Proposed Placing and Subscription to raise £11.4m

Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and reagents, is pleased to announce a proposed Placing and Subscription (together the “Fundraising”) at a price of 25 pence per share to raise gross proceeds for the Company of £11.4 million.

The Placing will be conducted by way of an accelerated bookbuild process which will be launched immediately following this announcement, in accordance with the terms and conditions set out in the Appendix to this announcement. finnCap is acting as Nominated Adviser and Joint Broker, alongside WG Partners and Turner Pope who will also be acting as joint brokers in connection with the Placing (together the “Joint Brokers”).  It is expected that the Subscription will be concluded at the close of the accelerated book build process and will raise proceeds for the Company of £1.9 million.

It is proposed that the Placing will comprise of an element of Ordinary Shares that will be allotted pursuant to an existing authorisation to allot shares on a non-pre-emptive basis and admitted to trading on AIM on Friday 3 August 2018, with the balance of shares to be issued in connection with the Fundraising being subject to shareholder approval.  The Fundraising is not being underwritten.

The final number of Placing Shares will be agreed by the Joint Brokers and the Company at the close of the bookbuild, and the results of the Fundraising will be announced as soon as practicable thereafter. The timing for the close of the bookbuild and the allocation of Placing Shares shall be at the absolute discretion of the Joint Brokers, in consultation with the Company. The Company and the Joint Brokers reserve the right to issue and sell a greater or lesser number of shares through the Placing.


It is anticipated that the Fundraising will raise £11.4 million before expenses.  The Company intends to utilise the net proceeds of the Fundraising to enter into significant drug development partnerships, develop the Affimer therapeutic pipeline, license Affimer reagents and seek to achieve a clinic ready candidate for first-in-man trials of its PD-L1/LAG3 bispecific therapy.  Accordingly, the Company intends to deploy the funds to invest into the therapeutic pre-clinical and clinical programmes and to seek to grow the recurring revenue from the reagents business.

Therapeutics, approximately £6.2 million invested as follows:

  • £2.0 million deployed into the PD-L1/LAG3 bispecific programme focused on the IND enabling studies during 2018/19 that would facilitate the Company to commit, in future, to the substantial regulatory,  GMP manufacturing and clinical trials costs of a first-time-in-human Phase I clinical study in 2020/21;
  • £1.2 million deployed into the PD-L1 Drug Conjugate programme in partnership with Tufts Medical Center to seek to develop a novel PD-L1 targeted drug conjugate in order to achieve in-vivo pharmacology data in 2020 for development or partnering;
  • £0.75 million deployed into the targeted agonists in order to achieve i n-vivo pharmacology data in 2020 for partnering or development;
  • £1.0 million into the discovery pipeline to continue to build the pipeline of Affimer I-O assets for partnering and support third party technology evaluations through collaborative projects; and
  • £1.25 million invested into further staff costs related to the clinical and regulatory team, to include the appointment of a Chief Medical Officer for the Company, business development and IP protection.

Reagents, approximately £ 3.3 million invested as follows:

  • Business Development, £ 0.8 million to help deliver:
    • 10-20 royalty bearing license deals in place by 2021;
    • at least one major diagnostic license deal/partnership with seven figure royalty potential;
    • 50-100 paid for projects per year by 2021;
    • marketing, conferences, exhibitions; and
    • business development team shared with therapeutics: US (2 fte), Europe (3 fte), Asia.
  • Research and Development, £ 2.5 million to help deliver:
    • Applications development to generate technical marketing material;
    • Method development for high value difficult targets;
    • Generation of a pipeline of diagnostic Affimer assets for licensing; and
    • Applications and R&D team.

Other, £1.0 million to be utilised to cover:

  • capex, plc and central costs; and
  • intellectual property costs.


The interim results released on 16 April 2018 demonstrated the continued progress that the Company has made.  The results showed revenues increased 16 per cent to £1.5m (£1.3m FY17) and, at 31 January 2018, cash balances were £8.3 million.  With regards to the Affimer Therapeutics business, Avacta has made good progress with in-house programmes, the lead PD-L1 programme is on-track to deliver several key pre-clinical milestones in 2018 and there is continued platform validation and de-risking through completion of a number of in-vitro data packages.   The Company has made solid progress with a number of partners such as partners Moderna, Glythera Ltd and FIT Biotech (FITBIO:FN Finland).   There are ongoing collaborations with Memorial Sloan Kettering Cancer Centre and with OncoSec (NASDAQ: ONCS) and recently the Company announced a drug development partnership based on a ground-breaking co-invention with Tufts University School of Medicine in Boston, US.  This partnership focuses on an entirely novel approach to making drug conjugates combining Avacta’s Affimer technology with drugs developed by Professor William Bachovchin, Professor of Chemical and Molecular Biology at Tufts .  Avacta is in discussions with multiple pharma and biotech regarding Affimer therapeutics opportunities. The pipeline of opportunities continues to grow across multiple applications.

