Avacta continues its transition into a pure-play therapeutics company to advance its pre|CISION-enabled peptide-drug conjugate platform. The expanding pipeline has the potential to improve the therapeutic index of many highly potent yet systemically toxic oncology drugs. Progress has been tangible with early efficacy and safety data from the Phase Ia salivary gland cancer (SGC) dose escalation cohort of lead asset AVA6000 (FAP-Dox), and confirmation of dosing and ongoing enrolment into Phase Ib expansion cohorts. Candidate selection for a second pre|CISION programme has completed, with AVA6103 (FAP-EXd) on track to enter the clinic in early-2026. The disposal of Launch Diagnostics for £12.9m sharpens the therapeutics focus, broadening Avacta’s appeal to global specialist healthcare investors, and extends the cash runway into Q126. Further progress and positive clinical data over the next 24 months should provide multiple value inflection points. Our updated Avacta valuation is increased slightly to £449m/$561m, or 119p/share.
| Year-end: December 31 | 2022 | 2023 | 2024E | 2025E |
| Revenue (£m) | 9.7 | 23.2 | 23.8 | 4.3 |
| Adj. PBT (£m) | (15.1) | (20.1) | (23.3) | (28.2) |
| Net Income (£m) | (28.2) | (23.6) | (29.8) | (41.2) |
| Adj. EPS (p) | (36.6) | (24.9) | (33.6) | (43.3) |
| Cash (£m) | (14.3) | (9.1) | (10.3) | (11.3) |
| EBITDA (£m) | 41.8 | 16.6 | 16.9 | 1.0 |
Update
18 March 2025
| Price | 41.94p |
| Market Cap | £156.6m |
| Enterprise Value | £129.2m |
| Shares in issue | 376.2m |
| 12 month range | 31.1p-86.4p |
| Free float | 66.5% |
| Primary exchange | AIM London |
| Other exchanges | N/A |
| Sector | Healthcare |
| Company codes | AVCT.L |
| Corporate client | Yes |
Company description
Avacta is a clinical stage biotech focused on the novel pre|CISION platform to generate peptide drug conjugates to target delivery of toxic payloads into the tumour microenvironment, which has the potential to expand the reach and reduce the systemic toxicities of highly potent cancer therapeutics. Lead programme AVA6000 is in Phase Ib, with multiple next generation candidates in preclinical development.
Analysts
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043
Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042
Table of Contents
Avacta’s investment case is centred 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 in 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 24 months, with indication-specific clinical proof of concept data key to unlocking partnerships. Our valuation is £449m, or 119p/share.
Avacta is executing steadily on its therapeutics focused strategy as it seeks to enhance its appeal to global specialist healthcare investors and secure sustainable funding for further pipeline development (Exhibit 1). Existing funds (last reported as £32.5m at end-June 2024) provide funding through key value inflection points for lead asset AVA6000, with cash proceeds from the Launch Diagnostics divestment extending the cash runway into Q126. As is typical with development stage therapeutics focused companies, additional resources will be required to fully fund the next stage of AVA6000’s development and to move the next wave of pipeline assets, including AVA6103, into the clinic. Avacta is keeping options open regarding funding sources, considering licensing or other business development deals as well as the potential for dual listing on AIM and NASDAQ.
Our November 2024 Outlook provides detail on Avacta’s pre|CISION-enabled peptide-drug conjugate pipeline, the science behind it, and data to date. Newly released AVA6000 Phase Ia dose escalation data in previously treated salivary gland cancer (SGC), a hard-to-treat indication, suggest encouraging and durable efficacy with no severe cardiac adverse events. Median follow up is currently around five months, with median PFS not yet reached, vs median PFS of c 3.5 months with conventional anti-cancer therapy. Further updated Phase Ia dose escalation data are expected in Q225, with full Phase Ia data (including cardiac safety data and long-term follow up) to be presented in H225.
Phase Ia data support the decision to advance into Phase Ib expansion cohorts in three indications (SGC, high-grade soft tissue sarcoma, and triple negative breast cancer, TNBC) where doxorubicin has shown efficacy. Multiple patients have already commenced treatment – each arm will enrol 20-30 patients – with Phase Ib results anticipated at end-2025. These data will inform registrational study design for SGC, an orphan indication with high unmet need that offers a rapid route to market, with potential for parallel development in TNBC subject to funding.
