The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Sounding a little desperate now stt…
If there was credibility in what was being posted, fair enough, but it’s just error strewn…
To take your comment on adfvn…
Your quote “90% of the 50m projected for next year is already booked. But they haven't received it so it's expected. And contracts can get cancelled, delayed, postponed. They EXPECT to receive it is not the same as they WILL receive it. If they had received the money then it would be booked into this year's accounts, fy2021”
Let’s take the each point…
1) Studies typically take 6-8 months to complete - 6 months to tee up, 2 months to execute. In the last 18 months I can’t recall a pharma trial that hasn’t been followed through and delivered on time. Even patient numbers align with expectation at signature unless a proof point has been met and it could be terminated early. If the contracts are signed you can pretty much guarantee the revenue will follow.
2) The point on revenue in 2021 is just wrong (I suspect intentionally on you part). You can’t recognise the revenue if the service hasn’t been delivered. There are milestones over the challenge study period, at which point revenue can be recognised. Whether they get paid 20/30/40% upfront is irrelevant, revenue recognition will be down to delivery….so service delivered in 2022 will be recognised in 2022.
Think it would have been due to posts from Earache/Ryan in the same thread - messages were disappearing all the time NST... :-)
I think things can be taken too literally…generally find it easier to take a broader view rather than look at minutiae…we know CF gets carried away, he’s acknowledged it and has tempered his approach, which has, in part, rebased the share price - bizarrely I welcome the reset as can’t see downside from here.
Whether we get another big announcement in the next week or not, it’s an odd trigger to sell given that January should deliver good news if December doesn’t deliver (any more)
At a high level…
- We can see revenue growing - quite quickly - £22mn to £40ish to £55mn+ next year (without Covid studies (other than characterisation work))
- Contract values increasing - if the Influenza study last week was for similar 60-80 patients, that’s £5mn increment straight to bottom line.
- They are really considered with overheads, cut significantly previously, only investing where revenue follows e.g. Biohazard upgrade to QMB, thought I’d heard they were looking at closing Paris office so still managing costs tightly. Coupled with this, the EY (I think it was) interview with Leo was really good, took complete confidence from his finance approach.
- Cash will grow as will profit - it has to - unless they invest for growth and CF is canny enough not to waste cash frivolously.
- Prep looks imminent albeit 2p a share, but nice to get a step closer to a clean vehicle.
- Goodness knows with Imutex - favour a sale, and would love it to come left field…
- DiM - trust his timing on that…was talked up too early but is in a sweet spot - not giving it too much thought at the mo’
Last thought - for sale sign is definitely up, aside from Nasdaq comments previously, now saying Orph belongs in a bigger CRO, not expanded sites even though pretty much at capacity and sites available, increasing premium on studies making it more compelling to acquisitors in the immediate future, all feels like that is getting a lot closer…
All feels a bit of a no brainer to me…imho…
Fair play to you Rockz…between you and Bluebelly…!!
Just on the Bermuda location…did have a quick poke around. Based on the fact most ideas aren’t new, wondered if any other companies had done what Tils have done…came across these guys…previously in London, then Nasdaq…registered in Bermuda…now delisted as ltd co…but hold 88% majority share of a listed pharma company they acquired years back called DEVA on the Istanbul exchange. (Is a Turkish company so makes sense…)
EastPharma Ltd was established in 2006 with the aim of becoming a major player in the fast growing emerging markets pharmaceutical industry by means of organic growth, acquisitions and consolidation in fragmented markets.
Since EastPharma Ltd through EastPharma Sarl acquired control of the Turkish generic pharmaceutical company DEVA in 2006, and Saba in 2007. it has applied experienced management expertise to ensure these subsidiaries are in a strong position to increase their market share and profitability.
EastPharma Ltd had been a listed company in London Stock Exchange (LSE) since 2008 until it was delisted on 1st of August 2019 as per local legal requirements.
Foralumab is treating the body immune response rather than the virus itself (from memory).
On the wider topic, I, perhaps naively, don’t go with the view it’s a scam - the science board are sufficiently competent and experienced to know whether it warrants their continued involvement and association with Tiziana which they have continued to do.
I did pretty much divest here though due to the management approach (lack of speed of clinical plan, investor relations disdain, business structural changes etc…).
They have had a similar share price action in 2017, went up to £2.50 before dropping back off to £0.30, so form for a PR push, funding acquired and then back to working on the roadmap…2020/2021 has pretty much followed the same path.
