Shield Reports Positive FY20 as it evaluates its options for the US

Shield Therapeutics (STX FOLLOW), the commercial stage pharmaceutical company, which is focused on iron deficiency market, reported trading in-line with market expectations following strong year-on-year growth in the number of Feraccru® packs sold in Germany and the UK whilst the Company evaluates its options for commercialisation in the US.

FY20 Highlights

Unaudited revenue for the 12-month period to 31 December 2020 was £9.4m (FY19: £0.7m) largely as a result of the up-front license fee covering China, Taiwan, Hong Kong and Macau received from ASK Pharm.

Cash as at 31 December 2020 was £2.9m (1H20: £6.5m) with loan facilities from two significant shareholders of £4.4m extending the cash runway of the Group until late FY21.

18% Feraccu Revenue Growth

Sales of Feraccru® packs sold in Germany and the UK increased by around 70% in 2020 compared with 2019. However, revenue from these the sale of packs is only expected to increase 18% to £0.7m (FY19: £0.6m) due to FY19 revenue being inflated by the one-off revenue recognition from the sale of Shield's inventory of Feraccru® packs to Norgine when Norgine took over marketing from Shield in early 2019.

Whilst the Company admitted sales and marketing activities have been impacted by the coronavirus pandemic, particularly in the UK, demand for Feraccru® increased during the period as patients and their doctors become more wary of intravenous iron, which requires hospital visits.

Successful Paediatric Study

The first stage of the paediatric study plan, to compare the relative bioavailability of the liquid formulation required for children with the adult capsule, was successfully completed during Q4 2020. 

The study report from this stage will be completed by the end of Q1 2021 with the Company anticipating to start the main paediatric study in 120 children around mid-2021. Successful completion of this study could lead to expansion of the available market and potentially further patent protection.

Reanalysis of AEGIS-H2H study

The reanalysis of the H2H (head-to-head) study in which Feraccru®/Accrufer® was compared with intravenous iron demonstrated that Feraccru®/Accrufer® is a credible alternative to IV therapy for iron deficiency anaemia and maintains haemoglobin levels over the long term. A manuscript covering this study has been submitted to a relevant journal for peer-reviewed publication.

Robust IP Defence

As reported in October 2020,  following the filing of Shield's defence, Teva Pharmaceuticals has withdrawn both its appeal against the European Patent Office's decision with regard to Shield's patent No.2668175, which covers a "Process for preparing an iron hydroxypyrone" and their opposition with regard to Shield's patent No.3160951 which covers "Crystalline Forms of Ferric Maltol."  For the latter patent, this means that the patent will continue to provide protection through to October 2035.

Commenting on this update, Tim Watts, CEO of Shield Therapeutics plc, said: "2020 has been a positive year for Shield on many fronts.  European sales volume growth of around 70% despite the COVID pandemic is very encouraging for the long term with launches still to come in France, Italy and Spain and many other European markets, and the withdrawal of Teva's opposition to our European patents has removed a significant uncertainty.”

Outlook

Towards the end of 2020, Shield successfully converted Feraccru® capsules from gelatin to HPMC (hydroxypropyl methylcellulose) which provides an improved stability characteristic and also suitable for vegetarians and vegans.  

Furthermore, the FDA have approved an immediate extension to the shelf life of Accrufer® packs from 21 months to 24 months with ongoing studies aiming to demonstrate product stability for as long as 36 months.

Across France, Italy and Spain, Norgine are using the updated AEGIS H2H detailed study results to reconfirm pricing and reimbursement strategy for Feraccru®.

ASK Pharm has submitted the Investigational New Drug (IND) application for Feraccru® to the Chinese regulatory authorities with the expectation that the authorities will require only one further study, expected to be a 12-week Phase III study in 120 inflammatory bowel disease patients. Clinical supplies have been manufactured for the study which could get underway in H1 2021.  The study is expected to complete during 2022 and marketing approval and product launch could follow in 2023.  On approval, Shield is due to receive an $11.4 million milestone payment from ASK Pharm and tiered royalties of 10% or 15% of net sales.

With regard to the all-important US commercialisation strategy, the Company continues to pursue a dual strategy at this time including both out-licensing and Shield-led alternatives for the launch and commercialisation of Accrufer® in the US.  

Whilst discussions are ongoing with a number of potential out-licencing partners, the Company is also deploying a US commercial team comprising four managers, who have extensive experience of launching and commercialising multiple pharmaceutical products in the US. 

Their work is already well advanced and covers preparations for all activities and organisational matters which will be implemented quickly should Shield decide on launching Accrufer® by themselves including the supply chain logistics, pricing, market access, selling and marketing and preparing got the required regulatory compliance.  

Launch stocks of Accrufer® have been manufactured in readiness for whichever option the Company ultimately selects with various financing options for the estimated $30 million - $40 million investment required to achieve cash flow break even in the event of the Shield-led launch.

Tim added; “Progress by ASK Pharm in defining the necessary development path to product approval suggests that a launch in the huge market of China is possible by 2023. In the US our knowledge of the iron deficiency market and the great opportunity for Accrufer® has developed massively during the year such that we are now evaluating a Shield-led launch in the US as an alternative to out-licensing the product.  We aim to give clarity on the US by the end of March and I am sure that 2021 will be a transformational year for Shield."

Shares in Shield have had somewhat of a volatile 12-month period, falling from highs of 160p at the beginning of 2020 to lows of 54p at the height of the market wide Covid-19 crash. Importantly the shares recovered significantly since then to hit intraday highs of 140p, although recent selling has brough the shares back down to 54p today. Early morning trading has been indecisive following the FY20 Trading Update as investors wait for the company to confirm its preferred commercialisation strategy in the US and funding thereof.

STX price chart

Reasons to Follow STX

Shield is a de-risked, specialty pharmaceutical company focused on commercialising its lead product, Feraccru®/Accrufer®, a novel,  non-salt based oral therapy for adults with iron deficiency with or without anaemia. 

Proven and Approved

Feraccru®/Accrufer® has been approved for use in the United States, European Union, UK and Switzerland and has exclusive IP rights until the mid-2030s. 

Feraccru® is commercialised in the UK and European Union by Norgine B.V. and the Company is currently in the process of evaluating commercialisation options for the US market, including the potential launch of Accrufer® in the US by Shield. Shield also has an exclusive licence agreement with Beijing Aosaikang Pharmaceutical Co., Ltd., for the development and commercialisation of Feraccru®/Accrufer® in China, Hong Kong, Macau and Taiwan. 

The US Opportunity

The Company is currently considering two commercialisation strategies for the key US market. The first being a traditional out-license arrangement with a big Pharma company whereby Shield receives a large up-front license fee and ongoing royalties on sales and a Shield-Led plan whereby Shield retains total control of the product and markets and sells the drug itself.

The latter is expected to require an investment of up to US$40m to achieve cashflow break-even and the Company is currently in various discussion with finance providers should this be the preferred commercialisation option. Furthermore, the Company could adopt a hybrid approach whereby it co-promotes or sub-licenses Accrufer® in specific therapy areas, which would complement a Shield-led launch.