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(Alliance News) - Avacta Group PLC on Friday announced plans to raise GBP9 million and posted a slightly widened annual loss on research & development costs.
Affimer biotherapeutics and research agents developer Avacta is intending to raise up to GBP9 million gross from the issue of 59.8 million share at 15 pence each. This includes 59.6 million placing shares and 200,00 subscription shares.
finnCap will be nominated adviser and joint broker. WG Partners and Turner Pope will also act as joint brokers for the placing, which is priced at an 12% discount to the Thursday closing price of 17.00p.
Shares in Avacta were down 5.3% at 16.10 pence in London on Friday, which would put the placing price at a 6.8% discount.
The funds raised will be put toward a phase 1 clinical trial of Avacta's AVA6000 pro-doxorubicin, which is intended to selectively deliver chemotherapy drug doxorubicin to tumours. The money will also help move Avacta's Affirmer immunotherapy pipeline forward and assist with "further commercial progress for therapeutics and diagnostics".
For its financial year ended July 31, Avacta posted an GBP11.1 million pretax loss, widened from a loss of GBP10.4 million the year before.
This was the result of a 55% rise in research & development costs to GBP5.9 million from GBP3.8 million year-on-year. Administrative expenses were flat at GBP8.5 million.
Revenue rose 46% to GBP4.1 million from GBP2.8 million, lifted by the recognition of a USD2.5 million upfront milestone payment from LG Chem Life Sciences as part of a therapeutics partnership and licencing deal.
Chief Executive Alastair Smith said: "Doxorubicin is a USD1 billion drug despite severe cardiotoxicity issues that limits its effectiveness. In the case of Avacta's improved version of this drug, AVA6000 pro-Doxorubicin that is based on the Tufts technology, we have seen a dramatic improvement in safety in pre-clinical animal models. If we see a similar reduction in cardiotoxicity in humans in the planned phase 1 clinical trial of AVA6000 in 2020, then there is the potential for a major license deal that could generate a transformational, non-dilutive, upfront payment of tens of millions of dollars.
"This funding would support all our other programmes in future. We should also be able to apply the Tufts technology to improve the safety of a large number of other established chemotherapies and generate similar licensing opportunities. For this reason, we are prioritising this programme with respect to use of the proceeds of today's successful placing."
By Anna Farley; annafarley@alliancenews.com
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