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LSE interview – Cathal Friel refocuses Open Orphan #ORPH as he raises 5m and buys virology specialist hVIVO
In a wide-ranging interview with London South East, Open Orphan Executive Chairman Cathal Friel outlines his vision for the business and explains how the combined talents of Open Orphan, hVivo and Venn Life Sciences will create a soon to be profitable pharmaceutical services one-stop shop.
Friel says this acquisition is the last however, as he is a major shareholder and he doesn’t want to see his own shareholding diluted along with everyone elses. The focus has been on reducing head count and building revenues at Venn Life Sciences since the Open Orphan IPO last June. Now, with the £13M bolt-on acquisition of hVivo, the London-based virology specialist company, the game has changed once again.
Friel says he sees hVivo as a loss-making and hugely undervalued asset. hVIVO went from being a vaccines and virology specialist to a drugs discovery business five years ago, with Neil Woodford and other investors putting in 113m of investment. “I really like Trevor Phillips and Tim Sharpington who came in 18 month ago to turn it around. But the previous management team got lost and we have picked up a bargain”. So how much are the assets worth today? “It’s very hard to say” explained Cathal, “113M in five years is a lot to spend but you can’t blow it all.
We have a 24 bed quarantine clinic facility which is worth 25 million or so on replacement value, we have a virology lab with the world’s largest stock of virology models likewise worth 25 million, and 7 or 8 million, so we 50 or 60 million of real assets”.
Keeping pace with Open Orphan
It’s been an exceptionally busy few months for Open Orphan (ORPH) and its Executive Chairman Cathal Friel.
Since reversing into Venn Life Sciences last summer, Open Orphan has set it’s sights on a series of acquisitions to forge a specialist pharmaceutical services group with a focus on orphan drugs. In raising the money to complete the Venn Life Sciences and recent hVIVO acquisitions, Friel has invested over £2m of his own money through his investment vehicle Raglan Capital into Open Orphan. His investments are locked in until three years after the IPO in June 2019.
In 2018, over 50% of new FDA approved drugs were classed as ‘orphan’, i.e. treat rare diseases.
With this in mind, Friel and his team have constructed a vehicle to acquire and consolidate a number of smaller companies into a larger profitable pharma services company. Within this there is Open Orphan Genomic Health Data, using AI tools to build a valuable database of patient information using a low cost data collection methodology.
In the run up to the end of 2019, ORPH struck several three year contract agreements and collaborations lucrative partnership agreements and collaborations, most notably with French pharma giant Ipsen Group, Japanese pharma company Carna and a Tier 1 German pharma company as part of moving the original Venn business away from short term ad-hoc contracts towards longer more sustainable contracts.
The acquisition promised at Open Orphan’s launch last summer came to fruition in December, when the company announced the acquisition of hVIVO, a world leader in the provision of viral challenge study services to companies developing vaccines for viruses.
The deal offered 2.47 shares for each hVIVO share, providing its shareholders with a 33% uplift. Open Orphan also broke the mould by moving fast in a slow moving sector as this takeover was recorded as one of the fastest in 7 years for the London market, completing as it did in just 38 days. More importantly, the economies of scale the merger delivers greatly broadens Open Orphan’s in-house clinical offering and opportunities to commercialise the existing deal pipeline.
Both Venn and more importantly hVIVO had been chronically loss making, however given the compelling synergies, the Open Orphan team led by Friel are optimistic that the enlarged Group will be profitable by June 2020 if not before.
To maximise on the opportunities generated by the acquisition, a further £5.3m fundraise was completed at the end of January 2020, conducted at a small premium to market price and with a minimum fundraise of £2.5m once again underwritten by Friel’s investment vehicle. The raise was oversubscribed, predominantly funded by institutional investors and at a good premium to the IPO fundraise in June 2019. Added to this, Friel personally invested £300k.
As part of the hVIVO acquisition, Open Orphan now owns the largest quarantine facility in N Europe, with 24 quarantine bedrooms at Queen Mary’s Hospital in London.
As things currently stand, this facility may potentially be used for ill patients patients during the current Coronavirus crisis that is gripping China and slowly spreading to other countries.
Professor John Oxford, one of the original founders of hVIVO is also a world-leading expert on Coronavirus and virology. In this capacity he has appeared across numerous TV and radio programmes over the past week, and is also an advisor and consultant to Cathal Friel and the enlarged Open Orphan Group.
The coming days will see more information emerge about Open Orphan and hVivo’s capabilities surrounding virology, vaccines and the quarantine facility.
To keep up to speed with this fast moving company, the latest copy of the Open orphan investor presentation is now available to view on https://www.openorphan.com/investors/reasons-invest.
