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Shield Therapeutics funded through to 2020

Shield expects the results from its head-to-head study on Feraccru this quarter and a decision by the FDA on US approval by the end of July
Blood cells
In Europe, Feraccru can now be used in all adults to treat iron deficiency with or without anaemia, whatever the patient's primary disease

Drugs developer Shield Therapeutics PLC (LON: STX) saw an explosive increase in revenues in the second half of 2018, thanks to its commercialisation agreement with Norgine.

A trading update covering the first half of the company’s current fiscal year revealed revenues for the period are expected to clock in at around £11.9mln, up from £637,000 in the corresponding period of 2017.

READ: US FDA to make decision on Shield Therapeutics’ Feraccru drug by end of July

In September 2018, Shield licensed its iron deficiency treatment, Feraccru, to Norgine in most European countries, receiving an £11mln upfront licence fee in the process.

Norgine began to promote Feraccru in the UK and Germany in December as these are markets where the product was already commercially available and being reimbursed.

Feraccru will be launched by Norgine in the other major European markets when pricing and reimbursement negotiations are concluded, with these launches not expected before 2020.

Discussions are underway with third parties for the licensing of Feraccru commercial rights in certain other countries.

Shield finished the year with cash of £9.8mln, down from £13.3mln at the end of 2017. Taking into account expected royalty income from Norgine during 2019, which is anticipated to grow steadily based on sales in the UK and Germany, but excluding any development or sales milestones that may be received from Norgine, the board is confident that the group's “cash runway” currently extends into 2020 based on currently planned expenditure on research & development.

The group said it has been made aware that a third party has raised objections with the European Patent Office to the group's patents (#2 668 175 and # 3 160 951) that cover "Process for preparing an iron hydroxypyrone" and "Crystalline forms of ferric maltol" respectively.

On the basis of specialist advice received and the fact both patents went through an extensive examination process prior to grant, the group continues to have full confidence in the validity of the patents which expire in 2032 and 2035.

"Shield has entered 2019 in good shape,” declared Carl Sterritt, the chief executive officer of Shield Therapeutics.

“I have been encouraged by the sales performance of Feraccru in the UK and Germany, where upward sales momentum has been maintained through the last twelve months despite the lack of active sales promotion since February 2018 and I believe that Norgine, with its much larger field-based sales team and readily available resources, is well placed to build on the positive momentum we saw in 2018 and drive the Feraccru business forwards in Europe.

“In the USA I am looking forward to the 27 July 2019 PDUFA date for Feraccru and the opportunity for Feraccru to be commercialised in the world's largest prescription pharmaceutical market. To enable this we are focused on identifying a suitable US commercial partner at the earliest opportunity, and, based on ongoing discussions I believe we also have the potential to out-license Feraccru for commercialisation in other parts of the world," he added.

Liberum Capital Markets, which has an 80p target price for Shield's shares, said: "Shield has released a short preliminary update for its FY18 results. In this, it confirmed that it delivered revenues of £11.9mln of which £0.6mln came from product sales in the first eight months of the year and a further £0.1mln from royalties over the remaining four months of 2018".

"It also provided an update on Norgine's roll-out across Europe with c.80reps in-place already (4x  the number Shield had). The company confirmed a year-end net cash position of £9.8m which should give it plenty of runway over the next twelve months. Lastly, Shield also reiterated that it expects the results from its head-to-head study in Q1 and a decision by the FDA on US approval by the end of July," the broker added.

With enough cash to fund the business into 2020 and two potentially major share price catalysts in the next six months, Liberum reiterated its 'buy' rating.

Broker Peel Hunt said the expected revenue of £11.9mln for 2018 was in line with its £12mln forecast while the end-of-year cash balance of £9.8mln was better than the £9.6mlnm it had predicted.

“The AEGIS H2H [head-to-head] study remains on track to report results by end March 2019, potentially resulting in a milestone payment from Norgine, amounting to c £2mln if it achieves its primary endpoint of non-inferiority [versus Ferinject, the leading intravenous iron therapy].”

Peel Hunt said its target price of 70p implies more than 100% upside “and includes nothing for the US market”, which Peel Hunt estimates could be worth an additional 85p per share on a partnered basis.

“If FDA approval is received this year, the US market offers further very strong near-term expansion potential for Feraccru,” the broker said.

Shares in Shield trade at 38p, up 0.6p on the day.

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