Avacta Group Regulatory News (AVCT)

21 Oct 2009 07:00

Avacta Group plc Placing Issue of Equity Directors Dealing & PDMR

Target of becoming a substantial and profitable business supporting the life sciences sector is on track

Avacta Group plc ("Avacta" or "the Company"), the biophysics company which provides innovative high value technologies and services to the pharmaceutical and diagnostics markets, announces that it proposes to raise up to 2 million (gross of expenses) from a conditional placing of 133,333,328 new ordinary shares of 0.1 pence each ("New Ordinary Shares") at a price of 1.5 pence per Ordinary Share (the "Placing"). 96,666,662 of the New Ordinary Shares have been placed by Daniel Stewart & Co plc ("Daniel Stewart") with institutional and other existing and new shareholders pursuant to a Placing agreement, the details of which are set out below. The remaining 36,666,666 New Ordinary Shares are to be placed by Daniel Stewart using a reasonable endeavours basis within 6 weeks of this announcement and this will be the subject of a separate announcement.

Use of Proceeds & Strategy

The cash proceeds of the Placing, amounting to approximately 2 million (before expenses) will be used to accelerate Avacta from the strong position it has achieved since admission to AIM, towards its near term goal of being a profitable and substantial business providing products and services to support the life sciences sector. The funds will be deployed to support the rapid growth of Avacta's own products and services and to support further acquisition opportunities.

Since coming to AIM in late 2006 Avacta has exceeded its stated developmental and commercial milestones and has established two operating businesses in its target markets of drug development and diagnostics. These businesses form the routes to market for its high value technology products. The Company recently announced the first sales of Optim, its flagship product, which is designed to significantly reduce risk and cost throughout the biopharmaceutical drug development process. In addition, the Company is expected to launch its first diagnostic product, Midas, into the veterinary healthcare market in early 2010. This system will be capable of delivering a wide menu of rapid diagnostic blood tests for both veterinary and, in due course, human healthcare. Avacta has several other products in development which will follow Optim into the drug development market and has already received sufficient customer interest indicating considerable demand.

The funds raised will be used to accelerate the commercialisation of these new products and diagnostic tests through improvements in infrastructure and enhanced commercial teams. In addition to its organic product pipeline, the Company is pleased to report its achievements in integrating the four complementary acquisitions made during the past two years. The Company has identified and is exploring other potential acquisition targets each of which could bring technologies and expertise into the growing business.

The Placing

The Placing Agreement contains warranties in favour of Daniel Stewart given by the Company and the Directors with respect to its business and certain matters connected with the Placing. In addition, the Company has given customary indemnities to Daniel Stewart in connection with the Placing and their performance of services in relation to the Placing. Daniel Stewart has certain rights to terminate the Placing Agreement in specified circumstances.

Pursuant to the Placing, certain Directors of the Company will subscribe for up to 3,333,331 new Ordinary Shares in aggregate. Details of the Directors' subscriptions and resultant holdings are listed in the table below:

Director No of Placing Number of shares on Percentage of Issued shares subscribed Admission Share Capital on for Admission Alastair Smith 666,666 50,228,296 4.02% Tim Sykes 666,666 3,785,384 0.29% Gywn Humphreys 1,333,333 14,659,169 1.17% Tony Robards 666,666 9,557,768 0.77%

Pursuant to the Placing, IP Group plc and IP Venture Fund, a fund managed by IP Group in which IP Group is an investor (together "IP Group") will subscribe for up to 36,666,666 New Ordinary Shares at the Placing Price. Following Admission, IP Group will be interested in 283,168,762 ordinary shares, representing 22.7 per cent of the Company's issued share capital on Admission.

As IP Group is a significant shareholder in the Company, the subscription for New Ordinary Shares by IP Group is a Related Party Transaction as defined by the AIM Rules. Accordingly, the Directors have consulted with Daniel Stewart and together they consider that the terms of the subscription by IP Group are fair and reasonable insofar as the shareholders are concerned.

Admission

Application has been made for the New Ordinary Shares to be admitted to trading on the AIM market of London Stock Exchange plc and dealings are expected to commence on 22 October 2009. The New Ordinary Shares will rank pari passu with existing shares in issue. Following the Placing, Avacta's issued share capital comprises 1,249,168,733 ordinary shares of par value 0.1 pence each.

21 October 2009

For further information, please contact:

Avacta Group plc Tel: 0844 414 0452 Alastair Smith, Chief Executive Officer www.avacta.com Tim Sykes, Finance Director Nominated Adviser & Broker Tel: 020 7776 6550 Daniel Stewart & Company Plc www.danielstewart.co.uk Simon Leathers/Stewart Dickson Financial PR Tel: 020 7417 8989 Haggie Financial LLP Nicholas Nelson Nicholas.nelson@haggie.co.uk 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 Avacta'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.