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Agree, the IP alone is worth this - the future is going to be diagnostics - Novacyt is, therefore,future...

I agree Sonic, whether there was a deliberate attempt by the BoD to bring the SP down, as some on here have suggested, I don't know, but there certainly wasn't any incentive to support the price. Being the new man, I would have definitely wanted to get any bad news out of the way.

So, I'm expecting good news from here on in. The big question is how long to wait.? I've been requesting a more formal timetable of key announcement dates from Novacyt. The response is open to a degree of interpretation, as I'm not sure whether the February R&D update I'm expecting qualifies as 'results '. It is more likely to be classified as a 'material update' so, I assume it will come out when ready which could be anytime.

"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."

We'll have to wait and see and hope the SP rises in anticipation. - I am very surprised to not have seen a more significant step change already, but perhaps it will take a few more days for folks to fathom.

It's time to step away from the screen for a bit, as "weighing the pig does not make it fatter". Good news is coming; I'm just going to have to back to being patient for the time being.

GLA

I couldn't agree more, Kaeren, and hope this is still to come, if not already in place.

HarChris - I completely agree, this is not the finished product - but we certainly have the foundations built, a skilled workforce and all the right material sto take us there. Looks like the foremen on site have also now been incentivised to start building!

With regards to these incentive (LTIP), I have already said it, but will say it again, as it does not appear to be sinking in in some quarters:

"What investors are forgetting, is these are minimum values. 777 to get your whole allocation. But these are shares not cash - so every penny above this counts as additional reward."

The management board get double for achieving £20 in three years then they would for achieving £10 - not double the shares, but double the cash on selling the shares. They can choose to keep the shares if they think they are going to go higher, or sell them if they need the money. The only stipulation is that the CEO and CFO keep at least half their shares for a further year so that they don't pump and dump in the final year.

If they achieve below an SP of £7.77, then the number of shares tapers off rapidly to the point that if they only achieve and SP of £4.71 they get nothing at all.'

So there is every incentive to go beyond the 777 figure - they will be seeing this as a minimum target.

#turningpoint

BYP - I'm talking about the fact that people on here are making out that 777 would be a maximum and not a minimum, which it really is to get the shares.
Even if one calculated as 6.72, as you suggest it may be, this is still a minimum threshold to get all the shares.

What people are not getting is that once this price is achieved and you can choose whichever calculation, then the value of the insensitive is based on the share price at the time the holder sells. If the SP is £20, for example, then the bonus is clearly worth twice the amount of the value that it would be if the SP were £10

And the 777 is not a maximum - as I posted earlier - this the minimum to get all their share bonus.

The sky is then the limit - the higher the SP the more they can sell them for.

Some are being obtuse (that means acting deliberately thick) on this for reasons only they will understand.

@neilrich - you're quite right, I wen through all their holdings again the other day. My error. He is underwater like many on here. Hence the tension between them at the AGM

HKK - you clearly did not read the posts last night.

Management cannot trade shares (buy nor sell) on the open market at the moment and cannot until the dispute has been resolved - this is fairly obvious really, as they know far more about it (good or bad) than we do - this has however now been confirmed and put to bed.

That's' why this LTIP is such good news, as it allows the management board to have the same interests as us. It s only human nature for them to want to earn money. Why would they want the SP to go up before they have shares themselves? Until now David Allmond and James McCarthy have had no shares. They will now want to see the SP rise and, whatever has happend up to this point, we* are now united in this aim. They will not just want to transform the company internally but will from now on have a much greater interst in the outward projection of the company. Institutional investors will be enticed too, that will make a huge difference to our prospects . Don't expect an overnight re-rate, but it will certainly be the beginning of the upward trend for which we have all* been waiting.

*not including those who are paid to keep the price down and are squealing on here today

I cannot see why the thread regarding this from last night was deleted. There were some constructive and intelligent posts. Kaeren basically was corroborating what Killkenny Ted had previously posted in terms of Exsig being validated in 8 separate nhs trials.
Poidster then went into more detail regarding the specific difficulties faced by front line staff in smaller labs.

Anyone who has watched the video showing the process for preparing the Exsig samples will fully understand what a truly convoluted process this was. However, this is normal for pathology labs and they knew what they wer buying - but very complex for less experienced staff being asked to test for the first time in the circumstances of a pandemic.

The crux of it, therefore, is that we have sold them a test that works as intended and had been properly and independently validated. They also knew what was involved in terms of process but still bought it - that's their problem.

