September 2021 Investor Forum

Attention focused on Accrufer progress

Shield Therapeutics (Shield) is a commercial-stage pharmaceutical company delivering specialty products that address patients’ unmet medical needs, with an initial focus on treating iron deficiency (ID). Accrufer® has just been launched in the US by Shield, where the initial aim is to greatly improve market awareness of its differentiating characteristics as an oral ID drug. In other territories, Feraccru® is being commercialised through licensing and partnerships. The US market has enormous potential, but, even on conservative forecasts with respect to market penetration, Shield is forecast to become profitable and cash-generative in 2023.

• Strategy: In the US, Shield has decided to sell Accrufer itself, thus retaining a greater share of profits for shareholders. Outside the US, Shield’s strategy is to out-license commercialisation rights to partners with appropriate expertise in target markets, which has been successfully achieved in Europe and China.
• US launch: A key event was the launch of Accrufer in the US on 1 July, using the strapline “Discover the legend of tolerable oral iron”. New market research has indicated that Shield needs to raise awareness of Accrufer’s clinical profile and positioning with the key prescribers responsible for 60% of oral iron Rx.
• Valuation: DCF-modelling each of the three main income streams – the US, Europe and China – generates an NPV, which, summed together, gives an EV for the group of $852m/£608m, or 281p per share. The current share price clearly applies a hefty discount for the execution risk associated with Accrufer.
• Risks: While there remains regulatory risk in China and Korea, Feraccru/ Accrufer has been de-risked by regulatory approvals in Europe and the US. There is execution risk associated with Shield’s go-it-alone strategy in the US, with a 12-month goal to increase awareness and establish payor coverage.
• Investment summary: The Shield-led launch of Accrufer was always the best option, in our opinion. Now that the period of commercial uncertainty in the US is over, the near-term target is to raise awareness, promote patient access programmes and establish payor coverage. The market seems overly worried about the “apparent” slow start, but any news on sales traction and/or the signing-up of payors should act as a catalyst to narrow the valuation disconnect.