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Allergy Therapeutics sees first-half sales, profits jump ahead of “pivotal” year

Allergy has a slew of data due to be published in the coming months, while key studies of its grass and peanut allergy jabs are due to kick off later in the year

young girl with allergy
The US market is potentially worth billions of dollars to Allergy

Allergy Therapeutics PLC (LON:AGY) shares rose on Wednesday as the firm enjoyed another six months of revenue and market share growth and ended 2018 with plenty of money in the bank ahead of what will be a "pivotal" year for the drug developer.

The Worthing-based company, which, as the name suggests, develops vaccines against common allergies, saw turnover rise 10.6% to £46.7mln in the six months ended 31 December, up from £42.2mln a year earlier.

READ: Allergy Therapeutics awaits PQ Birch trial data

The main contribution to sales came from Germany, Austria, Switzerland and the Netherlands, while last summer’s warm weather boosted demand for Allergy’s tree pollen jabs. The hot weather was less of a boon for grass pollens and the dust mite season was also weak.

Operating profits, once £5mln of R&D expenses are stripped out, jumped 27% to £15.7mln (H1 18: £12.3mln), as Allergy benefitted from last year’s investment in the commercial business and a higher gross margin.

In total, the company made a profit of £10.33mln (H1 18: £6.03mln) in the six month period.

Money in the bank

AIM-quoted Allergy finished 2018 with £31.6mln of cash in the bank (H1 18: £15.5mln), a figure which was boosted by a £10.6mln fundraise in July.

That means the firm has enough money to fully fund an extended Phase III trial of its grass pollen allergy treatment in the US and Europe, which is on track to get underway in the second half of 2019.

If all goes well, the grass study should pave the way for Allergy to enter the lucrative US market.

The first-in-human trial of its Polyvac peanut allergy vaccine is also slated to begin before the year is out.

Before that though, results from a late-stage study of Allergy’s PQ Birch jab are due within the next few weeks, while a read-out from a Phase I assessment of dust mite vaccine Acarovac is expected in the current half.

2019 to be a ‘very important year’

“The group has made a strong start to the financial year,” said chief executive Manuel Llobet.

“Our ultra-short course products continue to drive good sales growth in a relatively flat market and the Group's pre-R&D operating profit has increased as a result of investment into our commercial business last year and our focused sales and marketing strategy.

“2019 will be a very important year for the group and, in particular, our ultra-short course technology platform, with the start of the pivotal phase III Grass MATA MPL trial for the US and Europe.

“With an increasing market share, a healthy balance sheet, and an exciting clinical pipeline nearing key value inflection points, we look to the future with confidence.”

finnCap raises revenue estimate

In a note to clients, analysts at ‘house’ broker finnCap pointed out that Allergy Therapeutics’ first-half revenue was in line with its January trading update.

However, they added, profits and margins were “materially higher than we would have envisaged, some of which is timing-related and some structural given the positive market-share momentum.”

The analysts said they were using the opportunity to raise their revenue forecast for Allergy Therapeutics by around £1mln.

They pointed out: “The current share price is largely discounting a failed Phase III outcome for PQ Birch, which is due to report in Q1 2019.

“Given the balance sheet (£31.5m cash), underlying growth and previous clinical trial successes, we believe the risk/reward profile is highly attractive and reiterate our target of 47p.”

In early afternoon trading, shares in Allergy Therapeutics were 3.6% higher at 14.25p.

 -- Adds analyst comment, share price --

Quick facts: Allergy Therapeutics PLC

Price: 14.125 GBX

Market: AIM
Market Cap: £90.02 m

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