Avacta Group Plc (AVCT) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Avacta Group plc interim results investor presentation. [Operator Instructions] Given the significant number of attendees at today's meeting, the company will not be in a position to answer every question it received during the meeting itself. However, the company will review all questions submitted today and publish responses, where it's appropriate to do so. These will be made available to you via your Investor Meet Company dashboard, and you will receive an email notifying when they are ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. If you'd be so kind to give us your attention, we would be most grateful. And I'd now like to hand over to Tony Gardiner, CFO; and Alastair Smith, CEO, from Avacta. Good morning.

Thanks very much. Thanks very much indeed. Good morning, everyone, and thank you for attending. We're going to just switch our cameras off actually because that will make the presentation slightly larger on your screens, so please don't take that as rudeness, but it will be easier for you to see. So there's a lot to get through today, so just going to pile straight into the presentation. You've got Tony and myself on the call, as was just said. So as I said in the announcement this morning, it has been a genuinely transformative period for the Group with both divisions moving the Group substantially closer to the mission here of shaping the future of medicine with our 2 powerful, Therapeutic and Diagnostic platforms. So as a brief introduction for those who aren't familiar with the Company. Avacta has 2 divisions, the Therapeutics Division, which is now a clinical stage oncology drug company based in Cambridge and new offices in London, giving us a global outreach, a global headquarters for the Therapeutics Division in White City. An R&D center in Cambridge of around 35 people. Clinical development team that's been recently established by Neil Bell and Fiona McLaughlin and taken the AVA6000 drug into the clinic, obviously, we'll talk a lot more about that through the presentation. We have an in-house preclinical and clinical pipeline focused on oncology and obviously developing drugs based on those 2 platforms that we mentioned and we'll talk more about specifically the preCISION platform in this presentation because of AVA6000 and a number of global partnerships, which I can update you on, the key ones certainly in this presentation today. So Diagnostics Division also has gone through an incredible growth period over the last 12 months or so to become an ISO 13485 accredited IVD products company with the first product launched, the AffiDX SARS-CoV-2 antigen lateral flow test, which obviously we will cover in this presentation. Again, an R&D center and in fact the group headquarter is based in Wetherby in Yorkshire. A strong in-house product pipeline to feed in behind that first product that we just mentioned and a number of global technology evaluations and partnerships. Okay. Tony, could I hand over to you to go through the results, please.

Yes. Thanks, Alastair; and good morning, everyone. The interim results for the 6 months period to the 30th of June, the revenues reported of GBP 2.3 million did not include any sales of the AffiDX lateral flow test as that was launched post-period end and that compares to the GBP 1.8 million for the 6 months to June 2020. Main costs are the research and development costs for the AffiDX lateral flow test and the expanding Therapeutics development pipeline, which obviously includes the commencement of the AVA6000 Phase I clinical trials, which included GBP 6.7 million of costs there in the P&L compared to GBP 4.2 million in the prior period. That means that our retained losses following an allowance of GBP 1.2 million for R&D tax credits of GBP 10.2 million compared to GBP 7 million for the prior period. In terms of accounting policies together with accounting judgments and estimates, these results have all been prepared on a consistent basis with those that from the audited results for December 2020. I'll move on to the cash flow and balance sheet. The net cash outflow for the 6-month period was GBP 10.9 million, which includes GBP 1.4 million increase in our working capital as we scale up the AffiDX lateral flow test manufacturing and the setup costs associated with that. Alongside that there is a [ segregated result ] of CapEx as we have expanded the facilities in Wetherby and Cambridge. The comparative period showed a net cash inflow of just under GBP 46 million, that's obviously is a result of the fund raising that was completed back in June 2020. Importantly, cash and short-term deposits at the end of June were just a tad under GBP 37 million compared to GBP 48 million at the end of December 2020. The cash position continues to provide us with a base cash runway through into 2023 and obviously additional cash and profit generated from the AffiDX lateral flow tests will strengthen this position further. In terms of the balance sheet items, PPA and leased assets is just under GBP 5 million and intangible assets, which is mainly the capitalized development costs of the Affimer platform amount to GBP 9 million, which gives us a net asset position at the end of June of GBP 53 million. I want to hand back over to Alastair to continue the presentation.

