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Of course a material part of the disconnect might be that 8.9x is nowhere near "...the average industry multiplier".

Evidencing your 8.9x is data derived from an ETF investing in genomics companies (not Avacta's peer group).

Evidencing the 5x I proposed earlier is data derived from four mainstream pharma ETFs, six specialist BioTech ETFs, eight publicly traded companies and medians for the Drugs (BioTech) and Drugs (Pharma) sectors.

Here's some more.

You highlighted the Gilead/Immuno transaction earlier. US law requires the board of a company that is recommending a takeover to its shareholders (in this case Immunomedics) to file a document* known as a “Solicitation/Recommendation Statement”. In this document the board of the company demonstrates that the proposed transaction makes financial sense for its shareholders - specifically that it isn’t being sold at an undervalue. Immuno retained an IB called Centerview to provide and evidence the required supporting analysis, for which Centerview were paid a fee of $58m….

One element of their analysis was to identify and study EV/Revenue multiples for a set of comparable companies. Here are the companies that they identified, together with their EV/Revenue multiples:

Alnylam Pharmaceuticals, Inc. 5.0x ? ?
argenx SE 4.7x ? ?
BioMarin Pharmaceutical Inc. 3.6x ? ?
Genmab A/S* 8.7x ? ?
Incyte Corporation 3.8x ? ?
Neurocrine Biosciences, Inc. 3.8x ? ?
Sarepta Therapeutics, Inc. 2.9x ? ?
Seattle Genetics, Inc. 6.1x ? ?

Here’s Centerview’s professional opinion: “Based on this analysis and other considerations that Centerview deemed relevant in its professional judgment and experience, Centerview selected a reference range of 4.0x to 6.0x 2024E revenue multiples (“2024E EV/?Revenue Trading Multiples”) to apply to the Company’s (i) Wall Street research analyst consensus estimated revenue for calendar year 2024 and (ii) revenue for calendar year 2024 set forth in the Projections, excluding one-time milestones.”

*https://tinyurl.com/427jvzem

It's always been my view that the primary utility of valuations lies in the journey not the destination. Considering/discussing inputs and assumptions (both explicit and implicit) makes for better analysis and understanding, which then drives better investment decision making. Forums like this are at their best when they provide a venue for different people (particularly those with professional experience) to engage in reasoned debate. Very very few people go from bean to cup, from experience of clinical trials to lived knowledge of valuation methods. I am no pharma expert, and continue to learn from @RAH0084 and others here. Pooling the collective knowledge of contributors is our best chance...

#3/2....

...happy to add at this level if I didn't already have my desired position size.

#2/2

Looking harder at the methodology there are a number of implicit assumptions, for which some further allowance/adjustment may be appropriate:

1. Is it reasonable to assume that Pro-Dox will replace 100% of the current use cases for generic Dox? For example, is generic Dox used only on tumours where FAP mediated cleavage (I hope I have the right phrase) is possible? If not, should the USD1.5bn market size estimate be reduced accordingly?

2. Is it reasonable to assume that none of the revenue generated by a dose of Pro-Dox is shared with (or otherwise attributed to) the manufacturers of the active Dox component? If not, should the USD1.5bn market size estimate be reduced accordingly?

3. Is it reasonable to assume that no further debt or equity capital will be needed to fund the remaining trial stages, to fund passage through the complex approval processes applicable globally and to build/access the necessary manufacturing and distribution capabilities? If not, should an allowance be made for this?

I am inclined to:

a. Reduce the addressable market-size by a modest 10% ($150m) to allow for some continued usage of generic Dox
b. Reduce the addressable market-size by 5% ($75m) to allow for the possibility that AVCT won’t retain all of the revenue from every Pro-Dox dose
c. Assume a 50% (have I seen @RAH0084 use this figure in a CoS discussion?) impact on existing shareholders for additional capital requirements by increasing shares in issue to 450m
d. Apply the revenue multiple of 5x discussed above

That gets me to ($1.5bn - $0.225bn) * 5 = $6.4bn, which is £5.3bn / 450m shares or £11.80 per share vs @RAH0084’s £44 per share.

This is a prospective back-of-an-envelope valuation for 100% success (not just FDA approval, but commercial success) and takes no account of the years that will pass before revenues begin.

To get to a valuation for today, let’s assume a 25% chance of commercial success and that we are 4 years (???) from revenue realisation. 4 years at 10% cost of capital = 68% in NPV terms.

£11.80 * 25% * 68% = £2

My view therefore is that AVCT at £1.30 is materially undervalued by the market today (principally CoS related) but I do not think this undervaluation is anywhere close to the extreme level proposed by @RAH0084. It’s not credible to conclude simply that II’s “don’t get it…”. It is more likely that they have a more critical focus on multiples, the time value of money, funding needs and the chance of commercial success.

