Trading and Strategic Update

RNS Number : 2943D

Abingdon Health PLC

02 March 2022

 

Abingdon Health plc

("Abingdon" or "the Company")

Trading and Strategic Update

Focus on three strategic growth areas: Contract service, e-commerce and own product development

AppDx ® smartphone solution achieves critical technical performance milestone ready for commercial launch

York, U.K. 2 March 2022: Abingdon Health plc (AIM: ABDX), a leading international developer and manufacturer of high quality and effective rapid tests, provides the following trading update for the six months ended 31 December 2021 ("the Period"), and update on Company strategy.

Trading update

Group revenues were approximately £1.7m (H1 2020: £7.7m), with the year-on-year decrease being predominantly linked to no DHSC revenues being recognised in the Period, as well as other non-recurring COVID-19 related sales falling in the prior year. This decrease in revenue versus the Board's prior expectations was caused primarily by the lack of use of the AbC-19™ Rapid Test by DHSC against initially forecasted sales and also in a period when the Company continued to develop new products and invest in its operating infrastructure, with a consequential impact on the level of losses incurred.

The cash position as at 31 December 2021 was £5.9m, following the fundraise in December which brought £6.1m (net of fees) into the business for working capital and R&D investment. The Board believes that cash balances are sufficient to meet the Company's current requirements, with a range of mitigating actions available to conserve cash if needed.

The Company will release its results for the six months ended 31 December 2021 later in March 2022, when the Board will also provide an update on current trading.

DHSC update

Abingdon has not been paid invoices totalling £8.45m by the DHSC for lateral flow devices delivered to DHSC in January 2021 and for components purchased on behalf of the DHSC at their request in 2020. Following mediation, as required by the contracts with the DHSC, the Company agreed non-binding Heads of Agreement with the DHSC on 9 November 2021, however, the Company still awaits payment and closure of this matter. The Company is looking forward to the judicial review scheduled for May 2022 when facts in relation to the arrangements with the DHSC will enter the public domain.

Strategic update

It remains the Company's view that the COVID-19 pandemic will serve as a catalyst to decentralise testing to the home, doctor's office or workplace, and away from costly and time-consuming laboratory testing, enabling individuals to take greater control of their own healthcare through the use of self-tests. In light of recent changes to national COVID-19 strategies in the UK and abroad, the Board has taken the view that Abingdon's strategy should increasingly focus on the longer-term opportunities across multiple sectors, including infectious diseases, for lateral flow testing.

With regards to the AbC-19™ Rapid Test, the Directors strongly believe that the test has significant utility, as evidenced by the RNS Reach issued today which links AbC-19™ test results to individual immunity levels. However, to date, national testing strategies have not focused on antibody testing. Therefore, the Company has, for now, decided to rotate its focus away from block sales to health authorities toward end users of the AbC-19™ test and the BioSure COVID-19 antibody test for which Abingdon is the manufacturer. The AbC-19™ product will therefore remain available for sale, including via the Abingdon website, and the Company will be ready to scale-up its supply as and when national testing strategies focus on an individual's antibody levels as a proxy for immunity.

The Company intends to focus on the following three strategic growth areas:

1)  Contract Service

Abingdon will continue to offer its contract service customers first-class development, technical transfer and manufacturing solutions, supported by additional expertise such as its in-house regulatory team.

Non-COVID-19

As explained in the IPO Admission Document, the Board plans in the medium term to focus on broader areas of application for lateral flow tests. In this regard, the Company has successfully secured two contract service opportunities to date in 2022, one with an existing customer and one with a new European customer. One of these customers is in the field of fertility testing, the other is in the field of environmental monitoring, with both having commenced the process of scale-up to automated manufacturing.  

COVID-19
Abingdon continues to work with Vatic Health Limited ("Vatic") on the technical transfer to large-scale manufacture of its Know-Now™ COVID-19 rapid antigen test into Abingdon's facilities. The Company notes the recent announcement by Vatic of its strong clinical trial results to date and its expectation of a near-term submission to the FDA EUA. The Directors expect the Vatic Know-Now™ test to complete technical transfer to manufacture during March 2022 and the Company has received initial manufacturing orders.

The Directors were disappointed with the pause in the transfer of Avacta Group plc's ("Avacta") AffiDX® SARS-CoV-2 antigen lateral flow tests, following the successful preparation of three batches of its product which adhered to the agreed specifications and passed all quality control procedures. Abingdon scientists remain in discussions with Avacta regarding any ongoing requirements.

Abingdon will continue to discuss contract services opportunities in the area of COVID-19 antigen testing specifically where the products are already in manufacture and a second manufacturer is required. A number of these discussions are ongoing.

2)  Self-test e-commerce site

The Company is in the process of developing and launching an enhanced version of its B2C e-commerce website, due for completion in Q2 2022. The Directors believe that the direct to consumer lateral flow test market will grow significantly. In its recent report, Future Market Insights forecasts the global market for self-testing kits will be worth US $11bn by 2030.

The Company expects its e-commerce site to become a 'one-stop shop' for consumers to purchase lateral flow tests across a range of indications. Abingdon will market both its own tests as well as complementary third-party tests, which will be independently validated at the Company's in-house laboratories to ensure that the consumer has confidence in the performance of these tests.

3)  New product development

Own brand lateral flow test development

As set out at the time of fundraising in December 2021, the Company intends to develop lateral flow self-tests in areas of large and unmet need. The Company has commenced its product development process to develop lateral flow self-tests for influenza A and B, Lyme disease and hepatitis C, and will provide updates on the progress of these in due course.

