Avacta Group plc (LON:AVCT), the developer of Affimer® biotherapeutics and research reagents, has announced today a proposed Subscription to raise gross proceeds of £2 million. The Subscription comprises of 11,111,110 subscription shares at a price of 18 pence per new ordinary share, being a 2% discount to 14 day volume weighted average of 18.4 pence. The two subscribers are Clare Hughes (wife of Richard Hughes, co founder of Zeus Capital) and Mahmud Kamani, co-founder of Boohoo.com (LON:BOO). Admission of the Subscription Shares is subject to, amongst other things, shareholder approval at the general meeting, notice of which will be sent to shareholders shortly. A further announcement will be made in due course.
Reason for the Subscription and Use of Proceeds
The Company intends to utilise the net proceeds of the Subscription to continue to execute the strategy outlined last October. The Company’s key objectives are to enter the clinic with its first preCISION chemotherapy programme, to secure further significant drug development partnerships that help progress the Company’s technology platforms, and to continue to grow revenues and secure licensing partnerships for Affimer® diagnostics reagents. Given the current economic climate the Board have deemed it prudent to take on a small amount of additional equity capital at this time to ensure that it is in a strong position to exploit progress after the coronavirus pandemic is over.
Current trading and outlook
Following the collaboration and option agreement with ADC Therapeutics SA (Lausanne, CH) at the end of 2019, Avacta has successfully expanded the LG Chem Life Sciences Partnership and established a joint venture in South Korea with Daewoong Pharmaceutical Co. Ltd.
Avacta Group expects to announce its results for the 17 months to 31 December 2019 later this quarter and ended the period with cash balances of £8.7 million.
Avacta will file a CTA application as soon as possible for a phase I dose escalation study for its lead preCISION pro-drug chemotherapy AVA6000 pro-doxorubicin. A positive outcome to this phase I study would require an improved safety profile compared with standard Doxorubicin since the efficacy of this existing chemotherapy is well known. Positive data could lead to a significant licensing opportunity for AVA6000 with companies currently marketing existing Doxorubicin products or with companies that are currently carrying out clinical studies combining Doxorubicin with their checkpoint inhibitors. A successful outcome to the study would also open the potential to using the preCISION tumour targeting technology developed at Tufts University and exclusively licensed by Avacta to improve the safety profile of many other chemotherapies.
The Company is monitoring the UK Government’s guidance regarding COVID-19 pandemic. The Company has instigated a working from home policy where possible and has curtailed all travel. Laboratory staff are continuing to carry out their duties working in smaller teams to allow social distancing to be observed. The Group’s revenues are not expected to be materially affected this year and will continue to benefit from the expanded LG Chem partnership, the new collaboration established with ADC Therapeutics and the recently announced joint venture with Daewoong Pharmaceuticals; each of which will fully fund Avacta’s related R&D activities. The Company has made good progress in manufacturing drug material for the AVA6000 phase I clinical trial and in preparing the CTA filing. At this stage the Company does not expect to experience significant delays of more than a few weeks due to the coronavirus outbreak, but it is reliant on clinical trials proceeding in the UK by the end of the year. The small amount of additional capital raised through the Subscription will help to ensure that the Company can deliver on key milestones despite the COVID-19 pandemic.