Avacta Group plc! Innovation for global health! Interim Results! 25th April 2012!

Transcription

1 Avacta Group plc Innovation for global health Interim Results 25th April 2012

2 Important Notice This presentation does not constitute a recommendation regarding the shares of Avacta Group plc (the Company ) nor a representation that any dealing in those shares is appropriate. The Company accepts no duty of care whatsoever to the reader of this presentation in respect of its contents and the Company is not acting in any fiduciary capacity. No offer or invitation or solicitation of any offer to acquire securities of the Company is being made now nor does this presentation constitute or form part of any invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act No reliance may be placed for any purpose whatsoever on the information contained in this presentation or any assumptions made as to its completeness and no warranty or representation is given by or on behalf of the Company nor its directors, employees, agents, and advisors as to the accuracy or completeness of the information or opinions contained in this presentation and no liability is accepted by any of them for any such information or opinions, provided that nothing in this paragraph shall exclude liability for any representation or warranty made fraudulently. The information and opinions contained in this presentation are provided as at the date hereof. The contents of this presentation are confidential and must not be copied, published, reproduced, distributed or passed in whole or in part to others at any time by recipients. This presentation is being provided to recipients on the basis that they keep confidential any information contained herein or otherwise made available, whether oral or in writing, in connection with the Company. In particular, this presentation should not be distributed, published or reproduced in whole or in part or disclosed by recipients to any other person or entity and, in particular, should not be distributed to United States residents, corporations, or other entities, US persons (as defined in Regulation S promulgated under the United States Securities Act of 1933 (as amended)), persons with addresses in the United States of America (or any of its territories or possessions), Canada, Japan, the Republic of Ireland, the Republic of South Africa or Australia, or to any corporation, partnership or other entity created or organised under the laws thereof, or in any other country outside the United Kingdom where such distribution may lead to a breach of any law or regulatory requirement. Notwithstanding the foregoing, the Company can distribute this document to US Persons (as defined above), persons with addresses in the United Stats of America (or its territories or possessions), United States residents, corporations or other entities if the Company is satisfied that an applicable exemption applies. Distribution of this document in the United States of America in the absence of such an applicable exemption may constitute a violation of United States of America securities law. By agreeing to receive this presentation you agree to be bound by the foregoing restrictions. 2

3 Avacta Overview

4 Innovation for Global Health Tools to help drive down the cost of healthcare Our purpose is to drive down the cost of healthcare around the world by providing better tools to help reduce the cost of drug development and to improve diagnostics. High cost of drugs Pressure from insurers Wrong/ delayed treatment Pressure from patients High cost of healthcare Pressure from governments Slow/ inadequate diagnostics Pressure from regulators Long hospital stays 4

5 Market Strategy Large healthcare markets with high growth potential Our market strategy is to build from largely unregulated markets towards the more highly regulated, but higher value, human diagnostics market. Biopharmaceuticals $202bn market by 2013 Fastest growing pharma sector 20% CAGR >1/3rd of all drugs in development 2,500-7,000 biotech ventures worldwide Life Science Instruments and Reagents $10bn market Protein Microarrays $2bn market Veterinary Health Veterinary diagnostics $2-3bn 25,000 vets in EU; 25,000 vets in US Veterinary Point of Care Immunodiagnostics $1bn market Human Health In-vitro diagnostics market $50bn POC diagnostics $19bn in 2011 Companion Diagnostics $300m and huge growth potential driven by personalised medicine 5

6 Product Strategy End user driven product development from discovery to diagnostics Our product strategy is to combine high technology, consumables and reagents to provide better tools that help reduce the costs and risk of drug development and that provide improved diagnostics. Our Products and Pipeline Optim 1000 New QC Product Development AX.1 (Vet) Protein Microarrays Discovery/R&D Tools Laboratory Diagnostics/ Manufacturing QC Tools Companion Diagnostics Diagnostics How We Fit With Our Customers Processes Drug/Biomarker Discovery Preclinical R&D Phase I/II Phase III Manufacturing & Commercialisation Patient Care 6

7 Current Products Better tools for drug development and diagnostics Optim 1000 Protein Analysis System Optim 1000 is the only product that allows detailed stability analysis of biological drugs cost effectively and quickly, very early in development to weed out potential failures and reduce wasted development costs Installed base of 27 (at Jan ) including many top ten pharma sites AX-1 Rapid Blood Testing System AX-1 allows laboratory standard blood tests, not cut down versions, to be simply carried out in-clinic Rapid, easy to use and very sensitive Multiple analytes in one instrument Opportunity to create a large menu of different blood tests for veterinary and human healthcare Shipping later in FY k per unit Average 10 per test 92.5k per unit 240 per test 7

