REG - hVIVO PLC - Acquisition: two Clinical Research Units from CRS

hVIVOAnnouncement

29/01/2025 07:15

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RNS Number : 0308V  hVIVO PLC  29 January 2025

hVIVO plc

("hVIVO", the "Company" or the "Group")

 

Acquisition of two Clinical Research Units from CRS for €10.0m

 

Outlook for 2025 and 2026

 

·    CRS is a German based full-service early-stage clinical development
CRO

·    First step in hVIVO's M&A strategy and further diversifies
hVIVO's services to include in-patient Phase I and Phase II trials across a
broader range of therapeutic areas

·    Establishes a significant footprint in Europe with 120 beds across
two sites in Germany

·    Total consideration of €10.0 million in cash, funded from hVIVO's
existing cash resources

·    The two units being acquired recorded revenue of €19.9 million in
2024 (unaudited) and €18.6 million in 2023

·    Acquisition expected to be earnings accretive in 2026

·    Enlarged Group weighted contracted orderbook of £67 million as
at 31 December 2024* following record delivery of £62.7m revenue by hVIVO in
2024

·    Full year revenue guidance of £73 million in 2025 with EBITDA
margins anticipated to be mid-high teens (excluding one-off costs)

·    Expect to deliver strong growth in revenue in 2026 and a significant
improvement on EBITDA margin

 

*Does not include the recently announced
(https://polaris.brighterir.com/public/hvivo/news/rns_widget/story/rg1o9zr)
pivotal Phase 3 HCT for ILiAD Biotechnologies, expected to be the Group's
largest HCT to date.

 

Commentary on FY24 results are available here
(https://hvivo.com/regulatory-news-and-email-alerts/) .

 

hVIVO plc (AIM: HVO), a fast-growing early-stage Contract Research
Organisation ("CRO") and the world leader in human challenge clinical trials,
announces that it has acquired two Clinical Research Units ("CRUs") from CRS
Clinical Research Services Management GmbH ("CRS") (the "Acquisition"), a
German full-service early-phase CRO which provides early clinical development
services, including first-in-human and proof-of-concept trials. The
Acquisition has been completed for a cash consideration of €10.0 million,
wholly funded from the Group's existing cash resources (£44.2 million
(unaudited) as at 31 December 2024).

 

Details of the Acquisition and strategic rationale

 

Founded in 1977 and headquartered in Mannheim, Germany, CRS has enrolled over
7,700 participants in the past six years across 260 trials, earning a strong
reputation for quality, safety and excellence. hVIVO has acquired CRS'
Mannheim and Kiel units which accommodate 120 beds in total, with the Mannheim
facility being one of the largest clinical trial facilities in Germany with 94
beds. CRS' Berlin site will remain an independent operation, continuing as
hVIVO's preferred partner for specialised clinical trials.

 

CRS has an extensive and diversified European client base across
pharmaceutical, biotechnology and CRO businesses, including four of the
world's largest 10 biopharma companies. CRS Mannheim specialises in conducting
cardiometabolic, immunology/inflammation, and complex PK/PD studies in healthy
volunteers, while Kiel is renowned for its expertise in trials involving renal
and hepatic impaired patients.

 

The Acquisition expands hVIVO's suite of services while also strengthening the
Group's existing service offering. hVIVO will now offer Phase I and in-patient
Phase II clinical trial services including first-in-human, SAD/MAD, BE/BA,
QTc, DDI* and specialist renal and hepatic impairment trials. The Acquisition
brings considerable cross-selling opportunities for both hVIVO and Venn Life
Sciences as well as a broader client base and more diverse revenue streams.
CRS currently outsources a number of services which the Group will now be able
to provide in-house, such as laboratory, biometry, and consulting services
including CMC, Clinical, PK, as well as regulatory services. The addition of
two new sites in continental Europe gives the Group international clinical
site capabilities for large field trials and means that it can now offer
patient recruitment services in two of Europe's most highly populated
countries with high levels of clinical trial activity.