That's, great. Thanks, Tony. Okay. So I want to initially focus on the AVA6000 Phase I clinical trial because of the obvious significant value driver that it is for the Group over the next 6 to 9 months. So first of all, let me remind everyone or perhaps for some people I introduce the preCISION technology. So the preCISION technology is a highly specific what's called a substrate for an enzyme called FAP-alpha, okay. So the function of an enzyme is to cut biological molecules and it cuts what is called the substrate. preCISION is the substrate for FAP-alpha, which is an enzyme that's highly up-regulated in solid tumors. So this particular enzyme is found in large quantities, in high concentration in solid tumors. You see on the right, I won't read through that, but the graph on the right shows you the amount of FAP-alpha in certain solid tumors. And clearly there is some, where the -- where that particular enzyme is expressed very highly. It is expressed or produced in very low quantities in healthy tissue. So this particular enzyme is effectively tumor specific, although there is a low background level in healthy tissues. And the preCISION substrate for that enzyme is highly specific to the enzyme and that's really where the IP lies, and this is IP that we exclusively license from Tufts University Medical School in Boston. And the reason that is so important, because other companies and academic groups have tried to harness the enzymatic activity of FAP in the past, but have largely failed because they couldn't get the specificity to that particular enzyme, because there's another -- a number of other enzymes that are very close related, but they are distributed all around the body and are not specific to the tumor. So the key here is that preCISION is absolutely specific to this tumor enzyme. So when you attach the preCISION chemistry, and I'll show you what that looks like on the next slide, when you attach that preCISION chemistry to a chemotherapy with chemotoxin, it prevents that drug from getting into cells making that drug effectively inert until it gets into the tumor, where it encounters the FAP-alpha and the FAP-alpha cuts off the preCISION chemistry, remember the function of an enzyme is to cut biological molecules. So when the drug modified with preCISION gets into the tumor and encounters FAP-alpha, the preCISION chemistry is removed releasing the active chemotherapy. The preCISION chemistry can also be incorporated into the linker or what is called a drug conjugate, where you use an Affimer or an antibody with a linker to a toxin or indeed a radiopharmaceutical to be able to add additional targeting or even therapeutic benefit through the Affimer or the antibody, and the preCISION chemistry can be added into the linker to release that warhead or chemotoxin in the tumor microenvironment. So there is huge potential for this platform providing, of course, that we can get positive data from the Phase I study that we've just initiated, which is obviously our focus in this part of the presentation. So just to go into a little bit more detail and using AVA6000 as the specific example. So on the left-hand side, you see what I've just described in words, but in pictures. So the dox AVA6000 is a preCISION modified form of doxorubicin. Doxorubicin as a chemotherapy, we will talk about in a moment. It's been around for many years and it is highlighted there with the blue circle. That is the chemotherapy. In the red circle is the preCISION chemistry. So it's a -- it's for those who know about these things, it's a small dipeptide and it is chemically linked to doxorubicin to create AVA6000, what we call a prodrug, which as we said on the previous slide, is inert to that point because it can't get into cells to kill them. The tumor microenvironment is a very complex environment with many different types of cells. It's a complex milliard of different cells and it's the fibroblast and some cancer cells, where the FAP-alpha resides, and it's those up-regulated FAP-alpha cells that the prodrug encounters, encounters the enzyme on the surface of those cells, and you see on the right-hand side, certainly in cartoon form, that the FAP-alpha behaves like a pair of scissors, removes the preCISION chemistry from doxorubicin and you'll notice that it leaves doxorubicin itself. It's not a modified form of doxorubicin. It is the drug doxorubicin when the preCISION chemistry is removed and that's important in terms of the regulatory pathway through to market approval. It leave doxorubicin, which is now of course active, able to enter cells in the tumor. So you effectively here have a way of releasing, if you like, or activating the chemotherapy within the tumor and reducing the side effects, reducing the exposure in -- from a systemic perspective in healthy tissue. Just to emphasize that point finally. If you look on the left here, this represents that the situation, where the standard dosing -- systemic dosing with the chemotherapy, which is that all the organs in the body as well as the tumor are exposed to the chemotherapy. And of course, it's that damage to healthy tissues that leads to poor tolerability for patients and that's a problem across the board for chemotherapies, not just doxorubicin. It's that systemic exposure and systemic safety that causes the issue with these drugs, which are generally efficacious. On the right-hand side is the situation with the preCISION prodrug systemic dosing. So here the -- it's AVA6000 is dosed systemically, which as we've talked about is inert until it -- through the circulation gets into the tumor and encounters FAP-alpha, where the chemotherapy is released. So the principle is that, healthy tissues should receive much lower exposure than the tumor tissues improving the tolerability and safety and, therefore, efficacy for the patients. Okay. So a little bit background on doxorubicin and AVA6000 just before we go on to talk about the clinical trial and progress in that regard. So as we've said, AVA6000 is a preCISION prodrug of doxorubicin. It's a generic drug, been around for a long period of time. Standard of care for soft tissue sarcoma and a few other indications. Its use is limited by the serious safety issues, which are primarily cardiotoxicity, but also myelosuppression. Myelosuppression means suppression of the -- effectively suppression of the immune system. But nevertheless, despite those issues with the drug, it's a $1 billion generic drug market. So clearly, there is a significant opportunity for a form of doxorubicin that has significantly improved safety, allowing patients to be treated with a larger number of cycles, so that the principle here is not necessarily to treat the patient with much higher doses, but to be able to treat the patient over a much longer period of time because it's the cumulative toxicity that prevents that from happening with doxorubicin. On the right-hand side of this slide, you will see one small part of the preclinical data package, but obviously, it's the reason that we are so excited about the potential for the preCISION platform and for AVA6000. So on the left of that graph, you see the situation in this animal model, when the animals are dosed with standard doxorubicin. So you see what you would expect to see, which is the concentration of doxorubicin in the heart shown in pink and in the tumor is roughly equal. So one-to-one ratio, because you are dosing the animal with doxorubicin, it's systemic, the heart is receiving the same exposure as the tumor, which as we've discussed is the issue here. On the right-hand side is the data for