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Shield Therapeutics achieving significant milestones

Last updated: 09:40 03 Feb 2020 GMT, First published: 09:37 03 Feb 2020 GMT

Shield Therapeutics: Achieving significant milestones

Shield Therapeutics (STX) detailed a series of achievements in its FY19 business update. The highlights included a 67% increase in sales volumes in European markets and, notably, FDA approval of Feraccru (Accrufer) with the broadest possible label to treat iron deficiency with or without anaemia. It also delivered a post-period announcement of an attractive licensing deal with ASK Pharm in China. The very positive body of clinical data, and the product profile, position Accrufer to challenge market incumbents in US, an addressable market worth up to $2bn, whilst the deal with ASK Pharm improves the company’s financial, strategic and commercial prospects and opens the door to China, the world’s second largest pharma market.

 

Exclusive deal for Asian territories: In January STX announced its licence agreement for Feraccru/Accrufer with the integrated specialty pharma company Beijing Aosaikang Pharmaceutical Co Ltd (ASK Pharm) covering China, Hong Kong, Macau and Taiwan. STX has received $11.4mln upfront, with a further $11.4mln payable on the regulatory approval of the product in China. ASK Pharm will bear all development costs. STX is also eligible to receive up to $40mln in milestones-related to cumulative sales and tiered royalties on net sales between 10% to 15%.

Achieving a key milestone: ASK Pharm is a well-resourced participant in the vast Chinese pharmaceuticals market valued at over $120bn, the second largest in the world, and where the prevalence of iron deficiency/iron deficiency anaemia (ID/IDA) is very high. China is going through an era of radical healthcare reform, driven by greater demand for access to quality healthcare, greater efficiency and improved access to branded prescription pharmaceutical products for its population of 1.4bn people, providing a large addressable population if Feraccru is approved and reimbursed.

Financial highlights: FY19 revenues were in line with expectations at £2.9mln, including £2.3mln milestones from Norgine and Ewopharma, and £0.6mln of Feraccru revenues related to royalties from European partner Norgine. During 2019 Norgine’s marketing efforts focused on England and Germany, in line with the current reimbursement coverage. Positive sales volume trends included a 28% increase in H219 sales vs H119, up 67% vs FY18. STX licensed European rights for Feraccru to Norgine in September 2018. The latter is now applying for reimbursement coverage in the larger European markets including France, Italy, Spain and other parts of the UK supported by the very positive clinical data package for Feraccru.

Cash runway extended: Cash at the end of December 2019 stood at £4.1mln, augmented post year-end by the £7.6mln ($11.4mln) upfront payment from ASK Pharm, taking STX’s cash runway into 2021, providing headroom to pursue its US partnering discussions on its own terms.

Compelling Head to Head study results: 12-week outcomes comparing Feraccru to the market-leading intravenous iron therapy Injectafer/Ferinject (Vifor Pharma) met the study objective of non-inferiority, providing compelling data both to support ongoing US partnering discussions and commercialisation/reimbursement for current partners. The 52-week data from the study was equally impressive, clearly demonstrating the ability of Feraccru to prevent recurrence of IDA over the long term in the population treated, whereas the median time to relapse for the IV iron-treated patients was just 85 days. Other key factors include its convenience, as patients can take Feraccru at home, as well as avoiding the life-threatening risks associated with IV iron administration.

Feraccru deal: Accessing the world’s second largest pharma market

In January, STX announced its exclusive licence agreement for Feraccru/Accrufer with the specialty pharma company Beijing Aosaikang Pharmaceutical Co. Ltd (ASK Pharm) covering China, Hong Kong, Macau and Taiwan. The $11.4mln upfront payment received post-year-end provides a balance sheet boost, with a further $11.4mln payable on the regulatory approval of the product in China. STX is also eligible to receive up to $40mln in sales milestones related to cumulative sales, and tiered royalties on net sales, of between 10% to 15%. ASK is responsible for covering all the costs of development, regulatory approval and manufacturing, and distribution within the stated territory.

