Alliance Pharma – 78.6p

27 November 2019 – return of licensing rights

The international healthcare group has announces that it has reached agreement with Duchesnay Inc. of Canada to return the UK and EU licensing rights to Xonvea.  This is a prescription medicine for the treatment of nausea and vomiting in pregnancy where conservative management has failed. The uptake of Xonvea in the UK has been slower thanoriginally anticipated, in part due to the ongoing delay in the issuing of updated clinical guidelines.  The market for Xonvea in Europe has also become more competitive, making an EU rollout less attractive for Alliance Pharma.  Under the terms of the agreement signed with Duchesnay, the £2.0m in milestone payments made to date by Alliance will be repaid to the Group, £0.25m in 2019 and the balance in 2020.  Alliance Pharma will continue to make Xonvea available to patients in the UK for up to 12 months to assist Duchesnay with the transition to a new licensee.  Non-underlying inventory provisions and associated restructuring costs in connection with the return of the Xonvea rights will be approximately £1.9m in the year ending 31 December 2019.  However, planned investment in Xonvea in 2020 and beyond is now set to be diverted into growth brands and international operations.  This means that there is no overall change to underlying trading expectations as a result of the decision.  We keep our BUY rating.

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