Member Info for M.McNulty

Hi Captain, yes - certainly only guesswork. But surely that's what much of forward looking research is comprised of - educated guessing?

Thanks PSB - very kind of you and glad it was of help. [And thank you to everyone else for your kind comments yesterday, it means a lot.]

So much going on throughout both of Avacta's divisions - the pipeline for potential news must be bursting..! Plenty of news to come for each of the tests under development - and I also think we'll hear of two new (COVID-19 related) projects shortly, namely a commercial partnership to develop a third type of test, and a partner coming in to fast-track a NAf therapy.

What an incredibly exciting time to be an Avacta shareholder.

Afternoon all, hope everyone's keeping well.

I've completed the third and final instalment of my update note, which focusses on valuation. Hopefully some find it helpful.

https://aimchaos.files.wordpress.com/2020/06/avacta-group-update-ii-part-iii-1.pdf

Needless to say, all of the content - and assumptions used - is entirely my own opinion, and entirely independent. So absolutely do not treat it as guidance from the company or its brokers.

https://aimchaos.com/

Morning all,

A brilliant announcement today. We essentially now have successful in-vitro results for a NAf therapy for COVID-19.

The CEO references the key potential benefits that a NAf therapy would enjoy over a NAb therapy:

“Their small size and high solubility means that a much higher concentration of Affimer molecules can be used in the drug formulation to more effectively block the spike proteins on each virus particle and better protect the patient; bispecific and trispecific Affimer neutralising therapies that bind to more than one part of the spike protein could ensure the effectiveness of the neutralising therapy even if the virus' spike protein mutates.”

I specifically referenced these on pp.13-14 of the below note a couple of weeks ago, along with several other potential advantages:

https://aimchaos.files.wordpress.com/2020/06/avacta-group-update-ii-part-ii.pdf

I would suggest that having spoken initially to Big Pharma, Avacta was told to go back and generate these in-vitro data. Now that the company has successfully achieved this, I really believe that a partnership with a major will be secured and a NAf therapy fast-tracked into clinic.

Arguably the most important aspect of such a partnership to Avacta would be that the Affimer technology itself will be brought into clinic this year (see p.16-17 of above note). NAb therapies currently in Phase I trials suggest that initial data read-out will take a month at most (Lilly / AbCellera trial). If Affimer is proved safe in man, this will be the most important single value inflection point in Avacta’s history. In my mind, this alone will be a billion-dollar event.

Plenty of further news to come “in the very near future” from the plethora of workstreams throughout the Company’s two divisions. So much value to unlock, and now with the cash (and potentially, multiples more than that, by year end) to unlock it all.

A very happy holder here.

Hi PSB, yes I speak to the management teams of all the companies I have long-term investments in.

The 1,000,000 was me.

Hi quercusrobor, thank you or the kind words.

Yes, our position is still intact - in fact, a little bigger now. Pretty horrendous seeing it halve in value in the space of three weeks(!) - but fortunately I do not have to access the cash any time soon, and so can wait for the story to play out, regardless of the share price behaviour.

Part 2:

On the COVID-19 LFT front, the CEO said last week he is “absolutely confident” the test will work. Whether it’s ready for distribution on1 August or 1 September – it will ultimately sell in the hundreds of millions – or as may as Avacta and its partners can make.

The BAMS test could start generating revenue for Avacta in 3-4 weeks, I believe. There is no reason to think that BAMS alone could not generate many millions in revenue for Avacta per month.

It seems that we will also get an announcement very shortly of a third type of test that Avacta and an as yet unnamed partner are working on. It could be any number of types of test – whatever it is, it’ll add another element of de-risking to the investment thesis, and of course another revenue stream.

Finally, we should not forget the potential for Affimers to be used in a COVID-19 neutralising therapy. The CEO suggested last week that they were focussing on optimising the Affimers for this particular workstream: to me, it seems obvious that they’d only be doing this additional work as a result of a specific request for more data before a major partner might commit to a development programme.

For me, there is a high chance that Avacta will generate hundreds of millions of dollars of revenue in H2. If a Covid-19 therapeutic drug is launched, then we could also receive verification of Affimers being safe in-man – again, in H2. This would be a fundamental value inflection point in Avacta’s history.

It’s also important to bear in mind that one of the most respected long-term investors in the world just injected £10m at 120p via his fund.

To summarise: within the next 12 months, Avacta has a very good chance of being one of the most important names on the planet, both with regards to COVID-19 testing and with regards to cancer treatment.

A ~£213m enterprise value looks a tad low to me.

