Allergy Therapeutics plc (LON:AGY), the fully integrated specialty pharmaceutical company specialising in allergy vaccines, announced today a placing and subscription of up to 40,000,000 new ordinary shares of 0.1 pence each in the capital of the Company, representing up to approximately 6.7% of the Company’s existing ordinary share capital, to raise up to £10.6 million.
Highlights
· Placing and subscription of up to 40,000,000 New Shares in the Company, representing up to approximately 6.7% of the Company’s existing ordinary share capital, at a price of 26.5 pence per New Share to raise up to approximately £10.6 million before expenses.
· The Company intends to use the Placing and Subscription proceeds to expand the planned Phase III PQ Grass Trial, part fund the Acarovac Phase II Trial and continue to progress its diversified pipeline.
· Revenue for the financial year ended 30 June 2018 is expected to be £68.3 million (2017: £64.1 million). This represents a 6.6% annual growth on a reported basis and 3.5% on a constant currency basis despite the unusually weak pollen season in 2017. The Company is also continuing to gain market share within its core markets in Europe and data for the key markets for the 9 months ended 31 March 2018 showed an increase of 0.7 of a market share point[1].
The Placing is being conducted through an accelerated bookbuilding process which will commence immediately in accordance with the terms and conditions set out in Appendix I to this Announcement.
Panmure Gordon (UK) Limited is acting as Financial Adviser, Nominated Adviser and Corporate Broker in respect of the Placing.
Manuel Llobet, Chief Executive Officer, stated: “Allergy Therapeutics is poised for a transformational period of growth both with our marketed products and our R&D pipeline. With this planned funding, we hope to expand our planned Phase III PQ Grass trial, scheduled to start in H2 2019, including a project to analyse pollen trends in the US to maximise the exposure of patients to grass pollen. We also intend to support the Acarovac Phase II trial and, looking further out, further progress our diversified pipeline of patient friendly, convenient to use products including Polyvac Peanut.”
Background to the Placing and Subscription
Allergy Therapeutics is an international commercial biotechnology company focused on the treatment and diagnosis of allergic disorders, including aluminium free immunotherapy vaccines that have the potential to cure disease. The Group sells proprietary and third-party products from its subsidiaries in eight major European countries and via distribution agreements in an additional fourteen countries. Its broad pipeline of products in clinical development include vaccines for grass, tree and house dust mite, and peanut allergy vaccine in pre-clinical development. Adjuvant systems to boost performance of vaccines outside allergy are also in development.
In a trading update for the year ended 30 June 2018, the Company reported that revenues for the year are expected to be in line with market expectations at £68.3 million (2017: £64.1 million). This performance represents 6.6% annual growth on a reported basis and 3.5% on a constant currency basis which reflects a strong performance during an unusually weak pollen season in 2017. The Group is continuing to gain market share within its core markets in Europe and data for the key markets for the nine months ended 31 March 2018 showed an increase of 0.7 of a market share point[2].
The Company is making continual advances across all three of its major strategic objectives; profitably expanding the existing European business; preparing for product entry into the US market; and developing a strong product pipeline.
The European business of Allergy Therapeutics has grown at a CAGR of 10% over the last 19 years from its flexible and varied product portfolio. Recently, the Company reported annual growth of 3.5% and increased its market share by 0.7 of a market share point[3] which is the result of:
· Innovative, convenient and patient-friendly (short-course) products;
· Increased regulatory requirements which has resulted in 40% of all the products that were on the market and submitted for the TAV process dropping out and no longer being allowed to be sold in Germany[4];
· Focused investment across the business;
· Strength of a broad portfolio with modified house dust mite and venom SCIT; and
· Scaling-up to drive technological and geographical expansion.
The Directors believe that the US allergy immunotherapy market is estimated to be valued at $2 billion and, of that market, estimated peak grass sales could be $300-400 million. There are no registered injected products and adherence levels to treatments are as low as 15%[5]. The changing US regulatory landscape provides an opportunity for Allergy Therapeutics. New United States Pharmacopeia and US Food and Drug Administration regulations are moving to pharmaceutical grade, centrally manufactured, single allergen treatments. Existing products in the market are long courses of treatment with between 50-100 injections with efficacy in 6-12 months. Allergy Therapeutics can offer a short course treatment of 4-6 injections with efficacy in three weeks for a four shot treatment plan.
