Avacta : Grant Funding

10 August 2016

Avacta Group plc

('Avacta' or 'the Group' or 'the Company')

Avacta and Leeds University awarded £3.8m Medical Research Council funding to develop new diagnostic tests

· Collaboration to develop rapid tests to differentiate between viral and bacterial infections,anddifferentiate bacterial strains

· R&D programme aims to combine Avacta's Affimer technology with novel microfluidic biosensors

· Avacta has first rights to commercialise new tests developed under the programme

Avacta Group plc (AIM: AVCT), the developer of Affimer biotherapeutics and research reagents, is pleased to announce that a collaborative development programme with Leeds University has been awarded a £3.8 million grant by the Medical Research Council to develop novel, rapid diagnostic toolsincorporating Affimer reagents,to differentiate between viral and bacterial infections,and differentiate bacterial strains.

This programme will develop next generation biosensors to differentiate between bacterial and viral infections and also to determine which bacterial strain has caused the infection so that the correct antibiotic can be quickly administered.This will allow for more targeted use of antibiotics, reducing the number of wrongly prescribed treatments and increasing efficacy for patients, which will contribute to a reduction inanti-microbial resistance (AMR).

AMR is a major challenge for global healthcare. There is a growing global increase in the number and type of bacteria resistant to antibiotics, and stagnation in the development of new antibiotics and viable alternatives. The current lack of rapid and accurate diagnostic tools for infectious diseases often leads to inappropriate antibiotic prescription, which has had a direct and significant impact on the increase of AMR, including the methicillin resistance of staphylococcus aureus(MRSA). This also leads to poor control of potentially life-threatening infections such as clostridium difficile, and the continued increase in hospital caught infections.

Affimer technology is an engineered alternative to antibodies that can capture a target, such as a bacterial or viral protein, with a high degree of specificity. Affimer reagents can be used to create accurate diagnostic tests and laboratory assays, and can also be developed as new therapeutic candidates.

The development of the biosensors will take place at Leeds University in the Groups of Professors Christoph Walti (Electronic Engineering) and Mike McPherson (Biochemistry). Avacta will provide support for the development of Affimer reagents that will be incorporated into the biosensors to facilitate the specific capture of bacterial biomarkers.

As part of the collaborative agreement between Avacta and the University of Leeds, Avacta will have the first rights to commercialise the new Affimer reagents and new diagnostic tests developed under the programme.

Alastair Smith, Avacta Group Chief Executive commented:

'I am delighted that the potential of Affimer reagents to improve rapid diagnostics has been recognised by the Medical Research Council through this substantial funding. The combination with the innovative microfluidic devices developed at Leeds University is very promising and could lead to a new class of rapid test device.

'There is a growing, global need for diagnostic tests that differentiate bacterial strains. Anti-microbial resistance is a huge issue for healthcare providers and one that is only going to get worse if the prescription of antibiotics is not targeted by accurate and rapid diagnostics. This programme fits perfectly with our near term commercial strategy to focus on developing Affimer reagents for rapid diagnostics. It will deliver valuable Affimer reagents that are specific to key bacterial strains, which can be developed into a range of third party diagnostic platforms. In the longer term the programme will also deliver novel, microfluidic, rapid test devices, which may surpass existing technologies.

'This is another example of the continued strong momentum behind the Affimer technology and I look forward to reporting on progress on this and other applications.'

ENDS

Notes to Editors

For further information from Avacta Group plc, please contact:

About Avacta Group plc(www.avacta.com)

Avacta's principal focus is on its proprietary Affimer technology which is anovel engineered alternative to antibodies that has wide application in Life Sciences for diagnostics, therapeutics and general research and development.

Antibodies dominate markets worth in excess of $75bn despite their shortcomings. Affimer technology has been designed to address many of these negative performance issues, principally; the time taken to generate new antibodies, the reliance on an animal's immune response, poor specificity in many cases, and batch to batch variability. Affimer technology isbased on a small protein that can be quickly generated to bind with high specificity and affinity to a wide range of targets to enable diagnostics, research assays and therapeutics.

Avacta has a pre-clinical therapeutic development programme with an in-house focus on immuno-oncology and bleeding disorders as well as partnered development programmes. Avacta is commercialising non-therapeutic Affimer reagents through licensing to developers of life sciences research tools and diagnostics.