Is the drop in the Open Orphan (ORPH) share price a buying opportunity?
The Open Orphan (LSE:ORPH) share price has been producing some pretty lacklustre returns recently. Since around mid-April, the stock has dropped by 25%. Although it is worth noting that its up by nearly 190% over the past 12 months. A demerger on the horizon  There are undoubtedly many factors influencing the ORPH share price. However, it seems one in particular is affecting it. And that is the planned separation of the business. Around the same time as the stock started falling, Open Orphan announced its intention to spin off its drug development division from its clinical trial services business. And following shareholder approval at the end of the month, the separation progress began. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! Apart from costs related to the task, several of the firms promising assets are being moved out of the balance sheet. So I think the market is correcting itself to account for this. The new spin-off has been titled Poolbeg Pharma. It is currently in the process of becoming listed on the Alternative Investment Market (AIM). Its flagship project is POLB-001  a new treatment for severe influenza, ready for Phase II clinical trials. This is particularly exciting as the management team has estimated that this treatments addressable market size is around $800m. Thats more than four times the current market capitalisation of Open Orphan based on the share price today. Meanwhile, the firms pharmaceutical services division will remain as part of Open Orphan. The intention is to allow both companies to operate independently and thus reduce the risk profile of the core business. After all, developing new drugs is a long and expensive process that doesnt always end well. Existing investors will receive shares in Poolbeg once it becomes listed. And I would expect a good portion of the lost value from the ORPH share price to re-emerge in the form of Poolbeg stock. Ive previously explored my excitement around Open Orphans Disease in Motion platform, which will remain a part of the original business. As a reminder, this project allows clients to access an enormous database of clinical, immunological, virological, and digital biomarkers. This sort of data is exceptionally useful during the drug development process and can significantly accelerate research. Thats a powerful advantage to have over other CROs. For this reason, I would typically see the recent fall in the ORPH share price as a definite buying opportunity. However, when bringing the demerger into the picture, things get a bit more complicated. The prospect of an $800m drug is exciting. But there remains a long road ahead. Completing Phase II and Phase III trials will be a multi-year process during which many things can go wrong. To make matters worse, there are currently 32 other competing influenza Phase II drug trials and a further 16 already in Phase III. Needless to say, the competition remains fierce. And with no other medicines currently in its development portfolio, Poolbeg looks quite risky as an investment in its current state. Personally, Im not interested in having Poolbeg Pharma in my portfolio. At least, not at the moment. Therefore, even though the ORPH share price has fallen, I wont be buying any shares until after the demerger is complete.