Member Info for Merchantbanker

Vascular - Elisa sales is disappointing. But the downfall of what is preventing Elisa sales taking off is partly the larger scale of other players and partly that the lateral flow market being close to delivering mass capacity. Omega have reacted to that by increasing the lateral flow capacity plan from 1m to 2.5m+. So the lack of success of Elisa has actually created a larger lateral flow play which is really where the big opportunity is.
The thing with lateral flow tests is they may find that demand closer to home is far greater than they might have expected meaning they have less supply for the export market.

DOH - That is a drug development agreement. I want a diagnostics test. I want something that has graduated from development. I don't discredit the things they are trying to develop. But this requires near term delivery and something that matures out of development.

TripHop - Not being a manufacturer is a huge risk as it's eggs all in one basket. It also means they will make less profit per test sold as the manufacturer will take margin. But again there is no rns to say it is complete, it could be tomorrow, it could be any time, but it can't be in clinical validation. I think we agree on that. Look that is one of the things that reduces the risk here, having manufacturing capacity means that if your tests are not in demand then you can still find new income streams. But the reality is we have world class products already.

I think the IP angle is a huge misconception. Money is made from making and selling. The IP is only of value if there is a USP. Several companies are now getting to the business end of delivering a test, and capacity will be in high demand. Sir Jon Bell says 6 tests. Having IP in this domain is only of value if you happen to be able to achieve something others cannot. Otherwise the test becomes a commodity and it is all about cash generation through making and selling.
I don't see it as a rivalry. I have separate opinions on both companies. I really would like to see avacta be successful and I hope they are, my comments are based on my understanding of facts and chances of success and how that translates to risk/reward value at current valuations. I haven't written avacta off for certain, I just don't understand the confidence in Affimers when they have been around for 6 years and not led to commercial products. I like to see a track record and proof of success.

Do you even know what gold standard means? It is highly unlikely that any lateral flow antigen test can be considered gold standard. A Gold Standard test is a technical term meaning the test that is considered to give the definitive diagnosis beyond any other opinion. That means the highest sensitivity which is highly unlikely to be achieved by any lateral flow test.

ODX have the following:

The best Lateral Flow Antibody test in the world, backed by the uk government, to be used in mass testing and vaccine efficacy developed with Oxford University with the same reagents as the vaccine trials. A supply agreement with the UK RTC for at least 200k per month with 25% of total demand.

The only lateral flow triple antibody tests enabling detection of active infections and past infections earlier. Self branded and already gaining commercial traction with November supply consumed already

Soon to add Lateral Flow Antigen test developed by world class developer who are backed by Gates Foundation, UK Government and various world aid agencies. Test already used in live trials, and expected to be CE marked by Mologic any day. Will be self branded as a Visitect test.

The only lateral flow self test for CD4 working towards the fight against HIV measuring immunity levels.

The lateral flow market is in its infancy and Omega are armed with the best hedged portfolio of tests that they could possibly have achieved. 2.5m capacity will be commercially lucrative to ODX but only a drop in the ocean of total demand. They do not need any other tests to maximise that capacity and it is worth upwards of £300m annual profit once fully utilised.

Triphop - Per avacta rns and the recent Q&A, they stated they will inform the market when they have achieved a pilot batch ready for clinical validation. The lack a confirmation RNS is evidence that they currently don't have a test ready for clinical validation. It will need clinical validation by a third party, already disclosed as LSTM, then it will need some form of real life testing.
You cannot self certify an IVD. You can get it CE marked by a third party without any regulatory approval, and the fact they are not ready to even go into clinical validation with that party is evidence of the current status.

