announcement of mature transaction "imminent" according to latest interview
"Ptarmigan is developing the Evolène Valley (Swiss Canton of Valais), into an exclusive, sustainable world-class Alpine destination.
Ptarmigan has a land bank comprising of 89,000sqm, including development permits in Evolène village – the heart of the valley."
RTO imminent then by the sounds of it. Exciting stuff!
The move ties in with what was mentioned in the corporate update on 18th Oct:
"the Board is also examining broadening the Company's reach in the green sector, and in particular the health and medical rehabilitation destination sectors"
The company aims to consolidate a series of small-to medium-sized consultancies in the €5-€15mln revenue bracket, where there is an opportunity to develop top-line and cost synergies, targeting a consolidated group that is in sum more valuable than its separate parts.
The current enterprise value of ORPH of circa £13mln offers an attractive entry point ahead given the rapid scale-up plans, as well as profitability targeted in H120. On this EV, ORPH has a valuation multiple of only 1.1x trailing twelve-month proforma revenues of €14.3mln (£12.2mln). To give context, peers in the contract research organisation (CRO) sector are valued at 1.5 to 2 times EV/revenues, suggesting that an EV of the business of £18-25mln is justified, with upside as it delivers its revenue scale-up plans."
From 12:37 in that interview:
"So when we talk about the value though, the value here is astronomical and I say that kind of wisely. We're targetting to get 10,000 data records within the next 2 years. If you look at precedents in the marketplace, each of those records are valued nominally at about 5000 euros. So the value of the database, assuming there was a linear uptake of the data is 50 million. Now I say that carefully because that's a nominal value. We're assuming there's going to be multiple pharma companies looking at this data at the same time, so there'll be multiples of that value on the database."
Must be getting very close now to that tipping point after which the business really starts to take off.
"We've got 227 headsets in the field at the moment. We've got an extra 30 odd that are going in over the next few weeks. And then we've got 118 that are agreed and that will go in place in the next few months, certainly all before the end of the year.” - 2:21
“So we're starting to see this snowball effect. But it's a snowball effect with really high quality partners.” - 2:41
“We'll have about 400 by the end of the year. And as we said in the statement, 400 based on historic, old numbers on our total universe would get us to breakeven. But if you actually look at that on current averages, then that breakeven falls considerably. So our current running average is over £350 per week per headset so that then reduces the breakeven much nearer to 300.” - 2:57
“And obviously once we hit that magical breakeven figure which will be later this year, early next year at the latest, then everything that we do just flows straight to the bottom line.” - 3:32
"Cathal Friel has invested a couple of million,he has a lot more than that!" - is that just speculation or do you have a link to his net worth?
Retirement age - "Maurice is 57, I'm 54 and Brendan's 67 so we're not going to be in this for a long time." - https://www.youtube.com/watch?v=Ix6GhEQYVYQ (from 7:11)
The management is clearly very convinced it can do it, having invested a significant portion of net worth:
“We're very focussed on shareholder returns because the three of us own over 1/3 of the company and we've put most of our life savings into it”
https://www.youtube.com/watch?v=Ix6GhEQYVYQ (from 21:49)
They have also locked themselves in for 3 years with their investments.
So basically all fairly close to retirement age, investing a significant portion of their net worth and not being able to access or use that capital for anything else. They'd only do this if they were very convinced indeed that they could make a decent return.
Good to know at least that the management is highly motivated to engineer a rising share price, whatever that takes.
Exit target of 200 to 300 million in a couple of years vs. current £16 million market cap. That's a lot of potential share price upside if they get anywhere near that kind of growth.
"We're acquiring the other companies at 1 to 1.5x revenues, so it's the valuation arbitrage. We buy them for 1 to 1.5x and our exit will be 3 to 4x revenues. So if we get it to 50 million turnover, which is the target for 2 years, we'd expect at least 200 if not 300 million exit price."
https://www.youtube.com/watch?v=NBogHS5uocM (from 4:28)
A good dip buying opportunity being provided here as the story starts to gain traction. Some strong share price gains to be had in the coming months:
"We are now beyond the half way stage of what looks like a very promising year."
"We are therefore confident in our target of not only reaching monthly breakeven in Q1 2020, but in delivering 1000 installed headsets by the end of 2020."
"Our partnership model is a winning formula and whilst there is much to be done, we look forward with considerable confidence."
From 18:28 - Genomic Health Data Platform valuation
"In terms of the valuation, we estimate that each patient is valued at about £5,000 per dataset. We aim to collect 10,000 patient records over the next 2 years....The value of that nominal database at 10,000 datasets is £50 million. Now that assumes a linear 1:1 pharma access looking at that data, but in fact this is a pretty competitive database, so non-exclusive multiple pharma parties can be looking at this data in parallel. So the value of this 10,000 datasets is actually many multiples of £50 million. So we're very excited..."
"And as we strategically build through bolt-ons and we get our revenue above 30 million, I believe that re-rating will happen. And when I talk about the re-rating in this high-end consulting clinical evaluation space, most of our peers are valued at 2.5 to 3 times revenue. So if we're at 30 million revenues, we should be at 60 million plus valuation."
Current market cap - £16m.
Also worth noting that the directors are so convinced of a rising share price that they are happy to lock themselves in for 3 years. That's a real sign of confidence. Totally aligned with shareholders on all the swings up and down. Especially Cathal Friel with over £2million of his own money tied up.
"We've put our money where our mouth is. As you'll see in our presentation in our website, 35% of Open Orphan is owned by myself, the management team and founders. We're locked up for 3 years."
https://soundcloud.com/doc-h-4/orph-cathal-friel-of-open (from 2:03)
"The management team and Board have a strong track record and we are confident in our abilities to generate significant shareholder returns."
Maurice Treacy highlights the significant value of the genomic health database in a recent presentation. Some very good potential upside from this alone.
"When I talked about the 10,000 data records we hope to collect or corral in our database, each one of those per patient is valued roughly, based on these precedents, at about 5000. So the nominal value of that database is about 50 million.
That's just assuming a linear access fee. We hope there will be multiple pharma companies looking at this data at the same time."
https://www.youtube.com/watch?v=XrT6SBVa5F0 (16:36 onwards)