
30
September 2024
Avacta Group
plc
("Avacta", the "Group" or the "Company")
Interim
Results
pre|CISION™ enabled peptide
drug conjugate AVA6000 continues to demonstrate a highly
encouraging tolerability profile with robust preliminary efficacy
signals in both dose escalation arms of Phase 1a
trial
Continued strong clinical
performance supports broader confidence in the pre|CISION™
platform
Avacta Group plc (AIM: AVCT),
a life sciences company developing innovative,
targeted oncology drugs and powerful diagnostics,
announces its unaudited interim results for the
six months ending 30 June 2024 ("H1 2024") with recent progress
against the Company's 2024 stated goals.
Operational developments
· Enrollment in the AVA6000 Phase 1a dose escalation trial of
AVA6000, a peptide drug conjugate enabled by the pre|CISION™
platform, has completed with no maximum tolerated dose ("MTD")
identified. A favorable safety profile was reported
· Multiple durable RECIST responses were observed in patients
with high-grade sarcoma and salivary gland cancers, indicating that
tumor cell expression of FAP is not required for the release of
doxorubicin, with even lower levels of stroma-only expression being
sufficient
· Enrollment in the recommended dose for expansion (RDE) cohort
is ongoing, focusing on patients with high-grade sarcomas and a
subset of head and neck cancer (salivary gland cancer)
· Formation of Scientific Advisory Board
("SAB") chaired by William D. Tap MD, Chief of the Sarcoma Oncology
Service at the Memorial Sloan Kettering Cancer Center in New York
City to guide the ongoing clinical development of AVA6000 and the
pre|CISION™ platform
Financial highlights
· Financial performance of the Group in line with the Board's
expectations
· Revenues of £11.3 million (H1 2023: £11.9 million; FY 2023:
£23.3 million)
· R&D expenditure of £6.7 million (H1 2023: £6.0 million; FY
2023: £14.5 million)
· Adjusted EBITDA loss (before non-cash and non-recurring items)
of £11.1 million (H1 2023: £7.9 million; FY 2023: £20.1
million)
· Reported loss of £12.5 million (H1 2023: £11.5 million; FY
2023: £25.0 million)
· Loss
per ordinary share of 3.8p (H1 2023: loss 4.3p; FY 2023: loss
9.2p)
· Fundraise completed in March 2024 raising £31.1 million
(gross)
· Cash
and cash equivalents of £32.5 million (30 June 2023: £26.0 million;
31 December 2023: £16.6 million)
· Events
after the reporting period:
· In
July 2024, settlement in cash of the quarterly amortization payment
of £3.08 million in connection with the Group's convertible
bond
· Diagnostics division revenue grew to £11.2
million (H1 2023: £9.9 million; year ended 31 December 2023, FY
2023: £21.2 million). Adjusted EBITDA improved to a profit of
£0.1 million (H1 2023: loss of £0.4 million; FY 2023: loss of £1.2
million)
Outlook
· At the
half year stage, the data from the ongoing Phase 1a clinical study
of AVA6000 continues to support Avacta's growing confidence in
AVA6000 and the wider potential of the pre|CISION™
platform
· A
process to divest the Group's Diagnostics division has commenced in
order to maximize value for shareholders, ensure our focus as a
therapeutics-focused Company and support our appeal to specialist
international investors
· The
Board of Directors is also exploring opportunities for a dual
listing on NASDAQ and an update on this aspect of the Group's
longer-term financing strategy will be provided in due
course
Shaun Chilton, Chairman of Avacta Group plc
commented:
"Over the four months since Chris Coughlin's and
my appointments, we have made significant progress
on key strategic priorities. Alongside the Board and
wider team, we have carried out a detailed review
of all the Group's operations and financials with a
focus on prioritizing further investments in
therapeutics, including the acceleration of the
AVA6000 clinical
trial enrollment.
"We are very encouraged by the potential of the innovative
medicines in the Avacta pipeline which we plan to present at our
live R&D Spotlight in October focusing on the Next Generation
of the pre|CISION™ platform.
"We have commenced a process to divest the Diagnostics
Division and have started to receive indicative offers. Our
longer-term financing strategy is being formulated and includes a
potential dual listing of the Company on NASDAQ, which the Board
sees as a key strategic option for the Company."
Christina Coughlin, MD, PhD, Chief Executive Officer of Avacta
Group plc, commented:
"We are seeing notably positive progress on our drug
development candidate AVA6000 with the completion of the Phase 1a
trial with no maximum tolerated dose and opening of the RDE
expansion. This novel peptide drug conjugate
continues to
demonstrate a highly favorable tolerability profile and robust
preliminary signs of efficacy, with several durable responses, as
it moves through clinical development.
"The AVA6000 data in the clinic has led to a growing
confidence in the pre|CISION™platform and its potential for
patients. Our next generation programs will leverage the
pre|CISION™platform as a foundation for other tumor-specific
warhead delivery systems.
"This platform will underpin our wider clinical strategy and
our ambition of bringing these novel cancer medicines closer to
patients and delivering value for shareholders. Along with the rest
of the team, I'm excited about the opportunity and look forward to
expanding the opportunity that pre|CISION
offers."
Avacta will be hosting a live
R&D Spotlight: Next Generation of pre|CISION™ Medicines in
London on 30 October 2024. This event is open to both analysts and
investors, further details are provided on the Company website
at
https://avacta.com/2024-rd-spotlight-live-event/.
For
further information from Avacta Group plc, please
contact:
Avacta Group plc
Christina Coughlin, CEO
Michael Vinegrad, Group
Communications Director
|
Tel: +44
(0) 1904 21 7070
www.avacta.com
|
Peel Hunt (Nomad and Broker)
James Steel / Chris Golden / Patrick
Birkholm
|
www.peelhunt.com
|
ICR
Consilium
Mary-Jane Elliott / Jessica Hodgson
/ Sukaina Virji
|
avacta@consilium-comms.com
|
About Avacta Group plc - www.avacta.com
Avacta Group is a UK-based
life sciences company focused on improving healthcare outcomes
through targeted cancer treatments and diagnostics.
Avacta Therapeutics: a clinical
stage oncology biotech division that is harnessing the proprietary
pre|CISION platform technology to develop novel, highly targeted
cancer drugs.
The pre|CISION™ platform is a highly
specific substrate for fibroblast activation protein (FAP) which is
upregulated in most solid tumors compared with healthy tissues. The
pre|CISION™ platform harnesses this tumor specific protease to
cleave pre|CISION™ peptide drug conjugates and pre|CISION™
antibody/Affimer® drug conjugates in the tumor
microenvironment, thus releasing active payload in the tumor and
reducing systemic exposure and toxicity, allowing dosing to be
optimized to deliver the best outcomes for patients.
The lead pre|CISION™ program
AVA6000, a peptide drug conjugate form of doxorubicin, is in Phase
1 studies. It has shown an improvement in safety and tolerability
in clinical trials to date compared with standard doxorubicin and
preliminary signs of clinical activity in multiple
patients.
