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Key question then is where has that cash gone. They state the drop in cash position is due to investments over the course of the year. Needs some digging.
I thought it looked good at first pass. Not sure if the drop is people taking your view JS, or just the fact it is a liquidity event on an illiquid stock in a dreadful market. Could be an opportunity down here but needs a thorough look first.
Good point. Obviously, I mean “the price that shall not be named”.
Forget that, what about our old friend 137p?
You have to be impressed with the size of the raise at market price, even if that’s been beaten down lately.
Say what you like about whether they have finished the platform development promised last year, but you can’t argue with the delivery of impressive commercial partnerships and rapidly increasing revenues at this point. They seem to be right on the cusp of growing revenues to the point of actually putting a big dent in the overheads.
2019 revenue: £0.14m
2020 revenue: £1.7m
2021 revenue: £2.6m, resulting in cash burn of c.£5.3m.
Then revenue was up 160% in H1 22 vs H1 21 to £2m, although with 6 month cash burn of £3.4m…
Obviously future revenue and cost increases will be lumpy, but at the rate of cost growth and assuming margins continue to improve, my guess is they could break even somewhere in the region of £12-20m/yr revenue (higher numbers being conservative and assuming scalability is not completely frictionless ). There seems a decent chance this raise could get them over the line to achieve that, with high double/triple digit annual revenue growth for the next 2-3 years, or at the least it should provide a couple years’ cash runway through the ongoing harsh economic climate.
Say they were to make £5-6m this year (loss of £5-7m on £11-12m costs) and £10m the next (loss of £2-5m on £12-15m costs), then break even in 2024? With those losses offset from a stash of £17m (end 2021 cash plus current raise of £10m), this raise would comfortably see them through. All assuming continued successful execution of growth. And this is much more conservative of course than the promised “guaranteed £30m revenue over two years”, in which case they should be pretty comfortable you’d think, and maybe just need the cash now to ramp up investment in that rapid growth.
Am I wide of the mark, or do these numbers look fair to those of you who know BIDS better than me? Would be interested to see Stifel’s revenue forecast estimates if I can find and check out the note later.
Thanks, good summary. I’m in the TG group and read everything there, but this makes it even clearer to me.
New betting shop next to the food bank! Honestly, with strategy nous like that you’re wasted on benefits. ;)
Great post, JT. Thanks for compiling it all and laying it out so clearly.
Regarding the US hospitals coming on line:
At the AGM AS commented that getting all the admin/paperwork in place for the US hospitals was more time-consuming than initially expected. This may relate to getting individual hospitals up and running, and/or the ODD.
Running clinical trials in the US can be very expensive. The ODD gives financial incentives/tax breaks. We know AS is cautious and doesn’t like to throw money away, and that Avacta now has top US oncology advisors who will have guided them through the most prudent way to work within the system. It was clearly preferable to wait until the ODD was in place, which was received too late to contribute to P1a.
They obviously had no problem recruiting all the patients they needed for P1a from the UK (especially in cohort 3 that completed without any delay, which perhaps says something that people were lined up ready to go). Phase 1b requires lots more patients, all starting in parallel.
IMO, US hospitals will almost certainly come online in phase 1b for (at least) the STS indication in the ODD. There is no problem to be inferred from them not being online already.
The original post seems to be an effort using non-Affimer small binding molecules from the University of Lisbon, with some other collaborators.
Interesting though that they report the potential for improved efficacy vs antibodies due to small molecule size penetrating the tumour micro-environment. Let’s hope LG Chem are finding similar.
Sorry, should say ”all know what happened there”
Someone (I think RAH) posted on Twitter “only other holding is Arix… We all know what seemed there.” Well, forgive my ignorance, but I didn’t know!
From what I can tell, Arix entered a strategic partnership with Arix in 2017 (https://arixbioscience.com/news/arix-bioscience-plc-signs-strategic-agreement-with-takeda), and the 4.79M share holding in this screen-shotted Takeda investment vehicle represents about 3.7% of the company. It seems to me they have a partnership in developing up and coming biotechs that probably helps Takeda to scan the horizon outside their home market, and maybe brings companies like Avacta to Takeda’s attention.
But the investment in Arix and partnership with them seem to go hand in hand. Perhaps this signals intent to partner with Avacta… or who knows?
