Open Orphan Plc (LON:ORPH), a rapidly growing specialist CRO pharmaceutical services company which is the world leader in the testing of vaccines and antivirals using human challenge clinical studies, has announced its interim results for the six months ended 30 June 2020. The interim results include the first six months of hVIVO group (“hVIVO”) following its acquisition by Open Orphan Plc on the 17 January 2020.
Operational Highlights:
· Completed the acquisition of hVIVO plc for an aggregate consideration of approximately GBP£13 million in equity on 17 January 2020
· Implemented a major restructuring and integration of our operations to drive efficiency and competitiveness which is now substantially completed
· Successfully secured a number of RSV human challenge studies in the period including:
– £3.4m contract with a major European biotech company, with anticipated £7m follow-on study
– £3.7m contract with a US biotechnology company
· Driving growth of Dutch early clinical development services while refocussing French operations towards biometry services
· Large contract signed with a global leader in vaccine development
· Launch of COVID-19 Antibody testing partnership with Quotient Ltd
· Appointment of Leo Toole as Group Chief Financial Officer enhancing the executive management team
Financial Highlights:
· Cash and cash equivalents at half year end of GBP £14.7m following two successful placings:
– Executed a fundraise on 31 January 2020 raising GBP £5.3 million at 6.1p per share (before expenses)
– Executed a fundraise on 22 May 2020 raising GBP £12.6 million at 11p per share (before expenses)
· Reported Interim Results
o Revenue of GBP £7.1 m for H1 2020 – continued focus on delivering larger contracts
o EBITDA loss of GBP £4.1m for H1 2020
o Operating Loss of GBP £5.0m for H1 2020
· Pro-forma Interim Results
o Revenue of GBP £7.4m (H1 2019 Revenue of GBP £11.6m)
o EBITDA Loss of GBP £4.7m (H1 2019 EBITDA loss of GBP £4.7m)
o Operating Loss of GBP £5.6m (H1 2019 Operating Loss of GBP £6.3m)
· Post completion of Merger, reduction in overheads on target to deliver annualized cost efficiencies of GBP £10.1m by end of 2020
Post Period End:
· Acquired the CHIMagents team in July, reinforcing hVIVO’s position as the world leading services company in the testing of vaccines and antivirals through human challenge study clinical trials.
· Integrated hVIVO’s unparalleled database of infectious diseases progression data into the Open Orphan data platform – expecting potential commercialisation in Q4, with some of the world’s largest wearable companies for this disease progression data.
· Progressing as planned to monetise two of our non-core assets, the 49% stake in Imutex and the 62.6% stake in PrEP.
· The Company continues to provide testing to large commercial employers in the UK and Ireland as part of a combined COVID-19 antibody and COVID-19 PCR (swab) testing offering.
· Contracts signed post period end include:
– Laboratory services contracts signed with a number of parties – a key strategic growth area for Open Orphan taking advantage of our laboratory expertise.
– Contract signed with Codagenix Inc. for a first-in-human Phase I COVID-19 vaccine study, demonstrating that hVIVO’s quarantine facility is uniquely suited to conducting Phase I studies for infectious disease vaccines such as this.
– Further RSV human challenge study contract for £4m signed with a Top 3 global pharma company with hVIVO acting as sponsor for this study.
– First-in-human clinical pharmacology trial signed with Carna BioSciences.
– Contract signed with a major European pharmaceutical company for data management, statistics and medical writing to support a 750 subject oncology study.
– Contract signed for a further £4.3m human challenge study with a top 10 global vaccine company.
Outlook:
· The Group has a strong pipeline of contracted work and new projects at an advanced stage of negotiation and is targeting growth with strong operating cash flow in the second half of 2020 and is on target to be operationally profitable in Q4.
· As of September 2020, we are close to having the hVIVO quarantine clinic block booked with conventional challenge studies until December 2021. Quarantine clinic block expected to shortly be booked out for the next 18 months to two years with conventional challenge study contracts.
· Further to its announcements of 9 March 2020 and 22 May 2020, the Company is well progressed in developing the world’s first Coronavirus human challenge study model to test a range of COVID-19 vaccines, complementing existing human challenge study models. We are in advanced discussions and negotiations with a range of potential customers, including the UK Government to test COVID-19 vaccines.
Cathal Friel, Executive Chairman of Open Orphan, said:
“Since we acquired hVIVO in January 2020, we have achieved what we set out to do. We have created a leaner more efficient businesses, removed excess costs and we are now a truly unique clinical research organisation (CRO) that is the world leader in the testing of vaccines and antivirals through the use of human challenge clinical trials. We have secured larger, more profitable contracts with both large pharma and the leading vaccine developers globally. We have delivered upon our aim of improving revenue streams through the delivery of several new revenue lines including the provision of laboratory services to third parties. We have reinvigorated both the Venn Life Sciences business and the hVIVO business during the first half of 2020 and have created a strong foundation for future growth.
