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Allergy Therapeutics PLC: DEEP DIVE

Allergy Therapeutics’ risk-reward profile now “highly attractive” after PQ Birch disappointment

The sell-off that followed the recent disappointment of Allergy’s PQ Birch jab means now might be a good time to invest, according to City broker finnCap
young girl with allergy
OVERVIEW: AGY The Big Picture
There’s still hope for PQ Birch according to analysts
  • Develops treatments for common allergies

  • Market share is growing

  • More than £30mln in the bank


    Phase I read-out of Acarovac trial (H1 19) the next major inflection point


What it does

As the name suggests, Allergy Therapeutics PLC (LON:AGY), which is headquartered in Worthing, West Sussex and employs around 500 people, develops inoculations against common allergies.

It has five products registered, as well as another five that are available on a named patient basis – this means they can only be prescribed by a doctor.

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.

The company has been pouring money into making injections rather than tablets.

This has two major benefits, both of which are linked. Firstly, injections tend to yield improved clinical results versus tablets. As a result, they are preferred by physicians in places such as the US and Germany – some of the largest markets in the world.


How it’s doing

Allergy recently received the results from the Phase III trial of PQ Birch – its injection designed to treat birch pollen-induced hay fever.

Because of the subjective nature of studies, proving the benefit of allergy treatments is notoriously difficult.

Despite biomarkers showing a clear effect on the immune system, patients didn’t report enough of an improvement in their logs for the primary endpoint (the main goal) of the trial to be met.

Away from the lab, the company recently revealed another year of revenue and market share growth as it ended 20128 financially well-resourced.

Turnover grew by 10.6% in the 12 months ended December 31, with the main contributions to sales coming from Germany, Austria, Switzerland and the Netherlands.

Its most popular products were the group's ultra-short course, aluminium-free treatments such as Pollinex and Pollinex Quattro (pollen) as well as Acarovac (dust mite) and Venomil (wasp sting).

At the period-end, the company had cash of £31.6mln, up from £25.8mln. The figures were in line with market forecasts.

"This is another period of revenue growth and continued gain in market share for Allergy Therapeutics, in line with our mid and long-term strategy,” said chief executive Manuel Llobet.


Blue sky

It’s looking like a busy year for Llobet and his team. They’re set to meet with US and German regulators over the coming weeks to discuss its PQ Grass trials.

That Phase III study is pencilled in for the second half of the year.

Before then, the read-out from a Phase I assessment of Acarovac is expected at some point before the end of June.

Bosses will also be analysing the full PQ Birch data once it becomes available. The result of the recent study, whilst disappointing, doesn’t necessarily mean the end for the jab.

There is still the possibility of another clinical trial, while the real-world data which is being collected by people who are using the treatment on a named-patient basis could add weight to its argument.


What analysts say

“The top-line data for Allergy Therapeutics’ Phase III PQ Birch trial in birch pollen-induced allergic rhinoconjunctivitis, released on 18 March, was disappointing but already largely discounted, in our opinion, by the 50% fall in the share price in the months prior to the data release,” said finnCap analyst Mark Brewer.

“While the primary endpoint was not met, secondary endpoints looking at biomarker data suggest a clear pharmacological effect occurred. This is probably insufficient to sway the regulator, but gives hope that PQ Birch will ultimately be approved.

“PQ Birch represents c.4% of group revenues, sold on a named-patient basis, and while the result will raise questions about the viability of the broader PQ franchise, including the upcoming PQ Grass pivotal Phase III trial, the risk to revenue forecasts is considered minimal.

“We make no change to forecasts but reduce our target price to 40p to reflect the uncertainty over timing of future PQ clinical trials. The risk-reward profile is highly attractive at this level and significantly skewed to the upside.”

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Allergy Therapeutics PLC Timeline

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