I can see a path to £4+ per share based on AVA6k ALONE during the next (say) 12-24 months. That would be a 200%+ return, driven ideally by news flow driving up the implied CoS and steady/additional II onboarding including placings at premiums etc. Grey swans include licensing deal(s), trade sale(s), takeover bids etc - all of which are credible catalysts for a positive value inflection.

I am a non-nervous long-term (since June 2020 fund raise) holder, and would be happy t

#1/2

@RAH0084 - in his oft-referenced valuation methodology proposes £44/share if AVA6k is a success. This relies heavily on the 8.9x revenue multiple sourced from a finerva report on valuation multiples, which says: "After a peak in Q4 2020, in Q4 2021 the median EV/Revenue multiple for BioTech & Genomics companies was 8.9x, at its lowest level in 2 years." https://tinyurl.com/5z5pc8fu

The 8.9x revenue multiple is derived from the 41 underlying holdings of an ETF known as GNOM, which invests “…in companies that potentially stand to benefit from further advances in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics, and biotechnology”. GNOM in q4 2021 was perhaps still deflating from the Covid bubble; it’s sp is down by about 40% since then with a contraction in revenue multiples to 4.4x prospective (see below). It isn’t an obvious/good match for Avacta which is fundamentally not a genomics business, so I took a look across a wider landscape of pharma sector and ETF data in order to gain additional insight into revenue multiples.

At the sector level, using US data https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/psdata.html:
Drugs (Biotechnology) P/S 5.78x, EV/Revenue 6.18x (+7%)
Drugs (Pharmaceutical) 4.38x, EV/Revenue 4.85x (+10%)

Morningstar report prospective Price/Sales ratios for mainstream Pharma ETFs. Note that EV/Revenues ratios are a little higher than Price/Sales because of adjustments required for debt financing.

Mainstream Pharma ETFs:
IHE (iShares US Pharmaceuticals) https://tinyurl.com/bdfpe73a P/S 3.01x
PJP (Invesco Dynamic Pharmaceuticals) https://tinyurl.com/bdh83cm3 P/S 2.87x
PPH (VanEck Pharmaceuticals) https://tinyurl.com/bdfbt3vw P/S 0.94x (outlier so care required)
XPH (SPDR® S&P Pharmaceuticals) https://tinyurl.com/bdesvjtk P/S 2.59x

Specialist/Small BioTech ETFs:
BIOT* (L&G Pharma Breakthrough) https://tinyurl.com/24hwcp95 P/S 3.54x
SBIO (ALPS Medical Breakthroughs) https://tinyurl.com/4eefmc4k P/S 1.94x
BTEC (Principal Healthcare Innovators) https://tinyurl.com/y28trm2c P/S 4.16x
CNCR (Loncar Cancer Immunotherapy) https://tinyurl.com/3r4c4e5d P/S 2.73x
HEAL (iShares Healthcare Innovation) https://tinyurl.com/2p9hxjwz P/S 2.96x
GNOM (Global X Genomics & Biotechnology) https://tinyurl.com/3c6ddmky P/S 4.42x

*BIOT is interesting, because its universe is focused on “..companies which are publicly traded on various stock exchanges around the world that are actively engaged in the research, development and manufacture of orphan drugs.”

For wider context, some specific company Price/Sales Ratios:
Roche 3.47x
Novartis 3.46x
AstraZeneca 4.55x
Pfizer 2.31x
AbbVie 4.75x
J&J 4.27x
Merck 4.58x
Moderna 2.99x

Considering all of these data-points, my view is that a revenue multiple of 4-6x is appropriate. I would use 5x for back-of-an-envelope illustrations of potential value.

@RAH0084 - the June 2020 offer circular contained specific provisions worded to allow for increased issuance: “The Company, finnCap and Zeus may, by agreement with each other, increase the amount to be raised…” and “ The Company and the Joint Brokers reserve the right to issue and sell a greater or lesser number of shares…”

The October 2022 open offer circular contained no such provision(s).

Your repeated assertion that "..following the company’s refusal to take the extra £13m from SHs at the OO.." is a misinterpretation or misrepresentation of what actually happened. Avacta did not have the authority to issue more shares than they did.

@RAH0084 - the clause below (from the October 2022 Open Offer Circular) limited the number of shares AVCT could issue to 2,106,980. It will likely have been included because of Prospectus regs which limit the amount companies can raise without publishing a full Prospectus (an onerous task as contents have be verified / attested). There are circumstances where over-subscribed capital raises can result in an increase to the number of shares issued. In this instance that was never possible because of the way the Open Offer was executed.