 

In 2024, CRS introduced a new Business Development team and commercial
leadership which has already had success in building a stronger sales
pipeline. With the diversified full service offering of the new combined
Group, the Company anticipates CRS' sales to continue to drive growth going
forward. The integration of the Business Development teams will support the
multiple cross-selling opportunities that are expected to be realised from the
Acquisition across hVIVO, Venn, and CRS service offering. As most of the
trials conducted by CRS are in patients, it could provide opportunities to run
multi-site trials across the Group's UK & German sites. hVIVO will also
deploy its core existing systems into CRS to drive efficiencies and long-term
growth.

 

The current senior leadership team at CRS, consisting of Dr. Elisabeth
Lackner, Chief Executive Officer; Catherine Canales, Chief Commercial Officer;
Prof. Dr. Thomas Forst, Chief Medical Officer; and Till Mieskes, Chief
Financial Officer, will continue in their roles. They will work closely with
hVIVO's team to implement new initiatives designed to drive growth and deliver
a profitable business by 2026.

 

Trading history of two units being acquired

 

The Mannheim and Kiel units recorded unaudited revenues of €19.9 million in
the financial year ended 31 December 2024 (€18.6 million in 2023), with an
adjusted EBITDA loss of €1.8 million (€1.6 million in 2023). Under hVIVO's
ownership the two units will undergo an investment and restructuring programme
to assist with their integration which is expected to cost c.€2.5 million in
2025 including net liabilities being acquired of less than €0.5 million.

 

Current year and 2026 outlook

 

The Company expects to achieve Group revenues of £73 million in 2025,
anticipated to be weighted towards the second half, representing a robust
year-on-year performance of the core business (excluding the impact of the
one-off client funded facility fee of £4.3 million recognised in 2024) but
including revenues expected to be generated by CRS. The Company expects to
achieve EBITDA margins in the mid-high teens in 2025 (excluding any one-off
costs) and remain cash generative. While the integration of the Acquisition
into the wider Group is expected to impact EBITDA margins in the short term,
CRS is expected to be earnings accretive in 2026. The Group expects to deliver
strong revenue growth in 2026 and a significant improvement on EBITDA margins
following the integration of CRS.

 

The combined Group entered 2025 with a pro forma weighted contracted orderbook
of £67 million as at 31 December 2024 which stretches into 2026. The weighted
contracted orderbook does not include the recently announced pivotal Phase 3
HCT for ILiAD Biotechnologies, expected to be the Group's largest HCT to date.

 

As reported on 10 September 2024, the Group had a pipeline of short to medium
term potential opportunities of c.£40 million, of which c.£15 million has
already been converted into signed contracts, with c.£25 million representing
active opportunities.  In 2024 the Group updated its challenge agent
portfolio and as a result, has seen a significant rise in interest in its HCT
models, with more opportunities in an advanced stage than at any time in 2024.
As an example, the increased global hMPV infections have increased client
interest in the Company's new hMPV human challenge model. Further to recently
awarded contracts for hLAB and field studies, the Company expects the growth
to continue in these service lines. Following the Acquisition, average
contract sizes across the Group are anticipated to increase, as well as growth
in the CRS sales pipeline.

 

The Board is pleased to have commenced its M&A strategy to further grow
and diversify its revenue streams and to deliver its £100 million Group
revenue target by 2028. The Group will continue to explore further small
bolt-on acquisitions that meet the Company's strategic and financial criteria.

 

Yamin 'Mo' Khan, Chief Executive Officer of hVIVO plc, said: "I am delighted
to have completed this acquisition of CRS' clinical research units at Mannheim
and Kiel, aligning with our M&A strategy to find complementary businesses
that can further broaden our service offering. The acquisition will establish
a significant European footprint for hVIVO, which combined with CRS' expertise
in early clinical development, will create significant synergies and growth
opportunities for the entire Group.

 

"CRS is a well-respected brand in the industry providing high quality services
for early-stage clinical development. They are one of the leading European
clinical trial units with a loyal customer base, a strong team, and a history
of delivering consistent revenues. I look forward to working with the CRS team
and leveraging our combined expertise to deliver growth for the Group.

