Allergy Therapeutics is really exciting
The allergy specialist has an interesting pipeline and significant catalysts ahead
For people who love the warmer months, allergies can really get you down, whether it’s the constant sneezing, the itchy eyes or the endlessly runny nose while sprinting for the bus.
One company trying to eradicate the frustrating sideeffects of allergies is Allergy Therapeutics (AGY:AIM), a business which generated £69.9m in revenue in the 12 months to 30 June 2017.
It sells proprietary and third party products in nine major European countries and via distribution agreements in an additional 10 countries.
Its pipeline of products in clinical development includes vaccines for grass, tree and house dust mite.
PEANUT ALLERGY MARKET AN ‘$8BN MARKET OPPORTUNITY’
Allergies aren’t just associated with people getting cold-like symptoms. Some allergic reactions can be life threatening such as anaphylaxis which can be triggered by certain foods such as peanuts.
Allergy Therapeutics has developed a vaccine called Polyvac which it hopes will cure peanut allergies, although it is still in early stages of testing.
If the company is eventually successful with the trials, the allergy specialist could tap
an $8bn worldwide market opportunity.
BIRCH POLLEN TREATMENT SET TO DRIVE SALES IN EUROPE
One of the key catalysts for the company is Phase III trial results for its Pollinex Quattro (PQ) Birch immunotherapy to treat symptoms from birch pollen, which can cause hay fever.
Approximately one in four people in the UK are allergic to pollen from trees, according to the NHS. Hay fever sufferers particularly struggle when tree pollen is at its worst between late March and mid-May.
PQ Birch is already being sold in Europe on a restricted basis but the company wants approval across Europe in 2019 to expand its scope and boost sales.
Allergy Therapeutics is expecting the Phase III trial data in the second half of 2018 and hopes to also use it for approval in the US.
If Allergy Therapeutics is the first to launch PQ Birch in the US by 2022, Stifel analyst Christian Glennie estimates $400m in peak sales with a 20% to 25% market share.
Another important step for the company is to complete the Phase II dose-ranging study of PQ Grass, an injection that aims to cure grass pollen-induced allergic rhinitis, which causes inflammation of the inside of the nose.
Investors should appreciate that pharmaceutical companies spend a lot of money on product development, hence why Allergy Therapeutics is forecast to have negative free cash flow for at least the next three years.
You should only invest in the stock if you have an appetite for risk and understand that any gains will come in the form of a rising share price and that dividends are unlikely for the foreseeable future. (LMJ)