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Chris - you only need to look at the miniscule volume trading - everyone's just sitting on their hands and waiting. We can all take break until we get news.

I agree with you Chris - the conflict will have little consequence on the SP in the medium term. Of far more significance will be what Biosysnex's next move is and what the company announces in terms of future strategy.

You can wish it down as much as you like BYP but if news drops that is positive for us, then you'll be caught out. Of course, the there is no guarantee of positive news and you may be quids in.

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Amongst it all are a few interesting posts today trying to rationalise the seemingly illogical SP action.

I’ve been away from the screen travelling the breadth of Norfolk and Suffolk looking for artisan producers for my new pub project. For example, here’s where we’re getting our flour for our pie pastry and pizza dough https://letheringsettwatermill.co.uk/ [We’re cutting out the airmiles, so finding a local supplier of British produced chickpeas for our homemade humous was a breakthrough!] Anyway, time away at the wheel has given me time to account for our SP predicament:

Certainly, there are more unknowns than knowns which leads to volatility and speculation.
We know, for example, that there has been a dispute, but the exact nature is opaque, to say the least. ‘We have strong legal grounds to assert our contractual rights’, is the positive. The reasonable worst case has already been discounted in the accounts too, so we should see a dividend form this when finally resolved. Speculation says it may all be linked to the GLP review which has bene kicked into tough (well May at the earliest).

It has no doubt soured our relationship with the DHSC, however, but not terminally. We have been still supplying the NHS after all, albeit in much smaller quantities (4.7m contract). GM has gone and, again, the detail is not known. It could be to do with the dispute, the LTIP or any number of other reasons. Relationships among the board appeared strained, though, and it left a (rudderless?) interregnum at a critical period with communication blackout further depressing sentiment.

The new CEO has spent time assessing the situation – to me the positive from this is that any further bad news would have been aired at this point. In the meantime, the SP has been let slip. The BoD are meant to support shareholder value but, without any incentive, they could argue that by focusing on the long term aims of the company and the sharp end of the company (test sales and R&D) they have done just that. On top of the loss of their largest contract by far, it’s been a rapidly changing landscape with one new variant after another and, to top it off, UK imposed, regulatory barriers (CDTA) were added to this mayhem. So, the day-to-day SP may not have been their focus. Their agility allowed them to make the best of the situation and they rapidly pivoted towards the private sector and overseas (European) markets. I have sighted Jeff Bezos before as he explained Amazons SP drop not reflecting what was happening on the ground.

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Cash in bank has not been squandered and has still been growing. The disappointment was on the lack of growth of non-covid. This remained static, or dropped slightly in real terms – but, again, the focus would have been on covid sales whilst the opportunity still presented itself.

The post-pandemic strategy has been outlines with three major strands:

• Leveraging existing assets in terms of POC testing and instrumentation.
• Becoming a key player in global surveillance
• Developing further non-covid tests – more specifics to be announced in April for release Q4 2022 (so they must have something already in mind but don’t want to alert the completion yet).
In the meantime, we have had the announcement regarding the new LTIP. This gives a minimum target of 777p at which price the management members are given their full allocation of shares. Any increase on this will result in a pro-rata pay out once their share allocation is converted to cash. To me, this was the pivot point in terms of SP fall. However, the incentive plan is based on the SP in three years, so there is little immediacy – still a long-term hold for the patient!

The company is hugely undervalued, however, and with a market capitalisation below 130m leaves us hugely exposed. It is no surprise that we have Biosynex coming along. (The surprise is that private equity hasn’t.) Again, this causes more speculation with more unanswered Qs:

• Is it purely speculative (unlikely for a Bio Co., but may attract private equity to do similar)?
• Part of a distribution deal - they sell our tests and instruments in Europe; we open up the UK for them (their share buys shows intent but why not reciprocate?)
• Merger – similar to the above but creating larger company with aim of becoming md-cap sooner. (Economies of scale give us far more clout.)
• Takeover – we should not get ahead of ourselves. So far, they have only bought 4%. PI are still in control here, and they need our votes. There will be a large spectrum of current holders. Some, who have recently bought in would be happy to vote yes to an offer of three or four pounds whilst others, such as me, would want to see nearer our £15 target price. The BoD could recommend or advise but with little holding of their own would have little sway. The reality would be that PI would collectively agree to something in-between.
•
Without further information, we can only speculate. Whatever the reason, for Biosynex’s interest, however, we would expect an increase in SP, as all scenarios are good news in terms of the current SP. So, why is it not shifting. And how can they buy without the SP increasing?

