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For a company that’s just revealed £3.6m revenue for 17 months, you don’t think the current market cap will be justified when bringing in £50m for an initial contract with more to come, whilst also transitioning in to a clinical stage biotech? You think an additional £50m makes a difference? Deals starting to arrive will be a massive step for what was a tiny company.
But we are not a one trick pony, look at the depth of other technologies we have. To me our tests were a revenue stream which avoid further placements. This company isn't about COVID tests alone. The market will see this and I would expect a substantial rise, we will win contacts all over the world if we remain the gold standard and this will bring years of revenue for an existing technology
Agree, it is based on potential, but we are already 600m+ MC thats not exactly a small unknown company. We have no idea what our margins are going to be, ODX have the same problem, noone knows the numbers. This contract is the first glipse of how much money all these companies will make. Odx is struggling because investors dont know how much profit they will actually make. I dint think we get to 1bn on potential alone, we will need numbers.
The first deal(s) will be small as our initial capacity will be small. We’re not going to sign a deal for a billion tests if we can only initially supply at 5m a month. Chances are we’ll not know both the number of tests and the revenue anyway as that immediately means losing the ability to negotiate
If Alistair pinned potential on the UK government contact, yes I would be concerned but he has talked about European deals and that brings higher margin. We need a use case for technology and what could be better than UK Government.
We are proving our technology on the world stage, I don't think it matters £50m or £100m. Once the world sees we have the best test/technology on the market and it is being used in real life our value will soar.
Startup companies accept some contracts just to prove their technology.
The market price is based upon potential not just one contract.
Rolly
Oh dear your numbers, you were good at Maths in Grange Hill but you seem to gone down the nick a bit since you started knocking about with Tucker Jenkins
I am saying the market sentiment will not be good on a 50m deal, we didn't wait this long just to have a little 50m fee. 100m is a better base to build a higher market cap off, as we know bigger deals will follow. 50m will just lead to a sell off, and we have to then go from a lower starting point. Which then feeds into the chart traders who will call 290 a top. Sentiment, momentum and real numbers is what is needed, 50m is meh, wont be impressed at all.
We’ve been working with Mologic for months developing AffiDx. Do you think conversations were not had on working with HMG? The relationship is clearly very good.
I don’t think the relationship would be that good if they had been lined up as sovereign behind the back of Avacta. Especially, as of the presentation, we were still in active discussions to use their manufacturing capacity.
Well we know Mologic have been working with 2 companies with IP. Affimers and Aptamers. I know which one I would bet on it being if I had to!
BUT, is it us?
my 6 pennyworth:
the contract is between The Authority & GAD
3.1.10 Test Developer to grant a licence to Mologic......
3.3 Supplier not the 'manufacturer of record'
If neither Mologic nor GAD, whose IPR is being licensed for manufacture?
Fascinating expert level stuff Rolly. I’m assuming you do this kind of analysis professionally?
Just to confirm, you think that £100m is good because it sounds nice, but £50m is bad because it’s smaller? You think the former will get us to £5, but the latter will see the SP suffer? So, the share price is currently on a knife edge due to a difference of £50m revenue? By the way, the market cap moved by £50m today...
Thanks Rolly - there has been no ‘news’ for nearly 6 months. Until CE lands, and we have orders arriving, it’s sentiment based movements that have driven us to this crescendo. Granted, test performance news has derisked the investment.
Any order will see investors develop even stickier hands, forcing the SP north. Regardless of the value.
No still there (although once you have followed the link you may have to refresh the page F5)
Have these contracts been taken down now? I can’t seem to open them from the links here.
If I were the government, I would choose GAD over ODX - they’re driven by price.
They’ve loaned ODX equipment to reduce overheads in that £374m contract, diluting it’s potential share holder return.
Sounds to me that GAD are using a third party contractor for part of their operations and ODX are not. I’m not convinced of the significance of these contracts in terms of the identity of the test developer - but it is significant in that matters are clearly still progressing and possibly about to reach a conclusion.
Hope you're right PAH00, but not sure CE mark has anything to do with it.
I just picked 100m as a significant number, whereas 50m is a bit underwhelming. My expections were we get to £5 which would take us to over 1bn market cap. But to get there, we need real revenue numbers. I know the real profit will come from EU, but the gov deal needs to be significant (it should be because this is a big deal). Ive seen too many sell the news moves, never thought of avacta as one, but thats how it has traded lately.
Also interesting to note that GAD would seem to account for approx 62.5% of govt manufacturing capacity and Omega 37.5%:
Omega award: £50M-£374M
GAD award: £50M-£1B
Comparing the equivalent Omega redacted contract (£374mil), I notice that paragraphs 3.1.10 & 3.1.11 are omitted from the Omega contract. So, the question is, why would those two paragraphs feature in the Mologic/GAD contract, but not in the Omega contract? Assuming GAD & Omega will be making the same sovereign test, one would think those two paragraphs would be applicable to both manufacturers.
Quick follow up on that...
Looking at the signature page, both contracts were signed within 3 days of each other. So, the exclusion of paragraphs 3.1.10 & 3.1.11 from the Omega contract can't be accounted for by some miscellaneous update to the contract that occurred over time. So, to me it suggests that the IP paragraphs are associated with some internal relationship between GAD and Mologic, otherwise it would also feature in the Omega contract.
Ok my take on the black boxes is that possibly someone redacted this by using a redaction format that would have made it invisible and then it almost looks like someone went over it sloppily and made black boxes using a drawing feature as some boxes cover the last letter of a word and the boxes appear to not cover capital letter and lower case l’s , t’s etc. Very odd unless it is a method that offsets the redaction. I can’t find options in Adobe that indicate a format that would do this. Happy to be proved otherwise...
Rolly - how are you valuing Avacta at the moment? How does your £100m impact the MCAP?