Half Yearly Report

RNS Number : 7147A
Allergy Therapeutics PLC
25 March 2013
 



25 March 2013

 

 

Allergy Therapeutics plc

("Allergy Therapeutics" or "the Company")

 

Interim Report for the six months ended 31 December 2012

 

 Allergy Therapeutics plc (AIM: AGY), the fully integrated speciality pharmaceutical company specialising in allergy vaccines, announces the interim results for the six months ended 31 December 2012.

 

Highlights

·      Revenue £25.7m (H1 2012: £28.5m) impacted principally by foreign exchange movements

·      At constant currency gross revenue (excludes rebate) £29.8m (H1 2012: £29.8m)

o Revenue outside of Germany (excluding milestones) increased 5% at constant currency to £9.8m (H1 2012: £9.4m)

o Decline in gross revenues (before rebate) in Germany of 6% at constant currency to £19.2m (H1 2012: £20.4m)

·      Cash Balance improved to £3.5m (H1 2012: £2.0m) with no bank debt (H1 2012: £9.4m)

·      FDA Clinical Hold Lifted in August 2012 on Company's grass pollen allergy vaccine (Grass MATA MPL/ Pollinex® Quattro Grass 0.5ml)

o Partnering strategy underway to commercialise Pollinex® Quattro in US

·      Pollinex® Ragweed distribution agreement signed with Paladin Labs, in Canada in December 2012

 

Post-period events

·      US Patent approved for sublingual administration of MPL adjuvant and vaccine antigens in March 2013

 

Manuel Llobet, Chief Executive Officer, commented:

 

"During the first half of the Company's fiscal year, Allergy Therapeutics achieved a major strategic objective, namely the lifting of the clinical hold on Pollinex® Quattro Grass 0.5ml by the FDA. This vaccine has the potential to transform allergy treatment in the US, providing a short-course, safe, and effective vaccination to allergic rhinitis sufferers. Discussions are continuing with potential partners to help develop and commercialise Pollinex® Quattro in the important and currently poorly served US market. In Europe the Company has increased its market share in a number of markets.

 

"The Company remains focused on opportunities to grow the business in Europe, Emerging Markets and the US, that will enable the Company to broaden its product portfolio and increase its footprint."

 

 

For further information

Allergy Therapeutics

+44 (0) 1903 845 820

Manuel Llobet, Chief Executive Officer


Ian Postlethwaite, Finance Director


www.allergytherapeutics.com




Nomura Code Securities

+44 (0) 207 776 1200

Juliet Thompson / Clare Terlouw




FTI Consulting

+44 (0) 207 831 3113

Simon Conway / Susan Stuart / Victoria Foster Mitchell


 

 

 

 

Joint Statement from the Chairman and Chief Executive Officer

 

Operating Review

 

At the beginning of the financial year we were pleased to report that the clinical hold on The Company's development program for Pollinex® Quattro in the United States had been formally lifted by the US FDA (Food and Drug Administration). Allergy Therapeutics is subsequently focused on securing a suitable partner with whom it intends to complete late stage clinical development, submit a BLA (Biologics License Application) to the FDA, and ultimately launch Pollinex® Quattro in the important US market. Discussions are on-going and the Company will provide an update on Pollinex® Quattro commercialisation developments during the second half of 2013. 

 

With a suitable partner, Pollinex® Quattro could be the first registered subcutaneous vaccine to be launched in the US market, which is predominantly a subcutaneous market.  The product could revolutionise treatment for grass related allergic rhinitis in the US by providing effective, fast-acting treatment to allergy sufferers. Pollinex® Quattro involves four pre-seasonal allergy vaccine injections administered over a month, making it an attractive alternative to the prolonged course of weekly to monthly injections over three years that is currently available with the allergen extract vaccines used in the United States.

 

In Europe the Company is pleased to report that it has increased its market share across a number of key markets including Germany, Austria, Italy, the Netherlands and the UK.  Revenue growth outside of Germany (excluding milestones) increased 5% at constant currency to £9.8m. This was achieved despite very challenging market conditions reflecting the broader macro economy, governmental austerity measures and the new regulatory environment in Europe. In Germany, revenue growth was impacted by the various factors resulting in gross sales at constant currency of £19.2m (H1 2012: £20.4m).

