Open Orphan plc (LON:ORPH), a rapidly growing specialist pharmaceutical services clinical research organisation (CRO) and a world leader in vaccine and antiviral testing using human challenge clinical trials, has announced that it is at an advanced stage in planning for a possible spin-out of certain non-core Development IP Assets. These Development IP Assets are a portfoilio of intellectual property and development assets, including HVO-001 which has potential application in the treatment of respiratory disease. These do not include the equity interests in Imutex Limited and PrEP Biopharm Limited.
The Board believes that to maximise shareholder value that the Development IP Assets are best developed separately from the core services business. Furthermore, such a spin-out transaction could provide the opportunity to secure separate financial resources for these assets, to enable accelerated development of these assets and achievement of commercial milestones. A spin-out transaction would also allow Shareholders to benefit from both the value of the development assets and the standalone value of the core services business, as they progress through their own key milestones.
To this end, a circular (a “Circular”) is being sent to shareholders today providing background to, details of and reasons for, a proposed Reduction of Capital and Distribution in Specie, to facilitate the possible spin-out and admission to AIM of the Company’s non-core Development IP Assets. The reduction in capital will also allow for the Company to pay dividends and distributions to shareholders should the Board deem it appropriate in the future.
The Board has decided to take the necessary preliminary steps in preparation for a potential spin-out, including incorporating a new subsidiary, further details of which are outlined in the Circular. The Company has decided to proceed in obtaining the approvals necessary for the Reduction of Capital and the Distribution in Specie which are required to implement the demerger. Notwithstanding that the Company is seeking the necessary approvals for the Reduction of Capital and the Distribution in Specie now, these considerations remain at an early stage, and there can be no guarantee that the Reduction of Capital and/or the Distribution in Specie will be completed. HMRC advance clearance for the Demerger has been successfully obtained so any distribution would be exempt for income tax purposes and have no capital gains implications for UK shareholders. Further announcements will be made at the appropriate time.
Notice of General Meeting
The Circular contains a notice convening the General Meeting to be held at 11 a.m. on 29 April 2021 at which the Resolutions will be proposed.
Full details are outlined in the Circular, which will be posted to Shareholders today and will shortly be available, in accordance with AIM Rule 20, here: https://www.openorphan.com/investors/circulars-and-admission-document
Cathal Friel, Executive Chairman, said: “I am delighted that we are putting in place the first steps needed to enable the monetisation of some of our non-core assets. Over the last year we have been busy transforming Open Orphan into a profitable enterprise with a world leading position testing vaccines and antivirals using human challenge studies. We now have an opportunity to deliver significant further shareholder value by the Demerger of these non-core assets. Their development and commercialisation can be accelerated through the Demerger, which offers the opportunity to access financing as a separate public company listed on AIM and a separate business focussed on the successful commercialisation of pharmaceutical products.
“It is well known in the global public markets that value is better recognised in the life sciences space when profitable services businesses are viewed separately from pharmaceutical development businesses that have different funding needs. This is now an excellent opportunity for shareholders in Open Orphan to maximise value through separate shareholdings in both a profitable pharma services company as well as an exciting pharma products commercialisation company. I believe that both are well positioned for success as we head into a decade of exponential capital investment across a broad range of infectious disease and respiratory illnesess. This is a sector that has been under-invested in the last thirty years and as such, will be one of the more exciting growth opportunities within the life sciences industry.”
