Allergy Therapeutics plc (LON:AGY), the fully integrated specialty pharmaceutical company specialising in allergy vaccines, today announced its preliminary results for the year ended 30 June 2018.
Financial highlights
· 6.6% revenue growth increase in actual terms to £68.3m (2017: £64.1m)
· 3.5%1 revenue growth at constant currency2 to £66.4m (2017: £64.1m)
· One point increase to 14%3 in market share in European business (2017: 13%)
· 10% compound annual growth in net sales over 19 years since the company formed
· 26% increase in operating profit4 (pre-R&D) to £9.3m (2017: £7.4m)
· Cash at 30 June £15.5m (2017: £22.1m) prior to the July 2018 fundraising of £10.2m net of expenses
Operational highlights
· Successful completion of the Phase II PQ Grass (G205) in May, allowing progression to a pivotal trial for US registration. The Phase III PQ Birch (B301) study has completed and top line data are now expected by the end of the year
· Good pipeline progress, including initiation of Acarovac Phase I trial (data readout expected H1 2019) and positive pre-clinical Polyvac peanut work, with first in-human trials expected in 2019
· Completion of £10.6m (gross) oversubscribed placing in July 2018
Manuel Llobet, Chief Executive Officer of Allergy Therapeutics plc, commented: “2018 was a solid year for Allergy Therapeutics as we made important progress in key areas across the Company. We generated continued growth despite a low pollen season in our core business, with constant currency revenue growth of 3.5%1, driving additional gains in market share and a 26% increase in pre-R&D operating profit4. We also achieved significant clinical success in the year, with the positive Phase II PQ Grass in May and we now expect headline data from the Phase III PQ Birch study by the end of the year. With progress towards the US market, a pipeline of exciting clinical and pre-clinical assets, and a robust balance sheet, we look to the future with confidence in our growth prospects.”
1Percentage based on figures in thousands (2018: £66.369m, 2017:£ 64.139m)
2Constant currency uses prior year weighted average exchange rates to translate current year foreign currency denominated revenue to give a year on year comparison excluding the effects of foreign exchange movements.
3Market data and internal estimates for 12 months to 30 June 2018 for Allergy Therapeutics’ direct sales competitive markets excluding UK and Switzerland due to lack of competitor information.
4Operating profit (pre R&D) is calculated by adding back R&D expenditure for the year to the operating loss of the year to arrive at an operating profit (pre R&D) of £9.3m (2017: £7.4m)
CHAIRMAN’S STATEMENT
Overview
I am pleased to introduce the Group’s 2018 Annual Report & Accounts. Our three-pronged strategy continues to develop well with an impressive, profitable European business despite a low pollen season, a large upside potential with the US market and a strong pipeline.
Commercial & clinical performance
This year’s performance demonstrates the resilience of our business in relatively weak market conditions. We have continued to gain market share from competitors while growing revenues by 3.5%1 in constant currency2 and increasing pre-R&D operating profit4 by 26%. We continue to build suitable infrastructure for our future plans with organisational development and an increasingly US-focused team.
We also had a successful year with regard to clinical trials, with the PQ Grass Phase II trial (G205) delivering positive data, further reinforcing the quality of our technology platform. Headline data from the PQ Birch Phase III trial (B301) is now expected by the end of the year, and the Phase I Acarovac trial will read out in the first half of 2019. First in-human trials for Polyvac peanut are also expected to start in 2019.
Fundraising
In July 2018, we completed a successful placing and subscription of 40m shares, raising £10.6m gross. The Group now has sufficient capital to fully fund an extended Phase III Grass trial in the US and EU.
Governance
Corporate Governance is important to the business and we have always developed our governance framework over and above the level required for an AIM listed company of our size. This year, the London Stock Exchange announced that from September 2018, all AIM listed companies will be required to apply a recognised corporate governance code. We have chosen to apply the QCA Governance Code and I am pleased to report that we have disclosed full compliance against the Ten Principles in the Governance Report. This year, the General Data Protection Regulations were introduced and the business has taken a number of steps to ensure compliance with the regulations.
Looking ahead
We are pleased with the current momentum in the business and are confident that we can continue to deliver against our strategy in the year ahead. We are developing the infrastructure to achieve the goals that we have set ourselves with significant growth in the R&D team as well as other areas. We look forward to the exciting developments in our early pipeline planned for 2019, and we expect to continue to grow our European business while progressing towards US and German registration for our lead products.