 

The Company anticipates regulatory news in Germany and Switzerland, where it submitted a Marketing Authorisation Application (MAA) for Pollinex® Quattro Grass 0.5 mL to the Paul Ehrlich Institute (PEI) and Swissmedic respectively. PEI has not disclosed when an update on the review process can be expected but the Company is hopeful of an update during the first half of 2013. Assuming approval in this timeframe the Company expects to launch the new presentation of Pollinex® Quattro to coincide with part of the 2013 grass pollen season.

 

In December 2012 the Company announced the termination of its distribution agreement with Lincoln Medical Limited for the distribution rights to Anapen®, an epinephrine auto-injector product.  Allergy Therapeutics terminated its arrangement due to problems related to the voluntary recall of Anapen® by Lincoln Medical, originally announced by Allergy Therapeutics in May 2012. Although it is disappointing to lose a product line, overall the Anapen® contract delivered a net positive return to the Company.

 

Allergy Therapeutics has one of the most competitive product portfolios in the European immunotherapy market. The Company remains committed to preserving this position by diversifying its portfolio and expanding its presence in new and existing markets.

 

Our Americas business has also seen good progress. In Canada we signed a new distribution agreement with Paladin Labs, one of Canada's leading specialty pharmaceutical companies with extensive experience marketing in-licensed products. We are confident that this new agreement will increase Pollinex® Ragweed market share in Canada. In South America we have made progress with the launch of operations in a number of markets, albeit at a slower rate than originally planned.

 

 

Financial Review

 

Net revenue was £25.7m (H1 2012: £28.5m). Despite weak allergy vaccine markets in Europe and the loss of Anapen® sales, gross sales, excluding the German rebate, at constant currency were unchanged at £29.8m (H1 2012: £29.8m). The Company recognised milestone revenue of £0.8m in relation to signing a new distributor for Canada. During the period under review (6 months to December 2012) the Company was subject to the full rebate charge in Germany, although it benefited from an exemption to the increase in the German rebate for the period January to June 2012. However, the net impact of the rebate was an increase in costs to the Company of £0.4m taking the rebate charge for the period to £1.7m (H1 2012: £1.3m). If an exemption is granted for the current period, the Company will be entitled to a refund of £1.1m.

 

With a weaker Euro: GBP average exchange rate during period against the prior period, revenues for the period decreased by 10% to £25.7m (H1 2012: £28.5m). The average Euro: GBP exchange rate in the period was 1.25 compared to 1.15 in H1 2012; the weakening Euro adversely impacted revenue by £2.2m.

 

As in previous years, owing to the seasonality of the pollen allergy market, some 60% to 70% of Allergy Therapeutics' revenues are generated in the first half of the financial year and, as a consequence, the Company records profits in the first half of the year and losses in the second half.

 

Cost of goods were reduced in the period to £7m (H1 2012: £7.5m) but primarily due to foreign exchange impacts on revenue gross profit decreased to £18.8m (H1 2012: £21.1m) which represents a gross margin of 73% (H1 2012: 74%).

 

Management maintained sales and marketing initiatives at levels similar to the previous period and distribution costs at £8.9m (H1 2012: £9.0m) are broadly similar to the previous period. Administration expenses of £3.6m (H1 2012: £3.2m) were up by 12%. Of this net increase, £0.5m represents the cost of ending the distributor agreement in Canada with the previous distributor. A further £0.1m cost was recognised in relation to the termination of the licensing agreement with Lincoln Medical Ltd for the Anapen® device.

 

Research and development expenditure increased by 12% to £1.0m (H1 2012: £0.9m), due to an increased spend on projects although the overall spend remains lower compared to earlier years.

 

The Euro denominated loan was repaid in April 2012 which means there is no retranslation difference on the loan in this period (H1 2012: £1.0m credit). The finance expense for this period reflects the interest on the overdraft and German pension fund finance cost. The overdraft was fully repaid at 31 December 2012.

 

The tax charge in the period of £0.2m relates mainly to the Italian subsidiary. No other group company is expected to report a material tax charge in this financial year. An R&D tax credit was recognised during the comparative period offsetting the overseas tax charges accrued. This resulted in a net tax credit in H1 2012 of £0.4m.

