Allergy Therapeutics delivered a solid 6% revenue growth for FY20 to £78.2m, from £73.7m, despite COVID-19 impacts taking a 2% toll. The well-established European commercial platform produced operating profit before R&D of £14.2m, from £11.3m, with R&D spend of £9.0m, from £13.2m. Pollinex Quattro Grass is set to start a pilot Phase III study before initiating full registration trials. The promising VLP-based peanut vaccine reported highly encouraging preclinical data which, if maintained, could be transformational for future prospects. The fruits of the development portfolio are expected to enable the market entry into the commercially attractive US. Cash resources of £37.0m are ample to fund near-term requirements. We initiate coverage with a £325m (51p a share) valuation.
Companies: Allergy Therapeutics Plc
Allergy Therapeutics (AGY): Corp FY 2020 – record pre-R&D EBIT | Amino Technologies (AMO): Corp Argentinian software contract win | ANGLE (AGL): Corp Peer reviewed publication, using Parsortix in MBC | Bigblu Broadband (BBB): Corp Quickline secures up to £6.1m of subsidy in Lincolnshire | Hardide (HDD): Corp Trading in line with a stronger Q1 expected | Trackwise Designs (TWD): Corp Interim results, new contracts boost confidence | Xeros (XSG): Corp Commercial progress tracking in line with expectations
Companies: AGY AMO HDD AGL XSG TWD BBB
Allergy Therapeutics reported full-year 2020 results that were marginally ahead of expectations, driven by lower overhead costs (COVID-related) and lower R&D. This underpinned 25% growth in pre-R&D EBIT to £14.2m on 7% CER revenue growth and continued, albeit smaller, market share gains. Year-end net cash was £33.2m, providing the company with the financial resources to execute on current research programmes. The outlook remains characterised by the start of the Phase III Grass MATA MPL trial in US/Europe, enhanced by a broadening pipeline of opportunities and continued commercial traction in core European markets. We have made small upward adjustments to our forecasts and raise our target price to 45p, which is underpinned by the current commercial operations, with potential upside in Grass MATA MPL in the US (c.21p on risk-adjusted DCF), Polyvac peanut vaccine and the recently broadened VLP technology licence.
Umuthi Healthcare Solutions Plc, the technology led healthcare business focused on the distribution of pharmaceuticals and the provision of medical facilities in remote areas, seeking admission to the Standard Listing segment of the Official List The Hut Group. Expected intention to float on the Main Market. THG is a vertically integrated digital-first consumer brands group, retailing its own brands in beauty and nutrition plus third party brands, via its proprietary technology platform to an online and global customer base. For the year ended 31 December 2019, THG's revenue was £1.1 billion, up 24.5 per cent. year-on-year, and its Adjusted EBITDA was £111.3 million, representing an Adjusted EBITDA margin of 9.8 per cent . The Company has experienced an acceleration in growth during 2020, with revenue of £676 million, up 35.8 per cent. on the equivalent prior year period , achieved in the 6 months to 30 June 2020, which the Directors believe evidenced the non-discretionary nature of the nutrition and beauty categories . Kibo Energy PLC, the multi-asset Africa focused energy company, is seeking admission for its 100% owned UK subsidiary Sloane Developments Ltd , which will be renamed Mast Energy Developments PLC (MED), to the Standard List of the London Stock Exchange plc . Targeted for Q4 2020. The MED business strategy is to acquire and develop a portfolio of flexible small-scale power generation assets, exploiting a growth niche market in the UK for Reserve Power generation to balance out the national grid at critical times.
Companies: DTG KRPZ IRON DNL RBG MPAC AGY SENS TGP
Omega Diagnostics (ODX.L): Group performs CE-marking of Mologic Ltd’s COVID-19 antibody test | Diurnal (DNL.L): Distribution agreements for Europe | Allergy Therapeutics (AGY.L): Licence agreement to secure new vaccine technology
Companies: ODX DNL AGY
Allergy Therapeutics (AGY): Corp Broadening and deepening VLP vaccine pipeline | IQGeo Group (IQG): Corp US telecoms network contract win | Omega Diagnostics (ODX): Corp Mologic COVID-19 test CE Marked | President Energy (PPC): Corp Off to a flying start
Companies: AGY ODX PPC IQG
For this Monthly, we are delighted that Rooney Nimmo and 24Haymarket have allowed us to reproduce a recent report they jointly published, entitled An analysis of UK exits (2015-2019), which provides a granular analysis by sector of the activity in our dynamic private companies world. We hope you find the insights of interest.
