hVIVO plc (HVO) Earnings Call Transcript & Summary

Great. Right. Well, thank you very much for joining us, everybody, this evening. Welcome to the Value of the Market's shareholder webinar. We're joined this evening by Open Orphan's Executive Chairman, Cathal Friel, who's going to talk us through some of the recent exciting developments that there'd been with the company. There's been a huge amount of news flow. The company has been extremely active. We last caught up with Open Orphan about 3 months ago, where we spoke with Maurice about the future plans for the company. And I think it's fair to say so far, the company really executed on that. So this evening, we'll have a brief presentation from Cathal. You'll see in the bottom right-hand corner of your screen, there's a chat window where you can write question, which will come through to our moderator, which will be passed through to us over the course of the evening. Once Cathal has finished his presentation, he and I will discuss the company further. I'll put your questions to him as well as questions that have been sent to me as well. And we've obviously received quite a few questions in advance of this call as well. A lot on social media and direct to the Value to the Market. So thank you to everybody who sent those. So Cathal, let me pass over to you, and you can present your presentation.

Okay, Ben. This is a pleasure, and thank you very much and for everybody listening, I have demonstrated my lack of knowledge as a 55-year-old Chairman of pharmaceutical services company, but we got there. Anyway, look, Ben, it's a pleasure and really for everybody listening, what we're trying to create is something unique on the AIM market. I say I'm 55. I've been around the AIM market for a long time, corporate finance, promoter. And in this company, we said stated AIM, when we IPO-ed on the 20th of June, we were going to acquire a number of struggling pharma services company, bolt them together rapidly, create some scale. We weren't going to develop products because I thought products is too high risk, high reward and a number of loss-making pharma services companies together and rapidly create what we'll call the European pharma services company. We also stated we were going to focus on niches, such as the orphan drug. And why that is because, being frank, I know the orphan drug space reasonably well. My last company, Amryt Pharma, which I IPO-ed 4 years ago, and which now did GBP 150 million in revenues last year, proved reasonably success. So I thought, let's focus on orphan drugs because they're high margin, small trials and a very growth market. We have done that. And as you'll see in Slide 5, that's -- or the first slide up, it's #5 here in front of me. We're creating a European full-service pharma company. And why is that? Because, look, we want to provide everything from how you make the drug, that's CMC, preclinical. That's 2 preclinical Phase I. Phase II, regulatory approval. And then along the way, I want to talk about in a minute, we acquired a really exciting, we believe, it's called the sleeping giant, hVIVO. They are the world leader, I'm speaking in the office here along with Trevor Phillips, our CEO, in East London, part of Queen Mary's Hospital and let me talk more about one there. But basically, we took them. We acquired it. We've almost fixed it. Then 179 staff when we acquired it at end of June. Massively loss-making. Never made money. Pharma services companies should not be loss-making. It's a cost-plus business. We've taken out 40, 50 of the Venn staff. The last 25 are unfortunately leaving their company in the coming weeks. And then we have a nice profitable services company within Venn and Open Orphan. We're in the same process now with hVIVO. The exciting part of hVIVO, and let's squint to it on that slide, it provides -- top left-hand corner in the first slide, hVIVO provides viral challenge studies for antivirals, vaccine, respiratory diseases, laboratory services, highly special virology, immunology and respiratory. Being honest with you, all of those words weren't in the broadsheet or tabloid papers 3 months ago when we started this deal, but I think every word on that page is on everybody's lips these days. So sometimes, you get lucky. We're very fortunate hVIVO is in an enviable position due to the help it provides. It helps pharmaceutical companies speed up the testing of vaccines. And guess what, there's a lot of work around at the moment to try and speed up the testing of a coronavirus vaccine. So we're, one could say, the right place, right time to help out. It's a very unfortunate predicament. But as they always say, every cloud has a silver lining. So the current interest in vaccines is actually almost a golden opportunity for hVIVO. Vaccine development work. The reason we picked it up so cheap, has been the Cinderella of the pharma industry for a long time. The reason we acquired it, it's quite similar to orphan drug trials. Orphan drug trials are 100 to 150 patients, can last 3 to 6 months, are not expensive to do. hVIVO challenge studies they do are 100, 150 patients in the last 3 to 6 months. And at the end of it, the company will know does the vaccine work or not. So that's kind of in summary what hVIVO does. It has Europe's -- and I'll come to this in a minute, only 24-bed commercial quarantine unit based here in part of Queen Mary's Hospital. It's a virology laboratory. And if you look at the bottom of that page, we now provide a full service, we integrated it together. Top right-hand corner. Maurice, my colleague who co-founded Open Orphan with me, he care for the corona data and he put together the Open Orphan genomic database. We're busy populating that, and you'll see there on the top right-hand corner, it says Orphan drug genomic data platform captures valuable genetic data from patients population, incorporates the AI tools. But guess what? Bottom line, potential to utilize hVIVO's patient data. hVIVO have been doing patient challenge studies, testing vaccines going back for almost 30 years. They're a treasure trove of genomic data, which they've never gotten around to monetizing. So guess what, we now can help them integrate that to our platform, accelerate our genomic database. So that's an absolute fit. Bottom right-hand corner of that slide, Imutex. Being frank folks, this is our lottery ticket. hVIVO, born through GBP 113 million, most of the comments of Mr. Woodford. A lot of the money was put into developing this product. hVIVO is the only, far as I know, company in the world that has a Phase II completed flu universal vaccine -- universal flu vaccine. It's getting ready for Phase III. We're not going to spend any money on that. But when we get a direction of travel from the FDA and EMA, the plan will be to out-license that. Imutex today also has a mosquito virus vaccine. We're downplaying that other than you're investing in a very profitable, plan to be profitable pharmacy services company, and this, the lottery ticket in the corner. Again, the current coronavirus epidemic makes the whole idea of a universal flu vaccine very, very topical. So I would advise people to keep an eye carefully on Imutex. It could really transform the business, but we're not dependent on them. Moving swiftly on to the next slide. Let me see, this work? Yes. Next slide then is titled higher value, longer-term contracts. We acquired Venn through a reverse takeover of it last end of June. We fixed it. We eliminated an awful lot of headcount. And guess what, I will come to the Venn's data of the revenue who've done -- Venn revenue has gone up, almost the biggest pipeline ever going into this year despite losing a lot of middle management. We had forced discussions with hVIVO early November. And by the middle of December, we had 3 joint pitches go out. And why has the acquisition of hVIVO been the fastest takeover of 1 public company on AIM by another in 7.5 years is because, look at slide -- the second slide, the high-value, long-term contracts, Slide #2. Basically, challenge studies are very sticky, very specialist. hVIVO are one of the few companies in the world who specialize in a lot of challenges studies. The market leader. So here in Eastland, we're the world leader in this really simple at niche where you test flu vaccines rapidly in a live environment in quarantine clinic. Interesting, very exciting space to be in the moment. But they invariably get asked to do Phase II studies. We don't have the capability to do. They invariably get to asked to be data management. They don't have the capability. They invariably get asked to do CMC. And they invariably get asked to do preclinical Phase I. So put the 2 companies together, and the problem with Venn/Open Orphan is we don't have enough work for our preclinical team or our Phase I team or our Phase II. There were more people we were going to let go in the coming months. hVIVO are turning down customers that work. So now as per Slide 2, we put the 2 together, the typical contract for hVIVO was GBP 3 million to GBP 5 million, 2 to 3 years. The typical Venn one is GBP 5 million to GBP 7 million. Put the 2 companies together, the contract value on average goes GBP 10 million to GBP 20 million in 3 to 8 years. So now you can see why these 2 companies on that page fit together like a glove. So rather than dwell much on