A second wake-up call for the market

Avacta (AVCT) is a pre-clinical stage biotechnology company and the proprietary owner of Affimer technology. Affimers represent a radical alternative to the established antibody technology. The significant technical and commercial benefits of Affimers are being increasingly recognised, evidenced by corporate and academic interests, ongoing evaluations and deal flow. AVCT has just announced that, following a review period, Moderna has exercised its option to enter into an exclusive licensing agreement to further develop certain Affimer therapeutics for undisclosed targets. This is the second licensing deal with a major pharma player in the past few months.

• Strategy: AVCT is aiming to commercialise its Affimer technology through licensing for research and diagnostics, and by identifying and developing its own proprietary therapeutic pipeline for partnering. AVCT has sufficient cash resources to identify an Affimer lead and be ready for first-in-man trials in 2020.
• Licensing deal: Following the deal with LG Chem last December for a total value of up to $310m, Moderna has now exercised its option to develop certain Affimers against an undisclosed target. The financial terms have not been disclosed, but we expect AVCT to receive near-term development milestones.
• Moderna: Following its recent IPO in December 2018, which valued the company at $7.5bn, Moderna is a strong partner in the emerging field of therapeutic mRNA. With 11 compounds in clinical development, it represents a valuable partner that further supports and validates the Affimer platform.
• Risks: Affimers represent a new disruptive technology, and the potential customer base has taken some time to recognise their advantages. While all new drug development carries a high risk, AVCT has hit a number of important milestones over the last two years, greatly reducing the risk profile.
• Investment summary: AVCT has made considerable progress towards its goal of having a number of commercial partnerships for its Affimer technology, as well as developing its own proprietary Affimer-based drugs and growing a separate, profitable reagents business. The rising number of collaboration deals being discussed and signed is clear indication of the long-term value of its Affimer technology, which the market is currently only just beginning to recognise.