Member Info for Sorcerer

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.

Interesting to note from the daily testing stats that, out of the c.1.8m tests being reported daily, only around 300k are PCR tests, so it would seem reasonable to infer that the balance (1.5m) are LFTs. If that's correct, it means that the UK is already doing 40m LFTs per month and that's with testing only currently taking place in some quite limited settings, with limited numbers of people.

I'd suggest that anyone who hasn't yet done so just runs some numbers on their calculator - if you're using the calculator on your phone, you'll need to turn it sideways, so that you don't run out of characters on the display :-)

I'm expecting an RNS tomorrow morning explaining that Avacta have successfully applied the Pre-Cision platform to it's first psychological target, enabling the phenomenon known as FOMO to take place continuously throughout the week, rather than in the limited doses that apply with conventional shares.

Alastair Smith said "The problem with conventional FOMO is that it can only really be used once each week at most, invariably on a Friday, and it's efficacy dwindles over time without a solid pipeline of news. By applying the Pre-Cision platform to FOMO, coupled with our novel perpetual news-flow engine, FOMO can now be expected every day of the week for many months to come, with no adverse side-effects or subsequent share price toxicity. We're in the process of reviewing our P1 results which are extremely encouraging for Avacta shareholders, but not such good news for shareholders of shares in the placebo group"

Good summary Investor - one thing stood out for me was the way that the investigations into having a combined second generation test are described:

" Avacta and Mologic are also exploring the possibility of combining Avacta's spike antigen test with Mologic's nucleocapsid antigen test[3] in a single device which would be a world first and has the potential to deliver the most sensitive rapid antigen test possible."

the words "deliver the most sensitive rapid antigen test possible" are interesting - they're not setting the bar at simply improving performance further, but aiming to reach 100% sensitivity alongside the 100% specificity they already have. If they can make that work, it may have profound implications not just for the Covid test, but also for any future LFT development for other diseases too, which will presumably all be constrained in similar ways. Perhaps affimers could be used to augment existing LFT performance in the same way that Precision is being used to augmenting existing chemotherapy drugs?

It may be spiteful, but is it just me who gets a warm feeling knowing that whoever it was who offloaded last Friday ahead of the trading update did so at the expense of missing out on this week's rise? Who says there's no such thing as Karma?

Only just watched the presentation and credit where it's due, I think that was a solid update that was clearly directed at many of the concerns that have been raised on this board in recent months. I thought Lyn was both contrite and candid and it was good to hear a bit more about the reasons for certain decisions (e.g. the decision to not get involved with broader testing because of the lab requirements and how that would impact the business).

It would be great to hear that sort of update on a more regular basis.

One thing we know about Lyn Rees is that he is absolutely focused on hitting his numbers, so the failure to do that must feel like a very personal failure to him. I hope that both he and the wider Board are mindful of the impact that the deferred revenue will have on the cash position and that any thoughts of further acquisitions are similarly deferred until the company is firmly cash generative. It's time to let the sales volumes catch up with the size of the distribution infrastructure, so the jam can start to flow today, rather then adding ever more jam machines that only ever provide the promise of jam tomorrow.

Conserve cash while the revenue base catches up with the cost base and the SP will then start to reflect the value of what's been built here - it's not rocket science.

Not just mirror - if they pull off both the testing and the cancer therapies, this will magnify what happened at NCYT (think Hubble telescope :-)

More importantly, success with this first trial underpins the safety and efficacy of the whole PreCISION pro-drug platform, which is why they're already prepping the next three horses in the stable.

Success with Pro-doxorubixin opens the gateway to the whole chemotherapy market. Difficult to imagine why this wouldn't be conjugated with every single chemo drug in existence if / when it's proven to be safe and effective.

Jadam, just to be clear, what I actually said was "at the volumes they're currently reporting, the Covid testing feels relatively marginal".

We have been told that the testing revenue (not capacity) was c£0.5m over the last couple of months, which equates to c£3m per year (£250k x 12), hence the assertion that it feels relatively marginal (10-15% of total revenues). Potential is there to do more and they may yet announce a material scale up in either actual tests and/or capacity, but going on the latest update from the CEO himself, at this point the testing is a useful additional revenue stream and not much more. The flip side of this is that they have held onto the confidence in the end of year numbers, which suggests that the core business is motoring and may even now be doing better than expected, given the apparent slowdown in the Covid testing activity.