Member Info for StarBright

In simple terms Avacta can’t use the science day to reveal any information “…likely to have a significant effect” [on the share price] without RNS’ing it first.

Looks like J-Pow is going to keep the music playing, @Hurst10.

Especially when his pretend-y quotes are the wrong way around...

I am waiting for the release of HurstGPT.

The statement that IG “…still have 6% short” is easy to misinterpret.

The 6% refers to the percentage of IG’s clients with short positions. As they have between 51 and 250 clients with open positions, we know that they have between 3 and 15 clients with open short positions. That isn’t many!

If we were to make the following assumptions:
1. The NET exposure of IG’s book is just under 3% say 8m shares total
2. Average position sizes are comparable for clients with long and short exposures

then we might estimate that IG clients hold short positions on 8m x 6% or 480k shares. That’s 0.18% of shares in issue.

It’s immaterial. Posters suggesting (repeatedly!) that the holders of these positions can impact the share price are jumping at shadows.

Focus on the picnic, not the wasp…

Some poorly structured thoughts on this...

Over 1000 tickets today with only 15 >£50k indicates that we are seeing a return of retail buying, perhaps driven in part by AVCT's attendant charismatic mega-rampers...;>

The larger trades - and there are enough of these that they can't be dismissed - may indicate that some DFM's have got involved. Perhaps some of those running discretionary-(ish...) accounts for bigger ticket private investors (it is bonus time in the Square Mile..) who like a punt on small-caps. Doubtful any of them will get to TR1 size as quite a few players.

Average traded volume post Jan 17th has doubled relative to the preceding 15 days, with 44m traded. 8m needed for a TR1. Therefore unlikely that a new proper insto investor (eg an active small cap fund or similar) has built a TR1-level position since Jan 17th. 8m would be nearly 20% of flow = very heavy footprints in the market. Happy to be proved wrong on this by a TR1 one morning!

More than one active fund / manager taking positions. Possible, and the best scenario for retail... I still think they will wait to see if the co is looking for funding before launching into the secondary market though.

Trade buyers = unlikely to be building a position ahead of an offer. Not really how they roll given constraints of the Takeover Code. I think they'd look at licensing first also.

Bronte short 0.5% per latest FCA daily update = only 1.35m shares. If they wanted out they'd be long gone without any market impact. So not really a credible reason for the rise. As usual LSE boards overestimate the impact of insignificant shorts. Take a look at Hindenburg on Adani if you want to see what a real short attack looks like: https://hindenburgresearch.com/adani/

Absent exogenous impacts my hunch is that the SP will continue to drift up until the science day.

A credible strategy for traders might be to build and maintain an overweight position until say Feb 20th with the idea of selling this into retail buying when the ramp is really on, thus avoiding any risk that science day doesn't launch the promised rocket...

Investors need only hold and see what turns up...

Yes. Entries in the 2022 accounts will reflect the impact of that funding round. If it was executed above AVCT's original acquisition price, we'll see any uplift reported as a gain on deemed disposal.

Yes - this is good news. Perhaps some choppy price action in the short term, but I think the SP can and will move up from here as the project becomes real.

@Hurst10, AVCT's interest in Affyxell is subject to "equity accounting" in AVCT's books. This is more complex than "carried at cost". Too large/complex a topic for a comprehensive explanation here, but the relevant consideration is that post-acquisition changes in Affyxell's value will be reflected in AVCT's books. This applies specifically to post-acquisition funding rounds, like the one RNS'd on July 21st. If such a round is conducted at a significant premium to AVCT's acquisition cost the "Gain on deemed disposal" is reported. This disclosure requirement will trump any confidentiality considerations so we'll get to know for sure.

TLDR version is that changes in the the value of Affyxell will be reported.

That’s a good article. Thanks for pointing it out.