that, let me bring you in to how this fits together. And the really exciting -- and on our recent road show, which we led and which was basically predominantly institutions was 5.3 million. It was oversubscribed. And this is my favorite slide. hVIVO, a very extensive asset portfolio. We acquired hVIVO for GBP 13 million in Open Orphan paper. And along the way, guess what, came with GBP 2 million in cash. The real value is in [indiscernible]. However, we're saying we believe there's at least GBP 50 million to GBP 60 million of real assets in hVIVO. And these assets are unique. And the world is screaming out to them. Just sitting here with Trevor, we've had an invite from certain Chinese people, ones [indiscernible] has never heard of before. The world is looking for access to these assets. For the last 3, 4, 5 years, they've been underutilized. That was a big part of the reason the company lost an awful lot of money. Bottom of Page 3, the London unit. First of all, top of Page 3, GBP 100 million was raised and invested in hVIVO state-of-the-art labs to support its clinic, chemistry models and former drug discovery strategy. It was actually GBP 113 million that was raised, an awful lot of money. We acquired it for less than 10p in a pound. And it wasn't all wasted. The London unit at the bottom left-hand corner of Page 3, that is Europe's only 24-bed quarantine unit. It is basically able to treat patients, test them, run vaccine trials. Replacement cost in my books is between GBP 25 million and GBP 30 million to replace that. Slightly over to the right, on-site is quite unique. There was at least GBP 7 million or GBP 8 million in replacement costs of the on-site virology laboratory. And virology, that's for testing vaccines and viruses and is not very topical today. The bottom of the page, the piece the lawyers did sign off on, they were arguing to tell us, is it -- the lab worth GBP 25 million or GBP 20 million. But the thing they did sign off is hVIVO, see the bottom of that Page 3, so hVIVO there has a leading portfolio, 2 flu, 2 RSV, 1 HRV, 1 asthma, 1 cough and 1 COPD viral challenge models. To replicate this portfolio would cost in excess of GBP 25 million and take a minimum of 6 years' work. No other [ channel ] study service provider in the world has such a comprehensive portfolio. To be honest, there is 1 company, a GBP 20 billion company called SGAS based out of Switzerland with a Belgian outlook. It has a small 7-bed quarantine unit, and it has 1 challenge study model. And there's only 1 other unit, the West Coast, it's called West Coast Clinical Trials. And it has 1 challenge study. So when you add the clinic, GBP 25 million, GBP 30 million, the lab, GBP 7 million to GBP 10 million and the portfolio, you can clearly see we have GBP 50 million to 60 million in real assets. Compliments of Mr. Woodford. And weirdly, when we started discussions 2, 3 months ago, the world wasn't aware what was a 24-bed quarantine unit. I think everybody listening tonight would say I think we know what that means. Yes, a viral laboratory is not handy. So look, we're extremely unique, extremely handy. And being honest, it's not insight by us. This was right place, right time, we just got lucky. However, the business has been massively loss-making, as you'll see. And working here with Trevor, we're committing to the market the combination of Open Orphan and hVIVO will be profitable in the coming months, not quarters, months; 2, 3, 4 months, this company will be breaking even. We're trading at the moment, anybody wanting to buy the stock today. We were about a GBP 34 million, GBP 35 million market cap. That's just marginally above 1x revenues, and with GBP 7.5 million cash in the bank. So we're trading at less than 1x revenue. Every other pharma services company trades between 2, 3 and 4x revenues. Why? They're hugely profitable. The spin-off cash, our entity doesn't make money today. So we're fairly valued at 1x revenue. However, the minute we prove to the market we're profitable, we should be at 2x, if not 3x uplift in the share price because now we'll be judged as our peers. How are we going to get there? Fourth and final slide, the robust combined pipeline. hVIVO have a pipeline, and this is a solid pipeline of 81 million contracts (sic) [ GBP 81 million ]. In the past, that pipeline was vastly smaller. In the past, they converted, you'll see the 46% of their contracts who are not judging, they're going to convert that. But even a fraction of that conversion will produce. The combined entities last year, Open Orphan and hVIVO, came almost close, just shy of GBP 30 million. So we have a business today, GBP 30 million past tense last year and on targeted breakeven in the next 3, 4 months. Forward to the next slide, Open Orphan building recurring revenues. What do we do in Open Orphan? We acquired Venn, which, in turn, has customers in Paris and Amsterdam for about 30 years. One-off short-term contracts. I came in, we lost a big percentage of staff, got rid of them. And we started converting. They've got IPSEN who's worked with the Venn business in Paris for 25 years; Carna in Japan, likewise. And we said, folks, if you want -- we need 3-year contracts. The same with our friends, German, the Tier 1, that's [indiscernible]. They got all their PK studies done with the Venn office in Amsterdam for the last 20 years, 3-year studies. So at the moment, in Open Orphan we have GBP 10.5 million in confirmed backlog orders, GBP 4 million in advanced stage under MSAs and approximately GBP 10 million. So ultimate target in our model at the moment is doing from GBP 30 million last year to GBP 35 million this year. And if we do that, our model, as shown, will make GBP 5 million EBITDA this year. So that kind of sums up where we're coming from on the pipeline, kind of sums up where our plan is. I would like to talk briefly about why we feel we'd be the person to do this. Basically, the -- you'll see initial register. The management team is probably one of the largest management stakes of many AIM companies. That's predominantly a large stake by myself, Brandon and Maurice where I put over GBP 2.5 million of my own cash into the company to get it going. I remain a very hands-on involved as an Executive Chairman. I know some listeners around Christmas panicked and pushed their stock down to 4p because they thought I got bored and moved down, I was going to be a boring old non-Exec Chairman and I wasn't going to be around. I'm sitting here in Trevor's office at 20 past 7:00 on a Tuesday evening, in Whitechapel in East London. And as Trevor knows and to say, I'm not going anywhere. We're going to stay very hands on. These companies need to be fixed very quickly. So the -- and in the IPO -- or sorry, the [ place in ] 2 weeks ago, we announced it publicly and guess what? Our share price went up. We went predominantly institutional networks. But because we guided the market what we're doing, retail private clients who had liquidated bought the stock around 6 or [ 6.518 ]. We have had some selling in the past week, and it's kind of almost glad to see them gone. We had 1 large institution who didn't want to engage with us, Jupiter, and it's on Friday, their Tier 1 came out, and gather they're gone, they're off the share register. I can't officially say that. But our broker friends said Jupiter no longer holds shares. We had another Tier 1 come out on Friday from Invesco, one of our other large shareholders. That was any confirmation that they haven't sold any shares. Their percentage had dropped from 11% to 9%. That was dilution because they didn't follow the money. We've been assured by the largest shareholders, they like this roll-up, they like the consolidation and, more importantly, they would like us by the turn of the year to sell [indiscernible] to a larger entity, and we all get out together. And being frank, that's music to my ears. I said at the IPO last June, we were going to fix 1 or 2 small struggling companies. It's almost like fixing up houses, paint them, clean them, new windows, fix them, put a tenant in, mow the lawn. So and being honest with you, that's kind of what we're doing with these business, taking 2 loss-making, struggling companies, knock them together, get good revenue in them, make sure they're profitable and position them for an exit, hopefully later this year where we will exit on 2 to 3x, maybe 4x revenue is the target. So I think in summary, Ben, I might hand over to you if you have any questions. That kind of gives everybody a whistle stop tour. We've built. We said we'd do it. We've done the fastest takeover in AIM over Christmas. And we're quite excited where we go from here. But we now have a company that's, believe it or not, in the eye of the storm, and we're delighted to be able to provide services now to the U.K. government, the Chinese government and pharma companies that we have a full-service quarantine clinic where we can run immediate trials. We've got a full viral laboratory and the world's largest portfolio of challenge study models. So I would say sometimes the harder you work, the luckier you get. But being honest, we all work very hard, but we didn't believe 2 months ago that suddenly challenge study models and viral and vaccine development would be so sexy and so interesting. Ben, does that give you a whistle stop tour of what we have?