AVA6000, but it's showing the amount of doxorubicin, released doxorubicin, okay. So in pink, you see that this dose of AVA6000 is 6 times the dose on the left-hand side of doxorubicin. So we've increased the dose by a factor of 6 and you start to see some doxorubicin appear in the heart because, as I said, there is a low background level of FAP-alpha, very low, but, nevertheless, there is a low background level, so you start to see some appearance of the doxorubicin in the heart tissue. But at that point, you have nearly 20 times the concentration of doxorubicin in the tumor tissue, and it's that improvements in what we call the therapeutic index that is key and is obviously what's driving our excitements around the preCISION platform. So there is a significant potential market as we said. We've done quite a bit of work trying to understand that market and continue to do that by the way. But we think it's a significant market with a potentially a 5% to 10% royalty to Avacta through a licensing deal. We developed milestones along the way. So quite a significant commercial opportunity for AVA6000 alone, but we will talk about the broader pipeline in a moment as well. Okay. So I have to stop saying transformative, I keep saying it's over and over again, but I mean it has genuinely been a huge step forward for the Company becoming a clinical stage oncology drug company with the dosing of the first patient in August. So Neil and his team did an outstanding job of getting the CTA filed by the end of the year 2020. We've received approval for the Phase I study, which I'll describe in a moment from the MHRA during the reporting period and ethics approval and have gone on to dose first patient in August at the Royal Marsden. We will very shortly have 3 more sites online. So the first patient has been dosed multiple times at the Royal Marsden. It would be wholly inappropriate for me to go into any detail about that at this point. But in terms of when will we be able to provide the market with an update that we said consistently towards the end of the year into Q1, that's the sort of time we will have gone through multiple dose escalation cycles, which I'll describe in a moment. And this study has been designed to be extremely data rich around PK/PD, all the safety indicators that you would expect, because, of course, not only does this add value to the AVA6000 asset, but it adds value to the whole preCISION pipeline that follows on behind it. So having as much data as possible around how the preCISION substrate behaves in humans is key to this study. So the dose escalation phase is the initial phase, which we will complete in Q2 next year. That's design what's called a Three + Three. So effectively, 3 patients are dosed at the starting dosing level, which is 80 milligrams per meter squared for AVA6000, which equates to 54 milligrams per meter squared of doxorubicin. And for information that is just below -- it's 90% of the normal doxorubicin dosing level. So that is a level, where we would expect to see safety issues and the normal safety and tolerability issues with doxorubicin. We're not -- the first cohort is not being dosed at a tiny fraction of the normal level. So the first patient was dosed and has been dosed multiple times, and I can't say any more at this stage, obviously, other than we're very pleased with the positive progress at this stage. So what happens beyond the first cohort is that the dose is escalated towards a higher level, that level will be determined by the investigators at the clinical trial sites and our medical adviser, and then another cohort of 3 patients will receive that higher dose and so on, until again the investigators, the medical advisers, determine the maximum tolerated dose and the recommended Phase II dose for the dose expansion Phase Ib. So we expect to go through approximately 4 cohorts, 12, maybe 15 patients during the next couple of quarters. So by the end of Q1, we will have a huge amount of data describing the PK/PD safety and so forth for AVA6000. The dose expansion phase follows on from that's where we will focus on 2 or possibly 3 particular cancer types and look at a larger number of patients, 15 to 20, within each of those cohorts and that Phase 1b part of this study will take approximately a year. Okay. So I mentioned a couple of times the pipeline that sits behind AVA6000. I think it's worth just reiterating this, because positive data from the Phase I study that we just talked through in the next 3, 4 months or so not only creates a potentially very valuable and proprietary form of doxorubicin, but also indicates that the preCISION platform is working as we expect. We've recapitulated the animal data in human. That opens up the potential to use the preCISION chemistry with a significant pipeline of other chemotherapy. So this is not just a single drug asset opportunity. It is a platform in a market worth nearly $57 billion and growing quite rapidly. But of course, as we've said several times limited by the tolerability and the safety of the drugs for patients. So just a couple of examples. Velcade is what's called a proteasome inhibitor. Takeda's Velcade is a small fraction, about 30% if I remember correctly, of the proteasome inhibitor market. It has limited approval due to the dose-limiting toxicities coming off patent as well next year. So we have been working on a preCISION form of Velcade, which we call AVA3996. We have set ourselves the objective of selecting a clinical candidate for that prodrug to be developed and taken into the clinic. So that objective is to have that clinical candidate selected by the end of this calendar year and I'm pretty confident we're going to achieve that. We are getting very close to that point. So that's good progress on the 3996 program to-date. Other potential preCISION prodrugs, it could be developed, we just chose another example there of paclitaxel, one of the taxanes, very large market, again significant toxicities, myelosuppression, peripheral neuropathy and so on. And on the right-hand side, that's a sample of the pipeline of preCISION chemotherapies prodrugs that could be developed. The pro-Velcade, well advanced, as we just described. Paclitaxel, Oxaliplatin and Gemcitabine all being reviewed in detail now to determine which of those would be the next one to develop in the pipeline. Okay. So just around upon partnerships as well, which are immensely important to us. Certainly, the LG Chem partnership, I mean LG Chem is a world-class, global fully integrated pharmaceutical company. I'm sure those of you heard me speak several times will know that we regard this as a very important strategic partnership with a pharmaceutical company that can manufacture and take drugs to market. We have a multi-target agreement with them to develop a number of Affimer therapeutics in different disease areas. That partnership was expanded last year to include our Affimer XT technology, which I will explain briefly in a moment. But very recently, yesterday in fact, we announced a significant milestone have been achieved in that the Affimer XT PD-L1 bispecific that we've been working on with LG Chem pass through a development milestone and LG Chem will be developing that pre-clinically with a view to IND filing that triggered an undisclosed milestone payment. And just to go back and explain for those of you aren't aware what Affimer XT is. If you have a relatively small drug like an Affimers or PD-L1 antagonist is just an Affimer, then it will get cleared through the kidneys relatively quickly in an hour or so in fact. So you -- for most