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Avacta raises ?3.75m, expects minimal impact from pandemic

By Josh White

Date: Monday 06 Apr 2020

Avacta raises ?3.75m, expects minimal impact from pandemic

(Sharecast News) - Biotherapeutics company Avacta Group announced on Monday that, in response to "substantial" institutional interest, it has conditionally raised gross proceeds of ?3.75m under a placing, through the issue of 20,833,333 new ordinary shares at a price of 18p each.
The AIM-traded firm said the fundraising was in addition to the subscription it announced on 2 April.

It said admission of both the placing and subscription shares remained subject to, among other things, shareholder approval at a general meeting.

Under the total fundraising, Avacta said it was proposing to raise ?5.75m before expenses, to fund the next key value inflection points.

Avacta said those points included the phase 1 clinical trial of AVA6000 pro-doxorubicin, the advancement of the 'Affimer' immunotherapy pipeline with partners, delivering further commercial progress for therapeutics and diagnostics, and developing a small pipeline of Affimer-based diagnostic tests for licensing.

The board noted that the issue price was at a discount of about 12% to the closing middle market price on 3 April.

Looking at its current trading, Avacta said that following the collaboration and option agreement with ADC Therapeutics at the end of 2019, it had expanded the LG Chem Life Sciences partnership and established a joint venture in South Korea with Daewoong Pharmaceutical.

Revenues for the 17 month period ended 31 December, which included the initial milestone payment from LG Chem, had grown 100% to ?5.5m from ?2.76m for the 12 months ended 31 July 2018, which was ahead of market expectations.

"Importantly, revenues from the Affimer diagnostics business have grown by 130% as more customer evaluations of the Affimer platform are underway," the board said in its statement.

"The group's order intake and sales pipeline into 2020 are the strongest to date."

Avacta said its revenues in 2020 were expected 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 would fully fund the company's related research and development activities.

It said its cash position at 31 December was ?8.7m, up from ?5.2m on 31 July, following completion of the placing in November.

"The company is monitoring the UK government's guidance regarding the Covid-19 coronavirus pandemic," the board said with regards to its current situation.

It said it had instigated a working from home policy where possible, and had curtailed all travel.

Laboratory staff were continuing to carry out their duties, working in smaller teams to allow social distancing to be observed.

The firm said its revenues were not expected to be materially affected in the current year as a direct result of the pandemic, and would continue to benefit from the expanded LG Chem partnership, the new collaboration established with ADC Therapeutics and the joint venture with Daewoong Pharmaceuticals.

"The company has made good progress in manufacturing drug material for the AVA6000 phase 1 clinical trial and in preparing the CTA filing," the board said.

"At this stage, the company does not expect to experience significant delays of more than a few weeks due to the Covid-19 pandemic, but it is reliant on clinical trials in the UK resuming by the end of the year."

At 1240 BST, shares in Avacta Group were up 12.8% at 23.12p.

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