REG - Avacta Group PLC - Proposed Placing to raise £3.75 million
THIS ANNOUNCEMENT, AND THE INFORMATION CONTAINED HEREIN, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
THE INFORMATION COMMUNICATED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
6 April 2020
Avacta Group plc
("Avacta", the "Group" or the "Company")
Proposed Placing to raise £3.75 million
Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and research reagents, announces that further to the announcement of 2 April 2020 detailing the subscription (the "Subscription"), and in response to substantial institutional interest, the Company has today conditionally raised gross proceeds of £3.75 million pursuant to a placing (the "Placing") through the issuance of 20,833,333 new ordinary shares ("Ordinary Shares") at a price of 18 pence per share, being the same price as the Subscription.
Admission of both the Placing Shares and Subscription Shares is subject to, amongst other things, shareholder approval at a general meeting ("General Meeting"), notice of which will be sent to shareholders later today.
finnCap is acting as nominated adviser and joint broker with regards the Placing. Neither the Placing nor Subscription is to be underwritten.
INTRODUCTION
On 2 April 2020 the Company announced the proposed Subscription and today announces the proposed Placing (together, the "Fundraising"). Pursuant to the Fundraising, the Company proposes to raise £5.75 million (before expenses) to fund the next key value inflection points, being:
• the phase 1 clinical trial of AVA6000 pro-doxorubicin;
• continuing to advance 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 Issue Price is at a discount of approximately 12 per cent to the closing middle market price of the Ordinary Shares on AIM on 3 April 2020, being 20.5 pence per Ordinary Share.
The Fundraising is, amongst other things, subject to Shareholder approval of Resolution 1, which will be proposed at the General Meeting.
CURRENT TRADING
Following the collaboration and option agreement with ADC Therapeutics 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.
Revenues for the 17 month period to 31 December 2019, which include the initial milestone payment from LG Chem, have grown 100% to £5.5 million from £2.76 million (12 months ended 31 July 2018), 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 Group's order intake and sales pipeline into 2020 are the strongest to date.
The Group's revenues in 2020 are 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 will fully fund Avacta's related R&D activities.
The cash position at 31 December 2019 was £8.7 million (31 July 2018: £5.2 million), following completion of the placing in November 2019.
AVA6000
Avacta will file a CTA application as soon as possible for a phase I dose escalation study for its lead preCISIONTM 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 preCISIONTM tumour targeting technology developed at Tufts University and exclusively licensed by Avacta to improve the safety profile of many other chemotherapies.
AVA004
The Group's lead Affimer® therapeutic molecule (AVA004-251Fc) has been shown to have equivalent tumour growth inhibition to three approved monoclonal antibody inhibitors of PD-L1 (Tecentriq, Imfinzi and Bavencio) in several in vivo animal efficacy models. The Group has completed cell line development, the first stage in the manufacturing process, with its partner Selexis. The next step of GMP manufacturing of AVA004-251 with a partner that has been identified and is expected to cost the Group approximately £5 million. This has been paused whilst the Group focuses on the nearest major value inflection point of delivering phase I data for AVA6000.
Diagnostics
The Group has made good commercial progress which is reflected in strong revenue growth and a growing pipeline of Affimer® technology evaluations with a range of partners. These evaluations are progressing well, and the primary objective remains converting these into license deals that will drive future royalty revenue. Additionally, the group is making very good progress with its own pipeline of diagnostic tests which will also deliver licensing opportunities in the medium term.
OUTLOOK AND COVID-19
The Company is monitoring the UK Government's guidance regarding the 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 as a direct result of the Covid-19 pandemic 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 Covid-19 pandemic, but it is reliant on clinical trials in the UK resuming by the end of the year.
GENERAL MEETING
A circular including notice of the General Meeting (the "Circular") will be sent to Shareholders later today convening the General Meeting to be held at 10:00 a.m. on 23 April 2020. Details of the General Meeting, as well as form of proxy will be sent to shareholders with the Circular. The Circular will also be available on the Company's website, www.avacta.com once posted.
ADMISSION
Application will be made to the London Stock Exchange for the New Ordinary Shares, to be issued pursuant to the Fundraising, to be admitted to trading on AIM and it is expected that Admission will become effective and trading in the New Ordinary Shares will commence on or around 8.00 a.m. on 24 April 2020.
Defined terms in this announcement are detailed in the Circular to be sent to shareholders later today.