Vascular - You might find this useful, you can find the target product profile, even dummy fill in the application form to see what's required. Condor is an open platform available to companies that claim to meet certain criteria. The fact that it is a saliva test was probably enough to get it accepted for evaluation.

https://www.condor-platform.org/industry

TripHop - BTW just have to say respect for that approach taking a position as a hedge, if you do fundamentally believe in avacta. That's a sensible move imo.
Regarding making whatever product makes more money....... there is not a chance that making a product for Avacta would be financially beneficial to ODX over producing a Visitect product. Just look at the UK RTC antibody test vs the visitect test. UK RTC is the best test out there yet we make more from the Visitect test.

Triphop - There is a major difference between the tech transfer of Mologic's product to ODX and Avacta's product to BBI..

Avacta's is a tech transfer from developer to manufacturer. You have to have a lead manufacturer to complete the development and to achieve any validations as the production line needs to prove consistency. ODX will tech transfer from Mologic who are the lead manufacturer and will CE mark the test themselves before the tech transfer to omega commences. This is a fundamental difference and explains why the Mologic test can be in the news tomorrow as an approved test by Mologic but avacta's can't. Avacta need the tech transfer to BBI to complete before they can put a test forward for clinical validation, omega are waiting for an approved product before comencing tech transfer and then ce marking the already approved product under their own brand.

Vascular - The Condor Program any company can apply to have their test evaluated by Condor if it meets certain criteria. It is not an invitation or confirmation of government interest. Most likely a product will be CE marked before it is evaluated centrally, just like it did with UK RTC, as CE mark can be done with a partner which is LSTM. How can the government evaluate a test that isn't yet ready for clinical validation? The test is not yet ready for clinical validation as there has been no RNS to say that it is under evaluation. On the other hand LTSM have been evaluating Mologic tests since the summer and Mologic tests have been used in live trials. It just shows that using choice words in RNS and presentation can lead investors to greatly enhance the significance of what is actually being said.

Wyndrum - Don't take this as hostility, take it as common sense. We have just had a presentation telling us that the Mologic Antigen test will consume our capacity and that the test is expected any day. 2.5m will be under pressure from ODX own product mix. There is no room for another test, even if Avacta do get a test. 2.5m is not big enough to offer capacity out to other products. If they were going to have 20m per week i might entertain the idea for a second.
To suggest that AVCT test will be made in ODX facility over an own branded product made by a company they have an existing commercial partnership with and have a proven track record, with backing of the likes of Gates, Global fund, UK Government, screams of desperation from Avacta supporters trying to justify the self importance of a test that has been mis sold by the ceo.
But here's the most stupid point in the idea..... If you think the demand for antigen tests is so vast that they need every manufacturer in the UK, then how do you expect odx to have spare capacity when they have an equivalent product that will have equivalent demand? Supply is going to be the limiting factor, you don't give it away to another company's product when you have your own product. It's basic common sense.
Sorry but you have been sold a dream that Avacta are going to have this world leading test that everyone in the industry is going to put their own projects on hold and help Alistair Smith enrich Avacta shareholders. I think before you start worrying about new manufacturers for the test, you should worry about whether there ever will be a test. And for the record i have no hostility towards avacta shareholders, only against the hype that the company have created without being able to back it up.

Probably it's not!!!!

Redboy - If they crack the antigen test for a combined test then it's cracked for a solo antigen test. I am getting more of the opinion that the particulars of this test are being kept under similar wraps to the UK RTC antibody test. We are in an unfortunate position as investors having had a lack of transparency on both fronts, but we certainly have two tests at the centre of the UK recovery plan.

Have been doing some digging this morning...... I have found the following:

The main lateral flow partner Liverpool School of Tropical medicine are working with is Mologic, with Pfizer funding the studies. There is specific talk about a rapid lateral flow antigen and antibody test, consistent with the slide from the recent mologic presentation. They have been running trials since August and this shows mologic have had test under evaluation for a few months.