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Well, we have the backdrop of yesterday evening’s announcement. The end of testing!
Really? Look again. Where are we currently positioned?

• NHS – will continue
• Overseas – no change there.
• Private – if you cannot get free tests – where are you going to turn? (Especially corporates. Plus, many countries still require PCR for entry)

So, I still see the announced 50% drop in covid revenue as conservative.

And finally, we have the global crisis with Russia and the Ukraine - this may lead to cash moving into safe heavens – but, as others have already pointed out, aren’t we such a port in the current storm? Diagnostics is here to stay and should not be affected by such events, even if they do escalate.

The public perception of testing has changed, the landscape has changed and POC is the future – it’s just all going to take it’s time to work its way through.

I’m not sure whether I have made this any clearer for myself or others, but my final summation is that the likes of HarChris and Kaeren (as well as Biosynex), to name but a few, are way ahead of the market. We have been breathing this share day in day out for two years now and know the company as well as any could. But the wider market is far more broad brush.
I’m hoping that, as the dust settles and clarity eventually returns (communications will come – it’s just a case of when, not if), and other people can see what we can see, then the rerate, which has been so long overdue, will also transpire.

The road to building a market leading mid-cap diagnostics company is long and arduous it seems. Let’s hope the climb is worth it!

IMO as always – please DYOR – and GLA

...and forgot to mention broker forecasts all appear to corroborate this with bullish forecasts, averaging at around at least 30% above current SP

target should be around 240

Does not make sense - we know they have sited their production near to clay pits, supply should not be - everyone had trouble with lorry drivers but really their is nothing to hold this back. The company have done well to mitigate covid, they are now back open for business, and have been for some time, and have an imaginative plan for the future including a brand new eco factory to come on line in a year or two

IMO market sentiment paints this co with the same brush sometimes - quite undeserved and traders are working the cyclical nature of the SP is this not ready for an upswing?

completely oversold, again - the more chaos and disruption abroad and the greater the impediments to distribution services, the more likely our builders will be buying home-grown bricks

buy-the-dips

I agree poker chips - and this looks like a good dip to buy this morning - you've got to ask yourself, how much will this Ukraine tragedy effect the figures in March? Already oversold before the weekend IMO

DYOR - GLA

I agree, Kaeren quite horrific. It's all distraction politics - George Orwell seemed to get it right so many years ago and nothing changes. Create a war to distract from the misery you are causing in other ways :(

An interesting post B2HS2L

We certainly have the same aims:

"BIOSYNEX plans to secure the Group’s general needs and pursue its external acquisitions with the ambition of becoming the European leader in the field of rapid POC (“Point Of Care”) diagnostics."

Well, we want to be a global leader in diagnostics but they are sticking to Europe for now. There are certainly synergies there.

That they are working with Enalees to get into veterinary market also piqued my interest. I've always thought our Q16 were well suited to vet's practices. Again plenty of synergy here . We have tests for viruses in birds and animals plus the machines - they have cornered the French veterinary market- let's go for the UK with our new 'boots on the ground' sales force.

Certainly some pennies to be made:

"The United Kingdom veterinary healthcare market was valued at USD 1350 million in 2020, and it is expected to reach USD 2425 million by 2026, registering a CAGR of nearly 9.5% during the forecast period, 2021-2026."

*Tuesday- should read 'tie-in'

(Typos do happen lol)

@Larry

What we know is that Vatel have been free to sell all of their shares for a long time:

"Vatel has agreed to a lock-in period for a certain number of the Ordinary Shares, whereby 1,107,255 Ordinary Shares will not be sold or transferred before 31 December 2021, and a further 1,033,438 Ordinary Shares will not be sold or transferred before 31 March 2021. The remaining 811,988 shares have no such restrictions."

Typos do happen, but this would have been immediately corrected. So, we can be pretty sure that Vatel's last Tuesday in date was March 2021.

