Affimer technology developer Avacta (LON: AVCT) is acquiring in vitro diagnostics distributor Launch Diagnostics for £24m, plus up to £13m in performance related earn outs. This acquisition is part of the strategy to build up a European distribution business.
A placing at 95p a share will raise £7m and a three-for-365 open offer could raise up to £2m more. The current share price is unchanged at 99p.
A convertible bond issue could raise £55m – issued at 95% so it could raise £52.5m – and it is convertible at a 25% premium to the 95p a share placing price. The conversion price could be adjusted after 18 months to a level no lower than the placing price. The bond lasts until 2027 and has an annual interest charge of 6.5% payable quarterly in cash or shares.
Launch Diagnostics
Kent-based Launch Diagnostics is a profitable business that supplies diagnostic reagents and instrumentation for pathology applications. There are customers in the UK, Belgium, Luxembourg and France.
Non-Covid sales were £14.2m in 2021 and there is significant repeat business. The additional consideration is based on 50% of gross margin above £2m from sales of Covid-related products in each of the next three years.
Avacta’s core business is the development of Affimers, which are engineered alternatives to antibodies, and the company owns the rights to the technology. Affimers are based on natural proteins that are adapted to behave like an antibody. They are much easier to make and easier to modify than antibodies.
Avacta had revenues of £2.94m in 2021 and there was a cash outflow from operating activities of £20.5m. Net cash was £17m at the end of June 2022.
The additional cash raised will help to finance the further development of affimers and related treatments.
