Avacta Share Discussion Threads

[wan] 06/1/2017 09:16

Again to be transparent and at the risk of overreacting, I think the news is note worthy enough for me to buy back some of my recent sells!

[wan] 06/1/2017 08:49

News from Pieris -

PIERIS PHARMACEUTICALS AND SERVIER FORGE STRATEGIC IMMUNO-ONCOLOGY CO-DEVELOPMENT ALLIANCE



Immuno-Oncology Pipline

PRS-332 Preclinical asset -

[lantanatony] 05/1/2017 11:42

Happy New Year Wan,
What a reversal of opinion on Avacta.
You were a big fan when you were selling!

[wan] 31/12/2016 11:45

Since the arrival of Aptuscan/Affimers I have always tried to understand the science and also keep a general eye on developments within the non-antibody market, including competitive offerings and emerging technologies etc. A relatively recent comment that I particularly took note of and one that is perhaps instructive was from Abcam -

Abcam acquires AxioMx to access new growth opportunities and extend antibody leadership

"After an extensive review of alternate scaffold and other in vitro technologies, we are confident that AxioMx has created unique, high-quality, and economically attractive methods to serve customers in research, diagnostic, and drug discovery labs globally,"


Alternatives to antibodies have been around for a very long time with some having been established since 1999, but antibodies are the ones that have flourished and the ultimate commercial breakthrough in therapeutics for non-antibody alternatives has still not arrived.

In non-therapeutic applications antibodies also dominate, with many non-antibody alternatives now suggesting that their offerings are superior to antibodies, yet despite these apparent advantages and being available for a very long time, again a breakthrough in non-therapeutic applications has yet to emerge.

Large players are developing their own alternatives to antibodies and also have a foot in the camp of perhaps some of the more promising alternatives . Non-exhaustive examples -

Roche - Pieris Pharmaceuticals, Anticalin technology platform (and possibly their own peptide technology)
Janssen - Their own alternative, Centyrins (and possibly why they pulled out of Molecular Partners collaboration).
Allergan - Molecular Partners, Darpin technology platform
AstraZeneca - Bicycle Therapeutics, bicyclic petide platform
Moderna - Avacta's Affimers
Moderna - Acuitas Therapeutics (not disclosed by Moderna) (and apparently they are also developing and utilising their own nanopartcle deliver technology).

Moderna may prove to be Avacta's lifeline, but it is far too early to tell (look at how long the others highlighted above have been in collaboration, plus the fact that they usually involved far higher upfront payment than what Avacta received from Moderna).

Phage display technology has become far more affordable and is enabling fast cost-effective development of alternatives to antibodies, and subsequently other non-antibody binding proteins are also emerging quickly.

Anyone with the slightest thought of Affimers disrupting the antibody market will be very disappointed as Antibodies and the plethora of alternatives will almost certainly coexist, but given the wide array of existing and emerging alternatives, the non-antibody market will not be controlled or dominated by any one technology! That's not to say alternatives to antibodies will not ultimately prove successful, but It is likely to be a highly fragmented market as they all have similar attributes, albeit some may command niche markets, which may prove enough financially, but in some situations niche might not provide the level of value inflection ultimately hoped for.

Although I remain open minded, in my opinion it is unlikely that Affimers will prove to be particularly superior to anything else out there, and whilst there might be room for several protein scaffolds across the range of therapeutic and non-therapeutic applications, it appears that there will be far more than just a few alternatives vying for a slice of the same business. Food for thought; is this why Moderna's upfront payment to Avacta was relatively small, especially in comparison to previous deals i.e. there is now plenty of choice (existing and emerging) and negotiations are somewhat one-sided? If so and IF Moderna make any further payments, then these are also likely be relatively small.

Furthermore, several of Avacta's previous collaborations have come to nothing (and did not get a mention in the AR), does this indicate similar in terms of increasing competitive offerings, or that Affimers failed to meet expectations? One would assume that it's one or a combination of both of them.

[spekky] 28/12/2016 22:18

Wan

Thanks for your summation.......sadly I fear you are more likely to be correct than incorrect.
I have been looking for a reason/trigger to reinvest.Having experienced some bad consolidations I cashed in just prior to Avactas'.Looking in from the other side you kind of become "poacher" ,if you get my drift.It would only have taken another Moderna type license (money upfront) and I would have been back in the blink of an eye.....but nothing.....ZERO.
Thank you for your great research and I still hope that you may be wrong.

[wan] 28/12/2016 17:18

LaValmy...One could answer your last question with another question, not just will Avacta benefit but will its shareholders? And one could also arrive at, not if it treads on the toes of IP's other investments in any way, such is the apparent involvement/control.