Afternoon all, hope everyone’s keeping well.

It’s been a horrible three weeks for holders, share-price wise. Down 50% from the highs.

Of course, the placing has pegged it back, but equally there was over £100m in the order book. We did see significant buying in the aftermarket - but unfortunately selling pressure has more than offset it.

This massive selling pressure is, I believe, a result of the combination of three key points:

Firstly, many UK investors seem to believe the virus is fading (as it is in the UK and mainland Europe) and that Avacta has ‘missed the boat’ by not having completed its LFT yet.

Secondly, many UK investors who are new to investing / trading (as a result of furlough / working from home) are beginning to go back to work, and so have pulled their money from the stock market (or at least, micro-and small-caps) altogether.

Thirdly, the news that Oxford University might have a vaccine approved in September (and AstraZeneca scaling up manufacturing capacity in readiness for it).

The amalgamation of these three is creating a snowball effect, knocking out stop losses and jittery investors alike.

To answer the first: the pandemic is, unfortunately, quite clearly growing in strength. The UK and mainland Europe are hardly representative of what’s going on across the globe.

With regards to the second: as a long-term investor, having short-term, panicky investors on the same register is a pain – there is too much volatility. So in one sense at least, this shake out is welcome.

Finally, whether the vaccine is ready for roll out in September or not, it will take many months – and most commentators have suggested multiple years – to achieve comprehensive vaccination across the world. Until that occurs, tests will be required in the hundreds of millions each month.

Hindsight is a wonderful thing. Sell at 200p+, buy it all back now, etc. Yet most people’s investment rationale was based on Avacta being fully funded for the next 18 months. I certainly didn’t see this placing coming.

Anyway – that cannot be changed. Now that it has occurred, I think it is quite simple to perceive that the £48m fundraise has been transformational for the company.

It could now run potentially three Phase I human trials next year. Pro-dox is a certainty; and then very likely an Affimer-only-based bispecific immunotherapy. However, there is also now the possibility that Avacta moves straight into a TMAC trial, without waiting for individual confirmation of each of the preCISION platform and the Affimer platform.

Pre-clinical data has suggested 60% complete regression, as well as bestowing subsequent immunity to re-challenges with the same tumour. This is truly ground-breaking stuff in cancer therapy.

Hi A_clabb, agreed that numbers won’t be pretty. I Imagine they’ll be delayed though for a month or two, as most companies seem to be doing (FCA / LSE permitting a three-month extension for submitting Annual Reports due to COVID-19).

However, I think that a value inflection point could come sooner - namely, a successful result in the large scale combustion testing. This could land at anytime now. If indeed positive, it’ll open up a multi-billion dollar market for Atlantis, and I would hope the investment community would perceive this immediately. I am confident that there are multiple end-of-life plants that Atlantis already has its eyes on, ready to pick them up on the cheap in the near term, if indeed the fuel trials are positive.

Evening all, hope everyone's doing well.

An interesting week! The placing price was shocking, to be honest - absolutely rampant insider dealing. Hopefully it gets investigated, but I'm not holding my breath.

However, the ~19% equity dilution pain should be more than offset but this transformative cash injection. The company will be able to run three - and possibly four - Phase I human trials next year from its in-house pipeline. A positive readout from its pro-dox trial will transform Avacta, in my view, into a billion (and more likely, multi-billion) pound company overnight. That read-out is less than 12 months away.

I personally think Avacta will generate hundreds of millions of dollars throughout the rest of this year in COVID-19 test sales. However, even if that doesn't occur, I still think the billion pound valuation is not just a possibility, but probable, within the next 12 months.

I bought more shares today, but not enough to retain a 1% holding after the dilution. Now hold ~0.9%, but delighted in the knowledge that I hold a smaller slice of what will ultimately be a much larger pie, and in a much shorter timeframe than I had assumed yesterday.

I've finished writing Part 2 of the three-part Update Note, covering the possibility of Avacta securing a major partner to develop an Affimer-based neutralising therapy for COVID-19:

https://aimchaos.files.wordpress.com/2020/06/avacta-group-update-ii-part-ii.pdf

Planning to finish Part 3 by the end of next week. It'll cover valuation analysis and an updated Investment Thesis.

Hope it helps!

Other notes viewable here:

https://aimchaos.com/

All notes: https://aimchaos.com

Don't know about you guys, but currently listening to Alastair present the pre-clinical data for the first two TMAC molecules (slide 15).

Not only demonstrate huge regression, but potential subsequent immunity.

Mind-blowing stuff.

Hi all, hope everyone’s keeping well.

