Avacta: key clinical data due over next 18 months

Avacta’s investment case centres on its proprietary pre|CISION drug delivery platform, which aims to reduce the efficacy/safety trade off seen with many potent therapeutics, thus expanding their reach. The pre|CISION platform is being harnessed to develop novel, highly targeted cancer drugs, and has been validated by lead programme AVA6000 (FAP-Dox), a peptide-drug conjugate of doxorubicin. Early clinical data for AVA6000 have shown selective activation at the target tumour site, resulting in lower toxicities than standard doxorubicin, and improved tolerability. Further AVA6000 data readouts from late-2025 will inform registrational study design in salivary gland cancer (SGC), an orphan indication, with potential for parallel development in triple negative breast cancer (TNBC). Second pre|CISION asset AVA6103 (FAP-EXd), a PK optimised peptide-drug conjugate of exatecan, is designed to improve its therapeutic index. AVA6103, like AVA6000, is highly applicable to certain breast cancer settings. IND-enabling work is ongoing, with Phase I initiation targeted for early-2026. Clinical and pipeline catalysts should provide multiple value inflection points over the next 18 months, with indication-specific clinical proof of concept data key to unlocking partnerships. Our valuation is £446m, or 114p/share.

Avacta’s transition to a pure play oncology biopharma company is approaching completion, pending conclusion of the Coris divestment. The next 18 months should provide multiple catalysts as its pre|CISION enabled pipeline delivers data. Updated clinical results for lead asset, AVA6000 (FAP-Dox), in salivary gland cancer (SGC) are expected in H225, which will include 11 patients from the completed Phase Ia escalation cohorts and c 30 SGC patients in the ongoing Phase Ib dose expansion. Similarly, initial AVA6000 Phase I data in triple negative breast cancer (TNBC) are expected in H126. SGC data could be the spur to a AVA6000 licencing deal, potentially funding the Phase II trials in SGC and TNBC planned for 2026. IND submission for second asset, AVA6103 (FAP-EXd), is on track for late-2025, with plans for Phase I initiation in Q126 and potential for first data in Q426. Management also expects to nominate the first product candidate in the FAP-targeted Affimer pre|CISION programme AVA7100 during H225, followed by IND-enabling work in 2026 and IND submission in late 2026.

Avacta’s long-term aim is to develop and commercialise a broad pipeline of peptide-drug conjugates (PDCs) that employ its pre|CISION technology to deliver potent warheads to tumours that over-express FAP (fibroblast activation protein), a tumour-associated enzyme. The two main pillars of this strategy are progressing the current pre|CISION pipeline (AVA6000, AVA6103, AVA7100), and both product- and technology-based business development activities to accelerate development/commercialisation and to exploit more fully the wide-ranging potential of the pre|CISION and Affimer technology platforms.

Two recent developments are critical to these plans and unlocking value creation. The first, the collaboration with Tempus, has provided Avacta with a better appreciation of the scope of the pre|CISION platform (Exhibit 1), helping define the addressable patient populations and refine indication selection, potentially enabling smarter clinical trial planning using AI. This indicates that optimal patient populations can be identified using co-expression of genes associated with FAP and payload sensitivity, with FAP expression unaffected across line of therapy.

Exhibit 1: Market opportunity with Avacta’s pre|CISION drug candidates

Source: Avacta

The second development, the filing of IP related to the pre|CISION-enabled sustained release mechanism in September 2024 broadens the applicability of the pre|CISION platform and could seed future collaborations that couple Avacta’s technology with a partner’s payload. This new IP covers modifications to PK/PD and the delivery/release of a payload in the tumour micro-environment (TME) or tumour site using proprietary cap/linker technology. AVA6103 is the first programme to incorporate this sustained release technology. Exhibit 2 outlines the advances in Avacta’s pre|CISION chemistry and IP, which expand the range of payloads that can be deployed and can also enable more specific tumour targeting with Affimer molecules. These payloads could include prior clinical failures due to therapeutic index or pharmacokinetic (PK) profile (as with exatecan), and therapeutic classes, such as cancer pathway targeted therapies or immune modulators, where more consistent delivery to the TME is beneficial.