Companies: AVO AGY ARBB ARIX CLIG ICGT NSF PCA PIN PXC PHP RECI SCE TRX SHED VTA
AGY is a long-established specialist in the prevention, diagnosis and treatment of allergies. Pollinex Quattro (PQ) is an ultra-short-course subcutaneous allergy immunotherapy (SCIT) platform, which continues to make strong market share gains in a competitive environment. Several products using the PQ platform are in late-stage development in order to move them to full registration under new EU and US regulations. Another reassuring trading update states that the company has hit new records and has the resources in place to fund its pending R&D investment programme required to get its products approved by the regulators.
Allergy Therapeutics (AGY.L): FY20 Trading Update | N4 Pharma (N4P.L): Change of adviser
Companies: Allergy Therapeutics Plc N4 Pharma Plc
Allergy Therapeutics (AGY): Corp | Arcontech (ARC): Corp
Companies: Allergy Therapeutics Plc Arcontech Group Plc
Allergy Therapeutics released a further positive trading update to that of 24 June, citing full-year revenues of £78.2m (+7% CER), above-market earnings and year-end cash of £37.0m (c.£5.4m higher than forecast). With confirmation that June was also a ‘normal’ month, albeit in the seasonally weaker second half, this should provide greater comfort to investors as we enter FY 2021, still with some uncertainty over the potential for second waves to disrupt patient visits. We make only minor changes to forecasts to reflect actual revenues and year-end cash in FY 2020 as well as small changes to FY 2021, but this is the third positive trading update since the interims. We reiterate our target price of 40p, which excludes any value attributed to early pipeline products and US market entry.
VarmX raises €32m in Series B financing round | Allergy Therapeutics (AGY.L): Invalidation of 2019 Phase 3 trial primary endpoint testing PQ-Birch
Allergy Therapeutics (AGY): Corp Regulatory update – Phase III birch allergy trial | Elixirr (ELIX): Corp Thriving on change | Telit (TCM): Corp Earnings well protected during COVID slowdown | Tracsis (TRCS): Corp Worst case avoided
Companies: AGY TRCS TCM
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Yourgene continues to progress across all areas of the business, with core trading on track. Demand has been increasing for Yourgene’s Covid-19 testing services, and is expected to reach 10k/month from early October onwards. This would equate to a £3.0m boost to revenues in the year to Mar-21 and we upgrade forecasts accordingly, with outer year estimates unchanged for now. We view this as a base level of demand, with scope for further upgrades if demand continues to increase and/or lasts beyond March. Our underlying estimates for the core are unchanged.
Companies: Yourgene Health Plc
Alliance Pharma’s H1 interims are relatively robust, with trading conforming to recent commentary. Whilst there has been an impact in some areas of the business in H1 (Prescription Medicine) as expected per the trading update in July, the rest of the business particularly Kelo-cote, has proved very resilient and highlights the defensive nature of the business, and underlying adj. PBT (excl. amortisation and impairment charges) was solid in H1 2020 at £16.3m (+7% YoY). We anticipate some push and pulls in H2 2020 but net we anticipate a better performance as demand recovers, and the Board have reiterated that full year results are expected to be in line with market expectations. The reinstatement of an interim dividend of 0.536p signals confidence in this. We have used today’s announcement to reinstate our forecasts, which are broadly in line with guidance and consensus. Our new FY’20 forecasts are c.10% below our previous estimates prior to the Covid-19 pandemic with YoY revenue and adj. EBITDA growth rates of -6.5% and -10.1%. We forecast a return to growth in FY’21 and have used the opportunity to introduce our FY’22 numbers looking for ‘see-through’ revenue of £153.2m and adj. EBITDA of £41.5m. Our main ongoing concern is that growth is highly dependent on Kelo-cote, a situation that has been augmented during the Covid-19 pandemic, and the Group needs to turn once again to deal-making to supplement organic growth to grow the portfolio. On our revised estimates, our new DCF/Peer group multiple derived target price is 91p/share and we move from Hold to Buy.
Companies: Alliance Pharma Plc
Futura Medical’s H120 results confirm progress is maintained as expected. The key developments with MED3000, its novel treatment for erectile dysfunction (ED), suggest that European OTC approval is likely during 2021 and in the US, pending a small six-month trial to show longer term efficacy, is expected in 2022. The format of this supplementary trial will be discussed at the next FDA meeting, expected before end-October. Current funds of £2.62m (at end-June 2020) provide a cash runway to Q221, although this does not include the costs of the US study. We value Futura Medical at £153.8m, equivalent to 60.9p a share.