Perfect, yes, thank you very much, Cathal. So we actually didn't move on to Slide 5. So when [indiscernible] you need talk a little bit about the pipeline. So I've pulled up Slide 5 so that our viewers can see that.

Apologies.

Can we just very, very quickly. Let's just have a quick talk about the pipeline. We've received a number of questions about it as well. So why don't you just sort of just talk us through some of the highlights on the pipeline so that we can see that in front of us now?

Yes. And look, apologies, I should have moved up our -- Slide 5, robust pipeline, combined pipeline. Let's take it from the top is easier. As you know, Ben, I'd probably talk too much and too fast. Across the top, hVIVO, solid pipeline. Opportunity client a, RSV challenge study. That's volunteers -- 38 volunteers; contract, GBP 2.4 million. That is a series of what's in the pipeline. Other, the total GBP 81 million. On the top right outside says there's hVIVO, solid pipeline of identified and pitched for contracts as of January 2020 is GBP 81.2 million. Significantly greater since a new management team implemented January '18, 2018, GBP 3.7 million; January '19, GBP 39 million. So the pipeline last year was GBP 39 million. The pipeline in January '18 was GBP 37 million. So the pipeline has doubled. Of these, the current management say this is a solid prospects. Next up, 46% of the January 2018 high probability pipeline value converted to signed contracts during 2018 and a similar conversion of 42% of last year's pipeline converted. Not all signed contract value is recognized as revenue in the year. The contract was signed, often a proportion continues in the following year as the contract delivered. And that's happening at the moment. There's a large, let's say German vaccine company that's been all over the news. They're in the clinic as we speak. They have all 24 beds booked out, and they're testing. We can't say what it is -- some novel virus or vaccine. So what we're saying here, we did -- hVIVO did about GBP 40.5 million revenue last year. We're not going to do GBP 40 million, that would be an absolute blatant lie. But we're going to do -- we're guiding the market, revenue will increase this year. The one thing we're doing in hVIVO is slashing the costs. Trevor and team communicated to you months ago, they took GBP 11 million out of the overheads. And in the weeks and months ahead, we intend to take another GBP 2 million or GBP 3 million of that overhead. So leaves me very excited as the single biggest shareholder. I underwrote the deal, the GBP 2.5 million and another GBP 300,000 last week. And that, well, we have a company that's right in the eye of the storm. It's in now with corona. Everyone [ has a job to them ]. It's been underutilized for years, but yes, it's pretty comfortable. So the next one down, Open Orphan building recurring revenues. We acquired Open Orphan about GBP 2.5 million. That was 20% of trading revenues. We acquired the really interesting one, hVIVO. hVIVO raised GBP 113 million [ real cash ] the last 5, 6, 7 years. It's been a bit of a joke, we moved the decimal point. We acquired it for GBP 13 million. That's 1-3, less than 10% of invested cash. And of that GBP 13 million, there was GBP 2 million cash in the balance sheet. So there has to be this [indiscernible] we feel. Now they're not on the balance sheet because Mr. Woodford wrote all assets [ of his discovery ] company. But we have a clinic that we think is worth GBP 25 million, GBP 30 million. We have a viral laboratory that's worth GBP 5 million, GBP 10 million, and we have the GBP 25 million of challenge study models. So I'm really excited of that pipeline, what we can do with it. Within Open Orphan, all we're doing, shedding headcount, shedding middle management, shedding some management and building relationships that have gone back 25 years of IPSEN, Carna, Boehringer, good people like that. So where we're seeing the Open Orphan revenue is that over GBP 10.5 million is confirmed backlog. That's orders in hand, with an additional GBP 4 million in advanced stage with clients under MSAs and with EUR 10 million in budget proposals en route that we've pitched for. So the reality was, Open Orphan did struggle to do GBP 14 million last year. We now have firm orders of GBP 10 million, potentially GBP 14 million in the coming weeks. So we will definitely increase revenue there. Last blob on that, combined pipeline is expected to deliver significant growth and profitability. The directors believe there is significant value uplift as the combined business demonstrates profitability when profitable CROs are all traded at a multiple of 2 to 3x revenue, Ixico, Ergomed, they're all 3.5x revenue. So we're currently -- because we're loss-making, we're only trading at 1x revenue. I believe in the coming weeks, once people realize the hVIVO orders are coming in, there has been no orders announced in a long time, and the market [ will say ] wow, this is a sleeping giant that is also in a Cinderella industry, i.e., the vaccine development. But suddenly, Cinderella has come to the ball. Does that make sense, Ben?

