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Avacta Group - Maximising Affimer's potential across therapeutics and diagnostic applications

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A licensing-driven business model to maximize Affimer's potential across therapeutics and diagnostic applications

KEY INVESTOR MESSAGES

  • Preliminary results for the financial year ending 31 July 2018 reveal a company on track to achieve key development and licensing milestones in the near term
  • Lead in-house immuno-oncology programs to produce first in-human data by 2020/2021
  • Affimer-drug conjugates (AfDC) co-developed with Tufts University to deliver in-vitro PoC in 2019
  • Multiple Affimer reagents' partnerships could be announced over the next twelve months
  • After recent fundraise the Company is well funded for the next 18-24 months
  • Avacta's market cap well below comparable peers, key inflection points over the coming 2-3 years point to significant upside

RECENT PROGRESS LEAVES US OPTIMISTIC ON KEY INFLECTION POINTS TO BE MET RIGHT ON TIME

Over the last year or so, management has delivered significant progress in bringing their Affimer platform into to the commercial stage, across both therapeutics and diagnostic applications.
 
This (and the recent fundraise) leaves us confident that Avacta is on track to meet key development targets over the next 2-3 years. Their main therapeutic programs (in-house PD-L1/LAG3 bispecific Affimer and Affimer-drug conjugates co-developed with Tufts University) are on track to deliver key data points between 2019-2021.
 
As part of a broader portfolio development plan, several partnerships (Moderna, FIT Biotech, OncoSec and Iksuda Therapeutics) continue to progress well and may certainly bring a healthy degree of risk-diversification and upside to the investment case over the coming years.
 
The Affimer reagents business is being built around external technology evaluations, of which many are in progress, and an internal pipeline of assays readily available for license. From this basis, we expect Avacta to announce multiple royalty-bearing deals over the coming months.

 

The addressable market for Affimer-based targeted biologic therapies is already worth in excess of US$75bn and is growing rapidly. Despite no shortage of competitors, Avacta's Affimer platform’s unique features and recent development progress (e.g. increased ability to fine tune Affimers' half-life) put the company in a favourable position to start finalising partnerships with big pharma in the near term (Avacta has one of the only two single-molecule bispecific PD-L1/LAG-3 inhibitors).

recent portfolio development progress, Avacta’s market capitalisation is still significantly lower than biotech peers with unique protein-based platforms and drug candidates in the clinical stage, where Avacta is on track to be by 2020/2021.

As investors are likely waiting for a tangible proof of Affimer’s commercial potential, either in terms of a collaboration with big pharma or the first in-human data, the current stock price may provide an extremely attractive entry point for those who want to maximise their upside, already persuaded by Affimer's strong scientific rationale and pre-clinical evidence.
 
In this respect it is also worth mentioning Ablynx’s US$4.8bn takeover by Sanofi in January 2018. The valuation of Ablynx, the leading non-antibody therapeutic platform, at the time of the deal reflected, of course, the fact that their lead drug was already under regulatory review, but a large portion of it was in our view related to the value attributed to their rich pipeline and their platform technology called Nanobodies. It is well known that Novo Nordisk was also looking at Ablynx and therefore it is likely that they continue to have interest in an alternative therapeutic platform like Avacta’s Affimer.

 

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