Member Info for Porky9

@Wilson63
Just looking forward to the day when GM says had enough of this French listing, due to all the manipulation, we are going main market or Nasdaq. Can't wait....

@Kitzie
My apologies, take your point. Thanks :)
I would imagine a fair few suppliers will want a supply order with Amazon.
Unless of course Novacyt want to license out the LFT to others or Massively increase production of them they will likely sell out quickly in relation to their capacity as it is.
Interesting the find that IT-IS has taken on further premises... oooh i say... a possible update confirming a further increase in capacity to marry with all the new staff appointments... bring it on...

@Kitzie
You have mentioned Amazon before and i also read the Amazon medical services press release BUT i genuinely don't see it as any threat, well certainly not to Novacyt anyhow.
As an online retailer they tend to ship other manufactures goods for margin, are they really going to want to bother to start manufacturing loads of these LFTs when they can just squeeze other manufactures for a bigger margin if they use their online market place? Also,
1. The volumes that Novacyt are talking about are, whilst adding a chunky additional revenue stream are still fairly low key in relation to the world markets volume potential.
2. This is an ADD on product to existing distribution channels likewise the second gen Antibody test when that is released, so i just see the LFT Antigen line as a "nice to have" additional revenue stream.
Will be interesting how this all unfolds all the same
Pork's

@Bluelight
LMOL, don't start my personal Troll off for God's sake :)
Take Care now
Pork's

I follow @BlackbirdInvest on Twitter as I value his research contributions and use a similar valuation model. Obviously, it has so far been proven incorrect (understatement) however, I still have the faith the SP is going to recover big style, the games not over yet by a long way. Anyhow, I digress.

His thread today: -
https://twitter.com/BlackbirdInvest/status/1395288527026495488

In effect, he believes that there will NOT be a go to LFT, or Sovereign LFT as some claim. He is of the opinion that the reason the £ 8bn DPF for LFTs: -
https://bidstats.uk/tenders/2021/W09/746193438
Is delayed and likewise the CE Mark Validation for Our LFT, the one AVCT has produced, and others trying for validation is because PD are taking the view that they have a specific set of their own validation criteria that an LFT must pass (including 3a), for certification and it will be a case of updating on a load of them all being currently validated in one block.

At the same time, as the portal has not been updated since early March he considers that there could well be a flood of LFT manufacturers all applying for Validation at the same time.

So, it could be a case, just like the Framework agreements where they pass say 100 providers that meet the criteria, and it is a case of supply as required up to the award limit granted.

I cannot say if this logic is right but it kind of feels likely based on past events.

From Novacyt’s point of view, they have initial capacity of 1m tests a week, as an additional product line it does feel like they will not have much of an issue selling via own existing channels world wide on the back of other orders, so should be straight forward. As for orders under the framework, well that’s anyone’s guess, we all know how unreliable DHSC are from past events.

Anyhow, whatever the case we should all know soon enough. Thought it worth sharing.

Take Care all

Pork’s

I feel I am qualified to at least comment here as I hold 100,000 shares at a much higher price which I have now written off.

The company itself and the work they are doing I still think is truly ground-breaking, nothing has changed on that score. Problem is that they have got into a mess with bad decisions on the financial side and they need support. Perhaps one or two NEDs with experience of restructure joining the board could be a good call?

The day they announced the credit facility with Mint my heart just sank, prior to that I was following the business adding to my research and I was considering making a significant further investment here. Thank God I did not. As soon as I read that RNS I just thought that is it now, they can keep drawing cash down and shareholders will just get hammered. Seen it all before. A set placing, you can cope with and budget for, but that arrangement was just a nightmare from the start, and I just think they were badly advised.

Problem now is that come 26th May the market gets flooded with 433m shares at 1.5p which frankly is just going to sink the Share Price even further and let us face it they are not going to be brought up easy are they? We will have close to 1 billion shares in issue. Its just not workable imo. A share consolidation must happen here surely.

Will just keep an eye on this for now. If I thought a chance of recovery, I would be filling my boots with stock at this level, but I just do not see it and that is because I just think we have far too many shares in issue now and I am not convinced they have enough cash going forwards without some form of further issue?

Once they have a strategic plan going forward, I will review and add then if its plausible.

GLA

So Travel Opens up and early days
It will be interesting to see how events unfold and indeed how we cope with the massive increase in PCR tests from this additional vertical:-

https://www.birminghammail.co.uk/news/midlands-news/pcr-tests-boots-tui-easyjet-20623643
Negative Covid tests are required for flying to a number of destinations as well as for returning to the UK

One PCR Test within 72 hours on the way out and on the return day 2 and day 8. So three tests per person.

You look at how many flights we carried out pre covid and you think wow, that's an incredible number of PCR tests. In fact its more tests than we carried out at the height of the pandemic in the UK.

