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5) a Joint Venture for ava6000 - An example here would be Johnson & Johnson + Pharmacyclics. We'd be looking at a ~$100-200M upfront payment, with an additional ~$1B in milestone paymets. This would be for a 50/50 split on all sales, and with the big pharma company paying most of the further clinical costs. This type of deal would A) give Avacta a bunch of cash to supercharge other assets, B) allow the trials needed (Phase II) to get ava6k approval for many other indications (breast, ovarian, etc) and C) provide a massive endorsement to the Precision technology.

(https://www.pharmatimes.com/news/j_and_j_pays_$150_million_upfront_for_pharmacyclics_cancer_drug_979916)

6) a Joint Venture for ava3996 - Similar to the above, but probably a lower monetary value, simply because it is in earlier development. However, the target of opportunity is much larger than for ava6k (which is very large in itself) as it may be 'tumour type agnostic".

7) license out Precision for other companies to put on their own proprietary warheads (MMAE's, etc). My view would be that these kinds of deals would look 'pre-clinical' with a relatively low upfront payment ($10s of millions), but with large milestone payments (and potentially some royalties).

My preference, for what it's worth (which is not much), would be for 2 and 7 in the near-term, with 5 close up behind. This would allow ava3996 to be kept in house, and at the same time accelerate ava6k to patients in many cancer types.

AS mentioned 'optionality' when asked about funding recently, so what are the options and general expectations? Below are 7 options which I think are possible.

1) Fund raise - this would result in dilution (which AS has stated they will try to avoid). However, if this would be a private sale to say, a large pharma company, it could actually end up being a very good thing. Effectively, this would mean the backing of a large pharma vouching for the pipeline.

2) license out one or more of the Precision pipeline products (e.g., oxaliplatin). Avacta have stated that they have already worked out the basic chemistry of many of them (ie., created lab versions). While these are all pre pre-clinical (i.e., very early stage) I would suggest the pharma companyies could look at them as pre-clinical, as they are 1) standard chemotherapies (so no suprises there) and 2) the mechanism of action of Precision is already proven. So I think the overall risk of these products is low. Recent pre-clinical license deals for ADCs have been for ~$50-60M upfront, with an additional ~$400-500M for mileston payments. Recent example include AstraZeneca (https://www.fiercebiotech.com/biotech/astrazeneca-spying-post-bcma-big-bucks-pays-55m-adc-join-peers-hot-cancer-space)

3) license out ava3996. This is pre-clinical, but like above, I believe the risk is quite low, given the fact that the Precision MOA has been proven, and Avacta can point to clear evidence that Precision works in humans. Also, they now have a ton of data in animal models for ava3996 (mice and dogs) which one can compare against ava6000. The bigger question is on the effectiveness of AVA2727D (the warhead). As this is in the very last stages of the pre-clinical work, I would argue that this could be seen almost as early stage human clinical trials (i.e., the MOA is known, but the effectiveness is uncertain). A recent example is Merck buying 7 ADCs from Kelun-Biotech for $175M upfront, and possibly $9.5 billion in total (https://www.merck.com/news/merck-and-kelun-biotech-announce-exclusive-license-and-collaboration-agreement-for-seven-investigational-antibody-drug-conjugate-candidates-for-the-treatment-of-cancer/). While this was for 7 ADCs it was not expected that all would make it to the clinic.

4) license out ava6000 for a specific tumour type (i.e., breast, ovarian, pancreatic, etc). I couldn't find many examples of this kind of deal, but Avacta have hinted at this in previous presenations (i.e., at the AGM). My guess is that this would effectively be like licensing a drug that was developed for a single cancer type, so would follow those kinds of deals...so maybe in the low $100Ms upfront, with another ~billion in milestones + royalties.

(continued below)

@icecool - thanks, i had missed that (patient numbers). and i agree, once part of a cohort, the patients can continue treatment but wont join another cohort.

