Thursday 23 January 2020

Open Orphan in line to take stake in '$1bn' flu drug

Pharma services: Open Orphan CEO Cathal Friel
Pharma services: Open Orphan CEO Cathal Friel
John Mulligan

John Mulligan

The planned reverse takeover by Irish pharma services firm Open Orphan of UK-based Hvivo will see the merged entity have a stake in what could be a $1bn-plus flu vaccine now under development.

The takeover deal - announced earlier this month - values Hvivo at £13m (€15.2m) and will give the combined business a valuation of about £28.5m (€33.4m).

Both firms are listed on the Alternative Investment Market in London.

Open Orphan is headed by chief executive Cathal Friel, who earlier this year reversed Open Orphan into clinical trials manager Venn Life Sciences.

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Mr Friel will be executive chairman of the enlarged Open Orphan-Hvivo entity.

The Hvivo transaction should see Open Orphan shareholders secure a stake in Imutex, a firm that is developing a promising universal flu vaccine now in late-stage development.

The universal flu vaccine differs from others in that it doesn't need to be altered every year to take account of new strains of the virus. Globally, seasonal flu kills up to 650,000 people every year, according to the World Health Organisation.

Results from mid-stage trials of the Imutex vaccine released earlier this year showed that it could significantly impact mild to moderate flu. It was the first time that a universal flu vaccine has been shown to reduce symptoms and to stimulate an immunological response.

It is hoped that the drug could also protect against unexpected flu strains.

Imutex is 49pc-owned by Hvivo, with the remainder owned by UK firm Seek.

However, Hvivo considers Imutex to be non-core, and has continued to explore options for its stake in the firm. Last year, Seek and Hvivo engaged Goldman Sachs to aid with a possible sale of Imutex.

Documents show that the investment bank was basing its likely fee for its services on two scenarios: Imutex having an enterprise value of up to $1bn (€902m), or more than $1bn.

Earlier this year, Hvivo said progress regarding strategic discussions related to its flu vaccine assets in Imutex have been "slower than we would have liked".

The Open Orphan takeover will see shareholders in the firm own just over 55pc of the enlarged group.

The deal - recommended by the independent Hvivo directors - is expected to be sealed by January 17. Open Orphan is proposing a £10m share placing to fund the deal.

Hvivo has been trying to reach break-even by cutting costs, including research and development spend, and refocusing its operational priorities. A new management team was installed last year.

The takeover will also see Hvivo's clinical facility in London form part of the enlarged group. The 24-bed unit is used to conduct clinical trials. It was built at a cost of about £40m.

Irish Independent

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