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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.
https://www.investopedia.com/ask/answers/05/economicmoat.asp
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?
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
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?
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
http://www.newcastle.mic.nihr.ac.uk/condor-platform
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?
thoughts everyone
Regards
Bramley 1967
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.
Moving on.
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?