This announcement contains inside information
for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR")

OPEN ORPHAN PLC

("Open Orphan" or the "Company")

Interim Results for six months ended 30 June 2021

Major year-on-year revenue growth and profitable H1 2021 performance following a year of turnaround and transition in 2020

Open Orphan (AIM: ORPH), a rapidly growing specialist contract research organisation (CRO) and a world leader in vaccine and antiviral testing using human challenge clinical trials, announces its unaudited interim results for the six months ended 30 June 2021. These results show a continued pattern of profitability from Q4 2020 to a firmly profitable position delivering a positive EBITDA profit of £2.1 million compared to an EBITDA loss of £4.1 million in H1 2020. We look forward to achieving record revenues in 2021 in our first full year of EBITDA profitability with recent contract wins and exceptional pipeline growth fueling revenues into 2022.  

In the past 12 months, the Company has received international recognition and media attention for its excellence in delivering human challenge studies as a partner in the world's first COVID-19 human challenge characterisation study. The Company now has a broad range of human challenge study models, focusing on leveraging the major growth opportunities presenting in infectious and respiratory disease markets, including RSV, Influenza, Asthma, hRV, COPD and Malaria.

Profitable Financial Performance in H1 2021:

Operational highlights

Post-period end

Outlook

-     The Company is experiencing a major increase in negotiations, contract wins, and repeat contract wins with Big Pharma, while also seeing increased wins from biotech companies with major deals expected to now sign in Q4 2021 driving revenue in 2022

-     Open Orphan is expanding its focus and service offering in providing infectious and respiratory disease challenge studies

·     Full year guidance of c. £40m revenue (incl. other income) with full year EBITDA profitability for FY 2021, with non-COVID-19 work expected to represent c. 70% of FY 2021 revenue mix. While 2021 will represent record revenues for the Company and a return to full year EBITDA profitability, it is somewhat behind analyst expectations as the anticipated COVID-19 challenge studies will now likely commence in 2022 on foot of the successfully completed quarantine phase of the Human Challenge Programme characterisation study

·      Year-end cash balances expected to close in line with the half year position of £14.9m

·    Targeting revenues in the region of £50m for 2022 in non-COVID-19 work, reflecting signed contracts and contracts in advanced negotiations, ongoing momentum in the core business and ongoing market growth. COVID-19 revenue for 2022 will be in addition to this and will depend on the eventual timing of these studies

·     The Company continues to work towards the monetisation of all remaining non-core assets and to hand these back to Open Orphan shareholders via dividend in specie allowing the Company to focus on its core offering

-   These spin-offs / demergers offer an excellent opportunity for shareholders to maximise value in separate shareholdings in both exciting pharma product commercialisation companies, in addition to a profitable and world leading CRO

-      Opportunity to complete spin-off of Disease in Motion® platform along with plans to monetise the other non-core assets, namely the Company's 62.6% stake in PrEP Biopharm, and 49% stake in Imutex Limited

Cathal Friel, Executive Chairman of Open Orphan plc commented:

"Open Orphan has delivered very strong progress both operationally and financially. The Company's H1 2021 revenues grew by 242% versus H1 2020, which continues a pattern of profitability from Q4 2020 and transitions the business to a firmly profitable position, having delivered a positive EBITDA profit of £2.1 million in H1 2021. The business is now well positioned to capitalise on the significant growth in the infectious disease market, which is expected to grow to in excess of $250bn by 2025 and we have seen our business development pipeline grow accordingly.

"I am delighted and hugely satisfied with the fantastic turnaround and team effort by everyone in the Open Orphan organisation; they have completely transformed the business following the acquisition of both hVIVO and Venn in the past two years. These two companies are now fully integrated and, in the process, we have created the world leader in the testing of vaccines, antivirals and other infectious and respiratory disease products using human challenge studies. With a broadening portfolio of human challenge studies, we are well placed to continue working with Big Pharma and biotechs alike to move their products through the clinic as the infectious disease market experiences one of the largest pharmaceutical growth cycles ever, with the market expected to grow significantly by 2025.  We look forward to further progress and a profitable H2 as the business continues to attract additional clients.

"Additionally, we will look to provide further shareholder value through the monetisation of our non-core assets, as we did post-year end with the successful spin-out, listing and distribution in specie of Poolbeg Pharma plc."

Analyst Briefing

An online briefing for Analysts will be hosted by Cathal Friel, Executive Chairman, and Leo Toole, Group Chief Financial Officer, at 9.30am (BST) on 20 September 2021 to review the results and prospects. Analysts wishing to attend should contact Walbrook PR on openorphan@walbrookpr.com or on 020 7933 8780.

