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 divided 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.

Key Statistics



Top Shareholders


(Source: Thomson Reuters)

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 grown up 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 of product development cycle. 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.

Evolution of the company


(Source: Company Presentation, Company 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.

Investment Case
 

(a) Revenue generating and growing rare & orphan drug company.
(b) Exciting portfolio of commercial & late-stage development assets.
(c) Multiple life-cycle opportunities for existing assets.
(d) Highly experienced management team with proven track record.
(e) Scalable commercial, regulatory & medical infrastructure in place.
(f) Capacity to deliver sustainable revenue, pipeline & market growth globally.
(g) Financial flexibility to develop & launch pipeline programs.
 

Rich Development Pipeline

The Group has a rich product development in pipeline with some products in the last phase of development. The company’s AP101 product is in the phase 3 and it could significantly benefit the Group in terms of generating revenue. Other products are also in the development cycle with most of them clear the preclinical stage of the product development.


(Source: Company Presentation, Company Website)

Growth Factors


(Source: Company Presentation, Company Website)

(a) The company has a robust revenue generating commercial portfolio which would benefit its business.
(b) The company has late-stage development assets in its pipeline which would strengthen its portfolio.
(c) The Group is flexible in terms of its financial ability to develop and launch new products.
(d) The Group has an experience team and proper infrastructure for research and development purposes.
 

Industry Overview

With financial sustainability, care delivery, patient centricity, digital transformation, and regulatory compliance at the top of the agenda, health care sector leaders need to collaborate with all stakeholders—both within the health care ecosystem and those in converging industries—as they look to shape the future of health care and establish a sustainable smart health community. Global Health Care spending continues to increase dramatically and is projected to reach around $10 trillion by 2022.

Recent News

On 19^th February 2020, the company announced that it had submitted a draft registration statement to the U.S. Securities and Exchange Commission relating to the proposed listing of American Depositary Shares ("ADSs"), representing Amryt ordinary shares on the Nasdaq stock market ("Nasdaq").

On 15^th January 2020, the company announced its intention of participation at the Epidermolysis Bullosa World Congress which was held on 19-23 January 2020 in London. The company presented updates from its Epidermolysis Bullosa ("EB") research programme at the first World Congress 'EB2020' dedicated to this rare skin disease. This programme has conducted at 55 sites in 27 countries with results expected later this year.

Significant Milestone Achieved Through Acquisition of Aegerion Pharmaceuticals

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 31st October 2019, the company has 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.

Revenue Surged in H1 FY2019 Period

In the first half of 2019, the company’s revenue increased by 15.9% to €8.1 million as 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.

Key Performing Indicators

Total Revenue


(Source: Thomson Reuters)

The revenue of the company grew to EURO 14.45 million in FY2018 from EURO 1.35 million in FY2016, reflecting a growth of 227.16 per cent on a CAGR basis.

Gross profit


(Source: Thomson Reuters)

The gross profit of the company grew to EURO 9.16 million in FY2018 from EURO 0.77 million in FY2016, giving growth of 244.90 per cent on a CAGR basis.

Share Price Performance


Daily Chart as on 5^thMarch 2020, before the market closed (Source: Thomson Reuters)

On March 5, 2020, at the time of writing (before the market close, at 8:38 AM GMT), Amryt Pharma Holdings Ltd shares were trading at GBX 113, down by 2.30 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 21,842.60; 30 days – 74,377.20 and 90 days – 138,371.53. The group’s stock is reflecting lower volatility as against the benchmark index based on the company’s beta of 0.14. The outstanding market capitalisation was around £177.61 million. The share price is trading above its 200-day SMA which indicates bullishness in the stock.

From the technical standpoint, 14 days-Relative Strength Index of the stock is hovering near the oversold zone, which is strengthening the upside move.

Valuation Methodology

Method 1: EV to Sales Approach (NTM)

 

To compare Amryt Pharma with its peers, EV/Sales multiple has been used. The peers are H Lundbeck A/S (NTM EV/Sales was 3.11), Pfizer Inc (NTM EV/Sales was 4.57), Verona Pharma Plc (NTM EV/Sales was 0.57) and AB Science SA (NTM EV/Sales was 1.66). The Average of EV/Sales (NTM) of the company’s peers was 2.48x (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 23.23), Eli lily and Co (NTM EV/EBITDA was 16.85) and Kyowa Kirin Co Ltd (NTM EV/EBITDA was 16.71). The Average of EV/EBITDA (NTM) of the company’s peers was 18.93x (approx.)

Amryt Pharma V/S FTSE-AIM Price – 1 Year


(Source: Thomson Reuters)

In the last one year, Amryt Pharma share price has delivered 24.59 per cent return as compared to negative 3.27 per cent return of FTSE-AIM index, which shows that the stock has outperformed the index during the last year.

Amryt Pharma V/S Industry V/S Sector – 1 year


(Source: Thomson Reuters)

In the last one year, Amryt Pharma share price surged by 26.23 per cent which is higher than the industry growth of 15.14 per cent and sector growth of 13.17 per cent.

Amryt Pharma Total return- 1 year


(Source: Thomson Reuters)

In the last one year, Amryt Pharma has delivered a total return of 26.34 per cent while the FTSE All share index has delivered a total return of 0.93 per cent.

Growth Prospects and Risk Assessment

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.

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.

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 fundamental prospects and support from the valuation as done using the above two methods, we have given a “Speculative Buy” recommendation at the current  price of GBX 113 (as on 5th March 2020 at 8:38 AM GMT) with lower double-digit upside potential based on 18.93x NTM EV/EBITDA (approx.) on FY20E EBITDA (approx.) and 2.48x NTM EV/Sales (approx.) on FY20E sales (approx.). 
 
*All forecasted figures and Peers information has been taken from Thomson Reuters.

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