall's ForteBio division now leads analytical instruments sales within Pall and the training of the ForteBio sales, applications and support team on Optim 2 is well advanced.

Unit sales were slow during the period because of these transitions to Optim 2 and ForteBio, as the Board predicted in the Preliminary Results announcement dated 23 October 2012. However, ForteBio's exceptional technical and market knowledge is very encouraging and Avacta is now beginning to see positive results that support the view that the long term benefits will be significant. The period also saw the first customer to purchase a second Optim unit and there are other similar second unit purchases in the pipeline.

Animal Health Division

The Animal Health testing services business has performed ahead of expectations despite recessionary pressures affecting footfall into veterinary practices in the UK.

The AX.1 "Sensipod" bench top analyser and the first test, a canine allergy pre-screen, were field tested by several veterinary practices during the months leading up to the end of 2012. The positive feedback from that testing, which yielded only minor user experience improvement suggestions, has been incorporated into the production version which are now being built for stock. Avacta expects to make first commercial sales during Spring 2013. The expansion of the test menu is going well and may yield further tests for commercialisation during the current financial year.

Affimer Reagents

The intellectual property around a new class of affinity reagents, named Affimers by Avacta, was acquired during January 2012. From this standing start Avacta has made substantial progress in the technical and operational plan to commercialise Affimers.

Custom reagents (affinity reagents designed uniquely for a customer's target) are likely to form the first revenue generating opportunity for the Group, possibly as early as this calendar year. Early interest from potential customers has been significant and it has been necessary to accelerate the implementation of a semi-automated system to deal with likely demand. The system screens Avacta's 100 million strong library of proprietary Affimers for ones that bind to customers' specific targets for diagnostic, therapeutic or R&D purposes.

Further, Avacta has also set up and commissioned a high throughput robotic Affimer production facility that is capable of producing about 2000 Affimers per week which will be used to produce market leading high density protein microarrays. A clean room microarray production facility is now in place with early prototype arrays being produced to allow the manufacturing process to be optimised. Commercialisation of these protein microarrays is likely to commence in 2014.

-Ends-

For further information please contact:

Notes to Editors:

About Avacta

Avacta Group plc is a global provider of innovative technologies, consumables and reagents for the life science markets, from drug discovery to diagnostics.

Avacta's products address one of the most significant global challenges facing mankind today - the rapidly rising cost of healthcare for a growing and ageing population.

The cost of healthcare is driven by many factors. New drugs are expensive to develop, most don't reach the patient and those that do are often very costly to prescribe. Inadequate, incorrect or slow diagnosis causes delays that lead to longer or less effective courses of treatment resulting in lengthy or repeated hospitalisation.

Avacta is dedicated to developing and providing innovative and practical tools to help drug developers get their products to market quicker and more reliably, and to providing clinicians with rapid and powerful diagnostics to improve patient treatment, helping to reduce the cost of healthcare worldwide.

Avacta joined AIM in August 2006 and is based in Wetherby, England.

For further information visit www.avacta.com