TIDMSTX
RNS Number : 1417I
Shield Therapeutics PLC
10 December 2020
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public domain
Shield Therapeutics plc
("Shield" or the "Group" or the "Company")
Update re US partnering discussions
Shield considering launch of Accrufer(R) in the USA
Loan facilities agreed
London, UK, 10 December 2020: Shield Therapeutics plc (LSE:
STX), a commercial stage pharmaceutical company with a focus on
addressing iron deficiency with its lead product
Feraccru(R)/Accrufer(R) (ferric maltol), provides an update on its
plans to commercialise Accrufer(R) in the USA and its cash
position.
US commercialisation
Accrufer(R) was approved in July 2019 by the FDA for the broad
indication of treatment of iron deficiency in adults. Since then
Shield has conducted an extensive process to identify and appoint a
commercialisation partner for the US market and, through this
process, the Group and its advisers have engaged with a wide range
of interested parties. Since this process began Shield has received
numerous indicative proposals from potential commercialisation
partners and, whilst some of these reached late stages of
negotiation, they did not proceed to completion due to adverse
business events specific to the counterparties concerned and
unrelated to Accrufer(R). The Group remains in discussions with a
number of potential commercialisation partners for the US marketing
rights to Accrufer(R) but it is now clear that a transaction will
not be completed before the end of 2020.
The length of time that the process has taken and the late-stage
setbacks incurred have been frustrating for both the Board and
shareholders but Shield's understanding of the US iron therapy
market has developed significantly over the last year, and the
market itself has also evolved in that time, in large part due to
the COVID pandemic. Discussions with potential commercialisation
partners have demonstrated to Shield that it is realistic for
companies without large sales and marketing infrastructure to
launch a product such as Accrufer(R) in the US. The COVID pandemic
has accelerated the trend towards greater reliance on telesales,
e-detailing and on-line marketing, reducing the need for very large
sales teams. The COVID pandemic has also accentuated some of the
advantages that Accrufer(R), a well-tolerated and effective oral
treatment, offers over intravenous (IV) iron replacement therapy as
it avoids the need for patients, usually with underlying health
issues, to visit hospitals or clinics to be infused. Furthermore,
Shield believes that the first US launch of an oral HIF
inhibitor(1) for chronic kidney disease (CKD) patients, anticipated
in Q1 2021, is likely to increase the need for effective and well
tolerated oral iron replacement therapy.
The Board has therefore concluded that, in order to maximise the
Group's options, in parallel with continuing ongoing discussions
with potential licence partners it should explore the potential
launch of Accrufer(R) in the US by Shield, possibly including
co-promote and/or sub-licence partners in specific therapeutic
areas. To this end, work is being carried out with US-based
consultants and other advisers to develop a strategy and plans for
a Shield-led launch. A key component of this planning is to
establish the investment needed for such a launch. Shield estimates
that the amount required for the Group to reach the point at which
it generates cash, including the US launch costs, the costs of
Shield's current non-US operations and the ongoing paediatric study
is in the range of $30 million to $40 million. The Company expects
that any financing for a Shield led US launch of Accrufer(R) would
include a substantial debt component and Shield is in discussions
with several potential lenders and has already received a number of
term sheets on acceptable commercial terms.
The Group is continuing to progress both the out-licence and
Shield-led launch opportunities and will decide which of the
alternatives is likely to deliver greater value to shareholders,
taking into consideration the potential financial returns from each
alternative, and their respective risks.
The US market opportunity for Accrufer(R) is substantial and
growing:
-- Approximately 9-10 million US patients suffer from iron
deficiency anaemia , and possibly 2-3 times as many have iron
deficiency without anaemia
-- Almost 10 million iron replacement prescriptions are written
annually in the US, of which a substantial majority are for generic
ferrous oral iron salts which are well-known to be poorly tolerated
by patients
-- In Shield's head-to-head study which compared Accrufer(R)
with IV therapy, Accrufer(R) was shown to be a credible alternative
to IV therapy particularly for maintaining haemoglobin levels over
the long term
Shield therefore believes that there is an opportunity for
Accrufer(R) to take significant market share from both the existing
oral and IV iron products, and to grow the overall market,
potentially leading over time to Accrufer(R) sales potential of
several hundred million dollars per annum.
