November 2024 Investor Forum

Proactive cash management to cashflow-breakeven

Shield is a commercial-stage pharma company delivering specialty products that address the needs of patients with iron deficiency (ID). Since its July 2021 US launch, Shield and Viatris have increased physician awareness of the differentiating characteristics of ACCRUFeR® as an oral ID drug, in order to generate sales traction. The 3Q’24 trading update reiterated the interim statement dialog: sales continue to progress, while costs are being actively managed. Shield is being proactive, extending its working capital financing from $10m to $15m and issuing $10m new shares to AOP, to manage the company through to cashflow-breakeven in 2H’25.

• Strategy: Shield and co-marketing partner Viatris are commercialising Accrufer in the US. Elsewhere, 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.
• 3Q’24 trading: In 3Q’24, sales grew 4% over 2Q’24, to $7.2m, on the back of 20% Rx growth, offset by a weaker selling price in July, which gave an average of $167 per Rx for the quarter. Prices improved greatly, to $190+, in August and September. Gross cash to end-September was $7.7m, down from $8.1m at end-June, with management proactively strengthening the cash resources.
• ACCRUFeR Rx: Sequential 3Q’24 Rx growth of 20%, to 43,500, was modestly below expectations (28%). Combined with the weak July selling price, sales, at $7.2m, were below our $7.9m forecast. However, the higher $192 selling price in the latter months of 3Q’24 is expected to be maintained throughout 4Q’24.
• Forecasts: Modestly lower Rx growth has a knock-on effect on 4Q’24 expectations, but this is being offset by a selling price that is $20 higher than forecast, at $192. While this reduces overall 2024 sales by $1.0m, additional cost savings mean that our EBITDA and EBIT forecasts remain unchanged.
• Investment summary: The 3Q’24 trading statement indicates that Shield is continuing to move in the right direction and that the new CFO has a firm grip on cash. The trend for lower ACCRUFeR Rx growth, coupled with much-improved pricing (lower discounting), leaves forecasts broadly unchanged. Management is being very proactive in the management of gross cash in order to take the company through to cashflow-breakeven in 2H’25.