For easy access.
Starbright - You do make a compelling argument. I must confess to having only invested in Biotech stocks for the last 2 years so certainly do not claim to be an ultimate authority.
My one relevant experience however comes from Synairgen, which I have held shares in from a MCAP of c£20m. At that Mcap SNG had multiple institutional investors and UHNW investors who specialized in small cap biotechs.
Shares were owned by The Woodford fund, Leonard Licht, Acacia to name but a few. These some of shares may have been acquired through a placing but holdings were increasing and decreasing on the open market too.
While the MCAP was around £100m some relatively major funds purchased. Polar Capital has purchased 11% (now down to 8%) on the open market.
Should a good deal for VAL201 be secured and MCAP of c£50m be achieved, I think it is very possible that we could pick up a couple of funds. It would be this which would secure the new valuation and prevent a regression as seen on previous spikes.
Once the company has a pipeline of revenue, a new generation of investor will take note.
VAL301 is a repurposed formulation of VAL201 to target endometriosis (The growth of tissue similar to that of the uterus on the ovaries, bowel and pelvis lining commonly causing pain and infertility).
The current standard of care for endometriosis is a combination of painkillers, non-targeted hormone therapy and surgery. The non precision hormone therapy relies on the suppression of oestrogen production, which comes with a significant array of undesirable side effects including loss of bone density and fertility.
Pre-clinical studies carried out by VAL indicate that endometrial lesions were reduced by up to 50% and it is anticipated that the treatment would work without affecting fertility or bone density due to the targeted method of action.
Should this level of efficacy be demonstrated without side effects in human trials, then VAL301 has the potential to become the new standard of care for endometriosis. VAL301 could again prove revolutionary in its market.
17 months ago VAL entered into a collaborations agreement with an undisclosed major Japanese Pharma. While it is possible that the original investigations were paused to focus resources on COVID research, I am sure this is now well under way. In vitro studies, by a well resourced pharma can move pretty quickly. This could surprise us all by being the first deal over the line. Watch this space!
Starbright - If Cenkos can bring in investment from institutions for a placing, I see no reason why it shouldn’t be able to convince those same analysts/institutions to take long positions while the company does not need a placing.
I mentioned above that 55% of patients showed no advancement in disease while receiving VAL201 on the trial.
I had not realised at the time that the patients were given the treatment for between 18-26 weeks.
VAL201 prevented any progression of the disease for 4-6 months in over half the patients.
Feel free to use anything I post anywhere you think might be useful. I now follow you on Twitter. Not that I really use it. (@Joshblakemore)
Stay tuned for the next chapter - Understanding Val 301…..
Having increased my position this morning, I thought I would spend some time getting to know VALs flagship product and its competitors a little better.
The current first-line treatment for prostate cancer is a combination of radiotherapy, radical surgery and hormone therapy however, there are currently 4 only treatments approved by the FDA for treatment of castration resistant prostate cancer. Of these treatments, the best and current standard of care for CRPC extends life expectancy by a mere 4 month while subjecting the patient to a highly undesirable side effects.
Val is at the forefront of the development of SRC Inhibitors as a means of preventing progression of disease. There are numerous other drugs in pre-clinical and early stage trials, testing different means of SRC kinase inhibition and whether they might provide a superior or complementary mode of treatment to those currently approved.
VAL is notably superior as it does not cause androgen deprivation and its associated side effects due to its unique and highly targeted method. This is critical to the patients quality of life as well as their general wellness.
The top line data from the Phase 1/2 trial found that 55% of patients showed no progression of disease while on the trial. While the size of the trial obviously limits the conclusions which can be drawn, if VAL201 were to be able to prevent the progression of disease, without major side effects in over half of patients for a sustained period of time, then it is quite simply a game changer.
It is up to Suzy now to negotiate a licence or JV which suitably values its potential and sees it on the front line prolonging and hopefully saving lives.
With a Mcap of just under £50m it is worth dissecting the major sources revenue available to get a feel for whether the share price should go up or down.
Enterprise Value = 12x gross profit for non-covid related revenue.
Enterprise Value = 6x gross profit for covid related revenue.
Non covid revenue = £3.5m H1 2021
FY2021 Rev = £7m
Gross Profit Margin 40%
GP = £2.7m
Biosure Antibody test revenue = £33 x margin x sales
Gross profit margin (est.) 40%
Sales (est.) =500,000/year
GP = £6.6m
Now my projections for the lateral flow test sales relies on my firm belief that AVCT will in the next few weeks receive Home Ise Authorisation for their best in class test. Or failing that, a manufacturing deal with an alternate company be agreed. Let’s assume we supply £4m LFTs pcm to AVCT (AVCT have said they hope to produce 30m pcm)
AVCT test revenue = £5 x margin x sales
Gross profit margin (est.) 20%
Sales (est.) = 48m/year
GP = £46m
Without any provision for sales of Abingdon’s own covid products we reach a the following valuations:
Without AVCT sales:
£72m = £0.78 per share
With AVCT sales:
£348 = £3.70 per share
I can only conclude that at £0.50p a share there is a real opportunity for significant growth.
While our long term outlook is dependent on Suzy’s ability to secure lucrative JVs (which I am confident she will achieve) our short term share price action looks to be driven my technical factors.
Our last rise to 31p saw VAL break out from the year long downward trend. This reversal was confirmed when the previous resistance at 25.5p formed a new support level.
The 50ma looks likely to ‘golden cross’ the 200ma either tomorrow or Monday. This will add a another strong buy signal. I expect us to test the upper line of the new channel at 36p.
The contents of the investor presentation will the determine what happens next. Should the market be satisfied with an update, I would expect the rising channel to hold. Of course a licensing deal/JV would cause a significant re-rate.
As it was pointed out to me that odx also had a similar late afternoon rise, that probably rules out the AVCT leak.
But, we have major untapped LFT manufacturing capacity and our government has announced that we have a shortage of LFTs.
When the glove fits. Good luck all LTH!
Show me the money!
You seemed to have a good understanding of the Medusa/AVCT/Abdx tie up.
Are you expecting abdx to come on board only for component manufacture following the HUA of Avct’s LFA or do you think they could already be producing for use in a clinical setting? As Myles McNalty seems to imply?
Thanks I’m advance?
Avacta have been promising to reveal manufacturing capacity of 5m units per month.
If the rns lands, with numbers, this could be huge for abdx.
Genuinely cannot wait for 7 am tomorrow.
Jolly did you get back in? In the 30s?