The remarkable rise of rare and orphan drug producer Open Orphan (LSE:ORPH) continues with the confirmation of a new Covid-19 antibody test.
The company has been a favourite around these parts since October 2019, when it was at 5.5p. Now, the share price sits north of 14p on strong buying volume.
The market is finally waking up to the potential in Open Orphan. It took a while, but retail investors are now seeing what we’ve been saying for months.
Chairman Cathal Friel addressed the recent surging share price in a Monday 18 May RNS.
“[We note] the increase in the company’s share price and media comment regarding its collaboration with Quotient Limited. [We also note] the substantial increase in interest in antibody testing for Covid-19 following recent announcements by the UK government.”
Friel is talking of course about ORPH subsidiary hVIVO signing an exclusive partnership deal with US-listed Swiss pharma company Quotient (NASDAQ:QTNT).
Together, they will bring fast and accurate COVID-19 antibody testing to the UK. The UK government is desperate to buy millions of these antibody tests to ramp up key testing requirements to help reopen its shuttered economy.
At the end of March, Health Secretary Matt Hancock took a severe reputational hit on reports that the 3.5 million antibody tests purchased by the Department of Health had turned out to be ineffective.
Quotient’s MosaiQ Covid-19 antibody microarray “is on site” at hVIVO’s East London lab and should be operational inside two weeks, the chairman said. It will be able to undertake 3,000 tests a day.
“While there can be no certainty on pricing, the company notes current market prices ranging from £70 to £150 for home testing kits,” Friel said.
Clearly, this will be a huge revenue generator for Open Orphan.
No other company in the world has a portfolio like Open Orphan. There are better-known companies, of course. But this company has advantages that no-one can reverse engineer. It is a world leader in human challenge studies and has Europe’s only 24-bed quarantine unit with a virology lab on-site.
Covid-19 aside, Open Orphan has major money-making deals already confirmed. It announced a £3.5 million contract signed earlier this month and a £3.2 million challenge study deal confirmed in March. It is also moving into Phase 3 clinical trials for the elusive and ground-breaking universal flu vaccine.
Covid-19 stock rockets
Amid frothy markets and surging investor interest around Covid-19 testing and treatments, unprofitable biotech companies have been taking off like a rocket.
I’m talking about minnows such as Avacta (LSE:ACVT), Novacyt (LSE:NYCT), Omega Diagnostics (LSE:ODX), 4D Pharma (LSE:DDDD), Synairgen (LSE:SNG), Tilbury (LSE:TILS) and Genedrive (LSE:GDR).
At the moment, all it takes to pique investor interest in a quick profit is an RNS making some vague hand-wavy statement about how they are developing a potential test or drug that could aid the fight against Covid-19.
In the main, these are small R&D drug companies that hemorrhage cash, get heavily pumped, and on the other side of a momentum trade they drop like a stone.
These are not normal times, however. In the last three months the pandemic has engendered a new kind of gold rush, in Covid-19 biotech stocks.
When these companies wither on the vine after Covid-19, Open Orphan will continue to flourish.
We’re raising our conservative price target to 30p by the start of H2 2020.