Hvivo : Audited 2016 Preliminary Results

For immediate release 07:00: 20 April 2017

("hVIVO" or the "Company")

hVIVO plc (AIM: HVO), the pioneer of human disease models, is pleased to announce its audited preliminary results for the year ended 31 December 2016.

• Revenue of £19.9 million (2015: £7.7 million), includes £7.3 million from third-party client engagements and £12.5 million from equity investments (£9.7 million from the three PrEP-001 Phase IIa clinical studies and £2.8 million from the FLU-v Phase IIb clinical study)

• Gross profit of £4.2 million and gross profit margin of 21.3% (2015: gross profit £2.5 million and gross profit margin 31.8%), with margin dampened by clinical studies with equity investments

• Research and development (R&D) expense was £6.3 million (2015: £10.2 million) and is lower, as expected, compared to previous years, due to the timing of phases and weighting of costs of our discovery research programmes, with greater R&D expense in previous years from undertaking the sample clinical studies and subsequent third party transcriptomic analysis

• Administrative expenses were £13.8 million (2015: £13.7 million) with costs maintained primarily due to non-capitalisable costs of investment in a medical management technology platform, leveraging technology to improve efficiency, partially offset by ongoing cost savings and other efficiency initiatives

• Short-term deposits, cash and cash equivalents of £25.7 million at 31 December 2016 (2015: £51.2 million), extending cash runway into H2 2018

  Operational Highlights

• Filed hVIVO's first patent application in severe flu as a result of our our pathomics- informed drug target discovery, and in parallel, progressed the selection of a severe flu compound against this target, positioning hVIVO to lead the way in developing the first treatments for this area of high unmet need

• Advanced a potentially ground-breaking biological algorithm for predicting who will experience asthma worsening before symptoms emerge

• Conducted three Phase IIa clinical studies for PrEP-001 designed to address key clinical development questions, regarding target indications (both flu and cold), dosing regimens (daily dosing), and optimal field study population (healthy adults)

  • Contracted our second equity investment in April 2016, acquiring a 49.0% interest in Imutex Limited for £7.0 million, which holds two clinical stage vaccine platforms in universal flu (FLU-v) and mosquito-borne disease (AGS-v)

  • Advanced three clinical studies with FLU-v and AGS-v, with initial data read-outs expected in 2017

"In 2016 we leveraged the hVIVO platform to advance our equity investment-based clinical assets, while simultaneously converting our growing insight in flu and asthma into new inventions. Securing PrEP-001's clinical proof-of-concept in flu was a key achievement. Whilst PrEP-001's asthma trial results were not what we hoped for, our ongoing analysis of the data, in combination with hVIVO's proprietary common cold datasets, will inform future hypothesis for testing regarding specific asthma subtypes. In the meantime PrEP Biopharm will progress the product's development in the healthy adult population. Our Imutex investment brought us a universal flu vaccine and a mosquito-borne illness vaccine, both of which we were able to accelerate into the clinic, with initial data read outs expected in 2017.

Further to the platform's product testing activities, the hVIVO R&D team took the insight generated from previous years' samples and arrived at a qualified drug target and corresponding candidate compound list for severe flu, as well as produced our first biological algorithm for predicting patients at risk of asthma worsening before symptoms arise.

We look forward to advancing our inventions and clinical stage assets in 2017, as we seek to utilise our revolutionary platform and precision development approach to deliver respiratory precision medicine-based therapies."

hVIVO plc ("hVIVO"), a specialty biopharma company with discovery and clinical testing capabilities, is pioneering a human-based analytical platform to accelerate drug discovery and development in respiratory and infectious diseases. Leveraging human disease models in flu, RSV and asthma exacerbation, the hVIVO platform captures disease in motion, illuminating the entire disease life cycle from healthy to sick and back to health. Based in the UK, market leader hVIVO has conducted more than 45 clinical studies, inoculated over 2000 volunteers and has three first-in-class therapies currently in development with a growing pre-clinical pipeline.

In 2016, the insights enabled by our "disease in motion" human disease models allowed us to achieve significant steps in our quest for precision medicines in respiratory and infectious diseases. After three years of collecting and qualifying influenza (flu) disease in motion samples, we were able to demonstrate 'severe flu' as having a different pathophysiology to 'normal flu', opening up the ability to predict, diagnose and treat severe flu for the very first time. Additionally, from our new asthma exacerbation disease model, we were able to advance a potentially ground-breaking biological algorithm that can predict, up to two days before symptoms emerge, who will experience asthma worsening due to the common cold. Leveraging our platform for its product testing capabilities, we advanced PrEP-001 through three clinical studies aimed at widening its application, selecting the optimal dosing regimen, and investigating the best patient population in which to advance development. Lastly, we formed a joint venture with SEEK Group (SEEK) to develop two clinical stage vaccine assets in universal flu and mosquito-borne diseases, which we advanced into Phase IIb and first-in-man studies, respectively.

Severe flu - first pathomics patent application filed

Over hVIVO's 25 years of experience researching flu it has become clear that there are significant gaps in existing treatments and vaccines. We believe we can overcome these gaps by better understanding the immune response to flu infection. In particular, hVIVO noted that there were no treatments for severe flu. This translates into a worrying economic reality: in the US alone, there are 200,000 cases of severe flu annually, 20% of which develop acute respiratory distress syndrome (ARDS) and cause $13.8 billion in hospital costs. These figures can be expected to increase exponentially in pandemic outbreaks.

As such, hVIVO turned the power of our platform on severe flu in order to illuminate the correct drug targets to produce a positive therapeutic effect. Through our pathomics process, we arrived at a qualified pathway component for our severe flu drug target in under 18 months and filed our first patent application around this discovery in early July 2016. The invention in this initial patent application aims to protect our pathomics-informed drug target (HVO-001), with additional patent applications to follow that address novel and inventive use of the associated pathway and disease activity biomarkers.

Based on both in vitro and human ex vivo disease relevant assays, we are currently in the compound selection stage for our severe flu drug candidate. We believe our pathomics insights and our efforts over the past three years to distinguish those pathways involved in severe flu positions hVIVO to lead the charge in defining and treating this area of high unmet medical need.

Data mining - translating insights to products

Once we had identified a biological distinction between severe and normal flu, we turned to data mining of our time-course, disease in motion samples to reveal patterns and meaningful correlations between clinical, cellular and molecular data. Our goal is subsequently to identify molecular signatures and biological algorithms that can serve as predictor tools and patient stratification guides. For flu, we have identified a candidate invention to distinguish who is contagious well in advance of showing symptoms (patent application filed in February 2017) and we are currently working to identify a molecular signature for predicting who will develop severe flu. Qualification of these discoveries is ongoing in 2017, and we continue to mine our existing discovery data sets with the goal of deriving additional commercially viable inventions.