8 Acquisition of Affinity Reagents Platform Connecting Avacta s markets from discovery to diagnostics Antibodies are the major class of affinity reagents with multiple markets worth over $300bn Avacta acquired the Affimer affinity reagents platform in January 2012 Affimers are not based on antibodies but on a small protein called Stefin A which has two loops that can be modified to create large numbers of antibody-like reagents each capable of binding a different target Affimers have clear cost and performance advantages compared with antibodies Protein microarrays produced using Affimers could provide best in class drug and biomarker discovery tools which can follow drugs through development and become companion diagnostics in direct response to new FDA guidelines 8

9 Management Team Extensive commercial experience and world class technical expertise Group Chief Executive and Founder Dr Alastair Smith World class scientific and technical expertise with a highly commercial approach Formerly Professor and Director of the Institute of Molecular Biophysics, Leeds University Chief Finance Officer Tim Sykes Extensive commercial and corporate transactions track record in high growth SMEs Previously Associate Director in KPMG Transactions Services Group Chief Executive Avacta Analytical Chris Dryden Technical and commercial management of entrepreneurial hightech businesses Expertise in market entry and growth strategies for high value hardware and software products Chief Executive Avacta Animal Health Ged Holmes Extensive sales, marketing and management experience across a range of multi-national corporates and SME businesses focused on technology and software 9

10 Outlook A solid base with huge growth potential in diagnostics Good growth towards breakeven of core businesses with AX-1 to come Fully funded to execute an accelerated growth programme with two huge potential opportunities : Huge Growth Potential in Diagnostics 1. Significant growth potential of AX-1 as installed base and test menu is grown Example return with an AX-1 installed base of 1000 units each doing 20 tests per week at 10 per test : ~ 10m recurring consumable revenues at 70% GP 2. Large opportunity for our proprietary reagents (Affimers) to dominate the protein microarrays market and provide unique discovery to diagnostics platform in direct response to new FDA personalised medicine guidelines 10

11 Business Update

12 Avacta Group plc Interim Results for the Period Ended 31 st January 2012 Solid growth in underlying revenues and significant reduction in operating losses H1 FY12 m H1 FY11 m FY11 Revenues Gross profit Gross margin 55.7% 50.1% 48.2% Overhead (1.33) (1.04) (2.10) Underlying operating loss (0.39) (0.54) (0.92) Amortisation and SBPs (0.13) (0.06) (0.20) Reported operating loss (0.52) (0.60) (1.12) Retained loss (0.35) (0.36) (0.59) EPS (0.02p) (0.03p) (0.04p) 12

13 Avacta Group plc Balance Sheet and Cash Flow at 31 st January 2012 Cash flow extracts 31/1/12 m 31/1/11 m 31/7/11 m Operating cash flow (0.26) (0.36) (0.59) Investing activities (0.57) (0.44) (1.02) Financing activities Net cash flow Balance sheet extracts 31/1/12 m 31/1/11 m 31/7/11 m Intangible assets Property, plant and equipment Cash Other net current assets Non-cash liabilities (0.26) (0.27) (0.26) Net assets

14 Commercial Highlights Solid growth in Optim sales and pipeline; AX-1 expected to ship this FY Analytical Business Unit H H Optim Despatch 13 8 Optim Installed Base Optim Revenue 0.70m 0.19m Consumable Revenue 0.11m 0.02m 12 8 Optim 1000 Installed Base (27) 7 Analytical CRO services offering expansion into US through partnership with Pall Life Sciences Stand alone Optim software package and seat licenses launched First two acute phase protein tests for dog and cat completed AX-1 in final stages of test validation and manufacturing scale up 14

15 Growth Drivers Key performance indicators for FY2012/13 Optim Analytical Business Unit Sales target 25 (FY12) - installed base 39 Currently 16 units despatched this FY Distribution in India/Brazil by end FY12 India about to sign Additional applications : 4 by end FY12 On schedule Stand alone software : launched Jan 12 Achieved Services Additional business development resource (2 FTE) added in Europe In place; sales pipeline seeing effect First revenue from US services collaboration with Pall Life Sciences First contract won AX-1 Animal Health Business Unit Shipping first units during FY12 - Delayed but still on track for shipping in FY12 Rapid growth of test menu - Recruitment of larger team underway - Menu of tests for development identified and validated Other Test Kits and Services Distribution deal in place for first two tests before end First supply agreement with IDEXX signed; second in pipeline Two more tests in development Multiple companion animal and livestock applications under review 15

16 Other Newsflow in the Period Appointment of Ged Holmes as CEO of Avacta Animal Health, September 2011 Expansion of Optim distribution into SE Asia through Pall Life Sciences, October 2011 Appointment of Panmure Gordon, October M placing and acquisition of affinity reagents platform, January 2011 Post Period End Appointment of Michael Albin as commercial advisor, March 2012 Appointment of Riccardo Pigliucci as strategic business development advisor, March 2012 Supply agreement with IDEXX, April 2012 Michael Albin 12 years with Applied Biosystems rising to VP, Science and Technology Pivotal in the development of the technology that sequenced the human genome Now life sciences consultant to businesses and investors Riccardo Pigliucci 23 years with Applera Corp (formerly Perkin Elmer Corp) rising to President and Chief Operating Officer Also CEO Life Science International Plc and Discovery Partners Inc Now providing strategic consultancy to life sciences and instrumentation companies globally 16