So why the dispute? Because we tried to help them out. They would have reported that it was too cumbersome when used on the front line. We then came up with ProMate™.

The contract says they are entitled to any updated/improved version of the test. (I no longer have the exact wording to hand - please post if you have this.) So, it will come down to whether the DHSC can argue that ProMate is simply the updated tests, or whether Novacyt can argue that ProMate is a completely new test. [I would say it is a different test, in the same way as a 3 gene tests is not and improvement on the tow gene test but a different test. This is why Novacyt would say the have (strong) grounds to exert their contractual rights.]

Knowing that this is what the dispute is about puts a completely different light on the situation. The tests were not faulty. It is just case of whether DHSC have to pay for the Exsig they returned to us as well, as the Promate tests they actually used, or whether they only pay for the one test (Exsig) and get the ProMate as a free substitute.

From my understanding of all this, if we lose we get paid for the Exsig only (worst case), and if we win we get paid for the Exsig and the ProMate (best case).

This is my reasoning and speculation only - please DYOR

Seems like more good news though - as I say, I cannot see why thread was removed? Nothing offensive was said - perhaps enough shorters (is it 5 required?) got together and reported it.

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@ RBMInvest – at 7:55 you say:

“Hindsight is a great thing, but it shows quite clearly that many LTHs were running on emotion, not logic, myself included.”

I believe the complete opposite is true (well the second part of your sentence, as hindsight would certainly be a benefit). The reason we didn’t sell at £12 was because we thought it could easily hit £15 (had the contract extension materialised and there been no dispute, I’m certain it would have done), that was not an emotional assumption but logical.

Then at £8 we didn’t sell (in fact I bought more), as the fundamentals still showed this as undervalued. On a technical basis it has ben undervalued ever since. So, looking at the share from a value perspective and applying normal valuation calculations (difficult at times, I know, with the scarcity of comms) it has been a buy in the logical sense at every point since. That is why some of us LTH (and perhaps we should be called more ‘traditional’ investors) have held. Unfortunately, the momentum trade has outstripped the value trade by a considerable margin.

Basically, just because the share was on a downward trajectory, investors sold (to protect capital) fearing a lower price despite the SP being fair or under what it should be. This leads to a downward spiral and further downward pressure. This emotional force was far stronger than I have ever encountered and, in retrospect, was a huge error (or omission) in my calculations (as you say hindsight is wonderful). This is perhaps due to the disproportioned amount of small PI investors who newly came to the market and invested into this particular company (and other similar stocks) on the way up who are swayed more by what people say on boards such as this and Twitter than on their own understanding and calculations.
So, momentum and emotional investment (call it sentiment) has trumped logic at every stage. The best course of action was not the logical one and we should have seen the crowd stampeding for the exit and got out first.

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So, what to do now? I believe, the stampede has run its course. The momentum has stopped and has got far too far ahead of itself. The logical argument is stronger than it has ever been. I thought this was going to spring back (or bounce off the bottom) faster than it has, but the emotion is clearly still running high and a lot who have already been burnt are very wary.
I can only go by what I see, and that is an agile, profitable company that has no debt and huge cash reserves (irrespective of the eventual dispute outcome). It is has acquired and instrument arm to add to its testing capability, it has vastly increased its sales force and developed a private sector customer base here and abroad. It has huge value in IP and is currently working behind the scenes on its future strategy and further product developments to keep itself ahead of the market and secure its future post pandemic.

Its stated strategy is firstly to build on its current portfolio of instruments and tests [further developments such as CoPrep in its instrumentation to further enhance workflow, development in its tests such as Promate™ for its other tests (possibly?) and speed of PCR (a 10-minute target) are currently being worked on and we may hear more at any time on these] and secondly it wants to position itself for national and global surveillance project bids, as the world moves form pandemic to endemic and looking to protect itself for future variants or other infections. It is developing a third strand to its post pandemic strategy that we will hear more detail in in April.

In addition to the above strategy to continue cash revenues we may receive a windfall in terms of dispute resolution and news on tie ups (such a Tata?) or other M&A activity. These events are by no means certain and cannot be counted on but should be considered as potential upsides when assessing risk/reward.

So, hindsight would indeed be wonderful, but logic (rather than emotion) says to me, if you were going to sell you should have done so before the hoards not after, this is the time to invest not trade out. Having been on the trip both ways, we all know this share can rise as quickly as it falls.

Let’s get back up that mountain!