Avacta Diagnostics focuses on
supporting healthcare professionals and broadening access to
diagnostics.
To register for news alerts by email
go to www.avacta.com/investor-news-email-alerts
Interim
report
Overview
The first six months of the year saw
a number of managerial and operational changes. The Company's
financial position remains in line with the Board's
expectations.
Avacta aims to leverage its
proprietary pre|CISION™ platform to develop
innovative oncology therapies that make a significant difference to
cancer patients' treatment experience and outcomes.
The pre|CISION™ platform has the
potential to enable patients to achieve improved outcomes with
fewer side effects by leveraging the tumor specific enzyme
Fibroblast Activation Protein (FAP) to protect normal tissues from
toxic drugs. Data recently presented at the European Society of
Medical Oncology (ESMO) conference demonstrate the observation of
warhead release in the tumor even in the setting of lower FAP
activity.
The Group is poised to move into the
next stage of development, implementing these findings of this drug
release mechanism across our innovative pipeline.
As previously announced the Board is
in the process of selling the Diagnostics business and sees a
dual-listing on NASDAQ as a key strategic step for the
Company.
pre|CISIONTM
The Avacta
pre|CISIONTM platform is a proprietary warhead
delivery system based on a tumor-specific protease that is
designed to concentrate highly potent warheads in the tumor
microenvironment while sparing normal tissues.
Fibroblast activation
protein-α (FAP) is an extracellular post-proline protease
that is upregulated in many solid tumors in a membrane-bound form
on cancer associated fibroblasts as well as tumor cells. FAP
activity is also observed as a soluble protease to a low degree in
plasma.
A
pre|CISIONTM molecule has two key
properties:
1. It prevents the
warhead from entering cells.
2. It is specifically
cleaved by FAP to release active warhead in the tumor.
The peptide moiety linker,
pre|CISION™, prevents cellular entry of the warhead unless it is
cleaved by FAP, thus enabling targeted delivery of the warhead to
tumors.
The first of Avacta's pre|CISION™,
molecules, AVA6000,
has achieved clinical proof-of-concept in a Phase 1a dose
escalation trial with multiple RECIST responses observed in
patients with high grade soft tissue sarcomas and salivary gland
cancers.
First Generation preCISION
Peptide Drug Conjugate (PDC): AVA6000
AVA6000 is a pre|CISIONTM
peptide drug conjugate which consists of doxorubicin conjugated
directly with a peptide moiety cleaved by FAP. The peptide is
cleaved in the TME to release active doxorubicin which is then
capable of killing either FAP+ cancer associated fibroblasts (CAFs)
or FAP-negative tumor cells.
Second Generation preCISION
Peptide Drug Conjugate
Second Generation pre|CISION PDC are
FAP-enabled warheads with two advances over Generation One: (1) PK
extension capabilities with an added capping group and (2)
additional linkers inserted between the warhead and preCISION
peptide allowing an adjustment to the rate of warhead cleavage
(kcat/Km). These advances in the preCISION pipeline allow tailored
delivery of warheads to the tumor microenvironment.
Third Generation pre|CISION™
Biologic Drug Conjugate
Our Third Generation
pre|CISIONTM biologic conjugate drug is a FAP-enabled
maleimide / cysteine conjugation to a biologic, in this case our
proprietary Affimer® molecule or a traditional antibody
conjugate. The warhead is delivered intratumorally in a sustained
release mechanism.
The progress in the Second
Generation and Third Generation programs will be detailed on 30
October 2024 at our live R&D Spotlight event, being held in
London
AVA6000 Phase 1a Clinical trial data summary
Efficacy
data
The Phase 1 clinical trial data have
been reported at two medical congresses (AACR, April 2024 and ESMO,
September 2024). In the most recent report, 57 patients were
treated in two dose escalation arms of the Phase 1 trial. Cancer
indications were categorized as FAPhigh (soft
tissue sarcoma and salivary gland cancer) or
FAPmid (pancreatic cancer, colorectal cancer, lung
cancer and other malignancies). Patients with indications
considered FAPlow were excluded from the
trial.
· Among
patients with FAPhigh cancers (n=23), three partial
responses and four minor responses were observed,
including:
o A
durable, confirmed partial response at 12 weeks in a 79-year-old
male patient with progressive salivary gland cancer (SGC). After an
initial minor response (22% reduction in SLD), the observed durable
PR is ongoing despite patient discontinuation due to lifetime
maximum dosing (duration of response >18 weeks, with 46.2%
reduction in SLD). Tumor histology demonstrates no expression of
FAP in tumor cells with only stromal cell expression
noted.
o A
minor response (14.6% reduction in SLD at first 8-week scan) in a
65-year-old female patient with SGC who remains on the trial. This
patient was dosed in the 250 mg/m2 Q2W cohort of the trial and had
progression on a prior line of therapy. This patient continues on
study. Similarly, the histology shows FAP-negative tumor cells and
FAP expression only in the stromal compartment.
o A
partial response (40.5% reduction in SLD) in a 55-year-old male
patient with dedifferentiated liposarcoma (DDLPS) who had
progressed on two prior lines of therapy in the metastatic setting.
After an initial minor response this patient experienced a partial
response with SLD change of -40.6%. The patient experienced new
lesions at their latest follow-up scan.
o A
partial response in a 60-year-old male with undifferentiated
pleomorphic sarcoma (UPS) with one prior line of therapy in the
metastatic setting (reported in April 2024 at the AACR
conference). This patient remains on study at the time of the
data cutoff with a duration of response of >55
weeks.
· Eight
patients remain on study in the Phase 1a cohorts with a diagnosis
of FAPhigh cancers.
· Among
patients with high grade sarcomas (UPS and DDLPS), two partial
responses have been observed among the 6 patients enrolled.
Similarly, one partial response and one minor response have been
observed with additional evidence of tumor shrinkage among ten
patients with salivary gland cancers with multiple patients still
ongoing in their treatment.
Among patients with
FAPmid cancers (n=26), two minor responses were
observed.
Safety and Pharmacokinetics
Data
Treatment with AVA6000 continues to
be well-tolerated with the addition of the Q2W dosing regimen (Arm
2) with a favorable safety profile and reduction in severe and
mild-to-moderate treatment-emergent toxicities as compared
with conventional dose doxorubicin. A maximum tolerated dose has
not been identified in either arm of the trial. The observed
cardiac safety profile of AVA6000 compares favorably to
conventional dose doxorubicin, with low incidence of left
ventricular ejection fraction (LVEF) changes (LVEF dysfunction
12.3% v. 48.4% with conventional doxorubicin1,2) and no
grade 3 or 4 severe cardiac events reported. No new dose limiting
toxicities were observed and neither arm has determined an
MTD.
Treatment with AVA6000 results in
multiple fundamental changes in the pharmacokinetics (PK) of
released doxorubicin (compared to conventional doxorubicin
administration3) including extension of the plasma
half-life and reduction in both the Cmax and volume of
distribution.