It really does. Yes. It really does.

So I'm going to throw a little bit of a curve ball at you here because I've [indiscernible] sort of listening with a great deal of interest about the business model and your plans for growing. Because when I last spoke with Maurice, we focused very much on the tech cost and [indiscernible], which is very, very interesting. One question that's just occurred to me listening to you, you've obviously talked a lot about the cost-cutting initiatives across the various businesses. Now given that the sort of business that is obviously very reliant on its [indiscernible], the one you talked us through, the carrying value of the realized assets you have and how the market cap is obviously trading at quite a significant discount to those. But what I wonder is how do you manage to maintain morale among your staff given that obviously you're, well, wielding the axe, want of a better expression?

Yes. Ben, look, a good, good question. And look, I was at the [indiscernible] investor thing today. We have an investor who backed this IPO, he's back in, and he asked that question. So I said, look, I decided -- I was in Paris last week, and I asked some of the staff in the previous week, I said, "Folks, look, you've been in a small, struggling company. Your share price dropped by 90%. I'm Mr. Big Bad Wolf, a cost cutter, I'm throwing middle management, senior management out. That's my style." But the feeling is among them, they're delighted to see finality. A lot of these companies are just too much middle management taking big salaries, and the junior and middle, the people who are actually the fee earners, the people doing the consultancy work have stepped up to the cup. More importantly, a lot of people initially, when I start talking, maybe it was 6, 9 months ago, were saying, oh, you can't be saying you're going to flip the company on. Actually, the staff are quite excited that say, well, we've been in these little struggling companies for years, wouldn't it nice to be [ in Brendan's old ] company, ICON? They're a GBP 9 billion market cap. They'll pay nice a pension. They won't be worried they'd run out of cash. So to answer your question, Ben, I couldn't answer that. And honestly, I've quizzed a few of our staff and said folks, what do you think? And their view is kind of, hurry up, fix the company, sell it. We don't job hop. We will be very happy being part of an ICON, a [ PowerXL ], a [ WuXI ] or something like that because the job security is then solved. Does that answer your question?

Yes. Absolutely, it does. And it also makes a lot of sense as well, I suppose that when working in an environment, which, it's a shrinking -- with a shrinking company and all the uncertainty that that brings, I suppose, at least, as you said, this brings a degree of finality in one sense, but impacts in a more positive light. What it also does is it gives people a view to potential upside in the future as you look to rebuild and make a much more ambitious company.

Absolutely. Absolutely.

So dovetailing into that, [ Riyadh ] asked this question, which you've touched on previously and also in your answer just then. You talked about your plan to sell the company within a few years to a large player as, [ Riyadh ] put it. My question is, is this realistic?

Absolutely. Look, and not within a few years. And this is, again -- bear in mind, look, I've spent most of my life not building companies, selling them. And that's where I've had 15 years run in trade sales. We're in a lucky position. Brendan Buckley, our former Chairman, he's my Co-Director on the Board, he sold his last company to ICON. He became the Chief Medical Officer of ICON. He joined them. They were GBP 800 million market cap. He had 10x uplift, did very well in the share price. When he left 1.5 years ago, it had twitched to GBP 8 billion, and that was taking no risk. Purely services, 0 services. And his take is, and he's [ understanding ], ICON would love to get their hands on the hVIVO assets. They did look at it a couple years ago. Our friend, Mr. Woodford, guided them hundreds of millions. So our view is let's not mess around. Let's get the company profitable. Let's get it re-rated. And late this year, and I mean late this year, we do need to look at a major transaction, which is probably very likely a trade sale. The reason being is that you can put the companies together. We can get them profitable very fast. If we hang around another year or 2, we could get a profit warning. Our job is find 2 damaged houses, replace them, clean them, fix the windows, replace the doors, clean them up, put it to a [ den ] and move on. As you know, Ben, there's 460-odd AIM listed companies, 80% have never made money in their life, they're loss-making. My belief is our job is to come in, tidy them up, fix them up, move them on. And we're not going to get people 5x the money or 6x the money unless that lottery ticket flu vaccine comes good. People coming in today should look at getting 2 to 3x the money by Christmas when we exit. So it's not years. It's when we exit. And again, another part of the reason, look, we have the hottest facility people ignored 6 weeks ago. Today, we have Chinese people who run the world looking to get access to the 24-bed facility here in London. It's a quarantine facility. Look and get access to the challenge [ to their ] models, looking to get access to the [ virus ]. So you and I know, hopefully, this virus is going to go away. It may. It may not, but let's not take that risk. Let's sell when there's huge interest in the market, and that means the commitment. And also, look, our 2 major shareholders, IP Group and Invesco, [ so we back ] the management team. If we committed, likewise, fix it and sell it. So we've got a kind of ticking clock. And once we get profitable, we're going to have lots of options. We might merge with a very big company. We might sell. But I think Christmastime is decision time for every.

