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‘LSTM is CURRENTLY evaluating the performance of prototype lateral flow tests provided by Cytiva alongside Avacta's ELISA laboratory test using SARS-CoV-2 coronavirus samples, as a precursor to full clinical validation studies.’

So they’ve been assessing the Cytiva built prototypes for four weeks now. I think we might hear some news on indicative specificity and sensitivity pretty soon. If LSTM have results and they are as good as we all expect and have been led to believe it makes sense to share them as soon as available, can you imagine the PR and the government excitement if we came out with:

‘A leading UK specialist university has examined this UK designed test and it is 90%+ / 98%+ and delivers results in a few minutes anywhere in the world without lab support, from saliva making it perfect for mass screening. The tests are being mass produced as we speak ready for final analysis in the governments world leading CONDOR programme’.

This is from weeks ago

Why does anyone care, it makes no difference how many recommends there are there’s not even on option to filter based on it is there? Just a record at the bottom of each post?

Sorry, what so you mean the second news item?

Thank you Libero, really appreciate the thorough reply.

Hi, I’m very intrigued by BMN at these prices. Would anyone care to give a quick summary of the key reasons to invest, likely inflection points and your medium term targets please? Many thanks

Whilst we wait anyone care to offer any predictions on timeline and SP predictions if we have a successful stage there announcement.

On timing I’m expecting to hear something this month based on the parallel progress, on where the SP goes I’m struggling with a target, given that we’re at a market cap of less that £20m it feels like this could really explode to multiples of where we are today but very hard to put an educated number on it.

Hi, does anyone have a rough idea of the timeline and key inflection points here they wouldn’t mind sharing please. Thanks

Totally agree. Ophidian’s input on the timeline in particular and interpretation of the science in general was excellent and it’s a big miss not getting his regular input on here.

The tests cost $2 to produce and we’ve been advised they will sell for between $15-30 so yes, I’d be very surprised indeed if we don’t make an average of at least £2.50 per test (potentially much more) on those economics.

I’d also be very surprised indeed if there wasn’t demand for much more than 30m a month around the world at those prices.

These were intended to be relatively conservative assumptions!

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!