Exhibit 2: pre|CISION IP families align with 3 generations of pipeline assets

Source: Avacta

Steady execution on Avacta’s therapeutics focused strategy should support management efforts to attract global specialist healthcare investors and secure sustainable funding for further pipeline development. As typical with development stage therapeutics companies, additional resources will be required to fully fund the next stage of AVA6000’s development in SGC and TNBC and to move the next wave of pipeline assets, including AVA6103 and AV7100, into the clinic. Last reported cash of £17.3m (end-April 2025) provides a runway into Q126, beyond key data (full Phase I results in SGC) for AVA6000. Avacta is maintaining optionality regarding funding sources, considering licensing or other business development deals as well as the potential for dual listing on AIM and NASDAQ.

The foundational IP around the sustained release pre|CISION mechanism and the better appreciation of the scope of the pre|CISION platform gleaned from the Tempus collaboration provides multiple new opportunities for Avacta to unlock value through generating and developing a pipeline of highly novel tumour targeting drug conjugates, subject to securing additional funds. One potential funding pathway centres on business development, including securing:

• Product-based partnerships: partnering or out-licensing deals with large pharma/biotech companies that have clinical and/or commercial expertise in certain therapeutic areas, or geographies, could help accelerate development of either existing or new product candidates. We note that Avacta is actively seeking a deal for AVA6000, ahead of starting Phase II development in H126; and
• Technology-based collaborations: to date, such alliances for either the pre|CISION and Affimer platforms have typically been outside Avacta’s core area of focus, with current collaborations covering the application of pre|CISION technology in FAP-activated radiopharmaceuticals (POINT Biopharma/Eli Lilly) and the development of Affimer-based therapeutics (through the AffyXell joint venture with Daewoong Pharmaceuticals, and a separate multi-product deal with LG Chem Life Sciences).

Through partnerships, there is also potential to couple Avacta’s pre|CISION platform and a partner’s payload to produce new tumour-targeting PDCs and, if these also incorporate its Affimer technology, Affimer-drug conjugates. Beyond the two disclosed pre|CISION programmes, AVA6000 and AVA6103, Avacta has FAP-enabled over ten other confidential pre|CISION molecules which are in preclinical testing and cover multiple therapeutic classes. The most advanced of these is AVA7100, a FAP-targeted Affimer pre|CISION molecule; little has been disclosed other than the expectation that the candidate molecule will be nominated in H225 and that this programme has the potential to target tumour types with lower expression of FAP.

AVA6000 (FAP-Dox): tumour-specific delivery confirmed

Avacta’s lead asset, AVA6000, has successfully completed the dose escalation cohorts in the Phase Ia study, demonstrating tumour-specific delivery of a potent and toxic payload (doxorubicin) with minimal systemic effects. AVA6000 showed no severe cardiotoxicity despite doses reaching nearly four-times the maximum tolerated dose (MTD) of conventional doxorubicin (75mg/m²). No MTD was reached for AVA6000, with a 310mg/m² dose (equivalent to 209mg/m² conventional doxorubicin) every three weeks selected as the recommended dose for expansion in the Phase Ib cohorts. Exhibit 3 provides an overview of the AVA6000 Phase I trial design.

Exhibit 3: FAP-Dox (AVA6000) Phase I trial design and patient population

Source: Avacta

The Phase Ib dose expansion is ongoing in three indications (with up to 30 patients to be enrolled in each) that were chosen based on the Phase Ia data, the unmet medical need, and their sensitivity to doxorubicin:

• Salivary gland cancer (SGC): 1L or 2L setting, any histologic subtype;
• High grade soft tissue sarcoma (HG-STS): 1L/2L setting, undifferentiated pleomorphic sarcoma or dedifferentiated liposarcoma;
• Triple negative breast cancer (TNBC): 1-3L setting (up to two prior lines of therapy), PD-L1-negative, BRCA wildtype.

The early AVA6000 clinical data and evolving competitive landscape in relevant cancer indications have informed Avacta’s decision to pursue further development in SGC and TNBC, with potential for Phase II studies to start in H126, subject to funding. Avacta’s strategy is to take a rapid route to market by targeting a first approval in an orphan indication with an accelerated approval pathway and attractive pricing, with parallel development in TNBC to later expand the label once the pivotal Phase III reads out. Avacta sees an opportunity for AVA6000 in 2L TNBC, where pricing should be maintained, given that Gilead’s Trop-2-directed ADC Trodelvy (US list price of $20,106 per cycle of two infusions) is likely to move into the first line setting in TNBC following positive Phase III data.