Avacta management have made notable progress in pipeline prioritisation, adding senior management capabilities, formalising the Tempus AI strategic partnership to help identify opportunities for pre|CISION-enabled therapeutics, and executing on the disposal of its non-core diagnostics business. Multiple catalysts expected over the next 24 months (Exhibit 3) include the start of Phase I for second asset, AVA6103, a pre|CISION-enabled peptide-drug conjugate incorporating highly potent topoisomerase I (topo I) inhibitor exatecan, in early 2026.
We value Avacta using a sum-of-the-parts model, comprising risk-adjusted NPVs (net present value) for the disclosed Therapeutics pipeline assets, and an indicative placeholder valuation for the pre|CISION platform, with each NPV including an estimate of the potential costs for each programme. The assumed success probabilities for each reflect the inherent clinical, regulatory, commercial, and execution risks. 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). An overview of the key assumptions underpinning our valuation are summarised in Exhibit 4, and more details on the rationale for each are available in our November 2024 Outlook.
As we had already excluded Diagnostics from our valuation, the only changes following the divestment of Launch for £12.9m are to: (1) net cash, which is now based on our estimate for end-December 2024 cash plus assumed net proceeds of £10.5m from Launch (and excludes the CB as we assume this will be settled in shares); and (2) a decrease in operating costs (as Diagnostic SG&A was not allocated to any pipeline assets). With these changes, our valuation is increased to £449m/$561m (from £439m/$548m), all else being equal, equivalent to 119p per share based on the most recent share count following the latest CB quarterly settlement (or 112p/share fully diluted for future shares to settle the CB).
Our valuation is focused on the core Avacta business and includes a blended valuation for AVA6000 and placeholder valuations for pipeline assets AVA6103 and AVA7100. Our AVA6000 NPV comprises an orphan opportunity (salivary gland cancer or soft tissue sarcoma) which Avacta could potentially commercialise alone, and a larger commercial opportunity (TNBC), where Avacta will likely need a commercial partner. We continue to attribute no material value to the Affimer platform, nor to the AffyXell JV in our model, reflecting the current lack of visibility and early developmental stage. Additionally, we ascribe no value to the remaining Diagnostics operations, namely Coris BioConcept, which is also earmarked for disposal. These non-core areas could represent potential upside.
In terms of changes to our financial forecasts (Exhibit 5) following the divestment, we have removed all future revenues from Launch Diagnostics. We also take this opportunity to remove future revenues from Coris (a smaller contributor) as we assume this will likely be divested in coming months. This has no impact on FY24e revenues, where our forecast remains £23.8m (preliminary FY24 financial results are anticipated in April), but has the effect of reducing FY25e revenues to £4.3m (from £25.8m) with only a few months contribution from both Launch and Coris now included in FY25. Our revenue forecasts continue to exclude any potential Therapeutics milestones.
Our R&D forecasts are largely unchanged (as the majority of these relate to Therapeutics); these continue to assume some spend on the broader pre|CISION pipeline beyond AVA6000. However, our FY25e SG&A forecast has been cut to £11.5m (from £19.8m) given that around 50% of SG&A relates to Diagnostics (our FY24e forecast is unchanged) and similar to revenues, we include a few months of Diagnostics related SG&A in FY25e given the timing of the divestment.
Our assumptions relating to the CB are unchanged; 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 we assume this will be in shares priced at 88.72p (non-cash movements).
Our updated forecasts now include assumed net cash proceeds of £10.5m from the Launch diagnostics divestment (we do not yet include any proceeds for Coris as we have limited visibility on the potential magnitude), extending the cash runway into early 2026. This remains more than sufficient to reach key value inflection points, including full AVA6000 Phase Ia data presentation in H225, and Phase Ib dose expansion cohort data at end-2025. Avacta will likely need additional funds to advance AVA6000 into Phase II, as well as progressing earlier pipeline assets AVA6103 and AVA7100 programmes through pre-IND studies; these could come from multiple potential sources which range from the Coris divestment, possible pipeline or platform partnerships, and/or the prospect of a NASDAQ IPO.
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