Amryt Pharma PLC (LON: AMYT)  

Amryt Pharma PLC (LON: AMYT) is an FTSE AIM 100 index listed UK-based commercial-stage biopharmaceutical company focused on acquiring, developing, and commercializing treatments to help patients with rare and orphan diseases. Moreover, the Company’s commercial business comprises three orphan disease products: metreleptin (Myalept/ Myalepta), Mycapssa®, and lomitapide (Juxtapid/ Lojuxta).

Development Pipeline

• Launch of Oleogel-S10: The Company had made accelerated progress regarding the launch of Oleogel-S10. Moreover, the target PDUFA date set by the FDA is 30 November 2021.
• AP103: It provides a potential treatment for patients with Dystrophic EB. Moreover, this polymer-based delivery platform has the potential to be developed for the treatment of other genetic disorders. Meanwhile, the Phase 1/2a clinical trial is planned to start in the second half of 2022.

(Source: Company Presentation)

Growth Prospects

• Acquisition Benefits: The Company would aim to extract cost synergies through the successful integration of Chiasma. Meanwhile, the Company had completed the acquisition on 05 August 2021.

• Key Geographies: The US accounted for 51.7% of global metreleptin revenues, while the EMEA region represented 43.0% in Q3 FY21. Moreover, the metreleptin revenues in the EMEA grew by 143.2% in Q3 FY21.

(Source: Company Results)

• Commercialization of Mycapssa®: Mycapssa® had generated USD 1.45 million of sales for Q3 FY21, driven by the advanced ordering made in Q2 FY21.

Key Risks

• Increase in Net Loss: The net loss had shown a significant increase during Q3 FY21 when compared with the Q3 FY20 levels.
• Compliance Risk: The Company operates in a highly regulated market, and any non-compliance with rules and laws could lead to penalties and loss of reputation.
• Potential delay in drug launches: Any delay in rolling out treatments could lead to a loss in revenue and market share to competitors.
• UK GDP: The UK economy witnessed a slowdown as the GDP grew quarter-on-quarter by around 1.3% during Q3 FY21, which remained merely lower-than-expected growth of around 1.50%.
• Expected Federal Reserve Tapering: The expected Federal tapering at the pace of USD 15 billion per month starting later this month may adversely impact the equity markets. Moreover, the Bank of England decided to keep interest rates unchanged in its latest meeting.
• Surge in UK Inflation: The UK inflation reached a 10-years high as it surged by around 4.2% for the 12 months ended October 2021. It may cause a sooner-than-expected interest hike.

Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Amryt Pharma PLC.  

Athyrium Capital Management, LP, is the most significant shareholder as it holds nearly 44.29 million shares as of 30 September 2021.    

Q3 FY21 Financial & Operational Highlights (for the three months ended 30 September 2021, as of 03 November 2021)

(Source: Company Results)

• Modest Revenue Growth: The Company posted robust year-on-year revenue growth of around 14.60% to USD 56.50 million during Q3 FY21, while it had reported a total revenue of USD 49.30 million for Q3 FY20. 
• Widening of Operating Loss: The operating loss had widened from negative USD 3.6 million for Q3 FY20 to negative USD 21.4 million for Q3 FY21.
• Decent Cash Balance: AMYT had reported a cash balance of USD 123.2 million as of 30 September 2021.

Financial Ratios (Q2 FY21)

Share Price Performance Analysis

(Source: Refinitiv; Analysis done by Kalkine Group)

On 18 November 2021, at 09:45 AM GMT, AMYT’s shares were trading at GBX 166.90, up by around 0.24% from the previous day closing price. Stock 52-week High and Low were GBX 230.00 and GBX 147.50, respectively.

From a technical perspective, the 14-days RSI stood at 46.72 levels. Moreover, the stock price is hovering above the 20-days simple moving average of GBX 166.60, indicating an upside potential in the stock price.

Over the last two years, AMYT’s stock price had delivered a positive return of around 37.04%, while the FTSE AIM 100 index (benchmark index) had produced a return of about 34.91%, and FTSE All-Share Pharmaceuticals & Biotechnology index (benchmark sector) had generated a return of approximately 9.83%. 

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Business Outlook

AMYT had managed to upgrade FY21 revenue ranging from USD 220 million to USD 225 million, representing robust growth of between 20% and 23% from the FY20 levels. Moreover, the Company aimed to capitalize on the growth opportunities for Mycapssa® and the potential to develop the underlying TPE platform in other areas. Meanwhile, the Company will have four commercialized products once Oleogel-S10 gets approved. However, the stock price may witness sizeable correction considering the UK GDP slowdown and UK consumer inflation reaching 10-year high. Thus, it would depend on the risk appetite of the investors to take a reasonable position on this company having a strong development pipeline and bright prospects.

Considering the strong revenue guidance for FY21, robust Q3 FY21 results, recent commercialization of Mycapssa®, decent liquidity profile, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Amryt Pharma PLC at the current market price of GBX 166.90 (as of 18 November 2021 at 09:45 AM GMT), with lower-double digit upside potential based on 12.05x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peer information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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