As always, DYOR - GLA

Sorry, I meant to add, I would let Mandy know- but I'm still waiting for a response from the email I sent yesterday asking about a February R&D update and whether we could have a formal calendar to include the AGM, TUs, R&D updates etc as they need to go into the diary :)

@mgmidget – an interesting point that you raise ref patent box at 16:35: “if the printer has a patent on it then sales of the cartridge also qualifies for the reduced 10% rate of corporation tax on profit”

Let’s hope they are aware of this – but I assume their tests are patented (certainly ProMate™) as well as the Q machines – but worth passing on just in case.

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@Kamakiriad – I don’t take quite the same view as Blue83; I agree things are never going back to how they were for Novacyt before covid. At 8:34, you state:

“I wouldn’t be surprised if some of that money is used to acquire a smaller company giving us further income. That is how this company has operated previously.”

Quite true and this is something we could expect (even if it’s not always that simple to find the right fit at the right price), but I think many here have forgotten that we already have acquired such a company as you say.

Pre-covid we were a test manufacturer, a pretty good one at that (although debt and lack of cash was holding us back), but still just a test manufacture. Making tests to be used on other people’s machines.
We are now a test and instrument supplier. But not any old instruments. Not everyone saw the value in the Q16 and Q32 machines (aka MyGo™ and MyGo Pro™) produced by IT-IS. But GM recognised the potential of these small (in size but large incapacity) portable devices, repackaging them as Versalab™, portable and flexible, depending on scale and location, from small suitcase to fully kitted trailer lab.

This package is now being further enhanced with Co-prep™ (to be released any time now). To improve the seamless workflow for larger scale projects, this will automate the pipetting stages. This together with an improved IT infrastructure and interface (also currently being worked on) will transform what we have to offer.

The state-of-the-art instrumentation and workflow will all be coupled with an improvement in the test technology itself. The recently developed ProMate™ has proven to work with covid PCR tests, removing several steps and thus further simplifying the procedure. The company has confirmed this technology can be applied to other PCR tests. It is just a question of to which tests, and then gaining the regulatory approvals.

I believe it is no surprise that non-covid sales remained fairly static over 2021 – all healthcare and labs appear to have been covid focussed with only essential other work being carried out. As they now turn to the backlog that has built up, I can see that we are in a much stronger position to compete for this other, non-coved related work.

We have a bolstered sales force (oh – you didn’t know that we didn’t have a sales force with feet on the ground pre-covid?), and we will have a seamless workflow system of our own, together with the most accurate and cost effective (Promate™ saves time) tests. Tests that will be repeatedly used once customers have bought into the technology – others have used the razer & blade (or printer & cartridge) analogy. This will take time to all pay out but will be unstoppable once in motion.

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The world has changed. The public’s view of testing has changed and Novacyt has changed. There is no putting it all back in the box how it was. Comparing us with what we were pre-covid only serves to highlight how ignorant the market is at present. They seemingly do not understand all of this at the moment and will need to wait to see the continued and increased revenues staring them in the face sometime down the line before buying in (they are meant to be forward looking as well!?) – unfortunately for them, they will then have to pay a huge premium.

It’s cheap as chips now for those who properly understand the situation. We are currently outnumbered by those who think we are burning money and not making it, but only by a fine margin. For how much longer? Are things about to turn? Are you back in yet Lewis?

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I agree with you, Neilrich3 – not only does Dr Tony Cooke predict the next variant will be on its way but, more importantly, that his company, Cambridge Clinical Laboratories (CCL), has been around for 16 years and has the option to focus on other virology or oncology testing. “We'll still be here.”

This is one of the companies we have been working very closely with for a number of year and one of the reasons we didn’t become a test provider ourselves (so as not to undermine them). Dr Cooke is also heavily involved with the Laboratory and Testing Industry Organisation (LTIO), which includes many other private test providers in its membership:

https://ltio.org.uk/members/

If you haven’t yet read the transcript to the DA interview that B2HS2L posted last night [Sat 21:25], it is a must read. I can’t believe how well it reads compared to how it was delivered (I know he was snivelling but, DA must have been very under the weather) – when you read it, as opposed to listen to him, you realise it’s not ‘word salad’ after all! Yes, they are keeping cards close to their chest for competitive reasons, and some detail has not yet been decided but the strategy is clear.

