This was the Stockopedia Stockslam pick that I presented at Damian Cannon’s excellent event. I thought I'd put it on it's own thread for discussion/dissection.
Allergy Therapeutics (LON:AGY) sits in my speculative portfolio that contains my picks in my search for the elusive multi-bagger.
Huge Opportunity: The target market is the many millions of people that suffer from allergies – 30% of Europeans and 25% of Americans are allergic to grass pollen alone. So a truly massive potential market for the company that is first to market with a cure. There are of course many treatments for the symptoms of allergy but no fully licensed cure, or in this case a vaccine (immunotherapy), for the underlying cause of an allergic response. Cures need to be specific to the particular allergen (the cause of the allergic response) – grass, tree pollen, dust, pets etc. And each cure that is created will need separate drug trials and a specific licence, so significant time and investment is required for each one. Which means of course that not only is there a huge potential market but competition is likely to be very limited as the barriers to entry are very significant.
Prospects: Allergy Therapeutics (LON:AGY) are in the lead with the development and licencing of several vaccines that target specifically major causes of allergies. Also, Allergy Therapeutics (LON:AGY) has a number of significant factors that enhance their chances of success:
- Its lead product Pollinex Quatro has already been prescribed in Europe to over 250,000 grass allergy sufferers on a ‘named-patient’ (controlled) basis;
- Recently reported Phase II results were positive; and
- Its key Phase III trials, towards gaining FDA approval, are fully funded by the £20m raised last year; and
- Allergy Therapeutics (LON:AGY) has a Mkt Cap of £160m but revenue of £64m (Fin Yr to June 2017) and was profitable (just) in the four year prior to the last two years of high development investment.
The first bullet point is important on two key aspects – firstly, it suggests that the treatment is safe and secondly, that it works! All this de-risks Allergy as an investment and significantly increases its chance of success.
Risky? Yes certainly, despite…
