The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Last bullet point got slightly cut off, it said:
Final word from CF - bear with us next two three weeks, can't be talking too much, need to keep head down as we approach potential IPO, more news and a higher profile in July and August
Will demerger RNS be before or after cut off point for dividend in specie eligibility?
- unless I missed it I don’t think CF really answered this question, but he did say this was weeks away rather than months for the first one, and paraphrasing heavily here but also ‘don't sell spinouts too early, take profit but stay for the ride’.
Have you considered using a SPAC for spin offs?
- Yes, CF invests personally, has £150k in UK SPAC but don't read too much into this. First spin off will be a ‘clean’ AIM listing. Those who benefit most from SPAC IPOs are those who get in early, CF wants to be more fair to existing shareholders
Why should I buy shares tomorrow?
- ORPH has done well so far, staff are working hard, company has a good team. Again mentioned that EKF created a billion in value in less than 18 months from spin offs, ORPH aiming for the same
Any IIs showing interest in spin offs?
- There will be fundraising for spin offs, primarily institutions, also some allocation for Primary Bid
From a CGT point of view, with all planned spin outs is there a danger that smaller shareholders end up with lots of smaller holdings rather than big holding in a larger company?
- Dividends to be given in assets you already own so no tax on the day dividend received, but there will be CGT if they go up in value and you sell. Non core assets to be separated because ‘conglomerates never worked’. Interest rates likely to be low for a long time, yield seekers will be buying stocks - good time to be divesting
DIM reliant on data from the rest of the company - how will this work when DIM is spun out? – With a ‘relationship agreement’ – a deal in place to secure access to the data, ‘very simple, no big deal’
Are SEEK dragging their heels?
- It’s not ORPH dragging our heels, if Seek are listening, what the hell are you doing?!
What IT security in place at ORPH to protect from ransomware for example, and is there a continuity plan?
- GCHQ visited ORPH as it is a very important company in the eyes of the British government. GCHQ said to call them if ORPH has any ransomware issues. UK is very safe place, government agencies actively keeping an eye on ORPH
Any medical issues with any Covid patients in the challenge studies?
No - if there had been you would likely have heard because nothing can be hidden in age of social media, but company can't comment on patients, who are asked not to disclose any info themselves until the end of the study
Confirm the 9 month lockup applies to spin off shares only, not ORPH shares?
- Lockup is 9 months for spinoff only, no lockup for ORPH shares, CF likes ORPH stock to have liquidity
Should all spin off shares be ISA compatible?
- CF thinks they will
If orph shares are in ISA will new shares also be held in ISA?
- Yes absolutely
Final word from CF - bear with us next two three weeks, can't be talking too much, need to keep head down as we approach potential IPO, more news and higher prof
UK is moving down the age ranges in terms of Covid vaccines offered and ORPH has still not started challenge study – is this a problem?
- Couldn’t keep up with the detail here but the answer was essentially no, this isn’t a problem
What is Hvivo’s involvement with Oxford's reinfection study?
- Hvivo gave them the virus that ORPH developed in conjunction with GOSH as they were paid to do so by the UK Gov vaccine taskforce, Hvivo has a good and growing relationship with Oxford
Guidance on Covid challenge studies?
- Big change will be shifting focus to antivirals, not just vaccines
Update on wearables licensing for DIM?
- Lots of work underway, platform is patented, trying to build standalone company, as this will maximise value
Are all interested wearable manufacturers still in talks to licence this data?
- All 5 or 6 wearable manufacturers are still in talks, plus more importantly ‘all 500+ pharmas’ will be interested in data
Are you still looking for fourth facility?
- Always looking for new facilities, watch this space. Better to overfill existing facilities and improve margin than end up with lower-margin overcapacity
Any extra non-core assets to be spun out?
- DIM will now definitely be spun out, likely by Christmas with dividend in specie
Update on Imutex / ConserV?
- CF pressuring ConserV to get moving with this, but still a work in progress. CF said it will be a problem if there isn’t any imminent progress
Expansion plans? Any further UK or foreign government contracts?
- Government is establishing the UK as a leader in vaccines, antivirals and infectious diseases, so there are lots of ongoing discussions. UK Gov has been ‘very kind’ to ORPH
Is ORPH constrained by British government in terms of potential buyout?
- Government wouldn't want to see ORPH taken over by a Chinese group, ‘but who knows’
What is the connection between Poolbeg and ORPH?
- Poolbeg is tax free spin off vehicle temporarily owned by directors, CF will end up with single digit percentage, c. 5% split among management
Any companies you want to buy?
