Rare and orphan drug consulting specialist Open Orphan (LSE:ORPH) announced the first of many planned key preferred partner agreements on Monday. The firm has signed a deal that will see Venn Life Sciences – part of the Open Orphan group – become the preferred partner for biopharma business Ipsen Group’s data management and biostatistics for three years. Open Orphan said that the deal – which has already delivered ‘substantial revenues’ – positions it as an integrated drug development partner for more firms like Ipsen.
The partnership also forms part of Open Orphan’s strategy to transform and restructure Venn by reducing operational leverage, increasing revenues, improving operating margins, and launching additional services. The business came to market in June this year following a reverse takeover of Venn alongside a fresh £4.5m equity injection – primarily from institutional investors.
On this, Open Orphan’s chief executive Cathal Friel added: ‘When we completed the reverse takeover of Venn earlier this summer, we promised shareholders that one of our key objectives would be to transform Venn into a profitable pharma services company. This partnership is the first of many steps to make Venn profitable and deliver a re-rating of the business to be in line with the wider sector. I look forward to announcing more positive news in due course.’
Open Orphan’s founders and management, who own 35pc of its issued share capital, believe there is a significant opportunity to consolidate a number of pharma services companies through acquisitions. Their goal is to cross-sell Open Orphan’s two unique digital offerings- its Virtual Rep platform and its Genomic Health Data platform – to secure an exciting future for the company.
Open Orphan is embarking on a rapid revenue growth strategy, acquiring high-margin smaller consultancies for between 1x-1.5x sales to take advantage of the valuation arbitrage. Most large pharma services companies that are generating €50m+ in revenues are valued at 2x to 3x sales.
There is already a fast-growing market for orphan drugs as the sector benefits from political support due to its targeting of the under-supplied treatment for specialist diseases. As it stands, there are around 30 million patients with rare orphan diseases across Europe.
With Venn Life Sciences being valued at only £4m despite annual revenues of €14m – €5m of which came from consulting services- Open Orphan’s new management team saw a clear opportunity at the time of its deal. What’s more, with more than 80pc of the business being generated from repeat clients, the team felt that this customer satisfaction that could be scaled up effectively via a clear growth strategy and additional services.
Robust service offering
Open Orphan’s Virtual Rep platform replaces the traditional and expensive sales representative, where traction with physicians is limited. The tool, which holds a database of over 4,000 rare/orphan drug physicians and key opinion leaders (KOLs), is cost-effective and offers multiple remote contact points for clients to engage with physicians. Another advantage of Virtual Rep is that AI can improve performance, and webinars can be used to increase reach. Companies pay a flat fee per month for the use of the platform to launch a product, and so Virtual Rep becomes similar to an online marketplace.
Meanwhile, Open Orphan’s Genomic Health Data Platform is capturing highly valuable genetic data by providing a solution for both patients and drug organisations. Patient Advocacy Groups of patients with rare/orphan conditions are encouraged to contribute their medical/clinical data to assist medical researchers in developing new treatments. Large pharma companies often look for specific and anonymised data to aid their drug discovery programs. As such, the profits generated from paid access will be split between the company and the relevant Patient Advocacy Groups – who are incentivised to increase and encourage data contributions to the platform.
Open Orphan took a great step forward in this area of its business in October, when it announced an agreement with Empiric Logic to complete the build-out of its Genomic Health Data platform. This will result in the creation of Europe’s first rare disease and advocacy-led database. Empiric Logic is a managed software service organisation specialising in the pharma services sector, and its propriety software will speed up the launch of Open Orphan’s platform- which is in its final stage of completion. Empiric Logic will integrate AI and security solutions into the database to prepare it for accepting its first data.
At the end of last month, Open Orphan’s director Maurice Treacy completed a live presentation and Q&A session with ValueTheMarkets. The event saw him detail the firm’s robust range of services and the opportunity on offer in Europe’s orphan drug market. For a full recording of the presentation, please click here.