Member Info for Greend100

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.

Re cash levels…
- TB CHIM
- Malaria CHIM
- Pneumococcas/Streptococcus CHIMs
- Upgrade of QMB to support elevated Biohazard status for Covid studies (I assume to support anti-viral studies)
- Improved technical accreditation (believe this is with a nod to the US to improve credibility)
The above are ones off the top of my head, which have been raised in recent presentations, and all seem eminently sensible investments…would rather they invested for growth rather than seek to build a cash pile…
However, saying cash is steady isn’t as helpful as saying cash is growing but we are investing in x, y and z …would help if they detailed their investment plans.

There is justifiable criticism of CF for being overly optimistic / using glib sound bites (share price growth etc…) / calling out imminent news that hasn’t yet materialised……but I’m quite enjoying the new approach…talk when you’ve an announcement to make and if it’s quiet in the meantime so be it (granted did revert to old CF in the Poolbeg session).

I try to take a logical view to Orph as the majority of discussions are emotive, and it still seems (to me) hugely appealing as an investment.

There are two key pieces for me…

Firstly, financial performance / market opportunity, and secondly, senior management team.

On the first…Core business trajectory is obvious.
- Aside from H1/H1 revenue growth, contracts increasing in value so cash straight to bottom line. (I don’t think influenza ones will increase as much as others but still positive)
- Demand is clearly there - I think Hvivo did 2 challenge studies in 2019, 10 this year, 15ish next excluding Covid.
- Low cost to grow (for short term growth)
- Cost management / frugality - there are no vanity projects, if it’s not linked to revenue it doesn’t happen - a little short term it’s potentially but Orph isnt going to be standalone for long.
- Market demand increasing - whether the overall market is $250bn, $150bn etc… I don’t see as relevant - its analyst views, they will vary, we don’t know how that breaks down. What we do know is that demand into Orph is growing, albeit would be nice to see 3-4 contracts land this side of Christmas to reaffirm this.

On the Management strength piece, I think this is hugely under called. See far too many plodders in SMT positions, very rare to find someone that drives change. With that there might be some bluster/bravado, but CF certainly mixes things up. Most outcomes will be positive, but will be the odd screw up. Having a bit of a maverick as a leader but a strong team behind you tends to be a winning solution.

Coupled with this is a strong work ethic (certainly can’t be questioned) and the ability to set a strong team around him.

Whether A Catchpole, A Wildfire, M Treacy, A French, B Buckley, and the non-execs e.g. E Sullivan, all seem to be highly competent individuals.

While news has been thin on the ground recently, the work in the background still strikes me as very positive.

I think any adjustment in share price is down to the price at the time - at 47p you can expect a reduction as people step back, at 20p very much doubt that will be the case (also expect price to rise leading into the spin out, from a 20p base).
If we run with the assumption that DiM will get away at £75mn (£50mn plus £25mn raised), that £50mn is 7p a share…
If Prep is worth £20mn - pretty much what they paid for it, you’ve got 2p ish there.
Imutex as mentioned before is difficult to value. Biondvax got to $600mn going through phase 3, with $20mn in cash, so mainly down to the asset.
If we ignore heady US valuations etc… and just assumed £100mn, that would be £49mn for Orph, so another 7p.
On assumptions discussed by others, that leaves the Core business at 4p…not going to happen…
Over the last four years, standard CROs have been valued at an average x3.4 of revenue (UK not US) - picked up from various credible reports e.g. Deloittes
While Mo Khan or Cathal can state it’s not a standard CRO (and justifiably), a 6-8x valuation is too bullish for me at the moment. Even taking the standard 3.4, a £40mn revenue this FY and let’s assume a modest £60mn next, puts the Core business in the £130mn-£200mn bracket, with it currently trading at the lower end of that range.
If we add the lower end 20p+2p+7p+7p, we are at 36p.
If we take the next year view of £60mn t/o, Core business would be 30p, add the others and we get to 46p which is in the range of broker forecasts.
Imutex sells for more / they beat guidance next FY / someone sees greater value than industry standard, upside on this…and naturally impact downwards if any of these aren’t delivered.
IMHO

Busy week, thanks for the detailed response Earache…only had chance to look at the motley fool article, will look at the others this evening…

On the motley fool article…he’s completely muddled…

“Completing Phase II and Phase III trials will be a multi-year process during which many things can go wrong. To make matters worse, there are currently 32 other competing influenza Phase II drug trials and a further 16 already in Phase III. Needless to say, the competition remains fierce. And with no other medicines currently in its development portfolio, Poolbeg looks quite risky as an investment in its current state.”

