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"My understanding was that avacta have the option to repay in cash."
Yes i believe that is correct. My understanding is that Heights have the right to convert any amount at anytime - subject to Avacta repaying in cash if they have it.
Do Avacta have a spare £38m ?
Avacta are a loss making company. I doubt they will use their cash pile to pay off the loan. They will just issue equity. Diluting the company matters less to the bod than it does to us annoying retail investors.
My understanding was that avacta have the option to repay in cash.
GJE maybe if heights allow it without converting.
In the absence of initial licensing cash Avacta will still need all the cash they can get to progress plans through 2025.
Actually RAH has extracted the relevant part on deal making:
https://x.com/RAH00084/status/1778314136218181714
AVCT, i'd like to see DX sold and monthly repayments paid back in cash from that point onwards. This would give a good balance between cash in bank and no further dilution.
Yes although "strengthen negotiating position" kind of implies "keeping going independently for as long as possible", so naturally they would want to borrow as much as possible balanced against dilution.
Imo DX proceeds, if a sale happens, wont be used to repay loan.
That's a plausible scenario, the only bit I might take issue with is when you say "The other comment that stood out yesterday was that the cash runway was required to strengthen the negotiating position, so that may have also been a clue as to what prevailed here."
That to me sounded a bit like typical AS BS. More likely I think is that AVCT borrowed as much as they could to get as far down the testing slipway as possible given there are always unforeseens that trip up the best laid plans.
Anyway, they have the money.
DX is the next hurdle. If they can't sell it for enough to clear the bond then they have to keep it and suffer the drain on resources and a drag on SP appreciation. So presumably it will be the lesser of 2 evils that will dictate that course of action. But we shall soon have a clear idea whats going on there.
The other comment that stood out yesterday was that the cash runway was required to strengthen the negotiating position, so that may have also been a clue as to what prevailed here.
I speculate that there were some prospective smallish license deals bubbling away (hence the previous bullishness), but the negotiations didn't go too well. Perhaps the avacta negotiating team weren't strong enough, or perhaps the second party felt they could get away with undercutting the deal based on Avacta's financial situation. At some point someone came in and said a. the terms of that deal are selling avacta down the river and b. it is likely to damage future deals with bigger players (also hinted at in yesterday's webinar), and so the whole deal was pulled. At which point avacta was at the mercy of the city boys, resulting in the heavily discounted placing.
So, yes of course any investment is a risk, however, my feeling is that it was the timings were maybe 12 months out for Avacta to have been able to effectively leverage what they have in any negotiations. I feel more confident that with the growing body of data, especially with the ongoing 2w trial, and the cash runway, that subsequent negotiations are going take place on a more level playing field.
Yes indeed, in which case why do it now?
If they had to, on a previous thread that they had less than 1 years cash to keep solvent, it might go someway to explaining the current SP. It was last ditch stuff...
We might never know but I do remember when BP had the oil disaster in the Gulf, it was later reported that it was at one stage, hours away from bankruptcy and that is multi-multi-multi billion dollar company.
Maybe from the business perspective it has been far more precarious than any of us have imagined.
It might explain the frequency of shorts out on the company and for all the vitriol expended on this subject, the risk of shorting a company is very high, you don't do it on a whim, or for a bit of malicious fun as many here seem to imply.
It might also explain the downward trend in the SP for so long, in that the risk of administration has been greater than the chance of a buyout within the timeframe of commercial approval, assuming that those hurdles are overcome.
We are back to probably acknowledging that this is a small, high risk bio-tech in which the vast majority fail rather than succeed.
Perhaps the market is not as thick as mince after all?
Yes, although my point was they might still have had to convince SPIV Bank plc to give them the loan at all.
More likely gje, AVCT has little or no say in any of it.
You have to assume AVCT needed the mony not the hedge funds needing to loan it.
Best off the top of my head analogy:
You desperately need a loan. High St. bank APR 9% but they won't lend you the cash. SPIV Bk, 36% APR happy to loan you the dosh.... what choice do you have?
I think it just confirms that AVCT do not have a commercial product yet.
(That was presumably why it was a bond and not a RI previously because then, that was the only deal in town and maybe it came with the requirement of buying those companies...?.... Ok thats a stretch, but my point is, don't work on the assumption that AVCT are in control of their own destiny. when it comes to finances.
