Avacta Group Regulatory News (AVCT)

1 August 2016

Avacta Group plc

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

Pre-close trading update

Strong performance in Affimer technology development

Commercialisation strategy progressing well

Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and research reagents, is pleased to provide the following pre-close trading update ahead of announcing its Preliminary Results for the year ended 31 July 2016 on Monday 17 October 2016.

Highlights

Commercial: Validation in key commercial applications

· Excellent progress has been made in developing several Affimer affinity purification systems.

o First commercial evaluation with a biological products manufacturer initiated.

· Collaboration agreement with UK lateral flow diagnostics company Mologic, to deliver multiple clinical assays incorporating Affimer reagents;

· Applications development programme to demonstrate Affimer reagents in a range of immunoassays is progressing well; expected to be completed by end of 2016.

· Twenty custom Affimer projects for third parties are currently in progress.

· Rapid generation and validation of three highly specific Affimer binders to Zika virus within just thirteen weeks of receiving the virus target demonstrates benefits of Affimer technology.

Therapeutics Programmes: Rapid and accelerating progress

· First ever animal study of an Affimer therapeutic molecule has been initiated with no adverse effects observed.

o Pharmacokinetics study of lead PD-L1 asset in immuno-oncology programme expected to report in autumn.

· Preclinical programme underway with Leeds General Infirmary to develop blood clotting modulators by targeting fibrinogen and other proteins in the clotting cascade.

o On target to complete first pre-clinical in-vitro data packages early in 2017.

· Scientific Advisory Board appointed to provide immuno-oncology target selection advice and to critically review programme progress.

· Partnership established with Glythera aimed at developing a disruptive new targeted drug conjugate therapeutic platform.

Financial: Performance in line

· Revenues for the year ended 31 July 2016 grew by approximately 19% to £2.15m (2015: £1.81m) in line with market expectations.

· Following the fund raise at the beginning of the financial year to support an in-house therapeutics R&D programme, the Company will adjust its accounting treatment to expense these R&D costs to be consistent with other companies with therapeutics programmes.

o This reclassification of expenditure has no impact on cash balances at 31 July 2016, which are anticipated to be circa £20m, or future cash projections.

o EBITDA losses for the year ended 31 July 2016 will increase to approximately £4.5m (2015: £2.3m) as a result of this change in accounting policy.

Facilities

· New laboratories and offices in both Cambridge and Wetherby are now operational providing the Company with first class facilities and growth capacity.

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

"We have made good progress in the key areas that we set out at the half year in our detailed strategy for commercialisation of Affimer reagents for research, diagnostics and therapeutics.

There are a significant number of Affimer technology evaluations now ongoing and we continue to grow the pipeline of such partnerships that will ultimately deliver a stream of "Affimer powered" products to underpin long term revenue growth.

We have delivered on some important commercial objectives including establishing collaborations with Mologic to validate Affimer reagents in a key diagnostics application and with Glythera to develop Affimer proteins for targeted drug delivery. We continue to explore other collaboration opportunities to broaden the application base.

We have made good progress in the Affimer therapeutic programmes and we have now achieved a significant milestone: the first animal study has been initiated, with no adverse effects, and we expect a detailed murine pharmacokinetic study of the lead PD-L1 Affimer inhibitor to report in autumn.

The success of our programme to develop specific Affimer binders to the Zika NS-1 protein is a perfect example of the speed with which high quality Affimer reagents can be developed to answer an urgent need where there is a gap in the antibody offering.

I look forward to updating the market as we develop these and other products further with clinical and commercial partners."

ENDS

Notes to Editors

For further information from Avacta Group plc, please contact:

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 $75bn 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 targets to enable diagnostics, research assays and therapeutics.

Avacta has a pre-clinical therapeutic 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.