To be fair I am reading between the lines and perhaps I am putting 2 & 2 together and arriving at 6, but at this stage I don't like what appears, on the face of it, to be occurring. However, the poor investment track record to date is fact and the other fact of where most those investments originated from is hard to ignore. In the interim of finding a good one (investment!) Alastair has been and is being paid very well in my book.

To be ruthless, to date Avacta appears to have been IP's dustbin or to be kinder, recycle bin! However, IP are still Avacta's largest shareholder (albeit reduced) and will thus suffer or benefit according to Avacta's performance, but to date it all looks just a bit too coincidental and controlled from where I am sitting.

[wan] 28/12/2016 16:28

laValmy...I did look into the Curidium acquisition from an IP Group perspective (and their previous names), but I gave up as it just opened more doors on to what is already a disaster in terms of investment. But I would not be surprised if there was some involvement/connected parties.

One of the aspects that has really bugged me though is the constant changing of focus/strategy and with inadequate/poor explanation, which has continued with Affimers.

[lavalmy] 28/12/2016 15:44

Wan

Thanks for the detailed exposition of the links between the two.

The Curidium acquisition, which didn't involve IP, at least on the face of it, was possibly even more murky. Avacta's own advisors happened to be significant shareholders in the target company. Additionally, this statement raised more than eyebrows:

'In view of the requirement for confidentiality and therefore the availability
to Avacta of all relevant persons who are presumed to be acting in concert with
Avacta to provide information, Avacta has not made any enquiries in this
respect of certain parties who may be deemed by the Panel to be acting in
concert with it for the purposes of the Recommended Offer. Any such additional
interest(s) or dealing(s) will be discussed with the Panel and, if appropriate,
will be disclosed in the Scheme Document or announced if requested by the
Panel.'

I have never seen such intentional non-disclosure.

Regardless of all that and the repeated transactions with IP, the real issue is that Smith has no track record of commercial success at all and quite an unenviable one of failure. The shotgun approach to 'what we are going to do with this technology' is mirrored somewhat by the continued acquisition of duds all of which promise to be the next sliced bread.

The stock market is risky enough anyway. I can't see any case that Avacta is investable at any price at all unless and until they demonstrate real commercial progress. Of course, it is even more worrying that having a focus on ubiquitination disappears at the same time as an IP linked company gets busy in the same area. If Affimer's do get to look more promising, will Avacta benefit?

[wan] 28/12/2016 15:28

Lentjes...I could be wrong of course, but either way I never feel that research is a waste of time i.e. you almost always learn something and sometimes it can be rewarding in more ways than the obvious.

Btw, you might be interested in an article in yesterdays FT.

Negligible’ link found between executive pay and performance
Top remuneration climbs 80% over 11 years against return on invested capital up 1%

The correlation between high executive pay and good performance is “negligible”, a new academic study has found, providing reformers with fresh evidence that a shake-up of Britain’s corporate remuneration systems is overdue.

[lentjes] 28/12/2016 14:50

wan

Once again thanks for taking the time to explain your concerns / views. I have read you posts over the last couple of years and obviously you have done your home works and must be frustrated that you now have the feeling its all been for nothing.

Hopefully if they were not already aware of the issues the II's can now take Alastair to task at the AGM on 20th Jan. I would go myself but will be out of the UK.

I only have a relatively small holding which I took a few months ago (mid 80s)so will sit back and watch how this one pans out.

Good luck

[mrangry2] 28/12/2016 09:47

Wan got it dead right with Carclo after doing all his usual research.

[wan] 28/12/2016 08:00

Lentjes...The level of institutional Investment is always an interesting aspect to consider, however, it's obviously no guarantee and like the rest of us they get it wrong too (and sometimes spectacularly!). Also it takes time for a trend to form and perhaps Avacta have been good at selling it will be different this time. And sometimes even the simple due diligence gets overlooked, or at least ignored/forgiven as this time surely it will be different.

Regarding the recent appointments, whilst it does offers a degree of comfort, personally I can no longer rely on that alone as countering the negatives, negatives which I am sure others will have (at least at the back of their minds).

With regard to Affimers going forwards, for me the apparent attributes sits somewhat awkwardly with the lack of commercialisation, so whilst I acknowledge the benefits that Affimers offer, I think there is a disconnect that is not yet evident.