Really happy with the share price performance today, especially as it’s become apparent that the market has absorbed a big sell off by Lombard. In this instance, I personally think that this block of shares was taken by Lombard, off IP Group, on the day of the announcement of the expanded placing. The price of the big dump on that day was 19p, for ~£5m. Lombard took a little under £1.5m of this. This additional stake has been flipped by Lombard for a ~450% profit (assuming a 105p average sale price), or ~£6.8m profit. For a 3-week trade, that’s phenomenal business. Lombard’s core holding remains untouched.

Some might argue that the TR1s of IP and Lombard don’t match up. In response, I would say that there is a grey area in reporting: some outfits declare on trade date (as did IP Group as soon as they dumped their 15% holding, on the same day as the announcement of the augmented placing); whilst others do so on settlement date. I feel it’s highly probable that Lombard would have taken that block of shares off Lombard on a T+4, hence the difference in declaration dates.

Anyway, this really is immaterial. The crucial point is that the market is absorbing major selling, and the SP is holding up well.

Looking forward to the annual report tomorrow. As a caveat: I personally am not expecting any new news, and I think it’s dangerous to get into the mindset that there must be. Annual reports are of course historic; only a minor portion is dedicated to outlook.

That said, it would be fantastic if we had a second RNS tomorrow of a new partnership. If not, don’t panic sell with the day traders first thing: I am incredibly confident that we’ll be receiving plenty of updates throughout May.

Be mindful that if there is no news, the typical troll attack will consist of, “£5m revenue for a £250m mkt cap?! That’s disgustingly overvalued!” To which I’d suggest retorting with a list of early stage / pre-revenue biotechs that are valued at, or have been acquired for, multiples of our current valuation. Best example is NASDAQ listed Moderna: revenue of $60m in 2019, current mkt cap of $16.3bn. Over 270x PSR. Using that metric, we could put ourselves at £1.36bn mkt cap. The two companies are not proper peers and so not comparable in that context, but hopefully you get the point! Historic numbers with early stage biotech are (almost entirely) meaningless. If the trolls demand other examples, anyone please feel free to drop me a message on Twitter and I’ll be more than happy to provide some.

Hi all, trust everyone's well. Another great day for Avacta again! I've posted the below on Twitter just now, but for anyone who doesn't use that platform:

……….

A glorious reversal for Avacta’s share price this afternoon. Obviously I am very biased, but I truly think that - bar the ultimate successful developer of a COVID-19 vaccine (who I think will be Moderna) - Avacta is one of the best positioned biotech companies globally to benefit from the pandemic.

There are now four types of COVID-19 test:

- PCR
- Antibody
- Antigen lateral flow device (‘antigen-LFD’)
- Antigen mass spectrometer (‘antigen-MS’)

Avacta has literally created the fourth type, antigen-MS (see last week's RNS). It will be mobilising the world's fleet of MS machines to hugely expand existing PCR testing capacity.

Avacta and its partner will have a monopoly over these machines, as they're the only ones who are (so far) developing this type of test.

Then there’s the third type, antigen-LFD. This is the uncontested game-changer in the battle against the COVID-19 pandemic.

This point-of-care test will facilitate the re-opening of airlines, offices, restaurants... Almost any enclosed space. Those who haven't already had the virus could use an LFD test dozens of times in the next 12 months.

Avacta's Affimer technology gives it an incredible advantage over other antigen-LFDs in development, as Affimers are easier, faster and crucially much cheaper to develop than antibodies.

The reagent in an LFD is a major cost component. It is thus clear to see why Avacta’s Affimer-based antigen-LFD is ideal of mass production and global rollout.

Avacta has already completed the difficult work, by generating highly specific Affimers to SARS-COV-2. As someone on this BB put so articulately recently, the Affimer reagent is the engine of the test; the type of test it goes into is just the chassis.

With its first-in-class engine, Avacta is well positioned to dominate the submarkets of 2 of the 4 types of COVID-19 test.

With a $100bn yearly spending programme on testing in the US alone being touted, it's clear that Avacta's mkt cap could go much, much higher, very quickly.

Let’s see what the rest of this week brings!

Morning all, a few people have let me know that for some reason LSE removed my post from Friday afternoon... Not sure why! Anywhere, here it is again:

..........

I find it quite astonishing that AVCT is only up 9% on today’s news. It has announced a second partnership to develop a COVID-19 antigen test, this one with Adeptrix.

The test, combining AVCT's Affimer platform and Adeptrix's proprietary BAMS platform, will utilise mass spectrometers (‘MS’).

