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Abzena set to grow even faster this year

Published: 08:17 14 Jun 2016 BST

Clean room
Work to reconfigure manufacturing suites to create two new clean rooms is already in progress in San Diego

Drug developer and pharma services group Abzena plc (LON:ABZA) is set to boost its already impressive revenue growth this year.

Results for the year to 31 March 2016 showed the top-line growing fast, as the company delivered on its growth strategy, but having made two acquisitions in the US towards the end of 2015 the company is confident of notching up another significant rise in the top-line in the current financial year.

Revenues rose 73.7% to £9.9mln from £5.7mln the year before, as the group became the partner of choice for many companies involved in the research & development (R&D) of biopharmaceuticals.

The majority of revenues were generated from the organic growth of the established business, which comprised 28% of the growth of the group. Growth was further accelerated by a revenue contribution from the acquired businesses of £2.7 million.

R&D expenditure rose 41% to £4.2mln from £3.0mln the year before, and is expected to drive future growth in service and licence revenues.

As is typical for companies at this stage of development, the company is loss-making, and the reported loss before tax widened to £10.9mln from £5.3mln, with almost half of the increased losses being due to one-off exceptional costs of £2.5mln, comprised of acquisition expenses of £1.5mln with the remainder being accounted for by the write off of intangible assets associated with the rebranding of the group and with regards to the closure of the business of Warwick Effect Polymers, a subsidiary purchased in 2012.

The cash position is healthy, with the group ending the reporting period with £13.7mln in cash and cash equivalents, compared to £15.8mln a year earlier.

The outlook is also bright, with the integration of US acquisitions PacificGMP (a contract manufacturing business) and TCRS (a contract chemist) nearing completion and already providing benefits to the wider business.

The benefits of the integrated Abzena Group are already evident, the company said in its full-year results statement. At this early stage of the current financial year contracted business is already in excess of £9 million, with a strong pipeline of further business opportunities being pursued across all areas of the group, Abzena said.

Abzena operates a hybrid model in which it offers its expertise as a service to pharma and biotech companies allowing it to generate revenues; where its intellectual property is then used to modify and improve an antibody it will negotiate a licence agreement.

It currently has 11 products in clinical development that were originally created using its proprietary technologies for its partners to development, up from eight a year earlier.

The board is confident that the successful development and commercialisation of what it terms its “ABZENA Inside” products by its partners have the potential to generate significant future revenues for Abzena.

The contract manufacturing business gives the company another string to its bow, and with biopharmaceutical companies expected to outsource about £2.9 billion (US$4.1 billion) of biomanufacturing work by 2019, according to a report last year in the BioPharma Reporter, it is expected that the majority of the group's service revenues will be generated from its manufacturing business in the US due to the high value of manufacturing contracts.

To support the growing biopharmaceutical outsourcing market, Abzena intends to increase its capacity for manufacture of biopharmaceutical products and invest in establishing the capability to manufacture antibody drug conjugates (ADCs) for clinical studies. 

Work to reconfigure manufacturing suites to create two new clean rooms is already in progress in San Diego. The facilities and systems required to produce linker-payload reagents for ADCs in accordance with good manufacturing practice (GMP) have been put in place in Bristol (US) and will be fully operational in the second half of 2016.

Ken Cunningham, chairman of Abzena, said that with the international expansion and the acquisition of the two US companies, the group is now able to support its partners through the drug development process and pitch to a broader spectrum of potential customers.

“We continue to focus on our growth strategy, investing in internal research & development to provide next generation technologies and enhancing our GMP manufacturing capabilities,” said John Burt, chief executive officer of Abzena.

“ABZENA Inside partners and service customers alike are reacting very positively to our enlarged offering and we expect the number of opportunities to work on programmes across the group to increase in the next financial year," Burt added.

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