Key part is the forward view though imv…revenues in H1 are based on contracts won last year…we know they take c 6 months to start and 2 months to run…while some revenue could be recognised during recruitment, you would expect most to be during the challenge study, so back end loaded.
Given contracts are of increasing value - recent ones 100% higher, but today’s c 50% higher.
Let’s take a conservative ave 60% higher…so your £20mn becomes £32mn, your profit jumps from £2mn to £14mn, taking EBITDA % from 10% to >40%…just for doing the same thing…
Whether the numbers are lower end of expectations or not, key piece for me is evidence of ongoing uplift in contract values - lot of talk about Covid challenge studies, but that’ll come in due course, best to take a conservative view on timings with that…but the contract piece gets little coverage…but it’s got huge implications. Last year these were tracking at £4mn a study, the RSV study with SAB in March this year jumped to £7.5mn, the Asthma announcement last month showed £8.1mn, the one on Monday… if in the same ballpark, further supports the trend of being able to double the revenues from existing facilities…and also has the benefit of flowing straight through to profit.
Aside from Royal Free coming on line next FY and search for additional capacity to support the pipeline, just the existing facilities should see profits jump significantly next year as these new increased contracts wash their way through.
Similar view as others, if we see 40-something for full year outlook it’s compelling (to me), H1 equivalent to full FY20. Broker reports suggest £46/47m and that’s after the known Gov challenge study delays.
Two key drivers for me re Core business growth, given close to capacity, (and first one feels a bit closer than the second, hoping that might be confirmed next week) 1) Any news on SGS tie up, and 2) Gov sign off. First one, gives Orph access to incremental £30-£40mn p/a if 24 beds available, and similar, if not higher at Royal Free, assuming COVID contracts > £10mn. If pipeline isn’t an issue, which CF has suggested it isn’t in the media rounds after the Asthma RNS, 14 or so deals in the pipeline (non-COVID), any additional capacity should be mopped up quickly. That creates a really strong growth story for revenue beyond FY21 and gives investors confidence there is scope to continue growing.
Anything EBIT +ve for FY21 outlook would be great - I know brokers are calling it higher - but slightly hesitant here given investment in COVID CHIM, A.Wildfire et al, additional Flu Camp screening centres…Some infrastructure going in where revenue will lag e.g. Gov contracts, but guess we’ll know for sure in 3 days.
Beyond that, would really help if we hear news on Imutex or DiM.
A lot of news due, and given low trading volumes at the moment, need some momentum back and only see that coming off 3-4 RNSs in quick succession.
Ones we are aware of:
- SGS Capacity
- Challenge study sign off / Trial confirmation.
- Codagenix - feels that it will drop once Gov sign off complete.
- Things have been mooted re a Benelux link - unclear on details
- Imutex - next steps
- First Malaria CHIM study
- Anti-Viral task force - not sure how much Hvivo vs Oxford, but CF has mentioned anti-virals.
- DiM - think laying foundations Q4 but assume a couple of months to complete.
- PrepB - as above
- Number of country collaborations possible - US, EU, Vietnam etc…?
- China
- Pneumococcus CHIM agent
Just my views - appreciate others might see things differently…
They have mentioned c. 6 months lead time and then 2 months to complete, so 8 months-ish to recognise all the revenue. There will be milestones as to when each stage complete and also accounting rules (IFRS) that dictate when you can recognise the contract in your revenue.
Is the odd contract e.g. Ampligen which they have looked to complete quicker I.e. squeeze into this FY.
The trade receivables is in the context of the assets at the stated point in time i.e. 31st May. That should be outstanding invoices at the 31st May, so £11.7mn billed for, payments to be received. It's not linked to the Income Statement in terms of when revenue is recognised.
You could assume if a say 60 day payment term, £11mn is due in which gives a feel for run rate of the business.
My understanding was that Orph did the work on Covid naive patients initially, Oxford doing those previously infected.
Orph producing the CHIM agent for Oxford as per May RNS and I assume will sell the Delta variant in Q4. Going into next year I assume Oxford could produce their own although doesn't appear to be straightforward.
Next year you'd expect various Pharma agreements with Orph (Codagenix (Covi-Vac) seems nailed on but would assume other second gen trials, strong relationship with Pfizer, and loads to improve - efficacy, cold storage, side effects etc...)), and then further gov work - while I suspect a lot will go Oxfords way, there's so little known about Covid still (Viral loads, shedding, age, those with different vaccines, strain etc...) it will run and run. You've already got lambda variant becoming dominant in some countries, delta mutation in UK etc... personally I don't think finding work on Covid will be an issue, just IMHO.
Hi - ADR in US, 2:1 so need to divide by 2 then fx.
Hopefully catch you on other boards, really valued your contributions, and hopefully TILS do come good on Crohns etc...
Both from around the area (Aldborough, Knaresborough, just outside York now).