GLA

https://www.telegraph.co.uk/travel/news/eu-travel-news-summer-holidays-green-list-tests-vaccine/
Holidaymakers could soon be hit by increased testing costs as regulators air concerns over the accuracy of cheap, do-it-yourself lateral flow tests and call for them to be replaced by pricey PCR tests.

The UK’s medicine and healthcare product regulator, the MHRA, explains that the incorrect use of rapid tests can lead to inaccurate results and are often best used under professional supervision, which isn’t possible when on holiday – unlike PCR tests, which are more expensive but could be the only alternative for future travellers.

Lateral flow tests are currently being sold to holidaymakers visiting green- and amber-list destinations, who are required to present a negative result before boarding their flight home, as part of reduced-price testing packs from operators.

An exclusive report by website Travel Gossip has revealed that pre-departure and test-to-return kits sold to British Airways’ customers have been taken off sale by provider Qured, as it has been discovered they are intended for professional use only.

The website also understands that the MHRA is also reviewing pre-departure lateral flow kits being sold to TUI customers, among others.

There are growing concerns over the ‘super spreading’ risk in airport queues, where green and amber list arrivals are mixing with people from red list destinations. Chief Medical Officer at Cignpost ExpressTest, Professor Denis Kinane, is urging the UK Government to tighten its testing regime and make PCR tests the norm.

He says: "Under current regulations, the Government requires travellers from red-list locations to take a lateral flow test before they fly to the UK… However, lateral flow tests have been shown to miss up to half of the asymptomatic carriers of Covid-19."

He insists PCR tests should be used instead, stating: "This is the best level of protection from variant strains of COVID-19 and is an effective way of minimising the risk of red and green travellers being at the same airports."

@Kaeren
Thanks for the Link

In that American Banking update where they detail the position that Numis hold they also state:-

"The stock has a market capitalization of £295.36 million and a PE ratio of 8.17"

So they are are clearly calculating the Share Price based on earnings in the region of £ 36m which is close to our H1 2020 figure?

Is it possible that due to the DHSC dispute and subsequent lack of clarity on Q4, that as there are no audited accounts yet to the year end that they are not in a position to update earnings until the audited position is actually confirmed?

If so, could publication of the accounts in June be the catalyst that leads us to a correct rating for the stock? I mean 8.17 Ratio is probably fair in line with our peers if the earnings are adjusted to what we believe they are likely to be in June? It would bring the business in like with EKF and others are identified by Steve earlier, SP about £ 25

Food for thought anyhow....

GLA

Thanks @Soder, nice one,
Indeed, looking really good, twitter picking up on it now, bodes well
https://twitter.com/Larry64450205/status/1394704764831731715

A number over at Microgen perhaps to support the forthcoming LFT roll out. Hardly a sign of a business in distress that's for sure...
Onwards and Upwards
Loving It,
Pork's

Cracking find by UK2day on twitter:-
https://www.globenewswire.com/news-release/2021/05/19/2232272/0/en/Point-of-Care-Testing-for-Infectious-Diseases-Market-to-hit-US-2-2-billion-by-2025-Global-Insights-on-Trends-Value-Chain-Analysis-Regulatory-Framework-Drivers-and-Future-Prospect-A.html
Point of Care Testing for Infectious Diseases Market to hit US $2.2 billion by 2025

@Ak-gabba
Thank's for pointing out in a friendly non arrogant way. You are correct:-
https://www.shortics.com/novacyt

World Quant 1.08% and Qube .48% = 1.56%
72m shares in issue
1,123,200 Short that must be brought back at some point.
GLA

@Brentw1
Arrogance is never a nice quality, it really isn't...

@ 1.butchers.bike

That is a REMARKABLY interesting find, thanks for sharing.

I stand by my initial reaction to this that the issue is simply down to over ordering at the start of the pandemic and then DHSC trying to wiggle out of paying by using their weight and expecting suppliers to bow down to them as they are government backed.

The house broker S P Angel kind of hinted at this position also.

Its pleasing to see that so many are starting to finally get resolved.

We know for a fact that the dispute has nothing to do with product quality a) the £ 3bn framework award included both Novacyt subsidiaries to supply the DHSC, this would not happen if the quality was in question and b) RNS this week confirmed we are supplying the NHS hence reconfirms same.

So, over ordering and what was agreed, now looks highly likely the cause of the dispute.

As I see it based on all the invoices and the declared spends to the year end by DHSC, based on my own calculations, so ignore/ agree as you see fit, there are three possible outcomes here imo: -

Bear: DHSC are right, Novacyt is wrong and a refund of £27m will be granted to DHSC to resolve the dispute deducted from Q4 2020 earnings declared.