Tumor biopsies taken 24 hours after
the first dose of AVA6000 reveal additional insights regarding the
role of FAP, in that the level of FAP positivity in the tumor
appears not to correlate with the level of released doxorubicin in
the TME (n=9). This lack of correlation indicates that lower
levels of FAP activity are sufficient for warhead release.
These data provide evidence for targeting of the
FAPmid tumor types with novel warheads.
The data emerging from the AVA6000
Phase 1a study have validated the performance of the pre|CISION™
platform, opening the opportunity to apply it to a broad range of
anticancer agents.
Diagnostics Division Update
The Diagnostics Division has
continued to grow revenues, with the sale of Coris products through
the Launch Diagnostics ('Launch') distribution channels and the
expansion of Launch into the German market. The Company streamlined
its operations during the period by closing its Wetherby facility,
having transferred product development activities to the Coris
operations in Belgium. Revenues have grown to £11.2 million in the
six-month period ended 30 June 2024, from £9.9 million in the same
period to 30 June 2023. This has led to an improvement in adjusted
EBITDA to £0.1 million in the six-month period ended 30 June 2024,
from an EBITDA loss of £0.4 million in the comparative period in
2023. The Company expects the Diagnostics
Division to remain adjusted EBITDA positive in H2 2024 and be cash
flow positive in 2025.
As previously announced, the Company
has been reviewing strategic options in relation to its Diagnostics
Division to ensure it maximizes value for shareholders. A process
to divest the division is ongoing and indicative offers have
started to be received.
Funding
The equity fundraise in March 2024
significantly extended the Group's cash runway and cash resources
are being managed prudently. The Group continues to explore all
available pathways to provide optionality for financing its
clinical therapeutics programs over the longer term, including
divestment of the Diagnostics Division, partnering, attracting
global specialist biotech investors and potentially a NASDAQ
dual-listing, on which further updates will be provided in the
coming months.
Financial Review
Revenue
Revenue for the six months ended 30
June 2024 reduced to £11.26 million compared to the same period in
2023 (H1 2023: £11.89 million; FY 2023: £23.25 million).
Revenue contribution from the
Therapeutics Division reduced to £0.06 million (H1 2023: £1.99
million; FY 2023: £2.06 million) due to the milestone achieved in
H1 2023 in the collaboration with AffyXell (which lead to
additional equity in the joint venture). Revenue from the
Diagnostics Division increased to £11.20 million (H1 2023: £9.90
million; FY 2023: £21.19 million) as the reporting period included
a full six months trading for both Launch Diagnostics ("Launch")
and Coris BioConcept ("Coris").
Research costs and selling,
general and administrative costs
Research costs relate predominantly
to the clinical and pre-clinical development work of the
pre|CISION™ therapeutics programs in the Therapeutics Division and
amounted to £6.75 million (H1 2023: £6.01 million; FY 2023: £14.53
million).
Selling, general and administrative
costs have increased to £9.37 million (H1 2023: £8.65 million; FY
2023: £16.86 million), reflecting a full period of ownership of
Coris relative to the one month contribution in H1 2023.
Adjusted
EBITDA
The Consolidated Statement of Profit
or Loss shows an Adjusted EBITDA loss position (before
non-recurring and non-cash items) of £11.10 million (H1 2023: £7.91
million; FY 2023: £20.14 million).
Other costs and
charges
Exceptional expenses of £1.52
million were incurred (H1 2023: £nil; FY 2023: £nil) relating to
both the closure of the Wetherby laboratory within the Avacta
Diagnostics division, and the replacement of the Group's prior
Chief Executive Officer.
Depreciation has increased to £1.39
million (H1 2023: £1.28 million; FY 2023: £2.64 million).
Amortization expense has increased to £0.58 million (H1 2023: £0.44
million; FY 2023: £1.03 million).
The share of the costs from the
AffyXell joint venture in the period was £0.40 million (H1 2023:
£0.42 million; FY 2023: £0.85 million). Avacta's shareholding in
AffyXell remained at 25% at the current and comparative
period-ends, reducing to 21% post period-end following completion
of a funding round by AffyXell which the Group did not participate
in.
No further acquisition-related
expenses were incurred during the period (H1 2023: £0.28 million;
FY 2023: £0.28 million).
Share-based payment charges have
increased to £2.26 million (H1 2023: £1.55 million; FY 2023: £2.91
million).
Operating
loss
The Group's operating loss increased
to £17.25 million (H1 2023: £11.88 million; FY 2023: £28.36
million).
Convertible bond
costs
During the reporting period there
have been two quarterly amortization repayments (of £2.55 million
each in equity) which reduces the original £55.00 million senior
unsecured convertible bonds issued in October 2022 at par value to
£35.70 million.
Subsequent to the period end in July
2024 a third quarterly amortization of £2.55 million (in addition
to £0.58 million of interest) was settled in cash leaving the
remaining balance of bonds at par value of £33.15 million.
The Board carefully
considers each payment separately as it arises, taking into account
a range of factors including the Company's cash runway, shareholder
dilution and broader business prospects.
The bond agreement contains embedded
derivatives in conjunction with an ordinary host debt liability. As
a result, the convertible bonds are shown in the Consolidated
Statement of Financial Position in two separate components, being
'Convertible bond - debt' and 'Convertible bond - derivative'. The
derivative element has been measured at fair value using a
Monte-Carlo option pricing model, which estimates the fair value
based on the probability-weighted present value of expected future
investment returns, considering each of the possible outcomes
available to the bondholders.
The derivative element, taking into
account the amortizations in the period, was revalued as at 30 June
2024 at £8.37 million (30 June 2023: £28.90 million; 31 December
2023: £18.33 million), which has resulted in a credit to the
statement of profit or loss on revaluation of derivative within the
period of £9.96 million (H1 2023: £5.86 million; FY 2023: £15.68
million).
The debt element of the bond has
reduced to £15.33 million (H1 2023: £15.68 million; 31 December
2023: £16.10 million), with an associated non-cash interest expense
of £6.35 million (H1 2023: £6.85 million; FY 2023: £14.73
million).
Loss for the
period
The reported loss after taxation was
£12.47 million (H1 2023: £11.53 million; FY 2023: £24.95
million).
The basic loss per share was 3.82p
(H1 2023: 4.28p; FY 2023: 9.15p).
Cash flow
The Group reported cash and
cash-equivalent balances of £32.53 million (30 June 2023: £25.97
million; 31 December 2023: £16.63 million).
There was a cash outflow from
operations and working capital movements of £12.84 million (H1
2023: £11.19 million; FY 2023: £21.85 million) and an outflow from
investing activities of £0.80 million from capital expenditure (H1
2023: outflow of £7.35 million; FY 2023: outflow of £9.00 million).
The significant decrease in the outflow is due to the acquisition
of tangible and intangible assets acquired through the Coris
acquisition in May 2023.