Alan Green – February 2020
Open Orphan #ORPH – Results of Placing and Subscription
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF OPEN ORPHAN PLC IN ANY JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
31 January 2020
Open Orphan plc – Results of Placing and Subscription
Open Orphan plc (ORPH), the rapidly growing specialist pharmaceutical services company which has a focus on orphan drugs, announces that, further to its announcement at 7.00 a.m. today (the “Fundraising Announcement”), it has successfully completed the oversubscribed Fundraising which is now closed.
The conditional Placing and Subscription has raised £5.3 million (before expenses) through the placing of 71,254,110 new Ordinary Shares and subscription of 15,631,143 new Ordinary Shares with certain institutional and new shareholders at an Issue Price of 6.1 pence per share.
As outlined in the Fundraising Announcement, the net proceeds of the Fundraising will be used to fund the growth and synergies programme of the business following the completion of the hVIVO acquisition on 17 January 2020. The complementary fit, the shared vision and strong shareholder support on both sides of the businesses has allowed Open Orphan to move swiftly to complete the public takeover from the first discussions in November.
hVIVO is an industry leading services provider in viral challenge studies and virology laboratory services. It has the only 24-bedroom state of the art quarantine clinic with on-site virology laboratory and provides a high level of infection control that allows multiple studies and virus-types to be used simultaneously. It has a world leading portfolio of viral challenge models including 2 Flu, 2 RSV, 1 Asthma, 1 Cough and 1 COPD viral challenge models.
Director Participation
The following Director of the Group participated in the Placing:
|
Name of Director |
Number of Placing Shares subscribed for |
Total Ordinary Shares following the Fundraising |
Total interest in the enlarged issued share capital |
|
Cathal Friel, Executive Chairman |
4,918,030 |
45,965,011 |
8.6 % |
The Placing participation from Cathal Friel is considered a related-party transaction for the purposes of Rule 13 of the AIM Rules for Companies. The directors (other than Cathal Friel) consider, having consulted with Arden Partners, the Company’s nominated adviser, that the Placing participation is fair and reasonable in so far as Open Orphan’s shareholders are concerned.
The Placing participation from Cathal Friel is considered a related-party transaction for the purposes of the Euronext Growth Rules. The directors (other than Cathal Friel) consider, having consulted with Davy, the Company’s Euronext Growth Adviser, that the Placing participation is fair and reasonable in so far as Open Orphan’s shareholders are concerned.
Admission and Total Voting Rights
The Fundraising is conditional on Admission, and is being carried out within the Company’s existing share authority to issue Ordinary Shares for cash.
It is expected that the Fundraising Shares will be admitted to trading on AIM and Euronext Growth at 8.00 a.m. on or around 6 February 2020 (or such later date as may be agreed between the Company and Arden, but no later than 28 February 2020).
Following Admission of the Fundraising Shares, the total number of Ordinary Shares in the Company in issue will be 532,507,627. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA’s Disclosure and Transparency Rules.
Cathal Friel, Executive Chairman of Open Orphan, said: “As I said in our RNS announcement of the 20th of January, I am hugely excited by the combination of Open Orphan and hVIVO. We have a fantastic team, substantial revenue potential and the opportunity to grow a profitable business quickly in the year ahead. I am personally participating in the placing as I believe in the strategy of the business and its ability to deliver substantial returns to shareholders in the next 12 months.
Furthermore, I am particularly excited as to the opportune timing of our acquisition of hVIVO, as virology, vaccines and viruses are particularly topical all around the world in recent days and weeks and hVIVO have the unique reputation as being the world leader in this space of providing services for over 30 years to the vaccine production companies around the world. Furthermore, hVIVO has quite a large database of anonymised patient data including genomic data and which we can now upload and potentially monetise through our Open Orphan Genomic Health Data platform.
We are delighted we have completed the Fundraising of over £5 million and welcome the new investors to the shareholder register, where our original Open Orphan founders and management team still retain a substantial stake in excess of 20% of the enlarged company because of our original personal investment in the business and which remains locked up for three years post our June 2019 IPO. The Fundraising strengthens the balance sheet to help us realise the full potential of the enlarged group. We are excited by the growth potential of the Company and look forward to creating value for all our shareholders.”
Capitalised terms in this Announcement shall have the meanings given to such terms in the Group’s announcement at 7.00 a.m. today.
