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The mid-year trading update has been mid to late October in each of the last three years. Lyn alluded to this year’s update being to a similar timescale, or maybe early November, so I think they will use that statement to settle nerves.

We already know from the AGM that they are (at least) on track to meet market / broker expectations for this financial year, with a significant pipeline already building into H2. The business is broadly at break even, with easily enough cash to cover their operations and a whole host of opportunities are now coming to fruition, so I’m expecting an upbeat trading update and a material re-rate back into the teens in the very near future.

The only consolation of the current SP is that the disconnect between the underlying value and future earnings of the company is now bigger than it has ever been. The markets are driven by both sentiment and fundamentals. Sentiment seems to have the upper hand at the moment, but with the return to 20%+ annual growth and a whole string of upside opportunities coming through, there will come a point very soon where the fundamentals kick in, as YGEN moves definitively into profit.

Our Market Cap is now less than last year's annual revenues and less than 2x the pre-Covid revenues. That in itself is a massive undervaluation, but add in the revenue potential from the substantial expansion in both commercial capability and lab capacity that has happened over the past two years and its staggering.

I think the 20% growth number that existing broker forecasts are based on will be significantly exceeded in the coming months. The market is ultimately only interested in whether the business will make money - the SP is pants, but it's clear that Yourgene is better placed than it has ever been to drive forward material growth in revenues and profitability. The idea that a global biotech selling over 100 products into 65 countries in expanding markets with IP protection around its key technologies, zero debt and 20%+ growth in its core business is worth just £35m is frankly absurd. The market will wake up to that at some point soon.

I'm not sure that all the speculation about a low ball buy-out is realistic. We need to remember that the II's are very significantly underwater too and they demonstrated the power they can exert by exercising their muscles at last year's AGM, which led to the embarrassing withdrawal of what would otherwise have been a relatively standard pre-emption rights resolution.

Any proposal to sell the company would need to satisfy those investors, many of whom invested at 17p per share back in August 2020 as part of the placing for the Coastal Genomics acquisition. They will want to see a return on their investment, so unless the company is in distress (and there is no indication of that), I'm struggling to see a scenario where any offer below that level could be credibly recommended by the Board - surely they'd simply say 'thanks but no thanks, we'll just keep going as we are'. The only circumstance where that choice would be taken away from the Board is in a hostile takeover situation, in which case the suitor would have been stake-building ahead of making an offer and it's abundantly clear that's not been happening.

My guess is that YGEN is simply out of favour with the market and until that changes, the SP will stagnate. If that's the case, it would only take the slightest sniff of an upgrade to revenues (and ideally profits) in the trading update to turn things around and a very decent re-rate could be on the cards.

I have to admit that today's RNS took me by surprise - firstly because I was leaning towards them wrapping up the trial without a further DE (for the reasons in my post earlier in the week), but secondly because such a short length of time has elapsed compared to previous DEs.

The first patient in cohort 1 was dosed on 11/08/21
The dose escalation to cohort 2 was announced on 03/02/22 (176 days later)
The dose escalation to cohort 3 was announced on 29/09/22 (146 days later)
The latest dose escalation was announced today (64 days later)

That is a huge reduction in the cycle time for the latest cohort.

We know from what AS has said previously that Covid disruptions slowed the cycle time for the first cohort. My understanding is that the 3+3 trial design requires that any patient who doesn't complete the trial must be replaced. This presumably significantly extends the cycle time for the whole cohort, as any patient who joins the cohort late still needs to go through the whole cycle.

We know that the patients who have selflessly volunteered for this trial are extremely sick. Given the advanced stage of their disease, it seems inevitable therefore that some of those patients will sadly not make it through the trial, requiring the recruitment of additional patients into the cohort to meet the trial's design requirements. Indeed, there was some suggestion that AS alluded to this possibility in one of his updates.

Now, if we assume that AVA6000 is working as expected, then it's also fair to assume that, all other things being equal, it's efficacy will likely increase as the dose is increased (subject to the potential constraints that I mentioned in my previous post). If that's the case then, given that each cohort starts with a fresh group of patients, we could reasonably hypothesise that, all other things being equal, the patients in the later cohorts would likely experience the most therapeutic benefit from participating in the trial. Correspondingly, we could also expect that they would be more likely to successfully reach the end of the treatment cycle.

There must be a reason for the latest cohort cycle time being so much shorter than the previous cycle times. To me it is highly suggestive that they did not need to recruit any additional patients into this cohort, which allowed the cohort to complete uninterrupted. If that's the case, it could be just down to chance, or it could equally be that the latest cohort saw a marked improvement in therapeutic efficacy, which enabled all of them to complete the cycle as an uninterrupted collective.

