Avacta Group Regulatory News (AVCT)

Avacta Group plc

Acquisition of Veterinary Diagnostics Company

Acute Phase Protein Tests Expands Avacta Animal Health Offering

Avacta Group plc ("Avacta" or the "Company"), which provides innovative high value technologies and services to the pharmaceutical and diagnostics markets, is pleased to announce the acquisition of Reactivlab Limited ("Reactivlab") for an initial consideration of £80,000, comprised of 4,432,133 Ordinary Shares and two deferred consideration elements which are dependent on annual sales volumes in the second and third years following completion. Reactivlab has developed a range of veterinary diagnostic tests with broad applicability in animal health and therefore complementary to the Company's existing activities.

 The Initial Consideration of £80,000 comprises of 4,432,133 Ordinary Shares of 0.1 pence each. The Deferred Consideration elements are payable on the second and third anniversary of completion and are calculated as being 30% and 100% of directly attributable revenues for the second and third years respectively. The deferred consideration is payable in Ordinary Shares to be issued at the prevailing market price at the time of issue, subject to a minimum issue price of 1.5p. The maximum aggregate consideration payable has been capped at £5 million.

Reactivlab's last reported statutory accounts were made up to 31 July 2009 and in which revenues for the year were £142,079, pre tax losses £142,596 and the closing net assets were £117,526. The company's December management accounts show a closing cash balance of c. £83,000.

Reactivlab was spun out of the University of Glasgow's world leading Veterinary School by its founder Professor David Eckersall to develop Acute-Phase Protein ("APP") tests for veterinary healthcare. APPs are a class of proteins whose concentrations in the blood change as part of the immune and inflammatory response to a wide range of problems such as infections, diabetes, hypertension and cardiovascular disease. They have widespread utility in veterinary diagnostics and are highly complementary to the current diagnostic offering from Avacta Animal Health.

In human health, the monitoring of APPs (particularly c-reactive protein) is extensively used and accounts for very high volumes of tests. These important tests are being adopted in veterinary healthcare and we predict that growth in this market will accelerate rapidly in the coming years.

Avacta is in a position to commercialise immediately the acquired APP tests through Avacta Animal Health's diagnostic testing laboratory services and shortly Avacta will also exploit the acquired assets through the provision of APP test kits suitable for very high volume testing in large commercial diagnostic laboratories. Additionally, some of the APP tests are ideal candidates for point-of-care use in the veterinary clinic, and they also have potential to be delivered at the point-of-care on Avacta's Midas platform which is due for launch in 2010.

Alastair Smith, Chief Executive, Avacta Group, commented:

"Naturally we are delighted to be bringing Reactivlab under the Avacta Animal Health umbrella. The combination of Reactivlab's established tests and world leading expertise in veterinary acute phase protein testing, with Avacta Animal Health's ability to commercialise veterinary tests, places us in a strong position to lead the growth in APP testing in this market. We believe that this will lead to substantial commercial and clinical value from a huge untapped marketplace. One only has to look at the human market in APP testing to see the potential for the veterinary application of these tests.

"The acquisition of Reactivlab is the next step in a well defined strategy of in-house product development and acquisitions to grow the Avacta Group as a leading provider of innovative life sciences support products and services aimed at two high value markets - drug development and healthcare."

3 March 2010

Enquiries:

Notes to Editors:

About Avacta

Avacta was spun-out from the University of Leeds in 2004 by its current management team as a biophysics company, with the aim of combining the disciplines of physics and biology to develop innovative technologies and expert technical services to address unmet needs in the biopharmaceutical and healthcare sectors. Avacta has a core bio-analytical technology development programme addressing the needs of the biopharmaceutical sector to fully characterise their new products at the earliest stage in their development to reduce the risk of late stage failure. High end analytical instruments and leading edge contract research services are being provided to the biopharmaceutical and healthcare/personal-care materials sectors through the Group's biotech support division, Avacta Analytical. High value solutions for rapid, point of care diagnostics based on these core bio-analytical technologies, with a near term focus on veterinary diagnostics, are being delivered through Avacta Animal Health. Longer term these technologies will be transferred into the human clinical diagnostics market. Avacta listed on AIM in August 2006.