Avacta shares sank on Thursday after the healthcare therapeutics and diagnostics company announced a heavily discounted placing.
Avacta raised £25.7m via a placing at 50p, a 34% discount to the closing price on 27th February. The company has secured funds from new and existing investors, including high-quality institutions and a European specialist healthcare fund.
Retail investors were able to partake in the fundraise through a REX retail offering.
Avacta shares were 30% lower at 52p in early trade on Thursday.
Avacta said it plans to use the majority of the proceeds from the placing to fund expansion of clinical trials and Phase 2 efficacy studies for its lead drug candidate AVA6000. The new funding will also provide working capital through the end of 2025.
AVA6000 is a modified form of the chemotherapy drug doxorubicin, designed to target tumors more precisely. The dose expansion trials are expected to begin in the second half of 2024 in the United States, followed by a Phase 2 efficacy study pending FDA approval. The trials will focus on treating rare cancers such as soft tissue sarcomas.
“Under very challenging market conditions we have raised financing that allows Avacta to progress at full speed its lead pre|CISION? targeted chemotherapy, AVA6000, into the expansion and Phase 2 efficacy studies. The emerging clinical data from the Phase 1 safety study strongly supports our belief that pre|CISION can change the way in which cancer is treated and we are pleased that we are now in a position to also progress the broader pre|CISION pipeline,” said Alastair Smith, Chief Executive Officer of Avacta Group.
In 2022, Avacta raised approximately £64m to fund the M&A-driven expansion of its Diagnostics division it now says it is seeking to divest in a way that maximises shareholder value.