Hi Icecool, where did you see that 5 patients have been dosed in C7? From the results presentation, I just saw the standard "3-6 patients" estimate.

FWIW, I think this cohort will take the same amount of time as recent cohorts (60-80 days). Remember, the bi-weekly dosing is also doing dose escalation, so even if they are starting at dosing levels below C7, they may end up dosing higher (after a couple dose increases). I think that the detailed PK data (and potentially biopsies) for this cohort, due to the very high dose, may be very informative regarding how the body deals with ava6k, leaving time, amount of dox in the system, etc. So it is definitely not one to skimp on.

@Bella - you're absolutely right, one should never underestimate the role of side discussions and contacts. However, when presenting new results to the community (be it science or investing) one wants the largest platform as possible, to spread the word far and wide.

@BV - indeed, I am certain that the choice of where/when to present has already been made. Abstracts for talks are typically due a few months before a conference (with an additional deadline of ~4 weeks for new/exciting results).

EMSO is definitely a possibility RAMBO. I wasn't aware of how large the Jeffries Healthcare conference aware, apparently the large in Europe. So that's a possibility as well, good spot.

The JP Morgan and Jeffries conferences are more business/investor orientated (new results can still be presented) and may be better for media attention. EMSO (and others like AACR) are more science focussed (although of course the major pharma companies will be represented). But I would be surprised if the results aren't released as part of a conference...it's the standard way to bring more attention to the results.

Great point, ava6k should strongly increase the effectiveness of immunotherapies, so future combination therapy trials are definitely in the works (although the first P2 trial will be ava6k as a monotherapy).

Just one note, ADCs won't be improved by Precision. Precision is effectively a new (and better) version of ADCs. The goal of both is to bring the warhead straight to the tumour cells and space healthy cells. What we can do, as pointed out my Myles, is to adopt some of the extremely potent warheads that are put on ADCs and put them with Precision.

As I wrote last week, one way to look at the Precision platform is to see it as disrupting the ADC market (which is currently all the craze in oncology)...which is currently about $10B per year and expected to triple by 2030.

@Doggy - I believe that was just about AS giving a more layman's description of the posters.

Exactly Timster. Posters are great, especially for early results (preclinical, etc), but if we're talking about paradigm shifting results, a centre stage prime time speaking slot is the goal.

As we saw on twitter (thanks to Andrew - https://twitter.com/Andrewp37075755/status/1712221451363799050/photo/1), the Head of Program Innovation, Global Drug Development at Novartis, Janet Munro, knows about the Precision platform and has said that some are describing at as a "treatment paradigm changer for oncology". She also said that she is "interested to hear about progress on the first therapeutic from Avacta's platform" (i.e., ava6k).

Note, however, that Avacta are not presenting anything on ava6k at this conference. This just highlights the importance of offline discussions in the industry...I can't imagine FMcL and others discussing the ava3996 pre-clinical results without touching on the success of ava6k.

But this begs the question, when will the ava6k results be presented? It is common for companies (in addition to published peer reviewed articles) to present exciting results at major conferences. This is a way to get the results to investors as well as the scientific community (and other companies) in an impactful way. I had thought that there was a small chance that Avacta might make an announcement during the conference in Boston this week (in addition to the two posters), but I guess it was just a bit too early. The next major conference where big and exciting results might be presented is the JP Morgan Healthcare Conference Jan 8-11th, 2024.

Technically, this is outside Q4 2023, but only just. So I wouldn't be surprised if the P1a data (c1-c7) is held up for a couple weeks beyond Q4 and is released as part of a presentation at the January conference. Needless to say that if Avacta were given a slot for a presentation at the JP Morgan Conference, this would be a massive PR opportunity.

@PL - that sounds reasonable to me.