GC could also have sold a stake during this time if wanting significant gain, but holding paper wealth relies on the company delivering on its clinical plan so can’t masquerade, they need to deliver to realise the value of his holding. You’ve also got the 3rd party tie ups…
Just keeping an eye out to see what happens…science always seemed credible to me but confidence in the management approach is shot…
Not sure if the likes of Sporty, Shiraz etc… still look in here - would be interested in their views…
To take your quote from yesterday JB…
“ORPH is a real business and at this level I wouldn't put anyone off buying it”…I don’t see you do anything other than put people off it…
Anyway, to your question…
Fair assumption that they can run 5-6 studies per site per annum…at c£6mn a study.
They have QMB which is being upgraded to take Covid work, with Whitechapel a less stringent profile for RSV, Influenza etc…
Whitechapel is repeatable, albeit low budget.
Royal Free they have for 3 years.
If they did 6 studies at each of QMB and Whitechapel and 2 per annum at RF (assume £10mn each), that gets them to c£90mn. If they needed to expand further I’m pretty sure they could put leasing agreements in elsewhere.
However, given it is likely to be sold in the next 12-18 months, I doubt the 10 year window is relevant. The only flaw I see is the hotel model doesn’t have credibility with a large player, but assume they would buy the IP, skill set, relationships rather than some of the infrastructure and invest capital themselves as recently seen with SGS.
Not a lot of that makes sense…
A duster?…it’s not O&G…its not a binary succeed or fail…it’s a credible business already, turnover is doubling this year, contracts increasing in size and number etc…
OO is primarily Hvivo…and other than Oxford (academia) is the only company who has run a Covid challenge study…they can’t commercialise until it’s formally approved…so no competitive advantage to lose, and enough opportunities to go round whenever that approval happens…
As for “rest of the world turbo charged forwards”…Orph aren’t a vaccine developer, they’re a CRO…test on behalf of others…
Will POLB make money before lock in ends…pretty much guarantee that to be no…but then neither has Sareum, Synairgen etc…. it’s purely down to what’s in the portfolio at that time and it’s credibility of pipeline development…if SP is where it is now, yep, people will bale, but reckon CF is more than aware of that…
Just offering an alternative view…
I think valuing a turnaround and growing business is difficult with PE…think that’s more credible in a couple of years time.
While revenue without profit is vanity, increased contract values and cost management suggests profitability should grow nicely - listening to Leo T gives confidence he’s thinking the right way.
If we use standard CRO multiplier of revenue, see 3.4x rev as typical for European standard CROs. CFs argued higher but don’t think the market sees that at the minute (US markets might agree with him)…Taking next year guidance, currently £56mn, would give 29p. That assumes no incremental Covid business - hence why next week so key as the incremental Covid work takes that figure significantly higher.
Cash, 2p.
Prep, 2p.
DiM…who knows…taking very conservative view, 2p, until more meat on that. Others will argue higher…
Imutex…Universal flu should be min £50mn plus for Orph 49%…again others might argue higher…5p
Ph1 AGS Flu-plus…phase 1 complete…anywhere between £20-50mn, so 2p ish.
Not really worth adding those up tbh as everything is sentiment driven, and need that significant newsflow to make a difference here…my opinion is just noise :-)
Not sure what else he can until it’s approved…they’re converting QMB to handle Covid studies so putting effort and funds in there…demand allegedly there according to CF (you would assume it to be the case), but MHRA approval required…all eyes on the 100 day mission implementation plan publication next week…
That’s what FTC is referring to below. At the moment, delta makes up 99% of UK cases, so will still be relevant for the foreseeable.
However, if it takes 6 months to characterise Alpha, and now 6 months to characterise Delta, it isn’t sustainable as a process. The 100 day mission, which is due to report next week, will detail how they intend to spin out new vaccines/anti-virals in short order…to do that, they’ll have to use Challenge studies…and must also find a way of rolling out through multiple parties, not just Orph.
Probably contentious to kick out a new treatment in 100 days - and may be that it is a target timescale rather than realistic - but if you are going to push out this approach (and it’s wider than UK, includes WTO/G7 etc…), the coming week is probably good timing given the worries over the Southern Africa strain…imho.
Think those sells at 19.50 are buys….just paid 19.37 to buy…
Thanks for posting Bazzaman - just listened through it…really insightful, genuine, gives confidence to me as an investor, if anyone hasn’t listened worth finding 30 mins to do so if you can…
Message was deleted yesterday so posting again based on mafiosas note below…
Think it’s quite simplistic really…
Orph is growing well, but hampered by sellers in a low volume market so taking time to wash through.
If we take the company, all looking good, rev going 20m to 40m-ish to something 60mn+ next year…with increased contract values, profit will follow. They are clearly frugal and only spend if direct revenue pull through so a route to full EBIT profitability looks pretty straightforward.
