8th Mar 2005 07:00
Allergy Therapeutics PLC08 March 2005 8th March 2005 Allergy Therapeutics plc Interim Results for the six months ended 31 December 2004 Allergy Therapeutics plc (LSE:AGY), the specialty pharmaceuticals companyfocused on allergy vaccines, today announced its maiden interim results for thesix months ended 31 December 2004. Highlights • Allergy Therapeutics shares admitted to trading on AIM on 11th October at a price of 73 pence per share • Fully-subscribed placing raised £15million of new capital, net of expenses • Gross sales up 13% to £14.1million (HY 2003: £12.1) • UK patent granted for sublingual (under the tongue) use of MPL(R) as an adjuvant to immunological therapies • Pollinex(R) Quattro awarded prestigious German MMW Arzneimittelpreis for pharmaceutical innovation, previously dominated by major pharmaceutical companies • Tom Holdich appointed as R&D director from Shire Pharmaceuticals Allergy Therapeutics has continued to make progress since the period end. InJanuary, the Company announced agreements with Allied Research International andAllerpharma to develop and commercialise Pollinex(R) Quattro for the Canadianmarket. Under the terms of the agreement Allergy Therapeutics will receivemilestone payments totalling £8million during the period of development andregistration of the products. Commenting on the results, Keith Carter, CEO of Allergy Therapeutics, said: "Allergy Therapeutics has made a strong start in its life as a public company.Trading in the core business has been strong and the development programme is ontrack to deliver the targets set out at flotation." For further information: Allergy Therapeutics 01903 844720Keith Carter, Chief ExecutiveIan Postlethwaite, Finance Director Grandfield 020 7417 4170Samantha Robbins / Charles Cook Chairman & Chief Executive's Statement Allergy Therapeutics continued to pursue its strategy as an integrated,Europe-based, specialty pharmaceutical company, looking to build its EU salesand marketing infrastructure and to progress its development pipeline ofinnovative, short-course allergy vaccines based on the immunostimulatoryadjuvant MPL(R). The guiding principle of the development pipeline is to createefficacious and safe allergy vaccines, which can be administered over a shortperiod of time, with few injections or injection-free. The Company made greatprogress on many fronts during the six months to 31 December 2004. Financial independence In October 2004, the company completed a successful IPO, listing the ordinaryshares on the Alternative Investment Market of the London Stock Exchange andraising its target of £15m of new capital, net of expenses. In combination withthe Company's operating cash flows, this funding allows Allergy Therapeutics topursue an independent strategy for the development of its pipeline and itsbusiness. Market and professional validation In September 2004, our MPL(R)-adjuvanted new product, Pollinex(R) Quattro, wasawarded the prestigious MMW Arzneimittelpreis by an independent panel ofexperts. This award is made for pharmaceutical innovation and has, in the past,always been won by major pharmaceutical companies. We are particularly pleasedthat Pollinex(R) Quattro was selected, as it is our flagship development product. Allergy Therapeutics is fortunate to have the technology and infrastructure tosell unregistered Named Patient Products ('NPPs'). Pollinex(R) Quattro iscurrently marketed on this basis in Germany, Italy and Spain by the Company'sown sales forces; sales were up by over 40% on the equivalent period in theprevious year, taking the total sold to date on a NPP basis to well over 100,000units. This extensive practical clinical experience with the productcontributes greatly to our confidence in the ultimate success of theregistration efforts with this family of products. In January 2005, we entered into agreements with Allied Research Internationaland Allerpharma to develop and commercialise Pollinex(R) Quattro in Canada; terms include upfront and milestone payments, linked to clinical development,totalling £8m, a supply agreement for the manufactured product and royalties onsales. This is the first out-licensing of the Pollinex(R) Quattro product line.Consistent with the Company's strategy of retaining rights for the EU,discussions regarding other markets have commenced and will be progressed;however, Allergy Therapeutics is a financially strong business, not dependent onthe further partnering of its pipeline, and so will only enter agreements highlyselectively. Development In August 2004, we were very pleased to announce the recruitment of Dr TomHoldich as R&D Director. Previously, Tom was Head of Clinical Research at ShirePharmaceuticals plc and he has a wide experience of clinical development andpharmaceutical registration. Under Tom's leadership, with the financial anddevelopment