- ORPH is an aggressive company with a good share price, so "who knows", watch this space. ORPH gets lots of approaches from companies who want to be bought and companies who want to buy ORPH. CF spent 15 years in corporate finance so likes this area
Any potential buyers for ORPH, and at what valuation?
- Don't get obsessed with selling out, so much more value and opportunity to be created in ORPH. ORPH won't run out of cash and won’t be raising, "keeps the wind in our sails"
- Do you view current ‘time’ as on a par with a supercycle?
Yes, current situation with interest and increased investment in infectious diseases is comparable to a commodities supercycle, and the supercycle has quite a few years to run
- Malaria, flu, asthma, HRV and RSV are bigger opportunities for ORPH than Covid, CF reiterated that ORPH is 10% Covid, 90% other work
- however, double digit deals for Covid to be announced very soon
- Smaller contracts from Paris and Breda offices won't always be announced but they are very busy and generating revenue
- DIM "definitely" a spinout now, another non-core asset to be divested, a "wonderful standalone business" with dividend in specie by Xmas
- PrepBio - "hope" to put this on Nasdaq
- Imutex – CF repeated his line that "if we can't do something with this in the middle of a pandemic / in the coming months then something is badly wrong"
- Flu isn't going away, but there has been no influenza for past 18 months due to social distancing and enhanced hygiene – the world needs to get ready for the inevitable next pandemic, which may be influenza and in which Imutex could be valuable
- ORPH only a 49% shareholder so ConserV are driving this process, CF has been "barking" at them for progress
Questions
When can we expect cash dividend, or will it be used for acquisition or buyback?
- Cash pile is growing, small amount being used to prepare the spinouts for divestment, CF wants to buy shares so a cash dividend would be nice for him! ORPH is not losing money, and won’t be raising either.
Accounts?
- End of month - will contain turnover and profit guidance for 2021, modest expectation for this year then "blow the lights out" subsequently. CF wants to exceed guidance.
Invesco are out, is there another II seller?
- CF ‘gathers’ that Invesco have gone, they are certainly below the notifiable threshold. SP likely dropping as RNS frequency has decreased, but some very large double digit deals incoming – SP should respond accordingly
Where do you see SP in 2021, 2022, 2025?
- Lots of talk previously from CF about SP, he obviously wants to see it growing, but didn't give specific figures this time
Demand for anti-microbial and influenza work? What sort of contract cost can we expect?
- Malarial challenge study work is incoming
How far into future are clinics booked?
- Up to 18 months / 2 years
Any outcome from conversations with China?
- ‘We like dealing with China, they have a lot of money.’ (That was probably the quote of the evening for me!) CF ‘would be very surprised’ if China don't do anything challenge study-wise; China using vaccine donations as political tool to essentially upstage western powers and particularly the USA. "Chinese conversations continue". Later said that ORPH wants to make sure China pays for their services rather than 'borrowing' them - ORPH have been quoting £30 - 50 million to ‘show China how to do it’.
Are new challenge studies on stream?
- Yes, lots coming through
What is the likely next company news?
- A lot of newsflow incoming following the recent (deliberate) quiet period, and only substantial news will be announced – no specifics mentioned
Made some notes as CF was presenting and answering questions just now - there was so much info I definitely missed some points/questions and potentially misheard a couple of answers so please add anything I missed or anything that isn't correct. Massive amount of information and incoming newsflow and CF sounding as positive as ever.
Main presentation
- Company accounts coming towards the end of June – they cover last year, so "don't get too excited"
- The big news from upcoming accounts will be formalised confirmation of profitability
- Guidance on profit / revenue guidance to come but CF wants to exceed the guidance given
- "trying to underpromise and overdeliver"
- CF is biggest shareholder so is looking forward to getting dividends in specie himself
- Reiterated that ORPH is not a Covid stock
- Malaria challenge study contracts coming soon, 47 antimalarial products that could make use of this challenge study model
- Huge amount of flu work, asthma and RSV
- A lot of money being spent on treatments and vaccines for respiratory diseases
- Covid challenge characterisation well underway in Royal Free, completion due soon
- ORPH being "paid handsomely" to develop new Covid variant for use in trials
- Substantial Covid announcements expected over the summer
- Low UK deaths show vaccines are working but new vaccines needed every year - ORPH is only company that can provide challenge studies for testing them
- UK antiviral taskforce created, similar to vaccine taskforce, additional challenge study opportunities as UK Gov wants to lead the world in developing these drugs due to risk of winter third wave and ongoing vaccine hesitancy (as a side note, I wish the UK government had shown more support to SNG if this is the case!)