• ‘become a leading global clinical diagnostics company in the fight against infectious disease’
• ‘our purpose being to protect people by providing the right information at the right place at the right time’
• ‘providing actionable health information, and protecting people from the invisible threat [e.g. antibody resistant pathogens]’

He set out two core strands:
1. clinical diagnostics with our instruments and our research use portfolio as an innovation engine for the future (i.e. building on ad selling the exiting 550-600 odd RUO tests)
2. global first responder towards major disease outbreak as we have done so for Covid-19 (be ready to bid for national and global surveillance projects).

Part 2 of 2

Well three strands actually, as he then goes on to say “I really want to be more market or customer lead serving our medical needs and picking important under-served issues in the future as we invest in the non-covid portfolio”

So, the third strand is yet to be revealed in detail – this is where I believe he will be working with the likes of CCL , Katalyst Laboratories and Wren Health. These companies were around before covid and want to be around post covid but, like Novacyt, their funds will have been bolstered and they will be looking to future growth and not collapse like the fly-by-night outfits that sprung up for travel testing. April is not far away, and DA is no doubt canvasing for a range of views as to where they can fulfil future needs. They want to develop test that are actually going to be bought and used after all.

“We proudly innovated 15 new products last year, to tackle the evolving disease, we've developed a new customer base largely in the private sector, - film, media, employers etc , - to help test their workforces.”
Testing of workforces is going- to be a growth market – the question is which tests to develop first? Surely it’s best to ask their ‘new customer base’.
“We are doing a number of assessments for where the key unmet needs are that we could best serve in infectious disease.”

So, this is a solid company properly planning and doing due diligence for its long-term future before spending any of our hard-earned cash on further R&D. I cannot see anything wrong in that.

In the meantime, many of our eagle-eyed board have spotted much going on in terms of IT development. Some software/interface enhancements to our instrument base is already being worked on behind the scenes (as is the speed of PCR). Whether this is for domestic supply for for international customer is yet to be seen but I’ve no doubt exciting news will be revealed in due course.

The oversell has been overdone. Whether the trolls and shorts can squeeze a few more pence out before it is let go is to be seen – but there is only so long one can hold a float underwater. Good luck to you, Lewis – you may get in at 150 or you may have egg on your face if this springs back sooner; I suspect there are many waiting to play the same game. I hope you don’t miss the boat.

GLA

@LTHs - it is well worth a read of this thread if you are unsure about our financial position. Well done DRB , Hydr, ChrisToffer and HarChris for questioning what the worst case position may be and for setting out the figures so clearly.

I concur with the calculations regarding potential maximum liability and also the reservations regarding cash in bank, which remains somewhat opaque without a full breakdown - tax being the most difficult to assess.

Whilst calculating the very worst case is a very useful exercise that can possibly put end-stop to the SP slide and to counter troll misinformation, please remember this is exactly what it is - the worst possible case, where we have to pay back all the money for tests delivered. [Tests which the DHSC had themselves already validated no less!] The board have said this case is "possible but not probable" and that has now been reiterated by DA. Any new CEO spends their interregnum looking for all the skeletons, so that these can be aired at the earliest opportunity (i.e. not on my reign) - it is most reassuring that DA appears to have found none. He has also reiterated that we have ‘a [very] strong case to enforce our contractual rights’.

It is most likely that we will have to provide replacement tests at costs (£20m) or provide something else of a similar value (as time has moved on and the DHSC's needs will have changed). [Remember this will probably be a negotiated settlement.] The likelihood of the DHSC making a full payment (whilst possibly being ethically and contractually the correct thing to do), is equally unlikely without us going to court.

The unintentional message of 'go away and come back in April' was surely received by many, which precipitated some trading out and then fear, misinformation and, in some cases, pure, weary exasperation has led to a mass selloff that has taken us far below the point many of us thought previously possible. As many here have stated, 'the results weren't really that bad'.

I'm hoping that, before the trolls return en-masse, the weekend will give investors time to look at the information available in the clear light of day. The current mcap is surely bereft of logic.

You have to ask yourself, is this company with no debts, a large cash pile and forecast revenues of well over £50m (before new products come on-line), a company intertwined with the leading scientific community that has delivered at every point in terms of world leading, cutting edge R&D, a company with a heritage of being first to market for tests as wide ranging as H1N1 Bird flu (2009), Ebola (2014), Zika (2016) and Covid19 (2020), and which is now positioning itself in pole place for lucrative bids as the global leader in surveillance in a changed world where countries switch their focus from dealing with this pandemic to spotting the next, really worth just £20m?

