finnCap Research Company Notes - 22 April 2020
Apr 22, 2020 / News
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Sector: Life Sciences
Avacta (AVCT) : Corp
COVID-19 rapid POC test – ahead of schedule
Key data
- Share price (p) 55.0
- Target price (p) 76.0
- Market cap (£m) 114.4
- Enterprise value (£m) 105.7
Further to the announcement on 8 April that it was developing an Affimer-based COVID 19 point-of-care (POC) rapid antigen test, Avacta announced that after only four weeks, and well ahead of schedule, it has identified a number of highly specific Affimers that bind to the spike protein of SARS-CoV-2 virus. We are making no changes to forecasts or our target price until we have greater visibility over a design freeze and/or clinical validation for the test, but recognise the potential near-term value that this rapid POC test could potentially generate in a very large market (>$1bn) where current supply cannot meet global demand. The upside, if successful, is substantial, as illustrated by the c.£250m incremental value created by Novacyt’s COVID PCR-based antigen test. How much of this market Avacta could garner will depend on the competitive environment, but the global market is expected to be for hundreds of millions of tests potentially as well as an ongoing need for antigen testing as the disease recurs.
Mark Brewer
020 7220 0556
Sector: Life Sciences
Shield Therapeutics (STX) : Corp
Directorate change
Key data
- Share price (p) 105.5
- Target price (p) 350.0
- Market cap (£m) 123.5
- Enterprise value (£m) 115.8
Shield announced that, following discussions with major shareholders and by mutual agreement, Carl Sterritt will step down as CEO with immediate effect. Tim Watts has been appointed as Chief Executive Officer from his role as CFO, which he has held since August 2018. Whilst this comes as a surprise, Carl will actively support Tim over the coming months through the closing of a partnering agreement for its lead asset, Feraccru/Accrufer, in the US. Although potentially unsettling to some, it should not detract from the ultimate value of Feraccru/Accrufer and we reiterate our target price of 350p, accordingly.
Mark Brewer
020 7220 0556
Sector: Mining
Chaarat Gold Holdings (CGH) : Corp
Consolidating gold in the FSU
Key data
- Share price (p) 25.2
- Target price (p) 53.0
- Market cap (£m) 121.5
- Enterprise value (£m) 189.8
We initiate coverage of Chaarat, an AIM-listed gold producer making the transformation from junior to mid-cap. It is one of the few London gold companies pursuing an M&A strategy with actions rather than just words. 2019 saw the beginning of Chaarat’s new trajectory with the acquisition of the Kapan operation in Armenia and the start of construction at Tulkubash, its heap leach mine in the Kyrgyz Republic. In the medium term this will be followed by development of its 4.5Moz Kyzyltash Project, and most likely supported by further M&A activity. Momentum has been slightly affected by COVID-19; however, we anticipate this to be a six-month slowdown with no lasting negative effect. For investors seeking gold company exposure with a consolidation strategy, Chaarat has Resources of >9Moz and a risked NAV of £279m.
Charlie Long
020 3772 4683
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