Investor presentation

OPEN ORPHAN PLC is pleased to announce that Cathal Friel and Leo Toole will also provide a live presentation relating to H1 2021 Interim Results via the Investor Meet Company platform on 20 September 2021 at 6:00pm (BST).

The presentation is open to all existing and potential shareholders.

Investors can sign up to Investor Meet Company for free and add to meet OPEN ORPHAN PLC via:

https://www.investormeetcompany.com/open-orphan-plc/register-investor

Investors who already follow OPEN ORPHAN PLC on the Investor Meet Company platform will automatically be invited.

For further information please contact:

Notes to Editors

Open Orphan plc (London and Euronext: ORPH) is a rapidly growing pharmaceutical service/contract research company that is a world leader in testing vaccines and antivirals using human challenge clinical trials. The Company provides services to Big Pharma, biotech and government/public health organisations.

Open Orphan runs challenge studies in London from both its 19-bedroom Whitechapel quarantine clinic and its state-of-the-art 24-bedroom QMB clinic with its highly specialised on-site virology and immunology laboratory. Open Orphan has a leading portfolio of human challenge study models for infectious and respiratory diseases and is developing a number of other models. There has been an explosion in the growth of the infectious disease pharmaceuticals market, which is estimated to grow to in excess of $250bn by 2025. The Group is focused on refreshing its existing challenge models and develop new models, such as Malaria, to address the dramatic growth potential of the global infectious disease market.

Building upon its many years of challenge studies and virology research, the Company is developing an in-depth database of infectious disease progression data. Based on the Company's Disease in Motion® platform, this unique dataset includes clinical, immunological, virological and digital (wearable) biomarkers. The Disease in Motion platform has many potential applications across a wide variety of end users including big technology, wearables, pharma and biotech companies.

Open Orphan's Paris office has been providing biometry, data management and statistics to its many European pharmaceutical clients for over 20 years. For over 15 years, the Company's Netherlands office has been providing drug development consultancy and services, including CMC (chemistry, manufacturing and controls), PK and medical writing, to a broad range of European clients. Both offices are now also fully integrated with the London office and working on challenge study contracts as well as supporting third party trial contracts.

OPEN ORPHAN PLC

("Open Orphan" or the "Company")

Interim Results for six months ended 30 June 2021

Executive Chairman's Statement

For the six months ended 30 June 2021

Dear Shareholder,

I am very happy to report to you on the strong operational and financial progress made in the first half of 2021.

Having completed the integration of hVIVO plc with our existing Venn Life Sciences and Open Orphan DAC operations in 2020 and building on the profitable results in Q4 2020, we have successfully brought the combined business to EBITDA profitability, reversing a significant EBITDA loss and delivered 242% reported revenue growth in H1 2021 versus H1 2020.

This represents the culmination of almost 18 months of work by our dedicated staff to turn around the business by building out an enhanced portfolio of contracts with world leading established pharma players and innovative pharma start-ups driving leading edge novel technologies. During this time, we have also restructured and integrated our core functions while driving significant synergies; this has enabled the Group to enhance revenue generation and profitability through substantially increased operating leverage and margins.

As we move into a post-pandemic world, there has been an enormous expansion of investment in the infectious and respiratory disease market, which is estimated to grow to in excess of $250bn by 2025. We are already benefitting from this rapidly expanding market, with our 242% revenue growth period on period, driven by six active challenge studies in the period (vs two in H1 2020), a testament to the increased demand for testing infectious disease products. The Group has further established its position as the world leader in the testing of vaccines and antivirals through human challenge studies by investing in refreshing its existing challenge models and developing new models, such as Malaria, to address the enormous expansion of the global infectious disease market.

We are actively engaging with a large number of the world's leading pharma companies who are stepping up their research in the areas of infectious disease. Two of our recent clients a top tier pharma company and Bavarian Nordic have referenced in their market updates the important contribution made by the Open Orphan plc subsidiary hVIVO in their Phase 2a challenge studies that we recently completed on both their RSV vaccine programmes. An increasing number of our recent deals and contract negotiation pipeline are from repeat Big Pharma clients.  As such, we believe that Open Orphan is very well placed to capitalise on the rapidly growing market for human challenge trials to test infectious disease products with an expanding pipeline of major contracts. H1 2021 has also seen us diversify our associated services offering with our virus manufacturing and lab services continuing to play an important role in our mix of services.

