Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
We know the DHSC are prioritising swab types as:
anterior nares
mid-turbinate
saliva
So does it not seem odd that Mologic only refer to “respiratory swabs”? Surely if it was the Government’s preferred method of anterior nasal they would state this? Maybe I’m reading too much into it, but “respiratory swabs” seems quite generic.
The phrases that spring to my mind are:
Patience is a virtue.
Good things come to those who wait.
Plus Buffet’s “the stock market is a device for transferring money from the impatient to the patient”
Also Warren Buffet, when asked why people didn’t simply do what he does - buys and holds quality companies, he said “because nobody wants to get rich slow”
What Avacta are trying to achieve is extremely difficult but if all goes to plan the rewards will be spectacular. I think we can forgive a few bumps in the road.
Another great interview from AS. Almost too many potential revenue streams to take in, even for well researched long term investors.
He seemed absolutely certain about the CE mark happening, and again restated “around the end of the quarter.”
I know we shouldn’t focus on the UK Government contract, especially with the world at our feet, but again everything seems to fit:
16th Feb - clinical evaluation data - AS says “I am confident that these data will accelerate our commercial discussions regarding the roll-out of the test when it is approved for professional use.”
So at this point they can effectively sign agreements based on the evaluation data, with a view to a finalised contract on confirmation of CE mark being achieved (around the end of the quarter).
A couple of weeks later, on 5th March the DHSC change their criteria to AN or saliva and launch an £8 billion tender to start on 7th April.
15th March - as per the ODX RNS the Government await confirmation that a COVID-19 lateral flow antigen test has passed the necessary performance evaluation.
15th March - Chris Malloy, chair of the rapid antigen test consortium says “Numerous bilateral deals have also been agreed between members as a result of industry coming together with intense purpose and leaving competition at the door in order to prioritise the generation of new UK tests and manufacture them at a scale never considered possible.”
He also says “We would like to take the time now to thank all those suppliers and manufacturers who have contributed their time and resources to this national effort”
We know that Avacta are part of his #consortium, and that sounds like something you would say at the end of a journey, where the outcome is now certain.
17th March - A very confident AS says they WILL CE mark the test around the end of the quarter - no ambiguity.
Put all these together with the capacity Avacta have already secured from Abingdon, BBI, Mologic and GAD, as well as potential for several million per month from Omega (?) and as a wild card up to 50 million per month from Medusa’s new manufacturing site (?) plus overseas manufacturers mentioned by AS, and it looks increasingly likely to me that as soon as the CE mark is achieved - sometime prior to the 7th April - the Government contract, or at least a significant chunk of it, will be rubber stamped.
The Times confirms LFTs to be used - “Fans attending the FA cup final and the snooker will have to return a negative lateral flow test and will be tested again after the events. The idea is that will mean they will not need to comply with social distancing.”
Gr33nings68, Ava6000 is the Precision platform. TMAC would combine this with affimers in a single drug but this won’t be until after affimers are proven safe in humans. I think they said they would update the market in q2 re affimer therapeutics, but are looking to select a candidate by the end of this year, so probably phase 1 in 2022. I’m pretty sure that’s what it said in the BU.
Jvetch,
Good point, and I agree that it could very well be awarded to the consortium as a whole, depending on how it’s structured. However, the ‘mid single digit’ sales price to governments quoted by Avacta made me think that they would be the lead supplier, with say 25-30% margin after manufacturing, packaging, distribution costs etc.
I really don’t mind whether Avacta get the majority of the contract with a 25% margin, or 25% of the contract with 90%+ margin for affimer supply only.
I’ve been pondering the case for the majority, if not the whole £8 billion tender to be allocated to the AffiDX LFT - Hear me out, there are lots of things that line up:
Avacta Downing Street meetings, followed by AS talk of UK needing at least 120 million per month.
Avacta switch to AN followed by Government switch to AN as preferred method.
Timings - from delays in a ‘sovereign test’ matching Avacta delays, to AS stating the test will be ready at the end of March lining up with the new tender starting 7th April.
Avacta massively scaling up affimer production facilities.
Scale up of UK manufacturers and AS having been ‘in discussions’ with overseas manufacturers since September. I suspect these may be in place and ready to roll as soon as they are given the nod.
The silence from Avacta on UK supply since September matching that from the Govt, press and consortium manufacturers.
The ‘belt and braces’ approach to having Mologic CE mark as a back up to ensure it is completed by the end of March.
The Huff Post article, written by a respected journalist with connections at Westminster putting Avacta at the heart of Moonshot.
Avacta quote that “healthcare service providers and governments” likely to be the largest volume customers.
