Thread by @TaylorQuant

Some great discussion and writing going around today. Hate to repeat a tweet but Friday really has made investors and potential investors take a step back and put #NCYT under the microscope.

Not everyone posts on main feed though.

Copying this from @duncanhallas..

Because it mirrors my feelings strongly about M&A right now. Some food for thought.

Duncan: "The more I think about it the more I don’t want NCYT to make a small bolt on acquisition at a very high premiums.

Interestingly the value we present to a future buyer based on our cash + incoming revenue + IP & operations is genuinely interesting. Remember CFOs are the ones that approve acquisitions.

Having done some more research today seems that what we have really missed in the past is global reach both direct to add to what was always a very average distributor network. The product pre-Covid was already excellent.*

Covid's windfall is to allow that product portfolio to become an option for buyers around the globe. Also we’re not hampered by the huge opex cost of the traditional players. Free from the constraints of the DHSC we can be much more strategic.

We can be more aggressive, with a more digitally-enabled business. We could actually undercut competitors significantly in their key accounts and capture emergent buyers before they become large consumers.

Also this frees up real R&I capability (if the vision is there).

I feel Versalab will morph into something unrecognisable in 2-3 years. I’m feeling really good about the opportunity still and we will see if GM has the vision."

* The portfolio Duncan references above is PrimerDesign's 550+ products and Q16 device.

Although small and portable, the Q16 has its limitations.

Some potential investors may be thinking if Novacyt weren't selling all these tests before, 'why would they after Covid'?

Well you know the tests are excellent as Duncan references above, but you need the sales team and the cash to build that sales team (hence the ridiculous hiring spree for the 2nd year running now).

But also..

The Q32 only launched just before the pandemic hit. There was little time to roll this device out, the focus shifted entirely to the pandemic.

Luckily for Novacyt they had just released the Q32 pre-pandemic and we saw the result - multiplex testing.

WinterPlex and VARIplex are two names you know now, and although Novacyt could have designed those assays before - they couldn't have run them on their own Q16.

That's why Novacyt's fortune is more than just about the pandemic striking.

They had already developed new portable PCR tech just before Covid hit to allow them to push into deeper decentralised PCR testing markets and offer market leading multiplex capabilities.

Even without the pandemic, Novacyt would still have been pushing into this area in 2020 onwards.

Obviously the pandemic has provided a 5 year advance on cash and a host of new technologies to their portfolio.

I digress, but the point there is that as Duncan says - @NovacytGroup always had the portfolio of tests.

The main driver for their success now is organic growth in international markets.

Which they're already doing.

We're actually very, very close. And we now have the ability to be very, very aggressive. We have cash, we're small and nimble enough still to switch R&D from one market need to the next on the drop of a hat.

Mullis wasn't being bullish when he said he was talking Novacyt Mid Cap.

It's looking more like an inevitable conclusion. The foundation already existed. The pandemic noise and volatility just obscures a very obvious future leader here.

Anyway just thought the observations were interesting. Seen a lot of really great quality chat today and honestly it's been great for me to sit back and absorb and debate a bit of it and work out my own conviction. Oddly more positive than ever after the weekend reading.

I definitely recommend everyone read this by @BlackbirdInvest before deciding on Novacyt's current value too, even before we move deeper into the non-covid strategy (which I expect begins in two months after the last two products for covid are launched).

https://twitter.com/BlackbirdInvest/status/1381260355599536128?s=20

Although the company's current mcap looks comical, there are reasons for it - an extremely powerful sentiment and doubt from casual investors who only understand Novacyt as a 'covid stock'.

That will change once Novacyt updates the market on their future strategy in Q2.

We have a selloff.

And it is like the selloff that took us back down to £2 from £5 last year, which had streams of investors kicking themselves for missing the opportunity come autumn. They were filled with doubt and trolled out of seizing an obvious play in the 200s.

Hopefully reading some sensible material this weekend will let us all go into next week prepared to make rational decisions.

And remember, Mullis and the team work daily to make this happen. They are so close to pivoting into a sustainable revenue testing Co.

And that's where the Gold is.

That's where we finally get a PE ratio worth talking about.

Good luck all.

(They're also a really, really nice group of people to get behind, and that's why I trust they'll do this, and do it right, without misleading us)

ESG on point. And Mediscience Winner 2020 for USP.