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Drug rejection knocks Alliance Pharma

The European drugs regulator has rejected the marketing application for nausea drug Diclectin
August 2, 2017

When Alliance Pharma (APH) spent £1.5m on the UK and European rights to the pregnancy related nausea treatment Diclectin, management was hopeful that the drug could replicate the success it has enjoyed in the US where annual sales recently reached $200m (£151m). That optimism has now been quashed after the European drugs regulator rejected the drugs marketing application. Alliance's shares dropped 9 per cent on the news.

IC TIP: Buy at 51p

The rejection – while disappointing – is unlikely to have a noticeable impact on Alliance’s near-term performance as broker Numis had included just £0.2m of Diclectin sales for the year to December 2017 and £1.6m in 2018. The shares therefore continue to look good value, trading on just 13 times forward earnings.