Open Orphan at ‘advanced stage’ of possible spin out of non-core assets
(ORPH ) informed investors that the Company is at “an advanced stage” of a possible spin out of some of its non-core development intellectual property assets.
Addressing shareholders, the Board said it believes that to maximise shareholder value that the Development IP Assets are ‘best developed separately from the core services business.’
The portfolio of assets includes the potential respiratory treatment, HVO-001. The company noted that it won’t be offloading equity interests in companies Imutex and PrEP Biopharm.
A spin-out transaction could secure separate financial resources for the assets, enable their accelerated development and achieve commercial milestones, the Company told investors.
The Group said it will also allow shareholders to benefit from the value of the development assets and the core services business, ‘as they progress through their own key milestones.’
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, where investors will be given shares in a new AIM company containing the non-core intellectual property assets.
Open said it 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.
ORPH explained to investors that the information will be sent out in order to facilitate the possible spin-out and admission to AIM of the Group’s non-core Development IP Assets.
Specifically, the reduction in capital will also allow ORPH to pay dividends and distributions to shareholders should the Board deem it appropriate in the future. Open Orphan said these considerations remain at an early stage with no guarantee that it will be completed.
"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 into a profitable enterprise with a world leading position testing vaccines and antivirals using human challenge studies,” said Executive Chairman, Cathal Friel.
“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.
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 illness.
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,” he added.
Today’s news of a proposed spin-out is expected to grant Open Orphan the opportunity to deliver significant further shareholder value by the Demerger of these non-core assets.
ORPH said the assets’ development and commercialisation can be accelerated through the Demerger, which offers the opportunity to access financing as a separate public company and a separate business focused on the successful commercialisation of pharmaceutical products.
Executive Chairman, Friel, said he believes this is an excellent opportunity for shareholders to maximise value through separate shareholdings ‘in both a profitable pharma services company as well as an exciting pharma products commercialisation company. ‘
Shares in Open Orphan have nearly doubled in value since the beginning of 2021. The stock was trading 8.33% lower this morning at 41.25p following the Group’s announcement.
Reasons to ORPH
Open Orphan is a rapidly growing Contract Research Organisation and world leader in the testing of vaccines and antivirals through the use of human challenge clinical trials.
The Group comprises two commercial specialist CRO services businesses, hVIVO and Venn Life Sciences and is also building out a valuable data platform business. All businesses are now working closely together to offer upselling and cross selling opportunities.
World Class Facilities
Open has Europe's only 24-bedroom quarantine clinic with onsite virology providing individually isolated rooms and specialist laboratory facilities. The hVIVO facility offers highly specialised virology and immunology laboratory services to support pre-clinical and clinical respiratory drug, antiviral, and vaccine discovery and development.
Largest Test Portfolio
Open Orphan has a leading portfolio of 8 viral challenge study models, which are: 2 FLU, 2 RSV, 1 HRV, 1 Asthma, 1 cough and 1 COPD viral challenge models. As announced in early March 2020, it is rapidly advancing several COVID-19 challenge study models and expects to be helping many COVID-19 vaccine development companies to test their vaccines.
hVIVO works with UK and Irish companies to provide COVID-19 testing to staff to protect staff and customers from a workplace COVID-19 outbreak through its COVID Clear offering.
The company announced that its firstvolunteer had been dosed with the Codagenix needle free, intranasal COVID-19 vaccine, COVI-VAC as part of a Phase I clinical trial of COVI-VAC currently being carried out by hVIVO, at its facility in the UK.
Rapidly Expanding Market
The market for vaccine development and testing has grown rapidly over the past six months, largely due to the outbreak of Covid-19.
However, ORPH believes Governments and International pharmaceutical companies around the world will be making enormous ‘catch-up investments’ in all types of vaccine development to ensure the effects of any pandemic can be mitigated in the future, which it said should result in the hIVO facility being booked out for months, if not years, in advance going forward.
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