Excellent. So you talked during the presentation, you said that you then wanted to speak a bit more about why you feel that you and your team are the right people to be driving this business forward. So in that context, [ Ravi ] has actually asked this question where he said, can you tell us about the new management figures in place following the mergers? What experience do they have? And why does this make them suitable for the roles they have taken?

Okay. Good question. Look, I'm not a competent CEO. I hated the last year being the CEO of a small pharma services company. I'm not [indiscernible], I'm very good as a cost cutter, I'm very good at doing deals, I'm very good at raising money. So I was never happier to hand over the role to Trevor Phillips as CEO; and Tim Sharpington, who's COO. Both of them are lifers of the pharma services industry. Both came in 18 months ago, they took GBP 11 million of the annualized cost base in hVIVO. hVIVO was massive loss-making till they got involved. We're making it clear, there's probably a few more million to come out in the coming weeks. But they're the safe pair of hands. But I'm the cranky, mouthy chairman, who's going to stay very much in touch with the market, and we do a lot of events, make sure the retail know all about what we're doing and deliver results. I'm also the single largest shareholder. I've set up GBP 2.5 million of my own cash in at the IPO. I put GPB 300 in along with every other investor and I've got another GBP 300 and every other investor [indiscernible] 10 days ago. So there's nobody more committed than myself. So I think the combination of Trevor and Tim, they're lifers of the pharma industry. They know what they're doing. Maurice in Dublin who's kind of half a lifer in genomic data, and then Brendan and the other Board members guiding us along. So it's a very hands on, very small tight team. We're not building that part. We're building it to fix it and sell it.

Excellent. Understood. So as we move forward, we've had a few questions from people, which broadly fall into the same category about upcoming news flow, obviously, with a lot of expectation around contract wins. So the slide that we have in front of us, you have a pipeline, as you say, of GBP 81.2 million. Before I ask for any questions from anyone else, you -- obviously, you've managed to double the pipeline over the last year. You've just talked about potentially selling the business by the end of this year if -- with a fair wind behind you. But irrespective of that, what kind of pipeline -- sales pipeline growth might you anticipate by this time next year? Could we see sort of a similar increase? Will it stabilize? What would your expectation be there for the business?

Yes. Look, for any bar, this is, again, somebody spent 15 years with selling companies. We need and demonstrate at least 3, 4 large contract conversions in the coming months, one hopefully next week, one the following month, one with hVIVO. That is the plan. hVIVO has to reassure the market it can convert and announce. So look, news flow, there will be more contract wins being announced by the Open Orphan Paris Dutch base. That's easy because the contracts are GBP 0.5 million to GBP 2 million or GBP 3 million. So we are assuring the market. There will be news flow. I've been a bit naughty. This week, look, we've got a bit of Jupiter last week. They're gone. But look, there's some people are panicking, oh, what's happened this week? There's a few more sellers. Look, would we like it a little bit [indiscernible]? Not too much. We don't want our share price going upwards only, doubling and then collapsing. So this week, I would say, is the week of a little bit of volatility. People can trade in and out. And next week, we would hope to, let's say, drive things forward and keep it going. So we're not going to have a straight line up 50% or 100%. We'll bounce around a little bit, but the plan would be to keep news flow. And I think, look, if I'm going to be doing a lot of investor relations every second week, I can't do that without news flow. So I think if all listeners can bear in mind, small cap A companies die without news flow. We're in a lucky position. We've now put 2 small cap companies together. So we have a job that you should have twice the news flow of any small cap companies. Does that answer your question?

Yes. It does. It does. So I think in summary, so people, when they're asking will you announce to the markets contract wins as they come in, it sounds like the definitive answer to that is yes, of course, because you need to demonstrate the ability to close this pipeline that we've built.

Yes. And look, also to reassure you on the sales process. Look, any buyer locked in the business, we have got unique assets. Any vaccine services company would give their right eye now to have the facilities here in London. We could start a sales process today. We would get a good return on our money. The inflection point will be late this year when we have proven to the market, and this is to answer you, announced 3, 4 major contract wins. And look, I'm staking my reputation, between now and the summertime we will have 3 to 4 major contract wins in hVIVO publicly announced. We're not going to hide anything. As the contracts come in, we will be the first to learn about them. Well, then the next piece, no big multinational is going to make the combined businesses profitable. And I think I've proven in Open Orphan, we will make these companies profitable. They're not that hard. You just keep cutting until you're at the breakeven point. And then your last question, yes, the pipeline is growing. There'll be something phenomenally wrong if we don't have the facility. In past years, it was 30%, 35% occupancy. It's almost like filling bedrooms in a hotel. If you don't keep their occupancy up, you lose money. There'll be something very strange this year if we're having a very high occupancy level given that this is one of the few places in Europe where you've got 24 beds that you can actually high quarantine clinic and a viral laboratory on site. So I think [indiscernible] news flow, conversion, do those. May the exit commence. That's why I've been saying that this year.

Excellent. Well, let's talk a bit about the wider business. I [indiscernible] following the previous webinar that we did a few months ago. [ Ravi's ] asked us, can you talk us through the progress across Open Orphan's wider business? How are the Genomic Health Data platform and virtual rep platforms developing?