Poolbegs’ lead drug is a therapeutic, treating illness, cytokine storm scenario again, but different pathway - will it prove effective, who knows…but it’s not an influenza drug treatment/vaccine.
His view on the number of influenza drugs in development may be accurate, but suspect it covers vaccines and therapeutics and also aren’t universal in nature as per my note last week (think he’s mistaking Poolbeg and Imutex) .

Briefly on the Biondvax piece, that was aiming to be a universal vaccine so competition for Imutex not POLB - different market. From memory Biondvax was around £50mn market cap, but climbed to 250-300mn before phase 3 failed - climb started after ph2 success confirmation but also tied in with whole Covid ramp in 2020 so difficult to tell how much of the growth was attributable to which factor, hence difficult to value Imutex…

This was a public service announcement on behalf of the bear party…

Re Orph, no one (to do with the company has said next year) - last word from CF was that they’ll all be done by Christmas and DiM ready to go…do I think they’ll squeeze all three in the next two months, probably not, but you cant just make stuff up stating nothing till next year…and pitch it as fact.

On the wider point, markets may adjust, but UK not exactly flying, FTSE where it was 20 years ago…US a different matter, but even then most analysts not forecasting an adjustment beyond 10% which would still leave the Dow and Nasdaq above precovid levels.

Hi Earache,
Just been going through your last note - I’m ignoring the back and forth bb comments, don’t want to add fuel to that fire, distracting enough as it is, but wanted to see if you could clarify something please?

(Earache) There are currently 32 other much more recently developed universal influenza drugs actually in Phase II trials and 16 already in Phase III.

(Q) Do you have details of these you could share? As far as I know, 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.

Re POLB-001, is an Immunemodulator, works as a therapeutic rather than as a vaccine.

I know Hvivo did further development work 2018, as to appetite of acquisitors, think we would all be speculating, depths of complex science that one. I don’t think phase has a huge bearing though, see ph 1 completions, 2a, 2b ready devs being acquired frequently and success rate risk factor is a given in the sector, you know you’ll miss far more often than win…

This was in the 14th July RNS

Completion of CHIMagents acquisition

Separately, and further to the Company's announcement of 15 July 2020, Open Orphan announces that it has completed its acquisition of CHIMagents Limited. CHIMagents was established to assist in the design, manufacture and testing of challenge agents for use in challenge studies. The CHIMagents team have been working alongside the

Open Orphan team since July 2020 supporting the design, manufacture and testing of both new challenge agents and the Company's industry leading portfolio of existing challenge study agents.

Bloody cut and paste - you get the idea of where I’m coming from :-)

Hi Extrader, my understanding of timings from what has been said…delta strain is being manufactured by Nov/Dec to support characterisation study on Delta (alpha done, just awaiting report which seems likely early Nov based on comments from Dr Chiu). I’m assuming they’ll continue manufacturing it to support private sector anti viral trials next year and challenge studies post characterisation. Characterisation for delta would be Jan-May(ish) and CF has already mentioned that they’ve agreed c £5-6mn on top of the non-Covid £50mn for next FY from the characterisation work in H1, so timing for H2 to start running challenge trials seems realistic, although frustrating.
May also be why he is talking up anti viral work which could run off alpha characterisation?

Key part for me in the Telegraph article was the number of enquiries and ramping up the biohazard element of QMB to support Covid trials outside of Hi Extrader, my understanding of timings from what has been said…delta strain is being manufactured by Nov/Dec to support characterisation study on Delta (alpha done, just awaiting report which seems likely early Nov based on comments from Dr Chiu). I’m assuming they’ll continue manufacturing it to support private sector anti viral trials next year and challenge studies post characterisation. Characterisation for delta would be Jan-May(ish) and CF has already mentioned that they’ve agreed c £5-6mn on top of the non-Covid £50mn for next FY from the characterisation work in H1, so timing for H2 to start running challenge trials seems realistic, although frustrating.
May also be why he is talking up anti viral work which could run off alpha characterisation approval which should be imminent??

Number of enquiries around Covid would suggest market is more anti-virals / therapeutics.

Other key element of Daily Telegraph article was the ramping up the biohazard element of QMB to support Covid trials outside of Royal Free - only logical reason for spending (and CF is frugal) is if QMB is going to support Covid studies. Would also explain need for another hotel as need to take non-Covid work out of QMB and support it elsewhere.

Didn’t want to bite but couldn’t help myself…think your comment was intentionally inaccurate..,

(Q) Where is the growth? Once the assets have been off-loaded where does it leave the company.?

