Avacta and some key points!29 Apr 2020 21:28
I am sure this post is worth reading again from M. McNulty ( the credit is with him for this post) from the other day in response to a question from an investor here to the potential for the share price.
“I expect we’ll hit £500m mkt cap (~240p) pre-commencement of sales, if the test is developed successfully and CE marking secured. Timeframe for that – May/June.
Thereafter I think sales will just grow exponentially. Once £1bn market cap (~480p) mkt cap is surpassed (which I believe will happen once sales commence), the share price could go anywhere.
I’ve always had a long-term valuation target of £4bn mkt cap (a little under £20/s), based on the Sanofi / Ablynx transaction. But on top of the antibody memetic platform, we also have targeted chemo and the COVID-19 angle. As such, I think it really is impossible to place any sort of target price on the stock.
Its technology could literally lead the global war against the pandemic, and in the longer term its therapeutics division could genuinely reshape the field of cancer treatment. Gross sales annually for this second market alone would be several hundred billion dollars. How do you put a value on the company that could ultimately take a significant chunk of it?
In my opinion, it’s dangerous to place a specific exit price for yourself on a company like this. I certainly haven’t for myself. Conventional valuation metrics do not apply, and total addressable market (‘TAM’) calculations are just pie in the sky, really. If I had to point out a TAM for Avacta, I could say that the company is currently trading on much less than 0.1% of its ultimate TAM. Perhaps around 0.05%, at the moment. Even accounting for all of the development and commercialisation risks ahead, that is far too low by many multiples – in my opinion, at least!
I won’t give advice on what to do with your shares – but what I can say is what I’m doing, and that is just to let the story play out. The ideal scenario would really be for the decision to be taken from my hands, with a takeover of the company by a major. Indeed, this is what I think will ultimately transpire.”
The confidence from our CEO on these projects and the impact on people getting back to normal life and the potential for targeted cancer treatments. Today I was talking to an oncologist who is aware that this technology is in test and she told me, that there is much excitement in there field that if this pre-CISION can be implemented for multiple chemotherapy mixes it will change cancer treatments for ever and when you think around one third of the population are affected that is an off the scale impact of oncology on the whole planet.
Something to make you think.
Cheers RK
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