Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
I posted this last week and it seems particularly pertinent today given we have confirmation of high S&S and a scale up on manufacturing to get closer to the numbers referred to here (with more to come). I thought it might be worth reflecting on again amongst all the noise:
A few people have thrown around valuations this morning based on the massive rise in Abbott’s valuation on their successful test. Whilst I’d love the immediate £40 predictions to be true I’ve tried below to present some conservative assumptions to show what I think is possible.
I’ve tried to be realistic in these assumptions, many will say I’ve undercalled them but if you assume:
- We scale up and sell 30m LFD tests a month (obviously could easily we way more than this)
- We keep that rate for 2 years (or average that rate over 24 months, whichever way you prefer to look at it)
- We make £2.50 profit per test
That’s £1.8bn in profit from the lateral flow test alone, in just two years. Even if you attach no other value to the company at all that alone is a SP of around £6.00 that should be realised on announcement at an absolute minimum.
Now assume we continue to sell but at maybe a quarter of that rate for another 2 years. Add another £1.50 on to the SP Assumptions so £7.50.
Now assume BAMs delivers £400m or so of profit (conservative but realistic). Another £1 so £8.50
Add another £1 for the sewage test and you’ve got £9.50.
So close to £10 on relatively conservative assumptions just on the COVID tests and note this is just profit realised in the next few years, no long term assumptions around longer term PE, etc. All this could be announced and factored in in just the next few weeks.
Then on top of that you have:
LG Chem partnership, worth £500m+
preCISION, potentially worth billions
TMAC, potentially worth billions
A number of other partnerships already announced worth £hundreds of millions
(And note we already have £50m in cash to fund and accelerate the development and clinical trials of these
It’s not hard at all to see the inflection points here that could add another £10 easily to the SP on top of the above and in relatively short order, potentially much more.
And all that is without any irrational exuberance, SP being pumped up, FOMO and greed driving higher, any longer term diagnostics value, etc, etc.
We’re sitting on something in incredibly valuable here and not long to wait now.
This is important and may have been missed by many.
LSTM are validating the tests produced by Cytiva, the very first prototypes, and have been for almost four weeks. That means they could announce the S&S of these any day.
The reference to starting clinical validation soon in the RNS refers to the scales up manufacturing that BBI and now Abingdon (and others to follow) will do in the many millions. That will be to prove it works as well when mass produced but I strongly believe we will hear from LSTM well before that.
For those that followed Sona this is the path they took. The initial results (which will be the equivalent of the LSTM results due any day) sent their SP soaring six fold, a couple of weeks later they revised them after they had produced more tests and had more data. That later revision had minimal impact on the SP, all the gains were in the first announcement based on evaluating just 30 prototypes.
Today is great news as it shows the confidence to keep scaling up production capacity. For those trying to read negativity into the RNS it most definitely does not mean there is any delay in getting S&S data as this will come from LSTM first from the Cytiva batch.
Alistair is confident and we are on. Great news all round.
Just looking back at my post from this morning. I talked about 30m tests a month at £2.50 profit driving a £10 share price from testing alone.
Just looking again today at the record cases in some countries, the size of the Abbott order from the US (buying up everything they can make this side of Christmas in one go), the reopening of schools, the need for mass screening around the world as winter comes. It’s easy to make a case for a much higher number.
Imagine if we could product 100m tests a month. We’d sell them I’m sure and at £2.50 profit a time we’d be on track for £3bn a year in profit. Sounds crazy but you’d get that level of tests in Europe alone by testing just one person in seven once a month and that’s before you even consider the rest of the world.
To be clear I don’t expect that to happen, producing that many would be tough, the margins would likely be squeezed at that level, we’d probably be taken over before it happened. But we do have a world beating product and if, as we all believe, Affirmers are the key to making it work no-one else can touch it. Nice to dream on a Friday night ahead of a bank holiday.
Number three sounds like it needs expensive and cumbersome kit (holographic microscope). Number one sounds like just another nasal swab.
Number two must be us surely? It’s Condor. It’s pregnancy style test. It’s saliva. It’s 10 minutes.
Very exciting indeed.
