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Amryt Pharma: US deal set to transform the orphan drug company

Snapshot

  • A revenue-generating orphan drugs company
  • Completed a transformational deal
  • Expected to be a high growth business  
Amryt Pharma PLC -

Quick facts: Amryt Pharma PLC

Price: 128.5 GBX

AIM:AMYT
Market: AIM
Market Cap: £198.53 m
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We wanted to create a new investment thesis

CEO Joe Wiley 

 

What the company does

Amryt Pharma PLC (LON:AMYT) sells and develops orphan drugs used to treat rare diseases with two products on the market. It has recently completed a transformational acquisition of a US company.

 

 

So, bring us up to date

On September 25 it formally completed the acquisition of Aegerion Pharmaceuticals Inc. and, backed by shareholders, has raised US$60mln in new funds. Joe Wiley, chief executive of Amryt Pharma PLC, described as “dramatic and transformational” the deal to acquire the US firm.

The business was bought out of Chapter 11 bankruptcy protection in a transaction backed by convertible bondholders, creditors and Nasdaq-listed Novelion Therapeutics, Aegerion’s parent company.

The complex transaction, which gives Amryt full control of the Lojuxta cholesterol treatment, creates an international business that would have generated revenues of US$136.5mln last year.

In December Amryt said the integration of Aegerion Pharmaceuticals was progressing “ahead of expectations” and there were US$60.9mln in the bank as of 16 December, which was “significantly” more than expected after raising US$60mln in September.

 

 

Looking ahead

According to the healthcare research house Stifel, sales will be in the order of US$150mln this year driven by Lojuxta and hormone replacement Myalept, rising to US$173mln next year.

Operating profits for 2020 are forecast to be US$25.7mln and will more than double to US$57.2mln in the following 12 months, according to Stifel analyst Max Herrmann.

Management said potential market opportunity for its AP101 candidate is US$1bn.

 

Growing quickly

Speaking as the final part of the transaction was completed, CEO Wiley told Proactive: “We didn’t expect to grow so quickly, but the plan was always to be transactional."

As well as having two existing products on the markets, it has two potential new treatments in the late stage of development.

Wiley said Amryt is in the process of breaking the mould in the UK drug development space by creating a sustainable, profitable business with huge upside if its phase III drug candidates hit the market.

 

 

Key drug fast-tracked

AP101 is being developed for epidermolysis bullosa (EB), where tissue blisters to the touch. Currently undergoing a phase III clinical trial, the treatment will now be on an accelerated development and review pathway under the Food & Drug Administration’s protocol.

Fast-track designation also allows for more frequent communication with the watchdog, while AP101 may benefit from a priority and/or rolling review. It is granted to drug candidates that treat serious illnesses where there is an unmet medical need.

As at 17 December 2019 there were 236 patients out of the 245 target either already enrolled or scheduled to enter the study shortly.

 

Another Shire Pharma?

Its story is similar to that of Shire, founded by the company's chairman Harry Stratford, which grew to be one of the nation’s top 50 largest businesses, developing a portfolio of niche medications.

“We wanted to create a new investment thesis,” said CEO Wiley.

“We wanted to say you can invest in a solid business that will generate cash flow; that is sustainable into the future and will grow with the upside of potential new drugs and the other development pipeline opportunities we have.”

 

What the broker says

Stifel’s Herrmann reckons Amryt and Aegerion are stronger together.

He reckons sales from sales from Lojuxta and Myalept will be US$309.5m by 2022.

He pointed out that revenue-generative orphan drug companies trade at 8.8-times historic earnings. On that basis, Amryt would be worth US$1.2bn, or 89p a share.

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Full interview: Amryt Pharma well positioned to become 'global leader in...

Amryt Pharma PLC's (LON:AMYT) Rory Nealon talks Proactive London's Andrew Scott through their trading update for the nine months to the end of September 2019. It's a period in which Amryt completed the acquisition of Aegerion Pharmaceuticals Inc and saw the firm go from a single-product,...

on 5/11/19

3 min read