I don't know whether we will get the readout from the whole trial at the same time as the last cohort finishes, or whether they may announce the end of trial first and then release the data a few days later. Either way, if cohort 4 finishes in a similar (or shorter) timescale to cohort 3, then I think we would know that the drug was hitting the mark.

I've been thinking about whether there will be a further DE before phase 1 is drawn to a close and while it could clearly go either way, I'm personally now leaning towards there not being a further dose escalation. The reasoning behind this is as follows:

1. Given that we haven't hit MTD yet, it seems pretty clear that the Dox is being contained (outside of the TME) and therefore we are unlikely to reach dose limiting toxicity any time soon in terms of impacts away from the TME.

2. In terms of Dox levels in the TME, then assuming that AVA6000 is cleaving, we are already at doses that are many multiples (likely orders of magnitude) greater than standard Dox.

3. While the TME has its own physiology and pathology, my understanding is that it's not an island that's completely cut off from its surrounding tissues (it's more of a land-locked entity). I suspect, therefore (and I'm happy to be corrected), that even though the Dox is only being released in the TME, there will be some kind of halo effect on the surrounding tissues, as presumably those tissues will experience the highest levels of leakage from the cleaved Dox. If that's true, then continuing to escalate the dose ad infinitum is not without consequence - it may not cause the kind of systemic side effects that normal chemo does, but it could cause significant harm to tissues local to the TME.

I recognise that that it's a tasteless metaphor, but using military action as a comparator, then there are a range of options for taking out a target. A bullet is the most precise and least likely to cause collateral damage. A precision missile is the next most targeted, but may cause some collateral damage in a halo around the strike zone. A cluster bomb will take out the target and everything around it. Thermobaric and then nuclear weapons come next. The point being that escalating the intensity of the attack increases the certainty of destroying the target, but also expands the size of the 'halo' impact. That matters if your dealing with cancers attached to (or close to) important organs, as there's little point in destroying the cancer if you destroy the tissues of a surrounding organ at the same time.

So, my feeling is that there's a good chance that phase 1 may be drawn to a close sooner rather than later because, assuming it's working, the team will want to move forward with the next phase of the trials on the basis that the levels of Dox in the TME are probably already well in excess of what will be needed to material enhance the therapeutic index of the drug. There must also be a significant possibility that they have already reached the effective maximum therapeutic efficacy of the drug - i.e. if a tumour isn't responding at the current levels, then it's probably Dox resistant and may not respond to at any level.

Exciting few weeks ahead.

I actually thought the presentation was professional and reassuring - nothing new in terms of the strategy and key messages, but it does sound like they are now making material progress in the US, where they are wanting to expand their commercial presence to capitalise on the pipeline of opportunities they are working on. That suggests to me that growth is not just returning, but will accelerate markedly with the right commercial resources in place.

While he was true to previous form on the share price, Lyn did say that the business was seriously undervalued. Sooner or later the market cap will adjust to reflect the growth and revenue potential of the business - that's how the market works.

After re-watching Alastair's presentation of the recent AVA6000 poster for the AACR (https://avacta.wistia.com/medias/kv40kul5b2), I've been doing a bit of research on Patient Derived Xenograft (PDX) models, which Alastair covers 8mins 40secs through the presentation. The information that's readily available on these models is quite technical, but the following paper, which explores the pitfalls of the models, is quite helpful in explaining what PDX models are, how they are used and what their limitations are: https://www.oncotarget.com/article/27001/text/

In essence, human tumours are transplanted into genetically immunodeficient mice (I think this is to prevent the innate immune response in the mice from attacking the transplanted cancer) and then therapies are trialed to determine the efficacy of whatever drugs are being considered. It seems that these models are used in both drug development (as with AVA6000) and in personalised treatment planning. The former seeks to identify the efficacy of new treatments against a range of PDX models derived from different patients, whereas the latter seeks to identify the efficacy of a range of different treatments against a specific patient's tumour, to enable a personalised treatment plan to be developed for that patient, based on which drug(s) worked best with the mouse PDX models.

The main limitation with these PDX models seems to be that, in some cases, the resulting tumour growth can sometimes take on the characteristics of murine (rodent) cancer cells, rather than simply propagating the implanted human cancer cells, which would clearly limit the utility of the models for determining the efficacy of the drug being evaluated on human cancers. However, this limitation seems to be well understood and the models do seem to be regarded as an effective means of evaluating the effect of new oncology drugs on human cancer cells.

