Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Something occurred to me today that I hadn't really clocked previously, triggered by Alistair's slide showing the slide with all the FAP levels for different types of cancer.
The slide showed that the highest FAP levels occur in Cancers of Unknown Primary i.e. where a secondary cancer is detected/diagnosed, but they can't find the primary. Now, AS has always talked about pre-CISION providing a mechanism for precise targeting of tumour cells, which is correct, but in the conceptual model that I had in my head, I'd always envisioned that the targeting was towards a specific recognised tumour i.e. "we know you have x cancer and we're going to target it directly with a warhead that will blitz it". The model in my head had the focus of the treatment being on the primary tumour alone, but of course while that's all true, the bit that I had missed, is that the drug won't simply target the known tumour , it will actively seek out and destroy any tumours exhibiting elevated FAP levels. It doesn't need to know where the primary is, it will seek it out and destroy it. Similarly, it also doesn't need to know if or where a diagnosed primary cancer has spread to, it will mop up all the secondary tumours along with the primary.
AVA6000 isn't a carefully targeted warhead, it's a fleet of heat-seeking missiles sweeping the patient's body for anything that looks like a tumour.
Good post Kong and I agree with all the sentiment, but to be clear, he said that they would be releasing more pre-clinical data at next week's conference, not clinical data. I'm sure it will all add weight to the evidence, but it's an important distinction.
AS was at his very best today - explaining complex stuff in simple terms that everyone can understand. A reminder too of the huge number of irons they have in the fire - literally dozens of opportunities on both sides of the business.
While the emphasis is rightly on AVA6000 and the therapeutic pipeline, they have clearly still got big plans for the Covid LFT (and making good progress with it), but the ambition on the diagnostics side of the business goes way beyond Covid and that sounds almost as exciting as the therapeutics. They're genuinely reimagining healthcare - on both sides of the business.
I may be wrong, but my understanding is that the cleaved Dox in the tumour would be significantly increased even if the dosage was exactly the same as ordinary Dox, as all of the active drug is concentrated into the tumour, rather than being activated throughout the rest of the body. It's the opposite effect to the 80 to 4,000 fold reduction in healthy cells - the drug keeps circulating until it hits the tumour cells and then it gets released, so the tumour automatically concentrates the drug, even before the dose is increased. I'm guessing a fair bit will get broken down before it reaches the tumour but, to me, logic says that the concentration in the tumour must be higher on a like for like basis.
It would be good of one of the scientists could confirm, as if this is the case, then even the first round was effectively hitting the tumour with a significantly higher exposure than standard Dox.
Personally, while I don't think it's a slam dunk that progression to Dose Escalation means that the drug must have activated in the tumour, it does seem unlikely that they would be continuing with the trial if it hadn't. What would be the purpose of continuing with the trial if the Doxorubicin hadn't been activated?
They now know that the PreCision aspect of the drug was safely administered in the first cohort, so they're progressively raising the Doxorubicin levels to see how high they can safely take them. If the drug wasn't activating in the tumour (and therefore anywhere, as it's inert until it's activated by the FAP in the tumour), then escalating the dose would be futile, as the increased dose would simply stay locked inside the PreCision shell, so there would be nothing further to test. If no further learning could be derived from the trial (no matter how high the dose is taken), then that would presumably have triggered an early end to the trial on the basis of futility. It would also seem to be unethical, as you would be denying the patients the opportunity of an alternative therapy, simply to trial an inactive drug that had no chance of success. So, I think it's reasonable to assume that the drug has activated.
I personally also think that, since the CEO remains 'very pleased' with what he has seen, that the systemic levels of the drug are in line with what they were expecting and that gives them confidence to move to the dose escalation stage. If the systemic incidence of the drug wasn't in line with what they were expecting (i.e. it was broadly the same, or not much better than standard Doxorubicin), then that would suggest that the PreCision technology had failed in its primary objective of targeting the chemo into the tumour. If that was the case, you'd have to again ask why they would continue with the trial? What could they learn from continuing if they know that PreCision is safe, but it doesn't work? So, I think it likely that they have indications that the PreCision platform is working as intended, or at least it is working to an extent that makes continuing with the trial worthwhile.
