Al­lergy Ther­a­peu­tics is re­ally ex­cit­ing

The al­lergy spe­cial­ist has an in­ter­est­ing pipe­line and sig­nif­i­cant cat­a­lysts ahead

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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)

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