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Love that last bit
I think it is a mistake to treat Novacyt as a pharma stock and assume it will need a "moat" in the form of patents, it is more of a mass market medical equipment supplier. Drugs cost hundreds of millions to develop and that is why patents are essential to protect the investment in intellectual property. In the current market Novacyt still has first mover advantage. It is in a position where it's products are in production and it has scaled up production and can take on big orders. Demand for testing is still increasing exponentially and there is a shortage of test kits.
It is all very well competitors having good tests in development, but will they get to market in time? Our government is already tendering for the foreseeable future and planning for winter. Novacyt is in a position to tender, the competition aren't.
Thank you seadoc at least we are worth something then im quite relieved.
On another topic of moats an no moats i think although sp prices rise the value of our money goes down so although numbers may appear to increase or hold the value of the money you put in may have been worth more than it is now what with inflation and package size decreasing by a third or more.
johnnybbad. UKOG has been on a downward spiral for years (with one recent spike). Who needs advice?
We all saw what happened to shirts on EUA...expect the same with novacyt. Eventually the market will wake up I expect rns towards the end of next week and saliva to be mentioned
Yes agreed although he has the right to post his arguments with respect, from an investment point of view, they are weak arguments. I've not seen anything to worry me other than trying to create a fear factor for the uninitiated.
balanced thank you for that very useful. I was never convinced by the moat argument for ncyt
I think we can fit into the definition of an economic moat according to investpedia and we are able to tick most of the categories. There is one for good leadership as well.
The world is littered with successful businesses that are making millions and billions in income that seemingly do not have a moat. There are even pharmaceutical companies selling generic drugs and they are increasing profits every year.
An economic moat is only relevant imo for an established business and not for a fast growing company like ours that is gaining market share from the big companies. The company's products are innovative (I think there was a post on here a while back nominating the company for innovative product of the year award?).
We all know that and it is widely accepted without a doubt that Coca Cola has an economic moat . So naturally you would think it has been a fantastic investment?
Yes and no. Coca Cola share price was $43 in July 1998 and today it is $45.15. So other than collecting dividends someone between those time periods (and it is a very long time period) would have seen virtually no share price growth. I understand that some commentators criticise CC's management and I have heard that even Buffet accepts it is not going to give you the growth rates that it did in the early days of his ownership. Pepsi has been a much better investment and the share price is still growing reflecting the growth in the business. One interesting point is that when Buffet bought his shares for $2-3 (I think it was in these low prices) others could not see why he was doing it and did not believe there was much more growth to come!
So the lesson here is also about profitability and growth and not just a moat. Imo our company is at the beginning of its growth journey and I look forward to the next instalment.
Speak for yourself Chrishar. I see no reason to write a love letter to seadoc.
I very much appreciate your posts seadoc, thank you for educating us. Your recent musings have given me added confidence that this is a good investment however at this level and I feel you're coming round to novacyt slowly. I understand that the lack of ability to patent genesig and primer design tests is a big factor in your decision making. And I fully understand why you shorted this stock up in the 400s back in April. Your point about having no moat is important but are you sure that's as important as you think it is right now?
You see fair value at 250 (~£170m mcap). You see the next bottom at 210 (~£140m mcap). But what we're now seeing is a difficulty for other companies that had shown amazing promise (look at avacta and genedrive) to muscle into the market. It's starting to look like this first mover advantage has not simply gained novacyt a £100m headstart but potentially a monopolistic advantage through the partnerships it has and its strong association with the WHO. You yourself agree that antigen testing has to be front and centre going forward and that this isn't going away for a long time...
We're not talking about normal times, we're talking about a pandemic where governments far and wide are throwing enormous amounts of money at it. We're seeing promises such as the £5b from the UK government to build up diagnostics in nations around the world. So I ask again, is the lack of moat and patent really that significant if novacyt continue to make millions and millions each week?
ps. ****tail refers to a mixture, as a bartender might make up. **** refers to a male bird but also refers to a part of the male anatomy and it would seem that it is a banned word.
