Avacta Group plc (AIM: AVCT) has announced a proposed Subscription to raise £2 million at a price of 18p. The Subscription comprises of 11,111,110 subscription shares at a discount of 2% on the 14-day volume weighted average of 18.4 pence.
The two subscribers are Clare Hughes (wife of Richard Hughes, co-founder of Zeus Capital) and Mahmud Kamani, co-founder of Boohoo.com. Admission of the Subscription Shares is subject to shareholder approval at the general meeting.
Use of Proceeds
The funds raised will be used to execute the strategy outlined by the Company in October 19. The key objectives are to enter the clinic with its first preCISION chemotherapy programme, to secure further significant drug development partnerships that help progress the Company’s technology platforms, and to continue to grow revenues and secure licensing partnerships for Affimer® diagnostics reagents.
Given the current global crisis the Company deemed it prudent to strengthen the balance sheet to ensure it is in the right position to progress once the coronavirus pandemic is over. Through the recent collaboration and option agreement with ADC Therapeutics SA (Lausanne, CH), Avacta has successfully expanded the LG Chem Life Sciences Partnership and established a joint venture in South Korea with Daewoong Pharmaceutical Co. Ltd. The Company’s related R&D activities will be funded by through these agreements.
The Company will file a CTA application as soon as possible for a phase I dose escalation study for its lead preCISION pro-drug chemotherapy AVA6000 pro-doxorubicin.
Shares in Avacta are down 5% to 20p in early morning trading
Current Trading
The Company has stated that revenues are not expected to be materially affected this year due to COVID-19. The Company has made good progress in manufacturing drug material for the AVA6000 phase I clinical trial and in preparing the CTA filing. Although there may be some delay caused by COVID-19, the Company does not expect these to be more than a few weeks but is reliant on clinical trials proceeding in the UK by the end of the year.
The Company expects to announce its results for the 17 months to 31 December 2019 later this quarter and ended the period with cash balances of £8.7 million.