Amryt Pharma PLC

Founded in 2015, Amryt Pharma PLC (LON: AMYT) is a FTSE AIM 100 index listed commercial-stage biopharmaceutical entity, which is dedicated to developing and commercializing novel therapeutics for patients with rare life-threatening diseases.

Rationale for Valuation – SELL at GBX 145.00

• Exit Post Delisting News: AMYT has unveiled its intentions to delist from the AIM index; therefore, it is recommended to liquidate the position at the current levels.
• Continued Losses: By the end of H1 FY21, the accumulated deficit has increased to US$276,096 from US$235,605 in H1 FY20.
• Technical Indicator: From a technical standpoint, the current market price is trading below the 20-day EMA (GBX 159.00), reflecting a bearish price momentum.
• Underperformance Against Index: AMYT’s stock has fallen over 29% in the past year, showing underperformance against the FTSE AIM index.
  

Key Risks

• Commercialization Risk: The growth trajectory depends on the pipeline of product candidates, which could fail to be marketable products.
• Credit Risk: There is a liquidity risk as the Company has been incurring losses since its inception.

Recent News

AIM Delisting: On 22 November 2021, Amryt Pharma announced intentions to cancel the trading on AIM index from 11 January 2022. The Company will only be publicly tradeable in the form of Nasdaq-listed ADSs.

Q3 FY21 Trading Update (for the six months ended 30 June 2021, as on 28 July 2021)

 (Source: Company Website)

• Revenue Growth: During Q3 FY21, revenue grew 14.6% year-on-year in Q3 FY21 to US$56.5 million
• EBITDA Positive: It reported 7seventh consecutive quarter of positive EBITDA generation excluding Chiasma transaction costs.
• Liquidity: At the end of 30 September 2021, the Company reported cash of US$123.2 million.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: EV/Sales Approach (FY21) (Illustrative) 

Conclusion

Amryt Pharma reported revenue growth in H1 FY21 with certain regulatory and commercial successes; however, it sustained operating and net losses. The Company still doesn’t not have any financial guidance for its profitability.

It has also announced the delisting from the AIM index, while the rising uncertainties pertinent to resurgence in coronavirus cases from Omicron variant could delay its clinical trials and it can also fail to achieve the expected synergy from Chiasma’s transaction. Therefore, it is prudent to liquidate the position at the current levels. The stock made a 52-week high and low of GBX 230.00 and GBX 136.00, respectively.

Based on the proposed delisting, significant losses, market uncertainties, gloomy outlook, unfavourable valuation done using the above method, we have given a “SELL” recommendation on Amryt Pharma PLC at the current market price of GBX 145.00 (as on 29 November 2021, at 8:05 AM GMT).

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

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