On Wednesday 30th October, Avacta Group (LON:AVCT), the cancer treatments and diagnostics life sciences business, will be presenting a live Research & Development Spotlight entitled Next Generation of pre|CISION Medicines.
It is expected that there will be keen investor interest to hear what the group has to say about its pre|CISION platform.
The Business
Avacta Group is a UK-based life sciences company focused on improving healthcare outcomes through targeted cancer treatments and diagnostics.
It has two main segments: a clinical stage oncology biotech division harnessing proprietary therapeutic platforms to develop novel, highly targeted cancer drugs, and a diagnostics division focused on supporting healthcare professionals.
Avacta Therapeutics: which is the clinical stage oncology biotech division that is harnessing the proprietary pre|CISION platform technology to develop novel, highly targeted cancer drugs.
The pre|CISION™ platform is a highly specific substrate for fibroblast activation protein (FAP) which is upregulated in most solid tumors compared with healthy tissues.
Avacta Diagnostics: which focuses on supporting healthcare professionals and broadening access to diagnostics, has two business units – Launch Diagnostics and Coris Bioconcept.
Launch Diagnostics is a well-established sales channels in the professional, centralised hospital laboratory testing market in the UK and France.
Coris, based in Gembloux, Belgium, develops, manufactures and markets rapid diagnostic test kits, mainly lateral flow tests, for use by healthcare professionals.
In the highly competitive diagnostics market, Avacta’s proprietary Affimer® platform has the potential to provide differentiated immunodiagnostic products to gain competitive advantage and grow market share.
This Week’s Interim Results
Last Monday morning the group reported its Interim Results for the six months to end-June, showing much in line with expectations, with revenues off slightly at £11.3m (£11.9m) and running at a first-half loss of £12.5m (£11.5m).
The Diagnostics division revenues advanced to £11.2m (£9.9m), however, it must be noted that the company has started the process to divest this side of the business, in order to maximise value for shareholders, while ensuring its focus as a therapeutics-focused company and support its appeal to specialist international investors.
After the £31.1m cash raise in March this year, the group ended the period with £32.5m cash and cash equivalents, against £26.6m at the same time last year.
The first six months of the year saw a number of managerial and operational changes, while its financial position remains in line with the Board’s expectations.
Management Comments
New Chairman Shaun Chilton stated that:
“Over the four months since Chris Coughlin’s and my appointments, we have made significant progress on key strategic priorities.
Alongside the Board and wider team, we have carried out a detailed review of all the Group’s operations and financials with a focus on prioritizing further investments in therapeutics, including the acceleration of the AVA6000 clinical trial enrolment.
We are very encouraged by the potential of the innovative medicines in the Avacta pipeline which we plan to present at our live R&D Spotlight in October focusing on the Next Generation of the pre|CISION™ platform.
We have commenced a process to divest the Diagnostics Division and have started to receive indicative offers.
Our longer-term financing strategy is being formulated and includes a potential dual listing of the Company on NASDAQ, which the Board sees as a key strategic option for the Company.”
Avacta aims to leverage its proprietary pre|CISION™ platform to develop innovative oncology therapies that make a significant difference to cancer patients’ treatment experience and outcomes.
The pre|CISION™ platform has the potential to enable patients to achieve improved outcomes with fewer side effects by leveraging the tumor specific enzyme Fibroblast Activation Protein (FAP) to protect normal tissues from toxic drugs.
The group is poised to move into the next stage of development, implementing these findings of this drug release mechanism across our innovative pipeline.
New CEO Christina Coughlin, MD, PhD, stated that:
“We are seeing notably positive progress on our drug development candidate AVA6000 with the completion of the Phase 1a trial with no maximum tolerated dose and opening of the RDE expansion.
This novel peptide drug conjugate continues to demonstrate a highly favourable tolerability profile and robust preliminary signs of efficacy, with several durable responses, as it moves through clinical development.
The AVA6000 data in the clinic has led to a growing confidence in the pre|CISION™platform and its potential for patients.
Our next generation programs will leverage the pre|CISION™ platform as a foundation for other tumor-specific warhead delivery systems.
This platform will underpin our wider clinical strategy and our ambition of bringing these novel cancer medicines closer to patients and delivering value for shareholders.”
Analyst Views
At Trinity Delta, its analysts Lala Gregorek and Philippa Gardner consider that Avacta is transitioning into a developer of innovative highly targeted specialist oncology products.
They state that once the Diagnostics division has been divested, Avacta will become a fully focused biotech company.
That is an important element of the strategy to broaden Avacta’s appeal to specialist healthcare investors via a potential additional listing on NASDAQ, securing sustainable funding for further pipeline development.
Trinity Delta concludes by noting that
“pending the October R&D event in London we maintain our Avacta valuation of £675m, equivalent to 188p/share.”
In My View
There is a lot going on within this £161m capitalised group.
The recent corporate shake-up appears to have been initially beneficial, and if the divestment goes ahead, and a NASDAQ quote is achieved, this group could well be significantly improving its 45.5p share price within months.