Group News
OMD Acquisition
Dec 14, 2007Complimentary gas detection and analysis technology to broaden market reach
Avacta Group plc
£3 million Acquisition
Avacta Group plc (“Avacta” or the “Company”), which develops detection and analysis technology aimed at the defence & security, biopharmaceutical and clinical diagnostics markets, announces the acquisition of Oxford Medical Diagnostics Limited (“OMD” or the “Target”) a specialist in high sensitivity laser based gas detection technology which spun out from Oxford University in 2004. The applications are synergistic with Avacta’s existing products and customers and the technology is complimentary, providing gas phase detection capabilities to work alongside Avacta’s core strengths in liquids and solids analysis.
The initial purchase consideration of £3 million will be satisfied by a small cash payment and the issue of approximately 43.9 million ordinary shares at 5.0 pence per share and options over a further 14.8 million ordinary shares with a weighted average exercise price of 0.6 pence per share. Additional options will be granted at nominal value in respect of an incentive scheme for key personnel up to the value of £1.9 million subject to the satisfaction of certain operational and commercial milestones over a period of up to four years.
OMD’s patented technology uses infrared absorption spectroscopy and is targeted at two major markets: industrial process monitoring and, in the longer term, clinical diagnosis through the rapid analysis of breath samples.
Industrial Process Monitoring
OMD’s laser based gas analysis device has reached the final prototype stage and the first product, which will provide a measurement of moisture content in natural gas which drives gas value, will reach the market in nine months time. OMD’s technology will provide quick and sensitive measurements in a cost effective product. This equipment is expected to position Avacta as a leading developer of this type of technology.
The market for gas analysis technology is large, at approximately £1 billion and includes security and defence applications, toxic gas detection in a range of industries, and gas quality analysis in sectors such as the petrochemical industry. OMD already has a commercial partner to address the natural gas market and several other partnership deals under discussion. Point of Care Clinical Diagnostics A growing number of diseases, such as tuberculosis, asthma, lung cancer and some ulcers, can be diagnosed through presence of certain molecules in the breath. At present such analysis is carried out using large, expensive and complex mass spectrometers. OMD has a strong patent position to use its technology to analyse breath for diagnostic purposes and Avacta believes that the equipment under development will lead to lower cost, portable devices which can be used easily by clinicians to give accurate, rapid diagnoses.
Professor Alastair Smith, Chief Executive, Avacta, commented:
“OMD is a perfect fit for Avacta. It brings a highly complimentary capability that has applications in our core markets of biopharmaceuticals, defence and healthcare and brings with it new routes to market for us in industrial process monitoring. The Oxford founders, led by Professor Graham Hancock, and the operational team are a huge asset to the wider Group.
“The long term goals of the two companies are also perfectly aligned - to provide high value products for the lucrative clinical diagnostics market. Point-of-care health diagnosis is increasing in importance, driven by the need to effect more immediate treatments. We believe that the OMD technology, which has a well protected position in this application area, will become an important tool for clinicians helping to make breath diagnostics a routine method of health assessment in the future.
With the exception of any director who is involved in the transaction as a related party, the directors of Avacta consider, having consulted with the Company’s nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.
14 December 2007
Enquiries:
| Avacta Group plc: Alastair Smith, Chief Executive | Tel: 0870 835 4367 |
| Nexus Financial Ltd: Nicholas Nelson / Kathy Boate | Tel: 020 7451 7050 |
| WH Ireland: David Youngman / Robin Gwyn | Tel: 0161 832 2174 |
| BankOra Limited: Henry Turcan / Michael Brennan | Tel: 020 7099 1940 |
Notes to Editors: About AvactaAvacta was spun-out from the University of Leeds in 2004 by its current management team as a biophysics company, with the aim of combining the disciplines of physics and biology to develop innovative technologies and expert technical services to address needs in the pharmaceutical, defence and clinical diagnostics markets. Avacta has a core bio-analytical technology development programme addressing the needs of the biopharmaceutical sector to fully characterise their new products at the earliest stage in their development to reduce the risk of late stage failure. High value solutions in defence and clinical diagnostics are also being provided by Avacta’s development programmes. A successful and growing part of the Avacta business model is its technical services arm, Avacta Analytical Ltd which is focused on providing leading edge contract research to the biopharmaceutical and healthcare/personal-care materials sectors. Avacta listed on AIM in August 2006.