Avacta LON:AVCT the AIM-listed biotech company is on the verge of a significant medical breakthrough – if investor sentiment is to be believed.
The Yorkshire-based life sciences company has seen its shares return 123% in one year, and 41.5% year-to-date. The company opened trading today (18th January) at 159.9p and was up to a near 52-week high of 165p in the first three hours. Avacta shares have ranged between 37.99p and 168p over a 52-week period.
The company has a current market capitalisation of GBP411.5m.
Cancer trials
Excitement has been building as the company has been progressing with its Phase 1 study for its pro-doxorubicin (AVA6000) treatment for cancerous tumours. And after good results in 4Q22, yesterday Avacta announced that the trial had met its primary goals.
In fact, given the market reaction – a jump from 137.3p at close on Monday to a peak of 167p today – investors probably believe that Avacta think the trial has gone better than expected.
The results showed that the AVA6000 chemotherapy therapy – which targets metastatic solid tumours – was well-tolerated by patients in the trial, twice as tolerable as the normal dose of doxorubicin, the underlying chemotherapy drug. Moreover, the efficacy of the delivery system, which releases the chemotherapy treatment like a warhead around the tumour, was much higher and safer than traditional chemotherapy treatment with much higher therapeutic levels at source than in the bloodstream.
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Further trials
The patient trial included 19 subjects with advanced or metastatic solid tumours and following the results, the clinical Safety Data Monitoring Committee recommended a continuation to higher dose subjects with the aim of identifying a maximum tolerated dose necessary to inform the dosing levels for the phase 1b and future studies. In an announcement Avacta said it expected to complete these additional tests on further subjects during the 1H23.
Dr Alastair Smith, chief executive officer of Avacta said in the statement: “We’re delighted with the very positive data emerging from the dose escalation study of our lead […] tumour targeted therapy AVA6000. The very significant reduction in the usual toxicities, plus the observed release of doxorubicin at significant levels in the tumour tissue, show that the […] platform has the potential to significantly improve the safety and tolerability of chemotherapies, and other drugs, by targeting their release to the tumour.
Smith continued: “This is extremely encouraging as we work towards realising our vision of ‘chemotherapy without side effects’ to make a meaningful difference to cancer patients’ lives.”
AVA6000 is not Avacta’s only party piece, as the biotech also is developing a platform hosting a novel class of biotherapeutics based on a naturally occurring human protein, focusing on immunotherapies in the fight against cancer. There is potential to combine these two platforms to create effective treatments for all cancer patients including those who do not respond to existing immunotherapies.
Diagnostics consolidation
The company has two centres of operation, its White City, London division focuses on therapeutics and cancer treatments, and its Wetherby-based operation is developing diagnostics product. The company is aggressively pursuing M&A opportunities to consolidate the fragmented European diagnostics sector with the aim of building a substantial in-vitro diagnostics business with a global-reach.
The company acquired Launch Diagnostics, an independent in-vitro diagnostics distributor in the UK, with a track record of more than 30 years, based in Kent and with around 70 staff, in October 2022 for GBP24m on a debt-free, cash-free basis. Launch Diagnostics provides immunodiagnostic and molecular test products, technical support and maintenance to healthcare providers. Earlier in the year, Avacta had sold Avacta Animal Health, for GBP2.3m to Vimian Group.
The current share price is exciting, but Avacta still has a long way to go. In September 2022 the company released its interim results for 1H22. Encouragingly revenues were up to GBP5.5m for the period, compared to GBP1.5m for the corresponding period in 2021. However, the business was still loss-making, reporting operational losses of GBP9m, somewhat down from GBP10.2m losses in 1H21. The company reported GBP17m cash in the bank, down from GBP37m in 2021.
Deshe Analytics rate Avacta as ‘Underperform’. The analyst said: “Avacta Group Plc’s financial reports for 2Q22 showed some underwhelming results. Their negative growth, and value factors indicate that the company is finding it increasingly difficult to produce impressive numbers. Typically, results like these translate into sustained negative momentum and strong downward pressure on stock price.”
Originally listed in August 2006 and by the end of the year was trading at 674.8p. That said the results from this phase of the AVA6000 trial are very encouraging and Avacta could be ‘one to watch’ in 2023.
