Business Overview
Amryt Pharma Holdings Ltd (LON: AMYT) is a United Kingdom-based biopharmaceutical company, which is focused on delivering and developing innovative new treatments to assist in enhancing the lives of patients with orphan and rare diseases. The company includes a profitable and growing commercial business with a substantial development pipeline. It operates on integrity, ethical practice, and foundation of responsibility. The group’s commercial business is differentiated into four product portfolios: Juxtapid®/ Lojuxta® (lomitapide), Myalept® / Myalepta® (metreleptin), AP101 (Oleogel-S10), and AP103 (Gene Therapy). Its locations are dividend into four areas: London, Ireland, Boston (USA), and Germany.  The group was listed on the London Stock Exchange, NEX Exchange, and Irish Stock Exchange and is currently a constituent of the FTSE AIM All-Share index and FTSE AIM All-Share - Health Care index. Its earlier name was Amryt Pharma Plc.

Management

Ray Stafford is the Non-executive Chairman of the group. Dr. Joe Wiley holds the responsibilities of Chief Executive Officer of the group. Rory Nealon is the current Chief Financial Officer (CFO) and Chief Operating Officer (COO) and he has co-founded Amryt Pharma in August 2015.

Key Statistics



Top Shareholders

 

Key Products

Amryt's commercial business includes two orphan disease products. Juxtapid®/ Lojuxta® (lomitapide) product is approved for an adjunct to a lipid-lowering medicinal and other low-fat diet products for grownup persons with the infrequent cholesterol disorder, HoFH (Homozygous Familial Hypercholesterolaemia) in the Canada, Columbia, Argentina, the United States and Japan (under the trade name, Juxtapid®) and in the European Union (under the trade name, Lojuxta®). HoFH is an infrequent genetic disorder which weakens the body's capability to eradicate LDL (low-density lipoprotein) bad cholesterol from the blood. Myalept® / Myalepta® (metreleptin) product is approved as an adjunct to diet in the United States (under the trade name, Myalept®) as replacement therapy to treat the problems of leptin shortage in patients. For lipodystrophy, Metreleptin is also approved in Japan. AP101 (Oleogel-S10), the company’s lead development candidate, is a potential treatment for the cutaneous manifestations of EB (Epidermolysis Bullosa), a distressing and rare genetic skin disorder affecting adults and young children for which there is now no approved treatment.  Presently, it is being studied in Phase 3 clinical trial. AP101 has received a Fast Track Designation from the FDA and has also been awarded FDA (Food & Drug Administration) Pediatric Rare Disease Designation. For EB, the US and European market opportunity are expected by the Directors of the group to be in excess of $1 billion.

History


(Source: November Presentation, Company’s Website)

In 2015/16, the company was formed and acquired AP101. In the same period, the company was a part of the Alternative Investment Market (AIM) and also got Lojuxta in-license. In 2017, the company started the largest global EB phase 3 study. In 2018, the AP101 was awarded by FDA for Paediatric Rare Disease Designation. In 2019, Aegerion acquisition was closed. Through FDA, the company was also awarded a Fast Track designation.

Recent News

On 19^th December 2019, the company announced a market update, reflecting the integration of the latest acquisition of Aegerion Pharmaceuticals, Inc which was completed on September 24, 2019. By way of the issue of new ordinary shares, the group raised US$57 million at September 25, 2019. On 16^th December 2019, Amryt Pharma Holdings Ltd had US$60.9 million of cash which was substantially ahead of the group's anticipations. At 17th December 2019, there were 236 patients either already scheduled to enter the study shortly or registered in the EASE study. Management of the company estimates the EB market prospect to be in excess of one billion US Dollar.

Trading update for the nine months period ended 30^th September 2019

The company provided a trading update for the nine-months period ended 30 September 2019. From the completion of acquisition with Aegerion Pharmaceuticals, Inc, the company now has two commercial-stage assets, namely, Myalept® / Myalepta® (metreleptin) and Juxtapid® / Lojuxta® (lomitapide) and infrastructure in place through which the group is commercialising these assets in EMEA, LATAM, and North America.

On a proforma basis, the combined company’s revenue for the nine-month period to 30 September 2019 increased by 19.7% to $113.1 million as compared with the corresponding period of the last year. In Juxtapid®/ Lojuxta® (lomitapide), the company has generated revenue of $51.1 million in 9M FY2019, an increase of 6.5% from the $48 million in 9M FY18. For the nine-month period to 30 September 2019, the revenue was $61.7 million from Myalept® / Myalepta® (metreleptin), an increase of 34.7% against the same period last year. In metreleptin, the significant growth indicated the rollout of Myalepta® in Europe following the consent of the product by the European Medicines Agency (EMA) in the third quarter of 2018.

For Lojuxta®, the company is vigorously deploying its proven plan in Europe to revitalize the Juxtapid® business in the United States. On 31^st October 2019, the company had cash on hand of around US$61.2 million (unaudited).

From the FDA (Food and Drug Administration), AP101 received Fast Track Designation in October 2019. In the USA and the EU, Lomitapide has an orphan designation for Familial Chylomicronemia Syndrome (FCS). With FCS study, there have been three patients who received treatment with lomitapide under the extended access programme and experienced in the range of 50%-70% decrease in triglyceride levels.

