London, UK, 8 February 2017

Edison issues outlook on Abzena (ABZA)

Abzena has recently achieved a significant licensing deal for its proprietary site-specific ThioBridge antibody drug conjugate (ADC) linker technology with a San Diego-based biopharmaceutical company. The agreement covers the use of ThioBridge in up to 10 ADCs across a wide range of indications and a service agreement. This provides important validation of Abzena's proprietary ADC technology and hybrid business model. Our rNPV valuation increases to £117m following inclusion of the 10 ADCs now being developed through this deal.

We have increased our valuation to £117m (from £112m) or 85p per share (vs 82p). This is principally due to the inclusion of the 10 potential ADC products resulting from the recent (January 2017) ThioBridge agreement. We expect Abzena to gain greater deal economics from its ADC products due to the greater technological and IP input resulting from ThioBridge and therefore include a higher royalty rate (2.5%) than its antibodies developed using its Composite Human Antibody technologies (1%). We believe Abzena is well positioned to grow its integrated service offering and, as its Abzena inside products move through the clinic and onto the market, we expect upside to our current estimates.

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