The Open Orphan share price has climbed over 200% year-to-date! Is it worth investing in?

Open Orphan (LSE:ORPH) has enjoyed recognition and a share price spike in recent weeks. Year-to-date, the Open Orphan share price has risen over 200%. This is an incredible achievement for a relatively unknown company.

As global efforts to find a cure or solution to the coronavirus pandemic ramp up, the world is focused on the pharmaceuticals sector. One stock caught in the limelight is Open Orphan, which describes itself as ‘”a rapidly growing niche CRO pharmaceutical services company”.

Covid-19 antibody testing

Open Orphan runs two commercial specialist CRO services businesses: hVIVO and Venn Life Sciences. The former operates a quarantine clinic in London, complete with on-site virology lab. The company has over 20 years of experience running clinical trials on vaccines, and works with leading pharma companies and government agencies including Merck, GSK, Gilead and DARPA.

Yesterday the company confirmed hVIVO is signing an exclusive partnership agreement with US-listed Swiss pharma company Quotient. Together they will bring Covid-19 antibody testing to the UK. This should help the government understand the scale of the virus spread and help ease lockdown restrictions.

Antibody tests are used to detect if a person has previously contracted coronavirus and recovered. The presence of antibodies should mean the subject has a level of immunity. This would then allow them to go back into the community with more confidence.

Like its industry peers 4D pharma and Novacyt, Open Orphan has seen a spike in its share price since interest in its Covid-19 antibody test gained momentum. It has a MosaiQ Covid-19 Antibody Microarray machine on-site and hopes to have this up and running in two weeks. This machine can carry out 3,000 antibody tests per day. It will not deal directly with the public but intends to sell its services to its partners. These third parties will then sell home testing kits. The price point for home-testing is unknown but is expected to be between £70 and £150. 

Can the share price rise continue?

Aside from its Covid development efforts, there are other notable projects on the go that should boost the Open Orphan share price. It is heading for phase 3 clinical trials for a universal flu vaccine and recently signed two new contracts. Both contracts are to provide a respiratory syncytial virus human challenge study and each contract is worth over £3m. Once the pandemic is over and normality returns, I expect governments will continue to ramp up their investment in healthcare. As a world leader in virology and vaccine studies (including flu, asthma and COPD), Open Orphan could be well placed for further growth.

Open Orphan has an £80m market cap, negative earnings per share and no dividend. Listed on London’s AIM stock exchange, it is a micro-cap stock. These financials are not appealing to long-term value investors, which makes it a risky stock investment, particularly for beginners with little money.

The Open Orphan share price has already experienced a large hike and I imagine it will continue to fluctuate as testing increases. Although it undoubtedly carries risk, I do think it has a unique advantage and the potential for further advancement.