 

With the capital investment programme now complete and only a maintenance level of spend now required, property, plant and equipment has fallen from £8.1m to £7.3m as the depreciation charge for the period is higher than new equipment purchases. Goodwill remains broadly even at £2.5m, whilst other intangible assets have fallen by £0.8m due to the termination of the agreement with Lincoln Medical Ltd for the Anapen®  device.

 

Total current assets excluding cash have decreased by £0.3m to £15.5m (H1 2012: £15.8m) primarily due to a lower stock position. Total current liabilities excluding debt financing have decreased by £1.1m to £7.5m (H1 2012: £8.6m). The cash position has improved by £1.5m with cash standing at £3.5m (H1 2012: £2.0m), whilst gross bank debt has fallen to Nil (H1 2012: £9.4m).

 

Net cash generated by operating activities was an inflow of £4.1m (H1 2012: £7.6m), significantly lower than the previous period by £3.5m, due principally to lower revenue.

 

 

Financing

 

At the balance sheet date the Company financing facilities consisted of a variable overdraft (maximum available at December 2012 £3.5m). At the balance sheet date this facility was not drawn upon.

 

The Directors believe that the Company will have access to adequate facilities for the foreseeable future and accordingly have applied the going concern principle in drawing up the financial statements.

 

Movements in the currency markets between the respective values of the Euro and Sterling have an effect on the Company's operations. The Company manages its cash exposure in this respect by foreign currency hedges. Over 90% of our gross sales are denominated in Euros whereas c.50% of costs are incurred in the United Kingdom and denominated in Sterling.

 

Outlook

 

The lifting of the clinical hold by the FDA in August 2012 has allowed the Company to resume our Pollinex® Quattro development programme in the US. With this development alongside the expansion of our commercial activities in emerging markets, and expected regulatory news in Europe, we remain confident of achieving our ambition of building a global franchise of subcutaneous immunotherapy vaccines and becoming the market leader in this allergy segment. Additionally, in our domestic market in Europe we are also moving forward, implementing efficiencies and strengthening our position by winning market share and diversifying our revenue base.

 

 

Peter Jensen

Chairman

 

 

Manuel  Llobet

Chief Executive Officer

 

25 March 2013

 

 

 

 

ALLERGY THERAPEUTICS PLC

 

Consolidated income statement

 


Note

6 months to

 31 Dec

6 months to

 31 Dec

12 months to

 30 Jun



2012

2011

2012



£'000

£'000

£'000



unaudited

unaudited

audited






Revenue


25,749

28,526

41,280

Cost of sales


(7,021)

(7,455)

(13,670)






Gross profit


18,728

21,071

27,610






Distribution costs


(8,862)

(9,021)

(17,881)






   Administration expenses - other


(3,621)

(3,178)

(6,542)

   Research and development costs


(968)

(867)

(2,095)

Administration expenses


(4,589)

(4,045)

(8,637)






Other income


-

-

-






Operating profit


5,277

8,005

1,092






Finance income


15

1

5

Retranslation gain on Euro denominated borrowing facilities


-

966

999

Finance expense


(154)

(782)

(1,456)






Profit before tax


5,138

8,190

640

Income tax


(189)

372

183






Profit for the period


4,949

8,562

823
















Earnings per share

3




Basic (pence per share)


1.22p

2.76p

0.25p

Diluted (pence per share)


1.17p

2.66p

0.24p






 

 

Consolidated statement of comprehensive income

 



6 months to

 31 Dec

6 months to

 31 Dec

12 months to

 30 Jun



2012

2011

2012



£'000

£'000

£'000



unaudited

unaudited

audited






Profit for the period


4,949

8,562

823

Actuarial gain/(loss) defined benefit pension scheme


86

104

(734)

Exchange differences on translation of foreign operations


19

(432)

(431)

Revaluation gains


72

31

50






Total comprehensive income


5,126

8,265

(292)

 

Consolidated balance sheet

 



