Friday saw pharmaceutical services company Open Orphan (LSE:ORPH) raise £12 million to support its efforts in the fight against coronavirus.
Shares in the firm, which was down 10% at 13.4p at writing, were placed at 11p each. This was a 3.8% premium to their value on the trading day before Open Orphan announced that its hVIVO operation and diagnostics firm Quotient had struck a major deal to support Covid-19 antibody testing in the UK.
The money raised will now be used by the company to ramp up Covid-19 antiviral testing to its maximum capacity of 3,000 tests a day.
It will also be used to “maximise available Covid-19 opportunities”. This includes accelerating the development of a coronavirus challenge study model to capitalise on strong demand from vaccine developers around the world. According to Open Orphan, such challenge study models can accelerate vaccine development by up to three years.
Elsewhere, the placing proceeds will also be used to expand Open Orphan’s existing laboratory testing services to third-party pharmaceutical and biotech companies. This sits in line with the company’s goal of becoming a leading services provider to the viral and respiratory diseases sector.
Finally, the cash will strengthen the organisation’s balance sheet, allowing it to “take advantage of the significant and growing opportunities the board believes are available”.
Cathal Friel, Open Orphan’s executive chairman, said the fundraise has added “many new leading blue-chip institutional shareholders” to the firm’s register. He added that the company is approaching profitability, with up to six Covid-19 related challenge study contracts in the pipeline for 2020 and a further six in 2021.
“As a result of Covid-19, we are seeing unprecedented growth opportunities as pharma, biotech and governments around the world focus funding on finding solutions to Covid-19 and other respiratory diseases,” he said.
“As such, we’re developing several new revenue streams including by speeding up the development of both a seasonal coronavirus and a Covid-19 virus challenge study model to capitalise upon the Company’s inbound demand from Covid-19 vaccine developers globally.
“We have also opened up our laboratory services offering to third party pharma and biotech companies, as in the case of the recently announced Nearmedic contract, and from our state-of-the-art viral laboratory have launched a transformational Covid-19 antibody testing service which, unlike the home and online testing kits, offers 100% accuracy and the potential to complete up to 3,000 tests per day on a single machine.”