Open Orphan (LSE:ORPH) has signed new laboratory contracts for its London virology clinic, extending up a new area of business for the pharma services firm.
A Tuesday morning RNS detailed how subsidiary hVIVO had acquired three third-party service contracts to allow companies to test their products against a range of viruses at the firm’s unique 24-bed quarantine clinic in East London.
NoBACZ Ltd, spun out from Cambridge University, will experiment with its antimicrobial, antiviral liquid coating, which prevents surfaces from transmitting infections. It is expected to be utilised during the Covid-19 outbreak and beyond.
“hVIVO has the requisite experience and professional commercial focus to execute our pivotal studies rapidly and efficiently, allowing us to move forward in our ambitions to provide a quick-to-market solution for protecting the public against a resurgence of COVID-19 or similar outbreaks,” said NoBACZ CEO Jonathan Powell.
Russian biotech Nearmedic International has signed a contract with hVIVO as it seeks to
develop a RegG3 drug as a potential candidate to treat Covid-19. Further testing will continue to expand the drug into several disease areas including cystic fibrosis.
Nearmedic CEO Rupert Holms praised Open Orphan’s “unique combination of skills which shall help Nearmedic to get its novel ezrin peptide technology to the global pharmaceutical markets.”
The third contract is with an unnamed Massachusetts biotech, which will run an in-vitro testing programme.
These are the first contracts signed since Open Orphan raised £12m in an oversubscribed placing to expand capacity at its state-of-the-art laboratory.
In a separate update Open Orphan announced the exercise of a small number of warrants, which executive chairman Cathal Friel told us were for investors who participated in a loan note financing for Venn Life Sciences in 2018.
Speaking to Valuethemarkets.com, Friel said: “This is an exciting new area of business for us. Not only does hVIVO have the world’s only 24-bed quarantine clinic for testing vaccines but we also have one of the best-equipped virology laboratories on site.”
“To run challenge study clinic trials and test vaccines and antivirals it is necessary to have access to a virology lab,” Friel added, “but hVIVO were only doing their own internal clinical work and the lab only had capacity utilisation of 10%-20%.
The additional 80% of available capacity offers Open Orphan a huge opportunity to provide a suite of testing services to small cap pharma companies and biotechs. Very few, if any, have their own dedicated virology laboratory.
The previous management spent around £10m to expand and kit-out the laboratory, but never opened it up to third parties.
This represents a significant growth area for the AIM-listed firm, which went public via a successful reverse takeover in July 2019.
The company says it will hit operational profitability by Q3 2020.
“Since opening up the laboratory to third parties we have built a really strong pipeline of work in a relatively short period of time and look forward to expanding on this and converting opportunities,” Friel said.
As is common with AIM fundraises, the ORPH share price has shown a somewhat magnetic attraction to the recent 11p placing price. But as repeat revenue-generating news keeps rolling in, investors are staying patient.
Canny investors know Open Orphan has a unique advantage with this laboratory service. And that’s before mentioning a Phase 3 universal flu vaccine, recent contracts signed with its other subsidiary Venn Life Sciences, hVIVO’s 100%-accurate Covid clear test, and the potential of a 49% stake in Immutex.
With the company taking full advantage of everything it has to offer, this revitalised business could be life-changing not just for early investors but for executive chairman Cathal Friel too, who holds 6.92% of the outstanding share capital.