drugs, you want a longer exposure than that. And so what we have done is develop Affimers that bind to human serum albumin, which is a large protein that's in very high concentration in blood and it's too large to be cleared through the kidneys. So Affimer XT binds to that serum albumin. And if you then bind the PD-L1 Affimer to the Affimer XT, it will piggyback, if you want to use that, that phrase piggyback, around the circulation on serum albumin, too big to be cleared through the kidneys, and you can achieve many days, if not couple of weeks of serum half-life for that PD-L1 antagonist. The benefit of doing it like that is that you still got a very small biological drug, which can therefore penetrate tumor tissue in principle, that's the -- that's certainly the belief they will penetrate the tumor tissue more deeply. So I think it is hard to overestimate the importance of that progress with LG Chem. We now have a major pharmaceutical company taking a bispecific Affimer therapy into full pre-clinical development alongside our own parallel programs in-house with the Affimer platform. The POINT license, which we achieved very early in the reporting period, was to provide POINT with access to the preCISION platform for the development of tumor-activated radiopharmaceuticals. So very, very hot area at the moment, so some of you will be aware. They are now -- the first program has been initiated. We're not directly involved in the work. It's a license we provided to POINT, and -- but that's first program has been initiated. The ADC Therapeutics collaboration, we provided ADC Therapeutics with Affimer reagents against the target of interest. They have decided not to take that program forward following the evaluations, so that will not be taken forward. On the Daewoong partnership, we've made enormous strides actually with Daewoong over the last year or so early in the reporting period. We successfully raised money for AffyXell with Daewoong of around $7.3 million with a number of significant VCs in South Korea and Southeast Asia. We have generated Affimer molecules against the first 2 targets in that program with AffyXell with Daewoong and have very good progress with the in-vitro and in-vivo characterization of those lead Affimer molecules and the engineered mesenchymal stem cells. So just very briefly because it is a, I think, a really interesting and potentially hugely valuable, but really interesting concept that Daewoong working with us on here. So the stem cells, mesenchymal stem cells, can be -- we've demonstrated that we can modify those stem cells to produce and secrete, so spit out if you like, Affimer therapies. So the stem cell not only has its own therapeutic benefit, but it can be supported by immunomodulatory Affimers in-situ in the patient. So it's a really novel next generation stem cell therapy. And as I say really good progress so far with both the Affimer programs and the mesenchymal stem cell programs with Daewoong. Very briefly, I won't read through -- obviously won't read through the bios of the 3 individuals you see on your screen, but absolutely delighted to have got 3 people of this caliber to join our Scientific Advisory Board for the Therapeutics Division. Professor Spicer has a world-leading Phase I clinical trials center in London. Professor Komanduri is an extremely well-known immunologist with a focus on T-cell immunology in cancer. And Dr. Champiat works at the Gustave Roussy Center in Paris, again, hugely well known, many, many clinical trials in progress or completed with very large pharma and biotech. He is an extremely well-known physician in France with a real focus around immunotherapy, toxicity management. So 3 really world-class individuals joined the Scientific Advisory Board for the Therapeutics Division to give us advice strategically on pipeline decisions, but also obviously input to the clinical studies. So very conscious of time, moving onto the Diagnostics division. I don't think you will need any reminding that we have now become an ISO 13485 accredited IVD products company with the first product launched, which is a SARS-CoV-2 antigen lateral flow test. The AffiDX brand is the Diagnostic product brand, not just the -- this particular product brand is the Diagnostic product brand and will be the brand for the pipeline of products coming out over the subsequent years. The antigen test itself and we've talked many times about what these lateral flow tests are intended to do. They are intended to identify infectious individuals and do that obviously accurately and in a short period of time. It's a 20-minute test to identify those individuals who are likely or more likely to transmit the infection to others. The key features and benefits and I'll focus on the left-hand side of this slide actually and interestingly I can now give you, of course, some real world commercial feedback from the market on what our customers are interested in as far as differentiating the product from the many other tests that are out there in the market. It's a crowded marketplace, which obviously presents its challenges. But fortunately, we have a high performing and differentiated test that allows us to start to win market share in that crowded market. So really on the left-hand side are the key benefits and one actually that's a surprise to us, which I will mention in a moment. So first of all, patient-friendly. There is no doubt that the fact that it's a very simple nasal swab. So swabbing of the nostrils and not nasopharyngeal test, which is very unpleasant, as I'm sure everybody has experienced. That is a big selling point because many other tests on the market are nasopharyngeal tests. In order for them to convert a nasal test, they have to go through further clinical validation and CE regulatory marking. So that's a really good differentiating benefit. The performance, of course, is a major plus and we'll talk a little bit more about that and the further data that we've obtained more recently as well. So a high performing test certainly amongst the best. It's difficult to say that it's the best, but it's certainly amongst the best on the market in terms of sensitivity, up to a high CT value, low viral load that we will talk about in a moment. Interestingly, there is a huge focus on the Delta variant, much less so on the other variants. Obviously, Delta has become the dominant variant globally, but nevertheless we don't get much in the way of questions or inquiries about other variants, but the Delta variant is hugely important. And I think Avacta is unique in having published its data specifically on the Delta variant. I'm sure, they are not aware of any other lateral flow test that has specifically said that it can detect the Delta variant or published any data and that data is on our website. A dozen patient samples that were fully sequenced to identify the Delta variant and we have very good performance in detecting that dominant variant with the test. The fact that it is a U.K.