ALK-Abelló’s Q1 Surge: Allergies to Profits, But Risks Linger

ALK-Abelló A/S (OTCPK:AKBLF) delivered a robust start to 2025, with its Q1 earnings call revealing strong financial momentum, driven by tablet sales and pediatric product launches. Yet, lingering challenges in subcutaneous immunotherapy (SCIT) and macroeconomic risks temper optimism. Here’s what investors need to know.

Financial Highlights: Growth and Efficiency

ALK’s first-quarter revenue surged 12% year-over-year to DKK 1.522 billion (€192.5 million), with all sales regions posting double-digit gains. North America rebounded strongly (+14%), while International markets (including Asia) boomed (+24%). The star performer was the company’s allergy tablets, which jumped 22% to DKK 857 million, fueled by higher volumes and shipments to Japan via partner Torii.

Profitability improved sharply: EBIT rose 50% to DKK 469 million, pushing the EBIT margin to 31%, up from 23% in Q1 2024. A 36% cost-to-revenue ratio—down from 42%—highlighted operational efficiency gains. Free cash flow nearly tripled to DKK 330 million, underscoring ALK’s financial health.

Product Performance: Tablets Lead, SCIT Struggles

ALK’s tablet portfolio remains its engine:
- ACARIZAX (house dust mite tablet): Expanded into 12 countries for pediatric use, exceeding expectations.
- ITULAZAX (tree pollen tablet): Secured EU approval for children aged 5–17, broadening its reach.

However, SCIT sales—traditionally a core revenue stream—faltered. European SCIT sales dipped due to fewer new patients, while international SCIT revenue plunged 85% as shipments to China halted. Jext, an adrenaline auto-injector, also saw a temporary sales dip in Europe due to lower U.K. replacement rates.

Strategic Momentum: Pediatrics and Innovation

ALK’s “Allergy+” strategy is paying off:
- Neffy® nasal spray: Set for European launches by Q3 2025, with a U.S. co-promotion deal inked with ARS Pharma.
- Peanut allergy tablet: Phase 2 trials are advancing, with patient recruitment ongoing.

CEO Peter Halling emphasized the pediatric focus: “Expanding into younger age groups is unlocking new markets,” he noted, citing ACARIZAX’s success.

Risks and Challenges

1. SCIT Headwinds: The China-related SCIT slump and European demand softness raise concerns about this mature product line’s future.
2. Margin Volatility: While Q1’s 31% EBIT margin was impressive, management warned this is not sustainable—the full-year margin target is ~25%.
3. Macroeconomic Uncertainties: Trade wars and tariffs could disrupt supply chains, though ALK believes impacts will be “modest.”

Full-Year Outlook: Can the Momentum Continue?

ALK reaffirmed its 2025 guidance:
- Revenue growth: 9–13%, driven by tablet expansion and neffy’s launch.
- EBIT margin: Expected to improve 5 percentage points to ~25%, aided by higher volumes and cost discipline.

The company’s confidence hinges on executing its pediatric and innovation agenda while mitigating SCIT risks.

Conclusion: A Buy with Caveats

ALK-Abelló’s Q1 results are undeniably strong, with tablets and pediatric products driving growth. The tripled free cash flow and margin expansion suggest management is delivering on operational targets. However, investors must weigh this against risks like SCIT’s decline and geopolitical uncertainties.

For a buy rating, the key is whether ALK can sustain tablet momentum and offset SCIT headwinds. With neffy’s U.S. entry and pediatric approvals, the long-term thesis remains intact. But short-term volatility is likely. Hold for now, but keep an eye on Q2 execution and trade policy developments.

In a sector increasingly focused on precision therapies, ALK’s allergy immunotherapy pipeline positions it well—but it must prove it can navigate both old and new challenges.