Avacta: data could pique BD or funding interest

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 faridoxorubicin (AVA6000 or FAP-Dox), a peptide-drug conjugate of doxorubicin. Early clinical data for faridoxorubicin have shown selective activation at the target tumour site, resulting in lower toxicities than standard doxorubicin, and improved tolerability. Further Phase I 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 near-term value inflection points, with indication-specific clinical proof of concept data key to unlocking partnerships. Our Avacta valuation is £457m, or 111p/share.

Avacta is focused on exploiting the full potential of its pipeline and pre|CISION platform having completed its transition to a pure play oncology biopharma company following divestment of its Diagnostics businesses. Its long-term aim is to develop and commercialise a broad pipeline of peptide-drug conjugates (PDCs) that employ its pre|CISION technology, improving the therapeutic index of many highly potent yet systemically toxic oncology drugs, allowing their targeted delivery and cleavage in the tumour microenvironment (TME) by FAP (fibroblast activation protein), a tumour-associated enzyme.

The two main pillars of Avacta’s strategy are progressing the current pre|CISION pipeline (faridoxorubicin, AVA6103, AVA7100), and business development to secure product partnerships or technology collaborations (as outlined in our June 2025 Update) to accelerate development/commercialisation and to exploit more fully the wide-ranging opportunities that could be addressed with the pre|CISION and Affimer technology platforms. The October pipeline update should provide more insights into the pre|CISION platform and potential pipeline expansion; however, with a cash runway into Q126 (beyond key faridoxorubicin clinical read outs), securing the funding to progress faridoxorubicin into Phase II and the next wave of pipeline assets into the clinic is a priority.

Pipeline news flow expected over the next 12-18 months includes full Phase Ia data for lead asset faridoxorubicin at ESMO, and detailed data by year-end from salivary gland cancer (SGC) patients enrolled in the Phase Ia dose escalation and Phase Ib dose expansion cohorts. Similarly, initial Phase I data in triple negative breast cancer (TNBC) is due H126. SGC data could catalyse a licensing deal for faridoxorubicin, 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 (subject to funding) and potential for first data in Q426, before embarking on Phase Ib expansion cohorts in early-2027. Management also expects to nominate the first FAP-targeted Affimer pre|CISION product candidate (AVA7100) during H225.

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, as for the purposes of our model we assume this will be settled in shares). Our valuation has been updated to reflect interim H125 results and any changes to our forecasts and has been rolled forwards in time. This results in a modest rNPV increase to £457m (from £446m), now equivalent to 111p per share based on the most recent share count (or 96p per share fully diluted including future shares to settle the CB). An overview of the key assumptions underpinning our valuation is provided in Exhibit 1.

Exhibit 1: 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 H125 revenues from continuing operations (Therapeutics) of £56k (H124: £56k). R&D expenses increased, as planned, to £7.2m (H124: £6.5m) due to ongoing investment into both faridoxorubicin and FAP-EXd. Conversely, SG&A costs were lower at £4.5m (H124: £4.7m). Operating loss from continuing operations narrowed slightly to £14.2m (H124: £14.9m), however the net loss after tax widened to £16.1m (H124: £5.7m), as H124 included non-cash financial income of £13.4m (vs £1.0m in H125) related to revaluation of the derivative element of the convertible bond. The loss from discontinued operations (Diagnostics) narrowed to £1.6m (H124: £2.3m) following the sale of Launch Diagnostics, which was completed in March 2025; the sale of Coris Bioconcept was completed post period end in September 2025.

At end-June 2025, the principal balance remaining on the October 2022 £55m convertible bond (CB) was £25.5m. Post period end, there was a quarterly amortisation of £2.55m (plus interest) in July, settled with the £3.1m net proceeds of the July equity raise, reducing the principal balance to £22.95m. The October amortisation of £2.55m (plus interest) will also be settled from the net proceeds of £3.1m from the September equity raise (September 2025 Lighthouse).

At the time of the September 2025 raise, CB amendments were agreed, which included: (1) payment of the October 2025 quarterly repayment and interest in cash; (2) deferral of the January 2026 and April 2026 quarterly CB repayments and interest until October 2027; and (3) the bondholder having the right to accelerate payment (in cash or shares) of one or both deferred repayments on the earlier of (i) the release of Phase Ib faridoxorubicin data in TNBC and (ii) 30 June 2026. In addition, the CB conversion price was reset at 75p (previously 88.72p). These amendments are subject to Avacta raising at least £13m in aggregate funding from any Therapeutics partnership or other deal, strategic investment, and/or an equity fundraise by 15 January 2026. For the purposes of our model, we have deferred the January 2026 and April 2026 repayments to October 2027, when the CB is due to be fully settled (hence we include two quarterly amortisations during H226 and six during 2027), and we continue to assume that future amortisations and interest are settled through issuing shares.

End-June 2025 cash and equivalents were £12.6m (end-December 2004: £12.9m) which include the £8.8m proceeds from the March 2025 sale of Launch Diagnostics. Post-period, Avacta completed two equity raises for a total of £6.5m gross (c £6.2m net) to fund the July and October 2025 CB repayments. In addition, the sale of Coris was agreed and completed for £2.15m in cash, with a potential earn-out of up to £650k contingent on meeting certain sales thresholds (note that this earn-out is not included in our forecasts). Current cash resources continue to provide a runway into Q126, beyond key data read outs, including SGC data for faridoxorubicin in H225.

Our forecasts have been updated post H125 interim results to incorporate recent events. We include token revenues in FY25 to reflect H125 trends, but nothing beyond, given the limited visibility on potential milestones or deals. Our updated FY25e R&D forecast of £14.7m assumes a similar level of spend in H225, and a small uptick in FY26e to £15.5m. Similarly for SG&A we forecast FY25e expenses of £9.1m based on the H125 trend, with an incremental increase to £9.2m in FY26e.

For the purposes of our model, we continue to include £30m of cash inflows in FY26e (as illustrative short-term debt) which could come from a variety of sources, such as potential licensing deals or collaborations, and debt and/or equity funding which could include the potential for dual listing on AIM and NASDAQ.

Exhibit 2: 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.