REG - Allergy Therapeutics - Trading update for the year ended 30 June 2023

Allergy TherapeuticsAnnouncement

10/08/2023 07:00

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RNS Number : 8575I  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

+44 (0)1903 845 820

 

Panmure Gordon (Nominated Adviser and Broker)

Freddy Crossley, Emma Earl, Corporate Finance

Rupert Dearden, Corporate Broking

+44 (0)20 7886 2500

 

Consilium Strategic Communications

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) .

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