Jobs have been cut at York-based Abingdon Health to reduce costs after a challenging year

York-based Abingdon Health said its trading performance over the financial year ended June 30 2022 had been disappointing.

The company said that full revenues are expected to be in the region of £2.8m and a substantial loss for the year will be incurred.

A significant proportion of these losses relate to the increase in operational infrastructure related to AbC-19 - a range of COVID-19 rapid antibody tests - the DHSC (Department of Health and Social Care) contract and the subsequent unwinding of this investment, Abingdon said.

The statement added: "As part of this, the company further restructured its operations early in Q4 FY22 with a reduction in headcount from 123 employees at the end of December 2021 to 86 employees at the end of July which, along with other cost saving measures implemented, has significantly reduced the ongoing monthly operational cash outflow."

"The company’s cash balance at the end of July was £7.6m, following the settlement of the outstanding monies owed by the DHSC, including the £1.5m that is held in a blocked account awaiting the outcome of the Judicial Review. The directors are of the opinion that the current cash balance gives the company sufficient working capital beyond the end of the current fiscal year ending 30 June 2023without material revenue growth.

"Abingdon transitioned its focus back to its contract service business model in FY22 and as and when the company begins generating meaningful commercial traction, it will look to grow its headcount sustainably and in line with the anticipated growth of the business and revenues.

In the second half of FY22, the company signed six new technical transfer contracts. These commercial opportunities span a range of markets and are underpinned by Abingdon’s lateral flow expertise as well as the flexibility of its commercial proposition, the company said.

Abingdon is actively working on the transfer of three of these projects, in the areas of fertility and food testing, with a number of the remaining transfers anticipated to start later in the year, subject to various conditions being met.

In May 2022, the company announced that it had signed a significant contract with a European customer with minimum revenues of £2.7m in the first year.

Due to issues unrelated to Abingdon, the technical transfer process, which was originally expected to take two months, is yet to complete. The company is continuing its dialogue with the customer, however, regrettably there is now a high degree of uncertainty around the timing or materialisation of any revenues under this contract, the statement said.

The statement added: "Following the announcement on 5 April 2022, the company continues to work closely with Vatic as they progress their US FDA Emergency Use Approval and awaits the key reagent from Vatic to begin the manufacturing of the devices. It is anticipated that there is the potential for significant manufacturing volume subject to Vatic attaining FDA EUA approval; although the timing or materialisation of revenues in relation to this contract are uncertain.

"In June 2022, Abingdon announced a supply agreement with Taiwanese group Arise Biotech for the supply of 10 million Abingdon Health Simply Test COVID-19 antigen tests, with an option for Arise to acquire an additional 20 million tests. The purchase order is subject to the Abingdon Simply Test receiving Taiwan EUA. Abingdon continues to work closely with Arise on the regulatory process with the Taiwanese FDA."

"The company launched its Abingdon Simply Test range on its new e-commerce site on 21 July 2022, with 11 self-test products available across a range of indications. It is intended that Abingdon will both develop its own products and work with a range of suppliers, including its contract service customers, to provide a broad range of self-test products on the Abingdon Simply Test e-commerce site.

"Abingdon continues to develop its own self-test products and is currently focused on two self-tests: flu and Lyme disease; both of which should reach proof of concept shortly. The Company has also conducted some preliminary work in the area of Hepatitis C testing."

In May 2022, the company announced the signing of a strategic partnership with DeepVerge plc for the development of a range of tests, initially focusing on lateral flow test devices to detect pathogens and chemicals in wastewater. DeepVerge will fund the development of the tests and Abingdon will be the exclusive manufacturer following completion of the development and technical transfer process.

Commenting on trading and outlook, Chris Yates, CEO of Abingdon Health plc, said: “Despite what has been a challenging year for the company, we are nonetheless encouraged by our progress, with a range of new COVID-19 and non-COVID-19 opportunities. We believe that FY23 will see a return to revenue growth and that our programme of investment will see us begin to generate meaningful commercial traction.

“FY22 was disappointing in many respects, particularly the distraction of the Judicial Review and the challenges in resolving the lack of payment from the DHSC. Despite this hindrance we have built a solid base of international opportunities and we look forward to the new financial year with a growing base of contract service customers.”