Cash inflow from financing
activities, being net proceeds from the issue of share capital and
share options, net of the principal elements of lease payments
amounted to £29.09 million (H1 2023: outflow of £0.56
million; FY 2023: outflow of £1.30 million). The cash inflow in the
period related to the equity fundraise in March 2024 which
generated a net inflow of £29.40 million.
Financial
position
Net assets as at 30 June 2024 were
£48.16 million (30 June 2023: £22.74 million; 31 December 2023:
£21.81 million) of which cash and cash equivalents amounted to
£32.53 million (30 June 2023: £25.97 million; 31 December 2023:
£16.63 million).
Right-of-use assets amounting to
£6.27 million (30 June 2023: £6.18 million; 31 December 2023: £7.07
million) are recognized in relation to the Group's leasehold
properties and other leased assets, together with a corresponding
lease liability of £6.60 million (30 June 2023: £6.10 million; 31
December 2023: £7.03 million).
Intangible assets decreased to
£30.18 million (30 June 2023: £33.46 million; 31 December 2023:
£30.84 million) due to amortization of intangible assets acquired
through the Launch and Coris acquisitions.
Liabilities in relation to the
unsecured senior convertible bonds issued in October 2022 result in
a fair value of the derivative element of £8.37 million (30 June
2023: £28.90; 31 December 2023: £18.33 million). The convertible
bond debt element at 30 June 2023 was £15.33 million (30 June 2023:
£15.68; 31 December 2023: £16.10 million).
Events after the reporting period
In July 2024, settlement in cash of
the quarterly amortization payment in respect of the unsecured
convertible bonds, comprising principal of £2.55 million and
interest of £0.58 million.
In September 2024, AffyXell
Therapeutics Co., Ltd ('AffyXell'), an associate of the Group,
successfully completed a funding round, thereby reducing the
Group's shareholding to 21%. Avacta did not participate in the
funding round.
The Group has announced its
intention to divest the Diagnostics Division, at this stage of the
divestment process an estimate of the effect on the financial
statements cannot be made.
Shaun Chilton
|
Christina
Coughlin
|
Chairman
|
Chief Executive
Officer
|
30 September 2024
|
30
September 2024
|
|
|
Condensed Consolidated Statement of Profit or
Loss
for
the 6 months ended 30 June 2024
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
Notes
|
|
6 months
ended
30 June
2024
|
|
6 months
ended 30 June 2023
|
|
Year
ended
31
December 2023
|
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
|
Revenue
|
4
|
11,261
|
|
11,889
|
|
23,247
|
Cost of sales
|
|
(6,240)
|
|
(5,141)
|
|
(12,003)
|
Gross profit
|
|
5,021
|
|
6,748
|
|
11,244
|
|
|
|
|
|
|
|
Research costs
|
|
(6,746)
|
|
(6,009)
|
|
(14,529)
|
Selling, general and administrative
expenses
|
|
(9,373)
|
|
(8,646)
|
|
(16,855)
|
Adjusted EBITDA
|
|
(11,098)
|
|
(7,907)
|
|
(20,140)
|
Exceptional expenses
|
|
(1,521)
|
|
-
|
|
-
|
Amortization expense
|
|
(575)
|
|
(437)
|
|
(1,033)
|
Impairment charge
|
|
-
|
|
-
|
|
(512)
|
Share of loss of
associate
|
|
(404)
|
|
(424)
|
|
(847)
|
Acquisition related
expenses
|
|
-
|
|
(282)
|
|
(282)
|
Depreciation expense
|
|
(1,393)
|
|
(1,276)
|
|
(2,638)
|
Share-based payment
charge
|
|
(2,262)
|
|
(1,553)
|
|
(2,906)
|
Operating loss
|
|
(17,253)
|
|
(11,879)
|
|
(28,358)
|
|
|
|
|
|
|
|
Convertible bond - interest
expense
|
6
|
(6,345)
|
|
(6,847)
|
|
(14,730)
|
Convertible bond - revaluation of
derivative
|
6
|
9,955
|
|
5,862
|
|
15,684
|
Finance income
|
|
420
|
|
331
|
|
655
|
Finance costs
|
|
(213)
|
|
(268)
|
|
(568)
|
Loss before tax
|
|
(13,436)
|
|
(12,801)
|
|
(27,317)
|
Taxation
|
|
964
|
|
1,269
|
|
2,370
|
Loss for the period
|
|
(12,472)
|
|
(11,532)
|
|
(24,947)
|
|
|
|
|
|
|
|
Foreign operations - foreign
currency translation differences
|
|
(349)
|
|
(179)
|
|
1
|
Other comprehensive income
|
|
(12,821)
|
|
(11,711)
|
|
(24,946)
|
|
|
|
|
|
|
|
Total comprehensive loss for the period
|
|
(12,821)
|
|
(11,711)
|
|
(24,946)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
Basic and diluted
|
|
(3.82p)
|
|
(4.28p)
|
|
(9.15p)
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Financial
Position
as
at 30 June 2024
|
|
Unaudited as
at
|
|
Unaudited as
at
|
|
Audited as
at
|
|
|
30 June
2024
|
|
30 June
2023
|
|
31
December 2023
|
|
|
£000
|
|
£000
|
|
£000
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
3,415
|
|
2,814
|
|
2,921
|
Right-of-use assets
|
|
6,270
|
|
6,175
|
|
7,065
|
Investment in associate
|
|
3,731
|
|
4,539
|
|
4,079
|
Intangible assets
Deferred tax asset
|
|
30,181
247
|
|
33,455
-
|
|
30,837
253
|
Non-current assets
|
|
43,844
|
|
46,983
|
|
45,155
|
|
|
|
|
|
|
|
Inventories
|
|
2,612
|
|
3,052
|
|
2,585
|
Trade and other
receivables
|
|
7,589
|
|
6,770
|
|
6,585
|
Income tax receivable
|
|
2,717
|
|
4,975
|
|
2,239
|
Cash and cash equivalents
|
|
32,532
|
|
25,968
|
|
16,627
|
|
|
|
|
|
|
|
Current assets
|
|
45,450
|
|
40,765
|
|
28,036
|
|
|
|
|
|
|
|
Total assets
|
|
89,294
|
|
87,748
|
|
73,191
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liabilities
|
|
(5,299)
|
|
(4,703)
|
|
(5,735)
|
Financing liabilities
Provisions
|
|
(166)
(272)
|
|
(238)
-
|
|
(219)
-
|
Deferred tax
|
|
(128)
|
|
(2,952)
|
|
(323)
|
Non-current liabilities
|
|
(5,865)
|
|
(7,893)
|
|
(6,277)
|
|
|
|
|
|
|
|
Trade and other payables
|
|
(10,132)
|
|
(10,805)
|
|
(9,225)
|
Lease liabilities
|
|
(1,300)
|
|
(1,394)
|
|
(1,295)
|
Financing liabilities
|
|
(134)
|
|
(339)
|
|
(166)
|
Convertible bond - debt
|
6
|
(15,331)
|
|
(15,679)
|
|
(16,098)
|
Convertible bond -
derivative
|
6
|
(8,370)
|
|
(28,900)
|
|
(18,325)
|
Current liabilities
|
|
(35,267)
|
|
(57,117)
|
|
(45,109)
|
|
|
|
|
|
|
|
Total liabilities
|
|
(41,132)
|
|
(65,010)
|
|
(51,386)
|
|
|
|
|
|
|
|
Net
assets
|
|
48,162
|
|
22,738
|
|
21,805
|
Equity attributable to equity holders of the
Company
|
|
|
|
|
|
|
Share capital
|
7
|
36,185
|
|
27,629
|
|
28,501
|
Share premium
|
|
112,462
|
|
75,698
|
|
83,220
|
Reserves
|
|
(4,322)
|
|
(4,371)
|
|
(4,163)
|
Retained earnings
|
|
(96,163)
|
|
(76,218)
|
|
(85,753)
|
|
|
|
|
|
|
|
Total equity
|
|
48,162
|
|
22,738
|
|
21,805
|
Total equity is wholly attributable
to equity holders of the parent Company.