That might be an unwelcome dose of dox, @Energyshares…

Interesting perspective @mowzerrocks. Do you think that innovative companies (like Avacta) that need investment to deliver amazing advances in medical treatment are better funded by motivated private & professional investors, or by the government? Do you believe that the government will do a better job than you of selecting the best companies to support with your hard-earned cash?

I think that I can and will make better investment decisions than the government (of any political persuasion).

Trade reports are hard to read/interpret. But here’s my take:

- the 225000 (14:04) and the 288078 (16:16) appear to make up the other side of the 513078 (16:53)
- the two 250k trades might be also be a matched buy and a sell.

So 763078 shares changing hands within a tight spread..?

It’s not possible to interpret the prints with any certainty, despite posters here and elsewhere confidently offering their preferred explanations.

The idea that Insto buyers will bid the price up once Killik have finished selling is mistaken. If there was insto interest they'd be doing block trades with Killik now. Better for Killik, and better for the instos too.

Do you really think that interested instos will watch Killik sell bucketfulls at 20p today and then pay 25p/35p/50p+ for the same shares next week....?

I see that Avacta’s most explosive rampers are busy hyping this event up…

But anyone taking even a moment to look at the agenda will understand that this is an event run by the local borough council in conjunction with Imperial College, their partners in an urban regeneration project. It’s promoting the “White City Innovation District” - a worthy re-development of some old office and light commercial buildings aimed at creating jobs and enterprise in a troubled urban location. I offer no criticism of this. The event features academics from Imperial College alongside representatives from some of their shiny new tenants including Avacta. No formal presentations; just panel discussions (the easy option for contributors because no prep is required…) on “collaboration in the life science community”, “AI for good business” and “How do we fund the life sciences?”. No doubt the council chap will focus on access, inclusion, public-private partnerships and all the other latest local council buzzwords.

This is not an event where Avacta are going to release any jaw-dropping news. More likely, Dr McLaughlin will offer some thoughtful responses in the panel discussion before shaking a few hands and making a run for the exit before she gets dragged into the execrable “networking session(s)” which are a highlight only for attendees who don’t have real jobs like hers….

Investors in AVCT need not pay any attention to this event. It’s just the company being good citizens in their new location.

@BlahBlack, there are some relaxations applying to companies <£200m market cap.

The notion that "no-one has noticed" doesn't really hold water. Stiffel - AVCT's broker - have an analyst (Christian Glennie) who covers AVCT. He's an experienced guy, with many years in the healthcare sector. Part of his job is to talk directly with fund managers investing in companies like AVCT; he will have been a busy man since the RNS on Jan 17th. "No-one has noticed" is likely a misguided assumption.

Perhaps a better assumption is that the existing/established institutional investors in the space have heard, but have either drawn different conclusions to the loudest voices here or have decided to wait - for further info, further trial data, further detail on the pathway to commercialisation, further indications from the company regarding capital requirements etc.

Where the science day may have an impact is in attracting closer attention from outside the existing circle. They will be working very hard to get the right guest list, hence the high-profile speakers etc. Mr Glennie will be looking to secure follow--up meetings with II's who have not yet engaged. It will take time for such prospects to move to active participation so don't pay too much attention to rampers promising explosive developments on Feb 23rd. As I have said in previous posts it is unlikely that active institutional investors will wade into the secondary market in the way envisaged by some here and on Twitter. They will not "...scramble for shares..." and drive a multi-bag for existing holders. Their operating assumption will be that AVCT will look for fresh equity capital at some point in the near future, and that such a raise will afford them the chance to get onboard. They will expect the upcoming science day to be - in part - a platform for exploring this.

Of course the risk is that they are all wrong-footed by the announcement of a licensing deal or takeover approach, either of which might prompt a welcome dislocation in the SP. Looking like you can raise equity capital is a good way to flush out such interest. My take is that AVCT is playing a canny game here, keeping open different options so as to maximise its negotiating position should one of the possibilities become serious.