John_james, DNA was first isolated in the mid 19th century. It was not until Crick and Watson worked out the double helix in early 50s that molecular genetics started. Simplistically if you want to divide you unzip the coil from one end and create two new coils, matching an A with a T and a C with a G so once you have got to the end you will have two strands identical to each other and both identical to the original. That is a polymerase chain reaction or pcr. When I was a medical student (early 70's) my supervisor was regularly pcr working on Drosphila which has the advantage of just two pairs of chromosomes and one of the pairs is tiny and is the sex chromosome. The nucleus is the "hard drive" of the cell. To get the information into the "processor" a copy of a length of DNA is copied into RNA, different sugar, bit less "springy" and easier to work on and still C paired with G but A paired with U. That is called transcription. If you have a length of RNA you can reverse transcribe to a double strand of DNA and once you have that do pcr. You have doubled the amount, repeat 10 times and you have 1000 times the amount. None of this is patented.
PrimerDesign have found one sequence which has only ever been found in SARS-CoV-2 and so is 100% specific. It can be used on any pcr machine. Another company could find a sequence, either the same or another, that is also 100% specific. Or the virus which is mutating at an alarming rate could mutate in that sequence and PrimerDesign would not be able to "see" it.
Through Exsig they have proprietary products to speed up the extraction of the RNA. They have a fast pcr. In a reference lab they might do 40 cycles of pcr, each cycle involves three changes of temperature. If you only do 20 cycles it takes half the time. If you have an enzyme ****tail that works twice as fast you can do 40 cycles in the time that a standard pcr takes to do 20. At the end you apply your probe and get a positive or negative. They may have found the best ****tail.
Finally through Gensig they have a small, portable automated machine that does all of the above. I cannot open the webpage this morning but I guess it is optimised to look for SARS-CoV-2 will run only on reagents supplied by PrimerDesign and would be ideal for testing before a football match or at airports.
So I am afraid the the answer to "Does it mean theyre paying ncyt for the privilege or not necessarily hence no branding on tests" is... Yes and no. But I hope my little essay will hope you and other investors make your decisions.
Seadoc , can anyone make and sell an rt pcr test or does primerdesign ltd / novacyt have the rights ?
Everyone quoting “The gold standard”
Does it mean theyre paying ncyt for the privilege or not necessarily hence no branding on tests
Chrishar, "So at £180m mcap I can't see what the reward is for you keeping half your short open?"
Simplistically, I now see 210 as the next bottom just because it failed to hold over 285p. Why? There is no "moat". Rtr and PcR are not patented. The full genome is in the public domain. The single sequence, a single segment, has proven specific over 50,000 sequences and despite 10,000 known mutations of which 27 infect humans, about 10 kill and 7 are in circulation in UK today. I saw 225.7 as underpriced, 250 as a fair price and 475 as overpriced (which is why I opened a down bet).
Interesting post seadoc, but I have a question for you.
I'm not in the camp that is so blown away by novacyt that I'd sell my house, my car and my dog to invest here. But I have felt for a good while now that the upside is far bigger than the downside. I like you see demand for testing staying high for the foreseeable future and it is highly likely novacyt are putting in place the sort of contracts that will cement solid cash generation into 2021.
So at £180m mcap I can't see what the reward is for you keeping half your short open?
Jimbooop, Wearing my medical hat I could not get the concept of an affimer to a swab containing a virus within cells. Do you have a link to that news? FWIW I could not get a short on AVCT so, probably, this has been known for the last month or maybe more. And before anyone points it out I do still have half my down-bet in NCYT but it is still the best test.
Antibody tests mean nothing. Even if you have antibodies you can still get ill and even without being ill can be infective.
There could be a vaccine, but not one that is effective. The future has to be based on testing and if NCYT can get a near patient, soon, test these shares are worth a fortune.
Apparently Avacta won't be tendering as their test isn't ready so one potential competitor out the way.
Condor are the company that will be assessing which tests the government should use see the site
There is a video conference via zoom call you can watch on the 15th outlining this. This is a 1,3 billion pound programme so I am not sure how quickly we will get to hear when the government will decide on what tests to use. We must be at the top of this list though as we are already working with Government. Politically I cant see them turning round and not using how tests as it would sound like that hadn't made the right choice in the first place and who else has got the range of tests we have and also mobile testing which we are just about to launch. If we do get an RNS I can't see this being part of it as this is process is going to take a few months?
Tender deadline is 20 July. So i imagine announcements will be made a few weeks after that. Early August will be instrumental here. Momentum will pick up and buyers will flood in as we draw nearer the end of the month.
We are blue!
When do we think the government will be awarding chunks of their £5billion pot for testing, was their any timeline on the condor program or is it open ended?