Approved by the Board and authorized
for issue on 30 September 2024.
Shaun Chilton
|
Dr Christina
Coughlin
|
Chairman
|
Chief Executive
Officer
|
Condensed Consolidated Statement of Changes in
Equity
for
the 6 months ended 30 June 2024
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|
Share
Capital
|
Share
premium
|
Other
reserve
|
Translation reserve
|
Reserve
for own shares
|
Retained
earnings
|
Total
Equity
|
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
At
1 January 2023
|
26,685
|
62,184
|
(1,729)
|
50
|
(2,755)
|
(63,440)
|
20,995
|
|
|
|
|
|
|
|
|
Loss for the period
|
-
|
-
|
-
|
|
-
|
(11,532)
|
(11,532)
|
Other comprehensive income for the
period
|
-
|
-
|
-
|
(179)
|
-
|
-
|
(179)
|
Total comprehensive loss for the period
|
-
|
-
|
-
|
(179)
|
-
|
(11,532)
|
(11,711)
|
|
|
|
|
|
|
|
|
Transactions with owners of the
company:
|
|
|
|
|
|
|
Exercise of options
|
107
|
117
|
-
|
-
|
-
|
-
|
224
|
Transfer of own shares
|
-
|
-
|
-
|
-
|
242
|
(242)
|
-
|
Convertible bond - issue of
shares
|
837
|
13,397
|
-
|
-
|
-
|
-
|
14,234
|
Equity-settled share based
payment
|
-
|
-
|
-
|
-
|
-
|
1,553
|
1,553
|
|
|
|
|
|
|
|
|
At
30 June 2023
|
27,629
|
75,698
|
(1,729)
|
(129)
|
(2,513)
|
(73,661)
|
25,295
|
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
(13,415)
|
(13,415)
|
Other comprehensive income for the
period
|
-
|
-
|
-
|
180
|
-
|
-
|
180
|
Total comprehensive loss for the period
|
-
|
-
|
-
|
180
|
-
|
(13,415)
|
(13,235)
|
|
|
|
|
|
|
|
|
Transactions with owners of the company:
|
|
|
|
|
|
|
Convertible bond - issue of
shares
|
726
|
7,493
|
-
|
-
|
-
|
-
|
8,219
|
Exercise of options
|
146
|
29
|
-
|
-
|
-
|
-
|
175
|
Transfer of own shares
|
-
|
-
|
-
|
-
|
28
|
(28)
|
-
|
Equity-settled share based
payment
|
-
|
-
|
-
|
-
|
-
|
1,351
|
1,351
|
|
|
|
|
|
|
|
|
At
31 December 2023
|
28,501
|
83,220
|
(1,729)
|
51
|
(2,485)
|
(85,753)
|
21,805
|
|
|
|
|
|
|
|
|
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
(12,472)
|
(12,472)
|
Other comprehensive income for the
period
|
-
|
-
|
-
|
(349)
|
-
|
-
|
(349)
|
Total comprehensive loss for the period
|
-
|
-
|
-
|
(349)
|
-
|
(12,472)
|
(12,821)
|
|
|
|
|
|
|
|
|
Transactions with owners of the company:
|
|
|
|
|
|
|
Issue of shares
|
6,230
|
23,174
|
-
|
-
|
-
|
-
|
29,404
|
Exercise of options
|
357
|
43
|
-
|
-
|
-
|
-
|
400
|
Transfer of own shares
|
-
|
-
|
-
|
-
|
200
|
(200)
|
-
|
Convertible bond - issue of
shares
|
1,096
|
6,016
|
-
|
-
|
-
|
-
|
7,112
|
Own shares acquired
|
1
|
9
|
-
|
-
|
(10)
|
-
|
-
|
Equity-settled share based
payment
|
-
|
-
|
-
|
-
|
-
|
2,262
|
2,262
|
At
30 June 2024
|
36,185
|
112,462
|
(1,729)
|
(298)
|
(2,295)
|
(96,163)
|
48,162
|
Condensed Consolidated Statement of Cash
Flows
for
the 6 months ended 30 June 2024
|
Unaudited
|
|
Unaudited
|
|
Audited
|
Note
|
6 months
ended
30 June
2024
|
|
6 months
ended
30 June
2023
|
|
Year
ended
31
December
2023
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
Operating cash outflow from
operations
8
|
(12,839)
|
|
(11,194)
|
|
(21,845)
|
|
|
|
|
|
|
Interest received
|
420
|
|
331
|
|
655
|
Interest elements of lease
payments
|
(193)
|
|
(128)
|
|
(304)
|
Interest elements of financing
liabilities
|
(6)
|
|
-
|
|
(11)
|
Income tax received
|
296
|
|
2,942
|
|
6,633
|
Net
cash used in operating activities
|
(12,322)
|
|
(8,049)
|
|
(14,872)
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchase of plant and
equipment
|
(702)
|
|
(406)
|
|
(1,124)
|
Proceeds from sale of plant and
equipment
|
86
|
|
-
|
|
60
|
Acquisition of right of use
asset
|
(6)
|
|
-
|
|
(42)
|
Acquisition of subsidiary, net of
cash disposed of
|
-
|
|
(6,896)
|
|
(6,931)
|
Purchase of intangible
assets
|
(173)
|
|
(49)
|
|
(96)
|
Payment of deferred consideration on
past acquisition
|
-
|
|
-
|
|
(868)
|
Net
cash used in investing activities
|
(795)
|
|
(7,351)
|
|
(9,001)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from exercise of share
options
|
401
|
|
224
|
|
398
|
Repayment of financing
liabilities
|
(77)
|
|
(49)
|
|
(246)
|
Principal elements of lease
payments
|
(636)
|
|
(736)
|
|
(1,450)
|
Proceeds from issue of share
capital
|
31,148
|
|
-
|
|
-
|
Transaction costs relating to the
issue of share capital
|
(1,744)
|
|
-
|
|
-
|
Net
cash flow from financing activities
|
29,092
|
|
(561)
|
|
(1,298)
|
|
|
|
|
|
|
Net increase/(decrease) in cash and
cash equivalents
|
15,975
|
|
(15,961)
|
|
(25,171)
|
Cash and cash equivalents at the
beginning of the period
|
16,627
|
|
41,781
|
|
41,781
|
Effect of movements in exchange
rates on cash held
|
(70)
|
|
148
|
|
17
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the
period
|
32,532
|
|
25,968
|
|
16,627
|
Notes to the unaudited condensed consolidated financial
statements
for
the 6 months ended 30 June 2024
1) Basis of
preparation
Avacta Group plc ('the Company') is
a company incorporated in England and Wales under the Companies Act
2006. These condensed consolidated interim financial statements
('interim financial statements') as at and for the 6 months ended
30 June 2024 comprise the Company and its subsidiaries (together
referred to as 'the Group').