Yes. Look, Maurice, this is his baby. He put one together before. Now he was only as the rep of a venture capital company called ARCH Ventures. They put it together in Dublin, it's called Genomic Medicine. Now again, a good example, Celarity and [ Celsun ] in year 3, they sold for $508 million to WuXI in Hong Kong. And people said they sold too soon, but they only invested capital of less than $100. They've got 5x the money. So that was him. He had a tiny stake, he brought all that knowledge of building that was probably Europe's biggest genomic database. They basically got patient records over 100,000 average people. And he got out. So he's here helping us now repeating all that, but this time, he's doing it at a fraction of the cost because we're doing it on a similar platform, which is basically a copy, but we're actually storing data on behalf of patient advocacy groups that we had targeted to have a certain amount of data in -- by the end of this year. hVIVO has 30 years of clinical trial genomic data sitting on file in-house. So Maurice's job now is, well, [ running, waiting ] slowly to collect that data. He's a treasure trove of data here in hVIVO offices. Let's integrate that. So basically, it's not a loan in lieu of a lottery card. And Imutex having that flu vaccine, a universal flu vaccine on our hands, we also have FOMO, as Brendan says, fear of missing out. So we're running the sale process later this year. Having the genomic database and having it pop in a decent amount of data, a lot of the buyers are saying, well, we've got to buy this because, look, these guys have built that genomic database. The reason we should sell soon [indiscernible] within a year of Maurice's business being sold, the Irish government got a bit [ antsy ] and actually said, "Hey, hang on a minute. WuXI is a Chinese company." 100,000 of the Irish DNA is now technically belong to a Chinese company. So if Maurice had waited a year, they probably couldn't sell that company. So again, what I'm trying to reassure, Ben, if you spend my life, 15, 20 years selling companies, there is a window to sell companies. If you hang around too long, that window usually closes. So I think within what we have, we have a couple of unique things that we can sell this year. And I think we shouldn't be greedy. Do it, fix it, sell it, and we all get together and hopefully, we'll have a nice audience in London and Dublin next year and say, "Right, let's do another one. Let's pick up 1 or 2 more struggling companies. Let's trash the overhead. Let's throw out a lot of middle management. Let's fix it and sell it." I keep saying there's 846 of them. We've only got 2 of them. 80% of that 846 have never made money. And that's always a crime in my books.

Well, Maurice, certainly preaching to the choir there, I can tell you. So in which case, that actually brings us nicely to something that Albert's brought up. You've spelled out sort of how a business like Open Orphan can be affected by macro -- by the macro wins. So he's asked the question here, is your business being impacted by macro issues aside from the coronavirus? What else is influencing Open Orphan on a wider scale?

Look, we're kind of lucky. On the road show, every fund manager said to Trevor and team, well, tell us a bit of Brexit strategy. And they said, "Well, we don't need one." And they said, "Why?" "We don't move product. We're services." So the services are performed in London. Brexit strategy and the macro strategy is if you're moving product. We don't move product anywhere. We provide services in situ here in London, and we provide services in the Paris office and the Dutch office. And so basically, so the macro strategy, no issue. We're in a very fast-growing, profitable industry. Pharma services [ is here up ]. It's good. So yes, we're in a very lucky position. I think once we get -- we're now at [indiscernible]. We said at IPO, we get GBP 30 million in the first 6 months. People laughed. I think -- not really laugh, and say, wow, how do you do get GBP 30 million in 6 months? We acquired it. Once we get the GBP 40 million, GBP 50 million, that's where headwinds, and that's where I think we shouldn't be greedy. It's easy to get GBP 30 million, GBP 40 million, then the macro, you start bumping into the big guys. So that goes back why I think we should be focused on an exit sooner rather than later.

So in that context, do you have any plans for any further acquisitions? This is a question that's been asked by a few people in various different ways. Is there any plan to add to the business? Or are you planning on sticking with what you have?

No, Ben, I'm delighted you asked because I forgot to mention that earlier today in another function. No, there's no more fundraisers and no more acquisitions. We now have a really attractive full-service pharma. We've had enough to do to fix it. I'm writing no more checks. And anybody listening, I don't want anybody else writing more checks to raise more money. We don't. We've got GBP 7 million, GBP 7.2 million exactly, cash in the bank this evening. It's supposed to be a profitable company. We're supposed to be services. That money, the bulk of it will remain on our balance sheet to give the hVIVO major customers comfort this company is not going out of the business. So no, no more acquisitions, no more fundraising. The next major transaction, if I have my way, and I'm the biggest shareholder, and most of the people came in is let's sell the company to somebody. And I don't say -- I'm not trashing [ the board ]. I think this is an opportunity. We're [ mined it at ] GBP 30 million, GBP 35 million. We can easily get GBP 80 million to GBP 100 million. Let's not be greedy [ till we're worth ] hundreds of millions. Everyone at the table tonight, if they were offered 2 to 3x their share price in 6 or 9 or 12 months, go back to go, I'm sure nobody would be saying no. As people start thinking, oh, we're going to be millionaires, let's get 5 or 6x the common share price is when we get lost. We want to keep the strategy pure, clean and effective.

Yes. I mean at 2, 3x return on your money within 12 months, I mean that's a phenomenal return. You've already -- earlier in your presentation, you talked a bit about the current balance sheet, and you valued the real assets on the books at between GBP 50 million to GBP 60 million, including cash balance. So just to recap, and I know you already said this earlier on, but I think just for the sake of the Q&A, it would just be worth repeating. What do you think would be the trigger point for a re-rate in the share price so that your true asset value is recognized in the market cap?

Yes, Ben. Look, we're currently valued at 1x revenue at the moment. Forget about the assets, okay? But we do have assets. They've been -- they're not sitting on the balance sheet because Mr. Woodford claimed this was a discovery company. And being a discovery company, he wanted to invest hundreds of millions and keep writing checks. So he would [indiscernible] a noncapitalized investment, it was just written off as he went along. But we do have 50 or 60 people come and look at the clinic. People in East London. It's part of Queen Mary's Hospital. They can come and see it, and the deck will be [indiscernible] with GBP 25 million worth of challenge study models, nobody will have held back. But sorry, Ben, I've lost my point. Give me the question again? [indiscernible].

I was just asking, what do you think the catalyst will be for the re-rates in share price? What...

