Avacta (LON:AVCT) is a pre-clinical stage biotechnology company and the proprietary owner of Affimer technology. Affimers represent a radical alternative to the established antibody technology, which continues to dominate the drug industry,despite its limitations. The significant technical and commercial benefits ofAffimers are being recognised increasingly through corporate and academic interest, ongoing evaluations, and deal flow. Avacta has successfully completed a Placing of shares to raise £11.6m (gross) to fund its therapeutic pipeline and to increase commercial traction of its Affimer platform for future licensing deals.
Strategy: AVCT is aiming to commercialise its Affimer technology through licensing for research and diagnostics, and by identifying and developing its own proprietary therapeutic pipeline for partnering. AVCT has sufficient cash resources to identify an Affimer lead to be ready for first-in-man trials in 2020.
Capital increase: AVCT has completed a Placing and Subscription for a total of 46.47m shares @25p per share with existing and new shareholders to raise gross new funds of £11.6m. This will provide the working capital for the next 12 months and boost the forecast period-end net cash position of £4.5m.
Use of proceeds: AVCT provided a precise allocation of the proceeds with 48% assigned to progress the therapeutic Affimer development and to prepare for the clinic. Reagents and general R&D will receive 25% (£3.3m) and 19% (£2.5m), respectively, for gaining additional commercial traction of the Affimer platform.
Risks: Affimers represent a new disruptive technology and the potential customer base might take time to recognise their advantages. While all new drug development carries a high risk, Avacta has hit a number of important milestones over the last two years which have reduced the risk profile greatly.
Investment summary: Avacta has made considerable progress towards its goal of having its own proprietary Affimer-based drugs and growing a separate profitable reagents business. The company has identified potential therapeutic leads and completed both in-vitro and in-vivo pharmacokinetic pre-clinical, efficacy tests. The rising number of collaborating deals being signed is a clear sign of the value of the technology the market does not seem to recognise yet.
