Avacta Group PLC (LON:AVCT) is leveraging the antibody-like properties of Affimers for Therapeutic and Diagnostic applications across multi-billion dollar markets, including testing and treatment for COVID-19, building a differentiated pipeline and global partnerships. The near-term key is the roll out of its SARS COV-2 antigen tests, including potentially one of the first Point-of-Care tests to-market, offering game-changing commercial scope, sufficient to significantly accelerate the clinical development of its Therapeutic pipeline.
- Collaborations; in FY19 AVCT formed partnerships to progress Affimers in a range of highly promising therapeutic applications, including with ADC Therapeutics, and set up a 48% owned JV with Daewoong Pharma. Moderna exercised its option on a first Affimer target. We estimate these collaborations plus its partnership with LG Chem Life Sciences, present aggregate milestones up to $0.5bn plus future royalties, and crucially, they cover R&D costs of taking first Affimers into the clinic.
- Diagnostics; the division has a late stage pipeline addressing markets with projected value up to $18bn. Affimer-based assays can potentially displace market share from antibody equivalents, largely unhindered by IP. The ability to rapidly generate Affimer reagents against SARS-COV 2 showcases the characteristics of Affimers for Diagnostic use. Even by capturing a small share of the estimated millions of tests per day needed globally to bring COVID-19 under control to help people safely resume normal activities, provides game-changing commercial scope; we estimate annual sales up to $2bn at scale.
- Novel Technologies; AVCT is focused on clinically validating its novel pre|CISION platform based on technology licensed from Tufts University School of Medicine, through a trial start for the first candidate AVA6000 in the next 12-months. Initially this can multiply up the $1bn market for standard chemotherapy doxorubicin on which AVA6000 is based, as well as improve other established chemotherapies. pre|CISION technology is also being used to generate a potent new class of Affimer Drug Conjugates called TMACs. This combines the Affimer and pre|CISION platforms in a single drug synergising the potency of chemotherapy with immunotherapy and can build on the hugely promising field of Antibody Drug Conjugates, predicted to exceed $9bn by 2025.
- Avacta Group has promising Therapeutic and Diagnostics pipelines; we suggest a base case valuation of AVCT of £290m. There is clearly enormous upside from a successful rollout of SARS COV-2 tests. Even executing a fraction of this potential in FY20 would be transformational, providing cash resource to advance its promising Therapeutics pipeline. Applying market metrics it also implies that a £ multi-billion valuation of AVCT is achievable on execution.