For further information please contact
Open Orphan plc
Cathal Friel, Executive Chairman +353 (0)1 644 0007
Trevor Phillips, Chief Executive Officer +44 (0)20 7347 5350
Arden Partners plc (Nominated Adviser and Joint Broker) +44 (0)20 7614 5900
John Llewellyn-Lloyd / Benjamin Cryer
Davy (Euronext Growth Adviser and Joint Broker) +353 (0)1 679 6363
Anthony Farrell
Camarco (Financial PR) +44 (0)20 3757 4980
Tom Huddart / Daniel Sherwen
|
1 |
Details of the person discharging managerial responsibilities/person closely associated |
|||||
|
a) |
Name |
Cathal Friel |
||||
|
2 |
Reason for the notification |
|||||
|
a) |
Position/status |
Executive Chairman |
||||
|
b) |
Initial notification/ Amendment |
Initial Notification |
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|
Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor |
||||||
|
a) |
Name |
Open Orphan plc |
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|
b) |
LEI |
213800VT5KBM7JLIV118 |
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|
Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted |
||||||
|
a) |
Description of the financial instrument, type of instrument Identification code |
Ordinary Shares
ESVUFR ISIN GB00B9275X97
|
||||
|
b) |
Nature of the transactions |
Purchase of 4,918,030 ordinary shares |
||||
|
c) |
Price(s) and volume(s) |
|
||||
|
d) |
Aggregated information – Aggregated volume – Price |
4,918,030 £299.999.83 |
||||
|
e) |
Date of the transaction |
31/01/2020 |
||||
|
f) |
Place of the transaction |
Dublin |
||||
Open Orphan #ORPH – Proposed Placing to raise a minimum of £5 million to fund growth and convert hVIVO proposal pipeline
THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF OPEN ORPHAN PLC IN ANY JURISDICTION WHERE TO DO SO WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
31 January 2020
Open Orphan plc – Proposed Placing and Subscription to raise a minimum of £5 million
Open Orphan plc (ORPH), a rapidly growing specialist pharmaceutical services company which has a focus on orphan drugs, with reference to its announcement of 20 January 2020, is pleased to announce a fundraising to raise a minimum of £5 million (before expenses) (the “Fundraising”) via a conditional placing of new Ordinary Shares (“Placing Shares”) at a price of 6.1 pence per new Ordinary Share (the “Issue Price”) to institutional and other investors (the “Placing”) and a subscription of new Ordinary Shares (“Subscription Shares”) at the Issue Price to institutional and other investors (the “Subscription”).
Fundraising highlights:
– The Group intends to conduct a conditional Placing and Subscription to raise a minimum of £5 million via the Placing of the Placing Shares at the Issue Price and Subscription of the Subscription Shares at the Issue Price.
– The Placing is to be conducted by way of an accelerated bookbuild process which will commence immediately following this Announcement and will be subject to the terms and conditions set out in Appendix I to this Announcement.
– The Company has conditionally raised approximately £1.0 million (before expenses) through the Subscription of 15,631,143 Subscription Shares.
– The proceeds of the Fundraising receivable by the Group will be used to fund the growth and synergies programme of the Group following completion of the Merger of Open Orphan and hVIVO (the “Merger”).
– The Issue Price represents a premium of approximately 0.8 per cent. to the closing mid-market price on 30 January 2020, being the latest practicable date before this Announcement.
– The Fundraising has been underwritten up to £2.5 million by Raglan Capital Limited, an entity controlled by Cathal Friel. Cathal Friel also intends to participate in the Placing.
– Admission of the Placing Shares and Subscription Shares (the “Fundraising Shares”) to trading on AIM and Euronext Growth (“Admission”) is expected to occur no later than 8.00 a.m. on 6 February 2020 or such later time and/or date as Arden, Davy and the Group agree (being in any event no later than 8.00 a.m. on 28 February 2020).
Cathal Friel, Executive Chairman of Open Orphan commented: “The Fundraising of £5 million will be used to fund the growth and synergies programme of the business and provide balance sheet strength to convert a strong pipeline of proposals with hVIVO. We are excited by the potential of the combined businesses, which we believe is positioned for profitability, and can deliver substantial returns for our shareholders.”
For further information please contact
Open Orphan plc
Cathal Friel, Executive Chairman +353 (0)1 644 0007
Trevor Phillips, Chief Executive Officer +44 (0)20 7347 5350
Arden Partners plc (Nominated Adviser and Joint Broker) +44 (0)20 7614 5900
John Llewellyn-Lloyd / Benjamin Cryer
Davy (Euronext Growth Adviser and Joint Broker) +353 (0)1 679 6363
Anthony Farrell
Camarco (Financial PR) +44 (0)20 3757 4980
Tom Huddart / Daniel Sherwen
Additional information
Expected timetable of principal events
|
Announcement of the Fundraising |
31 January 2020 |
|
Announcement of the results of the Fundraising |
31 January 2020 |
|
Admission of the Fundraising Shares to trading on AIM and Euronext Growth and commencement of dealings |
8.00 a.m. on 6 February 2020 |
|
Expected date for CREST accounts to be credited in respect of Fundraising Shares in uncertified form |
6 February 2020 |
|
Where applicable, expected date for despatch of definitive share certificated for Fundraising Shares in certified form |
20 February 2020 |