4 days ago
Hvivo blames US trade disruption for halving in share price
Uncertainty caused by trade disruption in the United States and an adverse funding environment has resulted in the cancellation of a big contract for Hvivo, sending shares in the tester of infectious and respiratory disease products sharply lower.
The Aim-listed group said that one of its clients had cancelled a 'significant' contract and another had postponed a smaller one, which Hvivo believes was a result of 'current uncertainties in the pharmaceuticals industry', particularly in the US. This had led to an increase in cancellations and delays of clinical trials across the industry, the company said, also citing a 'continued depressed biotech financing market'.
Hvivo infects volunteers with safe doses of virus agents then quarantines them before testing the efficacy of vaccines and antivirals in so-called human challenge trials. The company, formerly known as Open Orphan and once a large holding in Woodford Capital's Equity Income Fund, provides clinical development services to clients that include a number of the world's biggest biopharmaceutical groups, such as Pfizer.
It said it had £47 million of revenue contracted for the present financial year, including cancellation and postponement fees, and anticipated further contract wins over the course of the year.
The company warned, however, that if these contract wins did not materialise then it was likely that the group would fall to a mid-single-digit operating loss for the year.
All but one of the contacts for 2025 have started, Hvivo said, giving management confidence that 'there is a low risk of any further cancellations'. Shares in Hvivo more than halved in value during morning trading before paring some losses. They ended the day down 7½p, or 46.3 per cent, at 8¾p.
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Dr Yamin 'Mo' Khan, chief executive at Hvivo, said: 'Whilst we are disappointed to have received notification from these clients due to matters beyond our control, we still remain confident in the continued growth of human clinical trials and the overall prospects of Hvivo as we also continue to diversify our revenue streams.'
Analysts at Shore Capital said concerns of a slowdown in the contract research organisation sector had also been flagged by Hvivo's larger peers, who have cited more cautious spending and clients delaying their decision making.
'Some of the negative narrative towards vaccines from Trump appointees at the US health department and the US Food and Drug Administration has clearly been an added cause for concern,' Sean Conroy, an analyst at Shore Capital, said.
'We would still caution against forming any endemic view towards vaccine development and the longer-term prospects of the human clinical trial business.'