Answer - a rapidly growing CRO. Under Hvivo, had 24 beds and couldn’t fill those, as only had 40% occupancy.
Now have 43 beds plus royal free for three years, full occupancy, plus proven model of adding hotel space for non Covid contracts, and seeking more. Spinning round a hotel costs £1.5m, rent modest, ave contract value of £5-8mn…can run c 4-5 a year. Feels like good growth to me, also achieved H1/H1 growth of 240%, suspect your comment was intentionally misleading.

(Q) I think Nasdaq is a red herring dangled to shareholders as they believe its access to fortunes and companies being valued at insane values.

Answer - I don’t think Orph will exist in its current state this time next year. ConservBio, US focussed, Prep into US SPAC, Imutex -US gov/private sector tie up probable (hoping as a sale), NEJM, WSJ, NYT articles…media focus has switched to US…I think it will go Nasdaq but as broader US tie up…I don’t think it’s looking at being an ADR set up, just personal view…

Imutex harder to value…strong credibility in having Flu-v ph2 done with Unisec consortium in EU, and NIADH/NIH engagement. Flu-v 003 done with 175 adults, and follow on Flu-v 004 showed reduce disease, symptom and viral load.
FDA meetings to agree confirmation of remaining development pathway being done through ConservBio. Then have AGS-v 1b complete and AGS-v Plus ph1 in 2019/20 conducted with NIH, so strong, credible channels.
Re valuation, if we take Biondvax, they were c $60mn USD pre-Covid, but also prior to sign off on ph2, so difficult to see to what extent the climb in Q2 last year was attributable to moving into ph3 vs market momentum. At its peak, it hit $600mn, and with cash if just $21mn at end of 2019, most of that value is in the IP.
Given Imutex is ph3 ready…pick a number between $100m and $600m, personally look at lower end but still significant.

Taken from Biondvax SEC filing 2019..,

Biondvax SEC filing 2019
our competitors currently include large fully integrated pharmaceutical companies such as Sanofi-Pasteur, GlaxoSmithKline, Seqirus (Ex bioCSL and Novartis flu vaccines), AstraZeneca and Abbott (Solvay) as well as companies and academic research institutes in various developmental stages attempting to develop improved influenza vaccines, such as Imutex, AltImmune, Inovio Pharmaceuticals, Inc., FluGen, Inc., Medicago, Vivaldi Biosciences, Vaccitech, and Vaxart.
Influenza Vaccine Candidates in Development

To our knowledge, there are a number of companies and academic labs attempting to develop new influenza vaccines. Our information as to the identity of our competitors, the nature of the competing product candidate and the development stage of such competing product candidates relies solely on publicly available information that we are aware of. The following is a summary of known competitors and competing product candidates:

Imutex Limited, a joint venture between SEEK, a privately held UK-based company, and hVIVO PLC, is developing a vaccine based on six specific peptides to induce cellular immunity. In 2011 SEEK published Phase 2 challenge clinical trial results in 28 people which indicated that its vaccine stimulated the immune system and was found to be safe. In April 2016, it was reported that SEEK and hVIVO invested approximately $20 million to create Imutex, a startup with a “Phase 2a ready” universal flu vaccine candidate. In March 2018 and January 2019, Imutex reported their Phase2b challenge trial achieved the primary endpoint of a statistically significant reduction in mild to moderate influenza.

Just adding comment re the spin offs…difficult to gauge value, but given both are looking like landing in the US that helps with values being at the upper end.
Prep is probably easier…

Just looking at PrepBio…doesn’t feel far off
CF mentioned the previous week re SPAC in the US …(a nod to Eskers for finding the Revelation Biosciences/Petra Acquistions tie up in the US (see below) and their reference to Prep-001 in their SEC filings (competitor reference…I think)).
? Revelation Biosciences has three developments, but in their infancy. REVTx -99 is due to run ph2 viral challenge study and ph1 proof of concept. REVTx-200 is an intranasal immunomodulator, REVDx-501 is a point of care diagnostic.
? Petra is the SPAC, with $73mn cash, merged business valued at $128mn, giving $55mn as Revelation value so c. £40mn.
? I think CF has mentioned Prep will have some other bolt ons when it splits, so comparable, but is further advanced than the Revelation Bio Immunomodulator on their lead product, having completed phase 1b/2a for both treatment of Influenza and Non-Influenza Upper Respiratory Infections.
? Expectation is that Prep is also going the SPAC route into US. If we assume same valuation at £40mn x 62%, gives £25mn, or 3.5-4p a share.
- From memory, Hvivo paid £14mn for their stake and was also a linked challenge study at the same time, so could have been higher. Since then, undertaken further clinical trials to increase value and also market values should be increasing given current situation. A £25mn valuation of the Orph stake feels lower end, so may be upside potential on the 3.5-4p?? (IMV)