Avacta Group Regulatory News (AVCT)

1 August 2014

Avacta Group plc

("Avacta" or "the Group")

Pre-close trading update

Avacta Group plc (AIM: AVCT), the global provider of proprietary diagnostic tools, consumables and reagents for human and animal healthcare provides the following trading update for the year ended 31 July 2014.

Revenues for the year ended 31 July 2014 grew by approximately 18% to £3.2m (2013: £2.7m) and EBITDA before non-recurring items is anticipated to be in line with market expectations. In May 2014, the Group was successful in raising £10.2 million gross proceeds through a placing of new ordinary shares with both new and existing shareholders to strengthen the balance sheet and support the Group's future development, specifically in the development and commercialisation of Affimers, Avacta's proprietary antibody replacement technology. Over the course of the year, the Group has strengthened the Board with the addition of Craig Slater as Chief Operating Officer and Dr Michael Albin and Dr Trevor Nicholls as Non-Executive Directors.

The Group would like to provide a short update on Avacta's three businesses:

Avacta Life Sciences

During the reporting period, the Group has demonstrated with scientific data that Affimers substantially resolve the negative performance issues associated with antibodies, and therefore provide significant competitive advantages. In addition, the technical processes for the development and manufacturing of Affimers have been established and the Group completed a fund raise to support expansion of the commercial and operational activities. The implementation of this expansion plan is on schedule and the next major milestone is the launch of the Affimer catalogue which is scheduled to happen in September 2014. During the reporting period, key staff have been recruited, including Dr Matt Johnson (CTO), who was previously the Head of R&D at Abcam plc, and Michael Vinegrad (Head of Digital Marketing) who was previously Communications and Marketing Specialist at Smith and Nephew plc.

Several commercial partnerships have been established including a license agreement with Blueberry Therapeutics Limited, a commercial collaboration with Ubiq Bio BV and a distribution partnership for the Japanese market with Cosmo Bio. First orders for custom Affimer reagents were also secured from a handful of academic and commercial customers and sales and marketing collateral and delivery capability is now in place to allow business development to accelerate. The Directors believe that no technical hurdles to this commercialisation remain and the Group is now focused on the expansion of the commercial and operational teams that are required to support sales growth.

Avacta Animal Health

Revenues from the Group's reference laboratory services and diagnostic kits grew by approximately 7% to £1.6m (2013: £1.5m). New canine lymphoma and pancreatitis tests, available as pay per click algorithms, are expected to contribute to performance in the next financial year along with the sales of their constituent diagnostic kits. Progress with the Group's in-clinic diagnostic device, Sensipod, has been further delayed. The development of a number of new assays for Sensipod has highlighted that the production of the immuno-capture surface, which binds the analyte from the sample for detection, is introducing variability in the test results which is not acceptable. In order to implement high value tests such as the canine lymphoma and pancreatitis tests on Sensipod, which will strongly differentiate the product in the market, the method of preparing the capture surface is being improved. Considerable effort has been expended on improving the capture surface consistency over the past six months and good progress is being made towards a high volume, routine manufacturing process that yields test reproducibility considerably better than existing point of care technologies. 

Avacta Analytical

Revenues achieved by the Group's Optim product grew by approximately 25% to £1.5m (2012: £1.2m). Optim sales have matched management's expectations in Europe through its direct sales team, and in Japan through its exclusive distributor. However, performance in the key North American market has been below management expectations. Avacta Analytical has therefore altered its strategy to serve this market directly alongside its current commercial partner, which will become a non-exclusive distributor. This change in strategy is likely to lead to an initial slower period of sales as Avacta Analytical builds its capability and pipeline in North America.

Date of Preliminary Results

The Group expects to release its Preliminary Results on Thursday, 16 October 2014.

- Ends -

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About Avacta Group plc - www.avacta.com

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