Trading update for the year ended 30 June 2023

Allergy Therapeutics PLC

10 August 2023

 

Allergy Therapeutics plc

("Allergy Therapeutics" or the "Company" or the "Group")

Trading update for the year ended 30 June 2023

10 August 2023: Allergy Therapeutics plc (AIM: AGY), the integrated commercial biotechnology company specialising in allergy vaccines, today announces its trading update for the year ended 30 June 2023.

Financials

Revenue for the year ended 30 June 2023 is expected to be 16% lower at £61.0 million (2022: £72.8 million) as a consequence of the short-term pause in production that occurred during October and November 2022.

The underlying operating loss before research and development costs, and exceptional items is expected to be £13.3 million (2022: £3.4 million profit), reflecting the decline in revenue caused by the short-term pause in production, together with increased manufacturing and administrative costs.

After an increase in research and development costs to support the initiation of the G306 trial for Grass MATA MPL and preparation for the P101 PROTECT peanut study, the underlying operating loss before exceptional items is expected to be £33.4 million (2022: £12.2 million loss).

These results are before fair value accounting for (i) the 33,333,332 warrants issued on 28 February 2023 and (ii) the substantial finance premium that is payable in the event that the G306 trial for Grass MATA MPL is successful and all amounts due under the £40.75 million senior secured loan facility (the "Loan Facility") are not repaid from the proceeds of the equity financing announced on 6 April 2023 (the "Equity Financing") by 6 January 2024, full details of which are set out in such announcement (the "Financing Announcement"). The Directors have reasonable expectations that the Phase III G306 trial will be successful. Pursuant to the terms of the Equity Financing, the Company is required to apply the proceeds of the Equity Financing in repaying amounts outstanding under the Loan Facility.

The unaudited cash balance at 30 June 2023 was £14.8 million (31 December 2022: £15.2 million) after drawing down £26 million from the Loan Facility, of which £10 million has been used to repay the loan notes issued on 28 February 2023.

As previously reported in the Company's interim results for the six months ended 31 December 2022 ("Interim Results"), the Group's German subsidiary has received notification from the German national health insurance association that manufacturer's rebates are due on sales of certain products launched on the market from 1 September 2017. After taking legal advice, the Group had considered the likelihood of any payment of a rebate or other cash outflow in relation to this matter to be below 50%, and accordingly no provision has been made in the financial statements for the period prior to 31 December 2022. However, there is a risk that up to £13.6 million cumulative revenue recognised in respect of certain products in periods up to and including 31 December 2022 may be reversed due to the level of rebate being applied. Subsequent to publication of the Company's Interim Results and following further discussions with the national health insurance association, it is possible that a provision for rebates may be required in the results for the year ended 30 June 2023, however the Group expects that any cash liability incurred would be very significantly less than the maximum rebate. The unaudited operating loss above is before any provision for historic rebates.

Outlook

As a result of the manufacturing capacity that needs to be allocated to investigational medicinal product batches for use in clinical trials, sales for the financial year to 30 June 2024 are expected to be slightly lower than the comparable period ended 30 June 2023, while costs and overheads before research and development costs and exceptional items are expected to be slightly higher. The planned investment in clinical trials for the G306 grass study, long-term G308 grass paediatric study and P101 peanut study will result in a very significant increase in research and development costs, subject to funding. A further increase in investment in plant and equipment is planned to support the continuing improvements in manufacturing and quality.

With over 90% of revenues and approximately 50% of costs (excluding research and development costs) denominated in Euros, and approximately 60% of research and development costs denominated in US dollars, movements in the currency markets have an effect on the Group's operational finances.

As set out in the Financing Announcement, the proceeds from the Equity Financing are to be used to refinance the Loan Facility. Certain foreign direct investment clearances which are conditions to the Equity Financing have been obtained, although one further foreign direct investment approval is still required, the timing for which is uncertain but it is anticipated that this will not be before September. There can be no guarantee as to whether this will be received or to the exact timing, both of which are outside the control of the Company.

Notwithstanding the Loan Facility and planned refinancing of the Loan Facility through the Equity Financing, the Group expects that additional funding will be required from around October onwards for trading, working capital, capital expenditure and continuing research and development programmes. Discussions are ongoing with certain shareholders on providing additional funding; these discussions continue to be positive but there are no binding arrangements at this stage.

Clinical Update

VLP Peanut

The clinical development for the Group's innovative, short-course peanut allergy vaccine candidate, VLP Peanut, via subcutaneous injection is progressing as planned. The P101 PROTECT trial is a first-in-human study evaluating the safety and tolerability of VLP Peanut in healthy and peanut allergic adult subjects.

In April 2023, the Group announced that the first cohort of peanut allergic patients had received the peanut allergy vaccine candidate via skin prick testing (SPT). Subsequently, the PROTECT trial has progressed to dose escalation in the healthy subject cohorts. Cohorts 1 and 2 are progressing as planned and approval has been received from the independent safety review committee to progress with the fourth planned escalating cumulative dose. No safety signal has been observed in healthy subjects to date during escalating dosing in the first two cohorts of healthy subjects, with further cohorts planned pending an ongoing safety review after each dose.

Taken with the previously announced data in peanut allergic patients, this new data provides further assurance of the hypo-allergic safety profile of VLP Peanut, a key step in realising the potential as being a transformative option for peanut allergy sufferers. After this safety evaluation of subcutaneous injections in healthy volunteers, the Group will commence with the Phase IIa portion of the PROTECT trial with double-blind subcutaneous dose escalation in peanut allergic subjects.

Grass G306

The pivotal Phase III G306 trial evaluating efficacy of the Group's wholly owned short-course grass pollen immunotherapy, Grass MATA MPL, began in Q3 2022, and the interim trial results continue to be expected in Q4 2023. 

This announcement contains inside information for the purposes of the UK Market Abuse Regulations.

-  ENDS -

For further information, please contact:

Allergy Therapeutics

Manuel Llobet, Chief Executive Officer

Martin Hopcroft, Interim Chief Financial Officer

[phone]

Panmure Gordon (Nominated Adviser and Broker)

Freddy Crossley, Emma Earl, Corporate Finance

Rupert Dearden, Corporate Broking

[phone]

Consilium Strategic Communications

Mary-Jane Elliott / David Daley / Davide Salvi

[phone]

[e-mail]

About Allergy Therapeutics

Allergy Therapeutics is an international commercial biotechnology company, headquartered in the UK, focussed on the treatment and diagnosis of allergic disorders, including aluminium free immunotherapy vaccines that have the potential to cure disease. The Group sells proprietary and third-party products from its subsidiaries in nine major European countries and via distribution agreements in an additional ten countries. Its broad pipeline of products in clinical development includes vaccines for grass, tree, house dust mite and peanut. For more information, please see www.allergytherapeutics.com.

 

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