REG - Allergy Therapeutics - Interim Results for six months ended 31 Dec 2023
27/03/2024 07:00
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RNS Number : 4174I Allergy Therapeutics PLC 27 March 2024
Allergy Therapeutics plc
("Allergy Therapeutics" or the "Company" or the "Group")
Interim Results for the six months ended 31 December 2023
Significant clinical and regulatory progress
Financial turnaround on track. Strengthened balance sheet and restructuring
plan paves the way to future growth.
- Primary end point met in G306 Pivotal Study for Grass Allergic
Patients
- Successful development of VLP Peanut vaccine program underpins the
phase I/IIa study.
27 March 2024: Allergy Therapeutics plc (AIM: AGY), the fully integrated
commercial biotechnology company specialising in allergy vaccines, announces
its unaudited interim results for the six months ended 31 December 2023.
Highlights
Financial
- Completion of the subscription and open offer (the "Equity Financing")
to restructure the Group's balance sheet, enhancing financial stability with
net assets increasing to £26.5m
- Implementation of ongoing cost reduction strategy, reducing the
Group's overheads pre-R&D by 14.9%
- Increased investment in R&D pipeline, demonstrating the Group's
commitment to innovation and the development of allergy immunotherapies
Operational
- Primary endpoint of the Group's pivotal Phase III G306 trial for Grass
MATA MPL met and discussions with regulators ongoing ahead of planned market
authorisation application
- Subcutaneous dosing of peanut allergic patients has begun in the Phase
I/IIa PROTECT trial
- Group continues to focus on high value growth products to enhance
future profitability
Post Period
- The first £7.5m of the existing £40m Amended Loan Facility (defined
below) drawn down from ZQ Capital and Southern Fox (the "Lenders")
- Successful discussions with the Lenders have led to an agreement for a
further £15m of the £40m Amended Loan Facility to be drawn down during Q2
calendar year 2024
Manuel Llobet, CEO at Allergy Therapeutics, stated: 2023 has been an important
year, marked by a highly focused approach to our business priorities, and a
steadfast commitment to our Grass and Peanut allergy R&D programmes. We
have navigated the challenges of last year, resulting in more streamlined
operations and improved cost-effectiveness. This progress starts to pave the
way towards a return to growth.
The successful completion of the pivotal Phase III G306 trial for Grass MATA
MPL, meeting its primary endpoint, and the continuous clinical advancements in
our VLP Peanut R&D programme, are a testament to our innovative
capabilities. The progress in the development of these two treatments
reaffirms the purpose of our work, to transform the lives of people with
allergies and those around them.
None of this could have been achieved without the resilience, commitment, and
passion of our R&D team, all employees across the Group and our Board. I
am proud of the progress the Company has made in a difficult year.
Finally, thank you to our shareholders who have remained supportive of the
Company throughout the period, including in the Equity Financing completed in
October.
Financial Review
Revenue for the six months ended 31 December 2023 was £33.6m (2023 H1:
£39.9m) representing a reduction of 16% on a reported and constant currency
basis. This decrease in revenue is due to the previously reported
manufacturing capacity that needed to be allocated to investigational
medicinal product batches for use in clinical trials and the ongoing programme
of continuous improvement across the supply chain and quality systems paving
the way for increased capacity. Demand for the Company's products continues to
be robust with the revenue achieved being limited by manufacturing capacity
constraints. As previously announced a further increase in investment in plant
and equipment is also planned to support the continuing improvements in
manufacturing and quality which will be a multi-year investment. The focus
has been on higher value products and markets, which are expected to enhance
future profitability.
Cost of sales reduced to £13.1m (2023 H1: £14.1m) as a consequence of the
reduced volumes allocated to manufacturing commercial sales batches.
Sales, marketing and distribution costs were lower than the prior period at
£10.2m (2023 H1: £13.2m) mainly as a result of reduced marketing and
promotional activity. Administrative expenses reduced to £11.1m (2023 H1:
£11.9m) due to continued cost control initiatives. Exceptional costs were
£0.4m (2023 H1: £0.4m) as a result of the ongoing review of funding options.
The operating loss pre-R&D and exceptional costs was £0.1m (2023 H1:
£1.0m operating profit pre-R&D and exceptional costs). This loss was
mitigated by the successful efforts to reduce distribution and administrative
costs through cost control initiatives implemented over the past year.