resources in place, we are now positioned to complete the clinicaldevelopment of our novel MPL(R)-based vaccine pipeline, in which we believe muchof the potential value of the company lies. Progress has been made towards conducting Phase III programmes during 2006 forthe lead subcutaneous products of Grass, Tree & Ragweed. Interactions with theUS Food and Drug Administration (FDA) have clarified where any additionalpre-Phase III information is needed. The proposed design of further studies hasbeen accepted and, through our partnership with Allied Research Inc, thesestudies have been scheduled through 2005. Allergy Therapeutics plans toinitiate the Phase III programme for the Pollinex(R) Quattro family of vaccines,starting in Q4 2005. An advantage of Allergy Therapeutics' pipeline is thedegree of commonality between the individual vaccine product development plans;the path to registration for Grasses will inform the process for other allergens- Trees, Ragweed, House Dust Mite - hence the agreement of the firstInvestigational New Drug application for Pollinex(R) Quattro Grasses, received on 18 February 2005, will allow the efficient progress of the whole portfolio ofinjected vaccines. Intellectual Property In November 2004, the UK Patent Office granted our patent for the sublingual(under the tongue) use of MPL(R) as an adjuvant to immunological therapies,including allergy vaccines. This was the first grant for this family of patentapplications. The patent is very broad, covering all antigens, and thereforecould cover vaccines for many diseases as well as allergy. For AllergyTherapeutics, the immediate benefit is that we can now commence proof of conceptclinical studies on a sublingual, MPL(R)-containing allergy vaccine withconfidence regarding the protection of the intellectual property we willgenerate. It is thought that such injection-free products would havesignificant commercial potential. In February 2005, GSK announced that it has been granted EU regulatory approvalfor Fendrix, a vaccine for hepatitis B containing the adjuvant MPL(R). This isthe first MPL(R)-containing product to receive a major market approval and further confirms the wide acceptance and efficacy of the adjuvant. Financial Review Our results for the six months to 31 December 2004 have been very encouragingand have continued the progress shown in previous years. We are pleased to report that the Group's sales for the six month period to 31December 2004 are in line with the Board's expectations. Gross sales for theperiod (before the statutory rebate in Germany) were £14.1m, compared with£12.5m in the same period in 2003. This represents an increase of 13%, drivenprimarily by a 42% growth in sales of Pollinex(R) Quattro, the Group'saward-winning, four shot allergy vaccine. Owing to the seasonality of the allergy market, some 70% of AllergyTherapeutics' sales are made in the first half of the Company's financial yearand, as a consequence, the first half results give a better than normalindication of full year performance. At present, approximately 70% of Allergy Therapeutics' sales are generated inGermany, so the increase of the compulsory rebate from 6% to 16% in January 2004has been costly to the Company, with a charge of £2m in the period to 31December 2004, compared with £0.4m in the same period in 2003. Despite therebate, net sales were maintained at £12.1m. As from 1 January 2005, the rebatehas reverted to 6% and is now calculated using current list prices, instead ofthe previously used October 2002 prices. Gross profit of £9.4m represents a margin of 78% of sales, compared with £9.1mand 75% in the same period last year. This encouraging trend, especially aftertaking into account the increase in German rebates, is as a result of theincreasing proportion of Pollinex(R) Quattro sales and is helped further in theperiod by the release of a stock obsolescence provision of £0.3m. Marketing expenses, the major component of distribution costs, have increased inline with expectation as we have intensified the promotional spend on our highmargin products. Administration costs of £2.0m remain broadly in line with theprevious period. Research and development expenditure increased during the period to £0.7m (H12003: £0.1m) as the development activity for the Pollinex(R) Quattro vaccine range was initiated. In the future this spend will increase markedly as thedevelopment programme progresses. The operating profit for the period was £2.6m (H1 2003: £3.7m). However, beforedevelopment costs, German rebate and an exceptional charge crystallised by theplacing, the operating profit was £5.9m (H1 2003: £4.3m), which allows for amore reasonable comparison of performance and highlights the strong performancefrom the core business in this period. Interest receivable was significantlyhigher at £163,000 (H1 2003: £11,000), as a