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Thanks for posting, gmcc. It's the sort of email a CEO might send after a long, hard week and shows that Al shares our frustration with the SP. The most likely cause for delay i would think is waiting for the FDA stuff. A short delay now may speed up the overall process of getting AVA6000 to market.
The DE5 RNS will arrive when it arrives. We may then get some further RNS's after AACR - there will be certainly be many discussions there i am sure, but the deals will not be inked until some time afterwards so hopefully we will not see the usual nonsense ramping on here and false deadlines.
ATB
It's not a manufacturer. It's a box shifter.
Don't think any of us understand the logic for the Launch purchase. Maybe just because it was available?
Pre-Covid, it was making maybe £1m, or perhaps £1.5m excluding the owner's salary, so not that cheap.
It's basically a "box-shifter" with some strong relationships with various health services. If we had any affimer based diagnostic tests to sell it would be useful for that, but we don't as yet....
https://www.abstractsonline.com/pp8/#!/10828/session/378
AVA3996
Agreed, RD. I thought Luke's posts were useful in identifying why the market might be underpricing this one. For example, underestimating the TAM.
I've thought a bit about competition, but i'm not really qualified to assess the risk. One big thing in Avacta's favour is that chemo is not that difficult to administer in terms of resources. Some of the potential oncology treatments talked about seem to be great science but totally beyond the reach of most health services worldwide in terms of cost and staffing.
Finally, i wonder how many II's are actually allowed to invest in AIM shares and how many of those have the nerve or surplus funds to do so. The UK market is pretty broken in terms of backing UK companies, but luckily the Americans do have the internet.
GLA
SB, thanks for your contributions and for raising the quality of discussion on here. I also use a lower multiple than RAH in my *** packet calc on the basis that interest rates are higher now than in the past decade which will lower acqn multiples paid. Gilead/immuno was 2020 from memory.
I also use a higher market size and allow for a small royalty payable to Tufts.
All this largely cancels out!
I remain a big fan of Avacta licensing all assets. If they took a 10% royalty on AVA6000 and got the licensee to fund everything going forward then the SP is a multiple of current just on that. (e.g. $150m pre-tax x12 / $1.20 at 300m shares = £5). No need for further dilution under the license model co SP gyrations become irrelevant.
I assume it is a bargaining ploy to say that Avacta will retain its lead asset. If so, not sure it's a good ploy.
ATB
Fair points, Neutronic. I don't understand why it's controversial to say there is a disconnect here between current SP and what we think it is worth - presumably the more bullish a poster is, the more glaring the disconnect must appear.
Fwiw, i think there is perceived risk around Avacta's small size/limited resources and their patchy comms history. I think it was a bit of an own goal to invite ii's to a presentation and not have say 15 mins from the CFO talking in broad terms about possible funding strategies. (Yes, it was a science day, but they are financial investors).
Also, why not say they are awaiting regulatory approval for DE5 due to a change in protocol if that is the case.
All very frustrating, but also perpetuates the image they are stretched a bit thin i feel.
I'm pretty sure there will be a data room. Can't see why they wouldn't have one. It's pretty straightforward to upload the docs and then it's just a matter of getting NDA's signed and issuing passwords. Routine stuff tbh.
It's a great read, and brought home to me how important it is having the oncologists like Dr Tap behind on your side.
I started The Song of the Cell, but stalled.....
ATB
Fair points, RD. I'm hopeful that data has been shared as the trial has progressed and that a licence deal could be "soon" (in the dictionary sense of the word rather than any other usage).
I'm confident that the first licence deal will unlock others - affirmation, FOMO etc. On that basis i don't think the company needs to extract every last penny from the first deal, more important to get it done.
Soros talks about reflexivity in SP's - strong SP's make it easier to raise equity and incentivise employees etc so i do think a CEO needs to think about the SP to some extent. I can easily derive a valuation of £20 a share here, but no company is going to pay that against the current SP. We a little vulnerable to a lowball offer.
Fingers crossed then for an early RNS.
Btw and off topic, just finished reading "For blood and money"; highly recommend it. Think someone on here mentioned it so thanks for that tip.
GLA
LG Chem was inked Dec 2018 and Affy Jan 2020. My point is why nothing since?