I've been thinking about what might come out of the detailed analysis of the phase 3 sprinter data and I'm sure there will be quite a lot of insights that are hidden beneath the headline (binary) assessment that the end points weren't met. What I think we can reasonably say with some certainty is that there will be cohorts within the trial that responded far more to SNG than others - the headline numbers are effectively an average across the entire trial population, so within that we should expect to see quite wide variations across a range of different variables such as sex, race, known co-morbidities etc. I suspect that most of those differences will likely be either relatively marginal across a big sub-set, or less marginal across a smaller sub-set of the trial, which may make it unlikely we'll see much that has clear statistical significance at this point. There is one variable, however, that I think we should look out for in particular, as I think it will be very much on the minds of the scientists running all of these trials and that's vaccinated versus unvaccinated patients.
My reasoning is twofold:
Firstly, it's probably one of the few subdivisions of the trial population that doesn't immediately render the resulting component parts too small to provide anything meaningful - I doubt that it would be 50/50, but we know that with Omicron, the hugely increased rate of infection meant that, even with the majority of the population vaxed, there are still significant numbers of those people going into hospital. In the UK, 90% of the population is vaxed, but if just 1% of those people end up in hospital (versus e.g. 10% of unvaxed), the absolute numbers of each are pretty much the same, so that would mean that I think it's likely that the trial population contained a good sized cohort of both, which should bolster the chances of statistical significance.
Secondly, you'd have to assume that vaccination status will have had a material impact on the patient outcomes and there could therefore very easily be a material difference between the two cohorts i.e. you might see a 60% reduction in deaths for unvaxed versus a 20% reduction in vaxed (or vice versa). Could that be enough to be statistically significant across the smaller population size? I don't know, but it would definitely lend weight to undertaking a larger platform trial.
But, I hear you say, why does that difference matter when the population is being progressively vaccinated, so the numbers of unvaxed patients is continually dropping? It matters because we are just one nasty vaccine-evading variant away from the whole population becoming effectively unvaccinated again. The science suggests that this is pretty likely at some point in the future, so in that event, having a variant-agnostic therapy that's ready to go could be the difference between the world going back to square one with this virus, or having the means to manage whatever it throws at us.
From what I can see, SNG and SAB both progressed to the phase 3 trial in October last year. Based on that, I can only think of three scenarios for SNG, given today’s news regarding SAB:
1. SNG have been informed that they have also been withdrawn from Phase 3, but for some reason (e.g. the time difference for regulatory clearances between the US and UK?) delayed the announcement and we’ll hear it via RNS in the morning.
2. SNG have not yet been informed that they are also being withdrawn from the trial, because the protocols require that they evaluate each drug separately, but that withdrawal may still happen.
3. SNG remain in the trial because, for whatever reason, the assessment of their viability is materially different to SAB.
Whatever the next 24 hours holds, it feels to me like it’s going to get interesting again.
The SP is clearly where it is because the market sees little prospect of news on either the LFT or preCision front over the next few months. However, that completely disregards the possibility of the safety aspects of the trial data being released earlier than the end of Q2, or a major partnership or licensing deal being announced across any one of a wide range of strings that Avacta has to its bow, or some other completely new use case for the LFT (non-Covid) that opens up a completely new part of that market.
Avacta's business model is largely based on such partnerships / deals and they have a pretty strong history over the past two years of announcing such news completely without warning, so I wouldn't be at all surprised if we got some left field news that takes the market by surprise. Imagine what would happen to the SP if they announced just one licensing deal to take a candidate from the PreCision pipeline forward - you'd have to think that those conversations were pretty likely to be taking place right now, with a key part of the discussion being how the risk premium would be different for a deal signed now versus one signed at the end of the DE phase.
Like most on here I would imagine, I'd never heard of Doxorubicin before I came across Avacta. If I'm honest, I've been a bit lazy in not doing any real research into it beyond what Alistair has taught us through the various presentations that he's done over the last couple of years. While I don't think the latest interview was particularly great, AS's style is incredibly accessible and he makes the technical detail so much easier for the lay person to understand, which satisfied my needs as an investor until now.
Now that we're into the dose escalation phase, I've started to do a bit more research into the history of Doxorubicin and its existing clinical use, to try and get a better feel for the constraints that clinicians currently have to work around. While it's clear that it's an incredibly powerful drug for treating a wide range of cancers, what I've read has really opened my eyes to what a horrible substance it is a how much of battering patients are currently getting whenever they take it. We all know about how horrible chemotherapy is (hair loss, nausea and now cardiotoxicity and wider organ damage, thanks to AS's tutorials), but the attached articles give some real insights into what those things mean in practice, plus a whole raft of other things that the patients have to endure that the clinicians have to routinely manage when they give this. I've even learned a new word today (vesicant) - and it's not a nice one!
