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One if things that often seems to get missed in the discussions about the value of Avacta's Covid 19 work is that the Affimer technology is a platform that is not Covid specific. The expansion of resources and capabilities that has been enabled by the recent fundraising, coupled with the experience gained during this pandemic, means that Avacta will be able to respond much faster to a future pandemic.
Assuming that the LFTs work, then Avacta will have a template for responding to any new virus that springs up in the future - everything is in place and they now know all the steps they need to follow to get to market, so could respond much more quickly. Imagine if Avacta's viral diagnostics capabilities had been where they are now when the virus broke out in China last December - we could have had LFTs by February/March and got on top of it before it became a pandemic.
We already know that Avacta is so much more than a Covid play because of its cancer-related platforms (platforms - again), but Covid won't be the last virus that the world has to deal with - Swine Flu, Avian Flu, SARS, MERS and Ebola have all reared their ugly heads in the past ten years or so and many more will do so in the future. This really does have the potential to be a game changer and while the LFT is probably the Covid-related thing that Avacta will make its name with right now, the most exciting thing for me is the potential for an Affimer-based therapy that inhibits the function of the virus. It's going to take a while to develop that, but if it works and the platform can be shown to have wider application for developing neutralising therapies for other pathogens, then that would be huge. And the beauty of it is that all of it stems from the same raw material - just get hold of some samples of the latest virus that the WHO are concerned about, spin up a bunch of new Affimers and then work out which of them are best to use for testing and which can be used as neutralising therapies. If none of the first batch work, make some more until you find one that works.
This for me is why Avacta is head and shoulders above all the other plays. It's like the difference between form and class in sport. Many of the other Covid stocks have form at the moment, but Avacta is in a class of its own.
Been thinking about this paragraph in today's RNS: "The BAMS assay for the spike protein serves as a useful diagnostic tool because this particular viral protein is displayed on the surface of the virus particle and directly involved in engaging host cells (via ACE2 receptor) during infection. For this reason, the same BAMS assay for the spike protein can also be used for drug development efforts to screen compounds that block interaction with host cells through the ACE2 receptor to prevent virus infection."
To me, that's a different therapeutic angle to what was previously suggested, which involved the direct use of the Affimer itself to inhibit the function of the spike protein. I think what this is saying is that the BAMS assay could be used to test the efficacy of a whole range of other drugs (not Affimers) to see whether they are inhibiting the spike protein i.e. take a Covid-19 sample, add a drug to it and then test to see if the drug has inhibited the spike protein. Presumably you would be looking for anything that yielded a negative test result from what you know is a positive sample because the drug has already attached itself to the spike protein, so the Affimer can't.
If that's what this is saying, then it could massively accelerate the development of new therapies, with the starting point being every single drug that already exists (and therefore already approved/understood) in the world today? Not sure how much commercial value you could derive from it (as it's an enabler, not a therapy in its own right) but it might add enormously to the overall scientific effort.
After being a bit uncertain about this first thing, I think it’s a really positive development. Not just because of the market reaction, but because it massively strengthen’s Avacta’s arm in all of theIr commercial negotiations. Beggars can’t be choosers and while Avacta have a unique product, they didn’t have all that much financial muscle - having a huge capital reserve means that we can probably now secure terms that might not otherwise have been possible when dealing with huge multi-nationals.
A bit surprised that people are seeing negatives in this deal.
We can probably be reasonably assured that there were other options on the table, but this was the most commercially attractive deal to the company.
While it’s a bit of an unconventional route to market, there are some obvious advantages for Avacta going down this route:
- Initially, this new company will only have one product to market and sell.
- The balance of power in the relationship rests with Avacta - Medusa19 are nothing without Avacta, but the opposite isn’t true.
- I think the idea of ‘mates rates’ is flawed - mutually beneficial yes, but had Avacta gone with a bigger established pharma distributor, the power balance would have been reversed and might have been more royalty than profit share.
Avacta retains independent control over the direct to consumer distribution, which will be the most profitable channel. Had they gone with a partner involved in other channels, there could have been complexities with conflicts between wholesale and retail channels etc.
I wonder if people would have reacted differently if Avacta had simply said they were going to build a new direct distribution arm? What’s the difference?