Financial Highlights (for the six months ended 30 June 2019)

In the first half of 2019, the company’s revenue increased by 15.9% to €8.1 millionas compared with the corresponding period of the last year, due to the positive reimbursement decisions in France and in the UK (Q4 FY18) for Lojuxta, with preliminary orders received from UK patients in Q4 FY18 and from French patients in Q1 FY19. In Lojuxta (lomitapide), the revenue rose by 19.5% to €7.9 million as compared to €6.6 million in H1 FY18. The company’s future sales progress will be driven by current markets and from new territories. On 30 June 2019, the company had cash of €4.8 million. The company also announced a new board structure for the Enlarged Group.

Revenue development in the lead commercial asset, Lojuxta, is a crucial measure for the company. In December 2016, this business has been contributing cash since the company in-licensed the product, generating annual revenues for the financial year 2018 of €13.6 million, which signifies a surge of 14.2 per cent as compared with the financial year 2017 annual revenues of €11.9 million.

Financial Ratios 

 

The reported gross margin in H1 FY2019 declined by 4.7 per cent to 60.5 per cent against 61.4 per cent reported last year for the same period. But the gross margin was slightly down as compared to industry median. On the liquidity front, Amryt Pharma Holdings Ltd’s current ratio was lower than the industry median of 2.28, reflecting insufficient current assets to pay its short-term obligations. On leverage front, the debt-equity ratio of the Amryt Pharma Holdings Ltd was nil.

Share Price Performance


Daily Chart as at January-09-20, before the market close (Source: Thomson Reuters)

On January 09, 2020, at the time of writing (before the market close, at 10:38 AM GMT), Amryt Pharma Holdings Ltd shares were trading at GBX 123.65, up by 0.12 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 143/GBX 69.90. Stock’s average traded volume for 5 days was 40,333.60; 30 days – 168,975.07 and 90 days – 149,775.62. The average traded volume for 5 days was down by 76.13 per cent as compared to 30 days average traded volume. The outstanding market capitalisation was around GBP 190.36 million.

Valuation Methodology

Method 1: EV to Sales Approach (NTM) 
 


To compare Amryt Pharma Holdings Ltd with its peers, EV/Sales multiple has been used. The peers are Pierrel SpA (NTM EV/Sales was 2.02), Enzymatica AB (NTM EV/Sales was 4.65), Ab Science SA (NTM EV/Sales was 1), Advicenne SA (NTM EV/Sales was 5.01), Pfizer Inc (NTM EV/Sales was 4.86), Bayer AG (NTM EV/Sales was 2.45), Verona Pharma PLC (NTM EV/Sales was 0.20), H Lundbeck A/S (NTM EV/Sales was 2.66) and Kyowa Kirin Co Ltd (NTM EV/Sales was 4.51). The median of EV/Sales (NTM) of the company’s peers was 2.66x (approx.).

Method 2: EV to EBITDA Approach (NTM)



To compare Amryt Pharma Holdings Ltd with its peers, EV/EBITDA multiple has been used. The peers are Swedencare AB (NTM EV/EBITDA was 27), Photocure ASA (NTM EV/EBITDA was 24.07), Pfizer Inc (NTM EV/EBITDA was 11.73), AstraZeneca PLC (NTM EV/EBITDA was 16.21) and Kyowa kirin Co Ltd (NTM EV/EBITDA was 18.62). The Average of EV/EBITDA (NTM) of the company’s peers was 19.53x (approx.).

Key Risks

The group faces substantial competition from other pharmaceutical and biotechnology companies. The company’s operations are also impacted negatively by fluctuations in the forex rates as the majority of supplies are acquired in several regions.

Key Strengths

The current patents deliver robust in-market protection for Lojuxta in the licensed territories. The late-stage development asset, AP101 and the company’s lead commercial asset, Lojuxta, are reinforced by novel early-stage development (AP103). The company’s main objective is to become an international leader in rare and orphan diseases, accelerated through the newly revealed acquisition of Aegerion, which will improve pipeline of promising development opportunities and provide two substantial revenue-generating products.

Growth Prospects


(Source: November Presentation, Company Website)

By the end of 2019, the company expects that the study will be fully enrolled with top-line data anticipated in the first half of 2020. This will drive an additional revenue development of the company’s lead commercial asset, Lojuxta®, an endorsed treatment for grownup patients with rare cholesterol disorder. The company estimated that the addressable market for AP101 is over €1 billion. The company keeps on launching new platforms and upgrade the old products and services to become one of the market leaders in the healthcare market.

Conclusion

The company has shown decent business performance in the first nine months of the financial year 2019. The top-line performance has improved for the period.The company has evolved with a single asset in EMEA (through the acquisition of Aegerion),  to become an international biopharmaceutical group with a commercial infrastructure across North America, EMEA and LATAM. On a proforma basis, the combined revenues were increased from the same period in 2018. The company will continue to deliver decent business performance in the near term.

The company is on track to implement the strategy of becoming an international leader in the orphan and rare disease space. In 2020, the company anticipates good progress in the financial performance.

Over the course of 2 years (FY16 - FY18), the company’s revenue surged from EUR 1.35 million in FY16 to EUR 14.45 million in FY18. This represent an increase of more than 200 per cent.

Based on the decent prospects and support from the valuation as done using the above two methods, we have given a “BUY” recommendation at the closing price of GBX 123.50 (as on 8^th January 2020) with lower double-digit upside potential, based on 2.66x NTM EV/Sales (approx.) on FY20E sales (approx.) and 19.53x NTM EV/EBITDA (approx.) on FY20E EBITDA (approx.).
 
 
*The “Buy” recommendation is also valid for the current price as covered in the report (as on 9-January-2020).
*All forecasted figures and Peer information have been taken from Thomson Reuters. Currency exchange rate taken for 1 EUR = 0.851922 GBP.

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