Contract suspensions see Fusion Antibodies warn on revenue

Contract research organisation Fusion Antibodies issued a revenue warning on Monday, after a “challenging” first six months of trading as a number of valuable projects were suspended by clients due to delayed investment.

The AIM-traded firm said it now expected revenues for the year to be at least £2.8m - significantly behind current market expectations.

To address the challenge, Fusion said it had engaged with potential clients for its broader service offering, including negotiations for a significant order for an integrated service contract.

Although negotiations were ongoing, the majority of revenues would be recognisable in the financial year starting 1 April.

In addition, Fusion said it had signed a memorandum of understanding with a “leading” biotechnology company in the US, focused on artificial intelligence and machine learning to generate ‘de-novo’ antibody sequences.

The company said it would use its ‘Mammalian Display’ technology to express the antibodies as focussed libraries.

It said the deal was expected to provide a new route-to-market for AI-generated antibodies, offering clients a complementary solution to its established discovery methods.

Fusion Antibodies added that it recently commercialised its Mammalian Display technology as the first technology to come from its ‘OptiMAL’ research and development programme.

Despite experiencing technical issues with its supplier, the full DNA library required to support OptiMAL had now been delivered.

The company said it was increasing resources to the research and development programme to accelerate progress.

“This is an important period for Fusion as we roll out the end-to-end integrated therapeutic antibody discovery services and augment this by introducing new technologies from our research and development programmes to create stronger revenue streams in the next financial year and position the business for a sustained period of growth,” said chief executive officer Adrian Kinkaid.

“It is important for the business to keep abreast of the constantly developing technologies driving therapeutic antibody development as the sector strives to bring better drugs to patients more rapidly.”

Kinkaid said the company was “particularly enthusiastic” about its newly-announced Mammalian Display capabilities being matched “so well” with the exciting potential of artificial intelligence and machine learning approaches to antibody design.

“When these are harnessed correctly, they are being heralded as our sector's most important innovation since the invention of phage display.”

At 1513 GMT, shares in Fusion Antibodies were down 25.15% at 35.56p.

Reporting by Josh White for Sharecast.com.