The COVID-19 crisis is throwing up all sorts of possibilities in the small cap market as various biotech and pharma enterprises seek to develop treatments for the virus. Many have already travelled a long way down the road in terms of developing respiratory treatments, but testing is also increasingly being seen as critical if we are going to find our way out of the coronavirus maze.
Avacta is the latest London-listed stock that has been garnering attention from investors. It is teaming up with Cytiva, previously known as GE Healthcare Life Sciences, to develop a test that can diagnose COVID-19 in just a few minutes. This would facilitate mass testing for the virus, which is what is needed.
The global testing campaign has been hampered by a lack of speedy tests that can yield a result on site, and also by unreliable results from the latest batch of new solutions. We have already seen how in Korea poor testing has led to claims that patients who have recovered from the virus have seemingly developed it again.
Avacta had already travelled some way down the road already with development of a reagent that can detect COVID-19 and will now be working with Cytiva, which has a point of care test strip platform.
“Importantly, the test will indicate if a person has the virus now, whether they are showing symptoms or not, and will do so in minutes, in situ, with no need for laboratory equipment,” said Dr Alastair Smith, CEO at Avacta Group. “Unfortunately many millions of people around the world will ultimately become infected and it is likely to be an annual occurrence. There is a clear and urgent need for a test that can be carried out quickly in the community to limit the spread of the virus and track its progress.”
Timewise, the company says it plans to have developed Affirmer reagents for a COVID-19 test by the end of May which can be transferred to Cytiva and other potential manufacturers around the world.
Avacta shares shot up more than 200% from its 7 April close of 23.20p to hit a high of 71p on 15 April. At the time of writing Avacta stock was trading in the 65p range. Long term investors in Avacta will know that the company still has some ground to make up from its high of £1.22, a level it has been retreating from since January 2016. However the stock is now trading at levels not seen since January 2018.
The company has also just issued a further 20.8m ordinary shares at 18p / share as it sought to raise a further £5.75 million to fund a number of other projects, among them the development of an Affirmer diagnostic testing process for licensing out and further commercial progress on therapeutics and diagnostics.
Avacta said that it did not expect revenues to be materially affected by the COVID-19 outbreak and that it foresaw only marginal delays to its testing programs. It is also actively involved in developing further strategic partnerships, including with LG Chem and ADC Therapeutics.