Fusion Antibodies is a company I have covered before. Post my original research note which you can go back and read here the share price enjoyed a rise of over 100% giving anyone who followed the opportunity to de-risk, return initial capital and enjoy a free ride as I did myself.

The rise was largely due to the hype around Pharma during COVID with the race on to find treatments, that and Fusion were growing revenues and developing their MAL (Mammalian Antibody Library).

Fortunes took a turn for the worse these past few years given the lack of investment in BioTech, revenues dropping, awful market conditions and questionable Management

Inflection Point

So unsurprisingly, with the back-drop and fund-raises, Fusions share price has been hammered (with the company now just capped at £3M), but with the new CEO Adrian Kinkaid at the helm, Fusion have been ‘heads down’ during the lull and completed work on a number of services/technology stacks that I now believe see Fusion at an inflection point.

About Fusion

Fusion are an established and recognised expert in clinical antibody discovery which incorporates discovery, engineering and supply of antibodies. This process assists Large Pharma, Diagnostics and Research companies in ‘getting to the clinic’ faster, working in fields such as Biotech, Veterinary Medicine, and Drug Discovery.

The services Fusion offer can be categorised as Tech (including AI & Machine Learning), Engineering (creating the end antibodies for the required target) and wet-lab services to take antibody design into the real-world.

Technology Platforms

Fusion have been working hard to develop their technology offerings, creating distinct technology applications that can be used by clients for different purposes. These services offer the opportunity for licensing, a huge potential revenue generator.

AI/ML-Ab

Fusion have developed their own Artificial Intelligence and Machine Learning technology that is used to design antibodies. The technology provides a starting point from which the antibodies can be developed further in a ‘wet-lab’ environment (that Fusion have).

The advantage here for prospective clients is the speed at which antibodies can be initially developed for their target in addition to being more cost-effective. Fusion then, if required can further ‘fine-tune’ these antibodies to provide the best antibody.

Fusion have received their first purchase order for their AI/ML-Ab services with the company confident more will follow given inbound interest to date and the ever increasing scope of AI.

OptiMAL

OptiMAL is the companies flag-ship product and combines two components that Fusion developed. The ‘Opti’ Library which closely models the human immunome and the Mammalian Display relating to animals. Combining the two produces a powerful antibody solution that is particularly suited to therapeutics.

The company sees OptiMAL as a huge opportunity as the generated libraries are unique sequences meaning that Fusion can license out multiple libraries to different clients.

OptMAL is currently being trialled by the NCI (National Cancer Institute) as part of an agreement with Fusion to validate the platform. Obviously upon validation, this would be a huge outcome for Fusion and the sort of re-rating event that speculative investors like you and I dream of.

OptiPhage

OptiPhage is essentially a spin-off of OptiMAL but packaged into Phage display format. Phage is targeted at clients in the industry that use Phage approaches (Phages, formally known as bacteriophages, are viruses that solely kill and selectively target bacteria)

Using OptiPhage allows clients to mimic the immunome of animals which negates the need for animal testing.

Again, like OptiMAL, OptiPhage allows for multiple licensing deals and Fusion have already announced their first contract for OptiPhage as detailed in the RNS last month.

Recent Events & Success

If you look through multiple recent RNS you will see that the company are winning regular contracts and the fruits of their technology platform development and wet-lab services are being seen. In the recent trading update, the company have reported a growing order book, whilst still not that large, it’s growing and with the new platforms in place and being marketed stands a good chance of steadily growing further. The elephant in the room of course is these contracts turning into royalties or larger licensing deals, that will be where the ‘bread and butter’ is!

Fusion have announced just this week, an additional deal with an existing client (which validates Fusions technology and existing partnership with said client) for £200,000. Again this may sound modest but part of the contract is a royalty on sales of the final product once successfully approved.

Of course we don’t know who the client is or what the product being developed is but in the world of Pharma, royalties could be significant and move the dial for Fusion and Investors. Remember, this is one contract!

Fully Funded

The company through the recent fundraise now have c£1.3m cash (about half the current £3M Market Cap and excluding revenues to come) and this should see the company through well into 2025.

Summary

In this brief blog, I’ve covered Fusions offerings which I believe have the potential worth of far more than a c.£1.5M enterprise value when you consider current cash. I’m sure if Fusion listed on the NASDAQ and called themselves Fusion AI they’d probably be trading at £500M+ Cap 

Jokes aside, you can see Fusion have some fantastic technology complementing their expertise. Fusion are transitioning from a traditional service/labour based organisation to a company that can exploit their technology offering huge possibilities in terms of licensing and royalties. This is the upside a speculative investor wants.

The company can’t really comment on their share-price but I can, I can’t see how with Fusions potential, their patented IP and growing order-book/partnerships, the company isn’t trading north of 20p which is still just a mere c.£20M cap

But let’s not forget, Fusion are revenue generating and have turned the ship around reporting a growing order book. At £3M Cap, cash runway well into 2025, regular contract wins and technology offerings that have now matured, I see potentially huge upside from the current valuation which appears to be sat at a level currently manipulated by the market who may suddenly have an unpleasant surprise on any game-changer announcement!