Open Orphan’s hVIVO signs £8m contract to test antiviral product
(ORPH ) said its subsidiary hVIVO has signed an £8.1m contract with a major global pharmaceutical firm to test its inhaled human rhinovirus (hRV) antiviral product, with the bulk of the revenue from this contract to be recognised across 2021 and 2022.
Under the terms of the agreement, hVIVO will test the antiviral product using its asthma human challenge study model, which uses a hRV challenge agent (common cold virus). This antiviral study will be conducted by hVIVO and is expected to commence 1H22.
Asthma is a long-term condition that is characterised by inflammation and narrowing of the small airways of the lungs, which causes coughing, shortness of breath and chest tightness.
Currently, 5.4 million people in the UK receive treatment for asthma, and illnesses such as the common cold, which is most commonly caused by HRV, can worsen symptoms.
In a research note, analysts at Arden Partners said the contract win reflects “the increasing value and breadth of challenge study contracts that the Group is pursuing and winning.”
In our view, the stock’s sharp pullback in recent months represents a strong buying opportunity when considering the ongoing COVID and related infectious diseases issues.”
A subsidiary of Open Orphan, hVIVO has two decades of experience and expertise in safely conducting challenge studies across a range of respiratory and infectious disease viruses, including, inter alia, various strains of influenza, RSV, HRV, Asthma and Malaria.
The Group said the contract underlines the increased international focus and investment into respiratory and infectious diseases following the pandemic, in areas previously underserved by the pharmaceutical industry including, interia alia, the common cold and flu.
Executive Chairman of Open Orphan, Cathal Friel, said: “Post-pandemic most governments across the world, all of the Big Pharma companies and many of the smaller pharma companies are now investing hugely in new infectious and respiratory disease products and as such, this market is expected to grow from $20bn in 2019 to $250bn by 2025.”
Friel explained that this “restocking of the pharmaceutical industries medicine cabinet of infectious disease products around the world is now leading to an enormous expansion of investment into the infectious disease and respiratory product market and will be seen as one of the biggest growth opportunities in the history of the pharmaceutical industry.”
Analysts also pointed to the broader investment opportunity in the infectious disease space. Commenting on this latest asthma challenge model contract win, Arden said Open Orphan was “beginning to monetise the broad range of IP within the challenge model portfolio.”
In terms of market scope, analysts explained: “The lack of investment in infectious diseases by large pharma in recent years indicates that R&D should expand to $250b by 2025 according to the press release, representing a huge growth opportunity for Open Orphan.”
“Our 50p sum of parts valuation consists of £260m for hVIVO based on premium peer group multiples of 5x EV/Sales and c. 40x P/E (2021E) and assumed valuations of non-core assets of Imutex and Prepbiopharm. Our recent work on pharma assets and demand in infectious diseases indicates licencing deals for attractive assets could be worth £50-100m.”
Arden Partners said it has made no changes to its market forecasts of Open Orphan on the back of this contract and that it sees this as “further validation of the increasing pipeline.”
“In addition, the scale of this contract, the customer in question as a global pharmaceutical company and the expanding investment in infectious disease R&D suggests that Open Orphan continues to occupy an exciting position at the fulcrum of the industry and the global battle against infectious diseases which we believe is good for investors,” analysts added.
“Having recently launched our Malaria Human Challenge Study Model, adding to our world leading portfolio of challenge study models, ORPH is now ideally situated to be one of the few companies in the world that can quickly and efficiently test a broad range of these new infectious and respiratory disease products in our human challenge clinical trial studies.
Open Orphan is well placed to work with Big Pharma and biotechs alike to move their products through the clinic as human challenge becomes a part of mainstream clinical trial design,” added Friel.
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 first volunteer 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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