Strong first-half performance and record forward visibility
Upgrade of Full Year Revenue and EBITDA Guidance
hVIVO plc (AIM & Euronext: HVO), the world leader in testing infectious and respiratory disease products using human challenge clinical trials, announces its unaudited interim results for the six-month period ended 30 June 2023.
Financial highlights
· First half revenue growth of 52% to £27.3 million* (H1 2022: £18.0 million)
· EBITDA more than doubled to £5.2 million (H1 2022: £2.3 million)
· EBITDA margin increased to 19.1% (H1 2022: 12.6%)
· Net cash of £31.3 million as at 30 June 2023 (H1 2022: £15.9 million)
· Weighted contracted orderbook of £78 million as at 30 June 2023 (30 June 2022: c.£70 million)
*The Group will now report revenue excluding other income, such as R&D tax credits. Other income in H1 2023 was £1.4 million (H1 2022: £0.9 million).
Operational highlights
· Human metapneumovirus (hMPV) challenge model under development, funded by an end-to-end human challenge service contract with North American biopharmaceutical company
· Completed the manufacturing of Influenza H1N1 and Omicron human challenge viruses
· Asia-Pacific (APAC) region identified as a key long term growth area, underscored by the signing of first challenge trial contract signed with APAC client in over a decade
· The Group’s fast growing drug development consultancy arm, Venn Life Sciences, awarded a €3.2 million contract with a major pharmaceutical client
· Value proposition for human challenge trials reinforced by positive outcomes from hVIVO challenge trials
o Pfizer’s ABRYSVO™ became one of the first RSV vaccines to receive FDA approval in May 2023 having received Breakthrough designation
o Cidara received FDA Fast Track designation for its influenza antiviral candidate in June 2023
o SAB Biotherapeutics received FDA Breakthrough and Fast Track designation for its influenza antiviral candidate in April 2023
Post-period end highlights
· New state-of-the-art facility, largely funded by a number of hVIVO clients and which only involves a nominal cash contribution by the Group, is due to open in H1 2024. This facility will have 50 quarantine bedrooms, with potential to expand to 70 beds, enlarged cutting-edge laboratories, an outpatient unit, and corporate office
· Flu B challenge model under development, funded by £13.1 million bespoke manufacturing and characterisation contract with existing top five global pharmaceutical client
Current trading and outlook
As at 30 June 2023, the Group’s weighted contracted orderbook increased to £78 million (H1 2022: £70 million), an increase of 11%. The orderbook is diversified across multiple clients, challenge agents and geographies, allowing the management team to effectively optimise its resources and enhance its adaptability and flexibility in managing its revenue pipeline. Coupled with its track record of excellent operational delivery, this provides a strong foundation for future growth.
The Group recently announced its plan to move to a new state-of-the-art facility which is due to open in H1 2024. The move will enable the Group to increase its revenue potential by increasing its number of quarantine beds, improving its ability to conduct larger studies faster, enable multiple concurrent trials improving utilisation levels and support the development of new CRO service revenue streams. Additionally, consolidating hVIVO’s clinical and laboratory operations into a single location will lead to improved operational efficiencies, further enhancing long term margins. Its current quarantine facilities will remain open until the new facility is fully operational, however by availing of break clauses in its current leases, the Group has ensured an orderly transition to its new and improved facility and as such, will not incur lease costs on any of its legacy quarantine facilities beyond Q3 2024.
The Group has minimised the impact from delays in UK clinical trial approvals by the Medicines and Healthcare products Regulatory Authority (MHRA) by working closely with its clients and the MHRA in recent months and has received all outstanding approvals. hVIVO continues to monitor the situation closely, working with its clients to ensure the timely delivery of its studies
hVIVO increases its revenue guidance to £55 million (excluding other income) for 2023 and increases its EBITDA margin guidance for 2023 to c.19%.
Dividend
The Company intends to pay a nominal annual dividend going forward, details of which will be announced alongside publication of the Group’s audited results for FY23.
Yamin ‘Mo’ Khan, Chief Executive Officer of hVIVO, said: “The first half of 2023 has delivered another period of excellent growth and progress towards our goal of establishing a long-term sustainable growth model. The increasing number of trials, as well as the growing volunteer cohorts and expanding use cases, highlights that the human challenge market is experiencing a strong growth trend that we strongly believe will continue over the long term. The outlook for the business is extremely positive, as our new state-of-the-art facility sets us up to accelerate our growth over the long term. We are delighted to increase our revenue guidance and EBITDA margin guidance for 2023. Finally, I would like to thank our staff for their continued dedication and boundless enthusiasm as we progress towards our vision to transform global healthcare.”
Investor presentation
Yamin ‘Mo’ Khan, Chief Executive Officer, and Stephen Pinkerton, Chief Financial Officer, will provide a live presentation via the Investor Meet Company platform on 12 September 2023 at 18:00 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 hVIVO here.