- Spinouts – CF has seen some of the speculation and wants to ‘debunk some myths’ about Poolbeg Pharma – all that has gone into Poolbeg is HV-001 and 'some other assets that are in the basement', i.e. anything of which ORPH has 100% ownership
- This process requires ORPH to set up a series of companies, and these companies can't be owned by ORPH so the named directors are essentially ‘placeholders’ - around 99% of shares will ultimately be owned by ORPH shareholders but there will be a small shareholding retained by management as an incentive
- When company hands shareholders spinoff shares, it will be via a statutory demerger with HMRC approval – this means that as ORPH is demerging assets we the shareholders already own, there is no tax to pay, but there will be a lock in of 9 months or possibly slightly less
- I was really struggling to keep up here but I think CF said there are ‘lots more assets to be vended into Poolbeg’ – can anyone confirm?
- For the spinouts, dilution is inevitable as the companies will need to raise money – a substantial allocation of new shares will go to Primary Bid so CF recommended getting accounts set up in advance if interested
Try the registration link here that ORPH have provided:
https://www.openorphan.com/investors/key-dates-calender
I think you need to find ORPH (C) on Investor Meet Company instead of the usual ORPH - not sure why they have two listings on there now but I had the same issue finding it last week.
Interesting they mention that as well as ORPH/Hvivo, "contract research organisations (CROs) such as ICON are collecting biomarker data including from wearables, to help validate clinical studies and to help monitor patient outcomes more effectively."
ICON are highly acquisitive and buy out another company more or less every year - wonder whether SGS would have some competition if they made a takeover approach for ORPH.
Published this morning:
https://www.proactiveinvestors.co.uk/companies/news/951156/open-orphan-unlocking-the-value-of-non-core-assets-951156.html/long
No problem registering to join a webinar but this one hasn't been listed on either Investor Meet Company or ORPH's own website so I had no idea it was even happening until it was mentioned on here.
If it's open to all then it could be better publicised as everyone is keen to hear some news after such a long period of relative quiet from CF.
I missed that last post - thanks Bazzaman.
Same here Demon G, very keen to watch the presentation but not keen on signing up for yet another platform.
Can't see any upcoming ORPH presentations on Investor Meet Company either, so would be grateful if a Telegram user could share the link to join the webinar here, assuming access isn't only available to those with Telegram.
A major DIM contract would do just fine!
Had a look at my notes from the past few ORPH presentations and we're waiting for news on multiple fronts, some of it imminently:
- Trading update - aiming for before June so next couple of weeks if all on track, and "the results are nice"
- Spin off of all three non-core assets before the end of the summer if all goes to plan, inlcuding one to Nasdaq, so within the next four months if all on track (might be a big 'if')
- First contracts with DIM - CF has stated some of the world's biggest brands including Apple, Google and Amazon are interested in Hvivo's data - and DIM to ultimately be spun out into 'ORPH Data'
- Contracts with Chinese - ORPH in discussions with Chinese government for some time now and many Chinese pharmas want to use challenge studies - ORPH had a call with seven CEOs of Chinese vaccine manufacturers and Chinese regulator recently
- Contracts with more North American pharmas - "North America watching our challenge trials very closely"
- A number of Covid trial contracts will be announced soon, all £10m+ (CF speaking back in March)
- New screening centres being looked at across Europe, with Ireland and France specifically mentioned
- New malaria, pneumococcal and anti-microbial challenge study models
The SP has not been fun to watch the past few weeks and especially the past few days, but the sheer amount of potential in this company and the amount of incoming news is more than enough to keep me in. CF has referred to the 'billion dollar club' on more than one occasion and he has more reasons than anyone to make it happen.
Just published by the Telegraph. Demand for LFTs is sounding strong.
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https://www.telegraph.co.uk/news/2021/04/30/quarantine-self-isolation-could-replaced-daily-tests/
Quarantine and self-isolation could be replaced with daily tests
Replacing quarantine and self-isolation with daily tests is under consideration, papers released by the Scientific Advisory Group for Emergencies (Sage) suggest.
A pilot study found most people would be more likely to share details of their contacts, if they tested positive, if they knew that the consequence for others would be daily tests, rather than isolation.
The study by Public Health England involved 1,760 close contacts of those with the virus, who were given the option to take lateral flow tests for seven days as an alternative to quarantining.
If the tests were negative, the individual could continue with their daily activities.