Allergy Therapeutics is progressing its Birch Phase III trial for Europe, the results of which are expected in Q3 2018. The Phase III field trial in Europe recruited 582 patients from 59 centres in Germany, Austria, Poland and Sweden. The trial is a double blind placebo controlled trial and is pivotal for approval in Germany. If the trial is successful and approved, the next step is expected to lead to a market authorisation.
On 21 May 2018, the Company announced positive top-line results from its grass modified allergen tyrosine absorbed MPL Phase II dose ranging study. The trial met its primary endpoint of establishing a dose-response relationship and a Phase III dose. The trial, conducted on 447 patients in 50 sites in Germany, Austria and Poland, measured four aspects of eye symptoms to generate a total symptom score.
Acarovac, the Company’s Mite MPL house dust mite product, is currently undergoing its Phase I trial with the results expected in H1 2019. Acarovac is a short-course product that can be used to address the potential market of $3 billion[6] worldwide with only Europe partially covered already. In the Company’s preclinical pipeline, its Polyvac peanut product offers a potential solution to the $8 billion[7] worldwide food allergy market. The single dose of VLP combined with recombinant peanut allergen successfully protects against anaphylaxsis when challenged with peanut. Polyvac Peanut received positive results from its pre-clinical research and pre-clinical development has been progressing according to plan with important product differentiation demonstrated. The Company signed a manufacturing contract for scale-up of the Polyvac product with the aim of having the first trial in humans in 2019.
Reasons for the Placing and Subscription and Use of Proceeds
The Directors believe that Allergy Therapeutics has the opportunity to accelerate growth across its three pillars of growth outlined above. Allergy Therapeutics is seeking to raise up to £10.6 million via the Placing and Subscription, earmarked for investment by the Company in:
· expanding the planned Phase III PQ Grass trial, scheduled to start in H2 2019. The Phase III trial will entail an increase in the number of patients recruited to the study, the introduction of a vaccinated placebo arm (following the completion of the trial, to reduce the overall cost of the potential safety database), and an additional project to analyse pollen trends in the US to maximise the exposure of patients to grass pollen;
· part funding of the Acarovac Phase II trial (balance of funding for trial from CDTI to start, subject to contract, in 2019); and
· ensuring continued progress on a diversified pipeline, including developing the Polyvac Peanut product.
Details of the Placing and Subscription
The New Shares are to be allotted and issued by the Company pursuant to the Directors’ existing authority to allot Ordinary Shares for cash on a non-pre-emptive basis approved by shareholders at the Company’s annual general meeting held in 2017. The Placing will be effected by way of a bookbuilding process to be managed by Panmure Gordon and will be conducted in accordance with the terms and conditions set out in Appendix I. The Bookbuild will commence with immediate effect and the book is expected to close no later than 4.30 p.m. today, 19 July 2018, although Panmure Gordon reserves the right to close the book earlier, without further notice. The Company has received non-binding indications of interest from potential institutional investors for the Placing and Subscription during a pre-marketing process. The timing of the closing of the book and allocations is at the absolute discretion of Panmure Gordon. The Placing and Subscription will be limited to the subscription of up to 40,000,000 New Shares, representing up to approximately 6.7% of the Company’s existing ordinary share capital at the Issue Price. The number of New Shares will be agreed by the Company with Panmure Gordon at the close of the Bookbuild. Details of the number of New Shares will be announced as soon as practicable after the close of the Bookbuild.
The New Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of the Company, including the right to receive all dividends or other distributions made, paid or declared in respect of such shares after the date of issue of the New Shares.
The Placing is conditional, inter alia, upon:
i. admission of the New Shares to trading on AIM becoming effective (“Admission”);
ii. the Subscription Agreement becoming unconditional in accordance with its terms (save for any condition relating to Admission) and the subscription funds being received by the Company prior to Admission; and
iii. the Placing Agreement between the Company and Panmure Gordon not being terminated prior to Admission.
The Subscription is conditional, inter alia, upon the Placing Agreement becoming wholly unconditional in accordance with its terms and not being terminated, and Admission having occurred.
Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM and it is expected that Admission will become effective and that dealings in the New Shares will commence at 8.00 a.m. on or around 25 July 2018.