MSs are found in hospitals, clinics and labs worldwide. The test will be both highly sensitive and specific, and critically:

"Hundreds of samples per day can be analysed by a single technician using BAMS, exceeding the capacity of a single PCR machine."

Crucially, these machines are NOT currently being used for COVID-19 testing. AVCT / Adeptrix have thus devised a fourth method of testing, namely "antigen-MS".

MSs across the globe can now be mobilised to add to existing PCR testing capacity. And AVCT / Adeptrix are the ONLY players in this submarket.

Another key point t note is that it would seem that AVCT’s novel antigen-MS test will be MS-brand agnostic. Any type of MS machine will be able to diagnose the test. This is in contrast to PCR testing, where many PCR machines will only run tests of their owners' branding.

I do not have any accurate figures for the number of MS machines worldwide (I estimate ~500k) - but from what it seems, AVCT and its partner will have a genuine monopoly on them for COVID-19 testing. Moreover, the partners talk of the test working as a certainty: manufacturing to start next month!

AVCT could receive its first royalty cheque at the end of July. Now, consider how Novacyt’s (NCYT) (a PCR test producer) revenue has rocketed (£90m+ in past ten weeks). AVCT has no competition, and essentially unlimited processing capacity to roll out its novel antigen-MS test (no one is using MS machines yet!).

Major revenues could commence within 8 weeks for AVCT, and it will bear no production / distribution risk.

The market hasn't received this more warmly because it's fixated on the lateral flow device - understandably, as the LFD could be game-changing for the world.

But it is not recognising that today, AVCT has secured a more certain - and still potentially colossal - revenue steam. This will underpin the current share price and fund all operations for the foreseeable future. It also massively de-risks the very small chance of the LFD failing.

I have bought more (increased to 2.08m to retain 1%, post dilution). I am utterly perplexed that the market cannot see the significance of today's news. It is perhaps not game-changing for the world (although it'll assist hugely in the battle against COVID-19); but it is game-changing for AVCT.

Hi Wildstar,

Apologies for the delayed response, I was offline for all of yesterday.

I expect we’ll hit £500m mkt cap (~240p) pre-commencement of sales, if the test is developed successfully and CE marking secured. Timeframe for that – May/June.

Thereafter I think sales will just grow exponentially. Once £1bn market cap (~480p) mkt cap is surpassed (which I believe will happen once sales commence), the share price could go anywhere.

I’ve always had a long-term valuation target of £4bn mkt cap (a little under £20/s), based on the Sanofi / Ablynx transaction. But on top of the antibody memetic platform, we also have targeted chemo and the COVID-19 angle. As such, I think it really is impossible to place any sort of target price on the stock.

Its technology could literally lead the global war against the pandemic, and in the longer term its therapeutics division could genuinely reshape the field of cancer treatment. Gross sales annually for this second market alone would be several hundred billion dollars. How do you put a value on the company that could ultimately take a significant chunk of it?

In my opinion, it’s dangerous to place a specific exit price for yourself on a company like this. I certainly haven’t for myself. Conventional valuation metrics do not apply, and total addressable market (‘TAM’) calculations are just pie in the sky, really. If I had to point out a TAM for Avacta, I could say that the company is currently trading on much less than 0.1% of its ultimate TAM. Perhaps around 0.05%, at the moment. Even accounting for all of the development and commercialisation risks ahead, that is far too low by many multiples – in my opinion, at least!

I won’t give advice on what to do with your shares – but what I can say is what I’m doing, and that is just to let the story play out. The ideal scenario would really be for the decision to be taken from my hands, with a takeover of the company by a major. Indeed, this is what I think will ultimately transpire.

A strong close to the week yesterday. I really expect the share price to push up into the 150-200p range in the coming days and weeks.

The only two hurdles remaining are: Cytiva announcing whether they have successfully put the Affimer reagent on its device, and whether testing has demonstrated that it is sensitive and specific enough for commercialisation.

In my opinion, the chances of success are very high:

- The company has already stated that its newly generated Affimers bind to SARS-CoV-2 with extremely high specificity;

- I highly doubt Cytiva would have attached their name to this project, were they not very confident that the tech transfer was a simple process (it is after all very well-trodden), and that efficacy of Affimers would not be diminished on their strips;

- Two academic reports have been published in recent weeks about saliva being a reliable tool to detect SARS-CoV-2.

If/when these two hurdles are cleared, then the sky is the limit for Avacta’s share price, for me.

