Good afternoon, ladies and gentlemen. Welcome to the Open Orphan plc interim results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just simply type in your question at any time and press Send. The company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we would like to submit the following poll, and I'm sure the company would be most grateful for your participation. I'd now like to hand over to CEO Yamin Khan. Good afternoon.
Hi. Thanks, Mark. Good evening, everyone, wherever you may be. I'm very pleased to be able to announce the first half 2022 results to you all. As you all know, I joined in February of this year, so I had quite a hectic six months. We have made good progress in the first half of the year, and we have a very good insight over the next 18-24 months. Without further ado, we'll get straight into the presentation. Here's your standard disclaimer statement. I'm Yamin Khan. I joined as a non-executive director to Open Orphan in October last year and took up the role of CEO as of February.
Prior to that, I have over 25 years of experience of working in the CRO and the biotech industry, and I have a PhD in biochemistry. I'll ask Leo to quickly introduce himself too. Leo?
Well, good evening, everybody, and we're very grateful to present to you today. I'm Leo Toole. I've been CFO with Open Orphan for 3 years now. I've 25 years' experience in finance in FMCG and most recently in various life science roles in private and public settings across multiple finance functions. Thank you.
Thank you, Leo. First order of business, I'm pleased to announce that we will be changing our name from Open Orphan to hVIVO. In fact, we have today started that process, and we expect to complete the process by the twenty-sixth of February. On that date, around that date, at least, we will change our market ticker from ORPH to HVO. The question may be, why are we doing this? In fact, we've been thinking about doing this for a while now. Open Orphan was a company used to bring together Venn Life Sciences and hVIVO, and we think we're at a stage where hVIVO will be the main company. All our customers and our employees know us as hVIVO or as Venn Life Sciences.
Open Orphan really is a financial vehicle used to interact with the shareholders and the markets, and I believe that the shareholders and markets may be missing something by not fully being aware of what hVIVO is up to. We're also through this mechanism of change, we're reducing the number of brands we need to keep up. As I mentioned, all our sponsors know us as hVIVO. All our scientific publications that we've had recently, including Nature and New England Journal of Medicine, have all been under the hVIVO portfolio. I think it's a good time to make this change. It's a positive change. The initial feedback from all the different parties we've received has been very, very positive.
In fact, I think the first question everyone asks is, "Why didn't you do this sooner?" I'm glad we're making this change. Yeah, we are streamlining and making everything a lot simpler. After this change, the brand that we will be working under will be Venn Life Sciences, part of hVIVO. hVIVO and FluCamp, which of course is the recruitment platform that is a part of the hVIVO challenge offering we provide. For those of you who don't know who hVIVO, formerly known as Open Orphan, is, we are the world leader in providing challenge studies for infectious diseases and respiratory diseases. We have conducted over 66 challenge trials to date.
We have inoculated over 3,500 volunteers and have a portfolio of more than 10 challenge models. Now, we are the world leader in this, in fact, by many, many factors. Our next competitor has less than two challenge agents, and they've done, at our estimates, less than 10% of the challenge studies that we have done. We are truly the world leader, and our goal is to consolidate that position. During this presentation, I'm gonna talk about some of the additional services we will be offering to our customers, but remain in no doubt that we remain as a core challenge study CRO. In fact, in that sense, we are the only challenge study CRO.
The other two CROs that do conduct challenge studies are really phase one CROs that happen to do challenge studies. For us, this is our main core business, and it is growing at a tremendous rate, which you will see on the next slide. To give you a very brief summary of our first half of numbers, Leo later on will give you more color on this. We announced GBP 18 million of revenue in the first half of 2022, backed up by an ever-increasing EBITDA margin, getting us to GBP 2.3 million of EBITDA.
The cash position still remains very strong of just under GBP 16 million at the end of June of this year. With regards to future growth, while we are still committing to our guidance for 2022 full year revenues of GBP 50 million, and one of the key questions we have been asked is how do you increase that shift from one H to two H? Well, we have already started this. For July and August, we have already generated revenue of GBP 9 million, and we will continue to increase that revenue month on month to get to our GBP 50 million target. I'm also very pleased to inform you that we are keeping to our guidance of between 13%-15% of EBITDA margins.
Previously, I have said that we will be delivering a double-digit percentage point, so we are kind of increasing that a little bit. On top of that, I'm pleased to say that 80% of our projected revenue for next year is already contracted. Our backlog at the beginning of this month stood at GBP 80 million. That's a record backlog. This gives us foresight and transparency over the next 18 months. The fact that we can now say that 80% of our 2023 revenue is already contracted is a significant milestone for the company. To address this additional work and the increase in number of volunteers we need, we have increased our capacity to screen healthy volunteers to 1,000 per week. We have ongoing partnerships with four of the top 10 biopharma with regards to challenge trials.