-developed test is very important to customers obviously, particularly in Europe and the U.K., but generally actually in the APAC region as well. The fact that it's U.K. developed is really important and the fact that it's manufactured in the U.K. as well. And then the fifth one that's not on there, which a little bit of a surprise to us, but interesting and very nice to hear is that customers are really interested that it has a new technology in it, the Affimer platform. We didn't anticipate that would be something people would focus in on. They were focusing on the performance and be less concerned about the technology under the bonnet. But interestingly, it's become a real point of interest and, therefore, something we push on in the business development, the fact that there is a novel platform, which has given this test excellent performance. So this is data that most of you will have seen before. This is the regulatory data submitted in the technical file in the IFU. And I will just highlight the fact that the points I made earlier on about high and good performance, excellent performance in the infectious range. So many tests are talking about Ct values of 25 and below as the infectious range. We do not believe that, that is sufficiently sensitive. People with a PCR Ct value of viral load up to 30 are certainly infectious. If they are in an enclosed environment or [ intermittent we saw ] for a period of time, then that is an infectious viral load. So simply saying 20 and below is good enough, is not true. The AffiDX SARS-CoV-2 test has very, very good sensitivity for 27 and below, which is where we have set the sort of benchmark of infectious, but even in the higher 20 is very good performance as well. So to be frank, anything above 90%, when you are up to 30 would be very good indeed. In terms of specificity, again, the regulatory data is in the table there, 99% over 100 samples having missed one just in the footnote there. But to explain to you, we have done a further roughly 130 odd negative samples since to define that decimal place better and we continue to take more negative samples as well. So the specificity now is at 99.6%, which is clearly important if you're doing very large numbers of test and the false positive rate is obviously important because it has an impact on the individual that takes the test. The current manufacturing capacity, GAD, is around 1 million tests per month. In principle that can be scaled actually. But I just want to give you the facts of where we're at right now, around 1 million tests per month. The manufacturing process has been transferred to Abingdon Health. We're now going through the what's called the validation batches. So those are 3 batches that obviously should be identical. So that is going on now. Those should be salable product. But the point is that the process has been transferred to Abingdon and we're now into that final validation stage, which should be salable product. Abingdon Health could add a further 1 million to 2 million tests per month and indeed that is scalable, but we are well advanced actually in putting in place both European and potentially, if we need it, Asian manufacturing that would make a very significant difference to those numbers. Obviously, we're going to be driven by the growth in sales and demand, but we do have both of those capacities in Europe and Asia well advanced to switch on when we need them. From a sales perspective, we are making direct sales ourselves to large corporates for workforce testing, to elite sports clubs, into the travel industry and testing services. So there's a lot of companies now providing testing services in U.K. and Europe, and those are our key areas of focus. So large individual sales rather than small sales that -- which we're doing through distributors. And Calibre Scientific, you'll be aware, we announced recently as the first U.K., EU distributor, where we are speaking with Calibre about other territories actually and we have ongoing work with distributors in the APAC region. And the reason you can see in the bubble to the right-hand side, the reason that, that is driving our strategies because the APAC region accounted for a very significant part of the SARS-CoV-2 antigen test sales in the last year. So we are working with distributors in the APAC region to get the additional regulatory approval, so CE mark gets you a long way, but there is local regulatory approvals as you would imagine that are not too onerous to get, but working with the distributors to open up those markets as well, which are clearly very significant. Although it's the last bullet point on the page is by no means they are least and in fact probably the most important bullet point on this page actually. And we've been saying for a long period of time that the ability to do self-testing is key to the commercial success here. Professional use tests, although the rules are obviously being stretched under the pandemic circumstances as to how professional use tests are used, clearly a self-test with a CE Mark for self-testing opens up a very significantly larger market. Medusa19 have done an outstanding job actually of taking the technical file through regulatory submission to a notified body in Europe. That decision process obviously sits with the notified body and that is not in our control. So I can't give you a precise timing of when we would expect to get the CE Mark for our self-test. But I think we are making very good progress in that regard. So just to go through summary and some closing comments, then so try not to say transformative too many times, but that it genuinely has been a challenging, of course, but a very, very significant period of growth and progress for both of the Avacta Divisions to take the Diagnostic business from a business that was largely focused on partnering to get Affimer reagents into partners' product pipelines, which still doing with companies like Biokit and so on. But to take that and under the circumstances of the pandemic as well to be an ISO 13485 accredited IVD product company in the last year launched the first product and have a significant commercial opportunity for that professional use tests. But obviously, as we just mentioned potentially even greater market opportunity for the self-test when it arise, that I think is -- whilst it's been bloody hard work, it is a real achievement. We have significant capacity in the U.K. and now the opportunity to expand that both in the U.K. and overseas, so very pleased with that. The focus is around direct sales ourselves and distributors U.K., EU, private sales and particularly for us getting distributors onboard in the APAC region. From a Therapeutics perspective, I've had a personal goal for a long time in Avacta of getting this division to be a clinical stage company. So personally and obviously for the company, extremely pleased to achieve that goal and to have dosed first patient with what I sincerely hope is a transformational platform to develop a number of chemotherapies 6000 and beyond, which are of course affordable cancer therapies. Many immunotherapies, Affimer-based or antibody-based are much more expensive to develop and, of course, chemotherapies are very affordable. So if we can contribute to this field by reducing the side effects and improving the tolerability of chemotherapy in general, then I'm sure you can see that is a value driver way beyond what we're going to achieve with COVID test sales. And so we're aiming for an IND filing for AVA6000 before the end of '21. I am currently confident that we will achieve that. So that will lead into a clinical study in the US. We have 2 clinical trial sites identified. We just achieved that milestones. We discussed with LG Chem, which means they will take an Affimer bispecific forward through pre-clinical development with the goal of IND filing and taking that into the clinic themselves in parallel to our own AVA028 program. AffyXell well-funded to hit the next milestone in the middle of next year and we have a number of development candidate selection milestones across our programs and with partners during the next 12 months to drive [ news flow ]. So I'll leave it there, if I can?