The only major (known) potential for bad news would be the initial readouts for the impending pro-dox trial, which we should hear about early next year. And so we'd have a good six months of just positive news about more partnerships - and crucially, sales - in the Diagnostics division (i.e. COVID1-19 tests).

Until those hurdles are cleared, the share price will be driven by:

- more partnerships secured with major diagnostics companies, to produce lateral flow devices and perhaps high throughput immunoassays (like PCR testing);

- pre-orders of test strips by bodies such as PHE;

- grant funding.

Then of course there is always the potential for updates on partnerships (existing or new), within the Therapeutics division. There should also be news on the Company's in-house pipeline of products-under-development, notably an IND/CTA submission for pro-dox.

Investment thesis, 01/03/2020:

aimchaos.files.wordpress.com/2020/03/avacta-group-investment-thesis-3.pdf

Update note, 15/04/2020:

aimchaos.files.wordpress.com/2020/04/avacta-group-update.pdf

Please could everyone stop responding to, or even commenting on, trolls. They will only become increasingly frequent in the weeks ahead, unfortunately, as the share price rises. There will always be envy and bitterness in the world. By referring to their presence in any way at all, you are assisting them in clogging this board and distracting existing and potential new investors from actual discussion on the Company and sharing of research. Please don’t even respond to this last paragraph. Just use the filter button liberally.

Hi MM, yes I do agree - both parties will be supremely confident that it's feasible. And, as No.1SS says, Affimers have been put on lateral flow devices before in prototype form. We shouldn't not highlight the risk though, however small it may be. I for one haven't sold a single share so far.

Hi MKumar - it all depends on the individual investor's investment horizon, really. I am happy to hold these for several years, or until the company gets bought out. This I think is highly likely, as I wrote about in my first note.

At the current price, the mkt cap is still just under £200m. A competing antibody memetic platform went for €3.9bn recently. Yes, it had been proved safe in humans (on the therapeutics side of the business), whilst the Affimer tech has not yet; but on the other hand, the owner (Ablynx) didn't have the COVID19 play. Perhaps more importantly, it didn't have a second, separate platform that could also be worth multi-$billions, like Avacta does with pre INCISION.

Over the coming weeks the share price will be very volatile, and I'm not going to suggest to anyone to buy or sell. But personally, I see the share price rising significantly over the coming weeks. Over the coming months and years, I see it doing (perhaps many) multiples. All my own opinion, of course.

Hi all, hope everyone is enjoying the rise today. I am convinced we are still in the very early days of the rise. There is of course a small risk of Cytiva not being able to successfully integrate the Affimer-based reagent onto its strip – but I really think that risk is very small. It is also the reason why the share price is not 3x its currently level already.

Anyway, to the point of this post: as I write on p.5 of my second note, the mass media seems largely oblivious to a point-of-care antigen test for COVID-19. They either read:

- “POC” and automatically think, “antibody test – whether the patient has HAD the virus – this can be done on a home test kit”; Or they read:

- “PCR” and automatically think, “PCR test – whether the patient currently HAS the virus – this takes a couple of days as the swab must be sent to the lab”.

Avacta’s reagents will enable the development of a test that takes the best qualities of antibody and PCR: it will detect whether the patient currently HAS the virus, like a PCR test (multiple more use cases, as opposed to antibody tests); and it will be able to be self-administered by the patient at home, taking a matter of minutes.

When the mainstream media fully realises the implications of Avacta’s test, the company’s name will go global, in my opinion. The potential market is astronomical – I cover uses cases on p.10 of my update note.

It’s also worth highlighting something from the news today: Heathrow wants to introduce mass testing. This is something I suggested could happen in my note last week (p.10). As I said in it, 4.3 billion passengers were carried in 2018. Antibody testing is frankly of minor importance in this scenario – it won’t detect whether the patient HAS the virus, and therefore whether he/she is infectious / shedding it. Hence Heathrow is talking about temperature checks. That is, to be honest, a pretty medieval diagnosis. Again, there is not widespread knowledge of what Avacta is developing: just imagine the demand for the product when it is ready for commercialisation.

Update note:

aimchaos.files.wordpress.com/2020/04/avacta-group-update.pdf

Investment thesis:

aimchaos.files.wordpress.com/2020/03/avacta-group-investment-thesis-3.pdf

P.S. best thing to do, in my view, is to filter the doomsayers and absolutely not respond, or even acknowledge their presence. Having had a City career solely focussed on micro-caps, I can tell you that paid derampers do exist. Please don’t even respond to this last paragraph!

It is just a question of drowning out those who are themselves mischievously try to drown out good debate and sharing of research in order to drag the price down.