There is in my view a somewhat concerning backdrop emerging for non-antibody binding proteins. Molecular Partners (MP) a listed entity also offering an antibody alternative, perhaps offers some perspective. In 2015 Roche pulled out of a collaboration with MP, and in late 2016 Janssen terminated a collaboration in immunology, leaving MP with just one partner. I will add more to this general aspect shortly.

One area of concern that I flagged to Avacta back in July was that unlicensed Affimers were being offered for sale (which they were unaware of), nearly 6 months later, they are still being offered. So one has to ask two questions, how strong is the IP? And perhaps more importantly how easy is it to produce versions of non-antibody binding proteins? I will again add more to this aspect.
Unlicensed Affimers -

The bonus waiver deserves greater scrutiny, check the values of the new awards compared to the original bonus value. I tend to agree that such an award could not be justified if there was significant news pending anytime soon.

[danatkins] 28/12/2016 05:41

I believe IP group have slightly increased their share holdings and J O Hambro have passed 5%. Wan has raised some interesting points however I believe Affimers have the ability to deliver. Selling now means selling on the lows but of course it can go lower. Next year is make or break concerning my investment here.

[lentjes] 28/12/2016 02:13

wan

Thanks for taking the time to explain the links and your concerns in relation to IP Group's involvement and at the end of the day the facts do point to a conflict of interest. Do you think all the major share holders are in this together including

Henderson Global Investors – 11.8%
Aviva 9.7%
Baillie Gifford & Co Limited – 7.6%
Ruffer LLP – 7.1%
J O Hambro - 4.7%
Fidelity 4.1%
NFU - 3.5%

as I would have thought if not involved then they would surely be aware of the same links and have the same concerns. Also I would expect that the new appointments that have come on board over the last couple of years with reputations to maintain would have something to say if the situation continued

What is your view on Affimers going forward and do you think the hype is also part of another scam by IP ?

In relation to the recent bonus waiver by the BoD my view is that this could indicate either there are no deals on the horizon (otherwise why not tough it out until they could announce the deal) or alternatively they could be taking advantage of the decline in the share price to stock up shares

[poacher45] 27/12/2016 17:15

One for you Wan Oakley Capital Investments. A start up fund but with the difference that the new companies are really starting to pay off. First dividend to be paid end of January and 4.5p being a reasonable amount. Brexit has caused a big revaluation of the companies holdings plus very profitable exits. Peter Dubens the director has recently bought over four purchases 1,784,588 shares. Woodford owns nearly 40,000,000. Asset value is approx 231p per share. What do you think Wan it looks really good to me.

[lantanatony] 27/12/2016 14:07

Lentjes
Sorry about the typos in a rush...

[lantanatony] 27/12/2016 13:20

Lentjes
I feel Wan's post today explains why the influence of IP Group and others like them is a concern.
Avacta seems to be somewhat of a dumping ground for a number of IP's less successful investments.
Wan ,is right to point out this is a reaccruing event!
Why does the Avacta CEO tolerate this? Is it because he has no choice?
How knows ,but one thig is for sure, Avacta is becoming a Bermuda Triangle for IP Group spinins.
Add to that,the Avacta CFO is from Fusion.Is it possible IP Group endorsed his appointment?
It's just a question ......

[wan] 27/12/2016 09:09

To explain why I am uncomfortable regarding IP Group's involvement, it is best summed up by Avacta's chronic performance since listing and the routine destruction in shareholder value.

Anyone can check the history and how virtually 'everything' is connected to IP Group. You won't find it on Avacta's website as it is not exactly a record you want to highlight! A brief summary (which is not exhaustive);

2007 - Avacta Group plc - Acquisition of Oxford Medical Diagnostics Ltd -
As the vendors of OMD include IP Group PLC ("IP Group") which, through its subsidiary company, Techtran Group Limited, is a substantial shareholder of Avacta, the acquisition is classified as a related party transaction under the AIM Rules. With the exception of Alan Aubrey, who is a director of Avacta and of IP Group, the directors of Avacta consider, having consulted with WH Ireland Limited, the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.


Such potential according to the releases..........However, Avacta sold OMD at a substantial loss!

2009 - Avacta Group plc - Acquisition of Theragenetics Ltd
As the vendors of Theragenetics include IP Group PLC ("IP Group") which, through its subsidiary company, Techtran Group Limited, is a substantial shareholder of Avacta, the acquisition is classified as a related party transaction under the AIM Rules. With the exception of Alan Aubrey, who is a director of Avacta and of IP Group, the directors of Avacta consider, having consulted with Daniel Stewart & Company plc, the Company's nominated adviser and joint broker, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

The acquisitions of Theragenetics and Curidium will consolidate strong IP positions in CNS personalised medicine tests and combined with Avacta's own commercialisation skills should help to provide important new technology and services to the healthcare sector.