Of course. Thank you very much indeed to both Tony and Alastair for updating investors. [Operator Instructions] But just ahead of going into the Q&A, I'd like to take a few minutes to remind you that a recording of this presentation along with a copy of the slides and the published Q&A can be accessed via your Investor Meet Company dashboard. As we said, we will notify you when the significant number of questions have been submitted, if had an opportunity will be gone through. [Operator Instructions] As I mentioned, there are significant number of attendees on today's call and we did receive both a number of questions ahead of the event and obviously during this event. And I think what the Company have done is to try and allocate the question to perhaps areas or themes of where investors had submitted questions. So perhaps, Tony and Alastair, if I may, I can start off with the first one, which reads as follows. How are you following the pharmacokinetics and toxicology of the cleaved non-doxorubicin part of the AVA6000?

Okay. Yes. So that's an interesting question. So we are measuring the levels of 6000 dox and the cleaved substrates in plasma and urine using HPLC. So there is no time to explain what that is, but this is a straightforward way to do that over a 72-hour period post-dose. So that allows us to look at those compounds and how they are eliminated from the body over time. From a tox point of view, that -- the non-doxorubicin part, what we call 5140, we've assessed that in animal tox and in silico and there's no indication there should be any tox issues. And we will obviously follow that in the Phase I escalation phase.

