Open Orphan (ORPH ) confirmed to investors that it has received court approval for its reduction in capital as the company continues to progress towards its planned demerger.
The Group told investors back in April 2021 that it was at “an advanced stage” of a possible spin out of some of its non-core development intellectual property assets. Addressing shareholders, the Board said it believed that the development IP assets would be ‘best developed separately from the core services business’ to maximise shareholder value.
A spin-out transaction could secure separate financial resources for the assets, enable their accelerated development and achieve commercial milestones, the Company told investors.
The Group said it will also allow shareholders to benefit from the value of the development assets and the core services business, ‘as they progress through their own key milestones.’
At the time, Open proceeded in obtaining the approvals necessary for the reduction of capital and the distribution in specie which are required to implement the demerger.
Specifically, the reduction in capital will also allow ORPH to pay dividends and distributions to shareholders should the Board deem it appropriate in the future. Open Orphan said these considerations remain at an early stage with no guarantee that it will be completed.
However, this morning, the company said it had received court approval for the reduction in capital which it explained will become effective on registration of the Court order at Companies House, which the company said is expected to occur ‘in the next few days.’
The reduction of capital will give the firm the ability to not only affect the Distribution in Specie, as part of the proposed spin-out of certain non-core Development IP Assets, but also to make other distributions to Shareholders and/or buy back its own Open Orphan Ordinary Shares in the future if and when the Directors may consider that it is appropriate to do so.
The portfolio of assets includes the potential respiratory treatment, HVO-001, an orally available, immunomodulator drug which the firm says has the potential to treat a broad range of serious unmet needs in patients suffering from severe and fatal respiratory disease.
It is anticipated that a spin-out pursuant to the Demerger would allow ORPH’s shareholders to benefit from both the value of the Development IP Assets and the standalone value of the remaining business as it progresses through its own key milestones, it noted.
ORPH said it continues to make good progress towards delivering against the potential Demerger and Distribution in Specie. Meanwhile, it also stated that the terms defined in the circular back in April 2021 shall have the same meanings as in the announcement.
Executive Chairman, Cathal Friel, commented: “We are delighted to have received Court approval of the reduction of capital. The reduction of capital will allow us to return value to shareholders as we go forward either as a distribution in specie as part of the proposed spin-off or through a share buy back or a payment of a dividend, as appropriate.”
He added, “The Company and the entire Open Orphan team have made significant progress in the past year and we remain on target with all of our plans as we continue to build the company going forward.”
View from Vox
The Company’s proposed spin-out is expected to grant Open Orphan the opportunity to deliver significant further shareholder value by the Demerger of these non-core assets.
ORPH said the assets’ development and commercialisation can be accelerated through the Demerger, which offers the opportunity to access financing as a separate public company and a separate business focused on the successful commercialisation of pharmaceutical products.
Executive Chairman, Friel, said he believes this is an excellent opportunity for shareholders to maximise value through separate shareholdings ‘in both a profitable pharma services company as well as an exciting pharma products commercialisation company. ‘
Shares in Open Orphan have increased by over 50% in value since the beginning of 2021.
Insert SP chart.
Reasons to ORPH
Open Orphan is a rapidly growing Contract Research Organisation and world leader in the testing of vaccines and antivirals through the use of human challenge clinical trials.
The Group comprises two commercial specialist CRO services businesses, hVIVO and Venn Life Sciences and is also building out a valuable data platform business. All businesses are now working closely together to offer upselling and cross selling opportunities.
World Class Facilities
Open has Europe's only 24-bedroom quarantine clinic with onsite virology providing individually isolated rooms and specialist laboratory facilities. The hVIVO facility offers highly specialised virology and immunology laboratory services to support pre-clinical and clinical respiratory drug, antiviral, and vaccine discovery and development.
Largest Test Portfolio
Open Orphan has a leading portfolio of 8 viral challenge study models, which are: 2 FLU, 2 RSV, 1 HRV, 1 Asthma, 1 cough and 1 COPD viral challenge models. As announced in early March 2020, it is rapidly advancing several COVID-19 challenge study models and expects to be helping many COVID-19 vaccine development companies to test their vaccines.
hVIVO works with UK and Irish companies to provide COVID-19 testing to staff to protect staff and customers from a workplace COVID-19 outbreak through its COVID Clear offering.
The company announced that its firstvolunteer had been dosed with the Codagenix needle free, intranasal COVID-19 vaccine, COVI-VAC as part of a Phase I clinical trial of COVI-VAC currently being carried out by hVIVO, at its facility in the UK.
Rapidly Expanding Market
The market for vaccine development and testing has grown rapidly over the past six months, largely due to the outbreak of Covid-19.
However, ORPH believes Governments and International pharmaceutical companies around the world will be making enormous ‘catch-up investments’ in all types of vaccine development to ensure the effects of any pandemic can be mitigated in the future, which it said should result in the hIVO facility being booked out for months, if not years, in advance going forward.
Follow News & Updates from Open Orphan here: