Where are we?19 Oct 2022 11:18
So, there was a cash raise after all. So all the invective here about dismissing that was incorrect. That means there was some sort of leak. which presumably (and the presumption could be wrong), was why the short was increased.
However the reason for it and the way it was structured seemed to take us here all by surprise, but not crucially, the market. The market recently pushed the SP to around this figure 3 times in the last month with the short-lived rallies topping out at 111p and 107p (ie not far away before the selling started again)
The reaction so far is that this 95p price is now seen as what the market will pay for the AVCT stock. The lack of reaction suggests to me this whole deal was well known to interested parties. (AS said this had been worked on for the last 12 months).
Right now due to the complete lack of excitement in the stock price, it would seem that this is the price for cash flow/cash burn, stability in the stock.
So given where AVCT is in the trial, where does that leave us?
Has the market really priced in the success of 1a? (give or take 10%), or will there be a re-rate as 1b gets underway?
Given I did not see this deal coming I am trying to think through what might be next. This seems to me to be a Rabbit-Out -Of-The-Hat moment, for most if not all Pi's. Clearly now there is potential for surprise RNS's on (large) orders won through this diagnostic arm.
That to me is quite exciting and indeed why would there not be, otherwise what was the point in buying the company and indeed AVCT make reference to it as to be vehicle to quickly supply its affimer tech to the inherited customer base.
My conclusion is that this deal has bought AVCT time (and cash flow) while the lengthy time of trials has to run its course.
I don't know how the market will react to good data from the first phase of the trial soon to be reported (and it could be that that data could easily be longer coming than we would like due to the uncertainty of the individuals patients health who have very generously allowed themselves to be associated with the trial.)
I think this deal will allow interest to be maintained and therefore a certain amount of activity in the SP to remain rather than it going on to a back boiler and maybe (due only to a lack of news interest) a slightly declining SP has some money is moved elsewhere for quicker returns.
Patience is the order of the day (again) and the picture will be clearer as and when the data is released on the trial and the market's reaction to it.
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