For further information from Avacta Group plc, please contact:
Avacta Group plc
Alastair Smith, Chief Executive Officer
Tony Gardiner, Chief Financial Officer
Tel: +44 (0) 844 414 0452
finnCap Ltd (Nomad and Joint Broker)
Geoff Nash / Giles Rolls / Teddy Whiley - Corporate Finance
Tim Redfern - ECM
Tel: +44 (0) 207 220 0500
www.finncap.com
Zeus Capital Limited (Joint Broker)
John Goold / Rupert Woolfenden - Corporate Broking
Tel: +44 (0)203 829 5000
Yellow Jersey (Financial Media and IR)
Sarah Hollins
Henry Wilkinson
Zyme Communications (Trade and Regional Media)
Katie Odgaard
Tel: +44 (0)203 004 9512
Tel: +44 (0)7787 502 947
About Avacta Group plc - https://www.avacta.com
Avacta is developing novel cancer immunotherapies combining its two proprietary platforms - Affimer® biotherapeutics and pre|CISION™ tumour targeted chemotherapy. With this approach, the Company aims to address the lack of a durable response to current immunotherapies experienced by most patients. The Company's therapeutics development activities are based in Cambridge, UK.
The Company benefits from near-term revenues generated from Affimer reagents for diagnostics, bioprocessing and research, through a separate business unit based in Wetherby, UK.
The Affimer platform is an alternative to antibodies derived from a small human protein. Despite their shortcomings, antibodies currently dominate markets worth in excess of $100bn. Affimer technology has been designed to address many of these negative performance issues, principally: the time taken, and the reliance on an animal's immune response, to generate new antibodies; poor specificity in many cases; large size and cost.
Avacta's pre|CISION platform, activates chemotherapy only in the tumour, thereby limiting systemic exposure and damage to healthy tissues, and thus improving the overall safety and therapeutic potential of these powerful anti-cancer treatments.
By combining these two platforms the Company is building a wholly owned pipeline of novel cancer therapies with the aim of creating effective treatments for all cancer patients including those who do not respond to existing immunotherapies. Avacta expects to take its first drug, a pre|CISION targeted form of the standard-of-care Doxorubicin, into the clinic in late 2020.
Avacta has established drug development partnerships with pharma and biotech, including with Moderna Therapeutics Inc., a collaboration with LG Chem to develop treatments for autoimmune and inflammatory diseases worth up to $310m, a partnership with ADC Therapeutics to develop Affimer drug conjugates and a joint venture in South Korea with Daewoong Pharmaceuticals to develop the next generation of stem cell therapies that incorporate Affimer immuno-modulators. Avacta actively seeks to license its proprietary platforms in a range of therapeutic areas.
The Avacta diagnostics business unit works with partners world-wide to develop Affimers for evaluation by those third parties with the objective of establishing royalty bearing license deals. The Company is also developing a small in-house pipeline of Affimer-based diagnostic assays for licensing.
To register for news alerts by email go to www.avacta.com/investor-news-email-alerts
KEY STATISTICS
Number of Existing Ordinary Shares in issue on the date of the Circular
176,036,837
Number of Placing Shares
20,833,333
Number of Subscription Shares
11,111,110
Aggregate number of New Ordinary Shares to be issued pursuant to the Fundraising
31,944,443
Issue Price
18p
Number of Ordinary Shares in issue immediately following Admission(1) (2)
207,981,280
Percentage of the Enlarged Share Capital represented by the New Ordinary Shares immediately following Admission(1) (2)
15.36 per cent
Gross proceeds from the Fundraising(2)
£5.75 million
(1) Assuming no Ordinary Shares are issued between the date of the Circular and Admission or other than the relevant New Ordinary Shares.
(2) Assuming completion of the Fundraising at the Issue Price.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the Subscriptions
2 April 2020
Announcement of the Placing
6 April 2020
Publication and posting of the circular and the Form of Proxy
6 April 2020
Latest time and date for receipt of Forms of Proxy
10:00 a.m. on 21 April 2020
General Meeting
10:00 a.m. on 23 April 2020
Admission
8:00 a.m. on 24 April 2020
Subscription Shares and Placing Shares credited to CREST members' accounts in uncertified form
on 24 April 2020
Dispatch of definitive share certificates for New Ordinary Shares in certificated form
no later than 8 May 2020
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIOEBXGDSBBGDGGU
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