So if you want proof of how involved Mologic are in the NHS plan's and the significance of Mologic as an industry specialist, there is. It is highly likely some of the trials in the north west are using Mologic's tests. We still have to workout how the Mologic test will go into production in the numbers required. Perhaps Pfizer could provide the answer. It's a long shot but at some stage there will be m&a and there will be big players swarming around if they can get back door access to high quality tests.

http://www.isrctn.com/editorial/retrieveFile/cfd8e833-e57d-4d20-89ce-4cca5bd6a111/38524
http://www.isrctn.com/ISRCTN89159899

Pfizer sold their diagnostics arm in 2004. Could they be looking to get back into the business? They could easily absorb a handful of diagnostics businesses and rebuild a diagnostics arm. Mologic might not be in the shop window, but Omega offers a back door into Mologic's products with the added bonus of the UK RTC test. I do think at some stage deep pockets are needed to really take tests into mass production.

https://www.pfizer.com/partnering/areas_of_interest/precision_medicine
https://www.thepharmaletter.com/article/pfizer-sells-diagnostics-unit

This gives a wider outlook of the partnership with LSTM and Mologic.

https://www.medrxiv.org/content/10.1101/2020.04.29.20082099v1.full.pdf

Omega NED William Rhodes is ex Pfizer.

Pfizer also have links with Oxford Uni.

https://www.medsci.ox.ac.uk/divisional-services/support-services-1/business-partnerships-office/researchalliances/pfizer

CD4 tests would also greatly appeal to Pfizer for their ViiV Healthcare JV with GSK in treating HIV.

Saseefeldt = Clueless. It really isn't difficult to work out.

"how much of that is already baked in to the £100M+ MCAP?"

2m tests per week * 52 weeks = 104m annual capacity by April.

Assume 400k UK RTC
Assume 200k Mologic Antigen Tests
Assume 1.4m Mologic Antigen tests

Annual profit would be circa £208m at an average £2 profit per test. Average industry p/e is 9. Use 5x as prudent. You get just over £1bn valuation.

So how much of this is priced in, well very little. I accept Mologic Antigen test is yet to be CE marked and that capacity is still 5 months away from 2m, so i do not expect it to be valued their today, bit it shows very little is priced in, and it is undervalued for what has been achieved. By this time next year they will have cash in the bank equivalent of today's MCAP (Assuming it isn't reinvested or distributed).

Talking about orders is a poor attempt to knock it. UK RTC will consume at least 200k per week. That is in the bag. If you can't see that they will sell as many antigen tests as they can make, then it beggars belief.

Mologic build a new manufacturing facility with 40m annual capacity commencing April. They have also had a $20m + grant from Gates since, so who knows what their capacity is now. It could be 100m a year. The fact is though, that is not even enough for the if repeat testing is the plan. However, gates and co are not funding Mologic to mass produce tests for the UK, they are funding them to enable supply to low income countries so a large proportion Mologics production will be sold close to cost to low income countries.

Our partnership with Mologic hands over the blueprint of a finished quality product and enables us to brand it as out own.

Globally over the next 2-5 years, billions of lateral flow tests will be consumed. Omega once scaled up to 2m per week can make 100m or so. The market is many times larger than what ODX can possibly supply alone. There will be a shortfall in tests and in particular quality tests. Our sales with be unquestionable. Profit for the next calendar year will be greater than the current mcap. Apply 5x earnings to it conservatively.

Ha the old IP argument again!!! One of the digest misconceptions going around with covid stocks. Mologic tests will be branded as Omega/Vivisect tests. Go and invest in a company that have their own "IP" in a test that may never get to market. The value is in making at cost and selling for profit. IP is useless without manufacturing capacity and quality tests. It is quality products and manufacturing capacity where the money is to be made, not throwing millions into development for a test that may never work.

Just seen an email from Turner Pope, David evans is launching an IPO for an investment company intuitive investments. May explain why he sold some shares as BoD investing a substantial amount themselves. I wonder if ODX will be one of their first purchases.

Remember......

These are our most lucrative tests. $15 a go at 70% margin.

1.4bn people in China

Soon to open up US market

*food... no fools test although that could come in handy too!