The interim financial statements for
the 6 months ended 30 June 2024 are unaudited. This information
does not constitute statutory accounts as defined in Section 435 of
the Companies Act 2006. The financial figures for the year ended 31
December 2023, as set out in this report, do not constitute
statutory accounts but are derived from the statutory accounts for
that financial year. The statutory accounts for the year ended 31
December 2023 were prepared under IFRS and have been delivered to
the Registrar of Companies. The auditors reported on those
accounts. Their report was unqualified, did not draw attention to
any matters by way of emphasis and did not include a statement
under Section 498 of the Companies Act 2006.
The Board confirms that, to the best
of its knowledge, these condensed financial statements have been
prepared in accordance with IAS34 Interim Financial Reporting and should
be read in conjunction with the Group's last annual consolidated
financial statements as at and for the year ended 31 December 2023
('last annual financial statements'). They do not include all of
the financial information required for a complete set of IFRS
financial statements. However, selected explanatory notes are
included to explain events and transactions that are significant to
an understanding of the changes in the Group's financial position
and performance since the last annual financial
statements.
The Group's operations and results
are not impacted by seasonal fluctuations.
The Board approved these interim
financial statements for issue on 30 September 2024.
2) Use of judgements and estimates and
significant accounting policies
The preparation of the interim
financial statements requires management to make judgements and
estimates that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Although these estimates are based on management's best knowledge
of the amount, events or actions, actual events ultimately may
differ from those estimates.
The significant judgements made by
management in applying the Group's accounting policies, and the key
sources of estimation uncertainty were the same as those described
in the last annual financial statements with the exception of those
discussed below:
- Presentation of discontinued operations - a judgement exists
in relation to whether the Diagnostics division should be presented
as a discontinued operation and a held for sale asset, given the
announced divestment process. A sale must be deemed highly probable
for an operation to be disclosed as such. Given the early stage of
the divestment process this was not judged to be the case at 30
June 2024, but had been judged to have become so by 30 September
2024 and as such has been disclosed as a subsequent event. A
similar judgement must also be made in relation to whether the
Wetherby diagnostics laboratory, closed during the period,
represented a separate major line of business or geographical area
of operations and as such should be presented as a discontinued
operation rather than as an exceptional expense. Due to the close
interactions between the laboratory and other product development
operations within the wider Diagnostics division, it has been
judged that the Wetherby laboratory is not significantly distinct
enough to warrant presentation as a discontinued
operation.
The accounting policies applied in
these interim financial statements are the same as those applied in
the Group's consolidated financial statements as at and for the
year ended 31 December 2023. A number of new standards were
effective from 1 January 2024 but they do not have a material
effect on the Group's financial statements.
3) Segmental
reporting
The Group has two distinct operating
segments: Diagnostics and Therapeutics. These are the reportable
operating segments in accordance with IFRS 8 Operating Segments. The Directors
recognize that the operations of the Group are dynamic and
therefore this position will be monitored as the Group
develops.
Segment revenue represents revenue
from external customers arising from sale of goods and services,
plus inter-segment revenues. Inter-segment transactions are priced
on an arm's length basis. Segment results, assets and liabilities
include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis.
The Group's revenue from continuing
operations to destinations outside the UK amounted to 39% (6 months
to 30 June 2023: 47%; year to 31 December 2023: 45%). The revenue
analysis below is based on the country of registration of the
customer:
|
|
6 months ended 30 June
2024
|
|
6 months
ended 30 June 2023
|
|
Year ended
31 December 2023
|
£000
|
|
|
|
|
|
|
UK
|
|
6,885
|
|
6,323
|
|
12,750
|
France
|
|
2,846
|
|
2,248
|
|
4,120
|
Rest of Europe
|
|
960
|
|
1,285
|
|
3,688
|
North America
|
|
-
|
|
21
|
|
21
|
South Korea
|
|
56
|
|
1,991
|
|
2,055
|
Rest of World
|
|
514
|
|
21
|
|
613
|
|
|
11,261
|
|
11,889
|
|
23,247
|
During the six month period ended 30
June 2024, there were no transactions with a single external
customer that exceeded 10% of the Group's revenue, being
£1,126,000.
During the six month period ended 30
June 2023, transaction with one external customer in the
Therapeutics segment, amounted individually to 10% or more of the
Group's revenue, being £1,991,000.
During the year 31 December 2023,
transactions with one external customer in the Therapeutics segment
amounted individually to 10% or more of the Group's revenues from
continuing operations, being £2,054,000.
Operating segment analysis for the six months ended 30 June
2024
|
Diagnostics
|
Therapeutics
|
Central
overheads1
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
Revenue
|
11,205
|
56
|
-
|
11,261
|
Cost of goods sold
|
(6,240)
|
-
|
-
|
(6,240)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
Gross profit
|
4,965
|
56
|
-
|
5,021
|
Research costs
|
(197)
|
(6,549)
|
-
|
(6,746)
|
Selling, general and administrative
expenses
|
(4,689)
|
(1,330)
|
(3,354)
|
(9,373)
|
Adjusted EBITDA
|
-------------
79
|
-------------
(7,823)
|
-------------
(3,354)
|
-------------
(11,098)
|
Exceptional expenses
|
(1,028)
|
-
|
(493)
|
(1,521)
|
Depreciation expense
|
(763)
|
(617)
|
(13)
|
(1,393)
|
Amortization expense
|
(569)
|
(5)
|
(1)
|
(575)
|
Share of loss of
associate
|
-
|
(404)
|
-
|
(404)
|
Share-based payment
expense
|
(120)
|
(577)
|
(1,565)
|
(2,262)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
Segment operating loss
|
(2,401)
|
(9,426)
|
(5,426)
|
(17,253)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
1Central overheads, which relate to operations of the Group
functions, are not allocated to the operating segments.
Operating profit/loss is the measure
of profit or loss regularly reviewed by the Board. Other items
comprising the Group's loss before tax are not monitored on a
segmental basis.