Our core business of non-COVID-19 work reflected 75% of revenues in H1 2021 (£16.4m), with the balance (£5.6m) relating to COVID-19 projects. Given the strong growth trends towards infectious diseases, we expect our revenue mix to be increasingly weighted towards traditional challenge models for H2 2021 and into 2022.

As noted previously, we have substantially increased the number of quarantine beds that we have access to. We have grown from the original 24 quarantine bedrooms in our Queen Mary's BioEnterprises Centre in Whitechapel in East London, by adding 19 additional bedrooms through the conversion of the Whitechapel Hotel into the Whitechapel Clinic. Additionally, all COVID-19 characterisation study activities were conducted in the 19-bedrooms quarantine facility at the Royal Free Hospital in London.  We have also increased our volunteer recruitment capacity through the opening of a new volunteer screening centre in Manchester and also a new dedicated street level screening facility in QMB, increasing our weekly screening capacity to in excess of 520 volunteers which is a five-fold increase over the prior years' screening capability.

Non-core asset monetisation

In May this year, we completed a share capital reduction within the Company as an important enabler to progress the monetisation of non-core assets via distribution in specie. In June, we completed a first distribution in specie in relation to the demerging of certain non-core assets into Poolbeg Pharma Limited ("Poolbeg Pharma"), which subsequently in July raised £25m and completed an IPO on the AIM market of the London Stock Exchange. The value of the distribution in specie shares for Open Orphan shareholders is valued at £26.2m as of 16 September 2021. The IPO was non-dilutive to Open Orphan and created substantial value for Open Orphan shareholders who received these dividend shares in a tax efficient manner as part of a HMRC approved statutory demerger, meaning this dividend in specie had no income tax liability for shareholders.

The Group is actively progressing our efforts to monetise our Disease in Motion® platform, which leverages a unique data-focused platform, comprising clinical, immunological, virological, and digital (wearable) biomarkers with multiple infectious disease applications for a wide variety of end users including Big Tech, wearables, pharma, and biotech companies. Over the coming months, we will advance the opportunity to spin-out the Disease in Motion platform, building on our success with Poolbeg Pharma plc. We continue to work towards monetising our existing joint ventures (49% share in Imutex Limited, developing vaccines against Influenza and universal mosquito borne diseases, and 62.62% of PrEP Biopharm Limited focused on the prevention of respiratory infections).

Financial Results

Continuing from a profitable Q4 2020, the Company has moved the business to a firmly profitable position, delivering revenue of £21.9m (vs £6.4m in H1 2020) and a positive EBITDA of £2.1m (vs an EBITDA loss of £4.1m in H1 2020). Other income grew to £1.2m in H1 2021 from £0.7m in H1 2020.

A strong series of new contract wins coupled with a focus on restructuring, integration and operating synergies, has driven significant year on year performance improvements, with gross margin having grown to 28% (H1 2020: 6%).

In light of the merger of Open Orphan plc and hVIVO plc on 17 January 2020, financial results are presented below on a reported basis and on a proforma basis to show a full calendar year comparison.

Cash and cash equivalents were £14.9m as 30 June 2021, this primarily reflects the operating cashflow cycle of the business with new contract prepayments expected in H2 2021. Year-end cash balances are expected to be in line with the half year position. The Company only has total debt of £323k which resulted from a loan note structure that was exercised prior to the IPO of Open Orphan in 2019. This £323k is due to be paid back in full by year end 2023.

Building on strong H1 2021 performance, which maintains a strong trend that began in Q4 2020, we continue our efforts to strengthen and optimise EBITDA margins by driving improved capacity utilisation across our quarantine units and labs, leveraging technology to improve operational efficiency, and driving full revenue recovery for billable time across all service lines. In addition, we have renegotiated operating leases to optimise rental costs in light of our core operational footprint and evolving post pandemic work practices.

Outlook

Going forward, the Group is focused on the strong growth prospects in the infectious and respiratory disease market, which has an expected global market value of $250bn by 2025. The Company is well placed to continue working with Big Pharma and biotech companies to progress their infectious and respiratory disease products through the provision of human challenge studies in diseases such as RSV, Influenza, Asthma, hRV, COPD and Malaria.

Our clinical science teams and laboratory development teams continue to address ground-breaking research projects with major pharmaceutical players.

The Group intends to continue the process of monetising its non-core assets to focus on building its position as the world leader in testing vaccines, antivirals, infectious and respiratory disease products.

I look forward to updating you in due course as we progress our exciting plans for the future.

Cathal Friel
Executive Chairman
20 September 2021                                               

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

Consolidated Statement of Financial Position

As at 30 June 2021

Consolidated Statement of Changes in Shareholders' Equity