# Allergy Therapeutics plc Successful legal outcome removes uncertainty

- Link: https://www.directorstalkinterviews.com/allergy-therapeutics-plc-successful-legal-outcome-removes-uncertainty/412787907
- Published: 2019-07-01T08:33:27+01:00
- Author: Giles Arbor

**Allergy Therapeutics plc** ([LON: AGY](https://www.directorstalkinterviews.com/company/allergy-therapeutics/agy.l))
is a long-established specialist in the prevention, diagnosis and treatment of allergies.
The Pollinex Quattro (PQ) platform, an ultra-short-course subcutaneous allergy immunotherapy(
SCIT), continues to gain market share despite its availability in the EU on a ‘named-
patient’ (NP) basis only. Several products are in clinical development, with the
aim of moving the platform to full registration under the new regulatory framework.
AGY has issued a positive trading update highlighting the strong operating performance
of the group. Also, it has reached a successful settlement of an ongoing legal dispute
with one of its third-party R&D contractors.

 * **Strategy:** AGY is a fully-integrated pharmaceutical company focused on the
   treatment of allergies. There are three parts to its strategy: continued development
   of its European business via investment or opportunistic acquisitions; the US
   PQ opportunity; and further development of its pipeline.
 * **Trading update:** Underlying sales growth appears close to expectations, rising
   8.7% to £74.0m (£68.3m). Although further Brexit costs (-£0.5m est.) have dented
   any prospect of gross margin improvement, this has been more than offset by lower
   spend on marketing (+£1.0m), G&A (+£1.0m) and R&D (+2.0m).
 * **Legal settlement:** AGY has settled a legal dispute with Inflamax Research 
   Inc (Inflamax) regarding the inconclusive US Phase II Grass MATA MPL trial. Inflamax
   has paid AGY $7.4m/£6.0m in full settlement of the dispute. In addition, Inflamax
   has agreed to pay a ‘substantial portion’ of AGY’s legal costs.
 * **Risks:** AGY’s primary risk lies in the timings of the regulatory approval 
   process, mostly outside of its control, related to the PQ Birch immunotherapy
   and the European TAV process for full approval. Ongoing trials do represent a
   risk, but this is limited by the products’ use on a named-patient basis.
 * **Investment summary:** The share price continues to recover from the overly 
   pessimistic view of the PQ Birch trial primary endpoint failure in March and 
   the positive trading update and news that the legal dispute has been settled 
   will help. Despite the recovery to date, AGY is trading on an EV/sales of only
   0.93x 2019E, down to 0.86x 2020E – well below the multiples commanded by its 
   direct competitors.

[DOWNLOAD THE FULL REPORT](https://www.hardmanandco.com/wp-content/uploads/2019/06/AGY-Trading-and-legal-update-1-July-2019.pdf)

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