The information reported to the
Board does not include balance sheet information at the segment
level.
Operating segment analysis for the six months ended 30 June
2023
|
Diagnostics
|
Therapeutics
|
Central
overheads1
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
Revenue
|
9,898
|
1,991
|
-
|
11,889
|
Cost of goods sold
|
(5,133)
|
(8)
|
-
|
(5,141)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
Gross profit
|
4,765
|
1,983
|
-
|
6,748
|
Research costs
|
(663)
|
(5,346)
|
-
|
(6,009)
|
Selling, general and administrative
expenses
|
(4,529)
|
(1,185)
|
(2,932)
|
(8,646)
|
Adjusted EBITDA
|
-------------
(427)
|
-------------
(4,548)
|
-------------
(2,932)
|
-------------
(7,907)
|
Depreciation expense
|
(640)
|
(632)
|
(4)
|
(1,276)
|
Amortization expense
|
(431)
|
(4)
|
(2)
|
(437)
|
Share of loss of
associate
|
-
|
(424)
|
-
|
(424)
|
Acquisition related
expenses
|
-
|
-
|
(282)
|
(282)
|
Share-based payment
expense
|
(403)
|
(600)
|
(550)
|
(1,553)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
Segment operating loss
|
(1,901)
|
(6,208)
|
(3,770)
|
(11,879)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
1Central overheads, which relate to operations of the Group
functions, are not allocated to the operating segments.
Operating profit/loss is the measure
of profit or loss regularly reviewed by the Board. Other items
comprising the Group's loss before tax are not monitored on a
segmental basis.
The information reported to the
Board does not include balance sheet information at the segment
level.
Operating segment analysis for the year ended 31 December
2023
|
Diagnostics
|
Therapeutics
|
Central
overheads1
|
Total
|
|
£000
|
£000
|
£000
|
£000
|
Revenue
|
21,192
|
2,055
|
-
|
23,247
|
Cost of goods sold
|
(11,988)
|
(15)
|
-
|
(12,003)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
Gross profit
|
9,204
|
2,040
|
-
|
11,244
|
Research costs
|
(1,421)
|
(13,108)
|
-
|
(14,529)
|
Selling, general and administrative
expenses
|
(8,963)
|
(2,489)
|
(5,403)
|
(16,855)
|
Adjusted EBITDA
|
-------------
(1,180)
|
-------------
(13,557)
|
-------------
(5,403)
|
-------------
(20,140)
|
Impairment charge
|
(512)
|
-
|
-
|
(512)
|
Depreciation expense
|
(1,359)
|
(1,271)
|
(8)
|
(2,638)
|
Amortization expense
|
(1,020)
|
(10)
|
(3)
|
(1,033)
|
Share of loss of
associate
|
-
|
(847)
|
-
|
(847)
|
Acquisition related
expenses
|
-
|
-
|
(282)
|
(282)
|
Share-based payment
expense
|
(359)
|
(1,739)
|
(808)
|
(2,906)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
Segment operating loss
|
(4,430)
|
(17,424)
|
(6,504)
|
(28,358)
|
|
-------------
|
-------------
|
-------------
|
-------------
|
1Central overheads, which relate to operations of the Group
functions, are not allocated to the operating segments.
Operating profit/loss is the measure
of profit or loss regularly reviewed by the Board. Other items
comprising the Group's loss before tax are not monitored on a
segmental basis.
The information reported to the
Board does not include balance sheet information at the segment
level.
4) Revenue
The Group's operations and main
revenue streams are those described in the last annual financial
statements. The Group's revenue is all derived from contracts with
customers.
Disaggregation of revenue
In the following table, revenue is
disaggregated by its nature. The table also includes a
reconciliation of the disaggregated revenue with the Group's
reportable segments (see Note 3).
Six
months ended 30 June 2024
£'000
|
Diagnostics
|
Therapeutics
|
Total
|
Nature of revenue
|
|
|
|
Sale of goods
|
10,506
|
-
|
10,506
|
Provision of services
|
652
|
-
|
652
|
Licence-related income
|
47
|
56
|
103
|
|
11,205
|
56
|
11,261
|
Six
months ended 30 June 2023
£'000
|
Diagnostics
|
Therapeutics
|
Total
|
Nature of revenue
|
|
|
|
Sale of goods
|
9,379
|
-
|
9,379
|
Provision of services
|
519
|
3
|
522
|
Licence-related income
|
-
|
1,988
|
1,988
|
|
9,898
|
1,991
|
11,889
|
Year ended 31 December 2023
£'000
|
Diagnostics
|
Therapeutics
|
Continuing
operations
|
Nature of revenue
|
|
|
|
Sale of goods
|
20,019
|
-
|
20,019
|
Provision of services
|
1,173
|
3
|
1,176
|
Licence-related income
|
-
|
2,052
|
2,052
|
|
21,192
|
2,055
|
23,247
|
5) Earnings per
share
|
Unaudited
|
|
Unaudited
|
|
Audited
|
£'000
|
6 months ended 30 June
2024
|
|
6 months
ended 30 June 2023
|
|
Year ended
31 December 2023
|
|
|
|
|
|
|
Loss for the period
|
(12,472)
|
|
(11,532)
|
|
(24,947)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
(number)
|
326,900,635
|
|
269,159,631
|
|
272,683,485
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic and diluted loss per ordinary share
|
(3.82)
|
|
(4.28)
|
|
(9.15)
|
-
|
|
|
|
|
|
6) Convertible bond
In October 2022, the Group issued
senior unsecured convertible bonds ('the Bonds') of £55 million to
a fund advised by Heights Capital Ireland LLC, a global equity and
equity-linked focussed investor.
The Bonds were issued at 95% par
value with total net proceeds of £52.25 million, and accrue
interest at an annual rate of 6.5% payable quarterly in
arrears.
The Bonds contain various conversion
and redemption features. The Bonds have a maturity of five years,
and are repayable in 20 quarterly amortization repayments, of
principal and interest over the five-year term, in either cash or
in new ordinary shares at the Group's option. If in shares, the
repayment is at the lower of the conversion price (88.72p) or a 10%
discount to the volume weighted average price ('VWAP') in the five-
or ten-day trading period prior to election date. The conversion
price reset downwards from the original 118.75p at the Reset Date
on 20 April 2024. There is a Reset Clawback Period in place until
20 January 2025 during which, if the VWAP of the Company's Ordinary
Shares on each of at least 20 dealing days in any period of 30
consecutive dealing days is greater than 130% of the pre-reset
conversion price, then the conversion price will be restored,
thereby reversing the effect of the reset made on 20 April 2024.
Additionally, the bondholder has the option to partially convert
the convertible bonds at their discretion which has occurred twice
to date, on 10 February 2023 and 20 September 2023 where £2.85
million and £0.85 million of principal was settled
respectively.
