New research from UK-based institute Arden Partners has highlighted that Open Orphan’s asset quality “leaves it well placed to continue to capitalise on the high levels of industry activity.” 
 
The research note follows news released by Open Orphan this morning in which the group unveiled a new RSV challenge study contract with an unnamed clinical stage biotechnology company.  
 
RSV, or respiratory syncytial virus, is a contagious virus affecting the respiratory tract of children and at-risk older adults; and in severe cases, it can cause pneumonia and other life-threatening breathing difficulties. There is currently no treatment on the market for RSV. 
 
This latest contract win follows a string of recent positive announcements for the group, including yesterday’s news that the first cohort of volunteers from the world’s first human challenge characterisation study had successfully completed their quarantine phase. 
 
Arden cited the range of recent successes, highlighting that they are demonstrative of the group’s ability ‘to develop and convert new business across the entirety of its clinical areas.’ 
 
Today’s ‘substantial and significant’ contract win between Open’s subsidiary, hVIVO, and the US biotechnology company will enable the two companies to conduct a new human viral challenge study for a respiratory syncytial virus (“RSV”) prophylactic and treatment.  
 
The study is expected to start in 4Q21 and contribute £7.5m in revenue over its duration. ‘In keeping with similar challenge study contracts,’ analysts at Arden wrote in its research note this morning, ‘we anticipate a significant portion of cash paid upfront at the start of the study, thus supporting the Group’s working capital position and growing cash balance.’ 
 
Arden said Open has focused its efforts ‘to build a sustainable and profitable pipeline model’ and it expects this year’s numbers to remain “well underpinned with further upside, especially considering the momentum in the business and recently increased capacity.” 
 
It said, “The Group’s asset quality leaves it well placed to continue to capitalise on the high levels of industry activity, which we expect will remain elevated and this announcement and the ongoing crystallisation of the Group’s pipeline is further confirmation of that.” 
 
“The stock trades on 16x EV/EBITDA and 22.8x P/E for 2021E but with significant UK government work falling into 2022, the stock only trades on 14x 2022E P/E, demonstrating the substantial growth and excellent industry positioning of the Group,” the firm added. 
 
There is currently no specific treatment on the market for RSV and Open says hVIVO division is “currently the only company worldwide” that can facilitate challenge studies for the virus.  
 
Open Orphan has described today’s contract win as ‘substantial and significant’ and said it is in advanced negotiations with all the significant RSV vaccine and drug developers globally.  
 
Shares in Open Orphan have increased by over 25% in value since the beginning of the year, with the stock demonstrating a more than four-fold increase since the start of April 2020.