The assertion "..following the company’s refusal to take the extra £13m from SHs at the OO.." is a misinterpretation or misrepresentation of what actually happened. Avacta did not have the authority to issue more shares than they did.

"The Open Offer will result in the issue of an aggregate of 2,106,980 Open Offer Shares, assuming full take up under the Open Offer (representing approximately 0.79 per cent. of the Enlarged Ordinary Share Capital). Following the issue of the Open Offer Shares pursuant to the Open Offer (and assuming that the Open Offer is taken up in full), Qualifying Shareholders who do not subscribe for any of their Open Offer Entitlements will suffer a dilution of approximately 0.80 per cent. to their interests in the Company, as a result of the Open Offer."

@hamsters18 - yes, I suspect GL was invited to "step up" to create space for Richard Herbert, all in a terribly English super-nice way of course. It will help with credibility given ANGS bumpy history with drilling.

Drilling: Excellent news
Board changes: Look sensible / well thought-through to me
Short-term financing : Prob expensive (I will analyse more closely later) but likely better than another placing

A good RNS for patient holders.

Good.

I didn’t say that SD was a flop @Wyndrum. Only that the content balance may have been mismatched to the audience. I also said that you can't judge an event like the Science Day by looking at the short-term share price impact…

It’s 0.6% so irrelevant. When they want to close they will do so with ease. Ignore the LSE/Twitter fantasists and their pantomime “burn the shorts” Pavlovian nonsense - they don’t have a clue.

The future of ANGS share price will be determined by what happens underground at Saltfleetby and by the 100.4% of holders with long positions.

GSA is known for being a quant house, that is they specialise in portfolios run systematically by computer models. Their (short) position here may be driven entirely by historical price/volume data, TA if you like. They aren’t usually fundamental investors looking to generate returns by understanding companies and their activities.

I wouldn’t get too aerated about this. Hedge funds have been a key part of capital markets for many years, and these guys are just doing what they do. They are (collectively) an important part of the price discovery process, helping capital markets to function more efficiently.

I agree that the SD event contained a partial mismatch between content and audience. Too much in-depth science for the invited fund managers with not enough focus on the road to commercialisation. You could see this quite early on when the Stiffel guys (who are home team) were having to step up and ask questions. The pm's present would have been interested/engaged by the science (and some of them likely specialist life science investors with technical backgrounds) but they will have been expecting more in terms of delineating the commercial opportunities that the science is creating. The medical celeb endorsements were great, but occupied too much time. My sense was that the balance was 90% technical / 10% commercial when perhaps 70/30 would have been a better mix. Avacta is evidently inexperienced at dealing with institutional investors - they should perhaps have had better guidance from Stiffel who are paid to do this...

But you can't judge an event like this Science Day (SD) by looking at the short-term share price impact. You only have to skim this board and twitter to see that AVCT was(is?) a share pregnant with unrealistic PI expectations. What we see yesterday and so far today may be no more than the sorry exit of the get-rich-quick money that AVCT's charismatic mega-rampers worked so hard to attract with their hype and explosive "valuations"... This money NEVER sticks around, and chasing/pumping as the ramperati do has no beneficial effect in the medium to long-term; it just creates noise (see this board) and volatility (see price action).

In the long run this isn't going to matter. The value is still there and the scientific narrative (at least) is better articulated and endorsed. The data shared has provide a material degree of de-risking so far as the underlying science is concerned. That's all good!

Holders with positions sized to their risk-appetite need only hold and wait for further progress. Those looking to add to their positions may have been presented with an unexpected opportunity to add.

No worries. Let’s wait for the late trade reports, perhaps they will contain a clue..

@Push2 - I do know the ins and outs of this, for the sane reason that you know the ins and outs of drilling..! Knowledge gained from professional experience not YouTube videos. Take a look at my posting history if you want a broad hint as to my professional background.

“MM’s can see your stops” is a bulletin board myth, up there with the likes of “Takeovers have to be at or above the highest traded price of the last year” and “A big buyer doesn’t have to do a TR1 if they still have an open order” etc.

These boards are at their best when they allow posters with professional experience to combine their knowledge. I know nothing about drilling, but a lot about investing. Dumpster-diving for pearls as we are here, we should pool our resources.

@Push2 - it doesn’t work like that. The RSP’s see only what is shown to them as orders or requests for quotes. Any platform sharing client info as you propose would be committing a regulatory breach.

@Push2 - the idea that stops are “visible to those at the sharp end” is entirely incorrect, just bulletin board nonsense. They can take a guess using historic price/volume data in conjunction with their experience, but they have no more definitive information than you or I.

That is my view too. They’d find a (valid) reason to delay until Monday morning. No-one wants to drop +ve news late in the last session.

I’d prefer there NOT to be an RNS today now….

What - exactly - do you mean @Hurst10..?