Accelerating effectiveness of enlarged sales team

Shield is a commercial-stage pharma company delivering specialty products that address patients’ unmet medical needs, with an initial focus on iron deficiency (ID). Since its US launch in July 2021, Shield has been increasing physician awareness of the differentiating characteristics of Accrufer® as an oral ID drug, with the aim of ramping up prescription (Rx) growth and sales traction. Positive Rx momentum in 2022 started to accelerate at the end of 1Q’23 and has continued into 3Q’23, following expansion of the Shield-Viatris commercial team. In the event that the US goals are achieved, there would be considerable upside potential to the valuation.

• Strategy: In the US, Shield is commercialising Accrufer alongside its co-marketing partner, Viatris. Outside the US, Shield’s strategy is to out-license commercial rights to partners with appropriate expertise in target markets, which has been achieved so far in Europe, China, Republic of Korea and Canada.
• Accrufer Rx: The interim results statement indicated that Accrufer Rx growth is accelerating following recruitment and training of the expanded field force, albeit slightly below our forecast. The indicative 80% growth rate in 3Q’23 is expected to be confirmed in a statement towards the end of November.
• Valuation: Although Accrufer Rxs were modestly below our forecast, the market was more disappointed by the unexpected capital increase accompanying the loan refinancing package. However, if Shield gets anywhere close to its revised 2024 and 2025 Rx numbers, the stock will appear cheap.
• Risks: Commercial execution is key. The QoQ momentum in Rx growth has greatly reduced the risk. By 4Q’23, the 100-strong sales team, together with Viatris’s well-established network, should boost both Rxs and confidence. More challenging is the reduction in average discount for each Accrufer Rx.
• Investment summary: During 2023, the market has continued to fret about whether the acceleration in Rx needed to hit full-year targets will be achieved. Early benefits to Accrufer Rxs from the enlarged and trained Shield-Viatris sales team were further evident in 1H’23, which augurs well for the future and the achievement of sales forecasts. The next update will be confirmation of 3Q’23 Rx data in November, followed by a full-year trading update in January 2024.