Medical technology company Admedus (ASX: AHZ) is on the brink of attracting at least $18 million to fund further research into its vaccine program.
Admedus announced that its subsidiary Admedus Vaccines Pty Ltd has signed a letter of intent (LOI) with Hong Kong-based investor Star Bright Holding to kick off negotiations to establish a firm and ongoing “funding arrangement”.
To demonstrate the seriousness of their intentions, the LOI includes a non-refundable break fee of $500,000 which secures a six-month exclusivity period for Star Bright.
The overarching plan is for Star Bright to buy a 60% stake in Admedus Vaccines for $18 million with shareholders in the parent company retaining 40%.
With an LOI signed and announced to the market, investors took notice. Admedus shares jumped 11% higher up to $0.40 per share, as the two companies begin negotiations towards a hasty deal to be fleshed out over the coming months.
“The due diligence process has been completed, with the terms and construct of the deal to be negotiated over the next six months. We look forward to working through these negotiations and will update the market again upon signing of a final agreement,” said Mr Wayne Paterson, chairman and CEO of Admedus.
Mr Paterson added that “once finalised, this will also deliver on our earlier commitment to secure an alternative funding source for the immunotherapies division which requires significant additional investment to fulfil its potential as the developer of ground-breaking vaccines.”
Admedus’ admitted focus is on developing the next generation of technologies in partnership with other companies whilst acquiring strategic assets to grow product and service offerings.
The company has stakes in a variety of assets from research & development through to clinical development as well as sales, marketing and distribution.
Just last month, Admedus signed a purchasing agreement with a major US-based group purchasing organisation through its US subsidiary, Admedus Corporation and saw its proprietary ADAPT technology (used to treat a variety of heart defects) given the green light by Canadian regulators.
With funding now secured for its spin-off vaccine unit, the company hopes to develop a series of vaccines for various diseases and cancers.
“We welcome today’s development as the execution of this agreement will allow our research team, including Professor Ian Frazer, to continue and expand their important and potentially life-saving work developing vaccines and treatments for a variety of diseases and cancers,” said Mr Neil Finlayson, CEO of Admedus Vaccines.