Avacta Group (AIM:AVCT )reported results for the 17-month period ending 31 December 2019 as in line with expectations with revenues nearly doubling for its diagnostics firm.
The developer of Affimer® biotherapeutics and reagents saw losses widen from £2.8m to £15.62m with pre-tax losses also increasing to £18.05m from £10.39m in 2018.
The majority of the increase in losses was due to research costs which surged to £7.9m from 2.8m, mainly as the Company accelerated development of its proprietary Affimer therapeutic programmes.
Administrative expenses have increased during the year to £10.06m from £7.24m proportionately in-line with the 17-month period compared to the prior 12-month period.
Avacta showed revenues to have nearly doubled to £5.5m in the 2019 period from £2.8m in the previous 12-month period to 31 July 2018 amid a solid performance in its Affimer diagnostics reagents business.
The group reported strong revenue growth of £0.8 million for its Affimer diagnostics reagents business which continues to see ongoing progress with partners towards new licensing deals.
“The strong commercial progress in the Affimer diagnostics business unit is reflected in the number of technology evaluations and growing revenue,” said Dr Alastair Smith, CEO.
Shares in Avacta Group were trading 4.74% lower at 110.5p on Wednesday.
Specifically, Avacta cited ‘excellent progress’ with the division’s expanded deal with LG Chem Life Sciences which is anticipated to generate potential revenues of up to $310 million.
Avacta saw a strong start to 2020 after announcing two partnerships established to develop an Affimer-based COVID-19 antigen tests in an effort to address a lack of widespread testing.
Meanwhile, the group said the planned phase I study of AVA6000 pro-doxorubicin in cancer patients, which is anticipated for 2020/2021, could be “transformational” for the group.
Smith said that AVA6000 has the potential to become “a proprietary blockbuster in its own right” if the preclinical performance of this drug is successfully recapitulated in humans.
In a morning research note, broker finnCap noted that Avacta has a cash runway into 2022 despite any disruption as a result of the pandemic.
Following a post-period end £5.75m fundraising, the group said it remains well capitalised with a £10.5m net cash position as at 30 April 2020.
Looking ahead, Avacta expects to see benefitsfrom its expanded LG Chem partnership, a new collaboration established with ADC Thera peutics and the recently-announced joint venture with Daewoong Pharmaceuticals.
Analysts added that by this time, Avacta should have delivered “at least two transformational value inflection points” in each of the Therapeutics and Diagnostic business units.
“We consider Avacta to be at a very exciting point in its evolution, with multiple significant valuation drivers,” added finnCap.
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Avacta Group is also included in the Vox Covid-19 Crusaders index.