DYOR

@Blue83 ref your 13:52 post you state:

"As DA has implied, at last, it was also in the context of NCYT being run uncommercially. Lets hope they get to grips with it at last."

For all his faults, I think this (and DA's comments ref becoming more market led) are a bit unfair on GM.

Don't get me wrong- DA would have done some thorough analysis on recent R&D spend, and the ensuing revenue, and no doubt found it wanting.

But if we think back, GM was very much market led. In fact, he saw clear opportunity to be first to market with a very in-demand product, which is why we were able to clear debt and fill the coffers in the first place. He then continued to be market led with other R&D developments.

I have no doubt he would have asked DHSC what they wanted . They wanted something simpler to use, hence promate was developed- an ingenious product that will bring in revenues for many years to come, as it can be transferred to other products.

So, where did DA find products & developments wanting and why?

Well The DHSC said they needed to be able to distinguish between covid and flu as well as other common winter viruses. And this where the goal posts started to move. The company was the first to bring out such a multiplex product (WinterPlex) but I doubt they made a bean from it. Not really the government's fault either this time, no one had seen that the full lockdown would kill flu cases dead.

Then the French said they wouldn't buy our product as they needed 2 gene test. We delivered- but did they then buy? Not a chance - they would view Primer Design as British- so led us up the garden path. The US is equally protectionist. The FDA changed their rules and wanted multiplex rather than simple covid tests. Again we delivered with multiplex kits able to distinguish between covid strains - did that make a difference? Still waiting for regulatory approvals no doubt ("End of the line, Limies")

Back to the UK - the Government has done the opposite, completely sidelining UK diagnostics, to buy unethically cheap foreign imports! How can Novacyt win?

Their only option was to go to the private sector and other EU countries. (It now looks like there may be further opportunities in P*kistan and possibly India.)

So perhaps we are misinterpreting what DA means by developing market led products. Perhaps it's more about developing products for markets who are actually going to buy rather than for those constantly giving us the cold shoulder.

Or perhaps its not about the R&D afterall. This is top class and every time they were asked, they delivered. But more about developing relationships with our key clients. GM had done this well with the likes of CCL and others where they were scientific buddies but not so well elsewhere.

I agree DA didn't do himself justice in the recent interview but sales is his forte - he might just be the guy we now need to build the kind of connections required to fire up sales and take us forward

I agree there is plenty of value here - but looks like everyone is playing a bit of a waiting game at the moment- to see who blinks first. I've not seen the trading volume at such low levels for a long time.

What everyone seems to be missing is the new strategy. Yes, non-covid sales will be important part of the future mix but global surveillance is going to be the next being thing, as the pandemic becomes endemic.

We are positioning ourselves ready to respond to national and international tender processes. In the near future there will be warehouses built full of ready to go tests and equipment - I could see Versalab fitting well into this mix. Ready to roll out in the event of a new outbreak - they can't simply keep idle labs open indefinitely this would be a far more cost effective and pragmatic solution.

We are due an R&D update in February - which starts next week by the way. We have been told that information on the non-covid tests to be released in Q4 will be forthcoming in April, but we should also be expecting an update far sooner on all the other developments in the pipeline.

What I'm hoping to see is how the Promate technology can be applied to other tests in the folio. The equipment developments are another area we should be looking out for in terms of IT interface and speed. They are keeping their cards close. This sector is highly competitive and there is far more going on behind the scenes than meets the eye. (The 10 minute PCR test 'leak' to camera was missed and not intended by management and was quickly put back under raps.) Remember, R&D spend has gone up. So, don't imagine for one minute that they've been sitting doing nothing for three months.

All will be revealed in due course and, as Kaeren has intimated, it might be sooner rather than later once share options have been awarded!

Whilst certain aspects of the RNS were disappointeing, I was buoyed by cash position. It is not being squandered. Yes, investors don't want it to just sit there either, but it is not burning a hole in our pockets. It gives us great flexibility and security in the year(s) ahead. At the AGM James Mccarthy was very deliberate about how such money would be spent - only to further growth ambitions as laid out in the company strategy.

I think he is more astute than has been given credit. Remember, IT-IS was bought for around €6m (10m minus about 4m cash back). Calculate how many such revenue generating small companies could be bought for 100m. He's not throwing our money around that's for sure and the core strategy remains to build the company out to midcap, organically or otherwise.

I believe we have the means in terms of cash, IP and expertise to fulfil that ambition. So, yes, completely undervalued and still relatively low risk at these levels considering the potential upside.

GL all LTH who have hung in and any newbies.