Companies: Futura Medical Plc
Yourgene has announced it has appointed IBL-America as a non-exclusive distributor for its range of PCR-based reproductive health and oncology products, including the DPYD assay which tests whether cancer patients are at risk from the administration of a common chemotherapy agent. These will be initially sold into the Research Use Only market in the US. As such, initial revenues are likely to be modest, but will act as an important test bed for establishing potential demand in the clinical setting. If the reception is positive, products will be submitted for FDA registration, potentially unlocking a £30m addressable market opportunity. We make no change to our forecasts, but view this another positive step to generating meaningful revenues in the world’s largest market, which remains a largely greenfield opportunity for Yourgene.
SDI reported full-year results to 30 April that were slightly ahead (+2%) of the trading update issued by the company on 23 April with net debt of £4.0m comparing favourably to our forecast of £4.3m. Underlying organic growth of 3.7% organic growth, despite the COVID-19 disruption in Q4, was supplemented by growth from acquisitions in FY 2019 and FY 2020. Adjusted pre-tax profit rose 44% to £4.3m with adjusted EPS up 21% to 3.4p. Net debt at 30 April was £4.0m. With evidence of trading activity normalising and the positive outlook statement, indicating adjusted pre-tax profit to be at least as good as FY 2019, we reinstate forecasts. We re-introduce a target price of 100p, which implies the stock trading on FY 2021 P/E of 27.5x falling to 24.6x in FY 2022 – in line with its peer group (e.g. Judges Scientific which trades on 33.8x, falling to 27.5x for slightly lower growth) and underpinned by a FY 2020 free cashflow yield of 3.2%.
Companies: SDI Group Plc
IXICO has been selected as the image collection and analysis partner for the Bio-Hermes trial, co-ordinated by the Global Alzheimer's Platform Foundation (GAP). The trial, aiming to assess Alzheimer's Disease (AD) biomarkers, will see IXICO analyse the brain scans of 1,000 patients with early stage AD. While participation will deliver revenues to IXICO in subsequent years, we believe the enhanced profile amongst the trial participants and GAP industry partners will deliver significant ‘intangible' benefits to the company. We maintain our Buy recommendation.
Companies: IXICO Plc
The COVID-19 pandemic has had a significant impact globally in many areas. While primarily a health issue, it has had wide-ranging implications for stock markets, which have now rallied after the plunge in share prices in mid-March when the full severity of the emerging pandemic became more widely appreciated. Nonetheless, the FTSE 100 Index remains almost 20% off its late February 2020 figure.
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Having navigated the challenge of running a clinical trial during a global pandemic, Destiny has blossomed in mid-2020. It is on track to announce topline Phase 2b results for XF-73 in the prevention of post-surgical infections in Q1 2021. It has also expanded its pipeline to span the two most contemporary issues in biotech – the microbiome and the prevention of COVID-19 infections. Destiny’s interim financials demonstrate its continued prudent financial management that underpins these achievements against the backdrop of Covid-19.
Companies: Destiny Pharma Plc
Whilst headline H1 revenue growth of 23% is eye-catching, for us the most comforting factor is the robust performance of the underlying business in the most challenging of circumstances. Sales of the Primestore MTM sample collection device contributed £6.5m, meaning the core business was -8% in the period, well ahead of internal expectations. Highlights include strong performances from BhB, DiaSpect Tm and the Clinical Chemistry portfolio, all of which grew revenues in the period. Whilst there were challenges in certain geographies, this is a very creditable performance and testament to the strength and defensiveness of the core business. We make no further change to our forecasts at this stage, having upgraded regularly in recent months. Given we have only included firm orders for Primestore up until the end of this month, we remain confident further upgrades are likely for the rest of this year and into next. In the meantime, latent growth potential in the core business is building with, inter alia, Chinese approval of Quo-Test, strong momentum with DiaSpect Tm, the Trellus health investment and a variety of contract manufacturing orders in the Central Lab/Life Sciences segment adding to the medium term growth outlook. Given the continuing scope for upgrades, we continue to see upside potential in the shares – EKF remains one of our Best Ideas for 2020 (up 66% YTD).
