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Open Orphan signs £3.2m challenge study deal with upside potential (ORPH)

Friday saw Open Orphan (LSE:ORPH) reveal the signing of a multi-million-pound deal with a European biotech company.

The contract, which is projected to deliver £3.2 million in revenue this year, will see Open Orphan provide a human challenge study for respiratory syncytial virus. Should the study be a success, then the firm expects an additional follow-on larger challenge study to begin at the end of the fourth quarter. This could deliver additional revenue totalling at least £7 million.

Open Orphan said the contract provides an example of hVIVO, part of its operations, successfully converting its pipeline and maintaining its position as world-leading viral challenge studies provider.

“This agreement continues to endorse the importance being placed on the use of viral challenge models supporting product development for companies developing antivirals, vaccines and respiratory therapeutics,” added Open Orphan’s chief executive Trevor Phillips.

The organisation merged with hVIVO earlier this year in the fastest London Stock Market takeover for seven-and-a-half years. The two companies decided to combine because they felt they could offer a more “end-to-end” service as an enlarged entity due to their complementary services.

Before the deal, hVIVO – a leading provider of challenge studies – could not advance the drugs it tests onto the pre-clinical, Phase I, and Phase II trial stages as it lacked the capability. As Open Orphan can provide these facilities, the two firms are now beginning to offer an expanded service to existing and new clients, commanding more considerable sums for their contracts.

On Friday, chief executive Cathal Friel added that the latest deal highlights the benefits of the merger.

“In the short term, the combination of Open Orphan and hVIVO is expected to result in substantial cost savings through the elimination of subcontractor costs where they can be replaced by new capabilities within the company,” he said.

Elsewhere, Open Orphan highlighted the increasing awareness of virology in the face of the rise of Covid-19, or coronavirus. HVIVO is well positioned for this, as it boasts Europe’s only commercial 24-bed quarantine clinic and on-site virology laboratory and is the only company globally with the capability to run an RSV human challenge study.

The enlarged Open Orphan group recently moved to capitalise on this by establishing an advisory board tasked with providing solutions to the coronavirus outbreak. The committee is headed up by Professor John Oxford, a professor at Queen Mary’s University London and a leading expert on influenza known for his treatment work on bird fly SARS, and MERS. Critically, Oxford is also one of the founders of hVIVO.

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