I have to say that I hadn't fully appreciated the significance of the PDX models, but it's obvious to me now why the share price rocketed when the poster was published - the In Vivo PDX model data isn't simply about the efficacy of AVA6000 in mice, it's about the efficacy of AVA6000 on human cancer cells in mice. That's hugely significant, as you would imagine that the TME of human cancer cells mice would likely to be very similar, if not near identical to the TME of the same tumours in humans. Given the clear efficacy of AVA6000 versus both placebo and ordinary Doxorubicin in the PDX mouse models, the only logical conclusion I can draw is that AVA6000 was clearly being cleaved in the TME of these mouse PDX models, a TME which is likely significantly closer to human biology than mouse biology, as it's made up of human cancer cells.

AS has access to all the trial data as it emerges and can compare all of it to what they saw in the PDX models - I think his continued confidence is hugely significant.

Yourgene is an enigma to me. Notwithstanding the various own goals over the last 5 /10 /15 years (yes, been in since Vialogy), YGEN is now poised for global expansion across literally dozens of markets, and yet, we’re sitting here with a market cap that’s only fractionally more than 1x last yeast’s annual revenues. And that’s in a sector where, even in a bear market, the most mature (low growth) businesses trade at 5 to 6 times annual revenues and high growth businesses trade at multiples of those numbers. At some point, YGEN is going to post some numbers that the market has to respond to and when it does, we will surely be in for a huge re-rating.

Lyn is characteristically coy about what the YGEN share price should be. But it’s not a difficult question - we’ve acquired a number of businesses in the sector, so it’s not difficult to put a value on what YGEN is really worth. My question for Lyn when I next get the opportunity to ask is “Yourgene has a track record of acquiring promising businesses to support its growth plans. If you came across a company doing what Yourgene is doing today, how much would you be prepared to pay for all that potential”. I’d love to know the answer.

A quick question for any intellectual property experts out there. Will the licensing of the precision version of a drug lead to a new period of patent protection for whoever licences it? Just thinking that, if that’s the case, there could be an absolute tsunami of pharma companies queuing up if AVA6000 proves successful. If the licensing effectively creates a new patent, then regardless of whether the current (non-prescision) version is on or off patent, you could imagine that the existing manufacturers would want to move very rapidly to protect their existing revenue streams.

I've been thinking about the steer that AS gave at the AGM that AVA6000 would likely be targeting ovarian and soft tissue sarcoma in the dose expansion phase and what we might infer from that. I was particularly wondering how they had concluded that those were the cancer types to target and why, for example, not include pancreatic cancer or maybe breast cancer?

Looking at some of the literature, it's clear that different cancers respond differently to different treatments at different stages. So, standard of care not only differs according to the type of cancer, but also according to what stage the cancer has reached. We know that Doxorubicin is a very powerful chemo drug, but it doesn't seem to have universal application in terms of being selected as standard of care for all types of cancer - it's primarily used to treat breast cancer, ovarian cancer, soft-tissue sarcoma and lymphoma (not pancreatic cancer, as far as I can tell).

Perhaps unsurprisingly, the trial may be showing that the most promising results have been seen with two of the main types of cancer for which Dox is already the standard of care i.e. greatest benefit is derived from taking a drug that already works well for a particular cancer and super-charging it. Presumably, it will also be relatively easier to seek approval for a pro-drug that is already the accepted standard of care, than to try and broaden its application and displace completely different drugs used for other types of cancer.

So what can we infer from this? Well, I think we can be pretty certain that the trial must include patients suffering from ovarian cancer and soft tissue sarcoma - otherwise, how could they possibly be confident of targeting those in the next phase? And then that leads to a further inference, which is that either those are the only two types of cancer that the patients in the trial have (unlikely), or that there are other cancer types included, but that those have responded relatively less well. That wouldn't be a surprise, because ordinary Dox has varying efficacy for different types of tumours, so Pro-Dox probably will do too. But, crucially, that difference could only be observed if the drug was having an effect on the tumours i.e. AVA6000 is being cleaved in the TME and the Dox is being released - it must be working, otherwise, how could you determine which cancer types to target in the next phase?

Just listened to the presentation and they have an incredibly impressive offering - I was struck by the M&A pricing info too, which gives an indication of what someone would pay for YGEN (i.e. around £375m - interesting slip of the tongue there from Lyn when he was talking about revenues). The Ranger tech sounds like a real differentiator that will drive huge value in the US and globally and could be very attractive to a larger player.

To be fair to Lyn, they really do have all their ducks lined up now - a hugely broad platform that's primed to drive real growth across a much wider range of global markets than ever before.

I'm feeling very excited again by the prospects 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.

Ophidian - are you saying interest from AZ?

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