Genedrive PLC (LON:GDR) said it is well placed to grow the business and exploit opportunities in the diagnostics testing market after raising £6mln through a successful placing and the issue of convertible loan notes.
The rapid diagnostics specialist said on November 16 that it had raised gross proceeds of £3.5mln via a conditional placing of 15,217,391 shares at 23p each with new and existing investors. It raised a further £2.5mln through the issue of convertible loan notes to small and medium-cap backer, BGF.
The company has proposed raising up to a further £500,000 by way of a broker option to allow existing and other investors to participate in the fundraising at the 23p-a-share placing price, which will be open until 6 December 2018.
The net proceeds will help fund the company's assay development programmes in antibiotic-induced hearing loss (AIHL) and tuberculosis (mTB).
It will also support plans to launch Genedrive hepatitis C virus (HCV) identification kit in up to 30 countries over the next year.
"The HCV market is significant with many millions of people affected by the disease in low and middle-income countries but low diagnosis rates,” said David Budd, the chief executive of Genedrive.
“We have the first-to-market point-of-need molecular test, a strong commercial platform and a clear strategy to deliver revenue growth. A test for antibiotic-induced hearing loss, a first product aimed at non-LMIC markets, and the re-launch mTB provide further potential to benefit from the capabilities of our Genedrive diagnostics platform.”
He added: "Securing BGF as a cornerstone investor and the fundraising we have announced today will put us in a strong position to deliver on these opportunities.”
The company reported positive operational progress in the year to June 30.
Hep C ID kit begins commercial sales
Commercial roll-out of its HCV ID kit into the Europe, Middle East, and Africa region began in March, with an initial focus in Africa, through a distribution agreement with Sysmex Corporation. It has since launched the product in Asia, also through Sysmex.
The group also has a distribution agreement for the product with Arkray Healthcare in India.
Hearing loss test market 'sizeable and attractive'
Genedrive’s AIHL received a grant from the NHS in June for the development and initial implementation of a point of care test for the prevention of hearing loss in newborn children.
The firm said the deal will “de-risk the sometimes difficult part of introducing new tests within the NHS environment in the future”.
Genedrive does not expect any difficulties in developing the assay so is focusing attention on overcoming the challenges of customer adoption, including IT and connectivity requirements.
“If proven, there is a sizeable and attractive market which the group plans to start to exploit during the calendar year 2020,” it said.
Tuberculosis test under development
For the mTB test the company is developing, it was awarded £1.1mln from public body Innovate UK in January.
The funding will provide a large portion of the capital needed to refine and develop an alternative sample preparation process.
The group said there would also be an assay reformulation to create a test suitable for detection of the most prevalent drug resistant strains of mTB.
Genedrive sees potential for further orders from US defence
In another area of the business, the group completed a development programme with the US Department of Defense (DoD) for pathogen identification in the year with the contract generating revenue of £1.6mln.
Genedrive has received an initial US$900,000 order and believes there is potential for further engagement from the DoD next year. The order is expected to be recognised as revenue in the first half of the new financial year.
Genedrive focusing on the core diagnostic market
As part of its strategy to focus the attractive global diagnostic market, the company sold its non-core Preclinical Research Services and Pharmaco-genomic Services businesses for an initial £1.15mln.
It will receive up to an additional £750,000 based on R&D tax credits earned in the 36 months post sale.
The proceeds of the disposal were used to invest in diagnostics.
Last year the group generated revenue of and other income of £1.9mln and an operating loss of £7.4mln.