result of higher cash balancesfollowing the IPO in October 2004. Capital expenditure for the period was £0.5m (H1 2003: £0.2m) and mainlyrepresents upgrades to plant and machinery and the introduction of a new ERPsystem, allowing for better gross margin analysis. Net current assets, excluding cash, increased to £2.2m (H1 2003: £1.1m)reflecting higher gross sales. When comparing the balance sheet to the position as at 30 June 2004, debtors of£3.8m are significantly higher than as at 30 June 2004 (£2.1m), due to thehighly seasonal pattern of sales, which normally peak in October or Novembereach year as patients are treated pre-seasonally and fall to a year low in thesummer. For the same reason, creditors falling due within 1 year, at £3.8m, arehigher than as at 30 June 2004 (£3.3m), due to increased trading activity, mostnotably due to higher rebate accruals in the German market, linked to highersales. Net assets of £24.8m (H1 2003: £9.4m) show a net increase of £15.4m, dueprimarily to the £15m net proceeds from the IPO in October 2004. Net cash inflow before financing for the six month period to 31 December 2004was £1.7m, £0.7m lower than in the same period in 2003, due to a higherinvestment in R&D and a benefit in the previous period of £0.4m from thesurrender of tax losses to a shareholder under consortium loss relieflegislation. Outlook For our core marketed products 2005 got off to a good start and we anticipate anexcellent full year of trading. Our strategy is, where possible, to establishour own sales and marketing infrastructure in the EU, and we are continuallyassessing our sales and marketing activities in this light; we hope to makefurther progress in this regard in the coming 6 - 12 months. Outside the EU we are expecting to gain our first experience with the Japaneseregulatory authorities (MHLW), as we proceed with plans to meet the regulatoryrequirements for Pollinex(R) Quattro Japanese Cedar. Partnership discussionsregarding Pollinex(R) Quattro for the USA and Japan continue, but we cannotcurrently predict the outcome; meanwhile we continue the product developmentprocess as planned. On the product development front, we anticipate the commencement of pivotalPhase III studies on the Pollinex(R) Quattro family of products towards the end of this calendar year, and are in the clinic currently with precursor work asrequested by the FDA. We will shortly commence our 'first in man' proof ofconcept study of MPL(R) delivered sublingually; this will provide firstindications of how this adjuvant reacts when delivered without injection andhence the prospects for an efficacious sublingual allergy vaccine. We are entering an exciting and active period at Allergy Therapeutics. Ignace Goethals Keith CarterChairman Chief Executive Officer8th March 2005 8th March 2005 Consolidated profit and loss accountfor the six month period ended 31 December 2004 6 months 6 months Year ended to to 31 Dec 31 Dec 30 June 2004 2003 2004 Note £'000 £'000 £'000 Turnover 2 12,140 12,105 18,001 Cost of sales (2,709) (3,031) (5,513) Gross profit 9,431 9,074 12,488 Distribution costs (3,750) (3,456) (6,569) --------- -------- ---------Administrative expenses- other (1,978) (2,051) (4,335) Research and development costs (665) (141) (451) Exceptional costs 6 (614) - - --------- -------- --------- Administrative expenses (3,257) (2,192) (4,786) Other operating income 160 195 423 Operating profit 2,584 3,621 1,556 Interest receivable and similar 163 11 60incomeInterest payable on loans and (39) (14) (26)overdrafts Profit on ordinary activities before 2,708 3,618 1,590tax Tax on profit on ordinary - (372) (372)activities Retained profit for the financial 2,708 3,246 1,218period Basic earnings per share 3 5.2p 7.9p 3.0pDiluted earnings per share 3 4.5p 6.1p 2.5p All amounts relate to continuingactivities Consolidated balance sheetat 31 December 2004 Note 31 Dec 31 Dec 30 June 2004 2003 2004 £'000 £'000 £'000Fixed assetsIntangible assetsGoodwill 2,850 3,173 2,945Other intangible assets 1,013 1,152 1,072 3,863 4,325 4,017Tangible assets 1,926 1,293 1,650 5,789 5,618 5,667Current assetsStocks 2,185 1,723 1,825Debtors: amounts falling due within one 3,832 3,699 2,062yearDebtors: amounts falling due after one - - 223yearCash at bank and in hand 17,234 3,165 1,457 23,251 8,587 5,567 Creditors: amounts falling due within (3,801) (4,319) (3,277)one year Net current assets 19,450 4,268 2,290 Total assets less current liabilities 25,239 9,886 7,957 Creditors: amounts falling due after one (459) (460) (881)year Net assets 4 24,780 9,426 7,076 Capital and reservesCalled up share capital 73 51 51Share premium account 14,945 - -Profit and loss account (30,020) (30,753) (32,730)Other reserves - share premium on shares 40,128 40,128 40,128issued by subsidiaryOther reserves - shares held in Employee (346) - (373)Benefit Trust