Research and development costs increased to £11.4m (2023 H1: £8.5m) mainly
due to the Group's pivotal G306 Phase III trial of Grass MATA MPL which
successfully met its primary endpoint as previously announced on 14 November
2023.
The operating loss was £11.9m (2023 H1: £8.0m), and the loss before tax was
£14.9m (2023 H1: £8.2m). The tax charge of £0.7m (2023 H1: £0.3m) relates
to the overseas subsidiaries.
At 31 December 2023, the Group had cash of £13.5m (30 June 2023: £14.8m)
and debt of £1.6m (30 June 2023: £27.1m). This debt reduction was achieved
through the successful completion of the Equity Financing to restructure the
Group's balance sheet.
The operating cash outflow was £10.8m and investing outflow £1.8m, offset by
a net inflow of £11.2m from the net proceeds of the issue of equity shares
and repayment of shareholder loans.
The Company completed the £40.75m Equity Financing on 13 October 2023,
proceeds of which were used to repay amounts drawn at that time under the
original loan facility ("Loan Facility") arranged with the Lenders.
The Loan Facility agreement was amended twice (the "Amended Loan Facility"),
as first announced in a circular on 27 September 2023 and subsequently on 27
December 2023.
The Amended Loan Facility provides £40m available to be drawn down from 15
January 2024 until 15 January 2026 with interest payable semi-annually at 12
per cent. per annum and a repayment date of 15 January 2027. Under the
attached warrant instrument, on each drawdown under the Amended Loan Facility
the Lenders are issued 25 warrants for each £1 drawn down up to a maximum of
1,000,000,000 warrants. The warrants entitle the holders to subscribe for
new ordinary shares at a price of 4 pence per share and are exercisable in
whole or in part from 1 July 2024 until 15 January 2027.
£7.5m is currently drawn down under the Amended Loan Facility. The Lenders
and the Company have also agreed to a further drawdown of £15m from the
Amended Loan Facility, expected during April 2024. Following this drawdown,
the Group expects that additional funding will be required during Q1 FY2025
for trading, working capital, capital expenditure and continuing R&D
programmes.
The Directors have applied the going concern principle in preparing the
interim results for the six months ended 31 December 2023, however there is
material uncertainty due to the need for additional near-term funding and the
balance of the Amended Loan Facility currently being uncommitted.
R&D Programme Updates
The Group announced in December 2023 the positive primary and secondary
endpoint outcomes of the G306 pivotal Phase III trial investigating Grass MATA
MPL. This pivotal Phase III trial assessed efficacy of the Group's wholly
owned short-course grass pollen immunotherapy, Grass MATA MPL.
The data gathered was highly consistent with that seen in prior trial data.
The Group is collating a full data package for regulatory submission and
discussions with regulators ahead of planned market authorisation application
are ongoing. The Group expects to be the first company to register SCIT Grass
immunotherapy under the Therapie Allergene Verordnung (TAV) programme.
Preparations are also ongoing for the initiation of the G308 combined
short-term and long-term paediatric clinical trial that is due to commence in
Q2 2024. This trial is designed to support a paediatric indication for the
Group's Grass MATA MPL product and to also provide long-term efficacy and
disease modifying data. This trial will meet the previously communicated
requirements of Paediatric Committee for a paediatric registration in Germany.
The VLP Peanut R&D programme is further advancing and in March 2024 the
Group announced that subcutaneous dosing of peanut allergic patients had begun
in the Phase I/IIa PROTECT trial without any relevant safety issues. The
PROTECT trial is designed to evaluate the novel virus-like particle
(VLP)-based peanut allergy vaccine candidate ("VLP Peanut").
The PROTECT trial is being executed in the US and conducted in both healthy
volunteers and peanut allergic patients and consists of Part A and Part B.
· Part A of the clinical trial is open-label and involves ascending
doses of subcutaneous immunotherapy (SCIT) dosing of VLP Peanut in healthy
volunteers (Group A1) and skin-prick testing in peanut allergic patients
(Group A2).
· Part B of the clinical trial is double-blind, placebo-controlled
and is being conducted in subjects with peanut allergy. Part B includes an
innovative biomarker part to support clinical proof of concept, in
collaboration with the renowned allergy laboratories at Johns Hopkins
University (US) and Imperial College (UK).