Experts said the process might “reduce the negative psychological and financial impacts of quarantine” and limit workplace absences.
The research found that more than six in ten of those offered daily tests took up the option.
And more than half of participants said they would be more likely to share the details of people they had been in contact with after a positive test result, if they knew that their contacts would be offered the option of daily testing instead of quarantine.
Only two per cent reported that they would be less likely to provide details of their contacts.
Scientists found the most common motives for taking daily tests were to find out if they had the virus, to help beat the virus, and to protect vulnerable people that they lived with or met regularly.
Opinion article published today looking at the ethics of Hvivo's challenge studies for Covid-19. No new information really but still an interesting read.
Beneficially, it also highlights that challenge study work will be in demand even as the first generation of vaccines are rolled out.
https://www.pharmaceutical-technology.com/features/covid-19-human-challenge-trial/
Britons behind world's most accurate rapid Covid test raise $50m
Sense Biodetection said it expected Covid-19 to be around for the 'long-term' and could be managed using its tests
A British start-up behind what looks set to be the world's most accurate rapid Covid-19 test has raised $50m (£35.7m) in fresh cash as it prepares to help cope with a third wave of the virus.
Cambridge-based Sense Biodetection said it had raised the cash to accelerate the launch of its tests, which is expected to come before the autumn.
The disposable tests claim to combine the ease of the rapid lateral flow tests, which give Covid-19 test results within minutes, with the accuracy of the PCR tests, which are sent away to labs for verification.
Sense boss Harry Lamble said the company had a "six-year head start on others that have jumped on a Covid bandwagon".
It comes amid concerns over the accuracy of lateral flow tests, with the Guardian last week publishing leaked emails between officials which suggested there had been a high rate of false positives.
Downing Street later responded by saying the tests had been "rigorously evaluated, and we believe that they are both accurate and incredibly useful in terms of being able to spot asymptomatic cases of the virus". However, Sense expects its tests to be equal to PCR tests, which are used to confirm positive cases.
"We're in the final phases of scaling up, so investing in production lines. We're looking to really get the tests into people's hands rather than just to conclude a research and development programme."
Investor Michael Anstey, from Cambridge Innovation Capital, said if there was another wave coming after the summer then "Sense will be ready".
"We think Covid will sadly be with us for the long-term. This is something that will help us to live with Covid indefinitely The high-volume testing is great for the short-term, but they're not appropriate for long-term management of Covid, whereas Sense's product is."
The latest funding round comes around a year and a half after Sense last raised cash, at the time having said it was developing DIY flu tests - something it said could curb outbreaks and save the NHS billions.
Mr Anstey said he believed that Sense "could be one of the UK's largest businesses", pointing to the size of its peers, such asCepheid, which was taken over for $4bn in 2016.
"That's the trajectory we're on."
Sadly no mention of interferon but The Telegraph have just published this:
https://www.telegraph.co.uk/news/2021/04/20/covid-treatment-tablets-could-available-take-home-autumn/
A new “antivirals taskforce” is being created by the Government, similar to the vaccines taskforce which has had such success rolling out jabs across Britain.
Boris Johnson said: “The success of our vaccination programme has demonstrated what the UK can achieve when we bring together our brightest minds.
“Our new antivirals taskforce will seek to develop innovative treatments you can take at home to stop Covid-19 in its tracks.
“These could provide another vital defence against any future increase in infections and save more lives.”
While there has been much public discussion about Covid vaccines protecting the most vulnerable and stopping infection spread, advancements in treatments for coronavirus have received less media coverage.
The antivirals taskforce will identify and hand out innovative Covid-19 treatments with the hope of making them widely available before the flu season this winter.
I did wonder why I got an alert when it doesn't mention Imutex or Flu-v - just spotted the URL is truncated and finishes with flu-v!
As much as I hate to link to anything from the Motley Fool, I just got an email alert about this article, regarding J&J's deal with Cidara to develop a universal flu vaccine:
https://www.fool.com/investing/2021/04/14/could-johnson-johnson-be-a-big-winner-in-the-flu-v/
No mention of Imutex or Flu-v specifically, but the comment that "I think for the vaccines, it just makes sense because you can combine them and have one shot cover both the flu and the coronavirus" ties in nicely with CF's recent confirmation that Flu-v could be adapted to also work as a universal coronavirus vaccine.
J&J have paid $27m upfront to Cidara who are only at preclinical stage (compared to Phase III-ready Flu-v), with a further $753m tied to development/commercial milestones.