Allergy Therapeutics lifts interim sales as Germany recovery gathers pace

Allergy Therapeutics reported first-half revenue of £36.3m (to end-December), up 7% from £34.0m a year earlier, driven by a recovery in Germany and stronger sales of approved products despite the phase-out of unregistered therapies under Germany’s Therapy Allergen Ordinance (TAV). In December Germany approved Grassmuno, the firm's subcutaneous grass-pollen immunotherapy — the first such launch in 20 years — with commercial sales begun in January; the group expects full-year revenue to exceed last year’s level. Cash fell to £10.1m from £12.8m, but warrant exercises brought in £55m used to repay shareholder loans, and the company has access to an additional £70m of potential funding (a £50m unsecured facility and a £20m Hayfin facility).

Analysis

Market structure: Allergy Therapeutics (AIM:AGY / OTC:AGYTF / FRA:HHU) is a clear near‑term beneficiary of Germany’s Therapy Allergen Ordinance (TAV) — H1 revenue rose to £36.3m (+7%) despite product phase‑outs, and December approval of Grassmuno gives it first‑mover advantage for subcutaneous grass immunotherapy in Germany in 20 years. Winners are fully approved immunotherapy producers (AGY, larger EU players with registered portfolios); losers are small local suppliers with unregistered formulations facing mandated removals this year. Expect pricing power to improve modestly in 3–12 months as constrained supply removes legacy low‑price competitors, supporting higher ASPs for approved injectables.

Risk assessment: Balance sheet improved via £55m warrant proceeds but cash was £10.1m at Dec; access to £70m (new £50m unsecured loan + £20m Hayfin) mitigates immediate liquidity risk yet increases refinancing/drawdown and covenant tail risk if uptake lags. Tail risks: delayed/blocked TAV enforcement, Grassmuno uptake slower than forecast (physician inertia), adverse pediatric trial readout; each could cut upside by 30–70% over 6–18 months. Catalysts to watch: interim results in March, commercial sales cadence Jan–Jun 2026, and TAV removal milestones across 2026.

Trade implications: Direct play is equity exposure to AGY sized to risk appetite; options (12‑month calls or verticals) can concentrate upside while limiting downside. Relative trades: long small‑cap AGY vs short a larger, richly valued allergy/immunotherapy peer (e.g., ALK‑Abelló CPH:ALK‑B) dollar‑neutral to capture re‑rating if German share shifts; avoid owning debt or long‑dated convertibles until pediatric readout. Cross‑asset: improved credit profile should compress AGY’s cost of debt/downside CDS; limited FX/commodity impact.

Contrarian angles: Consensus assumes rapid conversion to approved products; adoption may take 6–12 months as clinics reorder and reimbursement/pricing negotiations conclude, so upside could be back‑loaded and volatility high. Market may underprice dilution/covenant risk if AGY draws the £50m facility; conversely the market may underappreciate upside if Grassmuno captures even 10–20% of Germany’s grass immunotherapy volume within 12 months, implying 25–50% incremental revenue potential. Historical parallels: regulatory consolidation in EU drug niches favored well‑capitalized specialists but only after 6–18 months of commercial execution.

Key Decisions for Investors

• Establish a 2–3% portfolio long position in Allergy Therapeutics (AIM:AGY / OTC:AGYTF) within 2 weeks; target +40% upside over 6–12 months if H2 sales and March interim results confirm uptake, set a 25% stop‑loss to limit downside if TAV enforcement or pediatric safety issues emerge.
• If liquid, purchase a 12‑month AGY call spread (buy ATM or 20% OTM call, sell ~50% OTM call) sizing max premium to 0.5–1% of portfolio to express asymmetric upside while capping cost; unwind at 50% of target profit or on negative pediatric/interim readouts.
• Implement a dollar‑neutral pair: long AGY (2%) / short ALK‑Abelló (CPH:ALK‑B) (1.5%) to exploit regulatory reallocation in Germany; close the pair if relative performance diverges >15% in 60 days or if ALK reports better‑than‑expected German uptake.
• Avoid taking exposure to AGY corporate debt or buying into any £50m facility draw until company discloses covenants and draw schedule; reassess after March interim results and TAV enforcement milestones (monitor by 30 June 2026).