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Allergy Therapeutics plc: THE INVESTMENT CASE

Allergy Therapeutics readies grass pollen treatment for Phase III trial after “extremely positive” mid-stage results

The Phase II study of Allergy Therapeutics’ PQ Grass immunotherapy – an aluminium-free, ultra-short course hay fever treatment – evaluated dose response and safety
little girl sneezing in a field
CEO Manuel Llobet expects to kick off a Phase III study in 2019

Allergy Therapeutics PLC (LON:AGY) has hailed the “extremely positive results” from the Phase II trial of its grass pollen-induced hay fever immunotherapy.

The AIM-quoted firm said PQ Grass met its primary endpoint, with those taking the drug showing “a highly statistically significant” reduction in symptoms compared to patients in the placebo arm of the study.

READ: Allergy Thera highlights benefits of adjuvant technology

WATCH: CEO upbeat after latest trial results

Allergy already has a treatment for grass pollen-induced allergic rhinitis – a fancy term for hay fever. But this new formulation is an injection which includes an adjuvant to help boost the body’s immune response.

“We are thrilled with these extremely positive results demonstrating dose-dependent efficacy of the product including the current marketed dose,” said chief executive Manuel Llobet.

“With an optimal dose identified, we look forward to sharing this new, exciting data with the health authorities and plan to commence a phase III study in 2019.”

One of the key target markets for the PQ Grass is the US, where it would be the first immunotherapy injection to be registered and where peak grass vaccine sales could be US$300-$400mln a year.

Doctors want injectable treatments

“Allergy is the only company to have been putting material investment into more convenient injections, that are preferred by physicians in the largest markets in the world (Germany, US, Japan),” wrote Numis analyst Paul Cuddon in a research note.

“We expect this to pay dividends longer term given the improved patient adherence and clinical results with SCIT (injection) over SLIT (under-the-tongue), and the likelihood that a large number of competitor products will be taken off the market given the heightened standards.” 

Cuddon has the stock as ‘buy’ with a 45p target price. Allergy shares rose 8.1% to 26.5p in early deals on Monday.

The company has three growth ‘pillars’, which includes growing strongly in its European heartland where it has a robust, profitable business.

Three pillars

It wants to do this by expanding its market share and making additional product registrations.

It has a strong pipeline of products coming through and investment in this regard will help underpin the bedrock of the business. This is growth pillar two.

The third is the US, which as the largest allergy market in the world, provides a significant opportunity. The environment there is changing, potentially driving new customers towards the firm’s products.

As mentioned above, the potential market size of the US could be transformational for Allergy Therapeutics as the graphic below reveals.

Allergy Therapeutics has an 80-year history and so is no “jam tomorrow” drug development company and was spun out of SmithKline Beecham in 1999.

No flash in the pan

Headquartered in Worthing, West Sussex, it employs around 500 people.

Its most commonly prescribed vaccines are used to treat pollen-related allergies, particularly allergies to grasses and trees.

It has a strong presence in Europe, with established operations in Germany, Italy, Spain, Austria, Switzerland, the Netherlands and the United Kingdom, while in other markets, it often makes its products available through distribution partners.

Its Pollinex Quattro vaccine for the treatment of seasonal allergic rhinitis (hay fever) from grass, tree or ragweed pollen allergy is already established in Europe.

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