Covid-19 vaccine announcement wipes £150m off value of Leeds biotech firm

Avacta chief executive Dr Alastair Smith

News that a Covid-19 vaccine is in the works has been positively received by the markets as a whole but one Yorkshire-based business saw £153m wiped off its value as its stock took a tumble as businesses involved in testing become “less attractive” to investors.

Avacta Group, the Wetherby-based life sciences business has seen its shares increasing in value since the start of 2020, but they truly took off while the UK was in its first lockdown and the business confirmed it was working on a rapid test for coronavirus.

Since then its share price peaked at 202p in May and then more recently at 195p in October, as the firm kept the market updated on the progress of its rapid test clinical trials and its partnerships with .

However, today’s news from Pfizer, that preliminary analysis of the first effective coronavirus vaccine shows it can prevent more than 90% of people from getting Covid-19, saw Avacta’s share price fall by 35.48% to 110p per share.

This drop saw its market cap fall £152.85m and saw city analysts said the news of a potential vaccine made the medium to long term outlook for testing “less attractive”.

Avacta isn’t the only business to be negatively impacted with life sciences businesses Novacyt down 33.14% and Manchester-based Genedrive falling by 38.68%. In addition other sectors which have benefitted from lockdown saw a fall, with both Ocado and Just Eat Takeaway shares dropping in value.

Russ Mould, investment director at AJ Bell said explained that today’s news had triggered “one of the biggest single day movements in global equities for a long time.”

He added: “A successful vaccine has greater significance than Joe Biden winning the US election as it would effectively pave the way to restarting economic growth globally.

“On the flipside, stocks connected with Covid-19 testing were in retreat as investors took the view that their medium to longer term prospects were less attractive.”

Mould however cautioned that “Pfizer’s update is not confirmation that the vaccine is safe for wide scale deployment” and that it was still in trial.

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