The world is full of patented ideas that never get to see the light of day. Thats the market AVCT are in until its approved with a capital "A"
Given the obnoxious fund managers we have seen paraded on vox markets by Paul Hill, and the throw away comment by AS about PI's importance, I suspect the truth is somewhere along the lines of:
A small amount was sold to respectable funds to give a semblance of legitimacy, and the remains were sold to cretinous hedge funds with the strapline "you can have these cheap and double your money - this is a private investors wet dream and they'll provide the liquidity" (excuse the awful pun)
Now I don't think Avacta management went out of their way to concoct this scenario, and reckon that the UK financial markets just suck at the moment (as evidenced by a few recent anecdotes of biotechs having a really hard time raising funds) and this time they were just caught out, plain and simple.
Well, at last, it seems more here are starting to divorce the business from the science....
Here are details of the AXA Framlington Health fund - https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/a/axa-framlington-health-class-z-accumulation - Fund size £590m, 46 holdings (mainly big pharma companies), average £12.8m per holding.
and the AXA Framlington Biotech fund - https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/a/axa-framlington-biotech-class-z-accumulation - Fund size £423m, 50 holdings (mostly medium sized and small biopharma companies), average £8.5m per holding.
The 2,336,248 shares acquired by AXA IM cost £1.67m which is approx 0.4% of the latter fund's value. A nominal amount at a bargain price or just dipping their toe in the water? Anyway, they will be monitoring performance and will keep, increase or sell their holding as they deem best.
Well that's AS for you. Always ready to smother a pig with lipstick.
I was just about to post something similar ....although my information comes from a different site, so I'm guessing that Framlington Biotec is the 'European health fund' AS keeps referring too, .....the funds worth 411m and they do state in their mission peace that ..."The aim of this Fund is to provide long-term capital growth over a period of 5 years or more" so hopefully they will stick around for a while.
But I am surprised by the small amount of shares/% they have taken which amounts to about 1.65m......hardly screams total confidence and certainly doesn't warrant AS giving them a gold halo award...... and if they only took 5% and were worth worth trumpeting......then clearly most of the shares were taken by flipper funds and he obviously new that.
Well the 2,336,248 shares acquired by AXA Investment Managers UK Ltd between the previous listing on the Fidelity site and 31 March 2024 represents 4.56% of the Placing Shares (for IIs) placed on 28/29 February.
As this is the largest and only share number increase in the top five shareholders listed on the Fidelity site as of 31 March 2024, I would hazard a guess that these shares were bought for the AXA Framlington Biotech and/or Health funds, which are two respected funds with long investment records. Not as good as the Polar Capital Biotechnology fund, but may be in future if they stick with the Avacta shares...
Look on latest list of shareholders on Bloomberg.
Thank you craig
BV...'There are two types of (European) specialist healthcare funds: those that nurture and bring on small 'healthcare' companies; and those that just buy and sell shares in 'healthcare' companies.'
Agree totally, hence my earlier comments.
I've gone all out with Medicxi purely because of the Eliott Forster connection and other little coincidences which may or may not be relevant. In order to commercialise ourselves we NEED a Medicxi on board NOW...
One other point...the new Avacta website layout...if you check the various companies listed on the Medicxi site they generally follow a similar format and the new Avacta website seems to fit in with their style...again could just be a coincidence...
Sorry should have said scroll down -
AXA Investment Managers UK Ltd 2,336,248 0.27449 2336248 - 31 Mar 2024 0.67
Https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BYYW9G87-avacta-group-plc/profile
Yesterday, HurstBot generated one of its random, unqualified statements: "Interesting to see AXA and Baillie Gifford on the shareholder list." If that is indeed true, then both of these companies have health funds and only Baillie Gifford has previously been listed. Unfortunately there was no printout along with the statement so where the data came from, if other than a shortcircuit, we may never know.
There are two types of (European) specialist healthcare funds: those that nurture and bring on small 'healthcare' companies; and those that just buy and sell shares in 'healthcare' companies. The former usually demand influence, such as a seat on the board, for their input and support. Maybe we'll hear about that after the 40 day embargo is lifted. The latter trade according to their view of each company, its management, its prospects, the sector and the market. My belief is that AS has got his brightest lipstick out for the latter.