If you've not read any of the history, the Wikipedia entry gives a good overview (link below). The second link is an article headed "Doxorubicin is the infamous red devil" and that gives some horrific insights into how the side effects of this drug are managed by clinicians (and how long lasting they are - cardiac problems starting up to 8 years after final treatment). Even with the quite extensive knowledge I've gained from Avacta, this was a very sobering read and a real eye opener for me that shows just what a difference the pre-CISION platform is going to make for cancer care if (when) it succeeds.
https://en.wikipedia.org/wiki/Doxorubicin
https://voice.ons.org/news-and-views/outpatient-oncology-drug-series-doxorubicin-is-the-infamous-red-devil
A genuine question for any virologists or people who understand the genetic evolution of viruses. Given that the nature of viruses is to rapidly evolve, does it follow that the mutations observed with Omicron represent a permanent change in the course of the evolution of Covid, or could the next variant of concern emerge directly from one of the earlier variants, without the same mutations observed in Omicron?
The reason for asking is hopefully obvious - if it’s the former, then the ongoing work to adapt the LFT is the only way to address the performance issues with Omicron. If it’s the latter, is it possible that a new variant could emerge that doesn’t evade detection with Avacta’s test in the way that Omicron does and therefore brings the original test formulation back into the frame?
The thing that struck me most of all about today's interview was that it felt so much less prepared than previous ones - in the previous interviews, PH asked generally well constructed questions and AS then started each answer with "I'm glad you asked me that Paul...." This time, PH's questions were all over the place and AS's mind seemed to be in another place and he handed most questions over to FM, who as CSO was (rightly) mostly just concerned about the trial protocols and not disclosing anything. All of it added up to the most cautious interview I've seen from AS, which is just weird given how pleased they must be with the DE milestone.
Not much point in trying to work out the whys and wherefores, but given that the simplest answer is often the right one, I wonder whether PH just badgered AS into doing it today straight on the back of the roadshows and AS acquiesced to give a nod to his longstanding PIs, but they just didn't have the time or energy to do it justice after being tied up all of last week and inbox overflowing with enquires (from big pharma :-)
I'm sure we won't have to wait until the summer for news to pique the market's interest once more - it's easy to normalise the potential of this share, but it's anything but normal.
I don't think there will be any NDAs or information given to these investors that isn't already in the public domain - it would be illegal to provide new investors with information that existing investors don't have, even more so if the purpose of that was to allow them in before information was released to the market.
Given that we've not had any news this week, it's looking like these events are simply aimed at drumming up interest in the company and while that may be with an eye on a future fund-raise, the company doesn't need to do that right now, so I'd be surprised if we hear anything on that front during Q1 or Q2.
Of course, drumming up interest may itself drive the SP up, if there's a significant uplift in new demand
I agree mowzerrocks that nothing will be said at the investor presentations that hasn't been RNS'd, but the same spiel about being very please would have a different context, as we're 3 months further on. So, if AS says that they remain VERY pleased with what they're seeing, then that would be a material acknowledgement that the trial continues to go well.
It's not clear whether the investor roadshow's indicates an interest in bringing in new capital, or simply to bolster interest in the share and add to the weight of Institutional Investors on the register. However, if we assume for a moment that they might be thinking of raising some more capital, then it would make no sense to me for Avacta to be doing so if they knew the results from AVA6000 were any cause for concern. As a minimum, they will have to be open and transparent about what they know ahead of any further fundraise, so if they know the results to be concerning, I think they would have to declare that either ahead of or during the roadshows (and certainly before any further fundraise). That would be self-defeating as the SP would be trashed and they'd never get the funding away because of doubts over the platform.
Furthermore, I can't see any way that they would have made the decision they did on the LFTs if they knew the AVA6000 results were shortly going to knock them back further - you simply wouldn't take two such massive hits to the SP in such close proximity to each other if you then intended to tap up the market for capital. You'd either muddle through with the LFT (like everyone else) or you'd defer the roadshows until after you'd fixed the problems and raise money off the top of the SP spike when that was announced.