ASK Pharm, which is quoted on the Shenzhen Exchange at a market capitalisation of c£1.6bn and reported FY18 sales of c $650mln. It is a well-resourced participant in the vast Chinese pharmaceuticals market, which was valued at over $123bn in 2018, equalling the combined size of European pharma markets. It is forecast to rise nearly 40% to reach up to $170bn by 2023 (source: IQVIA). This is partly as a result of the China Government’s ongoing drive for innovation and quality improvement moving towards an increase in the volume of prescribed patented, as opposed to generic, pharmaceuticals in the country. This factor has led it to be one of the highest spending emerging pharma markets.

The prospects for the development and launch of Feraccru are supported by ASK Pharm’s status as an integrated pharma company comprising R&D, and manufacturing and also with a comprehensive commercialisation infrastructure of over 1,000 reps. Its product portfolio includes primarily oncology and gastroenterology products, complementing Feraccru in the hospital pharma market.

Potential to address specific unmet need

Commercially-speaking, this deal offers STX significant potential since there is a high prevalence of ID/IDA in China by sheer population size. The market, meanwhile, is relatively undeveloped. In IDA sufferers, the most susceptible sub-groups include those suffering from chronic kidney disease (CKD) in which IDA is a major complication and is associated with renal and cardiovascular failure and high mortality. In Asian populations the incidence of CKD is elevated, associated with high blood pressure and diabetes.

While Feraccru has a broad label for treating ID with or without anaemia, Feraccru is already supported by very strong clinical data, specifically in treating IDA in CKD and IBD. In all, there are more than 100mln sufferers of CKD in China alone (source: Lancet 2012).

Vifor’s market leading IV iron, Injectafer, is being targeted for launch in 2021

The main treatment options after oral irons are IV-administered, including Venofer (Vifor Pharma) for CKD indications. However, this product has a history of adverse events and needs to be administered in a hospital setting via an injection. Vifor’s market leading IV iron, Injectafer, is being targeted for launch in 2021, providing an opportunity for Feraccru to establish early ground alongside it, if approval is gained promptly, and indeed to potentially benefit from the profile-raising and education surrounding the treatment area. As a reminder, the benefits of Feraccru include its ease of use, oral administration, significant efficacy and safety data, an ability to maintain iron levels over the long term as well as potentially being lower cost. Injectafer is only generally administered when a patient has relapsed and always carries risk of fatal adverse reactions, so therefore, must always be administered in a hospital setting.

The regulatory pathway for Feraccru is via the China Imported Drug License (IDL). The IDL route enables imported pharmaceuticals to be marketed in China, and the National Medical Products Administration requires bridging studies to be conducted prior to launch. While the rate of progress within China is accelerating at unprecedented levels, Chinese companies seek to bolster pipelines by in-licensing innovative drugs where there is high unmet need, from overseas sources. ASK Pharm will work towards the rapid approval and commercial launch of Feraccru, although in the interim there is likely to be a lack of visibility on timescales and the assumption is that it could take until 2023 before Feraccru becomes widely commercially available.

A key highlight of 2019 included presentation of positive data from STX’s AEGIS head-to-head study of Feraccru vs the leading IV iron, Ferinject

Compelling data from non inferiority H2H study

A key highlight of 2019 included presentation of positive data from STX’s AEGIS head-to-head study of Feraccru vs the leading IV iron, Ferinject. The data, which were presented at the 27th United European Gastroenterology Week (UEG) by Dr Stefanie Howaldt, principal investigator of the AEGIS trial, included additional detail on the longer-term data out to 52 weeks and confirmed not only that the primary endpoints were met, but that Feraccru prevented the recurrence of IDA. Thus, it provided a real oral alternative to IV iron, which in the study had a relapse rate of just 85 days. These outcomes provide strong support for the positioning of STX’s oral treatment for current and potential partners including in a broad preventative setting.

The data are supportive of Feraccru and present a clear commercial challenge to market-leading IV iron products such as Ferinject in Europe (Injectafer in US), particularly given Feraccru’s convenience and safety profile. The study outcomes also suggest that Feraccru offers a clear alternative to IV iron, prevents the relapse of IDA and the need for repeat IV iron infusions.

Conclusions

We consider that the China deal further reduces the risk profile of the company. Whereas the STX share price has weakened on a one-month view. This appears to run counter to the prospects provided by its deal with ASK Pharm, as well as the boost to the balance sheet giving additional headroom to achieve a deal in US on its own terms. We look forward to news on the outcome on US partnering discussions, which is likely to provide the next main value inflection point for STX.

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