Shield Therapeutics’ (STX’s) interim results highlight the progress made year to date. Re-analysis of the Feraccru/Accrufer AEGIS-H2H data show it is a credible alternative to IV iron therapy for iron deficiency anaemia (IDA) in the long term. With the product out-licensed in China to partner ASK Pharm, all eyes remain on the announcement of a US commercial partner (expected this year). Royalties received from H120 sales of the product (UK and Germany) by partner Norgine are slowly building, but pricing and reimbursement discussions resuming in Europe could lead to ongoing rollouts in key countries (France, Spain and Italy) in 2021. STX’s cash runway extends into Q121, an upfront licensing payment from a US deal would ameliorate the need for further capital. We value Shield at £379.1m.
The re-analysis of the Feraccru/Accrufer AEGIS-H2H data confirmed Feraccru is a credible alternative to IV iron. This could potentially accelerate US partnering discussions and the resumption of pricing and reimbursement negotiations in key EU markets. Feraccru/Accrufer is making inroads in Europe, with net sales growing ~50% over the previous six months (Germany and UK), further uplift in Europe will be determined by additional launches from late 2021 by partner Norgine. The major focus for STX is establishing a US partner, as the US is a critical market (c 50% of our STX valuation) and management has ordered launch stock ahead of the potential year-end launch, highlighting its confidence there will be a deal in Q420.
Shield reported revenues of £8.9m and a net profit of £3.1m in H120 (H119: net loss £4.2m), benefiting from the $11.4m upfront payment from ASK Pharm. The H120 cash position of £6.5m implies a runway into Q121. A US partnering deal and associated upfront licensing payment would extend the cash reach and enable STX to start the formulation development work on PT20 (phosphate binder). We forecast that sustainable profitability is achievable from 2022 (assuming US launch 2020), with gross margins nearing c 50–60% in the long term. Partnering strategies enhance economic returns and de-risk the investment case.
Our revised valuation is £379.1m or 324p/share, versus £381.7m or 326p/share. We have revised our FY20 forecasts downwards by removing any US sales contribution from Accrufer. We have increased our G&A and reduced our R&D assumptions for FY20. We roll forward our model, update for FX and include end2020 net cash forecast of £5.5m. Our NPV calculation is based on Feraccru achieving peak sales of €130m in Europe, $410m in the US and $126m in China.