Member Info for ShearClass

@Oriens, yep £36m of Q1 private sales is pretty rubbish isn't it? I mean SourceBio had 2020 revenues of £50m, had £8m cash and has a market cap of £116m... we've done that in Q1 and have an enterprise value of £140m right now! (In case this isn't clear I am being sarcastic).

I agree that to take a big position the valuation needs to come down a bit further in the near term, on a medium term view looking out to YE2023, if they hit their ambition of 100% per annum revenue growth then this is getting increasingly cheap. The market is currently either unaware of this, disbelieving of it, or being played by an aggressive short seller. Time will be the best judge as always!

Wilson, that is interesting... @ShaunP did you have any source for this production figure? Again going back to the October RNS when we acquired IT-IS, they say £5m per annum turnover. So £416k per month sales at 300 units gives an average selling price of £1380 each... We know that the Q16 retails for £4750 & the Q32 for £11,650, so this looks a bit off as I can't imagine Nova are marking them up that much.

There are lots of unknowns though;

- Ratio of Q16's vs Q32's sold?
- Spread of revenue across 2020 - presumably IT-IS were ramping up production themselves as pandemic demand picked up
- The £5m estimate could have been very conservative and was made in mid October, so every chance this could have been exceeded

If we are manufacturing 1500 per month then that would be 37.5% of the LumiraDX production, making the valuation look even more ludicrous...

And yes VanV, we are vertically integrated, something which the market doesn't seem to think has any value at present...it will be a key pillar of the 5 year strategy though.

FFS, they sold 17m shares each in the IPO, retaining 95m shares each - it's all in the admission doc. £68+m each in proceeds. Why on earth would they be wanting to sell more in the open market? If they had wanted to sell a bigger stake they would have agreed to list at a lower price - i.e. list at £3 and sell 30m shares each... this is Carmignac aggressively going after them - quite entertaining to watch unless you took too many shares in the first week.

Does the fact directors own 55% of the company not count for anything?!

Simple, not sure why you're bothering to hold shares if you don't know the difference between PROmate and what we were offering last year...

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/957995/TVG_Report-PROmate.pdf

"The validation performance of the PROMate assay aligns with the acceptable performance characteristics for sensitivity and specificity for the point of care (rapid testing)."

"PROmate™ is the only rapid direct-to-PCR COVID-19 assay approved by the Department of Health and Social Care's Technology Validation Group."

We didn't have an approved rapid POC test available in 2020...

I started the below analysis with optimism, but wow, I can't actually believe the comparisons...

Let's compare ourselves to LumiraDX, as we are also aiming to become a 'next generation point of care diagnostics testing company'. They are listing on NASDAQ in the coming months in a SPAC deal;

https://www.lumiradx.com/uk-en/news-events/lumiradx-a-next-generation-point-of-care-diagnostics-testing-company

1. "Estimating 2021 revenue of $600 million - $1 billion, up from $139 million in 2020"

2. "Current global manufacturing production of >1,000 Platforms per week, capacity of more than 15 million tests per month and ramping significantly, since September 2020 more than 13,000 instruments have been shipped to over 60 countries

3. "LumiraDx also announced that it has secured $400 million in new debt financing, $300 million funded senior loan facility and a commitment letter for up to a $100 million for an asset-based revolving credit facility to further support its growth strategy and commercial ramp"

4. "The pro forma enterprise value of the combined company is approximately $5.0 billion"

Novacyt:

1. We are estimating 2021 revenues of £171m / $241m after delivering £277m / $387m in 2020. 2021 would be between 25% and 40% of LumiraDX. This could easily be higher.

2. IT-IS production; "From November 2020, the Company has scaled-up manufacturing capacity for instrument production more than five-fold" - So let's assume they were producing 50 instruments a month pre November (they were forecast to achieve £5m revs for 2020, so £416k per month = £8k per instrument, which is about right), the capacity from November would be 250 instruments a month / 62 a week. This is only 6.25% of LumirDX, but could have been scaled further...