Thank you very much, indeed, Alastair. The next question reads as follows, when will shareholders be given an indication as to how the AVA6000 dosing and early readings are going?

Yes. So I've given certainly positive guidance today. I mean it would be totally inappropriate to talk about the data at this point given that there is -- a single patient has been dosed. It's very early in the process, but we are feeling very pleased. We are going to open up new trial sites very, very soon actually, which will increase the flow of patients into the study. There is no concern at all with the investigators about patient numbers. So we expect to remain on schedule for Q1. We will update the market as soon as we possibly can. For example, escalating the dose and starting the next cohort is a strong indicator that the investigators and the medical advisers are happy with the safety. So we'll communicate that. And as I think I said earlier, whilst cardio tox is key, we can monitor that with ECG and sono -- some little biomarkers, that there are other things like neutropenia, which is a drop in the level of certain immune cells, which are really straightforward to measure and they are a good early surrogate for safety. So we will be monitoring that as well. So over time -- excuse me, by the time we get into Q1, we really should have quite extensive data to update the market with.

That's great. Thank you very much indeed. Moving on to the next question. When is home use authorization expected for the AffiDX LFT? And can the company provide clarity as to what specifically is involved in this process that's taken so long?

Yes. Yes. So I mean it's really important. So obviously I wanted to answer this question, which a lot of people have asked. So first of all, I mean, we've talked about regulatory process before, but just to recap, there is an additional study called a lay user study, which really focuses on the usability of the test. It's not a clinical validation, it's the usability. That data which Medusa19 carried out, that is combined with the technical data for the performance of the test itself. And then that full technical file was notified -- was submitted to the notified body for review. So unlike the self-declaration for the professional use test and a CE Mark the self-test is confirmed by the notified body. So we have to wait for that. Medusa19 has led that process. And as I said in the presentation, they have done a really outstanding job. The question, I don't know, who it is, but is suggesting that it's taken a long time. But I think you'll find that notified body review can take many, many, many months even under normal times. So making the progress that has been made is not in my view taken a long time. So I sincerely hope that we are close to having that CE Mark. But we are in the hands of the notified body at this point.

That's great. Thank you very much indeed. Why has that been what appears to be no commercial interest in the take-up of COVID tests developed by a vector, particularly as the company has reported such outstanding success in trials?

Yes. I mean it's just not true at all to say, there is no commercial interest. I mean hopefully what we've talked about today gives more information around that. Now we are clearly not the first test to market. So as I said, this is a crowded market, but fortunately we have a very good test, which is allowing us to build market share and that will take some time. So for now, we need to focus on marketing, business development, getting the approvals in additional territories, which is the APAC region in particular, which is really important, commercial partnerships with distributors and potentially licensees actually, so we can build the awareness of the product and drive the long-term sales. It's really clear that testing for COVID is going to be around for much longer than I anticipated. I think because of the mutational rate of this particular virus is likely to be seasonal for a very long time, maybe, forever, like flu. So there is a long-term commercial opportunity here, which we will build and is the basis for a profitable Diagnostics division.

