The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
CF has also said that the data will be licenced to multiple wearables manufacturers (and big tech and big pharma) with an upfront payment and ongoing licence fees, and that the data alone could be worth more than the current market cap for ORPH. Definitely a lot of excitement around the wearables deals, among many other things in the pipeline.
Thanks for this Peter, interested to hear they think ORPH will make further acquisitions - did they explain why they think that?
CF was asked about further acquisitions in a webinar back in October and seemed to explicitly rule it out, saying he wouldn't want to risk shareholder money and that no further acquisitions are needed because they've got more than enough to keep them busy.
Seems more likely in my mind that ORPH itself will be bought out by a bigger CRO, which CF has also alluded to.
His LinkedIn says he joined the board of Imutex in August 2020, so fairly recently.
Sounds like it - local news reported the involvement of the University of Southampton fairly recently:
https://www.dailyecho.co.uk/news/18833042.southampton-university-researchers-working-covid-19-study/
"Medical researchers from the University of Southampton are offering expert input towards the study to explore and establish human challenge trials in the UK."
"Robert Read, Professor of Infectious Diseases at the University of Southampton, and Director of the NIHR Southampton Biomedical Research Centre helped devise the strategy for this Controlled Human Challenge study."
"Up to 90 volunteers could be involved in the research which is backed by a £33.6m investment by the government in partnership with Imperial College London, hVIVO, a world leader in the testing of vaccines, and the Royal Free London NHS Trust."
Good to see they're recruiting!
On the subject of fast-tracking:
https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN28U0WC
"Drugmakers will be offered fast-tracked approvals for innovative medicines in the UK", if they are addressing an "unmet need".
I don't have an FT subscription unfortunately so I can't read the original article but we know that ORPH are already working closely with the British government, and I'd definitely say that a universal flu vaccine is a currently unmet need - this could potentially bode well for Imutex.
Moniman - I posted this link a while ago:
https://hvivo.com/hvivo-announces-a-joint-venture-investment-with-the-seek-group-to-develop-vaccines-against-flu-and-zika-infections/
It says that "depending upon the outcomes of these studies, Imutex may also pursue Fast Track designation for these vaccines."
Not that I'm a scientist by any means but from what I've read, the data so far from Flu-v and AGS-v sounds like it's been very encouraging, so I'm also surprised it's been relatively quiet on this front in terms of 'fast tracking'.
However CF's recent announcement that Imutex may also have a seasonal Covid vaccine was also very encouraging. 'Watch this space'.
Excellent find Eskers, thanks for sharing.
Thanks to @ugly_winning on Twitter for sharing this link:
https://www.japantimes.co.jp/news/2020/12/12/national/science-health/infectious-diseases-database/
"The [Japanese] government is considering setting up an integrated database to facilitate the prompt treatment of infectious diseases such as COVID-19, sources said Saturday. If implemented, the database will also assist researchers in the development of vaccines."
Interesting that this was published two days after a Japanese TV crew were at Hvivo filming for a broadcast around Christmas time.
Might be nothing or just a coincidence, but ORPH is already working with or talking to the UK/Chinese governments, could be adding Japan to the list soon.
Maybe a long shot but I wonder if the exciting/bemusing announcement coming soon is anything to do with the approach from the Chinese government.
Agreed - after CF's comments in his interview a couple of weeks ago where he said he expects to see ORPH using SGS's facilities in a mutually beneficial arrangement, I'm not sure what would be 'bemusing' to investors if that turned out to be the third facility announcement.
Please add anything I missed or got wrong.
Some thoughts:
- great to get a small update on the Covid potential of Imutex's Flu-v vaccine - this has been mentioned in presentations and on the website for a while but without any further news. This could potentially be a huge development.
- Pleased to see monetisation options for database beyond the wearables
- People will be "bemused and excited" by news of fourth facility - any thoughts on what CF could mean by this?
Questions:
Has option to acquire CHIMagents been exercised?
--- Original contract was smart way of acquiring 6 staff from competitor - hasn’t been exercised but is only a formality. ORPH no longer has that competitor. No issue whatsoever with the CHIMagents plan.
Many companies working on Covid vaccine. Imutex is the most advanced universal flu vaccine candidate - could it also be used as Covid vaccine?
--- We are taking our time because Imutex potentially has a seasonal Covid vaccine. Also mentioned AGS-v with promising results from Phase I. Don’t want to just sell to the first bidder, taking our time to get max value from this asset.
Ethics committee will have lots of questions about new challenge model - any protocols submitted yet and any pushback?
--- All studies have to get approval, we don’t update the market on this as regulators don’t like it but this is work in progress. We are awaiting regulatory approval on Codagenix trial which is a new generation of vaccine and we will announce this to the market. Approvals not an issue at the moment.
