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Allergy looks to future trials

Following the unexpected birch trial failure earlier this year, the allergy treatments specialist is focusing on its other product lines
Allergy looks to future trials

Shares in Allergy Therapeutics (AGY) tumbled earlier this year after the unexpected failure of its birch allergy treatment at the third phase of trials. Remaining “in dialogue” with German regulators, the group has shifted its attention instead to its grass allergy vaccine, due to start its Phase III trial in autumn next year. Success here would be one of the last hurdles before being able to tap into a US market estimated to be worth $2bn (£1.6bn).

IC TIP: Hold at 13p

It was this product that was the subject of a legal case concerning Inflamax’s handling of an earlier trial. Benefiting from a £6m settlement, operating profit – excluding research and development (R&D) costs) – increased by more than a fifth in 2019 to £11.3m. While R&D expenditure was £3m lower, this is projected to rise in FY2020 as clinical trial activity ramps up – this includes the next trial phase for its oral treatment for dust mite allergy.

The commercial division is somewhat less significant to future growth than progress in the clinical pipeline. Nevertheless, the European business increased its market share by half a percentage point, with higher sales for its Pollinex franchise despite lower incidence of grass pollen last summer.

Broker FinnCap forecasts an adjusted pre-tax loss of £4.1m in 2020, widening to £13.2m in 2021.

ALLERGY THERAPEUTICS (AGY)  
ORD PRICE:13pMARKET VALUE:£ 84.3m
TOUCH:13-13.5p12-MONTH HIGH:25pLOW: 7p
DIVIDEND YIELD:nilPE RATIO:24
NET ASSET VALUE:5.9p*NET CASH:£25.0m
Year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201543.20.70.02nil
201648.5-12.1-2.3nil
201764.1-2.0-0.4nil
201868.3-6.9-1.3nil
201973.74.30.6nil
% change+8---
Ex-div:na   
Payment:na