Just wanted to highlight that Florida is a regular poster here with a good posting history.
The big unknown is what Avacta will earn for each test - they haven't said that it's a royalty based deal, just that it's a partnership. "Avacta will own the intellectual property relating to the COVID-19 Affimer-reagents and will retain all the commercial rights to future products. Further commercial details have not been disclosed."
How do we know that the deal isn't simply that Avacta bring the IP to the party and Cytiva bring the manufacturing and distribution capacity, with a profit sharing arrangement?
Think I also read recently Bakky that Illumina has a bigger market share than Thermo, so it's remarkable that the growth that's been achieved is with only about a third of the market to go at. In theory our addressable market will more than double once the CE approval comes through for the Illumina version.
I was thinking about the Nasdaq angle too - I seem to recall that LR suggested that the US tended to place much higher valuations on growth biotechs than in the UK - something like 4 times as high, but not sure if that's a constant multiplier or whether it was 4 times what the price was at the time. Think it was said at around 13 to 15p, so that translated into 50 to 60p at the time, but there was a cost (around £500k ish?) that he felt the business couldn't justify at the time. You'd have to wonder if this might happen alongside, or shortly after, the Illumina product launches in the US.
Looking forward to the trading update - this one is pivotal to understand the growth trajectory of the enlarged group following the two recent acquisitions. Add in the new income streams from manufacturing the NCYT components / tests and lab support for NHS testing and it's sure to be an interesting update.
All of the known income streams aside, I wonder if YGEN are exploring whether their genetic profiling expertise (acquired with Elucigene and currently used in oncology) could be used to develop a test that could determine those individuals at highest risk from Covid-19? There's quite a lot of research going on at the moment on that front and if that research identifies genes that pre-dispose people to an acute immune response (which, as I understand it, is what leads otherwise healthy people to develop Acute Respiratory Distress Syndrome), then YGEN would presumably be well placed to commercialise a test that could screen people for that genetic trait.
While it was a very pleasant surprise to see the RNS this morning and it is undoubtedly good news for the company, it is even better news for the UK, as the expansion of testing is a key part of the strategy to defeat this pandemic.
Some frankly laughable numbers bandied around on here today, but the most important thing to my mind is that this will inject cashflow into the business at a time when liquidity is king, so this news both de-risks the core business and adds to the overall revenue numbers (and bottom line), which is a rare thing in the current market.
The fundamentals are exceptional here and today's news expands the product range, while protecting against any bumps in the road from the impacts of Coronavirus. I'm looking forward to the next trading update in April.
Welcome ex-SSXers!
SXX managed to turn an incredible opportunity into a car crash for so many people, so I hope you make back your money here. YGEN has nothing like the scale of SXX, but it has a fraction of the shares in issue and many of those are not in public hands, so if interest picks up, this will move extremely quickly (and has done already this year on virtually no volume at all).
This is a much more mature business than SXX - a wide product range already selling in 60+ countries and eye-watering growth, with new markets about to open up and territories expanding all the time. I see YGEN as being where SXX might have been in 7 years time - zero debt and massive operational gearing that means that a big part of future revenue growth will go straight through to the bottom line.
Potential here is enormous and the absence of debt combined with recent transition to profitability means that any takeover offer (which could easily come) will need to properly recognise the true value of the business, not a distressed sale.
The 30m trade at 17.34 looks a bit weird
Apart from the scale of it, the odd thing is that the price says 5.06, but the value says £2m
£2m divided by 30,000,000 shares = 6.67p per share, not 5.06
Might be a glitch or a mistake I guess, but it looks odd
Re-posting an extract of a post I made over the weekend, as I think talk of a vote in two weeks is wrong. Happy to be corrected.
As I understand it, the proposed takeover is being progressed as a Scheme of Arrangement, which has slightly different criteria to a contractual takeover offer, but which still follows a similar timetable. That key aspects of the timetable from our perspective are that:
- The Scheme Document needs to be published within 28 days of the announcement of the firm offer (i.e. by 17th February)
- Once the Scheme Document has been published, there must be a minimum of 21 days before the Court Hearing and the General Meeting (at which shareholder votes take place).
