Strong sales drive market share gains

AGY is a long-established specialist in the prevention, diagnosis and treatment of allergies. Pollinex Quattro continues to gain market share despite being available in the EU only on a ‘Named Patient’ basis. Trials for full approval as a biological have progressed well in the EU, with the first patient recruited in the pivotal birch pollen allergy vaccine Phase III trial. US trials are back on-track with a new safety trial underway. Investment in marketing infrastructure over the last two years is bearing fruit with strong underlying sales growth in a flat market, improving market share by an estimated two percentage points.

• Strategy: AGY is a fully integrated pharmaceutical company focused on the treatment of allergies. There are three parts to its strategy: continued development of its European business via investment or opportunistic acquisitions; the US PQ opportunity; and further development of its pipeline.
• Trading update: A trading update released to the market indication that AGY has continued to gain market share in Europe with underlying sales growth of +15% to £64.1m (£48.5m), which was nearly £2m above expectations, an exceptional performance in the seasonally weaker second half.
• Cash position: The strong sales position was reinforced by a better than expected period-end cash position of £22.1m (£27.8m @ 31st Dec). This suggests a leverage effect from increased sales, and timing of R&D spend, have reduced significantly the expected 2H losses. Net cash is forecast at about £18.5m.
• Site visit: AGY benefits from its very strong heritage, backed-up by continuous investment in manufacturing facilities, such that it passes regulatory inspections consistently and delivers quality product in a timely manner. This is fundamental to its strong operating performance, and was borne out during a recent site visit.
• Investment summary: AGY is going through an exciting period, with a clear vision, gaining market share from competitors, and leading the race to have its products fully approved and regulated as biologicals, first in Europe, then in the US, where the regulators are demanding change. Read-out from the EU Phase III PQBirch trial in 2018 will provide the next major value inflexion point.