A minor fly in the ointment was the slower growth of the US. Here management has invested to “position the business favourably” for selling integrated development services.
It means costs will be higher than guided, particularly when translated from dollars into sterling, which has weakened post-Brexit.
“Our strategy of investing in future capacity will ensure our ability to provide quality service for this high level of customer need as our partners’ programmes progress,” said chief executive John Burt.
“We continue to explore funding options to enable us to maintain this level of growth and to continue to expand our bio-manufacturing capacity and capabilities."
In a separate announcement, the company said it had signed an agreement with University College London to manufacture Magacizumab, which uses Abzena’s composite human antibody technology.
The company operates a hybrid model, which means its revenues come from providing antibody research and engineering services and creating drug conjugates (targeted treatments for diseases such as cancer). It also manufactures antibodies and proteins for clinical studies.
Where Abzena applies its technology to re-engineer a partner’s product it might earn licence fees, milestone payments and even royalties if a drug makes it to the market. Where its technology is embedded, the firm calls these ‘Abzena inside’ products.
The deal with UCL is falls into that latter category.
In fact a new ‘Abzena inside’ product entered phase I clinical development recently, which means it now has 12 clinical-stage products. Two of these are in phase II.
Last month the firm unveiled an agreement with an unnamed San Diego biopharmaceutical company worth up to US$300mln to license out its ThioBridge technology.
It is the second major deal of this kind in the space of year for Abzena following its tie-up with NASDAQ-listed Halozyme Therapeutics (NASDAQ:HALO), which is worth up to US$150mln in staged payments.
ThioBridge is an antibody drug conjugate linker, which, in layman’s terms, means it attaches antibodies and other proteins to drugs.
“We will review our current-year forecasts, but retain a positive fundamental stance,” said Dr Jens Lindqvist of N+1 Singer.
What the brokers say
Numis Securities analyst Stefan Hamill reckons revenues for the year ended March will be in the order of £19.5mln.
He is “tweaking up” overhead costs and research and development to £16mln from £15.2mln previously, bringing the EBITDA loss up “slightly” to £7.5mln.
He hailed the “operational progress” expanding the US operations, while the synergies from acquisitions are starting to come through.
“The key new news is that the clinical, ‘Abzena Inside’ portfolio has now expanded to 12 clinical products, with an unnamed US biotech moving a product into phase I,” said Hamill in a note to clients.
The stock, currently changing hands for 38p, is worth 90p, according to the Numis analyst.
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