RE: SP target13 Mar 2021 10:35
This is what fincap think after the latest affimer deal:
Diagnostics licence with Biokit
The licence agreement signed with Biokit, for the use of an Affimer reagent in an in-vitro diagnostics (IVD) product, is the first full commercial agreement within diagnostics. It provides further external endorsement of Avacta’s capabilities and serves as a reminder of the broad application of the Affimer platform outside of therapeutics and SARS-CoV-2. This licence is the third non-therapeutics agreement signed (New England Biolabs – life science research applications in 2018 and Astrea Bioprocessing in 2020) and in line with the building momentum of customer evaluations and development programmes using Affimers. We reiterate our SOTP valuation of 310p, with the key near-term milestone (clinical evaluation of lateral flow SARS CoV-2 test) expected around the end of Q1 2021.
Newsflow. Avacta signed a licence agreement with Biokit, to incorporate Affimer® reagents into an undisclosed Biokit in-vitro diagnostic (IVD) product. Avacta will receive a royalty on future sales (low single digit is typical in the industry), once product development has completed and regulatory approval granted. The agreement also has scope to expand the partnership to include other diagnostic targets and future Affimer-based IVDs.
Biokit is part of Werfen, a privately owned company located near Barcelona, with a global IVD presence. Werfen generated revenues and EBITDA of €1.47bn and €345m in 2019, respectively, of which IVD revenues accounted for €1.29bn (growing at c.7%) – so a very relevant and well respected partner.
Strong endorsement for use of Affimers in diagnostics, following an extensive evaluation by Biokit of certain Affimer reagents designed to detect an undisclosed, albeit key analyte. This is a significant milestone for Avacta as it validates the Affimer reagent platform for diagnostics. It is the first commercial licence agreement reached with a third party in the diagnostics market (Avacta received an undisclosed upfront in 2017 from a top 3 diagnostics company to gain exclusive rights to several Affimer reagents), with Avacta understood to have further Affimers under licensing discussions (5 at the time of its fundraise in June 2020).
Valuation. No changes to forecasts and we reiterate our SOTP target price of 310p. Of this, diagnostics (excluding AffiDX SARS CoV-2 rapid antigen test) account for c.20p (c.£50m) of the valuation. There is clearly scope for this to rise and we reference Bioventix (BVXP: £220m market capitalisation) as an example of the IVD licensing model Avacta is pursuing in conjunction with development of its wholly- owned pipeline of diagnostic products.”
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