Sorry BV, but I disagree, it doesn't sound ambiguous to me. "Therefore, in parallel with the completion of cohort 7, the Company intends to begin a short study to explore more frequent dosing (fortnightly) of AVA6000 AS A FIRST LINE TREATMENT in patients with soft tissue sarcoma." The emphasis is mine. The "AS A" is clearly referring to the 'more frequent dosing'. You can't explore a first line treatment, without testing it as a first line treatment.

The only ambiguous statement is "in parallel with the completion of cohort 7". Does this mean only have cohort 7 finishes, or is it during this cohort? I thought it was the former, but in the interview, AS appears to imply it is the later.

@yeboha - it depends. There are different kind of deals. If the offer is in 'cash', then yes. Sometimes the offer is say (in your example) £2B upfront and a further £2B in milestone payments. So you would get half the cash up front and half over time when the milestones are met. Finally, there are deals that give you a proportionate amount of stock in the company buying the smaller company (Avacta in this case), or a mix of cash and stock. However, for smaller deals (say sub-£20B) a buyout is typically fully in cash.

I don't think so Energy. AS stated that the posters would be available on the conference website after the conference.

Both presentations are just posters, so Fiona won't be presenting anything. Both posters will be available on the conference website after the conference.

@SNewby - quite simple. 100x times the current market cap of Avacta is ~$51 billion. If the Precision platform performs as well as we think it will (i.e., based on the evidence to date), then a market cap of $50B is easily within reach.

Pfizer's current mcap is $188B, and if it is 24x more today than it was in 1984, then it had an mcap of $7.8B at the time...i.e., already a massive company (especially at the time).

So the difference would be that by getting into Avacta today would be at a much earlier stage than Pfizer in 1984.

Good points BV. It should also be noted that for standard dox, the normal schedule is every 3 weeks, but a large fraction of the patients undergoing treatment have this schedule modified, either through dosing holidays are changing to less frequent dosing. So I agree, that it is perfectly reasonable to think that if ava6k is dosed every 2 weeks, for a subset a patients that are having trouble tolerating the drug, they will be moved to a 3-weekly dosing schedule. i.e., every 2 weeks is the maximum, but patients with weaker systems may have longer rests between treatments.

@Bella - they definitely won't increase the dosage every two weeks. The idea is to make sure that a bi-weekly dosing schedule is safe. So, like the previous cohorts, each cohort will receive the a given dosage and will remain at that dosage. The question is how many cycles do they go through (minimum 2) before they can start on the next cohort at a higher dosing level. The reason that dox is limited to 3 week cycles is that it takes the human body about that long to recover from the previous cycle. Specifically, what I learned at the AGM, is that it is the white blood cell count that often takes a nosedive after each cycle of dox (specific types of white blood cells in particular). This is one big reason why patients undergoing chemotherapy are prone to infection and sickness, often needing to be hospitalised.

Each cohort will be faster than we've seen so far (C1-C7), simply due to the dosing regimen. But the clinicians running the trial (and Avacta) will already have seen the blood work from the patients dosed so far, so they will know the average drop in white blood cells (amongst other indicators) and the 'recovery time'. This is clearly less than two weeks, but of course, there could be cumulative effects, which I believe is what they are testing for in this bi-weekly study.

FWIW, my opinion is that if the C7 patients are still not showing evidence of being near MTD, then the bi-weekly study will start at the C5 level...possibly C6 if the clinicians are very confident.

Excellent find Muck, shows just how important ODD is. Proves (to me anyway) that Avacta have a clear strategy regarding the Precision pipeline, i.e., ava6k first followed by ava3996 and others.

And if I asked the same question but about being a first line treatment in Phase 2 trials, this is what I get:

Phase 2 clinical trials in oncology typically do not serve as first-line treatments for cancer patients. Instead, phase 2 trials usually focus on evaluating the effectiveness and safety of experimental therapies as second-line or later treatments. In general, phase 2 trials in oncology are typically conducted after phase 1 and focus on patients who have already received first-line treatments and need alternative options due to disease progression or treatment resistance.