I've thought it odd that they would hold on to all these shares for so long and certainly feel that if they had kept them they would not be selling now off book. This part is speculation but I'd be inclined to agree with you - they have long gone and would have sold the remainder at around £8 adding to the downward pressure on SP last year. Bloomburg is inaccurate and they haven't informed/updated Novacyt of their reduced (zero) holding.

It will be interesting to hear whether Mandy is able to shed light on this.

This would be good news as it helps to explain the previous downward pressure and, once sold, they cannot sell again. It also means that Biosynex are buying on the open market and this will further support the continued upward SP.

I don't think Biosynex will be stopping at 4%

@oOriens

It's not about the US - that's just an example of the sort of spending to expect. This is still embryonic- most are still licking their wounds and not got onto the next step properly.

It's about global surveillance - I suspect every country will do their own thing (can't see WHO getting everone to do joined up planning - but you would hope there'll be some sharing of information) some will do more than others, some will do very little, no doubt, and others will spend billions.

It's a bit of these billions we should be after and with our IP and clinical/uni links, plus some global reach, we should be working towards being able to capitalise.

Plenty of opportunities that's for sure - maybe Biosynex sees it...

Drip, drip

Well, what did I say? I'm enjoying the drip, drip of good news - waiting for the gush to come. Another drip just landed!

Whilst we are now all being distracted by the Biosynex moves, let's not forget one of the key strands of Novacyt's strategy.

Not the one about post-covid revenues, and not the one about leveraging their current portfolio of over 550 tests and instruments (including the transfer of their Promate™ technology to these tests and the IT enhancements to their instrument [Q16 and Q32] interfaces, and improved workflow [Co-Prep]) - the other one - the one about global surveillance.

Thank you to Kaeren for posting the link to the latest SAGE minutes in her 13:53 post on this thread:

https://www.gov.uk/government/publications/sage-105-minutes-coronavirus-covid-19-response-10-february-2022

As Gazman123 says, they are not too long - quite digestible really and you all have the weekend ahead - but if you are really struggling for time, here are a couple of extracts:

Paragraph 8
"There is no reason why future dominant variants should be similarly or less severe than
Omicron, which may be an exception in having lower severity. The next dominant variant
in the UK (and internationally) could have similar pathogenicity to previous variants, such
as Delta. The range of evolutionary possibilities also includes substantial change to
immune recognition."

Paragraph 14
"The emergence of new variants and a resultant wave of infections can occur very
quickly, potentially within just several weeks. The ability to rapidly detect and
characterise new variants and to scale up necessary responses (such as TTI and
vaccinations) quickly will be very important. Considerations for future response
preparedness and surveillance infrastructure should take this into account."

And then this extract from the Strategy and Full Year 2021 Trading Update:

"Maintaining Novacyt's position as a "global first responder" to rapidly address significant disease outbreaks through testing and market surveillance"

o Novacyt has a track record of speed and agility to deliver critical products, as demonstrated in its response to the COVID-19 pandemic, and previous outbreaks including Zika, H1N1 (swine flu), and Ebola

Someone has got to keep an eye out for the next variant, which could be less, equally of more severe than existing strains. Whatever it is, all responsible governments will want to know when it arrives and how bad it is, so they can respond accordingly. I believe that there will be large contracts available - as we saw announced in the US yesterday - more billions for testing:

"Two people familiar with the administration’s plan confirmed key details on Tuesday: $17.9 billion for vaccines and treatments, $4.9 billion for testing, $3 billion to cover coronavirus care for uninsured people, and $3.7 billion to prepare for future variants."

We will be ideally placed to pick up a piece, of this big pie.

Now back to those drip

There's absolutely no doubt that this RNS is good news, if only in so far as, it's not bad news!

It was not long-ago that the talk on here was regarding meddling with data and other dodgy practices. The CDTA review will have been thorough and gives us a clean bill of health.

I had also worried that they (the CDTA) may have been in cahoots with the DHSC and were perhaps delaying approvals in order to put further pressure on Novacyt in the negotiations. It may mean the complete opposite now, and this has been approved ready for new hospital orders.

Not being able to sell our test in the UK was a real barrier; having this removed for a significant test has got to be seen as positive, even if belated. As gizmo says, the ongoing market will be in the NHS trust where we have our Q machines placed - not in the mega-labs.

Whether the market reacts favourably in the short term is another matter - but for me this removes further down-side risk.