We're expanding on our challenge models to what we already have, adding new influenza models, Omicron challenge model hopefully will be active next year, and the malaria model, which is currently active right now. We're also adding new revenue streams in addition to the challenge studies, including site services and laboratory services. Of course, we've added a new screening facility in Manchester to increase the pool of patients from which we can recruit for. The key highlight for me really is the order book or the backlog that we have generated. This chart shows the increase in the order book year-on-year. December 2020 was a little blip because of the COVID-19 trial we ran.
You can see at the end of June, we had a GBP 70 million pound backlog, which has now increased to GBP 80 million. If you add on top of that the fact that we are now generating revenue of, you know, GBP 9 million for the last 2 months, we are in a very good place. With regards to the increase in backlog, well, that's come from new work that we assigned over the last six to nine months, both with biotechs and with big pharma, medium-sized projects and large projects. In fact, you know, we signed our largest ever contract of just over which is under GBP 50 million for a full end-to-end human challenge study program. This included manufacturing the challenge agent, conducting the dosing study, and then the actual challenge study.
We have also listed some of the additional challenge studies we have won. Post period, I'm very pleased to inform you that we've signed another GBP 6 million influenza challenge trial and our second end-to-end manufacturing characterization and a challenge study program. This is something new for us, and the fact that we have two of these under our belt says a huge amount to the team we have internally that has been able to gain these contracts and now actually are executing them internally. I talked about expanding the portfolio of the challenge models. Now, we know we are the world leader in manufacturing of new challenge agents. The two end-to-end programs that we were awarded, we are the only commercial organization in the world that can do this under one roof. We don't have any competitor in this region.
We can manufacture, conduct a dosing study and a challenge study all ourselves, and this is something that's really important to us as we go forward in trying to build on this. We're also we have already started manufacturing the Omicron challenge model, and we hope to have that active next year. On top of that, of course, we did recently launch our asthma challenge model, and we have an active asthma challenge trial ongoing with a big pharma, and we also now have an active malaria model which we are currently marketing to our clients. Just to reiterate, this is an example of how we can grow by expanding on our challenge model.
As we move forward, we will always be looking out for new opportunities, new indications where we can build more challenge models and therefore diversify and expand on the different offerings we have just based on the different challenge models. One of the key challenges in clinical trial is recruitment. 80% of the trials that get delayed because of poor patient or volunteer recruitment. We have invested quite heavily over the last 5, 10 years in building the FluCamp brand. FluCamp brand is very well known within the industry. It uses technology to get leads and process them through the different steps and get volunteers into quarantine. This is something that we have now upgraded. For example, now our healthy volunteers can go in and do self-booking online. We've expanded the number of weeks to which they can add their own appointments.
We have a new CRM that manages these healthy volunteers through their progress from the lead generation all the way to quarantine. We have a more detailed online screening for our patients. For example, when we are recruiting asthma patients into our trials, we have a more detailed questionnaire so that if patients are not suitable, they are rejected at that stage rather than them coming in-house. Okay. We've also expanded the number of marketing channels we are using, and we have added the usage of influencers in different social media platform to recruit more patients. As I mentioned earlier, we're now able to conduct full screening in our Manchester facility, so our healthy volunteers don't have to come to London twice before they get into quarantine.
They can get the visit one and then the second visit, both locally in Manchester, and if they pass both visits, they can then travel to London knowing that they are now eligible to go into the quarantine. The number of leads that we need to feed these studies, of course, remains high. This is something that we are rising to as a challenge because this is something we know that if we can't recruit, we won't be able to recognize revenue. We have shown historically 100% delivery rate in ensuring we meet our recruitment challenges. Now, this is fairly unique in the industry, and I think the FluCamp team and our recruitment team are working very, very hard with regards to innovation and putting out the FluCamp message out there for everyone.
Apart from the core challenge study service we're offering, what else are we doing? Well, one of the things we are doing right now is we're increasing our laboratory services, and we're offering them to third parties. During my last conversation with you guys, we talked about us getting accreditation. I'm pleased to announce that we have got the CAP, the College of American Pathologists accreditation, and that's currently in place. This allows us to market our laboratory services to other global CROs and the biopharma industry, and that is actively happening right now. We've also launched our clinical site. With regards to the resources and the facilities we have in place, we're now able to conduct field-based Phase II and Phase III studies run by other CROs or other biopharma companies.
Now, during a challenge study screening process, around 80% of the healthy volunteers we screen are not eligible to go into a challenge study. What we're doing right now is using that part, that 80% of the patients that we can't use for challenge study, to divert them into field-based phase II or phase III studies. With minimal addition in resources and no addition in facilities, we've now been able to tap into a new revenue stream. In addition to this, we are looking into potentially referring some of our healthy volunteers who are ineligible for the challenge trials to other third-party phase I units, and this is something also under consideration. What really pleases me that we're now able to offer additional services to our current clients, as well as new clients.
