Shield Therapeutics: Accrufer momentum building

Hardman & Co

Shield Therapeutics plc (LON:STX) is a commercial-stage pharma company delivering specialty products that address patients’ unmet medical needs, with an initial focus on iron deficiency (ID). Following launch of Accrufer® in the US, in July 2021, the initial challenge was to greatly improve market awareness of its differentiating features as an oral ID drug. Although the initial uptake was slower than anticipated, there are clear signs in the 1H’22 results that momentum is building. During 2H’22, management will continue to investigate potential sources of capital needed to accelerate prescription (Rx) growth and obtain sales traction.

  • Strategy: In the US, Shield Therapeutics is commercialising Accrufer itself, thus retaining a greater share of profits for shareholders. Outside the US, Shield’s strategy is to out-license commercial rights to partners with appropriate expertise in target markets, which has been achieved in Europe, China, Republic of Korea and Canada.
  • US penetration: During 1H’22, considerable progress has been made towards physician awareness and payor coverage – >100m lives contracted. After a strong June, 1H’22 Rx were higher than expected, at 11,223, and the discounts are reducing. The aim now is to increase the sales team to accelerate Rx growth.
  • Financing update: The $10m shareholder loan was drawn down on 1 August. AOP has shown confidence, and been opportunistic, by converting $2.8m into shares at 5.52p. Shield is looking at all possible approaches to raise additional working capital to expand the sales team and accelerate the rate of progress.
  • Risks: With a completely new commercial team, the key risk was in the execution of its commercial strategy for Accrufer in the US. There is no certainty that Shield Therapeutics will be able to find additional non-dilutive capital without resorting to an equity issue at a time when investors have become increasingly risk-averse.
  • Investment summary: The market reacted badly to the slow uptake of Accrufer in the first nine months from US launch, which has resulted in the company needing more capital by the end of 2022. However, all the signals are that Accrufer is gathering momentum, which would benefit further from growing the commercial team. Additionally, the market is ignoring the fact that iron replacement remains a hot area, as evidenced by recent M&A activity.

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