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.."I think CF mentioned $1 B for the core business for the first time including possible$250 M bonds. .."
That was Amryt's Enterprise Value (MCap + Debt).
Correct, but to add that CF said that was him ambition for ORPH (post spinouts - that was my understanding).
And cut out the double servings!
Barwick - that was very amusing - we need a little humour on here
he also said why cant ORPH aim for 10x, as for your weight problem cut out the bread and crisps and the beer that should help you Kap :-) GL.
I am chunky shareholder of ORPH and POLB. I intend to hold my positions at least till HASDAQ listings in 2H 2022 (?). Therefore I am interested in fundamentals and news where I could be wrong. I do not need confirmation bias. Hence my pushbacks: 1. $250bn market - massive figure - would bre great to know what does it mean for ORPH? 2. During previous webcast in August CEO answering to Q38 said “I will be disappointed if we wont substantially exceed consensus 2021 sales expectations of £50m” - since then CEO revised down its expectations to £40v (Consensus now at £42). 3. IPOs of the remain 3 spinn offs are pushed forward from before X-mas to early 2022 4. CEO announced that he is working on the merger to increase the size for NASDAQ listings - execution and dilution risks? Other wise he is still very bullish continuously saying to us that POLB is 10x and ORPH is 3x opportunities
He's there yet again Wally. Excellent coverage for us all.
.."I think CF mentioned $1 B for the core business for the first time including possible$250 M bonds. .."
That was Amryt's Enterprise Value (MCap + Debt).
Thanks WallyJ, got called away with fifteen mins to go so missed a lot of the questions. Knew you wouldn't let us down. :)
Audible "yes" from me with the," recorded date will be before announcement for DIM" answer.
If you ever get stuck for work you'ld make a great stenographer. lol
Excellent thank you wally
Great summary WallyJ. I think CF mentioned $1 B for the core business for the first time including possible$250 M bonds. They hinted aspirational t profit margin up from 30 percent to 40 percent. £50 M revenue/40 percent margin/cost minimised/ optimistic £20 M profit/earnings multiple of 20-30 ..still there will be bit of a gap. But it is possible with allowance for CF exuberance! Nasdaq applies high multiple to biotech stocks but generally it is higher than UK even for a pharma services company and hopefully the annual revenue will creep up with time. If the spin offs are counted in, then very significant prospect from here.
Thanks again from me too Wally.
Terrific summary wally, thanks so much.
Thanks Wally, like Jayne I listened to the presentation and that is a great summary.
- With US expansion, is iteasy to get staff (not sure I caught this question correctly)?
ORPH was in WSJ multiple times recently, will be in the New York Times this week, staff love coming to us
- Merger, 2021 or 2022?
Didn’t say merger, Nasdaq is the plan
- Why no revenue streams prior to IPO for DIM?
Work in progress, no problem IPO-ing DIM, “trust me there”, will be around 90% owned by ORPH shareholders, small stake for management
- Is there a delta variant characterisation study underway or even needed?
We are the only people in the world who can do this, there will be a characterised delta variant in not too instant future available for studies
- Where will you recruit volunteers when most people are vaccinated?
Most volunteers 25 - 30, now we have characterised model why test it on covid-naive people, using vaccinated or immune volunteers reduces risk further
- Receivables are relatively high compared to turnover?
High level of receivables last year because of timing to do with issuing invoices to customers. A lot of that cash is now cycled into business in Q3
- Possible JV to go to Nasdaq - would this be with another pharma or CRO?
Makes sense, might be better to offer whole pie rather than just a piece of the pie
- Two malaria contracts by Christmas?
Watch this space, actively working on it
- Who is ORPH’s peer group?
We are the world leaders, we’ve created the peer group
- Can qualifying date for spinouts be the date of the RNS?
Mistakes have been made, EKF is the only other company doing this and they also made mistakes, “things we have learned”, recorded date will be before announcement for DIM
- If a new product provides multi year protection for Covid, will CHIMS still be required
Unlikely that a product will ever do this, Covid will be around for a while, more like influenza
- What IP do we have to protect challenge studies?