The fact that we have already signed a good size contract for our clinical site services is a very good sign for us that we are doing the right thing and able to diversify and cross-sell to our current clients. Revenue remains a very key driver for business. Now, we talked about offering laboratory services. Most of the clients for Venn Life Sciences are in early clinical development. They're in phase I or even earlier. What we want to do is to able to offer our laboratory services from hVIVO to the Venn Life Sciences customers, which would be wonderful. In addition, this year, twice, we have had the great news that two of the Venn Life Sciences customers have moved on to hVIVO's challenge model programs, and this is a first in the history of the company.
We have also integrated Venn and hVIVO to be able to offer a full service to our customers. For any given human challenge trial, our Venn colleagues write the protocol, our hVIVO colleagues will then recruit the healthy volunteers and treat the patient in the quarantine, and then back to our Venn colleagues to perform the data management and the stats analysis and the medical writing. Both teams are now working together, thereby reducing what we need to outsource to third parties. I think this is a great sign of the integration of the two groups and in us able to offer our clients a one-stop shop, and therefore a seamless transition from writing a protocol all the way to finally getting the final report to our clients. What are the dynamics with regards to the market size?
I'm sure most of you know that viruses and antivirals and vaccines are in the news almost daily. The amount of funding in this area has increased significantly. Pre-COVID antiviral and vaccine therapeutic sales was second only to oncology. The number of vaccines and antivirals in Phase I and Phase II is more than ever before. That's our core market, of course. Any vaccine or antiviral that's in Phase I or Phase II is a potential target for a challenge trial. Clients are seeing different benefits from doing challenge trials, and I'll go through some of those in a bit. In addition, we expect the challenge study market size to increase to around GBP 700 million+ in about 5-6 years. This is great news for us considering we are the world leader in performing challenge trials.
In addition to that, we're seeing some of our clients achieve huge benefits from doing a challenge trial. For example, Bavarian Nordic obtained a breakthrough status, which means they can save up to two years with regards to regulated timelines. We have another client, a big pharma, that achieved similar status through conducting a challenge study. This in effect means that both of these companies will now be able to sell their drug if it's successful and gets marketing authorization for a longer period of time. Now, typically, a drug of this magnitude would get a revenue of around $1 billion a year. You can imagine doing a challenge study and saving potentially two years will have a significant impact. The return on investment for our client is huge.
For a small fee to do a challenge trial and a 10-month period, they can make huge savings. The reason why clients are doing challenge studies differ. Here's an overview of some of the reasons why challenge studies are becoming more of a norm and why clients are conducting challenge studies more and more. One of the key things here is they de-risk the phase three program. A phase three study typically costs $100 million, okay? With doing a challenge study, which costs a lot less than that, and within a 10-month period, they are able to work out whether the drug is effective or not. Effectively, they know what kind of signal they will get before they make the full commitment to a 3-year, 4-year long phase three study costing a significant amount of money.
They're also able to optimize the phase III design in a way that they know exactly what endpoint to use to determine whether the drug works or not, what time points to use, what sample size. In other words, how many volunteers or patients they should recruit to their study. All of these factors go into the client's decision in why they should do a challenge study and the benefits of that. We have internally changed the way we sell our services because hVIVO is the number one provider of challenge studies. We know that we need to sell the concept of challenge studies and why challenge studies are an important step for our clients to get to their goals much faster and much cheaper. If we do that, we know we have a good chance of actually executing the challenge studies.
I think this is one of the reasons why we're seeing an increase in interest. Not only have we now a huge backlog, but our sales pipeline still remains very strong, and we are getting more queries every week with regards to future challenge studies. Our majority of clients can be split into two, big pharma and biotechs. I'm very pleased to say that four of the top 10 global big pharma are our repeat clients. They have been clients in the past, they're current clients, and we look forward to working with them in the future. Here, we show some numbers with regards to the number of trials we have run with the different big pharma that we've had. The great thing about working with big pharma, of course, is that it is stable work.
They have a lot of foresight, a lot of thought into before they execute a challenge program, so they know what the return on investment will be. The fact that big pharma is aware and is conducting challenge studies on an ongoing basis, they know they have a lot of confidence in this model. Now, this gives us confidence in turn that we know that the future for challenge studies is very strong. We are very optimistic in that we can continue to expand the portfolio offerings we make in addition to the challenge programs we're running, but also increasing the number of challenge models we are currently offering. On top of that, 40% of our current order book is with big pharma. Again, this shows that we have a very strong and stable foundation to build on.