On the strength of the preliminary efficacy data and a more straightforward clinical development pathway, SGC has been chosen as the orphan indication ahead of STS. SGC is a chemo-refractory indication with no defined treatment regimen, whereas doxorubicin monotherapy or combination therapy is the preferred regimen for STS as stipulated by NCCN guidelines. Thus, AVA6000 development in STS would likely require a head-to-head randomised controlled study vs doxorubicin in 1L STS, while in the 2L setting patients will already be affected by doxorubicin-related cardiotoxicity. We note that in 1L STS the efficacy hurdle has also been raised, with the doxorubicin comparator arm in Boehringer Ingelheim’s unsuccessful Phase II/III Brightline-1 trial of MDM2-p53 antagonist brigimadlin showing a longer progression-free survival (PFS) than expected of 7.9 months.

In contrast, AVA6000 has shown promising early efficacy in SGC, with durable responses (one confirmed partial response, four minor responses), a disease control rate over 90% and median follow up of 5.9 months in the 11 SGC patients enrolled in the Phase Ia cohorts (Exhibit 4). Median PFS has not yet been reached (vs median PFS of c 3.5 months for conventional therapy in pre-treated SGC). Additional AVA6000 data in SGC is due late-2025 and will include patients from both Phase Ia (n=11) and Phase Ib (n=30) cohorts. These data will include cardiac safety and long-term follow up, as cardiotoxicity typically appears post therapy, and long-term follow up will enable Avacta to assess the potential to move beyond the current maximum cumulative doxorubicin exposure of 550mg/m². Similar Phase I data in TNBC are expected in H126.

Exhibit 4: AVA6000 Phase Ia data in SGC

Source: Avacta  Note: data cut off April 10, 2025; all patients with the diagnosis of SGC treated at or above the 250 mg/m² dose level, regardless of schedule; median follow up 25.3 weeks.

One partial response (PR) in a SGC patient in the Phase Ib portion of the study has been disclosed so far. A reduction of almost 50% in combined tumour diameter was seen at the first scan of a 69-year-old male with metastatic SGC. This patient had previously been treated with surgery and radiation but had not received prior systemic therapy. We note that patients treated in the Phase Ib expansion cohorts are likely to be more homogeneous in terms of prior therapy and will be treated with the same dose of AVA6000.

Clinical development in TNBC slightly lags SGC, due to a requirement for cardiac safety data ahead of enrolling this cohort plus industry-wide headwinds created by budget cuts at academic institutions impacting clinical trial support funding. Nevertheless, timelines are now back on track (Exhibit 5), with the start of Phase II studies earmarked for 2026 and first potential launch in 1L/2L SGC in 2028/29 assuming successful development and accelerated approval, with full approval in SGC and in 2L mTNBC occurring in a similar 2031/32 timeframe.

Exhibit 5: AVA6000 clinical development plans

Source: Avacta

AVA6103 (FAP-EXd): proving sustained release clinically

Following candidate selection in H224 for second asset, AVA6103, a pre|CISION-enabled PDC incorporating highly potent topoisomerase I (topo I) inhibitor exatecan, preparations are underway to support IND submission by end-2025. Early clinical development plans and timelines are illustrated in Exhibit 6. Subject to funding, the AVA6103 Phase Ia study will initiate in Q126 with initial data in Q426 (which should advance partnering discussions), before embarking on Phase Ib expansion cohorts in early-2027.

Exhibit 6: AVA6103 clinical development plans

Source: Avacta

AVA6103 was designed to target delivery of exatecan to the tumour microenvironment (TME), taking advantage of its potent efficacy profile while overcoming its limitations (severe dose-limiting toxicities, such as neutropenia and thrombocytopenia, and short half-life) by modifying its PK profile and improving tolerability through reducing peripheral exposure of released exatecan.

Preclinical in vitro and in vivo data presented at the American Academy of Cancer Research (AACR, April 2025) in several solid tumour types (colorectal, gastric, melanoma, pancreatic, sarcoma, and TNBC) confirmed the highly specific delivery of exatecan directly into the TME, with up to 85-fold higher levels of exatecan in tumour cells vs plasma, and demonstrated the bystander effect, killing both FAP-positive cancer associated fibroblasts and FAP-negative tumour cells. Importantly, data also provided proof of the pre|CISION sustained release mechanism, with exatecan’s nine-hour half-life extended to over 60 hours. Additionally, tumour growth inhibition was shown in multiple efficacy studies, with durable complete responses and biomarker analysis indicating this was due to on-target effects of exatecan. These data all support the principle of AVA6103, with the next step being achievement of clinical proof of concept in late-2026.

