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Bella - indeed!
I doubt the existing contract with Medusa19 is valid or even relevant in it's current form with regards to their manufacturing.
Wasn't it purely a retail sales contract? Now they need a manufacturing contract, and if they get one it will be on similar terms to all the other manufacturers.
I feel pretty confident in AS (and the rest of the Avacta team) to get the right deal. Yorkshiremen and money, usually a safe combination :-)
Ndn71 agree we will get an RNS for CE but it will only be 6 working days from submission if there are no hiccups/questions/missing data/staff shortages etc etc...
Fingers crossed it all goes to plan.
This is one such deal where we probably won't see any sales detail. We may get details of a launch if we're lucky but it will be more likely just income shown in our accounts.
'Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and reagents and LG Chem Life Sciences, the life sciences division of the South Korean LG Group, today announced a multi-target collaboration and development agreement. The agreement provides LG Chem with the exclusive rights to develop and commercialise, on a worldwide basis, multiple Affimer® therapeutics intended for treatment of patients in the fields of inflammatory disorders, and oncology. Under the terms of the agreement, Avacta will generate and carry out the discovery, optimisation and protein engineering of Affimer® drug candidates against a set of undisclosed targets. LG Chem and Avacta will collaborate to progress these candidates through to drug candidate selection and LG Chem will be responsible for preclinical and clinical development and world-wide marketing of any resulting products.'
We should get an RNS when CE marked and that should be within 6 business days of submission.
Coming days could be through Friday...so please don't get upset if we don't see a CE approved RNS tomorrow or Tuesday.
No Avacta has always talked about licencing deals not actually producing and on selling themselves which I still think is the main game plan. So this would mean we will get RNSs telling us when licence deals etc have been struck and not sales volumes.
Now a partnership can still be a licence for profit share deal whereby Avacta licences the affirmer tech, provides ongoing scientific and research support and keeps trademarks/patents up to date...but isn't responsible for production and sales of end product.
We’re already in that position. We have private agreements with companies that have contracts with the govt, but we’re still planning on selling in to Europe. What’s the difference if Medusa do have their own manufacturing? It depends on how crystal clear the contract was for the profit share. If they’ve made huge investments, they’ll be wanting a return, the partnership muddies the waters a bit as it’s not as clear.
Here’s another scenario, they produce their stockpile and want to sell it DTC for increased margin but Al wants a deal with a European govt. Who is calling the shots? It’s messy, they have the rights to sell exclusively, but it’s a profit share. There’s always been a question mark over where they would get their product from. If they’ve got their own capacity to resolve that, that’s works for all in a lot of ways. They crack on, sell wherever as we still make money, how much, who knows as they can load the costs. It’s all additional, so we’d have:
- possibly a govt contract - via UKRTC
- definitely 5m+ for Europe - via existing contracts and newly ‘inked’ ones
- low possibility of US
- Xm via Medusa selling DTC and wherever
I’m just ignoring the latter until it turns up and it’s clear how it’ll work. There’s plenty else to look forward to.
Re Medusa: as with everyone else and probably the entire market I’m highly skeptical, good thing is that it’s completely priced out at the moment so any news will be a bonus. I wouldn’t be counting any chickens with them but sometimes with billion pound investors and over a year of work can do wonders....
Hopefully we get a meatier RNS this week with some contract/manufacturing news embedded as opposed to a yes it’s on market intraday
Pl, in the scenario that sees Medusa manufacturing Affidx, there would be at minimum one clause to renegotiate. That would be the clause that covers who gets first call on any available product. For example, let's say Avacta has managed to stockpile 10ml tests manufactured by GAD. Medusa receives a purchase order for 10ml tests from one of their customers, at the same time as Avacta receive an order for 10ml tests from govt (UK, or other). Who do you think gets first call on the stockpile? Fairly obvious answer, I would think.
Now let's imagine that stockpile had been built using Medusa manufacturing capacity. Who gets first call in that case? I'm pretty sure Medusa won't be saying "Ok, Al, we'll send over the tests right now. We'll just get on the blower and tell our customer sorry we're out of stock"
Another is experience of doing things at vast scale.
Contrast with loss-making companies who are medical device experts, but struggling to run two pennies together and growing more slowly while trying to minimise shareholder dilution.
You can recruit in that IVD talent, and it seems they have, in the form of Christian “Peter Pan” Stephenson and others.
And a slave workforce, like chi-nah...
One advantage they do have over the other LFD manufacturers is billions of capital to deploy from elsewhere.
Seems very plausible too PL75 as I said yesterday seems crazy they would have outstripped GAD,BBI, Abingdon and ODX in 5 months.
Their pointless test does have an LFD element but would they have the tooling to make the same quality of device as the afore mentioned "proper" LFD manufacturers.
Who knows? Hopefully all will be revealed in the coming days...
There are no further negotiations, they agreed to a profit sharing deal for DTC sales. Part of the cost element is manufacturing. If they’ve secured their own manufacturing, smashing, if not it’ll need to come from somewhere. I just struggle to believe they’ve managed to increase their capacity to be the largest LFD manufacturer in the U.K. by far during a time when every govt in the world is looking to procure capacity. Especially when it would have been sat idle as they’re not getting sales for their pointless test. Access to a supply chain means they have had access through their own partners for their pointless test to increased capacity. How large that figure is or if it’s true, who knows. It might be suitable and they might be able to help broker a deal to provide access to this capacity, but these are all complete unknowns. We’re all praising their business acumen, they’ll be recouping their costs - how much of that will be shoved through as an extra margin on their side? They can subcontract to a subsidiary within their group with high costs and siphon off a chunk of profits, how tight was the original deal? I don’t believe or trust them, but if they rock up with huge capacity at bargain rates then I’ll happily munch on humble pie.
