Shield Therapeutics FY19 results illustrate balance sheet strength into 2021
(LSE: STX ) has released is FY19 results to 31 December 2019 highlighting the positive long-term study data from Feraccru®/Accrufer®. From a balance sheet perspective, the Company finished the year with net cash of £4.1m as at 31 December, which was strengthened post period end with a US$11.4 million upfront licence payment received in January 2020 from its exclusive agreement with ASK Pharm in China which also includes up to US$51.4m future development and sales milestones and sales royalties.
Operating Highlights
Operational highlights for the period include approval from the FDA for Accrufer® with a broad label for treating iron deficiency in adults. Furthermore, positive results from a Head-to-Head (‘H2H’) study demonstrated Feraccru®/Accrufer® offers a simple, well tolerated and efficacious oral treatment alternative to IV iron therapy, without the need for hospital-based administration.
Post-period end, Shield signed a landmark exclusive licence agreement with Beijing Aosaikang Pharmaceutical Co. Ltd ("ASK Pharm") for the development and commercialisation of Feraccru®/Accrufer® in China.
The agreement included a US$11.4 million upfront licence payment to Shield with up to US$51.4 million in development and sales milestones.
ASK Pharm has also agreed to pay tiered double-digit royalties for ongoing net sales and will cover the costs of all development and regulatory activity in China.
Financial highlights
Revenues for the 12-month period fell to £0.7 million (2018: £11.9 million) as upfront payments seen in 2018 did not transpire in 2019. £0.6 million came almost entirely from Norgine based on sales-related activity.
The loss for the year was £8.8 million (2018: £1.8 million), largely as a result of fixed overheads of £3.9 million and £2.5 million (2018: £4.3 million) development costs charged to the income statement with approximately £1.4 million (2018: £3.3 million) capitalised. The £1.4 million of capitalised development costs is predominantly due to the AEGIS-H2H study.
Net cash, as at 31 December 2019, was therefore £4.1 million (2018: £9.8 million)
Outlook
The $11.4 million upfront payment from ASK Pharm provides Shield with a cash runway extending into the first quarter of 2021, which obviously provides the company lots of flexibility to negotiate the best possible commercialisation arrangements across other territories, including the US.
The positive results of the AEGIS-H2H comparator study, combined with the broad iron deficiency labels in the US and Europe mean that Feraccru®/Accrufer® is a highly competitive product, and should drive Shield's royalty and sales milestone income for many years.
As per the going concern note in the accounts, “the Directors are considering further commercialisation out-licensing opportunities for Feraccru®/Accrufer®, in the USA and also in other territories.” These negotiations are expected to include upfront payments will obviously be the main focus for the remainder of 2020 for the incoming CEO, Tim Watts.
Share Trading
Shares in Shield have recovered strongly from lows of 49p seen at the height of the COVID-19 crisis and opened down 12% at 9p following publication of the FY19 results.
Commenting on the preliminary results, Tim Watts, CEO of Shield Therapeutics plc, said: "I am honoured to have been appointed as CEO at this important time for Shield. 2019 was a very successful year for Shield with the approval of Accrufer® by the FDA for marketing in the USA and the positive long-term results from the AEGIS-H2H clinical study, and the conclusion in January 2020 of the licence agreement with ASK Pharm in China. Our top priority is now to conclude a partnering agreement in the USA during 2020."
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