hVIVO (HVO) , a contract research organisation specialising in human challenge trials, announced unaudited interim results for the 6 months ended 30 June 2023 (H1 2023).
hVIVO saw revenues increase 52% to £27.3m, compared to £18m in H1 2022. EBITDA more than doubled to £5.2m from £2.3m last year and EBITDA margin increased to 19.1% from 12.6% a year ago. Net cash also doubled to £31.3m as of June 30 2023, compared to £15.9m in June 2022. The company's weighted contracted orderbook stood at £78m on June 30 2023, from £70m a year ago.
Operationally, hVIVO kept busy with multiple human challenge models completed or under development. Most notably, the company is developing a new human metapneumovirus (hMPV) challenge model, funded by an end-to-end contract with an undisclosed North American biopharma. Also during the period, hVIVO completed manufacturing of its Influenza H1N1 and Omicron human challenge viruses.
Post-period, the clinical trial company began development of a Flu B challenge model, funded by a £13.1m contract with an existing "top five" global client. hVIVO's drug development consultancy arm Venn Life Sciences is also growing as it was awarded a €3.2m contract with a major pharma client.
A number of hVIVO human challenge trials saw positive outcomes during the period, namely Pfizer’s ABRYSVO, which became one of the first RSV vaccines to receive FDA approval in May 2023. Additionally, Cidara received FDA Fast Track designation for its influenza antiviral candidate in June 2023, and SAB Biotherapeutics received FDA Breakthrough and Fast Track designation for its influenza antiviral candidate in April 2023.
Post-period, hVIVO started work on a new facility, largely funded by a number of its clients, due to open in H1 2024. It will host 50 quarantine beds, with the potential to expand to 70, an expanded labs, an outpatient unit, and new corporate office.
View from Vox
An excellent set of interim results from hVIVO as the company continues to solidify its leadership position within the rapidly growing human challenge trial market. Revenues increased 52%, EBITDA more than doubled, and margin increased to 19.1% from 12.6% a year ago. Net cash doubled to £31.3m on the back of a growing orderbook of £78m as of June 30.
As detailed above, the company is juggling multiple large contracts with an orderbook 11% larger this year and significantly diversified across multiple clients, challenge agents, and geographies, underpinning revenue visibility to H2 2024. The recently announced plan to move to a new expanded and more modern facility in H1 2024 will enable hVIVO to further increase its revenue potential with more quarantine beds and the ability to conduct multiple studies simultaneously and faster.
The new facility will also consolidate hVIVO's clinical and lab operations as well as corporate offices, increasing operational efficiency, reducing costs, and potentially increasing long-term margins.
hVIVO continues to be highly cash generative as evidenced by its doubled cash balance, even after the payment of a £3m special dividend in June 2023. Underlying free cashflow (before the payment of the special dividend) was £6m in H1, reflecting strong EBITDA growth and upfront customer payments. hVIVO is already fully contracted to achieve its full-year revenue and margin guidance, which was bumped up today to £55m and 19% respectively.
In summary, H1 2023 was another period of rapid growth for hVIVO, building on equally impressive performance in FY22. The company remains an attractive value proposition for pharma and biotech companies seeking fast and cost-effective data that enables them to fast-track larger Phase 2 trials and the rest of the development pathway for their candidates. Demand for human challenge trials has soared for the value and benefits they offer, and hVIVO is quickly establishing itself as a leader in the space.
Investors continue to buy HVO, driving the shares 54% higher year-to-date, and 80% higher in the past year.
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