Cash position and loan facilities
At 30 November 2020 the Group held unaudited cash balances
amounting to GBP3.8 million and, due to prudent cash management,
its cash runway now extends into Q2 2021. The Group has received
letters of intent from AOP Orphan International AG ("AOP"), a
shareholder owning 10.7% of the Company's issued share capital, and
Dr Christian Schweiger, a board member and holder of 3.5% of the
Company's issued share capital, confirming that they are prepared
to lend the Group up to EUR4.0 million and CHF1.0 million
respectively in order to provide working capital for the Group. In
total these amount to approximately GBP4.4 million which would
extend the Group's cash runway until around the end of 2021.
The two loan facilities are unsecured and will be structured
identically and provide for 50% of each facility to be drawn down
on 1 February 2021 and the remaining 50% to be available for
drawdown at Shield's request during the rest of 2021. Interest of
10% pa is payable on the amounts drawn down. The loans will be
repayable in cash in the event that Shield receives a licence
upfront payment above a certain level, secures a debt facility with
another lender, raises new equity or, in any event, by 31 January
2022. However the lenders will have the right, but not the
obligation, to convert any outstanding loan balances into ordinary
shares in Shield at any time at a 5% discount to the market price
at the time or, in the event of a new equity raise, on the same
terms as all other investors subscribe. An arrangement fee of 2% is
payable to the lenders on signing the formal loan documentation.
The letters of intent are binding on both AOP and Dr. Schweiger.
Execution of the formal loan documentation will also be subject to
Aim Rule 13.
The Company expects to provide a trading update in January
2021.
Commenting on this update, Tim Watts, CEO of Shield Therapeutics
plc, said: "I am very grateful to AOP and Dr Schweiger for making
loan facilities available to the Group. These will give us time to
secure the best possible outcome for all shareholders. It is clear
from our work over the last year, including market research and
discussions with potential partners, that there is an exciting
opportunity for Accrufer(R) in the United States. Patients,
prescribers and payers express the need for a well-tolerated and
effective oral iron therapy as an alternative to IV iron
replacement and older oral iron products. Although we continue to
have attractive licence discussions, it is prudent that we also
assess other options by which we can drive value for our
shareholders and a Shield-led launch of Accrufer(R) is a very
credible alternative plan. The Board remains very confident that
either way we will secure an outcome which will generate
substantial value for shareholders."
Notes
(1) Hypoxia-inducible factor (HIF) prolyl hydroxylase enzyme
inhibitors are a new oral class of agents for the treatment of
anemia in CKD. These agents work by stabilizing the HIF complex and
stimulating endogenous erythropoietin production even in patients
with end-stage kidney disease.
For further information please contact:
Shield Therapeutics plc www.shieldtherapeutics.com
Tim Watts, CEO +44 (0)20 7186 8500
Nominated Adviser and Joint
Broker
Peel Hunt LLP
James Steel/Dr Christopher
Golden +44 (0)20 7418 8900
Joint Broker
finnCap Ltd
Geoff Nash/Matt Radley/Alice
Lane +44 (0)20 7220 0500
Financial PR & IR Advisor
Walbrook PR +44 (0)20 7933 8780 or shield@walbrookpr.com
+44 (0)7980 541 893 / +44 (0)7584 391
Paul McManus/Lianne Cawthorne 303
About Shield Therapeutics plc
Shield is a de-risked, specialty pharmaceutical company focused
on commercialising its lead product, Feraccru(R)/Accrufer(R), a
novel, stable, non-salt based oral therapy for adults with iron
deficiency with or without anaemia. Feraccru(R)/Accrufer(R) has
been approved for use in the United States, European Union, UK and
Switzerland and has exclusive IP rights until the mid-2030s.
Feraccru(R) is commercialised in the UK and Europe by Norgine B.V.
and the Company is currently in the process of selecting a
commercialisation partner for the US market. Shield also has an
exclusive licence agreement with Beijing Aosaikang Pharmaceutical
Co., Ltd., for the development and commercialisation of
Feraccru(R)/Accrufer(R) in China, Hong Kong, Macau and Taiwan.
For more information, please visit www.shieldtherapeutics.com .
Follow Shield on Twitter @ShieldTx
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