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Innovative Avacta building the framework for success

Avacta has developed an innovative protein-scaffold platform, with potential applications in the life sciences research, diagnostic and therapeutic markets
picture of an affimer
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Affimer molecules are ten times smaller than antibodies

Avacta Group Plc (LON:AVCT) described as “excellent” results from the latest study of its Affimer technology, which it said is now at an “inflection point” as a therapeutic platform.

Researchers looked at immunogenicity - assessing whether Affimer provoked an unwanted immune response – and compared with Avastin, an antibody used to treat cancer.

It was shown to have low immunogenicity, which chief executive Dr Alastair Smith, said “significantly de-risks” the Avacta breakthrough and potentially opens up a “multi-billion dollar biotherapeutics market”.

“Immunogenicity is a key concern for any protein-based therapeutic in development, especially for a new therapeutic platform such as that based on our Affimer technology,” he went on.

“I am delighted that the results of this extensive study shows unequivocally that none of the Affimer scaffolds induce a significant immunogenic response.

WATCH: Avacta boss talks through "excellent" study results ...

“This bodes well for their further development as therapeutics, as there is an accepted correlation between this type of ex-vivo study and a patient's immunogenic response when dosed with the drug in the clinic.”

Better than expected results

The update was provided alongside the company’s interim results for the six months ended January 31.

Operationally, Avacta revealed “excellent progress” had been made with the company’s in-house immuno-oncology programme, which is on course to have its first drug candidate in the clinic by 2019.

Avacta said multiple Affimer leads had been found, while the first animal efficacy study was completed during the period with positive results.

The customer order book for Affimers, meanwhile, is up 70% year-on-year, with four out of the top ten global pharma giants and more than ten other biotech and pharma companies paying to use the Avacta technology, or collaborating with the firm.

Revenues for the half-year increased 20% to £1.3mln, while the operating loss was £3.9mln. Cash burn was lower than expected analysts said.

The company is financially well positioned with cash of £16.1mln in the bank as at January 31.

The technology in detail

Avacta has developed an innovative protein-scaffold platform, with potential applications in the life sciences research, diagnostic and therapeutic markets.

Named Affimers, the scaffolds are essentially small, engineered proteins, some of which are of human origin and some of plant origin, capable of binding specific molecular targets, in a similar way to antibodies.

However, compared with antibodies, Affimers have several innovative and distinctive features, which could potentially make them a better tool for several diagnostic and therapeutic applications.

They are smaller, quicker to manufacture and easier to format, but they maintain antibody-like biologic activity when binding a target.

Commercial potential

In order to maximise the potential of the technology, Avacta is pursuing a development strategy based on two business lines:

-         Servicing the life sciences research and diagnostic industry with customised Affimer reagents

-         Using Affimers as the core of a potential new generation of drugs

Avacta plans to commercialise Affimer reagents by licensing them to a broad range of clients in the bio-pharmaceutical and diagnostic industry.

“Based on the data generated by the ongoing tests with a wide range of third parties, we believe it is reasonable to expect that the first commercial deal could be signed before the end of 2017,” said Dr Riccardo Lowi, analyst at the research firm Capital Networks.

Undervalued?

With a market capitalisation of £45mln, Lowi thinks the company is “significantly undervalued”.

The small-cap broker finnCap shares this view and thinks the shares are worth around 200p based on fundamentals versus the current price of 65.5p a share (up of 7% on the day).

That uptick in the stock reflects a better than expected financial performance in which cash burn was lower than forecast.   

“The positive immunogenicity data further de-risks the Affimer platform, the value of which, relative to market cap, is substantial,” said finnCap analyst Mark Brewer.

“This should engender additional external interest in the platform, increasing the probability of generating a licensing or partnership with big pharma and biotech.”

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