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Open Orphan Insists There’s No Problem, No, Really!

Tim Worstall
Tim Worstall trader
Updated 4 May 2022

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Key points:

Open Orphan (LON: ORPH) shares are up 6% this morning as the company makes two announcements. One is the announcement of a useful little contract for the company but we’re not told of the size or import of it. The other is that the shares of the company could be suspended. It would be terribly cynical to connect the two announcements, they're being released on the same day.

The contract is with “an existing top 5 global pharmaceutical client” to manufacture a virus to be used in testing. As this is what Open Orphan does for a living that is good news. But as ever with such corporate announcements, it’s what isn’t said that needs to be examined for the import of the whole message.

That ORPH has a contract in its base business is good, of course, it is. But if it were truly material to the fortunes of the company we’d expect to see some mention of the size of it, some revenue numbers perhaps. As with that last announcement there. That we don’t could lead to the temptation of viewing the announcement as being making a little more out of it than it’s worth. Game-changing numbers do tend to get announced as numbers after all.

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The other announcement today is that ORPH stock could be suspended. This is tied up with the Arden Partners takeover. Arden used to be the nominated advisor (NOMAD) for Open Orphan. But as a result of the takeover by Ince Arden has now lost the ability to be a NOMAD. Thus those companies to which Arden was the nominated advisor now need to find a new one.

That’s OK, there are a number of companies out there that can do that work. Open Orphan as contracted with Liberum to be so, they’re a respected company, so no problem, right? But of course, bureaucracy never does work quite that way.

What’s happening is that Liberum needs to do its due diligence before finally signing off on being responsible for Open Orphan – for that is part of what a NOMAD does, keeps an eye on the listed company on behalf of the shareholders. This is all taking longer than might be hoped – which is a good thing in one way, for it does mean that Liberum is taking its responsibilities seriously.

If we go back to the original announcement by Open Orphan of Liberum’s appointment then we can see that there’s until 27 July for the completion of that due diligence. Which should be plenty of time and so the company’s statement that there’s no problem foreseen seems entirely reasonable.

The time to get worried might be as that date approaches and there’s no further news that Liberum is to take up that permanent post – or, of course, if there’s a statement that it won't.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.