07 August 2017

Avacta Group plc

("Avacta" or "the Group" or "the Company")

Trading Update and Notice of Results

Significant progress and substantial de-risking of the Affimer therapeutics platform

Commercial traction for Affimer reagents building and multiple licenses agreed

Avacta Group plc (AIM: AVCT), the developer of Affimer^® biotherapeutics and reagents, is pleased to provide a business and trading update ahead of its results for the year ending 31 July 2017, which the Company expects to announce in full on Wednesday 4th October 2017.

Highlights

Affimer Therapeutics

·      Excellent progress in primary immuno-oncology programme (PD-L1 inhibitor)

o  Multiple Affimer PD-L1 inhibitors generated and a lead Affimer selected for further development

o  Programme remains on track for first-in-man clinical trials in 2019

o  Clear indication of efficacy in industry standard mouse syngeneic model

·      Discovery programme delivering a pipeline of Affimer binders to other important immuno-oncology targets

·      Excellent progress has been made in building a pre-clinical dataset underpinning and significantly de-risking the broader Affimer biotherapeutic opportunity. For example:

o  Insignificant risk of immunogenicity of Affimer technology demonstrated in first major trials on human samples

o  Good pharmacokinetics of therapeutic Affimers shown in in vivo models

o  Efficacy of Affimer therapeutic demonstrated for the first time in an animal model

o  Good production yields of several important therapeutic Affimer formats confirmed

o  Rapid time scale for new Affimer discovery demonstrated with multiple targets in immuno-oncology: major competitive advantage

·      Partnership with Moderna expanded to include more drug targets

·      Collaboration signed with Sloan Kettering Cancer Center to show potential of Affimer based CAR-T therapies: reporting H1 2018

·      Collaboration with Glythera established to demonstrate suitability of Affimers as the targeting molecule in drug conjugates: reporting H2 2017

Affimer Research and Diagnostics Reagents

·      Strong growth in pipeline of paid-for Affimer technology evaluations with order book up 64% YOY. Focus on commercial licensing opportunities with pharma, biotech, diagnostic and life science tools companies. Examples include:

o  Affimers for purification of therapeutic products from biological samples generated for a North American life sciences company: evaluation progressing well with potential for commercial licensing

o  Multiple Affimers provided to a large biotech to assist with drug/target structural studies in oncology

o  Affimers for point-of-care testing provided to a large global consumer test developer for evaluation and potential licensing

·      Evaluations now beginning to deliver licensing agreements and repeat business that will underpin medium and long term revenue growth

o  First license for development agreed with one of the top three global diagnostics companies

o  More than ten Affimer R&D licenses agreed for in-house use and repeat business generated

o  Reagents evaluations with pharma and biotech also leading to potential therapeutics interest

Financial

·      Revenues for the year ended 31 July 2017 anticipated to increase by 27% to £2.75m (2016: £2.17m) in line with market forecasts

·      Cash position well ahead of market expectation at £13m (2016: £19.5m)

·      Loss before interest and taxation (LBIT) is expected to be in line with market forecasts at £7.9m (2016: £5.7m)

Other Highlights

·      Affimer intellectual property portfolio

o  Development of third generation of the Affimer technology (further improved biophysical properties and broad IP coverage) completed and patent application filed in July 2017

o  First generation Affimer technology patents granted in EU, US and China

·      Two new facilities completed in Wetherby and Cambridge totaling around 20,000 sq ft

·      Avacta Life Sciences team grown to 68

Dr Alastair Smith, Avacta Group Chief Executive Officer, commented:

"I am very pleased indeed with the significant commercial and technical progress that has been made in the past twelve months. Interest in the Affimer technology from pharma and biotech is growing as the technology becomes better known and its technical benefits are demonstrated by data emerging from our in-house programmes. Additionally, the results of our immunogenicity study substantially de-risks the Affimer platform from a therapeutics perspective, and gives us confidence as we aim to move our first Affimer drug candidate into the clinic in 2019. I am confident that this strong progress will lead to transformational therapeutic licensing deals in due course.

We are also seeing very good growth in the number of paid-for custom Affimer projects and evaluations in the diagnostics and research markets and I am delighted that we have been able to report the signing of the first agreement for Affimer product development following a technology evaluation by one of the world's largest diagnostics developers. A number of other evaluations are advancing positively and we believe that these will lead to further licensing deals which would result in long term royalty based revenue growth from non-therapeutic applications.

I look forward to updating the market with the Company's Preliminary Results in early October at which time I will also be providing a detailed update on the therapeutic development plans and pipeline."

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 a novel 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 $50bn 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 is based on a small protein that can be quickly generated to bind with high specificity and affinity to a wide range of protein targets.

Avacta has a pre-clinical biotech 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.