Key points
The firm has two exciting treatments that seek to better tackle cancer
It contributed to the Covid-19 testing roll out
Interim losses widened from £6.9m to £10.1m year on year
Pharmaceuticals and diagnostics company Avacta Group (LSE: AVCT) specialises in cancer treatments. The FTSE AIM firm focuses on clinical stage development and currently has two major proprietary treatments. It also provides Covid-19 testing kits in the UK. Its share price has had some volatile movements over the past year, and I want to know more. Should I buy this company for my long-term portfolio, or avoid it? Let’s take a closer look.
Exciting medical advancements and the Avacta share price
The firm developed two revolutionary cancer therapies and diagnostics procedures. The first, Affirmer®, is a proprietary therapeutic platform. This treatment, the company says, seeks “to address the lack of a durable response to current cancer immunotherapies”.
Using naturally occurring human protein, Affirmer provides an “alternative to antibodies derived from small human protein”. Indeed, while tackling an important issue, this could be lucrative for the firm and positive for the Avacta share price. The antibody market is potentially worth over $100bn.
The company’s second medical advancement is named pre|CISION. This is targeted chemotherapy that seeks to lessen the side-effects for patients. The AVA6000 trial moved to the clinical stage in summer 2021. On 3 February 2022, the Phase 1 trial advanced after a “positive review”. The Avacta share price rose 3% on this news. It is currently trading at 47p. This is down 74% over the past year.
Furthermore, much of the excitement about the business arose because it manufactures Covid-19 testing kits in the UK. These gained approval in June 2021. While the rapid antigen test was fit for use in the UK, the government paused its roll out when the Omicron variant struck. It resumed in December 2021.
Lukewarm results
The company is clearly active within the cancer treatments and diagnostics field. While this is important in creating new technologies, it may also positively impact the Avacta share price in the near future.
As is the case with many early-stage pharmaceutical firms, however, the company results show widening losses. This may be due to efforts to finance new technologies. Indeed, the interim results for the six months to 30 June 2021 show that research costs had nearly doubled year on year, to £6.2m.
For the same time period, revenue increased from £1.8m, in the first half of 2020, to £2.3m. Despite this, losses widened from £6.9m to £10.1m. This doesn’t exactly fill me with confidence as a potential investor.
The company is developing some amazing cancer treatments. However, the recent results are not strong enough to encourage me to buy the shares. While I won’t rule out a purchase in the future, I will be standing aside in the near term.
The post The Avacta share price: buy or avoid like the plague? appeared first on The Motley Fool UK.
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Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
