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Hi all,
With the recent terrible turbulent month, I thought I would summarise my current thoughts on Avacta.
Avacta’s current situation.
> It has been an awful month. SP has dropped nearly 50% from all time highs yet during the drop, we found out that we have the best COVID LFT in the current market which picks up the Delta variant whereas competitors struggle to identify the Delta variant.
Current Market situation.
> Cases worldwide (WW) are increasing due to the Delta variant.
> Vaccines are working but roll out WW has been slow exc UK. The vaccines are less effective on the Delta variant the other variants. The vaccines are even less effective against the Peruvian variant which has now been identified in the UK.
> While the cases and deaths link seem to have broken, hospitalisations are still increasing dramatically.
> Testing will continue being a key tool to fight against COVID.
> COVID is not going away, we will have to live with it.
Why has the SP dropped so much.
> No forthcoming orders when test was released.
> Previously investors were focused on orders from the UK Gov. Recently, the UK Government plans have been focusing on the Vaccine and PCR strategy with minimal talk on LFTs. That being said, the UK Gov are currently looking into using LFTs to reduce quarantining. The study is to take a LFT each day over 10 day period, positive LFT = individual keeps quarantining, if LFT is negative, then you’re able to go out that day. This is an ongoing trial.
> Large fund reducing stake.
> All these have amplified the SP falling.
Avacta’s Investment Case
> Is Covid going away? No
> Are Covid LFTs still in big demand? Yes.
> Can Avacta compete against other competitors? Yes
> Has anything materially changed with Avacta? No
Current LFTs
> Pricing of LFTs have fallen due to the increased supply. They currently are selling around £4 per test which would give Avacta £1 profit per test. This is roughly aligned to our expectations.
UK Gov
> My personal view of why the UK Gov has been quiet on LFTs is that the current LFTs in the UK do not pick up the Delta variant and that the Test & Trace program has been total shambolic with only 14% of LFTs having been recorded. Whilst the UK haven’t been efficient with LFTs, LFTs have been proven many times to be a very useful tool against COVID. This has been backed by research papers and successful country rollouts of LFTs.
> We know that Avacta is still in talks with the UK Government. NHS are rolling out a new test in July which would be professional use only and that Schools are expecting a better, more sensitive LFT in the new term in September. Logic says it will be Avacta’s however, it is an unkown factor and history tells us otherwise.
> Regardless of the UK Gov’s stance with LFTs, the rest of the world especially the EU are after excellent LFTs to assist in defeating COVID with the expected market for COVID LFTs being 3-5 years.
Thanks Hurst
Hurst where was the mentioned?
The thing is we have PREcision and Affimers.. we know they work bloody well, just look at our partnerships.
if anyone has any spare cash, let’s squeeze them
It seems that everyone has a very short memory. Just yesterday we found out that the NHS were going to be using new tests that were going to be manufactured in the UK. This shouts Avacta
It also has the exact same process as Innova which doesn’t align with the NHS guidance on a new LFT where they said the process is slightly different
McGurk we know Orient Gene has the same EUA that expires alongside Innova’s. It is not a new test and has been used for sometime. This will not be the new test that the NHS were talking about yesterday
I haven’t seen this for a while :) Thanks for the reminder!
Honestly so impressed with his tenacity. He’s great at giving a balanced approach. Only qualm would be to reduce the summary and get to the key questions. In fact, don’t ask too many questions as then the gov can choose the ones to answer
Thanks Timster. Regarding Medusa, Al mentioned that they are pushing ahead with Medusa to achieve home use certification. Both have very big interests to achieve it
Just laying out the stuff we know.
Our test is the most sensitive
Out test picks up the delta variant and trounces the competition
NHS are rolling out new tests soon..
We are part of the UK consortium
We know there are NDAs and right of first refusal from the government
We know we are in talk with the UK gov
We know that for the UK gov to purchase LFTs, they must go through PD.
We know that PD have got rid of the frozen step which affirmers had trouble with.
We know that Medusa 19 are turbo charging home use certification
So while it has been a painful wait. There are still so many opportunities to look forward to. I haven’t even spoken about the other division and all the other deals that Avacta have achieved
Mr A, Al said our margin on a €4 test would be 30%. So if we were to apply the same margin on those prices it would be greater than £1
The cheaper test’s who are less sensitive will be ruled out by regulation over time. With people and companies building their awareness of what sensitivity and CT levels actually mean, people will start to realise how important they are and they will buy the best test out there. Avacta will dominate the market. Price’s could even sky rocket, simple supply and demand. So Wyn I think you’re 25p profit per test will never happen and as you say is a ‘wild guess’. There are always questions and unknowns. Honestly I think todays mcap is fair value for all of Avacta’s other depts and risks. The value of LFTs in the current mcap is minimal. Any positivity or good news will start the rise back up to +250.
Bump
Bump
Can’t like this statement enough. Grateful for all those contributors keeping up with the rampers and doomers
The Oxford vaccine & more importantly the Pfizer vaccine are not that effective on the Indian variant. The data came out the other showed that they only 33% effective after one dose of the vaccines. To me, that shows the variants are getting worse. UK testing will not be stopped regardless on how well our deaths & infections are. With a better situation in the UK, flights will increase dramatically which provides a key reason why testing needs to continue for the next few years. Wyndrum you’re always good at providing a constructive view on items, but I disagree with you on this point. I’ll echo Timster’s messages ;)
I thought people would have known Al’s timescales by now... days = weeks, weeks = months and months = years. I strongly believe next week will be a mental week
It’s definitely a good test and would be very useful if stats are as good as they say. They state 98% sensitivity and 100% specificity however they don’t say at what CT was used to achieve those stats. It’s been CE marked for months and yet this is the first trial the product is using. It will be interesting to keep an eye on the development on this