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An interesting observation from Deltic Energy’s results, released today:

“While gas prices have inevitably come down significantly from the unprecedented highs experienced in 2022, as the energy crisis and the war in Ukraine has continued, a structural shift in gas markets appears to have occurred with long term gas prices expected to remain significantly higher than historic averages. While we do not seek to predict commodity prices, nor do our projects require inflated prices, we believe the long term pricing outlook should strongly support ongoing investment in new gas projects.“

Details of the pathway to commercialisation for AVA6k please. Not looking for definitive commitments - rather a picture of the company’s current thinking, plans and expectations.

I met a former colleague for lunch recently. He runs a quant investment team, responsible for >USD40bn in client assets. Five years ago they began using AI within their econometric models, to test potential sources of alpha in multi-asset portfolios. He told me that they have now reached the stage where their AI-engine itself is able to write code that will hunt for and then test alpha sources. It is a second-order system - one that is capable of building/coding de novo AI-driven investment processes without human intervention.

I find this interesting, not scary.

ChatGPT has demonstrated the ability to learn,

Thank you!

Here's precisely what he said:

"Our understanding from the regulators at this point is that, because exactly as you described this is a well understood drug thats been around a very long time, in fact the phase 2 study would be what's called pivotal. That would be the study that would get market approval; you wouldn't need to go onto a phase 3 as you would do with a new drug entity."

There's a little wriggle-room "...understanding from the regulators at this point..." but it's pretty clear that he doesn't expect P3 to be necessary. Also that this is a material advantage in terms of £££ and time.

So.... You'd have thought that this would be an important point to include in the Science Day presentation to "City analysts and fund managers". That it doesn't get a mention in the SD deck is perhaps a prime example of why I describe AVCT's interactions with insto investors as "naive". Even if the company didn't initially think to include it, Stifel should have caught and rectified the omission as they are meant to be providing advice and assistance in dealing with insto investors...

@Gallmat's request for a sourced statement confirming that no P3 will be required for AVA6k remains unanswered... I can't see anything in the SD presentation or recent RNS either way.

This is a material point. I too would welcome unequivocal confirmation that no P3 is required.

Or - if the truth is *may be* rather than *is* - I'd like to know that, and I'd like to understand who makes the decision and when.

Thank you in advance.

In commercial terms, the Prometheus story & deal is perhaps the best analog I've seen for Avacta. PRA023 is their "pathfinder" product at the most advanced stage in terms of trials, and they have others following behind such that the notion of a platform is supportable. Their EV trebled to USD6bn last December on announcement of positive P2 results and a raise to fund P3. They had also held "Science Day" style events in July 2022 and July 2021. AVCT is a year or so behind this..?

The 75% premium Merck propose takes them to $10bn net of cash. Underpinning this appear to be estimated peak annual sales of USD2bn - 3bn for their pathfinder product achieved by 2030, so a simple P/S ratio somewhere between 3.5x and 5x. Sales to start in 2026, so 3 years from now.

@RAH084 asked a rhetorical question yesterday as to whether AVCT's products/platform could generate USD3bn of sales by 2030. This looks eminently possible to me, given continued positive test results etc. So the Prometheus story shows that there is a credible pathway to a USD10bn valuation.

Looking through Prometheus' various IR/Corporate/Conference presentations I can see that they have been quite deliberate and consistent in outlining the addressable 2030 market opportunity. There is a commercial thread that runs through their narrative. My view remains that AVCT has to do more on this front if they are to attract additional engagement and capital from quality insto investors. Such institutional investment is needed, either to fund commercialisation (Prometheus raised USD500m for P3!) or to drive positive price action in the secondary market. My sense is that Dr Smith and his senior colleagues are wary of outlining anything regarding £££ and time; perhaps justifiably so given their past experiences! But setting out expectations is a necessary part of a company's corporate story. If they wish to attract institutional capital - either in the primary or secondary market sense - they will need to overcome their fears and set out more regarding the opportunity and the path to commercialisation.

