Trading update: gaining market share

AGY is a long-established specialist in the prevention, diagnosis and treatment of allergies. The Pollinex Quattro (PQ) platform, the ultra-short course subcutaneous allergy immunotherapy (AIT), continues to gain market share, despite its availability in the EU only on a ‘named-patient’ basis. 2019 is expected to deliver progress in several areas, notably PQ Birch, for which top-line Phase III data are due in 1Q’19. A trading update has confirmed strong market share gains and cash generation in the traditionally strong 1H period. AGY also has important meetings scheduled with both the EU and US regulators during 1Q’19 regarding PQ grass trials.

• 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: Underlying product sales were particularly strong in 1H’19, rising 10.6% to £46.7m (£42.2m) compared with our forecast of 7.0% growth, suggesting further market share gains. The cash position at the period-end was modestly below forecasts at £31.6m, representing £5.5m cash generation.
• Clinical/regulatory update: The statement also highlighted a wave of clinical and regulatory activity during 1H calendar 2019. Key will be the headline data from the European Phase III PQ Birch trial, expected in 1Q’19. In addition, meetings with both the FDA and the German regulators have been scheduled.
• Risks: AGY’s primary risk lies in the timings of the regulatory approval process, mostly outside of its control, related to the PQ Birch immunotherapy and the European TAV process for full approval. Ongoing trials do represent a risk, but this is limited by the products’ use on a named-patient basis.
• Investment summary: AGY is approaching an exciting period. It has a clear vision, is gaining market share from competitors, and is leading the race to have its subcutaneous-administered products fully approved and regulated as biologicals – first in Europe and then in the US, where the regulators are demanding change. Read-out from the EU Phase III PQ Birch trial in 1Q’19 will provide the next major value inflection point.