# Shield Therapeutics Taking on China

- Link: https://www.directorstalkinterviews.com/shield-therapeutics-taking-on-china/412802674
- Published: 2020-01-14T07:26:28+00:00
- Author: Amilia Stone

**Shield Therapeutics **(LON:STX) is a commercial-stage company delivering specialty
products that address patients’ unmet medical needs, with an initial focus on treating
iron deficiency (ID) with ferric maltol. Recent news that the FDA had approved this
drug for a broad indication opened up a market in the US currently worth over $1bn
p.a. On 8 January, STX announced a development and commercialisation licence deal
in China with Beijing Aosaikang Pharmaceutical Co (ASK Pharm), whose local expertise
should support approval and deliver strong licensing income in what is the world’s
second largest pharmaceuticals market.

 * **Strategy:** STX’s strategy is to out-license the commercial rights to its products
   to partners with marketing and distribution expertise in target markets. These
   deals allow STX to retain its intellectual property (IP) and to keep investing
   in its R&D pipeline, while benefiting from immediate and long-term value.
 * **China deal:** The novel iron replacement therapy, Feraccru/Accrufer, has been
   exclusively licensed to ASK Pharm for development and commercialisation in China.
   This paves the way to a large and growing market for iron replacement products
   and strengthens STX’s hand in ongoing negotiations with potential US partners.
 * **Valuation:** Addition of the China deal takes our valuation to £422m/360p. 
   The $11.4m/£8.7m upfront payment extends STX’s cash runway into 2021. The next
   value inflection point will be when STX announces who its US commercial partner(
   s) is, and the terms of the licensing deal.
 * **Risks:** All drug companies carry development risk. However, the clinical risk
   with STX is limited because of Feraccru/Accrufer’s clinical profile and existing
   marketing approvals. The main risk is achieving an appropriate partnering deal
   in the US and executing on commercialisation strategy to capture market share.
 * **Investment summary:** The FDA approval and pending launch of Accrufer reinforces
   our view that Shield Therapeutics is at an exciting juncture. It has delivered
   on all the goals set at the time of its IPO in 2016. Feraccru/Accrufer has been
   validated by EU and US regulatory approvals, and the commercial deal in Europe
   looks set to be repeated in the US. Announcement of its commercial partner, together
   with the terms of any deal, represent the next valuation inflection point.

[DOWNLOAD THE FULL REPORT](https://www.hardmanandco.com/wp-content/uploads/2020/01/STX-China-deal-14-January-2020.pdf)

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