Open Orphan (ORPH ) the specialist contract research organisation, announced this morning unaudited interim results for the 6 months ended 30 June 2022 (H1 2022)
Financial results
Open Orphan reported revenues of £18.9m, down from a strong period in H1 2021 of £23.2m.
However, the strong order book of £70m, which has almost tripled year-on-year (H1 2021: £25m). has provided significant confidence the Company can achieve full-year revenue guidance of £50m, underpinned by robust trading in July and August.
EBITDA grew 10% to £2.3m (H1 2021: £2.1m) with increased EBITDA margins of £12.1% (H1 2021: 8.9%).
Cash also increased to £15.9m as of 30 June 2022, compared to £14.9m a year ago.
New contracts
Open Orphan has had a busy 2022 so far, having won a string of large contracts.
Open Orphan's largest contract in H1 was a £14.7m deal signed with a "top 5" global pharma client for a full-service influenza challenge model programme. Other major contract wins in H1 include a £7.3m influenza challenge trial signed with a European biotech, a £7.2m RSV human challenge study with a "top 5" global pharma company, and a £5m RSV challenge trial signed with a European biotech.
Additionally, Open Orphan entered into an agreement with Vaxart to develop an Omicron COVID-19 human challenge model, with the intent to conduct an Omicron human challenge study in 2023.
The company was also awarded its first contract to act as a vaccination site for a Phase II study by an "existing Big Pharma" client.
Operational improvements
Open Orphan made investments in wholly owned hVIVO's facilities, which have enabled it to significantly expand screening capacity. As a result, it has doubled volunteer capacity to 1000/week, opened a new FluCAmp volunteer recruitment facility in Whitechapel with a 44% increase in number of beds, and opened a new volunteer recruitment centre in Manchester.
Open Oprhan expanded hVIVO's primary lab at QMB and added new satellite lab facilities in Whitechapel and Manchester. The company can now offer Phase II/III field-based studies.
Yamin 'Mo' Khan was appointed CEO in February 2022, "strengthening Executive Management Team and bringing significant CRO experience".
Post-period end
Since 30 June, the company has continued to win new large contracts:
A £10.4m contract was signed with an "existing top 5 global pharma client" for a new full-service challenge model development programme. And a £6.2m influenza human challenge study contract was signed with US biotechnology company Cocrystal Pharma.
Additionally, hVIVO's laboratory received a College of American Pathologists (CAP) accreditation last week, potentially increasing its marketability for third-party laboratory services.
July and August saw strong trading with revenues of £9m and a cash balance of £20m as of 1 September 2022.
Name change
Open Orphan also announced today it would assume the name of its wholly owned flagship subsidiary hVIVO.
"The Board believes that the name change reflects the Company's core human challenge and early clinical services business, where the hVIVO name has strong global brand recognition within the biopharma industry and beyond, as well as aligning the Company more closely with its long and established heritage." the company said.
The company's new ticker will be HVO as of 26 October 2022, and its website will switch to www.hvivo.com. The Company's ISIN and SEDOL will remain the same.
View from Vox
Open Orphan's large number of major contracts signed in H1 speak to the rapid momentum the company has generated in only 6 months, with the pace continuing to accelerate. While revenues decreased some to £18.9m on 30 June from £23.2m the year prior, the company's book order nearly tripled to £70m year-on-year. In July and August alone, Open Orphan recorded £9m of new revenue and added £4.1m to its cash balance.
The £80m of new book orders is expected to be recognised across 2022, 2023, and 2024, giving the company a predicable steady flow of future revenue. Four of the top 10 global biopharma companies are now regular repeat clients of Open Orphan.
Open Orphan's growth is being driven by increasing demand for human challenge services in a rapidly expanding infectious and respiratory disease clinical trials market. Since the COVID-19 pandemic, there has been a marked increase in the number of companies looking to test vaccines and antivirals against specific subtypes of viruses that have the potential to be widely spread. Influenza is becoming a major focus, with an estimated 1 billion cases per year, including 3-5 million severe cases.
To keep up with this growth in demand, Open Orphan has made the right investments in its operational capacity as detailed above, and further expansion is expected. Open Orphan has also diversified its offerings, currently adding new challenge models, including SARS-CoV-2 Omicron and a new influenza strain.
Open Orphan expressed confidence in meeting current market expectations for FY2022. "The Group remains well positioned and well capitalised to deliver sustainable long-term profitability targeting double digit EBITDA profit margins of between 13-15%." it said.
Yamin 'Mo' Khan, CEO, expanded: "I am pleased to report that the Group has leveraged the strong foundations laid in 2021, continuing its profitable momentum into 2022. Importantly, the Group achieved double digit EBITDA profit margins for the first time, a key goal for the business following the first full year of EBITDA profitability last year. In the second half, we expect revenues to grow considerably and profit margins to increase further as a number of significant contracts signed earlier in the year enter the clinic."
Yamin 'Mo' Khan was guest on the Vox Markets podcast this morning. Click here for that conversation.
Open Oprhan's decision to assume the name of its wholly-owned subsidiary hVIVO should be easy for investors to get used to, given the company has now become nearly synonymous with hVIVO. The new ticker HVO goes live on 26 October 2022. Shareholders will be unaffected by the change.
Investors welcomed today's news with ORPH shares up 2.38% in early trading.
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