Positioned for growth and profitability

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 generating prescription (Rx) growth and sales traction. Positive momentum in 2H’22 should be accelerated substantially in 2023, with Viatris as its new commercial partner, and increased resources from a capital increase. 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: Shield has been building awareness QoQ throughout 2022 with a small sales team (average 25). The positive momentum is expected to accelerate with a combined Shield-Viatris sales team of 100. Shield stated clear three-year targets in its recent Circular, which suggest US sales of $150m in 2025.
• Valuation: The share price had been marked down throughout 2H’22 on the expectation that Shield would be tapping the market for a substantial capital increase. However, this ignored the potential benefits of a large co-marketing partner. Even on a larger share capital, the DCF valuation is 72p.
• Risks: As before, the main risk is execution. However, the QoQ momentum in Rx growth in 2022, with a small sales team, boosted confidence from the Viatris partnership and its well-established networks; a 100-strong sales team – 4x the 2022 average – and the necessary capital, has greatly reduced this risk.
• Investment summary: Uncertainty about whether positive 1H’22 signals for Accrufer would continue throughout 2H’22, and the need for more capital, has left Shield trading on an EV of just £21.8m (0.3x 2024E EV/sales). Confirmation of the 2H’22 Rx growth, addition of Viatris to the party, and an oversubscribed equity raise should allay any lingering fears. The shares are expected to respond quickly to the first evidence of any benefits from the Viatris relationship.