 31 Dec

 31 Dec

 30 Jun



2012

2011

2012



£'000

£'000

£'000



unaudited

unaudited

audited

Assets





Non-current assets





Property, plant and equipment


7,317

8,147

7,555

Intangible assets - Goodwill


2,489

2,536

2,489

Intangible assets - Other


1,332

2,175

2,107

Investment - Retirement benefit asset


2,811

2,473

2,569






Total non-current assets


13,949

15,331

14,720






Current assets





Trade and other receivables


9,222

8,663

4,997

Derivative financial instruments


24

278

483

Inventory


6,298

6,845

6,651

Cash and cash equivalents


3,513

1,960

903






Total current assets


19,057

17,746

13,034






Total assets


33,006

33,077

27,754






Liabilities





Current liabilities





Trade and other payables


(7,424)

(8,589)

(6,312)

Current borrowings


(114)

(3,153)

(1,426)

Derivative financial instruments


(70)

-

(9)






Total current liabilities


(7,608)

(11,742)

(7,747)






Net current assets


11,449

6,004

5,287






Non current liabilities





Retirement benefit obligation


(4,884)

(3,907)

(4,717)

Non current borrowings


(97)

(6,223)

(97)

Derivative financial instruments


-

(276)

(162)

Deferred taxation


(161)

(176)

(165)

Non current provisions


(292)

(287)

(274)











Total non current liabilities


(5,434)

(10,869)

(5,415)






Total liabilities


(13,042)

(22,611)

(13,162)






Net assets


19,964

10,466

14,592






Equity





Capital and reserves





Issued capital


420

321

417

Share premium


67,714

58,705

67,571

Merger reserve - shares issued by subsidiary


40,128

40,128

40,128

Reserve - shares held by EBT


67

67

67

Reserve - share based payments


1,596

1,459

1,496

Reserve - convertible loan notes


3,652

-

3,652

Revaluation reserve


1,369

1,297

1,297

Foreign exchange reserve


112

92

93

Retained earnings


(95,094)

(91,603)

(100,129)






Total equity


19,964

10,466

14,592

 

 

Consolidated statement of changes in equity

 


Issued capital

Share premium

Merger reserve  shares issued by subsidiary

Reserve  shares held in EBT

Reserve  share based payments

Reserve convertible

Loan note

Revaluation reserve

Foreign exchange reserve

Retained earnings

Total equity

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 


 

At 31 December 2011

321

58,705

40,128

67

1,459

-

1,297

92

(91,603)

10,466

 












 

Exchange differences on translation of foreign operations








1


1

 

Actuarial gains









(838)

(838)

 

Valuation losses taken to equity







19



19

 












 

Net income recognised directly in equity

-

-

-

-

-

-

19

1

(838)

(818)

 

Profit for the period after tax









(7,739)

(7,739)












Total recognised income and expense

-

-

-

-

-

-

19

1

(8,577)

(8,557)

Share based payments





69





69

 

Shares issued

96

8,866




3,652




12,614

Transfer of depreciation on revalued property







(19)


19

-

 

Transfer of lapsed options to retained reserves





(32)




32

-

 

At 30 June 2012

417

67,571

40,128

67

1,496

3,652

1,297

93

(100,129)

14,592

 












 

Exchange differences on translation of foreign operations








19


19

 

Actuarial gains







        

               

86

86

 

Valuation losses taken to equity







72

           

       

72

 


 











 

 

Net income recognised directly in equity

-

 

-

 

-

 

-

 

-

 

-

72

19

86

4,949

177

4,949

 

Profit for the period after tax

 

 

 

-

 

-

 

-

 

-

 

-

 

72

 

19

 

5,035

 

5,126

Total recognised income and expense

-

 

Share based payments





100





100

 

Shares issued

         3

      143








146

Transfer of depreciation on revalued property










-

Transfer of lapsed options to retained reserves










-

 

At 31 December 2012

420

67,714

40,128

67

1,596

3,652

1,369

112

(95,094)

19,964

 












 

 

 

Condensed consolidated cash flow statement 

 



6 months to

 31 Dec

6 months to

 31 Dec

12 months to

 30 Jun



2012

2011

2012



£'000

£'000

£'000



unaudited

unaudited

audited






Cash flows from operating activities










Profit before tax


5,138

8,190

640






Adjustments for:





Finance income


(15)

(1)

(5)

Finance expense


154

782

1,456

 

Revaluation (gain)/loss on loan


-

(966)