With regards to biotechs, of course, biotechs have different reasons to get on challenge studies. One reason may be, for example, they want to get to phase II as early as possible because that means they can get the Nasdaq listing. Another reason is to maybe increase their valuation. A biotech's asset is worth X if it's passed phase I program, which shows that it's safe. That multiple increases significantly if they're able to show that the drug is effective. They can do this under a year, under 10 months by doing a challenge trial. This is huge for them. The number of companies that we have worked with in the past that have been acquired by big pharma, partly on the back of challenge study data is increasing.
We do see that these challenge studies are really good for the big pharma, for them running their programs, for expanding the program, for even deselecting the programs they don't wanna go forward, but also for the biotechs who want to get the results sooner and faster, and then be able to propagate that asset either through out-licensing or being acquired by big pharma. Both of the customers remain strong. 60% of our order book currently sits with the biotech, but of course, our Venn Life Sciences also work with biotech quite significantly. Our Venn Life Sciences have a wonderful model where they have a roll-on, year-on-year projects.
Most of their clients, I think over 80% of them are repeat clients, and they continue to work across both biotechs and also with the big pharma. I think here I will hand over the baton to Leo to go through some of the financial performance and outlook.
Thank you, Mo. Just to summarize some of the key takeaways here from the numbers. Firstly, we think these are very solid numbers showing ongoing progress, but really still on the journey to improve our financial performance. Secondly, we know that we're trading well for the first two months of H2. That leads us on, thirdly, to say that we remain on track to meet our financial goals for the fiscal year. Just to remind you, our goals are to grow revenue, grow absolute EBITDA, and grow EBITDA as a percentage of revenue. Looking at the numbers, again, just to reiterate, just under GBP 19 million in revenue in the first half of the year. That's in line with the run rate that we had for all of last year.
It is down on H1 2021, but that reflects two things. The general lumpiness of the business which I'll touch on in a moment, plus there was some COVID activity in H1 that wasn't repeated. Importantly, as I touched on, we have a revenue of GBP 9 million for July and August this year, which means we're really on track to deliver the slightly heavier weighting of revenue in the second half of the year. As a result of that, we remain on track to deliver our guidance of GBP 50 million for the year, which will be almost a 30% step up on revenue in 2021. Importantly, hVIVO remains the strong engine of growth, but within that, we are diversifying where the revenue comes from.
Mo touched on already how we're expanding the different challenge models that we're doing within influenza, within RSV. We're also looking at new revenue streams that allow us to utilize our assets and utilize our team. We touched on it already, but the Venn division is now a smaller part of the business, and there are questions why we don't report more Venn contracts. The reality is that these are smaller contracts now as part of our overall mix of contracts, and therefore they're not material in terms of disclosure to the market. Venn is still doing lots of repeat business, lots of recurring business. It's steady, it's stable, and growing at approximately 5% per annum.
Importantly, the Venn team is contributing by allowing cross-selling of challenge studies for hVIVO, as well as providing important work for the London team to get those studies done. Moving on to give a little bit more color on EBITDA and cash. EBITDA has as we show in this graph, EBITDA has grown from a loss-making position in 2020 to a continued profitable position in 2022. This is despite a modest reduction in revenue year-on-year, which I touched on a moment ago. That's demonstrating real progress to get to a stable financial position. Now, we made this point back in June. We're not yet happy that we're at the right position in terms of our EBITDA margins.
It's important that they are positive, but they have historically been in the low single digits. We committed that we are working to get into double digits or into teens in terms of EBITDA margin, and we're very confident now we're gonna make significant progress in that regard. We're going to continue the work to deliver improved margin, EBITDA margins. What we've done to deliver that is really focus on productivity gains in our operations and our overheads. We've worked to improve utilization across our service lines. We've improved productivity through our rotas, through our training programs. We've introduced new CRM systems for recruitment and screening, and that allows us to get improved yield on our recruitment spend. In our base period last year, there was also some COVID-related expenses that are not recurring.
We've also gotten better at managing the take-on of bench staff or variable bench staff. All of that has led us to drive an improved margin for the business, and we're gonna continue that work as business as usual as we drive the business forward. Looking at cash, again, we are in a strong position, and we've grown cash for the last number of halves. In fact, our cash at the end of August was up at GBP 20 million, just to give you that trading update. That reflects the nature of our business model, whereby our clients pay us significant 15%-20% of contract value upfront in cash. That puts us in a really strong financial position to conduct our studies and gives us real strength on our balance sheet.
The last point here, our goal, as we touched on, is really to drive sustainable profitability and cash generative business. We know that this is a journey, but we're now, I think, providing real evidence of progress because we're continuing to deliver strong absolute revenue growth in our absolute EBITDA, but as well as seeing progress on our EBITDA margin. We're gonna continue that progress. To address some of the questions, we think, or it's our judgment that by building that sustainable track record of delivery, that we will drive real value in the share price over time. We think that that will be rewarded by continuing to work on the fundamentals of the business.