Valuation and Financials

We value Avacta using a sum-of-the-parts model, comprising risk-adjusted NPVs (net present value) for the disclosed pipeline assets, and an indicative placeholder valuation for the pre|CISION platform; more details on the rationale for each are provided in our November 2024 Outlook. The rNPVs are summed and then netted against unallocated operating costs and net cash (excluding the convertible bond, CB, which we assume will be settled in shares). Our valuation has been updated post FY24 results, has been rolled forwards in time, and reflects latest management project timeline expectations. This results in a largely unchanged valuation of £446m (from £449m), equivalent to 114p per share based on the most recent share count following the latest CB quarterly settlement (or 108p/share fully diluted for future shares to settle the CB); an overview of the key assumptions underpinning our valuation are summarised in Exhibit 7.

Exhibit 7: Avacta sum of the parts valuation

Source: Trinity Delta  Note: assumptions include a 12.5% discount factor; £/$ FX rate of 1.25; * blended valuation comprising an orphan opportunity at 60% and a larger partnering opportunity at 20%

Avacta reported FY24 revenues from continuing operations (Therapeutics) of £0.1m (FY23: £2.9m which included AffyXell milestones). On a continuing operations basis, R&D expenses were £14.3m (FY23: £13.1m), largely due to ongoing spend on both AVA6000 and AVA6103. Higher SG&A expenses of £12.0m (FY23: £7.9m) included £2.0m in exceptional items (£1.1m for termination payments and settlement agreements; £0.7m legal and professional fees connected to the strategic shift to Therapeutics; and £0.2m related to the winding down of the Diagnostics division). Together with non-cash items relating to the convertible bond (see below), the FY24 Net Loss from continuing operations was £29.4m (FY23: £29.2m). Revenues from Diagnostics, now a discontinued operation, were £24.3m (FY23: £21.2m) which, together with associated costs, generated a loss from discontinued operations of £23.4m (FY23: £4.1m loss).

At end-December 2024 the £55m senior, unsecured Convertible Bond (CB) issued in October 2022 was held on the balance sheet with a value of £21.8m (FY23: £39.3m). We note prior year restatements related to changes in the measurement of the CB derivative valuation at inception and subsequent reporting dates. This consisted of a debt component of £20.5m (FY23: £24.3m) and a derivative fair value of £1.3m (FY23: £15.0m). The changes in these elements resulted in a FY24 non-cash gain on revaluation in the P&L of £13.7m and a non-cash interest expense of £9.9m. Post period end, there have been two quarterly amortisations, in January and April, which were both settled in shares. Following these amortisations, the CB principal remaining is £25.5m. For the purposes of our model, we continue to assume the CB and coupon are fully paid by October 2027 (ie five years from issuance) and that this will be achieved through issuing shares.

End-December 2024 cash was £12.9m (end-December 2023: £11.5m); this excludes £4.9m (FY23: £5.1m) cash within Diagnostics. Following the divestment of Launch Diagnostics in March 2025, end-April 2025 cash was £17.3m, providing a runway into Q126.

Our updated forecasts post FY24 financial results are now on a continuing operations basis (Exhibit 8). We continue not to include any Therapeutics revenues given the limited visibility on potential milestones. Our R&D forecasts assume some increased investment in FY25e from the FY24 £14.3m base, but a bigger uptick in FY26e as larger trials are initiated. For SG&A we forecast only incremental growth in FY25e and FY26e from the £10.1m base in FY24.

Our updated forecasts are in-line with management commentary of a cash runway into Q126. This is sufficient to reach a number of key milestones, including SGC data for AVA6000 in H225. For the purposes of our model, we include £30m of cash inflows in FY26e (as illustrative short-term debt) which could come from a variety of sources, including potential proceeds from the Coris divestment (where we have limited visibility on both timing and magnitude), licensing deals or collaborations, and debt and/or equity funding.

Exhibit 8: Summary of financials

Source: Avacta, Trinity Delta. Note: Adjusted numbers exclude exceptionals. FY24 cash of £17.8m includes £4.9m held within Diagnostics. FY26e includes £30m cash inflow (as illustrative short-term debt) which could come from a variety of sources.