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https://www.londonstockexchange.com/news-article/DEST/clinical-development-update/16310920
Good news that XF-73 dermal is moving towards the clinic. The real value catalyst remains a commercial deal for XF-73
Today’s AVCT announcement gives us increasing confidence of imminent, positive commercial / funding news. On positive news the market currently doesn’t allow for slow rises, it just gaps up on open so we are adding slightly to the AVCT position this morning.
We have also added to the position in BSF for similar reasons
https://www.londonstockexchange.com/news-article/AVCT/appointment-of-christina-coughlin/16295665
An excellent move by the company. Christina has clearly impressed and added value to the clinical strategy, perhaps responsible for the AVA6000 study re-design and overall acceleration of the FDA approvals. Obviously Christina has decided she wants to be ‘in’ rather than just a temporary consultant. The company has allowed, by its standards, quite incendiary language for them about the next frontier of oncology and game-changing platform, just as the company is expected to start announcing commercial deals
Replay of a recent presentation with the CEO giving additional colour
We recently had correspondence with the Chairman to understand when they might follow up on the promised investor presentation to avoid having to organise another EGM. He responded that progress is being made and I followed up with the below email to try to encourage concrete action which has been noted.
“I and many other shareholders have shown a great deal of patience over a number of years. There is no thought of an EGM for a general update but to propose resolutions, specifically the removal of James and Lisa as directors for the reasons previously highlighted. In the spirit of always trying to be constructive I offer some thoughts on what I believe would go a long way to keeping investors calm. I hope that you will take these as the feedback of supportive shareholders and not an attempt to teach you to suck eggs!
The Azerion settlement is undoubtedly a good result and a new commercial agreement with them was a positive surprise for everyone. However, investors don’t fully understand the implications of the EUR3m cash. There is confusion as to whether it is a lump sum to be received imminently (ahead of the new commercial agreement kicking in) or in tranches over a period of time. This is obviously relevant for the other key confusion relating to the funding from Irdeto. With the CLN and share consolidation announced in mid-Oct and no announcements since then, it is unclear whether the first £0.6m tranche was drawn down and whether any further tranches will now need to be drawn following the Azerion settlement. While the share consolidation has no impact on value, confusion around whether it will still happen (and when) muddies the waters for investors who perhaps don’t all fully appreciate the mechanics of it. You may well have seen that when the announcement was made, many investors believed it was a dilution and not a consolidation. It is difficult for investors to determine a reasonable valuation when they can’t make a reasonably simple determination of likely further dilution.
The question of further dilution then leads to the current run rate cash burn. In June of last year, it was stated that run rate cash costs would be reduced by 40%. With the Venatus agreement it is assumed that, in addition, the entire US team payroll has reduced to zero as well. In H1 last year, reported cash costs were c.£6m, equating to £12m for the full year. A 40% reduction takes that to c.£7m and then perhaps a further £1m saving comes from US headcount reductions to leave the company with a £6m cost base? That figure may now be even lower? While engaged shareholders can make these estimates, the market at large needs the numbers spoon feeding to them as it has little time for anything beyond the obvious.
Everyone understands confidentiality with clients, but investors don’t understand why clarity can’t be provided around the resellers (Venatus, Azerion, Atplay and others) and the revenue / gross margin model of these and potential licensing agreements. With high margin licensing revenues and 30% gross margins (?) through advertising resellers there is an achievable revenue number that shareholders can calculate to take a view on the breakeven point. Investors don’t need the finer details of individual clients if this simple maths can be explained clearly, which it has not yet been.
I look forward to a company presentation and hope that it will be presented by management (perhaps on Investor Meet) with a Q&A. I fear simply publishing a corporate presentation without investors being able to see and question the CEO will only exacerbate the disillusionment with management. Simply the announcement of a date for this will create positive sentiment from shareholders still waiting for this from September. There is also expectation of a tangible outcome from the review of board roles (including the advisory board) and advisors that was announced. Confirmation that the VST transaction has completely ‘gone away’ would also be useful to allow investors to focus on the core business.
It remains a concern that shareholder input and feedback is regarded as a governance issue and not an opportunity. Governance is the job description of the board. If someone is consistently raising concerns, leaders don’t ignore them and allow those concerns to become the generally accepted narrative. They bring them in, listen to their unvarnished views and then give them the job of fixing the issues. To succeed, that person must instantly switch to being a cheerleading advocate.
I genuinely believe investor trust and confidence can be easily restored with some simple, effective communications to provide clarity. All of the above can be answered and addressed today. Shareholders struggle to understand why there is a continuing reluctance to be transparent and engage when it is so easy. In the absence of clarity or information, it is human nature to fill the void with speculation and negativity. Surely everyone agrees that an improved valuation is beneficial for the company and provides options”.
https://www.londonstockexchange.com/news-article/DEST/year-end-business-update/16274804
Nothing new in this update which appears to be a “please be a bit more patient” marker to the market after some share price weakness when a deal wasn’t announced by the end of last year
https://www.investormeetcompany.com/meetings/review-of-the-ava6000-clinical-trials-phase-1a-data
Q&A from the December shareholder presentation published. Obviously there is a need to read between some lines but this once again highlights the potential value of the platform that remains seemingly well hidden from the market. Commercial deals licensing the Pre-Cision platform to generate non-dilutive funding to advance its own lead assets are the catalyst the market likely needs to take notice
https://www.londonstockexchange.com/news-article/AVCT/als-6000-101-phase-1a-study-data/16249496
https://avacta.com/wp-content/uploads/2023/12/AVA6000-Data-Release-13-December.pdf
Continued positive news from Avacta with their detailed Phase 1a data release, confirming that the PreCision platform is working as intended while positive signs of efficacy have been seen even during the safety phase of the trial. With this release of data we hope to see some commercial activity in the coming months related to the PreCision platform, validating its value and providing non-dilutive funding for continued development
We have added a small additional position to MKA on the back on this morning’s news and in anticipation of news on the Malawi MDA which government officials had targeted for December execution
Excellent news for MKA representing a major milestone in their recycling technology to reach commercial scale production. They also note a potentially significant uplift in future production targets from 100 tpa to up to 1,000 tpa
A starter position has been added to new idea Destiny Pharma in anticipation of XF-73 partnering news while recognising there will likely be opportunities to add lower on price drift from any extended period to additional news
https://www.islesofscilly-travel.co.uk/wp-content/uploads/2023/11/HW-Approach-17-November-2023.pdf
Quite a cheeky offer from HARL! Essentially telling them they’re coming to compete them out of the market so will offer them a 20% discount for their shares before they do. This probably falls well under the definition of ‘punchy’ and have to admire the confident approach
Following interim results this morning re-affirming our view of the levels of undervaluation, we have added small positions to IG Design and Brickability. We have also removed the small position in Character Group given the limited opportunity to drive the required change in governance that might make the company investible.
I have been surprised by the almost complete lack of concern amongst shareholders about the management and governance of the business. The board and management have ignored all requests for a discussion on the business, the major shareholders are unconcerned about remuneration levels and governance red flags, and the wider shareholder base appears entirely inactive despite efforts to engage. Given the shareholder base and apparent wide shareholder apathy towards the company, there seems little value in pursuing change at a company where shareholders have no apparent appetite for such change. Given the the very real concerns we have over governance, the small model portfolio position will be released in favour of our numerous compelling ideas
A solid performance given the economic backdrop but with continued caution on newbuild volumes in the near future. The latest acquisition and strong performance of the non-brick divisions reduces the company’s reliance on brick while even that division is diversified from private housebuilding. The long term fundamentals continue to highlight the undervaluation.