Dosing in Group A2 of PROTECT was recently completed and results have been
well-received in scientific forums and are submitted for publication in the
prestigious Journal of Allergy and Clinical Immunology. Part A1 has progressed
well, with 2 cohorts of healthy subjects having successfully completed
up-dosing up to 25-fold the starting dose. Following an external safety review
committee, it was determined that it was safe to proceed with incremental
subcutaneous dosing in healthy subjects in subsequent cohorts and to start
dosing in peanut allergic patients in the Phase IIa part of the trial (Group
B).
Outlook
In the second half of the financial year, sales are expected to be slightly
higher than the previous year. Consequently, overall sales for the full year
ending on 30 June 2024 are expected to be slightly lower than the
corresponding period ending 30 June 2023. The Group will continue with cost
control initiatives but will undertake selective investments such as the
programme of continuous improvement across the supply chain and quality
systems paving the way for increased capacity. This is an ongoing multi-year
project.
The Group's R&D programmes, including the G306 Phase III trial, the
upcoming G308 paediatric clinical trial, and the PROTECT trial, continue to
progress the Company's efforts towards its strategic goals of strengthening
our pipeline and expanding in Europe.
The ongoing discussions surrounding further funding, coupled with the
financing provided by our major shareholders under the Amended Loan Facility
underline the confidence held in the Group and the future potential that can
be leveraged from the R&D pipeline. The Group is planning for success,
and preparations are underway for relevant health authority submissions that
will support the unmet need in the market for allergic patients.
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
Shaun Furlong, Chief Financial Officer
+44 (0)1903 845 820
Panmure Gordon (Nominated Adviser and Broker)
Emma Earl, Freddy Crossley, Mark Rogers, Corporate Finance
Rupert Dearden, Corporate Broking
+44 (0)20 7886 2500
ICR Consilium
Mary-Jane Elliott / David Daley / Davide Salvi
+44 (0)20 3709 5700
allergytherapeutics@consilium-comms.com
(mailto:allergytherapeutics@consilium-comms.com)
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
(http://www.allergytherapeutics.com) .
ALLERGY THERAPEUTICS PLC
Consolidated income statement
6 months to 6 months to 12 months to
31 Dec 2023 31 Dec 2022 30 Jun 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 33,572 39,901 59,587
Cost of sales (13,052) (14,118) (26,342)
Gross profit 20,520 25,783 33,245
Sales, marketing and distribution costs (10,222) (13,237) (23,705)
Administration expenses (11,138) (11,863) (25,179)
Research and development costs (11,386) (8,498) (20,121)
Exceptional costs - adjustment to provision - - (2,069)
Exceptional fundraising costs (420) (424) (2,681)
Other income 760 282 856
Operating loss (11,886) (7,957) (39,654)
Finance income 159 155 329
Finance expense (3,189) (398) (2,441)
Loss before tax (14,916) (8,200) (41,766)
Income tax (735) (306) (1,305)
Loss for the period (15,651) (8,506) (43,071)
Loss per share
Basic (pence per share) (0.58)p (1.29)p (6.43)p
Diluted (pence per share) (0.58)p (1.29)p (6.43)p
Consolidated statement of comprehensive income
6 months to 6 months to 12 months to
31 Dec 2023 31 Dec 2022 30 Jun 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Loss for the period (15,651) (8,506) (43,071)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of net defined benefit liability (749) 479 603
Remeasurement of investments-retirement benefit assets 324 661 (867)
Revaluation gains - freehold land and buildings - - 428
Total other comprehensive loss (425) 1,140 164
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 392 414 193
Total comprehensive loss (15,684) (6,952) (42,714)
ALLERGY THERAPEUTICS PLC
Consolidated balance sheet
31 Dec 2023 31 Dec 2022 30 Jun 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Assets
Non-current assets
Property, plant and equipment 23,392 22,096 23,241
Intangible assets - goodwill 3,364 3,407 3,346
Intangible assets - other 1,626 1,202 1,790
Investment - retirement benefit asset 5,346 7,042 4,866
Total non-current assets 33,728 33,747 33,243
Current assets
Inventories 11,893 10,971 11,593
Trade and other receivables 9,934 11,697 7,088
Cash and cash equivalents 13,522 15,197 14,845
Total current assets 35,349 37,865 33,526
Total assets 69,077 71,612 66,769
Liabilities
Current liabilities
Trade and other payables (20,088) (14,299) (16,683)
Current borrowings (635) (775) (648)
Lease liabilities (1,115) (1,132) (1,155)
Provisions (3,434) - -
Derivative financial instruments - (847) (79)
Total current liabilities (25,272) (17,053) (18,565)
Net current assets 10,007 20,812 14,961
Non-current liabilities
Retirement benefit obligations (8,685) (8,179) (7,917)
Deferred taxation liability (463) (402) (454)
Provisions (95) (152) (3,581)
Lease liabilities (7,152) (6,669) (7,747)