Avacta ‘mid single digit’ sale price to Government matching £8 billion/12/120 million per month equals £5.56.
Necessity of UK Government wanting to secure the supply of affimers as a reagent? Guaranteed continuity of supply, cheap, stable, consistent, easy to produce, highly specific and British.
Whilst the £10 billion DPS for LFTs says it will be divided into lots, the £8 billion tender says “This tender is divided into lots: No” https://www.find-tender.service.gov.uk/Notice/004511-2021#VI.%20Complementary%20information-0
This suggests the whole tender could be one of the ‘lots’ and may be allocated to one test.
Everything is lining up for early April. Oh, and if the risk/reward is too much it’s not a bad thing to have a potential successful treatment for most cancers in your back pocket, as well as BAMS, the licensing deals and the potential to license out the affimers to Abbott, Roche, Thermo Fisher etc...
Whilst the £10 billion DPS for LFTs says it will be divided into lots, the £8 billion tender says
“This tender is divided into lots: No”
https://www.find-tender.service.gov.uk/Notice/004511-2021#VI.%20Complementary%20information-0
Does this suggest the whole tender could be one of the ‘lots’ and may be allocated to just one test?
This link shows the dates -
https://bidstats.uk/tenders/2021/W08/745734524
Interesting new contract on bidstats - 500k awarded to Moore Medtech for the supply of lateral flow tests to Sellafield. They don’t appear to manufacture - just supply tests:
“We are a small business who pride ourselves on helping businesses to recover from the ongoing pandemic by providing the best solutions from antiviral cleaning products to private Covid testing solutions.”
So it’s interesting that their location is shown as Wetherby
https://bidstats.uk/tenders/2021/W08/745734560
I can understand people focusing on 10 million per month capacity for the LFT as that is what AS alluded to in the recent interview.
However, to me the capacity for the ‘sovereign test’ is akin to dark matter - everyone knows it must be there, but until it is observed directly it can’t be taken as fact - and so AS is unable to refer to it.
Following on from my post yesterday the two huge clues this week are Avacta’s ‘mid-single digit GBP range’ comment and the Government’s £10 billion spend over 12 months.
Taking a range of £3-7 as mid-single digit then logically the Government consortium must be highly confident that they have access to capacity in the region of between 119 million and 278 million units per month on average, although I think a price point of between £5-7 is more likely, so 119 million - 166 million pm.
The only question remains is whether the Avacta LFT forms a significant part of this, but the clues are looking pretty good and we will find out for certain in the next few weeks.
WildStar, I’ll have a go for fun!
If Avacta were to supply the bulk of the Government LFTs then potentially £10 billion at say 25% margin would give a gross profit of 2.5 billion. Depends what PE ratio you would apply, and I suppose that in turn would depend on the perceived longevity. It could be argued that worldwide there will be demand for several years for a high quality test.
So off the top of my head a forward PE of 1 based on those figures (approximate as gross profit) would be roughly £10, PE of 2 would be £20 and so on.
As unlikely as it seems that Avacta could make these quantities through UK and overseas manufacturers, albeit with Government help on scale up, AS did use the words, when speaking about affimer production “If we get to that 120 million per month or even higher numbers by accessing markets around the world then that will require some third party contract manufacturing.”
So he has certainly been planning, with others, for these kind of numbers for many months.
So getting back to the projected UK Requirements of 120 million per month referenced by AS numerous times in the September presentation, when he admitted being in detailed discussions with Governments and health authorities.
https://www.investormeetcompany.com/investor/meeting/interim-results-for-the-6-months-ended-30-june-2020-2
This coming just a few weeks after AS had gone to Downing Street and had discussions with the PM
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/958306/Rt-Hon-Boris-Johnson-MP-meetings-July-to-September-2020.csv/preview
Knowing what we know from today’s Bidstats video that the UK will spend £10 billion on LFTs in the next 12 months.
https://vimeo.com/516654709/b3f7bdeda6
I thought it would be interesting to use AS’s figure of 120 million units per month to work out a possible price per unit to see if it fits with Avacta’s recent business update where they say “Healthcare services providers and governments are likely to be the largest volume customers of a professional use rapid antigen test and with an estimated price point in the mid-single digit GBP range.’
So £10 billion pounds divided by 1.44 billion units per year (120 million per month x 12) gives a sales price per unit of around £6.95.
I would say this just about falls within the “mid-single digit GBP range”
Around 5 mins 40 seconds
https://vimeo.com/516654709/b3f7bdeda6
Up to £10 billion for 12 months - first deliveries mid April
https://vimeo.com/516654709/b3f7bdeda6