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Unless there’s a very good explanation for the circumstances surrounding the shocking raise then AS simply has to go- confidence and trust is shot. His position is untenable unless he has a very good reason why we weren’t to worry about funding to then deliver one of the worst raises I can recall
@Thevalue curve - the Avacta deals you reference were pre clinical and have milestone payments built in so not comparable to deals done for clinical stage assets. Re Moderna, they changed strategy post pandemic to target later stage assets as they had the war chest to do so from the vaccine.
Https://ir.genmab.com/news-releases/news-release-details/genmab-broaden-and-strengthen-oncology-portfolio-acquisition#:~:text=Genmab%20will%20acquire%20ProfoundBio%20for,net%20debt%20and%20transaction%20expenses).
Three clinical stage assets, multiple pre clinical and the technology platform for $1.8bn
For me Matml it would be a positive if we had funds to achieve those objectives, which we don't. We already knew dox was suitable for other indications but that it was unrealistic financially to pursue them without a partner with deep pockets. Now it seems we've gone from pivotal P2 for STS and commercialisation to scatter gun and hope. So many questions.
That, amongst many other aspects of this update, is perplexing me too Matml. If they'd done this abysmal raise to get us through a pivotal P2 study to commercialisation and self sufficiency then it would be much easier to stomach. I can only conclude the FDA didn't agree with their thinking and the strategy changed, again.
Mature reply. I was simply stating that in terms of long term value, it was better to raise at this paltry level and gather more data than do a licence deal. Have you got any suggestions? Or are you just here to hurl school yard insults
I sincerely hope that they are working on funding. The only question for me is will it be dilutive? If it is having let the SP drift downwards that would be p1ss poor. Non-dilutive funding that takes AVA6000 through to commercialisation and we are off to the races and will never look back. All the signs are that it will be non-dilutive but it's time to deliver.
Biotech companies significantly progressing their pipeline and the SP not reflecting that progress isn’t a phenomenon unique to Avacta. Look at XBI (benchmark NASDAQ biotech ETF): it’s made up of great companies that have made fantastic progress but its value has halved since 2021.
Capital is no longer free and the cost of holding a company that isn’t revenue generating is more expensive than it has been for > 15 years. Government bonds are yielding over 4%, risk free. Previously, when holding a growth stock in a zero-interest rate environment, you weren’t missing out on anything. Now you are so it’s rational that non -rev generating growth stocks are struggling. In these markets the only thing that matters is £.
I’ve no doubt that if Avacta had made the recent progress in 2021, we would have been trading £3/4+ but IMO right now Avacta has to licence something to get the SP to sustain a rally. We need to factor in the changing macro environment when looking at the SP.
TD are an FCA regulated sector specialist who Avacta are happy to pay. Exhibit 11 in their report (source: Biomedtracker 2020 Notes: LOA is likelihood of approval) shows that P1 oncology COS to approval is 5.3%. TD explain why they have used a COS rate double that. One of the reasons is that dox is an existing treatment. I don’t think a regulated entity using a COS nearly double the actual success rate of P1 to approval for oncology should be called lily livered but we’re all welcome to our opinions.
It's easy to criticise but I’ve not seen any alternative approaches forthcoming except the fabled 8.9 x multiplier of revenues we aren’t receiving.
Let’s assume TD went down that route as it seems very popular.:
Dox market could $5n according to Dr Smith with AVA6000’s improved safety profile. But if we’re not going to factor in risks, costs, dilution etc. then why stop there?
The chemo market – another 50bn market
We’ve also got a PD-1 candidate etc. – 30 bn market
Don’t forget the JV stem cell opp– currently 12bn market but hey if we’re not using discount rates, factoring risks etc. then let’s use the 2030 projected market which is >30bn
Then there’s the MABs market which is $200bn. Affimers are better. No risks, zero costs to get there.
Add it all up = $310bn
Multiply by 8.9 = $2.759tn MCAP
Avacta is worth more than Apple! Yes, it’s the market that’s “thick as mince”
Absolutely agree Strangy and my post wasn't aimed at you BTW. He gets on my nerves at times too. It was just a factual observation. He apparently gets other trades very wrong although I don't follow those / give a ****. The uber rampers also talk down to people despite never calling anything correctly / spouting absolute nonsense, which equally gets on my nerves.
It is interesting how in years gone by, Wyn barely got a recc and now he regularly gets more than those criticising (except the occasional amusing insult of course). Wonder why that is? Who's been right more often, Wyn or the uber rampers? It's becoming increasingly apparent that people are equally as bored of uber rampers who haven't called anything correctly as they are the de-rampers, who also haven't called anything correctly (decide for yourselves whether Wyn is a deramper or not although I suspect most already have)
Unless I’m missing something Rah, Avacta have already confirmed that active dox is being released in the TME: 5:24 during the AACR poster presentation released yesterday being the latest occasion. Why would “dox not be dox”? It isn’t remaining inert so will do what dox does
Thinking aloud, Dr Smith is looking to get II's on board. Would he be more or less likely to achieve this objective if the SP was significantly higher having released the SD slides, clarified status of AVA600 trial, AVA3996 poster via RNS? The SP being lower makes it far more likely we will get II's on board. Whether that happens of course remains to be seen.
Great article, thanks for sharing. I think the extract below explains why we haven't seen a deal yet.
" About 35% of milestones in biotech deals are typically achieved, so the risk-adjusted value of these deals is considerably lower3. Nevertheless, the relative value of these partnering deal values is notable given that biotechs do not usually out-license or partner their most promising programs".
Dr Smith: "it would be a strategic mistake to licence your lead asset". It's almost as if our CEO knows what he's doing.
Perhaps we could see things start to move once AVA3996 is approved for in human clinical trials? It would explain Dr Smith being so silent and seemingly relaxed about TX funding.