Avacta to Re-rate Dramatically Upwards23 Dec 2021 14:44
Initial LFT diagnosis response to the pandemic was to use PCR and LFTs and as there were no accurate LFTs, Government’s across the World accepted low quality but high-volume tests, which in theory were able to do a partial job. We are now at the stage where the best tests will survive a cull (e.g. UK Desktop Review). The recent Omicron variant of concern has sent alarm bells across the world that this virus mutates substantially and as such we will be living with Covid-19 for a long time to come.
Avacta’s recent study showed 100% sensitivity and sensitivity at Ct28 [1], which confirms the AffiDX test quality (best in class) and underlines the importance of the Affimer platform. Consumer self-test CE mark for Avacta/Medus19 [2], will make the expansion of sales to other regions outside of the UK and EU much easier.
In the Abingdon RNS of 1st Dec 2021, “Avacta have indicated that they may require the Company to produce between one and two million tests per month.” [3] and tech transfer will complete this month and significant capacity to ramp up production further. In addition, Avacta/Medusa19 have international manufacturing in place (c. 30M/month) along with the potential of Medusa 19 own capacity. In effect, Avacta/Medusa19 have the capacity to be producing well over 30 million tests per month soon. With only the better tests surviving for future outbreaks, I am convinced that this bodes well for companies like Avacta. When taken into context of the world demand for lateral flow tests [4], with over 500 million tests to be handed out next month in the US alone, it shows that Avacta revenue, if not greater, could well be in the hundreds of millions.
Keep also in mind that the AVA6000 dose escalation news is imminent. Avacta recently applied for and were accepted for IND by the FDA, which would have required them to submit BOTH clinical and pre-clinical data. As soon as the Pk data is available, either in the next week or early Q1 2022, this will open up other pro-drugs in the Avacta pipeline. In essence resulting in a dramatic re-rate in the share price and placing a multi-billion dollar price on the Avacta market cap.
In addition, the collaborations with industry leaders e.g. LG Chem [5] will add substantial value to Avacta. PD-L1 immunotherapy is currently approx. £20b per annum. LG Chem have, on their own pre-clinical data moved ahead with using Affimer technology and the collaboration. Considering Avacta previously used AVA04 (half-life extension technology (XT)), this is not surprising. The quality of the pre-clinical (in vitro and in vivo) results speak volume. Not only can it disrupt PD-1/PD-L1 and block PD-1 signalling, it also increases IFN-? production is well tolerated and inhibits tumour growth and T cell infiltration.
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