Long term borrowings (948) (1,199) (26,439)
Total non-current liabilities (17,343) (16,601) (46,138)
Total liabilities (42,615) (33,654) (64,703)
Net assets 26,462 37,958 2,066
Equity
Capital and reserves
Issued share capital 4,776 689 689
Share premium 154,672 119,029 119,030
Merger reserve 40,128 40,128 40,128
Reserve - share based payments - 2,824 2,906
Revaluation reserve 1,501 1,073 1,501
Reserve - warrants 412 - 412
Foreign exchange reserve (338) (509) (730)
Retained earnings (174,689) (125,276) (161,870)
Total equity 26,462 37,958 2,066
ALLERGY THERAPEUTICS PLC
Consolidated statement of changes in equity
Issued share Capital Share premium Merger reserve Reserve - share based payment Foreign exchange reserve Retained earnings Total equity
Revaluation reserve Reserve -
warrants
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2022 689 119,029 40,128 2,824 1,073 (509) (125,276) 37,958
-
- - - - - (221) - (221)
Exchange differences on translation of foreign operations
-
Valuation gains taken to equity (land and buildings) - net of deferred tax - - - - 428 - - 428
-
Remeasurement of net defined benefit liability - - - - - - 124 124
-
Remeasurement of investments - retirement benefit assets - - - - - - (2,160) (2,160)
-
Total other comprehensive loss - - - - 428 (221) (2,036) (1,829)
-
Loss for the period after tax - - - - - - (34,565) (34,565)
-
Total comprehensive loss - - - - 428 (221) (36,601) (36,394)
-
Share based payments - - - 89 - - - 89
-
Shares issued - 1 - - - - - 1
-
Transfer of lapsed options - - - (7) - - 7 -
to retained earnings -
Warrants issued - - - - - - - 412
412
At 30 June 2023 689 119,030 40,128 2,906 1,501 (730) (161,870) 2,066
412
- - - - - 392 - 392
Exchange differences on translation of foreign operations
-
Remeasurement of net defined benefit liability - - - - - - (749) (749)
-
Remeasurement of investments - retirement benefit assets - - - - - - 324 324
-
Total other comprehensive loss - - - - - 392 (425) (33)
-
Loss for the period after tax - - - - - - (15,651) (15,651)
-
Total comprehensive loss - - - - - 392 (16,076) (15,684)
-
Share based payments - - - 351 - - - 351
-
Transfer of lapsed options to retained earnings - - - (3,257) - - 3,257 -
-
Shares issued 4,087 36,672 - - - - - 40,759
-
Share issue costs - (1,030) - - - - - (1,030)
-
At 31 December 2023 4,776 154,672 40,128 - 1,501 (338) (174,689) 26,462
412
ALLERGY THERAPEUTICS PLC
Consolidated cash flow statement
6 months to 6 months to 12 months to
31 Dec 2023 31 Dec 2022 30 Jun 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash flows from operating activities
Loss before tax (14,916) (8,200) (41,766)
Adjustments for:
Finance income (159) (155) (329)
Finance expense 3,189 398 2,441
Non-cash movements on defined benefit pension plan (160) (142) (79)
Depreciation and amortisation 2,114 2,102 4,224
Net monetary value of above the line R&D tax credit (760) (282) (856)
Charge for share based payments 351 25 114
Payments for retirement benefit investments - - (159)
Movement in fair value of derivative financial instruments (79) 731 (37)
(Increase)/decrease in trade and other receivables (3,307) (1,042) 3,380
(Increase) in inventories (255) 611 (183)
Increase in trade and other payables 3,174 (1,405) 4,818
Net cash used by operations (10,808) (7,359) (28,432)
Income tax received/(paid) 34 (92) (449)
Net cash used by operating activities (10,774) (7,451) (28,881)
Cash flows from investing activities
Interest received 69 18 82
Payments for intangible assets - (630) -
Payments for property plant and equipment (1,865) (2,255) (4,669)
Net cash used in investing activities (1,796) (2,867) (4,587)
Cash flows from financing activities
Net proceeds from issue of equity shares 39,731 6,488 6,489
Repayment of bank loan borrowings (333) (533) (961)
Interest paid on loan borrowings (1,646) (137) (2,117)
Repayment of principal on lease liabilities (409) (761) (1,281)
Interest paid on lease liabilities (159) (160) (334)
Proceeds from shareholder loan 14,075 - 36,000
Repayment of shareholder loan (40,075) - (10,000)
Net cash generated in financing activities 11,184 4,897 27,796
Net decrease in cash and cash equivalents (1,386) (5,421) (5,672)
Effects of exchange rates on cash and cash equivalents 63 103 2
Cash and cash equivalents at the start of the period 14,845 20,515 20,515
Cash and cash equivalents at the end of the period 13,522 15,197 14,845
1. Interim financial information
The unaudited consolidated interim financial information is for the six months
ended 31 December 2023. The financial information does not include all the
information required for full annual financial statements and should be read
in conjunction with the consolidated financial statements of the Group for the
year ended 30 June 2023, which were prepared under International Financial
Reporting Standards (IFRS) in issue as adopted by the UK and with those parts
of the Companies Act 2006 that are relevant to the Group preparing its
accounts in accordance with UK-adopted IFRS.