(999)

 

Non cash movements on defined benefit pension plan


84

69

164

 

Depreciation and amortisation


683

948

1,892

 

Charge for share based payments


100

62

131

 

Financial derivative instruments


460

(1,083)

(1,280)

 

Disposal of property, plant and equipment


601

-

8

 

(Increase) in trade and other receivables


(4,175)

(1,616)

1,287

 

Decrease/(increase) in inventories


401

97

272

 

Increase/(decrease) in trade and other payables


828

1,273

(642)

 






 

Net cash generated by/(used in) operations


4,259

7,755

2,924

 






 

Interest paid


(151)

-

(51)

 

Income tax (paid)/ (received)


(8)

(189)

7

 






 

Net cash generated by/(used in) operating activities


4,100

7,566

2,880

 






 

Cash flows from investing activities





 

Interest received


15

1

5

 

Investments


(127)

(124)

(311)

 

Payments for intangible assets


(12)

(663)

(829)

 

Payments for property plant and equipment


(227)

(218)

(432)

 






 

Net cash used in investing activities


(351)

(1,004)

(1,567)

 






 

Cash flows from financing activities





 

Proceeds from issue of equity shares


146

-

12,614

 

Repayment of borrowings


-

(9,362)

(22,623)

 

Proceeds from borrowings


-

4,366

7,680

 

Bank loan fees and interest paid


-

(592)

(406)

 






 

Net cash generated by/ (used in) financing activities


146

(5,588)

(2,735)

 






 

Net increase/(decrease) in cash and cash equivalents


3,895

974

(1,422)

 

Effects of exchange rates on cash and cash equivalents


27

(62)

(35)

 

Cash and cash equivalents at the start of the period


(409)

1,048

1,048

 





         

 

Cash and cash equivalents at the end of the period

    3,513

1,960

(409)

 

 

Cash at bank and in hand


 

3,513

 

1,960

 

903

 

Bank overdraft

-

-

(1,312)

 

Cash and cash equivalents at the end of the period

3,513

  1,960

(409)

 

 

1. Interim financial information

The unaudited consolidated interim financial information is for the six month period ended 31 December 2012.  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 Company for the year ended 30 June 2012, which were prepared under International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

 

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. The Company's statutory financial statements for the year ended 30 June 2012 prepared under IFRS have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) of the Companies Act 2006.

 

2. Basis of preparation

The interim financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention except for land and buildings and derivative financial instruments which have been measured at fair value. The accounting policies adopted in this report are consistent with those of the annual financial statements for the year to 30 June 2012 as described in those financial statements.

 

Going Concern

The Group has been profit making in the six months to 31 December 2012, as it was in the corresponding period ending 31 December 2011 and has made operating profits in the years ending 30 June 2010 onwards.

 

Detailed budgets have been prepared, including cash flow projections for the periods ending 30 June 2013 and 30 June 2014. These projections include assumptions on the trading performance of the operating business and the continued availability of the existing debt facilities. After making appropriate enquiries, which included a review of the annual budget and latest forecast, by considering the cash flow requirements for the foreseeable future and the effects of sales and other sensitivities on the Company's funding plans, the Directors continue to believe that the Company will have adequate resources to continue in operational existence for the foreseeable future and accordingly have applied the going concern principle in drawing up these financial statements. In reaching this view, the Directors have considered and prioritised the actions that could be taken to offset the impact of any shortfall in operating performance.

 

3. Earnings per share

 


6 months to 31 Dec 2012

6 months to 31 Dec 2011

12 months to 30 Jun 2012


unaudited

unaudited

audited


£'000

£'000

£'000

Profit after tax attributable to equity shareholders

4,949

8,562

823






Shares

Shares

Shares


'000

'000

'000





Issued ordinary shares at start of the period

406,913

310,772

310,757

Ordinary shares issued in the period

2,930

-

96,141

Issued ordinary shares at end of the period

409,843

310,772

406,913





Weighted average number of shares in issue for the period

407,157

310,772

326,795

Weighted average number of shares for diluted earnings per share

424,688

321,360

340,051





Basic earnings per share (pence)

1.22p

2.76p

0.25p

Diluted earnings per share (pence)

1.17p

2.66p

0.24p

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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