- The Court then has to sanction the scheme before it becomes effective (the 'Effective date') which could take a further two to three weeks.
- The acquiring company must then settle (pay the monies) within 14 days of the Effective Date.
The above is consistent with the company saying that it expects the scheme to become effective by the end of March. So this means that the vote is still somewhere between three and five weeks away, depending on when the Scheme Document is issued. Clearly, AAL will probably want to issue the Scheme Document as soon as they can, because it narrows the overall window available for any counter-offer.
Another thing to note: The BOD have NOT sold their shares or agreed to sell their shares - they have given an irrevocable undertaking that they will vote in favour of the Scheme at the Court Hearing and Special Meeting. 'Irrevocable' suggests that they are committed to do this regardless of what else may happen (e.g. a better offer), but given that their holdings only represent 2.5% of the company, it's unlikely to be material in terms of the final outcome. It clearly appears, however, to be an endorsement of the AAL deal, although that deal could obviously be adjusted in the light of an alternative offer (so conceivably they could still meet this obligation by voting for a better AAL deal).
As I understand it, the proposed takeover is being progressed as a Scheme of Arrangement, which has slightly different criteria to a contractual takeover offer, but which still follows a similar timetable. That key aspects of the timetable from our perspective are that:
- The Scheme Document needs to be published within 28 days of the announcement of the firm offer (i.e. by 17th February)
- Once the Scheme Document has been published, there must be a minimum of 21 days before the Court Hearing and the General Meeting (at which shareholder votes take place).
- The Court then has to sanction the scheme before it becomes effective (the 'Effective date') which could take a further two to three weeks.
- The acquiring company must then settle (pay the monies) within 14 days of the Effective Date.
The above is consistent with the company saying that it expects the scheme to become effective by the end of March. So this means that the vote is still somewhere between three and five weeks away, depending on when the Scheme Document is issued. Clearly, AAL will probably want to issue the Scheme Document as soon as they can, because it narrows the overall window available for any counter-offer.
I'm not sure what advantage would be gained by another interested party (if any remain) delaying any counter-offer that they were thinking of making, other than that they may need time to work it through, but clearly once the Scheme Document is issued, the clock is really ticking. I'm also not sure whether we should read anything into this being a Scheme of Arrangement rather than a takeover offer - I'm no expert, but it seems to imply a greater sense of collaboration between Sirius and AA, but it may also be preferable to AA in terms of the voting thresholds required.
Another thing to note: The BOD have NOT sold their shares or agreed to sell their shares - they have given an irrevocable undertaking that they will vote in favour of the Scheme at the Court Hearing and Special Meeting. 'Irrevocable' suggests that they are committed to do this regardless of what else may happen (e.g. a better offer), but given that their holdings only represent 2.5% of the company, it's unlikely to be material in terms of the final outcome. It clearly appears, however, to be an endorsement of the AAL deal, although that deal could obviously be adjusted in the light of an alternative offer (so conceivably they could still meet this obligation by voting for a better AAL deal).
One other thought is on why CF has been so silent throughout all of this. Several reasons for this have been amply explored on here, but one which hasn't been put forward is that, for whatever reason, CF needs to distance himself as much as he can from the AAL deal. That would allow him, for example, to be a better advocate for an alternative if that does become available at some point, as he hasn't publicly fronted the AAL deal. I can't put any substance behind this - it's just a thought.
"I have a mate who’s relative works a Sirius’s head office and they have been told yesterday there will be shareholders vote on accepting AA’s offer"
Er, your mate's relative could have found that out ten days ago by reading the Takeover Code.
Achille / Yash88,
Thank you for reaching out, but I'm afraid that, while I completely understand the reasoning of all those involved in initiating this action, I don't feel able to contribute at the moment. This is for two reasons:
Firstly, my view is that such action is premature until we have a clear and definitive way forward from the BOD. Until the BOD communicates anything to the contrary, I believe that the strategic review continues to be ongoing and there are therefore a broad range of possible outcomes for both the project and my investment.