With regards to Affimer research and diagnostics reagents, the focus is on licensing opportunities for reagents in non-therapeutic markets: progress has been made with multiple third-party technology evaluations and Avacta is expecting further licensing deals in 2018.  In addition, there has been strong growth in public validations of Affimer technology by third parties. This includes a record period for publication of third party peer reviewed scientific papers using Affimers as well as public support by likes of Covance and Heptares.

Since 31 January 2018,  Avacta has made progress in a second therapeutic programme, a LAG-3 inhibitor, such that the Group is confident to leap-frog the planned clinical trials for a PD-L1 inhibitor on its own and, on a similar timescale, aim for first-time-in-human clinical data for a PD-L1/LAG-3 bispecific therapy – a potentially much more valuable asset.

The Company is working with partners to demonstrate the potential of the Affimer technology in other therapeutic areas. In one such area, gene delivery, the Company has received a great deal of interest as a result of, the Directors believe, the technical benefits of the Affimer technology for this application. Moderna, Oncosec and FIT Biotech are all gene delivery collaborations. Moderna is evaluating Affimers against multiple targets and the Company expects Moderna to make a decision whether to develop these Affimers further before the end of 2018. In May 2018 the Company announced that its research collaboration with FIT Biotech had successfully completed a proof-of-concept gene delivery study with very encouraging data, showing sustained production of Affimer molecules by the muscle tissue of mice following a single dose of the Affimer DNA using the FIT technology.

With the growing body of data generated in-house and through collaborations, the Company expects that it will have sufficient evidence of the performance of Affimer therapeutics to secure at least one significant development partnership including an upfront payment with a significant pharma partner in the next two years before it reaches the clinic itself with its lead in-house programme. The Company expects that, in due course, clinical data from its in-house programmes will be seen as a major de-risking point that will make deal-making easier and deal sizes larger.


The Directors intend to invest a total of £70,000 in the Fundraising as follows:

Eliot Forster, Non-executive Chairman, intends to subscribe for 120,000 Ordinary Shares in the Subscription at the Issue Price for a total of £30,000.

Alastair Smith, Chief Executive Officer, intends to subscribe for 40,000 Ordinary Shares in the Placing at the Issue Price for a total of £10,000.

Alan Aubrey, Non-Executive Director, intends to subscribe for 80,000 Ordinary Shares in the Placing at the Issue Price for a total of £20,000.

Trevor Nicholls, Non-Executive Director, intends to subscribe for 40,000 Ordinary Shares in the Placing at the Issue Price for a total of £10,000.


The proposed participation of Eliot Forster, Alastair Smith, Alan Aubrey and Trevor Nicholls in the Fundraising is deemed a related party transaction pursuant to the AIM Rules. The Independent Directors consider, having consulted with the Company’s nominated adviser, finnCap, that the terms of the Director’s participation in the Fundraising is fair and reasonable insofar as the Shareholders are concerned.

The proposed participation of IP Group Plc in the Placing is deemed a related party transaction pursuant to the AIM Rules. The Independent Directors consider, having consulted with the Company’s nominated adviser, finnCap, that the terms of IP Group Plc’s participation in the Placing is fair and reasonable insofar as Shareholders are concerned.


The Company has four option schemes in place, a share incentive plan, an EMI scheme, an unapproved scheme and a long term incentive plan. There are currently in issue options to subscribe for 4,756,972 Ordinary Shares, representing 6.7 per cent of the Existing Ordinary Shares. Following the Fundraising the Enlarged Share Capital is expected to be 114,749,487 Ordinary Shares. To ensure key staff are fully incentivised, it is intended that the number of shares under option be increased to 17,200,000, representing 15 per cent of the Enlarged Share Capital. As at the date of this announcement there are 1,489,072 Ordinary Shares that have been awarded to staff below management level under an EMI option scheme. The exercise price for these options is between 70p and 134p per share. It is intended that for this scheme only the exercise price will be amended to be the Issue Price.