Avacta falls as stuttering revenues exacerbate losses

Avacta Group's shares slid on Tuesday as interim revenues dropped on the back of a lower contribution from the life sciences division, which resulted in wider losses.

The biotherapeutics and research reagents developer recorded revenues of £1.0m for the year ended 31 January, down 34% compared to the year before, leading to an increase in its losses before tax of 31% to £5.8m.

Losses were also exacerbated by administrative expenses increasing by 3% to £4.1m and research and development costs rising by 63% to £2.4m as the group focuses on its key objective of first-time-in-human data for the Affimer therapeutic programme and growing a profitable Affimer reagents business.

Alastair Smith, chief executive of Avacta, said: "First-time-in-human data is a significant value inflection point for the technology and a major de-risking point from a deal making perspective. The group remains on track, to a tight schedule, to dose first patients in late 2020. The addition of Dr Jose Saro as chief medical officer is a significant strengthening of the senior management team with regards this translation of programmes into the clinic."

The AIM traded company also reported a major development partnership and license agreement with LG Chem Life Sciences for the development of Affimer therapeutics for oncology and the treatment of inflammatory diseases, which it said was potentially worth over $300m plus future royalties on product sales.

Avacta said it remains on track to begin a Phase I clinical trial of its first Affimer therapeutic candidate next year, which are small, engineered proteins that are capable of binding specific molecular targets.

Cash and cash equivalents stood at £11.8m at the end of the period, up from £8.3m at the same point the year before following a successful fundraising in August for £11.6m.

It also received its first up-front milestone payment of $2.5m, from LG Chem.

"As a proven platform technology addressing multiple non-therapeutic markets the Group has the opportunity to grow a profitable reagents business, and there is significant upside potential as it builds a pipeline of valuable Affimer drug assets," said Smith.

Avacta Group's shares were down 9.33% at 34.00p at 1125 BST.