I’ve a couple of contributions on stocks I think could double in 2006. Here’s the first one – the second one will come after once I remember the reasons why I bought it. I take it the rules don’t allow ‘just a hunch’ :)
Allergy Therapeutics offer price 86p
The sources used are Growth Company Investment articles from Jan and September this year along with AGY announcements.
AGY is a vaccine developer for (surprise, surprise) allergies. It has that nice mix of blue sky products in late stage development accompanied by an underlying profitable business that alone arguably supports a significantly higher valuation for the company.
Management looks strong. The company was established after a buy-in from SmithKline Beecham who held 14% after flotation (not sure of GSK holding now).
The existing products on the market produced sales for June 2005 of 22.9m (up from 18m) and an operating profit before exceptionals of 6.1m. This funds a large proportion of R&D and clinical trial work for the company’s development projects. There was an overall loss of 1.9m
The company is well funded with 15.1m cash held at June 2005.
There is room for significant growth as 70% of sales were in the German market.
AGY’s vaccine appeal is based on their lead product, Pollinex Quattro, requiring only four jabs rather than the multiple of that usually required. An oral variation is also under development.
13 clinical trials have commenced.
Aside from the growth in the European market AGY also has pivotal studies applicable for the North American markets.
There was a recent disappointment in that one phase 111 trial (product G301) was delayed until the 2007 U.S. pollen season in order to give sufficient time to enroll 600 patients. I viewed the dip in the share price following the rns as a significant buying opportunity.
Importantly, the stock will not be without news in the coming months. Phase 11 trial results for Pollinex Quattro for Ragweed (the main allergen in the U.S.) are expected in the first quarter of 2006.Last patient due to be treated on 20th December 2005. Ragweed affects 55% of ‘allergic rhino-conjunctivitis sufferers in the U.S.
The ragweed product is a version of an existing proven treatment therefore the chances of failure are significantly reduced.
Each allergen Quatro study that AGY conducts is a double-blind placebo-controlled trial. Each participant is tested twice – that’s more than the U.S. regulators require.
It’s not without risk of course but it’s an attractive and rare combination of an increasingly (underlying)profitable pharma company with late stage development products that have the potential to provide a long-time ‘cure’ as opposed to temporary relief for the substantive global hay fever market.