 

"Overall, the mid- and long-term outlook for the Group is excellent. We have
laid foundations for future growth, expanded our service offerings organically
and diversified to a wider range of revenue streams through the CRS
acquisition. As such, I believe we have significantly strengthened and
diversified the business and have enhanced our ability to deliver our target
of growing Group revenue to £100 million by 2028."

 

Dr Elisabeth Lackner, Chief Executive Officer of CRS, said: "I am delighted
that the CRS Mannheim and Kiel units are joining the hVIVO Group. Together, we
can leverage each other's specialist CRO expertise and complementary
infrastructures. CRS' clinical trial sites seamlessly enhance hVIVO's site
services offering, and the combined Group will be able to develop new ways to
benefit our global client base."

 

Analyst briefing

A briefing for sell-side equity analysts will take place on Wednesday 29
January 2025 at 11.00am GMT. To register and for more details please contact
Walbrook PR on hvivo@walbrookpr.com (mailto:hvivo@walbrookpr.com) .

Investor presentation

 

Yamin 'Mo' Khan, Chief Executive Officer, and Stephen Pinkerton, Chief
Financial Officer, will provide a live presentation relating to the trading
update and acquisition via the Investor Meet Company platform on Wednesday 29
January 2025 at 5.00pm GMT.

 

Investors can sign up to Investor Meet Company for free and add to meet hVIVO
here (https://www.investormeetcompany.com/hvivo-plc-1/register-investor) .
Investors who already follow hVIVO on the Investor Meet Company platform will
automatically be invited.

 

*SAD: Single Ascending Dose, MAD: Multiple Ascending Dose, BE: Bioequivalence,
BA: Bioavailability, QTc: Corrected QT, DDI: Drug-Drug Interaction.

 

For further information please contact:

 

 hVIVO plc                                       +44 (0)20 7756 1300
 Yamin 'Mo' Khan, Chief Executive Officer

 Stephen Pinkerton, Chief Financial Officer

 Cavendish Capital Markets Limited (Nominated Adviser and Joint Broker)                  +44 (0)20 7220 0500
 Geoff Nash, Camilla Hume, Harriet Ward

 Nigel Birks - Life Science Specialist Sales

 Louise Talbot - Sales

 Peel Hunt LLP (Joint Broker)                                        +44 (0)20 7418 8900
 James Steel, Dr Christopher Golden

 Davy (Joint Broker)                                                 +353 (0) 1 679 6363
 Anthony Farrell, Niall Gilchrist

 Walbrook PR (Financial PR & IR)                 +44 (0)20 7933 8780 or hvivo@walbrookpr.com

 Paul McManus / Phillip Marriage /               +44 (0)7980 541 893 / +44 (0)7867 984 082 /

Louis Ashe-Jepson
+44 (0)7747 515 393

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
("MAR") EU no.596/2014. Upon the publication of this announcement via
Regulatory Information Service ("RIS"), this inside information is now
considered to be in the public domain.

 

 

Notes to Editors

 

hVIVO plc (https://hvivo.com/) (Ticker: HVO) is a rapidly growing early-stage
Contract Research Organisation (CRO) and the global leader in human challenge
trials. The company delivers end-to-end clinical development services to a
diverse and expanding client base, including seven of the world's ten largest
biopharma companies.

 

hVIVO specialises in conducting human challenge trials across multiple
infectious and respiratory indications, leveraging its state-of-the-art
quarantine facility in London-the largest of its kind worldwide. The company
also offers comprehensive virology and immunology laboratory services under
the hLAB (https://hlabservices.com/) brand.

 

Through its German subsidiary, CRS (https://crs-earlyphase.com/) , hVIVO
operates a 120-bed capacity across Mannheim and Kiel, providing early-phase
clinical trial services, including first-in-human and proof-of-concept
studies. Its second subsidiary, Venn Life Sciences
(https://www.vennlifesciences.com/) , offers Early Drug Development Consulting
and Biometry services to the biopharma sector.

 

The Group provides fully integrated drug development solutions from
preclinical stages through Phase II trials, alongside patient recruitment via
FluCamp (https://flucamp.com/) . Additionally, its five clinical sites support
outpatient Phase II and III trials, ensuring a seamless and efficient pathway
from discovery to late-stage development.

 

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