The interim financial information has not been audited nor has it been
reviewed under ISRE 2410 of the Auditing Practices Board. The financial
information set out in this interim report does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006.
2. Basis of preparation
As permitted, this Interim Report has been prepared in accordance with the AIM
rules and not in accordance with IAS 34 "Interim Financial Reporting". The
accounting policies adopted in this report are consistent with those in the
annual financial statements for the year to 30 June 2023. There are no
accounting standards that have become effective in the current period that
would have a material impact upon the financial statements.
Going Concern
The financial statements have been prepared on a going concern basis after
considering the Group's and the Company's current cash position and reviewing
budgets and cash flow forecasts for a period of at least 12 months from the
date of approval of these financial statements.
On 27 December the Group announced a second amendment to the Amended Loan
Facility which provided for a £40m loan facility of which £7.5m would be
initially committed, the remaining £32.5m uncommitted. The committed portion,
being £7.5m, was drawdown in Q1 calendar year 2024. Successful discussions
with the Lenders, post period, have led to an agreement for a further £15m of
the £40m Amended Loan Facility to be drawn down during Q2 calendar year 2024.
Interest accrues on the loan at 12% per annum with interest payments due every
6 months. Full repayment of the interest and principal is due by 15 January
2027.
The Directors have prepared cash flow forecasts for the period to 30 June
2025, which assume that the Group will be able to undertake additional
financing activities. £7.5 million is currently drawn under the Amended
Loan Facility. Following future drawdown of the recently agreed further
£15m from the Amended Loan Facility, the Group expects that additional
funding will be required during Q1 FY2025 onwards for trading, working
capital, capital expenditure and continuing R&D programmes. The remaining
uncommitted portion of the Amended Loan Facility, should it become committed,
would provide sufficient funds for the 12-month going concern review period.
The Directors acknowledge that a material uncertainty exists over the Group's
ability to access additional sources of finance, which will be required to
fund trading, working capital, capital expenditure and continuing R&D
programme.
The Directors have reasonable expectations that additional financing can be
obtained for the Group and Company. Accordingly, they have prepared these
financial statements on a going concern basis.
3. Loss per share
6 months to 6 months to 12 months to
31 Dec 2023 31 Dec 2022 30 Jun 2023
Unaudited Unaudited Audited
Loss after tax attributable to equity shareholders (£'000) (15,651) (8,506) (43,071)
Issued ordinary shares at start of the period ('000) 679,105 644,105 644,105
Ordinary shares issued in the period ('000) 4,087,335 35,000 35,000
Issued ordinary shares at end of the period ('000) 4,766,440 679,105 679,105
Weighted average number of shares in issue for the period 2,720,224 661,605 670,355
Weighted average number of shares for diluted earnings 2,720,224 661,605 670,355
Basic earnings per ordinary share (pence) (0.58)p (1.29)p (6.43)p
Diluted earnings per ordinary share (pence) (0.58)p (1.29)p (6.43)p
The diluted loss per share for 2023 does not differ from the basic loss per
share as the exercise of share options would have the effect of reducing the
loss per share and is therefore not dilutive under the terms of IAS 33.
4. Events after the balance sheet date
There were no disclosable events after the balance sheet date other than the
drawdown of funds and agreement for further drawdown discussed in note 2 to
the unaudited consolidated interim financial information above.
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