Shareholders' funds 24,780 9,426 7,076 Equity 24,770 9,416 7,066Non-equity 10 10 10 24,780 9,426 7,076 Consolidated cash flow statementfor the six month period ended 31 December 2004 6 months 6 months Year to to ended 31 Dec 31 Dec 30 June 2004 2003 2004 Note £'000 £'000 £'000 Cash inflow from operating activities 5 2,057 2,359 1,508 Returns on investment and servicing offinanceInterest received 163 11 60Interest paid (39) (14) (26) 124 (3) 34 Taxation - 364 364 Capital expenditure and financialinvestmentPurchase of fixed assets and (456) (320) (760)intellectual propertySale of tangible fixed assets 3 - - (453) (320) (760) Cash inflow before financing 1,728 2,400 1,146 Acquisitions and disposalsDeferred consideration - (32) (308) FinancingNet funds raised on AIM 14,967Bank loans repaid (945) (500) (305)Sale/(purchase) of EBT shares 27 - (373)Premium on shares issued by - 30 30subsidiary 14,049 (502) (956) Increase in cash in period 15,777 1,898 190 Reconciliation of net cash flow to movement in net funds 6 months to 6 months to Year ended 31 Dec 2004 31 Dec 2003 30 June 2004 £'000 £'000 £'000 Increase in cash in the period 15,777 1,898 190Net loans repaid 945 500 305 Movement in net funds in period 16,722 2,398 495Net funds at beginning of period 512 17 17 Net funds at end of period 17,234 2,415 512 Notes to the interim reportsFor the six month period ended 31 December 2004 1 Basis of preparation The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. Theprincipal accounting policies of the Group have remained unchanged from thoseset out in the Group's June 2004 annual report and financial statements. Thefinancial information set out in this interim report is unaudited and does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. On 11 October 2004 Allergy Therapeutics plc acquired, by way of ashare-for-share exchange, the whole of the issued share capital of AllergyTherapeutics (Holdings) Ltd. Accordingly, as permitted by Financial ReportingStandard no.6, the combination has been merger accounted for as if the Group ascurrently constituted had been in place throughout the whole of the periodcovered by these accounts. The Group profit and loss account for the financial period and the comparativesfor the Group balance sheet and Group profit and loss account have beenpresented as though they had always been part of Allergy Therapeutics plc,despite the fact that the Company was only incorporated on 4 October 2004, inorder to compare meaningfully the performance of the underlying Group. 2 Analysis of turnover 6 months to 6 months to Year ended 31 Dec 2004 31 Dec 2003 30 June 2004 £'000 £'000 £'000Turnover by destinationUK 58 45 101Germany 9,017 8,327 11,715Rest of Europe 2,881 3,543 5,197Rest of World 184 190 988 ----------- ----------- ----------- 12,140 12,105 18,001 ----------- ----------- -----------Turnover by originUK 1,262 2,093 3,369Germany 9,017 8,309 11,715Rest of Europe 1,861 1,703 2,917 ----------- ----------- ----------- 12,140 12,105 18,001 ----------- ----------- ----------- 3 Earnings per share 6 months to 6 months to Year ended 31 Dec 2004 31 Dec 2003 30 June 2004 Earnings for the period (£'000) 2,708 3,246 1,218 Weighted number of shares in issue 51,991,728 40,838,342 40,935,583Diluted weighted number of shares in 60,787,224 53,063,458 49,294,066issue Basic earnings per share (pence) 5.2 7.9 3.0Diluted earnings per share (pence) 4.5 6.1 2.5 4 Reconciliation of movement in shareholders' funds 6 months 6 months Year to to ended 31 Dec 31 Dec 30 June 2004 2003 2004 £'000 £'000 £'000 Profit for the financial period 2,708 3,246 1,218Other recognised gains and losses relating to 2 (11) 40the period (net)Issue of shares (net of issue costs) 14,967 - -Share premium on shares issued by subsidiary - 30 30Purchase of shares by EBT - - (375)Sale of shares by EBT 27 - 2 Net addition to shareholders' funds 17,704 3,265 915 Opening shareholders' funds 7,076 6,161 6,161 Closing shareholders' funds 24,780 9,426 7,076 5 Reconciliation of operating profit to operating cash flow 6 months 6 months Year ended to to 30 June 31 Dec 31 Dec 2004 2004 2003 £'000 £'000 £'000 Operating profit 2,584 3,621 1,556Depreciation 203 152 319Amortisation of intangibles 228 228 333Gain on disposal of fixed assets (3) - -Effect of foreign exchange rate (95) (36) 109changes(Increase) / decrease in stocks (360) 192 90(Increase) / decrease in debtors (1,547) (2,120) (682)Increase/ (decrease) in creditors 1,047 322 (217) Net cash inflow from continuing 2,057 2,359 1,508activities 6 Exceptional costs The Group incurred a cost of £614,000 in respect of consultancy servicesprovided in 2000, payable on an initial public offering (IPO) or 'exit'. Thiswas reported as a contingent liability, as defined by FRS 12, in the accountsfor the year ended June 2004. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Allergy Thera.