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Allergy hopes to crack US

Allergy Therapeutics says it will crack the lucrative US immunotherapy market in a matter of months
September 23, 2014

Six months ago, it looked as if the surge in Allergy Therapeutics' (AGY) share price was a passing fancy - prompting us to downgrade our tip (Buy, 14p, 27 Feb 2014). As we predicted, attention in the allergy specialist spiked when its larger competitor Circassia (CIR) floated on London's main market in March, raising £175m.

IC TIP: Hold at 25p

But interest remains strong in the allergy market - and in Allergy Therapeutics, which reported a 13 per cent improvement in gross revenues for the first half of 2014. This translated into a 71 per cent increase in operating profits to £1.2m. In Europe, which is still the group's main area of operation, its market share grew by 9 percentage points on average, as demand grew for aluminium-free immunotherapy treatments.

Chief executive Manuel Llobet said the company was just a few months away from reaching an agreement with the US Food and Drug Administration to register its treatment for grass allergies and start work on relevant clinical trials. Mr Llobet is confident an agreement will be reached because the FDA has approved several similar vaccines, including three products that have already hit the market.

Analysts at Peel Hunt expect pre-tax profits of £1.2m for the current financial year, giving EPS of 0.3p, up from £0.5m and 0.1p, respectively.

ALLERGY THERAPEUTICS (AGY)
ORD PRICE:25pMARKET VALUE:£102m
TOUCH:24-26p12-MONTH HIGH:33pLOW: 7p
DIVIDEND YIELD:NILPE RATIO:156
NET ASSET VALUE:3.7p*NET CASH:£2m

Year to 30 JuneTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201040.8-0.10.20nil
201141.6-2.3-0.86nil
201241.30.60.25nil
201339.30.50.14nil
201442.01.10.16nil
% change+7+120+14-

Ex-div: n/a

Payment: n/a

*Includes intangible assets of £3.8m or 0.9p a share