Appreciate that’s what most of us want to know about most, Templar, but I guess from Avacta’s point of view, it looks like they maybe want to compartmentalise comms about the diagnostics and therapeutics going forward. AVA6k going into the clinic is a huge development and deserves to be centre-stage in this interview with no LFT distraction.
They spent a lot of the last year tagging some acknowledgment of the LFT onto each RNS, with comforting words like “shortly” or “soon”, and it came back to bite them hard, producing unnecessary volatility (both ways) in the share price. Sure, it would be good to hear about production numbers and how they expect the ramp-up to be phased, but perhaps at this stage the lumpiness of any major orders make that too uncertain. It very much looks like we are going to be given LFT updates as they have occurred from here on.
Can’t say I blame them, given the sort of attention and manipulation the stock has attracted based on LFT speculation. Admittedly the LFT story is what brought me to it, but then I did my research and appreciate the broader scope of the company. They deserve to be considered for more than just the covid LFT, so they can’t just talk about that in every single update from here to forever. This change in comms approach is like ripping off a band-aid. Painful for now, but it’ll get better and hopefully improve the stickiness of the shareholder register in the longer term.
Pretty sure Paul will have been strongly requested not to ask about the LFT. Nothing gutless about abiding with that. These investor interviews aren’t given out willy-nilly - we and Paul are not entitled to them - and if you’ve followed AVCT closely, you’d know Paul has done the last few of them for Avacta now, and no doubt hopes to do more in future.
Indeed they ditched the previous interviewer Giles, presumably for his relentless and uncompromising grillings. Legend has it Al’s shumper was originally donned to conceal the sweat patches he used to get while facing a particularly withering barrage of tough questions from Giles. But there are only so many times you can hold a CEO’s feet to the flames before they regret giving you the gig.
Anyway, back to Paul. Why should he burn his bridges for one question that isn’t going to get an answer? He did his best with an open question about other progress across the group, but they didn’t bite.
Great video on AVA6000 though.
There could be more from spread bet positions closing.
If people have a long spread bet that closes upon hitting a stop loss, I’m not sure you’d see that on the trades list, unless the spread bet broker holds a corresponding position in the background.
Where is mapp indeed! What wise words of loosely rhyming warning would she impart? …
Hoping we’ve now hit rock bottom
Last chance for top ups if you’ve not got em?
Eventually the shorters will capitulate
Trolls toddle off or switch to love from hate
Then with shorts closed and rosy thoughts ahead
Forward momentum again, will be sought instead.
Oh and when news lands one day - what a day!
The charts will all be b******s anyway.
Assuming all true - and seems completely plausible so why not? - Great to know, thanks. Sales to shareholders are lovely, but this is the sort of purchaser that generates recurring revenues. Obviously at 55 EUR a pop, £5 for the test itself is nothing to them. Perhaps the clinical validation (presumed to be in Spain) has helped to build a strong reputation in certain corners of the medical community for the AffiDx test over there.
CodeJunkie, this sort of use case is precisely what CE mark for prof use enabled. The distribution agreement with Calibre enabled supply to this market.
I suspect at some point we’ll find they’ve low-key sold a few million LFTs via Calibre already, while gradually ramping up the supply chain, and given our beaten-down expectations, we’ll all be happy with the progress and recurring revenues. Shame about the current SP, but still excited for the future on all fronts here.
It’s not just data lag that causes the mis-labelling. It depends on where the trade was priced relative to the midpoint of the bid and ask spread at the time it was reported. So if the bid is 115 and the ask is 120, anything above 117.5 is labelled a buy, anything below is labelled as a sell.
The MMs do regularly place trade offers the ‘wrong’ side of the midpoint and make a sell look like a buy, or a buy look like a sell. Whether this is always intentional, or sometimes just a quirk of the bid/ask spread not being reported correctly in real time, I’m not sure.
As I understand it though (someone please correct me if wrong) large trades are often reported with a time delay and therefore more likely to be mislabelled due to change of the spread between the time of trade and time of reporting.
And far fewer test sales required for breakeven if the direct to consumer (DTC) market comes in with a mark up! (Post HUA of course…)
Let’s say it went up to m just £8 per unit for DTC (very reasonable as a box of 25 for professional use is £7/unit now). Assuming a 50% split of c£4 profit per unit with Medusa19 (just a baseless guess). Then c11 million sales to this market would offset current annual losses, ie <1m/month.
Price and profit split could be too conservative, but shows how even “humble” initial numbers will be transformative.
Think you’re mixing profit and gross revenue a bit there. 54 million LFT sales in a year would achieve massive profits! But 50% margin is a bit rich. We’ve been told 1-1.5 EUR profit and £5 sale price per unit, ie c20-30% margin.
I’d suggest somewhere in the range of 1.5m-2m LFTs per month achieves breakeven, not considering other sources of income across the group.
Thanks for sharing their reported timelines - good to know!
FYI though they licensed Precision delivery mechanism, not the TMAC concept, and it doesn’t include any Affimers.