I'm not expecting anything on AVA3996 just yet (though it would be nice and might calm down the BB a bit), which is why i talked only about Affimers.
Things need to move faster if the full potential is to be realised and i just get the impression nothing happens that hasn't gone across Alan's desk. That doesn't scale.
It's not uncommon in the VC world for the founder to be moved to one side once the company reaches a certain size. Often they are poor delegators and this slows down decision making.
I think it is legitimate to ask why there aren't more commercial deals - I'm actually thinking mainly of Affimers here. The antibody market is worth over $100bn and they ain't all going into humans (where Affimers are still to be tested). So why so few deals?
Before i'm accused of being a deramper, AVCT is around 5% of my portfolio so i hold it with some conviction around the science (in Dr Tap we trust) but the fact is that there is an AS discount to the SP and there will be until the market sees some serious deals inked or a beefing up of the commercial management.
ATB
Spot on, Faulkes. Management need to take a long hard look at themselves and ask why the company's games are just not that much fun to play? There seems to be an emphasis on visuals and realism at the expense of gameplay.
That said, it would be hard to make a Warhammer RTS that isn't fun wouldn't it???
Could be a good re-entry point here, but i don't think any rush. They do say profit warnings come in threes...that just reflects the fact that it often takes management time to adjust. In blaming the consumer rather than the games themselves we can probably say that adjustment has further to run.
ATB
I like this bit: "and hear from selected key opinion leaders in the field of oncology".
It's pretty telling that they want to be associated with this trial, and to give up their time to be at little old Avacta's Science Day.
GLA
Personally i'd be quite happy for the company to drop good news into an illiquid market. I've seen directors on AIM recommend lowball offers in the past (most recently LOAD) with some lame boilerplate to the effect it's a 50% premium to the rolling average SP etc etc, so be nice to see the SP up sharply from these levels.
What i still struggle with is that the company raised £55m at a ridiculously low coupon, but don't seem to have any price sensitive info they feel the need to share with the market. That investor must possess spheres of titanium!
Anyway, it does feel increasingly unlikely we will see an RNS before 2023 now; happy to be wrong ofc.
DTW,
I agree, it seems odd that the company doesn't believe that it is in possession of price sensitive information that should be disclosed. I wonder if the Advisors are starting to feel a bit twitchy?
If AS is bogged down in DD then that would be a possible reason. The extension of that, as has been said before on this board, if that after the mother of all RNS's lands, there may be no opportunity to buy in. Accordingly, i've been nibbling (not chomping) on the shares of late.
GLA
Yes the price action suggests this is not a totally done deal. Hopefully the other II's will hold out for a better price.
Stockopedia has FY23 forecast eps of 27.7p so an exit multiple of 14.5. Seems very cheap given the long runway for growth in data centre and renewables.
Not easy finding good small caps like this so bit disappointed tbh, although i can see the strategic fit.
Starbright, there are a couple of different things going on here.
If Avacta sell the drug themselves then EV/revenue would be a useful shorthand to value the company. Operating profit would be a high percentage of revenue - if we assumed say 50% then 8.9 x's revenue is only 18 x's EBIT. Seems reasonable.
If instead Avacta licence the tech (my preference) then that is pretty much pure profit and the market would assign a similar multiple to that. So if we assume $150m royalties at 18x's give an EV of $2.7bn for dox alone.
Been holding here since 60p and topping up recently. I can't be certain they will be successful, but the £55m convertible is a massive clue IMO that they will be /have been.
ATB
Biglittle, as i said many moons ago i welcome dissenting views as it encourages me to regularly check my investment thesis. However, your posts don't seem to reflect the facts (the trade debtor position is clearly explained in their commentary plus see my post below on that and the cash position) so i too am kind of curious as to what your motivation is with respect to Frontier? Are you an ex-employee or something? I'm long the shares and happy with their performance to date, hence why i post here from time to time, but i'm struggling to understand why you continue to post (i'm assuming you don't own the shares!?)
The cash position was very clearly explained in the interims. Sales of Planet coaster were predominantly via Steam and therefore the cash from e.g. November sales would have been collected post period end (typically 30 - 60 days later). Debtors were £7m higher at end November than previous year end reflecting the high level of sales at launch. Not an issue as this will since have been received as cash. Interestingly, the new CFO has bought shares which i take as a very positive sign.