Moving on, just to give you a flavor of, you know, recap where we've come from and to give you a flavor of the market consensus on where the business will go in the future. Just to recap, only a few years ago, we did GBP 22 million in revenue, and we're happy to guide that we will maintain our guidance of £50 million for this year. That is still very good progress in terms of top line revenue. The strong backlog that we have, and recall £80 million at the end of August, means that we have really strong visibility over our revenues into 2023. Over 80% of that is contracted, and the balance of that backlog will actually be delivered in 2024.
that gives us a really strong position to drive forward, where we focus on delivery, focus on improving EBITDA margins over the coming period. I'll now pass back to Mo.
Thank you for that, Leo. Just to really give you a recap and a summary. The market dynamics remain strong. The number of studies being conducted in infectious diseases and respiratory is increasing. A lot of focus on being prepared for the next pandemic, which kinda sits with us really well as you can imagine. We have a lot more work with the big pharma, which is great for long-term sustainable growth. Secondly, the infrastructure that we have is scalable. We are able to add more capacity in a very short timeframe. Just to give you an example, we have previously added a new facility within a 4- or 5-month period. We know a study typically needs between 6-7 months to get started.
If required, we have that option and we will be able to build out a new facility. We don't think capacity in that sense is a constraint for us. We've already expanded the screening capacity both here in London and also by adding a new facility in Manchester. We are the trusted partner for our big pharma customers, and we've seen that across a number of years and across a number of studies and across a number of indications. Order book growth is fantastic. The fact that we currently have GBP 80 million worth of work signed up that's gonna be recognized between now and the next 18 months is a significant milestone for the company. I was brought on in this company to help get a model of sustainable revenue growth and improvements in margin.
We are already beginning to see the improvements in margin, slowly, but improving nonetheless. The next step is to grow the revenues. You can only grow the revenues by building a backlog. I think that backlog now is significant and now we need to work hard in converting the backlog into a strong and sustainable revenue. We expect to see a significant year-on-year revenue growth from 2021 to 2022, an improvement in EBITDA, including the margins, and we expect again, to grow our revenues going into 2023 and improve our EBITDA margins. I think Open Orphan, hopefully going forward known as hVIVO, is in a very good place for the future.
I know there's a lot of frustration of the share price, but the key fundamentals of the company and where it is placed today and for future growth. I think we are a very good story, and we're in a unique position to make most of this growth in challenge studies.
That's great, Mo and Leo. Thank you very much for your presentation. I may, if I may take the liberty on the news that you probably haven't heard, Leo and Mo, that sadly the Queen has just passed. If I may just hold this meeting just for a minute, just while we pause just to reflect, and then we'll go into the Q&A, if I may. Thank you.
Sure.
Thank you very much indeed, and thank you for everybody on the call for that as well. Leo and Mo, obviously, investors had the ability to submit questions throughout today's presentation, and thank you to all of those investors that have taken time to do so. I wondered if I may just hand back to you now, given the significant attendance that we've had on today's call. Obviously, there's been a lot of questions of a similar nature, and what we've tried to do is try to provide those to you in a way that hopefully we can cover as many topics. Apologies to any investors if we don't get to your specific question, but to say that we are trying to cover all those themes that you wish to address.
If I may just hand back to you, Mo, if I can, ask you to read out any questions and give a response, and I'll pick up from you at the end. Thank you.
Yeah. I'll do my best considering the news that just informed us. My condolences to the royal family and everyone associated with the family. Very sad day for the country. I'll do my best and go through this. We have some pre-submitted questions, and I've also seen a long list of questions that have come in in advance. We'll try and get through these questions as many as we can. The first question that was pre-submitted is how is the business going to grow turnover and increase profits? Well, I think we are beginning to see that, right?
With only four months or less than four months to go to the end of the year, we are giving guidance of GBP 50 million of revenue. That's almost 30% increase in revenue year-on-year. Our EBITDA margins last year wasn't that great, but it was the first year we've actually seen a positive EBITDA margin. That will also increase. I feel that the backlog we currently have will give us the opportunity to have a sustainable long-term growth, both in revenue as well as an improvement in our EBITDA margins.
On top of that, of course, you know, I do want us to make sure that we make the most of the healthy ones we bring in providing the clinical site services and then also increasing the utilization of our robotic services to third parties. That's key for us, I think. When will you monetize the malaria challenge model? Well, we are actively pursuing customers on that model, and we will continue to do that. This model was active this year. Remember, it's a new area that we have moved into. All our previous studies have been in antivirals. This is a parasite, as I'm sure you're aware, so this is a new area.
It does take some time, a little bit longer to convert an active model into revenue. As you can see from our influenza and RSV experience, sometimes you do get a lot of these contracts in a very short timeframe. You know, hopefully, that will happen in the coming months and maybe next year. With regards to the market, why doesn't the company have any significant institutional investors, seeing as there were more institutional investors two years ago when the business was considerably small? This is one of my goals, to increase the institutional investors in the company. We can do this by showing sustainable growth, both in revenue and EBITDA. That's key. I said, as I said before, to do that, we need to grow the backlog.