Neutral: DHSC and Novacyt reach a mediation, and nothing is further due from DHSC and there are no refunds from Novacyt either. Or some further stock deal is agreed at discount or some other adjustment that has little impact to either party.

Bull: DHSC realise that the contract stands, they must pay the minimum contract order price agreed for the period and Novacyt are then able to invoice £ 23m being the contract shortfall which will add to revenues going forward.

Anyhow we should all know soon enough, and should the matter still drag on to the end of H1, which frankly is not in anyone’s interests DHSC or Novacyt’s then, a provision in the declared accounts will be made confirming the exact position. Either way total clarity.

Meanwhile, imo the bear position has already been completely factored into the Share Price, so I see it as only positive from here. Damage has been done; we are at fire sale share price levels, so its all north from here.

As I say, I remain VERY positive.

GLA

Pork’s

Very, Very Relaxed

Quick Maths 72m of shares in Issue, 8m+ currently short and Retail sales completely dried up meanwhile new fund on the scene now adding.

So where exactly are those shares going to come from?

Attempt yesterday to short, was a relative success? Only problem was that BNP Parabis Asset Management took a new position which took the fizz out of it.

With so many updates now due and cash adding to the business at the rate of about £500k every working day, going short here frankly looks more like an act of total stupidity rather than one of calculated risk.

Of course, they are relentless in their quest and may even try again but I am comfortable. I can see this gap up fairly soon frankly.

GLA what ever your call

Pork’s
PS - wouldn't be surprised if this closed +25p today following a small short reduction or fund buy close to the bell. Time will tell.

Such a shame for what imo is a really superb R&D business that is genuinely trying to make a difference.

However, its decision to take the CLA in the first place was ill advised imo and was always going to end in misery. Personally i hate these sorts of deals as they just result in constant dilution BUT they needed the money to advance their work and I guess with the Eli Lilly situation they had little options.

Problem now is that come 26th May the market gets flooded with 433m shares at 1.5p which frankly can only really take the SP further down. That will give us just shy of 1 billion Shares in Issue. Absolutely ridiculous. So where to from here?

Personally, i would like to see them survive this and go on to do great things. This is what i would do if i was in their position.

1. IF the other developments can break through and demonstrate real potential then they should be able to secure a new backer - this is what they really need.

2. Consolidation of the new shares in issue. At least 10:1 but i would go for 20:1 - If they did a 20:1 it would reduce the Shares in issue back down to 48,987,466 a more manageable level.

3. Issue 16,329,155 to a NEW strategic partner at 10p increasing the shares in issue back to 65,316,621 but the new strategic partner owning 25% of the business.

4. The above move would reduce the mcap short term to £ 6.5m BUT it would clear out all the issues, Give them the capital required to continue their work, strategic partner could help them advance their profile and the shares would start to become attractive again.

Unless they sort something like the above i would say 1 billion shares is unmanageable, alternatively they just sell to a better funded player or merge with another group, something has to give

GLA

As identified by Kat earlier:-

Very shrewd move from BNP Parabis Asset Management to Buy in today. Nice one.
https://twitter.com/Kat_Hassard/status/1394604619691593728/photo/1

Great to see new funds with confidence buying in. Helped contra the effect of the short placed. Brilliant.
Another day less in the reducing time window before Bulls reclaim control
Just LOVING it
Not much longer at these price levels, sooner we are back to pre crash levels the better.
GLA

20 false tests is a bit much, perhaps she had been at the diet coke...

I understand a big pile of boxes of Innova LFTs are just sitting in the reception free for Students to take home and most students are just walking past them not in the slightest bit interested !!

That being said; the market for LFTs is still expected to grow from $8BN to $10BN a year over the next four years. so its a case of supplying to markets where there is demand.

Students in the UK are lucky that they are in a position that if they need a PCR test they can at least get one on the NHS free, other countries around the world are obviously not so fortunate.

Clearly still a lot of demand for both tests

Compliments of UK2day on Twitter:-

We are introducing two 7-day PCR testing sites with extended hours of operation
https://www.gov.uk/get-coronavirus-test
Planning is afoot to deliver PCR testing kits to large businesses and schools. PCR tests allow the accurate identification of new variants.

Add in the increase demand for PCR tests for Travel and test volume is sure to remain high.

GLA

GM Following SP Crash First week March 2021: -

“Junior markets are sentiment led and despite fundamentals can react irrationally. IMO eventually sentiment will catch up with fundamentals. If they do not, then we can leverage these fundamentals in a different way to address the fickle nature of junior markets.”

Now, If I were a betting man, I would say that an acquisition diversifying into a different field is now absolutely odds on. It is a total no brainer. Highly likely. This SH playing into a tight range must be peeing GM off as much as it us retail SH.

GLA, see what tomorrow brings

Pork's