So, to me, it's much more plausible that they have high confidence in the AVA6000 results and decided they could take the short-term hit from the LFT to protect the integrity of company ahead of finalising the data and releasing it to the market, at which point they then have a very real opportunity to talk to investors about - they would then be saying something like "We're now very confident we have a platform that works and we want to accelerate the pipeline from 2 trials to 5/6/7/8 all running in parallel, so we can shape the future of medicine - is anyone interested?"
This week's LFT news was clearly unexpected and unwelcome, although with hindsight may yet prove to be the most astute thing the company could have done in the circumstances - that won't be clear for some time, but assuming the market for LFTs does remain and that they can get the revised test sorted reasonably quickly, then the opportunity at that point for a product that manifestly knocks spots other other tests with the Omicron variant and can be demonstrably adapted to new variants in short timescales could turn out to make the current pain a price worth paying.
It's worth noting, however, that only £10m of the proceeds from the £48m fundraise in June 2020 was earmarked for advancing the diagnostics side of the business (including all of the Covid tests, not just the LFT development). The rest (some 80%) was to accelerate and expand the cancer pipeline on the therapeutic side of the business.
That fundraising was massively oversubscribed (by several multiples of what they planned to raise, even after expanding the retail offer). If all of of the institutional investors (including a major US strategic investor) saw the value at 120p based on where Avacta were 18 months ago, I wonder how they would value the business today, standing on the brink of the first readout from one of the most exciting cancer drug trials in recent history?
The post period update sounds very encouraging to me - “Since the end of September 2021, the Group has maintained H1 revenue run-rates and continued to pursue its non-COVID-19 growth strategy.” That means that, as a minimum, we can expect third quarter revenues to be somewhere between the average for H1 (£8.75m) and the run rate for Q2 (£10.5m), so revenues already at £26 to £28m for the year, with a quarter still to go.
Assuming that trajectory is maintained, that puts annual revenues at £35-£40m. That’s a very material uplift on the last publicly stated numbers.
Hopefully we'll get a decent trading update with the confirmation of the half-year numbers - it feels like Q3 was a pretty important quarter for YGEN and we'll be within spitting distance of the end of next week, so Lyn may well feel confident enough to make reference to how Q3 compares with Q2. If it's anything like the same as Q2, then that puts us on £27m for the year already and, more importantly, holding up very nicely during a period when the world thought that PCR testing was going to dwindle. You'd have to say that Q4 looks likely to beat Q3 on most fronts, so we could be in for a very interesting update.
Another really upbeat update from YGEN - 80% year in year growth is very impressive and I think Lyn was holding some back, so expect the £15m to rise to at least £16m by the time of the trading update. So that's the best part of £10m revenue in Q2 and Lyn said they feel that Q3 is looking better than Q2. Even if they saw no further growth, we'd be on track for £20m in H2, so £36m overall for the year, which is a material upgrade.
I keep a series of regular calculations going on YGEN and it has historically seen second half revenues being 27% up on the first half, which is £20m, so that £36m feels doable, even without the expanded testing capacity or US revenues, so I reckon with a following wind we could head up towards £40m at the full year.
Surely the market has to start taking notice!
Surprised that people haven't picked up on what LR said about the Covid test volumes being 22,000 last week - what's that in terms of revenue to YGEN? If it lasts for even a few months, then it's going to be a major boost to the numbers. Regardless, I think the refreshed numbers that we will get at the end of Sept / early Oct will surprise to the upside. I suspect we will be surpassing £30m this year and probably quite comfortably - and that's without even the sniff of a govt contract, which Lyn all but said h expected to be announced within the next few weeks.
The latest update was not only the most positive that I can remember, but it was backed up with a genuine sense that we are on the cusp of some very material developments for YGEN. I think our time is finally coming.
The material shift that I noticed in this presentation was that AS is now talking about a pipeline of diagnostic products in the same way that he has previously talked about a pipeline of products on the therapeutic side of the business. That means that this is now seen as a long-term, diversified, revenue stream, rather than a one-hit Covid windfall. That's important because the previously perceived one-off nature of the Covid tests has always moderated the value placed on that side of the business (e.g. to a 1 or 2 year PE multiple) by shareholders. That's no longer the right way to value the diagnostics part of the business - Covid testing now assumed to be here for 3-5 years and a continuing pipeline of other diagnostic products mean that we can start to think about higher PE multiples than have previously been ascribed to the diagnostics side. That shift ought to eclipse any worries people have about the precise timing and size of the early contracts.