Avacta Shares Have Risen 43% YTD. So Why Are They Pulling Back?

The Avacta Group Plc (LON: AVCT) share price has risen 43% this year but has recently pulled back. Is the uptrend over, or is this just a normal pullback before the rally continues? Let’s dive into the company to find out what could come next for investors. 

To understand Avacta’s prospects, we have to examine the proprietary drug platforms created by the biotech company. The first platform is the Affirmer platform, which has been developed to transform the use of antibodies to fight diseases. 

The Affirmer platform eliminates many side effects associated with using antibodies, including the high manufacturing costs, their poor specificity, which leads to many unintended side effects, and their reliance on the response from an animal’s immune system to work. Some analysts believe the platform is worth much more than Avacta’s current market cap. 

Avacta has also developed the pre|CISION chemotherapy platform, which promises to eliminate all the side effects of chemotherapy, including hair loss. The platform could revolutionise the cancer treatment industry but is still far from commercialisation. 

AVA6000 is the lead drug candidate developed on the pre|CISION platform and is still in phase 1 clinical trial, where it has generated a favourable safety profile in participants. Interestingly, the drug has been awarded orphan drug designation by the US FDA. 

Still, there are no guarantees that AVA6000 will reach commercialisation since it still has to pass phase 2 and 3 clinical trials. Still, Avacta could be sold for billions to the right bidder, given the potential impact of its drug platforms. 

Avacta has pursued partnerships with other pharma companies, including a licence agreement with Point BioPharma, a joint venture with DaeWoong Pharmaceutical, and a $400 million partnership with LG Chem.

Some analysts have expressed concern that Avacta’s long-serving CEO and founder, Alastair Smith, may resist attempts to buy the company.  

However, I think he could sell for the right price since the leading global pharma companies prefer to acquire promising companies instead of just partnering with them. I believe a multi-billion offer might convince Smith to sell Avact to a big pharma company.

As for the pullback in Avacta shares, I think it is a normal pullback, and the price will reverse course in the next few days. 

*This is not investment advice. 

The Avacta share price has risen 43% since the year started but has recently pulled back. Here’s why.