Most investors will not even recognise these companies, but value is nowhere to be seen!

2010 - Avacta Group plc - Acquisition of veterinary diagnostics company

Avacta is in a position to commercialise immediately the acquired APP tests through Avacta Animal Health's diagnostic testing laboratory services and shortly Avacta will also exploit the acquired assets through the provision of APP test kits suitable for very high volume testing in large commercial diagnostic laboratories. Additionally, some of the APP tests are ideal candidates for point-of-care use in the veterinary clinic, and they also have potential to be delivered at the point-of-care on Avacta's Midas platform which is due for launch in 2010.


Exploit is a bit strong considering that high volume testing has never happened and most will know that the development of Midas (after ridiculous delays) was ditched for a substantial loss!

Note the following -
17 Aug 2007 - IP Group plc (LSE: IPO) (“IP Group”), the intellectual property commercialisation company, is delighted to announce that it has invested £450,000 in its third University of Glasgow spin-out company called ReactivLab Limited (“ReactivLab” or “the Company”) for a 33.2% stake.



So, we won't really know what value has or has not been created until Avacta Animal Health is sold off, which in my view looks increasingly like it will happen. But given the loss incurred from Midas, ultimately I can't see much change coming shareholders way.

2011 - Avacta Group plc – £5.13m placing, acquisition, new equity incentive scheme and notice of general meeting

The Placing is a related party transaction as defined by the AIM Rules, as IP Group (together with its subsidiary undertakings) is a substantial shareholder in Avacta and its CEO, Alan Aubrey, is also a non-executive director of Avacta. The Acquisition is also a related party transaction as IP Group is the ultimate parent undertaking of IP2IPO Limited, a substantial shareholder of Aptuscan.



Add in to the mix Avacta's (and in my opinion IP Groups) value destroying previous deals (from Avacta shareholders perspective), one has to question what we ended up with given that IP were ultimately the vendor of Aptuscan.

Avacta and Glythera announce collaboration to develop novel, potentially highly potent, drug class

Thu 14th Jul 2016
Guess who is a major shareholder in Glythera? So it will be interesting to see what materialises and I reserve judgement.

Recently someone on here raised the topic of Ubiquitin. Recall Alastairs commentary regarding Avacta's focus on Ubiquitination. When was the last time you heard Alastair tout the benefits of this approach/strategy?

I did a lot of research around the science and potential for ubiquitin, but ubiquitination has gone quiet from Avacta's perspective. However, its not so quiet elsewhere! Ubiquigent has been busy -
Ubiquigent is a unique enabler of ubiquitin-system targeted drug discovery
But guess who is a major shareholder in Ubiquigent'? By know you have probably already guessed......IP Group!

The track record perhaps tells us a lot, but I for one have found myself asking what conflicts of interest there might be?

There is one thing you can almost guarantee you will get with Avacta, they will quietly change strategy. Most will recall recently the cessation of development/focus on Microarrays along with building a large catalogue of reagents....but surely we have to ask who ultimately drives these decisions and to suit who?

[wan] 23/12/2016 11:26

Perhaps over the coming week or so, I will find the time to air some of the issues that have been concerning me of late.

[lantanatony] 23/12/2016 11:02

We will miss you Wan.
Can I ask what tipped the balance?

[wan] 23/12/2016 07:37

In the interest of transparency, currently I am finding more reasons to sell than to hold and subsequently I have reduced my holding further over the last few days.

[lantanatony] 21/12/2016 12:33

Yes Wan ,
Competition is a major concern and Avacta need a very good new COO to stem the tied.
But keeping back a small holding maybe a wise move.
Good luck.

[wan] 20/12/2016 17:20

The Drewster...You will note that I mentioned I still have a residual holding which, at this stage, is still large enough for any upside to be rewarding, but as I said, the remaining holding will be fluid and dictated by continued and critical assessment of my investment rationale and indeed what else I am seeing in the market, from Avacta itself, emerging competition in terms of other scaffold offerings (others have been and are being developed) and indeed alternative technologies (Btw, Bicycle Therapeutics concluded another deal for their smaller peptide technology in quick succession!).

[the drewster] 20/12/2016 12:01

Gutted for you wan

Having spoken to some of the researchers using Affimers, I'm quietly confident, add in a strengthening of the board members who understand governance, and I believe the odds of a success are in our favour.

Only time will tell of course, and I wish you the best of good fortune wherever you choose to invest your new found cash pile.