Looking ahead, I am extremely excited by the potential for this business, we have entered a decade of significant spending on vaccines and antivirals by both governments and pharma companies around the world. The Open Orphan Group including hVIVO and Venn Life Sciences is ideally positioned to capitalise on this increase in vaccine development expenditure. Earlier this year we set ourselves the target of being profitable in the second half of 2020 and I am delighted to confirm that, despite profitability taking a few months longer than expected, we are on target to be operationally profitable in Q4 2020.
None of the above would have been possible without the exceptional effort, dedication and professionalism shown by all hVIVO, Venn and Open Orphan team members. They have worked diligently through the past 6 months, despite the added difficulty of the pandemic, to ensure that we have delivered an excellent performance. The teams are really well positioned to thrive as the world leaders in the testing of vaccines and antivirals for the decade ahead.”
Conference call for sell-side analysts and investors
The Company will hold a conference call for sell-side analysts and investors at 10:30 today.
Details for the conference call can be found at: https://www.speakservecloud.com/register-for-call/254ba4b5-e780-48fb-9142-c5762f4ef8ef
A corporate presentation is available to shareholders on the Group’s website at: https://www.openorphan.com/investors/reports-and-presentations/year/2020
Executive Chairman’s Statement
Dear Shareholder,
As Executive Chairman, I am very happy to report the first set of combined results since Open Orphan plc’s (formerly Venn Life Sciences Holdings plc) acquisition of hVIVO plc (now hVIVO Limited) in January 2020.
Summary
The 6 months to the end June 2020 have been a period of significant change initially focussed on progressing our strategy to sign contracts for our world leading human challenge studies clinical trials which are used to test vaccines and anti-virals. We are also signing new contracts for biometry services from our Paris office and early clinical development services from our Breda, Netherlands office while at the same time developing further new revenue streams such as laboratory services to complement our existing London business. This has all been done while at the same time we implemented a major restructuring and integration of our operations to drive efficiency and competitiveness which is now substantially completed.
Also, in this period, the Company addressed the rapidly evolving COVID-19 pandemic event by enabling a safe and efficient working environment for our staff at home and in our clinic and laboratory facilities. We have worked proactively with our clients to manage project timetables to minimize the impact of Covid-19 on our revenues streams while continuing to build new relationships to expand our confirmed project pipeline well into 2021 and beyond.
Other highlights include the completion of a placing of £12.6m (before expenses) at 11p per share in May 2020 allowing us to invest to accelerate the development of a world-first coronavirus challenge study model to test COVID-19 vaccines and antivirals. This was all done while also expanding our laboratory service offerings to offer enhanced external laboratory services and to develop testing services to support the nascent testing environment for Covid-19.
Interim Results
Reported results for Open Orphan plc are summarized below and are covered by the schedules and notes from pages 6 to 14 of these Interim Financial Statements (and in particular reflect reverse merger accounting treatment under IFRS 3 and IFRS 10 of the combination of Venn Life Sciences Holdings plc and Open Orphan DAC as of 28 June 2019). We also share for reference the results for hVIVO plc (now hVIVO Limited), Open Orphan plc (formerly Venn Life Sciences Holdings plc) and Open Orphan DAC on a stand-alone basis.
Governance
The Board continues to recognise the importance of the high standards of corporate governance and considers that the Group’s success is enhanced by the imposition of a strong corporate governance framework. I am grateful for the contributions of the new Board formed after the acquisition in January 2020 and want to acknowledge the important service of Trevor Philips during his tenure on the Boards of hVIVO plc (now hVIVO Limited) and Open Orphan plc until he stepped down in May 2020.
Outlook
Our business outlook has never been stronger. Demand and interest to complete Challenge studies in our 24-bed quarantine facilities in the UK is translating into a steady flow of signed new contracts and new customer engagement. As a result of the fundraise at the end of May, Open Orphan now has a large, healthy cash balance and, as such, is very well capitalised and we are ideally placed to be providing such services to governments and pharma companies around the world who seek to address the current pandemic and mitigate the risk of future such events. We are progressing a number of encouraging avenues to rapidly develop a human challenge model specific to SARS CoV-2 to fast track the identification of efficacious vaccines and treatments for Covid-19.
Our early clinical development business based out of Breda in the Netherlands is showing strong year on year growth while our biometry services based out of our Paris office, now focussing on data management, biostatistics, medical writing and randomisation, are contributing strongly to generate synergies for our viral challenge studies and expand their pipelines.
Across the second half of 2020, we will see the impact of the major efforts undertaken across the Group to divest from underperforming businesses, reduce overheads, deliver merger integration savings and right-size the management team including combining senior roles in both Venn and hVIVO leading to operational profitability in Q4. Our renewed focus on reducing hierarchy has increased the speed of decision making while empowering our teams to deliver our ambitious goals.
In addition, data is an important upstream area of development for the Group where we believe there will be an important convergence of hVIVO’s global infectious disease progression data with the digitization of other vital signs and biomarkers available through our challenge studies, all with the goal of creating a ground-breaking Open Orphan Health Data platform that can be monetized with major pharma players.
I am very encouraged for the remainder of 2020 and our prospects in 2021. We have a world leading team, focused on ground-breaking work which will create sustainable value for all our stakeholders.
Cathal Friel
Executive Chairman
30 September 2020
