Avacta Group Regulatory News (AVCT)

24 July 2018

Avacta Group plc

("Avacta" or "the Group" or "the Company")

Major Therapeutics Co-development Partnership

Collaboration Based on Ground-breaking Co-Invention with Tufts University School of Medicine

Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and reagents, is pleased to announce that it has agreed a co-development partnership with Bach BioSciences, a company commercialising the research of William Bachovchin, Professor of Developmental, Chemical and Molecular Biology at Tufts University School of Medicine, Boston. The collaboration will develop a new class of Affimer drug conjugate therapies with a novel mode of action that combines Avacta's Affimer technology with drug conjugates developed at Tufts.

In a ground-breaking co-invention with Tufts, the Company has devised a new class of drug conjugate. This selectively releases a potent drug in the tumour microenvironment (TME) without requiring cellular internalisation of the conjugate as is otherwise the case with traditional antibody-drug conjugates. Some of the novel and differentiating features of Avacta's Affimer-drug conjugate ("AfDC") platform include:

· Utilising Affimers that target immune-checkpoints such as PD-L1 which serves the dual purpose of localising the drug conjugate to the tumour, while also being immuno-oncologically active and functioning as immune checkpoint inhibitors; and

· Incorporating a novel linker chemistry designed by Tufts to release, only in the tumour, the active forms of highly potent small molecule drugs that are activators of innate immunity. This thereby creates a highly localised inflammatory event that is synergistic with the Affimer check-point inhibitor.

Avacta and Tufts have jointly filed for broad patent protection for this inventive concept. The patent covers Affimers, and a wide range of other binders, against oncology, viral and inflammatory targets that are not internalised rapidly enough to be useful in traditional antibody-drug conjugates. It also covers a wide range of drugs to which the binders can be conjugated.

The drug development partnership that the Company is now initiating with Professor Bachovchin will develop the first example of this new class of drug conjugate based on the combination of Affimer PD-L1 inhibitors and an I-DASH small molecule inhibitor for which considerable clinical data has already been generated by the laboratory at Tufts.

Avacta has exclusive rights to commercialise these novel drug conjugates.

Dr Alastair Smith, Chief Executive Officer of Avacta Group, commented:

"We are very excited indeed by this highly novel Affimer drug conjugate concept, the first example of which builds on our own PD-L1 programme and the world-class research of Professor Bachovchin at Tufts University School of Medicine, one of the top US medical schools and research institutes.

We believe that this new drug conjugate platform is transformational for the business. From our initial discussions with several large pharmaceutical companies, it is clear that there is significant interest and there is certainly the potential for partnering at an early stage once we have the appropriate supporting data from the collaboration with Professor Bachovchin.

Broad patent protection for this dual mode of action therapy would be extremely valuable because it could be applied to a wide range of cancers for which patient response to checkpoint inhibitors alone is not high.

The initial embodiment of the concept, which uses a PD-L1 Affimer, becomes Avacta's second major drug development programme alongside the PD-L1/LAG-3 bispecific blockade. This will maximise the value we deliver to shareholders from the investment in the PD-L1 programme since 2015 and we very much look forward to updating the market on the progress made in the coming months."

Dr Amrik Basran, Chief Scientific Officer of Avacta Group, added:

"Cancer immunotherapy can be an effective treatment strategy, but pharmaceutical companies' early enthusiasm has given way to the reality of limited patient responses that the industry is now trying to address.

In particular, while patients that do respond to current checkpoint inhibitors do so with significant and durable benefits, the unfortunate reality is that for most major tumours only about 20-30 percent of patients actually respond to the use of checkpoint inhibitors leaving a substantial number of patients unable to realize the full therapeutic benefit.

Development of bispecifics, such as our PD-L1/LAG-3 programme, is one way to address this, but inducers of innate immune responses have also garnered considerable attention. In this new class of drug conjugate that we are developing with Professor Bachovchin, this innate immune response will be combined with check-point inhibition and we expect to see significant improvements in efficacy and safety.

