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, announced its audited results for the 12 months to 31 December 2020. Following the acquisition of hVIVO in January of last year, 2020 was a year of transition for the Company with management integrating both businesses and driving improvements in revenue, gross margin and efficient overheads.
This culminated in Q4 2020 proving to be an inflection point for the Company as it successfully generated both an operating profit and positive cashflow. In addition, the Company ended the year with a strong order book of contracted revenue which has been the foundation for the Company’s very strong start to 2021. In the context of the rapidly evolving COVID-19 pandemic and broader growth of the global infectious disease market, this should translate into very strong growth opportunities for the Company going forward.
Operational highlights:
· Integration of hVIVO and Venn Life Sciences completed with pharmaceutical services business now profitable and poised for strong revenue and EBITDA growth in 2021; growing working capital balance on hand
· Clearly established as the world leader in the testing of vaccines and antivirals through the use of human challenge study clinical trials
· Strategy in place to maximise shareholder value via the demerger of non-core assets with first spin-out Poolbeg Pharma Ltd well under way
· In the last 12 months substantially increased the number of quarantine beds available to Open Orphan:
§ Original 24 quarantine beds in Queen Mary’s BioEnterprises Centre (QMB) in Whitechapel
§ 19 bed additional beds through the conversion of the Whitechapel Hotel
· Open Orphan has the capacity to screen in >500 volunteers per week to support a growing pipeline of human challenge studies.
§ New state-of-the-art volunteer recruitment screening centre on the ground floor of QMB
§ New standalone regional volunteer recruitment screening centre in Manchester
· Strategic decision In March 2020 to develop a COVID-19 challenge model:
§ hVIVO was uniquely placed to contribute to a world-first initiative led by the UK government to work as part of the Vaccine Task Force’s Human Challenge project to manufacture a COVID-19 virus, and to collaborate on the design and delivery of a characterization study to understand how to use this virus for vaccine and anti-viral challenge trials, which is ongoing.
§ Collaboration is ongoing with significant progress achieved to enable the Group to test vaccines and therapeutics against COVID-19 in the near future.
Financial highlights
· An important year of transition to reverse the proforma losses in 2019 by strengthening business development, restructuring underperforming businesses, driving cross group synergies, eliminating unnecessary layers of management, and integrating support functions across the Group.
· Significantly improved track record of major contract wins in 2020 (versus 2019) setting the scene for strong revenue growth in 2021
· Turnaround on track evidenced by an operating profit delivered for Q4 2020 and targeting full year profitability in 2021
· Cashflow positive in Q4 2020 driven by advanced cash payments on major agreements.
· Pharmaceutical services business (the combined business of Venn and hVIVO) is operationally profitable and moving into cash generation.
· Well capitalized following two placings raising a combined total of £17.9m (before expenses)
· Cash and cash equivalents of £15.1m as at 31 May 2021
· Proforma revenues of £22.4m (2019: £23.7m), with losses reduced to £11.3m (2019: £14.5m)
· Reported revenues of £22.0m (2019: £3.5m), with a reported loss for the period of £10.8m (2019: £5.7m)
Outlook:
· Clinical Science Teams and Laboratory Development Teams continue to address ground-breaking research projects with major pharmaceutical players – strong demand for services expected.
· Planned demerger strategy is progressing well with further update provided today on Poolbeg Pharma
· Demergers offer an excellent opportunity for shareholders to maximise value through separate shareholdings in a profitable pharma services company as well as exciting pharma products commercialisation companies.
· Opportunity to progress Disease in Motion® platform.
· Targeting delivery of full year profit in 2021 – focusing on enhancing profits and earnings
Cathal Friel, Executive Chairman of Open Orphan plc commented: “The Group is not simply satisfied to have returned to a positive operating position at the end of 2020 and to be targeting to deliver a full year profit in 2021, it is now focused to further enhance the quality of profits and earnings of the Group going forward. Therefore, notwithstanding the strategic investments we are making in new challenge models and the Disease in Motion® platform, we will relentlessly focus on cross selling our services across our broad client base, leveraging technology to drive improved efficiencies, and stripping away unnecessary cost in our operations.”
“It has been a remarkable year and I am grateful to our team for their hard work and loyalty. I am also grateful to you, our shareholders for the faith you have placed in the Group. The new financial year has started well and is already very well advanced. We are confident that the actions we are taking now to drive our core CRO business and monetise non-core assets should create significant value for all our stakeholders.”
The Company’s Annual Report and Accounts for the year ended 31 December 2020 will be posted to shareholders in due course together with the notice of the 2021 Annual General Meeting], and will be available on the Company’s website, https://www.openorphan.com/
Analyst Briefing
An online briefing for Analysts will be hosted by Cathal Friel, Executive Chairman, and Leo Toole, Group Financial Officer, at 11.00am on Thursday 17 June 2021 to review the results and prospects. Analysts wishing to attend should contact Walbrook PR on [email protected] or on 020 7933 8780.