17 Accelerating Growth Through Innovation and Investment

18 Investment to Accelerate Growth End user driven product development from discovery to diagnostics Fully funded to invest in a three year programme : AX-1 veterinary test menu expansion New quality control technology for biopharma manufacturing New protein microarray drug and biomarker discovery tools which can be leveraged to provide entry into human companion diagnostics. New QC Product Development AX-1 test menu expansion Protein Microarrays Companion Diagnostics Discovery/R&D Tools Laboratory Diagnostics/ Manufacturing QC Tools Diagnostics 18

19 The Case for Companion Diagnostics Different people respond differently to a given drug treatment In many human diseases drugs only work for 50% of patients or fewer This results in costly drug development failures at the clinical trials stage and drugs that could help some patients never reaching the market Millions of patients are currently prescribed ineffective and expensive treatments Tests that identify which patients will respond to a given drug (companion diagnostics) maximise the success of clinical trials and target the right drug to the right patients helping drive down the cost of global healthcare Figure2.OneSizeDoesNotFitAll PERCENTAGEOFTHEPATIENTPOPULATIONFORWHICH APARTICULARDRUGISINEFFECTIVE,ONAVERAGE ANTI&DEPRESSANTS(SSRIs) 38% ASTHMADRUGS 40% DIABETESDRUGS 43% ARTHRITISDRUGS 50% ALZHEIMER SDRUGS 70% CANCERDRUGS 75% Sourceofdata:BrianB.Spear,MargoHeath&Chiozzi,JefferyHuff, ClinicalTrendsin MolecularMedicine, Volume7,Issue5,1May2001,Pages201&

20 The Drug Developers Perspective New drugs will require development of a companion diagnostic The FDA and other regulatory bodies are going to require new drugs to have companion diagnostics to identify those patients who will benefit from the treatment The guidance is that the same diagnostic platform should be used to develop the drug and to provide the companion diagnostic from discovery to diagnostics Affimer based protein microarrays provide a combined discovery/diagnostic platform to satisfy regulatory guidelines In Vitro Companion Diagnostic Devices FDA DRAFT GUIDANCE July 14, 2011 Ideally, a therapeutic product and its corresponding IVD companion diagnostic device would be developed contemporaneously, with the clinical performance and clinical significance of the IVD companion diagnostics device established using data from the clinical development program of the corresponding therapeutic product. 20

21 Protein Microarrays A discovery/diagnostic tool limited only by reagent availability Two dimensional arrays of capture (affinity) reagents used to characterise the protein content of complex samples e.g. blood $2bn protein microarray market currently limited only by availability of antibody affinity reagents Antibody arrays are typically a few hundred pixels in size because there is a limited range of antibodies available Avacta s proprietary affinity reagents Affimers could replace antibodies as the affinity reagent of choice Avacta already has a 17,000 Affimer array and is working towards a 100,000 array which should be the best in class affinity microarray Y"Y" Y" Y" Y"Y" Y" Y" Y"Y" Y" Y" Y"Y" Y" Y"Y" Y" Y" Y"Y" Y" Y" = affinity reagent molecule 21

22 Affimers Unlocking the potential of protein microarrays with Affimer reagents Antibodies are the major class of affinity reagents with multiple markets worth over $300bn Avacta s Affimer reagents are not based on antibodies but on a small protein called Stefin A which has two loops that can be modified to create large numbers of reagents each capable of binding a different target Competitive Advantages The AffimerStructure Faster Better Cheaper Months to deliver new reagents not years Much wider range of affinity properties possible Much more robust especially on surfaces like arrays Much cheaper to manufacture using simple processes. than antibodies 22

23 The Protein Microarray Opportunity A non-capex driven high margin revenue stream Global Biochip (DNA Microarrays, LabonChip, Protein Microarrays, Tissue & Cell Arrays) Market: Trends & Forecast ( ) The global protein microarray market was valued $595 million in 2010 and is expected to grow at a CAGR of 19.9% during Diagnostics represents the highest potential application market growing at a CAGR of 24.8% Affimer arrays under development targeting validation with pharma partners Business Model There is already an established installed base of microarray readers for DNA and protein arrays No requirement to develop hardware or grow installed base Non-capex driven high margin recurring revenue stream through sales of arrays and reagents Route to Market Direct sales of arrays to drug and diagnostic developers Commercial partnership with established diagnostic developer Licensing of reagents for specific diagnostic applications 23

24 Summary A solid base and fully funded to accelerate growth Proprietary technology products with recurring consumables and reagents revenue First phase of product development completed Good growth in revenue and contribution from AX-1 yet to come Two operating businesses entirely focused on commercialisation and making steady progress to profitability Fully funded accelerated growth programme to exploit existing Avacta IPR Huge potential growth in diagnostics driven by expanding AX-1 menu and developing companion diagnostics based on proprietary protein microarrays 24