Avacta need to be collecting all these references and data points. As soon as the testis ready the story that goes with it will be critical to the PR and sales. Having, and shouting about, data like this from a reputable source such as this will really help with media coverage, attention and therefore interest and sales. Especially true if the S&S is slightly lower than perfectly take nasal swabs, we should make sure we draw attention to the fact that they often aren’t perfectly taken, hence why saliva is a winner.
Bit of a random link this but I thought I’d share it.
The organiser of the above festivals talking about them returning next year and how; ‘COVID has given us a year off, so the innovation for next year is testing – everybody will be tested‘ and ‘We don’t need a vaccination because we can work through the problem with a really good testing regime‘.
He goes on to say ‘ We’ll get there with testing and tracing. It will become the new norm. One of the government advisors, Professor John Bell, was talking really positively about the norm becoming everyone testing themselves twice a week in the near future – as in, within the next few months. We’ll learn to do that until we suppress the disease’...’there will be some sort of test... it will take 10 minutes...you can see kids doing it outside, who can neck a pint quickest, who can do a test quickest’.
Not too much new in there but interesting to see our story beginning to filter out into mainstream discussion.
https://www.nme.com/news/music/reading-leeds-festival-boss-2021-line-up-tickets-testing-melvin-benn-interview-2739191
Thanks GLR, although I think you are being way to conservative with your market cap estimates on your forecasts there. If we are selling 30m PCM at a £2.50 profit the market cap is going to be way North of £1bn, that would be valuing us at barely one years cash generation and factoring in now value whatsoever for anything else we offer or any terminal value in sales beyond one year. I’d say at an absolute minimum you would be looking at double, probably treble £1bn MC on those sales. I agree we would rapidly become a takeover target but that would not come cheap. I wouldn’t be surprised to see the diagnostic unit being sold off for perhaps £2.5-3bn in those circumstances and the therapeutics unit left to carry on advancing the cancer treatment with the potential of the same value creation again a couple of years down the line.
A few people have thrown around valuations this morning based on the massive rise in Abbott’s valuation on their successful test. Whilst I’d love the immediate £40 predictions to be true I’ve tried below to present some conservative assumptions to show what I think is possible.
I’ve tried to be realistic in these assumptions, many will say I’ve undercalled them but if you assume:
- We scale up and sell 30m LFD tests a month (obviously could easily we way more than this)
- We keep that rate for 2 years (or average that rate over 24 months, whichever way you prefer to look at it)
- We make £2.50 profit per test
That’s £1.8bn in profit from the lateral flow test alone, in just two years. Even if you attach no other value to the company at all that alone is a SP of around £6.00 that should be realised on announcement at an absolute minimum.
Now assume we continue to sell but at maybe a quarter of that rate for another 2 years. Add another £1.50 on to the SP Assumptions so £7.50.
Now assume BAMs delivers £400m or so of profit (conservative but realistic). Another £1 so £8.50
Add another £1 for the sewage test and you’ve got £9.50.
So close to £10 on relatively conservative assumptions just on the COVID tests and note this is just profit realised in the next few years, no long term assumptions around longer term PE, etc. All this could be announced and factored in in just the next few weeks.
Then on top of that you have:
LG Chem partnership, worth £500m+
preCISION, potentially worth billions
TMAC, potentially worth billions
A number of other partnerships already announced worth £hundreds of millions
(And note we already have £50m in cash to fund and accelerate the development and clinical trials of these
It’s not hard at all to see the inflection points here that could add another £10 easily to the SP on top of the above and in relatively short order, potentially much more.
And all that is without any irrational exuberance, SP being pumped up, FOMO and greed driving higher, any longer term diagnostics value, etc, etc.
We’re sitting on something in incredibly valuable here and not long to wait now.
1. That’s a massive amount of money and hints at what could be possible for our far superior test
2. At the $5 per test quoted that’s 150m tests which is all that Abott have said they can produce this year. I.E. Trump has bought the whole production leaving none available for anyone else and no more for the US to go beyond this so it’s not like it’s any kind of remotely credible threat to any sales anywhere other than into the US and I would still expect huge US demand for us and everyone else in the world to be crying out for a fast lateral flow device - up steps Avacta
Still very, very clear to me that Avacta will sell as many LFDs as they can possible produce and for very, very healthy returns for shareholders
I agree on the Trump / America point. But fortunately an ace up our sleeves is Cytiva, part of a massive and innovative US company. Let Cytiva take the credit in the US (designed and developed right here is the USA!) and Trump can call it an ‘America test to put an end to the China virus’ as much as he likes as far as I care, just as long as he spends a few billion buying them!