@360phil - your interpretation is correct. The new options vest (ie become exercisable) once the SP reaches 3p. The exercise price is 1.8p

Sure. The valuation gap between NASDAQ and UK-quoted companies is very real, and recent correspondence suggests that Dr Smith has his eyes firmly on that. It could be that a move to NASDAQ (not a simple task!) is a key step along the way toward the level of launchpad valuation needed to get a USD5bn takeover offer one day.

Takeover premiums are usually expressed as a % of the previous 30 days average closing prices.

According to Biopharmadive, median premiums in transactions for Biopharma companies with MCap >$50m are in the 50% - 74% range. The proposed Merck / Prometheus deal announced on Sunday sits just above this.

As transaction values increase, the incidence of outsize premiums diminishes. Looking at transactions above USD4bn, the highest reported premiums are 122% (Roche / Spark Therapeutics 2019 and Bristol Myers Squibb / Turning Point 2022)

Some more examples here: https://www.fiercepharma.com/pharma/top-10-ma-deals-2022
Some more data here: https://www.statista.com/statistics/1093439/biopharma-company-trade-sales-premiums-us/

So anyone hoping for an overnight 10x doesn't have history on their side!

For AVCT to generate 10x returns from the starting point of its current USD0.5bn market cap, the sp will need to be driven to a materially higher level prior to any takeover. This will require engagement and capital from institutional investors that the company has not yet shown it is able to secure. In simple terms, the path to (say) USD5bn requires AVCT to make "organic" progress toward a launchpad of at least USD2bn market cap before getting itself bought out at a top-quartile premium.

Quite. It looks like they can meet/exceed their return objectives without taking any equity risk.

Small sellers hold the whip hand today; price is down with median trade size <2k shares. If on such a day you are looking to buy in size >EMS then feeding the fish with a succession of small market orders isn’t the best way to go, despite the illusion of control it offers. A better strategy is to place a limit order at an optimistic price point. You may well get filled at a better price than your limit…

From the RNS:

“We are expecting the well to clean up further which is likely to raise that flow rate in the future. Whilst producing through a temporary connection, the new well flowline will be constructed to enable full plateau production this summer.”

What have the Romans ever done for us, @numptytrader…?

@Mr008: “The stock price of Angs now depends on MM's interpretation of the RNS.”

Nonsense.

The stock price of ANGS will be depend upon investor’s interpretation of the RNS. The market makers will do no more than hunt for the price level at which the most volume is generated in two-way trading.

Spot on @darientaylor.

A bumpy ride for those who’ve taken the equity risk, but the resulting situation is even better than that envisaged back in October 21. Well done to all at ANGS.

@HITS - without the use of a time machine, they can’t do more than say what testing has shown and what they believe the sidetrack is capable of…

Here’s what they said last year when production (re)started: “ The Company has achieved flow rates from well A4 of 4 mmscf/d (million standard cubic feet per day) at approximately 55 bar and well over 4.5 mmscf/d from well B2 at approximately 45 bar which, taken together, greatly exceed the 2017 combined shut-in rate of 5 mmscf/d from those wells as advised in the Company's presentation of December 2019 and in subsequent communications.”

At some point @HITS you might show a little grace and acknowledge the success that ANGS have achieved here.

An interesting quote from an FT article on this:

“Merck is either optimistic or desperate if it is willing to pay $5bn more than Prometheus’ valuation three days ago. But it has the funds. Merck’s market capitalisation is $300bn and it has more than $13bn in cash. Its shareholders understand that these gambles are required ahead of blockbuster drugs rolling off patent.

Large cash balances along with stable businesses in a wobbly economy allow pharma companies to pursue such deals. Prometheus comes just weeks after Pfizer spent $43bn acquiring SeaGen, a maker of cancer treatments, previously pursued by Merck. Late last year, Amgen bought Horizon Therapeutics for $28bn.

Biotech and life science valuations have moderated since 2021. But the chance for premium buyouts has not disappeared.“

Everyone likes a Florida conference in April. An expected perk for senior employees of US corporations. Every golf course within a 20-mile radius will be booked solid...

There was competition to purchase Prometheus, according to CNBC who also said the USD10.8 billion deal appears to be highest seen for any company at Phase II.

Credit due to their CEO & team! I wonder if they ever held a science day for potential investors...