The Affimer-drug conjugate circulates as a single molecule, in which the conjugated drug is inert, until it encounters enzymes selectively expressed in tumours, where the drug is released, and through its mechanism of action is designed to turn immunologically "cold" tumours "hot" and receptive to immunotherapy. It is our expectation that this will increase the percentage of responsive patients dramatically and, in doing so, it will make a meaningful difference to the lives of a great many cancer patients."

For further information from Avacta Group plc, please contact:

About the PD-L1/I-DASH AfDC:

The first AfDC to be developed will be an anti-PD-L1 Affimer/I-DASH inhibitor conjugate using Avacta's Affimer PD-L1 inhibitors to target the conjugate to tumours in which PD-L1 is upregulated. The linker between the Affimer and I-DASH inhibitor includes a substrate sequence that is cleaved by an enzyme that is also selectively upregulated in extracellular space of tumours relative to normal tissues in the body - providing a second tumour targeting mechanism. The I-DASH inhibitor is a small molecule drug for which Professor Bachovchin has already generated substantial preclinical and clinical anti-tumour data. In the conjugated form of the AfDC, the I-DASH inhibitor is inert. When released from the linker through cleavage by the enzyme, the I-DASH inhibitor selectively targets tumour associated macrophage causing a major inflammatory event stimulating the patient's immune system to attack the tumour. The effects include potent priming of tumour antigen-specific CD8+ T-cell responses, enhanced trafficking of key effector immunocytes to the tumour, increased levels of dendritic cells and activated NK cells and accelerated expansion of tumour specific T-cells. Like STING agonists (Merck, Aduro, iTeos), Toll-like receptor agonists (Medimmune/AZ, GSK, Pfizer) and other general inducers of innate immune responses, systemic administration of I-DASH inhibitors can cause body-wide activation of innate immune responses (in this case by targeting macrophage throughout the body) and in so doing produce dose-limiting toxicities that can make it difficult to achieve an effective concentration in the tumour. The use of an Affimer targeting PD-L1 serves both as a means to target the super-potent I-DASH inhibitor to the tumour and reduce the systemic toxicity risks, as well as to produce a localized synergistic effect combining pharmacological effects of PD-L1 inhibition and I-DASH inhibition in the tumour.

About Avacta Group plc (www.avacta.com)

Avacta's principal focus is on its proprietary Affimer® technology which is a novel engineered alternative to antibodies that has wide application in Life Sciences for diagnostics, therapeutics and general research and development.

Antibodies dominate markets worth in excess of $100bn despite their shortcomings. Affimer technology has been designed to address many of these negative performance issues, principally; the time taken to generate new antibodies, the reliance on an animal's immune response, poor specificity in many cases, and batch to batch variability. Affimer technology is based on a small protein that can be quickly generated to bind with high specificity and affinity to a wide range of protein targets.

Avacta has a pre-clinical biotech development programme with an in-house focus on immuno-oncology and bleeding disorders as well as partnered development programmes. Avacta is commercialising non-therapeutic Affimer reagents through licensing to developers of life sciences research tools and diagnostics.

About Bach Biosciences LLP

Bach Biosciences LLP is the mission-driven development company associated with Dr. William Bachovchin's laboratory at Tufts University School of Medicine. Bach Biosciences is accelerating breakthrough discoveries into therapeutics for patients, from its own drug development pipeline or by working in partnership with other life science companies. Bach Biosciences' leadership and development team is highly skilled in translational medicine and pharmaceutical development, having had a number of programs move into clinical development and into the marketplace. The company and its founders have established strategic partnerships with contract research organizations, investors, and pharmaceutical partners to support technology development. Dr. Bachovchin is the inventor on 46 issued US patents, including reach-through patents covering the field of DPP-IV inhibitors for treating diabetes, a $10B market. This patent has been licensed by Merck, Novartis, Bristol-Myers Squibb and Boehringer Ingelheim. In addition three drugs first designed, synthesized and characterized in Dr. Bachovchin's laboratory at Tufts University School of Medicine have been advanced into human clinical trials.