@Buenavista - RDR has pushed IFA's away from investment decisions/recommendations at the level of individual companies. IFA's are experts on financial planning - how much to save, how to use tax shelters etc - not experts on where to invest, as many have found out to their cost! Most IFA's today "outsource" actual investment decision making to discretionary fund managers who run funds designed for IFA clients. This has had the desired effect of professionalising this part of the advice chain.

At the HNWI end of the marketplace, most of the DFM's (Rathbones, Brewin et al) have similarly commoditised their investment offerings, with their "brokers" further distanced from real investment decision making.

But the decline of small cap funds (and the consequent decline in the pool of capital available to small cap companies looking to raise equity finance - the problem to which AS refers) is more to do with poor returns from the asset class and MIFID changes to the research model than it is driven by RDR.

V interesting.

By way of explanation, MIFID changed the way in which fund managers pay for research from investment banks. Historically the cost of research - essentially the phalanx of analysts producing broker notes and helping fund managers better understand companies - was "bundled" with the cost of execution. When a fund manager transacted with a broker they would pay (say) 0.2% of the trade value as commission. MIFID required the brokers to charge explicitly for research, and the fund managers to be able to show an audit trail from research through to decision making. Execution is paid for separately at an "unbundled" rate, say 0.04%. The change was well intended, and I suspect overall has been beneficial as there were many abuses under the old system. But it has had a catastrophic effect on the provision of expert analysis/research on small cap companies (in simple terms it's why the likes Myles McNulty are no longer employed by brokers) which has made it harder for small caps to raise equity capital here.

It's less easy to see how RDR has had such an effect. RDR introduced regulation on how retail intermediaries (IFA's) are remunerated, essentially shifting them to a model where they charge explicit fees for their services rather than taking commission on product sales. It also increased the level of qualifications required - which is one reason why the IFA community were so upset by it. I don't see immediately how RDR has raised the cost of capital for small caps, or made it harder to access to such capital in the UK. Perhaps only because there are fewer small cap retail funds than there used to be, but it's a bit of a stretch to pin this on RDR! I'd be interested to hear Dr Smith's explanation for referring to RDR as he has.

I applaud Dr Smith for raising this topic. CEO's of innovative businesses like Avacta have a strong platform from which to engage on such matters, but generally don't. It's great to see him taking a public stand.

The SP is >50%+ from the recent (Nov 22) placing! So, low when compared to what?

- the closing price the day before the RNS was released..?
- the ATH..?
- the figures suggested by AVCT's more explosive ("...billion dollar RNS..") rampers..?

The market HAS seen the recent RNS, and has - at this point at least - reached a different conclusion to the loudest voices here.

Many PI's are now looking to the science day on Feb 23rd for lift-off, propelled by institutional investors "..scrambling" to get on board the rocket. This is unlikely, as it isn't how discretionary institutional investors work. They won't drive a short-term 5-10x by buying in the secondary market, especially as AVCT has a starting EV of £375m and no meaningful turnover let alone cash generation as yet.

There are some potential catalysts for short-term price action. The announcement of a potential licensing deal or an indication of takeover interest (for example). It is also possible that price-insensitive index fund buying will return, although these - ETF's in particular - can be awkward passengers to carry. All of these are possible, and for this reason it is better to stay invested in order to ensure that you can capture any such price dislocations.

Absent such dislocation though I think it is more realistic to expect the unlocking of value in AVA6k (and other projects) to take time. The company needs to accumulate further/conclusive evidence of safety/efficacy etc on the clinical side; this may require larger scale trials than those conducted to date. Additionally they will need to demonstrate more clearly - either by a licensing deal or a clear pathway to commercialisation - how returns for shareholders will be generated.

AVCT is an excellent candidate for the speculative compartment of a diversified portfolio, and I plan to remain invested whilst value is being unlocked. If I didn't already have my desired position size, I'd be happy to add at the current SP. AVCT should not however be viewed or described as de-risked!