High cost of entry, staff required, lab required, regulatory requirements - big barriers to entry, and each challenge model is private and patented
- What is each bed worth to company and what is total capacity?
Don’t give much detail on value for commercial confidentiality, capacity covered earlier
- What’s to stop traders jumping in for spinoff shares then selling out?
It is an issue, we will have to think on this, we will try to be careful with remaining dividends in specie, ‘we won’t get everything right’ but will try to
Final word - bear with us, been a bumpy few months, CF has never been happier or more excited, aiming for 10x with Poolbeg, also wants similar for ORPH by getting on Nasdaq
Wallyj, thanks you're a star (once again). I watched the presentation - very reasssuring and great to have Leo explaining the figures in more depth - but no way I'd be able to sum it all up as concisely as you've just done. :-)
- Gov Covid challenge study seems to have stalled, what are we waiting for?
Working with gov always a challenge, Britain is world leader in this, and is only country in the world that can do this, bear with us, it’ll come through
- £40m UK contract - delivered in 2021 and accounted for this year?
£8m so far, £12m for FY, substantially more Covid revenue to be accounted for later
- Beds fully booked, looking to expand?
Now have more clinics than previously, can easily convert another hotel down the road if required, not a problem with capacity, we don’t need to go abroad, more efficient and better margin if we stay nearby
- Dual listing for ORPH?
“Absolutely”, multiple times SP uplift if we dual listed on Nasdaq, “Nasdaq is the place to go”, watch this space over coming months, it’s work in progress, H2 of next year
- When spinouts complete, would you sell ORPH?
Everything is for sale, “vastly bigger uplift” if we linked up with a partner
- Lagging share price due to big seller, why has this not rebounded if selling has stopped?
Tony Richardson wrongly blamed, overall market has had a crap summer, optimistic between now and Xmas
- Cash and profit a little disappointing - won’t be affected by further spinouts?
Absolutely, cash will increase, Poolbeg model was correct, will be reused
- Open to selling Imutex rather than listing?
Yes absolutely, DIM will definitely be IPO'd, other two we will extract the biggest price possible, whether that is a listing or a cash sale
- Reconcile H2 guidance of £18m with previous comments of £40m?
We are aiming for £40m this year, 80% capacity in clinic is effectively full as you need to account for empty time for disinfection and fresh set up
- Will CHIM studies take place in 2022?
Yes absolutely, slots are on a “use them or lose them” basis, government has to come to us if they want the slots they’ve bought
- Can you remain independent?
Yes, being listed on AIM and Nasdaq will keep us independent. Sometimes CF gets too excited and sets expectations too high
- Clarity on why R&D tax credits are negative?
Expect shortly to get cash credits we are owed, it’s an accounting ‘quirk’ that explains this (I may have misunderstood this question and answer!)
- How much are you expecting to be charged for extra hotels?
Cost to convert is around £1m, many empty hotels in London so we can play them off against each other for best price, very modest cost
- Malaria trials - who are you working with?
As much as we can in London, famous schools and universities here, why go abroad? Trials run in Whitechapel
- Increased capacity - what is the arrangement, do you lease the rooms?
We offer hotel amount of money for whole hotel or a floor in the hotel for 6 or 12 months, with a break clause if required
- Do ORPH own the data captured by the characterisation study?
Jointly owned in the partnership, but more important data is Flu, RSV and Asthma - Covid data is interesting
- Indication of current FY forecast? Where can we expect to finish?
FY £40m, not guiding on profitability but similar margins to H1, cash pile increasing slightly
- Dividend by Xmas?
Work in progress, more focused on dividends in specie as priority but CF would welcome a cash dividend as the largest shareholder
- Why are margins slim?
Business a year or so ago had slim margins with little room to manage currency swings; margins are now improved and EBITDA profitable so we have headroom to manage currency risk; operations are naturally hedged with sterling and euro spending - euros managed in Paris/Breda offices, London handles sterling transactions so this works well
- FY results in a more timely manner? Feb or March?