Thank you very much indeed, Alastair. Turning to really the theme around the share price really, the next question kind of summarizes it. Would Avacta care to comment on the significant share price decline and how they are proposed to address this in the near and long term?

Yes. So I mean, it's a very fair question. The fall in share price is clearly not something that anybody is happy with. But my focus has got to remain on driving the business forward and firstly that means delivering a profitable Diagnostics division. And secondly, in the Therapeutics division, we need to do all we can to maximize the value of the Phase I data for 6000 because as we said, that drives not only the value of that particular asset, but an incredible pipeline potentially behind it. So as I said on a number of occasions, the potential value to Avacta shareholders of the preCISION platform being shown to work well in human, reducing the effects of -- side effects of chemotherapy, that dwarfs COVID testing revenues. And so whilst the COVID testing revenues and the pipeline of next products is incredibly important to the Diagnostic business, the preCISION platform and then the Affimer immunotherapies have the potential to deliver to Avacta shareholders much greater value. And then we shouldn't, of course, sort of gloss over the importance of supporting our partner programs, that's also really important to address the near-term and long-term value and, therefore, share price. Because if LG take an Affimer into the clinic before we do, it will have a huge effect on the value of that platform and the value -- valuation of the company.

That's great. Thank you very much indeed. Biodegradable lateral flow cassettes would be a big USP. Do you have any moves in this direction?

Yes. I mean that's a -- it's a really good question. And yes, biodegradable cassettes would be a -- actually a significant competitive advantage and it would underline Avacta's commitment to sustainability as well for -- not just for this test actually, for future AffiDX lateral flow test. So exploratory work is being carried out with our injection moulder. But I want -- I just want to say, it is not a trivial matter of just replacing the existing plastic with a biodegradable one. The cassette is an integral, mechanical component that claps the nitrocellulose test strip in a certain way that controls the sample liquid flow. So the physical properties of the new plastic need to be right as well. But we're certainly committed to trying to find a sustainable alternative, which would be a big commercial advantage, as you can appreciate. A lot of people are uncomfortable with the amount of plastic waste being created and we are too. And as soon as I've got a material update on this, I'll inform shareholders.

That's great. Thank you very much indeed. Is it currently a Japanese distributor or manufacturing partner in place for Diagnostics or is one being considered?

There isn't one currently. The APAC region, we've identified, this is a significant market. Japan isn't top of the list, but it's certainly on the list. We're working with distributors in other markets in the APAC region at the moment to get the regulatory approvals. But -- so Japan is on the list, but not top of the list. There isn't a distributor yet in place.

Thank you. And then just turning to the last question really. Has the company been given any clarity as to why Conifer, who are noted in the 2020 fund raise as a strategic investor reduce their holding significantly or potentially to zero?

Yes. So regarding Conifer, remain an important shareholder. I'm not quite sure why anyone would think that they reduce the holding to zero. The holding is 2.99% and it's on the Avacta website. So the -- there are certain threshold holdings that trigger an announcement and obviously going to 2.99%, cross the 3% threshold, which is why there was an announcement. But I can certainly confirm that Ruane, Cunniff remain an important shareholder for us and a very supportive one.

Well, that's great. Well, thank you very much. As we are now coming up to the hour, firstly, I'd like to thank all the investors that have taken time to submit questions during today's event and the live event. As I did say at the outset that all these questions and just given the significant number of questions and attendees on the call will be available to the company to review. And as I said, we will post responses to everybody at the same time and you will receive an email notifying that when it's ready. Tony, Alastair, I know investor feedback is important and we will shortly direct all the investors on the call to give you their thoughts and expectations. But I guess before doing so, if I could just ask you for a few closing comments.

Yes. Of course, well, as I said, it's been a period of huge progress and firsts for the Group across both divisions. So now we have a commercial stage ISO 13485 IVD product company with the first product launch, which has -- for a Diagnostics product, the SARS-CoV-2 antigen test has huge commercial potential, which could be expanded soon with the consumer self-test, as well with Medusa19. And on the Therapeutics side, the transformation into a clinical stage oncology drug company is a huge step forward. It's drawn a huge amounts of focus and attention on the Group and the preCISION and the Affimer platform actually from pharmaceutical companies and investors. So a period of very significant milestones. I'm looking forward some more very significant value inflection points. I'm looking forward to having the chance to update the market in the coming months.

Alastair, Tony, thank you, once again, for updating investors this morning. [Operator Instructions] On behalf of the management team of Avacta Group plc, we would like to thank you for attending today's presentation. That now concludes today's session. Good morning to you all.