We have done that to a certain extent, but of course, that is not a finished article. We will continue to build on that. I met some of the institutional investors back in June. We were meeting them this week and next week, and we're hopefully convincing them that, you know, this is a company that can show good growth and EBITDA. But as I said, this does take time, but I am very focused on increasing our share of institutional investors in the company. By the way, we did appoint a new NOMAD in Liberum who are also helping us get us access to new institutional investors. I noticed registration of hVIVO in U.S., what is the intention to list open up on Nasdaq? hVIVO has been listed in the U.S. for a while now.
As I mentioned earlier, Nasdaq always remains as an option for us. There is no short-term commitment, but it is a potential option for us. The company has signed GBP 87 million of contracts in the last 12 months. I'm not sure that figure is quite correct, but I'll go with it. Are these contracts going to generate any profit? If so, why is the share price at a 2-year low? On your first point, absolutely. These projects will generate profits. There's no point in gaining and winning these projects if they're not gonna generate profits. We have different pricing models. We have more efficiencies within our operational models. Absolutely. We need to improve on our margins to be able to deliver the EBITDA that we talked about earlier.
With regards to the share price, now, absolutely I agree with you. The share price is in the wrong place. It should not be where it is right now. There's some things that we just cannot control. The current global market condition, the cost of living, inflation, the war in Ukraine, the supply chain issues, all are contributing factors. For me and the company, our goal is to ensure good delivery on the key fundamentals of the company. I believe that if we continue to grow our revenues, our EBITDA margins, grow our cash, I think the market will come and show the true value of the company. On top of that, as I mentioned, we are following institutions in building a greater share from their side.
As I said, that can only happen once we start delivering a sustainable growth in our key financial fundamentals. We have a pre-submitted question, and I'm sure there will be a lot more on this coming in. Why have the spin-outs not happened? What is causing delay? I have spoken to Cathal, and as I mentioned in a previous call, my job really is to grow Open Orphan hVIVO and Venn Life Sciences. The core businesses that we have active here. Cathal Friel is taking an active role in the spin-outs, and I have spoken to him earlier about this, and he has said he's currently actively working on this. As soon as the market changes and it's more receptive to spin-outs and IPOs, he will be executing this.
The timing of this is unfortunately we are unable to determine that right now, but rest assured that Cathal Friel is currently working on the spin-outs, and when we have the right opportunity at the right time, we will be delivering on this. If SEEK Group are not prepared to move Imutex forward, why can't Open Orphan use its cash flow to buy a controlling stake in Imutex? I think that was one of the mixed messages previously from Open Orphan. We don't want to be a biotech. We are a service provider, we are a CRO. We need to know fundamentally what we do, what we offer to our customers, and that's what we will do. The goal of hVIVO going forward will be continue to act as a CRO. Now, why has Yamin Khan not bought any shares?
When the relevant closed period will finish, I will be buying shares. I have committed to this before on this call, so it's just a matter of timing. I do have to pay my bills first, and we know what's happened to those. On top of that, I do think some of you may be a little bit disappointed with the amount I buy. My net worth is not the same as Cathal's, but I will commit to buying these shares in the near future. As I said before, I will do that, but please don't be too disappointed with regards to the pound amount you may see on the register. A question for you, Leo. Have you got enough cash to see you through the next full year without a further placing?
Well, Mo, I think I'm happy to say that I think as we touched on, we're very well-financed with a strong balance sheet. We haven't done a placing now in over two years. Right now, in terms of our normal operations, we don't see a need to. We always take a view in terms of strategic opportunities as they present themselves for the business in terms of M&A and otherwise, but those are the only reasons why I think we would really go and do a placing right now for a real strategic activity. Obviously, we keep those kind of things under review at all times.
What I can say, again, just to reiterate the message, by focusing on being sustainably profitable, by generating cash with a very strong order book, we're in great shape, and we don't need cash. Just in case, to avoid any doubt, we have no bad debts at the moment. We have very, very good collections of our receivables. Our, you know, our overall cash cycle is really supporting our growth that we've just described.
Thank you, Leo. So I'll get to the questions that have come in during our presentation today. Hi, Mo, how confident are you of signing more COVID challenge study contracts? Well, we are pretty confident. We are building the Omicron challenge model. I think I saw a question, what variant is that? That's BA.5, which is the most recent variant, and we hope to add to the current client we have in backlog, as we move forward. This is something we feel is a good demand for. Of course, these things take time, and we will be able to build on this. What else we have? Mo and Leo, why do you think the stock didn't move today? Do you wanna get that, Leo?