Despite what we’re seeing as relatively poor results Sona are still up almost 20% today following a dip yesterday and their SP is still more that 3x what is was before they hastily declared their S&S lab results (ie when they were roughly at the stage we are now)
We have way more positives here and are also expecting better performance and a much easier to use and lower cost solution.
Even if we only matched Sona’s rise to today we’d be sitting on a share price of between £5-6 and we know we expect much better outcomes than they had.
Exciting times and not long to wait now.
Can you explain what you mean please by ‘the auction shows that the MMs do not have many shares versus where they were a few weeks ago’?
I’d always assumed that the named MMs with their bid and offers at the EMS were the only hand they showed and that other lines in the auction were other players with DMA. This is a genuine question, are you saying the other entries in the auction are the MMs showing how much they have to sell and how much they want to buy? Hoping to learn something here. Thanks
Quite a drop from the 96%/96% they originally reported that saw their SP fly but was based on only 30 samples.
We’ve had plenty of hints now that the Avacta LFD is going to be >90% and high 90%’s, assuming so it will blow Sona out of the water now.
We know he has contacts and is a major shareholder. His research is also absolutely first class and has helped many (myself included) immensely.
It’s not like he tweets about Avacta every day, the point he made yesterday is just as valid today. I definitely wouldn’t read anything whatsoever into this. Although if I was to be paranoid and see things where they don’t exist it would be just as, if not more,likely that he would be aware of positive news and not able to share it than anything negative. This is one of the most bizarre deramping comments yet.
Global, last week you said this, I’ve copied and pasted your entire post:
‘ Anyone thinking price is too high think again, check the report by Myles, this is a very long term hold, going to hit £20 in the foreseeable future’
The only thing that has changed since then is that we are a few days closer to news and the price is now cheaper for anyone looking to buy. You seem wildly schizophrenic on this, I hope you aren’t buying high and then selling low. The sensible strategy on AVCT is hold, hold, hold and wait for the rewards and if possible top up on any dips (like today)
So you obviously called it right and well done to you.
But just looking at this you’ve had roughly a 3.5% gain on your total holding as a result of this trade but imagine if a big RNS had dropped in the meantime you would have lost a third of what could have been a massive, multi bagging gain.
I salute you for making the decisions that work for you but to me the risk / reward ratio of that move looks way out of kilter with news due anytime. Even when getting it massively right, and I obviously admit it’s worked out for you, your upside is pretty modest percentage wise is it not? Not something I would risk in these circumstances but each to their own.
So many positives here, SP drifting a little on news not being announced yet but all it means is a chance for bargain top ups (which I’ve taken advantage of today). There is so much to be excited about, both very short term and in the medium to long term:
Lateral flow test in testing and being ramped by Sir John Bell, the governments advisor and Matt Hanc’ock. News beginning to leak to the media too. This is going to sell as much as can possibly be produced, all around the world.
New manufacturing partners due to be announced any day now. If (as I expect) we see scale of tens or even hundreds of millions a month production this will explode.
Finalised specificity and sensitivity to be announced for LFT. CEO has declared himself ‘very happy indeed’ with them and Sir John Bell is talking about a pregnancy style antibody test well into the ‘90’s on these ratings. Anything at that level would be transformative for mass screening and would also be well above the FDA limits that have been set but not yet reached by anyone. We’ve been as good and told we are above that.
BAMS news due any day now and expected to be the new ‘gold standard in testing’. This will also prove beyond doubt the the superiority of our tech.
Sewage testing partnership is looking exciting
Partnership with LG Chem is worth significantly more than our current market cap on it’s own
IND filing due very soon
£50m cash in the bank
Oh and and just to cap it off the preCISION and TMAC platforms look like they might just be the future of cancer care.
Plus there has been the carrot dangled of potential other partnerships.
Cannot begin to describe how excited I am about the prospects for Avacta. Good luck everyone, I hope this is life changing for you as well as transformational for the world.