Investor deep dive
Analysts eye more licensing deals for Avacta’s Affimer technology in 2019
Avacta Group - Capital Network: Preliminary Results
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.
Following the release of FY 2017 preliminary results, we have updated our chart showing the key upcoming milestones for Avacta's reagents and therapeutic programs.
As regards the further pre-clinical development of the Affimer's immuno-oncology program, we expect Avacta to focus on additional in-vivo PK and toxicity studies and on the preparation of the tech transfer and CMC (chemistry, manufacturing and control) dossier.
We also note that Avacta's collaborations with Moderna, the Sloan Kettering Cancer Center and Glythera are all progressing according to plan and are due updates over the next 12 months.
With custom Affimers' order book up 91% y-o-y, we would expect that one or more of the ongoing paid-for evaluations will lead to the finalization of further licensing agreements in the coming quarters.
Quick facts: Avacta Group PLC
Market Cap: £26.02 m
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