Again, Mo touched on it earlier. It's often very hard to understand the movements in the market, given lots of other external factors impacting the market. We're satisfied that by, again, reiterating that by focusing on profitability of the business, generating cash, over time, the share price will value us properly or appropriately. We are focused on continuing to deliver good news to the markets.
Yeah. Just to kind of add to Leo's point, I think we are underappreciated, we are undervalued. Talking to some of the institutions today, some of the brokers today, they agree with that. I just think it's a matter of time. I know we've said this before, but the key thing for us as a management team and a group is to deliver on the key fundamentals, and that's what we are doing. We are delivering what we said we are gonna deliver. GBP 50 million of revenue this year and 13%-15% EBITDA margin this year. That's what we are committing to going forward for this year. That's a significant growth year on year. 2023 revenues are guided by the in-house broker at GBP 54 million.
Is that the current capacity of the company? We are guiding at GBP 55 million. No, this is not just the current capacity. We have the potential to increase the revenue beyond that before we fulfill all of our capacity. Would you be developing further strains of COVID model or is there sufficient interest in the Omicron? We have sufficient interest in Omicron. Right now, we don't have plans to develop any further COVID models, but we don't know what the future holds for COVID, for the virus and potential future variants. Never say never, but right now, we're focusing on building the Omicron BA.5 model. What else? Somebody asked, "Why are you working from home on the results day? Aren't you taking us seriously?" This is not my home.
I am sitting in our Whitechapel offices in London. Could you please explain the big difference in the exceptional items? Leo, maybe this is for you. What needs to be done to turn this figure around?
I think what that impact is year on year is last year there was a, an accounting adjustment to reflect the revaluation of an asset that was then eventually spun out into Poolbeg. That was a technical accounting adjustment. Typically, in terms of guiding operational performance, that's why we focus on revenue, EBITDA and EBITDA as a percentage of revenue. Those are the best indicators in terms of our day-to-day, our operational performance. As we've said, our goal is that each of those measures grow year on year.
Thank you. What impact, if any, does today's news about a successful Oxford vaccine for malaria have on the urgency value of hVIVO's work in the same area? The news that we have received is very positive with regards to a treatment for malaria. The early results have shown an 80% efficacy rate, which is wonderful because malaria is a huge problem, especially in the poorer regions of the world. I think maybe we're jumping the gun a little bit too early. The full field trial results will not come out maybe until towards the end of this year or next year. I think only then will we realize the full effectiveness of this product.
Of course, the goal of the scientific community is to eradicate all, you know, anti-parasitic or antivirals and so on. For us, it's to continue to expand on the different models we have. We need to diversify our risk. Like I said, we have more than 10 challenge models. At any given point in the future, in the short or long term, some of these may get eradicated, but we need to make sure that we are continuing to expand on the challenge models that we have and continue to grow our revenue. Mo, you just said the market is not valuing hVIVO business model properly. Why not buy back shares then? It's on the agenda. I'm not committing to doing this, and I'm not saying we never do this. This is something that we keep under consideration as we go forward.
Why do 4 of the top 10 biopharma use hVIVO services? What do the other six top 10 companies do or seem to progress their development pipelines instead of challenge model? It depends on the priorities of the different companies. Some companies may not have a large portfolio of antivirals and vaccines. Others may use different methodologies. In other words, a field-based phase II trial. We are exploring and actively talking to some of the other big pharma to add them to our portfolio of services. 4 is a very good start considering it's 100% repeat business with these customers.
Of course, we are not satisfied, we're not content, and we are looking to expand on working with more big pharma, but also not forgetting that the biotech also need to do challenge studies to progress their drugs faster. One for you, I think, Leo. How are you going to boost pre-tax profits, which are currently tiny given current revenues?
Yes. I mean, really the message is continue to drive revenue and EBITDA. If we do that as we've just described, then net profit will also rise consistent with those measures. As I said, just in terms of KPIs that we track, so consistent measurement for the market, we focus on those measures. By driving those up, we will also drive net or pre-tax profits up.
Okay. I'm gonna start going through this a little bit faster. I think there's about 50-odd questions, and we have 5 minutes. I'm gonna try and focus on some of the topics maybe we have not covered. The profit seems very small in H1 in relation to H2. Is that because of fixed costs? Yes, to a certain extent, that's correct. As we build size, we will improve our margin, and we will be able to deliver a greater EBITDA in the second half of the year. Can you explain how you have GBP 80 million order book but only 80% of full year 2023 revenue? It all depends on the timing of the studies. The different clients are in different stages with regards to developing their drugs.
For example, we have one client in the backlog, and their study starts in first quarter 2024. It all depends on when the client is ready to go ahead with the trial, and that's when it gets placed in that quarter, for example, or in that month, and then we build the backlog and, you know, project the revenue from that. When was the last time Venn Life Sciences delivered a contract? They deliver a contract very often. The only reason why you may not hear of them because they're relatively small in size, so we don't need to generate an RNS on a contract that is not having a significant impact on the market. Rest assured they are winning contracts.
