Inivata has four months to snare lifeline capital
Cambridge life science business Inivata has until August to find unspecified millions to continuing pursuing its growth vision, directors and auditors state in the Babraham Research Campus company’s annual report for the year to December 31.
Inivata says discussions are underway with potential backers to head off a financial crisis and possible insolvency.
In a stark assessment of the race for fresh investment, auditor PwC adds: “At current spending levels the group and company would run out of money in August 2020.”
Inivata states in the annual report: “The group's business model depends on its ability to grow revenues from both In VisionFirst®-Lung testing and pharma collaborations or raise sufficient funding to provide resources for future development and business operations.
“Although the group has a strong existing investor base, there can be no assurances that it will grow revenues to adequate levels or be able to raise sufficient funds on a timely basis or at acceptable terms.
“The group has engaged in discussions with potential new financial investors as well as various potential strategic partners to provide additional funding.”
There is no doubting the quality of current backers, the success in fundraising to date or the potential for its core technology.
Inivata Limited and its wholly-owned subsidiary, Inivata Inc. performs research and development in clinical cancer genomics using circulating DNA analysis to improve testing and treatment for oncologists and their patients. The technology is based on pioneering research from the Cancer Research UK Cambridge Institute, University of Cambridge and has been reinforced by multiple high calibre publications.
The group has a CLIA certified, CAP accredited laboratory in Research Triangle Park (RTP), North Carolina in the US and a lab in Cambridge UK.
Admin expenses rose in the year as the company put in place the platform for global growth – a necessary curse for any globally ambitious life science business that cannot afford to stand still.
The current pressing issue isn’t caused by big losses or poor revenue from past year business; neither was the case. The issue is rather one of getting enough capital into the tank to exploit the many opportunities created.
A Series B funding round, which started in August 2018, provided additional subscribed capital of £6,500,000 and £10,500,000 in January and March 2019, respectively.
Existing investors Woodford Patient Capital Trust, IP Group, Cambridge Innovation Capital, and Johnson & Johnson Innovation (JJDC) participated in the round and were joined by RT Ventures in March 2019.
The funds were used to advance the US commercial roll-out of the group's first product, InVisionFirst®-Lung, in the US market and continue development of the product pipeline, including enhancements to the InVisionFirst®-Lung product.
In 2020, the group has continued to further its development programs, extend its products and product development into new and adjacent markets, continued commercialisation of InVisionFirst®-Lung, and expand business development discussions.
It aims to continue focusing on MRD product development with a US reimbursement path planned through the US Food and Drug Administration, which will require increased regulatory demands to achieve US reimbursement.
The group's business model depends on its ability to grow revenues from both In VisionFirst®-Lung testing and pharma collaborations or raise sufficient funding to provide resources for future development and business operations.
In 2019, the group commercialised Inivata's first product. Additional funding will be necessary to scale up the organisation to a fully resourced commercial entity which will be a significant change for the business.
Inivata says there can be no assurances that the group commercialises on a timely or successful basis or that there will be sufficient market acceptance of its products/services or ability to offer a broad test menu on a timely basis.
The independent auditors' report by PwC in Cambridge spells out the reality of the situation: “The group's and company's ability to continue in operational existence for a period of 12 months from the date of signing these financial statements is dependent on the ability to secure further funding through the issuance of shares, a collaboration agreement or some other form of partnering agreement.
“However, as at the date of signing these financial statements, the required funding has not yet been committed and may be impacted by ongoing uncertainty associated with COVID-19.
“The cash in hand at the date of approval of the financial statements is not sufficient for the group and company to continue in operational existence for a period of 12 months after the date of signing these financial statements.
“At current spending levels, the business would run out of money in August 2020. It will therefore require further funding in order to continue in business for 12 months from the date of signing these financial statements.
“These conditions indicate the existence of a material uncertainty that may cast significant doubt about the group's ability to continue as a going concern.
“Given the quality of the group's underlying technology and its demonstrated market fit among third party discussions to date, the directors are confident that Inivata will be able to attract investment to support business operations consistent with the strategic arrangement entered.”