You say IIs are not selling - Morningstar data shows different story. Is share price being held back by IIs selling?
--- People say share price hasn’t performed, but has had significant uplift in 12 months. We are not in the Covid bubble, we don’t want to see our SP get ahead of itself. No particularly big institutional selling. A lot of retailers who bought in at sub 15p have taken profits, especially with CGT news recently. Remember CF and founders are locked in for another 18 months - “we are relaxed” about it and are confident the SP will rise.
Is Royal Free exclusively for UK govt. and not for private pharma companies?
At the moment, £40m contract from UK Gov will keep us busy for next year or two. After that, RF will be available for other work. People will be ‘bemused and excited’ by announcement of third facility. We will then look for fourth facility as there will be a “feeding frenzy” for vaccine trials over next few years. Timescales have been massively condensed for creation of new challenge study.
Deal structure for wearables - one-off licence fee or recurring annual licence fee?
Didn’t know about wearable deal 3-4 months ago. Loads of wearables deals with loads of parties, cash upfront followed by recurring revenue. CF has never been more excited in his life than he is with current opportunities for ORPH.
Some notes from CF's presentation just now. Not much new in the slides but some interesting updates on timescales and Imutex.
Main presentation:
- ORPH is "clearly profitable" for a few months now
- Venn will be announcing a vaccine contract not immediately but in the near future
- Cash balance £21.5m but not updated - still showing balance from end of October (“making profit every week, every month”)
- Hvivo quarantine unit booked out til December 2021, second facility at Royal Free ‘pretty full’, at final stage of negotiations for third facility to be announced before the end of January. Third facility is a ‘light touch lease’ with no long term commitment
- Hoping to get approval pretty soon for Codagenix trial
- Next generation of Covid vaccines will have 5 - 7 years of immunity
- “Bear with us, we’re not far away” from wearables deal - a number of deals to be announced in this space (i.e. not exclusive rights to one bidder as originally suggested)
- Slide mentioned opportunities to commercialise this data with big pharma and big tech companies, in addition to wearables companies
- CF Mentioned again, no more fundraises, cash to be returned to “long suffering” shareholders
- Pipeline remains in excess of £160m
- TV crew at Hvivo today for Japanese broadcast over Christmas
- Imutex - a little behind schedule but not too far, “bear with us for a short while” and we will be divesting Influenza Immune Modulator, PrepBio and Imutex - “worth taking the time to get right”, “won’t be done by Christmas” but won’t be much longer
This is the event Vascular - https://www.sharesmagazine.co.uk/events/event/shares-investor-evening--webinar-091220
CF also did an interview with MSQ Ventures back in April - https://youtu.be/P21snVLiA3Q
MSQ helps Western pharma/biotech companies secure business in China - http://msqventures.com/
Thanks for these calculations Peter.
Interested to see what Imutex is ultimately valued at - CF has previously compared it to the sale of Themis which was for an unknown price but thought to be up to 500m, and he thought Imutex would be at the upper end of that range. In a later investor presentation he said he'd be happy with 200m and doesn't think it's worth much more than that. Then there are the two scenarios from Goldman Sachs, valuing it at either up to a billion or over a billion.
Remember as well that ORPH only has a 49% stake in Imutex, so if they do opt for a Nasdaq listing rather than cash sale, it would need to list at over £250m for your 18p per share calculation to work. Seems possible but time will tell! CF also said they quickly had more interest in Imutex after Biondvax's Phase III trial failed.
Agreed, seems almost impossible for it to not get signed off at this stage, just wondered if the wearables deal(s) are contingent on formal approval.
Is it possible there'll be no news on the wearables until the challenge study is formally signed off? Without confirmation that the challenge study is definitely going ahead, the wearables manufacturers wouldn't know for sure whether they were bidding on the data currently available available, or that plus incoming data from (potentially) upcoming trials.
It's already on YouTube Steadfast - https://youtu.be/ll7tWyxcOpQ
As a third of the value of challenge studies is paid in advance and the clinic is fully booked until end of 2021, is significant 2021 revenue already reflected in cash position?
--- No definitely not, we are generating cash, including upfront payment from UK government. Broker notes were based on the single Hvivo facility in Whitechapel. Capacity now doubled with Royal Free, extra 19 beds. This is not yet factored into any projections. Third facility coming up, announcement expected soon. Potential for fourth facility too. ‘Watch where we’re going from here, I’ve never been more excited.’
Competitors, global expansion, market size.
--- We talk to all competitors. World’s too big to be fighting with SGS. (?)
--- Mentioned something about the Chinese government but I missed this part of the answer
--- Market growing exponentially