Secondly, on the basis of the above, I continue to hold and therefore haven't personally made a loss at this point. Indeed, in the scenario of a takeover on the terms outlined to date by AA and the Company, I would actually make a marginal profit on my current holding, albeit one that represents a paltry reward given the opportunity cost of what I could have achieved for significantly less risk elsewhere over the time that I've been invested.
So, I don't see that I could reasonably argue that I am going to (or may even be likely to) incur a loss based on anything other than pessimistic speculation about a possible outcome which has no firm basis in fact at this point. Don't get me wrong, I believe that the Company needs to provide a full update on the strategic review ahead of us making any decision about any offer and I am completely against the Company being sold for 5.5p per share, as I believe that such an outcome would be utterly unjust for long term shareholders, given the risk that we have taken to get to where we are. However, I can't actually claim that I have lost any money at this point ahead of knowing what the final outcome is and I also can't say that I feel particularly misled by the Company, based on the (admittedly limited) facts we currently have. That's not to say that the communication couldn't have been considerably better, but I'm not sure how much more they can say in the current situation until they have something else concrete to disclose.
I hope you understand and will watch your progress with interest, while continuing to consider my own position as the situation develops. If my stance alters, I will of course let you know.
1. When asked about what access they had been given to conduct their DD (about 18 minutes in), the response was "We have had really good co-operation from the Sirius team and have had what I call appropriate access for an external party coming in to look at their information. And you’ll be aware from their own announcements that they were running a little bit of a process to look for a strategic partner, so we’ve had good access, but it wouldn’t be appropriate for me to comment further today."
Difficult to tell from this whether their bid has come out of the strategic review, but something about the tone of the response suggested to me that it may not have done i.e. their DD has run in parallel, but it was helpful that information was being made available for participants in the strategic review anyway. Interesting also that he said "were running" (rather than "are running"). That could mean that the process has ended, but on balance from the way it was said I think it just meant that when they were doing the DD, that process was also happening.
2. This huge $27Bn global mining company has been all over the revised development plan and has broadly endorsed it - i.e. the revised plan is the way that they intend to develop the project if they acquire it and the numbers look about right to them. That is a massive endorsement of the plan - the whole point of any interested parties undertaking due diligence is to confirm that what's is being presented is technically viable and that the numbers stack up - and that's just what they've done.
So, we've just been told by a highly credible independent business that they have reviewed the Company's plans and signed off on their DD (and also, by the way, suggested that the shaft sinking risks aren't really a worry to them). Why, therefore, should we have any reason to believe that the other interested parties who were involved in the Strategic Review won't have reached the same conclusion?
There has been a huge amount of gnashing and wailing on here for the last two days, but based on what the Company has actually told us (and putting to one side what we might reasonably think they should have told us), the only facts that we know for certain are that the review remains ongoing (because we haven't been told otherwise) and that we've had an approach about a possible takeover offer at 5.5p. And we also now know that the potential bidder thinks that the revised project plans look pretty robust, so we may get a firm offer by 5th Feb, after which we will have at least a further month to have a vote and decide if we're going to accept the offer.
To me, the risks haven't really changed unless we are definitively told what the outcome of the review is and that there are no other interested parties in the mix. I guess it's possible that the Company doesn't want to say that, as it would undermine our position, but until we hear one way or the other, it's impossible to call.
IBAB, have they moved you to the RNS department?
We would only be offered shares in AAL if they changed the offer from a cash offer to a share based offer. In such circumstance (and subject to whatever constraints there may be about issuing new shares in AAL), the fact that it was a share based offer rather than a cash offer would not make it any more valuable to SXX shareholders (apart from saving trading costs) - they would simply offer the share equivalent of the cash value. Given that most SXX holders probably wouldn't want to hold shares in AAL and that those that do can simply buy in the market with the cash they get, then I think it's unlikely that they will change the offer.
They're not obliged to say they would recommend, but I think they are obliged to say at this point whether they would or wouldn't recommend such an offer (it being the only declared offer we have at this point).
So, in the scenario that I outlined, to say anything other than they would recommend it wouldn't make any sense - if they said that they won't be recommending the offer, they would be going against a viable option that could yet prove to be the best offer on the table and would also be indicating that they believe that they are going to have a better deal on the table, which would undermine the confidentiality (and therefore the viability) of any other discussions that are still ongoing.