They are subject to an audit so does take time, generally three months, end of March or early April will be earliest
- Why has JS not bought any Poolbeg shares?
He came in late so didn’t have the opportunity but he will have opportunity and will buy shares
- DIM - when will this be completed?
Around turn of the year, likely after Xmas “given where the markets are”
- Are all wearables companies still interested in the data?
Absolutely, largest database in the world of its type, everyone’s interested, DIM will be “really cool”, wearables only one element of the business, clinical trials also major target market to speed up trial processes and outcomes, DIM is "super exciting"
- CEO in mind?
Work in progress, CF doesn’t like using share issues to attract talent
- Imutex update?
Work in progress, good conversations ongoing with ConserV
- Spinouts complete by Xmas previously mooted - still the case?
No, work in progress, sometimes things take a little longer, we are a small team and working hard, summer is quiet period in pharma industry
- Costs that will impact profits re: spinouts?
Absolutely none. Preparation has already been done for spinouts, malaria challenge study required some cash, this is now all complete
- New malaria CHIM accessible soon, any more to come?
TB challenge study model incoming (rife in prisons apparently)
- Major contract with China?
China has become a little bit more difficult but they want challenge studies more than anyone, taking a little longer but they have big problem with flu/pneumococcus, “politics has got in the way” but still work in progress
- Any conversations with pharmas on Covid studies?
Studies can now be run in sites other than the Royal Free, “more enquiries than ever” for testing Covid products, however Covid studies are still taking time because it is still “scary” for regulators, but a lot of Covid work incoming next year
- When is the characterisation study complete?
It is already complete, more interest now than there was 6 or 12 months ago - 2k+ Covid products in clinic, many are interested in using CHIM
Made some notes in the presentation just now. I missed a couple of questions so please feel free to add them if you caught them.
- World leader in testing vaccines and antivirals using HCS, addressing the growing infectious/respiratory disease market
- By 2025, market will be worth around $250bn - a fivefold increase
- 242% revenue growth H1 2021 vs 2020; 75% non-Covid and 28% gross margin
- Great customer base, plenty of repeat business from world’s biggest pharmas
- 4 other hotels in Whitechapel that could be used for additional quarantine space, “we will extend our quarantine space on the back of demand, expansion is no longer our problem, we won’t be paying for fitouts”
- “Restocking and replenishing 30 years of underinvestment in infectious disease products will be one of the biggest gold rushes in the history of the pharmaceutical industry” - big pharma and governments will be spending big
- H1 - £5.4m Covid revenue, £16.5m non-Covid, significant pipeline for remainder of the year
- Characterisation study in RF is complete, we can now potentially look at signing large contracts
- Covid studies likely to be pushed back to next year, permissions need to be sought
- This morning’s RNS contract was asthma with GSK
- Only company in the world with a working Covid challenge study model
- Lab services continue progress towards CAP and UKAS accreditation
- Revenue per employee has more than doubled
- “Cash and cash equivalent” balance currently at £14.9m
- H1 gross margin 22% up year on year
- “No concerns that we are bleeding cash”
- New challenge study models incoming, aiming to broaden offering (linked to lab services accreditation)
- “Continue to be very disciplined with our overheads to improve margins”
- Full year 2021 revenue guidance is £40m; full year will be EBITDA profitable
- Targeting c.£50m non-Covid revenue in 2022, Covid revenue will be in addition to this
- “We are not relying on Covid to be our engine of growth”
- Hesitant to forecast a Covid revenue figure as uncertainty remains over start dates for Covid challenge study contracts
- Poolbeg “has clear trajectory to get onto Nasdaq very soon”
- DIM - 100% control of this non-core asset, “it is ready, no more cash required to be spent, probably won’t be done this side of Xmas but likely early next year, this company could grow very fast”
- Imutex - CF remains frustrated but dialogue underway with SEEK, who are now more attuned to plans for Imutex (no more specific details given)
- PrepBio - similar status to Imutex currently
- Ambition for each non-core company plus core ORPH business to each reach $1bn market cap (did I catch this correctly? CF has previously said mooted $1bn valuation was core and non-cores combined)