Apologies, yes. We're valued at the moment at 1x revenue, and that's proper value. We're loss-making. Why is most pharma companies, Ergomed, [ Zico ] and everybody else valued at 3x revenue? Because you get 25% of the contract upfront in cash, you generate gross margins as high as 40 odd percent, net margins of 15% to 20%, it's a very profitable business. So hence, those margins, the valuation of a pharma services company is 3x revenues. We -- collectively, the division have never made money. So the market, and I value it at 1x revenue, that's enough, we're loss-making. I've given clear guidance, the market will have, within Q1, at the latest within Q2, we will be announcing, making it clear, we won't be backwards. We'll be profitable because there's something badly wrong if we're not profitable. And that GBP 7.2 million cash balance on our balance sheet as of today will be at risk if we don't start making friends very fast.

Yes. Exactly.

So the catalyst -- sorry, the catalyst at the re-rate is when the market realizes these folks have eliminated those losses, and they're profitable. [ Zico ] is a classic one. It was making losses forever [ in the mend ]. Last summer, finally announced bit of slashing and burning, went profitable, and they've got a 3x uplift in share price now because it's at 3x revenue as share price went from 20p to 90p, [indiscernible] actually 4x up, say, 80p. That's what happens with companies stop burning cash. That's when you move from the 80% loss-making companies to the 20% of AIM-listed companies that actually make money.

Absolutely. Now and so we have a question from [indiscernible] who wanted to ask what the plans are for using or deploying the GBP 5 million raised in the recent placing. But if I've understood this correctly, what you're saying is -- it's almost a defensive move in some ways where you put in place a foundation -- a cash foundation for the company so that in the event maybe things don't quite work out as expected, and you -- maybe the losses continue for a bit longer, you have a bit of both buffer space to give you the ability to close some of these contracts, but also more importantly, to help you close these contracts, you can demonstrate to potential customers that you've got sufficient cash resources behind the business to see you through the initial stage of delivering contracts.

Ben, you haven't won. But we do have -- bear in mind, what -- I came into Venn with 179 staff, we've lost 49. There is the last 20 tricky ones, if I'm being honest, mostly French and a couple of Dutch who won't leave without a little bit of a push. It's almost -- keep asking, can they fly? Can they work the top window? No, you're not allowed to do it in Paris anymore. So we've got to incentivize it by paying some of them off. So off the fund raise, we have allocated about GBP 0.75 million from rationalization costs. That's to get our French and our Dutch headcount down to the 100 total in the group. That's where we go, certainly profitable. The rest of the buffer is you're absolutely right, just in case any slip or trip, but it's really that hVIVO pipeline, the GBP 80 million pipeline. They are large pharma companies around the world, they're U.S. State Department, there's different parties at the table who want challenge studies done. They don't want to be dealing with another company running out of cash. They want to say, show us the money, 5 million or 6 million. Oh, you're not going out of business, we'll sign your contract. hVIVO had a rough time for 2 years. The share price collapsed by 95%, and we picked it up for a song. But anybody -- nobody is going to sign contracts with the share price in free fall and the cash [indiscernible] rapidly. That's all sorted. No more share price question. And we've -- as you said, Ben, there's a cash buffer on the balance sheet to reassure the customers. hVIVO's not going out of business anytime soon.

Understood. So we've got a very good question here from [ Joe ], which it will be good to hear the answer just to clarify sort of the long-term plan with respect to a sale. So Joe's asked, is the plan to sell the Open Orphan genomic business, alongside hVIVO and Venn? So when you talk about making a sale of the company, are you talking about selling the whole thing or are you looking to [indiscernible] parts of it?

No, Ben, the entire thing. The combination is worth more. I don't think any shareholders around the table want us to be sending them a dividend check in this, no. Look, Open Orphan is a full services company. It now comes with Europe's only 24-bed quarantine clinic, comes with a viral laboratory, the challenge study models and comes with the genomic database. So it's far more as a combined entity. We -- look, it sounds cheap. We only want GBP 100 million for it. That's 3x the current share price. That's only GBP 100 million. It's 3x the average companies. That's just a normal trading revenue. So I think we're not going to be greedy; 3x, it's a good figure. And then look, again, some people are a little uncomfortable. [indiscernible] fixes them up and smashes them and moves on. But hey, folks, look, 846 companies, 80% loss-making, that's not a great place to be. I think we want people to be terrified. [indiscernible] the guys are coming next year again, consolidate, fix, move on. I just think at the times of new Woodford perennially throwing buckets of cash into loss-making companies. You, me and everybody else, I buy a lot of shares in small [indiscernible] companies. I go bananas every time there's a big discounted rights issue. It's just paying management's salaries. I think the time has come. We're very lucky. Let's turn around. It's a bit like what people have done for years. Let's fix up some houses and move them on. Clearly fix up houses, the people who make the most money is fix them up and move them on. It's not the people who hang onto them.

Yes, I really couldn't agree more with you about that. And I very much get the sense out there that people have really had enough of that aspect of the market, these perennial discounted raises just simply to pay directors' and advisers' fees, and that really -- the only purpose they serve. There's no value being created. So no, I think the way you're pitching yourself and your team, I definitely see the long-term potential. So okay, well, let's talk a little bit about the market opportunity then. So we've had these questions submitted in advance by an investor. I'll just read out what he's put here. So he says the share price has taken a hammering and is well below the current place -- sorry, it's well below the placing price currently. I think that's a bit dramatic, but let's stick with the point. Are Open Orphan in contact with their broker to try and clear any large sellers? As the placing is oversubscribed, might some institutions be interested?

