Tuesday saw Open Orphan (LSE:ORPH) reveal a transformational Covid-19 vaccination contract with the UK government that could be worth up to £40 million.
The first part of the contract will see Open Orphan subsidiary hVIVO develop a Covid-19 human challenge study model. This will include manufacturing the challenge virus and the first-in-human characterisation study for the virus, with completion scheduled for May next year.
The work will identify the most appropriate dose of the challenge virus for use in future human challenge studies – a critical step in helping to develop vaccines and antivirals for infectious diseases like Covid. According to Open Orphan, this alone could be worth around £10 million to hVIVO, dependent on the final number of characterisation study volunteers.
Alongside this, Open Orphan also revealed on Tuesday that the UK Government had paid three slot reservation payments for £2.5 million each for full Covid-19 human challenge study vaccine trials, to be held next year. The pharma services company has already guided the market that these studies could be valued at between £8-10 million each. This means that the total value of the UK Government contract could reach up to £40 million when the initial £10 million payment is taken into account
Open Orphan has seen its shares increase in value considerably in the run-up to the announcement, as talks were ongoing. At writing, it sat at 28.9p with a market cap of £192.1 million – more than 500% higher than at the beginning of the year.
And now, analysts are predicting even more upside, with broker Arden notably increasing its price target for Open Orphan to 32p from 28p.
Elsewhere on Tuesday, Open Orphan announced that its human characterisation study would be conducted by hVIVO at The Royal Free Hospital’s specialist research unit in London under the scrutiny of leading scientists. The subsidiary will also be expanding its Clinical Operations in London to facilitate work at the site.
Meanwhile, its category two facility at Queen Mary’s Bioenterprise Centre, London, will continue to be used to deliver traditional challenge study contracts and is booked to maximum capacity until Summer 2021.
“We look forward to working with our partners to develop a COVID-19 human challenge study model which will be used to safely accelerate the discovery of effective vaccines and antivirals against COVID-19.“Cathal Friel, Executive Chairman – Open Orphan’s
“We hope our work will reduce the impact of COVID-19 on individuals and communities, and our thoughts go out to the many people whose lives have been affected by the pandemic.”Cathal Friel,Executive Chairman – Open Orphan’s
Meanwhile, UK government business secretary Alok Sharma added:
“The funding announced today for these ground-breaking but carefully controlled studies marks an important next step in building on our understanding of the virus and accelerating the development of our most promising vaccines which will ultimately help in beginning our return to normal life.”