The bond agreement contains embedded
derivatives in conjunction with an ordinary host debt liability. As
a result, the convertible bonds are shown in the Consolidated
Statement of Financial Position in two separate components, being
'Convertible bond - debt' and 'Convertible bond - derivative'. At
issuance, the total inception value was £52,500,000, being the 5%
issue discount to the principal amount of the Bonds, with the
initial carrying amount of the debt liability element being the
difference between this inception value of the convertible bond and
the fair value at inception of the derivative element. Given the
option of the bondholder to convert the bond at their discretion,
the debt and derivative liability elements are classified as
current liabilities.
The derivative element has been
measured at fair value using a Monte-Carlo option pricing model,
which estimates the fair value based on the probability-weighted
present value of expected future investment returns, considering
each of the possible outcomes available to the bondholders. This
therefore falls under Level 3 of the fair value hierarchy.
Significant assumptions used in the fair value measurement include
the volatility rate. The table below documents the impact on
changes in volatility by 25% on the fair value
measurement.
Volatility (%)
|
83
|
108
|
58
|
Convertible bond - derivative liability
(£'000)
|
8,370
|
9,410
|
7,400
|
The host debt liability is measured
at amortized cost, being adjusted to reflect revisions in estimated
cashflows arising from early conversion events or settlements of
quarterly amortization events in shares.
During the 6 month period ended 30
June 2024, the following conversion events occurred:
- On 22 January 2024,
3,425,373 new ordinary shares were issued in settlement of the
quarterly principal of £2.55 million and interest repayment of
£0.66 million.
- On 20 April 2024,
7,529,825 new ordinary shares were issued in settlement of the
quarterly principal of £2.55 million and interest repayment of
£0.62 million, reducing the principal remaining to £35.70
million.
|
Convertible bond -
derivative
|
Convertible bond -
debt
|
|
£000
|
£000
|
At 1 January 2023
|
39,100
|
18,729
|
Settlement of liability through
issue of shares
|
(4,338)
|
(9,897)
|
Interest expense
|
-
|
6,847
|
Revaluation of derivative
|
(5,862)
|
-
|
|
------------
|
-----------------
|
At
30 June 2023
|
28,900
|
15,679
|
Settlement of liability through
issue of shares
|
(753)
|
(7,464)
|
Interest expense
|
-
|
7,883
|
Revaluation of derivative
|
(9,822)
|
-
|
|
-----------
|
-----------------
|
At
31 December 2023
|
18,325
|
16,098
|
Settlement of liability through
issue of shares
|
-
|
(7,112)
|
Interest expense
|
-
|
6,345
|
Revaluation of derivative
|
(9,955)
|
-
|
|
-----------
|
-----------------
|
At
30 June 2024
|
8,370
|
15,331
|
|
-----------
|
-----------------
|
7) Share capital
|
Unaudited
Six months ended 30 June 2024
|
Unaudited
Six months ended 30 June 2023
|
Audited
Year ended 31 December 2023
|
|
£000
|
£000
|
£000
|
Allotted, called up and fully
paid:
- 361,078,622 (H1 2023: 275,520,666; 2023: 284,240,834 ordinary
shares of 10p each
- 19,327,344 deferred shares of 0.4p each
|
36,108
77
|
27,552
77
|
28,424
77
|
|
-----------
|
-----------
|
-----------
|
|
36,185
|
27,629
|
28,501
|
|
-----------
|
-----------
|
-----------
|
During the period, the following
ordinary share issues occurred:
- On 22 January 2024,
3,425,373 new ordinary shares were issued in settlement of the
quarterly principal of £2,550,000 and interest repayment of
£663,000 of the convertible bond.
- On 15 February 2024,
9,515 ordinary shares of 10p each were allotted and issued at 105p
per share to Link Market Services Trustees Limited as Trustee of
the Avacta Group plc SIP.
- On 4 March 2024,
27,390,485 ordinary shares of 10p each were allotted and issued at
50p further to a placing of shares, with a further 130,000 ordinary
shares of 10p each being allotted and issued in relation to a
management subscription of shares. On 19 March 2024, a further
23,879,124 conditional placing shares and 10,896,948 REX offer
shares of 10p each were allotted and issued at 50p. Placing costs
of £1,744,000 were incurred and offset against the share premium
reserve.
- On 20 April 2024,
7,529,825 new ordinary shares were issued in settlement of the
quarterly principal of £2,550,000 and interest repayment of
£622,000, reducing the principal remaining to £35,700,000 of the
convertible bond.
Additionally, during the year a
total of 3,576,518 ordinary shares of 10p each were allotted and
issued following the exercise of vested EMI and unapproved
options.
8) Operating cash outflow from
operations
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
6 months
ended
30 June
2024
|
|
6 months
ended
30 June
2023
|
|
Year
ended
31
December
2023
|
|
£000
|
|
£000
|
|
£000
|
|
|
|
|
|
|
Cash flow from operating activities
|
|
|
|
|
|
Loss for the period
|
(12,472)
|
|
(11,532)
|
|
(24,947)
|
Adjustments for:
|
|
|
|
|
|
Amortization
|
575
|
|
437
|
|
1,033
|
Impairment losses
|
-
|
|
-
|
|
512
|
Depreciation
|
1,393
|
|
1,276
|
|
2,638
|
Net (gain) / loss on
disposal
of property, plant and
equipment
|
(9)
|
|
23
|
|
(2)
|
Deferred income movement
|
630
|
|
-
|
|
28
|
Share of loss of
associate
|
404
|
|
424
|
|
847
|
Profit on lease
modification
|
-
|
|
-
|
|
1
|
Equity-settled share-based payment
charges
|
2,262
|
|
1,553
|
|
2,906
|
Increase in investment in
associate
|
(56)
|
|
(1,988)
|
|
(1,950)
|
Net finance costs
|
(3,830)
|
|
653
|
|
(1,277)
|
Taxation
|
(964)
|
|
(1,270)
|
|
(2,370)
|
Operating cash outflow before changes in working
capital
|
(12,067)
|
|
(10,424)
|
|
(22,581)
|
|
|
|
|
|
|
(Increase) / decrease in
inventories
|
(58)
|
|
(85)
|
|
196
|
(Increase) / decrease in trade and
other receivables
|
(1,035)
|
|
144
|
|
841
|
Increase / (decrease) in trade and
other payables
|
321
|
|
(829)
|
|
(301)
|
Operating cash outflow from operations
|
(12,839)
|
|
(11,194)
|
|
(21,845)
|
9) Events after the reporting period
In July 2024, there was a settlement
in cash of the quarterly amortization payment in respect of the
unsecured convertible bonds, comprising principal of £2.55 million
and interest of £0.58 million.
In September 2024, AffyXell
Therapeutics Co., Ltd ('AffyXell'), an associate of the Group,
successfully completed a funding round, which Avacta did not
participate in, thereby reducing the Group's shareholding from 25%
to 21%.
The Group has announced its
intention to divest the Diagnostics Division, at this stage of the
divestment process an estimate of the effect on the financial
statements cannot be made.