Shield Therapeutics: Accrufer® launch on schedule

Hardman & Co

Shield Therapeutics plc (LON:STX) is a commercial-stage pharmaceutical company delivering specialty products that address patients’ unmet medical needs, with an initial focus on treating iron deficiency (ID). Feraccru®/Accrufer® has been approved by the regulators in both Europe and the US. Following completion of a capital increase in March 2021 to raise the necessary funds, momentum has picked up significantly in preparing for the US launch of Accrufer, which is due around the end of June. Even on conservative forecasts with respect to the speed and quantum of market penetration, Shield is forecast to become profitable in 2023.

  • Strategy: Outside the US, Shield’s strategy is to out-license commercialisation rights to partners with appropriate expertise in target markets, which has been successfully achieved in Europe and China. In the US, Shield has decided to sell Accrufer itself, thereby retaining a greater share of the profits for shareholders.
  • Accrufer launch: The board decided that it was in shareholders’ best interests to launch Accrufer into the US market by itself, generating greater value than with a licensing deal. Following the capital increase, Shield has accelerated its detailed planning and logistics and remains on schedule to launch in June.
  • Valuation: DCF-modelling each of the three main income streams – the US, Europe and China – generates an NPV, which, summed together, gives an EV for the group of $852m/£608m, or 281p per share. The current share price is clearly applying a very heavy discount for the execution risk associated with Accrufer.
  • Risks: While there remains regulatory risk in China, Feraccru/Accrufer has been de-risked by regulatory approvals in Europe and the US. There is execution risk associated with Shield’s go-it-alone strategy in the US, but recruitment of an experienced team of US commercial managers addresses and minimises this.
  • Investment summary: The Shield Therapeutics-led launch of Accrufer was always the best option, in our opinion. Although the fundraise was dilutive for shareholders, they were all invited to participate. Now that the period of uncertainty is over, coupled with the listing on the OTCQX market in the US to raise awareness and improve liquidity, we are starting to see a recovery in the shares. The actual launch of Accrufer in June will be the next catalyst to narrow the valuation disconnect.

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