Companies: EKF Diagnostics Holdings Plc
Interim results to 30 June largely reflected the licensing income from ASK Pharm in China. Revenues were £8.9m, with royalties of c.£0.2m despite disruptions due to COVID-19 and £8.7m of milestone payments. This resulted in an adjusted net profit of £4.4m (vs a loss of £3.4m in H1 2019). A net cash inflow of £2.4m in the period resulted in cash at 30 June of £6.5m, providing a cash runway to Q1 2021. The figure excludes potential significant up-front payments and milestones for the US, for which a licensing deal is still expected. An order to its contract manufacturer for US launch stocks for delivery by year-end should provide comfort despite the understandable shortage of information pertaining to licensing discussions. We leave our forecasts unchanged (excludes potential upfront payments from US licensing deal) and reiterate our 350p target price.
Companies: Shield Therapeutics Plc
Interim results to 30 June 2020 showed a 38% increase in revenues, despite COVID-related disruption to clinical trials, illustrating the clear commercial focus that has been brought to bear on its range of digital technologies and solutions. Together with an 18% reduction in operating expenses, adjusted LBITDA and pre-tax loss improved by £1.3m to -£0.29m and -£0.36m, respectively. Period-end cash was £1.96m, with cash burn falling £1.1m to £0.2m in the period. Break-even in Q4 2020 is still anticipated. The contracted order book increased 35% to c.£10m at 31 August (vs. 30 June 2020), providing increased visibility of revenues in H2 and FY 2021 (c.108% and 57% of current forecasts, respectively). Due to the changing working patterns that are emerging as a result of the COVID pandemic, we believe that Cambridge Cognition is well positioned to be a long-term beneficiary of the trend of running virtual trials. We leave forecasts unchanged, but in light of the strong order book and potential for future upgrades, we raise target to 80p, which implies a 2021 EV/sales multiple of 3.4x.
Companies: Cambridge Cognition Holdings Plc
Tiziana Life Sciences PLC (LON:TILS, NASDAQ:TLSA) has expanded the range of indications — which include severe inflammatory and autoimmune diseases — of its lead therapy fully human anti-CD3 monoclonal antibody Foralumab, signing a new collaboration in Brazil to develop the nasal formulation of For
Companies: Tiziana Life Sciences Plc
While disruption was significant in H1, Warpaint still made a small profit and generated cash. Crucially, even with some ongoing weakness in markets like the US, trading has recently bounced back to pre-CV19 budgeted levels. This is a function of the brand and range development work, and broadening distribution in the UK (Tesco/Wilko). It also highlights the appeal of its value-for-money on-trend brands. Improved visibility around the full year outcome has led to PBT guidance being reinstated for FY20, and dividends being proposed. This is likely to be well received by the market.
Companies: Warpaint London Plc
Interim results to 30 June reflected the increase in R&D expenses commensurate with the continued enrolment into its Phase 2b study of XF-73. The statutory net loss was £2.4m (vs.£2.1m) with adjusted net loss also £2.4m (vs. £2.0m), driven by £2.3m (+35%) of R&D. Period-end cash was £5.6m (vs. £7.5m at 31 December 2019). Having agreed a protocol amendment with the FDA, which revised the XF-73 nasal study size to 125 patients without comprising the statistical quality, and having brought on stream more clinical centres to Europe, we are increasingly confident that the study will complete in Q4 2020, allowing for presentation of headline results in Q1 2021. The value of XF-73 at this point, given that Destiny should have a Phase III-ready asset with FDA Fast Track designation, is expected to rise substantially. XF-73 could potentially be the first approved antimicrobial for the prevention of S. aureus infections in high-risk surgery patients, for which there is a clear unmet medical need in an estimated $1bn+ addressable market. We leave forecasts unchanged and reiterate our 250p target price.
Shield Therapeutics’ (STX’s) interim results highlight the progress made year to date. Re-analysis of the Feraccru/Accrufer AEGIS-H2H data show it is a credible alternative to IV iron therapy for iron deficiency anaemia (IDA) in the long term. With the product out-licensed in China to partner ASK Pharm, all eyes remain on the announcement of a US commercial partner (expected this year). Royalties received from H120 sales of the product (UK and Germany) by partner Norgine are slowly building, but pricing and reimbursement discussions resuming in Europe could lead to ongoing rollouts in key countries (France, Spain and Italy) in 2021. STX’s cash runway extends into Q121, an upfront licensing payment from a US deal would ameliorate the need for further capital. We value Shield at £379.1m.
