Penarth-based EKF Diagnostics is exploring funding options for its newly formed UK business entity Renalytix AI.

Insider Media reports the listed point of care business has confirmed its intention to undertake a market sounding with selected institutional investors in connection with the prospective spin-out and initial public offering (IPO) of Renalytix AI.

It is expected that any equity fund raising would target proceeds of $25m (about £20m).

EKF is in the process of transferring its licence to certain sTNFR (solid tumour necrosis factor) biomarkers to its US subsidiary Renalytix AI Inc. The UK entity, Renalytix AI Plc, has an exclusive license and collaboration agreement with the Icahn School of Medicine at Mount Sinai in New York.

Subject to separate funding, these Renalytix AI entities would be combined within Renalytix AI Plc and would undertake clinical utility and large scale clinical validation studies beginning in 2019.

In a statement, EKF said “The directors continue to believe that the Renalytix AI business has the potential to deliver significant upside value for EKF shareholders. The directors of Renalytix AI are exploring funding options for that business, including equity funding. The market sounding exercise is being conducted in order to assist the directors in determining the feasibility of an IPO in the near term.”