Open Orphan PLC (LON:ORPH) said it completed an important year of transition with an inflection point in the fourth quarter as it generated both an operating profit and positive cashflow, with full year profitability targeted for 2021.
Following the acquisition of hVIVO in January last year, the AIM-quoted contract research organisation said the integration with its Venn Life Sciences business was completed during the year, establishing it as the world leader in the testing of vaccines and antivirals through the use of human challenge study clinical trials.
With a growing pipeline of these studies, Open Orphan said its expanded operations now have the capacity to screen in up to 500 volunteers per week at the state-of-the-art Queen Mary's BioEnterprises Centre (QMB) in Whitechapel.
This helped significantly improve its track record of major contract wins in 2020, it said, setting the scene for strong revenue growth in 2021.
Open Orphan said the transition in 2020 reversed the proforma losses seen in 2019 by strengthening business development, restructuring underperforming businesses and integrating support functions across the group.
Looking at the finances, pro forma revenue came to £22.4mln for the year, versus £22.7mln in 2019, with losses for the period cut to £11.3mln from £14.5mln.
But a profit was delivered in the fourth quarter, with positive cashflow driven by advanced cash payments on major agreement.
Cash and equivalents stood at £15.1mln as at the end of May 2021, following two placings.
Executive chairman Cathal Friel said: “The group is not simply satisfied to have returned to a positive operating position at the end of 2020 and to be targeting to deliver a full year profit in 2021, it is now focused to further enhance the quality of profits and earnings of the group going forward.
“Therefore, notwithstanding the strategic investments we are making in new challenge models and the Disease in Motion platform, we will relentlessly focus on cross selling our services across our broad client base, leveraging technology to drive improved efficiencies, and stripping away unnecessary cost in our operations."
He added that the new financial year has “started well and is already very well advanced”.
“We are confident that the actions we are taking now to drive our core CRO business and monetise non-core assets should create significant value for all our stakeholders.”
WATCH: Open Orphan spin-out Poolbeg Pharma 'ready to go' with plans to list on London market
Having reached this point with the core business, Friel and the board also have a strategy to maximise shareholder value by emerging assets that are deemed to be non-core, with the first spin-out, Poolbeg Pharma Ltd, today announcing its intention to float on AIM.
Providing more details on the demerger, Open Orphan said Poolbeg has a first-in-class, Phase II-ready small molecule immunomodulator for severe influenza, addressing an unmet market for effective treatments worth around US$800mln.
Applications beyond influenza are also thought possible with label extensions, with Poolbeg holding worldwide rights for all uses.
Talks are underway with an AI data analysis platform to make use of Poolbeg's licensed access to Open Orphan's infectious disease progression data and bio banks to accelerate the identification of drug targets and other products, which the directors believe could generate significant shareholder value.
The company said it has also identified a pipeline of further assets for acquisition post-IPO.
Poolbeg chief executive Jeremy Skillington, said: "The COVID-19 pandemic has placed the issue of infectious diseases firmly in the public eye; governments and international organisations are now investing heavily to ensure they are better prepared.
"Poolbeg Pharma is aiming to carve out a leading position in this rapidly evolving and expanding sector. We have an excellent heritage in infectious diseases and a management team with a track record of delivering value creation."