They have capacity for 15m tests per month, we can match if not exceed this, having been at potentially 20m as far back as last summer...

We ship to over 130 countries vs 60 stated for LumiraDX.

3. LumiraDX will have $433m of cash + $318m of debt to deploy on expansion / R&D. Novacyt had £91.8m / $128m at year end, but could conceivably have at least £150m / $210m now... (we know they got another £48m from DHSC in Feb) So they have around 25% of the firepower of LumiraDX, more than enough to compete.

4. LumiraDX have an ENTERPRISE value of $5b, Novacyt has a current EV of £145m / $203m if we assume cash is still £91m!

So we are currently valued at 4% of LumiraDX!

Isn't this simply crazy?

Here is their full presentation, released last month;
https://static1.squarespace.com/static/5fcfb6a6de407d5e35d28f10/t/60816db74fbe6204af35df8d/1619094970622/LumiraDx+-+CAHC+April+2021.pdf

Page 11 has the TAM (total addressable market) of the platform at $31b.... If we capture just 0.1% of that market then it would net $31m per annum post Covid…

The acquisition of IT-IS is simply superb, a genuine masterstroke in the making!

@wishiknew, what numbers do you want to see? Other than the price I don’t get what they could have included? It’s a product release, not a dragons den pitch!

Just for context, here’s Apple’s original iPod release from 2001; https://www.apple.com/newsroom/2001/10/23Apple-Presents-iPod/

No numbers outside of product features & sales price. It didn’t do too badly for them did it?

Great news! This excellent Novacyt Insider article is a must read; https://novacytinsider.com/poc-wars-part-i/

I’d like to see them upgrade the DIY box for something more stylish, but the bottom line is substance is more important than style - it’s a fantastic product & the launch timing is impeccable as always. Our potential future revenues just got a bit bigger :)

Short updated - now its up to 1.03%, the FCA site says the following;

"You should send your positions by 3.30pm on the trading day after the day the position was reached. All calculations should be made as at midnight on the trading day the position was reached."

So presumably the update for the 24th May was for the short position at close of play Friday?

Carmignac Gestion 1.03% 24 May 2021
Carmignac Gestion 0.94% 21 May 2021
Carmignac Gestion 0.83% 20 May 2021
Carmignac Gestion 0.70% 19 May 2021
Carmignac Gestion 0.52% 18 May 2021

Unsurprising that the price has been struggling with them selling between 500k - 1m shares a day...

If they keep increasing it will present an opportunity, to have sold 1.03% of the share capital within 10 trading days is very aggressive indeed, even more so when that represents 5% of the free float. An unexpected partnership would give them food for thought!

MisterETrayda, this is where the share price is driven ; https://www.boursorama.com/cours/1rPALNOV/

You could have as many buys as you like on AIM but it will not impact the price. Euronext is the parent exchange, it controls to price.

@Butchers, @Shinfalls, please read my earlier post today re. Euronext. AIM market makers do not control the share price here in any way whatsoever. Euronext is the parent exchange, when the price rises or falls on there, it follows on AIM. The only time that AIM will move independently is if Euronext is closed for a public holiday or the share price has a temporary suspension. I've been watching this dance for 15 months and it is 100% the case.

The AT trades on AIM are algo buys / sells to adjust the price so that it accurately reflects Euronext, otherwise PI's would be able to make margin every time there was a rise or fall in Paris.

As for the CEO needing to be more proactive in addressing the share price fall, why should he care about the share price in the short term? If it was £10 in Jan & is £10 again in July then why does he care about what happens in between? How can he control this? In the short term the market is a voting machine, longer term it's a weighing machine. Value will out, it doesn't need the CEO tweeting or releasing 'rampy' RNS's every week to attain a fair valuation.