Yes. Look, Ben, I think, as I said, clearly, this week is the week for a little bit of volatility. Look, last week, Jupiter sold out entirely. That was 8%, 9% of the company. So if Jupiter wasn't selling last week, that shareholder would say, "Well, we got probably 30%, 40%." Share price down dramatically is a bit melodramatic because we're down 6%. And there's no major sellers today. It's some people panicking, I think. I think we've a bit of a -- almost the coronavirus is good news for us, unfortunately, but there's some people panicking, the market's going to melt down. So I think watch this space in the coming weeks. I met a lot of people at the show who said, look, well, when the share price dipped to the run-up to Christmas to 4.5p, people were saying, kind of lost the plot who's been non-exec chairman, we don't like -- he's -- I was very happy. I filled my boots at 4.5p, and it was back up at 6p. What we would suggest to people is don't fill your boots. But look, it won't be straight upwards only. There -- it was over subscribed. It was institutional. We will have people come in at the market in the coming week. I think being frank, we need to deliver some news flow, real news flow, other than me talking a good talk. So I would be disappointed if it comes a week or 2, there's not some decent news on from either Open Orphan, Venn side or hVIVO on contract wins. If we're going to make company's business profitable, you've got to see the contract wins. So I would guide -- watch the market for news flow and contract wins, watch what happens to share price afterwards. I think short term, over the coming days and weeks, I'm not going to get obsessed if the share price is up or down 10%. I'm looking for the double when we get re-rated in a month or 2 and a triple by year-end. So we'd advise people to just go easy, don't go crazy. But as we announce news flow, reward us by buying the shares. Don't buy them until you see the news flow. And the news flow been real contract wins.

Yes. I mean, you've made at that point crystal clear over the course of this presentation. But what [indiscernible] will we converge and if this [indiscernible] the GBP 1.3 million pipeline that's possible. So we're now onto our last question. So if anybody else has any final questions, please do send them through to our moderator. But to finish off with, unless we get any other questions through, [ Kieran ] has asked us, Cathal, will you or any of your colleagues be investing any more [ purse ] money into Open Orphan? You've already given us an idea of how the extent to which you backed the company, and of course, you've just cautioned against going all in on this? But what would you say to Kieran? What's your plan?

Yes. Well, Kieran, as you know, again, this is a typical public company director question. So here I go. We can't buy shares because we're insiders at the moment. We only can buy shares in placings, okay, when the market is cleansed. However, over the coming weeks and months, if there comes opportunity when -- where we're cleansed, we're not [indiscernible] information, absolutely, I'm always interested in increasing my stake. I just think it's -- I said earlier, this is a sleeping giant. It's probably one of the best opportunities I've ever seen my life. And given that we're in control and we have a clear plan, fix it and sell it, I think it's great. So we have -- if I'm allowed an opportune time, absolutely. I have most of my friends, colleagues, relations invested in the company. So nobody has more exposure than I if we don't deliver, but I wouldn't have done that unless I was clear in delivery. Actually segue slightly one part here, I forgot to mention to you and it's very interesting, and it's just not to overdo the corona business, but the original founder of the company, he's become a friend, his name is Professor John Oxford. There's a Wikipedia page on him. He would have been very involved in the company up to 5 years ago. He took time off and moved away. He'd been very involved in the SARS epidemic, very involved in the MERS one, very involved in Ebola. He published the book 2 years ago. Front page of it is guess what, it's the coronavirus. Even more importantly, the front page of the book, the cover is the [ Wuhan ] coronavirus. Look, he has now come back in recent days. He's agreed to be a consultant and adviser to the company and myself. So John is going to hopefully help the company in the background as well. He's going to be probably Chairman of our scientific advisory board. So I think there's substantial movement all round. He's come back and he's said, well, "Cathal, I formed this company in '89." And he's been on the BBC News. He's been on Sky. It's seen as one of the world's leaders in vaccines and deal with the coronavirus. But he says, "I'm very keen to get back and involved. I think hVIVO is now at a point in time when I've always thought it would get to, it's the center of the storm as we speak."

Excellent. Yes. It's, I mean as you're saying, incredibly timely. And no, I mean as you say, unfortunately incredibly timely, but it's obviously really sort of put quite a significant aspect of the business moved into the popular consciousness. So and that's, obviously, I can sense of how that's going to help strengthen you. So Cathal, look, we've got one final question here, which you have broadly answered, the next [indiscernible] a way to sum things up in [indiscernible]. Albert's asked us, to sum up, what are the core reasons to invest in Open Orphan right now?

Okay. Good question, Albert. Look, we're booking the trend. We're putting our money where our mouth is. I don't think there's many management teams who would write as much a check than I and some of my colleagues have written. We have a really, really clear, non-distracted model. We're going to fix the company. We are conscious of our staff, look, we know where they stand. Both companies have a traumatic 2 years, collapsing share prices, almost run out of cash. The funny part is the staff can't wait to be part of a big company. And then the reason to buy it is we're currently trading at 1x revenue because we're loss-making. When, not if, we become profitable, that should re-rate to 2x revenue or 3x. We're also -- we're being careful, like -- but every cloud has a silver lining. Speaking to John Oxford, he believes SARS disappeared, MERS disappeared. He said, "Look, we've all got to take a deep breath. Corona is coming, but corona will go." Smallpox was the most deadly virus in the world. The governments got together and eradicated it. Viruses are not hard to kill. You just need government support. So I would be very optimistic the current epidemic will pass over. It's a bit like a nasty dose of the corona -- the flu. The flu is actually more deadly. But I think where we are, we think we just -- it's -- we're genuinely lucky. I did not -- cannot believe 2 months ago, we sat down to try and work with this company, that it would be front-to-page headlines, some of the things we're involved in.

Excellent. Well, Cathal, thank you very much for taking the time to present to us and to answer all the questions that our viewers and shareholders have been put to you. We're obviously looking forward to news flow over the coming months. And in particular, we're obviously all hoping to see you close some of these contracts. So look...

I would say, Ben, I would say weeks, not months. We're all dead in months -- weeks. Okay?

Weeks, weeks. I mean in the coming weeks, okay, that's pretty [indiscernible]. Yes. So obviously, you've given a very, very bullish view of the company. So thank you for taking the time with us this evening.

Ben, as always, it's a pleasure. And look, I'm always open for a challenge. And so I'll go to a lot of investor events over the coming months, so please, any way I'm not delivering, feel free. You know where to find me. They're on our website, meet me at some investor events and give me a hard time if we're not delivering please, okay?

Excellent. Brilliant. And thank you very much to everybody who's taken the time to view the presentation this evening. Thank you.

Thank you, Ben. Thanks. Bye.