Avacta raises £45 million to rapidly scale COVID-19 diagnostics
Avacta Group plc has announced its intention to raise gross proceeds of up to £45 million by means of a placing to institutional, a direct subscription and offers to retail and other investors via the PrimaryBid platform at a price of 120 pence per share.
Whilst the Issue Price is at a discount of approximately 4.4 per cent to the 30-day volume weighted average price, many investors will be suffering from seeing highs over 215p over the past week.
Use of Proceeds
The consensus view is that hundreds of millions of antigen tests will be required per month to support the fight against the pandemic and initial easing of the lock-down during 2020, and to deal with the long-term challenge of the COVID-19 pandemic. The Company has therefore proposed the use of proceeds to include the COVID-19 opportunity and other differentiated cancer therapies.
Rapid Scale-up of Diagnostics Business, £10 million:
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Working capital for the COVID-19 testing opportunity
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Expansion of in-house diagnostics product development capabilities including facilities, capital equipment; scientific, commercial and senior leadership teams
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Acceleration of broader diagnostics product pipeline and commercial partnerships
Accelerated Expansion of Pipeline of Differentiated Cancer Therapies, £35 million:
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Rapidly growing the pre|CISION™ pre-clinical pipeline and delivering pre-clinical packages for several pro-drugs (pre|CISION™ velcade, paclitaxel and oxaliplatin).
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Expanding the Affimer® immunotherapy pipeline (PDL1-TGFβ inhibitor and PDL1-cytokine bispecifics).
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IND/CTA filings for one or more Affimer immunotherapies (TMAC drug conjugate (PDL1-IDASH) or first bispecific candidate) and one or more pre|CISION pro-drugs.
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Obtain first-in-human data for the Affimer® platform.
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UK phase I clinical trial for first pre|CISION™ chemotherapy AVA6000 pro-doxorubicin covered by current balance sheet. Proceeds will fund IND filing AVA6000.
Trading Update
The Company also announced revenues for the 17-month period to 31 December 2019 to have grown 100% to £5.5 million from £2.76 million (12 months ended 31 July 2018).
Importantly, revenues from the Affimer® diagnostics business have grown, over the same period, by 135% as more customer evaluations of the Affimer® platform are underway with the strongest order intake to date.
Furthermore, the directors believe that there are only a few rapid antigen tests in development and none have CE/FDA approval yet, whereas Avacta has already put in place one distribution partner for the direct-to-consumer market (Medusa19) and will put in place additional distribution partners for the healthcare professional/work-force testing markets, as well as OEM partnerships in order to maximise the commercial opportunity.
Given the expected volume of sales for COVID-19 antigen testing products, the potential revenue stream has the potential to be transformational for Avacta.
Avacta intends to commercialise further the COVID-19 Affimer reagents that it has generated through additional diagnostic development partnerships
Shares in Avacta have traded down from recent highs of 215p to open at 133p following the placing at 120p
The Group also updated investors on its other diagnostic opportunities outside of COVID-19, including the commercial progress which is reflected in strong revenue growth and a growing pipeline of Affimer® technology evaluations with a range of partners.
The Company advises that these evaluations are progressing well, and that the primary objective remains converting these into licence deals that will drive future royalty revenue.
Additionally, the Group has stated it is making very good progress with its own pipeline of diagnostic tests, which will also deliver licensing opportunities in the medium term.
Avacta has been on the top perfomrers in the VOX Markets Covid-19 Index, which can be found here: https://www.voxmarkets.co.uk/index/vox-covid-19/
Disclaimer & Declaration of Interest
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