Shield Therapeutics: Master of its own destiny

Shield’s investment proposition is very simple: it hinges on its US success in commercialising Accrufer (US brand) to treat iron deficient anaemia using its own 30-person salesforce and a striking ad campaign. Shield owns the product, takes

Proactive Published 25/08/2021

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Investment proposition hinges on success of US launch

The market is large with 10mln oral prescriptions a year. Accrufer offers excellent tolerability and efficacy compared to other oral iron products. Whilst we think that it will take the rest of 2021 to gain US market traction, partly due to COVID-19, we expect a strong sales trajectory to emerge during 2022. In Europe, H1 sales volumes grew from a low base with royalty revenue of £0.5mln. Partner Norgine needs to gain public national reimbursements for Ferracru (EU brand) and build market share.

Ferric Maltol: Approved in Europe and the US

Iron supplements are essential for patients with anaemia, low red blood cell counts. Red blood cells transport oxygen by using haemoglobin (Hb). Hb requires a charged iron atom (a ferric ion) so patients with iron deficiency make lower amounts of Hb, so become anaemic. Effective iron supplementation enables normal production of Hb so reversing anaemia and its symptoms.

Iron has to be transported across the gut lining by a specific transporter protein: ferroportin, so ferric maltol, by delivering ferric ions to the transporter, aids absorption. Ferric maltol is an iron-containing compound taken by mouth at a dose of 30mg twice per day. Maltol, a sugar, surrounds the iron solubilising it. Iron can exist in two charged forms: ferrous (double positive) and ferric (triple positive) ions. Ferrous preparations are more soluble - so used in cheap generic oral preparations, but the ferrous ions have to oxidise within the gut to ferric ions to be absorbed. This oxidation creates gut toxicities. Ferric preparations are orally poorly bioavailable so, other than Ferracru, need to be given by injection or intravenously.

Once inside the body, the iron is taken up and transported by normal iron metabolism proteins like transferrin and ferratin. This restores normal iron levels and Hb. Excessive iron is also dangerous.

Registration trials were conducted in patients with inflammatory bowel disease and chronic kidney disease who were unresponsive to, or unable to tolerate other oral iron therapies. Patients need to take Accrufer for at least 12 weeks, depending on condition, to see a therapeutic gain. Typically, a course will be at least 16 weeks. The comparison arm was a placebo.

Ferracru was European Medicines Agency approved in 2016 following a positive regulatory opinion. It is indicated for patients with inflammatory bowel disease suffering from iron deficiency.

In the US, Accrufer was Federal Food and Drug Administration approved in July 2019 for iron deficiency, a much broader indication than in Europe.

Large US market opportunity

A phase III trial, the AEGIS US head-to-head study (NCT02680756) assessed Accrufer longer term up to 52 weeks, against iv iron, Injectafer with the primary endpoint measured at 12 weeks. The aim was to show that they were equivalent (within 20%). Data were initially reported in 2019. The response levels for patients who followed the full trial protocol with Accrufer were within 20% of those treated with Injectafer. Unfortunately, within the statistical interpretation of the pre-specified trial design, Accrufer cannot be claimed to be non-inferior (that is, effectively equivalent) to Injectafer as when all patients are included, the 20% 12-week threshold was missed. As a result, Accrufer is positioned against oral products not against injectable ferric products.

Shield is running a study to broaden the label further to include 1.6mln children and adolescents with IDA. A small cross-over study was satisfactorily completed in H1 2021. The main study should start recruitment in H2 2021.

Trials and data

Competitive landscape

Iron deficiency is common but particularly associated with women, due to regular periods, people with kidney disorders and people with inflammatory bowel disease who lose blood due to gut lesions. Some cancer patients can also become iron deficient. The cheapest treatment is to use various soluble iron preparations: ViFor estimates there are over 3,000 brands worldwide. Generally, these are not very effective as based on ferrous solutions, discussed above, with gastrointestinal side effects. However, clinical guidance generally recommends that oral iron is given before infused or injectable preparations.