If anyone has any other info of a deeper involvement between Arix and Takeda I’m keen to hear it.
Weird. I thought I’d woken up and maybe 12 months of posts had been deleted, leaving this up top!
AS has said finding reagents is quick and easy. It’s sorting out the final test design and getting regulatory approvals that takes a long time.
I’m pretty sure they’ve decided not to tell the market about anything in the diagnostics pipeline until it launches, at this stage. Don’t want to remind people of the LFT disappointment, or distract them from the real value driver which is the ongoing trial.
MrA, can you explain your reasoning? You don’t think there will be US hospitals involved until mid-Phase 2? Or is this a typo and you meant Dec 2022?
Tbh I’d rather not hear that a US site is coming online until phase 1b at this point, as it could mean resetting the timeline on the current cohort.
We are 40 days into the third cohort of phase 1a. Each cohort only takes 3 patients, if all goes to plan.
Depending on what exchange rate you use over the period, it’s $146k - $168k for the remaining 5 months. So indeed, maybe monthly revenues are a bit lumpy. Should all come out in the wash, in time.
Comparing end-year unaudited figures back to half-year figures:
1 year to end June 2022:
- Revenue: £1.1m
- Gross profit: £498k
- EBITDA: -£490k loss
6 months to end-December 2021:
- Revenue: £281k
- Gross profit: £205k
- ”Earnings”: -£640k
Leaving, for the 6 months to end-June 2022:
- Revenue: £810k (as reported today)
- Gross profit: £293k
- EBITDA: +£150k ??
I am conscious that EBITDA was not explicitly reported for the half-year, so I may be comparing apples to oranges and finding a peach. However the -£640k half-years earnings were set against the end June 2021 annual EBITDA result of -£1,032, which was also used as the comparative for today’s reported EBITDA.
So… We may be earnings positive now?
But it seems odd that for a 50% increase in the 6-month gross profit, there is such a swing in earnings, unless administrative expenses have been massively slashed. Is there an error in my calcs? Or could buying up Krunch and LiveScores have cut admin costs by such a huge amount?
Good point. They are using 1.34, but it’s closer to 1.2 now. The exchange rate (USD/GBP) was a bit higher than now in June, and a lot higher in Q1. Look at the exchange rate charts somewhere (eg xe.com).
If it’s not a simple spreadsheet error using an old exchange rate, then it could be some complex mixture of currencies coming in across different regions in different currencies, and exchange rates being agreed at the time of transactions filtering through a couple months later.
Good thing they used the word “approximately” and caveat this is unaudited.
Steve, still trying hard now aren’t you. Clear for all to see your agenda.
Very happy with this update. Triple digit growth % over the previous 6 months, which represented the post-old business low the company is building from.
We’re not going to get the detailed breakdown by division/region (until the final report?), so my concern was are the monthly revenues quoted cherry-picking the best months, or are these figures representative? This shows the latter to be true.
- The 6 months to end-June delivered £810k revenue (approx. $1080k).
- This averages at $180k per month.
- February revenue quoted at >$150k.
- June revenue quoted at $243k
All on a nice (and rapid) growth trajectory.
I’m sure they could do it. But the ability to create misleading trade buy/sell flags is part of the market makers’ advantage.
You have to ask yourself, who is LSE for?
They could also enable pinning of information, or better archiving of useful discussions.
Hi BITL,
Thanks, I’m well aware of all this. All signs point to the targeting being exquisite (tbc officially, of course). But we should be wary of suggesting or thinking these in vitro results mean the drug is likely to be 80-4000 x less toxic in the body over its full cycle from infusion to excretion/break-down.
I feel like we had this conversation soon after the poster release, but I’ve seen a few people in the last month or so seeming to view these numbers as more significant than they are. This is basically just saying AVA6000 is effectively inert or negligibly toxic in the presence of normal cells with low FAP.
Additional thing about the ‘80-4000x less toxic’ figure - that is for AVA6000 in its uncleaved form, vs doxorubicin. Once AVA6000 has cleaved in the presence of FAP(a), the doxorubicin released is just as toxic.
So in human trials the relative toxicity will depend more on where the doxorubicin is released, and where it goes after release (if anywhere).