Global Market Insights estimates that the rapid influenza diagnostic tests market will be worth US $689m globally by the year 2025. The majority of flu testing is currently performed by professionals using 'for professional use only' tests, and the Directors believe there is a clear rationale for an influenza self-test, with encouraging early market feedback having been undertaken with consumers and clinicians. 

AppDx ® smartphone app solution for lateral flow tests

AppDx® uses proprietary digital processing and machine learning algorithms to allow the objective reading of lateral flow results via a smartphone. Abingdon has developed this algorithm as a Software Development Kit (SDK) which can then be incorporated into a smartphone app solution in any potential application, for example in the development of self-test solutions in the clinical market.

The AppDx® SDK is protected by a portfolio of intellectual property. In addition to being a knowledge leader for source code for SDK in this field, and holding historic patents, the Company has a newly granted UK patent on the use of neural networks to read lateral flow tests (GB2583149) with other international applications pending. The Company has additional patent applications filed and in process.

Using deep learning for the qualitative readout of rapid tests, Abingdon's model achieved 98.15% sensitivity and 98.28% specificity on a blood-based lateral flow test. Following achievement of this critical technical performance milestone the AppDx® SDK is ready for commercial launch. The Company will now seek to work with a small number of strategic partners to bring this important digital solution to market later this year.

Chris Yates, Chief Executive Officer of Abingdon Health, commented: "The COVID-19 market for lateral flow tests has been unpredictable against the constantly evolving pandemic situation. In the UK, the COVID-19 antigen test market has been dominated by overseas manufacturers and there has been no Government support to date for COVID-19 antibody testing. Although it still remains an opportunity for the business, it is clear that we can no longer rely on the COVID-19 market to meet our growth plans. It is also important we respond to fundamental changes in our market which support a greater adoption and broader utility for lateral flow testing as a core diagnostic away from centralised labs. Therefore, I am pleased to set out our strategic and commercial update today.

"Our focus will continue to be on serving our contract customers in bringing their products to market, in both COVID and non-COVID indications. We have world-class facilities in both York and Doncaster, with leading-edge high throughput automation and significant in-house expertise in developing, transferring in and scaling-up lateral flow test production. We will also continue to market the AbC-19™ test for individuals who want to know their antibody status, while remaining ready to scale-up our supply as and when national testing strategies focus on an individual's antibody levels as a proxy for immunity.

"We strongly believe the lateral flow self-test market will expand significantly, and therefore we are investing in a state-of-the-art e-commerce site to allow B2C distribution of our own and third-party tests, supported by our own in-house validation of these third-party tests. In addition, we have made good initial progress in the development of our own self-tests with an initial focus on Influenza, Lyme disease and Hepatitis C. We are also delighted to see our AppDx ® smartphone app achieve a critical technical performance milestone, making it ready for commercial launch, further raising awareness and applicability of our growing product base." 

Dr Chris Hand, Chairman of Abingdon Health, commented: "The period has been a difficult one for us as we move to re-establish the growth of our Company following the focus we put into antibody testing and scale up of manufacturing systems at the request of DHSC during 2020 and early 2021. It is disappointing that DHSC have still not paid Abingdon for products and services delivered over 12 months ago even though we reached a non-binding agreement nearly four months ago. It is a testament to the robustness of our staff, Company and shareholders that we remain well placed to execute the next phase of the Company's growth in spite of this behaviour by DHSC which has hampered our progress. We are working to rebuild shareholder value and as previously announced the additional investment by Chris Yates and me totalling approximately £500,000, at the time of the recent funding round in December 2021, illustrates our alignment with shareholders. I would like to thank shareholders for their support of the Company and thank Abingdon employees for their continued hard work and commitment."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Enquiries:

Abingdon Health plc			www.abingdonhealth.com/investors/
Chris Yates,  Chief Executive Officer			Via Walbrook PR
Melanie Ross , Chief Financial Officer
Christopher Hand,  Non-Executive Chairman
Singer Capital Markets (Sole Broker and Nominated Adviser)			Tel: [phone]
Shaun Dobson, Peter Steel, Alex Bond (Corporate Finance)
Tom Salvesen (Corporate Broking)
Walbrook PR Limited		Tel: [phone] or  [e-mail]
Paul McManus / Phillip Marriage	Mob: [phone]
Alice Woodings	Mob: [phone]

About Abingdon Health

Abingdon Health is a world leading developer and manufacturer of high-quality rapid tests across all industry sectors, including healthcare and COVID-19. Abingdon is the partner of choice for a growing global customer base and takes projects from initial concept through to routine and large-scale manufacturing and has also developed and marketed its own labelled tests.

The Company offers product development, regulatory support, technology transfer and manufacturing services for customers looking to develop new assays or transfer existing laboratory-based assays to a lateral flow format. Abingdon Health aims to support the increase in need for rapid results across many industries and locations and produces lateral flow tests in areas such as infectious disease, clinical testing including companion diagnostics, animal health and environmental testing. Faster access to results allows for rapid decision making, targeted intervention and can support better outcomes. This ability has a significant role to play in improving life across the world. To support this aim Abingdon Health has also developed AppDx^®, a customisable image capturing technology that transforms a smartphone into a self-sufficient, standalone lateral-flow reader.

 Founded in 2008, Abingdon Health is headquartered in York, England.

  For more information visit:  www.abingdonhealth.com

 

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