If you look at multiples in the industry, average CRO has 3.4x revenue - I know CF has claimed higher but even on average multiple, shows upside without considering spin offs.
On the selling, personally not sure if it’s Hargreaves Hale going to zero, there are 3-4 small legacy ex Venn / Hvivo holders in the 1-3mn range who could be selling down, but days like today will help wash it through.
There is a potential argument that missed timelines have impacted sentiment and thus volume so things take longer to wash through than we would wish, but unsure if reduced volume is specific to Orph or symptomatic of sector / aim ?
While I partially understand the berating of CF (he has his strengths and weaknesses like all of us), as a company I think it’s hard to argue that they aren’t moving in the right direction…
Think criticism of CF is outweighing the improving business fundamentals at the moment…sentiment will return…as to when…??
They always RNS’d the larger Venn contracts esp the 2 yr agreements, so nothing new there - just tick over background stuff for me.
Can someone check my logic…
1) Exact Science paid $2.8bn for Genomic health (granted not comparable)
2) Analysts like Wainwright assumed 10% for Accustem so $280mn.
3) From memory there were around 180mn shares in Tils. At $0.21 on OTC, divide by 2 and FX conversion…gives c £15mn market cap…
Awful lot of effort on GCs part to get to that…. surely it must have upside from there…??
Well…glass half full view…
1) Looks like it’s going to finally list on Nasdaq, albeit a year late…
2) 20:1 consolidation not really relevant, could be 50:1, just depends what list price is…assuming £1.50 ish if OTC relevant??
3) Hoping they push it out with some news flow - a year ago it was meant to be piloted in Milan, Spare was a further advancement…surely must be some serious progression in the last year to shout about…and GC knows how to sell a story when he needs to…
I think that view is fair Shandy, but would like to see Covid regulatory sign off aswell - it’s due, and given the regulatory webinar next week, job advertisements, Dr Chui’s comments on when submitted etc…, would like to think that’s done in the next couple of weeks.
Like others, Imutex has frustrated - feels like a lot more impetus and increasing expectation of some degree of US Gov tie up, but has taken forever to get to this point…
Have a different view on DiM - think CF talked too soon but like a more considered approach…
Personally think too much onus being put on Covid with DIM, all the existing data captured is hugely valuable if it can be provided in a consumable manner to the pharma industry - it’s not an easy task…
They can’t go and sell a csv/excel file…the data needs to be consumable, so a chunk of IT/Data science activity, licensing models built, user interface probably etc…, would naturally like it to move quicker, but think they are seeing a bigger picture (hopefully)…
Not saying these will all happen in the next 5 weeks, but struggling to see where else there are so many irons in the fire…
- “Several” new contracts - CFs words not mine - will have to be if targeting 15 studies next FY, and has mentioned 14 advanced pipeline opps. Should be 2-3 due but who knows…
- First Malaria trial
- TB CHIM launch
- Characterisation approval of Alpha - huge if this happens assuming it gives nod for private sector challenge studies.
- Additional capacity - new Whitechapel hotel facility (thinking post Xmas)
- Confirmation QMB has biohazard accreditation to support Covid studies (will need to reallocate QMB studies to other facilities if planning on running Anti viral Covid studies in H1 next year)
- PrepBio sale
- Imutex sale (lap of the gods this one, but lot more chatter in recent weeks than previous)
- Initial steps to roll out DiM - won’t be launched this FY IMO but process should have started.
- Commercial agreement with SGS - not capacity related, unclear as to what - that was in my notes but can’t recall where mentioned.
Replaced by Richard Huston a couple of months back...
Info on recent transaction he was involved in:
https://apnews.com/press-release/accesswire/europe-business-health-efd890e9e1f57679389aafeb709625d0
I posted this elsewhere way back…but might allay your fears JB.
As far as I am aware, Imutex is the only ph3 ready universal vaccine candidate. We know Biondvax failed, Vaccitech ph 2 failed. While Novavax Nanoflu and Medicago have developed quadrivalent variants at ph3, my understanding is that they target the head (easier to mutate) rather than the stalk (Imutex) which limits their effectiveness and doesn’t make them universal. Inovio is ph1, Vaxart Flugen ph1, Vivaldi ph2a, Altimmune’s Nasovax I think is ph2a and seasonal rather than universal…I’ve tried finding others but with no luck.
mRNA technology might help speed up others but a long road from pre-clinical to ph3, especially where you are trying to target multiple strains not just one, and given Imutex targets the stalk, huge clinical advantage.