Great case study on the Bourse this morning on the workings of supply and demand and why we find ourselves down here...

https://www.boursorama.com/cours/1rPALNOV/

A few buys at the open for around 25k shares sent the price up 2%, however this way immediately countered by a 22k sell, volume then died off with no single trade larger than 3k, before another sell of 14k arrived sending the price into the red. Then around 9am, three consecutive sells totalling 12k dropped the price further to 3% down for the day, before a buyer finally stepped in and took 12k back.

The market makers had no choice but to drop the price once buyers didn't step in for the 22k, this was accentuated by the further 14k and 12k sells. This happens day after day over there (17 of the last 22 days have been red). The LSE share price then simply follows the Bourse down, no matter what the UK buy / sell proportion is, with stops being taken on the way.

My take is the wider French market see Novacyt as a British company that had a lucky break in 2020 and are now falling apart, most won't have a clue about the finer details of the DHSC dispute that we discussed in depth here yesterday. There will also be negative sentiment around vaccines / Brexit that will no doubt put off many potential new buyers.

This is what is creating such an unparalleled buying opportunity. IMO once the financials are released, value buyers will step in and send the price up significantly.

It is a bizarre setup, perhaps GM wants to drive as many shares as possible off the Bourse to LSE so he can make a case to the board for delisting from Euronext?

Why would existing holders decide to sell today with a flat share price? I bought some first thing as it feels like an opportune time to add, I'm surprised by the lack of interest but even more so by the sells...

This link takes you straight to the short; https://shorttracker.co.uk/company/GB00BNDRMJ14/

They are taking quite a heavy position considering the free float is only around 20%... whilst I'm not hugely surprised given the initial valuation, I would be surprised if they continue to increase at the current level. The share is trading on a 3 year forward P/E of around 20 if they hit their medium term target of doubling revenue every year & maintaining gross margins + low CAPEX. That would be nonsensical for an established business growing that fast, so clearly this is offset against the execution risk that presently exists.

I've got an initial position but will watch for an opportune time to add more.

@Wilson, many thanks for sharing poidster's post from earlier in the year (and trawling back to find it!). Overall that sounds like a fairly typical new product launch, there are always going to be teething problems. The main point is it was signed off by the DHSC Technical Validation Group and this validation report & approval is still live now. Gaining approval certainly isn't easy, as evidenced by the small number of tests that have this status (with ours still being the only direct to PCR rapid test that I could see...)

"The time to result for 16-32 reactions is approximately 80-90 minutes." Is the crucial part. This is clearly feasible for airport use, hence it doesn't surprise me that some are already using it (Newcastle Airport was confirmed from memory?). Take the test at check in 2 hours before the flight, receive the results, no interruption to the normal flow, other than needing to get to the airport in good time.

Also very positive to see Michael Mina backing rapid PCR as a primary widespread testing option, clearly this is common sense but it's something which is currently being slept on by the financial markets, as evidenced by the valuation gap between NCYT and AVCT...

https://www.independent.co.uk/news/health/coronavirus-latest-guidance-indian-variant-b1853137.html

This is truly unbelievable. Effectively announcing a local lockdown in 8 areas last Friday but not communicating it to anyone?! The government have truly lost the plot here, what on earth is going on?

"It is my interpretation that there have been usage issues with the pre PROmate tests"

What is your interpretation based on?

The international business only accounted for 30% of sales in 2020, generating net ticket sales of £235m and revenue of £11m (4.6% margin). The year before it was £490m and revenue of £26m (5.3% margin). No idea where you are getting 10% from. This is heading much lower, £1.4b market cap is obnoxious for a company that is loss making and has just had it's legs taken from under it. They boasted about having 30% of the UK e-ticket sales in their final results, how's that looking now?

@Christoffer, yep I think we're in the right ballpark... If the DHSC payment disclosures showed £0 in payments since October I could maybe understand the share price behaviour, however the bottom line is we've received around £144m net of VAT since October / the half year results. This is worth £2 a share alone... yet we sit over £1 lower than the share price at the half year results! Yes vaccines have arrived since then but so have variants. Add in another £36m of non DHSC sales in Q1 and you have a very unique, special situation!