Avacta to buy Launch Diagnostics, raise up to £62m

Avacta CEO Alastair Smith

Wetherby-based clinical stage oncology drug company Avacta Group said it agreed to acquire Kent-based Launch Diagnostics Holdings Ltd. for up to £37 million and that it plans to raise up to around £62 million.

Avacta conditionally agreed to acquire Launch Diagnostics for an upfront cash consideration of £24 million with an earn-out based on future business performance capped at £13 million.

Launch Diagnostics is an independent distributor in the UK in-vitro diagnostics (IVD) market.

“The acquisition is the first step in a M&A-led growth strategy by Avacta for its diagnostics division, with the vision of building an integrated and differentiated IVD business with global reach serving professionals and consumers,” said Avacta.

“The company believes that there is a significant commercial opportunity in the EU and the UK markets, which are fragmented, to build its position in the immunodiagnostics and molecular diagnostics value chain by acquiring companies that are complementary to Avacta’s core strengths in research and development.”

On its fundraising, Avacta announced a proposed placing of shares to raise £5 million via an accelerated bookbuild, an open offer of shares to raise up to £2 million, and an offering of convertible bonds in aggregate principal amount of £55 million.

Avacta said it intends to use the net proceeds of the fundraise to pay the initial consideration of £24 million for the acquisition, for general working capital purposes of the enlarged group and to support expected growth of the group.”

Avacta CEO Alastair Smith said: “This acquisition will add an established distribution channel to Avacta with three decades of customer relationships and deep market knowledge to drive future product development, strategy and growth.

“It is the landmark first step in our ambitious M&A-led growth strategy for Avacta’s diagnostics division that has been a year in the making.

“Our vision is to build an integrated, differentiated, global reach IVD business serving professionals and consumers, that uses the benefits of its Affimer platform to differentiate immunodiagnostic products in a competitive market.

“This is a transformational moment for Avacta Diagnostics, adding a well-established route to market for existing and future in-house and acquired products in the UK and across several key European markets.

“Avacta’s Therapeutics division continues to make good progress as expected in the clinical development of AVA6000, its first therapeutic product based on its proprietary pre|CISION technology as it progresses with the fourth cohort of patients in the phase 1 dose escalation study ALS-6000-101.”