The leading injectable or intravenous (iv) iron product, sold by the Swiss company Vifor, is ferric carboxymaltose (chemically distinct from ferric maltose). This is sold as Ferrinject (Europe) and as Injectafin (US). In-market 2020 global sales were CHF 1bln and ViFor claims that this equates to about a 50% share. In the US, sales in-market were US$446mln giving ViFor’s marketing partner revenues after wholesale and discounts of US$415.5mln. Sales volumes were down 6.6% as patients avoided clinics due to COIVID-19. Potentially, Accrufer as an effective oral product could be more acceptable to at-risk patients. Pharmacosmos (Denmark) sells MonoFer (ferric derisomaltose) and CosmoFer (iron dextran), which are ferric products given intravenously. Sales are not disclosed.

The US market is the largest and the most receptive market in the world for novel pharmaceutical treatments. Accrufer is positioned as a second-line option after generic oral ferrous salts and before the use of injectable or intravenous ferric products. There are about 10mln adults with iron-deficient anaemia (IDA) in the US with about 10mln oral iron prescriptions and 2.3m iv/injectable prescriptions.

In the US, Shield sells Accrufer directly using its own 30-person sales force. Accrufer was launched on schedule on 1 July 2021. The current activity is to add Accrufer to hospitals and other formularies so that it is available for physicians to prescribe. Shield has so far found the interest level amongst physicians to be high.

In addition, physicians are seeking a safer and more effective oral iron product as they are not satisfied with current (ferrous) oral products. Tolerability and efficacy are seen as crucial. We also note that price acceptability is going to be important - more so for general physicians, less so for specialists who see more severe cases and may be more inclined to use an injectable product.

Shield has developed a visually striking ad campaign with comprehensive literature and online back-up materials.

Korean deal

In August 2021, a deal with Korea Pharma was announced. The partner will pay all in-country costs. The deal terms are:

Upfront payment of £0.5mln at signing;
Milestone payment of£1.5mln upon first commercial sale of Accrufer;
Additional milestone payments of up to £4.0mln upon achievement of specified cumulative sales targets;
Royalties of 15% of net sales of Accrufer in Korea.

Valuation considerations and sales development

Shield has disclosed its internal projections that peak revenues could be in the US$300-500mln per year range from 2027 onwards. It is possible on Shield’s internal estimates that cash flow neutrality will be reached around 2023. This will be a key target for investors to watch.

US sales costs can be high and the need to get product onto formularies and get traction on specialist prescribing, especially when COVID-19 still makes direct product promotion difficult, means that we do not expect significant US revenue generation during H2 2021. A better perspective will be given by H1 2022 sales development. However, and positively, Shield fully controls the sales and promotion and reaps, after wholesale and patient support costs, all the profits. This means that once Accrufer gains market traction, it should develop into a strong, consistent and profitable franchise.

We do not expect significant European growth for some time. It is unclear how much Norgine is investing in market development or how much share of the future market Shield will receive.

The product is also licensed with ASK Pharma for China. The China launch is anticipated for 2023 on trial completion. Licensing agreements are being negotiated in other countries. A deal for South Korea was announced in August 2021 (see above).

Financial commentary

We do not make a financial forecast. Sales, adjusted royalties, in H1FY21 were £0.5mln. The comparable period in 2020 was distorted by the excellent partnering deal with Jiangsu Aosaikang Pharmaceutical Co. Ltd with a substantive upfront payment of US$11.4mln.

We note the H1 rise in sales and admin costs to £6.1mln vs £4.8mln due to investment in the US sales force. This will probably rise further in H2FY21 as the full impact of the 30-person sales force and advertising support are seen. R&D rose from £0.7mln to £1.6mln due to the paediatric study; this will stay high over H2FY21 as the trial enters its next, larger phase.

Cash in Dec 2020 was £2.9m. A placing of £27.7mln in H1FY21 left June 30 2021 cash at £22.6mln. This can fund the marketing for the US launch phase and support sales development through 2022.