Sorry, distracting others... as you were Sangi :-)
All the best Roker! I still hold albeit at a reduced level - will just leave it to run now and forget about it. Relying on the scientists at TILS now.
Enjoy the season with Harrogate Town (and Sunderland) saw your comments a few weeks back! (Mrs Green used to run a florist shop at the turret building on the Stray years ago).
Aside from the contract info posted previously, just a quick assessment on revenue and bed utilisation...
- Folk have mentioned the lack of new contracts being signed and the disconnect with CF's assertion that the facilities are fully booked this year and significant utilisation already for next year.
- If we go back to 2019 RNS's / early 2020, HVIVO as it was then and Open Orphan only announced two significant contract wins, could assume maybe £4.5mn each (seemed a common figure). Venn we know did £8mn, so with a £22mn revenue line, looking at another £5mn of non-RNS stuff.
- Taking this FY, I can see 5 large contract announcements, plus characterisation work, Oxford CHIM agents etc..., plus Venn and got to a c. £46mn revenue figure (would like it to be £50mn but still double last FY).
When it comes to beds utilisation...if we run with rounded numbers...each study has c. 80 people, you need a minimum two weeks quarantine for each patient, and have 40 beds in total (give or take). Assuming you need a bit of space front and back end, you are looking at c. 6 weeks per study.
5 large studies + small ones, soon gets us towards the 80% utilisation figure.
Royal Free obviously critical as that gives new capacity for next year, and assuming Codagenix plus three Govt studies (offset by no characterisation work), "should" see upside of c. £20-£25mn. Could be higher if we take the £10mn+ assumption per CV19 study from CF. Also shows how with the number of challenge agents available, that you need extra capacity to extend the revenue line in FY23 (next year I would expect £70mn+ once Challenge study sign off hence September/October this year critical but then hit a space limitation going into the following FY) - or you charge more per study but a fine line to tread with customers there.
The pieces we don't know is how much demand there is for other challenge studies as the majority are RVS - but why develop new CHIM agents unless you can see demand - and how much pent up demand is there for additional studies should they be able to secure more beds.
He crops up everywhere...Helium1, Bradha etc.... same story...
Would rather he kept it in Open Orphan, get it to scale and then separate it off. Given all they have going on I would have thought that was easier? - only reason I can think they want to do it now is to get Open Orphan stripped back to just the Core business.
I know SGS are touted as potential purchasers but Icon, with the Irish connection and strong acquisitive behaviour must be credible aswell...
Not sure why the negativity....EV/Revenue and EBITDA ratios far higher in US, makes sense from a valuation perspective but also operationally...the Board, Science Board etc... all over there
Re. valuations - if you take the CRO sector as an example (know more about that) - EBITDA to Enterprise value c. 8x as an average in UK, 27x in the US...
(they do make life complicated for themselves mind...)
We've been through this Bear, I listed all contracts that should fall into this FY last week - we know they are at capacity with existing beds, we know time to complete, we can cross reference RNSs with Clinicaltrials data to check on number of participants and timeliness...went through costs aswell, but will do an updated view on that over the weekend.
£109mn mkt cap and sat on a cash pile of £30mn(ish)... feels way over done but sentiment change requires newsflow...
The existing vaccines have limited efficacy and limited duration, so longer term work will assess how those previously vaccinated respond to different scenarios...dimensions of the study just change, already seeing that in the characterisation studies...(factor in age, gender, vaccine previously received, time since infection) and then anti-virals, loads of work - will be shared e.g. with Oxford etc...
I think there are two separate threads to the Challenge studies Moniman... One is around Vaccine dev e.g. Codagenix/Covi-Vac as an example, other is around understanding which is key for Government... e.g. How does viral load differ between vaccinated and unvaccinated, vaccine spread difference, seasonality etc... lot of insight still to be established. That will run and run...
I guess first question is whether it's accurate, so need to wait for more info...
...and if it is, what has been raised as a result...£100mn, then fair enough, £10mn...not good...they clearly need significant funds to commercialise it so expecting significant share issue...
lastly, is GC on 25% cut of any successful fund raise ;-)
Sorry, should have added - at that point in time, 29th April, they had just completed their 3rd cohort of participants in the characterisation work - typically quarantined for 14 days, initially started with 3 individuals, increasing to 10. Believe the current extension of the characterisation work has larger cohorts, given the inferred value.
Not sure if people caught this presentation back at the end of April, but first half was presented by Dr Chris Chiu (Imperial) talking about the role of Challenge studies, and then details the approach for Covid 19. Gives some details around the characterisation process, but also shows the thinking around importance of challenge studies, interestingly to speed up the drug development cycle, and negate the need for expensive, protracted phase 3 studies where time is of the essence with Covid. Worth listening to if you have a spare 30 mins.
https://lshtm.cloud.panopto.eu/Panopto/Pages/Viewer.aspx?id=91c8a0a8-8d48-4f2b-8461-ad2000ed534b