TMAC is tumour microenvironment activated conjugates. The TMA is a part shared with precision, and that’s the delivery mechanism. The conjugate part of TMAC means it involves two drugs delivered in tandem with complementary effects. It’s also TMAC that “cured” some of the mouse tumours and induced in them an immune response against future recurrences in pre-clinical studies.
10 years… That’s some long haul! Good on you.
I see this in the 2020 annual report, which is the latest I’m aware of on the TMAC programme. Thought you might have some additional info.
“In vivo studies of the lead TMAC® programmes
are ongoing to support the selection of a clinical development candidate from the pipeline. The first of these programmes is AVA04-VbP, a TMAC® combining a PD-L1 Affimer® antagonist with VbP. The second TMAC® programme combines an Affimer® against an undisclosed target with VbP.
These in vivo studies will continue through 2021 and are expected to support the selection of the first TMAC® drug candidate during 2022 for pre-clinical and clinical development.”
Exciting if true. The last batch of data in early 2020 was phenomenal. Where does your understanding come from?
It’s a good point, maybe we break even on even lower sales than his estimate.
If we take the previous annual losses of about £20m per year, that’s about £1.7m/month to offset. If we’re making 1-1.5EUR profit per LFT that’s on the order of 1.5m/month LFT sales to break even. Break even = no more raises for the foreseeable future. Share price then is only about takeover defence and keeping shareholders happy.
And as I’ve said in a previous post, more than breaking even, the revenue from each batch of sales can feed back into a bigger production run for the next batch of sales, driving us incrementally towards the sort of profits to get excited about. Right now, if we called up 35m/month manufacturing capacity we’d go bankrupt before we got paid for them.
I should say it will feel like Christmas. Hopefully it won’t literally be Christmas!
Yep, it sounds good, but if I think back to previous government statements going back to ~September last year, it sounded just as good before and still nothing… yet. So he says “wolf!” again and everyone’s head is swivelling. I think we need to manage our expectations on the likelihood and timeline of that helping us. But equally, I’m not going to publicly abuse the guy while hashtagging #AVCT!
If UK gov and Medusa19 and EU markets are all waiting for the home use approval, then when that announcement comes it will be very much like Christmas.
So, I think it’s important at this stage to discuss what constitutes the “near future”. Is that sooner or later than “shortly”? ;)
Exactly. They won’t be able to give him anything new, or insider knowledge.
But he can ask about all the announcements on projects that have been made public and subsequently gone quiet - are they still proceeding?
Lots of people want to know about LFT manufacturing capacity, but I think the bigger thing is current manufacturing run rate/sales numbers, because we know the “capacity that is available to Avacta” and that it is not all being called up yet.
Maybe they will be able to give him some platitudes or directional indicators on LFT sales.
But the management definitely have a stake in spinning a good yarn, as they want larger shareholders to stay onboard and hold long term, and would especially want to keep influential holders like Myles on side. Interesting to see what they tell him that he’s allowed to share publicly.
Thanks for sharing. Though, I’ll believe it when I see it. They’ve been making positive noises to the Uk diagnostics industry for at least a year now, with zero results to show - in fact they’ve even stuffed Abingdon and Novacyt up royally over refused payments, and Mologic/Avacta with the PD fiasco.
It’s nice that they’re still making positive noises - the (questionable) boon of giant government orders is still conceivably in play - but I currently give it a <10% chance of leading to orders and reliable payments, and clearly the market does too.
Home use is the big LFT play for me.
Apunter, I take this as meaning that they hadn’t been able to acquire the data to demonstrate whether the shows corresponded to free gas. Absence of evidence is not evidence of absence.
If they had that data, they might potentially try an open hole well test even if they couldn’t get a liner or tools down. But too costly/ too little benefit if they can’t even be sure that the hole is still open below the hang-up depth.
However I acknowledge it could be read more negatively.
To be clear, I have no position here and no angle to push, just looking in to discuss and assess after the RNS.
Hi gogs, I’d need to see the data to make an informed opinion on next target. He1 have great geologists and I’m sure will make the right choice. All I have seen is the RNSs, which are always as positive as possible while being purposefully light on detail so as not to give away too much to competitors.
As you say, with an appraisal hole, they might look at setting casing to stabilise the overburden just above the first untested reservoir, before drilling and logging it. (I assume this is what you mean. A production liner is normally used in reservoir development.) It’s more expensive to put in extra casing strings in terms of material and time, but if you gotta do it, you gotta do it…
Correct, Phantom. It can tend to occur more when drilling through unconsolidated and/or highly fractured formations. In this case it’s more likely the former due to low burial depth.
In interbedded sands/mudstones, one of the two bed types may collapse preferentially, leaving ledges in the borehole that are a real pain when pushing things into or pulling them out of the hole. This can be exacerbated when the hole is inclined and/or has curves or “doglegs” in it, such as may occur in a sidetracked well like Tai-1.
Another issue with washouts is when sticking electrical wire line tools in the hole, a lot of them rely on contact with the rock face to get good data.
They may look at whether they can do anything clever with mud additives or drilling parameters in the next well to improve hole quality, or look at pipe-conveyed logging. But to some extent you have to accept drillability risk comes with the territory and they may have just been unlucky not to get the tools down this time.
… data.