Shares in Hvivo nosedive as it loses key contract and postpones another
Shares in Irish clinical trials company Hvivo plummeted more than 47 per cent on Friday after the group told investors of the cancellation of one 'significant' contract and the postponement of another.
The company, which is listed in London, informed the market on Friday it had received notification of the cancellation of a 'significant human challenge trial', alongside the postponement of another, as well as the cancellation of a 'smaller study'.
Human challenge trials, where products are tested on humans in a controlled environment, make up a significant portion of the group's business.
Hvivo said the client decisions are believed to be related to the 'current uncertainties' in the pharmaceutical industry and the 'continued depressed' biotech financing market.
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'The current volatility in the pharmaceutical industry, particularly in the US, is impacting the whole contract research organisation industry and has led to an increase in cancellation rates, postponement of clinical trials, and delays in approvals for new projects,' it said.
The group's board said it 'remains confident' the underlying concept of human challenge trials and their place in the drug development process is 'stronger than ever'.
It said the company's sales pipeline is at a 'record level' and includes some 'large, high probability opportunities' that are in 'advanced discussions', and which could commence in late 2025 and provide significant revenues in its full year 2026.
The company currently has £47 million (€56 million) of revenue contracted for its full year 2025, which is inclusive of cancellation and postponement fees.
It said it expects to achieve further contract wins during the course of the year, but that should these not materialise, revenues of £47 million would result in a mid-single digit operating loss before exceptional items for the full year.
All but one of the contracts for 2025 have already commenced and the board believes there is 'a low risk' of any further cancellations.
Hvivo gave revenue guidance in April of £73 million for 2025 and said 70 per cent of that was contracted. Davy analyst Colin Grant pointed out this implies it had contracts of around £51 million on its books at that time.
'The company is now saying that it has £47 million of contracted revenue,' he said. 'This includes some cancellation fees.'
Mr Grant said Hvivo is 'likely' to win more contracts during the remainder of the year, which 'could boost revenues and earnings'.
He said the company is 'net cash' so remains in a 'strong position to execute its strategy of building a sustainable and diversified business'. He added that the role of human challenge trials in the drug development industry 'remains extremely favourable'.
The company said it will provide further clarity around outlook later in the year and will update the market as new contracts are signed.
Hvivo chief executive Dr Yamin 'Mo' Khan said he was 'disappointed' by the developments, but is 'still confident in the continued growth of human challenge trials and the overall prospects' for the company.
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