I'm enjoying this drip feed of positive news for the moment - just waiting for the sudden gush to come!

GLA

@Butcher's Bike - I tend to agree. We have some powerful IP that Biosynex would love to get their hands on - especially in terms of our instrumentation and Promate technology. We, on the other hand, have excellent tests but are limited by clinical sales lacking in the kind of volume that the self/home use market that Biosynex are in would bring.

Biosynex certainly mean business if their track record is to go by. I doubt this is takeover unless they have backers giving them the necessary leverage but some form of partnership is possible (if not an actual merger) or at least a deal/tie up of some kind.

Whatever is going on, I can only see positives out of this. The LTIP with its 777 minimum target stopped the drop, this is going to give us the impetus and momentum to push us back the other way. Many sitting on the sidelines will see this as the signal to join back in as there is no longer a chance of this dropping any lower. I cannot see many wanting to sell for a while, that's for sure.

With only one way traffic, I'm looking forward to a steep ascent!

As all LTH already know, the future is PoC diagnostics (or should I say RDTs) after all - the future is Novacyt ...

GLA

Poidster and Sonicboomboy's consecutive posts together summarise the situation well.

I believe there will still be a role for large centralised labs for some types of tests, in terms of efficiencies of scale, but for almost any type of tests one can think of, be they for animals or humans, don't you want the results as soon as possible? Yes, if it costs less for your cholesterol test to be sent off it may be worth the wait, but anything spreadable needs to come back ASAP.

So, point of care is definitely the way forward and we are ideally placed in terms of iur IP. Our PCR instruments are already some of the most compact and portable on the market. The competition won't stand still though and speed will be critical. Promote already gives us a current advantage in terms of simplicity of use (and this technology is transferable to our huge portfolio of tests) but at 60 to 80 minutes (which is OK for a hospital setting) we are not quite in the realms of 'wait for your tests results and discuss with your vet or consultant' yet. Hence why they are working with a goal of a 10 minute PCR.

So we have plenty we can sell at the moment but once our 'even better if' comes along this will open a huge, burgeoning market for us. We gave the accuracy and reputation plus the agility to fill this space.

Poidster paints a rocky path ahead (seems familiar!); he sees the huge windfall revenues declining before the new POC market has time to develop and make up for the loss.

However, this is where I think Sonic's post comes in. The fact that covid sales will reduce significantly (not to nothing as there will continue to be a requirement, especially in hospital settings where we have our machines - plus there may be other new opportunities, such as care homes, which we don't seem to have cracked yet) is surely obvious to all and, as it has been stated by the company, has been more than factored in.

The trading is about sentiment and value. Revenue is going to drop before it will be replaced. The drop is already factored in but how forward looking is the market? Can it see over the canyon? April will be critical in terms of articulating this vision and enabling people to see further ahead, but the savcy can clearly already see the direction.

There is always risk, but for us this is mitigated to a great degree by our enormous cash reserves that other companies of our size can only dream of. Plus the dispute, that has been a burden until now, may well produce an additional wind fall. And finally we have three key strands to our strategy - as well as this point of care market and leveraging our existing portfolio, we must not forget our position for a key role in disease surveillance.

I believe the sell-off was hugely overdone. The LTIP was the catalyst required and we are now at the start of a long reversal. Momentum, which was our enemy on the way down, is about to become our friend.

IMO only please DYOR

In April we will hear direction of travel in terms of products to be released in Q4, but I'm still hoping for a February R& D update on current developments as this would fit in with their usual pattern of information flow.

In particular I'd love to hear what's been going on behind the scenes in terms of the software developments (this interface tech will be transferable to non-covid too), plus CoPrep (also applicable to all tests) and anything else they been working on since September, they certainly won't have been twiddling their thumbs.

With the LTIP in place, it would not surprise me if they began to more regularly drip feed god news now and Novacyt have not ruled out any further coms before April, a reminder of the response I received from Mandy (company IR):

"I will keep pushing for a formal calendar of events to go on the website, in the meantime I would remind shareholders that the Company is fully cognisant and compliant at all times with its disclosure obligations therefore results will tend to be issued around the same time throughout the year with material news flow disclosed immediately as required."

A pendulum has to stop for a moment before it can swing the other way.

Did anyone else feel the SP stop last week?