Despite the favourable reaction to the announcement of the Bach Biosciences agreement (stock up 35%), Avacta’s market capitalisation is still much lower than biotech peers that have unique protein-based platforms and drug candidates in the clinical stage, where Avacta is on track to be by 2020.Full report is available via Capital Network website
Avacta’s FY 2017 Preliminary Results: Reagents and therapeutics programs all on track
KEY INVESTOR MESSAGES
- Avacta’s Affimer® technology is a proprietary alternative to antibodies with key technical and commercial benefits
- Avacta is building a pipeline of Affimer drugs for immuno-oncology and growing revenues based on a licensing model for Affimer reagents
- Excellent progress in both parts of the business during the reporting period substantially de-risking the opportunity
- A pipeline of potential valuable and licensable drugs is being built and the company is targeting first clinical trials in 2019
- A sum-of-the-parts model now suggests an equity value four times the current market capitalisation
On the 4th October, Avacta Group Plc (LON:AVCT) has reported preliminary results for the fiscal year ending July 2017, including a detailed update on the business.
Overall Avacta Group Plc (LON:AVCT) is delivering according to management's guidance and has made significant progress in both the Affimer reagents' business and the Affimer therapeutics programs (please refer to our initiation report of March 2017 for an overview of Avacta's Affimer technology and business strategy).
As regards the Reagents business, Avacta Group Plc (LON:AVCT) announced in April 2017 that, after a trial period, they have granted a leading diagnostic company exclusive rights to specific Affimer reagents. Although financial details weren't disclosed, this was the first time that Avacta signed an agreement of this nature, representing an important inflection point in de-risking the reagents business.
As such we remove any risk adjustment from our valuation of the Affimer reagents business, which we now value approx. £140mil, from about £110mil before this deal was signed.
- Key inflection point: topline data readout from the PhaseOut DMD phase 2 trial in Duchenne (DMD) expected in 3Q 2018
- Imminent start of a pivotal phase 3 study for ridinilazole in C. difficile infections (CDI)
- Recent Discuva acquisition reinforces novel antibiotics discovery capabilities
- Current valuation (market cap of c. $165 mln) undemanding given the stage and commercial potential of Summit's lead programs
- Genedrive's PLC (LON: GDR) HepC test just entered the commercial phase as partner Sysmex launched in EMEA and APAC territories in recent weeks
- Re-design of the mTB test in progress, launch date to be announced in the next fiscal year
- Discussions for the disposal of the Services business entered an exclusivity period, expect an update by the end of June
- Careful cash management with a £3.9mln cash balance at the end of February, we would expect a capital raise in the second half of calendar year 2018
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