Seems very plausible and again I'd ask why on earth would they need that volume for their own pointless test.
They are very canny operators who know how to exploit opportunities to make money.
The scenario you paint makes perfect sense.
If their capacity is real and the quality assurances in place, it seems a very likely outcome.
Another point to add to the M19 strategy:
The commercial landscape in the UK changed massively when the Uk government became the sole customer, with their own logistics supply chain. The only way to get a slice of that domestic pie is to develop or manufacture tests. Not wanting to be cut out of the deal with Avacta, their Uk focus would have had to shift to manufacturing.
Thanks - lots of interesting discussion. Starting to believe Medusa might become a key player in the story myself.
Think about it from the angle of their strategy:
- Medusa recognised the massive market potential for antigen LFTs.
- Avacta don’t do logistics, so having a partner on board that has experience of, and a strong track record with, massive logistics supply chains made sense.
- Medusa start to scale up said supply chain.
- Medusa recognised Avacta test was potentially many months away from launch. They found an alternative test to try to market in the mean time (the RSPT).
- At some point it becomes clear that the demand for the Avacta test is going to massively outstrip supply, and Medusa19, run by the canny business people that it is, realised the bottleneck in their supply chain was going to be manufacturing. So they make their own manufacturing capacity. They trial it on the RSPT until they can get a final design of Avacta TT’ed across.
A lot of speculation there. But seems a plausible series of events to me. That scale of manufacturing capacity would more likely match the demand profile for AffiDx, not the RSPT.
I think Avacta would require the same S&S values for all LFDs manufactured using affimers in order not to devalue of their IP, and that implies TT and uniformity of accuracy, not necessariily of appearance or branding though. I'm sure Medusa also would want the product to be of the same quality.
Lol. You clarified while I was typing.
Yes. I agree Medusa could be in the running on that basis.
Lots to look forward to.......
................................................... "in the coming days!!"
Just to add. This is why reagent only licensing deals are less likely than deals to manufax our exact test.
Licensing reagents only, means the other party has to go through the whole test design/validation process from scratch. Which will take a whole lot longer than just tech transfer to produce our exact test, using the Gad produced architecture.
gmcc: Hard to believe Avacta have pulled out of the deal merely due to a change in sampling method. Not in their interests to do that. If Avacta thought it was a good idea re: saliva, why would they now think it not a good idea re: AN. Of course, existing agreement can be changed or new agreement put in place.
MilkMONSTA: Of course, Avacta would have to TT the test architecture Avacta/Mologic have come up with. But, don't forget the cassette is made of 'readily available components', so easy enough to do. This would be part of the negotiation. I don't mean 'close' in the lovey, dovey sense, let's amend that close working relationship :-)
Medusa’s opening negotiating position
- We manufacture your tests with our own raw materials, with you providing the reagents
It isn't as easy as making any old cartridge to put the reagents in though is it Scaredy? Al himself said for example, that they went through many, many paper strips to select the one that worked best.
The reagents were ready over a year ago. Getting the test architecture right has taken a huge amount of time to get right. Medusa can't just bang the reagents into what they have at hand.
"given the close relationship between the two"
Not sure there is much evidence as yet to sugeest the relationship is "close"?
Not sure if still relevant or applicable as agreements can be changed , note original agreement with Medusa 19 was based on "saliva test "
"Avacta Group plc (AIM: AVCT), the developer of Affimer® biotherapeutics and reagents, is pleased to announce that it has entered into an exclusive distribution agreement with Medusa19 Limited (“Medusa19”) for direct-to-consumer sales of a saliva-based rapid test for the COVID-19 antigen."
“My view - Medusa talking about their increasing capacity was a marketing ploy to try and get some fomo going.”
I think there may be more truth in that than you imagine PL. However, the fomo element may very well be directed at Avacta. It is highly likely there have been discussions/negotiations between Avacta and Medusa regarding Medusa’s manufacturing capacity, given the close relationship between the two. Assuming this to be the case, it might be useful to look at the probable opening positions of the two companies in such a negotiation.
Avacta’s opening negotiating position
- You manufacture our tests and we stick to the original profit sharing deal, with you having exclusivity for B2C and non-exclusivity for other markets
Medusa’s opening negotiating position
- We manufacture your tests with our own raw materials, with you providing the reagents and we pay you a small commission on any sales we make (emphasising the gulf in margin for them between sales of Affidx & RSPT). We have exclusivity for B2C and non-exclusivity for other markets
Important to remember that when the two companies struck a deal last year, presumably it was not known or envisaged that some months down the line Medusa would become a manufacturer of LFD’s. Had Medusa already been a manufacturer of LFD’s at that stage, the deal they arrived at would probably have looked very different – with Medusa having a much stronger hand to play.
I think the negotiations (in all probability still ongoing) between the two companies will be directed at finding a compromise between these two opening positions. It would not be unreasonable to hypothecate that Medusa, overstating their manufacturing capacity and embellishing demand for the RSPT test, are merely using this as leverage in the above negotiations. Medusa will know all too well the value of this capacity to Avacta.
Not to exaggerate the point, I can’t over emphasise the sense of urgency and enthusiasm exuding from our friend down at M19, when he said “we need the numbers”, together with his look of disappointment at not being able to find the extra tests. To me, that doesn’t square with someone who is confident of knocking out 25ml RSPT tests per week, and as a consequence, just sees Affidx, due to supply limitations, as a nice little earner on the side. Tempting to say, watch this space.