In fact, they're growing year-on-year, but the size of each individual contract, considering they are a consulting service, is not as large as a human challenge trial, for example. Is the company leveraging the unique position it has, considering the margins on these large contracts are very low and inflation is running in double digits? Absolutely, we do take into account the inflation, and we ensure we achieve the right margin that we need to deliver our EBITDA targets. Approximately how much of the business is flu? Flu is the dominant indication we are working on, no doubt. But like I said before, we are diversifying this. Even within flu, we have active ongoing trials in different variants of flu.
Even though they're all in flu, there's different variants of flu that we are currently working on. Can you explain the reason behind why Venn hasn't been rebranded into hVIVO? Absolutely. We don't want to lose the customer base. All the Venn customers know Venn as Venn. For us to go in and force a change to hVIVO, I don't think it is a great thing to do. In addition, our other colleagues have gone through a number of transitions already. We believe Venn has a very good brand name right now in the market, and we need to make the most of that. Leo, why can't Open Orphan grow revenue uniformly? The numbers are too lumpy and the market hates that.
Great comment. I mean, historically, because we didn't have a consistency in terms of our order book, then revenues were lumpy. Going forward, it's you know, when you have GBP 80 million in contract signed, you're actually much better placed to have consistent delivery of that revenue. Utilization levels in our or occupancy levels in a quarantine unit have been low in H1 this year. They're going to improve significantly in H2 this year, and we expect that level of occupancy will be maintained across all of 2023. We expect that lumpiness won't be there to the same extent next year.
Thank you. Is there any seasonality to cash flow? No, there isn't. It's purely based on when we are awarded new projects and when we sign them. What EBITDA margin do you think you can hit long term? I believe my target would be in the high teens. I think that is something we should be able to achieve. Do you foresee any margin pressure from the increased cost of energy? Insignificant on that because the total energy cost to the company is fairly low compared to the cost we have to provide the facilities and the staff and the resources and so on. What are the biggest risks for the foreseeable future? I think I'll give you the answer maybe in a different way. The biggest challenge is recruitment of healthy volunteers.
That's one reason why FluCamp is such a high-profile initiative for us. We need to make sure that we continue to recruit our healthy volunteers as we continue to build the organization. How vulnerable is the business to cyberattacks? I don't think we're vulnerable. That doesn't mean it's a hundred percent foolproof. We've seen what's happened to other organizations. In fact, we just renewed our insurance policy on this. But yeah, we have good cybersecurity. We have a fully fledged IT team that takes care of our cybersecurity. What are the greatest risks? Maybe you can cover this, Leo. What are the greatest risks to your cost base as a result of inflation?
Well, you touched on energy and fortunately, it's not such a big part of our cost base. Wage inflation is a concern, but we work to try and really drive productivity. We like to drive high utilization. We do proactively look at pricing mechanisms within our contracts so that we can try and pass, you know, if we have to, pass those cost increases onto our clients. Our focus, though, is really by driving revenue and profit performance that we will try and stay ahead of these inflationary pressures and manage that as best we can.
Okay. Mark, I think it's 7:00 PM.
Yeah.
I could go on for another hour.
I know. For every question you seem to answer, there seems to be another two or three coming your way. Look, what we'll do is we'll make all these questions available, and if there are any topics, subjects that you feel you wanna add a response, you can just provide that, and we'll make those available to the investors on today's call. With that in mind, Mo, and Leo, I'm mindful that investor feedback is important, and I'll shortly redirect investors to provide you with their thoughts and expectations. I wonder, before doing so, if I may just ask you for a few closing comments, and then I'll redirect investors for their feedback.
Okay. Leo, do you wanna go first?
Sorry, Mo.
No, I'll go. Sorry. I think the key message for us is that we realize that the share price is not where it should be. The key financial fundamentals are strong. The growth that we have projected for Open Orphan as a group remains on track. The backlog should give you confidence in that. I believe that really it's just a matter of time before the share price reflects the true value of the company. I know I've said this before, but if we weren't delivering on our key fundamentals, then I think, you know, there's kind of real frustration, and I would agree with that. The fact that we are able to deliver this, I think another question I just saw, are you confident of delivering your 22 numbers?
I am confident of delivering our 22 numbers. I think we do that, and then we get institutional board. We hope to see a turnaround on our share price. Thank you for all of your interest and being loyal and committed to us for all this time and tonight, and we look forward to speaking to you again.
That's great. Leo, Mo, thank you very much indeed for updating investors this evening. Could I please ask investors now to close this session, as we'll now automatically redirect you for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. It'll take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Open Orphan PLC, we'd like to thank you for attending today's presentation. Good evening to you all.