On behalf of the Board, I would like to thank all the employees of Allergy Therapeutics for their commitment, creativity and teamwork.
Peter Jensen
Chairman
25 September 2018
CHIEF EXECUTIVE OFFICER’S REVIEW
Introduction
We are reporting a year of strong progress made against our strategic objectives of expanding in Europe, preparing for entry into the US market, and making clinical progress with the Group’s lead assets. Despite a low pollen season, we have maintained sales growth across our European business and continued to capture additional market share. Our clinical pipeline has strengthened with a positive data readout from our Grass Phase II trial and we continue to progress our early stage assets. As a result of these two developments – growing the commercial business in Europe and advancing our pipeline of assets – we continue to make good progress towards entering the attractive and commercially significant US market. In a market with a 16% compliance rate, our convenient and ultra-short course products have the potential to make a material impact for US patients.
European business
This year’s performance has demonstrated the robustness of our European business, the quality of our convenient, aluminium-free, patient-friendly and technologically-advanced products, and the excellent work of our sales and marketing teams. Despite a weak pollen season in the spring and summer of 2017, sales of £68.3m were up 3.5%1 on last year on a constant2 basis (6.6% on an actual basis) and we captured an additional one point of market share.
In addition, operating profit4 pre-R&D increased 26%, demonstrating a sturdy trading model and continued cost discipline. This achievement of leveraging our sales to deliver profit is important both for generating returns from our business and to finance more of our pipeline from internal resources.
Clinical trial success
The Group has successfully completed a major trial with the recent readout of its Phase II PQ Grass trial for the US and Europe, and we look forward to the upcoming results of the Phase III trial for PQ Birch in Europe which are now expected by the end of the year.
The results of the PQ Grass Phase II trial, reported on 21 May 2018, offered an excellent foundation for the Grass Phase III trial in the US:
– Primary endpoint was met with a highly statistically significant dose-response relationship
– All dosing regimes were safe and well tolerated
– Current marketed product showed significant improvement compared to placebo
– Significant increase in immunoglobulin results, highly consistent with the dose response observed for the primary endpoint
– Excellent adherence to short course treatment (>95%)
Pipeline progress
The Group has also made significant progress with pipeline products. The Acarovac Phase I trial for house dust mite allergies is progressing well, with readout expected in calendar H1 2019. The process of scaling up our Polyvac peanut product is also on track, and we expect to have the first in-human trials in 2019.
In addition, we continue to move forward with the TAV process for products currently sold in Germany on a named-patient basis. All ten of our products which were initially registered in the process in 2010 remain in the pipeline. The most advanced are PQ Birch and Trees, followed by the PQ Grass. The Oralvac product for Grass, Tree and House Dust Mite will soon enter Phase IIa.
Progress towards US market entry
Having successfully completed the Grass Phase II trial, we expect to start the pivotal Phase III Grass trial for the US in H2 2019. Our recent fundraising allows us to progress with the expanded trial and we will meet with the FDA to agree the process for the phase III CTA in the coming months.
We continue to prepare for entry into the US market, including planning for reimbursement and manufacturing. We will also assess further development of PQ Ragweed and PQ Trees for the US.
Funding
In July 2018, we successfully placed 40 million shares raising £10.6m gross. Alongside the Grass Phase III extension, part of the sum raised will go towards the Acarovac Phase II trial, expected to start in calendar 2019 subject to satisfactory Phase I results.
Outlook
The outlook for the financial year ahead is positive. Discussions with the regulatory authorities regarding the PQ Grass Phase III trial in the autumn will be critical, as well as the upcoming results of PQ Birch Phase III trial. The Phase I Acarovac trial will read out in calendar H1 2019, while the peanut product is expected to start first in human studies in the calendar year 2019.
As with many companies operating in Europe, we continue to monitor the potential impact of Brexit. Clearly uncertainty remains about the future relationship between the UK and the EU and we will continue our mitigation planning. We remain of the view that, assuming a satisfactory agreement is reached between the UK and the EU, Brexit will not have a material impact on our business.
In operational terms, financial year 2019 is expected to show strong sales growth, more in line with prior years. Margins are expected to remain stable as we continue to invest in the business for future growth.
With the foundations laid for an important year, we look forward to continuing to execute our strategy by growing our European business, progressing our lead and early-stage assets through clinical development, and preparing to enter the commercially attractive US market. In doing so, we hope to create significant value for our shareholders.
Manuel Llobet
CEO
25 September 2018
