Member Info for Caughtsneezing

Yesterday was a bit worrying for me.

Previous presentations had left me feeling fairly confident that we had multiple options on the table for both third party collaborations and AVA6000 partnership when needed and while I was disappointed with it the raise could fit into that narrative.

There was a 5 minute period yesterday where I became less sure though. I am hoping that it was just a relatively inexperienced CEO over correcting when trying to show strength but her words definitely implied that we are still casting around and hoping for something to land based on data. To me that raises the spectre of more significant dilution in the short term.

Presumably RH started lighting up her phone because she brought it back towards the end but it’s still managed to sow a seed of doubt in what should really have been a moment of triumph.

I get the impression that CC is working to a long term time frame in Her view of shareholder value. That’s well and good for my sipp investment but as someone who’s been invested for 5 years it’s time to start realising some gains on the isa side too. More of the same isn’t going to do that.

On balance I still think it’s more likely than not that we see some form of deal before the year is out along with some decent sp appreciation from the SGC data but that was a definite whiff. CC needs a bit more practice in answering these questions before the next runout.

Once released, ava6000 and dox are chemically identical.

Any assertion that they will perform differently to each other is a misunderstanding of the science. The release mechanism will be the variable and the data from SGC and TNBC will absolutely be enough to provide a read across. There will always be a threshold at which point there isn’t enough of the drug being released to be statistically superior, I’m pretty sure that we all understand that STS expresses enough fap to fall the right side of that line.

Realistically though this passed from intellectual provocation into a poor application of statistics a long time ago.

STS was replaced by SGC, not TNBC.

TNBC was added to the trial because of CC's previous experience with it and its high TAM making it commercially attractive. STS was the quick route to market, which was then superseded.

Avacta only need one fast track indication. In the unlikely event of TNBC not working as expected it would just be dropped rather than replaced with STS, the strategic benefit just wouldn't be there for STS in the same way.

Pros:

Small enough to indicate that further funds are expected in the relatively short term.

RNS does not mention funding of P2 for either indication going forward.

Improves bargaining position for above short term funding

Cons:

Timing is an odd one - clearly held the SP back last week and it out seems to run contrary to CCs messaging on third party partnerships. Why is this necessary if one is coming? Will it turn out to just be be a way or rewarding RH's friends for helping out with the two previous issues?

Initial reactions to this raise is annoyance, despite its modest size. It seemed like we would be able to navigate through to non dilutive funding without further raises, at least until the SP improves. If this is the final one though I am fine with it, if it's an indication that timings have slipped or options have changed then less so. Only time will tell on that one.

Keen to see an explanation to the contrary but I don’t see how it follows that dilution is preferable to divestment here.

The uber bull case proves the platform and provides funding to advance a suite of drugs addressing the full spectrum of fap expressing tumours.

Prior to that, there are short term funding requirements for SGC, TNBC and AVA6103 phase 1. The elephant in the room on these is that the trials cannot be started without being fully funded.

To get there the options are either find through a mixture of third party warhead and licence deals on AVA6000. A third party takes on the much higher costs of the TNBC trial while the funds raised cover SGC to accelerated approval and revenues and 6103 through phase 1. At that point funding requirements are much more easily satisfied through SGC revenue and equity or debt raising at a valuation at multiples of now.

Option 2 is an equity raise to cover all costs associated with all 3 trials up front. Realistically, raising the best part of 100m isn’t happening without massive dilution and at a discount to today’s price. Long term though, you keep all of the future revenues and split between the increased shareholder base.

Success to that point though, means that the platform is working. Any assets that have been given away can be replaced but the equity dilution is something that you can’t undo. At that point the market isn’t going to care if it’s looking at 10 assets covering a range of cancers including a specific subset of tnbc or if it’s 9 and excludes that cohort. The valuation will be materially the same, it’s just that one route the share price is 1/3 higher than the other.

Exatecment you say...

We all agree. You should definitely go all in on a short in the run up to Christmas and tell us how that works out.

Nothing unknown and confirmation the p1b results for sgc are due in q4, plus no timeline slippage on AVA6103. Seems a long stretch from terrible to me…

That is TNBC specific no? Which implies SGC sooner than that.

You’ve also got to expect a backstop date would be one you consider easily achievable, the last TB big you want is a race to publish when it comes to scientific data so the company clearly believes either there won’t be one or a decision to bring the redemption forward won’t be an issue.

And long may it continue.

I've noticed in the most recent deck that a couple of timeframes that were Q1 2026 have slipped to H1 over the last few months. If that stays true I suspect that we may well need these extra pennies to reduce the impact of a larger raise than just the CLN in October. it would seem to be the time for it provided the price sustains and an additional £10-£15m will tide us over to what is hopefully a fairly hefty TNBC licence deal if that is delayed by a couple of months.

"You only go for low hanging fruit if you can't reach the higher fruit."

If ever a statement illustrated an absence of critical thinking it's this one.

SGC is selected due to its lower barrier to access but also its ability to secure ongoing non dilutive funds in the shortest time frame.

Not only would continuing with STS require a larger, costlier cohort but it will also take twice as long, requiring further divestment or dilution along the way just to keep the lights on. There is no point whatsoever in pursuing a minimax strategy if you have to give away the farm to attain it, that would be opposite of creating shareholder value.

SGC ensures that the companies future remains in its own hands, TNBC comes along (in not too much longer than STS would) as the cash cow and assuming they can't find an orphan indication for it, AVA6103 lands 2 years later. That's all the prospects the company needs, selecting STS at this point would risk all of that.

I wouldn’t say imminent but I also wouldn’t be surprised if they have considered scenarios that bring forward the accelerated approval timeline by a good year or 18 months depending on the data. That would mean that we’re still a year or so away from the early window though.

This had been in my mind too so I know that CC has referenced this, possibly during science day or one of the 6103 reveals.

The pipeline so far has been selected so as to not cut across itself. Cancer treatment is very much still a horses for courses approach, there will be other treatments already out there in specific indications are more efficacious than either 6000 or 6103 and at one new molecule a year it will still be a long time before they start eating their own lunch on these.

Worth bearing in mind too that the time to market for a new molecule is likely 7-10 years per, provided they are all successful. Options for accelerated approval are much fewer in larger indications with effective treatments already so the bar for clinical trials will be that bit higher and take longer to prove. NPV calculations for a purchased drug aren't likely to go much beyond about 15 years before assuming zero returns so even if we were to cut across certain lines after a point it shouldn't materially impact thinking.