- Pharma industry uncertainties to blame
- Depressed biotech financing market
- Year-to-date shares down 56%
Shares in Hvivo (HVO:AIM) fell to a 52-week low in morning trading as the leading CRO (contract research organisation) firm said it had received notification of a significant HCT (human challenge trials) contract cancellation, a postponement, and a smaller study cancellation.
The company attributed the cancellations to the ‘current uncertainties in the pharmaceutical industry and the continued depressed biotech financing market.’
‘The current volatility in the pharmaceutical industry, particularly in the US, is impacting the whole CRO industry and has led to an increase in cancellation rates, postponement of clinical trials, and delays in approvals for new projects,’ the company added.
More encouragingly, the firm said it expects to win further contracts during full year 2025, although if this doesn’t materialise, current revenues of £47 million ‘would result in a mid-single digit operating loss (pre-exceptional items) for the full year.’
WHAT DOES HVIVO DO?
The company specialises in conducting HCTs which differ from traditional clinical trials as they involve infecting a healthy group of carefully selected volunteers with a specific virus in a controlled environment rather than testing safety and efficacy on participants who are sick.
Hvivo is the world’s only specialised HCT CRO and has conducted around 70 trials and performed more than 4,000 volunteer inoculations. The firm claims to have more than 90% market share in the commercial HCT market.
WHAT DID THE CEO SAY?
Yamin Mo Khan 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 challenge trials and the overall prospects for HVIVO as we also continue to diversify our revenue streams and build our offering as a full-service CRO.
‘We currently have our largest ever sales pipeline, including projects under discussion that would represent some of our largest ever value contracts for human challenge trials, such as the world's first ever Phase 3 HCT.’
A TEMPORARY SETBACK
Analysts at Shore Capital believe the latest contract cancellations are sizeable but likely to be a ‘transient’ setback.
‘Concerns of a broader slowdown in the CRO sector had continued to be raised by some of HVIVO’s larger peers as a result of more cautious spending and delayed decision-making from clients, stemming from a reprioritisation of pipeline assets (pharma) and the ongoing challenging funding environment (biotech).’
Shore Capital is forecasting HVIVO to deliver its medium-term ambition of £100 million revenue in full year 2028, particularly because of efforts ‘to diversify the business away from its lumpier HCT contracts.’